On December 13, 2019, the US Department of Justice (DOJ) issued an update to its 2016 guidance regarding enforcement in export control and sanctions investigations of businesses. The updated policy now offers voluntary self-disclosure credit to financial institutions and sets out three criteria that, when met, will create a presumption that a company will receive a non-prosecution agreement and will not pay a fine in connection with criminal violations of US export control or economic sanctions laws.
- Voluntary self-disclosure: Such self-disclosures must be made to the National Security Division’s Counterintelligence and Export Controls Section (CES); disclosures that are made only to the relevant administrative agency will not qualify for benefits under this DOJ policy. Further, disclosures must be made “prior to an imminent threat of disclosure or government investigation,” must be disclosed within a reasonably prompt time after becoming aware of the potential violations, and must include all relevant facts, including individuals involved in or responsible for the misconduct.
- Cooperation: Companies must fully cooperate with the DOJ. To qualify for credit for full cooperation, companies must disclose all relevant facts and attribute those facts to specific sources; must be proactive rather than reactive in such disclosure; must preserve, collect and disclose relevant documents, including documents outside the United States; must de-conflict interviews and investigative steps with steps that the DOJ intends to take in its investigation where requested and appropriate; and must make available for interviews company officers and employees with relevant information. Companies that do not meet the requirements for full cooperation may nonetheless be eligible for some cooperation credit, though the benefits will be less.
- Remediation: The DOJ expects that companies will timely and appropriately remediate the circumstances leading to the violation. This includes analyzing and addressing root causes of the violation, implementing an effective compliance program, disciplining responsible employees and their supervisors, ensuring retention of records, and taking other steps to identify and mitigate risk.
Even if a company meets all three of the above criteria, the presumption that the company will receive a non-prosecution agreement and will not pay a fine will not apply where certain aggravating factors are present. These factors include exports of items controlled for proliferation reasons to proliferator countries, exports of items known to be used in the construction of WMD, exports to foreign terrorist organizations or persons designated as global terrorists, exports of military items to hostile foreign powers, repeated violations, and knowing involvement of upper management in the prohibited conduct. A voluntary self-disclosure in these circumstances will nonetheless be considered by DOJ in determining whether to recommend a more lenient fine and appointment of a monitor. Moreover, getting full credit for a voluntary self-disclosure to DOJ and entry into a non-prosecution agreement may still result in forfeiture or disgorgement of any unlawful gains from the conduct at issue.
It is important to note that this policy applies when the identified misconduct is criminal in nature (i.e., willful violations); it does not affect the process for submitting voluntary disclosures to the agencies responsible for administering and enforcing the relevant regulations. Companies submitting voluntary disclosures to CES should continue to also submit disclosures to the relevant administrative agencies.
The updated DOJ policy provides a framework that companies that identify potentially criminal conduct should consider when determining how to address such conduct. Companies that identify potential violations of US export controls or economic sanctions should analyze the underlying facts when determining whether to submit a voluntary disclosure, and, if so, to what agencies a disclosure should be submitted. In cases involving potential willful conduct, this analysis should include whether to submit a disclosure to CES in addition to the relevant regulatory agencies.
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