By Kristine Kelleher

On July 26th, U.S. government agencies published a “tri-seal note” describing the Voluntary Self-Disclosure (VSD) policies applicable to export controls.  This is the second joint document issued by three key U.S. regulators – the Department of Commerce, Bureau of Industry and Security (BIS), the Department of the Treasury, Office of Foreign Assets Control (OFAC), and the Department of Justice (DOJ).  The first document was issued in March, where the agencies collaborated to clamp down on companies evading Russia-related sanctions.  You can read that first notice here.

This second note reinforces existing expectations and outlines the procedures urging industry to submit Voluntary Self Disclosures for export control and sanction violations.

What is this and why was it issued?

In short, the second tri-seal note outlines the U.S. government’s perspective and expectations when it comes to Voluntary Self Disclosures.  The agencies issued this note to set forth each department’s policies, while specifically reminding companies of their responsibility of having a “critical role in identifying threats from malicious actors and helping to protect national security.”

What changed when it comes to Voluntary Self Disclosures?

While the new guidance document doesn’t introduce any new policy announcements, per se, it does highlights the key points of BIS, OFAC & DOJ’s separate disclosure policies.  Since the 2022 Russian invasion of Ukraine, these agencies have joined forces to place an increased emphasis on combined enforcement of sanction and export law violations. The document reiterates that failure to immediately investigate a potential export/sanctions violation could be perceived by the government as a demonstration of a compliance gap within the company’s overall export compliance program.

The document validates and bolsters what we already know:

  1. We should expect to see increased enforcement for export and sanction violations.
  2. The government emphasizes that export controls are one of its top priorities.
  3. Companies are strongly encouraged to file VSDs as soon as possible to receive favorable status. This means a greater likelihood of potential penalty discounts and significant mitigation of civil and/or criminal liability.

Conclusion:  Incentives for VSDs have never been higher

The compliance note is a heads-up to industry who profit from participating in the international marketplace that criminal enforcement of export and sanction laws are ramping up.  In a nutshell, the government is looking to leverage U.S. businesses to detect, investigate and report national security threats by trying to incentivize companies to voluntarily disclose potential violations of U.S. export control laws.

It’s also a reminder of the requirements and benefits of voluntarily disclosing violations.  In exchange, the government offers “credit” to those who submit VSDs and offers strong incentives for whistleblowers and tipsters.  By issuing this note, it empowers companies to be part of reporting national security threats to the U.S. government.

Do you suspect violations at your company or need help navigating this process?  Our team of trade compliance experts can help.  Schedule a no-charge consultation today.

Kristine Kelleher is a Trade Compliance Consultant for Export Solutions -- a full-service consulting firm specializing in U.S. import and export regulations.