Traditionally Export Related Voluntary Disclosures/Voluntary Self-Disclosures have been filed with DDTC, BIS, OFAC or occasionally the Bureau of Census. Each of these agencies encourages companies and individuals to file the Disclosures and they provide an incentive in that the filing can be considered as a mitigating factor to the violation(s) committed. The number of agencies interested in seeing your Disclosures is increasing.
In October, the National Security Division (NSD) of the U.S. Department of Justice (DOJ) established a formal, voluntary self-disclosure program for violations of U.S. economic sanctions and export controls. The program encourages companies and individuals who knowingly and willingly violate export laws to self-disclose to DOJ (in addition to what other Voluntary Disclosure/Voluntary Self-Disclosure would have been filed with other USG agencies). According to DOJ, the incentive for filing a Voluntary Self-Disclosure, full cooperation and appropriate remedial actions can extend to being eligible for a significantly reduced penalty; the possibility of a non-prosecution agreement; a reduced period of supervised compliance; reduced fines and/or forfeitures; and lack of requirement of a Special Compliance Official. At the moment, the referral of Voluntary Disclosures/Voluntary Self-Disclosures by DDTC and BIS to DOJ for review is discretionary, not mandatory. The new DOJ program does not contain any requirements that Disclosures are required to be referred by other agencies.
Later in October the Department of Justice published a proposed rule entitled, “Withholding of Unclassified Technical Data and Technology from the Public Disclosure”. The proposed rule is currently seeking Public Comment. Directed at DoD components, their contractors and grantees, the proposed rule is meant to control the transfer of technical data and technology. The rule advised that when DoD component has “substantial and credible information” that a qualified US contractor has violated US export controls, violated its certification, made a certification in bad faith, or omitted or misstated a material fact, the DoD component will temporarily revoke the US contractor’s qualification to receive export controlled information from DoD. While there is currently in the proposed rule no requirement or encouragement for a contractor to file a Voluntary Disclosure with DoD, if other agencies (DDTC, BIS and now DOJ) were to notify DoD of a disclosure of violations in connection with a DoD contract, the contractor involved could face a temporary revocation of its right to receive export controlled technical data from DoD. Currently, there is no requirement that DDTC or BIS provide copies of Voluntary Disclosures/Voluntary Self-Disclosures to DoD, but in practice Disclosures can be provided to DoD for review of the technology involved and an assessment of any National Security implications; so the opportunity for DoD review is present.
Jim McShane is a Sr. Consultant, Trade Compliance for Export Solutions -- a full-service consulting firm specializing in ITAR and EAR regulations.