BIS's Fast-Track to Resolving Voluntary Self-Disclosure

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Jan. 19, 2024
By: Marvin E. McPherson

The Bureau of Industry and Security (BIS) made significant strides in export enforcement in 2023. As touted in the Export Enforcement Year-End Review, BIS secured its highest penalty case against Sea Gate for $300 million, among other large penalty cases. The agency focused its Year- end review on its success and improved capabilities in export enforcement.

In lock step with the increased priority of enforcement, BIS is also encouraging voluntary self-disclosure. BIS updated its Voluntary Self-Disclosure (VSD) policy to further incentivize the disclosure of minor or technical export violations. The updates provide added benefits for companies that disclose violations where no aggravating factors are present.

Aggravating factors include:

1.              Willfulness – violations as the result of a decision to take action with the knowledge that such action would constitute a violation of U.S. law.

2.              Recklessness/gross negligence – violations as a result of deliberate intent to violate, attempt to violate, conspire to violate, or cause a violation of the law.

3.              Concealment - a deliberate effort to hide or purposely obfuscate conduct.

In such cases, when a company discloses a violation where no aggravating factors are present, BIS’ new process will typically be able to resolve the matter through a no-action letter or a warning letter, without the imposition of monetary penalties, within 60 days of the final submission. The new voluntary disclosure program is intended to provide a framework for companies to proactively address and rectify export control violations, while also offering the potential for more favorable treatment in the resolution of such matters.

The consequences of not participating in the BIS new voluntary disclosure program may include being treated as an aggravating factor, potential enforcement actions, penalties, prosecution, and a lack of mitigation. It is important to consider the potential impact and benefits of voluntary disclosure in each specific circumstance.

If you need further assistance or have specific questions about the voluntary disclosure program, please contact any attorney at Barnes Richardson and Colburn.