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On June 30, 2022, the US Department of Commerce’s Bureau of Industry and Security (“BIS”) announced four key policy changes to strengthen the administrative enforcement program and tackle external threats. These policy changes prioritize the “most serious violations” and cases that pose the greatest danger to US security.

The four policy changes made to the BIS’s Administrative Enforcement Program include:

Imposition of Significantly Higher Penalties

The most serious administrative violations will trigger more stringent penalties to deter future bad actors and level the playing field. BIS is expected to update aggravating and mitigating factors in the existing settlement guidelines to address this policy change and ensure the guidelines are more uniformly applied.

Using Non-Monetary Resolutions for Less Serious Violations

Violators whose breaches do not pose “serious national security harm” but exceed a warning letter or no-action letter, will be offered non-monetary settlement agreement resolutions to rectify the violation in return for violators accepting responsibility, admitting to the conduct, and committing to enhanced compliance measures.

Elimination of “No Admit, No Deny” Settlements

Violators will no longer be able to settle allegations against them without having to admit to the underlying factual conduct. However, admission will grant the resolving party a reduced penalty. This policy change is another effort to promote transparency and accountability among all relevant parties.

Dual-Track Processing of Voluntary Self-Disclosures (“VSDs”)

VSDs involving minor or technical infractions will be resolved on a “fast-track” with a warning letter or no-action letter within 60 days of receipt of a final submission. Conversely, VSDs that indicate potentially more serious violations will be assigned to both a field agent and an Office of Chief Counsel attorney for an in-depth investigation. The Department of Justice’s Counterintelligence and Export Controls Section will assign an attorney as well in the most serious cases.

Author

Bart McMillan leads the Chicago Office’s International Trade Compliance Subpractice within the North American International Commercial Practice. He advises US and non-US companies on international trade compliance matters arising under US export controls, trade sanctions, and antiboycott rules, as well as under US customs laws with respect to classification, valuation, country of origin, free trade agreements, and the protection of intellectual property at the US border. His practice also covers anti-bribery and specialized commercial compliance issues in sales and sales promotion under the US Foreign Corrupt Practices Act (FCPA), non-US anti-bribery law, and non-US commercial laws. Mr. McMillan has been practicing with Baker McKenzie for the entirety of his legal career, and during 2004 he was located in the Washington, DC office. He is a frequent speaker on international trade compliance matters at seminars, conferences, and company training events. While pursuing his J.D. at NYU School of Law, Mr. McMillan was Staff Editor (1997-98) and Associate Editor (1998-99), New York University Law Review; and he participated in a semester exchange to the Central European University (Budapest) (Legal Studies Dep’t).

Author

Meghan (Meg) Hamilton is a member of the International Commercial Practice Group and the International Trade Compliance Sub-Practice Group in Baker McKenzie, Chicago, where she has been an associate since 2015. Meg regularly assists multinational companies on sanctions, customs and export control compliance as well as other international trade matters, including commercial agreements and anti-boycott regulations. She is active in civic activities throughout Chicago, serving on the Young Professional Board of the Center for Disability and Elder Law as well as the Auxiliary Board of the Chicago Legal Clinic.

Author

Andrea Tovar regularly advises multinational companies on cross-border commercial transactions and complex privacy and international trade matters. Andrea is also a member of the Firm’s Technology, Media & Telecoms Global Industry Group and Co-Chairs the North America Baker Unidos Affinity Group.

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