In a memo to export enforcement employees on April 18th, the Bureau of Industry and Security (BIS) emphasized the importance placed on companies voluntarily disclosing export violations. In the memo, BIS wrote that not only will a disclosure be seen as a mitigating factor in determining any penalties, but also that deliberately NOT submitting a disclosure when a violation is discovered will be considered an aggravating factor. “When someone chooses to file a VSD, they get concrete benefits; when someone affirmatively chooses not to file a VSD, however, we want them to know that they risk incurring concrete costs.”
Additionally, BIS states that the reporting of unrelated third party violations to BIS will be credited to the reporting company as “exceptional cooperation”, which will also be seen as a mitigating factor in any future violations. The memo states:
“One of the three “Mitigating Factors” contained in our guidelines is “Exceptional Cooperation with OEE.” And among the subfactors that OEE considers in evaluating “exceptional cooperation” is whether a party has “previously made substantial voluntary efforts to provide information (such as providing tips that led to enforcement actions against other parties) to federal law enforcement authorities in support of the enforcement of U.S. export control regulations.” In other words, when a company becomes aware that some other company’s conduct may have violated the EAR, discloses such conduct to OEE, and that tip results in enforcement action — then we will consider that a mitigating factor if a future enforcement action, even for unrelated conduct, is ever brought against the disclosing party.”
To read the complete memo go to https://www.bis.doc.gov/index.php/documents/enforcement/3262-vsd-policy-memo-04-18-2023/file
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