On December 13, 2019, the National Security Division of the Department of Justice released an updated policy entitled Export Control and Sanctions Enforcement Policy for Business Organizations (“Policy”). The Policy updates the “Guidance Regarding Voluntary Self-Disclosures, Cooperation, and Remediation in Export Control and Sanctions Investigations Involving Business Organizations,” issued in 2016. The purpose of the Policy is to encourage companies to voluntarily self-disclose all potentially willful violations of the statutes implementing the U.S. government’s primary export control and sanctions regimes directly to the National Security Division (“NSD”).
Assuming that a company voluntarily self-discloses to the Counterintelligence and Export Control Section of the NSD; fully cooperates; and timely and appropriately remediates the violations, then there will be a presumption that the company will receive a non-prosecution agreement and will not pay a fine. Even if there are aggravating circumstance suggesting some criminal enforcement, a company that voluntarily self-discloses, fully cooperated and remediated, then the DOJ will recommend a fine that is 50% less than the suggested fine and will not require the appointment of a monitor, assuming that at the time of resolution, the company has implemented an effective compliance program.
As discussed in this post, the benefits set forth in the Policy are very similar to those provided in the FCPA Corporate Enforcement Policy. The similarities were intentional, including using the same terms of “voluntary self-disclosure” and “full cooperation” and “remediation”. As stated in the Policy, the DOJ is trying “to standardize, to the extent possible, DOJ voluntary disclosure policies.”
A couple of key take-aways:
- The voluntary disclosure must be made to both the Counterintelligence and Export Control Section and to any regulatory agencies. In other words, disclosure of sanction violations only to OFAC will not count as voluntary self-disclosure under the Policy.
- Disclosures must include all relevant facts known at the time of disclosure, including any individuals substantially involved in the misconduct. In addition, the disclosure must include all relevant facts gathered during the internal investigation.
- Cooperation must be proactive and not reactive meaning that the disclosure must be voluntary and not just when specifically asked to do so.
- Remediation must be complete. A company cannot retain any of its ill-gotten gains. The company is required to pay all disgorgement, forfeiture, and/or restitution resulting from the misconduct at issue.
- Remediation must demonstrate a thorough analysis of the causes of the underlying conduct.