Department of Justice (DOJ) October 2, 2016 guidance reaffirms its position to treat U.S. export controls and sanctions violations as an attack on the U.S. national security and DOJ’s Yates Memo guiding prosecutors to “promote greater accountability for individual corporate defendants” such as directors and employees of the company. Guidance also places jurisdictional chart for actors involved in voluntary self-disclosure (VSD).
Ordinarily, when an organization voluntarily self-discloses violations of U.S. export controls and sanctions, it presents its VSD to the appropriate regulatory agency under the procedures set forth in the agency’s regulations. * * * Business entities should continue to submit VSDs to the Department of State, Directorate of Defense Trade Controls (DDTC) for violations of the International Traffic in Arms Regulations (ITAR); to the Department of Commerce, Bureau of Industry Security (BIS) for violations of the Export Administration Regulations (EAR); and to the Department of the Treasury, Office of Foreign Assets Control (OFAC), for violations of U.S. sanctions regulations.
But, submission to the particular agency may not be enough! If violation is “done with knowledge that it is illegal,” then VSD should also be submitted to Counterintelligence and Export Control Section of the DOJ’s National Security Division. Guidance goes on to say:
The following actions are required for a company’s disclosure to be deemed voluntary:
* * *
The company discloses the conduct to CES and the appropriate regulatory agency “within a reasonably prompt time after becoming aware of the offense,” U.S.S.G. § 8C2.5(g)(1), with the burden on the company to demonstrate timeliness. (emphasis added) * * *
This raises a question, if a company submits disclosure only to DDTC, BIS or OFAC, but not to DOJ, then does it mean that the disclosure cannot be deemed as voluntarily made, therefore depriving that company from VSA benefits?