Upload
vukhue
View
240
Download
2
Embed Size (px)
Citation preview
Export Control Agency
Enforcement and
Agency Visits
August 7, 2017
Olga Torres, Managing Member
Torres Law, PLLC
Agenda
• Overview of Export Agencies
• Enforcement After ECR
• Enforcement Penalties, Trends & Cases
• Outreach Visits
• Visit Preparation
Export Agency Enforcement • BIS: Office of Export Enforcement (“OEE”)
– Works with DOJ and BIS’ Chief Counsel to prosecute criminal and
administrative cases
• DDTC
– No formal enforcement branch similar to BIS’ OEE
– Office of Defense Trade Controls Compliance (“DTCC”)
adjudicates administrative enforcement cases
• ICE: Homeland Security Investigations (“HSI”)
– Enforces domestic and international criminal violations of the EAR
and ITAR
• OFAC
– No formal enforcement branch
– Coordinates with various other agencies, including FBI, CBP, HSI,
OEE and others
ECR: A Mixed-Bag for
Enforcement
oClearer, more positive
lists usually simplify the
jurisdiction determination
process
oBetter coordination
between different export
agencies (E2C2)
oConsolidated screening
list
oNew definition of
“specially designed”
oIncreased responsibility
without equivalent
increase in resources
oMultiple regulatory
revisions to keep up with
E2C2 • As part of ECR, the Obama administration established
the Export Enforcement Coordination Center, also called
E2C2.
• Promotes collaboration between the different government
agencies
• Housed within ICE’s Homeland Security Investigations (HSI).
• Representation from eight U.S. departments and 15 federal
agencies
• About 52% of cases handled by E2C2 were found to have
existing cases or information residing with another agency.
DDTC & ECR
• Since 2013, disclosures to DDTC have decreased each
year. A driving factor of this decrease has been the
removal of thousands of items from DDTC jurisdiction.
BIS & ECR • While DDTC’s jurisdiction has
decreased, BIS has seen an
increased workload since the
beginning of the ECR initiative.
• “Preliminary findings indicate that
BIS staff levels are not in line with
growth in export license applications
and enforcement activities. Despite
the extraordinary commitment and
tireless effort of our employees, we
have reached the tipping point.”
Penny Pritzker, former
Secretary of Commerce
ECR & Enforcement
• Even if your items have shifted from control under the
ITAR to EAR-control, you should not assume that BIS is
more lenient, or forgiving than the DDTC.
• Historically, BIS is more likely than DDTC to penalize
exporters, even in voluntary self-disclosure (“VSD”)
situations. Although BIS offers significant mitigation from
VSDs, disclosures can take months to resolve and are
more likely than DDTC disclosures to result in a
monetary fine.
DOJ Guidance
• On October 2, 2016 the
Department of Justice published
its Guidance Regarding
Voluntary Self-Disclosures
– The Guidance states that a top
priority of the DOJ will be to
pursue “willful export control
and sanctions violations by
corporate entities and their
employees”
– Explicitly implements the 2015
“Yates Memo,” which
emphasizes enforcement
against corporate individuals
Increased Cooperation Between
Agencies
• ZTE Settlement (BIS/OFAC/DOJ)
– March 7, 2017
– Chinese telecom company sold
equipment containing American
technology/hardware to sanctioned
countries (Iran & North Korea)
– BIS Settlement: $661 million ($300
million suspended during 7-year
probation)
– OFAC Settlement: $100,871,266
– DOJ Fines & Forfeiture:
$460,488,798
Government Visits
We now know how the enforcement
agencies generally operate, but what if they
show up at your business…
OEE Visits • Visit v. Inquiry
– When you ask OEE to your office it’s a
visit
– When OEE arrives at your door it’s an
inquiry
• Selection Criteria
– Recent focus on companies that have not
previously submitted applications for
actual or “deemed” export licenses
• Document Requests
– OEE may make requests for documents,
including internal audits or freight
forwarder, shipper and ultimate consignee
records
• 743 OEE outreach visits in FY 2016
Negative Consequences
• “Knowledge” component
– Sometimes the fact that a
company has received an
OEE outreach visit can be
used as evidence of
knowledge of the
unlawfulness of activity
subject to an administrative
or criminal case
• Discovery of violations
– Not always clear how BIS
addresses violations
discovered during OEE visits
EMCD Visits
• BIS’ Office of Exporter Services
Export Management and Compliance
Division (“EMCD”) has also conducted
visits for the past 1-2 years
• Selection Criteria:
1. EMCD initiates reviews of Automated
Export System (“AES”) records to
confirm compliance with export
requirements
2. EMCD meets with parties with AES filing
errors and “others of interest,” without
giving an explanation of what would
make an exporter “of interest”
• 40 EMCD visits in FY 2016
DDTC Company Visit Program
(CVP”) • Two Types of visits:
– CVP-Compliance (“CVP-C”)
– CVP-Outreach (“CVP-O”)
• Visits to entities registered with DDTC – Defense article manufacturers
– Exporters of defense articles and defense
services
– Brokers under ITAR §129
– Foreign Military Sales (FMS) freight
forwarders
• Administered by Defense Trade
Controls Compliance (“DTCC”)
CVP-Compliance Visits
• CVP-C visits are designed for
oversight activities, especially as a
manner of monitoring Consent
Agreements.
• Also review compliance programs in
the context of:
– Adjudication of voluntary self-disclosure,
– Adjudication of directed disclosure, or
– Other compliance matters.
• More in-depth look at company’s
compliance program than CVP-
Outreach visits.
CVP-Outreach Visits
• CVP-O visits provide
opportunity for:
– Discussing challenges,
– Learning how industry is adapting
to Export Control Reform and
other compliance changes, and
– Offering suggestions or best
practices.
• CVP-O visits are unrelated to
specific compliance matters.
CVP Selection Criteria
• A variety of factors are taken into account when DDTC
selects a company to be visited, including:
1. Type and sensitivity of technology
2. Nature of business
3. Volume of licensed/regulated activity
4. Experience conducting ITAR activities
5. Geographic location (and other DDTC travel requirements)
6. Recommendations from DTCP and DTCL
7. Follow-up to a disclosure of an ITAR violation (for CVP-C)
8. Monitoring of a consent agreement (for CVP-C)
DTAG Recommendations
• Defense Trade Advisory Group (“DTAG”)
– Approached by DDTC to provide recommendations re:
CVP
– Summary:
• Rename/Distinguish CVP-O
• Consider “In-Reach” instead
• Market benefits received by visited companies
• Include Licensing and Policy
• Offer collaborative events at DDTC or via web
• Enhance predictability and transparency (e.g., schedule,
risk)
Questions?
Olga Torres, Managing Member
Torres Law, PLLC
Dallas, Philadelphia
www.torrestradelaw.com
Visit our website and sign up for our free
Trade Law Newsletter!