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United States Bureau of Industry and Security reinforce importance of export compliance

As plans to amend the BIS’ approach to export control enforcement are gaining momentum, the overarching message to companies is: “Implement effective compliance programs on the front end or risk penalties on the back end that will hurt both your reputation and your bottom line.”

Assistant Secretary for Export Enforcement, Matthew Axelrod, laid out the Bureau of Industry and Security’s plans to amend its approach to export control enforcement and antiboycott laws in the United States in a recent statement.

The aims of the proposed policy changes are to increase transparency, improve compliance procedures and incentivise individuals and businesses to take the policy updates into serious consideration.

 

Axelrod stated that there were 3 key policy amendments to focus on over the coming months:

Consistent with the Security and Exchange Commission’s administrative proceedings or initiations of criminal charges, the new rule would end the current practice of not publicising charging letters until the case has been resolved. Meaning, any type of charge will be known to the public no matter the level of charges.

Companies will be required by law to admit to specific wrongdoings. An Admitted Statement of Facts could act as a deterrent to other companies however, it could dissuade companies from resolving cases before trial.

Currently, BIS imposes lower than standard administrative penalties to businesses based on mitigating circumstances, however, Axelrod indicated that any amended penalty amounts would be implemented to incentivise companies to further invest in their compliance best practices or be vigilant when making transactions to ensure that they do not infringe on EAR rules.

The Assistant Secretary for Export Enforcement further indicated that the current penalties, of up to $300,000 per violation or twice the transaction value (whichever is higher), would likely be increased to act as a deterrent for violations.

The key takeaway from Axelrod’s message is to review all compliance programs and best practices in order to ensure that they work and function effectively in practice. Not only must the implementation be prioritised, but the review and continual optimisation of compliance (whether through internal or external sources) practices should be of utmost importance to companies.

To find out more, contact our dedicated US compliance team, who can guide you through this process, here.

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