Latest Joint Compliance Note Highlights Inter-Agency Coordination on Sanctions, Export Controls

On July 26, the U.S. Justice, Commerce, and Treasury Departments issued a tri-seal compliance note clarifying the agencies’ policies on voluntary self-disclosure of potential sanctions and export control violations. The latest note consolidates key information for companies about the advantages of coming forward with possible breaches of national security laws.

The combined guidance, along with other recent announcements, underscores the U.S. government’s increasing reliance on inter-agency coordination and information-sharing. This heightened focus on collaboration between institutions, both domestic and foreign, means a higher enforcement risk for companies, especially those with an international presence.

The new document outlines the up-to-date guidelines for each department’s voluntary self-disclosure policies. This is the second joint note on sanctions and export controls issued by the three federal law enforcement agencies since Russia’s invasion of Ukraine in February 2022. The first joint compliance note, issued in March of this year, warned companies against the use of third-party intermediaries to evade sanctions and other restrictions. 

The latest tri-seal note stresses the importance of having a strong compliance program and the benefits offered to businesses that choose to disclose potential misconduct.

“Responsible companies that come forward as soon as they learn of potential sanctions and export control violations will benefit from the protections of these self-disclosure policies,” said Assistant Attorney General Matthew G. Olsen of the Justice Department’s National Security Division. 

According to the note, in its effort to address criminal violations of sanctions and export control laws, the Justice Department’s National Security Division (NSD) updated its voluntary self-disclosure policy on March 1, 2023. The latest NSD policy makes it clear that a company’s voluntary self-disclosure only counts if it is made before any potential wrongdoing becomes public or is otherwise known by the DOJ. The NSD also requires that companies divulge all known and relevant information about the violation in a timely manner. If these conditions are met and there are no aggravating factors, a company could reduce its criminal liability or avoid criminal prosecution altogether.

The compliance note also outlines the Department of Commerce’s Bureau of Industry and Security’s (BIS) self-disclosure policy. According to the document, like the NSD, BIS requires disclosures to be timely and comprehensive, and companies to be fully cooperative. Last year BIS also adopted new rules which state that self-disclosures for minor violations would be resolved within 60 days, allocating more resources for in-depth investigations of potentially serious misconduct.

In the compliance note, the Treasury Department’s Office of Foreign Assets Control (OFAC) also encourages companies to disclose any potential wrongdoing in a timely manner to reduce civil penalties. It’s worth noting that, according to OFAC’s policy, meaningful compliance efforts may also mitigate penalties. Companies can find out what OFAC considers an effective compliance program by reviewing its 2019 compliance commitments guidance.

The document concludes with a note on the Financial Crime Enforcement Network’s (FinCEN) Anti-Money Laundering and Sanctions Whistleblower Program. This program offers monetary rewards to individuals, both in the U.S. and abroad, who provide information about sanctions evasion and Bank Secrecy Act violations.

The latest joint compliance note makes it clear that agencies are working closely together to address wrongdoing related to sanctions and export controls. This was reiterated in remarks published on the same day as the compliance note by Assistant Secretary Matthew S. Axelrod of the Department of Commerce’s Office of Export Enforcement.

“I’m announcing today that we just signed an agreement with OFAC formalizing our closecoordination and partnership. My team and I already meet regularly with our counterparts at OFAC. [...] As a result, you can expect to see more coordinated enforcement actions from us going forward,” the prepared remarks said. 

Now is a good time for businesses with any exposure to sanctions, export controls, and other national security regulations to review their compliance playbooks, as well as evaluate other internal and external resources needed to minimize liability risk.