The Bureau of Industry and Security (BIS) Office of Export Enforcement has issued a memo on April 18, 2023, regarding the consequences of parties who fail to report “significant” possible violations of the Export Administration Regulations (EAR) through a Voluntary Self Disclosure (VSD). The memo serves as a reminder to companies about the benefits of disclosing such violations, which include a reduction in monetary penalty, and highlights the risks associated with non-disclosure.
The memo emphasizes the importance of VSDs, stating that companies that choose not to disclose their findings of possible violations of EAR, which may pose a national security threat, will be subject to severe consequences. Non-disclosure of a potential violation will be considered an aggravating factor should BIS discover the violation, which could result in additional penalties and sanctions.
In contrast, companies that disclose another company’s possible EAR violation may receive leniency in future enforcement actions, as this will be taken into account as a mitigating factor. BIS has provided a confidential reporting form that may be used to report another company’s possible violation of the EAR.
The memo also highlights the importance of promoting a “culture of compliance” that extends beyond the compliance department to all levels of the organization. BIS emphasizes that it is the responsibility of all employees to comply with EAR regulations, and failure to do so can have severe consequences for the company as a whole.
In summary, the memo serves as a reminder of the importance of VSDs and the risks associated with non-disclosure of potential EAR violations. Companies are encouraged to promote a strong culture of compliance throughout the organization and to utilize the confidential reporting form to report potential violations by other companies.
