US Trade Compliance: 3 Depts Enforcement Guide

On July 26,2023,three major US government departments - the Department of Justice (DOJ),the Bureau of Industry and Security of the Department of Commerce (BIS),and the Office of Foreign Assets Control of the Department of the Treasury (OFAC) jointly issued the Three - Department Enforcement Statement on voluntarily disclosing potential violations.As the three departments have become increasingly closely coordinated in law enforcement in the fields of trade control and sanctions since this year,enterprises must pay attention.This article deeply analyzes the content of the enforcement statement and,combined with the latest law - enforcement cases,explores the trend of US trade control,providing reference for enterprises.

I.Overview of the Three - Department Enforcement Statement

The Three - Department Enforcement Statement does not create a new mechanism but reaffirms their respective voluntary disclosure policies,covering cases related to criminal violations of export control and economic sanctions.Although the three departments adopt a positive attitude,there are slight differences in application scope,disclosure requirements,etc.

(1) NSDs voluntary disclosure mechanism: The cases handled by NSD include those related to criminal violations of export control and economic sanctions.If a company can fully and truthfully disclose illegal acts and take timely and appropriate remedial measures,NSD will presume to reach a non - prosecution agreement with it.

According to the NSD enforcement policy,the following conditions must be met for the three mitigating factors of "full and truthful disclosure," "full cooperation," and "timely and appropriate remedial measures":

(2) BISs disclosure mechanism: As the primary enforcement agency for export controls,the BIS encourages companies to voluntarily disclose violations to it,with particular emphasis on the "dual-track" mechanism and the mechanism for voluntary disclosures involving third parties.

(3) The US Department of the Treasurys disclosure and reward mechanism: In contrast,the Department of the Treasury reaffirmed its basic requirements for voluntary disclosure under the Economic Sanctions Enforcement Guidelines and provided the anti - money laundering and sanctions violation reporting mechanism of the Financial Crimes Enforcement Network.

Depending on whether the violation constitutes a major violation (egregious case),OFAC will judge the specific fine amount according to the following logic:

II.US Recent Law - Enforcement Trends Related to Trade Compliance from the Perspective of the Three - Department Enforcement Statement

The three - department enforcement statement shows the determination of joint law - enforcement and supervision.Matthew Axelrod,Assistant Secretary of Commerce,explained the similarities and differences of different voluntary disclosure programs and announced the results of cross - departmental cooperation.

(1) Disruptive Technology Strike Force: Jointly established by BIS and the Department of Justice to investigate and supervise the so - called violations of providing advanced technology to US opponents.

(2) The cooperation mechanism between BIS and the Department of the Treasury: Including the coordination and cooperation agreement signed by BIS and OFAC to deal with violations of export control and sanctions overlap.

(3) Progress of major criminal investigation cases: The Disruptive Strike Force jointly cooperated by BIS and the Department of Justice may also further announce the progress of major criminal investigation cases.

III.Suggestions for Chinese Enterprises

Against the backdrop of Sino - US trade,Chinese enterprises need to pay attention to the trends of US law - enforcement departments and adopt a three - step risk management approach: pre - event risk assessment,in - event dynamic control,and post - event compliance review.If planning to make a voluntary disclosure,professional institutions should be introduced for assessment to prevent risks under Chinese law.

In the increasingly complex international situation,the compliance risks and costs that Chinese enterprises need to pay attention to in overseas operations are gradually increasing.The release of the Three - Department Enforcement Statement poses new challenges and requirements for enterprises compliance management.Only by making advance preparations can enterprises be well - prepared in a complex compliance environment.