In June 2022, US Deputy Attorney General Lisa Monaco sparked widespread attention when she reframed sanctions as “the new FCPA” (Foreign Corrupt Practices Act). Some were taken aback by this statement, realizing that the administration was preparing to intensify sanctions and export controls.
Post this declaration, US authorities have indeed established an array of export measures and sanctions in response to geopolitical shifts, with several leading to record-breaking penalty settlements. The aim of such measures has been to enhance the control and management of export enforcement risks faced by multinational corporations.
Enforcement cases, traditionally settled without penalties or public acknowledgment, have seen a change. The Department of Justice, on record, got its largest sanction violation settlement through a guilty plea. The Office of Foreign Assets Control and Commerce Department’s Bureau of Industry and Security also recorded their most significant penalties.
From these rapid changes, several key trends regarding export enforcement have surfaced. One such trend has been the specific emphasis on cases involving China and Russia. Take the example of the Seagate Technology Holdings Plc. In this case, Seagate chose to continue transactions with specific Chinese customers despite the violation of export controls. This move, in contrast with its competitors’ approaches, led to the largest standalone administrative penalty by the Bureau of Industry and Security underlining the current political climate.
Another focal point for authorities has been evasion, which has been evident in many recent cases. These include those where deception tactics were used to facilitate the illegal export of goods to Russia through intermediary corporations based in locations such as Turkey, India, China, and the United Arab Emirates.
A significant case to illustrate this would be the Binance Holdings Ltd. case where it was found that top executives were hiding potential sanctions violations. This ultimately resulted in the largest enforcement action of 2023 and the largest settlement by the DOJ linked to a guilty plea.
From these events, it is clear that the enforcement agencies are not tolerant of sophisticated companies with inadequate compliance practices. They have also emphasized the importance of cooperation. Despite the record settlement with Binance, the company did receive significant cooperation credit, an indicator that cooperation is a critical factor for these authorities.
As part of this shift in enforcement focus, multiple US government agencies such as DOJ, BIS, and OFAC are now working collaboratively to enforce export controls and sanctions regulations. This coordinated action highlights the Biden administration’s commitment towards the priority of export enforcement.
Gazing towards the future, the enforcement of national security laws and regulations, particularly sanctions and export controls, is expected to continue to be a focal point for the US government. Given this increasingly aggressive enforcement climate, it has become more critical than ever for companies to conduct risk assessments related to export compliance, identify necessary improvements, and work closely with trusted partners to inform enforcement authorities as needed.
It’s crucial, particularly for the legal professionals navigating these complex terrains, to understand the landscape and stay informed. Learn more here.