On March 2, 2023, the Department of Justice announced several new initiatives that prioritize the investigation and enforcement of economic sanctions evasion, export control violations, and similar economic crimes. Deputy Attorney General Lisa Monaco announced a “surge of resources to address a troubling trend: the intersection of corporate crime and national security.” In particular, DOJ’s National Security Division “will be elevating its attention to corporate crime through an infusion of personnel and expertise.” Additionally, Deputy Attorney General Monaco revealed a joint national security compliance advisory with the Commerce and Treasury Departments.
Corporate Crime and National Security
Deputy Attorney General Monaco described companies as “the front lines of today’s geopolitical and national security challenges,” and noted that “increasingly, corporate criminal investigations carry profound national security implications.” According to Deputy Attorney General Monaco, recent geopolitical events have “elevated the importance of sanctions and export control enforcement.” Deputy Attorney General Monaco reiterated two themes she has emphasized over the past year when discussing sanctions enforcement: first, she again described sanctions as the “new FCPA.”[1] That is, DOJ is putting companies on notice that it will prioritize sanctions enforcement similar to how it has prioritized enforcement of Foreign Corrupt Practices Act violations as part of DOJ’s corporate enforcement efforts. Second, she repeated that sanctions issues impact a variety of industries.[2] Sanctions are no longer a “technical area of concern for select businesses” but should “now be at the top of every company’s risk compliance chart.” Deputy Attorney General Monaco noted that DOJ is currently handling corporate investigations involving sanctions investigations across “industries as varied as transportation, fin tech, banking, defense and agriculture.”
Expansion of National Security Division
To support this increased emphasis on investigating and enforcing sanctions violations by companies outside of financial services, DOJ will be adding more than twenty-five new prosecutors to DOJ’s National Security Division. The hiring spree also includes the National Security Division’s first-ever Chief Counsel for Corporate Enforcement. Deputy Attorney General Monaco also announced that DOJ would be making a “substantial investment” in the Bank Integrity Unit (BIU) of the Criminal Division’s Money Laundering and Asset Recovery Section, praising the BIU’s “significant track record of prosecuting global financial institutions for sanctions violations” and noting that the additional resources would allow the Bank Integrity Unit to build upon its successes and “be a strong partner” to the National Security Division.
Related, the National Security Division recently published an updated enforcement policy for business organizations. While the policy now notes that it will inform all corporate criminal matters handled by the Division, it is “most applicable” to self-disclosures of potential criminal violations of export and sanctions laws. The presumption, established in the December 2019 version of the policy, that a company will receive a non-prosecution agreement if it makes a voluntary self-disclosure, fully cooperates, and timely and appropriately remediates, remains in place.[3] In a speech last year, Deputy Attorney General Monaco contrasted the first resolution under the National Security Division’s voluntary self-disclosure program with four recent corporate guilty pleas, concluding: “The math is simple: self-disclosure can save a company hundreds of millions of dollars. For any company that thinks it may have a sanctions problem, I have a clear, unequivocal message for you: pick up the phone and call us. Do not wait for us to call you.”
Multiple Agencies Issue New Sanctions and Export Control Compliance Guidance
Finally, in her March 2, 2023 speech, Deputy Attorney General Monaco announced that the National Security Division would begin issuing joint advisories with the Commerce and Treasury Departments to provide information about enforcement trends and to convey expectations regarding national security-related compliance. The first compliance note, issued the same day by DOJ, the Department of Commerce’s Bureau of Industry and Security (BIS), and the Department of the Treasury’s Office of Foreign Assets Control (OFAC), focuses on the use of third-party intermediaries or transshipment points to circumvent restrictions, disguise the involvement of Specially Designated Nationals and Blocked Persons (SDNs) or parties on the Entity List in transactions, and obscure the true identities of Russian end users. The compliance note sets forth common red flags that can indicate a third-party intermediary may be engaged in sanctions evasions efforts, such as using shell companies to conduct international wire transfers or routing purchases through certain transshipment points commonly used to illegally redirect restricted items to Russia or Belarus. The joint notice encourages best practices, such as screening current and new customers against the Consolidated Screening List and OFAC Sanctions Lists and reviewing BIS and OFAC enforcement and targeting actions as they often reflect certain tactics and methods used by intermediaries engaged in sanctions evasion.
The joint compliance note concludes that businesses “of all stripes” should act responsibly by implementing rigorous compliance controls. OFAC Director Andrea Gacki noted that the issuance of a joint alert illustrates “the importance of a risk-based approach that protects the international financial system from abuse,” and Assistant Attorney General for National Security Matthew Olsen echoed this sentiment, describing companies as the “first line of defense.”[4]
[1] See also, e.g., https://www.justice.gov/opa/speech/deputy-attorney-general-lisa-o-monaco-delivers-keynote-remarks-2022-gir-live-women (“The growth of sanctions enforcement follows the path that the FCPA traveled before it.”).
[2] See also, e.g., https://www.justice.gov/opa/speech/deputy-attorney-general-lisa-o-monaco-delivers-keynote-remarks-2022-gir-live-women (“[S]anctions enforcement is relevant to an expanding number of industries. Sanctions have been considered by some as a concern mainly for banks and financial institutions. As companies grapple with the fallout of Russian aggression and the new intensity of sanctions enforcement, though, they are recognizing that the risk of sanctions violations cuts across industries and geographic regions. For any multinational corporation — indeed, for any business with an international supply chain — sanctions should be at the forefront of its approach to compliance.”).
[3] When announcing the new National Security Division enforcement policy in 2019, DOJ explained that, “[g]iven threats to national security posed by violations of our export control and sanctions laws, we determined that a presumption of an NPA without a fine was appropriate,” versus a presumption of declination. See https://www.justice.gov/opa/speech/principal-deputy-assistant-attorney-general-david-burns-delivers-remarks-announcing-new.
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