U.S. Commerce Dept.’s BIS Announces Changes to Voluntary Self-Disclosure Policy for Violations of Dual-Use Export Controls under EAR

The United States Department of Commerce's Bureau of Industry and Security (BIS) has announced changes to its Voluntary Self-Disclosure (VSD) policy pertaining to minor and technical violations under the Export Administration Regulations (EAR). This announcement, dated January 16, 2024, represents a continuation and refinement of the policy modifications previously introduced on June 30, 2022, and April 18, 2023, aimed at bolstering the VSD process's efficiency and efficacy.

Matthew S. Axelrod, Assistant Secretary for Export Enforcement, highlighted the effectiveness of these policy changes in a recent address at the NYU School of Law's Program on Corporate Compliance and Enforcement. Key points of his speech included a noted increase in VSD submissions involving serious violations, expedited processing for minor or technical violations, and a rise in VSDs related to third-party misconduct.

The BIS introduced four major changes to its VSD policy:

1. Submission Method: The BIS now strongly encourages electronic submission of VSDs to BIS_VSD_INTAKE@bis.doc.gov. This includes initial notifications, extension requests, and narrative accounts. Electronic signatures are also accepted for these submissions. While paper submissions are still accepted, the BIS website encourages providing an email address for faster response.
2. Streamlined Reporting for Non-Aggravated Violations: For disclosures without aggravating factors, BIS has implemented an abbreviated narrative account option. This simplified account should briefly detail the potential violations as per 15 C.F.R Part 764.5(c)(3), without necessitating the full documentation outlined in Section 764.5(c)(4) or the five-year review outlined in Section 764.5(c)(3), unless requested by the Office of Export Enforcement (OEE).
3. Consolidated Approach for Minor Violations: The BIS now allows for the bundling of multiple minor or technical violations into a single submission if they occurred in close temporal proximity. This streamlines the process for violations that are less severe and lack aggravating factors. Examples of minor or technical violations include immaterial filing errors, unintended recordkeeping errors, or good-faith misinterpretation of EAR.
4. Expedited Handling of Illegally Exported Goods: An expedited process has been established for handling requests to address unlawfully exported items. This includes a streamlined procedure for parties to request permissions from BIS's Office of Exporter Services for actions like disposing or transferring the items. The OEE will generally recommend BIS to authorize reexports for returning unlawfully exported items to the U.S.

These changes are a part of the BIS's ongoing efforts to refine and improve the VSD process, ensuring that it remains an effective tool for enforcing compliance while acknowledging the varying degrees of severity in violations.

Kirton McConkie is the premier law firm for international trade in the Mountain West, with a dedicated practice group specializing in EAR and ITAR export controls and trade restrictions, OFAC sanctions, and FCPA anti-bribery and anti-corruption.