Non-Disclosure Of Export Controls Violation May Now Constitute An "Aggravating" Factor

On April 18, 2023, Matthew S. Axelrod, Assistant Secretary for Export Enforcement at the U.S. Department of Commerce, Bureau of Industry and Security (BIS), released a memorandum which signals a significant shift in BIS's stance on voluntary self-disclosures (VSD), or lack thereof. The memo clarifies that a company's failure to voluntarily disclose after learning of a possible violation of the Export Administration Regulations (EAR) will be considered an "aggravating factor" in BIS enforcement actions and explains that this policy will apply where the Department of Commerce has determined "there is a deliberate nondisclosure for significant possible violations." The memo further explains that BIS is focused on VSDs of "significant" violations—"the types of violations that reflect potential national security harm"—and the new policy is not intended to increase the number of "minor or technical VSDs."