Voluntary Disclosure/Consent Agreements:
Voluntary Disclosure/Voluntary Self Disclosure/Prior Disclosure
Both the Department’s of State (DDTC) and Commerce (BIS) encourage the
submission of Voluntary Disclosures (also referred
to as Voluntary Self Disclosures) by companies who believe they may have
violated the applicable export control regulation.
Voluntary Disclosures are an excellent indicator
of the effectiveness of a company's export/import compliance program.
Not only do they evidence the company’s intent to comply with U.S. export
control requirements, but they also demonstrate the company’s ability to
identify violations and correct discrepancies.
The U.S. Government carefully reviews Voluntary Disclosures received from
companies to determine if violations of the regulations have occurred and to
determine the appropriate corrective action. Most Voluntary Disclosures are
resolved by means other than the issuance of an administrative penalty.
However, in instances in which the U.S. Government determines that the
issuance of an administrative penalty is appropriate for the resolution of a
violation, the regulators afford the submission
of a Voluntary Disclosure "great weight" in assessing and mitigating the
penalty, and in most cases the fines and other administrative
penalties may be significantly reduced.
Given the scope of today’s global business and the complexity of the ITAR
and the EAR, every exporter will potentially have violations. But it is
worth noting that voluntary disclosures with State or Commerce generally do
not result in fines, penalties or Consent Agreements. In most cases,
transparency and thoroughness of voluntary disclosures, combined with a well
designed, and functioning compliance program, are a company’s best defense
in avoiding costly administrative proceedings and settlements.
U.S. Customs “Prior Disclosure” - Under the U.S. Customs
Regulations, importers who find a potential non-compliance may take
advantage of filing a “Prior Disclosure” to effectively put CBP on notice
that an investigation is being undertaken. This filing generally serves to
reduce any potential fines or penalties that may have been issued should a
disclosure not have been made. Examples of non-compliances can be potential
violation of the U.S. Customs Regulations, such as undervaluation,
misdescription of merchandise, overvaluation, antidumping/countervailing
duty order evasion, improper country of origin declarations or markings, or
improper claims for preference under a free trade agreement or other duty
preference programs. While importers are not required to make prior
disclosures they may ELECT to do so before or without knowledge that CBP has
initiated a formal CBP investigation of the violation, thus potentially
reducing any fines and penalties that CBP may have issued. ITCS has
experience in this area and can assist the company in conducting an internal
investigation as well as assist in the preparation of the Prior Disclosure
documentation to CBP.
ITC Strategies has helped numerous companies manage the issues
associated with violations of export and import regulations. Whether it is
in the investigation of a potential problem or the preparation of a voluntary
disclosure to one of the regulating agencies, ITC Strategies can help you –
when determined to be appropriate - attain the mitigating benefit that the
submission of a voluntary disclosure can provide.
Consent
Agreements:
Both the Department’s of State and Commerce can impose civil penalties for
violations of the International Traffic in Arms Regulations (ITAR) and the
Export Administration Regulations (EAR) respectively. Those penalties are
often contained within a Consent Agreement which
is the result of negotiations between the government agency and the charged
exporter, the terms of which are closely tied to the specific facts of the
associated violations.
Consent Agreements specify the fines to be paid and outline the measures
required to enhance the company’s compliance program. Imposition of civil
penalties generally includes the payment to the U.S. Government and the
institution of
enhanced compliance measures within the company. Sometimes
referred to as “remedial compliance measures”,
these requirements can often be complex and daunting to implement. They may
include:
• A requirement for the appointment of a Special Compliance Officer (SCO)
• Implementation of specific measures to prevent future violations of a
similar nature
• Engaging in a comprehensive independent audit
(see audit page)
• Institution of an automated export tracking system, to name only a few…
Each Consent Agreement is tailored to the unique circumstances of the issues
associated with the violations and will generally be determined based on:
• The severity of the export violations that have occurred in relation to
U.S. National Security and Foreign Policy concerns
• The cooperativeness of the company in coming to resolution
• The level of compliance measures already in place at the company at the
time of the violations
ITC Strategies has extensive experience in assisting companies
manage the requirements associated with Consent Agreements. Whether it is
reviewing/assessing the specifics of the remedial compliance measures being
negotiated, assisting in the implementation, or conducting the independent
audits, ITC Strategies has the expertise to
efficiently and effectively get you to the finish line.
