BIS Issues Final Rule on VSD Policies and Penalty Guidelines
BIS recently issued a final rule to amend the Export Administration Regulations (EAR), making several changes to their Voluntary Self Disclosure (VSD) policies, as well as updates to guidance on penalty determinations.
The rule codifies previously announced policy changes through several Policy Memoranda including an April 2023 memorandum on voluntary-self disclosures, and a June 2022 memorandum on strengthening administrative enforcement.
Revisions to Voluntary Self-Disclosures
The rule makes both substantive and procedural changes to the VSD policies:
- Addition of non-disclosure as an aggravating factor – the new rule makes clear that BIS will consider a deliberate decision to not disclose a violation as an aggravated factor when determining what administrative sanctions will be imposed.
- New dual track for processing VSDs – one track for minor or technical violations, the other for significant violations.
- Authorizes any person (not just the party submitting a VSD) to notify the Director of BIS’s Office of Export Enforcement (OEE) that a violation has occurred and to request permission to engage in corrective activities.
Revisions to Penalty Guidelines
This rule makes several changes to the BIS Penalty Guidelines, including:
- Changes the base penalty caps:
- Non-egregious VSD cases: was $125,000, now one-half of the transaction value.
- Non-egregious cases that are not initiated by a VSD: was $250,000, now the full transaction value.
- Permits BIS to use non-monetary penalties to resolve cases that are not egregious and have not resulted in national security harm, but rise above the level of cases warranting a warning letter.
- Removes from the BIS […]
