Sometimes it is beneficial for an exporter to voluntarily self-disclose its export violations to the U.S. Government. Maybe an exportation of an item occurred without first obtaining the necessary license, or maybe the item was shipped to a company overseas other than allowed in a license. Both situations are violations of the Export Administration Regulations, and both violations could result in $250,000 penalties against the exporter. By voluntarily self-disclosing the violation, the exporter would reduce, and might even eliminate, such a penalty.
For a suspected violation of 15 CFR 764.2 of the Export Administration Regulations (EAR) enforced by the Bureau of Industry and Security (BIS) of the U.S. Department of Commerce, an exporter may submit a voluntary self-disclosure (popularly known as a “VSD”) to the Office of Export Enforcement of BIS at its Washington, D.C. headquarters office. The contents of what must be included in a VSD are established in 15 CFR 764.5.
Procedurally, once a properly filed VSD is received by the BIS, it is investigated by a Special Agent from the Office of Export Enforcement. If a penalty or other sanction is contemplated, the case is referred to an attorney with the Office of Chief Counsel of BIS. The BIS attorney will contact the exporter’s attorney, eventually resulting in a written Settlement Agreement between the exporter and the BIS. Negotiating the terms of the Settlement Agreement is critical.
The Obama Administration is actively pursuing export control reforms. Importantly, Kevin Wolf, Assistant Secretary of Commerce for Export Administration, on November 9, 2010, at the Global Trade Controls Conference in London, England, stated:
Enforcement will become an even higher priority…We have long promoted the submission of voluntary self-disclosures (VSDs). We view VSDs, along with internal compliance programs, as important mitigating factors.
There will always be occasional errors by exporters. Exporters should consult with knowledgeable and experienced international trade attorneys before submitting a VSD. With more enforcement, there are sure to be more investigations and more penalties assessed by the Government against exporters, and likely more VSDs submitted to the Government by exporters.