Fresh Looks at U.S. Sanctions & Export Controls

What loopholes actually expose my company to liability?

When Loopholes Create Liability Pitfalls: A Fresh Look at Export Controls (August 25, 2023)

Carlson launches the “Fresh Look” series with a cautionary tale of how (mis)perceived loopholes or technicalities may instead expose companies and individuals to liability.

How to identify and assess my risks?

Know Your Customer, But Also Yourself: A Fresh Look at Sanctions & Export Controls Risk Assessments in the Era of the 'New FCPA' (September 28, 2023)

Huneke and Carlson explain that sanctions and export controls risk must be assessed in an updated and more effective manner that reflects the current heightened economic sanctions and export controls enforcement environment.

How to respond to allegations or reports of evasion?

Slow is Smooth, Smooth is Fast: A Fresh Look at Planning and Executing Internal Investigations into Allegations of Sanctions or Export Controls Evasion (October 30, 2023)

Huneke and Carlson discuss how the U.S. Navy SEAL's and aikido martial arts masters' principle of “Slow is Smooth, Smooth is Fast" helps to respond to allegations of sanctions or export controls evasion.

What are the penalties, and how might those evolve?

From Peanuts to Prison Time – A Fresh Look at the Evolution of Export Controls Penalties (November 14, 2023)

Huneke and Carlson discuss how export control penalties have historically fallen behind FCPA penalties and how that might change given new U.S. national security priorities.

• Cited by Richard Vanderford, “U.S. Likely to Levy Higher Penalties for Export-Control Violations,” Wall Street Journal (Jan. 17, 2024)
• Cited by Amy Mackinnon, “Russia’s War Machine Runs on Western Parts,” Foreign Policy (Feb. 22, 2024))

How do DOJ corporate enforcement policies apply?

An Ounce of Prevention is Worth a Pound of Cure . . . or an Imposed Compliance Monitorship: A Fresh Look at the DOJ's Corporate Enforcement Toolkit Applied to Sanctions and Export Controls Enforcement (December 4, 2023)

Huneke and Carlson examine the U.S. Department of Justice (DOJ)'s corporate enforcement tools to increase the cost of non-compliance. These tools include the DOJ's new policies requiring companies to claw back or withhold executive compensation, requiring CEOs and chief compliance officers to make pre-release compliance certifications, and expanding the grounds for appointing independent compliance monitors.

How can boards of directors manage their risk?

Boards of Directors Lovin' It after McDonald's? A Fresh Look at Directors' Duty of Oversight in the New Era of Sanctions & Export Control Corporate Enforcement (January 12, 2024)

Huneke and Carlson examine the increasing liability risk for boards of directors given heightened geopolitical tensions and a renewed focus on U.S. national security. Huneke and Carlson discuss how the Delaware Chancery Court summarized directors' duty of oversight in the McDonald's shareholder litigation, and how the duty of oversight could apply to sanctions- and export controls-evasion—both in terms of compliance programs and responding to alleged or reported evasion.

What is the “willfulness” standard for criminal liability?

How Not to Stand Out Like a Sore Thumb (Part 1): A Fresh Look at the “Willful” Intent Standard for Criminal Liability in Export Controls and Sanctions Corporate Enforcement (February 13, 2024)

Huneke and Carlson explored how the “willfulness" trigger for criminal liability works in practice, and provided practical tips for manufacturers and exporters seeking to ensure their compliance programs are calibrated to the risk of criminal enforcement.

What is the “high probability” standard under the EAR?

How Not to Stand Out Like a Sore Thumb (Part 2): A Fresh Look at the “High Probability” Definition of Knowledge Applied to Export Controls and Sanctions Enforcement (February 21, 2024)

Huneke and Carlson delve into the “high probability" definition of knowledge in the U.S. Export Administration Regulations, which is also the same standard that applies to indirect payments under the U.S. Foreign Corrupt Practices Act (FCPA). This standard has in many ways been a key driver of FCPA enforcement for the past two decades but has not (yet) been applied by the Departments of Commerce or Justice in the context of export controls evasion.

How to respond to U.S. congressional inquiries?

“Expect Some Illumination”: A Fresh Look at U.S. Congressional Hearings in the Era of Sanctions and Export Controls as the New FCPA (March 14, 2024)

Huneke and Carlson provide observations and practical guidance for companies expecting to go before Congress. This was a timely subject given the Feb. 27 hearing in the U.S. Senate where senators called data of sales by four U.S. manufacturers to Kazakhstan and other diversion points “troubling" and previewing further hearings.

How to improve pre- and post-resolution monitoring?

Monitoring What Matters: A Fresh Look Proposal to Government and Industry for How Post-Resolution Oversight Can Best Deny Hostile Actors the Means to Cause Deadly Harm (March 28, 2024)

Huneke and Carlson explain why traditional monitoring might not achieve national security objectives, be too costly, and take too long. They propose an alternative framework for companies under investigation to consider pre-resolution or to negotiate for post-resolution with U.S. agencies.

My company received a list from BIS. What does it mean?

A Whole New National Security Ballgame: Key Practical Takeaways for Export Control Compliance from the 2024 BIS Update Conference (April 5, 2024)

Huneke and Carlson explain the significance of the so-called “red flag” letters sent by BIS to more than 20 American companies, both in terms of due diligence on the listed third parties and potential exposure under the “high probability” standard.

What will drive BIS enforcement going forward, and how should I prepare my company?

BIS Primes the Corporate Enforcement Engine: A Fresh Look at What Recent BIS Actions & Statements Mean and a Proposed Framework for How U.S. Companies Can Best Prepare (May 30, 2024)

Huneke and Carlson provide updates regarding BIS officials’ statements about export control enforcement, their comparison of emerging export control enforcement to past FCPA enforcement, and identify five core principles to guide the creation of risk-mitigation framework in the new enforcement environment driven by the “high probability” standard found in both the FCPA and the Export Administration Regulations.

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