BIS Continues Self-Reporting Campaign


The Commerce Department's Bureau of Industry and Security is urging companies to come forward if they uncover potential export-control violations. Speaking at the WSJ Risk & Compliance Forum, Matthew Axelrod, an assistant secretary for export enforcement, warned that if companies fail to disclose potential violations or conduct investigations, it could be seen as an "aggravating factor" during the resolution process. The change in policy, introduced in March and clarified last month  [see story]  marks a departure from the previous approach, which rewarded companies for coming forward but didn't penalize those that didn't.

Companies that self-report violations can typically receive penalty reductions, but those that choose not to could face harsher penalties. The new policy applies to situations where there is "a deliberate nondisclosure of significant possible violations," Axelrod said.

The Justice Department's criminal fraud section also emphasized the importance of self-reporting potential violations during the forum. Glenn Leon, the chief of the section, said companies with strong compliance programs were more likely to detect and report fraud, adding that the department was being more transparent about its expectations.

Despite criticism that some prosecutions can take months or years to play out, Leon reassured the public that the work of bringing cases to trial was going smoothly. "These are big, complex cases," he said. "Nothing's broken. Nothing is wrong."

The change in policy is part of an effort to encourage companies to take responsibility for any violations and work with regulators to remediate problems. By being transparent about its expectations and offering penalty reductions to companies that self-report, the government hopes to build stronger relationships with businesses and improve overall compliance.

Last week BIS extended the comment period for it's proposed rulemaking on voluntary self-disclosure [88 FR 30721]


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