“Sanctions and Export Controls as the New FCPA: The Increasing Overlap of Anti-Corruption, Export Controls and Economic Sanctions”

Earlier today, at the 39th annual ACI FCPA Conference, Matthew Axelrod, Assistant Secretary for Export Enforcement at the US Department of Commerce, participated in a panel titled “Sanctions and Export Controls as the New FCPA: The Increasing Overlap of Anti-Corruption, Export Controls and Economic Sanctions.”

Assistant Secretary Axelrod set the stage by noting how sweeping sanctions and export controls are a critical part of US national security strategy right now. He explained that sanctions and export controls have been a key element of the US government’s response to Russia’s invasion of Ukraine and “incredibly effective” at keeping resources out of the hands of Russian forces. He also addressed export restrictions related to China, trumpeting the Commerce Department’s significant new rules expanding export controls on US supercomputers and advanced semi-conductors. (Axelrod noted that, while a lot of attention currently is directed at strategic threats concerning Russia and China, the US government remains concerned about the use of sensitive technology for military purposes by Iran and North Korea.)

When asked about Deputy Attorney General Lisa Monaco’s recent statement that sanctions are “the new FCPA,” Axelrod observed that the Department of Justice wants enforcement of sanctions laws to grow and wants more resources to help this effort, similar to how DOJ has invested in enforcement of the Foreign Corrupt Practices Act (FCPA) over the past 15 years. According to Axelrod, DOJ’s criminal enforcement complements civil enforcement efforts by Commerce (namely, the Bureau of Industry and Security) and Treasury (namely, OFAC). He described increasing collaboration among these agencies, pointing to Task Force KleptoCapture as an example of how they are joining forces to address sanctions, export control and corruption issues related to Russia. Mr. Axelrod telegraphed that it is “possible” and, indeed, “likely” that there will be more national security-related enforcement actions that involve criminal prosecution for corrupt activity. He expects continued interplay among export controls, sanctions and the FCPA. He offered his estimation that this is “not just the flavor of the month.”

With respect to the specific role of the Commerce Department’s Bureau of Industry and Security (BIS), Axelrod said that one of its most important tools is the ability to cut off export privileges. He noted that BIS is trying to give companies more guidance on how to comply with export controls, and he reminded the audience that the Commerce Department has agents all over the country who can help companies comply. Axelrod also touched on BIS’s approach to enforcement. He said that, while his preference is to address potential issues on the front end before there is a violation, he expects that with new export control rules there will come more enforcement actions. He explained that the settlement of charges by BIS will require admissions of wrongdoing. He further noted that BIS rewards voluntary disclosures.

Your Enforcement Edge team is on the ground at the FCPA conference, and plans to keep you posted about events as they unfold. Stay tuned.

© Arnold & Porter Kaye Scholer LLP 2022 All Rights Reserved. This blog post is intended to be a general summary of the law and does not constitute legal advice. You should consult with counsel to determine applicable legal requirements in a specific fact situation.