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BIS Issues Additional Enhancements to Voluntary Self-Disclosure Process

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Takeaways

  • On January 16, 2024, the Bureau of Industry and Security Office of Export Enforcement announced several updates to its VSD process aimed at enhancing the program’s overall efficiency and effectiveness.
  • These enhancements create a more streamlined disclosure process for minor violations, including through abbreviated narratives, quarterly bundled disclosures, and limiting the requirement to include a five-year lookback.
  • As the third VSD policy enhancement in as many years, BIS continues to incentivize and facilitate parties’ cooperation in the VSD program.

On January 16, 2024, the Bureau of Industry and Security (BIS) Office of Export Enforcement (OEE) announced several updates to its Voluntary Self-Disclosure (VSD) process aimed at enhancing the program’s efficiency and effectiveness, while also facilitating the overall disclosure process and incentivizing cooperation.

This update follows policy memoranda published on June 30, 2022, and April 18, 2023, and demonstrates the value BIS places on voluntary disclosures and its reliance on industry cooperation.

By improving its programmatic processes, OEE’s latest enhancements enable quick resolutions, allocate appropriate credit, and provide learning opportunities for deserving parties.

Streamlined Disclosure Process for Minor and Technical Violations
The updated VSD process creates a less burdensome and more streamlined process for disclosing minor violations through the following updates:

  • Abbreviated Narrative Accounts for Certain Disclosures: Building on its June 2022 memoranda, BIS has expanded the “fast-track” resolution policy for parties disclosing minor or technical infractions and will now allow parties disclosing violations absent aggravating factors to submit abbreviated narratives briefly describing the nature of the violation.
  • No Five-Year Review Requirement for Minor Violations: Parties disclosing violations where no aggravating factors are present are no longer required to conduct a five-year lookback, unless explicitly requested by OEE. However, should aggravating factors be suspected and not reported, OEE will request the complete narrative and accompanying documentation as required under Section 764.5(c)(3) of the Export Administration Regulations (EAR). Parties should note, however, that violations not voluntarily disclosed will not be treated as part of the disclosure.
  • Bundled Disclosure Submissions for Minor Violations: BIS clarified that parties may bundle disclosures of multiple minor violations (i.e., no aggravating factors are present) for submission on a quarterly basis.

Clarification on Third Party’s Role with Respect to Items Subject to a Violation
The policy update also emphasizes third parties’ roles with respect to items subject to a violation.

In general, EAR General Prohibition 10 prohibits anyone with knowledge of a violation from taking actions with respect to relevant items unless authorized by BIS.  Authorization can be requested from BIS’s Office of Exporter Services (EAR 764.5(f)) where such violations are disclosed to OEE.  In the past the party would usually make both such disclosures and authorization request.

In this case, the policy clarifies that any person (not just a party submitting a VSD) may notify the OEE Director of a violation and request special permission to engage in otherwise prohibited activities. Such notifications will be considered as fulfilling the VSD requirements, even when the disclosure does not involve a violation by the submitter.

The January 16 updates from BIS demonstrate a continued aim to incentivize voluntary self-disclosure, including by third parties. BIS expects that the changes announced will streamline the VSD process for both the reporting entities and government.