BIS Announces Enhancements to Voluntary Self-Disclosure Program

On January 16, 2024, the Bureau of Industry and Security (BIS)’ Assistant Secretary for the Office of Export Enforcement (OEE), Matthew Axelrod, published a policy memorandum announcing updates to BIS’ Voluntary Self-Disclosures (VSD) process, including electronic submissions of VSD and faster options for disclosures.

This announcement was likely in response to the positive results from similar policy changes made on April 18, 2023 covering minor infractions. Speaking at a New York University School of Law event, Axelrod said that BIS saw an annual increase of 80% in disclosures of potentially serious violations and an annual increase of 33% in tips since the April 2023 announcement on VSD. As the April announcement also included: (1) the new policy treating a party’s affirmative decision to file or not file a VSD as a mitigating or aggravating factor, respectively, when determining penalties; and (2) the offer of a “cooperation credit” for parties (including competitors) that inform BIS of violations, the increase in VSDs and tips is likely in response to this “carrot and stick” approach.

In the January announcement, BIS strongly encourages parties to email initial notifications, extension requests and narrative accounts of disclosure (email address: [email protected]). The submissions may also be signed electronically. BIS will still accept hard copy submissions but is actively promoting electronic submissions if possible.

“Abbreviated Narrative Accounts” Allowed for Minor or Technical Infractions

A “fast track” resolution policy for VSD covering minor or technical infractions has been in effect since June 30, 2022. Under this policy, qualifying VSDs will receive a warning or a no-action letter within 60 days of the final submission of the VSD. 

The January announcement supplements this policy by adopting an “abbreviated narrative account” option for VSD submissions covering violations where no aggravating factors are present. The account should still describe the nature of the violations but does not have to include all of the normally required accompanying documentation unless specifically requested by the Office of Export Enforcement (OEE). Also, parties using the abbreviated narrative are not required to conduct a five-year lookback unless so requested by OEE.

Quarterly VSDs Bundling all Minor Infractions

BIS has been accepting bundled VSDs covering minor infractions since the April 18, 2023, announcement. To streamline the process for minor or technical infractions, BIS clarifies that companies can also “bundle these disclosures for submission on a quarterly basis.” 

BDO Insight

BDO can assist clients in developing an export compliance program, as well as assess the effectiveness of existing compliance procedures to help avoid infractions and to identify them early on. BDO can also help companies determine whether infractions qualify for “fast track” treatment or require additional documentation and then help companies with submitting VSDs relating to both significant and minor infractions to BIS.