Criminal Enforcement of Export Control/Sanctions Laws Announced as Top Priority of Justice Department and Partner Agencies Just as Higher Penalties Authorized

The Justice Department has strongly signaled its enhanced commitment to aggressive criminal enforcement of export control and economic sanctions laws. In a press conference announcing the expansion of the Justice Department's counter-proliferation program, Assistant Attorney General Kenneth Wainstein called the criminal prosecution of export control (including sanctions) violations the Department's "leading counterintelligence priority."

Initiative Involves Increased Inter-Agency Cooperation

The new initiative, which was announced jointly by the Justice Department (DOJ) and several partner agencies (including the Federal Bureau of Investigation, the Commerce Department, Immigration and Customs Enforcement, and the Defense Criminal Investigation Service), is described as "a national initiative that will harness the counter-proliferation assets of U.S. law enforcement, licensing, and intelligence agencies to combat the growing national security threat posed by illegal exports of restricted U.S. military and dual-use technology to foreign nations and terrorist organizations."

A critical part of DOJ's enforcement program will be the formation of Counter-Proliferation Task Forces in certain U.S. Attorney's offices around the country, particularly in districts with large concentrations of high-tech businesses and research facilities. Task forces are already in place in the Southern District of New York, District of Connecticut, District of Maryland, and the District of Columbia, with other task forces soon to follow.

Formal Announcement Confirms Recent DOJ Emphasis on Export/Sanctions Enforcement

The Department noted that the majority of export control cases in recent years have involved China and Iran and that those two countries continue to be areas of particular concern to enforcement authorities. Iran is also one of the five countries (along with Syria, Burma, Sudan, and Cuba) that are the subject of economic sanctions laws whose violations will be targeted as a closely related facet of the new enforcement priority.

The Justice Department began sharpening its focus on the export control arena over the past several months. As the Justice Department disclosed in a fact sheet simultaneously with its announcement of the new initiative, a non-exhaustive list of recent prosecutions in this area from the past year includes thirty-three criminal cases (five in the past few weeks alone). In June, DOJ created the position of National Export Control Coordinator, appointing veteran prosecutor Steven Pelak to implement the just-announced initiative, foster coordination among agencies with export control responsibility, and provide nationwide training and monitoring of export control prosecutions.

Executive Policy Dovetails with Increased Civil and Criminal Penalties

The criminal enforcement initiative dovetails with higher statutory maximum civil and criminal penalties for export control and economic sanctions violations. The President has just signed into law the International Emergency Economic Powers Enhancement Act, which significantly increases fines for violations of the International Emergency Economic Powers Act, the authority for most economic sanctions regulations as well as the Export Administration Regulations. Under the new law, maximum civil penalties would increase from the current $50,000 to $250,000, or twice the amount of the transaction involved, whichever is greater. Criminal penalties also increase significantly. The potential term of imprisonment will be as much as 20 years, while criminal fines have increased to a maximum of $1 million per violation. Furthermore, the bill suggests a potential level of retroactivity, with the new civil penalties applying to an enforcement action that "is pending or commenced on or before the date of enactment" of the legislation.

Implications of the New Initiative and Increased Penalties

The prospect of expanded and more aggressive criminal prosecution of export control and economic sanctions laws by the Justice Department highlights the importance of companies having effective and up-to-date compliance programs, and makes it imperative that, when potential violations arise, companies consult with experienced counsel, promptly conduct an appropriate internal investigation, and make an informed corporate decision about how best to address the situation, including possible voluntary disclosure and positioning the company in the event of a criminal enforcement action.

These measures are also likely to have a considerable impact on civil enforcement of the economic sanctions and export control laws, which has increased significantly in recent years. The regulatory regimes that comprise these two overlapping areas of the law are very complex, and companies accordingly have to be very careful to avoid the unknowing violations that are subject to civil penalties. The five-fold increase in potential civil penalties increases the risk of substantial fines, even for wholly inadvertent mistakes. 

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O'Melveny & Myers LLP has extensive experience with export controls and economic sanctions matters, including experience from prior senior government service. We welcome your comments and questions on these important developments. Please contact Steve Bunnell at (202) 383-5321 or Greta Lichtenbaum at (202) 383-5249 for additional information.

Steve Bunnell is a partner in the D.C. office specializing in global enforcement and white collar criminal defense matters. Steve was formerly Chief of the Criminal Division in the U.S. Attorney's Office for the District of Columbia, where he supervised numerous criminal cases involving export control and sanctions violations. Greta Lichtenbaum is a partner in the D.C. office and counsels clients on U.S. laws that apply to international business, including export controls and economic sanctions laws. She assists clients in their development of compliance programs in this area, and represents them in licensing and enforcement matters before the U.S. Government.


This memorandum is a summary for general information and discussion only and may be considered an advertisement for certain purposes. It is not a full analysis of the matters presented, may not be relied upon as legal advice, and does not purport to represent the views of our clients or the Firm. Greta Lichtenbaum, an O'Melveny partner licensed to practice law in the District of Columbia and Pennsylvania, Stevan Bunnell, an O'Melveny partner licensed to practice law in the District of Columbia, and Pammela Quinn, an O'Melveny counsel licensed to practice law in the District of Columbia and Virginia, contributed to the content of this newsletter. The views expressed in this newsletter are the views of the authors except as otherwise noted.