“Sanctions is the new FCPA.”
Deputy Attorney General Lisa Monaco
President Biden recently signed a foreign aid bill1 that will have significant implications for United States sanctions enforcement, specifically Section 206 of the International Emergency Economic Powers Act (50 U.S.C. 1705) and Section 16 of the Trading with the Enemy Act (50 U.S.C. 4315). U.S. sanctions are policy tools used to advance national security and foreign policy objectives. These sanctions include financial and trade restrictions imposed against countries, entities, and individuals whose actions contradict U.S. national security interests or violate U.S. laws. Notably, this bill provides regulators and prosecutors with double the amount of time from five years to 10 years to investigate sanctions infractions.
This extension of the statute of limitations will likely result in larger fines against companies that are found to have violated sanctions laws, as well as more investigations. With the extension, prosecutors will have more time to identify and charge additional violations, thereby increasing the risk for exposure to further infractions and substantial penalties. Previously, companies were permitted a five-year review to see whether the sanctions violation was an isolated incident, or whether it was a systematic compliance gap within the company. Now, companies will have to look back a decade.
With the extension, prosecutors will have more time to identify and charge additional violations, thereby increasing the risk for exposure to further infractions and substantial penalties.
Going hand-in-hand with this update, the Department of Justice (DOJ) announced plans last year to hire over 20 prosecutors to investigate criminal violations of economic sanctions and export controls. Federal prosecutors collaborate with the Department of Treasury’s Office of Foreign Assets Control (OFAC), which imposes sanctions designations and can also bring civil penalties.
Additionally, since its inception last year, the Disruptive Technology Strike Force (Strike Force) created by the DOJ and Department of Commerce, has proven highly successful. The Strike Force has charged 14 cases involving sanctions and export control violations, precisely in line with the bill’s desired effects. Bolstering to the Strike Force, the DOJ and Commerce just announced the addition of the Disruptive Technology Protection Network with Japan and South Korea. The U.S., Japan, and South Korea share strong trade and law enforcement capabilities, and this partnership will strengthen the network of information-gathering and sharing. These agencies are further supported by similar actors such as the Bureau of Industry and Security (BIS) and the Directorate of Defense Trade Controls (DDTC).
This change in the statute of limitations timing derives from legislation that details how regulatory agencies can work to prevent illegal trade. One act described in the legislation encourages OFAC to sanction Mexican drug cartels that manufacture fentanyl and transport it into the United States. Another act requested that the DOJ’s Financial Crimes Enforcement Network (FinCEN) provide detailed guidance on fentanyl-related money laundering risks.
Companies should remain diligent with regard to their compliance practices and confer with counsel about how these changes may impact their businesses.
1See H.R. 8038, 118th Cong. (2024) SEC. 3111 (as passed by House, Apr. 20, 2024).
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