It has been a little more than a year since Russia’s invasion of Ukraine, and the war continues to rage. In an effort to deter the Russian government and weaken its military capabilities, the United States has imposed significant sanctions and export controls targeting Russia. Recognizing that these sanctions and export control laws merit aggressive enforcement, the U.S. Department of Justice (DOJ) over the past year has made investigation and prosecution of violations a priority.
Last year, shortly after the invasion, DOJ launched Task Force Kleptocapture. Staffed with prosecutors from across the Department, this interagency group was created to enforce the sanctions and export restrictions that the United States has imposed on Russia by targeting the crimes of Russian officials, government-aligned oligarchs, and those who aid or conceal their unlawful conduct.
Notwithstanding Kleptocapture’s success during its first year, DOJ and its government partners are now taking significant additional steps to secure greater compliance with the sanctions and export controls targeting Russia, as well as those targeting national security threats emanating from China, Iran and North Korea. These steps, which should lead to many more enforcement actions against businesses in the United States and abroad, are summarized below.
Launch of Disruptive Technology Strike Force
On February 16, 2023, DOJ and the Commerce Department announced the formation of the Disruptive Technology Strike Force, a joint venture led by DOJ’s National Security Division (NSD) and Commerce’s Bureau of Industry and Security (BIS) that also includes the FBI, Homeland Security Investigations, and fourteen of the largest U.S. Attorneys’ offices across the country. The Strike Force is intended “to target illicit actors, strengthen supply chains and protect critical technology assets from being acquired or used by nation-state adversaries.” Members of the Strike Force will use advanced data analytics and intelligence information, as well as traditional investigative tools such as subpoenas, to identify and prosecute criminal violations of export control laws and enhance administrative enforcement actions. In particular, the announcement singled out technologies related to supercomputing and exascale computing, artificial intelligence, advanced manufacturing equipment and materials, quantum computing, and biosciences as being of particular concern to the Strike Force. It named China, Iran, Russia, and North Korea as examples of adversaries that may put these advanced technologies to use in ways that threaten U.S. security or lead to oppression of domestic populations.
More Prosecutors to Pursue Sanctions and Export Control Violations
In April 2022, Deputy Attorney General Lisa Monaco famously signaled DOJ’s view of the importance of pursuing corporate sanctions violators by describing sanctions enforcement as “the new FCPA.” At last week’s ABA National Institute on White Collar Crime, Monaco returned to this topic, stating that “[i]ncreasingly, corporate criminal investigations carry profound national security implications.” To address this concern, Monaco announced significant restructuring and resource commitments within the NSD, noting the Division will add twenty-five new prosecutors to investigate and prosecute sanctions evasion, export control violations, and similar economic crimes. This will include the creation of a new post in NSD, Chief Counsel for Corporate Enforcement.
Monaco also announced additional resources for the Bank Integrity Unit (BIU) in the Criminal Division’s Money Laundering and Asset Recovery Section, a Unit she described as having a significant track record of prosecuting global financial institutions for sanctions violations. The new resources are intended to strengthen BIU’s partnership with NSD in pursuing international financial institutions.
NSD, BIS, and OFAC Issue Joint Compliance Note
On the same day, NSD, BIS, and Treasury’s Office of Foreign Assets Control (OFAC) issued the first-ever Tri-Seal Compliance Note, titled Cracking Down on Third-Party Intermediaries Used to Evade Russia-Related Sanctions and Export Controls. Monaco indicated that this advisory will be part of an ongoing effort – “akin to the FCPA guidance we have for years published jointly with the SEC” – to identify enforcement trends and to convey the government’s expectations regarding national security-related compliance.
Among other subjects, the six-page Compliance Note describes common red flags that may indicate the existence of third-party intermediaries that are attempting to evade restrictions and obscure the true identities of Russian end users. The document also summarizes evasive tactics used by those who were subsequently targeted for enforcement action. The Compliance Note explains that, while it focuses on Russia-related sanctions and export controls, the compliance principles found in the document apply broadly to all U.S. government enforcement regimes, including the Disruptive Technology Strike Force.
The joint production of this Compliance Note, along with the work of Task Force Kleptocapture and the Disruptive Technology Strike Force, indicate the development of a stronger partnership between NSD, FBI, BIS and OFAC. When such a partnership is combined with a significant expansion in the number of federal prosecutors dedicated to investigating violations of sanctions and export controls, more enforcement is certain to follow. Corporate compliance officers would do well to assess whether their businesses are vulnerable and adjust accordingly.
