Credit: Original article can be found here
Export Controls and Human Rights Initiative Code of Conduct Released at the Summit for Democracy
Human Rights Code of Conduct. On March 30, the Department of State released a Code of Conduct as part of the U.S.-led Export Controls and Human Rights Initiative. The Initiative – launched at last year’s Summit for Democracy by the United States, Canada, France, the Netherlands, and the United Kingdom – intends “to counter state and non-state actors’ misuse of goods and technology that violate human rights.” In the year following the Summit, the United States led an effort to get countries to endorse a nonbinding, voluntary Code of Conduct which calls for “subscribing states” to consult with human rights stakeholders when implementing export controls, share information among subscribing states about threats associated with the trade that poses human rights issues, share best practices in implementing effective controls, and more. The governments of Albania, Australia, Bulgaria, Canada, Croatia, Ecuador, Estonia, Germany, Kosovo, Latvia, New Zealand, North Macedonia, Spain, and many more have signed on. Following the second Democracy Summit, the Department of State will continue to engage with subscribing states to implement portions of the Code and with non-subscribing states to seek additional endorsements.
The full announcement can be found here. The Code of Conduct can be found here.
Notably. International support for the protection of human rights means that human rights will increasingly be a basis for implementing more stringent multinational export controls. While non-binding, the Code should prompt compliance departments to ensure that human rights considerations are a part of export compliance.
DOJ: Deputy Attorney General Lisa Monaco Delivers Remarks at American Bar Association National Institute of White Collar Crime
Front lines. On March 2, Deputy Attorney General Lisa Monaco discussed DOJ efforts to promote a culture of corporate compliance. Monaco acknowledged that in this “uncertain geopolitical environment, corporate crime and national security are overlapping to a degree never seen before.” She emphasized that companies are on the “front lines of today’s geopolitical and national security challenges.”
Monaco described strengthening corporate compliance through the promotion of voluntary self-disclosure and structuring compensation and claw-back programs in such a way that shift “the burden of corporate malfeasance away from uninvolved shareholders onto those more directly responsible.” She also announced a pilot program whereby every corporate resolution requires the offending company to implement “compliancepromoting criteria within its compensation and bonus system.” The pilot program would also allow the Criminal Division to reduce fines for companies that attempt to claw back compensation from individual wrongdoers. In addition, if the company successfully recovers the money, it may keep it.
The full remarks can be found here.
Notably. This pilot program is likely to become permanent even if changes are made to the program before it is officially implemented. Companies should update compliance programs to reflect the pilot program and the concept of clawing back compensation – while also recognizing the effective compliance efforts of individual personnel.
Departments of Justice, Commerce and Treasury Issue Joint Compliance Note on Russia-Re-lated Sanctions Evasion and Export Controls
Joint Action. On March 2, DOJ, BIS, and OFAC released their first joint, “tri-seal,” compliance note relating to the risks associated with third-party intermediaries and transshipment points. The note highlights how Russia and its proxies use third-party intermediaries and transshipment countries to circumvent sanctions and U.S. export control laws. The note also lists common red flags that could indicate a third party is engaged in sanctions evasion, including:
- The use of corporate vehicles to obscure ownership, the source of funds, or the countries involved.
- A reluctance to share information or complete an end-user form.
- The use of shell companies for international wire transfers, last-second changes to delivery addresses, and the use of personal email accounts rather than a corporate address.
- The lack of an organizational web presence.
- Routing purchases through established transshipment points like China (Hong Kong and Macau), Armenia, Turkey, and Uzbekistan.
The three agencies will continue to “inform the private sector about enforcement trends and provide guidance to the business community on compliance with U.S. sanctions and export laws.”
The Joint Compliance Note can be found here.
Notably. While DOJ, BIS, and OFAC have repeatedly shown a willingness to hold offending companies and individuals accountable for violations of U.S. export laws, this type of notice serves to equip companies with guidance on preventing violations from occurring altogether.