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Voluntary Disclosure/Consent Agreements:

Voluntary Disclosure/Voluntary Self Disclosure/Prior Disclosure

Both the Department’s of State (DDTC) and Commerce (BIS) encourage the submission of Voluntary Disclosures (also referred to as Voluntary Self Disclosures) by companies who believe they may have violated the applicable export control regulation.

Voluntary Disclosures are an excellent indicator of the effectiveness of a company's export/import compliance program. Not only do they evidence the company’s intent to comply with U.S. export control requirements, but they also demonstrate the company’s ability to identify violations and correct discrepancies.

The U.S. Government carefully reviews Voluntary Disclosures received from companies to determine if violations of the regulations have occurred and to determine the appropriate corrective action. Most Voluntary Disclosures are resolved by means other than the issuance of an administrative penalty. However, in instances in which the U.S. Government determines that the issuance of an administrative penalty is appropriate for the resolution of a violation, the regulators afford the submission of a Voluntary Disclosure "great weight" in assessing and mitigating the penalty, and in most cases the fines and other administrative penalties may be significantly reduced.

Given the scope of today’s global business and the complexity of the ITAR and the EAR, every exporter will potentially have violations. But it is worth noting that voluntary disclosures with State or Commerce generally do not result in fines, penalties or Consent Agreements. In most cases, transparency and thoroughness of voluntary disclosures, combined with a well designed, and functioning compliance program, are a company’s best defense in avoiding costly administrative proceedings and settlements.

U.S. Customs “Prior Disclosure” - Under the U.S. Customs Regulations, importers who find a potential non-compliance may take advantage of filing a “Prior Disclosure” to effectively put CBP on notice that an investigation is being undertaken. This filing generally serves to reduce any potential fines or penalties that may have been issued should a disclosure not have been made. Examples of non-compliances can be potential violation of the U.S. Customs Regulations, such as undervaluation, misdescription of merchandise, overvaluation, antidumping/countervailing duty order evasion, improper country of origin declarations or markings, or improper claims for preference under a free trade agreement or other duty preference programs. While importers are not required to make prior disclosures they may ELECT to do so before or without knowledge that CBP has initiated a formal CBP investigation of the violation, thus potentially reducing any fines and penalties that CBP may have issued. ITCS has experience in this area and can assist the company in conducting an internal investigation as well as assist in the preparation of the Prior Disclosure documentation to CBP.

ITC Strategies has helped numerous companies manage the issues associated with violations of export and import regulations. Whether it is in the investigation of a potential problem or the preparation of a voluntary disclosure to one of the regulating agencies, ITC Strategies can help you – when determined to be appropriate - attain the mitigating benefit that the submission of a voluntary disclosure can provide.

Consent Agreements:

Both the Department’s of State and Commerce can impose civil penalties for violations of the International Traffic in Arms Regulations (ITAR) and the Export Administration Regulations (EAR) respectively. Those penalties are often contained within a Consent Agreement which is the result of negotiations between the government agency and the charged exporter, the terms of which are closely tied to the specific facts of the associated violations.

Consent Agreements specify the fines to be paid and outline the measures required to enhance the company’s compliance program. Imposition of civil penalties generally includes the payment to the U.S. Government and the institution of enhanced compliance measures within the company. Sometimes referred to as “remedial compliance measures”, these requirements can often be complex and daunting to implement. They may include:
• A requirement for the appointment of a Special Compliance Officer (SCO)
• Implementation of specific measures to prevent future violations of a similar nature
Engaging in a comprehensive independent audit (see audit page) 
• Institution of an automated export tracking system, to name only a few…

Each Consent Agreement is tailored to the unique circumstances of the issues associated with the violations and will generally be determined based on:
• The severity of the export violations that have occurred in relation to U.S. National Security and Foreign Policy concerns
• The cooperativeness of the company in coming to resolution
• The level of compliance measures already in place at the company at the time of the violations

ITC Strategies has extensive experience in assisting companies manage the requirements associated with Consent Agreements. Whether it is reviewing/assessing the specifics of the remedial compliance measures being negotiated, assisting in the implementation, or conducting the independent audits, ITC Strategies has the expertise to efficiently and effectively get you to the finish line.