Three Signs of a New Era in U.S. Export Controls and Sanctions Enforcement

3 minute read | March.29.2023

In light of Russia’s invasion of Ukraine and intensifying strategic competition with China, the U.S. government is prioritizing enforcement of export controls and economic sanctions in unprecedented ways.  We expect higher budgets and greater interagency coordination for international trade enforcement to result in previously unseen compliance risk. Here are three signs of a new era of U.S. trade controls enforcement:

  1. The U.S. government is allocating additional resources.

    1. Increased Hiring of Prosecutors for Trade Violations. The National Security Division at the Department of Justice (DOJ), responsible for the criminal prosecution of trade controls violations, is adding 25 prosecutors, including a new “Chief of Counsel for National Security Corporate Enforcement.”
    2. Increased Budget for Export Controls Enforcement. For FY 2023, Congress increased funding for the Department of Commerce’s Bureau of Industry and Security (BIS), which has primary export control enforcement responsibility, by more than 25%.
    3. Increased Budget for Sanctions Enforcement. Congress also increased sanctions-enforcement funding for the Department of the Treasury’s Office of Terrorism and Financial Intelligence, which includes the Office of Foreign Assets Control (OFAC), by more than 20% and allowing more than 60 new hires.

  2. Federal agencies are enhancing their collaboration.

    1. Disruptive Technology Strike Force. In February 2023, the DOJ and BIS announced a new joint “Disruptive Technology Strike Force” to target unlawful exports of critical technologies, such as semiconductors, supercomputing, and artificial intelligence, to countries including China, Iran, Russia, and North Korea.
    2. Joint Compliance Note. In March 2023, the DOJ, BIS, and OFAC published a first Joint Compliance Note outlining compliance expectations and identifying red flags related to trade restrictions against Russia. The Joint Compliance Note is part of an interagency effort to inform the private sector about enforcement trends and convey expectations as to national security-related compliance.
    3. Task Force KleptoCapture. In March 2022, the DOJ launched Task Force KleptoCapture, an initiative comprised of multiple law enforcement agencies dedicated to enforcing trade restrictions against Russia in the aftermath of its invasion of Ukraine.

  3. The Justice Department has pledged robust prosecution of sanctions violations.

    In addition to the 25 new prosecutors dedicated to trade investigations, Deputy Attorney General Lisa Monaco announced in July 2022 that “sanctions are the new FCPA." This remark refers to the DOJ’s aggressive pursuit of violations of the Foreign Corrupt Practices Act (FCPA) over the past 20 years. In February 2023, Deputy Attorney General Monaco reemphasized that “Justice Department prosecutors will be vigorously enforcing” export control rules, previewing a new era of trade controls enforcement.

Companies should adapt their compliance arrangements to the federal government’s new prioritization of export controls and sanctions enforcement. It is especially important to ensure that international trade compliance programs and compliance training programs are sensitive to the variety of new, complex restrictions regarding China and Russia. 

We at Orrick are closely tracking related developments.  Stay tuned for updates.