What You Need to Know
- Key takeaway #1DOJ has repeatedly highlighted the importance of compliance with U.S. economic sanctions, export controls, and other national security laws. Companies should ensure their compliance programs take these regimes into account.
- Key takeaway #2If a violation is found, it may implicate multiple U.S. government agencies and an analysis of DOJ, BIS, OFAC, and FinCEN requirements and expectations is critical.
- Key takeaway #3Cooperating with DOJ (and other agencies) is still encouraged and can have benefits if potential violations are identified.
On September 11, 2023, the U.S. Department of Justice (“DOJ”)’s National Security Division (“NSD”) announced the appointment of its first-ever Chief Counsel and Deputy Chief Counsel for Corporate Enforcement, fulfilling a commitment made by DOJ in March 2023. Both appointees are prosecutors with significant experience prosecuting large-scale, international corporate crimes, commensurate with DOJ’s recent emphasis on holding accountable corporate actors that violate national security laws, including sanctions and export controls.
New DOJ Chief Counsel and Deputy Chief Counsel for Corporate Enforcement
Ian C. Richardson will serve as NSD’s first Chief Counsel for Corporate Enforcement, joined by Christian J. Nauvel who has been named Deputy Chief Counsel for Corporate Enforcement. Richardson joins NSD from the U.S. Attorney’s Office for the Eastern District of New York, where he was an Assistant U.S. Attorney and successfully prosecuted Lafarge S.A. and LaFarge Cement Syria S.A. (“LaFarge”) for conspiring to provide material support and resources in Northern Syria from 2013 to 2014 to the Islamic State of Iraq and al-Sham (“ISIS”) and the al-Nusrah Front (“ANF”), both U.S.-designated foreign terrorist organizations, in violation of 18 U.S.C. § 23398(a)(1). Nauvel was previously a Trial Attorney in the Criminal Division’s Money Laundering and Asset Recovery Section (“MLARS”). He also worked on the National Cryptocurrency Enforcement Team (“NCET”) and served as a lead prosecutor in U.S. v. Huawei, which charged Huawei and two subsidiaries with a number of crimes, including sanctions violations.
These appointments are part of the surge of resources at DOJ announced by Deputy Attorney General (“DAG”) Lisa Monaco on March 2, 2023 at the American Bar Association National Institute on White Collar Crime, to address the intersection of corporate crime and national security, emphasizing the Department’s reinvigorated focus on corporate compliance with sanctions and export controls.
As we reported previously, in those remarks the DAG outlined specific actions that demonstrate DOJ’s commitment to combatting corporate crime in the national security space: (1) the addition of 25 new prosecutors in DOJ’s NSD who will investigate and prosecute sanctions evasion, export control violations, and similar economic crimes; (2) the appointment of NSD’s first-ever Chief Counsel for Corporate Enforcement; (3) routine joint statements from DOJ, the Treasury, and Commerce regarding national security-related enforcement compliance; and (4) a substantial investment in the Bank Integrity Unit (“BIU”) in the Criminal Division’s Money Laundering and Asset Recovery Section, which has a track record of prosecuting global financial institutions for sanctions violations.
Other Recent Collaboration between DOJ and Partner Agencies
These actions are in addition to the Disruptive Technology Strike Force (“DIS-Tech Strike Force”) announced in February co-led by NSD and the U.S. Department of Commerce’s Bureau of Industry and Security (“BIS”), which we previously reported on. According to Commerce Assistant Secretary for Export Enforcement Matt Axelrod, the DIS-Tech Strike Force now has 14 local cells across the United States, each of which includes a federal prosecutor and agents from BIS, Homeland Security Investigations, and the FBI, and aim to target illicit actors, strengthen supply chains, and protect critical technological assets from being acquired or used by nation-state adversaries (i.e., China, Iran, North Korea, and Russia).
Additionally, in July 2023, DOJ, BIS, and the U.S. Department of the Treasury’s Office of Foreign Assets Control (“OFAC”), issued a tri-seal compliance note, which explained each of DOJ, BIS, and OFAC’s voluntary self-disclosure policies, as well as the U.S. Department of the Treasury’s Financial Crimes Enforcement Network (“FinCEN”)’s whistleblower program. The tri-seal compliance note discusses the benefits of cooperation with DOJ (and other agencies), including, for example, that NSD generally will not seek a guilty plea, and that there will be a presumption that the company will receive a non-prosecution agreement and will not pay a fine.
DOJ Is Vocal About Its Expectations for Industry
DOJ has also telegraphed its prioritization of national security focused criminal charges in public remarks to industry leaders. DOJ Principal Associate Deputy Attorney General Marshall Miller emphasized this commitment in remarks made in May 2023 at the Ethics and Compliance Initiative IMPACT Conference. He noted that since October 2022, “roughly two-thirds of the department’s major corporate criminal resolutions have implicated United States national security.”
Last week, Mr. Marshall reiterated the same message at the Global Investigation Review’s Annual Meeting, where he urged corporations to work with DOJ to identify and prevent these types of risks, and warned that “national security laws must rise to the top of your compliance risk chart, with the recognition that even the most innocuous-looking transaction or activity could implicate our collective security.” He also highlighted recent penalties as examples of DOJ’s efforts, including:
- DOJ’s seizure of one million barrels of Iranian crude oil earlier this month from Suez Rajan Limited (“Suez Ranjan”), who pleaded guilty in April 2023 to conspiring to violate the International Emergency Economic Powers Act (“IEEPA”), and agreed to pay a fine of $2.5 million. Suez Rajan worked with entities affiliated with the Iranian Revolutionary Guard Corp and its Qods-Force to covertly sell and transport Iranian oil, using the U.S. financial system to facilitate such sales and transports. Suez Rajan’s parent, Empire Navigation, cooperated with DOJ on this seizure.
- In April 2023, DOJ secured a guilty plea from British American Tobacco’s subsidiary BAT Singapore Marketing for conspiracy to commit bank fraud and conspiracy to violate IEEPA, specifically U.S. economic sanctions on North Korea. The parent company, British American Tobacco, entered into a Deferred Prosecution Agreement (“DPA”) for the same charges. In total, British American Tobacco and its subsidiary paid combined penalties of more than $629 million. In a press release announcing the settlement, DOJ noted that the guilty plea and NDA were part of a larger strategy aimed at “countering nation-state threats.”
For further information, please contact:
Caroline E. Brown, Partner, Crowell & Moring