BIS Charging Letter
The Bureau of Industry and Security (BIS) at the United States Department of Commerce is tasked with enforcing the nation’s export laws and ensuring that international trade treaties are followed. Potential violators of these Export Administration Regulations (EAR) can face criminal and administrative investigations and penalties. These administrative investigations begin with a BIS charging letter, which now can get published for the public to see well before the investigation is even complete.
BIS Charging Letter Team Lead
Former DOJ Trial Attorney
BIS Charging Letter Team
Former HSI Special Agent
Tackling these investigations from their very beginning is now even more important. Not only can they carry administrative sanctions with the potential for escalating into criminal charges, but now they also come with an immediate dose of extremely negative publicity for companies that are merely suspected of misconduct.
The federal import and export defense and compliance lawyers at Oberheiden P.C. have represented companies of all sizes and in a wide variety of industries comply with the labyrinthine EARs promulgated by the Department of Commerce through the BIS.
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Dr. Nick Oberheiden
Founder
Attorney-at-Law
Lynette S. Byrd
Former DOJ Trial Attorney
Partner
Brian J. Kuester
Former U.S. Attorney
Hon. Kevin McCarthy
55th Speaker, U.S. House of Representatives (ret.)
Government Consultant
Mike Pompeo
Of Counsel
Former U.S. Secretary of State
John W. Sellers
Former Senior DOJ Trial Attorney
Linda Julin McNamara
Federal Appeals Attorney
Nicholas B. Johnson
Former Prosecutor
Roger Bach
Former Special Agent (DOJ)
Chris J. Quick
Former Special Agent (FBI & IRS-CI)
Michael S. Koslow
Former Supervisory Special Agent (DOD-OIG)
Ray Yuen
Former Supervisory Special Agent (FBI)
The BIS, Charging Letters, and EARs: An Overview
The BIS is the part of the U.S. Department of Commerce that is in charge of enforcing export controls and complying with foreign treaties. It does this in order to advance national security, foreign policy, and promote American economic objectives.
Within the BIS is the Office of Export Enforcement, or OEE. The OEE is the subdivision that enforces the Export Administration Regulations. These EARs are designed to secure American trade and preserve the nation’s technological advantage by detecting and prosecuting unauthorized transactions with countries that:
- Have programs for creating and maintaining weapons of mass destruction,
- Threaten U.S. security or regional stability,
- Promote or condone terrorism, or
- Abuse human rights within their borders.
The OEE is the only federal law enforcement agency that enforces export controls and that has both administrative and criminal jurisdiction over people and parties that violate it.
When initiating an administrative enforcement action against a company that appears to be in violation of the EARs, the OEE will issue a BIS charging letter. This letter informs the recipient company of the OEE’s initial determination that the company may be in violation of export controls and is subject to sanctions if a subsequent investigation confirms these suspicions.
Previously, these BIS charging letters were issued in secret to the recipient company. They were only released to the public if the subsequent investigation determined that there was a violation or other wrongdoing – something that could take years to complete, but which ensured that companies would not suffer reputational harm until allegations of misconduct were actually proven. That policy, however, has ended.
Recent Changes in BIS Charging Letter Process to Shine Spotlight on Potential Violators
Recently, the BIS issued a final rule that ended the policy of waiting to publicize BIS charging letters until the final administrative disposition of the case. Instead of holding back this potentially damaging information from the public until it can be proven to be true, the BIS can now release it to the public’s attention at any point prior to the administrative disposition.
While the changes were not unanticipated – BIS leaders stated their intentions to make these changes as early as May – the repercussions are not trivial. While the penalties of an administrative or criminal violation of the EAR regulations are significant already, the negative publicity of even an allegation of misconduct can easily cost a company millions of dollars in reputational damage.
The fact that these charging letters can now be released to the public for its reaction before the investigation is complete is disconcerting for companies that do business abroad.
Global Politics and Developments Increase the Need for Strict Compliance
Given the fact that BIS charging letters can be made public at such an early stage in the process, it becomes even more important for international companies to take the steps necessary to maintain strict compliance with the Export Administration Regulations that apply to them. This has become increasingly difficult to do as international politics is in a period of upheaval and conflict. When Russia invaded Ukraine, the EARs were rapidly revised in an attempt to sanction Russian President Putin and his close associates. The result was a period of uncertainty for international companies as they audited their foreign transactions and investments to make sure that they were still complying with the law.
Some Frequently Asked Questions About BIS Charging Letters and Oberheiden P.C.
What Should I Do If I Have Received a BIS Charging Letter?
If you or your company receives a BIS charging letter, the first thing that you should do is to consult with a lawyer who is experienced with these administrative actions. You should definitely not respond to the letter without getting experienced and knowledgeable legal advice first. Doing so can potentially make matters worse, often without you knowing about it.
In many cases, company executives who take it upon themselves to reply to the BIS end up revealing information that the agency was unaware of, and that actually strengthens the BIS’s case against them. Unfortunately, most executives who take this devastating step do so in the thought that they are helping the company by explaining to the BIS why they have no reason to investigate further. These attempts frequently backfire, to terrible results.
What are the Potential Penalties?
The potential penalties that are on the table when the BIS issues a charging letter for an import or export violation vary on several things:
- The federal statutes or regulations being invoked
- Whether the allegations are administrative, civil, or criminal
- The severity of the alleged violations
Even if the charges end up only being pursued as an administrative case, the sanctions can be significant. If your company needs a registration to conduct the international trade at issue, you can count on losing it through the administrative action. Your company will also likely face fees or penalties or be made to disgorge any funds gotten through the course of transactions.
If the case escalates into a civil or even a criminal case, further sanctions include more fines and potentially even prison time for the executives behind the wrongful conduct.
Why are BIS Charging Letters Released to the Public Earlier Than Before?
In the past, BIS charging letters would only be released for public dissemination after the administrative investigation had run its course. Starting on June 2, 2022, though, newly issued BIS charging letters could be released at any point – including the moment they are sent by the BIS.
The provided justification for this change was that it deterred other violators from taking the same course of conduct, pressed companies to strengthen their compliance efforts, and make the violation process more transparent.
The decision, however, opens up companies to the reputational harm that would come with an allegation that they were caught in violation of sanctions and other international trading rules – a very disparaging accusation that, at the point in the administrative proceeding that it is made public, has very little to back it up.
Why Doesn’t Oberheiden P.C. Call Itself the Best BIS Defense Firm?
Because that is something that carries far more weight when it is said by our prior clients than when it is said by our firm. The experience of our senior-level attorneys and the savvy legal representation that they can provide, however, have led to numerous clients providing strong testimonials about the legal advice that you can expect from Oberheiden P.C. in your case.
The Compliance and Defense Team at Oberheiden P.C.
International import/export law has always been a complicated and rapidly-shifting field of law. It can be difficult to satisfactorily pin down what is going to be required for compliance, let alone executing on the strategies for doing so. Even when compliance is achieved, maintaining it can be extremely tricky, as unforeseeable events like a natural disaster or the fallout from political instability or a declaration of war can throw those compliance measures to the wind.
The import and export compliance and defense lawyers at Oberheiden P.C. can help, from determining whether your company is even subject to import and export regulations to defending against a BIS investigation or administrative action.
Our attorneys all have numerous years of experience guiding companies and their executives and stakeholders through the minefield that is United States import and export law. Additionally, our roster of senior-level attorneys is supported by numerous former federal agents, many of whom are retired and bring with them extensive knowledge of the law enforcement process.
That institutional and inside knowledge of the workings of the federal agencies overseeing this important aspect of your industry, together with the experience necessary to provide exceptional legal advice, have made Oberheiden P.C. a law firm to turn to for guidance, compliance strategies, and legal defense. Our track record of bringing cases to a successful resolution before charges are ever filed is even more important now that the charging letter can be released so soon into your case.
Contact us online or call Oberheiden P.C. at (888) 680-1745 to get started on your legal needs related to import and export law and BIS charging letters.
