United States: Whatcha Gonna Do When They Come For You? Export Control Agency Visits, Part 2

Last Updated: October 27 2017
Article by Olga Torres and Derrick Kyle

This article is the second part of a two-part series. In the first article, we introduced the types of company visits conducted by the two major U.S. export agencies,1 and discussed potential outcomes and consequences of these visits. In this second article, we discuss what to expect during a visit from the agencies and best practices to prepare for them.  The first article can be accessed here.

DDTC Visits

The Directorate of Defense Trade Controls ("DDTC") Office of Defense Trade Controls Compliance ("DTCC") has published specific guidance regarding what companies should expect from a Company Visit Program ("CVP") effort. DTCC will initially contact the selected company, at which point the company could elect not to participate in the CVP visit.2 If the company decides to participate in the CVP visit, DTCC and the company will coordinate and select a date for the visit. After a visit date is confirmed, DTCC will send a formal visit notification letter outlining an agenda for the visit and may request certain pre-visit materials, such as an organizational chart or written export procedures.  

For the initial meeting with the company, DTCC typically requests to meet with senior management to discuss visit objectives. During this initial meeting, the company should provide the DTCC officials with background information about the company and any activities that are regulated by the International Traffic in Arms Regulations ("ITAR"). After the initial meeting, the CVP team from DTCC will meet with operations personnel that are actively engaged in ITAR-controlled activity, e.g., the shipping and compliance departments. Depending on the size of a company and its ITAR operations, these visits will last either one or two days. After concluding its meetings with operations personnel, the CVP team will again meet with senior management to review the information gathered during the personnel meetings, answer questions, and address concerns of the company. Shortly after completion of the visit, DTCC will provide the visited company with a close-out letter that "summarizes observations; notes strong compliance practices; discusses initiatives taken by the company in response to [Export Control Reform]; recommends areas for improvement, if any; and addresses feedback, questions, or concerns of the company."3

BIS Visits

As we discussed in the first article in this series, two branches within BIS conduct outreach visits: the Office of Export Enforcement ("OEE") and the Office of Exporter Services Export Management and Compliance Division ("EMCD"). EMCD outreach visits are relatively new, so there is generally less information available about these visits. On the other hand, outreach visits from OEE have occurred for decades and are much more prevalent than EMCD visits (e.g., there were 743 OEE visits in fiscal year 2016 compared to only 40 visits from EMCD in the same period). For these reasons, this article will focus on OEE visits, though our recommendations would be equally applicable to either type of visit.

OEE outreach visits are conducted for a variety of reasons, including providing export guidance to the selected company, building a relationship with industry, intelligence gathering, and investigation. OEE outreach visits are often scheduled after the submission of a voluntary self-disclosure ("VSD"). After selecting a company for an outreach visit, an OEE officer will contact the company and set a date for the visit. Like DTCC's CVP team, an OEE officer may request certain documents prior to the actual visit. This request could include administrative subpoenas, internal audits by a corporate compliance officer or manager, freight forwarder, broker, and ultimate consignee records.4

OEE has not issued written guidance regarding what to expect on the day of the visit, but typically it will request to meet with a point of contact at the company who can discuss export compliance issues. OEE typically does not provide a visit agenda, but will outline the reasons for the visit if asked by the company. OEE may request additional documentation while on-site, and will generally request the company's point of contact to provide an overview of the company's export operations. OEE may also request a company facility walkthrough (e.g., warehouses and manufacturing floors), or ask specific questions related to the reason for the visit. Typically, either during or after the meetings, OEE will provide the visited company with copies of BIS' own publications such as i) freight forwarder guidance, ii) know your customer guidance, iii) how to request an ECCN, iv) OEE field offices, v) export compliance guidelines outlining the elements of an effective export compliance program, and vi) consolidated screening list, to name a few.

Visit Preparation

When notified of an impending export control agency visit, a company should take several measures to adequately prepare for it. First, if the pre-visit communications with the company have not made it clear, the company should determine the scope and agenda of the meeting; it's difficult to prepare for a visit if you are uncertain regarding the reason for the visit. Next, the relevant company point of contact should immediately notify senior management and legal counsel (either in-house or outside counsel) regarding the upcoming visit. Additionally, companies should communicate the importance of the visit to any personnel that may be asked to meet with the agency. 

Prior to the meetings, the company should review its export compliance program and procedures for errors. A visiting export agency team could notice any obvious violations. At a minimum, the company should review its export manual and other written export procedures to ensure they are accurate and up-to-date. Further, the company should prepare for a potential walkthrough of the company's facilities, and should also conduct a review of recent exporting activity, which may require the running of an Automated Commercial Environment ("ACE") export report(s).

The officers or employees participating in the meetings should be well-versed in the relevant export control regulations and should be prepared to answer questions about the company's export operations. Company representatives should also be prepared to handle requests for documentation. The export regulations require maintaining export records for a period of five years after the export or the expiration of the license that authorizes the export. For outreach visits that are conducted pursuant to the submission of a VSD, the company should be prepared to answer specific questions about the circumstances of the violation(s) disclosed in the VSD and any corrective measures implemented to prevent further violations.

During the visit, representatives of the selected company should take detailed notes regarding the conversations between the company and the visiting agents. Importantly (and obviously), when answering questions posed by government agency visitors, do not lie, and if you are uncertain about something, you can ask the government agents to provide you some time to review and provide the information at a later time.

After the visit concludes, review the notes taken during the visit, document the discussions, and circulate internally to relevant company contacts. Companies should maintain detailed lists regarding any documentation provided to or received from the government. You can also create a list of any follow-up questions or concerns to send to legal counsel (if counsel was not present during the visit) or the visiting agency. Finally, review the visit takeaways and implement any corrective actions necessary to improve the company compliance program. Visits from government agencies can certainly be stressful, but it is important to use the visit as an opportunity to learn and obtain more or better resources for export compliance.

If you have been selected for a company visit by an export agency and wish to share your experience, or simply seek more information about these visits, we encourage you to contact us.

Footnotes

1 Department of Commerce's Bureau of Industry and Security ("BIS") and the Department of State's Directorate of Defense Trade Controls ("DDTC").

2 Electing not to participate may be tempting, but it would probably be more helpful to adequately prepare for a visit than to refuse to be a part of one.

3 Defense Trade Controls Compliance Company Visit Program (CVP), Department of State, Directorate of Defense Trade Controls, 8 (July 2016), available at https://www.pmddtc.state.gov/compliance/documents/CVP_Overview.pdf.

4 James Fuller, What Triggers a BIS Visit or Inquiry: What to Expect and How to Prepare, U.S. Department of Commerce, Bureau of Industry and Security, 6 (2017), available at http://www.exporttexas.com/sites/default/files/Events/OEE.pdf

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Olga Torres
Derrick Kyle
Events from this Firm
25 Sep 2018, Conference, Dallas, United States

Location:

Liuna Station
360 James St., N, Hamilton
Toronto, Canada

Olga Torres will speak on the latest in U.S. trade law developments. For the full agenda, click HERE.

Similar Articles
Relevancy Powered by MondaqAI
Waller Lansden Dortch & Davis
 
In association with
Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
Waller Lansden Dortch & Davis
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions