Export Controls and Economic Sanctions REGULATORY AND GOVERNMENT AFFAIRS

As export sales, outsourcing and cross-border collaborations transform industries and economies, international transactions and technological exchanges remain subject to a global patchwork of export control and economic sanctions regulations. Amid increasing regulatory enforcement, companies and institutions need incisive and thorough advice.

WilmerHale’s Export Control Group is a team of lawyers with the knowledge, experience and global reach to provide comprehensive compliance, licensing, enforcement and policy counsel on export matters to companies and institutions from early-stage companies to universities and large, multinational corporations.

International transactions can raise significant foreign policy and national security concerns, and US authorities have determined that business relationships are increasingly vulnerable to security risk and espionage. The US regulatory landscape includes the Departments of Treasury, State, and Commerce, each with its own export restrictions, transaction licensing standards and compliance requirements. Violations can lead to severe consequences, including corporate and individual criminal liability, civil money penalties, and administrative sanctions such as suspension of export privileges.

Sanctions Compliance

Treasury Department foreign assets control regulations prohibit or severely restrict transactions with targeted countries, entities and individuals. These restrictions affect the relationships between US parent companies and their foreign subsidiaries. US sanctions may interfere with an acquisition of a non-US company that does business in a country targeted by US sanctions. Among our recent engagements, WilmerHale’s Export Control Group:

  • Advised executives of a US company’s wholly-owned Persian Gulf subsidiary on the applicability of Iranian sanctions regulations to the subsidiary and the US nationals employed there.
  • Advised a US-based pharmaceutical company on licensing and compliance requirements affecting an Indian joint venture that included property interests in Cuba.
  • Counseled buyer and sellers in international merger and acquisition transactions on the regulatory impact of foreign companies’ business operations in sanctioned countries such as Iran and Syria.

For clients involved in the financial services sector, we provide a broad range of sophisticated legal services needed by financial institutions and other clients to comply with financial sanctions and anti-money laundering regulations in the difficult enforcement environment at the intersection of the USA PATRIOT Act and the general foreign assets control regulations. We prepare anti-money laundering compliance programs for banks, broker-dealers, mutual funds, hedge funds, investment advisers, and other types of financial institutions.

Jurisdiction and Classification

State Department defense trade control requirements govern global trade in military articles and services covered by the International Traffic in Arms Regulations. Commerce Department "dual-use” export controls regulate exports and re-exports of commodities, equipment, software and technologies that have potentially sensitive uses. WilmerHale’s Export Control Group advises clients on the roles of the State and Commerce departments, including Commodity Jurisdiction requests to ascertain whether State Department controls apply in a particular case. As export restrictions vary according to the design or performance specifications of an item, we also advise clients on self-classifications and formal Commerce Department export classification requests. Among our recent work, we:

  • Advised UK technology companies on the application of US International Traffic in Arms Regulation (ITAR) requirements to UK defense suppliers seeking US defense contracts, and conducted a seminar on the transatlantic defense trade the Farnborough International Air Show.
  • Obtained export classifications for technologies needed by a US company to establish a product design center in Beijing.
  • Secured favorable Commodity Jurisdiction decisions confirming that military funding and sales would not impose ITAR controls over technologies with significant commercial markets.

Securing Export Licenses

Depending upon the jurisdiction and technical classification, export regulations may impose licensing requirements that vary according to the relevant countries, parties, end use, and technical parameters. WilmerHale advises clients on all phases of export licensing, including preparation of application materials, advocating for approval, and engaging directly with regulatory authorities amidst intra-agency disputes. Among our export licensing work, we:

  • Obtained Commerce Department licensing for a US aerospace company to transfer technologies for a major aviation project in China.
  • Assisted a client with a controversial licensing application to secure a resolution before the multi-agency Operating Committee and Advisory Committee on Export Policy.
  • Implemented manufacturing license agreements to authorize US industrial suppliers to export ITAR-regulated components and technical specifications to contract manufacturers in Canada and Mexico.

Addressing Deemed Exports

With millions of non-US nationals employed in the US, companies and institutions must consider restrictions on "deemed exports,” in which technical disclosures to foreign nationals are treated as exports to the individual’s home country. Recently, we have:

  • Secured authorizations for an after-market aircraft equipment supplier to disclose technical materials to foreign nationals working in the US.
  • Advised a US information technology manufacturer on regulatory exceptions for certain fundamental research activities conducted in the course of sponsored university research programs.

Strategies for Compliance

We help exporters to implement internal policies and procedures to promote compliance with export and sanctions regulations, which are technically complex and constantly changing. These measures include corporate compliance programs, standardize contractual assurances, technology classification processes, transaction and customer screening, and in-house training and compliance reviews.

Experience in Enforcement

When a compliance issue arises, WilmerHale’s Export Control Group brings extensive experience in internal investigations, administrative enforcement, and defensive litigation in federal courts. We frequently advise clients on matters involving voluntary self-disclosures of export or sanctions violations, and the risks and benefits of self-disclosures. When compliance issues arise in the course of a corporate transaction, we advise clients on the potential impact on the prospective transaction and on the allocation of risks and liabilities between the parties. For example, we have:

  • Prepared voluntary self-disclosures and negotiated settlement agreements with the Treasury, Commerce and State departments.
  • Conducted internal investigations to identify and evaluate potential violations in advance of governmental enforcement proceedings.
  • Intervened in a corporate transaction upon discovering potential liabilities for export violations during due diligence review.

Shaping Export Policy

Export and sanctions policies change in response to evolving foreign policy, national security, and technological developments, among other factors. Recent initiatives include enhanced penalties and validated end user programs to distinguish among entities in controlled countries. We enable clients to participate in legislative and regulatory activities that affect the export restrictions and requirements that affect them. For example, we:

  • Represent a coalition of computer and information technology companies on revisions of controls on high-performance computing equipment.
  • Advise nanotechnology innovators on emerging export control policies.
  • Advise industry participants on potential legislation to replace the expired Export Administration Act.
Perspective, Globally

WilmerHale’s Export Control Group is an integral part of the firm’s comprehensive international and transactional practices. Export control issues are among those addressed in Committee on Foreign Investment in the United States (CFIUS) reviews of foreign acquisitions of US businesses. With a footprint across the US, Europe, and China, WilmerHale brings a global perspective to export control issues. For example, we can address importing countries’ restrictions on incoming cryptographic technologies that are authorized for export from the US. Exports of US-origin technologies from the European Union (EU) may implicate both US and EU export controls, and EU exports may be regulated at both the EU and individual Member State levels. We recently counseled an international auto manufacturer on EU, German and Dutch export control and licensing requirements.

As export sales, outsourcing and cross-border collaborations transform industries and economies, international transactions and technological exchanges remain subject to a global patchwork of export control and economic sanctions regulations. Amid increasing regulatory enforcement, companies and institutions need incisive and thorough advice.

WilmerHale’s Export Control Group is a team of lawyers with the knowledge, experience and global reach to provide comprehensive compliance, licensing, enforcement and policy counsel on export matters to companies and institutions from early-stage companies to universities and large, multinational corporations.

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Contacts

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Hurewitz, Barry J.

Barry J. Hurewitz

Partner

+1 202 663 6089 (t)

barry.hurewitz@wilmerhale.com

Meltzer, Ronald I.

Ronald I. Meltzer

Senior Counsel

+1 202 663 6389 (t)

ronald.meltzer@wilmerhale.com