Law Firm Expects US to Expand Statute of Limitations for EAR Violations
Companies should expect the U.S. to soon expand the statute of limitations for certain export control violations to align with a similar extension for sanctions violations, a law firm said.
President Joe Biden on April 24 signed into law a wide-ranging national security bill that extended the statute of limitations on certain sanctions violations from five to 10 years (see 2404290071 and 2404240043). Steptoe, in a May 2 client alert, said it envisions the U.S. making the same change for violations of the Export Administration Regulations to make sure U.S. enforcement powers are consistent for breaches of both sanctions and export control rules.
Steptoe said the current extension applies only to civil and criminal violations of the International Emergency Economic Powers Act and the Trading with the Enemy Act. And even though IEEPA “forms the statutory foundation for several other types of US government regulatory programs," including certain portions of the EAR, Steptoe said most of the EAR falls under the authority of the Export Control Reform Act of 2018.
"This extension of the limitations period under IEEPA without a corresponding change to ECRA now creates an unusual and challenging disconnect between the basic enforcement authorities underlying the US export controls and sanctions regimes,” the firm said.
“For that reason, we would expect to see a similar change to the EAR limitations period.”
Even if the statute of limitations for EAR violations remains unchanged, the bill affects other IEEPA-based national security programs carried out by agencies other than the Office of Foreign Assets Control, including the Bureau of Industry and Security. Another firm, Akin, said the bill extended the limitation statutes for “multiple existing or forthcoming national security programs” enforced by BIS, DOJ and the Treasury Department, including the BIS Information and Communications Technology and Services program and Treasury’s upcoming outbound investment restrictions.
Another portion of the bill amends existing Iran sanctions law to expand the definition of “significant financial transaction,” Akin said, which is used by the U.S. to apply sanctions on foreign banks dealing with the Central Bank of Iran or another sanctioned Iranian financial institution. That definition now includes transactions by Chinese financial institutions, “without regard to the size, number, frequency or nature of the transaction,” that involve purchases of petroleum products from Iran. It also includes transactions by foreign banks that involve purchase of Iranian unmanned aerial vehicles, UAV parts or related systems, the law firm said.
The bill also revised certain export control and sanctions authorities related to Iran, including language that will expand the Bureau of Industry and Security’s Iran-related Foreign Direct Product rule to cover a wider scope of non-U.S.-produced items, Steptoe said.