Law Firms Preparing for 'Uptick' in DOJ Sanctions, Export Control Enforcement

Although DOJ announced a host of Russia-related indictments and asset seizures last year, recent remarks by Deputy Attorney General Lisa Monaco signaled that the agency’s enforcement efforts will only increase, Akin Gump said. Monaco earlier this month said the agency plans to add 25 new prosecutors to investigate sanctions evasion and export control violations (see 2303070023).

“We expect that DOJ will take the lessons it has learned from these cases and bring them to bear with new focus and intensity in their investigation and prosecution of corporate wrongdoing in the national security space,” Akin Gump said in a March client alert. The firm said it’s preparing for an “uptick in investigative activity and enforcement actions in this area.”

Some lawyers are already seeing the increased DOJ focus. Adam Smith, a trade lawyer with Gibson Dunn and former senior adviser to the director of the Office of Foreign Assets Control, said he’s been responding to subpoenas on behalf of clients “fairly frequently, and certainly more frequently from DOJ than we have seen in years past.”

Smith pointed to Monaco’s remarks last year and earlier this month, when she said “sanctions are the new” Foreign Corrupt Practices Act. FCPA enforcement efforts have received major resources from DOJ over the last 15 years (see 2303030035). “I think you're going to see more and more DOJ action, more and more DOJ interest,” Smith said in a recent interview.

Skadden said the increased “emphasis” on export control and sanctions violations “may require some companies to reassess their compliance programs.” The firm said banks and companies should make sure their compliance programs are “dynamic in response to the novel and expansive use of sanctions and export controls” against Russia.

They should also take into account the March joint compliance alert issued by DOJ, BIS and OFAC, Skadden said, which outlines methods Russia uses to circumvent trade restrictions and describes red flags that compliance officials should be monitoring (see 2303020054). The firm said banks should be training sales employees and other officials who “manage operational risk” to “identify patterns associated” with the Russian sanctions evasion tactics mentioned in the alert.

The alert also mentioned “‘compensation incentives’ as a component to an ‘effective’ compliance program,” Perkins Coie noted. In her remarks earlier this month, Monaco said those incentives could help companies “align their executives’ financial interests with the company’s interest in good corporate citizenship.” Perkins said this could help “shift the burden of corporate malfeasance away from uninvolved shareholders onto those more directly responsible.”

“Nothing grabs attention or demands personal investment like having skin in the game, through direct and tangible financial incentives,” the firm said.

Perkins Coie said companies should consider “carefully updating and evaluating the effectiveness” of their compliance programs and be prepared for more DOJ investigations. “The upshot is that companies can expect that sanctions violations and export controls violations will be increasingly pursued with the same level of resources and vigor that we have come to expect from DOJ with regard to FCPA enforcement,” the firm said.