In the News: Higher Penalties for US Export Violations; Shein IPO Dilemma; and Further US Restrictions on China Investments

Expansion of the U.S. Export Control Regime

Matthew Axelrod, the Assistant Secretary for Export Enforcement at the U.S. Department of Commerce's Bureau of Industry and Security (DOC), announced last week that U.S businesses will face higher penalties for export violations. In remarks made at the New York University School of Law during a corporate compliance and enforcement event, Axelrod said U.S. businesses violating export rules will receive "stiffer penalties" to prevent future violations involving foreign countries—specifically China, Russia and Iran, according to a report by Reuters. In addition, the Wall Street Journal reported that these export controls aim to restrict material sent to Russia that could be used in its war against Ukraine, and to block China's access to advanced semiconductors that could be used in military applications. The expansion of the export control regime and economic sanctions has emerged as a key component of U.S national security policy.

In addition to higher penalties for export violations, Axelrod also mentioned the Commerce Department's voluntary self-disclosure policy, which bears two new clarifications: If a U.S business discovers an export violation and does not alert the DOC, this would be counted as an aggravating factor in their penalty guidelines. Furthermore, if a U.S. business chooses not to investigate an export violation problem in their business, that would also be considered an aggravating factor.