Key Takeaways:

  • Launch of the Disruptive Technology Strike Force (DTSF) signals increased enforcement targeting certain advanced technologies.
  • DTSF embodies the "whole of government" approach to export enforcement, combining representatives from the Department of Justice, Homeland Security and the Commerce Department's Bureau of Industry & Security.
  • DTSF leadership encourages voluntary disclosure and urges greater collaboration between government and the private sector to prevent and detect unlawful exports of key technologies.

On April 28, 2023, U.S. Attorney for the District of Massachusetts Rachel Rollins, joined by national and local federal enforcement officials from the Disruptive Technology Strike Force (DTSF), described the DTSF mission and provided guidance on complying with export enforcement reforms at the Massachusetts Export Center's event, "The Disruptive Technology Strike Force: A New Era in Export Enforcement." The DTSF was launched as a collaboration between the Department of Justice and the Department of Commerce in February 2023 as part of the "whole-of-government approach" to targeting illicit actors, strengthening supply chains, and protecting critical technologies from being acquired or used by nation-state adversaries such as China, Russia, Iran, and North Korea. Led by the Justice Department's National Security Division and the Commerce Department's Bureau of Industry and Security (BIS), the DTSF operates through collaboration between and among the FBI, Homeland Security Investigations and 14 U.S. Attorney's Offices in 12 cities. This event was the first in what DTSF promised to be a "roadshow" series of similar presentations around the country.

One of the DTSF's goals is to foster partnerships with the private sector in protecting U.S. advanced technologies from illegal acquisition and use by nation-state adversaries. The DTSF explained that the advanced technologies on which they are focused raise national security concerns due to their ability to help boost nation-state adversaries' military capabilities or mass surveillance programs that enable human rights abuses. Examples of advanced technologies drawing DTSF attention include those related to supercomputing and exascale computing, artificial intelligence, advanced manufacturing equipment and materials, quantum computing, and biosciences. Local DTSF team leaders consistently stressed their willingness to meet with members of the private sector informally to gain a better understanding of the trade landscape. Taking a cue from the Department of Homeland Security's "see something, say something" motto, DTSF underscored its interest in receiving leads – if a company receives an inquiry that seems strange or suspicious, they advised that the company should not only trust its compliance "instincts" but also requested that the company pass along that lead to DTSF.

National and local DTSF leaders, flanked by prosecutors from the U.S. Attorney's Office in Massachusetts, reiterated the importance of voluntary self-disclosure and cooperation, focusing heavily on the recent memorandum issued by the U.S. Assistant Secretary for Export Enforcement, Matthew Axelrod (the "Axelrod Memo"). As described in a previous alert, the Axelrod Memo provided substantial guidance as to the approach BIS will take to voluntary self-disclosures. In response to questions suggesting that the tone of the Axelrod memo was more "stick" than "carrot," DTSF resisted that characterization and instead focused on a distinction between compliance "mistakes" (which it described as low level errors that are bound to happen in this complex compliance landscape) and "willful" misconduct (which it described as intentional misconduct motivated by profit that puts U.S. national security and foreign policy at risk). Of course, there are a wide range of situations that fall somewhere in-between, and the officials stressed that each situation would be evaluated on its own merits. One important message, though, was that DTSF leaders recognized that how they acted in individual cases would be seen and understood by the private sector as sending a message, and that acting disproportionately in a given situation could have a chilling effect on the willingness of companies to make a voluntary disclosure in the future. Using the example of the SAP settlement, the team underscored that voluntary disclosure is taken into consideration in determining whether to bring a criminal charge against a company, as well as in the consequences imposed in any non-criminal resolution. They asked companies to turn to the local DTSF about suspicious activity, consult with inside and outside counsel and make necessary voluntary disclosures. Furthermore, they encouraged companies to provide leads on other actors, including competitor companies who are engaging in misconduct, stating that this would help to level the playing field for those companies that are trying to play by the rules.

Finally, the DTSF team clarified that enforcement activity will certainly go beyond the 12 cities where DTSF cells are located. They also explained that the six types of critical technologies listed by the Justice Department and Commerce Department are the current starting point, but that industry should expect that list to evolve and develop over time. They also signaled that enforcement in this area is an administration priority, that more resources are being deployed, and that international cooperation is increasing, so that we should expect more enforcement actions against companies that violate export laws and regulations.

Now more than ever, companies faced with choosing whether to voluntarily disclose violations of the export control laws should carefully consider their options and engage counsel when in need of guidance. Attorneys from Foley Hoag's International Trade & National Security team have been involved in hundreds of investigations related to export controls and sanctions laws, and are able to provide comprehensive, practical support to exporters who find themselves in violation of those laws.

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