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US Issues Tri-Seal Compliance Note to Highlight how Foreign Persons can be Subject to US Sanctions and Export Controls

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On March 6, 2024, the US Department of Justice (“DOJ”), Department of Commerce’s Bureau of Industry and Security (“BIS”), and Department of the Treasury’s Office of Foreign Assets Control (“OFAC”) jointly issued a compliance note titled “Tri-Seal Compliance Note: Obligations of foreign-based persons to comply with US sanctions and export control laws” (“Tri-Seal Compliance Note“). This note highlights longstanding US sanctions and export controls that apply to non-US companies and individuals as well as the risks of non-compliance by non-US parties. The Tri-Seal Compliance Note addresses legal exposure beyond US persons, addressing how those who violate applicable sanctions or engage with sanctioned entities will be held accountable. This publication follows a Tri-Seal Compliance Note issued in July 2023, which addressed voluntary self-disclosure (see our related blog post here), and one issued in March 2023, which addressed Third-Party Intermediaries and Russia-Related Sanctions (see our related blog post here).

The Tri-Seal Compliance Note serves as a resource for non-US companies and individuals, outlining sanctions and export control requirements and potential consequences for non-compliance. These consequences can be severe, including substantial financial penalties, criminal charges, and even being barred from doing business with the United States. This action reflects the US Government’s focus on strengthening the extraterritorial reach of its sanctions and export control regimes.

To extent they have not already, companies should carefully review the Tri-Seal Compliance Note and assess their potential exposure under US sanctions and export controls. In this note, the US Government recommends a “risk-based approach to sanctions compliance by developing, implementing, and routinely updating a sanctions compliance program.” The Tri-Seal Compliance Note also emphasizes the importance of robust internal controls for managing risks, recommending that companies establish “strong internal controls to govern payments and the movement of goods involving affiliates, subsidiaries, agents or other counterparties.”

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Mr. McMillan's practice involves compliance counseling; compliance programs; licensing; compliance reviews; internal investigations; voluntary disclosures; administrative enforcement actions; criminal investigations; customs inquiries, audits, detentions, and seizures; and trade-compliance due diligence and post-acquisition integration in mergers and acquisitions. His practice includes matters that implicate the US International Traffic in Arms Regulations (ITAR), US Export Administration Regulations (EAR), US National Industrial Security Program (NISP), the US Committee on Foreign Investment in the United States (CFIUS), and equivalent non-US laws. Mr. McMillan regularly advises on and represents clients in matters involving technology, including its control, protection, accidental disclosure, diversion, or unauthorized collection. Mr. McMillan has extensive experience working with companies in the aerospace and defense industry, as well as companies in the Middle East and other parts of Asia.

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Alex advises clients on compliance with US export controls, trade and economic sanctions, export controls (Export Administration Regulations (EAR); International Traffic in Arms Regulations (ITAR)) and antiboycott controls. He counsels on and prepares filings to submit to the US Government's Committee on Foreign Investment in the United States (CFIUS) with respect to the acquisition of US enterprises by non-US interests. Moreover, Alex advises US and non-US companies in the context of licensing, enforcement actions, internal investigations, compliance audits, mergers and acquisitions and other cross-border transactions, and the design, implementation, and administration of compliance programs. He has negotiated enforcement settlements related to both US sanctions and the EAR.

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Eunkyung advices clients on various regulatory compliance and trade issues, concentrating on the US export controls such as the Export Administration Regulations (EAR) and International Traffic in Arms Regulations (ITAR), economic and trade sanctions, US customs and import laws, the US Foreign Corrupt Practices Act (FCPA), and foreign anti-bribery laws.

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