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Arnold & Porter Discusses New National Security-Based Restrictions on Corporate Activity

Recently, the whole of the U.S. government has showcased its commitment to addressing the national security implications of certain corporate activities. On September 11, 2023, the U.S. Department of Justice (DOJ) tapped its first National Security Corporate Enforcement Chief. The previous week, the Congressional Research Service published two updated reports surveying the United States’ existing national security legal framework, in light of recent and anticipated expansion of U.S. national security laws. The U.S. government increasingly views corporate activities involving advanced technologies as posing one of the “most direct, serious threat[s]” to the national security of the United States, thereby thrusting the private sector to the frontlines of the struggle for dominance in the new global order. This means that every business decision — from operations to employment, information and communications technologies and services sourcing, sales, distribution, mergers and acquisitions, and more — now runs the risk of being scrutinized by the U.S. government under a powerful national security lens.

Criminal and administrative investigations into corporate activities such as sanctions and export control evasion, corruption, money laundering, and cyber- and crypto-enabled crimes are increasingly — now routinely — said to raise national security concerns. Companies are, in turn, being forced to find quick solutions to address and, in some cases, disclose these highly sensitive issues as they arise. With national security concerns now on every front of their operations, companies must be prepared to navigate these challenges by seeking guidance from expert counsel to understand how to address the dynamic environment they face.

Put simply, any entity that engages in cross-border transactions, relies on an international supply chain, hires foreign nationals, or develops or creates advanced technologies runs a substantial risk of increased administrative enforcement activity and restrictions. DOJ prosecutors will also be watching closely. Principal Associate Deputy Attorney General Marshall Miller recently remarked:

Since October 2022 — so over the last seven months — roughly two-thirds of [DOJ’s] major corporate criminal resolutions have implicated United States national security. The charges have varied, from sanctions violations to terrorism crimes and money laundering for Russian interests, and so have the corporate defendants, which have operated in industries from construction and finance to agriculture and telecommunications. But the trend is real, and we’re committed to dedicating the resources necessary to counter the threat.

The message is clear: sanctions are the new Foreign Corrupt Practices Act (FCPA). DOJ has dramatically increased its resources targeting criminal export controls and sanctions enforcement, just as it did 15 years ago with respect to the FCPA. DOJ’s increased investment in FCPA enforcement paid off in the landmark Siemens AG guilty plea and criminal fine, and has continued to pay dividends in investigations, prosecutions, and penalties ever since. Many clues indicate that “national security” restrictions are next.

Consider just the first eight months of 2023:

Moreover, these measures must be considered through the lens of DOJ’s updated “Evaluation of Corporate Compliance Programs” document, which has become ever more expansive and comprehensive over time. Combine this U.S. government push towards “national security” compliance with the unprecedented current emphasis on corporate voluntary self-disclosures, and ever-increasing financial incentives for whistleblowers, and you get stakes for companies that have never been higher.

This new emphasis on cooperation, DOJ’s willingness to use additional tools such as the False Claims Act as levers to bring companies to heel, and more recent actions such as BIS’ largest standalone administrative resolution in the Seagate Technology case, demonstrate that the old way of looking at enforcement is no longer sufficient. Companies that assume that Commerce merely presents regulatory issues — or that the prospect of sanctions transgressions can be cured by software — are assuming an unacceptable level of risk. With DOJ prosecutors increasingly cohabitating the compliance space with regulators, DOJ is sure to look to bring action in the courtroom, and not just the boardroom.


A deluge of national security-premised executive orders, and competing regulatory and congressional actions, has coincided with an intensified DOJ focus on corporate liability and voluntary self-disclosures. In this dynamic and risky legal environment, companies must proactively seek to insulate their business interests from the risk of government intervention. A simple “wait-and-see” approach relying on conventional business decisions will not survive the next generation of enforcement actions. The financial costs of failure to make a voluntary self-disclosure can greatly enhance the risk for corporations, officers, and employees alike.

A comprehensive “national security survey” by a team of expert counsel would signal to shareholders and the U.S. government a corporate commitment to U.S. national security priorities, would encourage public and private investment, and could forestall further regulator and prosecutorial intervention. Such a top-to-bottom survey of a company’s risk profile should include a review of all corporate activities that implicate U.S. national security or national security-adjacent risks, including potential violations of human rights, Anti-Money Laundering/Countering the Financing of Terrorism standards, and transborder flows of personal data.

Counsel with deep expertise and direct government experience will be integral in helping companies stay ahead of the compliance game as there already exist a vast number of complex national security related laws — the International Emergency Economic Powers Act, FARA, the Export Control Reform Act, the Arms Export Control Act, the FCPA, and the Economic Espionage Act, to name a few — and the watchdogs seem ready to hunt.

This post comes to us from Arnold & Porter Kaye Scholer LLP. It is based on the firm’s memorandum, “The Battle Lines Are Drawn: What Industry Should Expect From New National Security-Premised Restrictions,” dated September 12, 2023, and available here.

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