On April 24, 2024, the 21st Century Peace Through Strength Act became law. Although the Act contains many key national security policies, including aid for Ukraine and Israel, one provision that has been overlooked is a change to the statute of limitations for two key sanctions laws. More specifically, the Act increases the statute of limitations under the International Emergency Economic Powers Act (IEEPA) and the Trading with the Enemy Act (TWEA) from five years to ten years. With this change, the U.S. Department of the Treasury's Office of Foreign Assets Control (OFAC) and the Department of Justice can initiate enforcement actions for potential violations extending much further back in time.
Companies will need to account for this change when implementing sanctions compliance programs. Recordkeeping policies should be updated to ensure that companies keep ten years' worth of transactional and compliance data to navigate future enforcement cases. Although the Act did not explicitly change recordkeeping requirements in the law, in practice companies are wise to change internal recordkeeping because regulators can now ask about compliance going back ten years. Internal investigations and voluntary self-disclosures will need to expand to review ten years of compliance as a best practice to cover the broader statute of limitations. Given already significant costs for internal investigations looking back five years, the new ten-year statute of limitations may change the calculus for conducting and scoping internal reviews. Additionally, in the mergers and acquisitions context, acquirers will need to expand due diligence to look back further in time, and seek representations and warranties that account for the longer statute of limitations.
It remains to be seen whether a similar expansion of the statute of limitations is forthcoming under export controls, including the Export Administration Regulations, to align with the Act's changes. Many companies treat export and sanctions compliance under the same policies and procedures based on significant overlap between compliance with such laws. As a result, companies implementing changes to their sanctions compliance practices to account for the Act may also want to consider extending such changes to export controls compliance as well.
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