Employers to the rescue? Potential compliance risks when assisting male employees to leave Ukraine | Orrick, Herrington & Sutcliffe LLP


Companies looking to help their Ukrainian employees safely leave Ukraine should be aware of the potential risks associated with the Foreign Corrupt Practices Act (FCPA) and other US laws and regulations. Following Russia’s invasion of Ukraine, Ukrainian President Volodymyr Zelensky ordered a general military mobilization and declared martial law to ban male Ukrainian citizens between the ages of 18 and 60 from leaving the Ukraine.

Many companies spanning a wide variety of sectors – from banks and law firms to tech companies and nonprofits – employ Ukrainians subject to this ban. Over the past few weeks, several of these companies have hired expert security companies and mercenaries to help their employees and contractors exit Ukraine safely, including providing visa assistance and money. According to reports, these “evacuation efforts have been complicated by Ukraine’s decree that most men between the ages of 18 and 60 must remain in the country”.

Given the turmoil in Ukraine, the willingness of employers to help employees leave Ukraine safely is understandable. But in such efforts, companies should be aware of the potential legal risks involved, if their assistance results in employees defying Ukraine’s decree on martial law. In addition to the risk of violation of Ukrainian law, risks may arise under the FCPA, money laundering laws, False Claims Act, 18. USC Section 1001 (False Statements to Government Officials), immigration and sanctions regulations, not to mention internal corporate compliance. Strategies.

FCPA

Two types of FCPA liability may arise from employers’ efforts to facilitate the extraction of Ukrainian male employees from Ukraine. First, the anti-bribery provision prohibits the bribery of foreign public officials to obtain or retain business by U.S. persons and companies, U.S. and foreign companies listed on U.S. stock exchanges or that are required to file periodic reports with the SEC, and certain foreign persons and companies operating in the United States. The FCPA also expressly prohibits corrupt payments made by third parties or intermediaries. Because extracting employees from Ukraine may be considered a business advantage, the FCPA’s bribery provision may apply in this context. Indeed, we understand that FCPA issues involving comparable scenarios have arisen before.

In addition, the books and records provision of the FCPA requires that public companies (1) establish and maintain books and records that accurately and fairly reflect the transactions of the company, and (2) design and maintain an adequate system internal accounting controls. As a result, a public company risks liability if it inaccurately records payments made to secure extractions of Ukrainian employees, or if such payments are made in violation of anti-corruption policies or inconsistent with anti-corruption controls. -corruption.

International money laundering

Employers also risk being held liable under money laundering laws, in particular section § 1956(a)(2) which criminalizes international money laundering transactions. Using US financial institutions to promote or conceal the proceeds of certain “Specified Unlawful Activities” (SUA) is a crime. There are over 200 SUAs that can serve as predicates for a money laundering charge. They include bribery, fraudulent immigration actions, and certain offenses in violation of the laws of a foreign country. The risk of liability exists even when the underlying criminal activity occurs overseas and the only activity taking place in the United States is wire transfers. A money laundering charge may accompany other charges or may stand alone.

Misrepresentation to U.S. Government and Immigration Laws

There is a risk that if an employee of a company makes false statements to a U.S. immigration official to obtain U.S. immigration status, either orally or in writing, that employee could be held liable under the 18 USC § 1001 (misrepresentation) or various immigration fraud statutes.[1] Many people have been convicted of making false statements to immigration officials, including making false statements orally and on written customs forms. There are even more cases where misrepresentation to immigration officials constitutes immigration fraud. Importantly, less than 18 USC § 2 (aiding and abetting); 18 USC § 371 (conspiracy), employers could also face a risk of liability, if their efforts were construed as knowingly aiding and abetting or conspiring to aid their employees in making false statements in the employment process. immigration. Immigration fraud can be a separate offense or form the basis of a money laundering charge.

Misrepresentation Act

Employers who are U.S. government contractors are exposed to additional liability risks under the False Claim Act (FCA) if they submit false claims to the U.S. government in an attempt to conceal improper payments made for extract Ukrainian employees from the country. The FCA prohibits, among other things, making a false statement to the United States government, creating or using a false record or misrepresentation for a false statement, or conspiring to do so. Recently, a government contractor faced liability from the FCA when his bribery scheme caused another government contractor to submit false invoices to the US government. And there have been other instances where companies have faced dual FCPA/FCA allegations for bribery schemes in the United States and abroad.

Risks of sanctions

In response to Russia’s invasion of Ukraine, the United States and its allies imposed sweeping and unprecedented sanctions against Russian banks, entities and individuals. Certain regions of Ukraine are also subject to full embargo restrictions. If employers transact with individuals or companies associated with sanctioned individuals, firms or financial institutions, or in those embargoed regions, they risk sanctions based on a strict accountability standard. This means that, in many cases, a US person can be held civilly liable for sanctions violations even without knowledge or reason to know that they were engaging in such a violation.

Since Russia’s invasion of Ukraine, the DOJ has unveiled its first-ever criminal indictment for violations of Crimea-related sanctions. With the new KleptoCapture Task Force tasked “to investigate and prosecute violations of new and future sanctions imposed in response to the invasion of Ukraine”, enforcement activity will increase in the near future.

Overall Application Risks

The situation in Ukraine is tragic and employers rightly and admirably want to protect Ukrainian employees and their families. The United States and its allies have come together in support of Ukraine and its people. Governments provided humanitarian and military aid. Millions of people around the world donated money, cryptocurrency and food, volunteered their time and demonstrated in solidarity. At the same time, the United States and its allies clearly disapproved of Russia’s actions and joined forces to impose sanctions and enforcement efforts.

In this context, the US government may not be keen on invoking the laws discussed above to prosecute companies that help their Ukrainian male employees get to safety. It is more likely that the government will seek to investigate and prosecute “those whose criminal acts enable the Russian government to continue this unjust war”.

Nonetheless, companies should think twice before engaging third parties to facilitate employee extraction. Companies that decide to take the risk should take precautions, including conducting thorough third-party verification and investigating the methods used by affiliates or third-parties in the field to facilitate employee evacuations. They must also adhere to their internal compliance policies and follow escalation and exception processes where applicable.


[1] 18 USC § 1546 (prohibits immigrant and non-immigration visa fraud, including the use of fraudulent immigration documents or any misrepresentation or misrepresentation to obtain visas or other immigration documents) ; 18 USC § 1028 (establishes a general criminal penalty for document fraud in connection with identification documents and document authentication functions); 8 USC § 1324(c) (establishes civil penalties for immigration document fraud).

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