VOLUNTARY DISCLOSURE POLICY
Proprietors of Distilled Spirits Plants, Bonded Wine Cellars,
Tax Paid Wine Bottling Houses, Brewers, Importers,
Wholesale Malt Liquor Dealers, Wholesale Liquor Dealers,
and Others Concerned:
Purpose. A number of inquiries have been received
regarding the policy of the Bureau of Alcohol, Tobacco and
Firearms concerning voluntary disclosure by the persons or
organizations responsible for violations of laws administered
and enforced by the Bureau. In addition, the Bureau intends as
a general matter to place increasing emphasis on the use of
criminal sanctions, particularly where the mitigating factor of
voluntary disclosure is not present. This circular is issued as
the official statement of ATF policy regarding the voluntary
disclosure of violations or possible violations of the Federal
Alcohol Administration Act and those sections of the Internal
Revenue Code relating to alcoholic beverages.
Basically, the policy is that all persons or business
entities subject to the jurisdiction of the Bureau, are en-
couraged to come forward and voluntarily and fully disclose
their violations of the above statutes.
Such disclosure will
be viewed as a mitigating factor in deciding what action to
take. Such a voluntary disclosure will not result in any
immunity from criminal, civil or administrative action. In
addition, such disclosure will not affect any tax related lia-
bility -- criminal or civil -- under the Internal Revenue Code.
Factors to be considered in terms of possible mitigation are
the speed and completeness with which voluntary disclosure
is made after knowledge of possible violations is brought to
the attention of corporate management, and the steps to be
taken to discipline those responsible for the illicit activities
and to prevent the recurrence of such offenses in the future.
The range of Bureau actions include: admonition or
reprimand; acceptance of an offer-in-compromise; permit
suspension; permit revocation; or referral for civil or
criminal action to the Department of Justice. Actions
against individual corporate officers may in certain cases
be more severe than those taken against the corporation.
An industry member wishing to make a voluntary disclosure
of acts and practices which may constitute violations of the
above statutes should do the following:
1. Upon establishing the existence of possible violations, write
the Bureau stating the intention to make such a full disclo-
sure. Include in that letter a description of the internal
review and audit which the company will make to determine
the full extent of the illicit activities that may have occurred,
a statement as to when that audit will commence and an
estimate of the time which will be required to complete
that review and audit.
2. Start the proposed internal review and audit promptly and
be prepared to modify or expand it to meet suggestions
made by ATF after consideration of the letter of notifi-
cation.
3. Make full disclosure to ATF of all illicit acts and practices
with sufficient detail to permit independent verification
by ATF, furnish ATF a complete report on the internal
review and audit and be prepared to make any additional
investigation or verification suggested by ATF after it has
considered the report.
4. Establish effective internal procedures to prevent recurrence
of violations, including the adoption of policies for taking
company action against employees in the event future viola-
tions are uncovered.
It has been our experience that a mere commitment by top
management accompanied by a warning letter to all sales employees
from the president does not constitute sufficient internal controls,
particularly in a large organization. The illicit and the question-
able practices can be eliminated only by positive action. That
includes giving employees a full set of guidelines to follow, making
them fully aware that the consequences of noncompliance will be
stern disciplinary action, a system of positive checks to make sure
that the employees do in fact follow the guidelines, and retention of
full records of the checks made and disciplinary action, if any,
taken.
ATF will take appropriate action on voluntarily disclosed
violations up to and including a recommendation of criminal pro-
secution where it is warranted. Examples where criminal prose-
cution may be recommended, even where the activities are
voluntarily disclosed, include bribery of public officials, involve-
ment in organized criminal activities, previous obstruction of
justice and particularly flagrant violations of the Federal Alcohol
Administration Act.
The information obtained through voluntary disclosure will
be verified via ATF field investigation to the extent necessary
to insure that a full and complete disclosure has been made.
Particular attention will be paid to determine if the admission
of minor or technical violations is being used to cover up more
extensive or serious violations. Verification will also involve
determining whether the proscribed practices have been dis-
continued. Finally, an inquiry will be made into whether
adequate internal controls have been established to prevent
recurrence of the practices. These field investigations will be
carried out by personnel of the Regulatory Enforcement or
Criminal Enforcement Divisions, as appropriate.
If during the course of reviewing the disclosure it becomes
apparent that the disclosure is inaccurate or incomplete in any
respect, ATF will initiate a full investigation of the trade
practices of the industry member. If evidence disclosed by
such an investigation indicates that any such omissions or in-
accuracies were deliberate, the disclosure will not be con-
sidered a mitigating factor in determining what action will be
taken by ATF. Further, consideration will be given as to
whether the omissions or inaccuracies would constitute an
additional charge of obstruction of justice.
Information voluntarily disclosed to ATF will be made
available to other Federal and State agencies as appropriate.
Finally, the voluntary disclosure procedure will not serve
to terminate or delay an investigation which has already been
initiated at the time a commitment is made, nor bar investi-
gations of offenses involved in the disclosure. Ordinarily
ATF will not initiate a new investigation for a reasonable
amount of time to give the industry member a chance to conduct
the internal audit. ATF, however, retains the discretion to do
so if deemed by it to be appropriate.
Inquiries. Inquiries concerning this Circular should
refer to its number and be addressed to the Assistant
Director (Regulatory Enforcement), Bureau of Alcohol,
Tobacco and Firearms, 1200 Pennsylvania Avenue, N.W.,
Washington, D. C. 20026.
Director |