What's Happening?
On October 27, 2026, the U.S. Department of Justice (DOJ) announced a non-prosecution agreement (NPA) with Extreme Networks, Inc. to resolve sanctions and export control violations. The violations involved sales to Moscow Machinery Building Plant Avangard
(MMZA), a Russian weapons manufacturer whose owner has been on the Specially Designated Nationals and Blocked Persons List since July 2014. Between March 2018 and March 2022, Extreme Networks used a Russia-based subsidiary and a third-party distributor to fulfill purchase orders from MMZA, while concealing MMZA’s role. The company also filed false export information, impeding the enforcement of U.S. sanctions and export controls. This resolution marks the first “near miss” NPA under DOJ’s Department-wide Corporate Enforcement and Voluntary Self-Disclosure Policy (CEP) and the first under the CEP announced by the National Security Division (NSD). Extreme Networks will forfeit $487,860.92 in proceeds and pay a criminal fine of the same amount. Additionally, the company agreed to a $1,529,685.00 settlement with OFAC for parallel conduct, with a portion satisfied by the DOJ fine.
Why It's Important?
This case highlights the U.S. government's stringent enforcement of sanctions and export controls, particularly concerning entities linked to national security interests. The resolution with Extreme Networks underscores the critical importance of robust compliance programs for U.S. companies operating internationally, especially in regions with heightened geopolitical risks. The fact that this is the first “near miss” NPA under the DOJ’s new CEP provides valuable insight into how the Department distinguishes between imperfect self-disclosures and outright failures to disclose. It signals that while timely and voluntary self-disclosure is preferred for maximum credit, companies that disclose under imminent threat of public exposure can still receive substantial benefits, such as an NPA instead of more severe penalties. This approach aims to encourage companies to come forward even when their disclosures are not perfectly aligned with the CEP's ideal criteria, thereby enhancing the overall effectiveness of U.S. sanctions enforcement and protecting national security and economic interests.
What's Next?
Extreme Networks is required to implement significant remediation measures as part of its NPA. These include terminating its relationship with the third-party distributor involved in the illicit sales, improving screening procedures, hiring additional compliance personnel, and implementing enhanced diligence procedures for mergers and acquisitions. These actions are designed to prevent future violations and strengthen the company's internal controls. For other U.S. companies, this resolution serves as a clear directive to assess and bolster their internal reporting and escalation procedures for potential misconduct across all areas enforced by the DOJ. The case emphasizes that timely disclosure is paramount, urging companies to ensure their screening, monitoring, and internal reporting mechanisms can identify potential violations early. Even if a disclosure is not perfectly timely, the “near miss” NPA demonstrates that prompt disclosure, coupled with cooperation and remediation, can still lead to more favorable outcomes compared to non-disclosure. Companies should anticipate continued strict enforcement of sanctions and export controls by the DOJ and OFAC.
Beyond the Headlines
The Extreme Networks case reveals a nuanced approach by the DOJ in applying its Corporate Enforcement and Voluntary Self-Disclosure Policy. While the CEP prioritizes timely self-disclosure, the “near miss” provision acknowledges the complexities companies face in identifying and reporting misconduct. This flexibility suggests a pragmatic shift in enforcement strategy, aiming to incentivize cooperation even when ideal conditions for disclosure are not met. The fact that the misconduct involved national security-related sanctions but was not treated as an aggravating circumstance indicates that the DOJ's assessment focuses more on the egregiousness and pervasiveness of the misconduct within the company, rather than solely on the category of offense. This could encourage companies to disclose violations that might otherwise be concealed due to fear of severe repercussions, ultimately leading to more effective enforcement and a stronger compliance culture across industries. The case also highlights the ongoing challenges of supply chain transparency and the need for robust due diligence, especially when dealing with international partners and complex distribution networks.
