More than one-third of the defense export end-use cases closed in fiscal year 2024 were unfavorable, according to an annual report from the State Department’s Directorate of Defense Trade Controls on the performance of DDTC’s “Blue Lantern” end-use monitoring program. The report’s findings highlight the importance for defense exporters to maintain effective compliance procedures.
The Blue Lantern program aims to minimize the risk of diversion and unauthorized use of U.S. defense articles, combat illicit arms trafficking, uncover violations of the Arms Export Control Act, and build confidence and cooperation among defense trade partners. Blue Lantern end-use monitoring includes pre-license, post-license/pre-shipment, and post-shipment checks to verify the bona fides of foreign consignees and end-users, confirm the legitimacy of proposed transactions, and provide reasonable assurance that (1) the recipient is complying with U.S. government requirements with respect to use, transfers, and security of defense articles and services and (2) such articles and services are being used for the purposes for which they are provided.
DDTC maintains a watch list with more than 241,000 entities that is used to flag parties on export authorization applications for possible Blue Lantern checks. In FY 2024 DDTC reviewed 102,907 watch list name matches and made 2,417 new entries and 3,239 modifications.
According to the report, in FY 2024 DDTC initiated Blue Lantern checks on 292 export authorizations or authorization requests in 70 countries. Europe accounted for the largest share of these initiations at 34 percent, followed by East Asia and the Pacific at 19 percent, the Near East and the Western Hemisphere at eight percent each, South/Central Asia at two percent, and sub-Saharan Africa at one percent.
Of the 341 Blue Lantern cases closed in FY 2024, 123 were determined to be unfavorable. The Near East had the highest rate of unfavorable checks at 55.3 percent, followed by Europe at 41.4 percent, sub-Saharan Africa at 40 percent, East Asia and the Pacific at 36.2 percent, South/Central Asia at 16.7 percent, and the Western Hemisphere at 14.3 percent.
The report states that the leading causes of an unfavorable finding in FY 2024 were refusal to cooperate (32 cases), derogatory information/unreliable foreign party (27), unlicensed party (22), lack of secure storage facilities (11), unable to confirm order or receipt of goods (10), unauthorized reexport/retransfer (4), and inability to confirm existence of foreign party (1).
Finally, the report notes that unfavorable cases resulted in several types of actions, including returning without action or denying export license applications, removing parties from licenses, updating the DDTC watch list, or referring cases to the Office of Defense Trade Controls Compliance.
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