In a recent guidance document the Bureau of Industry and Security newly recommends as a best practice that exporters, reexporters, and transferors of common high-priority list items conduct additional screening of parties to such transactions to prevent diversion to Russia through third countries. Separately, BIS has encouraged industry to use this guidance and other resources to “improve export compliance systems and exercise enhanced due diligence.”
For more information on restrictions on exports to Russia and ensuring your company is in compliance, please contact Kristine Pirnia at (202) 730-4964 or via email.
BIS generally administers export controls on end-users by designating them on one of its public screening lists – e.g., the Unverified List, Entity List, Military End-User List, and Denied Persons List – each of which imposes its own specific set of license or other requirements involving listed parties.
BIS also uses a variety of other mechanisms to notify companies and universities about other parties of national security concern that are not included on any of those lists, such as those that present a risk of diverting items controlled under the Export Administration Regulations to restricted end-uses or end-users in Russia. The new guidance outlines each of these mechanisms as well as the responsibilities of companies and universities to mitigate associated diversion risks.
- Supplier list letters identify foreign parties not on one of the screening lists that have exported to, or facilitated transactions with, destinations or end-users of national security or foreign policy concern and are sent to companies or universities regardless of whether they have previously engaged in transactions with those parties. Recipients should scrutinize transactions with identified parties to determine whether any of the red flags identified in BIS’ “Know Your Customer” Guidance are present. To aid in such determinations these letters generally include additional tailored guidance about red flags to look for and suggested due diligence tips.
- Project Guardian requests ask companies and universities to (1) be on the lookout for transactions with a specific party or inquiries about a specific item and (2) deny (or at least suspend filling) orders in such circumstances and contact their local Export Enforcement field office for guidance on how to proceed.
- Red flag letters inform companies that one of their customers may have, in violation of the EAR, reexported or transferred (in-country) the same type of item that the company previously exported to that customer. Companies and universities have a duty to evaluate red flags and determine whether they can be explained or justified and are encouraged to keep associated records. If a red flag cannot be resolved the transaction should be avoided or a BIS license should be sought. BIS will consider failure to do so as an aggravating factor in any subsequent administrative enforcement action.
- “Is informed” letters notify individual companies and universities of supplemental license requirements applicable to specific items going to specific entities or destinations, or to specific activities of U.S. persons, because of U.S. national security or foreign policy concerns. Recipients who engage in a transaction covered by the letter without the required authorization violate the EAR.
In addition, BIS is now recommending as a best practice screening export transactions against the parties identified by the Trade Integrity Project, an initiative that monitors military and dual-use trade with Russia and displays entities that have shipped common high-priority list items to Russia since 2023. The CHPL currently includes 50 items identified by six-digit Harmonized System codes that Russia seeks to procure for its weapons programs. BIS strongly encourages companies involved in the export, reexport, or transfer (in-country) of CHPL items to screen transaction parties against the list on the TIP website and determine whether any red flags are present before proceeding with transactions with listed parties.
Copyright © 2024 Sandler, Travis & Rosenberg, P.A.; WorldTrade Interactive, Inc. All rights reserved.