On November 6, 2023, the Department of Commerce’s Bureau of Industry Security (“BIS”) and the Department of the Treasury’s Financial Crimes Enforcement Network (“FinCEN”) published a joint notice (“Joint Notice”) to announce a new Suspicious Activity Report (“SAR”) key term for financial institutions when reporting possible attempts by entities or individuals to evade US export controls. This builds on similar efforts by BIS and FinCEN to require SARs for transactions related to transactions that may be involved in evasion of export controls targeting Russia. Continued cooperation between BIS and FinCEN on these types of efforts underscores the expectation of the US Government that financial institutions leverage their sophisticated compliance programs to detect potential non-compliance with export controls.
According to the Joint Notice, financial institutions should use the new key term (“FIN-2023-GLOBALEXPORT”) in SARs to flag transactions that may involve evasion of US export controls, not just those targeting Russia. BIS and FinCEN are still advising financial institutions to continue using the key term (“FIN-2022-RUSSIABIS“) when filing SARs related to potential Russian export control evasion. The agencies previously issued joint alerts in June 2022 and May 2023 about the Russia-focused changes to SAR reporting and Russian evasion activities; our blog posts about these past joint alerts are available here and here. BIS utilizes SARs to uncover violations of US export control regulations.
The Joint Notice highlights the crucial role of financial institutions in adopting a risk-based approach to trade transactions and maintaining vigilance against global attempts to circumvent export controls. This notice includes a list of red flag indicators of export control evasion, particularly those involving advanced and critical technologies, which can also be applied by exporters during due diligence efforts.
In conjunction with the Joint Notice, Assistant Secretary of Commerce for Export Enforcement Matthew S. Axelrod stated, “disrupting the diversion of critical U.S. technologies to nation-state adversaries and malign actors around the globe is our highest priority. This powerful new SAR key term will enable even more BIS investigative and Entity List actions against global threats.”
In the same statement, FinCEN Director Andrea Gacki said, “the purposeful evasion of U.S. export controls, regardless of where it occurs or the adversary it supports, is a serious national security issue. FinCEN is proud to partner with BIS in issuing this Notice and providing financial institutions with a new key term which they can use to file suspicious activity reports when they suspect such activity.”
The authors acknowledge the assistance of Vanessa Keverenge with the preparation of this blog post.