‘Traditional’ Export Due Diligence Isn't Enough, BIS Leader Says

“We are asking the private sector to step up more than it has,” Undersecretary Alan Estevez said March 27 in opening remarks at the BIS Update Conference in Washington. “Traditional due diligence is not sufficient -- especially if your company or your clients have complicated distribution networks.”

Estevez said BIS is looking to work more closely with companies to “enhance due diligence to detect efforts to evade our controls.” That has included new partnerships with the Treasury and State departments to share information with exporters about “bad actors” sending items to Russia or Iran, Estevez said, especially in the semiconductor supply chain.

He said the agency detained 559 shipments worth over $284 million that were destined to Russia between Feb. 24, 2022, and Dec. 31, 2023. The agency is hoping closer collaboration with industry and better due diligence can help stop more illegal exports.

“No one wants American-designed items turning up in Iranian drones or weapons used by Russia to kill civilians in Ukraine or attack Ukraine’s critical infrastructure,” he said. “But it’s happening. This is a global challenge, and we all need to do more and think creatively.”

Estevez said companies “need to show a commitment at the highest levels and continue to devote resources” to their compliance efforts. He stressed the importance of “detecting red flags, vetting intermediaries, tracking controlled products, and sharing information and best practices.”

Commerce Secretary Gina Raimondo, in recorded remarks played during the conference, also called on companies to conduct “extensive due diligence to spot red flags when the ultimate end-user is unknown.” She urged companies to reach out to BIS with questions or tips about companies evading the restrictions. “We cannot allow U.S.-designed components in Russian- or Iranian-based systems on the battlefield in Ukraine," she said.

Estevez also said the agency is working to convince more trade partners to impose similar export controls, including on semiconductor-related exports to China that BIS released in 2022 and updated last year (see 2402020050). Although the U.S. has since convinced the Netherlands and Japan to impose some similar measures, chip companies have criticized BIS for not first imposing the controls multilaterally (see 2311150029).

But Estevez said “history has shown that the United States often needs to lead.” The Biden administration “places the highest priority on working with our allies to make sure we are not alone,” he said. “This remains an important priority as we continue to assess these technology-based restrictions.”

Speaking more broadly about other dual-use export controls, Estevez said U.S. allies are examining the “legal authorities” they may need to introduce multilateral restrictions outside the Wassenaar Arrangement, a consensus-based regime that has been hampered in recent years by Russia’s membership (see 2310050026). BIS has said it’s studying ways to create a new multilateral export control framework, although agencies disagree on the best path forward (see 2403060042 and 2312080053).

“We will continue working to bring others on board and further align our controls as we seek to address additional critical and emerging technologies,” Estevez said.