BIS Banking Guidance Signals Enforcement 'Likely on the Horizon,' Law Firm Says
Recently issued Bureau of Industry and Security guidance that outlined the agency’s due diligence expectations for banks (see 2411010030) was a “warning shot” to financial institutions that they must take export compliance seriously, Meshkat Law said in a November client alert. The firm said the new guidance dispelled “any notions that compliance with the [Export Administration Regulations] is just for exporters.”
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The guidance was partly meant to spread awareness among banks that they could be at risk of violating the EAR’s General Prohibition 10, which restricts companies from financing or servicing any item subject to the EAR if they have knowledge an EAR violation has occurred, is about to occur or is intended to occur. Meshkat said it has “yet to see” the government publicly penalize a financial institution for violating General Prohibition 10, but that could soon change.
“This new BIS Guidance geared specifically for [financial institutions] suggests such enforcement actions are likely on the horizon,” the firm said.