Treliant Takeaway…Financial Institutions to Remain Vigilant Against Evasion of Export Controls

FinCEN and BIS Issue Joint Notice Highlighting New Suspicious Activity Report (SAR) Key Term

• Source: fincen.gov

Takeaway:

Following up on prior joint guidance for financial institutions to utilize the key term “FIN-2022-RUSSIABIS” when filing Suspicious Activity Reports (SAR) related to potential Russia-related export control evasion, a new SAR key term “FIN-2023-GLOBALEXPORT” is to be used by financial institutions when reporting potential evasion of U.S. export controls not related to Russia’s invasion of Ukraine.

Ensuring compliance with complex export controls and sanctions regulations is a formidable challenge for many organizations. Key concerns include navigating intricate legal frameworks, monitoring international trade activities, and mitigating the risks of potential violations.

Treliant provides comprehensive support by conducting thorough compliance assessments, helping organizations understand the intricacies of these regulations, and pinpointing potential vulnerabilities. Our team offers tailored solutions, including developing of robust compliance programs, conducting ongoing monitoring, and training to address specific challenges, helps support adherence to regulations, and minimizes the risk of costly violations.

Highlights:

The Financial Crimes Enforcement Network (FinCEN) and the U.S. Department of Commerce’s Bureau of Industry and Security (BIS) have issued a joint notice to further emphasize the importance of financial institutions applying a risk-based approach to trade transactions and remaining vigilant against efforts by parties seeking to evade export controls, globally. The new joint guidance builds upon the Russia related circumstances that were the focus of two prior alerts. The new notice extends beyond Russia-specific efforts and highlights a new key term, “FIN-2023-GLOBALEXPORT” designated for SARs tied to potential U.S. export control evasion. The joint notice also highlights global red flag indicators of export control evasion, with a focus on advanced and critical technologies, that can be applicable to due diligence efforts of exporters in addition to financial institutions.

The notice also gives an overview of the Disruptive Technology Strike Force (DTSF), formed in February 2023, to protect advanced U.S. technologies from illicit acquisition by nation-state adversaries for military modernization and mass surveillance programs. This includes enforcing SAR filing requirements and maintaining proper documentation.

What Does This Mean for Financial Institutions?

The joint notice and new SAR key term, continues to highlight the importance of accurately reporting certain activities of focus in helping to protect national security interests and to promote foreign policy objectives and increases the responsibility of financial institutions to monitor and report attempts at export control evasion. It impacts all financial institutions involved in international transactions, requiring enhanced due diligence, updated training, and effective reporting processes. Compliance burdens continue to increase as institutions work to integrate these new directives into their operational practices.