BIS Hoping to Expand Footprint Amid Rise in Workload, Export Control Evasion Tactics
The Bureau of Industry and Security is hoping to expand the number of officers it sends overseas and increase collaboration with other investigative agencies, partly to help with a larger workload and a rise in new export control evasion trends. Agents said BIS has seen a steady increase in work since the enactment of the Export Control Reform Act of 2018, which has been made more complex by the rise in cryptocurrency schemes, increasingly sophisticated uses of front companies and ransomware attacks.
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BIS’s Office of Export Enforcement is specifically hoping to send more officers to South America if the agency receives enough money in the next congressional funding cycle, said James Brigham, acting special agent in charge of OEE’s Boston field office. He also said the agency hopes to continue a “growing trend” wherein BIS agents are partnered with the FBI and the Defense Department’s Defense Criminal Investigation Agency. “The next budget for [Fiscal Year] 2023 hopefully will give us more funding to actually add to that,” Brigham said during a Jan. 28 conference hosted by the Massachusetts Export Center.
BIS has also hired a “significant” number of export analysts during the last decade, and Brigham said he hopes more can be stationed in field offices outside of Washington. He said the agency has about 130 total field agents, with another “30 to 40” at BIS headquarters. “I can see that expanding with our next budget,” he said.
The agency’s expansion comes amid an increasing workload over the past several years resulting from ECRA. Since 2018, BIS has worked through a flurry of new export regulatory activity, including the transfer of export oversight for certain firearms from the State Department to the Commerce Department in 2020 (see 2001170030), a surge in Entity List additions and a range of new regulations, such as the military end-user list in 2021 (see 2012220027 and 2102190042).
From 2019 to 2020, BIS received 5,000 additional export license applications, saw export-related convictions rise by about 20% and nearly doubled its administrative penalties, Brigham said. “There's an obvious correlation between getting these new authorities and these new responsibilities,” he said, “and the amount of work that we've been doing.”
As BIS has increased its penalties and Entity List activity, criminals are “getting a little bit more smart,” Brigham said, including with how they structure their businesses. “They’re getting more sophisticated, using multiple locations, multiple front companies, multiple email addresses to circumvent the regulations and to hide the true destination of their goods.”
Canada, for example, has been an increasingly popular home for front companies owned by people hoping to export U.S. goods to China and Iran, Brigham said. “That’s been on our radar,” he said, “but it's becoming more active.”
Some exporters are also increasingly turning to “nontraditional banking” activities, including Bitcoin and cryptocurrency schemes, to avoid export controls, Brigham said. “This has been going on for quite some time, but it's just starting to come into focus in the world of export enforcement.”
Stephen Valentine, a special agent in OEE’s Boston field office, said he is increasingly seeing cyber hackers use ransomware to steal export-controlled technology. “Maybe your company or technology wasn't necessarily targeted, but your data was stolen in a ransomware attack and then exported, which of course can bring liability to the company,” Valentine said. He expects cybercrime to be a significant part of export enforcement “for the foreseeable future.”
Both Brigham and Valentine urged exporters to share tips and concerns with field agents, saying they welcome “informal’ conversations. “Every time you reach out, it doesn't have to be a formal voluntary self-disclosure," Valentine said. “The vast majority of our work day-in and day-out is not hunting U.S. companies. It is looking to establish those relationships and get your assistance."
Even so, Brigham said companies should always have a “plan for when mistakes are made” and should always make their “export compliance bible” available to employees, whether it’s in a shared computer drive or in a physical binder. The best export compliance programs usually have “senior management buy-in,” Brigham added. “That seems to be when the export compliance program really takes shape and has a foothold in the company.”