BIS, FinCEN Hoping to Publish Another Joint Alert Next Year, Official Says
A recent joint alert by the Commerce and Treasury departments has been a boon to industry and the government, and has given export control officers more leads to track down potential Russia violations, said Matthew Axelrod, Commerce’s top export enforcement official. Axelrod said the alert has been so successful that the two agencies are hoping to publish another one next year.
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“We’re really happy with how that went,” Axelrod, the Bureau of Industry and Security's assistant secretary for export enforcement, said during an event last week hosted by the American Bar Association. “We're working with [Treasury’s Financial Crimes Enforcement Network] to see if we can do some sort of follow up with them to build on the success there,” possibly “sometime in 2023.”
The alert, published in June, was expected to ​signal new government expectations for banking industry sanctions compliance and put companies and entities “on notice” about the types of red flags they should be monitoring for potential Russian sanctions and export control evasion tactics (see 2210060043). Lawyers advised customers and borrowers of financial institutions that the alert may cause banks to request more information about their export control compliance practices (see 2207130014).
The joint alert created a new code for financial institutions to include in their suspicious activity reports to signal that the activity may be connected to efforts to evade Russian sanctions and export controls. Axelrod said BIS has since noticed “a lot” of reports being filed with that code, which are helping agents track down potential violations.
“We go through them, we look for leads and then we push them out to the field, and then we have things to work based on” those reports, Axelrod said. “I think it's working a lot.”
Although the alert was mainly aimed at the financial industry, Axelrod said the agency has received positive feedback from other sectors. He said freight forwarders have told him they are now closely monitoring for the sanctions evasion “red flags” highlighted in the notice. Some red flags include: entities with “little to no web presence,” “rapid shifts to new purchasers of transactions involving restricted luxury goods” or transactions associated with “atypical shipping routes for a product and destination.”
He added the agency hasn’t yet seen efforts to evade U.S. export controls through crypto payments or other digital currencies, but said it could happen. “It is certainly possible,” Axelrod said, “and even likely that we are going to come across it.”
Axelrod also touched on BIS efforts to improve Russian export control enforcement coordination with other countries. The agency is still hoping to create some type of “international enforcement coordination mechanism,” he said, adding that the U.S. is hoping to start with the European Union (see 2210210029).
“I want to make sure that, over time, those controls that are parallel on paper are implemented in parallel ways and enforced in parallel ways,” Axelrod said. “There isn't currently a multilateral coordinating mechanism, and we're working to try and establish that.”
BIS is also hoping to eventually bring in countries in Southeast Asia and the Five Eyes, Axelrod said, referring to the intelligence alliance the U.S. has with Australia, Canada, New Zealand and the U.K. “I think we're going to start having regular calls with them,” he said of countries in Asia. “We're going at it a bunch of different ways to try and make sure that we're coordinated internationally on the enforcement side.”
The agency is also looking to add overseas export control officers, Axelrod said. BIS is currently hiring for one officer in Taiwan and another in Finland.