FinCEN and BIS Issue Joint Notice & Key Term for Global Export Control Evasion

On 6th November, The Department of Commerce’s Bureau of Industry and Security (BIS) and the U.S. Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) declared a joint notice on Suspicious Activity Report (SARs) and a key term “FIN-2023-GLOBALEXPORT” for financial institutions. The notice provides a way for financial institutions to report suspicious activities or violations of the US export controls globally, aside from the Russia-Ukraine conflict, as per FinCEN press release.

The joint notice is a collaborative step by FinCEN and BIS to strengthen export laws and cut off worldwide non-compliance with the US export regulations.

The issued notice highlights the significance of financial institutions adopting a risk-assessment approach in trade transactions and staying alert to any global attempts to evade export laws. The notice also points out the warning signs of evading export laws worldwide, focusing on key technologies, and serves as guidance for both export companies and financial institutions.

The director at FinCEN, Andrea Gacki said,  “FinCEN is proud to partner with BIS in issuing this Notice and providing financial institutions with a new key term which they can use to file suspicious activity reports when they suspect such activity.”

In June 2022 and May 2023, FinCEN and BIS issued warnings for financial institutions to stay alert for any attempts made by Russia to avoid the US export restrictions due to its invasion of Ukraine.

BIS relies on SARs to scrutinize potential breaches of the US export laws. The Disruptive Technology Strike Force led by BIS, is prioritizing investigations where high-technology such as semiconductors, quantum, and hypersonics are employed by other countries, to challenege the US military power or to conduct mass surveillance.

Adhering to sanctions is crucial for regulatory compliance, which involves checking no people, entities or transactions are under sanctions by the use of up-to-date information and effective screening technology.

Importance of FinCEN Notice in Sanction Screening

There are clear guidelines on which HS codes are to be looked for while monitoring for transactions related to export and import allows helps Financial institutions in sanction screening.

The latest FinCen update guides FIs on how they can report SARs related to violations of global export controls which are not limited to Russia.

Sanction screening refers to verifications of individuals, entities, and transactions to confirm they are not restricted by government-issued sanctions or trade restrictions. In the financial sector, sanction screening acts as a measure to detect and prevent money laundering.  Government and private bodies as well as regulatory authorities responsible for managing sanction lists and keeping them up-to-date.

Also Read: The Role of Sanctions in Due Diligence