International Trade Law News

Published by Jacobson Burton Kelley PLLC

In an effort to educate U.S. exporters on how to prevent the diversion of U.S. goods to Iran, the Bureau of Industry and Security (BIS) has created a new web page entitled "Guidance on Actions Exporters Can Take to Prevent Illicit Diversion of Items to Support Iran’s Nuclear Weapons or Ballistic Missile Programs."

The guidance is part of an inter-agency effort to counter Iran’s pursuit of technology that could enable it to develop weapons of mass destruction and the means to deliver them. It follows enforcement and administrative actions taken last week by BIS and other agencies against 75 entities allegedly involved in a global procurement network which sought to illegally acquire U.S.-origin dual-use and military components for the Iranian Government.

Examples of the guidance posted by BIS include:

• Not all items that Iran could use for weapons of mass destruction-development activities are listed on the CCL. Therefore, exporters must be vigilant on the potential end-use of all items exported from the United States. (e.g., epoxy resin). [Note: These are known as EAR99 and may not be exported to Iran and other sanctioned countries without an export license].

• The exportation of any item that is subject to the EAR (including an EAR99 item) to Iran without a license is prohibited under regulations maintained by the Department of the Treasury’s Office of Foreign Assets Control (OFAC). This includes any exports to a third country if the exporter knows or has reason to know that the item will be reexported to Iran. [Note: Only agricultural products, medicine and medical devices are eligible to be exported to Iran pursuant to an OFAC license].

• Exporters should screen parties to a transaction against the Denied Persons List, Entity List, Unverified List, BIS General Orders, and the Specially Designated Nationals and Blocked Persons List. [Note: BIS recently eliminated General Order No. 3].
  

• Exporters should take note of any abnormal circumstances in a transaction that indicate that the export may be destined for an inappropriate end-use, end-user, or destination. For example:

• unusual quantity requests;
• paying above market prices or using unusual payment methods;
• waivers of normal installation, training or maintenance agreements; and
• requests for delivery to one country with original orders from a second country or direct delivery to a freight forwarder.

• When such "red flags" arise, you should check out the suspicious circumstances and inquire about the end-use, end-user, or ultimate country of destination.

• Companies should have in place compliance and/or business procedures to be immediately responsive to theft or unauthorized delivery.

Labels: BIS, Export Controls, Sanctions; Iran