Export control enforcement ‘transformed’ since Ukraine invasion, BIS says
The US Commerce Department’s Bureau of Industry and Security (‘BIS’) has dramatically expanded its enforcement capabilities and international partnerships in response to Russia’s invasion of Ukraine while intensifying actions against China and Iran, BIS Assistant Secretary Matthew Axelrod told the Practising Law Institute’s (‘PLI’) Export Controls Conference on 9 December.
‘Export Enforcement, now more than ever before, is the tip of the spear when it comes to preventing sensitive U.S. technologies from being put to malign purposes by our adversaries,’ said Axelrod, who began his tenure ‘just two months before Russia’s full-scale invasion of Ukraine’ in February 2022.
The agency has achieved unprecedented levels of enforcement and cooperation, establishing new multilateral enforcement mechanisms and strengthening penalties against violators. ‘We changed our procedures – to make our charging letters public, to eliminate “no admit, no deny” settlements, and to raise the penalty amounts for serious violations,’ Axelrod said in his speech. ‘Our enforcement authorities under the Export Control Reform Act are mighty.’
The Disruptive Technology Strike Force, launched with the Department of Justice in February 2022, has filed 25 criminal cases – a 50% increase over the previous two years. ‘Because our resources are limited, it’s a zero-sum game,’ Axelrod explained, ‘We’ve needed to be relentless in our thinking about how to use our finite resources to have the biggest national security impact.’
Commenting on China, he said, ‘We’ve been laser-focused on countering the PRC’s efforts to leverage advanced technologies for military modernization purposes,’ noting the initiative targets ‘quantum computing, advanced semiconductors, and hypersonics.’
BIS has achieved ‘the highest number ever of convictions, months of imprisonment, Temporary Denial Orders, end-use checks, and post-conviction denial orders,’ he said, highlighting a record $300 million penalty against Seagate for Huawei violations earlier this year. ‘We’ve also publicly listed, for the first time ever, nearly 200 aircraft from Russia, Belarus, and Iran that have flown in violation of our controls,’ Axelrod noted.
Working with the Justice Department, earlier this year BIS seized a $13 million plane linked to Venezuela’s Maduro regime and secured forfeiture of a Boeing 747 cargo plane previously owned by sanctioned Iranian airline Mahan Air.
‘While export controls have long been coordinated multilaterally on the policy side, there have not been any corresponding multilateral coordination mechanisms when it comes to enforcement,’ he said. ‘Thanks to our leadership efforts, and those of our allies and partners, I’m proud to say that’s no longer the case,’ he added, detailing new partnerships through the G7 Export Control Working Group, the Disruptive Technology Protection Network with Japan and South Korea and the ‘Export Enforcement Five’ with Australia, Canada, New Zealand and the UK.
Notable cases included ‘dismantling over a dozen separate illicit Russian procurement networks,’ including one led by Maxim Marchenko, who received a three-year sentence in July for using Hong Kong shell companies to obtain military-grade electronics. The agency has also targeted Chinese military technology acquisition and Iranian weapons programs while adding over 900 parties to its Entity List and placing new Export Control Officers in Taiwan and Finland.
