BIS rule adding end-user controls to sanctioned persons is ‘a force-multiplier’
In a final rule published for inspection 20 March, the US Bureau of Industry and Security (‘BIS’) has made changes to the end-user controls of the Export Administration Regulations (‘EAR’) ‘to add end-user controls, and in certain cases expand existing end-user controls, on certain persons identified on the List of Specially Designated Nationals and Blocked Persons (SDN List) maintained by the Department of the Treasury’s Office of Foreign Assets Control (OFAC).’
Lawyers have commented that the changes represent a ‘dramatic’ expansion of the bureau’s export and reexport controls. The rule explains, ‘[A]fter reviewing categories of end users and global activities that implicate both financial and export control concerns, BIS has determined to implement EAR license requirements for all items subject to the EAR for all persons blocked under eleven OFAC-administered sanctions programs.’
It says that BIS will also continue to apply licence requirements involving ‘all items subject to the EAR in connection with persons sanctioned under three OFAC-administered sanctions programs.’
The EAR restrictions involving these 14 OFAC-administered sanctions programmes, it says, ‘serve as a force multiplier and complement OFAC’s blocking sanctions, which prohibit all transactions by U.S. persons or within (or transiting) the United States that involve any property or interests in property of designated or blocked persons, unless authorized by a general or specific license issued by OFAC, or exempt.’
BIS says that the new EAR licence requirements for exports, reexports, and transfers ‘allows for the EAR controls to act as a backstop for activities over which OFAC does not exercise jurisdiction, including deemed exports and deemed reexports, and for reexports and transfers (in-country) that would otherwise not involve U.S. persons (e.g., U.S. financial institutions).’
In addition, it says, ‘The new license requirements allow for controls on items outside the United States, complementing the existing authority in many OFAC programs to impose blocking sanctions on persons who materially assist, sponsor, or provide financial, material, or technological support for, or goods or services to or in support of, SDNs, even outside of U.S. jurisdiction.’
