On an Oct. 31 webinar hosted by Kharon, Matthew Axelrod, Assistant Secretary for Export Enforcement at the U.S. Department of Commerce’s Bureau of Industry and Security (BIS), emphasized the critical role financial institutions play in export control enforcement.
The webinar, which focused on export control compliance, highlighted that banks are now considered essential to the U.S. national security ecosystem. They can help prevent sensitive American technology from falling into the wrong hands, including those of foreign threat actors who could use it against the U.S.
“When an item goes overseas, there is a financial transaction that accompanies that. So banks have a role to play in the item that’s going from the United States to overseas,” Axelrod said.
He added that the stakes are now higher for banks to do more in this regard as “the national security threat picture changes.”
Axelrod was elaborating on recent guidance released by BIS in early October, which warned financial institutions about potential liabilities for failing to implement export control-related red flags into their compliance programs. Unlike previous BIS guidance, the recent advisory emphasizes the responsibility of financial institutions to ensure that their transactions do not assist entities in evading U.S. export controls.
Axelrod added that the guidance aims to help banks comply with the agency’s rules and reduce their risk of violations.
The webinar, which focused on export control compliance, highlighted that banks are now considered essential to the U.S. national security ecosystem. They can help prevent sensitive American technology from falling into the wrong hands, including those of foreign threat actors who could use it against the U.S.
“When an item goes overseas, there is a financial transaction that accompanies that. So banks have a role to play in the item that’s going from the United States to overseas,” Axelrod said.
He added that the stakes are now higher for banks to do more in this regard as “the national security threat picture changes.”
Axelrod was elaborating on recent guidance released by BIS in early October, which warned financial institutions about potential liabilities for failing to implement export control-related red flags into their compliance programs. Unlike previous BIS guidance, the recent advisory emphasizes the responsibility of financial institutions to ensure that their transactions do not assist entities in evading U.S. export controls.
Axelrod added that the guidance aims to help banks comply with the agency’s rules and reduce their risk of violations.
“I would much rather have people comply with our rules on the front end than us have to enforce on the back end. Because when we're enforcing on the back end, it typically means that an item is already gone where it shouldn't have gone,” Axelrod said, adding that it could pose a national security risk to the country.
He noted that BIS is not only focusing on financial institutions but is also examining the role of freight forwarders and express shippers in export control compliance, as they play a major role in helping with the transportation of sensitive items overseas.
Recently, the U.S. government issued advisories recommending that entities acting as middlemen in the transportation industry, including freight forwarders, strengthen their compliance programs to prevent bad actors from evading sanctions and export controls.
Axelrod concluded by encouraging financial institutions to reach out to his agency if they believe they may have violated BIS’s rules, emphasizing that it’s in their best interest to do so sooner rather than later.
“If you think you might have some liability with us, it is definitely in your interest to come in and tell us, because you get treated much better if you knock on our door before we come knocking on yours,” he said.
Recently, the U.S. government issued advisories recommending that entities acting as middlemen in the transportation industry, including freight forwarders, strengthen their compliance programs to prevent bad actors from evading sanctions and export controls.
Axelrod concluded by encouraging financial institutions to reach out to his agency if they believe they may have violated BIS’s rules, emphasizing that it’s in their best interest to do so sooner rather than later.
“If you think you might have some liability with us, it is definitely in your interest to come in and tell us, because you get treated much better if you knock on our door before we come knocking on yours,” he said.
Kharon’s Dane Shelly and Matthew Axelrod, Assistant Secretary for Export Enforcement at BIS, discuss recent guidance on the growing responsibilities of financial institutions and banks in complying with export controls and managing risks in global transactions. Click to watch the webinar on-demand.
