The Commerce Department has sent letters to more than 20 companies with a list of foreign parties that appear to be still selling restricted technology to Russia, an official said
Matthew Axelrod is assistant secretary for export enforcement at the Commerce Department. PHOTO: ROD LAMKEY/ZUMA PRESS
The U.S. Commerce Department is continuing to dial up its warnings about violating rules against the export of sensitive technologies to foreign adversaries amid findings that U.S. components have found their way to Russia’s military and to battlefields in Ukraine.
Matthew Axelrod, assistant secretary for export enforcement, on Thursday said Commerce’s Bureau of Industry and Security was taking additional steps to address the problem, including by sending trade data to the companies that manufacture technology that has been found in drones and missiles supplied to Russia.
BIS, which oversees lists of restricted technology and reviews applications for their export, has seen its powers come into greater focus amid Russia’s war in Ukraine and the U.S.’s increasingly adversarial stance on China.
Even so, enforcing the export rules and economic sanctions that seek to punish Russian President Vladimir Putin and keep sensitive technology out of Russia and Chinese hands has proven tricky. Russia in many cases has managed to work around the measures.
The Commerce Department sent letters to more than 20 companies last year, and it recently went a step further by providing them with a list of more than 600 foreign parties that appear to have continued to sell restricted parts to Russia, Axelrod said in a speech in Washington on Thursday.
The Justice Department separately on Thursday said a grand jury had indicted a Latvian citizen over a conspiracy to sell sophisticated avionics equipment to Russian companies, in violation of U.S. export controls laws. Oleg Chistyakov, who was arrested in Riga last week at the request of U.S. authorities, is the third individual to be arrested and charged in the scheme, the department said. Chistyakov couldn’t be immediately reached for comment.
The Commerce Department notifications are the latest in a number of steps that the department’s export controls watchdog has taken to ratchet up pressure on companies. The bureau in 2022 made changes to how it handles cases of export control violations, including by creating a program that encourages companies to self-report possible infractions.
The program resulted in the bureau seeing an 80% increase in the number of voluntary disclosures from companies in the prior fiscal year, Axelrod said.
BIS can only bring administrative penalties against companies, but it has also stepped up its work with federal prosecutors. The Justice Department last year launched a so-called Disruptive Technology Strike Force, which pairs prosecutors with Commerce Department agents to investigate and prosecute criminal violations of export controls laws.
The bulk of activity at BIS over the last two years has concentrated on adding persons and companies to the bureau’s list of prohibited entities, said Jonathan Poling, a former federal prosecutor and a partner at the law firm Akin Gump Strauss Hauer & Feld who works with companies to comply with U.S. export controls rules. There has also been a focus on enforcing export controls rules relating to particularly sensitive technologies, including artificial intelligence and quantum computing, he said.
When it comes to enforcing and penalizing companies or individuals who export restricted technology to Russia or help the country evade sanctions, Poling said it may take some time before more of those cases emerge.
In one notable development, the Commerce bureau has also stepped up its collaboration with the Treasury Department’s Financial Crimes Enforcement Network, which oversees regulation of anti-money-laundering rules and collects reports of suspicious transactions from banks and other financial institutions. FinCEN has asked banks to flag possible violations of export controls and Russia sanctions in their suspicious transactions reports using dedicated tags.
To date, BIS has reviewed more than 700 suspicious transaction reports, Axelrod said Thursday, and taken action in connection with more than a 100 of the filings. Poling said the use of suspicious activity reports was significant.
“That’s a new stream of evidence that the Commerce Department had not been getting before and I think in the long term will be a game changer for them,” Poling said.
Source: The Wall Street Journal