Good morning. It is a pleasure to be back at the West Coast Forum to discuss new developments regarding Export Enforcement’s activities at the Bureau of Industry and Security, including our implementation of Export Control Reform – in other words, how we are erecting higher walls around the most sensitive items, end uses, and end users. As Under Secretary Hirschhorn said yesterday, the time for discussing what we are going to do has passed. Since October 2013, we are now administering controls over former U.S. Munitions List items on the Commerce Control List. This movement of items is occurring in waves, with items associated with military aircraft, vehicles, vessels, subs, and auxiliary equipment already completed, and certain satellite and military electronics-related items being transitioned next.


During this process, our Special Agents and enforcement analysts have been ramping up our monitoring and investigative capability associated with the 600 series military items, while continuing to monitor exports and reexports of dual-use items.


The evolution of our enforcement posture over the past year, and the associated accomplishments that I will review this morning, underscore the benefit to U.S. national security and U.S. economic security – including the protection of business reputations and proprietary data -- of having dedicated Department of Commerce resources enforcing 600 series military items and dual-use exports.


The security environment we face today is distinctive and diverse. While many of our concerns have remained constant for several years or decades, they are continually evolving. As these threats evolve and proliferators become more sophisticated, our collective mission remains the same: identify proliferation networks and dismantle or disrupt them.


The Role of Export Enforcement


For those new to the Export Administration Regulations, or EAR, and even for our more experienced exporters, I think it is important to frame the context of Export Enforcement’s role at the Bureau of Industry and Security. We work to ensure that strategic trade is secured by an effective export control system based largely on multilateral control lists that deter, prevent, and redress the diversion of dual-use and munitions items to end users and for end uses involved in the development of weapons of mass destruction and advanced conventional weapons or that support international terrorism. I like the metaphor that BIS plays defense on the Commerce export promotion team. We want to promote secure trade that is in the national interest of the United States. To that end, our law enforcement program focuses on sensitive exports to hostile entities or those that engage in onward or inward proliferation.


Over these past 32 years, Export Enforcement at BIS has evolved into a sophisticated law enforcement agency, with criminal investigators and enforcement analysts working together with licensing officers to identify violations and redress them. Using our subject matter expertise in the area of export controls, coupled with our unique and complementary administrative enforcement tools, as well as our partners in other agencies, industry, and abroad, we have leveraged our authorities to maximize the impact we are having.


BIS maintains Special Agents at offices in 14 cities across the United States. BIS also has Special Agents assigned with the Department of Commerce’s Foreign Commercial Service to conduct end-use checks to safeguard the disposition of U.S.-origin items exported abroad. These Export Control Officers or ECOs are assigned to six strategic locations that are critical to our mission: China, the United Arab Emirates, India, Russia, Singapore, and Hong Kong. All of these ECO positions have regional responsibilities that extend their reach to an additional forty-three countries.


The talented personnel that BIS has cultivated is only one of our strengths. As I spoke of previously, our administrative enforcement tools are also unique. The EAR places legal responsibility on persons who have information, authority or functions relevant to carrying out transactions subject to the EAR. These persons may include exporters, freight forwarders, carriers, consignees, and other participants in an export transaction. The EAR applies not only to parties in the United States, but also to persons in foreign countries who are involved in transactions subject to the EAR. And with the President’s Export Control Reform Initiative in full swing, our responsibilities are significantly increasing with the transfer of tens of thousands of military parts and components from the International Trafficking in Arms Regulations, or ITAR, to the EAR.


BIS pursues EAR violators, both domestically and abroad, and subjects them to both criminal and administrative fines and penalties. Under the International Emergency Economic Powers Act (IEEPA), criminal penalties can reach 20 years imprisonment and $1 million per violation. Administrative monetary penalties can reach $250,000 or twice the value of the transaction, whichever is greater, and a denial of export privileges.


Finally, no picture is complete without reference to the Office of Antiboycott Compliance (OAC). OAC carries out its mandate through a threefold approach: monitoring boycott requests received by U.S. businesses, bringing enforcement actions when necessary, and guiding U.S. businesses on the application of the EAR to particular transactions. In addition to these traditional compliance tools, OAC goes to the source to eliminate boycott requests at their origin. By working with its government partners in the Office of the U.S. Trade Representative and at the Department of State, OAC has met with the ministries of boycotting countries issuing the most boycott-related requests. By meeting with these governments and pointing out the barrier to trade that boycott requests impose, OAC often is able to remove prohibited language, enabling U.S. businesses to compete on an equal footing in this region of the world.


Vital Role of Industry


Industry IS the first line of defense. Industry reports of suspicious transactions have led to the identification and disruption of some of the most sophisticated proliferation networks. Our special agents will tell you that some of our best cases start from industry sources. Without the cooperation of industry, these bad-actors would have continued to operate unabated. I strongly encourage you to report suspicious transactions through our website or by contacting the closest Office of Export Enforcement (OEE) field office.


Last year, I discussed with you our plans to expand outreach to companies involved with the transfer of munitions items to the CCL. Since the last time I spoke to you here, OEE has conducted over 1,500 outreaches and tailored our outreach materials to align with the new 600 Series requirements. Your knowledge and compliance with the EAR establishes a built-in warning system for Export Enforcement to be aware of suspicious actors.


Coupled with this general outreach, Export Enforcement has expanded its Guardian outreach program to industry over the past year, where we alert companies of suspicious parties that may be seeking to obtain your items. We fully appreciate the reputational risk associated with your items being involved in illicit activities, and this advance warning system is meant to help you identify otherwise unforeseen risks in potential transactions.


One of the new areas of focus in this regard relates to cyber-intrusions and data exfiltration that result in your export controlled data ending up overseas.


To expand further, it is becoming almost a daily occurrence to read about a cyber intrusion or attack. President Obama recently stated that "[T]he Cyber threat is one of the most serious economic and national security challenges we face as a nation. America's economic prosperity in the 21st century will depend on cyber security." FBI Director James Comey testified before Congress that "[t]he risk of cyberattacks is likely to exceed the danger posed by al-Qaeda and other terrorist networks as the top national security threat to the United States and will become the dominant focus of law enforcement and intelligence services."


Cyber activities range from denial of service attacks on public facing websites to the compromise and theft of enormous amounts of bulk personal data. These crimes affect everyone from large U.S. Government contractors working on the Nation’s most sensitive technology to your neighborhood retail franchise. The perpetrators of cyber-crime are varied; they include independent hackers, criminal organizations as well as state actors.


Let me be clear, the theft of export controlled information from your computer systems as a result of foreign cyber actors is a threat to U.S. national security interests and your company’s competitive lifeblood: intellectual property.


The U.S Government is attempting to address this looming menace through a whole of government approach. On February 12th of this year, the National Institute of Science and Technology, a sister agency at the Department of Commerce, published the first National Cyber Security Framework, which can be found at Regardless of the type of business sector or an organization’s size, an entity can use the framework to determine its current level of cybersecurity, set goals for cybersecurity that are in sync with its business environment, and establish a plan for improving or maintaining its cybersecurity. This Framework also offers a methodology to protect privacy and civil liberties to help organizations incorporate those protections into a comprehensive cybersecurity program. The Framework is part of a larger initiative to combat the ever evolving cyber threat. Both the FBI and the Department of Homeland Security’s Office of Infrastructure Protection are developing programs and initiatives to help the private sector protect, identify, mitigate and report malicious cyber activity and actors.


Export Enforcement is working closely with our government partners in both the regulatory as well as the law enforcement community to address this challenge. We are identifying opportunities to utilize and incorporate our unique authorities and abilities into this critical effort. It is my intent to raise the level of awareness as well as to encourage the reporting of malicious cyber events by the exporting community, especially when export controlled information is compromised. Evaluate whether you need to incorporate cyber security into your company’s export compliance program as well as report cyber incidents.


Reporting the exfiltration of controlled technology is separate and distinct from submitting a voluntary self-disclosure (VSD). The latter involves your discovery of a violation of the EAR committed by your company. By reporting cyber thefts, you are giving us critical information that can allow BIS, working with our interagency partners, to identify these cyber-actors and bring our unique BIS tools to bear against them. I believe that cyber security, like effective export controls, can only be achieved effectively with your support and partnership.


Returning to VSDs, let me reinforce a message from last year: The best way to ensure you’re not violating the regulations is to have a comprehensive internal compliance program (ICP) in place. A good compliance program pays for itself: it keeps you from committing a violation in the first place; and if you do slip up, it will be a mitigating factor in an administrative penalty proceeding.


An ICP ensures that all employees understand the EAR and know that senior management is committed to compliance with the regulatory regime. Other key aspects of the ICP is knowing your customers, asking for end-use certificates, and effectively screening them against government lists. Let me highlight specific actions you should be taking in this regard:


  1. All transactions should be screened against government lists. A consolidated list is available for free at
  2. All items subject to an export transaction should be classified against the Commerce Control List (or CCL) and sales persons need to understand list-based, end use, and end user controls.
  3. For items subject to a license, you have an obligation to share license conditions with your customer and I highly encourage you to ensure they acknowledge their intent to comply if such acknowledgement is not otherwise required by BIS. Our end-use checks over the past year have found significant non-compliance in this area.
  4. For license exception transactions involving Strategic Trade Authorization (STA), ensure that you obtain the certification from your consignee before you ship in which the recipient acknowledges that it understands that any subsequent retransfer or reexport requires a similar consignee statement prior to such retransfer or reexport. BIS is planning to amend the STA certification contents to more clearly articulate this existing requirement.
  5. For export transactions with end use or end user concerns, it is recommended that you obtain end use certificates and double check potential licensing requirements. Self-blinding by not inquiring about end use or not doing due diligence on an end user is not an acceptable defense.
  6. Finally, for items moving through transshipment countries like Hong Kong, Singapore, and the UAE, it is important for you to understand the foreign export control requirements of those countries in addition to those of the EAR. In December 2013, BIS published a new best practice encouraging exporters to obtain a copy of their customer’s import license prior to exporting and to ensure that your customer in Hong Kong or Singapore is aware of export control requirements for the reexport, transshipment, or transit of your item through their country.


In particular for Hong Kong, the absence of receipt of such an import certificate from the importer should be a red flag. We have encountered many Hong Kong entities that are nothing more than secretarial firms who simply offer a forwarding service for the reexport of your item to another country. Because of the likely difference in licensing treatment for your item to Hong Kong as compared to most other countries, such as China, extra due diligence is warranted. Foreign shell companies establishing businesses in transshipment zones, even for legitimate purposes such as preferential tax treatment, can result in the diversion of your items and a violation of the EAR. Once again, you need to perform due diligence checks on your customers.


Higher Wall Initiatives


Last year, I discussed two key organizational efforts that contribute to the higher fence paradigm: the Information Triage Unit housed in our Office of Enforcement Analysis and the Export Enforcement Coordination Center, or E2C2, housed at the Department of Homeland Security. In its first year of full operations, the ITU reviewed almost 700 license applications, producing more than 1,000 reports on foreign parties to such license applications. It is safe to say that when the ITU gets involved with licenses for the most sensitive transactions, the U.S. Government’s ability to evaluate the bona fides of the foreign parties is significantly improved, thereby facilitating the processing of these license applications as well as securing the integrity of our export control system.


The E2C2 has been similarly effective in bringing better coordination of export enforcement investigations. Deconfliction involves law enforcement agencies exchanging information about new cases to determine if any other U.S. Government agency already has an investigation related to the same matter or possesses information that will aid in the investigation. The deconfliction process is enhancing case work and interagency collaboration, while ensuring that in the rare occasion an active investigation was already under way and unknown to the requesting agency, both agencies coordinate with one another.


As stated by Under Secretary Hirschhorn, in December 2013, we significantly upgraded our end-use check authorities by strengthening the Unverified List or UVL, further enhancing our higher walls initiative. Previously, when BIS was unable to confirm the bona fides of a foreign party during an end-use check, we could designate persons on the UVL, thereby creating a red flag for subsequent export transactions. However, the public found the red flag confusing, with no clear guidance as to how to overcome it other than by applying for a license.


Accordingly, we have amended the UVL to instruct exporters how to address UVL-designated parties. For transactions normally subject to a license exception, where a UVL party is involved, the exporter must seek a license from BIS. For all other transactions not subject to a license requirement, the exporter must obtain a statement from the UVL party certifying compliance with the EAR and agreeing to host an end-use check. That will assist BIS to determine the bona fides of the party.


We are also continuing to work closely with our colleagues at the Directorate of Defense Trade Controls to coordinate end-use checks where EAR items, such as those under the 600 Series, are collocated with ITAR items. This will avoid duplication of resources and allow the U.S. Government to obtain a more fulsome picture of the activities of foreign parties involved with U.S. exports.




Some recent case successes demonstrate the vigor with which we use our BIS criminal and civil authorities to secure U.S. trade. Since our conference here last year, we have had some very exciting cases across a spectrum of issues and destinations. Let me tell you about just a few of them.


Our biggest civil penalty in the past year, in fact the biggest ever, was levied against Weatherford International Ltd. in Houston, Texas, and four of its subsidiaries who agreed to pay a combined $100 million for export control violations to Iran, Syria, Cuba, and other countries. A $50 million civil penalty was imposed for the export of oil and gas equipment to Iran, Syria, and Cuba in violation of the EAR and the Iranian Transactions and Sanctions Regulations (ITSR). BIS also alleged that Weatherford exported items controlled for nuclear non-nonproliferation reasons to Venezuela and Mexico. The Department of Justice imposed a $48 million monetary penalty on Weatherford International Ltd. pursuant to a deferred prosecution agreement and also imposed $2 million in criminal fines pursuant to guilty pleas by two of Weatherford’s subsidiaries. Weatherford agreed, as part of the settlement agreement, to hire an unaffiliated third-party expert in U.S. export control laws to audit its compliance with respect to all exports or re-exports to Cuba, Iran, North Korea, Sudan, and Syria for calendar years 2012, 2013, and 2014. The Weatherford investigation was conducted by OEE at BIS, working closely with Treasury’s Office of Foreign Assets Control and the Department of Justice.


As a result of a joint investigation by OEE and Immigration and Customs Enforcement (ICE) at the Department of Homeland Security, Ming Suan Zhang, a citizen of the People’s Republic of China, was sentenced to 57 months incarceration for violating the International Emergency Economic Powers Act by attempting to export high-grade carbon fiber from the United States to China. This material can be used in the production of such items as ballistic missiles, unmanned aerial vehicles, and nuclear centrifuges. In this particular case, Zhang attempted to negotiate a long-term contract for massive quantities of the controlled commodity, which he asserted was to be provided to a Chinese company involved in the development of a military fighter aircraft.


Another joint investigation by OEE, FBI, ICE, and the Defense Criminal Investigative Service resulted in SEYED AMIN GHORASHI SARVESTANI, an Iranian national, being sentenced to 30 months in prison for conspiring to export goods, including satellite technology, and hardware from the United States to Iran. GHORASHI conspired to acquire satellite technology and hardware from a supplier based in the United States for shipment to Iran. To conceal the true destination of the goods from the U.S. supplier, GHORASHI and his co-conspirators arranged for the items to be shipped first to the United Arab Emirates and subsequently shipped to Iran.


As a result of an investigation by OEE, in April 2013, Computerlinks FZCO in the United Arab Emirates was fined $2.8 million by BIS, the statutory maximum penalty. Computerlinks was involved in the transfer to Syria of devices from the U.S. company Blue Coat designed to monitor and control Internet traffic. Under the distribution agreement with Blue Coat, Computerlinks FZCO was obligated to "comply with all export and import laws, rules, policies, procedures, restrictions, and regulations of the Department of Commerce." Computerlinks knew that the items were destined for end users in Syria. However, when placing these orders with Blue Coat, Computerlinks falsely stated that the end users for the items were the Iraq Ministry of Telecom and the Afghan Internet service provider Liwalnet.


Last year I also told you about Timoth Gormley, the export control officer at Amplifier Research who was sentenced to 42 months in prison, admitting that he had: altered invoices and shipping documents to conceal the correct classification of amplifiers to be exported so that they would be shipped without the required licenses; listed false license numbers on export paperwork for defense article shipments; and lied to fellow employees about the status and existence of export licenses.  On September 26, 2013, BIS denied Mr. Gormley’s export privileges for 10 years based on his conviction. And on January 17, 2014, BIS reached a settlement with Amplifier Research for a $500,000 penalty. However, BIS suspended the civil penalty in its entirety because of the VSD filed by Amplifier Research in 2011 detailing the actions of Gormley and its substantial cooperation in the course of this investigation. The settlement also mandates that Amplifier Research hire an expert outside of the company to conduct an audit of its compliance with export control laws, including recordkeeping. By filing the VSD, Amplifier Research avoided criminal charges (against the company itself), and the suspended fine will be waived at the end of the penalty period provided all commitments are met.


These are just a few of the cases OEE agents investigated in the last year. In fiscal year 2013, BIS investigations led to the criminal convictions of 52 individuals and businesses for export violations with penalties of over $2.6 million in criminal fines, more than $18 million in forfeitures, and more than 881 months of imprisonment. In addition, we completed 63 administrative export cases, resulting in $6.1 million in civil penalties. Export Enforcement also supported the addition of 68 new parties onto the BIS Entity List. Fiscal year 2014 has started off strong with the Weatherford case, with the BIS responsible for a $50 million civil penalty.




To say that I am proud of my organization is an understatement. Given our resources compared with the breadth of items we regulate and the controls we enforce, our successes demonstrate that Export Enforcement clearly "punches well above its weight class." However, our success is dependent upon the efforts of industry, our interagency colleagues, and international partners.


Let me reiterate that our goals in this regard should be complementary: safeguarding your products and intellectual property from diversion is good for your company and U.S. national security. A key piece of this involves implementation of a good ICP and promptly informing your local OEE field office of suspicious inquiries or activities involving the illicit export of controlled items, violations committed by your company or its employees in the form of a VSD; or alerting the U.S. Government of illicit acquisitions of controlled technology, such as through cyberintrusion, in order for Export Enforcement, along with our interagency partners, to take action against these nefarious actors.


I will now turn the podium over to our new Deputy Assistant Secretary for Export Enforcement, Richard Majauskas, who will moderate the Enforcement panel. Our panel is composed of Doug Hassebrock, the Director of the Office of Export Enforcement; Kevin Kurland, Director of the Office of Enforcement Analysis; Cathleen Ryan, Acting Director of the Office of Antiboycott Compliance; and Anthony Levey, the Special Agent in Charge of our Los Angeles Field Office. Thank you for your attention and participation in this conference.


© BIS 2020