On July 10, 2024, the Department of Commerce’s Bureau of Industry and Security (BIS) published guidance summarizing the actions it takes to identify and inform industry about parties that present diversion risks to countries or entities of concern. This guidance is offered in an effort “to address the evolving tactics of our adversaries to circumvent U.S. export controls” and offer further details on the tools BIS relies upon to alert companies about parties of diversion concern.
While BIS generally administers controls on end users by designating them on one of its public screening lists (e.g., the Unverified List, Entity List, etc.), the agency also uses additional measures to notify companies about other parties of concern, such as those that present a risk of diverting export-controlled items to restricted end uses or end users in Russia. The newly published guidance outlines the different actions that BIS takes – through “supplier list” letters, Project Guardian requests, “red flag” letters and “is informed” letters – to inform companies about parties that present diversion risks.
The guidance also offers a new recommended best practice asking that exporters, reexporters, and transferors of Common High Priority List (CHPL) items (50 items identified by their six-digit Harmonized System code) screen transaction parties using an online resource made available by the Trade Integrity Project (TIP). TIP, a non-government entity, relies on recent trade data to list all companies that have supplied firms located in Russia. The website does note that its data is derived from public sources and may contain errors or inconsistencies, and that any reliance on the data is “strictly at your own risk.” Nevertheless, BIS “strongly encourages” companies to screen against this list and conduct any further diligence to determine if there are any red flags before proceeding with a transaction.