On November 6, 2023, FinCEN and the BIS issued a new SAR key term to support financial institutions in reporting potential efforts to evade U.S. export controls beyond the Russia-related circumstances that were the focus of those prior two alerts. The new joint notice builds on the success of the two prior alerts issued jointly by the two agencies in generating suspicious activity reporting related to Russia-related export control evasion.
This joint Notice provides U.S. financial institutions with red flags to assist them in identifying transactions potentially tied to the illicit acquisition of items subject to the Export Administration Regulations (EAR), including, for example, advanced technologies that can be used in new or novel ways to enhance adversaries’ military capabilities or support mass surveillance programs that enable human rights abuses. These red flag indicators include the following:
Purchases under a letter of credit that are consigned to the issuing bank, not to the actual enduser. In addition, supporting documents, such as a commercial invoice, do not list the actual end-user.
Transactions involving entities with little to no web presence, such as a website or a domainbased email account.
A customer lacks or refuses to provide details to banks, shippers, or third parties, including details about end-users, intended end-use(s), or company ownership.
Transactions involving customers with phone numbers with country codes that do not match the destination country.
Parties to transactions listed as ultimate consignees or listed in the “consign to” field appear to be mail centers, trading companies, or logistics companies.
The item (commodity, software or technology) does not fit the purchaser’s line of business.
The customer name or its address is similar to one of the parties on a proscribed parties list, such as the BIS Lists of Parties of Concern (e.g., Entity List, Unverified List, Denied Persons List), Treasury’s List of Specially Designated Nationals and Blocked Persons (SDN List), or State’s Statutorily Debarred Parties List. Special attention should be paid to the basis for listing on the Entity List or SDN List, as linkages to weapons of mass destruction programs or military-intelligence end-users or end-uses implicate broader controls regardless of whether an item is subject to the EAR.
Transactions involve a purported civil end-user, but basic research indicates the address is a military facility or co-located with military facilities in a country of concern.
Transactions involving companies that are physically co-located, or have shared ownership, with an entity on the Entity List or the SDN List.
Transactions that use open accounts/open lines of credit when the payment services are conducted in conjunction with known transshipment jurisdictions and/or the products listed in payment memos align with those identified by BIS as a disruptive technology (see the “Disruptive Technology Strike Force” highlighted below) or included on the CCL.
The customer is significantly overpaying for an item based on known market prices.
Transactions involve a last-minute change in payment routing that was previously scheduled from a country of concern but now routed through a different country or company.
Transactions involve payments being made from entities located at potential transshipment points or involve atypical shipping routes to reach a destination.
The joint notice can be found here.