Clifford Chance

US Commerce Department Announces Long Anticipated Export Control Enforcement Warning to Financial Institutions Globally, Recommending Specific Actions to Manage Enforcement Risk

October 11, 2024

On October 9, 2024, the US Department of Commerce, Bureau of Industry and Security ("BIS") issued, "New Guidance to Financial Institutions on Best Practices for Compliance with the Export Administration Regulations" ("Guidance") that, for the first time, expresses an intent by BIS to hold domestic US and non- US financial institutions liable for violations of US export control regulations for which they have provided financing or servicing. While acknowledging that generally the burden and risks for export control violations fall on exporters, BIS warns that given ongoing geopolitical issues, in particular involving Russia and China, they expect all financial institutions to be proactive in detecting and preventing export control violations, including detailed risk management recommendations, or face potential enforcement action. The Guidance follows on prior joint BIS/ Financial Crimes Enforcement Network guidance to financial institutions emphasizing the parallel anti-money laundering risks for financial institutions processing payments related to export control violations. The Guidance doesn't involve any changes in regulation, but rather signals in very clear language that BIS going forward will use existing authority to hold financial institutions accountable.

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