BIS Report Highlights Increased Enforcement on Tech Export Controls

The Bureau of Industry and Security (BIS) released its latest “Don’t Let This Happen to You!” report, detailing recent U.S. export control civil and criminal enforcement actions. According to an article by Fenwick & West, the BIS report highlights the following key focuses:

• Illicit diversion of U.S. and Western technologies to Russia for its war in Ukraine, involving machine tools and semiconductors.
• Controls on advanced technologies that threaten national security, such as AI, quantum computing, and biotechnology.
• Diversion of U.S.- and Western-made components to Middle Eastern terrorist groups.
• China’s acquisition of items potentially used to undermine human rights and regional security, especially in AI and supercomputing.

The BIS report underscores the U.S.’s heightened trade control enforcement, noting a record number of export control convictions and penalties last year. A prominent theme is cracking down on networks facilitating the illicit flow of goods to malign actors.

Case studies reveal sophisticated schemes, such as Chinese nationals using a U.S. front company to obtain advanced integrated circuits, a Bulgarian firm attempting to buy electronics for Russian military use with false end-user information, and a U.S. front company purchasing aviation components for export to Iran via shell companies and bank accounts in Turkey.

The report emphasizes the extensive extraterritorial reach of U.S. export controls, with significant enforcement actions against companies operating outside U.S. jurisdiction. For instance, BIS imposed a $300 million penalty on Seagate for transactions with Huawei using tools made with U.S.-origin technology, governed by the expanded Foreign Direct Product Rule.

The article suggests that companies producing or selling dual-use goods, particularly in electronics, industrial, and advanced technology sectors, should implement robust risk-based compliance controls. The BIS report offers valuable guidance on common evasion attempts, compliance expectations, and enforcement priorities.