Banks are being asked to do more in the area of export control because the international threat landscape has shifted dramatically in the past few years, a top U.S. Commerce Department official said today during the ABA/ABA Financial Crimes Enforcement Conference in Arlington, Virginia. The department also issued guidance for financial institutions on best practices for compliance with the Export Administration Regulations, or EAR.
The appearance by Assistant Secretary for Export Enforcement Matthew Axelrod marked the first time a Commerce Department official has addressed the conference — itself an indication of the changing nature of what is being expected from banks. During a Q&A, Axelrod said that two decades ago, the primary international concern for the U.S. was terrorism. While terrorists remain a concern, today the main threats are nation-states such as Russia, China and North Korea, he said. The job of his office is to prevent those nations from obtaining goods and technology that could bolster their military capabilities.
“The reason I’m here, speaking with all of you, is given the stakes, we really see this as an all-hands-on-deck moment,” Axelrod said. “Of course, it is the U.S. companies — your customers — that have primary responsibility in this area, but when the technology or item gets sold and shipped overseas, they’re not the only ones involved in this process.”
The guidance, published by the Commerce Department’s Bureau of Industry and Security, provides both background information on the EAR and recommendations on steps financial institutions can take to minimize the likelihood of EAR violations. One thing that banks need to keep in mind is it is a violation of the rules to knowingly facilitate a financial transaction that runs afoul of export controls, and “knowingly” doesn’t mean the bank knew about the specific violation in advance, he said.
“If you’re aware of facts that lead to a high probability of evasion, then you’re violating General Prohibition 10 of our rules [the EAR], and so you don’t want to do that,” he said.
