The U.S. Department of Commerce’s Bureau of Industry and Security (BIS) has introduced big changes to its export control regulations, targeting entities involved in Russia’s invasion of Ukraine, narcotics trafficking, and terrorist activities.
The new rules, effective March 21, 2024, aim to protect U.S. national security and foreign policy interests by restricting these entities’ access to U.S. goods, technologies, and services.
Strengthening Sanctions Against Russia and Belarus:
In response to Russia’s ongoing aggression in Ukraine and Belarus’s substantial enabling of the invasion, BIS has expanded its export controls on entities designated under several Executive Orders related to the conflict. The new regulations impose license requirements for all exports, re-exports, or transfers of items subject to the Export Administration Regulations (EAR) when these designated entities are party to the transaction. This move complements the sanctions imposed by the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) and aims to limit access to U.S. items, regardless of their source.
Example: An entity designated under E.O. 14024 for its involvement in Russia’s invasion of Ukraine will now require a license from BIS for any export, re-export, or transfer of EAR-controlled items, even if the transaction does not involve U.S. persons or the U.S. financial system.
Targeting Narcotics Trafficking and Criminal Networks:
The amended regulations also target entities involved in narcotics trafficking and other criminal activities, as designated by OFAC. BIS now requires licenses for all exports, re-exports, or transfers of items subject to the EAR when these entities are party to the transaction. This expansion of controls beyond the previously limited restrictions on firearms and related items seeks to further protect U.S. national security and foreign policy interests by preventing these entities from accessing U.S. goods and technologies.
Example: A person designated under the Foreign Narcotics Kingpin Sanctions Regulations will now require a BIS license for any export, re-export, or transfer of EAR-controlled items, not just firearms and related items, as was the case before this rule change.
Consolidating SDN-Related End-User Controls:
To streamline the export control regulations and facilitate compliance, BIS has consolidated several sections related to Specially Designated Nationals (SDNs) into a single section. This consolidation includes the addition of eleven new SDN identifiers, covering entities linked to Russia’s invasion of Ukraine, narcotics trafficking, and terrorist activities. The revised regulations also remove outdated or obsolete provisions, such as those related to Specially Designated Terrorists (SDTs) and specific Iraq-related controls, to further simplify the regulatory landscape.
Example: Rather than consulting multiple, separate sections of the EAR to determine license requirements for SDNs, exporters can now refer to the consolidated § 744.8 for a comprehensive list of applicable SDN identifiers and their associated restrictions.
By expanding license requirements, consolidating SDN-related controls, and removing outdated provisions, BIS aims to strengthen the effectiveness of its regulations while reducing the compliance burden on exporters.
