BIS Sending Russia-Related ‘Red Flag’ Letters to US Companies, Official Says

The Bureau of Industry and Security is sending letters to American companies that are selling or producing items found in Russian weapons, asking them to stop selling goods to certain foreign customers.

BIS has so far in the last several weeks sent letters to more than 20 U.S. manufacturers and distributors that make and sell products that “continue to be found in recovered missiles and drones inside Ukraine,” said Matthew Axelrod, the agency’s top export enforcement official.

Axelrod, speaking March 28 during the BIS annual Update Conference, said the initiative follows a similar effort from last year, when the agency also sent “red flag” letters to U.S. exporters, pinpointing “specific customers of theirs who had been identified in customs data as continuing to export to Russia.” Those letters asked the exporters to use “heightened due diligence for their identified customers” and to bolster their screening efforts, Axelrod said, especially for products on the agency’s list of common high-priority items.

But BIS has since "gone further," Axelrod said, and is now "sending information from these commercially available datasets directly to the U.S. manufacturers and distributors who make and sell” those items.

Axelrod said the new letters include information on more than 600 foreign businesses that BIS said may be sending items to Russia. The letters ask the American manufacturers and distributors to “voluntarily stop shipping to these parties due to the high risk of transshipment to Russia,” Axelrod said. He said the agency used commercially available datasets, including customs data, to find those foreign businesses.

Another BIS official, speaking during the conference on background under a policy for certain career personnel, said the red flag letters are meant to push compliance teams to "be more proactive." The official stressed that the letters don't necessarily require the companies receiving them to apply for a license.

"We're telling you that this company you're shipping to is sending stuff to Russia," the official said. "Red flag letters are important, and you should follow them."

Axelrod said BIS Undersecretary Alan Estevez, along with officials at the State and Treasury departments, has also been "reaching out directly to senior leaders" at American firms to discuss new ways they can "prevent their products from ending up inside Russian weapons." Estevez said earlier this week that the U.S. is trying to share more information with exporters about “bad actors” sending items to Russia or Iran (see 2403270007).

BIS "must continue to work as closely as possible with industry, our interagency colleagues, and our international partners," Axelrod said. "That way, we can both impede the Russian war machine and deter other would-be aggressors from following [Russian President Vladimir] Putin’s path."