BIS Issues New Forwarder Guidance, Touts Disclosure Policies

The Bureau of Industry and Security last week published an updated freight forwarder guidance, outlining forwarders’ compliance responsibilities, the red flags they should be monitoring and a set of best practices they should follow when they’re involved in an export. The agency also issued a new version of its “Don’t Let This Happen to You” document, which includes new summaries and case examples of recent export control investigations.

BIS developed the forwarder guidance over the past year while meeting with trade associations and other companies, where it discussed “issues specific to the freight forwarding and express carrier communities,” said Matthew Axelrod, the agency’s top export enforcement official. Axelrod, speaking during the BIS annual conference last week, said both updated documents are meant to “help further drive front-end compliance with our rules,” according to prepared remarks.

He said the rapid pace of technology innovation and that the “world is now interconnected” have raised the “prominence and impact” of BIS enforcement efforts, warning companies to invest in their compliance programs.

“Taking a shortcut to finalize a sale is also not worth it. Profit cannot be the sole consideration,” Axelrod said in a speech to conference attendees, where he also revealed BIS has been sending “red flag letters” to companies whose products are being used by Russia’s military (see 2403280058). “We need industry to prioritize compliance with our export rules, because the stakes have never been higher.”

Axelrod over the past two years has led a BIS effort to convince more companies to submit voluntary disclosures while increasing penalties on businesses that don’t self-report (see 2304180071 and 2401170059). Some industry lawyers and advisers have said the changes have been mostly positive, while others have said it’s too early to tell (see 2402130013).

Speaking during a March 27 news conference, Axelrod said he believes the policy changes are working.

BIS has been receiving the same number of overall disclosures, but it’s seeing a higher percentage of companies sending the agency tips about competitors and disclosing violations that are potentially more serious, “which is kind of what we want,” Axelrod said in response to a question from Export Compliance Daily.

“It's what the policies were designed to do,” he said, “which was to make it easier for companies to disclose the more minor technical things and get quick responses, which then allows them and us to spend more time on the potentially more significant violations.”