Intelligence sharing alliance to formalize export controls enforcement cooperation efforts

The US Bureau of Industry and Security has announced that the “Five Eyes” countries have committed to formally coordinate on export controls enforcement. The intelligence alliance member countries hope to increase enforcement outcomes including detentions, penalties and public identification of so-called diversionary actors.

A new commitment to coordinate on export controls enforcement

The “Five Eyes” (FVEY), an intelligence partnership composed of Australia, Canada, New Zealand, the United Kingdom and the United States, share a broad range of intelligence with one another as a significant unified multilateral intelligence alliance. On 28 June 2023, the US Commerce Department’s Bureau of Industry and Security (BIS) announced that the Five Eyes countries had committed to formally coordinate on export controls enforcement. This will enable the Five Eyes partners to leverage enforcement resources to expand each country’s capacity to take action to prevent and deter evasion of export controls, particularly Russia’s access to technology aiding its invasion of Ukraine. The announcement followed a meeting in Ottawa, Ontario, earlier in the week, where the Five Eyes countries committed to sharing information on emerging trends in export control violations.

As summarized by BIS, the partnership will involve the exchange of information related to export control violations, including trends in illicit procurement methods, which will aid the Five Eyes countries in identifying and addressing export evasion risk and prevent unauthorised transfers. Joint investigations and coordinated enforcement actions can also be expected. The statement from BIS underlines the importance of fostering strong public-private partnerships, and countries will be seeking to strengthen enforcement partnerships with industry. Through this commitment the countries hope to increase enforcement outcomes including detentions and penalties, as well as public identification of those engaged in diversion.

Increasing emphasis on multilateral trade controls enforcement

This announcement is another example of the recent shift towards multilateral enforcement of sanctions and trade controls by regulators. For example, in April, U.S. Treasury Deputy Secretary Wally Adeyemo, U.S. Commerce Deputy Secretary Don Graves, and Vice Minister Masato Kanda of the Japanese Finance Ministry convened Deputies of the G7 Enforcement Coordination Mechanism to respond to evasion and circumvention of sanctions targeting Russia.

More broadly, in October 2022 the UK and U.S. regulators for financial sanctions, HM Treasury Office of Financial Sanctions Implementation (OFSI) and the U.S. Treasury’s Office of Foreign Assets Control (OFAC) respectively, announced an “Enhanced Partnership” and committed to a closer working relationship. The new announcement from Five Eyes countries on collaboration further solidifies the coordinated approach the countries are taking to export control and sanctions enforcement.

Businesses can expect information sharing between regulators in the UK and U.S., as well as with other Five Eyes countries, to boost mutual-enforcement capacity with a view to reducing gaps in enforcement. Further, active collaboration, including joint investigations into breaches of export controls and of sanctions are a foreseeable progression from expanded information sharing.

Next steps

Companies with a presence in the Five Eyes countries can expect increased scrutiny as regulators expand and routinize intelligence sharing, potentially increasing enforcement risks. Further, although the 28 June announcement emphasized a focus on export controls on Russia and Belarus, we expect this collaboration will not be limited to export controls applicable to those countries. Companies should take such enforcement coordination into account when assessing potential export compliance violations of cross border activities. Businesses should review their compliance policies and procedures to ensure they are proportionate to this increased regulatory focus.

Authored by Beth Peters, Mandi Jacobson, Daniel Shapland, Helka Kittila and Andrea Fraser-Reid.