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Companies Frustrated by New US Strategy to Prevent Technology Leaks to Russia, Lawyers Say

Global Investigations Review

The US agency in charge of enforcing export controls is using a novel and legally ambiguous strategy to strong-arm companies into halting shipments to foreign businesses suspected of diverting restricted technology to Russia, lawyers say.


Lawyers agreed that while red flag letters aren't legally binding, they significantly raise a company's risk of being held liable for its goods winding up in Russian military equipment.

Anthony Rapa of Blank Rome in Washington, D.C., said red flag letters don't carry the same weight as "is informed" letters, which impose a legal restriction on exporting specific items to certain entities.


Rapa said that from the moment a company receives an "informed letter," it is legally obligated to seek approval from BIS to keep engaging in specific export activity.

By contrast, red flag letters don't appear to impose any new legal restriction, instead relying on "strategic ambiguity" to pressure companies into self-correcting potential compliance issues, he said.

Still, ignoring a red flag letter - whether by failing to increase due diligence or terminate contracts - could be considered an aggravating factor in a subsequent enforcement action, Rapa said.

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"Companies Frustrated by New Us Strategy to Prevent Technology Leaks to Russia, Lawyers Say," by Gaspard Le Dem was published in Global Investigations Review on May 31, 2024.