# Presentation: 248685

## ARMS AND STRATEGIC TECHNOLOGY INVESTIGATIONSPROJECT SHIELD AMERICA

## LAW ENFORCEMENT FOR A CHANGING WORLD

- TERRORIST ATTACKS ON NYC & PENTAGON
- GROWTH OF STATE SPONSORED TERRORIST ACTION
- WEAPONS PROLIFERATION
- NUCLEAR MATERIAL SMUGGLING – LOOSE NUKES PHENOMENA

**Notes:**
Several events in the past five years have had a profound effect on the United States foreign policy and as a result, on our export control programs.
1. The fall of the Soviet Union and the end of the cold war has reduced the number of overall controls.  
2.  During 1995,  State sponsored Terrorism was at a ten year high despite a trend over the past four years of fewer terrorist incidents.
3. More countries are seeking the materials for weapons of mass destruction, rogue states in the middle east as well as North Korea and China.
4.  The phenomena of the smuggling of nuclear materials is appearing on the European continent but no incidents in the U.S.

## CHANGES IN EXPORT CONTROLS

- LICENSING AGENCIES DECONTROLLING NUMEROUS COMMODITIES
- INCREASED USE OF FOREIGN POLICY SANCTIONS AND EMBARGOES
- FOREIGN MILITARY SALES

**Notes:**
Changes in Export Controls and Laws

1. In 1994,  the Administration undertook a major review of export laws and controls.  Both the Commerce and State Departments, the two principal licensing agencies, have changed or decontrolled many materials.  
2.  The President continues to exercise his use of sanctions and embargoes as a critical tool of  U.S. foreign policy.  By the imposition of sanctions and embargoes, the U.S. can punish a country, as an example, for human rights violations.
3. Sale of military surplus and weaponry under a State Department and Dept. of Defense program is expanding.

## NEW THREATS ON THE HORIZON

- CASH POOR FSU COUNTRIES SALE OF NUCLEAR STOCKPILE
- STATE SPONSORED TERRORISM
- RELIGIOUS EXTREMISM
- DOMESTIC TERRORIST GROUPS
- INDUSTRIAL ESPIONAGE

**Notes:**
The new threat
1.  With the dissolution of the Former Soviet Union,  many of the new republics have depressed economies.  Without real industries, theses cash poor countries are turning to the sale of their only remaining economic resource, that being the stockpile of nuclear weapons and materials that the Soviets left behind. 
2.  Islamic fundamentalism is growing and with it, the growth of State sponsored terrorism.  The attack on the World Trade Center is a clear example that terrorism is on the move and is being imported into the United States.   U.S. facilities abroad have also been subjected to attacks, most recently the attack on the U.S. military barracks in Saudi Arabia.
3.  We also see a marked growth of home-grown terrorism such as the attack on the Murrah Federal building in Oklahoma City.
4.  We also see for the first time, cooperation between terrorist elements which formerly were compartmentalized.  We now see groups cooperating with each other by training, sharing supplies and even finances.
5. Finally, we see aggressively expanding industrial espionage programs by countries that are considered our allies (such as Japan, France and Israel) as well as espionage from more antagonist countries such as China.

## EXPORT CONTROL LAWS

- ARMS EXPORT CONTROL ACT   (AECA)
- EXPORT ADMINISTRATION ACT  (EAA)
- INTERNATIONAL EMERGENCY ECONOMIC POWERS ACT ( IEEPA)
- TRADING WITH THE ENEMY ACT (TWEA)

**Laws**

**Notes:**
The U.S. has four primary laws which govern the controls of exports:

A.  The Arms Export Control Act governs the export of munitions and defense articles and vests the licensing authority for munitions exports with the State Department.  The Customs Service acts as the sole law enforcement agency for munitions export investigations and enforcement activity.
B. The Export Administration Act governs the export of technologies, mainly dual use items, which are licensed by the Commerce Department’s Bureau of Export Administration.  The Customs Service and the Commerce Department’s Bureau of Export Enforcement share the law enforcement responsibilities for the EAA.
C.  The International Emergency Economic Powers Act is the law which enables the President to impose sanctions and embargoes under Executive Order, permits the implementation of our national security and foreign policy initiatives.  This is the law which enables the President to bar certain items from export (or import) from a given country, to block financial accounts or bar activity altogether.  The licensing authority for the IEEPA law is the Treasury Department’s Office of Foreign Assets Control and the Customs Service serves as the principal law enforcement agency for IEEPA violations.
4. The Trading with the Enemy Act is the oldest export control law on the books.  This law imposes strict sanctions against Cuba and North Korea which are enforced by the Customs Service. 

## ARMS EXPORT CONTROL ACT

- REQUIRES REGISTRATION OF PERSONS ENGAGED IN THE BUSINESS OF MANUFACTURING OR EXPORTING DEFENSE ARTICLES AND SERVICES.
- REQUIRES LICENSE TO EXPORT MUNITIONS ITEMS, RELATED TECHNOLOGY, AND SERVICES.
- INTERNATIONAL TRAFFIC IN ARMS REGULATIONS (ITAR)
- UNITED STATES MUNITIONS LIST (USML)
_*www.pmdtc.org/reference.htm*_
- ADMINISTERED BY THE U.S. DEPARTMENT OF STATE - DIRECTORATE OF DEFENSE TRADE CONTROLS _*www.pmdtc.org*_
- ENFORCED BY ICE

- 22 USC 2778

**Notes:**
Direct commercial sales of U.S. origin defense products, components, technologies, and services are controlled by the ITAR which are administered by the State Department to implement the Arms Export Control Act.  Those items requiring export licenses from the State Department’s Department of Defense Trade Controls (DDTC) appear in the U.S. Munitions List in the ITAR.  The Defense Department’s Defense Technology Security Administration (DTSA) also reviews many of the applications. 

Any item on the Munitions List requires a license for export to all countries (with a few exceptions for Canada.)

Manufacturers, Exporters must register with Department of State
Exporter must obtain prior approval for Transaction - Export License
Exporter must file license with Customs
Customs compares shipments to license prior to export

End-use reports are required for ITAR items.  DDTC operates Blue Lantern program to verify end-users.  UNFAVORABLE BLUE LANTERN CHECKS WILL RESULT IN ICE INVESTIGATION OF EXPORTER

## EXPORT ADMINISTRATION REGULATIONS

- 50 USC APP. 2401
- EAA EXPIRED IN AUGUST 1994
- EAR ENFORCED UNDER IEEPA BY PRESIDENTIAL ORDER
- ADMINISTERED BY THE U.S. DEPARTMENT OF COMMERCE - BUREAU OF INDUSTRY SECURITY _*www.bis.doc.gov*_
- ENFORCED BY ICE AND DOC

**Notes:**
The Commerce Department administers the Export Administration Regulations (EAR) which implement the EAA, even though the EAA expired in August 1994.  Presidents Clinton and Bush has kept the EAA export controls in force since then by executive order under the International Emergency Economic Powers Act.  

Regulated by the Commerce Department’s Bureau of Export Administration are exports of dual-use advanced technology and materials having both military and civilian applications.

By executive order in 1990, President Bush vastly increased the scope of export controls aimed at halting proliferation of nuclear, chemical, and biological weapons and missiles.  Bush’s Enhanced Proliferation Control Initiative (EPCI) is a catch-all provision requiring exporters to apply for a Commerce Department license on shipment of any goods he or she knows would be used for proliferation of weapons of mass destruction, whether or not the items are controlled otherwise.

The Commerce Department regulations also control exports of commodities in short supply like the export of crude oil carried on the Trans-Alaska Pipeline is controlled as is that of crude oil and western red cedar harvested from federal or state lands.

## INTERNATIONAL EMERGENCYECONOMIC POWERS ACT

- 50 USC 1701-1706
- ECONOMIC SANCTIONS AND EMBARGOES AGAINST COUNTRIES AND INDIVIDUALS, I.E. TERRORISTS
- USED BY THE PRESIDENT TO ENFORCE THE EAR
- CURRENT SANCTIONS CAN BE FOUND:_*www.treas.gov/ofac*_
- ENFORCED BY ICE

**Notes:**
When the President declares a national emergency with respect to a threat to the national security, foreign policy, or economy of the US, Customs enforces any import or export previsions and economic sanctions imposed.

## TRADING WITH THE ENEMY ACT

- 50 USC APP. 1
- ONLY APPLIES TO CUBA AT THIS TIME
- ADMINISTERED BY OFAC
- ENFORCED BY ICE

## INTANGIBLE TECHNOLOGY TRANSFERS

- EXPORTS VERSUS DEEMED EXPORTS BOTH AECA VIOLATIONS
- EXPORTS
- COMMODITIES OR TECHNICAL DATA IN TANGIBLE FORM
- TRANSFER IN GEOGRAPHICAL TERMS - A BORDER CONTROL ISSUE
- DEEMED EXPORTS
- BORDER CAN BE IRRELEVANT - USUALLY INVOLVES TRANSFER TO FOREIGN NATIONALS

**Notes:**
Licensable technology to a particular foreign country also applies to a citizen of that country who is in the United States.

It is incumbent upon the company to get a license to expose foreign nationals to licensable technology.

## INTANGIBLE TECHNOLGY TRANSFER

- INTANGIBLE TECHNOLOGY TRANSFERS
- ELECTRONIC TRANSFER OF DOCUMENTARY TECHNOLOGY OR TECHNICAL DATA
- BLUE PRINTS
- DIAGRAMS
- MANUALS, INSTRUCTIONS
- ILLEGAL EXPORT OF TECHNICAL ASSISTANCE
- TRAINING, CONSULTING, TECHNICAL ADVISE
- CAN BE VIA EMAIL, PHONE, MEETING, WEB SITE ETC.

## ASTI APPROACH TOEXPORT ENFORCEMENT

- INTERDICTION
- CUSTOMS AND BORDER PROTECTION (CBP)
- ICE
- INVESTIGATION
- ICE
- INTELLIGENCE - TARGETS AND TECHNOLOGY
- ICE, CBP
- INTEL COMMUNITY
- DOD
- INTERNATIONAL COOPERATION
- INDUSTRY OUTREACH
- 	PROJECT SHIELD AMERICA

**Notes:**
ICE uses a four-pronged approach to its export control program

1. Interdiction

2.  Investigations

3.  Intelligence

4.  Industry Outreach- Shield America

## INTERDICTION EFFORTS

- 7300 CBP INSPECTORS
- 300 PORTS OF ENTRY AND EXIT
- CORE GROUP FOR EXPORT CONTROL
- AUTOMATED EXPORT SYSTEMS

**Notes:**
1. There are currently some 6,000 inspectors assigned at over 300 ports. These inspectors are responsible for importation and exportation examinations.
2. The 300 ports of entry and exit include land borders, international airports, cargo container stations and seaports.
3.  A core group of highly trained, veteran inspectors make up our Contraband Enforcement Teams which target suspicious exports for examination.
4.  Needless to say the volume of exports is a daunting one.  In order for us to work smarter and target the potential suspect shipments while not impeding legitimate shipments, Customs has turned to an aggressive automated interface to review shipments prior to inspection at the ports.

##  AUTOMATION EFFORTS

- INTEGRATION OF LICENSING SYSTEMS
- AUTOMATED DECREMENT OF LICENSING
- PRE-SHIPMENT APPROVALS

**AES**

**Notes:**
The Automated Export System is currently under development within the Customs Service.  The goal of the system is for exporters to input information relating to upcoming exports well in advance of the shipments expected departure.  This will enable Customs to review the descriptions of the exported material and insure compliance with export control laws.  
1.  It is anticipated that the AES system will interface with the Commerce Department’s ECASS system, the State Dept. ODTC database, DEA’s chemical control data along with Customs violator systems.  
2.  It is also expected that the system would permit the automated decrement of State and Commerce export licenses.
3.  Implementation of the system would permit the advanced clearance of exports and permit exporters to streamline the license application process.

## ARMS AND STRATEGIC TECHNOLOGY  INVESTIGATIONSROLE OF ICESPECIAL AGENTS

**Notes:**
The Automated Export System is currently under development within the Customs Service.  The goal of the system is for exporters to input information relating to upcoming exports well in advance of the shipments expected departure.  This will enable Customs to review the descriptions of the exported material and insure compliance with export control laws.  
1.  It is anticipated that the AES system will interface with the Commerce Department’s ECASS system, the State Dept. ODTC database, DEA’s chemical control data along with Customs violator systems.  
2.  It is also expected that the system would permit the automated decrement of State and Commerce export licenses.
3.  Implementation of the system would permit the advanced clearance of exports and permit exporters to streamline the license application process.

## INVESTIGATIONS

- INDUSTRY COOPERATION
- OVERT INVESTIGATIONS
- DETENTIONS AND LICENSE DETERMINATIONS
- UNDERCOVER STINGS

**Notes:**
The techniques used by Customs special agents in export investigations are varied.
1.   One of the most important tools we have at our disposal is our industry outreach program.  I will speak more about that in a minute.
2. Agents conduct overt investigations where we utilize extensive authorities granted under the export laws I have previously discussed.  The export laws permit the issuance of export summons for information and documents which allow agents to compel companies to provide information relating to violations of export laws.  We also utilize a vast methodology in order to prove violations of the export laws.
3.  As you know, the export laws also permit the detention of exports in order for Customs to ascertain if licenses are required for given commodities.  Although, not always a popular technique, Customs agents can delay the shipment until the necessary information can be gathered to ensure compliance with our export laws.
4. And finally, we often employ undercover operations as tests of exporters and companies to ensure export law compliance.  Agents will pose as arms dealers or brokers for foreign governments and attempt to acquire shipments unlawfully.  Needless to say, these types of investigations are carefully scrutinized by our management to ensure that innocent parties are not entrapped.

## INTELLIGENCE

- INTELLIGENGE DEVELOPMENT
- 	ICE
- 	CBP
- 	INTEL COMMUNITY
- 	DOD

## INTERNATIONAL COOPERATION

- MULTI-NATIONAL INVESTIGATIONS
- INSPECTIONS BASED ON INFO FROM OTHER NATIONS
- TRAINING & TECHNICAL ASSISTANCE

## INDUSTRY OUTREACHPROJECT SHIELD AMERICA

- ENHANCE PUBLIC AWARENESS OF EXPORT LAWS
- PROVIDE OPPORTUNITY FOR PRIVATE SECTOR INPUT
- GENERATE COOPERATION** **

**Notes:**
One of our most important tools is our industry outreach program, which we call Operation Shield America.  When we initially conceived the program in 1981, it was a two part program.  The first part was to ensure exporters knew the rules regarding exporting and the second part was to establish a network of contacts with the exporting community to assist our agents with their investigations.

1.  The program, (which would include today’s presentation) is still aimed at enhancing the exporting public’s awareness of the Customs role in export control.  
2.  In addition, we hope that these types of presentations will provide an opportunity for industry representatives to enlighten us on areas of mutual interest and concern.
3. We hope that these types of events will foster better cooperation with our industry.
4. And finally, our contacts are recorded in a database in Washington for historical contacts.

## INDUSTRY’S ROLE IN COMPLIANCE

- KNOW YOUR CUSTOMER
- IT’S YOUR BUSINESS - BE ALERT AND RECOGNIZE POTENTIAL ILLEGAL EXPORTS AND DIVERSIONS
- EXPORT MANAGEMENT TRAINING

**Notes:**
We strongly believe that the “know your customer” rule is the best method that an exporter can utilize to ensure that the end user of a licensable commodity does not fall into the wrong hands.  Knowing your customer, is ensuring that who you are dealing with is reputable.  This  can prevent one of the biggest obstacles we have in weapons proliferation, that of diversion of legitimate shipments to proliferators.

1. Knowing Your Customer and
2. Recognizing that you as an exporter, are in the best position to know if the customer may divert the shipment.  However, if you have doubts, the best thing you can do, is contact your local Customs Office of Investigations.  We will help you check out a customer that you may suspect of diverting a shipment.

## RED FLAG INDICATORS OF POTENTIAL ILLEGAL EXPORTS

- WILLING TO PAY CASH
- NORMAL TRANSACTIONS USE LETTERS OF CREDIT
- WILLING TO PAY IN EXCESS OF MARKET VALUE
- WON’T PROVIDE END USER OR END USE INFORMATION
- END USE INFORMATION INCOMPATIBLE WITH NORMAL PRODUCT USE

- FINAL CONSIGNEE IS FREIGHT FORWARDER ETC.
- CUSTOMER IS UNFAMILIAR WITH THE PRODUCT, ITS APPLICATION, SUPPORT EQUIPMENT, PERFORMANCE INCONSISTENT WITH CUSTOMER’S NEEDS
- CUSTOMER ORDERS PRODUCTS NOT COMPATIBLE WITH THEIR BUSINESS
- CUSTOMER HAS NO BUSINESS BACKGROUND

**Notes:**
Shown here are some of the “Red Flag” Indications that signal possible illegal exports or diversions.  This listing is not exhaustive; it provided to aid public awareness and private sector efforts to combat illegal exports.

1) Cash Sales - A customer’s willingness to pay cash for high value orders, or unusual or extremely lucrative financial compensation for the product
2) Reluctance on the part of the purchaser or shipper to provide an end use or end user
3) Instructions to make direct shipments to trade companies, freight forwarders, export companies or companies with no apparent connection the purchaser.
4) Packing requirements inconsistent with shipping mode and/or destination
5) Products or options ordered that appear in compatible with the Customer’s environment or line of business..i.e.: Brewery fermenter to Islamic center
6) Circuitous or economically illogical routing, particular through Canada to non Canadian end users
7. Customer appears unfamiliar with the product or its application, support equipment or performance.
8. Customs declines normal service or installation, performance bonds etc. 
9.Orders placed by firms or individuals from foreign countries other than the stated end user.

## RED FLAG INDICATORS OF POTENTIAL ILLEGAL EXPORTS

- ORDERS PLACED FROM FIRMS OR IDIVIDUALS IN COUNTRIES OTHER THAN END USE COUNTRY
- SHIPMENT VIA CIRCUITOUS OR ECONOMICALLY ILLOGICAL ROUTE
- CUSTOMER DECLINES INSTALLATION OR SERVICE CONTRACTS
- PACKAGING INCONSISTENT WITH SHIPPING MODE OR DESTINATION

- PACKING INCONSISTENT WITH SHIPPING, OVERLY SECURE PACKING TO  DETER EXAMINATION, ALTERED LABELS
- SIZE/WEIGHT OF PACKAGE DOES NOT MATCH PRODUCT
- FRAGILE OR OTHER MARKINGS ARE INCONSISTENT WITH PRODUCT

## DESIRED CHEMICAL & BIOLOGICAL TECHNOLOGY

- FERMENTERS
- CENTRIFUGAL SEPARATOR
- SAFETY HOODS - CLASS II OR III
- REACTOR VESSELS
- HASTELLOY-HIGH NICKEL ALLOYS
- DOUBLE-SEAL PUMPS

## DESIRED NUCLEAR TECHNOLOGY

- MARAGING STEEL
- SPIN-FORMING MACHINERY
- BERYLLIUM
- GRAPHITE COMPONENTS
- RADIATION SHIELDING
- ELECTRON BEAM WELDERS

## DESIRED MISSILE TECHNOLOGY

- NOSE CONE/RE-ENTRY VEHICLE
- CARBON/CARBON
- SKIN
- MARAGING STEEL
- SOLID FUEL MOTOR
- PROPELLANTS
- FINS
- CARBON/CARBON

- GUIDANCE SYSTEM
- GPS/INS
- 3-AXIS GYRO
- 3-AXIS ACCELERATOR
- MOTOR
- KEVLAR
- MARAGIN STEEL
- CARBON/CARBON
- CARBON/ PHENOLIC

## THE THREAT OF PROLIFERATION COUNTRIES

- IRAN
- LIBYA
- N. KOREA
- CHINA
- SYRIA
- PAKISTAN

**Notes:**
Needless to say, these countries we know have a history of procuring components to nuclear weapons, chemical and biological warfare materials, and missile delivery systems

## TRANSSHIPMENT COUNTRIES

- U.A.E
- SINGAPORE
- HONG KONG
- CYPRUS
- JORDAN
- MALTA
- THAILAND
- YEMEN
- SUDAN

**Notes:**
However, these countries have a history of diversion of materials to proliferant countries.  This may be due to lax export control and enforcement, government condoned policy, or more likely a government’s desire not to hurt their countries commerce and industry.

## HOW TO RESPOND TO A SUSPICIOUS CONTACT

- DON’T SLAM THE DOOR
- KEEP IT NEUTRAL
- OBTAIN CONTACT NUMBERS OR EMAIL
- QUICKLY CONTACT  ICE SPECIAL AGENTS  FOR A CONTROLLED AND MONITORED RESPONSE

## QUESTIONS AND DISCUSSION

**Notes:**
Now I would welcome any questions you may have.

Thank you