Trends in University Disclosures Include Possible Entity List Violations, Biohazards, BIS Says
A new compliance note released by the Bureau of Industry and Security this week reveals the types of export violations that universities are most commonly disclosing to BIS, what led to those violations and the steps the academic institutions took to improve their compliance programs. The agency also issued a set of resources it said universities should use for compliance, including lists of risky parties maintained by both the government and outside organizations.
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During the last 10 years, BIS said, it has received at least nine reports from universities disclosing possibly illegal exports to entities on its Entity List. Some of those transactions involved genetic material and genetically modified organisms, and one transaction involved the element hafnium, which BIS said is used in nuclear reactor control rods.
BIS said those possible violations often began because universities didn’t know enough about, or were confused by, the Entity List and “specific restrictions placed on listed organizations.” The agency also pointed to “incorrect screening procedures, such as not screening all parties to a transaction,” including the purchaser, intermediate consignee, ultimate consignee, and end user; and not re-screening parties before shipping the items. BIS said exporters should re-screen companies because it's possible that the Entity List or another denied party list was updated after a transaction was agreed to but before the item was shipped.
After disclosing those issues, BIS said universities improved their screening processes for both international collaborations with other researchers and for tangible and intangible shipments. Schools put in place regular updates to their internal restricted party screening lists and began requiring screening against the government’s Consolidated Screening List “at every step in the procurement process, including at time of export, and more thorough vetting of all parties to a transaction,” BIS said. The agency also said some institutions “began using additional export compliance software to improve screening.”
The most common university disclosure received by BIS over the last decade involved illegal exports of biohazards. The agency said it received at least 12 disclosures involving exports of chemicals, microorganisms, and toxins, “including vials or small quantities of biological agents such as Dengue-2 virus,” and “pathogens such as pseudorabies virus strains, genetically modified vesicular stomatitis virus, and isolates of Magnaporthe oryzae.”
BIS said most of the conduct arose because the university or researchers didn’t understand the specific export requirements for vials of hazardous biological materials. Others were confused about how those items were classified and misunderstood export licensing rules.
Universities have since put in place “more rigorous” export control training programs for researchers and other staff members, “including clear guidelines on handling and exporting biohazardous materials,” BIS said. Some schools also created new offices and working groups to “administer export compliance programs” and put in place “enhanced tracking and documentation processes.”
BIS announced a settlement with Indiana University in June -- but didn't fine the school -- after it illegally exported genetically modified fruit flies carrying a controlled toxin. The university voluntarily disclosed the issue, admitted to violating the Export Administration Regulations and agreed to meet several government-imposed export compliance commitments, including increased compliance training (see 2406250022).
The agency said it has also received nine disclosures from universities that may have violated deemed export controls, which usually require companies or other entities to apply for a license before sharing a controlled item, software or technology with a foreign person on U.S. soil if a license would normally be required for that person's home country. BIS said these disclosures most often involved technology related to electronics, telecommunications and information systems, and aerospace and propulsion. Four cases involved the release of controlled technology to Iranian nationals.
Most of those universities didn’t understand deemed export rules, BIS said. “A lack of effective internal controls and training on export compliance also played a role.” After the disclosures, the schools put in place “mandatory training programs for staff and students involved in research and development” and created “internal control systems to track and monitor the access of foreign nationals to controlled technologies.”
Other disclosures submitted to BIS involved academic institutions that failed to file electronic export information, didn’t maintain required export records or improperly used a license exception. The agency said it found that some universities didn’t know enough about Automated Export System's electronic export filing rules and weren’t trained well enough on the types of records they needed to keep.
Two disclosures involved universities that incorrectly used license exception TMP (temporary imports, exports, reexports, and in-country transfers), which allows for the temporary export of certain controlled items as long as those items are returned no later than one year after the export if not consumed or destroyed. One case involved an export of infrared cameras that were “hand-carried and exported from the United States,” BIS said. Universities mainly didn’t understand the conditions they needed to meet to use the license exception, the agency said, adding that some failed to request an extension beyond the exception’s one-year limit.
BIS said the compliance note and the list of compliance resources are meant to build on the agency’s academic outreach program, an initiative designed to improve compliance at universities that have a higher risk for illegal tech transfers. The agency has reached out to more than 20 universities about joining the effort (see 2303100021 and 2206290019).