New BIS Guidance Recommends That Financial Institutions Implement Export Control Due Diligence

On October 9, 2024, the U.S. Commerce Department, Bureau of Industry and Security (BIS) issued new guidance to financial institutions on how to comply with and minimize the risk of violating the Export Administration Regulations (EAR). Through this new guidance, BIS is affirmatively recommending that financial institutions implement EAR-related due diligence procedures within their existing compliance programs.

The guidance includes best practices for financial institutions and focuses on General Prohibition 10 under the EAR, which prohibits, among other things, any person, regardless of location, from financing or servicing any item that is subject to the EAR with knowledge that a violation of the EAR has occurred, is about to occur, or is intended to occur. The EAR defines "knowledge" as not only positive knowledge that the circumstance exists or is substantially certain to occur, but also an awareness of a high probability of its existence or future occurrence.