June 2017 – Made in America: Defending Out Technology – FBI Handout

Made In America
What is illicit procurement?
Illicit procurement occurs when a foreign entity evades U.S. export law by purchasing U.S. origin items through misrepresentation of the items’ destination, end-user, or intended purpose. Such illegal acquisitions have provided countries with the fruits of U.S. research and strategic technology while compromising U.S. security and military superiority.

How does illicit procurement work against U.S. counterproliferation efforts?
Counterproliferation refers to diplomatic, intelligence, and military efforts to combat the development of weapons, including both weapons of mass destruction, nuclear missiles, and certain conventional weapons. Circumventing U.S. Government controls of sensitive equipment, software, and technology gives adversaries the opportunity to develop powerful weapons with potentially catastrophic consequences.

Why is knowing an exported product’s intended purpose important?
In the film, Iranian criminals arrange for carbon fiber, a dual-use product, to be delivered to the Czech Republic for the stated purpose of bicycle manufacturing. Dual-use technologies are products and normally used for civilian purposes but which may have military applications. High grade carbon fiber is a good example of a dual-use technology because its high tensile strength, low weight, high chemical resistance, high temperature tolerance and low thermal expansion, makes it popular in civil engineering, motorsports, and competitive sports gear such as golf clubs and tennis rackets. However, carbon fiber can also be used to make centrifuge rotors for machines that enrich uranium.

Iran is currently trying to procure items for its uranium enrichment program such as carbon fiber, filament winding machines, and epoxy resin or related hardening/accelerator agents necessary to bind the carbon fibers used in both uranium centrifuge and missile structures. Thus, U.S. manufacturers of such items must be particularly vigilant.

Are certain American made products more likely to be subject to illicit procurement than others?
Some of the technology most urgently desired by adversaries includes:

•  modern manufacturing technology for the production of microelectronics, computers, digital electronic components and signal processing systems;
•  technology for developing aircraft, missile and other tactical weapon delivery systems;
•  all types of advanced signal and weapons detection, tracking and weapons monitoring systems;
•  night vision technology; and
•  technology and equipment used in the construction of nuclear, biological, and chemical weapons.

My company is small/its products can’t be used to create dangerous weapons. Why should I worry about
deceptive procurement?
All businesses involved in any aspect of technology research, development, or production are potential
targets and can be exploited. The seizure of just one small piece of restricted technology, however
innocuous it may seem, can have a tremendous impact on a foreign adversary’s capabilities. Products from
every level of the supply chain—down to the tiniest components produced by far-removed
subcontractors—are desirable to our enemies.

What are the latest trends in deceptive procurement? Is technology making it easier to get away with
this serious crime?
The Internet allows proliferators to quickly locate products for sale anywhere in the world with just a few
keystrokes. They are then able to communicate that information via email to their middlemen overseas and
direct them to specific U.S. suppliers. These foreign middlemen agents may change their names frequently
and may never see or touch the products they order from the United States. They work in conjunction with
freight forwarders, who at their instruction remove and replace the inbound shipping records with
outbound shipping records to transfer the goods to prohibited end-users. The location of the middlemen,
as shown in this film, may or may not be in the same country as the shipping route of the goods or the flow
of money.

In today’s world of web-based purchases and deals struck over e-mail, it may be difficult for exporters to
know with whom they are dealing. Much like the phishing schemes so rampant in the cyber world, those
seeking illicit exports will often email requests for quotes to dozens of suppliers at once. The law of
averages holds that at least one company will take the bait—don’t let it be yours!

In Made in America, NuTech has unknowingly been supplying materials to Iran. Would my company be
subject to punishment if it has unknowingly been shipping products that ultimately wind up in tradesanctioned
countries?
The FBI encourages the submission of Voluntary Self-Disclosures (VSDs) by parties who believe they may
have violated export law. VSDs are a compelling indicator of a party’s intent to comply with U.S. export
control requirements. Most VSDs are resolved with the issuance of a warning letter. Should Export
Enforcement determine an administrative penalty is appropriate for the resolution of a VSD, the VSD will
mitigate the penalty.

Did this incident actually happen? Is the nuclear enrichment facility in Qom, Iran operational?
Yes. This film is based on a real FBI case worked by agents in FBI’s New York Field Office that resulted in the
neutralization of key suppliers to Iran’s Nuclear and Ballistic Missile Program.
There is a uranium enrichment facility (Fordow Fuel Enrichment Plant) located 20 miles northeast of the
Iranian city of Qom. The site was constructed in secret as early as 2006 and discovered in September 2009.

How do I know if I am allowed to export to a particular buyer? How do I know what can or cannot ship to
particular countries?
The Department of Commerce’s Bureau of Industry and Security maintains screening lists that advise the
exporting public of export restrictions. In the event an entity, company, or individual on one of these lists
appears to match a potential party in an export transaction, additional due diligence is required.
BIS’s website: http://www.bis.doc.gov

Additionally, the Office of Foreign Assets Control (OFAC) at the Treasury Department administers a number
of U.S. economic sanctions and embargoes. Some programs are comprehensive in nature and include
broad-based trade restrictions, while others target specific individuals and entities.
OFAC’s website: http://www.treasury.gov/ofac

What Red Flags should American exporters look for?

• The customer or its address is similar to one found on the Department of Commerce’s Bureau of
• Industry and Security list of denied persons.
• The customer or purchasing agent is reluctant to offer information about the end-use of the item.
• The product’s capabilities do not fit the buyer’s line of business, such as an order for sophisticated
• computers for a small bakery.
• The item ordered is incompatible with the technical level of the country to which it is being shipped,
• such as semiconductor manufacturing equipment being shipped to a country that has no electronics
• industry.
• The customer is willing to pay cash for a very expensive item when the terms of sale would normally
• call for financing.
• The customer has little or no business background.
• The customer is unfamiliar with the product’s performance characteristics but still wants the
• product.
• Routine installation, training, or maintenance services are declined by the customer.
• Delivery dates are vague, or deliveries are planned for out of the way destinations.
• A freight forwarding firm is listed as the product’s final destination.
• The shipping route is abnormal for the product and destination.
• Packaging is inconsistent with the stated method of shipment or destination.
• When questioned, the buyer is evasive and especially unclear about whether the purchased product
• is for domestic use, for export, or for re-export.

I feel I have been targeted for illicit procurement. What should I do?
Proliferation networks are sophisticated and far-reaching. We are working hard to disrupt, neutralize, and
eliminate these networks, but we need your help. If you suspect you have been targeted please contact
your local FBI office or go to https://tips.fbi.gov.

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