Listing Imposes Some of Most Stringent Restrictions on Parties Linked to Iranian and Russian Drones and Parties Involved in Illicit Diversion of U.S.-origin Items to Russia

WASHINGTON, D.C. – Yesterday, the Commerce Department’s Bureau of Industry and Security (BIS) added 42 entities to the Entity List. These entities contributed to Russia’s military and defense industrial base. Specifically, eleven entities in yesterday's rule are directly tied to or associated with the joint Iranian-Russian efforts to develop and construct a UAV production facility in the “Alabuga Special Economic Zone,” which is intended to produce thousands of Shahed-136 drones in support of Russia’s war effort against Ukraine. Two entities are added for engaging in illicit efforts to acquire and divert the highest priority U.S.-origin electronic components with military applications, including in connection with avionics, missiles, unmanned aerial vehicles (drones, or UAVs), electronic warfare receivers, and military radar. Thirteen entities are added for engaging in dealings with entities on the Entity List, including entities designated as Russian military end users, or entities subject to sanctions administered by the Department of the Treasury’s Office of Foreign Assets Control (OFAC). Sixteen other entities are being added pursuant to two BIS enforcement actions involving the acquisition and diversion of U.S.-origin electronic and avionic components on behalf of parties in Russia.

Among the 42 entities added to the Entity List yesterday are Hans Maria De Geetere, KnokkeHeist Support Management Corporation, and European Technical Trading BV, under the destination of Belgium; Eriner LTD. and The Mother Ark., under the destination of Cyprus; and Hasa Nederland B.V. and its alias European Trading Technology BV., under the destination of Netherlands. This action is taken in coordination with the unsealing of an indictment announced yesterday by the U.S. Attorney’s Office for the District of Oregon after a Disruptive Technology Strike Force investigation targeting a Belgian national, Hans Maria De Geetere. OFAC is also adding De Geetere, along with nine entities and five individuals to the List of Specially Designated Nationals and Blocked Persons.

These entities are involved in ongoing efforts to circumvent U.S. export controls on sensitive military electronics, contrary to U.S. national security and foreign policy interests, through the acquisition and illicit diversion of U.S.-origin electronic components on behalf of parties in China and Russia. These components can be used in military applications, including missiles, unmanned aerial vehicles, electronic warfare receivers, and military radar. Further, Hans Maria De Geetere has falsified official documents and provided false end-user information to U.S. and foreign companies to circumvent export controls and sanctions. At times, these falsified documents were also used for export license applications.

“The United States and our international allies and partners continue to stand with Ukraine and are taking strong action against Russia’s efforts to obtain items that can be used in military applications, including to produce missiles, drones, and electronic warfare equipment,” said Under Secretary of Commerce for Industry and Security Alan Estevez. “Yesterday’s actions send a clear message to individual criminals and other enterprises globally that seek to circumvent or illicitly support Russia, wherever they are located, as well as nation-states that seek to support Russia’s illegal war—we remain vigilant and committed to stopping them.”

“We must continue working to deny Russia’s military industrial base the components and support needed to continue its heinous war against Ukraine. Yesterday’s action sends a clear message that the U.S. and our partners are watching and will act forcefully,” said Assistant Secretary of Commerce for Export Administration Thea D. Rozman Kendler. “Our controls are in place to protect the national security of the United States, and bad actors that violate them will be held accountable.”

“Yesterday’s designations of parties engaged in the illicit procurement of U.S. technology for Russian and Iranian military platforms are the direct result of BIS enforcement actions, from criminal investigations to end-use checks to analytical tradecraft,” said Assistant Secretary for Export Enforcement Matthew S. Axelrod. “Working with our partners from the Disruptive Technology Strike Force and the Treasury Department, we are leveraging all tools and authorities to cut off the flow of critical U.S. electronics and avionics needed for Russian and Iranian UAV, missile, and other weapons programs.”

Text of the rule is available online here. This rule is effective upon publication in the Federal Register.

Additional Background:

Yesterday's additions are being made because these entities contributed to Russia’s military and defense industrial base in support of its unjustified war against Ukraine. Activities contrary to U.S. national security or foreign policy interest included:

• Illicit efforts to acquire and divert U.S.-origin electronic components with military applications. Such efforts were revealed through investigative activity including the identification of certain components that were recovered from a downed Iranian Mohajer6 drone used by Russia in Ukraine and Tier 1 High Priority Items identified by the U.S. and international partners. These items are of the highest concern due to their critical role in the production of advanced Russian precision-guided weapons systems, Russia’s lack of domestic production, and limited global manufacturers.
• Activities directly tied to or associated with the joint Iranian-Russian efforts to develop and construct a Russia UAV production facility in the “Alabuga Special Economic Zone that will mass produce Iranian-designed drones.”
• Entities that acquired and illicitly diverted U.S.-origin electronic components on behalf of parties in the People’s Republic of China and Russia in connection with the unsealing of a federal indictment in the District of Oregon against Hans Maria De Geetere that was coordinated through the Disruptive Technology Strike Force co-led by the U.S. Departments of Justice and Commerce. These components can be used in military applications including missiles, unmanned aerial vehicles, electronic warfare receivers, and military radar. At least one of the types of integrated circuits supplied by De Geetere matched the model number of components recovered from a Russian made drone downed in Ukraine.
• Entities and two individuals arrested in March 2023 believed to have procured and transshipped U.S.-origin avionics equipment to Russia, including to governmental entities and military end users, both before and after Russia's invasion of Ukraine.

Entities added yesterday are listed under the destinations of Armenia (3), Belarus (1), Belgium (3), China (1), Cyprus (4), Germany (1), Kazakhstan (1), Netherlands (1), Russia (27), and the United Arab Emirates (1). Twenty-five of these entities are also receiving a “footnote 3" designation as Russian or Belarusian 'military end users’ pursuant to section 744.21 (g) of the Export Administration Regulations. This designation subjects these entities to the Russia/Belarus-Military End User Foreign Direct Product (FDP) Rule, which impose license requirements for any transaction involving items that are subject to U.S. law —including certain transactions with foreign-produced items —where any of these entities is a party, or if the exporter has knowledge or reason to know that those items are destined for one of these entities. If a license is sought, it will be reviewed under a policy of denial, with case-by-case consideration only provided for certain food and medicine. These are some of the most stringent restrictions on items and the circumstances under which a license may be approved of any FDP rule.

Additional Background on the Entity List Process

These BIS actions were taken under the authority of the Export Control Reform Act of 2018 and its implementing regulations, the Export Administration Regulations (EAR).

The Entity List (supplement no. 4 to part 744 of the EAR) identifies entities for which there is reasonable cause to believe, based on specific and articulable facts, that the entities—including businesses, research institutions, government and private organizations, individuals, and other types of legal persons—that have been involved, are involved, or pose a significant risk of being or becoming involved in activities contrary to the national security or foreign policy of the United States. Parties on the Entity List are subject to individual licensing requirements and policies supplemental to those found elsewhere in the EAR.

Entity List additions are determined by the interagency End-User Review Committee (ERC), comprised of the Departments of Commerce (Chair), Defense, State, Energy, and where appropriate, the Treasury, based on specific and articulable facts that the entities have been involved, are involved, or pose a significant risk of being or becoming involved in activities contrary to the national security or foreign policy interests of the United States.

The ERC makes decisions regarding additions to, removals from, or other modifications to the Entity List. The ERC makes all decisions to add an entity to the Entity List by majority vote and makes all decisions to remove or modify an entity by unanimous vote.

Additional information on the Entity List is available on BIS’s website at: https://bis.doc.gov/index.php/policy-guidance/faqs