The U.S. is on a mission to protect sensitive technologies. First came the CHIPS and Science Act and a wave of export controls to protect advanced semiconductor chips from entering China. And now, several U.S. regulatory departments have joined forces to create the Disruptive Technology Strike Force.
Read on to learn more about the Strike Force and how to create a plan for complying with regulations.
What is the Disruptive Technology Strike Force?
Earlier this year, the U.S. Department of Justice (DOJ) and the U.S. Department of Commerce announced they were forming a joint Disruptive Technology Strike Force, including the Federal Bureau of Investigation (FBI), Homeland Security Investigations (HSI), and 14 U.S. Attorneys’ Offices in 12 major cities across the country. The Strike Force’s primary focus is to target illicit actors, strengthen U.S. supply chains, and protect critical technologies from being acquired by U.S. adversaries. The effort will be co-led by DOJ’s National Security Division (NSD) and the Commerce Department’s Bureau of Industry and Security (BIS).
In the announcement, four countries were named as adversaries, but the primary focus is China. The other three countries – Iran, North Korea, and Russia – are already subject to significant sanctions and export controls. While it does not create any additional export controls on China, the Strike Force will work to ensure that those who break existing laws are held accountable.
In order to achieve its objectives, the Disruptive Technology Strike Force will:
- Investigate and prosecute criminal violations of export laws
- Enhance administrative enforcement of U.S. export controls
- Foster partnerships with private-sector organizations
- Use international partnerships to coordinate law enforcement actions and strategies
- Utilize data analytics and intelligence to develop and perform investigations
- Conduct field office trainings
- Build relationships between the Strike Force and members of the Intelligence Community
Has there been regulatory action?
Only a few months after the Disruptive Technology Strike Force formed, the DOJ announced the group’s first enforcement actions, including criminal charges in five cases and four arrests from five different U.S. Attorney’s Offices. These charges range from export violations, smuggling, and theft of trade secrets.
Two of the cases involve the disruption of procurement networks created to help the Russian military obtain sensitive technology, and another alleges a Chinese procurement network established to provide Iran with materials used in ballistic missiles and weapons of mass destruction.
The remaining two cases involve allegations of trade secret theft from U.S. technology companies with the intent to market the technology in foreign countries. For example, in one case a former Apple engineer was charged with stealing the company’s code for self-driving cars and bringing it to a competitor in China.
How can I avoid Disruptive Technology Strike Force actions?
This first batch of enforcement actions by the Disruptive Technology Strike Force highlight the challenges U.S. companies face, both in protecting their intellectual property and in ensuring compliance with export controls. The importance of a robust export controls compliance program has never been more clear.
To avoid enforcement action from the Disruptive Technology Strike Force, companies will want to have information on all associated importers, exporters, and buyers. A commercial risk intelligence platform, such as Sayari Graph, leverages global public records and graph technology to pre-compute complex, cross-border corporate networks, thus providing a clear picture of companies in both the public and private sector, their infrastructure, and relationships. This comprehensive view provides importers with broader context surrounding their partners and counterparties. If you’re looking to stay in lock step with regulators, BIS also relies on Sayari Graph data for regulating trade.
U.S. regulators, including BIS, have emphasized the risks of doing business with Chinese military-industrial complex companies and state owned enterprises (SOEs). While there is an explicit list of Chinese military end users (MEUs) to avoid, this list is non-exhaustive and the burden to ensure customers are not military end users falls on the exporter.
>> Learn our four strategies for identifying Chinese military companies <<
Sayari Graph can help enrich BIS MEU, NS-CMIC, Section 1260H, and other regulatory lists with complete subsidiaries, joint ventures, branches, trade partners, and affiliates. This allows exporters to quickly uncover hidden trade counterparty connections, including transshipment risk and geographic proximity to designated entities. Additionally in Graph, users can upload counterparty lists for efficient bulk screening for entities located in a military innovation zone.
For inspiration, watch one of our in-house analysts perform an example investigation and learn how to identify potential Chinese military end users.
Other industries should stay abreast of semiconductor export controls
The semiconductor industry won’t be the only affected industry by the Disruptive Technology Strike Force and the export controls have the potential to affect a greater array of industries. He said any industry with a heavy reliance on data processing – including biotech, automotive, and many others – will likely feel the effects.
One example he cited was electric cars. These vehicles rely heavily on chips, and China is a major exporter of these cars, on top of being the largest global exporter of vehicles in general. The cloud computing industry also finds itself in the middle of this debate because its data centers make heavy use of GPU chips.
While these industries may not be directly implicated in the export legislation as currently written, Miller suspects they will feel the effects indirectly.
To hear more of Chris MIller’s insights on the wave of changes that could result from new semiconductor export controls, watch our extended interview here.