Dual Use Technologies - Are You Exposed? An often unknown risk for SMBs......

Office of Public Affairs | Iranian Company and Two Iranian Nationals Charged with Conspiring to Provide Material Support to Islamic Revolutionary Guard Corps (IRGC) and for Scheme to Procure U.S. Technology for Iranian Attack Drones | United States Department of Justice

This falls into the category of Dual-Use technologies, and many of these component manufacturers have no idea their products are being used in drones, much less Iranian drones. Yet they are still responsible.

If you're exposed or think you may be, you must understand the risk and have the proper procedures and controls to protect yourself.

With our tested industry-leading approach to due diligence and continuous risk monitoring, we can help ensure your protection. Our solutions are proven, effective, and easy to implement.

Here's a brief overview of what is a relatively complex risk, especially for Small & Medium sized businesses:

A parts manufacturer has several legal and regulatory obligations to prevent its products from being used in, for example, Iranian drones, particularly given U.S. and international sanctions on Iran. These obligations include:

1. Export Control Laws (U.S. & International)

2. U.S. Export Administration Regulations (EAR): The U.S. Department of Commerce's Bureau of Industry and Security (BIS) enforces controls on dual-use items. If the components are subject to the EAR, the manufacturer must ensure they are not exported to Iran directly or indirectly.

3. International Traffic in Arms Regulations (ITAR): If the components are defense-related, ITAR (regulated by the U.S. State Department) imposes strict controls on exports and prohibits unauthorized sales to Iran.

4. EU & Other National Sanctions: Many allied countries have similar controls restricting sales to Iran.

2. Know Your Customer (KYC) & Due Diligence

• Manufacturers must screen buyers and distributors using denied party lists such as:

  • U.S. Specially Designated Nationals (SDN) List (OFAC)

  • Entity List (BIS)

  • Unverified List (BIS)

• Conduct end-use verification to ensure components are not re-exported or diverted to Iran via intermediaries.

3. Anti-Diversion Controls

• Implement contractual clauses that prohibit re-export to Iran.

• End-use statements or certifications from buyers are required to confirm compliance.

• Monitor for suspicious purchasing behavior (e.g., unusual bulk orders, routing through high-risk countries like UAE, Turkey, or Malaysia, which have been used as transshipment points).

4. Enforcement Risks & Penalties

• Civil & Criminal Penalties: Violating U.S. sanctions or export controls can result in severe fines, loss of export privileges, or even criminal charges.

• Reputational Damage: Being linked to Iranian drone programs could lead to harmful media exposure, loss of business partnerships, and government scrutiny.

• Secondary Sanctions: Even non-U.S. companies may face U.S. penalties if they knowingly facilitate prohibited transactions with Iran.

Mitigation Strategies

• Regularly update compliance policies and train staff.

• Use AI-driven supply chain monitoring tools.

• Report suspicious inquiries or attempted diversions to relevant authorities (e.g., BIS, OFAC, or local enforcement agencies).

Have questions? Please reach out to us at info@s6rg.net