Made in America
A dramatic recounting of a true story that illustrates the need for vigilance in international sales and export compliance. An interview with an export compliance officer follows this film.
Traditional Red Flag Indicators
Below are common RED FLAG indicators a buyer of your products may not be authorized to receive them or is otherwise engaged in criminal activity. If RED FLAGS are present, you should exercise due diligence and inquire about the suspicious circumstances to ensure appropriate end-use, end-user, and ultimately country of destination information is obtained.
- Buyer is reluctant to offer information about the end-use of the ordered product
2. Product's capabilities do not fit the buyer's line of business
3. Buyer's IP address does not match the stated location
4. Company receives the same request for a quote (RFQ) from multiple customers
5. The RFQ appears to be cut-and-pasted into the email
6. Buyer carbon copies unknown individuals
7. A freight forwarder, Importer/ Exporter, or General Trading Company is listed as the final
8. Routine installation, training, warranty, or maintenance services are declined by the buyer
9. Buyer is unfamiliar with the product’s performance.
10. Buyer is evasive when asked about whether parts are for domestic use or re-export
11. Buyer has little to no presence on the Internet
12. The shipping address is a residence or a building that leases virtual office space
13. Unusual method of payment or unexpected source of payment
Gina. This just came in from that suspected uranium facility in Iran.
I don't recognize the markings. Looks like some sort of manufacturing logo. If we can figure that out, we'll know what we're dealing with.
MARTY: Okay, everybody.
This is Jodi Kinnear, our new export compliance officer. We managed to steal her away from Geotronics. She's here to help you with your export paperwork and to ensure that all of our international sales are in compliance.
JODI: Good morning.
WAYNE: I don't know what Marty's paying you, but it ain't enough.
MARTY: Thanks, Wayne. Look, from here on out, she reviews and approves every international sale before it ships. In other words, you don't see pay till Jodi says okay. Got it? Good. Let's get back to work. This stuff isn't going to sell itself.
Here we are. Make yourself at home.
JODI: Thank you.
MARTY: If there's anything you need, just ask.
JODI: Actually, I'd like to familiarize myself with our international clients. Could I get the paperwork on the last six months of sales? I'd like to see how our people were reporting their compliance checks.
MARTY: Sure. They're all in compliance. But you go for it. I'll send them over.
[cell phone ringing]
YASMIN: Hamid, I just got an email from my mother. Rahim has been arrested in Tehran.
What? What for?
I don't know. They won't tell me. He was pulled off the street by some men wearing uniforms right in front of my mother.
But he has American residency now. He was just visiting.
Maybe they think he's a spy.
YASMIN: You've got to do something, Hamid. He's our son. You have to talk to your friend.
Hey, boss. Shipment is in. I'll call you back.
Did the driver have any problems?
No. It was smooth sailing.
Good. I'm nearly done with the customs forms.
We need to get these recrated. I want to get this out to Dubai today.
HAMID: Amir, it's me. Hamid. Good to hear from you, my friend. The shipment has arrived with no difficulties. Did you receive your payment?
Yes. Thank you. But that's not what I'm calling about. It's my son, Rahim. He's been arrested in Tehran.
AMIR: Really? When?
HAMID: About four days ago. He was grabbed off the street, pushed into a van. No one has heard from him since.
Probably the Revolutionary Guard. I'll see what I can find out for you.
Thank you, sir.
AMIR: Hopefully I'll have some news for you when I see you on Monday.
AMIR: Yes. I'm coming to Prague. I have a new business opportunity for us to discuss.
HAMID: That's good news. Thank you, sir. Is he going to help Rahim?
I hope so.
All right, I got to get back to you.
Got a minute?
How well do you know Barton Exports?
A good little client. High-grade carbon fiber. Three, four orders a year. Total about five tons.
Why are you asking?
Well, I was going through old sales, and I noticed some irregularities.
He's a New York company, but he has us drop-ship orders to the Czech Republic? It doesn't cost us anything. We bill him directly for international shipping. His client is Zymax General Trading, a Czech corporation that resells our product to the European companies that make -- High-end golf clubs. Tennis rackets. Bikes. Perfectly legit.
What do you mean?
I called a sporting goods manufacturer today, and they said they would never use that high a
grade of carbon fiber. It's way too expensive for what they need.
That grade can also be used for centrifuges for uranium enrichment.
I also found this. Two months ago, a shipment got hung up in customs.
Zymax sent us an email requesting our help getting the shipment released.
It means nothing. A typo on the shipping form held it up. And maybe the golf company's making new-generation clubs.
True. But I talked to Susie in accounting, and she said all the wire transfers came from the UAE.
And what concerns me most is that Zymax is a Czech company, but the IP address on this email is from Iran.
I did my checks.
The paperwork was good.
Have you taken this to Barton?
JODI: No, not yet. I wanted to talk to you first.
At this point, we have more questions than answers. It's probably nothing.
JODI: You may be right. But I think we should share this with the FBI.
MARTY: But what if you're wrong? We could be smearing him and lose a good client in the process.
JODI: Something's not right here, Marty. I worked with the FBI at Geotronics. They can help us sort this thing out. And they understand discretion. We should call.
GINA: Thank you, ma'am. We'll come by.
Hey, Jim. I just got a call from this company called NuTech. They manufacture carbon fiber. And they think some of their product has gone south.
GINA: Look familiar?
Do you think your desk can spare you for the afternoon?
MARTY: These are ours.
Jesus. I spent two tours trying to keep WMDs out of the wrong hands, and here I am helping Iran build nukes.
If you can help us find the person who's selling your product to Iran, you'd be helping to disrupt a major proliferation network.
Yeah. We think we may know who it is. Peter Barton, Barton Exporting.
Jodi noticed some irregularities in their shipments to a Czech company called Zymax Import/Export. The IP address on one of Zymax's emails actually came from Iran.
They claim to sell carbon fiber to the high-end European sporting goods market, but I just talked to someone in that industry, and they don't use that grade of carbon fiber.
This is everything we have.
This'll be a big help.
You need anything, you just ask.
JIM: End user statements. Purchase orders. Bank statements. We could arrest Barton today.
Yeah. But we want the whole network, all the way back to Iran.
I'll call the AUSA and see if we can go up on Barton's comms.
I'll dig into Zymax and see what they're talking about.
And let's reach out to the LEGAT in the Czech Republic, see what they know about them.
I found your son.
The Revolutionary Guard are holding him.
Can you get him released?
There are limits to my influence, but perhaps you can help.
What do you need?
Rad-hardened FPGA's. Field-programmable gate arrays.
What are they?
For our space program.
Does it matter?
I'm just calculating the risks.
Calculate the reward as well.
I'm sure you'll find a way. Hm?
I need to get Rahim home.
This will help.
[camera snapping photos]
PETER: I reviewed the FPGA specs. I can get them for you, but it's going to be risky. They have military applications.
HAMID: My client is willing to pay top dollar. I'm sure you can figure it out. I'll get you a quote, and we'll finalize the deal when I see you in Baltimore.
When will that be?
HAMID: I'm not sure yet. I'll get back to you.
PETER: [on recording] I'll get you a quote, and we'll finalize the deal when I see you in Baltimore.
When will that be?
HAMID: [on recording] I'm not sure yet. I'll get back to you.
Sir, this is Barton.
He's a lower-level middle man.
This is Hamid Karimi.
Now, he's a good catch, but our real target...
...is Amir Yazdi.
We've identified him as a high-ranking intelligence officer. Now, he's our ultimate target.
MALE: So we get him and we cause a significant disruption in the nuclear and missile programs.
GINA: Hamid is the key to Amir if we can get him to cooperate.
JIM: We have enough evidence to arrest him in the Czech Republic today. It'd be cleaner if we got him here.
GINA: Shouldn't be a problem. He and his wife want to emigrate. He's got a son in med school in Cleveland and two brothers in Baltimore. He applied for a visa a few months ago. Still pending.
Can we expedite that?
I can reach out to my contact at State.
YASMIN: Hamid, our visas have been approved.
HAMID: Really? That's good news.
When can we leave?
I'll call my brothers and arrange our travel. I'll have to do some work while we're there, but we'll have plenty of time to do other things.
I'm so excited.
HAMID: So am I.
CUSTOMS OFFICER: Let's go. Come on next...
HAMID: Good morning.
Hi, how are you?
Good, how are you?
Good, good. I need your passports and your customs declaration.
Okay. Thank you.
What country are you a citizen of?
And where were you born?
We were born in Iran.
What is the purpose of your visit?
Here to visit our son.
Sir, I can't finish your inspection here. Just follow this officer, and he's going to take you to secondary.
And you can take your documents and go right to the baggage area.
CLERK: Next. Hi, how are you.
OFFICER: Come with me, please, sir. You can have your wife and daughter meet you in baggage claim.
You go ahead. I'll catch up with you at the baggage area.
But Hamid --
It's okay. Go ahead.
Excuse me, ladies. We're with the FBI. We have a few questions for you. Could you please come this way?
GINA: Mr. Karimi, I'm Special Agent Gina Vanderpool. I'm with the FBI. And your life just changed forever.
Do you know why you're here?
Perhaps. Am I under arrest?
GINA: But there are things you can do to help yourself and your family.
PETER: I've sent the specs to Geotronics Digital, a local company that makes the FPGAs you need.
They can deliver three weeks after payment is made. You prepared to move?
That is acceptable.
We've been lucky so far.
But we need to be careful. [laughing] Because I wouldn't last long in prison.
I'll wire you the money.
Have the paperwork done in a couple of days.
PETER: Fair enough.
[camera snapping photos]
[in Farsi] Driver, let's continue.
HAMID: My eldest son is in medical school here. My youngest son, he's the restless one. It was a mistake for him to go to Iran. It is my country, but I don't believe in the regime.
Well, why are you in this line of work?
It wasn't my plan.
It was a gradual thing.
I'm an engineer by trade.
It started when I was asked to source some replacement parts from the U.S. It was very lucrative. One thing led to another. But I'm not proud of what I've done.
And now they have your son.
GINA: Your food's getting cold.
When will you arrest Barton?
After we get Amir.
How do your transactions normally work?
He wires the money to my warehouse in Prague.
Then I send the product to his warehouse in the Emirates. He moves the goods from there to Iran.
He's visited you in Prague before?
We often have dinner when he's in town.
He doesn't normally hand me money or receive any goods personally
They'll never arrest him in Dubai.
We need him in Prague.
He's due back in a week or two, I believe.
We can try to schedule the exchange for then.
[cell phone ringing]
All arrangements have been made
I'm prepared to deliver the product.
AMIR: [speaks in Farsi] Bisar khob. But I understand you've been visiting America.
How do you...
I met my contact here. I prefer to do it in person with no email or phone calls.
A reasonable precaution.
But there has been a change of plans.
AMIR: What change?
I want my son released.
This is not part of the arrangement.
When he is released, I will ship you the product.
AMIR: It is unacceptable.
He doesn't matter to you. He's a nobody.
It is out of my hands.
HAMID: Then no deal.
That stunt might have just bought you extra prison time if this deal falls through.
[cell phone ringing]
I am sorry. But he is my son.
You're going to regret this.
Do we have a deal?
AMIR: I will be in Prague in a week with my engineer.
He is going to verify the quality of the shipment. If it's acceptable, I will have Rahim released.
You must bring Rahim with you to Prague.
Don't push your luck, my friend.
He will stay in Iran until I see the shipment.
AMIR: Then he will be on the first flight out.
That's as good as I can do.
You might have just dodged a bullet.
[cell phone ringing]
JIM: Hi, Ms. Kinnear? Jim Henniger from the FBI.
What can I do for you, Agent Henniger?
Well, actually, I'm an analyst, not an agent.
JODI: What's the difference?
Agents have guns, and analysts have computers.
JODI: You can do more with a computer than a gun.
Well, sometimes it's handy to have both.
Hey, you said you used to work at Geotronics.
JIM: Well, we could really use your help.
HAMID: As you requested.
A present for me?
This has tested our friendship. I caution you next time not to pull a trick like this.
It may not go so well.
How's your wife?
Let's do lunch sometime, huh?
What about my son?
Hamid, Hamid, Hamid.
[officers speaking in Czech]
EXPORT COMPLIANCE OFFICER: I work for Reliance Steel & Aluminum Company. We're headquartered out of Los Angeles, California, and our product is primarily raw material, raw metallic material, so steel, aluminum, some copper.
So if it's made of metal, we sell that metal. Our product lines make a lot of dual-use products: bridges, office buildings, commercial airplanes, automobiles. But they also make things that go boom. You know, missiles, military aircraft, nuclear applications.
My job is to ensure that we sell metal for legitimate, legal uses. Our material can end up in the wrong hands by usually diversion. We'll sell it to Customer X, and then they sell it to Customer Y, and it ends up with plenty of frequent flyer miles before it ends up at the final destination, which is to embargoed countries or destinations or prohibited persons or prohibited end uses.
Primarily, we seek to make sure that when we get a purchase order from a customer, that we research the customer: Who are they? What is it? We require a written end use and end user statement. And we vet that out against what the product is. We ensure that what they're ordering fits what they're telling us.
One example we had a few years back -- customer wanted to order some stainless steel round bar, and told us it was for commercial helicopter parts. Which fits. They use stainless steel round bar to make commercial helicopters all day long. However, the country of destination was the UAE. And the UAE is not known for commercial aviation manufacturing.
And after a Google search, really couldn't find a helicopter manufacturer in the UAE. So obviously that was a giant red flag that what the customer was supplying us for an end use/end user doesn't fit the country of destination that they're telling us. So ultimately, that would be something that we would potentially report up to the FBI or other law enforcement agencies as a, "Hey, this may be a hot one."
Some of the red flags that we've identified for our industry -- first and foremost, the throwaway email.
The Outlooks, the Hotmails, the Yahoos. If they're really old-school, we see an AOL every once in a while.
One of our tools we have is an IP address scanner, and so we'll take the IP address from an email and drop it in it. Tells us where the email originated from. We've had a few
come back as Tehran, so that's always interesting. That certainly elevates the amount of phone calls that get made and get sent my way.
Also, we use a lot of Google Earth; look at addresses that they're giving us for ship-to addresses, and, does it logistically make sense?
We've had examples of customers wanting tens of thousands of pounds of material delivered to the 20th floor of a high-rise building or to a townhouse in the middle of downtown Europe somewhere.
And for us, because our product is oftentimes very big and very heavy, that's one of the flags that we can identify. If they are ordering product that they have no knowledge of, that means that they are really totally outside the metals industry.
There's a difference between somebody who's maybe a new procurement agent for a customer, a legitimate customer, versus somebody who is just completely grasping at straws and is probably on the bottom end of some illicit procurement network, and he's being coached.
One of the big red flags we have for especially international customers is when we ask them for an end use/end user statement and they come back with, "Inventory," or, "For stock." Well, usually you're inventorying or stocking for some sort of industry or some sort of end use. So what is that end use? We have to know where it's going, what it's going to be made into, what it's going to turn into.
I have a very high level of support at the executive level, and that is key to the success of any export program at any organization. If your president or vice president of your organization thinks that export compliance is just another pain-in-the-neck compliance regulatory burden, they're going to treat it like that, and that attitude is going to flow through the whole organization and make it nearly impossible for you to exist or to effectively manage the process.
If you have somebody at the upper levels that supports the whole thing and that actively backs your play, it makes it a lot easier.
Ninety-nine percent of export is about managing risk. We reduce risk by applying for licenses. We reduce risk by getting end use and end user information. We reduce risk by doing denied party screenings. We reduce risk by properly filling out our paperwork and following the terms and conditions of our licenses.
We reduce risk by reaching out to the Bureau or other law enforcement when we see something that doesn't fit. We reduce risk when we refuse orders that are clearly not right.
Everything is risk management. And that's ultimately what we're doing, is managing risk, reducing that risk to as small as possible, without paralyzing our business. When you're asked to reach out to law enforcement or include law enforcement, federal law enforcement into your business world, there is a certain level of, ugh, you know?
But overall, you know, when they reached out to us, they kind of explained what they were looking to do. It fit what we were looking to do. They were very clear in explaining that, "Hey, we're not here to get in your way. We're not here to prevent you from doing business. We're not here to help you lose business. In fact, we'd like you to do more business."
At the executive level, they understand that that level of cooperation benefits everybody: benefits industry, it benefits law enforcement, and it benefits, quite frankly, our country, because we've learned that when things go wrong, typically regulatory environments constrict. They make it more difficult to do business. So if we can prevent it from going wrong in the first place through either cooperation with law enforcement and the FBI and things like that and internal policies and procedures, in the long term, it saves us money.
We want to protect our corporate reputation. We want to do the right thing because it's the right thing to do. We want to keep the bad guys from getting the good stuff.
And the Bureau has tools and resources that we don't have because we're not in that world.
And all we can do is be the front line to say, "Something's not right here. What do you guys think?" and let them handle it.
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