24 October 2023
In today's interconnected world, businesses operate on a global stage, where international trade and security often intersect. Understanding and mitigating potential risks is paramount. This blog post is designed to provide businesses with an in-depth look into Iran's ballistic missile procurement activities, as outlined by advisory reports from the U.S. Departments of Commerce, State, Treasury, and Justice. Let's explore the key takeaways and the importance of staying informed.
Iran's Ballistic Missile Procurement Activities: The Basics
Iran possesses one of the most extensive ballistic missile programs in the Middle East, boasting over ten distinct ballistic missile systems either in its inventory or in various stages of development. With a stockpile of hundreds of missiles, Iran continues to focus on solid- and liquid-propellant short- and medium-range ballistic missile systems.
The Role of Foreign Goods and Technologies
To support its missile programs, Iran actively seeks foreign-produced goods and technologies that it cannot manufacture domestically. Notably, Iran targets advanced U.S. items such as technologies for precision optical components and integrated circuits. The high quality and advanced technical specifications of these components make them particularly attractive.
Export Controls and Evasion Tactics
To counter Iran's acquisition of sensitive goods, the United States imposes significant export restrictions. However, Iran employs various tactics to evade scrutiny and sanctions. These tactics include routing shipments through multiple countries, obscuring the end-user, falsifying documentation, and using complex financing schemes.
Deceptive Techniques Employed by Iranian Procurement Networks
Annex 1 of the advisory report delves into the deceptive techniques used by Iranian ballistic missile procurement networks. They employ a layered approach to obscure the end-user, falsify end-use documentation and shipping details, route shipments through multiple countries, and use deceptive tactics to access international and U.S. financial systems.
Key Goods Sought by Iran's Missile Program
Annex 3 provides a comprehensive list of key goods actively sought by Iran's missile program. This includes equipment, materials, electronics, and guidance systems, and it's a valuable resource for businesses aiming to ensure compliance with U.S. legal requirements.
Private Industry's Role in Detection and Prevention
Private industry plays a crucial role in detecting and preventing Iran's procurement efforts. Iran's procurement networks are active in many countries, emphasizing the need for businesses to be aware of the techniques, entities, goods, and technologies involved in Iran's ballistic missile procurement efforts.
Commitment to Countering Iran's Ballistic Missile Development
The United States is unwavering in its commitment to countering Iran's ballistic missile development and proliferation activities, and it holds those assisting Iran's program accountable, regardless of their location or nationality.
In a world where global trade and international security are closely intertwined, staying informed about risks and challenges is essential for businesses. The insights provided in this advisory report offer a valuable resource to help companies implement effective due diligence policies and procedures, ensuring compliance with U.S. legal requirements.
While the advisory primarily addresses U.S. legal authorities, it's important for businesses operating across multiple jurisdictions to also consider and comply with applicable third-country laws and regulations.
The proactive stance of businesses and their commitment to compliance and security are critical elements in safeguarding both national and international interests. By staying informed and vigilant, companies can actively contribute to global security efforts.
Annex 1. Deceptive Techniques Employed by Iranian Ballistic Missile Procurement Networks
Iran has the largest ballistic missile program in the Middle East, with more than 10 distinct ballistic missile systems either in its inventory or in development, and a stockpile of hundreds of missiles. Iran continues to develop a range of solid- and liquid- propellant short- and mediumrange ballistic missile systems, and is exploring multiple pathways to advance its missile capabilities.
Iran seeks foreign-produced goods and technologies that it cannot produce domestically for use in its ballistic missile programs. Iran may target sophisticated U.S. items, such as technologies for precision optical components and integrated circuits, due to their high quality and advanced technical specifications and capabilities, both directly from U.S. companies and through the international market. To prevent Iran’s acquisition of these items, the United States imposes substantial restrictions on exports to Iran. However, to avoid scrutiny, Iran often seeks advanced U.S. and other foreign components and equipment, some of which may not be subject to multilateral export controls, via third countries.
Iran maintains an extensive overseas network of procurement agents, front companies, intermediaries, and suppliers to obtain sensitive dual-use items. These procurement networks use a variety of methods to evade export controls and sanctions, including: obscuring the end user through a layered approach, falsifying end-use documentation and shipment details, routing shipments through several countries, and using deceptive tactics to access the U.S. and international financial systems.
Obscuring the End User Through Transaction Layering: Iranian procurement agents routinely route shipments, communications, and finances through several layers of companies, brokers, and intermediaries. The layers provide buffering between an unwitting product manufacturer or supplier and the ultimate Iranian missile program end user, and the number of layers can vary by procurement attempt. Communication is also routed through many steps, with brokers associated with front companies and suppliers communicating (and entering into transactions) directly to avoid involvement of the Iranian missile program end user.
Falsifying Documentation: Shipping documentation, such as bills of lading and shipping invoices, may be falsified by suppliers or front companies at any stage during shipment to conceal shipping routes, embarkation ports, consignees, and/or shipping agents. Sensitive items may be mislabeled and marked as general-purpose goods that are widely available commercially, to evade notice or extra scrutiny by port or shipping officials. For delivery, entities may consolidate and repackage items for onward shipment to Iran, hiding the true end user from the manufacturers and distributors of the items.
Use of Third Countries for Transshipment: Iranian procurement agents will often route shipments through multiple countries prior to onward shipping to Iran. Shipping documentation may list a company in a third country as the ultimate end-user. After receiving the consignment of goods, a third-party company will ship directly to Iran or ship through another foreign-based company for subsequent shipment to Iran.
Financing schemes: Iranian procurement agents may use deceptive methods to access the international and U.S. financial systems. The entities involved in these schemes range from state-owned entities and financial institutions in Iran, to brokers, agents, banking representatives, and even diplomats based in other countries. These entities generally establish and utilize a complex and long-standing network of front and shell companies outside of Iran or use aliases to mask the origin and true purpose of the funds. These entities also use these companies to establish multiple bank accounts in foreign jurisdictions and use the international banking system to generate funds and facilitate transactions that either finance or provide supplies benefiting the regime and its weapons programs.
Annex 3. Key Goods Sought by Iran’s Missile Program
The following list of goods identifies a number of U.S.-origin and foreign-produced goods sought by Iran for its ballistic missile program. Items noted with an asterisk (*) indicate goods that have previously been sought from the United States by Iran.
Production and Testing Equipment:
carbon fiber production equipment, carbon fiber/filament winding machines, cold flow milling machines, computer numerical control (CNC) machines*, environmental test chambers, measuring equipment, rate tables Goods and
aluminum tubing*, aramid fiber, ball bearings, carbon fiber*, cobalt and nickel powder*, corrosion-resistant and ultra high-strength steel, epoxy-based adhesives, glass fabric, graphite cylinders*, hardener*, high-grade aluminum alloy, pressure bolts, resins, seamless steel tubes, thermal insulation, titanium sheets*, tungsten-coated graphite, thermowells, tungsten metal powder, tungsten-copper alloy plates, X-ray tubes*
circuit card assemblies*, complex programmable logic devices*, cryogenic accelerometers*, digital signal processors*, electrical connectors (D sub connectors)*, field programmable gate arrays*, flow indicators, fluxgate compass modules*, inertial sensors*, level and temperature transmitters, micro controllers*, pin diode limiters*, power amplifiers*, power transistors*, pressure transducers*, thermowells, YIG-Tuned GaAS FET Oscillator*, microelectromechanical systems (MEMS) components
Guidance, Navigation and Control:
accelerometers*, gyroscopes *, navigational sensors *, inertial measurement systems