Export controls and counterproliferation finance: two sides of the same underlying illegal WMD activity

Abstract

ABSTRACTThe separation between export control and counterproliferation finance (CPF) efforts may be undermining governments’ ability to detect and stop weapons of mass destruction (WMD) proliferation. Using export-control information in screening financial transactions and using financial information in export-control decision making can be mutually reinforcing, each system feeding new information back to the other, creating a fuller picture of proliferation procurement networks. This article begins by identifying the US domestic agencies and international bodies involved in export controls and CPF, respectively, followed by a brief outline of the international and domestic sanctions regimes and export-control implementation. It then examines why financial information has historically not been considered relevant to export control and why export-control information is not regularly used to stop financial crime. The article then discusses the limitations of existing proliferation-finance guidance provided to financial institutions, as well as the problematic exclusion of marine insurance from US anti-money-laundering regulations and how it detracts from counterproliferation efforts. The authors conclude with a series of concrete options for better integrating export-control enforcement and combating proliferation finance, including options for both the US and the international community.