June 13, 2023

US issues advisory on the increasing threat posed by Iran’s UAV program

The US recently issued guidance regarding the increasing threat posed by Iran’s procurement, development, and proliferation of unmanned aerial vehicles (“UAVs”).  The guidance was issued by the US Department of Commerce, the Department of Justice, the Department of State, and the Department of the Treasury to alert industry participants of the global threat posed by Iran’s UAV-related activities and the need to take steps to avoid activities that might contribute to Iran’s UAV program, including via direct and indirect transfers to third-country suppliers.  The guidance serves and an advisory intended to highlight the importance of having an effective compliance program that specifically addresses Iran’s UAV-related activities and ensures that industry participants are complying with applicable laws across the entire supply chain.

According to the advisory, the threat posed by Iran’s UAV program has increased over the last ten years as Iran has worked to lower costs, simplify production, and made both armed and unarmed UAVs easier to use – factors have made Iranian UAVs more appealing to countries of concern to which Iran may transfer them, including Russia that has used them in its war against Ukraine and the Houthis who have used UAVs to conduct strikes inside Yemen and on neighboring countries.

The advisory confirms that Iran relies upon foreign procurement to obtain certain items for its UAV program and, while US-origin technologies are often preferred, it uses many components produced by third-country suppliers.  The advisory also provides a list and description of the key commodities that Iran usually imports for its UAV program, including certain US-branded electronics such as field programmable gate arrays (FPGAs), RF transceivers, microcontrollers, and capacities – some of which may not be included on the Commerce Control List but are, nonetheless, controlled for export to Iran by US sanctions or export controls.  The advisory also recommends that exporters, manufacturers, and distributors of key commodities should take special care to conduct “know-your-customer” due diligence and track to whom they sell and/or ship their items.  Manufacturers, in particular, are also urged to establish multiple methods to track items because of the prevalent practice in Iran of obscuring the sources of components used, by lasering off serial numbers and other identifying information.

The advisory also provides an overview of relevant US export control laws and US sanctions authorities and regulations aimed at hindering the development of programs like Iran’s UAV program, as well as an overview of the penalties for violating these laws.  In addition, it provides an extensive, though not exhaustive, list of red flag indicators to help determine whether a customer might be engaged in sanctions or export control evasion.  These red flags include, but are not limited to, the use of corporate vehicles to obscure the ownership, source of funds, or countries involved in transactions; a reluctance to share information about the products’ end users; payments that come from a third-party country or business not listed in the end-user documentation; or transactions associated with atypical shipping routes.  In order to avoid such risks, the advisory suggests that industry participants should, among other things, screen current and new customers, intermediaries and counterparties through the Department of Commerce’s Consolidated Screening List and the Department of the Treasury’s List of Specially Designated Nationals and Blocked Persons (“SDN List”).

Guidance to Industry on Iran’s UAV-Related Activities