Tag: trade compliance

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AI Today in 5

AI Today in 5: July 27, 2026, The Great Panic Edition

Welcome to AI Today in 5, the newest addition to the Compliance Podcast Network. Each day, Tom Fox will bring you 5 stories about AI to start your day. Sit back, enjoy a cup of morning coffee, and listen in to AI Today in 5. All from the Compliance Podcast Network. Each day, we consider five stories from the business world, compliance, ethics, risk management, leadership, or general interest about AI.

Top AI stories include:

  1. A rogue agent and a hack spark an AI panic. (WSJ)
  2. AI and SOX compliance. (Grant Thornton)
  3. AI and trade compliance. (Thomson Reuters)
  4. JLL adds AI to healthcare platform. (Facilities Dive)
  5. AI cybersecurity starts with good governance. (Healthcare Finance News)

For more information on the use of AI in compliance programs, Tom Fox’s new book, Upping Your Game, is available. You can purchase a copy of the book on ⁠Amazon.com⁠.

To learn about the intersection of Sherlock Holmes and the modern compliance professional, check out Tom’s latest book, The Game is Afoot-What Sherlock Holmes Teaches About Risk, Ethics and Investigations on ⁠Amazon.com⁠.

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Red Flags Rising

Red Flags Rising: S01 E43: BIS’s New Enforcement KPI – Challenges and Opportunities

Mike and Brent provide their day-of reactions to July 14, 2026, testimony by U.S. Department of Commerce Under Secretary for Industry & Security, Jeffrey Kessler, before the Foreign Affairs Committee of the U.S. House of Representatives. Although much of the coverage of the hearing and the Under Secretary’s remarks has focused on the Members of Congress questioning why more rules and Entity List additions haven’t been forthcoming, Mike and Brent highlight the Under Secretary’s own emphasis on more enforcement—not more rulemaking or entity-listing—as being the key metric for U.S. national security.

Mike and Brent discuss their main takeaways from the Under Secretary’s testimony (02:00); the increase in monetary penalties imposed by the Bureau of Industry & Security (“BIS”) from 2024 to 2025 and during the first half of 2026 (07:28); what BIS is requesting for FY2027 and what they will do with it, including adding 370 new Office of Export Enforcement Agents (09:43); how the Under Secretary responded to criticism, including his remark that “I do not think that more regulation equates to more national security” (12:12); why misperceived loopholes will continue to lead to liability pitfalls (13:19); the return of U.S. congressional focus on battlefield recoveries (13:56); the Under Secretary’s invitation for Congress to judge his and BIS’s success based on enforcement (16:52); how and why the “high probability” standard is an opportunity for compliance teams in these circumstances to do more with less or on tight budgets (19:40); how taking a fresh look at the meaning of “red flags,” “possibility,” and “probability” can all help take advantage of such opportunities (28:03); and the confirmed death of the AI Diffusion Rule (32:42).

Mike and Brent then conclude with this episode’s “Managing Up” segment (36:24).

Resources:

Under Secretary Kessler’s prepared remarks, hearing video link, and other materials.

Eleanor Olcott, “Nvidia’s Banned AI Chips Double in Price on China’s Black Market,” Financial Times (Jun. 23, 2026) (subscription required)

Red Flags Rising Episode 22, “All-In on America’s AI Action Plan”

Red Flags Rising Episode 39, “Pull, Push, Tap, Aim, Fire—What Recent Settlements and Indictments Teach about Clearing Compliance Jams”

UAE LinkedIn Post

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Red Flags Rising

Red Flags Rising: S01 E39: Pull, Push, Tap, Aim, Fire – What Recent Settlements and Indictments Teach about Clearing Compliance Jams

Mike and Brent return to discuss lessons from Brent’s Aikido instructor and Marine Corps combat veteran Frank Doran and how those lessons can help trade compliance professionals work through compliance jams. Mike and Brent discuss the enforcement wave that unfolded in March 2026 (01:28); their March 10, 2026, National Security Law & Enforcement event in New York City (01:51); how that event was designed to get to practical solutions (02:30); the need today to have a broader “compliance aperture” (03:59); the importance of effective communication up to management and boards, especially around “central compliance risks” (the standard under Delaware law) (04:37); Carole Basri’s prediction that soon many companies will have Chief National Security Officers (05:31); two significant enforcement actions from Q1 2026 (07:42); the DOJ National Security Division’s March 30, 2026, announcement regarding voluntary disclosures (11:37); two significant indictments from Q1 2026 (12:06); boards of directors’ duty of oversight when it comes to national security (13:39); and the relevance of increased agitation from the U.S. Congress for more enforcement (18:39); the status of the proposed Remote Access Security Act (19:35); and what is the compliance path forward, including Brent’s Fraud Four Circle Framework (21:57). Mike and Brent then conclude with a special edition of Brent Carlson’s “Managing Up” about Frank Doran and the meaning and importance—to not only infantrymen but also compliance professionals—of “Pull, Push, Tap, Aim, Fire” (24:40).

Resources:

BIS enforcement actions

DOJ NSD Voluntary Disclosure Policy (Mar. 30, 2026)

More about Frank Doran: https://aikido-west.org/frank-doran

Frank Doran, “Pull, Push, Tap, Aim, Fire” (1995)

Boards of Directors and the Duty of Oversight: “Boards of Directors Lovin’ It after McDonald’s? A Fresh Look at Directors’ Duty of Oversight in the New Era of Sanctions & Export Control Corporate Enforcement,” NYU PCCE Blog (Jan. 12, 2024)

Brent’s Fraud Four Circle Framework article: “A Light Shines Through the Darkness in Disputes, Investigations, and Trade Compliance: A Fresh Look at the Classic Fraud Triangle with the Fraud Four-Circle Framework℠,” NYU PCCE Blog (Jan. 8, 2026)

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Red Flags Rising

Red Flags Rising: S01 E33: Back to Basics

As the geopolitical and national political winds continue to swirl, Mike & Brent go back to basics to level-set and provide some foundational first principles of export controls compliance. They discuss the roller-coaster of the Affiliates Rule suspension (01:44); why the real risks from a compliance and enforcement perspective lay just outside of the Rule (02:37); how General Prohibition 10, the full definition of “knowledge” to include “an awareness of a high probability,” and the various inchoate provisions (i.e., causing, aiding and abetting, solicitation and attempt, conspiracy, acting with knowledge, misrepresentation and concealment, intent to evade, and failure to comply with recordkeeping requirements) are the foundational anti-diversion provisions under the U.S. Export Administration Regulations (EAR) (03:02); great listener feedback about how the Affiliates Rule shaped the in-house discussion of diversion risk (05:23); developing and implementing a high probability protocol as the only way to stay grounded in dynamic and challenging times (08:33); recent legislative proposals and hearings, including a recent hearing by a subcommittee of the House Foreign Affairs Committee focused on export control loopholes, and the dangers of a dissatisfied U.S. Congress (09:42); why the definition of “knowledge” under the EAR is not mere legalese to be lost in the 1,467 pages (as of January 1, 2025) of the EAR but is instead the path forward for both government and industry (14:18); the details and implications of General Prohibition 10 (17:11); the details of the full definition of “knowledge,” including what we can learn from its history in the U.S. Foreign Corrupt Practices Act and, before then, the Model Penal Code (18:48); and recent enforcement activity by DOJ and BIS, and what the activity signals about the government’s next enforcement moves (22:30).

They then conclude with the latest installment of Brent’s increasingly popular “Managing Up” segment (27:14).

Resources:

Brent’s latest NYU Law School Program on Corporate Compliance & Enforcement post, from October 31, 2025

Brent’s email: brent@redflagsrising.com

Mike’s email: michael.huneke@morganlewis.com

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Red Flags Rising

Red Flags Rising: S01 E31: Running To and Through the Export Controls Investigation Finish Line – Avoiding Resolution Pitfalls and Monitoring What Matters

Mike and Brent take a break from Affiliates Rule (delayed) suspension news to focus on practical advice for companies that may be in the midst of U.S. government investigations into alleged export control violations. They discuss the importance of engaging with the government with an awareness and an appreciation for the latest enforcement trends and signals, particularly regarding the government’s emphasis on the full definition of “knowledge” to include “an awareness of a high probability” (00:49); the importance of not being surprised by these trends in the middle of an investigation (02:52); the dangers to the cost, delay, and outcome of any investigation for failing to perceive the signals through the noise (04:08); the particular relevance of these strategies in defending against allegations of entity-shifting (09:48); the need to consider waiving privilege over prior bad legal advice—especially to avoid paying more to protect an investigation that was triggered by adhering to the prior advice (11:52); what to look for in the terms of a proposed settlement agreement, including whether and how the company will be “covered” if there are post-resolution reports of additional, previously undisclosed pre-resolution misconduct (13:22) and executive officer certification requirements (16:51); and the importance in national security resolutions, where they are imposed, of having post-resolution independent monitors or independent compliance consultants commit to focused, risk-based post-resolution monitoring that direct addresses the root causes of the violations, to avoid “industrial tourism” and to best promote the national security objectives of the United States (19:34).

Then, conclude with the next installment of Brent Carlson’s “Managing Up” segment (23:37).

Resources:

Brent’s latest NYU Program on Corporate Compliance & Enforcement (PCCE) post, “From Peanuts to Elephant-Sized Penalties: A Fresh Look at Recent U.S. Export Controls Enforcement Developments & Future Trends” (Oct. 31, 2025)

Mike & Brent’s prior NYU PCCE post, “Monitoring What Matters: A Fresh Look Proposal to Government and Industry for How Post-Resolution Oversight Can Best Deny Hostile Actors the Means to Cause Deadly Harm” (Mar. 28, 2024)

Contact Brent: brent@redflagsrising.com

Contact Mike: michael.huneke@morganlewis.com

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Red Flags Rising

Red Flags Rising: S01 E30: Look Before You Leap, Think Before You Speak

Fresh off the October 15, 2025, WIT-NC/PAEI/TTRA “Global Trade Compliance Best Practices Conference” in Santa Clara, California, Mike and Brent discuss the practical takeaways of several recent media reports and statements from the U.S. Congress, including how compliance programs that incorporate the high-probability standard give executives and spokespersons the most options. Specifically, they discuss the conference (00:49); the recent Affiliates Rule (01:27); why straightforward statements that a company “complies with the law” might generate cynicism from the public and inquiries as to how from the government (02:59); why it’s important for companies to consider the context in which their public statements will appear, even where they might not agree with the facts asserted in that context (04:06); how delegitimizing the laws in the eyes of the public might be one of the smugglers’ objectives (05:47); how thinking about compliance as never being a one-and-done solution can help avoid pitfalls in public statements (06:54); why it’s dangerous to rely upon assertions by anonymous “legal experts” reported in articles about the existence of loopholes, including because those loopholes do not actually exist (08:49); the importance of keeping in mind, in the context of the Entity List and the Affiliates Rule, that the List is but one part of U.S. export controls and statements that fixate on the Entity List’s applicability expose corporations to questions about their compliance with other catch-all provisions, with General Prohibition 10, and with the various inchoate provisions (10:27); the importance of appreciating that U.S. regulators read the news too (11:40); how the “high probability” standard can help companies in making enhancements to their compliance programs to better support broader public statements as to their compliance with the law (14:41); recent reports about U.S. items being sold for crime control purposes and attention from the U.S. Congress on those reports (15:03); similar risks related to the recent report by the U.S. House of Representatives’ Select Committee on the Chinese Communist Party (17:23); keeping in mind that your own disagreement with U.S. national security policy is not a defense to export controls promulgated in support of that policy (19:02); and the importance of having advisors who are viewed by the government as honest brokers that are not clinging to legacy views about the government’s intentions or authorities (21:07).

Mike and Brent then conclude with another installment of Brent Carlson’s “Managing Up” (23:29).

Resources:

Contact Brent: brent@redflagsrising.com

Contact Mike: michael.huneke@morganlewis.com

Learn more about the conference’s organizing associations:

Women in International Trade – Northern California (WIT-NC)

Professional Association of Exporters & Importers (PAEI)

Technology Trade Regulation Alliance (TTRA)

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Red Flags Rising

Red Flags Rising: S01 E29: Affiliates Rule Aftermath – Finding the Right Path Forward

Mike and Brent take an even deeper dive into the “Affiliates” or “50%” Rule announced by the Bureau of Industry & Security (BIS) on September 29, 2025. They identify several misperceptions in the public discussion, explain why they are misperceptions, and identify the pitfalls of operating under those misperceptions—especially in response to inquiries by BIS about pre-rule due diligence on affiliates of entities on the entity list. Specifically, they discuss why the Affiliates Rule is a close cousin to the Office of Foreign Assets Control’s own 50% rule, but why and how BIS’s Affiliates Rule serves different national security objectives and operates a bit differently (02:42); whether the Affiliates Rule brings new compliance burdens and, if so, risk-based due diligence strategies and likely questions from BIS regarding why (10:26); why in the current geopolitical context the benefit of local, boots-on-the-ground compliance might be overstated—or significantly discounted by the U.S. government—and what to do about it (16:18); why it would be a mistake to think that BIS is not today able to bring enforcement actions based on the Affiliate Rule, especially given their ability to bring enforcement actions on the “full” definition of knowledge to include “an awareness of a high probability” (19:26); and why it is dangerous to think of “knowledge” as only “actual knowledge,” and thereby misperceiving that the new Affiliates Rule—by reminding everyone that the catch-all provision under which the Entity List is promulgated is a strict-liability regulation, even as to awareness—has someone taken away a previously available “absence of actual knowledge” defense (23:00).

Mike and Brent then offer practical tips for applying for the license available under the Affiliates Rule for situations where the exporter, reexporter, or transferor is aware of “red flags” as to ownership that it cannot resolve through risk-based due diligence (28:20).

Mike and Brent then conclude with a special edition of Brent Carlson’s “Managing Up,” in which Brent offers some valuable self-reflection (34:58).

Resources:

More about Brent: www.redflagsrising.com

Contact Brent: brent@redflagsrising.com

Mike: https://www.linkedin.com/in/mhuneke/, https://www.morganlewis.com/bios/michaelhuneke

Contact Mike: michael.huneke@morganlewis.com

BIS’s “Export Control Decision Tree”

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Red Flags Rising

Red Flags Rising: S01 E28: The Long-Awaited “50% Rule” – Key Takeaways and Liability Pitfalls to Avoid

Mike and Brent return with their take on a hotter-than-hot topic, the Bureau of Industry & Security’s new “50% Rule,” effective yesterday, September 29, 2025. Mike and Brent discuss the news of the rule’s announcement and the basics of what it does (00:46); the fact that the rule was effective immediately upon filing for public review, i.e., on September 29, 2025 (02:24); the fact that 50% is not some threshold under which risk goes away (06:19); how commentary suggesting that a “loophole” has been closed is not entirely accurate because such a loophole never existed in the first place (08:12); the requirements (including a description of due diligence performed) under a new, unique license application process (09:45); what enforcement risks are likely to arise in the government’s implementation of the new rule, especially if the government compares pre-rule trade flows to post-rule trade flows (10:43); the importance of not making a quick decision in how to respond to the new rule that you might later regret (12:23); the dangers of misreading the new rule to permit entity-shifting as an appropriate response (15:53); BIS’s caution that the rest of the U.S. Export Administration Regulations (EAR) still apply, separately from the Entity List (18:43); the admonition by BIS that “exporters, reexporters, and transferors have an affirmative responsibility to know the ownership of the foreign companies that are parties to a transaction” (19:45); the statement in the rule that those same actors “must adopt a risk-based compliance program to assist them in complying with these requirements” (20:14); the new “Red Flag 29” added to the BIS Know-Your-Customer (KYC) Guidance (21:05); and the importance of the explanatory text’s reference to “control” (irrespective of ownership) by a listed entity as a “red flag” requiring further due diligence (21:59).

Mike and Brent conclude with another installment, back by popular demand, of Brent Carlson’s “Managing Up” segment (24:57).

Resources:

Brent’s new contact information: brent@redflagsrising.com

Mike’s new contact information: michael.huneke@morganlewis.com

Brent LinkedIn

Mike LinkedIn

The U.S. export controls “Country List” (Supplement No. 1 to Part 740)

The BIS Press Release (with a link to the new rule)

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Red Flags Rising

Red Flags Rising: S01 E26 – Grab the Carrots, Avoid the Sticks, and Get Ready for More Transparency

Mike and Brent pick up the discussion from Episode 25 with some further thoughts on the proposed revenue-sharing arrangement between the U.S. government and certain exporters, including what should be anticipated from the U.S. government in terms of increased transparency (01:36), give their take on the Maintaining American Superiority by Improving Export Controls Transparency Act signed into law by the President, including both what it does do and what it doesn’t do (10:27), and provide their takes on the long-running media speculation about a so-called “50% rule” that would extend the Entity List maintained by the U.S. Bureau of Industry & Security (BIS) automatically to subsidiaries or affiliates owned 50% or more by a listed entity (18:53), including questions that the debate raises about what due diligence is being done now on subsidiaries and affiliates of listed entities, and important distinctions between U.S. economic sanctions—from where the 50% rule concept is being borrowed—and U.S. export controls that suggest the rule is better suited for the former than the latter.

They conclude with another installment of Brent Carlson’s “Managing Up” (26:25).

Resources:

Brent LinkedIn

Mike LinkedIn

Mike & Brent’s “Fresh Looks” Series

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AI Today in 5

AI Today in 5: August 20, 2025, The In Pursuit of Super-Intelligence Episode

Welcome to AI Today in 5, the newest edition to the Compliance Podcast Network. Each day, Tom Fox will bring you 5 stories about AI to start your day. Sit back, enjoy a cup of morning coffee, and listen in to the AI Today In 5. All, from the Compliance Podcast Network. Each day, we consider four stories from the business world, compliance, ethics, risk management, leadership, or general interest about AI.

For more information on the use of AI in Compliance programs, my new book, Upping Your Game. You can purchase a copy of the book on Amazon.com