As explained by today’s report [PDF 307 KB], this DDTC program monitors the end-use of defense articles, defense services, and brokering activities exported through commercial channels and subject to State Department licenses or other approvals.
The program’s end-use monitoring includes pre-license, post-license, or post-shipment inquiries or “checks” undertaken to verify the bona fides of proposed foreign consignees and end-users, to confirm the legitimacy of proposed transactions.
FY 2012 findings
According to today’s DDTC release, for FY 2012, Europe and South Central Asia had the highest rate of unfavorable checks (approximately 27%).
The report notes that Europe typically has the lowest unfavorable rate; this year’s findings are attributed to 30 unfavorable checks involving a single entity that failed to sufficiently cooperate with DDTC’s inquiries and also revealed stockpiling concerns.
Unlike last year, the lowest unfavorable rate was in the Near East, which previously held the highest.
The leading cause of an unfavorable result in FY 2012 was identified as “derogatory information / foreign party deemed unreliable” (41 cases). This was noted to have been a leading factor in previous years as well, although the number of cases closed unfavorable for this reason decreased since FY 2011, which recorded 76 such cases. This broad category includes criminal records, derogatory information from various sources, and varying concerns regarding a company’s bona fides.
For more information, contact a professional with KPMG’s Trade & Customs practice:
John L. McLoughlin
Todd R. Smith
Luis A. Abad
Or your local KPMG Trade & Customs professional.