The Blue Lantern program “monitors the end-use of defense articles, technical data, defense services, and brokering activities exported through commercial channels and subject to [DOS] licenses or other approvals.” On July 6, the Department of State (DOS), Directorate of Defense Trade Controls (DDTC) published a Congressional report on End-Use Monitoring of Defense Articles and Defense Services for FY 2020.

The program’s focus is to verify the legitimacy of foreign consignees, end-users, and their proposed transactions. The program also seeks to provide “reasonable assurance” that the recipient is complying with U.S. requirements and the articles and services are being used appropriately, as required under Section 40A(a)(2)(B) of the Arms Export Control Act.

Blue Lantern checks of foreign parties are risk-based and focus primarily on licenses and applications with any unfamiliar foreign parties, sensitive technology, and unusual shipping patterns. A number of the entities subject to closer scrutiny under these checks correlate with their membership on the DDTC Watch List, an internal screening tool used by the DOS and Department of Commerce.

A check results in three possible outcomes:

• Favorable checks which (1) verify the defense articles or services were received; (2) confirm the parties are legitimate; (3) and enhance the parties’ understanding of U.S. export laws.

  • Around 1% of licenses or license applications approved by the U.S. in FY 2020 were subject to Blue Lantern checks.

• No Action checks which temporarily close cases due to logistical challenges or other non-fraudulent factors. Cases can reopen once these challenges are overcome.

• Unfavorable checks occur when findings of fact are unverifiable or inconsistent with information in the license application.

  • The three most common reasons for unfavorable checks in FY 2020 were:

    • Derogatory information/foreign party deemed unreliable

    • Participation of an entity not listed on the license or application

    • Inability to confirm order or receipt of goods