Blue Lantern End Use Monitoring Report

The Blue Lantern program, managed by the Country and End-Use Analysis Division (CEA) of the Department of State, is designed to ensure the security and integrity of U.S. defense trade. The program is designed to minimize the risk of diversion and unauthorized use of U.S. defense articles, combat gray arms trafficking, uncover violations of the AECA, and build confidence and cooperation among defense trade partners.

It monitors the end-use of defense articles (including technical data), defense services, and brokering activities under the Arms Export Control Act (AECA) and the International Traffic in Arms Regulations (ITAR). Several Blue Lantern checks not only reviewed specific transactions but also analyzed the management structure and security controls of foreign companies that may pose a risk of diversion due to their acquisition by another foreign entity.

Program Activities: In FY 2022, CEA initiated 305 Blue Lantern checks in over 60 countries. The program included pre-license, post-license/pre-shipment, and post-shipment checks. The Blue Lantern program was affected by Russia's invasion of Ukraine in February 2022, leading to a suspension of routine checks and a reliance on consultations with the Ukrainian Embassy in Washington, DC, for transaction verifications.   In-country end-use checks in Ukraine resumed in FY 2023 with limited site visits, as security conditions allow, and will be counted as part of the report for the next fiscal year.

Results: Of the 226 Blue Lantern checks closed in FY 2022, 159 (70%) reported "favorable" results, while 67 (30%) were deemed "unfavorable." Unfavorable checks were due to inconsistencies in the license application, unresponsiveness of a foreign party, or discrepancies in the information provided by the foreign party. No instances of potential or actual diversion were documented, but three instances of unauthorized reexports/retransfers were identified.

Actions Taken: Unfavorable Blue Lantern cases led to various actions, including denying or returning license applications without action, removing parties from licenses, updating the DDTC Watch List, or referring cases to the Office of Defense Trade Controls Compliance (DTCC) and/or U.S. law enforcement agencies for investigation and action. Seven unfavorable checks were referred to DTCC in FY 2022.

Regional Distribution of Unfavorable Cases: The NEA (North Africa & Middle East) region had the highest percentage of unfavorable checks (33%), primarily due to derogatory information on foreign parties. The EUR (Eurasian)  and EAP (East Asian & Pacific) regions had unfavorable rates of around 30%, while the AF (Aftica) and SCA (South Central Asia) regions had unfavorable rates of 40% and 50%, respectively. There were no unfavorable checks in the WHA (Western Hemisphere) region in FY 2022.

Firearms Cases: Of the 226 Blue Lantern checks closed in FY 2022, 36 involved U.S. Munitions List (USML) Category I (Firearms), with three of these cases being deemed unfavorable. The unfavorable rate for checks involving USML Category I articles was 8% for FY 2022.

DDTC Watch List: In FY 2022, CEA reviewed 65,677 DDTC Watch List name matches and made 1,536 new entries and 2,096 modifications to the list. The Watch List is an internal screening tool containing over 229,000 entities and is used to flag export authorization applications for possible Blue Lantern checks. Since FY 2020, CEA has shared the DDTC Watch List with the Department of Commerce’s Bureau of Industry and Security to improve its ability to regulate items under its control.

[Blue Lantern Report]