Compliance And Export Controls
Understanding Export Controls is a fundamental necessity for companies in general and not only for those that do business outside of the United States as the controls also apply to transactions that occur within the United States (“deemed export”).
Export Controls are U.S. laws and regulations designed to protect the national security and foreign policy interests of the United States, restricting the export, reexport or transfer (in-country) of certain goods, services, information and technologies to businesses, research institutions, government and private organizations, individuals, and other types of legal persons.
Emails and voice messages or meetings and conferences or articles are also a sort of transferring/exporting/reexporting transaction under Export Controls regulations.
Export regulations apply to organizations of all sizes, including one-person operations and private individuals transferring, exporting or reexporting items to family and friends.
Did you know that approvals and licenses are required depending on…
- WHAT you/your businesses are transferring/exporting/reexporting?
- WHO is receiving what you/your businesses are transferring/exporting/reexporting?
- WHERE you/your businesses are transferring/exporting/reexporting to?
- WHY the company or individual needs what you are transferring/exporting/reexporting to it/him/her?
To every single transfer, export or reexport you/your business will want to ask WHAT? WHO? WHERE? and WHY? Here are the reasons:
WHAT
Items with commercial use can also be used in conventional arms, weapons or mass destruction, terrorist activities, or human rights abuses, as well as less sensitive military items. You have to check the EAR (Export Administration Regulations) for information on how export license requirements may apply to what you intend to transfer/export/reexport.
WHO
Certain foreign companies or individuals that you are transferring/exporting/reexporting to may be subjected to specific license requirements or you are not allowed to send anything to them at all depending on how it shows on the Entity List or the U.S. Denied Party screening list. You have to have those entities screened before starting any transaction.
WHERE
Furthermore, the U.S. export regulations restrict transfer/export/reexport to certain destinations. Some countries may have embargoes or sanctions in place and licensing vary depending upon the particular destination. To some countries all transactions without a license authorization are prohibited and to other destinations sanctions limit certain items, data, service or technology to be exported without a license.
WHY
Before what you are transferring/exporting/reexporting reaches its final destination you have to make sure how it will be used and by whom. You will want to have an end-user certificate to certify that the entity receiving what you are transferring is the final recipient and will not send it to another company or individual.
Understanding export control compliance is crucial and “ignorance of the law is no excuse” for breaking it.
Businesses in general should understand why having an export compliance program in place is so important.
An Effective Export Control Compliance Program
The first step is to acknowledge the need to establish an export control compliance program. By assessing and identifying the potential threats, you can establish policies and standards that specifically address the risks you have previously identified.
Well-designed policies and procedures should incorporate the entirety of companies’ operations. It begins before you ever receive an order. Include ways to mitigate risks at each step until the recipient has received what you are transferring/exporting/reexporting.
After your policies have been written and procedures implemented, your employees (and leaders) should still be trained regularly. The training sessions must include areas where your company has struggled as well as center on high risks that have been recently identified. Have your company’s program audited by someone who wasn’t part of the program implementation process, preferably an independent third party. Adopt the perspective of wanting to know what you should be doing to improve your company’s program and where your organization fails to meet the standards.
Prae Venire
At Prae Venire, we are aware of the need for export control compliance systems. For information about how we can support your business, contact us to schedule your consultation.