Export Compliance? Why I should care! Part 2

Export Compliance means implementing measures to adhere to applicable laws and regulations concerning Export Control and Trade Sanctions. Export Control and Trade Sanctions are restrictions in trade: dealings with listed companies or individuals, limitations in the supply of goods or technology, country embargoes.

Examples of trade restrictions are everywhere, and so are examples of violations of these regulations. Risks are substantial financial penalties, reputational damage, revocation of export licenses or becoming a sanctioned party yourself. 

Companies that have violated export control and trade sanctions legislation, can be fined for millions for selling items to restricted parties, or purchasing goods in conflict with at that time applicable sanctions. Even a business trip to a country under embargo has led to punitive measures in the past. 

As a European company, European jurisdiction applies. But there is more. If your company, by its activities or related transactions, has a link with the United States, even the long arm of US law is something to keep in mind. The US export legislation “follows the goods”. This means that exports, re-exports and transfers of covered items are being regulated globally, even if the transaction is between Non-US persons and takes place outside the US. And it becomes even more complex considering end use or the foreign-made direct product rule, additional extra territorial measures by the US. 

Compliance with export control and trade sanctions law is not an obligation of result, however it does require a far-reaching commitment obligation. Having measures implemented to comply with export control and trade sanctions laws is conditional to mitigate risks and to provide a license to operate in an international trading environment. Export Control and Trade Sanctions are increasingly present in global trade. Take the extraordinary speed of sanctions implementation shown by authorities after the invasion of Ukraine by Russia as an example. It made the necessity of the capability to react immediately very clear. Companies engaged in business with Russia suddenly had to make sure their exports complied with a substantial number of sanctions  they probably never had to deal with before. Mature screening of existing and new business relations had to be in place, including ultimate      beneficial owner (UBO) due diligence.  

In the current global geopolitical context, you simply cannot afford to be unprepared anymore.  Efficient organization of compliance in your company leads to the ability to adapt swiftly to changing regulatory conditions. In addition, it gives your company a competitive edge by being a trustworthy business partner. Completely ‘in control’. 

So, you think compliance is a burden? Change your point of view. Make sure you do not create an administrative overkill, instead implement a functional Export Compliance Policy to become adaptive, in control and a reliable partner in the supply chain. And you still think compliance is costly? Try non-compliance…