What is Export Compliance?

Governments and international bodies maintain regulations and rules governing all export activities within their jurisdictions. Export compliance, therefore, refers to the act of complying with these regulations. It is the legal obligation of organizations to comply with all export regulations and rules that are relevant and applicable to the jurisdictions where they conduct business.

Export compliance is a multi-faceted process, and can necessitate several different actions on the part of an organization. These can include:

  • Screening against relevant denied and restricted party lists to help ensure they are not doing business with any individual or entity on a government or international watch list;
  • Avoiding business with countries and jurisdictions that have been sanctioned by the government where the organization has operations;
  • Ensuring restricted and controlled items are not exported, and securing and managing the appropriate documentation to be able to do so where possible;
  • Keeping personnel and staff up-to-date on export compliance regulations and obligations;
  • Maintaining a verifiable audit trail of export compliance related activities;
  • Restricting access to controlled goods, technology, or knowledge; and
  • Verifying the end-use and end-users for exports, particularly for controlled goods and technology.

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What are export control laws? Why are exports regulated?

Export control laws are the laws and regulations governing export activities for all organizations and businesses within a jurisdiction. Governments use export control laws to regulate exports from a country for a variety of reasons. These can range from national security interests (such as not wanting to share sensitive technology or intelligence that can be militarized by foreign governments), to foreign policy (such as sanctions and embargoes that restrict trade with specified nations).

What is trade compliance?

Trade compliance is the process of complying with all laws covering the trade of goods and technology. This can mean not only export control regulations and laws, but also the import laws, as well as any international regulations and rules that must be abided by while in transit. Export compliance can be viewed as being a part of trade compliance, but not the other way around.

What are the bodies that regulate exports?

Governments and international organizations around the world operate different bodies that administer and regulate export compliance. It is the responsibility of companies, research entities, and non-profits, among others, to properly understand the requirements within the jurisdictions they are operating in.

For example, in the United States, the primary bodies regulating exports and enforcing export compliance are Bureau of Industry and Security (BIS), the Directorate of Defense Trade Control (DDTC), and the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC). Similar organizations exist in the European Union and elsewhere around the world. Other international bodies include the United Nations, central banks, and law enforcement agencies.

Why do organizations have to comply with export compliance regulations?

Simply put, because it is the law. Export compliance regulations have the full legal backing of the governments that enforce them, and not complying can lead to a variety of unpleasant and undesirable outcomes and consequences for organizations and businesses. Nor is ignorance of the law an excuse for not complying – organizations are expected to educate themselves on the relevant regulations and laws that apply to them, and comply with them accordingly in order to keep their business viable and to protect their reputation and image.

Having export compliance solutions and tools in place can help reduce the amount of labor, time, and resources involved in the compliance process, and can therefore help organizations reduce their risk coverage while also being cost-effective.

What are the penalties for not complying with export compliance regulations?

While different governments and bodies have different penalties for non-compliance, some of the most common ones administered across the world include monetary fines (both civil and criminal) and even prison time. Other extra-legal negative consequences for non-compliance can include adverse media coverage, brand and reputational damage, and disruption in the supply chain (causing further economic and financial losses).

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