By Jim McShane, Export Solutions

Appropriate to the Season and to something that should stay with us all throughout the year…

On the first day of Christmas my company gave to me-

A Management Compliance Policy which establishes my management’s and my company’s commitment to export compliance;

On the second day of Christmas my company gave to me-

An Export Compliance Officer and an Empowered Official to provide me understanding, assistance and directions as I navigate export regulations in my daily activities;

On the third day of Christmas my company gave to me-

Three Golden Rules of Export Compliance:

  • Know your Customer
  • Know your Product
  • Know the export regulatory requirements

On the fourth day of Christmas my company gave to me-

Processes and procedures for four sets of export regulations (ITAR, EAR , OFAC and FTR) to ensure my compliance and my company’s compliance;

On the fifth day of Christmas my company gave to me-

An understanding of International Sanctions and what they mean:

  • Embargoed Country Sanctions
  • Economic Sanctions
  • Arms Embargoes
  • Specially Designated Nationals and Blocked Persons List
  • Multi-lateral Sanctions (e.g. UN Sanctions)

On the sixth day of Christmas my company gave to me-

Export Compliance Training:

  • Basic Awareness
  • Classification
  • Advanced Compliance
  • Classification
  • Sanctions Training
  • My company’s Export Management and Compliance Program

To ensure I understood the company requirements and the export regulations;

On the seventh day of Christmas my company gave to me-

An Export Classification Matrix to record and maintain records for classification decisions which includes:

  • Product Description (Part or Drawing Number)
  • Country of Origin
  • Export Classification
    • USML Category
    • ECCN
  • Schedule B Number/HTS Number
  • HTS Rulings (for imports)
  • Commodity Jurisdiction Case Number (if applicable)
  • Commodity Classification Request (if applicable)

On the eighth day of Christmas my company gave to me-

Eight “Red Flags” to think about and beware of:

  • The customer or its address is similar to one of the parties found on the restricted parties list and/or the denied persons.
  • The customer or purchasing agent is reluctant to offer information about the end-use of the item.
  • The customer is willing to pay cash for a very expensive item when the terms of sale would normally call for financing.
  • The item ordered is incompatible with the technical level of the country to which it is being shipped.
  • Routine installation, training, or maintenance services are declined by the customer.
  • Delivery dates are vague, or deliveries are planned for out of the way destinations.
  • The customer or purchasing agent is reluctant to offer information about the end-use of the item.
  • The customer is unfamiliar with the product’s performance characteristics but still wants the product.

On the ninth day of Christmas my company gave to me-

A matrix of recordkeeping requirements to comply with §122.5 (and other sections of the ITAR), Part 762 of the Export Administration Regulations, 15 CFR § 30.10 of the Foreign Trade Regulations and other regulatory requirements:

  • Export Licenses and Exemptions/Exceptions
  • Audits (internal and external)
  • Correspondence to and from Government Agencies
  • Training Records
  • Voluntary Disclosures/Voluntary Self-Disclosures
  • Shipping Documentation
  • Electronic Export Information (EEI)
  • Classifications
  • Order information

On the tenth day of Christmas my company gave to me-

A ten point checklist to internally monitor and evaluate the company’s “state of compliance”:

  1. Export Compliance Training
  2. Visitors and Facility Security
  3. Control of Technical Data
  4. Export Authorizations
  5. Classification
  6. Export Screening
  7. Shipping Documentation
  8. Registration
  9. Recordkeeping
  10. Escalations of Export Issues and Voluntary Disclosures

On the eleventh day of Christmas my company gave to me-

A Consolidated Screening List with a Search engine to screen my customers, vendors, suppliers, employees, contractors and consultants against:

  1. Denied Persons List
  2. Unverified List
  3. Entity List
  4. Nonproliferation Sanctions 
  5. AECA Debarred List
  6. Specially Designated Nationals List
  7. Foreign Sanctions Evaders List
  8. Sectoral Sanctions Identifications (SSI) List
  9. Palestinian Legislative Council (PLC) List
  10. The List of Foreign Financial Institutions Subject to Part 561 (the Part 561 List)
  11. The Consolidated Screening List (a consolidated screening tool)

On the twelfth day of Christmas my company gave to me-

A reminder of what I need to do:

  1. Be Responsible
  • Yes, these are laws and regulations that must be followed, but also they have a direct effect on the success of you company.
  1. Be Responsive
  • Regardless of your position or function in the company, always work to achieve and maintain compliance.
  1. Be Protective
  • Your company has invested in Intellectual Properties (some of which will be export-controlled) and is trusted by its customers to protect their export-controlled technical data and technology. Remember that export-controlled technical data and technology cannot be provided to or accessed by Foreign Persons, unless there is an export authorization approving such provision/access. Handle, store and transmit all export-controlled technical data and technology in a manner that is compliant with the regulations.
  1. Be Diligent
  • Learn and Understand U.S. Export Laws and Regulations and how they affect my company and my job;
  • You cannot know how to be compliant unless you understand the Laws and Regulations that you are required to be compliant with;
  • Remember your company’s export compliance is directly affected by the compliance of its employees.
  1. Be Aware
  • Know whether the items and/or the technical Data/technology you are working with or have access to are export-controlled and handle them accordingly.
  1. Attend all training offered
  • The more trained you are, the more you will understand and that will make compliance easier. Even if the training is not directly related to your job, ask to attend – you may learn something new or gain a better understanding of what you know which will make you more compliant.
  1. Review my company’s compliance plan
  • Don’t just look at the sections of the compliance plan that you feel effect what you do, understand the whole plan – it is a company compliance plan, not a job compliance plan.
  1. Review the processes and procedures from the compliance plan and follow them
  • Your company has made every attempt to make its compliance processes and procedures not merely relevant to the company but also to all the functions within the company.
  1. Don’t Assume – Ask!!
  • Not sure or you have questions? Ask the Export Compliance Officer or Empowered Official and be sure!
  1. See It – Report It!!
  • If something does not look right, there is a good chance it isn’t. Report it to your Export Compliance Officer, Empowered Official, or immediate Supervisor. Violations can be costly.
  1. Be Compliant
  • As defined in Merriam Webster Dictionary: “ready or disposed to comply.”
  1. Remember the Three Golden Rules of Export Compliance from the third day of Christmas:
  • Know your Customer
  • Know your Product
  • Know the export regulatory requirements

While we here at Export Solutions cannot make all of your Christmas wishes come true, we can offer you a free consultation to help you remain compliance or become compliant this year.

Enjoy the Season and have a compliant New Year!

Jim McShane is a Sr. Consultant, Trade Compliance for Export Solutions -- a full-service consulting firm specializing in ITAR and EAR regulations.