- Compliance risks in international trade, purchasing and sales
- Countries in which special risks exist
- What are the liability risks?
- Development of an export control compliance organization
- Compliance for import and export
- Introduction to the most important directives and standards More info
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Increasing importance of trade compliance
Philipp Müller is tired. The negotiations with the South African business partners were tough. Now he is waiting in Johannesburg for the departure of his return flight to Frankfurt am Main. When he leaves for boarding, he is startled: His laptop bag is gone! It has obviously been stolen. A disaster! The thief can now use the device to dial into the intranet of Müller's company and access sensitive data. His company produces hydraulic cylinders, which are normally installed in vehicles. In a slightly modified form, however, they could also be used in nuclear weapons systems. "Dual use," experts call it. Müller's colleagues who deal with trade compliance now face a major challenge because of the theft.
The example outlined here shows how exceedingly complex the topic of export control can be. After all, all forms of technology transfer must comply with certain export licensing regulations. And in the case of the stolen laptop outlined here, a technology transfer may actually take place without there having been any deliberate export at all.
Export control and the Trade Compliance Management System
Any company engaged in international trade must establish an internal export control system. It serves as a central part of the company's trade compliance management system. However, there are a number of things to keep in mind when doing so. Participants in Security Island's e-learning course "Trade Compliance" receive a sound introduction to the important topic of export control. They learn about the most important trade compliance laws and regulations. This enables them to avoid liability risks in terms of export control.
In fact, the export business is associated with enormous liability risks. Violations are punished severely. Many companies are not even aware of the many legal pitfalls associated with export control. Even negligent actions can lead to liability, criminal prosecution and heavy fines. It should be emphasized that companies are responsible for their own compliance with trade regulations due to their duty of care. They must ensure adequate monitoring and conduct appropriate audits. If they fail to meet this obligation, problems are inevitable.
Raise awareness of export controls among managers and employees
Internationally active producers and trade organizations operate in a highly regulated field. Only if they are familiar with the regulations, exercise due diligence for audits and properly document all steps, they are on the safe side in the field of export control. One way to make managers and employees aware of the important topic of export control is to take Security Island's online course of the same name.
Trade compliance and export controls affect all trade and brokering transactions. However, non-lawyers sometimes reach their limits when confronted with the multitude of terms. Experts speak of export, for example, when goods are delivered from the EU to a third country. However, if the goods in question are only delivered from Germany to Austria, they are referred to as shipments. Of course, different regulations apply to export control in each case.
Due diligence applies to export controls
Anyone who is active in the import-export sector must comply with numerous regulations. These include customs duties and taxes, export quotas and product standards, tax regulations, import requirements and import quotas. Embargo and sanctions lists also play a role, as do legally prescribed measures to prevent money laundering and terrorist financing. In addition, the War Weapons Control Act or the Chemical Weapons Convention apply to some technical or chemical products. Regulations on product liability and product piracy must also be observed. The comprehensive and increasing regulation is undoubtedly justified. However, it certainly does not make it any easier for companies to do business. After all, they are obliged to comply with all these regulations as part of their duty of care.
Recognizing alarm signs in good time: Export control in practice
Even the best export controls can reach their limits. Time and again, businessmen with criminal intentions approach legitimate entrepreneurs. The risk of becoming involved in corrupt activities is increasing. In the USA, the "know your customer" (KYC) principle is therefore very widespread. According to this principle, companies must scrutinize their partners before doing business with them. This can only be achieved with a functioning trade compliance system. If anything appears unusual during the check, alarm bells should ring immediately.
Possible indications of improper business dealings can be found, for example, in documents that do not stand up to authenticity checks. Caution is also advised if business partners fail to submit requested documents. Other red flags include customers who refuse to be verified or who provide inconsistent addresses. Even if they are pushing hard for speed in business transactions, the verification should be all the more careful. There must be that much time.
Export control checklist: These points are important
An export control checklist should include a series of questions that are thoroughly checked step by step: Is the information provided by the business partner plausible? What about authenticity? Is the information provided complete? Does the check of the personal data show any anomalies? Is there any suspicion that there might be misuse of the products? Does the buyer intend to circumvent embargo regulations? Is there any missing information on the use of the products? Are the transportation routes unusual and are the products risky? Who is the recipient country? Is there suspicion of money laundering?
BAFA provides information on export control
Each country has a central point of contact for export control. In Germany, for example, it is the Federal Office of Economics and Export Control (BAFA), based in Eschborn, Hesse. One of the authority's core tasks is to check whether the export of goods requires a license and is eligible for approval. In its export controls, it is guided by the security needs and foreign policy interests of the Federal Republic of Germany within the framework of international and legal obligations. Several times a year, BAFA also offers events dealing with export control issues. As a rule, these events are aimed at an interested specialist audience seeking first-hand information on current legal developments.
Online course on export control: deepening knowledge with e-learning
However, if the goal is to learn about the basics of trade compliance and export controls, Security Island's "Export Control" e-learning is recommended. Participants learn how to recognize and avoid liability risks. Finally, you can test your newly acquired or refreshed knowledge with a test.