VOICES FROM THE INDUSTRY: Increased export scrutiny requires corporate-wide plan

While federal laws restricting exports of goods and technology have been in existence since the 1940s, companies and individuals have increasingly faced civil and criminal penalties that include millions of dollars in fines, prohibition from future exporting and even prison terms.

flagged and identified on the denied party list? Simply put, is the end user of the product or technology identified by the U.S. government as one banned from receiving such technologies?

Customer service representatives need to know whether the services they provide support an illegal export. If so, their services could constitute a new illegal export violation.

Site security personnel must be able to identify the nationality of ex-U.S. visitors to determine what information they can access and to ensure they are not afforded access to classified information

Since September 11, 2001, amid heightened national security concerns, the U.S. government has tightened export regulations, catching many companies off guard and at risk of severe penalties.

As small and mid-sized companies continue to globalize, distributing products and services to customers throughout the world, they face the challenges of complying with myriad export laws and would be wise to create a corporate-wide, holistic approach to compliance efforts to avoid unintended export violations.

Export law falls under the jurisdiction of various United States government agencies, including the Department of Commerce, the Department of State, the Department of Homeland Security and the Department of Treasury.

The rules, which regulate the distribution of information, technology and commodities to foreign nationals and foreign countries, are applied depending on the product being exported, to whom and for what purpose.

And it’s not just products that are subject to export law; information transferred to foreign countries or foreign nationals in the U.S., as well as financial transactions, may be subject to export law.

For example, a product that is designed for commercial use but could be used by terrorists or the military is considered a dual-use item and may fall under certain export law through the Department of Commerce, Bureau of Industry and Security (BIS). Or, the disclosure of technology or information to a foreign national in the United States could be deemed an export to the home country of the national, and if a proper export license is not secured, penalties could arise.

Violations could occur even if technology or information is not actually disclosed but to which a foreign national has access-either through the computer, blueprints or technical specifications – that may not be exported to the person’s home country.

Understanding and adhering to export law, therefore, is the job of more than one person. It’s a cooperative effort throughout the corporation, from the human resources department to sales and marketing to customer service. Nearly everyone in a corporation could stumble and fall into an export violation without knowing it unless there is a concerted focus on compliance.

The human resources department and managers need to understand how export laws affect foreign nationals who may be employed with the company. When is an export license required and what information may those employees access?

Sales and marketing experts need to know their customers. Are they red
and other export-controlled data, except as allowed by an export license.

Controllers must be able to identify whether financial transactions could occur with forbidden parties.

An enterprise technology control plan can help companies record and implement the necessary controls for compliance with export laws. Technology control plans meeting the expectations of the Bureau of Industry and Security often include direct reporting to a corporate officer, legal function involvement, “hot line” access for reports of possible violations and follow-up record keeping for not less than five years.

The rewards of international business transactions help to balance the economic peaks and valleys of domestic business. However, international business success requires knowing and obeying the export rules applicable to your products, the countries where you do business, your individual customers and the non-citizens who have access to your enterprise, its products and its technology.