Export compliance risk mitigation is an essential but often overlooked element of compliance programs. Export compliance risk mitigation involves identifying potential compliance gaps in your export processes and implementing strategies to address them. This can include conducting risk assessments, engaging stakeholders, and prioritizing corrective actions to ensure adherence to export regulations.
The Bureau of Industry and Security (BIS) address this issue in depth in Export Compliance Guidelines, The Elements of an Effective Compliance Program. This publication cites the root cause of poor risk assessment as the prioritization of day to day tactical targets over a more strategic approach.
The Need for Risk Assessments
Violations of the Export Administration Regulations (EAR) and International Traffic in Arms Regulations (ITAR) can result in fines, imprisonment, loss of export privileges, and negatively effect the organization’s reputation. Assessments can be broken down into three major categories: the item to be exported, the customer, and organizational operations.
Item to be Exported: If an item has not been properly classified it may be unwittingly exported without required licensing, resulting in an export violation.
Customer: If a potential customer has not been screened prior to initiation of a transaction, licensing requirements may not be met, an export to a denied party may occur, and a deemed export may occur when technical details are discussed.
Organizational Operations: Compliance programs must be tailored to the specific requirements of an organization. These programs should include effective procedures that are communicated to a properly trained staff. Clear paths of communication must exist within the organization to address any shortcomings of the program or potential violations.
Conducting Assessments
An initial assessment should be conducted when creating a compliance program. It should consider the nature of the business, the types of exports planned, the prospective cliental, and the specific regulations governing exports (EAR or ITAR).
Facility security should be a part of any export compliance risk mitigation assessment. This can be accomplished by creating a Technology Control Plan (TCP). A Technology Control Plan (TCP) describes the controls required to protect export controlled items, technical data, and CUI present at a facility to ensure compliance to federal regulations and contractual requirements.
Programs should be regularly reviewed by upper management at regular intervals to ensure that the program effectively mitigates risks of violations and that it is adequately resourced to function as documented.
Conclusions
Effective export compliance is not the result of a small team within the organization. Every employee has responsibilities for export compliance, beginning with top management. Top management must be committed to the Export Compliance Program, develop a culture of compliance, and effectively organize procedures and work instructions to ensure that all required tasks are completed. Risk assessments and program audits must be conducted on a regular basis to allow the organization to adapt to changing risk profiles and revised regulations.
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