Mass Export Center OCT 2011
• Roles
• Program elements
• Audit tips www.dlexports.com
Natascha Finnerty
DL Exports International, Inc
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• Published guidelines for establishing export management system
– Nunn-Wolfowitz report google nunnwolfowitz
– BIS/DDTC Compliance guidelines Programs are on their websites
– DDTC guidelines
• BIS updated their guidelines in
2010 and have 9 elements
– Includes managerial tasks
– Administrative requirements www.dlexports.com
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• Management commitment
• Export Policy
• Regulatory understanding
• Resources
• Time
• Training
AB Tech
EXPORT
POLICY www.dlexports.com
3

• In successful companies, compliance is part of the corporate culture
• It can be a competitive asset and should be listed on your website
• Small investment can save big over new penalties www.dlexports.com
4

• Establish an Export Steering
Committee
• Nominate a Focal Point
• Engage kick off training
• Review business and applicable regulations www.dlexports.com
5

• Conduct a risk assessment – see BIS guidelines
• Establish/revise policies & procedures that address cradle to grave of hardware and technology release life cycle – integrate into quality
SOPs, other compliance programs
• Train personnel
• Implement & audit www.dlexports.com
6

Suggested Members www.dlexports.com
• Finance
• Legal
• HR
• IT
• Security
• Sales & Marketing
• Sales Admin.
• Contracts/Accounting
• Order Admin
• Manufacturing
• Traffic
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• Effect of Sarb-Ox
• Higher fines and penalties
• New mitigating and aggravating factors
• Export reform - Mixing of ITAR and
EAR rules?
• Securing of IP from foreign parties or customers
• Are contractors or outsourced companies screened?
• Anonymous reporting?
www.dlexports.com
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• Upper Management needs to be informed and verify compliance as part of corporate governance
• Penalties could adversely affect financial position of company, whether public or private
• Could stop a sale or acquisition
• Disclosure requirements www.dlexports.com
9

• What percentage of your business is exports? Are you publicly held?
• What percentage of your suppliers is foreign?
• Is your company a related company?
• Do you export to resellers? If yes, whom do they sell to?
www.dlexports.com
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• MUST PREVENT AND DETECT
VIOLATIONS
– DOES YOURS?
• HOW DO YOU USE METRICS TO
MEASURE IT?
www.dlexports.com
11

• Are they written in the active voice?
• Do they describe the responsible personnel?
• Do you detail the records that are created by the process?
• Is there a risk assessment and control process?
www.dlexports.com
12

www.dlexports.com
13

• Level of technology, ITAR?
• Is end-user known?
• Dealings in countries of concern? www.dlexports.com
14

• Any potential misuse of product
(EPCI)?
• Multiple shipping sites?
• Do you control distribution channels?
• Do you require licenses and need to adhere to qty, value, provisos?
• AES compliance?
www.dlexports.com
15

• EAR (& Antiboycott)
• ITAR
• OFAC
• Foreign Trade Regs
• NISPOM
• CUSTOMS
• CONSENT AGREEMENTS
16 www.dlexports.com

• DO YOU EXPORT CONTROLLED
HARDWARE OR TECHNOLOGY?
(ITAR/EAR)
– Need export license application procedures, processing, license management, closing
• Product classification
• Classification of new products
• Purchased Products www.dlexports.com
17

• Do you know your customers?
– Or sell thru distributors?
– Or you find out about them later
• sw registrations
• repair www.dlexports.com
18

• Compliance Policy and Org chart with responsibilities
– Time to get management support
– List back-ups to each key position
– Central focal point
• Product matrix
– Ongoing, tie it to new product release
• Country charts
– Automate, where possible
• Denial list screening and managing hits www.dlexports.com
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• Duties are cross functional
• Employees receive training on export procedures
• Use an Action
Plan until completed www.dlexports.com
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• Borrow from your company’s procedures templates and use flow charts
– ISO, TQM, Industry Quality standards, Sarbanes Oxley
• Upload an International
Compliance website
– Policy, training slides, product matrix, FAQs
• Coordinate with other compliance efforts: Quarterly reports to management
21 www.dlexports.com

Order
Rec’d
Conduct screening
• DPL, Entity, SDN
-Country
-High Risk
• Proliferation
Product matrix
Lic determ
Y Apply for lic.
Cancel Order
Contact ECM
Order OK?
N
Prepare Docs
Ship www.dlexports.com
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1. Administrative Elements:
– Management Commitment
– Responsible Officials
– Record Keeping
– Training
– Internal Reviews
– Notifications www.dlexports.com
23

– Denial Orders
– ECCN Classification/License
Determination
– Diversion Risk
– Nuclear End-Users/Uses
– Chemical & Biological End-Users/Uses
– Antiboycott Compliance
– Add’l US Gov’t Agency Requirements www.dlexports.com
24

Check all exports against:
• Restricted Parties and updates
• Product Matrix/Classification
• License requirements
• Restricted/Embargoed Countries
• Antiboycott www.dlexports.com
25

• You need to review all products to determine if an export license may be required
• This is done export compliance manager with the help of IT
• Controlled items can be hw, sw, technology relating to
– computers,
– software with encryption, telecommunications products, lasers
– Industrial equipment and chemicals www.dlexports.com
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• This process is ongoing, and requires regular updates as new items are developed or upgraded.
• You need to determine the export commodity classification number
(ECCN), countries that may require a license, and customs numbers (Sch
B).
• The Product Matrix list is included in the Export Compliance Program.
www.dlexports.com
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• You need to ensure that you do not sell to prohibited parties identified by the US
Government and, potentially, other gov’ts.
• Most companies need to get Compliance
Screening Service for this purpose
• These lists are updated regularly by the government.
• We must determine who is the end-user, what is the end-use, who are the parties to the transaction
• Screening must occur before the items are shipped for exports supporting particular projects
28 www.dlexports.com

• Need enough information to clear hits – what agency, what are the requirements
• Determine if it is a false hit
• Contact government agency or get certification from the person
• Keep records of hits www.dlexports.com
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• We need to ensure that we recognize any unusual circumstances or “Red Flags”
• Each employee is responsible for taking appropriate actions if a transaction seems suspicious
• Report any unusual activity throughout sales and to the
Export Compliance Manager
WHEN IN DOUBT, CHECK IT OUT!
www.dlexports.com
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DO NOT SHIP TO THESE COUNTRIES
WITHOUT A LICENSE!
• The following countries are under
General Embargo:
Cuba Iran North Korea Sudan Syria
• The following countries are highly-controlled:
Iraq Libya
There are many denied parties in these countries:
Banks, Entities (Companies) and Individuals www.dlexports.com
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Country Groups D
• Military & Terrorist
Rwanda Angola Libya
• Countries of Concern
China Taiwan India
Pakistan Middle East
Former Soviet Bloc www.dlexports.com

• US companies and their subsidiaries may not participate in the Boycott of
Israel
• Watch for any statements that include:
- you must “comply with Arab
League Boycott of Israel”, or
- request for certification that
Goods are “not of Israeli Origin”
• Must report all such statements to
DOC www.dlexports.com
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• We must keep records for 5 years
• Transaction Records include:
– Purchase Orders
– Quotes
– Commercial Invoices
– Bills of Lading & Air Waybills
Comm
– AES records Invoice
– Banking documents & letters of credit
– Export checklists
– Screening results
– Correspondence and contracts www.dlexports.com
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• Acknowledgment of the
Compliance policy
• Notices in contracts with resellers and websites
• Training records
• Audit Records
• Export licenses and classifications
• Encryption reports www.dlexports.com
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• Apply Due Diligence
• Know your customer
• Follow the system for approving exports
• Contact the Export Compliance
Manager with ANY QUESTIONS!
www.dlexports.com
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• The entire organization must implement procedures
• Export Compliance Manager acts as a focal point www.dlexports.com

www.dlexports.com
• Export Coordinator & back-up - annual external sessions
• Upper management
• Related employees - Inhouse annually
• New employee training
• Specific training for each department
38

– Per the govt – audit, audit , audit!
– Is there a schedule?
– Records?
– Internal or External
– Copies of hand-outs?
– Using the latest technology?
www.dlexports.com
39

Ensure that your subsidiaries have controls at their site!
• Denied parties screening
• Antiboycott
• Embargoed countries
ABC Sarl
ABC GmbH www.dlexports.com
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