Arpil 19-22, 2004Export Compliance Training1 Export Compliance Management December 10, 2013

Compliance Program Compliance Programs are put in place to ensure adherence to the regulations and to prevent violationsCompliance Programs are put in place to ensure adherence to the regulations and to prevent violations Compliance Programs may vary depending on the business model (EAR, ITAR, NAFTA, FCPA etc.)Compliance Programs may vary depending on the business model (EAR, ITAR, NAFTA, FCPA etc.) The Department of Commerce, Bureau of Industry and Security Compliance Guidelines Provide 9 Key Elements to Developing an Effective Export Management and Compliance Program and Manual.The Department of Commerce, Bureau of Industry and Security Compliance Guidelines Provide 9 Key Elements to Developing an Effective Export Management and Compliance Program and Manual.

EMCP 9 Core Elements of an Effective EMCP (Export Management Compliance Program)9 Core Elements of an Effective EMCP (Export Management Compliance Program) 1.Management Commitment: Senior management must establish written export compliance standards for the organization, commit sufficient resources for the export compliance program, and ensure appropriate senior organizational official(s) are designated with the overall responsibility for the export compliance program to ensure adherence to export control laws and regulations.Senior management must establish written export compliance standards for the organization, commit sufficient resources for the export compliance program, and ensure appropriate senior organizational official(s) are designated with the overall responsibility for the export compliance program to ensure adherence to export control laws and regulations. 2.Continuous Risk Assessment of the Export Program 3.Formal Written Export Management and Compliance Program: Effective implementation and adherence to written policies and operational procedures. 4.Ongoing Compliance Training and Awareness

EMCP Cont. 5.Pre/Post Export Compliance Security and Screening: Screening of employees, contractors, customers, products, and transactions and implementation of compliance safeguards throughout the export life cycle including product development, jurisdiction, classification, sales, license decisions, supply chain, servicing channels, and post-shipment activity.Screening of employees, contractors, customers, products, and transactions and implementation of compliance safeguards throughout the export life cycle including product development, jurisdiction, classification, sales, license decisions, supply chain, servicing channels, and post-shipment activity. 6.Adherence to Recordkeeping Regulatory Requirements 7.Internal and External Compliance Monitoring and Periodic Audits 8.Maintaining a Program for Handling Compliance Problems, including Reporting Export Violations 9.Completing Appropriate Corrective Actions in Response to Export Violations

Export Compliance Management Compliance is an ongoing process - not one actCompliance is an ongoing process - not one act Day-to-day operations should include screening and checks to safeguard against violationsDay-to-day operations should include screening and checks to safeguard against violations Denied/Restricted Party Screening, Embargo Country Screening, Product Screening, Antiboycott Screening and other relevant screens based on particular business model and compliance obligations.Denied/Restricted Party Screening, Embargo Country Screening, Product Screening, Antiboycott Screening and other relevant screens based on particular business model and compliance obligations. Processes should be checked to ensure effectiveness, identify weaknesses and demonstrate due diligenceProcesses should be checked to ensure effectiveness, identify weaknesses and demonstrate due diligence Every Compliance Program Should Include Auditing Process as well as a process for handling ViolationsEvery Compliance Program Should Include Auditing Process as well as a process for handling Violations

Project Background GENERAL PROHIBITIONS & OTHER SCREENING Denied Parties Screening Anti-boycott Screening Embargoed Countries Screening Red Flag Screening Office of Foreign Assets Control Excluded Parties Lists NLR No License Required Shipment Ordered Presented for Export License Required PREPARATION OF EXPORT DOCUMENTS DESTINATION CONTROL STATEMENT Schedule B or HTS Determination Internal Classification (ECCN / ITAR) Manufacturer BIS / DOS Product File FDA or OGA Docs/Reporting AES Reporting US Bureau of Census US CBP at Port of Export SAMPLE EXPORT COMPLIANCE FLOW ECCN LICENSE DETERMINATION Confirmation # SNAP-R/D-Trade Classification Verification > $2500 per Schedule B SNAP-R (or D-trade) Application Process Export File / Records NAFTA or Other FTA Consideration U.S. Munitions List Category CANCEL ORDER License Received License Denied Contact EMC

Transaction-Level and Process-Level Reviews Compliance with the RegulationsCompliance with the Regulations Does the compliance program cover the relevant compliance obligations based on your business?Does the compliance program cover the relevant compliance obligations based on your business? Are the compliance processes functional?Are the compliance processes functional? Are the compliance processes preventing violations and risks?Are the compliance processes preventing violations and risks? Compliance with Internal Program: Policies, Procedures, ManualsCompliance with Internal Program: Policies, Procedures, Manuals Are the processes you developed being followed?Are the processes you developed being followed? Vendor/Third Party ControlsVendor/Third Party Controls Are Third Parties utilized for Compliance Initiatives?Are Third Parties utilized for Compliance Initiatives? Are they following compliance processes?Are they following compliance processes? Are these processes updated to match current business practices?Are these processes updated to match current business practices? Export Compliance Management

Comprehensive - Corporate-level Audit Focus on Companies Overall Export Management and Compliance Program; Process and TransactionsFocus on Companies Overall Export Management and Compliance Program; Process and Transactions Through interviews with export-related personnel and management along with review of procedures, manuals, and transactional documents this Audit should Review:Through interviews with export-related personnel and management along with review of procedures, manuals, and transactional documents this Audit should Review: Operational Practice compared to Written Procedures Management CommitmentManagement Commitment Training and educational programsTraining and educational programs Order processing systemOrder processing system Export Controls/Screening processExport Controls/Screening process Analysis of export authorization processAnalysis of export authorization process Handling of LicensesHandling of Licenses Internal assessmentsInternal assessments Notifications of noncompliance Notifications of noncompliance Procedures for corrective actions & follow-up Procedures for corrective actions & follow-up Foreign national visitors/employees Foreign national visitors/employees Technology controls Technology controls Travel & Hand-carry items Travel & Hand-carry items Recordkeeping practices Recordkeeping practices Operational Practice to Procedures Operational Practice to Procedures Export Compliance Management

Conclusion Having an Effective Export Compliance Program in place will minimize risk of noncompliance and will act as a mitigating factor in an enforcement proceedingHaving an Effective Export Compliance Program in place will minimize risk of noncompliance and will act as a mitigating factor in an enforcement proceeding Review your Compliance Program and Auditing ProcessReview your Compliance Program and Auditing Process Keep Audit TrailsKeep Audit Trails Ensure proper resources, training and controls are in placeEnsure proper resources, training and controls are in place If weaknesses are discovered implement corrective actionsIf weaknesses are discovered implement corrective actions

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