International Trade Resources Podcast Export Controls Deep Dive Customer Risk
Today on the International Trade Resources Podcast, our host Kim Kirkendall is joined by Josh Rodman, who is a Senior Associate Attorney with Sandler, Travis & Rosenberg, to discuss the customer risk in Export Compliance as it fits into the interplay between customer, product, and country. NOTE: none of the information here or in the podcast is legal advice and it is provided for informational purposes only.
We discuss the different organizations listeners need to be aware of for Export Compliance. These organizations include the Department of Commerce, Department of Treasury, The Department of State, and Bureau of Industry and Security. Josh also covers acronyms such as CIFUS, OFAC, SDN, CSL, CCAT, CCL, ITAR, EAR, and ECCN. When we talk about export controls that apply to products, we're talking about US Department of Commerce and State rules. Treasury and OFAC rules relate to sanctions.
Kim and Josh move into how important it is to know your customer. Josh emphasizes that a company's responsibility does not end at their sale to a distributor. Depending on the country that the distributor is located in and the export control level of the product or products, you may need to do additional digging and research on who the subsequent customers will be after the distributor takes possession of the goods. It can be important to get additional information or written assurances from the distributor as to who the subsequent customers will be.
The OFAC 50% rule applies to company ownership of customers, distributors, end users. The Department of Treasury puts out a list called the Specially Designated Nationals list, among other resources. Doing business with individuals and/or companies on the SDN list typically requires a license. Josh notes that the Department of Treasury typically doesn’t issue licenses to anyone on the list. Josh explains how the 50% rule works as it applies to SDN companies & individuals.
Josh discusses resources available to companies looking to improve their export controls. He shares the many free tools available by the Department of Commerce or through the Department of State. Kim talks about the importance of primary and secondary data collection when companies are doing their research.
When it comes to the “who” part of export compliance, a lot of the work revolves around gathering information and asking questions. We note how complicated that can be in daily business when sales people may not be as aware of compliance regulations. Establishing a compliance team can help ensure gathering information from customers becomes a daily part of business.
Things you’ll learn
- The three factors in export control risk don't exist in a vacuum. The company needs to assess customer, country and product in most situations
- Our guest outlines free resources companies can use to research their export transaction to identify if that sale falls under regulations and learn about what to do if it does
- The importance of training and procedures to reduce the risk of a problematic transaction and for support if there is a government investigation into a prior transaction
Episode Sponsors:
Acclime China:
Corporate Services and full Accounting/CPA/Tax for China.
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Email: intltradepodcast@gmail.com
Disclaimer: The content of this podcast is for informational purposes only and does not constitute legal or commercial advice. We provide no guarantee for the accuracy of the information provided. Reproduction or transmission of this podcast is strictly prohibited.