Guidance

Export control compliance case studies

Updated 23 December 2022

These case studies show examples of best practice and desirable approaches to licence compliance.

Implementing these procedures will help licence holders:

• meet the terms and conditions of the licence
• pass an inspection by an ECJU compliance inspector

See the compliance code of practice for export licensing.

Example 1: compliance when there are many controlled items

This company has several operating units. It has dual-use products.

It uses:

• open individual export licences (OIELs)
• open general export licences (OGELs)
• individual licences

Commitment to compliance

The chairman has placed a letter on the organisation’s intranet. This is addressed to all employees with any involvement in export control compliance.

Delegation of responsibilities

The managing directors of the operating units have responsibility for compliance.

Each has nominated an export control coordinator.

There is a nominated compliance liaison officer within each function in the operating unit.

These functions can include:

• sales and marketing
• order processing
• production
• despatch and shipping
• maintenance
• finance
• personnel

Export control responsibility is spelt out in each individual’s job description.

Information

The export control coordinator in each business unit:

• maintains up-to-date information on regulations
• gets ECJU’s notices to exporters email updates
• gets email alerts from GOV.UK when there are:
  • new pages or updates from ECJU
  • new pages or updates about embargoes and sanctions

The export control coordinator contributes occasional pieces to the company-wide newsletter. This is to raise general awareness.

Training

The export control coordinator records all jobs with export control compliance responsibilities. The responsibilities are set out in each job description. This is regardless of whether the job has direct or indirect input to export controls.

Anyone in such a job must undertake one of 2 standard modules of training. This is regardless of whether it is induction or re-training.

One module is primarily for administration staff. This is a basic introduction to export licensing and how the system for compliance works.

The other module is for more customer-oriented staff.

This includes:

• sales
• maintenance
• middle managers throughout the company

It covers:

• why export controls exist
• the hazards of non-compliance
• how to spot suspicious orders

Training material includes:

• booklets
• webinars
• DVDs and slides

Procedures

The compliance liaison officer in each function draws up the local procedures for export control.

The compliance liaison officer passes this to the export control coordinator. The coordinator checks it and then includes it in the manual for the operating unit.

These functional procedures highlight important export control activities within the company.

Sales and marketing

The compliance liaison officer feeds into business planning. This ensures consideration of export licencing at the outset of a project or when looking at new markets.

The compliance liaison officer:

• publicises indicators of suspicious enquiries
• makes export controls an element in sales training
• ensures that all quotations to both UK and overseas enquirers include a statement of the potential need for an export licence
• gives agents written instructions about UK export controls and contact details of the export control coordinators

Design and development:

The compliance liaison officer:

• sees plans for new design and development
• gives early advice on possible licensing implications
• consults with ECJU and Ministry of Defence if there is a military use, allowing design amendment where necessary

Order processing

The order processing system includes a checklist of export licensing issues.

This should:

• flag a new order by:
  • product
  • destination
  • licence type and number
• indicate end-use information requirements
• number orders sequentially and keep a paper file of end-use statements for each transaction
• records financial status checks, including details of directors of the customer company

The export control coordinator has online access and must record approval of the order and licence detail. This is before generation of an invoice. The licence details appear on the paperwork generated to go with the goods

Despatch and shipping

The compliance liaison officer issues a checklist of instructions for freight forwarders.

There is a close relationship with freight forwarders. The compliance liaison officer provides training sessions for their staff on export controls.

Before despatch the compliance liaison officer or delegated deputy checks:

• completed documentation
• licence details

Final clearance is then given.

Returned export documents are filed with other documents relating to that transaction.

Record keeping

There is a 4 year on-site document retention policy for all orders. Documents are then electronically archived for an indefinite basis.

Documents include the:

• contract
• letter of credit
• consignee or end-user undertaking

Access to the computer record is by:

• company name
• address
• postcode
• product
• country of destination or final destination

Audit

Compliance liaison officers conduct a self-audit of the procedures in their function twice a year. This includes checks of documentation, implementation, and training. They report the result of this audit to the export control coordinator. There is joint resolution of any problems.

Export control coordinators conduct peer audits of other operating units. This is to improve the objectivity of the review.

Example 2: compliance when there is a limited number of controlled items

This company:

• is a distributor of electronic components and associated products
• has an extensive catalogue of products
• supplies to mainly small or medium-sized original equipment manufacturers
• uses a sophisticated computer-controlled order processing system
• uses one UK site for all operations, including stockholding
• supplies overseas orders through:
  • subsidiaries in important markets
  • distributors in other territories

Responsibility

The export director has responsibility for export control supported by:

• the order processing manager, who creates and implements a viable set of procedures
• the finance coordinator, who checks for creditworthiness, as well as licence coverage, end-use and ultimate end-use

Quality

The subject of export control is a permanent agenda item at any senior management meetings. It should form part of the ‘Total Quality Management’ programme.

Staff awareness

All staff administering export orders have guidance covering:

• identification of licensable products
• types of licences and working practices
• production of shipping documents
• audit trail
• quotations

A sales team undertakes regular visits to agents and subsidiaries in all territories. They brief on export controls and, in particular, on end-use concerns.

Identification of licensable goods

Controls only apply to a small proportion of the company’s stock. The order processing system has a flagging process.

The flags:

• highlight the need for a licence
• show if an OIEL held by the company is applicable
• state if there is a valid end-user undertaking on file

If any relevant information is not available (for example concerning the consignee or end-use) a standard letter is sent to the customer requesting further details.

Introduction of a ‘positive’ licensing regime within the company is inappropriate.

End-use

Flags are available in the order processing system to highlight end-use concerns.

Staff refer orders from new consignees to the export manager or order processing manager. They carry out further checks on the consignee and end-use.

The business maintains regular contact with ECJU.

Documentation

Product descriptions of relevant goods have an ‘L’ mark in the order processing system. The addition of the letter ‘L’ follows identification of part of an order as requiring an export licence.

The commercial invoice refers to the export licence.

An export log captures relevant information including:

• consignee
• goods
• value
• licence type

The company’s export log is available for the ECJU compliance inspector to identify shipments for audit.

Shipping

A close working relationship exists with the principal freight forwarder. There are regular discussions on export licensing. Shipments use direct routing wherever possible.

Example 3: compliance with electronic transfer of controlled technology

This company:

• electronically transfers controlled technology
• transfers controlled technology between foreign countries

Export control

Decisions on whether the technology requires an export licence need to be made as soon as possible. The trigger for technology transfer could be the signing of a non-disclosure agreement. There is a similar, immediate point at which a licence is required when trade controls are applicable.

Responsibility

The electronic transfer of controlled technology and the movement of controlled goods between foreign countries, do not necessarily pass through the usual export control channels.

The company selects staff to play a more active role in complying with export control legislation. This could include:

• personnel in sales and marketing
• project managers
• senior engineers

Some companies have software to control technology transfers. Others rely on the provisions of a contract or project to define what can be transmitted and between which people. Details of every transaction are usually not required.

The relevant project manager should confirm whether the item needs a licence. This data is then passed to someone who can determine which licence is applicable.

Staff awareness

Potential exporters are all staff with access to both:

• controlled technology
• electronic means of transfer

They must be briefed on their responsibilities under the legislation.

The level of detail and the method of doing this should be relevant to the needs and culture of your company. When they audit, compliance inspectors will ask to see what the company has done.

Actions could include:

• reading the guidance on exporting military or dual-use technology: definitions and scope
• setting up an authorisation system for laptops leaving the UK so they are:
  • signed for
  • checked for sensitive technology and appropriate Ministry of Defence approvals

Record keeping

Where possible you should use existing records.

The information you need to have available is:

• a description of the technology sent (including the type and use)
• details of the person or entity it is sent to, including:
  • information on end-users and any other party to the transaction
  • the destination countries involved
• the date of the transfer or the period of time the transaction takes place over (start and end dates in cases where the transfer takes place over a period of time)
• any other records which the licence may specifically state

Electronic transfer of technology

Compliance inspectors will not need to see every email.

You should record (as part of the project plan) what technology was sent, to what organisation, when the transfer began and when it ended.

If it is part of a call-off contract to provide assistance there will be a start and end date to the contract. Invoices are likely to hold information on the technology transferred and where to.

Trade controls

Records of trade control transactions can be:

• emails or faxes
• records of telephone conversations

This is acceptable to a compliance inspector if the documentation confirms that the terms of the licence have been met.