By: Stephen Wagner
You are so confused.
BIS Agents were in your office conducting an “industry outreach.” They spoke with your export managers and scanned through your export records and training program materials. However, when they reviewed your export compliance manual, they said that it was inadequate and that your company could face higher penalties because of it, if violations are found.
When your company created the manual three years ago, they precisely followed and used the outline and sample forms for export compliance manuals that were given by BIS on its own website. Since you followed their forms to the letter, how can you be non-compliant?
Simply put: when it comes to export compliance manuals, one size does not fit all.
The Bureau of Industry and Security (BIS) (the Department of Commerce’s export control office) has developed and published “Compliance Guidelines: How to Develop an Effective Export Management and Compliance Program and Manual.” Within the contents of this 145-page document, BIS delineates the “Key Elements” necessary for export compliance programs in general and, more specifically, the manuals that are supposed to capture the policies and procedures that underlie those programs.
Yet, as informative and helpful as these Compliance Guidelines can be, they are just that – guidelines. BIS stresses the importance of customizing the contents of your compliance manual (and program) to reflect your company’s operational realities and meet your company’s specific needs.
For example, if your company sends its technicians (and their equipment) out to overseas clients and customers to perform training, maintenance, repairs and warranty replacements, your compliance manual should specifically address the controls you have put in place to safeguard – and license, when necessary – the equipment, software, technical drawings and knowledge that goes out with them. While the BIS-provided manual outline addresses “Nuclear explosive activities” and end-use checks for “Certain Rocket Systems and Unmanned Air Vehicles,” those sections are probably irrelevant for most companies and can be omitted from the export compliance manual.
Your company needs to reevaluate your compliance manual to see if the manual does such things as:
- capture the company’s current operations and work-flows,
- provide standard operating procedures (SOPs) for compliance activities and safeguards during each step of the export process,
- allocate specific compliance tasks to specific responsible personnel, and
- involve all levels of the company from the senior executives responsible for operations all the way down to the people working the loading dock.
In addition, your compliance manual should contain features that are not even included in the BIS Guidelines. For example, your manual could contain, if applicable, SOPs to identify and prevent foreign corrupt practices, such as improper payments to foreign government officials. Also, every manual should have procedures on how to respond to enforcement activities such as investigations, subpoenas and an announced or unannounced “industry outreach,” which is just an enforcement action in disguise.
You can also think outside the box when it comes to an export compliance manual. The “manual” does not have to be a three-ring binder on a bookshelf. An effective manual can also be well-documented checks and balances that are integrated into your automated processes. For example, when entering the “ship to” name on a packing list, a pop-up window can ask whether the employee has checked the consignee’s name against screening lists promulgated by the various export control agencies. Many enterprise accounting, logistics, and inventory control solutions can incorporate such control features into company operations.
Most critically, your export compliance manual needs to be a living, breathing document. A manual created three years ago that has sat on a shelf almost invariably is outdated. The company must have procedures in place for reviewing and updating the compliance manual no less than annually. Employees need to be trained on how to use the manual (and report needed corrections to SOPs). Finally, the manual needs to be in harmony with – and accurately reflect – the overall export compliance program for the company.
The importance of having an up-to-date, dynamic export compliance manual cannot be underestimated. As special agents from the BIS Office of Export Enforcement will tell you, having a current manual (as part of the overall compliance program) is accorded “great weight” by BIS as a mitigating factor in possible export penalties and sanctions. In contrast, an out-of-date manual speaks of an export compliance program that probably is not being adequately implemented by a company.