5/29/2015. Export Compliance Overview. Agenda. Regulatory Overview. In the News. Key Program Elements. Quiz

Transcription

1 Export Compliance Overview William Barthell Global Trade Compliance Symantec Corporation June 19, 2015 Agenda Regulatory Overview In the News Key Program Elements Quiz Copyright 2015 Symantec Corporation 2 Regulatory Overview Copyright 2015 Symantec Corporation 3 1

2 Export Control Purpose of export control is to protect national security, foreign policy, and economic interests of exporting nations Export controls govern transfer of goods or technology based on: Classification Intended destination End user End use U.S. based corporations must comply with: U.S. export rules on a worldwide basis Local laws and regulations of countries from which we export and to where we import 4Copyright 2015 Symantec Corporation Export Defined Under U.S. law, exports include: Shipment of controlled goods, technology, or information out of the U.S. in any manner Transfer of ownership or control of these items to a foreign person Disclosure of technical information about these items to a foreign person Electronic software transmissions and downloads, or making available software for download, outside the U.S. Software as a Service 5Copyright 2015 Symantec Corporation Key Regulatory Authorities Singapore U.S. Treasury U.S. Commerce U.S. State European Union Ireland Jurisdiction extends to all U.S. origin goods or technology transferred anywhere in the world, including re exports Additional Requirements: Rules of foreign countries/regions from where you export (e.g., Singapore, Ireland, EU) Multilateral export control regimes to which the U.S. is a party (e.g., Wassenaar) 6Copyright 2015 Symantec Corporation 2

3 Items Subject to Control Export laws apply to both tangible (e.g., hardware appliances) and intangible (e.g., software, source code, services) items In the U.S., dual use items are listed on the Commerce Control List (CCL), under the Export Administration Regulations (EAR) Defense articles are listed on the U.S. Munitions List (USML) under the International Traffic in Arms Regulations (ITAR) For items subject to control, exporters must obtain export license, or rely on license exceptions, in order to export or re export 7Copyright 2015 Symantec Corporation Technology Transfers Under U.S. law, transfers of technology (e.g., source code), technical information or know how to foreign nationals: Are subject to export controls May occur visually, orally, or by practice or application under the guidance of persons with knowledge of the technology Apply to employees, contractors, interns, or service providers Usually in R&D engagements May be prohibited or require an export license prior to transfer 8Copyright 2015 Symantec Corporation Export Licenses Whether an export license is required depends on: Classification Intended destination End user End use of item Different controls apply based on all of the above Permission must be acquired prior to export Many products can be exported without a license based on license exceptions Licenses not granted for exports to denied persons or to embargoed countries (with very limited exceptions) 9Copyright 2015 Symantec Corporation 3

4 Restricted Party Lists Restricted party lists and denied party lists (RPL/DPL) are intended to control exports to persons or entities for national security or foreign policy reasons Key lists include: Entity List, Denied Persons List, Unverified List (BIS) AECA Debarred List (DDTC) Specially Designated Nationals List (OFAC) EU and UN Sanctions Lists U.S. authorities publish Consolidated Lists for screening purposes Screen against lists with automated systems 10 Copyright 2015 Symantec Corporation Red Flags Red Flags: Indicators of wrongdoing or potential violations of export requirements, such as: Customer name/address similar to party on restricted list Customer refuses to disclose end use of item Customer requests to pay in cash or ship to out of the way place Customer refuses to complete required documentation, certifications Certain destinations call for extra scrutiny (e.g., Dubai and Hong Kong) as known transit points 11 Copyright 2015 Symantec Corporation Causes of Export Control Violations Why do violations occur? Lack of training and awareness Insufficient controls Improper business practices Intentional wrongdoing Contributing factors Global business operations Speed and volume of export transactions Pressure to perform (e.g., sales targets, development timelines) Reduce the risk of violations through continual review and improvement of your program 12 Copyright 2015 Symantec Corporation 4

5 Sanctions, Penalties and Consequences Criminal and administrative sanctions monetary fines, civil penalties, imprisonment, restrictions or denial of export privileges, exclusion of practice before BIS Additional penalties debarment from U.S. government contracts, seizure/forfeiture of export items Negative impact on business bad publicity, loss of goodwill, high costs for investigation and remediation Exporters must exercise great care and diligence to ensure compliance 13 Copyright 2015 Symantec Corporation Sanctions Defined Penalties by one or more countries against a target country or person for political reasons Most common target: foreign governments Other targets can be individuals, corporations, entities, or non state actors such as terrorist or criminal organizations May be comprehensive or selective, with bans, restrictions or freezes on: Trade (import/export) Assets Financial transactions Diplomatic relations Admission (travel/visa) 14 Copyright 2015 Symantec Corporation Key Sanctions Regimes United Nations U.S. Treasury U.S. Commerce U.S. State European Union The Security Council deliberates and adopts sanctions resolutions binding on all member states 15 Copyright 2015 Symantec Corporation Administers comprehensive and selective sanctions programs; manages lists of Specially Designated Nationals and Blocked Persons, Foreign Sanctions Evaders, Sectoral Sanctions ID List, etc. Imposes and enforces license restrictions, prohibitions and end user/end use restrictions to supplement sanctions programs Implements nonproliferation policies, programs and initiatives (WMD, missiles) under multiple U.S. legal authorities (Executive Orders, statutes, regulations) Adopts and enforces sanctions against Designated Persons; supplemented by individual country level sanctions (e.g., UK) 5

6 U.S. Sanctions Laws In the U.S., sanctions are based on Executive Orders, federal statutes, federal regulations, and/or international mandates Sanctions apply to direct transactions as well as facilitation activity Sanctions apply to activity in the U.S. or whenever a U.S. company or person is involved U.S. person includes: All individuals and companies in the U.S. U.S. citizens or permanent residents Companies organized under U.S. law, including non U.S. branches U.S. offices or branches of non U.S. companies In practice, U.S. corporations, and foreign corporations operating in the U.S., need to comply with U.S. sanctions laws on a global basis 16 Copyright 2015 Symantec Corporation Office of Foreign Assets Control Treasury Department, through OFAC, oversees economic and trade sanctions activities OFAC administers sanctions against: Individuals Corporations or entities Terrorist or criminal organizations Narcotics traffickers Persons engaged in the proliferation of weapons of mass destruction OFAC acts to prevent prohibited transactions Any dealings with countries or persons subject to sanctions requires OFAC review/approval by means of licenses, exceptions or exemptions 17 Copyright 2015 Symantec Corporation BIS Provisions U.S. Department of Commerce, Bureau of Industry and Security (BIS) implements embargoes and sanctions controls under the Export Administration Regulations Provisions cover: All licensing requirements, policies, and exceptions for countries subject to general embargoes or comprehensive sanctions Sanctions on selected categories of items to specific destinations in support of UN Security Council arms embargoes U.S. policy based restrictions (e.g., Restrictions on Certain Military End Uses in the People s Republic of China or Russia) 18 Copyright 2015 Symantec Corporation 6

7 European Union Sanctions Designed to safeguard common values, fundamental interests, independence and integrity of the EU based on UN Charter Imposed by the EU acting on its own or to implement binding resolutions of UN Security Council Must be applied by all persons and entities doing business in the EU, and by EU nationals and entities doing business outside the EU Individual EU member states (e.g., the UK) maintain their own sanctions regimes in addition to EU administered programs 19 Copyright 2015 Symantec Corporation UN Sanctions Authorized under Chapter VII of the UN Charter Decision making authority resides in Security Council; decisions binding on all UN members Types of sanctions: Diplomatic, travel bans, asset freezes, arms embargoes, and commodity interdiction Key objectives: Resolution of intrastate conflicts Non proliferation of weapons of mass destruction Counter terrorism Democratization Protection of civilians and human rights 20 Copyright 2015 Symantec Corporation In the News Copyright 2015 Symantec Corporation 21 7

8 In the News Recent Enforcement Actions ebay, Inc. PayPal, a division of ebay, will pay $7.7 Million to settle charges by the U.S. Treasury Department's Office of Foreign Assets Control that it violated trade sanctions against Iran, Sudan, and Cuba a total of 486 times by failing to properly screen transactions with OFAC sanctioned companies and persons. Intersil Corporation Entered into a consent agreement with the DDTC to settle allegations that it had engaged in the unauthorized export and re export of integrated circuits controlled under ITAR, leading to potentially thousands of export violations. As part of the consent agreement, Intersil agreed to pay $6 Million in fines and a further $4 Million on remedial compliance measures, a total penalty of $10 Million. Computerlinks FZCO, the UAE subsidiary of the German firm Computerlinks AG Agreed to pay a $2.8 Million civil penalty, the statutory maximum and complete three external audits of its export control compliance program for violations of the EAR related to the transfer to Syria of Blue Coat equipment for use in monitoring and controlling internet traffic. Computerlinks was, at the time, an authorized reseller for Blue Coat Systems, Inc. of Sunnyvale, California. Wind River Systems Agreed to pay $750,000 to settle allegations that it had sold encryption software to entities on the BIS Entity List. The penalty was approved to "serve as a reminder to companies of their responsibility to know their customers and, when using license exceptions, to ensure their customers are eligible recipients". Weatherford International Ltd. Entered into a deferred prosecution agreement to pay $100 Million for export control violations related to exports of oil and gas equipment to Iran, Syria, Cuba and other countries the largest civil penalty imposed by BIS to date. 22 Copyright 2015 Symantec Corporation Key Program Elements Copyright 2015 Symantec Corporation 23 Key Elements of a Successful Trade Compliance Program Know your Products Classify products, services and technology Know your People Screen employees, contractors, resellers, distributors, end user customers Establish Safeguards Design an end to end compliance process throughout export lifecycle Conduct Audits Perform periodic audits and monitoring to identify areas for improvement Maintain Records Ensure to keep organized records of transactions for reporting 24 Copyright 2015 Symantec Corporation 8

9 Key Elements (cont.) Allocate Budget and Resources Maintain Professional Staff and Budget Implement Training Develop and implement formal training program for target audiences Leverage Automation Implement automated tools to gather data, screen, and train Develop Investigatory Skill Utilize internal and external resources to manage investigations Define Process to Address Problems Ensure a documented process to escalate and resolve issues 25 Copyright 2015 Symantec Corporation Key Elements (cont.) Monitor your Network Develop process to screen and monitor third party partners reach out Manage Regulatory Changes Establish process for tracking changes and making necessary changes Invest in Websites Design and build robust websites for compliance team, employees, partners, and customers Promote Cross Functional Communication Maintain effective channels of communication with internal stakeholders Seek to Continuously Improve Challenge your team to continuously improve the compliance function 26 Copyright 2015 Symantec Corporation Quiz Copyright 2015 Symantec Corporation 27 9

10 Quiz Question One Under U.S. law, which of the following is NOT an export? 1. The cross border shipment of technical products 2. The provision of technical services to an overseas customer 3. The electronic delivery of software abroad 4. The disclosure of technical information to a foreign person in the U.S. 5. The provision of source code to a U.S. person in the U.S. 6. The transfer of technical know how to an overseas partner 28 Copyright 2015 Symantec Corporation Quiz Question Two Which of the following does not have a direct role in administering sanctions provisions or programs? 1. The Office of Foreign Assets Control 2. The Department of Commerce 3. The United Nations 4. The Department of Defense 5. The European Union 6. The U.K Government 29 Copyright 2015 Symantec Corporation Quiz Question Three Which of the following is NOT a key element of a successful trade compliance program? 1. A robust training program that leverages technology 2. Knowing your customers and partners 3. Classifying your products, services, and technology 4. Managing product marketing plans 5. Screening product orders 6. Developing investigatory skills 30 Copyright 2015 Symantec Corporation 10

11 Thank you! Copyright 2014 Symantec Corporation. All rights reserved. Symantec and the Symantec Logo are trademarks or registered trademarks of Symantec Corporation or its affiliates in the U.S. and other countries. Other names may be trademarks of their respective owners. This document is provided for informational purposes only and is not intended as advertising. All warranties relating to the information in this document, either express or implied, are disclaimed to the maximum extent allowed by law. The information in this document is subject to change without notice. 11