If your organisation is involved in exporting or importing products your quality management system should reflect the requirements of international regulations and legislation. There are a multitude of international sanctions that have been imposed on countries and regimes which may be inadvertently be breached by UK, US and EU-based business operators. To protect these business operators from sanctions legislation breaches, a multitude of guidelines have been put in place. In a quality management system, managers should identify issues that affect the context of the organisation. Export and import activities will definitely affect the context. Therefore, managers should have processes in an ISO 9001 system that recognize imposed sanctions and the impact these can have. Managers should ensure that they identify legislation for ISO 9001 procedures and regularly carry out compliance audits as part of their ISO 9001 audit programme.
Trade between countries is a very common occurrence. Businesses are incentivized by profit to try and capture proportions of foreign markets through exports or acquire cheaper foreign materials through imports. Sanctioned goods and technology usually include weapons and ammunition but can also be extended to dual-use (military and civilian applications) goods and technology such as vehicles, software, clothing and protective and building equipment that can potentially be used for internal repression. The risk is a business inadvertently exporting to or buying goods and technology from a sanctioned or embargoed country.
Why should businesses care about where they export their goods to? It may simply be illegal. The stakeholders involved, including governments, due to their respective codes and rules may seek to punish a business if it came to light that said business was exporting to a blacklisted country. The UK, EU and USA all have similar sets of rules, regulations and guidelines for domestic businesses to follow and adhere to when exporting goods to foreign markets.
The control of overall UK policy on international sanctions and the implementation process fall under Foreign Office (FCO) and Department for International Trade (DIT) jurisdiction respectively, with the DIT’s Export Control Joint Unit (ECJU) controlling and administering the UK’s export control and licensing system. Financial sanctions are controlled by HM Treasury’s Office of Financial Sanctions Implementation (OFSI). A variety of relevant legislation is involved in decision-making processes. All UK legal persons and entities have a legal obligation to report suspicious activity and dealings to the OFSI and DIT. If they fail to do so criminal charges may be brought against them by HM Government. As of yet there have been no significant changes to legislation following the BREXIT transition period ending 31 December 2020, although they can be expected. Follow the FCO, DIT and HM Treasury for updates on sanctions, regulations and legislation.
The Council of the European Union controls the administration and implementation of international sanctions and restrictive measures, and has released a variety of legislation, rules and regulations to guide EU-based businesses along best practices when dealing with exporting of goods and technology. Any sanction imposed by the EU must be applied within the territory of the EU or by any legal entity, person or body, inside or outside the EU. As in the UK, all persons and entities subject to EU jurisdiction are obligated under EU law to inform authorities of any information at their disposal which would facilitate the application of restrictive measures against blacklisted entities and to co-operate with authorities in the verification of this information, or face prosecution by Member States. For more information on direct EU legislation regarding this topic, see the EU Best Practices for the effective implementation of restrictive measures. Follow European Union External Action and the Official Journal of the European Union for more information and regular updates on EU sanctions.
All policy on sanctions and restrictive measures is controlled by the US Department of the Treasury’s Office of Foreign Assets Control (OFAC). OFAC publishes comprehensive lists of individuals or companies owned or controlled by, or acting on behalf of, targeted and sanctioned countries, known as Specially Designated Nationals (SDNs) and it is the legal responsibility of US legal entities to ensure they are dealing with cleared entities and individuals. It is generally prohibited in dealing with sanctioned countries and entities although licenses can be procured from OFAC. Dealing with blacklisted entities without consultation or clearance from OFACs can result in various penalties imposed for different levels of offences, punishable by civil penalty. For more information on updates and various legislation and guidelines see the OFACs website.
Published on 10 August 2020
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