If you are wondering what might be in store for the export and financial compliance industry in the New Year, cast a glance back at some of the major events of 2019 and you could glean some clues. The big picture view points to not only tougher enforcement but also the need for a keener eye to keep pace with ongoing changes in the regulations and constant updates to compliance content.
The clearest clue comes from the Office of Foreign Assets Control (OFAC) for example, which in the past year reached settlements with more than 20 organizations, which were handed down fines totalling $1.3 billion. Compare this to the approximately $71 million levied in 2018, $119 million in 2017, $21 million in 2016 and $600 million in 2015.
You never know when an organization will be added to—or removed from—a sanctions list
One of the best examples of the fluidity of U.S. sanctions is the case of Chinese tech firm, Huawei. In the early part of 2019, the Bureau of Industry and Security (BIS) announced that American corporations were forbidden from engaging with Huawei in any capacity. The regulations got a little less extreme over time, with the creation of a temporary 90-day license for Huawei, until finally some license applications for export to Huawei began to be approved as late as November.
And it wasn’t just corporations that saw their status in flux this year, either. In October 2019, the U.S. government placed sanctions on several Turkish ministries and individuals as a result of that country’s military operations in Syria—sanctions that were lifted less than two weeks later upon Turkey’s announcement of a ceasefire.
Sanctions enforcement is only ramping up
While screening for denied and restricted parties, as well as sanctioned and embargoed countries, has long been on the forefront of global trade compliance, authorities such as the Bureau of Industry and Security (BIS) are stepping up their efforts to enforce the ultimate end user(s). New to the concept of end use? We have multiple articles that will provide an overview.
In the past year, Canada also took further steps to strengthen its export control practices, further details of which can be found on their Global Affairs Canada website. And let’s not ignore dual-use goods, about which the additional export and trade controls thereof the European Union issued directives.
2019 should reinforce the need for diligence when it comes to export, trade and financial compliance
Cases such as the above illustrate a far more rapid cycle of changes for compliance regulations across the United States and governments across the globe, serving only to demonstrate the necessity of keeping abreast of the developments occurring on a now almost daily-basis in the compliance world.
In the increasingly integrated global economy and geopolitical landscape, it is highly unlikely that any organization anywhere—and in all industries and of every size—is entirely isolated from or immune to global export and trade compliance considerations.
The final point
The common misconception is that only high tech companies or those in aerospace and defense, chemicals, semi-conductors among others need to pay attention to export compliance. The fact is that any business can be subject to sanctions. To hit home the point, in 2019 a travel company, an atomic clock maker, and a cosmetics firm were also all found guilty of export violations.
Which makes it that much more important for all organizations to always be doing their due diligence to stay on the right side of export compliance regulations—especially since most laws place the onus on organizations to understand what regulations apply to them.