Dual-Use Trade Controls: The New EU Guidance on Internal Compliance

On 30 July 2019, the European Commission published the EU Guidance on Internal Compliance Programme (ICP) for dual-use trade controls, which directly addresses companies involved in the trade of dual-use items. With these legally non-binding guidelines, the Commission has formulated certain expectations on corporations when it comes to their internal compliance programme for trade control regulations.

The Commission recommends, depending on the size, structure, and scope of the company’s specific business activity, to take into account seven core elements for the creation of an effective ICP:

1. a top-level management commitment to compliance in order to create a culture of compliance and publicly support the company’s internal compliance procedures;
2. a clear organisation structure, well-defined responsibilities and sufficient resources;
3. training and awareness raising of export control regulations for staff;
4. the establishment and implementation of effective transaction screening processes and procedures;
5. the continuous review and improvement of the ICP through performance review, audits, reporting procedures and corrective action;
6. comprehensive recordkeeping and documentation of dual-use trade control related activities and
7. the establishment of physical and information security of dual-use items, including software and technology.

Companies may use these core elements as “building blocks” for the preparation and improvement of their own ICP. The practical recommendations given by the Guidance can thereby help them answering the Commission’s expectations.

Given the importance of compliance especially in the sensitive area of dual-use trade, the EU Guidance serves as a helpful tool for establishing and maintaining an effective compliance programme. The Information Leaflet about Internal Compliance Programmes by Germany’s Federal Office for Economic Affairs and Export Control (BAFA) provides additional guidance in this respect.

If you have any questions about your internal compliance programme, on how to implement the new Guidance or on other issues that concern dual-use trade control, Roland M. Stein and Leonard von Rummel are more than happy to provide assistance.