What do I have to consider as an export officer Part 1: Sanction List Check

21. Jun 2018 | Compliance & Risk Management, Export Control, Knowledge, Sanctions lists

In the series “What does an export officer have to consider?”, we would like to give you an overview of the necessary customs and foreign trade law steps to be taken in the case of intra-Community deliveries and exports to third countries.

Need for sanction edishe list verification

Following the terrorist attacks of 11 September 2001, the European Union adopted, on the basis of United Nations Security Council resolutions, regulations aimed at combating terrorism. These regulations apply directly in all EU Member States and must be respected by all without the need for national transposition measures. Irrespective of whether the persons, associations, organisations or companies listed in the lists of names are located in Germany or in any other country.

No funds or economic resources may be made available, directly or indirectly, to the persons, organisations or entities listed in the annexes to the Regulations.

The audit covers all persons involved in the transaction. This includes employee examination for holders of the AEO licence. Violations of the provisions of these regulations may constitute criminal offences in accordance with Section 34 of the AWG.

The following regulations of the European Union must be observed by everyone in the EU:

  • VO (EC) No 881/ 2002
  • VO (EC) No 2580/2001
  • VO (EU) No 753/2011

In addition, there are restrictions on persons, organisations and companies resulting from country embargoes.

The information sheet Against Terrorism of the Federal Office for Economic Affairs and Export Control contains detailed information: http://www.bafa.de/DE/Aussenwirtschaft/Ausfuhrkontrolle/Embargos/embargos_node.html

Importance for practice

You must check all business partners of your company against so-called sanction lists (also called compliance lists or terrorist lists). The website of the federal and state justice portal offers the possibility of manual verification, a manual examination of the American sanctions lists is possible on the following website: http://export.gov/ecr/eg_main_023148.asp It is also necessary that the audit procedure and the resulting result be documented in the company.

Since all business partners of the company have to be examined, i.e. interested parties, customers, suppliers, service providers and even employees at the AEO, a manual check is hardly feasible in practice. Especially since not only new contacts have to be checked before a transaction is started or at the latest before the conclusion of a contract, but also all existing contacts have to be checked regularly. The legislator has stipulated that two days after publication in the EU Official Journal, a transaction with a company or a person of these lists is a criminal offence.

Accordingly, depending on the size of the company and the business, it is worth regularly having all new and existing business partners match all new and existing business partners with all EU sanctions lists and their changes, depending on the size of the company and their business. It also makes sense to take american sanctions lists into account, because if you do not comply, the consequences for your company can be very large. If you get yourself on an American sanctions list, you risk losing American customers and suppliers. Another advantage of the software: as a rule, documentation is possible, which can be used as proof of the compliance check carried out in the case of an audit.

However, it is recommended that you also create a procedure instruction. This should include, inter alia, information on the persons responsible, reporting obligations and, in particular, the procedure for hits occurring. In this context, please differentiate the legal regulation from which the hit results (e.g. European regulation, American regulation, etc.). This is essential to help you understand which authority you need to address in the event of a hit.

Tips for how to deal with “hits”

If there is a full agreement (so-called Red Alerts), you must contact the competent authority, as no funds or economic resources may be made available to listed persons. In Germany, this is the Federal Office for Economic Affairs and Export Control (BAFA). No funds or economic resources may be made available to listed persons.

Partial matches (warnings) must be clarified whether or not this is actually your own business partner. Often, only parts of the contact match, so the hit can be considered harmless. If a match cannot be completely ruled out, the examination by the Federal Office for Economic Affairs and Export Control (BAFA) is necessary.

In order to comply with German and European regulations, you are obliged to do so, whether you contact the respective state authority in case of matches in the event of matches in the event of matches from other countries, is your company policy decision. However, especially when hitting American lists, consider the possible consequences for your company.