Government Controls

Requirements

 The U.S. Government expects businesses to understand and comply with each agencies' regulations. Claiming ignorance of the law will not help an organization that has violated a regulatory policy. U.S. business (and individuals) must pre-determine a number of factors related to a business transaction prior to exporting or importing any item between the U.S. and a foreign entity.

Businesses must understand the U.S. Government classification or level of control each article, technical transfer or training/defense service provided is (or what agency controls a product or service and what those controls are). Occasionally your organization will find that you have items under multiple agencies control — it is important that you follow the regulations of each of those agencies.

There must be a clear understanding of who the ultimate end-user of the product or service is. For example, if a company sells aircraft parts to France, and is aware that France intends to send those parts to Iran, the transaction would not be allowed. A business must have enough information about a proposed sale that they can state they know exactly who and where their product is being sold. An organization that willfully turns a blind eye to the true end-use can end up in a world of trouble with the USG regulatory agencies. You must know your customer and what they intend to do with the product or service you are providing.

Potential customers must be screened against the various U.S. Government denied, embargoed, or restricted lists. A customer that is on one of those lists is not allowed under U.S. Foreign Policy to have access to technology, equipment, training, etc. and the transaction will not be authorized. In addition, your organization may be required to report to a USG agency that a certain entity or individual has attempted to enter into a business arrangement with your organization. Businesses must know the who, what, when, why, and where of any transaction they are contemplating that involves foreign entities or individuals. It is your organization's responsibility to make sure there are no problems with your customers, vendors, subcontractors and so forth. Failing to ensure that your business is working with USG "good guys" could have disastrous results for your organization; particularly if you are working with an entity that supports terrorism or WMD proliferation.

A business must obtain the required license authorizations, exemptions or exceptions from the appropriate U.S. Agency prior to making a transaction. In some cases, the authorization must be obtained prior to making a proposal or presentation.

Once the correct authorization is obtained, a business must then ensure that it follows the limitations and conditions of that authorization to the letter, including the requirement of keeping records, making annual reports to the U.S. Authorizing Agency, if required, and tracking the use of the authorization each and every time it is used. The recordkeeping burden is on your organization and it is extensive — every communication, transaction, email, phone call or fax to a foreign party should be reviewed to make sure it is not an export — or if it is an export, that the authorization your business has obtained covers that particular transaction. Always ask an expert and do not attempt to make such decisions alone — it can quickly get you in trouble and both you and your organization may face fines and penalties.