The Nine Key Elements of an Effective Compliance Program

In order to avoid inadvertent violations of the International Traffic in Arms Regulations (ITAR) and the Export Administration Regulations (EAR), companies must have in place an Effective Compliance Program as part of their Policies and Procedures Guide.  The Compliance Program is documented as an Export Management and Compliance Program, which is one of the nine key elements of the compliance program.

There is no “one size fits all” or “cookie cutter” approach to an effective compliance program.  Each company’s situation is unique and the program must be geared to that company and its unique environment.  However, each program should include the following key elements (taken largely from advice from the Bureau of Industry and Security, Department of Commerce):

  1. Management Commitment.  Management was “walk the talk” and provide the resources necessary to make the program work.
  2. Risk Assessment.  Creating a culture of export compliance in the company will significantly lower the exposure to risks.  In addition, a thorough assessment of the entire process from manufacture to end user has to be achieved and the risks assessed.  You may have to get help in this area.
  3. A Written Export Management and Compliance Program (EMCP).  This written plan must include all compliance policies, fully define all operating procedures for all export processes, and include all designated personnel – it’s more than a policy document, it’s an operational plan.
  4. Compliance Training.  Everyone involved in exporting needs both formal and informal training.  Informed employees minimize the likelihood that an inadvertent noncompliance will occur.
  5. Cradle to Grave Export Compliance Security.  Manage the process from the first point of regulatory risk through the entire life of the product.  Monitor post-shipment activities.
  6. Keep Records.  See EAR Part 762.
  7. Export Compliance Monitoring and Auditing.  An audit is the most effective and efficient way to identify your company’s compliance risks and vulnerabilities and provide reasonable assurance that your compliance safeguards and measures are effective.
  8. Handling and Reporting Export Compliance Problems and Violations.  The key here is to identify problems and violations early, take corrective action quickly, and self report the violation.

9.  Corrective Action.  When you find a problem, fix it.  This concept and culture has to be imbedded in the program and in management’s actions and words.

About ojmurphy

I'm Jay Murphy, founder and president of the consulting firm, TransGlobal Consulting, LLC. I have more than 25 years successful experience managing international programs in Europe, Asia, and the Middle East and have valuable experience dealing with the Export Compliance issues associated with international business. My experience with Hughes Aircraft Company, Raytheon Company, The Aerospace Corporation and the smaller firm of Advatech Pacific has given me a broad knowledge of corporate life and the sensitivities associated with foreign customers. I also teach International Business and The Legal Environment of Business at a college near Los Angeles. I also teach statistics and applied quantitative analysis at a private university. TransGlobal Consulting, LLC is a Disabled Verteran Business Enterprise and a certified small business.
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