1. U.S. Export Controls
How to Comply with Commercial, Dual-Use, and
and Defense Article Regulations and U.S. Trade Sanctions
Export Controls Compliance Programs (Including Key Lists to Check) and Voluntary Disclosures
                                                                      
                                                                      
                                                                      
                                                                      
                                                                      
                                                                      
                                                                      
                                                                      
                                                                      
May 11, 2016
Copyright Holland & Hart LLP All Rights Reserved.

2. Disclaimer
This presentation, related materials and subsequent discussion are provided for educational purposes only. They do not constitute legal advice nor do they necessarily reflect the views of Holland & Hart LLP or any of its attorneys other than the speaker. This presentation is not intended to create an attorney-client relationship between you and Holland & Hart LLP. If you have specific questions as to the application of the law to your activities, you should seek the advice of your legal counsel.

3. AGENDA Introductions EAR / ITAR Overview
Licensing and Commodity Jurisdiction
OFAC Compliance
Lunch Keynotes
Economic Espionage and Theft of Trade Secrets
Export Regulations Enforcement
Export Control Reform Initiative Update
ITAR Registration Requirements (Including ITAR Part 129 Brokering)
Export Controls Compliance Programs (Including Key Lists to Check) and Voluntary Disclosures

4. Implementing Effective Measures
EXPORT COMPLIANCE PROGRAMS
Implementing Effective Measures

5. EXPORT COMPLIANCE PROGRAMS
At a minimum, a program should include:
Compliance policy and export responsibility
Proper classification, licensing and checks
Screening of denied parties, end-uses/end-users and red flags
Training, audits, and updates
Technology control plan
Safety valve for reporting violations

6. EXPORT COMPLIANCE PROGRAMS
Why is a compliance program important?
To rebut regulator’s presumption your company acted with knowledge
To be effective, it most come from the top

7. EXPORT COMPLIANCE PROGRAMS
Customer Screening:
Must be centralized and preferably automated
DDTC issues a debarred party list
OFAC - Specially Designated Nationals List (SDNL), Foreign Sanctions Evaders List (FSE), Sectoral Sanctions Identifications List (SSI)
BIS - Denied Parties List, Entity List
Non-Proliferation Sanctions Lists

8. EXPORT COMPLIANCE PROGRAMS
ITAR - Destination Screening
Licenses Required for All Exports and Re-exports
Unless an exemption is available
Embargoed Destinations
126.1 Countries
Assess where your customer is located early on in transaction

9. UNDERSTANDING THE EXPORT COMPLIANCE PROCESS
Main embargoed countries under OFAC
Other countries are subject to OFAC sanctions

10. UNDERSTANDING THE EXPORT COMPLIANCE PROCESS
All embargo regimes are different
Products and technology
Financial transactions and facilitation
Changes on-going concerning Cuba

11. UNDERSTANDING THE EXPORT COMPLIANCE PROCESS
ITAR Section Countries

12. UNDERSTANDING THE EXPORT COMPLIANCE PROCESS
ITAR Section Countries
Afghanistan, Belarus, Burma, Central African, Cote d‘Ivoire, Cuba, Cyprus, Democratic Republic of Congo, Eritrea, Fiji, Haiti, Iraq, Iran, Lebanon, Liberia, Libya, North Korea, Somalia, Sri Lanka, The Republic of Sudan, Syria, Venezuela, Vietnam, and Zimbabwe
Policy of denial vs. case-by-case review
Immediate obligation to notify DDTC

13. EXPORT COMPLIANCE PROGRAMS
Jurisdictional Determination
You need to know your product
Failure to determine jurisdiction has resulted in many export violations
Be careful with dual-use vs. ITAR
Origin of the product is fundamental
If your product is incorporated into a foreign made product, ITAR jurisdiction remains

14. EXPORT COMPLIANCE PROGRAMS
Develop internal procedure for jurisdictional determination
Export jurisdictional determination team
Individual with expertise in technology
Alternative - Submit Commodity Jurisdiction Requests to DDTC
Develop an export commodity jurisdiction matrix
Use it, consult it, update it

15. EXPORT COMPLIANCE PROGRAMS
Dealing with Risk Areas - Technology Control Plan (TCP):
Facility Access Control
Hiring
Exposed technology in the work area
Visits by Foreign Persons
IT controls
Discussions with Foreign Persons anywhere

16. EXPORT COMPLIANCE PROGRAMS
Recordkeeping
If it is not in writing, how can you prove it?
Company policy for record retention essential
Routine destruction of documents, when allowed by law
Record retention will help in the event of the potential inadvertent violation

17. EXPORT COMPLIANCE PROGRAMS
Reporting
Provide a safety valve for reporting violations
Contact information of compliance personnel
Anonymous hotline
Voluntary Disclosure
Credit for voluntary disclosure, remedial measures and cooperation
Alternative could be directed disclosure, larger penalties
Recordkeeping is fundamental for an accurate voluntary disclosure

18. EXPORT COMPLIANCE PROGRAMS
Training
Initial training sessions by outside counsel/ training provider
Web-based training
Face-to-face training
On-going targeted training
Document it!

19. EXPORT COMPLIANCE PROGRAMS
Compliance Audits
Self-Initiated Audit/Assessment
Comprehensive vs. Focused Review
Internal vs. External
On-Going vs. Annual
Develop an audit plan and follow it
Directed Audits
Resulting from Government investigation, settlement, or no-action resolution

20. VOLUNTARY DISCLOSURES
What to do if an export control violation occurs?
ITAR §
EAR § 764.5
“Strongly Encourage” Disclosure
Mitigating Factor

21. VOLUNTARY DISCLOSURES
Disclosures are only voluntary if filed before the U.S. government learns of the violation on its own.
Notification should be filed immediately after a potential violation is discovered, and then conduct a through review of the transactions related to the suspected violations.

22. VOLUNTARY DISCLOSURES
What Information Should Be Included?
A precise description of the nature and extent of the violation
The exact circumstances of the violation (why, what, where, when, how)
Complete identities of the parties involved
Export license numbers
USML categories
Description of corrective actions undertaken

23. VOLUNTARY DISCLOSURES
Copies of all documentation related to the transaction
Certification of empowered official
“True and correct to the best of my knowledge and belief”

24. WHAT IF…. DDTC/BIS DISCOVERS A POTENTIAL VIOLATION?
Remain calm…
Contact specialized legal counsel
Do not file or sign any documents or make any statements with the U.S. government unless you are absolutely certain of its accuracy
Conduct a thorough investigation before responding to any request for information
Cooperate and work towards a resolution

25. QUESTIONS