Compliance Creates Alliance 12 Feb 2024, 9:04 am

Products and services for military purposes are subject to strong and complex legal frameworks. This is essential for the protection of vital controlled defense articles and services. Getting and being involved means having responsibility, and therefore securing and adapting your processes and control mechanisms

Text: Peter Buiting NIDV Magazine

Competitive advantages are in reach which is essential in today’s aerospace and defense industry. How? We asked Mike Farrell, with 35 years of experience with US and EU trade compliance regulations, to share some insights.

Bureaucracy or Bureau-crazy?

Exorbitantly long delays in defense programs, exclusion from certain programs and large fines are the result of an inadequate mindset and compliance monitoring systems. Mistakes will be made; however, the consequences are very significant. The mindset with US export controls and enforcement agencies is quite liberating. Reaching out transparently proves good intent. This is one of Mike’s many examples to revisit compliance. Away from a bureaucratic red tape boogieman image. “Everyone makes mistakes; anyone who does not either covers something up or is too stupid to know.” (Former Director State department).

In business relations, knowing the regulatory environment is deeply beneficial. As an example: Everyone in the chain of business has a collective and personal responsibility for controlled products and services.. Mike, a UK cadet in an earlier life, recounts his first drill sergeant’s summary of this advantage: “If you learn the rules better than any other officer, no one can **** you”. That expletive has become more likely in recent decades. The exponential growth of documentation and data, and analytical tools playing catch-up, improves the odds that omissions and negligence are discovered. As in all learning environments, taking mistakes in stride feels exposed at first, but will improve your effectiveness and secure your organization.

Compliance in practice

Compliance in Aerospace and defense means conforming to rules and regulations The real work starts by defining the Jurisdictions and subsequently by translating the requirements to an Export Control Management System (Risk matrix and to policies, procedures and work instructions) . Once compliance has reached the behavioral stage, be prepared to get involved in a much less clear-cut world: culture, behavior compliance Many more colleagues than just compliance officers alone will need to share responsibilities. They need to know the organization supports them when sharing and defining risks, which in hierarchical/political environments is a constant balancing act. Finding a working match between procedures and a working culture, corporate, national or international cultures, will differ each time. The top brass has to be on board and supportive: “Compliance starts at the top and begins at the bottom.”

How does this affect me?

Compliance is essentially your “license” to operate. Risk mitigation or security work is not easily combined with an entrepreneurial mindset, yet lives and democracies must be able to depend on your contributions. “Why would you endanger or be a national security risk? To cut corners for profit margins? Compliance is in essence an integrity test: accepting judicious rules for the greater benefit. That does not mean blindly ticking boxes: going through a client’s workflow with the compliance requirements has often led to new insights and innovations and great business potential.”

Arrests in the Netherlands and Belgium for Selling Technology to Russia 26 Jan 2024, 1:38 pm

Following a tip-off from U.S. justice authorities, police raids were conducted in Rotterdam, Sluis, and the Belgian cities of Knokke and Eeklo. These operations involved searches of homes and offices. The Belgian Public Prosecutor’s office reported that four individuals were detained for questioning in Belgium and two in the Netherlands.

Key Points:

1. Investigation Triggered by U.S. Intelligence: The U.S. law enforcement agencies had already initiated an investigation into the ‘illegal export of dual-use goods from the U.S. and money laundering.’ These dual-use items, such as microchips and turbine engines, can be utilized for benign devices but also for drones, missiles, and other military equipment.
2. Ban Post Russian Invasion of Ukraine: Since the large-scale Russian invasion of Ukraine nearly two years ago, the export of such items has been prohibited. Russia, in dire need of these items, has been attempting to acquire them.
3. Defence Procurement Network Involvement: The suspects are believed to be part of a ‘defence procurement network’ that acquired electronics for Russia’s military use, according to the U.S. Department of Treasury. This involved various small companies worldwide.
4. The Central Figures: The U.S. identifies Belgian businessman Hans De G. (61) as a key figure in this network. He, along with his brother Tom (59), allegedly collaborated with a Russian secret agent. For years, they are accused of exporting dual-use goods, including microchips, to Russia and China.

Implications for Trade Compliance:

This case highlights the critical need for vigilance and compliance in international trade, especially regarding dual-use goods that can be employed for military purposes. Companies engaged in international trade must ensure they are not inadvertently contributing to the illegal export of sensitive technologies. This incident underlines the importance of thorough due diligence and adherence to international trade regulations and sanctions.

Trade compliance companies should take this as a reminder to reinforce their compliance strategies and to stay informed about the latest developments in international trade laws and sanctions. The collaborative efforts between international law enforcement agencies also underscore the growing scrutiny in global trade, emphasizing the need for transparent and legal trading practices.

Source: RTL News