MA. EXPORT CENTER

COMPLIANCE CLINIC

Presented by : Paul Divecchio –DiVecchio & Associates Phone: (617) 513-3230, Fax: (508) 393-3645 Email: pauldivec@earthlink.net

CURRENT CLIMATE

• MANY REGULATORY CHANGES(You have to Keep Up With Them)

“EXPORT CONTROL REFORM” * Singular licensing Agency * Singular Control List * Singular Enforcement Agency * Singular IT Data Base

• Targeted Enforcement (Collaborative Effort)

• Ambiguous Regulations/Convoluted

• Coordinate and Communicate – A MUST

WHATZ HAPPENEN

• Criminalization of corporate wrongdoing• Dramatically increased Penalties• High scrutiny on corporate ethics• Accountability for directors and individual

managers• Evolving enforcement initiatives & tools• Global Compliance a MUST• REFORM????????

CHANGING ENVIRONMENT• Post 9/11 – Corporate Governance • Laws & Regulations constantly shifting - Foreign policy (“as the world turns”)• Global Trends - Nonproliferation (“the know standard”) – U.S. “EPCI” – Regime “catch all” - Anticorruption Laws (FCPA) - Greater Regime participation – Mexico/Singapore/Malaysia/Taiwan - Transhipment “Best Practices” - Compliance and Enforcement issues of U.S. Corp’s foreign affiliates • Enforcement Initiatives - Spot audits – AES data/license data/PLC & PSV/safeguard trips/ web search• New Investigatory Tools - Global harmonization of resources - Intelligence sharing - Automation of export reporting (enforcement targeting) - Tenfold increase in Penalties

HIGHER SCRUTINY = NEW COMPLIANCE CULTURE

What can happen if it goes wrong?

• Fines (CONGRESS PASSED 10/03/07) $50k TO $250k IEEPA• Negative Publicity• Denial Export Privileges• Disruption of Business• Jail Time

ACCOUNTABILITY

Knowledge includes not only actual knowledge of an event, but also an awareness of “high probability”* of its occurrence.

Not this!

So … use all available information.Seek more information if you have suspicions.

*The US government would like to revise its regulations to say that you have “knowledge” of an event if a reasonable exporter would consider the event “more likely than not”.

THIS WAS WITHDRAWN BY BIS

The “Corporate Challenge”

How to get 100% of employees & their managers to work to the same standards of integrity (and tell you if

they see problems)?

Trade Compliance Program

• Connecting People and Processes Globally

• Automation – Trade Tools

• Maintaining a Robust Compliance Program is Critical!

Compliance is a

Living ProcessNOT a Project

senior management

commitment & resources

clear written standards& controls

effective training & communication

consistent monitoring, evaluation & reporting

• “walk the talk” & visible decisions

• compliance resources & positioning

• unambiguous

• beyond “legalese”

• job related & continuous

• multimedia

• metrics & measurement

• confidential channel to report concerns

• reports to senior management & Board

consistent enforcement

due care in delegating authority

program oversight

• continuous risk assessment & improvement

• review & amend program after breaches occur

• avoid discretionary authority to managers likely to violate

• promotions & new hires

• no “double standard”

• non-retaliation

• performance alignment

Starting point: 7 elements of an effective (beyond paper) program

2. Compliance Planning

4. Measurement, Evaluation & Corrective Action

3. Implementatio

n& Operation

5. Management

Review & Certification

1. Compliance risk assessment & prioritisation

5-Step Implementation Process*

*Integrated into existing risk management processes

Export Compliance DecisionsExport Compliance Decisions

Everybody Has it??

WHEN IN IT OUT, NOT:

IT OUTWHEN IN

3. Abide by the Exporters Cardinal Rule

2. Document Decisions

1. USE COMMON SENSE!!

Demonstrate your D2

“Due Diligence”