IDENTIFYING AND MITIGATING RISKS FROM US SANCTIONS AND EXPORT CONTROLS
All companies, US and non-US, have exposure to US sanctions and export controls. The level of risk exists on a continuum. On the low-risk end, you might have a French manufacturer of light bulbs, using a French bank, and selling to French customers. On the high-risk end is a US business manufacturing parts for military aircraft that it sells to militaries around the world. While the French company may have relatively limited exposure to US sanctions and export controls, ‘limited’ is not the same as ‘none’. It is equally incumbent on both businesses to consider their risks under US sanctions and export controls and develop strategies to mitigate their exposure. In analysing a given company’s risk profile, the following four questions are the first that come to mind. Is the company a US or non-US company? What is the company producing or otherwise providing as a service? Where is the company doing business? Who is the company doing business with?
Is the company a US or non-US company?
As a foundational matter, US-based businesses generally face the highest level of risk with respect to sanctions and export controls. All transactions carried out by the business are subject to US law and are therefore within the jurisdiction of the governing agencies, including the Office of Foreign Assets Control (OFAC), the Bureau of Industry and Security (BIS), and the Directorate of Defense Trade Controls (DDTC). Further, with limited exceptions, all products manufactured will either be subject to the Export Administration Regulations (EAR) or the International Traffic in Arms Regulations (ITAR).
Apr-Jun 2023 Issue
GM