Don’t Let COVID Find Vulnerabilities with your Compliance

October 4, 2021

Submitted by: Kelly Klinefelter, Navguardian, LLC

As the Delta variant of COVID-19 continues to surge, we know our fight with the pandemic is not over. Through all of the changes in our world, US exporters have had to flex to work within the new situation they find themselves. Product and labor shortages, supply-chain issues, freight delays and added costs, and product cost increases, are just a few of the challenges set before them. With all of this change, it is now more important than ever to stay on top of operating procedures put in place to remain compliant with US export regulations. Here are a few points to keep in mind.

  1. There is no grace period for compliance during COVID-related business disruptions. The US Government has issued economic relief packages for companies dealing with the effects of the pandemic. That is not the case for compliance, and for good reason. There were/are still fines and penalties given for violations because there is no down time in the efforts behind the reasons for the myriad of export controls. Essentially, it is for the greater good and safety of the world. In turn, there should be no down time in your company’s compliance. For example, include a backup plan for when people have to be out of the office. Who is responsible for export screening when the normal person in charge of that task is out of the office? This should be something explicitly stated in your Export Compliance Program so the key individuals are aware of the procedures in place. Export compliance is a dynamic field that is ever-changing, and US exporters are required to remain aware and stay compliant with those changes, regardless of the obstacles in the way.
  2. Do you have employees working remotely? Check to see if a license is required or encryption is needed for data transfers. Remote work and blended schedules have become much more common with the pandemic and, with that change, organizations need to assess the possible vulnerabilities of information breaches. The US Government requires that controlled technical data, technology, and software would need to have specific types of encryptions to send or may require a license to send. There are also other reasons sending would require a license or may be prohibited; for example, it could be based on the person receiving the data, and it would matter how the data is used. The same questions asked when determining license requirements for export of physical items would need to be considered for this less tangible area of data transfers. The main questions to ask are:
    • First off, is the transfer considered an “export”? If Yes:
      • What is the data / software / technology? Is this included on the Bureau of Industry’s Commerce Control List (CCL) or on the Department of States US Munitions List?
      • Where is it going? Is this going to a foreign country that is embargoed or sanctioned? For items on the CCL, is the destination country controlled for the same reason that the item is controlled? If the data stays in the US, will a non-US person have access to it?
      • Who will receive it? Does the entity have matches on any of the US Government lists to check for screening?
      • How will it be used? There are prohibited uses; for example, nuclear proliferation and chemical and biological weapons are prohibited end-uses.
    • All of these questions need to be asked for any export transaction.
  3. Are you storing data on cloud storage? Check to see if a license is required or encryption is needed for data transfers. Cloud storage of information has been helpful during this time to communicate information when some or all employees work remotely. If data is stored on a server in a foreign country, it can be considered an export unless it is encrypted to US government specifications. The same considerations detailed above would need to be reviewed to determine if a license is required or if the data transfer is prohibited.
  4. You are not alone – you have help. It is easy to get overwhelmed if you are new to exporting or learning about the various export regulations. There are many (sometimes free) resources available to you to assist with US Exports. The Iowa Economic Development Authority’s International Trade Office is a great free resource for Iowa exporters that will get you on your feet with more resources and opportunities. There are also consultants such as me who will provide customized solutions, training and consulting with your specific Export Compliance Programs. We are all here and happy to help in whatever capacity you need.
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