WA 2011- Internal Compliance Programmes

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Best Practice Guidelines on Internal Compliance Programmesfor Dual-Use Goods and Technologies

(Agreed at the 2011 Plenary)

Participating States of the Wassenaar Arrangement,

Taking into account that development and implementation of Internal ComplianceProgrammes (ICP) by enterprises and academic institutions (hereinafter called exporter),though not legally binding, are recommended for their internal management of transfers of dual-use goods and technologies,

Recognizing that each Participating State has a national export control system that must becomplied with, and in an effort to assist exporters to meet these controls,

Recognizing that export control on dual-use items is mainly implemented by the competentauthorities of each Participating States, and cooperation between domestic export controlauthorities and exporters is essential for effective export control systems,

Bearing in mind the Initial Elements of the Wassenaar Arrangement (WA), in particular theoverall aim of preventing destabilizing accumulations of conventional arms by, i.a. promotinggreater responsibility in transfers of dual-use items, and recalling the following WAdocuments which refer to an ICP:

- the Best Practices for Effective Enforcement (agreed at the 2000 Plenary);- the Best Practices for Implementing Intangible Transfer of Technology Controls

(agreed at the 2006 Plenary);- the Best Practice Guidelines for the Licensing of Items on the Basic List and

Sensitive List of Dual-Use Goods and Technologies (agreed at the 2006 Plenary);and,

- the Statement of Understanding on Implementation of End-Use Controls forDual-Use Items (agreed at the 2007 Plenary),

Affirming that establishment of ICPs can help exporters to understand and take full account of domestic export control legislation and procedures, and reduce the risks of their involvementin ineligible exports that contravene the purposes of the WA, by supplying to unauthorizedend-users such as terrorists and countries of concern;

Bearing in mind that the method in which ICPs are developed and implemented will dependon the size, organizational structure, and other circumstances of exporters,

Agree that:

1. Each Participating State should encourage, where appropriate, its exporters to develop andimplement ICPs, and may assist such endeavours by such means as providing expertiseand guidance material on ICPs in any relevant form, including discussion of ICPs inexport control seminars and providing exporters with opportunities to consult on the formand content of their ICPs;


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2. Participating States may also consider, as far as their domestic laws and regulations permit,measures and stimuli that would encourage exporters to introduce ICPs (e.g. taking thedevelopment and implementation of an ICP into account when considering applicationsfor licences and revoking existing licences, or making an ICP a condition for the grantingof a general licence for an exporter.);

3. Elements for effective ICPs are as set out in the Reference List in the Annex. This isneither exhaustive nor binding. Exporters may combine basic and additional elementsfrom the List as appropriate to develop an ICP which is most applicable to theircircumstances;

4. The competent authorities of the Participating States should as appropriate, and inaccordance with their domestic legislation and practice, encourage exporters to submittheir draft ICPs for examination and comment, for example in the case where ICP is aprecondition for any privileged licence procedures. They should also take steps to assessan exporters compliance with domestic export control laws and regulations, asappropriate, which may involve face-to-face consultations and/or inspection visits.


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Annex

Elements of Internal Compliance ProgrammesFor Dual-Use Items

(Reference List)

Domestic export control authorities should, where appropriate, encourage theirexporters to develop and implement Internal Compliance Programme (ICP), which mayinclude the following elements.

An exporter may combine, the following basic and additional elements, asappropriate, to develop an ICP applicable to its structure, size, and other specificcircumstances.

Basic Elements Additional Elements Notes

1. Commitment to Compliance 1. Commitment to Compliance1.1. Written statement by a senior

representative, such as the CEO,that the exporter is aware of alldomestic Export control laws andregulations, and complies withthem.

1.2. To make all employees andofficers aware of the statementprovided in para 1.1.

2. Structure and Responsibility 2. Structure and Responsibility2.1. Establish an internal

organizational structure,responsible for export control,either as a stand-alone unit or asan additional task for anappropriate unit.

2.1. It should be independentfrom the sales department orany other export oriented units.

2.1.1. Nomination of a seniorrepresentative director, or otherindividual of corresponding status,as the Chief Export ControlOfficer (CECO)

2.1.1. Competent authoritiesmay establish a set of criteriafor such nominations.

CECO should acquireappropriate knowledgefor his/her responsibility.

2.1.2. CECOs Duties

- The CECO is responsible for:a. development and revision of the ICP;

b. development and revision of operation procedures;

c. staying up-to-date withchanges to relevantregulations and with anydirections or guidance issuedby the competent authorities;

d. classification/identification,

screening and approval of business transactions;

2.1.2. CECOs Duties

- The CECO is responsible for:h. guidance to subsidiariesand affiliates.

- Distribution of anorganizational chart to allemployees that clearly showsthe internal structures andresponsibilities for exportcontrol within the exporter.


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e. general export controlmanagement, throughout theexporter, including directionand communication;

f. assignment of personnel incharge of auditing; and

g. training.2.2. Appointment of an Export

Control Manager (ECM) andestablishment of an ExportControl Unit reporting to theECM.

- Making the ECM knownwithin the organization

- The ECM carries out theexport control operationsunder the directions of theCECO.

The ECM and ExportControl Unit are normallyto be found in largerorganizations. Theirduties and responsibilitiesmirror those of theCECO.

2.3. Appointment of an exportcontrol officer (ECO) in eachbusiness unit.

- An ECO is responsible for thefollowing activities;a. making the instructions

and requirements of theECM known within thebusiness unit

b. promotion of exportcontrol operatingprocedures; and

c. training3. Export Screening Procedures 3. Export Screening Procedures3.1. Classification/IdentificationProcedure- Establish whether the goods and/or

technologies to be transferredrequire an export licence underapplicable control lists.

- Consult with competent authoritiesand other relevant bodies, whereappropriate.

Where the items to beexported are designedand developed by theexporter, persons incharge of technical affairsand the CECO/ECMshould be involved in therating of items underapplicable control lists.

Where items to beexported have beenexternally sourced theoriginal supplier shouldbe asked for technicalspecifications and anassessment of classification/identification

under applicable controllists.


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Other relevant bodiesmay includeorganizations approved orcertified by thecompetent authorities for

providing classification/ identification services.

3.2. End-Use Screening- Verify that the items to be exported

will not be used for purposes otherthan the declared use

- Ensure that any non-listed dual-useitems for a destination subject to abinding UN arms embargo, or anyrelevant regional arms embargo,are not intended for a militaryend-use

CECO/ECM shouldconsult with the domesticauthorities, when anyquestion arises concerningexport control.

cf. End-User AssurancesCommonly UsedConsolidated IndicativeList (agreed at the 1999Plenary, amended at the2005 Plenary).

cf. Statement of Understanding onImplementation of End-Use Controls forDual-Use Items (agreedat the 2007 Plenary)

cf. Statement of Understanding onControl of Non-ListedDual-Use Items (agreed

at the 2003 Plenary) List of AdvisoryQuestions for Industry(agreed at the 2003Plenary)

3.3. Customer / End-user Screening- Verify whether the end-users /

customers are identified withred-flags or other early warningsystems

3.4. Information by the competentauthorities- Verify whether the competent

authorities inform that export ortransfer of the non-listed items issubject to the submission of alicence application.

3.5. Transaction ScreeningProcedures

- Implement procedures to helpprevent diversion of theexport/transfer to unauthorizedend-users or end-uses.

Implementation of electronic data processing(EDP) supported by orderprocessing systems mayassist these endeavours.

In order to systematize

and facilitate theimplementation of procedures through 3.1 to3.4, introduction of check list is recommended.


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3.6. Where necessary ensure thatlicences are applied for accordingto domestic licence applicationprocedures.

The exporter needs toapply for licences, incases where screeningdetects that non-listed

items may be used forpurposes covered byend-use oriented controlsor where it is determinedthat the transfer of alisted item to a particulardestination/end-userwould not be covered byan existing individual,global or general licenceor the conditions attachedto the use of that licence.

4. Shipment Control 4. Shipment Control4.1. Confirm before shipment/

transfer that:- Classification/Identification and

Transaction Screenings arecompleted;

- Goods and/or technologies andtheir quantities correspond to thedescriptions set out in exportinstruction documents and/orexport licences.

5. Performance review 5. Performance review5.1. Establish a regular performance

review system to confirm that theexport control operation isimplemented appropriatelyaccording to the ICP and theoperational procedures and iscompliant with all relevantdomestic laws and regulations

It is recommended that aperformance review iscarried out by a unitseparated from sales or byan outside specialist, as thestructure, size and othercircumstances of theexporter permit.Performance reviews couldbe carried out annually.

6. Training 6. Training6.1. Training and education of

officers and employees- Ensure that staffs are aware of all

domestic export control laws,regulations, policies and controllists and all amendments to themas soon as they are made public.

6.1. Training and education of officers and employees

- Archive internal trainingrecords including staff participation in externalevents.

Training and continuededucation should becarried out for employeesat all levels, especially newstaff, persons who work insales, export related units,or are involved intechnology transfer.

Provision of at desk training using electronic

media, such as theinternet and CD / DVDs,may be useful tosupplement and reinforceformal training sessions.


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7. Record Keeping 7. Record Keeping7.1. Archive export-related

documents for an appropriateperiod according to therequirements of domestic exportcontrol regulations

Export-related documentsmay include exportlicences, end-useassurances, commercialinvoices, clearancedocuments, productclassification/identificationsheets, and records of electronic transfers.

7.2. The exporters practicesand procedures for archivingmaterial should be known byall relevant staff.

Archived records shouldbe traceable.

8. Reporting and Corrective Action 8. Reporting and Corrective

Action8.1. A prompt report should be made

to the CECO/ECM of anyviolations or suspected violationsof export control regulations orICP procedures.

8.2. A prompt report should be madeto the competent authorities if theCECO/ECM confirms a violationof export control laws andregulations.

Violations of export controllaws and regulations shouldbe investigated bycompetent domesticauthorities. The violators

could be punishedaccording to domestic legalprocedures.

8.3. Ensure any corrective actionsnecessary are implemented sothat similar violations do notrecur .

Implement, as appropriate,disciplinary proceduresagainst any member of staff responsible for confirmedviolations of export controlregulations or ICPprocedures.

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