Run export control and sanctions compliance at product speed

Executive overview

Technology trade controls define competitive advantage. The Export Control Reform Act of 2018 (ECRA) codifies the Commerce Department’s authority to maintain the Export Administration Regulations (EAR), identify emerging and foundational technologies, and impose licensing requirements on items listed in the Commerce Control List (CCL).^{50 U.S.C. § 4811} The International Emergency Economic Powers Act (IEEPA) empowers the U.S. President to regulate commerce in response to national emergencies, authorising sanctions programmes enforced by the Office of Foreign Assets Control (OFAC).^{50 U.S.C. §§ 1701–1707} The European Union’s Regulation (EU) 2021/821 modernises dual-use export controls, coordinating licensing across Member States and introducing controls on cyber-surveillance items.^{Regulation (EU) 2021/821} Sanctions regimes, such as Council Regulation (EU) No 269/2014 targeting actions undermining Ukraine’s territorial integrity, impose asset freezes, prohibitions on making funds available, and sectoral restrictions.^{Regulation (EU) No 269/2014}

With October 2024 BIS rules expanding controls on advanced-node semiconductors, AI accelerators, and equipment, and with OFAC issuing secondary sanctions advisories for financial institutions aiding evasion, compliance teams must synchronise classification, licensing, screening, and reporting across jurisdictions.^{89 Fed. Reg. 50812 (June 18, 2024)} This guide outlines the operating model to achieve that synchronisation, drawing on Zeph Tech’s supply chain briefings and policy intelligence.

We detail how to integrate export controls into engineering release processes, manage sanctions screening at scale, conduct investigations, and present defensible evidence during enforcement actions. Align these practices with the compliance operations control room to ensure incident response muscle and with the infrastructure resilience guide for redundancy planning.

Legal baseline

Export Control Reform Act of 2018. Enacted as Subtitle B of Title XVII of the John S. McCain National Defense Authorization Act for Fiscal Year 2019, ECRA mandates the Secretary of Commerce to establish controls on the export, reexport, and in-country transfer of items subject to U.S. jurisdiction. Section 1758 directs identification of emerging and foundational technologies essential to national security. Section 1761 requires compliance with multilateral regimes such as Wassenaar, Australia Group, MTCR, and NSG. Violations carry civil penalties up to the greater of $300,000 or twice the value of the transaction, and criminal penalties up to $1 million and imprisonment.^{50 U.S.C. § 4819}

International Emergency Economic Powers Act. IEEPA authorises the President to declare national emergencies in response to unusual and extraordinary threats, blocking property and prohibiting transactions. OFAC administers sanctions through regulations codified in Title 31 of the Code of Federal Regulations. Penalties for violations can reach the greater of $368,136 or twice the value of the transaction per violation (adjusted annually). Corporate officers can face personal liability.

Regulation (EU) 2021/821. This regulation replaces the previous Dual-Use Regulation, expanding controls on cyber-surveillance items, introducing human rights considerations, and creating an EU-level coordination mechanism (the Dual-Use Coordination Group). Articles 5 and 9 allow Member States to adopt additional controls for public security or human rights concerns. Exporters must obtain authorisations for listed items and maintain records for at least five years. Violations are subject to Member State penalties, including criminal sanctions.

Sanctions regimes. Council Regulation (EU) No 269/2014 imposes asset freezes and travel bans on individuals and entities linked to actions destabilising Ukraine. It prohibits making funds or economic resources available, directly or indirectly, to designated parties. The U.S. maintains parallel sanctions under Executive Orders 13660, 13661, and subsequent authorities. Secondary sanctions risk extends to financial institutions facilitating prohibited transactions.

Supplementary regimes. Include the U.S. Foreign Direct Product Rule (FDPR) expansions targeting advanced semiconductors, the Uyghur Forced Labor Prevention Act (UFLPA) presumptions for goods from Xinjiang, and UK sanctions under the Sanctions and Anti-Money Laundering Act 2018. This guide references these regimes where they intersect with core obligations.

Intangible technology transfers. Both the EAR and Regulation (EU) 2021/821 capture intangible transfers, including downloads, emails, technical discussions, and remote access. Article 2(1) of the EU regulation explicitly covers transmission of software and technology by electronic media. ECRA Section 4801(14) defines “technology” to include information necessary for the development, production, or use of an item, regardless of format. Organisations must therefore implement controls for collaboration tools, cloud repositories, and conferencing platforms to prevent unauthorised releases.

Multilateral coordination. ECRA Section 4813 directs U.S. authorities to seek alignment with allies through regime participation and bilateral talks. Regulation (EU) 2021/821 Articles 23–24 establish mechanisms for information exchange between Member States and the Commission. Monitoring these forums provides early insight into forthcoming control changes, such as updates to Wassenaar Arrangement lists or joint EU-U.S. statements on semiconductor controls.

Governance model

Establish a global trade compliance office reporting to the Chief Legal Officer with dotted-line accountability to the Chief Operating Officer. The office owns policy, risk assessment, licensing, screening, and enforcement response.

Trade compliance committee. Convene quarterly meetings with legal, supply chain, finance, engineering, sales, and public policy leads. Review regulatory changes, licence status, screening performance, incidents, and enforcement trends. Prepare dashboards for the board risk committee.

Policies. Draft a Global Trade Controls Policy referencing ECRA, EAR, IEEPA, OFAC sanctions, EU Regulation 2021/821, and national implementing laws. Include requirements for classification, licensing, screening, record-keeping, and reporting. Integrate with code of conduct and supplier standards. Review annually.

Training. Provide role-based training: engineering teams learn classification and technology release controls; sales teams learn restricted party screening and end-use/end-user due diligence; finance teams learn blocked property handling. Track completion and comprehension. Use case studies from recent enforcement actions.

Accountability. Assign regional trade compliance leads (Americas, EMEA, APAC). Each maintains jurisdiction-specific registers, monitors legislative updates, and coordinates regulator engagement. Document responsibilities using RACI matrices covering classification, licensing, shipment release, and incident response.

Classification and screening

Commerce Control List (CCL) analysis. Catalogue products, software, and technology. Determine Export Control Classification Numbers (ECCNs) using technical specifications. Document rationale, references to CCL categories, and supporting analysis. For ambiguous items, submit Commodity Classification Automated Tracking System (CCATS) requests to BIS. Maintain version-controlled classification dossiers.

Technology release controls. Implement deemed export procedures for non-U.S. persons accessing controlled technology. Track access through identity management systems, training completion, and project approvals. For EU operations, assess whether technology falls under Annex I of Regulation 2021/821 and apply internal compliance programmes recommended by the Commission.

Screening workflows. Screen customers, suppliers, logistics providers, investors, and employees against OFAC’s Specially Designated Nationals (SDN) list, BIS Entity List, Denied Persons List, Unverified List, EU consolidated financial sanctions list, UK sanctions list, and UN sanctions. Automate screening with daily list updates. Implement fuzzy matching and manual review. Document matches, escalation decisions, and outcomes.

End-use and end-user due diligence. Evaluate red flags (military end-use, nuclear, missile, or WMD proliferation). For transactions involving China, Russia, Belarus, Iran, or other high-risk destinations, conduct enhanced due diligence. Obtain end-use statements, verify business registrations, and review financial flows. Document findings and approvals. If red flags persist, deny transactions and file suspicious activity reports where required.

Record-keeping. Maintain classification records, screening logs, due diligence documents, licences, and correspondence for at least five years (U.S.) and ten years (EU recommended). Ensure records are audit-ready.

Collaboration tooling controls. Implement data loss prevention (DLP) policies, access controls, and approval workflows for repositories containing controlled technology. Require export control approval before granting external collaborator access. Log downloads, screen share sessions, and code repository clones involving restricted technology. Integrate warnings into development environments reminding engineers of deemed export restrictions.

Licensing strategy

Licence determination. Use the country chart (EAR Supplement No. 1 to Part 738) to determine licence requirements based on ECCN and destination. For EU exports, determine whether national general licences, EU general export authorisations (EUGEAs), or individual licences apply. Evaluate catch-all controls under Article 4 of Regulation 2021/821.

Licence applications. Prepare comprehensive applications: technical descriptions, classification, end-user certificates, compliance history, and risk mitigations. For U.S. licences, submit via SNAP-R; for EU, use national licensing portals. Coordinate with legal counsel for sensitive technologies. Track processing times and update stakeholders.

Supporting evidence. Attach technology control plans, cybersecurity policies, supply chain transparency reports, and end-use monitoring commitments. Highlight compliance investments (training, audits) to strengthen applications. Provide third-party attestations where available, such as ISO/IEC 27001 certifications or government security clearances.

Licence management. Maintain a licence register capturing conditions, expiration dates, reporting requirements, and utilisation percentages. Integrate with ERP systems to block shipments lacking valid licences. Implement alerts 90 days before expiry. Document compliance with conditions (e.g., submission of post-shipment reports).

Licence exceptions and general authorisations. Train teams on EAR licence exceptions (ENC, TSU, RPL, GOV) and EU EUGEAs (EU001–EU008). Implement eligibility checks and documentation requirements. For ENC, maintain customer classification notifications. For TSU, ensure appropriate end-use. Record reliance on exceptions and provide regulators upon request.

Usage analytics. Monitor how frequently teams rely on licence exceptions, the product categories involved, and associated destinations. Use analytics to detect emerging risk patterns (e.g., repeated ENC usage for high-performance compute exports) and adjust controls or seek licences proactively.

Reexport and transfer management. Track reexports involving third countries and intra-company transfers. Determine whether U.S. jurisdiction continues under de minimis rules or FDPR. Document calculations and control decisions.

Sanctions operations

Programme mapping. Maintain a sanctions matrix summarising active programmes (Ukraine-/Russia-related, Iran, North Korea, Syria, counterterrorism, cyber-related, human rights, global Magnitsky). Include prohibitions, licensing requirements, sectoral sanctions (SSI directives), and secondary sanctions exposure. Map to jurisdictions (U.S., EU, UK, Canada, Australia).

Blocked property handling. When encountering potential matches, immediately block funds or property and report to OFAC within ten business days. Maintain blocked property logs and annual reports (31 C.F.R. § 501.603). In the EU, freeze assets and notify national competent authorities. Coordinate with finance to segregate funds.

Payment screening. Integrate sanctions filters into payment systems. Monitor for IP spoofing, nested correspondent banks, and trade finance red flags. Use machine learning to reduce false positives while preserving manual oversight. Document rules and tuning decisions.

Evasion detection. Analyse trade data for transshipment through jurisdictions like Hong Kong, Turkey, UAE, or Kazakhstan. Monitor for shell companies, unusual payment terms, or inconsistent shipping routes. Collaborate with intelligence teams and use open-source data to identify evasion networks. Report suspicious activity to regulators.

Investigative collaboration. Participate in industry information-sharing groups, such as the U.S. Trade Compliance Practitioners Forum or EU outreach programmes, to exchange anonymised red flags and typologies. When lawful, share intelligence with law enforcement task forces combating sanctions evasion. Document contributions and ensure privacy compliance.

Humanitarian and cybersecurity exceptions. Assess whether transactions qualify for general licences (e.g., OFAC GL 25C for internet services supporting freedom of expression, EU humanitarian exemptions). Document eligibility analysis and compliance conditions.

Communications controls. Maintain approved messaging templates for responding to counterparties linked to sanctions. Provide escalation pathways for frontline staff who receive requests that may implicate sanctions. Track interactions to evidence diligence.

Supply chain controls

Supplier segmentation. Classify suppliers by risk: strategic technology providers, logistics partners, distributors, resellers. For each, document jurisdiction, ownership, compliance posture, and licence requirements. Align with third-party governance frameworks.

Contract clauses. Embed export control and sanctions clauses in supplier contracts: compliance warranties, notice obligations, audit rights, indemnification, flow-down requirements. Include language addressing reexport controls, diversion, and forced labour compliance.

Logistics controls. Coordinate with freight forwarders to ensure correct licence documentation, Electronic Export Information (EEI) filings via ACE, and customs declarations. Audit forwarders for compliance with denied party screening and embargoed destination controls. For EU shipments, verify customs export declarations (EXA) include licence numbers.

Component traceability. Implement traceability for semiconductors, high-performance computing components, and dual-use software. Use serialization, tamper-evident packaging, and blockchain or secure databases to track transfers. Document custody chain for regulators.

Resilience planning. Identify alternate suppliers and manufacturing sites outside high-risk jurisdictions. Maintain inventory buffers for controlled items. Evaluate onshoring or friendly-shoring options. Align with resilience strategies.

Forced labour diligence. Integrate forced labour risk assessments, including UFLPA rebuttal evidence, into supplier onboarding. Collect supply chain mapping, bills of material, and third-party audit reports. Coordinate with sustainability teams to ensure trade compliance and human rights policies reinforce each other.

Digital twins. Build digital twins of supply networks to simulate disruption scenarios triggered by new sanctions or export controls. Model capacity constraints, lead times, and logistics reroutes. Use insights to prioritise inventory allocation and capital expenditure on diversification.

Enforcement readiness

Monitoring. Track regulatory updates from BIS, OFAC, EU Commission, national authorities, and UN Security Council. Subscribe to bulletins, maintain legislative trackers, and brief executives monthly. Document impact assessments and action plans.

Scenario libraries. Maintain a catalogue of enforcement scenarios (e.g., unlicensed exports, sanctions evasion, deemed export violations) with predefined investigative steps, disclosure templates, and communications plans. Update scenarios after each enforcement action or regulatory change.

Investigations. Establish procedures for responding to subpoenas, administrative summons, or on-site inspections. Assemble response teams (legal, compliance, IT, logistics). Preserve documents, maintain privilege, and coordinate with external counsel. Conduct internal investigations documenting findings, root causes, and remediation.

Voluntary self-disclosures (VSDs). Encourage prompt reporting of potential violations. For U.S. matters, submit VSDs to BIS or OFAC with detailed narratives, corrective actions, and compliance programme enhancements. For EU, notify national authorities. Track deadlines, maintain communication logs, and implement remedial measures.

Metrics for remediation. Quantify remediation progress (controls implemented, systems upgraded, staff retrained) and include in VSD follow-ups. Demonstrating measurable improvement can mitigate penalties and build regulator confidence.

Remediation. Implement corrective actions: policy updates, training, system enhancements, disciplinary measures. Document completion and verify effectiveness. Report remediation to regulators when required. Integrate lessons into risk assessments.

Board reporting. Provide quarterly briefings to the board risk or audit committee covering compliance status, incidents, enforcement trends, and strategic risks. Include scenario analyses (e.g., escalation of sanctions, expansion of FDPR). Align with board oversight blueprint.

Metrics and reporting

Key metrics.

• Classification accuracy. Percentage of product portfolio with current ECCNs validated within the past 12 months.
• Licence cycle time. Average days from licence submission to approval by jurisdiction.
• Screening effectiveness. Match resolution time, false positive rate, and number of escalated matches.
• Incident closure. Days to close investigations and implement remediation.
• Training coverage. Staff compliance training completion and assessment scores.
• Revenue at risk. Value of orders on hold pending licence or sanctions clearance.
• Audit findings. Number of internal or external audit findings and remediation status.

Dashboards. Build dashboards integrating ERP data, screening logs, licence registers, and incident systems. Provide real-time visibility to executives. Include geographic heatmaps, risk scoring, and predictive analytics to forecast licensing needs.

Regulatory reporting. Track deadlines for BIS semi-annual reports (e.g., encryption reports), OFAC blocked property reports, and EU licence usage reports. Maintain calendar alerts and assigned owners.

Continuous improvement. Conduct quarterly reviews comparing performance against benchmarks. Identify bottlenecks, update KPIs, and share insights with functional leaders. Document improvement initiatives and outcomes.

Board dashboards. Summarise KPIs, risk trends, and pending enforcement actions for directors. Include heatmaps linking trade compliance risks to strategic initiatives (new market entries, product launches). Provide scenario forecasts showing revenue impact under different regulatory tightening assumptions.

Roadmap

0–6 months. Complete classification refresh incorporating October 2024 BIS rule changes. Update sanctions matrices for new EU and U.S. designations. Train staff on revised controls. Implement enhanced screening analytics. Review supplier contracts for updated clauses.

6–18 months. Automate licence management with workflow tools integrated into ERP and logistics systems. Establish scenario planning exercises for potential expansion of semiconductor controls or new AI-related export restrictions. Participate in industry associations (e.g., SEMI, SIA) to anticipate regulatory proposals.

Trade diplomacy engagement. Coordinate with government affairs to contribute data and case studies to policy consultations, including U.S. Commerce emerging technology rulemakings and EU export control outreach events. Document advocacy positions and align messaging with compliance commitments.

18–36 months. Invest in advanced analytics for trade compliance (graph analysis for network detection). Expand compliance footprint to emerging hubs (India, Vietnam). Align with EU’s review of the Dual-Use Regulation and potential U.S. legislative updates. Embed trade compliance metrics into enterprise OKRs.

Calendar integration. Sync deadlines with the policy calendar, including EU sanctions package renewals, U.S. Export Control Review Committee meetings, and multilateral regime plenaries. Schedule annual tabletop exercises simulating enforcement actions.

Appendix: Artefacts and resources

Template library. Provide ECCN determination templates, end-use statement forms, licence application checklists, screening escalation forms, and VSD drafting guides.

Reference repository. Store legislative texts, BIS FAQs, OFAC advisories, EU guidance, UK Office of Financial Sanctions Implementation (OFSI) notices, and industry association briefings. Tag by topic and jurisdiction.

Systems architecture. Document integrations between ERP, screening engines, document repositories, and analytics platforms. Include data flow diagrams, access controls, and audit logging configurations.

Capability maturity model. Assess maturity across governance, classification, licensing, screening, incident response, and analytics. Set target states and roadmap actions.

Stakeholder engagement. Track meetings with regulators, industry groups, and partners. Document commitments, feedback, and action items. Share updates with leadership and board committees.