Effectively navigating through global sanctions and export controls

Guaranteeing and safeguarding trade compliance is an essential part of the business and operations of modern air carriers and freight forwarders. For example, failing to address and properly apply export compliance control can result in hefty fines. Non-compliance can also have financial and legal repercussions and sometimes even result in criminal prosecution, especially if matters of national and international security enter the equation. For example, in 2021 Virgin Atlantic was fined 1 million dollars for transiting Iraqi airspace without permission. 

The current conflict in Ukraine also highlights the risks. In light of the sanctions against Russia, some of the world’s biggest names have already been hit with fines ranging from hundreds of thousands to several millions of dollars for carrying non-compliant shipments. Not complying with US Export Administration Regulations (EAR) regarding Russia can result in up to 20 years of imprisonment and fines per violation of up to and beyond 1 million dollars.

Additionally, the legislative jungle of rules, regulations, sanctions, and export controls is gradually getting denser and more complex, and cluttered. Timely preparation for tighter and more restrictive export control regulations is therefore essential. Read on to find out more about this trend and the best ways to re-evaluate your compliance program.

Sanction violations in the aviation industry

There are several activities that are generally prohibited and often lead to the violation of sanctions in the aviation industry. Let’s take a look at the most important and common ones.

  • Engaging in transactions with sanctioned individuals or entities. Several countries and supranational entities (such as the EU) enforce economic sanctions against countries and groups of individuals that violate human rights and international laws, such as the current Russian regime, terrorists, and narcotics traffickers.
  • Flying over closed air spaces. Current examples are western airplanes that fly over Russia and the Ukraine war zone or Russian planes that enter the airspace of western nations that support Ukraine.
  • The airborne transport of prohibited goods and illegal cargo, such as illegal arms, endangered animals and plants, and products made from (body parts of) endangered species (ivory, turtle shells, souvenirs, shark fins).
  • Non-compliance regarding standards and regulations for the airworthiness of aircraft, aircraft operation, and the training and licensing of flight crew members.
  • Failing to comply with (inter)national and regional customs regulations. This is usually the result of complex regulations, limited resources and personnel, manual and error-prone processes, supply chain complexity, and language or cultural barriers. Sometimes, air cargo companies have to deal with a combination of all these challenges and complicating factors.
customs officer

Increased sanctions and tighter export control regulations

Sanctions and export control rules are constantly changing and getting more restrictive. A perfect example of this trend is the ICS2 security regulations that came into effect in March 2023 and require the submission of advanced shipment information before air cargo is loaded on a plane. This means that air cargo carriers have to adhere to an extra set of rules and regulations on top of the already existing regulatory frameworks.

Additionally, the EU Council settled on its negotiating position (general approach) for an EU law that introduces criminal offenses and penalties for violating EU sanctions. This directive, when adopted, will be an essential tool to ensure that violating sanctions does not pay off. The sanctions are also seen as a crucial tool in the EU support of Ukraine and the country’s fight against the Russian illegal aggression that currently devastates the country.

More regulation means more enforcement. It will also mean that internal risk assessments will look different from those you drew up a year earlier and must be thoroughly revisited. The company compliance department needs to have the right mindset around the direction of travel and enforcement.

Re-evaluating your compliance program

Since the rule work is expanding and export controls are getting ever tighter, now is a good time for companies to revisit their risk assessment and compliance program. First of all, it is advisable to build and maintain a network of export and sanctions experts in the most important countries.

Secondly, it is vital to have properly documented audit trails to prove compliance to government agencies. Such audit trails should be subject to a number of important best practices.

  • Put specific payment streams, individuals, or organizations under close monitoring to ensure all their actions are appropriate in the future.
  • Preserve and use all the potentially relevant data to an investigation, compliance check, and audit trail.
  • Know the latest rules and regulations.
  • When collecting and reviewing information, consider international and national data privacy laws. Staying up to date with the latest regulation helps carriers comply with governments’ investigation and enforcement policies.
  • Beware of blacklists and red flags, which are tricky pitfalls for air cargo carriers. Carriers need to check each shipment against all applicable regulatory lists to verify that the involved parties, commodities, and countries do not appear on these lists.
  • An audit trail of all history and record of context will allow easy tracking of all performed cases and processes. This will help carriers deal with non-compliance issues and pinpoint any possible gaps in the process.

The right technology and software can play a crucial role in facilitating effective compliance frameworks and audit trails. They allow you to automate and improve many steps of the compliance program, making them less time-intensive and error-prone. The right technology and software also allow you to clean, standardize and enrich data in an automated fashion, carry out predictive analysis, and speedily and accurately perform various compliance checks.

Conclusion: make serious work of safeguarding trade compliance

Safeguarding trade compliance is more important than ever for air cargo carriers since sanctions and export control rules are constantly prone to changes and getting more restrictive. A professional compliance management tool helps you prevent common and costly sanction violations and allows you to streamline your compliance processes.

Be Informed’s International Trade & Transport Compliance Solution (ITTS) is a high-quality solution that enables organizations to automatically check international trade and transport transactions for potential compliance issues. ITTS allows all involved parties to automatically check international trade and transportation transactions for potential compliance issues. It also assists staff members in resolving problematic transactions and establishes a thorough audit trail to demonstrate compliance to regulators.

ITTS also allows air cargo companies to analyze hundreds of thousands of documents and establish the right connections between all these parcels of information. This enables the system to recognize abnormal or suspicious behavior, allowing the airline to highlight potentially illicit incidents or changes in the behavior of freight forwarders, carriers, or shippers.

Want to know more?

Are you an air cargo company that wants to perfect compliance with rules and regulations in order to avoid sanctions? And would you like to learn more about how to cope with increasingly complex compliance export control regulations using the unique features of ITTS? Then be sure to visit our webpage and reach out to us.

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