The Importance of Program Setup and Administration

Compliance program effectiveness is a factor that U.S. Government agencies consider in deciding whether to criminally charge a company, negotiate a plea, enter into a civil settlement or issue a warning for violations of U.S. export and import laws. Fortunately, the Departments of State, Commerce, Homeland Security, Treasury, Justice, and the Securities and Exchange Commission publish standards that they use to evaluate the effectiveness of company compliance programs. Many of these agency standards are overlapping or duplicative, carrying added importance from their repeated appearances across government sources. For example, almost every agency responsible for enforcement of export and import laws requires a clear management statement of commitment to compliance. [F/N 1] The presence of this standard across government sources underscores its importance to effective compliance programs.

The HEXDI.com online compliance program management tool mapped over 1,000 government standards from agency manuals, memoranda, consent agreements, and other sources. To address overlaps and duplicities, HEXDI merged the standards into hundreds of individual line items, organized under 12 top-level compliance modules as follows:

As shown above, the greatest number of government standards falls under the Program Setup and Administration Module, which accounts for nearly a quarter of all the government standards. This module includes 56 line items, to include those requiring identification of key employees with responsibilities under the program (40 standards) locating key employees in a company unit that minimizes potential conflicts of interest (29 standards); sufficiently empowering key employees to perform their responsibilities (30 standards); and ensuring that key employees have sufficient competencies, qualifications, and training to perform their responsibilities (32 standards). Considering the combined government agency focus on these items, they present a priority for virtually every compliance program.

More detailed information on the HEXDI items and modules [F/N 2] and a comprehensive listing of the U.S. Government standard sources mapped by the tool are available at HEXDI.com. The HEXDI tool is regularly updated, so the distribution of agency standards may change over time.

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[F/N 1] See e.g., U.S. Department of Commerce, Bureau of Industry and Security, Export Compliance Guidelines; The Elements of an Effective Export Compliance Program (2017); U.S. Department of Commerce, Export Administration Regulations, former 15 CFR § 752.11, Internal Control Programs (for Special comprehensive License) (January 1, 2015); U.S. Department of Homeland Security, Customs and Border Protection, Office of International Trade, Importer Self-Assessment Handbook (June 2011); Wassenaar Arrangement, Best Practice Guidelines on Internal Compliance Programmes for Dual-Use Goods and Technologies, Elements of Internal Compliance Programmes For Dual-Use Items (2011); and U.S. Department of State, Directorate of Defense Trade Controls, Compliance Program Guidelines (undated).

[F/N 2] Compliance Program 13 is for compliance with the DFARS Cyber Security Clause and HEXDI plans release of Module 14 for Fundamental Research in Summer 2018.

The above is not intended as an exhaustive list of restrictions that may apply to a particular transaction nor advice for a specific transaction because the specifics of an individual case may implicate application of other U.S. laws as well as foreign laws that carry added or different requirements. In addition, U.S. export control and sanctions laws are frequently subject to change. Such changes can affect the continued validity of the information above.