In an interview with LDaily, Alexander Witt, a consultant on sanctions and export control at the Association of Certified Sanctions Specialists (ACSS), reveals the essence of the challenges associated with sanction regulation and export control. He also shares valuable recommendations on how company management can effectively respond to the increasing workload and emphasizes the importance of an ethical approach in business.
LDaily: Please tell us a bit about yourself and your experience.
A. Witt: My name is Alexander Witt. I work as a Sanctions & Export Controls Consultant for the Association of Certified Sanctions Specialists (ACSS). We have over 1000 members worldwide and create a home for sanctions professionals. We organize webinars and offer certificate courses on sanctions and export controls, so people can get more educated in these subject areas.
LDaily: How do economic sanctions and export control change businesses?
A. Witt: Sanctions and Export Controls are the opposite of Free Trade. In a peaceful world and an open economic environment, all countries would be able to trade freely with each other, without any tariffs on goods or customs controls. Unfortunately, there are many state and non-state actors, which should not be allowed to get their hands on all the goods they want. On a global level, an example are the non-proliferation and anti-terrorism sanctions and export controls by the United Nations (UN) and smaller membership-based agreements such as Wassenaar or the Nuclear Suppliers Group (NSG).
The trade restrictions have a direct impact on any company or organization, which imports or exports goods and services. Even within a country, the transfer of certain goods might be prohibited.
Every business, small or large, should at least be aware of sanctions and export controls.
LDaily: What precautions and strategies can you recommend to companies for compliance with export control requirements and managing risks associated with sanctions?
A. Witt: Depending on the nature of the company’s business activities and size, the measures to respect sanctions and export control laws and regulations can vary between extensive or low.
Screening your customers and suppliers is the most important action, any company should perform.
If you deal with dual-use goods or defense goods and services, you have to do more than just screening, including building and maintaining an Internal Compliance Program (ICP), and hire staff to deal exclusively with trade compliance.
LDaily: What are the main challenges and obstacles that companies face when adapting to changing international sanctions and export control rules?
A. Witt: Staying up to date with the regulations is probably the biggest challenge for compliance personnel at the moment. The number of regulations on sanctions and export controls has tripled in 2023. If your company or organization does not hire more staff to deal with the increase of work, your compliance staff might get overwhelmed. This could lead more mistakes and ultimately to violations of laws and regulations.
LDaily: How should company leadership respond?
A. Witt: A company’s long-term goal should be ethical business. Doing the right thing creates new business opportunities and keeps you out of trouble with the government regulators. The company leadership needs to demonstrate to the entire company that it acts ethically and responsibly. A management statement on compliance with sanctions and export control laws and regulations should be backed up actions. Actions include hiring experienced compliance staff, provide them with enough resources and continuous training.
LDaily: What trends and changes in global politics and economics might impact the future development and application of sanctions and export control rules?
A. Witt: The biggest challenge in global politics is the evasion of sanctions and export controls. If the countries which impose sanctions cannot agree on the measures against a target, or the coalition of states is not united in its approach against a target, the loopholes can weaken sanctions. We can observe that at this moment in the case of russia. The russian government and its military are still able to get their hands on needed products from countries, which do not impose sanctions against it. As long as we have loopholes, sanctions cannot bite and achieve their desires goals.
LDaily: What consequences might arise for companies in case of violating export control and sanction requirements, and what steps should be taken to prevent such situations?
A. Witt: The consequences for violations vary by country and are based on that country’s jurisdiction. Penalties can vary from a warning, a monetary fine, and even imprisonment.
In order to prevent a violation and a penalty, a company should perform a risk assessment and decide how much measures it needs to implement to comply with its national and international laws and regulations.
LDaily: What risk management strategies do you consider most effective for companies operating in conditions of a constantly changing international political situation and export control rules?
A. Witt: Sign up to all relevant government agency newsletters and updates on sanctions and export controls. At ACSS, we created a Guide to Stay-Up-To-Date, which is free. Download the Guide and sign up for the all the updates. Screen your customers and suppliers daily. Know your products and make sure you know what you import or export. If you have to deal with sanctions and export controls on a regular basis, hire a compliance professional to deal with the tasks.
LDaily: In response to vladimir putin’s unprovoked and unjustified military aggression against Ukraine, the EU imposed unprecedented sanctions aimed to:
Please assess the effectiveness of sanctions against russia.
A. Witt: I am very proud of the achievements of the international coalition supporting Ukraine and targeting russia through sanctions. I believe the economic pressure on russia is very high and the coalition succeeded in excluding russia to a great extent from the global economy. The behavior of russia might not have changed. But we should not underestimate how painful the sanctions are for russia.
LDaily: What global challenges does the modern world face in your field?
A. Witt: The biggest challenge for companies and organizations globally is the lack of resources of compliance teams. Compliance needs more resources, including more staff focusing on trade compliance, continuous training, and support from the management.
Mistakes and violations happen mostly due to human error. New technology can help us with compliance, but people will always come first. Let’s appreciate what compliance professionals do and support them better.
