Every company that exports commodities (goods, software or technology) which are covered by the European or German Commerce Control List must in all cases have named a so-called “Export Officer” (EO) to the Federal Office of Economics and Export Control (BAFA) (hereafter only referred to as the Export Officer (EO)).
The BAFA processes applications for export licences only if the company submitting the application has previously nominated an Export Officer. Furthermore, if the BAFA comes to the conclusion that the Export Officer is unreliable with respect to ensuring that his or her company will comply with the European and German export control regulations, no applications will be processed by this company either (Section 8, paragraph 2 of the German Foreign Trade Act (AWG).
It is imperative that the Export Officer is a member of the Management Board whose business domain also actually covers export control according to the company’s internal allocation of business. Power of attorney alone is not sufficient for the EO to be recognised by the BAFA. The EO is responsible in particular for the organisational, personnel selection and further training obligations with regard to export control. This special responsibility cannot be delegated to others, even if other individuals are charged with its implementation in the day-to-day business of the company. The EO therefore has a key function in the field of export control, which he or she can only fulfil from the point of view of the authorities and courts if he or she continually maintains, monitors and improves a Compliance Management System (CMS) that satisfies the requirements of the associated business. The synonymous designation of the BAFA for such a CMS is Internal Compliance Program (ICP). The contents behind these two designations are fundamentally the same.
Against the background of this key function of the EO and the requirement for a corresponding CMS/ICP for export control, the previous BAFA announcement “on the Principles of the Federal Government for evaluating the reliability of exporters of war weapons and arms-related goods” has been revised with effect from October 20, 2020 and published in the Federal Gazette on October 19, 2020. The new announcement contains legal information and organisational recommendations to companies which are formulated in a way which is correspondingly clearer and more explicit. At the same time, the forms for the nomination of the EO (Form AV1) and the delegation of his or her signature authority with respect to approval applications to other employees (Form AV2) were also adapted accordingly in line with the revised announcement. A new aspect is that these forms can now also be submitted electronically to the BAFA. There is a transitional period up to January 31, 2021 for the recognition of the declarations submitted before October 20, 2020 on the previous forms.
An EO who has been nominated with the old or new AV1 form is considered as such until his or her nomination is revoked and notified to the BAFA. The BAFA is to be informed without delay if the EO is changed or if he or she leaves the company in the meantime. According to the BAFA, the change of form does not mean that the AV1 has to be renewed for Export Officers who remain in office after the transitional period has expired. In contrast, any delegation of his or her express sole signature authority for export licence applications to other employees (e.g. a so-called Export Control Officer) must be renewed annually to the BAFA using the AV2 form, i.e. without fail with the new AV2 form after the transitional period and the expiry of the one-year validity of the declaration.
The large number of exporting companies which are located in Germany do not have any listed goods that require the formal nomination of an EO in order to apply for export licences. However, depending on the business areas in which they operate, these companies may also be affected by the German and European export control regulations. Certain critical forms of use, such as military purposes, therefore also result in export licensing obligations in critical countries for goods which are not listed (e.g. countries which are subject to arms embargoes). Due to possible violations with respect to non-listed goods or embargo regulations, the entire management is first and foremost the focus of the investigating authorities and courts in such cases. For this reason, such companies are also well advised as a matter of principle to clearly address and organise the question of responsibility within the management team with regard to export controls, even if no EO has to be nominated to the BAFA.
My recommendation regarding this new notification of the BAFA, its background and the accompanying change to the forms is that the employees who are responsible for export control should regularly report on these and similar changes on their own initiative to their respective Export Officers or the entire management team. The old notification that no longer applies can be understood as a kind of “warning” or “wagging finger” with regard to the dutiful fulfilment of the compliance requirements associated with export control. For this reason, this opportunity should be taken at the same time to subject the CMS/ICP system to at least a rough and random review by the EO, Export Control Officers or external experts in an appropriate form.
Insofar as such a review reveals shortcomings (e.g. a lack of employee training, a failure to check the product portfolio against annually modified lists of goods), errors (e.g. a failure to renew AV1 or AV2 in the past), or even infringements (false customs declarations or even unauthorised exports), these must be corrected, made up for or reported accordingly. These processes and decisions should be documented in order that they can be considered a visible element of a functioning CMS/ICP system for export control under the specific personal responsibility of the individual appointed from the management team or the Export Officer as a “matter for the management“.