global trade & government affairs

GLOBAL TRADE & GOVERNMENT AFFAIRS

IT / Telecoms sectorRisk management: sanctions compliance

GLOBAL TRADE & GOVERNMENT AFFAIRS DLA Piper 1

In today's regulatory environment companies involved in cross-border activity have a

clear and on-going requirement to identify, manage and, where appropriate reduce

the financial and reputational risks associated with an increasingly complex network

of international trade rules and regulatory requirements. Over the past decade, the

rapid pace of technological advances in the telecommunication and IT sector, in

areas such as cloud computing and hosted infrastructure services, has coincided

with a widening of European and wider international export control regulations.

Export control and sanctions requirements cover a broad range of

telecommunications and IT hardware, software and technology. Controls include

restrictions on the export of systems, equipment and components and prohibitions on

both the physical and electronic transfer of associated software and technology.

Software vendors, computer manufacturers, companies providing data control and

protection solutions, or those involved in the provision of IT, security, and

communications solutions need to consider their exposure to export control and

sanctions risks.

The consequences of any failure to comply with the applicable rules in the various

jurisdictions where your company operates and the risks associated with violations

by third parties have been all too apparent in recent years.


NAVIGATING TRADE COMPLIANCE -CHALLENGED FOR THE IT AND TELECOMS SECTORIntangible transfers of software via the intranet, intra-corporate dissemination of controlled technology

via shared server environments and controls on the transfer of hardware and software which

incorporate encryption or cryptographic functions are caught in a complex matrix of export control

regulation.

The implementation of legislation aimed at prohibiting electronic transfers, for example web-based

sales, has led to confusion on the scope and potential application of regulatory requirements.

Regulators struggle to keep pace with continued developments in the sector and commercial

operators face difficulties in assessing their legal obligations as they relate to day to day commercial

reality.

To add to the confusion, similar products and activities may be subject to different controls or licensing

requirements dependant on where they are destined for use, who the end user is or whether the

ultimate destination subject to a trade embargo or economic sanctions programme. For example,

certain dual use technology is specifically carved out from prohibitions on export from the EU to Iran,

but is currently controlled for export to certain end users in Russia.

Despite the undoubted compliance challenges that the sector faces, the procedures for investigating,

prosecuting and penalising violations export controls on the transfer of telecommunications and IT

hardware, software and technology are the same as those in relation to illegally exporting military

equipment, arms and ammunition.


ONE TEAM TO GUIDE YOU ON TRADE COMPLIANCE WHEREVER YOU OPERATEOur Global Trade Practice advises on all aspects of international trade law, including financial

sanctions, export controls, trade embargoes, customs procedures and international trade agreements.

Our worldwide network of offices cooperates seamlessly across national boundaries, allowing you to

access the best legal advice from one source. We remain partner-led, client-orientated and

commercially-focused to provide rapid, professional support to assist your decision making and deliver

innovative trade compliance strategies and effective risk management.

Partnering with a trade compliance specialist, attuned to your particular needs in relevant jurisdictions,

helps to ensure that your business is well placed to meet the associated regulatory challenges, stay

one step ahead of the competition and secure the best commercial outcome for your company.

OUR GLOBAL TRADE PRACTICE

We are experts in international trade regulation and are regularly instructed by some of the largest

multinational corporations to boutique start-ups to advise on the development of compliance policies,

the implementation of fit for purpose procedures and the management of regulatory risk in relation to

potentially sensitive commercial transactions. Our detailed knowledge of trade compliance regimes

across the globe and experience in handling complex transactions and commercially sensitive

investigations means that we are experienced in working with clients at all levels to manage financial,

criminal and reputational risk.

We regularly advise clients on the handling and coordination of multijurisdictional investigations

involving potential violations of international sanctions, export controls and customs regulations. We

have developed a number of innovative tools to assist clients with the assessment of their trade

compliance risk profile. We work with multinational companies to develop and implement global

policies and procedures for the identification and management of risk associated with cross-border

activity. We advise clients on their legal and regulatory obligations in relation to potentially sensitive

cross-border transactions including: trade financing and payment transactions; import and export

activity and associated licensing and reporting requirements; fund management, M&A activity and

investment transactions; and, the management of third party risk, enhanced counter-party screening

and due diligence.


OUR EXPERIENCE

DLA Piper's Global Trade Practice has extensive experience in advising and representing a wide

range of companies on export control regulations and transactions involving countries and entities

subject to economic sanctions and trade embargoes.

Our lawyers in Europe and the United States regularly advise telecommunications and IT clients on

across the full range of legal and practical implications associated with the current regulatory

framework, minimising compliance risks and keeping abreast of current enforcement trends.

Examples of our specific experience include:

Advising an international software developer

and telecommunications company on product

classification issues for the identification of

export controlled hardware and software,

compliance risk associated with distribution

networks and cloud computing solutions and

regulatory obligations associated with export

authorisations, licensing conditions and

regulatory reporting.

Assisting various multinational

telecommunications and IT companies with

product reviews and obtaining necessary

approvals for exports and re-exports from the

EU and U.S. of sophisticated products,

services and technology to sensitive countries

and regions (such as Russia, China and the

Middle East).

Advising a global IT & communication

solutions company in relation to its

compliance with EU and US sanctions and

export control requirements .

Advising various European based software

developers, including subsidiaries of U.S.

companies, on the applicability of EU and

U.S. export control and sanctions laws to their

activities and related licensing requirements.

Assisting a major telecommunications

company in undertaking a multi-jurisdictional

investigation involving a comprehensive

transactional review and wider compliance

audit of the organization’s European business

units.

Advising a global provider of business and

financial news services on carrying out an

internal investigation into approximately

10,000 unlicensed transfers of controlled

products from its European distribution

centre.

Designing and refining compliance

programmes, for a number of European

based IT and telecommunications solutions

providers, tailored to the individual

companies' export activities across a range of

European jurisdictions.

We regularly assess and develop processes

to address complex compliance concerns,

such as employment of third-country and dual

nationals by the exporter and recipients of

technical data and assistance, the

implications of shared information technology

networks, e-mail servers and outsourcing

relationships and brokering and trafficking

rules.

Conducting export control and sanctions due

diligence in connection with exports and re-

exports, distributor/supply agreements, in

relation to a number of telecommunications

and IT mergers, acquisitions, and joint

ventures.

Counselling several telecommunications and

IT clients with respect to their exposure for

export violations committed by third parties

and potential courses of action to protect their

business interests.


OUR GLOBAL REACH

CONTACTSJohn Forrest

London

T +44 20 7153 7835

[email protected]

DLA Piper is a global law firm operating through various separate and distinct legal entities.

For further information please refer to www.dlapiper.com.


www.dlapiper.com

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