In certain situations, violating legislation while importing and importing products may qualify as a criminal (economic) offence. This is something organisations want to prevent at all times. Not only because of the consequences in criminal law, but also because of the reputational damage to the company and the potential for financial loss. Moreover, government organisations and financial service providers are increasingly calling upon companies to demonstrate that their operations are compliant. It is important to be aware at all times who you are doing business with and how the buyer intends to use the products. A good compliance policy helps you to know who your customers are, and where your products are going, as well as understanding the requirements that apply in the destination country.
The above described risks are particularly relevant to services or products that although not illegal, and normally used for civilian purposes, may also have a military application. These products are referred to as ‘dual-use’ products. Examples include software, technology, computers, electronics, material processing systems, navigation and avionic systems, telecommunications equipment, information security, marine systems and shipping.
If the product to be exported appears on the list of ‘dual-use’ goods, an export licence is required. Without a licence, the goods cannot be delivered and you as an entrepreneur can run the risk of fines and even criminal sanctions.
There is also a risk of legal products being supplied to persons or countries subject to political sanctions. Such sanctions are imposed to prevent products or services from being used for terrorist purposes or in any other way that could lead to the violation of human rights. If you knowingly or unknowingly supply such products to a sanctioned company or country, or if the product is used or sold on by the end user for the manufacture of nuclear weapons, or for military purposes, then you run a (financial) risk.
You as an entrepreneur are also required to correctly register any products or services you import or export to the customs authorities. Using the correct goods code in the customs declaration is of vital importance when it comes to charging on levies and customs duties. If the code is incorrect, the customs authorities can impose an additional assessment. In turn, this may result in higher financial expenses for your company.