Procurement Glossary
Export control: Legal basis and compliance in Procurement
November 19, 2025
Export control encompasses government regulations for monitoring and restricting exports of certain goods, technologies, and services. In Procurement , it Procurement a central role in supplier selection and contract design, as violations of export regulations can have significant legal and financial consequences. Find out below what export control means, what requirements must be observed, and how current developments are influencing procurement practices.
Key Facts
- Export control regulates the export of goods, technologies, and know-how for national security purposes.
- Dual-use goods are subject to special licensing procedures and controls.
- Violations can result in fines of up to €500,000 and imprisonment.
- Purchasers must check suppliers against embargo lists and sanctions lists
- Compliance programs are mandatory for companies operating internationally.
Contents
What is export control?
Export control refers to the system of government measures for regulating and monitoring the export of goods, technologies, and services from a country.
Legal basis and scope of application
The German Foreign Trade Act (AWG) and the Foreign Trade Ordinance (AWV) form the legal basis for export controls. These regulations implement international agreements such as the Wassenaar Arrangement and EU regulations. This affects not only physical goods, but also technology transfer and technical support.
Export control vs. customs clearance
While customs clearance primarily serves fiscal purposes, export control serves national security and foreign policy. Export licenses are required prior to customs clearance and are subject to stricter screening procedures than regular customs processes.
Importance of export control in Procurement
For buyers, export control means a comprehensive due diligence obligation when selecting suppliers. They must ensure that suppliers are not sanctioned persons or companies and that the goods delivered do not violate export restrictions.
Requirements and implementation of export control
The practical implementation of export controls requires systematic processes and clear responsibilities within the procurement organization.
Compliance programs and organizational structures
Companies must establish internal compliance programs that include export control officers, training programs, and documentation systems. These programs should be audited regularly and adapted to changes in the legal situation.
- Appointment of qualified export control officers
- Implementation of screening systems for suppliers
- Establishment of escalation processes for suspected cases
Supplier verification and sanctions list screening
Purchasers must check all business partners against current sanctions lists, including EU consolidation lists, OFAC lists, and UN sanctions lists. AEO status can serve as an indicator of trustworthiness, but it does not replace a full check.
Goods classification and approval procedures
Critical goods must be classified correctly and the appropriate export licenses obtained. Dual-use goods are subject to special controls, as they can be used for both civilian and military purposes.
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Compliance key figures and quotas
Effective export control requires measurable performance indicators to monitor compliance performance and identify areas for improvement.
Screening efficiency and hit rates
The number of identified sanctions hits in relation to audited business partners shows the effectiveness of the screening process. Typical benchmarks are 0.1-0.5% positive hits for initial screening of new suppliers.
- Screening coverage: Percentage of suppliers screened (target: 100%)
- False positive rate: false alarms per 1,000 tests
- Response time for critical hits (target: less than 24 hours)
Training and awareness metrics
Regular employee training is essential for effective export control. Training completion rates, test results, and incident rates after training measure the effectiveness of awareness programs.
Audit results and compliance scores
Internal and external audits assess the quality of export control systems. Compliance scores based on documentation quality, process adequacy, and system availability enable continuous improvement.
Risks, dependencies and countermeasures
Violations of export control regulations can have consequences that threaten the existence of companies and require proactive risk management strategies.
Legal and financial sanctions
Export control violations are prosecuted as administrative offenses or criminal offenses and can result in fines of up to €500,000, prison sentences of up to five years, and export bans. In addition, there is a risk of reputational damage and loss of business due to exclusion from public contracts.
Supply chain disruptions and compliance gaps
Inadequate export controls can lead to sudden delivery stoppages if suppliers are subsequently placed on sanctions lists. Complex, multi-stage supply chains make complete transparency difficult and increase the risk of undetected violations.
- Regular updating of the supplier database
- Implementation of early warning systems
- Development of alternative procurement sources
Technological and operational challenges
Outdated IT systems and manual processes increase the risk of compliance errors. Integrating different data sources and harmonizing different sanction regimes pose additional operational challenges.
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Practical example
A German mechanical engineering company sources electronic components from Asia for its production facilities. During a routine supplier audit, the compliance team discovers that a subcontractor of the main supplier is on the EU sanctions list. The company immediately stops all deliveries, informs the authorities, and activates alternative sources of supply. Thanks to the established early warning system, production downtime can be avoided and legal consequences averted.
- Immediate delivery stops for sanction hits
- Proactive communication with authorities
- Activation of backup suppliers
Current developments and interpretation of export controls
Geopolitical tensions and technological developments are leading to a continuous tightening and expansion of export controls worldwide.
Tightening of the sanctions regime
The number and scope of international sanctions have increased significantly in recent years. Technology sectors such as semiconductors, telecommunications, and artificial intelligence are particularly affected. Companies must adapt and expand their compliance systems accordingly.
Digitization of export control
AI-based screening tools and automated compliance systems are revolutionizing export control. These technologies enable real-time monitoring of supply chains and automatic risk assessments, but they do not reduce the responsibility for manual reviews of critical cases.
Extraterritorial application and secondary sanctions
US export controls are increasingly being applied extraterritorially, which can also affect German companies without direct US business. Secondary sanctions against third-country transactions significantly increase the complexity of compliance requirements.
Conclusion
Export control is an indispensable part of modern procurement strategies and requires systematic compliance processes. The increasing complexity of international sanctions regimes makes professional export control systems a business necessity. Companies that invest in robust compliance structures at an early stage secure competitive advantages and minimize existential risks. Digitalization offers new opportunities for efficient and reliable export control.
FAQ
What are the most important export control laws in Germany?
The Foreign Trade Act (AWG) and the Foreign Trade Ordinance (AWV) form the legal basis. In addition, the EU Dual-Use Regulation, UN sanctions, and industry-specific regulations such as the War Weapons Control Act for the arms industry apply.
How often do suppliers need to be checked against sanctions lists?
An initial check before concluding a contract is mandatory. After that, regular re-screenings should be carried out at least quarterly, or monthly in the case of critical suppliers. In addition, ad hoc checks are required when sanctions lists are updated.
What penalties apply for export control violations?
Administrative offenses can be punished with fines of up to €500,000. Intentional violations are considered criminal offenses and can result in prison sentences of up to five years. In addition, export bans and exclusion from public contracts may be imposed.
What are dual-use goods and why are they relevant?
Dual-use goods have both civilian and military applications. They are subject to special licensing procedures because their export could jeopardize national security. Examples include encryption technology, certain chemicals, and precision tools.
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