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ian stewart

Company membership in Alpha provides access to a range of services that aid firms in meeting trade control obligations. Alpha provides a voice for members with government and provides forums through which you can share your experiences of complying with trade controls on a daily basis; become part of a community of private sector business committed to preventing proliferation in the supply chain; and receive a 25% discount on our Business Membership offers. Membership is free for smaller firms (<25 people).

Business membership comes with a range of benefits, which include:

  • Access to privileged areas of the Alpha website including the “markets” and online forum areas;
  • Attendance at monthly^ virtual seminars
  • Access to entity screening and entity lists*
  • Attendance to Project Alpha annual symposium;
  • One free at-premises consultation with Alpha experts on implementation of trade controls
  • A full communications package to include weekly trade control updates and free monthly subscription to the Project Alpha Bulletin;
  • Business helpline for emergency assistance on export control licence and sanctions issues;
  • Project Alpha business logo to use for endorsement purposes on internet, intranet and Alpha website to demonstrate commitment to Alpha’s guidelines;
  • Bespoke training courses and use of Institute professionals at in-house training events;
  • Two places to attend any "sector specific" conference. (Up to 4 such conferences will be organised per year~). Planned events include "machine tools" and "composites"
  • Subscription to "Trading in..." series (Quarterly publication on specific trade issues, such as "trading in China", "trading in machine tools" etc) 
  • Discounted rates on training and professional qualifications through distance learning and e-modules;

Project Alpha Partners Against Proliferation will receive a 10% discount

Members oversee the effort of Alpha's staff through Alpha's steering board. Ideas on additional events, services, and activities will be pursued at the discretion of members.

Click here to contact the Alpha team to discuss membership opportunities in more detail.

*when available

 ^virtual seminars are scheduled to run once per month but are subject to change. 

~subject to minimum participation requirement

The Alpha team frequently visits firms to discuss export compliance issues. The team includes former UK government officials with many years of experience working in this area. They are happy to discuss any difficulties which firms have in implementing export control regulations and to provide support and guidance. Email This email address is being protected from spambots. You need JavaScript enabled to view it. to arrange a visit. 

Firms should also consider sharing suspicious inquiries that they receive with the project team. Doing so can have significant benefits in helping firms across the board to prevent illicit trade.

The project team has experience dealing with this type of sensitive information and has strict research ethics and data protection protocols in place to ensure information is secure. Firms will be asked how their information may be used: in a named case study, such as the piece detailing Rakon UK’s work to prevent illicit trade, in an anonomised case study such as this, or just for background information. 

The Alpha team is pleased to announce that as part of the Virtual Conference Series, David Lowrie will speak on his experiences combating suspicious inquiries from Iran while implementing compliance. David, compliance manager at Rakon UK, recently published a paper on this topic with Alpha's own Daniel Salisbury. Please register for this event here. Note: this event is free for Alpha members and for smaller firms as defined here

In April 2013 the Secretariat of the European Council proposed new elements for inclusion in the Council's guidelines on implementation and evaluation of restrictive measures (sanctions). The new elements cover the criteria that should be used when determining whether an entity is "owned or controlled" by a designated entity. 

On 4-5 June, Dr Matthew Moran hosted a workshop on Iran sanctions and the insurance industry at the Royal Society. The workshop brought together leading experts from the insurance industry with policy representatives from the UK Foreign & Commonwealth Office, HM Treasury, US Treasury, the UN Panel of Experts and the European External Action Service. The workshop was funded by the Economic and Social Research Council (ESRC), AXA, Freshfields Bruckhaus Deringer LLP, Lloyd's, Marsh & McLennan Companies and Swiss Re.

The workshop complements work of Project Alpha to improve the implementation of trade controls in the insurance industry. More information on Alpha's work on insurance can be found on this page.

Note: This is a draft for comment. Please contact Ian Stewart with comments (02078481342/ This email address is being protected from spambots. You need JavaScript enabled to view it.

 

Trade Compliance in the Financial Services Sector

Entitles involved in proliferation like most legitimate entities must access the international financial system to conduct trade and access services. The primary function of proliferation financing controls is to deny known proliferators access to such services. The secondary purpose is to detect illicit proliferation financing. Compliance with proliferation financing is usually implemented through banks existing financial crimes and anti-money laundering systems which include entity screening and due diligence measures.

Background

Recognising the importance of financial services in the conduct of both legitimate and illicit business governments have long required banks to implement measures to combat financial crime and money laundering. Increasingly since the beginning of the “War on Terror”, authorities have required financial institutions to implement sanctions against individuals and entities known to be involved in activities of concern.

Sanctions in this context include a range of measures. At the UN level sanctions are adopted against individuals involved in terrorism, human rights abuses, and WMD proliferation. These measures are amplified in many capitals around the world. Also at the national level are economic sanctions adopted against countries such as Iran. Sanctions encompass a range of measures from denying access to services to freezing bank accounts. Sanctions may also prohibit the financing of certain activities, such as the financing of investment in Iran’s oil and gas sectors to give one specific example.

Implementation

Financial services organisations are required to implement a broad range of trade compliance measures, from anti-money-laundering to due diligence. To meet these obligations, banks in particular usually have a well-developed compliance function which includes an extensive designated entity screening system. Trade compliance measures are usually implemented through this system. 

Primarily to comply with money laundering regulations, banks usually conduct due diligence to confirm clients bona fides. For personal back accounts this may include verifying a client’s identification papers, whereas for business accounts this may include verifying a business’s registration, premises, or credit score.  

Compliance in action

The structure of a bank’s compliance system may vary significantly depending on the size and structure of the bank. Nonetheless, banks usually appoint a ‘head of compliance’ who oversees the function of compliance. This individual may oversee elements of the compliance function based elsewhere in the bank. For example, the designated entity screening is usually centralised in a specific country to leverage IT expertise. The due diligence function is usually dispersed throughout the bank's operations, perhaps with a functional head in each operating jurisdiction.

Entity screening

Banks may deal with hundreds of thousands of accounts each day. To ensure that banks do no clear a transaction to an entity of known proliferation concern, the bank must implement a “designated entity screening system” whose purpose is to identify matches between account holders and listed entities.

There are numerous lists of suspect entities. The following page (see below) provides a link to most relevant lists. Banks usually opt to integrate all lists even when they do not operate in the issuing jurisdiction.

Entity screening is an imprecise system. It is good practice to incorporate fuzzy logic and phonetic matching into screening systems. This inevitably results in false positives – potential matches that when investigated prove not to link the transaction with a designated entity. It is typical for the rate of false positives to exceed 2%, thus potentially requiring thousands of manual checks per week.

Activity-based Restrictions

Certain restrictions are activity-based and thus require banks to know more than the bona fides of account holders. Examples include banks on investment in Iran’s oil and gas sectors. To fully comply with such restrictions, banks typically require clients to answer questionnaires about their business.

Suspicious transactions

Banks are encouraged to reveal suspicions about illicit financing. In the non-proliferation sphere, this could include where firms provide credentials that prove to be false or attempted transactions that were in fact prohibited. 

Following publicity in 2002 of hitherto covert aspects of Iran’s nuclear programme, the international community has pressured the Iranian government to be transparent about the programme and its objectives , and to stop sensitive work, particularly that related to uranium enrichment. The IAEA has published a series of reports documenting concerns[1]. Iran in response has consistently denied military intent, arguing that its nuclear ambitions are civil in character and legal under its membership of the NPT.

The IAEA Board of Governors referred Iran to the United Nations Security Council in 2005 for non-compliance with its safeguards obligations. Since 2006 four sets of UN Security Council sanctions resolutions have been implemented.[2]

UNSRC1540

UNSCR 1540

In April 2004, the United Nations Security Council voted to adopt UN Resolution 1540 on the non-proliferation of weapons of mass destruction. The resolution is important because it calls for states to establish controls on the exports of goods which could be of use in a WMD programme. UNSCR 1977 of 2011 extended the mandate of 1540 and the committee which was set up to monitor 1540 implementation. This page will attempt to deconstruct some of the key elements of Resolution 1540 with the aim of highlighting where it fits in with national control regimes.

Four key things to take from UNSCR1540 are as follows:

·         Resolution 1540 was passed by the Security Council in 2004 in the aftermath of a number of important proliferation developments.

·         After 1540, states were legally required to develop and implement a system of controls on the export of sensitive goods which could have a use in a WMD programme;

·         1540 universalised and formalised the requirement that states address a broader non-proliferation agenda which includes the financing of proliferation and transportation of goods to illicit programmes;

·         1540 first officially highlighted the role that the private sector can play in countering the proliferation of weapons of mass destruction.

NB: All quotations are taken from UNSCR1540, the original text of which can be found here.

The background to the resolution and each of the following three points will be explored in turn:

Background to 1540

A couple of factors led to the consideration and passing of the resolution at the United Nations:

·         The A Q Khan network was uncovered in the period immediately prior to the consideration of the resolution. The Khan network, centring around Pakistani nuclear scientist Abdul Qadeer Khan, was involved in illicit transfers of nuclear technology to a number of proliferant states around the world.

·         The terrorist attacks of 9/11 heightened concerns surrounding the possibility of nuclear terrorism. The first couple of clauses refer to non-state actors.

UNSCR 1977

·         UNSCR 1977 was the follow on to 1540 which extended the mandate of the 1540 committee, set up to monitor implementation around the world.

Controls on Sensitive Exports Universalised

1540 essentially made it mandatory for all states to put in place export controls. Article 3 reads as follows:

Decides also that all States shall take and enforce effective measures to establish domestic controls to prevent the proliferation of nuclear, chemical, or biological weapons and their means of delivery, including by establishing appropriate controls over related materials and to this end shall:

(a) Develop and maintain appropriate effective measures to account for and secure such items in production, use, storage or transport;

(b) Develop and maintain appropriate effective physical protection measures;

Parts (a) and (b) relate more to measures to secure fissile material (it would be impractical and damaging to trade to enforce domestic controls on dual use technologies for example).

(c) Develop and maintain appropriate effective border controls and law enforcement efforts to detect, deter, prevent and combat, including through international cooperation when necessary, the illicit trafficking and brokering in such items in accordance with their national legal authorities and legislation and consistent with international law;

Part (c) decides that states will establish or continue to maintain border controls and the ability to enforce them.

(d) Establish, develop, review and maintain appropriate effective national export and trans-shipment controls over such items, including appropriate laws and regulations to control export, transit, trans-shipment and re-export and controls on providing funds and services related to such export and trans-shipment such as financing, and transporting that would contribute to proliferation, as well as establishing end-user controls; and establishing and enforcing appropriate criminal or civil penalties for violations of such export control laws and regulations;

Part (d) decides that states will establish, develop, review and maintain a national export control system over sensitive goods. 

A Broader Agenda

1540 universalised and formalised the requirement that states address a broader non-proliferation agenda which includes the financing of proliferation and transportation of goods to illicit programmes: Article 3 includes that states should establish:

(d) ... appropriate laws and regulations to control export, transit, trans-shipment and re-export and controls on providing funds and services related to such export and trans-shipment such as financing, and transporting that would contribute to proliferation

Part (d) decides that states should develop laws and regulations relating to the provision of funds and services that would enable proliferation

The Role of the Private Sector

UNSCR 1540 also assigned a role to the private sector in making export controls work, calling upon states:

 

8 (d) To develop appropriate ways to work with and inform industry and the public regarding their obligations under such laws;

 

Clause 8 part (d) highlights the need to engage the private sector if they are to be compliant with legislation.

 

UNSCR 1977 goes further and:

 

encourages the 1540 Committee, at its discretion, to draw also on relevant expertise, including, civil society and the private sector, with, as appropriate, their State’s consent;

 

 

 

Sanctions and Non-proliferation in the Insurance Industry

In at least three ways the insurance industry is an enabler of activities and thus has a responsibility to ensure those activates do not threaten international peace and security, including the proliferation of Weapons of Mass Destruction.

First, programmes of concern, such as those in Iran and North Korea, typically require goods from the international marketplace. This kind of trade is often dependent upon insurance: for example, through a “letter of credit” offered by a bank, or by the issuing of an insurance policy covering a vessel in which the goods are shipped.

Second, infrastructure with possible use in proliferation often also requires insurance in order to limit the liability of an incident. A nuclear power plant, for example, may well be insured through insurance ‘pools’ so that in the case of an accident the owner of the facility has limited liability.

Third, there are the indirect effects of providing insurance services. For example, if an insurer provides services to a business sector, which itself creates the necessary resources to allow a government to continue with its programme of concern, then the insurer is, de facto, supporting proliferation. Examples of this would include providing insurance cover to Iran’s oil and gas sectors, which are restricted by sanctioned since they are a key source of revenue for the Iranian government.

Why the Insurance Industry should care about Sanctions

The insurance industry has an obligation to adhere to the letter of the law in all cases. It is often prudent from a risk mitigation perspective, however, to adhere not only to the letter but also the spirit of such laws. Failure to do so can result in unmanageable reputational risks, an undesirable risk landscape for future business, and the untold costs, in terms of business resources, of providing policies that cannot be fulfilled.[1].

In practice, it is often diligent to adhere to US unilateral sanctions measures, even when not subject to US laws. There are a variety of reasons why this is prudent. First, US laws are increasingly extraterritorial, meaning that firms conducting trade which would be prohibited if the firm was US-owned could, for example, be prohibited from conducting certain business in the US, including supplying the federal government or accessing the US financial system. Second, US law makers have demonstrated a resolve to restrict further the provision of trade-related services from the international marketplace The insurance industry can pre-empt the imposition of new laws and extraterritorial measures by adopting systems and processes now which appropriately manage the changing risk landscape.

What the Insurance Industry could do to Protect Itself

Insurance firms should consider taking a systematic approach to the implementation of non-proliferation and sanctions measures. This systematic approach must be supported by the company’s top management and  in the form of both training and guidance for company staff. The systematic approach has two aspects:

Compliance

For the insurance industry, compliance with trade controls typically involves the screening of policies against lists of designated entities, using screening systems specifically intended for this purpose. The objective is to ensure that any matches between a party to a policy and a “designated entity” are identified and managed.

US unilateral measures also require insurers to exclude policies covering certain proscribed activities with countries such as Iran. This typically requires the insurer to collect information from the prospective policy holder on the nature of their business and to ensure that the provided information is valid. In practice, this may be achieved by asking the policy seeker to complete a questionnaire thereby introducing a self-declaration clause in the policy, rendering the policy invalid if it emerges that illegal activities have been undertaken.

Risk management

When a policy is not, strictly speaking prohibited according to the terms of the compliance process, the insurer should evaluate the benefits and risks associated with accepting the policy. This is primarily the task of an underwriter, but underwriters can also be supported by a risk management function.

Policies can pose a number of risks from a proliferation perspective. The primary risks are as follows:

  • That a facility seeking insurance, such as a nuclear reactor, is involved in the production of Weapons of Mass Destruction or prerequisite materials;
  • That a policy in other ways enables trade in prerequisite materials which can be used in the production of Weapons of Mass Destruction

 

Insurers can mitigate the risks posed by such policies by ensuring that government-led measures, such as export controls and IAEA safeguards, are adhered to by the policy holder.

Alpha for Insurers

Alpha is developing guidance for insurers on implementing non-proliferation and sanctions from a compliance and risk management perspective. Alpha also maintains information useful for implementing these systems in practice, such as country profiles. Finally, Alpha offers training for compliance and risk management professionals. Click here to find out more about Alpha’s services and memberships.



[1] Since insurance payments cannot be made when illegal activity is evident, policies which relate to proliferation cannot ultimately be fulfilled.

Click on sub-headings in the risk matrix (nuclear, missile etc.) to link to more detailed pages about the specific risks...

 

What Do Exporters Need to Know?

It is rare that export licenses are refused to the US from the UK (and vice versa). While both countries are nuclear weapons states with active ballistic missile programs, neither is known to seek goods illicitly.

Nonetheless, while there are no special considerations, standard export licensing requirements apply.

Risk

Nuclear

Missile

The US signed the Nuclear Non-proliferation Treaty as a nuclear weapons state in 1968. As such, trade in nuclear-related goods to nuclear-related entities can be licensed for export in line with standard licensing requirements.

The US has an active and highly advanced ballistic missile and space industry. However, the military and civilian dimensions of this programme are well separated. Exports of sensitive items to these sectors can be licensed for export in line with standard licensing requirements.

Chemical

Biological

The US does not have an active chemical weapons programme. It does have a stockpile of chemical weapons which are in the process of being destroyed. Sensitive exports are still subject to licensing requirements

The US does not have an active biological weapons programme or an existing stockpile. Sensitive items can be licensed for export in line with standard licensing requirements.

Military Goods

Internal Diversion

Military-related exports to the United States are rarely refused. One exception is incorporation cases where goods are to be exported to the United States for incorporation into military aircraft for an ultimate end use in Israel.

The risk of illicit internal diversion from an American company to US programmes of concern is minimal.

Outward Diversion (Re-export)

The US has a strong export compliance system and does not pose an outward diversion risk.

Recommended Precautions

Standard export compliance requirements.

State Owned WMD-Related Entities

Nuclear
National Nuclear Security Administration (NNSA)
(Semi-autonomous agency within the Department of Energy)
Nuclear Weapons R&D Conducted at:
Los Alamos National Laboratory, New Mexico
Lawrence Livermore National Laboratory, California
Sandia National Laboratory, California & New Mexico
Production, Maintenance, and Dismantlement Undertaken at:
Pantex Plant, Texas
Kansas City Plant, Kansas
Y-12 National Security Complex, Tennessee
Other Sites

Savannah River Site
, South Carolina (Tritium production)
Nevada National Security Site, Nevada (related experiments)

 

Click on sub-headings in the risk matrix (nuclear, missile etc.) to link to more detailed pages about the specific risks...

 

What Do Exporters Need to Know?

The UK is a de-jure Nuclear Weapons State under the NPT. The UK has never sought goods illicitly.

Risk

Nuclear

Missile

The UK signed the Nuclear Non-proliferation Treaty as a nuclear weapons state in 1968, and civil nuclear facilities are placed under IAEA and Euratom safeguards.

The UK does not have an active ballistic missile programme.

Chemical

Biological

The UK does not have an active chemical weapons programme.

The UK does not have an active biological weapons programme.

Military Goods

Internal Diversion

Exports of Military Goods can likely be licensed for export in line with standard licensing requirements.

Nil.

Outward Diversion (Re-export)

The UK has a strong export compliance system and does not pose an outward diversion risk.

Recommended Precautions

Comply with origin country’s standard licensing requirements.

State Owned WMD-Related Entities

Nuclear

Atomic Weapons Establishment
Aldermaston and Burghfield

 

 

View the methodology used to create this page here.

 

Russia

Click on sub-headings in the risk matrix (nuclear, missile etc.) to link to more detailed pages about the specific risks...

 

What Do Exporters Need to Know?

Licensing statistics suggest that there are few exports and fewer refusals to Russia from the UK or US.  Nonetheless, Russia is a nuclear weapons state with an active ballistic missile program and goods that could assist those programs may be refused. Russia is not known to be a major source of components for proliferants elsewhere.

Risk

Nuclear

Missile

Russia signed the nuclear non-proliferation treaty as a nuclear weapons state in 1968. As such, trade in nuclear-related goods to nuclear-related entities can be licensed for export in line with standard licensing requirements.

Russia has an active and highly advanced ballistic missile and space industry. However, the military and civilian dimensions of this programme are well separated. Exports of sensitive items to these sectors can be licensed for export in line with standard licensing requirements.

Chemical

Biological

Russia is not known to have an active chemical weapons programme. It does have a stockpile of chemical weapons which are in the process of being destroyed. Sensitive exports are still subject to licensing requirements.

Russia is not known to have an active biological weapons programme; there are uncertainties about a possible existing stockpile. Sensitive items can be licensed for export in line with standard licensing requirements.

Military Goods

Internal Diversion

Military goods can be exported to Russia under licence.

Russia is not known to seek goods illicitly from the international marketplace.

Outward Diversion (Re-export)

 

Recommended Precautions

Standard export licensing requirements.

State Owned WMD-Related Entities

Nuclear
Rosatom State Atomic Energy Corporation (formerly Federal Agency for Atomic Energy).
Atomenergoprom (joint stock company; part of Rosatom)
Nuclear Weapons Complex branch of Rosatom (developing, testing, producing, and dismantling). This consists of two branches:
1) Nuclear Weapons Production Division
2) Development and Testing Division
Under the second branch there are two research institutes:
All-Russian Scientific Research Institute for Experimental Physics in Sarov (VNIIEF)
All-Russian Scientific Research Institute for Technical Physics in Snezhinsk (VNIITF)

 

 

 

 

 

Syria

Click on sub-headings in the risk matrix (nuclear, missile etc.) to link to more detailed pages about the specific risks...

 

What Do Exporters Need to Know?

Syria is of high proliferation concern. Non-controlled goods with utility to WMD programs are frequently refused and Syria is subject to an arms embargo.

Risk

Nuclear

Missile

Syria does is not believed to have an active nuclear weapons programme; however, the country has pursued nuclear technology in the past. Exporters should proceed with caution; license applications should be submitted to national authority in line with standard requirements. If in doubt, exporters should contact their national authority.

Syria has an active missile programme.

Chemical

Biological

Syria is believed to have an active chemical weapons programme. Exporters should proceed with caution; license applications should be submitted to national authority in line with standard requirements. If in doubt, exporters should contact their national authority.

Syria may have an active biological weapons programme. Exporters should proceed with caution; license applications should be submitted to national authority in line with standard requirements. If in doubt, exporters should contact their national authority.

Military Goods

Internal Diversion

Sanctions may cause Syria to attempt to illicitly procure military technologies. Exporters should proceed with caution; license applications should be submitted to national authority in line with standard requirements.

Syria illicitly seeks goods to support its WMD programs using false front companies and complex trade routes.

Outward Diversion (Re-export)

The discovery of a North-Korean designed reactor in Syria during the last decade suggests that Syria cooperates with a number of other countries to forward WMD programs.

Recommended Precautions

All proliferation-sensitive exports should be referred to the national authority and additional due diligence should be undertaken to validate the credentials of the stated end user. Exporters should also be mindful of red-flag indicators.

State Owned WMD-Related Entities

Note: Exporters should also refer to UN, EU, and US designated entity lists before conducting trade. Syria uses front companies extensively.

Nuclear
Atomic Energy Commission of Syria (AECS)
Syrian Scientific Research Centre (SSRC)
Missile
Syrian Scientific Research Council (SSRC), Damascus


Please note it is your responsibility to ensure that your activities do not breach these sanctions. If you wish to do business  with Syria you are advised to look at the UKTI, BIS, FCOand HM Treasury webpages. If there is uncertainty you are advised to seek independent legal advice to ensure you do not breach sanctions. It is a criminal offence to breach these sanctions and carries a penalty of up to 7 years imprisonment.

 

Pakistan

Click on sub-headings in the risk matrix (nuclear, missile etc.) to link to more detailed pages about the specific risks...

 

What Do Exporters Need to Know?

Pakistan has nuclear weapons and ballistic missiles, and licences for exports to Pakistan are frequently refused. Licence applications for goods controlled because of a nuclear-related end use will not be approved for export to nuclear-related end uses, although exports of nuclear-related dual-use goods to non-nuclear end uses are considered on a case-by-case basis. Pakistan procures goods illicitly to support its nuclear and missile programs, and non-controlled but proliferation sensitive goods are also often refused.

Risk

Nuclear

Missile

Pakistan’s nuclear weapons program illicitly seeks goods from overseas. Exports for nuclear end use are likely to be refused.

Pakistan’s missile program is thought to illicitly acquire goods from overseas. Technology with possible missile-related uses are likely to be refused export licences unless there is confidence that the goods will not be diverted.

Chemical

Biological

Pakistan is not thought to have a Chemical Weapons program, although a number of licences of valves and pipe work controlled for possible Chemical Weapons use have been refused by both the UK and the US

Pakistan is not thought to have Biological Weapons program, and no licenses for biological-related technology have been refused from either the UK or the US.

Military Goods

Internal Diversion

Licenses are required for the export of all military goods to Pakistan. Licences are occasionally refused.

Pakistan makes routine use of illicit procurement methods to obtain proliferation-sensitive items from the international marketplace. Businesses exporting to Pakistan should review the guidance below.

Onward Diversion (Re-export)

Pakistan is not known to have transferred sensitive technologies onwards to other countries in the recent past despite having a history of doing so.

Recommended Precautions

Businesses should ensure that they have in place robust export or financial compliance systems that include end user due diligence as Pakistan is thought to routinely use intermediaries and front companies to procure proliferation-sensitive goods from the international marketplace.

State Owned WMD-Related Entities

In addition to the following entities, companies should develop end use screening procedures that screen customers against the lists maintained by the US Treasury and Department of Commerce, although such lists have no legal jurisdiction within the UK.
Pakistan Atomic Energy Organisation

Dr. A Q Khan Research Laboratories

 

 The following considerations apply to the three categories of nuclear-related trade:

 

Unsafeguarded facilities / entities identified above

Safeguarded facility

Other industries / facilities

Trigger List export

Licence / Gov-Gov assurances required. Neither likely to be issued.

Licence / Gov-Gov assurances required. Neither likely to be issued.

Licence / Gov-Gov assurances required. Neither likely to be issued.

Listed “dual use” export

Licence required. Approval unlikely.

Licence required. Approval unlikely.

Some licences refused.

Non-listed goods

Submit all licences

Submit all licences

Submit licence if you know or suspect the end use may relate to WMD

 

 

 

 

 

 

Click on sub-headings in the risk matrix (nuclear, missile etc.) to link to more detailed pages about the specific risks...

 

What Do Exporters Need to Know?

DPRK has been subject to certain trade and other sanctions since it withdrew from the Nuclear Non-proliferation Treaty (NPT). North Korea subsequently tested nuclear weapons and demonstrated to the world that it has both centrifuge and reactor-based nuclear programs. North Korea's proliferation of ballistic missile technology also drives international concern.

DPRK sustains its programs by illicitly seeking goods from the international marketplace. It is widely reported that North Korean firms acquire much of the technologies they require to sustain its nuclear and missile programs from Chinese firms in defiance of sanctions, and western suppliers selling certain proliferation-sensitive goods to China could inadvertently end up supplying the North Korean program.

Exporters should seek guidance from the national authority for all exports. Licenses for controlled goods or goods with utility to nuclear, chemical, biological, missile, or military programs are likely to be refused unless a humanitarian exemption applies. UN and EU sanctions also impose sanctions on certain designated entities.

Financial and banking institutions must also implement trade compliance programs to ensure their obligations are met. 

Risk

Nuclear

Missile

North Korea’s nuclear program is subject to sanctions because of North Korea’s withdrawal from the NPT. Exports to nuclear-related end uses or exports of nuclear-sensitive goods will not be licenced.

North Korea’s ballistic missile programs are of concern because of their potential use in delivering nuclear weapons. Exports to support these programs will not be licenced.

Chemical

Biological

North Korea may have an active chemical weapons program. The export of goods controlled because of possible chemical weapons end uses are prohibited by EU sanctions.

North Korea may also have an active biological weapons program. The export of goods controlled because of possible biological weapons end uses are prohibited by EU sanctions

Military Goods

Internal Diversion

UN, EU and UK sanctions include an Arms embargo, and applications for military-related export licenses will be refused.

North Korea’s programs are known to seek goods illicitly, and there is a real risk that any export of proliferation-sensitive technologies to civil end uses in North Korea will be diverted.

Outward Diversion (Re-export)

North Korea is known to pose an outward diversion risk for military equipment. North Korea probably also poses an outward diversion risk for dual-use equipment too.

Recommended Precautions

Submit all exports to national authority and develop an export or finance compliance system.

State Owned WMD-Related Entities

Note: UN, EU, and US sanctions designate North Korean entities that are of proliferation concern. Those lists are updated frequently, and exporters or financial institutions should ensure that they operate from the latest designation lists.

 

Click on sub-headings in the risk matrix (nuclear, missile etc.) to link to more detailed pages about the specific risks...

 

What Do Exporters Need to Know?

DPRK has been subject to certain trade and other sanctions since it withdrew from the Nuclear Non-proliferation Treaty (NPT). North Korea subsequently tested nuclear weapons and demonstrated to the world that it has both centrifuge and reactor-based nuclear programs. North Korea's proliferation of ballistic missile technology also drives international concern.

DPRK sustains its programs by illicitly seeking goods from the international marketplace. It is widely reported that North Korean firms acquire much of the technologies they require to sustain its nuclear and missile programs from Chinese firms in defiance of sanctions, and western suppliers selling certain proliferation-sensitive goods to China could inadvertently end up supplying the North Korean program.

Exporters should seek guidance from the national authority for all exports. Licenses for controlled goods or goods with utility to nuclear, chemical, biological, missile, or military programs are likely to be refused unless a humanitarian exemption applies. UN and EU sanctions also impose sanctions on certain designated entities.

Financial and banking institutions must also implement trade compliance programs to ensure their obligations are met. 

Risk

Nuclear

Missile

North Korea’s nuclear program is subject to sanctions because of North Korea’s withdrawal from the NPT. Exports to nuclear-related end uses or exports of nuclear-sensitive goods will not be licenced.

North Korea’s ballistic missile programs are of concern because of their potential use in delivering nuclear weapons. Exports to support these programs will not be licenced.

Chemical

Biological

North Korea may have an active chemical weapons program. The export of goods controlled because of possible chemical weapons end uses are prohibited by EU sanctions.

North Korea may also have an active biological weapons program. The export of goods controlled because of possible biological weapons end uses are prohibited by EU sanctions

Military Goods

Internal Diversion

UN, EU and UK sanctions include an Arms embargo, and applications for military-related export licenses will be refused.

North Korea’s programs are known to seek goods illicitly, and there is a real risk that any export of proliferation-sensitive technologies to civil end uses in North Korea will be diverted.

Outward Diversion (Re-export)

North Korea is known to pose an outward diversion risk for military equipment. North Korea probably also poses an outward diversion risk for dual-use equipment too.

Recommended Precautions

Submit all exports to national authority and develop an export or finance compliance system.

State Owned WMD-Related Entities

Note: UN, EU, and US sanctions designate North Korean entities that are of proliferation concern. Those lists are updated frequently, and exporters or financial institutions should ensure that they operate from the latest designation lists.

 

Click on sub-headings in the risk matrix (nuclear, missile etc.) to link to more detailed pages about the specific risks...

 

What Do Exporters Need to Know?

Israel is a nuclear weapons state outside of the Non-Proliferation Treaty. Israel has never openly declared its programme; export licenses for nuclear end-uses are likely to be refused.

Israel has an active missile and space programme; license applications will be considered on a case-by-case basis.

Israel may have active chemical and / or biological weapons programmes. Export licensing statistics show that there were a number of refusals for technologies of possible chemical weapons end-use.

The UK has restricted the sale of military goods to Israel since the early 2000s.

Exporters should check with the national authority if in doubt.

Risk

Nuclear

Missile

Israel is a de facto nuclear weapons state outside of the Non-proliferation Treaty. Israel has never openly confirmed the existence of their programme. Export license applications for items controlled for nuclear end-uses for export to Israel will be refused.

Israel is known to have an active ballistic missile programme; Israel is outside of major international agreements in this regard. Israel also has an active space programme. Sensitive missile-related technologies may be licensed to Israel on a case-by-case basis in line with standard licensing requirements.

Chemical

Biological

Israel may have an active chemical weapons programme. Israel certainly has the capability to manufacture a number of chemical agents and has not signed the Chemical Weapons Convention. Export licensing statistics show many refusals of chemical weapons-related technologies.

Israel may have an active biological weapons programme. Israel has not signed the Biological Weapons Convention.

Military Goods

Internal Diversion

The UK has restricted the sale of conventional weaponry to Israel since the early 2000s.

Israel is no longer thought to illicitly procure sensitive technologies.

Outward Diversion (Re-export)

There are no specific concerns associated with onward transfers of sensitive technologies from Israel.

Recommended Precautions

Standard licensing requirements; exporters doing business with Israel should implement an export compliance system to mitigate risks.  

State Owned WMD-Related Entities

Nuclear
Israeli Atomic Energy Commission
Organisation has oversight, advises the government on policy, research and development priorities, and implementation.
Negev Nuclear Research Centre (Dimona)
A full suite of infrastructure is reportedly at the Dimona site, including milling, conversion, enrichment, fuel fabrication; Plutonium source, reprocessing
Soreq Nuclear Research Center (SNCR)
Weaponisation, Research and Development

 

 

 

 

 

 

 

 

 

Click on sub-headings in the risk matrix (nuclear, missile etc.) to link to more detailed pages about the specific risks...

 

What Do Exporters Need to Know?

The UN, EU, UK, and US all have imposed sanctions on Iran because of the countries outstanding issues with the IAEA. Controlled goods cannot be exported from the UK to Iran unless a humanitarian exemption applies, and the EU maintains a list of additional items controlled only for export to Iran.

US, EU, and UK sanctions also designate certain individuals, entities, and financial institutions in Iran, effectively prohibiting British firms from engaging these entities in business activities.

US extraterritorial measures can also punish firms based outside the US for conducting business or investing in Iran. Countries procuring oil from Iran.

Risk

Nuclear

Missile

Iran’s nuclear program is subject to sanctions because of outstanding issues with the IAEA. Exports to nuclear-related end uses or exports of nuclear-sensitive goods will not be licenced.

Iran’s ballistic missile programs are of concern because of their potential use in delivering nuclear weapons. Exports to support these programs will not be licenced.

Chemical

Biological

Iran may have a chemical weapons program. The export of goods controlled because of possible chemical weapons end uses are prohibited by EU sanctions

Iran may have a biological weapons program. The export of goods controlled because of possible biological weapons end uses are prohibited by EU sanctions

Military Goods

Internal Diversion

UN, EU and UK sanctions include an Arms embargo, and applications for military-related exports will not be licenced.

Iran’s programs illicitly seek proliferation-sensitive goods from the international marketplace. There is a real risk that ostensibly civil exports will be diverted to end uses of concern.

Outward Diversion (Re-export)

Iran is known to pose an outward diversion risk for military equipment. Iran probably also poses an outward diversion risk for dual-use equipment too.

Recommended Precautions

Sanctions and restrictive measures on Iran evolve rapidly, and exporters should sign up to the ECO’s Notices to Exporters. All exporters and financial institutions should have a trade compliance system in place to ensure that the requirements of sanctions requirements are met.

State Owned WMD-Related Entities

Note: UN, EU, and US sanctions designate Iranian entities that are of proliferation concern. Those lists are updated frequently, and exporters or financial institutions should ensure that they operate from the latest designation lists.

Please note it is your responsibility to ensure that your activities do not breach these sanctions. If you wish to do business  with Iran you are advised to look at the UKTI, BIS, FCOand HM Treasury webpages. If there is uncertainty you are advised to seek independent legal advice to ensure you do not breach sanctions. It is a criminal offence to breach these sanctions and carries a penalty of up to 7 years imprisonment.

 

 

 

 

 

 

 

 

 

On 20-21 March Project Alpha hosted representatives from the United Nations' (UN) 1540 panel of experts, the UN North Korean panel of experts and several governments for a conference on Antiproliferation. Antiproliferation is the concept of preventing proliferation through engaging the private sector.

The event coincided with three other notable developments. First, a grant was secured from the  Macarthur Foundation to forward Alpha’s work in highlighting and addressing supply chain proliferation risks, thus bringing Nick Mitchel on to the project’s staff (see below). Second, the Foreign and Commonwealth Office approved Alpha’s grant proposal for the coming financial year, thus allowing the team to drive forward research and responses to proliferation-related trade. Third, after an eight week spell as a senior visiting research fellow, the conference brought to an end the visit of Dr Rajiv Nayan from the Institute for Defence Studies and Analyses, New Delhi, who has been working with Alpha to identify good practices for private sector outreach to be employed in India.

Click on sub-headings in the risk matrix (nuclear, missile etc.) to link to more detailed pages about the specific risks...

 

What Do Exporters Need to Know?

China is a nuclear weapons state that has an active intercontinental ballistic missile program. There are some indications that China may also have chemical weapons program. The Chinese military-industrial complex actively seeks advanced hardware from the west. The Chinese private sector is also a major source of materials and components in the North Korean and Iranian programs of concern.

Risk

Nuclear

Missile

China signed the nuclear non-proliferation treaty as a nuclear weapons state. As such, trade in nuclear-related goods to nuclear-related entities can be licenced for export in line with standard licensing requirements.

China has an active and advanced ballistic missile and space industry. A lack of transparency means that the military and civilian dimensions of this programme may not be fully separated. Nonetheless, exports of sensitive items to these sectors can be licensed for export in line with standard licensing requirements.

Chemical

Biological

China possibly has an active chemical weapons programme. It does have a stockpile of legacy chemical munitions on its territory which are in the process of being destroyed. Standard export licensing conditions apply

China may have an active biological weapons programme or an existing stockpile. Sensitive items can be licensed for export in line with standard licensing requirements.

Military Goods

Internal Diversion

China is subject to an arms embargo, and licences for the export of military goods will not be granted.

Export licence applications to the Chinese military/industrial complex are frequently refused, and there is a real risk that such end users could attempt acquire goods illicitly.

Outward Diversion (Re-export)

The risk of diversion from the Chinese private sector to other countries’ programmes of concern is high. Exporters should implement the Project Alpha guidance on due dilligence and contact their national authorities if concerned about fulfilling an order.

Recommended Precautions

Exporters should implement the Project Alpha guidance on export compliance, with a specific focus on due diligence.

State Owned WMD-Related Entities

Entities of possible concern

Research & development, production

China Academy of Engineering Physics (CAEP)
China National Nuclear Corporation (CNNC)
- state owned conglomerate playing a role in civil and military nuclear issues.

Reportedly involved in warhead design:

China Institute of Atomic Energy (CIAE)
China Institute of Radiation Protection (CIRP)

China Aerospace Science and Technology Corporation (CASC)
China Academy of Sciences (CAS)


Please note it is your responsibility to ensure that your activities do not breach these sanctions. If you wish to do business  with China you are advised to look at the UKTI, BIS, FCOand HM Treasury webpages. If there is uncertainty you are advised to seek independent legal advice to ensure you do not breach sanctions. It is a criminal offence to breach these sanctions and carries a penalty of up to 7 years imprisonment.

This country profile has been prepared by the Project Alpha team using the methodology which can be viewed here. There is a guide available on the use of country profiles available here.

 

 

 

 

 

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