Controls on exports and Sensitive countries
Leonardo has established an overall program for the Group – the Trade Compliance Program – in order to ensure full compliance with the applicable laws and regulations laid down by the competent authorities in the field of Trade Compliance. The Program ensures also timely identification and fulfilment of requirements prescribed by applicable national, EU and international legislation, in particular, regarding the export and import of defence and dual use products and services, of commercial products and services subject to regulations as well as obligations related to embargoes, sanctions or other trade restrictions.
Main national and international regulations on Trade Compliance:
Law n. 185/1990, as amended by Legislative Decree n. 105/2012
Licensing and controls for export of military goods and technologies (Italy)
International Traffic in Arms Regulations (ITAR)
Defence articles, services and brokering (US)
Export Administration Regulations (EAR)
Dual-use items, goods and technologies (US)
Office or Foreign Assets Control (OFAC)
Programs of sanctions and embargos (US)
Foreign Corrupt Practices ACR (FCPA)
Prohibits improper payments to foreign officials (US)
Transfer of defence-related products within the Community (EU)
Council of the European Union, 5 June 1998
Code of conduct on arms exports (EU)
Council Common Position 2008/944/CFSP
Common rules governing control of exports of military technology and equipment (EU)
Council of the European Union, 15 February 2010
Common list of military equipment (EU)
Regulation (EC) 428/2009
Community regime for the control of exports, transfer, brokering and transit of dual-use items (EU)
Export Control Act 2002
Control for export of goods to overseas destination, (UK)
The UK Anti-Bribery Act 2010
Active and passive bribery, bribery of foreign officials, corporate bribery (UK)
Missile Technology Control Regime (MTCR)
Rules and controls on the export of missile technology
Nuclear Suppliers Group (NSG) Guidelines
Rules and controls on the export of nuclear technology
The Wassenaar Arrangement (WA)
Export Controls for Conventional Arms and Dual-Use Goods and Technologies
The Program is defined in Guidelines No. 16 dated September 20, 2016 “Trade Compliance” for the One Company and in Directive No. 5 dated December 19, 2016 “Trade Compliance” (replacing the Directive no. 21/2012 (“Trade Compliance Program”) for all the Subsidiaries.
The Guidelines and the Directive as above rules to the following activities:
a) Governance and implementation of the Trade Compliance Program;
b) Trade Control (export, import, transit, brokering, re-export, transfer or use of defence products, dual-use or certain types of commercial products subject to restrictions);
Roles and Responsibilities
- Senior Compliance Officer (SCO): responsible for supervising the implementation of this Directive and the Guidelines on Trade Compliance, with the possibility to report potential risks or violations to the Chairman and Managing Director, as well as to the other bodies and internal committees.
- Trade Compliance (TCO): responsible for management and coordination of Trade compliance activities of Leonardo at the One Company and Group level. As part of TCO, TCD (Trade Compliance of Division) is in charge of managing the trade compliance activities of each Division and ITC (UK/International Trade Compliance) is in charge of coordination and monitoring of Trade Compliance activities of foreign Subsidiaries.
- Trade Compliance Subsidiary (TCS): responsible for ensuring the implementation of Directive 5/2016, in particular TCS of Direct and Strategic Subsidiaries have the responsibility to act as connection with TCO/ITC and with TCS of indirect controlled subsidiaries.
Adoption of Guidelines, Directives and Procedures related to Trade Compliance
Leonardo has issued, and regularly updates, the Guidelines and the Group’s Directive that establish, among other matters, the minimum requirements of the Trade Compliance Program, in order to ensure the observance of the provisions established by the applicable laws and by the relevant authorities, especially with reference to the legal systems in which the Group operates (Italy, US and UK ) and the international regulations (in particular, the Resolutions of the United Nations Security Council) and European regulations (Council of the European Union). Every Division of Leonardo and the Subsidiaries exposed to Trade Compliance risks is required to adopt/update specific procedures.
ELEMENTS OF THE TRADE COMPLIANCE PROGRAM:
The risk analysis, expected by the Guidelines and Directive is performed and repeated on a regular basis with reference to the company transactions involving defence materials, goods and services, technical data and applications for dual use and, within the sensitive countries, with reference also to commercial products. This analysis takes into account the laws of the jurisdictions in which Leonardo and the respective subsidiaries are incorporated and operate (including the countries in which supplies are performed), as well as EU and US laws that define and control the export and marketing of such goods and services. The risk analysis process is subject to review on a regular basis and also on the occasion of special events that may expose to Trade Compliance risks (for example mergers, acquisitions, development of new products or services).
The Commodities classification aims to the identification and classification of the goods, products and services in order to ensure compliance to applicable rules and regulations and to adopt control processes to verify Trade restrictions of certain good/products prior to export, re-export, transfer or re-transfer.
Know your customer
Verification of new customers/end users, shall be carried out prior to any sale (for example type of entity, ownership structure and any other information on the customer’s reputation and integrity). Based on the analysis of this information, the company is capable of assessing whether there are potential risks (“red flags”).
This screening system aims to carry out appropriate verifications on the customers and on the relevant parties to a transaction, including end users, in order to verify and identify if they are included in lists as proscribed persons, are subject to trade restrictions or prohibitions.
Monitoring politically sensitive transactions
Monitoring establish that some transactions, even non-related to export or re-export of materials subject to restriction and however take place toward countries concerned with embargoes, sanctions or other restrictive measures (“Sensitive Countries”) are subject to prior notification and periodic reporting.
The list of Sensitive Countries for the Leonardo Group, subject to periodical review by the Head of TCO , is currently the following:
|Central African Republic|
|Democratic Republic of Congo|
|People's Republic of China, excluding Hong Kong and Macau|
The Program provides for constant training of employees on laws applicable in the field of Trade Compliance and advanced training sessions for people more involved in related processes.
Immediate notification of critical issues
The Program provides for the immediate reporting, decision-making and corrective measures to be carried out in the event of potential violations of the applicable laws. The Head of TCO shall be notified of the potential violations and shall be kept informed of the corrective measures taken and provide information to the SCO.
Assessment of the Program
A periodic assessment of the Trade Compliance Program shall be carried out according to Guideline 16/2016 and Directive 5/2016.
Leonardo and its subsidiaries shall retain relevant documentation for a minimum time period of five years or for any longer period provided for by local laws.
The Council, chaired by the SCO, promotes the cooperation, exchange of information, training and development and maintenance of best practices in the field of Trade Compliance.
Management of whistleblowing
In regards to reporting potential violations (whistleblowing) refer to Leonardo's “Whistleblowing Management Guidelines” of March 18, 2015.