Navigating a minefield - Australia's defence export controls and sanctions regimes on products

Corporations operating in Australia need to be aware of the defence export controls and sanctions regimes as they become increasingly complex with growing lists of restricted products and international sanctions. Substantial penalties for non-compliance now apply.


  • A surprisingly wide range of restrictions apply to a range of products, destinations and consignees.
  • The source of the defence export controls is the Defence and Strategic Goods List (DSGL) while the sanctions are covered by the Australian Sanctions Regime (ASR).
  • Sanctions and defence export controls are administered by the Department of Foreign Affairs and Trade (DFAT), the Australian Customs and Border Protection Service, and the Defence Export Control Office (DECO).
  • There is an online registration and application system administered by DFAT and DECO, but for more complex export arrangements or particularly sensitive products, face-to-face discussions may be necessary.
  • Failure to comply can result in up to 10 years imprisonment for individuals, and fines totalling the greater of $1.7 million or three times the value of the prohibited export transaction.
  • Mistakes occur, and in our experience DFAT and DECO have accepted this in cases where the corporation voluntarily reports the contravention, has an acceptable compliance system in place, and can demonstrate that it has taken appropriate steps to prevent further breaches.

What should exporters do?

As a minimum, exporters of goods from Australia should:


  • the origin of each component of the products being exported
  • the identity of the purchaser, its directors , officers and ultimate owners
  • the applicable Australian and international sanctions regimes and how they apply to your exports.

Establish a system which:

  • identifies sanctioned products, individuals and countries relevant to your business
  • operates an effective internal product checking and approval system
  • designates trained personnel to manage the registration and applications for permits (where required)
  • retains expert advice for complex arrangements
  • incorporates sanctions training into your compliance training program.

Seek approvals:

  • by registering where necessary and applying for the required export licenses.

The fine print

Australian sanctions and defence export controls

Australia applies United Nations sanctions and has its own set of autonomous sanctions. The current Australian sanctions regimes (as at 1 November 2014) are depicted below:

Click here to view image.

Traditional sanctions impose outright trade embargoes. While that can still occur, more recent Australian sanctions and defence export control regimes tend to be directed at more specific targets applying to categories of exports and specific transactions with specified individuals or entities.

Prohibitions apply not only to the immediate use of a restricted or sanctioned product, but possible dual -use capabilities (goods that have the potential for both military and non-military use). Similarly, the ASR also precludes transactions which indirectly involve a sanctioned country, individual or entity, unless a permit is obtained.


An auto part may be used in military as well as private vehicles, even if produced and sold for private use. The defence export controls restrict the export of vehicle components designed for vehicles for the towing of munitions. Although the auto part may not be specifically designed for military use, it may be used or modified for such purposes. Accordingly, given the dual-use potential an export permit may be required.

A product in relation to which there is no defence export control or sanctions problem may be sold on- sold to a buyer located in a sanctioned country, or any one of whose directors, management or ultimate owners is a sanctioned person.

Over 5,000 named individuals are listed on the ASR Consolidated List maintained by DFAT and regularly updated. The list is accessible here.

Specific transactions with sanctioned countries, entities or persons deemed to be a threat to international and Australian security are restricted unless a permit to export the product is obtained in advance.


The direct or indirect supply, sale or transfer to the Democratic Republic of the Congo of arms or weapons, ammunition, military vehicles and equipment, spare parts and accessories and paramilitary equipment without a sanctions permit is prohibited.The use of or dealing with an asset that is owned or controlled by a ‘designated person’ from the Former Federal Republic of Yugoslavia and making an asset available directly or indirectly to such a ‘designated person’ without a sanctions permit is prohibited. The term ‘asset’ is defined broadly to include an asset or property of any kind, whether tangible or intangible, movable or immovable.

In addition, exporting products to a non-sanctioned country may also be prohibited without a permit, if the ultimate destination of the product is a sanctioned country or the ultimate buyer is a sanctioned corporation or individual. Even if the export is to a non-sanctioned customer or country, the export may require a permit if DFAT deems that the customer may supply the products to an entity on the sanctions list. Association with sanctioned entities may be indirect, such as through the shareholders, strategic partners, or financiers.

The Australian export control regimes also govern trade in technologies and software. Developing industries such as 3-D printing, advanced computer software and drone technology have dual civilian and military applications. These developments mean that corporations in Australia are facing increasing responsibilities and greater uncertainty when exporting new and innovative technologies.

Australia has recently passed legislation, to come into effect in May 2015, which will further restrict the transfer of technology in intangible formats (email or web upload) and will restrict the provision of defence training services.

Other regimes

Australian exporters need to consider more than the Australian sanctions regimes. In some circumstances they may need to also comply with export control regimes in other countries, if either the corporation has a parent or subsidiary in, or exports have an association with, those countries.

The United States International Traffic in Arms Regulation (ITAR) is the best known example. ITAR controls the export and "retransfer" of goods or technology on the United States Munitions List (USML). That list covers much more than munitions - including aircraft and related articles, chemical agents, forgings, castings and machined bodies, firmware, software, and systems.

A US corporation or person which designs or produces a product or technology on the USML must register with the US Department of State and then obtain a license before exporting that product or technology, regardless of to whom it is to be exported. That license is granted on the basis that retransfer of the export is prohibited without approval from the US Department of State. The US has a specific end-use monitoring program.


If a US manufacturer of auto parts capable of being used in military vehicles, obtains an ITAR license to export the product to a customer in Australia, the Australian corporation will contravene the ITAR by re- exporting the product unless, in addition to obtaining any necessary Australian permits, it also obtain a license from the US Department of State. Even if the product was manufactured in Australia under licence, the corporation may still require US export approval because ITAR extends to products produced using US technology.

There is a positive obligation to report non-compliance., and failure to comply with the US regulations may result in substantial penalties for corporations and up to 20 years imprisonment for executives.

ITAR is just one example. Another is the EU Dual Use Export Control Regime. There are export control regimes in most developed exporting countries, and as technology develops and new geopolitical issues impacting world markets emerge, export control regimes will continue to expand.