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The ten most frequently asked questions about Internal Compliance Programme (ICP).
An increasing number of companies are receiving questions from banks, logistics partners or supervisory authorities regarding sanctions, export controls and compliance. Businesses engaged in international trade or operating in sensitive sectors will inevitably encounter these issues at some point. A commonly used instrument to manage such risks is an Internal Compliance Programme, abbreviated as ICP. But what exactly is an ICP, when is one required, and what is expected from your organisation? Below, we answer the ten most frequently asked questions about an ICP.
1. What is an ICP?
An Internal Compliance Programme is an internal system of policies, procedures and measures designed to ensure that a company complies with export control and sanctions laws and regulations. An ICP sets out, among other things, how a company identifies risks, monitors transactions and shipments, trains employees and handles incidents. It is therefore not a standalone document, but a structured and systematic way of working within the organisation, based on internal policies and procedures.
2. For whom is an ICP relevant?
An ICP is relevant for companies engaged in international trade that may be subject to export control or sanctions regimes. This includes companies exporting strategic goods, software or technology, as well as service providers, distributors and trading companies. For exports from the Netherlands to a third country of so-called dual-use items, an export licence is required. Dual-use items are goods intended for both civil and military use. In addition, exports to certain third countries may be prohibited under sanctions legislation.
3. Is an ICP a legal requirement?
No, an ICP is not a statutory obligation as such. However, in many situations, authorities and banks do expect companies to have an adequate export compliance system in place. When applying for certain licences, such as global export licences for strategic goods including dual-use and military items, a properly functioning ICP is a key requirement.
4. When does the government expect a company to have an ICP?
The expectation that a company has an ICP increases as the level of risk increases. This may be the case, for example, in relation to exports of dual-use or military goods, transactions involving sanctioned countries, complex international supply chains, or where applications for export licences are submitted on a recurring basis.
5. What are the key elements of an ICP?
Although an ICP is always tailor-made, it generally consists of seven core elements:
- Top-level management commitment to compliance
- Organisational structure and allocation of responsibilities
- Export screening procedures
- Transaction screening processes and procedures
- Training and awareness
- Audits, reporting and corrective measures
- Record keeping and archiving
6. Does an ICP need to follow a specific format?
No, there is no fixed statutory format for an ICP. However, governments and supervisory authorities do provide guidance on the minimum requirements they expect. An ICP should be proportionate to the size, structure and activities of the company.
7. What is the difference between an ICP and general compliance?
An ICP specifically focuses on export control and sanctions legislation. As such, it forms part of a broader compliance framework, but it does not replace general compliance. An ICP primarily addresses risks related to international trade, goods flows and geopolitical developments.
8. Why do banks increasingly ask for an ICP?
Banks themselves are subject to strict sanctions and anti-money laundering obligations. In the context of international payments, they seek insight into the risks associated with the underlying transactions. An ICP helps a company demonstrate that its internal processes are properly organised. This can help prevent delays in payments and contribute to a smooth relationship with the bank.
9. What are the risks if an ICP is absent or ineffective?
The absence of a properly functioning ICP can have serious consequences, such as the refusal or withdrawal of licences, or restrictions imposed by banks or trading partners. In addition, it becomes significantly more difficult to argue that a violation occurred unintentionally if internal controls are lacking.
10. How can Kneppelhout assist with setting up or updating an ICP?
Kneppelhout supports companies in designing, reviewing and updating an ICP that is tailored to their specific activities and risk profile. We assist, among other things, with identifying relevant export control and sanctions risks, drafting clear procedures and formalising responsibilities within the organisation.
In addition, we advise companies in dealings with supervisory authorities, banks or trading partners, and on aligning the ICP with licence applications and existing compliance structures. An ICP should not only be legally sound, but also practical and workable in day‑to‑day operations.
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