Governance

Sarah Rice

Director

Brief Overview

Third-party relationships are one of the fastest-growing export control risks. Regulators expect companies to detect behavioural red flags, monitor intent, control technology access, and prove governance at boardroom level. Firms that elevate their approach gain resilience, regulatory confidence, and competitive advantage.

Export control regimes across the UK, U.S., EU, and allied jurisdictions have undergone significant tightening in recent times. That tightening is reshaping liability, pushing it upstream.

This pertains to exporters themselves, as well as their broader ecosystems of distributors, brokers, contract manufacturers, logistics providers, research partners, and even cloud-service vendors: export controls are expanding. So is corporate liability. 

“The growing number of export restrictions is disrupting companies’ market strategies and tangling their supply chains.”

Why this matters

Export controls have shifted from a specialist compliance concern to a strategic enterprise risk. As diversion pathways evolve and IP moves across borders digitally, companies are increasingly judged not by their internal controls, but by the behaviour of their distributors, research partners, and service providers. Boardroom-level oversight is now essential; those who master it aren’t just safer, but better positioned to win trust, licences, and market share.

Expert advisory on third-party risk in export controls → 

Export controls, third-party risk, and value chain

In the UK, the 2025 regulatory updates under the Export Control Joint Unit (ECJU) bring a refreshed control list into force, as of 16 December 2025. The changes align the UK’s consolidated export control list with recent multilateral export control regimes, reflecting updated definitions of dual-use goods, emerging technologies, and broader compliance obligations. 

At the same time, licensing statistics show growing strain: in 2025, the number of standard individual export licences (SIELs) granted dropped compared with historical averages, while refusals increased: a signal that regulators are scrutinising export applications more closely, especially where dual-use or high-risk items are concerned. 

Beyond licensing bottlenecks, enforcement itself has grown more aggressive. In 2025, several UK exporters faced heavy compound settlements for unlicensed exports of military-listed goods under the Export Control Order 2008. In October 2024, one company alone was issued a compound settlement offer of over £370k after a breach. 

In parallel, in the U.S. the Bureau of Industry and Security (BIS) has expanded risk thresholds under new rules: under the latest 50%-ownership rule, exporters, re-exporters, or transfers may face civil – or even criminal – liability if they deal with entities majority-owned by a party on the U.S. “Entity List.” 

Beyond a business simply classifying its own items correctly, export control compliance extends to its entire value-chain. Export control risk has morphed into third-party liability risk – where partners, resellers, cloud-service vendors, logistics intermediaries, and even third-country subsidiaries can trigger enforcement consequences that cascade back to you. 

The third-party problem: where risk sits in modern supply chains

In a fragmented global trade environment, export control risk lies not only with the original exporter, but with third parties further down the value chain. Contract manufacturers, integrators, and subcontractors often handle components across multiple jurisdictions; if a partner misdeclares technology, or bypasses licensing requirements, the original exporter can face liability.

Distributors or resellers selling into high-risk or embargoed jurisdictions create “diversion risk.” Regulators (especially under frameworks like the U.S. EAR) increasingly hold exporters accountable for the downstream use of their products. Trade-finance and logistics intermediaries – freight forwarders, customs brokers, and payment agents – are another hotspot: misleading documentation, ambiguous origin claims, split shipments, or transit through third countries can trigger enforcement scrutiny. 

Opaque beneficial ownership structures, including shell companies, joint ventures, and investment vehicles, also amplify risk. Regulators expect transparency on ultimate owners and affiliations with sanctioned entities; inadequate due diligence itself may be considered a breach. Even when products or technology never physically leave the exporter (such as software, technical data, or transfers to overseas R&D partners), third-party risk can persist. 

Regulatory red flags 

Increasingly, regulatory scrutiny is concentrated on the diversion pathways that sit behind seemingly legitimate orders: goods routed through classic trans-shipment corridors such as the UAE, Türkiye, and Central Asia; procurement requests that spike suddenly, or follow unusual sequencing; or counterparties whose declared end-use doesn’t align with the sensitivity of the technology in question. 

Investigators also pay attention to “soft” indicators, such as requests for remote troubleshooting, or cloud-based accesses: both of which might potentially allow a third party to interact with controlled or dual-use technology from afar. Typically, a business placing an order may look low-risk, but under closer investigation, operates with a trading footprint, logistics patterns, or financing arrangements that leave it in breach of export controls. 

Due diligence 2.0

Most organisations can say, truthfully, that they “screen” third parties. However, from a regulatory perspective, screening is not the same as understanding intent. The required level of diligence – what some in finance and business are terming “due diligence 2.0” – looks beyond onboarding checks and KYC (know-your-customer) files. 

Rather, this heightened diligence involves asking whether a counterparty’s behaviour aligns with its stated purpose. For instance: 

  • Are ordering patterns consistent with capabilities? 
  • Do shipping routes make economic sense? 
  • Does the beneficial ownership (past the first layer) reveal actors operating in high-risk jurisdictions, or with access to dual-use tech?

It may also evaluate how a partner interacts with your technology stack:

  • Who has cloud credentials that could grant remote access to controlled designs? 
  • Which distributors or repair centres have the capability to extract sensitive data? 

Questions like these are pushing companies to really understand the deep operational realities of their supply chain partners. Increasingly, boardrooms need continuous monitoring, and an always-defensible governance trail.

Technology transfer and knowledge leakage 

A company can fall foul of export controls without actually shipping products: the risk here is in how knowledge, access, and expertise move across borders through third-party relationships. International research partnerships, joint ventures, and cross-border R&D all create channels through which sensitive IP can be accessed, reproduced, or repurposed – often inadvertently. 

The same may apply to foreign students, visiting researchers, and contracted engineers whose work grants them proximity to dual-use technologies subject to deemed-export rules.

What “good” looks like

A template approach to third-party export control risk

For boardrooms, the goal is the capability to demonstrate credible oversight of who can access products, data, IP, and supply chain. 

Managing third-party export control risk
Component What “good” looks like
  1. Risk-tiering of counterparties
 Tier partners by behaviour, jurisdiction, and access risk (not just sector). Apply enhanced scrutiny to distributors, logistics partners, research collaborators (etc) in high-risk corridors.
  1. Provenance + ownership verification
 Validate beneficial ownership, map intermediaries, and verify that a partner’s actual trading footprint aligns with its stated business model. 
  1. Transaction monitoring
 Detect unusual orders, routing anomalies, or end-use inconsistencies. Embed monitoring triggers that escalate suspicious activity to senior decision-makers.
  1. Contractual control mechanisms
 Use export control clauses: audit rights, tech-access restrictions, licence-flow-down requirements, and mandatory notification of ownership or capability changes.
  1. Escalation
 Codify when a transaction moves to legal, trade compliance, HR, or executive oversight. 
  1. Cross-functional governance
 For instance; legal assesses jurisdiction, compliance screens, procurement manages lifecycle risk, trade teams confirm licensing, and tech security governs IP access. Leadership ensures integrated, not siloed, control.

The strategic upside: from defensive compliance to competitive advantage

Ultimately, this enhanced governance of third-party export controls enables smoother market access, simplifies export licensing conversations, and reduces regulatory intervention – especially in high-growth, high-scrutiny sectors.

In addition, a more transparent supply chain naturally strengthens resilience. This helps companies avoid the operational shocks that could follow partner failures, illicit diversion, or last-minute licensing blocks. For OEMs (original equipment manufacturers) and government customers, it also signals dependability: buyers increasingly prioritise partners who can prove control over their third-party ecosystem.

Businesses committed to cultivating these deeper strategic and operational capabilities gain a significant competitive edge. They build trust much faster, move more confidently through high-risk jurisdictions, and position themselves as a “safe pair of hands” in markets where export control assurance is a differentiator, not a given.

Contact clearBorder now → 

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Export Controls, Governance

The Lowdown on SC Clearance in the UK: What You Need to Know for Export Controls

Overview Security Check (SC) clearance is a critical requirement for UK businesses whose employees need long-term or frequent access to classified government information. For organisations operating across borders, especially those involved in defence, cybersecurity or sensitive supply chains, understanding and complying with national security vetting is essential. This article explains what SC clearance is, why certain roles require it, who is eligible and how the UK’s national security vetting process works from application to renewal. It also outlines the commercial advantages of holding SC clearance and provides practical guidance to help businesses prepare successful applications and avoid delays. For companies seeking assurance, clarity or hands-on support, obtaining expert consultancy can significantly streamline the process and reduce compliance risks. Key Insights SC clearance grants access to SECRET information and in some cases supervised access to TOP SECRET assets, making it a mandatory requirement for many roles in defence, government contracting, security or sensitive international operations. The SC vetting process is thorough, involving background checks, employment history verification, financial reviews and interviews designed to assess reliability, integrity and vulnerability to external risks. To qualify, applicants must generally have five years of UK residency, be sponsored by an approved organisation and demonstrate a legitimate business need for access to classified information. The UK Government recognises seven levels of national security vetting, with SC sitting mid-level within this hierarchy, more stringent than CTC but less intensive than Developed Vetting (DV). Businesses benefit commercially from holding SC clearance, including stronger eligibility for government contracts, improved trust with domestic and international partners, reduced risk exposure and enhanced employee career progression. Common application challenges include incomplete forms, unclear employment history, financial inconsistencies and insufficient preparation for interviews, all issues that can be mitigated through specialist consultancy. SC clearance is valid for 10 years but may be reviewed or revoked at any time if circumstances change, making ongoing compliance essential for organisations and employees. For businesses navigating cross-border operations or moving into regulated sectors, obtaining expert guidance ensures faster processing, reduced operational risk and continued access to sensitive supply chains or strategic contracts. As a business owner with cross-border operations, you may sometimes require employees to have access to classified information. This means you need to comply with the UK’s national security policies. The UK government has strict regulations in place for vetting individuals who need access to sensitive information – one such clearance level is SC clearance, or Security Check clearance. SC clearance is a security clearance level that enables individuals to access information that’s classified as ‘SECRET’ and above. The clearance process involves a background investigation, questionnaire, and interview to determine an individual’s eligibility. What is SC Clearance? Security clearance is a UK confidentiality accreditation, designed to safeguard national interests and control access to information which the government deems sensitive. SC clearance enables individuals to access confidential information classified as ‘SECRET’ or above. The clearance process involves a thorough vetting process, including a background investigation, questionnaire, and interview to determine an individual’s eligibility. The government processes, on average, 164,700 CTC and SC clearances per year (National Audit Office), and it’s necessary for those who require access to sensitive information for their job – especially those in defence, cybersecurity, and government roles. SC clearance is crucial for businesses operating in the UK that deal with classified information and require employees with “long-term, frequent, and uncontrolled access to SECRET assets or occasional, supervised access to TOP SECRET assets” (United Kingdom Security Vetting). Why Do Some Employees Need SC Security Clearance? Security clearance checks are necessary for individuals who require access to classified information as part of their job. The government stipulates that “long-term, frequent, and uncontrolled access to SECRET assets or occasional, supervised access to TOP SECRET assets” (Ministry of Justice) are grounds for seeking SC clearance. For instance, this would apply to individuals: Working in roles that deal with sensitive information, such as defence, cybersecurity, and federal government positions Handling confidential and classified information regularly, with long-term and uncontrolled access to SECRET assets Working with occasional, supervised access to TOP SECRET assets Accessing information that could potentially harm national security if it fell into the wrong hands Collaborating with international partners that require a high level of security clearance. The Requirements for SC Clearance To be eligible for SC clearance, applicants must meet the following requirements: Be a UK national or have been a resident in the UK for a minimum of five years Provide detailed information about their personal and professional background, including any previous criminal convictions or financial issues Undergo a thorough background investigation, including interviews with current and former employers and references Agree to regular security checks and adhere to strict guidelines on the handling of sensitive information Have a legitimate business need for access to classified information or assets Be sponsored by an organisation that holds a valid SC clearance Follow all security protocols and guidelines established by the government agency or department responsible for the clearance Note that these are general requirements and specific job positions may have additional or more stringent eligibility criteria. Book a Consultation Ready to get expert help? Book a consultation today and take the next step. Book Your Consultation SC & the National Security Vetting Process The government lays out seven levels of vetting and security clearance, each more tightly-controlled and exacting than the last. Security Check clearance sits at approximately the midway point. The UK government security vetting hierarchy Accreditation For: Access to: BPSS (Baseline Personnel Security Standard) Civil servants, members of the armed forces, temporary staff in departments, and government contractors. UK OFFICIAL assets and occasional access to UK SECRET assets. AC (Accreditation Check) Individuals who require an Airport Identification Card or UK Crew Identification Card. Aviation security trainers. Security-restricted area of UK airports. Aviation-related assets. CTC (Counter Terrorist Check) Individuals working in proximity to at-risk public figures, with access to data/assets of value to terrorists. Public figures, locations and information at risk from terrorist attacks. SC (Security Check) Individuals with uncontrolled access to SECRET assets and occasional access to TOP SECRET assets. SECRET assets frequently. TOP SECRET assets, with supervision. eSC (Enhanced Security Check) Positions requiring access to SECRET code word material. Certain overseas posts under threat from espionage. Material requiring additional assurance above SC, but not to DV level. DV (Developed Vetting) Individuals requiring frequent, uncontrolled access to TOP SECRET assets / any access to TOP SECRET codeword material. TOP SECRET assets. TOP SECRET codeword material. eDV (Enhanced Developed Vetting) A very small number of posts where additional assurances are required above DV level. The most sensitive national and international material / assets. The Application Process Applying for SC clearance can seem a somewhat long-winded or troublesome process, but it is mandatory for those who require access to classified information, and the penalties for failing to obtain accreditation far outweigh the inconvenience of applying. Below, we’ll guide you through the steps of the SC clearance application process, so you can be confident in your understanding of what is required. Complete the SC Clearance application form: The first step is to fill out the application form, which can be obtained from the UK Security Vetting (UKSV) website. The form will require personal details, employment history, and other relevant information. Initial screening: Once the application is submitted, an initial screening is conducted to ensure that the candidate meets the minimum requirements for clearance. This includes a review of criminal records, employment history, and other relevant factors. Security vetting: If the candidate passes the initial screening, they will undergo a more detailed security vetting process. This includes interviews with friends, family, and former colleagues, as well as a review of financial history and credit reports. Reference checks: Reference checks are also conducted during the security vetting process. The candidate’s references will be contacted to confirm the accuracy of the information provided in the application. Final decision: After all the checks are complete, a final decision will be made on whether or not to grant SC clearance. This decision is made by a UKSV case officer, who will take into account all the information gathered during the application and vetting process. Review: SC clearance is valid for 10 years and must be renewed after this time period. However, the clearance may be revoked at any time if the individual no longer meets the requirements for clearance. In order to navigate the application process as smoothly and efficiently as possible, it’s advisable to obtain specialist trade consultancy services. Contact us now to learn how we can help your organisation get the accreditation it requires. The Business Benefits of Security Check Accreditation Obtaining Security Check clearance is not just a legal requirement for individuals and organisations who require access to classified information; it also offers significant business benefits for employers. So what are the advantages of holding SC clearance for businesses and their employees? Increased eligibility for government contracts and opportunities to work with high-security organisations Improved reputation and credibility as a trustworthy and reliable business partner Better access to international business opportunities due to increased trust and reliability Increased employee job satisfaction and retention due to higher levels of job security and opportunities for career progression Potential reduction in insurance premiums due to a reduced risk of security breaches and data loss Top Tips For a Successful Application With the right preparation and approach, making an SC application can be a seamless process. We’d strongly recommend contacting our specialist team to help you prepare; beyond this, we’ve put together some expert tips that will give you the best chance of a successful application. Understand the requirements: Make sure you fully understand the requirements and eligibility criteria for SC clearance. This will help you to determine if you are suitable for the level of clearance required. Provide accurate information: It’s important to be honest and provide accurate information in your application. Any inconsistencies or omissions can lead to delays or even a rejection. Complete the application thoroughly: Take your time to complete the application thoroughly, and ensure that you provide all the necessary information and supporting documents. Prepare for the interview: If you are required to attend an interview, make sure you prepare thoroughly. This includes researching the role and the clearance level required, as well as practicing your interview technique. Follow up with your sponsor: After submitting your application, keep in touch with your sponsor or point of contact. They can provide updates on the status of your application and answer any questions you may have. Need National Security Clearance to Sustain Your Operations? There are a range of reasons why you, your organisation, or a staff member might need to seek formal security clearances. It could be private sector employees working with access to sensitive information, or government departments with interests linked to national security and intelligence agencies. Whatever the case, if you conduct cross-border operations and want some impartial, independent advice on gaining the clearances you require, we’re here to help. Here at clearBorder, we offer a number of specialist training modules, such as Border Ready Importing & Exporting, to help get your team border-ready. You can take advantage of our expert consultancy services for bespoke advice and practical guidance on ensuring your operations run smoothly, efficiently and profitably, both now and in the future. Just contact us today to speak to a member of our team. Notifications

The Lowdown on SC Clearance in the UK: What You Need to Know for Export Controls
Governance

Mastering UK Internal Trade Governance: A Guide to Regional Market Success

As uncertainties in global trade continue to rise, many UK businesses have turned to domestic markets for more stable growth. However, trading with other UK nations also brings its own set of challenges, particularly around regional regulations, compliance requirements, and market-specific standards. In this guide, we’ll explore how businesses can navigate internal trade regulations, build robust systems that ensure compliance, and capitalise on opportunities throughout the UK. Are internal trade regulations limiting your growth in domestic markets? Contact clearBorder for tailored advice on how to navigate internal trade policies. Understanding Internal Trade Governance For UK businesses, internal trade governance refers to the rules and regulations that control how goods and services move within England, Scotland, Wales and Northern Ireland. Domestic regulations determine everything from how products can be sold across different regions in the UK to what standards must be met in each location. Navigating internal trade governance effectively is essential for maintaining market access, ensuring regulatory compliance, and managing operational costs. While many businesses turn to trade consultants to ensure international trade compliance, understanding internal trade governance is equally important for maintaining efficient operations. The Growing Importance of Internal Markets The domestic market has become increasingly vital for UK businesses for several reasons. Recent global economic uncertainties, including tariff trade wars, trade barriers, and supply chain disruptions, have shown the risk of over-dependence on international trade. This has led many UK companies to focus on building a strong domestic market to gain more stable revenue streams. Rising international shipping costs and complex customs procedures have made serving domestic markets more cost-effective. Brexit also increased trading costs, which have led many UK companies to strengthen their presence across England, Scotland, Wales, and Northern Ireland to build resilience against external market volatility. Finally, government investments in regional development and the growth of digital commerce have created new opportunities within domestic markets. Although there are many opportunities for internal trade, there are many regional requirements that businesses must adhere to to ensure smooth trade operations and success in new markets. Understanding Internal Trade Policy in the UK The UK’s internal trade structure operates through a complex network of regional and national regulations, developed to ensure fair trade across different jurisdictions. While aligned with World Trade Organization principles, each country in the UK maintains distinct regulatory frameworks. This structure aims to balance local needs with cross-border trade. Businesses must adapt to varying regional requirements to maintain efficient operations. Key Compliance Areas for UK Trade Internal trade governance directly affects how businesses operate across different UK nations, and companies must navigate a range of local requirements that can vary significantly between regions. This includes: Specific product licenses and permits for each region Different product labelling requirements between regions Documentation for trade between Great Britain and Northern Ireland Region-specific product safety certificates and conformity marks Varying proof of origin documentation when moving goods between UK nations Specific SPS requirements for agricultural products moving between regions Product testing and quality assurance requirements These variations can significantly affect operational costs and market access strategies. However, with expert trade guidance, it’s possible to navigate the internal trade regulations for each region and succeed in new markets. Building Effective Regional Compliance Systems While navigating internal trade barriers can be challenging, businesses can address regional compliance in several ways: Using detailed compliance systems to map out requirements for each region. This includes product standards, documentation requirements, and reporting obligations. Creating region-specific compliance checklists, relevant forms, and trade procedures. Conducting regular internal audits to ensure continued compliance. Maintaining digital records of all regional certifications and permits. Establishing clear communication channels with regulatory bodies. Implementing training programs to keep staff updated on regional requirements. This systematic approach can help businesses prevent compliance gaps and efficiently manage trade across different jurisdictions. Trade Barriers in the Digital Economy While the digital economy has made internal trade easier, cross-border data flows have also introduced some challenges for internal trade governance. The UK takes a unified approach to data protection through the UK GDPR, but there are still regional requirements regarding data and digital services. For example: Scotland: The supply of digital content is regulated differently across UK nations, with Scotland having additional provisions under the Consumer (Scotland) Act 2020. Northern Ireland: Digital service providers (DSPs) operating between Great Britain and Northern Ireland face different digital compliance standards under the Windsor Framework. Wales: The Welsh Language (Wales) Measure 2011 requires certain digital services to be provided in both English and Welsh, affecting e-commerce and online service providers operating in Wales. In addition, payment processing systems need to adapt to different tax regimes. Cloud services must also ensure data residency complies with both UK-wide and regional requirements. Businesses operating across the UK must maintain flexible digital systems to accommodate these regional differences. This often requires region-specific user agreements, tailored privacy policies, and adaptable e-commerce platforms that can handle varying regulatory requirements across England, Scotland, Wales, and Northern Ireland. Turning Regional Challenges into Business Opportunities Managing multiple compliance systems, adapting to varying regional standards, and maintaining consistent operations across different jurisdictions remain significant challenges. Businesses must stay current with evolving laws and regulations that can differ significantly between regions. Navigating these complexities often requires staff training and the guidance of trade consultants. However, effective internal trade governance creates numerous opportunities for business growth and operational excellence: Market expansion: Companies that understand regional requirements can strategically expand into new UK markets with lower risk and faster deployment times. Operational efficiency: Developing robust compliance systems for internal trade often leads to improved overall operational efficiency. This benefit can also extend to international trade governance for trade with developing countries. Competitive advantage: Many companies struggle with internal trade compliance, which may prevent them from entering new markets. Those who excel at it can gain a significant edge over competitors, particularly in highly regulated sectors. Risk mitigation: Strong internal trade governance helps businesses identify and address potential compliance issues before they become problems, protecting reputation and avoiding financial penalties. Developing Your Internal Trade Strategy: Expert Guidance Navigating internal trade governance requires a strategic approach, combining proactive management with expert support. Businesses must constantly monitor regional regulations, using reliable information sources to stay current with requirements across regions. Regular engagement with regulatory groups and policy discussions can help businesses anticipate changes and adapt proactively. Building flexible operating models can make it easier to adapt to new regulations. Trade consultancy firms like clearBorder can be invaluable when navigating internal trade governance. Through specialised training and tailored guidance, companies can understand the regulatory requirements that apply specifically to their business and develop the necessary compliance frameworks. At clearBorder, our trade specialists have comprehensive knowledge of internal trade regulations that many businesses often overlook. Our experts can provide guidance on strategic planning, supply chain diversification, and freight forwarding, helping to optimise regional trade operations and ensure full regulatory compliance. At clearBorder, our expertise also extends into international trade. Our trade consultants provide specialised guidance on every aspect of trade, including export controls, customs procedures, and SPS control compliance. Our Border Ready training programme can equip your team with essential skills to navigate cross-border trade, minimise border delays, and reduce the risk of fines. Contact clearBorder for tailored guidance on internal trade regulations.  

Mastering UK Internal Trade Governance: A Guide to Regional Market Success
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