New act on dual-use items entered into force in September – what companies need to know

The new act on dual-use items supplements the EU Export Control Regulation

Export control of dual-use items in the EU is based on the Export Control Regulation that has been in force since September 2021. In the regulation, ‘dual-use items’ refers to items that can be used for both civilian and military purposes. A dual-use item can be a tangible item or an intangible item, such as software.

On 16 August 2024, the President of the Republic of Finland approved the new act on export control of dual-use items as well as amendments to the provisions in chapter 46 of the Criminal Code of Finland to sanction the breach of the obligations laid down in the act on dual-use items. The amendments were made to the provisions concerning regulation offences and failure to file an export control notification of dual-use items. The new act on dual-use items replaces the previous act that had been in force since 1996 and constitutes the national legislation that supplements the application of the Export Control Regulation.

The Export Control Regulation leaves some key aspects of the practical implementation of export control to be set out in national legislation. These include in particular authorities’ responsibilities, control measures, imposition of sanctions and some matters relating to authorisation requirements and notification obligations. Member States can also prohibit or impose an authorisation requirement on the export of dual-use items not listed in the Export Control Regulation for reasons of public security, including the prevention of acts of terrorism, or for human rights considerations.

A national control list improves the efficiency of export control by responding to rapid technological advancements and hybrid threats

The purpose of the act on dual-use items is to ensure efficient export control. A national control list is appended to the act. Export of the listed dual-use items from Finland to outside of the EU is controlled by an export authorisation procedure administrated by the Ministry for Foreign Affairs of Finland. By assessing the end-use and end-users of dual-use items in advance in accordance with the criteria laid down in the Export Control Regulation, the national export authorisation procedure helps to prevent these items ending up in unwanted uses.

When enacting the act, the Finnish Government deemed it necessary to adopt a national control list as the earlier approach that was based on international export control regimes is not fit for purpose in the current international environment. The national control list is needed as rapid technological advancements and an increase in hybrid threats require an efficient export control framework and an ability to act nationally in matters relevant to Finland’s comprehensive security. Adopting the national control list is not meant to decrease Finland’s active involvement in international export control regimes but to support them in reaching their goals.

The national control list includes items that are relevant to the development of foreign, security and defence policy, such as items related to quantum technology and advanced semiconductor manufacturing technology as well as devices and technology related to materials engineering. These items and technologies are all subject to sanctions against Russia or would support the development of Russia’s research or military capacity. If the national export authorisation requirement were not in place, these items could be exported from Finland without control and sanctions could be circumvented via third countries.

The act on dual-use items further emphasises the importance of recognising legislation applicable to your company

The national supplementing legislation provided for in the new act on dual-use items primarily affects the operations of companies that export dual-use items and other organisations, such as universities. The new legislation also affects companies that act as brokers, transit operators or providers of intra-Union transfer of dual-use items or provide technical assistance relating to dual-use items.

What makes adapting operations in accordance with the obligations set out in the national control list more difficult is the fact that the list includes several intangible items, as does the control list appended to the Export Control Regulation. These include primarily software, technical data relating to technology and offering technical assistance. Due to the prevalence and variety of intangible items, companies and other operators should put rigorous effort into identifying whether the act on dual-use items is applicable to their operations and comply with the export authorisation procedure carefully to minimise harm to business or research operations.