The Middle East is an attractive export market for many Dutch and European companies, from industrial goods to high-tech components. At the same time, the region is far from uniform in compliance terms: sanctions regimes, export control risks and end-user risks vary greatly by country and sector. A generic approach therefore often falls short.
Why this region calls for extra attention
A number of factors make exporting to the Middle East more complex than average from a compliance perspective:
- Sanctions regimes that vary greatly by country — from virtually no restrictions to extensive sectoral and targeted sanctions.
- A higher presence of defence and dual-use related end use, even for civilian products.
- Diversion risk to sanctioned neighbouring countries via intermediaries.
- Complex ownership structures, in which UBOs are sometimes hard to trace.
The key checks per area of attention
Sanctions screening
Screen not only the direct customer, but also UBOs, affiliated entities and — where relevant — the bank involved in the transaction. Some countries and sectors in the region are subject to specific EU, UN, OFAC or UK sanctions that do not always overlap.
Export control and dual-use classification
Assess whether the product appears on the dual-use control list, and take the catch-all clause into account when the stated end use does not convincingly fit the customer profile — a common signal when exporting to this region.
End-user research
Check whether the end user is actually the party that will use the product, or whether the goods are being diverted to a third party or a neighbouring country to which restrictions apply. An end-user statement is a starting point, not a guarantee.
UBO and structure research
Ownership structures in the region regularly run through holding companies in several jurisdictions. Map the ultimate beneficial owners before entering into a business relationship.
Payment routes
Watch out for payments via third countries or parties with no visible role in the transaction — a signal that occurs more often than average in trade via this region.
Example from practice
A Dutch manufacturer of industrial components receives an order from a distributor in the Gulf region. The product itself is not classified as dual-use, but the distributor asks for delivery via an intermediary in a neighbouring country, with payment from a third jurisdiction. None of these elements is in itself proof of a problem, but the combination is exactly the pattern where further investigation into the actual final destination is warranted.
Frequently asked questions
Does the same sanctions regime apply to the whole Middle East?
No. Sanctions regimes vary greatly by country within the region. An approach that is sufficient for one country may be insufficient for another.
Is extra due diligence always needed when exporting to this region?
Not by definition, but the combination of risk factors often justifies a risk-based, somewhat more extensive assessment, especially with new customers or intermediaries.
What is the most common pitfall?
Relying on a single sanctions screening of the direct customer, without paying attention to UBOs, intermediaries and the actual final destination of the goods.
TradeRisk supports companies with compliance checks for exports to high-risk regions, with sanctions screening, export control and dual-use assessment and end-user research. Also read more about 10 red flags for international end users and sanctions circumvention via third countries.