Understanding TARIC, Dual-Use Goods, and Compliance Obligations

Understanding TARIC, Dual-Use Goods, and Compliance Obligations

In today’s complex regulatory environment, businesses engaging in international trade must navigate a wide array of compliance requirements.

Among the most critical of these are the TARIC system and the rules governing dual-use goods under the EU Dual-Use Regulation.

For service providers, law firms, and professional advisors, understanding these systems is essential not only from a trade perspective, but also as part of our broader AML (Anti-Money Laundering) and sanctions compliance framework.

What is the TARIC System?

TARIC, the Integrated Tariff of the European Union, is the EU’s centralized database of all trade-related measures.

TARIC serves as a central reference for:

• Identifying the correct tariff classification for goods;
• Checking applicable customs duties and taxes;
• Understanding import and export restrictions (e.g. quotas, licensing, bans);
• Complying with EU Trade regulations and agreements.

Every product imported or exported must be classified under a CN/HS code, which is then cross-referenced in TARIC to determine:

• Custos duties and tariffs.
• Import/export licensing requirements.
• Prohibitions or restrictions (e.g. for sanctioned goods).
• Documentation obligations (e.g. under the EU Deforestation Regulation for paper/wood products).

In practice, TARIC is the starting point for ensuring that goods move lawfully across borders without regulatory or compliance risk.

What Are Dual-Use Goods?

Dual-use goods are items that can be used for both civilian and military purposes.

The EU regulates these through Regulation (EU) 2021/821, which contains a detailed Annex I list updated regularly.

Examples of dual-use goods include:

• Advanced electronics and semiconductors.
• Telecommunications and encryption software.
• Certain chemicals and materials that could be used for weapons manufacture.
• Navigation or night-vision equipment.

Not all goods are dual-use, but the only way to be certain is to classify them and check against Annex I.

Why Are These Checks Important for AML Compliance?

From an AML and sanctions perspective, conducting TARIC and dual-use checks ensures that:

• The products involved in a transaction are not prohibited or restricted by EU or international sanctions.
• No license is required for export or import without being obtained first.
• Clients are not indirectly involved in sanctions evasion, proliferation financing, or high-risk trade flows.

These checks can reveal:

• Goods that are explicitly sanctioned (e.g. certain technologies when trading with Russia/Belarus).
• Goods subject to restrictions or licensing (e.g. chemicals or advanced electronics).
• Goods requiring additional compliance documentation (e.g. paper/wood imports under the EU Deforestation Regulation).

By integrating these checks, firms demonstrate a robust AML compliance culture, as required by EU Directives, ICPAC guidance, and national AML laws.

What Information Must Clients Provide?

In order to perform accurate TARIC and dual-use checks, clients must provide clear, detailed product and transaction information, including:

1. Exact product details: trade/chemical name, CAS number, technical datasheet (MSDS).
2. Customs classification: CN/HS code (8-digit EU or 10-digit TARIC subheading).
3. Trade details: country of origin, country of export, destination country, and intended end-use.
4. Counterparty details: suppliers, buyers, intermediaries (names, addresses, company registrations).
5. Supporting documents: invoices, contracts, purchase orders, and for wood/paper products — due diligence statements, waybills, purchase agreements.

Without this information, compliance checks cannot be completed effectively.

When Should Checks Be Conducted?

Checks should be carried out:

• At client onboarding (to understand the nature of business and risk profile);
• Before each new transaction involving international trade, especially with sensitive goods or higher-risk jurisdictions;
• On a continuous monitoring basis, as product lists and sanctions regimes evolve frequently.

Conclusion

The TARIC system and the dual-use goods regulation are not just technical trade matters, they are a vital part of an organization’s AML, sanctions, and compliance obligations.

By collecting the right information from clients and running systematic checks, firms can protect themselves and their clients from severe legal, financial, and reputational risks.

At CYAUSE AUDIT SERVICES LTD, we support our clients with end-to-end compliance checks, ensuring that their business relationships remain lawful, transparent, and aligned with both EU and Cypriot regulatory requirements.