Key terms, explained briefly and with sources.
From Hermes cover and the 50% rule to the AMLR: the essential terms for compliance in trade, trade finance and ECA business – each with its legal basis where there is one.
GuideECA compliance checklist: 20 checkpoints from application to claimOpen the checklist GuideSpotting sanctions evasion in trade: the key red flagsOpen the red flagsECA business and export finance
- #ECA (export credit agency)
A public body, or one acting on the state’s behalf, that covers export transactions against political and commercial risk – through insurance, guarantees and sometimes direct loans. In Germany the Federal Government provides this through its export credit guarantees.
ECA business →- #Hermes cover
Common name for the Federal Republic of Germany’s export credit guarantees, named after the government’s long-standing mandatary. They protect exporters and lending banks against losses for political and commercial reasons – provided the cover conditions are met.
ECA business →- #OECD Arrangement
The Arrangement on Officially Supported Export Credits sets minimum terms for officially supported export credits – such as down payment, maximum tenors and minimum premium rates – to prevent a subsidy race between governments.
ECA business →- #OECD Common Approaches
OECD Recommendation on environmental and social due diligence for officially supported export credits. Projects are classified into categories A, B or C by potential impact and benchmarked against international standards such as the IFC Performance Standards.
ECA business →- #OECD Recommendation on Bribery
The OECD Recommendation on Bribery and Officially Supported Export Credits (last revised 2019) requires ECAs to act against corruption – including applicant declarations and disclosure of agents and commissions.
ECA business →- #Buyer credit
A bank lends directly to the foreign buyer, who uses the loan to pay the exporter. Buyer credits are frequently covered by an ECA.
ECA business →- #Supplier credit
The exporter grants the buyer deferred payment terms. The credit risk initially sits with the exporter and can be covered by an ECA or sold through forfaiting.
ECA business →- #Forfaiting
The purchase of an export receivable by a bank or forfaiter without recourse to the exporter – usually backed by bills of exchange, guarantees or letters of credit.
Trade finance compliance →
Sanctions
- #50% rule
Under OFAC practice, entities owned 50% or more – directly or indirectly, individually or in aggregate – by blocked persons are themselves blocked, even if not listed. Under the EU Best Practices (July 2024 update), an entity is owned by listed persons where they hold – also in aggregate – 50% or more; control also suffices. Its funds are then rebuttably presumed to be controlled by the listed person.
Sanctions compliance →- #Secondary sanctions
Measures by which a state – above all the US – targets persons outside its jurisdiction for dealings with sanctioned targets, for example by listing them or cutting them off from its financial system.
Sanctions compliance →- #EU anti-circumvention tool
Under Article 12f of Regulation (EU) 833/2014 the EU can restrict sales of specific goods to third countries through which the Russia sanctions are systematically circumvented. The countries concerned are listed in Annex XXXIII.
Sanctions compliance →- #“No Russia” clause
Obligation under Article 12g of Regulation (EU) 833/2014 to contractually prohibit re-export to Russia when selling certain sensitive goods to third countries – with adequate remedies in case of breach.
Export control →- #Shadow fleet
Tankers and other vessels with opaque ownership, frequent flag and name changes and disabled tracking signals (AIS), used to circumvent oil sanctions and price caps.
Trade finance compliance →
Export control
- #Dual-use items
Goods, software and technology that can be used for both civil and military purposes. Their export from the EU is governed by Regulation (EU) 2021/821; listed items are set out in its Annex I.
Export control →- #ICP (internal compliance programme)
An internal compliance programme for export control: responsibilities, processes, training, record-keeping and audit. Its core elements are set out in Commission Recommendation (EU) 2019/1318.
Export control →- #Catch-all
A licence requirement even for non-listed items when the authority has informed the exporter of a sensitive end use – such as weapons of mass destruction or military end use in a country under arms embargo. If the exporter is aware of such a use, it must notify the authority (Article 4 of the Dual-Use Regulation).
Export control →- #CHPL (Common High Priority List)
A joint list of the EU, US, UK and Japan covering items Russia needs for its weapons systems. It is the basis for enhanced due diligence against circumvention, particularly for deliveries to third countries.
Export control →
Money laundering and TBML
- #TBML (trade-based money laundering)
Money laundering through trade transactions – via false prices, quantities or goods descriptions, multiple invoicing, multiple financing or phantom shipments. The anomaly sits in documents and goods flows, not in the payment alone.
Trade finance compliance →- #FATF lists
After each plenary the FATF publishes two lists: high-risk jurisdictions subject to a call for action or enhanced due diligence (“black list”) and jurisdictions under increased monitoring (“grey list”).
AML/CFT →- #Business-wide risk assessment
The obligation of obliged entities to identify, assess, document and regularly update their money laundering and terrorist financing risks (EU: Directive (EU) 2015/849 as amended and, from 10 Jul 2027, AMLR (EU) 2024/1624; in Germany § 5 GwG) – the basis for all internal controls.
AML/CFT →- #AMLR
The EU Anti-Money Laundering Regulation (Regulation (EU) 2024/1624) applies directly in all member states from 10 July 2027 and harmonises, among other things, due diligence, beneficial ownership rules and cash limits.
AML/CFT →
Trade finance
- #Letter of credit (MT700)
A bank’s undertaking to pay against presentation of agreed documents. It is issued via SWIFT message MT700 and usually governed by the ICC rules UCP 600.
Trade finance compliance →- #Documentary collection (MT4xx)
The bank collects payment from the buyer against release of the documents, without giving its own payment undertaking. It is governed by the ICC rules URC 522; the collection instruction usually travels with the documents, and SWIFT Category 4 messages (e.g. MT410, MT412, MT416, MT400 advice of payment) accompany the processing.
Trade finance compliance →- #Guarantee and standby (MT760)
A bank guarantee or standby letter of credit securing payment or performance obligations, sent via SWIFT MT760; guarantees are often subject to the ICC rules URDG 758.
Trade finance compliance →
These explanations are for orientation and do not replace a legal assessment of the individual case. As of September 2026.
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