Trade compliance violations can pose major threats to revenue.
For any company, nothing can damage sales like a major trade compliance violation that hits the 6 o’clock news. Who wants to do business with a company that puts America and its allies at risk? The market consequences of non-compliance with foreign trade regulations easily rival the regulatory fines, denial of export privileges and other penalties.
All companies need to ensure they aren’t selling to individuals or entities on the Department of State’s Office of Foreign Assets Control (OFAC) list of Specially Designated Nationals (SDN). No one wants to be caught dealing with terrorists, major drug traffickers or weapons proliferators—aside from the penalties and possible jail terms, the damage to reputation is often enough to sink an organization.
Protecting against violations requires continual screening
How do you protect your company from violating of one of the many foreign trade regulations—with all its consequent penalties and reputational damage
Starting at the beginning of a potential sales cycle, companies need to know immediately if a party will cause compliance troubles—before they’ve invested sales development time, opportunity and resources. And that knowledge needs to be continually updated throughout each phase of the sales process: from leads to cultivation to order entry to shipping—every time for every lead and every repeat customer. So if a transaction turns into a legal no-go, you’ve minimized your damages at the earliest possible. Companies also need to know in advance if their logistics providers and their partners pose compliance issues, so they can protect their competitive advantages in meeting delivery commitments and resolving issues effectively and efficiently.
Whether your sales take place through your staff, agents, or eCommerce websites, it’s critical to quickly and easily determine whether or not you can legally proceed. The excuse “they weren’t on that list yesterday” doesn’t go far in defending against a violation charge, or explaining your actions to your biggest customers.
Screening needs to be fast, accurate and non-intrusive
No-one wants to bring their operations to its knees with screening systems that are ineffective or inefficient, generating too many false positives and creating other compliance and business burdens as a result of inadequate integration with their corporate systems, or less than current, accurate or comprehensive content.
Other issues for companies in the Controlled Goods space
For companies dealing with controlled goods there are other trade compliance issues of pressing concern:
- What’s the classification of the goods—are they on the Directorate of Defense Trade Controls (DDTC) USML list or the Bureau of Industry and Security (BIS) CCL list of military goods?
- Are licenses or technical assistance agreements required based on the classification, destination, end user, end use or employees working on the project?
- Is there a license in place already, and if for products, how much room is left? If not, what’s the lead time to get one?
- Are the parties on the BIS entity, denied or unverified lists? Or the DDTC debarred parties list? When was this last checked? Do we know enough about the end-use? Have we done our due diligence, and can we prove it?