“A system that is both watertight and user-friendly as well as capable of meeting internal and external reporting requirements.”

In the current economic and political climate, the role of trade compliance in profitability and shareholder value has captured the attention of corporate executives, board members, and their consultants and advisors.

Corporations with strong, well-coordinated compliance controls characteristically achieve highly effective, efficient, and streamlined operations that sustain cost reduction measures. Their supply chain processes are usually highly evolved, flexible, and lean. And their growth strategies are typically advanced, capturing market share in emerging markets in advance of their competitors, with brand equity protection from reputation-tarnishing export control violations.

Not since Sarbanes-Oxley has the specter of executive and director personal liability for corporate actions been top of mind for so many. And, as with SOX, reducing the risk of exposure to trade compliance violations that compromise reputations, both personal and corporate, starts with executive commitment.

Corporate activities requiring foreign trade compliance controls

There is little left of the once-popular misconception that trade compliance applies only to companies that import or export; that concerns with homeland security, anti-money laundering, nonproliferation, anti-trafficking, counter-terrorism, sanctions, embargoes, denied entities, blocked transactions etc. were the purvey of the defense industry.

Few companies these days are without foreign transactions on their books: supply chains have long established low-cost country sourcing, globalization has hit its stride, eCommerce is ubiquitous, and growth is often accomplished through M&As (where trade compliance controls are included in due diligence).

However, even for corporations without foreign transactions, there are very real trade compliance risks. These are magnified when goods or services fall under the jurisdiction of the Department of State, Directorate of Defense Trade Control (DDTC) and its International Traffic in Arms Regulations (ITAR), or the Department of Commerce, Bureau of Industry and Security (BIS) and the Export Administration Regulations (EAR).

Organizations designated as “Financial Services” under the jurisdiction of FinCEN, universities and research organizations contending with the deemed export rule, foreign subsidiaries of U.S.-based companies within USG extraterrestrial reach—the list of those vulnerable to export compliance controls grows longer each year.


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