2016 Resolution Checklist to Strengthen Your Trade Compliance

Many businesses struggle and miss opportunities because of inconsistent practices and procedures involved in managing their global footprint. But, 2016 could be a year of excellence, organization, and increased capabilities for your business- if you work to strengthen your trade compliance.

According to a recent Aberdeen study on Global Trade Compliance Priorities, Best in Class Organizations reported they had an average trade compliance error rate of 25.7% on their international orders. So, for a business with 1,000 entries per year, there were 257 entries with errors. Errors are the weak link that threatens your compliance goals. But there is so much more to focus on than just errors.

The obstacles and regulations of global trade are fluid, shifting, and changing often. Knowledge is power in this situation, so to remain in compliance and still be competitive in your market, you must have a plan in place and follow through.

We often make New Year’s Resolutions for improvement on a personal level, but we should not forget to implement resolutions to improve how we do business, strengthen any areas of weakness, and map out an actionable plan for growth, further success, and strong trade compliance in the coming year.

Here is Your 2016 Check List to Strengthen Your Trade Compliance:

• Look at your trade processes and pinpoint key areas of weakness: There are several factors that can have a significant impact on your business, your reputation, and your bottom line because they can leave you vulnerable to liability. Compliance means being accountable- by producing complete and accurate records for all importing and exporting processes throughout your procurement/export-to-payment cycle. If poor compliance practices are not discovered and corrected, you may pay the price (penalties, customs audits, border delays, increased inspections, or loss of importing or exporting privileges), which can have a serious impact on your business. A lack of knowledge about evolving rules and regulations can lead to penalties, extensive audits, and other costs.
• Verify your data at every step in the import or export process: Imports are often delayed upon arrival to the United States because the information that was required, say by the FDA (a government agency), was not complete, was inaccurate, or simply was not unavailable because you failed to obtain it. You need to close any gaps in reporting and constantly manage each phase of your process. By auditing all entries for inaccuracies as part of your overall audit program, you can also minimize the possibility of lost duty savings.
• Improve your export screening process: Screening should not be too simplistic. OFAC’s concerns go beyond the relatively small number of country sanctions (like those found on BIS’s Commerce Country Chart and DDTC’sCountry Policies and Embargoes chart), but also with many thousands of Specially Designated Nationals (SDNs), which is a constantly changing list of individuals, business entities, groups and organizations, banks, and ships (or “vessels of concern,”) to be avoided. A complete search includes screening not only the address you ship to, or the person, but also the product, company, and other parties involved in the transaction. Many software solutions do not offer multiple layers in their search criteria, look to upgrade to a program that will raise red flags regarding shipping to embargoed countries, or ship a product to a party that lacks government clearance- especially if the product has the potential to be used as a weapon against the US. You are expected to know your customer. A reliable screening software solution should also upload changes to the list the moment they become available. This is a critical element in any company’s compliance program.
• Evaluate your suppliers better: You should strive to always know the location of the production facility of your suppliers and recognize their susceptibility to security threats. If they are located in a country considered vulnerable to security threats, this can affect the security of their operations and add a level of risk to shipments that you accept.
• Know your industry-specific regulations: OFAC has a list of compliance regulations that industry-specific. This gives you downloadable guidelines and FAQs for specific industries, including Exporters and Importers. There are also services that allow you to receive regular email updates to the latest regulation changes.
• Regular employee training is essential to improving your compliance at all levels: When you are dealing with constant changes to regulations, the only way to ensure that all staff understands the applicable laws and regulations, as well as the business’s policies, processes, and specific risk profile, is to support continuous training and education of your employees. Education is vital to any corporate compliance program.
• Appoint a dedicated, educated Compliance Officer: There should be someone with this dedicated title, who undergoes continual education and training (do not skimp on this ongoing process) to better focus on this component of the business. This position should revolve around protecting you from risks of potential penalties that could total millions of dollars. With a myriad of laws and regulations that are continually changing, management roles for internal control are a more challenging job than ever before, with a wide range of responsibilities. Your Compliance Officer should help streamline the entire compliance process because if you are dealing with multiple regulations at the same time, a seamless process of managing all that is required with each of these initiatives is challenging but critical.
• Look to regular, unbiased audits: It is best to schedule regular compliance reviews and assessments, conducted by experienced auditors, consultants, or other qualified independent parties outside of your company, at least every 12- 18 months. This is the most reliable way to verify that your OFAC compliance program is operating as effectively as possible and is fully compliant with the law.

Strengthening your trade compliance is absolutely critical in today’s global climate. Understanding and monitoring OFAC compliance is a challenge that must be met head-on for businesses that have foreign suppliers, customers, or clients, or who work with any overseas partners. By tightening your compliance program and seeking the latest education and knowledge, you set your business on a path to being fully compliant and more successful in 2016.