Creating a Trade Compliance Culture in Your Organization

Trade compliance culture refers to a general awareness of best practices for complying with international trade regulations within an organization and what can possibly go wrong in the event of non-compliance. Today’s global business environment has become more complex for organizations to navigate, and violation of international business regulations may result in criminal or administrative penalties. Occasionally, it can adversely affect national security.

This article discusses various strategies you can employ for creating a trade compliance culture within your organization.

Why is trade compliance necessary?

Trade compliance is at the heart of international trade. It speaks to how well an organization observes the laws and regulations that govern international business operations, from the C-Suite executives to the custodial staff. Companies that engage in import and export have a responsibility to adhere to regulations applicable to the merchandise they handle. Also, observing the rules and regulations minimizes the risks and consequences of noncompliance and protects the reputation of the organization.

For example, corporate executives must set the tone of trade compliance. They should empower officers who have the responsibility for trade compliance and encourage other employees to cooperate. The finance and accounting personnel must see to it that the costing and valuation of transactions are done accurately. The procurement department must ensure that due diligence is carried out in their selection process so that only reliable and trusted suppliers are engaged.

The sales and customer service personnel must receive adequate training so they are aware of the dos and don’ts of international trade transactions when dealing with customers. Shipping and receiving department employees must determine the best and most cost-effective means of transporting goods.

Noncompliance with international trade regulations generally has serious repercussions. Businesses that fail to comply may suffer reputational damage in addition to financial loss. Responsible officers of the organization may face criminal charges or even serve prison time. It is therefore mandatory that every organization develops a trade compliance culture that is an integral part of the company’s operations and reduces the risks associated with noncompliance.

Every organization needs to adopt the following strategies in order to create a trade compliance culture.

Create a trade compliance program

Developing a trade compliance program is an effective way of minimizing noncompliance and protecting the organization’s vital interests. No two organizations are the same. Every organization must develop a trade compliance program that reflects their specific circumstances. Creating a compliance program that is unique to the company will allow factors such as the size of the business, the volume of trade, and the complexity of internal processes to be incorporated. The program should not only address current requirements but also take into consideration future needs.

The details of the program must be in writing so it can be followed like a map to ensure consistent compliance. It should be an approved company document comprising policies and operational procedures the organization implements. The document must be easy to understand, and it should be made available to all employees who are governed by it. It should be editable so it can be modified to accommodate future changes in trade regulations.

Corporate must set the tone

The Chief Executive Officer (CEO) and other top executives of the organization have the power to motivate staff to take action. The CEO should make a written commitment to trade compliance, if possible annually to set the tone within the organization. This should be shared with all company employees, including interns and temporary hires. Top executives of the company should take the opportunity at meetings and casual conversations to reinforce management commitment to trade compliance.

Training is essential

Trade compliance is the responsibility of everyone in the organization. Your trade compliance program should include robust training for every employee, including orientation for new hires and remedial training whenever compliance gaps are discovered. The training should be delivered by trade compliance experts.

Hire a compliance officer

The trade compliance officer will provide updates from time to time to all company employees, including contractors. The officer will also:

• Set up scheduled times for activities relating to trade compliance.

• Ensure that audit of previous transactions is conducted for accuracy and report inaccurate submittals.

• Meet with service providers on a regular basis to reinforce the importance of trade compliance.

• Stay up to date with training and arrange for the training of personnel as needed for each department.

Effective trade compliance practiced by all members of an organization, from the corporate executives to the custodial staff, will improve the company’s bottom line and ensure the risks and consequences associated with noncompliance are minimized. In addition, the training of personnel is key to the development of a trade compliance culture. We are experts in import-export education at Global Training Center. Get in touch with us today at (915) 534-7900 for the training of your personnel on all aspects of international trade compliance. We will be glad to assist.