“We used a different solution for screening but our legal department complained that it missed more than it caught. We also recognized a need for a solution that was more comprehensive and would allow us to automate other export control functions.”
EXPORT COMPLIANCE OFFICER, PENNSYLVANIA
Product trade compliance issues impact company revenues.
From the boardroom to the shipping room, from sales to customer service, trade compliance issues have significant impact on corporate revenues, decisions and processes. When business processes that support trade compliance are inadequately supported by modern technologies, the manpower and resources required to protect the company, its executive and shareholders from the regulatory and business risks of non-compliance can be staggering.
Companies that purchase from or sell to foreign entities face a number of thorny trade compliance issues. Some are a direct consequence of trade regulations governing the goods themselves, or due diligence and corporate governance requirements. Others are a result of the entities and countries involved in the transaction or government import and export reporting requirements.
These same compliance and business issues also affect companies that buy and sell goods (tangible or intangible) exclusively in the domestic market when these goods are controlled by laws and regulations one might suspect would apply only to physical imports or exports.
What are the main product trade compliance issues companies face, and how do they affect your business processes and bottom line?
• Compliance Issues Affecting Business Processes and Revenue
• Ineffective Compliance Systems and Outdated Content
Exports, Re-exports and Deemed Exports
Since 9/11, the laws, regulations and procedures surrounding the export, re-export and deemed export of goods, technologies and materials have become more complex and rigorous. Perhaps most importantly however, they have become subject to increased government scrutiny and enforcement efforts.
Export compliance violations can see the company facing penalties ranging from $50,000 to $10,000,000 per transaction, denial of export privileges and its executive facing lengthy prison terms. Equally compelling are the consequent damage to corporate reputation and image, and the substantial costs of legal representation, management distraction and business interruption.
For these reasons, top priority export compliance issues generally include:
• Screening Customers, Vendors, Employees, Countries and Trade Chain Partners
• BIS-controlled Goods
• Goods Capable of Military Use (ITAR)
• Schedule B Tariff Classification
• Manage Export Licenses, Exceptions and Exemptions
All of these issues are compounded when dealing with multiple locations, sales out of foreign locations, and third-party sales.
The regulatory environment surrounding the import of goods, parts, materials and ingredients has always been complex and subject to frequent change. For most companies, top priority product compliance issues are to: