Trade compliance can be a significant challenge. In this 3 Minute
Explainer, we explain why shippers should automate compliance processes.
Shipping goods internationally comes with a host of rules. Export
compliance cannot be ignored. Violating trade laws and regulations
puts a company at the risk of fines.
Depending on where they ship from, and to, companies have a huge
number of rules and regulations that they must follow.
In 2020, the US Treasury Department’s Office of Foreign Assets
Control (OFAC) issued over $23
million in fines, plummeting from almost $1.3
billion in monetary penalties for sanctions violations.
Many companies outside the US are also subject to OFAC regulations.
Any company that issues or receives payments in US dollars must abide
by OFAC rules.
OFAC is just one of many government organizations that can issue
fines for compliance violations. In the United States, the Department
of Commerce’s Bureau of Industry and Security (BIS) is responsible for
issues of national security and sensitive technology.
The European Union has similar laws restricting or prohibiting goods.
Under Article 267 of the Union Customs Code (UCC), the EU can restrict
goods to protect human health, the environment, public security and so forth.
Shippers need to be aware of, and abide by, all the national and
international trade compliance that apply across the supply chain.
Furthermore, shippers must correctly classify their goods. Customs
authorities around the world issue fines if companies fail to use the
correct commodity codes.
In addition to fines, incomplete compliance procedures can result in
missed delivery deadlines, lost shipments and other supply disruptions.
Repeat offenders may have their export privileges revoked. All of
this can impact a company’s customer relationships, reputation and
ultimately, its bottom line.
Global shippers that automate
trade compliance mitigate these risks, and remove costly time-
and labor-intensive processes.
Automation removes the guesswork out of trade compliance processes.
Automated trade compliance solutions offer:
Access to international HS codes, country-specific commodity
codes, and any changes made to these
Up-to date international and government lists of denied or
The ability to automatically run background checks on customers
and prospective trading partners
The ability to identify and complete license requirements with
minimal manual research
Audit trails and compliance metrics for ongoing improvements
With an automated trade compliance solution, shippers proactively
mitigate risk, as well as remove time and labor intensive manual
processes. We will now look at these in more detail.
A manual process, such as a restricted party screening or a
sanctioned party list screening check, that would have taken hours can
be done automatically. Automatic screening has a minimal risk of
errors, reducing the possibility of fines and penalties.
Automated compliance tools combine historical data, with real-time
regulatory information, plus previously stored customer and partner
profiles. Therefore, a trade compliance solution creates a holistic
For effective trade compliance, every process, workflow and report
must be tracked and documented. These must also be stored for future
reference. This is known as the compliance audit trail.
The audit trail is critical to ensuring compliance with international
regulations. Therefore, an automated solution must be able to
cross-reference a compliance audit trail with various international
regulations and customs requirements.
Global trade compliance solutions help export teams to ensure that
they are not sending goods to embargoed countries or restricted individuals.
International and government lists of denied parties are subject to
frequent changes. As a result, manually checking these lists is a
Automated trade compliance solutions give shippers access to the
latest trade content data. This allows personnel to identify denied
parties, controlled products, embargoes and sanctioned countries.
Automated trade compliance solutions allow you to run a compliance
check whenever you need. This could be at the beginning of a customer
relationship, at shipment, or any time in between. As a result, trade
compliance automation makes it easy for companies to perform due diligence.
This allows shippers to significantly, along with penalties, fines or
By automating trade compliance, shippers streamline internal
processes, mitigate the risk of violations, and improve customer
experience. Automation is not simply about avoiding fines — it offers
a competitive advantage.
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