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Three steps to exposing compliance risks

01 November 2017/Categories: CILT, Industry News, Freight Forwarding, Logistics & Supply Chain, Ports, Maritime & Waterways



Increasing security threats and political instability across the globe are fuelling changes in export control regulations and frequent, new restrictive measures. A new fact sheet published by AEB, a leading provider of global trade and supply chain software and services, supports businesses engaged in global trade to identify and manage compliance risks successfully. 

The new fact sheet can be downloaded free of charge at https://www.aeb.com/uk/media/fact-sheet-compliance-risks.php.

Sanctions by national, regional, and global authorities aim to combat violations of international law, proliferation of weapons of mass destruction, and global terrorism. While global bans and restrictions are essential for secure and fair global trade, they also present tremendous challenges for businesses looking to operate efficient, competitive, and secure supply chains. Those who violate EU regulations or US sanctions face harsh consequences: penalties, imprisonment, and the loss of licensing and customs privileges. This is often followed by reputational damage, loss of business, and trade restrictions impeding further international business activities. 

Every company is responsible for ensuring that it does not provide funds or economic resources to any individuals or organisations on whom financial sanctions have been imposed. Sanctions list screening involves checking all business contacts stored in a company’s ERP and logistics systems for matches in the defined restricted party lists. Companies who are already screening their business contacts against the OFAC SDN or the EU’s CFSP sanctions lists are already ideally positioned to meet their legal requirements in this respect. 

But there are compliance risks that cannot be identified with the help of restricted party lists. And there are three important areas harbouring common pitfalls that companies looking to ensure due diligence need to be aware of:

1. Bans on indirect provisions
2. Prevention of corruption and money-laundering
3. Brand damage through indirect involvement in illegal or illicit business transactions

Geoff Taylor, Managing Director of AEB (International) Ltd, said: “The price for non-compliance with global trade bans and restrictions is high and no business can afford reputational damages, fines, or criminal charges in today’s competitive, global marketplace. Our new fact sheet explains three main compliance traps that present significant potential for risk – especially for larger companies with international customers. It’s also of special relevance for businesses in industries with high public visibility like the financial sector, and in highly regulated environments like aerospace and defence or the pharmaceutical industry. Our fact sheet explains what steps companies can take to expose and manage these risks successfully – achieving visibility, compliance, and competitiveness at the same time.”

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