Tech-driven strategies for building a robust compliance program

“The freight forwarding community serves as a linchpin in the global supply chain, ensuring that the right goods get to the right place” - Matthew S. Axelrod, Assistant Secretary for Export Enforcement at the Bureau of Industry and Security (BIS).

The freight forwarding and customs broker community operates at the heart of international trade, managing the complexities of customs procedures, export controls, and regulatory compliance. This critical function not only sustains the flow of global trade but also upholds the integrity of the regulatory systems that govern it.

Why a robust compliance program matters

Today, agencies like the BIS and the U.S. Department of State are intensifying their focus on freight forwarders' adherence to stringent compliance standards. These regulatory bodies aren’t just enforcing rules - they’re actively scrutinizing freight forwarders to ensure that comprehensive compliance programs are in place.

These regulatory bodies do not hesitate to impose substantial fines and penalties on businesses that are found to be non-compliant. For instance, in April 2023, the BIS levied a record USD 300 million penalty on a technology firm for export regulation violations, highlighting the significant financial risks for businesses that fail to comply.

Key principles for a strong compliance program

To meet the rigorous standards set by regulatory agencies, freight forwarders should adhere to the key principles outlined by the BIS for an effective compliance program:

1. Have strong and continuous management commitment. To build and maintain an effective program senior management must:
   • Publicly support compliance policies and procedures.
   • Provide sufficient resources for compliance.
   • Support export compliance training and regular sessions.
2. Identify and mitigate your organization’s potential vulnerabilities by conducting frequent risk assessments.
3. Write and implement export authorization procedures on jurisdiction, classification, licensing and screening. This is vital for preventing your organization from exporting unauthorized items and possibly facing export penalties.
4. Assign individuals roles in record keeping and ensure procedures meet the requirements in EAR § 762.4.
5. Provide training for all employees involved in exports, including support staff, to stay updated on regulations and network with other export compliance practitioners.
6. Perform regular audits to gauge how well procedures are implemented and identify areas for improvement.
7. Implement a program to handle compliance issues, including how to prevent export violations and how to take corrective actions when a violation is found.
8. Whether writing an Export Compliance Program (ECP) for the first time or maintaining an ECP, ensure the manual remains current and relevant to the members of your organization..

Building a robust compliance program with ComplianceWise

In this context, technology becomes an indispensable ally. A robust compliance program, supported by the right technology, enables freight forwarders to navigate the complexities of global trade with confidence and precision.

Enter ComplianceWise – an innovative solution that seamlessly integrates compliance management into your everyday operations. Tailored for the complexities of global trade, ComplianceWise simplifies navigating the 'What, Who, and Where' of compliance with ease and precision.

How ComplianceWise integrates advanced compliance checks into logistics workflows:

Commodity risk assessment

ComplianceWise performs thorough commodity risk assessments on all bookings and shipments. Powered by BorderWise, our comprehensive database and reference tool for customs and border compliance, this feature evaluates compliance risks associated with military goods, dual-use items, and other controlled trade categories, such as those governed by CITES.

BorderWise provides up-to-date global trade regulations, classification codes, and trade agreement rules, making it easier to ensure compliance across jurisdictions. When risks are identified, the system provides immediate access to relevant export and import compliance requirements, enabling logistics professionals to make informed decisions quickly.

Denied Party Screening and country/region checks

ComplianceWise also integrates Denied Party Screening and country/region checks into a single, streamlined view within each job. This functionality is crucial for preventing inadvertent engagement in prohibited transactions.

Key features include:

• Recording compliance decisions: Users can document key compliance decisions and relevant notes directly within the job, creating a clear audit trail.
• Compliance risk reviews: The system prompts users to review a job's compliance risk factors before proceeding with restricted actions, ensuring that all potential risks are considered.
• Blocking and overriding actions: ComplianceWise can prevent restricted actions when risks are identified, but authorized users can override these blocks if necessary, ensuring flexibility in decision-making.
• Audit traceability: In the event of an audit by regulatory authorities like OFAC or BIS, ComplianceWise provides detailed traceability at the job level, demonstrating the compliance process followed.

Comprehensive compliance visibility

The Compliance Risk tab within ComplianceWise offers a holistic view of all risk factors associated with a job. This aggregated data determines the overall compliance risk status of the job, allowing users to assess risk levels at a glance. This includes:

• Harmonized Codes: The system checks these codes against compliance databases to identify risks related to military goods, dual-use items, and other controlled commodities.
• Denied Party Screening status: It provides the screening status of all parties involved in the job, ensuring that no prohibited entities are engaged.
• Embargoed countries: ComplianceWise flags any embargoed countries associated with the job, adding another layer of risk assessment.

Detailed compliance logging and reporting

ComplianceWise doesn't just help in identifying and managing risks; it also offers robust logging and reporting features that are essential for maintaining regulatory compliance:

• Compliance logs: The system records every change to a job's compliance status, including who made the decision and when, providing a complete record of the compliance process.
• Senior management reports: ComplianceWise generates reports focusing on compliance risks for both planned and departed shipments, detailing where assessments have been performed and highlighting any areas where risks remain unaddressed.

Make compliance your competitive advantage

Today’s regulatory environment demands a proactive and integrated approach to managing compliance risks. Freight forwarders must evolve from viewing compliance as a peripheral concern to recognizing it as a central element of their operational strategy, understanding that partnering with customers to ensure overall compliance across the supply chain is crucial to protecting all parties involved.

By centralizing your compliance risk management and ensuring thorough audit readiness, you can turn compliance from a potential liability into a driver of business excellence and resilience.

Choose ComplianceWise to safeguard your operations, protect your reputation, and succeed in an increasingly regulated world.