The Greek philosopher Heraclitus once famously said: “The only thing that is constant is change.” In the world of trade compliance, country sanctions and restricted parties lists are no exception to this rule.
Time and time again, I see people with printed lists of countries posted near their computers, to remind them of where they cannot ship. While these lists are important reminders, many of them are rarely updated. The regulations are not set in stone!
Take for instance, Iraq. For many years, there were stringent economic sanctions against Iraq, however, many of these sanctions ended in 2003. Surprisingly, I still see companies that will not ship to Iraq … and lose valuable business and revenue as a result. This is where restricted party screening becomes a “must” for any compliance program. In addition to the country sanctions, it’s critical to screen each party to the transaction. Here are some important reminders when conducting your restricted party screens. (If you’re going to keep a printed checklist at your desk, I would recommend this one!)
1. Screen all parties to the transaction
This includes not only screening the party’s name, but the address as well. Restricted parties have a tendency to move around or change their names. Screening both the name and address of the party provides extra protection against unauthorized exports.
2. Have a plan
Include a hold process in your procedures which allows for the Export Compliance Officer (or other responsible party) to place the transaction on hold until a hit can be resolved.
3. Resolve any “hits”
Don’t simply cancel a transaction because there’s a potential match on the restricted party lists. Include a resolution process in your procedure. Review each hit carefully to determine if the hit is a false positive or a true hit. If you have a true hit, then document it and cancel the transaction.
4. Keep records
Be diligent about keeping detailed records on restricted party screenings. If you have resolved any potential false positives, be sure to document your decision and keep that information with your export documentation for that transaction.
5. Don’t ignore red flags
They are bright red for a reason! If you’ve determined that your hit is a false positive, but other red flags still exist, then cancel the transaction. Do not self-blind or ignore red flags. It’s easy to develop “tunnel vision” here and think that the only criteria is a restricted party screen, which could cause you to miss other important warning signs about the transaction.
6. Don’t compromise your business for any transaction
Never move forward with a transaction involving a restricted party because sales is breathing down your neck or the items are sitting on the dock. This could result in hefty fines and possible debarment (not to mention personal liability). No export is worth that!
As always, if you cannot resolve your hit, seek guidance from an expert.
Emmalie Armstrong is a Trade Compliance Consultant with Export Solutions – a firm specializing in U.S. import/export regulations.