C5 2018 Forum

The ROI of automating export control compliance

In today’s globalized and competitive markets, business leaders are typically focused on increasing productivity, reducing costs, developing innovative products, and winning new customers.

To many, it seems like export control compliance does not inherently add value to a service or product – and they therefore regard it as a burden. After all, compliance can’t really be considered a revenue-generating portion of the company.

Those that fail to implement effective export control compliance programs, though, risk jeopardizing their business operations and reputations. Based on this alone, investing in export control compliance already makes good business sense. But there is even greater potential to be tapped: Companies that additionally introduce automation into their compliance programs also benefit from greater efficiency, reduced costs, and – importantly – increased regulatory compliance.


Turning burden into opportunity in a world of constant change

Any compliance program today must be configured to cater for changing policies, legislation, technologies, and so on. It must be robust and adaptable enough to deal with uncertainty and unpredictability.

Expecting the unexpected

In 2016, President Trump promised an unpredictable US foreign policy if he were to win the presidency. “We must as a nation be more unpredictable,” he said. “We are totally predictable.”

An unpredictable foreign policy inevitably makes export control regulations more subject to change. It also makes the job of export control practitioners that bit harder. Keeping an eye on the news for foreign policy changes is therefore always advisable.

Any change in the global security environment can directly impact financial sanctions and export controls, and with this also on international supply chains and business decisions regarding certain markets.

Russia sanctions

Volatility around Russian sanctions has had a great impact on trade compliance for the Nordics region in recent years. US regulations in particular can present great challenges for non-US companies.

Non-US companies may face punitive measures if they knowingly cause a violation of the secondary sanctions relating to Russia pursuant to the US Government’s Countering America’s Adversaries Through Sanctions Act (CAATSA).

Companies must remain vigilant in monitoring all applicable sanctions – national, EU, and US – and align their export controls compliance policies and procedures in accordance to latest legislation while avoiding impacts on their trade operations.

What makes an effective export control compliance program?

commitment
commitment

Commitment at the top

Compliance should be a cultural factor within a company and this is based on the visible commitment of senior executives and management.

training
training

Training and awareness

To further support the cultural attitude towards compliance, regular employee training is of paramount importance to ensure all teams are aware of their responsibilities. 

screening
screening

Screening

To ensure trade does not take place with an individual or entity on one of the restricted party lists, a compliance program must include continued screening against all applicable, published entity lists. 

record
record

Recordkeeping

To support audits, identification of violations, and voluntary disclosures, records should be easily accessible to support efficient and effective audits.

policies
policies

Written policies

It is essential to define, document, and communicate corporate policies. 

self audit
self audit

Self-audit

To support the ongoing maintenance of a compliance program and to minimize the risk of violations coming to light during an external audit, a company should perform their own, internal audits periodically.

change
change

Managing change

Compliance programs must be configured to cater for changing policies, legislation, technologies, etc. They must be robust and adaptable enough to deal with uncertainty and unpredictability.

software
software

Software automation

Software systems are a very cost-effective means of ensuring export control security without slowing down business processes.

Business benefits of automation: Export control compliance software

Considering the volume, complexity, and frequent changes of export control regulations across the globe, it’s virtually impossible to establish successful programs without IT support. Software solutions reduce reliance on manual processes and therefore support companies to:

  • Decrease costs
  • Increase efficiency
  • Minimize errors
  • Standardize procedures
  • Increase regulatory compliance
  • Improve recordkeeping and the level of information available to auditors

The best systems enable you to comply with all relevant regulations, mitigate supply chain risks, increase efficiency, and demonstrate due diligence to regulatory authorities.


What you should look for in effective export control compliance software solutions

erp
erp

Integrate with ERP systems

Export control compliance should be part of standard business processes and not a separate activity. Software can support real-time, automated checks for export license requirements, restricted-parties, and more, directly in your ERP. 

training
training
screening

Restricted-party screening

Screening all your business partner names and addresses against the sanctions lists of the UN, EU, US, and other authorities is simply not practical as a manual activity. Software can fully automate the process in real-time or as a batch run.

product classification
product classification

Product classification

The kind of automation commonplace for many other aspects of global trade and logistics is now also available to support the product classification process. Software can support correct identification of the customs commodity codes and/or dual-use codes.

license
license

License determination

Software can help you answer key questions about your shipment: Are there any embargoes in place for the country I want to ship to? Do I require a license to ship my goods? It should also block goods shipment if a license hasn’t been obtained yet.

data service
data service

Data service updates

Automated data updates ensure that you are always checking against the most up-to-date version of the sanctions lists and export control regulations.

license management
license management

License management

Automatically identify which license might be applicable for the shipment; and, produce a full audit trail of which licenses have been used for which shipment including decrements on value and quantity. 

Return on investment

Implementing an effective export control compliance program that is robust enough to cope with current challenges and is flexible enough to facilitate future requirements is of utmost importance in protecting your business operations and reputation. This requires investment.

A return on this investment is hard to measure. A robust compliance program is perhaps more comparable to having a good insurance policy in place. No reputable business would trade without insurance for professional liability, property, and vehicles. Similarly, no reputable business should trade without taking measures to ensure export control regulatory compliance. Here are four good reasons why:

image
image

Protecting brand image

Companies often spend significant amounts of money, time, and resources to develop their brand image. Integrity, trustworthiness, reliability, and transparency often form key elements of this. Unfortunately, however, it’s easy to lose a good brand image in a very short time if the right protective measures are not taken.

penalties
penalties

Avoiding penalties

Prevention is better than cure, as they say. Criminal fines, administrative penalties, and costs associated with defending against enforcement actions can impose a massive burden on a company’s finances. Effective export control compliance programs are the best way to avoid such penalties in your company.

penalty mitigation
penalty mitigation

Penalty mitigation

It’s far better to detect potential problems and violations before the enforcement authorities do so. If things do go wrong, your company can make a voluntary self-disclosure (VSD) of any issues. Typically, this will lead to a government warning letter or significantly reduced penalties.

shareholder
shareholder

Shareholder value

Damage to brand image and significant financial penalties can have a very direct impact on the shareholder value of the company. It is extremely important, therefore, to ensure that an effective export control compliance program is in place to avoid such financial impacts.

About AEB

More than 5,000 companies around the globe are automating their global trade, supply chain, and logistics processes with AEB software. They can prevent legal violations long before a delivery is made. Make global trade compliance an opportunity, not a risk.

  • Restricted Party Screening
  • Export Controls
  • License Management
  • Automated Product Classification
  • ITAR and EAR
  • Politically Exposed Person (PEP) Screening
  • Anti-Bribery and Anti-Corruption
  • Multi-Country Customs Filing

And much more.

Discover Trade Compliance Management with AEB