One of the most significant changes to export rules in the aftermath of the 9/11 terrorist attacks and subsequent threats was the increased attention paid to denied or restricted parties. Referred to generally by the U.S. Department of Commerce as “Parties of Concern,” these companies, entities, or individuals may require the screener, be it the importer, exporter or any other entity in the transportation supply chain, to apply additional due diligence before transacting business with that matched party of concern.
In the event a company, entity, or person on one of the following lists appears to match a potential party in an export transaction, additional due diligence is required before proceeding. Depending on which list the match was found, a match indicates either: there is a strict export prohibition; a specific license requirement; or the presence of a “red flag.” Prior to taking any further actions, users are to consult the requirements of the specific list on which the company, entity, or person is identified by reviewing the webpage of the agency responsible for the list.
The Bureau of Industry and Security, U.S. Department of Commerce maintains the following lists that shippers must use when importing or exporting goods:
Denied Persons List: A list of individuals and entities that have been denied export privileges. Any dealings with a party on this list that would violate the terms of its denial order are prohibited.
Entity List: The Entity List identifies foreign parties that are prohibited from receiving some or all items subject to the EAR unless the exporter secures a license. Those persons present a greater risk of diversion to weapons of mass destruction (WMD) programs, terrorism, or other activities contrary to U.S. national security or foreign policy interests. By publicly listing such persons, the Entity List is an important tool to prevent unauthorized trade in items subject to the EAR.
Unverified List: A list of parties whom BIS has been unable to verify. No license exceptions may be used for exports, re-exports, or transfers (in-country) to UVL parties. A statement must be obtained from such parties prior to shipping items not subject to a license requirement.
Consolidated Screening List: A consolidation of the export screening lists of the Departments of Commerce, State, and the Treasury put into one spreadsheet to assist in screening potential parties to regulated transactions.
As a shipper, it’s in your best interest to do the proper due diligence in advance before shipping to any of these parties, which may result in either avoidance in doing business with entities who populate these lists and/or moving forward with the shipment in accordance with the specific criteria of the regulatory agency and if so required, report your results via the proper channels. In today’s extremely busy, global trade environment, heeding this advice is often easier said than done. For example, the Departments of State, Commerce, and Treasury each issue lists of individuals, companies, or other organizations whose US export privileges have been restricted or revoked. The lists include both U.S. and foreign individuals and organizations – all of which can be properly screened in advance using DB Schenker’s Restricted Party Screening Tool.
As part of our DB Schenker Trade Advisory Solutions, we provide a straightforward, web-based compliance system that shippers can use to conduct their restricted party screenings in a confident and user-friendly manner. The tool also enables automated, periodic re-screening and documentation generation (for audit purposes), and screens against various Federal and International excluded parties lists and those maintained by various law enforcement agencies.
Five Benefits of a Third-Party Screening Tool
The U.S. Department of Commerce isn’t alone in its quest to shut down transactions to and from potentially dangerous trading partners. Regulatory agencies and governments around the world have clearly stated their expectations regarding the screening of domestic trading partners and/or international partners. As they aim to better comply with international trade laws and other regulations, organizations are increasingly turning to restricted party screening tools to determine whether the names and addresses of their consignees and all other party involved in the supply chain appeared on any “denied parties” lists.
Here are five other ways shippers are benefiting from restricted party screening tools while streamlining the compliance component, avoiding fines, and operating in a globally-conscious manner:
- Avoid false “positives.” These platforms help shippers build compliance records, make educated judgments, and avoid “false positives” that can occur during the screening process.
- Manage supply chain risk. Failure to comply with governmental restricted and denied party lists can lead to significant consequences, even if the infraction occurs on a single shipment. With an eye on reducing supply chain risk, shippers are using technology to avoid these problems and operate in the most compliant manner possible.
- Determine which international “blacklists” to screen against. In addition to the U.S., numerous other countries publish their own lists of restricted parties.
- Keep up with new trade regulations. Every year a new set of trade regulations goes into effect that can impact unknowing shippers. Restricted party screening solutions help shippers stay on top of these changes and avoid penalties and fines.
- Take the complexity out of the process. Many national governments and multinational groups publish lists of denied parties. While these lists are available from their sources, screening across of them can be a cumbersome process. Companies can save both time and hassle by using a software platform that collects these lists and then screens against them.
The penalties and impact associated with poor denied/restricted party screening can be steep and long lasting. While penalties and fines can create short-term financial impacts, the long-term damage to a shipper’s brand, reputation, and supply chain can reach far beyond those initial slaps on the wrist. By leveraging a robust technology platform, companies can rest easy knowing that compliance is covered while they continue to build their global brands.
For more details about DB Schenker Trade Solutions please visit ts.dbschenker.com or call 1-844-SCH-TRADE (724-8723)
