Why do we care about Trade Compliance?

Though we don’t normally like to dwell on the negative side of international trade it is important that companies take International Trade Compliance seriously.  This affects both customs procedures, ie tariff classification, origin and valuation issues as well as export control matters, whether they are related to embargoes and sanctions (eg trading with Belarus for example), UK export licensing controls on dual-use or military goods or the USA extra-territoriality controls on EAR and ITAR controlled goods and technology.  So for once here are the potential penalties a non-compliant business could face.

  • Individual prison sentences e.g. up to 10 years in UK, and 20 years in US
  • Extradition (e.g. Tappin)
  • Significant fines for companies (unlimited in UK)
  • Denial of export privileges (e.g. licences withdrawn or not renewed)
  • Forfeiture of goods
  • Debarment from government contracting
  • Listing in the US as a restricted party (e.g. for association with terrorist or WMD proliferator)
  • Reputational harm and Corporate Social Responsibility (CSR) concerns
  • Management time\legal expenses
  • Enforcement is on the rise


What we recommend is that a business undertakes a ‘risk assessment’ to see if there are any areas of trade compliance which require attention or re-structuring.  Companies do perform risk assessments, why?

  • It is an essential part of risk management procedure for the,
  • supports not only identification but also evaluation of risks
  • act as a starting point for developing efficient and effective compliance programmes
  • enables comparison against benchmarks
  • supports determination of acceptable levels of risk
  • commonly part of an organisation’s mechanism for determining risk and managing compliance, often required to feed into Board’s “risk register”


In other words … get your ducks in a row!



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Written on 5th April 2013 by Sandra Strong FIEX (CITA) Managing Partner Strong & Herd LLP

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