No Result
View All Result
SUBSCRIBE | NO FEES, NO PAYWALLS
MANAGE MY SUBSCRIPTION
NEWSLETTER
Corporate Compliance Insights
  • Home
  • About
    • About CCI
    • Writing for CCI
    • NEW: CCI Press – Book Publishing
    • Advertise With Us
  • Explore Topics
    • See All Articles
    • Compliance
    • Ethics
    • Risk
    • FCPA
    • Governance
    • Fraud
    • Internal Audit
    • HR Compliance
    • Cybersecurity
    • Data Privacy
    • Financial Services
    • Well-Being at Work
    • Leadership and Career
    • Opinion
  • Vendor News
  • Career Connection
  • Events
    • Calendar
    • Submit an Event
  • Library
    • Whitepapers & Reports
    • eBooks
    • CCI Press & Compliance Bookshelf
  • Podcasts
  • Videos
  • Subscribe
  • Home
  • About
    • About CCI
    • Writing for CCI
    • NEW: CCI Press – Book Publishing
    • Advertise With Us
  • Explore Topics
    • See All Articles
    • Compliance
    • Ethics
    • Risk
    • FCPA
    • Governance
    • Fraud
    • Internal Audit
    • HR Compliance
    • Cybersecurity
    • Data Privacy
    • Financial Services
    • Well-Being at Work
    • Leadership and Career
    • Opinion
  • Vendor News
  • Career Connection
  • Events
    • Calendar
    • Submit an Event
  • Library
    • Whitepapers & Reports
    • eBooks
    • CCI Press & Compliance Bookshelf
  • Podcasts
  • Videos
  • Subscribe
No Result
View All Result
Corporate Compliance Insights
Home Compliance

Trade Compliance Is Simple, Except When It Isn’t

by Doreen M. Edelman
January 7, 2014
in Compliance, Featured
businessman considering confusing options

With the new year, I have been thinking back on the last 12 months and where I have seen the most confusion for companies regarding import and export compliance.  It has been a tough year for companies doing international business and for compliance and risk professionals.  We have all spent hours trying to determine what export control reform will mean for our companies, we have watched countries negotiate for greater access to the U.S. market and we continue to see increased enforcement for all types of trade enforcement, from customs and border protection to the Department of Treasury, the Department of Justice and the Securities and Exchange Commission.  Each of these areas requires companies to examine their internal processes, procedures and documentation for doing business globally.  On the surface it sounds simple, but in reality it isn’t as easy as senior management may assume.

Let’s say the CEO embraces compliance and instructs management to ensure the company is protected.  What usually happens? Management meets and decides to:

  • Train internally
  • Update the company’s manual
  • Send a few employees to additional training

Check, check, check.  Compliance is good.  So why do I think this company is not really improving its compliance? Several reasons:

  1. Internal training requires real understanding of the new regulatory environment.  Most companies don’t have internal officers who have had the time or the motivation to appreciate the nuances of the export changes.  In fact, in most companies, export and import roles are dispersed throughout the company.  Logistics, sales, business development and product development all play a role in the process, and no one person really understands all the procedures that go into internal compliance.  Internal training that is just “check the box” may allow you to document that your employees have been trained, but it really doesn’t make you any more compliant or reduce your corporate and individual risks.  Therefore, internal compliance officers need good, in-depth training that is tailored specifically for your business, is up-to-date and considers your existing procedures so the training jibes with your internal SAP-style system and your method for doing business.  That usually means one-on-one training.
  2. In-house lawyers usually have an understanding of the big picture and the importance of training and compliance, but they are wearing lots of hats and can’t delve into the details. They either need a bucket of money to rely on external consultants or to hire compliance experts.  If you aren’t in a trade-centric city, finding even an experienced trade paralegal can be tough.
  3. Where is the funding coming from?  If no funding is allocated to improve the compliance process and documentation, increase due diligence by internal investigations, hire more people, pay for advanced export training or bring in a trainer, how is it possible to improve compliance?
  4. And it always comes back to the “tone at the top.”  Senior management cannot delegate away compliance responsibility.  If every senior manager doesn’t treat trade compliance as a real risk area, then the receptionist and the facilities manager won’t either.  Why do we care if the receptionist and facilities manager understand about trade compliance?  Because they are your front lines.  The facilities manager has to know that technology controlled by the Commerce Department can’t be visible to the evening cleaning crew or it could be a deemed export.  The receptionist has to know that the overnight package going to China must be treated differently than the designs going to St. Louis.  You can’t assume the third-party shipper has this under control.  They are only your agent.

These issues are even more complicated for large companies.  Large companies that import and export daily have teams of people crossing many departments involved in trade.  However, often one department doesn’t take full responsibility for the big picture.  This leaves big gaps in compliance.  Moreover, large corporations are also trying to meet business deadlines and corporate objectives. Legal staffs and budgets for outside law firms have been cut and everyone is trying to do more with less.  Yet they may be exporting and/or importing thousands of different SKUs.  Even if internal audit participates and makes recommendations, I see companies not able to focus on what needs to be done.  They are just too busy running the business.  Projects start but don’t get completed. Personnel don’t have the proper knowledge to follow through.  Licenses may be obtained but aren’t being efficiently tracked for compliance with provisos.  Re-export information isn’t being communicated from the foreign party or subsidiary to someone who knows the requirement to notify the government of the change.  Too much is happening too fast.  Our computer systems aren’t set up to keep up.

What do I suggest? How can companies manage trade compliance?

  1. It isn’t enough to just train.  Charles E. Duross, Deputy Chief of the U.S. Department of Justice’s FCPA unit recently said, “Training is insufficient.”  I would say training alone isn’t enough.  To be compliant, companies actually must commit to a new way.  Just like in sports and music, knowledge is a requirement, but you must practice.  Compliance must be proactive to prevent violations.  No longer is “hope for the best and change after a problem is discovered” an acceptable risk profile.  The global marketplace is becoming synonymous with the marketplace in general. We are all doing global business and the bar has to be raised.
  2. Embrace technology.  Anyone I know personally will be laughing.  I repel technology. However, new project management formats are being developed to help compliance groups manage and follow legal obligations. Again, this sounds simple, but I have seen many companies just lose track of requirements.  The IT system must be set up so that busy professionals can’t hit “dismiss” and overlook a compliance obligation.
  3. Resources will have to be dedicated to such compliance. Again, it isn’t an afterthought. Trade compliance must have a seat at the table along with other serious risks.  More people will have to get down and dirty and learn the details on a day-to-day basis so risks can be spotted and addressed.
  4. Senior management must stay engaged throughout the year.  A lot can be done by mirroring corporate wellness programs and safety matters.  “Compliance Minutes” and discussion groups are real possibilities.  Everyone in the company really has a role to play, and when each employee feels empowered, the company will benefit.
  5. Accountability.  There is no way around this if you really want to improve compliance. Hold people accountable. Period. It works. (And the government likes it.)

Sorry to be a downer, but I really have seen a lot of missed opportunities for companies to improve compliance, mitigate penalties and be proactive over the last year.  I hope this article will give you ideas to build into your corporate structure.

Footnote: I have been writing trade compliance for CCI since November 2011.  Starting in January 2014, I am passing the baton to my colleague, Klint Alexander.  He has a wealth of knowledge from the standpoint of a government official, a trade practitioner and a university professor.  Please see his bio here.


Tags: Proxy Access
Previous Post

Five Key Headlines From 2013 That Will Shape the Future of Internal Auditing

Next Post

What Do Aesop’s Fables and Risk Management Frameworks Have in Common?

Doreen M. Edelman

Doreen M. Edelman

Doreen-Edelman-Baker-Donelson-Bearman-Caldwell-&-Berkowitz Doreen M. Edelman is a shareholder at Baker, Donelson, Bearman, Caldwell & Berkowitz P.C. in Washington, D.C., where she helps clients create business solutions for international trade compliance. She has more than 20 years of experience developing compliance programs and counseling clients on export licensing, export controls, FCPA and Office of Foreign Assets Control (OFAC) sanction laws. Ms. Edelman also helps companies prepare global business plans and work through foreign government market regulations.

Related Posts

leather chairs in empty boardroom

Key Considerations for the 2020 Proxy Season

by Richard Smith and Judy Canavan
April 16, 2020

As we move into proxy season, BDO’s Richard Smith and Judy Canavan discuss notable areas to watch for – including...

CII Report on Proxy Access Bylaws at U.S. Companies Finds Consensus on Key Provisions

CII Report on Proxy Access Bylaws at U.S. Companies Finds Consensus on Key Provisions

by Corporate Compliance Insights
February 2, 2017

Washington, D.C. (Feb. 2, 2017) — The Council of Institutional Investors (CII) today published a report on proxy access bylaw provisions...

Compliance lessons from Qualcomm’s FCPA enforcement action

Lessons From Qualcomm

by Thomas Fox
March 9, 2016

Having violated the accounting provisions of the FCPA on several occasions, Qualcomm has been the target of an SEC investigation...

Richard Bistrong’s From Behind the Bribe: The Sharp End of Compliance

Richard Bistrong’s From Behind the Bribe: The Sharp End of Compliance

by Richard Bistrong
August 12, 2015

A short film on Richard Bistrong's journey through the dark side of international business, “getting caught” and what that might...

Next Post
tortoise and hare

What Do Aesop’s Fables and Risk Management Frameworks Have in Common?

Compliance Job Interview Q&A

Jump to a Topic

AML Anti-Bribery Anti-Corruption Artificial Intelligence (AI) Automation Banking Board of Directors Board Risk Oversight Business Continuity Planning California Consumer Privacy Act (CCPA) Code of Conduct Communications Management Corporate Culture COVID-19 Cryptocurrency Culture of Ethics Cybercrime Cyber Risk Data Analytics Data Breach Data Governance DOJ Download Due Diligence Enterprise Risk Management (ERM) ESG FCPA Enforcement Actions Financial Crime Financial Crimes Enforcement Network (FinCEN) GDPR HIPAA Know Your Customer (KYC) Machine Learning Monitoring RegTech Reputation Risk Risk Assessment SEC Social Media Risk Supply Chain Technology Third Party Risk Management Tone at the Top Training Whistleblowing
No Result
View All Result

Privacy Policy

Founded in 2010, CCI is the web’s premier global independent news source for compliance, ethics, risk and information security. 

Got a news tip? Get in touch. Want a weekly round-up in your inbox? Sign up for free. No subscription fees, no paywalls. 

Follow Us

Browse Topics:

  • CCI Press
  • Compliance
  • Compliance Podcasts
  • Cybersecurity
  • Data Privacy
  • eBooks Published by CCI
  • Ethics
  • FCPA
  • Featured
  • Financial Services
  • Fraud
  • Governance
  • GRC Vendor News
  • HR Compliance
  • Internal Audit
  • Leadership and Career
  • On Demand Webinars
  • Opinion
  • Resource Library
  • Risk
  • Uncategorized
  • Videos
  • Webinars
  • Well-Being
  • Whitepapers

© 2022 Corporate Compliance Insights

No Result
View All Result
  • Home
  • About
    • About CCI
    • Writing for CCI
    • NEW: CCI Press – Book Publishing
    • Advertise With Us
  • Explore Topics
    • See All Articles
    • Compliance
    • Ethics
    • Risk
    • FCPA
    • Governance
    • Fraud
    • Internal Audit
    • HR Compliance
    • Cybersecurity
    • Data Privacy
    • Financial Services
    • Well-Being at Work
    • Leadership and Career
    • Opinion
  • Vendor News
  • Career Connection
  • Events
    • Calendar
    • Submit an Event
  • Library
    • Whitepapers & Reports
    • eBooks
    • CCI Press & Compliance Bookshelf
  • Podcasts
  • Videos
  • Subscribe

© 2022 Corporate Compliance Insights

Welcome to CCI. This site uses cookies. Please click OK to accept. Privacy Policy
Cookie settingsACCEPT
Manage consent

Privacy Overview

This website uses cookies to improve your experience while you navigate through the website. Out of these, the cookies that are categorized as necessary are stored on your browser as they are essential for the working of basic functionalities of the website. We also use third-party cookies that help us analyze and understand how you use this website. These cookies will be stored in your browser only with your consent. You also have the option to opt-out of these cookies. But opting out of some of these cookies may affect your browsing experience.
Necessary
Always Enabled
Necessary cookies are absolutely essential for the website to function properly. These cookies ensure basic functionalities and security features of the website, anonymously.
CookieDurationDescription
cookielawinfo-checbox-analytics11 monthsThis cookie is set by GDPR Cookie Consent plugin. The cookie is used to store the user consent for the cookies in the category "Analytics".
cookielawinfo-checbox-functional11 monthsThe cookie is set by GDPR cookie consent to record the user consent for the cookies in the category "Functional".
cookielawinfo-checbox-others11 monthsThis cookie is set by GDPR Cookie Consent plugin. The cookie is used to store the user consent for the cookies in the category "Other.
cookielawinfo-checkbox-necessary11 monthsThis cookie is set by GDPR Cookie Consent plugin. The cookies is used to store the user consent for the cookies in the category "Necessary".
cookielawinfo-checkbox-performance11 monthsThis cookie is set by GDPR Cookie Consent plugin. The cookie is used to store the user consent for the cookies in the category "Performance".
viewed_cookie_policy11 monthsThe cookie is set by the GDPR Cookie Consent plugin and is used to store whether or not user has consented to the use of cookies. It does not store any personal data.
Functional
Functional cookies help to perform certain functionalities like sharing the content of the website on social media platforms, collect feedbacks, and other third-party features.
Performance
Performance cookies are used to understand and analyze the key performance indexes of the website which helps in delivering a better user experience for the visitors.
Analytics
Analytical cookies are used to understand how visitors interact with the website. These cookies help provide information on metrics the number of visitors, bounce rate, traffic source, etc.
Advertisement
Advertisement cookies are used to provide visitors with relevant ads and marketing campaigns. These cookies track visitors across websites and collect information to provide customized ads.
Others
Other uncategorized cookies are those that are being analyzed and have not been classified into a category as yet.
SAVE & ACCEPT