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Denied Party Screening – The Toughest Measures You Can Take
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In a recent case, a US Citizen and CEO of a metallurgy company was found guilty of exporting cobalt and nickel to Iran without acquiring a license from the US Treasury Department’s OFAC. There are several indicators suggesting that this was a murky deal, especially due to the unlawful diversions. The transaction was certainly a diversion to a U.S. sanctioned country and prohibited under the U.S. law. As such, the CEO was penalized with a sentence of 4 years in prison.
This case suggests how serious the U.S. government authorities are in terms of export controls. Obviously, the U.S. doesn’t want to suffer in the hands of terrorists, rogue governments and other extremist bodies that make the world a vulnerable place. Therefore, all kinds of businesses should toe the line and adhere to the strict export control regulations.
The government recommends Denied Party Screening as the best method for evaluating the risk related to the buyers, consignees and importers located outside of the US.
How does the government hold an organization responsible for its export deals?
Exporting companies and organizations, as well as any companies dealing with foreign nationals and foreign businesses need to keep a complete record of the party they are dealing with. Name and address information, and if known, the information related to the shareholders of the buyer/importer need to gathered and screened separately against the restricted and sanctioned party lists.
Thanks to the compliance efforts of the exporters’ community, the US national security remains strong in all aspects. As a responsible and compliant organization, you should take strong measures to ensure no transaction has been done with restricted and/or denied entities and persons inadvertently.
How to achieve that?
The US Departments of State, Commerce and Treasury have revoked and restricted export privileges of several individuals, organizations, and also imposed sanctions on certain countries. Along with the BIS (Bureau of Industry and Security), Office of Foreign Assets Control (OFAC) publish several lists that contain restricted and denied entities. As a prerequisite for any international transaction, you have to review, verify and screen all parties involved in the transaction. This process is called export screening or watch list screening.
Since the US regulations and the restricted/watch list are updated regularly and quite frequently, you will have to maintain and update the information available. In order to achieve all these, the key challenges include storage and linking of information about traders, individuals, organization, etc.; identifying whether the partner’s name is on a banned party list or not; holding and resolving processes for seamless shipments.
Professional solutions for organizations
You already know how daunting it is to implement the toughest measures. Precisely, the professional solution is installing a restricted party screening software. Seen as a technological advancement, the software allows quick and precise screening of traders, partners, dealers, importers, etc.
It would take a lot of time if you deploy manual resources for evaluating a trader’s identity against the denied party lists. Ultimately, you lose a fair amount of valuable time and resources. On the other hand, the automated software offers a versatile and efficient platform, making the matters simpler and easier.
As of price considerations, while the large companies can avail expensive screening software for themselves, the small and medium organizations can benefit from the cloud-based solutions. You can request for trial versions of the software from the software vendors or companies and evaluate them.
Fred Danny has written several articles about the denied party screening software and trade compliance solutions. He highlights about Export Screening controls and cloud-based solutions for small and mid-sized businesses. He also explains why restricted party screening software is an evident requirement.
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