The supply chain nowadays is even more complicated than it was before, big props to the ever-expanding sanctions landscape resulting from the Russian-Ukraine conflict and enforcement risk is even higher given the broader array of US federal and international agencies intent on strict compliance. Regular supplier sanction monitoring and business/trade operations and evaluations are becoming increasingly important to ensure organisations are reaching their compliance goals.
The Problem
The problem is exacerbated as the infotec environment matures, allowing suppliers and purchasers, as well as the transaction’s connected parties, to be vetted in real time. Furthermore, businesses’ reliance on their supply chain has grown even stronger, owing to shortages created by the COVID epidemic, inflationary pressures, and, most recently, the geopolitical and global economic consequences of the Russian-Ukraine conflict.
Sanctions Compliance
Supplier sanction monitoring is based on strict responsibility, which means that no group of conduct is immune from enforcement action. As a result, we are witnessing a compliance race in which new procedures and technology are implemented. Even if your organisation is benchmarked against its rivals, authorities may perceive your compliance program to be subpar the next year (or quarter) if the pace of penalty requirements has quickened. Companies under the scrutiny of OFAC, the Department of Commerce, the SEC (Securities and Exchange Commission – especially for anti-bribery and corruption), the Department of Justice, and their counterparts frequently raise compliance standards.
Starting from the suppliers
Trade activities are exceedingly complicated and need careful sanctioning. Understanding your customer is a good place to start. Integrity monitors in high-risk sectors are increasingly setting the bar for businesses to engage in Know Your Customer (KYC) policies that attempt to understand customer ownership structures and supply networks. While some businesses may need to start with a risk-based strategy, it’s critical to thoroughly screen your top suppliers and purchasers and guarantee that items are evaluated throughout the product and service life cycle (including product warranties & maintenance contracts).
Beyond sanctions
Considering not only Russia sanctions, but also other consolidated sanctions lists and arms embargoes / UN resolutions, or even smaller programs such as Australia’s DFAT list or Singapore’s MAS lists, your business should consider whether it is exposed to other sanctions regimes. It also encompasses those affecting other nations and specifically designated nationals of other targeted countries.
The way forward
When engaging in deeper relationships with suppliers & buyers, a business should ensure supplier sanction monitoring for comprehensively sanctioned countries. Companies should vet their suppliers and buyers against both OFAC’s SDN list and a non-consolidated list, as well as any other applicable lists. A shipment tracking program could take the form of a vessel tracking tool that would rapidly screen vessels for sanctions concerns and track their movements. Taking these steps will put your business well on the way to avoiding the ire of the regulators.
Find more details at: https://go.fiscaltec.com/supplier-sanctions-monitoring