It may not be a “Hallmark” holiday, but World Customs Day is a great opportunity to step back and consider how you structure and support compliance with customs requirements.
International trade is critical to the survival of most companies. Frequently, however, knowledge of the work of customs teams is hidden from view. That is, of course, until something goes wrong. The penalties for non-compliance include graduated fines, the loss of export privileges, and potentially jail time for responsible executives.
A green routing by customs is not an indication of compliance. It simply means that a shipment has been allowed to continue to its destination. When customs issues are detected, it typically starts with one shipment. This prompts an investigation into an increased sample and then a potential trawl through years of transaction history. Systematic non-compliance can result in the recalculation of fees, penalties, and interest.
Here are 5 questions to ask yourself:
- Does my company have qualified and trained personnel in place who are aware of our company’s customs and trade obligations?
- Do they have access to the tools and information that they need to keep abreast of ever-changing requirements?
- Do we have documented trade compliance and customs procedures that describe our approach to compliance?
- Do we have management controls and reviews in place to verify compliance and address exceptions and areas of doubt?
- Do we have external partners that can support our customs needs? Do we have the governance processes in place to satisfy ourselves that their submissions in our name are accurate and compliant?
If you can answer these questions positively and with confidence, then reach out to your trade compliance team to thank them for their professionalism and support. Ask them what they need to improve their effectiveness, and ensure that they know that they have an open channel to express any concerns.
If you cannot confidently respond positively, then take the time to dig further to understand the level of risk to you, your company, and your ability to trade internationally.
Too many companies have delegated trade and customs responsibilities to low levels within the organisation:
- where resources have not been formally trained
- where company obligations are not properly understood
- where decisions are made with loose and unstructured guidance from colleagues and freight carriers
- where processes are not documented
- where the focus is on expediting transactions rather than ensuring compliance
- where excessive reliance is placed on partners such as customs brokers
- where decisions on customs representation are taken without sufficient management oversight
- where validation and audits of compliance are absent
In our dealings with companies in this field, management’s lack of awareness of its obligations is frequently the most significant impediment. Ignorance of the requirements is not, however, an acceptable defence. In the absence of these processes and structures, it is a company failure to ensure compliance.
Take the time today to ask your team the 5 questions above. If you do not get a satisfactory answer, don’t wait for a notification from customs authorities or for next year’s World Customs Day.
We would be delighted to help with training – to ensure awareness of obligations, with a formal assessment of gaps – to identify the scale of the problem, and with hands on support to address the challenges identified.
To all the resources that are working diligently to meet customs and trade compliance requirements – Happy World Customs Day.
Supply Chain Enabled
