Denied party screening 2016 webinar final

Denied & Restricted Party Screening

The Keys To Success

WEBINAR 2016

Presenters Ned Blinick Dave Moore Dana M. Smalley

Vice President / Blinco President / Vigilant President / PITC

ContentsSafe Harbor Statement

Knowledge Is The Key To Success

Denied Party Screening: 101

Your Obligation

Reality & Truth

Help & Guidance

Closing

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Safe Harbor Statement

This presentation includes publically available data, opinions, estimates or other information that might be considered

forward-looking. While the statements enclosed represent current judgment on what the legal obligations currently are

as of the date of this presentation, you are encouraged to independently review all material provided herein. The

content is subject to risks and uncertainties that could cause actual results to differ materially.

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Knowledge Is The Key To Success

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Knowledge Is The Key To Success

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Ignoranceis not an option!

Knowledge Is The Key To SuccessIgnorance is not an option - Examples

US import law specifically dictates an importer take “reasonable care” (US Customs “Mod Act” of 1993 under 19CFR)

US export law specifically dictates you cannot “self blind” (Supplement 3 to Part 732 of 19CFR)

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Denied Party Screening 101

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Denied Party Screening 101Governments around the world maintain lists of “denied” or “restricted” parties with whom they dictate it is prohibited to do business with.

Challenge #1: There are over hundreds of lists with thousands of parties to check globally.

These lists can, and do change daily

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Denied Party Screening 101Who should be screened?

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• Governments• Companies• Banks• Freight Forwarders

• Customers• Suppliers / Vendors• Agents• Service Providers

• Employees• Visitors• R&D Partners• Consultants

Challenge #2: This is potentially a large list of master data to screen

Denied Party Screening 101

Do governments actually dictate to screen employees?

Do companies actually screen their employees?

Challenge #3: Employee screening has different legal implications beyond global trade and differ by country.

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Denied Party Screening 101

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https://www.bis.doc.gov/index.php/forms-documents/doc_view/413-part-736-general-prohibitions

US Export Regulation Example

Denied Party Screening 101

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US Export Regulation Example

Denied Party Screening 101US Dept. of Commerce has the following embedded within their best practice outline (interpretation of the regulations)

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http://www.bis.doc.gov/index.php/forms-documents/doc_view/7-compliance-guidelines

Current Guideline – US Dept. of Commerce

Denied Party Screening 101

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http://www.bakermckenzie.com/files/Uploads/Documents/Amterdam/TradeCompliance%20Conference/pn_amsterdam_tradecontrolssanctions_fuchs_nov12.pdf

Employee DPL Screening

2012 Study –Baker McKenzie Firm

Denied Party Screening 101

Employee Rescreening

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https://www.eandi.org/pdf/HireRight_EmployeeBenchmarkingReport_2014_4.14.pdf

2014 Study –Hire Right Benchmark

Denied Party Screening 101Bottom Line - DPL screening is not optional

DPL Screening (manual or automated) is a legal obligation and a required part of your business!

Each government and government department can and will impose their own fines, based on the violations incurred.

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Denied Party Screening 101

The enclosed is a collection of 253 various country’s denied party lists, and their regulatory references to comply with.

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Your Obligation

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Your Obligation

Steer Clear of Trouble

If a party is a potential match on multiple lists, you have risk and liability to review each listing.

You must review each list to confirm if the “Potential Match” is a true or false hit.

If an denied party is on multiple lists, you risk being under violation of each lists when doing business with a denied party, pending your transaction circumstances.

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Your ObligationKey Screening Triggers

◦ Screen before you make a shipment

◦ Screen before any financial transaction are made

◦ Screen before visitors enter your facility when you have trade controlled technology (deemed export risk)

Helpful Insight

Screening at the time orders are taken:◦ Prevents you from delay on the back end – time of shipping

◦ Provides critical lead time if a potential match is a valid hit, to escalate internally

◦ Prevents possible waste of time, materials and money

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Your ObligationScreening Considerations

Because you cannot do business with parties on DPL lists, and the lists change daily, the effort to screen can become challenging.

Key details to look at:◦ How quickly do you ship when an order is placed?

◦ How quickly do you make payments?

◦ Do you have the ability to screen at the front desk of your facilities when necessary?

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Your ObligationsQuestions To Ponder

If you have a automated solution, do you understand and manage it’s screening parameters & preferences?

◦ What is your company’s risk tolerance level?

◦ What types of word matching algorithm are used?

◦ Do you have an option to test the screening solution?

◦ Do you have an option to modify or use your preferred settings?

◦ What lists does the solution screen against?

◦ What lists do you wish to / need to screen against?

◦ Who is your company?

◦ Where do you have locations (inclusive of part ownership or voting shares)?

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Reality & Truth

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Reality & TruthReality

Compliance is perceived as a cost to business, however it’s also a cost avoidance

Denied party screening is a core foundational element to any trade compliance program

Denied party screening is a current focus of many government audits based on the publicized steep penalties

Challenge #4: Initial working of the denied party screening is typically a monumental task because you are screening your full database of parties

◦ Do not under estimate this level of effort

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Reality & TruthTruth

Many companies do not have the in-house bandwidth to tackle their initial screening

Screening can be more efficient when you cleanse your data prior to screening◦ Removing duplicates will reduce your overall volume to screen and work

◦ Reviewing data integrity will help improve your overall screening accuracy

A form of automation is almost a necessity to meet your compliance responsibilities◦ The number of lists to screen against matched with customer’s volume of data, makes it close to

impossible to manually screen in a timely fashion.

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Reality & TruthTruth

Just because you automate screening, doesn’t mean you are hands free driving…

◦ You will still have to work the “potential matches” or those screenings which require review or are escalations

◦ Have a business process documented and in place to work the potential matches

Don’t screen what you don’t have or what is not accurate

◦ Back to knowing your business and your data…

The good, the bad and the ugly. When you start to look, you will learn a lot about your business

◦ Everyone does! Take it in stride and move forward in a positive direction

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Reality & TruthTruth

Understand the confirmed hits / matches and the control list the party is on.

◦ Every list has different reasons for why they post party’s names on them. You need to consult with your legal or executive management to understand if your business is affected by that list or reason the party is on the list.

◦ Understanding the trade regulations and your responsibility to them is key to making the right business decision.

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HHS – Excluded by the Dept. of Human Services from participation in all Federal health care programs

DOC – Theft, wire fraud, money laundering and misapplication of government funds.

DOJ - fraud or felony convictions arising out of a contract with the Department of Defense (DOD), drug trafficking or possession convictions

OPM – Lost professional licenses, convicted of a crime related to the delivery of or payment for services, violated provisions of aFederal program or barred by another Federal agency.

FDA-FNS – Disqualified and Restricted Clinical Investigators, FDA Debarred Individuals, firms under the Application Integrity Policy and individuals who have been debarred or suspended from activities by any Executive Branch department.

FDA-FS - convicted of civil judgment for commission of fraud or criminal offense in connection with obtaining, attempting to obtain, or performing a public or private agreement or transaction; violation of Federal or State antitrust statutes, commission of embezzlement, theft, forgery, bribery, falsification or destruction of records, making false statements, tax evasion; violation of the terms of public agreement or transaction so serious as to affect the integrity of an agency program.

ARMY/NAVY/AIR FORCE – court martials, tax and regulatory as defined by Judge Advocate General

EPA – convictions, civil judgments or fact based cases involving environmental crimes, contract fraud, embezzlement, theft, forgery, bribery, poor performance, non-performance or false statements.

Reality & Truth

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Help & Guidance

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Help & GuidanceHelp Yourself First – Ask Questions

Is Your Data Clean?Duplicates

Accuracy

What Data Do You Capture?Company Name (i.e. party types such as - Customer, Supplier, Vendor, Logistic Providers, etc.)

Location Address (Street, City, State, Zip Code, Country)

Billing Address

Actual ship to address (i.e. drop shipment, Intermediate Consignee, 3PL, etc.)

Contact names

Where Do You Capture Data In Systems Other Than ERP?Employee names & addresses

Building visitors

Financial institutions (i.e. accounting, letters of credit, wire transfers, etc.)

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Help & GuidanceWhat Data Does Your Legal Department Wish To Screen?

Logistical / Business Operations (Tend to be Party Types in a ERP System)

Customers & Bill To Party

Vendors & Suppliers

Logistic Providers (i.e. Freight Forwarder, Cross Dock Consolidations, Carriers, etc.)

Financial Institutions (Companies Who Pay Your Company)

Other

Building Visitors

Employees

Individuals Granted Systems Access (i.e. Consultants, On Demand Support, etc.)

Are You In Over Your Head?

Making Decisions on Behalf of a Company is a Personal Liability. Know when to ask for help and seek guidance

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Help & GuidanceFinding Government Guidance on Their Expectations of Working Potential Matches Can Be Challenging.

Each government can offer their way of meeting their legal and regulatory responsibilities.

Most of which are manual efforts.

Unfortunately, there is not currently a free publically available screening solution to screen against all global Denied Party Lists.

◦ Maybe some day ….

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Help & GuidanceWhat is Publically Available?

The USA now provides a Consolidated Screening List (CSL) for some (not all) of the US DPL lists:

http://apps.export.gov/csl-search#/csl-search

Individual global government lists with links are provided in slide 15

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Help & GuidanceThe US Department of Treasury / OFAC Provides Guidance On How To Work a Potential Match

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http://www.treasury.gov/resource-center/faqs/Sanctions/Pages/directions.aspx

Help & GuidanceExample:

Impressively OFAC walks you through the process of determination when performing a review of a potential match.

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NOTE: This is for the OFAC DPL list only, however it is helpful perspective in the evaluation process

Help & GuidanceExample Cont.:

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NOTE: This is for the OFAC DPL list only, however it is helpful perspective in the evaluation process

Help & GuidanceConsistency is Critical

Ensure your staff is consistently following the same procedures to review potential matches

Ensure your staff understands what they can or cannot do when reaching out to potential matches to ask questions.

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Help & GuidanceAdditional Help & Guidance

While the global trade community may be small, we tend to help our own.

◦ Reach out and call a community member (ICPA has a member directory for this very purpose)

◦ Leverage research tools (ICPA and other communities retain a database of commonly asked questions with answers).

◦ If you need additional help beyond the basics, it may be a good time to consider consultants who are experts in this area

◦ When necessary, engaging in legal assistance may be a healthy path to take based on your internal company findings

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Closing

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Closing

Challenge RecapChallenge #1: There are over hundreds of lists with thousands of parties to check globally.

These lists can, and do change daily

Challenge #2: There is potentially a large list of party master data to screen

Challenge #3: Employee screening has different legal implications beyond global trade and differ by country.

Challenge #4: Initial working of the denied party screening is typically a monumental task because you are

screening your full database of parties

Do not under estimate this level of effort

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Closing

Knowledge is the key to success

Be aware….be prepared!

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Thank You

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Ned BlinickV.P. Sales and MarketingBlinco Systems Inc.(416) 510-8800 ext. [email protected]

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Dave MoorePresident Vigilant Global Trade Services LLC(260) [email protected]

Dana M. SmalleyPresident Partners In Trade Compliance (PITC)(941) [email protected]

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