Ensuring export compliance: What do firms have to do?

How can firms ensure they remain in full compliance with all export clearance requirements?

All exports require paperwork. But while ensuring the correct forms and declarations have been filled out can be tedious and time-consuming, the costs for getting this wrong can be high.

Incomplete, inaccurate or late export declarations can have a range of consequences, from delays during the customs process to the prospect of financial penalties or the loss of critical licenses. In some cases, there may even be the potential for criminal charges for companies or directors.

Ensuring you're always in compliance with export clearance requirements is essential to the success of any business. Therefore, having the right tools to streamline these complex activities and automate declarations as much as possible will be hugely beneficial.

What is export compliance?

Export compliance refers to all the activities firms must complete to ensure they are following all rules and regulations imposed by governments in the country of origin of your goods.

This ranges from ensuring every item in your shipment is classified correctly to staying in line with national security requirements in the country or territory in question. The most important aspects of export compliance requirements include:

Export control rules

Export control rules are among the most critical elements of compliance. Many countries have strict rules on the shipment of items that may undermine national security or be used in military equipment.

Items where export controls frequently apply include those that are classified as 'dual-use' - especially those that may primarily have been designed or intended for civilian purposes, but can also have military applications. Chemicals, technology products such as semiconductors, and high-precision items such as ball bearings are often among those where shipments will be restricted by export controls.

Items that may be subject to this typically require additional export declarations and clearances and may need special licenses or have restrictions on where they may be used.

Denied party screening

Denied party screening is required to ensure that goods are not being shipped to customers or destinations that are subject to sanctions or other restrictions. It is the responsibility of the exporter to check the details of the recipient of any items - including the names of individuals, organizations and other related companies - against denied and restricted party lists.

This can be a challenging exercise, as there are hundreds of such lists in use around the world, and they are constantly being revised and updated in response to new and expiring sanctions.

As such, being able to automate these requirements and ensure they are being carried out on a regular basis, not just at the first point of contact with potential customers, but throughout all business relationships, is vital.

Key steps in the export clearance process

Ensuring your items are ready for export and have all the correct documentation can be a complex, multi-stage process. However, there are a few key steps that should be undertaken for every shipment. Having a clear process in place that is repeatable and can be applied when shipping goods to multiple jurisdictions is vital in keeping export management under control.

This should involve the following essential steps:


Ensuring your goods are classified correctly isn't just about accurate reporting - it's also critical in making certain you're paying the appropriate rate of customs duties for each item. Audits and customs checks that identify any errors can lead to significant delays and penalties.

Licensing requirements

As well as some items that will face complete export bans, there are a wide range of restrictions and licenses to be taken into account. This may include international sanctions or trade embargos, while the rules will differ by country. For instance, while there may be some nations that items can be exported to freely, other destinations for the same goods will require a specific license.

Know your customer

Know your customer, or KYC, efforts are vital in ensuring that buyers are not subject to any restrictions, whether on an individual, organizational or governmental level. Checking customers against published lists can be laborious, especially when exporting to multiple countries, so having the right tools in place to automate this is highly valuable.

Understand usage

Being able to know exactly how any goods will be used at the other end of the supply chain is another must, and requires careful due diligence. This is particularly important when exporting goods that can be classified as dual-use items.

Ensuring accurate export declarations

Ensuring the accuracy of an export declaration is not just about staying in compliance with regulations. It's also vital in maintaining the smooth flow of trade. Inaccurate or incomplete export customs clearance information can cause significant delays to shipments, leading to a wide range of additional costs, and can be especially harmful to businesses that depend on 'just in time' supply chains.

The US Department of Commerce's Bureau of Industry and Security highlights several factors that are essential in building an effective export clearance and compliance program. These include:

  1. Management commitment - Senior personnel within the business must provide leadership and commit to compliance. Making this a priority at the top will ensure all employees take this seriously.
  2. Risk assessment - A thorough risk assessment should help identity potential issues such as licensing requirements, export controls and denied party screening.
  3. Export authorization - This should determine which agencies will have jurisdiction over any exported items, what classifications they require and any additional licenses and screening processes that will be needed.
  4. Record-keeping - A full knowledge of what details must be kept, how long logs should be retained for and what, if any, documentation is exempt ensures declarations are always complete.
  5. Training - A thorough training process for everyone in the organization who is involved with the export of goods is vital in ensuring all compliance requirements are understood and being followed.
  6. Audits - Export managers will need to regularly audit their compliance systems to ensure regulations are being adhered to.
  7. Handling export violations - If regulations are breached, the ability to detect issues and respond quickly with corrective action can avoid some of the most severe consequences of such failings.

Having an effective software solution can help address many of the above issues. For example, tools that can classify export goods for multiple countries in order to automatically apply the correct customs rates help reduce the risk of errors and violations, while also compiling a full record of exports.

Being able to automate and streamline declaration processes using this technology ensures organizations are always in full compliance with customs requirements, while also improving productivity, cutting costs and giving more time back to employees.

Advantages of customs clearance software solutions

Having all the functionality for every country in a single location makes the process of filing customs declarations much easier and faster. One platform with an intuitive, uniform interface - like MIC's customs and trade compliance software solutions - for all jurisdictions provides for better accuracy and reassures importers and exporters they are fully compliant at all times.

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