Coalition for Excellence in Compliance Releases Restricted Party Screening and Other Export Compliance Best Practices
The
Coalition for Excellence
in Export Compliance (CEEC) (pronounced “seek”), a voluntary
group of experienced export compliance professionals from leading companies,
law firms, research organizations and consulting firms, recently released a series of detailed and
practical standards containing best practices on a wide range of important topics for export
and sanctions compliance programs.
CEEC's mission is to provide a uniform set of best practices that companies and trade
compliance professionals could use to provide clarity
over the existing patchwork of official and unofficial guidance
regarding export and sanctions compliance requirements and programs. The best
practices are not tied to any particular country’s
laws or requirements and are intended to be applicable worldwide.
To date, CEEC has issued best practices covering a wide range of topics, including:
screening, training, classification, personnel, management commitment, license
determinations and use, and intangible exports. Additional compliance-related
best practices topics will be issued by CEEC in the near future.
CEEC’s best practices on Restricted
Party Screening (pdf) contains valuable guidance on restricted party screening
programs and ways to implement screening programs. For example, CEEC’s
restricted party screening best practices provides recommendations on the types
of parties to be screened, how and when screening should be conducted, the structure
of restricted party screening programs, the lists to check and how matches and
potential matches to restricted party lists should be handled.
With respect to
the types of parties to be screened, CEEC’s screening best practices note that
both domestic and international
transactions should be screened, since certain restrictions may apply to
domestic transactions, domestic transactions may be part of an international
transaction, and reputational concerns may exist. The screening best practices provide a detailed list of the types of parties that should be screened (to the
extent applicable), including customers, suppliers, freight forwarders, banks,
agents, ship to parties, etc.
CEEC’s screening best practices indicate that a “software tool should be used for screening” and that it should
“employ a “fuzzy logic” algorithm to identify close as well as identical
matches.” Of course, because restricted party list changes are often effective
immediately, the “the automated screening tool must
promptly update all applicable watch lists as these lists are changed and
updated by issuing authorities.”
As for the structure of a
restricted party screening program, CEEC’s screening best practices recommend
that the screening process should be documented, and it could be “advantageous to centralize the
screening program” in order to “minimize duplicative work and promote
uniformity.”
Regarding the lists to check,
CEEC advises that a “risk analysis should be done to determine
which lists (by country, type, etc.) are needed for the organization to use for
screening.” For example, it “may be appropriate to use different lists for
different businesses, different categories of transactions, or different
geographic locations.”
CEEC’s screening best practices provides specific information and guidance on the frequency of screening and at
what point in the screening process screening should be done. For example, the
best practices recommend that new business partners should be screened prior to
the first transaction or other business dealing and that organizations “should
consider implementing procedures to screen at the time the business partner is
entered into the organization’s database, when background or credit checks are
run, when quotes or proposals are requested, or at some other time, as
appropriate.” The best practices indicate that “the intervals in between
database screenings should be measured and limited in order to mitigate the
risk of doing business with a restricted/prohibited/denied party.”
Finally,
with respect to screening matches and potential matches, CEEC’s best practices
state that an organizations’ restricted party screening process “must allow for
a transaction to be halted unless and until any screening matches are cleared.
To minimize business disruption, potential matches should be cleared as
promptly as possible and the determination “should be documented.” When an
actual match to a restricted party list occurs, the CEEC best practices advise
that “depending upon the nature of the list, the legal applicability in the
jurisdiction, and an evaluation of reputational concerns, the process must
allow for determination by an authorized person whether the transaction may
proceed . . . and this decision should be documented.”
CEEC members encourage comments
and suggestions for improving the best practices and CEEC’s website contains a contact page for the
submission of comments on their efforts to date.
Labels: best practices, CEEC, Export Controls, Sanctions
|posted by Douglas N. Jacobson| Permalink 
