{"id":10859,"date":"2022-11-30T16:06:18","date_gmt":"2022-12-01T00:06:18","guid":{"rendered":"https:\/\/www.qad.com\/blog\/?p=10859"},"modified":"2023-01-18T16:07:15","modified_gmt":"2023-01-19T00:07:15","slug":"denied-party-screening-why-it-matters","status":"publish","type":"post","link":"https:\/\/www.qad.com\/blog\/2022\/11\/denied-party-screening-why-it-matters","title":{"rendered":"Denied Party Screening: Why It Matters"},"content":{"rendered":"

[vc_row][vc_column][vc_single_image image=”10860″ img_size=”full”][vc_column_text]If you\u2019re the operations, supply chain or logistics manager of a manufacturing firm, knowing who your trading partners are \u2014 and that you\u2019re engaging with authorized suppliers and customers \u2014 is critical.<\/span><\/p>\n

Law enforcement and trade regulators around the globe compel organizations to verify the identities of their trading partners. This helps them to close the net on terrorist and criminal organizations, as well as rogue states.\u00a0<\/span><\/p>\n

In order to comply with global trade regulations, manufacturers must ensure that their trading partners do not appear on any sanctions or denied party lists (DPLs). In addition, they need to verify if an item requires an export license and ensure that the individuals or locations that have ordered their products are eligible to receive them.<\/span><\/p>\n

Organizations that fail to provide adequate screening can face severe penalties. For some recent examples, take a look at \u201c<\/span>Don\u2019t Let This Happen To You<\/span><\/a>\u201d \u2014 a round-up of fines imposed by the US Department of Commerce\u2019s Bureau of Industry and Security. As this document makes clear, BIS will impose penalties for license missteps as well as for more serious compliance violations.\u00a0<\/span><\/p>\n

It is important to note that denied party screening, also known as sanctioned party list screening or restricted party screening, does not just apply to overseas shipments. Manufacturers of dual-use goods must screen domestic shipments to ensure that money and products don\u2019t flow to terrorist and criminal organizations. <\/span>Dual-use goods are items that can be used both for civilian and military applications.<\/span> Furthermore, manufacturers in the US, must take into account deemed export laws. Under these regulations, shipping technology, goods or even information to a foreign national based in the US is known as a \u201cdeemed export\u201d even though the goods have not left US soil.<\/span><\/p>\n

These challenges are driving demand for <\/span>automated screening software<\/span><\/a>. The alternative? Checking each shipment manually to determine whether the recipient\u2019s name or business entity, along with the name of the recipient’s bank, business partners, and known associates, do not appear on any published list of sanctioned organizations and individuals.<\/span><\/p>\n

Manual screening against all of these lists is labor intensive \u2014 particularly for high volume shippers. Nevertheless, failure to comply with these restrictions and regulations is not an option. Organizations who violate trade regulations are at risk of high fines, ruptured business relationships and damaging publicity if their products fall into the wrong hands.<\/span><\/p>\n

Six Reasons Why Businesses Need Denied Party Screening<\/span><\/h2>\n

Let\u2019s look at six reasons why manufacturers need automated trade compliance screening.<\/span><\/p>\n

TOO MUCH INFORMATION<\/span><\/h3>\n

Published lists of sanctioned parties and controlled products are subject to near constant change. Unfortunately, manually keeping track of changes to DPLs is time-consuming and labor intensive. This can lead organizations to be somewhat lax about updating their information when applying these checks.<\/span><\/p>\n

Automated trade compliance screening software makes the process easy. It accesses real-time data from published lists of sanctioned entities, ensuring that your screening process is consistently updated and accurate.<\/span><\/p>\n

DUAL-USE PRODUCTS<\/span><\/h3>\n

Certain industries \u2014 such as high tech, industrial manufacturing, and life sciences \u2014 deal with added complexity when shipping their products. That complexity is due to the potential for misuse of their products. Electronics and components that seem harmless enough often face added regulations. This is due to the fact that criminals, terrorists or other bad actors could potentially use their parts in ways not intended by their primary purpose.<\/span><\/p>\n

For instance, a diesel engine can power a lawn mower \u2014 or a rocket launcher. Live viruses intended for vaccinations could instead be used to build a biological weapon. Car batteries can provide a ready source of power for almost any use \u2014 not all of them friendly. Nitrogen-based fertilizer can be used to build bombs. Even electronics from a music power amplifier, or PA, could be repurposed to build rudimentary electronic weapons.<\/span><\/p>\n

Because of this potential for dual product usage, it\u2019s important to ensure that trading partners are who they say they are. Implementing <\/span>automated screening<\/span><\/a> and checking products and components against ECCN lists are key steps to ensure export safety.<\/span><\/p>\n

SUPPLIER REQUIREMENTS<\/span><\/h3>\n

As penalties for trade compliance violations become more expensive and tightly enforced, many manufacturers have found themselves on the radar of regulatory agencies. Suppliers are held responsible to ensure that their products don\u2019t end up in the wrong hands. They, in turn, are holding their customers responsible, requiring that the distributors that purchase products from them implement trade compliance as well.<\/span><\/p>\n

Automated trade compliance software helps manufacturers comply with these supplier requirements. As a result, this helps to maintain business relationships and prevent losses in revenue.<\/span><\/p>\n

FOLLOW THE MONEY<\/span><\/h3>\n

The potential for money laundering and terrorist financing are major concerns for any organization involved in global trade. Cyber-criminals, terrorists, and organized crime figures operate in every corner of the world. As a result, no matter where you trade, you must ensure that any payment you receive does not come from hackers, terrorists or organized crime syndicates.<\/span><\/p>\n

REPUTATION PROTECTION<\/span><\/h3>\n

No manufacturer wishes to see their company or brand name associated with a rogue state, terrorist attack or criminal event. That\u2019s why denied party screening is a critical part of your brand protection and risk mitigation strategy. Automated screening can not only prevent your products from falling into the wrong hands, it also shows that you exercised due diligence to prevent that from happening. Denied party screening and compliance checks are essential parts of the audit trail, helping you prove to authorities that you did your part to keep your shipments safe.<\/span><\/p>\n

E-COMMERCE<\/span><\/h3>\n

Manufacturing firms are increasingly engaged in B2B e-commerce. Globally, <\/span>e-Commerce is expected to grow<\/span><\/a> from $3.3 trillion USD today to $5.6 trillion in 2026.<\/span><\/p>\n

As e-commerce volumes grow, it\u2019s becoming more challenging to ensure that products aren\u2019t misplaced or misused. Organizations that work with third party fulfillment or contract shippers must be especially careful to ensure that their products don\u2019t end up in the hands of blacklisted individuals.<\/span><\/p>\n

Manufacturing firms are increasingly dependent on global and e-commerce trading relationships. Yet, with access to foreign markets and fewer in-person interactions comes a greater responsibility to ensure the safety and security of every shipment. With automated trade compliance screening, companies can save time, avoid fines, and ensure that their trading partners are reputable as they grow their global businesses.<\/span><\/p>\n

For further information, learn how <\/span>QAD Global Trade and Transportation Execution (GTTE)<\/span><\/a> can help your organization ensure accurate denied party screening and reduce supply chain risk.<\/span>[\/vc_column_text][\/vc_column][\/vc_row]<\/p>\n","protected":false},"excerpt":{"rendered":"

[vc_row][vc_column][vc_single_image image=”10860″ img_size=”full”][vc_column_text]If you\u2019re the operations, supply chain or logistics manager of a manufacturing firm, knowing who your trading partners are \u2014 and that you\u2019re engaging with authorized suppliers and customers \u2014 is critical. Law enforcement and trade regulators around the globe compel organizations to verify the identities of their trading partners. This helps them […]<\/p>\n","protected":false},"author":53,"featured_media":10860,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[2045],"tags":[2560,2559,516,2558,2561],"class_list":["post-10859","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-supply-chain-trends","tag-deemed-exports","tag-denied-party-screening","tag-global-trade-management","tag-restricted-party-screening","tag-sanctioned-party-list-screening"],"yoast_head":"\nDenied Party Screening: Why It Matters | QAD Blog<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.qad.com\/blog\/2022\/11\/denied-party-screening-why-it-matters\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Denied Party Screening: Why It Matters | QAD Blog\" \/>\n<meta property=\"og:description\" content=\"[vc_row][vc_column][vc_single_image image=”10860″ img_size=”full”][vc_column_text]If you\u2019re the operations, supply chain or logistics manager of a manufacturing firm, knowing who your trading partners are \u2014 and that you\u2019re engaging with authorized suppliers and customers \u2014 is critical. 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