Policy & Compliance
your cargo’. In certain cases, Members will have to consider procedural changes, for instance when ‘on- boarding’ new clients to conduct the appropriate due diligence checks. Let us briefly consider what a Member can do operationally to prevent other parties from exploiting loopholes in the supply chain. These steps could include both physical and documentary checks in their cargo handling procedures. Some of these, such as screening export cargo, are statutory aviation security requirements. A lot of information on due diligence checks is contained within the BIFA website. The BIFA Good Practice Guide Credit Application Procedures provides information and guidance on how to conduct checks at the credit application stage that Members should consider undertaking. Scan QR code (right). The guidance considers what information is required in order to make an informed decision about the potential customer and how to go about obtaining it. It is essential that this information is checked in line with company procedures and challenged where applicable. The BIFA STC must be incorporated in the trading contract and, wherever possible, trade references obtained. Revalidating information One point that is often overlooked is the process for revalidating the above information at regular intervals and how these records are to be retained. At a shipment level, it is important wherever possible that freight and documents are carefully checked and information cross-referenced. For Members using Client Relationship Management (CRM) systems, regular checks must be made on the data held, based on the type of freight handled and volumes. This is particularly relevant where the data is used to pre- populate important documents and, in particular, Customs declarations. It is not possible to provide specific guidance on how frequently these checks need to be made but checking authorisations, etc, may provide an indication. Also, careful thought should be given if an unusual transportation route is
difficulties in explaining its actions. This in turn increases the likelihood of the Member, particularly when acting as an indirect Customs agent, incurring financial penalties or prosecution. Hand-in-hand with due diligence checks, which are a continuous process in the relationship between Member and customer, it is important to consider sensible mitigation processes to limit risks. These can be integrated in the general management procedures of the Member to cover checks both of a general nature and on specific shipments. It is noticeable that Members experience a higher incidence of problems with one-off/unsolicited consignments. The BIFA STC highlight a range of commodities that should only be handled after the Member has agreed in writing to handle such products. In addition to limiting the type
Credit application
of goods handled, particular attention must be given to the risks involved where trade involves geographical regions and countries that are deemed to be ‘high risk’. The Foreign, Commonwealth & Development Office (FCDO) website gives some indication of these risks, but there are various indices that look
into areas such as crime and corruption. Whilst most forwarders use IT systems to process documentation and Customs entries, consideration should be given to employing additional risk mitigation systems. This may include embedding sanctions and export control compliance checks in processes, which would be most applicable at a shipment level. In addition, consideration should be given to establishing geographical location checks, which could involve the assistance of local offices or agents. The importance of knowing your customer and its products is also relevant alongside monitoring any issues in the supply chain. Mistakes will occur However careful Members are, mistakes can occur. Therefore, it is important to have processes in place to cover a situation where something has gone wrong. If something is shipped in error, breaching sanction legislation, there are potentially very significant penalties, costs and, most worryingly, reputational damage. In order to control such situations, it is essential that clear policies and reporting lines have been established. There should be clearly understood areas of responsibility, and consideration should be given to what specialist assistance such as solicitors, PR consultants and insurers may be required to assist in handling the situation and containing the fallout. Due diligence and mitigating strategies are becoming increasingly important to business and the range of subjects covered seems to be ever expanding. For instance, environmental issues are increasingly being included in due diligence checks on suppliers. This is a direct response to customer demand and, in certain cases, BIFA is aware of Members declining business where they feel that the potential customer’s business ethics are at odds with their own.
“ It is important to have processes in place to cover a situation where something has gone wrong. If something is shipped in error, breaching sanction legislation, there are potentially very significant penalties, costs and, most worryingly, reputational damage.
stipulated, or if information is unclear/incomplete or vague. Clarification should be sought to resolve such issues and e-mails retained, or reference to telephone calls recorded on file or held electronically.
From anecdotal evidence, it would appear that files, Customs entries, etc, are not adequately checked before being closed to ensure that the freight movement and its constituent elements were correctly completed. The identification and correction of an error is an important step in remedying a problem and preventing its re-occurrence. From practical experience, BIFA has noted that the UK authorities, confronted by growing non-compliance, are becoming increasingly assertive when conducting investigations. The freight forwarder/Customs agent, if it has not kept accurate records, will face increased
May 2024 | 15
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