How have multi national companies administer the Specially Designated National List? SDN list?
The US Department of Treasury, Office of Foreign Assets Controls ("OFAC") publishes a regularly updated list of SDNs that can be viewed at www.treas.gov/offices/enforcement/ofac/sdn/
How does your company administer the list?
The listing is not very user friendly. The listing is prone to human error, common names, many aliases?
How do you prove due Diligence?
Answers (2)
William D
Contract/Relationship Management and Regulatory Compliance International Business
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There are so many lists in addition to the SDN, maintained by Commerce, State, Defense and Homeland Security, and you are right they are not overly friendly, and are prone to error. it would be nice to have the lists, integrated. In my practice with small and mid sized companies, when a client is requesting a search of these lists it is time consuming and frustrating, because just reviewing the list is not going to complete due diligence.
Once you have reviewed the list, your company should also check out your client for "red flags". This is an important component in proving due diligence. What is the Opacity rating of the country in which you are planning on doing business, where is the client's bank and who are its principal's. Document everything you ask and are told.
Administering the list is the least of the problem, proving that you actually do the follow-up is key.
I served as GC in an international trading company that ran failed to perform due diligince on several customers (prior to my joining) what an expensive mess.
We have also had clients who have failed to prove due diligence, and helped them set up internal procedures with expternal assistance to get the required information quickly.
Bill Downey
Links:
Stephen,
I agree with Mr. Downey's answer and, as a former VP of Global Supply Chain, I have managed companies' compliance programs and I have some further recommendations.
I suggest you first consider your level of exports. If they are few (e.g. 3-5 per week), you may be able to get by with manual searches of the government websites (see link provided). However, if you a have significant level of exports (e.g. >5-10 per week), you should consider using a software program such as Global Wizard (see exitsinc link provided). If you are a major exporter (i.e. multi-national company), you will benefit from having an integrated export compliance software module with your ERP / order processing system to ensure 'closed loop' compliance.
Best demonstrated practices will have you check 'the lists' as far up the order cycle as possible. For example, you do not want to be bound by the terms of the sales agreement only to find out later that you are prohibited by law from shipping to the customer. Alternatively, ensure that the terms of your sales agreements have specific language to protect against that circumstance. You will also want to check the parties again at time of shipment as names could be added between the time of order taking and shipment (especially if you have long order cycle).
Of course, locusts and fire will descend upon you if you accidentally ship to a restricted party, so don't do it...
I hope that helps.
Jim
