The Thirteen Commandments of Export and import
Compliance Programs
Introduction
This guide provides thirteen simple rules to help companies design and implement effective systems for complying with export and import (customs) laws. Such programs are known by a variety of names, including export managements systems (EMS), preventative or due diligence programs, and internal compliance programs (ICPs). We will use the phrase internal compliance program, with the acronym ICP.
One of the best things about ICPs is there is no single, correct way for designing and implementing one. However, the price for this latitude is that you must make sure your ICP incorporates and anticipates legal requirements. You should consider this guide as only a generalized introduction. It's not comprehensive and it's not legal advice customized for your company's unique needs.
These commandments are according to Braumiller & Rodriguez, and should not be seen as government-approved guidelines. You still need to do a great deal of additional homework, including making sure that the information provided within this guide remains current and correct.
13 Commandments:
The Thirteen Commandments: No. 1
"Commit To Having An Export / import Compliance Program"
Here are some pros and cons of designing and implementing a good ICP:
A. Pros
1) No Matter What, You Must Have a Reliable Method for Ensuring that Your Company is Complying with Export and import Laws
Designing a good ICP may be initially expensive and time-consuming. However, ICPs are now standard in the corporate world and for international merchants. If you don't have an ICP and your company is caught violating an export or import law, you will be sorry. You will then be spending so much more money and time, including paying fines and penalties and working anxiously trying to re-earn the Government's good will, when some simple preventative measures could have spared you of needless pain. Perhaps most gruesome of all, you risk years of intrusive scrutiny from government inspectors.
2) No Matter What, You Must Have a Reliable Method of Keeping Export and import Records and Producing Those Records Upon Demand From the Government
U.S. federal law imposes significant recordkeeping responsibilities on both importers and exporters, and their agents. Violators risk harsh penalties, delays of shipments, and the enmity of government auditors. The list is extensive of the documents you must keep and must produce upon the Government's demand (see Commandment 9 and 10, below). The only adequate way to know if you are complying with these recordkeeping requirements is to have an ICP in place.
3) You Can Incorporate the Laws of Other Countries
Your compliance obligations don't stop at USA borders. Other nations are becoming as prolific as the USA in regulating international trade and investment. Countries are forming regional alliances to create additional opportunities and barriers for transnational trade. Supra-national organizations (like the World Trade Organization) are creating new forums for resolving trade disputes. It is becoming increasingly difficult to even think about complying with the laws of other jurisdictions without first having a good ICP in place.
4) A Good ICP will Help You Keep a Step Ahead of the Government
You'll be able to respond to and correct problems before the Government ever finds out. The more you know, the more options you have for dealing with export or import violations. For example, although there is no affirmative duty to report a violation to the Government, your company has the option of disclosing the violation to the Government. A "voluntary self-disclosure" may convince the Government to decrease the penalty or not to penalize your company at all. Even if you don't disclose, you will know how to prevent this type of violation in the future.
5) You Can Customize Your ICP
Although all good ICPs share basic characteristics, your company has a great deal of flexibility in designing its own ICPs. The Government does not require that you institute an ICP (although it does impose qualifications to certify your ICP for special benefits). Everyone understands that any ICP must reflect your company's unique needs and a corporate culture. Think of an ICP as another valuable tool that will help your company plan its business decisions.
6) If the Government Finds Violations, an honest ICP May Reduce Bad Consequences
A good, honest ICP tends to positively impress government officials who uncover company violations or an administrative body or court that imposes sanctions for those violations. For example, if your company is convicted of violating an export or import law, the judge may reduce a prison sentence or fine if your company had an appropriate ICP in place when the violation occurred (see U.S. Sentencing Guidelines, §2M5.1.5 and 2M5.2 (export violations), §2T2.2.3 (import duties), § 8A1.2(k) and §8C2.5(f) (ICPs)).
B.
Cons -- There may be problems to setting up an ICP, including:
1) A Good ICP Costs Money and Time
You may have to spend much human and financial capital instituting a good ICP, especially if your company has been lax in its compliance efforts. But, again, pay now or pay a lot more later (see Commandment 1(A)(1), above).
2) A Crummy ICP is Worse Than Not Having One
An ICP cannot guarantee that your company won't be penalized criminally or administratively. How much your exposure is reduced depends on how sincere your company is in designing and implementing a good ICP. A half-hearted attempt won't impress the Government, and surely cannot provide the needed guidance for your exporting and importing needs.
3) An Incriminating Paper Trail
A good ICP will always assume that violations will be discovered (because they will). You don't want to make an incriminating paper trail that will support lawsuits or criminal prosecutions against your company. There are ways to minimize risks, and a competent attorney can advise you how best to safeguard your information and secrets (see Commandment 12, below).
C. What If You Already Have An ICP?
1) Whatever compliance program you already have in place, it cannot be a one-time, half-hearted, perfunctory effort.
A good ICP must be organic, constantly growing and responding to your company needs, and incorporating vital personnel in a free-flow of information and adjustment. An ICP could always use some tweaking, some refinement to make sure your company is complying as effortlessly as possible with export and import laws. Some ICPs may need to be totally revamped to reflect the company's renewed efforts at compliance and to reflect changes in the law.
