Executive Summary
Management: Organization obligation
Management and trade compliance officers at management levels are responsible for ensuring that the regulations in foreign trade are complied with company-wide. Trade Compliance Management Systems are the means of fulfilling this legality and organization obligation.
Regulations in foreign trade: Foreign trade law, export control, customs law ...
Foreign trade regulations are derived from: Foreign trade law, export control, trade embargoes, financial sanctions and customs law. And often also from the U.S. export control law.
Trade Compliance: Protection against personal liability risks
A tailor-made and "auditor-proof" trade compliance organization offers many advantages. One of the most important advantages is the protection of the management and trade compliance officers from personal liability risks in foreign trade. This may even include protection against imprisonment or fines, which are possible in extreme cases.
BGH / German Federal Supreme Court: Efficient compliance management systems pay off
In May 2017, the Federal Supreme Court (BGH) ruled that an efficient compliance management system can result in a lower fine for violations. An effective (trade) compliance management system is therefore profitable for companies – also financially.
HTCC: Consult, support and relieve. On-site.
HTCC Hagemann Trade Compliance Consulting advises, supports and relieves you on-site in improving or setting up your Trade Compliance Management System (TCMS). The on-site consultation offers many advantages. The most important advantages are: Jointly designing and implementing a trade compliance management system tailored to your company.
Trade Compliance Management System
Trade Compliance Management Systems contain concrete measures to ensure that a company complies with foreign trade regulations. Trade compliance concerns all imports and exports of goods or services.
The term "management" shows that trade compliance does not work automatically. Due to its organizational duty, the company's top management must establish suitable, appropriate and effective measures within the company. The aim is to ensure that all employees comply with legal and internal regulations.
The background for this is the so-called legality obligation, which obliges the company's management to comply with all applicable laws throughout the company – not just foreign trade regulations. This makes also clear that the main and ultimate responsibility for trade compliance always lies with the management.
International Standards and Best Practices
The minimum requirements for a Trade Compliance Management System include:
- A suitable trade compliance organizational structure
- Individual trade compliance processes that are coordinated across divisions and departments and supported by automated software solutions
- Company-wide rolled out manuals and work instructions for export control, customs and foreign trade law
The standards and best practices for internationally active companies and groups include at least:
- Clear trade compliance tasks, roles, competencies, responsibilities, controls and communication channels according to the three-lines-of-defense model
- Transparent delegation and escalation rules
- Emergency processes
- Cross-divisional and cross-departmental trade compliance committees
- Training of all employees
- Reporting
- Regular monitoring of business transactions to ensure compliance with legal and internal foreign trade regulations
Important: Compliance Statement of the Management
However, the most important thing – and therefore also at the beginning of all compliance measures – is the management's clearly communicated statement of compliance stating that the company has a law-abiding and value-oriented culture. And that the management does not tolerate violations of legal or internal (foreign trade) regulations. It is precisely this so-called "compliance-tone-from-the-top" of the management that effectively ensures that regulations are adhered to throughout the company.
The Advantages of Trade Compliance
If tailordly implemented and correctly understood, trade compliance management fulfills an extremely important function. In the long term, the management system to ensure compliance with foreign trade regulations secures the company's good reputation as a reliable link in the international supply chain. Violations of foreign trade regulations and thus potentially high fines or damages are avoided. Trade compliance management ensures a confident relationship with customers, suppliers, authorities and foreign trade auditors. The company value and thus also the jobs of all employees is permanently secured by trade compliance management.