The Acme Experience: Ignore Trade Compliance at Your Own Risk

How can you know what you don’t know about trade regulations? The fact is, even if you have a reputable freight forwarder and customs broker, you may not be safe.

If these parties—or if someone in your own organization—doesn’t follow the compliance rules for imports and exports, your company is ultimately liable for the fines, penalties, and even loss of trade privileges that can result.

Here’s how Acme Industries[1] discovered the gaps in its trade practices.

Correcting Costly Trade Compliance Errors

Acme’s story began when its vice president of logistics, Donna Smith, attended one of our seminars on trade compliance and policy. Smith returned to Acme and reviewed some of the things she had learned at the seminar. That’s when she called in one of our Trusted Advisor® experts to conduct a mock audit of the company’s compliance activities and then, to talk to senior executives in the company to explain their responsibilities.

Acme is a large importer/exporter of common consumer goods that are not controlled for export. The company distributes products to more than 150 countries, and has a long history of conducting business with the utmost integrity. That made it all the more sobering to company leaders when they sat down to review the results of the mock audit.

The audit revealed a number of serious violations of federal regulations, including:

  • Shipping to destinations without the proper authorization from the U.S. government
  • Incorrectly valuing its goods for U.S. import, as well as export
  • Not claiming “assists” on imported merchandise
  • Not screening business partners to verify they were not on the denied parties lists
  • Lack of awareness that a previous broker had used its tax ID number to clear goods for another company

If these errors remained uncorrected, Acme risked millions of dollars in fines and penalties, potential loss of export privileges, and even possible jail time for individuals at the company. Fortunately, Acme was able to work with our trade policy team and correct these issues before any major damage was done.

Final Thoughts

Acme’s name has been changed to protect the company’s confidentiality, but its experience—and discoveries—are all too real. The good news is, you can conduct a mock audit of the work done by your freight forwarder, customs broker, and people throughout your organization to discover errors and correct them.

You have the power to enable people to discover what they don’t know about their responsibilities and help protect your company’s future. I encourage every organization to review its company policies on trade compliance now and question if there’s any room for error. If so, ask for help!

Learn more about the Acme story through a case study, “How one company developed and executed a U.S. import/export compliance program.

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