MDI Building an Export Compliance Program

Due diligence is a term used frequently by US regulatory agencies to describe compliance practices that corporations must have in place when engaging in global trade.

The mandatory checks and balances are fairly standard across the board, and many global US corporations are aware of them. However, it is interesting to note that only 62% of exporters surveyed in an October 2009 study by Management Dynamics actually have a full Export Compliance Program in place. This leaves quite a few companies that are vulnerable to risks in their supply chain. Penalties and fines have been on the rise since 2006, with the implementation of the USA PATRIOT Act and the International Emergency Economic Powers Act in 2007. All companies, large and small, are susceptible to committing infractions when not exercising due diligence.

Small to medium-sized enterprises (SME) have particular difficulty exercising compliance because of resource constraints. The lack of full-time compliance teams and introduction of new
international markets can make compliance difficult, and often times an obstacle.

The usual Catch-22 with export compliance is that additional checks in a supply chain will slow it down, creating bottlenecks and costly time delays, as well as the need for additional resources. However, recent studies have shown that a compliance program with the assistance of emerging technologies can actually improve supply chain speed and beef up data integrity.

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