What Constitutes a Global Trade Compliance Violation?

New and aspiring business owners often associate payment of taxes as the sole requirements of global trade compliance. However, trade compliance entails much more than paying taxes, as it also entails maintaining documentation of products, adhering to trade embargoes or agreements and upholding the standards set by U.S. Customs and Border Protection (CBP). Meanwhile, a violation of global trade compliance statutes could decimate a business or even result in incarceration. Thus, it is in your best interest to understand what constitutes a violation.

A Violation Can Occur at Any Stage in Transport

Adherence to global trade compliance means the product is subject to specific trade agreements and import or export regulations set forth by the country of origin, its destination and all countries involved during transport.

For example, a product manufactured with supplies from an area that CBP has currently listed as terrorist-sponsors can be subject to the embargo. Thus, the product and its manufacturing components are also subject to the requirements of global trade compliance.

Unknowingly Violating Statutes Does Not Excuse the Issue

Ignorance is not bliss when it comes to global trade compliance. Per Jim Chester, global trade compliance statutes mandate penalties if a company or person unknowingly commits a violation. In addition, exporting software and technology can also become major players in global trade compliance. Some countries may be subject to additional requirements within the Export Administration Regulations (EAR). Simply selling a product to a foreign area could result in a violation, even though your company is not necessarily involved in paying fees for taxes for its export.

Global Trade Compliance Continues After Export or Import

The movement of products to the end user does not mean the need to follow global trade compliance statutes is ending. Instead, documentation, including bills of lading, proof of destination, proof of payment for value-added taxes (VATs) upon delivery and additional verification measures may be required by CBP. Moreover, some areas of documentation are traditionally self-managed. However, CBP officials may request all documentation for a period of up to five years at any given time. Consequently, you need to make sure any third-party entities you work with — such as Flash Global — have experience in record keeping and auditing.

Fines Are Not the Only Form of Punishment

Unlike a disgruntled customer wanting to return a product, a violation of global trade compliance statutes can include many different penalties. Some of these additional punishments may include the following:

  • CBP may review or revoke your export or import privileges.
  • You may face criminal penalties.
  • Monetary penalties of up to $11,000 per violation.
  • If the violation relates to the EAR, penalties cost up to $1 million per violation and 20 years’ imprisonment.
  • Additional penalties for violating the International Emergency Economic Powers Enhance Act (IEEPEA) may be as high as $250,000 per violation or double the amount of the original transaction, whichever is higher.

Safeguard Your Interests with Flash Global Now

Global trade compliance is complicated. While you can work to prevent violations with country A, you could be violating statutes set with country C when working with shippers in country B. Rather than risking your livelihood, let the trade compliance experts at Flash Global handle the work for you. Contact Flash Global online or by calling 1 (866) 611-7874 today.


Main Line

Customer Response Center (24/7/365)