It's illegal to export to someone who appears on any of the government's denied party lists, also known as restricted party lists. And it's not just your customers. It's illegal to include any denied parties in any part of your transactions.
The best way to avoid doing this—and the only way to know for sure—is to run screenings for every single export that check all the parties against each denied party list.
Denied Party Screening Options
You have two options when it comes to denied party screening services:
1. Use the government's Consolidated Screening List.
The Consolidated Screening List (CSL) is a list of parties for which the United States government maintains restrictions on certain exports, reexports or transfers of items. It currently includes the 11 largest denied party lists published by a variety of agencies. And the price is right; there is no charge for using the CSL.
Keep in mind that while the CSL includes 11 lists of bad guys, it does not include names from all 100-plus government lists. And navigating the support material about any potential masses is often difficult since it is presented as text without any formatting. While the service is free, you get what you pay for.
2. Use a denied party screening software.
This option is a step up from the CSL, because the software not only checks the name, but also address and other information, of the parties. It also employs algorithms that check variations on spellings. It maintains an audit trail of your screenings, so you have proof that you are doing your due diligence for all your exports. And it provides much more detailed results, as you will see below.
Shipping Solutions Professional's Export Compliance Module screens against names and addresses pulled from more than 140 different U.S. government-published restricted party lists as well as lists published by other countries and international organizations like the United Nations.
With the Shipping Solutions software you can check all the required government lists by just clicking a button, and the denied party screening tool checks all the parties in your export transaction, including the ultimate consignee, bill-to party, intermediate consignee, freight forwarder, and notify party.
Dealing with Denied Party Screening Matches
When you do your screenings, hopefully you never get a match against any of the lists, and you're good to proceed with your export (as long as you comply with all your other export compliance responsibilities, of course).
But what happens when you get a match or a potential match for one of the export parties? You need to know what to do.
1. Follow Your Company's Export Management and Compliance Program
Hopefully your company has a plan in place for how to deal with most issues that may come up with exporting, including matches to denied party screenings. It should include who to notify, what procedures should be followed to review the match, and how to document your decisions.
More than just having a plan, people should also be trained to follow it—an EMCP isn’t worth the paper it’s printed on unless it is being used. If you don’t have an EMCP, this is the perfect time to create one.
2. Hold the Order or Shipment for Further Review
If you get a potential match from denied party screening software, hold the order/shipment for further review and a final determination. A good software will provide you with a lot of information your company can use to make a determination.
A. Review the match score.
Shipping Solutions’ restricted party screening tool displays all potential matches that score 60% or higher based on our search algorithm. A 100% match is an exact match; a 60% match is a much less likely match, and you may need to do some research to determine whether or not this party actually appears on one of the denied party lists.
The sample results pictured above shows that the first two results are exact matches based on the contact name. Matches can also be made on the organization name and the address information. They both have match scores of 100%. The third match is 98%, and if the image extended further down the page, you would see lower and lower potential match scores.
One of the details in your EMCP should be at what level you deem a potential match worth investigating. It may be 60% or higher; it may be 80% or higher. This is a business decision based on your company’s risk tolerance.
B. Review the details.
It's often fairly obvious whether or not someone is a match. In addition to the match score, the results from your screenings include which country or international agency has published the denied party lists, since the Shipping Solutions software check lists from other countries and international organizations.
This is helpful if you’re exporting to countries in which your company may have a physical presence and therefore be governed by their regulations as well. If your exports are not governed by other countries’ regulations, you may choose to ignore them.
In the example above, the second match displayed is a list published by the Australian government—the “AUSTRAC Consolidated List of all persons and entities.” If you don't do business in Australia, you may decide you can ignore this match.
C. Review the official notice for more information about the screening.
The Shipping Solutions restricted party screening results include the official notice that a person or individual was added to a list, which for U.S. lists, is usually found in the Federal Register or an Office of Foreign Asset Control (OFAC) Bulletin.
In the example above, our screened contact was published in the OFAC Bulletin on March 28, 2014. As you can also see, this Restricted Party List (RPL) is maintained by the Department of Treasury, and the exact list name is Specially Designated Nationals (SDN) - “Executive Order Additional Designations - Ukraine.” If you were to search this list, you’ll see that it relates to sanctions against individuals in retaliation for Russia’s invasion and annexation of the Crimean region of Ukraine.
D. If you still question a potential match, contact the listing agency for guidance.
If your company is still unsure whether or not you should be doing business with the person or organization identified in your denied party screening, you should contact the appropriate agency for guidance. Agencies include:
3. Document All Your Compliance Efforts
You should maintain records of every denied party screening that you run including the results you received and any decisions you made based on those results.
If you do get a potential match and decide to move forward with exporting to that party, document how you came to the decision to decide to ship. For example, you reached out to BIS and were notified that it was OK to proceed.
By thoroughly documenting every step of the way, you show your willingness to comply with export regulations, and attempting to comply is a strong mitigating factor against penalties should you face any compliance issues.
Keep your records for at least five years, and regularly audit your results to make sure the right decisions are being made and the procedures outlined in your EMCP are being followed. Here’s a checklist you can follow to audit your company's export procedures.
Your Best Bet
The easiest and most efficient way to run denied party screenings, document your results, and keep records that are an important part of your company's EMCP is to use Shipping Solutions software. Let us show you how Shipping Solutions software can save you time, money and plenty of frustration with your export compliance tasks.