How Know Your Counterpart Helps You Avoid Trade Compliance Risks

Businesses engage various stakeholders, starting from consultants, traders, customers, freight forwarders, etc. If you are conducting business in the United States or using the US Dollars for transactions, not learning about the opposite side isn’t an option. Since this isn’t a caveat or a side-note for exporters or businesses, but a regular exercise – know your counterpart is an effective step to avoid trade compliance risks.

What could be more jeopardizing than dealing with an entity that is denied or restricted for its dubious transactions across the globe? How would you handle a money laundering or criminal organization or individual to avert risks? The list of penalized organizations goes long for both intentionally and unintentionally engaging with denied parties or entities under the scanner.

Know your counterpart isn’t a mere exercise to defer from civil or criminal penalties. Whether you are a small company or defense contractor dealing with CUI, your liberties may confine to a certain perimeter. Those privileges might get snatched away, let alone the reputational damage. Therefore, your organization must exercise due diligence while dealing with any party, irrespective of their professional stature, scope & financial outlook.

How to avoid trade compliance risks?

Consult a trade compliance expert if you don’t even know where to start. However, advanced screening software solutions help you weed out entities with dodgy credentials. Installing an ICP or Internal Control Program with Know Your Customer in a setup to develop a risk-based approach can help you avoid risks or wrong indulgence or penalties from regulating authorities.