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Policy & Compliance


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Protect your staff over ‘due diligence’


With regulators tightening compliance checks and holding individual employees responsible for matters of due diligence, Members are advised to review and if necessary amend their procedures in order to protect their interests.


One of the main messages that BIFA has been repeating to Members for many years is “know you customer”, or as it is nowadays referred to, “due diligence checks”. However, the basic message is clear – Members should carry out sufficient checks to ensure that they have an overview of the customer’s corporate structure and governance. Also, it should be established that clients know what they are shipping and how to handle these commodities, the documentation required and their legal responsibilities. Governments have encouraged traders to adopt voluntary


schemes such as Authorised Economic Operator (AEO) certification, which relies on auditing by HM Revenue & Customs (HMRC) to ensure long-term compliance. Reports from companies who are part of such schemes indicate that they improve their training, knowledge of customs regulations and compliance procedures. It has been noted over the last three years that government


departments are starting to place greater emphasis on physical intervention. Traditionally, inspections would be carried out by HMRC/Border Force officers at the frontier. Now we are seeing checks being undertaken inland and other agencies such as Trading Standards becoming increasingly involved in checking goods to ensure that they are safe to be put on to the market. It is clear that larger, especially multinational, companies are


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taking compliance more seriously than ever before. These traders take the necessary steps to ensure that they meet the relevant regulations. In the UK, non-compliance in three areas has created a significant and continuing response from HMRC and associated agencies. These areas are: • Onward Supply Relief (OSR), • Valuation, • Undeclared/misdeclared cargoes.


Widening checks Government reaction to tackling these issues, under pressure from the European Commission, even if clumsy in certain cases, has been relatively swift. HMRC launched the Inland Pre-Clearance Operation, which has largely eliminated OSR-related problems. The authorities are widening the scope of these checks, particularly focusing on e-commerce business regardless of origin country. The emphasis remains on valuation and ensuring that the description and quantities declared are accurate. Concurrently with the increased level of interventions, HMRC has


issued guidance in the form of, for example, Customs Information Paper (CIP) (27) 2017. In five very detailed pages, HMRC explains the level of due diligence checks required by traders and customs representatives prior to submitting a customs declaration. BIFA, in order to assist its Members, has published due diligence guides


January 2020


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