COMMENT DESCARTES SYSTEMS GROUP
Complexity is increasing for denied party screening rules
Thomas Lobert, solutions consultant at Descartes Systems Group, debates whether it is time for companies to invest in compliance technology for more consistent and thorough screening.
N
o one wishes to see their company associated with denied parties at any level of their external-facing business
interactions. Yet, in today’s unpredictable world, every commercial relationship could have hidden risks with the potential to put organisations on the wrong side of the regulatory divide. Businesses are required to comply with various
international trade regulations and export control laws to operate legally, ethically and responsibly in the global marketplace. For example, the United States has robust
export control regulations administered by several agencies including the Department of Commerce, Department of State and Department of the Treasury. These all aim to prevent the unauthorised transfer of sensitive technology, goods and services that could harm national security or foreign policy interests.
Denied party screening, also known as restricted
party screening, helps businesses to ensure compliance with these regulations by preventing companies from engaging in business transactions with individuals, organisations or countries on denied party lists. Failure to comply with these the worst-case scenario, criminal charges. This can be prevented by leveraging the expertise of a software provider, sharing the responsibility for staying compliant. With that said, risk lies in the hands of both the buyer and software provider, so let’s examine the pros and cons of outsourcing your
THE PROS
Compliance requirements may vary over time, and outsourcing provides the ability to scale screening efforts up or down based on business needs. to changing regulations, market conditions or business expansion without the need for internal restructuring. Moreover, using a software provider is a good
way for companies to save on costs. As opposed to investing in an in-house screening team and infrastructure, outsourcing allows companies to access the necessary screening capabilities without the associated overhead costs, which would be
10 February 2025 Irish Manufacturing
the resources to establish and maintain a dedicated compliance team. and should be made where possible, so businesses must assess if they have the time and resources to conduct consistent screening under one’s own steam.
THE CONS implications based on the scope of services, transaction volume and contractual arrangements. short-term and long-term costs, potential cost compliance if the outsourcing arrangement does not meet expectations. What’s more, the sharing of sensitive information with a third-party provider could raise concerns companies must ensure that the outsourcing partner has robust data protection measures in place, such as encryption, secure data storage, access control and adherence to data privacy regulations. Ultimately, this comes down to dependency.
The provider has direct control over the screening process, which can be problematic during sensitive operations that require immediate responses, and that’s before mentioning other issues including communication, delays, knowledge and their capabilities.
TIME TO INVEST Nevertheless, companies should screen their processes regularly. After weighing up the pros and cons of outsourcing, it could be argued that having an integrated system provided by a third-party risk management vendor is your best option. Due to challenges from geopolitical instability and
technology such as Descartes Systems’ Denied Party Screening software is required to keep pace with the globally changing regulations and enforcement agencies that are increasing complexity. As well as serving as a trusted partner, Descartes Denied Party Screening software solutions provide a centralised and consistent screening process across multiple areas of a business. This allows organisations disruptions, as it covers a host of areas including export compliance, legal, shipping and logistics, sales and marketing, procurement, visitor management, human resources, IT and more. To conclude, there is a strong argument to say
that leveraging the expertise of a software provider is the path to take for staying compliant. By sharing the responsibility with a reputable provider, the foundations for growth can be laid, all while helping organisations to remain compliant in today’s unpredictable world.
www.irish-manufacturing.com
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