Maureen Cori, Hurricane Commerce

Hurricane Commerce Q&A with Maureen Cori, a senior member of our Content and Compliance team.

Hurricane has experts in compliance, customs, logistics, eCommerce and technology. Here, we catch up with Maureen Cori, Hurricane’s Chief Content and Compliance Officer Designate, to find out more about her world and the ever-increasing regulations and laws which are impacting businesses across the globe.

How did you get into customs and compliance? Was it something you always wanted to do, or did you just fall into it?

In this business, they say, “you either love it or hate it”. I absolutely fell into it – and fell in love with it – hard! While in college, I got an entry level job working on ocean freight clearances and was hooked on international trade.

My original passion was rooted in the arts, but I retargeted my focus on transport and international trade. After working in a Customs Broker on ocean freight clearances, I went on to work for DHL.

I started with typing and faxing manifests and classifying goods based on manifest descriptions – vastly different from today’s world.

After years of development my growing understanding and learning led me to monitoring compliance across the business from training development, supporting sales to assisting our customers in understanding what was required to export or import.

I decided to sit for the US Customs Brokers License exam after months of courses, and I was lucky enough to be part of the 1% that passed the examination to be licensed.  Obtaining my license allowed me to manage any type of Customs Brokerage operation in the US and gave me the opportunity to be the Corporate license holder for a business.

 

How has the need for compliancy changed since you started in this industry and why has it become so important in recent years?

Compliance has always been a focus when I first started in transport and international trade, but the game and the players were quite different. It was a smaller world, and there was le

ss accessibility to all involved in the supply chain.

The World Customs Organization (WCO) created the first-ever Harmonised Tariff System, effective in 1988 – also known as Harmonized System (HS). This was the start of a major shift in compliance with some structure and clear regulated rules around product classification and duties and taxes.

The role of Customs at that time was to collect duties and taxes at the point of entry. The focus was on late filing of entry summary and duties and taxes and fines.

Everything changed post-9/11. New laws and regulations came into play, and if they had already been in place, they were now enforced. Compliance was the focus. The cost of non-conformity to these old and new laws was high, and ignorance was no longer an acceptable defence.

Understanding your customers, who do you do business with, what are red flags, became critical to business. Government agencies created partnerships with trade through voluntary programmes like Customs Trade Partnership Against Terrorism (CTPAT) and Authorised Economic Operator (AEO) for example.

 

How have advancements in technology allowed improvements in compliance to occur so smoothly?

Technology was not even part of the process – manual intervention is what you relied on, and human error was always a factor. The internet was a new concept and regulators were just learning how to navigate the rules and laws around it.

Advance data is a game-changer for all, and improvements in technology have meant there is no room for error.

Regulatory authorities around the world are demanding accurate data and in many cases at wheels up or 4 hours prior to arrival at the destination. This was a culture shock for all industries and a very heavy financial burden on the private sector. Bad data creates fines, penalties, detentions, and more.

Compliance is a critical business requirement that is also a benefit. Compliance should not be considered a cost centre, but rather a selling proposition. In today’s world, businesses want transparency, accuracy, and compliance to be reputable and successful.

 

How has the Trump Presidency impacted international trade and particularly compliance?

Trump’s Presidency has seen a big shift in the US’s approach to International Trade. One such example is the introduction of the STOP ACT, which is aimed at targeting postal opioids shipped via overseas postal operators.

Advanced Data requirements are mandated to postal operators to support the STOP ACT among other things. Compliance measures will be in place to support the STOP ACT with heavy fines associated with non-compliance.

Other changes during this administration have included the China Trade Wars, additional tariffs, the new Universal Postal Union (UPU) Terminal Fees agreement and the removal of North America Free Trade Agreement (NAFTA) to form the United States Mexico Canada agreement (USMC). These are all game changes in the world of compliance, Intellectual Property Rights (IPR) and international trade.

 

With the US election coming up later this year, how big an impact will it have on upcoming regulatory changes and the chances for more to be introduced?

I do not have a crystal ball, but I can say this is a critical election year for the United States. Regardless of the outcome, if President Trump is re-elected or if Vice President Biden is elected there will be changes ahead.

Trade relations will be something to watch closely. If it is sanctions lifted or tightened, or if we see more prohibitions or restrictions, tariff rates, or more trade wars, new regulatory changes will happen.

 

What initial steps can a business take to improve their compliance procedures?

Compliance should be the foundation for every organization and falls into two main categories: Compliance with laws and regulations and Compliance with internal policies and procedures.

Compliance, both legal and internal, is a tone that needs to come from the top of all companies as non-compliance has implications company wide. Once established, a company’s compliance programme should be regularly internal audits, and gaps identified and addressed.

Having a designated Compliance Officer within a company providing guidance to the business is critical, and in recent years has become a Board level position.

Many new businesses or current businesses that expand into international transactions do not always understand the cross functional connections to a single process and the impact it may have. Understanding your compliance requirements is the start of a Global Trade Compliance Programme.

A designated Compliance Officer within a company providing guidance to the business is essential. Mapping out processes and potential risk or remediations is recommended. Know your customers and always screen all your parties in your supply chain to ensure you are working with good people.

By having a programme in place your business can swiftly adapt and update processes and procedures when new laws or regulations come into place and be compliant.

Compliance graphic

Denied Parties: Ignorance is not bliss

With the explosive growth of eCommerce and cross border trade showing no sign of abating, compliance and Denied Party screening have been thrust into the spotlight.

The era of the mega fine has emerged, with constantly changing international sanctions policies impacting unsuspecting companies in unwelcome ways.

In addition to the potential for reputational damage, penalties for non-compliance can include substantial fines – multimillions of dollars in some instances – revocation of export privileges and criminal charges, including prison time.

Do you really know who you are you doing business with? You need to be screening your customers, partners, and suppliers.

Screening for Denied and Restricted Parties, to ensure that goods are not destined for an individual, company or entity that appears on any one of the hundreds of different denied parties lists, should be an integral component of every company’s governance, risk and compliance strategy.

Due diligence is key and compliance is your responsibility. Below we answer some of the questions we are most often asked.

What is a Denied Party?

A Denied Party can be an individual, company or entity for which government authorities have imposed restrictions or bans on their right to trade.

This is often due to engagement in illegal activity of some kind.

Obvious restricted organisations include terrorism, organised crime, arms or drugs trafficking, human trafficking etc.

Denied Party lists are also known by different terms such as Restricted Party, Denial Lists, Specially Designated Nationals, Trade Party Screening and many more.

What are Denied Party lists?

Government agencies across the globe as well as international organisations such as the United Nations publish lists of individuals, companies and entities that are denied or restricted from doing business with.

What is Denied Party Screening?

Denied Party screening is a validation process for carrying out checks on individuals, companies or entities that are on a sanctioned list or watch list against any one of the hundreds of different Denied Parties lists to ensure that you are not involved in transactions that are being conducted with any potential Denied Party.

Denied Party screening demonstrates reasonable care and is part of your due diligence to comply with standards set by governments and agencies worldwide.

In the event an individual, company or entity on one such list appears to match a potential party in the sale of goods, additional due diligence is required before proceeding.

Typically, depending on which list the match was found, a match would indicate one of the following scenarios:

  1. A strict export prohibition
  2. A specific licence requirement
  3. A possible red flag in relation to the transaction

Why do I need to screen?

All businesses have an obligation to screen. Every time money changes hands, there is a responsibility to ensure that the goods are not destined for an individual, company or entity on a government watch list

Shouldn’t my Logistics Service Provider do this?

Many companies make the mistake of thinking that the burden of compliance rests with the shipping or freight forwarding company but this is not the case.

You are responsible to know your customers, suppliers and even third-party services providers.

What about exporting to countries under sanctions or embargoes?

Virtually every nation, on every continent, has debarred individuals, organisations and entities inside their borders—even Antarctica!

Given the ever-changing nature of international sanction regulations and policies, especially in the current political climate, companies are at risk of engaging with a denied or restricted person, company, or entity regardless of where they export to.

Can’t we just pay the fine?

Fines incurred because of an export violation should not be treated as an acceptable business expense.

Compliance is a legal requirement. In addition to fines, criminal penalties can include jail time and organisations can have their ability to export privileges revoked. Reputational damage and negative media attention are likely from any export violation. Ignorance is not bliss.

Ultimately, the decision to accept or decline a customer is totally at the discretion of the sender or retailer.

How can Hurricane help?

Denied Party screening is not an exact science and is subject to many factors that can influence the match. Names are not unique, neither are addresses to individuals or companies.

Hurricane Commerce can help you automate your screening program. We source current information on Denied Parties, accessing intelligence from over 90 key international and national lists.

Hurricane’s Denied Party software is accessed via our API service and provides real time, up-to-date information for review against Denied Parties lists to ensure your business is informed and compliant with global requirements.

 

Blog by Martin Palmer, Hurricane Commerce’s Chief Content and Compliance Officer

How compliant are you?

How compliant are you?

The second half of 2020 and 2021 will see numerous regulations around product data, VAT changes and compliance being introduced worldwide, affecting businesses ranging from small eCommerce stores to the larger postal operators.

The regulations around data enhancement for postal operators such as the introduction of Import Control System 2 (ICS2) or the implementation of the US STOP Act will provide the biggest operational challenges.

Both require postal operators to provide accurate and detailed consignment data prior to goods being imported. The minimum data set that will be required as of the introduction of the regulations will be HS6 codes, product descriptions, the value of goods, and the details of the senders and receivers.

Failure to comply with these changes will result in goods being returned, destroyed, or held until the required data is received.

VAT models are being completely revamped in 2021 with the biggest change being the abolition of the exemption of VAT on low value items under €22. This will result in EU and non-EU businesses charging VAT at checkout for consignments worth €150 or below.

Declaring VAT payments will be done via the Import One Stop Shop (IOSS) once it has been introduced which will make the businesses liable for the declaration and payment of VAT to the country of destination, replacing the need to register in individual countries.

Nothing moves without the right data and increasing global regulation is providing huge challenges to those involved in cross-border eCommerce trade.

Hurricane covers 4 key pillars – data enhancement, duty and tax calculations, prohibited and restricted goods screening, and denied party screening.

Hurricane provides businesses with the tools to improve their compliancy – reducing the risk of heavy fines, as well as improving their data, ensuring goods move through customs smoothly. It also prevents additional costs and improves the customer experience and your overall competitiveness.

Hurricane’s solutions include our deep-learning Bluestone AI that drives its auto-classification function; our Aura API that covers Duty and Tax Calculations, Prohibited and Restricted Goods Screening and Denied Party Screening; and our game-changing Zephyr bulk clearance API which enables the efficient checking and completion of cross-border shipment pre-advices submitted to postal authorities by their customers.

To help you stay ahead of the regulations that are coming into force, we have produced a handy infographic explaining what they are and how they will impact your business.

Amazon fine a warning to all eCommerce businesses

Amazon fine a warning to all eCommerce businesses

The fine awarded to Amazon this week for multiple violations of US sanction regulations should be a warning to everyone involved in cross-border eCommerce trade.

The online behemoth agreed to pay a fine of $135,000 in relation to violations around the selling of low value retail goods and services to individuals in regions such as Crimea, Iran, Syria, North Korea and Cuba.

These alleged violations took place between 2011 and 2018 and the fine given was half the sum of the total cost of the transactions, due to Amazon disclosing the violations themselves, as well as the US Treasury’s Office of Foreign Assets Control (OFAC) deeming them “non-egregious”.

The violations centred around Amazon’s automated screening system which is used to analyse customer and transactional data to determine whether a purchase is legitimate or should be flagged. In these cases, the system failed to fully analyse all data accurately allowing slight misspellings to be accepted by the system.

In its report OFAC stated: “This case demonstrates the importance of implementing and maintaining effective, risk-based sanctions compliance controls including sanctions screening measures appropriate for eCommerce and other internet-based business that operate on a global scale.”

OFAC added: “Such large and sophisticated businesses should implement and employ compliance tools and programs that are commensurate with the speed and scale of their business operations. Global companies that rely heavily on automated sanctions screening processes should take reasonable, risk-based steps to ensure that their processes are appropriately configured to screen relevant customer information and to capture data quality issues, such as common misspellings.”

OFAC also recommended routine testing of automated systems to ensure the effectiveness and identify any failings.

In addition to the fine, Amazon will have incurred significant legal fees and the cost of putting in place various remedial measures to tighten its processes.

A company like Amazon can meet those costs, but for most businesses involved in cross-border eCommerce, such costs would be considered substantial.

Common remedial measures would include gap analysis of company-wide processes, introduction of trade controls and export controls management systems, training programmes and reviews and audits of their screening process and corrective actions. For some it could mean having to introduce a Denied Party screening process.

Even more important than the financial penalties is the potential largescale damage to an organisation’s brand and reputation. Customer trust is an essential ingredient in successful cross-border eCommerce.

Many millions of pounds are often spent building an online retailer’s brand, but far less attention is paid to the complexities of global compliance.

With new regulations being introduced every year, it is easy for businesses to fall foul of them.

Integrating an efficient and accurate Denied Party screening solution, such as the one provided by Hurricane Commerce, means businesses can minimise the risks of sending goods to banned parties, drastically reducing the chance of expensive fines and a damaged reputation.

Q&A with Hurricane BDM, Robert Dundas

Q&A with Hurricane BDM, Robert Dundas

The Hurricane marketing team recently caught up with Robert Dundas, Business Development Director, to talk about some of the big challenges and opportunities confronting the postal industry, in particular the exponential growth in cross-border eCommerce and a plethora of new regulations.

So, Rob, can you give us a bit of your background and how it lends itself to your role within Hurricane?

The last ten or so years of my career have been spent in the cross-border logistics industry with Skynet and Spring GDS (the cross-border arm of the Dutch post office). I then started my own consultancy business back in 2019, working with major e-retailers, looking objectively at logistics issues and creating the bespoke solutions.

During this time, how has the industry changed?

It has given me the chance to witness the rapid decline in traditional mail as more and more document traffic moved online, as well as the meteoric growth of eCommerce packet and parcel traffic, as retailers tapped into the commercial benefits of cross-border Postal solutions.

eCommerce has been somewhat of a saviour for the Posts as it has allowed them to weather the storm of a declining traditional market, the need for small (lower value) packets and parcels to be shipped domestically and worldwide gave them a lifeline they could not ignore.

Yearly research continues to prove this point, as cross-border eCommerce has meant that by 2025 there will be 200 billion parcels shipped a year.

This obviously represents a fantastic opportunity for Posts, but does it also bring risks?

The challenge for Posts is adapting their solutions to handle large volumes of low value parcels, which up until now have been allowed to move across borders with relative anonymity.

Recent regulatory changes such as the US Stop Act and the introduction of ICS2 in March 2021, has meant that these low value parcels will now be required to have an electronic data set sent with them.

Think of it like a person travelling with a passport. Without it, you are not allowed to travel to another country, the same applies for parcels which without electronic data entry into your destination country will be delayed or blocked.

How can Postal Operators manage this need for electronic data when dealing with such a high volume of parcels?

Over the last few years we have seen a dramatic shift in the workload being automated rather than being completed manually. This will be no different, to efficiently complete data sets, Posts will need to utilise technology to stay competitive and improve their value offering.

With the introduction of AI especially, data sets can now be completed and sent to the importing customs authority in a matter of minutes ensuring goods will arrive in country unhindered, or flagging early issues such as restricted or prohibited items or denied parties.

Why is it so important to have an effective and efficient solution in place once these regulations are enforced?

e-retailers live or die on the quality of their customers’ shopping experience and shipping and delivery is an important element of this. Postal Operators need to apply intense focus on their service offering if they wish to protect their market share. Integrators and couriers are waiting on the side lines to pounce on the SME eCommerce market, therefore Posts need to ensure they are prepared for compliance changes.

Ensuring accurate data sets are tied to their shipping is going to be vital in delivering shipments in line with their service commitments and protect the relationship they have with their customers. Failure to do so may result in problems with shipments, affecting transit times and the overall customer experience. The result may be their customers moving to direct competitors.

With ICS2 and other regulations coming into effect in early 2021, what is the timeline for Posts to ensure they are prepared?

Realistically, Posts only have 3-4 months to integrate, test and implement a solution into their service. We are living in unique times and with the build-up to Peak 2020 only months away, now really is the time to start preparing for compliance changes coming into effect in 2021.

However, Posts which successfully prepare will not only cement their position in the market but will be able to grow their business.

Hurricane has 2 unique SaaS based solutions utilising AI and APIs to help Posts calculate duty and taxes, screen their shipments for prohibited and restricted goods, denied parties and ensure that all their data is compliant with importing customs regulations to take advantage of fast track customs lanes.

Easy to integrate and simple to run, Hurricane is a fantastic opportunity for any Post to be prepared for changes and grow their business.

The future international postal strategy and ETOEs

The future international postal strategy and ETOEs

By Jan Kooyman, Co-Founder of Hurricane Commerce

Pre-Corona global eCommerce represented an annual turnover of almost $4.0 trillion of which 20% was cross border.

The Corona crisis resulted in a rapid growth in domestic eCommerce. In Europe and the US some domestic eCommerce categories have shown a growth of up to 40%. Fast growing eCommerce categories have included personal care, apparel, footwear, consumer electronics and home and garden.

Cross border eCommerce has declined as the result of the lack of (air) transport capacity, the closure of borders and the impact Corona has had on consumer trust.

Within Hurricane we believe that global parcel delivery infrastructure will be restored quickly because of the need to make up for the current economic losses.

Cross border will grow even faster by leveraging on the new online demands. Several postal operators have already re-invented Sea Post and integrators have started to augment their airlift capacity.

Many postal operators are trying to compensate for the decline in traditional mail by leveraging on the expected growth of cross border eCommerce.

One of their strategies in doing so is by setting up or expanding global ETOE networks. An Extra Territorial Offices of Exchange (ETOE) is a mail centre that a designated postal service provider operates in a country abroad. The designated postal operator of country A operates postal export and/or import services under its own brand in country B.

Corona is just one of the elements that is currently impacting the growth of cross border eCommerce.

This year and 2021 will also be characterised by huge changes in the regulatory frameworks that are applicable to the international exchange of low value parcels and packets. Major regulations that will impact the cross border eCommerce industry include:

  1. The US Stop-Act which requires the provision of valid electronic data for custom clearance purposes.
  2. The VAT modernisation in the EU and UK which will lead to the removal of low value thresholds (of € 22 -) and which will put the obligation to declare and pay for VAT on the sending retailers or market places. The EU has set in place a system (International One Stop Shop) with which foreign retailers can declare and pay VAT to the country of destination. Norway, Australia, and New Zealand are also implementing a solution that is comparable with IOSS. Hurricane’s expectation is that several other countries will soon follow this approach as well.
  3. As of March 2021, all posts will have to comply with the requirement to provide an Entry Summary Customs Declaration when importing packet and parcels into the EU.
  4. We anticipate there will be a significant increase in international distribution costs resulting from the new international (UPU) agreements that regulate these costs. Estimates are that Terminal Dues will increase on average between 20% and 30% in 2020. Expectations for 2025 are between 165% and 300% depending on country of origin.

These changes will have to be translated by posts into re-defining their global (ETOE) strategy. International postal supply chains will have to adapt to this new reality.

If posts want to maintain their current market share (70%) in the distribution of e-commerce parcels and packets they will need to re-invent their international export and import strategy towards low value parcels and packets.

Not losing their market share in domestic delivery will for posts among others require the offering of:

  1. State of the art services like Delivered Duty Paid or efficient and customer friendly Cash On Delivery (COD) methods.
  2. Highly efficient and cost-effective customs clearance procedures to importing posts, integrators and large foreign retailers and market places. The current administrative fees that posts are charging for custom clearance and the payment of duties and taxes will in view of the removal of low value thresholds most certainly destroy the postal import market for parcels and packets.
  3. Competitive delivery costs by providing other posts access to volume, pre-sortation and/or downstream rebates.
  4. Delivery options (home, post office, parcel locker, etc.).
  5. Efficient return handling that includes an efficient reimbursement of paid duties and taxes.

In our view, a successful postal cross border and ETOE strategy will be characterised by:

  1. A valid and complete pre-alerting (Electronic Advanced Data) of postal consignments supporting access to fast track and efficient custom solutions, which may be postal or commercial. Commercial clearance will be required in case the sending post chooses for a direct insert solution (offering of consignments to the delivering post based on domestic conditions).
  2. Shipping compliant consignments by performing standard prohibited, restricted and denied parties checks. Avoiding customs spot checks, blockages and fines.
  3. Bi- or multi-lateral agreements between posts granting access to cost efficient delivery solutions and state of the art services like PDDP and/or electronic COD.
  4. Access to efficient commercial export and import clearance in case a sending post wants to apply a direct insert or alternative delivery solution for certain destination countries.

The Hurricane Postal Service offering has been specially designed to support posts in the development and implementation of a highly successful international strategy covering the key areas of data enhancement, tax and duty calculations, restricted and prohibited goods and denied parties.

https://www.cep-research.com/news/etoes-can-help-posts-to-profit-from-cross-border-e-commerce

EU goods eligible for relief

EU goods eligible for relief

On the 31 March 2020, the European Commission issued guidance on customs during the Covid-19 outbreak, including the following measures:

  • waiver on traders requiring guarantees for specific customs procedures
  • the treatment of goods as temporary admissions with the deferment of import duty
  • a simplification of customs processes and in a few cases acceptance of transport / commercial documents to streamline trade procedures

These measures are only applicable to specific products and it is up to each customs authority in Europe to interpret their own procedures

You can make sure that your business is helping the supply chain run smoothly by ensuring that your goods are correctly classified (HS6 code), you are aware of any prohibitions or restrictions that may be applicable, and that you are not shipping to any denied parties.

Hurricane’s unique software solutions, including Duty and Tax calculations, Prohibited and Restricted commodity checks and Denied Party Screening will not only allow you to maximise your growth opportunities but also help your business remain compliant in the complex world of international trade.

De Minimis Changes – Norway April 2020

De Minimis Changes – Norway April 2020

Many countries allow for the importation of goods without the payment of import duty or VAT (Sales Tax, GST) for items under a certain value. This is commonly referred to as ‘De Minimis’ or ‘Low Value’.

From 2020, Norway will abolish the exemption of VAT and other indirect taxes on low value goods sent from foreign sellers to consumers in Norway. The intent is to charge VAT for all goods, regardless of value.

The changes will take place in two steps.

  1. From 1 January 2020, the exemptions for low value goods (goods with a value below 350 NOK) will be abolished for foodstuffs, restricted goods and goods subject to excise duties.
  2. From 1 April 2020, the exemption for VAT for the remaining goods will be abolished.

Hurricane’s Duty and VAT calculator will help your business stay up to date and maximise your growth opportunities, but also help you remain compliant in the complex world of international trade.

only allow you to maximise your growth opportunities but also help your business remain compliant in the complex world of international trade

Luxury Brands turning to eCommerce for the first time

Luxury Brands turning to eCommerce for the first time

In a recent article in ‘Time and Tide’, they wrote:

“As of today, you can buy Patek Philippe online. Will COVID-19 force more brands into e-commerce? “

A crisis can often prove the catalyst for change. Amid the chaos, we’re forced to rethink how we do things — often with positive results. The First World War, for example, had a radical impact in redefining civil liberties, race relations and women’s rights. It’s way too early to untangle the full impact of the coronavirus on the watch industry. But there are signs the pandemic could push certain brands to reconsider their stiff resistance to e-commerce.

Watch brands have always maintained a heavy reliance on selling through bricks and mortar stores. Morgan Stanley analysts estimate that third-party retailers account for some 90 per cent of Swiss watch sales. Direct online sales offer the alternative approach. Yet while some watch groups — notably Richemont and LVMH — have embraced online retail, most have only taken tentative steps into the virtual world.

A report last year from the online marketing consultancy Digital Luxury Group found that only 40 per cent of luxury watch brands are presently offering direct-to-consumer e-commerce. In fact, online sales of luxury watches account for less than 5 per cent of all sales, according to The Mercury Project, a data-driven consulting company focused on the watch and jewellery industry. “

It is likely that during the enforced lockdown that many other luxury brands that have traditionally sold their wares via a physical high street presence may now be considering entry into the lucrative eCommerce market place.

Hurricane’s unique software solutions, including Duty and Tax calculations, Prohibited and Restricted commodity checks and Denied Party Screening will not only allow you to maximise your growth opportunities but also help your business remain compliant in the complex world of international trade.

Source: https://timeandtidewatches.com/as-of-today-you-can-buy-patek-philippe-online-will-covid-19-force-more-brands-into-e-commerce/