Shipment control is the phase of the overall STC compliance process prior to the actual export or transfer of strategic items from the country of export/transfer in which the completion of the transaction screening processes are confirmed, additional screening (particularly for restricted parties and diversion risk) is conducted if and as needed, any government authorizations necessary for the transaction to proceed are confirmed, and the information included in licenses and shipping documents is verified. In short, the purpose of the shipment control element is to verify that transaction screening procedures have been completed prior to shipment and to confirm the accuracy and integrity of the transaction and shipping documentation.
Those responsible for shipping in the enterprise should have (or be provided) a process for releasing or holding a shipment based on the results of the shipment control checks. Shipment control sometimes is included as a sub-element/process of the “Transaction Screening” portion of an ICP, but current international “best practice” suggests that it should be treated as a distinct ICP element, despite the similarities with and relationship the transaction screening element.
Implementing the Shipment Control element requires your enterprise to complete five tasks:
Task 1: Determine Who Will Develop the Shipment Control Process
The shipment control process should be developed by the enterprise’s empowered compliance official (CCO or TCO, depending on your enterprise’s organizational structure) together with shipping/logistics personnel, and support from legal counsel and perhaps even with (supplemental) input from the enterprise’s (trusted) freight forwarder or transportation company. The empowered compliance official should ensure that the shipment control process is integrated into the overall trade compliance system and workflow. Legal counsel can offer guidance on whether there are diversion risk indicators that, because they are codified in the national STC legislation, if present in the proposed shipping arrangements, could impute the knowledge or suspicion of an unauthorized end-user, destination, or end-use necessary to trigger a “catch-all” control (if such controls are present in the jurisdiction in which the enterprise is operating). The enterprise’s shipping/logistics/import-export personnel can assist in crafting the specific set of checks that should be conducted as part of the shipment control process.
Note: In the end, your enterprise must be the one to both formulate, and conduct the shipment control process. However, if your enterprise utilizes a known and trustworthy freight forwarder or transportation company, those organizations may be able to provide helpful inputs on what aspects of the shipment process should be checked.
Task 2: Design the Specific Procedures for Shipment Control
The Shipment Control process typically is implemented at some point after the “Transaction Screening” processes have been completed and before the enterprise commences the shipment of the item(s) (or conducts the services) involved in the transaction.
The following are among the specific checks that should be conducted as part of the shipment control process:
If any aspect of the transaction has changed since the time that the “Transaction Screening” process was conducted, it will be necessary to re-run the “Transaction Process” or at least the sub-processes that have been affected by the changes in the transaction. The enterprise can add to or adjust the list of shipment control checks that the shipment will be screened against using its own knowledge-base and experience. In all cases, it is critical that the shipment control process discourages “self-blinding” the enterprise from identifying restricted end-users, destinations, and potential diversion risks. Finally, as part of the shipment control process, a protocol for alerting the empowered compliance official of any shipment control check “hits”, and a procedure for further investigating and assessing the potential diversion risk should be developed.
Task 3: Assign the Personnel that Will Be Responsible for Executing the Shipment Control Process
Once the shipment control process has been designed, the responsibility for conducting shipment control screening in accordance with that process must be assigned. Personnel from the logistics/shipping/import-export team or those that have the primary interface with the freight forwarders, customs brokers, and carriers can be the ones who conduct the shipment control screens. As noted above, there should be a procedure to refer the proposed transaction to the empowered compliance official for further review in cases where there are any “hits” against any of the established shipment control checks.
Task 4: Establish Procedures to Keep the Shipment Control Process and Inputs Up-to-Date
The enterprise trade compliance staff should stay current with the diversion risk, transit/transshipment, and broker/intermediary provisions of any applicable domestic and foreign regulations, as they may change from time-to-time. In addition, in conjunction with its audits/internal reviews and/or on an annual basis, the enterprise should evaluate its shipment control process to ensure that it is as comprehensive and effective as possible. To those ends, the enterprise also should try to develop good communication and information channels with the STC licensing agencies in the jurisdictions where it is operates to help stay current with proliferation trends and to help further enhance its approach to shipment control.
Task 5: Document the Shipment Control Process and Its Outcomes
All records of the shipment control process must be retained for future reference and auditing purposes by the personnel conducting the screening. Note: Please refer to the “Recordkeeping and Documentation” section of the ICP Guide for more detailed information about recordkeeping best practices.