Industry must adopt a more risk based approach, combining manual checks, denied party and risk-based screening, and KYC assurance, says Datanomic...
The logistics and third party supply chain industry should brace itself for greater scrutiny, more rigorous auditing checks, and potential changes to the existing 'trusted shipper' system, following the bombs found on cargo and passenger flights from Yemen, according to risk & compliance screening and enterprise data management specialist, Datanomic.
The cargo flight bomb plot means the logistics and supply chain industry will need to adopt a more risk based approach, combining existing Know Your Customer (KYC) checks and manual scans, with risk-based Customer and Denied Party screening with automated escalations when risk thresholds are breached, triggering additional investigations into the shipment involved. Such risk assessment, argues Datanomic, will become a much higher priority for Supply Chain Management solution providers and Third Party Logistics companies who will feel the brunt of the regulator if their screening protection is deemed inadequate.
"We should be careful that such plots don't result in knee-jerk reactions that overlay massive additional burdens on compliance and shipping teams, but certain risk factors should trigger deeper levels of investigation by the carrier," said Simon Pearson, Vice President Risk & Compliance Screening for Datanomic. "For example, in this case, should an individual from a higher risk country, whose first shipment is a parcel of goods to a religious or political institution, be subject to additional caution, screening and scanning? Whilst there might not be any legislative requirement to prevent access to services for an individual or entity who is not on a Denied Party or Sanctions list, applying risk-based business rules to each consignment request could provide a low-overhead method of identifying possible threats."
Significantly heightened scrutiny of international exporters is just around the corner according to Pearson: "Supply chain and logistics companies will not only be facing increased pressure to implement risk profiling, but also demonstrate that they have the necessary procedures and systems in place. Likewise, as the nature of terrorist threats continues to evolve, we believe this will spread to other industries, such as the food chain, pharmaceuticals and dual use products."
As of August 2010, 100 percent of cargo on U.S. passenger planes now has to be screened. Most of the screening - and the safe warehousing and delivery of the screened goods - is handled by private shippers who, if they comply with government regulations, are certified as "safe shipper" (or "known shippers"). The goods delivered to airports by these safe shippers will be subjected to less rigorous - and, hence, speedier - security checks. Likewise, in the UK, the 'trusted shipper' system means that a company is audited by the Department of Transport and given status as a trusted partner and their cargo is trusted to be safe and not subject to screening.
Datanomic believes such security systems and procedures are likely to be updated or amended in the wake of this recent terrorist attempt, placing more pressure on private logistics companies and supply chain solution providers to implement higher levels of risk assessment, with the threat of significant penalties for deploying ineffective or insufficient protection. Indeed, compliance failures are already impacting upon these industries, with multi-million dollar fines and prison sentences for criminal prosecutions pursued by the US Treasury Department's Office of Foreign Assets Control (OFAC).
Last month Datanomic extended its expertise of helping Financial Services organisations achieve and maintain regulatory compliance to the Manufacturing, Logistics and Export Supply Chain Management industries with a new dedicated solution to ensure export compliance. Datanomic's Denied Party Screening provides all companies engaged in international export with an exceptionally accurate and configurable solution for screening against Denied Party lists or 'Denied Trade Lists' to ensure compliance with international legislation.
Deutsche Post DHL (DPDHL), the world's leading mail and logistics services Group, has standardised on Datanomic's award-winning screening technology to screen four million freight and logistics customers and subcontractors worldwide, and comply with stringent German, European Union, international and United Nations anti-terrorism regulations.
Datanomic's solutions have already been implemented by some of the world's largest banks, insurers, asset and wealth managers and other financial services institutions to reduce their global Compliance risk, and this pattern is now spreading to other industries. In addition to the parcel, freight forwarding and logistics industry, Datanomic's software is being adopted in other non-financial services industries that require stringent Know Your Customer (KYC) compliance requirements, such as the diamond and tobacco industries. The company forecasts acceleration in the adoption of its technology across diverse industries facing ever-increasing Anti-Money Laundering, Counter-Terrorism Financing, and Risk & Compliance requirements. Datanomic was recently ranked 11th in The Sunday Times Tech Track 100 for the fastest growing technology companies in the UK.