April 25, 2016

The US Governments Consolidated Screening List - Still an Inadequate Search Tool

AUTHOR:
John P. Priecko, President and Managing Partner, Trade Compliance Solutions
Screening remains a critical element in any comprehensive global trade compliance
program. Various sources indicate there are now more than 400 lists globally including
a wide variety of debarred, denied, embargoed, prohibited, proscribed, restricted and
sanctioned entities. Those lists include companies, countries, individuals and a variety
of other organizations around the world. One knowledgeable provider says that number
now exceeds 500. Whatever the number is, it continues to grow.
REALITIES: Doing business with an entity on one of these lists has resulted and may
result in significant fines, penalties and a great deal of US Government (USG) scrutiny.
It can also result in the offending entity ending-up on one or more of these lists.
If you believe that the USG Consolidated Screening List (CSL) is one-stop shopping for
screening, it is absolutely not. If all you check is the CSL you are not covering all the
lists you need to consider. With faulty or incomplete screening you put your
organization and yourself at risk. Depending on the entity or entities involved and
technology transferred, there could also be significant harm to our economic and
national security. Inadequate due diligence is not a hallmark of a comprehensive
compliance program.
Material CSL shortfalls include a limited ON or OFF Fuzzy Name Search capability
and no inherent search record keeping capability. The CSL covers just 11 USG lists
representing about 3% of the lists around the world. Further, according to State
Department, savvy industry counterparts and lawyers, the System for Award
Management (SAM), another USG online search tool, is also essential to screen
against. The SAM and hundreds of other lists relevant to international trade are not
included in the CSL.
WARNINGS: CSL use alone without other more comprehensive screening tools places
organizations and individuals at great risk. Remember: The US Principal Party in
Interest (USPPI) is responsible when transacting with an entity on one or more of these
lists. There are at least several real world cases where the USPPI incorrectly assumed
the CSL covered all the relevant bases, when in fact it did not.
FOOD FOR THOUGHT: Are you screening all the lists that need to be checked and at
key points? Do you rely on a no-cost partial solution that can result and has resulted in
violations? What do you need to do to ensure thorough screening list compliance to
minimize exposure, liability and risk in a much invigorated enforcement environment?
Suggestions, comments, inputs regarding the above narrative are encouraged and
welcome. Please contact John Priecko, 703-895-1110, jpriecko@comcast.net.