Tuesday, April 12, 2016

The US Government's Consolidated Screening List - Still an Inadequate Search Tool

Screening remains a critical element in any truly comprehensive global trade compliance program.  Based on recent estimates there are now more than 400 lists globally including a wide variety of debarred, denied, embargoed, prohibited, proscribed, restricted and sanctioned entities.  That number continues to grow.  Doing business with an entity on one of these lists has resulted and may result in significant fines and penalties.  You and your organization can also end-up on one of these lists. 

For those who have the false impression that the US Government (USG) Consolidated Screening List (CSL) is one-stop shopping when it comes to screening, there is no doubt it is not.  If all you check is the CSL you are in no way covering all the lists you need to consider.  The reality is with faulty or incomplete due diligence you put your organization and yourself at risk.  

Material CSL shortfalls include a limited “Fuzzy Name Search” capability with a simple “ON” or “OFF” function and no inherent search record keeping capability.  The CSL currently only covers 11 USG lists representing about 3% of the lists around the world.  Further, according to State Department and savvy industry counterparts including seasoned lawyers, the System for Award Management (SAM), another USG online search tool that consolidates what used to be included on the Excluded Parties List System, is also essential to screen against.  The SAM and hundreds of other lists relevant to international transactions are not included in the CSL.

WARNINGS:  CSL use alone without other much 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?  Is your organization at more risk in this area than it should be?  What do you need to do to ensure adequate 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.

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