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Trade compliance is the process of complying with all laws covering the trade of goods and technology. This can mean not only export control regulations and laws, but also the import laws, as well as any international regulations and rules that must be abided by while in transit. Export compliance can be viewed as being a part of trade compliance, but not the other way around.

There are three main aspects of import compliance:

• Identifying and classifying the goods being imported;
• Calculating tariffs and duties associated with importing the goods;
• Applying for licenses, if necessary. For example, in the U.S., food and medicine need to be registered with the FDA (Food and Drug Administration), while in Canada, pharmaceuticals may need to be registered with Health Canada.

Depending on the jurisdiction, as well as the nature of the specific goods being imported, there may be additional items to consider. For example, free trade agreements, trade quotas, free trade zones, and so on.

Export compliance involves adhering to laws, regulations, and international trade agreements governing the export of goods, services, and technology to ensure that transactions do not violate national security, economic, or trade policies. Non-compliance can result in severe penalties, including fines, loss of export privileges, reputational damage, and even criminal charges. It also helps businesses avoid shipping delays and ensures smooth international trade operations.

Denied party screening refers to the process of comparing names of customers, business partners, facility visitors, etc., against official watch lists of individuals and entities with whom it is illegal to do business. Denied party screening is a crucial element of most export compliance processes, and can help maximize an organization’s export compliance coverage and safeguard them against violations.

While different governments and bodies have different penalties for non-compliance, some of the most common ones administered across the world include monetary fines (both civil and criminal) and even prison time. Other extra-legal negative consequences for non-compliance can include adverse media coverage, brand and reputational damage, and disruption in the supply chain (causing further economic and financial losses).