Risk management becomes more important with the new Union Customs Code
New system based solutions will offer customs authorities better possibilities to validate data received. The Union Customs Code (UCC) allow customs authorities to perform their controls up to five years back in time. This is an increase with two years when comparing to the previous customs legislation. To avoid unpleasant surprises, we need to identify and manage the potential risks in our day to day customs processes.
Some risks are more important than others
EU wide and national restrictions are most important since non-compliance could lead to very severe consequences such as termination of customs permits which in turn could affect the more commercial (costs and or customer relationships) side of the business. Second comes duty calculation where errors could have a big economic impact. Statistical data are also of importance but the consequences are not as high in this area.
Systematic errors can become burdensome
The automated customs processes of today’s have greatly speeded up the declaration processing time but on the downside the risk of systematically made errors is found. Once the automated processes are implemented the deliveries from the systems are relied upon and not questioned as in a manual process. Some of the risks that could occur are source data not being properly validated, permits and routines being outdated and the automated processes are built based on the competence of the developing team. There is an obvious risk that many small errors build up to create big problems where the financial impact could be huge.
Internal risk & audit measures
The process of identifying and managing risks within the customs area is no different than other business areas. The challenges we find many companies struggling with are often the result of insufficient competence in the area of customs matters. To prevent the risk of costly errors, existing internal compliance organisations should be broadened to include customs matters as well. It is imperative that solid routines and work processes are in place and that the performance are reviewed regularly.
We urge our customers to include customs compliance in their risk assessment and internal audit programmes. Where there is a lack of competence, external expertise can be involved to build up the internal knowledge and design the risk and audit programmes.
If you have any further questions, or want to know more, don’t hesitate to contact us.