U.S.-Cuba Trade: Where Do Sanctions, Sourcing, and Compliance Meet?

Between the changing diplomatic ties between the United States and Cuba, and expectations that the Trump administration will redraw U.S. policy toward Cuba, sanctions with the island nation are unclear. The country is still embargoed and for nearly all products, normalized trade has to overcome many hurdles.

Shippers are watching Cuba closely, and analyzing market and product gaps waiting to be filled. There are, however, many unanswered questions and misconceptions around sanctions.

With the high potential for fines or, more likely, seized shipments, global trade and supply chain managers need to take a critical look at the changing realities of sanctions, sourcing, and compliance when trading with Cuba.

Here’s a current roundup of key questions and answers:

I do not have the time to follow embargoes while running my business. Is there anything I can do to mitigate risk?

Companies need to anticipate risk well before shipment and sourcing. Businesses that succeed in the global arena are those that weigh the right trade and sourcing factors ahead of, or in tandem with, sourcing and prior to transactional decisions.

How can I ensure that employees or partners do not ship to denied or restricted countries?

In the United States, companies have an obligation to ensure that they do not transact business with prohibited or restricted entities, corporations, countries, or persons.

It’s incredibly challenging, however, to collect, maintain, and update denied, restricted, and sanctioned data from multiple global lists—some of which change hourly. Technology solutions can help companies fulfill their responsibility by simplifying the ongoing research and management of sanctioned, denied, and restricted party details, and by automating the practice of screening customers, prospects, suppliers, employees, and more against this data.

How can I ensure that my transactions are screened prior to purchasing?

Cloud-based technology solutions are available to help companies of all sizes quickly and efficiently screen customers, suppliers, and/or trading partners against a database of international restricted and denied party lists.

The most advanced solutions allow companies to tailor screening processes to fit unique risk parameters—for example, a medical equipment supply company needs different screening lists than a financial services business—transaction volumes, and any integration requirements with enterprise resource planning or global trade management systems.

How do changing diplomatic relations impact sourcing?

Sourcing goes hand-in-hand with practical distribution and transport. If properly vetted line-item and party details can populate manifests, then companies can enjoy added efficiencies and are better equipped to focus on business development. Supply chains must be responsive to changing denied-party screening status, and incorporate fluctuating duty rates or trade agreements into the sourcing and/or manufacturing equation.

In addition, leading companies are uniting denied party screening with supply chain trends. From volume data, commodities, and production inputs, market leaders are qualifying overseas trading partners and monitoring cross-border supplier relationships to reveal meaningful business intelligence.

If I am in a location that is authorized to ship to Cuba, what other regulations do I need to adhere to? What is a security filing?

More and more countries are adopting the World Customs Organization’s (WCO) Standards to Secure and Facilitate Global Trade (SAFE Framework) modernization initiative and implementing security filing requirements. In addition to exporters and carriers, global security filings are also becoming the responsibility of forwarders. With security filing requirements on the rise, and countries such as Cuba adopting advance manifest requirements, intermediaries and/or carriers must capture required information from shippers and transmit the data to customs agencies. Technology solutions can help companies stay up to date with evolving security filing capabilities.

My company is really about the bottom line; however, how can I counter the potential for fines?

Many companies have discovered that streaming data into leading business applications is a prime opportunity to consolidate screening processes. With the right content populating existing systems, businesses are better equipped to avoid fines, improve processes, and mitigate risk.

It is essential, however, that companies not drain IT resources to establish this type of robust connectivity. Technology and expertise are often required to map existing fields and databases to ensure that information seamlessly powers systems via a number of electronic methods and protocols.

—Joe Mallozzi, Vice President, Transportation Management, Descartes