Having held responsibility for risk and compliance, in a global air charter environment, this has always prompted a variety of reactions from colleagues in industry. It ranges from the usual “business prevention” jokes to, occasionally “…so what is it that you actually do?”
Managing bad actors, foreign policy and sanctions in aviation
Jokes aside, managing some of those practical, potential risks has never felt more crucial than now. Whilst unrest continues to dictate the tone across many countries, many, even in a business that they know well, are beginning to feel a sense of unease around how to comply with increasing regulation without slowing down the commercial pace.
For many, sanctions were a relatively little known and rarely explored topic. Now the global headlines are nudging the business community that it is time to “wise up”.
Whether it be the avoidance of financial crime implications or simply how to manage the evolving landscape involving countries subject to increasing restrictions, knowledge is key.
Understanding your counterparties and the company they keep, is now implicit as best practice.
The story so far… and who sets the tone?
So, we see an increasing number of companies and individuals sanctioned by the key regulators in the UK, EU and US. Individual countries often quickly follow suit or draw their own line in the sand, sometimes taking a controversial, alternative stance. However, watch out, they may misalign. Cuba sanctions in the US, for example, have long contradicted the EU position making global logistics business decisions challenging.
Additionally, with multi modal logistics companies in mind, our global waters are a prime target for conflict and shipping vessels and human rights are increasingly playing a large part as instruments of controlling poor behaviour.
Types of enforcement vary. Some prohibit specific or broad trade and support whilst others embargo financial transactions and freeze the ability to travel.
Commercial challenges and pitfalls of flying “Politically Exposed Persons”
To confuse matters, restricted persons may not be sanctioned. There is also an increasing need to also focus on those who are deemed as PEPs (“politically exposed persons”) as a broad set of criteria applies to these people and to those with whom they are associated. The aim of this is to reduce their level of influence or control and ultimately their perceived ability to involve themselves with large scale bribery and corruption.
Many indirect restrictions present real challenges for businesses that may be small in size but operating in high-risk sectors or territories. Beware also that connections with those entities run the risk of upsetting your banking partners whose risk tolerance may differ from your own and who have access to more sophisticated software than many of their clients.
Long gone are the days where the “unregulated” sector of aviation can be cavalier about such things. The blunt reality is that none of us can afford to believe that this is not important. The key is how best to apply a practical approach to sanctions and screening in the context of your own operational and sector requirements.
The cost of screening
For many senior teams managing smaller companies in aviation, the cost of screening software can be high where lower screening volumes may not justify expenditure on “industry standard” known software. There are some cost-effective tools which address many of the needs of SMEs however, minus a specialist compliance skillset, it can be a challenge to ensure that the business decision makers are equipped with the necessary level of guidance and support that they require to help the business deliver such solutions effectively.
The software solutions have been designed to be very user friendly but integration of the right screening software for your business is the beginning. The greater challenge is to resource your risk management with the necessary degree of experience to navigate and manage the information appropriately in an often time critical industry.
Buyer beware, a little knowledge can be dangerous to the untrained eye. You may think that you have it nailed but, in reality, you may be missing some key data or may be interpreting the data you have incorrectly or not rigorously enough. Screening insufficient or inaccurate data can also lead to costly prosecution.
Assuring your supply chain partners
Ultimately, screening is a tool in your box towards effective diligence to avoid doing business with unsavoury third parties. Third party risk management not only offer yours supply chain partners the comfort and re assurance that you take such risks seriously for all but are well worth the investment in helping protect your financial, legal and reputational considerations.
Whether you are looking to screen your customers and suppliers or simply keen to review your current business risks, we are here to help. We have over 40 years of experience of screening and oversight of more than 120,000 charter flight programmes and ancillary support services in transportation.