Export Compliance

Transnational crime knows no borders—why screening everyone matters

Back in September 2016, the Office of Foreign Assets Control (OFAC), designated an organization named PacNet Group (PacNet)—an international payments processor and money services business—as a transnational criminal organization.

This puts the organization on the same level, from a criminal standpoint, as some of the world’s most notorious mobsters, drug cartels and murderers.

12 people and 24 business entities located across 18 countries, including several in Canada—PacNet’s home base—were linked to willfully assisting, providing support and other activities related to a wide range of mail fraud schemes that have stolen hundreds of millions of dollars.

What’s even more significant, one of the 12 people is a highly-respected business professional in Canada’s national capital of Ottawa. Director of PacNet-linked company, Canadian-based Accu-Rate Corporation, this individual also served as the Chair of Ottawa’s Chamber of Commerce at the time of OFAC’s sanctions, and was a nominee for Ottawa’s Businesswoman of the year in 2015.

The takeaway—screen everyone, every entity

All too often, organizations assume that screening is primarily meant to prevent transactions from taking place between individuals or entities from sanctioned or embargoed countries, rather than seemingly legitimate businesses operating within the borders of our largest trading partners, free trade or otherwise.

But a “transnational criminal organization” means just that—they operate irrespective of borders—so you simply cannot be assured that because they’re based in a country that one would normally deem safe, countries like Canada and the U.K., for example, that they are exempt from criminal activity.

The same goes for individuals. On the face, one would assume someone in a position of leadership in a trusted community organization, such as a Chamber of Commerce, would be the last person to show up on OFAC’s Specially Designated Nationals list. But the PacNet example demonstrates that you just never know who may end up on a government watch list.

More about the PacNet case and their far reaching criminal activities can be found in Exposed: The secret powerhouse processing millions in global fraud on CNN Money.

Where are your goods really going?

Then there is the matter of “end use” to think about—which is a unique challenge in itself. “End Use Controls” are the measures the Departments of Commerce, State and Defense have in place to prevent the unauthorized export and re-export of items subject to export control. Screening is just the first step towards helping to ensure compliance in this area. Businesses wishing to make their products are kept out of the wrong hands would be well advised to take additional measures, namely requesting an end-use certificate from the customer—regardless of where that customer is located, Canada included.

By receiving written confirmation from the buyer—an End User Statement[i]—that they are the end recipient of your goods, you’ll be able to demonstrate that you’ve taken measures to avoid inadvertently doing business with someone in a sanctioned or embargoed country, or on a denied or restricted party list. And your organization will be better protected as a result.

Did we mention you should screen—everyone?

To reiterate the lessons learned from the PacNet case, regardless of with whom you do business, and where they are located, it’s critical to screen every transaction. And this includes individuals and entities you’ve screened in the past. Government watch lists can, and do, change frequently, and when it comes to denied and restricted party screening, you can never be too careful.


[i] For more information about End Use and End User Statements, please read our article, More Than Just an End User Statement: Best Practices for Evaluating End Users.