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Understanding trade compliance: A guide for global businesses

Trade compliance ensures your business meets trade laws and regulations. Stay compliant - learn how to safeguard your global operations today.

08/28/2025 · 4 minute read

In today’s dynamic and rapidly evolving global business environment, staying current and complying with trade regulations is more than just best practice — it is a vital safeguard that helps maintain seamless business operations, ensures legal adherence, and protects your company from costly fines and reputational damage.

What is trade compliance?

Trade compliance is a requirement that all businesses must conform with trade laws, regulations, and policies that govern the import and export of goods and services.

The complexity of legally binding trade compliance requirements can be daunting. For example, some of the key elements of trade compliance include:

  • Proper documentation for imports and exports
  • Adherence to sanctions and embargoes
  • Correct tariff classification and duty payments
  • Compliance with food, health, and safety standards
  • Sector-specific controls, such as chemical weapons or nuclear technology
  • Anti-boycott regulations and anti-bribery conventions
  • Anti-dumping and anti-subsidy laws

Depending on the jurisdiction, neglecting any of these elements can result in severe consequences, including fines, seizure of goods, operational disruptions, and reputational damage.

Is the trade compliance landscape changing?

Today’s trade compliance environment is arguably more complex than ever, driven by evolving regulations, geopolitical shifts, and increased demands for transparency. This complexity is further intensified by sanctions, customs laws, and trade agreements, which can pose challenges in terms of trade compliance resource allocation, time management, and costs.

Announcements of tariffs and counter-tariffs and trade deals can be unpredictable, susceptible to change, and open to misinterpretation. For instance, the website for the Harmonized Tariff Schedule (HTS), which details tariff rates and statistical categories for all merchandise imported into the US, is averaging 120,000 additional visits per day compared to 2024. The recent expansion of tariffs and other trade measures may present compliance risks, so it is important to comply with correct customs procedures, including duty rates, origin of goods, and export controls.

The Harmonized System (HS) is an internationally standardized classification system used by customs authorities worldwide to categorize products and determine the correct taxes, tariffs, and duties for import and export activities. With over 98% of global merchandise classified under the HS, accurate classification is essential for compliance. Properly submitting the correct HS codes is crucial when filing import or export declarations, as well as for documentation such as shipping invoices, letters of credit, certificates of origin, and packing lists.

Sanctions and export controls are another instrument of government policy applied with increasing frequency. As of July 2025, the EU has 5,410 individuals and entities on its sanctions list and 36 regimes.

In addition, the governments of the US, the UK, and the EU are increasingly imposing export controls on specific technologies based on origin, particularly in the telecommunications and cybersecurity sectors, due to concerns over risks such as espionage, intellectual property theft, and infrastructure security. 

This dynamic environment, where trade enforcement spans a range of industries, products, geographies, and sustainability considerations, underscores the importance of proactive compliance strategies to mitigate risks and ensure seamless international trade.

What are the consequences of non-compliance?

Recent data shows a 15% increase in enforcement actions related to trade violations in 2024, highlighting heightened regulatory scrutiny. Non-compliance can have serious repercussions, including:

  • Financial penalties: Violations can lead to hefty fines — up to 10% of annual global turnover or US$1 million per violation, depending on jurisdiction.
  • Reputational damage: Non-compliance can tarnish a company's brand, eroding customer trust and investor confidence.
  • Business operations disruption: Customs delays, seizure of goods, or export bans can halt supply chains.
  • Legal consequences: Criminal charges, sanctions, and license revocations can have long-lasting legal implications.

Is supply chain transparency part of trade compliance?

Supply chain transparency and trade compliance are increasingly intertwined, requiring businesses to ensure their supply chains are both compliant with international trade regulations and transparent to stakeholders.

Supply chain transparency refers to the process of collecting, verifying, and sharing information about the origins, production practices, and movement of goods throughout a supply chain. This may include data on suppliers, raw material sources, shipping and logistics, product certifications, and environmental and labor practices.

Examples of supply chain transparency compliance include the US trade law 19 USC 1307, which prohibits the importation of goods made wholly or in part with forced labor, and the EU Deforestation Regulation (EUDR) which requires companies importing, exporting, or placing specific commodities on the EU market to ensure their products are deforestation-free and legally produced. The UK government has guidance for companies to ensure that modern slavery is not taking part in supply chains. Similar policies in other territories include the US Uyghur Forced Labor Prevention Act, the EU’s Forced Labour Regulation, and Canada’s Modern Slavery Act.

Strengthening supply chains, knowing your suppliers, and improving social sustainability can help you maintain a successful and responsible business.

How can technology enhance trade compliance visibility?

As the demand for trade compliance and supply chain transparency grows, business leaders can leverage emerging technologies to address these challenges. Artificial intelligence (AI) can be integrated into compliance processes by analyzing large volumes of data and records swiftly and with greater accuracy, improving classification and documentation processes. Marsh McLennan’s Sentrisk is an example of an AI-powered platform that harnesses data capabilities to highlight these types of hidden vulnerabilities within a company’s supply chains.

In real time, AI tools can also screen sanctioned individuals or entities, identify and flag potential compliance or supplier issues, and monitor regulatory changes across different countries, thereby enhancing overall transparency and communication within supply chains.

It should be noted that any technology that collects and uses data requires robust data security measures to protect sensitive information and ensure compliance with data regulations, such as the EU’s General Data Protection Regulation (GDPR).

How to mitigate trade compliance risks

Risk managers and compliance teams may be growing more concerned about trade compliance mitigation given recent developments and shifts. As such, implementing and strengthening trade compliance frameworks is vital. Here are some essential steps:

  1. Conducting due diligence and risk assessments
    Thoroughly screen suppliers, customers, and partners against denied party lists, embargoes, and sanctions. Regular audits, proper documentation, and continuous monitoring systems and training programs are vital.
  2. Integrating and coordinating action
    Embed compliance processes into your company's workflow across departments to monitor regulatory changes continuously. Share information on regulatory updates, define clear responsibilities, and establish policies and internal controls.
  3. Providing employee training
    Equip staff with targeted training, such as on anti-money laundering (AML) or anti-bribery, to ensure they understand regulatory requirements and their roles in maintaining compliance.
  4. Leveraging technology
    Use advanced screening tools for real-time verification of parties, goods, and transactions.
  5. Maintaining a comprehensive risk register
    Develop and regularly update a risk register that catalogs all potential compliance risks. Prioritize risks based on their impact and likelihood, ensuring that mitigation strategies are current and effective.
  6. Implementing robust systems and controls
    Deploy automated license management and real-time screening systems integrated with client onboarding and transactional protocols. These tools help maintain ongoing compliance with sanctions, export controls, and anti-corruption laws.

While no one can predict the exact trajectory of trade policies and regulations in the coming months or years, establishing resilience now through a comprehensive trade compliance strategy is likely to be more cost-effective than addressing issues after they arise.

Building a resilient trade compliance framework

The integration of advanced technology with Marsh’s expert advisory services has the potential to revolutionize how businesses understand and manage their compliance risks. In an era where trade compliance requirements are becoming more complex, comprehensive visibility and resilience are no longer just risk management tools — they are key sources of competitive advantage. Organizations that invest in these capabilities today will be better equipped to navigate future challenges, aligning with regulatory compliance while maintaining operational efficiency and agility. 

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