Regulators have sent numerous messages that companies who source from abroad need to subject their entire supply chain to extensive due diligence, based on state-of-the-art compliance measures to minimize supply chain risks. These include the issuance of an unusual briefing by the Departments of State, Treasury, and Homeland Security on the need for supply chain due diligence, a special advisory from the Department of Homeland Security on supply chain due diligence and compliance best practices, and a seven-figure Office of Foreign Assets Control (OFAC) penalty for a company not engaging in “full spectrum” supply chain due diligence. In addition, Customs has now fully implemented the supply-chain requirements of the Uyghur Forced Labor Prevention Act (UFLPA), which targets goods that are sourced in whole or in part from the Xinjiang Uyghur Autonomous Region within China. As a result, the amount of goods seized by Customs for forced labor, human trafficking, and UFLPA concerns has soared from around $3 million per year to well over $1 billion per year.
The message from the U.S. government is simple: companies that source from abroad need to take full responsibility for the ethical sourcing…
