What Every Multinational Should Know About … Conducting a Supply-Chain Integrity Compliance Self-Check
As detailed in Parts I, II, and III of this risk-assessment self-check series, we are publishing a series of self-check assessment guides covering the key regulatory and contractual risk areas for multinational companies. This article provides Part IV, which is a self-check assessment for companies to self-assess the status of their supply chain compliance. Part III provided a self-check assessment for conducting a sell-side contracts review; Part II covered the topic of conducting a buy-side contracts review; and Part I provided a self-check for general compliance.
Governments all around the world are sending a consistent message: multinational companies need to take responsibility for ethical sourcing throughout their supply chains. As a result, companies with international supply chains need to be aware of how the interlocking web of regulations, including prohibitions of the use of forced labor or human trafficking, restrictions on using Uyghur forced labor (as covered by the Uyghur Forced Labor Prevention Act), economic sanctions restrictions on sourcing of products from sanctioned countries, regions, and persons, conflict minerals restrictions, and supply-chain transparency rules all communicate a uniform message: companies need to be proactive and take responsibility for their supply chain, right down to the last sub-supplier. To comply, multinational companies need to know (and be able to prove) who made what, where, with which inputs, and under what conditions.
To help multinational companies deal with this reality, we are providing this checklist to allow companies self-assess the status of their supply chain compliance. A “no” answer doesn’t automatically mean noncompliance, but it should indicate a potential red flag and a potential gap for remediation.
I. Supply-Chain Mapping & Transparency
- Does your company have an up-to-date map of all direct upstream suppliers?
- Does your supply chain map extend to all sub-suppliers?
- Does your company know the actual manufacturing site(s) for each product/SKU (not just the vendor’s HQ address)?
- Has your company identified raw-material and component origins for high-risk inputs (cotton, polysilicon, seafood, critical minerals, etc.)?
- Do your company’s contracts with suppliers require consent to, or disclosure of, changes in manufacturing location, subcontracting, or sourcing?
- Does your company have a documented process to validate supplier claims (audits, data checks, document testing), not just collect certifications?
II. Supplier Onboarding & Ongoing Due Diligence
- Is there a risk-tiered supplier onboarding process tied to country, sector, and product risk?
- Are suppliers screened at onboarding and periodically for: (1) OFAC/economic sanctions/restricted parties risk; (2) forced-labor risk indicators; (3) human trafficking/labor broker/UFLPA risk; and (4) adverse media/supply chain integrity red flags?
- Does your company require suppliers to identify: (1) beneficial ownership; (2) labor brokers and recruitment practices; and (3) sourcing of key raw materials?
III. Forced Labor & Human Trafficking Controls
- Does your company have a written forced-labor compliance policy and supplier code of conduct with audit rights and remedies?
- Does your company prohibit recruitment fees and require evidence of: (1) worker contracts in native language; (2) proof of wage payments; (3) identity retention policies (no document confiscation); and (4) freedom of movement and voluntary overtime?
- Does your company assess labor-broker usage and high-risk indicators (debt bondage, withheld wages, coercion)?
- Does your company have a process to respond to forced-labor allegations with: (1) rapid internal investigation steps; (2) documentation preservation; (3) shipment holds (when necessary); and (4) corrective action plans with deadlines?
IV. UFLPA Readiness (Detention/Withhold Release Orders)
- Does your company maintain a UFLPA playbook that addresses who does what when contacted by CBP regarding a potential detention?
- Can your company produce traceability evidence quickly for imported products, including: (1) purchase orders and invoices by tier; (2) production records; (3) bills of materials; (4) shipping docs and container records; (5) supplier affidavits tied to specific shipments; and (6) transaction-level traceability for key inputs?
- Does your company maintain a “high-risk input” list (e.g., cotton, tomatoes, polysilicon, certain minerals) with enhanced documentation rules?
- Does your company have a documented approach for suppliers operating in or sourcing from high-risk regions, up to and including exclusion where risk cannot be mitigated?
V. OFAC/Sanctions Compliance & Restricted Parties Screening
- Does your company screen suppliers, intermediaries, freight forwarders, and financial institutions against restricted-party lists at onboarding and periodically?
- Does your company screen beneficial owners and not just the immediate counterparty?
- Are countries of concern flagged in procurement and logistics workflows (including transshipment points)?
- Does your company have controls to prevent indirect dealings (e.g., sales routed through distributors) from creating sanctions exposure?
- Does your company maintain auditable logs of: (1) screening results; (2) potential match resolution; and (3) approvals and exceptions?
- Is there a documented escalation process for: (1) clearing potential matches/false positives; (2) dealing with blocked or rejected transaction decisions; and (3) contract termination or wind-down steps (where required)?
VI. Conflict Minerals & Critical Raw Materials
- Does your company have a current scoping determination to identify products that contain tin, tantalum, tungsten, or gold (3TG)?
- Does your company identify 3TG smelters/refiners and assess whether they are recognized/validated programs and whether they are located in or sourcing from high-risk areas?
- Does your company maintain internal records supporting conflict minerals due diligence steps taken?
VII. Data, Documentation & Auditability
- Does your company have a process to annually update supply chain integrity certifications?
- Does your company have a process to address non-responsive suppliers (deadlines, escalation, disqualification)?
- Does your company maintain a centralized repository for supply-chain integrity evidence, accessible for rapid response?
- Are supplier certifications tied to specific products, facilities, time periods, and shipments?
- Does your company periodically test documentation quality (spot checks)?
- Does your company periodically conduct on-site audits of vendor locations?
VIII. Governance, Training & “Stop-Hold-Release” Authority
- Does your company have a named compliance owner for supply-chain integrity with authority across procurement, logistics, and compliance?
- Are procurement and sourcing teams trained on: (1) forced-labor red flags; (2) UFLPA detention response basics; (3) sanctions risk indicators; and (4) when to escalate?
- Does your company have clear “stop-hold-release” authority and defined triggers (e.g., missing traceability, sanctions match, forced-labor allegations)?
- Does your company track issues to closure with corrective action plans, deadlines, and repeat-offender controls?
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The Foley International Trade & National Security Team is monitoring all international trade, enforcement, and compliance developments, which we post as they occur on our Tariff & International Trade Resources blog. Click Here To Register for our email list to receive future emails and practical international regulatory compliance tips, including our Tariff-ied! and What Every Multinational Should Know articles.
Our white paper on Managing Import and Tariff Risks During a Trade War outlines a 12-step plan to provide practical steps to help importers navigate the tariff and international trade risks in the current tariff and trade environment, while the companion white paper on Managing Supply Chain Integrity Risks provides practical advice to deal with heightened supply chain risks pertaining to goods imported into the United States, including the increasing use of detentions by Customs.
