AEO & compliance

Nowadays, AEO and compliance are indispensable in international trade. However, this does not mean that the maintenance of the AEO authorisation and/or retaining a high compliance level is straightforward. Procedures, internal controls, audits and monitoring are key themes in this respect. Furthermore, an AEO- or Compliance Control Framework can help to ensure compliance completely.

The AEO status plays an important role to companies involved in customs logistics. Being able to meet the AEO requirements is also important for obtaining and retaining other customs authorisations. What does this mean for your company in particular?

AEO, authorised economic operator, was introduced in 2005/2006 into the European Union (hereafter: EU). If an EU-based company was in possession of an AEO certificate at the time, the European customs authorities would consider this company as a reliable party. Meanwhile, the AEO certificate has been replaced by an AEO authorisation. The customs authorities assess whether this authorisation is being managed correctly and whether the holder is actually 'in control'.

The AEO attributes to maintaining a certain compliance standard in the international trade. Both customs authorities and businesses can use the AEO status of companies to distinguish reliable companies within the international supply chain. Having an AEO authorisation indicates that a company has taken measures to ensure safety in the supply chain. For example the use of procedures to ensure a correct customs declaration or the use of security measures to ensure safe storage of products.

The AEO authorisation provides different possible benefits to companies. Companies with an AEO authorisation may be less frequently physically and administratively inspected by customs authorities. Another benefit relates to the impact on customs authorisations such as a lower or zero guarantee related to certain customs authorisations.

Meeting the AEO requirements

Requesting an AEO authorisation seems fairly simple. You perform a self-assessment, fill in the application form and declare at the time of application that you will take measures to be "in control". However, this is only the start of the process of holding an AEO authorisation. Many requirements need to be met in order to be able to declare that your company complies today and will continue to do so in the future. Ensuring the retention of the AEO authorisation is of course also important for the future.

AEO requirements are as follows:

  • A record of compliance with customs legislation and taxation rules (this includes the absence of records related to (serious) criminal offences of the economic activities).
  • Maintaining a correct and complete trade and transport administration.
  • Proven financial solvency.
  • Practical professional competence or professional qualifications.
  • Appropriate security and safety standards (with the AEO security authorisation).

The preparation of the AEO application, as well as the authorisation and the maintenance of the AEO, is a time consuming process. Thorough preparation is the key to success. After all, it is expected that the applicant who wants to become an AEO is in control of its business.

We will therefore not only assess your AEO application, but we will also help you to maintain the AEO authorisation in the future. We do this by gathering information, assessing and coordinating procedures, instructions and working agreements, but also by consulting with Customs.

Practical help

1. Integrate a Compliance Control Framework into your business

The applicant who wants to obtain an AEO authorisation is in control of its business. This means that, depending on the type of AEO (Customs, Security or Full) applied for and the company's business activities, the company should have in place appropriate organisational measures in the fields related to the AEO criteria, aiming at ensuring that risks linked to the customs activities may be identified and avoided or minimised.

We have therefore developed the AEO Control Framework. Based on a set of procedures, internal controls, internal audits, registration of notifications and incidents and reports, your company is fully in control. The framework can also be used for other certification programs than AEO. Please feel free to contact our experts to discuss the possibilities.

2. Involve all relevant departments of your business with your Compliance Control Framework

The AEO authorisation does not only impact the everyday functioning of the department responsible for the operations covered by customs legislation. It is often no problem for a customs manager to maintain the procedures within his field of expertise and to compare them to the operational processes. How does this work when it comes to specific matters of security, IT, screening and training of staff, financial aspects or data security? In this area, the customs manager is not the leading figure within a company, but he is often the contact person for these aspects in the context of the AEO authorisation. Therefore, you need to make sure that other departments are (and remain) involved in AEO. An effective AEO Control Framework stands or falls with an effective communication structure.

3. Assemble an compliance team

A compliance team should include representatives from several different business units, the so-called stakeholders. Needless to say, the structure of the team will depend on the nature and size of your company, but the following departments are for sure eligible to join the compliance team: directors/management, customs, quality, purchasing, production, logistics, sales, corporate security, finance, IT and human resources. As you may notice, these departments correspond exactly to the components mentioned in the AEO Guidelines from the EU.

All stakeholders will have to check and maintain their own procedures in relation to their specialism and in the context of AEO and report the output from internal checks to the manager of the (AEO) compliance team.