facilitating trade: improving customs risk management

Facilitating Trade:

Improving Customs Risk Management Systems in the

OIC Member StatesOIC Study 2018

11th Meeting of the COMCEC Trade Working Group

1

The presentation is specially prepared for the 11th Meeting of the COMCEC Trade Working Group

Objectives and Methodology of the Study 1

Benchmark Criteria of the Study 2

Main Findings – Analysis Results 3

OIC Case Studies 5

OIC MS CRM Challenges / Policy Options 6

Non-OIC Case Studies 4

2




OIC Case Studies 5



3

4

Desk Research‣ Literature Review

‣ Review Trends in

CRM Experiences

Globally

‣ Locate and Analyze

CRM Systems in

Three Non-OIC

Countries

‣ Develop Lessons

Learned and Critical

Success

Factors/Challenges

‣ Survey creation and

dissemination

‣ Collection,

systematization and

analyzing of the

statistical data from

internationally

available databases

‣ To document the

current status of CRM

systems in the OIC

MS and develop

benchmarking criteria

‣ Face-to-face

interviews with

representatives from

CAs

‣ Identify the major

steps necessary to

achieve an efficient

and effective CRM in

these countries

‣ Draw a series of

conclusions and for

further improvement

of CRM across the

OIC member states

‣ Analyzing by different

statistical tools as

descriptive statistics

‣ Compare different

variables and

correlation analysis

‣ Find the influence of

different aspects of

CRM development in

OIC MS with trade

costs, country

rankings related to

trade facilitation

Desk

Research

Data

Collection

Data

Analysis

Field Visit

Case Study

1. Methodology and Objectives of the StudyMethodology of the Study

5

• To improve awareness of the CRM and the benefits it produces for the trade facilitation

• To share information on the best practices of CRM implementation

• To explore the state of play of CRM in the OIC countries, including CRM implementation, performance and trade facilitation impacts, and

• To provide policy options and guidelines for establishing/improving effective CRM.

1. Methodology and Objectives of the StudyObjectives of the Study

6

Introduction 1Conceptual Framework 2Global Trends and Best

Practices 3

Analysis of the CRM

Implementation Stage 4Assessments in 3 OIC

Member Countries 5Conclusions and

Recommendations 6

1. Methodology and Objectives of the StudyThe Sections of the Study




OIC Case Studies 5



7

‣ Customs Code,

Implementing

Regulation and

Customs

Strategy

‣ Law Enforcement

and CRM

Strategy/Policy

‣ Action Plan and

KPA

‣ MMA and MoUs

‣ Implementation

of International

Standards and

Agreements

Supporting

Mechanism

‣ Organizational

Structure Support

of CRM

‣ Change

Management and

Continuous

Improvement

‣ Human Resource

Development

(Knowledge-

Based Systems)

‣ Processes and

Standard

Operational

Procedures.

Organization &

Management

‣ Risk Assessment

(Risk

Identification Risk

Analysis and

Risk Evaluation

and Prioritization)

‣ Preparation/

Profiling

‣ Targeting

‣ Covering/

Treatment

‣ Evaluation of

outcomes/

Feedback

CRM

Cycle

‣ Key Performance

Area,

‣ Key Performance

Indicators

‣ Performance

Indicators

Monitoring &

Review

‣ Tools, equipment,

and

Infrastructure;

‣ LE IT System;

‣ CRM Module

Embed in CDPS /

Integrated CRM

System;

‣ Data Warehouse,

Business

Intelligence, and

Data Mining.

Technology/

Infrastructure

8

2. Benchmark Criteria of the Study

9

Data

Collection

3 different collection methods: interviews,

survey and desk research. OIC MS returned

the limited number of surveys (12 in total)

collection of information for the three case

studies (Turkey, Senegal and Albania CAs).

relies on single criteria - Risk Management

Cycle, on which information can be obtained

for all OIC MS even in the absence of a

survey

1

2

3

Desk Research

and Interviews

Cross-country

Comparison

Assessment method – Cross-country comparison: single criteria

2. Benchmark Criteria of the Study




OIC Case Studies 5



10

CRM Level of

Implementation

Coverage of the CRM

Process

‣ No CRM

‣ Basic CRM

‣ Medium CRM performances

‣ Advance CRM performances

‣ Full CRM performances

‣ No Coverage

‣ 2 Processes of the CRM

‣ 3 - 4 processes of the CRM

‣ 5 processes of the CRM

‣ All CRM processes covered11

Level of coverage of the CRM cycle

3. Main Findings – Analysis Results

30% Full CRM7% Advance CRM

44% Medium CRM

3% Basic CRM16% No CRM

12

Level of coverage of the CRM cycle in OIC MS3. Main Findings – Analysis Results

13

Level of coverage of the CRM cycle between the three OIC regional groupings


• 34 OIC MS was participating to the

2017 Second Global Survey on

Trade Facilitation and Paperless

Trade Implementation

• 13 (38.24%) reported that they

have fully implemented CRM; 15

(41.42%) reported partial

implementation stage; 2 (5.88%)

in the planning stage and 7 OIC

MS have not implemented CRM14

Level of coverage of the CRM cycle in the OIC MS


2010 ~ 2017

2000 ~ 2010

1990 ~ 1999

16 CDPS

11 CDPS

11 CDPS

Information available for 38 OIC MS

15

Timeline - CDPS Implementation in OIC MS


16

Trade Costs and Time Comparative Analysis between OIC MS,

EU, CEFTA and ASEAN


OIC MS Year of adoption of AEO Concept No. of operators

Albania Adopted legislation

Algeria 2012

Azerbaijan 2013 1

Bahrain Under Development

Bangladesh Under Development Exporter at the pilot stage

Brunei Darussalam Sutera Lane Merchant Scheme 2017

Cameroon Performance Operators’ Contracts 2011 27 Importers

Ivory Coast 2017Experimental phase 2nd quarter

2017 with 10 pilot companies

Egypt 2005 115

Indonesia 2013 9

Iran 2014 11

Jordan Golden List 2005 60

Kazakhstan 2013 5 legal entities

Kyrgyzstan EAEU legislation adopted

Lebanon 2010

Malaysia 2010 59

Morocco 2006 342 (180 category A)

Mozambique 2012 6

Nigeria 2017

Oman 2017

Pakistan Under Development

Saudi Arabia 2017

Senegal Privileged Partnership Programme 2011 22

Sudan Golden List 2016 5

Tajikistan EAEU legislation adopted

Togo Privileged Partnership Framework 2016 10 pilot operators

Tunisia 2010 25

Turkey 2013 225

Uganda 201317 Importers/Exporters

19 Customs clearing agents

United Arab Emirates Golden List programme 2007 26

• 26 out of 57 OIC MS have not implemented AEO;

• 4 MS has the legal framework for authorized traders programme adopted;

• 3 MS are under development;• 24 MS has implemented the AEO or similar

simplification measures concepts.According to the WCO Compendium of AEO Programme (2017):• Total number of the AEO operators in OIC MS

is 606 • In average, 25 operators per MS• Turkey is the leader in the OIC MS with 225

AEO operators, and Morocco with 180 AEO operators (category A).

19

Authorized Economic Operator





OIC Case Studies 5



20

‣ Customs Strategy provides

valuable input in the LE and

CRM Strategies/Policy;

‣ The laws are fully compliant

with current EU acquis

supported by the other

related regulations and

strategies.

Seneal

‣ The Australian Border Force

(ABF) adopted Strategy

2020 and the Corporate

Plan 2015-19, aligned with

the ABF reform programme;

‣ Main objectives stipulated in

the 2020 Strategy is risk-

based processes of

passengers and goods flow,

customs compliance, and

revenue collection.

Albania

‣ New Legislative framework

(regulatory framework for

CRM, supported by a series

of measures to TF and

ensures compliance)

‣ Strategy related to CRM is

Intelligence-led, risk-based

streamline, simplification of

trade processes, other

border-related risks through

an integrated risk

management approach.21

4.1 Legal, Strategic and Other Mechanism

4. Non-OIC Case Studies

Kosovo Australia New Zealand

‣ Establishment of Risk

Management Commission

(RMC) monitoring the

customs compliance and

revenue collection.

‣ Australian Customs and

Protection of Borders

Service were merged with

the Department of

Immigration and Border

Protection to establish the

Australian Border Force

(2015);

‣ Customs and Border

Protection introduced a

Profile Management Board

and developed a plan for

measurement of the CRM

performances.

‣ Establishment of Customs

Audit and Risk Committee

monitoring the

performances in information

management, enforcement,

revenue collection,

coordinated examination

and delegation of control.

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4.2 Organization and Management



‣ Full coverage of the CRM

Cycle

‣ LE IT System for managing

the feedback/irregularities;

‣ Exchange of customs data

in real time with the

neighboring countries

(SEED)/Risk Assessment

on pre-arrival information;

‣ Intelligence based CRM.


Cycle

‣ Use of intelligence,

combined with information

flows from other intelligence

agencies;

‣ Common CRM

repository/CRM

management system with

border and OGAs;

‣ National level - exchange of

information


Cycle

‣ Automated Targeting

System – assesses pre-

arrival passenger’s

information;

‣ Border Protection Financial

Management Information

System (FMIS)

‣ Exchanges data with OGAs,

National, and International

agencies.

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4.3 Risk Management Cycle



‣ The performances of KC

CRM is monitored

continuously -

comparative analysis of

risk indicators/profiles on

the historical data using

BI and data mining.

‣ Evaluation of the

effectiveness of CRM -

Cargo Intervention

Strategy (CIS) and

Differentiated Risk

Response Model

(DRRM).

‣ CRM assessment tool -

Customs Harm Model,

enables NZCS to

measure the impact of

Customs’ enforcement

and risk management

performances.

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4.4 Monitor and Review



‣ CRM supported by the

AW, Integrated LE IT

System, DWH/BI and

data mining;

‣ Australian Integrated

Cargo IT System (ICS) -

CDPS with full coverage

of CRM Cycle;

‣ Use of advanced CRM

technique - data mining

and risk profile

simulation.

‣ Joint Border

Management System

(JBMS) - advanced risk

management tools

supporting Customs and

Ministry of Primary

Industry and all border

stakeholders.

25

4.5 Technology






OIC Case Studies 5



26

‣ CRM Strategy - Overall

Customs Strategy

‣ Improvement of legal,

technical and

administrative

infrastructure

‣ AEO implemented in

2013, (225 AEO

certificates issued)

‣ LE strategy vs CRM

Strategy (control and

facilitation purposes)

‣ CRM strategic plan

without regulatory

character.

‣ PPP established in 2011.

PPP will transform in

AEO. (11 PPP holders)

‣ Administrative

Instructions,

Implementing

Regulations, and SOP

‣ Implemented the AEO

status (no trader has

applied for AEO)

27

5.1 Legal and Strategic Support to the CRM

5. OIC Case Studies

Turkey Senegal Albania

‣ Decentralized (risk

assessment process

performed on the

local and regional

level)

‣ Centralized (CRM

and Intelligence

Department)

‣ The IT department is

providing continuous

support to the CRM

and the Intelligence

Department.

‣ Centralized (Risk

Analysis, Unit and

the Monitoring Unit)

‣ Plan: Merge CRM

and Intelligence (with

44 customs officers)

28


5. OIC Case Studies


‣ Integrated DW

(GUVAS) supports

CRM in identification

of the risks

‣ Cover the full CRM

cycle and is

intelligence-led.

‣ Full automation of

CRM

‣ Inter-Services

Committee

coordinate the CRM

Department

‣ 2 parallel CRM

systems – SIAR and

TAME

‣ The CRM

Department is

responsible for CRM

Cycle

‣ ACA is part of the

SEED project

29


5. OIC Case Studies


‣ Monitor performances

related to CRM

‣ Risk Profiles assessment

at every six months.

‣ Quantitative Measurements

‣ National Information and

Documentation System

(FNID - drugs, litigation,

vessels and currency

declarations)

30


5. OIC Case Studies

Turkey Senegal

‣ Advanced IT tools

‣ Integrated customs

data warehouse

(GUVAS) -monitor

and measure

‣ Ongoing project for

implementation of

data mining concept

in TCA.

‣ GAINDE Intégrale

CDPS

‣ SW and TAME for

risk analysis,

targeting and risk

guidance.

31

5.5 Technology

5. OIC Case Studies

Turkey Senegal




OIC Case Studies 5



32

Policy Options

‣ Revenue collection VS trade facilitation,

community protection, and national

security

‣ Strategic support of CRM with overall customs

strategy and specific Law Enforcement and CRM

Policy

‣ Strategy review and evaluation of

progress. Information to measure progress

regarding non-revenue related strategic

objectives not available

‣ Develop clear goals, objectives and performance

measures (balancing revenue and non-revenue

objectives)


6. OIC CRM Challenges / Policy Options

Challenges

33

Policy Options

‣ Action plans are not specific ‣ Development of strong strategic planning process

‣ Legal basis for exchange of security-

related information of high-risk

consignments

‣ Laws: Customs control is based on risk analysis, use of

pre-arrival information and the concept of simplified

procedures

‣ Legal Basis - AEO

‣ Customs and trade partnership programmes for AEO

‣ Customs-to-Business Cooperation to facilitate legal

trade;



Challenges

34

Challenges Policy Options

‣ Lack of or inadequate control

authority

‣ Sufficient authority to undertake inspection functions, with

adequate powers



35

Policy Options

‣ Traditional silo-functional and geographical

lines

‣ Critical “value-added” functions (TF, CRM,

intelligence, PCA)

‣ Lack of change management and continuous

improvement‣ Sound change management strategy



Challenges

36

Policy Options

‣ Cooperation with other border management

agencies

‣ Strong CA HRM Strategic Planning Process

‣ Ensure continuous HR development and career

advancement

‣ Training for customs staff

‣ Development and implementation of a training

programme for customs staff

‣ Conduct organizational competency

assessment/audit to identify current gaps;



Challenges

37

Policy Options

‣ Necessary CRM processes with the requisite

SOPs.

‣ Risk Management Committee

‣ Monitoring process

‣ From partial to full coverage of the CRM cycle

using BPR;

‣ Develop and review CRM processes and integrate

them into the other CA processes



Challenges

38

6.2 Organization and Management (IT Systems VS Cycle)


39

Policy Options

‣ CRM is not based on compliance

measurement, risk assessment or profiling.

‣ Concept of measurement, object of measurement

and methods of measurement (consequences and

uncertainty)

‣ CRM cycle focus on high-risk goods while

facilitating low-risk shipments‣ Advanced risk assessment techniques and tools

‣ Coverage of CRM cycle based on CRM

functionalities embedded in CDPS

‣ Enhanced use of IT for integration of the full CRM

cycle



Challenges

40

Policy Options

‣ Lack of automated processing

‣ Regular and ad-hoc review and updating of the

risk profiles/indicators

‣ IT systems for management of the

feedback/outcomes from the control

‣ Lack of cooperation/exchange of information

with the relevant stakeholders

‣ Closer contact and communication with traders

and OGAs

‣ Information exchange with other Customs

administrations in real time



Challenges

41

42



43

6.3 RM Cycle (Example of Text Mining on e-News Sources)


Policy Options

‣ Action plan - elements for measuring the

performances of LE and CRM ‣ Appropriate management information, operational

statistics and performance indicators

‣ Performance information and operational

statistics related to revenue collection

performance

‣ Supportive IT systems

‣ CRM SOP and business processes are poorly

developed ‣ Improving existing business processes

(international standards and procedures)



Challenges

44

Policy Options

‣ Adequate tools, equipment and infrastructure

for the inspection ‣ Strategic support of CRM focusing on safety and

security instead only on revenue collection;

‣ Pre-arrival/pre-departure information for risk

assessment

‣ IT support for the electronic submission of pre-

arrival/pre-departure information for risk

assessment.

6.5 Technology


Challenges

45

Policy Options

‣ Manual, non secured management of

information in LE;‣ Integrated Customs Law Enforcement IT System;

‣ CRM Module embedded in CDPS; ‣ Integrated Customs Risk Management System;

‣ Data is frozen in multiple systems/data layers; ‣ Data integration for effective CRM;

‣ Manual data processing and „homegrown“

solutions‣ Data Warehouse / Business intelligence;

6.5 Technology


Challenges

46

Policy Options

‣ Inconsistent „fact“ base for decisions create

multiple versions of the truth;

‣ Using data mining and predictive analytics‣ Non-application of international standards can

hamper operation of data transfer, and

exchange of messages.

6.5 Technology


Challenges

47

6.5 Technology Example (Kosovo Law Enforcement IT System)


48

6.5 Technology (ICT Traditional Silo)


49

6.5 Technology (Big Data – Common CRM Repository)


50

6.5 Technology (Data Integration steps)


51

6.5 Technology (Example of ICRM System Conceptual Model)


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facilitating trade: improving customs risk management

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