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Saudi Customs publishes information on its Authorized Economic Operator program

Executive summary

Saudi Arabia has developed an Authorized Economic Operator (AEO) program and published the requirements to join. Businesses achieving AEO status obtain various customs benefits, including dedicated fast lanes and priority treatment. The accreditation process can be lengthy. Interested businesses should perform a thorough assessment of their customs and supply chain controls to ensure they meet AEO criteria before submitting an application.

Detailed discussion

Background

In June 2005, the World Customs Organization adopted the ”SAFE Framework of Standards to Secure and Facilitate Global Trade” to act as a deterrent to international terrorism, secure revenue collections and promote trade facilitation worldwide. One of the building blocks of this international framework is the AEO concept, where Customs authorities can accredit businesses that have high-quality internal processes that prevent tampering with goods in international transport. AEO is aimed at various stakeholders involved in the international trade of goods, including importers, exporters, warehouse owners, clearing agents and logistic carriers. AEO accreditation gives businesses an internationally recognized quality mark that indicates that their international supply chain is secure.

Saudi Arabia has developed its own AEO program, and Saudi Customs has published information on the requirements to join the program and the benefits that it can bring for businesses. Saudi Customs piloted the program with a limited number of large organizations in the country, and has now opened up applications to the wider business community.

Requirements to become an AEO

Before granting a business with AEO status, Saudi Customs will carry out an in-depth analysis of the existing processes and controls relating to the international supply chain. As a minimum, the applicant should meet the following requirements:

  • Three years of strong customs compliance and lack of criminal offenses
  • The existence of a robust electronic record keeping system
  • Financial solvency for the parent company and subsidiaries
  • The appointment of a responsible contact person with extensive corporate knowledge of customs related matters
  • A policy for security focused training and awareness for staff
  • Satisfactory procedures for verifying the accuracy of customs declarations and confidentiality
  • The ability to demonstrate safety measures in regards to containers, transport, company premises, warehouses, facilities, and the security of staff and workers
  • A process to check the adherence of business partners to security standards
  • An efficient system of crisis management and incident recovery
  • The ability to track key performance indicators to reduce risks and enhance security

Given the global profile of AEO status and the benefits it can bring, the criteria are set at a very high level. Even businesses experienced in customs practices should review the robustness of their processes and controls.

Advantages of AEO status

Achieving AEO status brings a host of benefits to businesses, including:

  • A dedicated fast lane at all points of entry in Saudi Arabia
  • Priority over non-AEO shipments in all customs procedures
  • The possibility to clear goods prior to arrival/departure
  • The possibility to have goods released before payment by using bank guarantees
  • Reduced physical inspection of goods
  • The possibility of physical inspections to be carried out at the warehouse or storage facilities of the AEO
  • The potential to benefit from similar programs in countries with Mutual Recognition Agreements
  • Use of AEO logo in marketing materials
  • A dedicated Saudi Customs account manager

Joining the program

The process to join the AEO program is as follows:

  1. The business submits an application.
  2. Saudi Customs assesses the application against the AEO criteria.
  3. The business performs a self-assessment using a questionnaire.
  4. Saudi Customs will assign a team to review the application, and carry out necessary on-site checks.
  5. AEO status is granted to an applicant that satisfies all program criteria.
  6. The AEO is assigned a dedicated an account manager by Saudi Customs.

During the application process, Saudi Customs is likely to request process documents for review, and carry out on-site audits to make sure the applicant’s facilities meet the AEO criteria.

Implications

AEO accreditation can offer significant benefits to businesses in Saudi Arabia, including enhanced movement of goods and lower costs for international trade.

Interested businesses should perform a thorough assessment of their customs and supply chain controls to ensure they meet AEO criteria before submitting an application. Submitting an application before carrying out a current state assessment could lead to rejection by Saudi Customs, and having to restart the process.

EYG no. 011164-18Gbl

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