Compliance · methodology
The seven checks.
What every supplier passes before a buyer can see them, the regulation each check answers to, and where our responsibility ends.
Version 2.0 — 29 July 2026 · EU 2023/1115 · UFLPA · CSDDD · EU–Mercosur and EU–Colombia FTAs
Overview
Merco is a compliance-first sourcing platform for the LATAM → EU/US corridor. Every supplier completes seven sequential verification checks before their products become visible to buyers. The checks are not tiered by order size and are applied uniformly.
This document states each check, its regulatory basis, the evidence required, and how the check is performed. It is written for legal, compliance and procurement teams conducting supplier due diligence on us or on a supplier we have listed.
The seven checks
01 · AML/CFT · CSDDD Art. 8
KYB — Know Your Business
Every supplier goes through company registration verification, beneficial ownership mapping and FATF AML/CFT screening before activation. We verify that the legal entity name matches chamber of commerce records, that there is no OFAC / EU / UN sanctions match, and that the UBO chain is disclosed down to a 25% ownership threshold.
02 · EU 2023/1115 (EUDR)
EUDR traceability — farm polygon verification
For EUDR-regulated materials — leather, wood-derived fibres, natural rubber — suppliers upload farm boundary GeoJSON in WGS84 / EPSG:4326. Each polygon is analysed against Copernicus Sentinel-2 L2A imagery: an NDVI histogram for the EUDR baseline window (July–December 2020) is compared with the trailing 180-day window, and a deterministic fusion returns CLEAR, REVIEW, DETECTED or UNVERIFIED. Hansen Global Forest Change and GLAD alerts are cross-checks where enabled; the primary verdict does not depend on them. A polygon that is not CLEAR blocks product listing.
03 · EU 2023/1115 Art. 4–9
Due Diligence Statement (DDS)
After polygon verification, Merco generates a EUDR Due Diligence Statement referencing the verified polygon IDs, the product HS codes and the supplier EORI number. The statement is locked with a SHA-256 hash and stored immutably, and exports as a PDF and as TRACES XML. It accompanies every commercial shipment, as the regulation requires.
04 · US UFLPA (2021) · CBP WRO
UFLPA screening
For US-bound shipments, suppliers are screened against the UFLPA Entity List, CBP Withhold Release Orders and the Uyghur Human Rights Project database. Any cotton, polyester or textile input from Xinjiang requires an additional Section 307 rebuttable evidence package. MID codes are validated against CBP construction rules.
05 · CSDDD Art. 7–8 · SA8000
Labour and social audit
Suppliers hold a current SMETA 4-Pillar, BSCI or SA8000 audit no more than 24 months old, or complete our remote social compliance questionnaire. The indicators reviewed are working hours (ILO ≤ 60h/week), freedom of association, child labour screening with minimum-age verification, and living wage benchmarking against national data.
06 · EU Textile Regulation · GOTS · GRS · OCS
Material certification
Products carrying a sustainability claim need the certificate behind it: GOTS for organic cotton (≥ 70% organic fibre), GRS for recycled content (≥ 20% recycled), OCS for organic blends. Certificates are validated against the issuer’s own database — Textile Exchange, Control Union, Bureau Veritas — and an expired certificate raises an alert and blocks listing renewal.
07 · EU–Mercosur FTA · EU–Colombia FTA
FTA and rules of origin
Preferential tariff eligibility is calculated from the product’s HS code, its material composition and the country of manufacture. For EU-bound shipments out of Mercosur (Brazil, Argentina, Uruguay, Paraguay) or Colombia, the two-stage transformation rule is assessed, and EUR.1 movement certificates or origin declarations (consignments up to €6,000) are prepared and attached to the shipment dossier.
Why the order matters
The sequence is load-bearing. Identity is established before any document is accepted; land is verified before a statement referencing it can be issued; the statement is issued before a product can be listed for an EU buyer. A check that runs after the fact produces a record, not evidence.
Where a check cannot be completed, the result is a hold rather than a pass. An unverifiable polygon returns UNVERIFIED, which blocks the statement in the same way a detected loss event does.
Scope and limitations
Merco is not a customs broker. We do not submit customs declarations for buyers or suppliers. We prepare compliance documentation — DDS, EUR.1, origin declarations — but the EU operator of record for EUDR purposes is the importing buyer.
Cotton and synthetic textiles are outside EUDR scope (Regulation (EU) 2023/1115, Annex I). EUDR checks apply to leather, natural rubber, wood-derived fibres (viscose, modal and lyocell from non-certified sources), soy, palm, cocoa, coffee and cattle products.
We do not guarantee EUDR compliance. We provide the workflow, the document management and the satellite analysis that support it. Legal responsibility for due diligence sits with the buyer as EU operator under Art. 4 of Regulation (EU) 2023/1115.
Requirements referenced here are current as of the date below. We track EU legislative change — CSDDD implementation, EUDR scope revisions — and update supplier requirements when it lands.
This document describes our verification process. It is not legal advice, and it does not transfer the importing operator's obligations under Regulation (EU) 2023/1115.