Comparing and verifying
Transaction verification is a process of comparing and then verifying all transactions within a specific product type, group or region over a given time period.
Certification bodies will be notified when transaction verification is necessary. Certificate holders will also be informed, and will cooperate with their certification body to provide the required data. The standard stipulates as follows:
1.7: The organization shall support transaction verification conducted by its certification body and Accreditation Services International (ASI), by providing samples of FSC transaction data as requested by the certification body.
The intention of this criterion is to ensure that FSC systematically investigates high-risk product types, species and regions, and limits the amount of inaccurate transactions. All FSC chain of custody certificate holders are subject to transaction verification. Only relevant data taken from invoices will be collected and no financial information will be required.
Steps 8 to 10 may be repeated several times for supply chains deemed high-risk.
Identification of potential risk
Consistent rumours or indications of high risk in a supply chain
Verification of risk
Investigation by ASI to verify level of risk. Spot-audits are part of verification.
Risk evaluation report sent to FSC
ASI sends evaluation of risk level to FSC with recommendation of further action.
Recommendation by supply chain integrity experts to FSC Supply Chain Integrity Steering Committee
FSC's Supply Chain Integrity Team recommends further action to the Steering Committee on the basis of ASI investigation.
Decision to implement transaction verification
Decision by the FSC Supply Chain Integrity Steering Committee to implement transaction verification in the supply chain.
Notification to all certification bodies
All certification bodies are notified by ASI about upcoming transaction verification request, including timeline and affected certificates.
Information to affected certificate holders
Affected certificate holders are notified by their certification body.
Call for transaction verification data
Affected certificate holders are requested to provide transaction verification data for a specified period of time.
Transaction data is analysed
Transaction data is forwarded by certification body to ASI who analyse and verify. Mismatching claims are investigated further.
Action taken on mismatches
In case of evidence of fraudulent actions by certificate holders, action is taken by FSC Legal unit, FSC Supply Chain Integrity and ASI.
How do certificate holders forward transaction data?
Certificate holders can submit their data using pre-defined formats supplied by FSC. The format requires information on volumes bought and sold, as well as unique identifiers such as invoice numbers.
How do certificate holders know if they are subject to transaction verification?
Certification bodies will notify the affected certificate holders, providing clear instructions, timelines and requirements of the specified transaction verification loop.
Read more on this: FSC Board Approves Plan To Address False Claims In The FSC System
Who will process the data that is submitted for transaction verification and is a non-disclosure agreement signed as part of the process?
Transaction verification is a certification activity carried out by Certification Bodies with their clients, and Certification Bodies collect the transaction data from their client certificate holders.
As with all certification activities, and according to FSC-STD-20-001, clause 1.8, the Certification Body “shall be responsible, through legally enforceable commitments, for the management of all information obtained or created during the performance of certification activities”. According to FSC-STD-20-001, clause 2.4.2, the Certification Body must have established procedures to “define the controls needed for the identification, transport, transmission, storage, protection, retrieval and disposition of its records related to the implementation of FSC requirements, including controls to safeguard confidentiality”. Therefore, if a certificate holder has concerns on matters regarding certification activities, including Transaction Verification, the certificate holder should raise these concerns with its Certification Body.
Certification Bodies must have the necessary agreements with their clients to comply with the requirements of FSC-STD-20-001.
Who will be processing the data?
Certification Bodies provide the transaction data to ASI for investigation through verification that FSC output claims made by certificate holders are accurate and match with the FSC input claims. This check-and-balance system is essential for a third-party certification system like FSC, which cannot be waived.
Note: Processing of business sensitive and confidential data is lawful as processing is necessary in order to ensure compliance with the FSC Certification scheme to which the data subject is party.
What happens if data from two trading parties does not match?
When ASI verifies that transactions do not match between trading partners, ASI informs the applicable certificate holders’ Certification Bodies to request additional information for further investigation.
Will FSC have access to the submitted data and store it?
In carrying out transaction verification, FSC does not expect or require receiving, accessing or processing Transaction Verification data. However, FSC does receive all relevant information and data regarding non-conformities identified via ASI investigations, so that FSC can take the appropriate measures to protect the FSC scheme and FSC’s reputation. FSC has the appropriate legal agreements with ASI and Certification Bodies to handle such data and information.
Are transaction verification requirements the same everywhere in the world?
Yes, they are the same everywhere in the world. However, based on a risk analysis and evidence of false claims, FSC and ASI will mainly focus transaction verification loops on certain regions and supply chains, where likelihood of false claims is high.
What happens if a certificate holder refuses to provide transaction data to their certification body?
The refusal to provide transaction data represents a breach of the contractual agreement between the organization and the certification body. If the information is not provided within the time frame requested by the certification body, the certificate holder will be issued a CAR or have their certificate suspended and/or terminated.
What are the consequences for uncertified businesses that are found making false and/or inaccurate claims?
Fraud and misuse of the FSC label by non-certificate holders are dealt with through the FSC legal office and trademark enforcement team, which investigate false use of FSC trademarks for non-eligible products and take legal action when needed.
What is the difference between false claims, inaccurate claims, and fraud?
‘Fraud’ is the term used for intentional false claims within the FSC system. ‘False claims’ happen when a product that is not eligible to be sold as FSC certified is sold with FSC claims on its sales documents. False claims can be intentional or not. They are only considered fraud when it can be proven without a doubt that the claim was made intentionally. ‘Inaccurate claims’ are where a product that is eligible to be sold as FSC certified is sold with the wrong claim (e.g. a product that should be sold as FSC Mix is sold as FSC 100%).
What information must be provided to fulfil the transaction verification requirement?
The data required for each TV loop may vary but generally will include information on trading partner (e.g. name, FSC CoC code), quantity, units, FSC claim type and species. Other data may be requested such as transaction identifier (e.g. invoice number), transaction date, description of products, country of origin, etc. No financial information will be required. The data will be collected on a sample basis, usually relating to a specific species, product type or timeframe in a specified format. The size of the sample requested will be determined by FSC and ASI based on risk. Auditors may also request access to shipping documents, invoices, or similar for confirmation.
Bamboo supply chains:
FSC Suspends Two Certificate Holders Following Investigation - 18 June 2018
Report on Effect of Supply Chain Integrity in Charcoal Supply Chains - 4 December 2019
FSC Conducts Investigations On Charcoal Producers - 2 July 2018
The report shows the effect of transaction verification and wood identification tests in the charcoal supply chains from 2017-2019. It also provides information on how the efforts to eliminate false claims from the FSC supply chains has led to increased areas of FSC certified forests in Namibia.
Transaction Verification In Paulownia Supply Chains - 19 February 2019
FSC Introduces New Okoume Transaction Verification - 28 July 2020
FSC Introduces New Charcoal Transaction Verification - 28 July 2020
FSC Introduces Transaction Verification for All Forests in China - 14 April 2020
Transaction Verification in Oak Flooring Supply Chains - 9 April 2019