Introduction: Why understanding enforcement matters

The EU Deforestation Regulation (EUDR) introduces more than a new set of sustainability rules. It comes with a robust enforcement framework that will actively monitor compliance. For companies, understanding how the regulation is enforced is as critical as understanding what it requires.

With EUDR obligations taking effect for large companies in December 2025 and for small and micro companies by mid-2026, national authorities and customs agencies are preparing to audit supply chains and flag violations. 

Ignoring enforcement mechanisms can lead to shipment seizures, financial penalties, and reputational risk. But knowing how compliance is assessed in practice helps businesses build due diligence systems that can withstand scrutiny from the start.

In this article, we explain how EUDR enforcement works: From the role of customs and national regulators to the concept of substantiated concerns and the penalties for non-compliance. We also share practical steps businesses can take to reduce enforcement risk through strong due diligence and smart tooling.

How EUDR compliance is monitored

EUDR enforcement isn’t limited to post-facto audits or passive paperwork checks. It’s a structured, data-driven process that begins the moment goods enter the EU and extends far beyond customs clearance. For companies preparing their due diligence systems, understanding how compliance is verified in practice is essential. 

Competent authorities: The frontline of enforcement

Every EU Member State has designated one or more Competent Authorities responsible for enforcing the EUDR. These national regulators, often tied to environmental, agriculture, or forestry ministries, oversee whether operators meet their due diligence obligations. They carry legal authority to audit, investigate, and, where needed, apply penalties.

Unlike scheduled financial audits, EUDR inspections can be unannounced. Competent Authorities may request documentation, review systems, or inspect facilities without prior notice.

These authorities also operate in coordination with customs and their counterparts across the EU. If non-compliant goods are detected in one country, the information is shared to prevent entry elsewhere creating a joined-up enforcement network across the single market.

Tip: Not sure who your Competent Authority is?
The European Commission maintains an official list of Competent Authorities by country. Check yours here.

Customs is your first point of contact

EUDR enforcement doesn’t start with regulators, it starts at the border. Every shipment of in-scope commodities must be linked to a due diligence statement (DDS). Customs authorities will now verify this DDS as part of the standard import or export declaration process.

If a DDS is missing, incomplete, or associated with a high-risk source or flagged operator, customs can delay or suspend the release until a Competent Authority completes its review. This early-stage enforcement prevents non-compliant goods from entering the EU market in the first place.

Today, this coordination happens through national contact points and customs systems. But that process is evolving. By June 2028, the EU will launch a fully integrated Single Window Environment, an automated interface connecting national customs systems with the EUDR database. Once in place, customs officers will receive real-time alerts if a DDS is missing or linked to risk indicators, streamlining enforcement and closing current coordination gaps.

For operators, this means border checks will become faster but also more precise. Any inconsistencies in documentation or risk status will be caught earlier and with greater certainty.

Risk-based enforcement, not random spot checks

EUDR does not treat all operators equally and that’s intentional. The regulation mandates a risk-based inspection model designed to focus enforcement where the likelihood of deforestation or non-compliance is highest.

Authorities base their inspection plans on several factors: the country of origin’s risk level, the type of commodity being traded, the complexity of the supply chain, and the operator’s compliance history. They also account for “substantiated concerns” raised by third parties, such as NGOs, whistleblowers, or competitors.

To guide the yearly inspections, the European Commission has introduced a country benchmarking system. Each origin country is classified as high, standard, or low risk. This classification directly influences how frequently operators dealing with goods from those regions are inspected.

The regulation sets clear minimum inspection thresholds:

These thresholds apply to both the number of operators and the volume of goods they handle. The higher the risk, the more scrutiny. But no risk category is exempt. Authorities may conduct inspections on any operator at any time if a concern is flagged or conditions change.

This tiered model ensures that enforcement resources are allocated where they are most needed, while preserving a baseline level of oversight across all supply chains.

What are substantiated concerns, and how do they work?

One unique feature of the EUDR enforcement regime is the concept of “substantiated concerns.” This mechanism allows third parties to formally notify authorities of potential non-compliance. Under the regulation, a substantiated concern is defined as a “duly reasoned claim based on objective and verifiable information” suggesting that a company is not complying with the EUDR.

In plain terms, it’s a credible, evidence-backed tip-off that a trader or operator may be violating the regulation.

Who can submit a substantiated concern?

Any person or organization can file a substantiated concern with a national Competent Authority. This includes individuals, civil society groups, non-governmental organizations, and even business competitors. There is no requirement to be directly affected by the potential violation.

For example, an environmental group that uncovers satellite evidence of recent deforestation on a plantation linked to an EU importer could raise a concern. Similarly, a labor rights organization could file a concern about violations of local laws by a commodity producer.

What happens once a concern is filed?

Competent Authorities are legally required to assess all substantiated concerns “without undue delay” and to do so “diligently and impartially.” If the claim appears credible, they must take appropriate enforcement actions such as launching an official investigation, requesting company records, or conducting interviews. In some cases, interim measures may also be applied to prevent further harm during the review process.

In effect, substantiated concerns act as an early warning system. They allow authorities to act on credible information even if a company hasn’t been flagged through routine inspections.

Response timeline and feedback

Authorities must inform the party that submitted the concern of the outcome within 30 days unless national law specifies otherwise. This feedback includes whether an investigation has been launched or closed, along with the rationale behind that decision. The feedback loop is a critical element in building trust in the mechanism.

To encourage responsible reporting, the regulation incorporates strong confidentiality safeguards. The identity of the individual or organization submitting the concern must be protected upon request. 

Why this matters for operators

The substantiated concern mechanism effectively extends enforcement beyond government oversight by empowering the public to act. In many cases, EUDR investigations may begin with a concern raised by an external party.

For example:

• A watchdog group submits satellite imagery showing land clearing on a supplier farm.
• A local community group presents evidence of land rights violations by a timber exporter.

In both cases, the Competent Authority would investigate whether the EU-based operator fulfilled its due diligence obligations.

This adds a layer of accountability. Even if a company is not selected for routine inspection, it may still face scrutiny if a third party raises a substantiated concern. 

What happens if you’re reported or found non-compliant

Nobody wants to end up in an EUDR enforcement case, but it’s crucial to know what the process looks like if it happens. Here’s a breakdown of what you can expect if you’re flagged or found non-compliant.

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1. Interim measures and investigation

Once a Competent Authority has credible evidence or suspicion of non-compliance they can immediately take interim action. This includes seizing goods or suspending them from sale to prevent deforestation-linked products from entering or staying on the market. 

For instance, if your shipment is under investigation, they may detain the goods in a warehouse or instruct you not to sell or move them until cleared.

2. Compliance check and hearings

The authorities will initiate a full compliance check. This may involve auditing your due diligence system, reviewing supply chain documentation, or conducting formal hearings. Full cooperation is mandatory, including providing access to relevant data and facilities.

If the investigation stems from a substantiated concern, authorities will evaluate the specific claims, for example, whether sourcing occurred from recently deforested land, and test the adequacy of your due diligence.

3. Finding of non-compliance

If the authority concludes that EUDR rules were breached, they’ll issue a formal notice requiring you to take corrective action without delay. Depending on the case, you may be required to:

• Fix procedural or data gaps (e.g. submit missing documentation, correct geolocation data)
• Halt distribution of affected products
• Withdraw or recall items already on the market
• Dispose of or donate non-compliant goods
• Strengthen your due diligence processes (e.g. improve supplier monitoring, retrain staff)

You’ll receive a deadline. If you fail to comply, authorities can escalate enforcement through court orders or direct action.

4. Penalties for non-compliance

Each EU Member State defines its own penalties, but they must meet minimum EU standards. These include:

• Fines: Up to 4% of your annual EU turnover. Fines are scaled based on environmental harm, financial benefit, and prior violations.
• Confiscation: Authorities can seize both products and profits from non-compliant goods.
• Temporary bans: Operators may be barred from selling regulated commodities or from participating in public tenders for up to 12 months.
• Loss of simplified due diligence: Repeated or serious violations can revoke eligibility for simplified procedures in low-risk countries.

These penalties underscore that EUDR non-compliance isn’t insignificant, it can be business-altering. A 4% turnover fine for a large company can be in the tens or hundreds of millions of euros. A trading ban, even temporary, can disrupt supply chains and contracts.

Authorities are also required to report enforcement outcomes to the European Commission, which will publish company names, violations, and penalties, making reputational risk part of the consequence. 

Real-world causes of non-compliance

In practice, most enforcement cases stem from a few recurring issues:

• Not having a strong due diligence system in place or failing to submit the required statement
• Providing false or misleading data
• Sourcing products from land that was deforested or used illegally after 2020
• Ignoring credible red flags, including NGO reports or public allegations tied to your suppliers
• Repeating past violations or failing to fix compliance issues once flagged

How companies can reduce risk and stay compliant

The EUDR sets a high bar for traceability and accountability. Staying compliant means more than submitting a statement. It requires building systems that are adaptable, accurate, and defensible under scrutiny. Here’s how companies can reduce risk and meet expectations with confidence.

1. Build a robust due diligence system and make it audit-ready

Your due diligence system is your first line of defense. It should be a structured and documented process, typically maintained in a manual or digital tool, that covers information collection, risk assessment, and risk mitigation for each batch of commodity you handle.

Crucially, your due diligence system needs to be audit-ready. The regulation requires operators to store due diligence statements and supporting documentation for at least five years. In practice, this means you should be able to present a complete file, physical or digital, on demand. That file should clearly document the evidence and reasoning used to determine that the product is compliant.

2. Review your system annually and adapt to new risks

EUDR compliance is not static. Companies must regularly reassess whether their systems remain effective as external risks evolve.The European Commission recommends a full system review at least once a year. These reviews should test whether:

• All required data is being collected
• Risk assessments are consistently applied
• Mitigation steps are being executed and documented

If conditions change, such as increased deforestation alerts in a source region, or new national laws affecting legality, you’re expected to revise your procedures. Updates should be formally documented and kept on record for five years.

3. Ensure data accuracy and traceability

The foundation of a defensible due diligence statement is traceability. You must be able to link each product back to its exact point of origin with full confidence that:

• Coordinates lead directly to the actual farm boundaries, not just the general area
• Volumes, supplier names, and documentation match across all files
• Legal documents are official, complete, and translated where necessary

High-quality data helps reduce two types of risk: genuine non-compliance, and false positives during enforcement screening. If your documentation is thorough and consistent, it’s far less likely to draw attention during risk profiling. In contrast, submissions with missing or implausible data, such as blank fields or coordinates that point to urban areas, are easy targets for inspection.

4. Use external certifications wisely

Third-party certification schemes, such as FSC for timber or RSPO for palm oil, can support your risk assessment, but they do not replace your own due diligence. Certifications can be a positive risk indicator and may reduce your residual risk when evaluating a supply chain, especially if the certifier uses credible and independent verification. 

However, you still need to complete all the EUDR due diligence steps yourself: collecting required information, assessing risk, mitigating if needed, and documenting everything in a due diligence statement. Think of certifications as supporting evidence, not a compliance shield.

5. Prepare a response plan just in case

Even well-prepared companies can be subject to inspections or substantiated concerns. Planning ahead can reduce confusion and improve outcomes if that happens.

Key steps include:

• Assigning internal roles for regulatory communication
• Creating a process for gathering requested documents quickly
• Preparing external communication templates, in case you need to update customers or partners
• Know who your national Competent Authority is and how to reach them. 

How software helps enforce-proof your workflow

The demands of the EUDR make manual compliance increasingly risky. While strong processes and trained teams are essential, digital tools can help ensure that nothing falls through the cracks in the following ways:

Centralize data and documentation: EUDR compliance produces vast amounts of information: coordinates, supplier records, legality documents, risk assessments, and due diligence statements. A digital platform allows you to organize all of it in one place linked to each shipment or product lot. This eliminates the chaos of spreadsheets and email chains, and ensures that when authorities request evidence, everything is accessible within minutes. Audit trails are created automatically, and documentation is standardized across teams.

Automate key workflows and deadlines: Purpose-built software can embed compliance checks directly into your operations. It can prompt procurement teams to collect required data, block progress until geolocation is provided, or send alerts when a due diligence statement deadline is approaching. 

Proactively manage supply chain risk: Advanced tools go beyond data storage. They help identify and act on risks. This includes:

• Flagging suppliers from high-risk countries
• Sending deforestation alerts using satellite data
• Tracking reports on land conflicts or legality issues

Technology as your compliance co-pilot: Software doesn’t replace human oversight. But it reinforces your processes, ensures tasks are completed consistently, and gives compliance teams time to focus on what matters most.

How Coolset helps you stay on track

Coolset’s platform is designed to simplify EUDR compliance for companies of all sizes. It enables businesses to:

• Automate DDS generation: Pull supplier data into pre-configured DDS templates. Save time and reduce errors.
• Validate origin data: Flag missing GPS coordinates, incomplete documents, or mismatches.
• Benchmark risk: Incorporate EU country risk scores to scale due diligence efforts based on sourcing location.
• Audit-proof recordkeeping: Maintain all DDS, supplier documents, and risk assessments in a secure archive.
• Integrate with ERP tools: Pull product data and sourcing details directly from procurement or supply systems.

Coolset’s tools are pre-configured to support EUDR documentation requirements and designed for ESG or compliance teams that need to move fast.

The solution is launching later this year and you can get early access by joining the waitlist.

FAQ - EUDR compliance and enforcement

What is a substantiated concern under EUDR?

It’s the regulation’s formal reporting mechanism for potential non-compliance. A substantiated concern is defined as “a duly reasoned claim based on objective and verifiable information” suggesting that an operator or trader has breached the EUDR.

Any individual, NGO, or organization can submit such a claim to a Member State’s Competent Authority. If credible, the authority must assess it impartially, investigate, and take appropriate action. The complainant should be informed within 30 days of what follow-up action was taken. In short, substantiated concerns allow third parties to trigger enforcement scrutiny when they present solid evidence of a violation.

Who enforces EUDR and how?

National Competent Authorities are responsible for enforcement, working alongside customs. Authorities conduct compliance checks using a risk-based approach, focusing on high-risk commodities, regions, or companies with prior issues.

EU law sets minimum inspection thresholds (e.g. 9% of operators sourcing from high-risk areas must be checked annually) and allows for unannounced audits. These may include document reviews, site visits, and goods testing. Customs enforce compliance at borders by verifying due diligence statement references and suspending clearance if necessary. Enforcement is coordinated through EU information systems to ensure consistency across Member States.

What are the penalties for non-compliance?

Penalties vary by country but must be “effective, proportionate, and dissuasive.” They include:

• Fines of up to at least 4% of annual EU turnover for serious violations
• Confiscation of products and any associated profits
• Temporary bans (up to 12 months) from selling regulated commodities or participating in public procurement
• Orders to withdraw or recall products from the market
• Suspension of simplified due diligence privileges

Penalties may be applied together. Final enforcement outcomes are made public, with the names of offending companies and details of the penalties published by the EU.

How can my company reduce the risk of being flagged?

Embed compliance into daily operations. Start with a strong due diligence system and keep records organized and accessible. Review your DDS at least annually and update it in response to new risks or developments.

Ensure all data, geolocation, legality, deforestation status, is accurate and verifiable. Submitting incorrect information (like wrong coordinates) is a breach in itself.

Monitor your supply chain for red flags. If a concern is raised by an NGO, in the media, or elsewhere, investigate it rather than waiting for enforcement. While sourcing from low-risk countries can reduce exposure, remain vigilant across all geographies.

Internally, train your procurement and sourcing teams on EUDR requirements. Engage with authorities’ guidance and industry initiatives to stay aligned with evolving best practices.

Can I be reported anonymously?

Yes. The EUDR requires Member States to protect the identity of those submitting substantiated concerns. This aligns with EU whistleblower protections, allowing informants to remain confidential if they choose. Authorities assess the claim regardless of whether the complainant is named. For companies, this means a concern can be submitted at any time by anyone, and still prompt an investigation. The anonymity provision ensures the focus stays on the facts, not the individual raising them.

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