Use this as a check list to discover possible violations of the Export Administration Regulations. You may also wish to visit WEB page that provides "Know Your Customer Guidance".
13 Red Flag Indicators for Export Transactions as follows:
- The customer or its address is similar to one of the parties found on the Commerce Department’s [BIS's] list of denied persons.
- The customer or purchasing agent is reluctant to offer information about the end-use of the item.
- The product's capabilities do not fit the buyer's line of business, such as an order for sophisticated computers for a small bakery.
- The item ordered is incompatible with the technical level of the country to which it is being shipped, such as semiconductor manufacturing equipment being shipped to a country that has no electronics industry.
- The customer is willing to pay cash for a very expensive item when the terms of sale would normally call for financing.
- The customer has little or no business background.
- The customer is unfamiliar with the product's performance characteristics but still wants the product.
- Routine installation, training, or maintenance services are declined by the customer.
- Delivery dates are vague, or deliveries are planned for out of the way destinations.
- A freight forwarding firm is listed as the product's final destination.
- The shipping route is abnormal for the product and destination.
- Packaging is inconsistent with the stated method of shipment or destination.
- When questioned, the buyer is evasive and especially unclear about whether the purchased product is for domestic use, for export, or for reexport.
In assessing diversion risks, identifying potential export violations, verifying end-uses, and determining the suitability of end-users to receive commodities or technology; Laws and regulations require that exporting firms come to "know their customers" by exerting all reasonable efforts to ascertain the end-use, the end-user, the ultimate destination, and other facts relating to a transaction or activity.
Before engaging in a transaction or activity, an exporter must determine whether "red flag indicators" are present.
These "red flag indicators" are specifically intended to assist exporters in exploring whether abnormal circumstances exist such that the transaction or activity may be destined for an inappropriate end-use, end-user, or destination.
The "red flag indicators" were developed to illustrate the types of circumstances that should cause reasonable suspicion that a transaction or activity may violate laws and regulations.
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