Export Regulations Due Diligence and Best Practices

Export Regulations Due Diligence

Export regulations due diligence is a somewhat vague term given the gravity of maintaining an export compliance program.  It is no easy task to determine product classifications, obtain licenses, and screen potential customers.

Bureau of Industry and Science and Export Administration Regulations

The Bureau of Industry and Security (BIS) manages Export Administration Regulations (EAR).  The EAR is a series of regulations that control the export of items that have the potential to fall under dual usage categories.  Dual usage refers to technology that can be used for both peaceful and military purposes.  Before exporting a product a business must determine whether an export license is needed from the Department of Commerce.  This is done by finding the classification of the product’s Export Control Classification Number (ECCN).  All ECCNs are listed in the Commerce Control List (CCL) 

BIS Best Practices for Export Regulations Due Diligence

BIS guidelines include the following best practices for maintaining due diligence for the EAR:

  1. Conduct a thorough assessment of your product’s potential application.  Even if an item would not require a license you should consider if there are any potential dual usage concerns.
  2. Always conduct a stringent vetting of new or unfamiliar customers and be on the lookout for any of the following “red flags”.
    • A new customer places an unexpected and/or high-value order for sophisticated equipment.
    • The customer is a reseller or distributor. In such cases, you should always inquire who the end user is.
    • The customer has no website or social media and is not listed in online business directories.
    • The customer’s address is similar to an entity listed on the CSL, or the address indicates the customer is located close to end users of concern, including co-located with an entity listed on the Entity List.
    • Your customer places an order ex works.   Ex works refers  to instances when a seller makes a product available at a designated location, and the buyer of the product must cover the transport costs and make all shipping arrangements through a freight forwarding service.  In such cases, request that the freight forwarder provide you a copy of the Electronic Export Information (EEI) filing to ensure the information is accurate.

CVG Strategy

CVG Strategy has the compliance and training programs to help you meet EAR due diligence requirements.  Often smaller businesses often don’t have the bandwidth to dedicate to adequate export compliance.  Because of this we offer outsourced Export Compliance Officer services.  We also offer signs and accessories to aid in Visitor Access Control on our ITAR Store.

CVG Strategy, LLC is recognized the world over as the premier provider of customized ITAR Consulting and ITAR & Export Compliance Programs.  We provide training that addresses critical U.S. Government regulations including EAR, ITAR and other regulatory agencies.

Contact Us with your EAR and ITAR questions to see how we can help.

Kevin Gholston

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