Vetting Your Overseas Buyers

We all know that there are certain bad actors on the international stage with whom U.S. companies should not do business, but how do you properly determine that your foreign buyer is not one of these?

Check the Consolidated Screening List to see if trade with your business partner or end-user is allowed, allowed but requires a license, is restricted, or is prohibited. 

The Consolidated Screening List (CSL) is a list of parties for which the U.S. Government maintains restrictions on certain exports, reexports, or transfers of items. The CSL consolidates export screening lists from the Departments of Commerce, State and the Treasury and may be used as an aid to industry in conducting electronic screens of potential parties to regulated transactions.

Do your due diligence in researching your business partner, having compliance programs in place, and being alert to suspicious activity.

When researching your business partner or customer, there are several things you can do to ensure they are a reliable end-user and partner and will not violate any U.S. trade policies:

  • Request an end-user certificate and visit their public website, if available
  • Review other social media sources and request business registration
  • Provide license and regulatory conditions in writing and obtain written confirmation
  • Conduct a visit to the company, in person or virtually, and make sure there aren’t any other red flags

Good compliance programs ensure that businesses have all the necessary steps and contingency plans in place to ensure company compliance with all U.S. export laws and regulations. Important elements of a compliance program include:

  • management commitment, continuous risk assessment, and formal written guidelines
  • pre and post export compliance security and screening
  • adherence to recordkeeping requirements
  • internal and external compliance monitoring and periodic audits
  • program for handling compliance problems and completing appropriate corrective actions

For more information, see the Export Compliance Guidelines posted by the BIS.

Included among examples of red flags are orders for items which are inconsistent with the needs of the purchaser, a customer’s declining installation and testing when included in the sales price or when normally requested, or requests for equipment configurations which are incompatible with the stated destination (e.g., 120 volts in a country with a standard of 220 volts). See the Red Flags List published by the BIS, which is not all-inclusive, but is intended to illustrate the types of circumstances that should cause reasonable suspicion that a transaction will violate U.S. trade laws and regulations.

Once you have verified you are dealing with an authorized international partner and have received the necessary licensing (if required), use the Destination Control Statement on all trade documents.

The Destination Control Statement (DCS), required for all exports under Export Administration Regulations (EAR) and International Traffic in Arms Regulations (ITAR), can also be used for any U.S. exports.

At a minimum, the DCS must state:

“These items are controlled by the U.S. Government and authorized for export only to the country of ultimate destination for use by the ultimate consignee or end-user (s) herein identified. They may not be resold, transferred, or otherwise disposed of, to any other country or to any other person other than the authorized ultimate consignee or end-user(s), either in their original form or after being incorporated into other items, without first obtaining approval from the U.S. government or as otherwise authorized by U.S. law and regulations.”

Where required, the DCS must be entered on the invoice and on the bill of lading, air waybill, or other export control document that is included with the shipment from origin to destination.

If you have questions or would like more information, please contact MITC. We’re here to help with one-on-one assistance to get the right answers for your business.