Think You Know Your Customers?

No doubt you stay in close contact with your customers. Perhaps you even perform due diligence on prospective customers. In any case, exporters are required to screen all exports using the various watch lists or the Consolidated Screening List. Export software is a valuable tool for this purpose.

Most SMEs (Small and Medium-Sized Enterprises) do not have an ECP (Export Compliance Program) or in-house expertise. If you are the CEO, COO, or CFO of one of these companies we advise assessing the risk of non-compliance and taking action. Fines and penalties for export violations can be as high as $1 million. In the meantime, here is a list from the Bureau of Industry and Security (BIS) website of things to look for in an export transaction. Make sure you are not doing business with the bad guys. A little due diligence up front saves a lot of trouble later on.

The customer or its address is similar to one of the parties found on the Commerce Department’s [BIS’] 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 is unfamiliar with the product’s performance characteristics but still wants the product.

The customer has little or no business background.

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.

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