Things to Look for in Export Transactions

Use this as a check list to discover possible violations of the Export Administration Regulations.
You may also wish to visit our page that provides "Know Your Customer Guidance."

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 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.

If you have reason to believe a violation is taking place or has occurred, you may report it to the
Department of Commerce by calling its 24-hour hot-line number: 1 (800) 424-2980. Or, if you
prefer, use our form to submit a confidential tip.
 Trade-based money laundering red flags

1. Inability of a bank customer to produce trade documentation to back up a requested bank transaction
2. Significant discrepancies appear between the description of the commodity on the bill of lading and the
invoice
3. Significant discrepancies appear between the description of the goods on the bill of lading or invoice and
the actual goods transported
4. Significant discrepancies appear between the value of the commodity reported on the invoice and the
commoditys fair market value
5. Shipment locations or description of goods that are inconsistent with the letter of credit
6. Documentation showing a higher or lower value or cost of merchandise than that which was declared to
Customs and border Protection or paid by the importer
7. A transaction that involves the use of amended or extended letters of credit that are amended significantly
without reasonable justification or that include changes to the beneficiary or location of payment
8. A third party paying for the goods
9. A consignment that is inconsistent with the business (eg a steel company that starts dealing in paper
products, or an information technology company that suddenly starts dealing in bulk pharmaceuticals)
10. Customers conducting business in high-risk jurisdictions. Although not specifically identified by the US
Federal Financial Institutions, Examination Council or FATF, FTZs may be added to the list of high-risk
jurisdictions given that there is an argument that FTZs exacerbate the risk
11. Customers shipping items through high-risk jurisdictions, including transit through non-cooperative
countries
12. The commodity is transshipped through one or more jurisdictions for no apparent economic reason
13. Customers involved in potentially high-risk activities, including those subject to export/import restrictions
such as equipment for
Military or police organizations of foreign governments, weapons, ammunition, chemical mixtures, classified
defense articles,
Sensitive technical data, nuclear materials, precious gems, or certain natural resources such as metals,
ore and crude oil
14. Obvious over- or underpricing of goods and services
15. Obvious misrepresentation of quantity or type of goods imported or exported
16. A transaction structure that appears unnecessarily complex so that it appears designed to obscure the
transactions true nature
17. A shipment that does not make economic sense (eg the use of a large container to transport a small
amount of relatively low value merchandise)
18. Consignment size appears inconsistent with the scale of the exporter or importers regular business
activities
19. The type of commodity being transported appears inconsistent with the exporter or importers usual
business activities
20. The method of payment appears inconsistent with the risk characteristics of the transaction, for example
the use of an advance payment for a shipment from a new supplier in a high-risk country
21. A transaction that involves receipt of cash or payment of proceeds (or other payments) from third-party
entities that have no apparent connection with the transaction or which involve front or shell companies
22. A transaction that involves commodities designated as high risk for money laundering activities, such
as goods that present valuation problems or high value, high turnover consumer goods