Businesses involved in import and export transactions are bound by the regulations of the Export Administration(EAR).  These regulations state that it is illegal not to know your customer.  Meaning that the products shipped or received must be clearly defined in terms of the end use of the items.  Items exported that are intended for use in the destination country for purposes relating to biological, chemical, or nuclear weapons or anything else related to weapons and missiles are strictly regulated, and require valid licenses.  It is illegal to turn a blind eye, companies must do everything they possibly can to know those they are doing business with and to report any abnormal or suspicious circumstances surrounding the transactions.

These circumstances or suspicions are termed “red flags”.  One such give away, is when a company places an order for items that are not congruent with the needs of the business.  Another red flag is when the company declines installation of a product or the testing of that product when that service is provided in the total cost of the order or purchase or when the order placed is incompatible for the given destination, such as in voltage of electricity; when a country’s standard volts is 220 but they order products of 120 volts.

If one does not notice any red flags, and if the information the company receives is valid, then one may proceed with business transactions.  The company is not required to further verify, inquire or investigate when there are no initial red flags, however if there are the company has the duty to investigate.  They must dig deeper in the attempt to define the end use of the products they are about to export.  Documents are required to be obtained, and any concealment or misrepresentation of the facts is illegal.  Some companies may react in turning a blind eye to the red flags, a kind of ‘don’t ask don’t tell’ mentality.  This is very dangerous.  Sales teams must question potential clients as to the exact use of their products.  Companies will still be held liable in the end, should their products be used at the end destination for the above mentioned purposes of weapons and/or missile production.  Be aware, always know your customer.

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