Published 5 Jun 2023
What is Export Compliance?
Export compliance is a requirement by the U.S. Department of Commerce designed to enforce the Export Administration Regulations (EAR) and regulate the export of “dual-use” items or products that have both commercial and military applications. The Commerce Control List (CCL) categorizes each item using a five-character alphanumeric code called Export Control Classification Number (ECCN).
Export Compliance Checklist
An export compliance checklist is an assessment tool used to determine compliance with Export Administration Regulations and implement corrective actions for non-compliance. Easily evaluate the recordkeeping, auditing, reporting, and escalation procedures of the company using this checklist. It is designed to help compliance teams perform a risk assessment of their security and screening procedures. With this checklist, you can:
- Assess internal process checks such as pre-order entry screen, unverified list, and more.
- Take/attach photos of non-compliance, best practices, and more.
- Assign corrective actions with a due date and priority level.
- Complete the export compliance audit with digital signatures.
- Automatically generate and share the export compliance audit report.
In this article
- What is an Export Compliance Checklist?
- Export Compliance: Guide Questions and Red Flags
- Export Compliance App
- Mobile-ready Export Compliance Checklists
What is an Export Compliance Checklist?
An export compliance checklist is an assessment tool used to easily identify red flags, effectively implement corrective actions, and proactively ensure EAR compliance. Criminal fines of up to $1 million per violation, civil penalties of up to $500,000 per violation, and/or imprisonment of up to twenty years await non-compliant corporations or individuals.
Export Compliance: Guide Questions and Red Flags
EAR-compliant manufacturers and exporters of dual-use items improve productivity, gain visibility across their entire operations, and prevent debarment or losing export licenses. To help your business easily comply with EAR, here are 5 key determinants with corresponding potential EAR-violation scenarios developed by the Bureau of Industry and Security (BIS):
1. What is the product?
Deemed exports, or the disclosure of EAR-controlled technical data to foreign persons in the U.S., require appropriate export licenses. Properly classify your EAR-controlled commodity, software, or technology according to the following CCL categories:
- Category 0 – Nuclear Materials, Facilities, and Equipment, and Miscellaneous Items
- Category 1 – Special Materials and Related Equipment, Chemicals, Microorganisms, and Toxins
- Category 2 – Materials Processing
- Category 3 – Electronics
- Category 4 – Computers
- Category 5 – Telecommunications and Information Security
- Category 6 – Sensors and Lasers
- Category 7 – Navigation and Avionics
- Category 8 – Marine
- Category 9 – Aerospace and Propulsion
EAR Compliance Red Flags for Items:
- 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 customer is unfamiliar with the product’s performance characteristics but still wants the product.
- 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.
2. Where is the product going?
For any export or re-export, specifying the country of ultimate destination determines licensing requirements. Refer to the Commerce Country Chart and identify required export licenses for listed or embargoed countries.
EAR Compliance Red Flags for Destinations:
- Delivery dates are vague, or deliveries are planned for out-of-the-way destinations.
- The shipping route is abnormal for the product and destination.
- Packaging is inconsistent with the stated method of shipment or destination.
3. Who will receive the product?
The ultimate end-user of EAR-controlled items cannot be a part of the BIS’ Denied Persons List (DPL). When a receiving party is on the Unverified List (UVL), companies should obtain a UVL statement prior to exporting, re-exporting, or transferring (in-country) EAR-controlled items.
EAR Compliance Red Flags for End-user:
- 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 has little or no business background.
4. What will the receiver do with the product?
The manner in which EAR-controlled items are ultimately used should adhere to BIS’ end-use control policy, which sets restrictions on certain nuclear end-uses, rocket systems, and chemical and biological weapons.
EAR Compliance Red Flags for End-use:
- The customer or purchasing agent is reluctant to offer information about the end-use of the item.
- When questioned, the buyer is evasive and unclear about whether the purchased product is for domestic use, export, or re-export.
- Routine installation, training, or maintenance services are declined by the customer.
5. What else does the receiver do?
Entities or individuals engaging in certain activities related to exports such as contracting, financing, and freight forwarding in support of a proliferation project may prevent your company from dealing with them.
EAR Compliance Red Flags for Export-related Activities:
- The customer or purchasing agent is reluctant to offer information about the end-use of the item.
- When questioned, the buyer is evasive and unclear about whether the purchased product is for domestic use, export, or re-export.
- Routine installation, training, or maintenance services are declined by the customer.
EAR and ITAR are two regulations that often get confused with each other since both are concerned with export for the Government’s defense.
ITAR stands for International Traffic in Arms, it is in charge of regulating sale, distribution, and manufacturing of defense articles and defense services. Meanwhile, EAR which stands for Export Administration Regulations (EAR) regulates commercial and dual-use items and technology that is also used for defense but is not covered by ITAR.
In terms of governing agency, ITAR is regulated by the U.S Department of State (DDTC), while EAR is governed by the U.S Department of Commerce. Moreover, ITAR items are listed under the United States Munitions List (USML), while EAR items are listed under the Commerce Control List (CCL).
Export Compliance App
Implementing an effective export management and compliance program, which usually involves manual recordkeeping, can be burdensome and time-consuming. Never miss another EAR compliance audit using SafetyCulture (formerly iAuditor), the world’s most powerful inspection platform. Now equipped with the new collaborative actions feature, compliance teams, and administrative personnel can efficiently perform the following:
- Spot issues and correct them as a group, where each action includes a built-in chat and activity feed. Learn more.
- Capture photo evidence of potential failures and assign corrective actions
- Send/receive notifications for scheduled internal process checks and compliance audits
- Unlimited storage, integrations, and real-time analytics for premium accounts.
- Automatically generate and share export compliance audit reports.
- Preview sample report.
Mobile-ready Export Compliance Checklists
EAR Compliance Checklist
An EAR compliance checklist aims to help manufacturers and exporters of EAR-controlled items easily comply with the Export Administration Regulations (EAR). Use this checklist to identify EAR compliance red flags and assess your current security and screening procedures for Denied Persons List, Entity List, and Prohibited Nuclear, Rocket Systems, Unmanned Air Vehicles, Missiles, Chemical, and Biological Weapons End-uses/users. If non-compliance is detected, create an action and assign it to key personnel with a priority level and due date.
ITAR Compliance Checklist
An ITAR compliance checklist is a tool used by arms suppliers to determine if their company complies with ITAR. Use this comprehensive checklist to conduct annual compliance audits and detect ITAR non-compliance based on export clearance requirements, ITAR-controlled technical data, use of ITAR exemptions, and more. This 60-item checklist has been designed for compliance officers to easily perform the following:
- Determine ITAR compliance based on 26 categories, including registration, licenses, and voluntary disclosure;
- Capture photo evidence of ITAR compliance;
- Assign corrective actions for non-compliant items; and
- Sign off with digital signatures and auto-generate the ITAR compliance report.
SafetyCulture Content Specialist
Jona Tarlengco
