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US exporters must approach their transactions carefully. There are entities the US government has deemed as a threat to the country’s national security. If you conduct business with one of these groups, you could find yourself facing steep penalties. At Cargo Export USA, our export consultants have helped numerous customers with denied party screening. We’ll use this experience to provide you with the information you’ll need to maintain compliance.
Key takeaways:
Now that we have the basics out of the way, let’s go over the specifics of denied parties screening.
Denied parties are individuals and entities that are denied export privileges. This means exporters are forbidden from conducting business with denied parties. Individuals and entities become denied parties due to the activities they engage in.
This includes:
Due to the nature of these activities, it’s essential that exporters carefully screen the parties they work with in their transactions. We’ll show you who to screen and when in the following sections.
All entities you conduct business with as an exporter could qualify as a denied person, which means you’ll have to screen each one carefully.
This includes:
Thoroughly screening each member in the supply chain ensures logistical reliability and compliance with government export regulations.
All the partners you conduct business with during an international transaction should be screened at the first point of contact and prior to all future transactions.
Denied party lists are frequently updated. Partners you’ve exported with or customers you’ve sold to for years could be flagged at a moment’s notice. You could end up missing vital updates if you’re not performing routine checks of each party.
Screening on an ongoing basis ensures your partners are cleared with the government.
Denied parties can be found in various lists that are maintained by different government and international agencies. Fortunately, you can access all of them in the Consolidated Screening List (CSL). We’ll explain how this list works in the following section.
The Consolidated Screening List (CSL) aggregates 13 export screening lists from the Departments of Commerce, State, and Treasury.
This includes:
While you can check each of these lists separately, the CSL allows you to access them with a single search. There are also a variety of tools that will make screening much easier for you.
This includes:
All CSL tools are updated every day at 5:00 AM EST/EDT. Updates to the aggregated lists are pulled from the federal agencies responsible for their maintenance.
Therefore, it’s the responsibility of the Departments of Commerce, State, and Treasury to update their files to ensure the CSL provides accurate information.
If you get a denied party match during the screening process, you’ll need to take corrective measures.
Here’s what you’ll need to do:
You should immediately halt your export when you get a denied party match. Otherwise, you can get yourself into some serious trouble with the US government.
There’s always the possibility that you could end up with a false positive. To ensure your entity is actually a denied party, you should conduct a thorough investigation into their identity.
If it’s a company that got flagged, determine who owns or controls it. Check the end-use and end-user if you received a match for your customers.
It’s a good idea to address government authorities that oversee the denied party regulations during your investigation. They have plenty of useful information that will be useful. Cargo Export USA also has consultants that can provide their assistance.
After your research, you’ll need to make a decision. If your investigation leads you to conclude that your match is a denied party, you’ll need to cancel the transaction immediately and make other arrangements.
In the case of false positives, you can proceed with the exporting process. Make sure to document every denied party screening run you perform. This includes the results of each test and the decisions you made based on them.
Exporting goods with or to a denied party can result in criminal and civil penalties. The type of punishment can vary based on the regulation broken by the exporter. There are three specific regulations that dictate the repercussions of exporting to denied parties.
We’ve provided a graphic that shows the parent agency and sub agency that oversee each regulation.
Now that we have that covered, we’ve provided a graphic that shows the criminal and civil penalties under each regulation for exporting to a denied party.
Provided by BIS, DDTC, and OFAC
In addition to criminal and civil penalties, violating these regulations can result in the denial of your export privileges and the revocation of licenses or other export authorizations.
Related: ITAR vs Ear Compliance
If you need further assistance, you can reach our team by calling (866) 485-4892 or navigating to our contact page. We have plenty of resources that we can provide to ensure you enjoy a smooth exporting experience.
You can also get help from Linda D., our export consultant. She has decades of experience in the industry, which means she’ll be able to provide you with insightful advice to ensure your endeavors are a success.
