Checklist · Business

Screening a Transaction and Fixing a Trade Compliance Problem: A Practical Checklist

19 U.S.C. § 1484

Type
Checklist
Jurisdiction
National
Date
2026-03-26
Topic
Business

This checklist runs a cross-border transaction from quote to archive and then runs a discovered violation from stop to disclosure. The pre-transaction sections cover product and technology classification, destination analysis, party and ownership screening, end-use inquiry, and the license or exception decision, each with the record that must be created. Separate sections address deemed exports in hiring and access provisioning, distributor and reseller controls, import entry and valuation, and the specific triggers that require a same-day escalation. The response sections cover stopping the conduct, preserving records, scoping a lookback, evaluating voluntary self-disclosure and prior disclosure, and remediating visibly. Every item is written so a non-specialist can execute it and counsel can supervise it, with pointers to the underlying rules for anything that needs explanation.

Screening a Transaction and Fixing a Trade Compliance Problem: A Practical Checklist

Business > International Trade and Sanctions | Published 26 March 2026 - Updated 23 July 2026 | UpLaw - uplaw.us

How to Use This Checklist

Parts 1 through 8 run before a transaction. Parts 9 through 12 run after something has gone wrong. Doctrine behind any step is in the comprehensive guide; the narrative introduction is how export controls and sanctions actually work.

⚠ Two rules that override everything else. First, if a screening hit involves funds or property, there is a short legal deadline under 31 C.F.R. Part 501 — escalate the same day. Second, if you discover a past violation, the value of voluntary self-disclosure decays with every week you wait.

Part 1 — Determine Which Regime Governs

☐ Identify the item precisely — hardware, software, and technology are three separate questions, and a single product usually raises all three.

☐ Ask whether it is a defense article. If the item was specially designed for a military application, check the United States Munitions List at 22 C.F.R. Part 121 with the definitions at 22 C.F.R. Part 120.

☐ If not, determine whether it is subject to the EAR using the scoping rules at 15 C.F.R. Part 734, including de minimis U.S. content and foreign direct product analysis for foreign-made items.

☐ Work the decision steps at 15 C.F.R. Part 732 in order rather than jumping to a conclusion.

☐ If the fork is genuinely unclear, request a commodity jurisdiction determination rather than guessing. Guessing wrong exposes the company to the harsher regime without the mitigation of having asked.

☐ Confirm registration obligations. Manufacturers, exporters, and brokers of defense articles must register before engaging in controlled activity, independent of any actual export.

Part 2 — Classify

☐ Assign an ECCN or confirm EAR99 for every product, software module, and technology set. Record the basis, the preparer, and the date.

☐ Do not accept a default EAR99 from a freight forwarder or a spreadsheet inherited from a predecessor. Ask how the determination was made.

☐ Classify software and technology separately from hardware. They frequently carry different controls.

☐ Check encryption functionality specifically. Standard commercial cryptography is a common and frequently missed trigger.

☐ Tie reclassification to engineering change control so a design change reopens the question automatically.

☐ For Munitions List items, document the specially designed analysis rather than the conclusion.

☐ Record classifications in one table that sales, shipping, and HR can all consult.

Part 3 — Analyze the Destination

☐ Run the reasons for control against the Commerce Country Chart at 15 C.F.R. Part 738.

☐ Check the general prohibitions at 15 C.F.R. Part 736, which apply regardless of the chart.

☐ Check embargoes and special controls at 15 C.F.R. Part 746.

☐ Check whether an OFAC program covers the jurisdiction — comprehensive programs such as those at 31 C.F.R. Part 515 and 31 C.F.R. Part 560 prohibit dealings irrespective of classification.

☐ Identify the ultimate destination, not the ship-to address. Onward movement is the exporter's problem where it knows or should know.

☐ Confirm no transit or transshipment country creates a separate issue.

Part 4 — Screen the Parties

☐ List every party: customer, end user, ultimate consignee, intermediate consignees, freight forwarder, banks and payment intermediaries, agents, distributors, contract manufacturers, and vendors.

☐ Screen against all applicable lists — OFAC's blocked persons and non-SDN lists, the Entity List, the Denied Persons List, the Unverified List, and debarred parties.

☐ Apply the fifty percent ownership rule. An entity owned in the aggregate fifty percent or more by blocked persons is blocked even though it is named nowhere. Screening a name alone is insufficient for meaningful counterparties.

☐ Screen at every stage: onboarding, quote, order acceptance, before shipment, before payment, and on a recurring cycle against updated lists.

☐ Record the result, the date, the list versions, the reviewer, and the disposition. An undocumented screen is no screen.

☐ On a hit, stop the transaction and escalate the same day. Do not tell the counterparty anything that could tip off an investigation.

☐ If funds or property are involved, treat the reporting clock as running immediately under 31 C.F.R. Part 501.

Part 5 — Ask About End Use

☐ Obtain a written statement of end use and end user for every foreign transaction. The document is worth more than the answer.

☐ Check the prohibited end uses at 15 C.F.R. Part 744, which apply even to EAR99 items sold to unlisted parties in friendly countries.

☐ Work the red-flag list and resolve every hit in writing: ☐ Customer reluctant to give end-use or end-user information. ☐ Stated end use inconsistent with the product's capabilities or the customer's business. ☐ Routing through a country unrelated to buyer or end user. ☐ Customer declines installation, training, or maintenance the product normally requires. ☐ Unusual payment terms, overpayment, or payment from a third country. ☐ Freight forwarder listed as end user. ☐ Request to describe the goods inaccurately on documents. ☐ Packaging or labeling inconsistent with the stated destination.

☐ Document the resolution of every red flag. An unresolved flag is evidence of reason to know, and willful blindness counts as knowledge.

☐ Refuse in writing any request to misdescribe goods, and reassess the relationship.

Part 6 — Decide on Authorization

☐ Check whether a license exception applies under 15 C.F.R. Part 740, and confirm every condition is satisfied, not just the headline eligibility.

☐ Record the specific exception relied on in the shipping file for each shipment.

☐ Calendar every condition — return dates, reporting, value limits, recordkeeping.

☐ If a license is required, apply under 15 C.F.R. Part 748 with realistic lead time, and do not commit to a delivery date that assumes instant approval.

☐ For defense articles, apply under 22 C.F.R. Part 123 and confirm whether an agreement is required for technical data or defense services; check restrictions at 22 C.F.R. Part 126.

☐ For sanctions questions, check for an applicable general license first, then apply for a specific license under 31 C.F.R. Part 501 if needed.

☐ Read the license conditions and distribute them to whoever must comply. A license held by legal and unknown to shipping is a violation waiting to happen.

☐ Confirm the license names the actual parties. An affiliate of a licensed end user is not a licensed end user.

Part 7 — Deemed Exports: Hiring, Access, and Collaboration

☐ Add an export question to onboarding. Before repository, cloud, or lab access is granted to a foreign national, determine whether controlled technology is involved.

☐ Treat access grants as releases — permissions, screen shares, design reviews, and verbal explanations all count.

☐ Re-run the analysis when a person changes roles or projects.

☐ Segregate controlled technology technically, not by policy. Access control lists are enforceable; instructions are not.

☐ Apply the same analysis to contractors, interns, and visiting researchers.

☐ Keep the inquiry narrow and consistent to avoid citizenship-status discrimination exposure; the boundary is discussed in hiring and background checks.

☐ Adopt a travel policy with clean devices for international travel, rather than relying on an exception whose conditions are hard to satisfy abroad.

☐ Check research agreements for publication or participation restrictions that would defeat a fundamental research exclusion.

Part 8 — Imports

☐ Confirm who is the importer of record and that the person bearing the reasonable care duty under 19 U.S.C. § 1484 knows they bear it.

☐ Review the tariff classification yourself. A broker-supplied code that nobody has checked is not reasonable care.

☐ Obtain binding rulings for high-volume or high-value items where classification is arguable.

☐ Confirm valuation includes all statutory additions: assists, selling commissions, royalties and license fees related to the goods, packing, and proceeds of subsequent resale accruing to the seller.

☐ Flag every free-of-charge item supplied to a foreign producer — tooling, dies, molds, materials, and engineering — as a potential assist requiring apportionment.

☐ Apply extra scrutiny to related-party pricing.

☐ Determine country of origin by substantial transformation, not by where the goods shipped from.

☐ Confirm marking requirements are satisfied on the goods and their containers.

☐ Verify invoice content against 19 U.S.C. § 1481.

☐ Understand the penalty exposure for material false statements and omissions under 19 U.S.C. § 1592 and the forfeiture exposure under 19 U.S.C. § 1595a.

☐ Keep entry records and supporting documentation for the full retention period.

Part 9 — When You Discover a Problem: The First Day

☐ Stop the conduct. Halt shipments, freeze the account, suspend the access. Do not complete "just the last order."

☐ Do not return blocked funds. Segregate them and escalate; returning blocked property is itself a violation.

☐ Issue a litigation hold covering shipping records, classification files, screening logs, license files, access logs, and counterparty communications, following issuing a litigation hold and preserving ESI.

☐ Suspend automatic deletion, including chat and messaging tools.

☐ Retain counsel with trade experience before anyone contacts an agency or a counterparty.

☐ Identify any reporting deadline that is already running under 31 C.F.R. Part 501.

☐ Instruct employees in writing not to discuss the matter outside counsel and not to delete anything.

☐ Do not send a company-wide explanation. It will be produced.

Part 10 — Scope the Lookback

☐ Define the population: which items, which parties, which destinations, over what period.

☐ Pull transaction-level data from ERP and shipping systems, not just email.

☐ Determine whether conduct was knowing, including whether red flags were raised internally and ignored.

☐ Quantify: number of transactions, value, and the number of discrete violations, remembering that penalties under 50 U.S.C. § 1705 are assessed per violation.

☐ Identify parallel exposure — customs under 19 U.S.C. § 1592; contract defaults; suspension and debarment risk for federal contractors, discussed in government contracting; and foreign regimes.

☐ Expect scope to expand. One discovered shipment routinely becomes a multi-year review.

☐ Preserve privilege by conducting the review through counsel and labeling work product correctly.

Part 11 — The Disclosure Decision

☐ Determine whether the agency already knows. Mitigation depends on being first.

☐ File an initial notification where the regime allows, preserving the benefit while the review continues.

☐ Assemble the disclosure package: factual narrative, transaction schedule, root-cause analysis, and remediation plan.

☐ For imports, evaluate a prior disclosure before any formal investigation begins; the penalty reduction is substantial and time-sensitive.

☐ Decide who signs and who is briefed — board or ownership level for anything material.

☐ Weigh the alternative honestly. Undisclosed violations discovered by an agency are treated far more harshly, and enforcement exposure includes denial of export privileges under 15 C.F.R. Part 764 and debarment under 22 C.F.R. Part 127.

☐ Anticipate a parallel criminal inquiry where conduct was willful, and prepare accordingly using the approach in white collar and financial crime.

Part 12 — Remediate and Prove It

☐ Fix the control that failed, not the person. Was classification missing? Screening stale? An access grant unreviewed? A license condition uncalendared?

☐ Implement automated screening if it was not already running, and re-screen the entire customer and vendor master.

☐ Complete the classification table for all products, software, and technology.

☐ Add the end-use question to the quote and order templates.

☐ Connect HR onboarding and IT access provisioning to the export determination.

☐ Train the five functions that create exposure: sales, engineering, HR, shipping, and finance.

☐ Name one owner outside the sales organization with authority to stop a shipment.

☐ Set retention at five years for classifications, screenings, licenses and conditions, end-use documentation, and shipping records.

☐ Audit against actual transactions, not policies, and document what was tested.

☐ Record everything. Remediation is a formal mitigating factor, and undocumented remediation counts for very little.

Part 13 — Acquisition Diligence

☐ Request the classification table and ask who prepared it and when.

☐ Request two years of screening logs.

☐ List every foreign national with access to controlled technology and the export determination for each.

☐ Request all licenses, agreements, and their conditions, plus evidence of compliance with those conditions.

☐ Identify every jurisdiction sold into for five years, directly or through distributors.

☐ Request all end-user certificates and destination control statements.

☐ Ask whether any voluntary or prior disclosure has ever been filed, and what happened.

☐ Ask whether any payment has ever been blocked or rejected by a bank.

☐ Run sanctions ownership analysis on the target and its major counterparties.

☐ Price the exposure and negotiate specific indemnities; the broader transaction framework is in buying and selling a business.

☐ Plan any post-closing disclosure before closing. Acquirer disclosures of inherited conduct are recognized and treated favorably, but only when made promptly.

Part 14 — Function-by-Function Assignments

Trade compliance fails at the seams between departments. Give each function a short, concrete list rather than a copy of the whole program.

Sales

☐ Never quote a foreign customer without confirming the item's classification is on file. ☐ Ask the end-use question at quote stage, in writing, and put the answer in the file. ☐ Never promise a delivery date that assumes a license will be granted instantly. ☐ Send every new counterparty for screening before the first quote, not before the first shipment. ☐ Report red flags the day you notice them, in writing, to the compliance owner. ☐ Never agree to describe goods on documents in any way other than accurately.

Engineering

☐ Treat every design document as potentially controlled technology until classified. ☐ Ask before sharing files, screens, or explanations with anyone outside the United States or with any foreign national. ☐ Notify compliance when a design change may alter classification. ☐ Do not carry controlled data abroad; use the clean-device travel policy. ☐ Do not grant repository access; route access requests through the access-control process.

Human resources and IT

☐ Route every new hire, contractor, intern, and visiting researcher through the export determination before access is granted. ☐ Re-run the determination on role change. ☐ Implement segregation technically through access control lists, not through instructions. ☐ Keep the determination record with the personnel or vendor file. ☐ Apply the inquiry narrowly and identically across candidates.

Shipping and logistics

☐ Confirm the classification and the authorization before every shipment. ☐ Record the specific license or exception relied on in the shipping file. ☐ Include the destination control statement on the documents. ☐ Screen the forwarder and the consignee, not just the customer. ☐ Retain shipping records for the full retention period.

Finance

☐ Screen the paying entity, not just the customer of record. ☐ Escalate any rejected or blocked payment the same day — deadlines under 31 C.F.R. Part 501 run immediately. ☐ Never return funds that may be blocked. ☐ Flag payments from unexpected jurisdictions or third parties. ☐ Ensure customs duty accruals reflect assists and other statutory additions to value.

Part 15 — The Monthly and Annual Rhythm

Monthly

☐ Re-screen the active customer, vendor, and counterparty master against updated lists. ☐ Review new counterparties onboarded during the month for complete files: screening, classification, end-use statement. ☐ Review any red flags raised and confirm each was resolved in writing. ☐ Confirm license conditions coming due in the next sixty days.

Quarterly

☐ Sample shipments and verify that the recorded authorization actually covered them. ☐ Review distributor and reseller activity for destination anomalies. ☐ Review access grants to controlled technology made during the quarter. ☐ Confirm classification table currency against engineering change logs.

Annually

☐ Refresh the risk assessment for new products, destinations, channels, and corporate structure. ☐ Train the five exposed functions, with attendance recorded. ☐ Audit against actual transactions, not policies, and document findings and remediation. ☐ Test the escalation path end to end with a tabletop scenario. ☐ Confirm records retention is operating and that nothing has aged out prematurely. ☐ Review whether any general license relied upon has been amended.

⭐ The one habit worth more than the rest. Write down the answer. Classification, screening result, end-use statement, license condition, red-flag resolution — each is a sentence and a date. Enforcement outcomes turn less on whether a company was careful than on whether it can prove it was.

Part 16 — Scenario Drills

Run these with the team once a year. Each has a wrong instinctive answer, which is why they are worth practicing.

A long-standing customer suddenly asks for shipment to a different country

☐ Do not treat the relationship history as clearance. The destination analysis restarts at 15 C.F.R. Part 738, and the general prohibitions at 15 C.F.R. Part 736 apply afresh. ☐ Re-screen the new consignee and any new intermediaries. ☐ Ask why the destination changed and record the answer. A customer who cannot explain is a red flag. ☐ Confirm the existing license or exception actually covers the new destination and party. It usually does not.

An employee forwards a technical drawing to a personal email account to work from home

☐ Determine whether the drawing is controlled technology. ☐ Determine the employee's nationality only if the analysis requires it, and only through the established process. ☐ Treat the transfer as a potential release requiring the same analysis as any export; the location of the sender is irrelevant. ☐ Fix the control — data loss prevention and access segregation — rather than issuing a reminder.

A distributor's order pattern changes sharply

☐ Compare order volume against the distributor's plausible market. Volumes far exceeding local demand suggest diversion. ☐ Request end-user documentation for recent orders and exercise the audit right in the distribution agreement. ☐ Consider suspending shipments pending explanation; the contractual suspension right exists for exactly this. ☐ Document the inquiry. If diversion later surfaces, the file showing you asked is the difference between a violation and a defense.

A bank calls about a rejected payment

☐ Treat it as a legal event with a running clock under 31 C.F.R. Part 501, not an operational problem. ☐ Do not instruct the customer to resend from a different bank. That is potential evasion. ☐ Identify the party that triggered the rejection and re-diligence the entire relationship. ☐ Escalate to counsel the same day and evaluate whether a lookback is warranted.

A potential acquisition target sells into a market you avoid

☐ Assume successor liability and diligence accordingly, using Part 13. ☐ Do not accept management assurances in place of records. ☐ Model the exposure per violation, not per relationship. ☐ Decide before closing whether a post-closing disclosure will be made, and by whom.

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