Sanctions and export-control screening
Checking whether the buyer, seller, banks, vessel and end user appear on UN, EU, US (OFAC) or UK (OFSI) sanctions lists, and whether the goods are going to sanctioned countries or prohibited uses. Banks may freeze payments that carry sanctions risk, and breaches lead to heavy fines and account closures. Because sanctions change often, screening should be repeated for every deal, watching for evasion signs such as ship renaming or switched-off AIS.
Related terms
Country risk and transfer risk
The risk that money cannot reach the seller because of economic or political events in the buyer’s country – foreign-currency shortages, capital controls, sanctions, war or a moratorium – even when the buyer is willing and able to pay. OECD country risk classifications and sovereign credit ratings are used to gauge it. Sales to high-risk countries call for confirmed letters of credit, export credit insurance and payment in a strong currency.
Dual-use goods and export controls
Licensing requirements for exporting items that can serve both civilian and military purposes – certain special steels, titanium and superalloys, carbon fibre, rare earths, some chemicals and precursors. Lists and rules are set nationally on the basis of the Wassenaar Arrangement, Nuclear Suppliers Group, Australia Group and Missile Technology Control Regime (e.g. EU Regulation 2021/821, US EAR). Exporting without a licence carries criminal penalties, so the seller should request an end-user certificate.
Know your customer / know your business (KYC / KYB)
The process of verifying, before doing business, that a counterparty really exists, who its officers and ultimate beneficial owners are, and whether it is subject to sanctions or adverse media. Tools include tax and trade-registry records, signature authorisations, licences, bank references and site visits or video verification. Banks perform KYC under anti-money-laundering law; for trading parties it is the first line of defence against fraud. The platform’s “Verified company” badge is based on this kind of document check.
Explained in the trade handbook
More in Customs, tax & compliance
- Anti-dumping and countervailing duty (AD)
- Bonded warehouse
- Carbon Border Adjustment Mechanism (CBAM)
- Certificate of origin and preferential origin proofs (EUR.1, A.TR, Form A) (C/O)
- Commercial invoice
- Customs broker
- Customs valuation (transaction value)
- Export declaration
- HS code (Harmonized System)
- Import duty (customs tariff)
- Inward processing relief (IPR)
- Packing list (P/L)