Posted on August 30, 2021
What is Reasonable Due Diligence?
An array of documentation can be used by exporters and re-exporters to validate the parties, end uses, and end users involved with export transactions. The following are tools that should be used by exporters and re-exporters in varying degrees as part of the due diligence to validate export transactions.
- End-Use and End-User Statements
- Denied Party Screening
- Internet research validating the parties to the export transaction
- Business licenses and other documents validating the bona fides of the parties, should information regarding the entities to the transaction not be easily discovered through internet searches.
Of these tools for performing due diligence, the most important, by far, is the End User Statement/End-Use Certification. In our opinion, this document should be obtained for all export transactions. After receipt of the EUS/EUC, the U.S. exporter should perform Denied Party Screening on the names of the parties to the export transactions, including the purchaser, intermediate consignees, ultimate consignee, and end-user, doing “fuzzy” searches of company names and variations on the company name. In addition, the Denied Party Screening should search for companies at the same or similar addresses. Widely scoped Denied Party Screening is crucial to the overall due diligence, as it demonstrates to the U.S. Government that the exporters (and re-exporters) took steps to validate that the parties to the transaction are not prohibited from receiving U.S. exports.
Following the Denied Party Screening, we recommend that exporters and re-exporters perform an internet search to ensure that the parties named on the EUS/EUC exist and are in a business with a connection to the product to be exported. Should information on the parties not be able to be readily found on the internet, the exporter or re-exporter should contemplate getting a more detailed EUS/EUC and having it signed both by their customer and the ultimate consignee/end-user. Even in cases where a multi-party signed EUS/EUC is received. It may be necessary to receive copies of business formation documents if the exporter or re-exporter cannot find information on a party to the export transaction after an internet search, particularly the stated end-user/ultimate consignee.