CE Export Controls & Sanctions Compliance Flashcards

What is the 'de minimis' rule under EAR and when does U.S. content in a foreign product trigger U.S. export controls?

Answer: When U.S.-controlled content exceeds 25% of the total value (or 10% for certain countries) of a foreign-made item, U.S. export control jurisdiction may apply

The EAR de minimis rule establishes thresholds (25% for most destinations, 10% for embargoed countries) above which U.S.-origin controlled content in a foreign product triggers U.S. re-export controls.

What are 'red flags' in export compliance and what must a U.S. exporter do upon encountering them?

Answer: Suspicious circumstances suggesting an export may violate the law; the exporter must stop the transaction, investigate, and resolve concerns before proceeding

BIS's 'Know Your Customer' guidance identifies red flags (e.g., buyer reluctance to provide end-use information, unusual payment terms, atypical shipping routes) that signal potential violations requiring investigation.

What is a Denied Parties List screening and why is it required before every export transaction?

Answer: A check against government lists of sanctioned/restricted entities to ensure the buyer, end-user, or intermediary is not prohibited from receiving U.S. exports

Screening against denied parties lists (SDN, Entity List, Denied Persons List, etc.) before each transaction is a legal requirement and a core compliance best practice to avoid sanctions violations.

What is a Voluntary Self-Disclosure (VSD) in EAR/OFAC compliance and what benefit does it provide?

Answer: Proactively reporting potential export violations to BIS or OFAC before being investigated, which typically results in substantially reduced penalties

Voluntary self-disclosure to BIS or OFAC for potential violations demonstrates good faith compliance and typically results in significantly reduced fines compared to violations discovered through investigation.

What is the U.S. Foreign Corrupt Practices Act (FCPA) and how does it affect U.S. exporters operating internationally?

Answer: A U.S. law prohibiting American companies from bribing foreign government officials to obtain or retain business contracts

The FCPA prohibits U.S. companies and individuals from offering or paying bribes to foreign officials, with significant criminal and civil penalties; it applies globally to any person or entity with U.S. connections.

What is the difference between a general license and a specific license under the Export Administration Regulations?

Answer: A general license authorizes certain exports automatically without application; a specific license is an individually approved authorization issued by BIS for a particular transaction

General licenses (often called license exceptions) allow qualifying exports without BIS application, while specific licenses require an individual BIS application and approval for the particular export transaction.