07.12 Export Control & Sanctions Screening
Governance metadata | Owner: Head of Finance/Legal | Last reviewed: 2026-10-22 | Next review: 2027-01-31
Core principle: export control is not about "how much is the tariff," but about "can we sell it, can we ship it, and to whom." This is an operating framework, not legal advice; final authority rests with Legal and the official texts.
1. Triggers
Screen before quoting or shipping if any of the following applies:
- The item may be export-controlled (encryption, RF, AI compute, drones, cameras, navigation);
- The destination is sanctioned or embargoed;
- The end use is sensitive (military, surveillance, WMD-related);
- The customer, payer, or logistics provider matches a restricted list;
- Technical data, source code, or cloud services are provided across borders.
2. U.S. Regime (Overview)
| Concept | Function |
|---|---|
| EAR | Export Administration Regulations; covers items, software, technology |
| ECCN | Export Control Classification Number; determines control level |
| CCL | Commerce Control List |
| License Exception | Conditional exemption from a license |
| Entity List | Restricts specific parties |
| OFAC SDN | Sanctions list; asset freeze/transaction prohibition |
| ITAR | U.S. Munitions List; boundary with EAR requires legal judgment |
| De minimis | Rule on U.S.-content percentage |
Classification and licensing are subject to current BIS/OFAC rules. Never self-classify based on experience alone.
3. China Regime
- Export Control Law and the dual-use items export control list;
- Technology export restriction catalogue;
- Unreliable Entity List and other countermeasures;
- Compliance obligations for re-exports and transshipments.
4. EU and Other Regimes
- EU Dual-Use Regulation;
- Member-state export licenses;
- UN/EU/UK sanctions lists.
5. Sensitive Points for Smart Hardware
| Category/capability | Risk area |
|---|---|
| Encryption and RF | Encryption functions, frequency bands, power |
| AI compute/models | Compute thresholds, model use, cloud services |
| Drones | Flight performance, payload, navigation |
| Cameras/night vision | Resolution, infrared, surveillance use |
| Positioning/navigation | High-precision GNSS, anti-jamming |
| Batteries/materials | Specific materials and energy density |
6. Five-Element Screening
- Customer: name, registered address, ultimate beneficial owner;
- Address: whether it is in a sanctioned/embargoed region;
- End use: civilian/military/surveillance/transshipment;
- Payer: whether it matches the customer and appears on any list;
- Logistics provider: freight forwarder, carrier, and destination port restrictions.
Screening tools: official lists plus commercial databases. Keep screenshots of all results for the period required by company policy.
7. Red Flags (10)
[ ] Customer refuses to explain the end use
[ ] Requests a changed delivery address or transshipment via a third country
[ ] Payer differs from the customer
[ ] Order specifications clearly exceed civilian needs
[ ] Requests removal of product markings/serial numbers
[ ] Requests source code or encryption keys
[ ] Freight forwarder refuses to disclose the final destination port
[ ] Customer name closely resembles a listed party
[ ] Sudden large order with pressure to ship quickly
[ ] Intermediary connected to a sanctioned country/region
If any applies → hold shipment and escalate to Legal.
8. Handling Process
- Hold quoting/shipping;
- Collect the five elements and red-flag evidence;
- Legal determines whether a license is required or the transaction is prohibited;
- Record the decision and its basis;
- Train sales/customer service annually;
- Review historical orders when rules change.
9. Execution Checklist
[ ] Build a controlled-items list and preliminary ECCN assessment
[ ] Risk-tier destination countries/regions
[ ] Customer/payer/logistics screening process
[ ] Five-element record template
[ ] Red-flag training
[ ] Shipment-hold and legal-escalation path
[ ] License applications and record retention
[ ] Annual compliance training and drill
[ ] Re-review triggered by rule changes
10. Related Documents
- 07.03 IP and FTO
- 07.04 Trade Tariffs and HTS
- 07.02 US/EU/JP Wireless Compliance
- 07.08 Tariff Shock Contingency
Disclaimer: This is an internal operating framework, not legal advice. Classification, licensing, and sanctions determinations must be confirmed by qualified legal counsel/customs brokers against the official texts.
Review record (2026-10-22): This is an export-control operating framework. The names of EAR/ECCN/OFAC/ITAR have been checked; it does not constitute legal advice. Classification and licensing remain subject to Legal and the official texts.
Official References (for review)
- US BIS (EAR/ECCN/Entity List): https://www.bis.gov
- US OFAC (SDN/sanctions): https://ofac.treasury.gov
- EU Dual-Use Regulation (EUR-Lex): https://eur-lex.europa.eu
- China MOFCOM (export control): http://www.mofcom.gov.cn