Compliance

Export Red Flags: Know Your Customer Warning Signs and What to Do

Export red flags are signs an item may be heading to a prohibited end use, end user or destination. The warning signs BIS expects you to spot and what to do.

Oct 28, 2026 3 min read By ECCN.help

An export red flag is a circumstance that suggests an export may be destined for an inappropriate end use, end user or destination, for example a customer who will not state the end use. Under the EAR, BIS expects exporters to notice these signs and act on them. Classification and screening answer what the item is and who is listed. Red flags answer a harder question: does anything about this transaction suggest the item is heading somewhere it should not?

Many prohibitions in Part 744 apply when the exporter "knows" of a prohibited end use or end user. The EAR defines knowledge to include awareness of a high probability, inferred from circumstances, so ignoring red flags is no defence. BIS's Know Your Customer guidance, Supplement No. 3 to Part 732 of the EAR, sets out what it expects. BIS also publishes red flag lists of its own.

Red flags relate to end use and end users, which can require a licence or prohibit an export regardless of classification, so they apply to EAR99 items as well.

Common export red flags

  • The customer is reluctant to give end-use or end-user information.
  • The product does not fit the buyer's business (a bakery ordering high-performance computers).
  • The buyer is willing to pay cash for an expensive item normally financed.
  • The buyer has little business background, or an address that is a residence or a freight forwarder.
  • The buyer declines installation, training or warranty that would normally be wanted.
  • Delivery dates are vague, or delivery is to an out-of-the-way place.
  • The routing is unusual for the product and destination.
  • Packaging is inconsistent with the shipping method or destination.
  • The buyer asks whether the item needs a licence, or how to avoid one.
  • The stated end use is incompatible with the item's capability.

What to do when you see a red flag

One red flag does not mean a violation. It means you must look into it before proceeding:

  1. Pause the transaction.
  2. Ask the customer to explain the end use, the end user and the destination.
  3. Verify the answers through company registration, the website, references, and a site visit where warranted.
  4. Document the question, the answer and your conclusion.
  5. Escalate if the flag cannot be resolved, and do not ship without further review.

A customer who will not answer is itself a strong red flag. Do not proceed.

Red flags and diversion

Many enforcement cases involve items bought through intermediaries in third countries and diverted to restricted destinations. BIS and other agencies publish lists of items and patterns associated with diversion, for example certain electronics and components. Be particularly careful when a new customer in a transit hub orders items on such lists.

Recording a resolved red flag

A short note in the customer file is often all that is needed. It should give the flag, the explanation received, the evidence checked and who decided. See export recordkeeping requirements.

In ECCN.help

ECCN.help classifies the item and screens named parties against OFAC lists. Those are the objective checks. Red flags need human judgement, but the classification record from the rule-based ECCN.help Classification Workflow helps you compare the stated end use with what the item can actually do.

ECCN.help provides research and assistance, not legal advice. Verify every result against the regulation.

Frequently asked questions

What is a red flag in export compliance?

A circumstance that suggests an export may be destined for an inappropriate end use, end user or destination, for example a customer who will not state the end use.

What must I do when I see an export red flag?

Stop and inquire. Resolve the red flag with the customer and document how it was resolved before proceeding. If it cannot be resolved, do not proceed without further review.

Does one red flag mean a violation?

No. It means you must look into it before proceeding.

What if the customer will not answer?

That is itself a strong red flag. Do not proceed.

Can I ignore a red flag if the item is EAR99?

No. Red flags relate to end use and end users, which can require a licence or prohibit an export regardless of classification.

Where does BIS list export red flags?

In its Know Your Customer guidance, Supplement No. 3 to Part 732 of the EAR, and in its published red flag lists.

Related guides

Licensing When Is an Export Licence Required? The Four-Question Test An export licence is required when the ECCN, destination, recipient or end use triggers one under the EAR and no exception applies. The four-question test. Read guide → Screening OFAC Screening for Exporters: Who, When and How to Screen OFAC screening for exporters: which sanctions lists to check, who to screen, the 50 percent rule, clearing fuzzy matches, when to rescreen and what to record. Read guide → Compliance Export Compliance for Small and Medium Exporters: A 30-Day Plan A 30-day export compliance plan for small and medium exporters: classify products, screen parties, decide licences, write a procedure, train and keep records. Read guide →

← All export control guides · How to use ECCN.help