Red Flags

This section draws together the due diligence elements identified from the analysis on this sectoral guidance.

Red Flag Handout — Click to download these red flags a a printable flyer.

Category	Red Flag	Source
Company/Partner	Company is linked to the military or on a watch list Company operates in a strategic sector Company's website identifies problematic activity such as links to military end-uses and/or military end-users of concern Company is less than 5 years old Company has previous negative publicity for proliferation concerns Company is an authorized arms manufacturer or is listed as a strategic enterprise Company’s website has a communist party page demonstrating its close links to the Chinese state.	Company website, LinkedIn, news media coverage, sanctioned entity lists (in particular, the China country section of the U.S> BIS Entity List, and the U.S. DoD’s “Chinese Military Companies List” per Section 1260H of the NDAA of 2021; and the U.S. Treasury Dept. OFAC’s “Non-SDN Chinese Military-Industrial Complex Company List (NS-CMIC List)).
Academic Involvement	Entity is a university in a country of concern (or identified explicitly on a sanctions/restricted party list or on the ASPI University tracker Entity has an academic program or laboratory in a strategic field and receives government sponsorship Entity has a known linkage to national laboratory researchers in a strategic field	University website; U.S. BIS Entity List; Japan Foreign End-User List, (maybe EU / UK) ASPI Tracker
Nature of Technology	Is the technology on a control list? Is the technology a chokepoint technology? Is the technology sought by a country of concern through a nationalized indigenization plan? Was a military-grade product sought for civilian purposes when a civilian-grade option is available? Does the technology feature in the sectoral analysis section of this guidance?	Technology control lists, product order
Shipping	Destination in a country of concern, including great powers for strategic technology Vague delivery dates Odd destinations and/or unusual routing	Product order
Illicit Involvement	Is there a lack of information on end use? Is the procurer an intermediary rather than an end user? Are they hesitant to provide information on the actual end user? Lack of company website or other official presence Cash payments for expensive orders that usually are financed Incomplete orders, shipments for specific parts	See also the distributors section below
Geography and Third Country Diversion	Is a party to the transaction in a country of concern or contested territory like in Ukraine? Is the party based in Hong Kong (mostly relevant for China) or in a CIS country (mostly relevant for Russia? Is the destination in a location that is a hub for controlled activity? Does the end destination make sense for the product being purchased? Is the end destination a freight forwarding firm or other transshipment hub? Is the shipping route abnormal? Does the product make sense for the customer? Is the packaging consistent for the product and destination? Can the country support the industry the technology is viable for?
China Specific Red Flags	Company has a known link to the Thousand Talents Plan or similar recruitment agencies. Company is in a strategic industry and located in a domestic geographical hub near other entities in that industry. Is the end user one of the authorized military goods manufacturers or is it a strategic entity such as CASC, China Academy of Launch Vehicle Technology, or the Chinese Academy of Engineering Physics?
Transaction	Routine maintenance or services declined by customer.
Russia Specific Red Flags	Is the company a wholesaler? Wholesalers are often used as intermediaries by Russian companies engaged in emerging technology development to access parts and components. Does your business partner in your country own a company inside of Russia? This is a common technique in more sophisticated procurement attempts. Is the company attempting to buy electronics, machine tools or other goods that can be used in armaments production? Is the company asking you to pay via cryptocurrency or to a bank account in a third country? Does the company have a website? Does the website advertise that they can help their customers avoid trade restrictions?