A supplier background check is a fixed set of independent checks you run on an exporter before money moves: identity, ownership, sanctions screening, litigation and insolvency, adverse media, trade activity in shipment records, and the site. Six of the seven are desk work against public sources, free, about twenty minutes each. Run them in that order, because identity feeds everything after it: screening a trade name you copied off a quotation is how buyers end up with a clean result on a company that does not exist.
The short version
- Start at the company registry. The legal name and registration number you pull there are the inputs for every later check.
- Sanctions screening is not optional once money crosses a border. Your bank screens the payment whether or not you did, and US civil liability does not require intent.
- Name matching throws false positives. Resolve each hit against identifiers and record the decision; an unresolved hit is worth the same as no screening.
- Trade records are the only check that tests the claim itself rather than the paperwork about it.
- Tier the spend: three free checks on everyone, paid audits only where the exposure earns them.
What does a supplier background check actually cover?
Seven areas: corporate identity, ownership and legal representative, sanctions and denied-party screening, litigation and insolvency, adverse media, trade activity in shipment records, and site verification. The first six are desk checks against public sources; the seventh needs eyes at the address.
| Check | What it catches | Where you look |
|---|---|---|
| Corporate identity | No such company; details that contradict the quotation; entity dormant or struck off | gsxt.gov.cn (China, run by SAMR), Companies House (UK), MCA master data and DGFT's IEC lookup (India) |
| Ownership and legal representative | Who can bind the company; several "suppliers" sharing a director; a sanctioned owner behind a clean trading name | Same registry record: shareholders, capital, legal representative; parent filings |
| Sanctions and denied party | A counterparty you are prohibited from paying, so the bank blocks the transfer | OFAC Sanctions List Search, US Consolidated Screening List, EU consolidated list, UK Sanctions List, DGFT Denied Entity List |
| Litigation and insolvency | Unpaid judgments, enforcement blacklisting, winding-up already running | China Enforcement Information Open Network (zxgk.court.gov.cn), IBBI and NCLT records, Insolvency Service register (UK), PACER (US) |
| Adverse media | Repeat non-delivery, short shipment, quality substitution, seizures | News in the local language and script, trade forums, association and customs notices |
| Trade activity | Whether they export at all: shipments, buyers, destinations, recency, trend | Shipment-level trade records, as in a TradeVerify verification report |
| Site verification | A trading company presenting itself as the factory; an address that is an office suite | Third-party inspection, unscripted live video walkthrough, satellite imagery |
Corporate identity and ownership: start at the registry
Ask for the business licence, then verify it rather than filing it. In China the number to check is the 18-digit unified social credit code, and the registry entry gives you the registered Chinese name, legal representative, capital, status and business scope. Business scope is the quiet one: if it reads wholesale and trade only, you are not talking to the manufacturer, whatever the photographs suggest. For an Indian exporter the equivalents are the 10-digit IEC issued by DGFT, the 15-character GSTIN, and the MCA record, where a status other than active is a stop sign.
Three mismatches beat any certificate: registry name against invoice name, registered address against factory address, bank account name against the legal entity. That last one is where payment-diversion fraud lands.
Read the same record again for ownership: shareholders, authorised signatory, any parent. A contract signed without authority is hard to enforce, and ownership decides your sanctions answer.
Sanctions and denied-party screening is not optional
If money crosses a border, someone screens the transaction. Correspondent banks screen every payment they clear, and a US-dollar payment pulls the deal into US jurisdiction wherever buyer and seller sit. Civil liability under US sanctions does not require that you knew, and a payment blocked mid-shipment costs far more than the check does.
The lists that matter for a company background check for suppliers, named properly. Overlap is normal, since most implement UN Security Council designations, but never treat one as covering another:
- OFAC SDN List — the Specially Designated Nationals and Blocked Persons List, maintained by the Office of Foreign Assets Control at the US Treasury. Free to search via OFAC's Sanctions List Search, which covers its other lists.
- US Consolidated Screening List — ten restricted-party lists from Commerce, State and Treasury in one search, including the Bureau of Industry and Security's Entity List, Denied Persons List and Unverified List. Those are export-control instruments rather than asset freezes.
- EU consolidated list — the consolidated list of persons, groups and entities subject to EU financial sanctions, maintained by the European Commission and binding on EU nationals, anyone in the EU, and anyone doing business there.
- UK Sanctions List — maintained by the FCDO and, since 28 January 2026, the only source of UK designations, after OFSI's consolidated list of asset-freeze targets was retired. OFSI, inside HM Treasury, still enforces financial sanctions and issues licences.
- DGFT Denied Entity List — India's list of IEC holders barred from DGFT authorisations, usually over unmet export obligations or unpaid dues. A supplier on the DEL may not be able to ship under the scheme they quoted you.
The DEL works the same way: a supplier can sit on it and appear nowhere on the SDN List.
Then the part everyone gets wrong. Name matching throws false positives constantly, mostly through transliteration, because Latin-script renderings of Arabic, Chinese and Russian names are not standardised. OFAC's own tool ships with a confidence slider and a match score. A 92% score is not a finding, it is a question. Resolve it against legal name, registration number, address and jurisdiction, then write down what you concluded. An unresolved hit gives you the compliance paperwork of screening with none of the protection.
Litigation, insolvency and adverse media
These answer a different question: will the company still be standing when your deposit is due to become a shipment? China publishes an enforcement blacklist through the Supreme People's Court, the list of dishonest judgment debtors, naming parties that could pay a judgment and did not. In India, insolvency proceedings surface through IBBI and NCLT records.
Adverse media is worth an hour if you search the legal name in the local language and script, not only the English trading name, because the complaints that matter get filed locally. Look for a pattern, not one angry post; silence around a small exporter means little.
Trade activity, then the site: proof the operation is real
Every check above tests documents about a company. Shipment records test the claim itself. If a supplier says they have exported this product to Europe for a decade, the record either shows a decade of European consignments or it does not, and the gap is the finding. Bill-of-lading and customs records are legally public in the United States and several other markets; for India we work from mirrored licensed trade data. Read whether shipments exist at all, how many distinct buyers, which destinations, how recent the last one is, and whether the product codes match the quote.
Buyer concentration is the underrated read. One buyer across three years means captive or newly independent; twenty buyers across eight markets means twenty buyers audited them before you.
A website, a certificate and a brochure are all authored by the supplier. The shipment record is authored by the act of shipping.
Site verification is the one thing you cannot do from a desk. Before paying for an audit, ask for a live video walkthrough: the street nameplate, the loading bay, the machine they claim to own, filmed now rather than sent as a file. A plant that photographs as 8,000 square metres and maps to a third-floor office has answered it.
How to run a supplier background check without hiring an agency
Tier the work by exposure: agencies earn their fee at the top tier, not the bottom.
- Every supplier, before a quote becomes a PO (30 minutes, free): registry record, sanctions screening on the entity and its owners, trade-activity check.
- Before the first payment above your threshold: litigation and insolvency, adverse media in the local language, and bank details verified by voice on a number from the registry record, never the one on the invoice.
- Before a large order or an exclusive agreement: paid site audit, financials, and references you source from buyers in the shipment data, not the list the supplier hands you.
- Every 12 months for suppliers you keep: re-screen sanctions, since lists change weekly, and re-check ownership and trade activity for drift.
When a check comes back thin rather than bad, the fix is commercial. Move the risk into the terms: a letter of credit instead of a telegraphic transfer, a smaller first order, staged payment against a bill of lading. Third party due diligence tells you how much to trust; payment terms decide what you lose if you are wrong.
How TradeVerify helps
We do one part of this well: the trade-activity check.
- Search the exporter's name for a TradeScore built from shipment-level records: export history, distinct buyers, destination markets, recency, trend, plus red-flag screens. Coverage: 15.7M+ companies across 240+ markets, free to check.
- Read it against what you were told: claimed years, markets and volume either survive the record or they do not. A sample report shows the fields.
- Use it to triage: suppliers that clear the trade record move on to litigation, media and audit work, suppliers with no record rarely justify the spend. Suppliers being checked can claim their profile on the supplier side.
What it does not do, plainly. A trade record cannot tell you a company is honest, solvent or good at quality control, and it is no substitute for screening the lists above yourself. Coverage is uneven on some lanes, and a domestic supplier can be legitimate with no export record at all. It is one input in a vendor background check — the input hardest to fabricate. We are independent of the suppliers we score.