U.S. export transactions with persons listed on the Unverified List may require a Commerce Department export license.
The Commerce Department’s Bureau of Industry and Security has added 50 persons to its Unverified List based on inconclusive end-use checks of their compliance with U.S. export control regulations.
The new entries to the list consist of 36 persons located in China, seven in Hong Kong, one in Indonesia, two in Malaysia and four in the United Arab Emirates.
The Unverified List, short for the List of Unverified Persons in Foreign Countries, was officially established by BIS in June 2002.
There are myriad reasons why end-use checks cannot be completed, causing these persons to be added to the Unverified List. For example, BIS may be unable to find a foreign party at the address indicated on the export documents and thus cannot contact the party by telephone or email. There may be cases in which BIS is prevented by foreign governments from performing thorough export end-use checks.
Under these circumstances, BIS may not have sufficient information to add foreign persons of concern to the Entity List under the Export Administration Regulations (EAR) and thus will place them on the Unverified List.
Export transactions with persons listed on the Unverified List may require a Commerce Department export license. If not subject to a license, the exporter is required to obtain and keep on record an Unverified List statement from the listed individual before proceeding with the shipment.
If an exporter receives a hit against the Unverified List, Paul DiVecchio, a 35-year export compliance consultant based in Boston, recommends:
• Notifying the export compliance officer in charge, which is critical if the hit relates to a remote facility, overseas affiliate or reseller;
• Evaluating and investigating the potential transaction to determine whether the company will proceed with the transaction. In some cases, the company may decide to refuse the business;
• If the product is eligible for a license exception to the country where the Unverified List party is located, then the company cannot use the license exception. It has to apply for a validated license with Commerce;
• Before exporting, re-exporting or transferring any product or technology to a Unverified List party, a company must acquire a written, signed and dated statement from that party that includes physical addresses of the end user (no Post Office boxes), as well as other contact information such as telephone and fax numbers, emails and websites; agreement not to use the item in any way that’s prohibited by the EAR; a clear declaration of the end use; agreement to cooperate with any U.S. government end-use checks; and accessibility to any requested documents related to the shipment. This document must be retained in the U.S. exporter’s records,
Since these export transactions must be filed in the Automated Export System (AES), which is part of Customs and Border Protection’s Automated Commercial Environment (ACE), Unverified List violations will be easier for BIS enforcement officers to detect and investigate, DiVecchio said.
He advised if an export transaction appears suspicious, the exporter or forwarder should notify the local BIS Office of Export Enforcement.
Exporters also should note that BIS occasionally will remove persons from the Unverified List. In its Thursday Federal Register notice, the agency removed 10 individuals (three in China, one in Finland, five in Russia and one in the U.A.E.).