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List of Unverified Persons in Foreign Countries, Guidance to Exporters as to “Red Flags”

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Bureau of Industry and Security, Commerce.




As part of its preventive enforcement efforts, the Bureau of Industry and Security (“BIS”) conducts pre-license checks (“PLC”) and post-shipment verifications (“PSV”) on certain export transactions. This notice sets forth a list of persons in foreign countries who were parties in past transactions where PLCs or PSVs could not be conducted for reasons outside the control of the U.S. Government. This notice also advises exporters that the involvement of a listed person as a party to a proposed transaction constitutes a “red flag” as described in the guidance set forth in Supplement No. 3 to 15 CFR part 732. Under that guidance, the “red flag” requires heightened scrutiny by the exporter before proceeding with a transaction in which a listed person is a party.


This notice is effective June 14, 2002.

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Thomas W. Andrukonis, Office of Enforcement Analysis, Bureau of Industry and Security, Telephone: (202) 482-4255.

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In administering export controls under the Export Administration Regulations (15 CFR parts 730 to 774) (EAR), BIS carries out a number of preventive enforcement activities with respect to individual export transactions. Such activities are intended to assess diversion risks, identify potential violations, verify end-uses, and determine the suitability of end-users to receive U.S. commodities or technology. In carrying out these activities, BIS officials, or officials of other federal agencies acting on BIS's behalf, selectively conduct pre-licence checks (“PLCs”) to verify the bona fides of the transaction and the suitability of the end-user or ultimate consignee. In addition, such officials sometimes carry out post-shipment verifications (“PSVs”) to ensure that U.S. exports have actually been delivered to the authorized end-user, are being used in a manner consistent with the terms of a license or license exception, and are otherwise consistent with the EAR.

In certain instances BIS officials, or other federal officials acting on BIS's behalf, have been unable to perform a PLC or PSV with respect to certain export control transactions, for reasons outside the control of the U.S. Government (including a lack of cooperation by the host government authority, the end-user, or the ultimate consignee). This notice sets forth a list of certain foreign end-users and consignees involved in such transactions. The list is called the “Unverified List.”

The inability of BIS to verify the nature of the activities, or suitability, of any end-user or consignee involved in an export transaction can raise concerns about the bona fides of such person, and that person's suitability for participation in future transactions subject to the EAR. Accordingly, this notice also advises exporters that the participation of a person on the Unverified List in any proposed transaction will be considered by BIS to raise a “red flag” for purposes of the “Know Your Customer” guidance set forth in Supplement No. 3 to 15 CFR part 732. Under that guidance, whenever there is a “red flag,” exporters have an affirmative duty to inquire, verify, or otherwise substantiate the proposed transaction to satisfy themselves that the transaction does not involve a proliferation activity prohibited by part 744, and does not violate other provisions of the EAR.

The listing of a person on the Unverified List does not equate to a licensing requirement such as that imposed on persons included on the Start Printed Page 40911Entities List in 15 CFR part 744. If an exporter can satisfy himself that the transaction does not involve a proliferation activity and does not violate any other provision of the EAR, the exporter may proceed with the transaction notwithstanding the inclusion of the person on the Unverified List. If an exporter continues to have reasons for concern after the inquiry, the exporter should refrain from such transaction or submit all relevant information to BIS in the form of an application for a license or a request for an advisory opinion.

Periodically, BIS will add persons to the Unverified List based on the criteria set forth above, and remove the names of persons from the Unverified List when warranted. Moreover, BIS may add to the Unverified List names of persons that BIS discovers are affiliated with a person on the Unverified List by virtue of ownership, control, position of responsibility, or other affiliation or connection in the conduct of trade or business. Any person on the Unverified List may request that BIS review its inclusion on the Unverified List by filing an appeal in accordance with 15 CFR part 756.

The “Unverified List” is set forth below.

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Dated: June 11, 2002.

Kenneth I. Juster,

Under Secretary for Industry and Security.

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Unverified List

[June 14, 2002]

NameCountryLast known address
Power Test & Research Institute of GuangzhouPeople's Republic of ChinaNo. 38 East Huangshi Road, Guangzhou.
Civil Airport Construction CorporationPeople's Republic of China111 Bei Sihuan Str. East, Chao Yang District, Beijing.
Xian XR Aerocomponents Co., LtdPeople's Republic of ChinaXujiawen Beijiao, Xian, Shaanxi.
Shaanxi Telecom Measuring StationPeople's Republic of China39 Jixiang Road, Yanta District Xian, Shaanxi.
S.B. Submarine Systems Co., LtdPeople's Republic of China1591 Hongqiao Rd., Bldg. 15, Shanghai.
Beijing San Zhong Electronic Equipment Engineer Co., LtdPeople's Republic of ChinaHai Dian Fu Yuau, Men Hao 1 Hao, Beijing.
Huabei Petroleum Administration Bureau Logging CompanyPeople's Republic of ChinaSouth Yanshan Road, Ren Qiu City, Hebei.
Yunma Aircraft MfgPeople's Republic of ChinaYaopu, Anshun, Guizhou.
Daqing Production Logging InstitutePeople's Republic of ChinaNo. 3 Fengshou Village, Sartu District, Daqing City, Heilongjiang.
Dee Communications M SDN. BHDMalaysiaG5/G6, Ground Floor, Jin Gereja, Johor Bahru.
Arrow Electronics IndustriesUnited Arab Emirates204 Arbift Tower, Benyas Road, Dubai.
The Unverified List includes names and countries of foreign persons who in the past were parties to a transaction with respect to which BIS could not conduct a pre-license check (“PLC”) or a post-shipment verification (“PSV”) for reasons outside of the U.S. Government's control. Any transaction to which a listed person is a party will be deemed by BIS to raise a “red flag” with respect to such transaction within the meaning of the guidance set forth in Supplement No. 3 to 15 CFR part 732. The red flag applies to the person on the Unverified List regardless of where the person is located in the country included on the list.
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[FR Doc. 02-15095 Filed 6-13-02; 8:45 am]