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Revisions to the Unverified List-Guidance as to “Red Flags”

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Information about this document as published in the Federal Register.

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Bureau of Industry and Security, Commerce.




On June 14, 2002, the Bureau of Industry and Security (“BIS”) published a notice in the Federal Register that set forth a list of persons in foreign countries who were parties to past export transactions where pre-license checks (“PLC”) or post-shipment verifications (“PSV”) could not be conducted for reasons outside the control of the U.S. Government (“Unverified List”). This notice advised 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, requiring heightened scrutiny by the exporter before proceeding with such a transaction. The notice also stated that, when warranted, BIS would remove persons from the Unverified List. Recently a PSV was completed at the facilities of Daqing Production Logging Institute, No. 3 Fengshou Village, Sartu District, Daqing City, Heilongjiang, People's Republic of China. Accordingly, by this notice, Daqing Production Logging Institute is removed from the Unverified List.


This notice is effective July 25, 2003.

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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 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 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 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). In a notice issued on June 14, 2002 (67 FR 40910), BIS set forth an Unverified List of certain foreign end-users and consignees involved in such transactions.

The June 14, 2002 notice also advised exporters that participation of a person on the Unverified List in a proposed transaction will be considered by BIS to raise a “red flag” under the “Know Your Customer” guidance set forth in Supplement No. 3 to 15 CFR Part 732 of the EAR. Under that guidance, whenever there is a “red flag,” exporters have an affirmative duty to inquire, verify, or otherwise substantiate that proposed transaction to satisfy themselves that the transaction does not involve a proliferation activity prohibited in 15 CFR Part 744, and does not violate other requirements set forth in the EAR.

The Federal Register notice further stated that BIS may periodically add persons to the Unverified List based on the criteria set forth above, and remove names of persons from the list when warranted.

BIS has not conducted a PSV in a transaction involving Daqing Production Logging Institute, No. 3 Fengshou Village, Sartu District, Daqing City, Heilongjiang, People's Republic of China, a person included on the Unverified List. This notice advises exporters that Daqing Production Logging Institute is removed from the Unverified List, and the “red flag” resulting from Daqing Production Logging Institute's inclusion on the Unverified List is rescinded.

The Unverified List, as modified by this notice, is set forth below.

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Lisa A. Prager,

Acting Assistant Secretary for Export Enforcement.

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Unverified List (as of July 25, 2003)

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. Start Printed Page 44040

NameCountryLast known addrress
Lucktrade InternationalHong Kong Special Administrative RegionP.O. Box 91150, Tsim Sha Tsui, Hong Kong.
Brilliant IntervestMalaysia14-1, Persian 65C, Jalan Pahang Barat, Kuala Lumpur, 53000.
Dee Communications M SDN.BHD......doG5/G6, Ground Floor, Jin Gereja, Johor Bahru.
Shaanxi Telecom Measuring StationPeople's Republic of China39 Jixiang Road, Yanta District Xian, Shaanxi.
Yunma Aircraft Mfg.......doYaopu Anshun, Guizhou.
Civil Airport Construction Corporation......do111 Bei Sihuan Str. East, Chao Yang District, Beijing.
Power Test & Research Institute of Guangzhou......doNo. 38 East Huangshi, Road, Guangzhou.
Beijing San Zhong Electronic Equipment Engineer Co., Ltd......doHai Dian Fu Yuau, Men Hao 1 Hao, Beijing.
Huabei Petroleum Administraion Bureau Logging Company......doSouth Yanshan Road, Ren Qiu City, Hebei.
Peluang TeguhSingapore203 Henderson Road #09-05H, Henderson Industrial Park, Singapore.
Lucktrade International PTE Ltd......do35 Tannery Road, #01-07 Tannery Block, Ruby Industrial Complex, Singapore 347740.
Arrow Electronics IndustriesUnited Arab Emirates204 Arbift Tower, Benyas Road, Dubai.
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[FR Doc. 03-19017 Filed 7-24-03; 8:45 am]