Revisions to the Unverified List-Guidance as to “Red Flags” Under Supplement No. 3 to 15 CFR Part 732

AGENCY:

Bureau of Industry and Security, Commerce.

ACTION:

Notice.

SUMMARY:

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”). Additionally, on July 16, 2004, BIS published a notice in the Federal Register that advised exporters that the Unverified List would also include persons in foreign countries in transactions where BIS is not able to verify the existence or authenticity of the end-user, intermediate consignee, ultimate consignee, or other party to the transaction. These notices 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. This notice removes five entities from the Unverified List based upon recently conducted PSVs. The entities are: Shaanxi Telecom Measuring Station, 39 Jixiang Road, Yanta District Xian, Shaanxi, People's Republic of China; Yunma Aircraft Mfg., Yaopu Anshun, Guizhou, People's Republic of China; Civil Airport Construction Corporation, 111 Bei Sihuan Str. East, Chao Yang District, Beijing, People's Republic of China; Huabei Petroleum Administration Bureau Logging Company, South Yanshan Road, Ren Qui City, Hebei, People's Republic of China; and Beijing San Zhong Electronic Equipment Engineer Co., Ltd., Hai Dian Fu Yuay, Men Hao 1 Hao, Beijing, People's Republic of China.”

DATES:

This notice is effective July 28, 2004.

FOR FURTHER INFORMATION CONTACT:

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

SUPPLEMENTARY INFORMATION:

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 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 export transactions where BIS officials, or other federal officials acting on BIS's behalf, were 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). On July 16, 2004, BIS published a notice in the Federal Register that advised exporters that the Unverified List would also include persons in foreign countries in transactions where BIS is not able to verify the existence or authenticity of the end-user, intermediate consignee, ultimate consignee, or other party to the transaction. The notices further stated that BIS may periodically remove names of persons from the list when warranted.

BIS has now conducted PSVs in transactions involving the following five persons included on the Unverified List: Shaanxi Telecom Measuring Station, 39 Jixiang Road, Yanta District Xian, Shaanxi, People's Republic of China; Yunma Aircraft Mfg., Yaopu Anshun, Guizhou, People's Republic of China; Civil Airport Construction Corporation, 111 Bei Sihuan Str. East, Chao Yang District, Beijing, People's Republic of China; Huabei Petroleum Administration Bureau Logging Company, South Yanshan Road, Ren Qiu City, Hebei, People's Republic of China; and Beijing San Zhong Electronic Equipment Engineer Co., Ltd., Hai Dian Fu Yuay, Men Hao 1 Hao, Beijing, People's Republic of China. This notice advises exporters that Shaanxi Telecom Measuring Station, Yunma Aircraft Mfg., Civil Airport Construction Corporation, Huabei Petroleum Administration Bureau Logging Company, and Beijing San Zhong Electronic Equipment Engineer Co., Ltd., are removed from the Unverified List, and the “red flags” resulting from their inclusion on the Unverified List are rescinded.

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

Unverified List (as of [Insert Date of Publication])

The Unverified List includes names, countries, last known addresses of foreign persons involved in export transactions with respect to which: the Bureau of Industry and Security (“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, and/or BIS was not able to verify the existence or authenticity of the end-user, intermediate consignee, ultimate consignee or other party to an export transaction. 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.