[Federal Register Volume 67, Number 115 (Friday, June 14, 2002)]
[Pages 40910-40911]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-15095]



Bureau of Industry and Security

[Docket No. 020607143-2143-01]

List of Unverified Persons in Foreign Countries, Guidance to 
Exporters as to ``Red Flags''

AGENCY: Bureau of Industry and Security, Commerce.

ACTION: Notice.


SUMMARY: 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.

DATES: This notice is effective June 14, 2002.

FOR FURTHER INFORMATION CONTACT: Thomas W. Andrukonis, Office of 
Enforcement Analysis, Bureau of Industry and Security, Telephone: (202) 



    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

[[Page 40911]]

Entities 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.

    Dated: June 11, 2002.
Kenneth I. Juster,
Under Secretary for Industry and Security.

                             Unverified List
                             [June 14, 2002]
              Name                      Country       Last known address
Power Test & Research Institute   People's Republic   No. 38 East
 of Guangzhou.                     of China.           Huangshi Road,
Civil Airport Construction        People's Republic   111 Bei Sihuan
 Corporation.                      of China.           Str. East, Chao
                                                       Yang District,
Xian XR Aerocomponents Co., Ltd.  People's Republic   Xujiawen Beijiao,
                                   of China.           Xian, Shaanxi.
Shaanxi Telecom Measuring         People's Republic   39 Jixiang Road,
 Station.                          of China.           Yanta District
                                                       Xian, Shaanxi.
S.B. Submarine Systems Co., Ltd.  People's Republic   1591 Hongqiao Rd.,
                                   of China.           Bldg. 15,
Beijing San Zhong Electronic      People's Republic   Hai Dian Fu Yuau,
 Equipment Engineer Co., Ltd.      of China.           Men Hao 1 Hao,
Huabei Petroleum Administration   People's Republic   South Yanshan
 Bureau Logging Company.           of China.           Road, Ren Qiu
                                                       City, Hebei.
Yunma Aircraft Mfg..............  People's Republic   Yaopu, Anshun,
                                   of China.           Guizhou.
Daqing Production Logging         People's Republic   No. 3 Fengshou
 Institute.                        of China.           Village, Sartu
                                                       District, Daqing
Dee Communications M SDN. BHD...  Malaysia..........  G5/G6, Ground
                                                       Floor, Jin
                                                       Gereja, Johor
Arrow Electronics Industries....  United Arab         204 Arbift Tower,
                                   Emirates.           Benyas Road,
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.

[FR Doc. 02-15095 Filed 6-13-02; 8:45 am]