[Federal Register Volume 69, Number 136 (Friday, July 16, 2004)]
[Notices]
[Pages 42652-42654]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-16143]


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DEPARTMENT OF COMMERCE

Bureau of Industry and Security

[Docket No. 040706200-4200-01]


Addition of Persons to the Unverified List, Guidance To Exporters 
as to ``Red Flags,'' and Criteria for Listing of Unverified Persons in 
Foreign Countries

AGENCY: Bureau of Industry and Security, Commerce.

ACTION: Notice.

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SUMMARY: On June 14, 2002, the Bureau of Industry and Security 
(``BIS'') published a notice in the Federal Register establishing a 
list of persons in foreign countries who were parties to past export 
transactions where pre-license checks or post-shipment verifications 
could not be conducted for reasons outside the control of the U.S. 
Government (``Unverified List''). See 67 FR 40910. That notice also 
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. Under that 
guidance, the ``red flag'' requires heightened scrutiny by the exporter 
(and others involved in the transaction) before proceeding with a 
transaction in which a listed person is a party. Since that time, BIS 
has issued subsequent notices that added persons to and removed them 
from the Unverified List, as circumstances warranted. This notice 
advises exporters that the Unverified List will now also include 
persons in foreign countries in situations where BIS is not able to 
verify the existence or authenticity of the end user, intermediate 
consignee, ultimate consignee, or other party to an export transaction. 
This notice also adds five persons to the Unverified List and advises 
exporters that the involvement of these persons as a party to a 
proposed transaction constitutes a ``red flag.''

DATES: This notice is effective July 16, 2004.

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

SUPPLEMENTARY INFORMATION:

Background

    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-
license 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.

A. Inclusion of Persons on the Unverified List

    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). As 
a result, certain foreign end-users and consignees involved in such 
transactions have been listed on the Unverified List.
    This notice advises exporters and other persons that the Unverified 
List will now also include persons involved in export transactions 
where BIS has not been able to verify the existence or authenticity of 
the end user, intermediate consignee, ultimate consignee, or other 
party to an export transaction. This could include situations where the 
end-users or consignees are merely post-office boxes, drop shipment 
points, or front companies.
    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, BIS continues to advise the exporting 
community that the participation of a person on the Unverified List in 
any proposed

[[Page 42653]]

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 and other persons 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 
Entity List in 15 CFR part 744. If an exporter or other person involved 
in the transaction is satisfied 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 or other 
person involved in a transaction continues to have reasons for concern 
after the inquiry, that person 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. Persons on the Unverified List may request that BIS 
review their inclusion on the Unverified List by filing an appeal in 
accordance with 15 CFR part 756.

B. Addition of New Entities on the Unverified List

    This notice advises exporters and other persons that BIS has added 
the following five entities to the Unverified List:

Jetpower Industrial Ltd, Room 311, 3rd Floor, Wing On Plaza, 62 Mody 
Road,Tsim Sha Tsui East, Kowloon, Hong Kong Special Administrative 
Region.
Onion Enterprises Ltd., Room 311, 3rd Floor, Wing On Plaza, 62 Mody 
Road, Tsim Sha Tsui East, Kowloon, Hong Kong Special Administrative 
Region.
Lucktrade International, Room 311, 3rd Floor, Wing On Plaza, 62 Mody 
Road, Tsim Sha Tsui East, Kowloon, Hong Kong Special Administrative 
Region.
Litchfield Co. Ltd., Room 311, 3rd Floor, Wing On Plaza, 62 Mody Road, 
Tsim Sha Tsui East, Kowloon, Hong Kong Special Administrative Region.
Sunford Trading Ltd., Unit 2208, 22/F, 118 Connaught Road West, Hong 
Kong Special Administrative Region.

    This notice advises exporters that Jetpower International Ltd., 
Onion Enterprises Ltd, Litchfield Co. Ltd, and Sunford Trading Ltd are 
added to the Unverified List, and that a second address has been added 
for Lucktrade International in the Hong Kong Special Administrative 
Region. A ``red flag'' now exists for transactions involving these 
persons due to their inclusion on the Unverified List. As a result, 
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 in 15 
CFR Part 744, and does not violate other provisions of the EAR.
    The Unverified List, as modified by this notice, is set forth 
below.

Julie L. Myers,
Assistant Secretary for Export Enforcement.

Unverified List (as of July 16, 2004)

    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 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 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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             Name                    Country         Last known address
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Lucktrade International.......  Hong Kong Special  P.O. Box 91150, Tsim
                                 Administrative     Sha Tsui, Hong Kong.
                                 Region.
Brilliant Intervest...........  Malaysia.........  14-1, Persian 65C,
                                                    Jalan Pahang, Barat,
                                                    Kuala Lumpur, 53000.
Dee Communications M SDN. BHD.  Malaysia.........  G5/G6, Ground Floor,
                                                    Jin Gereja Johor
                                                    Bahru.
Shaanxi Telecom Measuring       People's Republic  39 Jixiang Road,
 Station.                        of China.          Yanta District,
                                                    Xian, Shaanxi.
Yunma Aircraft Mfg............  People's Republic  Yaopu, Anshun,
                                 of China.          Guizhou.
Civil Airport Construction      People's Republic  111 Bei Sihuan Str.
 Corporation.                    of China.          East, Chao Yang
                                                    District, Beijing.
Power Test & Research           People's Republic  No. 38 East Huangshi
 Institute of Guangzhou.         of China.          Road, Guangzhou.
Beijing San Zhong Electronic    People's Republic  Hai Dian Fu Yuau, Men
 Equipment Engineer Co., Ltd.    of China.          Hao 1 Hao, Beijing.
Huabei Petroleum                People's Republic  South Yanshan Road,
 Administration Bureau Logging   of China.          Ren Qiu City, Hebei.
 Company.
Peluang Teguh.................  Singapore........  203 Henderson Road
                                                    09-05H,
                                                    Henderson Industrial
                                                    Park, Singapore.
Lucktrade International PTE     Singapore........  35 Tannery Road
 Ltd.                                               01-07
                                                    Tannery Block, Ruby
                                                    Industrial Complex,
                                                    Singapore 347740.
Arrow Electronics Industries..  United Arab        204 Arbift Tower,
                                 Emirates.          Benyas Road, Dubai.
Jetpower Industrial Ltd.......  Hong Kong Special  Room 311, 3rd Floor,
                                 Administrative     Wing On Plaza, 62
                                 Region.            Mody Road, Tsim Sha
                                                    Tsui East, Kowloon.
Onion Enterprises Ltd.........  Hong Kong Special  Room 311, 3rd Floor,
                                 Administrative     Wing On Plaza, 62
                                 Region.            Mody Road, Tsim Sha
                                                    Tsui East, Kowloon.
Lucktrade International.......  Hong Kong Special  Room 311, 3rd Floor,
                                 Administrative     Wing On Plaza, 62
                                 Region.            Mody Road, Tsim Sha
                                                    Tsui East, Kowloon.
Litchfield Co. Ltd............  Hong Kong Special  Room 311, 3rd Floor,
                                 Administrative     Wing On Plaza, 62
                                 Region.            Mody Road, Tsim Sha
                                                    Tsui East, Kowloon.

[[Page 42654]]

 
Sunford Trading Ltd...........  Hong Kong Special  Unit 2208, 22/F, 118
                                 Administrative     Connaught Road West.
                                 Region.
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[FR Doc. 04-16143 Filed 7-15-04; 8:45 am]
BILLING CODE 3510-33-P