For all of you diligently screening your transactions against the many restricted parties lists published by the U.S. government, you are most likely aware that some items can actually be sent to some entities on the lists. The Unverified List, published by the Department of Commerce, Bureau of Industry and Security (BIS), was previously a list of individuals that have had requirements for pre- or post-shipment verifications (end-use checks) by the U.S. government. These entities were able to receive some commodities with and/or without a license. The entities listed in the Unverified List had some type of difficulty with the end-use verification and were then added to the Unverified List. Exporters were required to treat any transaction with these entities as a “red flag”.
As of January 21st, new unverified list regulations are in effect for entities on the Unverified List. The Unverified List will be erased and a new list will be created. You will need to pay attention to the Federal Register notices to keep up with the list as it is recreated. Furthermore, there are new requirements when shipping to entities on this list. First, exporters are no longer able to use license exceptions for those shipments going to an unverified list. Second, an Automated Export System (AES) Electronic Export Information (EEI) record is required regardless of value (even if the item is exported under “No License Required (NLR)”). Third, the regulations require exporters to have the entity on the Unverified List sign an “Unverified List Statement” for shipments that are shipped as NLR. By the way, don’t look for this language in the regulations, because it’s not in there.
My advice: Stay away from any entity that’s on the Unverified List. If you have to continue business with one of the Unverified List entities, be very diligent with the end-use information and make sure you are getting the proper statements in place. You may even want to perform an end-use check yourself. If the business is that crucial to your company, go visit your customer!
Tom Reynolds is the Vice President of Operations for Export Solutions, a consultancy firm which specializes in helping companies with import/export compliance.