14 June 2002

[Federal Register: June 14, 2002 (Volume 67, Number 115)]
[Notices]
[Page 40910-40911]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr14jn02-48]

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DEPARTMENT OF COMMERCE

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.

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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)
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-
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]
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              Name                      Country       Last known address
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Power Test & Research Institute   People's Republic   No. 38 East
 of Guangzhou.                     of China.           Huangshi Road,
                                                       Guangzhou.
Civil Airport Construction        People's Republic   111 Bei Sihuan
 Corporation.                      of China.           Str. East, Chao
                                                       Yang District,
                                                       Beijing.
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,
                                                       Shanghai.
Beijing San Zhong Electronic      People's Republic   Hai Dian Fu Yuau,
 Equipment Engineer Co., Ltd.      of China.           Men Hao 1 Hao,
                                                       Beijing.
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
                                                       City,
                                                       Heilongjiang.
Dee Communications M SDN. BHD...  Malaysia..........  G5/G6, Ground
                                                       Floor, Jin
                                                       Gereja, Johor
                                                       Bahru.
Arrow Electronics Industries....  United Arab         204 Arbift Tower,
                                   Emirates.           Benyas Road,
                                                       Dubai.
------------------------------------------------------------------------
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]
BILLING CODE 3510-33-P