Exporters Beware: BIS Requires More to Export to Persons on the Unverified List

In the category of lesser regulatory changes that occurred during the pre-holiday season, on December 19, 2013, the Department of Commerce’s Bureau of Industry and Security (BIS) amended its Export Administration Regulations (EAR) for exports to persons listed on the Unverified List (UVL).

The amended regulations made the following changes:

• Requires exporters to file an Automated Export System (AES) record for all exports subject to the EAR involving a party (or parties) to the transaction who are listed on the UVL

• Suspends the availability of license exceptions for exports, re-exports, and transfers (in-country) involving a party or parties to the transaction who are listed on the UVL

• Requires exporters, re-exporters, and transferors to obtain a UVL statement from a party (or parties) to the transaction who are listed on the UVL before proceeding with exports, reexports, and transfers (in-country) involving items subject to EAR, but where the item does not require a license (i.e., No License Required [NLR])

• Adds UVL to Supplement No. 6 to Part 774

• Adds to EAR procedures on requesting removal or modification of a UVL entry.

These changes, effective January 21, 2014, enhance the US Government’s ability to verify bona fides of parties to exports (re-exports or in-country transfer) of EAR items. Additionally, they provide increased visibility into such exports (re-exports and transfers) involving persons whose bona fides cannot be verified.

In practical terms, however, it may instead have the following impact:

• Cause carefully screening exporters — who might otherwise attempt an export to a UVL person (since they are not denied parties, designated “entities” or specially designated persons) — to say “no thanks, not worth the bother;”

• Increase the number of violations for the unwary exporter who exports to a UVL person, since such exporter will likely have filed an incorrect AES record and failed to obtain the required statement from the UVL person.

Arent Fox has significant experience in helping companies navigate and comply with US sanctions laws and export controls. If you have any questions regarding the above, please contact Kay C. Georgi and Tina Termei with Arent Fox’s International Trade practice.