Revision to the Unverified List-Guidance as to “Red Flags”

AGENCY:

Bureau of Industry and Security, Commerce.

ACTION:

Notice.

SUMMARY:

On June 14, 2002, the Bureau of Industry and Security (“BIS”) published a notice in the Federal Register that set forth 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”). Additionally, on July 16, 2004, BIS published a notice in the Federal Register that advised exporters that the Unverified List would also include persons in foreign countries in transactions where BIS is not able to verify the existence or authenticity of the end-user, intermediate consignee, ultimate consignee, or other party to the transaction. Those notices 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, requiring heightened scrutiny by the exporter before proceeding with such a transaction. This notice adds fourteen entities to the Unverified List. The entities are: Semicom Technology International LLC, in the UAE, Amiran Trading Company in the UAE, Sarelica (Sar Elica) FZC in the UAE, Fuchs Oil Middle East in the UAE, Parto Abgardan in the UAE, Vitaswiss Limited in the UAE, Al-Thamin General Trading LLC, in the UAE, Reza Nezam Trading in the UAE, Davood Khosrojerdi, dba Al Musafer Tourism and Cargo in the UAE, Part Tech Co., in the UAE, Bazar Trading Co., in the UAE, Al Aarif Factory Equipment Trading LLC in the UAE, Centre Bright Company in Hong Kong, and IC Trading Ltd., in Russia.

DATES:

This notice is effective October 19, 2006.

FOR FURTHER INFORMATION CONTACT:

Marcus Cohen, Office of Enforcement Analysis, Bureau of Industry and Security, Telephone: (202) 482-4255.

SUPPLEMENTARY INFORMATION:

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.

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). BIS listed a number of foreign end-users and consignees involved in such transactions in the Unverified List that was included in BIS's Federal Register notice of June 14, 2002. See 67 FR 40910. On July 16, 2004, BIS published a notice in the Federal Register that advised exporters that the Unverified List would also include persons in foreign countries 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. See 69 FR 42652.

The June 14, 2002 and July 16, 2004 notices advised exporters that the involvement of a listed person in a transaction constituted a “red flag” under the “Know Your Customer” guidance set forth in Supplement No. 3 to 15 CFR part 732 of the EAR. 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 in 15 CFR part 744, and does not violate other provisions of the EAR. The Federal Register notices further stated that BIS may periodically add persons to the Unverified List based on the criteria set forth above, and remove persons when warranted.

This notice advises exporters that BIS is adding to the Unverified List the following entities: Al Aarif Factory Equipment Trading LLC, Sheikh Fahad Saad Alsbah Bldg., Al Maktoum Street, P.O. Box 28162, Dubai, UAE (also located in Al Quoz district of Dubai), Al-Thamin General Trading LLC, P.O. Box 41364, Dubai, UAE, Amiran Trading Company, Arbift Tower, 1st Floor, Flat No. 1803, Deira, UAE, also P.O. Box 6 1463, Jebel Ali, Dubai, UAE, Bazar Trading Co, Baniyas Tower, Suite 212, Dubai, UAE. Centre Bright Company, Unit 7A, Nathan Commercial Building, 430-436 Nathan Road, Kowloon City, Hong Kong, Davood Khosrojerdi, dba Al Musafer Tourism and Cargo, Concord Tower, Al Maktoum Street, PO Box 77900, Dubai, UAE, Fuchs Oil Middle East, Sharjah Airport International Free Zone, Sharjah, UAE, IC Trading Ltd, Yauzskaya Str. 8, Bldg 2, Moscow, Russia, Part Tech Co, Baniyas Tower, Suite 212, Dubai, UAE, Parto Abgardan, Showroom #5, Sheikh Rashid bin Khalifa al Maktoum building, Dubai, UAE, Reza Nezam Trading, Al Dana Center, Al Maktoum Street, P.O. Box 41382, Dubai, UAE, Sarelica (Sar Elica) FZC, Bldg. #3, Office No. 3 G-08, P.O. Box 41 71 0, Hamariya Free Zone, Sharjah, UAE, Semicom Technology International LLC, Office No. 18, 6th Floor, Horizons Business Centre, Al-Doha Centre, Al-Maktoum St., P.O. Box 41096, Dubai, UAE, and Vitaswiss Limited, P.O. Box 61069, Office #R/A 8 CB03, UAE, BIS has determined that it is appropriate to add these entities to the Unverified List because BIS was unable to conduct a PLC, a PSV, and/or was unable to verify the existence or authenticity of an end user, intermediate consignee, ultimate consignee, or other party to an export transaction. A “red flag” now exists for transactions involving these entities 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.

Unverified List (As of October 19, 2006)

The Unverified List includes names, countries, and 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 of 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.