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How Well Do You Know Your Export Customer?

10/27/02 6:00 PM | Catherine J. Petersen | Restricted Party Screening
Exporters are often not aware that there are lists of individuals, firms and other entities that are restricted by U.S. law from purchasing goods shipped from the United States. Unfortunately for these exporters, their introduction to these restrictions comes when they receive a call from a Bureau of Industry & Security (BIS) Special Agent.

Exporters are often not aware that there are lists of individuals, firms and other entities that are restricted by U.S. law from purchasing goods shipped from the United States. Unfortunately for these exporters, their introduction to these restrictions comes when they receive a call from a Bureau of Industry & Security (BIS) Special Agent.

Every exporter should be screening their international customers against a number of U.S. government “restricted parties” lists. These lists are managed by the Department of Commerce, U. S. State Department and the Treasury’s Office of Foreign Assets Control and encompasses 14,000 plus companies, individuals and organizations.

All exporters who sell products of U.S. origin are required to verify that their customer, end-user(s), banks and other known parties to the transaction are not on these lists. At a minimum, there are two critical points to check the lists: before the quotation is sent out, and before the shipment has been made.

You may download each of the lists independently or you may subscribe to the service offered by the National Technical Information Service (NTIS) in cooperation with BIS. You can subscribe to the online EAR database, which includes access to the Prohibited Parties Database or by calling the NTIS at 800-363-2068.

A subscription to this online service allows you to screen your export orders against the government lists of prohibited parties described below with just a single keyword search. The 2003 price for an on-line subscription is $252 and the paper version is $125. If your company exports general merchandise, you are advised to check all the lists.

If your company manufactures arms regulated under the International Traffic in Arms Regulations, you must check the fourth list—Debarred Parties.

Denied Persons List—Parties denied export privileges as administered by the Bureau of Industry & Security (formerly known as the Bureau of Export Administration or BXA). The list may be found in the Export Administration Regulations, 15 CFR Part 764 Supplement No. 2. The Department of Commerce maintains the current “Denied Persons List.”

You should check this list prior to responding to any potential customers who want you to export your merchandise to them. If you encounter a firm that is on this list, you may contact the Office of Enforcement Support for a clarification of the scope of the denial order for that firm or individual. Their phone number is (202) 482-4255.

The Denied Persons List is printed quarterly and distributed as a supplement to subscribers of the Export Administration Regulations. The Denied Persons List is updated in the daily publication of the Federal Register and as a separate publication on the Internet.

Entity List—Entities subject to license requirements because of their proliferation of weapons of mass destruction. The list may be found in the Export Administration Regulations, 15 CFR Part 774 Supplement No. 4 and as a separate publication on the Internet.

Specially Designated Nationals, Terrorists, Narcotics Traffickers, Blocked Persons and Vessels—Parties subject to various economic sanctioned programs administered by the Office of Foreign Assets Control (OFAC).

The Treasury Department’s Office of Foreign Assets Control (OFAC) maintains the “Specially Designated Nationals and Blocked Persons” listing, which is a compilation of entities that have violated U.S. law. As a result of the violation(s), the companies and individuals on this list are prohibited from purchasing products from U. S. firms or people. OFAC has designed a web site to serve as an unofficial reference tool to assist the public in complying with the various programs it administers.

Debarred Parties—Parties denied export privileges under the International Traffic in Arms Regulations (ITAR) as administered by the Office of Defense Trade Control (DTC).

Unverified List—The Unverified List includes names and countries of foreign persons who have been parties to a transaction, but BIS was not able to conduct a pre-license check (PLC) or a post-shipment verification (PSV) for reasons outside of the U.S. government's control. This list serves as notice to U.S. exporters to be vigilant before engaging in transactions involving such end users.

If you are an exporter of commodities or products that require special care and control, you must familiarize yourself with all of the applicable regulations, including other controls and expanded lists of individuals or companies to whom you will not be able to sell your products.

BIS recommends that you screen the end use, end user and country of destination for all your exports whether or not your product requires special care. BIS has published the Export Management System guidelines, which recommend that every exporter create a document that proves they have screened their products, buyers and country of destination before they shipped.