What happens when an Unverified Entity shows up to the (screening) party?

Over the years, companies have designed various strategies on how to screen their international orders. Many strategies use very tight protocols when it comes to their algorithms for names and then have policies on how to manage the order. We see many different government agencies with various lists, some lists are direct “red” lights, for which all orders must be stopped - while some lists are “yellow”, indicating to proceed with caution. An example would be a listing known as a “UV” unverified entity. 

So, what exactly is the Unverified List (UVL)?

The UVL lists names of companies that the Bureau of Industry Security (BIS) could not verify as bona fide because an end-user check could not be completed to a satisfactory level. Usually, this is due to reasons outside of the US  Government’s control. 

Parties listed on the UVL are ineligible to receive items subject to the Export Administration Regulations (EAR) by means of a license exception. 

In addition, exporters must file an Automated Export System record for all exports to parties listed on the UV, regardless of value, and obtain a statement from such parties prior to exporting, re-exporting, or transferring to such parties any item subject to the EAR which is not subject to a license requirement. Restrictions on exports, re-exports, and transfers (in-country) to persons listed on the UVL are set forth in  Section 744.15 of the EAR. The Unverified List is set forth in  Supplement No. 6 to Part 744 of the EAR. 

So, what are the steps to properly manage these exports?

• Screen all parties for all transactions against the "Restricted Parties List."
• Evaluate and investigate the potential transaction to determine whether the customer will proceed with the transaction. In some cases, the customer may decide to refuse the business.
• License Exceptions are NOT available. If the commodity is eligible for a license exception to the country where the UVL is located, you cannot use the license exception; you would have to apply for a validated license.
• UVL statement is a MUST. Before exporting, re-exporting, or transferring any product or technology to a UVL, you must acquire the statement from the UVL with the following information*:

1. Name of UVL party; complete physical address, to include shipping, corporate, and end-user addresses, if different (simply listing a post office box is insufficient); telephone number; fax number; email address; website (if available); and name and title of individual signing the UVL statement. 
2. Agrees not to use the item(s) for any use prohibited by the United States Export Administration Regulations (EAR), 15 CFR Parts 730-772, and agrees not to re-export or transfer (in-country) the item(s) to any destination, use or user prohibited by the EAR.
3. Declares that the end-use, end-user, and country of ultimate destination of the item(s) subject to the EAR are as follows: [INSERT END-USE, END-USER, AND COUNTRY OF ULTIMATE DESTINATION]. 
4. Agrees to cooperate with end-use checks, including a Post-Shipment Verification, conducted by or on behalf of the Bureau of Industry and Security, U.S. Department of Commerce, for any item subject to the EAR in transactions to which they were a party in the last five years. This cooperation includes facilitating the timely conduct of the check and providing full and accurate information concerning the disposition of items subject to the EAR. 

5. Agrees to provide copies of this document and all other export, re-export or transfer (in-country) records required to be retained in part 762 of the EAR. 

6. Certifies that the individual signing the UVL statement has sufficient authority to legally bind the party.

And finally, please keep in mind:

• AES filing is ABSOLUTELY mandatory. Requiring exporters to file an Automated Export System (AES) record for all exports subject to the EAR involving a party to the transaction who is listed on the UV, regardless of value, (meaning the $2500.00 per classification number does not apply).
• See something, say something! If the transaction appears to be suspicious, consider notifying the local Office of Export Enforcement (OEE) in order to partner with the agency.    

*excerpted from https://www.bis.doc.gov/index.php/policy-guidance/lists-of-parties-of-concern/unverified-list

In order to avoid any potential risk or license violations, it is imperative to know what parties are involved with your customers' shipments. Should you have any questions or concerns, please reach out to me directly.