05-21621. 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. These 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 five entities to the Unverified List. The entities are: T.Z.H. International Co. Ltd., Room 23, 2/F, Kowloon Bay Ind Center, No. 15 Wany Hoi Rd, Kowloon Bay, Hong Kong, Special Administrative Region; Design Engineering Center, House 184, Street 36, Sector F-10/1, Islamabad, Pakistan; Kantry, 13/2 Begovaya Street, Moscow, Russia 125284; Elaton Company, 20B Berezhkovskaya Naberezhnaya, Moscow, Russia; and Pskovenergo Service, 47-A Sovetskaya Street, Pskov, Russia Federation, 180000.

DATES:

This notice is effective October 31, 2005.

FOR FURTHER INFORMATION CONTACT:

Thomas W. Andrukonis, Office of Enforcement Analysis, Bureau of Industry and Security, Telephone: [phone].

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-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). 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 T.Z.H. International Co. Ltd. in the Hong Kong Special Administrative Region, Design Engineering Center in Pakistan, Kantry in Russia, Elaton Company in Russia, and Pskovenergo Service in Russia to the Unverified List. 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.

Wendy Wysong,

Deputy Assistant Secretary for Export Enforcement.

Unverified List (as of October 31, 2005)

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.

Name	Country	Last known address
Lucktrade International	Hong Kong Special Administrative Region	P.O. Box 91150, Tsim Sha Tsui, Hong Kong.
Brilliant Intervest	Malaysia	14-1, Persian 65C, Jalan Pahang Barat, Kuala Lumpur, 53000.
Dee Communications M SDN. BHD	Malaysia	G5/G6, Ground Floor, Jin Gereja, Johor Bahru.
Peluang Teguh	Singapore	203 Henderson Road #09-05H, Henderson Industrial Park.
Lucktrade International PTE Ltd	Singapore	35 Tannery Road #01-07 Tannery Block, Ruby Industrial Complex, Singapore, Ltd. 347740.
Arrow Electronics Industries	United Arab Emirate	204 Arbift Tower, Benyas Road, Dubai.
Jetpower Industrial Ltd	Hong Kong Special Administrative Region	Room 311, 3rd Floor, Wing On Plaza, 62 Mody Road, Tsim Sha Tsui East, Kowloon.
Onion Enterprises Ltd	Hong Kong Special Administrative Region	Room 311, 3rd Floor, Wing On Plaza, 62 Mody Road, Tsim Sha Tsui East, Kowloon.
Lucktrade International	Hong Kong Special Administrative Region	Room 311, 3rd Floor, Wing On Plaza, 62 Mody Road, Tsim Sha Tsui East, Kowloon.
Litchfield Co. Ltd	Hong Kong Special Administrative Region	Room 311, 3rd Floor, Wing On Plaza, 62 Mody Road, Tsim Sha Tsui East, Kowloon.
Sunford Trading Ltd	Hong Kong Special Administrative Region	Unit 2208, 22/F, 118 Connaught Road West.
Parrlab Technical Solutions, LTD	Hong Kong Special Administrative Region	1204, 12F Shanghai Industrial Building, 48-62 Hennesey Road, Wan Chai.
T.Z.H. International Co. Ltd.	Hong Kong Special Administrative Region	Room 23, 2/F, Kowloon Bay Ind Center, No. 15 Wany Hoi Rd, Kowloon Bay.
Design Engineering Cebter	Pakistan	House 184, Street 36, Sector F-10/1, Islamabad.
Kantry	Russia	13/2 Begovaya Street, Moscow.
Elaton Company	Russia	20B Berezhkovskaya Naberezhnaya, Moscow.
Pskovenergo Service	Russia	47-A Sovetskaya Street, Pskov, Russia Federation, 180000.