On February 8th, 2022, BIS published a final rule in the Federal Register (with implementation on date of publication) involving the addition of thirty-three entities in the Peoples Republic of China to the Unverified List (Supplement 6 to Part 744 of the EAR). Let’s take a moment to answer a couple of FAQs related to this action.
Q:1 What is the UVL and why are entities added to it?
Answer: The Unverified list (Supplement 6 to Part 744 of the EAR) is a compilation of entities where BIS was unable to establish their bona fides or legitimacy/reliability as end users of items that are subject to the EAR. In cases where BIS conducts a pre-license or end use check, there are times in which the agency is unable to contact a particular foreign entity. In addition, parties may fail to properly demonstrate use or disposition of items subject to the EAR or a foreign government may not cooperate in arranging and/or conducting an end use check. In such cases BIS may add entities to the UVL to send a signal to U.S. exporters that doing business with such entities entails additional compliance risks and that deeper due diligence and some additional required documentation needs to be completed prior to engaging in transactions with such entities.
Q:2 Can we export, re-export or transfer items subject to the EAR to an entity listed on the UVL?
Answer: In many cases YES, you can export to entities on the UVL however conditions do exist. Specifically, you may NOT use any License Exceptions found in Part 740 of the EAR (or anywhere else within the EAR). In addition, prior to export, re-export or in-country transfer you MUST obtain a special UVL Statement in which the UVL listed entity agrees to specific terms and conditions as outlined in Part 744.15(b)(2)(i-vi) of the EAR. TSI Global Consulting can assist in preparing and providing exporters with the required UVL statement.
It is important to note that entities listed on the UVL have not been singled out by the U.S. government as having specific identifiable national security or foreign policy concerns, however because BIS has not been able to verify their bona fides deep due diligence is required prior to export, re-export, or transfers with UVL listed entities. Doing business with such entities does entail enhanced export compliance risk. TSI Global Consulting can assist in helping you mitigate the associated risks of doing business with UVL’s while remaining in compliance with the EAR. Call the office for further details.