BIS Clears Verification Backlog, Credits Policy Change

Commerce’s Bureau of Industry and Security (BIS) announced that 33 parties will be removed from the Unverified List, 27 of which are based in the People’s Republic of China (PRC) with others located in Indonesia, Pakistan, Singapore, Turkey, and the United Arab Emirates. 

“The ability to verify the legitimacy and reliability of foreign parties receiving U.S. exports through the timely completion of end-use checks is a core principle of our export control system,” said Assistant Secretary for Export Enforcement Matthew S. Axelrod.  “Our removal of 33 parties demonstrates the concrete benefit companies receive when they or a host government cooperates with BIS to complete a successful end-use check.”  

BIS is taking this action because it was able to establish the bona fides – i.e., legitimacy and reliability relating to the end use or end user of items subject to the Export Administration Regulations (EAR) – of these parties through the successful completion of end-use checks.

On October 7, 2022, BIS announced a two-step policy (link to memo here) that moves parties onto the Unverified List, and then from the Unverified List to the Entity List, when a host government’s sustained non-cooperation prevents the timely scheduling of end-use checks.  Under the policy, parties can be added to the Unverified List 60 days after end-use checks are requested but host government inaction prevents their completion. In addition, after an additional 60 days of continued inaction by the foreign government, BIS will initiate the interagency regulatory process to move those parties from the Unverified List to the Entity List.  

Beyond the policy, parties can also be added to the Unverified List for other reasons, including our inability to contact or locate the party and failure by the party to appropriately demonstrate the disposition of items subject to the Export Administration Regulations.  If these circumstances are later remedied, the party may be removed from the Unverified List.

Prior to BIS issuing the policy issuing, requested end-use checks in the PRC had been met with lengthy scheduling delays.  The October issuance of the policy subsequently led directly to the scheduling of end-use checks in the PRC. On December 16, 2022, 26 parties located in the PRC were removed from the Unverified List after subsequent scheduling and successful completion of end-use checks.  On February 7, 2022, BIS added 31 parties located in the PRC to the Unverified List and moved nine parties located in Russia from the Unverified List to the Entity List.  This announcement results in an additional 27 PRC parties being removed from the Unverified List following successful checks.

In addition, BIS is removing two Russian entities from the UVL because they were added to the Entity List on June 6, 2022.

A link to the rule implementing this change, which includes a list of parties being removed, is available online at: Link.

The Unverified List (supplement no. 6 to part 744) is one of several lists, including the Entity List (supplement no. 4 to part 744) and the Military End User List (supplement no. 7 to part 744), administered and maintained by BIS.  These lists inform U.S. exporters and the general public of end-users that are of concern for various reasons, and that are subject to specific requirements or prohibitions in the EAR.