Exporters: New Additions to the “Unverified List”

If you’ve attended one of my export training classes in the past twenty years, then you’ve probably heard me talk about the “Unverified List.” It is a list of non-U.S. businesses that have special restrictions attached to their export transactions under U.S. law. You may still be able to export to them, but you are going to have to meet some additional requirements to complete the transaction.

The U.S. government added 33 new entries to the BIS Unverified List, today. The changes can be found in the Federal Register. All 33 of the additions to the list are located in China. Some may engage in aerospace business transactions.

The Unverified List is a list of companies that (1) the U.S. government has tried to “verify,” and has been unable to find or (2) the U.S. government has tried to validate the end use of a perviously received item and has been unable to verify that end use. The list may include businesses that are unable to be found because they may be shells with no physical existence (businesses without a physical location that expect to receive goods exported from the United States pose a higher threat of unwanted or illegal diversion) or businesses that pose a higher level threat of diversion because of their inability to answer end use questions.

For the unverified list countries, BIS does not have actual evidence of export non-compliance for these businesses – BIS simply has a higher degree of concern. There may be insufficient basis to add such businesses to the BIS entity list (which would typically prohibit exports to these targets without a license). Instead, they are added to the Unverified List and this reflects a “red flag.” This is meant to reflect a caution that must be cleared by the exporter before the export can be consummated.

You cannot use a license exception to ‘clear’ the red flag inherent in a listing on the Unverified List. 15 C.F.R. § 740.2(a)(17). Instead, you typically need to clear it through the use of a “UVL Statement.” 15 C.F.R. § 744.15(b). This statement will need to meet regulatory requirements and be signed by the unverified business.

Be careful about which version of the Unverified List you are using!! I went to the Unverified List published on the BIS website, today, and it was issued on July 12, 2021, so it does not include the newest additions to the unverified list. I also spot-checked a few of the businesses thorough the International Trade Administration’s consolidated screening list and the were not yet in the list (they are supposed to be there).

The new additions are effective immediately (that is, they are effective today) so they apply to all export transactions starting today!