International Law Advisory - BIS Updates

April 23, 2004

Today, the Bureau of Industry and Security (“BIS”) published a notice in the Federal Register (69 Fed. Reg. 22,002) that removed Power Test & Research Institute of Guangzhou from the Unverified List, and accordingly rescinded its “red flag” status under the “Know Your Customer” requirements of Supplement No. 3 to 15 C.F.R. part 732.

The Unverified List was established by BIS in June of 2002 as a preventative enforcement mechanism for individual export transactions. The list includes foreign persons who were parties to past transactions to which BIS was unable to perform a pre-license check (“PLC”) or post-shipment verification (“PSV”). PLCs are undertaken by the BIS to verify the bona fides of a particular transaction and to substantiate the suitability of the ultimate end-user. PSVs are undertaken by the BIS to ensure US exports are actually delivered to the appropriate end-user, are being used in conformity with the terms of any relevant license or exception, and are otherwise in accordance with the Export Administration Regulations (“EAR”) (15 C.F.R. parts 730 to 774). When a party listed on the Unverified List participates in a proposed transaction, pursuant to Supplement No. 3 to 15 C.F.R. part 732, a “red flag” is raised by the BIS with respect to the transaction and the exporter has an affirmative duty to inquire, verify, and generally substantiate that the transaction does not involve proliferation activity prohibited by 15 C.F.R. part 744 or otherwise violate EAR. Thus, such transactions require heightened scrutiny by the exporter prior to proceeding.

In accordance with EAR and 67 Fed. Reg. 4910, BIS also periodically conducts PLCs and PSVs at selected foreign persons’ facilities for purposes of removing those persons names from the Unverified List. Pursuant thereto, BIS recently conducted a PSV at the facilities of Power Test & Research Institute of Guangzhou, located at No. 38 East Huangshi Road in Guangzhou, China. Consequently, BIS has removed the aforementioned entity from the Unverified List.

Companies should update their screening mechanisms to ensure that any existing business relationships or transactions, and any relationships or transactions in the future are in compliance with the revised Unverified List. Please find below the official Unverified List as of April 23, 2004.

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
Shaanxi Telecom Measuring Station	People’s Republic of China	39 Jixiang Road, Yanta District Xian, Shaanxi
Yunma Aircraft Mfg.	People’s Republic of China	Yaopu, Anshun, Guizhou
Civil Airport Construction Corporation	People’s Republic of China	111 Bei Sihuan Str., East, Chao Yang District, Beijing
Beijing San Zhong Electronic Equipment Engineer Co., Ltd.	People’s Republic of China	Hai Dian Fu Yuau, Men Hao 1 Hao, Beijing
Huabei Petroleum Administration, Bureau Logging Company	People’s Republic of China	South Yanshan Road, Ren Qiu City, Hebei
Peluang Teguh	Singapore	203 Henderson Road #09–05H Henderson Industrial Park, Singapore
Lucktrade International PTE Ltd.	Singapore	35 Tannery Road #01–07 Tannery Block Ruby Industrial Complex Singapore 347740
Arrow Electronics Industries	United Arab Emirates	204 Arbift Tower, Benyas Road, Emirates Dubai

We will continue to keep you apprised of sanctions and export control developments. If you have any questions please feel free to contact Ed Krauland at 202.429.8083 or David Lorello at 202.429.6757.