15 May 2019
Additional Mainland Chinese and Hong Kong Entities Subject to Specific Licencing Requirements
The U.S. Department of Commerce’s Bureau of Industry and Security announced on 13 May that it will add 12 foreign entities and individuals to the Entity List, which contains the names of foreign parties that are subject to specific licencing requirements for the export, re-export and/or in-country transfer of controlled items. BIS indicates that the additions include four entities with locations in both mainland China and Hong Kong as well as a further two mainland Chinese persons, one person from Pakistan, and another five persons from the United Arab Emirates.
According to BIS, the four new entities located in both mainland China and Hong Kong attempted to procure U.S.-origin commodities that would have supported Iran’s weapons of mass destruction and military programmes, in violation of U.S. export controls. Two other mainland Chinese entities participated in the prohibited export of controlled technology, which was then supplied to organisations affiliated with the People’s Liberation Army.
The U.S. government has the authority to prohibit specific individuals and entities from receiving U.S. exports as well as to establish licencing and other requirements with respect to exports to certain parties, even for items that do not normally require a licence. Such restrictions are typically carried out through one of four lists: the Entity List, the Unverified List, the Denied Persons List, and the Treasury Department Specially Designated Nationals and Blocked Persons List. A summary of each of these lists is provided below.
- Entity List – A list of organisations identified by BIS as engaging in activities related to the proliferation of weapons of mass destruction. Depending on the item, a company may be required to obtain a licence to export to an organisation on the Entity List even if one is not otherwise required.
- Unverified List – A list of firms for which the BIS was unable to complete an end-use check. Firms on the unverified list present a “red flag” that exporters have a duty to inquire about before making an export.
- Denied Persons – U.S. exporters may not participate in an export or re-export transaction subject to the Export Administration Regulations with a person whose export privileges have been denied by BIS.
- Treasury Department Specially Designated Nationals and Blocked Persons List – A list maintained by the Office of Foreign Assets Control comprising individuals and organisations deemed to represent restricted countries or known to be involved in terrorism and narcotics trafficking.