On September 11, 2013 in the Federal Register, the Bureau of Industry and Security (BIS) of the Department of Commerce proposed to amend the Export Administration Regulations (EAR) with respect to transactions involving persons or parties who are listed on the Unverified List (UVL).  The UVL identifies parties who, in the past, have been party to a transaction with respect to which BIS could not conduct a pre-license check (PLC) or a post-shipment verification (PSV), raising potential concerns regarding the final disposition of goods exported to them.

Specifically, BIS proposed to amend the EAR to:

• Require that exporters file an Automated Export System (AES) record for all exports subject to the EAR involving a party or parties listed on the UVL;

• Suspend the availability of license exceptions for exports, reexports, and in-country transfers involving a party or parties listed on the UVL;

• Require exporters, reexporters, and transferors to obtain a UVL statement from a party or parties to the transaction who are listed on the UVL before proceeding with the transaction involving items subject to the EAR, unless the item does not require a license;

• Publish the UVL in the EAR; and

• Identify procedures for requesting removal or modification of a UVL entry.

These amendments to the EAR are a continuation of the general push by the Administration for exporters to “know your customer.”  Export Control Reform, as well as more recent amendments to the EAR, continues to place more responsibility on exporters to verify their customers and the end use of exported items in an effort to prevent illegal diversion.  As a result, companies may wish to revisit their existing procedures to ensure they have appropriate internal controls in place to address this increasing responsibility.

Comments to these proposed amendments are due by October 11, 2013. 

Mollie Sitkowski also contributed to this alert.