The Bureau of Industry and Security (BIS) has issued guidance that recommends using a new export screening list as additional due diligence to prevent diversion risks. This new database, The Trade Integrity Project has been released by the Open Source Center, which is based in the United Kingdom. This list focuses on entities involved in the diversion of goods related to the Common High Priority Items List (CHPL).
Common High Priority Items List
Since Russia began its invasion of Ukraine in January of 2022, the Department of Commerce has implemented stringent export controls through the Export Administration Regulations (EAR) to restrict Russian access to certain technologies. CHPL items include items designated in the CCL certain EAR99 designated electronic component parts and assemblies. These Common High Priority Items include:
- Tier 1: Items critical to the production of precision-guided weapon systems.
- Tier 2: Dual-use electronic components associated with regeneration of voice, images, or other data, radar and radio navigation apparatus, tantalum capacitors, ceramic dielectric multilayer capacitors, and electrical parts.
- Tier 3A: Electrical parts, certain passive components, antennas, cameras, transducers, photosensitive semiconductors, transistors, crystals, and components.
- Tier 3B: Mechanical components used in Russian weapon systems
- Tier 4A: Equipment for the production, manufacturing, or quality control of electrical components, modules, or circuit boards.
- Tier 4B: Computer Numerically Controlled (CNC) equipment, and components.
Other Screening Lists
The United States Government maintains the Consolidated Screening List (CSL) as an online consolidation of multiple export screening lists. The CSL is updated daily and includes tools that can optimize results such as a “fuzzy name search”. These tools allow for searches without knowing exact spelling of names. The CSL provides downloadable files that are date stamped to allow accurate record keeping.
The CSL includes screening lists from the Department of State, the Department of Commerce, and the Department of Treasury. These lists are updated daily and include “fuzzy name search” capabilities that can generate searches for variations in spelling or for names translated into English from non-Latin alphabets. Lists specific to the EAR include:
- Denied Persons List – This is a list of entities and individuals that have been debarred from export transactions by the BIS.
- Unverified List – End-users on this list have are entities that the BIS has been unable to verify in previous transactions. If a party to a potential transaction is found on this list it should serve as a “Red Flag” that indicates a level of risk that should be addressed before proceeding with a transaction.
- Entity List – If a party is found on this list it indicates that license requirements under the EAR.
- Military End User (MEU) List – Parties on this list indicate license requirements under supplement number 2 to part 744 of the EAR.
While the CSL provides some benefits to an organization it does not provide automation or easy implementation into business systems and databases. Private vendors supply Restricted Party Screening solutions that are affordable and modular. They can provide these screenings automatically and alert users to changes in status. They also provide more thorough searches across wider sets of list than the CSL.
CVG Strategy Export Compliance Management Programs
This new export screening list is yet another example of the increased level of complexities involved for organizations involved in export. Export compliance remains a dynamic concern for businesses engaged in international trade. Failure to comply with regulations can result in criminal prosecution including imprisonment and fines. It can also result in civil penalties and disbarment from export activities.
CVG Strategy can help you in understanding the International Traffic in Arms Regulations (ITAR) and the EAR, and help you establish a coherent and effective export compliance program. We can perform export control classifications, perform audits, assist in filings for export licenses and educate your team. Regardless of whether your business falls under EAR or ITAR, CVG Strategy has the expertise to help.