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Russian Company Removed from List of Entities Restricted from Receiving Dual-Use Exports

Tuesday, December 31, 2013
Sandler, Travis & Rosenberg Trade Report

The Bureau of Industry and Security has issued a final rule that, effective Dec. 31, removes one company in Russia (along with entries for this company under Germany and Taiwan) from the Entity List. This company is being removed as a result of its request for such action, a review of information provided in the removal request (including the company’s cooperation with the U.S. government and assurance of future compliance with the Export Administration Regulations) and further review conducted by the End-user Review Committee.

Certain exports, reexports and transfers (in-country) of items subject to the EAR to entities identified on the Entity List require licenses from BIS but are usually subject to a policy of denial because BIS considers such entities to present significant risks of diversion to weapons of mass destruction programs, terrorism or other activities that are contrary to U.S. national security or foreign policy interests. This license requirement applies to any transaction in which items are to be exported, reexported or transferred (in country) to such persons or in which such persons act as purchaser, intermediate consignee, ultimate consignee or end-user. In addition, the availability of license exceptions in such transactions is very limited.

BIS states that this removal eliminates this license requirement with respect to the affected company. However, it does not relieve persons proposing to export, reexport or transfer (in-country) items subject to the EAR to the removed company of other obligations under part 744 or other parts of the EAR. Neither the removal of a person from the Entity List nor the removal of Entity List-based license requirements relieves persons of their obligations under General Prohibition 5, which provides that, “you may not, without a license, knowingly export or reexport any item subject to the EAR to an end-user or end-use that is prohibited by part 744 of the EAR.” Additionally this removal does not relieve persons of their obligation to apply for export, reexport or in-country transfer licenses required by other provisions of the EAR. BIS strongly urges the use of its “‘Know Your Customer’ Guidance and Red Flags” when persons are involved in transactions that are subject to the EAR.

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