Ever heard of the BIS Entity List? More importantly, are you screening your transactions against this and other U.S. government watch lists? If you’re like most companies that we talk to, the answer to both of these questions is: “No.”
In fact, it’s safe to say that many – and perhaps even most – companies today have no knowledge of the various denied parties lists, including the BIS Entity List. Nor do they have any process for regularly screening their transactions against these lists. This issue is further compounded by the (false) belief, held by many organizations, that their products/services are somehow exempt from this screening requirement because what they make and sell is “harmless.”
Enter the recent case of Global Metcorp, Kesco Shipping and Multi-link Container Line. Here, the supposedly innocuous product that required no screening of any denied parties lists was scrap steel. The foreign recipient of this scrap metal was going to be the People’s Steel Mill in Pakistan – an organization which has been listed on the BIS Entity List for many years.
According to the charging documents, Global Metcorp arranged for the export of the steel, using Kesco and Multi-link as freight forwarders. BIS stopped the shipment, and the result was $28,000 in penalties for Kesco/Multi-link, while Metcorp was fined $50,000. (In the case of Metcorp, the majority of this fine will be deferred provided that other conditions are met. The company’s president is also required to complete mandatory export training courses.)
In the past year, the U.S. Government has made it easier for companies to actively screen these lists, including the Entity List, by consolidating them all into one database at www.export.gov. (Here’s the consolidated screening list if you haven’t already seen it.) This is a better tool than in prior years, when exporters would have to visit multiple websites to find each agency’s denied parties list. Of course, there are also automated screening programs which make this process basically effortless for your company.
So, it’s the typical carrot-and-stick approach. On the one hand, we have proactive outreach and enhanced tools. (The carrot). On the other hand, we have the U.S. Government actively pursuing those organizations and individuals who violate the law by engaging in business with denied entities. (The stick.)
Hopefully, the net result will be a future day when the majority of companies understand their responsibilities for screening to avoid export violations. Thoughts?
You can read more about the recent cases mentioned above here and here.
Tom Reynolds is the President of Export Solutions, a consultancy firm which specializes in helping companies with import/export compliance.