More Diligence Needed to Check Against Entity List Addresses, Former BIS Official Says
Companies should consider carrying out extra due diligence when vetting customers that could have connections to address-only listings on the Entity List, a trade lawyer and former Bureau of Industry and Security official said.
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“I would definitely put an additional flag for anything involving those countries where the addresses are,” said Melissa Mannino, former chief of enforcement and litigation at the BIS chief counsel office. “For everyone we’ve talked to, that's going to require a manual check at this point.”
BIS last year began adding addresses -- instead of company names -- to the Entity List as part of a strategy to target temporary office spaces that shell companies use to illegally buy or ship export controlled items (see 2406180033). So far, BIS has mainly added addresses in Hong Kong and Turkey.
Mannino, a lawyer with BakerHostetler, said she’s advising companies selling to those two regions to make sure their customer has no connection to the addresses on the Entity List, which may require a manual check in addition to their usual automated screening. That's because many automated screening tools rely on an entity’s name, not the address, to trigger a match to a government denied party list.
"It's hard," Mannino said during a virtual conference this week hosted by the Massachusetts Export Center. "People have been turning to automated screening, but now the rules are becoming so complex and changing so quickly that you can't really, I think, just rely on automated screening now, because you will miss things."
And for an export that could pass through multiple hands before reaching the end user, companies should make sure to document their due diligence steps and pass on the product’s export compliance requirements “to the other parties you're dealing with,” Mannino said. “It’s not a complete shield for liability, but it shows that you've done your diligence.”