Understanding the Bureau of Industry and Security's Entity List

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Oct. 13, 2023
By: Marvin E. McPherson

As an exporter it is important to understand the compliance requirements for exporting, re-exporting or transferring items. As seasoned exporters know, an integral part of pre-export checks includes a review of the Entity List. However, there is much confusion surrounding what the Entity List is and what it means to do business with a person listed on the Entity List.

The Bureau of Industry and Security (BIS) continues to maintain the Entity List, as seen by over 300 additional entities listed in 2023. However, the Entity List has at times generated confusion but remains crucial to understand for exporters trying to do business.

This Entity List is found in Supplement No. 4 to Part 744 of the Export Administration Regulations (EAR). Initially introduced in February 1997, the Entity List served the purpose of informing the public about entities engaged in activities that posed a heightened risk of diverting exported items to weapons of mass destruction programs. Since its inception, the criteria for inclusion on this list has evolved to encompass activities subject to State Department sanctions and actions conflicting with U.S. national security and foreign policy interests. As written previously, the control of exports has become a vital tool in U.S national security.

Each entity included on the Entity List is assigned a specific license requirement, license review policy, and Federal Register citation(s). These requirements can vary, encompassing all items subject to the EAR, items on the Commerce Control List (CCL), or specific items within the CCL. Therefore, careful review of each listing is paramount.

Recognizing the potential risks associated with entities on the Entity List, BIS emphasizes the importance of conducting thorough due diligence before engaging in transactions with them. This process involves reviewing various factors, including the entity’s name, address, corporate officers, business activities, and contact information, typically obtainable from the entity’s website or through online search results.

In pursuit of compliance, BIS recommends cross-referencing other U.S. government export screening lists to ensure that listed entities involved in activities not subject to the EAR do not violate sanctions or restrictions administered by other U.S. government agencies.

It is imperative to understand that BIS’s authority is limited to items subject to the Export Administration Regulations (EAR). While inclusion on the Entity List does not outright prohibit transactions with these entities, it does serve as a warning, particularly when dealing with U.S.-origin or EAR-subject items. Companies seeking to engage with these entities must exercise extra diligence to ensure that items are procured with the appropriate authorization. The Entity List primarily comprises entities about whom the U.S. government has reasonable cause to believe they are or may become involved in activities contrary to U.S. national security or foreign policy interests, as well as those acting on behalf of such entities.

If you have any questions surrounding transaction with entities on the entity list or your companies’ export compliance program please contact any attorney at Barnes Richardson and Colburn.