The Commerce Department’s Bureau of Industry and Security has done a very good job in posting relevant FAQs on its website that provide succinct guidance as to what is acceptable for compliance and what is prohibitive activity related to the restrictions.
First, it’s imperative that you obtain a written confirmation from an independent third party on letterhead (accounting or law firm) of the consignee that is in a position to verify the business relationship status of the consignee, demonstrating it’s a “legally distinct affiliate and is not a branch or operating division of any listed entities.”
Second, obtain a written assurance on company letterhead from a senior official of the consignee affirming that “they will not act as an agent, a front or a shell company for the listed restricted entities.” Remember to provide them with a complete list of associated restricted parties.
After obtaining the above mentioned assurances, you still need to exercise common sense and instincts to ensure that there is no stated or implied information suggesting that the integrity of the transaction is suspect.
One other area of importance to address is whether you can conduct business with a “listed entity.” The answer is “yes, but proceed with caution,” which could mean that you are restricted from providing U.S. products/technology (non-U.S products would not be prohibited if they meet the U.S. content de-minimis standard) without a valid export license, but could provide services, such as repairs for an existing customer product, as long as no replacement products are of U.S. origin.
DiVecchio, principal of Boston-based DiVecchio & Associates, has provided export compliance consulting services to U.S. exporters for nearly 40 years. He may be reached by email at email@example.com.