The individuals, groups, and businesses on the U.S. Prohibited Party Lists are off limits for American importers and exporters—you must avoid transactions with any of them. The problem: There are some 20,000 names on current lists, and individual names don’t necessarily have a connection with an embargoed country or sanctioned activity.
In other words, complying with the complex content of the U.S. Prohibited Party Lists is no easy matter, notes trade attorney Robin Grover. Yet compliance is not optional for companies in international trade. Access and continuous monitoring of these prohibited party lists are mandatory—and violating the ban can incur substantial civil and even criminal penalties, Grover explains in his AudioSolutionz training webinar, “The U.S. Prohibited Party Lists and How to Comply With Them.”
6 Lists Cover Denied Persons, Debarred Entities
The lists name countries, companies, and individuals that the U.S. State, Commerce, and Treasury Departments “have determined constitute a potential threat to domestic export control initiatives,” the U.S. State Department warns. The lists include:
- AECA Debarred List: Entities and individuals prohibited from participating directly or indirectly in the export of defense items, technical data, and services.
- S. Denied Persons List: Individuals and entities denied export privileges.
- S. Unverified List: Names and countries of foreign persons who in the past were parties to a transaction that did not receive a pre-license check or a post-shipment verification.
- S. Specially Designated Nationals Lists: Individuals and companies owned, controlled by, or acting for or on behalf of targeted countries.
- Entity List: Parties whose presence in a transaction can trigger a supplemental license requirement.
- S. Embargo Reference Chart: Countries against which the United States has imposed controls for the export of defense articles and services.
While these lists vary slightly, they contain basically the same kinds of information: names of individuals or parties, addresses (many individuals on the list are currently incarcerated), effective date, expiration date, type of denial, and appropriate Federal Register citations.
“It is critical for U.S. and non-U.S. companies alike to ensure they screen counterparties to transactions, including any beneficial owners and participating officers or directors, to ensure they are not captured on any of the lists of sanctioned parties,” noted Olga Torres, a managing member of Torres Law, a Dallas, Texas-based customs and global trade firm. “For parties captured on these lists, the road to removal is often long, winding, and uphill. Each authority typically outlines a path for appealing the designation or seeking removal, though the procedures are often somewhat opaque.”
Many Seek Help When Conducting Name Searches
The information on the lists may be presented plainly, but searching it is difficult. Furthermore, you must constantly monitor the lists—especially now.
U.S. actions against foreign entities took place at intense speed through the first half of 2018, noted counsel from Ropes & Gray, a global business advising firm. “The pace of change has been so intense and complex that, understandably, even the most sophisticated international companies and investors have been challenged to respond to policy and regulatory developments,” the lawyers said.
Plus, that pace “is unlikely to slow in the near future,” the Ropes & Gray lawyers added, because foreign countries will be responding to the U.S.’s many recent international actions: withdrawal from the Iranian denuclearization plan, nuclear talks with North Korea, trade battle with China, and investigations into Russian interference in the 2016 presidential election.
That’s why “a comprehensive and effective sanctions compliance strategy has never been more imperative,” the attorneys stated.
But beware: Complicating any search is the fact that an entity owned in some amount by one or more blocked parties can constitute a blocked entity.
“How can you screen for blocked entities that are not even listed as blocked entities?” rhetorically wondered writers for The Export Compliance Journal. A number of private companies offer searching for a fee, including Advanced Reporting and HireRight.
Whatever avenue you pursue, says Grover, you need a sound corporate strategy in place to spot potential threats.