{"id":421,"date":"2021-01-08T20:14:30","date_gmt":"2021-01-08T20:14:30","guid":{"rendered":"http:\/\/exportcompliancesolutions.com\/blog\/?p=421"},"modified":"2021-01-08T20:14:30","modified_gmt":"2021-01-08T20:14:30","slug":"new-commerce-ofac-sanctions-lists-include-communist-chinese-military-companies-entity-list-expanded","status":"publish","type":"post","link":"https:\/\/exportcompliancesolutions.com\/blog\/2021\/01\/08\/new-commerce-ofac-sanctions-lists-include-communist-chinese-military-companies-entity-list-expanded\/","title":{"rendered":"New Commerce and OFAC Sanctions Lists Include Communist Chinese Military Companies, Entity List Expanded"},"content":{"rendered":"<p>In separate, but related, December actions, the Department of Commerce&#8217;s Bureau of Industry and Security (BIS) and the Department of the Treasury&#8217;s Office of Foreign Assets Control (OFAC) published new sanctions lists largely aimed at companies tied to the Chinese military.<\/p>\n<p>The new lists build on the <a href=\"https:\/\/exportcompliancesolutions.com\/blog\/2020\/09\/24\/tough-china-entity-list-expands-communist-chinese-military-companies-identified\/\">2020 releases<\/a> of the Department of Defense list of Communist Chinese military companies.\u00a0 When first released, the presence of a company on that list was a \u201cred flag,\u201d but not a direct export restriction.\u00a0 The use of the list by the Departments of Commerce and Treasury changes that.<\/p>\n<p><strong>Commerce Military End User List &#8211; NEW ADDITION UNDER SUPPLEMENT #7 OF EAR!<\/strong><\/p>\n<p>On December 23, 2020, BIS published a rule (<a href=\"https:\/\/www.federalregister.gov\/documents\/2020\/12\/23\/2020-28052\/addition-of-military-end-user-meu-list-to-the-export-administration-regulations-and-addition-of\">85 FR 83793<\/a>) adding the Military End User (MEU) List to the Export Administration Regulations (EAR).\u00a0 The list identifies 102 entities, fifty-seven in China and forty-five in Russia, that have been identified by the U.S. government as \u201cmilitary end users\u201d subject to <a href=\"https:\/\/www.bis.doc.gov\/index.php\/documents\/regulations-docs\/2343-part-744-control-policy-end-user-and-end-use-based-2\/file\">EAR \u00a7744.21<\/a>.\u00a0 \u00a7744.21 restricts the export, reexport, or transfer (in country) of items identified in Supplement No. 2 to part 744 to military end users in China, Russia, and Venezuela.\u00a0 The restriction takes the form of a license requirement with a presumption of denial.\u00a0 License exceptions other than GOV may not be used for those entities.<\/p>\n<p>While long-awaited and very helpful for exporters, the MEU List is not an exclusive list of parties subject to the restrictions of \u00a7744.21.\u00a0 Careful evaluation of potential exports to China, Russia, and Venezuela is advised as even business entities may be considered \u201cmilitary end users\u201d which are defined broadly to include \u201cany person or entity whose actions or functions are intended to support \u2018military end uses.\u2019\u201d\u00a0 In the event that a member of the Department of Defense list of Communist Chinese military companies is not included on the MEU list, it should be considered a \u201cred flag\u201d for export compliance review.<\/p>\n<p>The new list is located at <a href=\"https:\/\/www.bis.doc.gov\/index.php\/documents\/regulations-docs\/2343-part-744-control-policy-end-user-and-end-use-based-2\/file\">Supplement No. 7 to Part 744<\/a> of the EAR.<\/p>\n<p><strong>OFAC Chinese Military Companies Investment Ban<\/strong><\/p>\n<p>On November 12, 2020, the President issued Executive Order 13959 (<a href=\"https:\/\/www.federalregister.gov\/documents\/2020\/11\/17\/2020-25459\/addressing-the-threat-from-securities-investments-that-finance-communist-chinese-military-companies\">85 FR 73185<\/a>) titled \u201cAddressing the Threat From Securities Investments That Finance Communist Chinese Military Companies,\u201d prohibits trading in securities of any \u201cCommunist Chinese military company\u201d effective January 11, 2021.<\/p>\n<p>The order includes an annex listing Communist Chinese military companies based on the Department of Defense list and provides for expanding the list in the future.\u00a0 As of January 8, 2021, the list reflects the three 2020 releases of the Department of Defense list.<\/p>\n<p>To implement the order, OFAC has established the <a href=\"https:\/\/home.treasury.gov\/policy-issues\/financial-sanctions\/sanctions-programs-and-country-information\/chinese-military-companies-sanctions\">Non-SDN Communist Chinese Military Companies List<\/a> (NS-CCMC) and has been regularly issuing <a href=\"https:\/\/home.treasury.gov\/policy-issues\/financial-sanctions\/faqs\/topic\/5671\">FAQs<\/a> on the topic.<\/p>\n<p><strong>Seventy-Seven <u>MORE<\/u> Added to Entity List<\/strong><\/p>\n<p>In another notable update, on December 22, 2020, BIS published a rule (<a href=\"https:\/\/www.federalregister.gov\/documents\/2020\/12\/22\/2020-28031\/addition-of-entities-to-the-entity-list-revision-of-entry-on-the-entity-list-and-removal-of-entities\">85 FR 83416<\/a>) which added seventy-seven entities to the EAR\u2019s <a href=\"https:\/\/www.bis.doc.gov\/index.php\/documents\/regulations-docs\/2347-744-supp-4-6\/file\">Entity List<\/a>.\u00a0 The new entries are located in the People&#8217;s Republic of China (China), Bulgaria, France, Germany, Hong Kong, Italy, Malta, Pakistan, Russia, and the United Arab Emirates (U.A.E.).\u00a0 The bulk of the new entries (60) are located in China.\u00a0 The rule also removed four entities in Israel and the U.A.E. and revised two entries.\u00a0 The Federal Register Notice contains the rationale for the additions, typically activity that is considered \u201ccontrary to the national security interests of the United States.\u201d<\/p>\n<p>BIS also issued a <a href=\"https:\/\/www.commerce.gov\/news\/press-releases\/2020\/12\/commerce-adds-chinas-smic-entity-list-restricting-access-key-enabling\">press release<\/a> and a <a href=\"https:\/\/www.commerce.gov\/news\/press-releases\/2020\/12\/statement-secretary-ross-departments-77-additions-entity-list-human\">statement from Secretary Ross<\/a> with additional background on the new Chinese entries.<\/p>\n<p><strong>Continuous Screening Recommended ACT NOW!<\/strong><\/p>\n<p>With the new Military End User List and the continued expansion of the Entity List, <a href=\"https:\/\/ecscreening.com\/\">denied party screening<\/a> requires the ongoing attention of export compliance personnel and programs.\u00a0 Customers, as well as intermediate parties and end users must be screened before an export can take place.\u00a0 With sanctions lists being updated on a nearly daily basis, continuous screening of those parties is the best way to keep up to date with changes.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>In separate, but related, December actions, the Department of Commerce&#8217;s Bureau of Industry and Security (BIS) and the Department of the Treasury&#8217;s Office of Foreign Assets Control (OFAC) published new sanctions lists largely aimed at companies tied to the Chinese military. The new lists build on the 2020 releases of the Department of Defense list [&hellip;]<\/p>\n","protected":false},"author":4,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"nf_dc_page":"","footnotes":""},"categories":[7,3],"tags":[],"class_list":["post-421","post","type-post","status-publish","format-standard","hentry","category-all","category-compliance"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v26.9 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>New Commerce and OFAC Sanctions Lists Include Communist Chinese Military Companies, Entity List Expanded - Export Compliance Solutions<\/title>\n<meta name=\"description\" content=\"DOD\u2019s Communist Chinese military company list formally used for Commerce Military End User List and OFAC securities restrictions. 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