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What is a Restricted Party?
Export Control regulations across various governing agencies (including but not limited to the Departments of Commerce and State) broadly restrict a U.S. person (which for these purposes includes a U.S. institution such as FIU) from conducting or facilitating an export, re-export, deemed export, with watch-listed persons or entities who have been flagged because of national security, nuclear, chemical/biological, economic sanctions or other federal concerns. These prohibitions also extend to conducting financial and/or service transactions with so-called “blocked” or “prohibited” persons or entities identified by the Treasury Department’s Office of Foreign Assets Control (OFAC) Specially Designated Nationals List (SDNL). It should be noted that these lists identify U.S.-based as well as international persons and entities. A significant number of international institutions including (but not limited to) research universities and institutes are Restricted Parties.
Conducting a transaction with such persons or entities may be subject to license approval or a presumption of license denial, depending on the person, entity, and basis of agency control. Acting without a license can result in significant personal as well as institutional sanctions and penalties.
Changes to the Lists of Restricted Parties
Each of the agencies identifies their respective watch-listed entities through publication in the Federal Register: new names and entities are added periodically. These requirements are conservatively (and more broadly) interpreted by industry, higher education, and research institutions to mean “not conducting business with” so as to avoid any unauthorized activity subject to these restrictions. U.S. universities and research institutions (including health science research institutions) are, in fact, often solicited by restricted parties who wish to benefit from a research, education, or business relationship.
Transactions involving Restricted Parties
Export transactions involving restricted individuals and entities are generally prohibited without an export license or other approval, including the transfer of EAR99 items (ex. clothing, toiletries, basic supplies, briefcases, etc.) and technology. Many of the listed persons and entities are restricted from receiving exports of U.S. technology that are not necessarily defined as controlled per se (based on specifications and capability) but are simply not in the public domain (i.e. “EAR99” information). The same restriction applies to shipments of commodities, i.e. items not specifically controlled based on an Export Control Commodity Number (“ECCN”) but rather based on the lowest level of control, EAR99. For example, when a university inadvertently exported tissue samples and other reagents to a restricted university in China that incorporated a large teaching hospital, this was determined to be a violation by the Department of Commerce, even though the items were EAR99 items.
International Higher Education Institutions may be Restricted Parties
All institutions (as well as other entities) located in a Comprehensively Sanctioned country (currently Iran, Syria, Cuba, and North Korea) are Restricted Parties. Likewise, China is home to well over 200 restricted institutions (a number of which are research and teaching entities). Because China represents one of the fastest growing regions in terms of U.S. joint research and educational exchange, U.S. entities are taking steps to ensure the fulsomeness of their restricted party screening procedures. This concern has been elevated by increased FBI visibility into the J-1 Exchange Visitors program and Confucius Institutes; NIH inquiries into conflict of interests with respected to NIH-funded programs; as well as recent procurement restrictions under the National Defense Authorization Act (NDAA) relevant to procurement from two significant Chinese vendors, Huawei and ZTE.
Identifying Restricted Parties
Robust screening identifies individuals and entities subject to U.S. Government export or payment authorization requirements or with whom engagement is prohibited altogether. The various Restricted Party lists may be referenced on the agencies websites, or by using the federal Consolidated Screening List. However, checking the Consolidated List at a single point in time risks missing later additions to the lists and may take extensive time to check multiple parties. To better support FIU personnel, FIU uses Visual Compliance Restricted Party Screening software. Visual Compliance allows users to screen a party once, and then receive notifications of any later changes to those results. RPS screens using Visual Compliance are easy to complete, and the system retains a record of all screens performed. For access to the Visual Compliance software, please contact the Export Office.
Who to Screen
Below is a list of categories of entities that we recommend should be selectively screened, prior to formal engagement or executed agreement with such party:
- Industry research sponsors (domestic and international)
- External (non-FIU) core lab facility users and fee-for-service customers
- Parties to inter-institutional MOU and MOA joint venture and affiliation agreements, including (but not limited to) scientific exchange programs, research collaboration, and academic exchange agreements
- Vendors and subcontractors (domestic and international)
- Non-Disclosure Agreement (NDA) and Material Transfer (MTA) partners
- Recipients/consignees of international shipments, including those who are not already screened as part of the MTA process
- J-1 Visa Visitor Exchange candidates as well as affiliated/home institutions (where known) of J-1 candidates (screening to occur early in the visa support process when the candidate is first identified)
- International donors of financial gifts
- Commercial licensees of patented technology as well as unpatented “know-how” license agreements (as applicable)
- Investors in related spin-off entities
- On-line course registrants (who are not otherwise registered FIU students)
- International recipients of reimbursement payments, to the extent not covered through vendor screening
- Visiting delegations to the campus from international institutions (name of institution and individuals)
If you have questions or need assistance in determining who should be screened and/or when to perform screening, please contact the Export Office for assistance.
Performing Restricted Party Screening
If you do not have access to Visual Compliance, please contact the administrative manager for your unit or department. That individual may have access and be able to assist you. If your department/unit does not have Visual Compliance access, please contact Export Control.
Once Visual Compliance access is setup, screen the party using the software. For most screening, you will not receive any matches. If you do receive a potential or actual match, you will need to determine whether the listed individual is the same person that you are screening. Reviewing details about that individual (such as age, nationality, residence, education/work history, marital status, etc.) may help you resolve a potential match. For assistance reviewing potential matches, please contact your HR representative or the Export Office.
If you believe that the individual you screened is in fact a Restricted Party, contact the Export Office as soon as possible. We will review the potential match, the reasons for Restriction, and help you determine next steps. It is not advisable to contact the subject individual prior to working with Export Control.
Lastly, per federal regulations you must retain all screening records (including names of individuals screened and any facts used to clear matches) in a separate electronic and/or paper file for five (5) years.
Special Restricted Party FAQ’s
1. With respect to the categories of individual entities and persons bullet-pointed above, do we need to screen every individual or entity involved, even if such entity is either a federal agency, or well-known industry entity or research institution?
The short answer is no; the regulations do not prescribe mandatory screening of every entity or who, exactly, to screen. Rather, the prohibition addresses more broadly the class of prohibited end users and restricted parties. That leaves a considerable margin of discretion. However, as a practical matter, many units/departments find it logistically or procedurally easier to screen these categories of entities and signatory individuals on an up-loaded, batched basis, rather than incorporating the extra step of extracting entities that would clearly not present any risk.
2. Separate from taking a go-forward approach pursuant to new agreement partners, do we need to screen the names of entities and signatories associated with existing, active contractual agreements and MOUs?
The short answer is yes. That in order to minimize exposure to the fullest extent possible, it does make sense to screen all existing, active agreement parties.
3. What about legacy terminated agreements (entities and individuals)?
Absent any specific knowledge that an entity or signatory was (or may now be) on a restricted party list, and absent any ongoing activity with such parties, most institutions do not perform retrospective screening pursuant to inactive parties and agreements. If you believe that you may have previously inadvertently engaged with a restricted party, please contact the Export Office.