ÿWPCD- ¶y½îZ1 ÷tx‹ÀOÒ¤ðôt¿•,PÃ4'õ ã9ÿIh˜ª-ôœ…)7vC?)ö Qs‚˜‚<øë¶1ê¾ø#Fâk+¡ÊP):Í’‹ Ó41\TÍíÅ'Ð6ÁÑþááI™0²T~V5NŒÁ+J ÿÿ(_23Ó ¨ý ÓÓ ` ÓÓ&<<”ìDœôL¤&ÓÔ2ÔÔ3  Ôà..àÓ  ÓÓ2(Ü Ü4Œ ä <”ìDœôL¤2ÓÓ ¨ý Ó*;+J ÿÿ(_22Ó ¨ý ÓÓ ¸ ÓÓ#””ìDœôL¤#ÓÔ2ÔÔ3  Ôà..àÓ  ÓÓ2(Ü Ü4Œ ä <”ìDœôL¤2ÓÓ ¨ý Ó*8+J ÿÿ(_21Ó ¨ý ÓÓ  ÓÓ ììDœôL¤ ÓÔ2ÔÔ3  Ôà..àÓ  ÓÓ2(Ü Ü4Œ ä <”ìDœôL¤2ÓÓ ¨ý Ó*5+J ÿÿ(_20Ó ¨ý ÓÓ h ÓÓDDœôL¤ÓÔ2ÔÔ3  Ôà..àÓ  ÓÓ2(Ü Ü4Œ ä <”ìDœôL¤2ÓÓ ¨ý Ó*2+J ÿÿ(_19Ó ¨ý ÓÓ À ÓÓœœôL¤ÓÔ2ÔÔ3  Ôà..àÓ  ÓÓ2(Ü Ü4Œ ä <”ìDœôL¤2ÓÓ ¨ý Ó*/+J ÿÿ(_18Ó ¨ý ÓÓ  ÓÓ ôôL¤ÓÔ2ÔÔ3  Ôà..àÓ  ÓÓ2(Ü Ü4Œ ä <”ìDœôL¤2ÓÓ ¨ý Ó* ÿÿ(_17Ô2ÔÔ3  Ô€*DJ ÿÿ(_16Ó ¨ý ÓÓ ° ÓÓ,"Œ Œ ä <”ìDœôL¤,ÓÔ2ÔÔ3  Ô€Ó  ÓÓ2(Ü Ü4Œ ä <”ìDœôL¤2ÓÓ ¨ý Ó*AJ ÿÿ(_15Ó ¨ý ÓÓ  ÓÓ)ä ä <”ìDœôL¤)ÓÔ2ÔÔ3  Ô€Ó  ÓÓ2(Ü Ü4Œ ä <”ìDœôL¤2ÓÓ ¨ý Ó*>J ÿÿ(_14Ó ¨ý ÓÓ ` ÓÓ&<<”ìDœôL¤&ÓÔ2ÔÔ3  Ô€Ó  ÓÓ2(Ü Ü4Œ ä <”ìDœôL¤2ÓÓ ¨ý Ó*;J ÿÿ(_13Ó ¨ý ÓÓ ¸ ÓÓ#””ìDœôL¤#ÓÔ2ÔÔ3  Ô€Ó  ÓÓ2(Ü Ü4Œ ä <”ìDœôL¤2ÓÓ ¨ý Ó*8J ÿÿ(_12Ó ¨ý ÓÓ  ÓÓ ììDœôL¤ ÓÔ2ÔÔ3  Ô€Ó  ÓÓ2(Ü Ü4Œ ä <”ìDœôL¤2ÓÓ ¨ý Ó*5J ÿÿ(_11Ó ¨ý ÓÓ h ÓÓDDœôL¤ÓÔ2ÔÔ3  Ô€Ó  ÓÓ2(Ü Ü4Œ ä <”ìDœôL¤2ÓÓ ¨ý Ó*2J ÿÿ(_10Ó ¨ý ÓÓ À ÓÓœœôL¤ÓÔ2ÔÔ3  Ô€Ó  ÓÓ2(Ü Ü4Œ ä <”ìDœôL¤2ÓÓ ¨ý Ó(/J ÿÿ&_9Ó ¨ý ÓÓ  ÓÓ ôôL¤ÓÔ2ÔÔ3  Ô€Ó  ÓÓ2(Ü Ü4Œ ä <”ìDœôL¤2ÓÓ ¨ý Ó( ÿÿ&_8Ô2ÔÔ3  Ô(DJ ÿÿ&_7Ó ¨ý ÓÓ ° ÓÓ,"Œ Œ ä <”ìDœôL¤,ÓÔ2ÔÔ3  ÔÓ  ÓÓ2(Ü Ü4Œ ä <”ìDœôL¤2ÓÓ ¨ý Ó(AJ ÿÿ&_6Ó ¨ý ÓÓ  ÓÓ)ä ä <”ìDœôL¤)ÓÔ2ÔÔ3  ÔÓ  ÓÓ2(Ü Ü4Œ ä <”ìDœôL¤2ÓÓ ¨ý Ó(>J ÿÿ&_5Ó ¨ý ÓÓ ` ÓÓ&<<”ìDœôL¤&ÓÔ2ÔÔ3  ÔÓ  ÓÓ2(Ü Ü4Œ ä <”ìDœôL¤2ÓÓ ¨ý Ó(;J ÿÿ&_4Ó ¨ý ÓÓ ¸ ÓÓ#””ìDœôL¤#ÓÔ2ÔÔ3  ÔÓ  ÓÓ2(Ü Ü4Œ ä <”ìDœôL¤2ÓÓ ¨ý Ó(8J ÿÿ&_3Ó ¨ý ÓÓ  ÓÓ ììDœôL¤ ÓÔ2ÔÔ3  ÔÓ  ÓÓ2(Ü Ü4Œ ä <”ìDœôL¤2ÓÓ ¨ý Ó(5J ÿÿ&_2Ó ¨ý ÓÓ h ÓÓDDœôL¤ÓÔ2ÔÔ3  ÔÓ  ÓÓ2(Ü Ü4Œ ä <”ìDœôL¤2ÓÓ ¨ý Ó(2J ÿÿ&_1Ó ¨ý ÓÓ À ÓÓœœôL¤ÓÔ2ÔÔ3  ÔÓ  ÓÓ2(Ü Ü4Œ ä <”ìDœôL¤2ÓÓ ¨ý Ó&/J ÿÿ$_Ó ¨ý ÓÓ  ÓÓ ôôL¤ÓÔ2ÔÔ3  ÔÓ  ÓÓ2(Ü Ü4Œ ä <”ìDœôL¤2ÓÓ ¨ý Ó Ñ e Ñmailto:warvin@bis.doc.gov,(.(3Ä($¤¤Ý ƒüœ!ÝÔUSUS.,ÔÝ  Ýà  àòòÚ  Ú0Ú  Úóó(#Ã$òòÚ  Ú0Ú  Úóó dhttp://www.regulations.govÝ ƒüœ!ÝÔUSUS.,ÔÝ  ÝÔ_ÔÔf @ ÔÑ€<ïOÑÑ8€íXdìdÈ8ÑÓÓà€¨¨5(#àÔf  ÔÔg ÔÔf  ÔÔg Ôà€@öö5(#àBilling€Code€3510„33„PˆÐ ° ÐÌò òDEPARTMENT€OF€COMMERCEó óÐ `° ÐÌò òBureau€of€Industry€and€Securityó óÐ  ` ÐÌò ò15€Ô_ÔCFRÔ_Ô€Parts€732,€736,€740,€744,€752,€764,€and€772ó óÐ À  ÐÌò ò[Docket€No.€€040915266„4266„01]ó óÐ pÀ ÐÌò òÔ_ÔRINÔ_Ô:€0694„AC94ó óÐ  p ÐÌò òRevised€ð ðKnowledgeðð€Definition,€Revision€of€ð ðRed€Flagsðð€Guidance€and€Safe€Harboró óÐ Ð  ÐÌò òAGENCY:ó ó€€Bureau€of€Industry€and€Security,€Commerce.Ð €Ð ÐÌò òACTION:ó ó€Proposed€rule.Ð 8"ˆ  ÐÌò òSUMMARY:€€ó óThis€proposed€rule€would€revise€the€knowledge€definition€in€the€ExportÐ ð%@!$ ÐAdministration€Regulations€to€incorporate€a€ð ðreasonable€personðð€standard€and€to€replace€theÐ Ð' #& Ðphrase€ð ðhigh€probabilityðð€with€the€phrase€ð ðmore€likely€than€not.ðð€€It€also€would€update€the€ð ðred€Ð  ¨)ø$( Ðflagsðð€guidance€and€would€provide€a€safe€harbor€from€liability€arising€from€knowledge€under€thatÐ ° ÐdefinitionÔf  ÔÔg Ô.Ôf  ÔÔg ԀРˆØ ÐÌò òDATES:€€ó óComments€must€be€received€by€November€12,€2004.Ð 8 ˆ ÐÌò òADDRESSES:ó ó€Send€comments€on€this€proposed€rule€to:€the€Ô‡ XíXXXÔFederal€Ô_ÔeRulemakingÔ_Ô€Portal:€€Ð ð @  ÐÔ4‚tÝ °ÔÝ‚ÍOÝÔÿÔòòÝ  ÝÔ5  Ôhttp://www.regulations.govÔ6¢ÔÝ‚ÍO¶ƒÝóóÔÿÔÝ  ÝÔ7Ý D äÔ€,Ô#†XíXX Xí1#Ô€via€e„mail€to€Ô4‚Ý þÔÝ‚ÍOÝÔÿÔòòÝ  ÝÔ5  Ôrpd2@bis.doc.gov,Ô6•ÔÝ‚ÍO©ƒÝóóÔÿÔÝ  ÝÔ7Ý î×Ô€fax€them€to€202„482„3355,€or€onÐ Ð  Ðpaper€to€Regulatory€Policy€Division,€Office€of€Exporter€Services€Room€2705,€U.S.€DepartmentÐ ¨ø  Ðof€Commerce,€Washington,€D.C.€20230.€€Refer€to€Regulation€Identification€Number€0694„AC94Ð €Ð Ðin€all€comments.Ð X¨ ÐÌò òFOR€FURTHER€INFORMATION€CONTACT:ó ó€For€further€information€regarding€thisÐ X Ðproposed€rule,€contact:€William€Ô_ÔArvinÔ_Ô,€Office€of€Exporter€Services,€at€Ô4‚AÝ ºÔÝ‚ÍOÝÔÿÔòòÝ  ÝÔ5  Ôwarvin@bis.doc.gov,Ô6M ÔÝ‚ÍOa ƒÝóóÔÿÔÝ  ÝÔ7Ý f! Ô€faxÐ è8 Ð202„482„3355€or€telephone€202„482„2440Ð À ÐÌò òSUPPLEMENTARY€INFORMATION:ó óÐ p À Ðà  àÌòòBackgroundÐ  $p" Ðóóà  àÌà  àòòKnowledge€DefinitionóóÐ Ð' #& ÐÌà  àThe€current€definition€of€ð ðknowledgeðð€in€ðð772.1€of€the€EAR€encompasses€ð ðnot€onlyÐ €+Ð&* ÐÔ_Ôpositive€knowledge€that€a€circumstance€exists€or€is€substantially€certain€to€occur,€but€also€anÐ ° Ðawareness€of€a€high€probability€of€its€existence€or€future€occurrence.€€Such€awareness€is€inferredÐ ˆØ Ðfrom€evidence€of€the€conscious€disregard€of€facts€known€to€a€person€and€is€also€inferred€from€aÐ `° Ðpersonððs€willful€avoidance€of€facts.ðð€€This€proposed€rule€would€amend€the€definition€ofÐ 8 ˆ Ðknowledge€in€Ôf  ÔÔg ÔÔf  ÔÔg ÔfourÔf  ÔÔg Ô€ways,€incorporating€a€ð ðreasonable€personðð€standard,€replacing€the€phraseÐ  ` Ðð ðhigh€probabilityðð€with€the€phrase€ð ðmore€likely€than€not,ððÔf  ÔÔg Ô€adding€the€phrase€ð ðòòinteróó€òòaliaóóðð€to€theÐ è 8  Ðdescription€of€the€facts€and€circumstances€that€could€make€person€aware€of€the€existence€orÐ À  Ðfuture€occurrence€of€a€fact,Ôf  ÔÔg Ô€and€eliminating€the€phrase€ð ðknown€to€the€personðð€from€the€sentenceÐ ˜è  Ðin€the€knowledge€definition€that€states€that€knowledge€may€be€inferred€from€ð ðconscious€disregardÐ pÀ Ðof€facts€known€to€the€person.€€The€proposed€rule€also€limits€the€applicability€of€the€definition€toÐ H˜ Ðcertain€actors€in€transactions€subject€to€the€Export€Administration€Regulations€(EAR)€andÐ  p Ðexcludes€certain€usages€from€the€definition.€Ð øH ÐÌà  àBIS€believes€that€incorporating€the€reasonable€person€standard€into€the€definition€willÐ ¨ø Ðfacilitate€public€understanding€of€the€definition,€particularly€as€it€applies€to€knowledgeÔf  ÔÔg ÔÔf  ÔÔg Ô„Ôf  ÔÔg ÔbasedÐ €Ð Ðlicense€requirements,€and€restrictions€onÔf  ÔÔg Ô€use€ofÔf  ÔÔg Ô€License€Exceptions.€€Under€this€revisedÐ X ¨ Ðdefinition€a€party€would€have€knowledge€of€a€fact€or€circumstance€if€a€reasonable€person€in€thatÐ 0"€  Ðpartyððs€situation€would€conclude,€upon€consideration€of€the€facts€and€circumstancesÔf  ÔÔg Ô,€that€theÐ $X" Ðexistence€or€future€occurrence€of€the€fact€or€circumstance€in€question€is€more€likely€than€not.Ð à%0!$ ÐÌÐ  )à$( Ðà  àBIS€believes€that€replacing€the€phrase€ð ðhigh€probabilityðð€with€the€phrase€ð ðmore€likelyÐ ° Ðthan€notðð€is€not€a€change€from€current€policy€and€practice.€€The€phrase€ð ðmore€likely€than€notðð€isÐ ˆØ Ðbetter€understood€than€ð ðhigh€probability.ðð€€Moreover,€companies€with€a€strong€complianceÐ `° Ðcommitment€are€unlikely,€even€under€the€current€definition,€to€proceed€with€transactions€if€theyÐ 8 ˆ Ðconclude€that€the€circumstance€of€concern€is€ð ðmore€likely€than€not.ððÐ  ` ÐÌà  àAdding€the€phrase€ð ðòòinter€aliaóóðð€to€the€description€of€the€circumstances€under€whichÐ À  Ðknowledge€may€be€inferred€emphasizes€that€the€factors€cited€in€the€definition,€òòi.e.óó€the€consciousÐ ˜è  Ðdisregard€or€willful€avoidance€of€facts€are€not€the€only€factors€from€which€knowledge€may€beÐ pÀ Ðinferred.Ð H˜ ÐÌà  àRemoving€the€phrase€ð ðknown€to€the€personðð€from€the€sentence€in€the€knowledgeÐ øH Ðdefinition€that€states€that€knowledge€may€be€inferred€from€ð ðconscious€disregard€of€facts€known€toÐ Ð  Ðthe€personðð€would€eliminate€the€use€of€the€defined€term€in€the€definition.Ð ¨ø ÐÌà  à€Other€proposed€changes€to€the€definition€address€the€scope€of€its€application.€€The€phraseÐ X ¨ Ðð ðWhen€referring€to€an€actor€in€a€transaction€that€is€subject€to€the€EARÔ‡ XíXXXíÔðð€would€be€added€to€theÐ 0"€  Ðbeginning€of€the€definition,€and€language€would€be€added€to€specify€that€the€definition€concernsÐ $X" Ðknowledge€of€a€fact€or€circumstance€relating€to€such€a€transaction.Ô#†XíXX Xí—#Ô€€These€changeÔf  ÔÔg ÔsÔf  ÔÔg Ô€would€makeÐ à%0!$ Ðclear€that€the€definition€would€not€apply€to€provisions€of€the€EAR€in€which€ð ðknowledgeðð€andÐ ¸'#& Ðrelated€terms€are€used:€(1)€to€refer€to€technologyÔf  ÔÔg ÔÔf  ÔÔg Ô;Ôf  ÔÔg Ô€(2)€to€ð ðpersonal€knowledgeðð€or€to€knowledge€ofÐ )à$( Ðthe€EAR;€(3)€to€describe€the€basis€for€an€agency€or€official€to€take€an€enforcement€orÐ h+¸&* ÐÑ<ïOÑâ <âÑe°Ñâ <âÑ  Ñadministrative€action;€(4)€to€indicate€an€alternative€name€(as€in€the€phrase€ð ðalso€known€asðð);€(5)Ð e Ðin€explanatory€text€that€has€no€legal€effect;€(6)€in€a€requirement€that€a€party€certify€that€aÐ =Ø Ðstatement€is€true€to€the€best€of€its€knowledge;€or€(7)€when€referring€to€the€requirements€orÐ ° Ðprohibitions€of€a€law€other€than€those€implemented€by€the€EAR.€€Finally,€language€would€beÐ í ˆ Ðadded€excluding€from€the€definition€the€use€of€ð ðknowledgeðð€terms€in€the€description€of€criminalÐ Å ` Ðliability€in€Section€764.3(b).€€The€proposed€definition,€like€the€current€definition€of€ð ðknowledgeððÐ  8  Ðin€ðð772.1,€would€also€not€apply€to€Part€760€of€the€EAR€(Restrictive€Trade€Practices€or€Boycotts).Ð u  ÐÓ‡ (G/x3ÓÌÓ…† (#3x<"…Óà  àòòEnhanced€Red€FlagsóóÐ %À ÐÌà  àBIS€is€proposing€to€update€and€augment€the€ð ðred€flagðð€guidance€and€to€increase€from€12Ð Õp Ðto€23€the€number€of€circumstances€expressly€identified€as€presenting€a€red€flag.€€The€revisedÐ ­H Ðguidance€would€reflect€experience€gained€since€the€existing€red€flags€and€guidance€wereÐ …  Ðdeveloped€in€the€mid„1980s.€€The€ð ðred€flagsðð€would€continue€to€provide€guidance€that€BISÐ ]ø Ðbelieves€is€useful€in€preventing€the€diversion€of€items€that€are€subject€to€the€EAR€to€proliferationÐ 5Ð Ðrelated€purposes€as€well€as€other€potential€violations€of€the€EAR.€€Ôf  ÔÔg ÔÔf  ÔÔg ÔAlthough€the€ð ðred€flagsððÐ  ¨ Ðprovide€guidance,€this€rule€would€€also€€incorporate€€them€by€reference€Ôf  ÔÔg Ô€into€the€proposed€safeÐ å!€  Ðharbor€and€the€Internal€Compliance€Programs€requirements€of€Special€Comprehensive€Licenses.€Ð ½#X" ÐÔf  ÔÔg ÔÔf  ÔÔg ÔTo€clarify€the€role€the€red€flags€would€play€under€this€ruleÔf  ÔÔg Ô,€BIS€is€proposingÔf  ÔÔg Ô€to€add€a€statementÐ •%0!$ Ðthat€the€red€flags€and€know€your€customer€guidance€do€not€derogate€from€obligations€imposedÐ m'#& Ðelsewhere€in€the€EAR€andÔf  ÔÔg Ô€to€remove€the€statement€ð ðThis€guidance€does€not€change€or€interpretÐ E)à$( Ðthe€EARðð€from€supplement€No.€3€to€part€732.Ð +¸&* Їà  à€BIS€believes€that€many€conscientious€participants€in€export€transactions€are€followingÐ e Ðthe€current€ð ðred€flagðð€guidance.€€BIS€anticipates€that€the€added€benefit€of€the€safe€harborÐ =Ø Ðprovision€would€encourage€more€parties€to€take€these€measures€and€thereby€prevent€diversions€toÐ ° Ðproscribed€or€inappropriate€end„uses.€€€€Ð í ˆ ÐÌòòà  àSafe€HarboróóÐ  8  ÐÌà  àBIS€is€proposing€to€create€a€safe€harbor€from€liability€arising€from€knowledgeÔf  ÔÔg ÔÔf  ÔÔg Ô„Ôf  ÔÔg ÔbasedÐ Mè  Ðlicense€requirements,€Ôf  ÔÔg Ôknowledge„based€Ôf  ÔÔg Ôrestrictions€onÔf  ÔÔg Ô€use€ofÔf  ÔÔg Ô€License€Exceptions,€and€otherÐ %À Ðknowledge€provisions€in€the€EAR€that€are€subject€to€the€proposed€definition€of€knowledgeÐ ý˜ Ðdescribed€above.€€Under€this€safe€harbor,€parties€who€take€steps€identified€in€a€new€ðð764.7€willÐ Õp Ðnot€have€knowledge€imputed€to€them€by€application€of€the€ð ðreasonable€personðð€standard€stated€inÐ ­H Ðthe€new€definition.€€Ôf  ÔÔg ÔÔf  ÔÔg ÔParties€who€report€to€BISððs€Office€of€Enforcement€Analysis,€prior€toÐ …  Ðshipment,€all€material€information€regarding€the€existence,€assessment,€and€satisfactoryÐ ]ø Ðresolution€of€the€red€flag(s)Ôf  ÔÔg Ô€and€who€do€not€otherwise€have€ð ðknowledge,ðð€as€defined€in€ðð772.1,Ð 5Ð Ðwill€be€eligible€for€a€safe€harbor€from€any€enforcement€action€arising€from€the€red€flag(s)€thatÐ  ¨ Ðthey€have€addressed.€Ð å!€  ÐÌà  àThe€steps€to€be€listed€in€ðð764.7€are:€€Ð •%0!$ ÐÌÔf  ÔÔg ÔÔf  ÔÔg Ôà0  àÔf  ÔÔg Ô(1)€Ôf  ÔÔg ÔÔf  ÔÔg ÔComply€with€any€item€and/or€destination„based€license€requirements€and€otherÐ E)à$( Ðnotification€or€review€requirements;Ð+¸&*(#(# ЀÔf  ÔÔg ÔÌà0  à(2)€Determine€whether€parties€in€the€transaction€are€subject€to€a€denial€order€or€to€certainÐ =Ø Ðsanctions,€whether€they€appear€on€the€Entity€List€or€the€Unverified€List,€whether€theÐ ° Ðtransaction€is€governed€by€a€general€order€issued€by€BIS;€and€Ðí ˆ(#(# ÐÌà0  à(3)€Follow€the€procedures€for€identifying€and€resolving€red€flags€set€forth€in€SupplementÐ  8  ÐNo.€3€to€Part€732.Ðu (#(# Ðà  àÌÔf  ÔÔg ÔÌà  àÔf  ÔÔg ÔIf€BIS€concludes€that€a€reported€transaction€involves€unresolved€red€flags,€it€will€soÐ ý˜ Ðadvise€the€submitting€party.€€If€a€party€has€actual€knowledge€or€awareness€that€the€fact€orÐ Õp Ðcircumstance€in€question€is€more€likely€than€not,€then€even€if€the€party€receives€BIS€concurrenceÐ ­H Ð(based€on€a€report€to€the€Office€of€Enforcement€Analysis)€that€red€flags€are€resolved,€the€partyÐ …  Ðwill€not€be€eligible€for€the€safe€harbor€nor€will€BIS€concurrence€bind€a€subsequent€enforcementÐ ]ø Ðaction€or€prosecution,€because€the€report€would€have€misstated€or€withheld€relevant€information.€€Ð 5Ð ÐÌÌà  àBIS€Ôf  ÔÔg ÔÔf  ÔÔg Ôexpects€toÔf  ÔÔg Ô€responÔf  ÔÔg ÔÔf  ÔÔg ÔdÔf  ÔÔg Ô€toÔf  ÔÔg Ô€mostÔf  ÔÔg Ô€such€reports€within€45€days€of€receipt.€Ôf  ÔÔg ÔÔf  ÔÔg ÔBIS€willÐ ½#X" Ðacknowledge€in€writing€receipt€of€all€reports€and€will€provide€a€telephone€number€for€theÐ •%0!$ Ðreporting€party€to€call€to€learn€the€status€of€the€report€if€it€has€not€heard€from€BIS€by€the€dateÐ m'#& Ðstated€in€the€acknowledgment.€€BIS€may€consult€with€other€government€agencies€beforeÐ E)à$( Ðresponding€to€the€party€submitting€the€report.€€However,€until€receiving€written€confirmationÐ +¸&* Ðfrom€BIS€or€contacting€BIS€after€the€date€specified€in€the€acknowledgment€and€learning€that€BISÐ e Ðwill€not€be€responding€to€the€report,€€the€party€is€not€entitled€to€conclude€that€Ôf  ÔÔg Ô€BIS€concurs€in€theÐ =Ø Ðpartyððs€assessment€that€any€red€flags€have€been€successfully€resolvedÔf  ÔÔg ÔÔf  ÔÔg Ô.€Ôf  ÔÔg Ô€Ôf  ÔÔg Ô€òòóóÐ ° Ðà  àParties€who€have€filed€such€reports€may€not€file€a€license€application€relating€to€the€sameÐ í ˆ Ðsituation€while€the€report€is€under€review€by€BIS.€€Such€license€applications€will€be€returnedÐ Å ` Ðwithout€action.€€In€addition€to€language€in€the€new€ðð764.7,€ðð748.4(f)€would€be€modified€toÐ  8  Ðimplement€this€prohibition.€€Ð u  ÐÌà  àòòOther€Clarifying€Amendments€and€Conforming€ChangesóóÐ %À ÐÌà  àThe€proposed€rule€would€also€amend€the€EAR€in€the€following€ways:Ð Õp ÐÌà  à(1)€òòRemoval€of€Superfluous€or€Potentially€Confusing€Uses€of€a€ð ðKnowledgeðð€TermóóÐ …  ÐÌà  àThe€proposed€rule€would€revise€three€provisions€of€the€EAR€to€clarify€that€they€refer€toÐ 5Ð Ðall€requirements€under€part€744,€not€just€to€requirements€based€on€knowledge.€€TheseÐ  ¨ Ðamendments€would€not€change€the€substance€of€any€provision.€€The€provisions€to€be€amended€inÐ å!€  Ðthis€way€are:Ð ½#X" ÐÌÓ‡ (G/x3ÓÝ"‚3£"ÝÝ  ÝÝ‚3£7@ÝÔ2G/Ôð!ðÔ3  Ôà0  àÝ  ÝGeneral€Prohibition€Five,€which€references€the€recipient€and€end„use€based€export€andÐ m'#& Ðreexport€requirements€of€part€744€and€which€is€found€at€ðð736.2(b)(5);݃3£7@d@ÝŒÐE)à$((#(# ÐŒÝ  ÝÐ +¸&* ÐÝ"‚3£"ÝÝ  ÝÝ‚3£´AÝÔ2G/Ôð!ðÔ3  Ôà0  àÝ  ÝThe€prohibition€on€using€License€Exception€AGR€for€transactions€in€which€a€license€isÐ e Ðrequired€by€part€744€found€at€ðð740.18;€and݃3£´AáAÝŒÐ=Ø(#(# ÐŒÝ  ÝÌÝ"‚3£"ÝÝ  ÝÝ‚3£CÝÔ2G/Ôð!ðÔ3  Ôà0  àÝ  ÝThe€prohibition€on€using€Special€Comprehensive€Licenses€to€meet€license€requirementsÐ í ˆ Ðimposed€by€part€744€found€at€ðð752.9(a)(3)(ii)(H).݃3£C/CÝŒÐÅ `(#(# ÐŒÝ  ÝÓ…† (#3x¶?…ÓÓ‡ (G/x3ÓÌÓ…† (#3xÚD…Óà  à(2)€òòConsolidation€of€ð ðRed€Flagsðð€TerminologyóóÐ u  ÐÌÓ‡ (G/x3ÓÝ"‚3£"ÝÝ  ÝÝ‚3£¼FÝÔ2G/Ôð!ðÔ3  Ôà0  àÝ  ÝThe€recitation€of€the€text€of€the€ð ðred€flagsðð€that€are€currently€described€as€ð ð€.€.€.€signs€ofÐ %À Ðpotential€diversion€.€.€.ðð€in€ðð752.11(c)(13)(i)€would€be€replaced€with€a€reference€toÐ ý˜ Ðsupplement€No.€3€to€part€732.݃3£¼FéFÝŒÐÕp(#(# ÐŒÝ  ÝÓ…† (#3x;F…ÓÌà  àòòRequest€for€CommentsóóÐ …  ÐÌà  àBIS€is€seeking€public€comments€on€this€proposed€rule.€€BIS€will€consider€commentsÐ 5Ð Ðabout€all€aspects€of€this€proposed€rule,€but€is€particularly€seeking€comments€on€whether€theÐ  ¨ Ðproposed€changes€to€the€definition€of€the€term€ð ðknowledgeðð€will€increase€the€burden€on€smallÐ å!€  Ðentities€and€whether€the€economic€impact€of€the€proposal€will€be€significant€and€on€whether€theÐ ½#X" Ðð ðsafe€harborðð€provision€is€likely€to€be€useful.€€The€period€for€submission€of€comments€will€closeÐ •%0!$ ÐNovember€12,€2004.€€BIS€will€consider€all€comments€received€before€the€close€of€the€commentÐ m'#& Ðperiod€in€developing€a€final€rule.€€Comments€received€after€the€end€of€the€comment€period€willÐ E)à$( Ðbe€considered€if€possible,€but€their€consideration€cannot€be€assured.€€BIS€will€not€accept€publicÐ +¸&* Ðcomments€accompanied€by€a€request€that€a€part€or€all€of€the€material€be€treated€confidentiallyÐ e Ðbecause€of€its€business€proprietary€nature€or€for€any€other€reason.€€BIS€will€return€such€commentsÐ =Ø Ðand€materials€to€the€persons€submitting€the€comments€and€will€not€consider€them€in€theÐ ° Ðdevelopment€of€the€final€rule.€€All€public€comments€on€this€proposed€rule€must€be€in€writing,Ð í ˆ Ðincluding€fax€or€e„mail,€and€will€be€a€matter€of€public€record,€available€for€public€inspection€andÐ Å ` Ðcopying.€€The€Office€of€Administration,€Bureau€of€Industry€and€Security,€U.S.€Department€ofÐ  8  ÐCommerce,€displays€these€public€comments€on€BIS's€Freedom€of€Information€Act€(FOIA)€WebÐ u  Ðsite€at€http://www.bis.doc.gov/foia.€€This€office€does€not€maintain€a€separate€public€inspectionÐ Mè  Ðfacility.€€If€you€have€technical€difficulties€accessing€this€web€site,€please€call€BIS's€Office€ofÐ %À ÐAdministration€at€(202)€482„0637€for€assistance.€€€€€€€€Ð ý˜ ÐÌÌò òRulemaking€Requirements:ó óÐ …  ÐÌà  à1.€This€proposed€rule€has€been€determined€to€be€significant€for€purposes€of€E.O.€12866.€Ð 5Ð ÐÌà  à2.€Notwithstanding€any€other€provision€of€the€law,€no€person€is€required€to€respond€to,Ð å!€  Ðnor€shall€any€person€be€subject€to€a€penalty€for€failure€to€comply€with€a€collection€of€information,Ð ½#X" Ðsubject€to€the€requirements€of€the€PRA,€unless€that€collection€of€information€displays€a€currentlyÐ •%0!$ Ðvalid€OMB€control€number.€This€proposed€rule€involves€a€collection„of„information€requirementÐ m'#& Ðapproved€by€the€Office€of€Management€and€Budget€(OMB)€under€the€Paperwork€Reduction€ActÐ E)à$( Ð(PRA).€The€OMB€control€number€for€this€collection€is€0694„0088,€which€relates€to€BISððsÐ +¸&* Ðapplication€forms.€€This€proposed€rule€also€would€create€a€new€information€collection€in€which€Ð e Ðprivate€parties€provide€the€government€information€about€suspicious€circumstances€theyÐ =Ø Ðencounter€and€how€they€resolve€them.€€This€information€collection€would€require€OMB€approvalÐ ° Ðbefore€being€implemented.Ô‡ XíXXXíÔÐ í ˆ ÐÌà  à3.€€This€rule€does€not€contain€policies€with€Federalism€implications€as€this€term€is€definedÐ  8  Ðin€Executive€Order€13132.Ð u  ÐÌà  à4.Ô#†XíXX XíV#Ô€€The€Chief€Counsel€for€Regulation€of€the€Department€of€Commerce€has€certified€to€theÐ %À ÐCounsel€for€Advocacy€that€this€proposed€rulemaking€is€not€expected€to€have€a€significantÐ ý˜ Ðeconomic€impact€on€a€substantial€number€of€small€entities.€€Ð Õp ÐÌà  àTo€estimate€the€number€of€small€entities€that€would€be€affected€by€this€rule,€BISÐ …  Ðevaluated€its€licensing€database€to€determine€the€number€of€businesses€that€applied€for€exportÐ ]ø Ðlicenses€where€ð ðknowledgeðð€of€a€particular€circumstance€concerning€the€end„use€or€end„userÐ 5Ð Ðtriggers€a€license€requirement.€€A€total€of€149€entities€applying€for€such€licenses€in€2003€wereÐ  ¨ Ðidentified.€€BIS€then€conducted€an€Internet€search€of€those€businesses€to€determine€which€ofÐ å!€  Ðthose€businesses€disclosed€their€sales€or€employment€levels€on€Web€sites.€€BIS€compared€thoseÐ ½#X" Ðsales€or€employment€levels€to€those€found€in€the€Small€Business€Administrationððs€Table€of€SmallÐ •%0!$ ÐBusiness€Size€Standards€Matched€to€North€American€Industry€Classification€System€publishedÐ m'#& Ðon€its€Web€site€at€http://www.sba.gov/size/sizetable2002.html€.€€That€table€provides€maximumÐ E)à$( Ðsales€or€employment€levels€that€constitute€a€small€business€for€a€number€of€industries.€€BIS€doesÐ +¸&* Ðnot€have€similar€industry€classification€for€the€entities€in€its€licensing€database€so€it€adopted€aÐ e Ðconservative€approach€and€used€the€maximum€sales€and€employment€values€from€the€SBA€table.€Ð =Ø ÐThose€values€were€$28.5€million€and€1500€employees,€respectively.€€BIS€excluded€any€entity€thatÐ ° Ðit€could€identify€as€exceeding€either€of€these€values.€€Forty„three€entities€were€excluded€by€thisÐ í ˆ Ðmethod,€leaving€a€total€of€106€that€might€be€small€entities.€€All€of€these€entities€would€be€subjectÐ Å ` Ðto€this€rule.€€In€addition,€this€rule€would€not€increase€the€number€of€entities€that€are€subject€to€theÐ  8  ÐExport€Administration€Regulations€or€to€the€provisions€of€those€regulations€under€whichÐ u  Ðknowledge€triggers€a€requirement€to€act€or€refrain€from€acting.€€€Ð Mè  ÐÌà  àBIS€does€not€have€data€to€indicate€how€many€enforcement€proceedings€under€the€ExportÐ ý˜ ÐAdministration€Regulations€apply€to€small€entities.€€However,€in€its€Fiscal€Year€2003€AnnualÐ Õp ÐReport,€BIS€reported€the€criminal€ð ðconviction€of€21€individuals€and€businessesðð€and€ð ð34Ð ­H Ðadministrative€enforcement€settlementsðð€for€the€fiscal€year.€€In€addition,€there€were€threeÐ …  Ðadministrative€proceedings€that€resulted€in€denials€of€export€privileges.€€Some€of€these€actionsÐ ]ø Ðprobably€did€not€involve€small€entities€and€there€may€be€some€overlap€in€cases€where€a€singleÐ 5Ð Ðentity€received€both€criminal€and€administrative€sanctions.€€Ð  ¨ ÐÌà  àAssuming€that€all€of€BISððs€FY€2003€enforcement€actions€were€against€small€entities€andÐ ½#X" Ðthat€106€of€the€149€entities€that€applied€for€a€license€in€FY€2003€were€all€small€entities,€the€ruleÐ •%0!$ Ðwould€affect€a€substantial€number€of€small€entities.€€However,€although€there€would€be€aÐ m'#& Ðsubstantial€number€of€small€entities€affected€by€this€rule,€this€rule€will€not€have€a€significantÐ E)à$( Ðeconomic€impact€on€a€substantial€number€of€small€entities€because€the€overall€economic€costsÐ +¸&* Ðassociated€with€this€rule€are€minimal.€€As€discussed€below,€BIS€does€not€believe€that€businessesÐ e Ðwill€see€this€change€as€imposing€a€materially€different€standard€on€their€compliance€activities.Ð =Ø ÐÌà  àAlthough€this€proposal€has€the€potential€to€impact€a€substantial€number€of€small€entities,Ð í ˆ ÐBIS€does€not€believe€that€it€will€have€a€significant€economic€impact€on€the€affected€small€entities.€Ð Å ` ÐFundamentally,€BIS€does€not€believe€that€moving€to€a€ð ðmore€likely€than€notðð€formulationÐ  8  Ðincreases€a€companyððs€responsibility€with€respect€to€knowledge.€€Rather,€as€stated€in€the€rule,€weÐ u  Ðsee€this€as€a€clarification€of€the€current€standard€and€as€consistent€with€existing€BIS€and€industryÐ Mè  Ðpractice.Ð %À ÐÌà  àFrom€a€practical€perspective,€based€on€BISððs€experience€with€industry€compliance€withÐ Õp Ðthe€existing€standard,€BIS€believes€that€companies€treat€facts€that€are€ð ðmore€likely€than€notðð€asÐ ­H Ðcreating€a€ð ðhigh€probabilityðð€of€the€fact.€€In€other€words,€in€our€experience,€companies€wouldÐ …  Ðtake€the€position€that€there€is€a€ð ðhigh€probabilityðð€of€a€given€fact€if€the€fact€is€ð ðmore€likely€thanÐ ]ø Ðnot.ðð€€Those€who€must€comply€with€these€regulations€are€in€businesses€engaged€in€exporting€andÐ 5Ð Ðreexporting€and€must€make€decisions€quickly€based€on€practical€considerations.€€The€likelyÐ  ¨ Ðscenarios€are€that€either€(1)€the€party€has€knowledge€of€some€facts€that€suggest€a€proliferationÐ å!€  Ðend„use,€an€obligation€to€disclose€or€a€possible€violation€of€law€and€with€that€knowledge€decidesÐ ½#X" Ðto€either€apply€for€a€license€or€to€forego€the€business,€or€(2)€that€the€party€has€no€knowledge€ofÐ •%0!$ Ðany€such€facts,€and€would€not€be€required€to€obtain€a€license€under€either€the€old€or€the€newÐ m'#& Ðdefinitions.€€Thus,€even€if€there€were€a€distinction€between€the€terms€ð ðhigh€probabilityðð€andÐ E)à$( Ðð ðmore€likely€than€not,ðð€the€distinction€would€be€unlikely€to€affect€the€decision€making€process€ofÐ +¸&* Ða€business€person€who€is€deciding€whether€to€proceed€with€a€sale.€€Stated€otherwise,€if€a€partyÐ e Ðpreparing€to€undertake€an€export€transaction€encounters€a€reason€to€believe€that€a€fact€orÐ =Ø Ðcircumstance€exists€that€implicates€a€licensing€requirement€under€the€Regulations,€that€party€canÐ ° Ðreasonably€be€expected€either€to€apply€for€a€license€or€forego€the€transaction,€regardless€ofÐ í ˆ Ðwhether€ð ðknowledgeðð€is€defined€by€reference€to€a€ð ðmore€likely€than€notðð€or€ð ðhigh€probabilityððÐ Å ` Ðformulation.€€Ð  8  ÐÌà  àTo€the€extent€that€a€business€engages€in€this€kind€of€legal€analysis,€use€of€the€term€ð ðmoreÐ Mè  Ðlikely€than€not,ðð€which€is€a€well€known€legal€standard,€will€reduce€uncertainty€among€those€whoÐ %À Ðmake€these€decisions,€and€thereby€will€reduce€the€economic€impact€of€the€control€and€theÐ ý˜ Ðnecessity€of€legal€counsel.€€In€addition,€BIS€does€not€believe€that€small€entities€will€incurÐ Õp Ðadditional€costs€due€to€training€or€legal€counseling€to€comply€with€the€new€requirements.€€BISÐ ­H Ðprovides€a€number€of€opportunities€for€counseling€or€training€to€assist€businesses€in€theirÐ …  Ðcompliance€efforts€at€no€charge€or€at€a€reasonable€cost.€€BIS€maintains€telephone€advice€lines€inÐ ]ø ÐCalifornia€and€Washington€to€provide€timely€answers€to€people€who€have€questions€concerningÐ 5Ð Ðits€regulations.€€It€also€provides€an€e„mail€address€where€such€questions€may€be€submitted.€€BISÐ  ¨ Ðgives€written€advisory€opinions€concerning€its€regulations.€€BIS€provides€training€seminars€inÐ å!€  Ðcooperation€with€trade€associations€and€other€groups€around€the€country.€€The€costs€of€thisÐ ½#X" Ðtraining€ranges€from€$75€to€$350€depending€on€the€nature,€length€and€location€of€the€program.€Ð •%0!$ ÐHowever,€one€should€not€attribute€the€entire€training€cost€or€even€a€significant€portion€of€it€to€thisÐ m'#& Ðproposed€rule.€€€Even€if€one€did,€BIS€does€not€believe€that€$350€would€constitute€a€significantÐ E)à$( Ðeconomic€impact.€€Ð +¸&* Їà  àIn€terms€of€the€costs€of€the€inquiry€that€BIS€recommends€companies€conduct€in€responseÐ e Ðto€red€flags,€BIS€does€not€believe€that€the€costs€will€significantly€increase€when€compared€to€theÐ =Ø Ðcompanyððs€responsibility€under€the€existing€rule.€€Companies€are€currently€expected€to€makeÐ ° Ðinquiries€before€proceeding€when€information€indicating€a€proliferation€end-use,€an€obligation€toÐ í ˆ Ðdisclose,€or€a€violation€of€law€comes€to€their€attention.€€The€Regulations€currently€provide€anÐ Å ` Ðillustrative€list€of€red€flags,€but€do€not€limit€any€duty€to€inquire€to€the€circumstances€on€that€list.€Ð  8  ÐBy€increasing€the€number€of€circumstances€that€are€specifically€called€out€as€ð ðred€flags,ðð€BIS€isÐ u  Ðreducing€any€uncertainty€that€a€company€faces€in€determining€what€information€provides€suchÐ Mè  Ðindications.€€BIS€expects€that,€under€the€proposed€rule,€the€cost€of€the€inquiries€performed€byÐ %À Ðcompanies€will€not€increase€and€will€continue€to€be€reasonable€given€the€information€that€theÐ ý˜ Ðcompany€has€received€and€the€items€involved€in€the€transaction.€€The€proposed€rule€makes€thisÐ Õp Ðpoint€clear€by€stating€that:Ð ­H Ðà8  àÐ Ð Ð  Ðà8  àyou€are€expected€to€conduct€an€inquiry€that€is€reasonable€for€a€party€in€yourÐ ]ø Ðcircumstances.€€Thus,€if€you€are€exporting€specially€ordered€equipment€that€youÐ 5Ð Ðmanufactured€as€part€of€a€negotiated€sale€to€an€end„user€in€an€industry€with€whichÐ  ¨ Ðyou€do€a€substantial€part€of€your€business,€you€may€be€expected€to€conduct€a€moreÐ å!€  Ðthorough€and€better€targeted€inquiry€than€a€distributor€exporting€off„the„shelfÐ ½#X" Ðequipment€that€is€used€in€a€wide€range€of€commercial€and€industrial€contexts.Е%0!$Ð Ð  ÐÌThe€purpose€of€the€rule€is€to€clarify€responsibilities€and€provide€greater€certainty€to€partiesÐ E)à$( Ðinvolved€in€export€transactions€when€confronted€with€indications€of€a€proliferation€end„use,€anÐ +¸&* Ðobligation€to€disclose€or€a€possible€violation€of€law.Ð e ÐÌà  àFinally,€in€assessing€the€possible€economic€impact€of€this€rule,€one€should€look€at€it€in€itsÐ ° Ðentirety.€€The€rule€contains€a€safe€harbor€provision€that€enables€a€business€to€learn,€beforeÐ í ˆ Ðproceeding€with€the€transaction,€whether€BIS€concurs€that€its€actions€qualify€for€the€safe€harbor.€Ð Å ` ÐThis€opportunity€to€avoid€fines€and€penalties€mitigates€the€impact€of€this€rule.€€Ð  8  ÐÌà  àAccordingly,€the€Chief€Counsel€for€Regulation€of€the€Department€of€Commerce€hasÐ Mè  Ðcertified€to€the€Chief€Counsel€of€Advocacy€that€this€proposed€rule€will€not€have€a€significantÐ %À Ðeconomic€impact€on€a€substantial€number€of€small€entities.€BIS€invites€comment€on€thisÐ ý˜ Ðcertification,€including,€but€not€limited€to€whether€the€proposed€changes€to€the€definition€of€theÐ Õp Ðterm€ð ðknowledgeðð€will€increase€the€burden€on€small€entities€and€whether€the€economic€impact€ofÐ ­H Ðthe€proposal€will€be€significant.Ð …  ÐÌ‚ò òList€of€Subjects€ó óÐ 5Ð ÐÌòò15€CFR€Parts€732,€740,€748,€and€752óóÐ å!€  ÐÌà  àAdministrative€practice€and€procedure,€Exports,€Reporting€and€record€keepingÐ •%0!$ Ðrequirements.€Ð m'#& ÐÌòò15€CFR€Parts€736,€and€772óóÐ +¸&* Їà  àExports.Ð e ÐÌòò15€CFR€Part€744óóÐ ° ÐÌà  àExports,€Reporting€and€record€keeping€requirements.Ð Å ` ÐÌòò15€CFR€Part€764óóÐ u  ÐÌà  àAdministrative€practice€and€procedure,€Exports€Law€enforcement,€Penaltiesòò.Ð %À ÐÌóóAccordingly,€parts€732,€736,€740,€744,€752,€764,€and€772€of€the€Export€AdministrationÐ Õp ÐRegulations€(15€CFR€730€„€799)€are€amended€as€follows.Ð ­H ÐÌò òPART€732€[AMENDED]ó óÐ ]ø ÐÌà  à1.à ` àRevise€the€authority€citation€for€part€732€to€read€as€follows:Ð  ¨ ÐÔ‡ XíXXXíÔÌò òà  àAuthorityó ó:€50€U.S.C.€app.€2401€òòet€seqóó.;€50€U.S.C.€1701€òòet€seqóó.;€E.O.€13026,€61€FRÐ ½#X" Ð58767,€3€CFR,€1996€Comp.,€p.€228;Ô#†XíXX Xí ˆ#ÔÔ‡X¯÷XXXíÔ€E.O.€13222,€66€FR€44025,Ô#†XíXXX¯÷ˆ‰#ÔÔ‡ XíXXXíÔ€3€CFR,€2001€Comp.,€p.€783;Ô#†XíXX Xíã‰#ÔÔ‡ XíXXXíÔÐ %8!$ ÐNotice€of€August€6,€2004,€69€FR€48763€(August€10,€2004).Ô#†XíXX Xí@Š#Ôò òó óÐ u'#& ÐÌà  à2.à ` àRevise€supplement€No.€3€to€part€732€to€read€as€follows:Ð %+À&* Їà  àSupplement€No.€3€to€Part€732€ð!ð€€€BISððs€Know€Your€Customer€Guidance€and€Red€Flags.Ð e ÐÌà  à(a)€Introduction.€€Several€provisions€of€the€EAR€are€applicable€if€a€party€has€knowledgeÐ ° Ð(as€defined€in€ðð772.1€of€the€EAR)€of€a€particular€fact€or€circumstance.€€Examples€includeÐ í ˆ Ððð764.2(e),€which€prohibits€taking€certain€actions€regarding€an€item€that€is€subject€to€the€EARÐ Å ` Ðwith€knowledge€that€a€violation€has€occurred,€is€about€to€occur€or€is€intended€to€occur€withÐ  8  Ðrespect€to€that€item€and€ðð744.4,€which€requires€a€license€to€export€or€reexport€any€item€subject€toÐ u  Ðthe€EAR€if€the€exporter€or€reexporter€knows€that€the€item€will€be€used€in€the€design,Ð Mè  Ðdevelopment,€production,€stockpiling,€or€use€of€chemical€or€biological€weapons€in€or€by€anyÐ %À Ðcountry.€€The€following€guidance€is€provided€with€respect€to€these€knowledge€standards.€€It€isÐ ý˜ Ðalso€useful€with€respect€to€other€EAR€requirements€because€a€heightened€awareness€of€the€signsÐ Õp Ðof€potential€diversion€can€help€to€prevent€violations.€€This€guidance€and€the€red€flags€are€alsoÐ ­H Ðincorporated€by€reference€in€ðð764.7€(Safe€Harbor€from€Certain€Knowledge„based€Requirements)Ð …  Ðof€the€EAR.€€The€red€flags€are€incorporated€into€the€system€for€screening€customers€that€is€part€ofÐ ]ø Ðthe€internal€control€program€required€of€Special€Comprehensive€License€holders€and€consigneesÐ 5Ð Ðand€described€in€ðð752.11(c)(13)(i)€of€the€EAR.Ôf  ÔÔg Ô€€The€ð ðred€flagsðð€and€know€your€customerÐ  ¨ Ðguidance€do€not€derogate€from€obligations€imposed€elsewhere€in€the€EAR.Ôf  ÔÔg Ô€€Ð å!€  ÐÌÐ  •%0!$ Ðà  à(b)€Know€Your€Customer€Guidance.€€Ð e ÐÌà  à(1)€òòLook€out€for€red€flagsòòóó.óó€€In€all€transactions€subject€to€the€EAR,€look€out€for€anyÐ ° Ðabnormal€circumstances€that€indicate€that€the€transaction€may€involve€an€inappropriate€end-use,Ð í ˆ Ðend-user€or€destination€or€otherwise€violate€the€EAR.€€Such€circumstances€are€referred€to€as€ð ðredÐ Å ` Ðflags.ðð€€Red€flags€may€be€presented€by€information€provided€by€a€customer€or€informationÐ  8  Ðobtained€from€another€source€(òòe.Ôf  ÔÔg Ôg.óó,€a€credit€report€that€you€might€run€on€a€new€customer€wishingÐ u  Ðto€place€a€large€order).Ð Mè  ÐÌà  àà ` à(i)€Red€flags€point€to€a€heightened€risk€of€a€problem€with€the€transaction.€€MostÐ ý˜ Ðcommonly,€red€flags€indicate€a€heightened€risk€that€a€claimed€end„use,€end„user€or€ultimateÐ Õp Ðdestination€is€not€the€actual€one.€€Red€flags€of€this€type€thus€can€point€to€the€possibilities€that€theÐ ­H Ðexport€or€reexport€is€actually€destined€for€an€embargoed€country,€an€end€use€that€triggers€aÐ …  Ðlicense€requirement€under€part€744€of€the€EAR,€a€person€denied€export€privileges€under€part€764Ð ]ø Ðof€the€EAR,€a€person€on€the€Entity€List€in€supplement€No.€4€to€part€744,€specially€designatedÐ 5Ð Ðglobal€terrorists€(òòseeóó€ðð744.12),€specially€designated€terrorists€(òòseeóóðð744.13),€designated€foreignÐ  ¨ Ðterrorist€organizations€(òòseeóó€ðð€744.14),€€persons€on€the€list€of€specially€designated€nationalsÐ å!€  Ðidentified€by€the€bracketed€suffix€€IRAQ2€(òòseeóóòò€óóðð744.18),€a€transaction€that€would€violate€a€BISÐ ½#X" ÐGeneral€Order€(òòseeóó€supplement€No.€1€to€part€736),€persons€on€the€Unverified€List€published€byÐ •%0!$ ÐBIS,€or€an€end„use€or€end„user€that€is€restricted€under€part€744.€€€€€€€€Ð m'#& ÐÌÐ  +¸&* Ðà  àà ` à(ii)€What€constitutes€a€red€flag€depends€on€the€context.€€A€fact€or€circumstanceÐ e Ðthat€raises€a€red€flag€for€an€export€of€one€type€of€item,€to€a€given€destination,€or€a€particularÐ =Ø Ðbusiness€model€may€be€innocuous€for€an€export€involving€a€different€item,€a€differentÐ ° Ðdestination,€or€different€business€model.€€The€role€that€you€are€playing€in€a€transaction€is€alsoÐ í ˆ Ðrelevant€to€what€facts€or€circumstances€you€are€expected€to€recognize€as€red€flags.€€For€example,Ð Å ` Ða€manufacturer€who€is€exporting€one€of€its€products€will€be€expected€to€be€highly€familiar€withÐ  8  Ðthe€configurations€or€specifications€required€for€an€end„use€stated€by€a€customer.€€Thus,€aÐ u  Ðmanufacturer€should€be€able€to€recognize€when€a€deviation€from€such€parameters€is€indicative€ofÐ Mè  Ðan€end„use€other€than€what€is€stated.€€Similarly,€if€a€freight€forwarder€is€better€able€than€anÐ %À Ðexporter€to€recognize€that€the€location€of€an€intermediate€consignee€is€incongruous€with€theÐ ý˜ Ðclaimed€ultimate€destination,€then€such€information€could€be€regarded€as€a€red€flag€for€the€freightÐ Õp Ðforwarder,€but€not€the€exporter.€€The€general€rule€is€that€you€should€treat€a€fact€or€circumstance€asÐ ­H Ða€red€flag€if€it€would€cause€a€reasonable€person€in€your€situation€(òòe.Ôf  ÔÔg Ôg.óó,€€manufacturer/exporter,Ð …  Ðfreight€forwarder,€distributor/reexporter)€to€suspect€that€a€transaction€may€involve€anÐ ]ø Ðinappropriate€end-use,€end-user€or€destination,€or€otherwise€violate€the€EAR.€€Ð 5Ð ÐÌà  àà ` à(iii)€€Red€flags€may€also€be€raised€in€exports€that€have€been€licensed€by€BIS;€forÐ å!€  Ðexample,€information€you€receive€after€obtaining€an€export€license€may€suggest€a€risk€ofÐ ½#X" Ðdiversion.€€Parties€should€identify€and€respond€to€red€flags€in€all€transactions,€including€ones€forÐ •%0!$ Ðwhich€an€export€license€has€been€obtained.Ð m'#& ÐÌò òó óÔ‡XíXXXíÔÐ  +¸&* Ðà  à(2)€€€òòMake€those€who€act€on€your€behalf€awareóó.€€Your€employees€and€others€acting€onÐ e Ðyour€behalf€(for€example,€a€contractor€hired€to€perform€export„related€functions)€need€to€knowÐ =Ø Ðhow€to€take€the€steps€described€below,€especially€identifying€and€responding€to€red€flags.€€If€suchÐ ° Ðpersons€have€knowledge€or€reason€to€know€a€fact€or€circumstance,€that€knowledge€or€reason€toÐ í ˆ Ðknow€can€also€be€imputed€to€employers€or€other€principals,€so€that€the€latter€are€also€liable€for€aÐ Å ` Ðviolation.€€Ô#†XíXXXíV£#ÔThus,€it€is€especially€important€for€firms€to€establish€clear€policies€and€effectiveÐ  8  Ðcompliance€procedures€to€ensure€that€knowledge€about€transactions€can€be€evaluated€byÐ u  Ðresponsible€senior€officials.€€Failure€to€do€so€could€be€regarded€as€a€form€of€self-blinding€(òòseeóóÐ Mè  Ðparagraph€(b)(5)€of€this€supplement€No.€3€to€part€732€€and€ðð772.1,€definition€of€òòknowledgeóó).Ð %À Ðò òó óÌà  à(3)€€òòIf€there€are€red€flags,€inquireóó.€€When€there€is€a€red€flag,€you€have€an€affirmative€dutyÐ Õp Ðto€inquire€into€the€circumstances€giving€rise€to€the€red€flag€and€whether€they€in€fact€present€aÐ ­H Ðheightened€risk€of€an€inappropriate€end„user,€end„use€or€ultimate€destination,€or€of€some€otherÐ …  Ðpossible€violation€of€the€EAR.€€In€so€doing,€your€object€is€to€verify€or€substantiate€whether€theÐ ]ø Ðconcerns€indicated€by€the€red€flag€are€really€present€(òòe.Ôf  ÔÔg Ôg.óó,€the€real€end„use,€end„user€or€ultimateÐ 5Ð Ðdestination).€€This€duty€of€heightened€scrutiny€is€present€in€all€transactions€subject€to€the€EARÐ  ¨ Ðinvolving€red€flags.€€Absent€red€flags€(or€an€express€requirement€in€the€EAR),€you€do€not€have€anÐ å!€  Ðaffirmative€duty€to€inquire,€verify,€or€otherwise€ð ðgo€behindðð€the€customerððs€representations.€Ð ½#X" ÐThus,€if€there€are€no€red€flags,€you€can€rely€upon€representations€from€your€customer€in€preparingÐ •%0!$ Ðand€submitting€export€control€documents€and€any€license€application€that€may€be€required.Ð m'#& ÐÌÐ  +¸&* Ðà  àà ` à(i)€€In€responding€to€red€flags,€you€are€expected€to€conduct€an€inquiry€that€isÐ e Ðreasonable€for€a€party€in€your€circumstances.€€Thus,€if€you€are€exporting€specially€orderedÐ =Ø Ðequipment€that€you€manufactured€as€part€of€a€negotiated€sale€to€an€end„user€in€an€industry€withÐ ° Ðwhich€you€do€a€substantial€part€of€your€business,€you€may€be€expected€to€conduct€a€moreÐ í ˆ Ðthorough€and€better€targeted€inquiry€than€a€distributor€exporting€off„the„shelf€equipment€that€isÐ Å ` Ðused€in€a€wide€range€of€commercial€and€industrial€contexts.Ð  8  ÐÌà  àà ` à(ii)€€The€following€are€means€of€inquiry€that,€depending€on€particularÐ Mè  Ðcircumstances,€you€should€pursue€in€response€to€a€red€flag:Ð %À ÐÌà0  àà ` àà ¸ à(A)€Seek€further€information€or€clarification€from€the€customer,€theÐ Õp Ðultimate€consignee,€and/or€end„user.€€€Ð­H(#(# ÐÌà0  àà ` àà ¸ à(B)€Conduct€searches€of€relevant€publications€or€public€information€on€theÐ ]ø ÐInternet€for€additional€information€or€to€confirm€representations€you€have€received.€€Ð5Ð(#(# ÐÌà0  àà ` àà ¸ à(C)€Where€appropriate€for€a€particular€industry€or€commercial€context,Ð å!€  Ðconsult€standard€references€or€official€sources.€€For€example,€the€International€AtomicÐ ½#X" ÐEnergy€Agency€(IAEA)€makes€available€information€about€what€nuclear€facilities€areÐ •%0!$ Ðunder€IAEA€safeguards,€which€is€relevant€to€determining€whether€export€or€reexport€forÐ m'#& Ðuse€at€a€particular€nuclear€facility€requires€a€license€under€ðð744.2.ÐE)à$((#(# Ðà  à€€€€€€€€€€€€€€€€€€€€Ð +¸&* ÐÔ‡XíXXXíÔà  à(4)€€òòReevaluate€all€of€the€information€after€the€inquiryóóòò.óó€€The€purpose€of€your€inquiry€is€toÐ e Ðprovide€a€basis€for€making€an€honest,€well„informed€assessment€of€whetherÔ#†XíXXXí´#Ô€the€concernsÐ =Ø Ðindicated€by€the€red€flag€are€really€present€in€your€transaction.€€One€way€of€making€thisÐ ° Ðassessment€is€to€determine€that€the€red€flag€is€in€fact€explained€by€circumstances€that,€in€theÐ í ˆ Ðcontext€of€your€transaction,€do€not€present€the€concerns€generally€associated€with€the€red€flag.€Ð Å ` ÐFor€example,€a€sudden€change€in€delivery€instructions€can€present€a€red€flag,€but€the€red€flagÐ  8  Ðcould€be€resolved€by€establishing€that€the€facility€to€which€the€items€were€originally€to€beÐ u  Ðdelivered€had€been€recently€damaged€by€fire.€€If€the€result€of€your€reasonable€inquiry€andÐ Mè  Ðreevaluation€is€that€this€red€flag€does€not€point€to€a€risk€of€diversion€or€concealed€end„use,€youÐ %À Ðcould€proceed€with€the€transaction.€€On€the€other€hand,€if€after€evaluating€in€good€faith€all€of€theÐ ý˜ Ðfacts€and€circumstances€you€have€ascertained,€you€believe€that€the€export€is€actually€destined€forÐ Õp Ða€country,€end„user€or€end„use€for€which€an€export€license€is€required,€you€should€not€proceedÐ ­H Ðwith€the€transaction€without€complying€with€that€license€requirement.€Ô‡XíXXXíÔ€In€making€such€anÐ …  Ðassessment,€you€are€expected€to€bring€to€bear€whatever€relevant€background€or€expertise€youÐ ]ø Ðhave.€€€Ô#†XíXXXíº#ÔÐ 5Ð ÐÌà  à(5)€òò€Do€not€self-blindóó.€€Throughout€the€process€of€identifying€and€responding€to€red€flags,Ð å!€  Ðyou€must€honestly€take€into€account€the€facts€and€circumstances€presented€to€you.€€Do€not€cut€offÐ ½#X" Ðthe€flow€of€information€obtained€or€received€in€the€normal€course€of€business.€€For€example,€doÐ •%0!$ Ðnot€instruct€the€sales€force€to€tell€potential€customers€to€refrain€from€discussing€the€actualÐ m'#& Ðend-use,€end-user,€and€ultimate€destination€for€the€product€your€firm€is€seeking€to€sell.€€Do€notÐ E)à$( Ðput€on€blinders€that€prevent€learning€relevant€information.€€An€affirmative€policy€of€steps€toÐ +¸&* Ðavoid€ð ðbadðð€information€would€not€insulate€a€company€from€liability,€and€would€be€consideredÐ e Ðevidence€of€knowledge€or€reason€to€know€the€facts€in€question.€Ð =Ø ÐÌà  à(6)€òòIf€there€are€still€reasons€for€concern,€refrain€from€going€forward€with€the€transactionÐ í ˆ Ðor€contact€BISóó.€€òòóóIf€you€continue€to€have€reasons€for€concern€after€your€inquiry€and€reevaluation,Ð Å ` Ðthen€you€should€either€refrain€from€going€forward€with€the€transaction€or€submit€all€of€theÐ  8  Ðrelevant€information€to€BIS€in€the€form€of€an€application€for€a€license€or€in€such€other€form€asÐ u  ÐBIS€may€specify.€You€have€an€important€role€to€play€in€preventing€exports€and€reexports€contraryÐ Mè  Ðto€the€national€security€and€foreign€policy€interests€of€the€United€States.€€BIS€will€continue€toÐ %À Ðwork€in€partnership€with€the€private€sector€to€make€this€front€line€of€defense€effective,€whileÐ ý˜ Ðminimizing€where€possible€the€regulatory€burden€on€legitimate€participants€in€exportÐ Õp Ðtransactions.€€If€you€have€any€question€about€whether€you€have€encountered€a€red€flag€or€whatÐ ­H Ðsteps€you€should€take€in€response€to€a€red€flag,€or€if€you€decide€to€refrain€from€the€transaction,Ð …  Ðbut€believe€you€have€information€relating€to€completed€or€attempted€violations€of€the€EAR,€youÐ ]ø Ðare€encouraged€to€advise€BISððs€Office€of€Export€Enforcement€through€BISððs€Web€site€or€atÐ 5Ð Ð1-800-424-2980€or€the€Office€of€Exporter€Services€at€(202)€482-4811.€Ð  ¨ ÐÌà  à(c)€òòRed€Flags:€Examplesóó.€€As€described€below,€BIS€has€identified€a€number€of€red€flagsÐ ½#X" Ðthat€apply€in€different€contexts.€€This€discussion€is€not€all-inclusive,€but€is€intended€to€illustrateÐ •%0!$ Ðthe€types€of€circumstances€to€which€you€should€be€alert.€€BIS€may€supplement€this€description€ofÐ m'#& Ðred€flags€in€future€guidance€on€its€Web€site.€€Examples€of€red€flags€in€various€situations€include:Ð E)à$( ÐÐ +¸&* ÐÔ‡XíXXXíÔà  à1.à ` àThe€customer€or€purchasing€agent€is€vague,€evasive,€or€inconsistent€in€providingÐ e Ðinformation€about€the€end-use€of€a€product.Ð =Ø ÐÌà  à2.à ` àThe€productððs€capabilities€do€not€fit€the€buyerððs€line€of€business€or€level€ofÐ í ˆ Ðtechnical€sophistication.€€For€example,€a€customer€places€an€order€for€several€advanced€lasersÐ Å ` Ðfrom€a€facility€with€no€use€for€such€equipment€in€its€manufacturing€processes.Ð  8  ÐÌà  à3.à ` àA€request€for€equipment€configuration€is€incompatible€with€the€stated€ultimateÐ Mè  Ðdestination€Ô#†XíXXXíxÆ#Ô(òòe.Ôf  ÔÔg Ôg.óó,€120€volts€for€a€country€with€220€volts).Ô‡XíXXXíԀР%À ÐÌà  à4.à ` àThe€product€ordered€is€incompatible€with€the€technical€level€of€the€country€toÐ Õp Ðwhich€the€product€is€being€shipped.€€For€example,€semiconductor€manufacturing€equipmentÐ ­H Ðwould€be€of€little€use€in€a€country€without€an€electronics€industry.Ð …  ÐÌà  à5.à ` àThe€customer€has€little€background€in€the€relevant€business.€€For€example,Ð 5Ð Ðfinancial€information€is€unavailable€from€ordinary€commercial€sources€and€the€customerððsÐ  ¨ Ðcorporate€principal€is€unknown.€€Ð å!€  ÐÌà  à6.à ` àThe€customer€is€willing€to€pay€cash€for€an€expensive€item€when€the€normalÐ •%0!$ Ðpractice€in€this€business€would€involve€financing.Ð m'#& ÐÌÐ  +¸&* Ðà  à7.à ` àThe€customer€is€unfamiliar€with€the€productððs€performance€characteristics,€butÐ e Ðstill€wants€the€product.Ð =Ø ÐÌà  à8.à ` àInstallation,€testing,€training,€or€maintenance€services€are€declined€by€theÐ í ˆ Ðcustomer,€even€though€these€services€are€included€in€the€sales€price€or€ordinarily€requested€forÐ Å ` Ðthe€item€involved.Ð  8  ÐÌà  à9.à ` àTerms€of€delivery,€such€as€date,€location,€and€consignee,€are€vague€orÐ Mè  Ðunexpectedly€changed,€or€delivery€is€planned€for€an€out-of-the-way€destination.Ð %À ÐÌà  à10.à ` àThe€address€of€the€ultimate€consignee,€as€listed€on€the€airway€bill€or€bill€of€lading,Ð Õp Ðindicates€that€it€is€in€a€free€trade€zone.Ð ­H ÐÌà  à11.€€The€ultimate€consignee,€as€listed€on€the€airway€bill€or€bill€of€lading,Ô#†XíXXXí§É#ÔÔ‡XíXXXíÔ€is€a€freightÐ ]ø Ðforwarding€firm,€a€trading€company,€a€shipping€company€or€a€bank,€unless€it€is€apparent€that€theÐ 5Ð Ðultimate€consignee€is€also€the€end„user€or€the€end„user€is€otherwise€identified€on€the€airway€billÐ  ¨ Ðor€bill€of€lading.Ð å!€  ÐÌà  à12.à ` àThe€shipping€route€is€abnormal€for€the€product€and€destination.Ð •%0!$ ÐÌà  à13.à ` àPackaging€is€inconsistent€with€the€stated€method€of€shipment€or€destination.Ð E)à$( ÐÐ +¸&* Ðà  à14.à ` àWhen€questioned,€the€buyer€is€evasive€or€unclear€about€whether€the€purchasedÐ e Ðproduct€is€for€domestic€use,€export€or€reexport.Ô#†XíXXXíöÐ#ÔÐ =Ø ÐÌà  à15.€€The€customer€uses€an€address€that€is€inconsistent€with€standard€business€practices€inÐ í ˆ Ðthe€area€(òòe.Ôf  ÔÔg Ôg.óó,€a€P.O.€Box€address€where€street€addresses€are€commonly€used).€€Ð Å ` ÐÌà  à16.€€The€customer€does€not€have€facilities€that€are€appropriate€for€the€items€ordered€orÐ u  Ðend„use€stated.€€Ð Mè  ÐÌà  à17.€€The€customerððs€order€is€for€parts€known€to€be€inappropriate€or€for€which€theÐ ý˜ Ðcustomer€appears€to€have€no€legitimate€need€(òòe.Ôf  ÔÔg Ôg.óó,€there€is€no€indication€of€prior€authorizedÐ Õp Ðshipment€of€system€for€which€the€parts€are€sought).Ð ­H ÐÌà  à18.€€The€customer€is€known€to€have€or€is€suspected€of€having€dealings€with€embargoedÐ ]ø Ðcountries.€Ð 5Ð ÐÌà  à19.€€The€transaction€involves€a€party€on€the€Unverified€List€published€by€BIS€in€theÐ å!€  ÐòòFederalóó€òòRegisteróó.à ¸ àÐ ½#X" ÐÌà  à20.€€The€product€into€which€the€exported€item€is€to€be€incorporated€bears€unique€designsÐ m'#& Ðor€marks€that€indicate€an€embargoed€destination€or€one€other€than€the€customer€has€claimed.€€Ð E)à$( ÐÐ +¸&* Ðà  à21.€€The€customer€gives€different€spellings€of€its€name€for€different€shipments,€which€canÐ e Ðsuggest€that€the€customer€is€disguising€its€identity€and/or€the€nature€and€extent€of€its€procurementÐ =Ø Ðactivities.Ð ° ÐÌà  à22.€€The€requested€terms€of€sale,€such€as€product€specification€and€calibration,€suggest€a€Ð Å ` Ðdestination€or€end„use€other€than€what€is€claimed€(òòe.Ôf  ÔÔg Ôg.óó,€equipment€that€is€calibrated€for€a€specificÐ  8  Ðaltitude€that€differs€from€the€altitude€of€the€claimed€destination).€€€€€Ð u  ÐÌà  à23.€€The€customer€provides€information€or€documentation€related€to€the€transaction€thatÐ %À Ðyou€suspect€is€false,€or€requests€that€you€provide€documentation€that€you€suspect€is€false.€€Ð ý˜ ÐÌà  àÌò òPART€736€„€€[AMENDED]ó óÐ …  ÐÌà  à3.à0 ` àRevise€the€authority€citation€for€part€736€to€read€as€follows:Ð5Ð` (#` (# Ðò òÔ‡ XíXXXíÔÌà  àAuthorityó ó:€50€U.S.C.€app.€2401€òòet€seqóó.;€50€U.S.C.€1701€òòet€seqóó.;€22€U.S.C.€2151€(note),Ð å!€  ÐPub.€L.€108„175;€E.O.€12938,€59€FR€59099,€3€CFR,€1994€Comp.,€p.€950;€E.O.€13020,€61€FRÐ Å#`" Ð54079,€3€CFR,€1996€Comp.€p.€219;€E.O.€13026,€61€FR€58767,€3€CFR,€1996€Comp.,€p.€228;Ô#†XíXX XíˆÝ#ÔÔ‡X¯÷XXXíÔ€E.O.Ð %8!$ Ð13222,€66€FR€44025,Ô#†XíXXX¯÷ß#ÔÔ‡ XíXXXíÔ€3€CFR,€2001€Comp.,€p.€783;€E.O.€13338,€69€FR€26751,€May€13,€2004;Ð u'#& ÐNotice€€October€29,€2003,€68€FR€62209,€3€CFR,€2003€Comp.,€p.€347;€Notice€of€August€6,€2004,Ð M)è$( Ð69€FR€48763€(August€10,€2004).Ô#†XíXX Xíß#Ôò òó óÔ‡ XíXXXíÔÐ %+À&* ÐÔ#†XíXX Xí¬à#ÔÌà  à4.à ` àIn€ðð736.2,€revise€paragraph€(b)(5)€to€read€as€follows:Ð =Ø ÐÌò òðð736.2€General€Prohibitions€and€Determination€of€Applicabilityó óÐ í ˆ ÐÌ*€€€*€€€*€€€*€€€*Ð  8  Ðà  à(b)€€€*€€€*€€€*Ð u  Ðà  à(5)€òòGeneral€Prohibition€Five€ð!ð€Recipient€and€€End„Use€License€Requirementsóó.€€If€aÐ Mè  Ðlicense€is€required€because€of€the€recipient€or€end€use€as€specified€in€part€744€of€the€EAR,€youÐ %À Ðmay€not€export€or€reexport€without€such€license.Ð ý˜ ÐÌÌ*€€€*€€€*€€€*€€€*Ð …  ÐÌÌò òPART€740€„€€[AMENDED]à  àó óà h àà À àÐ  ¨ ÐÌà  à5.à0 ` àRevise€the€authority€citation€for€part€740€to€read€as€follows:н#X"` (#` (# ÐÌÔ‡ XíXXXíÔò òà  àAuthority:ó ó€50€U.S.C.€app.€2401€òòet€seqóó.;€50€U.S.C.€1701€òòet€seqóó.;€€Sec.€901„911,€Pub.€L.Ð m'#& Ð106„387;€E.O.€13026,€61€FR€58767,€3€CFR,€1996€Comp.,€p.€228;€€E.O.€13222,€66€FR€44025,€3Ð M)è$( ÐCFR,€2001€Comp.,€p.€783;€Notice€of€August€6,€2004,€69€FR€48763€(August€10,€2004).Ô#†XíXX XíLä#ÔÐ %+À&* Їà  àÌà  à6.à0 ` àIn€ðð740.18,€revise€the€last€sentence€of€paragraph€(c)(4)€to€read€as€follows:Ð=Ø` (#` (# ÐÌà  àò òðð740.18€Agricultural€Commodities€(AGR).ó ó€€Ð í ˆ ÐÌà  à*€€€*€€€*€€€*€€€*Ð ¥ @  Ðà  àà ` à(c)€€*€€€*€€€*Ð }  Ðà  àà ` àà ¸ à(4)€*€€€*€€€*€€(Note€that€the€fact€that€you€have€been€advised€that€no€agencyÐ Uð  Ðhas€objected€to€the€transaction€does€not€exempt€you€from€other€license€requirements€under€theÐ -È ÐEAR,€including€those€based€on€recipient€or€end„use€in€part€744€of€the€EAR.)Ð   ÐÌÌà@ÆÆ"ìà*€€€*€€€*€€€*€€€*ˆÐ ( ÐÌò òPART€748€ð!ð€[AMENDED]ó óÐ =Ø ÐÌà  à7.à0 ` àRevise€the€authority€citation€for€part€748€to€read€as€follows:Ðí!ˆ ` (#` (# ÐÌò òÔ‡ XíXXXíÔà  àAuthority:ó ó€50€U.S.C.€app.€2401€òòet€seqóó.;€50€U.S.C.€1701€òòet€seqóó.;€E.O.€13026,€61€FRÐ %8!$ Ð58767,€3€CFR,€1996€Comp.,€p.€228;Ô#†XíXX Xíƒé#ÔÔ‡X¯÷XXXíÔ€E.O.€13222,€66€FR€44025,Ô#†XíXXX¯÷gê#ÔÔ‡ XíXXXíÔ€3€CFR,€2001€Comp.,€p.€783;Ð }'#& ÐNotice€of€August€6,€2004,€69€FR€48763€(August€10,€2004).Ô#†XíXX XíÂê#ÔÐ U)ð$( ÐÐ -+È&* Ðà  à8.€€In€ðð748.4,€revise€paragraph€(f)€to€read€as€follows:Ð e ÐÌò òà  àðð748.4€Basic€Guidance€Related€to€Applying€for€a€Licenseó óÐ ° Ðà  àà ` àà ¸ àà  àÌà  à*€€€*€€€*€€€*€€€*Ð Å ` ÐÌà  à(f)€Redundant€Submissions€Prohibited.€€You€may€not€submit€a€license€application€for€aÐ u  Ðtransaction€if:Ð Mè  ÐÌà  àà ` à(1)€You€have€already€submitted€a€license€application€for€that€transaction€and€theÐ ý˜ Ðlicense€application€is€still€pending€before€BIS;€orÐ Õp Ðà  àà ` à(2)€You€have€submitted€a€safe€harbor€report€for€the€transaction€pursuant€toÐ ­H Ððð764.7(Ôf  ÔÔg ÔÔf  ÔÔg ÔcÔf  ÔÔg Ô)€of€the€EARÔf  ÔÔg ÔÔf  ÔÔg Ô€andÔf  ÔÔg Ô€the€BIS€decision€is€still€pendingÔf  ÔÔg Ô.€Ð …  Ðà@ÆÆ"ìà*€€€*€€€*€€€*€€€*ˆÐ ]ø Ðò òPART€752€ð!ð€[AMENDED]ó óÐ 5Ð ÐÌà  à9.à0 ` àRevise€the€authority€citation€for€part€752€to€read€as€follows:Ðå!€ ` (#` (# ÐÌò òÔ‡ XíXXXíÔà  àAuthority:ó ó€50€U.S.C.€app.€2401€òòet€seqóó.;€50€U.S.C.€1701€òòet€seqóó.;€E.O.€13020,€61€FRÐ •%0!$ Ð54079,€3€CFR,€1996€Comp.€p.€219;Ô#†XíXX Xí^ð#ÔÔ‡X¯÷XXXíÔ€E.O.€13222,€66€FR€44025,Ô#†XíXXX¯÷Añ#ÔÔ‡ XíXXXíÔ€3€CFR,€2001€Comp.,€p.€783;Ð u'#& ÐNotice€of€August€6,€2004,€69€FR€48763€(August€10,€2004).Ô#†XíXX Xíœñ#Ôò òó óÔ‡ XíXXXíÔÐ M)è$( ÐÔ#†XíXX XíLò#ÔÐ %+À&* Ðà  à10.à0 ` àIn€ðð752.9,€revise€paragraph€(a)(3)(ii)(H)€to€read€as€follows:Ðe` (#` (# ÐÌà  àò òðð752.9€Action€on€SCL€Applicationsó ó.Ð ° ÐÌà  àà ` à(a)€*€€€*€€€*€€€Ð Í h ÐÌà  àà ` àà ¸ à(3)€*€€€*€€€*Ð }  ÐÌà  àà ` àà ¸ àà  à(ii)€*€€€*€€€*Ð -È ÐÌà  àà ` àà ¸ àà  àà h à(H)€A€notice€that€the€consignee,€in€addition€to€otherÐ Ýx Ðrequirements€may€not€sell€or€otherwise€dispose€of€any€U.S.€origin€items€under€the€SCL€if€aÐ µP Ðlicense€is€required€by€part€744€of€the€EAR.Ð ( ÐÌ*€€€*€€€*€€€*€€€*€€€Ð =Ø ÐÌà  à11.à ` àIn€ðð752.11,€revise€paragraph€(c)(13)€to€read€as€follows:Ð í!ˆ  ÐÌà  àò òðð752.11€Internal€Control€Programs.ó óÐ %8!$ ÐÌà  à*€€€*€€€*€€€*€€€*Ð M)è$( Ðà  àà ` à(c)€€€*€€€*€€€*Ð %+À&* Ðà  àà ` àà ¸ àÔ‡ X¯÷XXXíÔ€(13)€€A€system€for€screening€customers€and€transactions€to€identify€anyÐ e Ðcircumstances€(ð ðred€flagsðð)€that€indicate€an€item€might€be€destined€for€an€inappropriate€end„use,Ð =Ø Ðend„user,€or€destination.€€This€system€must:Ð ° Ðà  àà ` à(i)€Be€able€to€identify,€as€a€minimum,€the€red€flags€in€paragraph€(c)€of€supplementÐ í ˆ ÐNo.€3€to€part€732€of€the€EAR,€and;Ð Å ` Ðà  àà ` à(ii)€Function€in€conformance€with€the€ð ðknow€your€customerðð€guidance€provided€inÐ  8  Ðparagraph€(b)€of€supplement€No.€3€to€part€732€of€the€EAR:Ð u  ÐÌÔ#†XíXX X¯÷÷#ÔÌà@ÆÆ"ìà*€€€*€€€*€€€*€€€*ˆÐ ý˜ Ðò òPART€764€[AMENDED]ó óÐ Õp ÐÌà  à12.à ` àRevise€the€authority€citation€for€part€764€to€read€as€follows:Ð …  ÐÌò òÔ‡ XíXXXíÔà  àAuthority:ó ó€50€U.S.C.€app.€2401€òòet€seqóó.;€50€U.S.C.€1701€òòet€seqóó.;Ô#†XíXX XíÂú#ÔÔ‡X¯÷XXXíÔ€E.O.€13222,€66€FRÐ 5Ð Ð44025,€Ô#†XíXXX¯÷^û#ÔÔ‡ XíXXXíÔ€3€CFR,€2001€Comp.,€p.€783;€Notice€of€August€6,€2004,€69€FR€48763€(August€10,€2004)Ô#†XíXX XíÎû#ÔÔ‡ XíXXXíÔ.Ô#†XíXX Xícü#ÔÔ‡ XíXXXíÔÐ  ° ÐÌà  àÌà  à13.à ` àAdd€ðð764.7€to€read€as€follows:€€Ð %8!$ ÐÌò òà  àðð764.7€Ô#†XíXX Xí¦ü#ÔSafe€harbor€from€knowledge„based€requirementsó ó.€Ð M)è$( Ðà  àParties€involved€in€exports,€reexports€or€other€activities€subject€to€the€EAR€who€meet€theÐ -+È&* Ðrequirements€of€this€section€can€avail€themselves€of€a€ð ðsafe€harborðð€against€being€found€to€haveÐ e Ðhad€knowledge€of€a€fact€or€Ôf  ÔÔg Ôcircumstance€under€the€definition€of€€òòknowledgeóó€in€Ôf  ÔÔg ÔÔf  ÔÔg Ôðð772Ôf  ÔÔg Ô.1.€€Ôf  ÔÔg ÔÔf  ÔÔg ÔThe€safeÐ =Ø Ðharbor€can€apply€only€to€requirements€or€prohibitions€of€the€EAR€that€incorporate€knowledge,€asÐ ° Ðdefined€in€ðð772.1,€as€an€element.Ôf  ÔÔg ÔÐ í ˆ ÐÌà  à(a)€òòYou€must€not€have€actual€knowledge€or€actual€awareness€that€the€fact€or€circumstanceÐ  8  Ðat€issue€is€more€likely€than€notóó.€€The€safe€harbor€is€available€only€to€parties€who€do€not€haveÐ u  Ðactual€knowledge€or€actual€awareness€that€the€fact€or€circumstance€in€question€is€more€likely€thanÐ Mè  Ðnot.€€For€example,€if€you€are€about€to€export€an€item€subject€to€the€EAR€and€are€aware€that€it€isÐ %À Ðmore€likely€than€not€that€the€item€will€be€used€in€the€design,€development,€production,Ð ý˜ Ðstockpiling,€or€use€of€chemical€or€biological€weapons€in€any€country,€ðð744.4€of€the€EAR€requiresÐ Õp Ðyou€to€obtain€a€license€for€that€export€and€the€safe€harbor€will€not€relieve€you€of€that€licenseÐ ­H Ðrequirement.€€€€€Ð …  ÐÌà  à(b)€òòÔ‡ XíXXXíÔYou€must€take€the€following€stepsóó.€€Ô#†XíXX Xíæ#ÔÐ 5Ð ÐÌà  à(1)òòÔ‡ XíXXXíÔóó€€òòÔf  ÔÔg ÔÔf  ÔÔg ÔóóÔ#†XíXX Xíw#Ô€€òòComply€with€item€and€/or€destination„based€license€requirements€and€otherÐ å!€  Ðnotification€or€review€requirementsóó.€€Determine€whether€a€license€is€required€because€of€theÐ ½#X" Ðdestination€and€the€itemððs€status€on€Commerce€Control€List€and€comply€with€any€such€license€orÐ •%0!$ Ðother€review€requirements.€Ôf  ÔÔg Ô€€If€you€are€an€exporter€or€reexporter,€you€must€Ôf  ÔÔg Ôeither€Ôf  ÔÔg Ômake€a€Ôf  ÔÔg ÔÔf  ÔÔg ÔgoodÐ m'#& ÐfaithÔf  ÔÔg Ô€effort€to€classify€Ôf  ÔÔg ÔÔf  ÔÔg Ôthe€item€or€you€must€obtain€a€classification€from€BIS.€€You€must€obtainÐ E)à$( Ðany€licenses€required€to€send€the€item€to€the€destination€you€intend€to€send€it€to.€€€If€the€itemððsÐ +¸&* Ðreason€for€controlÔf  ÔÔg Ô€on€the€Commerce€Control€List€Ôf  ÔÔg ÔÔf  ÔÔg Ôis€EI,€you€€must€comply€with€any€requirementsÐ e Ðto€notify€the€U.S.€government€or€to€obtain€U.S.€government€approval€prior€to€export€or€reexport.€€€Ð =Ø Ѐ€Ôf  ÔÔg ÔÌà  àÔ‡ XíXXXíÔÌà  à(2)€€òòDetermine€whether€the€parties€to€the€transaction€are€subject€to€a€denial€order,€or€toÐ Å ` Ðcertain€sanctions,€and€whether€they€appear€on€the€Entity€List€or€Unverified€List,€and€whether€theÐ  8  Ðtransaction€is€governed€by€a€BIS€General€Orderóó.€€If€you€are€an€exporter€or€reexporter,€or€a€freightÐ u  Ðforwarder€or€other€party€acting€on€an€exporterððs€or€reexporterððs€behalf,€determine€whether€theÐ Mè  Ðparties€to€the€transaction€fall€within€any€of€the€following€categories:׃×Ý ƒX#ÃÝòòÚ  Ú1Ú  ÚóóÝ  Ý×  ×Ð %À ÐÌà  àà ` à(i)€Persons€subject€to€denial€of€U.S.€export€privileges€under€a€BIS€order.€€SuchÐ Õp Ðorders€are€published€in€the€òòFederalóó€òòRegisteróó.€€BIS€also€makes€available€unofficial€lists€of€deniedÐ ­H Ðpersons€on€its€Web€site€at€www.bis.doc.gov€and€in€an€unofficial€version€of€the€EAR,€which€isÐ …  Ðpublished€by€the€Government€Printing€Office€and€to€which€members€of€the€public€may€subscribe.€Ð ]ø ÐIf€an€end„user,€ultimate€consignee€or€principal€party€in€interest€is€subject€to€a€denial€order€thatÔf  ÔÔg ÔÐ 5Ð ÐÔf  ÔÔg Ô€prohibits€your€proposed€transaction,€you€must€not€proceed.€€€Ð  ¨ ÐÌà  àà ` à(ii)€Persons€appearing€on€the€Unverified€List,€which€is€published€by€BIS€in€theÐ ½#X" ÐòòFederalóó€òòRegisteróó€and€unofficially€maintained€on€BISððs€Web€site.€€The€Unverified€List€identifiesÐ •%0!$ Ðpersons€in€foreign€countries€that€were€parties€to€past€transactions€for€which€an€end„use€visitÐ m'#& Ð(either€a€pre„license€check€or€a€post„shipment€verification)€could€not€be€conducted€for€reasonsÐ e Ðoutside€of€the€control€of€the€U.S.€Government.€€The€presence€on€the€Unverified€List€of€an€end„Ð =Ø Ðuser,€ultimate€consignee€or€principal€party€in€interest€presents€a€red€flag€for€the€transaction,€asÐ ° Ðdescribed€in€supplement€No.€3€to€part€732€of€the€EAR.€€Ð í ˆ ÐÌà  àà ` à(iii)€Persons€appearing€on€the€Entity€List€in€supplement€No.€4€to€part€744.€€To€theÐ  8  Ðextent€described€in€that€supplement,€a€license€is€required€to€export€or€reexport€items€subject€toÐ u  Ðthe€EAR€to€persons€on€the€Entity€List.€€òòSeeóó€ðð744.1(c).€€Any€applicable€license€requirements€mustÐ Mè  Ðbe€met€before€you€proceed€with€the€transaction.€€Ð %À ÐÌà  àà ` à(iv)€Specially€designated€global€terrorists€[SDGT],€(òòseeóó€ðð744.12),€speciallyÐ Õp Ðdesignated€terrorists€[SDT]€(òòseeóóðð744.13),€designated€foreign€terrorist€organizations€[FTO]€(òòseeóó€Ð ­H Ððð744.14),€and€persons€on€the€list€of€specially€designated€nationals€identified€by€the€bracketedÐ …  Ðsuffix€[IRAQ2]€(òòseeóóòò€óóðð744.18).€€License€requirements€for€exports€and€reexports€to€such€parties€areÐ ]ø Ðdescribed€in€the€referenced€sections€of€part€744.€€Any€applicable€license€requirements€must€beÐ 5Ð Ðmet€before€you€can€proceed€with€the€transaction.Ð  ¨ ÐÌà  àà ` à(v)€Ôf  ÔÔg ÔÔf  ÔÔg ÔThe€requirements€of€aÔf  ÔÔg Ô€BIS€General€Order.€€These€General€Orders,€which€areÐ ½#X" Ðpublished€in€the€òòFederalóó€òòRegisteróó€and€codified€in€supplement€No.€1€to€part€736,€Ôf  ÔÔg Ômay€Ôf  ÔÔg Ôplace€specialÐ •%0!$ Ðrestrictions€on€exports€and€reexportsÔf  ÔÔg Ô€certain€destinations€orÔf  ÔÔg Ô€to€named€persons.€€Before€you€mayÐ m'#& Ðproceed€with€the€transaction,€you€must€comply€with€any€applicable€license€requirements€or€otherÐ E)à$( Ðrestrictions€imposed€by€Ôf  ÔÔg ÔÔf  ÔÔg ÔanyÔf  ÔÔg Ô€applicable€General€OrderÔf  ÔÔg Ô.€€€€€€€€€Ð +¸&* Їà  à(3)€€òòIdentify€and€respond€to€red€flagsóó.€€If€you€are€a€party€involved€in€an€export,€reexport€orÐ e Ðother€activity€subject€to€the€EAR,€comply€with€the€guidance€on€how€to€identify€and€respond€toÐ =Ø Ðred€flags€as€set€forth€in€paragraphs€(b)€and€(c)€of€supplement€No.€3€to€part€732€of€the€EAR.Ô#†XíXX Xí“ #ÔÔ‡ XíXXXíÔÔf  ÔÔg ÔÔf  ÔÔg ÔÐ ° ÐÔ#†XíXX XíO#ÔÌà  à(c)€òòReport€to€BIS.óó€€To€beÔf  ÔÔg Ô€eligible€for€the€Ôf  ÔÔg ÔÔf  ÔÔg Ôsafe€harbor,€parties€must€report€the€red€flags€thatÐ Å ` Ðthey€identified€and€how€they€resolved€them.€€BIS€will€respond€to€such€reports€indicating€whetherÐ  8  Ðit€concurs€with€the€partyððs€conclusion.€€€BIS€may€consult€with€other€government€agencies€inÐ u  Ðdeveloping€its€response€to€any€such€reportÔf  ÔÔg Ô.Ð Mè  ÐÌà  à(1)€€Prior€to€proceeding€with€the€transaction€a€party€seeking€to€be€eligible€for€the€safeÐ ý˜ Ðharbor€must€submit€a€written€report€by€first„class€mail,€express€mail,€or€overnight€delivery€to€theÐ Õp ÐBureau€of€Industry€and€Security,€Office€of€Enforcement€Analysis,€Ô‡XíXXXíÔ14th€Street€and€ConstitutionÐ ­H ÐAvenue,€NW,€Room€4065,€Attn:€Safe€Harbor€Guidance,€Washington,€D.C.€20230Ô#†XíXXXí#Ô.€€The€reportÐ …  Ðmust€demonstrate€that€the€party€has€taken€the€actions€described€in€paragraph€(b)€of€this€section.€Ð ]ø ÐIn€particular,€the€report€must€include€all€material€information€relating€to€the€red€flags€and€theÐ 5Ð Ðsteps€the€party€took€to€resolve€the€concerns€raised€by€the€red€flags.€Ð  ¨ Ðà  à(2)€€BIS€will€Ôf  ÔÔg ÔÔf  ÔÔg Ôacknowledge€receipt€of€all€reports€received€and€provide€the€reporting€partyÐ å!€  Ðwith€a€telephone€number€at€which€to€contact€BIS€if€it€does€not€receive€a€response€by€the€dateÐ ½#X" Ðstated€in€the€acknowledgement.€€BIS€expects€to€respond€to€mostÔf  ÔÔg Ô€reports€within€45€days€of€itsÐ •%0!$ Ðreceipt€of€the€report.€€The€response€shall:Ð m'#& ÐÌà  àà ` à(i)€€State€that€BIS€concurs€with€the€partyððs€judgement€that€it€has€adequatelyÐ +¸&* Ðaddressed€the€concerns€raised€by€the€red€flags;Ð e ÐÌà  àà ` à(ii)€State€that€BIS€does€not€concur€with€the€partyððs€judgement€that€it€hasÐ ° Ðadequately€resolved€those€concerns€and€describe€additional€information€that€would€be€necessaryÐ í ˆ Ðto€resolve€them€adequately;€Ð Å ` ÐÌà  àà ` à(iii)€Issue€an€ð ðis€informedðð€notice€(pursuant€to€ðððð744.2(b),€744.3(b),€744.4(b),Ð u  Ð744.6(b)€or€744.17(b)€of€the€EAR)€informing€the€party€of€a€license€requirement€under€ðððð744.2,Ð Mè  Ð744.3,€744.4,€744.6,€or€744.17(b)€of€the€EAR;€or€Ð %À ÐÌà  àà ` à(iv)€state€that€more€time€is€needed€to€review€the€submission.€Ð Õp ÐÌà  à(3)€Ôf  ÔÔg ÔÔf  ÔÔg ÔThe€party€is€not€entitled€to€conclude€that€BIS€concursÔf  ÔÔg Ô€with€the€partyððs€Ôf  ÔÔg Ôjudgement€thatÔf  ÔÔg ÔÐ …  Ðthe€party€has€adequately€resolved€the€concerns€raised€by€the€red€flags€Ôf  ÔÔg ÔÔf  ÔÔg Ôuntil€it€either€receives€aÐ ]ø Ðresponse€from€BIS€so€stating€or€contacts€BIS€at€the€telephone€number€indicated€in€theÐ 5Ð Ðacknowledgment€and€is€told€that€BIS€will€not€be€responding€to€this€reportÔf  ÔÔg Ô.€Ð  ¨ ÐÌà  à(4)€A€response€by€BIS€Ôf  ÔÔg ÔÔf  ÔÔg Ôstating€that€it€concurs€with€the€partyððs€judgement€that€it€hasÐ ½#X" Ðresolved€the€concerns€raised€by€the€red€flags€or€a€statement€by€BIS€that€it€will€not€be€respondingÐ •%0!$ Ðto€the€reexportÔf  ÔÔg Ô€shall,€provided€the€party€submitting€the€report€has€taken€the€steps€in€paragraph€(b)Ð m'#& Ðof€this€section,€serve€as€confirmation,€based€on€the€information€in€the€partyððs€submission,€that€theÐ E)à$( Ðparty€Ôf  ÔÔg ÔÔf  ÔÔg Ôhas€adequately€resolvedÔf  ÔÔg Ô€the€Ôf  ÔÔg ÔÔf  ÔÔg Ôconcerns€raised€by€the€red€flagsÔf  ÔÔg Ô.€€However,€such€confirmationÐ +¸&* Ðshall€not€bind€a€subsequent€enforcement€action€or€prosecution€if€the€submitting€party€had€actualÐ e Ðknowledge€or€actual€awareness€that€the€fact€or€circumstance€in€question€was€more€likely€than€not,Ð =Ø Ðor€if€the€submission€misstated€or€withheld€relevant€material€information.€€€Ð ° ÐÌà  à(5)€€If€BIS€responds€as€described€in€paragraph€(Ôf  ÔÔg ÔÔf  ÔÔg ÔcÔf  ÔÔg Ô)(2)(ii)€of€this€section€and€the€partyÐ Å ` Ðproceeds€without€taking€the€additional€steps€to€resolve€the€concerns,€then€it€will€not€qualify€forÐ  8  Ðthe€safe€harbor.Ð u  ÐÌà  à(6)€In€this€paragraph€(Ôf  ÔÔg ÔÔf  ÔÔg ÔcÔf  ÔÔg Ô),€the€date€of€BISððs€receipt€of€the€report€shall€be€the€date€of€receiptÐ %À Ðby€the€Office€of€Enforcement€Analysis€as€recorded€in€a€log€maintained€by€that€office€for€thisÐ ý˜ Ðpurpose€and€the€date€of€€BISððs€response€shall€be€the€postmark€date€of€BISððs€response.€Ð Õp Ðà  àÔ‡ XíXXXíÔÌà  àà ` àÔ#†XíXX Xíl0#ÔÔ‡ XíXXXíÔÌà  àà ` àà ¸ àà  àà h àà À àà  àà p àÌò òPART€772€ð!ð€[AMENDED]ó óÐ 5Ð ÐÌà  à14.à ` àThe€authority€citation€for€part€772€continues€to€read€as€follows:Ð å!€  Ðà  àò òÔ#†XíXX XíÇ0#ÔÔ‡ XíXXXíÔAuthority:ó ó€€50€U.S.C.€app.€2401€òòet€seqóó.;€50€U.S.C.€1701€òòet€seqóó.;Ô#†XíXX Xí2#ÔÔ‡X¯÷XXXíÔ€E.O.€13222,€66€FRÐ ½#X" Ð44025,Ô#†XíXXX¯÷¯2#ÔÔ‡ XíXXXíÔ€3€CFR,€2001€Comp.,€p.€783;€Notice€of€August€6,€2004,€69€FR€48763€(August€10,€2004).Ô#†XíXX Xí3#Ôò òó óÔ‡ XíXXXíÔÐ %8!$ ÐÌà  à15.à ` àIn€ðð772.1€revise€the€definition€of€òòknowledgeóó€to€read€as€follows:Ð M)è$( ÐÔ_ÔÐ %+À&* Ðà  àðð772.1€Definition€of€terms€as€used€in€the€Export€Administration€Regulations€(EAR).Ð e ÐÌà  à*€€€*€€€€*€€€*€€€*Ð ° ÐÌòòà  àKnowledgeóó.€€Ô#†XíXX Xíº3#Ô€When€referring€to€an€actor€in€a€transaction€that€is€subject€to€the€EAR,Ð Å ` Ðknowledge€(the€term€may€appear€in€the€EAR€as€a€variant,€such€as€ð ðknow,ðð€ð ðreason€to€know,ðð€orÐ  8  Ðð ðreason€to€believeðð)€of€a€fact€or€circumstance€relating€to€the€transaction€includes€not€onlyÐ u  Ðpositive€knowledge€that€the€fact€or€circumstance€exists€or€is€substantially€certain€to€occur,€butÐ Mè  Ðalso€an€awareness€that€the€existence€or€future€occurrence€of€the€fact€or€circumstance€in€questionÐ %À Ðis€more€likely€than€not.€€Such€awareness€is€inferredÔf  ÔÔg Ô,€òòinteróó€òòaliaóó,Ôf  ÔÔg Ô€from€evidence€of€the€consciousÐ ý˜ Ðdisregard€of€facts€and€is€also€inferred€from€a€personððs€willful€avoidance€of€facts.€€This€usage€ofÐ Õp Ðð ðknowledgeðð€incorporates€an€objective,€ð ðreasonable€personðð€standard.€€Under€that€standard,€aÐ ­H Ðparty€would€have€knowledge€of€a€fact€or€circumstance€if€a€reasonable€person€in€that€partyððsÐ …  Ðsituation€would€conclude,€upon€consideration€of€the€facts€and€circumstancesÔf  ÔÔg Ô,€that€the€existence€orÐ ]ø Ðfuture€occurrence€of€the€fact€or€circumstance€in€question€is€more€likely€than€not.€€òòNote:óó€€ThisÐ 5Ð Ðdefinition€applies€to€ðððð730.8(a)(4)(iv);€732.1(d)(1)(x);€732.3(m);€732.4(a);€Supp.€No.€2€to€partÐ  ¨ Ð732;€ðððð€734.2(b)(2)(ii);€òòóó736.2(b)(7);€736.2(b)(10);€Supp.€No.€2€to€part€736,€Administrative€OrderÐ å!€  ÐTwo,€paragraph€(a)(1)(ii)(E);€ðððð€740.13(e)(4);€740.13(e)(6);€740.16(Ô_ÔiÔ_Ô);€740.17(e)(3);€740.5;Ð ½#X" Ð740.7(b)(4);€740.9(a)(3)(iii)(B);€742.10(a)(2)(ii)€;€742.8(a)(2);€Supp.€No.€6€to€part€742,€paragraphÐ •%0!$ Ð(d)(1);€ðððð€744.17;€744.2;€744.3;€744.4;€744.5;€744.6;€745.1(a)(1)(ix);€746.3(a)(4),€746.3(f)(2)(Ô_ÔiÔ_Ô),Ð m'#& Ð746.7(a)(2)(ii);€748.11(e)(4)(ii)(òò2óó);€748.14(g)(2)(vii);€€748.3(c)(2)(iii);€748.4(d)(1);€748.9(g)(3);Ð E)à$( ÐSupp.€No.€1€to€part€748;€Supp.€No.€2€to€Part€748,€paragraphs€(g)(2)(iii)€and€(iv);€Supp.€No.€2€toÐ +¸&* ÐPart€748,€paragraph€(j)(3)(ii);€Supp.€No.€2€to€Part€748,€paragraph€(l);€Supp.€No.€2€to€Part€748,Ð e Ðparagraph€(o)(3)(Ô_ÔiÔ_Ô);€Supp.€No.€5€to€part€748,€paragraph€(a)(5)(ii);€ðððð€750.7(h)(3);€752.4(b);Ð =Ø Ð752.11Ô_Ô(cÔ_Ô)(12);€752.11Ô_Ô(cÔ_Ô)(13);€752.4;€754.2(j)(3)(Ô_ÔiÔ_Ô)(D);€758.3Ô_Ô(cÔ_Ô);€762.1(a)(2);€762.6(a)(2);Ð ° Ð764.2(e);€764.2(f)(2);€764.2(g)(2);€Supp.€No.€1€to€part€764(b),€paragraph€(d)€under€the€headingÐ í ˆ Ðð ðSECONDðð;€Supp.€No.€1€to€part€766,€III,€A€paragraphs€headed€ð ðDegree€of€Willfulnessðð€andÐ Å ` Ðð ðRelated€Violationsðð;€and€ðð772.1€definition€of€ð ðtransfer.ðð€€This€definition€does€not€apply€to€partÐ  8  Ð760€of€the€EAR€(Restrictive€Trade€Practices€or€Boycotts)€or€to€the€following€EAR€provisions:Ð u  Ððððð730.8(b);€732.1Ô_Ô(cÔ_Ô);€732.3(n);€734.1(a);€734.2(b)(3);€Supp.€No.€1€to€part€734,€questions€D(5)Ð Mè  Ðand€F(1);€738.4(a)(3);€740.11(c)(1)(ii)Ô_Ô(CÔ_Ô);€742.12(b)(3)(iv)(B)(8);€742.18;€Supp.€No€4€to€PartÐ %À Ð742,€€paragraph€2;€744.12;€744.14;€745.1(b)(2);€745.2(a)(1);€748.7(a)(2)(ii);€748.11Ô_Ô(cÔ_Ô)(1);Ð ý˜ Ð748.11Ô_Ô(cÔ_Ô)(3);€748.11(e)(4)(Ô_ÔiÔ_Ô);€750.8;€752.5(a)(2)(iv);€€752.8(d)(9);€€754.4(d)(1);€758.7(b)(6);Ð Õp Ð764.5(b)(5);€764.5Ô_Ô(cÔ_Ô)(5);€766.3(b);€766.6(b);€770.3(d)(1)(Ô_ÔiÔ_Ô)(A)€and€(B);€772.1€definitions€of€Ð ­H Ðð ðbasic€scientific€research,ðð€ð ðcryptography,ðð€ð ðdeformable€mirrors,ðð€ð ðdefense€trade€controls,ððÐ …  Ðð ðexpert€systems,ðð€€ð ðmultilevel€security,ðð€€ò òó óð ðrecoverable€commodities€and€software,ðð€ð ðtechnology,ððÐ ]ø Ðand€ð ðtime€modulated€widebandðð;€Supp.€No€1€to€part€774,€Category€1,€€Ô_ÔECCNÔ_Ô€1C351,€Reason€forÐ 5Ð ÐControl€paragraph;€Supp.€No.€1€to€part€774,€Category€1,€€Ô_ÔECCNÔ_Ô€1C991,€Related€ControlsÐ  ¨ Ðparagraph;€Supp.€No€1€to€part€774,€Category€2,€€Ô_ÔECCNÔ_Ô€2B119€Note€to€List€of€Items€Controlled;Ð å!€  ÐSupp.€No.€1€to€part€774,€Category€3,€Ô_ÔECCNÔ_Ô€3A001,€N.B.€to€paragraph€8€of€List€of€ItemsÐ ½#X" ÐControlled;€Supp.€No€1€to€part€774,€Category€3,€€Ô_ÔECCNÔ_Ô€3A002,€Related€Definitions€and€List€ofÐ •%0!$ ÐItems€Controlled;€Supp.€No.€1€to€part€774€Category€3,€Ô_ÔECCNÔ_Ô€3A225,€Heading€and€€List€of€ItemsÐ m'#& ÐControlled;€Supp.€No€1€to€part€774,€Category€4,€Ô_ÔECCNÔ_Ô€4A994,€List€of€Items€Controlled;€and€Ð E)à$( ÐSupp.€No.€1€to€part€774,€Category€6,€Ô_ÔECCNÔ_Ô€6C004€List€of€Items€Controlled.€€€€€Ð +¸&* ЇÔ‡ XíXXXíÔà  à*€€€*€€€*€€€*€€€*Ð e ÐÌÌÔ#†XíXX XíK#ÔÔ‡ XíXXXíÔDated:Ð í ˆ ÐÌÔf  ÔÔg ÔÔf  ÔÔg ÔÔ#†XíXX XíwK#ÔPeter€Ô_ÔLichtenbaumÔ_ÔÐ  8  ÐAssistant€Secretary€for€Export€Administration