Legal Definitions - entity list

The Entity List is a specific roster maintained by the U.S. government, primarily by the Department of Commerce's Bureau of Industry and Security (BIS). It identifies foreign individuals, companies, and government organizations that are deemed to pose a risk to U.S. national security or foreign policy interests. When an entity is placed on this list, it means that U.S. companies and individuals face heightened restrictions and often require special licenses to export, re-export, or transfer certain sensitive U.S.-origin items, technology, or software to them. The primary goal of the Entity List is to prevent items that could be used for military applications, weapons proliferation, or other harmful activities from reaching these designated parties. Any proposed transaction with an entity on this list is considered a "red flag" and warrants significant caution and due diligence to ensure compliance with U.S. export control laws.

• Example 1: High-Tech Component Sales

  A U.S. manufacturer of advanced microchips receives an order from a foreign telecommunications company. Before fulfilling the order, the U.S. manufacturer conducts a compliance check and discovers that the foreign company has recently been added to the Entity List due to concerns that its products are being used to support surveillance activities by an authoritarian government. Because of this listing, the U.S. manufacturer must now apply for a specific, often difficult-to-obtain, license from the U.S. government before it can legally export its microchips to that company, even if the chips have civilian applications.

  How this illustrates the term: This example shows a foreign company on the Entity List triggering specific license requirements for a U.S. exporter, highlighting the heightened scrutiny and restrictions imposed to address national security or foreign policy concerns.

• Example 2: Academic Research Collaboration

  A prominent U.S. university's engineering department plans to collaborate with a foreign research institute on a project involving advanced robotics. During the due diligence process, the university's legal team finds that the foreign institute is on the Entity List because of its suspected involvement in developing military drone technology for a country subject to U.S. sanctions. This listing means that sharing certain technical data, software, or even specific equipment with the foreign institute, which would normally be permissible for academic collaboration, now requires a special license from the U.S. government, making the collaboration significantly more complex or potentially impossible.

  How this illustrates the term: Here, a foreign research institute on the Entity List restricts the transfer of technical knowledge and equipment from a U.S. entity, demonstrating how the list controls the flow of sensitive information and technology to prevent misuse.

• Example 3: Supply Chain Due Diligence

  A U.S. company that produces specialized industrial machinery sources a critical component from an international supplier. The U.S. company regularly screens its supply chain partners. During a routine check, they discover that a key executive at their international supplier's subsidiary has been individually placed on the Entity List due to their alleged role in a network involved in illegally acquiring sensitive materials for a foreign military program. Even though the supplier itself is not listed, the presence of a listed individual within its leadership raises a "red flag," requiring the U.S. company to conduct extensive additional due diligence and potentially seek guidance from BIS to ensure that their continued business relationship does not inadvertently contribute to the listed individual's prohibited activities or violate export controls.

  How this illustrates the term: This example shows that individuals, not just organizations, can be on the Entity List, and their presence within a business relationship triggers a "red flag" and increased scrutiny, even if the direct transaction isn't with the listed individual themselves, emphasizing the broad reach of the list's restrictions.