Denied Party Screening

Best Practices
by Cindy Peeters
Millitech, Inc.
Technology Control
Officer/Facility Security Officer

Screening is the
foundation of effective
compliance

Millitech History

Millitech designs and manufactures millimeterwave components and systems for both
commercial and military applications.
Customers include Raytheon, BAE, Lockheed,
Boeing, Rockwell, and all the other major
defense contractors.
Foreign owned, operate under an SSA so we
can maintain our security clearance.
We have a large international business and
have many licenses & TAAs.
Denied party screening is essential in every
aspect of our business.

KNOW YOUR CUSTOMER

U.S. export controls laws and regulations prohibit

exporters from entering into a transaction with
knowledge that a violation of those laws has occurred
or is about to occur. They also contain prohibitions
against doing business with certain specified persons
and certain countries; exporting to prohibited end-uses
or end-users; and contributing to the proliferation of
weapons of mass destruction and delivery systems. To
avoid violating these prohibitions, an exporter must
make sure they are not dealing with a restricted party
or possible proliferators. In short, exporters have a
duty to exercise reasonable care in investigating the
parties involved in, and the nature of, its export
transactions.

Questions to ask yourself

Are you screening?

Why are you
screening?
Who is screening?
How are you
screening?
What are you
screening for?

Who are you

screening?
When are you
screening?
How often are you
screening?

Suggested Practice

As you can see, every

visitor in our company
has to come through
the front door, go
through DPS and be
badged. We start the
process early.
FYI we did not
conduct DPS on 3
week old Baby Brody,
but we did for his
mom.

DPS Process

Lists to Check

Lists to check
include:

Denied Persons
Entity List
Unverified List
OFAC Lists
Nonproliferation
Sanctions
Debarred List

Its burdensome for

companies that do
not have all
inclusive software
to check all these
lists which makes it
easier for people to
forget to screen.

What are Red Flags?

Possible indicators that an unlawful

diversion might be planned by the
customer
Abnormal or suspicious circumstances

There are obvious red flags and not so obvious

red flags. Most people that work in compliance
tend to have a gut feel when they think
something is fishy. Go with that feeling and do
your best due diligence to keep your company
out of jeopardy.

Examples of Red Flags

The customer or its address is similar to one of the parties

found on one of the denied persons lists.
The customer or purchasing agent is reluctant to offer
information about the end-use of the item.
The product's capabilities do not fit the buyer's line of
business, such as an order for sophisticated computers for a
small bakery.
The item ordered is incompatible with the technical level of
the country to which it is being shipped, such as
semiconductor manufacturing equipment being shipped to a
country that has no electronics industry.
The customer is willing to pay cash for a very expensive
item when the terms of sale would normally call for
financing.
The customer has little or no business background.

Examples of Red Flags

(contd)

The customer is unfamiliar with the product's performance

characteristics but still wants the product.
Routine installation, training, or maintenance services are
declined by the customer.
Delivery dates are vague, or deliveries are planned for out of
the way destinations.
A freight-forwarding firm is listed as the product's final
destination.
The shipping route is abnormal for the product and
destination.
Packaging is inconsistent with the stated method of shipment
or destination.
When questioned, the buyer is evasive and especially unclear
about whether the purchased product is for domestic use, for
export, or for re-export.

Hits or Matching Records

When DPS Results in Hits

Read and check the detailed results

Investigate and exclude any possibility of a coincidence or a
similar sounding name or entity.
Review the citation. There are instances where a name/entity
and citation may result in a match, but the citation does not
prohibit this particular business transaction.
Verify the name/entity, address, and citation using the DPS
Verification Statement form to document due diligence.

Verification should include at a minimum the completion of the

DPS Verification Statement form in which the name/entity, date,
signature and statement of the individual attesting they are not
excluded from US government export/import activity and
rejecting being a denied party are included along with a copy of a
drivers license, passport, or visa, if applicable. A template is
available.
Record and file the verification statement and all relevant
communication.
Proceed with the business transaction.

If verification cannot be obtained or the party is unwilling to

provide the necessary information, it is suggested to suspend
activity until there is cooperation, or terminate the activity.

DPS Verification Statement

I,_________________ , certify that I am not the same person(s) or

entity listed on the denied party screening performed by Millitech.
Further, I certify that I am presently not facing any penalties or
have affected privileges with the U.S. Government regarding
export/import regulations. Millitech has provided a printout of the
list of name(s) and/or address(es) which resulted from conducting
my name/entity search, and I verify that the names/entity,
residences, and affected privileges have no relation to me.
Prior to entering the facility and/or proceeding with a business
transaction/activity, I have provided Millitech a copy of my drivers
license (or Visa/Passport) which Millitech will keep in their files for
verification and record keeping purposes only.

Name:__________________________Date:______________

Signature:_______________________

Direct Hits (exact match)

When DPS Results in a Direct Hit (name and
citation applicable)

Read and check the detailed results.

Suspend the transaction or activity process

Inform the customer/visitor the transaction is on hold pending a

further detailed investigation of export/import compliance
matters and that there may be a delay or prolonged process
times.
Do not approve orders, sign off forms, release shipments or
authorize exports or visits.

Record and file all documentation.

Notify the party that this transaction cannot be completed
due to export/import compliance matters.

Verify it is a direct hit. Notify TCO.

It is recommend that this communication be documented and

filed with DPS related records for future reference.

STOP ACTIVITY

Example Employee

Millitech interviewed a potential technician

in March 2009. We ran a DPS, no matching
records.
Millitech hired this technician in July 2009.
We ran a DPS and at this time we had our
first direct hit on a person.
The alert was for a HUD (Housing and
Urban Development) offense.
We asked the employee about this finding
and he admitted that he and his family had
been indicted for a HUD crime and that
they were waiting for the trial.

Example Employee
(contd)
Our President, HR, Finance Director and

myself called our legal group and talked

about this topic and how to proceed.
Our decision was based on his job
description:

His job does not entail anything financial

He would have no access to money
He was on a 6 month trial (not because of DPS
finding) and if anything came up we would
dismiss him at that time

We hired this technician and had no issues

with him

Example - Visitor

George W. Bush comes to visit and wants to

partner with us on a defense RFP we are working
on:

George W. Bush is an alias used by many people

George does come up with an alert and you find that
this person is not allowed to work on government
contracts

Since we know this is not the same George Bush

being found on the lists that we are working with
we ask him to verify his identity and have him sign
the DPS verification statement and we can
continue to work with him

Example - Supplier

Bharat Electronics Ltd - India

When you look up this company you get

a country code alert.

In this example India companies are

on a watch list for atomic energy
(nukes) products.
If Millitech was selling them
components that would fall into this
category we would stop the activity
or apply for a license.

Questions?
Cindy Peeters
cpeeters@millitech.com