TerM

Denied Persons List (DPL)

TerM

Denied Persons List (DPL)

Introduction

There are certain people and organizations who have been caught carrying out extremely shady dealings involving US products. The worst offenders have been added to the Denied Persons List, a US government sanctions list prohibiting these entities from being involved in any transactions involving US goods and foreign persons or companies.

Here, we explore the DPL and why businesses need to be compliant. To start off, we’ll answer two questions in specific terms: what is the Denied Persons List, and who is responsible for publishing and enforcing it?

What is the Denied Persons List (DPL)?

The Denied Persons List (DPL) is a list of people and companies who have had their export privileges explicitly revoked by the United States. They are not allowed to be involved in exporting anything from the US, or in transferring ownership of US-made products to foreign people or countries.

This prohibition covers not just material goods, but also immaterial property such as computer source code.

Who Enforces the Denied Persons List?

The Denied Persons List is published by the US Bureau of Industry and Security (BIS), a branch of the US Department of Commerce. It is ultimately part of their Export Administration Regulations (EAR). The final authority for the denial orders rests with the US Federal Register.

The Difference Between the Denied Persons List and the Entity List

The Denied Persons List and the Entity List are two related, but separate, lists on US export control from the BIS. A person or company on the DPL is outright prohibited from participating in any export-related activities involving US products. This means:

  1. They may not send, transmit, or take items (including intellectual property) out of the US in any way. 
  2. They may not release or transfer ownership of technology (information) to a foreign person inside the US.
  3. They may not export any items (including intellectual property) imported into a foreign country from the US into another foreign country.

A person or company on the Entity List may be allowed to export, re-export, or transfer US products to foreign people or companies. However, to do so, they require a license that is subject to conditions specific to that person or company for each transaction. This licensing process is also bound by any other conditions as specified by the EAR.

Why the Denied Persons List is so Important for Compliance

It’s essential to comply with the Denied Persons List because the United States has deemed dealing in US products with people and companies on the list to be illegal. That means not only avoiding directly importing or taking ownership of US goods from people or companies on the DPL. It also means exercising due diligence when re-exporting or transferring ownership of US-made goods to foreign people or companies.

People and businesses must ensure no entity on the DPL is part of the supply chain in any transactions they make. Failure to adhere to the DPL can result in hefty fines, imprisonment (for company representatives), and even being added to the DPL.

But compliance with the DPL shouldn’t be for the sole purpose of avoiding US administrative penalties. Individuals and businesses on the DPL are usually there because they have a history of corrupt business practices, funding/supplying terrorist organizations, or otherwise presenting threats to US national security. 

So, avoiding doing business with them also helps an organization avoid being involved in fraud, money laundering, or other criminal activity. This, in turn, helps it preserve trust from clients, customers, regulators, and the general public.

Financial institutions are responsible for verifying that they are not conducting business with or on behalf of entities on the DPL. This should be a core component of the Know Your Customer (KYC) procedures that financial organizations conduct, as well as part of consistent transaction and behavior monitoring efforts.