R. Ellen Coley

ReavesColey PLLC

ellen.coley@reavescoley.com

757.410.8066 office

757.383.5876 mobile

Virginia Conference

On World Trade

ITAR COMPLIANCE

• To provide instruction on the

International Traffic in Arms

Regulations (“ITAR”)

• To provide guidance on ways to

avoid ITAR violations

Objectives

• National Security

• Anti-Terrorism

• Weapons Controls

• Crime Control

• Non-Proliferation

Why Does ITAR exist?

• ITAR- International Traffic in Arms Regulations

United States Munitions List (USML)

• EAR- Export Administration Regulations

Commerce Control List (CCL)

U.S. Export Control

Laws

• Any person subject to the jurisdiction

of the United States who, as principal

or agent (including a forwarding

agent), participates in an export

transaction

Who is subject to

ITAR?

• Items (plus technical data and software) listed

on the United States Munitions List (“USML”)

• Items specifically designed, developed,

configured, adapted or modified for a military

application (intended use does not matter)

• Services related to items on the USML

What is controlled by

ITAR?

• Actual shipment or transmission of items out of

the United States

• Release of technology or software subject to the

ITAR to a foreign national in the United States

What does it mean to

“Export”?

Actual shipment or transmission of

items subject to the ITAR from one

foreign country to another foreign

country

What does it mean

to “Re-export”?

• Transfers of technology (even within the U.S.) to

a foreign national are deemed as an export to

the foreign national’s home country

• All deemed exports subject to ITAR require a

license

• Watch out for plant visits, negotiations, and

employees (Form I-129 Certification)

What is a

“Deemed Export”?

• NOT a U.S. citizen or lawful permanent resident

(green card holder)

• In the U.S. on a temporary visa

Foreign Nationals

• If the item is controlled, then any technical data

and software related to the product is also

controlled

• Examples:

- Technical drawings

- Operating Manuals

- Training Manuals

Technical Data and

Software

• Ship it out of the U.S.

• Travel out of the U.S. and talk about the

technical data and/or software

• Transmissions out of the U.S. (phone call, fax,

email)

• Foreign national has access

Exporting Technical

Data and Software

• Internal control plan for restricting access

• Visitor sign-in (state citizenship)

• Locked doors/file cabinets

• Do not leave technical data visible to the open

public

Restricting Access

• Registration requirements

- Renew yearly

• Must obtain a license prior to exporting

- DTRADE

• Must inform employees about the terms and conditions of the license

ITAR Controlled

EAR Restricted

• Review the Commerce Control List

• Depending on what country it will be exported to, the export may require a license

• EAR 99- No license required to a particular country (unless general prohibitions apply)

• Technical Data

- Technical proposals (drawings &

specs)

- Follow-up discussions

• Office/Plant Visits

• Foreign national employees

Licensing of

Technical Data

• Export item unless:

– The end user is a prohibited person or entity

– The country of destination is under an

embargo

– You have knowledge of an impending

violation

What if the Item does

NOT

Require a License?

• Screen each customer

• Denied persons list

• Specially Designated Nationals list

• Documentation

Screening

• Is it an embargoed country?

– Cuba, Iran, Iraq, North Korea, Sudan, Syria

• Re-exports - check the country of FINAL

destination even if it will be shipped through

another foreign country first

Check the Country

of Final Destination

• The customer or its address is similar to one of the parties found on the Commerce Department's [BIS's] list of denied persons.

• 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.

Watch out for Red

Flags

• 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.

Watch out for Red

Flags

• 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.

Watch out for Red

Flags

• Government contractors may request an

ITAR certificate from their vendors and

subcontractors

• It may be broad, but do NOT over-certify

• ITAR registration

• Compliance program

ITAR Certificates

• Fines - Up to $1,000,000 per violation

• Criminal - Up to ten (10) years imprisonment (can prosecute company, officers and directors, and employees)

• Denial of export privileges

• Barred from working on government contracts

ITAR Violations

• Management commitment

- Management Policy Statement

- Reviewed and Signed every year

Compliance Plan

• Written guidelines

– Polices and procedures

– Review the handbook

– Identify the Compliance Team

– Handbook will be maintained by the

Compliance Team

Compliance Plan

• Compliance Training

– Annual training for all employees

- on-line classes

- in-house seminars

- external seminars

– Training for all new export personnel

Compliance Plan

• Cradle to Grave Export Compliance Security

– The Compliance Team will manage the

EMCP

– Document the entire process

Compliance Plan

• Recordkeeping Requirements

– 5 year retention period

– All records should be easily retrievable for any given export transaction

Compliance Plan

• Export Compliance Monitoring & Auditing

– Identify violations/problems

– Corrective measures

Compliance Plan

• Recordkeeping Requirements

– 5 year retention period

– All records should be easily retrievable for any given export transaction

Compliance Plan

• Guidelines for Handling & Reporting Export Violations/Problems

– Employees should discover and report violations and problems

– Anonymous reporting

Compliance Plan

R. Ellen Coley

ReavesColey PLLC

ellen.coley@reavescoley.com

757.410.8066 office

757.383.5876 mobile

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