Itar for senior executives

International Traffic In Arms Regulations (ITAR) For

Corporate Officers and Senior Management

Compliance Assurance LLCFebruary 16, 2011

Property of Compliance Assurance LLC


What Are the International Traffic In Arms Regulations?

Section 38 of the Arms Export Control Act (AECA) Authorizes the President to Control the Import and Export of Defense Articles and Services

Statutory Authority to Promulgate Regulations Was Delegated to the Secretary of State (E.O. 11958)

22 CFR part 120.1 Implements that Authority in the International Traffic In Arms Regulations

“The ITAR”Property of Compliance Assurance LLC

Property of Compliance Assurance LLCProperty of Compliance Assurance LLC

International Traffic In Arms (ITAR)


What Exactly is a Defense Article or Service?Part 120.2 – Items designated on the U.S. Munitions List

(USML) as specified in part 121 of the ITAR


USML Categories


• I - Firearms• II – Guns and Armament• III – Ammunition/Ordnance• IV - Launch Vehicles, etc.• V - Explosives, Propellants,

Incendiary Agents and Their Constituents

• VI - Vessels of War and Special Naval Equipment

• VII - Tanks and Military Vehicles• VIII - Aircraft and Associated

Equipment• IX - Military Training Equipment• X - Protective Personnel

Equipment• XI - Military Electronics• XII - Fire Control, Range Finder,

Optical and Guidance and Control Equipment

• XIII – Auxiliary Military Equipment• XIV - Toxicological Agents and

Equipment and Radiological Equipment

• XV - Spacecraft Systems and Associated Equipment

• XVI - Nuclear Weapons Design and Related Equipment

• XVII - Classified Articles, Technical Data and Defense Services Not Otherwise Enumerated

• XVIII – Directed Energy Weapons• XIX - Reserved• XX - Submersible Vessels,

Oceanographic and Associated Equipment

• XXI - Miscellaneous Articles




What Exactly is a Defense Article or Service?Part 120.3(a) - “is specifically designed, developed,

configured, adapted, or modified for a military application, and (i) Does not have predominant civil applications,

and(ii) Does not have performance equivalent (defined

by form, fit and function) to those of an article or service used for civil application;”




What Exactly is a Defense Article or Service?Defense Articles• Any item or technical data designated on the USML• Includes technical data recorded or stored in any physical

form, models, mock-ups or other items that reveal technical data

Defense Services• Furnishing assistance including training, to foreign persons in

the U.S. or abroad• Military training of foreign units and forces


Scope of Export ControlsWhat Items Are Controlled under the ITAR?• Essentially, any item specifically designed for military

purpose is controlled… down to the smallest part

• If any component is ITAR-controlled, then the equipment on which installed is also ITAR-controlled (see through rule)

• Purpose for which it is now being used is irrelevant

• E.g. Military aircraft (C-130) being used for cargo plane





What is a Broker (Part 129)?• Any person who acts as an agent for others in

negotiating or arranging contracts, purchases, sales or transfers of defense articles or services in return for a fee, commission or other consideration.

Brokering Activity is Controlled Under the ITAR!• Does not apply to domestic sales or transfers


Benefits of Being ITAR CompliantITAR Requirement to Participate in Defense

Article Manufacturing (Even Just Once!)

Demonstrates to Defense Contractors and Customers That You Are a Legitimate Partner• Like ISO / six sigma demonstrate commitment to quality• Often required part of prime contractor’s program

Protects Your Company From Fines, Penalties and Negative Publicity


Benefits of Not Being ITAR CompliantJoseph Piquet, Port St. Lucie, FL• Convicted of 7 counts of conspiracy to export military-use

electronic components to Hong Kong and PRC without the required export licenses under the Arms Export Control Act and the International Emergency Economic Powers Act (IEEPA)

• Submitted false End Use Certificates to the manufacturer (NGC)

• Sentenced to 5 years in prison

• Two years supervised release (after prison term)

Free Room and Board!Property of Compliance Assurance LLC

Senior Management Responsibility


Senior Management Responsibility• Keep Your DDTC Registration Current

– Officers, addresses/locations, contact numbers

• Sign Registration Statement and Transmittal Letters

• Confirm Which Senior Officer Listed on the Registration Statement Will Oversee the Compliance Program

• Designate and Provide DDTC list of Full-time Employees Who Serve as “Empowered Officials” – Provide names and contact info


Senior Management Responsibility• Maintain Records of Manufacture, Acquisition and

Disposition of ‘Defense Articles and Services’

• Maintain Records of Political Contributions, Fees and Commissions Furnished or Obtained

• Ensure That Managers, Supervisors and Employees Receive Training on AECA and ITAR Requirements

• Ensure That Employees Understand the Ramifications For Failure to Comply With the Regulations


Senior Management Responsibility


And If We Don’t…

The Ultimate Responsibility Belongs to Senior Management!

Who Is Your Empowered Official?• U.S. Person directly employed in a position having

authority for policy or management; and• Legally empowered to sign license requests or other

requests for approval• Understands the provisions and requirements or

statutes and regulations• Has the independent authority to:

• Inquire into any aspect of a proposed transaction • Verify the legality of the transaction and accuracy of info to be

submitted• Refuse to sign any license application or other request for approval

without prejudice or other adverse recourse


How Do We Ensure Compliance?


Senior Management Is Responsible But Does Not Manage the Day-to-day Activities…• Must Have a Comprehensive Export Compliance

Program!• Refer to the Compliance Guide Sent with

Registration


What Are the Key Elements of an Effective Compliance Program?


(1) Organizational Structure(2) Corporate Commitment and Policy(3) ID, Receipt & Tracking of ITAR Controlled Items(4) Re-export / Re-transfer Procedure(5) Restricted/Prohibited Exports & Transfers (6) Recordkeeping (7) Internal Monitoring & Auditing(8) Training(9) Notification & Escalation Policy

Source: U.S. Dept. of State, Bureau of Political Military Affairs


What Makes and Effective Compliance Program?


An effective export management and compliance program includes adherence to a set of operational compliance policies, procedures, and safeguards AND a written set of export-related guidelines that tell employees what is expected of them and provides management with a framework to evaluate whether: What should happen, does happen and What shouldn’t happen, doesn’t happen …on a daily basis.

Source: Bureau of Industry and Security


Have Questions? Give Me a Call:


www.WeAreCompliant.com

Itar for senior executives

Business

Transcript of Itar for senior executives