$36 Million Penalty, Compliance Measures Imposed for Export Violations

The State Department has announced that a U.S. company will pay a $36 million civil penalty to resolve 116 violations of the Arms Export Control Act and the International Traffic in Arms Regulations.

The violations include unauthorized exports of technical data to China; violations of terms, conditions, and provisos of several Directorate of Defense Trade Controls authorizations involving various countries; unauthorized exports of defense articles to two countries; and failure to report material changes to the company’s ITAR registration.

State notes that the company voluntarily disclosed all the alleged violations, fully cooperated with the department’s review, and implemented numerous improvements to its ITAR compliance program to prevent similar violations in the future.

As a result, $18 million of the penalty will be suspended on the condition that those funds are used for approved measures to further strengthen the company’s compliance program, which will include the following.

– implement a comprehensive, automated export compliance system that improves the company’s ability to oversee and monitor export, re-export, and re-transfer activity

– review, verify, and complete the export control jurisdiction of all hardware and/or software and any defense services or technical data

– perform at least one external audit of the company’s compliance with the consent agreement

– arrange and facilitate onsite reviews by the State Department