The State Department has imposed a $1 million civil penalty and a number of compliance measures as part of a consent agreement settling charges that a U.S. company registered as a broker, manufacturer, and exporter of defense articles committed ten violations of the Arms Export Control Act and the International Traffic in Arms Regulations. State notes that this agreement reflects a number of mitigating factors, including the company’s 14 voluntary disclosures and self-initiated compliance program improvements. However, State also pointed out that the company exhibited a systemic lack of authorization management and attention to the provisos, terms, and conditions of export authorizations.
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The charged violations fall into five categories.
- unauthorized exports of unmanned aircraft systems to Canada and failure to obtain end-use certifications for UAS and parts, components, and accessories exported to Canada
- unauthorized exports of technical data in the form of UAS user manuals to Australia, France, Canada, and Thailand
- unauthorized exports of UAS to the United Kingdom
- violations of the provisos, terms, and conditions of export licenses and other approvals
- failure to properly maintain records involving ITAR-controlled transactions
The consent agreement requires the company to take the following remedial measures over a two-year period.
- pay an aggregate civil penalty of $1 million in fines and remedial compliance measures
- establish policies and procedures for all employees with responsibility for AECA and ITAR compliance to address lines of authority, staffing levels, performance evaluations, and career paths
- with 120 days, conduct an internal review of AECA and ITAR compliance resources and establish the necessary actions to ensure that sufficient resources are dedicated to compliance
- appoint a special compliance officer to monitor the company’s AECA and ITAR compliance program, with specific attention to the areas associated with the violations at issue
- within 12 months, institute strengthened corporate compliance procedures
- within 18 months, conclude a review of the export control jurisdiction of the company’s ITAR-regulated hardware and any directly-related defense services, technical data, and software
- within 12 months, have an audit conducted by an outside consultant that provides a thorough assessment of the effectiveness of the company’s implementation of the consent agreement
State is not imposing an administrative debarment of the company due to its cooperation with the department’s review, expression of regret for the charged violations, and agreement to take the measures outlined above.