Background

The State Department has entered into a consent agreement under which a U.S. company will pay an $840,000 civil penalty to resolve alleged export violations. The company will also engage an external special compliance officer, conduct an external audit of and make enhancements to its export compliance program, review and verify the export control jurisdiction of all items it manufactures, and implement additional compliance measures. State will suspend $420,000 of the penalty amount on the condition that those funds are used for remedial compliance measures.

According to State, the alleged violations involve (1) the attempted unauthorized export of defense articles to various countries (including China and Lebanon) that are proscribed destinations under the International Traffic in Arms Regulations as well as Russia, a country subject to restrictive measures on defense exports at the time of the violations, (2) involvement in ITAR-regulated activities while ineligible, and (3) failure to maintain and produce records.

State notes that the consent agreement reflects the company’s cooperation, including submitting a voluntary disclosure that included a third-party audit report identifying various export violations. However, other violations were not disclosed.

For more information on export penalties and how to avoid or remediate them, please contact attorney Kristine Pirnia via email.

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