The State Department has imposed a $51 million fine and a number of compliance-related requirements against a U.S. company to settle charges that it violated U.S. export rules.

According to State, the company filed 24 voluntary disclosures over a nearly five-year period detailing a large number of violations that fall into three broad categories: (1) unauthorized exports and retransfers of technical data to foreign-person employees and contractors, (2) unauthorized exports of defense articles, including technical data, and (3) violations of license terms, conditions, and provisos of authorizations issued by the Directorate of Defense Trade Controls.

The company has acknowledged its obligation to maintain effective export control oversight, infrastructure, resources, policies, and procedures for its activities regulated by the Arms Export Control Act and the International Traffic in Arms Regulations. Toward that end State has suspended $24 million of the penalty for three years provided that the company uses that money to implement authorized remedial compliance measures, including the following.

- implementing a comprehensive, automated export compliance system throughout company units engaged in AECA- and ITAR-regulated activities

- reviewing, verifying, and completing the export control jurisdiction of all hardware and/or software as well as defense services or technical data

- prior to export, reexport, and/or retransfer, reviewing, verifying, and completing export control jurisdiction of each hardware item (and any defense services or technical data, including software) and items procured from suppliers for which such jurisdiction was not previously and accurately determined and/or verified

- having outside consultants perform two audits of the effectiveness of the company’s remedial measures

- conducting an internal review of AECA and ITAR compliance resources and taking actions to ensure those resources are sufficient

- appointing a special compliance officer to monitor, oversee, and promote the company’s AECA and ITAR compliance

For more information on export rules and how to ensure your company is in compliance, please contact attorney Kristine Pirnia at (202) 730-4964 or via email.

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