Background

A U.S. company will pay a $13 million civil penalty and make improvements to its export compliance program as part of an agreement settling allegations of unauthorized defense exports.

According to a State Department press release, the company was charged with unauthorized exports and retransfers to and/or within Canada, Ireland, Mexico, China, and Taiwan of technical data controlled under the International Traffic in Arms Regulations. This data contained engineering prints showing dimensions, geometries, and layouts for manufacturing castings and finished parts for multiple aircraft, gas turbine engines, and military electronics.

Under a 36-month consent agreement, State will suspend $5 million of the penalty so those funds can be used for remedial measures to strengthen the company’s compliance program. The company will engage an external special compliance officer for at least 18 months and conduct an external audit of its compliance program. The company also agreed to implement a comprehensive automated export compliance system, institute strengthened corporate export compliance procedures within ten months, and enhance its Arms Export Control Act and ITAR compliance program.

State notes that it is not administrative debarring the company at this time because it voluntarily disclosed the alleged violations, acknowledged their serious nature, cooperated with the department’s review, and made a number of compliance program improvements.

For more information on ensuring that your company complies with applicable export controls, please contact attorney Kristine Pirnia via email.

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