ITAR, or the International Traffic in Arms Regulations, is a set of strict rules and requirements governing the export and import of defense-related items and information. If your company handles defense-related materials, especially in highly regulated industries like aerospace and manufacturing, maintaining ITAR compliance is critical. After all, non-compliance can result in penalties of up to $1 million per violation.
Still, the requirements can be complex, from managing sensitive data to ensuring proper documentation during inspections. This guide will explain to you how ITAR compliance works, along with best practices so you can make it an essential part of your workflow and stay ahead of regulations.
What is ITAR compliance?
The United States International Traffic in Arms Regulations (ITAR) cover all American military products – everything from firearms and ammunition to military vehicles, such as tanks and naval vessels. ITAR covers missiles, military satellites, and chemical, biological, and nuclear weapons. If a product is on the United States Munitions List (USML), it is subject to ITAR. And it’s not just the physical products – the USML also includes all software, technical data, training, and other services. Everyone involved needs to follow ITAR compliance requirements to ensure that these products remain secure and don’t fall into the wrong hands.
Using an ITAR compliance checklist is an efficient and time-saving way to check and monitor whether requirements are being met. A regular assessment of the current status helps to identify problems in the system at an early stage and to eliminate causes. In addition, by involving employees in the process, awareness of the importance of compliance with ITAR regulations can be raised.
Does my company need ITAR compliance?
If your company is involved in the manufacture, export, import, or brokering of American military articles and/or services, it is subject to ITAR and needs an ITAR compliance checklist. You’ll also need to register with the U.S. Department of State Directorate of Defense Trade Controls (DDTC) and apply for the necessary licenses. Even if you only manufacture military products inside the U.S., you still need to register.
Here’s a quick overview of who needs compliance:
If you’re not sure if your products or services are on the USML, you can submit a Commodity Jurisdiction Request to the State Department and they’ll tell you. Keep in mind that all information associated with a product on the USML is covered by ITAR. For instance, any drawings, algorithms, specification sheets, and manuals, as well as any information on the design, manufacture, or use of the product, would be included.
The ITAR and the USML change from time to time, too, so it’s a good idea to go over your ITAR compliance audit checklist regularly. This is not something you can forget about once you’ve set up your company. Fulfilling ITAR compliance requirements requires continuous oversight.
What counts as export under ITAR?
“Export” doesn’t just mean sending products overseas. The State Department counts all the of the following as exporting information about a product – and this is by no means a complete list:
- Giving a speech about it in a foreign country or in the presence of a foreign national
- Having a private face-to-face conversation about it with a foreign national
- Discussing it with a foreign national via email, fax, phone call, or internet
- Carrying it with you into a foreign country, even if you don’t share it with anyone
- Allowing a foreign national who is working for you access to it
- Performing services on a USML item for a foreign party or in a foreign country
A foreign national is any non-citizen of the US who doesn’t have permanent resident alien status (a green card).
The ITAR compliance requirements
An ITAR compliance audit checklist will help make sure you follow the DDTC Compliance Program Guidelines. First of all, you would need to appoint someone within your company (or a whole department) who will be responsible for fulfilling ITAR compliance requirements. They’d supervise, record, and implement things such as…
Corporate structures, policies, and personnel involved in maintaining compliance
Management needs to give full support to the ITAR compliance program to allow it to succeed.
Methods used to track ITAR-controlled information and products
You’ll need to keep a complete record of all ITAR-related activities for at least 5 years (9 years in some cases).
Staff training in ITAR requirements, ensuring they’re kept up to date on any changes
All of your staff need to know what is required of them and what to expect. And they should understand the importance of maintaining compliance and what could happen if things go wrong. They’ll also need a good interpretation of what changes to the laws or licensing requirements will mean for them on a day-to-day level. Training should cover all your staff and consultants, including people in traffic, marketing, contracts, security, legal, public relations, and engineering departments. Your office administration and cleaning staff should be included as well.
Security screenings
All personnel who might gain access to ITAR-associated information will need a thorough screening. The compliance administrator will also need to ensure that your customers and carriers are screened, as well as the countries you’re dealing with. You’d also need risk assessments to make sure all transfer and storage procedures remain secure.
How your products will ultimately be used and who will use them
Who are your end users? And who are they sharing your products or information with?
Performance of regular audits
Your compliance administrator would be responsible for performing regular audits, perhaps with the assistance of an ITAR compliance audit checklist, to make sure that your compliance program remains effective.
Reporting procedures
You’d need effective reporting procedures to make sure compliance is constantly maintained. Your people should know what suspicious behavior looks like and exactly what to do if they see anything. An ITAR compliance checklist might be helpful here.
What can happen if I don’t follow ITAR compliance requirements?
An ITAR compliance checklist can help you avoid the penalties for violating ITAR. These can include the following:
- A fine of up to $1,000,000 and up 20 years imprisonment for each violation
- Debarment from performing contracts with the U.S. government
- Loss of export privileges
- Seizure of assets and goods
- Publication of your violation by the U.S. government, which can ruin your reputation
If you find that you’ve been in violation of ITAR compliance requirements, you can do a voluntary disclosure to the State Department. You’d tell them about the violation and, most importantly, how you intend to ensure it never happens again. If you make a convincing case they might decide not to penalize you, or at least reduce your penalty.
Best practices for ITAR compliance
Maintaining ITAR compliance can be complex, but you can follow these key best practices:
Develop a comprehensive ITAR compliance program
The foundation of any successful ITAR strategy is a well-documented compliance program.
This includes clear, detailed guidelines for handling defense-related items and information. You’ll need to define the specific steps your team must take at each stage, from procurement and storage to export and disposal. These processes should then be documented in a compliance manual for consistency across your organization.
Your ITAR compliance program should also define the roles and responsibilities of key team members. It’s recommended to assign a dedicated compliance officer to oversee the program since this centralizes responsibility. The compliance officer can be responsible for conducting regular internal assessments, updating the compliance manual as regulations evolve, and serving as the main point of contact for all ITAR-related matters.
Provide proper training to employees
Your staff plays a direct role in managing sensitive information and materials, so they need to fully understand the importance of ITAR and how it affects their daily work. Regular training should include:
- An overview of ITAR regulations and the penalties for non-compliance
- Specific procedures for handling ITAR materials
- Proper labeling and storage requirements
- Access control protocols so only authorized personnel can handle ITAR materials
- Reporting procedures for possible violations
You can also offer refresher courses to keep your team up-to-date on any changes to ITAR regulations or your internal compliance policies. This could be quarterly or semi-annual training sessions or online modules.
Implement strong data management systems
With ITAR regulations becoming more stringent, protecting sensitive information is top priority. Your data management systems should be secure, with access controls based on roles and responsibilities. All of your systems must be equipped with encryption and multi-factor authentication. Even if unauthorized access is attempted, the sensitive information remains unreadable and protected them,
Thorough logging and auditing capabilities are also essential. Your data management systems should meticulously track all access, modifications, and downloads related to ITAR materials. This provides a clear audit trail that you can review later on.
Conduct internal audits
With regular internal audits, your organization can identify any weaknesses or gaps in your compliance program and make necessary changes before they lead to violations. You can use a detailed ITAR compliance audit checklist that covers all aspects of your program, from employee training to data management protocols.
During the audit, carefully inspect all ITAR-related records, including training logs, export documentation, and inventory reports. Look for any gaps or questionable entries. Aside from reviewing documents, observe your team’s workflows in action too.