Threatening Storms of Export Compliance Program Violations for ITAR and EAR

An ITAR/Export Compliance Program is a set of procedures that help an organization operate their export activities in accordance with the Export Administration Regulations (EAR) and International Traffic in Arms Regulations (ITAR). Although an ITAR/export compliance program is only a small part of an organization’s compliance program, it is an extremely important segment, which could lead to major issues for a company if not properly managed. Becoming registered is not enough, a detailed compliance program must be in place to prevent issues for occurring and provide a framework for a response if something does occur.

It’s no secret that the Department of Commerce is cracking down on EAR violations. Enforcement has been regular, but has hit companies hard within the last ninety days. A corporation in the Northeast has experienced 15 violations resulting in $700,000 in fines and were related to shipments that had occurred over 5 years prior to the audit. Also, levied with aforementioned fines are thorough audits of the company’s entire export controls compliance program.

Thirteen of the fifteen violations stemmed from exporting goods without licenses, as they are controlled for national security and regional stability reasons. The two additional charges were for failing to comply with EAR record-keeping requirements. In addition to the $700,000 in fines, the company has been placed on an export denial list until the fines are paid and the audit is complete with the results submitted. The company was required to hire an unaffiliated third party consultant with expertise in the U.S. export control laws to conduct the audit.

It’s extremely important for a company to not only have an Export Compliance Program, but they must effectively establish and manage the program, tailoring it to the company while maintaining compliance with ITAR/EAR. Many companies are not aware if these regulations even apply or where to get started. Ledge Inc. leverages resources with extensive export and state department backgrounds to provide guidance, training and system development for ITAR/Export Compliance Programs, which may include site security improvements, IT infrastructure enhancements, and export licensing training.

In need of assistance with developing your Corrective Action Plan or Quality Management System? Contact Ledge today for assistance.