Minimize Liability With ECCN Arms Export Control Act of 1976 and ITAR International Trade Regulations 22 USC 2778
Engaging in the export of arms to foreign countries carry a significant liability to companies that are not aware of International Traffic in Arms Regulations (ITAR/ITARS) and the Arms Export Control Act of 1976 (AECA) or AECA Title 22 USC 2778.
The Department of Commerce and other criminal enforcement agencies have increased oversight and are targeting companies that are subject to the AECA and other international trade regulations.
Given the amount of exposure and even criminal liability for failure to follow ECCN and ITAR certification requirements, import export companies should make sure that executives and participants are trained about the liability that can attach.
- Criminal indictments and convictions can ruin your company’s reputation.
Sample of ITAR Violations
- On May 23, 2017, two defendants were arrested in Washington, D.C., three in the Southern District of Texas, and one in the District of Massachusetts. All are charged in the U.S. District Court for the District of Columbia with conspiracy to commit theft of trade secrets. The maximum penalty for a person convicted of conspiring to commit theft of trade secrets is 10 years in prison and potential financial penalties. The maximum statutory sentence is prescribed by Congress and is provided here for informational purposes. If convicted of any offense, the sentencing of the defendant will be determined by the court based on the advisory Sentencing Guidelines and other statutory factors. The charges in a criminal complaint are merely allegations, and every defendant is presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law. Read more here.
- Mark Komoroski, age 54, of Nanticoke, Pennsylvania, was indicted on May 10, 2017, for violating federal export laws and unlawfully possessing ammunition as a previously convicted felon. The maximum penalty under federal law is 20 years of imprisonment for the offenses, 10 years of imprisonment for the ammunition offense, a term of supervised release following imprisonment, and a fine. Read more here.
The Act, 22 USC 2778, regulates the export of “defense articles” such as ammunition and can expose a corporation to criminal liability if anyone is found to “willfully” violate ECCN and EAR99 requirements. See example of a case where an individual was convicted under the law for attempting to export small-arms ammunition to Jordan without a control license.
Be Prepared for Increased ECCN ITAR Oversight on International Trade
The federal government has increased International Trade enforcement control for large, mid-size and small companies that work in defense services or related technical data.
Import Export companies must make sure that their business practices and global supply chains are ITAR compliant. Read more about ITAR compliance here.
If your clients do not meet the key ECCN requirements, it can bring you under scrutiny for unknowingly violating strict provisions of ITAR. Having the right international trade guidance on your team can make or break your company’s future.
Arms Export Control Act ITAR Violations Under 22 USC 2778 and 2279
- Any person who willfully:
- Violates any provision of section 38 or section 39 of the Arms Export Controls Act of 1976 (22 USC 2778 and 2779), or any undertaking specifically required by part 124 of this subchapter; or
- In a registration, license application or report required by section 38 or section 39 of the Act (22 USC 2278 and 2779) or by any rule or regulation issued under either section, makes any untrue statement of a material fact or omits a material fact required to be stated or necessary to make the statements not misleading, shall, upon conviction, be subject to:
- Fines for each violation not more than $1,000,000; or
- Imprisoned for not more than 20 years;
- Or both.https://www.pmddtc.state.gov/regulations_laws/aeca.html
Read more about Import Export Controls Compliance and Regulations and Certification.
How Do Courts Look at the Legal Elements for ITAR Criminal Liability? Courts generally will not get into each party’s interpretation of what makes up a criminal violation of International Trade or the AECA.
Courts have ruled that some knowledge of an illegality is necessary to satisfy the willfulness requirement. However, courts are undecided as to the what knowledge level is required.
The best way to understand the willfulness requirement in the Arms Export Control Act is to look at the statutory interpretation because “determining the mental state required for commission of a federal crime requires…inference of [Congress’s intent].” See Staples v. United States, 511 US 600, 605 (1994).
- Willfulness under the Arms Export Control Act of 1976 requires only general knowledge of illegality.
- If companies seek to defend a conviction by arguing specific knowledge, the case can turn out to be a disaster.