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COMPLIANCE

Regulation Compliance

Trading defense articles is strictly controlled by the governing authorities. The two main laws that affect the manufacturing, sales and distribution of technology are the International Traffic in Arms Regulations (ITAR) and the Export Administration Regulations (EAR). The core purpose of the regulations is to prevent the transfer of sensitive information that can be exploited to undermine peace to the wrong hands. Hence, those laws set heavy penalties, both in civil and criminal. Failure to comply with ITAR can result in civil fines as high as $500,000 per violation, while criminal penalties include fines of up to $1,000,000 and 10 years imprisonment per violation. Under EAR, maximum civil fines can reach $250,000 per violation. Criminal penalties can be as high as $1,000,000 and 20 years imprisonment per violation.

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A brief synopsis of the differences, and the similarities for that matter, of two regulations can be as followings:

ITAR (22 CFR 120-130)

  • Regulates military items and defense articles based on the United States Munitions List (USML)

  • Regulates goods and technology designed to kill or defend against death in a military setting

  • Governed by strict regulatory licensing

  • Includes space related technology because of application to missile technology

  • Includes technical data and services related to defense articles

EAR (15 CFR 730-774)

  • Covers items designed for commercial use that, nonetheless, could have military application based on the Commerce Control List (CCL)

  • Covers both the goods and the technology, such as computers and software

  • Licensing addresses competing interests and foreign availability

  • Combines commercial and research objectives with national security

REGISTERED AS AN EXPORTER / BROKER AT DDTC

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Rapid Networks can walk you through the maze of regulations, so you can focus on your core strength of business.

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