ITAR or International Traffic in Arms Regulation is mandatory compliance for companies in the United States that trade in material, information and technology related to the military and defence. This law was put in place to protect the national and international interests of the sovereign US. It also helps restrict and regulate exports that might compromise the foreign policy objectives of the country. Most believe that only those companies that are directly related to the US military and defence are affected. But the ITAR applies to a wider set of organizations.
The ITAR export compliance law affects every firm or business that potentially deals in the items listed under the USML (United States Munitions List). It also affects companies that hire overseas employees because there are restrictions on knowledge transfer set by the law. Restrictions in the defence industry make it necessary for most companies to know what ITAR is, whether they need to comply with it and how.
This article will give you a rundown of the basics of ITAR compliance and how it affects businesses. Let us get to it.
What is ITAR Compliance?
According to a definition provided by Dunlap-Stone University, ITAR compliance is mandatory for companies involved in the manufacture, sale or distribution of goods and services mentioned in the USML. It also covers organizations related to companies that work with USML listed goods.
The law stipulates that such companies must be registered with the State Department’s Directorate of Defence Trade Controls. They should be compliant with all the provisions found in the Arms Export Control Act.
Simply put, the compliance restricts companies from sharing potentially sensitive data and tech-related to the US military in any manner with entities that do not have special permission from the US government.
Anyone found in violation of this law is liable to pay a hefty fine of over a million dollars per infraction. High-level executives in the company can also be imprisoned for up to 20 years if found to breach the law. This law is implemented very strictly in the United States. In 2019, an engineer was arrested when found travelling abroad with his work laptop that contained sensitive data listed on the USML.
What is the USML?
The United States Munitions List is an extensive document covering 21 categories of defence articles related to the ITAR. It includes military equipment and covers systems, technical data, services, components, and accessories. These items can be categorized as follows.
Personal protective equipment
Toxicological, chemical and biological agents
Explosives and related materials
All types of armaments
Military training materials
Guidance equipment and data
Nuclear weapons and associated materials
Any other items listed and deemed inappropriate
Who must be ITAR compliant?
One of the most popular misconceptions prevalent in the industry is that only companies related to the defence industry or government need to follow ITAR. This statement in itself is incomplete. As mentioned in the definition, organizations even remotely connected to the goods and services listed in the USML should be compliant. These organizations can include:
Computer software and hardware vendors
Import and export companies
Private research labs
Defence industry contractors and subcontractors
How to ensure ITAR compliance?
ITAR compliance is mandatory and must not be overlooked. While relevant information is available on the US Department of State’s website, here are a few tips that can be helpful.
Read and understand the USML and ITAR compliance guidelines clearly. Reclassify all your data into categories that fall under the scope of USML.
Implement strict background checks and screens to vet the integrity of consignees, end-users and export parties.
Implement a robust security and compliance program that covers all bases. Ensure all the listed policies are strictly followed.
Design and implement an awareness program for your employees. Train them to be thorough with their compliance with all the company’s security policies.
ITAR compliance can be complicated. It requires a solid security and data protection protocol. It is always advisable to work with an expert to identify vulnerabilities in your security system that may expose you. Any exposure puts you at risk of non-compliance, making you liable for hefty fines. Working with a top-notch penetration testing agency such as Packetlabs can help you detect vulnerabilities and weaknesses to mitigate them promptly.