The United States Munitions List or "USML" specifies what products and services are considered strategically important to the nation's military and defense operations.
Those that make the list are carefully regulated to prevent their becoming widely available outside of the country. ITAR compliance ensures producers of such goods and services can legally conduct business without risking government intervention and legal and financial consequences.
We'll dive into ITAR and how compliance works in greater detail below.
- What is ITAR?
- How ITAR Compliance Works
- Best Practices for ITAR Compliance
- Frequently Asked Questions (FAQs)
What is ITAR?
Photo by Lucas Sankey on Unsplash
ITAR stands for "International Traffic in Arms Regulations," a set of laws intended to preserve strategic advantages in technology within the US. These regulations govern the import and export of weapons as well as defense-related products and services.
More specifically, ITAR compliance deals specifically with weapons and defense items, while other regulations target strategically significant products.
ITAR-compliant companies must register directly with the State Department's Directorate of Defense Trade Controls (DDTC), which governs their trade activity from then on.
Anything on the United States Munitions List requires clearance from the State Department before it can be sold or marketed. ITAR compliance makes it possible for companies to produce such restricted products and services without breaking the law.
Perhaps not surprisingly, the rules for ITAR compliance are not set in stone. The USML changes regularly, and new rules are introduced as needed.
For example, new rules established for the use of data connected to items on the USML were established in 2020, shifting responsibilities pertaining to cloud storage.
Modern firms offering products and services covered by the USML must stay abreast of the ITAR compliance expectations to avoid serious repercussions, even where mere data is concerned.
How ITAR Compliance Works
The ITAR works alongside a few additional export control laws, including the Export Administration Regulations (EAR) and the US Sanctions Laws.
Here are the main concepts you should know to understand how ITAR compliance distinguishes itself from the compliance requirements for other laws:
Restricted products are categorized
Categories exist on the USML for the types of products and services that require ITAR compliance. These range from literal weapons and explosives to training processes, electronics, and chemicals.
There is considerable overlap between some categories and more commercial products. However, companies attempting to sell such items without complying with ITAR guidelines invite heavy fines and serious prison sentences for the individuals involved.
Image by Gerd Altmann from Pixabay
Data counts too
A common misconception about ITAR compliance is that only the actual product or service is regulated. Unfortunately, this is not the case.
Everything associated with the creation of an item on the list should be considered illegal to market without express permission from the DDTC. This includes data used with, by, or for the listed item.
Here are a few examples of ITAR violations involving data:
- Foreign communications - Having a conversation about technical details regarding your ITAR-controlled product or service with a foreigner, even in the US, is deemed an "export" of technical data.
- Physical shipping to foreigners - Shipping a manual for your product or service to a foreigner, even in the US, constitutes "exporting" technical data.
- Electronic transmissions to foreigners - Sending technical data for your ITAR-controlled product or service to a foreigner via email or any other electronic means also qualifies as an "export" of that data.
Everything counts
As mentioned above, everything associated with an ITAR-controlled item should be considered illegal to market or sell without express permission from the DDTC.
This makes tangential actions, such as providing services for an item on the USML for a foreigner, illegal as well. Foreign installations, consulting, etc., for such an item would all qualify as violations of the ITAR without prior permission.
Similarly, the custom components used to create a given product are also restricted.
For more information about this, check out the following video:
Best Practices for ITAR Compliance
Register with the DDTC
To achieve compliance, your organization is required to register with the DDTC and renew its registration every year (60+ days before the expiration date).
Request authorization every time
When it comes to ITAR, it’s best to err on the side of caution, as violations can incur million-dollar fines and up to 20 years in prison. Always request authorization from the DDTC before engaging in any transaction involving an item on the USML.
Monitor and encrypt cloud-based data transfers
Monitoring the whole of your network, whether on-premises, in the cloud, or somewhere in between, is essential for achieving full ITAR compliance.
This means keeping track of information concerning your ITAR-controlled product or service and preventing illegal exposure.
The State Department's amendment to the ITAR in 2020 gives organizations a bit of wiggle room in this area, allowing some forms of technical data to be shared with foreigners so long as end-to-end encryption is used.
Protecting your company from liability in the event of an accidental or malicious export of ITAR-controlled data is best achieved through strict policy implementation at every level of operations.
Implementing data loss protection solutions across your network is one of the most effective ways to block unwanted usage of classified information. Contact Digital Guardian today to learn more about how our data loss prevention solution can help your organization remain compliant—and potentially save money in the process.
