Arms & Dual-Use Goods Regulations

The Department of State has concluded an administrative settlement with AeroVironment, Inc. (AV) of Simi Valley, California, to resolve alleged violations of the Arms Export Control Act (AECA), 22 U.S.C. § 2751 et seq., and the International Traffic in Arms Regulations (ITAR), 22 C.F.R. Parts 120-130. The Department of State and AV have reached this settlement following an extensive compliance review by the Office of Defense Trade Controls Compliance in the Department’s Bureau of Political-Military Affairs.

The Department of State and AV have reached an agreement pursuant to ITAR § 128.11 to address alleged unauthorized exports of defense articles, including technical data; the failure to properly maintain records involving ITAR-controlled transactions; and violations of the provisos, terms, and conditions of export authorizations. The settlement demonstrates the Department’s role in strengthening U.S. industry by protecting U.S.-origin defense articles, including technical data from unauthorized exports. The settlement also highlights the importance of obtaining appropriate authorization from the Department for exporting controlled articles as well as maintaining proper records of such exports.

Under the terms of the twenty-four (24) month Consent Agreement, AV will pay a civil penalty of $1,000,000. The Department has agreed to suspend $500,000 of this amount on the condition that the funds have or will be used for Department-approved Consent Agreement remedial compliance measures. AV must also hire an outside Special Compliance Officer (SCO) for a term of one year and conduct an external audit to assess and improve its compliance program during the Consent Agreement term.

AV voluntarily disclosed to the Department the alleged AECA and ITAR violations, which are resolved under this settlement. AV also acknowledged the serious nature of the alleged violations, cooperated with the Department’s review, and instituted a number of compliance program improvements during the course of the Department’s review. For these reasons, the Department has determined that it is not appropriate to administratively debar AV at this time.

The Consent Agreement and related documents will be available for public inspection in the Public Reading Room of the Department of State and on Penalties and Oversights Agreements section of the Directorate of Defense Trade Controls’ website.

For additional information, please contact the Bureau of Political-Military Affairs’ Office of Congressional and Public Affairs at pm-cpa@state.gov.

Link:

State Department Press Release

Link:

EU Notice

The U.S. Department of State has concluded an administrative settlement with L3Harris Technologies, Inc. (L3Harris) of Melbourne, Florida, to resolve alleged violations of the Arms Export Control Act (AECA), 22 U.S.C. § 2751 et seq., and the International Traffic in Arms Regulations (ITAR), 22 C.F.R. Parts 120-130.  The Department of State and L3Harris have reached this settlement following an extensive compliance review by the Office of Defense Trade Controls Compliance in the Department’s Bureau of Political-Military Affairs.

The Department of State and L3Harris have reached an agreement pursuant to ITAR § 128.11 to address alleged unauthorized exports of defense articles, including technical data involving radios; providing a false statement regarding the promised payment of a commission; violating provisos, terms, and conditions of authorizations; and failing to properly manage temporary export licenses.

The settlement demonstrates the Department’s role in strengthening U.S. industry by protecting U.S.-origin defense articles, including technical data from unauthorized exports.  The settlement also highlights the importance of obtaining appropriate authorization from the Department for exporting controlled articles.

Under the terms of the 36-month Consent Agreement, L3Harris will pay a civil penalty of $13 million.  The Department has agreed to suspend $6.5 million of this amount on the condition that the funds have or will be used for Department-approved Consent Agreement remedial compliance measures.  In addition, an external Special Compliance Officer will be engaged by L3Harris to oversee the Consent Agreement, which will also require the company to conduct two external audits of its compliance program during the Agreement term as well as implement additional compliance measures.

L3Harris voluntarily disclosed to the Department the majority of the alleged AECA and ITAR violations, which are resolved under this settlement.  L3Harris also acknowledged the serious nature of the alleged violations, cooperated with the Department’s review, and instituted a number of compliance program improvements during the course of the Department’s review.  For these reasons, the Department has determined that it is not appropriate to administratively debar L3Harris at this time.

The Consent Agreement and related documents will be available for public inspection in the Public Reading Room of the Department of State and on the Penalties and Oversights Agreements section of the Directorate of Defense Trade Controls’ website.

For additional information, please contact the Bureau of Political-Military Affairs’ Office of Congressional and Public Affairs at pm-cpa@state.gov.

Link:

State Department Press Release

Notice

Notice to exporters 2019/10: Export Control Order 2008 amended and control list updated

Published 30 June 2019

Links:

Notice to Exporters 2019/10

Export Control (Amendment) Order 2019 (SI 2019 No. 989)\

Transposition Note

Consolidated Control List

Notice

Notice to exporters 2019/05: UK company fined more than £80,000 for illegal exports

Published 3 April 2019

A little more detail would be nice, don’t you think? What were the value of the goods? How was the penalty amount derived?

Link:

Notice to exporters 2019/05

Pensioner jailed for trafficking fighter jet parts to Iran

Press Release   •   Nov 22, 2018 16:28 GMT

Alexander George

A retired company boss has been jailed for trafficking fighter jet parts to Iran in violation of Weapons of Mass Destruction controls.

Alexander George, 77, from Bristol, has been jailed for two-and-a-half years for shipping military items to Iran, including Russian MiG and US F4 Phantom parts sent through various companies and countries, following an investigation by HM Revenue and Customs (HMRC).

Two others, Paul Attwater, 65, and his 66-year-old wife Iris, both of Telford, Shropshire, were handed suspended six-month prison sentences last month for sourcing dual-use aircraft parts from the US and shipping them to George’s companies in Malaysia and Dubai, which then sent them to Iran.

The UK operates a strict licensing regime to uphold international sanctions and to ensure military equipment and dual-use items, which could be used by both the military and civilian sectors, do not fall into the wrong hands.

HMRC investigators found George was shipping the aircraft parts to Iran via companies he owned in Malaysia and Dubai. He brought in the Attwaters to try and hide the smuggling operation further and they shipped parts, including those that they knew were restricted under Weapons of Mass Destruction controls, through their company.

Simon York, Director, Fraud Investigation Service, HMRC, said:

“These three sold banned items that ended up in Iran. They didn’t care what these parts might be used for, as long as they got paid.

“This was a calculated and cynical attempt to undermine strict trade embargoes and internationally agreed controls. They knew the rules and weaved increasingly elaborate plans to stay under the radar.

“This case, and these sentences, send a clear warning to others that if you try and shift illegal goods to sanctioned and embargoed countries – we will catch you and you will face justice.”

Effective controls and enforcement on Weapons of Mass Destruction, military and dual-use goods contribute to the UK’s national security and is a priority for the UK government.

George bought the aircraft parts from the United States and sent them to his companies in Malaysia and Dubai before illegally sending them on to Iran.

But he became concerned he was being investigated and even searched the internet to find out who was wanted by the FBI, CIA and Interpol for selling aircraft parts to Iran.

George then brought in the Attwaters, who operated Pairs Aviation Ltd from Crawley, East Sussex, to act as a buffer by ordering the parts and shipping them to George’s companies in Malaysia.

A number of exports from Pairs Aviation had been blocked by early 2010 over fears the items were ending up in Iran. All three directors were warned about exporting without a licence.

George was questioned by HMRC officers at Heathrow Airport in August and December 2010 and denied he was dealing in aircraft parts. He told officers he was dealing in wheelbarrows, goggles and gloves for the construction industry.

The trio decided to add an extra layer to the supply chain in a bid to further disguise their criminal trade. They began shipping the items to Holland, in the name of a company registered in the British Virgin Islands called Wiky Global Corp, before they were sent to Malaysia and then Iran.

George and Iris Attwater were convicted of knowingly exporting controlled military or dual-use goods between February 2010 and March 2016 after a trial at Southwark Crown Court.

Paul Attwater changed his plea to guilty towards the end of the trial. The Attwaters were each sentenced to a six-month suspended prison sentence at the same court on 26 October 2018.

George was sentenced to two-and-a-half years in prison at the Old Bailey today (22 November 2018).

HMRC estimates that George made profits of more than £5 million from the illegal sales and the Attwaters made a further £500,000 profit.

Action to recover the money, under the Proceeds of Crime Act, will now follow.

Luke Dockwray, Senior Specialist Prosecutor at the Crown Prosecution Service, said:

“Alex George, Paul Attwater and Iris Attwater sold aircraft components to countries and customers they knew required a license from the government.

“Despite being warned the goods they were exporting were at risk of being used in a Weapons of Mass Destruction programme, the defendants introduced new corporate entities into the trading chain to disguise the destination of the sales, in order to continue their supply.

“The CPS worked closely with HMRC to present the complex trading chains to the jury to demonstrate the criminal activity of these defendants.”

Notes for Editors:

1.Alexander Samuel George, DOB 01/11/1941, of Catley Grove, Long Ashton, Bristol, BS41 2EF was found guilty of being knowingly concerned in the export of goods with intent to evade the prohibition or restriction on such export, contrary to section 68(2) of the Customs and Excise Management Act (1979) and; Section 34 of the Export Control Order 2008 in relation to Section 20 (2) supplies and delivery to embargoed destination. He was jailed for two-and-a-half years at the OId Bailey on 22 November 2018. He was also disqualified from being a Director for nine years.

2.Paul Robert Attwater, DOB 08/03/1953, of Ketley Park Road, Ketley, Telford, Shropshire, TF1 5BF pleaded guilty to being knowingly concerned in the export of goods with intent to evade the prohibition or restriction on such export, contrary to section 68(2) of the Customs and Excise Management Act (1979). He was handed a six-month prison sentence, suspended for 12 months, at Southwark Crown Court on 26 October 2018. He was also disqualified from being a Director for six years.

3.Iris Louise Attwater, DOB 02/10/1952, of Ketley Park Road, Ketley, Telford, Shropshire, TF1 5BF was found guilty of being knowingly concerned in the export of goods with intent to evade the prohibition or restriction on such export, contrary to section 68(2) of the Customs and Excise Management Act (1979). She was handed a six-month prison sentence, suspended for 12 months, at Southwark Crown Court on 26 October 2018. She was also disqualified from being a Director for six years.

4.The UK regime is operated by the Export Control Joint Unit, which is part of the Department for International Trade (DIT). But HMRC has responsibility for enforcing the licensing requirements with particular reference to exporting military and sensitive goods to sensitive destinations and enforcement of UN and EU sanctions. UK controls are also placed on UK nationals operating anywhere in the world and extend to certain goods that are ‘exported’ from third county to third country (the goods do not have to enter the UK).

5.Follow HMRC Press Office on Twitter @HMRCpressoffice

6.HMRC’s Flickr channel: www.flickr.com/hmrcgovuk

Issued by HM Revenue & Customs Press Office

HM Revenue & Customs (HMRC) is the UK’s tax authority.

HMRC is responsible for making sure that the money is available to fund the UK’s public services and for helping families and individuals with targeted financial support.

Link:

HMRC Notice

The Directorate of Defense Trade Controls (DDTC) notes that these changes (the US Munitions List, or USML, is part of ITAR, the International Traffic in Arms Regulations), affect a narrow range of goods that were already covered by the EAR (Export Administration Regulations). This Final Rule takes effect December 31st:

  • Effective December 31st, 2016, for articles subject previously to the EAR but now subject to the ITAR under this rule, any unshipped balance under a Department of Commerce authorization will be null and void.

  • Effective December 31st, 2016, the ITAR will regulate the reexport or retransfer of articles subject previously to the EAR but now subject to the ITAR under this rule.

Link:

Federal Register Notice