ITAR compliance: a checklist

The International Traffic in Arms Regulations (ITAR) is a set of U.S. government regulations that control the export and import of defense-related articles and services. These regulations are administered by the U.S. Department of State's Directorate of Defense Trade Controls (DDTC). ITAR aims to protect U.S. national security interests by restricting the transfer of sensitive military technology to foreign entities.

ITAR covers items listed on the U.S. Munitions List (USML), which includes everything from firearms and ammunition to spacecraft and advanced electronics with military applications. The regulations require companies and individuals to obtain proper licenses before exporting, importing, or even sharing technical data related to defense articles with foreign persons. Violations can occur even when sharing information verbally or electronically with non-U.S. citizens, including foreign nationals working within the United States.

Non-compliance with ITAR can result in severe penalties, including substantial fines, imprisonment, and loss of export privileges. Companies must implement comprehensive compliance programs, conduct regular training, and maintain detailed records of all defense-related activities. The regulations also require careful screening of employees and business partners to ensure that sensitive information is only shared with authorized U.S. persons or properly licensed foreign entities.

ITAR compliance steps

Begin by conducting a thorough assessment to determine if your organization handles defense articles, services, or technical data listed on the U.S. Munitions List (USML). This involves reviewing all products, services, and information your company produces, imports, exports, or provides access to. Any items falling under the 21 USML categories require ITAR compliance measures. Establish clear procedures for evaluating new products or services to determine their ITAR status before they enter your operations.

Register with the Department of State's Directorate of Defense Trade Controls (DDTC) if your organization manufactures, exports, or brokers defense articles. This registration must be renewed annually and serves as a prerequisite for obtaining any export licenses or authorizations. Implement robust access controls to ensure only "U.S. persons" (citizens, permanent residents, asylees, or U.S. incorporated entities) can access ITAR-controlled items without proper authorization. Develop comprehensive policies for handling foreign national employees, visitors, or contractors who may require access to controlled information.

Establish a formal export authorization process that requires approval from the Department of State before sharing ITAR-controlled items with foreign persons. This includes obtaining appropriate licenses (DSP-5), technical assistance agreements (TAA), manufacturing license agreements (MLA), or Foreign Military Sales (FMS) authorizations depending on the type of export. Create detailed procedures for documenting all transfers and maintaining records of authorizations, ensuring compliance with retransfer restrictions that prevent foreign recipients from sharing items with unauthorized third parties.

Implement ongoing compliance monitoring through regular training programs, internal audits, and clear escalation procedures for potential violations. Establish secure storage and handling procedures for ITAR-controlled materials, including physical and cybersecurity measures. Develop incident response protocols and maintain relationships with legal counsel experienced in ITAR matters to address compliance issues promptly and effectively.

ITAR compliance checklist:

• Conduct USML Classification Review - Example: A software company reviews their drone control algorithms against USML Category VIII (aircraft systems) and determines the flight control software requires ITAR compliance measures

• Complete DDTC Registration - Example: A defense contractor manufacturing rifle scopes submits Form DS-2032 with the $2,250 annual fee and maintains current registration status for export eligibility

• Implement U.S. Person Access Controls - Example: A company restricts access to missile guidance technical data to U.S. citizens only, requiring foreign engineers to work on non-ITAR projects until proper authorizations are obtained

• Establish Export Authorization Procedures - Example: Before sharing night vision technology specifications with a Canadian partner, the company obtains a Technical Assistance Agreement (TAA) specifically naming all authorized Canadian personnel

• Create Foreign National Screening Process - Example: A defense manufacturer implements background verification for all visitors and contractors, maintaining a visitor log that tracks foreign nationals' access to facilities and ensures they only enter non-ITAR areas

• Develop Secure Storage and Handling Protocols - Example: ITAR technical drawings are stored in locked cabinets within access-controlled rooms, with digital files encrypted and stored on networks isolated from general business systems

• Maintain Comprehensive Documentation - Example: The company keeps detailed records of all DSP-5 export licenses, tracking which specific items were shipped to which authorized recipients, with retention periods meeting regulatory requirements

• Implement Regular Training and Auditing - Example: All employees receive annual ITAR training with role-specific modules, while compliance officers conduct quarterly audits of export documentation and access logs to identify potential violations

Common challenges

Organizations face significant challenges in correctly classifying defense articles and technical data under ITAR regulations. The United States Munitions List (USML) contains 21 complex categories covering everything from firearms to spacecraft, with intricate subcategories that can overlap or change over time. Determining whether specific items, components, or technical information fall under ITAR jurisdiction requires specialized expertise, as misclassification can result in severe penalties even when violations are unintentional.

Managing personnel access and authorization presents another major compliance challenge for organizations working with ITAR-controlled items. Companies must carefully track which employees can access defense articles and technical data, ensuring that only "U.S. persons" have access unless specific export authorizations are obtained. The complexity increases dramatically when dealing with dual nationals or third country nationals, as organizations must secure explicit authorization for each individual's access and maintain detailed records of who has been exposed to controlled information.

Export authorization and licensing procedures create substantial operational difficulties for organizations engaged in international defense trade. Companies must navigate multiple types of authorizations including export licenses (DSP-5), Technical Assistance Agreements (TAA), and Manufacturing License Agreements (MLA), each with specific requirements and lengthy approval processes. The prohibition on retransfer means organizations must also ensure that all downstream recipients are properly authorized, requiring constant vigilance over supply chains and subcontractor relationships that can span multiple countries and jurisdictions.

Simplifying ITAR compliance with an Enterprise Browser

ITAR compliance is not only a matter of national security, but also a significant compliance obstacle, and navigating its complex requirements can be daunting. With the Island Enterprise Browser, ITAR-regulated businesses can simplify compliance by having visibility into users, devices, geo-location, data, and applications — directly through the browser. By creating secure application boundaries and embedding robust controls, Island ensures ITAR data is accessible only by US citizens and stays within continental United States (CONUS) authorized systems, reducing audit scope and risk.

Frequently asked questions

Q: Who qualifies as a "U.S. person" under ITAR regulations?

A: A "U.S. person" includes U.S. citizens, permanent residents (green card holders), individuals granted asylum, refugees, and U.S. incorporated entities. Only these individuals can access ITAR-controlled items without requiring special export authorization.

Q: Do I need to register with DDTC if my company only manufactures components that might be used in defense applications?

A: Yes, if your components are classified under any of the 21 USML categories, you must register with DDTC. This applies whether you manufacture complete defense articles or components thereof. Registration is required annually and costs $2,250.

Q: What are the penalties for ITAR violations?

A: ITAR violations can result in severe penalties including substantial fines, imprisonment, and loss of export privileges. Even unintentional violations due to misclassification or improper handling can lead to significant consequences, making compliance programs essential.

Q: Can I share ITAR-controlled technical data with foreign nationals working in my U.S. office?

A: No, sharing ITAR-controlled information with foreign nationals, even those working within the United States, constitutes an export and requires proper Department of State authorization such as a Technical Assistance Agreement (TAA) or export license.

Q: What types of export authorizations are available under ITAR?

A: Common ITAR authorizations include DSP-5 export licenses for permanent exports, Technical Assistance Agreements (TAA) for sharing technical data and services, Manufacturing License Agreements (MLA) for manufacturing abroad, and Foreign Military Sales (FMS) authorizations for government-to-government transfers.