On February 29, the Boeing Company announced a $51 million settlement with the Department of State, Directorate of Defense Trade Controls (DDTC) for numerous violations of the Arms Export Control Act and the International Traffic in Arms Regulations (ITAR). Boeing's settlement marks one of the largest civil fines issued against a U.S. company by DDTC.
In its charging letter, DDTC identified 199 violations involving unauthorized exports of defense articles and technical data controlled under the United States Munitions List (USML) to non-U.S. persons employed by Boeing, including unauthorized exports to Russia and China. Certain of these unauthorized exports involved Significant Military Equipment (SME), which typically receives stricter scrutiny before the Department will approve its export.
DDTC noted multiple aggravating factors considered in issuing this historic penalty, including harm to U.S. national security. Of note, the violations described in the charging letter were voluntarily disclosed to DDTC by Boeing in 24 separate submissions between 2017 and 2022. The settlement illustrates DDTC's commitment to holding companies responsible for violations of U.S. export control laws even when those apparent violations are voluntarily disclosed to the Department.
In the consent agreement, Boeing agreed to intensive improvements to its existing export compliance procedures and to hire a special compliance officer, approved by DDTC, to oversee its overall export compliance program.
Boeing's violations demonstrate the complexities of U.S. export control laws and serve as a reminder to U.S. companies dealing in controlled articles and technologies. For those who employ foreign persons, appropriate authorizations must be obtained when sharing sensitive data and technology, whether those employees are located abroad or within the United States.
Through this settlement, DDTC also highlighted the need for U.S. companies to implement appropriate export control compliance plans and procedures. Spending the time and resources now to ensure these safeguards exist will save companies in the long-term.
Export control laws and regulations are constantly evolving. It is imperative that companies dealing in controlled items and technologies remain abreast of these changes and maintain robust compliance policies and procedures to avoid the steep penalties which may result from violations.
Buchanan's international trade and national security team is well equipped to assist you in navigating through and ensuring compliance with U.S. export control laws.
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