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Penalties for export control violations can be a bump in the road for stateside exporters. Certain exports from the USA are strictly regulated. Mistakes in export control compliance can lead to some serious consequences. From hefty fines to damaging your business’s reputation, the risks are real.
The U.S. Department of Commerce assesses penalties for export control violations, which can include severe fines, license revocations, and even imprisonment. These consequences exist to encourage adherence to ITAR and EAR regulations, which are essential for lawful international trade.
Join us as we review these penalties in greater detail and explain best practices for avoiding them.
Export control violations happen when someone breaks the rules about sending goods or technology out of the U.S.
Violations can be purposeful (a deliberate attempt to circumvent a fee) or accidental. It sounds complicated, but it’s a simple matter of making sure sensitive goods are controlled for national security.
Here are some common ways people violate export controls.
These mistakes can be big or small, but either way, they can lead to serious trouble, including fines and censures.
To begin, let’s look at some hypothetical examples of export control violations. In doing so, you’ll see how easy they can be to commit, even when not on purpose.
In the United States, export control violations can be broken down into two types. They are:
EAR is governed by the U.S. Department of Commerce’s Bureau of Industry and Security (BIS). Meanwhile, ITAR is overseen by the Department of State’s Directorate of Defense Trade Controls (DDTC).
Before we describe how each of these export control laws might be violated, let’s examine each in greater detail.
Get more details about export controls basics here.
Overseen by the U.S. Department of Commerce, EAR governs commercial products that have potential military uses. These are called dual-use items. They can include anything from computers to sensors and toxins.
EAR is intended to improve national security for citizens of the United States and importers around the world.
Let’s say there’s a U.S. firm that develops high-tech encryption software. They sell this software to a PC repair company in another country. The firm fails to first obtain the necessary EAR license.
This scenario is an EAR violation. It involves exporting a dual-use item to a sanctioned destination without the proper permission.
Violating EAR can have significant repercussions. These regulations ensure that goods and technology that could have military applications don’t fall into the wrong hands.
Here’s a rundown of the common penalties faced for violating EAR.
The U.S. takes EAR violations seriously due to the danger they pose to national security. While the regulations cover a broad range of items, the penalties for violating export control laws change based on the nature of the violation.
EAR covers commodities with potential military applications. Similarly, ITAR governs items which are specifically designed for military use.
ITAR control the export of defense-related articles and services. Managed by the U.S. State Department, ITAR prevents dangerous military technology and weapons from reaching enemies of the U.S.
Businesses who export military equipment must follow these regulations.
ITAR covers a wide range of products and services, mostly related to defense and military applications. Here are some examples:
ITAR compliance is not limited to physical items such as guns and vehicles. It also includes technical data, blueprints, and services related to these items. Let’s highlight this by taking a look at how an ITAR violation might appear.
Imagine a company in the U.S. manufactures advanced military-grade GPS systems. One of their employees emails detailed specifications of these systems to a contact in a foreign defense department. They do so without the proper licensing or certification.
This is an ITAR violation, as it involves the unauthorized transfer of defense-related information to a foreign entity. Companies dealing with any of these products or services must follow ITAR to avoid severe penalties.
ITAR violations result in similar penalties to EAR violations: fines and possible jail time. However, since ITAR governs military equipment, the severity of those punishments is higher.
| Penalty Type | Monetary Fines | Prison Time |
| Civil Fines | Up to $500,000 | n/a |
| Criminal Penalties | Up to $1,000,000 | Up to ten years |
Source: research.utk.edu
With national safety on the line, it’s easy to see why fines and penalties for ITAR violations can be so stiff. To avoid these and EAR violations, preparation is key. You’ll need a compliance checklist, among other strategies, to avoid mistakes while exporting.
As mentioned above, failure to comply can lead to serious penalties from ITAR and EAR violations. Following the steps below can help your business steer clear of violations during the export process:
These steps can help you reduce your risk of violating export controls. Understanding them and having effective compliance measures are key to a smooth, lawful export process.
Find more details about creating an ITAR or EAR compliance program.
While the penalties for violating export controls are considerable, they don’t have to stop you from doing business. With the right export partner, you can avoid these penalties and ship with confidence.
At Cargo Export USA, our team of brokers has decades of combined experience assisting exporters based in the U.S.
Look to us for help with all aspects of the export process, including:
Don’t let fines and penalties from export violations ruin your business. Call our expert team at (866) 301-0635 or connect with us online. We’re ready to help you steer around export control violations on your path to success.
