Securiti leads GigaOm's DSPM Vendor Evaluation with top ratings across technical capabilities & business value.

View

ITAR Violations: Types, Examples & Consequences

Contributors

Anas Baig

Product Marketing Manager at Securiti

Adeel Hasan

Sr. Data Privacy Analyst at Securiti

CIPM, CIPP/Canada

Listen to the content

This post is also available in: Brazilian Portuguese

In the international arms trade world, doing business as a defense contractor, broker, or even a supply chain service provider is like walking a tightrope. Just one misstep and you’ll find yourself in steep monetary fines, loss of business, or in the worst case scenario, imprisonment. Unfortunately, International Traffic in Arms Regulations (ITAR) violations are all too real for entities that end up with a breach of the provisions of the regulation. Take, for instance, the ITAR brokering violation case in 2022.

A Chinese US businessman was fined with imprisonment for violating the Brokering Regulation under ITAR Part 129. The offender operated as a broker for exporting defense-related items on the US Munitions List (USML) without registering as a broker with the State Department or obtaining a valid license - a condition under the ITAR Brokering Regulation for entities engaged in brokering activities.

In our previous blog, ITAR Compliance & ITAR Compliance Checklist, we’ve discussed the ITAR challenges, the primary responsibilities of the controllers, and best practices in great detail. This blog will focus on the various types of ITAR violations and the fatal consequences for businesses dealing in defense-related military goods and services.

Who Should Comply - An Overview

Our previous blog, ITAR Compliance, extensively discussed the entities that must follow ITAR regulations. To summarize, ITAR applies to entities that deal in defense-related military goods, services, and documentation. For instance, ITAR applies to defense item manufacturers, exporters, brokers, distributors, contractors, third-party suppliers, and even defense-related hardware or software providers.

As a basic yet important rule, the entity must be a US person, which according to 22 CFR § 120.62, is someone:

who is a lawful permanent resident as defined by 8 U.S.C. 1101(a)(20), or who is a protected individual as defined by 8 U.S.C. 1324b(a)(3). It also means any corporation, business association, partnership, society, trust, or any other entity, organization, or group that is incorporated to do business in the United States. It also includes any governmental (Federal, state, or local) entity. It does not include any foreign person as defined in § 120.63.

The United States Munitions List (USML) catalogs all 21 categories of military items, services, and documents that are subject to ITAR. If a defense-related item isn’t listed in the USML, then it is highly likely that it is subject to Export Administration Regulation (EAR).

5 Common Types of ITAR Violations

ITAR is a comprehensive regulation on the trade, export, or import of military gear, items, weapons, or related technical data. However, no matter the strictness of the regulation, violations are bound to happen in one way or another. You could be in steep fines and penalties if you are not careful or knowledgeable of ITAR violations. Let’s take a look at some of the common types of violations under ITAR.

1. Accidental Violations

It is imperative that entities dealing in military-grade products and services properly train their employees regarding ITAR compliance obligations. In fact, organizations must ensure that their operations and processes are aligned with the regulatory guidelines. But no matter how careful one could be, accidental violations are bound to happen.

Suppose that an appliance manufacturer deals in producing appliances for both domestic and military purposes and asks one of its engineers to create a domestic product. However, due to some misunderstandings or technical mishaps, the engineer integrates military-related data into the domestic product. Ultimately, the manufacturer exports the finished product outside the US.

Unbeknownst to them, this export of a product with defense-related technical data is a breach of ITAR. Even though the violation is accidental, it carries serious consequences.

2. Willful Failure to Comply

An Accidental breach can happen to anyone for several reasons, such as lack of due diligence or supervision, etc. However, in some cases, some businesses knowingly do not adhere to the regulations due to many reasons. For instance, an exporter might want to ditch the red tape or the demanding registration and licensing processes. Some businesses do not want to spend on adequate security measures. And in rare cases, the perpetrator may have a malicious intention to cause harm to the country.

Regardless of the reasons, willful failure to comply has dire consequences, as seen in the Chinese US businessman case we discussed earlier.

3. Failure to Register Or Obtain License

The manufacturing, brokering, exporting, temporary importing, and even distribution of military-related items, products, or services is prohibited without proper registration and prior approval or licensing. The business must first register with the Department of State, Directorate of Defense Trade Controls (DDTC) and get approvals for processing and export before transferring the product or its technical data to any foreign country.

4. Omission of Facts in Documents

Some companies intentionally omit factual information to get around ITAR compliance. This omission of facts can have dire consequences, which may lead to incarceration. Suppose that a manufacturer receives a bulk manufacturing order of military equipment from another company. However, the other company is in a country or region where the US bans the export, import, or distribution of their military-related items. To get around this problem, the manufacturer shows in its report that the customer resides in a country that is not subject to the US embargo. Such omission of facts is detrimental to the manufacturer and the US.

5. Hire Foreign Employees

There are many reasons why hiring foreign employees in companies that deal with military-related items can affect ITAR compliance. For starters, 22 CFR § 120.62 clearly indicates that the person or entity must be a US person to access, export, or import ITAR data. For ITAR compliance, an entity must have a robust compliance program, including employee background checks, training, etc.

Dreadful Consequences of ITAR Violations

It is important to note that non-compliance with the ITAR may have serious consequences for individuals and entities that deal with defense-related goods and services.

Civil Penalties

Entities and individuals alike that violate any provision of ITAR are subject to civil fines and penalties. These fines may range up to 1.2 million dollars in violation.

Criminal Penalties

Similarly, some violations are more harmful than others. Hence, any individual found to be involved in such violations may experience harsher penalties, such as a fine of up to 1 million dollars or imprisonment for up to 20 years or both.

Loss of Export License

Monetary loss isn’t the only thing one should consider while committing violations of the provisions of ITAR. Organizations that violate any provision of ITAR may lose their export license. The export license is the second important requirement after registration if a company wishes to export defense-related items outside the country. If a company loses its license, it can face detrimental consequences, such as loss of revenue or business altogether.

Declining Customer Trust

Violations or regulatory breaches can have a detrimental effect on the reputation of the business. It is critical to understand that customers trust a company if the company has a reputable standing in the market. However, if you are a known violator, you lose customer trust and some serious clients.

Leverage Securiti’s DataControl Cloud to Avoid ITAR Violations

ITAR compliance is necessary for every organization that manufactures or distributes military articles or data. The world’s renowned enterprises leverage Securiti’s Data Command Center to gain comprehensive visibility of all their sensitive data and establish controls across security, privacy, governance, and compliance. A unified framework enables businesses to eliminate the cost and complexities of cloud data management and protection.

Request a demo to learn how Securiti’s Data Command Center can help avoid ITAR violations.


Key Takeaways:

Here are the key takeaways regarding International Traffic in Arms Regulations (ITAR) violations and compliance:

  1. Stringent Regulations for Defense-Related Trade: ITAR imposes strict regulations on entities involved in manufacturing, brokering, exporting, or providing services related to military goods and services. Compliance with ITAR is mandatory for these entities to avoid legal repercussions.
  2. Broad Scope of Application: ITAR applies to a wide range of entities, including manufacturers, exporters, brokers, contractors, and third-party suppliers dealing with defense-related items listed on the United States Munitions List (USML). Compliance is required for both U.S. persons and entities.
  3. Common Types of ITAR Violations:
    - Accidental Violations: Result from misunderstandings or mishaps, despite efforts to align operations with ITAR guidelines.
    - Willful Failure to Comply: Deliberate non-adherence to ITAR regulations.
    - Failure to Register or Obtain License: Operating without proper registration or approval from the Department of State.
    - Omission of Facts in Documents: Intentionally omitting or misrepresenting information to circumvent ITAR compliance.
    - Hiring Foreign Employees: Employing non-US persons without ensuring compliance with ITAR restrictions.
  4. Severe Consequences of Violations: Non-compliance can lead to civil and criminal penalties, including fines up to $1 million or imprisonment for up to 20 years, loss of export license, loss of business, and a decline in customer trust.
  5. Need for Robust Compliance Programs: Entities subject to ITAR must have comprehensive compliance programs in place, including employee training, background checks, and adherence to all regulatory guidelines, to prevent violations.
  6. Securiti’s DataControl Cloud as a Solution: Securiti offers a Data Command Center that provides visibility and control over sensitive data, helping businesses manage and protect their data across security, privacy, governance, and compliance domains efficiently, thereby aiding in avoiding ITAR violations.
Join Our Newsletter

Get all the latest information, law updates and more delivered to your inbox


Share

More Stories that May Interest You
Videos
View More
Mitigating OWASP Top 10 for LLM Applications 2025
Generative AI (GenAI) has transformed how enterprises operate, scale, and grow. There’s an AI application for every purpose, from increasing employee productivity to streamlining...
View More
Top 6 DSPM Use Cases
With the advent of Generative AI (GenAI), data has become more dynamic. New data is generated faster than ever, transmitted to various systems, applications,...
View More
Colorado Privacy Act (CPA)
What is the Colorado Privacy Act? The CPA is a comprehensive privacy law signed on July 7, 2021. It established new standards for personal...
View More
Securiti for Copilot in SaaS
Accelerate Copilot Adoption Securely & Confidently Organizations are eager to adopt Microsoft 365 Copilot for increased productivity and efficiency. However, security concerns like data...
View More
Top 10 Considerations for Safely Using Unstructured Data with GenAI
A staggering 90% of an organization's data is unstructured. This data is rapidly being used to fuel GenAI applications like chatbots and AI search....
View More
Gencore AI: Building Safe, Enterprise-grade AI Systems in Minutes
As enterprises adopt generative AI, data and AI teams face numerous hurdles: securely connecting unstructured and structured data sources, maintaining proper controls and governance,...
View More
Navigating CPRA: Key Insights for Businesses
What is CPRA? The California Privacy Rights Act (CPRA) is California's state legislation aimed at protecting residents' digital privacy. It became effective on January...
View More
Navigating the Shift: Transitioning to PCI DSS v4.0
What is PCI DSS? PCI DSS (Payment Card Industry Data Security Standard) is a set of security standards to ensure safe processing, storage, and...
View More
Securing Data+AI : Playbook for Trust, Risk, and Security Management (TRiSM)
AI's growing security risks have 48% of global CISOs alarmed. Join this keynote to learn about a practical playbook for enabling AI Trust, Risk,...
AWS Startup Showcase Cybersecurity Governance With Generative AI View More
AWS Startup Showcase Cybersecurity Governance With Generative AI
Balancing Innovation and Governance with Generative AI Generative AI has the potential to disrupt all aspects of business, with powerful new capabilities. However, with...

Spotlight Talks

Spotlight 11:29
Not Hype — Dye & Durham’s Analytics Head Shows What AI at Work Really Looks Like
Not Hype — Dye & Durham’s Analytics Head Shows What AI at Work Really Looks Like
Watch Now View
Spotlight 11:18
Rewiring Real Estate Finance — How Walker & Dunlop Is Giving Its $135B Portfolio a Data-First Refresh
Watch Now View
Spotlight 13:38
Accelerating Miracles — How Sanofi is Embedding AI to Significantly Reduce Drug Development Timelines
Sanofi Thumbnail
Watch Now View
Spotlight 10:35
There’s Been a Material Shift in the Data Center of Gravity
Watch Now View
Spotlight 14:21
AI Governance Is Much More than Technology Risk Mitigation
AI Governance Is Much More than Technology Risk Mitigation
Watch Now View
Spotlight 12:!3
You Can’t Build Pipelines, Warehouses, or AI Platforms Without Business Knowledge
Watch Now View
Spotlight 47:42
Cybersecurity – Where Leaders are Buying, Building, and Partnering
Rehan Jalil
Watch Now View
Spotlight 27:29
Building Safe AI with Databricks and Gencore
Rehan Jalil
Watch Now View
Spotlight 46:02
Building Safe Enterprise AI: A Practical Roadmap
Watch Now View
Spotlight 13:32
Ensuring Solid Governance Is Like Squeezing Jello
Watch Now View
Latest
View More
Databricks AI Summit (DAIS) 2025 Wrap Up
5 New Developments in Databricks and How Securiti Customers Benefit Concerns over the risk of leaking sensitive data are currently the number one blocker...
Inside Echoleak View More
Inside Echoleak
How Indirect Prompt Injections Exploit the AI Layer and How to Secure Your Data What is Echoleak? Echoleak (CVE-2025-32711) is a vulnerability discovered in...
A Complete Guide on Uganda’s Data Protection and Privacy Act (DPPA) View More
A Complete Guide on Uganda’s Data Protection and Privacy Act (DPPA)
Delve into Uganda's Data Protection and Privacy Act (DPPA), including data subject rights, organizational obligations, and penalties for non-compliance.
Data Risk Management View More
What Is Data Risk Management?
Learn the ins and outs of data risk management, key reasons for data risk and best practices for managing data risks.
Beyond DLP: Guide to Modern Data Protection with DSPM View More
Beyond DLP: Guide to Modern Data Protection with DSPM
Learn why traditional data security tools fall short in the cloud and AI era. Learn how DSPM helps secure sensitive data and ensure compliance.
Mastering Cookie Consent: Global Compliance & Customer Trust View More
Mastering Cookie Consent: Global Compliance & Customer Trust
Discover how to master cookie consent with strategies for global compliance and building customer trust while aligning with key data privacy regulations.
View More
Key Amendments to Saudi Arabia PDPL Implementing Regulations
Download the infographic to gain insights into the key amendments to the Saudi Arabia PDPL Implementing Regulations. Learn about proposed changes and key takeaways...
Understanding Data Regulations in Australia’s Telecom Sector View More
Understanding Data Regulations in Australia’s Telecom Sector
Gain insights into the key data regulations in Australia’s telecommunication sector. Learn how Securiti helps ensure swift compliance.
Gencore AI and Amazon Bedrock View More
Building Enterprise-Grade AI with Gencore AI and Amazon Bedrock
Learn how to build secure enterprise AI copilots with Amazon Bedrock models, protect AI interactions with LLM Firewalls, and apply OWASP Top 10 LLM...
DSPM Vendor Due Diligence View More
DSPM Vendor Due Diligence
DSPM’s Buyer Guide ebook is designed to help CISOs and their teams ask the right questions and consider the right capabilities when looking for...
What's
New