The Cost of Non-Compliance: DDTC Increases Civil Monetary Penalties for Violations

Posted by Tondra Harvell
Blog originally posted on 21/07/2016 12:00 PM

ocean port

Beginning August 1, 2016, the Department of State’s Directorate of Defense Trade Controls is increasing the maximum amounts of the civil monetary penalties it assesses for violations of the of the Arms Export Control Act and the International Traffic in Arms Regulations (ITAR). 

The following adjustments will apply to all penalties assessed after Aug. 1 regardless of when the actual violation occurred. 

  • $1,094,010 (previously $500,000) for each violation of 22 USC 2778 (control of exports and imports of defense articles and services)
  • $795,445 (previously $500,000) for each violation of 22 USC 2779a (prohibition on incentive payments to satisfy an offset agreement for defense articles or services with a foreign country)
  • $946, 805 (previously $500,000) for each violation of 22 USC 2780 (prohibition on transactions with, including defense exports to, countries supporting acts of international terrorism)

Bad news? Penalties can be assessed on exports that occurred BEFORE the implementation date. 

Better news? Although DDTC is required to increase its maximum Civil Monetary Penalties, the agency notes it still has the discretion to assess a lower penalty than the maximum amount, should the circumstances warrant such action. 

Why the increases? 

You can thank the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015 (Section 701 of Pub. L. 114-74), which mandated that agencies make a one time “catch-up” adjustment to their Civil Monetary Penalties (CMPs) in order to account for inflation, which is said to erode the real “value” of statutorily mandated penalty amounts.  Joy.

Best news? Tradewin can help you avoid these penalties with the help of our expert staff specializing in Export Control. We'll work with you to determine how export control laws impact your business, and design a program that assures the compliant shipment of goods. 

Contact us today!

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Tondra Harvell

Written by Tondra Harvell

With more than 20 years’ experience in international trade and customs-related matters, Tondra has a wide variety of knowledge and skill on both a practical and strategic level. Her expertise includes compliance program and corrective-action plan development and implementation, large-scale project management, multi-national logistics and supply chain, client services, and multi-channel optimization. Tondra specializes in business process re-engineering, business requirements development, and cross-functional operational support. Most recent experience includes design and deployment of multi-scope Managed Trade Services platforms across several verticals. Tondra holds a Master’s Degree from McKendree University, a Master's Certificate in Human Resource Management from Villanova University and a Bachelor of Science in Management with a double major in Logistics and Human Resource Management from Park University, Summa Cum Laude.