60-Day Deadline Imposed
On December 13, the U.S. Department of State announced changes to the Voluntary Disclosure provisions of the International Traffic in Arms Regulations (ITAR), effective immediately. The amended regulations now impose a requirement that a complete voluntary disclosure be submitted within 60 calendar days of initial notification to State of the discovery of a violation, which must be supplied immediately after the discovery.
The voluntary disclosure regulations, found at 22 C.F.R. § 127.12, are designed to encourage disclosure to the Directorate of Defense Trade Controls (DDTC) of any violations of the export control provisions of, or any authorizations issued under the authority of, the Arms Export Control Act. Specifically, the regulations provide that a disclosure may be considered a mitigating factor in determining whether and to what degree administrative penalties may be imposed for the violation. In practice, many companies have found the voluntary disclosure program to be an effective tool, and have taken advantage of the opportunity to benefit from penalty mitigation in exchange for explaining to DDTC their prior violations and how they will be prevented from recurring.
As the focus on compliance has increased in recent years, so has the number of disclosures submitted to DDTC and the time involved in managing the program. In order to expedite the process, and to eliminate perceived abuses by exporters, DDTC has amended the regulations to require full disclosure within the 60 calendar day period following initial notification. A failure to complete full disclosure to DDTC’s satisfaction within the 60-day period may result in a determination by DDTC not to consider the notification as a mitigating factor in its assessment of the appropriate penalties. An allowance has been made for the request of an extension of the period where a full investigation and reporting of the violation cannot be completed within the 60 days. (more…)