Violations Of The ITAR, EAR Or OFAC Regulations: Mistake Or Willful Act?

The laws regarding what can be exported from the U.S. and where those exports can go are complex. Not surprisingly, these laws are violated on occasion. When violations occur, the critical question for enforcement agencies is whether the violations were willful. The answer to that question generally determines whether the violation is treated as a criminal act or a mistake meriting administrative settlement. Two recent enforcement actions stemming from violations of the International Traffic in Arms Regulations (ITAR) illuminate what it means to be a willful violator and how that status affects the outcome of the enforcement action.

Under the ITAR, as well as the Export Administration Regulations (EAR), and the sanctions regulations administered by the Office of Foreign Assets Control (OFAC), willful violations are criminal and punishable by prison sentences for individuals. As described more fully here, the meaning of "willful" varies depending upon the legal regime at issue. When a violation of the ITAR, the EAR or OFAC regulations is involved, willfulness amounts to general knowledge that one's conduct is unlawful. That is, even if the violator is honestly ignorant that the item being exported is on a particular restricted list, the willfulness requirement is met if the violator knows that the export is against the law.

One of the best ways for a violator to demonstrate that its violation was not willful is to self-disclose it. Indeed, in recognition of this fact and in order to encourage self-disclosures of systemic problems, the Department of Justice has followed a policy of foregoing prosecutions of companies that make complete, and self-initiated voluntary disclosures.1 (The same policy does not apply to individuals.)

Earlier this year, the Fourth Circuit analyzed the meaning of "willful" in the context of a prosecution under the Arms Export Control Act (AECA). United States v. Bishop, 740 F.3d 927 (2014), describes the unsuccessful appeal of Brian Bishop, a foreign service officer at the U.S. Embassy in Jordan who was convicted of a criminal violation of the ITAR. In preparing personal effects for shipment from the U.S. to his post in Amman, Bishop packed nearly 10,000 rounds of ammunition in boxes labeled "weights," and signed a packing slip certifying that his shipment did not contain "any unauthorized explosive materials, destructive devices or hazardous materials."2

Shipping company employees discovered the ammunition prior to...