Archive for the ‘Dual/3rd Party Nationals’ Category

Company Pays $100,000 for One Transfer of ITAR Technical Data to PRC Citizen Employee

Tuesday, August 9th, 2016 by Danielle McClellan

By: Danielle McClellan

Microwave Engineering Corporation (Microwave) of Andover, MA has pled guilty to one charge of an unauthorized export of a defense article to a foreign person and will pay $100,000 to settle the matter. The company designs and manufactures high-power, broadband passive components, antennas, and waveguides for radio frequency microwave and communication systems. The majority of Microwave’s business comes from orders for custom-designed parts and providing research and development services. Microwave’s products are used in both military and commercial applications and are often integrated into other systems.

The company has submitted over 120 authorizations with DDTC since 2007 and maintained a Technology Control Plan (TCP) which was approved by the Defense Security Service. Between September 2009 and September 2011 Microwave employed a foreign person (citizen of the People’s Republic of China) as a Research Scientist. The employee did obtain an H-1B visa in conjunction with the employment. Microwave’s Export Control Officer explained to the employee’s supervisor that the employee “could only work on general research concepts and could not work on anything related to specific product design or production.” By May 2010 the employee was moved to a segregated work space.

While the employee was employed with Microwave the then president, Dr. Rudolf Cheung, and another engineer repeatedly provided the employee with ITAR-controlled technical data (USML Category XI(b))  without obtaining authorization. Between December 2009 and June 2010 the employee received technical data related to five research and manufacturing projects. Of the five projects, only one actually resulted in a purchase order and finally a developed component in November 2011. Authorization was never obtained from DDTC for this project and the transfer of ITAR-controlled technical data to the employee related to the project was a violation. The Export Control Officer for Microwave became aware of the transfer of technical data for the project in May 2010 and worked to limit the unauthorized transfers.

On January 20, 2012, Microwave disclosed to DDTC the illegal transfer of technical data which also happened to be the day that Dr. Cheung pled guilty to an unrelated criminal violation of the AECA. The Department of State released the following as mitigating factors in the charging letter:

  • Respondent’s submission of a voluntary disclosure under ITAR § 127.12
  • Acknowledging both the charged violation and other potential violations;
  • The exceptional cooperation of the company during the Department’s review of the disclosed conduct; and
  • The reduced likelihood of future violations due to demonstrated improvements in Respondent’s internal compliance program.

The Department also considered countervailing factors.  Most notably:

  • Deficiencies in Respondent’s export compliance program prior to the charged violation;
  • The involvement of a foreign person from the People’s Republic of China, a proscribed destination under ITAR § 126.1 and by statute (Suspension of Certain Programs and Activities, Pub. L. No. 101-246, title IX, § 902,104 Stat. 83 (1990) (amended 1992));
  • The amount of time between discovery of the issues and notification of the Department; and
  • The potential harm to national security.

Charging Letter: http://pmddtc.state.gov/compliance/consent_agreements/pdf/MEC-PCL.pdf

Consent Agreement: http://pmddtc.state.gov/compliance/consent_agreements/pdf/MEC_CA.pdf

State/DDTC Posts New Agreement Guidelines for US-Canada Exchange of Notes re ITAR 126.18 Dual/3rds Exemption

Monday, March 5th, 2012 by Holly Thorne

Licensing: New agreement guidelines pursuant to the US-Canadian Exchange of Notes regarding ITAR section 126.18, Canada has provided appropriate implementation guidance which can be found at the following links:http://ssi-iss.tpsgc-pwgsc.gc.ca/dmc-cgd/bulletins/bulletin3-eng.html

I. Background — Classification Requests Section 748.3(a) of the Export Administration Regulations (EAR) sets forth a procedure for how the public may seek and receive determinations regarding where or if items “subject to the EAR”1 are classified on the EAR’s Commerce Control List (CCL). In essence, if one makes a request in accordance with EAR sections 748.1 and 748.3(b), the Commerce Department’s Bureau of Industry and Security (BIS) will issue a formal classification determination regarding which, if any, ECCN controls the item described in the request.

Classification determinations are only as good as the quality, clarity, and the accuracy of the information provided in the classification request. The rules pertaining to the classification of composite-related information are complex largely because composite related technology is complex. Small changes in facts can result in significant differences in the control status of technologies. Thus, if a classification request for composite-related information does not describe carefully and address all the potentially applicable regulatory, definitional, and technical issues associated with a particular item at issue (as opposed to broad categories of items), then the classification determination will not likely be as reliable or useful as it should or could be. The most common questions BIS personnel have received in recent years regarding such items pertain to whether information used in the production or development of carbon fiber organic matrix material systems and related structures are within the scope of Export Control Classification Number (“ECCN”) 1E001.

To read fully article see<http://www.bis.doc.gov/policiesandregulations/advisoryopinions/oct25_2011_guidance.pdf>

The following are paragraphs 1 and 2 of the 14-page document:

Guidance for Preparing Commodity Classification (“CCATS”) Requests for Information Pertaining to the Development or Production of Carbon Fiber Organic Matrix Composite Items (October 25, 2011)

I. Background — Classification Requests

Section 748.3(a) of the Export Administration Regulations (EAR) sets forth a procedure for how the public may seek and receive determinations regarding where or if items “subject to the EAR”1 are classified on the EAR’s Commerce Control List (CCL). In essence, if one makes a request in accordance with EAR sections 748.1 and 748.3(b), the Commerce Department’s Bureau of Industry and Security (BIS) will issue a formal classification determination regarding which, if any, ECCN controls the item described in the request.

Classification determinations are only as good as the quality, clarity, and the accuracy of the information provided in the classification request. The rules pertaining to the classification of composite-related information are complex largely because composite-related technology is complex. Small changes in facts can result in significant differences in the control status of technologies. Thus, if a classification request for composite-related information does not describe carefully and address all the potentially applicable regulatory, definitional, and technical issues associated with a particular item at issue (as opposed to broad categories of items), then the classification determination will not likely be as reliable or useful as it should or could be. The most common questions BIS personnel have received in recent years regarding such items pertain to whether information used in the production or development of carbon fiber organic matrix material systems and related structures are within the scope of Export Control Classification Number (“ECCN”) 1E001.

II. Purpose of this Document

In light of the foregoing, BIS hopes to begin building a public collection of carbon fiber organic matrix composite-related classification determinations that will be the foundation for the development of better and common understandings between and within industry and government regarding the proper classifications of a wide variety of such technologies. For such a collection to be useful, however, the requests should address all the relevant definitional and control variables in the EAR for such composite-related technologies. To assist those preparing such requests, BIS has assembled this guidance document. Section III below contains a description of the various EAR provisions relevant to analyzing the classification status of carbon fiber organic matrix technologies. Drawing upon these descriptions, section IV contains BIS’s recommendations for issues to consider and address when drafting classification requests for carbon fiber organic matrix technologies.

The guidance in this document is limited in scope to descriptions of composite-related EAR provisions in effect at the time of its publication and related suggestions pertaining to the preparation of classification requests. Exporters are reminded that they will need to refer to all relevant EAR provisions in effect at the time of any particular export to determine the export control-related obligations pertaining to the export.

Source: http://www.bis.doc.gov/policiesandregulations/advisoryopinions.htm

UK Establishes Baseline for Compliance Procedures for ITAR Foreign National Exemption for Foreign Parties

Tuesday, January 3rd, 2012 by Holly Thorne

UK BIS/ECO Posts Exchange of Diplomatic Notes Concerning New Dual/3rd National ITAR Exemption

United States Department of State

Bureau of Political-Military Affairs

Directorate of Defense Trade Controls

Washington, DC

11 August 2011

Mr. William Mark Jesselt

Minister -Counselor (Defense Material)

British Embassy

Sir:

I have the honor to refer to discussions which have taken place between our two Governments concerning access of employees and in particular dual nationals and third country nationals to United States defense articles and technology. These discussions reflect the shared objectives of ensuring the security of defense articles, including technical data, in order to facilitate enhanced defense cooperation between our two Governments. As a result of these discussions it is the understanding of the Government of the United States of America that arrangements of mutual interest have been reached which are described below and will apply between our two Governments.

Our two Governments recognize that it is in the sovereign national security interests of both the United States and the United Kingdom to provide for protection of their own and each other’s defense articles and technical data, in furtherance of defense cooperation between our two Governments. It is understood that the Government of the United Kingdom has instituted security procedures for governmental and industrial operations concerning access to sensitive assets and information.

The Government of the United Kingdom requires a Baseline Personnel Security Standard (BPSS) for employment screening of civil servants, members of the armed forces and temporary staff, and for government contractors undertaking contracts involving sensitive information. It is understood that this screening covers nationality rules for government service where appropriate, verification regarding immigration and nationality, screening to guard against persons posing as prospective employees for commercial or personal gain, verification regarding criminal records, and screening for other factors indicating an individual’s suitability for access to sensitive government assets. It is also understood that a BPSS allows employee access to secret assets of United Kingdom origin, custody of secret assets and entry to work areas where secret assets are stored.

In acknowledgement of the aforementioned mutual interests and security procedures, the Government of the United States of America hereby recognizes that HMG’s BPSS, constitutes a screening process meeting the screening requirements of the International Traffic in Arms Regulation (ITAR), section 126.18(c)(2).

The two Governments further recognize that, in the course of investigations involving diversions of defense articles, including technical data, it may become necessary to exchange information concerning industrial security programs and individual data that may be considered private. It is understood that existing protocols and agreements between our two Governments provide for the sharing of such programs and data for the purposes of law enforcement under specified conditions, which include a requirement to protect such information within Government channels and to prevent it from public release. The two Governments intend accordingly to adhere to applicable, agreed procedures when requesting, receiving, and exchanging such information.

Additionally, it is noted that certain defense articles, including technical data, may be classified, in addition to being export controlled by the ITAR. In such cases, it is understood that employees possessing appropriate security clearances issued by the United Kingdom Government may be given access to United States’ classified defense articles, including technical data, consistent with and in accordance with the General Security Agreement of April 14, 1961, between the United Kingdom and the United States of America, as amended.

If the arrangements set out above are acceptable to the Government of the United Kingdom, I have the honor to propose that this Note and your reply to that effect, which instruments are not intended to be binding under international law, will place on record the understanding of our two Governments in this matter which will come into operation on the date of your reply.

I avail myself of this opportunity to renew to Your Excellency the assurance of my highest consideration.

 

For the Secretary of State:

s/

Beth M. McCormick

British Defense Staff — United States

British Embassy

3100 Massachusetts Ave, NW

Washington, DC

11 August 2011

 

Deputy Assistant Secretary McCormick

Bureau of Political-Military Affairs

US Department of State

Washington DC

Dear Deputy Assistant Secretary McCormick,

EXCHANGE OF NOTES BETWEEN THE UNITED KINGDOM OF GREAT BRITAIN AND NORTHERN IRELAND MINISTRY OF DEFENSE AND THE UNITED STATES DEPARTMENT OF STATE DIRECTORATE OF DEFENSE TRADE CONTROLS

I have the honour to acknowledge receipt of your Note dated 11th August 2011 concerning the access of employees and in particular dual national and third country nationals to Unites States ITAR controlled defence articles and technology and to confirm that the arrangement set out in your Note are acceptable to the Government of the United Kingdom that these instruments are not intended to be binding under international law.

I furthermore confirm that the arrangements set out in your Note will place on record the understanding of our two Governments in this matter which will come into operation on today’s date.  I avail myself of this opportunity to renew to you the assurances of my highest consideration.

Yours sincerely,

s/

Will Jessett CBE

Minister (Defense Materiel)

UK BIS/ECO Posts Q&A Matrix on Implementation of New Dual/3rd National ITAR Exemption

Tuesday, January 3rd, 2012 by Holly Thorne

Introduction

1.            This Table sets out a number of questions put to and answered by the US Department of State (DoS) (Director of Policy, Directorate of Defense Trade Controls) by HM Government (HMG) and UK industry, concerning this rule change which alters the way in which access by Dual and Third Country Nationals (DTCN) employees of importing (non-US) entities to ITAR-controlled material is controlled.  The effective date of the rule was 15th August 2011.

2.            This UK-specific Questions and Answers Matrix has been agreed by DoS to help UK End Users and Consignees comply with the rule change requirements and complements the Technology Security Plan (TSP) that HMG has also agreed with DoS.  The information suggested in this document is for guidance only and made without any endorsement, representation or warranty.  It is not intended to provide legal or professional advice, and any party seeking to rely on it should ensure that it has obtained its own legal advice to ensure that it is applied in accordance with UK law.

 

Clarification Question

 

DoS Clarification

1.  Is ITAR 124.16 still available for use as an alternative to ITAR 126.18 in TAA and MLA?

 

Yes ITAR 124.16 is still available.
2.  Does the new rule change offer two genuine alternatives to compliance by foreign consignees/end users; as employers they either obtain formal Government security clearance for their affected employees, or subject them to bespoke screening?

 

There are two genuine alternatives, ITAR 126.18(c)(1) and ITAR 124.18 (c)(2).  The screening procedures and associated requirement only apply to the second, and not the first which is solely concerned with security clearance of employees.
3.  What level of a formal Government Security clearance will suffice to meet the requirements of ITAR 126.18(c)(1)?

 

Any security clearance approved by the host Government of the end user/consignee is sufficient to meet these requirements. In the UK, Security Check (SC) clearance meets these requirements.
4.  Does the new rule apply to the export of UNCLASSIFIED ITAR-controlled material only? What then is the position in relation to the export of classified material? The ITAR 126.18 exemption is only available for UNCLASSIFIED US ITAR-controlled exports (below US CONFIDENTIAL). The US-UK Exchange of Notes (EoN) makes it clear that classified exports are to be dealt with separately under the UK-US General Security Agreement
5.  Does the new rule extend to all ITAR-controlled exports, or only to those governed by TAAs and MLAs? The new rule applies to the export of all ITAR-controlled material and hence all forms of US arms export licence.  DoS has recently published guidance on how to implement the new rule for licenses and Warehouse and Distribution Agreements.

 

6.  Why does the scope of the new rule include technical data but exclude “defense services”, even though both are encompassed by TAA/MLA?

 

“Defense services” cannot be retransferred as such.  “Defense services” do however remain a feature of retained ITAR 124.16 (amended) for MLA/TAA.
7.  How does the new rule treat sub-licensees and how do sub-licensing provisions work in relation to hardware licensing?

 

The new rule applies equally to sub-licensees as it does to licensees.  It has no bearing on formal applications for re-transfer. For hardware licensing see 5 above.
8.  Does conflict exist between ITAR 126.18 and ITAR 126.1(a), if so how will this be dealt with?

 

No conflict exists, because of the insertion of the phrase “notwithstanding any other provision of this part” into ITAR 126.18.  “Part” here means Part 126. Hence the exemption applies to 126.1(a) nationals and dual nationals who have undergone the UK’s Baseline Personnel Security Standard (BPSS).

 

9.  How does the new rule apply to end users and foreign consignees? Is there a distinction?

 

The new rule applies equally to end users and foreign consignees wherever they operate.
10.  Does the ITAR 126.18 requirement for NDAs (for employers with non-security cleared employees) apply to employers, employees or both?

 

How will this requirement work in relation to foreign governments and international organisations (NATO, EDA etc?)

Only the employer itself needs to enter into an NDA on a self-certification basis.  Individual employees need not do so.  This does not prohibit use of employee NDAs to support employer NDAs, but this is not an ITAR requirement and is a matter for the end user/consignee.

 

End users and consignees should note that the NDA required for the purpose of this rule change is not the same as the NDA referred to under existing Dept of State/DDTC Agreements Guidelines (Tab 11 refers).

 

HMG may follow the same process.

 

The NDA requirement does not apply to international organisations such as NATO and EDA.

 

11.  What form should the NDA take? A model NDA is to be found in the TSP and has been endorsed by DoS. This forms part of the agreed TSP for the UK and meets the NDA requirements for all exports.  DoS have also confirmed that the NDA process will involve self-certification without any need for delivery to DoS.
12.  Does the new rule permit transfers to employees outside of “the physical territories of the country where the end-user is located or the consignee operates”?

 

The transfer of defense articles pursuant to this section must take place completely within the physical territory of the country where the end-user is located, where the governmental entity or international organization conducts official business, or where the consignee operates, and be within the scope of an approved export license, other export authorization, or license exemption.
13.  How does the rule apply to personnel within the UK’s Armed Forces?  Are these to be treated as “bona fide, regular employees, directly employed by the….foreign government entity” (ITAR 126.18 (a) refers)? HM Armed Forces personnel are to be treated by the rule in the same way as other employees.

 

14.  Will the new rule require or imply the use of certification by end users/foreign consignees to exporters, that they have screened their affected employees for risk of diversion?

 

No certification is required. Indeed certification should not be requested by exporters.

 

15.  Does the rule require the disclosure of personnel records of employees of UK employers to DoS? DoS understands that any disclosure must be in accordance with UK law.  The EoN between the US and UK Governments recognises this and acknowledges the existence of previously agreed bilateral arrangements between the two Governments.  Any disclosure requests by DoS or its agents will be made via HMG.
16.  ITAR 126.1 cross-reference – Is it accepted that employees can travel for business, family and personal reasons? Yes.
17.  What about current employees who don’t have Baseline Personnel Security Standard (BPSS) clearance? Those affected employees already handling ITAR controlled materiel should already be covered under existing licences.  Other employees will be covered when the consignee has a BPSS process in place.
18.  Under ITAR 127.1(b), compliance obligations fall to the licensor.  Is this still the case with ITAR 126.18? This is not specifically addressed in the final rule change, but the answer is no.  DoS guidance on their website makes it clear that licensors have no obligation to obtain written statements or certifications from foreign companies with regard to 126.18.

 

19.  What about supply chains?  How are UK primes to ensure compliance by their sub-contractors, including those across the EU? There is no requirement to flow down ITAR 126.18 requirements to suppliers (sub-licensees).  Each supplier must take responsibility for complying with ITAR 126.18 etc.  Prior DDTC consent is still required for retransfers to third country suppliers.

 

20. To what extent, if any, could S 2(3)(B) of the Protection of Trading Interests Act 1980 render any discovery type activity by US authorities inadmissible? There is no restriction on the UK Secretary of State’s powers under the 1980 Act.  The EoN makes it clear that exchange of information must adhere to applicable agreed bilateral US UK protocols. It will not therefore be necessary to invoke the PTIA.
21. Is HMG content there are no conflicts with national regulations on employment law, privacy law etc? It is for each end user/consignee to ensure that their implementation of the rule change is effected in a manner which complies with UK law.  The TSP, model NDA and this Q&A Matrix are provided as guidance to assist end users/consignees in this exercise, but in the event of specific issues end users/consignees should obtain their own legal advice.

 

22. Will Non-Disclosure Agreements (NDAs) still be required even if a company has BPSS in place?

 

Yes.  A model NDA can be found in the TSP.
23. Will there be legal conflicts if employers have to screen certain employees for substantive contacts with ITAR prohibited nations (for e.g. Syria)?

 

Dept of State has confirmed that adopting the BPSS will meet the screening requirements.  Those UK end users/consignees who decide not to adopt the BPSS will have to introduce their own screening arrangements in order to comply with the rule change.
24. Will employers have to disclose private information to the US Dept of State about employees who are deemed as ‘diversion risks’? If an end user/consignee decides not to use BPSS to meet the screening requirements of the rule change then they may follow the guidance issued by DoS on their website dated 31 August 2011.

 

25. Will employers need to refuse or remove an employee to work on a project on the basis of a risk of diversion?

 

The end user/foreign consignee must assess the risk and act reasonably and proportionately in accordance UK law.

 

26. Currently the use of 124.16 permits the exchange of defence articles with DTCN employees of the approved sub-licensees provided they are nationals of countries that are members of NATO, the European Union, Australia, Japan, New Zealand, and Switzerland, without the need to sign a personal Non-Disclosure Agreement. Where this does not apply or cannot be used 126.18 to provide a mechanism for approval for DTCNs outside of the exempt 124.16 countries. Currently this approval is satisfied using 124.8(5) which must be specifically approved within the MLA/TAA agreement. Subsequently approved individuals are obliged to sign personal NDA’s before access to defence articles is permitted. The issue with the current approach, with many European countries, is the conflict with anti-discrimination, human rights and data protection laws when requesting an employee’s place of birth or nationality.

 

The new rule provides additional flexibility which avoids the issues pertaining to the current approach. It is potentially a simpler process provided risks of diversion are accounted for. It provides a choice – end users/foreign consignees could use either approach. Whether adoption of 126.18 clearance or screening procedures in other countries is practical or consistent with their domestic law is a matter for them.
27. Section 124.8(5) will now direct DTCN approvals through 124.16 and 126.18.  Does this mean 124.8(5) can no longer be used to approve nationals from countries outside of 124.16? No. Licensing can still be used pursuant
28. Will existing agreements remain valid but require amendment to incorporate the appropriate 126.18 wording? DoS have issued updated guidance on this transitional matter through their website.

 

29. As agreements are amended for other reasons will it be mandatory for the new 124.8(5) clause to be incorporated in place of the old one?

 

Yes.
30. Can the use of 124.16 and 124.8(5) still be used to approve employees access to defence articles in new agreements or must the provision at 126.18 be used?

 

DoS have confirmed that end users/consignees have a choice.
31. Who determines if a end user/consignees screening process is robust enough to meet the rule change requirements? Will the TSP only need to be provided at the request of the Dept of State or DDTC or its agents for civil and criminal law enforcement purposes? If a company uses the standard UK TSP agreed with DoS, there is no requirement in the new rule to have an individual company’s security plan endorsed by DoS.  Guidance is provided by DoS if a company wishes to pursue or develop its own TSP. The TSP only needs to be provided for civil and criminal law enforcement purposes and DoS understands any disclosure must be in accordance with UK law.

 

32. Do the screening results need to be provided to the US agreement holder? No.

 

33. Is there any requirement for the foreign consignee to maintain records of its sub-licensee DN/TCN approvals? No.
34. What responsibility does the foreign consignee have towards its sub-licensees? None.  The sub-licensee must ensure that it is compliant with the rule change. The foreign consignee may report its sub-licensees’ compliance preferences to the UK exporter.
35. ‘Regular Employees’ as defined in new 120.39 – that is permanent direct employees plus individuals ‘in a long term contractual relationship’ with the employer.

(i) Please confirm that sublicensees and contract employees, except those meeting the above criteria are not covered?

(ii) What does “long term” mean?

 

(i) This is correct.

 

(ii)  Per 120.39, Dept of State has confirmed that a regular employee generally includes individuals working under the direction and control of the company, working full time and exclusively for the company and where the staffing agency has no role in the work the individual performs.  This excludes sub-licensees and those working under short term contracts less than a year in length.

36. Can ‘temporary staff’ be taken to be ‘contract employees’ as defined in para 3.9b of the DDTC’s Agreement Guidelines, i.e. will contract employees with a UK Government BPSS clearance be covered by the 126.18 (c) (2) exemption?

 

Probably, but HMG is awaiting final guidance from DoS.
37   The provisions of this rule apply explicitly to governments / end users. Is it the intention of government end users to comply with them?

 

Dept of State understands HM Government will follow the TSP guidance, at its discretion and in accordance with UK law.
38.   Do the four key elements of the BPSS fully meet the screening requirements of 126.18 (c) (2)? Yes – the EoN agreed between the US Government and HMG on 11 August states that the BPSS meets the screening requirements of the rule change.

State/DDTC Posts “Implementation Considerations: Dual/Third National Rule”

Wednesday, October 5th, 2011 by Holly Thorne

DDTC provides the considerations below, in addition to a sample questionnaire and sample non-disclosure agreement, for the Dual/Third National Rule.”

To prevent diversion of ITAR-controlled defense articles, including technical data, to unauthorized end-users and end-uses consideration should be given to the following:

  • ITAR compliance program with implementing policies and procedures.
  • Empowered and experienced individuals responsible for implementation and oversight of the plan.
  • Record-keeping. The company should have processes and procedures in place to ensure that all records are maintained for no less than five years.
  • Employee training and education in the ITAR and the compliance program.
  • Specialized training of key personnel (e.g., human resources).
  • Employee screening to determine general bona fides and identify any diversion risk of ITAR-controlled defense articles, including technical data.
  • Non-Disclosure Agreement (NDA) with the employee as a condition of continued employment.
  • Substantive contacts. Contacts contemplated are relationships with individuals that pose a risk of diversion of ITAR-controlled defense articles, including technical data.
  • Contacts with Government or Military Officials, Agents, or Proxies.
  • Business contacts.
  • Family contacts.
  • Non-family contacts.
  • Continuing connections to a third country.
  • Frequent Travel. It may be an indicator of relationships with nationals of that country which pose a risk of diversion. Travel may be innocuous or a cover for diversionary activities.
  • Maintaining a residence in a third country. Maintaining a residence is not necessarily a disqualifier, but the circumstances of ownership and the potential for a broader connection to the country should be considered.
  • Bona fide, full-time regular employee. Employees qualify if they have a full time employment relationship with the company and the company is legally responsible for the employee’s actions.

The outlined implementation plan is a suggested approach, but is by no means the only way of complying with the rule and its core principle of preventing diversion of defense articles to unauthorized end-users and end-uses. Consistent with local national laws and programs for the control/protection of defense articles/technologies and consistent with the need for private entities to protect proprietary data, technology security plans should be designed with a comprehensive and individualized approach to securing sensitive data of all kinds with appropriate measures for physical security and personnel clearances.

Complete D-TCN Policy Implementation:
http://www.pmddtc.state.gov/licensing/documents/D-TCN_Policy_ImplementationFinal.pdf

Enclosures:

1) Sample Questionnaire

2) Sample Non-Disclosure Agreement (NDA)

Enclosure 1):

Sample Questionnaire

  1. How often and where do you travel outside (country of employment) for purposes other than employment with this company?
  2. Do you hold/use a passport from another country?
  3. Do you maintain a residence in another country?
  4. Do you have business contacts, business partners, business contracts, brokers, or any other relationship with a business in another country or other countries subject to U.S. or U.N. embargo?
  5. Do you have contact with family members that work for or with the government of another country? If so, what is their relationship with the government?
  6. Do you have contacts with any other individuals or groups involved in acquiring controlled defense articles, including technical data, illegally or otherwise circumventing export control laws? Please explain the nature of that contact.
  7. Do you hold any office, position, appointment, or any other relationship with the government of another country?
  8. Do you receive a salary, compensation, or any payment from any source (e.g., government, business, other organization or individual) in another country?
  9. Do you have contacts with agents from another country or another country’s government?
  10. Have you ever served in or provided information to the government of another country (e.g., military, foreign ministry, intelligence agency or law enforcement)?
  11. Is there any aspect of your overall relationship to another country that would cause you to violate company rules or release ITAR-controlled defense articles, including technical data, without authorization?
  12. Have you ever been approached or asked, directly or indirectly, to provide any ITAR-controlled defense article, including technical data, without authorization?
  13. Have you ever sold or been provided any ITAR-controlled defense articles, including technical data, of the company or any former employer without authority?
  14. Have you fully and completely disclosed all contacts with foreign persons, groups, associations, businesses and governments?
  15. Have you provided fully and truthfully all your contact information to the company, including any addresses, cellular telephone numbers, electronic mail addresses and social networking addresses?
  16. Will you report promptly to the company security officer inquiries or efforts by others in any manner to acquire export controlled defense articles, including technical data, without a license or other authorization?
  17. Have you answered all questions above fully, honestly and faithfully?

Enclosure 2):

Sample Non-Disclosure Agreement (NDA)

I, __________________, acknowledge and understand that any technical data related to defense articles on the U.S. Munitions List and proprietary data that I will have access to or which is disclosed to me by (employer’s name) are subject to control under United States law (the International Traffic in Arms Regulations (the “ITAR”).

I hereby certify that such controlled technical data will not be further disclosed, exported, or transferred in any manner not authorized under the ITAR, except with the prior written approval of the U.S. Department of State and [employer’s name]. I certify that I will report promptly to [employer’s name] and its security and export control officers any inquiry or request to provide controlled technical or proprietary data to any third person without authority.

I further certify that I have never acted for, represented, or provided information to and do not currently act for, represent, or provide information to any country or person acting on its behalf that is subject to Section 126.1 of the ITAR, including but not limited to Iran, Syria, North Korea, Sudan, China, Burma, Cuba, or Libya, or any entity that is owned or controlled by such country. Furthermore, I certify that I understand and will comply with the notification requirements of Section 126.1(e) of the ITAR or any other law.

I make this certification voluntarily and understand and agree that it may be provided to the government of *employer’s location+ and the United States which have an interest in ensuring that controlled defense articles and technical data are not provided or transferred to persons without authority.

Signature &  Printed Name &  Address:

______________________________

______________________________

______________________________

Additional guidance related to the August 15, 2011 implementation of the new 126.18 rule on dual and third country nationals can be viewed on the US Department of State website.

State/DDTC Posts New Guidance on Dual/Third Country Nationals

Monday, August 29th, 2011 by Holly Thorne

On August 15, the State/DDTC amended the ITAR with a policy that addresses transfers to the employees of approved dual national and third-country national organizations.

Prior to making transfers to certain dual national and third-country national employees under this policy, approved end-users must screen employees, make an affirmative decision to allow access, and maintain records of screening procedures to prevent diversion of ITAR-controlled technology for purposes other than those authorized by the applicable export license or other authorization.

More information

Additional Guidance information on Dual/Third Country National Policy Implementation

Monday, August 29th, 2011 by Holly Thorne

DDTC provides the considerations below, in addition to a sample questionnaire and sample non-disclosure agreement.

To prevent diversion of ITAR-controlled defense articles, including technical data, to unauthorized end-users and end-uses consideration should be given to the following:

  • ITAR compliance program with implementing policies and procedures.
  • Empowered and experienced individuals responsible for implementation and oversight of the plan.
  • Record-keeping. The company should have processes and procedures in place to ensure that all records are maintained for no less than five years.
  • Employee training and education in the ITAR and the compliance program.
  • Specialized training of key personnel (e.g., human resources).
  • Employee screening to determine general bona fides and identify any diversion risk of ITAR-controlled defense articles, including technical data.
  • Non-Disclosure Agreement (NDA) with the employee as a condition of continued employment.
  • Substantive contacts. Contacts contemplated are relationships with individuals that pose a risk of diversion of ITAR-controlled defense articles, including technical data.
  • Contacts with Government or Military Officials, Agents, or Proxies.
  • Business contacts.
  • Family contacts.
  • Non-family contacts.
  • Continuing connections to a third country.
  • Frequent Travel. It may be an indicator of relationships with nationals of that country which pose a risk of diversion. Travel may be innocuous or a cover for diversionary activities.
  • Maintaining a residence in a third country. Maintaining a residence is not necessarily a disqualifier, but the circumstances of ownership and the potential for a broader connection to the country should be considered.
  • Bona fide, full-time regular employee. Employees qualify if they have a full time employment relationship with the company and the company is legally responsible for the employee’s actions.

The outlined implementation plan is a suggested approach, but is by no means the only way of complying with the rule and its core principle of preventing diversion of defense articles to unauthorized end-users and end-uses. Consistent with local national laws and programs for the control/protection of defense articles/technologies and consistent with the need for private entities to protect proprietary data, technology security plans should be designed with a comprehensive and individualized approach to securing sensitive data of all kinds with appropriate measures for physical security and personnel clearances.

Complete D-TCN Policy Implementation:
http://pmddtc.state.gov/licensing/documents/D-TCN_Policy_ImplementationFinal.pdf>

State Department Issues Clarified Foreign National Deemed Export Licensing Guidance

Monday, January 4th, 2010 by Guest Author

Foreign nationals (other than U.S. permanent residents and protected individuals) must be licensed by the U.S. Department of State, Directorate of Defense Trade Controls (DDTC) before receiving access to technical data controlled for export under the International Traffic in Arms Regulations (ITAR). On March 2, 2009, DDTC posted to its website revised guidelines implementing DDTC policy for the licensing of foreign persons under the ITAR. These revised guidelines updated earlier issued guidelines from September 2008 that provided previously unstated explanations of DDTC policy, and are of critical importance to any ITAR registered corporation that employs, or is considering employing, a foreign national in a position requiring access to ITAR-controlled technical data or defense services. (more…)

ITAR Licensing for Foreign Person Employees

Wednesday, September 30th, 2009 by Danielle McClellan

Any US company who has employed a foreign national knows that a DSP-5 is going to be required to give the employee any access to any ITAR-related technical data or defense services. There are however instances where DDTC required a TAA along with the DSP-5. DDTC realized that this “double licensing” really wasn’t necessary and was actually causing them much more work than was necessary. Now all requests for the licensing of a foreign person employed by a US company/person must be submitted via a DSP-5 which will cover all requested levels of technical data and defense services, which will make licensing easier for both the exporter and DDTC. 
  (more…)

Need Export Compliance Training?

Friday, September 25th, 2009 by Danielle McClellan

One of the most obvious trends in US export and reexport controls is the dramatic increase in the number of enforcement cases for companies charged with violating US rules.  If you add complicated export and reexport regulations to the fact that potentially hundreds of employees in a single facility may export technical data, software or hardware, company compliance personnel certainly are under a lot of pressure to keep their companies out of trouble.  Training has to be a critical element of any company’s export compliance program, whether you have a team of export specialists or one person responsible for export controls.  Without consistent education on the EAR and ITAR you and your company are very susceptible to running afoul of the complex and changing regulations.

The Export Compliance Training Institute (“ECTI”) has created its e-Seminars to deliver expert training to individuals and companies that need training but don’t have the travel budget or the time to travel to a live, in person seminar. ECTI’s e-Seminars offer an in-depth understanding of the current regulations and what you need to do to keep your company compliant – without leaving your desktop. Two e-Seminars are available:  US Export Controls and US Defense Trade Controls.  John Black and Maarten Sengers, two of the world’s leading export compliance experts and teachers, are the e-Seminar instructors.

e-Seminars include video presentations, seminar slides and our seminar manuals on a usb drive with free next day shipping to the 50 US Continental States.

For more information go to http://www.learnexportcompliance.com/e-Seminars