What do ballistic missiles, acoustic sensors, and laser imaging systems have in common? They’re all goods regulated by the International Traffic in Arms Regulations (ITAR), a complex set of rules governing the export of military defense-related technologies and data.
Adhering to ITAR requirements is vital for businesses operating in the aerospace and defense industry, not only as a legal obligation but also as a critical measure for national security. The goal of the ITAR is to protect sensitive technologies from falling into the wrong hands and to maintain a strategic advantage in national defense.
Unfortunately, although ITAR compliance is critical for protecting sensitive technologies, it can be onerous for organizations to meet. Today, we’ll explore what the ITAR requires, who must comply, and how companies can strengthen their compliance postures with improved security measures and organizational awareness.
The International Traffic in Arms Regulations (ITAR) are US government regulations that control the export of military defense items under the Arms Export Control Act (AECA). The primary goals of ITAR are to regulate the export of defense-related articles and to prevent the unauthorized transfer of sensitive military technologies to foreign persons or entities.
There are three main categories of defense-related items on the United States Munitions List (USML) that are regulated by the ITAR:
The US Munitions List itself is long and detailed, including everything from shotguns and ammunition to guided missiles, torpedoes, aircraft, spacecraft, and chemical agents. Regulating the export of these items is intended to help safeguard national security interests and prevent crucial technology from falling in the wrong hands.
ITAR compliance is mandatory for any US individual or organization involved in the manufacture, export, or distribution of items listed on the USML. In practice, this usually includes companies in the aerospace, weapons and ammunition, and nuclear power industries. But it can also include tech companies — especially those focusing on robotics, automation, and related technologies. The ITAR even applies to the military supply chain at large, impacting wholesalers, chemical suppliers, component manufacturers, and more.
The ITAR does not apply to non-defense-related exports. For instance, exports of non-military software and technology are generally governed by the US Department of Commerce’s Bureau of Industry and Security (BIS) under the Export Administration Regulations (EAR).
Today, ITAR compliance is mandatory for over 13,000 businesses in the United States alone. The regulations also have an extraterritorial reach, requiring compliance from any foreign entity handling defense-related items or data that originated in the United States. Although there are some temporary exemptions, the law is generally quite strict about compliance.
Failure to comply with the ITAR can lead to severe consequences, including hefty fines, criminal charges, and reputational damage. Even inadvertent ITAR violations due to ignorance or oversight can incur significant penalties — including civil fines of up to $500,000 per violation, criminal fines of up to $1,000,000, and imprisonment for up to 10 years per violation.
Key components of ITAR compliance
Organizations will need a robust ITAR compliance program to adhere to regulatory requirements and foster trust among stakeholders. Below, we discuss the main elements involved in ITAR compliance.
First, businesses engaged in ITAR-controlled activities must register with the US Department of State’s Directorate of Defense Trade Controls (DDTC) and obtain a license to export USML-listed defense items and technical data.
Export control classification is an important part of the compliance process. Companies must classify their products and technical data according to the USML categories to determine whether they fall under ITAR jurisdiction. Those categories include:
Based on these classifications, companies must obtain export licenses or temporary import licenses and comply with strict specific documentation requirements.
One of the most challenging aspects of ITAR compliance is the mandate to protect technical data. Although the 2020 Encryption Rule allows some technical data to be stored or processed outside the US without being registered as an export, stringent cybersecurity measures are still required to prevent unauthorized access by non-US citizens.
Specifically, the Encryption Rule allows organizations to use end-to-end encryption with a FIPS 140-2 compliant module in order to secure unclassified technical data in transit from the sender to the end-user. If that data is stored in systems like file servers or cloud storage platforms, it needs to be encrypted independently from the infrastructure to ensure that no admin or cloud provider can access the data.
Beyond that, organizations must maintain control of the encryption algorithms without providing third-party access, which rules out the native encryption methods of common data storage solutions. They must also provide metadata obfuscation, protecting entire files and file names alike, for technical data.
Navigating the intricate framework of ITAR regulations can be daunting, especially for small to medium-sized enterprises (SMEs) with limited resources. Still, there are a number of steps that any organization can take to improve their cybersecurity and compliance programs.
Employee training: To stay ITAR compliant, companies may have to invest in staff training and related infrastructure. In general, regular training sessions and employee education programs are essential for fostering a culture of compliance within an organization, regardless of the specific regulations at play.
Consult the experts: It’s important to seek guidance from legal experts specializing in regulatory compliance to ensure that your organization understands the complexities of the ITAR and can navigate them effectively. Experienced compliance officers or consultants can also provide valuable insights into best practices for your specific industry.
Regular audits and reviews: Regular audits and reviews are fundamental to maintaining ITAR compliance. Organizations will need to systematically assess and document their export control processes, classification of controlled items, export licensing, and technology transfer protocols. By identifying any potential weaknesses or areas of non-compliance, you will be able to proactively take corrective actions and avoid penalties.
Robust data security measures: ITAR data should be protected by stringent access controls, encryption protocols, and authentication mechanisms to prevent unauthorized access. Make sure to establish clear protocols for data storage, transmission, and disposal to mitigate the risk of cyberattacks. Additionally, consider implementing comprehensive incident response plans to minimize potential damages and ensure compliance with ITAR reporting requirements in the event of a security breach.
Consider ShardSecure: The ShardSecure platform offers a robust, agentless, end-to-end encryption solution for ITAR-regulated technical data, protecting data on-premises, in the cloud, and in hybrid- and multi-cloud environments. ShardSecure keeps data safe from unauthorized users, separating admins and cloud service providers from sensitive data. This is crucial for ITAR compliance, which requires that technical data not be subject to unauthorized release to any third party.
ShardSecure is FIPS 140-2 Level 1 compliant (sufficient for the ITAR) and offers integration with market leaders of Hardware Security Modules (HSMs) to achieve FIPS 140-2 Level 3 if necessary. It addresses the metadata obfuscation requirements for ITAR technical data by obfuscating file content as well as any associated metadata, including names, tags, extensions, timestamps, file size, authors, and versions. The platform also offers an API that makes it possible to share data and facilitate automated workflows for data sharing between organizations in an ITAR-compliant way.
For more information about how ShardSecure supports ITAR compliance, check out our white paper here.
Export of Defense Articles and Services (ITAR) | Office of Trade Compliance
eCFR :: 22 CFR Part 121 | The United States Munitions List
U.S. Export Controls | International Trade Administration
Understanding ITAR Compliance Regulations, Standards, and Penalties | Kiteworks
22 CFR § 123.4 - Temporary Import License Exemptions | Cornell Law School
Directorate of Defense Trade Controls | United States Department of State
22 CFR § 121.1 - The United States Munitions List | Cornell Law School
DDTC’s ITAR Encryption Rule Goes Into Effect | Thomson Reuters