Kevin Gholston

The Directorate of Defense Trade Controls (DDTC), under the Department of State, has released the AUKUS Final Rule. This amendment, under part 126 of the International Traffic in Arms Regulations (ITAR) was published and became effective on December 30, 2025.  This exemption will greatly facilitate defense trade between defense trade between the United States, the United Kingdom, and Australia. 

AUKUS Final Rule Evolution

AUKUS was initiated as a strategic initiative to enhance the defense capabilities of all three nations.  It was created in response to national security threats posed by the Peoples Republic of China (PRC) and Russia.  Its initial priority, under Pillar 1, was to facilitate the Royal Australian Navy’s acquisition of nuclear-powered submarines.

AUKUS Pillar 2 was later initiated to develop advanced military capabilities between the three nations. Its focus includes artificial intelligence, quantum technologies, and undersea capabilities.  Pillar 2 is considered a crucial element in maintaining a competitive edge in the Indo-Pacific region.  Future developments in this effort may include Japan and South Korea.

Pillar 1 went through a temporary halt as the program underwent a Pentagon review to address capability concerns.  It was felt that the agreement would leave the U.S. with insufficient submarine assets.  These concerns were mitigated when the U.K. agreed to increase its shipbuilding and service industries.

Participating in AUKUS Pillar 2

The AUKUS defense trade and cooperation exemption applies to specific articles and defense services, and dual-use items.  It allows the export, reexport, retransfer or temporary import to designated countries without individual licenses.  Items not allowed under this exemption can be found under the Excluded Technology List.  Organizations in participating countries desiring to participate in the program must be registered Authorized Users.

AUKUS Revisions Affecting the EAR

The Bureau of Industry and Security (BIS) had published an interim final rule in April 2024 to remove license requirements for exports, reexports, and in-country transfers between the three countries.  In May 2024 the BIS made corrections to that publication to footnote 9. This change, while easing licensing and end use requirements for most items would leave in place license requirements for firearms-related items and other CC controlled items.

These items include ECCNs 0A501 (except 0A501.y), 0A502, 0A503, 0A504, 0A505.a, .b, and .x, 0A981, 0A982, 0A983, 0D501, 0D505, 0E501, 0E502, 0E504, 0E505, and 0E982. 

CVG Strategy Export Compliance Management Programs

The AUKUS final rule illustrates the everchanging risks and opportunities for organizations involved in the export of  ITAR regulated products.  Remaining informed and having an effective export compliance program is essential for maintain a competitive edge. 

Export Compliance Management Programs establish clearly defined policies and procedures for all departments within an organization.  They ensure that essential processes are performed to prevent violations.  They also ensure that training, auditing, and record keeping are maintained according to requirements.

CVG Strategy can help you understand export regulations, and help you establish a coherent and effective export compliance program.   We can perform export control classifications, perform audits, assist in filings for export licenses and educate your team.  Regardless of whether your business falls under EAR or ITAR, CVG Strategy has the expertise to help. 

Export regulations effectiveness in the protection of U.S. national security and promotion of foreign policy objectives has become a growing concern given the pace of regulatory changes.  Recently,  the Foundation for Defense of Democracies and the Center for Strategic and International Studies have published reviews of their findings on the issue.

U.S. Semiconductor Controls

Center to this assessment are controls put in place by the Department of Commerce to limit access of semiconductor manufacturing equipment and components with Artificial Intelligence (AI) capabilities to Chinese companies.  While some would argue that export controls on the semiconductor industry cut into U.S. corporate profits, it can also be argued that long term protection of technological leadership and national security issues are far more crucial.

Cutting edge AI chips that are subject to export control are still available to international partners.  This hold true for other emerging technologies such as biotechnology and high-bandwidth memory components.  Restricting these technologies from adversaries, most especially China, slows their ability to replicate or militarize them.  While some might contend that this will lead to China developing its own technological base, the fact remains that China remains the largest importer of semiconductors despite a sustained effort to develop a competitive technological base.

The Future of Export Controls

Export regulations effectiveness is essential in protecting national security and promoting foreign policy objectives, but their success often depends on proper enforcement and the specific context in which they are applied.  It is crucial that the Departments of State and Commerce clearly target strategic emerging technologies that effect national security.  These efforts should be conducted in concert with international partners and allies to achieve best results. 

It is also essential that U.S. producers of technology realize the long term consequences of sales to foreign competitors.  While short term gains may be achieved, the loss of technological leadership will lead to large scale loss of marketplace as products are copied and sold elsewhere.

Many in the export compliance industry have expressed a concern about using export controls as a bargaining tool.  The concern is, as Navin Girishankar and Matt Borman point out in their CSIS publication, that export controls remain a tool that is principled in nature rather than a transactional bargaining tool.

National Security Issues

In recent years, the U.S. has expanded its export controls, particularly against Russia and China. This has included enhanced restrictions on technology exports to Russia following its invasion of Ukraine and regulations targeting Chinese capabilities in artificial intelligence and semiconductors.  These effort have faced enforcement challenges such as increased global smuggling and evasion networks and underinvestment in enforcement technologies to monitor and control exports effectively.

Though not prominently featured in massed media, the United States and its partners and allies face critical security issues.  Export controls are an essential tool for maintaining national security.  They must be prioritized in their use to prevent the proliferation of weapons of mass destruction, Restrict access to advanced technologies by adversaries, and protect sensitive information and technologies from being exploited by hostile nations.

The Challenges Ahead for Businesses Involved in Export

U.S. businesses face increasing challenges from export regulations due to rising geopolitical tensions and complex compliance requirements.  These events can disrupt market strategies and supply chains. As an result, businesses must navigate an everchanging landscape of restrictions that can affect their ability to compete globally and manage costs effectively.

CVG Strategy Export Compliance Management Programs

Organizations involved with export must adhere to regulations regardless of export regulations effectiveness.  Remaining informed and having an effective export compliance program is essential for avoiding criminal and civil penalties.

Export Compliance Management Programs establish clearly defined policies and procedures for all departments within an organization.  They ensure that registration, item classifications, license applications, denied part screening, and security measures are taken that will prevent violation.  They also ensure that training, auditing, and record keeping are maintained according to requirements.

CVG Strategy can help you understand revisions to the International Traffic in Arms Regulations (ITAR) and the Export Administration Regulations (EAR), and help you establish a coherent and effective export compliance program.   We can perform export control classifications, perform audits, assist in filings for export licenses and educate your team.  Regardless of whether your business falls under EAR or ITAR, CVG Strategy has the expertise to help. 

The AUKUS nuclear submarine program is under a Pentagon review to access if the agreement will leave the U.S. Navy with sufficient submarine fleet assets to address its national security requirements.  There have been concerns that the current agreement would leave the United States with a shortage of Virginia class boats due to challenges in constructing and maintaining the vessels.  As a result, the Australian Submarine Agency will now be required to upgrade its Collins-class submarines.

U.S. and U.K. Submarine Industrial Bases

The U.S. Navy currently aims to produce three submarines annually by 2028, including one Columbia-class and two Virginia-class submarines.  It is facing delays in these programs, with production rates hovering around 1.1 to 1.2 boats per year. Congress has allocated billions to support submarine production, emphasizing the need to meet both domestic and allied demands.

The U.K. also faces significant challenges, including delays in production and a diminished workforce with the necessary skills.  Addressing these issues will require strategic investments, workforce development, and improved management of supply chains to ensure the UK can meet its submarine production goals effectively.

AUKUS Background

The AUKUS agreement is a trilateral security partnership between Australia, the United Kingdom, and the United States that was initiated in 2021. Its initial priority was to facilitate the Royal Australian Navy’s acquisition of U.S.-made Virginia-class submarines. This action was taken in response to China’s threat presence in the Indo-Pacific region in the past decade.

The partnership is also developing a new class of nuclear-powered submarines known as the SSN-AUKUS submarines, with the UK planning to build up to 12 submarines and Australia planning to build five. These attack submarines are expected to enter service in the late 2030s for the UK and early 2040s for Australia, replacing their current submarine classes.

AUKUS and US Export Regulation

The strategic partnership has also involved information sharing, counter-hypersonic technologies, cyber capabilities, artificial intelligence quantum technologies and additional undersea capabilities.  AUKUS defense trade rule changes were implemented in 2024 to ease International Traffic in Arms Regulations (ITAR) export policies on these military articles and technologies. 

The Bureau of Industry and Security (BIS) which administers the Export Administration Regulations (EAR) had published an interim final rule in April 2024 to remove license requirements for exports, reexports, and in-country transfers for most items between the three countries.

Repercussions for the AUKUS 

While defense trade aspects of the arrangement are likely to remain in place the viability of the submarine program remains in doubt.   In an appearance before the Senate Arms Services Committee, Adm. Daryl Caudle stated that the U.S. industrial base must grow to a capability of building 2.33 attack submarines per year while maintaining output of Columbia class nuclear ballistic submarines to maintain supplying Australia with submarines.

Caudle endorsed working with international partners for maintenance and repair requirements for U.S. ships.  He also stressed minimizing attrition at shipyard to address what amounts to a desired doubling of shipbuilding capabilities.

CVG Strategy Export Compliance Management Programs

The AUKUS Nuclear Submarine program review illustrates the everchanging risks and opportunities for organizations involved in the export of  ITAR regulated products.  Remaining informed and having an effective export compliance program is essential for maintain a competitive edge. 

Export Compliance Management Programs establish clearly defined policies and procedures for all departments within an organization.  They ensure that registration, item classifications, license applications, denied part screening, and security measures are taken that will prevent violation.  They also ensure that training, auditing, and record keeping are maintained according to requirements.

CVG Strategy can help you understand revisions to ITAR and EAR, and help you establish a coherent and effective export compliance program.   We can perform export control classifications, perform audits, assist in filings for export licenses and educate your team.  Regardless of whether your business falls under EAR or ITAR, CVG Strategy has the expertise to help. 

 

Revisions to the International Traffic in Arms Regulations (ITAR) and the United States Munitions List (USML) have been released to streamline compliance and enhance national security while facilitating trade with United States allies.  The Department of State Directorate of Defense Trade Controls (DDTC) has released these changes to clarify the ITAR and remove defense articles from the USML that no longer warrant inclusion. 

The DDTC has also added items to the USML to reflect advancements in technology and changes in defense needs. These changes will be in effect as of September 15, 2025.

Items Moved from ITAR to EAR Jurisdiction 

The Department of State has removed items from the USML that no longer warrant inclusion.  These items will likely be picked by the Bureau of Industry and Security (BIS). Organizations conducting license applications for items transitioning from the USML to the Commerce Control List (CCL) should refer to General Order No. 5 in supplement no. 1 to part 736 of the EAR. Parties currently holding licenses, agreements or approvals from the DDTC for transitioning items will not be affected by this change for a period of three years.

Revisions to the ITAR USML Categories

The following are highlights of changes to the USML.  The latest revision of the USML should be consulted for classifications and licensing concerns..

USML Category III – Ammunition and Ordnance

Under provisions for enhanced projectile tips, the USML now excludes steel or tungsten shotgun pellets with diameters less than or equal to 0.230 inches.  This exclusion pertains to lead free bird shot and therefore does not have a specific military function.

USML Category IV – Launch Vehicles, Guided Missiles, Rockets, Torpedoes, Bombs, and Mines

The USML now includes new license exemptions for large Unmanned Underwater Vehicles (UUVs) for UUVs having military, scientific, and commercial applications. The USML will now authorize temporary exports, reexports, and temporary imports of UUVs having a weight of up to 8,000 pounds.

USML Category V – Explosives and Energetic Materials, Propellants, Incendiary Agents and their Constituents 

Various pyrotechnic, binders, additives, and chemical precursors were added to this category of the USML.  The Department notes CAS numbers indicated on the USML may not cover all substances and mixtures described in the associated USML entries. 

USML Category VII – Ground Vehicles

Changes were made to define ITAR controlled vehicles as any vehicle meeting control parameters regardless of surface of operation, vehicle control type, or mode of locomotion.

USML Category VIII – Aircraft and Related Articles

The definition for AESA fire control radar on foreign advanced aircraft was revised to avoid the inadvertent inclusion of minor parts and components.  The recently announced F-47, the Air Force’s Next Generation Platform was also added to the aircraft list is paragraph (h)(1).  Additionally, descriptions for “specially designed” for foreign advanced military aircraft were expanded.  

USML Category XI – Military Electronics

The description of counter-jamming equipment in USML Category XI(a)(4)(iii) now excludes GNSS anti-jam and GNSS anti-spoofing systems.  The standard addresses Controlled Reception Pattern Antennas (CRPAs) that are applicable in military and critical applications where accurate positioning is essential.

USML Category XIX – Gas Turbine Engines and Associated Parts

AGT1500, CTS800, GE38, GE3000, HPW3000, MT7, T55, T408, or T700 engines are now licensed by the Department of Commerce when intended use is for aircraft controlled under ECCN 9A610 but are to be are to be controlled under the ITAR for all other circumstances.  Various other engine types were added to the USML.  

USML Category XX – Submersible Vessels and Related Articles

A new exemption will be available for the temporary export, reexport, and temporary import of UUVs described in USML Category XX(a)(10) under 8,000 pounds.  This includes provisions for defense services for those UUVs, when used for civil purposes. 

USML Category XXI – Articles, Technical Data, and Defense Services not Otherwise Enumerated

A note was added stating that the Director, Office of Defense Trade Control Policy reserves the right to designate catch-alls, exclusions, or designations of Significant Military Equipment (SME) for articles under this category.

CVG Strategy Export Compliance Management Programs

Revisions to the ITAR reflect a proactive approach to adapting to technological advancements and international security dynamics.  ITAR developments are continuing to add complexity for businesses engaged in sales of items that are intended for international sales international sales.  Failure to comply with regulations can result in criminal prosecution including imprisonment and fines.  It can also result in civil penalties and disbarment from export activities. 

Export Compliance Management Programs establish clearly defined policies and procedures for all departments within an organization.  They ensure that registration, item classifications, license applications, denied part screening, and security measures are taken that will prevent violation.  They also ensure that training, auditing, and record keeping are maintained according to requirements.

CVG Strategy can help you understand revisions to ITAR and EAR, and help you establish a coherent and effective export compliance program.   We can perform export control classifications, perform audits, assist in filings for export licenses and educate your team.  Regardless of whether your business falls under EAR or ITAR, CVG Strategy has the expertise to help. 

The Bureau of Industry and Security (BIS) has recently paused the processing of new export license applications, leading to significant delays. This pause, which affects applications submitted after February 5, 2025, has raised concerns about the impact on business.  The pause is part of an internal review of licensing policies initiated by Undersecretary Jeffrey Kessler and other officials. 

No formal announcement has been made regarding the expected duration of this pause, leaving the industry without clear standards for processing applications.  Industry officials express concern that these delays could negatively impact American companies and their ability to operate effectively.

Under Secretary of Commerce Jeffrey Kessler

Jeffrey Kessler, was appointed Under Secretary of Commerce for Industry and Security under President Donald Trump.  His focus, to this point has been on reforming the Bureau of Industry and Security (BIS) to enhance United States national security, particularly regarding advanced American technologies and export controls related to China. He has also faced scrutiny over budget requests and the effectiveness of existing regulations like the AI Diffusion Rule.

Kessler has defended the Bureau of Industry and Security’s (BIS) budget request, which seeks a 50% increase. He plans to hire nearly 200 additional Export Enforcement Special Agents and expand the number of Export Control Officers stationed overseas.

Kessler’s actions have been driven in part by criticism of the BIS for failures in safeguarding national security and preventing adversaries from accessing critical defense goods and technologies. This includes a lack of transparency in license approval rationale in cases where sensitive technologies have been sold to China despite a publicly stated presumption of denial policy.  

An Uncertain Road Ahead

BIS license delays are a subject of concern and apprehension for US businesses involved in export transactions.  There have been notable reductions in public statements from the agency since the beginning of the Trump administration.  Previous to Kessler’s leadership, license applications took, on average, 28 days for approval.  

Other concerns have been voiced over Kessler’s micromanagement approach delaying drafted changes to the Export Administration Regulations (EAR) and appointment of necessary personnel within the bureau. The Bureau of Industry and Security (BIS) has faced several challenges and shortcomings. These have included enforcement activities being hampered by outdated technologies and insufficient resources, underinvestment in technology, lack of proactive initiatives, and limited coordination with the Department of Defense Trade Controls (DDTC).

While it is important that the BIS no longer “rubber stamp” license approvals, frustration among exporters could be eased by increased communications.  Many license approvals to allied countries are occurring and, according to Reuters, communications with some companies is being maintained.

CVG Strategy Export Compliance Expertise

The DDTC, the BIS, and the OFAC, along with international partners have greatly increased their activities in the generation and enforcement of regulations.  This increases the likelihood of a non-egregious violation occurring even in a company with a well-run export compliance program.  CVG Strategy can assist organizations through the Voluntary Self Disclosure process and guide you through these difficult procedures.  

If you are part of a large corporation or a small company with a part-time compliance person, CVG Strategy has the compliance and training programs to help you meet International Traffic in Arms Regulations (ITAR) and Export Administration Regulations (EAR) rules and requirements.  As the BIS place controls on a growing number of technologies it becomes increasing difficult for smaller businesses to stay abreast of regulatory developments.  Because of this, we provide Export Compliance Management Programs (ECMP) for businesses of all sizes.  

CVG Strategy, LLC is recognized the world over as the premier provider of Export Compliance Consulting and Export Compliance Programs for businesses involved in export in the U.S. and Canada.  We also provide the essential training that ensures that your team is up to date on governmental regulations, including the Export Administration Regulations (EAR), the International Traffic in Arms Regulations (ITAR), the Canadian Controlled Goods Program, and Office of Foreign Asset Controls (OFAC) and other regulatory agencies and more.

The US Senate has approved the Export Control Transparency Act in an effort to enhance oversight of the Bureau of Industry and Security (BIS) dual use export controls.  This Act will require the BIS to submit quarterly reports to Congress detailing export licensing requests. This reporting would include aggregate statistics on all license applications and other requests for authorization.  The Act would also require the BIS to provide information of enforcement activities and end-use checks. 

Criticism has been leveled against the BIS for failures in safeguarding national security and preventing adversaries from accessing critical defense goods and technologies.  This includes a lack of transparency in license approval rationale in cases where sensitive technologies have been sold to China despite a publicly stated presumption of denial policy.

Challenges Facing the Bureau of Industry and Security (BIS) 

This legislation is part of on going effort to address the Bureau’s challenges in developing effective regulatory export controls for sensitive technologies.  The Bureau of Industry and Security (BIS) has faced several challenges and shortcomings in its previous actions regarding export controls. These have included enforcement activities being hampered by outdated technologies and insufficient resources, underinvestment in technology, lack of proactive initiatives, and limited coordination with the Department of Defense Trade Controls (DDTC).

Conclusions

The Export Control Transparency Act seeks to amend the export control reform act of 2018 in maintaining American superiority in technology and protecting United States national security.  Hopefully this will result in regulatory requirements that effectively target specific threats without placing unnecessary restrictions on legitimate exports.  Additionally, congressional oversight could provide license approvals consistent with the agency’s regulations.

CVG Strategy Export Compliance Expertise

The DDTC, the BIS, and the OFAC, along with international partners have greatly increased their activities in the generation and enforcement of regulations.  This increases the likelihood of a non-egregious violation occurring even in a company with a well-run export compliance program.  CVG Strategy can assist organizations through the Voluntary Self Disclosure process and guide you through these difficult procedures.  

If you are part of a large corporation or a small company with a part-time compliance person, CVG Strategy has the compliance and training programs to help you meet International Traffic in Arms Regulations (ITAR) and Export Administration Regulations (EAR) rules and requirements.  As the BIS place controls on a growing number of technologies it becomes increasing difficult for smaller businesses to stay abreast of regulatory developments.  Because of this, we provide Export Compliance Management Programs (ECMP) for businesses of all sizes.  

CVG Strategy, LLC is recognized the world over as the premier provider of Export Compliance Consulting and Export Compliance Programs for businesses involved in export in the U.S. and Canada.  We also provide the essential training that ensures that your team is up to date on governmental regulations, including the Export Administration Regulations (EAR), the International Traffic in Arms Regulations (ITAR), the Canadian Controlled Goods Program, and Office of Foreign Asset Controls (OFAC) and other regulatory agencies and more.

The Bureau of Industry and Security (BIS) is considering a 50% rule to address loopholes that are being used by subsidiaries of parent organizations on the BIS entity list.  The proposed regulation would be similar to current to regulations enacted by the Office of Foreign Asset Controls (OFAC).  This action would impose licensing requirements across corporate structures to parent companies and sister companies.

Restricting Exports of Advanced Technologies to China

The United States has implemented strict export controls to limit China’s access to advanced technology, particularly in the semiconductor and artificial intelligence (AI) sectors. These measures aim to protect national security and maintain U.S. technological leadership. China has implemented several strategies including having Chinese entities create subsidiaries to circumvent export controls.  Currently BIS sanctions do not apply to to distinct legal entities such as separate subsidiaries.

Implications of the Proposed Rule

The draft regulation is a needed enforcement action to prevent evasion of export controls.  It will however, require increased due diligence from organizations involved in the export of regulated items and technologies to avoid unintended violation of export regulations.  Increased scrutiny will be required in the screening of potential customers to ensure that they are not associated with listed entities.  Many in export compliance agree that the BIS may release an enhanced version of the BIS Entity List.

Denied Parties Screening

The U.S. Government maintains multiple screening lists of sanctioned entities and individuals that are updated on a regular basis. These updates should be checked against an organization’s current database of customers, suppliers, employees (to include consultants and contractors), and visitors, to determine if any new matches may exist. Records of these screenings should be maintained for a minimum of five years.

Performing effective screening programs can be a challenge for smaller organizations.  Many opt to rely on the Consolidated Screening List which is maintained by the United States Government.  While this provides basic tools for screening, it is not easily implemented into business systems and databases. 

CVG Strategy recommends that  Restricted Party Screening tools supplied by private vendors be used.  These tools can perform automatic rescreenings and provide alerts for any change in previously screened entities’ status.

Conclusions

Businesses will need to develop plans to react to the potential for increased risk while the BIS is considering this 50% rule.  This may include review and amendment of the organization’s export policies and procedures and a review of required resources to address the complexities involved with enhanced denied party screening.  

In the last decade, enforcement authorities actions in sanction cases have resulted in billions of dollars in civil and criminal penalties. This is because many businesses are lax in ensuring that parties they are engaging in transactions are not on denied parties lists.

CVG Strategy Export Compliance Expertise

The DDTC, the BIS, and the OFAC, along with international partners have greatly increased their activities in the generation and enforcement of regulations.  This increases the likelihood of a non-egregious violation occurring even in a company with a well-run export compliance program.  CVG Strategy can assist organizations through the Voluntary Self Disclosure process and guide you through these difficult procedures.  

If you are part of a large corporation or a small company with a part-time compliance person, CVG Strategy has the compliance and training programs to help you meet International Traffic in Arms Regulations (ITAR) and Export Administration Regulations (EAR) rules and requirements.  As the BIS place controls on a growing number of technologies it becomes increasing difficult for smaller businesses to stay abreast of regulatory developments.  Because of this, we provide Export Compliance Management Programs (ECMP) for businesses of all sizes.  

CVG Strategy, LLC is recognized the world over as the premier provider of Export Compliance Consulting and Export Compliance Programs for businesses involved in export in the U.S. and Canada.  We also provide the essential training that ensures that your team is up to date on governmental regulations, including the Export Administration Regulations (EAR), the International Traffic in Arms Regulations (ITAR), the Canadian Controlled Goods Program, and Office of Foreign Asset Controls (OFAC) and other regulatory agencies and more.

Self disclosure and cooperation in the investigation of export regulation violations by an entity’s acquiror has led to a waiver of prosecution against the acquiring company (White Deer Management LLC).  The Department of Justice’s National Security Division and the Southern District of Texas’s United States Attorney’s Office have also decided to decline prosecution of the acquired company Unicat Catalyst Technologies LLC. 

Federal agencies have instead opted to file criminal prosecution against Unicat’s former CEO and co-founder, Mani Erfan.  Efran has pled guilty to conspiring to violate sanctions, concealment, and money laundering.  According to Department of Justice (DOJ) records Erfan sold controlled catalysts used in petroleum refining and steel production to entities in Cuba, Syria, Venezuela, and Iran in violation of US sanctions.  

US Export Sanctions

U.S. export sanctions are legal restrictions imposed by the government to control the export of goods, services, and technology to certain countries or entities, primarily for national security and foreign policy reasons. These sanctions can prohibit all transactions or target specific items and require exporters to obtain licenses for compliance.  Targeted areas for sanctions include bans on the export of arms and controls over items classified as dual use.   

The International Traffic in Arms Regulations (ITAR) proscribe prohibited and denied countries in Section 126.1 of the regulations. The Bureau of Industry and Security (BIS) maintains a list of embargoed countries under Supplement 1 Part 740 of the Export Administration Regulations (EAR).  The BIS also maintains lists for Military End Use (MEU) items, General Embargoed Countries List, and a list of countries sanctioned in conjunction with UN embargoes.

Mergers, Acquisitions, and Export Compliance

Export compliance assessment is crucial during mergers and acquisitions (M&A) to avoid inheriting liabilities from the acquired company, such as violations of export regulations. It is essential therefore, that acquirers conduct thorough audits of entities they intend on purchasing before finalizing agreements.  Failure to detect previous violations can result in penalties, increased scrutiny from regulatory agencies, loss of business reputation, and restriction from future exports.  If irregularities are suspected self disclosure and cooperation with appropriate agencies should take place.

Voluntary Self-Disclosure

A Voluntary Self-Disclosure (VSD) is conducted when an organization recognizes that violations or suspected violations of export regulations of the United States have occurred. Voluntary self-disclosure to the Bureau of Industry and Security (BIS) is encouraged for parties who believe they may have violated export control regulations. Submitting a VSD in good faith can be a mitigating factor in determining administrative sanctions.  These actions should include full cooperation and remediation with all applicable agencies.

Federal enforcement agencies consider cases where self disclosure and cooperation have not occurred as aggravating circumstances when considering criminal and civil prosecution.  Examples of a failure of complete disclosure include not voluntarily self disclosing misconduct of employees, suppliers, and members of the leadership, and witholding relevant documents.

CVG Strategy Export Compliance Expertise

The DDTC, the BIS, and the OFAC, along with international partners have greatly increased their activities in the generation and enforcement of regulations.  This increases the likelihood of a non-egregious violation occurring even in a company with an effective compliance program.  CVG Strategy can assist organizations through the Voluntary Self Disclosure process and guide you through these difficult procedures.  

If you are part of a large corporation or a small company with a part-time compliance person, CVG Strategy has the compliance and training programs to help you meet International Traffic in Arms Regulations (ITAR) and Export Administration Regulations (EAR) rules and requirements.  As the BIS place controls on a growing number of technologies it becomes increasing difficult for smaller businesses to stay abreast of regulatory developments.  Because of this, we provide Export Compliance Management Programs (ECMP) for businesses of all sizes.  

CVG Strategy, LLC is recognized the world over as the premier provider of Export Compliance Consulting and Export Compliance Programs for businesses involved in export in the U.S. and Canada.  We also provide the essential training that ensures that your team is up to date on governmental regulations, including the Export Administration Regulations (EAR), the International Traffic in Arms Regulations (ITAR), the Canadian Controlled Goods Program, and Office of Foreign Asset Controls (OFAC) and other regulatory agencies and more.