Standard Licensing

ITAR Part §130 Requirements
Brokering Under the ITAR

  Broker is a tough concept to understand — this is best determined by your compliance professional. Even within industry and the State Department there are varying opinions on what actually constitutes brokering and if there are reporting requirements or prior approval requirements.

Brokering has been defined very broadly as someone who acts as an agent (and they do not have to use the title "agent" — it is a broad term, so think closely about what capacity outside entities work for your organization as) for other (like your organization or someone you are doing business with) to help in negotiating or arranging contracts, purchases, sales or transfers of defense articles or services in return for a fee, commission or other consideration — this means you do not even have to pay this "agent" if you are promising some sort of arrangement or benefit that is non-monetary.

Brokers could be arranging transportation, freight movement or even working with all foreign made, foreign owned items and still is considered brokering.

Companies that are entering into brokering relationships with individuals that will help facilitate sales of defense articles or services may have a requirement to request prior approval from the Department of State to engage in that brokering activity. Companies are required to report annually if they have engaged in any brokering activities. Finally, companies are required to obtain a separate State Department registration if they intend to broker, work with brokers (consultants, agents, etc.) prior to beginning those activities.

Your compliance professional is going to be one of the only people that can determine if brokering is occurring or not — they may have to do a fair amount of research, ask a lot of personal questions, see if the entity you wish to work with is registered with the Department of State and determine if the regulations have changed in the last month. This particular set of regulations is under near constant debate and must be closely monitored to determine what the current requirements are. Like much of Export and Import controls, these regulations can appear to be very subjective, thus difficult to understand, and harder to interpret "correctly."

Brokering regulations are the subject of much discussion and debate, both in industry and within the government. The Department of State is currently in the process of redefining the brokering requirements. Your compliance professional must keep up with the constantly changing regulatory environment to ensure that your organization is managing compliance correctly.