Broker filings, guidance and annual reports

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1. A yearly cycle of filings

A registered broker lives on an annual cycle. It registers every year, reports its brokering every year, and between renewals it tells the Directorate of Defense Trade Controls about certain changes within days. Who must register in the first place is covered in what counts as brokering. This piece covers what follows.

2. The statement of registration

An intended registrant submits Form DS-2032, the statement of registration, to the Office of Defense Trade Controls Compliance (22 CFR 129.8(a)). It must be signed by an empowered senior officer who is an American person, except that a foreign senior officer may sign where the registrant seeks to register only as a foreign broker. The statement may cover majority-owned or otherwise controlled subsidiaries and affiliates.

The registrant must show that it is incorporated or otherwise authorized to do business in its country, and foreign registrants provide substantially similar evidence, such as a foreign business license. An incomplete statement is either returned or answered with a list of what is missing (22 CFR 129.8(a)).

The statement carries two certifications (22 CFR 129.8(c)). The first covers the registrant, its listed affiliates and their senior officers and directors. It states whether any of them has ever been indicted, charged or convicted under the listed American criminal statutes, or under a foreign export law carrying more than one year of imprisonment. It also says whether any of them is barred from government contracts or from export and import approvals. The second states whether the registrant is foreign owned or foreign controlled, and if so identifies who ultimately owns or controls it.

3. Renewal and fees

Registration is annual, with the Tier 1 fee set in the registration rules for manufacturers and exporters. The fee does not depend on how many favorable determinations the broker received in the year (22 CFR 129.8(b)(1)). A group already registered as a manufacturer or exporter, with its brokering affiliates listed, does not pay again.

Timing is fixed. "A registrant must submit its request for registration renewal at least 30 days, but no earlier than 60 days, prior to the expiration date" (22 CFR 129.8(b)(2)). A registrant that lets its registration lapse and later registers again must pay fees for any part of the gap during which it was brokering (22 CFR 129.8(g)).

4. Changes that cannot wait for renewal

Some events must be reported within five days, by written notice signed by a senior officer (22 CFR 129.8(d)). They include an indictment, charge or conviction of any person covered by the registration certification, or that person becoming ineligible. They also include changes to the registrant’s name, address or legal structure, its ownership or control, and its board, senior officers, partners or owners. The establishment, acquisition or divestment of a brokering affiliate is reported the same way. Other changes are reported at renewal. The five-day rule applies to the registrant’s listed parent, subsidiaries and affiliates as well as to the registrant itself, since the certification covers them all.

A foreign takeover needs earlier notice. A registrant must notify the Directorate at least 60 days in advance of any intended sale or transfer to a foreign person of ownership or control of the registrant or of a listed parent, subsidiary or affiliate. That notice does not replace any prior approval otherwise required (22 CFR 129.8(e)).

After a merger or acquisition, the new entity reports its name and previous names, which registration number continues, and the numbers of all brokering approvals under the continuing registration. Any approval not included in that notification is considered invalid (22 CFR 129.8(f)).

5. Asking whether an activity is brokering

A person unsure whether an activity is brokering can ask in writing. The request describes the activities fully. It sets out what each participant will do, with each participant’s name, nationality and location. It describes each defense article by category, nomenclature, quantity, value and classification, and gives the end-user, the end-use and any agreement between the parties (22 CFR 129.9(a)).

The answer has formal status. "The guidance will constitute an official determination by the Department of State" (22 CFR 129.9(b)). It has a limit as well. "The guidance shall not substitute for approval when required under § 129.4" (22 CFR 129.9(b)). Guidance on other aspects of the brokering rules may be requested in the same way.

6. The annual brokering report

Every registered broker files a report of its brokering in the previous twelve months, with its renewal or, if it is not renewing, within 30 days after its registration expires (22 CFR 129.10(a)). The report covers activities that were approved and activities that were exempt.

The detail required is considerable (22 CFR 129.10(b)). For each activity the report gives the approval number or exemption claimed. It names every participant with address, nationality, location and role, and gives the quantity, description and dollar value of the articles or services. It also gives the type and value of any consideration received or expected, directly or indirectly, by anyone who took part, and its source. An empowered official certifies the report complete and accurate. "If there were no brokering activities, the report shall certify that there were no such activities" (22 CFR 129.10(c)).

Records sit behind the report. Registrants must keep brokering records under the same record keeping rules that apply to registered manufacturers and exporters (22 CFR 129.11).

7. What this means for a broker

The filings add up to a full record of who a broker is, who owns it, and every deal it touched. The annual report asks for the money that changed hands as well as the goods, including amounts expected but not yet paid. Ownership changes and legal trouble cannot wait for renewal. Approval for individual transactions, a separate requirement, is described in getting approval for a brokering transaction.

Key terms

Form DS-2032	The statement of registration filed each year by registrants, including brokers.
Five day notice	The deadline for reporting charges, ineligibility and key changes in a registrant’s details.
Brokering guidance	A written request for an official determination of whether an activity is brokering.
Annual brokering report	A yearly report of all brokering activities, participants and consideration, or a nil return.

Every statement above links to the document behind it. The full source list for this piece is on the sources page.

This page describes public United States government programs for general information. It is not legal, regulatory or procurement advice, and it does not address the facts of any particular case.

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