**TITLE 22\--FOREIGN RELATIONS**

**CHAPTER I\--DEPARTMENT OF STATE**

## PART 129 \-- REGISTRATION AND LICENSING OF BROKERS

**Section Contents**\
§ 129.1   Purpose.\
§ 129.2   Definitions.\
§ 129.3   Requirement to Register.\
§ 129.4   Registration statement and fees.\
§ 129.5   Policy on embargoes and other proscriptions.\
§ 129.6   Requirement for License/Approval.\
§ 129.7   Prior Approval (License).\
§ 129.8   Prior Notification.\
§ 129.9   Reports.\
§ 129.10   Guidance.

**Authority:**   Sec. 38, Pub. L. 104--164, 110 Stat. 1437, (22 U.S.C.
2778).

**Source:**   62 FR 67276, Dec. 24, 1997, unless otherwise noted.

##### § 129.1   Purpose.

Section 38(b)(1)(A)(ii) of the Arms Export Control Act (22 U.S.C. 2778)
provides that persons engaged in the business of brokering activities
shall register and pay a registration fee as prescribed in regulations,
and that no person may engage in the business of brokering activities
without a license issued in accordance with the Act.

##### § 129.2   Definitions.

(a) *Broker* means any person who acts as an agent for others in
negotiating or arranging contracts, purchases, sales or transfers of
defense articles or defense services in return for a fee, commission, or
other consideration.

\(b\) *Brokering activities* means acting as a broker as defined in
§129.2(a), and includes the financing, transportation, freight
forwarding, or taking of any other action that facilitates the
manufacture, export, or import or a defense article or defense service,
irrespective of its origin. For example, this includes, but is not
limited to, activities by U.S. persons who are located inside or outside
of the United States or foreign persons subject to U.S. jurisdiction
involving defense articles or defense services of U.S. or foreign origin
which are located inside or outside of the United States. But, this does
not include activities by U.S. persons that are limited exclusively to
U.S. domestic sales or transfers (e.g., not for export or re-transfer in
the United States or to a foreign person). For the purposes of this
subchapter, engaging in the business of brokering activities requires
only one action as described above.

\(c\) The term "foreign defense article or defense service" includes any
non-United States defense article or defense service of a nature
described on the United States Munitions List regardless of whether such
article or service is of United States origin or whether such article or
service contains United States origin components.

\[62 FR 67276, Dec. 24, 1997, as amended at 71 FR 20553, Apr. 21, 2006\]

##### § 129.3   Requirement to Register.

(a) Any U.S. person, wherever located, and any foreign person located in
the United States or otherwise subject to the jurisdiction of the United
States (notwithstanding §120.1(c)), who engages in the business of
brokering activities (as defined in this part) with respect to the
manufacture, export, import, or transfer of any defense article or
defense service subject to the controls of this subchapter (see part
121) or any "foreign defense article or defense service" (as defined in
§129.2) is required to register with the Directorate of Defense Trade
Controls.

\(b\) *Exemptions.* Registration under this section is not required for:

\(1\) Employees of the United States Government acting in official
capacity.

\(2\) Employees of foreign governments or international organizations
acting in official capacity.

\(3\) *Persons exclusively in the business of financing, transporting,
or freight forwarding, whose business activities do not also include
brokering defense articles or defense services.* For example, air
carriers and freight forwarders who merely transport or arrange
transportation for licensed United States Munitions List items are not
required to register, nor are banks or credit companies who merely
provide commercially available lines or letters of credit to persons
registered in accordance with Part 122 of this subchapter required to
register. However, banks, firms, or other persons providing financing
for defense articles or defense services would be required to register
under certain circumstances, such as where the bank or its employees are
directly involved in arranging arms deals as defined in §129.2(a) or
hold title to defense articles, even when no physical custody of defense
articles is involved.

\[62 FR 67276, Dec. 24, 1997, as amended at 71 FR 20553, Apr. 21, 2006\]

##### § 129.4   Registration statement and fees.

\(a\) *General.* The Department of State Form DS--2032 (Statement of
Registration) and the transmittal letter meeting the requirements of
§122.2(b) of this subchapter must be submitted by an intended registrant
with a payment by check, payable to the Department of State, of the fees
prescribed in Section 122.3(a) of this subchapter. Foreign brokers must
submit a check in U.S. dollars payable through a U.S. financial
institution that includes the registrant\'s legal name and address on
the check. The Statement of Registration and transmittal letter must be
signed by a senior officer (e.g., Chief Executive Officer, President,
Secretary, Partner, Member, Treasurer, General Counsel) who has been
empowered by the intended registrant to sign such documents. The
intended registrant shall also submit documentation that demonstrates
that it is incorporated or otherwise authorized to do business in the
United States. The requirement to submit a Department of State Form
DS--2032 and to submit documentation demonstrating incorporation or
authorization to do business in the United States does not exclude
foreign persons from the requirement to register. Foreign persons who
are required to register shall provide information that is substantially
similar in content as that which a U.S. person would provide under this
provision (e.g., foreign business license or similar authorization to do
business). The Directorate of Defense Trade Controls will notify the
registrant if the Statement of Registration is incomplete either by
notifying the registrant of what information is required or through the
return of the entire registration package with payment. Registrants may
not establish new entities for the purpose of reducing registration
fees.

\(b\) A person required to register under this part who is already
registered as a manufacturer or exporter in accordance with part 122 of
this subchapter must also provide notification of this additional
activity by submitting to the Directorate of Defense Trade Controls by
registered mail a transmittal letter meeting the requirements of
§122.2(b) and citing the existing registration, and must pay an
additional fee according to the schedule prescribed in §122.3(a). Any
person who registers coincidentally as a broker as defined in §129.2 of
this subchapter and as a manufacturer or exporter must submit a
Statement of Registration that reflects the brokering activities, the
§122.2(b) transmittal letter, as well as the additional fee for
registration as a broker.

\(c\) Other provisions of part 122, in particular, §122.4 concerning
notification of changes in information furnished by registrants and
§122.5 concerning maintenance of records by registrants, apply equally
to registration under this part (part 129).

\[62 FR 67276, Dec. 24, 1997, as amended at 69 FR 70889, Dec. 8, 2004;
71 FR 20553, Apr. 21, 2006; 73 FR 55441, Sept. 25, 2008\]

##### § 129.5   Policy on embargoes and other proscriptions.

(a) The policy and procedures set forth in this subparagraph apply to
brokering activities defined in §129.2 of this subchapter, regardless of
whether the persons involved in such activities have registered or are
required to register under §129.3 of this subchapter.

\(b\) No brokering activities or brokering proposals involving any
country referred to in §126.1 of this subchapter may be carried out by
any person without first obtaining the written approval of the
Directorate of Defense Trade Controls.

\(c\) No brokering activities or proposal to engage in brokering
activities may be carried out or pursued by any person without the prior
written approval of the Directorate of Defense Trade Controls in the
case of other countries or persons identified from time to time by the
Department of State through notice in the Federal Register, with respect
to which certain limitations on defense articles or defense services are
imposed for reasons of U.S. national security or foreign policy or law
enforcement interests (e.g., an individual subject to debarment pursuant
to §127.7 of this subchapter).

\(d\) No brokering activities or brokering proposal may be carried out
with respect to countries which are subject to United Nations Security
Council arms embargo (see also §121.1(c)).

\(e\) In cases involving countries or persons subject to paragraph (b),
(c), or (d), above, it is the policy of the Department of State to deny
requests for approval, and exceptions may be granted only rarely, if
ever. Any person who knows or has reason to know of brokering activities
involving such countries or persons must immediately inform the
Directorate of Defense Trade Controls.

\[62 FR 67276, Dec. 24, 1997, as amended at 71 FR 20553, Apr. 21, 2006\]

##### § 129.6   Requirement for License/Approval.

(a) No person may engage in the business of brokering activities without
the prior written approval (license) of, or prior notification to, the
Directorate of Defense Trade Controls, except as follows:

\(b\) A license will not be required for:

\(1\) Brokering activities undertaken by or for an agency of the United
States Government---

\(i\) For use by an agency of the United States Government; or

\(ii\) For carrying out any foreign assistance or sales program
authorized by law and subject to the control of the President by other
means.

\(2\) Brokering activities that are arranged wholly within and destined
exclusively for the North Atlantic Treaty Organization, any member
country of that Organization, Japan, Australia, or New Zealand, except
in the case of the defense articles or defense services specified in
§129.7(a) of this subchapter, for which prior approval is always
required.

\[62 FR 67276, Dec. 24, 1997, as amended at 71 FR 20553, Apr. 21, 2006\]

##### § 129.7   Prior Approval (License).

(a) The following brokering activities require the prior written
approval of the Directorate of Defense Trade Controls:

\(1\) Brokering activities pertaining to certain defense articles (or
associated defense services) covered by or of a nature described by Part
121, to or from any country, as follows:

\(i\) Fully automatic firearms and components and parts therefor;

\(ii\) Nuclear weapons strategic delivery systems and all components,
parts, accessories, attachments specifically designed for such systems
and associated equipment;

\(iii\) Nuclear weapons design and test equipment of a nature described
by Category XVI of Part 121;

\(iv\) Naval nuclear propulsion equipment of a nature described by
Category VI(e);

\(v\) Missile Technology Control Regime Category I items (§121.16);

\(vi\) Classified defense articles, services and technical data;

\(vii\) Foreign defense articles or defense services (other than those
that are arranged wholly within and destined exclusively for the North
Atlantic Treaty Organization, Japan, Australia, or New Zealand (see
§§129.6(b)(2) and 129.7(a)).

\(2\) Brokering activities involving defense articles or defense
services covered by, or of a nature described by, Part 121, in addition
to those specified in §129.7(a), that are designated as significant
military equipment under this subchapter, for or from any country not a
member of the North Atlantic Treaty Organization, Australia, New
Zealand, or Japan whenever any of the following factors are present:

\(i\) The value of the significant military equipment is \$1,000,000 or
more;

\(ii\) The identical significant military equipment has not been
previously licensed for export to the armed forces of the country
concerned under this subchapter or approved for sale under the Foreign
Military Sales Program of the Department of Defense;

\(iii\) Significant military equipment would be manufactured abroad as a
result of the articles or services being brokered; or

\(iv\) The recipient or end user is not a foreign government or
international organization.

\(b\) The requirements of this section for prior written approval are
met by any of the following:

\(1\) A license or other written approval issued under parts 123, 124,
or 125 of this subchapter for the permanent or temporary export or
temporary import of the particular defense article, defense service or
technical data subject to prior approval under this section, provided
the names of all brokers have been identified in an attachment
accompanying submission of the initial application; or

\(2\) A written statement from the Directorate of Defense Trade Controls
approving the proposed activity or the making of a proposal or
presentation.

\(c\) Requests for approval of brokering activities shall be submitted
in writing to the Directorate of Defense Trade Controls by an empowered
official of the registered broker; the letter shall also meet the
requirements of §126.13 of this subchapter.

\(d\) The request shall identify all parties involved in the proposed
transaction and their roles, as well as outline in detail the defense
article and related technical data (including manufacturer, military
designation and model number), quantity and value, the security
classification, if any, of the articles and related technical data, the
country or countries involved, and the specific end use and end user(s).

\(e\) The procedures outlined in §126.8(c) through (g) are equally
applicable with respect to this section.

\[62 FR 67276, Dec. 24, 1997, as amended at 71 FR 20553, Apr. 21, 2006\]

##### § 129.8   Prior Notification.

(a) Prior notification to the Directorate of Defense Trade Controls is
required for brokering activities with respect to significant military
equipment valued at less than \$1,000,000, except for sharing of basic
marketing information (e.g., information that does not include
performance characteristics, price and probable availability for
delivery) by U.S. persons registered as exporters under Part 122.

\(b\) The requirement of this section for prior notification is met by
informing the Directorate of Defense Trade Controls by letter at least
30 days before making a brokering proposal or presentation. The
Directorate of Defense Trade Controls will provide written
acknowledgment of such prior notification to confirm compliance with
this requirement and the commencement of the 30-day notification period.

\(c\) The procedures outlined in §126.8(c) through (g) are equally
applicable with respect to this section.

\[62 FR 67276, Dec. 24, 1997, as amended at 71 FR 20553, Apr. 21, 2006\]

##### § 129.9   Reports.

Any person required to register under this part shall provide annually a
report to the Directorate of Defense Trade Controls enumerating and
describing its brokering activities by quantity, type, U.S. dollar
value, and purchaser(s) and recipient(s), license(s) numbers for
approved activities and any exemptions utilized for other covered
activities.

\[71 FR 20554, Apr. 21, 2006\]

##### § 129.10   Guidance.

Any person desiring guidance on issues related to this part, such as
whether an activity is a brokering activity within the scope of this
Part, or whether a prior approval or notification requirement applies,
may seek guidance in writing from the Directorate of Defense Trade
Controls. The procedures and conditions stated in §126.9 apply equally
to requests under this section.

\[71 FR 20554, Apr. 21, 2006\]

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