ICTS International N.V. - Investigation of Possible Tax Violations by a Subsidiary

ICTS International N.V. (NASDAQ: ICTS), today reported
that the principal reason the Company is delayed in the filing of its
annual report on Form 20-F is as follows. Last year the Company's
subsidiary ICTS USA, Inc. filed a refund claim with the Internal
Revenue Service ("IRS") in an amount in excess of $2 million which was
to be reflected on the December 31, 2005 year end financial statements
as a receivable. The refund was not received and the Company made a
demand to the IRS for the refund. Thereafter, by letter dated August
15, 2006, the Company was advised that a criminal investigation by the
United States Department of Justice, Tax Division is ongoing by a
grand jury regarding possible criminal tax violations by the
subsidiary for the tax years 2002 and 2003 regarding certain royalty
payment made to the Company. As a result of the investigation the
Company believes that the refund had been put on hold.
   Mr. Menachem Atzmon, the Chairman of the Company's Supervisory
Board stated that, "The Company is unaware of any wrong doing by its
subsidiary. The subject matter of the investigation, the royalties,
was dealt with great care, and was subject to a study prepared by the
Company's auditors, being one of the big five. The Company adopted the
auditors recommendation and recorded the royalties accordingly. The
process was fully transparent and was reviewed by the government
agencies for which it was providing services. The Company has filed
its tax returns in full compliance with law, under the guidance of its
auditors. The Company will take all the necessary steps to collect the
sums due under the terms of the law. I wonder if there is any
connection between these events and the Company's claims against the
government, which are due to be heard in November?"

   About ICTS International N.V.

   ICTS specializes in the development and implementation of
innovative security concepts and solutions designed to meet the needs
of a variety of industries, mainly including transportation (aviation,
railroad and other means of public transportation), border control and
sensitive facilities. ICTS International benefits from over two
decades of expertise and international operational experience in
transportation security, with a particular emphasis on high-risk
environments, passenger processing transactions and the integration of
security services to provide a comprehensive security solution. It
also offers a wide variety of customized training programs, tailored
procedures and a wide range of security consulting services. The
company has developed and implemented unique technological solutions,
based on its comprehensive approach to security, designed to enhance
the level of security while accelerating the security check process.
www.icts-int.com

   This press release contains "forward-looking statements" within
the meaning of the Private Securities Litigation Reform Act of 1995,
regarding the Company's business strategy and future plans of
operations. Forward-looking statements involve known and unknown risks
and uncertainties, both general and specific to the matters discussed
in this press release. These and other important factors, including
those mentioned in various Securities and Exchange Commission filings
made periodically by the Company, may cause the Company's actual
results and performance to differ materially from the future results
and performance expressed in or implied by such forward-looking
statements. The forward-looking statements contained in this press
release speak only as of the date hereof and the Company expressly
disclaims any obligation to provide public updates, revisions or
amendments to any forward-looking statements made herein to reflect
changes in the Company's expectations or future events.