The US Treasury Department’s Office of Foreign Assets Control (“OFAC”), the US State Department’s Directorate of Defense Trade Control (“DDTC”), and the US Commerce Department’s Bureau of Industry and Security (“BIS”) have announced increases in the maximum civil monetary penalties (“CMPs”) under the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015 (“2015 Act”). This statute requires the agencies to make such adjustments annually by January 15 of each year. These newly adjusted CMPs may be imposed for violations of OFAC sanctions regulations, the International Traffic in Arms Regulations, and the Export Administration Regulations (“EAR”).
OFAC CMP Adjustments
Under OFAC’s Final Rule published on March 19, 2018, the adjusted penalties apply to CMPs that are assessed after March 19, 2018, regardless of whether the underlying violation predates the increase, as long as the violation occurred after November 2, 2015 (i.e., the date of the enactment of the 2015 Act). In other words, violations that occur after November 2, 2015 will be assessed at the newest CMPs. For violations that occurred before this date, the original CMPs will be used. The specific OFAC penalty adjustments for each relevant statute (as well as the 2016 “catch-up” adjustment and 2017 adjustments, for reference) are as follows:
|
Statute |
Original Maximum CMP (per violation) | 2016 Adjusted Maximum CMP (per violation) | 2017 Adjusted Maximum CMP (per violation) |
2018 Adjusted Maximum CMP (per violation) |
| Trading with the Enemy Act |
$65,000 |
$83,864 | $85,236 |
$86,976 |
| International Emergency Economic Powers Act (“IEEPA”) | The greater of $250,000 or twice the amount of the underlying transaction | The greater of $284,582 or twice the amount of the underlying transaction | The greater of $289,238 or twice the amount of the underlying transaction | The greater of $295,141 or twice the amount of the underlying transaction |
| Foreign Narcotics Kingpin Designation Act |
$1,075,000 |
$1,414,020 | $1,437,153 |
$1,466,485 |
| Antiterrorism and Effective Death Penalty Act of 1996 | The greater of $55,000 or twice the amount of which a financial institution was required to retain possession or control | The greater of $75,122 or twice the amount of which a financial institution was required to retain possession or control | The greater of $76,351 or twice the amount of which a financial institute was required to retain possession or control | The greater of $77,909 or twice the amount of which a financial institute was required to retain possession or control |
| Clean Diamond Trade Act |
$10,000 |
$12,856 | $13,066 |
$13,333 |
DDTC CMP Adjustments
DDTC published its CMP adjustments in a Final Rule on January 3, 2018. Unlike OFAC, DDTC will apply the increased CMPs to all penalties assessed on or after the date of the final rule, January 3, 2018, regardless of when the underlying violation occurred. The penalties assessed by DDTC for violations of specific sections within the Arms Export Control Act (“AECA”) (as well as the 2016 “catch-up” adjustment and 2017 adjustments, for reference) are as follows:
|
AECA Section |
Original Maximum CMP | 2016 Adjusted Maximum CMP (per violation) | 2017 Adjusted Maximum CMP (per violation) |
2018 Adjusted Maximum CMP (per violation) |
| 22 USC. § 2778(e) (control of exports and imports) |
$500,000 |
$1,094,010 | $1,111,908 |
$1,134,602 |
| 22 USC. § 2779a(c) (prohibition on incentive payments) |
$500,000 |
$795,445 | $808,458 |
$824,959 |
| 22 USC. § 2780(k) (transactions with countries supporting acts of international terrorism) |
$500,000 |
$946,805 | $962,295 |
$981,935 |
BIS CMP Adjustments
Finally, the US Commerce Department made adjustments to a number of CMPs in a Final Rule issued on January 8, 2018, which went into effect on January 15, 2018. Among these was an adjustment to CMPs for violations of IEEPA, the statute under which the EAR as well as most OFAC sanctions are enforced. The maximum CMP for violations of the EAR is the same as the CMP for violations of IEEPA announced by OFAC – $295,141 or twice the amount of the underlying transaction per violation. As with DDTC, these increased CMPs apply to all penalties assessed after the date of the Final Rule’s publication (i.e., January 15, 2018) regardless of when the underlying violation occurred.
For additional information, please contact the authors: Paul. E. Amberg or Alexandre (Alex) Lamy or any member of the US Outbound Trade group with whom you normally work. The authors thank Daniel Andreeff for his contribution to this article.
