The US Treasury Department’s Office of Foreign Assets Control (OFAC), the US State Department (State), and the US Commerce Department (Commerce) issued rules adjusting maximum civil monetary penalties (CMPs) under the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015 (FCA), as outlined below.  (For additional years of CMPs, see our previous blog post available here.) 

OFAC CMP Adjustments

Under OFAC’s final rule published on March 17, 2021, the adjusted penalties apply to CMPs that are assessed after March 17, 2021, as long as the violation occurred after November 2, 2015 (i.e., the date of the enactment of the 2015 Act).  OFAC imposes CMPs pursuant to the penalty authority in five statutes: the Trading with the Enemy Act (TWEA), the International Emergency Economic Powers Act (IEEPA), the Foreign Narcotics Kingpin Designation Act (FNKDA), the Antiterrorism and Effective Death Penalty Act (AEDPA), and the Clean Diamond Trade Act (CDTA). OFAC penalty adjustments for each of these statutes, as well as the 2019 and 2020 adjustments for reference, are below:

StatuteOriginal Maximum CMP (per violation)2020 Adjusted Maximum CMP (per violation)2021 Adjusted Maximum CMP (per violation)
Trading with the Enemy Act (TWEA)$65,000$90,743$91,816
International Emergency Economic Powers Act (IEEPA)The greater of $250,000 or twice the amount of the underlying transactionThe greater of $307,922 or twice the amount of the underlying transactionThe greater of $311,562 or twice the amount of the underlying transaction
Foreign Narcotics Kingpin Designation Act (FNKDA)$1,075,000$1,529,991$1,548,075
Antiterrorism and Effective Death Penalty Act (AEDPA)The greater of $55,000 or twice the amount of which a financial institution was required to retain possession or controlThe greater of $81,283 or twice the amount of which a financial institution was required to retain possession or controlThe greater of $82,244 or twice the amount of which a financial institution was required to retain possession or control
Clean Diamond Trade Act (CDTA)$10,000$13,910$14,074

In addition to updating these maximum CMPs, OFAC also issued a final rule on April 12, 2021, making a technical amendment to the definition of “applicable schedule amount” in the agency’s regulations.  The change requires that transactions of $200,000 or more are subject to the applicable schedule amount of $311,562.

State CMP Adjustments

State published the CMP adjustments in a final rule on February 2, 2021, which included the CMP adjustments for the Arms Export Control Act (AECA), the statute under which the International Traffic in Arms Regulations (ITAR) are enforced.  State will apply the increased CMPs to all penalties assessed on or after the effective date of the final rule, February 2, 2021, regardless of when the underlying violations occurred. The penalties assessed by State for violations of specific sections within the AECA, as well as the 2019 and 2020 adjustments for reference, are as follows:

AECA SectionOriginal Maximum CMP2019 Adjusted Maximum CMP (per violation)2020 Adjusted Maximum CMP (per violation)2021 Adjusted Maximum CMP (per violation)
22 USC § 2778(e) (control of exports and imports)$500,000$1,163,217$1,183,736$1,197,728
22 USC § 2779a(c) (prohibition on incentive payments)$500,000The greater of $845,764 or five times the amount of the prohibited paymentThe greater of $860,683 or five times the amount of the prohibited paymentThe greater of $870,856 or five times the amount of the prohibited payment
22 USC § 2780(k) (transactions with countries supporting acts of international terrorism)$500,000$1,006,699$1,024,457$1,036,566

Commerce CMP Adjustments

Finally, Commerce also adjusted a number of CMPs in a final rule issued on January 11, 2021, which went into effect on January 15, 2021. CMPs for violations of the Export Control Reform Act of 2018, the statute under which the Export Administration Regulations (EAR) are enforced, was adjusted from $305,292 to $308,901 per violation or twice the value of the transaction.  In the same final rule, Commerce adjusted CMPs for violations of the Collection of Foreign Trade Statistics Act of 2002 from $14,194 to $14,362.

Authors: Kerry Contini and Meghan Hamilton.

The authors acknowledge the assistance of Ryan Orange in the preparation of this blog post.

Author

Ms. Contini focuses her practice on export controls, trade sanctions, and anti-boycott laws. This includes advising US and multinational companies on trade compliance programs, risk assessments, licensing, review of proposed transactions and enforcement matters. Ms. Contini works regularly with companies across a wide range of industries, including the pharmaceutical/medical device, oil and gas, and nuclear sectors.