International Law Advisory - Increase in Fines for Export/Sanctions Violations: President Bush Signs IEEPA Enhancement Act

Today, President Bush signed the International Emergency Economic Powers Enhancement Act (IEEPA Enhancement Act), which significantly increases the civil and criminal penalties available under IEEPA. As reported on October 2, 2007, this penalty increase applies to violations under (1) nearly all of the economic sanctions programs administered by the Treasury Department’s Office of Foreign Assets Control (OFAC); and (2) the anti-boycott and export control rules in the Export Administration Regulations (EAR) of the Commerce Department’s Bureau of Industry and Security (BIS).

Under the IEEPA Enhancement Act:

• civil fines under IEEPA increase from $50,000 to the greater of $250,000 or twice the amount of the transaction at issue; and
• criminal penalties increase from $50,000 to up to $1,000,000 per violation, with the potential length of imprisonment (up to 20 years per violation) remaining unchanged.

The new civil penalties apply to violations where an enforcement action is pending or commenced on or after the date of enactment; while the new criminal penalties apply only to enforcement actions commenced after the date of enactment.

OFAC anticipates updating its enforcement guidelines in light of the new penalties. In addition, and as previously reported, BIS has already issued a rule clarifying that IEEPA penalties apply to the EAR when, as now, the Export Administration Act is not in effect. BIS now plans to issue a similar rule in respect of IEEPA penalties in the criminal context.

We will keep you advised of any additional developments, including any forthcoming changes to BIS rules and/or OFAC enforcement guidelines. Should you have any questions regarding how these changes may affect your company, please contact Ed Krauland at 202.429.8083 or Julia Court Ryan at 202.429.6418.