Overview
Today, the Treasury Department’s Office of Foreign Assets Control (OFAC) issued a rule increasing penalties for violations of its economic sanctions regulations. This type of penalty increase should now occur on an annual basis.
The maximum statutory penalty for each violation under most of OFAC’s sanctions programs, other than Cuba and a few others, is increasing from $250,000 to $284,582, or twice the value of the transaction, whichever is greater. The $250,000 statutory maximum has been in place since 2007.
For each violation of the Cuba regulations, the maximum civil penalty will increase from $65,000 to $83,864.
Penalties under OFAC’s other regulatory regimes will increase as well: under the Antiterrorism and Effective Death Penalty Act of 1996 (AEDPA) from $55,000 to $75,122; under the Foreign Narcotics Kingpin Designation Act (FNKDA) from $1,075,000 to $1,414,020; and under the Clean Diamond Trade Act (CDTA) from $10,000 to $12,856.
These new amounts apply to penalties assessed after August 1, 2016, for which the associated violations occurred after November 2, 2015. This move was prompted by the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015, which requires federal agencies to adjust their civil monetary penalty amounts to account for inflation. That law requires an initial “catch up” adjustment this year, and then annual adjustments in future years.
OFAC is accepting comments on this interim final rule until August 1, 2016. Other agencies are making similar changes. For example, Treasury’s Financial Crimes Enforcement Network (FinCEN) is amending its regulations under the Bank Secrecy Act. In addition, the State Department’s Directorate of Defense Trade Controls (DDTC) recently updated its penalty amounts under the International Traffic in Arms Regulations (ITAR).
