OFAC Increases Civil Penalties

The Department of the Treasury, Office of Foreign Assets Control (OFAC) announced on February 9 that it would be increasing the penalties it may assess under the regulations for alleged civil violations. The Federal Civil Penalties Inflation Adjustment Act of 1990, as amended by the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015, mandates that federal agencies readjust civil penalties annually to account for inflation as determined by the Consumer Price Index. The changes to OFAC’s civil penalties become effective today, February 10, 2017. It is important to note, however, that these higher penalties will be applied to cases already under investigation but where a penalty has not yet been assessed, regardless of when the underlying activity took place.

OFAC sanctions programs impacted by this adjustment include the following:

Program

Trading With the Enemy Act (TWEA), principally Cuba

International Emergency Economic Powers Act (IEEPA), most OFAC programs

Previous Penalty

$83,864 Greater of $284,582 or twice the amount of the underlying transaction

Current Penalty

$85,236 Greater of $289,238 or twice the amount of the underlying transaction

 

Additionally, OFAC has increased the applicable statutory maximum civil penalty per violation under the Terrorism Risk Insurance program to $1,333,312; the Terrorism and Effective Death Penalty Act of 1996 (AEDPA) to the greater of $76,351 or twice the amount of which a financial institution was required to retain possession or control; and penalties under the Clean Diamond Trade Act (CDTA) to $13,066.

Finally, as those familiar with these sanctions programs are well aware, OFAC rarely issues penalties in connection with a single violation. Therefore, penalties under any sanctions program may be a multiple of any of these penalty amounts before taking into consideration mitigating (or aggravating) factors.

For more information on sanctions programs in general or on the screening we recommend to avoid many of these alleged violations, please contact Joan Koenig, Mollie Sitkowski or any other member of Drinker Biddle’s Customs and International Trade Team.

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