October 26, 2020

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October 26, 2020

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The Department of the Treasury Announces Increased Penalties Under Regulations for Alleged Civil Violations

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 and 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.

© 2020 Faegre Drinker Biddle & Reath LLP. All Rights Reserved.National Law Review, Volume VII, Number 41
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About this Author

Mollie Sitkowski, Drinker Biddle Law Firm, Chicago, Trade Law Attorney
Associate

Mollie D. Sitkowski assists clients in ensuring their internal processes meet Customs' "reasonable care" standard. She assists clients with various aspects of trade law, including valuation, classification, free trade agreements, country of origin determinations, and auditing their import documentation to identify potential issues and risk areas. Mollie also supports clients with export compliance, including advising on export screening and classification, and filing license classification requests and voluntary disclosures with the Bureau of Industry...

312-569-1502
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