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”).
OFAC CMP Adjustments
Under OFAC’s final rule published on April 9, 2020, the adjusted penalties apply to CMPs that are assessed after April 9, 2020, 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 of 1996 (“AEDPA”), and the Clean Diamond Trade Act (“CDTA”). The specific OFAC penalty adjustments for each of the statutes (as well as the 2016-2019 adjustments for reference) are as follows:
| Statute | Original Maximum CMP (per violation) | 2016 Adjusted Maximum CMP (per violation) | 2017 Adjusted Maximum CMP (per violation) | 2018 Adjusted Maximum CMP (per violation) | 2019 Adjusted Maximum CMP (per violation) | 2020 Adjusted Maximum CMP (per violation) |
| TWEA | $65,000 | $83,864 | $85,236 | $86,976 | $89,170 | $90,743 |
| IEEPA | The greater of $250,000 or twice the amount of the underlying transaction | The greater of $284,582 or twice the amount of the underlying transaction | The greater of $289,238 or twice the amount of the underlying transaction | The greater of $295,141 or twice the amount of the underlying transaction | The greater of $302,584 or twice the amount of the underlying transaction | The greater of $307,922 or twice the amount of the underlying transaction |
| FNKDA | $1,075,000 | $1,414,020 | $1,437,153 | $1,466,485 | $1,503,470 | $1,529,991 |
| AEDPA | The greater of $55,000 or twice the amount of which a financial institution was required to retain possession or control | The greater of $75,122 or twice the amount of which a financial institution was required to retain possession or control | The greater of $76,351 or twice the amount of which a financial institution was required to retain possession or control | The greater of $77,909 or twice the amount of which a financial institution was required to retain possession or control | The greater of $79,874 or twice the amount of which a financial institution was required to retain possession or control | The greater of $81,283 or twice the amount of which a financial institution was required to retain possession or control |
| CDTA | $10,000 | $12,856 | $13,066 | $13,333 | $13,669 | $13,910 |
In addition to updating these maximum CMP amounts, OFAC also updated the IEEPA one-half maximum CMP for non-egregious cases where a party files a voluntary self-disclosure from $151,292 to $ 153,961.
State CMP Adjustments
State published the CMP adjustments in a final rule on January 14, 2020, which included the CMP adjustments for the Arms Export Control Act (“AECA”), the statute under which the International Traffic in Arms Regulations are enforced. State will apply the increased CMPs to all penalties assessed on or after the effective date of the final rule, January 14, 2020, regardless of when the underlying violations occurred. The penalties assessed by State for violations of specific sections within the AECA (as well as the 2016-2019 adjustments for reference) are as follows:
| AECA Section | Original Maximum CMP | 2016 Adjusted Maximum CMP (per violation) | 2017 Adjusted Maximum CMP (per violation) | 2018 Adjusted Maximum CMP (per violation) | 2019 Adjusted Maximum CMP (per violation) | 2020 Adjusted Maximum CMP (per violation) |
| 22 USC § 2778(e) (control of exports and imports) | $500,000 | $1,094,010 | $1,111,908 | $1,134,602 | $1,163,217 | $1,183,736 |
| 22 USC § 2779a(c) (prohibition on incentive payments) | $500,000 | $795,445 | $808,458 | $824,959 | The greater of $845,764 or five times the amount of the prohibited payment | The greater of $860,683 or five times the amount of the prohibited payment |
| 22 USC § 2780(k) (transactions with countries supporting acts of international terrorism) | $500,000 | $946,805 | $962,295 | $981,935 | $1,006,699 | $1,024,457 |
Commerce CMP Adjustments
Finally, Commerce also adjusted a number of CMPs in a final rule issued on January 3, 2020, which went into effect on January 15, 2020. CMPs for violations of the Export Control Reform Act of 2018, the statute under which the Export Administration Regulations are enforced, was adjusted from $300,000 to $305,292 per violation or twice the value of the transaction.
The authors acknowledge the assistance of Iris Zhang in the preparation of this blog post.
