The US Treasury Department’s Office of Foreign Assets Control (“OFAC”), the US Department of State’s Directorate of Defense Trade Controls (“DDTC”), and the US Department of Commerce’s Bureau of Industry and Security (“BIS”) have announced increases in the maximum civil monetary penalties (“CMPs”) that may be imposed for violations of OFAC sanctions programs, the International Traffic in Arms Regulations, and the Export Administration Regulations (“EAR”), respectively. The new maximum penalty amounts come into effect on August 1, 2016.
OFAC announced its CMP adjustments in an Interim Final Rule (which included a request for comments) published on July 1, 2016. In that Interim Final Rule, OFAC explained that it is adjusting CMPs that can be issued under five statutes: the Trading with the Enemy Act (“TWEA”), the International Emergency Economic Powers Act (“IEEPA”), the Antiterrorism and Effective Death Penalty Act of 1996 (“AEDPA”), the Foreign Narcotics Kingpin Designation Act (“FNKDA”), and the Clean Diamond Trade Act (“CDTA”). The specific penalty adjustments for violations of each of these statutes are as follows:
| Type of Violation | Original Maximum CMP | Adjusted Maximum CMP |
| TWEA Violations | $65,000 | $83,864 |
| IEEPA Violations | 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. |
| AEDPA Violations | 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. |
| FNKDA Violations | $1,075,000 | $1,414,020 |
| CDTA Violations | $10,000 | $12,856 |
The adjusted penalty amounts listed above will apply to civil penalties issued after August 1, 2016 for violations that occurred after November 2, 2015. (In other words, if civil penalties are imposed even after August 1, 2016 but for violations occurring pre-November 2, 2015, the old penalties will apply.)
DDTC published its CMP adjustments in a Final Rule on June 8, 2016. The penalties assessed by DDTC for violations of specific sections within the Arms Export Control Act are as follows:
| Type of Violation | Original Maximum CMP | Adjusted Maximum CMP |
| Violation of 22 U.S.C. 2778 (Control of Exports and Imports) | $500,000 | $1,094,010 |
| Violation of 22 U.S.C. 2779a (Prohibition on Incentive Payments) | $500,000 | $795,445 |
| Violation of 22 U.S.C. 2780 (Transactions with Countries Supporting Acts of International Terrorism) | $500,000 | $946,805 |
Unlike OFAC, DDTC will apply the adjusted maximum penalties to all penalties assessed after August 1, 2016 regardless of when the underlying violation occurred.
Finally, the US Department of Commerce published adjustments to a variety of CMPs on June 7, 2016. Among the penalty adjustments announced was an adjustment to the CMPs for violations of IEEPA—the statute under which BIS’s EAR are enforced. The maximum CMP for violations of the EAR and, by extension IEEPA will increase from $250,000 to $284,582 per violation—an increase that matches the one announced by OFAC. As with the changes published by DDTC, these increased maximum CMPs will apply to all penalties assessed after August 1, 2016 regardless of when the underlying violations occurred.
