If you don't recognize that figure, it's the oft-quoted maximum civil monetary penalty per violation of the Foreign Narcotics Kingpin Designation Act (FNKDA or “Kingpin Act”). It's such a strange number – and yet, so explainable.

The Federal Civil Penalties Inflation Adjustment Act of 1990, finally implemented in 2003, stipulates that government agencies must adjust the maximum civil monetary penalties for inflation at least every 4 years. That amount gets rounded based on the following schedule:

• Nearest $10 for penalties up to $100
• Nearest $100 for penalties up to $1000
• Nearest $1000 for penalties up to $10,000
• Nearest $5000 for penalties up to $100,000
• Nearest $10,000 for penalties up to $200,000
• Nearest $25,000 for penalties over $200,000

The Kingpin Act originally came with a statutory maximum of $1 million for civil penalties when it was passed in 1999. The inflation adjustment, before rounding, came to $1,082,000. After rounding, it came to $1,075,000.

In order for it to be adjusted upwards again, inflation between the last adjustment and the current one has to raise the Kingpin Act's maximum to just over $1,087,500. If it fails that, the number drops back down to $1,075,000, which will become the base for the next calculation.

Given that this requires less than 2% inflation over 4 years, it's surprising that we have seen no notice of an inflation adjustment upwards since 2003. TIme to ring up my buddies at OFAC…

So, now you know where the wacky $1,075,000 comes from.

Link:

Federal Register notice for implementation of requirement under FCPIA Act of 1990

Posted with Blogsy

Categories: Sanctions Regulations

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