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OFAC Statutory Maximum Fines indexed to inflation again

Implementation of the Federal Civil Penalties Inflation Adjustment Act

The Department of the Treasury’s Office of Foreign Assets Control (OFAC) is amending its regulations to implement for 2020 the Federal Civil Penalties Inflation Adjustment Act of 1990, as amended by the Debt Collection Improvement Act of 1996 and the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015.  This regulatory amendment adjusts for inflation the maximum amount of the civil monetary penalties that may be assessed under relevant OFAC regulations.  This regulatory amendment is currently available for public inspection with the Federal Register and will take effect upon publication in the Federal Register on Thursday, April 9, 2020.

Here are the existing and new statutory maximum amounts (from the referenced adjustment notice):

  • Trading with the Enemy Act (TWEA – only used for Cuban sanctions)
    • Current: $89,170
    • New: $90,743
  • International Emergency Economic Powers Act (IEEPA – used for more sanctions programs, unless noted otherwise)
    • Current: 302,584
    • New: $307,922
  • Antiterrorism and Effective Death Penalty Act (AEDPA)
    • Current: $79,874
    • New: $81,283
  • Foreign Narcotics Kingpin Designation Act (FNKDA, or Kingpin Act – for all narcotics sanctions)
    • Current: $1,503,470
    • New: $1,529,991
  • Chemical Diversion and Trafficking Act (CDTA)
    • Current: $13,669
    • New: $13,910

Note: IEEPA statutory maximum civil monetary penalties are capped at the listed amount above or double the transaction amount, whichever is greater.

Why index the penalties? Very simply put – to maintain the deterrent value of monetary penalties. For example, the original statutory maximum for FNDKA was $1,000,000. While it may still be considered a significant amount to be penalized, over time, it can be considered as a more nominal amount that can be considered part of the cost of doing business, if not adjusted for inflation – especially considering the value of the underlying drug trade. A similar thought process undoubtedly occurs for violations of the other statutes.

Link:

OFAC Notice

Inflation Adjustment Notice

Categories: Administrative Federal Civil Penalties Inflation Adjustment Act OFAC Updates Sanctions Regulations

eric9to5

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