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March 16, 2021: OFAC inflates its civil monetary penalties again…

The Department of the Treasury’s Office of Foreign Assets Control (OFAC) is amending its regulations to implement for 2021 the Federal Civil Penalties Inflation Adjustment Act of 1990, as amended by 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 Wednesday, March 17, 2021.

You may wonder why this is done. Simply put, if you don’t index penalties to inflation, over time, penalties lose their deterrence value. Does it make sense to index IEEPA penalties, since the penalty is the greater of the set amount and double the transaction amount? Sure, for violations of smaller amounts it’s still useful when the adjusted set amount is higher than the doubled amount. It’s also useful for cases where the value of the violation cannot be established, like the since-overturned case where ExxonMobil’s violation was the signing of a contract with the sanctioned head of Rosneft.

Links:

OFAC Notice

Inflation Adjustment Final Rule

Categories: Federal Civil Penalties Inflation Adjustment Act OFAC Updates

eric9to5

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