OFAC Increases Civil Monetary Penalties for 2023
Highlights
- The U.S. Department of the Treasury's Office of Foreign Assets Control (OFAC) is increasing each civil monetary penalty within its jurisdiction for 2023 by 7.7 percent, effective Jan. 13, 2023.
- The 2023 adjustments will apply to any civil penalties assessed after the effective date, including those whose associated violation occurred prior to Jan. 13, 2023.
The U.S. Department of the Treasury's Office of Foreign Assets Control (OFAC) is increasing each civil monetary penalty within its jurisdiction for 2023 by 7.7 percent. The increases came into effect on Jan. 13, 2023.1 Note that the 2023 adjustments will apply to any civil penalties assessed after the effective date, including those whose associated violation occurred prior to Jan. 13, 2023.
Annual Adjustments
The adjustments are required by the Federal Civil Penalties Inflation Adjustment Act of 1990, as amended by the Debt Collection Improvement Act (DCIA) of 1996 and further amended by the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015. The penalties are increased based on the cost-of-living adjustment, which is the percentage by which the Consumer Price Index (CPI) for the month of October 2022 exceeds the CPI for the month of October 2021.
The annual adjustment of OFAC's civil monetary penalties is a good reminder for businesses to periodically review and update sanctions compliance policies and procedures. OFAC has made clear that – given the dynamic nature of U.S. economic and trade sanctions – a successful and effective sanctions compliance program should be capable of adjusting rapidly to changes in the law and published guidance, including updates to OFAC's List of Specially Designated Nationals (SDNs) and Blocked Persons and new, amended or updated sanctions programs or prohibitions imposed on targeted foreign countries, governments, regions or persons. It is important for businesses of all sizes to routinely update compliance assessments and account for changes in the company's risk profile.
Penalty Increases
The increases of the maximum civil monetary penalties (CMP) are below:
Table 1 — Maximum CMP Amounts for Relevant Statutes
|
Statute |
Previous Maximum CMP Amount (per violation) |
New Maximum CMP Amount Effective Jan. 13, 2023 (per violation) |
|
Trading with the Enemy Act (TWEA) |
$97,529 |
$105,083 |
|
International Emergency Economic Powers Act (IEEPA) |
The greater of $330,947 or twice the amount of the underlying transaction |
$356,579 or twice the amount of the underlying transaction |
|
Antiterrorism and Effective Death Penalty Act of 1996 (AEDPA) |
The greater of $87,361 or twice the amount of which a financial institution was required to retain possession or control |
The greater of $94,127 or twice the amount of which a financial institution was required to retain possession or control |
|
Foreign Narcotics Kingpin Designation Act (FNKDA) |
$1,644,396 |
$1,771,754 |
|
Clean Diamond Trade Act (CDTA) |
$14,950 |
$16,108 |
Table 2 — Maximum CMP Amounts for Recordkeeping CMPs
|
Violation |
Previous Maximum CMP Amount |
New Maximum CMP Amount Effective Jan. 13, 2023 |
|
Failure to furnish information pursuant to 31 CFR 501.602, irrespective of whether any other violation is alleged |
$25,542 |
$27,520 |
|
Failure to furnish information pursuant to 31 CFR 501.602, where OFAC has reason to believe that the apparent violation(s) involves a transaction(s) valued at greater than $500,000, irrespective of whether any other violation is alleged |
$63,855 |
$68,801 |
|
Late filing of a required report, whether set forth in regulations or in a specific license, if filed within the first 30 days after the report is due |
$3,192 |
$3,439 |
|
Late filing of a required report, whether set forth in regulations or in a specific license, if filed more than 30 days after the report is due |
$6,386 |
$6,881 |
|
Late filing of a required report, whether set forth in regulations or in a specific license, if the report relates to blocked assets, an additional CMP for every 30 days that the report is overdue, up to five years |
$1,278 |
$1,377 |
|
Failure to maintain records in conformance with the requirements of OFAC's regulations or of a specific license |
$63,973 |
$68,928 |
OFAC is also implementing similar adjustments to the recordkeeping CMP amounts found in its Economic Sanctions Enforcement Guidelines in Appendix A to 31 CFR Part 501.
For More Information
For any questions about OFAC's adjustments to civil penalties or how to develop or update sanctions compliance policies or procedures, contact the authors or another member of Holland & Knight's International Trade Group.
Notes
1 OFAC, Inflation Adjustment of Civil Monetary Penalties, 88 Fed. Reg. 2229 (Jan. 13, 2023).
Information contained in this alert is for the general education and knowledge of our readers. It is not designed to be, and should not be used as, the sole source of information when analyzing and resolving a legal problem, and it should not be substituted for legal advice, which relies on a specific factual analysis. Moreover, the laws of each jurisdiction are different and are constantly changing. This information is not intended to create, and receipt of it does not constitute, an attorney-client relationship. If you have specific questions regarding a particular fact situation, we urge you to consult the authors of this publication, your Holland & Knight representative or other competent legal counsel.