OFAC Increases Civil Penalties

The Department of the Treasury, Office of Foreign Assets Control (OFAC) announced on February 9 that it would be increasing the penalties it may assess under the regulations for alleged civil violations. The Federal Civil Penalties Inflation Adjustment Act of 1990, as amended by the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015, mandates that federal agencies readjust civil penalties annually to account for inflation as determined by the Consumer Price Index. The changes to OFAC’s civil penalties become effective today, February 10, 2017. It is important to note, however, that these higher penalties will be applied to cases already under investigation but where a penalty has not yet been assessed, regardless of when the underlying activity took place.

OFAC sanctions programs impacted by this adjustment include the following:

Additionally, OFAC has increased the applicable statutory maximum civil penalty per violation under the Terrorism Risk Insurance program to $1,333,312; the Terrorism and Effective Death Penalty Act of 1996 (AEDPA) to the greater of $76,351 or twice the amount of which a financial institution was required to retain possession or control; and penalties under and the Clean Diamond Trade Act (CDTA) to $13,066.

Finally, as those familiar with these sanctions programs are well aware, OFAC rarely issues penalties in connection with a single violation. Therefore, penalties under any sanctions program may be a multiple of any of these penalty amounts before taking into consideration mitigating (or aggravating) factors.