President Bush authorized a substantial increase in the maximum civil and criminal penalties for export control violations under the International Emergency Economic Powers Enhancement Act (IEEPEA), which was signed into law on October 16, 2007. The Enhancement Act amends section 206 of the International Emergency Economic Powers Act (IEEPA), the statutory basis for the Export Control Administration Regulations (15 C.F.R. Parts 730-774) and for most of the Office of Foreign Assets Control (OFAC) economic sanctions.
The new act increases the maximum civil penalties from $50,000 to the greater of $250,000 or twice the value of the transaction for each violation of IEEPA. The new civil penalties apply to enforcement actions that are currently pending. In a press release, the Bureau of Industry and Security (BIS) interpreted an action to be pending if a final order has not yet been signed or the action was commenced on or after October 16, 2007. OFAC has not yet issued a statement regarding its interpretation of the effective date of the act. The new act further provides that criminal violators can be fined up to $1 million (up from $50,000) and/or serve up to 20 years in prison. These new criminal penalties apply to criminal enforcement actions commenced on or after October 16, 2007.
The fact that the penalties apply per violation amplifies their reach. Often, one export transaction originates multiple violations. The result will be enforcement actions with violation amounts totaling millions of dollars. More than ever, U.S. businesses need to be aware of these regulations and implement a compliance program to minimize their exposure to these skyrocketing penalties.