The U.S. Department of the Treasury’s Offi ce of Foreign Assets Control (OFAC) has published a statement clarifying how the agency plans to handle civil export penalties that were increased in accordance with the International Emergency Economic Powers Enhancement Act (IEEPA or Act), signed into law on October 16, 2007. OFAC is responsible for most of the embargo and sanction regulations that restrict U.S. transactions with specifi ed countries, such as Cuba, Iran and Sudan, and entities and individuals that have been identifi ed as terrorists or narcotics traffi ckers, or are restricted for other reasons.
In its published interim policy, OFAC has stated that any enforcement actions pending or commenced by OFAC on or after October 16, 2007, are subject to the increased penalties. The agency has not yet published the revised enforcement guidelines and procedures pursuant to IEEPA, however, resulting in this announcement regarding the interim policy for penalty actions.
The maximum penalties for violations of certain export licenses, orders, regulations or prohibitions issued under the IEEPA increase from $50,000 to $250,000 or twice the amount of the transaction that is the basis of the violation, whichever is greater. The Act also increases maximum criminal penalties from $50,000 and 10 years’ imprisonment to $1,000,000 and 20 years’ imprisonment. In the interim period before new procedures and guidelines are put into place, OFAC will continue to apply its Economic Sanctions Enforcement Guidelines and Economic Sanctions Enforcement Procedures for Banking Institutions to the new statutory penalty provisions.
Accordingly, any new Pre-Penalty Notices will be issued at the lesser of the transaction amount or the statutory cap. The mitigating and aggravating factors established in the current guidelines will continue to apply until revised enforcement guidelines are published. Any Pre-Penalty Notice that was mailed prior to October 16 will be subject to the original penalty amount stated in the notice and the Enforcement Guidelines, and Banking Enforcement Procedures will apply for calculating the penalty amount.
According to OFAC, any tentative settlement amount communicated to a party prior to October 16 will continue to be processed under the previous penalty guidelines. OFAC’s notice is somewhat vague, however, with respect to how it will handle settlements.
Finally, if a party has agreed to a Statute of Limitations Waiver, the maximum penalty amounts that will apply will be those applicable on the date the waiver was signed. Therefore, if the waiver is signed after October 16, the party will be subject to the new penalty amounts.