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.

Footnote

1. OFAC, Inflation Adjustment of Civil Monetary Penalties, 88 Fed. Reg. 2229 (Jan. 13, 2023).

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.