The Department of the Treasury's Office of Foreign Assets Control (OFAC) is issuing this final rule to adjust certain civil monetary penalties (CMPs) for inflation pursuant to t...
The Department of the Treasury's Office of Foreign Assets Control (OFAC) is issuing this final rule to adjust certain civil monetary penalties (CMPs) for inflation pursuant to the Federal Civil Penalties Inflation Adjustment Act of 1990, as amended by the Debt Collection Improvement Act of 1996 and the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015.
DATES:
Effective:
June 14, 2019.
FOR FURTHER INFORMATION CONTACT:
OFAC: Assistant Director for Licensing, 202-622-2480; Assistant Director for Regulatory Affairs, 202-622-4855; Assistant Director for Sanctions Compliance & Evaluation, 202-622-2490; or the Department of the Treasury's Office of the Chief Counsel (Foreign Assets Control), Office of the General Counsel, 202-622-2410.
SUPPLEMENTARY INFORMATION:
Electronic Availability
This document and additional information concerning OFAC are available from OFAC's website (
www.treasury.gov/ofac).
Background
Section 4 of the Federal Civil Penalties Inflation Adjustment Act (1990 Pub. L. 101-410, 104 Stat. 890; 28 U.S.C. 2461 note), as amended by the Debt Collection Improvement Act of 1996 (Pub. L. 104-134, 110 Stat. 1321-373) and the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015 (Pub. L. 114-74, 129 Stat. 599, 28 U.S.C. 2461 note) (collectively, the FCPIA Act), requires each federal agency with statutory authority to assess civil monetary penalties (CMPs) to adjust CMPs annually for inflation according to a formula described in section 5 of the FCPIA Act. One purpose of the FCPIA Act is to ensure that CMPs continue to maintain their deterrent effect through periodic cost-of-living based adjustments.
OFAC has adjusted its CMPs three times since the Federal Civil Penalties Inflation Adjustment Act Improvements Act went into effect on November 2, 2015: An initial catch-up adjustment on August 1, 2016 (81 FR 43070, July 1, 2016), and annual adjustments on February 10, 2017 (82 FR 10434, February 10, 2017), and March 19, 2018 (83 FR 11876, March 19, 2018).
( printed page 27715)
Method of Calculation
The method of calculating CMP adjustments applied in this final rule is required by the FCPIA Act. Under the FCPIA Act and the Office of Management and Budget guidance required by the FCPIA Act, annual inflation adjustments subsequent to the initial catch-up adjustment are to be based on the percent change between the Consumer Price Index for all Urban Consumers (“CPI-U”) for the October preceding the date of the adjustment and the prior year's October CPI-U. As set forth in Office of Management and Budget Memorandum M-19-04 of December 14, 2018, the adjustment multiplier for 2019 is 1.02522. In order to complete the 2019 annual adjustment, each current CMP is multiplied by the 2019 adjustment multiplier. Under the FCPIA Act, any increase in CMP must be rounded to the nearest multiple of $1.
New Penalty Amounts
OFAC currently is authorized to impose CMPs pursuant to five statutes: The Trading With the Enemy Act (50 U.S.C. 4301-4341, at 4315) (TWEA); the International Emergency Economic Powers Act (50 U.S.C. 1701-1706, at 1705) (IEEPA); the Antiterrorism and Effective Death Penalty Act of 1996 (Pub. L. 104-132, 110 Stat. 1212-1319, at 1250; 18 U.S.C. 2339B) (AEDPA); the Foreign Narcotics Kingpin Designation Act (Pub. L. 106-120, 113 Stat. 1626-1636, at 1632; 21 U.S.C. 1901-1908, at 1906) (FNKDA); and the Clean Diamond Trade Act (Pub. L. 108-19, 117 Stat. 631-637, at 634; 19 U.S.C. 3901-3913, at 3907) (CDTA).
The table below summarizes the existing and new maximum CMP amounts.
Statute
Existing
maximum CMP
amount
Maximum
CMP amount
effective
June 14, 2019
TWEA
$86,976
$89,170
IEEPA
295,141
302,584
AEDPA
77,909
79,874
FNKDA
1,466,485
1,503,470
CDTA
13,333
13,669
In addition to updating these maximum CMP amounts, OFAC is also updating a reference to one-half the IEEPA maximum CMP from $147,571 to $151,292.
Public Participation
Because the amended regulations involve a foreign affairs function, the provisions of Executive Order 12866 and the Administrative Procedure Act (5 U.S.C. 553) requiring notice of proposed rulemaking, opportunity for public participation, and delay in effective date, as well as the provisions of Executive Order 13771, are inapplicable. Because no notice of proposed rulemaking is required for this rule, the Regulatory Flexibility Act (5 U.S.C. 601-612) does not apply.
Paperwork Reduction Act
The Paperwork Reduction Act does not apply because this rule does not impose information collection requirements that would require the approval of the Office of Management and Budget under 44 U.S.C. 3501et seq.
b. In paragraph (a)(3), remove “$86,976” and add in its place “$89,170”.
3. Amend appendix A to part 501 as follows:
a. In paragraph V.B.2.a.i., remove “$147,571” and add in its place “$151,292”, and remove “$295,141” and add in its place “$302,584”.
b. In paragraph V.B.2.a.ii., remove “$295,141” in all three locations where it appears, and add in its place in all three locations “$302,584”.
c. Redesignate the note to paragraph (a) of section V.B.2.a. as paragraph V.B.2.a.v.
d. Revise newly redesignated paragraph V.B.2.a.v.
e. Designate the undesignated paragraph after newly redesignated paragraph V.B.2.a.v., which starts with “The following Matrix represents the base amount of the proposed civil penalty” and contains a table titled “Base Penalty Matrix,” as V.B.2.a.vi.
f. Revise newly redesignated paragraph V.B.2.a.vi.
The revisions read as follows:
Appendix A to Part 501—Economic Sanctions Enforcement Guidelines
* * * * *
V. * * *
B. * * *
2. * * *
a. * * *
v. The applicable statutory maximum civil penalty per violation for each statute enforced by OFAC is as follows: International Emergency Economic Powers Act (IEEPA)—greater of $302,584 or twice the amount of the underlying transaction; Trading with the Enemy Act (TWEA)—$89,170; Foreign Narcotics Kingpin Designation Act (FNKDA)—$1,503,470; Antiterrorism and Effective Death Penalty Act of 1996 (AEDPA)—greater of $79,874 or twice the amount of which a financial institution was required to retain possession or control; and Clean Diamond Trade Act (CDTA)—$13,669. The civil penalty amounts authorized under these statutes are subject to adjustment pursuant to the Federal Civil Penalties Inflation Adjustment Act of 1990 (Pub. L. 101-410, as amended, 28 U.S.C. 2461 note).
vi. The following matrix represents the base amount of the proposed civil penalty for each category of violation:
( printed page 27716)
* * * * *
PART 510—NORTH KOREA SANCTIONS REGULATIONS
4. The authority citation for part 510 continues to read as follows:
(c) IEEPA provides for a maximum civil penalty not to exceed the greater of $302,584 or an amount that is twice the amount of the transaction that is the basis of the violation with respect to which the penalty is imposed.
PART 584—MAGNITSKY ACT SANCTIONS REGULATIONS
36. The authority citation for part 584 continues to read as follows:
www.treasury.gov/ofac
28 U.S.C. 2461 note
31 CFR Parts 501