The Department of the Treasury's Office of Foreign Assets Control (OFAC) is issuing this final rule to adjust certain civil monetary penalties for inflation pursuant to the Fede...
The Department of the Treasury's Office of Foreign Assets Control (OFAC) is issuing this final rule to adjust certain civil monetary penalties for inflation pursuant to the Federal Civil Penalties Inflation Adjustment Act of 1990, as amended by the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015.
DATES:
This rule is effective January 12, 2024.
FOR FURTHER INFORMATION CONTACT:
OFAC: Assistant Director for Licensing, 202-622-2480; Assistant Director for Regulatory Affairs, 202-622-4855; Assistant Director for Compliance, 202-622-2490.
SUPPLEMENTARY INFORMATION:
Electronic Availability
This document and additional information concerning OFAC are available from OFAC's website (
www.treas.gov/ofac).
Background
Section 4 of the Federal Civil Penalties Inflation Adjustment Act of 1990 (Pub. L. 101-410, 104 Stat. 890; 28 U.S.C. 2461 note), as amended by the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015 (Pub. L. 114-74, 129 Stat. 599, 28 U.S.C. 2461 note) (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 nine times since the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015 went into effect on November 2, 2015: an initial catch-up adjustment on August 1, 2016 (81 FR 43070, July 1, 2016); an additional initial catch-up adjustment related to CMPs for failure to comply with a requirement to furnish information, the late filing of a required report, and failure to maintain records (“recordkeeping CMPs”) that were inadvertently omitted from the August 1, 2016 initial catch-up adjustment on October 5, 2020 (85 FR 54911, September 3, 2020); and annual adjustments on February 10, 2017 (82 FR 10434, February 10, 2017); March 19, 2018 (83 FR 11876, March 19, 2018); June 14, 2019 (84 FR 27714, June 14, 2019); April 9, 2020 (85 FR 19884, April 9, 2020); March 17, 2021 (86 FR 14534, March 17, 2021); February 9, 2022 (87 FR 7369, February 9, 2022); and January 13, 2023 (88 FR 2229, January 13, 2023).
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-24-07 of December 19, 2023, the adjustment multiplier for 2023 is 1.03241. In order to complete the 2024 annual adjustment, each current CMP is multiplied by the 2024 adjustment multiplier. Under the FCPIA Act, any increase in CMP must be rounded to the nearest multiple of $1.
New Penalty Amounts
OFAC imposes CMPs pursuant to the penalty authority in 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 (18 U.S.C. 2339B) (AEDPA); the Foreign Narcotics Kingpin Designation Act (21 U.S.C. 1901-1908, at 1906) (FNKDA); and the Clean Diamond Trade Act (19 U.S.C. 3901-3913, at 3907) (CDTA).
The table below summarizes the existing and new maximum CMP amounts for each statute.
Table 1—Maximum CMP Amounts for Relevant Statutes
Statute
Existing maximum
CMP amount
Maximum CMP
amount effective
Jan. 12, 2024
TWEA
$105,083
$108,489
IEEPA
356,579
368,136
AEDPA
94,127
97,178
FNKDA
1,771,754
1,829,177
CDTA
16,108
16,630
In addition to updating these maximum CMP amounts, OFAC is also updating two references to one-half the IEEPA maximum CMP from $178,290 to $184,068, and is adjusting the recordkeeping CMP amounts found in OFAC's Economic Sanctions Enforcement Guidelines in appendix A to 31 CFR part 501. The table below summarizes the existing and new maximum CMP amounts for OFAC's recordkeeping CMPs.
( printed page 2140)
Table 2—Maximum CMP Amounts for Recordkeeping CMPs
Violation
Existing maximum
CMP amount
Maximum CMP
amount effective
Jan. 12, 2024
Failure to furnish information pursuant to 31 CFR 501.602 irrespective of whether any other violation is alleged
$27,520
$28,412
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
68,801
71,031
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
3,439
3,550
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
6,881
7,104
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
1,377
1,422
Failure to maintain records in conformance with the requirements of OFAC's regulations or of a specific license
68,928
71,162
Finally, OFAC is making changes in the authorities citations of 31 CFR parts 583 and 594 to more specifically reference one of the relevant statutory authorities in each citation.
Public Participation
The FCPIA Act expressly exempts this final rule from the notice and comment requirements of the Administrative Procedure Act by directing agencies to adjust CMPs for inflation “notwithstanding section 553 of title 5, United States Code” (Pub. L. 114-74, 129 Stat. 599; 28 U.S.C. 2461 note). As such, this final rule is being issued without prior public notice or opportunity for public comment, with an effective date of January 12, 2024.
Regulatory Flexibility Act
Because no notice of proposed rulemaking is required, the provisions of the Regulatory Flexibility Act (5 U.S.C. 601et seq.) do not apply.
This rule is not a significant regulatory action as defined in section 3.f. of Executive Order 12866 of September 30, 1993, “Regulatory Planning and Review” (58 FR 51735, October 4, 1993), as amended.
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.
2. In § 501.701, in paragraph (a)(3) introductory text, remove “$105,083” and add in its place “$108,489”.
3. Amend appendix A to part 501 as follows:
a. In paragraph IV.A., remove “$27,520” and add in its place “$28,412” and remove “$68,801” and add in in its place “$71,031”;
b. In paragraph IV.B., remove “$3,439” and add in its place “$3,550”, remove “$6,881” and add in its place “$7,104”, and remove “$1,377” and add in its place “$1,422”;
c. In paragraph IV.C., remove “$68,928” and add in its place “$71,162”;
d. In paragraph V.B.2.a.i., remove “$178,290” and add in its place “$184,068” and remove “$356,579” and add in its place “$368,136”;
e. In paragraph V.B.2.a.ii., remove “$356,579” in all three locations where it appears and add in its place in all three locations “$368,136”;
f. In paragraph V.B.2.a.v., remove “$356,579” and add in its place “$368,136”, remove “$105,083” and add in its place “$108,489”, remove “$1,771,754” and add in its place “$1,829,177”, remove “$94,127” and add in its place “$97,178”, and remove “$16,108” and add in its place “$16,630”; and
g. Revise paragraph V.B.2.a.vi.
The revision reads as follows:
Appendix A to Part 501—Economic Sanctions Enforcement Guidelines
* * * * *
V. * * *
B. * * *
2. * * *
a. * * *
vi. The following matrix represents the base amount of the proposed civil penalty for each category of violation:
( printed page 2141)
* * * * *
PART 510—NORTH KOREA SANCTIONS REGULATIONS
4. The authority citation for part 510 continues to read as follows:
