The New Year is here and with the new year comes increased penalties for export violations pursuant to the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015.
The Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015 (“2015 Act”) became law in November 2015. The stated purpose of the 2015 Act is “to improve the effectiveness of civil monetary penalties and to maintain their deterrent effect.” The Federal Civil Penalties Inflation Adjustment Act requires agencies to make annual adjustments to civil penalties for inflation.
On January 3, 2020, the Department of Commerce published a Final Rule (Civil Monetary Penalty Adjustments for Inflation) which adjusted the civil monetary penalty (CMP) amounts for violations.
A CMP is defined as any penalty, fine, or other sanction that:
- Is for a specific monetary amount as provided by Federal law, or has a maximum amount provided for by Federal law; and,
- Is assessed or enforced by an agency pursuant to Federal law; and,
- Is assessed or enforced pursuant to an administrative proceeding or a civil action in the Federal courts.
Export-Related Penalty Increases
The Department of Commerce increased CMPs for a host of regulations, but of particular interest, export-related penalties.
CMPs were increased for the following regulations:
50 U.S.C. 1705(b), International Emergency Economic Powers Act (2007), violation, maximum from $302,584 to $307,922.
50 U.S.C. 4819, Export Control Reform Act of 2018 (2018), violation, maximum from $300,000 to $305,292.
13 U.S.C. 304, Census Bureau, Collection of Foreign Trade Statistics (2002), each day's delinquency of a violation; total of not to exceed maximum per violation, from $1,394 to $1,419; maximum per violation, from $13,948 to $14,194.
13 U.S.C. 305(b),Census Bureau, Collection of Foreign Trade Statistics (2002), violation, maximum from $13,948 to $14,194.
The effective date of the new penalties is January 15, 2020.
Additional Increases Expected
We can expect additional increases as other agencies will increase CMP’s at various points during the year.
Department of State – DDTC – last increased civil penalties in March of 2019.
Department of Treasury – OFAC – last increased civil penalties in June of 2019.
The annual increase of civil penalties, by law, underscores the point that “Compliance Makes Cents” or in this case, a strong and dedicated compliance program can “Save Cents”.
If you are wondering how these penalties might affect you, please contact Export Solutions for a free consultation.
Jim McShane is a Sr. Consultant, Trade Compliance for Export Solutions -- a full-service consulting firm specializing in ITAR and EAR regulations.