According to Treasury Department statistics, during the first six months of 2019, the Office of Foreign Assets Control (OFAC) has issued nearly $1.3 billion in penalties. That represents 18 settled cases and is an amount which is 17 times greater than all of 2018 (when there were seven settled cases.)
The totals for OFAC penalties from January 2017 through June 2019 are:
OFAC
- 2017 – 16 penalty cases = $119,527,845
- 2018 – 7 penalty cases = $71,510,561
- 2019 – 18 penalty cases = $1,279,339,579
TOTAL = $1,470,377,985
As for penalties by other agencies during that same time frame:
SEC & DOJ (FCPA combined)
- 2017 – 11 penalty cases = $1.92 billion
- 2018 – 16 penalty cases = $2.89 billion
- 2019 – 6 penalty cases = $3.99 billion
TOTAL = $8.8 billion
Bureau of Industry and Security (BIS)
- 2017 – 17 penalty cases = $689,827,675
- 2018 – 11 penalty cases = $1,401,783,100
- 2019 – 2 penalty cases = $134,000
TOTAL = $1,471,744,775*
*NOTE: During the above timeframe, BIS initiated 2,284 export control investigations, which represents a 21% increase the number of cases opened from the previous two-and-a-half years.
Directorate of Defense Trade Controls (DDTC)
- 2017 – 1 penalty case = $400,000
- 2018 – 1 penalty case = $30,000,000
- 2019 – 1 penalty cases = $400,000
TOTAL = $30,800,000
GRAND TOTAL FOR ALL FOUR AGENCIES = $11,772,922,760
There are many in industry who maintain that having a budget for an effective compliance program is counter to the “bottom line,” because compliance does not directly bring revenue or profits to a company. In fact, from experience, compliance budgets are usually one of the first to be cut during any budget reductions. To those who would profess such a belief, between January 2017 and June 2019, there are now exactly 11,772,922,760 reasons to invest more (in compliance) now and avoid paying more later!
Jim McShane is a Sr. Consultant, Trade Compliance for Export Solutions -- a full-service consulting firm specializing in ITAR and EAR regulations.