By Jim McShane, Export Solutions
ofac-penalties-new-high

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.)

Source: Bloomberg Law

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.