It just got more expensive to violate U.S. import/export regulations. In recent weeks, the various governmental agencies who administer and enforce these regulations have released updated penalty amounts. The main culprit? Everyone’s favorite “I” word – inflation!
Here’s a rundown of the new changes.
Directorate of Defense Trade Control (DDTC)
DDTC is the Department of State agency that administers and enforces the International Traffic in Arms Regulations (ITAR). On January 11, 2023, DDTC published new maximum penalties:
- The new statutory maximum penalty for ITAR violations under §127.10(a)(1)(i) is the greater of $1,200,000 or twice the value of the transaction that is the basis of the violation;
- For violations related to ITAR §127.10(a)(1)(ii), an amount not to exceed $996,685, or five times the amount of the prohibited incentive payment, whichever is greater;
- For violations related to ITAR §127.10(a)(1)(iii), an amount not to exceed $1,186,338.
- These revised amounts will apply only to those penalties assessed on or after January 11, 2023, regardless of the date on which the underlying facts or violations occurred.
Office of Foreign Assets Control (OFAC)
Effective January 13, 2023, The Department of the Treasury announced new civil monetary penalties for OFAC violations. These are related to five different statutes as follows:
- Trading With the Enemy Act (TWEA): Maximum penalty increased to $105,083 from $97,529;
- International Emergency Economic Powers Act (IEEPA): Maximum penalty increased to $356,579 from $330,947;
- Antiterrorism and Effective Death Penalty Act of 1996 (AEDPA): Maximum penalty increased to $94,127 from $87,361;
- Foreign Narcotics Kingpin Designation Act (FNKDA): Maximum penalty increased to $1,771,754 from $1,644,396;
- Clean Diamond Trade Act (CDTA): Maximum penalty increased to $16,108 from $14,950.
- These new amounts represent increases of approximately 7% across the board.
In addition, OFAC updated two references to one-half the IEEPA maximum from $165,474 to $178,290. It also raised various penalties for recordkeeping violations.
Bureau of Industry and Security (BIS)
BIS administers and enforces the Export Administration Regulations (EAR). On January 3, 2023, BIS announced the following higher penalties:
- Violations of the Export Controls Act of 2018 increased to $353,534 from $328,121;
- The higher penalty amount is effective January 15, 2023, and applies only to those penalties assessed by the department after this date.
In addition, the Census Bureau announced higher penalties for failure to file export information or reports required by 13 USC 304 within the prescribed period. Each day’s delinquency of a violation increased from $1,525 to $1,643, and the maximum per violation increased from $15,256 to $16,438.
The cost of non-compliance isn’t getting any cheaper. Now more than ever, companies must institute proper compliance programs, training and other measures to avoid these costly fines and penalties. If you need help mitigating your risk of a violation, contact Export Solutions for a free consultation today.
Tom Reynolds is the Vice President of Operations for Export Solutions, a consultancy firm which specializes in helping companies with import/export compliance.