The U.S. Department of the Treasury's Office of Foreign Assets Control (OFAC) is increasing each civil monetary penalty within its jurisdiction for 2023 by 7.7 percent. The increases came into effect on Jan. 13, 2023.1 Note that the 2023 adjustments will apply to any civil penalties assessed after the effective date, including those whose associated violation occurred prior to Jan. 13, 2023.
Annual Adjustments
The adjustments are required by the Federal Civil Penalties Inflation Adjustment Act of 1990, as amended by the Debt Collection Improvement Act (DCIA) of 1996 and further amended by the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015. The penalties are increased based on the cost-of-living adjustment, which is the percentage by which the Consumer Price Index (CPI) for the month of October 2022 exceeds the CPI for the month of October 2021.
The annual adjustment of OFAC's civil monetary penalties is a good reminder for businesses to periodically review and update sanctions compliance policies and procedures. OFAC has made clear that – given the dynamic nature of U.S. economic and trade sanctions – a successful and effective sanctions compliance program should be capable of adjusting rapidly to changes in the law and published guidance, including updates to OFAC's List of Specially Designated Nationals (SDNs) and Blocked Persons and new, amended or updated sanctions programs or prohibitions imposed on targeted foreign countries, governments, regions or persons. It is important for businesses of all sizes to routinely update compliance assessments and account for changes in the company's risk profile.
Penalty Increases
The increases of the maximum civil monetary penalties (CMP) are below:
Table 1 — Maximum CMP Amounts for Relevant Statutes
Table 2 — Maximum CMP Amounts for Recordkeeping CMPs
OFAC is also implementing similar adjustments to the recordkeeping CMP amounts found in its Economic Sanctions Enforcement Guidelines in Appendix A to 31 CFR Part 501.
Notes
1 OFAC, Inflation Adjustment of Civil Monetary Penalties, 88 Fed. Reg. 2229 (Jan. 13, 2023).