President Signs the Int'l Emergency Economic Powers Enhancement Act (to Increase Certain Export Penalties)
The President has signed into law S. 16121 which amends Section 206 of the International Emergency Economic Powers Act (IEEPA, 50 USC 1705) in order to increase penalties against violators of sanctions law by providing the Department of the Treasury and other federal agencies greater ability to deter wrongful investment and hold violators accountable for their actions.
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(The House of Representatives passed S. 1612 on October 2, 2007, while the Senate passed it on June 26, 2007. It was signed into law by the President on October 16, 2007 as Public Law (P.L.) 110-096.)
Civil Fines Would Increase Five-Fold, Criminal Fines 4-Fold
According to a June 2007 report from the Senate Committee on Banking, Housing and Urban Affairs, S. 1612 increases IEEPA penalties to ensure they reflect the seriousness of a violation. For example, under the prior penalty structure only $1.3 million could be assessed against a foreign bank with a U.S. presence that violated Office of Foreign Assets Control (OFAC) sanctions against Iraq, Sudan, and Cuba by processing 42 transactions totaling $55 million through the U.S.; under S. 1612, penalties could be over $100 million.
Civil fines. S. 1612 amends 50 USC 1705 by increasing the maximum civil penalty to the greater of $250,000 or twice the amount of the transaction that is the basis of the violation with respect to which the penalty is imposed. (The prior civil penalty was up to $50,000 per violation.)
This increased maximum applies to enforcement actions that are pending or commenced on or after October 16, 2007, the date of enactment of S. 1612.
Criminal fines and sentencing. In addition, S. 1612 increases criminal penalties to $1,000,000 with a maximum jail sentence of 20 years, or both. (The prior criminal penalty was up to $50,000 and 20 years imprisonment.)
These increases apply to enforcement actions that are commenced on or after October 16, 2007, the date of enactment of S. 1612.
Although IEEPA Intended for OFAC Sanctions, it Has Been Used by BIS
The Committee's report notes that although IEEPA is intended to be applied to Office of Foreign Assets Control (OFAC)-related sanctions, for the last six years (since the most recent expiration of the Export Administration Act (EAA) in 2001), export controls on dual use technologies have been implemented through the invocation of the IEEPA.
Absent the more robust authorities and penalties previously in force under the EAA, the Bureau of Industry and Security (BIS) has had to invoke the IEEPA in its execution of investigations and export enforcement activities.
According to the report, this situation has severely hampered BIS investigations and caused reluctance among some prosecutors to bring criminal indictments for export control violations. The report further notes that the Commerce Department's export control investigations of 16 cases under these authorities in 2006 led to penalties totaling only $1.6 million in fines.
1S. 1612 is entitled the International Emergency Economic Powers Enhancement Act.
S. 1612 available at http://frwebgate.access.gpo.gov/cgi-bin/getdoc.cgi?dbname=110_cong_bills&docid=f:s1612enr.txt.pdf.
Senate Banking, and Housing and Urban Affairs Committee report on S. 1612 (110-82, ordered to be printed June 13, 2007) available at http://frwebgate.access.gpo.gov/cgi-bin/getdoc.cgi?dbname=110_cong_reports&docid=f:sr082.110.pdf.