OFAC Amends Economic Sanctions Enforcement Guidelines, Requests Comments
The Office of Foreign Assets Control has issued an interim final rule, effective September 8, 2008, which amends its Economic Sanctions Enforcement Guidelines for persons subject to the requirements of U.S. sanctions statutes, executive orders and regulations.
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These Guidelines are applicable to all persons subject to any of the sanctions programs administered by OFAC.
OFAC Solicits Comments by November 7th to Improve the Guidelines
Although this interim final rule is effective immediately, OFAC is soliciting comments by November 7, 2008 on improving the Guidelines. (See notice for specific aspects of the Guidelines on which OFAC is requesting comments.)
Amended Guidelines Necessary Due to IEEPA Enhancement Act
In October 2007, the President signed into law the International Emergency Economic Powers Enhancement Act, substantially increasing the maximum penalties for violations of the International Emergency Economic Powers Act (IEEPA). The increased maximum penalty amounts set forth in the Enhancement Act, as well as its application to pending or commenced cases involving apparent violations of IEEPA, prompted the amendment of these Guidelines for determining an appropriate enforcement response to apparent violations of sanctions programs enforced by OFAC, and, in cases involving civil monetary penalties, for determining the amount of any civil monetary penalty.
Amended Guidelines Supersede Certain Prior Procedures and Proposals
According to OFAC, the Guidelines set forth in this interim final rule supersede the enforcement procedures for banking institutions set forth in the interim final rule of January 12, 2006, which is hereby withdrawn, as well as the proposed guidelines set forth in the proposed rule of January 29, 2003, which is also hereby withdrawn, with the exception of the Cuba Penalty Schedule. See ITT's Online Archives or 02/03/06 and 01/31/03 news, 06020399 3 and 03013199 3, for BP summaries.)
Guidelines Reflect Changes to Determining Violations, Penalties
The Guidelines issued in this interim final rule reflect several changes from the 2003 proposed rule and the 2006 interim final rule, including:
New process for determining penalty amount. In those cases in which the imposition of a civil monetary penalty is deemed appropriate, the Guidelines provide a new process for determining the penalty amount. This process involves first determining a base penalty amount. This base penalty amount is based on two primary considerations: (i) whether the conduct, activity, or transaction giving rise to a violation is egregious or non-egregious and (ii) whether the case involves a voluntary self-disclosure by the Subject Person.
The existence (or lack) of a voluntary self-disclosure is a major factor in establishing the penalty amount. The base penalty amount for a case involving a voluntary self-disclosure reflects a 50% or more reduction from the base penalty amount that would otherwise be applicable.
Once a base penalty amount is calculated based on the transaction value and egregiousness/voluntary self-disclosure factors, the amount may be adjusted upward or downward based on the other General Factors set forth in the Guidelines.
General Factors in determining enforcement. Rather than identifying "aggravating'' and "mitigating'' factors, the Guidelines set forth General Factors that OFAC will consider in determining an appropriate enforcement response to an apparent violation and, if a civil monetary penalty is warranted, in establishing the amount of that penalty.
Cautionary letters rather than warning letters, evaluative letters. The Guidelines provide for the issuance of either cautionary letters or findings of violation under certain circumstances, rather than the cautionary letters and warning letters provided for in the 2003 proposed rule and the evaluative letters provided for in the 2006 interim final rule.
Egregious and non-egregious cases distinguished. In recognition of OFAC's position that the enhanced maximum civil penalties authorized by the Enhancement Act should be reserved for the most serious cases, the Guidelines distinguish between egregious and non-egregious civil monetary penalty cases.
(See ITT's Online Archives or 10/23/07 news, 07102325, for BP summary of the President signing the Enhancement Act into law. See ITT's Online Archives or 06/17/08 news, 08061715, for BP summary of an OFAC final rule amending the penalty provisions of 17 sanctions programs.)
OFAC contact - Elton Ellison (202) 622-6140
OFAC final rule (FR Pub 09/08/08) available at http://edocket.access.gpo.gov/2008/pdf/E8-20704.pdf