October 16, 2007
The President signed legislation into law today that will dramatically increase the maximum civil penalties under the International Emergency Economic Powers Act ("IEEPA") from $50,000 to $250,000 per violation, or twice the amount of the transaction, whichever is greater. The maximum criminal penalty was also increased — from $50,000 to $1,000,000 per violation with the maximum period of confinement remaining at 20 years. The new increased monetary penalties apply to any violation to which an enforcement action is pending or commenced on or after the date of the enactment of the Act.
These new penalties are expected to have an immediate impact on violations of the Export Administration Regulations ("EAR") administered by the U.S. Department of Commerce’s Bureau of Industry and Security ("BIS") and most of the economic and trade sanctions programs administered by the U.S. Department of the Treasury’s Office of Foreign Assets Control ("OFAC"), including those in effect for Iran, Sudan, and Syria. Sanctions against Cuba and North Korea are unaffected as they are issued under the authority of the Trading With the Enemy Act ("TWEA").
IEEPA has served as the authority for continuation of the EAR since the Export Administration Act ("EAA") lapsed in 2001. An August 4, 2006 BIS final rule clarified that IEEPA civil penalties apply to violations of the EAR so long as IEEPA provides authority for continuation of the EAR. That clarification was issued after civil penalties under the IEEPA were increased from $11,000 to $50,000 under the Patriot Act Improvement and Reauthorization Act in March 2006. A similar rule clarifying the application of IEEPA criminal penalties under the EAR can be expected to be issued now that the criminal penalties have been increased.
The recent series of increases in the maximum penalties when combined with increased enforcement activity by OFAC and BIS signal an urgent need for companies to reevaluate their export compliance programs and raises the stakes considerably for companies or persons who have learned that they have violated these laws and are contemplating next steps.
Gibson, Dunn & Crutcher’s International Trade Regulation and Compliance Practice Group has experience in addressing compliance and enforcement concerns regarding these and other U.S. export laws. For further information, please contact the Gibson, Dunn & Crutcher attorney with whom you work, or the following members of the firm’s
International Trade Regulation and Compliance Practice Group:
Judith A. Lee (202-887-3591, email@example.com)
Daniel J. Plaine (202-955-8286, firstname.lastname@example.org)
Jim Slear (202-955-8578, email@example.com)
Andrea Farr (202-955-8680, firstname.lastname@example.org)
Patrick F. Speice, Jr. (202-887-3776, pspeiceJr@gibsondunn.com)
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