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Rule

Inflation Adjustment of Civil Monetary Penalties

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Information about this document as published in the Federal Register.

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AGENCY:

Departmental Offices, Financial Crimes Enforcement Network, and Office of Foreign Assets Control, Treasury.

ACTION:

Final rule.

SUMMARY:

The Department of the Treasury (“Department” or “Treasury”) publishes this final rule to adjust its civil monetary penalties (“CMPs”) for inflation as mandated by the Federal Civil Penalties Inflation Adjustment Act of 1990, as amended by the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015 (collectively referred to herein as “the Act”). This rule adjusts CMPs within the jurisdiction of certain components of the Department to the maximum amount required by the Act.

DATES:

Effective March 19, 2018.

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FOR FURTHER INFORMATION CONTACT:

For information regarding the Terrorism Risk Insurance Program's CMPs, contact Richard Ifft, Senior Insurance Regulatory Policy Analyst, Federal Insurance Office, Room 1410 MT, Department of the Treasury, 1500 Pennsylvania Avenue NW, Washington, DC 20220, at (202) 622-2922 (not a toll-free number), Kevin Meehan, Senior Insurance Regulatory Policy Analyst, Federal Insurance Office, at (202) 622-7009 (not a toll-free number), or Lindsey Baldwin, Senior Policy Analyst, Federal Insurance Office, at (202) 622-3220 (not a toll free number). Persons who have difficulty hearing or speaking may access these numbers via TTY by calling the toll-free Federal Relay Service at (800) 877-8339.

For information regarding Financial Crimes Enforcement Network's CMPs, contact the FinCEN Resource Center at (800) 767-2825 or email frc@fincen.gov.

For information regarding the Office of Foreign Assets Control's CMPs, contact the Assistant Director for Enforcement, tel.: 202-622-2430; Start Printed Page 11877Assistant Director for Licensing, tel.: 202-622-2480; Assistant Director for Regulatory Affairs, tel.: 202-622-4855; Assistant Director for Sanctions Compliance & Evaluation, tel.: 202-622-2490; or the Department of the Treasury's Office of the Chief Counsel (Foreign Assets Control), Office of the General Counsel, tel.: 202-622-2410.

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SUPPLEMENTARY INFORMATION:

I. Background

In order to improve the effectiveness of CMPs and to maintain their deterrent effect, the Federal Civil Penalties Inflation Adjustment Act of 1990, 28 U.S.C. 2461 note (“the Inflation Adjustment Act”), as amended by the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015 (Pub. L. 114-74) (“the 2015 Act”), requires Federal agencies to adjust each CMP provided by law within the jurisdiction of the agency. The 2015 Act requires agencies to adjust the level of CMPs with an initial “catch-up” adjustment through an interim final rulemaking and to make subsequent annual adjustments for inflation, without needing to provide notice and the opportunity for public comment required by 5 U.S.C. 553. The Department's initial catch-up adjustment interim final rules were published on June 30, 2016 (FinCEN) (81 FR 42503), July 1, 2016 (OFAC) (81 FR 43070), and December 7, 2016 (Departmental Offices) (81 FR 88600). The Department's 2017 annual adjustment was published on February 10, 2017 (82 FR 10434). The 2015 Act provides that any increase in a CMP shall apply to CMPs that are assessed after the date the increase takes effect, regardless of whether the underlying violation predated such increase.[1]

II. Method of Calculation

The method of calculating CMP adjustments applied in this final rule is required by the 2015 Act. Under the 2015 Act and the Office of Management and Budget guidance required by the 2015 Act, annual inflation adjustments subsequent to the initial catch-up adjustment are to be based on the percent change between the Consumer Price Index for all Urban Consumers (“CPI-U”) for the October preceding the date of the adjustment and the prior year's October CPI-U. As set forth in Office of Management and Budget Memorandum M-18-03 of December 15, 2017, the adjustment multiplier for 2018 is 1.02041. In order to complete the 2018 annual adjustment, each current CMP is multiplied by the 2018 adjustment multiplier. Under the 2015 Act, any increase in CMP must be rounded to the nearest multiple of $1.

Procedural Matters

1. Administrative Procedure Act

The Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015 (Section 701(b)) requires agencies, beginning in 2017, to make annual adjustments for inflation to CMPs, without needing to provide notice and the opportunity for public comment required by 5 U.S.C. 553. Additionally, the methodology used, effective 2017, for adjusting CMPs for inflation is provided by statute, with no discretion provided to agencies regarding the substance of the adjustments for inflation to CMPs. The Department is charged only with performing ministerial computations to determine the dollar amount of adjustments for inflation to CMPs. Accordingly, prior public notice and an opportunity for public comment and a delayed effective date are not required for this rule.

2. Regulatory Flexibility Act

Because no notice of proposed rulemaking is required, the provisions of the Regulatory Flexibility Act (5 U.S.C. 601 et seq.) do not apply.

3. Executive Order 12866

This rule is not a significant regulatory action as defined in section 3.f of Executive Order 12866.

4. Paperwork Reduction Act

The provisions of the Paperwork Reduction Act of 1995, Public Law 104-13, 44 U.S.C. Chapter 35, and its implementing regulations, 5 CFR part 1320, do not apply to this rule because there are no new or revised recordkeeping or reporting requirements.

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List of Subjects

31 CFR Part 50

  • Insurance
  • Terrorism

31 CFR Parts 501, 535, 536, 538, 539, 541, 542, 544, 546, 547, 548, 549, 560, 561, 566, 576, 584, 588, 592, 594, 595, 597, and 598

  • Administrative practice and procedure
  • Banks
  • Banking
  • Blocking of assets
  • Exports
  • Foreign trade
  • Licensing
  • Penalties
  • Sanctions

31 CFR Part 1010

  • Authority delegations (Government agencies)
  • Banks and banking
  • Currency
  • Investigations
  • Law enforcement
  • Reporting and recordkeeping requirements
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Authority and Issuance

For the reasons set forth in the preamble, part 50, chapter V, and part 1010 of title 31 of the Code of Federal Regulations are amended as follows:

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PART 50—TERRORISM RISK INSURANCE PROGRAM

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1. The authority citation for part 50 continues to read as follows:

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Authority: 5 U.S.C. 301; 31 U.S.C. 321; Title I, Pub. L. 107-297, 116 Stat. 2322, as amended by Pub. L. 109-144, 119 Stat. 2660, Pub. L. 110-160, 121 Stat. 1839 and Pub. L. 114-1, 129 Stat. 3 (15 U.S.C. 6701 note); Pub. L. 114-74, 129 Stat. 601, Title VII (28 U.S.C. 2461 note).

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2. Amend § 50.83 by revising paragraph (a) to read as follows:

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Adjustment of civil monetary penalty amount.

(a) Inflation adjustment. Any penalty under the Act and these regulations may not exceed the greater of $1,360,525 and, in the case of any failure to pay, charge, collect or remit amounts in accordance with the Act or these regulations such amount in dispute.

* * * * *
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PART 501—REPORTING, PROCEDURES AND PENALTIES REGULATIONS

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3. The authority citation for part 501 continues to read as follows:

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Authority: 8 U.S.C. 1189; 18 U.S.C. 2332d, 2339B; 19 U.S.C. 3901-3913; 21 U.S.C. 1901-1908; 22 U.S.C. 287c; 22 U.S.C. 2370(a), 6009, 6032, 7205; 28 U.S.C. 2461 note; 31 U.S.C. 321(b); 50 U.S.C. 1701-1706; 50 U.S.C. App. 1-44.

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Subpart D—Trading With the Enemy Act (TWEA) Penalties

[Amended]
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4. Amend § 501.701 as follows:

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a. In the note to paragraph (a)(1), remove “As of January 15, 2017,” ; and remove “$85,236” and add in its place “$86,976”.

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b. In paragraph (a)(3), remove “$85,236” and add in its place “$86,976”.

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5. Amend appendix A to part 501 as follows:

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a. In section V.B.2.a.i., remove “$144,619” and add in its place “$147,571”, and remove “$289,238” and add in its place “$295,141”.

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b. In section V.B.2.a.ii., remove “$289,238” in all three locations where it appears, and add in its place in all three locations “$295,141”. Start Printed Page 11878

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c. Revise the note to paragraph (a) of section V.B.2.a. to read as follows:

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Appendix A to Part 501—Economic Sanctions Enforcement Guidelines

* * * * *

B. * * *

2. * * *

a. * * *

Note to paragraph (a): The applicable statutory maximum civil penalty per violation for each statute enforced by OFAC is as follows: International Emergency Economic Powers Act (IEEPA)—greater of $295,141 or twice the amount of the underlying transaction; Trading with the Enemy Act (TWEA)—$86,976; Foreign Narcotics Kingpin Designation Act (FNKDA)—$1,466,485; Antiterrorism and Effective Death Penalty Act of 1996 (AEDPA)—greater of $77,909 or twice the amount of which a financial institution was required to retain possession or control; and Clean Diamond Trade Act (CDTA)—$13,333. The civil penalty amounts authorized under these statutes are subject to adjustment pursuant to the Federal Civil Penalties Inflation Adjustment Act of 1990 (Pub. L. 101-410, as amended, 28 U.S.C. 2461 note).

The following matrix represents the base amount of the proposed civil penalty for each category of violation:

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PART 535—IRANIAN ASSETS CONTROL REGULATIONS

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6. The authority citation for part 535 continues to read as follows:

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Authority: 3 U.S.C. 301; 18 U.S.C. 2332d; 31 U.S.C. 321(b); 50 U.S.C. 1601-1651, 1701-1706; Pub. L. 101-410, 104 Stat. 890 (28 U.S.C. 2461 note); Pub. L. 110-96, 121 Stat. 1011; E.O. 12170, 44 FR 65729, 3 CFR, 1979 Comp., p. 457; E.O. 12205, 45 FR 24099, 3 CFR, 1980 Comp., p. 248; E.O. 12211, 45 FR 26685, 3 CFR, 1980 Comp., p. 253; E.O. 12276, 46 FR 7913, 3 CFR, 1981 Comp., p. 104; E.O. 12279, 46 FR 7919, 3 CFR, 1981 Comp., p. 109; E.O. 12280, 46 FR 7921, 3 CFR, 1981 Comp., p. 110; E.O. 12281, 46 FR 7923, 3 CFR, 1981 Comp., p. 112; E.O. 12282, 46 FR 7925, 3 CFR, 1981 Comp., p. 113; E.O. 12283, 46 FR 7927, 3 CFR, 1981 Comp., p. 114; and E.O. 12294, 46 FR 14111, 3 CFR, 1981 Comp., p. 139.

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Subpart G—Penalties

[Amended]
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7. In the note to paragraph (a)(1) in § 535.701, remove “As of January 15, 2017, the” and add in its place “The”, and remove “$289,238” and add in its place “$295,141”.

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PART 536—NARCOTICS TRAFFICKING SANCTIONS REGULATIONS

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8. The authority citation for part 536 continues to read as follows:

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Authority: 3 U.S.C. 301; 31 U.S.C. 321(b); 50 U.S.C. 1601-1651, 1701-1706; Pub. L. 101-410, 104 Stat. 890 (28 U.S.C. 2461 note); Pub. L. 110-96, 121 Stat. 1011; E.O. 12978, 60 FR 54579, 3 CFR, 1995 Comp., p. 415; E.O. 13286, 68 FR 10619, 3 CFR, 2003 Comp., p. 166.

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Subpart G—Penalties

[Amended]
Start Amendment Part

9. In the note to paragraph (a)(1) in § 536.701, remove “As of January 15, 2017, the” and add in its place “The”, and remove “$289,238” and add in its place “$295,141”.

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PART 538—SUDANESE SANCTIONS REGULATIONS

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10. The authority citation for part 538 continues to read as follows:

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Authority: 3 U.S.C. 301; 18 U.S.C. 2339B, 2332d; 31 U.S.C. 321(b); 50 U.S.C. 1601-1651, 1701-1706; Pub. L. 101-410, 104 Stat. 890 (28 U.S.C. 2461 note); 22 U.S.C. 7201-7211; Pub. L. 109-344, 120 Stat. 1869; Pub. L. 110-96, 121 Stat. 1011 (50 U.S.C. 1705 note); E.O. 13067, 62 FR 59989, 3 CFR, 1997 Comp., p. 230; E.O. 13412, 71 FR 61369, 3 CFR, 2006 Comp., p. 244.

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Subpart G—Penalties

[Amended]
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11. In the note to paragraph (a)(1) in § 538.701 , remove “As of January 15, 2017” and add in its place “The”, and remove “$289,238” and add in its place “$295,141”.

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PART 539—WEAPONS OF MASS DESTRUCTION TRADE CONTROL REGULATIONS

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12. The authority citation for part 539 continues to read as follows:

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Authority: 3 U.S.C. 301; 22 U.S.C. 2751-2799aa-2; 31 U.S.C. 321(b); 50 U.S.C. 1601-1651, 1701-1706; Pub. L. 101-410, 104 Stat. 890 (28 U.S.C. 2461 note); Pub. L. 110-96, 121 Stat. 1011; E.O. 12938, 59 FR 59099, 3 CFR, 1994 Comp., p. 950; E.O. 13094, 63 FR 40803, 3 CFR, 1998 Comp., p. 200.

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Subpart G—Penalties

[Amended]
Start Amendment Part

13. In the note to paragraph (a)(1) in § 539.701, remove “As of January 15, 2017, the” and add in its place “The”, and remove “$289,238” and add in its place “$295,141”.

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PART 541—ZIMBABWE SANCTIONS REGULATIONS

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14. The authority citation for part 541 continues to read as follows:

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Authority: 3 U.S.C. 301; 31 U.S.C. 321(b); 50 U.S.C. 1601-1651, 1701-1706; Pub. L. 101-410, 104 Stat. 890 (28 U.S.C. 2461 note); Pub. L. 110-96, 121 Stat. 1011 (50 U.S.C. 1705 note); E.O. 13288, 68 FR 11457, 3 CFR, 2003 Comp., p. 186; E.O. 13391, 70 FR 71201, 3 CFR, 2005 Comp., p. 206; E.O. 13469, 73 FR 43841, 3 CFR, 2008 Comp., p. 1025.

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Subpart G—Penalties

[Amended]
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15. In the note to paragraph (a)(1) in § 541.701, remove “As of January 15, 2017, the” and add in its place “The”, and remove “$289,238” and add in its place “$295,141”.

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PART 542—SYRIAN SANCTIONS REGULATIONS

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