[Federal Register Volume 85, Number 172 (Thursday, September 3, 2020)]
[Rules and Regulations]
[Pages 54911-54914]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-19237]



[[Page 54911]]

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DEPARTMENT OF THE TREASURY

Office of Foreign Assets Control

31 CFR Part 501

[Docket Number OFAC-2020-0001]


Inflation Adjustment of Civil Monetary Penalties Related to 
Reporting and Recordkeeping

AGENCY: Office of Foreign Assets Control, Treasury.

ACTION: Interim final rule with request for comments.

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SUMMARY: The Department of the Treasury's Office of Foreign Assets 
Control (OFAC) is issuing this interim final rule to further implement 
the Federal Civil Penalties Inflation Adjustment Act of 1990, as 
amended by the Federal Civil Penalties Inflation Adjustment Act 
Improvements Act of 2015, by adjusting for inflation its civil monetary 
penalties for failure to comply with certain recordkeeping and 
reporting requirements, which are contained in OFAC's Economic 
Sanctions Enforcement Guidelines in OFAC's Reporting, Procedures and 
Penalties Regulations.

DATES: This rule is effective October 5, 2020. Comments must be 
received on or before October 5, 2020.

ADDRESSES: You may submit comments by either of the following methods:
    Federal eRulemaking Portal: www.regulations.gov. Follow the 
instructions on the website for submitting comments. Refer to Docket 
Number OFAC-2020-0001.
    Mail: Attn: Request for Comments (Inflation Adjustment of Civil 
Monetary Penalties Related to Reporting and Recordkeeping), Office of 
Foreign Assets Control, Department of the Treasury, 1500 Pennsylvania 
Avenue NW, Freedman's Bank Building, Washington, DC 20220. Refer to 
Docket Number OFAC-2020-0001.
    Instructions: All submissions received must include the agency name 
and the docket number that appears at the end of this document. All 
comments, including attachments and other supporting materials, will 
become part of the public record and subject to public disclosure. 
Sensitive personal information, such as account numbers or Social 
Security numbers, should not be included. Comments generally will not 
be edited to remove any identifying or contact information.

FOR FURTHER INFORMATION CONTACT: OFAC: Assistant Director for 
Licensing, 202-622-2480; Assistant Director for Regulatory Affairs, 
202-622-4855; or Assistant Director for Sanctions Compliance & 
Evaluation, 202-622-2490.

SUPPLEMENTARY INFORMATION:

Electronic Availability

    This document and additional information concerning OFAC are 
available from OFAC's website (http://www.treasury.gov/ofac).

Background

The Federal Civil Penalties Inflation Adjustment Act

    Section 4 of the Federal Civil Penalties Inflation Adjustment Act 
(1990 Pub. L. 101-410, 104 Stat. 890; 28 U.S.C. 2461 note), as amended 
by the Federal Civil Penalties Inflation Adjustment Act Improvements 
Act of 2015 (Pub. L. 114-74, 129 Stat. 599, 28 U.S.C. 2461 note) 
(collectively, the FCPIA Act), requires each federal agency with 
statutory authority to assess civil monetary penalties (CMPs) to adjust 
CMPs for inflation according to a formula described in section 5 of the 
FCPIA Act. One purpose of the FCPIA Act is to ensure that CMPs continue 
to maintain their deterrent effect through periodic cost-of-living 
based adjustments.
    The FCPIA Act directs agencies to adjust the level of CMPs for 
inflation with an initial ``catch-up'' adjustment to be effective no 
later than August 1, 2016, followed by annual adjustments. The FCPIA 
directs the Office of Management and Budget (OMB) to provide agencies 
with guidance and Consumer Price Index for all Urban Consumers (CPI-U)-
related multipliers for the initial catch-up adjustment and subsequent 
annual adjustments.
    OFAC currently is authorized to impose CMPs pursuant to five 
statutes: The Trading with the Enemy Act (50 U.S.C. 4315) (TWEA); the 
International Emergency Economic Powers Act (50 U.S.C. 1705) (IEEPA); 
the Antiterrorism and Effective Death Penalty Act of 1996 (18 U.S.C. 
2339B) (AEDPA); the Foreign Narcotics Kingpin Designation Act (21 
U.S.C. 1906) (FNKDA); and the Clean Diamond Trade Act (19 U.S.C. 3907) 
(CDTA).
    OFAC issued an initial catch-up adjustment rule for CMPs pursuant 
to these statutes on August 1, 2016 (81 FR 43070, July 1, 2016), and 
issued annual CMP increases on February 10, 2017 (82 FR 10434, February 
10, 2017), March 19, 2018 (83 FR 11876, March 19, 2018), June 14, 2019 
(84 FR 27714, June 14, 2019), and April 9, 2020 (85 FR 19884, April 9, 
2020).
    OFAC inadvertently omitted from its initial catch-up regulation and 
subsequent annual increases its CMPs for failure to comply with a 
requirement to furnish information, the late filing of a required 
report, and failure to maintain records, which are located in its 
Economic Sanctions Enforcement Guidelines in appendix A to 31 CFR part 
501. This interim final rule combines the catch-up adjustment that 
would have become effective August 1, 2016, plus the annual adjustments 
for 2017 through 2020 for these CMPs.
    In addition, OFAC is making technical edits to the authority 
citation for part 501 to conform to Federal Register guidance.

Calculation Method for Catch-Up Adjustments

    In order to complete the catch-up adjustment for CMPs, the FCPIA 
Act directs agencies to identify when the CMP amount or range was 
established or last adjusted, other than adjustments pursuant to the 
FCPIA Act. Agencies are directed to use that amount or range as a 
starting point for performing calculations. The catch-up calculations 
therefore exclude prior inflationary adjustments under the FCPIA Act. 
The FCPIA Act directs agencies to calculate initial catch-up 
adjustments based on the percent change between the CPI-U for the month 
of October in the year of the last non-FCPIA-Act-based adjustment and 
the October 2015 CPI-U. In accordance with the FCPIA Act, the amount of 
the CMP catch-up adjustment shall not exceed 150 percent of the 
corresponding level in effect on November 2, 2015 (the ``maximum 
adjustment''), and agencies must round all CMP levels to the nearest 
dollar after applying the multiplier.
    On February 24, 2016, OMB issued written guidance providing 
agencies with CPI-U-related multipliers to use when adjusting the CMP 
level or range of CMP levels based on the year the CMP was established 
or last adjusted by statute or regulation. (Memorandum for the Heads of 
Executive Departments and Agencies: Implementation of the Federal Civil 
Penalties Inflation Adjustment Act Improvements Act of 2015 (OMB Catch-
Up Guidance)).

Catch-Up Adjustments for Failure To Comply With a Requirement To 
Furnish Information and the Late Filing of a Required Report

    OFAC's CMPs for failure to comply with a requirement to furnish 
information pursuant to 31 CFR 501.602 and the late filing of a report 
set forth in regulations or a specific license are contained in 
sections IV.A and B, respectively, of appendix A to 31 CFR part 501. 
OFAC established these CMPs

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on September 8, 2008 (73 FR 51933, September 8, 2008), and OFAC has not 
adjusted them since. Pursuant to the OMB Catch-Up Guidance, the 
inflation factor for catch-up adjustments for these CMPs is 1.09819, 
with a maximum allowable adjustment of 150 percent of the CMP that was 
in effect on November 2, 2015.
    The CMP established in 2008 for failure to furnish information 
pursuant to 31 CFR 501.602 irrespective of whether any other violation 
is alleged is $20,000. Applying the multiplier of 1.09819 results in a 
catch-up CMP of $21,964. The CMP established in 2008 for failure to 
furnish information pursuant to 31 CFR 501.602 where OFAC has reason to 
believe that the apparent violation(s) involves a transaction(s) valued 
at greater than $500,000, irrespective of whether any other violation 
is alleged, is $50,000. Applying the multiplier of 1.09819 results in a 
catch-up CMP amount of $54,910. The CMP established in 2008 for the 
late filing of a required report, whether set forth in regulations or 
in a specific license, if filed within the first 30 days after the 
report is due, is $2,500. Applying the multiplier of 1.09819 results in 
a catch-up CMP amount of $2,745. The CMP established in 2008 for the 
late filing of a required report, whether set forth in regulations or 
in a specific license, if filed more than 30 days after the report is 
due, is $5,000. Applying the multiplier of 1.09819 results in a catch-
up CMP amount of $5,491. The 2008 CMP for the late filing of a required 
report, whether set forth in regulations or in a specific license, if 
the report relates to blocked assets, is an additional $1,000 for every 
30 days that the report is overdue, up to five years. Applying the 
multiplier of 1.09819 results in a catch-up CMP amount of $1,098. None 
of these catch-up increases exceeds the maximum adjustment amount. 
These catch-up increases are shown in Column 2 of Table 1.

Catch-Up Adjustment for Failure To Maintain Records in Conformance With 
the Requirements of OFAC's Regulations or of a Specific License

    OFAC last adjusted its CMP for failure to maintain records in 
conformance with the requirements of OFAC's regulations or of a 
specific license, which is located in section IV.C of appendix A to 31 
CFR part 501, on November 9, 2009 (74 FR 57593, November 9, 2009). The 
2009 adjustment of this CMP provides for a penalty in an amount up to 
$50,000. Pursuant to the OMB Catch-Up Guidance, the relevant inflation 
factor for the catch-up adjustment for this CMP is 1.10020, with a 
maximum allowable adjustment of 150 percent of the CMP that was in 
effect on November 2, 2015. Applying the multiplier of 1.10020 to this 
CMP results in the catch-up amount up to $55,010, which does not exceed 
the maximum adjustment. This catch-up figure is shown in Column 2 of 
Table 2.

Calculation Method for 2017, 2018, 2019, and 2020 Adjustments

    The FCPIA Act requires agencies to adjust CMPs annually for 
inflation subsequent to the initial catch-up adjustment. These annual 
adjustments are to be based on the percent change between the CPI-U for 
the October preceding the date of the adjustment and the prior year's 
October CPI-U. Each December, OMB issues the adjustment multiplier for 
the upcoming year's calculations. In order to complete the annual 
adjustment, each CMP (as revised by the catch-up adjustment) is 
multiplied by the adjustment multiplier for that year. Under the FCPIA 
Act, any increases in CMPs must be rounded to the nearest multiple of 
$1.
    The adjustment multiplier for the 2017 CMP increase was 1.01636, as 
set forth in OMB Memorandum M-17-11 of December 16, 2016 (Memorandum 
for the Heads of Executive Departments and Agencies: Implementation of 
the 2017 Annual Adjustment pursuant to the Federal Civil Penalties 
Inflation Adjustment Act Improvements Act of 2015). For the 2018 CMP 
increase, OMB Memorandum M-18-03 of December 15, 2017 provided an 
adjustment multiplier of 1.02041 (Memorandum for the Heads of Executive 
Departments and Agencies: Implementation of Penalty Inflation 
Adjustments for 2018, Pursuant to the Federal Civil Penalties Inflation 
Adjustment Act Improvements Act of 2015). For the 2019 CMP increase, 
OMB Memorandum M-19-04 of December 14, 2018 stated the adjustment 
multiplier was 1.02522 (Memorandum for the Heads of Executive 
Departments and Agencies: Implementation of Penalty Inflation 
Adjustments for 2019, Pursuant to the Federal Civil Penalties Inflation 
Adjustment Act Improvements Act of 2015,). For the 2020 CMP increase, 
OMB Memorandum M-20-05 of December 16, 2019 provided an adjustment 
multiplier of 1.01764 (Memorandum for the Heads of Executive 
Departments and Agencies: Implementation of Penalty Inflation 
Adjustments for 2020, Pursuant to the Federal Civil Penalties Inflation 
Adjustment Act Improvements Act of 2015).

Adjustments for 2017, 2018, 2019, and 2020 for Failure To Comply With a 
Requirement To Furnish Information and the Late Filing of a Required 
Report

    If OFAC had calculated the 2017 annual adjustment for its CMPs for 
failure to comply with a requirement to furnish information and the 
late filing of a report, each of the catch-up CMP amounts would have 
been multiplied by the OMB-provided factor of 1.01636. The resulting 
amounts for the 2017 CMPs are shown in Column 3 of Table 1. If OFAC had 
calculated the 2018 annual adjustment, the 2017 CMPs would have been 
multiplied by the OMB-provided factor of 1.02041. The resulting amounts 
for the 2018 CMPs are shown in Column 4 of Table 1. If OFAC had 
calculated the 2019 CMP adjustment, the 2018 CMPs would have been 
multiplied by the OMB-provided factor of 1.02522. The resulting amounts 
for the 2019 CMPs are shown in Column 5 of Table 1.
    For the 2020 CMP increases, OMB provided an adjustment factor of 
1.01764. OFAC multiplied the 2019 CMP amounts by this factor, resulting 
in the 2020 CMP amounts as shown in Column 6 of Table 2. These 2020 CMP 
amounts will be effective October 5, 2020 for associated violations 
that occurred after November 2, 2015 for which penalties were assessed 
on or after October 5, 2020.

Adjustments for 2017, 2018, 2019, and 2020 for Failure To Maintain 
Records in Conformance With the Requirements of OFAC's Regulations or 
of a Specific License

    If OFAC had calculated the 2017 annual adjustment for its CMP for 
failure to maintain records in conformance with the requirements of 
OFAC's regulations or of a specific license, the catch-up CMP amount 
would have been multiplied by the OMB-provided factor of 1.01636. The 
resulting amount for the 2017 CMP is shown in Column 3 of Table 2. If 
OFAC had calculated the 2018 annual CMP adjustment, the 2017 CMP would 
have been multiplied by the OMB-provided factor of 1.02041. The 
resulting amount for the 2018 CMP is shown in Column 4 of Table 2. If 
OFAC had calculated the 2019 CMP adjustment, the 2018 CMP would have 
been multiplied by the OMB-provided factor of 1.02522. The resulting 
amount for the 2019 CMP is shown in Column 5 of Table 2.
    For the 2020 CMP increase, OMB provided an adjustment factor of 
1.01764. OFAC multiplied the 2019 CMP amount by this factor, resulting 
in the 2020 CMP amount as shown in

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Column 6 of Table 2. This 2020 CMP amount will be effective October 5, 
2020 for associated violations that occurred after November 2, 2015 for 
which penalties were assessed on or after October 5, 2020.

Summary of CMP Increases in This Rule

    The CMP for failure to comply with the requirement to furnish 
information pursuant to 31 CFR 501.602 irrespective of whether any 
other violation is alleged will increase from $20,000 to $23,765. The 
CMP for failure to comply with a requirement to furnish information, 
where OFAC has reason to believe that the apparent violation(s) that is 
the subject of the requirement to furnish information involves a 
transaction(s) valued at greater than $500,000, irrespective of whether 
any other violation is alleged, will increase from $50,000 to $59,413. 
The CMP for late filing of a required report, whether set forth in 
regulations or in a specific license, if filed within the first 30 days 
after the report is due will increase from $2,500 to $2,970. The CMP 
for late filing of a required report, whether set forth in regulations 
or in a specific license, if filed more than 30 days after the report 
is due, will increase from $5,000 to $5,942. The CMP for late filing of 
a required report, whether set forth in regulations or in a specific 
license, if the report relates to blocked assets, an additional CMP for 
every 30 days that the report is overdue, up to five years, will 
increase from $1,000 to $1,189. The CMP for failure to maintain records 
in conformance with the requirements of OFAC's regulations or of a 
specific license will increase from a maximum of $50,000 to $59,522.

                      Table 1--CMPs for Failure To Comply With a Requirement To Furnish Information and the Late Filing of a Report
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                                       Column 1            Column 2            Column 3            Column 4            Column 5            Column 6
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Violation.......................  Existing CMP......  2016 catch-up CMP   2017 adjusted CMP   2018 CMP (factor    2019 CMP (factor    2020 CMP (factor
                                                       (catch-up factor    (factor of          of 1.02041          of 1.02522          of 1.01764
                                                       of 1.09819          1.01636 applied     applied to 2017     applied to 2018     applied to 2019
                                                       applied to          to catch-up CMP).   CMP).               CMP).               CMP) This is the
                                                       existing CMP).                                                                  penalty effective
                                                                                                                                       October 5, 2020.
Failure to furnish information    $20,000...........  $21,964...........  $22,323...........  $22,779...........  $23,353...........  $23,765.
 pursuant to 31 CFR 501.602
 irrespective of whether any
 other violation is alleged.
Failure to furnish information    $50,000...........  $54,910...........  $55,808...........  $56,947...........  $58,383...........  $59,413.
 pursuant to 31 CFR 501.602
 where OFAC has reason to
 believe that the apparent
 violation(s) involves a
 transaction(s) valued at
 greater than $500,000,
 irrespective of whether any
 other violation is alleged.
Late filing of a required         $2,500............  $2,745............  $2,790............  $2,847............  $2,919............  $2,970.
 report, whether set forth in
 regulations or in a specific
 license, if filed within the
 first 30 days after the report
 is due.
Late filing of a required         $5,000............  $5,491............  $5,581............  $5,695............  $5,839............  $5,942.
 report, whether set forth in
 regulations or in a specific
 license, if filed more than 30
 days after the report is due.
Late filing of a required         $1,000............  $1,098............  $1,116............  $1,139............  $1,168............  $1,189.
 report, whether set forth in
 regulations or in a specific
 license, if the report relates
 to blocked assets, an
 additional CMP for every 30
 days that the report is
 overdue, up to five years.
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            Table 2--CMPs for Failure To Maintain Records in Conformance With the Requirements of OFAC's Regulations or of a Specific License
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                                       Column 1            Column 2            Column 3            Column 4            Column 5            Column 6
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Violation.......................  Existing CMP......  2016 catch-up CMP   2017 adjusted CMP   2018 CMP (factor    2019 CMP (factor    2020 CMP (factor
                                                       (catch-up factor    (factor of          of 1.02041          of 1.02522          of 1.01764
                                                       of 1.10020          1.01636 applied     applied to 2017     applied to 2018     applied to 2019
                                                       applied to          to catch-up CMP).   CMP).               CMP).               CMP) This is the
                                                       existing CMP).                                                                  penalty effective
                                                                                                                                       October 5, 2020.
Failure to maintain records in    $50,000...........  $55,010...........  $55,910...........  $57,051...........  $58,490...........  $59,522.
 conformance with the
 requirements of OFAC's
 regulations or of a specific
 license.
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    The adjusted CMP amounts described in this rule are applicable only 
to CMPs assessed after October 5, 2020, whose associated violations 
occurred after November 2, 2015, the date of enactment of the FCPIA 
Act.

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Procedural Requirements

Notice and Comment

    As required by the FCPIA Act, these amendments are being published 
as an interim final rule with an effective date of October 5, 2020. 
Although other notice and comment procedures are not required, OFAC 
invites comments on this rule related to the catch-up adjustment only. 
The FCPIA Act expressly exempts the inflation adjustments from the 
notice and comment requirements of the Administrative Procedure Act, by 
directing agencies to adjust CMPs for inflation ``notwithstanding 
section 553 of title 5, United States Code'' (Pub. L. 114-74, 129 Stat. 
599; 28 U.S.C. 2461 note).

Regulatory Flexibility Act

    Because no notice of proposed rulemaking is required for this rule, 
the Regulatory Flexibility Act (5 U.S.C. 601-612) does not apply.

Paperwork Reduction Act

    The Paperwork Reduction Act does not apply because this rule does 
not impose information collection requirements that would require the 
approval of the Office of Management and Budget under 44 U.S.C. 3501 et 
seq.

List of Subjects for 31 CFR Part 501

    Administrative practice and procedure, Banks, banking, Blocking of 
assets, Enforcement guidelines, Exports, Foreign trade, Licensing, 
Penalties, Recordkeeping, Sanctions.
    For the reasons set forth in the preamble, 31 CFR part 501 is 
amended as follows:

PART 501--REPORTING, PROCEDURES AND PENALTIES REGULATIONS

0
1. The authority citation for part 501 is revised to read as follows:

    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, 2370(a), 6009, 6032, 
7205, 8501-8551; Pub. L. 101-410, 104 Stat. 890 (28 U.S.C. 2461 
note); 31 U.S.C. 321(b); 50 U.S.C. 1701-1706, 4301-4341.

Appendix A to Part 501--[Amended]

0
2. In appendix A to part 501:
0
a. Amend paragraph IV.A. as follows:
0
i. Remove ``$20,000'' and in its place add ``$23,765''.
0
ii. Remove ``$50,000'' and in its place add ``$59,413''.
0
b. Amend paragraph IV.B. as follows:
0
i. Remove ``$2,500'' and add in its place ``$2,970''.
0
ii. Remove ``$5,000'' and add in its place ``$5,942''.
0
iii. Remove ``$1,000'' and add in its place ``$1,189''.

0
5. In paragraph IV.C., remove ``$50,000'' and add in its place 
``$59,522''.

    Dated: August 27, 2020.
Bradley T. Smith,
Deputy Director, Office of Foreign Assets Control.
[FR Doc. 2020-19237 Filed 9-2-20; 8:45 am]
BILLING CODE 4810-AL-P