[Federal Register: October 28, 2003 (Volume 68, Number 208)]
[Rules and Regulations]
[Page 61359-61362]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr28oc03-13]
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DEPARTMENT OF THE TREASURY
Office of Foreign Assets Control
31 CFR Parts 501, 575, 597, and 598
Reporting, Procedures and Penalties Regulations; Iraqi Sanctions
Regulations; Foreign Terrorist Organizations Sanctions Regulations;
Foreign Narcotics Kingpin Sanctions Regulations
AGENCY: Office of Foreign Assets Control, Treasury.
ACTION: Final rule.
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SUMMARY: The Treasury Department's Office of Foreign Assets Control
(``OFAC'') is issuing a final rule to amend the Reporting, Procedures
and Penalties Regulations, Iraqi Sanctions Regulations, Foreign
Terrorist Organizations Sanctions Regulations, and Foreign Narcotics
Kingpin Sanctions Regulations (collectively, the ``Regulations'') to
implement the requirement of the Federal Civil Penalties Inflation
Adjustment Act of 1990 to adjust for inflation the maximum amounts of
the civil monetary penalties that may be assessed under the
Regulations.
EFFECTIVE DATE: October 23, 2003.
FOR FURTHER INFORMATION CONTACT: Chief, Civil Penalties Division, tel.
202/622-6140, or Chief Counsel, tel. 202/
[[Page 61360]]
622-2410, Office of Foreign Assets Control, Department of the Treasury,
Washington, DC 20220
SUPPLEMENTARY INFORMATION:
Electronic and Facsimile Availability
This file is available for download without charge in ASCII and
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FAC.'' Paper copies of this document can be obtained by calling the
Government Printing Office at 202-512-1530. Additional information
concerning the programs of the Office of Foreign Assets Control is
available for download from the Office's Internet Home Page at: http://www.treas.gov/ofac
or via FTP at ofacftp.treas.gov. Facsimiles of
information are available through the Office's 24-hour fax-on-demand
service: call 202/622-0077 using a fax machine, a fax modem, or (within
the United States) a touch-tone telephone.
Background
Section 4 of the Federal Civil Penalties Inflation Adjustment Act
of 1990 (``FCPIA Act'') (Pub. L. 101-410, 104 Stat. 890; 28 U.S.C. 2461
note), as amended by the Debt Collection Improvement Act of 1996
(``DCIA'') (Pub. L. 104-134, 110 Stat. 1321-373; 31 U.S.C. 3701 note)),
requires each Federal agency with statutory authority to assess civil
monetary penalties (``CMPs'') to adjust those 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 DCIA amended the FCPIA Act to require that each
agency, to the extent necessary, issue regulations at least every four
years to adjust its CMPs for inflation.
Section 5 of the FCPIA Act requires that each CMP having a
specified or maximum monetary amount provided for by Federal law be
increased by the percentage by which the Consumer Price Index for all
urban consumers (``CPI''), published by the Department of Labor, for
the month of June of the calendar year preceding the adjustment exceeds
the CPI for the month of June of the calendar year in which the amount
of the CMP was last set or adjusted pursuant to law. The statute
includes a mechanism for rounding penalty increases and limits the
first inflation adjustment of a CMP to 10 percent of such penalty.
With regard to rounding, the FCPIA Act sets out penalty ranges,
from amounts less than or equal to $100 to amounts greater than
$200,000, and provides different dollar multiples for rounding the
increase in each penalty range. Specifically, section 5(a) of the FCPIA
Act requires that any increase in a CMP be rounded to the nearest
multiple of:
1. $10 in the case of penalties less than or equal to $100;
2. $100 in the case of penalties greater than $100 but less than or
equal to $1,000;
3. $1,000 in the case of penalties greater than $1,000 but less
than or equal to $10,000;
4. $5,000 in the case of penalties greater than $10,000 but less
than or equal to $100,000;
5. $10,000 in the case of penalties greater than $100,000 but less
than or equal to $200,000; and
6. $25,000 in the case of penalties greater than $200,000.
OFAC currently is authorized to impose CMPs pursuant to five
statutes: The Trading with the Enemy Act (``TWEA'') (50 U.S.C. App.
16); the International Emergency Economics Powers Act (``IEEPA'') (50
U.S.C. 1705); the Iraq Sanctions Act of 1990 (``ISA'') (Pub. L. 101-
513, 104 Stat. 2049; 50 U.S.C. 1701 note); the Antiterrorism and
Effective Death Penalty Act of 1996 (``AEDPA'') (18 U.S.C. 2339B); and
the Foreign Narcotics Kingpin Designation Act (``FNKDA'') (21 U.S.C.
1906). The current maximum CMP for each of the first four statutes was
last adjusted or set by statute in 1996. The current maximum CMP under
the FNKDA was set when the statute was enacted in 1999 and has not yet
been adjusted for inflation.
With regard to those CMPs last adjusted or set by statute in 1996,
the CPI value increased from 156.7 for June 1996 to 179.9 for June
2002, resulting in an inflation factor of 1.148 (i.e., a 14.8 percent
increase). The CMP inflation factor for the FNKDA is 1.082 (i.e., an
8.2 percent increase), calculated using the CPI values of 166.2 for
June 1999 and 179.9 for June 2002.
The original maximum CMP of $50,000 under TWEA was adjusted for
inflation to $55,000 in 1996. Multiplying the current penalty of
$55,000 by the factor of 1.148 results in $63,140, an increase of
$8,140. When that number is rounded to the nearest multiple of $5,000,
as required by the FCPIA Act, the maximum TWEA-based CMP per violation
is increased to the inflation-adjusted amount of $65,000.
The original maximum CMP of $10,000 under IEEPA was adjusted for
inflation to $11,000 in 1996. Multiplying the current penalty of
$11,000 by the factor of 1.148 results in $12,628, an increase of
$1,628. When that number is rounded to the nearest multiple of $5,000,
as required by the FCPIA Act, the maximum IEEPA-based CMP per violation
remains $11,000.
The original maximum CMP of $250,000 under ISA was adjusted for
inflation to $275,000 in 1996. Multiplying the current penalty of
$275,000 by the factor of 1.148 results in $315,700, an increase of
$40,700. When that number is rounded to the nearest multiple of
$25,000, as required by the FCPIA Act, the maximum ISA-based CMP per
violation is increased to the inflation-adjusted amount of $325,000.
The maximum CMP of $50,000 under AEDPA was set by statute in 1996
and has not previously been adjusted for inflation. Multiplying the
current penalty of $50,000 by the factor of 1.148 results in $57,400,
an increase of $7,400. When that number is rounded to the nearest
multiple of $5,000, as required by the FCPIA Act, the maximum AEDPA-
based CMP per violation is increased to the inflation-adjusted amount
of $55,000.
The maximum CMP of $1,000,000 under FNKDA was set by statute in
1999 and has not previously been adjusted for inflation. Multiplying
the current penalty of $1,000,000 by the factor of 1.082 results in
$1,082,000, an increase of $82,000. When that number is rounded to the
nearest multiple of $25,000, as required by the FCPIA Act, the maximum
FNKDA-based CMP per violation is increased to the inflation-adjusted
amount of $1,075,000.
Executive Order 12866, Administrative Procedure Act, Regulatory
Flexibility Act, and Paperwork Reduction Act
Because the regulations involve a foreign affairs function,
Executive Order 12866 and the provisions of the Administrative
Procedure Act (5 U.S.C. 553) requiring notice of proposed rulemaking,
opportunity for public participation, and delay in effective date, are
inapplicable. Additionally, advance notice, public comment, and delayed
effectiveness are unnecessary because the regulations merely reflect
adjustments in penalty rates required by law and do not substantively
alter the existing regulatory framework or in any way affect the terms
under which civil penalties are assessed by OFAC. Because no notice of
proposed rulemaking is required for this rule, the Regulatory
Flexibility Act (5 U.S.C. 601-612) does not apply.
[[Page 61361]]
The Paperwork Reduction Act does not apply because the 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
31 CFR Part 501
Administrative practice and procedure, Banks, Banking, Blocking of
assets, Foreign trade, Licensing, Penalties, Reporting and
recordkeeping requirements, Sanctions.
31 CFR Part 575
Administrative practice and procedure, Banks, Banking, Blocking of
assets, Exports, Foreign trade, Humanitarian aid, Imports, Iran, Iraq,
Oil imports, Penalties, Petroleum, Petroleum products, Reporting and
recordkeeping requirements, Sanctions, Specially designated nationals,
Terrorism, Travel restrictions.
31 CFR Part 597
Administrative practice and procedure, Banks, Banking, Blocking of
assets, Foreign terrorist organizations, Penalties, Reporting and
recordkeeping requirements, Sanctions, Terrorism, Transfer of Assets.
31 CFR Part 598
Administrative practice and procedure, Banks, Banking, Blocking of
assets, Narcotics trafficking, Penalties, Reporting and recordkeeping
requirements, Sanctions, Significant foreign narcotics traffickers,
Specially designated narcotics trafficker, Transfer of Assets.
0
For the reasons set forth in the preamble, 31 CFR chapter V is amended
as follows:
PART 501--REPORTING, PROCEDURES AND PENALTIES REGULATIONS
0
1. The authority citation for part 501 continues to read as follows:
Authority: 18 U.S.C. 2332d; 21 U.S.C. 1901-1908; 22 U.S.C. 287c;
22 U.S.C. 2370(a); 31 U.S.C. 321(b); 50 U.S.C. 1701-1706; 50 U.S.C.
App. 1-44; Pub. L. 101-410, 104 Stat. 890 (28 U.S.C. 2461 note);
E.O. 9193, 7 FR 5205, 3 CFR, 1938-1943 Comp., p. 1174; E.O. 9989, 13
FR 4891, 3 CFR, 1943-1948 Comp., p. 748; E.O. 12854, 58 FR 36587, 3
CFR, 1993 Comp., p. 614.
Subpart D--Trading With the Enemy Act (TWEA) Penalties
0
2. Section 501.701 is amended by revising paragraph (a)(3) to read as
follows:
Sec. 501.701 Penalties
(a) * * *
(3) The Secretary of the Treasury may impose a civil penalty of not
more than $65,000 per violation on any person who violates any license,
order, or regulation issued under TWEA.
Note to paragraph (a)(3). The current $65,000 civil penalty cap
may be adjusted for inflation pursuant to the Federal Civil
Penalties Inflation Adjustment Act of 1990.
* * * * *
PART 575--IRAQI SANCTIONS REGULATIONS
0
1. The authority citation for part 575 continues to read as follows:
Authority: 3 U.S.C. 301; 18 U.S.C. 2332d; 22 U.S.C. 287c; Pub.
L. 101-410, 104 Stat. 890 (28 U.S.C. 2461 note); 31 U.S.C. 321(b);
50 U.S.C. 1601-1651, 1701-1706; Pub. L. 101-513, 104 Stat. 2047-2055
(50 U.S.C. 1701 note); E.O. 12722, 55 FR 31803, 3 CFR, 1990 Comp.,
p. 294; E.O. 12724, 55 FR 33089, 3 CFR, 1990 Comp., p. 297; E.O.
12817, 57 FR 48433, 3 CFR, 1992 Comp., p. 317; E.O. 13290, 68 FR
14307, March 20, 2003.
Subpart G--Penalties
0
2. Section 575.701 is amended by revising paragraph (a) introductory
text and paragraph (a)(1) to read as follows:
Sec. 575.701 Penalties.
(a) Section 586E of the Iraq Sanctions Act of 1990 (Public Law 101-
513, 104 Stat. 2049; 50 U.S.C. 1701 note), as adjusted pursuant to the
Federal Civil Penalties Inflation Adjustment Act of 1990 (Public Law
101-410, as amended, 28 U.S.C. 2461 note), provides that,
notwithstanding section 206 of the International Emergency Economic
Powers Act (50 U.S.C. 1705) and section 5(b) of the United Nations
Participation Act of 1945 (22 U.S.C. 287c(b)):
(1) A civil penalty of not to exceed $325,000 per violation may be
imposed on any person who, after the enactment of this Act, violates or
evades or attempts to violate or evade Executive Order Number 12722,
12723, 12724, or 12725, or any license, order, or regulation issued
under any such Executive Order;
Note to paragraph (a)(1). The current $325,000 civil penalty cap
may be adjusted for inflation pursuant to the Federal Civil
Penalties Inflation Adjustment Act of 1990.
* * * * *
PART 597--FOREIGN TERRORIST ORGANIZATIONS SANCTIONS REGULATIONS
0
1. The authority citation for part 597 is revised to read as follows:
Authority: 31 U.S.C. 321(b); Pub. L. 101-410, 104 Stat. 890 (28
U.S.C. 2461 note); Pub. L. 104-132, 110 Stat. 1214, 1248-53 (8
U.S.C. 1189, 18 U.S.C. 2339B).
Subpart G--Penalties
0
2. Section 597.701 is amended by revising paragraph (b) to read as
follows:
Sec. 597.701 Penalties.
* * * * *
(b) Attention is directed to 18 U.S.C. 2339B(b), as added by Public
Law 104-132, 110 Stat. 1250-1253, section 303, which, as adjusted
pursuant to the Federal Civil Penalties Inflation Adjustment Act of
1990 (Pub. L. 101-410, as amended, 28 U.S.C. 2461 note), provides that,
except as authorized by the Secretary of the Treasury, any financial
institution that knowingly fails to retain possession of or maintain
control over funds in which a foreign terrorist organization or its
agent has an interest, or to report the existence of such funds in
accordance with these regulations, shall be subject to a civil penalty
in an amount that is the greater of $55,000 per violation, or twice the
amount of which the financial institution was required to retain
possession or control.
Note to paragraph (b). The current $55,000 civil penalty cap may
be adjusted for inflation pursuant to the Federal Civil Penalties
Inflation Adjustment Act of 1990.
* * * * *
PART 598--FOREIGN NARCOTICS KINGPIN SANCTIONS REGULATIONS
0
1. The authority citation for part 598 continues to read as follows:
Authority: 3 U.S.C. 301; 21 U.S.C. 1901-1908; 31 U.S.C. 321(b);
Pub. L. 101-410, 104 Stat. 890 (28 U.S.C. 2461 note).
Subpart G--Penalties.
0
2. Section 598.701 is amended by revising paragraph (a) introductory
text and paragraph (a)(3) to read as follows:
Sec. 598.701 Penalties.
(a) Attention is directed to section 807 of the Foreign Narcotics
Kingpin Designation Act, which is applicable to violations of the
provisions of any license, rule, or regulation issued by or pursuant to
the direction or authorization of the Secretary of Treasury pursuant to
this part or otherwise under that Act. Section 807 of the Foreign
Narcotics Kingpin Designation Act, as adjusted pursuant to the Federal
Civil Penalties Inflation Adjustment Act of 1990 (Public Law
[[Page 61362]]
101-410, as amended, 28 U.S.C. 2461 note), provides that:
* * * * *
(3) A civil penalty not to exceed $1,075,000 per violation may be
imposed by the Secretary of the Treasury on any person who violates any
license, order, rule, or regulation issued in compliance with the
provisions of the Foreign Narcotics Kingpin Designation Act.
Note to paragraph (a)(3). The current $1,075,000 civil penalty
cap may be adjusted for inflation pursuant to the Federal Civil
Penalties Inflation Adjustment Act of 1990.
* * * * *
Dated: October 1, 2003.
R. Richard Newcomb,
Director, Office of Foreign Assets Control.
Approved: October 15, 2003.
Juan C. Zarate,
Deputy Assistant Secretary (Terrorist Financing and Financial Crimes),
Department of the Treasury.
[FR Doc. 03-27074 Filed 10-23-03; 2:56 pm]
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