Trends in OFAC Enforcement

By Juhi Tariq

– Which cases have been considered egregious?


AIG Case – June 26, 2017

Though the transactions totaled almost double the amount, OFAC’s base penalty for AIG was $198, 226.

Mitigating factors:

  • No prior penalty notice or Finding of Violation from OFAC in the past five years
  • Existence of a compliance program that included sanctions exclusions clauses
  • Remedial action in response to violations
  • Cooperation with OFAC’s investigation
  • Voluntary self-disclosure

Honda Finance Corporation -June 8, 2017

Mitigating factors:

  • HFC has not received a penalty notice or Finding of Violation from OFAC in the five years preceding the earliest date of the transactions giving rise to the Alleged Violations
  • AHFC took remedial action in response to the Alleged Violations, including by implementing a new policy governing its OFAC policies and proprietary systems
  • AHFC cooperated with OFAC’s investigation by voluntarily self-disclosing the Alleged Violations, providing detailed and well-organized information in a timely and efficient manner, and by signing and extending a statute of limitations tolling agreement
  • While the transactions constitute apparent violations of the CACR, OFAC issued a specific license to AHFC in June 2015 regarding the subject leases

 

The maximum penalty is the greater of $289,238 or an amount that is twice the amount of the transaction that is the basis of the violation. The penalties levied by OFAC are almost always proportionate to the dollar amount of the transaction but can be adjusted depending on whether the case is considered “egregious” or “non-egregious” and whether disclosed through a voluntary self-disclosure or not. For example, if non-egregious, and with a voluntary self-disclosure, the base amount of the proposed civil penalty is one-half of the transaction value, capped at a maximum base amount of $144,619 per violation. If the transaction value is less than $289,238 the base penalty is capped at one-half the statutory maximum penalty, which is based on the applicable schedule amount outlined in 31 CFR 501. For example, for a transaction valuing $1,000 or less, the statutory maximum is $1,000, but keep in mind that this can be adjusted to reflect mitigating and aggravating factors.