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October 02, 2007 

House Passes Law to Increase Penalties for Violating Export Control Laws

The U.S. House of Representatives today passed by voice vote the International Emergency Economic Powers Act (S. 1612), a bill that will significantly increase the penalties for violating IEEPA-based export control laws. Because the Senate passed the identical bill in June, the measure will be sent to the President for signature, which is likely to take place in a matter of days.

The passage of the International Emergency Economic Powers Act ("IIEPA Act") means that the maximum civil penalty for violating IIEPA-based export control laws will increase from $50,000 per violation to $250,000 or twice the amount of the transaction that is the basis of the violation with respect to which the penalty is imposed. The maximum criminal penalties for committing willful violations of IEEPA-based export control laws will increase to $1,000,000, with a maximum jail sentence of 20 years.

The original civil penalty amount was set at $10,000 when IEEPA (P.L. 95-223) was passed in 1977. Other than an inflation adjustment raising the maximum penalty amount to $11,000, there were no increases until the renewal of the USA PATRIOT Act in 2005 (Public Law 109-177) raised the level to $50,000. Thus, once the IEEPA Act is signed into law, the maximum civil penalties for export control violations will have increased more than 2170% in two years.

The IEEPA currently serves as the legal basis for the Export Administration Regulations (EAR) and most of the sanctions regimes administered by the Office of Foreign Assets Control (OFAC). The most notable exceptions are the sanctions programs on Cuba and North Korea which were issued under the authority of the Trading With the Enemy Act.

The changes in penalties will apply to all pending enforcement actions as well as those commenced on or after the date of the IIEPA Act's enactment.

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