Defense Trade Violation Penalties See Substantial Increases
The Department of State’s Directorate of Defense Trade Controls is increasing the maximum amounts of the civil monetary penalties it assesses for violations of the following provisions of the Arms Export Control Act.
- $1,094,010 (previously $500,000) for each violation of 22 USC 2778 (control of exports and imports of defense articles and services)
- $795,445 (previously $500,000) for each violation of 22 USC 2779a (prohibition on incentive payments to satisfy an offset agreement for defense articles or services with a foreign country)
- $946,805 (previously $500,000) for each violation of 22 USC 2780 (prohibition on transactions with, including defense exports to, countries supporting acts of international terrorism)
These updated amounts will apply to all penalties assessed after Aug. 1 regardless of when the actual violation occurred. DDTC notes that it retains the discretion to assess penalties lower than these maximum amounts should circumstances warrant.
DDTC was required to make these adjustments pursuant to a recent law mandating that federal agencies make a one time “catch-up” adjustment to their penalty amounts to account for inflation. This law also instructs agencies to make subsequent inflationary adjustments no later than Jan. 15 of each year, with the adjusted amounts taking effect immediately upon publication.