59–010 

Calendar No. 199 

110TH CONGRESS REPORT " ! SENATE 1st Session 110–82 

INTERNATIONAL EMERGENCY ECONOMIC POWERS ACT 

JUNE 13, 2007.—Ordered to be printed 

Mr. DODD, from the Committee on Banking, Housing and Urban 

Affairs, submitted the following 

R E P O R T 

[To accompany S. 1612] 

The Committee on Banking, Housing and Urban Affairs, having 

had under consideration an original bill (S. 1612) to amend the 

penalty provisions in the International Emergency Economic Powers Act, and for other purposes, reports favorably thereon and recommends that the bill do pass. 

I. PURPOSE

The International Emergency Economic Powers Act, also known 

as ‘IEEPA,’ codified presidential national emergency powers to investigate and impose controls on transactions as well as freeze foreign assets under the jurisdiction of the United States. The International Emergency Economic Powers Enhancement Act (hereafter 

‘the Act’) amends Section 206 for the purpose of increasing penalties against violators of sanctions law. The Act would advance 

foreign policy objectives and protect the national security of the 

United States by providing the Department of the Treasury and 

other federal agencies greater ability to deter wrongful investment 

and hold violators accountable for their actions. 

II. BACKGROUND

For thirty years, presidents of the United States have widely exercised their authorities under the International Emergency Economic Powers Act (50 U.S.C. Chapter 35). Under this statute, a 

president declares a national emergency with respect to an ‘‘unusual and extraordinary threat’’ posed by a country or 

transnational group. Section 1705 of the law details the president’s 

specific authorities to impose economic sanctions against these 

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threats, regulating and prohibiting foreign exchange transactions, 

bank payments or credit transfers, and the importing or exporting 

of currency or securities, among other powers. 

The Office of Foreign Assets Control (OFAC) at the Department 

of Treasury is principally designated to administer and enforce 

these economic sanctions activities, in coordination with agencies 

at the Departments of State, Homeland Security, and Justice. Ultimately, however, as Under Secretary of the Treasury for Terrorism 

and Financial Intelligence Stuart Levey pointed out in testimony 

before the Committee on March 21, 2007, the cooperation of private 

firms is critically important in the success of an economic sanctions 

regime. Without their adherence to relevant United States laws 

and regulations, it would be nearly impossible to prevent wrongful 

investment. By and large, according to the Department of the 

Treasury, companies meet their sanctions obligations, steering 

clear of countries and groups designated as threats to the United 

States. But when private industry does not comply, OFAC imposes 

penalties in accordance with Section 1705 of the International 

Emergency Economic Powers Act (IEEPA). Currently, penalties applied by OFAC remain relatively low. The original penalty amount 

was set at $10,000 in the IEEPA of 1977. Other than an inflation 

adjustment raising the level 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. 

III. DESCRIPTION OF THE BILL

In unanimously approving the International Emergency Economic Powers Enhancement Act, the Committee recognized that 

current penalties are neither adequate nor proportionate in many 

cases, for deterring companies from investing in bad actors. 

Penalties 

The Act would increase civil fines to $250,000 or twice the 

amount of the transaction. Such a change in law would allow the 

United States government to impose a penalty commensurate with 

the scope of the crime. Conversely, today, if a person makes a single illegal transaction, he/she will be fined $50,000, regardless of 

the size of the transaction. Rather than impose a single fine to fit 

every violation, the Act would ensure that penalties reflect the seriousness of a violation. 

In addition, the Act would increase criminal penalties to 

$1,000,000 with a maximum jail sentence of 20 years. The Act further clarifies the purpose of these criminal penalties to be imposed 

on a person who intentionally commits or helps support others’ violations of certain United States sanctions laws. 

Two recent cases help illustrate the need for these increases in 

penalties. According to OFAC, a large foreign bank with a U.S. 

presence recently processed 42 transactions totaling $55 million 

through the United States, in violation of OFAC sanctions against 

Iran, Sudan and Cuba. Under current law the maximum penalty 

OFAC could impose for these violations would be approximately 

$1.3 million, an apparently insignificant amount to a multi-national bank. In another example, a U.S. commodities brokerage 

firm engaged in a single transaction involving commodities from 

Sudan, valued at $1.4 million. Because only a single transaction 

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was involved, the maximum penalty was limited to $11,000 under 

then-applicable law. According to OFAC, even today’s maximum 

penalty of $50,000 seems disproportionately low for such a violation. 

The Act would update these penalties to improve sanctions enforcement. For the foreign bank, penalties could have been over 

$100 million. For the commodities brokerage company, the criminal 

penalty could be as high as $2.8 million based on the value of the 

transactions. 

Effective Date 

Under the Act, the changes in penalties would apply to all pending enforcement actions as well as those commenced on or after the 

date of the Act’s enactment. 

Reporting 

The Committee notes that under Section 1703 of IEEPA the 

president is required in every possible instance to ‘‘consult with the 

Congress before exercising any of the authorities granted by this 

chapter’’ and to ‘‘consult regularly with the Congress so long as 

such authorities are exercised.’’ In addition to ‘‘Periodic follow-up 

reports’’ to Congress every six months as stipulated in Section 

1704(c) of this statute, the president, through his designees shall 

provide detailed reports on the use of IEEPA authorities to the 

Committee. OFAC shall pay particular attention in these reports to 

the exercise of United States foreign policy toward the Islamic Republic of Iran and the Republic of Sudan as well as organizations 

affiliated with Al Qaeda, the Islamic Resistance Movement 

(Hamas), Hezbollah, Jemaah Islamiyah, Abu Sayyaf, and the Revolutionary Armed Forces of Colombia—People’s Army (FARC). 

Export Administration 

The Committee recognizes that the International Emergency 

Economic Powers Act has been applied to authorities outside this 

law’s principal purpose of establishing a framework for the government to impose foreign economic sanctions. Specifically, for the last 

six years, export controls on ‘dual use’ technologies have been implemented through the invocation of IEEPA. 

In absence of more robust authorities and penalties previously in 

force by authorization of the Export Administration Act (EAA), the 

Bureau of Industry and Security (BIS) at the Department of Commerce has been compelled to invoke IEEPA in its execution of investigations and export enforcement activities. According to BIS, 

such practices have severely hampered investigations and caused 

reluctance among some prosecutors to bring criminal indictments 

for export control violations. In addition, the ability to lead other 

countries to adopt comprehensive export control legislation, as 

called for by U.N. Security Council Resolution 1540, is undercut by 

the absence of the United States’ own EAA authority. 

As the Congressional Research Service recently reported, since 

1989, a long-term extension of the Export Administration Act has 

not been enacted. The export control process was continued from 

1989–1994 by temporary statutory extensions of EAA. Thereafter, 

it was periodically reauthorized for short periods of time, most recently expiring in August 2001. 

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The Committee does not consider the International Emergency 

Economic Powers Enhancement Act a substitution for legislation 

required to update and renew the Export Administration Act. Enacting meaningful export control legislation remains an important 

objective of this Committee to bar highly sensitive products and 

know-how from rogue states and terrorist groups, to protect critical 

technology, and to help curb the proliferation of nuclear, biological, 

and chemical weaponry. 

On March 21, 2007, the Committee on Banking, Housing, and 

Urban Affairs conducted a hearing entitled ‘‘Minimizing Potential 

Threats from Iran: Assessing the Effectiveness of Current US Sanctions on Iran.’’ In his testimony, Acting Under Secretary for the 

BIS Mark Foulon concurred with this assessment, pointing out that 

the Commerce Department’s export control investigations of 16 

cases under these authorities last year led to penalties totaling 

only $1.6 million in fines. 

IV. HEARINGS

The Committee on Banking, Housing, and Urban Affairs held the 

following public hearing on United States sanctions policy: 

On March 21, 2007: Minimizing Potential Threats from Iran: Assessing the Effectiveness of Current U.S. Sanctions on Iran. Witnesses: Ambassador R. Nicholas Burns, Under Secretary for Political Affairs, Department of State; Honorable Stuart Levey, Under 

Secretary for Terrorism and Financial Intelligence, Department of 

the Treasury; Mr. Mark Foulon, Acting Under Secretary for the 

Bureau of Industry and Security, Department of Commerce 

V. DEPARTMENT OF THE TREASURY COMMENT

The Department of the Treasury submitted the following letter 

of endorsement for the Act. 

MAY 15, 2007. 

Hon. CHRISTOPHER J. DODD, Chairman, Committee on Banking, Housing, and Urban Affairs, 

U.S. Senate, Washington, DC. 

DEAR MR. CHAIRMAN: The Department of the Treasury strongly 

supports the International Emergency Economic Powers Enhancement Act of 2007 and appreciates the leadership of the Chairman 

and Ranking Member in proposing legislation that significantly enhances the enforcement and deterrent effects of the International 

Emergency Economic Powers Act (IEEPA) sanctions. 

Through IEEPA, the President may respond to unusual and extraordinary threats originating in substantial part outside the 

United States by, among other things, prohibiting transactions associated with the identified threat. The current penalties under 

IEEPA do not constitute an effective deterrent to entities that violate IEEPA by engaging in prohibited transactions. This legislation 

will remedy that problem. 

IEEPA is an important tool in the effort to combat terrorist financing and other illicit activity such as WMD proliferation. The 

Department urges the Committee to approve this critical improvement to IEEPA. 

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The Office of Management and Budget has advised there is no 

objection from the standpoint of the President to the language submitted to the Committee by the Department of the Treasury. 

Sincerely, 

KEVIN I. FROMER, 

Assistant Secretary for Legislative Affairs, 

Department of the Treasury. 

VI. CONGRESSIONAL BUDGET OFFICE COST ESTIMATE

Section 11(b) of the Standing Rules of the Senate, and Section 

403 of the Congressional Budget Impoundment and Control Act, require that each committee report on a bill contain a statement estimating the cost of the proposed legislation. The Congressional 

Budget Office has provided the following cost estimate and estimate of costs of private-sector mandates. 

JUNE 13, 2007. 

Hon. CHRISTOPHER J. DODD, Chairman, Committee on Banking, Housing, and Urban Affairs, 

U.S. Senate, Washington, DC. 

DEAR MR. CHAIRMAN: The Congressional Budget Office has prepared the enclosed cost estimate for the International Emergency 

Economic Powers Enhancement Act. 

If you wish further details on this estimate, we will be pleased 

to provide them. The CBO staff contact is Daniel Hoople. 

Sincerely, 

PETER R. ORSZAG. 

Enclosure. 

International Emergency Economic Powers Enhancement Act 

The bill would amend the International Emergency Economic 

Powers Act (IEEPA) to increase the maximum civil and criminal 

penalties that may result from violations of that act. IEEPA authorizes the President to investigate, regulate, and prohibit certain 

financial transactions following a declaration of an ‘‘unusual and 

extraordinary threat’’ originating outside the United States. Under 

current law, individuals and entities that violate regulations promulgated under IEEPA are subject to civil penalties of up to 

$10,000, and criminal penalties of up to $250,000 and 10 years’ imprisonment. Under this legislation, the maximum penalty would be 

increased to $250,000 for civil violations and $1 million and 20 

years’ imprisonment for criminal violations. 

Enacting this bill could increase federal revenues as a result of 

the collection of additional civil and criminal penalties assessed for 

violations of IEEPA regulations. Civil penalties are typically assessed by the Office of Foreign Assets Control (OFAC) of the U.S. 

Treasury, while criminal penalties are assessed in the federal 

courts. Amounts collected from civil penalties are recorded in the 

budget as revenues and are deposited into the General Fund of the 

Treasury. Criminal fines are recorded as revenues, then deposited 

in the Crime Victims Fund, and later spent. Based on information 

from OFAC and the Administrative Office of the United States 

Courts, CBO expects that the increases proposed by this legislation 

would affect relatively few cases per year. As such, we estimate 

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that enacting this bill would probably have an insignificant effect 

on the federal budget over the next 10 years. 

This bill contains no intergovernmental or private-sector mandates as defined in the Unfunded Mandates Reform Act and would 

not affect the budgets of state, local, or tribal governments. 

The CBO staff contact for this estimate is Daniel Hoople. This 

estimate was approved by Peter H. Fontaine, Deputy Assistant Director for Budget Analysis. 

VII. COMMITTEE CONSIDERATION

The Committee on Banking, Housing, and Urban Affairs met in 

open session on May 16, 2007, and ordered the bill reported, as 

amended. 

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