Tariffs, OFAC and the DOJ (Part 1)

Key Takeaways

• DOJ targets import tariffs under False Claims Act, increasing penalties
• Export violations face criminal cases via OFAC and BIS enforcement
• Civil fines and criminal charges are climbing for trade compliance failures
• Companies must upgrade programs now to avoid costly enforcement actions

Pulse Analysis

U.S. enforcement agencies have entered a new era of trade compliance scrutiny, driven by the Justice Department’s aggressive use of the False Claims Act to pursue tariff‑related fraud. Recent civil settlements and criminal indictments illustrate that even modest misclassifications can trigger multi‑million‑dollar penalties. This shift reflects broader policy goals to protect domestic industries and recover revenue lost to improper import practices, prompting companies to reassess how they calculate duties and document transactions.

On the export side, the Office of Foreign Assets Control (OFAC) and the Bureau of Industry and Security (BIS) are no longer limited to administrative fines. Their investigations now serve as springboards for DOJ criminal cases, especially when violations involve sanctioned parties or dual‑use technologies. The convergence of regulatory and criminal enforcement means that a single compliance lapse can expose firms to both hefty civil fines and potential imprisonment for executives. Recent prosecutions underscore the importance of rigorous screening, licensing, and record‑keeping to avoid inadvertent breaches.

In response, businesses must adopt an enhanced trade compliance program that integrates risk‑based assessments, real‑time screening tools, and cross‑functional governance. Embedding compliance into procurement, logistics, and sales processes reduces the likelihood of violations and demonstrates good‑faith effort to regulators. Training, internal audits, and clear escalation pathways further fortify defenses. Companies that act proactively not only mitigate enforcement risk but also gain competitive advantage by assuring partners of reliable, lawful trade practices. The upcoming Part 2 will outline concrete steps for building such a resilient program.