[Title 31 CFR ]
[Code of Federal Regulations (annual edition) - July 1, 2010 Edition]
[From the U.S. Government Printing Office]



[[Page i]]

          

          31


          Part 500 to End

                         Revised as of July 1, 2010


          Money and Finance: Treasury
          



________________________

          Containing a codification of documents of general 
          applicability and future effect

          As of July 1, 2010
          With Ancillaries
                    Published by
                    Office of the Federal Register
                    National Archives and Records
                    Administration
                    A Special Edition of the Federal Register

[[Page ii]]

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                            Table of Contents



                                                                    Page
  Explanation.................................................       v

  Title 31:
    SUBTITLE B--Regulations Relating to Money and Finance 
      (Continued)
          Chapter V--Office of Foreign Assets Control, 
          Department of the Treasury                                 5
          Chapter VI--Bureau of Engraving and Printing, 
          Department of the Treasury                               809
          Chapter VII--Federal Law Enforcement Training 
          Center, Department of the Treasury                       815
          Chapter VIII--Office of Investment Security, 
          Department of the Treasury                               819
          Chapter IX--Federal Claims Collection Standards 
          (Department of the Treasury--Department of Justice)      845
  Finding Aids:
      Table of CFR Titles and Chapters........................     867
      Alphabetical List of Agencies Appearing in the CFR......     887
      List of CFR Sections Affected...........................     897

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                     ----------------------------

                     Cite this Code: CFR
                     To cite the regulations in 
                       this volume use title, 
                       part and section number. 
                       Thus, 31 CFR 500.101 
                       refers to title 31, part 
                       500, section 101.

                     ----------------------------

[[Page v]]



                               EXPLANATION

    The Code of Federal Regulations is a codification of the general and 
permanent rules published in the Federal Register by the Executive 
departments and agencies of the Federal Government. The Code is divided 
into 50 titles which represent broad areas subject to Federal 
regulation. Each title is divided into chapters which usually bear the 
name of the issuing agency. Each chapter is further subdivided into 
parts covering specific regulatory areas.
    Each volume of the Code is revised at least once each calendar year 
and issued on a quarterly basis approximately as follows:

Title 1 through Title 16.................................as of January 1
Title 17 through Title 27..................................as of April 1
Title 28 through Title 41...................................as of July 1
Title 42 through Title 50................................as of October 1

    The appropriate revision date is printed on the cover of each 
volume.

LEGAL STATUS

    The contents of the Federal Register are required to be judicially 
noticed (44 U.S.C. 1507). The Code of Federal Regulations is prima facie 
evidence of the text of the original documents (44 U.S.C. 1510).

HOW TO USE THE CODE OF FEDERAL REGULATIONS

    The Code of Federal Regulations is kept up to date by the individual 
issues of the Federal Register. These two publications must be used 
together to determine the latest version of any given rule.
    To determine whether a Code volume has been amended since its 
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Sections Affected (LSA),'' which is issued monthly, and the ``Cumulative 
List of Parts Affected,'' which appears in the Reader Aids section of 
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EFFECTIVE AND EXPIRATION DATES

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OMB CONTROL NUMBERS

    The Paperwork Reduction Act of 1980 (Pub. L. 96-511) requires 
Federal agencies to display an OMB control number with their information 
collection request.

[[Page vi]]

Many agencies have begun publishing numerous OMB control numbers as 
amendments to existing regulations in the CFR. These OMB numbers are 
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OBSOLETE PROVISIONS

    Provisions that become obsolete before the revision date stated on 
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``[RESERVED]'' TERMINOLOGY

    The term ``[Reserved]'' is used as a place holder within the Code of 
Federal Regulations. An agency may add regulatory information at a 
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This material, like any other properly issued regulation, has the force 
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that volume.

[[Page vii]]

    The Federal Register Index is issued monthly in cumulative form. 
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the revision dates of the 50 CFR titles.

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    Raymond A. Mosley,
    Director,
    Office of the Federal Register.
    July 1, 2010.







[[Page ix]]



                               THIS TITLE

    Title 31--Money and Finance: Treasury is composed of three volumes. 
The parts in these volumes are arranged in the following order: parts 0-
199, parts 200-499, and part 500 to end. The contents of these volumes 
represent all current regulations codified under this title of the CFR 
as of July 1, 2010.

    For this volume, Robert J. Sheehan, III was Chief Editor. The Code 
of Federal Regulations publication program is under the direction of 
Michael L. White, assisted by Ann Worley.


[[Page 1]]



                  TITLE 31--MONEY AND FINANCE: TREASURY




                  (This book contains part 500 to end)

  --------------------------------------------------------------------

    SUBTITLE B--Regulations Relating to Money and Finance (Continued)

                                                                    Part

chapter v--Office of Foreign Assets Control, Department of 
  the Treasury..............................................         500

chapter vi--Bureau of Engraving and Printing, Department of 
  the Treasury..............................................         601

chapter vii--Federal Law Enforcement Training Center, 
  Department of the Treasury................................         700

chapter viii--Office of Investment Security, Department of 
  the Treasury..............................................         800

chapter ix--Federal Claims Collection Standards (Department 
  of the Treasury--Department of Justice)...................         900

[[Page 3]]

    Subtitle B--Regulations Relating to Money and Finance (Continued)

[[Page 5]]



 CHAPTER V--OFFICE OF FOREIGN ASSETS CONTROL, DEPARTMENT OF THE TREASURY




  --------------------------------------------------------------------
Part                                                                Page
500             Foreign assets control regulations..........           7
501             Reporting, procedures and penalties 
                    regulations.............................          47
505             Regulations prohibiting transactions 
                    involving the shipment of certain 
                    merchandise between foreign countries...          94
515             Cuban assets control regulations............          95
535             Iranian assets control regulations..........         148
536             Narcotics trafficking sanctions regulations.         174
537             Burmese sanctions regulations...............         185
538             Sudanese sanctions regulations..............         208
539             Weapons of mass destruction trade control 
                    regulations.............................         238
540             Highly Enriched Uranium (HEU) Agreement 
                    assets control regulations..............         246
541             Zimbabwe sanctions regulations..............         256
542             Syrian sanctions regulations................         269
543             C[ocirc]te D'Ivoire sanctions regulations...         283
544             Weapons of mass destruction proliferators 
                    sanctions regulations...................         296
545             Taliban (Afghanistan) sanctions regulations.         309
546             Darfur sanctions regulations................         330
547             Democratic Republic of the Congo sanctions 
                    regulations.............................         342
548             Belarus sanctions regulations...............         355
551             Somalia sanctions regulations...............         368
560             Iranian transactions regulations............         377
575             Iraqi sanctions regulations.................         414
585             Federal Republic of Yugoslavia (Serbia and 
                    Montenegro) and Bosnian Serb-controlled 
                    areas of the Republic of Bosnia and 
                    Herzegovina sanctions regulations.......         431
586             Federal Republic of Yugoslavia (Serbia & 
                    Montenegro) Kosovo sanctions regulations         457
587             Federal Republic of Yugoslavia (Serbia and 
                    Montenegro) Milosevic sanctions 
                    regulations.............................         475

[[Page 6]]

588             Western Balkans stabilization regulations...         489
592             Rough diamonds control regulations..........         502
593             Former Liberian regime of Charles Taylor 
                    sanctions regulations...................         510
594             Global terrorism sanctions regulations......         524
595             Terrorism sanctions regulations.............         541
596             Terrorism List Governments sanctions 
                    regulations.............................         554
597             Foreign terrorist organizations sanctions 
                    regulations.............................         559
598             Foreign narcotics kingpin sanctions 
                    regulations.............................         572
Appendixes to Chapter V--Note...............................         583
Appendix A to Chapter V--Alphabetical Listing of Blocked 
  Persons, Blocked Vessels, Specially Designated Nationals, 
  Specially Designated Terrorists, Specially Designated 
  Global Terrorists, Foreign Terrorist Organizations, and 
  Specially Designated Narcotics Traffickers (as of May 13, 
  2010).....................................................         585
Appendix B to Chapter V--Alphabetical listing of vessels 
  that are the property of blocked persons or specially 
  designated nationals......................................         802

[[Page 7]]



PART 500_FOREIGN ASSETS CONTROL REGULATIONS--Table of Contents



      Subpart A_Relation of This Part to Other Laws and Regulations

Sec.
500.101 Relation of this part to other laws and regulations.

                         Subpart B_Prohibitions

500.201 Transactions involving designated foreign countries or their 
          nationals; effective date.
500.202 Transactions with respect to securities registered or inscribed 
          in the name of a designated national.
500.203 Effect of transfers violating the provisions of this chapter.
500.204 Importation of and dealings in certain merchandise.
500.205 Holding of certain types of blocked property in interest-bearing 
          accounts.
500.206 Exemption of information and informational materials.

                      Subpart C_General Definitions

500.301 Foreign country.
500.302 National.
500.303 Nationals of more than one foreign country.
500.305 Designated national.
500.306 Specially designated national.
500.307 Unblocked national.
500.308 Person.
500.309 Transactions.
500.310 Transfer.
500.311 Property; property interests.
500.312 Interest.
500.313 Property subject to the jurisdiction of the United States.
500.314 Banking institution.
500.316 License.
500.317 General license.
500.318 Specific license.
500.319 Blocked account.
500.320 Domestic bank.
500.321 United States; continental United States.
500.322 Authorized trade territory; member of the authorized trade 
          territory.
500.323 Occupied area.
500.325 National securities exchange.
500.326 Custody of safe deposit boxes.
500.327 Blocked estate of a decedent.
500.328 Status of those portions of Korea under control of the 
          government of the Republic of Korea; and of the diplomatic and 
          consular representatives of those countries.
500.329 Person subject to the jurisdiction of the United States.
500.330 Person within the United States.
500.331 Merchandise.
500.332 Information and informational materials.

                        Subpart D_Interpretations

500.401 Reference to amended sections.
500.402 Effect of amendment of sections of this chapter or of other 
          orders, etc.
500.403 Termination and acquisition of the interest of a designated 
          national.
500.404 Transactions between principal and agent.
500.405 Exportation of securities, etc. to designated foreign countries.
500.406 Drafts under irrevocable letters of credit; documentary drafts.
500.407 Administration of blocked estates of decedents.
500.408 Access to certain safe deposit boxes prohibited.
500.409 Certain payments to designated foreign countries and nationals 
          through third countries.
500.410 Currency, coins, and postage and other stamps.
500.411 Dealings abroad in commodities subject to the Regulations.
500.412 Process vs. manufacture.
500.413 Participation in certain development projects in Vietnam.

  Subpart E_Licenses, Authorizations and Statements of Licensing Policy

500.501 General and specific licensing procedures.
500.502 Effect of subsequent license or authorization.
500.503 Exclusion from licenses and authorizations.
500.504 Certain judicial proceedings with respect to property of 
          designated nationals.
500.505 Certain persons unblocked.
500.506-500.507 [Reserved]
500.508 Payments to blocked accounts in domestic banks.
500.509 Entries in certain accounts for normal service charges.
500.510 Payments to the United States, States and political 
          subdivisions.
500.511 Transactions by certain business enterprises.
500.513 Purchase and sale of certain securities.
500.514 Payment of dividends and interest on and redemption and 
          collection of securities.
500.515 Transfers of securities to blocked accounts in domestic banks.
500.516 Voting and soliciting of proxies on securities.
500.517 Access to safe deposit boxes under certain conditions.
500.518 Payments for living, traveling, and similar personal expenses in 
          the United States.

[[Page 8]]

500.519 Limited payments from accounts of United States citizens abroad.
500.520 Payments from accounts of United States citizens in employ of 
          United States in foreign countries and certain other persons.
500.521 Certain remittances for necessary living expenses.
500.522 Certain remittances to United States citizens in foreign 
          countries.
500.523 Transactions incident to the administration of decedents' 
          estates.
500.524 Payment from, and transactions in the administration of certain 
          trusts and estates.
500.525 Certain transfers by operation of law.
500.526 Transactions involving blocked life insurance policies.
500.527 Certain transactions with respect to United States patents, 
          trademarks, and copyrights.
500.528 Certain transactions with respect to blocked foreign patents, 
          trademarks and copyrights authorized.
500.529 Powers of attorney.
500.530 Exportation of powers of attorney or instructions relating to 
          certain types of transactions.
500.533 Exportations, reexportations, and incidental transactions.
500.535 Exchange of certain securities.
500.536 Certain transactions with respect to merchandise affected by 
          Sec. 500.204.
500.549 Proof of origin.
500.550 Transactions related to information and informational materials.
500.551 Reimports.
500.552 Research samples.
500.553 Prior contractual commitments not a basis for licensing.
500.554 Gifts of North Korean, North Vietnamese, Cambodian, or South 
          Vietnamese origin.
500.556 Joint bank accounts.
500.557 Proceeds of insurance policies.
500.558 Accounts of blocked partnerships.
500.559 Accounts of North Korean, North Vietnamese, Cambodian or South 
          Vietnamese sole proprietorships.
500.560 Bank accounts of official representatives of foreign governments 
          in North Korea, North Viet-Nam, Cambodia, or South Viet-Nam.
500.561 Transfers of abandoned property under State laws.
500.562 [Reserved]
500.563 Transactions incident to travel to and within North Korea.
500.564 [Reserved]
500.565 Family remittances to nationals of Vietnam and Cambodia.
500.566 Certain transactions authorized on behalf of North Korean 
          nationals incident to their travel and maintenance expenses.
500.567 U.S. assets of certain designated country corporations.
500.568 U.S. assets of blocked decedents.
500.569 [Reserved]
500.570 Cambodian property unblocked.
500.571 Transactions related to telecommunications authorized.
500.572 Humanitarian projects authorized.
500.573 Certain donations of funds and goods to meet basic human needs 
          authorized.
500.574 Executory contracts and related transactions authorized.
500.575 Certain services to Vietnamese nationals authorized.
500.576 Authorization of transactions concerning certain development 
          projects in Vietnam.
500.577 Authorization of bank transactions with respect to Vietnam by 
          certain international organizations.
500.578 Vietnamese property unblocked.
500.579 Authorization for release of certain blocked transfers by 
          banking institutions subject to U.S. jurisdiction.
500.580 Authorization of U.S. dollar clearing transactions involving 
          North Korea.
500.581 Financial transactions related to diplomatic missions 
          authorized.
500.582 Importation of North Korean-origin magnesite and magnesia.
500.583 News organization offices.
500.584 Energy sector projects in North Korea.
500.585 Payments for services rendered by North Korea to United States 
          aircraft authorized.
500.586 Authorization of new transactions concerning certain North 
          Korean property.

                            Subpart F_Reports

500.601 Records and reports.
500.602 Reporting of claims of U.S. nationals against North Korea.

                           Subpart G_Penalties

500.701 Penalties.

                          Subpart H_Procedures

500.801 Procedures.
500.802 Delegation by the Secretary of the Treasury.
500.803 Customs procedures; merchandise specified in Sec. 500.204.

                   Subpart I_Miscellaneous Provisions

500.901 Paperwork Reduction Act notice.

Appendix A to Part 500--Qualifying International Institutions

    Authority: 18 U.S.C. 2332d; 31 U.S.C. 321(b); 50 U.S.C. App. 1-44; 
Pub. L. 101-410, 104 Stat. 890 (28 U.S.C. 2461 note); E.O. 9193, 7 FR 
5205,

[[Page 9]]

3 CFR, 1938-1943 Comp., p. 1174; E.O. 9989, 13 FR 4891, 3 CFR, 1943-1948 
Comp., p.748.

    Source: 15 FR 9040, Dec. 19, 1950, unless otherwise noted.



      Subpart A_Relation of This Part to Other Laws and Regulations



Sec. 500.101  Relation of this part to other laws and regulations.

    (a) This part is separate from, and independent of, the other parts 
of this chapter with the exception of part 501 of this chapter, the 
recordkeeping and reporting requirements and license application and 
other procedures of which apply to this part. No license or 
authorization contained in or issued pursuant to one of those parts, or 
any other provision of law, authorizes any transaction prohibited by 
this part.
    (b) No license or authorization contained in or issued pursuant to 
this part shall be deemed to authorize any transaction prohibited by any 
law other than the Trading With the Enemy Act, 50 U.S.C. App. 5(b), as 
amended, the Foreign Assistance Act of 1961, 22 U.S.C. 2370, or any 
proclamation, order, regulation or license issued pursuant thereto.

[50 FR 27436, July 3, 1985, as amended at 62 FR 45101, Aug. 25, 1997]



                         Subpart B_Prohibitions



Sec. 500.201  Transactions involving designated foreign countries or their 

nationals; effective date.

    (a) All of the following transactions are prohibited, except as 
specifically authorized by the Secretary of the Treasury (or any person, 
agency, or instrumentality designated by him) by means of regulations, 
rulings, instructions, licenses, or otherwise, if either such 
transactions are by, or on behalf of, or pursuant to the direction of 
any designated foreign country, or any national thereof, or such 
transactions involve property in which any designated foreign country, 
or any national thereof, has at any time on or since the effective date 
of this section had any interest of any nature whatsoever, direct or 
indirect:
    (1) All transfers of credit and all payments between, by, through, 
or to any banking institution or banking institutions wheresoever 
located, with respect to any property subject to the jurisdiction of the 
United States or by any person (including a banking institution) subject 
to the jurisdiction of the United States;
    (2) All transactions in foreign exchange by any person within the 
United States; and
    (3) The exportation or withdrawal from the United States of gold or 
silver coin or bullion, currency or securities, or the earmarking of any 
such property, by any person within the United States.
    (b) All of the following transactions are prohibited, except as 
specifically authorized by the Secretary of the Treasury (or any person, 
agency, or instrumentality designated by him) by means of regulations, 
rulings, instructions, licenses, or otherwise, if such transactions 
involve property in which any designated foreign country, or any 
national thereof, has at any time on or since the effective date of this 
section had any interest of any nature whatsoever, direct or indirect:
    (1) All dealings in, including, without limitation, transfers, 
withdrawals, or exportations of, any property or evidences of 
indebtedness or evidences of ownership of property by any person subject 
to the jurisdiction of the United States; and
    (2) All transfers outside the United States with regard to any 
property or property interest subject to the jurisdiction of the United 
States.
    (c) Any transaction for the purpose or which has the effect of 
evading or avoiding any of the prohibitions set forth in paragraph (a) 
or (b) of this section is hereby prohibited.
    (d) The term ``designated foreign country'' means a foreign country 
in the following schedule, and the terms ``effective date'' and 
``effective date of this section'' mean with respect to any designated 
foreign country, or any national thereof, 12:01 a.m. eastern standard 
time of the date specified in the following schedule, except as 
specifically noted after the country or area.

[[Page 10]]

                                Schedule

    (1) North Korea, i.e., Korea north of the 38th parallel of north 
latitude: December 17, 1950.
    (2) Cambodia: April 17, 1975.
    (3) North Vietnam; i.e., Vietnam north of the 17th parallel of north 
latitude: May 5, 1964.
    (4) South Vietnam, i.e., Vietnam south of the 17th parallel of north 
latitude: April 30, 1975, at 12:00 p.m. e.d.t.

    (e) When a transaction results in the blocking of funds at a banking 
institution pursuant to this section and a party to the transaction 
believes the funds have been blocked due to mistaken identity, that 
party may seek to have such funds unblocked pursuant to the 
administrative procedures set forth in Sec. 501.806 of this chapter.

[15 FR 9040, Dec. 19, 1950, as amended at 18 FR 2079, Apr. 14, 1953; 50 
FR 27436, July 3, 1985; 62 FR 45101, Aug. 25, 1997]



Sec. 500.202  Transactions with respect to securities registered or inscribed 

in the name of a designated national.

    Unless authorized by a license expressly referring to this section, 
the acquisition, transfer (including the transfer on the books of any 
issuer or agent thereof), disposition, transportation, importation, 
exportation, or withdrawal of, or the endorsement or guaranty of 
signatures on, or otherwise dealing in any security (or evidence 
thereof) registered or inscribed in the name of any designated national 
is prohibited irrespective of the fact that at any time (either prior 
to, on or subsequent to the ``effective date'') the registered or 
inscribed owner thereof may have, or appears to have, assigned, 
transferred or otherwise disposed of any such security.



Sec. 500.203  Effect of transfers violating the provisions of this chapter.

    (a) Any transfer after the ``effective date'' which is in violation 
of any provision of this chapter or of any regulation, ruling, 
instruction, license, or other direction or authorization thereunder and 
involves any property in which a designated national has or has had an 
interest since such ``effective date'' is null and void and shall not be 
the basis for the assertion or recognition of any interest in or right, 
remedy, power or privilege with respect to such property.
    (b) No transfer before the ``effective date'' shall be the basis for 
the assertion or recognition of any right, remedy, power, or privilege 
with respect to, or interest in, any property in which a designated 
national has or has had an interest since the ``effective date'' unless 
the person with whom such property is held or maintained had written 
notice of the transfer or by any written evidence had recognized such 
transfer prior to such ``effective date.''
    (c) Unless otherwise provided, an appropriate license or other 
authorization issued by or pursuant to the direction or authorization of 
the Secretary of the Treasury before, during or after a transfer shall 
validate such transfer or render it enforceable to the same extent as it 
would be valid or enforceable but for the provisions of section 5(b) of 
the Trading With the Enemy Act, as amended, and this chapter and any 
ruling, order, regulation, direction or instruction issued thereunder.
    (d) Transfers of property which otherwise would be null and void, or 
unenforceable, by virtue of the provisions of this section shall not be 
deemed to be null and void, or unenforceable pursuant to such 
provisions, as to any person with whom such property was held or 
maintained (and as to such person, only) in cases in which such person 
is able to establish each of the following:
    (1) Such transfer did not represent a willful violation of the 
provisions of this chapter by the person with whom such property was 
held or maintained;
    (2) The person with whom such property was held or maintained did 
not have reasonable cause to know or suspect, in view of all the facts 
and circumstances known or available to such person, that such transfer 
required a license or authorization by or pursuant to the provisions of 
this chapter and was not so licensed or authorized or if a license or 
authorization did purport to cover the transfer, that such license or 
authorization had been obtained by misrepresentation or the withholding 
of material facts or was otherwise fraudulently obtained; and
    (3) Promptly upon discovery that:

[[Page 11]]

    (i) Such transfer was in violation of the provisions of this chapter 
or any regulation, ruling, instruction, license or other direction or 
authorization thereunder, or
    (ii) Such transfer was not licensed or authorized by the Secretary 
of the Treasury, or
    (iii) If a license did purport to cover the transfer, such license 
had been obtained by misrepresentation or the withholding of material 
facts or was otherwise fraudulently obtained;

the person with whom such property was held or maintained filed with the 
Treasury Department, Washington, DC 20220, a report in triplicate 
setting forth in full the circumstances relating to such transfer. The 
filing of a report in accordance with the provisions of this paragraph 
shall not be deemed to be compliance or evidence of compliance with 
paragraphs (d) (1) and (2) of this section.
    (e) Unless licensed or authorized by Sec. 500.504 or otherwise 
licensed or authorized pursuant to this chapter any attachment, 
judgment, decree, lien, execution, garnishment, or other judicial 
process is null and void with respect to any property in which on or 
since the ``effective date'' there existed the interest of a designated 
foreign country or national thereof.
    (f) For the purpose of this section the term ``property'' includes 
gold, silver, bullion, currency, coin, credit, securities (as that term 
is defined in section 2(1) of the Securities Act of 1933, as amended) 
(48 Stat. 74; 15 U.S.C. 77(b)), bills of exchange, notes, drafts, 
acceptances, checks, letters of credit, book credits, debts, claims, 
contracts, negotiable documents of title, mortgages, liens, annuities, 
insurance policies, options and futures in commodities, and evidences of 
any of the foregoing. The term ``property'' shall not, except to the 
extent indicated, be deemed to include chattels or real property.

[15 FR 9040, Dec. 19, 1950, as amended at 41 FR 16553, Apr. 20, 1976]



Sec. 500.204  Importation of and dealings in certain merchandise.

    (a) Except as specifically authorized by the Secretary of the 
Treasury (or any person, agency, or instrumentality designated by him) 
by means of regulations, or rulings, instructions, licenses, or 
otherwise, persons subject to the jurisdiction of the United States may 
not purchase, transport, import, or otherwise deal in or engage in any 
transaction with respect to any merchandise outside the United States 
specified in following paragraph (a)(1) of this section.
    (1) Merchandise the country of origin of which is North Korea, North 
Viet-Nam, Cambodia, or South Viet-Nam. Articles which are the growth, 
produce or manufacture of these areas shall be deemed for the purposes 
of this chapter to be merchandise whose country of origin is North 
Korea, North Viet-Nam, Cambodia, or South Viet-Nam, notwithstanding that 
they may have been subjected to one or any combination of the following 
processes in another country:
    (i) Grading;
    (ii) Testing;
    (iii) Checking;
    (iv) Shredding;
    (v) Slicing;
    (vi) Peeling or splitting;
    (vii) Scraping;
    (viii) Cleaning;
    (ix) Washing;
    (x) Soaking;
    (xi) Drying;
    (xii) Cooling, chilling or refrigerating;
    (xiii) Roasting;
    (xiv) Steaming;
    (xv) Cooking;
    (xvi) Curing;
    (xvii) Combining of fur skins into plates;
    (xviii) Blending;
    (xix) Flavoring;
    (xx) Preserving;
    (xxi) Pickling;
    (xxii) Smoking;
    (xxiii) Dressing;
    (xxiv) Salting;
    (xxv) Dyeing;
    (xxvi) Bleaching;
    (xxvii) Tanning;
    (xxviii) Packing;
    (xxix) Canning;
    (xxx) Labeling;
    (xxxi) Carding;
    (xxxii) Combing;
    (xxxiii) Pressing;
    (xxxiv) Any process similar to any of the foregoing.

[[Page 12]]


Any article wheresoever manufactured shall be deemed for the purposes of 
this chapter to be merchandise whose country of origin is North Korea, 
North Viet-Nam, Cambodia, or South Viet-Nam, if there shall have been 
added to such articles any embroidery, needle point, petit point, lace 
or any other article of adornment which is the product of North Korea, 
North Viet-Nam, Cambodia, or South Viet-Nam, notwithstanding that such 
addition to the merchandise may have occurred in a country other than 
North Korea, North Viet-Nam, Cambodia, or South Viet-Nam.

[40 FR 19202, May 2, 1975, as amended at 41 FR 16553, Apr. 20, 1976; 45 
FR 7224, Jan. 31, 1980]



Sec. 500.205  Holding of certain types of blocked property in interest-bearing 

accounts.

    (a) Except as provided by paragraphs (d), (e) and (f) of this 
section, or as authorized by the Secretary of the Treasury or his 
delegate by specific license, any person holding any property included 
in paragraph (h) of this section is prohibited from holding, 
withholding, using, transferring, engaging in any transactions 
involving, or exercising any right, power, or privilege with respect to 
any such property, unless it is held in an interest-bearing account in a 
domestic bank.
    (b) Any person presently holding property subject to the provisions 
of paragraph (a) of this section which, as of the effective date of this 
section, is not being held in accordance with the provisions of that 
paragraph, shall transfer such property to or hold such property or 
cause such property to be held in an interest-bearing account in any 
domestic bank within 30 days of the effective date of this section.
    (c) Any person holding any checks or drafts subject to the 
provisions of Sec. 500.201 is authorized and directed, wherever 
possible consistent with state law (except as otherwise specifically 
provided in paragraph (c)(3) of this section), to negotiate or present 
for collection or payment such instruments and credit the proceeds to 
interest-bearing accounts. Any transaction by any person incident to the 
negotiation, processing, presentment, collection or payment of such 
instruments and deposit of the proceeds into an interest-bearing account 
is hereby authorized: Provided, That:
    (1) The transaction does not represent, directly or indirectly, a 
transfer of the interest of a designated national to any other country 
or person;
    (2) The proceeds are held in a blocked account indicating the 
designated national who is the payee or owner of the instrument; and,
    (3) In the case of a blocked check or draft which has been purchased 
by the maker/drawer from the drawee bank (e.g., cashier's check, money 
order, or traveler's check) or which is drawn against a presently 
existing account, such bank, on presentment of the instrument in 
accordance with the provisions of this section, shall either:
    (i) Pay the instrument (subject to paragraphs (c) (1) and (2) of 
this section) or
    (ii) Credit a blocked account on its books with the amount payable 
on the instrument.

In either event, the blocked account shall be identified as resulting 
from the proceeds of a blocked check or draft, and the identification 
shall include a reference to the names of both the maker and payee of 
the instrument.
    (d) Property subject to the provisions of paragraph (a) or (b) of 
this section, held by a person claiming a set-off against such property, 
is exempt from the provisions of paragraphs (a), (b) and (c) of this 
section to the extent of the set-off: Provided however, That interest 
shall be due from 30 days after the effective date of this section if it 
should ultimately be determined that the claim to a set-off is without 
merit.
    (e) Property subject to the provisions of paragraphs (a) and (b) of 
this section, held in a customer's account by a registered broker/dealer 
in securities, may continue to be held for the customer by the broker/
dealer provided interest is credited to the account on any balance not 
invested in securities in accordance with Sec. 500.513. The interest 
paid on such accounts by a broker/dealer who does not elect to hold such 
property for a customer's account in a domestic bank shall not be less 
than the maximum rate payable on the

[[Page 13]]

shortest time deposit available in any domestic bank in the jurisdiction 
in which the broker/dealer holds the account.
    (f) Property subject to the provisions of paragraphs (a) and (b) of 
this section, held by a state agency charged with the custody of 
abandoned or unclaimed property under Sec. 500.561 may continue to be 
held by the agency provided interest is credited to the blocked account 
in which the property is held by the agency, or the property is held by 
the agency in a blocked account in a domestic bank. The interest 
credited to such accounts by an agency which does not elect to hold such 
property in a domestic bank shall not be less than the maximum rate 
payable on the shortest time deposit available in any domestic bank in 
the state.
    (g) For purposes of this section, the term ``interest-bearing 
account'' means a blocked account earning interest at no less than the 
maximum rate payable on the shortest time deposit in the domestic bank 
where the account is held, provided however, that such an account may 
include six-month Treasury bills or insured certificates, with a 
maturity not exceeding six-months, appropriate to the amounts involved.
    (h) The following types of property are subject to paragraphs (a) 
and (b) of this section:
    (1) Any currency, bank deposit and bank accounts subject to the 
provisions of Sec. 500.201;
    (2) Any property subject to the provisions of Sec. 500.201 which 
consists, in whole or in part, of undisputed and either liquidated or 
matured debts, claims, obligations or other evidence of indebtedness, to 
the extent of any amount that is undisputed and liquidated or matured; 
and,
    (3) Any proceeds resulting from the payment of an obligation under 
paragraph (c) of this section.
    (i) For purposes of this section, the term ``domestic bank'' 
includes any FSLIC-insured institution (as defined in 12 CFR 561.1).
    (j) For the purposes of this section the term ``person'' includes 
the United States Government or any agency or instrumentality thereof, 
except where the agency or instrumentality submits to the Office of 
Foreign Assets Control an opinion of its General Counsel that either:
    (1) It lacks statutory authority to comply with this section, or
    (2) The requirements of paragraphs (a) and (b) of this section are 
inconsistent with the statutory program under which it operates.

[44 FR 11766, Mar. 2, 1979]



Sec. 500.206  Exemption of information and informational materials.

    (a) The importation from any country and the exportation to any 
country of information or informational materials as defined in Sec. 
500.332, whether commercial or otherwise, regardless of format or medium 
of transmission, are exempt from the prohibitions and regulations of 
this part.
    (b) All transactions of common carriers incident to the importation 
or exportation of information or informational materials, including 
mail, between the United States and any foreign country designated under 
Sec. 500.201, are exempt from the prohibitions and regulations of this 
part.
    (c) This section does not authorize transactions related to 
information or informational materials not fully created and in 
existence at the date of the transaction, or to the substantive or 
artistic alteration or enhancement of information or informational 
materials, or to the provision of marketing and business consulting 
services by a person subject to the jurisdiction of the United States. 
Such prohibited transactions include, without limitation, payment of 
advances for information or informational materials not yet created and 
completed, provision of services to market, produce or co-produce, 
create or assist in the creation of information or informational 
materials, and payment or royalties to a designated national with 
respect to income received for enhancements or alterations made by 
persons subject to the jurisdiction of the United States to information 
or informational materials imported from a designated national.
    (d) This section does not authorize transactions incident to the 
exportation of restricted technical data as defined in section 799 of 
the Export Administration Regulations, 15 CFR parts 768-799, or to the 
exportation of goods

[[Page 14]]

for use in the transmission of any data. The exportation of such goods 
to designated foreign countries is prohibited, as provided in Sec. 
500.201 of this part and Sec. 785.1 of the Export Administration 
Regulations.

    Example #1: A U.S. publisher ships 500 copies of a book to Vietnam 
directly from San Francisco aboard a chartered aircraft, and receives 
payment by means of a letter of credit issued by a Vietnamese bank and 
confirmed by an American bank. These are permissible transactions under 
this section.
    Example #2: A Vietnamese party exports a single master copy of a 
Vietnamese motion picture to a U.S. party and licenses the U.S. party to 
duplicate, distribute, show and exploit in the United States the 
Vietnamese film in any medium, including home video distribution, for 
five years, with the Vietnamese party receiving 40% of the net income. 
All transactions relating to the activities described in this example 
are authorized under this section or Sec. 500.550.
    Example #3: A U.S. recording company proposes to contract with a 
Vietnamese musician to create certain musical compositions, and to 
advance royalties of $10,000 to the musician. The music written in 
Vietnam is to be recorded in a studio that the recording company owns in 
the Bahamas. These are all prohibited transactions. The U.S. party is 
prohibited under Sec. 500.201 from contracting for the Vietnamese 
musician's services, from transferring $10,000 to Vietnam to pay for 
those services, and from providing the Vietnamese with production 
services through the use of its studio in the Bahamas. No informational 
materials are in being at the time of these proposed transactions. 
However, the U.S. recording company may contract to purchase and import 
preexisting recordings by the Vietnamese musician, or to copy the 
recordings in the United States and pay negotiated royalties to Vietnam 
under this section or Sec. 500.550.
    Example #4: A Vietnamese party enters into a subpublication 
agreement licensing a U.S. party to print and publish copies of a 
musical composition and to sub-license rights of public performance, 
adaptation, and arrangement of the musical composition, with payment to 
be a percentage of income received. All transactions related to the 
activities described in this example are authorized under this section 
and Sec. 500.550, except for adaption and arrangement, which constitute 
artistic enhancement of the Vietnamese composition. Payment to the 
Vietnamese party may not reflect income received as a result of these 
enhancements.

[54 FR 5231, Feb. 2, 1989, as amended at 60 FR 8934, Feb. 16, 1995]



                      Subpart C_General Definitions



Sec. 500.301  Foreign country.

    The term foreign country also includes, but not by way of 
limitation:
    (a) The state and the government of any such territory on or after 
the ``effective date'' as well as any political subdivision, agency, or 
instrumentality thereof or any territory, dependency, colony, 
protectorate, mandate, dominion possession or place subject to the 
jurisdiction thereof,
    (b) Any other government (including any political subdivision, 
agency, or instrumentality thereof) to the extent and only to the extent 
that such government exercises or claims to exercise control, authority, 
jurisdiction or sovereignty over territory which on the ``effective 
date'' constituted such foreign country,
    (c) Any person to the extent that such person is, or has been, or to 
the extent that there is reasonable cause to believe that such person 
is, or has been, since the ``effective date'', acting or purporting to 
act directly or indirectly for the benefit or on behalf of any of the 
foregoing, and
    (d) Any territory which on or since the ``effective date'' is 
controlled or occupied by the military, naval or police forces or other 
authority of such foreign country.



Sec. 500.302  National.

    (a) The term national shall include:
    (1) A subject or citizen of a country or any person who has been 
domiciled in or a permanent resident of that country at any time on or 
since the ``effective date,'' except persons who were resident or 
domiciled there in the service of the U.S. Government.
    (2) Any partnership, association, corporation, or other 
organization, organized under the laws of, or which on or since the 
``effective date'' had or has had its principal place of business in a 
foreign country, or which on or since such effective date was or has 
been controlled by, or a substantial part of the stock, shares, bonds, 
debentures, notes, drafts, or other securities or obligations of which, 
was or has been owned or controlled by, directly or indirectly, a 
foreign country and/or one

[[Page 15]]

or more nationals thereof as defined in this section.
    (3) Any person to the extent that such person is, or has been, since 
the ``effective date'' acting or purporting to act directly or 
indirectly for the benefit or on behalf of any national of a foreign 
country.
    (4) Any other person who there is reasonable cause to believe is a 
``national'' as defined in this section.
    (b) The Secretary of the Treasury retains full power to determine 
that any person is or shall be deemed to be a ``national'' within the 
meaning of this section, and to specify the foreign country of which 
such person is or shall be deemed to be a national.

[17 FR 5343, June 12, 1952, as amended at 50 FR 27436, July 3, 1985]



Sec. 500.303  Nationals of more than one foreign country.

    (a) Any person who by virtue of any provision in this chapter is a 
national of more than one foreign country shall be deemed to be a 
national of each of such foreign countries.
    (b) In any case in which a person is a national of two or more 
designated foreign countries, a license or authorization with respect to 
nationals of one of such designated foreign countries shall not be 
deemed to apply to such person unless a license or authorization of 
equal or greater scope is outstanding with respect to nationals of each 
other designated foreign country of which such person is a national.
    (c) In any case in which the combined interests of two or more 
designated foreign countries and/or nationals thereof are sufficient in 
the aggregate to constitute control or ownership of 25 per centum or 
more of the stock, shares, bonds, debentures, notes, drafts, or other 
securities or obligations of a partnership, association, corporation or 
other organization, but such control or a substantial part of such 
stock, shares, bonds, debentures, notes, drafts, or other securities or 
obligations is not held by any one such foreign country and/or national 
thereof, such partnership, association, corporation or other 
organization shall be deemed to be a national of each of such foreign 
countries.



Sec. 500.305  Designated national.

    The term designated national shall mean any country designated in 
Sec. 500.201 and any national thereof including any person who is a 
specially designated national.



Sec. 500.306  Specially designated national.

    (a) The term specially designated national shall mean:
    (1) Any person who is determined by the Secretary of the Treasury to 
be a specially designated national,
    (2) Any person who on or since the ``effective date'' has acted for 
or on behalf of the Government or authorities exercising control over 
any designated foreign country, or
    (3) Any partnership, association, corporation or other organization 
which on or since the ``effective date'' has been owned or controlled 
directly or indirectly by the Government or authorities exercising 
control over any designated foreign country or by any specially 
designated national.
    (b) [Reserved]

    Note to Sec. 500.306: Please refer to the appendices at the end of 
this chapter for listings of persons designated pursuant to this part. 
Section 501.807 of this chapter sets forth the procedures to be followed 
by persons seeking administrative reconsideration of their designation 
or that of a vessel as blocked, or who wish to assert that the 
circumstances resulting in the designation are no longer applicable.

[15 FR 9040, Dec. 19, 1950, as amended at 41 FR 16554, Apr. 20, 1976; 61 
FR 32938, June 26, 1996; 62 FR 45101, Aug. 25, 1997]



Sec. 500.307  Unblocked national.

    Any person licensed pursuant to Sec. 500.505 as an unblocked 
national shall, while so licensed, be regarded as a person within the 
United States who is not a national of any designated foreign country: 
Provided, however, That the licensing of any person as an ``unblocked 
national'' shall not be deemed to suspend in any way the requirements of 
any section of this chapter relating to reports, and the production of 
books, documents, records, etc.

[15 FR 9040, Dec. 19, 1950, as amended at 54 FR 5231, Feb. 2, 1989]

[[Page 16]]



Sec. 500.308  Person.

    The term person means an individual, partnership, association, 
corporation, or other organization.



Sec. 500.309  Transactions.

    The phrase transactions which involve property in which any 
designated foreign country, or any national thereof, has any interest of 
any nature whatsoever, direct or indirect, includes, but not by way of 
limitation:
    (a) Any payment or transfer to any such designated foreign country 
or national thereof,
    (b) Any export or withdrawal from the United States to such 
designated foreign country, and
    (c) Any transfer of credit, or payment of an obligation, expressed 
in terms of the currency of such designated foreign country.



Sec. 500.310  Transfer.

    The term transfer shall mean any actual or purported act or 
transaction, whether or not evidenced by writing, and whether or not 
done or performed within the United States, the purpose, intent, or 
effect of which is to create, surrender, release, transfer, or alter, 
directly or indirectly, any right, remedy, power, privilege, or interest 
with respect to any property and without limitation upon the foregoing 
shall include the making, execution, or delivery of any assignment, 
power, conveyance, check, declaration, deed, deed of trust, power of 
attorney, power of appointment, bill of sale, mortgage, receipt, 
agreement, contract, certificate, gift, sale, affidavit or statement; 
the appointment of any agent trustee, or other fiduciary; the creation 
or transfer of any lien; the issuance, docketing, filing, or the levy of 
or under any judgment, decree, attachment, execution, or other judicial 
or administrative process or order, or the service of any garnishment; 
the acquisition of any interest of any nature whatsoever by reason of a 
judgment or decree of any foreign country; the fulfillment of any 
condition, or the exercise of any power of appointment, power of 
attorney, or other power.



Sec. 500.311  Property; property interests.

    Except as defined in Sec. 500.203(f) for the purposes of that 
section the terms property and property interest or property interests 
shall include, but not by way of limitation, money, checks, drafts, 
bullion, bank deposits, savings accounts, any debts, indebtedness 
obligations, notes, debentures, stocks, bonds, coupons, any other 
financial securities, bankers' acceptances, mortgages, pledges, liens or 
other right in the nature of security, warehouse receipts, bills of 
lading, trust receipts, bills of sale, any other evidences of title, 
ownership or indebtedness, powers of attorney, goods, wares, 
merchandise, chattels, stocks on hand, ships, goods on ships, real 
estate mortgages, deeds of trust, vendors' sales agreements, land 
contracts, real estate and any interest therein, leaseholds, ground 
rents, options, negotiable instruments, trade acceptances, royalties, 
book accounts, accounts payable, judgments, patents, trademarks, 
copyrights, contracts or licenses affecting or involving patents, 
trademarks or copyrights, insurance policies, safe deposit boxes and 
their contents, annuities, pooling agreements, contracts of any nature 
whatsoever, services, and any other property, real, personal, or mixed, 
tangible or intangible, or interest or interests therein, present, 
future, or contingent.

[15 FR 9040, Dec. 19, 1950, as amended at 55 FR 31179, Aug. 1, 1990]



Sec. 500.312  Interest.

    The term interest when used with respect to property shall mean an 
interest of any nature whatsoever, direct or indirect.



Sec. 500.313  Property subject to the jurisdiction of the United States.

    (a) The phrase property subject to the jurisdiction of the United 
States includes, without limitation, securities, whether registered or 
bearer, issued by:
    (1) The United States or any State, district, territory, possession, 
county, municipality, or any other subdivision or agency or 
instrumentality of any thereof; or
    (2) Any person within the United States whether the certificate 
which evidences such property or interest is

[[Page 17]]

physically located within or outside the United States.
    (b) The phrase property subject to the jurisdiction of the United 
States also includes, without limitation, securities, whether registered 
or bearer, by whomsoever issued, if the certificate evidencing such 
property or interest is physically located within the United States.



Sec. 500.314  Banking institution.

    The term banking institution shall include any person engaged 
primarily or incidentally in the business of banking, of granting or 
transferring credits, or of purchasing or selling foreign exchange or 
procuring purchasers and sellers thereof, as principal or agent, or any 
person holding credits for others as a direct or incidental part of his 
business, or any broker; and, each principal, agent, home office, branch 
or correspondent of any person so engaged shall be regarded as a 
separate ``banking institution.''



Sec. 500.316  License.

    Except as otherwise specified, the term license shall mean any 
license or authorization contained in or issued pursuant to this 
chapter.

[28 FR 6973, July 9, 1963]



Sec. 500.317  General license.

    A general license is any license or authorization the terms of which 
are set forth in this chapter.



Sec. 500.318  Specific license.

    A specific license is any license or authorization issued pursuant 
to this chapter but not set forth in this chapter.



Sec. 500.319  Blocked account.

    The term blocked account shall mean an account in which any 
designated national has an interest, with respect to which account 
payments, transfers or withdrawals of other dealings may not be made or 
effected except pursuant to an authorization or license authorizing such 
action. The term blocked account shall not be deemed to include accounts 
of unblocked nationals.



Sec. 500.320  Domestic bank.

    The term domestic bank shall mean any branch or office within the 
United States of any of the following which is not a national of any 
designated foreign country: Any bank or trust company incorporated under 
the banking laws of the United States or of any State, territory, or 
district of the United States, or any private bank or banker subject to 
supervision and examination under the banking laws of the United States, 
or of any state, territory or district of the United States. The 
Secretary of the Treasury may also authorize any other banking 
institution to be treated as a ``domestic bank'' for the purpose of this 
definition or for the purpose of any or all sections of this chapter.



Sec. 500.321  United States; continental United States.

    The term United States means the United States and all areas under 
the jurisdiction or authority thereof, including U.S. trust territories 
and commonwealths. The term continental United States means the states 
of the United States and the District of Columbia.

[50 FR 27436, July 3, 1985]



Sec. 500.322  Authorized trade territory; member of the authorized trade 

territory.

    (a) The term authorized trade territory shall include:
    (1) North, South and Central America, including the Caribbean 
region, except Cuba;
    (2) Africa;
    (3) Australia and Oceania, including Indonesia, New Zealand, and the 
Philippines;
    (4) Andorra, Austria, Belgium, Cyprus, Denmark, Ireland, the Federal 
Republic of Germany and the Western Sector of Berlin, Finland, France 
(including Monaco), Greece, Iceland, Italy, Liechtenstein, Luxembourg, 
Malta, the Netherlands, Norway, Portugal, San Marino, Spain, Sweden, 
Switzerland, Turkey, the United Kingdom, Vatican City, and Yugoslavia.
    (5) Afghanistan, Bangladesh, Bhutan, Burma, Hong Kong, India, Iran, 
Iraq, Israel, Japan, Jordan, Kuwait, Laos,

[[Page 18]]

Lebanon, Macao, Malaysia, Nepal, Oman, Pakistan, Qatar, Saudi Arabia, 
Singapore, South Korea, Sri Lanka (Ceylon), Syrian Arab Republic, 
Taiwan, Thailand, United Arab Emirates, and Yemen.
    (6) Any colony, territory, possession, or protectorate of any 
country included within this paragraph; but the term shall not include 
the United States.
    (b) The term member of the authorized trade territory shall mean any 
of the foreign countries or political subdivisions comprising the 
authorized trade territory.

(50 U.S.C. App. 5(b); E.O. 9193, 3 CFR 1943 Cum. Supp.; Treas. Dept. 
Order No. 128, 32 FR 3472)

[40 FR 19202, May 2, 1975, as amended at 41 FR 16554, Apr. 20, 1976; 42 
FR 27199, May 27, 1977; 54 FR 5231, Feb. 2, 1989]



Sec. 500.323  Occupied area.

    The term occupied area shall mean any territory occupied by a 
designated foreign country which was not occupied by such country prior 
to June 25, 1950.



Sec. 500.325  National securities exchange.

    The term national securities exchange shall mean an exchange 
registered as a national securities exchange under section 6 of the 
Securities Exchange Act of 1934 (48 Stat. 885, 15 U.S.C. 78f).



Sec. 500.326  Custody of safe deposit boxes.

    Safe deposit boxes shall be deemed to be in the custody not only of 
all persons having access thereto but also of the lessors of such boxes 
whether or not such lessors have access to such boxes. The foregoing 
shall not in any way be regarded as a limitation upon the meaning of the 
term custody.



Sec. 500.327  Blocked estate of a decedent.

    The term blocked estate of a decedent shall mean any decedent's 
estate in which a designated national has an interest. A person shall be 
deemed to have an interest in a decedent's estate if he:
    (a) Was the decedent;
    (b) Is a personal representative; or
    (c) Is a creditor, heir, legatee, devisee, distributee, or 
beneficiary.



Sec. 500.328  Status of those portions of Korea under control of the 

government of the Republic of Korea; and of the diplomatic and consular 

representatives of those countries.

    (a) Those portions of Korea which are under the control of the 
government of the Republic of Korea are not included within the term 
designated foreign country.
    (b) The diplomatic and consular representatives of the Republic of 
Korea are not deemed to be acting or purporting to act directly or 
indirectly for the benefit or on the behalf of any designated foreign 
country.

[41 FR 16554, Apr. 20, 1976, as amended at 45 FR 7224, Jan. 31, 1980]



Sec. 500.329  Person subject to the jurisdiction of the United States.

    The term, person subject to the jurisdiction of the United States, 
includes:
    (a) Any individual, wherever located, who is a citizen or resident 
of the United States;
    (b) Any person within the United States as defined in Sec. 500.330;
    (c) Any corporation organized under the laws of the United States or 
of any state, territory, possession, or district of the United States; 
and
    (d) Any corporation, partnership, or association, wherever organized 
or doing business, that is owned or controlled by persons specified in 
paragraph (a) or (c) of this section.

[50 FR 27436, July 3, 1985]



Sec. 500.330  Person within the United States.

    (a) The term, person within the United States, includes:
    (1) Any person, wheresoever located, who is a resident of the United 
States;
    (2) Any person actually within the United States;
    (3) Any corporation organized under the laws of the United States or 
of any state, territory, possession, or district of the United States; 
and
    (4) Any partnership, association, corporation, or other 
organization, wheresoever organized or doing business, which is owned or 
controlled by any person or persons specified in paragraph (a) (1), (2), 
or (3) of this section.

[[Page 19]]

    (b) [Reserved]

[20 FR 1379, Mar. 8, 1955]



Sec. 500.331  Merchandise.

    The term merchandise means all goods, wares and chattels of every 
description without limitation of any kind.

[24 FR 1984, Mar. 18, 1959]



Sec. 500.332  Information and informational materials.

    (a) For purposes of this part, the term informational materials 
includes, without limitation:
    (1) Publications, films, posters, phonograph records, photographs, 
microfilms, microfiche, tapes, compact disks, CD ROMs, artworks, and 
news wire feeds.
    (2) To be considered informational materials, artworks must be 
classified under chapter subheading 9701, 9702, or 9703 of the 
Harmonized Tariff Schedule of the United States.
    (b) The terms information and informational materials with respect 
to U.S. exports do not include items:
    (1) That would be controlled for export pursuant to section 5 of the 
Export Administration Act of 1979, 50 U.S.C. App. 2401-2420 (1979) (the 
``EAA''), or section 6 of the EAA to the extent that such controls 
promote the nonproliferation or antiterrorism policies of the United 
States, including ``software'' that is not ``publicly available'' as 
these terms are defined in 15 CFR parts 779 and 799.1 (1994); or
    (2) With respect to which acts are prohibited by 18 U.S.C. chapter 
37.

[60 FR 8934, Feb. 16, 1995]



                        Subpart D_Interpretations



Sec. 500.401  Reference to amended sections.

    Reference to any section of this chapter or to any regulation, 
ruling, order, instruction, direction or license issued pursuant to this 
chapter shall be deemed to refer to the same as currently amended unless 
otherwise so specified.



Sec. 500.402  Effect of amendment of sections of this chapter or of other 

orders, etc.

    Any amendment, modification, or revocation of any section of this 
chapter or of any order, regulation, ruling, instruction, or license 
issued by or under the direction of the Secretary of the Treasury 
pursuant to section 3(a) or 5(b) of the Trading With the Enemy Act, as 
amended, shall not unless otherwise specifically provided be deemed to 
affect any act done or omitted to be done, or any suit or proceeding had 
or commenced in any civil or criminal case, prior to such amendment, 
modification, or revocation, and all penalties, forfeitures, and 
liabilities under any such section, order, regulation, ruling, 
instruction or license shall continue and may be enforced as if such 
amendment, modification, or revocation had not been made.



Sec. 500.403  Termination and acquisition of the interest of a designated 

national.

    (a) Except as provided in Sec. 500.525, whenever a transaction 
licensed or authorized by or pursuant to this chapter results in the 
transfer of property (including any property interest) away from a 
designated national, such property shall no longer be deemed to be 
property in which a designated national has or has had an interest 
unless there exists in such property an interest of a designated 
national, the transfer of which has not been effected pursuant to 
license or other authorization.
    (b) Unless otherwise specifically provided in a license or 
authorization contained in or issued pursuant to this chapter, if 
property (including any property interest) is transferred to a 
designated national such property shall be deemed to be property in 
which there exists the interest of a designated national.



Sec. 500.404  Transactions between principal and agent.

    A transaction between any person within the United States and any 
principal, agent, home office, branch, or correspondent, outside the 
United States of such person is a transaction prohibited by Sec. 
500.201 to the same extent as if the parties to the transaction

[[Page 20]]

were in no way affiliated or associated with each other.



Sec. 500.405  Exportation of securities, etc. to designated foreign countries.

    Section 500.201 prohibits the exportation of securities, currency, 
checks, drafts and promissory notes to designated foreign countries.



Sec. 500.406  Drafts under irrevocable letters of credit; documentary drafts.

    Section 500.201 prohibits the presentation, acceptance or payment 
of:
    (a) Drafts or other orders for payment drawn under irrevocable 
letters of credit issued in favor or on behalf of any designated 
national;
    (b) Drafts or other orders for payment, in which any designated 
national has on or since the ``effective date'' had any interest, drawn 
under any irrevocable letter of credit; and
    (c) Documentary drafts in which any designated national has on or 
since the ``effective date'' had any interest.



Sec. 500.407  Administration of blocked estates of decedents.

    Section 500.201 prohibits all transactions incident to the 
administration of the blocked estate of a decedent, including the 
appointment and qualification of personal representatives, the 
collection and liquidation of assets, the payment of claims, and 
distribution to beneficiaries. Attention is directed to Sec. 500.523 
which authorizes certain transactions in connection with the 
administration of blocked estates of decedents and Sec. 500.568 which 
authorizes the unblocking by specific license of estate assets to 
certain heirs under certain circumstances.

[15 FR 9040, Dec. 19, 1950, as amended at 54 FR 5231, Feb. 2, 1989]



Sec. 500.408  Access to certain safe deposit boxes prohibited.

    Section 500.201 prohibits access to any safe deposit box within the 
United States in the custody of any designated national or containing 
any property in which any designated national has any interest or which 
there is reasonable cause to believe contains property in which any such 
designated national has any interest. Attention is directed to Sec. 
500.517 which authorizes access to such safe deposit boxes under certain 
conditions.



Sec. 500.409  Certain payments to designated foreign countries and nationals 

through third countries.

    Section 500.201 prohibits any request or authorization made by or on 
behalf of a bank or other person within the United States to a bank or 
other person outside of the United States as a result of which request 
or authorization such latter bank or person makes a payment or transfer 
of credit either directly or indirectly to a designated national.

[18 FR 2080, Apr. 14, 1953]



Sec. 500.410  Currency, coins, and postage and other stamps.

    Currency, coins, and postage and other stamps issued by North Korea, 
North Viet-Nam, Cambodia, or South Viet-Nam are merchandise of North 
Korean, North Vietnamese, Cambodian, or South Vietnamese origin subject 
to Sec. 500.204(a)(1).

[41 FR 16554, Apr. 20, 1976]



Sec. 500.411  Dealings abroad in commodities subject to the Regulations.

    Section 500.204 prohibits the unlicensed importation into the United 
States of commodities of North Korean, North Vietnamese, Cambodian, or 
South Vietnamese origin. It also prohibits, unless licensed, persons 
subject to the jurisdiction of the United States from purchasing, 
transporting or otherwise dealing with such commodities which are 
outside the United States.

[41 FR 16554, Apr. 20, 1976]



Sec. 500.412  Process vs. manufacture.

    A commodity subject to Sec. 500.204 remains subject howsoever it 
has been processed. It should not be assumed that a commodity which has 
undergone operations other than those listed in Sec. 500.204(a)(1), has 
become a manufactured form of the commodity rather than a processed form 
thereof. In case of question, a ruling should be requested from the 
Office of Foreign Assets Control. Requests for rulings in the form of 
license applications or otherwise should include adequate technical 
detail. It should be noted that it

[[Page 21]]

is quite possible for merchandise to have North Korea, North Viet-Nam, 
Cambodia, or South Viet-Nam as its ``country of origin'' for Foreign 
Assets Control purposes while having some other country as its ``country 
of origin'' for marking or statistical purposes.

[41 FR 16554, Apr. 20, 1976]



Sec. 500.413  Participation in certain development projects in Vietnam.

    The following examples illustrate the scope of the authorization in 
Sec. 500.576 for dealings in property in which Vietnam or a Vietnamese 
national has an interest with respect to development projects in Vietnam 
formally proposed or approved for execution, funding or sponsorship by a 
qualified international institution listed in appendix A to this part 
(``Qualified Projects'').

    Example # 1: The Government of Vietnam (``Vietnam'') approaches a 
U.S. financial consulting firm (the ``U.S. Consulting Firm'') for advice 
on building cement plants in Hanoi and Ho Chi Minh City. The project 
might be eligible for funding by the Asian Development Bank (the 
``ADB''), and Vietnam wants the U.S. Consulting Firm's assistance in 
conducting a feasibility study for submission to the ADB. Since the 
project has not yet been formally proposed or approved for funding by 
the ADB, no involvement of the U.S. Consulting Firm is authorized 
pursuant to Sec. 500.576. However, had the ADB formally proposed the 
project in its monthly ADB Business Opportunities as a project being 
considered for funding, or had it funded the feasibility study, Sec. 
500.576 would authorize the U.S. Consulting Firm's transactions.
    Example # 2: Upon ADB approval of funding for the cement plant 
project, a U.S. company (the ``U.S. Company'') forms a joint venture 
with a Vietnamese company to bid on construction of the cement plants in 
Hanoi and Ho Chi Minh City. The joint venture's bid is successful, and 
it purchases construction equipment from the United States, financed by 
a U.S. bank and insured by a U.S. company. Several items are sourced 
from the United States during construction, including cement equipment, 
which is covered by a ten-year service and maintenance agreement. The 
joint venture agreement calls for the continued management and operation 
of the plants by the U.S. Company after completion, and for the 
insurance of the plants by a U.S. insurance company. Each of these 
transactions with respect to the Qualified Project is authorized by 
Sec. 500.576.
    Example # 3: The International Finance Corporation (``IFC'') offers 
equity investment in a Vietnamese company to finance environmental 
safeguards for drilling operations in offshore oil fields. Various U.S. 
investors, including venture capital companies, brokerage firms, and 
investment banks contribute capital and receive shares in the Vietnamese 
company. This equity investment in a Qualified Project is authorized by 
Sec. 500.576. The U.S. companies purchasing these shares as part of the 
IFC-sponsored development project may hold or resell them, including 
resale to other persons subject to U.S. jurisdiction. Shares acquired by 
entities not subject to U.S. jurisdiction may not then be purchased or 
repurchased by a person subject to U.S. jurisdiction.
    Example # 4: (a) An Indonesian company (the ``Contractor'') is a 
successful bidder on a Qualified Project, and hires a U.S. law firm to 
represent it in contract negotiations with Vietnam to build a fish 
processing and canning facility in Vietnam funded by the World Bank. The 
law firm may represent the Contractor throughout the course of the 
project pursuant to Sec. 500.576, once the project has been formally 
proposed or approved for funding by the World Bank.

    (b) Once the Qualified Project is underway, the Contractor purchases 
equipment manufactured in France by a French company. The long-term 
servicing of the equipment, however, will be provided by the French 
company's U.S. subsidiary. The service transactions are authorized 
pursuant to Sec. 500.576.
    (c) After the processing facility is completed, Vietnam hires a U.S. 
marketing firm to develop marketing strategies for the product 
worldwide. It further asks the marketing firm to execute the strategies 
it devises and to represent the product in South-East Asia, including 
the domestic market in Vietnam. The marketing firm in turn would hire 
the brokerage services of a U.S. citizen domiciled in Thailand for the 
sale of the product to that country. These transactions are outside the 
scope of Sec. 500.576, and violate Sec. 500.201, because they are not 
directly incident to the Qualified Project funded by the World Bank.

[58 FR 68530, Dec. 28, 1993]

[[Page 22]]



  Subpart E_Licenses, Authorizations and Statements of Licensing Policy



Sec. 500.501  General and specific licensing procedures.

    For provisions relating to licensing procedures, see part 501, 
subpart E, of this chapter. Licensing actions taken pursuant to part 501 
of this chapter with respect to the prohibitions contained in this part 
are considered actions taken pursuant to this part.

[68 FR 53641, Sept. 11, 2003]



Sec. 500.502  Effect of subsequent license or authorization.

    No license or other authorization contained in this chapter or 
otherwise issued by or under the direction of the Secretary of the 
Treasury pursuant to section 3(a) or 5(b) of the Trading With the Enemy 
Act, as amended, shall be deemed to authorize or validate any 
transaction effected prior to the issuance thereof, unless such license 
or other authorization specifically so provides.



Sec. 500.503  Exclusion from licenses and authorizations.

    The Secretary of the Treasury reserves the right to exclude from the 
operation of any license or from the privilege therein conferred or to 
restrict the applicability thereof with respect to particular persons, 
transactions or property or classes thereof. Such action shall be 
binding upon all persons receiving actual notice or constructive notice 
thereof.



Sec. 500.504  Certain judicial proceedings with respect to property of 

designated nationals.

    (a) Subject to the limitations of paragraphs (b), (c) and (d) of 
this section judicial proceedings are authorized with respect to 
property in which on or since the ``effective date'' there has existed 
the interest of a designated national.
    (b) A judicial proceeding is authorized by this section only if it 
is based upon a cause of action which accrued prior to the ``effective 
date.''
    (c) This section does not authorize or license:
    (1) The entry of any judgment or of any decree or order of similar 
or analogous effect upon any judgment book, minute book, journal or 
otherwise, or the docketing of any judgment in any docket book, or the 
filing of any judgment roll or the taking of any other similar or 
analogous action.
    (2) Any payment or delivery out of a blocked account based upon a 
judicial proceeding nor does it authorize the enforcement or carrying 
out of any judgment or decree or order of similar or analogous effect 
with regard to any property in which a designated national has an 
interest.
    (d) If a judicial proceeding relates to property in which there 
exists the interest of any designated national other than a person who 
would not have been a designated national except for his relationship to 
an occupied area, such proceeding is authorized only if it is based upon 
a claim in which no person other than any of the following has had an 
interest since the ``effective date'':
    (1) A citizen of the United States;
    (2) A corporation organized under the laws of the United States or 
any State, territory or possession thereof, or the District of Columbia;
    (3) A natural person who is and has been since the ``effective 
date'' a resident of the United States and who has not been a specially 
designated national;
    (4) A legal representative (whether or not appointed by a court of 
the United States) or successor in interest by inheritance, device, 
bequest, or operation of law, who falls within any of the categories 
specified in paragraphs (d) (1), (2) and (3) of this section but only to 
the same extent that their principals or predecessors would be qualified 
by such paragraph.



Sec. 500.505  Certain persons unblocked.

    (a) The following persons are hereby licensed as unblocked 
nationals:
    (1) Any person resident in, or organized under the laws of a 
jurisdiction in, the United States or the authorized trade territory who 
or which has never been a designated national;
    (2) Any individual resident in the United States who is not a 
specially designated national; and

[[Page 23]]

    (3) Any corporation, partnership or association that would be a 
designated national solely because of the interest therein of an 
individual licensed in paragraph (a) or (b) of this section as an 
unblocked national.
    (b) Individual nationals of a designated country who take up 
residence in the authorized trade territory may apply to the Office of 
Foreign Assets Control to be specifically licensed as unblocked 
nationals.
    (c) The licensing of any person as an unblocked national shall not 
suspend the requirements of any section of this chapter relating to the 
maintenance or production of records.

[50 FR 27436, July 3, 1985, as amended at 54 FR 5232, Feb. 2, 1989]



Sec. Sec. 500.506-500.507  [Reserved]



Sec. 500.508  Payments to blocked accounts in domestic banks.

    (a) Any payment or transfer of credit to a blocked account in a 
domestic bank in the name of any designated national is hereby 
authorized providing such payment or transfer shall not be made from any 
blocked account if such payment or transfer represents, directly or 
indirectly, a transfer of the interest of a designated national to any 
other country or person.
    (b) This section does not authorize:
    (1) Any payment or transfer to any blocked account held in a name 
other than that of the designated national who is the ultimate 
beneficiary of such payment or transfer; or
    (2) Any foreign exchange transaction including, but not by way of 
limitation, any transfer of credit, or payment of an obligation, 
expressed in terms of the currency of any foreign country.
    (c) This section does not authorize any payment or transfer of 
credit comprising an integral part of a transaction which cannot be 
effected without the subsequent issuance of a further license.
    (d) This section does not authorize the crediting of the proceeds of 
the sale of securities held in a blocked account or a sub-account 
thereof, or the income derived from such securities, to a blocked 
account or sub-account under any name or designation which differs from 
the name or designation of the specific blocked account or sub-account 
in which such securities are held.
    (e) This section does not authorize any payment or transfer from a 
blocked account in a domestic bank to a blocked account in another 
domestic bank held under any name or designation which differs from the 
name or designation of the specific blocked account or sub-account from 
which the payment or transfer is made.

    Note to Sec. 500.508: Please refer to Sec. 501.603 of this chapter 
for mandatory reporting requirements regarding financial transfers.

[40 FR 7649, Feb. 21, 1975, as amended at 58 FR 47644, Sept. 10, 1993; 
62 FR 45101, Aug. 25, 1997]



Sec. 500.509  Entries in certain accounts for normal service charges.

    (a) Any banking institution within the United States is hereby 
authorized to:
    (1) Debit any blocked account with such banking institution (or with 
another office within the United States of such banking institution) in 
payment or reimbursement for normal service charges owed to such banking 
institution by the owner of such blocked account.
    (2) Make book entries against any foreign currency account 
maintained by it with a banking institution in any designated foreign 
country for the purpose of responding to debits to such account for 
normal service charges in connection therewith.
    (b) As used in this section, the term normal service charge shall 
include charges in payment or reimbursement for interest due; cable, 
telegraph, or telephone charges; postage costs; custody fees; small 
adjustment charges to correct bookkeeping errors; and, but not by way of 
limitation, minimum balance charges, account carrying charges, notary 
and protest fees, and charges for reference books, photostats, credit 
reports, transcripts of statements, registered mail insurance, 
stationery and supplies, check books, and other similar items.



Sec. 500.510  Payments to the United States, States and political 

subdivisions.

    (a) The payment from any blocked account to the United States or any

[[Page 24]]

agency or instrumentality thereof or to any State, territory, district, 
county, municipality or other political subdivision in the United 
States, of customs duties, taxes, and fees payable thereto by the owner 
of such blocked account is hereby authorized.
    (b) This section also authorizes transactions incident to the 
payment of customs duties, taxes, and fees from blocked accounts, such 
as the levying of assessment, the creation and enforcement of liens, and 
the sale of blocked property in satisfaction of liens for customs 
duties, taxes, and fees.



Sec. 500.511  Transactions by certain business enterprises.

    (a) Except as provided in paragraphs (b), (c) and (d) of this 
section any partnership, association, corporation or other organization 
which on the ``effective date'' was actually engaged in a commercial, 
banking or financial business within the United States and which is a 
national of any designated foreign country, is hereby authorized to 
engage in all transactions ordinarily incidental to the normal conduct 
of its business activities within the United States.
    (b) This section does not authorize any transaction which would 
require a license if such organization were not a national of any 
designated foreign country.
    (c) This section does not authorize any transaction by a specially 
designated national.
    (d) Any organization engaging in business pursuant to this section 
shall not engage in any transaction, pursuant to this section or any 
other license or authorization contained in this chapter, which, 
directly or indirectly, substantially diminishes or imperils the assets 
of such organization or otherwise prejudicially affects the financial 
position of such organization.
    (e) No dealings with regard to any account shall be evidence that 
any person having an interest therein is actually engaged in commercial, 
banking or financial business within the United States.



Sec. 500.513  Purchase and sale of certain securities.

    (a) The bona fide purchase and sale of securities on a national 
securities exchange by banking institutions within the United States for 
the account, and pursuant to the authorization, of nationals of any 
designated foreign country and the making and receipt of payments, 
transfers of credit, and transfers of such securities which are 
necessary incidents of any such purchase or sale are hereby authorized 
provided the following terms and conditions are complied with:
    (1) In the case of the purchase of securities, the securities 
purchased shall be held in an account in a banking institution within 
the United States in the name of the national whose account was debited 
to purchase such securities; and
    (2) In the case of the sale of securities, the proceeds of the sale 
shall be credited to an account in the name of the national for whose 
account the sale was made and in the banking institution within the 
United States which held the securities of such national.
    (b) This section does not authorize the crediting of the proceeds of 
the sale of securities held in a blocked account or a subaccount 
thereof, to a blocked account or subaccount under any name or 
designation which differs from the name or designation of the specific 
blocked account or subaccount in which such securities were held.
    (c) Securities issued or guaranteed by the Government of the United 
States or any State, territory, district, county, municipality, or other 
political subdivision thereof (including agencies and instrumentalities 
of the foregoing) need not be purchased or sold on a national securities 
exchange, but purchases or sales of such securities shall be made at 
market value and pursuant to all other terms and conditions prescribed 
in this section.



Sec. 500.514  Payment of dividends and interest on and redemption and 

collection of securities.

    (a) The payment to, and receipt by, a banking institution within the 
United States of funds or other property representing dividends or 
interest on securities held by such banking institution

[[Page 25]]

in a blocked account is hereby authorized provided the funds or other 
property are credited to or deposited in a blocked account in such 
banking institution in the name of the national for whose account the 
securities were held. Not withstanding Sec. 500.202, this paragraph 
authorizes the foregoing transactions although such securities are 
registered or inscribed in the name of any designated national and 
although the national in whose name the securities are registered or 
inscribed may not be the owner of such blocked account.
    (b) The payment to, and receipt by, a banking institution within the 
United States of funds payable in respect of securities (including 
coupons) presented by such banking institution to the proper paying 
agents within the United States for redemption or collection for the 
account and pursuant to the authorization of nationals of any designated 
country is hereby authorized provided the proceeds of the redemption or 
collection are credited to a blocked account in such banking institution 
in the name of the national for whose account the redemption or 
collection was made.
    (c) The performance of such other acts, and the effecting of such 
other transactions, as may be necessarily incident to any of the 
foregoing, are also hereby authorized.
    (d) This section does not authorize the crediting of the proceeds of 
the redemption or collection of securities (including coupons) held a 
blocked account or a subaccount thereof, or the income derived from such 
securities to a blocked account or subaccount under any name or 
designation which differs from the name or designation of the specific 
blocked account or subaccount in which such securities were held.
    (e) This section does not authorize any issuer or other obligor, 
with respect to a security, who is a designated national, to make any 
payment, transfer or withdrawal.



Sec. 500.515  Transfers of securities to blocked accounts in domestic banks.

    (a) Transactions ordinarily incident to the transfer of securities 
from a blocked account in the name of any person to a blocked account in 
the same name in a domestic bank are hereby authorized provided such 
securities shall not be transferred from any blocked account if such 
transfer represents, directly or indirectly, a transfer of the interest 
of a designated national to any other country or person.
    (b) This section does not authorize the transfer of securities held 
in a blocked account or subaccount thereof to a blocked account or 
subaccount under any name or designation which differs from the name or 
designation of the specific blocked account or sub- account in which 
such securities were held.

[32 FR 10846, July 25, 1967]



Sec. 500.516  Voting and soliciting of proxies on securities.

    Notwithstanding Sec. 500.202, the voting and the soliciting of 
proxies or other authorizations is authorized with respect to the voting 
of securities issued by a corporation organized under the laws of the 
United States or of any State, territory, or district thereof, in which 
a designated national has any interest.



Sec. 500.517  Access to safe deposit boxes under certain conditions.

    (a) Access to any safe deposit box leased to a designated national 
or containing property in which any designated national has an interest, 
and the deposit therein or removal therefrom of any property is hereby 
authorized, provided the following terms and conditions are complied 
with:
    (1) Access shall be permitted only in the presence of an authorized 
representative of the lessor of such box; and
    (2) In the event that any property in which any designated national 
has any interest is to be removed from such box, access shall be 
permitted only in the presence of an authorized representative of a 
banking institution within the United States, which may be the lessor of 
such box, which shall receive such property into its custody immediately 
upon removal from such box and which shall hold the same in a blocked 
account under an appropriate designation indicating the interest therein 
of designated nationals.

[[Page 26]]

    (b) The terms and conditions set forth in paragraph (a) of this 
section shall not apply to access granted to a representative of the 
Office of Alien Property pursuant to any rule, regulation or order of 
such Office.
    (c) The lessee or other person granted access to any safe deposit 
box pursuant to this section (except an agent or representative of the 
Office of Alien Property) shall furnish to the lessor a certificate in 
triplicate that he has filed or will promptly file a report with respect 
to such box, if leased to a designated national, and with respect to all 
property contained in the box to which access is had in which any 
designated national has an interest. The lessor shall transmit two 
copies of such certificate to the Treasury Department, Washington, D.C. 
The certificate is required only on the first access to the box. In case 
a report on Form TFR-603 was not made, a report is hereby required to be 
filed. All reports made pursuant to this section shall bear on their 
face or have securely attached to them a statement reading, ``this 
report is filed pursuant to 31 CFR 500.517''.

[15 FR 9040, Dec. 19, 1950, as amended at 35 FR 4045, Mar. 4, 1970]



Sec. 500.518  Payments for living, traveling, and similar personal expenses in 

the United States.

    (a) Payments and transfers of credit in the United States from 
blocked accounts in domestic banking institutions held in the name of an 
individual within the United States to or upon the order of such 
individual are hereby authorized provided the following terms and 
conditions are complied with:
    (1) Such payments and transfers of credit may be made only for the 
living, traveling, and similar personal expenses in the United States of 
such individual or his family; and
    (2) The total of all such payments and transfers of credit made 
under this section from the accounts of such individual may not exceed 
$250 in any one calendar month.
    (b) This section does not authorize any payment or transfer from an 
account in which a specially designated national has an interest.

[28 FR 6973, July 9, 1963]



Sec. 500.519  Limited payments from accounts of United States citizens abroad.

    (a) Payments and transfers of credit from blocked accounts for 
expenditures within the United States or the authorized trade territory 
of any citizen of the United States who is within any foreign country 
are hereby authorized provided the following terms and conditions are 
complied with:
    (1) Such payments and transfers shall be made only from blocked 
accounts in the name of, or in which the beneficial interest is held by, 
such citizen or his family; and
    (2) The total of all such payments and transfers made under this 
section shall not exceed $1,000 in any one calendar month for any such 
citizen or his family.
    (b) This section does not authorize any remittance to any designated 
foreign country or, any payment, transfer, or withdrawal which could not 
be effected without a license by a person within the United States who 
is not a national of any designated foreign country.



Sec. 500.520  Payments from accounts of United States citizens in employ of 

United States in foreign countries and certain other persons.

    (a) Banking institutions within the United States are hereby 
authorized to make all payments, transfers and withdrawals from accounts 
in the name of citizens of the United States while such citizens are 
within any foreign country in the course of their employment by the 
Government of the United States.
    (b) Banking institutions within the United States are also hereby 
authorized to make all payments, transfers and withdrawals from accounts 
in the name of members of the armed forces of the United States and of 
citizens of the United States accompanying such armed forces in the 
course of their employment by any organization acting on behalf of the 
Government of the United States while such persons are within any 
foreign country.
    (c) This section is deemed to apply to the accounts of members of 
the armed

[[Page 27]]

forces of the United States and of citizens of the United States 
accompanying such armed forces in the course of their employment by the 
Government of the United States or by any organization acting on its 
behalf even though they are captured or reported missing.



Sec. 500.521  Certain remittances for necessary living expenses.

    (a) Remittances by any person to any individual who is a resident of 
a foreign country and is within that foreign country are hereby 
authorized on the following terms and conditions:
    (1) Such remittances are made only for the necessary living expenses 
of the payee and his household and do not exceed $100 in any one 
calendar month to any one household;
    (2) Such remittances are not made from a blocked account other than 
from an account in a banking institution within the United States in the 
name of, or in which the beneficial interest is held by, the payee or 
members of his household;
    (3) Such remittances are not made from a blocked account which is 
blocked pursuant to Executive order 8389, as amended;
    (4) If the payee is within any designated foreign country, such 
remittances must be made through a domestic bank and any domestic bank 
is authorized to effect such remittances which, however, may be effected 
only by the payment of the dollar amount of the remittance to a domestic 
bank for credit to a blocked account in the name of a banking 
institution within such country.
    (b) This section does not authorize any remittance to, or for the 
benefit of, a specially designated national who is not within a 
designated foreign country.
    (c) This section does not authorize any remittance to an individual 
for the purpose of defraying the expenses of a person not constituting 
part of his household.
    (d) As used in this section, the term household shall mean:
    (1) Those individuals sharing a common dwelling as a family; or
    (2) Any individual not sharing a common dwelling with others as a 
family.

[28 FR 6974, July 9, 1963]



Sec. 500.522  Certain remittances to United States citizens in foreign 

countries.

    (a) Remittances by any person through any domestic bank to any 
individual who is a citizen of the United States within any foreign 
country are hereby authorized and any domestic bank is authorized to 
effect such remittances, on the following terms and conditions:
    (1) Such remittances do not exceed $1,000 in any one calendar month 
to any payee and his household and are made only for the necessary 
living and traveling expenses of the payee and his household, except 
that an additional sum not exceeding $1,000 may be remitted once to such 
payee if such sum will be used for the purpose of enabling the payee or 
his household to return to the United States;
    (2) Such remittances are not made from a blocked account other than 
from an account in a banking institution within the United States in the 
name of, or in which the beneficial interest is held by, the payee or 
members of his household;
    (3) If the payee is within any designated foreign country, such 
remittances must be made through a domestic bank and must be effected by 
the payment of the dollar amount of remittance to a domestic bank for 
credit to a blocked account in the name of a banking institution within 
such country.
    (b) This section does not authorize any remittance to an individual 
for the purpose of defraying the expenses of a person not constituting 
part of his household.
    (c) As used in this section, the term household shall mean:
    (1) Those individuals sharing a common dwelling as a family; or
    (2) Any individual not sharing a common dwelling with others as a 
family.

[[Page 28]]



Sec. 500.523  Transactions incident to the administration of decedents' 

estates.

    (a) The following transactions are authorized in connection with the 
administration of the assets in the United States of any blocked estate 
of a decedent:
    (1) The appointment and qualification of a personal representative;
    (2) The collection and preservation of such assets by such personal 
representative and the payment of all costs, fees and charges in 
connection therewith; and
    (3) The payment by such personal representative of funeral expenses 
and expenses of the last illness.
    (4) Any transfer of title pursuant to a valid testamentary 
disposition.

This paragraph does not authorize any unblocking or distribution of 
estate assets to a designated national.
    (b) In addition to the authorization contained in paragraph (a) of 
this section, all other transactions incident to the administration of 
assets situated in the United States of any blocked estate of a decedent 
are authorized if:
    (1) The decedent was not a national of a designated foreign country 
at the time of his death;
    (2) The decedent was a citizen of the United States and a national 
of a designated foreign country at the time of his death solely by 
reason of his presence in a designated foreign country as a result of 
his employment by, or service with the United States Government; or
    (3) The assets are unblocked under a specific license issued 
pursuant to Sec. 500.568.
    (c) Any property or interest therein distributed pursuant to this 
section to a designated national shall be regarded for the purpose of 
this chapter as property in which such national has an interest and 
shall accordingly be subject to all the pertinent sections of this 
chapter. Any payment or distribution of any funds, securities or other 
choses in action to a designated national shall be made by deposit in a 
blocked account in a domestic bank or with a public officer, agency, or 
instrumentality designated by a court having jurisdiction of the estate. 
Any such deposit shall be made in one of the following ways:
    (1) In the name of the national who is the ultimate beneficiary 
thereof;
    (2) In the name of a person who is not a national of a designated 
foreign country in trust for the national who is the ultimate 
beneficiary; or
    (3) Under some other designation which clearly shows the interest 
therein of such national.
    (d) Any distribution of property authorized pursuant to this section 
may be made to a trustee of any testamentary trust or to the guardian of 
an estate of a minor or of an incompetent.
    (e) This section does not authorize:
    (1) Any designated national to act as personal representative or co-
representative of any estate;
    (2) Any designated national to represent, directly or indirectly, 
any person who has an interest in an estate;
    (3) Any designated national to take distribution of any property as 
the trustee of any testamentary trust or as the guardian of an estate of 
a minor or of an incompetent; or
    (4) Any transaction which could not be effected if no designated 
national had any interest in such estate.
    (f) Any payment or distribution authorized by this section may be 
deposited in a blocked account in a domestic bank or with a public 
officer, agency, or instrumentality designated by the court having 
jurisdiction of the estate in one of the ways prescribed in paragraphs 
(c) (1), (2) or (3) of this section, but this section does not authorize 
any other transaction directly or indirectly at the request, or upon the 
instructions of any designated national.

[15 FR 9040, Dec. 19, 1950, as amended at 54 FR 5232, Feb. 2, 1989]



Sec. 500.524  Payment from, and transactions in the administration of certain 

trusts and estates.

    (a) Any bank or trust company incorporated under the laws of the 
United States, or of any State, territory, possession, or district of 
the United States, or any private bank subject to supervision and 
examination under the banking laws of any State of the United States, 
acting as trustee of a trust created by gift, donation or bequest and 
administered in the United

[[Page 29]]

States, or as legal representative of an estate of an infant or 
incompetent administered in the United States, in which trust or estate 
one or more persons who are designated nationals have an interest, 
beneficial or otherwise, or are co-trustees or co-representatives, is 
hereby authorized to engage in the following transactions:
    (1) Payments of distributive shares of principal or income to all 
persons legally entitled thereto upon the condition prescribed in 
paragraph (b) of this section.
    (2) Other transactions arising in the administration of such trust 
or estate which might be engaged in if no national of a designated 
foreign country were a beneficiary, co-trustee or co-representative of 
such trust or estate upon the condition prescribed in paragraph (b) of 
this section.
    (b) Any payment or distribution of any funds, securities or other 
choses in action to a national of a designated foreign country under 
this section shall be made by deposit in a blocked account in a domestic 
bank in the name of the national who is the ultimate beneficiary 
thereof.
    (c) Any payment or distribution into a blocked account in a domestic 
bank in the name of any such national of a designated foreign country 
who is the ultimate beneficiary of and legally entitled to any such 
payment or distribution is authorized by this section, but this section 
does not authorize such trustee or legal representative to engage in any 
other transaction at the request, or upon the instructions, of any 
beneficiary, co-trustee or co-representative of such trust or estate or 
other person who is a national of any designated foreign country.
    (d) The application of this section to trusts is limited to trusts 
established by gift, donation, or bequest from individuals or entities 
to benefit specific heirs, charitable causes, and similar beneficiaries. 
This section does not apply to trusts established for business or 
commercial purposes, such as sinking funds established by an insurer of 
securities in order to secure payment of interest or principal due on 
such securities.

[15 FR 9040, Dec. 19, 1950, as amended at 54 FR 5232, Feb. 2, 1989]



Sec. 500.525  Certain transfers by operation of law.

    (a) The following transfers by operation of law are hereby 
authorized:
    (1) Any transfer of any dower, curtesy, community property, or other 
interest of any nature whatsoever provided that such transfer arises 
solely as a consequence of the existence or change of marital status;
    (2) Any transfer to any person by intestate succession.
    (3) Any transfer to any person as administrator, executor, or other 
fiduciary by reason of any testamentary disposition; and
    (4) Any transfer to any person as administrator, executor, or 
fiduciary by reason of judicial appointment or approval in connection 
with any testamentary disposition or intestate succession.
    (b) Except to the extent authorized by Sec. 500.523, Sec. 500.568 
or by any other license or authorization contained in or issued pursuant 
to this chapter no transfer to any person by intestate succession and no 
transfer to any person as administrator, executor, or other fiduciary by 
reason of any testamentary disposition, and no transfer to any person as 
administrator, executor, or fiduciary by reason of judicial appointment 
or approval in connection with any testamentary disposition or intestate 
succession shall be deemed to terminate the interest of the decedent in 
the property transferred if the decedent was a designated national.
    (c) This section does not authorize any dealings in property by any 
person.

[25 FR 1910, Mar. 4, 1960, as amended at 54 FR 5232, Feb. 2, 1989]



Sec. 500.526  Transactions involving blocked life insurance policies.

    (a) The following transactions are hereby authorized:
    (1) The payment of premiums and interest on policy loans with 
respect to any blocked life insurance policy;
    (2) The issuance, servicing or transfer of any blocked life 
insurance policy in which the only blocked interest is that of one or 
more of the following:

[[Page 30]]

    (i) A member of the armed forces of the United States or a person 
accompanying such forces (including personnel of the American Red Cross, 
and similar organizations);
    (ii) An officer or employee of the United States; or
    (iii) A citizen of the United States resident in a designated 
foreign country; and
    (3) The issuance, servicing or transfer of any blocked life 
insurance policy in which the only blocked interest (other than that of 
a person specified in paragraph (a) (2) of this section) is that of a 
beneficiary.
    (b) Paragraph (a) of this section does not authorize:
    (1) Any payment to the insurer from any blocked account except a 
blocked account of the insured or beneficiary, or
    (2) Any payment by the insurer to a national of a designated foreign 
country unless payment is made by deposit in a blocked account in a 
domestic bank in the name of the national who is the ultimate 
beneficiary thereof.
    (c) The application, in accordance with the provisions of the policy 
or the established practice of the insurer, of the dividends, cash 
surrender value, or loan value, of any blocked life insurance policy is 
also hereby authorized for the purposes of:
    (1) Paying premiums;
    (2) Paying policy loans and interest thereon;
    (3) Establishing paid-up insurance; or
    (4) Accumulating such dividends or values to the credit of the 
policy on the books of the insurer.
    (d) As used in this section:
    (1) The term blocked life insurance policy shall mean any life 
insurance policy or annuity contract, or contract supplementary thereto, 
in which there is a blocked interest.
    (2) Any interest of a national of a designated foreign country shall 
be deemed to be a ``blocked interest.''
    (3) The term servicing shall mean the following transactions with 
respect to any blocked life insurance policy:
    (i) The payment of premiums, the payment of loan interest, and the 
repayment of policy loans;
    (ii) The effecting by a life insurance company or other insurer of 
loans to an insured;
    (iii) The effecting on behalf of an insured of surrenders, 
conversions, modifications, and reinstatements; and
    (iv) The exercise or election by an insured of non-forfeiture 
options, optional modes of settlement, optional disposition of 
dividends, and other policy options and privileges not involving payment 
by the insurer.
    (4) The term transfer shall mean the change of beneficiary, or the 
assignment or pledge of the interest of an insured in any blocked life 
insurance policy subsequent to the issuance thereof.
    (e) This section does not authorize any transaction with respect to 
any blocked life insurance policy issued by a life insurance company or 
other insurer which is a national of a designated foreign country or 
which is not doing business or effecting insurance in the United States.



Sec. 500.527  Certain transactions with respect to United States patents, 

trademarks, and copyrights.

    (a) There are hereby authorized:
    (1) The filing in the United States Patent Office of applications 
for letters patent and for trademarks registration;
    (2) The making and filing in the United States Copyright Office of 
applications for registration or renewal of copyrights;
    (3) The prosecution in the United States Patent Office of 
applications for letters patent and for trademarks registration;
    (4) The receipt of letters patent or trademark registration 
certificates or copyright registration or renewal certificates granted 
pursuant to any such applications in which any designated national has 
at any time on or since the ``effective date'' had any interest.
    (b) This section further authorizes, subject to the terms and 
conditions prescribed in paragraphs (c) and (d) of this section, the 
execution and recording of any instrument recordable in the United 
States Patent Office or the United States Copyright Office which affects 
title to or grants any interest in, including licenses under, any

[[Page 31]]

United States letters patent, trademark registration, copyright or 
renewal thereof, or application therefor, in which a designated 
national, who is such a national solely by reason of his relationship to 
an occupied area, has at any time on or since the ``effective date'' had 
any interest, or which constitutes or evidences a transaction made by, 
or on behalf of, or pursuant to the direction of or with such a 
designated national, or if any of the parties to such instrument is such 
a designated national.
    (c) Any such instrument the recording or the execution and recording 
of which is authorized by paragraph (b) of this section shall be 
recorded in the United States Patent Office or in the United States 
Copyright Office within ninety days of the date of execution thereof or 
ninety days from the ``effective date'' whichever is the longer period, 
or within such further time as may be allowed by the Secretary of the 
Treasury. The person presenting such instrument for recording shall file 
therewith in the United States Patent Office or United States Copyright 
Office a statement that such instrument is being recorded in accordance 
with the provisions of this section.
    (d) Any such instrument the recording or the execution and recording 
of which is authorized by paragraph (b) of this section may be set aside 
by the Secretary of the Treasury at any time within a period of three 
years from the date of recording except that the Secretary of the 
Treasury may in his discretion reduce such period of time with respect 
to any such instrument after the recording thereof, and further, the 
patents, trademarks, interests, applications, or rights thereunder so 
transferred may be vested by the Secretary of the Treasury.
    (e) This section also authorizes the payment from blocked accounts 
or otherwise, of fees currently due to the United States Government in 
connection with any transactions authorized by this section.
    (f) This section further authorizes the payment from blocked 
accounts or otherwise of the reasonable and customary fees and charges 
currently due to attorneys or representatives within the United States 
in connection with the transactions referred to in paragraphs (a), (b), 
and (e) of this section, provided that such payment shall not exceed (1) 
$100 for the preparation, filing, and prosecution of any letters patent; 
or (2) $50 for the preparation, filing and prosecution of any 
application for a trademark registration; or (3) $25 for the securing 
and registration of any copyright; or (4) $35 for the preparation and 
filing of any amendment to a pending application for letters patent or 
for a trademark registration.
    (g) This section also authorizes the payment of a nominal 
consideration not exceeding one dollar, to any party to an instrument 
executed or recorded hereunder with respect to the property affected by 
such instrument, as long as such instrument is subject to being set 
aside in accordance with paragraph (d) of this section.



Sec. 500.528  Certain transactions with respect to blocked foreign patents, 

trademarks and copyrights authorized.

    (a) The following transactions by any person who is not a designated 
national are hereby authorized:
    (1) The filing and prosecution of any application for a blocked 
foreign patent, trademark or copyright, or for the renewal thereof;
    (2) The receipt of any blocked foreign patent, trademark or 
copyright;
    (3) The filing and prosecution of opposition or infringement 
proceedings with respect to any blocked foreign patent, trademark, or 
copyright, and the prosecution of a defense to any such proceedings;
    (4) The payment of fees currently due to the government of any 
foreign country, either directly or through an attorney or 
representative, in connection with any of the transactions authorized by 
paragraphs (a) (1), (2) and (3) of this section or for the maintenance 
of any blocked foreign patent, trademark or copyright; and
    (5) The payment of reasonable and customary fees currently due to 
attorneys or representatives in any foreign country incurred in 
connection with any of the transactions authorized by paragraphs (a) 
(1), (2), (3) or (4) of this section.

[[Page 32]]

    (b) Payments effected pursuant to the terms of paragraphs (a) (4) 
and (5) of this section may not be made from any blocked account.
    (c) As used in this section the term blocked foreign patent, 
trademark, or copyright shall mean any patent, petty patent, design 
patent, trademark or copyright issued by any foreign country, in which a 
designated foreign country or national thereof has an interest, 
including any patent, petty patent, design patent, trademark, or 
copyright issued by a designated foreign country.

[15 FR 9040, Dec. 19, 1950, as amended at 50 FR 27437, July 3, 1985]



Sec. 500.529  Powers of attorney.

    (a) No power of attorney, whether granted before or after the 
``effective date'' shall be invalid by reason of any of the provisions 
of this chapter with respect to any transaction licensed by or pursuant 
to the provisions of this chapter.
    (b) This section does not authorize any transaction pursuant to a 
power of attorney if such transaction is prohibited by Sec. 500.201 and 
is not otherwise licensed or authorized by or pursuant to this chapter.
    (c) This section does not authorize the creation of any power of 
attorney in favor of any person outside of the United States or the 
exportation from the United States of any power of attorney.



Sec. 500.530  Exportation of powers of attorney or instructions relating to 

certain types of transactions.

    (a) The exportation to any foreign country of powers of attorney or 
other instruments executed or issued by any person within the United 
States who is not a national of a designated foreign country, which are 
limited to authorizations or instructions to effect transactions 
incident to the following, are hereby authorized upon the condition 
prescribed in paragraph (b) of this section:
    (1) The representation of the interest of such person in a 
decedent's estate which is being administered in any designated foreign 
country and the collection of the distributive share of such person in 
such estate;
    (2) The maintenance, preservation, supervision or management of any 
property located in any designated foreign country in which such person 
has an interest; and
    (3) The conveyance, transfer, release, sale or other disposition of 
any property specified in paragraph (a)(1) of this section or any real 
estate or tangible personal property if the value thereof does not 
exceed the sum of $5,000 or its equivalent in foreign currency.
    (b) No instrument which authorizes the conveyance, transfer, 
release, sale or other disposition of any property may be exported under 
this section unless it contains an express stipulation that such 
authority may not be exercised if the value of such property exceeds the 
sum of $5,000 or the equivalent thereof in foreign currency.
    (c) As used in this section, the term ``tangible personal property'' 
shall not include cash, bullion, deposits, credits, securities, patents, 
trademarks, or copyrights.



Sec. 500.533  Exportations, reexportations, and incidental transactions.

    (a) All transactions ordinarily incident to the exportation of 
goods, software, or technology (including technical data) from the 
United States or reexportation of U.S.-origin goods, software, or 
technology from a foreign country to any person in a designated foreign 
country or to the government of a designated foreign country, are hereby 
authorized, provided that the exportation or reexportation is licensed 
or otherwise authorized by the Department of Commerce under the Export 
Administration Regulations (15 CFR parts 730-799).
    (b) The general license does not authorize the financing of any 
transaction from a blocked account.

    Note to Sec. 500.533: See note to Sec. 500.586(b).

[65 FR 38165, June 19, 2000]



Sec. 500.535  Exchange of certain securities.

    (a) Subject to the limitations and conditions of paragraph (b) of 
this section and notwithstanding Sec. 500.202 of this chapter, any 
banking institution within the United States is authorized

[[Page 33]]

to engage in the following transactions with respect to securities 
listed on a national securities exchange, including the withdrawal of 
such securities from blocked accounts:
    (1) Exchange of certificates necessitated by reason of changes in 
corporate name, par value or capitalization,
    (2) Exchanges of temporary for permanent certificates,
    (3) Exchanges or deposits under plans of reorganization,
    (4) Exchanges under refunding plans, or
    (5) Exchanges pursuant to conversion privileges accruing to 
securities held.
    (b) This section does not authorize the following transactions:
    (1) Any exchange of securities unless the new securities and other 
proceeds, if any, received are deposited in the blocked account in which 
the original securities were held immediately prior to the exchange.
    (2) Any exchange of securities registered in the name of any 
designated national, unless the new securities received are registered 
in the same name in which the securities exchanged were registered prior 
to the exchange.
    (3) Any exchange of securities issued by a person engaged in the 
business of offering, buying, selling, or otherwise dealing, or trading 
in securities, or evidences thereof, issued by another person.
    (4) Any transaction with respect to any security by an issuer or 
other obligor who is a designated national.

[16 FR 767, Jan. 27, 1951]



Sec. 500.536  Certain transactions with respect to merchandise affected by 

Sec. 500.204.

    (a) With respect to merchandise the importation of which is 
prohibited by Sec. 500.204, all Customs transactions are authorized 
except the following:
    (1) Entry for consumption (including any appraisement entry, any 
entry of goods imported in the mails, regardless of value, and any other 
informal entries);
    (2) Entry for immediate exportation;
    (3) Entry for transportation and exportation;
    (4) Withdrawal from warehouse;
    (5) Transfer or withdrawal from a foreign-trade zone; or
    (6) Manipulation or manufacture in a warehouse or in a foreign-trade 
zone.
    (b) Paragraph (a) of this section is intended solely to allow 
certain restricted disposition of merchandise which is imported without 
proper authorization. Paragraph (a) does not authorize the purchase or 
importation of any merchandise.
    (c) The purchase outside the United States for importation into the 
United States of merchandise specified in Sec. 500.204 (other than 
merchandise to which Sec. 500.204(a)(1) is applicable) and the 
importation of such merchandise into the United States (including 
transactions listed in paragraph (a) of this section) are authorized if 
there is presented to the collector of customs in connection with such 
importation the original of an appropriate certificate of origin as 
defined in paragraph (d) of this section and provided that the 
merchandise was shipped to the United States directly, or on a through 
bill of lading, from the country issuing the appropriate certificate of 
origin.
    (d) A certificate of origin is appropriate for the purposes of this 
section only if:
    (1) It is a certificate of origin the availability of which for 
Foreign Assets Control purposes has been announced in the Federal 
Register by the Office of Foreign Assets Control; and
    (2) It bears a statement by the issuing agency referring to the 
Foreign Assets Control Regulations and stating that the certificate has 
been issued under procedures agreed upon with the United States 
Government.

[18 FR 2080, Apr. 14, 1953, as amended at 19 FR 5483, Aug. 27, 1954; 20 
FR 1379, Mar. 8, 1955; 40 FR 7649, Feb. 21, 1975; 50 FR 5753, Feb. 12, 
1985; 54 FR 5232, Feb. 2, 1989]



Sec. 500.549  Proof of origin.

    Specific licenses for importation of goods the origin of which is 
North Korea, North Viet-Nam, Cambodia, or South Viet-Nam are generally 
not issued unless the applicant submits satisfactory documentary proof 
of the location of the goods outside North Korea, North Viet-Nam, 
Cambodia, or South Viet-Nam prior to the applicable

[[Page 34]]

effective date and of the absence of any interest of North Korea, North 
Viet-Nam, Cambodia, or South Viet-Nam in the goods at all times on or 
since that date. Since the type of documents which would constitute 
satisfactory proof varies depending upon the facts of the particular 
case, it is not possible to state in advance the type of documents 
required. However, it has been found that affidavits, statements, 
invoices, and other documents prepared by manufacturers, processors, 
sellers or shippers cannot be relied on and are therefore not by 
themselves accepted by the Office of Foreign Assets Control as 
satisfactory proof of origin. Independent corroborating documentary 
evidence, such as insurance documents, bills of lading, etc., may be 
accepted as satisfactory proof.

[41 FR 16555, Apr. 20, 1976]



Sec. 500.550  Transactions related to information and informational materials.

    (a) All financial and other transactions directly incident to the 
importation or exportation of information or informational materials as 
defined in Sec. 500.332 of this part are authorized.
    (b) Transactions relating to the dissemination of information or 
informational materials are authorized, including remittance of 
royalties paid for information or informational materials that are 
reproduced, translated, subtitled, or dubbed. This section does not 
authorize the remittance of royalties or other payments relating to 
works not yet in being, or for marketing and business consulting 
services, or artistic or other substantive alteration or enhancements to 
information or informational materials, as provided in Sec. 500.206(c).

[54 FR 5232, Feb. 2, 1989, as amended at 60 FR 8934, Feb. 16, 1995]



Sec. 500.551  Reimports.

    Specific licenses are issued for reimportation of merchandise 
subject to Sec. 500.204 on proof of the export of the identical 
merchandise from the United States. Persons planning to export any such 
merchandise for exhibition, repair, or for any other purpose should 
first ascertain that reimportation will be authorized. Generally, 
reimportation is authorized only if Customs Form 4455 was completed at 
the time of export.

[40 FR 7650, Feb. 21, 1975]



Sec. 500.552  Research samples.

    Specific licenses are issued for importation of commodities subject 
to Sec. 500.204 for bona fide research purposes in sample quantities 
only.

[40 FR 7650, Feb. 21, 1975]



Sec. 500.553  Prior contractual commitments not a basis for licensing.

    Specific licenses are not issued on the basis that an unlicensed 
firm commitment or payment has been made in connection with a 
transaction prohibited by Sec. 500.204. Contractual commitments to 
engage in transactions subject to the prohibitions in Sec. 500.204 
should not be made, unless the contract specifies that the transaction 
is authorized by a general license or that it is subject to the issuance 
of a specific Foreign Assets Control license.

[40 FR 7650, Feb. 21, 1975]



Sec. 500.554  Gifts of North Korean, North Vietnamese, Cambodian, or South 

Vietnamese origin.

    (a) Except as stated in paragraph (b) of this section and in Sec. 
500.550, specific licenses are not issued for the importation of North 
Korean, North Vietnamese, Cambodian, or South Vietnamese origin goods 
sent as gifts to persons in the United States or acquired abroad as 
gifts by persons entering the United States. However, licenses are 
issued, upon request, for the return of such goods to the donors in 
countries other than North Korea, North Viet-Nam, Cambodia, or South 
Viet-Nam.
    (b) Specific licenses are issued for the importation directly from 
North Korea, North Viet-Nam, Cambodia, or South Viet-Nam:
    (1) Of goods which are claimed by the importer to have been sent as 
a bona fide gift and
    (2) Of goods which are claimed to have been acquired in North Korea, 
North Viet-Nam, Cambodia, or South Viet-Nam as a bona fide gift, subject 
to the conditions that:

[[Page 35]]

    (i) The goods are of small value, and
    (ii) There is no reason to believe that there is, or has been since 
the applicable effective date, any direct or indirect financial or 
commercial benefit to North Korea, North Viet-Nam, Cambodia, or South 
Viet-Nam or nationals thereof from the importation.

[41 FR 16555, Apr. 20, 1976]



Sec. 500.556  Joint bank accounts.

    Specific licenses are issued unblocking a portion of or all of a 
blocked joint bank account where a non-blocked applicant claims 
beneficial ownership, as follows:
    (a) Joint bank account, without survivorship provisions. Specific 
licenses are issued unblocking only that amount with respect to which 
the applicant is able to prove beneficial ownership by documentary 
evidence independent of his assertions of interest.
    (b) Joint bank account, with survivorship provision. Specific 
licenses are issued unblocking an amount equivalent to that portion of 
the total amount to which the applicant would be entitled if the total 
were divided evenly among the persons in whose names the account is held 
(e.g. 50 percent where there are two names; 33\1/3\ percent where there 
are three names). Such licenses are issued on the basis of applicant's 
assertions of beneficial ownership interest without the requirement of 
independent evidence.

[40 FR 7650, Feb. 21, 1975]



Sec. 500.557  Proceeds of insurance policies.

    (a) Specific licenses are issued authorizing payment of the proceeds 
of blocked life insurance policies issued on the life of a North Korean, 
North Vietnamese, Cambodian, or South Vietnamese national, who died in 
one of those countries after the applicable effective date to certain 
beneficiaries licensed as unblocked nationals pursuant to Sec. 500.505, 
as follows:
    (1) The applicant is a permanent resident of the United States or 
the authorized trade territory and is not a specially designated 
national; and
    (2) No interest on the part of a designated national not licensed as 
an unblocked national exists in that portion of the funds to which the 
applicant is entitled.
    (b) Applications for specific licenses under this section must 
include all of the following information:
    (1) Proof of permanent residence in the United States or the 
authorized trade territory, to be established by the submission of 
documentation issued by relevant government authorities that must 
include at least two of the following documents:
    (i) Passport;
    (ii) Voter registration card;
    (iii) Permanent resident alien card; or
    (iv) National identity card.

Other documents tending to show residency, such as income tax returns, 
may also be submitted in support of government documentation, but will 
not suffice in and of themselves; and
    (2) Proof of entitlement under the insurance policy to be 
established by a copy of the policy and an affidavit from an appropriate 
officer of a recognized insurance company acknowledging the legitimacy 
of the beneficiary's claim and the amount of the payment.
    (c) Any document provided pursuant to this section that is not 
written in the English language must be accompanied by a translation 
into English, as well as a certification by the translator that he is 
not an interested party to the proceeding, is qualified to make the 
translation, and has made an accurate translation of the document in 
question.

[54 FR 5232, Feb. 2, 1989]



Sec. 500.558  Accounts of blocked partnerships.

    Specific licenses are issued unblocking partnerships established 
under the laws of North Korea, North Viet-Nam, Cambodia, or South Viet-
Nam, as follows:
    (a) Where all of the general partners and limited partners, if any, 
have emigrated from North Korea, North Viet-Nam, Cambodia, or South 
Viet-Nam and have established residence in the United States or in a 
country in the authorized trade territory, specific licenses are issued 
unblocking the assets of the partnership after deducting the total debt 
due creditors wherever located.

[[Page 36]]

    (b) Where one or more partners, whether general or limited, is in 
North Korea, North Viet-Nam, Cambodia, or South Viet-Nam (or elsewhere 
but still blocked), specific licenses are issued unblocking only the net 
pro rata shares of those partners who are resident in the United States 
or in a country in the authorized trade territory after deducting the 
total debt due creditors wherever located.
    (c) The issuance of licensees is conditioned on the applicant 
furnishing the following information:
    (1) Detailed information as to the status of all debts and other 
obligations of the blocked partnership, specifying the citizenship and 
residence of each creditor as of the applicable effective date, and as 
of the date of the application;
    (2) The current status of the blocked partnership e.g., liquidated, 
nationalized, inoperative, etc.;
    (3) A detailed description of all the partnership's assets, wherever 
located; and,
    (4) A list of all partners, indicating whether they are general, 
limited, etc. and giving their citizenship and residence as of the 
applicable effective date and as of the date of filing of the 
application.

[40 FR 7651, Feb. 21, 1975, as amended at 41 FR 16555, Apr. 20, 1976; 45 
FR 7225, Jan. 31, 1980]



Sec. 500.559  Accounts of North Korean, North Vietnamese, Cambodian or South 

Vietnamese sole proprietorships.

    Specific licenses are issued unblocking sole proprietorships 
established under the laws of North Korea, North Viet-Nam, Cambodia, or 
South Viet-Nam if the proprietor has emigrated from those countries and 
established residence in the United States or a country in the 
authorized trade territory. Such licenses do not unblock any 
indebtedness of the proprietorship due to persons in North Korea, North 
Viet-Nam, Cambodia, or South Viet-Nam.

[41 FR 16556, Apr. 20, 1976, as amended at 45 FR 7225, Jan. 31, 1980]



Sec. 500.560  Bank accounts of official representatives of foreign governments 

in North Korea, North Viet-Nam, Cambodia, or South Viet-Nam.

    Specific licenses are issued authorizing payments from accounts of 
official representatives of foreign governments in North Korea, North 
Viet-Nam, Cambodia, or South Viet-Nam for transactions which are not 
inconsistent with the purposes of any of the regulations in this 
chapter.

[41 FR 16556, Apr. 20, 1976, as amended at 45 FR 7225, Jan. 31, 1980]



Sec. 500.561  Transfers of abandoned property under State laws.

    (a) Except as stated in paragraphs (b) and (c) of this section, 
specific licenses are not issued authorizing the transfer of blocked 
property to State agencies under State laws governing abandoned 
property.
    (b) Specific licenses are issued authorizing the transfer of blocked 
property, pursuant to the laws of the State governing abandoned 
property, to the appropriate State agency. Provided, That the State's 
laws are custodial in nature, i.e., there is no permanent transfer of 
beneficial interest to the State. Licenses require the property to be 
held by the State in accounts which are identified as blocked under the 
regulations. A separate index of these blocked assets is required to be 
maintained by the State agency. The requirements of this section for 
identification and separate indexing of blocked assets apply to all 
blocked assets held by State agencies and any licenses issued prior to 
the effective date of this section hereby are amended by the 
incorporation of such requirements.
    (c) To be eligible for a specific license under this section, the 
state agency must demonstrate that it has the statutory authority under 
appropriate state law to comply with the requirements of Sec. 500.205. 
Such a showing shall include an opinion of the State Attorney General 
that such statutory authority exists.

[44 FR 11767, Mar. 2, 1979, as amended at 50 FR 27437, July 3, 1985]

[[Page 37]]



Sec. 500.562  [Reserved]



Sec. 500.563  Transactions incident to travel to and within North Korea.

    (a) All transactions of persons subject to U.S. jurisdiction, 
including travel service providers, ordinarily incident to travel to, 
from, and within North Korea and to maintenance within North Korea are 
authorized. This authorization extends to transactions with North Korean 
carriers and those involving group tours, payment of living expenses, 
the acquisition of goods in North Korea for personal use, and normal 
banking transactions involving currency drafts, charge, debit or credit 
cards, traveler's checks, or other financial instruments negotiated 
incident to personal travel.
    (b) The purchase of merchandise in North Korea by persons subject to 
U.S. jurisdiction, and importation as accompanied baggage, is limited to 
goods with a foreign market value not to exceed $100 per person for 
personal use only. Such merchandise may not be resold. This 
authorization may be used only once in every six consecutive months. As 
provided in Sec. 500.206 of this part, information and informational 
materials are exempt from this restriction.
    (c) This section does not authorize any debit to a blocked account.

[60 FR 8935, Feb. 16, 1995]



Sec. 500.564  [Reserved]



Sec. 500.565  Family remittances to nationals of Vietnam and Cambodia.

    (a) The remittances specified in this section are authorized to be 
made to any close relative of the remitter or of the remitter's spouse, 
provided that the relative is a national of Vietnam or Cambodia, is a 
resident of Vietnam, Cambodia, or a country to which private remittances 
to nationals are not generally prohibited pursuant to this chapter, and 
is not a specially designated national.
    (b) Remittances made pursuant to this section may be made only as 
follows:
    (1) For the support of the payee, or for the support of the payee 
and members of his household, in amounts not exceeding $300 in any 
consecutive 3-month period to any one payee or to any household; and
    (2) For the purpose of enabling the payee to emigrate from Vietnam 
or Cambodia, in an amount not exceeding $750, to be made only once to 
any one payee, provided that the payee is a resident of and within 
Vietnam or Cambodia.
    (c) The term close relative used with respect to any person means 
spouse, child, grandchild, parent, grandparent, uncle, aunt, brother, 
sister, nephew, niece or spouse, widow, or widower of any of the 
foregoing.
    (d) The term member of a household used with respect to any person 
means a close relative sharing a common dwelling with such person.
    (e) This section does not authorize remittances from blocked 
accounts.
    (f) Specific licenses may be issued authorizing a U.S. financial 
institution to establish direct correspondent banking relations with a 
Vietnamese or Cambodian bank or banks for the sole purpose of 
facilitating the remittance of funds authorized by this section.

[56 FR 20349, May 3, 1991]



Sec. 500.566  Certain transactions authorized on behalf of North Korean 

nationals incident to their travel and maintenance expenses.

    (a) Except as provided in paragraph (b) of this section, the 
following transactions are authorized by or on behalf of a national of 
North Korea who enters the United States on a visa issued by the 
Department of State:
    (1) All transactions ordinarily incident to travel to, from, and 
within the United States are authorized, including the importation into 
the United States of accompanied baggage for personal use;
    (2) All transactions ordinarily incident to travel and maintenance 
within the United States, including payment of living expenses and the 
acquisition of goods in the United States for personal use; and
    (3) Normal banking transactions involving foreign currency drafts, 
traveler's checks, or other instruments negotiated incident to personal 
travel in the United States,

[[Page 38]]

    (b) This section does not authorize any debit to a blocked account.

(Sec. 5, 40 Stat. 415, as amended, 50 U.S.C. App. 5(b); 75 Stat. 445, 22 
U.S.C. 2370(a); Proc. 3447, 27 FR 1065, 3 CFR, 1959-1963 Comp.; E.O. 
9193, 7 FR 5205, 3 CFR, Cum. Supp., p. 1174; E.O. 9989, 13 FR 4891, 3 
CFR, 1943-1948 Comp., p. 748)

[49 FR 24994, June 19, 1984, as amended at 55 FR 31179, Aug. 1, 1990; 58 
FR 63084, Nov. 30, 1993; 60 FR 8935, Feb. 16, 1995]



Sec. 500.567  U.S. assets of certain designated country corporations.

    (a) Specific licenses may be issued unblocking the net pro rata 
shares of individuals who are permanent residents of the United States 
or the authorized trade territory, and who are not specially designated 
nationals, in U.S.-located assets of corporations formed under the laws 
of countries designated in this part, after deducting the total debt due 
creditors for claims that accrued prior to the effectiveness date, in 
cases where all of the following conditions are met:
    (1) The assets were owned by, or accrued to, the corporation before 
the effective date of the regulations;
    (2) The corporation did not carry on substantial business in the 
designated country under the management or control of the applicant(s) 
after the effective date;
    (3) In cases where the blocked assets purportedly have been 
nationalized by the designated country, compensation has not been paid 
to the applicant(s).
    (b) Applications for specific licenses under this section must 
include all of the following information:
    (1) A detailed description of the corporation, its by-laws, 
activities, distribution of shares, and its current status;
    (2) Proof of the permanent residence of the applicant(s) in the 
United States or the authorized trade territory.
    (3) A list of all officers, directors and shareholders of the 
corporation, giving the citizenship and the residence of each person as 
of the date of application;
    (4) A detailed description of all of the assets of the corporation, 
wherever located, including a statement of all known encumbrances or 
claims against them; and
    (5) Detailed information regarding the status of all debts and other 
obligations of the corporation, specifying the citizenship and residence 
of each creditor on the effective date and on the date of the 
application.

[50 FR 33720, Aug. 21, 1985]



Sec. 500.568  U.S. assets of blocked decedents.

    (a) Specific licenses may be issued unblocking the net pro rata 
shares of certain heirs of designated nationals in U.S.-located estate 
assets, after deducting the total debt due creditors for claims that 
accrued prior to the effective date, in cases where all of the following 
conditions are met:
    (1) The applicant is a permanent resident of the United States or 
the authorized trade territory and is not a specially designated 
national; and
    (2) No interest on the part of a designated national not licensed as 
an unblocked national pursuant to Sec. 500.505 exists in that portion 
of the assets to which the applicant is entitled.
    (b) Applications for specific licenses under this section must 
include all of the following information:
    (1) Proof of permanent residence in the United States or the 
authorized trade territory, to be established by the submission of 
documentation issued by relevant government authorities that must 
include at least two of the following documents:
    (i) Passport;
    (ii) Voter registration card;
    (iii) Permanent resident alien card; or
    (iv) National identity card. Other documents tending to show 
residency, such as income tax returns, may also be submitted in support 
of government documentation, but will not suffice in and of themselves;
    (2) Proof of death of the designated national to be established by a 
death certificate;
    (3) Proof of heirship, to be established by a copy of the decedent's 
duly executed will certified by a probate court, a court decree 
determining the heirs, or, failing the availability of such documents, 
copies of certificates establishing the relationship of the heir to the 
deceased, e.g., birth or marriage certificates; and

[[Page 39]]

    (4) A description of the assets involved, including interest due on 
blocked funds since April 1, 1979, the name and address of the 
institution in which the assets are held, the account or safe deposit 
box number, the name in which the assets are held and a statement of all 
known encumbrances or claims against them.
    (c) Any document provided pursuant to this section that is not 
written in the English language must be accompanied by a translation 
into English, as well as a certification by the translator that he is 
not an interested party to the proceeding, is qualified to make the 
translation, and has made an accurate translation of the document in 
question.

[54 FR 5232, Feb. 2, 1989]



Sec. 500.569  [Reserved]



Sec. 500.570  Cambodian property unblocked.

    All transactions otherwise prohibited by this part which involve 
property in which Cambodia or a national thereof has an interest, other 
than property blocked in the name of the Exchange Support Fund for the 
Khmer Republic, are authorized.

[59 FR 60559, Nov. 25, 1994]



Sec. 500.571  Transactions related to telecommunications authorized.

    All transactions of U.S. common carriers incident to the receipt or 
transmission of telecommunications involving North Korea are authorized.

    Note: Exports or reexports to North Korea of goods and technical 
data, or of the direct products of technical data (regardless of U.S. 
content), not prohibited by this part may require authorization from the 
U.S. Department of Commerce pursuant to the Export Administration 
Regulations, 15 CFR parts 768-799.

[57 FR 58986, Dec. 14, 1992, as amended at 60 FR 8935, Feb. 16, 1995]



Sec. 500.572  Humanitarian projects authorized.

    (a) All transactions by non-governmental organizations incident to 
carrying out humanitarian projects in Vietnam are authorized. For 
purposes of this section, the term ``non-governmental organization'' 
shall mean any private voluntary organization accorded tax exempt status 
under Sec. 501(c)(3) of the Internal Revenue Code, as well as any other 
organization engaged in voluntary charitable assistance activities that 
receives funding from private sources, including but not limited to 
accredited degree-granting institutes of education, private foundations 
and research institutions.
    (b) The non-governmental organization carrying out humanitarian 
projects in Vietnam pursuant to this authorization shall file an initial 
report within 10 business days after the formal commencement of U.S. 
activities on the project with the Office of Foreign Assets Control, 
Compliance Division, U.S. Department of the Treasury, 1500 Pennsylvania 
Avenue NW.--Annex, Washington, DC 20220, stating:
    (1) The name, address, and telephone number of the non-governmental 
organization, and the officer charged with supervision of the project in 
Vietnam; and
    (2) The nature, scope, purpose, and location of the project in 
Vietnam.

[57 FR 20766, May 15, 1992]



Sec. 500.573  Certain donations of funds and goods to meet basic human needs 

authorized.

    (a) The donation of funds for the purpose of contributing to the 
provision of humanitarian assistance to victims of natural disasters in 
North Korea is authorized, provided that such donations may only be made 
through the United Nations, related UN programs and specialized 
agencies, the American Red Cross and the International Committee of the 
Red Cross.
    (b) With respect to transactions not within the scope of the general 
license contained in Sec. 500.533 of this part, all transactions 
incident to the donation to North Korea of goods to meet basic human 
needs are authorized. For purposes of this section, goods to meet basic 
human needs shall be defined by reference to the Humanitarian License 
Procedure set forth in 15 CFR 773.5 (c) and (d) and supplement no. 7 to 
part 773 of the Export Administration Regulations.

    Note: Exports from the United States to North Korea or reexports to 
North Korea of

[[Page 40]]

U.S.-origin goods, or foreign goods containing U.S.-origin content or 
produced from U.S.-origin technical data, to meet basic human needs in 
North Korea may require authorization from the U.S. Department of 
Commerce.

[61 FR 9344, Mar. 8, 1996]



Sec. 500.574  Executory contracts and related transactions authorized.

    (a) Executory contracts. (1) Persons subject to U.S. jurisdiction 
are authorized to enter into executory contracts with Vietnam or 
Vietnamese nationals, or executory contracts in which Vietnam or a 
Vietnamese national has an interest, the performance of which is 
contingent upon the lifting or modification of the embargo on Vietnam to 
permit such performance.
    (2) Within 10 business days of signing an executory contract 
authorized pursuant to paragraph (a) of this section, the person subject 
to U.S. jurisdiction must file a copy of the contract with the Office of 
Foreign Assets Control, Compliance Programs Division, 1500 Pennsylvania 
Avenue, NW.--Annex 2131, Washington, DC 20220, referencing the fact that 
the contract was entered into pursuant to 31 CFR 500.574(a).
    (3) Specific licenses will be issued on a case-by-case basis to 
authorize financial transactions such as the payment of deposits, 
earnest money, signing bonuses, and administrative and registration fees 
incident to the signature of specific executory contracts authorized 
pursuant to paragraph (a)(1) of this section. The number of the 
pertinent license must be referenced in all funds transfers and other 
banking transactions through banks subject to U.S. jurisdiction made in 
connection with the contract.
    (b) Preparatory transactions. (1) Specific licenses will be issued 
authorizing commercial and financial transactions necessary to obtaining 
and preparing to perform executory contracts authorized pursuant to 
paragraph (a)(1) of this section. These commercial and financial 
transactions include:
    (i) Opening offices in Vietnam;
    (ii) Hiring staff;
    (iii) Writing and designing plans;
    (iv) Carrying out preliminary feasibility studies and engineering 
and technical surveys; and
    (v) Import, export, and service transactions incident to the 
foregoing.
    (2) Specific licenses issued pursuant to paragraph (b)(1) of this 
section will, to the extent feasible, encompass commercial and financial 
transactions incident to the licensed commercial purpose or activity.

    Note: Exports or reexports to Vietnam of goods and technical data, 
or of the direct products of technical data (regardless of U.S. 
content), in connection with activities licensed by FAC may require 
authorization from the U.S. Department of Commerce pursuant to the 
Export Administration Regulations, 15 CFR parts 768-799.

    (3) The number of the pertinent license must be referenced in all 
funds transfers and other banking transactions through banks subject to 
U.S. jurisdiction in connection with preparatory transactions under 
paragraphs (b) (1) and (2) of this section.

[57 FR 62230, Dec. 30, 1992]



Sec. 500.575  Certain services to Vietnamese nationals authorized.

    (a) Specific licenses may be issued on a case-by-case basis for the 
provision in the United States or a third country of business 
orientation or training services to Vietnamese nationals. The 
orientation or training program may pertain only to industrial or 
commercial processes, or to specific equipment and related technical 
data both of which are eligible for export under a general license to 
Country Group Y, as set forth in Supplement No. 1 to part 770 of the 
Export Administration Regulations, 15 CFR parts 768-799. Licenses issued 
pursuant to this section will not authorize Vietnamese participation in 
orientation and training programs with respect to specific equipment and 
related technical data that may not be exported under a general license 
to Country Group Y pursuant to the Export Administration Regulations. 
Training programs may involve instruction on the maintenance or 
operation of a particular product, but may not involve instruction in a 
product's design or manufacture.

    Note: The transfer of mass-market software and certain technical 
data eligible for export to most destinations under General License GTDU 
to Vietnamese nationals may require additional authorization from the

[[Page 41]]

U.S. Department of Commerce pursuant to the Export Administration 
Regulations.

    (b) Transactions directly incident to the travel and maintenance 
expenses of the Vietnamese nationals for purposes of orientation or 
training programs are authorized pursuant to Sec. 500.566. Payment of 
salaries or other fees to Vietnamese nationals participating in 
orientation or training programs is not authorized.
    (c) Applications for specific licenses should be submitted by the 
orientation or training program sponsor and should include a full 
description of the program to be offered, including the participants, 
the identity of their employers, and the capacities in which the 
participants are employed.

[58 FR 63084, Nov. 30, 1993]



Sec. 500.576  Authorization of transactions concerning certain development 

projects in Vietnam.

    (a) All transactions by persons subject to U.S. jurisdiction in 
connection with participation in development projects in Vietnam 
formally proposed or approved for execution, funding or sponsorship by 
the international institutions listed in appendix A to this part 
(``Qualified Projects'') are authorized. For purposes of this section, 
Qualified Projects include investment projects, structural adjustment 
lending, sector adjustment lending, International Monetary Fund balance-
of-payments support, and general development assistance including 
grants, technical assistance, and loans.
    (b) Persons subject to U.S. jurisdiction may provide both goods and 
services to any party contracting to participate in a Qualified Project 
pursuant to the authorization contained in this section.
    (1) Services may include financial, legal, consulting, insurance, 
shipping and other services.
    (2) Persons subject to U.S jurisdiction may participate in Qualified 
Projects as suppliers, contractors, or subcontractors, and through joint 
ventures with third-country nationals and Vietnamese nationals.
    (3) Persons subject to U.S. jurisdiction may finance, or guarantee 
the performance of, activities of U.S. participants in a Qualified 
Project; co-financing of or lending to the Qualified Project itself by a 
person subject to U.S. jurisdiction may be authorized by specific 
license pursuant to Sec. 500.801.

Illustrative examples of transactions covered by this section are set 
forth in Sec. 500.413.
    (c) Except as otherwise authorized, persons subject to U.S. 
jurisdiction may not participate in development projects in Vietnam that 
are bilaterally funded and administered, or in projects or feasibility 
studies prior to formal proposal or approval by a qualified 
international institution for its involvement in the project or study. 
If a qualified international institution formally proposes but 
thereafter rejects, terminates, or abandons a project, the project shall 
no longer constitute a Qualified Project for purposes of this section. 
Except as otherwise specifically authorized pursuant to this part, 
persons subject to U.S. jurisdiction may not enter into any new 
commitments with respect to the project after the date of such 
rejection, termination, or abandonment. In addition, this section does 
not authorize:
    (1) The importation of Vietnamese-origin goods into the United 
States, except as required to honor service or warranty contracts 
associated with Qualified Projects;
    (2) Offshore transactions of persons subject to U.S. jurisdiction 
involving the sale of Vietnamese-origin goods between Vietnam and third 
countries, or among third countries;
    (3) Flights into or out of Vietnam by aircraft owned or controlled 
by persons subject to U.S. jurisdiction, except when such persons 
transport, on aircraft they own, only passengers or cargo associated 
with a Qualified Project in which such persons are participating 
pursuant to this section;
    (4) The use in Vietnam of credit cards issued by a U.S. banking 
institution; or
    (5) A debit to a blocked account.

    Example: A Vietnamese highway project feasibility study financed by 
a third-country development agency is not a Qualified Project for 
purposes of this section. However, the feasibility study would be a 
Qualified Project, notwithstanding the bilateral funding, if the 
International Development Association had formally proposed the highway 
project as one under consideration for

[[Page 42]]

funding in its Monthly Operational Summary of World Bank and IDA 
Proposed Projects.

    (d) Within 10 business days after entering into an agreement for 
goods, services, financing, investment, or other participation in or 
related to a Qualified Project, the person(s) subject to U.S. 
jurisdiction entering into the agreement must register with the Office 
of Foreign Assets Control, Compliance Division, U.S. Department of the 
Treasury, 1500 Pennsylvania Avenue, NW.--Annex, Washington, DC 20220. 
The registration shall reference the fact that the agreement was entered 
into pursuant to 31 CFR 500.576(a), and shall provide:
    (1) The name, address, telephone and facsimile numbers, and 
nationality of the person(s) subject to U.S. jurisdiction;
    (2) If the reporting party is not an individual, the name, address, 
telephone and facsimile numbers of the individual to contact for further 
information,
    (3) The name of the international institution listed in appendix A 
formally proposing, approving, executing, funding, or sponsoring the 
project;
    (4) The name and a brief description of the project in Vietnam (with 
any contract, project, request for bid, or other identifying number);
    (5) A brief description of the activity covered by the agreement, 
and the contract value; and
    (6) If the reporting party is a subcontractor, the prime 
contractor's name, address, and nationality, and those of all 
intermediate subcontractors.

Registration is not required of agencies of the Federal Government 
participating in Qualified Projects.
    (e) Upon registration meeting the requirements of paragraph (d) of 
this section, the Office of Foreign Assets Control will assign a 
registration number to the contract involved. This number should be 
referenced in all funds transfers and other banking transactions that 
take place through banks subject to U.S. jurisdiction, and in all U.S. 
export documents, in connection with the Qualified Project in Vietnam in 
order to avoid the blocking of such funds and to facilitate export 
transactions.
    (f) Annual reports must be filed with the Office of Foreign Assets 
Control on the anniversary of the issuance of a contract registration 
number, briefly describing the status of the project and any material 
changes in the information originally provided.

    Note to Sec. 500.576: Exports or reexports to Vietnam of goods and 
technical data, or of the direct products of technical data (regardless 
of U.S. content), in connection with activities licensed by FAC may 
require authorization from the U.S. Department of Commerce pursuant to 
the Export Administration Regulations, 15 CFR parts 768-799.

[58 FR 68531, Dec. 28, 1993]



Sec. 500.577  Authorization of bank transactions with respect to Vietnam by 

certain international organizations.

    All transactions by banking institutions subject to U.S. 
jurisdiction incidental to the processing of transactions of the 
international institutions identified in appendix A with reference to 
Vietnam are authorized.

    Example: A transfer to Vietnam or a Vietnamese national of funds 
from the U.S. account of a qualified international institution listed in 
appendix A to this part, for a program, rent or salary payment, is not 
blocked under this part.

[58 FR 68532, Dec. 28, 1993]



Sec. 500.578  Vietnamese property unblocked.

    All transactions otherwise prohibited by this part which involve 
property in which a designated national of Vietnam has an interest are 
authorized.

[60 FR 12886, Mar. 9, 1995]



Sec. 500.579  Authorization for release of certain blocked transfers by 

banking institutions subject to U.S. jurisdiction.

    (a) Banking institutions subject to the jurisdiction of the United 
States are authorized to unblock and return to the remitting party funds 
that were blocked pursuant to this part because of an interest of 
Vietnam or a Vietnamese national and that came into their possession or 
control by wire transfer or check remittance received after December 31, 
1989, provided that no funds are released to the Government of Vietnam 
or any person in Vietnam.
    (b) Specific licenses may be issued authorizing the return to the 
remitting

[[Page 43]]

party of funds that were blocked by banking institutions subject to the 
jurisdiction of the United States pursuant to this part because of an 
interest of North Korea or a national thereof and that came into the 
banking institution's possession or control by wire transfer or check 
remittance, provided that no funds are released to the Government of 
North Korea, any entity controlled by the Government of North Korea, or 
any person located in, controlled from, or organized under the laws of 
North Korea.

[59 FR 26602, May 23, 1994, as amended at 60 FR 8935, Feb. 16, 1995]



Sec. 500.580  Authorization of U.S. dollar clearing transactions involving 

North Korea.

    Banking institutions organized under the laws of or located in the 
United States are authorized to process the transfer of funds in which 
North Korea or a national thereof has an interest. Persons subject to 
U.S. jurisdiction who are originators or ultimate beneficiaries of funds 
transfers, however, including U.S. banking institutions that are 
themselves originators or beneficiaries, may not initiate or receive 
such transfers if the underlying transactions to which they relate are 
prohibited pursuant to this part.

[60 FR 8935, Feb. 16, 1995]



Sec. 500.581  Financial transactions related to diplomatic missions 

authorized.

    All financial transactions related to activities of North Korean 
diplomatic missions in the United States and U.S. diplomatic missions in 
North Korea are authorized, with the exception of transactions involving 
the North Korean mission to the United Nations in New York, which are 
subject to approval by specific license.

[60 FR 8935, Feb. 16, 1995]



Sec. 500.582  Importation of North Korean-origin magnesite and magnesia.

    Specific licenses may be issued authorizing the importation into the 
United States of North Korean-origin magnesite or magnesia.

[60 FR 8935, Feb. 16, 1995]



Sec. 500.583  News organization offices.

    (a) Specific licenses may be issued authorizing all transactions 
necessary for the establishment and operation of news bureaus in North 
Korea by U.S. organizations whose primary purpose is the gathering and 
dissemination of news to the general public.
    (b) Transactions that will be authorized include but are not limited 
to those incident to the following:
    (1) Leasing office space and securing related goods and services;
    (2) Hiring North Korean nationals to serve as support staff;
    (3) Purchasing North Korean-origin goods for use in the operation of 
the office; and
    (4) Paying fees related to the operation of the office in North 
Korea.
    (c) Specific licenses may be issued authorizing transactions 
necessary for the establishment and operation of news bureaus in the 
United States by North Korean organizations whose primary purpose is the 
gathering and dissemination of news to the general public.
    (d) The number assigned to a specific license issued pursuant to 
this section should be referenced in all import documents, and in all 
funds transfers and other banking transactions through banking 
institutions organized or located in the United States, in connection 
with the licensed transactions to avoid the blocking of goods imported 
from North Korea and the interruption of the financial transactions with 
North Korea.

[60 FR 8935, Feb. 16, 1995]



Sec. 500.584  Energy sector projects in North Korea.

    Specific licenses may be issued to permit persons subject to U.S. 
jurisdiction to participate in certain energy sector projects in North 
Korea in connection with that country's transition to light-water 
reactor (``LWR'') power plants. Transactions that may be licensed 
include those related to LWR power plant design, site preparation, 
excavation, delivery of essential nonnuclear components including 
turbines and generators, building construction, the disposition of 
spentnuclear fuel, and the provision of heavy oil to North

[[Page 44]]

Korea for heating and electricity generation pending completion of the 
first LWR unit.

[60 FR 8935, Feb. 16, 1995]



Sec. 500.585  Payments for services rendered by North Korea to United States \

aircraft authorized.

    Payments to North Korea of charges for services rendered by the 
Government of North Korea in connection with the overflight of North 
Korea or emergency landing in North Korea by aircraft owned or 
controlled by a person subject to the jurisdiction of the United States 
or registered in the United States are authorized.

[62 FR 17548, Apr. 10, 1997]



Sec. 500.586  Authorization of new transactions concerning certain North 

Korean property.

    (a) Subject to the limitations in paragraph (b) of this section, 
transactions in which North Korea or a national thereof has an interest 
are authorized where:
    (1) The property comes within the jurisdiction of the United States 
or into the control or possession of a person subject to the 
jurisdiction of the United States on or after June 19, 2000; or
    (2) The interest in the property of North Korea or a North Korean 
national arises on or after June 19, 2000.
    (b)(1) Unless otherwise authorized by the Office of Foreign Assets 
Control, all property and interests in property of North Korea or its 
nationals that were blocked pursuant to subpart B of this part as of 
June 16, 2000, remain blocked and subject to the prohibitions and 
requirements of this part;
    (2)(i) The importation of products into the United States from North 
Korea requires approval from the Office of Foreign Assets Control. The 
person seeking to import products into the United States must provide 
information relevant to the determination whether the product was 
produced by
    (A) A foreign person whose actions triggered import sanctions under 
sections 73 and 74 of the Arms Export Control Act;
    (B) An activity of the government of North Korea relating to the 
development or production of any missile equipment or technology; or
    (C) An activity of the government of North Korea affecting the 
development or production of electronics, space systems or equipment, 
and military aircraft.
    (ii) Those seeking to import products from North Korea into the 
United States must submit all available information satisfying the 
requirements of paragraph (b)(2)(i) of this section; the name, address, 
telephone number, facsimile number, and e-mail address of the importer; 
a description of the product to be imported, including quantity and 
cost; the name and address of the producer of the product; the name of 
the location where the product was produced; and the name and address of 
the North Korean exporter. Requests for import review should be 
submitted by mail to North Korea Unit, Office of Foreign Assets Control, 
U.S. Department of the Treasury, 1500 Pennsylvania Avenue, NW, Annex, 
Washington, DC 20220. Upon review of the submitted information, the 
Office of Foreign Assets Control will issue a letter indicating the 
results of the review to the person seeking to import the product.
    (3) Except as authorized by Sec. 500.580 or unless otherwise 
authorized by the Office of Foreign Assets Control, persons subject to 
the jurisdiction of the United States are prohibited from engaging in 
any transfer from the government of North Korea:
    (i) Constituting a donation to a person subject to the jurisdiction 
of the United States; or
    (ii) With respect to which a person subject to the jurisdiction of 
the United States knows (including knowledge based on advice from an 
agent of the United States Government), or has reasonable cause to 
believe, that the transfer poses a risk of furthering terrorist acts in 
the United States.
    (4) This section does not affect any open enforcement action 
initiated by the U.S. government prior to June 19, 2000 or any seizure, 
forfeiture, penalty, or liquidated damages case that is considered 
closed in accordance with U.S. Customs or other agency regulations. This 
section also does not authorize the importation into the United States

[[Page 45]]

of goods that are under seizure or detention by U.S. Customs officials 
pursuant to Customs laws or other applicable provision of law, until any 
applicable penalties, charges, duties or other conditions are satisfied. 
This section does not authorize importation into the United States of 
goods for which forfeiture proceedings have been commenced or of goods 
that have been forfeited to the U.S. Government, other than though U.S. 
Customs disposition by selling at auction.
    (5)(i) Effective May 8, 2006, United States persons are prohibited 
from owning, leasing, operating, or insuring any vessel flagged by North 
Korea.
    (ii) Effective February 2, 2007, United States persons are 
prohibited from registering vessels in North Korea, or from otherwise 
obtaining authorization for a vessel to fly the North Korean flag.
    (iii) For purposes of this section, the term United States person 
means any United States citizen, permanent resident alien, entity 
organized under the laws of the United States or any jurisdiction within 
the United States (including foreign branches), or any person in the 
United States.

    Note to Sec. 500.586: The exportation and reexportation of items 
may be subject to license application requirements under regulations 
administered by other federal agencies (see e.g., the Export 
Administration Regulations administered by the Department of Commerce). 
It should also be noted that the shipment of strategic goods from a 
foreign country to North Korea by persons subject to the jurisdiction of 
the United States remains prohibited by 31 CFR part 505. The application 
requirements for a specific license relating to such goods are found in 
31 CFR 501.801.

[65 FR 38165, June 19, 2000, as amended at 71 FR 17346, Apr. 6, 2006; 72 
FR 4961, Feb. 2, 2007]



                            Subpart F_Reports



Sec. 500.601  Records and reports.

    For provisions relating to records and reports, see subpart C of 
part 501 of this chapter.

[62 FR 45101, Aug. 25, 1997]



Sec. 500.602  Reporting of claims of U.S. nationals against North Korea.

    (a) Requirement for reports. Reports are required to be filed on or 
before March 9, 1998, in the manner prescribed in this section, with 
respect to all outstanding claims held by United States nationals 
against the Government of North Korea or any North Korean government 
entity.
    (b) Who must report. A report must be submitted by each U.S. 
national having a claim outstanding against the Government of North 
Korea or any North Korean government entity. Reports should be submitted 
only by persons who were U.S. citizens or entities organized under the 
laws of a U.S. jurisdiction on the date of the loss.
    (c) How to register. U.S. nationals filing reports of claims must 
submit a letter containing the information required by paragraph (f) of 
this section. The letter must be sent to the Blocked Assets Division, 
Office of Foreign Assets Control, Department of the Treasury, 1500 
Pennsylvania Ave., NW.--Annex, Washington, DC 20220, to arrive by March 
9, 1998. A copy of the submission should be kept by the claimant.
    (d) Certification. Every report shall bear the signature of the 
claimant or a person authorized by the claimant to sign the report. The 
signature will certify that, to the best of the reporter's knowledge, 
the statements set forth in the report, including any papers attached to 
or filed with the report, are true and accurate, and that all material 
facts in connection with the report have been set forth.
    (e) Confidentiality of reports. Reports submitted pursuant to this 
section are regarded as privileged and confidential.
    (f) Contents of report. The report must contain the following 
information (with responses numbered to correspond with the numbers used 
below):
    (1) Identification of claimant.
    (i) Claimant's Legal Name.
    (ii) Claimant's Address.
    (iii) Telephone number of individual to contact regarding the 
report.
    (iv) If claimant is a naturalized citizen of the United States, 
state the place and date of naturalization.
    (v) If claimant is a corporation or business, state the place of 
incorporation and principal place of business.
    (2) Information concerning claim.
    (i) Amount of loss in U.S. dollars (indicate exchange or interest 
rates and

[[Page 46]]

relevant dates utilized for any currency translation or interest 
calculation).
    (ii) Describe the circumstances of the loss. Include the date of the 
loss and a description of the property, business, obligation, injury or 
other damage which is the subject of the claim.
    (g) Definition of United States national. For purposes of this 
section, the term United States national or U.S. national means:
    (1) An individual who is a citizen of the United States;
    (2) An individual who, though not a citizen of the United States, 
owes permanent allegiance to the United States, and is not an alien; or
    (3) A partnership, corporation, or other juridical entity organized 
under the laws of the United States or any jurisdiction within the 
United States.
    (h) Definition of the Government of North Korea; North Korean 
government entity. For purposes of this section:
    (1) The term Government of North Korea means the government of the 
territory of Korea north of the 38th parallel of north latitude, as well 
as any political subdivision, agency, or instrumentality thereof, or any 
territory, dependency, colony, protectorate, mandate, dominion, 
possession, or place subject to the jurisdiction thereof as of the 
``effective date.''
    (2) The term North Korean government entity means any corporation, 
partnership, or association, or other organization, wherever organized 
or doing business, that is owned or controlled by the Government of 
North Korea.

[62 FR 64721, Dec. 9, 1997]



                           Subpart G_Penalties

    Source: 63 FR 10324, Mar. 3, 1998, unless otherwise noted.



Sec. 500.701  Penalties.

    For provisions relating to penalties, see part 501, subpart D, of 
this chapter.

[68 FR 53641, Sept. 11, 2003]



                          Subpart H_Procedures



Sec. 500.801  Procedures.

    For license application procedures and procedures relating to 
amendments, modifications, or revocations of licenses; administrative 
decisions; rulemaking; and requests for documents pursuant to the 
Freedom of Information and Privacy Acts (5 U.S.C. 552 and 552a), see 
part 501, subpart E, of this chapter.

[62 FR 45101, Aug. 25, 1997, as amended at 68 FR 53641, Sept. 11, 2003]



Sec. 500.802  Delegation by the Secretary of the Treasury.

    Any action which the Secretary of the Treasury is authorized to take 
pursuant to the Trading With the Enemy Act may be taken by any person to 
whom the Secretary of the Treasury has delegated authority so to act.

[15 FR 9040, Dec. 19, 1950. Redesignated at 62 FR 45101, Aug. 25, 1997]



Sec. 500.803  Customs procedures; merchandise specified in Sec. 500.204.

    (a) With respect to merchandise specified in Sec. 500.204, whether 
or not such merchandise has been imported into the United States, 
directors of customs shall not accept or allow any:
    (1) Entry for consumption (including any appraisement entry, any 
entry of goods imported in the mails, regardless of value, or any other 
informal entries);
    (2) Entry for immediate exportation;
    (3) Entry for transportation and exportation;
    (4) Withdrawal from warehouse;
    (5) Transfer or withdrawal from a foreign-trade zone; or
    (6) Manipulation or manufacture in a warehouse or in a foreign-trade 
zone, until either;
    (i) A specific license pursuant to this chapter is presented; or,
    (ii) Instructions from the Foreign Assets Control, authorizing the 
transaction are received.
    (b) Whenever a specific license is presented to a director of 
customs in accordance with this section, one additional legible copy of 
the entry, withdrawal or other appropriate document with respect to the 
merchandise involved shall be filed with the director of customs at the 
port where the transaction is to take place. Each copy of any such 
entry, withdrawal or other appropriate document, including the 
additional copy, shall bear plainly on

[[Page 47]]

its face the number of the license pursuant to which it is filed. The 
original copy of the specific license shall be presented to the director 
in respect to each such transaction and shall bear a notation in ink by 
the licensee or person presenting the license showing the description, 
quantity, and value of the merchandise to be entered, withdrawn or 
otherwise dealt with. This notation should be so placed and so written 
that there will exist no possibility of confusing it with anything 
placed on the license at the time of its issuance. If the license in 
fact authorizes the entry, withdrawal or other transaction with regard 
to the merchandise, the director, or other authorized customs employee, 
shall verify the notation by signing or initialing it after first 
assuring himself that it accurately describes the merchandise it 
purports to represent. The license shall thereafter be returned to the 
person presenting it and the additional copy of the entry, withdrawal or 
other appropriate document shall be forwarded by the director to the 
Office of Foreign Assets Control, Treasury Department, Washington, DC 
20220.
    (c) Whenever a person shall present an entry, withdrawal or other 
appropriate document affected by this section and shall assert that no 
specific Foreign Assets Control license is required in connection 
therewith, the director of customs shall withhold action thereon and 
shall advise such person to communicate directly with the Office of 
Foreign Assets Control to request that instructions be issued to the 
director to authorize him to take action with regard thereto.

[40 FR 7651, Feb. 21, 1975, as amended at 57 FR 1387, Jan. 14, 1992. 
Redesignated at 62 FR 45101, Aug. 25, 1997]



                   Subpart I_Miscellaneous Provisions



Sec. 500.901  Paperwork Reduction Act notice.

    For approval by the Office of Management and Budget (``OMB'') under 
the Paperwork Reduction Act of information collections relating to 
recordkeeping and reporting requirements, to licensing procedures 
(including those pursuant to statements of licensing policy), and to 
other procedures, see Sec. 501.901 of this chapter. An agency may not 
conduct or sponsor, and a person is not required to respond to, a 
collection of information unless it displays a valid control number 
assigned by OMB. The information collection requirement in Sec. 500.602 
has been approved by the Office of Management and Budget and assigned 
control number 1505-0160.

[62 FR 45101, Aug. 25, 1997, as amended at 62 FR 64722, Dec. 9, 1997]



   Sec. Appendix A to Part 500--Qualifying International Institutions

Asian Development Bank (ADB)
Food and Agricultural Organization (FAO)
International Bank for Reconstruction and Development (IBRD, the ``World 
Bank'')
International Civil Aviation Organization (ICAO)
International Development Association (IDA)
International Finance Corporation (IFC)
International Fund for Agricultural Development (IFAD)
International Labor Organization (ILO)
International Maritime Organization (IMO)
International Monetary Fund (IMF)
Multilateral Investment Guarantee Association (MIGA)
UN Capital Development Fund (UNCDF)
UN Children's Fund (UNICEF)
UN Development Fund for Women (UNDFW)
UN Development Program (UNDP)
UN Economic & Social Commission for Asian and the Pacific (UNESCAP)
UN Education, Scientific and Cultural Organization (UNESCO)
UN Environment Program (UNEP)
UN Food Program (UNFP)
UN Industrial Development Organization (UNIDO)
UN International Drug Control Program (UNIDCP)
UN Population Fund (UNPF)
World Health Organization (WHO)
World Meteorological Organization (WMO)

[58 FR 68532, Dec. 28, 1993]



PART 501_REPORTING, PROCEDURES AND PENALTIES REGULATIONS--Table of Contents



     Subpart A_Relation of This Part to Other Parts in This Chapter

Sec.
501.101 Relation of this part to other parts in this chapter.

[[Page 48]]

                          Subpart B_Definitions

501.301 Definitions.

                            Subpart C_Reports

501.601 Records and recordkeeping requirements.
501.602 Reports to be furnished on demand.
501.603 Reports on blocked property.
501.604 Reports by U.S. financial institutions on rejected funds 
          transfers.
501.605 Reports on litigation, arbitration, and dispute resolution 
          proceedings.
501.606 Reporting and recordkeeping requirements applicable to economic 
          sanctions programs.

          Subpart D_Trading With the Enemy Act (TWEA) Penalties

501.700 Applicability.
501.701 Penalties.
501.702 Definitions.
501.703 Overview of civil penalty process and construction of rules.
501.704 Appearance and practice.
501.705 Service and filing.
501.706 Prepenalty Notice; issuance by Director.
501.707 Response to Prepenalty Notice.
501.708 Director's finding of no penalty warranted.
501.709 Penalty Notice.
501.710 Settlement.
501.711 Hearing request.
501.712 Acknowledgment of hearing request.
501.713 Order Instituting Proceedings.
501.714 Answer to Order Instituting Proceedings.
501.715 Notice of hearing.
501.716 Default.
501.717 Consolidation of proceedings.
501.718 Conduct and order of hearings.
501.719 Ex parte communications.
501.720 Separation of functions.
501.721 Hearings to be public.
501.722 Prehearing conferences.
501.723 Prehearing disclosures; methods to discover additional matter.
501.724 Documents that may be withheld.
501.725 Confidential treatment of information in certain filings.
501.726 Motions.
501.727 Motion for summary disposition.
501.728 Subpoenas.
501.729 Sanctions.
501.730 Depositions upon oral examination.
501.731 Depositions upon written questions.
501.732 Evidence.
501.733 Evidence: confidential information; protective orders.
501.734 Introducing prior sworn statements of witnesses into the record.
501.735 Proposed findings, conclusions and supporting briefs.
501.736 Authority of Administrative Law Judge.
501.737 Adjustments of time, postponements and adjournments.
501.738 Disqualification and withdrawal of Administrative Law Judge.
501.739 Record in proceedings before Administrative Law Judge; retention 
          of documents; copies.
501.740 Decision of Administrative Law Judge.
501.741 Review of decision or ruling.
501.742 Secretary's designee's consideration of decisions by 
          Administrative Law Judge.
501.743 Briefs filed with the Secretary's designee.
501.744 Record before the Secretary's designee.
501.745 Orders and decisions: signature, date and public availability.
501.746 Referral to United States Department of Justice; administrative 
          collection measures.
501.747 Procedures on remand of decisions.

                          Subpart E_Procedures

501.801 Licensing.
501.802 Decisions.
501.803 Amendment, modification, or revocation.
501.804 Rulemaking.
501.805 Rules governing availability of information.
501.806 Procedures for unblocking funds believed to have been blocked 
          due to mistaken identity.
501.807 Procedures governing removal of names from appendices A, B, and 
          C to this chapter.
501.808 License application and other procedures applicable to economic 
          sanctions programs.

                    Subpart F_Paperwork Reduction Act

501.901 Paperwork Reduction Act notice.

Appendix A to Part 501--Economic Sanctions Enforcement Guidelines

    Authority: 8 U.S.C. 1189; 18 U.S.C. 2332d, 2339B; 19 U.S.C. 3901-
3913; 21 U.S.C. 1901-1908; 22 U.S.C. 287c; 22 U.S.C. 2370(a), 6009, 
6032, 7205; 28 U.S.C. 2461 note; 31 U.S.C. 321(b); 50 U.S.C. 1701-1706; 
50 U.S.C. App. 1-44.

    Source: 62 FR 45101, Aug. 25, 1997, unless otherwise noted.



     Subpart A_Relation of This Part to Other Parts in This Chapter



Sec. 501.101  Relation of this part to other parts in this chapter.

    This part sets forth standard reporting and recordkeeping 
requirements

[[Page 49]]

and license application and other procedures governing transactions 
regulated pursuant to other parts codified in this chapter, as well as 
to economic sanctions programs for which implementation and 
administration are delegated to the Office of Foreign Assets Control. 
Substantive prohibitions and policies particular to each economic 
sanctions program are not contained in this part but are set forth in 
the particular part of this chapter dedicated to that program, or, in 
the case of economic sanctions programs not yet implemented in 
regulations, in the applicable executive order or other authority. 
License application procedures and reporting requirements set forth in 
this part govern transactions undertaken pursuant to general or specific 
licenses. The criteria for general and specific licenses pertaining to a 
particular economic sanctions program are set forth in subpart E of the 
individual parts in this chapter. Statements of licensing policy 
contained in subpart E of the individual parts in this chapter, however, 
may contain additional information collection provisions that require 
production of specified documentation unique to a given general license 
or statement of licensing policy.

[62 FR 52494, Oct. 8, 1997]



                          Subpart B_Definitions



Sec. 501.301  Definitions.

    Definitions of terms used in this part are found in subpart C of the 
part within this chapter applicable to the relevant application, record, 
report, procedure or transaction. In the case of economic sanctions 
programs for which implementation and administration are delegated to 
the Office of Foreign Assets Control but for which regulations have not 
yet been issued, the definitions of terms in this part are governed by 
definitions contained in the implementing statute or Executive order.



                            Subpart C_Reports



Sec. 501.601  Records and recordkeeping requirements.

    Except as otherwise provided, every person engaging in any 
transaction subject to the provisions of this chapter shall keep a full 
and accurate record of each such transaction engaged in, regardless of 
whether such transaction is effected pursuant to license or otherwise, 
and such record shall be available for examination for at least 5 years 
after the date of such transaction. Except as otherwise provided, every 
person holding property blocked pursuant to the provisions of this 
chapter or funds transfers retained pursuant to Sec. 596.504(b) of this 
chapter shall keep a full and accurate record of such property, and such 
record shall be available for examination for the period of time that 
such property is blocked and for at least 5 years after the date such 
property is unblocked.

    Note: See subpart F of part 597 for the relationship between this 
section and part 597.

[62 FR 45101, Aug. 25, 1997, as amended at 62 FR 52494, Oct. 8, 1997]



Sec. 501.602  Reports to be furnished on demand.

    Every person is required to furnish under oath, in the form of 
reports or otherwise, from time to time and at any time as may be 
required by the Director, Office of Foreign Assets Control, complete 
information relative to any transaction, regardless of whether such 
transaction is effected pursuant to license or otherwise, subject to the 
provisions of this chapter or relative to any property in which any 
foreign country or any national thereof has any interest of any nature 
whatsoever, direct or indirect. The Director may require that such 
reports include the production of any books of account, contracts, 
letters or other papers connected with any such transaction or property, 
in the custody or control of the persons required to make such reports. 
Reports with respect to transactions may be required either before or 
after such transactions are completed. Except as provided in parts 596 
and 597, the Director may, through any

[[Page 50]]

person or agency, conduct investigations, hold hearings, administer 
oaths, examine witnesses, receive evidence, take depositions, and 
require by subpoena the attendance and testimony of witnesses and the 
production of all books, papers, and documents relating to any matter 
under investigation, regardless of whether any report has been required 
or filed in connection therewith.

    Note: See subpart F of part 597 for the relationship between this 
section and part 597.

[62 FR 45101, Aug. 25, 1997, as amended at 62 FR 52494, Oct. 8, 1997]



Sec. 501.603  Reports on blocked property.

    (a) Who must report--(1) Holders of blocked property. Any person, 
including a financial institution, holding property blocked pursuant to 
this chapter must report. The requirement includes financial 
institutions that receive and block payments or transfers. This 
requirement is mandatory and applies to all U.S. persons (or persons 
subject to U.S. jurisdiction in the case of parts 500 and 515 of this 
chapter) who have in their possession or control any property or 
interests in property blocked pursuant to this chapter.
    (2) Primary responsibility to report. A report may be filed on 
behalf of a holder of blocked property by an attorney, agent, or other 
person. Primary responsibility for reporting blocked property, however, 
rests with the actual holder of the property, or the person exercising 
control over property located outside the United States, with the 
following exceptions: primary responsibility for reporting any trust 
assets rest with the trustee; and primary responsibility for reporting 
real property rests with any U.S. co-owner, legal representative, agent, 
or property manager in the United States. No person is excused from 
filing a report by reason of the fact that another person has submitted 
a report with regard to the same property, except upon actual knowledge 
of the report filed by such other person. Reports filed are regarded as 
privileged and confidential.
    (3) Financial institutions. For purposes of this section, the term 
``financial institution'' shall include a banking institution, domestic 
bank, United States depository institution, financial institution, or 
U.S. financial institution, as those terms are defined in the applicable 
part of this chapter.
    (b) What must be reported--(1) Initial reports--(i) When reports are 
due. Reports are required to be filed within 10 business days from the 
date that property becomes blocked. This reporting requirement includes 
payments or transfers that are received and blocked by financial 
institutions.
    (ii) Contents of reports. Initial reports on blocked property shall 
describe the owner or account party, the property, its location, any 
existing or new account number or similar reference necessary to 
identify the property, actual or estimated value and the date it was 
blocked, and shall include the name and address of the holder, along 
with the name and telephone number of a contact person from whom 
compliance information can be obtained. If the report is filed by a 
financial institution and involves the receipt of a payment or transfer 
of funds which are blocked by the financial institution, the report 
shall also include a photocopy of the payment or transfer instructions 
received and shall confirm that the payment has been deposited into a 
new or existing blocked account which is labeled as such and is 
established in the name of, or contains a means of clearly identifying 
the interest of, the individual or entity subject to blocking pursuant 
to the requirements of this chapter.
    (2) Annual reports--(i) When reports are due. A comprehensive report 
on all blocked property held as of June 30 of the current year shall be 
filed annually by September 30. The first annual report is due September 
30, 1997.
    (ii) Contents of reports. Annual reports shall be filed using Form 
TDF 90-22.50, Annual Report of Blocked Property. Copies of Form TDF 90-
22.50 may be obtained directly from the Office of Foreign Assets 
Control, by calling the fax-on-demand service maintained by the Office 
of Foreign Assets Control at 202/622-0077, or by downloading the form 
from the ``OFAC Press Releases and Miscellaneous Documents'' file 
library (``FAC--MISC'') located on the Government Printing Office's 
Federal Bulletin Board Online via GPO Access (Internet site: http://
fedbbs.access.gpo.gov/libs/

[[Page 51]]

fac--misc.htm). Photocopies of the report form may be used. Requests to 
submit the information required on Form TDF 90-22.50 in an alternative 
format developed by the reporter are invited and will be considered by 
the Office of Foreign Assets Control on a case-by-case basis. A copy of 
reports filed using form TDF 90-22.50 or in alternative formats must be 
retained for the reporter's records.
    (c) Reports on retained funds pursuant to Sec. 596.504(b) of this 
chapter. The reporting requirements set forth in this section are 
applicable to any financial institution retaining funds pursuant to 
Sec. 596.504(b) of this chapter, except that the account name shall 
reflect the name of the person whose interest required retention of the 
funds.
    (d) Where to report. All reports must be filed with the Office of 
Foreign Assets Control, Compliance Programs Division, U.S. Treasury 
Department, 1500 Pennsylvania Avenue NW.--Annex, Washington, DC 20220.

    Note: See subpart F of part 597 for the relationship between this 
section and part 597.

[62 FR 45101, Aug. 25, 1997, as amended at 62 FR 52495, Oct. 8, 1997]



Sec. 501.604  Reports by U.S. financial institutions on rejected funds 

transfers.

    (a) Who must report. Any financial institution that rejects a funds 
transfer where the funds are not blocked under the provisions of this 
chapter, but where processing the transfer would nonetheless violate, or 
facilitate an underlying transaction that is prohibited under, other 
provisions contained in this chapter, must report. For purposes of this 
section, the term ``financial institution'' shall include a banking 
institution, depository institution or United States depository 
institution, domestic bank, financial institution or U.S. financial 
institution, as those terms are defined in the applicable part of this 
chapter.
    (b) Rejected transfers. Examples of transactions involving rejected 
funds transfers include funds transfer instructions:
    (1) Referencing a blocked vessel but where none of the parties or 
financial institutions involved in the transaction is a blocked person;
    (2) Sending funds to a person in Iraq;
    (3) Transferring unlicensed gifts or charitable donations from the 
Government of Syria to a U.S. person;
    (4) Crediting Iranian accounts on the books of a U.S. financial 
institution; and
    (5) Making unauthorized transfers from U.S. persons to Iran or the 
Government of Iran.
    (c) When reports are due. Reports are required to be filed within 10 
business days by any financial institution rejecting instructions to 
execute payments or transfers involving underlying transactions 
prohibited by the provisions of this chapter.
    (d) What must be reported. The report shall include the name and 
address of the transferee financial institution, the date of the 
transfer, the amount of the payment transfer, and a photocopy of the 
payment or transfer instructions received, and shall state the basis for 
the rejection of the transfer instructions. The report shall also 
provide the name and telephone number of a contact person at the 
transferee financial institution from whom compliance information may be 
obtained.
    (e) Where to report. Reports must be filed with the Office of 
Foreign Assets Control, Compliance Programs Division, U.S. Treasury 
Department, 1500 Pennsylvania Avenue NW.--Annex, Washington, DC 20220.

[62 FR 45101, Aug. 25, 1997, as amended 70 FR 34061, June 13, 2005]



Sec. 501.605  Reports on litigation, arbitration, and dispute resolution 

proceedings.

    (a) U.S. persons (or persons subject to the jurisdiction of the 
United States in the case of parts 500 and 515 of this chapter) 
participating in litigation, arbitration, or other binding alternative 
dispute resolution proceedings in the United States on behalf of or 
against persons whose property or interests in property are blocked or 
whose funds have been retained pursuant to Sec. 596.504(b) of this 
chapter, or when the outcome of any proceeding may affect blocked 
property or retained funds, must:

[[Page 52]]

    (1) Provide notice of such proceedings upon their commencement or 
upon submission or receipt of documents bringing the proceedings within 
the terms of the introductory text to this paragraph (a);
    (2) Submit copies of all pleadings, motions, memoranda, exhibits, 
stipulations, correspondence, and proposed orders or judgments 
(including any proposed final judgment or default judgment) submitted to 
the court or other adjudicatory body, and all orders, decisions, 
opinions, or memoranda issued by the court, to the Chief Counsel, Office 
of Foreign Assets Control, U.S. Department of the Treasury, 1500 
Pennsylvania Avenue, NW.--Annex, Washington, DC 20220, within 10 days of 
filing, submission or issuance. This paragraph (a)(2) shall not apply to 
discovery requests or responses, documents filed under seal, or requests 
for procedural action not seeking action dispositive of the proceedings 
(such as requests for extension of time to file); and
    (3) Report by immediate facsimile transmission to the Chief Counsel, 
Office of Foreign Assets Control, at facsimile number 202/622-1911, the 
scheduling of any hearing or status conference in the proceedings 
whenever it appears that the court or other adjudicatory body may issue 
an order or judgment in the proceedings (including a final judgment or 
default judgment) or is considering or may decide any pending request 
dispositive of the merits of the proceedings or of any claim raised in 
the proceedings.
    (b) The reporting requirements of paragraph (a) of this section do 
not apply to proceedings to which the Office of Foreign Assets Control 
is a party.
    (c) Persons initiating proceedings subject to the reporting 
requirements of this section must notify the court or other adjudicatory 
body of the restrictions set forth under the applicable part in this 
chapter governing the transfer of blocked property or funds retained 
pursuant to Sec. 596.504(b) of this chapter, including the prohibition 
on any unlicensed attachment, judgment, decree, lien, execution, 
garnishment or other judicial process with respect to any property in 
which, on or after the applicable effective date, there existed an 
interest of any person whose property and property interests were 
subject to blocking pursuant to this chapter or were subject to 
retention pursuant to Sec. 596.504(b) of this chapter.



Sec. 501.606  Reporting and recordkeeping requirements applicable to economic 

sanctions programs.

    The reporting and recordkeeping requirements set forth in this 
subpart are applicable to economic sanctions programs for which 
implementation and administration have been delegated to the Office of 
Foreign Assets Control.



          Subpart D_Trading With the Enemy Act (TWEA) Penalties

    Source: 68 FR 53642, Sept. 11, 2003, unless otherwise noted.



Sec. 501.700  Applicability.

    This subpart is applicable only to those parts of chapter V 
promulgated pursuant to the TWEA, which include parts 500, 505, and 515.



Sec. 501.701  Penalties.

    (a) Attention is directed to section 16 of the TWEA, as adjusted 
pursuant to the Federal Civil Penalties Inflation Adjustment Act of 1990 
(Pub. L. 101-410, as amended, 28 U.S.C. 2461 note), which provides that:
    (1) Persons who willfully violate any provision of TWEA or any 
license, rule, or regulation issued thereunder, and persons who 
willfully violate, neglect, or refuse to comply with any order of the 
President issued in compliance with the provisions of TWEA shall, upon 
conviction, be fined not more than $1,000,000 or, if an individual, be 
fined not more than $100,000 or imprisoned for not more than 10 years, 
or both; and an officer, director, or agent of any corporation who 
knowingly participates in such violation shall, upon conviction, be 
fined not more than $100,000 or imprisoned for not more than 10 years, 
or both.
    (2) Any property, funds, securities, papers, or other articles or 
documents, or any vessel, together with its tackle, apparel, furniture, 
and equipment, concerned in a violation of TWEA may

[[Page 53]]

upon conviction be forfeited to the United States Government.
    (3) The Secretary of the Treasury may impose a civil penalty of not 
more than $65,000 per violation on any person who violates any license, 
order, or regulation issued under TWEA.

    Note to paragraph (a)(3). The current $65,000 civil penalty cap may 
be adjusted for inflation pursuant to the Federal Civil Penalties 
Inflation Adjustment Act of 1990.

    (4) Any property, funds, securities, papers, or other articles or 
documents, or any vessel, together with its tackle, apparel, furniture, 
and equipment, that is the subject of a violation subject to a civil 
penalty issued pursuant to TWEA shall, at the discretion of the 
Secretary of the Treasury, be forfeited to the United States Government.
    (b) The criminal penalties provided in TWEA are subject to increase 
pursuant to 18 U.S.C. 3571 which, when read in conjunction with section 
16 of TWEA, provides that persons convicted of violating TWEA may be 
fined up to the greater of either $250,000 for individuals and 
$1,000,000 for organizations or twice the pecuniary gain or loss from 
the violation.
    (c) Attention is directed to 18 U.S.C. 1001, which provides that 
whoever, in any matter within the jurisdiction of any department or 
agency of the United States, knowingly and willfully falsifies, conceals 
or covers up by any trick, scheme, or device a material fact, or makes 
any false, fictitious or fraudulent statements or representations, or 
makes or uses any false writing or document knowing the same to contain 
any false, fictitious or fraudulent statement or entry, shall be fined 
under title 18, United States Code, or imprisoned not more than 5 years, 
or both.

[68 FR 53642, Sept. 11, 2003, as amended at 68 FR 61361, Oct. 28, 2003]



Sec. 501.702  Definitions.

    (a) Chief Counsel means the Chief Counsel (Foreign Assets Control), 
Office of the General Counsel, Department of the Treasury.
    (b) Day means calendar day. In computing any period of time 
prescribed in or allowed by this subpart, the day of the act, event, or 
default from which the designated period of time begins to run shall not 
be included. The last day of the period so computed shall be included 
unless it is a Saturday, Sunday, or Federal legal holiday, in which 
event the period runs until the end of the next day that is not a 
Saturday, Sunday, or Federal legal holiday. Intermediate Saturdays, 
Sundays, and Federal legal holidays shall be excluded from the 
computation when the period of time prescribed or allowed is seven days 
or less, not including any additional time allowed for service by mail. 
If on the day a filing is to be made, weather or other conditions have 
caused the designated filing location to close, the filing deadline 
shall be extended to the end of the next day that the filing location is 
not closed and that is not a Saturday, a Sunday, or a Federal legal 
holiday. If service is made by mail, three days shall be added to the 
prescribed period for response.
    (c) Department means the Department of the Treasury.
    (d) Director means the Director of the Office of Foreign Assets 
Control, Department of the Treasury.
    (e) Ex Parte Communication means any material oral or written 
communication not on the public record concerning the merits of a 
proceeding with respect to which reasonable prior notice to all parties 
is not given, on any material matter or proceeding covered by these 
rules, that takes place between: A party to the proceeding, a party's 
counsel, or any other interested individual; and the Administrative Law 
Judge or Secretary's designee handling that proceeding. A request to 
learn the status of a proceeding does not constitute an ex parte 
communication; and settlement inquiries and discussions do not 
constitute ex parte communications.
    (f) General Counsel means the General Counsel of the U.S. Department 
of the Treasury.
    (g) Order of Settlement means a written order issued by the Director 
terminating a civil penalty action. An Order of Settlement does not 
constitute an agency decision that any violation took place.

[[Page 54]]

    (h) Order Instituting Proceedings means a written order issued by 
the Director to initiate a civil penalty hearing.
    (i) Prepenalty Notice means a written notification from the Director 
informing a respondent of the alleged violation(s) and the respondent's 
right to respond.
    (j) Penalty Notice means a written notification from the Director 
informing a respondent that the Director has made a finding of violation 
and, absent a request for a hearing, will impose a civil monetary 
penalty.
    (k) Proceeding means any agency process initiated by an ``Order 
Instituting Proceedings,'' or by the filing of a petition for review of 
an Administrative Law Judge's decision or ruling.
    (l) Respondent means any individual alleged by the Director to have 
violated a TWEA-based sanctions regulation.
    (m) Secretary's designee means a U.S. Treasury Department official 
delegated responsibility by the Secretary of the Treasury to consider 
petitions for review of Administrative Law Judge decisions made in civil 
penalty hearings conducted pursuant to this subpart.
    (n) Secretary means the Secretary of the Treasury.



Sec. 501.703  Overview of civil penalty process and construction of rules.

    (a) The administrative process for enforcing TWEA sanctions programs 
proceeds as follows:
    (1) The Director of the Office of Foreign Assets Control will notify 
a suspected violator (hereinafter ``respondent'') of an alleged 
violation by issuing a ``Prepenalty Notice.'' The Prepenalty Notice 
shall describe the alleged violation(s) and include a proposed civil 
penalty amount.
    (2) The respondent will have 60 days from the date the Prepenalty 
Notice is served to make a written presentation either defending against 
the alleged violation or admitting the violation. A respondent who 
admits a violation may offer information as to why a monetary penalty 
should not be imposed or why, if imposed, the monetary penalty should be 
in a lesser amount than proposed.
    (3) Absent a settlement agreement or a finding that no violation 
occurred, the Director of the Office of Foreign Assets Control will 
issue a ``Penalty Notice.'' The respondent will have 30 days from the 
date of service to either pay the penalty or request a hearing.
    (4) If the respondent requests a hearing, the Director of the Office 
of Foreign Assets Control will have two options:
    (i) The Director may issue an ``Order Instituting Proceedings'' and 
refer the matter to an Administrative Law Judge for a hearing and 
decision; or
    (ii) The Director may determine to discontinue the penalty action 
based on information presented by the respondent.
    (5) Absent review by a Secretary's designee, the decision of the 
Administrative Law Judge will become the final decision of the 
Department without further proceedings.
    (6) If review is taken by a Secretary's designee, the Secretary's 
designee reaches the final decision of the Department.
    (7) A respondent may seek judicial review of the final decision of 
the Department.
    (b) Construction of rules. The rules contained in this subpart shall 
be construed and administered to promote the just, speedy, and 
inexpensive determination of every action. To the extent there is a 
conflict between the rules contained in this subpart and a procedural 
requirement contained in any statute, the requirement in the statute 
shall control.



Sec. 501.704  Appearance and practice.

    No person shall be represented before the Director in any civil 
penalty matter, or an Administrative Law Judge or the Secretary's 
designee in a civil penalty hearing, under this subpart except as 
provided in this section.
    (a) Representing oneself. In any proceeding, an individual may 
appear on his or her own behalf.
    (b) Representative. Upon written notice to the Director,
    (1) A respondent may be represented by a personal representative. If 
a respondent wishes to be represented by counsel, such counsel must be 
an attorney at law admitted to practice before

[[Page 55]]

the Supreme Court of the United States, the highest court of any State, 
commonwealth, possession, or territory of the United States, or the 
District of Columbia;
    (2) A duly authorized member of a partnership may represent the 
partnership; and
    (3) A bona fide officer, director, or employee of a corporation, 
trust or association may represent the corporation, trust or 
association.
    (c) Director representation. The Director shall be represented by 
members of the Office of Chief Counsel or any other counsel specifically 
assigned by the General Counsel.
    (d) Conflicts of interest--(1) Conflict of interest in 
representation. No individual shall appear as representative for a 
respondent in a proceeding conducted pursuant to this subpart if it 
reasonably appears that such representation may be materially limited by 
that representative's responsibilities to a third person, or by that 
representative's own interests.
    (2) Corrective measures. An Administrative Law Judge may take 
corrective measures at any stage of a proceeding to cure a conflict of 
interest in representation, including the issuance of an order limiting 
the scope of representation or disqualifying an individual from 
appearing in a representative capacity for the duration of the 
proceeding.



Sec. 501.705  Service and filing.

    (a) Service of Prepenalty Notice, Penalty Notice, Acknowledgment of 
Hearing Request and Order Instituting Proceedings. The Director shall 
cause any Prepenalty Notice, Penalty Notice, Acknowledgment of Hearing 
Request, Order Instituting Proceedings, and other related orders and 
decisions, or any amendments or supplements thereto, to be served upon 
the respondent.
    (1) Service on individuals. Service shall be complete:
    (i) Upon the date of mailing by first class (regular) mail to the 
respondent at the respondent's last known address, or to a 
representative authorized to receive service, including qualified 
representatives noticed to the Director pursuant to Sec. 501.704. 
Absent satisfactory evidence in the administrative record to the 
contrary, the Director may presume that the date of mailing is the date 
stamped on the first page of the notice or order. The respondent may 
rebut the presumption that a notice or order was mailed on the stamped 
mailing date only by presenting evidence of the postmark date on the 
envelope in which the notice or order was mailed;
    (ii) Upon personal service on the respondent; or leaving a copy at 
the respondent's place of business with a clerk or other person in 
charge thereof; or leaving a copy at the respondent's dwelling house or 
usual place of abode with a person at least 18 years of age then 
residing therein; or with any other representative authorized by 
appointment or by law to accept or receive service for the respondent, 
including representatives noticed to the Director pursuant to Sec. 
501.704; and evidenced by a certificate of service signed and dated by 
the individual making such service, stating the method of service and 
the identity of the individual with whom the notice or order was left; 
or
    (iii) Upon proof of service on a respondent who is not resident in 
the United States by any method of service permitted by the law of the 
jurisdiction in which the respondent resides or is located, provided the 
requirements of such foreign law satisfy due process requirements under 
United States law with respect to notice of administrative proceedings, 
and where applicable laws or intergovernmental agreements or 
understandings make the methods of service set forth in paragraphs 
(a)(1)(i) and (ii) of this section inappropriate or ineffective for 
service upon the nonresident respondent.
    (2) Service on corporations and other entities. Service is complete 
upon delivering a copy of the notice or order to a partner, bona fide 
officer, director, managing or general agent, or any other agent 
authorized by appointment or by law to receive such notice, by any 
method specified in paragraph (a)(1) of this section.
    (b) Service of responses to Prepenalty Notice, Penalty Notice, and 
requests for a hearing. A respondent shall serve a response to a 
Prepenalty Notice and any request for a hearing on the Director

[[Page 56]]

through the Chief of Civil Penalties, Office of Foreign Assets Control, 
U.S. Treasury Department, 1500 Pennsylvania Avenue, NW., Washington DC 
20220, with the envelope prominently marked ``Urgent: Part 501 Action.'' 
Service shall be complete upon the date of mailing, as evidenced by the 
post-mark date on the envelope, by first class (regular) mail.
    (c) Service or filing of papers in connection with any hearing by an 
Administrative Law Judge or review by the Secretary's designee--(1) 
Service on the Director and/or each respondent. (i) Each paper, 
including each notice of appearance, written motion, brief, petition for 
review, statement in opposition to petition for review, or other written 
communication, shall be served upon the Director and/or each respondent 
in the proceeding in accordance with paragraph (a) of this section; 
provided, however, that no service shall be required in the case of 
documents that are the subject of a motion seeking a protective order to 
limit or prevent disclosure to another party.
    (ii) Service upon the Director shall be made through the Chief 
Counsel (Foreign Assets Control), U.S. Treasury Department, 1500 
Pennsylvania Avenue, NW., Washington, DC 20220, with the envelope 
prominently marked ``Urgent: Part 501 Proceeding.''
    (iii) Service may be made:
    (A) As provided in paragraph (a) of this section;
    (B) By mailing the papers through the U.S. Postal Service by Express 
Mail; or
    (C) By transmitting the papers by facsimile machine where the 
following conditions are met:
    (1) The persons serving each other by facsimile transmission have 
agreed to do so in a writing, signed by each party, which specifies such 
terms as they deem necessary with respect to facsimile machine telephone 
numbers to be used, hours of facsimile machine operation, the provision 
of non-facsimile original or copy, and any other such matters; and
    (2) Receipt of each document served by facsimile is confirmed by a 
manually signed receipt delivered by facsimile machine or other means 
agreed to by the parties.
    (iv) Service by U.S. Postal Service Express Mail is complete upon 
delivery as evidenced by the sender's receipt. Service by facsimile is 
complete upon confirmation of transmission by delivery of a manually 
signed receipt.
    (2) Filing with the Administrative Law Judge. Unless otherwise 
provided, all briefs, motions, objections, applications or other filings 
made during a proceeding before an Administrative Law Judge, and all 
requests for review by the Secretary's designee, shall be filed with the 
Administrative Law Judge.
    (3) Filing with the Secretary's designee. And all briefs, motions, 
objections, applications or other filings made during a proceeding 
before the Secretary's designee shall be filed with the Secretary's 
designee.
    (4) Certificate of service. Papers filed with an Administrative Law 
Judge or Secretary's designee shall be accompanied by a certificate 
stating the name of each person served, the date of service, the method 
of service and the mailing address or facsimile telephone number to 
which service was made, if not made in person. If the method of service 
to any person is different from the method of service to any other 
person, the certificate shall state why a different means of service was 
used.
    (5) Form of briefs. All briefs containing more than 10 pages shall, 
to the extent applicable, include a table of contents, an alphabetized 
table of cases, a table of statutes, and a table of other authorities 
cited, with references to the pages of the brief wherein they are cited.
    (6) Specifications. All original documents shall be filed with the 
Administrative Law Judge or Secretary's designee, as appropriate. Papers 
filed in connection with any proceeding shall:
    (i) Be on one grade of unglazed white paper measuring 8.5x11 inches, 
except that, to the extent that the reduction of larger documents would 
render them illegible, such documents may be filed on larger paper;
    (ii) Be typewritten or printed in either 10- or 12-point typeface or 
otherwise reproduced by a process that produces permanent and plainly 
legible copies;

[[Page 57]]

    (iii) Include at the head of the paper, or on a title page, the 
title of the proceeding, the name(s) of each respondent, the subject of 
the particular paper or pleading, and the file number assigned to the 
proceeding;
    (iv) Be formatted with all margins at least 1 inch wide;
    (v) Be double-spaced, with single-spaced footnotes and single-spaced 
indented quotations; and
    (vi) Be stapled, clipped or otherwise fastened in the upper left 
corner.
    (7) Signature requirement and effect. All papers must be dated and 
signed by a member of the Office of Chief Counsel, or other counsel 
assigned by the General Counsel to represent the Director, or a 
respondent or respondent's representative, as appropriate. If a filing 
is signed by a respondent's representative it shall state that 
representative's mailing address and telephone number. A respondent who 
represents himself or herself shall sign his or her individual name and 
state his or her address and telephone number on every filing. A witness 
deposition shall be signed by the witness.
    (i) Effect of signature. The signature shall constitute a 
certification that:
    (A) The person signing the filing has read the filing;
    (B) To the best of his or her knowledge, information, and belief, 
formed after reasonable inquiry, the filing is well grounded in fact and 
is warranted by existing law or a good faith argument for the extension, 
modification, or reversal of existing law; and
    (C) The filing is not made for any improper purpose, such as to 
harass or to cause unnecessary delay or needless increase in the cost of 
adjudication.
    (ii) If a filing is not signed, the Administrative Law Judge (or the 
Secretary's designee) shall strike the filing, unless it is signed 
promptly after the omission is called to the attention of the person 
making the filing.
    (d) Service of written orders or decisions issued by the 
Administrative Law Judge or Secretary's designee. Written orders or 
decisions issued by the Administrative Law Judge or the Secretary's 
designee shall be served promptly on each respondent and the Director 
pursuant to any method of service authorized under paragraph (a) of this 
section. Service of such orders or decisions shall be made by the 
Administrative Law Judge or the Secretary's designee, as appropriate.



Sec. 501.706  Prepenalty Notice; issuance by Director.

    (a) When required. If the Director has reason to believe there has 
occurred a violation of any provision of parts 500 or 515 of this 
chapter or a violation of the provisions of any license, ruling, 
regulation, order, direction or instruction issued by or pursuant to the 
direction or authorization of the Secretary pursuant to parts 500 or 515 
of this chapter or otherwise under the Trading With the Enemy Act, and 
the Director determines that further civil proceedings are warranted, 
the Director shall issue a Prepenalty Notice. The Prepenalty Notice may 
be issued whether or not another agency has taken any action with 
respect to the matter.
    (b) Contents of notice--(1) Facts of violation. The Prepenalty 
Notice shall describe the alleged violation, specify the laws and 
regulations allegedly violated, and state the amount of the proposed 
monetary penalty.
    (2) Right to respond. The Prepenalty Notice shall inform the 
respondent of respondent's right to make a written presentation within 
the time prescribed in Sec. 501.707 as to why the respondent believes 
there should be no finding of a violation or why, if the respondent 
admits the violation, a monetary penalty should not be imposed or why, 
if imposed, the monetary penalty should be in a lesser amount than 
proposed. The Prepenalty Notice shall also inform the respondent that:
    (i) The act of submitting a written response by the respondent is a 
factor that may result in a lower penalty absent any aggravating 
factors; and
    (ii) If the respondent fails to respond to the Prepenalty Notice 
within the applicable 60-day period set forth in Sec. 501.707, the 
Director may proceed with the issuance of a Penalty Notice.
    (3) Right to request a hearing. The Prepenalty Notice shall inform 
the respondent of respondent's right, if a subsequent Penalty Notice is 
issued, to request an administrative hearing. The Director will not 
consider any request

[[Page 58]]

for an administrative hearing until a Penalty Notice has been issued.



Sec. 501.707  Response to Prepenalty Notice.

    (a) Deadline for response.
    (1) The respondent shall have 60 days after the date of service of 
the Prepenalty Notice pursuant to Sec. 501.705(a) to respond thereto. 
The response, signed and dated, shall be served as provided in Sec. 
501.705(b).
    (2) In response to a written request by the respondent, the Director 
may, at his or her discretion for the purpose of conducting settlement 
negotiations or for other valid reasons, grant additional time for a 
respondent to submit a response to the Prepenalty Notice.
    (3) The failure to submit a response within the time period set 
forth in this paragraph (a), including any additional time granted by 
the Director, shall be deemed to be a waiver of the right to respond to 
the Prepenalty Notice.
    (b) Form and contents of response.
    (1) In general. The response need not be in any particular form, but 
must be typewritten and contain the heading ``Response to Prepenalty 
Notice'' and the Office of Foreign Assets Control identification number 
shown near the top of the Prepenalty Notice. It should be responsive to 
the allegations contained therein and set forth the nature of the 
respondent's admission of the violation, or defenses and claims for 
mitigation, if any.
    (i) The response must admit or deny specifically each separate 
allegation of violation made in the Prepenalty Notice. If the respondent 
is without knowledge as to an allegation, the response shall so state, 
and such statement shall constitute a denial. Any allegation not 
specifically addressed in the response shall be deemed admitted.
    (ii) The response must set forth any additional or new matter or 
arguments the respondent seeks, or shall seek, to use in support of all 
defenses or claims for mitigation. Any defense the respondent wishes to 
assert must be included in the response.
    (iii) The response must accurately state (for each respondent, if 
applicable) the respondent's full name and address for future service, 
together with a current telephone and, if applicable, facsimile machine 
number. If respondent is represented, the representative's full name and 
address, together with telephone and facsimile numbers, may be provided 
instead of service information for the respondent. The respondent or 
respondent's representative of record is responsible for providing 
timely written notice to the Director of any subsequent changes in the 
information provided.
    (iv) Financial disclosure statement requirement. Any respondent who 
asserts financial hardship or an inability to pay a penalty shall 
include with the response a financial disclosure statement setting forth 
in detail the basis for asserting the financial hardship or inability to 
pay a penalty, subject to 18 U.S.C. 1001.
    (2) Settlement. In addition, or as an alternative, to a written 
response to a Prepenalty Notice, the respondent or respondent's 
representative may seek settlement of the alleged violation(s). See 
Sec. 501.710. In the event of settlement prior to the issuance of a 
Penalty Notice, the claim proposed in the Prepenalty Notice will be 
withdrawn and the respondent will not be required to make a written 
response to the Prepenalty Notice. In the event no settlement is 
reached, a written response to the Prepenalty Notice is required 
pursuant to paragraph (c) of this section.



Sec. 501.708  Director's finding of no penalty warranted.

    If after considering any written response to the Prepenalty Notice 
submitted pursuant to Sec. 501.707 and any other relevant facts, the 
Director determines that there was no violation or that the violation 
does not warrant the imposition of a civil monetary penalty, the 
Director promptly shall notify the respondent in writing of that 
determination and that no civil monetary penalty pursuant to this 
subpart will be imposed.



Sec. 501.709  Penalty notice.

    (a) If, after considering any written response to the Prepenalty 
Notice, and any other relevant facts, the Director determines that there 
was a violation by the respondent and that a monetary penalty is 
warranted, the Director

[[Page 59]]

promptly shall issue a Penalty Notice informing the respondent that, 
absent a timely request for an administrative hearing, the Director will 
impose the civil monetary penalty described in the Penalty Notice. The 
Penalty Notice shall inform the respondent:
    (1) Of the respondent's right to submit a written request for an 
administrative hearing not later than 30 days after the date of service 
of the Penalty Notice;
    (2) That in the absence of a timely request for a hearing, the 
issuance of the Penalty Notice constitutes final agency action;
    (3) That, absent a timely request for a hearing, payment (or 
arrangement with the Financial Management Service of the Department for 
installment payment) of the assessed penalty must be made not later than 
30 days after the date of service of the Penalty Notice; and
    (4) That absent a timely request for a hearing, the respondent must 
furnish respondent's taxpayer identification number pursuant to 31 
U.S.C. 7701 and that the Director intends to use such information for 
the purposes of collecting and reporting on any delinquent penalty 
amount in the event of a failure to pay the penalty imposed.



Sec. 501.710  Settlement.

    (a) Availability. Either the Director or any respondent may, at any 
time during the administrative civil penalty process described in this 
subpart, propose an offer of settlement. The amount accepted in 
settlement may be less than the civil penalty that might be imposed in 
the event of a formal determination of violation. Upon mutual agreement 
by the Director and a respondent on the terms of a settlement, the 
Director shall issue an Order of Settlement.
    (b) Procedure--(1) Prior to issuance of Penalty Notice. Any offer of 
settlement made by a respondent prior to the issuance of a Penalty 
Notice shall be submitted, in writing, to the Chief of Civil Penalties, 
Office of Foreign Assets Control, U.S. Department of the Treasury, 1500 
Pennsylvania Avenue, NW., Washington, DC 20220.
    (2) After issuance of Penalty Notice. Any offer of settlement made 
by a respondent after issuance of a Penalty Notice shall state that it 
is made pursuant to this section; shall recite or incorporate as a part 
of the offer the provisions of paragraphs (b)(5)(ii) and (b)(6) of this 
section; shall be signed by the respondent making the offer, and not 
only by his or her representative; and shall be submitted to the Chief 
Counsel.
    (3) Extensions of time. The submission of any settlement offer does 
not provide a basis for adjourning or otherwise delaying all or any 
portion of the administrative civil penalty process.
    (i) Prior to issuance of Order Instituting Proceedings. Any 
respondent (or potential respondent in the case of a pending Prepenalty 
Notice) may request, in writing, that the Director withhold issuance of 
any such notice, or grant an extension of time to respond to any such 
Notice, for a period not to exceed 60 days for the exclusive purpose of 
effecting settlement. The Director may grant any such request, in 
writing, under terms and conditions within his or her discretion.
    (ii) After issuance of Order Instituting Proceedings. Upon mutual 
agreement of the Director and a respondent, the Administrative Law Judge 
may grant an extension of time, for a period not to exceed 60 days, for 
the exclusive purpose of effecting settlement.
    (4) Views of Administrative Law Judge. Where an Administrative Law 
Judge is assigned to a proceeding, the Director or the respondent may 
request that the Administrative Law Judge express his or her views 
regarding the appropriateness of the offer of settlement. A request for 
the Administrative Law Judge to express his or her views on an offer of 
settlement or otherwise to participate in a settlement conference 
constitutes a waiver by the party making the request of any right to 
claim bias or prejudgment by the Administrative Law Judge based on the 
views expressed.
    (5) Waivers. (i) By submitting an offer of settlement, a respondent 
making the offer waives, subject to acceptance of the offer:
    (A) All hearings pursuant to section 16 of the Trading with the 
Enemy Act (50 U.S.C. App. 16);

[[Page 60]]

    (B) The filing of proposed findings of fact and conclusions of law;
    (C) Proceedings before, and a decision by, an Administrative Law 
Judge;
    (D) All post-hearing procedures; and
    (E) Judicial review by any court.
    (ii) By submitting an offer of settlement the respondent further 
waives:
    (A) Such provisions of this subpart or other requirements of law as 
may be construed to prevent any member of the Director's staff, or 
members of the Office of Chief Counsel or other counsel assigned by the 
General Counsel, from participating in or advising the Director as to 
any order, opinion, finding of fact, or conclusion of law to be entered 
pursuant to the offer; and
    (B) Any right to claim bias or prejudgment by the Director based on 
the consideration of or discussions concerning settlement of all or any 
part of the proceeding.
    (6) If the Director rejects the offer of settlement, the respondent 
shall be so notified in writing and the offer of settlement shall be 
deemed withdrawn. The rejected offer shall not constitute a part of the 
record in any proceeding against the respondent making the offer, 
provided, however, that rejection of an offer of settlement does not 
affect the continued validity of waivers pursuant to paragraph (b)(5) of 
this section with respect to any discussions concerning the rejected 
offer of settlement.
    (7) No settlement offer or proposal, or any subsequent negotiation 
or resolution, is admissible as evidence in any administrative 
proceeding initiated by the Director.



Sec. 501.711  Hearing request.

    (a) Deadline for request. A request for an agency hearing shall be 
served on the Director not later than 30 days after the date of service 
of the Penalty Notice. See Sec. 501.705(b). A respondent may not 
reserve the right to request a hearing after expiration of the 30 
calendar day period. A request for a hearing that is not made as 
required by this paragraph shall constitute a waiver of the respondent's 
right to a hearing.
    (b) Form and contents of request. The request need not be in any 
particular form, but must be typewritten and contain the heading 
``Request for Agency Hearing''. The request must include the Office of 
Foreign Assets Control identification number shown near the top of the 
Penalty Notice. It should be responsive to the determination contained 
in the Penalty Notice and set forth the nature of the respondent's 
defenses or claims for mitigation, if any.
    (1) The request must admit or deny specifically each separate 
determination of violation made in the Penalty Notice. If the respondent 
is without knowledge as to a determination, the request shall so state, 
and such statement shall constitute a denial. Any determination not 
specifically addressed in the response shall be deemed admitted.
    (2) The request must set forth any additional or new matter or 
arguments the respondent seeks, or shall seek, to use in support of all 
defenses or claims for mitigation. Any defense the respondent wishes to 
assert must be included in the request.
    (3) The request must accurately state, for each respondent (if 
applicable), the respondent's full name and address for future service, 
together with current telephone and, if applicable, a facsimile machine 
number. If respondent is represented, the representative's full name and 
address, together with telephone and facsimile numbers, may be provided 
in lieu of service information for the respondent. The respondent or 
respondent's representative is responsible for providing timely written 
notice to the Director of any subsequent changes in the information 
provided.
    (c) Signature requirement. The respondent or, if represented, the 
respondent's representative, must sign the hearing request.



Sec. 501.712  Acknowledgment of hearing request.

    No later than 60 days after service of any hearing request, the 
Director shall acknowledge receipt and inform a respondent, in writing, 
whether an Order Instituting Proceedings shall be issued.



Sec. 501.713  Order Instituting Proceedings.

    If a respondent makes a timely request for a hearing, the Director 
shall

[[Page 61]]

determine, at his or her option, whether to dismiss the violation(s) set 
forth in the Penalty Notice or to issue an Order Instituting Proceedings 
to initiate the hearing process. The Order shall be served on the 
respondent(s) as provided in Sec. 501.705(c)(1). The Director may, in 
his or her discretion, withdraw an Order Instituting Proceedings at any 
time prior to the issuance of a decision by the Administrative Law 
Judge.
    (a) Content of Order. The Order Instituting Proceedings shall:
    (1) Be prepared by the Office of the Chief Counsel or other counsel 
assigned by the General Counsel and based on information provided by the 
Director;
    (2) State the legal authority under which the hearing is to be held;
    (3) Contain a short and plain statement of the alleged violation(s) 
to be considered and determined (including the matters of fact and law 
asserted) in such detail as will permit a specific response thereto;
    (4) State the amount of the penalty sought in the proceeding; and
    (5) Be signed by the Director.
    (b) Combining penalty actions. The Director may combine claims 
contained in two or more Penalty Notices involving the same respondent, 
and for which hearings have been requested, into a single Order 
Instituting Proceedings.
    (c) Amendment to Order Instituting Proceedings. Upon motion by the 
Director, the Administrative Law Judge may, at any time prior to 
issuance of a decision, permit the Director to amend an Order 
Instituting Proceedings to include new matters of fact or law that are 
within the scope of the original Order Instituting Proceedings.



Sec. 501.714  Answer to Order Instituting Proceedings.

    (a) When required. Not later than 45 days after service of the Order 
Instituting Proceedings, the respondent shall file, with the 
Administrative Law Judge and the Office of Chief Counsel, an answer to 
each of the allegations contained therein. If the Order Instituting 
Proceedings is amended, the Administrative Law Judge may require that an 
amended answer be filed and, if such an answer is required, shall 
specify a date for the filing thereof.
    (b) Contents; effect of failure to deny. Unless otherwise directed 
by the Administrative Law Judge, an answer shall specifically admit, 
deny, or state that the respondent does not have, and is unable to 
obtain, sufficient information to admit or deny each allegation in the 
Order Instituting Proceedings. When a respondent intends to deny only a 
part of an allegation, the respondent shall specify so much of it as is 
true and shall deny only the remainder. A statement of lack of 
information shall have the effect of a denial. A defense of res 
judicata, statute of limitations or any other matter constituting an 
affirmative defense shall be asserted in the answer. Any allegation not 
specifically addressed in the answer shall be deemed admitted.
    (c) Motion for more definite statement. A respondent may file with 
an answer a motion for a more definite statement of specified matters of 
fact or law to be considered or determined. Such motion shall state the 
respects in which, and the reasons why, each such matter of fact or law 
should be required to be made more definite. If the motion is granted, 
the order granting such motion shall set the periods for filing such a 
statement and any answer thereto.
    (d) Amendments. A respondent may amend its answer at any time by 
written consent of the Director or with permission of the Administrative 
Law Judge. Permission shall be freely granted when justice so requires.
    (e) Failure to file answer: default. If a respondent fails to file 
an answer required by this subpart within the time prescribed, such 
respondent may be deemed in default pursuant to Sec. 501.716(a). A 
party may make a motion to set aside a default pursuant to Sec. 
501.726(e).



Sec. 501.715  Notice of Hearing.

    (a) If the Director issues an Order Instituting Proceedings, the 
respondent shall receive not less than 45 days notice of the time and 
place of the hearing.
    (b) Time and place of hearing. All hearings shall be held in the 
Washington, DC metropolitan area unless, based on extraordinary reasons, 
otherwise mutually agreed by the respondent and the Director. The time 
for any

[[Page 62]]

hearing shall be fixed with due regard for the public interest and the 
convenience and necessity of the parties or their representatives. 
Requests to change the time of a hearing may be submitted to the 
Administrative Law Judge, who may modify the hearing date(s) and/or 
time(s) and place. All requests for a change in the date and time and/or 
place of a hearing must be received by the Administrative Law Judge and 
served upon the parties no later than 15 days before the scheduled 
hearing date.
    (c) Failure to appear at hearings: default. Any respondent named in 
an order instituting proceedings as a person against whom findings may 
be made or penalties imposed who fails to appear (in person or through a 
representative) at a hearing of which he or she has been duly notified 
may be deemed to be in default pursuant to Sec. 501.716(a). Without 
further proceedings or notice to the respondent, the Administrative Law 
Judge may enter a finding that the right to a hearing was waived, and 
the Penalty Notice shall constitute final agency action as provided in 
Sec. 501.709(a)(2). A respondent may make a motion to set aside a 
default pursuant to Sec. 501.726(e).



Sec. 501.716  Default.

    (a) A party to a proceeding may be deemed to be in default and the 
Administrative Law Judge (or the Secretary's designee during review 
proceedings) may determine the proceeding against that party upon 
consideration of the record if that party fails:
    (1) To appear, in person or through a representative, at any hearing 
or conference of which the party has been notified;
    (2) To answer, to respond to a dispositive motion within the time 
provided, or otherwise to prosecute or defend the proceeding; or
    (3) To cure a deficient filing within the time specified by the 
Administrative Law Judge (or the Secretary's designee) pursuant to Sec. 
501.729(b).
    (b) In deciding whether to determine the proceedings against a party 
deemed to be in default, the Administrative Law Judge shall consider the 
record of the proceedings (including the Order Instituting Proceedings) 
and shall construe contested matters of fact and law against the party 
deemed to be in default.
    (c) For information and procedures pertaining to a motion to set 
aside a default, see Sec. 501.726(e).



Sec. 501.717  Consolidation of proceedings.

    By order of the Administrative Law Judge, proceedings involving 
common questions of law and fact may be consolidated for hearing of any 
or all the matters at issue in such proceedings. The Administrative Law 
Judge may make such orders concerning the conduct of such proceedings as 
he or she deems appropriate to avoid unnecessary cost or delay. 
Consolidation shall not prejudice any rights under this subpart and 
shall not affect the right of any party to raise issues that could have 
been raised if consolidation had not occurred.



Sec. 501.718  Conduct and order of hearings.

    All hearings shall be conducted in a fair, impartial, expeditious 
and orderly manner. Each party has the right to present its case or 
defense by oral and documentary evidence and to conduct such cross 
examination as may be required for full disclosure of the relevant 
facts. The Director shall present his or her case-in-chief first. The 
Director shall be the first party to present an opening statement and a 
closing statement and may make a rebuttal statement after the 
respondent's closing statement.



Sec. 501.719  Ex parte communications.

    (a) Prohibition. (1) From the time the Director issues an Order 
Instituting Proceedings until the date of final decision, no party, 
interested person, or representative thereof shall knowingly make or 
cause to be made an ex parte communication.
    (2) Except to the extent required for the disposition of ex parte 
communication matters as authorized by law, the Secretary's designee and 
the Administrative Law Judge presiding over any proceeding may not:
    (i) Consult a person or party on an issue, unless on notice and 
opportunity for all parties to participate; or

[[Page 63]]

    (ii) Be responsible to or subject to the supervision, direction of, 
or evaluation by, an employee engaged in the performance of 
investigative or prosecutorial functions for the Department.
    (b) Procedure upon occurrence of ex parte communication. If an ex 
parte communication is received by the Administrative Law Judge or the 
Secretary's designee, the Administrative Law Judge or the Secretary's 
designee, as appropriate, shall cause all of such written communication 
(or, if the communication is oral, a memorandum stating the substance of 
the communication) to be placed on the record of the proceeding and 
served on all parties. A party may, not later than 10 days after the 
date of service, file a response thereto and may recommend that the 
person making the prohibited communication be sanctioned pursuant to 
paragraph (c) of this section.
    (c) Sanctions. Any party to the proceeding, a party's 
representative, or any other interested individual, who makes a 
prohibited ex parte communication, or who encourages or solicits another 
to make any such communication, may be subject to any appropriate 
sanction or sanctions imposed by the Administrative Law Judge or the 
Secretary's designee, as appropriate, for good cause shown, including, 
but not limited to, exclusion from the hearing and an adverse ruling on 
the issue that is the subject of the prohibited communication.



Sec. 501.720  Separation of functions.

    Any officer or employee engaged in the performance of investigative 
or prosecutorial functions for the Department in a proceeding as defined 
in Sec. 501.702 may not, in that proceeding or one that is factually 
related, participate or advise in the decision pursuant to Section 557 
of the Administrative Procedure Act, 5 U.S.C. 557, except as a witness 
or counsel in the proceeding.



Sec. 501.721  Hearings to be public.

    All hearings, except hearings on applications for confidential 
treatment filed pursuant to Sec. 501.725(b), shall be public unless 
otherwise ordered by the Administrative Law Judge or the Secretary's 
designee, as appropriate, on his or her own motion or the motion of a 
party.



Sec. 501.722  Prehearing conferences.

    (a) Purposes of conferences. The purposes of prehearing conferences 
include, but are not limited to:
    (1) Expediting the disposition of the proceeding;
    (2) Establishing early and continuing control of the proceeding by 
the Administrative Law Judge; and
    (3) Improving the quality of the hearing through more thorough 
preparation.
    (b) Procedure. On his or her own motion or at the request of a 
party, the Administrative Law Judge may direct a representative or any 
party to attend one or more prehearing conferences. Such conferences may 
be held with or without the Administrative Law Judge present as the 
Administrative Law Judge deems appropriate. Where such a conference is 
held outside the presence of the Administrative Law Judge, the 
Administrative Law Judge shall be advised promptly by the parties of any 
agreements reached. Such conferences also may be held with one or more 
persons participating by telephone or other remote means.
    (c) Subjects to be discussed. At a prehearing conference 
consideration may be given and action taken with respect to the 
following:
    (1) Simplification and clarification of the issues;
    (2) Exchange of witness and exhibit lists and copies of exhibits;
    (3) Admissions of fact and stipulations concerning the contents, 
authenticity, or admissibility into evidence of documents;
    (4) Matters of which official notice may be taken;
    (5) The schedule for exchanging prehearing motions or briefs, if 
any;
    (6) The method of service for papers;
    (7) Summary disposition of any or all issues;
    (8) Settlement of any or all issues;
    (9) Determination of hearing dates (when the Administrative Law 
Judge is present);
    (10) Amendments to the Order Instituting Proceedings or answers 
thereto;

[[Page 64]]

    (11) Production of documents as set forth in Sec. 501.723, and 
prehearing production of documents in response to subpoenas duces tecum 
as set forth in Sec. 501.728; and
    (12) Such other matters as may aid in the orderly and expeditious 
disposition of the proceeding.
    (d) Timing of conferences. Unless the Administrative Law Judge 
orders otherwise, an initial prehearing conference shall be held not 
later than 14 days after service of an answer. A final conference, if 
any, should be held as close to the start of the hearing as reasonable 
under the circumstances.
    (e) Prehearing orders. At or following the conclusion of any 
conference held pursuant to this rule, the Administrative Law Judge 
shall enter written rulings or orders that recite the agreement(s) 
reached and any procedural determinations made by the Administrative Law 
Judge.
    (f) Failure to appear: default. A respondent who fails to appear, in 
person or through a representative, at a prehearing conference of which 
he or she has been duly notified may be deemed in default pursuant to 
Sec. 501.716(a). A respondent may make a motion to set aside a default 
pursuant to Sec. 501.726(e).



Sec. 501.723  Prehearing disclosures; methods to discover additional matter.

    (a) Initial disclosures. (1) Except to the extent otherwise 
stipulated or directed by order of the Administrative Law Judge, a party 
shall, without awaiting a discovery request, provide to the opposing 
party:
    (i) The name and, if known, the address and telephone number of each 
individual likely to have discoverable information that the disclosing 
party may use to support its claims or defenses, unless solely for 
impeachment of a witness appearing in person or by deposition, 
identifying the subjects of the information; and
    (ii) A copy, or a description by category and location, of all 
documents, data compilations, and tangible things that are in the 
possession, custody, or control of the party and that the disclosing 
party may use to support its claims or defenses, unless solely for 
impeachment of a witness appearing in person or by deposition;
    (2) The disclosures described in paragraph (a)(1)(i) of this section 
shall be made not later than 30 days after the issuance of an Order 
Instituting Proceedings, unless a different time is set by stipulation 
or by order of the Administrative Law Judge.
    (b) Prehearing disclosures. (1) In addition to the disclosures 
required by paragraph (a) of this section, a party must provide to the 
opposing party, and promptly file with the Administrative Law Judge, the 
following information regarding the evidence that it may present at 
hearing for any purpose other than solely for impeachment of a witness 
appearing in person or by deposition:
    (i) An outline or narrative summary of its case or defense (the 
Order Instituting Proceedings will usually satisfy this requirement for 
the Director and the answer thereto will usually satisfy this 
requirement for the respondent);
    (ii) The legal theories upon which it will rely;
    (iii) Copies and a list of documents or exhibits that it intends to 
introduce at the hearing; and
    (iv) A list identifying each witness who will testify on its behalf, 
including the witness's name, occupation, address, phone number, and a 
brief summary of the expected testimony.
    (2) Unless otherwise directed by the Administrative Law Judge, the 
disclosures required by paragraph (b)(1) of this section shall be made 
not later than 30 days before the date of the hearing.
    (c) Disclosure of expert testimony. A party who intends to call an 
expert witness shall submit, in addition to the information required by 
paragraph (b)(1)(iv) of this section, a statement of the expert's 
qualifications, a list of other proceedings in which the expert has 
given expert testimony, and a list of publications authored or co-
authored by the expert.
    (d) Form of disclosures. Unless the Administrative Law Judge orders 
otherwise, all disclosures under paragraphs (a) through (c) of this 
section shall be made in writing, signed, and served as provided in 
Sec. 501.705.

[[Page 65]]

    (e) Methods to discover additional matter. Parties may obtain 
discovery by one or more of the following methods: Depositions of 
witnesses upon oral examination or written questions; written 
interrogatories to another party; production of documents or other 
evidence for inspection; and requests for admission. All depositions of 
Federal employees must take place in Washington, DC, at the Department 
of the Treasury or at the location where the Federal employee to be 
deposed performs his or her duties, whichever the Federal employee's 
supervisor or the Office of Chief Counsel shall deem appropriate. All 
depositions shall be held at a date and time agreed by the Office of 
Chief Counsel and the respondent or respondent's representative, and for 
an agreed length of time.
    (f) Discovery scope and limits. Unless otherwise limited by order of 
the Administrative Law Judge in accordance with paragraph (f)(2) of this 
section, the scope of discovery is as follows:
    (1) In general. The availability of information and documents 
through discovery is subject to the assertion of privileges available to 
the parties and witnesses. Privileges available to the Director and the 
Department include exemptions afforded pursuant to the Freedom of 
Information Act (5 U.S.C. 552(b)(1) through (9)) and the Privacy Act (5 
U.S.C. 552a). Parties may obtain discovery regarding any matter, not 
privileged, that is relevant to the merits of the pending action, 
including the existence, description, nature, custody, condition, and 
location of any books, documents, or other tangible things and the 
identity and location of any persons having knowledge of any 
discoverable matter. For good cause, the Administrative Law Judge may 
order discovery of any matter relevant to the subject matter involved in 
the proceeding. Relevant information need not be admissible at the 
hearing if the discovery appears reasonably calculated to lead to the 
discovery of admissible evidence.
    (2) Limitations. The Administrative Law Judge may issue any order 
that justice requires to ensure that discovery requests are not 
unreasonable, oppressive, excessive in scope or unduly burdensome, 
including an order to show cause why a particular discovery request is 
justified upon motion of the objecting party. The frequency or extent of 
use of the discovery methods otherwise permitted under this section may 
be limited by the Administrative Law Judge if he or she determines that:
    (i) The discovery sought is unreasonably cumulative or duplicative, 
or is obtainable from some other source that is more convenient, less 
burdensome, or less expensive;
    (ii) The party seeking discovery has had ample opportunity by 
discovery in the action to obtain the information sought; or
    (iii) The burden or expense of the proposed discovery outweighs its 
likely benefit, taking into account the needs of the hearing, the 
importance of the issues at stake, and the importance of the proposed 
discovery in resolving the issues.
    (3) Interrogatories. Respondent's interrogatories shall be served 
upon the Office of the Chief Counsel not later than 30 days after 
issuance of the Order Instituting Proceedings. The Director's 
interrogatories shall be served by the later of 30 days after the 
receipt of service of respondent's interrogatories or 40 days after 
issuance of the Order Instituting Proceedings if no interrogatories are 
filed by respondent. Parties shall respond to interrogatories not later 
than 30 days after the date interrogatories are received. 
Interrogatories shall be limited to 20 questions only. Each subpart, 
section, or other designation of a part of a question shall be counted 
as one complete question in computing the permitted 20 question total. 
Where more than 20 questions are served upon a party, the receiving 
party may determine which of the 20 questions the receiving party shall 
answer. The limitation on the number of questions in an interrogatory 
may be waived by the Administrative Law Judge.
    (4) Privileged matter. Privileged documents are not discoverable. 
Privileges include, but are not limited to, the attorney-client 
privilege, attorney work-product privilege, any government's or 
government agency's deliberative-process or classified information 
privilege, including materials classified pursuant

[[Page 66]]

to Executive Order 12958 (3 CFR, 1995 Comp., p. 333) and any future 
Executive orders that may be issued relating to the treatment of 
national security information, and all materials and information 
exempted from release to the public pursuant to the Privacy Act (5 
U.S.C. 552a) or the Freedom of Information Act (5 U.S.C. 552(b)(1) 
through (9)).
    (g) Updating discovery. A party who has made an initial disclosure 
under paragraph (a) of this section or responded to a request for 
discovery with a disclosure or response is under a duty to supplement or 
correct the disclosure or response to include information thereafter 
acquired whenever:
    (1) The party learns that in some material respect the information 
disclosed is incomplete or incorrect, if the additional or corrective 
information has not otherwise been made known to the other party during 
the discovery process or in writing; or
    (2) Ordered by the Administrative Law Judge. The Administrative Law 
Judge may impose sanctions for failure to supplement or correct 
discovery.
    (h) Time limits. All discovery, including all responses to discovery 
requests, shall be completed not later than 20 days prior to the date 
scheduled for the commencement of the hearing, unless the Administrative 
Law Judge finds on the record that good cause exists to grant additional 
time to complete discovery.
    (i) Effect of failure to comply. No witness may testify and no 
document or exhibit may be introduced at the hearing if such witness, 
document, or exhibit is not listed in the prehearing submissions 
pursuant to paragraphs (b) and (c) of this section, except for good 
cause shown.



Sec. 501.724  Documents that may be withheld.

    (a) Notwithstanding Sec. 501.723(f), the Director or respondent may 
withhold a document if:
    (1) The document is privileged;
    (2) The document would disclose the identity of a confidential 
source; or
    (3) The Administrative Law Judge grants leave to withhold a document 
or category of documents as not relevant to the subject matter of the 
proceeding or otherwise, for good cause shown.
    (b) Nothing in paragraph (a) of this section authorizes the Director 
to withhold documents that contain material exculpatory evidence.
    (c) Withheld document list. The Director and respondent shall 
provide the Administrative Law Judge, for review, a list of documents 
withheld pursuant to paragraphs (a)(1)-(3) of this section. The 
Administrative Law Judge shall determine whether any such document 
should be made available for inspection and copying.



Sec. 501.725  Confidential treatment of information in certain filings.

    (a) Filing document under seal. (1) The Director may file any 
document or any part of a document under seal and/or seek a protective 
order concerning any document if disclosure of the document would be 
inconsistent with the protection of the public interest or if justice 
requires protection of any person, including a source or a party, from 
annoyance, threat, oppression, or undue burden or expense, or the 
disclosure of the information would be, or might reasonably lead to a 
disclosure, contrary to Executive Order 12958, as amended by Executive 
Order 13292, or other Executive orders concerning disclosure of 
information, Department regulations, or the Privacy Act, or information 
exempt from release under the Freedom of Information Act. The 
Administrative Law Judge shall allow placement of any such document 
under seal and/or grant a protective order upon a showing that the 
disclosure would be inconsistent with any such statute or Executive 
order, or that the harm resulting from disclosure would outweigh the 
benefits of disclosure.
    (2) A respondent may file any document or any part of a document 
under seal and/or seek a protective order to limit such document from 
disclosure to other parties or to the public. The Administrative Law 
Judge shall allow placement of any document under seal and/or grant a 
protective order upon a showing that the harm resulting from disclosure 
would outweigh the benefits of disclosure.
    (3) The Administrative Law Judge shall safeguard the security and 
integrity of any documents under seal or

[[Page 67]]

protective order and shall take all appropriate steps to preserve the 
confidentiality of such documents or any parts thereof, including 
closing a hearing or portions of a hearing to the public. Release of any 
information under seal or to the extent inconsistent with a protective 
order, in any form or manner, is subject to the sanctions and the 
exercise of the authorities as are provided with respect to ex parte 
communications under Sec. 501.719.
    (4) If the Administrative Law Judge denies placement of any document 
under seal or under protective order, any party, and any person whose 
document or material is at issue, may obtain interlocutory review by the 
Secretary's designee. In such cases the Administrative Law Judge shall 
not release or expose any of the records or documents in question to the 
public or to any person for a period of 20 days from the date of the 
Administrative Law Judge's ruling, in order to permit a party the 
opportunity either to withdraw the records and documents or obtain 
interlocutory review by the Secretary's designee and an order that the 
records be placed under seal or a protective order.
    (5) Upon settlement, final decision, or motion to the Administrative 
Law Judge for good cause shown, all materials (including all copies) 
under seal or protective order shall be returned to the submitting 
parties, except when it may be necessary to retain a record until any 
judicial process is completed.
    (6)(i) Written notice of each request for release of documents or 
materials under seal or subject to a protective order shall be given to 
the parties at least 20 days prior to any permitted release or prior to 
any access not specifically authorized under a protective order. A copy 
of each request for information, including the name, address, and 
telephone number of the requester, shall be provided to the parties.
    (ii) Each request for access to protected material shall include the 
names, addresses, and telephone numbers of all persons on whose behalf 
the requester seeks access to protected information. The Administrative 
Law Judge may impose sanctions as provided under Sec. 501.729 for 
failure to provide this information.
    (b) Application. An application for a protective order or to place 
under seal shall be filed with the Administrative Law Judge. The 
application shall be accompanied by a sealed copy of the materials as to 
which confidential treatment is sought.
    (1) Procedure for supplying additional information. The person 
making the application may be required to furnish in writing additional 
information with respect to the grounds for objection to public 
disclosure. Failure to supply the information so requested within 14 
days from the date of receipt of a notice of the information required 
shall be deemed a waiver of the objection to public disclosure of that 
portion of the information to which the additional information relates, 
unless the Administrative Law Judge shall otherwise order for good cause 
shown at or before the expiration of such 14-day period.
    (2) Confidentiality of materials pending final decision. Pending the 
determination of the application for confidential treatment, 
transcripts, non-final orders including an initial decision, if any, and 
other materials in connection with the application shall be placed under 
seal; shall be for the confidential use only of the Administrative Law 
Judge, the Secretary's designee, the applicant, the Director, and any 
other respondent and representative; and shall be made available to the 
public only in accordance with orders of the Administrative Law Judge or 
the Secretary's designee.
    (3) Public availability of orders. Any final order of the 
Administrative Law Judge or the Secretary's designee denying or 
sustaining an application for confidential treatment shall be made 
public. Any prior findings or opinions relating to an application for 
confidential treatment under this section shall be made public at such 
time as the material as to which confidentiality was requested is made 
public.



Sec. 501.726  Motions.

    (a) Generally. Unless made during a hearing or conference, a motion 
shall be in writing, shall state with particularity the grounds 
therefor, shall set forth the relief or order sought, and shall be 
accompanied by a written brief of the points and authorities relied

[[Page 68]]

upon. Motions by a respondent must be filed with the Administrative Law 
Judge and served upon the Director through the Office of Chief Counsel 
and with any other party respondent or respondent's representative, 
unless otherwise directed by the Administrative Law Judge. Motions by 
the Director must be filed with the Administrative Law Judge and served 
upon each party respondent or respondent's representative. All written 
motions must be served in accordance with, and otherwise meet the 
requirements of, Sec. 501.705. The Administrative Law Judge may order 
that an oral motion be submitted in writing. No oral argument shall be 
heard on any motion unless the Administrative Law Judge otherwise 
directs.
    (b) Opposing and reply briefs. Except as provided in Sec. 
501.741(e), briefs in opposition to a motion shall be filed not later 
than 15 days after service of the motion. Reply briefs shall be filed 
not later than 3 days after service of the opposition. The failure of a 
party to oppose a written motion or an oral motion made on the record 
shall be deemed a waiver of objection by that party to the entry of an 
order substantially in the form of any proposed order accompanying the 
motion.
    (c) Dilatory motions. Frivolous, dilatory, or repetitive motions are 
prohibited. The filing of such motions may form the basis for sanctions.
    (d) Length limitation. Except as otherwise ordered by the 
Administrative Law Judge, a brief in support of, or in opposition to, a 
motion shall not exceed 15 pages, exclusive of pages containing any 
table of contents, table of authorities, or addendum.
    (e) A motion to set aside a default shall be made within a 
reasonable time as determined by the Administrative Law Judge, state the 
reasons for the failure to appear or defend, and, if applicable, specify 
the nature of the proposed defense in the proceeding. In order to 
prevent injustice and on such conditions as may be appropriate, the 
Administrative Law Judge, at any time prior to the filing of his or her 
decision, or the Secretary's designee, at any time during the review 
process, may for good cause shown set aside a default.



Sec. 501.727  Motion for summary disposition.

    (a) At any time after a respondent's answer has been filed, the 
respondent or the Director may make a motion for summary disposition of 
any or all allegations contained in the Order Instituting Proceedings. 
If the Director has not completed presentation of his or her case-in-
chief, a motion for summary disposition shall be made only with 
permission of the Administrative Law Judge. The facts of the pleadings 
of the party against whom the motion is made shall be taken as true, 
except as modified by stipulations or admissions made by that party, by 
uncontested affidavits, or by facts officially noticed pursuant to Sec. 
501.732(b).
    (b) Decision on motion. The Administrative Law Judge may promptly 
decide the motion for summary disposition or may defer decision on the 
motion. The Administrative Law Judge shall issue an order granting a 
motion for summary disposition if the record shows there is no genuine 
issue with regard to any material fact and the party making the motion 
is entitled to a summary disposition as a matter of law.
    (c) A motion for summary disposition must be accompanied by a 
statement of the material facts as to which the moving party contends 
there is no genuine issue. Such motion must be supported by documentary 
evidence, which may take the form of admissions in pleadings, 
stipulations, depositions, transcripts, affidavits, and any other 
evidentiary materials that the moving party contends support its 
position. The motion must also be accompanied by a brief containing the 
points and authorities in support of the moving party's arguments. Any 
party opposing a motion for summary disposition must file a statement 
setting forth those material facts as to which such party contends a 
genuine dispute exists. The opposition must be supported by evidence of 
the same type as that submitted with the motion for summary disposition 
and a brief containing the points and authorities in support of the 
contention that summary disposition would be inappropriate.

[[Page 69]]



Sec. 501.728  Subpoenas.

    (a) Availability; procedure. In connection with any hearing before 
an Administrative Law Judge, either the respondent or the Director may 
request the issuance of subpoenas requiring the attendance and testimony 
of witnesses at the designated time and place of hearing, and subpoenas 
requiring the production of documentary or other tangible evidence 
returnable at a designated time and place. Unless made on the record at 
a hearing, requests for issuance of a subpoena shall be made in writing 
and served on each party pursuant to Sec. 501.705.
    (b) Standards for issuance. If it appears to the Administrative Law 
Judge that a subpoena sought may be unreasonable, oppressive, excessive 
in scope, or unduly burdensome, he or she may, in his or her discretion, 
as a condition precedent to the issuance of the subpoena, require the 
person seeking the subpoena to show the general relevance and reasonable 
scope of the testimony or other evidence sought. If after consideration 
of all the circumstances, the Administrative Law Judge determines that 
the subpoena or any of its terms is unreasonable, oppressive, excessive 
in scope, or unduly burdensome, he or she may refuse to issue the 
subpoena, or issue a modified subpoena as fairness requires. In making 
the foregoing determination, the Administrative Law Judge may inquire of 
the other participants whether they will stipulate to the facts sought 
to be proved.
    (c) Service. Service of a subpoena shall be made pursuant to the 
provisions of Sec. 501.705.
    (d) Application to quash or modify--(1) Procedure. Any person to 
whom a subpoena is directed or who is an owner, creator or the subject 
of the documents or materials that are to be produced pursuant to a 
subpoena may, prior to the time specified therein for compliance, but 
not later than 15 days after the date of service of such subpoena, 
request that the subpoena be quashed or modified. Such request shall be 
made by application filed with the Administrative Law Judge and served 
on all parties pursuant to Sec. 501.705. The party on whose behalf the 
subpoena was issued may, not later than 5 days after service of the 
application, file an opposition to the application.
    (2) Standards governing application to quash or modify. If the 
Administrative Law Judge determines that compliance with the subpoena 
would be unreasonable, oppressive or unduly burdensome, the 
Administrative Law Judge may quash or modify the subpoena, or may order 
return of the subpoena only upon specified conditions. These conditions 
may include, but are not limited to, a requirement that the party on 
whose behalf the subpoena was issued shall make reasonable compensation 
to the person to whom the subpoena was addressed for the cost of copying 
or transporting evidence to the place for return of the subpoena.
    (e) Witness fees and mileage. Witnesses summoned to appear at a 
proceeding shall be paid the same fees and mileage that are paid to 
witnesses in the courts of the United States, and witnesses whose 
depositions are taken and the persons taking the same shall severally be 
entitled to the same fees as are paid for like services in the courts of 
the United States. Witness fees and mileage shall be paid by the party 
at whose instance the witnesses appear.



Sec. 501.729  Sanctions.

    (a) Contemptuous conduct--(1) Subject to exclusion or suspension. 
Contemptuous conduct by any person before an Administrative Law Judge or 
the Secretary's designee during any proceeding, including any 
conference, shall be grounds for the Administrative Law Judge or the 
Secretary's designee to:
    (i) Exclude that person from such hearing or conference, or any 
portion thereof; and/or
    (ii) If a representative, summarily suspend that person from 
representing others in the proceeding in which such conduct occurred for 
the duration, or any portion, of the proceeding.
    (2) Adjournment. Upon motion by a party represented by a 
representative subject to an order of exclusion or suspension, an 
adjournment shall be granted to allow the retention of a new 
representative. In determining the length of an adjournment, the 
Administrative Law Judge or the Secretary's designee shall consider, in 
addition to

[[Page 70]]

the factors set forth in Sec. 501.737, the availability of another 
representative for the party or, if the representative was a counsel, of 
other members of a suspended counsel's firm.
    (b) Deficient filings; leave to cure deficiencies. The 
Administrative Law Judge, or the Secretary's designee in the case of a 
request for review, may in his or her discretion, reject, in whole or in 
part, any filing that fails to comply with any requirements of this 
subpart or of any order issued in the proceeding in which the filing was 
made. Any such filings shall not be part of the record. The 
Administrative Law Judge or the Secretary's designee may direct a party 
to cure any deficiencies and to resubmit the filing within a fixed time 
period.
    (c) Failure to make required filing or to cure deficient filing. The 
Administrative Law Judge (or the Secretary's designee during review 
proceedings) may enter a default pursuant to Sec. 501.716, dismiss the 
case, decide the particular matter at issue against that person, or 
prohibit the introduction of evidence or exclude testimony concerning 
that matter if a person fails:
    (1) To make a filing required under this subpart; or
    (2) To cure a deficient filing within the time specified by the 
Administrative Law Judge or the Secretary's designee pursuant to 
paragraph (b) of this section.
    (d) Failure to make required filing or to cure deficient filing in 
the case of a request for review. The Secretary's designee, in any case 
of a request for review, may decide the issue against that person, or 
prohibit the introduction of evidence or exclude testimony concerning 
that matter if a person fails:
    (1) To make a filing required under this subpart; or
    (2) To cure a deficient filing within the time specified by the 
Secretary's designee pursuant to paragraph (b) of this section.



Sec. 501.730  Depositions upon oral examination.

    (a) Procedure. Any party desiring to take the testimony of a witness 
by deposition shall make a written motion setting forth the reasons why 
such deposition should be taken including the specific reasons why the 
party believes the witness may be unable to attend or testify at the 
hearing; the name and address of the prospective witness; the matters 
concerning which the prospective witness is expected to be questioned; 
and the proposed time and place for the taking of the deposition.
    (b) Required finding when ordering a deposition. In the discretion 
of the Administrative Law Judge, an order for deposition may be issued 
upon a finding that the prospective witness will likely give testimony 
material to the proceeding, that it is likely the prospective witness 
will be unable to attend or testify at the hearing because of age, 
sickness, infirmity, imprisonment or other disability, and that the 
taking of a deposition will serve the interests of justice.
    (c) Contents of order. An order for deposition shall designate by 
name a deposition officer. The designated officer may be the 
Administrative Law Judge or any other person authorized to administer 
oaths by the laws of the United States or of the place where the 
deposition is to be held. An order for deposition also shall state:
    (1) The name of the witness whose deposition is to be taken;
    (2) The scope of the testimony to be taken;
    (3) The time and place of the deposition;
    (4) The manner of recording, preserving and filing the deposition; 
and
    (5) The number of copies, if any, of the deposition and exhibits to 
be filed upon completion of the deposition.
    (d) Procedure at depositions. A witness whose testimony is taken by 
deposition shall swear or affirm before any questions are put to him or 
her. Examination and cross-examination of witnesses may proceed as 
permitted at a hearing. A witness being deposed may have counsel or a 
representative present during the deposition.
    (e) Objections to questions or evidence. Objections to questions or 
evidence shall be in short form, stating the grounds of objection relied 
upon. Objections to questions or evidence shall be noted by the 
deposition officer upon the deposition, but a deposition officer (other 
than an Administrative Law

[[Page 71]]

Judge) shall not have the power to decide on the competency, materiality 
or relevance of evidence. Failure to object to questions or evidence 
before the deposition officer shall not be deemed a waiver unless the 
ground of the objection is one that might have been obviated or removed 
if presented at that time.
    (f) Filing of depositions. The questions asked and all answers or 
objections shall be recorded or transcribed verbatim, and a transcript 
shall be prepared by the deposition officer, or under his or her 
direction. The transcript shall be subscribed by the witness and 
certified by the deposition officer. The original deposition transcript 
and exhibits shall be filed with the Administrative Law Judge. A copy of 
the deposition transcript and exhibits shall be served on the opposing 
party or parties. The cost of the transcript (including copies) shall be 
paid by the party requesting the deposition.



Sec. 501.731  Depositions upon written questions.

    (a) Availability. Depositions may be taken and submitted on written 
questions upon motion of any party. The motion shall include the 
information specified in Sec. 501.730(a). A decision on the motion 
shall be governed by Sec. 501.730(b).
    (b) Procedure. Written questions shall be filed with the motion. Not 
later than 10 days after service of the motion and written questions, 
any party may file objections to such written questions and any party 
may file cross-questions. When a deposition is taken pursuant to this 
section no persons other than the witness, representative or counsel to 
the witness, the deposition officer, and, if the deposition officer does 
not act as reporter, a reporter, shall be present at the examination of 
the witness. No party shall be present or represented unless otherwise 
permitted by order. The deposition officer shall propound the questions 
and cross-questions to the witness in the order submitted.
    (c) Additional requirements. The order for deposition, filing of the 
deposition, form of the deposition and use of the deposition in the 
record shall be governed by paragraphs (b) through (g) of Sec. 501.730, 
except that no cross-examination shall be made.



Sec. 501.732  Evidence.

    The applicable evidentiary standard for proceedings under this 
subpart is proof by a preponderance of reliable, probative, and 
substantial evidence. The Administrative Law Judge shall admit any 
relevant and material oral, documentary, or demonstrative evidence. The 
Federal Rules of Evidence do not apply, by their own force, to 
proceedings under this subpart, but shall be employed as general 
guidelines. The fact that evidence submitted by a party is hearsay goes 
only to the weight of the evidence and does not affect its 
admissibility.
    (a) Objections and offers of proof--(1) Objections. Objections to 
the admission or exclusion of evidence must be made on the record and 
shall be in short form, stating the grounds relied upon. Exceptions to 
any ruling thereon by the Administrative Law Judge need not be noted at 
the time of the ruling. Such exceptions will be deemed waived on review 
by the Secretary's designee, however, unless raised:
    (i) Pursuant to interlocutory review in accordance with Sec. 
501.741;
    (ii) In a proposed finding or conclusion filed pursuant to Sec. 
501.738; or
    (iii) In a petition for the Secretary's designee's review of an 
Administrative Law Judge's decision filed in accordance with Sec. 
501.741.
    (2) Offers of proof. Whenever evidence is excluded from the record, 
the party offering such evidence may make an offer of proof, which shall 
be included in the record. Excluded material shall be retained pursuant 
to Sec. 501.739(b).
    (b) Official notice. An Administrative Law Judge or Secretary's 
designee may take official notice of any material fact that might be 
judicially noticed by a district court of the United States, any matter 
in the public official records of the Secretary, or any matter that is 
particularly within the knowledge of the Department as an expert body. 
If official notice is requested or taken of a material fact not 
appearing in the evidence in the record, a party, upon timely request to 
the Administrative Law Judge, shall be afforded an opportunity to 
establish the contrary.

[[Page 72]]

    (c) Stipulations. The parties may, by stipulation, at any stage of 
the proceeding agree upon any pertinent fact in the proceeding. A 
stipulation may be received in evidence and, when accepted by the 
Administrative Law Judge, shall be binding on the parties to the 
stipulation.
    (d) Presentation under oath or affirmation. A witness at a hearing 
for the purpose of taking evidence shall testify under oath or 
affirmation.
    (e) Presentation, rebuttal and cross-examination. A party is 
entitled to present its case or defense by oral or documentary evidence, 
to submit rebuttal evidence, and to conduct such cross-examination as, 
in the discretion of the Administrative Law Judge, may be required for a 
full and true disclosure of the facts.



Sec. 501.733  Evidence: confidential information, protective orders.

    (a) Procedure. In any proceeding as defined in Sec. 501.702, a 
respondent; the Director; any person who is the owner, subject or 
creator of a document subject to subpoena or which may be introduced as 
evidence; or any witness who testifies at a hearing may file a motion 
requesting a protective order to limit from disclosure to other parties 
or to the public documents or testimony containing confidential 
information. The motion should include a general summary or extract of 
the documents without revealing confidential details. If a person seeks 
a protective order against disclosure to other parties as well as the 
public, copies of the documents shall not be served on other parties. 
Unless the documents are unavailable, the person shall file for 
inspection by the Administrative Law Judge a sealed copy of the 
documents as to which the order is sought.
    (b) Basis for issuance. Documents and testimony introduced in a 
public hearing are presumed to be public. A motion for a protective 
order shall be granted only upon a finding that the harm resulting from 
disclosure would outweigh the benefits of disclosure.
    (c) Requests for additional information supporting confidentiality. 
A person seeking a protective order under paragraph (a) of this section 
may be required to furnish in writing additional information with 
respect to the grounds for confidentiality. Failure to supply the 
information so requested not later than 5 days from the date of receipt 
by the person of a notice of the information required shall be deemed a 
waiver of the objection to public disclosure of that portion of the 
documents to which the additional information relates, unless the 
Administrative Law Judge shall otherwise order for good cause shown at 
or before the expiration of such 5-day period.
    (d) Confidentiality of documents pending decision. Pending a 
determination of a motion under this section, the documents as to which 
confidential treatment is sought and any other documents that would 
reveal the confidential information in those documents shall be 
maintained under seal and shall be disclosed only in accordance with 
orders of the Administrative Law Judge. Any order issued in connection 
with a motion under this section shall be made public unless the order 
would disclose information as to which a protective order has been 
granted, in which case that portion of the order that would reveal the 
protected information shall not be made public.



Sec. 501.734  Introducing prior sworn statements of witnesses into the record.

    (a) At a hearing, any person wishing to introduce a prior, sworn 
statement of a witness who is not a party to the proceeding, that is 
otherwise admissible in the proceeding, may make a motion setting forth 
the reasons therefor. If only part of a statement is offered in 
evidence, the Administrative Law Judge may require that all relevant 
portions of the statement be introduced. If all of a statement is 
offered in evidence, the Administrative Law Judge may require that 
portions not relevant to the proceeding be excluded. A motion to 
introduce a prior sworn statement may be granted if:
    (1) The witness is dead;
    (2) The witness is out of the United States, unless it appears that 
the absence of the witness was procured by the party offering the prior 
sworn statement;

[[Page 73]]

    (3) The witness is unable to attend or testify because of age, 
sickness, infirmity, imprisonment or other disability;
    (4) The party offering the prior sworn statement has been unable to 
procure the attendance of the witness by subpoena; or,
    (5) In the discretion of the Administrative Law Judge, it would be 
desirable, in the interests of justice, to allow the prior sworn 
statement to be used. In making this determination, due regard shall be 
given to the presumption that witnesses will testify orally in an open 
hearing. If the parties have stipulated to accept a prior sworn 
statement in lieu of live testimony, consideration shall also be given 
to the convenience of the parties in avoiding unnecessary expense.



Sec. 501.735  Proposed findings, conclusions and supporting briefs.

    (a) Opportunity to file. Before a decision is issued by the 
Administrative Law Judge, each party shall have an opportunity, 
reasonable in light of all the circumstances, to file in writing 
proposed findings and conclusions.
    (b) Procedure. Proposed findings of fact must be supported by 
citations to specific portions of the record. If successive filings are 
directed, the proposed findings and conclusions of the party assigned to 
file first shall be set forth in serially numbered paragraphs, and any 
counter statement of proposed findings and conclusions shall, in 
addition to any other matter presented, indicate those paragraphs of the 
proposals already filed as to which there is no dispute. A reply brief 
may be filed by the party assigned to file first, or, where simultaneous 
filings are directed, reply briefs may be filed by each party, within 
the period prescribed therefor by the Administrative Law Judge. No 
further briefs may be filed except with permission of the Administrative 
Law Judge.
    (c) Time for filing. In any proceeding in which a decision is to be 
issued:
    (1) At the close of each hearing, the Administrative Law Judge 
shall, by order, after consultation with the parties, prescribe the 
period within which proposed findings and conclusions and supporting 
briefs are to be filed. The party directed to file first shall make its 
initial filing not later than 30 days after the end of the hearing 
unless the Administrative Law Judge, for good cause shown, permits a 
different period and sets forth in the order the reasons why the 
different period is necessary.
    (2) The total period within which all such proposed findings and 
conclusions and supporting briefs and any counter statements of proposed 
findings and conclusions and reply briefs are to be filed shall be no 
longer than 90 days after the close of the hearing unless the 
Administrative Law Judge, for good cause shown, permits a different 
period and sets forth in an order the reasons why the different period 
is necessary.



Sec. 501.736  Authority of Administrative Law Judge.

    The Administrative Law Judge shall have authority to do all things 
necessary and appropriate to discharge his or her duties. No provision 
of these rules shall be construed to limit the powers of the 
Administrative Law Judge provided by the Administrative Procedure Act, 5 
U.S.C. 556, 557. The powers of the Administrative Law Judge include, but 
are not limited to:
    (a) Administering oaths and affirmations;
    (b) Issuing subpoenas authorized by law and revoking, quashing, or 
modifying any such subpoena;
    (c) Receiving relevant evidence and ruling upon the admission of 
evidence and offers of proof;
    (d) Regulating the course of a proceeding and the conduct of the 
parties and their representatives;
    (e) Holding prehearing and other conferences as set forth in Sec. 
501.726 and requiring the attendance at any such conference of at least 
one representative of each party who has authority to negotiate 
concerning the resolution of issues in controversy;
    (f) Subject to any limitations set forth elsewhere in this subpart, 
considering and ruling on all procedural and other motions;
    (g) Upon notice to all parties, reopening any hearing prior to the 
issuance of a decision;
    (h) Requiring production of records or any information relevant to 
any act

[[Page 74]]

or transaction subject to a hearing under this subpart, and imposing 
sanctions available under Federal Rule of Civil Procedure 37(b)(2) (Fed. 
R. Civ. P. 37(b)(2), 28 U.S.C.) for a party's failure to comply with 
discovery requests;
    (i) Establishing time, place, and manner limitations on the 
attendance of the public and the media for any hearing; and
    (j) Setting fees and expenses for witnesses, including expert 
witnesses.



Sec. 501.737  Adjustments of time, postponements and adjournments.

    (a) Availability. Except as otherwise provided by law, the 
Administrative Law Judge or the Secretary's designee, as appropriate, at 
any time prior to the filing of his or her decision, may, for good cause 
and in the interest of justice, modify any time limit prescribed by this 
subpart and may, consistent with paragraph (b) of this section, postpone 
or adjourn any hearing.
    (b) Limitations on postponements, adjournments and adjustments. A 
hearing shall begin at the time and place ordered, provided that, within 
the limits provided, the Administrative Law Judge or the Secretary's 
designee, as appropriate, may for good cause shown postpone the 
commencement of the hearing or adjourn a convened hearing for a 
reasonable period of time.
    (1) Additional considerations. In considering a motion for 
postponement of the start of a hearing, adjournment once a hearing has 
begun, or extensions of time for filing papers, the Administrative Law 
Judge or the Secretary's designee, as appropriate, shall consider, in 
addition to any other factors:
    (i) The length of the proceeding to date;
    (ii) The number of postponements, adjournments or extensions already 
granted;
    (iii) The stage of the proceedings at the time of the request; and
    (iv) Any other matter as justice may require.
    (2) Time limit. Postponements, adjournments or extensions of time 
for filing papers shall not exceed 21 days unless the Administrative Law 
Judge or the Secretary's designee, as appropriate, states on the record 
or sets forth in a written order the reasons why a longer period of time 
is necessary.



Sec. 501.738  Disqualification and withdrawal of Administrative Law Judge.

    (a) Notice of disqualification. If at any time an Administrative Law 
Judge or Secretary's designee believes himself or herself to be 
disqualified from considering a matter, the Administrative Law Judge or 
Secretary's designee, as appropriate, shall issue a notice stating that 
he or she is withdrawing from the matter and setting forth the reasons 
therefor.
    (b) Motion for Withdrawal. Any party who has a reasonable, good 
faith basis to believe an Administrative Law Judge or Secretary's 
designee has a personal bias, or is otherwise disqualified from hearing 
a case, may make a motion to the Administrative Law Judge or Secretary's 
designee, as appropriate, that the Administrative Law Judge or 
Secretary's designee withdraw. The motion shall be accompanied by a 
statement subject to 18 U.S.C. 1001 setting forth in detail the facts 
alleged to constitute grounds for disqualification. If the 
Administrative Law Judge or Secretary's designee finds himself or 
herself qualified, he or she shall so rule and shall continue to preside 
over the proceeding.



Sec. 501.739  Record in proceedings before Administrative Law Judge; retention 

of documents; copies.

    (a) Recordation. Unless otherwise ordered by the Administrative Law 
Judge, all hearings shall be recorded and a written transcript thereof 
shall be prepared.
    (1) Availability of a transcript. Transcripts of hearings shall be 
available for purchase.
    (2) Transcript correction. Prior to the filing of post-hearing 
briefs or proposed findings and conclusions, or within such earlier time 
as directed by the Administrative Law Judge, a party or witness may make 
a motion to correct the transcript. Proposed corrections of the 
transcript may be submitted to the Administrative Law Judge by 
stipulation pursuant to Sec. 501.732(c), or by motion. Upon notice to 
all parties to the proceeding, the Administrative Law

[[Page 75]]

Judge may, by order, specify corrections to the transcript.
    (b) Contents of the record. The record of each hearing shall consist 
of:
    (1) The Order Instituting Proceedings, Answer to Order Instituting 
Proceedings, Notice of Hearing and any amendments thereto;
    (2) Each application, motion, submission or other paper, and any 
amendments, motions, objections, and exceptions to or regarding them;
    (3) Each stipulation, transcript of testimony, interrogatory, 
deposition, and document or other item admitted into evidence;
    (4) With respect to a request to disqualify an Administrative Law 
Judge or to allow the Administrative Law Judge's withdrawal under Sec. 
501.738, each affidavit or transcript of testimony taken and the 
decision made in connection with the request;
    (5) All proposed findings and conclusions;
    (6) Each written order issued by the Administrative Law Judge; and
    (7) Any other document or item accepted into the record by the 
Administrative Law Judge.
    (c) Retention of documents not admitted. Any document offered as 
evidence but excluded, and any document marked for identification but 
not offered as an exhibit, shall not be part of the record. The 
Administrative Law Judge shall retain any such document until the later 
of the date the proceeding becomes final, or the date any judicial 
review of the final proceeding is no longer available.
    (d) Substitution of copies. A true copy of a document may be 
substituted for any document in the record or any document retained 
pursuant to paragraph (c) of this section.



Sec. 501.740  Decision of Administrative Law Judge.

    The Administrative Law Judge shall prepare a decision that 
constitutes his or her final disposition of the proceedings.
    (a) Content. (1) The Administrative Law Judge shall determine 
whether or not the respondent has violated any provision of parts 500 
and 515 of this chapter or the provisions of any license, ruling, 
regulation, order, direction or instruction issued by or under the 
authority of the Secretary pursuant to part 500 or 515 of this chapter 
or otherwise under the Trading with the Enemy Act.
    (2) The Administrative Law Judge's decision shall include findings 
and conclusions, and the reasons or basis therefor, as to all the 
material issues of fact, law or discretion presented on the record.
    (3) (i) Upon a finding of violation, the Administrative Law Judge 
shall award an appropriate monetary civil penalty in an amount 
consistent with the Penalty Guidelines published by the Director.
    (ii) Notwithstanding paragraph (a)(3)(i) of this section, the 
Administrative Law Judge:
    (A) Shall provide an opportunity for a respondent to assert his or 
her inability to pay a penalty, or financial hardship, by filing with 
the Administrative Law Judge a financial disclosure statement subject to 
18 U.S.C. 1001 that sets forth in detail the basis for the financial 
hardship or the inability to pay; and
    (B) Shall consider any such filing in determining the appropriate 
monetary civil penalty.
    (b) Administrative Law Judge's decision--(1) Service. The 
Administrative Law Judge shall serve his or her decision on the 
respondent and on the Director through the Office of Chief Counsel, and 
shall file a copy of the decision with the Secretary's designee.
    (2) Filing of report with the Secretary's designee. If the 
respondent or Director files a petition for review pursuant to Sec. 
501.741, or upon a request from the Secretary's designee, the 
Administrative Law Judge shall file his or her report with the 
Secretary's designee not later than 20 days after service of his or her 
decision on the parties. The report shall consist of the record, 
including the Administrative Law Judge's decision, and any petition from 
the respondent or the Director seeking review.
    (3) Correction of errors. Until the Administrative Law Judge's 
report has been directed for review by the Secretary's designee or, in 
the absence of a direction for review, until the decision

[[Page 76]]

has become a final order, the Administrative Law Judge may correct 
clerical errors and errors arising through oversight or inadvertence in 
decisions, orders, or other parts of the record.
    (c) Administrative Law Judge's decision final unless review 
directed. Unless the Secretary's designee determines to review a 
decision in accordance with Sec. 501.741(a)(1), the decision of the 
Administrative Law Judge shall become the final decision of the 
Department.
    (d) Penalty awarded. The Director is charged with implementing all 
final decisions of the Department and, upon a finding of violation and/
or award of a civil monetary penalty, shall carry out the necessary 
steps to close the action.



Sec. 501.741  Review of decision or ruling.

    (a) Availability. (1)(i) Review of the decision of the 
Administrative Law Judge by the Secretary's designee is not a right. The 
Secretary's designee may, in his or her discretion, review the decision 
of the Administrative Law Judge on the petition of either the respondent 
or the Director, or upon his or her own motion. The Secretary's designee 
shall determine whether to review a decision:
    (A) If a petition for review has been filed by the respondent or the 
Director, not later than 30 days after that date the Administrative Law 
Judge filed his or her report with the Secretary's designee pursuant to 
paragraph (b)(2) of this section; or
    (B) If no petition for review has been filed by the respondent or 
the Director, not later than 40 days after the date the Administrative 
Law Judge filed his or her decision with the Secretary's designee 
pursuant to paragraph (b)(1) of this section.
    (ii) In determining whether to review a decision upon petition of 
the respondent or the Director, the Secretary's designee shall consider 
whether the petition for review makes a reasonable showing that:
    (A) A prejudicial error was committed in the conduct of the 
proceeding; or
    (B) The decision embodies:
    (1) A finding or conclusion of material fact that is clearly 
erroneous;
    (2) A conclusion of law that is erroneous; or
    (3) An exercise of discretion or decision of law or policy that is 
important and that the Secretary's designee should review.
    (2) Interlocutory review of ruling. The Secretary's designee shall 
review any ruling of an Administrative Law Judge involving privileged or 
confidential material that is the subject of a petition for review. See 
Sec. 501.725.
    (b) Filing. Either the respondent or the Director, when adversely 
affected or aggrieved by the decision or ruling of the Administrative 
Law Judge, may seek review by the Secretary's designee by filing a 
petition for review. Any petition for review shall be filed with the 
Administrative Law Judge within 10 days after service of the 
Administrative Law Judge's decision or the issuance of a ruling 
involving privileged or confidential material.
    (c) Contents. The petition shall state why the Secretary's designee 
should review the Administrative Law Judge's decision or ruling, 
including: Whether the Administrative Law Judge's decision or ruling 
raises an important question of law, policy or discretion; whether 
review by the Secretary's designee will resolve a question about which 
the Department's Administrative Law Judges have rendered differing 
opinions; whether the Administrative Law Judge's decision or ruling is 
contrary to law or Department precedent; whether a finding of material 
fact is not supported by a preponderance of the evidence; or whether a 
prejudicial error of procedure or an abuse of discretion was committed. 
A petition should concisely state the portions of the decision or ruling 
for which review is sought. A petition shall not incorporate by 
reference a brief or legal memorandum.
    (d) When filing effective. A petition for review is filed when 
received by the Administrative Law Judge.
    (e) Statements in opposition to petition. Not later than 8 days 
after the filing of a petition for review, either the respondent or the 
Director may file a statement in opposition to a petition. A statement 
in opposition to a petition for review shall be filed in the manner

[[Page 77]]

specified in this section for filing of petitions for review. Statements 
in opposition shall concisely state why the Administrative Law Judge's 
decision or ruling should not be reviewed with respect to each portion 
of the petition to which it is addressed.
    (f) Number of copies. An original and three copies of a petition or 
a statement in opposition to a petition shall be filed with the 
Administrative Law Judge.
    (g) Prerequisite to judicial review. Pursuant to section 704 of the 
Administrative Procedure Act, 5 U.S.C. 704, a petition for review by the 
Secretary's designee of an Administrative Law Judge decision or ruling 
is a prerequisite to the seeking of judicial review of a final order 
entered pursuant to such decision or ruling.



Sec. 501.742  Secretary's designee's consideration of decisions by 

Administrative Law Judges.

    (a) Scope of review. The Secretary's designee may affirm, reverse, 
modify, set aside or remand for further proceedings, in whole or in 
part, a decision or ruling by an Administrative Law Judge and may make 
any findings or conclusions that in his or her judgment are proper and 
on the basis of the record and such additional evidence as the 
Secretary's designee may receive in his or her discretion.
    (b) Summary affirmance. The Secretary's designee may summarily 
affirm an Administrative Law Judge's decision or ruling based upon the 
petition for review and any response thereto, without further briefing, 
if he or she finds that no issue raised in the petition for review 
warrants further consideration.



Sec. 501.743  Briefs filed with the Secretary's designee.

    (a) Briefing schedule order. If review of a determination is 
mandated by judicial order or whenever the Secretary's designee reviews 
a decision or ruling, the Secretary's designee shall, unless such review 
results in summary affirmance pursuant to Sec. 501.742(b), issue a 
briefing schedule order directing the parties to file opening briefs and 
specifying particular issues, if any, as to which briefing should be 
limited or directed. Unless otherwise provided, opening briefs shall be 
filed not later than 40 days after the date of the briefing schedule 
order. Opposition briefs shall be filed not later than 30 days after the 
date opening briefs are due. Reply briefs shall be filed not later than 
14 days after the date opposition briefs are due. No briefs in addition 
to those specified in the briefing schedule order may be filed without 
permission of the Secretary's designee. The briefing schedule order 
shall be issued not later than 21 days after the later of:
    (1) The last day permitted for filing a brief in opposition to a 
petition for review pursuant to Sec. 501.741(e); or
    (2) Receipt by the Secretary's designee of the mandate of a court 
with respect to a judicial remand.
    (b) Contents of briefs. Briefs shall be confined to the particular 
matters at issue. Each exception to the findings or conclusions being 
reviewed shall be stated succinctly. Exceptions shall be supported by 
citation to the relevant portions of the record, including references to 
the specific pages relied upon, and by concise argument including 
citation of such statutes, decisions and other authorities as may be 
relevant. If the exception relates to the admission or exclusion of 
evidence, the substance of the evidence admitted or excluded shall be 
set forth in the brief, in an appendix thereto, or by citation to the 
record. If the exception relates to interlocutory review, there is no 
requirement to reference pages of the transcript. Reply briefs shall be 
confined to matters in opposition briefs of other parties.
    (c) Length limitation. Opening and opposition briefs shall not 
exceed 30 pages and reply briefs shall not exceed 20 pages, exclusive of 
pages containing the table of contents, table of authorities, and any 
addendum, except with permission of the Secretary's designee.



Sec. 501.744  Record before the Secretary's designee.

    The Secretary's designee shall determine each matter on the basis of 
the record and such additional evidence as the Secretary's designee may 
receive in his or her discretion. In any case of interlocutory review, 
the Administrative Law Judge shall direct that a

[[Page 78]]

transcript of the relevant proceedings be prepared and forwarded to the 
Secretary's designee.
    (a) Contents of the record. In proceedings for final decision before 
the Secretary's designee the record shall consist of:
    (1) All items that are part of the record in accordance with Sec. 
501.739;
    (2) Any petitions for review, cross-petitions or oppositions;
    (3) All briefs, motions, submissions and other papers filed on 
appeal or review; and
    (4) Any other material of which the Secretary's designee may take 
administrative notice.
    (b) Review of documents not admitted. Any document offered in 
evidence but excluded by the Administrative Law Judge and any document 
marked for identification but not offered as an exhibit shall not be 
considered a part of the record before the Secretary's designee on 
review but shall be transmitted to the Secretary's designee if he or she 
so requests. In the event that the Secretary's designee does not request 
the document, the Administrative Law Judge shall retain the document not 
admitted into the record until the later of:
    (1) The date upon which the Secretary's designee's order becomes 
final; or
    (2) The conclusion of any judicial review of that order.



Sec. 501.745  Orders and decisions: signature, date and public availability.

    (a) Signature required. All orders and decisions of the 
Administrative Law Judge or Secretary's designee shall be signed.
    (b) Date of entry of orders. The date of entry of an order by the 
Administrative Law Judge or Secretary's designee shall be the date the 
order is signed. Such date shall be reflected in the caption of the 
order, or if there is no caption, in the order itself.
    (c) Public availability of orders. (1) In general, any final order 
of the Department shall be made public. Any supporting findings or 
opinions relating to a final order shall be made public at such time as 
the final order is made public.
    (2) Exception. Any final order of the Administrative Law Judge or 
Secretary's designee pertaining to an application for confidential 
treatment shall only be available to the public in accordance with Sec. 
501.725(b)(3).



Sec. 501.746  Referral to United States Department of Justice; administrative 

collection measures.

    In the event that the respondent does not pay any penalty imposed 
pursuant to this part within 30 calendar days of the mailing of the 
written notice of the imposition of the penalty, the matter may be 
referred for administrative collection measures or to the United States 
Department of Justice for appropriate action to recover the penalty in a 
civil suit in a Federal district court.



Sec. 501.747  Procedures on remand of decisions.

    Either an Administrative Law Judge or a Secretary's designee, as 
appropriate, shall reconsider any Department decision on judicial remand 
to the Department. The rules of practice contained in this subpart shall 
apply to all proceedings held on judicial remand.



                          Subpart E_Procedures

    Source: 62 FR 45101, Aug. 25, 1997, unless otherwise noted. 
Redesignated at 68 FR 53642, Sept. 11, 2003.



Sec. 501.801  Licensing.

    (a) General licenses. General licenses have been issued authorizing 
under appropriate terms and conditions certain types of transactions 
which are subject to the prohibitions contained in this chapter. All 
such licenses are set forth in subpart E of each part contained in this 
chapter. General licenses may also be issued authorizing under 
appropriate terms and conditions certain types of transactions which are 
subject to prohibitions contained in economic sanctions programs the 
implementation and administration of which have been delegated to the 
Director of the Office of Foreign Assets Control but

[[Page 79]]

which are not yet codified in this chapter. It is the policy of the 
Office of Foreign Assets Control not to grant applications for specific 
licenses authorizing transactions to which the provisions of an 
outstanding general license are applicable. Persons availing themselves 
of certain general licenses may be required to file reports and 
statements in accordance with the instructions specified in those 
licenses. Failure to file such reports or statements will nullify the 
authority of the general license.
    (b) Specific licenses--(1) General course of procedure. Transactions 
subject to the prohibitions contained in this chapter, or to 
prohibitions the implementation and administration of which have been 
delegated to the Director of the Office of Foreign Assets Control, which 
are not authorized by general license may be effected only under 
specific licenses.
    (2) Applications for specific licenses. Original signed applications 
for specific licenses to engage in any transactions prohibited by or 
pursuant to this chapter or sanctions programs that have been delegated 
to the Director of the Office of Foreign Assets Control for 
implementation and administration must be filed by mail or courier. 
Applications will not be accepted by fax or electronically, unless 
otherwise authorized. Applications may be submitted in letter form with 
the exception of license applications for the unblocking of funds 
transfers. Applications for the unblocking of funds transfers must be 
submitted using TD-F 90-22.54, ``Application for the Release of Blocked 
Funds,'' accompanied by two complete copies of the entire submission. 
The form, which requires information regarding the date of the blocking, 
the financial institutions involved in the transfer, and the beneficiary 
and amount of the transfer, may be obtained from the OFAC Internet Home 
Page: http://www.treas.gov/ofac, the OFAC fax-on-demand service: 202/
622-0077, or the Compliance Programs Division, Office of Foreign Assets 
Control, Department of the Treasury, Washington, DC 20220. Any person 
having an interest in a transaction or proposed transaction may file an 
application for a license authorizing such transaction.
    (3) Information to be supplied. The applicant must supply all 
information specified by relevant instructions and/or forms, and must 
fully disclose the names of all parties who are concerned with or 
interested in the proposed transaction. If the application is filed by 
an agent, the agent must disclose the name of his principal(s). Such 
documents as may be relevant shall be attached to each application as a 
part of such application, except that documents previously filed with 
the Office of Foreign Assets Control may, where appropriate, be 
incorporated by reference in such application. Applicants are required 
to supply their taxpayer identifying number pursuant to 31 U.S.C. 7701, 
which number may be used for purposes of collecting and reporting on any 
delinquent amounts arising out of the applicant's relationship with the 
United States Government. Applicants may be required to furnish such 
further information as is deemed necessary to a proper determination by 
the Office of Foreign Assets Control. Any applicant or other party in 
interest desiring to present additional information may do so at any 
time before or after decision. Arrangements for oral presentation should 
be made with the Office of Foreign Assets Control.
    (4) Effect of denial. The denial of a license does not preclude the 
reopening of an application or the filing of a further application. The 
applicant or any other party in interest may at any time request 
explanation of the reasons for a denial by correspondence or personal 
interview.
    (5) Reports under specific licenses. As a condition for the issuance 
of any license, the licensee may be required to file reports with 
respect to the transaction covered by the license, in such form and at 
such times and places as may be prescribed in the license or otherwise.
    (6) Issuance of license. Licenses will be issued by the Office of 
Foreign Assets Control acting on behalf of the Secretary of the Treasury 
or licenses may be issued by the Secretary of the Treasury acting 
directly or through any specifically designated person, agency, or 
instrumentality.

[[Page 80]]

    (7) Address. License applications, reports, and inquiries should be 
addressed to the appropriate division or individual within the Office of 
Foreign Assets Control, or to its Director, at the following address: 
Office of Foreign Assets Control, U.S. Department of the Treasury, 1500 
Pennsylvania Avenue, NW.--Annex, Washington, DC 20220.
    (c) Registration of nongovernmental organizations--(1) Purpose of 
registration. For those parts of this chapter specifically authorizing 
the registration of nongovernmental organizations (``NGOs''), 
registration numbers may be issued on a case-by-case basis to NGOs 
involved in humanitarian or religious activities in countries or 
geographic areas subject to economic sanctions pursuant to this chapter 
V. A registration number authorizes certain transactions by or on behalf 
of the registered NGO otherwise prohibited by the specific part with 
respect to which the registration number is issued, including the 
exportation of goods, services, and funds to the country or geographic 
area subject to such part for the purpose of relieving human suffering. 
The transactions authorized for registered NGOs either will be specified 
by the statement of licensing policy in the part under which the 
registration number is issued or by the Office of Foreign Assets Control 
letter issuing the registration number.
    (2) Application information to be supplied. Applications for 
registration numbers should be submitted to the Compliance Programs 
Division, Office of Foreign Assets Control, U.S. Department of the 
Treasury, 1500 Pennsylvania Avenue, NW., Annex, Washington, DC 20220, or 
by facsimile to (202) 622-2426, and must include:
    (i) The organization's name in English, in the language of origin, 
and any acronym or other names used to identify the organization;
    (ii) Address and phone number of the organization's headquarters 
location;
    (iii) Full name in English, in the language of origin, and any 
acronym or other names used, as well as nationality, citizenship, 
current country of residence, place and date of birth for key staff at 
the organization's headquarters, such as the chairman and board members, 
president, director, etc.;
    (iv) Identification of field offices or partner offices elsewhere, 
including addresses, phone numbers, and organizational names used, as 
well as the identification of the senior officer(s) at these locations, 
including the person's name, position, nationality, citizenship, and 
date of birth (names of individuals and organizations shall be provided 
in English, in the language of origin, and shall include any acronym or 
other names used to identify the individuals or organizations);
    (v) Identification of subcontracting organizations, if any, to the 
extent known or contemplated at the time of the application;
    (vi) Existing sources of income, such as official grants, private 
endowments, commercial activities;
    (vii) Financial institutions that hold deposits on behalf of or 
extend lines of credit to the organization (names of individuals and 
organizations shall be provided in English, in the language of origin, 
and shall include any acronym or other names used to identify the 
individuals or organizations);
    (viii) Independent accounting firms, if employed in the production 
of the organization's financial statements (names of individuals and 
organizations shall be provided in English, in the language of origin, 
and shall include any acronym or other names used to identify the 
individuals or organizations);
    (ix) A detailed description of the organization's humanitarian or 
religious activities and projects in countries or geographic areas 
subject to economic sanctions pursuant to this chapter V;
    (x) Most recent official registry documents, annual reports, and 
annual filings with the pertinent government, as applicable; and
    (xi) Names and addresses of organizations to which the applicant 
currently provides or proposes to provide funding, services or material 
support, to the extent known at the time of the vetting, as applicable.
    (3) Use of registration number. Registered NGOs conducting 
transactions authorized by their registrations to support their 
humanitarian or religious activities pursuant to any part of

[[Page 81]]

this chapter should reference the registration number on all payments 
and funds transfers and on all related documentation, including all 
purchasing, shipping, and financing documents.
    (4) Limitations. Registered NGOs are not authorized to make 
remittances from blocked accounts. Registration numbers are not 
transferable and may be revoked or modified at any time at the 
discretion of the Director, Office of Foreign Assets Control. 
Registration numbers do not excuse compliance with any law or regulation 
administered by the Office of Foreign Assets Control or any other agency 
(including reporting requirements) applicable to the transaction(s) 
herein authorized, nor does it release the Registrant or third parties 
from civil or criminal liability for violation of any law or regulation.
    (5) Prior numbers. Registration numbers already issued remain in 
effect.

[62 FR 45101, Aug. 25, 1997, as amended at 65 FR 10708, Feb. 29, 2000; 
66 FR 2728, Jan. 11, 2001]



Sec. 501.802  Decisions.

    The Office of Foreign Assets Control will advise each applicant of 
the decision respecting filed applications. The decision of the Office 
of Foreign Assets Control acting on behalf of the Secretary of the 
Treasury with respect to an application shall constitute final agency 
action.



Sec. 501.803  Amendment, modification, or revocation.

    Except as otherwise provided by law, the provisions of each part of 
this chapter and any rulings, licenses (whether general or specific), 
authorizations, instructions, orders, or forms issued thereunder may be 
amended, modified or revoked at any time.

[63 FR 35809, July 1, 1998]



Sec. 501.804  Rulemaking.

    (a) All rules and other public documents are issued by the Director 
of the Office of Foreign Assets Control. In general, rulemaking by the 
Office of Foreign Assets Control involves foreign affairs functions of 
the United States, and for that reason is exempt from the requirements 
under the Administrative Procedure Act (5 U.S.C. 553) for notice of 
proposed rulemaking, opportunity for public comment, and delay in 
effective date.
    (b) Any interested person may petition the Director of the Office of 
Foreign Assets Control in writing for the issuance, amendment, or repeal 
of any rule.



Sec. 501.805  Rules governing availability of information.

    (a) The records of the Office of Foreign Assets Control which are 
required by the Freedom of Information Act (5 U.S.C. 552) to be made 
available to the public shall be made available in accordance with the 
definitions, procedures, payment of fees, and other provisions of the 
regulations on the Disclosure of Records of the Departmental Offices and 
of other bureaus and offices of the Department of the Treasury issued 
under 5 U.S.C. 552 and published at 31 CFR part 1.

    Note to paragraph Sec. 501.805(a): Records or information obtained 
or created in the implementation of part 598 of this chapter are not 
subject to disclosure under section 552(a)(3) of the Freedom of 
Information Act. See Sec. 598.802 of this chapter.

    (b) The records of the Office of Foreign Assets Control which are 
required by the Privacy Act (5 U.S.C. 552a) to be made available to an 
individual shall be made available in accordance with the definitions, 
procedures, requirements for payment of fees, and other provisions of 
the Regulations on the Disclosure of Records of the Departmental Offices 
and of other bureaus and offices of the Department of the Treasury 
issued under 5 U.S.C. 552a and published at 31 CFR part 1.
    (c) Any form issued for use in connection with this chapter may be 
obtained in person or by writing to the Office of Foreign Assets 
Control, U.S. Department of the Treasury, 1500 Pennsylvania Avenue, 
NW.--Annex, Washington, DC 20220, or by calling 202/622-2480.
    (d) Certain Civil Penalties Information. (1) After the conclusion of 
a civil penalties proceeding that results in either the imposition of a 
civil monetary penalty or an informal settlement, OFAC shall make 
available to the public certain information on a routine basis,

[[Page 82]]

not less frequently than monthly, as follows:
    (i) In each such proceeding against an entity, OFAC shall make 
available to the public
    (A) The name and address of the entity involved,
    (B) The sanctions program involved,
    (C) A brief description of the violation or alleged violation,
    (D) A clear indication whether the proceeding resulted in an 
informal settlement or in the imposition of a penalty,
    (E) An indication whether the entity voluntarily disclosed the 
violation or alleged violation to OFAC, and
    (F) The amount of the penalty imposed or the amount of the agreed 
settlement.
    (ii) In such proceedings against individuals, OFAC shall release on 
an aggregate basis
    (A) The number of penalties imposed and informal settlements 
reached,
    (B) The sanctions programs involved,
    (C) A brief description of the violations or alleged violations,
    (D) A clear indication whether the proceedings resulted in informal 
settlements, in the imposition of penalties, or in administrative 
hearing requests pursuant to the Trading With the Enemy Act (TWEA), 50 
U.S.C. 5(b), and
    (E) The amounts of the penalties imposed and the amounts of the 
agreed settlements.
    (2) The medium through which information will be released is OFAC's 
website at http://www.treas.gov/ofac.
    (3) The information made available pursuant to paragraph (d)(1) of 
this section shall not include the following:
    (i) The name of any violator or alleged violator who is an 
individual.
    (ii) Records or information obtained or created in the 
implementation of part 598 of this chapter.
    (4) On a case-by-case basis, OFAC may release additional information 
concerning a particular civil penalties proceeding.

[62 FR 45101, Aug. 25, 1997, as amended at 65 FR 41335, July 5, 2000; 68 
FR 6822, Feb. 11, 2003]



Sec. 501.806  Procedures for unblocking funds believed to have been blocked 

due to mistaken identity.

    When a transaction results in the blocking of funds at a financial 
institution pursuant to the applicable regulations of this chapter and a 
party to the transaction believes the funds have been blocked due to 
mistaken identity, that party may seek to have such funds unblocked 
pursuant to the following administrative procedures:
    (a) Any person who is a party to the transaction may request the 
release of funds which the party believes to have been blocked due to 
mistaken identity.
    (b) Requests to release funds which a party believes to have been 
blocked due to mistaken identity must be made in writing and addressed 
to the Office of Foreign Assets Control, Compliance Programs Division, 
1500 Pennsylvania Avenue, NW.--Annex, Washington, DC 20220, or sent by 
facsimile transmission to the Compliance Programs Division at 202/622-
1657.
    (c) The written request to release funds must include the name, 
address, telephone number, and (where available) fax number of the party 
seeking the release of the funds. For individuals, the inclusion of a 
social security number is voluntary but will facilitate resolution of 
the request. For corporations or other entities, the application should 
include its principal place of business, the state of incorporation or 
organization, and the name and telephone number of the appropriate 
person to contact regarding the application.
    (d) A request to release funds should include the following 
information, where known, concerning the transaction:
    (1) The name of the financial institution in which the funds are 
blocked;
    (2) The amount blocked;
    (3) The date of the blocking;
    (4) The identity of the original remitter of the funds and any 
intermediary financial institutions;
    (5) The intended beneficiary of the blocked transfer;
    (6) A description of the underlying transaction including copies of 
related documents (e.g., invoices, bills of lading, promissory notes, 
etc.);

[[Page 83]]

    (7) The nature of the applicant's interest in the funds; and
    (8) A statement of the reasons why the applicant believes the funds 
were blocked due to mistaken identity.
    (e) Upon receipt of the materials required by paragraph (d) of this 
section, OFAC may request additional material from the applicant 
concerning the transaction pursuant to Sec. 501.602.
    (f) Following review of all applicable submissions, the Director of 
the Office of Foreign Assets Control will determine whether to release 
the funds. In the event the Director determines that the funds should be 
released, the Office of Foreign Assets Control will direct the financial 
institution to return the funds to the appropriate party.
    (g) For purposes of this section, the term ``financial institution'' 
shall include a banking institution, depository institution or United 
States depository institution, domestic bank, financial institution or 
U.S. financial institution, as those terms are defined in the applicable 
part of this chapter.

[62 FR 45101, Aug. 25, 1997, as amended at 62 FR 52495, Oct. 8, 1997]



Sec. 501.807  Procedures governing removal of names from appendices A, B, and 

C to this chapter.

    A person may seek administrative reconsideration of his, her or its 
designation or that of a vessel as blocked, or assert that the 
circumstances resulting in the designation no longer apply, and thus 
seek to have the designation rescinded pursuant to the following 
administrative procedures:
    (a) A person blocked under the provisions of any part of this 
chapter, including a specially designated national, specially designated 
terrorist, or specially designated narcotics trafficker 
(collectively,``a blocked person''), or a person owning a majority 
interest in a blocked vessel may submit arguments or evidence that the 
person believes establishes that insufficient basis exists for the 
designation. The blocked person also may propose remedial steps on the 
person's part, such as corporate reorganization, resignation of persons 
from positions in a blocked entity, or similar steps, which the person 
believes would negate the basis for designation. A person owning a 
majority interest in a blocked vessel may propose the sale of the 
vessel, with the proceeds to be placed into a blocked interest-bearing 
account after deducting the costs incurred while the vessel was blocked 
and the costs of the sale. This submission must be made in writing and 
addressed to the Director, Office of Foreign Assets Control, U.S. 
Department of the Treasury, 1500 Pennsylvania Avenue, NW.--Annex, 
Washington, DC 20220.
    (b) The information submitted by the blocked person seeking 
unblocking or by a person seeking the unblocking of a vessel will be 
reviewed by the Office of Foreign Assets Control, which may request 
clarifying, corroborating, or other additional information.
    (c) A blocked person seeking unblocking or a person seeking the 
unblocking of a vessel may request a meeting with the Office of Foreign 
Assets Control; however, such meetings are not required, and the office 
may, at its discretion, decline to conduct such meetings prior to 
completing a review pursuant to this section.
    (d) After the Office of Foreign Assets Control has conducted a 
review of the request for reconsideration, it will provide a written 
decision to the blocked person or person seeking the unblocking of a 
vessel.

[64 FR 5614, Feb. 4, 1999]



Sec. 501.808  License application and other procedures applicable to economic 

sanctions programs.

    Upon submission to the Office of Management and Budget of an 
amendment to the overall burden hours for the information collections 
imposed under this part, the license application and other procedures 
set forth in this subpart are applicable to economic sanctions programs 
for which implementation and administration have been delegated to the 
Office of Foreign Assets Control.



                    Subpart F_Paperwork Reduction Act

    Source: 62 FR 45101, Aug. 25, 1997, unless otherwise noted. 
Redesignated at 68 FR 53642, Sept. 11, 2003.

[[Page 84]]



Sec. 501.901  Paperwork Reduction Act notice.

    The information collection requirements in subparts C and D have 
been approved by the Office of Management and Budget (``OMB'') under the 
Paperwork Reduction Act (44 U.S.C. 3507(j)) and assigned control number 
1505-0164. An agency may not conduct or sponsor, and a person is not 
required to respond to, a collection of information unless it displays a 
valid control number assigned by OMB.



 Sec. Appendix A to Part 501--Economic Sanctions Enforcement Guidelines.

    Note: This appendix provides a general framework for the enforcement 
of all economic sanctions programs administered by the Office of Foreign 
Assets Control (OFAC).

                             I. Definitions

    A. Apparent violation means conduct that constitutes an actual or 
possible violation of U.S. economic sanctions laws, including the 
International Emergency Economic Powers Act (IEEPA), the Trading With 
the Enemy Act (TWEA), the Foreign Narcotics Kingpin Designation Act, and 
other statutes administered or enforced by OFAC, as well as Executive 
orders, regulations, orders, directives, or licenses issued pursuant 
thereto.
    B. Applicable schedule amount means:
    1. $1,000 with respect to a transaction valued at less than $1,000;
    2. $10,000 with respect to a transaction valued at $1,000 or more 
but less than $10,000;
    3. $25,000 with respect to a transaction valued at $10,000 or more 
but less than $25,000;
    4. $50,000 with respect to a transaction valued at $25,000 or more 
but less than $50,000;
    5. $100,000 with respect to a transaction valued at $50,000 or more 
but less than $100,000;
    6. $170,000 with respect to a transaction valued at $100,000 or more 
but less than $170,000;
    7. $250,000 with respect to a transaction valued at $170,000 or 
more, except that where the applicable schedule amount as defined above 
exceeds the statutory maximum civil penalty amount applicable to an 
apparent violation, the applicable schedule amount shall equal such 
applicable statutory maximum civil penalty amount.
    C. OFAC means the Department of the Treasury's Office of Foreign 
Assets Control.
    D. Penalty is the final civil penalty amount imposed in a Penalty 
Notice.
    E. Proposed penalty is the civil penalty amount set forth in a Pre-
Penalty Notice.
    F. Regulator means any Federal, State, local or foreign official or 
agency that has authority to license or examine an entity for compliance 
with federal, state, or foreign law.
    G. Subject Person means an individual or entity subject to any of 
the sanctions programs administered or enforced by OFAC.
    H. Transaction value means the dollar value of a subject 
transaction. In export and import cases, the transaction value generally 
will be the domestic value in the United States of the goods, 
technology, or services sought to be exported from or imported into the 
United States, as demonstrated by commercial invoices, bills of lading, 
signed Customs declarations, or similar documents. In cases involving 
seizures by U.S. Customs and Border Protection (CBP), the transaction 
value generally will be the domestic value as determined by CBP. If the 
apparent violation at issue is a prohibited dealing in blocked property 
by a Subject Person, the transaction value generally will be the dollar 
value of the underlying transaction involved, such as the value of the 
property dealt in or the amount of the funds transfer that a financial 
institution failed to block or reject. Where the transaction value is 
not otherwise ascertainable, OFAC may consider the market value of the 
goods or services that were the subject of the transaction, the economic 
benefit conferred on the sanctioned party, and/or the economic benefit 
derived by the Subject Person from the transaction, in determining 
transaction value. For purposes of these Guidelines, ``transaction 
value'' will not necessarily have the same meaning, nor be applied in 
the same manner, as that term is used for import valuation purposes at 
19 CFR 152.103.
    I. Voluntary self-disclosure means self-initiated notification to 
OFAC of an apparent violation by a Subject Person that has committed, or 
otherwise participated in, an apparent violation of a statute, Executive 
order, or regulation administered or enforced by OFAC, prior to or at 
the same time that OFAC, or any other federal, state, or local 
government agency or official, discovers the apparent violation or 
another substantially similar apparent violation. For these purposes, 
``substantially similar apparent violation'' means an apparent violation 
that is part of a series of similar apparent violations or is related to 
the same pattern or practice of conduct. Notification of an apparent 
violation to another government agency (but not to OFAC) by a Subject 
Person, which is considered a voluntary self-disclosure by that agency, 
may be considered a voluntary self-disclosure by OFAC, based on a case-
by-case assessment. Notification to OFAC of an apparent violation is not 
a voluntary self-disclosure if: a third party is required to and does 
notify OFAC of the apparent violation or a substantially similar 
apparent violation because a transaction was blocked or rejected by that 
third party (regardless of when OFAC receives such notice from the

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third party and regardless of whether the Subject Person was aware of 
the third party's disclosure); the disclosure includes false or 
misleading information; the disclosure (when considered along with 
supplemental information provided by the Subject Person) is materially 
incomplete; the disclosure is not self-initiated (including when the 
disclosure results from a suggestion or order of a federal or state 
agency or official); or, when the Subject Person is an entity, the 
disclosure is made by an individual in a Subject Person entity without 
the authorization of the entity's senior management. Responding to an 
administrative subpoena or other inquiry from, or filing a license 
application with, OFAC is not a voluntary self-disclosure. In addition 
to notification, a voluntary self-disclosure must include, or be 
followed within a reasonable period of time by, a report of sufficient 
detail to afford a complete understanding of an apparent violation's 
circumstances, and should also be followed by responsiveness to any 
follow-up inquiries by OFAC. (As discussed further below, a Subject 
Person's level of cooperation with OFAC is an important factor in 
determining the appropriate enforcement response to an apparent 
violation even in the absence of a voluntary self-disclosure as defined 
herein; disclosure by a Subject Person generally will result in 
mitigation insofar as it represents cooperation with OFAC's 
investigation.)

              II. Types of Responses to Apparent Violations

    Depending on the facts and circumstances of a particular case, an 
OFAC investigation may lead to one or more of the following actions:
    A. No Action. If OFAC determines that there is insufficient evidence 
to conclude that a violation has occurred and/or, based on an analysis 
of the General Factors outlined in Section III of these Guidelines, 
concludes that the conduct does not rise to a level warranting an 
administrative response, then no action will be taken. In those cases in 
which OFAC is aware that the Subject Person has knowledge of OFAC's 
investigation, OFAC generally will issue a letter to the Subject Person 
indicating that the investigation is being closed with no administrative 
action being taken. A no-action determination represents a final 
determination as to the apparent violation, unless OFAC later learns of 
additional related violations or other relevant facts.
    B. Request Additional Information. If OFAC determines that 
additional information regarding the apparent violation is needed, it 
may request further information from the Subject Person or third 
parties, including through an administrative subpoena issued pursuant to 
31 CFR 501.602. In the case of an institution subject to regulation 
where OFAC has entered into a Memorandum of Understanding (MOU) with the 
Subject Person's regulator, OFAC will follow the procedures set forth in 
such MOU regarding consultation with the regulator. Even in the absence 
of an MOU, OFAC may seek relevant information about a regulated 
institution and/or the conduct constituting the apparent violation from 
the institution's federal, state, or foreign regulator. Upon receipt of 
information determined to be sufficient to assess the apparent 
violation, OFAC will decide, based on an analysis of the General Factors 
outlined in Section III of these Guidelines, whether to pursue further 
enforcement action or whether some other response to the apparent 
violation is appropriate.
    C. Cautionary Letter: If OFAC determines that there is insufficient 
evidence to conclude that a violation has occurred or that a Finding of 
Violation or a civil monetary penalty is not warranted under the 
circumstances, but believes that the underlying conduct could lead to a 
violation in other circumstances and/or that a Subject Person does not 
appear to be exercising due diligence in assuring compliance with the 
statutes, Executive orders, and regulations that OFAC enforces, OFAC may 
issue a cautionary letter, which may convey OFAC's concerns about the 
underlying conduct and/or the Subject Person's OFAC compliance policies, 
practices and/or procedures. A cautionary letter represents a final 
enforcement response to the apparent violation, unless OFAC later learns 
of additional related violations or other relevant facts, but does not 
constitute a final agency determination as to whether a violation has 
occurred.
    D. Finding of Violation: If OFAC determines that a violation has 
occurred and considers it important to document the occurrence of a 
violation and, based on an analysis of the General Factors outlined in 
Section III of these Guidelines, concludes that the Subject Person's 
conduct warrants an administrative response but that a civil monetary 
penalty is not the most appropriate response, OFAC may issue a Finding 
of Violation that identifies the violation. A Finding of Violation may 
also convey OFAC's concerns about the violation and/or the Subject 
Person's OFAC compliance policies, practices and/or procedures, and/or 
identify the need for further compliance steps to be taken. A Finding of 
Violation represents a final enforcement response to the violation, 
unless OFAC later learns of additional related violations or other 
relevant facts, and constitutes a final agency determination that a 
violation has occurred. A Finding of Violation will afford the Subject 
Person an opportunity to respond to OFAC's determination that a 
violation has occurred before that determination becomes final. In the 
event a Subject Person so responds, the initial Finding of Violation

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will not constitute a final agency determination that a violation has 
occurred. In such cases, after considering the response received, OFAC 
will inform the Subject Person of its final enforcement response to the 
apparent violation.
    E. Civil Monetary Penalty. If OFAC determines that a violation has 
occurred and, based on an analysis of the General Factors outlined in 
Section III of these Guidelines, concludes that the Subject Person's 
conduct warrants the imposition of a monetary penalty, OFAC may impose a 
civil monetary penalty. Civil monetary penalty amounts will be 
determined as discussed in Section V of these Guidelines. The imposition 
of a civil monetary penalty constitutes a final agency determination 
that a violation has occurred and represents a final civil enforcement 
response to the violation. OFAC will afford the Subject Person an 
opportunity to respond to OFAC's determination that a violation has 
occurred before a final penalty is imposed.
    F. Criminal Referral. In appropriate circumstances, OFAC may refer 
the matter to appropriate law enforcement agencies for criminal 
investigation and/or prosecution. Apparent sanctions violations that 
OFAC has referred for criminal investigation and/or prosecution also may 
be subject to OFAC civil penalty or other administrative action.
    G. Other Administrative Actions. In addition to or in lieu of other 
administrative actions, OFAC may also take the following administrative 
actions in response to an apparent violation:
    1. License Denial, Suspension, Modification, or Revocation. OFAC 
authorizations to engage in a transaction (including the release of 
blocked funds) pursuant to a general or specific license may be 
withheld, denied, suspended, modified, or revoked in response to an 
apparent violation.
    2. Cease and Desist Order. OFAC may order the Subject Person to 
cease and desist from conduct that is prohibited by any of the sanctions 
programs enforced by OFAC when OFAC has reason to believe that a Subject 
Person has engaged in such conduct and/or that such conduct is ongoing 
or may recur.

          III. General Factors Affecting Administrative Action

    As a general matter, OFAC will consider some or all of the following 
General Factors in determining the appropriate administrative action in 
response to an apparent violation of U.S. sanctions by a Subject Person, 
and, where a civil monetary penalty is imposed, in determining the 
appropriate amount of any such penalty:
    A. Willful or Reckless Violation of Law: a Subject Person's 
willfulness or recklessness in violating, attempting to violate, 
conspiring to violate, or causing a violation of the law. Generally, to 
the extent the conduct at issue is the result of willful conduct or a 
deliberate intent to violate, attempt to violate, conspire to violate, 
or cause a violation of the law, the OFAC enforcement response will be 
stronger. Among the factors OFAC may consider in evaluating willfulness 
or recklessness are:
    1. Willfulness. Was the conduct at issue the result of a decision to 
take action with the knowledge that such action would constitute a 
violation of U.S. law? Did the Subject Person know that the underlying 
conduct constituted, or likely constituted, a violation of U.S. law at 
the time of the conduct?
    2. Recklessness. Did the Subject Person demonstrate reckless 
disregard for U.S. sanctions requirements or otherwise fail to exercise 
a minimal degree of caution or care in avoiding conduct that led to the 
apparent violation? Were there warning signs that should have alerted 
the Subject Person that an action or failure to act would lead to an 
apparent violation?
    3. Concealment. Was there an effort by the Subject Person to hide or 
purposely obfuscate its conduct in order to mislead OFAC, Federal, 
State, or foreign regulators, or other parties involved in the conduct 
about an apparent violation?
    4. Pattern of Conduct. Did the apparent violation constitute or 
result from a pattern or practice of conduct or was it relatively 
isolated and atypical in nature?
    5. Prior Notice. Was the Subject Person on notice, or should it 
reasonably have been on notice, that the conduct at issue, or similar 
conduct, constituted a violation of U.S. law?
    6. Management Involvement. In cases of entities, at what level 
within the organization did the willful or reckless conduct occur? Were 
supervisory or managerial level staff aware, or should they reasonably 
have been aware, of the willful or reckless conduct?
    B. Awareness of Conduct at Issue: the Subject Person's awareness of 
the conduct giving rise to the apparent violation. Generally, the 
greater a Subject Person's actual knowledge of, or reason to know about, 
the conduct constituting an apparent violation, the stronger the OFAC 
enforcement response will be. In the case of a corporation, awareness 
will focus on supervisory or managerial level staff in the business unit 
at issue, as well as other senior officers and managers. Among the 
factors OFAC may consider in evaluating the Subject Person's awareness 
of the conduct at issue are:
    1. Actual Knowledge. Did the Subject Person have actual knowledge 
that the conduct giving rise to an apparent violation took place? Was 
the conduct part of a business process, structure or arrangement that 
was designed or implemented with the intent to prevent or shield the 
Subject Person from having such actual knowledge, or was the conduct 
part of a business process, structure or arrangement implemented for 
other legitimate reasons that made it difficult or

[[Page 87]]

impossible for the Subject Person to have actual knowledge?
    2. Reason to Know. If the Subject Person did not have actual 
knowledge that the conduct took place, did the Subject Person have 
reason to know, or should the Subject Person reasonably have known, 
based on all readily available information and with the exercise of 
reasonable due diligence, that the conduct would or might take place?
    3. Management Involvement. In the case of an entity, was the conduct 
undertaken with the explicit or implicit knowledge of senior management, 
or was the conduct undertaken by personnel outside the knowledge of 
senior management? If the apparent violation was undertaken without the 
knowledge of senior management, was there oversight intended to detect 
and prevent violations, or did the lack of knowledge by senior 
management result from disregard for its responsibility to comply with 
applicable sanctions laws?
    C. Harm to Sanctions Program Objectives: the actual or potential 
harm to sanctions program objectives caused by the conduct giving rise 
to the apparent violation. Among the factors OFAC may consider in 
evaluating the harm to sanctions program objectives are:
    1. Economic or Other Benefit to the Sanctioned Individual, Entity, 
or Country: the economic or other benefit conferred or attempted to be 
conferred to sanctioned individuals, entities, or countries as a result 
of an apparent violation, including the number, size, and impact of the 
transactions constituting an apparent violation(s), the length of time 
over which they occurred, and the nature of the economic or other 
benefit conferred. OFAC may also consider the causal link between the 
Subject Person's conduct and the economic benefit conferred or attempted 
to be conferred.
    2. Implications for U.S. Policy: the effect that the circumstances 
of the apparent violation had on the integrity of the U.S. sanctions 
program and the related policy objectives involved.
    3. License Eligibility: whether the conduct constituting the 
apparent violation likely would have been licensed by OFAC under 
existing licensing policy.
    4. Humanitarian activity: whether the conduct at issue was in 
support of a humanitarian activity.
    D. Individual Characteristics: the particular circumstances and 
characteristics of a Subject Person. Among the factors OFAC may consider 
in evaluating individual characteristics are:
    1. Commercial Sophistication: the commercial sophistication and 
experience of the Subject Person. Is the Subject Person an individual or 
an entity? If an individual, was the conduct constituting the apparent 
violation for personal or business reasons?
    2. Size of Operations and Financial Condition: the size of a Subject 
Person's business operations and overall financial condition, where such 
information is available and relevant. Qualification of the Subject 
Person as a small business or organization for the purposes of the Small 
Business Regulatory Enforcement Fairness Act, as determined by reference 
to the applicable regulations of the Small Business Administration, may 
also be considered.
    3. Volume of Transactions: the total volume of transactions 
undertaken by the Subject Person on an annual basis, with attention 
given to the apparent violations as compared with the total volume.
    4. Sanctions History: the Subject Person's sanctions history, 
including OFAC's issuance of prior penalties, findings of violations or 
cautionary, warning or evaluative letters, or other administrative 
actions (including settlements). As a general matter, OFAC will only 
consider a Subject Person's sanctions history for the five years 
preceding the date of the transaction giving rise to the apparent 
violation.
    E. Compliance Program: the existence, nature and adequacy of a 
Subject Person's risk-based OFAC compliance program at the time of the 
apparent violation, where relevant. In the case of an institution 
subject to regulation where OFAC has entered into a Memorandum of 
Understanding (MOU) with the Subject Person's regulator, OFAC will 
follow the procedures set forth in such MOU regarding consultation with 
the regulator with regard to the quality and effectiveness of the 
Subject Person's compliance program. Even in the absence of an MOU, OFAC 
may take into consideration the views of federal, state, or foreign 
regulators, where relevant. Further information about risk-based 
compliance programs for financial institutions is set forth in the annex 
hereto.
    F. Remedial Response: the Subject Person's corrective action taken 
in response to the apparent violation. Among the factors OFAC may 
consider in evaluating the remedial response are:
    1. The steps taken by the Subject Person upon learning of the 
apparent violation. Did the Subject Person immediately stop the conduct 
at issue?
    2. In the case of an entity, the processes followed to resolve 
issues related to the apparent violation. Did the Subject Person 
discover necessary information to ascertain the causes and extent of the 
apparent violation, fully and expeditiously? Was senior management fully 
informed? If so, when?
    3. In the case of an entity, whether the Subject Person adopted new 
and more effective internal controls and procedures to prevent a 
recurrence of the apparent violation. If the Subject Person did not have 
an OFAC compliance program in place at the time of the apparent 
violation, did it implement one

[[Page 88]]

upon discovery of the apparent violations? If it did have an OFAC 
compliance program, did it take appropriate steps to enhance the program 
to prevent the recurrence of similar violations? Did the entity provide 
the individual(s) responsible for the apparent violation with additional 
training, and/or take other appropriate action, to ensure that similar 
violations do not occur in the future?
    4. Where applicable, whether the Subject Person undertook a thorough 
review to identify other possible violations.
    G. Cooperation with OFAC: the nature and extent of the Subject 
Person's cooperation with OFAC. Among the factors OFAC may consider in 
evaluating cooperation with OFAC are:
    1. Did the Subject Person voluntarily self-disclose the apparent 
violation to OFAC?
    2. Did the Subject Person provide OFAC with all relevant information 
regarding an apparent violation (whether or not voluntarily self-
disclosed)?
    3. Did the Subject Person research and disclose to OFAC relevant 
information regarding any other apparent violations caused by the same 
course of conduct?
    4. Was information provided voluntarily or in response to an 
administrative subpoena?
    5. Did the Subject Person cooperate with, and promptly respond to, 
all requests for information?
    6. Did the Subject Person enter into a statute of limitations 
tolling agreement, if requested by OFAC (particularly in situations 
where the apparent violations were not immediately notified to or 
discovered by OFAC, in particularly complex cases, and in cases in which 
the Subject Person has requested and received additional time to respond 
to a request for information from OFAC)? If so, the Subject Person's 
entering into a tolling agreement will be deemed a mitigating factor. 
Note: a Subject Person's refusal to enter into a tolling agreement will 
not be considered by OFAC as an aggravating factor in assessing a 
Subject Person's cooperation or otherwise under the Guidelines.
    Where appropriate, OFAC will publicly note substantial cooperation 
provided by a Subject Person.
    H. Timing of apparent violation in relation to imposition of 
sanctions: the timing of the apparent violation in relation to the 
adoption of the applicable prohibitions, particularly if the apparent 
violation took place immediately after relevant changes in the sanctions 
program regulations or the addition of a new name to OFAC's List of 
Specially Designated Nationals and Blocked Persons (SDN List).
    I. Other enforcement action: other enforcement actions taken by 
federal, state, or local agencies against the Subject Person for the 
apparent violation or similar apparent violations, including whether the 
settlement of alleged violations of OFAC regulations is part of a 
comprehensive settlement with other federal, state, or local agencies.
    J. Future Compliance/Deterrence Effect: the impact administrative 
action may have on promoting future compliance with U.S. economic 
sanctions by the Subject Person and similar Subject Persons, 
particularly those in the same industry sector.
    K. Other relevant factors on a case-by-case basis: such other 
factors that OFAC deems relevant on a case-by-case basis in determining 
the appropriate enforcement response and/or the amount of any civil 
monetary penalty. OFAC will consider the totality of the circumstances 
to ensure that its enforcement response is proportionate to the nature 
of the violation.

IV. Civil Penalties for Failure To Comply With a Requirement To Furnish 
                       Information or Keep Records

    As a general matter, the following civil penalty amounts shall apply 
to a Subject Person's failure to comply with a requirement to furnish 
information or maintain records:
    A. The failure to comply with a requirement to furnish information 
pursuant to 31 CFR 501.602 may result in a penalty in an amount up to 
$20,000, irrespective of whether any other violation is alleged. Where 
OFAC has reason to believe that the apparent violation(s) that is the 
subject of the requirement to furnish information involves a 
transaction(s) valued at greater than $500,000, a failure to comply with 
a requirement to furnish information may result in a penalty in an 
amount up to $50,000, irrespective of whether any other violation is 
alleged. A failure to comply with a requirement to furnish information 
may be considered a continuing violation, and the penalties described 
above may be imposed each month that a party has continued to fail to 
comply with the requirement to furnish information. OFAC may also seek 
to have a requirement to furnish information judicially enforced. 
Imposition of a civil monetary penalty for failure to comply with a 
requirement to furnish information does not preclude OFAC from seeking 
such judicial enforcement of the requirement to furnish information.
    B. The late filing of a required report, whether set forth in 
regulations or in a specific license, may result in a civil monetary 
penalty in an amount up to $2,500, if filed within the first 30 days 
after the report is due, and a penalty in an amount up to $5,000 if 
filed more than 30 days after the report is due. If the report relates 
to blocked assets, the penalty may include an additional $1,000 for 
every 30 days that the report is overdue, up to five years.
    C. The failure to maintain records in conformance with the 
requirements of OFAC's

[[Page 89]]

regulations or of a specific license may result in a penalty in an 
amount up to $50,000.

                           V. Civil Penalties

    OFAC will review the facts and circumstances surrounding an apparent 
violation and apply the General Factors for Taking Administrative Action 
in Section III above in determining whether to initiate a civil penalty 
proceeding and in determining the amount of any civil monetary penalty. 
OFAC will give careful consideration to the appropriateness of issuing a 
cautionary letter or Finding of Violation in lieu of the imposition of a 
civil monetary penalty.

                        A. Civil Penalty Process

    1. Pre-Penalty Notice. If OFAC has reason to believe that a 
sanctions violation has occurred and believes that a civil monetary 
penalty is appropriate, it will issue a Pre-Penalty Notice in accordance 
with the procedures set forth in the particular regulations governing 
the conduct giving rise to the apparent violation. The amount of the 
proposed penalty set forth in the Pre-Penalty Notice will reflect OFAC's 
preliminary assessment of the appropriate penalty amount, based on 
information then in OFAC's possession. The amount of the final penalty 
may change as OFAC learns additional relevant information. If, after 
issuance of a Pre-Penalty Notice, OFAC determines that a penalty in an 
amount that represents an increase of more than 10 percent from the 
proposed penalty set forth in the Pre-Penalty Notice is appropriate, or 
if OFAC intends to allege additional violations, it will issue a revised 
Pre-Penalty Notice setting forth the new proposed penalty amount and/or 
alleged violations.
    a. In general, the Pre-Penalty Notice will set forth the following 
with respect to the specific violations alleged and the proposed 
penalties:
    i. Description of the alleged violations, including the number of 
violations and their value, for which a penalty is being proposed;
    ii. Identification of the regulatory or other provisions alleged to 
have been violated;
    iii. Identification of the base category (defined below) according 
to which the proposed penalty amount was calculated and the General 
Factors that were most relevant to the determination of the proposed 
penalty amount;
    iv. The maximum amount of the penalty to which the Subject Person 
could be subject under applicable law; and
    v. The proposed penalty amount, determined in accordance with the 
provisions set forth in these Guidelines.
    b. The Pre-Penalty Notice will also include information regarding 
how to respond to the Pre-Penalty Notice including:
    i. A statement that the Subject Person may submit a written response 
to the Pre-Penalty Notice by a date certain addressing the alleged 
violation(s), the General Factors Affecting Administrative Action set 
forth in Section III of these Guidelines, and any other information or 
evidence that the Subject Person deems relevant to OFAC's consideration.
    ii. A statement that a failure to respond to the Pre-Penalty Notice 
may result in the imposition of a civil monetary penalty.
    2. Response to Pre-Penalty Notice. A Subject Person may submit a 
written response to the Pre-Penalty Notice in accordance with the 
procedures set forth in the particular regulations governing the conduct 
giving rise to the apparent violation. Generally, the response should 
either agree to the proposed penalty set forth in the Pre-Penalty Notice 
or set forth reasons why a penalty should not be imposed or, if imposed, 
why it should be a lesser amount than proposed, with particular 
attention paid to the General Factors Affecting Administrative Action 
set forth in Section III of these Guidelines. The response should 
include all documentary or other evidence available to the Subject 
Person that supports the arguments set forth in the response. OFAC will 
consider all relevant materials submitted.
    3. Penalty Notice. If OFAC receives no response to a Pre-Penalty 
Notice within the time prescribed in the Pre-Penalty Notice, or if 
following the receipt of a response to a Pre-Penalty Notice and a review 
of the information and evidence contained therein OFAC concludes that a 
civil monetary penalty is warranted, a Penalty Notice generally will be 
issued in accordance with the procedures set forth in the particular 
regulations governing the conduct giving rise to the violation. A 
Penalty Notice constitutes a final agency determination that a violation 
has occurred. The penalty amount set forth in the Penalty Notice will 
take into account relevant additional information provided in response 
to a Pre-Penalty Notice. In the absence of a response to a Pre-Penalty 
Notice, the penalty amount set forth in the Penalty Notice will 
generally be the same as the proposed penalty set forth in the Pre-
Penalty Notice.
    4. Referral to Financial Management Division. The imposition of a 
civil monetary penalty pursuant to a Penalty Notice creates a debt due 
the U.S. Government. OFAC will advise Treasury's Financial Management 
Division upon the imposition of a penalty. The Financial Management 
Division may take follow-up action to collect the penalty assessed if it 
is not paid within the prescribed time period set forth in the Penalty 
Notice. In addition or instead, the matter may be referred to the U.S. 
Department of Justice for appropriate action to recover the penalty.

[[Page 90]]

    5. Final Agency Action. The issuance of a Penalty Notice constitutes 
final agency action with respect to the violation(s) for which the 
penalty is assessed.

                       B. Amount of Civil Penalty

    1. Egregious case. In those cases in which a civil monetary penalty 
is deemed appropriate, OFAC will make a determination as to whether a 
case is deemed ``egregious'' for purposes of the base penalty 
calculation. This determination will be based on an analysis of the 
applicable General Factors. In making the egregiousness determination, 
OFAC generally will give substantial weight to General Factors A 
(``willful or reckless violation of law''), B (``awareness of conduct at 
issue''), C (``harm to sanctions program objectives'') and D 
(``individual characteristics''), with particular emphasis on General 
Factors A and B. A case will be considered an ``egregious case'' where 
the analysis of the applicable General Factors, with a focus on those 
General Factors identified above, indicates that the case represents a 
particularly serious violation of the law calling for a strong 
enforcement response. A determination that a case is ``egregious'' will 
be made by the Director or Deputy Director.
    2. Pre-Penalty Notice. The penalty amount proposed in a Pre-Penalty 
Notice shall generally be calculated as follows, except that neither the 
base amount nor the proposed penalty will exceed the applicable 
statutory maximum amount: \6\
---------------------------------------------------------------------------

    \6\ For apparent violations identified in the Cuba Penalty Schedule, 
68 Fed. Reg. 4429 (Jan. 29, 2003), for which a civil monetary penalty 
has been deemed appropriate, the base penalty amount shall equal the 
amount set forth in the Schedule for such violation, except that the 
base penalty amount shall be reduced by 50% in cases of voluntary self-
disclosure.
---------------------------------------------------------------------------

                      a. Base Category Calculation

    i. In a non-egregious case, if the apparent violation is disclosed 
through a voluntary self-disclosure by the Subject Person, the base 
amount of the proposed civil penalty in the Pre-Penalty Notice shall be 
one-half of the transaction value, capped at a maximum base amount of 
$125,000 per violation (except in the case of transactions subject to 
the Trading With the Enemy Act, in which case the base amount of the 
proposed civil penalty will be capped at the lesser of $125,000 or one-
half of the maximum statutory penalty under TWEA, which at the time of 
publication of these Guidelines equaled $32,500 per violation).
    ii. In a non-egregious case, if the apparent violation comes to 
OFAC's attention by means other than a voluntary self-disclosure, the 
base amount of the proposed civil penalty in the Pre-Penalty Notice 
shall be the ``applicable schedule amount,'' as defined above (capped at 
a maximum base amount of $250,000 per violation, or, in the case of 
transactions subject to the Trading With the Enemy Act, capped at the 
lesser of $250,000 or the maximum statutory penalty under TWEA, which at 
the time of publication of these Guidelines equaled a maximum of $65,000 
per violation).
    iii. In an egregious case, if the apparent violation is disclosed 
through a voluntary self-disclosure by a Subject Person, the base amount 
of the proposed civil penalty in the Pre-Penalty Notice shall be one-
half of the applicable statutory maximum penalty applicable to the 
violation.
    iv. In an egregious case, if the apparent violation comes to OFAC's 
attention by means other than a voluntary self-disclosure, the base 
amount of the proposed civil penalty in the Pre-Penalty Notice shall be 
the applicable statutory maximum penalty amount applicable to the 
violation.
    The following matrix represents the base amount of the proposed 
civil penalty for each category of violation:

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[GRAPHIC] [TIFF OMITTED] TR09NO09.016

          b. Adjustment for Applicable Relevant General Factors

    The base amount of the proposed civil penalty may be adjusted to 
reflect applicable General Factors for Administrative Action set forth 
in Section III of these Guidelines. Each factor may be considered 
mitigating or aggravating, resulting in a lower or higher proposed 
penalty amount. As a general matter, in those cases where the following 
General Factors are present, OFAC will adjust the base proposed penalty 
amount in the following manner:
    i. In cases involving substantial cooperation with OFAC but no 
voluntary self-disclosure as defined herein, including cases in which an 
apparent violation is reported to OFAC by a third party but the Subject 
Person provides substantial additional information regarding the 
apparent violation and/or other related violations, the base penalty 
amount generally will be reduced between 25 and 40 percent. Substantial 
cooperation in cases involving voluntary self-disclosure may also be 
considered as a further mitigating factor.
    ii. In cases involving a Subject Person's first violation, the base 
penalty amount generally will be reduced up to 25 percent. An apparent 
violation generally will be considered a ``first violation'' if the 
Subject Person has not received a penalty notice or Finding of Violation 
from OFAC in the five years preceding the date of the transaction giving 
rise to the apparent violation. A group of substantially similar 
apparent violations addressed in a single Pre-Penalty Notice shall be 
considered as a single violation for purposes of this subsection. In 
those cases where a prior penalty notice or Finding of Violation within 
the preceding five years involved conduct of a substantially different 
nature

[[Page 92]]

from the apparent violation at issue, OFAC may consider the apparent 
violation at issue a ``first violation.'' In determining the extent of 
any mitigation for a first violation, OFAC may consider any prior OFAC 
enforcement action taken with respect to the Subject Person, including 
any cautionary, warning or evaluative letters issued, or any civil 
monetary settlements entered into with OFAC.
    In all cases, the proposed penalty amount will not exceed the 
applicable statutory maximum.
    In cases involving a large number of apparent violations, where the 
transaction value of all apparent violations is either unknown or would 
require a disproportionate allocation of resources to determine, OFAC 
may estimate or extrapolate the transaction value of the total universe 
of apparent violations in determining the amount of any proposed civil 
monetary penalty.
    3. Penalty Notice. The amount of the proposed civil penalty in the 
Pre-Penalty Notice will be the presumptive starting point for 
calculation of the civil penalty amount in the Penalty Notice. OFAC may 
adjust the penalty amount in the Penalty Notice based on:
    a. Evidence presented by the Subject Person in response to the Pre-
Penalty Notice, or otherwise received by OFAC with respect to the 
underlying violation(s); and/or
    b. Any modification resulting from further review and 
reconsideration by OFAC of the proposed civil monetary penalty in light 
of the General Factors for Administrative Action set forth in Section 
III above.
    In no event will the amount of the civil monetary penalty in the 
Penalty Notice exceed the proposed penalty set forth in the Pre-Penalty 
Notice by more than 10 percent, or include additional alleged 
violations, unless a revised Pre-Penalty Notice has first been sent to 
the Subject Person as set forth above. In the event that OFAC determines 
upon further review that no penalty is appropriate, it will so inform 
the Subject Person in a no-action letter, a cautionary letter, or a 
Finding of Violation.

                             C. Settlements

    A settlement does not constitute a final agency determination that a 
violation has occurred.
    1. Settlement Process. Settlement discussions may be initiated by 
OFAC, the Subject Person or the Subject Person's authorized 
representative. Settlements generally will be negotiated in accordance 
with the principles set forth in these Guidelines with respect to 
appropriate penalty amounts. OFAC may condition the entry into or 
continuation of settlement negotiations on the execution of a tolling 
agreement with respect to the statute of limitations.
    2. Settlement Prior to Issuance of Pre-Penalty Notice. Where 
settlement discussions occur prior to the issuance of a Pre-Penalty 
Notice, the Subject Person may request in writing that OFAC withhold 
issuance of a Pre-Penalty Notice pending the conclusion of settlement 
discussions. OFAC will generally agree to such a request as long as 
settlement discussions are continuing in good faith and the statute of 
limitations is not at risk of expiring.
    3. Settlement Following Issuance of Pre-Penalty Notice. If a matter 
is settled after a Pre-Penalty Notice has been issued, but before a 
final Penalty Notice is issued, OFAC will not make a final determination 
as to whether a sanctions violation has occurred. In the event no 
settlement is reached, the period specified for written response to the 
Pre-Penalty Notice remains in effect unless additional time is granted 
by OFAC.
    4. Settlements of Multiple Apparent Violations. A settlement 
initiated for one apparent violation may also involve a comprehensive or 
global settlement of multiple apparent violations covered by other Pre-
Penalty Notices, apparent violations for which a Pre-Penalty Notice has 
not yet been issued by OFAC, or previously unknown apparent violations 
reported to OFAC during the pendency of an investigation of an apparent 
violation.

                                  Annex

    The following matrix can be used by financial institutions to 
evaluate their compliance programs:

[[Page 93]]



                                                OFAC Risk Matrix
----------------------------------------------------------------------------------------------------------------
                 Low                                Moderate                                High
----------------------------------------------------------------------------------------------------------------
Stable, well-known customer base in   Customer base changing due to         A large, fluctuating client base in
 a localized environment.              branching, merger, or acquisition     an international environment.
                                       in the domestic market.
Few high-risk customers; these may    A moderate number of high-risk        A large number of high-risk
 include nonresident aliens, foreign   customers.                            customers.
 customers (including accounts with
 U.S. powers of attorney), and
 foreign commercial customers.
No overseas branches and no           Overseas branches or correspondent    Overseas branches or multiple
 correspondent accounts with foreign   accounts with foreign banks.          correspondent accounts with foreign
 banks.                                                                      banks.
No electronic services (e.g., e-      The institution offers limited        The institution offers a wide array
 banking) offered, or products         electronic (e.g., e-banking)          of electronic (e.g., e-banking)
 available are purely informational    products and services.                products and services (i.e.,
 or non-transactional.                                                       account transfers, e-bill payment,
                                                                             or accounts opened via the
                                                                             Internet).
Limited number of funds transfers     A moderate number of funds            A high number of customer and non-
 for customers and non-customers,      transfers, mostly for customers.      customer funds transfers, including
 limited third-party transactions,     Possibly, a few international funds   international funds transfers.
 and no international funds            transfers from personal or business
 transfers.                            accounts.
No other types of international       Limited other types of international  A high number of other types of
 transactions, such as trade           transactions.                         international transactions.
 finance, cross-border ACH, and
 management of sovereign debt.
No history of OFAC actions. No        A small number of recent actions      Multiple recent actions by OFAC,
 evidence of apparent violation or     (i.e., actions within the last five   where the institution has not
 circumstances that might lead to a    years) by OFAC, including notice      addressed the issues, thus leading
 violation.                            letters, or civil money penalties,    to an increased risk of the
                                       with evidence that the institution    institution undertaking similar
                                       addressed the issues and is not at    violations in the future.
                                       risk of similar violations in the
                                       future.
Management has fully assessed the     Management exhibits a reasonable      Management does not understand, or
 institution's level of risk based     understanding of the key aspects of   has chosen to ignore, key aspects
 on its customer base and product      OFAC compliance and its commitment    of OFAC compliance risk. The
 lines. This understanding of risk     is generally clear and                importance of compliance is not
 and strong commitment to OFAC         satisfactorily communicated           emphasized or communicated
 compliance is satisfactorily          throughout the organization, but it   throughout the organization.
 communicated throughout the           may lack a program appropriately
 organization.                         tailored to risk.
The board of directors, or board      The board has approved an OFAC        The board has not approved an OFAC
 committee, has approved an OFAC       compliance program that includes      compliance program, or policies,
 compliance program that includes      most of the appropriate policies,     procedures, controls, and
 policies, procedures, controls, and   procedures, controls, and             information systems are
 information systems that are          information systems necessary to      significantly deficient.
 adequate, and consistent with the     ensure compliance, but some
 institution's OFAC risk profile.      weaknesses are noted.
Staffing levels appear adequate to    Staffing levels appear generally      Management has failed to provide
 properly execute the OFAC             adequate, but some deficiencies are   appropriate staffing levels to
 compliance program.                   noted.                                handle workload.
Authority and accountability for      Authority and accountability are      Authority and accountability for
 OFAC compliance are clearly defined   defined, but some refinements are     compliance have not been clearly
 and enforced, including the           needed. A qualified OFAC officer      established. No OFAC compliance
 designation of a qualified OFAC       has been designated.                  officer, or an unqualified one, has
 officer.                                                                    been appointed. The role of the
                                                                             OFAC officer is unclear.
Training is appropriate and           Training is conducted and management  Training is sporadic and does not
 effective based on the                provides adequate resources given     cover important regulatory and risk
 institution's risk profile, covers    the risk profile of the               areas or is nonexistent.
 applicable personnel, and provides    organization; however, some areas
 necessary up-to-date information      are not covered within the training
 and resources to ensure compliance.   program.
The institution employs strong        The institution employs limited       The institution does not employ
 quality control methods.              quality control methods.              quality control methods.
----------------------------------------------------------------------------------------------------------------


[[Page 94]]


[74 FR 57601, Nov. 9, 2009]



PART 505_REGULATIONS PROHIBITING TRANSACTIONS INVOLVING THE SHIPMENT OF 

CERTAIN MERCHANDISE BETWEEN FOREIGN COUNTRIES--Table of Contents



Sec.
505.01 Short title.
505.10 Prohibitions.
505.20 Definitions.
505.30 Licenses.
505.31 General license for offshore transactions from certain countries.
505.40 Records and reports.
505.50 Penalties.
505.60 Procedures.

    Authority: 31 U.S.C. 321(b); 50 U.S.C. App. 1-44; Pub. L. 101-410, 
104 Stat. 890 (28 U.S.C. 2461 note); E.O. 9193, 7 FR 5205, 3 CFR, 1938-
1943 Comp., p. 1174; E.O. 9989, 13 FR 4891, 3 CFR, 1943-1948 Comp., p. 
748.

    Source: 18 FR 4291, July 23, 1953, unless otherwise noted.



Sec. 505.01  Short title.

    The regulations in this part may be referred to as the Transaction 
Control Regulations.

[19 FR 5483, Aug. 27, 1954]



Sec. 505.10  Prohibitions.

    Except as specifically authorized by the Secretary of the Treasury 
(or any person, agency, or instrumentality designated by him) by means 
of regulations, rulings, instructions, licenses, or otherwise, no person 
within the United States, for his own account or that of another, may 
purchase or sell or arrange the purchase or sale of any merchandise in 
any foreign country or obtain from any banking institution a credit or 
payment in connection therewith, or attempt to do any of the foregoing, 
if:
    (a) The transaction involves the shipment from any foreign country 
of any merchandise directly or indirectly to any destination within a 
country on the attached schedule, and
    (b) The merchandise is of a type the unauthorized exportation of 
which from the United States is prohibited by regulations issued under 
the Arms Export Control Act of 1976, 22 U.S.C. 2778, or the Atomic 
Energy Act of 1954, 42 U.S.C. 2011-2297g-4, or successor acts 
restricting the esportation of strategic goods.

                                Schedule

Albania
Bulgaria
Cambodia
The Czech Republic
Estonia
Latvia
Lithuania
North Korea
Mongolia
People's Republic of China
Poland
Romania
The Slovak Republic
The geographic area formerly known as the Union of Soviet Socialist 
Republics
Vietnam

[30 FR 1284, Feb. 6, 1965, as amended at 50 FR 27437, July 3, 1985; 56 
FR 45895, Sept. 9, 1991; 58 FR 13198, Mar. 10, 1993; 60 FR 34144, June 
30, 1995]



Sec. 505.20  Definitions.

    The definitions contained in subpart C, part 500 of this chapter are 
applicable to any terms therein defined which are used in this part.

[19 FR 5483, Aug. 27, 1954]



Sec. 505.30  Licenses.

    No regulation, ruling, instruction or license authorizes a 
transaction prohibited by Sec. 505.10 unless the regulation, ruling, 
instruction or license is issued by the Treasury Department and 
specifically refers to that section. For provisions relating to 
licensing procedures, see part 501, subpart E, of this chapter. 
Licensing actions taken pursuant to part 501 of this chapter with 
respect to the prohibitions contained in this part are considered 
actions taken pursuant to this part.

[18 FR 4291, July 23, 1953, as amended at 68 FR 53657, Sept. 11, 2003]



Sec. 505.31  General license for offshore transactions from certain countries.

    (a) Except as provided in paragraph (b) of this section, all 
transactions prohibited by Sec. 505.10 are hereby authorized provided:
    (1) Shipment is to a country listed in the schedule to Sec. 505.10, 
other than North Korea; and

[[Page 95]]

    (2) Shipment is made from and licensed by one of the following 
foreign countries: Australia, Austria, Belgium, Canada, Denmark, France, 
Finland, Germany, Greece, Hong Kong, Ireland, Italy, Japan, Luxembourg, 
The Netherlands, New Zealand, Norway, Portugal, Spain, Sweden, 
Switzerland, Turkey, or the United Kingdom.
    (b) This section does not authorize any transactions otherwise 
prohibited by this chapter.

[37 FR 3520, Feb. 17, 1972, as amended at 41 FR 16557, Apr. 20, 1976; 56 
FR 45895, Sept. 9, 1991; 58 FR 13198, Mar. 10, 1993]



Sec. 505.40  Records and reports.

    For provisions relating to records and reports, see Sec. Sec. 
501.601 and 501.602 of this chapter.

[18 FR 4291, July 23, 1953, as amended at 62 FR 45106, Aug. 25, 1997]



Sec. 505.50  Penalties.

    For provisions relating to penalties, see part 501, subpart D, of 
this chapter.

[63 FR 10331, Mar. 3, 1998, as amended at 68 FR 53657, Sept. 11, 2003]



Sec. 505.60  Procedures.

    For license application procedures and procedures relating to 
amendments, modifications, or revocations of licenses; administrative 
decisions; rulemaking; and requests for documents pursuant to the 
Freedom of Information and Privacy Acts (5 U.S.C. 552 and 552a), see 
part 501, subpart E, of this chapter.

[62 FR 45106, Aug. 25, 1997, as amended at 68 FR 53657, Sept. 11, 2003]



PART 515_CUBAN ASSETS CONTROL REGULATIONS--Table of Contents



      Subpart A_Relation of This Part to Other Laws and Regulations

Sec.
515.101 Relation of this part to other laws and regulations.

                         Subpart B_Prohibitions

515.201 Transactions involving designated foreign countries or their 
          nationals; effective date.
515.202 Transactions with respect to securities registered or inscribed 
          in the name of a designated national.
515.203 Effect of transfers violating the provisions of this part.
515.204 Importation of and dealings in certain merchandise.
515.205 Holding of certain types of blocked property in interest-bearing 
          accounts.
515.206 Exempt transactions.
515.207 Entry of vessels engaged in trade with Cuba.
515.208 Restrictions on loans, credits and other financing.

                      Subpart C_General Definitions

515.301 Foreign country.
515.302 National.
515.303 Nationals of more than one foreign country.
515.305 Designated national.
515.306 Specially designated national.
515.307 Unblocked national.
515.308 Person.
515.309 Transactions.
515.310 Transfer.
515.311 Property; property interests.
515.312 Interest.
515.313 Property subject to the jurisdiction of the United States.
515.314 Banking institution.
515.316 License.
515.317 General license.
515.318 Specific license.
515.319 Blocked account.
515.320 Domestic bank.
515.321 United States; continental United States.
515.322 Authorized trade territory; member of the authorized trade 
          territory.
515.323 Occupied area.
515.325 National securities exchange.
515.326 Custody of safe deposit boxes.
515.327 Blocked estate of a decedent.
515.329 Person subject to the jurisdiction of the United States.
515.330 Person within the United States.
515.331 Merchandise.
515.332 Information and informational materials.
515.333 Depository institution.
515.334 United States national.
515.335 Permanent resident alien.
515.336 Confiscated.
515.337 Prohibited officials of the Government of Cuba.
515.338 Prohibited members of the Cuban Communist Party.
515.339 Close relative.

                        Subpart D_Interpretations

515.401 Reference to amended sections.
515.402 Effect of amendment of sections of this part or of other orders, 
          etc.
515.403 Termination and acquisition of the interest of a designated 
          national.

[[Page 96]]

515.404 Transactions between principal and agent.
515.405 Exportation of securities, currency, checks, drafts and 
          promissory notes.
515.406 Drafts under irrevocable letters of credit; documentary drafts.
515.407 Administration of blocked estates of decedents.
515.408 Access to certain safe deposit boxes prohibited.
515.409 Certain payments to a designated foreign country and nationals 
          through third countries.
515.410 Dealing abroad in Cuban origin commodities.
515.411--515.413 [Reserved]
515.415 Travel to Cuba; transportation of certain Cuban nationals.
515.416-515.419 [Reserved]
515.420 Travel to Cuba.

 Subpart E_Licenses, Authorizations, and Statements of Licensing Policy

515.501 General and specific licensing procedures.
515.502 Effect of subsequent license or authorization.
515.503 Exclusion from licenses and authorizations.
515.504 Certain judicial proceedings with respect to property of 
          designated nationals.
515.505 Certain Cuban nationals unblocked; transactions of certain other 
          Cuban nationals lawfully present in the United States.
515.506-515.507 [Reserved]
515.508 Payments to blocked accounts in domestic banks.
515.509 Entries in certain accounts for normal service charges.
515.510 Payments to the United States, States and political 
          subdivisions.
515.511 Transactions by certain business enterprises.
515.512 Provision of certain legal services authorized.
515.513 Purchase and sale of certain securities.
515.514 Payment of dividends and interest on and redemption and 
          collection of securities.
515.515 Transfers of securities to blocked accounts in domestic banks.
515.516 Voting and soliciting of proxies on securities.
515.517 Access to safe deposit boxes under certain conditions.
515.518 [Reserved]
515.519 Limited payments from accounts of United States citizens abroad.
515.520 Payments from accounts of United States citizens in employ of 
          United States in foreign countries and certain other persons.
515.521 U.S. assets of certain Cuban corporations.
515.522 U.S. assets of certain Cuban decedents.
515.523 Transactions incident to the administration of decedents' 
          estates.
515.524 Payment from, and transactions in the administration of certain 
          trusts and estates.
515.525 Certain transfers by operation of law.
515.526 Transactions involving blocked life insurance policies.
515.527 Certain transactions with respect to United States intellectual 
          property.
515.528 Certain transactions with respect to blocked foreign 
          intellectual property.
515.529 Powers of attorney.
515.530 Exportation of powers of attorney or instructions relating to 
          certain types of transactions.
515.531 Payment of certain checks and drafts.
515.532 Completion of certain securities transactions.
515.533 Transactions incident to exportations from the United States and 
          reexportations of 100% U.S.-origin items to Cuba; negotiation 
          of executory contracts.
515.535 Exchange of certain securities.
515.536 Certain transactions with respect to merchandise affected by 
          Sec. 515.204.
515.540 [Reserved]
515.542 Mail and telecommunications-related transactions.
515.543 Proof of origin.
515.544 Gifts of Cuban origin goods.
515.545 Transactions related to information and informational materials.
515.546 Accounts of Cuban sole proprietorships.
515.547 Research samples.
515.548 Services rendered by Cuba to United States aircraft.
515.549 Bank accounts and other property of non-Cuban citizens who were 
          in Cuba on or after July 8, 1963.
515.550 Certain vessel transactions authorized.
515.551 Joint bank accounts.
515.552 Proceeds of insurance policies.
515.553 Bank accounts of official representatives in Cuba of foreign 
          governments.
515.554 Transfers of abandoned property under State laws.
515.555 Assets of Cuban firms wholly or substantially owned by U.S. 
          citizens.
515.556 [Reserved]
515.557 Accounts of Cuban partnerships.
515.558 Bunkering of Cuban vessels and fueling of Cuban aircraft by 
          American-owned or controlled foreign firms.
515.559 Certain transactions by U.S.-owned or controlled foreign firms 
          with Cuba.

[[Page 97]]

515.560 Travel-related transactions to, from, and within Cuba by persons 
          subject to U.S. jurisdiction.
515.561 Persons visiting close relatives in Cuba.
515.562 Officials of the U.S. government, foreign governments, and 
          certain intergovernmental organizations traveling to, from, 
          and within Cuba on official business.
515.563 Journalistic activities in Cuba.
515.564 Professional research and professional meetings in Cuba.
515.565 Educational activities.
515.566 Religious activities in Cuba.
515.567 Public performances, athletic and other competitions, and 
          exhibitions.
515.568 [Reserved]
515.569 Foreign passengers' baggage.
515.570 Remittances to nationals of Cuba.
515.571 Certain transactions incident to travel to, from, and within the 
          United States by Cuban nationals.
515.572 Authorization of transactions incident to the provision of 
          travel services, carrier services, and remittance forwarding 
          services.
515.573 Transactions by news organizations.
515.574 Support for the Cuban people.
515.575 Humanitarian projects.
515.576 Activities of private foundations or research or educational 
          institutes.
515.577 Authorized transactions necessary and ordinarily incident to 
          publishing.

                            Subpart F_Reports

515.601 Records and reports.

                           Subpart G_Penalties

515.701 Penalties.

                          Subpart H_Procedures

515.801 Procedures.
515.802 Delegation by the Secretary of the Treasury.
515.803 Customs procedures; merchandise specified in Sec. 515.204.

                   Subpart I_Miscellaneous Provisions

515.901 Paperwork Reduction Act notice.

    Authority: 18 U.S.C. 2332d; 22 U.S.C. 2370(a), 6001-6010; 22 U.S.C. 
7201-7211; 31 U.S.C. 321(b); 50 U.S.C. App 1-44; Pub. L. 101-410, 104 
Stat. 890 (28 U.S.C. 2461 note); Pub. L. 104-114, 110 Stat. 785 (22 
U.S.C. 6082); Pub. L. 105-277, 112 Stat. 2681; Pub. L. 111-8, 123 Stat. 
524; Pub. L. 111-117, 123 Stat. 3034; E.O. 9193, 7 FR 5205, 3 CFR, 1938-
1943 Comp., p. 1174; E.O. 9989, 13 FR 4891, 3 CFR, 1943-1948 Comp., p. 
748; Proc. 3447, 27 FR 1085, 3 CFR, 1959-1963 Comp., p. 157; E.O. 12854, 
58 FR 36587, 3 CFR, 1993 Comp., p. 614.

    Source: 28 FR 6974, July 9, 1963, unless otherwise noted.



      Subpart A_Relation of This Part to Other Laws and Regulations



Sec. 515.101  Relation of this part to other laws and regulations.

    (a) This part is separate from, and independent of, the other parts 
of this chapter with the exception of part 501 of this chapter, the 
recordkeeping and reporting requirements and license application and 
other procedures of which apply to this part. No license or 
authorization contained in or issued pursuant to one of those parts, or 
any other provision of law, authorizes any transaction prohibited by 
this part.
    (b) No license or authorization contained in or issued pursuant to 
this part shall be deemed to authorize any transaction prohibited by any 
law other than the Trading With the Enemy Act, 50 U.S.C. App. 5(b), as 
amended, the Foreign Assistance Act of 1961, 22 U.S.C. 2370, or any 
proclamation, order, regulation or license issued pursuant thereto.

[50 FR 27437, July 3, 1985, as amended at 62 FR 45106, Aug. 25, 1997]



                         Subpart B_Prohibitions



Sec. 515.201  Transactions involving designated foreign countries or their 

nationals; effective date.

    (a) All of the following transactions are prohibited, except as 
specifically authorized by the Secretary of the Treasury (or any person, 
agency, or instrumentality designated by him) by means of regulations, 
rulings, instructions, licenses, or otherwise, if either such 
transactions are by, or on behalf of, or pursuant to the direction of a 
foreign country designated under this part, or any national thereof, or 
such transactions involve property in which a foreign country designated 
under this part, or any national thereof, has at any time on or since 
the effective date of this section had any interest of any nature 
whatsoever, direct or indirect:
    (1) All transfers of credit and all payments between, by, through, 
or to any banking institution or banking institutions wheresoever 
located, with respect

[[Page 98]]

to any property subject to the jurisdiction of the United States or by 
any person (including a banking institution) subject to the jurisdiction 
of the United States;
    (2) All transactions in foreign exchange by any person within the 
United States; and
    (3) The exportation or withdrawal from the United States of gold or 
silver coin or bullion, currency or securities, or the earmarking of any 
such property, by any person within the United States.
    (b) All of the following transactions are prohibited, except as 
specifically authorized by the Secretary of the Treasury (or any person, 
agency, or instrumentality designated by him) by means of regulations, 
rulings, instructions, licenses, or otherwise, if such transactions 
involve property in which any foreign country designated under this 
part, or any national thereof, has at any time on or since the effective 
date of this section had any interest of any nature whatsoever, direct 
or indirect:
    (1) All dealings in, including, without limitation, transfers, 
withdrawals, or exportations of, any property or evidences of 
indebtedness or evidences of ownership of property by any person subject 
to the jurisdiction of the United States; and
    (2) All transfers outside the United States with regard to any 
property or property interest subject to the jurisdiction of the United 
States.
    (c) Any transaction for the purpose or which has the effect of 
evading or avoiding any of the prohibitions set forth in paragraph (a) 
or (b) of this section is hereby prohibited.
    (d) For the purposes of this part, the term foreign country 
designated under this part and the term designated foreign country mean 
Cuba and the term effective date and the term effective date of this 
section mean with respect to Cuba, or any national thereof, 12:01 a.m., 
e.s.t., July 8, 1963.
    (e) When a transaction results in the blocking of funds at a banking 
institution pursuant to this section and a party to the transaction 
believes the funds have been blocked due to mistaken identity, that 
party may seek to have such funds unblocked pursuant to the 
administrative procedures set forth in Sec. 501.806 of this chapter.

[28 FR 6974, July 9, 1963, as amended at 62 FR 45106, Aug. 25, 1997]



Sec. 515.202  Transactions with respect to securities registered or inscribed 

in the name of a designated national.

    Unless authorized by a license expressly referring to this section, 
the acquisition, transfer (including the transfer on the books of any 
issuer or agent thereof), disposition, transportation, importation, 
exportation, or withdrawal of, or the endorsement or guaranty of 
signatures on or otherwise dealing in any security (or evidence thereof) 
registered or inscribed in the name of any designated national is 
prohibited irrespective of the fact that at any time (either prior to, 
on, or subsequent to the ``effective date'') the registered or inscribed 
owner thereof may have, or appears to have, assigned, transferred or 
otherwise disposed of any such security.



Sec. 515.203  Effect of transfers violating the provisions of this part.

    (a) Any transfer after the ``effective date'' which is in violation 
of any provision of this part or of any regulation, ruling, instruction, 
license, or other direction or authorization thereunder and involves any 
property in which a designated national has or has had an interest since 
such ``effective date'' is null and void and shall not be the basis for 
the assertion or recognition of any interest in or right, remedy, power 
or privilege with respect to such property.
    (b) No transfer before the ``effective date'' shall be the basis for 
the assertion or recognition of any right, remedy, power, or privilege 
with respect to, or interest in, any property in which a designated 
national has or has had an interest since the ``effective date'' unless 
the person with whom such property is held or maintained had written 
notice of the transfer or by any written evidence had recognized such 
transfer prior to such ``effective date.''
    (c) Unless otherwise provided, an appropriate license or other 
authorization issued by or pursuant to the direction or authorization of 
the Secretary of the Treasury before, during or after

[[Page 99]]

a transfer shall validate such transfer or render it enforceable to the 
same extent as it would be valid or enforceable but for the provisions 
of section 5(b) of the Trading With the Enemy Act, as amended, and this 
part and any ruling, order, regulation, direction or instruction issued 
hereunder.
    (d) Transfers of property which otherwise would be null and void, or 
unenforceable by virtue of the provisions of this section shall not be 
deemed to be null and void, or unenforceable pursuant to such 
provisions, as to any person with whom such property was held or 
maintained (and as to such person only) in cases in which such person is 
able to establish each of the following:
    (1) Such transfer did not represent a willful violation of the 
provisions of this part by the person with whom such property was held 
or maintained;
    (2) The person with whom such property was held or maintained did 
not have reasonable cause to know or suspect, in view of all the facts 
and circumstances known or available to such person, that such transfer 
required a license or authorization by or pursuant to the provisions of 
this part and was not so licensed or authorized or if a license or 
authorization did purport to cover the transfer, that such license or 
authorization had been obtained by misrepresentation or the withholding 
of material facts or was otherwise fraudulently obtained; and
    (3) Promptly upon discovery that:
    (i) Such transfer was in violation of the provisions of this part or 
any regulation, ruling, instruction, license or other direction or 
authorization thereunder, or
    (ii) Such transfer was not licensed or authorized by the Secretary 
of the Treasury, or
    (iii) If a license did purport to cover the transfer, such license 
had been obtained by misrepresentation or the withholding of material 
facts or was otherwise fraudulently obtained;

the person with whom such property was held or maintained filed with the 
Treasury Department, Washington, D.C., a report in triplicate setting 
forth in full the circumstances relating to such transfer. The filing of 
a report in accordance with the provisions of this paragraph shall not 
be deemed to be compliance or evidence of compliance with paragraphs (d) 
(1) and (2) of this section.
    (e) Unless licensed or authorized by Sec. 515.504 or otherwise 
licensed or authorized pursuant to this chapter any attachment, 
judgment, decree, lien, execution, garnishment, or other judicial 
process is null and void with respect to any property in which on or 
since the ``effective date'' there existed the interest of a designated 
foreign country or national thereof.
    (f) For the purpose of this section the term property includes gold, 
silver, bullion, currency, coin, credit, securities (as that term is 
defined in section 2(1) of the Securities Act of 1933, as amended), 
bills of exchange, notes, drafts, acceptances, checks, letters of 
credit, book credits, debts, claims, contracts, negotiable documents of 
title, mortgages, liens, annuities, insurance policies, options and 
futures in commodities, and evidences of any of the foregoing. The term 
property shall not, except to the extent indicated, be deemed to include 
chattels or real property.

[28 FR 6974, July 9, 1963, as amended at 28 FR 7941, Aug. 3, 1963]



Sec. 515.204  Importation of and dealings in certain merchandise.

    (a) Except as specifically authorized by the Secretary of the 
Treasury (or any person, agency, or instrumentality designated by him) 
by means of regulations, rulings, instructions, licenses, or otherwise, 
no person subject to the jurisdiction of the United States may purchase, 
transport, import, or otherwise deal in or engage in any transaction 
with respect to any merchandise outside the United States if such 
merchandise:
    (1) Is of Cuban origin; or
    (2) Is or has been located in or transported from or through Cuba; 
or
    (3) Is made or derived in whole or in part of any article which is 
the growth, produce or manufacture of Cuba.
    (b) [Reserved]

[[Page 100]]



Sec. 515.205  Holding of certain types of blocked property in interest-bearing 

accounts.

    (a) Except as provided by paragraphs (d), (e) and (f) of this 
section, or as authorized by the Secretary of the Treasury or his 
delegate by specific license, any person holding any property included 
in paragraph (h) of this section is prohibited from holding, 
withholding, using, transferring, engaging in any transactions 
involving, or exercising any right, power, or privilege with respect to 
any such property, unless it is held in an interest-bearing account in a 
domestic bank.
    (b) Any person presently holding property subject to the provisions 
of paragraph (a) of this section which, as of the effective date of this 
section, is not being held in accordance with the provisions of that 
paragraph shall transfer such property to or hold such property or cause 
such property to be held in an interest-bearing account in any domestic 
bank within 30 days of the effective date of this section.
    (c) Any person holding any checks or drafts subject to the 
provisions of Sec. 515.201 is authorized and directed, wherever 
possible consistent with state law (except as otherwise specifically 
provided in paragraph (c)(3) of this section), to negotiate or present 
for collection or payment such instruments and credit the proceeds to 
interest-bearing accounts. Any transaction by any person incident to the 
negotiation, processing. presentment, collection or payment of such 
instruments and deposit of the proceeds into an interest-bearing account 
is hereby authorized: Provided that:
    (1) The transaction does not represent, directly or indirectly, a 
transfer of the interest of a designated national to any other country 
or person;
    (2) The proceeds are held in a blocked account indicating the 
designated national who is the payee or owner of the instrument; and,
    (3) In the case of a blocked check or draft which has been purchased 
by the maker/drawer from the drawee bank (e.g., cashier's check, money 
order, or traveler's check) or which is drawn against a presently 
existing account, such bank, on presentment of the instrument in 
accordance with the provisions of this section, shall either:
    (i) Pay the instrument (subject to paragraphs (c)(1) and (2) of this 
section) or
    (ii) Credit a blocked account on its books with the amount payable 
on the instrument.

In either event, the blocked account shall be identified as resulting 
from the proceeds of a blocked check or draft, and the identification 
shall include a reference to the names of both the maker and payee of 
the instrument.
    (d) Property subject to the provisions of paragraph (a) or (b) of 
this section, held by a person claiming a set-off against such property, 
is exempt from the provisions of paragraphs (a), (b) and (c) of this 
section to the extent of the set-off: Provided however, That interest 
shall be due from 30 days after the effective date of this section if it 
should ultimately be determined that the claim to a set-off is without 
merit.
    (e) Property subject to the provisions of paragraphs (a) and (b) of 
this section, held in a customer's account by a registered broker/dealer 
in securities, may continue to be held for the customer by the broker/
dealer provided interest is credited to the account on any balance not 
invested in securities in accordance with Sec. 515.513. The interest 
paid on such accounts by a broker/dealer who does not elect to hold such 
property for a customer's account in a domestic bank shall not be less 
than the maximum rate payable on the shortest time deposit available in 
any domestic bank in the jurisdiction in which the broker/dealer holds 
the account.
    (f) Property subject to the provisions of paragraphs (a) and (b) of 
this section, held by a state agency charged with the custody of 
abandoned or unclaimed property under Sec. 515.554 may continue to be 
held by the agency provided interest is credited to the blocked account 
in which the property is held by the agency, or the property is held by 
the agency in a blocked account in a domestic bank. The interest 
credited to such accounts by an agency which does not elect to hold such 
property in a domestic bank shall not be less than the maximum rate 
payable on

[[Page 101]]

the shortest time deposit available in any domestic bank in the state.
    (g) For purposes of this section, the term interest-bearing account 
means a blocked account earning interest at no less than the maximum 
rate payable on the shortest time deposit in the domestic bank where the 
account is held: Provided however, That such an account may include six-
month Treasury bills or insured certificates, with a maturity not 
exceeding six-months, appropriate to the amounts involved.
    (h) The following types of property are subject to paragraphs (a) 
and (b) of this section:
    (1) Any currency, bank deposit and bank accounts subject to the 
provisions of Sec. 515.201;
    (2) Any property subject to the provisions of Sec. 515.201 which 
consists, in whole or in part, of undisputed and either liquidated or 
matured debts, claims, obligations or other evidence of indebtedness, to 
the extent of any amount that is undisputed and liquidated or matured; 
and
    (3) Any proceeds resulting from the payment of an obligation under 
paragraph (c) of this section.
    (i) For purposes of this section, the term domestic bank includes 
any FSLIC-insured institution (as defined in 12 CFR 561.1).
    (j) For the purposes of this section the term person includes the 
United States Government or any agency or instrumentality thereof, 
except where the agency or instrumentality submits to the Office of 
Foreign Assets Control an opinion of its General Counsel that either:
    (1) It lacks statutory authority to comply with this section, or
    (2) The requirements of paragraphs (a) and (b) of this section are 
inconsistent with the statutory program under which it operates.

[44 FR 11770, Mar. 2, 1979]



Sec. 515.206  Exempt transactions.

    (a) Information and informational materials. (1) The importation 
from any country and the exportation to any country of information or 
informational materials as defined in Sec. 515.332, whether commercial 
or otherwise, regardless of format or medium of transmission, are exempt 
from the prohibitions and regulations of this part except for payments 
owed to Cuba for telecommunications services between Cuba and the United 
States, which are subject to the provisions of Sec. 515.542.
    (2) This section does not authorize transactions related to 
information or informational materials not fully created and in 
existence at the date of the transaction, or to the substantive or 
artistic alteration or enhancement of information or informational 
materials, or to the provision of marketing and business consulting 
services by a person subject to the jurisdiction of the United States. 
Such prohibited transactions include, without limitation, payment of 
advances for information or informational materials not yet created and 
completed, provision of services to market, produce or co-produce, 
create or assist in the creation of information or informational 
materials, and payment of royalties to a designated national with 
respect to income received for enhancements or alterations made by 
persons subject to the jurisdiction of the United States to information 
or informational materials imported from a designated national.
    (3) This section does not authorize transactions incident to the 
transmission of restricted technical data as defined in the Export 
Administration Regulations, 15 CFR parts 730-774, or to the exportation 
of goods for use in the transmission of any data. The exportation of 
such goods to designated foreign countries is prohibited, as provided in 
Sec. 515.201 of this part and Sec. 785.1 of the Export Administration 
Regulations.
    (4) This section does not authorize transactions related to travel 
to Cuba when such travel is not otherwise authorized under Sec. 
515.545.

    Example #1: A U.S. publisher ships 500 copies of a book to Cuba 
directly from Miami aboard a chartered aircraft, and receives payment by 
means of a letter of credit issued by a Cuban bank and confirmed by an 
American bank. These are permissible transactions under this section.
    Example #2: A Cuban party exports a single master copy of a Cuban 
motion picture to a U.S. party and licenses the U.S. party to duplicate, 
distribute, show and exploit in the United States the Cuban film in any 
medium, including home video distribution, for five years, with the 
Cuban party receiving

[[Page 102]]

40% of the net income. All transactions relating to the activities 
described in this example are authorized under this section or Sec. 
515.545.
    Example #3: A U.S. recording company proposes to contract with a 
Cuban musician to create certain musical compositions, and to advance 
royalties of $10,000 to the musician. The music written in Cuba is to be 
recorded in a studio that the recording company owns in the Bahamas. 
These are all prohibited transactions. The U.S. party is prohibited 
under Sec. 515.201 from contracting for the Cuban musician's services, 
from transferring $10,000 to Cuba to pay for those services, and from 
providing the Cuban with production services through the use of its 
studio in the Bahamas. No information or informational materials are in 
being at the time of these proposed transactions. However, the U.S. 
recording company may contract to purchase and import preexisting 
recordings by the Cuban musician, or to copy the recordings in the 
United States and pay negotiated royalties to Cuba under this section or 
Sec. 515.545.
    Example #4: A Cuban party enters into a subpublication agreement 
licensing a U.S. party to print and publish copies of a musicial 
composition and to sub-license rights of public performance, adaptation, 
and arrangement of the musical composition, with payment to be a 
percentage of income received. All transactions related to the 
activities described in this example are authorized under this section 
and Sec. 515.545, except for adaptation, and arrangement, which 
constitute artistic enhancement of the Cuban composition. Payment to the 
Cuban party may not reflect income received as a result of these 
enhancements.

    (b) Donation of food. The prohibitions contained in this part do not 
apply to transactions incident to the donation of food to 
nongovernmental organizations or individuals in Cuba.

[54 FR 5233, Feb. 2, 1989, as amended at 60 FR 39256, Aug. 2, 1995; 64 
FR 25812, May 13, 1999]



Sec. 515.207  Entry of vessels engaged in trade with Cuba.

    Except as specifically authorized by the Secretary of the Treasury 
(or any person, agency or instrumentality designated by him), by means 
of regulations, rulings, instructions, licenses or otherwise,
    (a) No vessel that enters a port or place in Cuba to engage in the 
trade of goods or the purchase or provision of services, may enter a 
U.S. port for the purpose of loading or unloading freight for a period 
of 180 days from the date the vessel departed from a port or place in 
Cuba; and
    (b) No vessel carrying goods or passengers to or from Cuba or 
carrying goods in which Cuba or a Cuban national has an interest may 
enter a U.S. port with such goods or passengers on board.

    Note to Sec. 515.207: For the waiver of the prohibitions contained 
in this section for certain vessels engaged in licensed or exempt trade 
with Cuba, see Sec. 515.550.

[58 FR 34710, June 29, 1993, as amended at 66 FR 36687, July 12, 2001]



Sec. 515.208  Restrictions on loans, credits and other financing.

    No United States national, permanent resident alien, or United 
States agency may knowingly make a loan, extend credit or provide other 
financing for the purpose of financing transactions involving 
confiscated property the claim to which is owned by a United States 
national, except for financing by a United States national owning such a 
claim for a transaction permitted under United States law.

[61 FR 37386, July 18, 1996]



                      Subpart C_General Definitions



Sec. 515.301  Foreign country.

    The term foreign country also includes, but not by way of 
limitation:
    (a) The state and the government of any such territory on or after 
the ``effective date'' as well as any political subdivision, agency, or 
instrumentality thereof or any territory, dependency, colony, 
protectorate, mandate, dominion, possession or place subject to the 
jurisdiction thereof,
    (b) Any other government (including any political subdivision, 
agency, or instrumentality thereof) to the extent and only to the extent 
that such government exercises or claims to exercise control, authority, 
jurisdiction or sovereignty over territory which on the ``effective 
date'' constituted such foreign country,
    (c) Any person to the extent that such person is, or has been, or to 
the extent that there is reasonable cause to believe that such person 
is, or has been, since the ``effective date,'' acting

[[Page 103]]

or purporting to act directly or indirectly for the benefit or on behalf 
of any of the foregoing, and
    (d) Any territory which on or since the ``effective date'' is 
controlled or occupied by the military, naval or police forces or other 
authority of such foreign country.



Sec. 515.302  National.

    (a) The term national when used with respect to a country shall 
include:
    (1) A subject or citizen of that country or any person who has been 
domiciled in or a permanent resident of that country at any time on or 
since the ``effective date,'' except persons who were permanent 
residents of or domiciled in that country in the service of the U.S. 
Government and persons whose transactions in that country were 
authorized by the Office of Foreign Assets Control.
    (2) Any partnership, association, corporation, or other organization 
that, on or since the effective date:
    (i) Was or has been organized under the laws of that country;
    (ii) Had or has had its principal place of business in that country; 
or
    (iii) Was or has been controlled by, or a substantial part of the 
stocks, share, bonds, debentures, notes, drafts, or other securities or 
obligations of which was or has been controlled by, directly or 
indirectly, that country and/or one or more nationals thereof.
    (3) Any organization's office or other sub-unit that is located 
within that country.
    (4) Any person to the extent that such person, on or since the 
``effective date'' was or has been acting or purporting to act directly 
or indirectly for the benefit or on behalf of any national of that 
country.
    (5) Any other person who there is reasonable cause to believe is a 
``national'' as defined in this section.
    (b) Persons who travel in Cuba do not become nationals of Cuba 
solely because of such travel.
    (c) The Secretary of the Treasury retains full power to determine 
that any person is or shall be deemed to be a ``national'' within the 
meaning of this section, and to specify the foreign country of which 
such person is or shall be deemed to be a national.

[28 FR 6974, July 9, 1963, as amended at 50 FR 27437, July 3, 1985; 64 
FR 25812, May 13, 1999; 68 FR 14144, Mar. 24, 2003]



Sec. 515.303  Nationals of more than one foreign country.

    (a) Any person who by virtue of any provision in this chapter is a 
national of more than one foreign country shall be deemed to be a 
national of each of such foreign countries.
    (b) In any case in which a person is a national of two or more 
designated foreign countries, as defined in this chapter, a license or 
authorization with respect to nationals of one of such designated 
foreign countries shall not be deemed to apply to such person unless a 
license or authorization of equal or greater scope is outstanding with 
respect to nationals of each other designated foreign country of which 
such person is a national.
    (c) In any case in which the combined interests of two or more 
designated foreign countries, as defined in this chapter, and/or 
nationals thereof are sufficient in the aggregate to constitute control 
or ownership of 25 per centum or more of the stock, shares, bonds, 
debentures, notes, drafts, or other securities or obligations of a 
partnership, association, corporation or other organization, but such 
control or a substantial part of such stock, shares, bonds, debentures, 
notes, drafts, or other securities or obligations is not held by any one 
such foreign country and/or national thereof, such partnership, 
association, corporation or other organization shall be deemed to be a 
national of each of such foreign countries.



Sec. 515.305  Designated national.

    For the purposes of this part, the term designated national shall 
mean Cuba and any national thereof including any person who is a 
specially designated national.



Sec. 515.306  Specially designated national.

    (a) The term specially designated national shall mean:
    (1) Any person who is determined by the Secretary of the Treasury to 
be a specially designated national,

[[Page 104]]

    (2) Any person who on or since the ``effective date'' has acted for 
or on behalf of the Government or authorities exercising control over a 
designated foreign country, or
    (3) Any partnership, association, corporation or other organization 
which on or since the ``effective date'' has been owned or controlled 
directly or indirectly by the Government or authorities exercising 
control over a designated foreign country or by any specially designated 
national.
    (b) [Reserved]

    Note to Sec. 515.306: Please refer to the appendices at the end of 
this chapter for listings of persons designated pursuant to this part. 
Section 501.807 of this chapter sets forth the procedures to be followed 
by persons seeking administrative reconsideration of their designation 
or that of a vessel as blocked, or who wish to assert that the 
circumstances resulting in the designation are no longer applicable.

[28 FR 6974, July 9, 1963, as amended at 61 FR 32938, June 26, 1996; 62 
FR 45106, Aug. 25, 1997]



Sec. 515.307  Unblocked national.

    Any person licensed pursuant to Sec. 515.505 licensed as an 
unblocked national shall, while so licensed, be regarded as a person 
within the United States who is not a national of any designated foreign 
country: Provided, however, That the licensing of any person as an 
unblocked national shall not be deemed to suspend in any way the 
requirements of any section of this chapter relating to reports, or the 
production of books, documents, and records specified therein.

[28 FR 6974, July 9, 1963, as amended at 54 FR 5233, Feb. 2, 1989]



Sec. 515.308  Person.

    The term person means an individual, partnership, association, 
corporation, or other organization.



Sec. 515.309  Transactions.

    The phrase transactions which involve property in which a designated 
foreign country, or any national thereof, has any interest of any nature 
whatsoever, direct or indirect, includes, but not by way of limitation:
    (a) Any payment or transfer to such designated foreign country or 
national thereof,
    (b) Any export or withdrawal from the United States to such 
designated foreign country, and
    (c) Any transfer of credit, or payment of an obligation, expressed 
in terms of the currency of such designated foreign country.



Sec. 515.310  Transfer.

    The term transfer shall mean any actual or purported act or 
transaction, whether or not evidenced by writing, and whether or not 
done or preformed within the United States, the purpose, intent, or 
effect of which is to create, surrender, release, transfer, or alter, 
directly or indirectly, any right, remedy, power, privilege, or interest 
with respect to any property and without limitation upon the foregoing 
shall include the making, execution, or delivery of any assignment, 
power, conveyance, check, declaration, deed, deed of trust, power of 
attorney, power of appointment, bill of sale, mortgage, receipt, 
agreement, contract, certificate, gift, sale, affidavit, or statement; 
the appointment of any agent, trustee, or other fiduciary; the creation 
or transfer of any lien; the issuance, docketing, filing, or the levy of 
or under any judgment, decree, attachment, execution, or other judicial 
or administrative process or order, or the service of any garnishment; 
the acquisition of any interest of any nature whatsoever by reason of a 
judgment or decree of any foreign country; the fulfillment of any 
condition, or the exercise of any power of appointment, power of 
attorney, or other power.



Sec. 515.311  Property; property interests.

    (a) Except as defined in Sec. 515.203(f) for the purposes of that 
section the terms property and property interest or property interests 
shall include, but not by way of limitation, money, checks, drafts, 
bullion, bank deposits, savings accounts, debts, indebtedness 
obligations, notes, debentures, stocks, bonds, coupons, and other 
financial securities, bankers' acceptances, mortgages, pledges, liens or 
other rights in the nature of security, warehouse receipts, bills of 
lading, trust receipts, bills of

[[Page 105]]

sale, any other evidences of title, ownership or indebtedness, powers of 
attorney, goods, wares, merchandise, chattels, stocks on hand, ships, 
goods on ships, real estate mortgages, deeds of trust, vendors' sales 
agreements, land contracts, real estate and any interest therein, 
leaseholds, ground rents, options, negotiable instruments, trade 
acceptances, royalties, book accounts, accounts payable, judgments, 
patents, trademarks, copyrights, contracts or licenses affecting or 
involving patents, trademarks or copyrights, insurance policies, safe 
deposit boxes and their contents, annuities, pooling agreements, 
contracts of any nature whatsoever, services, and any other property, 
real, personal, or mixed, tangible or intangible, or interest or 
interests therein, present, future or contingent.
    (b) As used in Sec. 515.208, the term property means any property 
(including patents, copyrights, trademarks, and any other form of 
intellectual property), whether real, personal, or mixed, and any 
present, future, or contingent right, security, or other interest 
therein, including any leasehold interest.

[28 FR 6974, July 9, 1963, as amended at 50 FR 27437, July 3, 1985; 56 
FR 49847, Oct. 2, 1991; 61 FR 37386, July 18, 1996]



Sec. 515.312  Interest.

    The term interest when used with respect to property shall mean an 
interest of any nature whatsoever, direct or indirect.



Sec. 515.313  Property subject to the jurisdiction of the United States.

    (a) The phrase property subject to the jurisdiction of the United 
States includes, without limitation, securities, whether registered or 
bearer, issued by:
    (1) The United States or any State, district, territory, possession, 
county, municipality, or any other subdivision or agency or 
instrumentality of any thereof; or
    (2) Any person with the United States whether the certificate which 
evidences such property or interest is physically located within or 
outside the United States.
    (b) The phrase property subject to the jurisdiction of the United 
States also includes, without limitation, securities, whether registered 
or bearer, by whomsoever issued, if the instrument evidencing such 
property or interest is physically located within the United States.



Sec. 515.314  Banking institution.

    The term banking institution shall include any person engaged 
primarily or incidentally in the business of banking, of granting or 
transferring credits, or of purchasing or selling foreign exchange or 
procuring purchases and sellers thereof, as principal or agent, or any 
person holding credits for others as a direct or incidental part of his 
business, or any broker; and, each principal, agent, home office, branch 
or correspondent of any person so engaged shall be regarded as a 
separate ``banking institution.''



Sec. 515.316  License.

    Except as otherwise specified, the term license shall mean any 
license or authorization contained in or issued pursuant to this part.



Sec. 515.317  General license.

    A general license is any license or authorization the terms of which 
are set forth in this part.



Sec. 515.318  Specific license.

    A specific license is any license or authorization issued pursuant 
to this part but not set forth in this part.

[28 FR 6974, July 9, 1963; 28 FR 7427, July 20, 1963]



Sec. 515.319  Blocked account.

    The term blocked account shall mean an account in which any 
designated national has an interest, with respect to which account 
payments, transfers or withdrawals or other dealings may not be made or 
effected except pursuant to an authorization or license authorizing such 
action. The term blocked account shall not be deemed to include accounts 
of unblocked nationals.

[28 FR 6974, July 9, 1963; 28 FR 7427, July 20, 1963]



Sec. 515.320  Domestic bank.

    The term domestic bank shall mean any branch or office within the 
United States of any of the following which is not a national of a 
designated foreign

[[Page 106]]

country; any bank or trust company incorporated under the banking laws 
of the United States or any State, territory, or district of the United 
States, or any private bank or banker subject to supervision and 
examination under the banking laws of the United States or of any State, 
territory or district of the United States. The Secretary of the 
Treasury may also authorize any other banking institution to be treated 
as a ``domestic bank'' for the purpose of this definition or for the 
purpose of any or all sections of this part.



Sec. 515.321  United States; continental United States.

    The term United States means the United States and all areas under 
the jurisdiction or authority thereof, including the Trust Territory of 
the Pacific Islands. The term continental United States means the States 
of the United States and the District of Columbia.

[49 FR 27144, July 2, 1984]



Sec. 515.322  Authorized trade territory; member of the authorized trade 

territory.

    (a) The term authorized trade territory includes all countries, 
including any colony, territory, possession, or protectorate, except 
those countries subject to sanctions pursuant to this chapter. The term 
does not include the United States.
    (b) The term member of the authorized trade territory shall mean any 
of the foreign countries or political subdivisions comprising the 
authorized trade territory.

[43 FR 51762, Nov. 7, 1978, as amended at 60 FR 54195, Oct. 20, 1995]



Sec. 515.323  Occupied area.

    The term occupied area shall mean any territory occupied by a 
designated foreign country which was not occupied by such country prior 
to the ``effective date'' of this part.



Sec. 515.325  National securities exchange.

    The term national securities exchange shall mean an exchange 
registered as a national securities exchange under section 6 of the 
Securities Exchange Act of 1934 (48 Stat. 885, 15 U.S.C. 78f).



Sec. 515.326  Custody of safe deposit boxes.

    Safe deposit boxes shall be deemed to be in the custody not only of 
all persons having access thereto but also of the lessors of such boxes 
whether or not such lessors have access to such boxes. The foregoing 
shall not in any way be regarded as a limitation upon the meaning of the 
term custody.



Sec. 515.327  Blocked estate of a decedent.

    The term blocked estate of a decedent shall mean any decedent's 
estate in which a designated national has an interest. A person shall be 
deemed to have an interest in a decedent's estate if he:
    (a) Was the decedent;
    (b) Is a personal representative; or
    (c) Is a creditor, heir, legatee, devisee, distributee, or 
beneficiary.



Sec. 515.329  Person subject to the jurisdiction of the United States.

    The term person subject to the jurisdiction of the United States 
includes:
    (a) Any individual, wherever located, who is a citizen or resident 
of the United States;
    (b) Any person within the United States as defined in Sec. 515.330;
    (c) Any corporation, partnership, association, or other organization 
organized under the laws of the United States or of any State, 
territory, possession, or district of the United States; and
    (d) Any corporation, partnership, association, or other 
organization, wherever organized or doing business, that is owned or 
controlled by persons specified in paragraphs (a) or (c) of this 
section.]

[50 FR 27437, July 3, 1985, as amended at 68 FR 14145, Mar. 24, 2003]



Sec. 515.330  Person within the United States.

    (a) The term person within the United States, includes:
    (1) Any person, wheresoever located, who is a resident of the United 
States;
    (2) Any person actually within the United States;
    (3) Any corporation, partnership, association, or other organization 
organized under the laws of the United

[[Page 107]]

States or of any State, territory, possession, or district of the United 
States; and
    (4) Any corporation, partnership, association, or other 
organization, wherever organized or doing business, which is owned or 
controlled by any person or persons specified in paragraphs (a)(1) or 
(a)(3) of this section.
    (b) [Reserved]

[28 FR 6974, July 9, 1963, as amended at 68 FR 14145, Mar. 24, 2003]



Sec. 515.331  Merchandise.

    The term merchandise means all goods, wares and chattels of every 
description without limitation of any kind.



Sec. 515.332  Information and informational materials.

    (a) For purposes of this part, the term information and 
informational materials means:
    (1) Publications, films, posters, phonograph records, photographs, 
microfilms, microfiche, tapes, compact disks, CD ROMs, artworks, news 
wire feeds, and other information and informational articles.
    (2) To be considered informational materials, artworks must be 
classified under Chapter subheading 9701, 9702, or 9703 of the 
Harmonized Tariff Schedule of the United States.
    (b) The term information and informational materials does not 
include items:
    (1) That would be controlled for export pursuant to section 5 of the 
Export Administration Act of 1979, 50 U.S.C. App. 2401-2420 (1993) (the 
``EAA''), or section 6 of the EAA to the extent that such controls 
promote nonproliferation of antiterrorism policies of the United States, 
including ``software'' that is not ``publicly available'' as these terms 
are defined in 15 CFR parts 779 and 799.1 (1994); or
    (2) With respect to which acts are prohibited by 18 U.S.C. chapter 
37.

[60 FR 39256, Aug. 2, 1995]



Sec. 515.333  Depository institution.

    The term depository institution means any of the following:
    (a) An insured bank as defined in section 3 of the Federal Deposit 
Insurance Act;
    (b) An insured institution as defined in section 408(a) of the 
National Housing Act;
    (c) An insured credit union as defined in section 101 of the Federal 
Credit Union Act; or
    (d) Any other institution that is carrying on banking activities 
pursuant to a charter from a Federal or state banking authority.

[57 FR 53997, Nov. 16, 1992]



Sec. 515.334  United States national.

    As used in Sec. 515.208, the term United States national means:
    (a) Any United States citizen; or
    (b) Any other legal entity which is organized under the laws of the 
United States, or of any State, the District of Columbia, or any 
commonwealth, territory, or possession of the United States, and which 
has its principal place of business in the United States.

[61 FR 37386, July 18, 1996]



Sec. 515.335  Permanent resident alien.

    As used in Sec. 515.208, the term permanent resident alien means an 
alien lawfully admitted for permanent residence into the United States.

[61 FR 37386, July 18, 1996]



Sec. 515.336  Confiscated.

    As used in Sec. 515.208, the term confiscated refers to:
    (a) The nationalization, expropriation, or other seizure by the 
Cuban Government of ownership or control of property, on or after 
January 1, 1959:
    (1) Without the property having been returned or adequate and 
effective compensation provided; or
    (2) Without the claim to the property having been settled pursuant 
to an international claims settlement agreement or other mutually 
accepted settlement procedure; and
    (b) The repudiation by the Cuban Government of, the default by the 
Cuban Government on, or the failure of the Cuban Government to pay, on 
or after January 1, 1959:
    (1) A debt of any enterprise which has been nationalized, 
expropriated, or otherwise taken by the Cuban Government;

[[Page 108]]

    (2) A debt which is a charge on property nationalized, expropriated, 
or otherwise taken by the Cuban Government; or
    (3) A debt which was incurred by the Cuban Government in 
satisfaction or settlement of a confiscated property claim.

[61 FR 37386, July 18, 1996]



Sec. 515.337  Prohibited officials of the Government of Cuba.

    For purposes of this part, the term prohibited officials of the 
Government of Cuba means Ministers and Vice-ministers, members of the 
Council of State and the Council of Ministers; members and employees of 
the National Assembly of People's Power; members of any provincial 
assembly; local sector chiefs of the Committees for the Defense of the 
Revolution; Director Generals and sub-Director Generals and higher of 
all Cuban ministries and state agencies; employees of the Ministry of 
the Interior (MININT); employees of the Ministry of Defense (MINFAR); 
secretaries and first secretaries of the Confederation of Labor of Cuba 
(CTC) and its component unions; chief editors, editors, and deputy 
editors of Cuban state-run media organizations and programs, including 
newspapers, television, and radio; and members and employees of the 
Supreme Court (Tribuno Supremo Nacional).

[74 FR 46003, Sept. 8, 2009]



Sec. 515.338  Prohibited members of the Cuban Communist Party.

    For purposes of this part, the term prohibited members of the Cuban 
Communist Party means members of the Politburo, the Central Committee, 
Department Heads of the Central Committee, employees of the Central 
Committee, and secretaries and first secretaries of the provincial Party 
central committees.

[74 FR 46003, Sept. 8, 2009]



Sec. 515.339  Close relative.

    (a) For purposes of this part, the term close relative used with 
respect to any person means any individual related to that person by 
blood, marriage, or adoption who is no more than three generations 
removed from that person or from a common ancestor with that person.
    (b) Example. Your mother's first cousin is your close relative for 
purposes of this part, because you are both no more than three 
generations removed from your great-grandparents, who are the ancestors 
you have in common. Similarly, your husband's great-grandson is your 
close relative for purposes of this part, because he is no more than 
three generations removed from your husband. Your daughter's father-in-
law is not your close relative for purposes of this part, because you 
have no common ancestor.

[74 FR 46003, Sept. 8, 2009]



                        Subpart D_Interpretations



Sec. 515.401  Reference to amended sections.

    Reference to any section of this part or to any regulation, ruling, 
order, instruction, direction or license issued pursuant to this part 
shall be deemed to refer to the same as currently amended unless 
otherwise so specified.



Sec. 515.402  Effect of amendment of sections of this part or of other orders, 

etc.

    Any amendment, modification, or revocation of any section of this 
part or of any order, regulation, ruling, instruction, or license issued 
by or under the direction of the Secretary of the Treasury pursuant to 
section 3(a) or 5(b) of the Trading With the Enemy Act, as amended, or 
pursuant to Proclamation 3447, shall not unless otherwise specifically 
provided be deemed to affect any act done or omitted to be done, or any 
suit or proceeding had or commenced in any civil or criminal case, prior 
to such amendment, modification, or revocation, and all penalties, 
forfeitures, and liabilities under any such section, order, regulation, 
ruling, instruction or license shall continue and may be enforced as if 
such amendment, modification, or revocation had not been made.

[[Page 109]]



Sec. 515.403  Termination and acquisition of the interest of a designated 

national.

    (a) Except as provided in Sec. 515.525, whenever a transaction 
licensed or authorized by or pursuant to this part results in the 
transfer of property (including any property interest) away from a 
designated national, such property shall no longer be deemed to be 
property in which a designated national has or has had an interest 
unless there exists in such property an interest of a designated 
national, the transfer of which has not been effected pursuant to 
license or other authorization.
    (b) Unless otherwise specifically provided in a license or 
authorization contained in or issued pursuant to this part, if property 
(including any property interest) is transferred to a designated 
national such property shall be deemed to be property in which there 
exists the interest of a designated national.



Sec. 515.404  Transactions between principal and agent.

    A transaction between any person within the United States and any 
principal, agent, home office, branch, or correspondent, outside the 
United States of such person is a transaction prohibited by Sec. 
515.201 to the same extent as if the parties to the transaction were in 
no way affiliated or associated with each other.



Sec. 515.405  Exportation of securities, currency, checks, drafts and 

promissory notes.

    Section 515.201 prohibits the exportation of securities, currency, 
checks, drafts and promissory notes to a designated foreign country.



Sec. 515.406  Drafts under irrevocable letters of credit; documentary drafts.

    Section 515.201 prohibits the presentation, acceptance or payment 
of:
    (a) Drafts or other orders for payment drawn under irrevocable 
letters of credit issued in favor or on behalf of any designated 
national;
    (b) Drafts or other orders for payment, in which any designated 
national has on or since the ``effective date'' had any interest, drawn 
under any irrevocable letter of credit; and
    (c) Documentary drafts in which any designated national has on or 
since the ``effective date'' had any interest.



Sec. 515.407  Administration of blocked estates of decedents.

    Section 515.201 prohibits all transactions incident to the 
administration of the blocked estate of a decedent, including the 
appointment and qualification of personal representatives, the 
collection and liquidation of assets, the payment of claims, and 
distribution to beneficiaries. Attention is directed to Sec. 515.523 
which authorizes certain transactions in connection with the 
administration of blocked estates of decedents, and Sec. 515.522 which 
authorizes the unblocking by specific license of estate assets to 
certain heirs under certain circumstances.

[28 FR 6974, July 9, 1963, as amended at 54 FR 5234, Feb. 2, 1989; 64 FR 
25812, May 13, 1999]



Sec. 515.408  Access to certain safe deposit boxes prohibited.

    Section 515.201 prohibits access to any safe deposit box within the 
United States in the custody of any designated national or containing 
any property in which any designated national has any interest or which 
there is reasonable cause to believe contains property in which any such 
designated national has any interest. Attention is directed to Sec. 
515.517 which authorizes access to such safe deposit boxes under certain 
conditions.



Sec. 515.409  Certain payments to a designated foreign country and nationals 

through third countries.

    Section 515.201 prohibits any request or authorization made by or on 
behalf of a bank or other person within the United States to a bank or 
other person outside of the United States as a result of which request 
or authorization such latter bank or person makes a payment or transfer 
of credit either directly or indirectly to a designated national.



Sec. 515.410  Dealing abroad in Cuban origin commodities.

    Section 515.204 prohibits, unless licensed, the importation of 
commodities of Cuban origin. It also prohibits, unless licensed, persons 
subject to the

[[Page 110]]

jurisdiction of the United States from purchasing, transporting or 
otherwise dealing in commodities of Cuban origin which are outside the 
United States.

[39 FR 25317, July 10, 1974]



Sec. Sec. 515.411--515.413  [Reserved]



Sec. 515.415  Travel to Cuba; transportation of certain Cuban nationals.

    (a) The following transactions are prohibited by Sec. 515.201 when 
in connection with the transportation of any Cuban national, except a 
Cuban national holding an unexpired immigrant or non-immigrant visa or a 
returning resident of the United States, from Cuba to the United States, 
unless otherwise licensed:
    (1) Transactions incident to travel to, from, or within Cuba;
    (2) The transportation to Cuba of a vessel or aircraft;
    (3) The transportation into the United States of any vessel or 
aircraft which has been in Cuba since the effective date, regardless of 
registry;
    (4) The provision of any services to a Cuban national, regardless of 
whether any consideration for such services is furnished by the Cuban 
national;
    (5) The transportation or importation of baggage or other property 
of a Cuban national;
    (6) The transfer of funds or other property to any person where such 
transfer involves the provision of services to a Cuban national or the 
transportation or importation of, or any transactions involving, 
property in which Cuba or any Cuban national has any interest, including 
baggage or other such property;
    (7) Any other transaction such as payment of port fees and charges 
in Cuba and payment for fuel, meals, lodging; and
    (8) The receipt or acceptance of any gratuity, grant, or support in 
the form of meals, lodging, fuel, payments of travel or maintenance 
expenses, or otherwise, in connection with travel to or from Cuba or 
travel or maintenance within Cuba.
    (b) Transactions incident to the travel to the United States of 
Cuban nationals traveling without a visa issued by the Department of 
State are not authorized under the provisions of Sec. 515.571.
    (c) Transactions described in paragraph (a) of this section are not 
``transactions ordinarily incident to travel to and from Cuba'' as set 
forth in Sec. 515.560(c).

[45 FR 32671, May 19, 1980, as amended at 64 FR 25812, May 13, 1999]



Sec. Sec. 515.416-515.419  [Reserved]



Sec. 515.420  Travel to Cuba.

    The prohibition on dealing in property in which Cuba or a Cuban 
national has an interest set forth in Sec. 515.201(b)(1) includes a 
prohibition on the receipt of goods or services in Cuba, even if 
provided free-of-charge by the Government of Cuba or a national of Cuba 
or paid for by a third-country national who is not subject to U.S. 
jurisdiction. The prohibition set forth in Sec. 515.201(b)(1) also 
prohibits payment for air travel to Cuba on a third-country carrier 
unless the travel is pursuant to an OFAC general or specific license.

[69 FR 33771, June 16, 2004]



 Subpart E_Licenses, Authorizations, and Statements of Licensing Policy



Sec. 515.501  General and specific licensing procedures.

    For provisions relating to licensing procedures, see part 501, 
subpart E, of this chapter. Licensing actions taken pursuant to part 501 
of this chapter with respect to the prohibitions contained in this part 
are considered actions taken pursuant to this part.

[68 FR 53657, Sept. 11, 2003]



Sec. 515.502  Effect of subsequent license or authorization.

    (a) No license or other authorization contained in this part or 
otherwise issued by or under the direction of the Secretary of the 
Treasury pursuant to section 3(a) or 5(b) of the Trading With the Enemy 
Act, as amended, or section 620(a), Pub. L. 87-195, or Proclamation 
3447, shall be deemed to authorize or validate any transaction effected 
prior

[[Page 111]]

to the issuance thereof, unless such license or other authorization 
specifically so provides.
    (b) No regulation, ruling, instruction, or license authorizes a 
transaction prohibited under this part unless the regulation, ruling, 
instruction, or license is issued by the Treasury Department and 
specifically refers to this part. No regulation, ruling, instruction or 
license referring to this part shall be deemed to authorize any 
transaction prohibited by part 500 of this chapter unless the 
regulation, ruling, instruction or license specifically refers to part 
500.



Sec. 515.503  Exclusion from licenses and authorizations.

    The Secretary of the Treasury reserves the right to exclude from the 
operation of any license or from the privileges therein conferred or to 
restrict the applicability thereof with respect to particular persons, 
transactions or property or classes thereof. Such action shall be 
binding upon all persons receiving actual notice or constructive notice 
thereof.



Sec. 515.504  Certain judicial proceedings with respect to property of 

designated nationals.

    (a) Subject to the limitations of paragraphs (b), (c) and (d) of 
this section judicial proceedings are authorized with respect to 
property in which on or since the ``effective date'' there has existed 
the interest of a designated national.
    (b) A judicial proceeding is authorized by this section only if it 
is based upon a cause of action which accrued prior to the ``effective 
date''.
    (c) This section does not authorize or license:
    (1) The entry of any judgment or of any decree or order of similar 
or analogous effect upon any judgment book, minute book, journal or 
otherwise, or the docketing of any judgment in any docket book, or the 
filing of any judgment roll or the taking of any other similar or 
analogous action.
    (2) Any payment or delivery out of a blocked account based upon a 
judicial proceeding nor does it authorize the enforcement or carrying 
out of any judgment or decree or order of similar or analogous effect 
with regard to any property in which a designated national has an 
interest.
    (d) If a judicial proceeding relates to property in which there 
exists the interest of any designated national other than a person who 
would not have been a designated national except for his relationship to 
an occupied area, such proceeding is authorized only if it is based upon 
a claim in which no person other than any of the following has had an 
interest since the ``effective date'':
    (1) A citizen of the United States;
    (2) A corporation organized under the laws of the United States or 
any State, territory or possession thereof, or the District of Columbia;
    (3) A natural person who is and has been since the ``effective 
date'' a resident of the United States and who has not been a specially 
designated national;
    (4) A legal representative (whether or not appointed by a court of 
the United States) or successor in interest by inheritance, device, 
bequest, or operation of law, who falls within any of the categories 
specified in paragraphs (a) (1), (2), and (3) of this section but only 
to the same extent that their principals or predecessors would be 
qualified by such paragraphs.



Sec. 515.505  Certain Cuban nationals unblocked; transactions of certain other 

Cuban nationals lawfully present in the United States.

    (a) General license unblocking certain persons. The following 
persons are licensed as unblocked nationals, as that term is defined in 
Sec. 515.307 of this part:
    (1) Any individual who:
    (i) Has taken up residence in the United States;
    (ii) Is a United States citizen, a permanent resident alien of the 
United States, or has applied to become a permanent resident alien of 
the United States and has an adjustment of status application pending; 
and
    (iii) Is not a specially designated national; and
    (2) Any entity that otherwise would be a national of Cuba solely 
because of the interest therein of an individual licensed in paragraph 
(a)(1) of this section as an unblocked national.

    Note to paragraph (a): An individual unblocked pursuant to this 
paragraph does

[[Page 112]]

not become blocked again merely by leaving the United States. An 
individual unblocked national remains unblocked unless and until the 
individual thereafter becomes domiciled in or a permanent resident of 
Cuba, meets any of the criteria in Sec. 515.302(a)(2) through (5), or 
is a ``specially designated national'' of Cuba, as that term is defined 
in Sec. 515.306 of this part.

    (b) Specific licenses unblocking certain individuals who have taken 
up permanent residence outside of Cuba. Individual nationals of Cuba who 
have taken up permanent residence outside of Cuba may apply to the 
Office of Foreign Assets Control to be specifically licensed as 
unblocked nationals. Applications for specific licenses under this 
paragraph should include copies of at least two documents issued by the 
government authorities of the new country of permanent residence, such 
as a passport, voter registration card, permanent resident alien card, 
or national identity card. In cases where two of such documents are not 
available, other information will be considered, such as evidence that 
the individual has been resident for the past two years without 
interruption in a single country outside of Cuba or evidence that the 
individual does not intend to, or would not be welcome to, return to 
Cuba.

    Note to paragraph (b): An individual unblocked pursuant to this 
paragraph remains unblocked unless and until the individual thereafter 
becomes domiciled in or a permanent resident of Cuba, meets any of the 
criteria in Sec. 515.302(a)(2) through (5), or is a ``specially 
designated national'' of Cuba, as that term is defined in Sec. 515.306 
of this part.

    (c) General license authorizing certain transactions of individuals 
who are lawfully present in the United States in a non-visitor status. 
An individual national of Cuba who is lawfully present in the United 
States in a non-visitor status is authorized to engage in all 
transactions available to an unblocked national, as that term is defined 
in Sec. 515.307 of this part, except that all property in which the 
individual has an interest that was blocked pursuant to this part prior 
to the date on which the individual became lawfully present in the 
United States in a non-visitor status shall remain blocked. Such an 
individual is further authorized to withdraw a total amount not to 
exceed $250 in any one calendar month from any blocked accounts held in 
the individual's name. For the purposes of this section, the term ``non-
visitor status'' does not apply to an individual who is present in the 
United States on a non-immigrant visa valid only for a specified period 
of time.
    (d) The licensing of any person pursuant to this section shall not 
suspend the requirements of any section of this chapter relating to the 
maintenance or production of records.
    (e) The following examples illustrate the application of this 
section:

    (1) Example 1: A national of Cuba with a blocked U.S. bank account 
receives a U.S immigration visa. Upon arrival in the United States, she 
is issued a permanent resident alien card and thereby is licensed as an 
unblocked national pursuant to paragraph (a) of this section. She can 
apply immediately to OFAC for a specific license to have her bank 
account unblocked.
    (2) Example 2: A national of Cuba with a blocked U.S. bank account 
arrives in the United States without a valid visa but is allowed by the 
U.S. Government to remain in the United States in a non-visitor status. 
One year later, he applies for and receives permanent resident alien 
status. From the date he was permitted to remain in the United States in 
a non-visitor status until the date he applies for permanent resident 
alien status, he qualifies for the general license contained in 
paragraph (c) of this section. During this time he can engage in all 
transactions as if he is an unblocked national, with the exception that 
he cannot gain access to his blocked bank account other than to withdraw 
$250 each month. Beginning at the point in time when he applies for 
permanent resident alien status, he is licensed as an unblocked national 
pursuant to paragraph (a) of this section. At this time, he can apply to 
OFAC for a specific license to have his blocked bank account unblocked.
    (3) Example 3: A national of Cuba with a blocked U.S. bank account 
arrives in the United States on a temporary visa valid for six months. 
After her visa expires, she remains in the United States for an 
additional six months and then applies to become a permanent resident 
alien. She has an adjustment of status application pending until she 
receives permanent resident alien status one year later. From her 
arrival in the United States until her application for permanent 
resident alien status, she does not qualify for any of the 
authorizations contained in this section. Instead, she is authorized by 
Sec. 515.571 only to engage in transactions ordinarily incident to her 
travel and maintenance in the United States and to withdraw $250 each 
month from her blocked account to cover her

[[Page 113]]

living expenses. Beginning with her application to become a permanent 
resident alien, she is licensed as an unblocked national pursuant to 
paragraph (a) of this section. At this time, she can apply to OFAC for a 
specific license to have her bank account unblocked.

    Note to Sec. 515.505: See Sec. 515.571 for the authorization of 
certain limited transactions incident to travel to, from, and within the 
United States by Cuban nationals who enter the United States on a non-
immigrant visa or other non-immigrant travel authorization issued by the 
State Department.

[68 FR 14145, Mar. 24, 2003, as amended at 74 FR 46004, Sept. 8, 2009]



Sec. Sec. 515.506-515.507  [Reserved]



Sec. 515.508  Payments to blocked accounts in domestic banks.

    (a) Any payment or transfer of credit to a blocked account in a 
domestic bank in the name of any designated national is hereby 
authorized providing such payment or transfer shall not be made from any 
blocked account if such payment or transfer represents, directly or 
indirectly, a transfer of the interest of a designated national to any 
other country or person.
    (b) This section does not authorize:
    (1) Any payment or transfer to any blocked account held in a name 
other than that of the designated national who is the ultimate 
beneficiary of such payment or transfer; or
    (2) Any foreign exchange transaction including, but not by way of 
limitation, any transfer of credit, or payment of an obligation, 
expressed in terms of the currency of any foreign country.
    (c) This section does not authorize any payment or transfer of 
credit comprising an integral part of a transaction which cannot be 
effected without the subsequent issuance of a further license.
    (d) This section does not authorize the crediting of the proceeds of 
the sale of securities held in a blocked account or a subaccount 
thereof, or the income derived from such securities to a blocked account 
or subaccount under any name or designation which differs from the name 
or designation of the specific blocked account or subaccount in which 
such securities were held.
    (e) This section does not authorize any payment or transfer from a 
blocked account in a domestic bank to a blocked account held under any 
name or designation which differs from the name or designation of the 
blocked account from which the payment or transfer is made.

    Note to Sec. 515.508: Please refer to Sec. 501.603 of this chapter 
for mandatory reporting requirements regarding financial transfers.

[32 FR 10846, July 25, 1967, as amended at 58 FR 47645, Sept. 10, 1993; 
62 FR 45106, Aug. 25, 1997]



Sec. 515.509  Entries in certain accounts for normal service charges.

    (a) Any banking institution within the United States is hereby 
authorized to:
    (1) Debit any blocked account with such banking institution (or with 
another office within the United States of such banking institution) in 
payment or reimbursement for normal service charges owed to such banking 
institution by the owner of such blocked account.
    (2) Make book entries against any foreign currency account 
maintained by it with a banking institution in a designated foreign 
country for the purpose of responding to debits to such account for 
normal service charges in connection therewith.
    (b) As used in this section, the term normal service charge shall 
include charges in payment or reimbursement for interest due; cable, 
telegraph, or telephone charges; postage costs; custody fees; small 
adjustment charges to correct bookkeeping errors; and, but not by way of 
limitation, minimum balance charges, account carrying charges, notary 
and protest fees, and charges for reference books, photostats, credit 
reports, transcripts of statements, registered mail insurance, 
stationery and supplies, check books, and other similar items.



Sec. 515.510  Payments to the United States, States and political 

subdivisions.

    (a) The payment from any blocked account to the United States or any 
agency or instrumentality thereof or to any State, territory, district, 
county, municipality or other political subdivision in the United 
States, of customs duties, taxes, and fees payable

[[Page 114]]

thereto by the owner of such blocked account is hereby authorized.
    (b) This section also authorizes transactions incident to the 
payment of customs duties, taxes, and fees from blocked accounts, such 
as the levying of assessments, the creation and enforcement of liens, 
and the sale of blocked property in satisfaction of liens for customs 
duties, taxes, and fees.



Sec. 515.511  Transactions by certain business enterprises.

    (a) Except as provided in paragraphs (b), (c) and (d) of this 
section any partnership, association, corporation or other organization 
which on the ``effective date'' was actually engaged in a commercial, 
banking or financial business within the United States and which is a 
national of a designated foreign country, is hereby authorized to engage 
in all transactions ordinarily incidental to the normal conduct of its 
business activities within the United States.
    (b) This section does not authorize any transaction which would 
require a license if such organization were not a national of a 
designated foreign country.
    (c) This section does not authorize any transaction by a specially 
designated national.
    (d) Any organization engaging in business pursuant to this section 
shall not engage in any transaction, pursuant to this section or any 
other license or authorization contained in this part, which, directly 
or indirectly, substantially diminishes or imperils the assets of such 
organization or otherwise prejudicially affects the financial position 
of such organization.
    (e) No dealings with regard to any account shall be evidence that 
any person having an interest therein is actually engaged in commercial, 
banking or financial business within the United States.



Sec. 515.512  Provision of certain legal services authorized.

    (a) The provision of the following legal services to or on behalf of 
Cuba or a Cuban national is authorized, provided that all receipts of 
payment of professional fees and reimbursement of incurred expenses must 
be specifically licensed:
    (1) Provision of legal advice and counseling on the requirements of 
and compliance with the laws of any jurisdiction within the United 
States, provided that such advice and counseling are not provided to 
facilitate transactions in violation of this part;
    (2) Representation of persons when named as defendants in or 
otherwise made parties to domestic U.S. legal, arbitration, or 
administrative proceedings;
    (3) Initiation and conduct of domestic U.S. legal, arbitration, or 
administrative proceedings in defense of property interests subject to 
U.S. jurisdiction;
    (4) Representation of persons before any federal or state agency 
with respect to the imposition, administration, or enforcement of U.S. 
sanctions against such persons; and
    (5) Provision of legal services in any other context in which 
prevailing U.S. law requires access to legal counsel at public expense.
    (b) The provision of any other legal services to Cuba or a Cuban 
national, not otherwise authorized in this part, requires the issuance 
of a specific license.
    (c) Entry into a settlement agreement affecting property or 
interests in property or the enforcement of any lien, judgment, arbitral 
award, decree, or other order through execution, garnishment, or other 
judicial process purporting to transfer or otherwise alter or affect 
property in which Cuba or a Cuban national has had an interest at any 
time on or since 12:01 a.m., e.s.t., July 8, 1963, is prohibited except 
to the extent otherwise provided by law or unless otherwise authorized 
by or pursuant to this part.

[68 FR 14146, Mar. 24, 2003]



Sec. 515.513  Purchase and sale of certain securities.

    (a) The bona fide purchase and sale of securities on a national 
securities exchange by banking institutions within the United States for 
the account, and pursuant to the authorization, of nationals of a 
designated foreign country

[[Page 115]]

and the making and receipt of payments, transfers of credit, and 
transfers of such securities which are necessary incidents of any such 
purchase or sale are hereby authorized provided the following terms and 
conditions are complied with:
    (1) In the case of the purchase of securities, the securities 
purchased shall be held in an account in a banking institution within 
the United States in the name of the national whose account was debited 
to purchase such securities; and
    (2) In the case of the sale of securities, the proceeds of the sale 
shall be credited to an account in the name of the national for whose 
account the sale was made and in the banking institution within the 
United States which held the securities for such national.
    (b) This section does not authorize the crediting of the proceeds of 
the sale of securities held in a blocked account or a subaccount 
thereof, to a blocked account or subaccount under any name or 
designation which differs from the name or designation of the specific 
blocked account or subaccount in which such securities were held.
    (c) Securities issued or guaranteed by the Government of the United 
States or any State, territory, district, county, municipality, or other 
political subdivision thereof (including agencies and instrumentalities 
of the foregoing) need not be purchased or sold on a national securities 
exchange, but purchases or sales of such securities shall be made at 
market value and pursuant to all other terms and conditions prescribed 
in this section.



Sec. 515.514  Payment of dividends and interest on and redemption and 

collection of securities.

    (a) The payment to, and receipt by, a banking institution within the 
United States of funds or other property representing dividends or 
interest on securities held by such banking institution in a blocked 
account is hereby authorized provided the funds or other property are 
credited to or deposited in a blocked account in such banking 
institution in the name of the national for whose account the securities 
were held. Notwithstanding Sec. 515.202, this paragraph authorizes the 
foregoing transactions although such securities are registered or 
inscribed in the name of any designated national and although the 
national in whose name the securities are registered or inscribed may 
not be the owner of such blocked account.
    (b) The payment to, and receipt by, a banking institution within the 
United States of funds payable in respect of securities (including 
coupons) presented by such banking institution to the proper paying 
agents within the United States for redemption or collection for the 
account and pursuant to the authorization of nationals of a designated 
country is hereby authorized provided the proceeds of the redemption or 
collection are credited to a blocked account in such banking institution 
in the name of the national for whose account the redemption or 
collection was made.
    (c) The performance of such other acts, and the effecting of such 
other transactions, as may be necessarily incident to any of the 
foregoing, are also hereby authorized.
    (d) This section does not authorize the crediting of the proceeds of 
the redemption or collection of securities (including coupons) held in a 
blocked account or a subaccount thereof, or the income derived from such 
securities to a blocked account or subaccount under any name or 
designation which differs from the name or designation of the specific 
blocked account or subaccount in which such securities were held.
    (e) This section does not authorize any issuer or other obligor, 
with respect to a security, who is a designated national, to make any 
payment, transfer or withdrawal.



Sec. 515.515  Transfers of securities to blocked accounts in domestic banks.

    (a) Transactions ordinarily incident to the transfer of securities 
from a blocked account in the name of any person to a blocked account in 
the same name in a domestic bank are hereby authorized provided such 
securities shall not be transferred from any blocked account if such 
transfer represents, directly or indirectly, a transfer of the interest 
of a designated national to any other country or person.

[[Page 116]]

    (b) This section does not authorize the transfer of securities held 
in a blocked account or subaccount thereof to a blocked account or 
subaccount under any name or designation which differs from the name or 
designation of the specific blocked account or subaccount in which such 
securities were held.

[32 FR 10847, July 25, 1967]



Sec. 515.516  Voting and soliciting of proxies on securities.

    Notwithstanding Sec. 515.202, the voting and the soliciting of 
proxies or other authorizations is authorized with respect to the voting 
of securities issued by a corporation organized under the laws of the 
United States or of any State, territory, or district thereof, in which 
a designated national has any interest.



Sec. 515.517  Access to safe deposit boxes under certain conditions.

    (a) Access to any safe deposit box leased to a designated national 
or containing property in which any designated national has an interest, 
and the deposit therein or removal therefrom of any property is hereby 
authorized, provided the following terms and conditions are complied 
with:
    (1) Access shall be permitted only in the presence of an authorized 
representative of the lessor of such box; and
    (2) In the event that any property in which any designated national 
has any interest is to be removed from such box, access shall be 
permitted only in the presence of an authorized representative of a 
banking institution within the United States, which may be the lessor of 
such box, which shall receive such property into its custody immediately 
upon removal from such box and which shall hold the same in a blocked 
account under an appropriate designation indicating the interest therein 
of designated nationals.
    (b) The terms and conditions set forth in paragraph (a) of this 
section shall not apply to access granted to a representative of the 
Office of Alien Property pursuant to any rule, regulation or order of 
such Office.



Sec. 515.518  [Reserved]



Sec. 515.519  Limited payments from accounts of United States citizens abroad.

    (a) Payments and transfers of credit from blocked accounts for 
expenditures within the United States or the authorized trade territory 
of any citizens of the United States who are within any foreign country 
are hereby authorized provided the following terms and conditions are 
complied with:
    (1) Such payments and transfers shall be made only from blocked 
accounts in the name, or in which the beneficial interest is held by, 
such citizen or his family; and
    (2) The total of all such payments and transfers made under this 
section shall not exceed $1,000 in any one calendar month for any such 
citizen or his family.
    (b) This section does not authorize any remittance to a designated 
foreign country or, any payment, transfer, or withdrawal which could not 
be effected without a license by a person within the United States who 
is not a national of a designated foreign country.

[28 FR 6974, July 9, 1963, as amended at 49 FR 27144, July 2, 1984]



Sec. 515.520  Payments from accounts of United States citizens in employ of 

United States in foreign countries and certain other persons.

    (a) Banking institutions within the United States are hereby 
authorized to make all payments, transfers and withdrawals from accounts 
in the name of citizens of the United States while such citizens are 
within any foreign country in the course of their employment by the 
Government of the United States.
    (b) Banking institutions within the United States are also hereby 
authorized to make all payments, transfers and withdrawals from accounts 
in the name of members of the armed forces of the United States and of 
citizens of the United States accompanying such armed forces in the 
course of their employment by any organization acting on behalf of the 
Government of the United States while such persons are within any 
foreign country.

[[Page 117]]

    (c) This section is deemed to apply to the accounts of members of 
the armed forces of the United States and of citizens of the United 
States accompanying such armed forces in the course of their employment 
by the Government of the United States or by any organization acting on 
its behalf even though they are captured or reported missing.



Sec. 515.521  U.S. assets of certain Cuban corporations.

    (a) Specific licenses may be issued unblocking the net pro rata 
shares of individuals who are permanent residents of the United States 
or the authorized trade territory, and who are not specially designated 
nationals, in U.S.-located assets of corporations formed under the laws 
of Cuba, after deducting the total debt due creditors for claims that 
accrued prior to the effective date, in cases where all of the following 
conditions are met:
    (1) The assets were owned by, or accrued to, the corporation before 
the effective date of the regulations;
    (2) The corporation did not carry on substantial business in Cuba 
under the management or control of the applicant(s) after the effective 
date;
    (3) In cases where the blocked assets purportedly have been 
nationalized by Cuba, compensation has not been paid to the 
applicant(s).
    (b) Applications for specific licenses under this section must 
include all of the following information:
    (1) A detailed description of the corporation, its by-laws, 
activities, distribution of shares, and its current status;
    (2) Proof of the permanent residence of the applicant(s) in the 
United States or the authorized trade territory;
    (3) A list of all officers, directors and shareholders of the 
corporation, giving the citizenship and the residence of each person as 
of the date of the application;
    (4) A detailed description of all of the assets of the corporation, 
wherever located, including a statement of all known encumbrances or 
claims against them; and
    (5) Detailed information regarding the status of all debts and other 
obligations of the corporation, specifying the citizenship and residence 
of each creditor on the effective date and on the date of the 
application.

[50 FR 33720, Aug. 21, 1985. Redesignated at 64 FR 25813, May 13, 1999]



Sec. 515.522  U.S. assets of certain Cuban decedents.

    (a) Specific licenses may be issued unblocking the net pro rata 
shares of certain heirs of designated nationals in U.S.-located estate 
assets, after deducting the total debt due creditors for claims that 
accrued prior to the effective date, in cases where all of the following 
conditions are met:
    (1) The applicant is a permanent resident of the United States or 
the authorized trade territory and is not a specially designated 
national; and
    (2) No interest on the part of a designated national not licensed as 
an unblocked national pursuant to Sec. 515.505 exists in that portion 
of the assets to which the applicant is entitled.
    (b) Applications for specific licenses under this section must 
include all of the following information:
    (1) Proof of permanent residence in the United States or the 
authorized trade territory, to be established by the submission of 
documentation issued by relevant government authorities that must 
include at least two of the following documents: (i) passport; (ii) 
voter registration card; (iii) permanent resident alien card; or (iv) 
national identity card. Other documents tending to show residency, such 
as income tax returns, may also be submitted in support of government 
documentation, but will not suffice in and of themselves;
    (2) Proof of death of the designated national to be established by a 
death certificate;
    (3) Proof of heirship, to be established by a copy of the decedent's 
duly executed will certified by a probate court, a court decree 
determining the heirs, or, failing the availability of such documents, 
copies of certificates establishing the relationship of the heir to the 
deceased, e.g., birth or marriage certificates;
    (4) A description of the assets involved, including interest due on 
blocked funds since April 1, 1979, the name and address of the 
institution in

[[Page 118]]

which the assets are held, the account or safe deposit box number, the 
name in which the assets are held and a statement of all known 
encumbrances or claims against them; and
    (c) Any document provided pursuant to this section that is not 
written in the English language must be accompanied by a translation 
into English, as well as a certification by the translator that he is 
not an interested party to the proceeding, is qualified to make the 
translation, and has made an accurate translation of the document in 
question.

[54 FR 5235, Feb. 2, 1989. Redesignated at 64 FR 25813, May 13, 1999]



Sec. 515.523  Transactions incident to the administration of decedents' 

estates.

    (a) The following transactions are authorized in connection with the 
administration of the assets in the United States of any blocked estate 
of a decedent:
    (1) The appointment and qualification of a personal representative;
    (2) The collection and preservation of such assets by such personal 
representative and the payment of all costs, fees and charges in 
connection therewith; and
    (3) The payment by such personal representative of funeral expenses 
and expenses of the last illness.
    (4) Any transfer of title pursuant to a valid testamentary 
disposition.

This paragraph does not authorize any unblocking or distribution of 
estate assets to a designated national.
    (b) In addition to the authorization contained in paragraph (a) of 
this section, all other transactions incident to the administration of 
assets situated in the United States of any blocked estate of a decedent 
are authorized if:
    (1) The decedent was not a national of a designated foreign country 
at the time of his death;
    (2) The decedent was a citizen of the United States and a national 
of a designated foreign country at the time of his death solely by 
reason of his presence in a designated foreign country as a result of 
his employment by, or service with the United States Government; or
    (3) The assets are unblocked under a specific license issued 
pursuant to Sec. 515.522.
    (c) Any property or interest therein distributed pursuant to this 
section to a designated national shall be regarded for the purpose of 
this chapter as property in which such national has an interest and 
shall accordingly be subject to all the pertinent sections of this 
chapter. Any payment or distribution of any funds, securities or other 
choses in action to a designated national shall be made by deposit in a 
blocked account in a domestic bank or with a public officer, agency, or 
instrumentality designated by a court having jurisdiction of the estate. 
Any such deposit shall be made in one of the following ways:
    (1) In the name of the national who is the ultimate beneficiary 
thereof;
    (2) In the name of a person who is not a national of a designated 
foreign country in trust for the national who is the ultimate 
beneficiary; or
    (3) Under some other designation which clearly shows the interest 
therein of such national.
    (d) Any distribution of property authorized pursuant to this section 
may be made to a trustee of any testamentary trust or to the guardian of 
an estate of a minor or of an incompetent.
    (e) This section does not authorize:
    (1) Any designated national to act as personal representative or co-
representative of any estate;
    (2) Any designated national to represent, directly or indirectly, 
any person who has an interest in an estate;
    (3) Any designated national to take distribution of any property as 
the trustee of any testamentary trust or as the guardian of an estate of 
a minor or of an incompetent; or
    (4) Any transaction which could not be effected if no designated 
national had any interest in such estate.
    (f) Any payment or distribution authorized by this section may be 
deposited in a blocked account in a domestic bank or with a public 
officer, agency, or instrumentality designated by the court having 
jurisdiction of the estate in one of the ways prescribed in paragraph 
(c) (1), (2) or (3) of this section, but this section does not authorize 
any other transaction directly or indirectly

[[Page 119]]

at the request, or upon the instructions of any designated national.

[28 FR 6974, July 9, 1963, as amended at 54 FR 5234, Feb. 2, 1989; 64 FR 
25813, May 13, 1999]



Sec. 515.524  Payment from, and transactions in the administration of certain 

trusts and estates.

    (a) Any bank or trust company incorporated under the laws of the 
United States, or of any State, territory, possession, or district of 
the United States, or any private bank subject to supervision and 
examination under the banking laws of any State of the United States, 
acting as trustee of a trust created by gift, donation or bequest and 
administered in the United States, or as legal representative of an 
estate of an infant or incompetent administered in the United States, in 
which trust or estate one or more persons who are designated nationals 
have an interest, beneficial or otherwise, or are co-trustees or co-
representatives, is hereby authorized to engage in the following 
transactions:
    (1) Payments of distributive shares of principal or income to all 
persons legally entitled thereto upon the condition prescribed in 
paragraph (b) of this section.
    (2) Other transactions arising in the administration of such trust 
or estate which might be engaged in if no national of a designated 
foreign country were a beneficiary, co-trustee or co-representative of 
such trust or estate upon the condition prescribed in paragraph (b) of 
this section.
    (b) Any payment or distribution of any funds, securities or other 
choses in action to a national of a designated foreign country under 
this section shall be made by deposit in a blocked account in a domestic 
bank in the name of the national who is the ultimate beneficiary 
thereof.
    (c) Any payment or distribution into a blocked account in a domestic 
bank in the name of any such national of a designated foreign country 
who is the ultimate beneficiary of and legally entitled to any such 
payment or distribution is authorized by this section, but this section 
does not authorize such trustee or legal representative to engage in any 
other transaction at the request, or upon the instructions, of any 
beneficiary, co-trustee or co-representative of such trust or estate or 
other person who is a national of any designated foreign country.
    (d) The application of this section to trusts is limited to trusts 
established by gift, donation, or bequest from individuals or entities 
to benefit specific heirs, charitable causes, and similar beneficiaries. 
This section does not apply to trusts established for business or 
commercial purposes, such as sinking funds established by an issuer of 
securities in order to secure payment of interest or principal due on 
such securities.

[28 FR 6974, July 9, 1963, as amended at 49 FR 27144, July 2, 1984; 54 
FR 5234, Feb. 2, 1989]



Sec. 515.525  Certain transfers by operation of law.

    (a) The following are hereby authorized:
    (1) Any transfer of any dower, curtesy, community property, or other 
interest of any nature whatsoever, provided that such transfer arises 
solely as a consequence of the existence or change of marital status;
    (2) Any transfer to any person by intestate succession;
    (3) Any transfer to any person as administrator, executor, or other 
fiduciary by reason of any testamentary disposition; and
    (4) Any transfer to any person as administrator, executor, or 
fiduciary by reason of judicial appointment or approval in connection 
with any testamentary disposition or intestate succession.
    (b) Except to the extent authorized by Sec. 515.522, Sec. 515.523 
or by any other license or authorization contained in or issued pursuant 
to this part no transfer to any person by intestate succession and no 
transfer to any person as administrator, executor, or other fiduciary by 
reason of any testamentary disposition, and no transfer to any person as 
administrator, executor, or fiduciary by reason of judicial appointment 
or approval in connection with any testamentary disposition or intestate 
succession shall be deemed to terminate the interest of the decedent in 
the

[[Page 120]]

property transferred if the decedent was a designated national.

[28 FR 6974, July 9, 1963, as amended at 54 FR 5234, Feb. 2, 1989; 64 FR 
25813, May 13, 1999]



Sec. 515.526  Transactions involving blocked life insurance policies.

    (a) The following transactions are hereby authorized:
    (1) The payment of premiums and interest on policy loans with 
respect to any blocked life insurance policy;
    (2) The issuance, servicing or transfer of any blocked life 
insurance policy in which the only blocked interest is that of one or 
more of the following:
    (i) A member of the armed forces of the United States or a person 
accompanying such forces (including personnel of the American Red Cross, 
and similar organizations);
    (ii) An officer or employee of the United States; or
    (iii) A citizen of the United States resident in a designated 
foreign country; and
    (3) The issuance, servicing or transfer of any blocked life 
insurance policy in which the only blocked interest (other than that of 
a person specified in paragraph (a)(2) of this section) is that of a 
beneficiary.
    (b) Paragraph (a) of this section does not authorize:
    (1) Any payment to the insurer from any blocked account except a 
blocked account of the insured or beneficiary, or
    (2) Any payment by the insurer to a national of a designated foreign 
country unless payment is made by deposit in a blocked account in a 
domestic bank in the name of the national who is the ultimate 
beneficiary thereof.
    (c) The application, in accordance with the provisions of the policy 
or the established practice of the insurer of the dividends, cash 
surrender value, or loan value, of any blocked life insurance policy is 
also hereby authorized for the purpose of:
    (1) Paying premiums;
    (2) Paying policy loans and interest thereon;
    (3) Establishing paid-up insurance; or
    (4) Accumulating such dividends or values to the credit of the 
policy on the books of the insurer.
    (d) As used in this section:
    (1) The term blocked life insurance policy shall mean any life 
insurance policy or annuity contract, or contract supplementary thereto, 
in which there is a blocked interest.
    (2) Any interest of a national of a designated foreign country shall 
be deemed to be a ``blocked interest.''
    (3) The term servicing shall mean the following transactions with 
respect to any blocked life insurance policy:
    (i) The payment of premiums, the payment of loan interest, and the 
repayment of policy loans;
    (ii) The effecting by a life insurance company or other insurer of 
loans to an insured;
    (iii) The effecting on behalf of an insured or surrenders, 
conversions, modifications, and reinstatements; and
    (iv) The exercise or election by an insured of nonforfeiture 
options, optional modes of settlement, optional disposition of 
dividends, and other policy options and privileges not involving payment 
by the insurer.
    (4) The term transfer shall mean the change of beneficiary, or the 
assignment or pledge of the interest of an insured in any blocked life 
insurance policy subsequent to the issuance thereof.
    (e) This section does not authorize any transaction with respect to 
any blocked life insurance policy issued by a life insurance company or 
other insurer which is a national of a designated foreign country or 
which is not doing business or effecting insurance in the United States.



Sec. 515.527  Certain transactions with respect to United States intellectual 

property.

    (a)(1) Transactions related to the registration and renewal in the 
United States Patent and Trademark Office or the United States Copyright 
Office of patents, trademarks, and copyrights in which the Government of 
Cuba or a Cuban national has an interest are authorized.
    (2) No transaction or payment is authorized or approved pursuant to 
paragraph (a)(1) of this section with respect to a mark, trade name, or 
commercial name that is the same as or substantially similar to a mark, 
trade name, or commercial name that was used in connection with a 
business or assets

[[Page 121]]

that were confiscated, as that term is defined in Sec. 515.336, unless 
the original owner of the mark, trade name, or commercial name, or the 
bona fide successor-in-interest has expressly consented.
    (b) This section authorizes the payment from blocked accounts or 
otherwise of fees currently due to the United States Government in 
connection with any transaction authorized in paragraph (a) of this 
section.
    (c) This section further authorizes the payment from blocked 
accounts or otherwise of the reasonable and customary fees and charges 
currently due to attorneys or representatives within the United States 
in connection with the transactions authorized in paragraph (a) of this 
section.

[60 FR 54196, Oct. 20, 1995, as amended at 64 FR 25813, May 13, 1999]



Sec. 515.528  Certain transactions with respect to blocked foreign 

intellectual property.

    (a) The following transactions by any person who is not a designated 
national are hereby authorized:
    (1) The filing and prosecution of any application for a blocked 
foreign patent, trademark or copyright, or for the renewal thereof;
    (2) The receipt of any blocked foreign patent, trademark or 
copyright;
    (3) The filing and prosecution of opposition or infringement 
proceedings with respect to any blocked foreign patent, trademark, or 
copyright, and the prosecution of a defense to any such proceedings;
    (4) The payment of fees currently due to the government of any 
foreign country, either directly or through an attorney or 
representative, in connection with any of the transactions authorized by 
paragraphs (a) (1), (2), and (3) of this section or for the maintenance 
of any blocked foreign patent, trademark or copyright; and
    (5) The payment of reasonable and customary fees currently due to 
attorneys or representatives in any foreign country incurred in 
connection with any of the transactions authorized by paragraphs (a) 
(1), (2), (3), or (4) of this section.
    (b) Payments effected pursuant to the terms of paragraphs (a) (4) 
and (5) of this section may not be made from any blocked account.
    (c) As used in this section the term blocked foreign patent, 
trademark, or copyright shall mean any patent, petty patent, design 
patent, trademark or copyright issued by any foreign country in which a 
designated foreign country or national thereof has an interest, 
including any patent, petty patent, design patent, trademark, or 
copyright issued by a designated foreign country.

[28 FR 6974, July 9, 1963, as amended at 60 FR 54196, Oct. 20, 1995]



Sec. 515.529  Powers of attorney.

    (a) No power of attorney, whether granted before or after the 
``effective date'' shall be invalid by reason of any of the provisions 
of this part with respect to any transaction licensed by or pursuant to 
the provisions of this part.
    (b) This section does not authorize any transaction pursuant to a 
power of attorney if such transaction is prohibited by Sec. 515.201 and 
is not otherwise licensed or authorized by or pursuant to this part.
    (c) This section does not authorize the creation of any power of 
attorney in favor of any person outside of the United States or the 
exportation from the United States of any power of attorney.



Sec. 515.530  Exportation of powers of attorney or instructions relating to 

certain types of transactions.

    (a) The exportation to any foreign country of powers of attorney or 
other instruments executed or issued by any person within the United 
States who is not a national of a designated foreign country, which are 
limited to authorizations or instructions to effect transactions 
incident to the following, are hereby authorized upon the condition 
prescribed in paragraph (b) of this section:
    (1) The representation of the interest of such person in a 
decedent's estate which is being administered in a designated foreign 
country and the collection of the distributive share of such person in 
such estate;
    (2) The maintenance, preservation, supervision or management of any

[[Page 122]]

property located in a designated foreign country in which such person 
has an interest; and
    (3) The conveyance, transfer, release, sale or other disposition of 
any property specified in paragraph (a)(1) of this section or any real 
estate or tangible personal property if the value thereof does not 
exceed the sum of $5,000 or its equivalent in foreign currency.
    (b) No instrument which authorizes the conveyance, transfer, 
release, sale or other disposition of any property may be exported under 
this section unless it contains an express stipulation that such 
authority may not be exercised if the value of such property exceeds the 
sum of $5,000 or the equivalent thereof in foreign currency.
    (c) As used in this section, the term tangible personal property 
shall not include cash, bullion, deposits, credits, securities, patents, 
trademarks, or copyrights.



Sec. 515.531  Payment of certain checks and drafts.

    (a) Any banking institution within the United States is hereby 
authorized to make payments from blocked accounts with such banking 
institution:
    (1) Of checks and drafts drawn or issued prior to the ``effective 
date'' provided:
    (i) The amount involved in any one payment, acceptance, or debit 
does not exceed $500; or
    (ii) The check or draft was within the United States in process of 
collection by a domestic bank on or prior to the ``effective date.''
    (2) [Reserved]
    (b) This section does not authorize any payment to a designated 
foreign country or any designated national thereof except payments into 
a blocked account in a domestic bank, unless such designated national is 
otherwise licensed to receive such payment.
    (c) The authorization contained in this section shall expire at the 
close of business on August 8, 1963.



Sec. 515.532  Completion of certain securities transactions.

    (a) Banking institutions within the United States are hereby 
authorized to complete, on or before July 12, 1963 purchases and sales 
made prior to the ``effective date'' of securities purchased or sold for 
the account of a designated foreign country or any designated national 
thereof provided the following terms and conditions are complied with, 
respectively:
    (1) The proceeds of such sale are credited to a blocked account in a 
banking institution in the name of the person for whose account the sale 
was made; and
    (2) The securities so purchased are held in a blocked account in a 
banking institution in the name of the person for whose account the 
purchase was made.
    (b) This section does not authorize the crediting of the proceeds of 
the sale of securities held in a blocked account or a subaccount 
thereof, to a blocked account or subaccount under any name or 
designation which differs from the name or designation of the specific 
blocked account or subaccount in which such securities were held.



Sec. 515.533  Transactions incident to exportations from the United States and 

reexportations of 100% U.S.-origin items to Cuba; negotiation of executory 

contracts.

    (a) All transactions ordinarily incident to the exportation of items 
from the United States, or the reexportation of 100% U.S.-origin items 
from a third country, to any person within Cuba are authorized, provided 
that:
    (1) The exportation or reexportation is licensed or otherwise 
authorized by the Department of Commerce under the provisions of the 
Export Administration Act of 1979, as amended (50 U.S.C. app. 2401-0420) 
(see the Export Administration Regulations, 15 CFR 730-774); and
    (2) Only the following payment and financing terms may be used:
    (i)(A) Payment of cash in advance. Except as provided in paragraph 
(a)(2)(i)(B) of this section, for the purposes of this section, the term 
``payment of cash in advance'' means that payment is received by the 
seller or the seller's agent prior to shipment of the goods from the 
port at which they are loaded;
    (B) Payment of cash in advance during Fiscal Year 2010. For sales of 
agricultural items delivered to Cuba between

[[Page 123]]

October 1, 2009, and September 30, 2010, or delivered pursuant to a 
contract entered into between October 1, 2009, and September 30, 2010, 
and shipped within twelve months from the signing of the contract, the 
term ``payment of cash in advance'' shall mean payment before the 
transfer of title to, and control of, the exported items to the Cuban 
purchaser;

    Note to Sec. 515.533(a)(2)(i)(B): The payment rule set forth in 
this paragraph is required by Section 619 of the Omnibus Appropriations 
Act, 2010 (Pub. L. 111-117).

    (ii) For authorized sales of agricultural items, financing by a 
banking institution located in a third country provided the banking 
institution is not a designated national, U.S. citizen, U.S. permanent 
resident alien, or an entity organized under the laws of the United 
States or any jurisdiction within the United States (including foreign 
branches). Such financing may be confirmed or advised by a U.S. banking 
institution; or
    (iii) For all other authorized sales, financing by a banking 
institution located in a third country provided the banking institution 
is not a designated national or a person subject to the jurisdiction of 
the United States. Such financing may be confirmed or advised by a U.S. 
banking institution.

    Note to paragraph (a): The transactions authorized by this paragraph 
include, but are not limited to, all transactions that are directly 
incident to the shipping of specific exports or reexports (e.g., 
insurance and transportation of the exports to Cuba). Transactions that 
are not tied to specific exports or reexports, such as transactions 
involving future (non-specific) shipments, must be separately licensed 
by OFAC. For the waiver of the prohibitions on entry into U.S. ports 
contained in Sec. 515.207 for vessels transporting shipments of items 
between the United States and Cuba pursuant to this section, see Sec. 
515.550.

    (b) Persons subject to the jurisdiction of the United States are 
authorized to engage in all transactions ordinarily incident to 
negotiation of and entry into executory contracts for the sale of items 
that may be exported from the United States to Cuba or 100% U.S.-origin 
items that may be reexported from a third country to Cuba consistent 
with the export licensing policy of the Department of Commerce, provided 
that performance of such executory contracts is expressly made 
contingent on the prior authorization by the Department of Commerce.

    Note to paragraph (b): This paragraph does not authorize 
transactions related to travel to, from, or within Cuba. See paragraphs 
(e) and (f) for general licenses, and paragraph (g) for a statement of 
specific licensing policy, with respect to such transactions.

    (c) This section does not authorize:
    (1) The financing of any transactions from any blocked account.
    (2) Any transaction involving, directly or indirectly, property in 
which any designated national, other than a person located in the 
country to which the exportation or reexportation is consigned, has an 
interest or has had an interest since the effective date set forth in 
Sec. 515.201 of this part.
    (d) In addition to those transactions authorized pursuant to 
paragraph (a) of this section, all transactions ordinarily incident to 
the processing of payments received for items exported from the United 
States to any person within Cuba are authorized, provided that:
    (1) The exportation is licensed or otherwise authorized by the 
Department of Commerce under the provisions of the Export Administration 
Act of 1979, as amended (50 U.S.C. App. 2401-2420) (see the Export 
Administration Regulations, 15 CFR 730-774);
    (2) The items are shipped from the port at which they are loaded on 
or before March 24, 2005; and
    (3) Payment is received by a U.S. banking institution on or before 
March 24, 2005, and prior to the transfer of title to, and control of, 
the exported items to the Cuban purchaser.
    (e) General license for travel-related transactions incident to 
sales of agricultural commodities, medicine, or medical devices. The 
travel-related transactions set forth in Sec. 515.560(c) and additional 
transactions that are directly incident to the commercial marketing, 
sales negotiation, accompanied delivery, or servicing in Cuba of 
agricultural commodities, medicine, or medical devices that appear 
consistent with the export or re-export licensing policy of the 
Department of Commerce are authorized, provided that:

[[Page 124]]

    (1) The traveler is regularly employed by a producer or distributor 
of the agricultural commodities, medicine, or medical devices or by an 
entity duly appointed to represent such a producer or distributor;
    (2) The traveler's schedule of activities does not include free 
time, travel, or recreation in excess of that consistent with a full 
work schedule; and
    (3) The traveler submits to OFAC at least 14 days in advance of each 
departure to Cuba a written report identifying both the traveler and the 
producer or distributor and describing the purpose and scope of such 
travel. Within 14 days of return from Cuba, the traveler shall submit a 
written report describing the business activities conducted, the persons 
with whom the traveler met in the course of such activities, and the 
expenses incurred. Such reports must be captioned ``Section 515.533(e) 
Report'' and faxed to 202/622-1657 or mailed to the Office of Foreign 
Assets Control, Attn: Licensing Division, 1500 Pennsylvania Avenue, NW., 
Annex-2nd Floor, Washington, DC 20220. If more than one traveler is 
traveling on the same trip for or on behalf of the same producer or 
distributor, one combined pre-trip and one combined post-trip report may 
be filed covering all such travelers.
    (f) General license for travel-related transactions incident to 
sales of telecommunications-related items. The travel-related 
transactions set forth in Sec. 515.560(c) and additional transactions 
that are directly incident to the commercial marketing, sales 
negotiation, accompanied delivery, or servicing in Cuba of 
telecommunications-related items that have been authorized for 
commercial export or re-export to Cuba by the Department of Commerce are 
authorized, provided that:
    (1) The traveler is regularly employed by a telecommunications 
services provider that is a person subject to U.S. jurisdiction or by an 
entity duly appointed to represent such a provider;
    (2) The traveler's schedule of activities does not include free 
time, travel, or recreation in excess of that consistent with a full 
work schedule; and
    (3) The traveler submits to OFAC at least 14 days in advance of each 
departure to Cuba a written report identifying both the traveler and the 
telecommunications services provider that is a person subject to U.S. 
jurisdiction and describing the purpose and scope of such travel. Within 
14 days of return from Cuba, the traveler shall submit a written report 
describing the business activities conducted, the persons with whom the 
traveler met in the course of such activities, and the expenses 
incurred. Such reports must be captioned ``Section 515.533(f) Report'' 
and faxed to 202/622-1657 or mailed to the Office of Foreign Assets 
Control, Attn: Licensing Division, 1500 Pennsylvania Avenue, NW., Annex-
2nd Floor, Washington, DC 20220. If more than one traveler is traveling 
on the same trip for or on behalf of the same telecommunications 
services provider that is a person subject to U.S. jurisdiction, one 
combined pre-trip and one combined post-trip report may be filed 
covering all such travelers.
    (g) Specific licenses for travel-related transactions incident to 
exports. Specific licenses may be issued on a case-by-case basis 
authorizing the travel-related transactions set forth in Sec. 
515.560(c) and additional transactions that are directly incident to the 
marketing, sales negotiation, accompanied delivery, or servicing in Cuba 
of exports that appear consistent with the export or re-export licensing 
policy of the Department of Commerce and are not authorized by the 
general licenses in paragraphs (e) and (f) of this section.

[68 FR 14146, Mar. 24, 2003, as amended at 70 FR 9225, Feb. 25, 2005; 74 
FR 46004, Sept. 8, 2009; 75 FR 10997, Mar. 10, 2010]



Sec. 515.535  Exchange of certain securities.

    (a) Subject to the limitations and conditions of paragraph (b) of 
this section and notwithstanding Sec. 515.202, any banking institution 
within the United States is authorized to engage in the following 
transactions with respect to securities listed on a national securities 
exchange, including the withdrawal of such securities from blocked 
accounts:
    (1) Exchange of certificates necessitated by reason of changes in 
corporate name, par value or capitalization,

[[Page 125]]

    (2) Exchanges of temporary for permanent certificates,
    (3) Exchanges or deposits under plans of reorganization,
    (4) Exchanges under refunding plans, or
    (5) Exchanges pursuant to conversion privileges accruing to 
securities held.
    (b) This section does not authorize the following transactions:
    (1) Any exchange of securities unless the new securities and other 
proceeds, if any, received are deposited in the blocked account in which 
the original securities were held immediately prior to the exchange.
    (2) Any exchange of securities registered in the name of any 
designated national, unless the new securities received are registered 
in the same name in which the securities exchanged were registered prior 
to the exchange.
    (3) Any exchange of securities issued by a person engaged in the 
business of offering, buying, selling, or otherwise dealing, or trading 
in securities, or evidences thereof, issued by another person.
    (4) Any transaction with respect to any security by an issuer or 
other obligor who is a designated national.



Sec. 515.536  Certain transactions with respect to merchandise affected by 

Sec. 515.204.

    (a) With respect to merchandise the importation of which is 
prohibited by Sec. 515.204, all Customs transactions are authorized 
except the following:
    (1) Entry for consumption (including any appraisement entry, any 
entry of goods imported in the mails, regardless of value, and any other 
informal entries);
    (2) Entry for immediate exportation;
    (3) Entry for transportation and exportation;
    (4) Withdrawal from warehouse;
    (5) Transfer or withdrawal from a foreign-trade zone; or
    (6) Manipulation or manufacture in a warehouse or in a foreign-trade 
zone.
    (b) Paragraph (a) of this section is intended solely to allow 
certain restricted disposition of merchandise which is imported without 
proper authorization. Paragraph (a) of this section does not authorize 
the purchase or importation of any merchandise.
    (c) The purchase outside the United States for importation into the 
United States of nickel-bearing materials presumptively subject to Sec. 
515.204 and the importation of such merchandise into the United States 
(including transactions listed in paragraph (a) of this section) are 
authorized if there is presented to the collector of customs in 
connection with such importation the original of an appropriate 
certificate of origin as defined in paragraph (d) of this section and 
provided that the merchandise was shipped to the United States directly, 
or on a through bill of lading, from the country issuing the appropriate 
certificate of origin.
    (d) A certificate of origin is appropriate for the purposes of this 
section only if
    (1) It is a certificate of origin the availability of which for 
Cuban Assets Control purposes has been announced in the Federal Register 
by the Office of Foreign Assets Control; and
    (2) It bears a statement by the issuing agency referring to the 
Cuban Assets Control Regulations or stating that the certificate has 
been issued under procedures agreed upon with the U.S. Government.

[30 FR 15371, Dec. 14, 1965, as amended at 47 FR 4254, Jan. 29, 1982; 50 
FR 5753, Feb. 12, 1985; 54 FR 5234, Feb. 2, 1989]



Sec. 515.540  [Reserved]



Sec. 515.542  Mail and telecommunications-related transactions.

    (a) All transactions of common carriers incident to the receipt or 
transmission of mail between the United States and Cuba are authorized.
    (b) All transactions, including but not limited to payments, 
incident to the provision of telecommunications services between the 
United States and Cuba, the provision of satellite radio or satellite 
television services to Cuba, or the entry into and performance under 
roaming service agreements with telecommunications services providers in 
Cuba, by a telecommunications services provider that is a person subject 
to U.S. jurisdiction are authorized. This paragraph does not authorize 
any transactions addressed in paragraphs (c), (d), (f) or (g) of this 
section, nor

[[Page 126]]

does it authorize the entry into or performance of a contract with or 
for the benefit of any particular individual in Cuba.
    (c) All persons subject to U.S. jurisdiction are authorized to enter 
into, and make payments under, contracts with non-Cuban 
telecommunications services providers, or particular individuals in 
Cuba, for telecommunications services provided to particular individuals 
in Cuba, provided that such individuals in Cuba are not prohibited 
officials of the Government of Cuba, as defined in Sec. 515.337 of this 
part, or prohibited members of the Cuban Communist Party, as defined in 
Sec. 515.338 of this part. The authorization in this paragraph 
includes, but is not limited to, payment for activation, installation, 
usage (monthly, pre-paid, intermittent, or other), roaming, maintenance, 
and termination fees.
    (d)(1) General license for telecommunications facilities linking the 
United States and Cuba. Transactions incident to the establishment of 
facilities to provide telecommunications services linking the United 
States and Cuba, including but not limited to fiber-optic cable and 
satellite facilities, are authorized.
    (2) Specific licenses for telecommunications facilities linking 
third countries and Cuba. Specific licenses may be issued on a case-by-
case basis authorizing transactions incident to the establishment of 
facilities to provide telecommunications services linking third 
countries and Cuba, including but not limited to fiber-optic cable and 
satellite facilities, provided that such facilities are necessary to 
provide efficient and adequate telecommunications services between the 
United States and Cuba.
    (e) Any entity subject to U.S. jurisdiction relying on paragraph 
(b), (c), (d)(1), or (d)(2) of this section shall notify OFAC in writing 
within 30 days after commencing or ceasing to offer such services, as 
applicable, and shall furnish by January 15 and July 15 of each year 
semiannual reports providing the total amount of all payments made to 
Cuba or a third country related to any of the services authorized by 
this section during the prior six months. These notifications and 
reports must be captioned ``Section 515.542 Notification'' or ``Section 
515.542 Report'' and faxed to 202/622-6931 or mailed to the Office of 
Foreign Assets Control, Attn: Policy Division, 1500 Pennsylvania Avenue, 
NW., Annex-4th Floor, Washington, DC 20220.
    (f) For the purposes of this section, the term telecommunications 
services includes but is not limited to telephone, telegraph, and 
similar services and the transmission of satellite radio and satellite 
television broadcasts and news wire feeds.
    (g) Nothing in this section authorizes the exportation or re-
exportation of any items to Cuba. For the rules related to authorization 
of exports and re-exports to Cuba, see Sec. Sec. 515.533 and 515.559 of 
this part.
    (h) For an authorization of travel-related transactions that are 
directly incident to the commercial marketing, sales negotiation, 
accompanied delivery, or servicing in Cuba of telecommunications-related 
items that have been authorized for commercial export to Cuba by the 
U.S. Department of Commerce, see Sec. 515.533(f) of this part. For an 
authorization of travel-related transactions that are directly incident 
to participation in professional meetings for the commercial marketing 
of, sales negotiation for, or performance under contracts for the 
provision of the telecommunications services, or the establishment of 
facilities to provide telecommunications services, authorized by 
paragraphs (b), (c), or (d)(1) of this section, see paragraph (a)(3) of 
Sec. 515.564 of this part. Nothing in this Sec. 515.542 authorizes 
transactions related to travel to, from, or within Cuba.

[74 FR 46005, Sept. 8, 2009]



Sec. 515.543  Proof of origin.

    Specific licenses for importation of goods of Cuban origin are 
generally not issued unless the applicant submits satisfactory 
documentary proof of the location of the goods outside Cuba prior to 
July 8, 1963 and of the absence of any Cuban interest in the goods at 
all times on or since that date. Since the type of document which would 
constitute satisfactory proof varies depending upon the facts of the 
particular case, it is not possible to state

[[Page 127]]

in advance the type of documents required. However, it has been found 
that affidavits, statements, invoices, and other documents prepared by 
manufacturers, processors, sellers or shippers cannot be relied on and 
are therefore not by themselves accepted by the Office of Foreign Assets 
Control as satisfactory proof of origin. Independent corroborating 
documentary evidence, such as insurance documents, bills of lading, 
etc., may be accepted as satisfactory proof.

[39 FR 25317, July 10, 1974]



Sec. 515.544  Gifts of Cuban origin goods.

    (a) Except as stated in paragraph (b) of this section, specific 
licenses are not issued for the importation of Cuban-origin goods sent 
as gifts to persons in the United States or acquired abroad as gifts by 
persons entering the United States. However, licenses are issued upon 
request for the return of such goods to the donors in countries other 
than Cuba.
    (b) Specific licenses are issued for the importation directly from 
Cuba:
    (1) Of goods which are claimed by the importer to have been sent as 
a bona fide gift or
    (2) Of goods which are imported by a person entering the U.S., which 
are claimed to have been acquired in Cuba as a bona fide gift, subject 
to the conditions that:
    (i) The goods are of small value, and
    (ii) There is no reason to believe that there is, or has been since 
July 8, 1963, any direct or indirect financial or commercial benefit to 
Cuba or nationals thereof from the importation.

[39 FR 25317, July 10, 1974; 39 FR 28434, Aug. 7, 1974, as amended at 49 
FR 27144, July 2, 1984]



Sec. 515.545  Transactions related to information and informational materials.

    (a) Transactions relating to the dissemination of informational 
materials are authorized, including remittance of royalties paid for 
informational materials that are reproduced, translated, subtitled, or 
dubbed. This section does not authorize the remittance of royalties or 
other payments relating to works not yet in being, or for marketing and 
business consulting services, or artistic or other substantive 
alteration or enhancements to informational materials, as provided in 
Sec. 515.206(a)(3).
    (b) Specific licenses may be issued on a case-by-case basis 
authorizing the travel-related transactions set forth in Sec. 
515.560(c) for purposes related to the exportation, importation, or 
transmission of information or informational materials as defined in 
Sec. 515.332.
    Note to Sec. 515.545. With respect to transactions necessary and 
ordinarily incident to the publishing and marketing of manuscripts, 
books, journals and newspapers, see Sec. 515.577.

[54 FR 5234, Feb. 2, 1989, as amended at 60 FR 39257, Aug. 2, 1995; 64 
FR 25813, May 13, 1999; 69 FR 75469, Dec. 17, 2004; 74 FR 46006, Sept. 
8, 2009]



Sec. 515.546  Accounts of Cuban sole proprietorships.

    Specific licenses are issued unblocking sole proprietorships 
established under the laws of Cuba if the proprietor has emigrated from 
Cuba and established residence in the United States or a country in the 
authorized trade territory.

[39 FR 25319, July 10, 1974. Redesignated at 64 FR 25813, May 13, 1999]



Sec. 515.547  Research samples.

    Specific licenses are issued for importation of Cuban-origin 
commodities for bona-fide research purposes in sample quantities only.

[39 FR 25318, July 10, 1974]



Sec. 515.548  Services rendered by Cuba to United States aircraft.

    Specific licenses are issued for payment to Cuba of charges for 
services rendered by Cuba in connection with overflights of Cuba or 
emergency landings in Cuba, of private, commercial or government-owned 
United States aircraft.

[39 FR 25318, July 10, 1974, as amended at 49 FR 27144, July 2, 1984]



Sec. 515.549  Bank accounts and other property of non-Cuban citizens who were 

in Cuba on or after July 8, 1963.

    (a) Citizens of foreign countries. Specific licenses are issued 
unblocking the accounts and other property of non-

[[Page 128]]

Cuban citizens who have left Cuba, provided that they submit evidence 
satisfactorily demonstrating that they have established residence in a 
foreign country in the authorized trade territory.
    (b) Decedents who died in Cuba on or after July 8, 1963. Specific 
licenses are issued authorizing the administration of the estates of 
non-Cuban decedents who died in Cuba, provided that any distribution to 
a blocked national of Cuba is made by deposit in a blocked account in a 
domestic bank in the name of the blocked national.

[39 FR 25318, July 10, 1974]



Sec. 515.550  Certain vessel transactions authorized.

    Unless a vessel has otherwise engaged in transactions that would 
prohibit entry pursuant to Sec. 515.207, Sec. 515.207 shall not apply 
to a vessel that is:
    (a) Engaging in trade with Cuba authorized by licenses issued 
pursuant to Sec. 515.533 or Sec. 515.559; or
    (b) Engaging in trade with Cuba that is exempt from the prohibitions 
of this part (see Sec. 515.206).

[64 FR 25813, May 13, 1999]



Sec. 515.551  Joint bank accounts.

    (a) Specific licenses are issued unblocking a portion of or all of a 
joint bank account blocked by reason of the fact that one or more of the 
persons in whose names the account is held is a blocked national, where 
a non-blocked applicant claims beneficial ownership, as follows:
    (1) Joint bank account, without survivorship provisions. Specific 
licenses are issued unblocking only that amount with respect to which 
the applicant is able to prove beneficial ownership by documentary 
evidence independent of his assertions of interest.
    (2) Joint bank account, with survivorship provisions. Specific 
licenses are issued unblocking an amount equivalent to that portion of 
the total amount to which the applicant would be entitled if the total 
were divided evenly among the persons in whose names the account is held 
(e.g. 50 percent where there are two names; 33\1/3\ percent where there 
are three names). Such licenses generally are issued on the basis of 
applicant's assertions of beneficial ownership interest without the 
requirement of independent evidence.
    (3) Joint bank account in the names of a husband and wife, with 
survivorship provision. Specific licenses are issued unblocking portions 
of such accounts blocked by reason of the residence of one spouse in 
Cuba in favor of the non-blocked spouse under the policy stated in 
paragraph (a)(2) of this section. However, if 50 percent of the account 
has been unblocked under that policy, and the spouse who is the blocked 
Cuban national subsequently dies, the surviving spouse may be entitled 
to a license unblocking the remainder of the assets under Sec. 515.522.
    (b) [Reserved]

[39 FR 25318, July 10, 1974, as amended at 49 FR 27145, July 2, 1984; 54 
FR 5234, Feb. 2, 1989; 64 FR 25813, May 13, 1999]



Sec. 515.552  Proceeds of insurance policies.

    (a) Specific licenses are issued authorizing payment of the proceeds 
of blocked life insurance policies issued on the life of a Cuban 
national who died in Cuba after July 8, 1963, to certain beneficiaries 
licensed as unblocked nationals pursuant to Sec. 515.505, as follows:
    (1) The applicant is a permanent resident of the United States or 
the authorized trade territory and is not a specially designated 
national; and
    (2) No interest on the part of a designated national not licensed as 
an unblocked national exists in that portion of the funds to which the 
applicant is entitled.
    (b) Applications for specific licenses under this section must 
include all of the following information:
    (1) Proof of permanent residence in the United States or the 
authorized trade territory, to be established by the submission of 
documentation issued by relevant government authorities that must 
include at least two of the following documents:
    (i) Passport;
    (ii) Voter registration card;
    (iii) Permanent resident alien card; or
    (iv) National identity card.

[[Page 129]]


Other documents tending to show residency, such as income tax returns, 
may also be submitted in support of government documentation, but will 
not suffice in and of themselves;
    (2) Proof of entitlement under the insurance policy to be 
established by a copy of the policy and an affidavit from an appropriate 
officer of a recognized insurance company acknowledging the legitimacy 
of the beneficiary's claim and the amount of the payment; and
    (c) Any document provided pursuant to this section that is not 
written in the English language must be accompanied by a translation 
into English, as well as a certification by the translator that he is 
not an interested party to the proceeding, is qualified to make the 
translation, and has made an accurate translation of the document in 
question.

[54 FR 5234, Feb. 2, 1989]



Sec. 515.553  Bank accounts of official representatives in Cuba of foreign 

governments.

    Specific licenses are issued authorizing payments from accounts of 
official representatives in Cuba of foreign governments for transactions 
which are not inconsistent with the purposes of any of the regulations 
in this chapter.

[39 FR 25319, July 10, 1974]



Sec. 515.554  Transfers of abandoned property under State laws.

    (a) Except as stated in paragraphs (b) and (c) of this section, 
specific licenses are not issued authorizing the transfer of blocked 
property to State agencies under State laws governing abandoned 
property.
    (b) Specific licenses are issued authorizing the transfer of blocked 
property, pursuant to the laws of the State governing abandoned 
property, to the appropriate State agency: Provided, That the State's 
laws are custodial in nature, i.e., there is no permanent transfer of 
beneficial interest to the State. Licenses require the property to be 
held by the State in accounts which are identified as blocked under the 
regulations. A separate index of these blocked assets is required to be 
maintained by the State agency. The requirements of this section for 
identification and separate indexing of blocked assets apply to all 
blocked assets held by State agencies and any licenses issued prior to 
the effective date of this section hereby are amended by the 
incorporation of such requirements.
    (c) To be eligible for a specific license under this section, the 
state agency must demonstrate that it has the statutory authority under 
appropriate state law to comply with the requirements of Sec. 515.205. 
Such a showing shall include an opinion of the State Attorney General 
that such statutory authority exists.

[44 FR 11771, Mar. 2, 1979]



Sec. 515.555  Assets of Cuban firms wholly or substantially owned by U.S. 

citizens.

    (a) Specific licenses are issued to applicants requesting the 
unblocking of their stock in Cuban corporations if:
    (1) The corporation was wholly or substantially owned by United 
States citizens on July 8, 1963;
    (2) The assets are in the United States and either;
    (3) The applicant is a stockholder who was a United States citizen 
on July 8, 1963 and owned the stock interests on that date; or,
    (4) The applicant is a non-blocked person who acquired such stock 
interest after July 8, 1963 from a person specified in paragraph (a)(3) 
of this section.
    (b) The issuance of licenses is conditioned on the applicant's 
furnishing the following information:
    (1) Detailed information as to the status of all debts and other 
obligations of the Cuban corporation, specifying the citizenship and 
residence of each creditor as of July 8, 1963, and as of the date of 
filing of the application;
    (2) Current status of the Cuban corporation, e.g., liquidated, 
nationalized, inoperative, etc.;
    (3) A detailed description of all the corporation's assets, wherever 
located;
    (4) A list of all officers, directors, and stockholders giving the 
citizenship and the residence of each such person as of July 8, 1963; 
and,
    (5) Satisfactory proof that such stock was owned by U.S. citizens as 
of July 8,

[[Page 130]]

1963. Such proof may consist of sworn statements by the persons in 
question attesting to their citizenship. The Office of Foreign Assets 
Control reserves the right to require additional proof of citizenship.

[39 FR 25319, July 10, 1974]



Sec. 515.556  [Reserved]



Sec. 515.557  Accounts of Cuban partnerships.

    Specific licenses are issued unblocking partnerships established 
under the laws of Cuba as follows:
    (a) Where all of the general partners and limited partners, if any, 
have emigrated from Cuba and have established residence in the United 
States or in a country in the authorized trade territory, specific 
licenses are issued unblocking the assets of the partnership after 
deducting the total debt due creditors wherever located.
    (b) Where one or more partners, whether general or limited, is still 
in Cuba (or elsewhere but still blocked), specific licenses are issued 
unblocking only the net pro-rata shares of those partners who are 
resident in the United States or in a country in the authorized trade 
territory after deducting the total debt due creditors wherever located.
    (c) The issuance of licenses is conditioned on the applicant's 
furnishing the following information:
    (1) Detailed information as to the status of all debts and other 
obligations of the blocked partnership, specifying the citizenship and 
residence of each creditor as of July 8, 1963, and as of the date of the 
application;
    (2) Current status of the Cuban partnership, e.g., liquidated, 
nationalized, inoperative, etc.;
    (3) A detailed description of all the partnership's assets, wherever 
located; and,
    (4) A list of all partners, indicating whether they are general, 
limited, etc. and giving their citizenship and residence as of July 8, 
1963, and as of the date of filing of the application.

[39 FR 25319, July 10, 1974]



Sec. 515.558  Bunkering of Cuban vessels and fueling of Cuban aircraft by 

American-owned or controlled foreign firms.

    Foreign firms owned or controlled by United States persons are 
authorized to engage in transactions ordinarily incident to the 
bunkering of vessels and to the fueling of aircraft owned or controlled 
by, or chartered to, Cuba or nationals thereof.

(50 U.S.C. App. 5(b); 22 U.S.C. 2370(a); E. O. 9193, 3 CFR 1943 Cum. 
Supp.; Treas. Dept. Order No. 128, 32 FR 3472)

[42 FR 58518, Nov. 10, 1977; 43 FR 19852, May 9, 1978. Redesignated at 
64 FR 25813, May 13, 1999]



Sec. 515.559  Certain transactions by U.S.-owned or controlled foreign firms 

with Cuba.

    (a) Effective October 23, 1992, no specific licenses will be issued 
pursuant to paragraph (b) of this section for transactions between U.S.-
owned or controlled firms in third countries and Cuba for the 
exportation to Cuba of commodities produced in the authorized trade zone 
or for the importation of goods of Cuban origin into countries in the 
authorized trade zone, unless, in addition to meeting all requirements 
of paragraph (b), one or more of the following conditions are satisfied:
    (1) The contract underlying the proposed transaction was entered 
into prior to October 23, 1992;
    (2) The transaction is for the exportation of medicine or medical 
supplies from a third country to Cuba, which shall not be restricted:
    (i) Except to the extent such restrictions would be permitted under 
section 5(m) of the Export Administration Act of 1979 or section 
203(b)(2) of the International Emergency Economic Powers Act if the 
exportation were subject to these provisions;
    (ii) Except in a case in which there is a reasonable likelihood that 
the item to be exported will be used for purposes of torture or other 
human rights abuses;
    (iii) Except in a case in which there is a reasonable likelihood 
that the item to be exported will be reexported; or
    (iv) Except in a case in which the item to be exported could be used 
in

[[Page 131]]

the production of any biotechnological product; and
    (v) Except in a case where it is determined that the United States 
Government is unable to verify, by on-site inspection or other means, 
that the item to be exported will be used for the purpose for which it 
was intended and only for the use and benefit of the Cuban people, but 
this exception shall not apply to donations for humanitarian purposes to 
a nongovernmental organization in Cuba.
    (3) The transaction is for the exportation of telecommunications 
equipment from a third country, when the equipment is determined to be 
necessary for efficient and adequate telecommunications service between 
the United States and Cuba.
    (b) Specific licenses will be issued in appropriate cases for 
certain categories of transactions between U.S.-owned or controlled 
firms in third countries and Cuba, where local law requires, or policy 
in the third country favors, trade with Cuba. The categories include:
    (1) Exportation to Cuba of commodities produced in the authorized 
trade territory, provided:
    (i) The commodities to be exported are non-strategic;
    (ii) United States-origin technical data (other than maintenance, 
repair and operations data) will not be transferred;
    (iii) If any U.S.-origin parts and components are included therein, 
such inclusion has been authorized by the Department of Commerce;
    (iv) If any U.S.-origin spares are to be reexported to Cuba in 
connection with a licensed transaction, such reexport has been 
authorized by the Department of Commerce;
    (v) No U.S. dollar accounts are involved; and
    (vi) Any financing or other extension of credit by a U.S.-owned or 
controlled firm is granted on normal short-term conditions which are 
appropriate for the commodity to be exported.
    (2) Travel-related transactions set forth in Sec. 515.560(c) and 
other transactions that are directly incident to marketing, sales 
negotiation, accompanied delivery, or servicing of exports that are 
consistent with the licensing policy under this section.
    (3) Importation of goods of Cuban origin into countries in the 
authorized trade territory.

    Note to paragraph (b): On October 23, 1992, sections 1705 and 1706 
of the Cuban Democracy Act of 1992, Pub. L. 102-484 (Oct. 23, 1992) 
(codified at 22 U.S.C. 6004 and 6005, respectively), prohibited OFAC 
from issuing licenses for any transaction described in this paragraph 
other than those transactions currently set forth in paragraph (a).

    (c) The term strategic goods means any item, regardless of origin, 
of a type included in the Commodity Control List of the U.S. Department 
of Commerce (15 CFR part 399) and identified by the code letter ``A'' 
following the Export Control Commodity Numbers, or of a type the 
unauthorized exportation of which from the United States is prohibited 
by regulations issued under the Arms Export Control Act of 1976, 22 
U.S.C. 2778, or under the Atomic Energy Act of 1954, 42 U.S.C. 2011, et 
seq., or successor acts restricting the export of strategic goods.

    Note to Sec. 515.559: For reexportation of U.S.-origin goods, 
wares, or merchandise by U.S.-owned or controlled foreign firms, see 
Sec. 515.533. Transactions by U.S.-owned or controlled foreign firms 
directly incident to the exportation of information or informational 
materials or the donation of food to nongovernmental entities or 
individuals in Cuba are exempt from the prohibitions of this part. See 
Sec. 515.206. For the waiver of the prohibitions contained in Sec. 
515.207 with respect to vessels transporting shipments of goods, wares, 
or merchandise pursuant to this section, see Sec. 515.550.

[40 FR 47108, Oct. 8, 1975, as amended at 42 FR 1472, Jan. 7, 1977; 42 
FR 16621, Mar. 29, 1977; 50 FR 27438, July 3, 1985; 53 FR 47527, Nov. 
23, 1988; 58 FR 34710, June 29, 1993; 64 FR 25814, May 13, 1999; 66 FR 
36687, July 12, 2001; 68 FR 14146, Mar. 24, 2003]



Sec. 515.560  Travel-related transactions to, from, and within Cuba by persons 

subject to U.S. jurisdiction.

    (a) The travel-related transactions listed in paragraph (c) of this 
section may be authorized either by a general license or on a case-by-
case basis by a specific license for travel related to the following 
activities (see the referenced sections for the applicable general and 
specific licensing criteria):
    (1) Family visits (general and specific licenses) (see Sec. 
515.561);

[[Page 132]]

    (2) Official business of the U.S. government, foreign governments, 
and certain intergovernmental organizations (general license) (see Sec. 
515.562);
    (3) Journalistic activity (general and specific licenses) (see Sec. 
515.563);
    (4) Professional research and professional meetings (general and 
specific licenses) (see Sec. 515.564);
    (5) Educational activities (specific licenses) (see Sec. 515.565);
    (6) Religious activities (specific licenses) (see Sec. 515.566);
    (7) Public performances, athletic and other competitions, and 
exhibitions (specific licenses) (see Sec. 515.567);
    (8) Support for the Cuban people (specific licenses) (see Sec. 
515.574);
    (9) Humanitarian projects (specific licenses) (see Sec. 515.575);
    (10) Activities of private foundations or research or educational 
institutes (specific licenses) (see Sec. 515.576);
    (11) Exportation, importation, or transmission of information or 
informational materials (specific licenses) (see Sec. 515.545); and
    (12) Certain export transactions that may be considered for 
authorization under existing Department of Commerce regulations and 
guidelines with respect to Cuba or engaged in by U.S.-owned or -
controlled foreign firms (general and specific licenses) (see Sec. Sec. 
515.533 and 515.559).
    (b) Effective October 28, 2000, no specific licenses will be issued 
authorizing the travel-related transactions in paragraph (c) of this 
section in connection with activities other than those referenced in 
paragraph (a) of this section.
    (c) Persons generally or specifically licensed under this part to 
engage in transactions in connection with travel to, from, and within 
Cuba may engage in the following transactions:
    (1) Transportation to and from Cuba. All transportation-related 
transactions ordinarily incident to travel to and from (not within) Cuba 
are authorized.
    (2) Living expenses in Cuba. All transactions ordinarily incident to 
travel anywhere within Cuba, including payment of living expenses and 
the acquisition in Cuba of goods for personal consumption there, are 
authorized, provided that, unless otherwise authorized, the total for 
such expenses does not exceed the ``maximum per diem rate'' for Havana, 
Cuba, in effect during the period that the travel takes place. The 
maximum per diem rate is published in the Department of State's 
``Maximum Travel per Diem Allowances for Foreign Areas,'' a supplement 
to section 925, Department of State Standardized Regulations (Government 
Civilians, Foreign Areas), which is available from the Government 
Printing Office, Superintendent of Documents, P.O. Box 371945, 
Pittsburgh, PA 1520-7954, and on the Department of State's Office of 
Allowances Web site (http://aoprals.state.gov).
    (3) Importation of Cuban merchandise prohibited. Nothing in this 
section authorizes the importation into the United States of any 
merchandise purchased or otherwise acquired in Cuba, including but not 
limited to any importation of such merchandise as accompanied baggage. 
The importation of Cuban-origin information and informational materials 
is exempt from the prohibitions of this part, as described in Sec. 
515.206.
    (4) Carrying remittances to Cuba. The carrying to Cuba of any 
remittances that the licensed traveler is authorized to remit pursuant 
to Sec. 515.570 is authorized, provided that:
    (i) The total of all family remittances authorized by Sec. 
515.570(a) does not exceed $3,000, and
    (ii) No emigration remittances authorized by Sec. 515.570(b) are 
carried to Cuba unless a U.S. immigration visa has been issued for each 
payee and the licensed traveler can produce the visa recipients' full 
names, dates of birth, visa numbers, and visa dates of issuance.

    Note to paragraph (c)(4): This paragraph does not authorize a 
traveler to carry remittances on behalf of other remitters.

    (5) Processing certain financial instruments. All transactions 
incident to the processing and payment of checks, drafts, travelers' 
checks, and similar instruments negotiated in Cuba by any person 
authorized pursuant to this part to engage in financial transactions in 
Cuba. For purposes of this section, the authorized transactions may be 
conducted using currency, which is defined as money, cash, drafts, 
notes, travelers' checks, negotiable instruments,

[[Page 133]]

or scrip having a specified or readily determinable face value or worth, 
but which does not include gold or other precious metals in any form.
    (d) A blocked Cuban national permanently resident outside the United 
States who is departing the United States may carry currency, as that 
term is defined in paragraph (c)(5) of this section, as follows:
    (1) The amount of any currency brought into the United States by the 
Cuban national and registered with U.S. Customs and Border Protection 
upon entry;
    (2) Up to $3,000 in funds received as remittances by the Cuban 
national during his or her stay in the United States; and
    (e) The following transactions by persons generally or specifically 
licensed to engage in travel-related transactions to, from, and within 
Cuba are prohibited by Sec. 515.201 unless specifically authorized:
    (1) All transactions by persons subject to U.S. jurisdiction related 
to the utilization of charge cards, including but not limited to debit 
or credit cards, for expenditures in Cuba.
    (2) All transactions related to the processing and payment by 
persons subject to U.S. jurisdiction, such as charge card issuers or 
intermediary banks, of charge card instruments (e.g., vouchers, drafts, 
or sales receipts) for expenditures in Cuba. The issuer of a charge 
card, or a foreign charge card firm owned or controlled by persons 
subject to U.S. jurisdiction, is not authorized to deal with a Cuban 
enterprise, a Cuban national, or a third-country person, such as a 
franchisee, in connection with the extension of charge card services to 
any person in Cuba.
    (f) Nothing in this section authorizes transactions in connection 
with tourist travel to Cuba, nor does it authorize transactions in 
relation to any business travel, including making or agreeing to make 
any investment in Cuba, establishing or agreeing to establish any branch 
or agency in Cuba, or transferring or agreeing to transfer any property 
to Cuba, except transfers by or on behalf of individual or group 
travelers authorized pursuant to this part.

[64 FR 25814, May 13, 1999, as amended at 66 FR 36688, July 12, 2001; 68 
FR 14146, Mar. 24, 2003; 69 FR 33771 and 33773, June 16, 2004; 74 FR 
46006, Sept. 8, 2009]



Sec. 515.561  Persons visiting close relatives in Cuba.

    (a) General license. (1) Persons subject to the jurisdiction of the 
United States and persons traveling with them who share a common 
dwelling as a family with them are authorized to engage in the travel-
related transactions set forth in Sec. 515.560(c) and additional 
transactions directly incident to visiting a close relative, as defined 
in Sec. 515.339 of this part, who is a national of Cuba, as defined in 
Sec. 515.302 of this part.
    (2) Persons subject to the jurisdiction of the United States and 
persons traveling with them who share a common dwelling as a family with 
them are authorized to engage in the travel-related transactions set 
forth in Sec. 515.560(c) and additional transactions directly incident 
to visiting a close relative, as defined in Sec. 515.339 of this part, 
who is a U.S. Government employee assigned to the U.S. Interests Section 
in Havana.
    (b) Specific licenses. Specific licenses may be issued on a case-by-
case basis authorizing persons subject to the jurisdiction of the United 
States and persons traveling with them who share a common dwelling as a 
family with them to engage in the travel-related transactions set forth 
in Sec. 515.560(c) and additional transactions directly incident to 
visiting a close relative, as defined in Sec. 515.339 of this part, who 
is neither a national of Cuba, as defined in Sec. 515.302 of this part, 
nor a U.S. Government employee assigned to the U.S. Interests Section in 
Havana.

[74 FR 46006, Sept. 8, 2009]



Sec. 515.562  Officials of the U.S. government, foreign governments, and 

certain intergovernmental organizations traveling to, from, and within Cuba on 

official business.

    The travel-related transactions set forth in Sec. 515.560(c) and 
such additional transactions as are directly incident to activities in 
their official capacities by persons who are officials of the United

[[Page 134]]

States Government, any foreign government, or any intergovernmental 
organization of which the United States is a member and who are 
traveling on the official business of their government or international 
organization are authorized.

[64 FR 25815, May 13, 1999]



Sec. 515.563  Journalistic activities in Cuba.

    (a) General license. The travel-related transactions set forth in 
Sec. 515.560(c) and such additional transactions as are directly 
incident to journalistic activities in Cuba by persons regularly 
employed as journalists by a news reporting organization or by persons 
regularly employed as supporting broadcast or technical personnel are 
authorized.

    Note to paragraph (a): See Sec. Sec. 501.601 and 501.602 of this 
chapter for applicable recordkeeping and reporting requirements. The 
exportation of equipment and other items to be used in journalistic 
activities may require separate licensing by the Department of Commerce.

    (b) Specific licenses. (1) Specific licenses may be issued on a 
case-by-case basis authorizing the travel-related transactions set forth 
in Sec. 515.560(c) and other transactions that are directly incident to 
doing research in Cuba for a free-lance article upon submission of an 
adequate written application including the following documentation:
    (i) A detailed itinerary and a detailed description of the proposed 
research; and
    (ii) A resume or similar document showing a record of publications.
    (2) To qualify for a specific license pursuant to this section, the 
itinerary for the proposed research in Cuba for a free-lance article 
must demonstrate that the research constitutes a full work schedule that 
could not be accomplished in a shorter period of time.
    (3) Specific licenses may be issued pursuant to this section 
authorizing transactions for multiple trips to Cuba over an extended 
period of time by applicants demonstrating a significant record of free-
lance journalism.

[64 FR 25815, May 13, 1999]



Sec. 515.564  Professional research and professional meetings in Cuba.

    (a) General license--(1) Professional research. The travel-related 
transactions set forth in Sec. 515.560(c) and such additional 
transactions that are directly incident to professional research by 
full-time professionals who travel to Cuba to conduct professional 
research in their professional areas are authorized, provided that:
    (i) The research is of a noncommercial, academic nature;
    (ii) The research comprises a full work schedule in Cuba;
    (iii) The research has a substantial likelihood of public 
dissemination; and
    (iv) The research does not fall within the categories of activities 
described in paragraph (c), (d), or (e) of this section.

    Note to paragraph (a)(1): This general license does not authorize as 
professional research any travel-related transactions incident to 
attendance at professional meetings or conferences. Such transactions 
must either qualify under the general license set forth in paragraph 
(a)(2) of this section or be the subject of a request for a specific 
license under paragraph (b) of this section.

    (2) Professional meetings organized by an international professional 
organization. The travel-related transactions set forth in Sec. 
515.560(c) and such additional transactions as are directly incident to 
travel to Cuba by full-time professionals to attend professional 
meetings or conferences in Cuba organized by an international 
professional organization, institution, or association that regularly 
sponsors meetings or conferences in other countries are authorized, 
provided that:
    (i) The international professional organization, institution, or 
association is not headquartered in the United States unless that 
organization, institution, or association has been specifically licensed 
to sponsor the meeting in Cuba;
    (ii) The purpose of the meeting or conference is not the promotion 
of tourism in Cuba or other commercial activities involving Cuba that 
are inconsistent with this part; and
    (iii) The meeting or conference is not intended primarily for the 
purpose of fostering production of any biotechnological products.

[[Page 135]]

    (3) Professional meetings for commercial telecommunications 
transactions. The travel-related transactions set forth in Sec. 
515.560(c) and additional transactions directly incident to 
participation in professional meetings for the commercial marketing of, 
sales negotiation for, or performance under contracts for the provision 
of the telecommunications services, or the establishment of facilities 
to provide telecommunications services, authorized by paragraphs (b), 
(c), or (d)(1) of Sec. 515.542 of this part by a telecommunications 
services provider that is a person subject to U.S. jurisdiction are 
authorized, provided that:
    (i) The traveler is regularly employed by a telecommunications 
services provider that is a person subject to U.S. jurisdiction or by an 
entity duly appointed to represent such a provider; and
    (ii) The traveler's schedule of activities does not include free 
time, travel, or recreation in excess of that consistent with a full 
work schedule.

    Note to paragraph (a): See Sec. Sec. 501.601 and 501.602 of this 
chapter for applicable recordkeeping and reporting requirements. 
Exportation of equipment and other items, including the transfer of 
technology or software to foreign persons (``deemed exportation'') and 
items not eligible for Department of Commerce GFT or BAG License 
Exceptions, 15 CFR 740.12 and 740.14, may require separate authorization 
by the Department of Commerce.

    (b) Specific licensing. Specific licenses may be issued on a case-
by-case basis authorizing the travel-related transactions set forth in 
Sec. 515.560(c) and other transactions that are directly incident to 
professional research and professional meetings that do not qualify for 
the general license in paragraph (a) of this section. Specific licenses 
may be issued pursuant to this section authorizing transactions for 
multiple trips to Cuba over an extended period of time by applicants 
demonstrating a significant record of research. Specific licenses will 
not be issued for travel-related transactions for purposes of attendance 
at meetings or conferences in Cuba organized by the Cuban government 
where such meetings or conferences could be intended primarily for the 
purpose of fostering the production of any biotechnological products.
    (c) Categories of activities that do not qualify for the general 
license in paragraph (a) of this section and for which the specific 
licenses described in paragraph (b) of this section will not be issued 
include recreational travel; tourist travel; travel in pursuit of a 
hobby; research for personal satisfaction only; and any travel for an 
authorized professional research purpose if the schedule of activities 
includes free time, travel, or recreation in excess of that consistent 
with a full work schedule of professional research or attendance at 
professional meetings or conferences.
    (d) An entire group does not qualify for the general license in 
paragraph (a) of this section and will not be issued a specific license 
under paragraph (b) of this section merely because some members of the 
group could qualify individually for such licenses.

    Example 1 to paragraph (d): A musicologist travels to Cuba to do 
research on Cuban music pursuant to the general license for professional 
researchers set forth in paragraph (a) of this section. Others who are 
simply interested in music but who do not research music as part of 
their careers may not engage in travel-related transactions with the 
musicologist in reliance on this general license. For example, an art 
historian who plays in the same band with the musicologist would not 
qualify as a professional researcher of Cuban music for purposes of this 
general license.
    Example 2 to paragraph (d): A specific license issued pursuant to 
paragraph (b) of this section authorizing travel-related transactions by 
a fish biologist who travels to Cuba to engage in professional research 
does not authorize transactions by other persons who might travel with 
the fish biologist but whose principal purpose in travel is to engage in 
recreational or trophy fishing. The fact that such persons may engage in 
certain activities with or under the direction of the professional fish 
biologist, such as measuring or recording facts about their catch, does 
not bring these individuals' activities within the scope of professional 
research and similar activities.

    (e) A person will not qualify as engaging in professional research 
merely because that person is a professional who plans to travel to 
Cuba.

    Example 1 to paragraph (e): A professor of history interested in 
traveling to Cuba for

[[Page 136]]

the principal purpose of learning or practicing Spanish or attending 
general purpose lectures devoted to Cuban culture and contemporary life 
does not qualify for the general license in paragraph (a) of this 
section or for a specific license issued pursuant to paragraph (b) of 
this section.
    Example 2 to paragraph (e): A professional photographer who wishes 
to take photographs in Cuba that will become the basis for creating post 
cards, paintings, and other secondary products or that merely document 
the photographer's travel does not qualify for the general license in 
paragraph (a) of this section or for a specific license issued pursuant 
to paragraph (b) of this section.

[64 FR 25815, May 13, 1999, as amended at 69 FR 33772, June 16, 2004; 74 
FR 46006, Sept. 8, 2009]



Sec. 515.565  Educational activities.

    (a) Specific institutional licenses. Specific licenses for up to one 
year in duration may be issued to an accredited U.S. undergraduate or 
graduate degree-granting academic institution authorizing the 
institution, its students enrolled in an undergraduate or graduate 
degree program at the institution, and its full-time permanent employees 
to engage, under the auspices of the institution, in the travel-related 
transactions set forth in Sec. 515.560(c) and such additional 
transactions that are directly incident to:
    (1) Participation in a structured educational program in Cuba as 
part of a course offered at the licensed institution, provided the 
program includes a full term, and in no instance includes fewer than 10 
weeks, of study in Cuba. An individual planning to engage in such 
transactions must carry a letter from the licensed institution stating 
that the individual is a student currently enrolled in an undergraduate 
or graduate degree program at the institution or is a full-time 
permanent employee of the institution, stating that the Cuba-related 
travel is part of a structured educational program of the institution 
that will be no shorter than 10 weeks in duration, and citing the number 
of the institution's license;
    (2) Noncommercial academic research in Cuba specifically related to 
Cuba and for the purpose of obtaining a graduate degree. A student 
planning to engage in such transactions must carry a letter from the 
licensed institution stating that the individual is a student currently 
enrolled in a graduate degree program at the institution, stating that 
the research in Cuba will be accepted for credit toward that degree, and 
citing the number of the institution's license;
    (3) Participation in a formal course of study at a Cuban academic 
institution, provided the formal course of study in Cuba will be 
accepted for credit toward the student's undergraduate or graduate 
degree at the licensed U.S. institution and provided the course of study 
is no shorter than 10 weeks in duration. An individual planning to 
engage in such transactions must carry a letter from the licensed U.S. 
institution stating that the individual is a student currently enrolled 
in an undergraduate or graduate degree program at the U.S. institution, 
stating that the study in Cuba will be accepted for credit toward that 
degree and will be no shorter than 10 weeks in duration, and citing the 
number of the U.S. institution's license;
    (4) Teaching at a Cuban academic institution by an individual 
regularly employed in a teaching capacity at the licensed institution, 
provided the teaching activities are related to an academic program at 
the Cuban institution and provided that the duration of the teaching 
will be no shorter than 10 weeks. An individual planning to engage in 
such transactions must carry a written letter from the licensed U.S. 
institution stating that the individual is a full-time permanent 
employee regularly employed in a teaching capacity at the U.S. 
institution and citing the number of the U.S. institution's license;
    (5) Sponsorship, including the payment of a stipend or salary, of a 
Cuban scholar to teach or engage in other scholarly activity at the 
licensed institution (in addition to those transactions authorized by 
the general license contained in Sec. 515.571). Such earnings may be 
remitted to Cuba as provided in Sec. 515.570 or carried on the person 
of the Cuban scholar returning to Cuba as provided in Sec. 
515.560(d)(3); or
    (6) The organization of and preparation for activities described in 
paragraphs (a)(1) through (a)(5) of this section by a full-time 
permanent employee of the licensed institution. An

[[Page 137]]

individual engaging in such transactions must carry a written letter 
from the licensed institution stating that the individual is a full-time 
permanent employee of that institution and citing the number of the 
institution's license.

    Note to paragraph (a): See Sec. Sec. 501.601 and 501.602 of this 
chapter for applicable recordkeeping and reporting requirements. 
Exportation of equipment and other items, including the transfer of 
technology or software to foreign persons (``deemed exportation''), may 
require separate authorization from the Department of Commerce.

    (b) Other specific licenses. Specific licenses may be issued to 
individuals on a case-by-case basis authorizing the travel-related 
transactions set forth in Sec. 515.560(c) and other transactions 
directly incident to the educational activities described in paragraphs 
(a)(2) and (a)(3) of this section but not engaged in pursuant to a 
specific license issued to an institution pursuant to paragraph (a) of 
this section.
    (c) Transactions related to activities that are primarily tourist-
oriented, including self-directed educational activities that are 
intended only for personal enrichment, are not authorized by this 
section.

[64 FR 25816, May 13, 1999, as amended at 68 FR 14147, Mar. 24, 2003; 69 
FR 33772, June 16, 2004]



Sec. 515.566  Religious activities in Cuba.

    (a) Specific license for U.S. religious organizations--(1) Issuance; 
renewal. A specific license may be issued to a religious organization 
located in the United States authorizing the organization and 
individuals and groups affiliated with the organization to engage, under 
the auspices of the organization, in religious activities involving 
transactions (including travel-related transactions) in which Cuba or a 
Cuban national has an interest. The application for the specific license 
must set forth examples of religious activities to be undertaken in 
Cuba. The religious organization's specific license may be renewed after 
a period of two years to authorize the organization and individuals and 
groups affiliated with the organization to continue to engage in the 
transactions authorized under the organization's license.
    (2) Scope of transactions authorized under U.S. religious 
organization's specific license; documentation. Upon receipt by the 
religious organization located in the United States of a specific 
license pursuant to paragraph (a)(1) of this section, the organization 
and individuals or groups affiliated with the organization are 
authorized to engage in the travel-related transactions set forth in 
Sec. 515.560(c) and such additional transactions as are directly 
incident to religious activities in Cuba under the auspices of the 
organization. Travel-related transactions pursuant to this authorization 
must be for the purpose of engaging, while in Cuba, in a full-time 
program of religious activities. Financial and material donations to 
Cuba or Cuban nationals are not authorized by this paragraph (a)(2). All 
individuals who engage in transactions in which Cuba or Cuban nationals 
have an interest (including travel-related transactions) pursuant to 
this paragraph (a)(2) must carry with them a letter from the 
specifically-licensed U.S. religious organization, citing the number of 
the organization's specific license and confirming that they are 
affiliated with the organization and are traveling to Cuba to engage in 
religious activities under the auspices of the organization.

    Note to paragraph (a): See Sec. Sec. 501.601 and 501.602 of this 
chapter for applicable recordkeeping and reporting requirements. 
Exportation of items to be used in Cuba may require separate licensing 
by the Department of Commerce.

    (b) Specific licenses. Specific licenses may be issued on a case-by-
case basis authorizing the travel-related transactions set forth in 
Sec. 515.560(c) and other transactions that are directly incident to 
religious activities not covered by a specific license issued pursuant 
to paragraph (a) of this section to a U.S. religious organization. 
Specific licenses may be issued pursuant to this section authorizing 
transactions for multiple trips over an extended period of time to 
engage in a full-time program of religious activities in Cuba.

[64 FR 25817, May 13, 1999]

[[Page 138]]



Sec. 515.567  Public performances, athletic and other competitions, and 

exhibitions.

    (a) Amateur and semi-professional international sports federation 
competitions. Specific licenses, including for multiple trips to Cuba 
over an extended period of time, may be issued on a case-by-case basis 
authorizing the travel-related transactions set forth in Sec. 
515.560(c) and other transactions that are directly incident to athletic 
competition by amateur or semi-professional athletes or athletic teams 
wishing to travel to participate in athletic competition in Cuba, 
provided that:
    (1) The athletic competition in Cuba is held under the auspices of 
the international sports federation for the relevant sport;
    (2) The U.S. participants in the athletic competition are selected 
by the U.S. federation for the relevant sport; and
    (3) The competition is open for attendance, and in relevant 
situations participation, by the Cuban public.
    (b) Public performances, other athletic or other non-athletic 
competitions, and exhibitions. Specific licenses, including for multiple 
trips to Cuba over an extended period of time, may be issued on a case-
by-case basis authorizing the travel-related transactions set forth in 
Sec. 515.560(c) and other transactions that are directly incident to 
participation in a public performance, athletic competition not covered 
by paragraph (a) of this section, non-athletic competition, or 
exhibition in Cuba by participants in such activities, provided that:
    (1) The event is open for attendance, and in relevant situations 
participation, by the Cuban public; and
    (2) All U.S. profits from the event after costs are donated to an 
independent nongovernmental organization in Cuba or a U.S.-based 
charity, with the objective, to the extent possible, of benefiting the 
Cuban people.
    (c) Specific licenses will not be issued pursuant to this section 
authorizing any debit to a blocked account.

    Note to Sec. 515.567: See Sec. 515.571 for the authorization of 
certain transactions related to the activities of nationals of Cuba 
traveling in the United States.

[69 FR 33772, June 16, 2004]



Sec. 515.568  [Reserved]



Sec. 515.569  Foreign passengers' baggage.

    The importation of Cuban-origin goods, otherwise prohibited by this 
part, brought into the United States as baggage by any person arriving 
in the United States other than a citizen or resident of the United 
States is hereby authorized, notwithstanding the provisions of Sec. 
515.803, provided that such goods are not in commercial quantities and 
are not imported for resale. This authorization does not apply to the 
importation of Cuban-origin alcohol or tobacco products.

[64 FR 25818, May 13, 1999]



Sec. 515.570  Remittances to Nationals of Cuba.

    (a) Family remittances authorized. Persons subject to the 
jurisdiction of the United States who are 18 years of age or older are 
authorized to make remittances to nationals of Cuba who are close 
relatives, as defined in Sec. 515.339 of this part, of the remitter, 
provided that:
    (1) The remittances are not made from a blocked source. Certain 
remittances from blocked accounts are authorized pursuant to paragraph 
(c) of this section;
    (2) The recipient is not a prohibited official of the Government of 
Cuba, as defined in Sec. 515.337 of this part, or a prohibited member 
of the Cuban Communist Party, as defined in Sec. 515.338 of this part; 
and
    (3) The remittances are not made for emigration-related purposes. 
Remittances for emigration-related purposes are addressed by paragraph 
(b) of this section.
    (b) Two one-time $1,000 emigration-related remittances authorized. 
Persons subject to the jurisdiction of the United States are authorized 
to remit the following amounts:
    (1) Up to $1,000 per payee on a one-time basis to Cuban nationals 
for the purpose of covering the payees' preliminary expenses associated 
with emigrating from Cuba to the United States. These remittances may be 
sent before the payees have received valid visas issued by the State 
Department or other approved U.S. immigration documents, but may not be 
carried by

[[Page 139]]

a licensed traveler to Cuba until the payees have received valid visas 
issued by the State Department or other approved U.S. immigration 
documents. See Sec. 515.560(c)(4) of this part for the rules regarding 
the carrying of authorized remittances to Cuba. These remittances may 
not be made from a blocked source unless authorized pursuant to 
paragraph (c) of this section.
    (2) Up to an additional $1,000 per payee on a one-time basis to 
Cuban nationals for the purpose of enabling the payees to emigrate from 
Cuba to the United States, including for the purchase of airline tickets 
and payment of exit or third-country visa fees or other travel-related 
fees. These remittances may be sent only once the payees have received 
valid visas issued by the State Department or other approved U.S. 
immigration documents. A remitter must be able to provide the visa 
recipients' full names, dates of birth, visa numbers, and visa dates of 
issuance. See Sec. 515.560(c)(4) of this part for the rules regarding 
the carrying of authorized remittances to Cuba. These remittances may 
not be made from a blocked source unless authorized pursuant to 
paragraph (c) of this section.
    (c) Provided the recipient is not a prohibited official of the 
Government of Cuba, as defined in Sec. 515.337 of this part, or a 
prohibited member of the Cuban Communist Party, as defined in Sec. 
515.338 of this part, certain remittances from blocked sources are 
authorized as follows:
    (1) Funds deposited in a blocked account in a banking institution in 
the United States held in the name of, or in which the beneficial 
interest is held by, a national of Cuba as a result of a valid 
testamentary disposition, intestate succession, or payment from a life 
insurance policy or annuity contract triggered by the death of the 
policy or contract holder may be remitted:
    (i) To that national of Cuba, provided that s/he is a close 
relative, as defined in Sec. 515.339 of this part, of the decedent;
    (ii) To that national of Cuba as emigration-related remittances in 
the amounts and consistent with the criteria set forth in paragraph (b) 
of this section.
    (2) Up to $300 in any consecutive three-month period may be remitted 
from any blocked account in a banking institution in the United States 
to a Cuban national in a third country who is an individual in whose 
name, or for whose beneficial interest, the account is held.
    (d) Specific licenses. Specific licenses may be issued on a case-by-
case basis authorizing the following:
    (1) Remittances by persons subject to U.S. jurisdiction, including 
but not limited to non-governmental organizations and individuals, to 
independent non-governmental entities in Cuba, including but not limited 
to pro-democracy groups, civil society groups, and religious 
organizations, and to members of such groups or organizations;
    (2) Remittances from a blocked account to a Cuban national in excess 
of the amount specified in paragraph (c)(2) of this section; or
    (3) Remittances by persons subject to U.S. jurisdiction to a person 
in Cuba, directly or indirectly, for transactions to facilitate non-
immigrant travel by an individual in Cuba to the United States under 
circumstances where humanitarian need is demonstrated, including but not 
limited to illness or other medical emergency.

    Note to Sec. 515.570: For the rules relating to the carrying of 
remittances to Cuba, see Sec. 515.560(c)(4) of this part. Persons 
subject to U.S. jurisdiction are prohibited from engaging in the 
collection or forwarding of remittances to Cuba unless authorized 
pursuant to Sec. 515.572. For a list of authorized U.S. remittance 
service providers other than depository institutions, see Authorized 
Providers of Air, Travel and Remittance Forwarding Services to Cuba 
available from OFAC's Web site (www.treas.gov/ofac).

[74 FR 46006, Sept. 8, 2009]



Sec. 515.571  Certain transactions incident to travel to, from, and within the 

United States by Cuban nationals.

    (a) Except as provided in paragraph (c) of this section, the 
following transactions by or on behalf of a Cuban national who enters 
the United States on a non-immigrant visa or other non-immigrant travel 
authorization issued by the State Department are authorized:
    (1) All transactions ordinarily incident to travel between the 
United States and Cuba, including the importation into the United States 
of accompanied baggage for personal use;

[[Page 140]]

    (2) All transactions ordinarily incident to travel and maintenance 
within the United States, including the payment of living expenses and 
the acquisition of goods for personal consumption in the United States;
    (3) All transactions on behalf of aircraft or vessels incident to 
non-scheduled flights or voyages between the United States and Cuba, 
provided that the carrier used has a carrier service provider license 
issued pursuant to Sec. 515.572. This paragraph does not authorize the 
carriage of any merchandise into the United States except accompanied 
baggage; and
    (4) Normal banking transactions involving foreign currency drafts, 
travelers' checks, or other instruments negotiated incident to travel in 
the United States by any person under the authority of this section.
    (5) All transactions ordinarily incident to the activities for which 
a visa or other travel authorization was issued.
    (i) This paragraph (a)(5) does not authorize receipt of compensation 
in excess of amounts covering living expenses and the acquisition of 
goods for personal consumption. See Sec. 515.565(a)(5) of this part for 
the case-by-case authorization of payments to certain Cuban scholars of 
stipends or salaries that exceed this limit.
    (ii) Examples of transactions authorized by this paragraph (a)(5) 
include: the payment of tuition to a U.S. educational institution by a 
national of Cuba issued a student visa; the payment of compensation 
covering only living expenses and the purchase of goods for personal 
consumption to a national of Cuba issued a performance-related visa; and 
the rental of a stage by a Cuban group issued a performance visa.
    (b) Payments and transfers of credit in the United States from 
blocked accounts in domestic banking institutions held in the name of a 
Cuban national who enters the United States on a visa or other travel 
authorization issued by the State Department to or upon the order of 
such Cuban national are authorized provided that:
    (1) Such payments and transfers of credit are made only for the 
living, traveling, and similar personal expenses in the United States of 
such Cuban national or his or her family;
    (2) The total of all such payments and transfers of credit made 
under this section from the accounts of such Cuban national do not 
exceed $250 in any one calendar month; and
    (3) No payment or transfer is made from a blocked account in which a 
specially designated national has an interest.
    (c) This section does not authorize any transfer of property to 
Cuba, or, except as otherwise authorized in paragraph (b) of this 
section, any debit to a blocked account.

    Note to Sec. 515.571: For the authorization of certain transactions 
by Cuba nationals who become U.S. citizens, apply for or receive U.S. 
permanent resident alien status, or are paroled into the United States, 
see Sec. 515.505 of this part.

[64 FR 25819, May 13, 1999, as amended at 68 FR 14148, Mar. 24, 2003; 69 
FR 33773, June 16, 2004]



Sec. 515.572  Authorization of transactions incident to the provision of 

travel services, carrier services, and remittance forwarding services.

    (a)(1) Authorization of travel service provider. The following 
persons wishing to provide services in connection with travel to Cuba 
are ``travel service providers'' for purposes of this part: Travel 
agents, ticket agents, commercial and noncommercial organizations that 
arrange travel to Cuba; tour operators; persons arranging through 
transportation to Cuba; persons chartering an aircraft or vessel on 
behalf of others in Cuba; and persons arranging hotel accommodations, 
ground transportation, local tours, and similar travel activities on 
behalf of others in Cuba. Travel service providers must obtain 
authorization from the Office of Foreign Assets Control before providing 
services with respect to travel to Cuba. The list stated above should 
not be considered exhaustive, as other persons may be ``travel service 
providers'' within the meaning of this part. Opinions may be obtained 
from the Office of Foreign Assets Control concerning the applicability 
of this licensing requirement in individual cases.

[[Page 141]]

    (2) Authorization of carrier service provider. Persons subject to 
U.S. jurisdiction wishing to provide carrier services by aircraft or 
vessels incidental to their non-scheduled flights or voyages to, from, 
or within Cuba are ``carrier service providers'' for purposes of this 
part. Carrier service providers must obtain authorization from the 
Office of Foreign Assets Control before providing services with respect 
to non-scheduled flights or voyages to, from, or within Cuba. Carriage 
to or from Cuba of any merchandise, cargo or gifts, other than those 
permitted to individual travelers as accompanied baggage, must also be 
authorized by licenses issued by the U.S. Department of Commerce.
    (3) Authorization of remittance forwarders. Persons subject to U.S. 
jurisdiction, including persons that provide payment forwarding services 
and noncommercial organizations acting on behalf of donors, that wish to 
provide services in connection with the collection or forwarding of 
remittances authorized pursuant to this part must obtain specific 
authorization from OFAC. Depository institutions, as defined in Sec. 
515.333, are hereby authorized to provide these services without 
obtaining specific authorization from OFAC. However, all licensed 
remittance forwarders, including depository institutions, that forward 
remittances authorized pursuant to this part are required to collect 
from persons who use their services information showing compliance with 
the relevant remittance provisions of this part. Depository institutions 
are permitted to set up testing arrangements and exchange authenticator 
keys with Cuban financial institutions to forward remittances authorized 
by or pursuant to Sec. 515.570, but may not open or use direct 
correspondent accounts of their own with Cuban financial institutions.

    Note to paragraph (a)(3): A suggested form for the collection of 
information showing compliance with the remittance provisions in Sec. 
515.570 is available from OFAC's Web site (www.treas.gov/ofac).

    (b) Terms and conditions of authorization to engage in service 
transactions. Authorization to engage in service transactions will be 
issued only upon the applicant's written affirmation and subsequent 
demonstration that it does not participate in discriminatory practices 
of the Cuban government against certain residents and citizens of the 
United States. Examples of such practices include, but are not limited 
to, charging discriminatory rates for air travel or requiring payment 
for services, such as hotel accommodations and meals, not desired, 
planned to be utilized, or actually utilized, based on such 
characteristics as race, color, religion, sex, citizenship, place of 
birth, or national origin. Authorization, whether a grant of provisional 
authorization or a license issued pursuant to this part, does not permit 
a travel or carrier service provider to provide services in connection 
with any individual's transactions incident to travel which are 
prohibited by this part.
    (c) Initial applications for licenses. The initial application for a 
license shall contain:
    (1) The applicant organization's name, address, telephone number, 
and the name of an official of the applicant organization responsible 
for its licensed services;
    (2) The state of applicant's organization, if a juridical entity, 
the address of its principal place of business and all branch offices, 
the identity and ownership percentages of all shareholders or partners, 
and the identity and position of all principal officers and directors;
    (3) Copies of any bylaws, articles of incorporation, partnership 
agreements, management agreements, or other documents pertaining to the 
organization, ownership, control, or management of the applicant; and
    (4)(i) In the case of applications for authorization to serve as 
travel or carrier service providers, a report on the forms and other 
procedures used to establish that each customer is in full compliance 
with U.S. law implementing the Cuban embargo and either qualifies for 
one of the general licenses contained in this part authorizing travel-
related transactions in connection with travel to Cuba or has received a 
specific license from the Office of Foreign Assets Control issued 
pursuant to this part. In the case of a customer traveling pursuant to a 
general license, the applicant must demonstrate that it requires each 
customer to attest, in a

[[Page 142]]

signed statement, to his or her qualification for the particular general 
license claimed. The statement must provide facts supporting the 
customer's belief that he or she qualifies for the general license 
claimed. In the case of a customer traveling under a specific license, 
the applicant must demonstrate that it requires the customer to furnish 
it with a copy of the license. The copy of the signed statement or the 
specific license must be maintained on file with the applicant.
    (ii) In the case of applications for authorization as remittance 
forwarders, a report on the forms, account books, and other 
recordkeeping procedures used to determine whether each customer has 
violated the terms of any authorization for remittances contained in or 
issued pursuant to this part, or sent remittances to persons ineligible 
to receive them under Sec. 515.570; and the method by which remittances 
are sent to Cuba and the procedures used by the applicant to ensure that 
the remittances are received by the persons intended.
    (d) Required reports and recordkeeping. (1) Each specific license or 
grant of provisional authority shall require that the service provider 
furnish annual reports to the Department of the Treasury, Office of 
Foreign Assets Control, Washington, DC 20220, during the term of the 
license. The required content of such reports and their due dates shall 
be provided to the service provider in a letter authorizing the provider 
to commence services. Each such report will cover only the one-year 
period immediately preceding the date of the report.
    (2) While the names and addresses of individual travelers or 
remitters, the number and amount of each remittance, and the name and 
address of each recipient, as applicable, need not be submitted with 
annual reports, this information must be retained on file with all other 
information required by Sec. 515.601 of this chapter. These records 
must be furnished to the Office of Foreign Assets Control on demand 
pursuant to Sec. 515.602 of this chapter.
    (3) Presentation of passenger lists. Tour operators, persons 
operating an aircraft or vessel, or persons chartering an aircraft or 
vessel on behalf of others, for travel to, from, and within Cuba must 
furnish the U.S. Customs Service on demand a list of passengers on each 
flight or voyage to, from, and within Cuba.
    (e) Procedures governing the grant of provisional authority, denial, 
suspension, or revocation of authority to engage in service 
transactions--(1) Grant of provisional authority. Following submission 
of a complete application as described in paragraph (c) of this section, 
the submission of any additional relevant information, and a preliminary 
evaluation by the Office of Foreign Assets Control, the applicant will 
be notified in writing that provisional authority has been granted to 
provide the services contemplated in the application. This provisional 
authority to provide services will remain in effect pending a final 
decision to grant or deny the license.
    (2) Denial of license--(i) Notice of denial. If the Director, Office 
of Foreign Assets Control, determines that the application for a license 
to engage in service transactions related to travel to Cuba, carrier 
service transactions related to travel to Cuba, or transactions related 
to remittance forwarding should be denied for any reason, notice of 
denial shall be given to the applicant. The notice of denial shall state 
the reasons for the denial.
    (ii) Grounds for denial. The causes sufficient to justify denial of 
an application for a license may include, but need not be limited to:
    (A) Any cause which would justify suspension or revocation of the 
authority of a service provider pursuant to paragraph (e)(3) of this 
section;
    (B) Failure to file a full and complete application;
    (C) Any willful misstatement of pertinent facts in the application;
    (D) Evidence indicating that the applicant participates in 
discriminatory practices of the Cuban Government against certain 
residents and citizens of the United States as described in paragraph 
(b) of this section; or
    (E) A reputation imputing to the applicant criminal, dishonest, or 
unethical conduct, or a record of such conduct.
    (3) Suspension or revocation of a license or provisional 
authorization. A license or

[[Page 143]]

provisional authorization issued pursuant to this section may be 
suspended for a specific period of time, or revoked, for the following 
reasons:
    (i) The service provider has willfully made or caused to be made in 
any application for any license, request for a ruling or opinion, or 
report be filed with the Office of Foreign Assets Control, any statement 
that was, at the time and in light of the circumstances under which it 
was made, false or misleading with respect to any material fact, or has 
omitted to state in any application, request for ruling or opinion, or 
report any material fact that was required;
    (ii) The service provider has failed to file timely reports or 
comply with the recordkeeping requirements of his license or provisional 
authorization.
    (iii) The service provider has been convicted, at any time after 
filing an application for a license under this section, of any felony or 
misdemeanor that:
    (A) Involved the importation, exportation, or transfer of property 
in violation of any law or regulation administered by the Office of 
Foreign Assets Control;
    (B) Arose directly out of the conduct of the business covered by the 
license; or
    (C) Involved larceny, extortion, forgery, counterfeiting, fraudulent 
concealment, embezzlement, fraudulent conversion, misappropriation of 
funds, or a violation of the Customs laws, export or import control 
laws, or banking laws.
    (iv) The service provider has violated any provision of law enforced 
by the Office of Foreign Assets Control or the rules or regulations 
issued under any such provision;
    (v) The service provider has counseled, commanded, induced, 
procured, or knowingly aided or abetted the violation by any other 
person of any provision of any law or regulation referred to above;
    (vi) The service provider has, in the course of the business covered 
by the license, with felonious intent, in any manner willfully and 
knowingly deceived, defrauded, misled, threatened, or coerced any client 
or prospective client; or
    (vii) The service provider has committed any other act or omission 
that demonstrates unfitness to conduct the business covered by the 
license.

[57 FR 53999, Nov. 16, 1992, as amended at 59 FR 31142, June 17, 1994; 
59 FR 44886, Aug. 30, 1994; 63 FR 27349, May 18, 1998. Redesignated and 
amended at 64 FR 25813, 25819, May 13, 1999; 68 FR 14148, Mar. 24, 2003; 
69 FR 33773, June, 16, 2004; 74 FR 46007, Sept. 8, 2009]



Sec. 515.573  Transactions by news organizations.

    (a) Specific licenses may be issued authorizing all transactions 
necessary for the establishment and operation of news bureaus in Cuba 
whose primary purpose is the gathering and dissemination of news to the 
general public. Transactions that may be authorized include, but are not 
limited to, those incident to the following:
    (1) Leasing office space and securing related goods and services;
    (2) Hiring Cuban nationals to serve as support staff;
    (3) Purchasing Cuban-origin goods for use in the operation of the 
office; and
    (4) Paying fees related to the operation of the office in Cuba.
    (b) Specific licenses may be issued authorizing transactions 
necessary for the establishment and operation of news bureaus in the 
United States by Cuban organizations whose primary purpose is the 
gathering and dissemination of news to the general public.
    (c) Specific licenses may be issued authorizing transactions related 
to hiring Cuban nationals to provide reporting services or other 
services related to the gathering and dissemination of news.
    (d) Note: The number assigned to a specific license issued pursuant 
to this section should be referenced in all import documents, and in all 
funds transfers and other banking transactions through banks organized 
or located in the United States, in connection with the licensed 
transaction to avoid the blocking of goods imported from Cuba and the 
interruption of the financial transactions with Cuba.

[60 FR 54197, Oct. 20, 1995. Redesignated at 64 FR 25813, May 13, 1999]

[[Page 144]]



Sec. 515.574  Support for the Cuban People.

    (a) Specific licenses may be issued on a case-by-case basis 
authorizing the travel-related transactions set forth in Sec. 
515.560(c) and other transactions that are intended to provide support 
for the Cuban people including, but not limited to, the following:
    (1) Activities of recognized human rights organizations,
    (2) Activities of independent organizations designed to promote a 
rapid, peaceful transition to democracy, and
    (3) Activities of individuals and non-governmental organizations 
that promote independent activity intended to strengthen civil society 
in Cuba.
    (b) Licenses will be issued pursuant to this section once the 
applicant shows that the proposed transactions are consistent with the 
purposes of this section and provides an explanation that no significant 
accumulation of funds or financial benefit will accrue to the government 
of Cuba.

[68 FR 14148, Mar. 24, 2003]



Sec. 515.575  Humanitarian projects.

    Specific licenses may be issued on a case-by-case basis authorizing 
the travel-related transactions set forth in Sec. 515.560(c) and such 
additional transactions as are directly incident to certain humanitarian 
projects in or related to Cuba not otherwise covered by this part that 
are designed to directly benefit the Cuban people. Such projects may 
include, but are not limited to: medical and health-related projects; 
construction projects intended to benefit legitimately independent civil 
society groups; environmental projects; projects involving formal or 
non-formal educational training, within Cuba or off-island, on topics 
including civil education, journalism, advocacy and organizing, adult 
literacy, and vocational skills; community-based grassroots projects; 
projects suitable to the development of small scale private enterprise; 
projects that are related to agricultural and rural development that 
promote independent activity; and projects to meet basic human needs. 
Specific licenses may be issued authorizing transactions for multiple 
visits for the same project over an extended period of time by 
applicants demonstrating a significant record of overseas humanitarian 
projects.

[68 FR 14148, Mar. 24, 2003]



Sec. 515.576  Activities of private foundations or research or educational 

institutes.

    Specific licenses may be issued on a case-by-case basis authorizing 
the travel-related transactions set forth in Sec. 515.560(c) and such 
additional transactions as are directly incident to activities by 
private foundations or research or educational institutes that have an 
established interest in international relations to collect information 
related to Cuba for noncommercial purposes, not otherwise covered by the 
general license for professional research contained in Sec. 515.564 or 
more properly issued under Sec. 515.575, relating to humanitarian 
projects. Specific licenses may be issued pursuant to this section 
authorizing transactions for multiple trips to Cuba for the same project 
over an extended period of time.

[64 FR 25820, May 13, 1999]



Sec. 515.577  Authorized transactions necessary and ordinarily incident to 

publishing.

    (a) To the extent that such activities are not exempt from this 
part, and subject to the restrictions set forth in paragraphs (b) 
through (d) of this section, persons subject to the jurisdiction of the 
United States are authorized to engage in all transactions necessary and 
ordinarily incident to the publishing and marketing of manuscripts, 
books, journals, and newspapers in paper or electronic format 
(collectively, ``written publications'').
    This section does not apply if the parties to the transactions 
described in this paragraph include the Government of Cuba. For the 
purposes of this section, the term ``Government of Cuba'' includes the 
state and the Government of Cuba, as well as any political subdivision, 
agency, or instrumentality thereof, including the Central Bank of Cuba; 
any person occupying the positions identified in Sec. 515.570(a)(3); 
employees of the Ministry of Justice; and any person acting or 
purporting to act directly or indirectly on behalf of any

[[Page 145]]

of the foregoing with respect to the transactions described in this 
paragraph. For the purposes of this section, the term ``Government of 
Cuba'' does not include any academic and research institutions and their 
personnel. Pursuant to this section, the following activities are 
authorized, provided that persons subject to the jurisdiction of the 
United States ensure that they are not engaging, without separate 
authorization, in the activities identified in paragraphs (b) through 
(d) of this section:
    (1) Commissioning and making advance payments for identifiable 
written publications not yet in existence, to the extent consistent with 
industry practice;
    (2) Collaborating on the creation and enhancement of written 
publications;
    (3)(i) Augmenting written publications through the addition of items 
such as photographs, artwork, translation, explanatory text, and, for a 
written publication in electronic format, the addition of embedded 
software necessary for reading, browsing, navigating, or searching the 
written publication;
    (ii) Exporting embedded software necessary for reading, browsing, 
navigating, or searching a written publication in electronic format, 
provided that, to the extent a license is required under the Export 
Administration Regulations, 15 CFR parts 730 through 774 (the ``EAR''), 
the exportation is licensed or otherwise authorized by the Department of 
Commerce under the provisions of the EAR;
    (4) Substantive editing of written publications;
    (5) Payment of royalties for written publications;
    (6) Creating or undertaking a marketing campaign to promote a 
written publication; and
    (7) Other transactions necessary and ordinarily incident to the 
publishing and marketing of written publications as described in this 
paragraph (a).
    (b) This section does not authorize transactions involving the 
provision of goods or services not necessary and ordinarily incident to 
the publishing and marketing of written publications as described in 
paragraph (a) of this section. For example, this section does not 
authorize persons subject to the jurisdiction of the United States:
    (1) To provide or receive individualized or customized services 
(including, but not limited to, accounting, legal, design, or consulting 
services), other than those necessary and ordinarily incident to the 
publishing and marketing of written publications, even though such 
individualized or customized services are delivered through the use of 
information and informational materials;
    (2) To create or undertake for any person a marketing campaign with 
respect to any service or product other than a written publication, or 
to create or undertake a marketing campaign of any kind for the benefit 
of the Government of Cuba;
    (3) To engage in the exportation or importation of goods to or from 
Cuba other than the exportation of embedded software described in 
paragraph (a)(3)(ii) of this section;
    (4) To operate a publishing house, sales outlet, or other office in 
Cuba; or
    (5) To engage in transactions related to travel to, from, or within 
Cuba.

    Note to paragraph (b): The importation from Cuba and the exportation 
to Cuba of information or informational materials, as defined in Sec. 
515.332, whether commercial or otherwise, regardless of format or medium 
of transmission, are exempt from the prohibitions and regulations of 
this part. See Sec. 515.206(a).

    (c) This section does not authorize persons subject to the 
jurisdiction of the United States to engage the services of publishing 
houses or translators in Cuba unless such activity is primarily for the 
dissemination of written publications in Cuba.
    (d) This section does not authorize:
    (1) Transactions for the development, production, or design of 
software;
    (2) Transactions for the development, production, design, or 
marketing of technology specifically controlled by the International 
Traffic in Arms Regulations, 22 CFR parts 120 through 130 (the 
``ITAR''), the EAR, or the Department of Energy Regulations set forth at 
10 CFR part 810.
    (3) The exportation of information or technology subject to the 
authorization requirements of 10 CFR part 810, or Restricted Data as 
defined in section

[[Page 146]]

11 y. of the Atomic Energy Act of 1954, as amended, or of other 
information, data, or technology the release of which is controlled 
under the Atomic Energy Act and regulations therein;
    (4) The exportation of any item (including information) subject to 
the EAR where a U.S. person knows or has reason to know that the item 
will be used, directly or indirectly, with respect to certain nuclear, 
missile, chemical, or biological weapons or nuclear-maritime end-uses as 
set forth in part 744 of the EAR. In addition, U.S. persons are 
precluded from exporting any item subject to the EAR to certain 
restricted end-users, as set forth in part 744 of the EAR, as well as 
certain persons whose export privileges have been denied pursuant to 
parts 764 or 766 of the EAR, without authorization from the Department 
of Commerce; or
    (5) The exportation of information subject to licensing requirements 
under the ITAR, or exchanges of information that are subject to 
regulation by other government agencies.
    (e) Pursuant to Sec. 515.564, specific licenses may be issued on a 
case-by-case basis authorizing the travel-related transactions set forth 
in Sec. 515.560(c) and such additional transactions that are directly 
incident to attendance of professional meetings that are necessary and 
ordinarily incident to the publishing and marketing of written 
publications.

[72 FR 50048, Aug. 30, 2007]



Sec. 515.578  Exportation of certain services incident to Internet-based 

communications.

    (a) Except as provided in paragraph (b) of this section, the 
exportation from the United States or by persons subject to U.S. 
jurisdiction to persons in Cuba of services incident to the exchange of 
personal communications over the Internet, such as instant messaging, 
chat and email, social networking, sharing of photos and movies, web 
browsing, and blogging, is authorized, provided that such services are 
publicly available at no cost to the user.
    (b) This section does not authorize:
    (1) The direct or indirect exportation of services with knowledge or 
reason to know that such services are intended for a prohibited official 
of the Government of Cuba, as defined in Sec. 515.337 of this part, or 
a prohibited member of the Cuban Communist Party, as defined in Sec. 
515.338 of the part.
    (2) The direct or indirect exportation of Internet connectivity 
services or telecommunications transmission facilities (such as 
satellite links or dedicated lines).
    Note to Sec. 515.578(b)(2): For general licenses related to the 
provision of telecommunications services between the United States and 
Cuba and contracts for telecommunications services provided to 
particular individuals in Cuba, see Sec. 515.542(b) and Sec. 
515.542(c), respectively, of this part. For a general license and a 
statement of specific licensing policy related to the establishment of 
telecommunications facilities linking the United States or third 
countries and Cuba, see Sec. 515.542(d) of this part.
    (3) The direct or indirect exportation of web-hosting services that 
are for purposes other than personal communications (e.g., web-hosting 
services for commercial endeavors) or of domain name registration 
services.
    (4) The direct or indirect exportation of any items to Cuba.
    Note to Sec. 515.578(b)(4): For the rules related to transactions 
ordinarily incident to the exportation or reexportation of items, 
including software, to Cuba, see Sec. Sec. 515.533 and 515.559 of this 
part.
    (c) Specific licenses may be issued on a case-by-case basis for the 
exportation of other services incident to the sharing of information 
over the Internet.



                            Subpart F_Reports



Sec. 515.601  Records and reports.

    For provisions relating to records and reports, see subpart C of 
part 501 of this chapter.

[62 FR 45106, Aug. 25, 1997]



                           Subpart G_Penalties

    Source: 63 FR 10331, Mar. 3, 1998, unless otherwise noted.



Sec. 515.701  Penalties.

    For provisions relating to penalties, see part 501, subpart D, of 
this chapter.

[68 FR 53657, Sept. 11, 2003]

[[Page 147]]



                          Subpart H_Procedures



Sec. 515.801  Procedures.

    For license application procedures and procedures relating to 
amendments, modifications, or revocations of licenses; administrative 
decisions; rulemaking; and requests for documents pursuant to the 
Freedom of Information and Privacy Acts (5 U.S.C. 552 and 552a), see 
part 501, subpart E, of this chapter.

[62 FR 45106, Aug. 25, 1997, as amended at 68 FR 53657, Sept. 11, 2003]



Sec. 515.802  Delegation by the Secretary of the Treasury.

    Any action under Sec. 515.201 which the Secretary of the Treasury 
is authorized to take pursuant to Proclamation 3447 or the Trading With 
the Enemy Act may be taken by the Director, Office of Foreign Assets 
Control, or by any other person to whom the Secretary of the Treasury 
has delegated authority so to act.

[28 FR 6974, July 9, 1963. Redesignated at 62 FR 45106, Aug. 25, 1997]



Sec. 515.803  Customs procedures; merchandise specified in Sec. 515.204.

    (a) With respect to merchandise specified in Sec. 515.204 
(including nickel-bearing materials presumptively subject thereto) 
whether or not such merchandise has been imported into the United 
States, collectors of customs shall not accept or allow any:
    (1) Entry for consumption (including any appraisement entry, any 
entry of goods imported in the mails, regardless of value, and any other 
informal entries);
    (2) Entry for immediate exportation;
    (3) Entry for transportation and exportation;
    (4) Withdrawal from warehouse;
    (5) Transfer or withdrawal from a foreign-trade zone; or
    (6) Manipulation or manufacture in a warehouse or in a foreign-trade 
zone, unless either:
    (i) The merchandise was imported prior to 12:01 a.m., February 7, 
1962, or
    (ii) A specific license pursuant to this part is presented, or
    (iii) Instructions from the Office of Foreign Assets Control, 
authorizing the transaction are received, or
    (iv) The original of an appropriate certificate of origin as defined 
in Sec. 515.536(d) is presented.
    (b) Whenever a specific license is presented to a collector of 
customs in accordance with this section, one additional legible copy of 
the entry, withdrawal or other appropriate document with respect to the 
merchandise involved shall be filed with the collector of customs at the 
port where the transaction is to take place. Each copy of any such 
entry, withdrawal or other appropriate document, including the 
additional copy, shall bear plainly on its face the number of the 
license pursuant to which it is filed. The original copy of the specific 
license shall be presented to the collector in respect of each such 
transaction and shall bear a notation in ink by the licensee or person 
presenting the license showing the description, quantity and value of 
the merchandise to be entered, withdrawn or otherwise dealt with. This 
notation should be so placed and so written that there will exist no 
possibility of confusing it with anything placed on the license at the 
time of its issuance. If the license in fact authorizes the entry, 
withdrawal or other transaction with regard to the merchandise the 
collector, or other authorized customs employee, shall verify the 
notation by signing or initialing it after first assuring himself that 
it accurately describes the merchandise it purports to represent. The 
license shall thereafter be returned to the person presenting it and the 
additional copy of the entry, withdrawal or other appropriate document 
shall be forwarded by the collector to the Foreign Assets Control.
    (c)(1) Whenever the original of an appropriate certificate or origin 
as defined in Sec. 515.536(d) is presented to a collector of customs in 
accordance with this section, an additional legible copy of the entry, 
withdrawal or other appropriate document with respect to the merchandise 
involved shall be filed with the collector of customs at the port where 
the transaction is to take place. Each copy of the entry, withdrawal, or 
other appropriate document, including the additional copy, shall

[[Page 148]]

bear plainly on its face the following statement: ``This document is 
presented under the provisions of Sec. 515.536 (c) of the Cuban Assets 
Control Regulations.'' The original of the certificate of origin shall 
not be returned to the person presenting it. It shall be securely 
attached to the additional copy required by this subparagraph and shall 
be forwarded by the collector to the Office of Foreign Assets Control, 
Treasury Department, Washington, DC 20220. Collectors may forward such 
documents weekly or more often if the volume warrants.
    (2) If the original of an appropriate certificate of origin is 
properly presented to a collector of customs with respect to a 
transaction which is the first of a series of transactions which may be 
allowed in connection therewith under paragraph (a)(6)(iv) of this 
section (as, for example, where merchandise has been entered in a bonded 
warehouse and an appropriate certificate of origin is presented which 
relates to all of the merchandise entered therein but the importer 
desires to withdraw only part of the merchandise in the first 
transaction), the collector shall so note on the original of the 
appropriate certificate of origin and return it to the importer. In 
addition, the collector shall endorse his pertinent records so as to 
record what merchandise is covered by the appropriate certificate of 
origin presented. The collector may thereafter allow subsequent 
authorized transactions on presentation of the certificate of origin. 
The collector shall, with respect to each such transaction, demand an 
additional copy of each withdrawal or other appropriate document, which 
copy shall be promptly forwarded by the collector to the Office of 
Foreign Assets Control, Treasury Department, Washington, DC 20220, with 
an endorsement thereon reading:

    This document has been accepted pursuant to Sec. 515.808(c) (2) of 
the Cuban Assets Control Regulations. Appropriate certificate of origin 
No.--------------from (country).


When the final transaction has been effected under the certificate of 
origin, the original shall be taken up and attached to the entry and 
forwarded as in this paragraph.
    (d) Whenever a person shall present an entry, withdrawal or other 
appropriate document affected by this section and shall assert that no 
specific Foreign Assets Control license or appropriate certificate of 
origin as defined in Sec. 515.536 (d) is required in connection 
therewith, the collector of customs shall withhold action thereon and 
shall advise such person to communicate directly with the Office of 
Foreign Assets Control to request that instructions be issued to the 
collector to authorize him to take action with regard thereto.

[30 FR 15371, Dec. 14, 1965, as amended at 57 FR 1388, Jan. 14, 1992. 
Redesignated at 62 FR 45106, Aug. 25, 1997]



                   Subpart I_Miscellaneous Provisions



Sec. 515.901  Paperwork Reduction Act notice.

    Collection of information on TDF 90-22.39, ``Declaration, Travel to 
Cuba,'' has been approved by the Office of Management and Budget 
(``OMB'') under the Paperwork Reduction Act (44 U.S.C. 3507(j)) and 
assigned control number 1505-0118. For approval by OMB under the 
Paperwork Reduction Act of information collections relating to 
recordkeeping and reporting requirements, to licensing procedures 
(including those pursuant to statements of licensing policy), and to 
other procedures, see Sec. 501.901 of this chapter. An agency may not 
conduct or sponsor, and a person is not required to respond to, a 
collection of information unless it displays a valid control number 
assigned by OMB.

[62 FR 45106, Aug. 25, 1997]



PART 535_IRANIAN ASSETS CONTROL REGULATIONS--Table of Contents



      Subpart A_Relation of This Part to Other Laws and Regulations

Sec.
535.101 Relation of this part to other laws and regulations.

[[Page 149]]

                         Subpart B_Prohibitions

535.201 Transactions involving property in which Iran or Iranian 
          entities have an interest.
535.202 Transactions with respect to securities registered or inscribed 
          in the name of Iran.
535.203 Effect of transfers violating the provisions of this part.
535.208 Evasions; effective date.
535.210 Direction for establishing an escrow agreement.
535.211 Direction involving transfers by the Federal Reserve Bank 
          concerning certain Iranian property.
535.212 Direction to transfer property in which Iran or an Iranian 
          entity has an interest by branches and offices of United 
          States banks located outside the United States.
535.213 Direction involving property held by offices of banks in the 
          United States in which Iran or an Iranian entity has an 
          interest.
535.214 Direction involving other financial assets in which Iran or an 
          Iranian entity has an interest held by any person subject to 
          the jurisdiction of the United States.
535.215 Direction involving other properties in which Iran or an Iranian 
          entity has an interest held by any person subject to the 
          jurisdiction of the United States.
535.216 Prohibition against prosecution of certain claims.
535.217 Blocking of property of the former Shah of Iran and of certain 
          other Iranian nationals.
535.218 Prohibitions and nullifications with respect to property 
          described in Sec. Sec. 535.211, 535.212, 535.213, 535.214 and 
          535.215 and standby letters of credit.
535.219 Discharge of obligation by compliance with this part.
535.220 Timing of transfers required by Sec. 535.212.
535.221 Compliance with directive provisions.
535.222 Suspension of claims eligible for Claims Tribunal.

                      Subpart C_General Definitions

535.301 Iran; Iranian Entity.
535.308 Person.
535.310 Transfer.
535.311 Property; property interests.
535.312 Interest.
535.316 License.
535.317 General license.
535.318 Specific license.
535.320 Domestic bank.
535.321 United States; continental United States.
535.329 Person subject to the jurisdiction of the United States.
535.333 Properties.
535.334 Act of the Government of Iran.
535.335 Claim arising out of events in Iran.
535.337 Funds.

                        Subpart D_Interpretations

535.401 Reference to amended sections.
535.402 Effect of amendment of sections of this part or of other orders, 
          etc.
535.403 Termination and acquisition of an interest of Iran or an Iranian 
          entity.
535.413 Transfers between dollar accounts held for foreign banks.
535.414 Payments to blocked accounts under Sec. 535.508.
535.415 Payment by Iranian entities of obligations to persons within the 
          United States.
535.416 Letters of credit.
535.420 Transfers of accounts under Sec. 535.508 from demand to 
          interest-bearing status.
535.421 Prior contractual commitments not a basis for licensing.
535.433 Central Bank of Iran.
535.437 Effect on other authorities.
535.438 Standby letters of credit, performance or payment bonds and 
          similar obligations.
535.440 Commercially reasonable interest rates.
535.441 Settlement Agreement regarding small claims.

  Subpart E_Licenses, Authorizations and Statements of Licensing Policy

535.501 General and sepcific licensing procedures.
535.502 Effect of license or authorization.
535.503 Exclusion from licenses and authorizations.
535.504 Certain judicial proceedings with respect to property of Iran or 
          Iranian entities.
535.508 Payments to blocked accounts in domestic banks.
535.528 Certain transactions with respect to Iranian patents, trademarks 
          and copyrights authorized.
535.531 Payment of certain checks and drafts.
535.532 Completion of certain securities transactions.
535.540 Disposition of certain tangible property.
535.566 Unblocking of foreign currency deposits held by U.S.-owned or 
          controlled foreign firms.
535.567 Payment under advised letters of credit.
535.568 Certain standby letters of credit and performance bonds.
535.569 Licensed letter of credit transactions; forwarding of documents.
535.576 Payment of non-dollar letters of credit to Iran.

[[Page 150]]

535.579 Authorization of new transactions concerning certain Iranian 
          property.
535.580 Necessary living expenses of relatives of the former Shah of 
          Iran.

                            Subpart F_Reports

535.601 Records and reports.

                           Subpart G_Penalties

535.701 Penalties.
535.702 Prepenalty notice.
535.703 Presentation responding to pre penalty notice.
535.704 Penalty notice.
535.705 Administrative collection; referral to United States Department 
          of Justice.

                          Subpart H_Procedures

535.801 Procedures.

                   Subpart I_Miscellaneous Provisions

535.901 Dollar accounts at banks abroad.
535.902 Set-offs by U.S. owned or controlled firms abroad.
535.904 Payment by Iranian entities of obligations to persons within the 
          United States.
535.905 Paperwork Reduction Act notice.

    Authority: 3 U.S.C. 301; 18 U.S.C. 2332d; 31 U.S.C. 321(b); 50 
U.S.C. 1601-1651, 1701-1706; Pub. L. 101-410, 104 Stat. 890 (28 U.S.C. 
2461 note); Pub. L. 110-96, 121 Stat. 1011; E.O. 12170, 44 FR 65729, 3 
CFR, 1979 Comp., p. 457; E.O. 12205, 45 FR 24099, 3 CFR, 1980 Comp., p. 
248; E.O. 12211, 45 FR 26685, 3 CFR, 1980 Comp., p. 253; E.O. 12276, 46 
FR 7913, 3 CFR, 1981 Comp., p. 104; E.O. 12279, 46 FR 7919, 3 CFR, 1981 
Comp., p. 109; E.O. 12280, 46 FR 7921, 3 CFR, 1981 Comp., p. 110; E.O. 
12281, 46 FR 7923, 3 CFR, 1981 Comp., p. 110; E.O. 12282, 46 FR 7925, 3 
CFR, 1981 Comp., p. 113; E.O. 12283, 46 FR 7927, 3 CFR, 1981 Comp., p. 
114; and E.O. 12294, 46 FR 14111, 3 CFR, 1981 Comp., p. 139.

    Source: 44 FR 65956, Nov. 15, 1979, unless otherwise noted.



      Subpart A_Relation of This Part to Other Laws and Regulations



Sec. 535.101  Relation of this part to other laws and regulations.

    (a) This part is separate from, and independent of, the other parts 
of this chapter with the exception of part 501 of this chapter, the 
recordkeeping and reporting requirements and license application and 
other procedures of which apply to this part. No license or 
authorization contained in or issued pursuant to such parts shall be 
deemed to authorize any transaction prohibited by this part, nor shall 
any license or authorization issued pursuant to any other provision of 
law (except this part) be deemed to authorize any transaction so 
prohibited.
    (b) No license or authorization contained in or issued pursuant to 
this part shall be deemed to authorize any transaction to the extent 
that it is prohibited by reason of the provisions of any law or any 
statute other than the International Emergency Economic Powers Act, as 
amended, or any proclamation order or regulation other than those 
contained in or issued pursuant to this part.

[44 FR 65956, Nov. 15, 1979, as amended at 62 FR 45107, Aug. 25, 1997]



                         Subpart B_Prohibitions



Sec. 535.201  Transactions involving property in which Iran or Iranian 

entities have an interest.

    No property subject to the jurisdiction of the United States or 
which is in the possession of or control of persons subject to the 
jurisdiction of the United States in which on or after the effective 
date Iran has any interest of any nature whatsoever may be transferred, 
paid, exported, withdrawn or otherwise dealt in except as authorized.

[45 FR 24432, Apr. 9, 1980]



Sec. 535.202  Transactions with respect to securities registered or inscribed 

in the name of Iran.

    Unless authorized by a license expressly referring to this section, 
the acquisition, transfer (including the transfer on the books of any 
issuer or agent thereof), disposition, transportation, importation, 
exportation, or withdrawal of, or the endorsement or guaranty of 
signatures on or otherwise dealing in any security (or evidence thereof) 
registered or inscribed in the name of any Iranian entity is prohibited 
irrespective of the fact that at any time (either prior to, on, or 
subsequent to the effective date) the registered or inscribed owner 
thereof may have, or appears to have, assigned, transferred or otherwise 
disposed of any such security.

[[Page 151]]



Sec. 535.203  Effect of transfers violating the provisions of this part.

    (a) Any transfer after the effective date which is in violation of 
any provision of this part or of any regulation, ruling, instruction, 
license, or other direction or authorization thereunder and involves any 
property in which Iran has or has had an interest since such effective 
date is null and void and shall not be the basis for the assertion or 
recognition of any interest in or right, remedy, power or privilege with 
respect to such property.
    (b) No transfer before the effective date shall be the basis for the 
assertion or recognition of any right, remedy, power, or privilege with 
respect to, or interest in, any property in which Iran has or has had an 
interest since the effective date unless the person with whom such 
property is held or maintained had written notice of the transfer or by 
any written evidence had recognized such transfer prior to such 
effective date.
    (c) Unless otherwise provided, an appropriate license or other 
authorization issued by or pursuant to the direction or authorization of 
the Secretary of the Treasury before, during or after a transfer shall 
validate such transfer or render it enforceable to the same extent as it 
would be valid or enforceable but for the provisions of the 
International Emergency Economic Powers Act and this part and any 
ruling, order, regulation, direction or instruction issued hereunder.
    (d) Transfers of property which otherwise would be null and void, or 
unenforceable by virtue of the provisions of this section shall not be 
deemed to be null and void, or unenforceable pursuant to such 
provisions, as to any person with whom such property was held or 
maintained (and as to such person only) in cases in which such person is 
able to establish each of the following:
    (1) Such transfer did not represent a willful violation of the 
provisions of this part by the person with whom such property was held 
or maintained;
    (2) The person with whom such property was held or maintained did 
not have reasonable cause to know or suspect, in view of all the facts 
and circumstances known or available to such person, that such transfer 
required a license or authorization by or pursuant to the provision of 
this part and was not so licensed or authorized or if a license or 
authorization did purport to cover the transfer, that such license or 
authorization had been obtained by misrepresentation or the withholding 
of material facts or was otherwise fraudulently obtained; and
    (3) Promptly upon discovery that:
    (i) Such transfer was in violation of the provisions of this part or 
any regulation, ruling, instruction, license or other direction or 
authorization thereunder, or
    (ii) Such transfer was not licensed or authorized by the Secretary 
of the Treasury, or
    (iii) If a license did purport to cover the transfer, such license 
had been obtained by misrepresentation or the withholding of material 
facts or was otherwise fraudulently obtained; the person with whom such 
property was held or maintained filed with the Treasury Department, 
Washington, D.C., a report in triplicate setting forth in full the 
circumstances relating to such transfer. The filing of a report in 
accordance with the provisions of this paragraph shall not be deemed to 
be compliance or evidence of compliance with paragraphs (d) (1) and (2) 
of this section.
    (e) Unless licensed or authorized pursuant to this part any 
attachment, judgment, decree, lien, execution, garnishment, or other 
judicial process is null and void with respect to any property in which 
on or since the effective date there existed an interest of Iran.
    (f) For the purpose of this section the term property includes gold, 
silver, bullion, currency, coin, credit, securities (as that term is 
defined in section 2(l) of the Securities Act of 1933, as amended), 
bills of exchange, notes, drafts, acceptances, checks, letters of 
credit, book credits, debts, claims, contracts, negotiable documents of 
title, mortgages, liens, annuities, insurance policies, options and 
futures in commodities, and evidences of any of the foregoing. The term 
property shall not, except to the extent indicated, be deemed to include 
chattels or real property.

[44 FR 65956, Nov. 15, 1979, as amended at 45 FR 24432, Apr. 9, 1980]

[[Page 152]]



Sec. 535.208  Evasions; effective date.

    (a) Any transaction for the purpose of, or which has the effect of, 
evading or avoiding any of the prohibitions set forth in this subpart is 
hereby prohibited.
    (b) The term effective date means, with respect to transactions 
prohibited in Sec. 535.201, 8:10 a.m. eastern standard time, November 
14, 1979, and with respect to the transactions prohibited in Sec. Sec. 
535.206 and 535.207, 4:19 p.m. eastern standard time, April 7, 1980.
    (c) With respect to any amendments of the foregoing sections or any 
other amendments to this part the term ``effective date'' shall mean the 
date of filing with the Federal Register.

[45 FR 24433, Apr. 9, 1980, as amended at 45 FR 26940, Apr. 21, 1980]



Sec. 535.210  Direction for establishing an escrow agreement.

    (a) The Federal Reserve Bank of New York, as fiscal agent of the 
United States, is licensed, authorized, directed and compelled to enter 
into escrow and related agreements under which certain money and other 
assets shall be credited to escrow accounts by the Bank of England or 
the N.V. Settlement Bank of the Netherlands.
    (b) The Federal Reserve Bank of New York is licensed, authorized, 
directed and compelled, as fiscal agent of the United States, to receive 
certain money and other assets in which Iran or its agencies, 
instrumentalities or controlled entities have an interest and to hold or 
transfer such money and other assets, and any earnings or interest 
payable thereon, in such manner and at such times as the Secretary of 
the Treasury deems necessary to fulfill the rights and obligations of 
the United States under the Declaration of the government of the 
Democratic and Popular Republic of Algeria dated January 19, 1981, and 
the Undertakings of the Government of the United States of America and 
the Government of Islamic Republic of Iran with respect to the 
Declaration of the Government of the Democratic and Popular Republic of 
Algeria, and the escrow and related agreements described in paragraph 
(a) of this section. Such money and other assets may be invested, or 
not, at the discretion of the Federal Reserve Bank of New York, as 
fiscal agent of the United States.

(Secs. 201-207, 91 Stat. 1626, 50 U.S.C. 1701-1706; E.O. 12170, 44 FR 
65729; E.O. 12205, 45 FR 24099; E.O. 12211, 45 FR 26685; E.O. 12276, 46 
FR 7913; E.O. 12279, 46 FR 7919; E.O. 12280, 46 FR 7921; E.O. 12281, 46 
FR 7923; E.O. 12282, 46 FR 7925; E.O. 12283, 46 FR 7927, and E.O. 12294, 
46 FR 14111)

[46 FR 14333, Feb. 26, 1981, as amended at 46 FR 42063, Aug. 19, 1981]



Sec. 535.211  Direction involving transfers by the Federal Reserve Bank 

concerning certain Iranian property.

    The Federal Reserve Bank of New York is licensed, authorized, 
directed and compelled to transfer to its account at the Bank of 
England, and subsequently to transfer to accounts in the name of the 
Central Bank of Algeria as Escrow Agent at the Bank of England that are 
established pursuant to an escrow and related agreements approved by the 
Secretary of the Treasury, all gold bullion, together with all other 
assets in its custody (or the cash equivalent thereof), of Iran or its 
agencies, instrumentalities or controlled entities. Such transfers, and 
whatever further related transactions are deemed appropriate by the 
Secretary of the Treasury, shall be executed when and in the manner 
directed by the Secretary of the Treasury.

(Secs. 201-207, 91 Stat. 1626, 50 U.S.C. 1701-1706; E.O. 12170, 44 FR 
65729; E.O. 12205, 45 FR 24099; E.O. 12211, 45 FR 26685; E.O. 12276, 46 
FR 7913; E.O. 12279, 46 FR 7919; E.O. 12280, 46 FR 7921; E.O. 12281, 46 
FR 7923; E.O. 12282, 46 FR 7925; E.O. 12283, 46 FR 7927, and E.O. 12294, 
46 FR 14111)

[46 FR 14333, Feb. 26, 1981]



Sec. 535.212  Direction to transfer property in which Iran or an Iranian 

entity has an interest by branches and offices of United States banks located 

outside the United States.

    (a) Any branch or office of a United States bank or subsidiary 
thereof, which branch, office or subsidiary is located outside the 
territory of the United States, and which, on or after 8:10 a.m., 
e.s.t., on November 14, 1979:
    (1) Has been or is in possession of funds or securities legally or 
beneficially owned by the Government of

[[Page 153]]

Iran or its agencies, instrumentalities, or controlled entities, or
    (2) Has carried or is carrying on its books deposits standing to the 
credit of or beneficially owned by such government, its agencies, 
instrumentalities or controlled entities, is licensed, authorized, 
directed and compelled to transfer such funds, securities and deposits, 
held on January 19, 1981, including interest from November 14, 1979, at 
commercially reasonable rates, to the account of the Federal Reserve 
Bank of New York, as fiscal agent of the U.S., at the Bank of England, 
to be held or transferred as directed by the Secretary of the Treasury. 
The funds, securities and deposits described in this section shall be 
further transferred as provided for in the Declarations of the 
Government of the Democratic and Popular Republic of Algeria and the 
Undertakings of the Government of the United States of America and the 
Government of the Islamic Republic of Iran with respect to the 
Declaration.
    (b) Any banking institution subject to the jurisdiction of the 
United States that has executed a set-off on or after 8:10 a.m., e.s.t., 
November 14, 1979, against Iranian funds, securities or deposits 
referred to in paragraph (a) of this section is hereby licensed, 
authorized, directed and compelled to cancel such set-off and to 
transfer all funds, securities and deposits which have been subject to 
such set-off, including interest from November 14, 1979, at commercially 
reasonable rates, pursuant to the provisions of paragraph (a) of this 
section.

(Secs. 201-207, 91 Stat. 1626, 50 U.S.C. 1701-1706; E.O. 12170, 44 FR 
65729; E.O. 12205, 45 FR 24099; E.O. 12211, 45 FR 26685; E.O. 12276, 46 
FR 7913; E.O. 12279, 46 FR 7919; E.O. 12280, 46 FR 7921; E.O. 12281, 46 
FR 7923; E.O. 12282, 46 FR 7925; E.O. 12283, 46 FR 7927, and E.O. 12294, 
46 FR 14111)

[46 FR 14333, Feb. 26, 1981]



Sec. 535.213  Direction involving property held by offices of banks in the 

United States in which Iran or an Iranian entity has an interest.

    (a) Any branch or office of a bank, which branch or office is 
located within the United States and is, on the effective date of this 
section, either:
    (1) In possession of funds or securities legally or beneficially 
owned by the Government of Iran or its agencies, instrumentalities or 
controlled entities, or
    (2) Carrying on its books deposits standing to the credit of or 
beneficially owned by such government or its agencies, instrumentalities 
or controlled entities, is licensed, authorized, directed and compelled 
to transfer such funds, securities and deposits, held on January 19, 
1981, including interest from November 14, 1979, at commercially 
reasonable rates, to the Federal Reserve Bank of New York, as fiscal 
agent of the U.S., to be held or transferred as directed by the 
Secretary of the Treasury.
    (b) Transfer of funds, securities or deposits under paragraph (a) of 
this section shall be in accordance with the provisions of Sec. 535.221 
of this part, and such funds, securities or deposits, plus interest at 
commercially reasonable rates from November 14, 1979, to the transfer 
date, shall be received by the Federal Reserve Bank of New York by 11 
a.m., E.D.T., July 10, 1981. For periods for which rates are to be 
determined in the future, whether by agreement between Iran and the bank 
or otherwise (see Sec. 535.440), interest for such periods shall be 
transferred to the Federal Reserve Bank of New York promptly upon such 
determination. Such interest shall include interest at commercially 
reasonable rates from July 19, 1981, on the interest which would have 
accrued by July 19, 1981.
    (c) Any funds, securities or deposits subject to a valid attachment, 
injunction or other like proceeding or process not affected by Sec. 
535.218 need not be transferred as otherwise required by this section.
    (d) The transfers of securities required by this section shall be 
made notwithstanding Sec. 535.202.

(Secs. 201-207, 91 Stat. 1626, 50 U.S.C. 1701-1706; E.O. 12170, 44 FR 
65729; E.O. 12205, 45 FR 24099; E.O. 12211, 45 FR 26685; E.O. 12276, 46 
FR 7913; E.O. 12279, 46 FR 7919; E.O. 12280, 46 FR 7921; E.O. 12281, 46 
FR 7923; E.O. 12282, 46 FR 7925; E.O. 12283, 46 FR 7927, and E.O. 12294, 
46 FR 14111)

[46 FR 26477, May 13, 1981, as amended at 46 FR 30341, June 8, 1981; 46 
FR 35106, July 7, 1981; 48 FR 253, Jan. 4, 1983]

[[Page 154]]



Sec. 535.214  Direction involving other financial assets in which Iran or an 

Iranian entity has an interest held by any person subject to the jurisdiction 

of the United States.

    (a) Any person subject to the jurisdiction of the United States 
which is not a banking institution and is on January 19, 1981, in 
possession or control of funds or securities of Iran or its agencies, 
instrumentalities or controlled entities is licensed, authorized, 
directed and compelled to transfer such funds or securities to the 
Federal Reserve Bank of New York, as fiscal agent of the U.S. to be held 
or transferred as directed by the Secretary of the Treasury. However, 
such funds and securities need not be transferred until any disputes 
(not relating to any attachment, injunction or similar order) as to the 
entitlement of Iran and its entities to them are resolved.
    (b) Transfers of funds and securities under paragraph (a) of this 
section shall be in accordance with the provisions of Sec. 535.221 of 
this part, and such funds and securities shall be received by the 
Federal Reserve Bank of New York by 11 a.m., E.D.T., July 10, 1981.
    (c) Any funds, securities or deposits subject to a valid attachment, 
injunction or other like proceeding or process not affected by Sec. 
535.218 need not be transferred as otherwise required by this section.
    (d) The transfers of securities required by this section shall be 
made notwithstanding Sec. 535.202.

(Secs. 201-207, 91 Stat. 1626, 50 U.S.C. 1701-1706; E.O. 12170, 44 FR 
65729; E.O. 12205, 45 FR 24099; E.O. 12211, 45 FR 26685; E.O. 12276, 46 
FR 7913; E.O. 12279, 46 FR 7919; E.O. 12280, 46 FR 7921; E.O. 12281, 46 
FR 7923; E.O. 12282, 46 FR 7925; E.O. 12283, 46 FR 7927, and E.O. 12294, 
46 FR 14111)

[46 FR 26447, May 13, 1981, as amended at 46 FR 30341, June 8, 1981; 46 
FR 35107, July 7, 1981]



Sec. 535.215  Direction involving other properties in which Iran or an Iranian 

entity has an interest held by any person subject to the jurisdiction of the 

United States.

    (a) Except as provided in paragraphs (b) and (c) of this section, 
all persons subject to the jurisdiction of the United States in 
possession or control of properties, as defined in Sec. 535.333 of this 
part, not including funds and securities owned by Iran or its agencies, 
instrumentalities or controlled entities, are licensed, authorized, 
directed and compelled to transfer such properties held on January 18, 
1981 as directed after that day by the Government of Iran, acting 
through its authorized agent. Such directions shall include arrangements 
for payment of the costs of transporting the properties, unless the 
possessors of the properties were required to pay such costs by contract 
or applicable law on January 19, 1981. Except where specifically stated, 
this license, authorization and direction does not relieve persons 
subject to the jurisdiction of the United States from existing legal 
requirements other than those based upon the International Emergency 
Economic Powers Act.
    (b) Any properties subject to a valid attachment, injunction or 
other like proceeding or process not affected by Sec. 535.218 need not 
be transferred as otherwise required by this section.
    (c) Notwithstanding paragraph (a) of this section, persons subject 
to the jurisdiction of the United States, including agencies, 
instrumentalities and entities controlled by the Government of Iran, who 
have possession, custody or control of blocked tangible property covered 
by Sec. 535.201, shall not transfer such property without a specific 
Treasury license, if the export of such property requires a specific 
license or authorization pursuant to the provisions of any of the 
following acts, as amended, or regulations in force with respect to 
them: the Export Administration Act, 50 U.S.C. App. 2403, et seq., the 
Aims Export Control Act, 22 U.S.C. 2751, et seq., the Atomic Energy Act, 
42 U.S.C. 2011, et seq., or any other act prohibiting the export of such 
property, except as licensed.

(Secs. 201-207, 91 Stat. 1626, 50 U.S.C. 1701-1706; E.O. 12170, 44 FR 
65729; E.O. 12205, 45 FR 24099; E.O. 12211, 45 FR 26685; E.O. 12276, 46 
FR 7913; E.O. 12279, 46 FR 7919; E.O. 12280, 46 FR 7921; E.O. 12281, 46 
FR 7923; E.O. 12282, 46 FR 7925; E.O. 12283, 46 FR 7927, and E.O. 12294, 
46 FR 14111)

[46 FR 14334, Feb. 26, 1981, as amended at 46 FR 26477, May 13, 1981; 49 
FR 21322, May 21, 1984; 66 FR 38554, July 25, 2001]

[[Page 155]]



Sec. 535.216  Prohibition against prosecution of certain claims.

    (a) Persons subject to the jurisdiction of the United States are 
prohibited from prosecuting in any court within the United States or 
elsewhere, whether or not litigation was commenced before or after 
January 19, 1981, any claim against the Government of Iran arising out 
of events occurring before January 19, 1981 relating to:
    (1) The seizure of the hostages on November 4, 1979;
    (2) The subsequent detention of such hostages;
    (3) Injury to United States property or property of United States 
nationals within the United States Embassy compound in Tehran after 
November 3, 1979; or
    (4) Injury to United States nationals or their property as a result 
of popular movements in the course of the Islamic Revolution in Iran 
which were not an act of the Government of Iran.
    (b) Any persons who are not United States nationals are prohibited 
from prosecuting any claim described in paragraph (a) of this section in 
any court within the United States.
    (c) No further action, measure or process shall be taken after the 
effective date of this section in any judicial proceeding instituted 
before the effective date of this section which is based upon any claim 
described in paragraph (a) of this section, and all such proceedings 
shall be terminated.
    (d) No judicial order issued in the course of the proceedings 
described in paragraph (c) of this section shall be enforced in any way.

(Secs. 201-207, 91 Stat. 1626, 50 U.S.C. 1701-1706; E.O. 12170, 44 FR 
65729; E.O. 12205, 45 FR 24099; E.O. 12211, 45 FR 26685; E.O. 12276, 46 
FR 7913; E.O. 12279, 46 FR 7919; E.O. 12280, 46 FR 7921; E.O. 12281, 46 
FR 7923; E.O. 12282, 46 FR 7925; E.O. 12283, 46 FR 7927, and E.O. 12294, 
46 FR 14111)

[46 FR 14334, Feb. 26, 1981]



Sec. 535.217  Blocking of property of the former Shah of Iran and of certain 

other Iranian nationals.

    (a) For the purpose of protecting the rights of litigants in courts 
within the United States, all property and assets located in the United 
States in the control of the estate of Mohammad Reza Pahlavi, the former 
Shah of Iran, or any close relative of the former Shah served as a 
defendant in litigation in such courts brought by Iran seeking the 
return of property alleged to belong to Iran, is blocked as to each such 
estate or person, until all such litigation against such estate or 
person is finally terminated. This provision shall apply only to such 
estate or persons as to which Iran has furnished proof of service to the 
Office of Foreign Assets Control and which the Office has identified in 
paragraph (b) of this section.
    (b) [No persons presently listed].
    (c) The effective date of this section is January 19, 1981, except 
as otherwise specified after the name of a person identified in 
paragraph (b) of this section.

(Secs. 201-207, 91 Stat. 1626, 50 U.S.C. 1701-1706; E.O. 12170, 44 FR 
65729; E.O. 12205, 45 FR 24099; E.O. 12211, 45 FR 26685; E.O. 12276, 46 
FR 7913; E.O. 12279, 46 FR 7919; E.O. 12280, 46 FR 7921; E.O. 12281, 46 
FR 7923; E.O. 12282, 46 FR 7925; E.O. 12283, 46 FR 7927, and E.O. 12294, 
46 FR 14111)

[46 FR 26478, May 13, 1981, as amended at 61 FR 8216, Mar. 4, 1996; 61 
FR 15382, Apr. 8, 1996]



Sec. 535.218  Prohibitions and nullifications with respect to property 

described in Sec. Sec. 535.211, 535.212, 535.213, 535.214 and 535.215 and 

standby letters of credit.

    (a) All licenses and authorizations for acquiring or exercising any 
right, power or privilege, by court order, attachment, or otherwise, 
including the license contained in Sec. 535.504, with respect to the 
property described in Sec. Sec. 535.211, 535.212, 535.213, 535.214 and 
535.215 are revoked and withdrawn.
    (b) All rights, powers and privileges relating to the property 
described in Sec. Sec. 535.211, 535.212, 535.213, 535.214 and 535.215 
and which derive from any attachment, injunction, other like proceedings 
or process, or other action in any litigation after November 14, 1979, 
at 8:10 a.m., e.s.t., including those derived from Sec. 535.504, other 
than rights, powers and privileges of the Government of Iran and its 
agencies, instrumentalities and controlled entities, whether acquired by 
court order or otherwise, are nullified, and all persons claiming any 
such right, power or privilege are hereafter barred from exercising the 
same.

[[Page 156]]

    (c) All persons subject to the jurisdiction of the United States are 
prohibited from acquiring or exercising any right, power or privilege, 
whether by court order or otherwise, with respect to property (and any 
income earned thereon) referred to in Sec. Sec. 535.211, 535.212, 
535.213, 535.214 and 535.215.
    (d) The prohibitions contained in paragraph (c) of this section 
shall not apply to Iran, its agencies, instrumentalities or controlled 
entities.
    (e) Paragraph (a) of this section does not revoke or withdraw 
specific licenses authorizing the operation of blocked accounts which 
were issued prior to January 19, 1981, and which do not relate to 
litigation. Such licenses shall be deemed to be revoked as of May 31, 
1981, unless extended by general or specific license issued subsequent 
to February 26, 1981.
    (f) The provisions of paragraphs (a), (b) and (c) of this section 
shall apply to contested and contingent liabilities and property 
interests of the Government of Iran, its agencies, instrumentalities or 
controlled entities, including debts.
    (g) All existing attachments on standby letters of credit, 
performance bonds and similar obligations and on substitute blocked 
accounts established under Sec. 535.568 relating to standby letters of 
credit, performance bonds and similar obligations are nullified and all 
future attachments on them are hereafter prohibited. All rights, powers 
and privileges relating to such attachments are nullified and all 
persons hereafter are barred from asserting or exercising any rights, 
powers or privileges derived therefrom.

(Secs. 201-207, 91 Stat. 1626, 50 U.S.C. 1701-1706; E.O. 12170, 44 FR 
65729; E.O. 12205, 45 FR 24099; E.O. 12211, 45 FR 26685; E.O. 12276, 46 
FR 7913; E.O. 12279, 46 FR 7919; E.O. 12280, 46 FR 7921; E.O. 12281, 46 
FR 7923; E.O. 12282, 46 FR 7925; E.O. 12283, 46 FR 7927, and E.O. 12294, 
46 FR 14111)

[46 FR 14334, Feb. 26, 1981, as amended at 46 FR 26477, May 13, 1981]



Sec. 535.219  Discharge of obligation by compliance with this part.

    Compliance with Sec. Sec. 535.210, 535.211, 535.212, 535.213, 
535.214 and 535.215, or any other orders, regulations, instructions or 
directions issued pursuant to this part licensing, authorizing, 
directing or compelling the transfer of the assets described in those 
sections, shall, to the extent thereof, be a full acquittance and 
discharge for all purposes of the obligation of the person making the 
same. No person shall be held liable in any court for or with respect to 
anything done or omitted in good faith in connection with the 
administration of, or pursuant to and in reliance on, such orders, 
regulations, instructions or directions.

(Secs. 201-207, 91 Stat. 1626, 50 U.S.C. 1701-1706; E.O. 12170, 44 FR 
65729; E.O. 12205, 45 FR 24099; E.O. 12211, 45 FR 26685; E.O. 12276, 46 
FR 7913; E.O. 12279, 46 FR 7919; E.O. 12280, 46 FR 7921; E.O. 12281, 46 
FR 7923; E.O. 12282, 46 FR 7925; E.O. 12283, 46 FR 7927, and E.O. 12294, 
46 FR 14111)

[46 FR 14334, Feb. 26, 1981]



Sec. 535.220  Timing of transfers required by Sec. 535.212.

    Transfers required by Sec. 535.212 to the account of the Federal 
Reserve Bank of New York, as fiscal agent of the U.S., at the Bank of 
England shall be executed no later than 6 a.m., e.s.t., January 20, 
1981, when the banking institution had knowledge of the terms of 
Executive Order 12278 of January 19, 1981.

(Secs. 201-207, 91 Stat. 1626, 50 U.S.C. 1701-1706; E.O. 12170, 44 FR 
65729; E.O. 12205, 45 FR 24099; E.O. 12211, 45 FR 26685; E.O. 12276, 46 
FR 7913; E.O. 12279, 46 FR 7919; E.O. 12280, 46 FR 7921; E.O. 12281, 46 
FR 7923; E.O. 12282, 46 FR 7925; E.O. 12283, 46 FR 7927, and E.O. 12294, 
46 FR 14111)

[46 FR 14335, Feb. 26, 1981]



Sec. 535.221  Compliance with directive provisions.

    (a) Transfers of deposits or funds required by Sec. Sec. 535.213 
and 535.214 of this part shall be effected by means of wire transfer to 
the Federal Reserve Bank of New York for credit to the following 
accounts: with respect to transfers required by Sec. 535.213, to the 
Federal Reserve Bank of New York, as fiscal agent of the United States, 
Special Deposit Account A, and with respect to transfers required by 
Sec. 535.214, to the Federal Reserve Bank of New York, as fiscal agent 
of the United States, Special Deposit Account B.
    (b) Securities to be transferred as required by Sec. Sec. 535.213 
and 535.214 of this

[[Page 157]]

part that are not presently registered in the name of Iran or an Iranian 
entity shall be delivered to the Federal Reserve Bank of New York in 
fully transferable form (bearer or endorsed in blank), accompanied by 
all necessary transfer documentation, e.g., stock or bond powers or 
powers of attorney. All securities transferred, including those 
presently registered in the name of Iran or an Iranian entity, shall be 
accompanied by instructions to deposit such securities to the following 
accounts: with respect to transfers required by Sec. 535.213, to the 
Federal Reserve Bank of New York, as fiscal agent of the United States, 
Special Custody Account A, and with respect to transfers required by 
Sec. 535.214, to the Federal Reserve Bank of New York, as fiscal agent 
of the United States, Special Custody Account B.
    (1) Securities which are in book-entry form shall be transferred by 
wire transfer to the Federal Reserve Bank of New York to the appropriate 
account named in this paragraph.
    (2) Definitive securities which are in bearer or registered form 
shall be hand delivered or forwarded by registered mail, insured, to the 
Federal Reserve Bank of New York, Safekeeping Department, to the 
appropriate account named in this paragraph.
    (c) If a security in which Iran or an Iranian entity has an interest 
is evidenced by a depositary receipt or other evidence of a security, 
the legal owner of such security shall arrange to have the security 
placed in fully transferable form (bearer or endorsed in blank) as 
provided in paragraph (b) of this section, and transferred pursuant to 
paragraph (b)(2) of this section.
    (d) Any person delivering a security or securities to the Federal 
Reserve Bank of New York under paragraph (b) of this section, shall 
provide the Bank at least 2 business days prior written notice of such 
delivery, specifically identifying the sending person, the face or par 
amount and type of security, and whether the security is in bearer, 
registered or book-entry form.

(Secs. 201-207, 91 Stat. 1626, 50 U.S.C. 1701-1706; E.O. 12170, 44 FR 
65729; E.O. 12205, 45 FR 24099; E.O. 12211, 45 FR 26685; E.O. 12276, 46 
FR 7913; E.O. 12279, 46 FR 7919; E.O. 12280, 46 FR 7921; E.O. 12281, 46 
FR 7923; E.O. 12282, 46 FR 7925; E.O. 12283, 46 FR 7927, and E.O. 12294, 
46 FR 14111)

[46 FR 30341, June 8, 1981]



Sec. 535.222  Suspension of claims eligible for Claims Tribunal.

    (a) All claims which may be presented to the Iran-United States 
Claims Tribunal under the terms of Article II of the Declaration of the 
Government of the Democratic and Popular Republic of Algeria Concerning 
the Settlement of Claims by the Government of the United States of 
America and the Government of the Islamic Republic of Iran, dated 
January 19, 1981, and all claims for equitable or other judicial relief 
in connection with such claims, are hereby suspended, except as they may 
be presented to the Tribunal. During the period of this suspension, all 
such claims shall have no legal effect in any action now pending in any 
court in the United States, including the courts of any state and any 
locality thereof, the District of Columbia and Puerto Rico, or in any 
action commenced in any such court after the effective date of this 
section.
    (b) Nothing in paragraph (a) of this section shall prohibit the 
assertion of a defense, set-off or counterclaim in any pending or 
subsequent judicial proceeding commenced by the Government of Iran, any 
political subdivision of Iran, or any agency, instrumentality or entity 
controlled by the Government of Iran or any political subdivision 
thereof.
    (c) Nothing in this section precludes the commencement of an action 
after the effective date of this section for the purpose of tolling the 
period of limitations for commencement of such action.
    (d) Nothing in this section shall require dismissal of any action 
for want of prosecution.
    (e) Suspension under this section of a claim or a portion thereof 
submitted to the Iran-United States Claims Tribunal for adjudication 
shall terminate upon a

[[Page 158]]

determination by the Tribunal that it does not have jurisdiction over 
such claim or portion thereof.
    (f) A determination by the Iran-United States Claims Tribunal on the 
merits that a claimant is not entitled to recover on a claim or part 
thereof shall operate as a final resolution and discharge of such claim 
or part thereof for all purposes. A determination by the Tribunal that a 
claimant shall have recovery on a claim or part thereof in a specified 
amount shall operate as a final resolution and discharge of such claim 
or part thereof for all purposes upon payment to the claimant of the 
full amount of the award including any interest awarded by the Tribunal.
    (g) Nothing in this section shall apply to any claim concerning the 
validity or payment of a standby letter of credit, performance or 
payment bond, or other similar instrument that is not the subject of a 
determination by the Iran-United States Claims Tribunal on the merits 
thereof. However, assertion of such a claim through judicial proceedings 
is governed by the general license in Sec. 535.504. A determination by 
the Iran-United States Claims Tribunal on the merits that a standby 
letter of credit, performance bond or similar obligation is invalid, has 
been paid or otherwise discharged, or has no further purpose, or any 
similar determination shall operate as a final resolution and discharge 
or Iran's interest therein and, notwithstanding the provisions of Sec. 
535.504, may be enforced by a judicial proceeding to obtain a final 
judicial judgment or order permanently disposing of that interest.
    (h) The effective date of this section is February 24, 1981.

(Secs. 201-207, 91 Stat. 1626, 50 U.S.C. 1701-1706; E.O. 12170, 44 FR 
65729; E.O. 12205, 45 FR 24099; E.O. 12211, 45 FR 26685; E.O. 12276, 46 
FR 7913; E.O. 12279, 46 FR 7919; E.O. 12280, 46 FR 7921; E.O. 12281, 46 
FR 7923; E.O. 12282, 46 FR 7925; E.O. 12283, 46 FR 7927, and E.O. 12294, 
46 FR 14111)

[46 FR 14335, Feb. 26, 1981, as amended at 47 FR 29529, July 7, 1982; 56 
FR 6546, Feb. 15, 1991]



                      Subpart C_General Definitions



Sec. 535.301  Iran; Iranian Entity.

    (a) The term Iran and Iranian Entity includes:
    (1) The state and the Government of Iran as well as any political 
subdivision, agency, or instrumentality thereof or any territory, 
dependency, colony, protectorate, mandate, dominion, possession or place 
subject to the jurisdiction thereof;
    (2) Any partnership, association, corporation, or other organization 
substantially owned or controlled by any of the foregoing;
    (3) Any person to the extent that such person is, or has been, or to 
the extent that there is reasonable cause to believe that such person 
is, or has been, since the effective date acting or purporting to act 
directly or indirectly on behalf of any of the foregoing;
    (4) Any territory which on or since the effective date is controlled 
or occupied by the military, naval or police forces or other authority 
of Iran; and
    (5) Any other person or organization determined by the Secretary of 
the Treasury to be included within paragraph (a) of this section.
    (b) A person specified in paragraph (a)(2) of this section shall not 
be deemed to fall within the definition of Iran solely by reason of 
being located in, organized under the laws of, or having its principal 
place of business in, Iran.



Sec. 535.308  Person.

    The term person means an individual, partnership, association, 
corporation or other organization.

[45 FR 24433, Apr. 9, 1980]



Sec. 535.310  Transfer.

    The term transfer shall mean any actual or purported act or 
transaction, whether or not evidenced by writing, and whether or not 
done or performed within the United States, the purpose, intent or 
effect of which is to create, surrender, release, transfer, or alter, 
directly or indirectly, any right, remedy, power, privilege, or interest 
with respect to any property and, without

[[Page 159]]

limitation upon the foregoing, shall include the making, execution, or 
delivery of any assignment, power, conveyance, check, declaration, deed, 
deed of trust, power of attorney, power of appointment, bill of sale, 
mortgage, receipt, agreement, contract, certificate, gift, sale, 
affidavit, or statement; the appointment of any agent, trustee, or 
fiduciary; the creation or transfer of any lien; the issuance, 
docketing, filing, or the levy of or under any judgement, decree, 
attachment, execution, or other judicial or administrative process or 
order, or the service of any garnishment; the acquisition of any 
interest of any nature whatsoever by reason of a judgment or decree of 
any foreign country; the fulfillment of any condition, or the exercise 
of any power of appointment, power of attorney, or other power.

[44 FR 75352, Dec. 19, 1979]



Sec. 535.311  Property; property interests.

    Except as defined in Sec. 535.203(f) for the purposes of that 
section, the terms property and property interest or property interests 
shall include, but not by way of limitation, money, checks, drafts, 
bullion, bank deposits, savings accounts, debts, indebtedness, 
obligations, notes, debentures, stocks, bonds, coupons, any other 
financial securities, bankers' acceptances, mortgages, pledges, liens or 
other rights in the nature of security, warehouse receipts, bills of 
lading, trust receipts, bills of sale, any other evidences of title, 
ownership or indebtedness, powers of attorney, goods, wares, 
merchandise, chattels, stocks on hand, ships, goods on ships, real 
estate mortgages, deeds of trust, vendors' sales agreements, land 
contracts, real estate and any interest therein, leaseholds, grounds 
rents, options, negotiable instruments, trade acceptances, royalties, 
book accounts, accounts payable, judgments, patents, trademarks or 
copyrights, insurance policies, safe deposit boxes and their contents, 
annuities, pooling agreements, contracts of any nature whatsoever, and 
any other property, real, personal, or mixed, tangible or intangible, or 
interest or interests therein, present, future or contingent.



Sec. 535.312  Interest.

    Except as otherwise provided in this part, the term interest when 
used with respect to property shall mean an interest of any nature 
whatsoever, direct or indirect.

[44 FR 75352, Dec. 19, 1979]



Sec. 535.316  License.

    Except as otherwise specified, the term license shall mean any 
license or authorization contained in or issued pursuant to this part.

[44 FR 66832, Nov. 21, 1979]



Sec. 535.317  General license.

    A general license is any license or authorization the terms of which 
are set forth in this part.

[44 FR 66832, Nov. 21, 1979]



Sec. 535.318  Specific license.

    A specific license is any license or authorization issued pursuant 
to this part but not set forth in this part.

[44 FR 66832, Nov. 21, 1979]



Sec. 535.320  Domestic bank.

    (a) The term domestic bank shall mean any branch or office within 
the United States of any of the following which is not Iran or an 
Iranian entity: any bank or trust company incorporated under the banking 
laws of the United States or of any state, territory, or district of the 
United States, or any private bank or banker subject to supervision and 
examination under the banking laws of the United States or of any state, 
territory or district of the United States. The Secretary of the 
Treasury may also authorize any other banking institution to be treated 
as a ``domestic bank'' for the purpose of this definition or for the 
purpose of any or all sections of this part.
    (b) For purposes of Sec. Sec. 535.413, 535.508, 535.531 and 
535.901, the term domestic bank includes any branch or office within the 
United States of a non-Iranian foreign bank.

[44 FR 66832, Nov. 21, 1979]

[[Page 160]]



Sec. 535.321  United States; continental United States.

    The term United States means the United States and all areas under 
the jurisdiction or authority thereof including the Trust Territory of 
the Pacific Islands. The term continental United States means the states 
of the United States and the District of Columbia.

[44 FR 66833, Nov. 21, 1979]



Sec. 535.329  Person subject to the jurisdiction of the United States.

    The term person subject to the jurisdiction of the United States 
includes:
    (a) Any person wheresoever located who is a citizen or resident of 
the United States;
    (b) Any person actually within the United States;
    (c) Any corporation organized under the laws of the United States or 
of any state, territory, possession, or district of the United States; 
and
    (d) Any partnership, association, corporation, or other organization 
wheresoever organized or doing business which is owned or controlled by 
persons specified in paragraph (a), (b), or (c) of this section.



Sec. 535.333  Properties.

    (a) The term properties as used in Sec. 535.215 means all 
uncontested and non-contingent liabilities and property interests of the 
Government of Iran, its agencies, instrumentalities, or controlled 
entities, including debts. It does not include bank deposits or funds 
and securities. It also does not include obligations under standby 
letters of credit or similar instruments in the nature of performance 
bonds, including accounts established pursuant to Sec. 535.568.
    (b) Properties do not cease to fall within the definition in 
paragraph (a), above, merely due to the existence of unpaid obligations, 
charges or fees relating to such properties, or undischarged liens 
against such properties.
    (c) Liabilities and property interests of the Government of Iran, 
its agencies, instrumentalities, or controlled entities may be 
considered contested only if the holder thereof reasonably believes that 
Iran does not have title or has only partial title to the asset. After 
October 23, 2001, such a belief may be considered reasonable only if it 
is based upon a bona fide opinion, in writing, of an attorney licensed 
to practice within the United States stating that Iran does not have 
title or has only partial title to the asset. For purposes of this 
paragraph, the term holder shall include any person who possesses the 
property, or who, although not in physical possession of the property, 
has, by contract or otherwise, control over a third party who does in 
fact have physical possession of the property. A person is not a holder 
by virtue of being the beneficiary of an attachment, injunction or 
similar order.
    (d) Liabilities and property interests shall not be deemed to be 
contested solely because they are subject to an attachment, injunction, 
or other similar order.

[66 FR 38554, July 25, 2001]



Sec. 535.334  Act of the Government of Iran.

    For purposes of Sec. 535.216, an act of the Government of Iran, 
includes any acts ordered, authorized, allowed, approved, or ratified by 
the Government of Iran, its agencies, instrumentalities or controlled 
entities.

(Secs. 201-207, 91 Stat. 1626, 50 U.S.C. 1701-1706; E.O. 12170, 44 FR 
65729; E.O. 12205, 45 FR 24099; E.O. 12211, 45 FR 26685; E.O. 12276, 46 
FR 7913; E.O. 12279, 46 FR 7919; E.O. 12280, 46 FR 7921; E.O. 12281, 46 
FR 7923; E.O. 12282, 46 FR 7925; E.O. 12283, 46 FR 7927, and E.O. 12294, 
46 FR 14111)

[46 FR 14336, Feb. 26, 1981]



Sec. 535.335  Claim arising out of events in Iran.

    For purposes of Sec. 535.216, a claim is one ``arising out of 
events'' of the type specified only if such event is the specific act 
that is the basis of the claim.

(Secs. 201-207, 91 Stat. 1626, 50 U.S.C. 1701-1706; E.O. 12170, 44 FR 
65729; E.O. 12205, 45 FR 24099; E.O. 12211, 45 FR 26685; E.O. 12276, 46 
FR 7913; E.O. 12279, 46 FR 7919; E.O. 12280, 46 FR 7921; E.O. 12281, 46 
FR 7923; E.O. 12282, 46 FR 7925; E.O. 12283, 46 FR 7927, and E.O. 12294, 
46 FR 14111)

[46 FR 14336, Feb. 26, 1981]

[[Page 161]]



Sec. 535.337  Funds.

    For purposes of this part, the term funds shall mean monies in 
trust, escrow and similar special funds held by non-banking 
institutions, currency and coins. It does not include accounts created 
under Sec. 535.568.

(Secs. 201-207, 91 Stat. 1626, 50 U.S.C. 1701-1706; E.O. 12170, 44 FR 
65729; E.O. 12205, 45 FR 24099; E.O. 12211, 45 FR 26685; E.O. 12276, 46 
FR 7913; E.O. 12279, 46 FR 7919; E.O. 12280, 46 FR 7921; E.O. 12281, 46 
FR 7923; E.O. 12282, 46 FR 7925; E.O. 12283, 46 FR 7927, and E.O. 12294, 
46 FR 14111)

[46 FR 30341, June 8, 1981]



                        Subpart D_Interpretations



Sec. 535.401  Reference to amended sections.

    Reference to any section of this part or to any regulation, ruling, 
order, instruction, direction or license issued pursuant to this part 
shall be deemed to refer to the same as currently amended unless 
otherwise so specified.

[45 FR 24433, Apr. 9, 1980]



Sec. 535.402  Effect of amendment of sections of this part or of other orders, 

etc.

    Any amendment, modification, or revocation of any section of this 
part or of any order, regulation, ruling, instruction, or license issued 
by or under the direction of the Secretary of the Treasury pursuant to 
section 203 of the International Emergency Economic Powers Act shall 
not, unless otherwise specifically provided, be deemed to affect any act 
done or omitted to be done, or any suit or proceeding had or commenced 
in any civil or criminal case, prior to such amendment, modification, or 
revocation and all penalties, forfeitures, and liabilities under any 
such order, regulation, ruling, instruction or license shall continue 
and may be enforced as if such amendment, modification, or revocation 
had not been made.

[45 FR 24433, Apr. 9, 1980]



Sec. 535.403  Termination and acquisition of an interest of Iran or an Iranian 

entity.

    (a) Whenever a transaction licensed or authorized by or pursuant to 
this part results in the transfer of property (including any property 
interest) away from Iran or an Iranian entity, such property shall no 
longer be deemed to be property in which Iran or an Iranian entity has 
or has had an interest, unless there exists in the property another such 
interest the transfer of which has not been effected pursuant to license 
or other authorization.
    (b) Unless otherwise specifically provided in a license or 
authorization contained in or issued pursuant to this part, if property 
(including any property interest) is transferred to Iran or an Iranian 
interest, such property shall be deemed to be property in which there 
exists an interest of Iran or an Iranian entity.

[45 FR 24433, Apr. 9, 1980]



Sec. 535.413  Transfers between dollar accounts held for foreign banks.

    Transfers authorized by Sec. 535.901 include transfers by order of 
a non-Iranian foreign bank from its account in a domestic bank (directly 
or through a foreign branch or subsidiary of a domestic bank) to an 
account held by a domestic bank (directly or through a foreign branch or 
subsidiary) for a second non-Iranian foreign bank which in turn credits 
an account held by it abroad for Iran. For the purposes of this section, 
a non-Iranian foreign bank means a bank which is not a person subject to 
the jurisdiction of the United States.

[44 FR 66833, Nov. 21, 1979]



Sec. 535.414  Payments to blocked accounts under Sec. 535.508.

    (a) Section 535.508 does not authorize any transfer from a blocked 
account within the United States to an account held by any bank outside 
the United States or any other payment into a blocked account outside 
the United States.
    (b) Section 535.508 only authorizes payment into a blocked account 
held by a domestic bank as defined by Sec. 535.320.

[44 FR 67617, Nov. 26, 1979]

[[Page 162]]



Sec. 535.415  Payment by Iranian entities of obligations to persons within the 

United States.

    A person receiving payment under Sec. 535.904 may distribute all or 
part of that payment to anyone: Provided, That any such payment to Iran 
or an Iranian entity must be to a blocked account in a domestic bank.

[44 FR 67617, Nov. 26, 1979]



Sec. 535.416  Letters of credit.

    (a) Question. Prior to the effective date, a bank subject to the 
jurisdiction of the United States has issued or confirmed a documentary 
letter of credit for a non-Iranian account party in favor of an Iranian 
entity. Can payment be made upon presentation of documentary drafts?
    Answer. Yes, provided payment is made into a blocked account in a 
domestic bank.
    (b) Question. Prior to the effective date, a domestic branch of a 
bank organized or incorporated under the laws of the United States has 
issued or confirmed a documentary letter of credit for a non-Iranian 
account party in favor of an Iranian entity. Payment is to be made 
through a foreign branch of the bank. Can payment be made upon 
presentation of documentary drafts?
    Answer. Yes, provided payment is made into a blocked account in a 
domestic bank.
    (c) Question. Prior to the effective date, a foreign bank confirms a 
documentary letter of credit issued by its U.S. agency or branch for a 
non-Iranian account party in favor of an Iranian entity. Can the U.S. 
agency or branch of the foreign bank transfer funds to the foreign bank 
in connection with that foreign bank's payment under the letter of 
credit?
    Answer. No, the U.S. agency's payment is blocked, unless the foreign 
bank made payment to the Iranian entity prior to the effective date.
    (d) Question. Prior to the effective date, a bank subject to the 
jurisdiction of the United States has issued or confirmed a documentary 
letter of credit for a non-Iranian account party in favor of an Iranian 
entity. The Iranian entity presents documentry drafts which are 
deficient in some detail. May the non-Iranian account party waive the 
documentary deficiency and authorize the bank to make payment?
    Answer. Yes, provided payment is made into a blocked account in a 
domestic bank. However, the non-Iranian account party is not obligated 
by these Regulations to exercise a waiver of documentary deficiencies. 
In cases where such a waiver is not exercised, the bank's payment 
obligation, if any, under the letter of credit remains blocked, as does 
any obligation, contingent or otherwise, of the account party. The 
documents are also blocked.
    (e) Question. Prior to the effective date, a bank subject to the 
jurisdiction of the United States has issued or confirmed a documentary 
letter of credit for a non-Iranian account party in favor of an Iranian 
entity. The Iranian entity does not make timely, complete, or proper 
presentation of documents, and the letter of credit expires. Does there 
remain a blocked payment obligation held by the bank?
    Answer. No, but any documents held by the bank continue to be 
blocked. It is also possible that the account party still has a related 
obligation to the Iranian entity and any such obligation would be 
blocked.
    (f) Question. A bank subject to the jurisdiction of the United 
States has issued a letter of credit for a U.S. account party in favor 
of an Iranian entity. The letter of credit is confirmed by a foreign 
bank. Prior to or after the effective date, the Iranian entity presents 
documents to the U.S. issuing bank. Payment is deferred. After the 
effective date, the Iranian entity requests that the issuing bank either 
return the documents to the Iranian entity or transfer them to the 
confirming bank. Can the issuing bank do so?
    Answer. No. The U.S. issuing bank can neither return nor transfer 
the documents without a license. The documents constitute blocked 
property under the Regulations.
    (g) Question. Prior to the effective date, a bank subject to the 
jurisdiction of the United States has issued or confirmed a documentary 
letter of credit for a non-Iranian account party in favor of an Iranian 
entity. The Iranian entity presents documentary drafts which are 
deficient in some detail. May

[[Page 163]]

the non-Iranian account party waive the documentary deficiency and make 
payment?
    Answer. Yes, provided payment is made into a blocked account in a 
domestic bank. However, the non-Iranian account party is not obligated 
by these Regulations to exercise a waiver of documentary deficiencies. 
In cases where such a waiver is not exercised, the amount of the payment 
held by the account party is blocked.

[44 FR 69287, Dec. 3, 1979, as amended at 44 FR 75353, Dec. 19, 1979]



Sec. 535.420  Transfers of accounts under Sec. 535.508 from demand to interest-bearing status.

    Section 535.508 authorizes transfer of a blocked demand deposit 
account to interest-bearing status at the instruction of the Iranian 
depositor at any time.

[44 FR 76784, Dec. 28, 1979]



Sec. 535.421  Prior contractual commitments not a basis for licensing.

    Specific licenses are not issued on the basis that an unlicensed 
firm commitment or payment has been made in connection with a 
transaction prohibited by this part. Contractual commitments to engage 
in transactions subject to the prohibitions of this part should not be 
made, unless the contract specifically states that the transaction is 
authorized by general license or that it is subject to the issuance of a 
specific license.

[45 FR 24433, Apr. 9, 1980]



Sec. 535.433  Central Bank of Iran.

    The Central Bank of Iran (Bank Markazi Iran) is an agency, 
instrumentality and controlled entity of the Government of Iran for all 
purposes under this part.

(Secs. 201-207, 91 Stat. 1626, 50 U.S.C. 1701-1706; E.O. 12170, 44 FR 
65729; E.O. 12205, 45 FR 24099; E.O. 12211, 45 FR 26685; E.O. 12276, 46 
FR 7913; E.O. 12279, 46 FR 7919; E.O. 12280, 46 FR 7921; E.O. 12281, 46 
FR 7923; E.O. 12282, 46 FR 7925; E.O. 12283, 46 FR 7927, and E.O. 12294, 
46 FR 14111)

[46 FR 14336, Feb. 26, 1981]



Sec. 535.437  Effect on other authorities.

    Nothing in this part in any way relieves any persons subject to the 
jurisdiction of the United States from securing licenses or other 
authorizations as required from the Secretary of State, the Secretary of 
Commerce or other relevant agency prior to executing the transactions 
authorized or directed by this part. This includes licenses for 
transactions involving military equipment.

(Secs. 201-207, 91 Stat. 1626, 50 U.S.C. 1701-1706; E.O. 12170, 44 FR 
65729; E.O. 12205, 45 FR 24099; E.O. 12211, 45 FR 26685; E.O. 12276, 46 
FR 7913; E.O. 12279, 46 FR 7919; E.O. 12280, 46 FR 7921; E.O. 12281, 46 
FR 7923; E.O. 12282, 46 FR 7925; E.O. 12283, 46 FR 7927, and E.O. 12294, 
46 FR 14111)

[46 FR 14336, Feb. 26, 1981]



Sec. 535.438  Standby letters of credit, performance or payment bonds and 

similar obligations.

    (a) Nothing contained in Sec. Sec. 535.212, 535.213 and 535.214 or 
in any other provision or revocation or amendment of any provision in 
this part affects the prohibition in Sec. 535.201 and the licensing 
procedure in Sec. 535.568 relating to certain standby letters of 
credit, performance bonds and similar obligations. The term funds and 
securities as used in this part does not include substitute blocked 
accounts established under section 535.568 relating to standby letters 
of credit, performance or payment bonds and similar obligations.
    (b) No transfer requirement under Sec. 535.213 or Sec. 535.214 
shall be deemed to authorize or compel any payment or transfer of any 
obligation under a standby letter of credit, performance bond or similar 
obligation as to which a blocked account has been established pursuant 
to Sec. 535.568 or as to which payment is prohibited under an 
injunction obtained by the account party.

(Secs. 201-207, 91 Stat. 1626, 50 U.S.C. 1701-1706; E.O. 12170, 44 FR 
65729; E.O. 12205, 45 FR 24099; E.O. 12211, 45 FR 26685; E.O. 12276, 46 
FR 7913; E.O. 12279, 46 FR 7919; E.O. 12280, 46 FR 7921; E.O. 12281, 46 
FR 7923; E.O. 12282, 46 FR 7925; E.O. 12283, 46 FR 7927, and E.O. 12294, 
46 FR 14111)

[46 FR 14336, Feb. 26, 1981, as amended at 46 FR 30341, June 8, 1981]

[[Page 164]]



Sec. 535.440  Commercially reasonable interest rates.

    (a) For purposes of Sec. Sec. 535.212 and 535.213, what is meant by 
``commercially reasonable rates'' depends on the particular 
circumstances. In the case of time or savings deposits, the 
``commercially reasonable rate'' is that rate provided for by the 
deposit agreement or applicable law. With respect to other obligations 
where the rate remains to be determined, it is presently expected that 
the ``commercially reasonable rate'' will be the rate agreed upon by the 
bank and Iran. However, where a deposit has in fact operated as a demand 
account under Treasury license, it would be appropriate to treat the 
deposit for purposes of Sec. Sec. 535.212 and 535.213 as a non-interest 
bearing account. Furthermore, in the event that the Iran-U.S Claims 
Tribunal (the ``Tribunal'') determines that interest additional to that 
agreed upon between the bank and Iran, or compensation or damages in 
lieu of interest, is due Iran, then that amount determined by the 
Tribunal to be owing to Iran shall be transferred as, or as part of, the 
interest at ``commercially reasonable rates'' required to be transferred 
pursuant to Sec. Sec. 535.212 and 535.213, regardless of any settlement 
between the bank and Iran or any release or discharge that Iran may have 
given the bank.
    (b) The contingent interest of Iran in any liability for further or 
additional interest, or compensation or damages in lieu of interest, 
that may be claimed in, and determined by the Tribunal, constitutes an 
interest of Iran in property for purposes of this part, and no agreement 
between Iran and any person subject to the jurisdiction of the United 
States is effective to extinguish such Iranian interest in property 
unless so specifically licensed by the Treasury Department.
    (c) For deposits held as time deposits, no penalty shall be imposed 
for early withdrawal. (In this connection, the Board of Governors of the 
Federal Reserve System has determined that application of the penalty 
for early withdrawal of time deposits transferred before maturity, 
pursuant to Sec. 535.213 is not required.)

(Secs. 201-207, 91 Stat. 1626, 50 U.S.C. 1701-1706; E.O. 12170, 44 FR 
65729; E.O. 12205; 45 FR 24099; E.O. 12211, 45 FR 26605; E.O. 12276, 46 
FR 7913; E.O. 12277, 46 FR 7915; E.O. 12278, 46 FR 7917; E.O. 12279, 46 
FR 7919; E.O. 12280, 46 FR 7921; E.O. 12281, 46 FR 7923; E.O. 12282, 46 
FR 7925; and E.O. 12294, 46 FR 14111)

[48 FR 253, Jan. 4, 1983]



Sec. 535.441  Settlement Agreement regarding small claims.

    (a) Award No. 483 of June 22, 1990 of the Iran-United States Claims 
Tribunal, approving and giving effect to the Settlement Agreement in 
Claims of Less Than $250,000, Case No. 86 and Case No. B38, dated May 
13, 1990 (the ``Settlement Agreement''), constitutes a determination by 
the Iran-United States Claims Tribunal of all claims encompassed therein 
within the meaning of Sec. 535.222(f) of this part. In accordance with 
Sec. 535.222(f), upon payment from the Security Account to the United 
States, the Settlement Agreement shall operate as a final resolution and 
discharge of all claims encompassed by the Settlement Agreement for all 
purposes. All such claims shall be subject to the exclusive jurisdiction 
of the Foreign Claims Settlement Commission on the terms established in 
the Settlement Agreement and by the provisions of Public Law 99-93, 
Title V, Aug. 16, 1985, 99 Stat. 437, applicable to en bloc settlements 
of claims of U.S. nationals against Iran.
    (b) Pursuant to the Settlement Agreement, the private claims subject 
to that agreement and this part are ``* * * claims of less than $250,000 
each, which have been filed with the Tribunal by the United States on 
behalf of U.S. nationals, which claims are included in Cases Nos. 10001 
through 12785, and which are still pending, * * * ,'' and ``* * * claims 
of U.S. nationals for less than $250,000 which have been submitted to 
the United States Department of State but were not timely filed with the 
Tribunal, as well as claims of U.S. nationals for less than $250,000 
which have been either withdrawn by the Claimants or dismissed by the 
Tribunal for lack of jurisdiction, * * * .'' Settlement Agreement, Art. 
I(A).

[55 FR 40831, Oct. 5, 1990]

[[Page 165]]



  Subpart E_Licenses, Authorizations and Statements of Licensing Policy



Sec. 535.501  General and specific licensing procedures.

    For provisions relating to licensing procedures, see part 501, 
subpart E, of this chapter. Licensing actions taken pursuant to part 501 
of this chapter with respect to the prohibitions contained in this part 
are considered actions taken pursuant to this part.

[68 FR 53657, Sept. 11, 2003]



Sec. 535.502  Effect of license or authorization.

    (a) No license or other authorization contained in this part or 
otherwise issued by or under the direction of the Secretary of the 
Treasury pursuant to section 203 of the International Emergency Economic 
Powers Act, shall be deemed to authorize or validate any transaction 
effected prior to the issuance thereof, unless such license or other 
authorization specifically so provides.
    (b) No regulation, ruling, instruction, or license authorizes a 
transaction prohibited under this part unless the regulation, ruling, 
instruction, or license is issued by the Treasury Department and 
specifically refers to this part. No regulation, ruling, instruction or 
license referring to this part shall be deemed to authorize any 
transaction prohibited by any provision of parts 500, 505, 515, 520 or 
530 of this chapter unless the regulation, ruling, instruction or 
license specifically refers to such provision.
    (c) Any regulation, ruling, instruction or license authorizing a 
transaction otherwise prohibited under this part has the effect of 
removing a prohibition or prohibitions in subpart B from the 
transaction, but only to the extent specifically stated by its terms. 
Unless the regulation, ruling, instruction or license otherwise 
specifies, such an authorization does not create any right, duty, 
obligation, claim, or interest in, or with respect to, any property 
which would not otherwise exist under ordinary principles of law.

[44 FR 66833, Nov. 21, 1979, as amended at 44 FR 75353, Dec. 19, 1979]



Sec. 535.503  Exclusion from licenses and authorizations.

    The Secretary of the Treasury reserves the right to exclude any 
person from the operation of any license or from the privileges therein 
conferred or to restrict the applicability thereof with respect to 
particular persons, transactions or property or classes thereof. Such 
action shall be binding upon all persons receiving actual notice or 
constructive notice thereof.

[44 FR 66833, Nov. 21, 1979]



Sec. 535.504  Certain judicial proceedings with respect to property of Iran or 

Iranian entities.

    (a) Subject to the limitations of paragraphs (b) and (c) of this 
section and Sec. 535.222, judicial proceedings are authorized with 
respect to property in which on or after 8:10 a.m., e.s.t., November 14, 
1979, there has existed an interest of Iran or an Iranian entity.
    (b) This section does not authorize:
    (1) Any pre-judgment attachment or any other proceeding of similar 
or analogous effect pertaining to any property (and any income earned 
thereon) subject to the provisions of Sec. Sec. 535.211, 535.212, 
535.213, 535.214 or 535.215 on January 19, 1981, including, but not 
limited to, a temporary restraining order or preliminary injunction, 
which operates as a restraint on property, for purposes of holding it 
within the jurisdiction of a court, or otherwise;
    (2) Any payment or delivery out of a blocked account based upon a 
judicial proceeding, pertaining to any property subject to the 
provisions of Sec. Sec. 535.211, 535.212, 535.213, 535.214 or 535.215 
on January 19, 1981;
    (3)(i) Any final judicial judgment or order (A) permanently 
enjoining, (B) terminating or nullifying, or (C) otherwise permanently 
disposing of any interest of Iran in any standby letter of credit, 
performance bond or similar obligation. Any license authorizing such 
action is hereby revoked and withdrawn. This revocation and withdrawal 
of prior licenses prohibits judgments or orders that are within the 
terms of this paragraph (b)(3)(i), including any such judgments or 
orders which may have been previously entered but which had not become 
final by July 2, 1982,

[[Page 166]]

through the conclusion of appellate proceedings or the expiration of the 
time for appeal.
    (ii) Nothing in this paragraph (b)(3) shall prohibit the assertion 
of any defense, set-off or counterclaim in any pending or subsequent 
judicial proceeding commenced by the Government of Iran, any political 
subdivision of Iran, or any agency, instrumentality or entity owned or 
controlled by the Government of Iran or any political subdivision 
thereof.
    (iii) Nothing in this paragraph (b)(3) shall preclude the 
commencement of an action for the purpose of tolling the period of 
limitations for commencement of such action.
    (iv) Nothing in this paragraph (b)(3) shall require dismissal of any 
action for want of prosecution.
    (c) For purposes of this section, contested and contingent 
liabilities and property interests of the Government of Iran, its 
agencies, instrumentalities, or controlled entities, including debts, 
shall be deemed to be subject to Sec. 535.215.
    (d) A judicial proceeding is not authorized by this section if it is 
based on transactions which violated the prohibitions of this part.
    (e) Judicial proceedings to obtain attachments on standby letters of 
credit, performance bonds or similar obligations and on substitute 
blocked accounts established under Sec. 535.568 relating to standby 
letters of credit, performance bonds and similar obligations are not 
authorized or licensed.

(Secs. 201-207, 91 Stat. 1626, 50 U.S.C. 1701-1706; E.O. 12170, 44 FR 
65729; E.O. 12205, 45 FR 24099; E.O. 12211, 45 FR 26685; E.O. 12276, 46 
FR 7913; E.O. 12279, 46 FR 7919; E.O. 12280, 46 FR 7921; E.O. 12281, 46 
FR 7923; E.O. 12282, 46 FR 7925; E.O. 12283, 46 FR 7927, and E.O. 12294, 
46 FR 14111)

[46 FR 14336, Feb. 26, 1981, as amended at 46 FR 26477, May 13, 1981; 47 
FR 29529, July 7, 1982; 47 FR 55482, Dec. 10, 1982; 48 FR 57129, Dec. 
28, 1983]



Sec. 535.508  Payments to blocked accounts in domestic banks.

    (a) Any payment or transfer of credit, including any payment or 
transfer by any U.S.-owned or controlled foreign firm or branch to a 
blocked account in a domestic bank in the name of Iran or any Iranian 
entity is hereby authorized: Provided, Such payment or transfer shall 
not be made from any blocked account if such payment or transfer 
represents, directly or indirectly, a transfer of the interest of Iran 
or an Iranian entity to any other country or person.
    (b) This section does not authorize:
    (1) Any payment or transfer to any blocked account held in a name 
other than that of Iran or the Iranian entity who is the ultimate 
beneficiary of such payment or transfer; or
    (2) Any foreign exchange transaction including, but not by way of 
limitation, any transfer of credit, or payment of an obligation, 
expressed in terms of the currency of any foreign country.
    (c) This section does not authorize any payment or transfer of 
credit comprising an integral part of a transaction which cannot be 
effected without the subsequent issuance of a further license.
    (d) This section does not authorize the crediting of the proceeds of 
the sale of securities held in a blocked account or a sub-account 
thereof, or the income derived from such securities to a blocked account 
or sub-account under any name or designation which differs from the name 
or designation of the specific blocked account or sub-account in which 
such securities were held.
    (e) This section does not authorize any payment or transfer from a 
blocked account in a domestic bank to a blocked account held under any 
name or designation which differs from the name or designation of the 
specified blocked account or sub-account from which the payment or 
transfer is made.

    Note to Sec. 535.508: Please refer to Sec. 501.603 of this chapter 
for mandatory reporting requirements regarding financial transfers.

[44 FR 66590, Nov. 20, 1979, as amended at 62 FR 45107, Aug. 25, 1997]



Sec. 535.528  Certain transactions with respect to Iranian patents, trademarks 

and copyrights authorized.

    (a) The following transactions by any person subject to the 
jurisdiction of the United States are authorized:
    (1) The filing and prosecution of any application for an Iranian 
patent,

[[Page 167]]

trademark or copyright, or for the renewal thereof;
    (2) The receipt of any Iranian patent, trademark or copyright;
    (3) The filing and prosecution of opposition or infringement 
proceedings with respect to any Iranian patent, trademark, or copyright, 
and the prosecution of a defense to any such proceedings;
    (4) The payment of fees currently due to the government of Iran, 
either directly or through an attorney or representative, in connection 
with any of the transactions authorized by paragraphs (a)(1), (2), and 
(3) of this section or for the maintenance of any Iranian patent, 
trademark or copyright; and
    (5) The payment of reasonable and customary fees currently due to 
attorneys or representatives in Iran incurred in connection with any of 
the transactions authorized by paragraphs (a)(1), (2), (3) or (4) of 
this section.
    (b) Payments effected pursuant to the terms of paragraphs (a)(4) and 
(5) of this section may not be made from any blocked account.
    (c) As used in this section the term Iranian patent, trademark, or 
copyright shall mean any patent, petty patent, design patent, trademark 
or copyright issued by Iran.

[45 FR 29288, May 2, 1980]



Sec. 535.531  Payment of certain checks and drafts.

    (a) A bank subject to the jurisdiction of the United States is 
hereby authorized to make payments from blocked accounts with such 
banking institution of checks and drafts drawn or issued prior to the 
effective date, Provided, That:
    (1) The amount involved in any one payment, acceptance, or debit 
does not exceed $3000; or
    (2) The check or draft was within the United States in process of 
collection by a domestic bank on or prior to the effective date and does 
not exceed $50,000.
    (3) The authorization contained in this paragraph shall expire at 
the close of business on January 14, 1980.
    (b) A bank subject to the jurisdiction of the United States as its 
own obligation may make payment to a person subject to the jurisdiction 
of the United States who is the beneficiary of any letter of credit 
issued or confirmed by it, or on a draft accepted by it, prior to the 
effective date, where the letter of credit was issued or confirmed on 
behalf of Iran or an Iranian entity, Provided, That:
    (1) Notwithstanding the provisions of Sec. 535.902, no blocked 
account may at any time be debited in connection with such a payment.
    (2) Such a payment shall give the bank making payment no special 
priority or other right to blocked accounts it holds in the event that 
such blocked accounts are vested or otherwise lawfully used in 
connection with a settlement of claims.
    (3) Nothing in this paragraph prevents payment being made to the 
beneficiary of any draft or letter of credit or to any banking 
institution pursuant to Sec. 535.904.
    (c) The office will consider on a case-by-case basis, without any 
commitment on its part to authorize any transaction or class of 
transactions, applications for specific licenses to make payments from 
blocked accounts of documentary drafts drawn under irrevocable letters 
of credit issued or confirmed by a domestic bank prior to the effective 
date, in favor of any person subject to the jurisdiction of the United 
States. Any bank or payee submitting such an application should include 
data on all such letters of credit in which it is involved. Applications 
should be submitted not later than January 10, 1980.
    (d) Paragraphs (a) and (b) of this section do not authorize any 
payment to Iran or an Iranian entity except payments into a blocked 
account in a domestic bank unless Iran or the Iranian entity is 
otherwise licensed to receive such payment.

[44 FR 75352, Dec. 19, 1979]



Sec. 535.532  Completion of certain securities transactions.

    (a) Banking institutions within the United States are hereby 
authorized to complete, on or before November 21, 1979, purchases and 
sales made prior to the effective date of securities purchased or sold 
for the account of Iran

[[Page 168]]

or an Iranian entity provided the following terms and conditions are 
complied with, respectively.
    (1) The proceeds of such sale are credited to a blocked account in a 
banking institution in the name of the person for whose account the sale 
was made; and
    (2) The securities so purchased are held in a blocked account in a 
banking institution in the name of the person for whose account the 
purchase was made.
    (b) This section does not authorize the crediting of the proceeds of 
the sale of securities held in a blocked account or a sub-account 
thereof, to a blocked account or sub-account under any name or 
designation which differs from the name or designation of the specific 
blocked account or sub-account in which such securities were held.



Sec. 535.540  Disposition of certain tangible property.

    (a) Specific licenses may be issued in appropriate cases at the 
discretion of the Secretary of the Treasury for the public sale and 
transfer of certain tangible property that is encumbered or contested 
within the meaning of Sec. 535.333 (b) and (c) and that, because it is 
blocked by Sec. 535.201, may not be sold or transferred without a 
specific license, provided that each of the following conditions is met:
    (1) The holder or supplier of the property has made a good faith 
effort over a reasonable period of time to obtain payment of any amounts 
owed by Iran or the Iranian entity, or adequate assurance of such 
payment;
    (2) Neither payment nor adequate assurance of payment has been 
received;
    (3) The license applicant has, under provisions of law applicable 
prior to November 14, 1979, a right to sell, or reclaim and sell, such 
property by methods not requiring judicial proceedings, and would be 
able to exercise such right under applicable law, but for the 
prohibitions in this part, and
    (4) The license applicant shall enter into an indemnification 
agreement acceptable to the United States providing for the applicant to 
indemnify the United States, in an amount up to 150 percent of the 
proceeds of sale, for any monetary loss which may accrue to the United 
States from a decision by the Iran-U.S. Claims Tribunal that the United 
States is liable to Iran for damages that are in any way attributable to 
the issuance of such license. In the event the applicant and those 
acting for or on its behalf are the only bidders on the property, the 
United States shall have the right to establish a reasonable 
indemnification amount.
    (b) An applicant for a license under this section shall provide the 
Office of Foreign Assets Control with documentation on the points 
enumerated in paragraph (a) of this section. The applicant normally will 
be required to submit an opinion of legal counsel regarding the legal 
right claimed under paragraph (a)(3) of this section.
    (c) Any sale of property licensed under this section shall be at 
public auction and shall be made in good faith in a commercially 
reasonable manner. Notwithstanding any provision of State law, the 
license applicant shall give detailed notice to the appropriate Iranian 
entity of the proposed sale or transfer at least 30 days prior to the 
sale or other transfer. In addition, if the license applicant has filed 
a claim with the Iran-U.S. Claims Tribunal, the license applicant shall 
give at least 30 days' advance notice of the sale to the Tribunal.
    (d) The disposition of the proceeds of any sale licensed under this 
section, minus such reasonable costs of sale as are authorized by 
applicable law (which will be licensed to be deducted), shall be in 
accordance with either of the following methods:
    (1) Deposit into a separate blocked, interest-bearing account at a 
domestic bank in the name of the licensed applicant; or
    (2) Any reasonable disposition in accordance with provisions of law 
applicable prior to November 14, 1979, which may include unrestricted 
use of all or a portion of the proceeds, provided that the applicant 
shall post a bond or establish a standby letter of credit, subject to 
the prior approval of the Secretary of the Treasury, in favor of the 
United States in the amount of the proceeds of sale, prior to any such 
disposition.
    (e) For purposes of this section, the term proceeds means any gross 
amount

[[Page 169]]

of money or other value realized from the sale. The proceeds shall 
include any amount equal to any debt owed by Iran which may have 
constituted all or part of a successful bid at the licensed sale.
    (f) The proceeds of any such sale shall be deemed to be property 
governed by Sec. 535.215 of this part. Any part of the proceeds that 
constitutes Iranian property which under Sec. 535.215 is to be 
transferred to Iran shall be so transferred in accordance with that 
section.
    (g) Any license pursuant to this section may be granted subject to 
conditions deemed appropriate by the Secretary of the Treasury.
    (h) Any person licensed pursuant to this section is required to 
submit a report to the Chief of Licensing, Office of Foreign Assets 
Control, within ten business days of the licensed sale or other 
transfer, providing a full accounting of the transaction, including the 
costs, any payment to lienholders or others, including payments to Iran 
or Iranian entities, and documentation concerning any blocked account 
established or payments made.

(Sec. 201-207, 91 Stat. 1626, 50 U.S.C. 1701-1706; E.O. 12170, 44 FR 
65729; E.O. 12205, 45 FR 24099; E.O. 12211, 45 FR 26605; E.O. 12276, 46 
FR 7913; E.O. 12279, 46 FR 7919; E.O. 12280, 46 FR 7921; E.O. 12281, 46 
FR 7923; E.O. 12282, 46 FR 7925; and E.O. 12294, 46 FR 14111)

[47 FR 31683, July 22, 1982]



Sec. 535.566  Unblocking of foreign currency deposits held by U.S.-owned or 

controlled foreign firms.

    Deposits held abroad in currencies other than U.S. dollars by 
branches and subsidiaries of persons subject to the jurisdiction of the 
United States are unblocked, provided however that conversions of 
blocked dollar deposits into foreign currencies are not authorized.

[44 FR 66833, Nov. 21, 1979]



Sec. 535.567  Payment under advised letters of credit.

    (a) Specific licenses may be issued for presentation, acceptance, or 
payment of documentary drafts under a letter of credit opened by an 
Iranian entity and advised by a domestic bank or an Iranian bank subject 
to the jurisdiction of the United States, provided, That:
    (1) The letter of credit was advised prior to the effective date;
    (2) The property which is the subject of the payment under the 
letter of credit was not in the possession or control of the exporter on 
or after the effective date;
    (3) The Beneficiary is a person subject to the jurisdiction of the 
United States.
    (b) As a general matter, licenses will not be issued if the amount 
to be paid to a single payee exceeds $500,000, or if hardship cannot be 
shown.

[44 FR 75354, Dec. 19, 1979]



Sec. 535.568  Certain standby letters of credit and performance bonds.

    (a) Notwithstanding any other provision of law, payment into a 
blocked account in a domestic bank by an issuing or confirming bank 
under a standby letter of credit in favor of an Iranian entity is 
prohibited by Sec. 535.201 and not authorized, notwithstanding the 
provisions of Sec. 535.508, if either:
    (1) A specific license has been issued pursuant to the provisions of 
paragraph (b) of this section, or
    (2) Eight business days have not expired after notice to the account 
party pursuant to paragraph (b) of this section.
    (b) Whenever an issuing or confirming bank shall receive such demand 
for payment under a standby letter of credit, it shall promptly notify 
the person for whose account the credit was opened. Such person may then 
apply within five business days for a specific license authorizing the 
account party to establish a blocked account on its books in the name of 
the Iranian entity in the amount payable under the credit, in lieu of 
payment by the issuing or confirming bank into a blocked account and 
reimbursement therefor by the account party.
    (c) Where there is outstanding a demand for payment under a standby 
letter of credit, and the issuing or confirming bank has been enjoined 
from making payment, upon removal of the injunction, the person for 
whose account the credit was opened may apply for a specific license for 
the same purpose and in the same manner as that set forth in paragraph 
(b) of this section. The issuing or confirming bank

[[Page 170]]

shall not make payment under the standby letter of credit unless:
    (1) Eight business days have expired since the bank has received 
notice of the removal of the injunction and;
    (2) A specific license issued to the account party pursuant to the 
provisions of this paragraph has not been presented to the bank.
    (d) If necessary to assure the availability of the funds blocked, 
the Secretary may at any time require the payment of the amounts due 
under any letter of credit described in paragraph (a) of this section 
into a blocked account in a domestic bank or the supplying of any form 
of security deemed necessary.
    (e) Nothing in this section precludes any person for whose account a 
standby letter of credit was opened or any other person from at any time 
contesting the legality of the demand from the Iranian entity or from 
raising any other legal defense to payment under the standby letter of 
credit.
    (f) This section does not affect the obligation of the various 
parties of the instruments covered by this section if the instruments 
and payment thereunder are subsequently unblocked.
    (g) For the purposes of this section, the term standby letter of 
credit shall mean a letter of credit securing performance of, or 
repayment of, any advance payments of deposits, under a contract with 
Iran or an Iranian entity, or any similar obligation in the nature of a 
performance bond.
    (h) The regulations do not authorize any person subject to the 
jurisdiction of the United States to reimburse a non-U.S. bank for 
payment to Iran or an Iranian entity under a standby letter of credit, 
except by payment into a blocked account in accordance with Sec. 
535.508 or paragraph (b) or (c) of this section.
    (i) A person receiving a specific license under paragraph (b) or (c) 
of this section shall certify to the Office of Foreign Assets Control 
within five business days after receipt of that license that it has 
established the blocked account on its books as provided for in those 
paragraphs. However, in appropriate cases, this time may be extended 
upon application to the Office of Foreign Assets Control when the 
account party has filed a petition with an appropriate court seeking a 
judicial order barring payment by the issuing or confirming bank.
    (j) The extension or renewal of a standby letter of credit is 
authorized.
    (k) All specific licenses previously issued under this section to 
account parties to standby letters of credit are revoked, effective 
February 28, 1991, unless the license holder submits documentation to 
the Office of Foreign Assets Control establishing that the specific 
license pertains to a standby letter of credit obligation that (1) is at 
issue in any claim brought before the Iran-United States Claims Tribunal 
(``Tribunal''), (2) is or was at issue in any claim that the Tribunal 
resolves, or has resolved, on the merits in favor of the account party, 
or (3) was at issue in a matter that was settled by the parties. The 
documentation required for such a showing may include such items as a 
copy of a Tribunal Award, a copy of a signed settlement agreement, or 
copies of cover pages of recent filings in pending Tribunal cases.

[47 FR 12339, Mar. 23, 1982, as amended at 56 FR 6546, Feb. 15, 1991]



Sec. 535.569  Licensed letter of credit transactions; forwarding of documents.

    When payment of a letter of credit issued, advised, or confirmed by 
a bank subject to the jurisdiction of the United States is authorized by 
either general or specific license, the forwarding of the letter of 
credit documents to the account party is authorized.

[45 FR 1877, Jan. 9, 1980]



Sec. 535.576  Payment of non-dollar letters of credit to Iran.

    Notwithstanding the prohibitions of Sec. Sec. 535.201 and 
535.206(a)(4), payment of existing non-dollar letters of credit in favor 
of Iranian entities or any person in Iran by any foreign branch or 
subsidiary of a U.S. firm is authorized, provided that the credit was 
opened prior to the respective effective date.

[45 FR 29288, May 2, 1980]

[[Page 171]]



Sec. 535.579  Authorization of new transactions concerning certain Iranian 

property.

    (a) Transactions involving property in which Iran or an Iranian 
entity has an interest are authorized where:
    (1) The property comes within the jurisdiction of the United States 
or into the control or possession of any person subject to the 
jurisdiction of the United States after January 19, 1981, or
    (2) The interest in the property of Iran or an Iranian entity (e.g. 
exports consigned to Iran or an Iranian entity) arises after January 19, 
1981.
    (b) Transactions involving standby letters of credit, performance or 
payment bonds and similar obligations, entered into prior to January 20, 
1981, described in Sec. 535.568 remain subject to the prohibitions and 
procedures contained in Sec. Sec. 535.201 and 535.568.
    (c) Property not blocked under Sec. 535.201 as of January 19, 1981, 
in which the Government of Iran or an Iranian entity has an interest, 
which after that date is or becomes subject to the jurisdiction of the 
United States or comes within the control or possession of a person 
subject to the jurisdiction of the United States for the express purpose 
of settling claims against Iran or Iranian entities, is excluded from 
any authorization in this part for any attachment, injunction or other 
order of similar or analogous effect and any such attachment, injunction 
or order is prohibited by Sec. Sec. 535.201 and 535.203.

(Secs. 201-207, 91 Stat. 1626, 50 U.S.C. 1701-1706; E.O. 12170, 44 FR 
65729; E.O. 12205, 45 FR 24099; E.O. 12211, 45 FR 26685; E.O. 12276, 46 
FR 7913; E.O. 12279, 46 FR 7919; E.O. 12280, 46 FR 7921; E.O. 12281, 46 
FR 7923; E.O. 12282, 46 FR 7925; E.O. 12283, 46 FR 7927, and E.O. 12294, 
46 FR 14111)

[46 FR 14336, Feb. 26, 1981]



Sec. 535.580  Necessary living expenses of relatives of the former Shah of 

Iran.

    The transfer, payment or withdrawal of property described in Sec. 
535.217 is authorized to the extent necessary to pay living expenses of 
any individual listed in that section. Living expenses for this purpose 
shall include food, housing, transportation, security and other personal 
expenses.

(Secs. 201-207, 91 Stat. 1626, 50 U.S.C. 1701-1706; E.O. 12170, 44 FR 
65729; E.O. 12211, 45 FR 26685; E.O. 12284, 46 FR 7929)

[46 FR 14330, Feb. 26, 1981]



                            Subpart F_Reports



Sec. 535.601  Records and reports.

    For provisions relating to records and reports, see subpart C of 
part 501 of this chapter.

[62 FR 45107, Aug. 25, 1997]



                           Subpart G_Penalties



Sec. 535.701  Penalties.

    (a) Attention is directed to section 206 of the International 
Emergency Economic Powers Act (the ``Act'') (50 U.S.C. 1705), which is 
applicable to violations of the provisions of any license, ruling, 
regulation, order, direction or instruction issued by or pursuant to the 
direction or authorization of the Secretary of the Treasury pursuant to 
this part or otherwise under the Act.
    (1) A civil penalty not to exceed the amount set forth in Section 
206 of the Act may be imposed on any person who violates, attempts to 
violate, conspires to violate, or causes a violation of any license, 
order, regulation, or prohibition issued under the Act.

    Note to paragraph (a)(1) of Sec. 535.701: As of June 10, 2008, the 
Act provides for a maximum civil penalty not to exceed the greater of 
$250,000 or an amount that is twice the amount of the transaction that 
is the basis of the violation with respect to which the penalty is 
imposed.

    (2) A person who willfully commits, willfully attempts to commit, or 
willfully conspires to commit, or aids or abets in the commission of a 
violation of any license, order, regulation, or prohibition shall, upon 
conviction, be fined not more than $1,000,000, or if a natural person, 
may be imprisoned for not more than 20 years, or both.
    (b) Adjustments to penalty amounts. (1) The civil penalties provided 
in the Act are subject to adjustment pursuant to the Federal Civil 
Penalties Inflation Adjustment Act of 1990 (Pub. L. 101-410, as amended, 
28 U.S.C. 2461 note).

[[Page 172]]

    (2) The criminal penalties provided in the Act are subject to 
adjustment pursuant to 18 U.S.C. 3571.
    (c) Attention is also directed to 18 U.S.C. 1001, which provides 
that whoever, in any matter within the jurisdiction of any department or 
agency of the United States, knowingly and willfully falsifies, conceals 
or covers up by any trick, scheme, or device a material fact, or makes 
any false, fictitious or fraudulent statement or representation or makes 
or uses any false writing or document knowing the same to contain any 
false, fictitious or fraudulent statement or entry, shall be fined under 
title 18, United States Code, or imprisoned not more than five years, or 
both.
    (d) Attention is directed to 18 U.S.C. 2332d, as added by Public Law 
104-132, section 321, which provides that, except as provided in 
regulations issued by the Secretary of the Treasury, in consultation 
with the Secretary of State, a U.S. person, knowing or having reasonable 
cause to know that a country is designated under section 6(j) of the 
Export Administration Act, 50 U.S.C. App. 2405, as a country supporting 
international terrorism, engages in a financial transaction with the 
government of that country, shall be fined under title 18, United States 
Code, or imprisoned for not more than 10 years, or both.

[44 FR 65956, Nov. 15, 1979, as amended at 61 FR 43461, Aug. 23, 1996; 
61 FR 54938, Oct. 23, 1996; 62 FR 45107, Aug. 25, 1997; 71 FR 29252, May 
22, 2006; 73 FR 32651, June 10, 2008]



Sec. 535.702  Prepenalty notice.

    (a) When required. If the Director of the Office of Foreign Assets 
Control (hereinafter ``Director'') has reasonable cause to believe that 
there has occurred a violation of any provision of this part or a 
violation of the provisions of any license, ruling, regulation, order, 
direction or instruction issued by or pursuant to the direction or 
authorization of the Secretary of the Treasury pursuant to this part or 
otherwise under the International Emergency Economic Powers Act, and the 
Director determines that further proceedings are warranted, he shall 
issue to the person concerned a notice of his intent to impose a 
monetary penalty. The prepenalty notice shall be issued whether or not 
another agency has taken any action with respect to this matter.
    (b) Contents--(1) Facts of violation. The prepenalty notice shall:
    (i) Describe the violation.
    (ii) Specify the laws and regulations allegedly violated.
    (iii) State the amount of the proposed monetary penalty.
    (2) Right to make presentations. The prepenalty notice also shall 
inform the person of his right to make a written presentation within 
thirty (30) days of mailing of the notice as to why a monetary penalty 
should not be imposed, or, if imposed, why it should be in a lesser 
amount than proposed.

[53 FR 7356, Mar. 8, 1988]



Sec. 535.703  Presentation responding to prepenalty notice.

    (a) Time within which to respond. The named person shall have 30 
days from the date of mailing of the prepenalty notice to make a written 
presentation to the Director.
    (b) Form and contents of written presentation. The written 
presentation need not be in any particular form, but shall contain 
information sufficient to indicate that it is in response to the 
prepenalty notice. It should contain responses to the allegations in the 
prepenalty notice and set forth the reasons why the person believes the 
penalty should not be imposed or, if imposed, why it should be in a 
lesser amount than proposed.

[53 FR 7356, Mar. 8, 1988]



Sec. 535.704  Penalty notice.

    (a) No violation. If, after considering any presentations made in 
response to the prepenalty notice, the Director determines that there 
was no violation by the person named in the prepenalty notice, he 
promptly shall notify the person in writing of that determination and 
that no monetary penalty will be imposed.
    (b) Violation. If, after considering any presentations made in 
response to the prepenalty notice, the Director determines that there 
was a violation by the person named in the prepenalty notice,

[[Page 173]]

he promptly shall issue a written notice of the imposition of the 
monetary penalty to that person.

[53 FR 7356, Mar. 8, 1988]



Sec. 535.705  Administrative collection; referral to United States Department 

of Justice.

    In the event that the person named does not pay the penalty imposed 
pursuant to this part or make payment arrangements acceptable to the 
Director of the Office of Foreign Assets Control within 30 days of the 
date of mailing of the penalty notice, the matter may be referred for 
administrative collection measures by the Department of the Treasury or 
to the United States Department of Justice for appropriate action to 
recover the penalty in a civil suit in a Federal district court.

[70 FR 15762, Mar. 29, 2005]



                          Subpart H_Procedures



Sec. 535.801  Procedures.

    For license application procedures and procedures relating to 
amendments, modifications, or revocations of licenses; administrative 
decisions; rulemaking; and requests for documents pursuant to the 
Freedom of Information and Privacy Acts (5 U.S.C. 552 and 552a), see 
part 501, subpart E, of this chapter.

[62 FR 45107, Aug. 25, 1997, as amended at 68 FR 53657, Sept. 11, 2003]



                   Subpart I_Miscellaneous Provisions



Sec. 535.901  Dollar accounts at banks abroad.

    Any domestic bank is hereby authorized to effect withdrawals or 
other transfers from any account held in the name of a non-Iranian bank 
located in a foreign country, provided such non-Iranian foreign bank is 
not a person subject to the jurisdiction of the United States.



Sec. 535.902  Set-offs by U.S. owned or controlled firms abroad.

    (a) Branches and subsidiaries in foreign countries of persons 
subject to the jurisdiction of the United States are licensed to set-off 
their claims against Iran or Iranian entities by debit to blocked 
accounts held by them for Iran or Iranian entities.
    (b) The general license in paragraph (a) of this section is revoked 
as of January 19, 1981.
    (c) For purposes of this section, set-offs include combinations of 
accounts and any similar actions.

(Secs. 201-207, 91 Stat. 1626, 50 U.S.C. 1701-1706; E.O. 12170, 44 FR 
65729; E.O. 12205, 45 FR 24099; E.O. 12211, 45 FR 26685; E.O. 12276, 46 
FR 7913; E.O. 12279, 46 FR 7919; E.O. 12280, 46 FR 7921; E.O. 12281, 46 
FR 7923; E.O. 12282, 46 FR 7925; E.O. 12283, 46 FR 7927, and E.O. 12294, 
46 FR 14111)

[46 FR 14337, Feb. 26, 1981]



Sec. 535.904  Payment by Iranian entities of obligations to persons within the 

United States.

    The transfer of funds after the effective date by, through or to any 
U.S. banking institution or other person within the United States solely 
for purposes of payment of obligations by Iranian entities owed to 
persons within the United States is authorized: Provided, That there is 
no debit to a blocked account. Property is not blocked by virtue of 
being transferred or received pursuant to this section.

[44 FR 66591, Nov. 20, 1979]



Sec. 535.905  Paperwork Reduction Act notice.

    For approval by the Office of Management and Budget (``OMB'') under 
the Paperwork Reduction Act of information collections relating to 
recordkeeping and reporting requirements, to licensing procedures 
(including those pursuant to statements of licensing policy), and to 
other procedures, see Sec. 501.901 of this chapter. An agency may not 
conduct or sponsor, and a person is not required to respond to, a 
collection of information unless it displays a valid control number 
assigned by OMB.

[62 FR 45107, Aug. 25, 1997]

[[Page 174]]



PART 536_NARCOTICS TRAFFICKING SANCTIONS REGULATIONS--Table of Contents



      Subpart A_Relation of This Part to Other Laws and Regulations

Sec.
536.100 Licensing procedures.
536.101 Relation of this part to other laws and regulations.

                         Subpart B_Prohibitions

536.201 Prohibited transactions involving blocked property.
536.202 Effect of transfers violating the provisions of this part.
536.203 Holding of certain types of blocked property in interest-bearing 
          accounts.
536.204 Evasions; attempts; conspiracies.
536.205 Exempt transactions.

                      Subpart C_General Definitions

536.301 Blocked account; blocked property.
536.302 Effective date.
536.303 Entity.
536.304 Foreign person.
536.305 General license.
536.306 Information and informational materials.
536.307 Interest.
536.308 License.
536.309 Person.
536.310 Property; property interest.
536.311 Narcotics trafficking.
536.312 Specially designated narcotics trafficker.
536.313 Specific license.
536.314 Transfer.
536.315 United States.
536.316 United States person; U.S. person.
536.317 U.S. financial institution.

                        Subpart D_Interpretations

536.401 Reference to amended sections.
536.402 Effect of amendment.
536.403 Termination and acquisition of an interest in blocked property.
536.404 Setoffs prohibited.
536.405 Transactions incidental to a licensed transaction.
536.406 Provision of services.
536.407 Offshore transactions.
536.408 Alleged change in ownership or control of an entity designated 
          as a specially designated narcotics trafficker.
536.409 Credit extended and cards issued by U.S. financial institutions.

 Subpart E_Licenses, Authorizations, and Statements of Licensing Policy

536.501 Effect of license or authorization.
536.502 Exclusion from licenses and authorizations.
536.503 Payments and transfers to blocked accounts in U.S. financial 
          institutions.
536.504 Investment and reinvestment of certain funds.
536.505 Entries in certain accounts for normal service charges 
          authorized.
536.506 Provision of certain legal services authorized.
536.507 Authorization of emergency medical services.

                            Subpart F_Reports

536.601 Records and reports.

                           Subpart G_Penalties

536.701 Penalties.
536.702 Prepenalty notice.
536.703 Response to prepenalty notice.
536.704 Penalty notice.
536.705 Administrative collection; referral to United States Department 
          of Justice.

                          Subpart H_Procedures

536.801 Procedures.
536.802 Delegation by the Secretary of the Treasury.

                    Subpart I_Paperwork Reduction Act

536.901 Paperwork Reduction Act notice.

    Authority: 3 U.S.C. 301; 31 U.S.C. 321(b); 50 U.S.C. 1601-1651, 
1701-1706; Pub. L. 101-410, 104 Stat. 890 (28 U.S.C. 2461 note); Pub. L. 
110-96, 121 Stat. 1011; E.O. 12978, 60 FR 54579, 3 CFR, 1995 Comp., p. 
415; E.O. 13286, 68 FR 10619, 3 CFR, 2003 Comp., p. 166.

    Source: 62 FR 9960, Mar. 5, 1997, unless otherwise noted.



      Subpart A_Relation of This Part to Other Laws and Regulations



Sec. 536.100  Licensing procedures.

    For provisions relating to licensing procedures, see part 501, 
subpart E, of this chapter. Licensing actions taken pursuant to part 501 
of this chapter with respect to the prohibitions contained in this part 
are considered actions taken pursuant to this part.

[68 FR 53657, Sept. 11, 2003]



Sec. 536.101  Relation of this part to other laws and regulations.

    (a) This part is separate from, and independent of, the other parts 
of this chapter with the exception of part 501 of this chapter, the 
recordkeeping and

[[Page 175]]

reporting requirements and license application and other procedures of 
which apply to this part. Differing foreign policy and national security 
contexts may result in differing interpretations of similar language 
among the parts of this chapter. No license or authorization contained 
in or issued pursuant to those other parts authorizes any transaction 
prohibited by this part. No license or authorization contained in or 
issued pursuant to any other provision of law or regulation authorizes 
any transaction prohibited by this part.
    (b) No license or authorization contained in or issued pursuant to 
this part relieves the involved parties from complying with any other 
applicable laws or regulations.

[62 FR 9960, Mar. 5, 1997, as amended at 62 FR 45107, Aug. 25, 1997]



                         Subpart B_Prohibitions



Sec. 536.201  Prohibited transactions involving blocked property.

    (a) Except as authorized by regulations, orders, directives, 
rulings, instructions, licenses, or otherwise, and notwithstanding any 
contract entered into or any license or permit granted prior to the 
effective date, no property or interests in property of a specially 
designated narcotics trafficker that are in the United States, that 
hereafter come within the United States, or that are or hereafter come 
within the possession or control of U.S. persons, including their 
overseas branches, may be transferred, paid, exported, withdrawn or 
otherwise dealt in.
    (b) When a transaction results in the blocking of funds at a 
financial institution pursuant to this section and a party to the 
transaction believes the funds have been blocked due to mistaken 
identity, that party may seek to have such funds unblocked pursuant to 
the administrative procedures set forth in Sec. 501.806 of this 
chapter.

[62 FR 9960, Mar. 5, 1997, as amended at 62 FR 45107, Aug. 25, 1997]



Sec. 536.202  Effect of transfers violating the provisions of this part.

    (a) Any transfer after the effective date, which is in violation of 
any provision of this part or of any regulation, order, directive, 
ruling, instruction, license, or other authorization hereunder and 
involves any property held in the name of a specially designated 
narcotics trafficker or in which a specially designated narcotics 
trafficker has or has had an interest since such date, is null and void 
and shall not be the basis for the assertion or recognition of any 
interest in or right, remedy, power or privilege with respect to such 
property.
    (b) No transfer before the effective date shall be the basis for the 
assertion or recognition of any right, remedy, power, or privilege with 
respect to, or interest in, any property held in the name of a specially 
designated narcotics trafficker or in which a specially designated 
narcotics trafficker has an interest, or has had an interest since such 
date, unless the person with whom such property is held or maintained, 
prior to such date, had written notice of the transfer or by any written 
evidence had recognized such transfer.
    (c) Unless otherwise provided, an appropriate license or other 
authorization issued by or pursuant to the direction or authorization of 
the Director of the Office of Foreign Assets Control before, during, or 
after a transfer shall validate such transfer or render it enforceable 
to the same extent that it would be valid or enforceable but for the 
provisions of the International Emergency Economic Powers Act, this 
part, and any regulation, order, directive, ruling, instruction, or 
license issued hereunder.
    (d) Transfers of property which otherwise would be null and void or 
unenforceable by virtue of the provisions of this section shall not be 
deemed to be null and void or unenforceable as to any person with whom 
such property was held or maintained (and as to such person only) in 
cases in which such person is able to establish to the satisfaction of 
the Director of the Office of Foreign Assets Control each of the 
following:
    (1) Such transfer did not represent a willful violation of the 
provisions of this part by the person with whom such property was held 
or maintained;
    (2) The person with whom such property was held or maintained did 
not

[[Page 176]]

have reasonable cause to know or suspect, in view of all the facts and 
circumstances known or available to such person, that such transfer 
required a license or authorization by or pursuant to this part and was 
not so licensed or authorized, or if a license or authorization did 
purport to cover the transfer, that such license or authorization had 
been obtained by misrepresentation of a third party or the withholding 
of material facts or was otherwise fraudulently obtained; and
    (3) The person with whom such property was held or maintained filed 
with the Office of Foreign Assets Control a report setting forth in full 
the circumstances relating to such transfer promptly upon discovery 
that:
    (i) Such transfer was in violation of the provisions of this part or 
any regulation, ruling, instruction, license, or other direction or 
authorization hereunder; or
    (ii) Such transfer was not licensed or authorized by the Director of 
the Office of Foreign Assets Control; or
    (iii) If a license did purport to cover the transfer, such license 
had been obtained by misrepresentation of a third party or the 
withholding of material facts or was otherwise fraudulently obtained.

    Note to paragraph (d)(3): The filing of a report in accordance with 
the provisions of this paragraph (d)(3) shall not be deemed evidence 
that the terms of paragraphs (d)(l) and (2) of this section have been 
satisfied.

    (e) Unless licensed or authorized pursuant to this part, any 
attachment, judgment, decree, lien, execution, garnishment, or other 
judicial process is null and void with respect to any property which, on 
or since the effective date, was held in the name of a specially 
designated narcotics trafficker or in which there existed an interest of 
a specially designated narcotics trafficker.



Sec. 536.203  Holding of certain types of blocked property in interest-bearing 

accounts.

    (a)(1) Any person, including a U.S. financial institution, currently 
holding property subject to Sec. 536.201 which, as of the effective 
date or the date of receipt if subsequent to the effective date, is not 
being held in an interest-bearing account, or otherwise invested in a 
manner authorized by the Office of Foreign Assets Control (e.g., Sec. 
536.504), shall transfer such property to, or hold such property or 
cause such property to be held in, an interest-bearing account or 
interest-bearing status in a U.S. financial institution as of the 
effective date or the date of receipt if subsequent to the effective 
date of this section, unless otherwise authorized or directed by the 
Office of Foreign Assets Control.
    (2) The requirement set forth in paragraph (a)(1) of this section 
shall apply to currency, bank deposits, accounts, obligations, and any 
other financial or economic resources or assets, and any proceeds 
resulting from the sale of tangible or intangible property. If interest 
is credited to an account separate from that in which the interest-
bearing asset is held, the name of the account party on both accounts 
must be the same and must clearly indicate the specially designated 
narcotics trafficker having an interest in the accounts. If the account 
is held in the name of a specially designated narcotics trafficker, the 
name of the account to which interest is credited must be the same.
    (b) For purposes of this section, the term interest-bearing account 
means a blocked account in a U.S. financial institution earning interest 
at rates that are commercially reasonable for the amount of funds in the 
account. Except as otherwise authorized, the funds may not be invested 
or held in instruments the maturity of which exceeds 90 days.
    (c) This section does not apply to blocked tangible property, such 
as chattels, nor does it create an affirmative obligation on the part of 
the holder of such blocked tangible property to sell or liquidate the 
property and put the proceeds in a blocked account. However, the Office 
of Foreign Assets Control may issue licenses permitting or directing 
sales of tangible property in appropriate cases.



Sec. 536.204  Evasions; attempts; conspiracies.

    Any transaction for the purpose of, or which has the effect of, 
evading or

[[Page 177]]

avoiding, or which facilitates the evasion or avoidance of, any of the 
prohibitions set forth in this part, is hereby prohibited. Any attempt 
to violate the prohibitions set forth in this part is hereby prohibited. 
Any conspiracy formed for the purpose of engaging in a transaction 
prohibited by this part is hereby prohibited.



Sec. 536.205  Exempt transactions.

    (a) Personal communications. The prohibitions contained in this part 
do not apply to any postal, telegraphic, telephonic, or other personal 
communication, which does not involve the transfer of anything of value.
    (b) Information and informational materials. (1) The importation 
from any country and the exportation to any country of information or 
informational materials as defined in Sec. 536.306, whether commercial 
or otherwise, regardless of format or medium of transmission, are exempt 
from the prohibitions and regulations of this part.
    (2) This section does not authorize transactions related to 
information and informational materials not fully created and in 
existence at the date of the transactions, or to the substantive or 
artistic alteration or enhancement of informational materials, or to the 
provision of marketing and business consulting services by a U.S. 
person. Such prohibited transactions include, without limitation, 
payment of advances for informational materials not yet created and 
completed, provision of services to market, produce or co-produce, 
create or assist in the creation of information and informational 
materials, and payment of royalties to a specially designated narcotics 
trafficker with respect to income received for enhancements or 
alterations made by U.S. persons to information or informational 
materials imported from a specially designated narcotics trafficker.
    (3) This section does not authorize transactions incident to the 
exportation of technology that is not informational material as defined 
in Sec. 536.306(b)(1) or incident to the exportation of goods for use 
in the transmission of any information.
    (c) Travel. The prohibitions contained in this part do not apply to 
transactions ordinarily incident to travel to or from any country, 
including importation of accompanied baggage for personal use, 
maintenance within any country including payment of living expenses and 
acquisition of goods or services for personal use, and arrangement or 
facilitation of such travel including non-scheduled air, sea, or land 
voyages. Any transactions entered into by a specially designated 
narcotics trafficker while traveling in the United States that are 
outside the scope of those set forth in this paragraph are in violation 
of Sec. 536.201.



                      Subpart C_General Definitions



Sec. 536.301  Blocked account; blocked property.

    The terms blocked account and blocked property shall mean any 
account or property subject to the prohibition in Sec. 536.201 held in 
the name of a specially designated narcotics trafficker or in which a 
specially designated narcotics trafficker has an interest, and with 
respect to which payments, transfers, exportations, withdrawals, or 
other dealings may not be made or effected except pursuant to an 
authorization or license from the Office of Foreign Assets Control 
authorizing such action.



Sec. 536.302  Effective date.

    The term effective date refers to the effective date of the 
applicable prohibitions and directives contained in this part which is 
12:01 a.m. EDT, October 22, 1995, or, in the case of specially 
designated narcotics traffickers designated after that date, the earlier 
of the date on which a person receives actual or constructive notice of 
such designation.



Sec. 536.303  Entity.

    The term entity means a partnership, association, corporation, or 
other organization, group or subgroup.



Sec. 536.304  Foreign person.

    The term foreign person means any citizen or national of a foreign 
state (including any such individual who is also a citizen or national 
of the United States), or any entity not organized solely under the laws 
of the United States or existing solely in the United

[[Page 178]]

States, but does not include a foreign state.



Sec. 536.305  General license.

    The term general license means any license or authorization the 
terms of which are set forth in this part.



Sec. 536.306  Information and informational materials.

    (a) For purposes of this part, the term information and 
informational materials means:
    (1) Publications, films, posters, phonograph records, photographs, 
microfilms, microfiche, tapes, compact disks, CD ROMs, artworks, and 
news wire feeds, and other information and informational articles.
    (2) To be considered informational materials, artworks must be 
classified under chapter subheading 9701, 9702, or 9703 of the 
Harmonized Tariff Schedule of the United States.
    (b) The terms information and informational materials with respect 
to U.S. exports do not include items:
    (1) That were, as of April 30, 1994, or that thereafter become, 
controlled for export pursuant to section 5 of the Export Administration 
Act of 1979, 50 U.S.C. App. 2401-2420 (the ``EAA''), or section 6 of the 
EAA to the extent that such controls promote nonproliferation or 
antiterrorism policies of the United States, including software as 
defined in 15 CFR part 772 that is not publicly available (see 15 CFR 
parts 734 and 772); or
    (2) With respect to which acts are prohibited by 18 U.S.C. chapter 
37.



Sec. 536.307  Interest.

    Except as otherwise provided in this part, the term interest when 
used with respect to property (e.g., ``an interest in property'') means 
an interest of any nature whatsoever, direct or indirect.



Sec. 536.308  License.

    Except as otherwise specified, the term license means any license or 
authorization contained in or issued pursuant to this part.



Sec. 536.309  Person.

    The term person means an individual or entity.



Sec. 536.310  Property; property interest.

    The terms property and property interest include, but are not 
limited to, money, checks, drafts, bullion, bank deposits, savings 
accounts, debts, indebtedness, obligations, notes, guarantees, 
debentures, stocks, bonds, coupons, any other financial instruments, 
bankers acceptances, mortgages, pledges, liens or other rights in the 
nature of security, warehouse receipts, bills of lading, trust receipts, 
bills of sale, any other evidences of title, ownership or indebtedness, 
letters of credit and any documents relating to any rights or 
obligations thereunder, powers of attorney, goods, wares, merchandise, 
chattels, stocks on hand, ships, goods on ships, real estate mortgages, 
deeds of trust, vendors sales agreements, land contracts, leaseholds, 
ground rents, real estate and any other interest therein, options, 
negotiable instruments, trade acceptances, royalties, book accounts, 
accounts payable, judgments, patents, trademarks or copyrights, 
insurance policies, safe deposit boxes and their contents, annuities, 
pooling agreements, services of any nature whatsoever, contracts of any 
nature whatsoever, and any other property, real, personal, or mixed, 
tangible or intangible, or interest or interests therein, present, 
future or contingent.



Sec. 536.311  Narcotics trafficking.

    The term narcotics trafficking means any activity undertaken 
illicitly to cultivate, produce, manufacture, distribute, sell, finance 
or transport, or otherwise assist, abet, conspire, or collude with 
others in illicit activities relating to narcotic drugs, including, but 
not limited to, cocaine.



Sec. 536.312  Specially designated narcotics trafficker.

    The term specially designated narcotics trafficker means:
    (a) Persons listed in the annex to Executive Order 12978 (3 CFR, 
1995 Comp., p.415);
    (b) Foreign persons designated by the Secretary of Treasury, in 
consultation with the Attorney General and the Secretary of State, 
because they are found:

[[Page 179]]

    (1) To play a significant role in international narcotics 
trafficking centered in Colombia; or
    (2) Materially to assist in, or provide financial or technological 
support for or goods or services in support of, the narcotics 
trafficking activities of specially designated narcotics traffickers; 
and
    (c) Persons determined by the Secretary of the Treasury, in 
consultation with the Attorney General and the Secretary of State, to be 
owned or controlled by, or to act for or on behalf of, any other 
specially designated narcotics trafficker.

    Note to Sec. 536.312: Please refer to the appendices at the end of 
this chapter for listings of persons determined to fall within this 
definition who have been designated pursuant to this part. Section 
501.807 of this chapter sets forth the procedures to be followed by 
persons seeking administrative reconsideration of their designation, or 
who wish to assert that the circumstances resulting in the designation 
are no longer applicable.

[62 FR 9960, Mar. 5, 1997, as amended at 62 FR 45107, Aug. 25, 1997]



Sec. 536.313  Specific license.

    The term specific license means any license or authorization not set 
forth in this part but issued pursuant to this part.



Sec. 536.314  Transfer.

    The term transfer means any actual or purported act or transaction, 
whether or not evidenced by writing, and whether or not done or 
performed within the United States, the purpose, intent, or effect of 
which is to create, surrender, release, convey, transfer, or alter, 
directly or indirectly, any right, remedy, power, privilege, or interest 
with respect to any property and, without limitation upon the foregoing, 
shall include the making, execution, or delivery of any assignment, 
power, conveyance, check, declaration, deed, deed of trust, power of 
attorney, power of appointment, bill of sale, mortgage, receipt, 
agreement, contract, certificate, gift, sale, affidavit, or statement; 
the making of any payment; the setting off of any obligation or credit; 
the appointment of any agent, trustee, or fiduciary; the creation or 
transfer of any lien; the issuance, docketing, filing, or levy of or 
under any judgment, decree, attachment, injunction, execution, or other 
judicial or administrative process or order, or the service of any 
garnishment; the acquisition of any interest of any nature whatsoever by 
reason of a judgment or decree of any foreign country; the fulfillment 
of any condition; the exercise of any power of appointment, power of 
attorney, or other power; or the acquisition, disposition, 
transportation, importation, exportation, or withdrawal of any security.



Sec. 536.315  United States.

    The term United States means the United States, its territories and 
possessions, and all areas under the jurisdiction or authority thereof.



Sec. 536.316  United States person; U.S. person.

    The term United States person or U.S. person means any United States 
citizen or national; permanent resident alien; entity organized under 
the laws of the United States or any jurisdiction within the United 
States (including foreign branches); or any person in the United States.



Sec. 536.317  U.S. financial institution.

    The term U.S. financial institution means any U.S. person (including 
foreign branches) that is engaged in the business of accepting deposits, 
making, granting, transferring, holding, or brokering loans or credits, 
or purchasing or selling foreign exchange, securities, commodity futures 
or options, or procuring purchasers and sellers thereof, as principal or 
agent; including, but not limited to, depository institutions, banks, 
savings banks, trust companies, securities brokers and dealers, 
commodity futures and options brokers and dealers, forward contract and 
foreign exchange merchants, securities and commodities exchanges, 
clearing corporations, investment companies, employee benefit plans, and 
U.S. holding companies, U.S. affiliates, or U.S. subsidiaries of any of 
the foregoing. This term includes those branches, offices and agencies 
of foreign financial institutions which are located in the United 
States, but not such institutions' foreign branches, offices, or 
agencies.

[[Page 180]]



                        Subpart D_Interpretations



Sec. 536.401  Reference to amended sections.

    Except as otherwise specified, reference to any section of this part 
or to any regulation, ruling, order, instruction, direction, or license 
issued pursuant to this part shall be deemed to refer to the same as 
currently amended.



Sec. 536.402  Effect of amendment.

    Any amendment, modification, or revocation of any section of this 
part or of any order, regulation, ruling, instruction, or license issued 
by or under the direction of the Director of the Office of Foreign 
Assets Control shall not, unless otherwise specifically provided, be 
deemed to affect any act done or omitted to be done, or any civil or 
criminal suit or proceeding commenced or pending prior to such 
amendment, modification, or revocation. All penalties, forfeitures, and 
liabilities under any such order, regulation, ruling, instruction, or 
license shall continue and may be enforced as if such amendment, 
modification, or revocation had not been made.



Sec. 536.403  Termination and acquisition of an interest in blocked property.

    (a) Whenever a transaction licensed or authorized by or pursuant to 
this part results in the transfer of property (including any property 
interest) away from a specially designated narcotics trafficker, such 
property shall no longer be deemed to be property in which a specially 
designated narcotics trafficker has or has had an interest, or which is 
held in the name of a specially designated narcotics trafficker, unless 
there exists in the property another interest of a specially designated 
narcotics trafficker, the transfer of which has not been effected 
pursuant to license or other authorization.
    (b) Unless otherwise specifically provided in a license or 
authorization issued pursuant to this part, if property (including any 
property interest) is transferred or attempted to be transferred to a 
specially designated narcotics trafficker, such property shall be deemed 
to be property in which there exists an interest of the specially 
designated narcotics trafficker.



Sec. 536.404  Setoffs prohibited.

    A setoff against blocked property (including a blocked account), 
whether by a U.S. bank or other U.S. person, is a prohibited transfer 
under Sec. 536.201 if effected after the effective date.



Sec. 536.405  Transactions incidental to a licensed transaction.

    Any transaction ordinarily incident to a licensed transaction and 
necessary to give effect thereto is also authorized, except a 
transaction by an unlicensed, specially designated narcotics trafficker 
or involving a debit to a blocked account or a transfer of blocked 
property not explicitly authorized within the terms of the license.



Sec. 536.406  Provision of services.

    (a) Except as provided in Sec. 536.205, the prohibitions contained 
in Sec. 536.201 apply to services performed by U.S. persons, wherever 
located:
    (1) On behalf of, or for the benefit of, a specially designated 
narcotics trafficker; or
    (2) With respect to property interests of a specially designated 
narcotics trafficker.
    (b) Example: U.S. persons may not, except as authorized by the 
Office of Foreign Assets Control by or pursuant to this part, provide 
legal, accounting, financial, brokering, freight forwarding, 
transportation, public relations, educational, or other services to a 
specially designated narcotics trafficker. See Sec. 536.506, with 
respect to certain authorized legal services.



Sec. 536.407  Offshore transactions.

    The prohibitions contained in Sec. 536.201 apply to transactions by 
U.S. persons in locations outside the United States with respect to 
property which the U.S. person knows, or has reason to know, is held in 
the name of a specially designated narcotics trafficker, or in which the 
U.S. person knows, or has reason to know, a specially designated 
narcotics trafficker has or has had an interest since the effective 
date.

[[Page 181]]



Sec. 536.408  Alleged change in ownership or control of an entity designated 

as a specially designated narcotics trafficker.

    (a) A change or alleged change in ownership or control of an entity 
designated as a specially designated narcotics trafficker shall not be 
the basis for removal of that entity from the list of specially 
designated narcotics traffickers unless, upon investigation by the 
Office of Foreign Assets Control and submission of evidence by the 
entity, it is demonstrated to the satisfaction of the Director of the 
Office of Foreign Assets Control that the transfer to a bona fide 
purchaser at arm's length is legitimate and that the entity no longer 
meets the criteria for designation under Sec. 536.312. Evidence 
submitted must conclusively demonstrate that all ties with other 
specially designated narcotics traffickers have been completely severed, 
and may include, but is not limited to, articles of incorporation; 
identification of new directors, officers, shareholders, and sources of 
capital; and contracts evidencing the sale of the entity to its new 
owners.
    (b) Any continuing substantial financial obligations on the part of 
the new owners to any specially designated narcotics traffickers, 
including long-term payment plans, leases, or rents, will be considered 
as evidence of continuing control of the entity by the specially 
designated narcotics trafficker. Purchase of a designated entity without 
ongoing substantial financial obligations to a specially designated 
narcotics trafficker may nonetheless be a basis for subsequent 
designation of the purchaser, if the transaction is determined 
materially to assist in or provide financial support for the narcotics 
trafficking activities of specially designated narcotics traffickers for 
purposes of Sec. 536.312(b)(2). For example, any acquisition 
transaction resulting in a direct cash transfer to or other enrichment 
of a specially designated narcotics trafficker could lead to designation 
of the purchaser. Mere change in name of an entity will not be 
considered as constituting a change of the entity's status.



Sec. 536.409  Credit extended and cards issued by U.S. financial institutions.

    The prohibition in Sec. 536.201 on dealing in property in which a 
specially designated narcotics trafficker has an interest prohibits U.S. 
financial institutions from performing under any existing credit 
agreements, including, but not limited to, charge cards, debit cards, or 
other credit facilities issued by a U.S. financial institution to a 
person designated under this part.



 Subpart E_Licenses, Authorizations, and Statements of Licensing Policy



Sec. 536.501  Effect of license or authorization.

    (a) No license or other authorization contained in this part, or 
otherwise issued by or under the direction of the Director of the Office 
of Foreign Assets Control, shall be deemed to authorize or validate any 
transaction effected prior to the issuance of the license, unless 
specifically provided in such license or authorization.
    (b) No regulation, ruling, instruction, or license authorizes any 
transaction prohibited under this part unless the regulation, ruling, 
instruction, or license is issued by the Office of Foreign Assets 
Control and specifically refers to this part. No regulation, ruling, 
instruction, or license referring to this part shall be deemed to 
authorize any transaction prohibited by any provision of this chapter 
unless the regulation, ruling, instruction or license specifically 
refers to such provision.
    (c) Any regulation, ruling, instruction, or license authorizing any 
transaction otherwise prohibited under this part has the effect of 
removing a prohibition or prohibitions contained in this part from the 
transaction, but only to the extent specifically stated by its terms. 
Unless the regulation, ruling, instruction, or license otherwise 
specifies, such an authorization does not create any right, duty, 
obligation, claim, or interest in, or with respect to, any property 
which would not otherwise exist under ordinary principles of law.

[[Page 182]]



Sec. 536.502  Exclusion from licenses and authorizations.

    The Director of the Office of Foreign Assets Control reserves the 
right to exclude any person, property, or transaction from the operation 
of any license, or from the privileges therein conferred, or to restrict 
the applicability thereof with respect to particular persons, property, 
transactions, or classes thereof. Such action shall be binding upon all 
persons receiving actual or constructive notice of such exclusion or 
restriction.



Sec. 536.503  Payments and transfers to blocked accounts in U.S. financial 

institutions.

    (a) Any payment of funds or transfer of credit or other financial or 
economic resources or assets into a blocked account in a U.S. financial 
institution is authorized, provided that a transfer from a blocked 
account pursuant to this authorization may only be made to another 
blocked account held in the same name on the books of the same U.S. 
financial institution.
    (b) This section does not authorize any transfer from a blocked 
account within the United States to an account held outside the United 
States.

    Note to Sec. 536.503: Please refer to Sec. 501.603 of this chapter 
for mandatory reporting requirements regarding financial transfers.

[62 FR 9960, Mar. 5, 1997, as amended at 62 FR 45107, Aug. 25, 1997]



Sec. 536.504  Investment and reinvestment of certain funds.

    (a) U.S. financial institutions are hereby authorized and directed 
to invest and reinvest assets held in blocked accounts in the name of a 
specially designated narcotics trafficker, subject to the following 
conditions:
    (1) The assets representing such investments and reinvestments are 
credited to a blocked account or sub-account which is in the name of the 
specially designated narcotics trafficker and which is located in the 
United States or within the possession or control of a U.S. person; and
    (2) The proceeds of such investments and reinvestments are not 
credited to a blocked account or sub-account under any name or 
designation which differs from the name or designation of the specific 
blocked account or sub-account in which such funds or securities were 
held; and
    (3) No immediate financial or economic benefit or access accrues 
(e.g., through pledging or other use) to the specially designated 
narcotics trafficker.
    (b)(1) U.S. persons seeking to avail themselves of this 
authorization must register with the Office of Foreign Assets Control, 
Blocked Assets Division, before undertaking transactions authorized 
under this section.
    (2) Transactions conducted pursuant to this section must be reported 
to the Office of Foreign Assets Control, Blocked Assets Division, in a 
report filed no later than 10 business days following the last business 
day of the month in which the transactions occurred.



Sec. 536.505  Entries in certain accounts for normal service charges 

authorized.

    (a) U.S. financial institutions are hereby authorized to debit any 
blocked account with such U.S. financial institution in payment or 
reimbursement for normal service charges owed to such U.S. financial 
institution by the owner of such blocked account.
    (b) As used in this section, the term normal service charge shall 
include charges in payment or reimbursement for interest due; cable, 
telegraph, or telephone charges; postage costs; custody fees; small 
adjustment charges to correct bookkeeping errors; and, but not by way of 
limitation, minimum balance charges, notary and protest fees, and 
charges for reference books, photostats, credit reports, transcripts of 
statements, registered mail, insurance, stationery and supplies, check 
books, and other similar items.



Sec. 536.506  Provision of certain legal services authorized.

    (a) The provision to or on behalf of a specially designated 
narcotics trafficker of the legal services set forth in paragraph (b) of 
this section is authorized, provided that all receipt of payment 
therefor must be specifically licensed.

[[Page 183]]

    (b) Specific licenses may be issued, on a case-by-case basis, 
authorizing receipt of payment of professional fees and reimbursement of 
incurred expenses for the following legal services by U.S. persons to a 
specially designated narcotics trafficker:
    (1) Provision of legal advice and counseling on the requirements of 
and compliance with the laws of any jurisdiction within the United 
States, provided that such advice and counseling is not provided to 
facilitate transactions that would violate any of the prohibitions 
contained in this part;
    (2) Representation of a specially designated narcotics trafficker 
when named as a defendant in or otherwise made a party to domestic 
United States legal, arbitration, or administrative proceedings;
    (3) Initiation of domestic United States legal, arbitration, or 
administrative proceedings in defense of property interests subject to 
U.S. jurisdiction of a specially designated narcotics trafficker;
    (4) Representation before any federal or state agency with respect 
to the imposition, administration, or enforcement of United States 
sanctions against significant narcotics traffickers centered in Colombia 
or specially designated narcotics traffickers; and
    (5) Provision of legal services in any other context in which 
prevailing United States law requires access to legal counsel at public 
expense.
    (c) The provision of any other legal services to a specially 
designated narcotics trafficker, not otherwise authorized in or exempted 
by this part, requires the issuance of a specific license.
    (d) Entry into a settlement agreement affecting property or 
interests in property of a specially designated narcotics trafficker or 
the enforcement of any lien, judgment, arbitral award, decree, or other 
order through execution, garnishment or other judicial process 
purporting to transfer or otherwise alter or affect a property interest 
of a specially designated narcotics trafficker is prohibited unless 
specifically licensed in accordance with Sec. 536.202(e).



Sec. 536.507  Authorization of emergency medical services.

    The provision of nonscheduled emergency medical services to a 
specially designated narcotics trafficker located in the United States 
is authorized, provided that any payment for such services requires 
prior authorization by specific license.



                            Subpart F_Reports



Sec. 536.601  Records and reports.

    For provisions relating to records and reports, see subpart C of 
part 501 of this chapter.

[62 FR 45107, Aug. 25, 1997]



                           Subpart G_Penalties



Sec. 536.701  Penalties.

    (a) Attention is directed to section 206 of the International 
Emergency Economic Powers Act (50 U.S.C. 1705--the ``Act''), which is 
applicable to violations of the provisions of any license, ruling, 
regulation, order, direction or instruction issued by or pursuant to the 
direction or authorization of the Secretary of the Treasury pursuant to 
this part or otherwise under the Act.
    (1) A civil penalty not to exceed the amount set forth in Section 
206 of the Act may be imposed on any person who violates, attempts to 
violate, conspires to violate, or causes a violation of any license, 
order, regulation, or prohibition issued under the Act.

    Note to paragraph (a)(1) of Sec. 536.701: As of June 10, 2008, the 
Act provides for a maximum civil penalty not to exceed the greater of 
$250,000 or an amount that is twice the amount of the transaction that 
is the basis of the violation with respect to which the penalty is 
imposed.

    (2) A person who willfully commits, willfully attempts to commit, or 
willfully conspires to commit, or aids or abets in the commission of a 
violation of any license, order, regulation, or prohibition shall, upon 
conviction, be fined not more than $1,000,000, or if a natural person, 
may be imprisoned for not more than 20 years, or both.
    (b) Adjustments to penalty amounts. (1) The civil penalties provided 
in the Act are subject to adjustment pursuant to the Federal Civil 
Penalties Inflation

[[Page 184]]

Adjustment Act of 1990 (Pub. L. 101-410, as amended, 28 U.S.C. 2461 
note).
    (2) The criminal penalties provided in the Act are subject to 
adjustment pursuant to 18 U.S.C. 3571.
    (c) Attention is also directed to 18 U.S.C. 1001, which provides 
that whoever, in any matter within the jurisdiction of any department or 
agency of the United States, knowingly and willfully falsifies, conceals 
or covers up by any trick, scheme, or device a material fact, or makes 
any false, fictitious or fraudulent statements or representations or 
makes or uses any false writing or document knowing the same to contain 
any false, fictitious or fraudulent statement or entry, shall be fined 
under title 18, United States Code, or imprisoned not more than five 
years, or both.
    (d) Violations of this part may also be subject to relevant 
provisions of other applicable laws.

[62 FR 9960, Mar. 5, 1997, as amended at 71 FR 29252, May 22, 2006; 73 
FR 32652, June 10, 2008]



Sec. 536.702  Prepenalty notice.

    (a) When required. If the Director of the Office of Foreign Assets 
Control has reasonable cause to believe that there has occurred a 
violation of any provision of this part or a violation of the provisions 
of any license, ruling, regulation, order, direction or instruction 
issued by or pursuant to the direction or authorization of the Secretary 
of the Treasury pursuant to this part or otherwise under the 
International Emergency Economic Powers Act, and the Director determines 
that further proceedings are warranted, he shall issue to the person 
concerned a notice of his intent to impose a monetary penalty. The 
prepenalty notice may be issued whether or not another agency has taken 
any action with respect to this matter.
    (b) Contents--(1) Facts of violation. The prepenalty notice shall 
describe the violation, specify the laws and regulations allegedly 
violated, and state the amount of the proposed monetary penalty.
    (2) Right to respond. The prepenalty notice also shall inform the 
respondent of respondent's right to respond to the notice within 30 days 
of its mailing as to why a monetary penalty should not be imposed, or, 
if imposed, why it should be in a lesser amount than proposed.



Sec. 536.703  Response to prepenalty notice.

    (a) Time within which to respond. The respondent shall have 30 days 
from the date of mailing of the prepenalty notice to respond in writing 
to the Director of the Office of Foreign Assets Control.
    (b) Form and contents of written response. The written response need 
not be in any particular form, but shall contain information sufficient 
to indicate that it is in response to the prepenalty notice. It should 
respond to the allegations in the prepenalty notice and set forth the 
reasons why the person believes the penalty should not be imposed or, if 
imposed, why it should be in a lesser amount than proposed.
    (c) Informal settlement. In addition or as an alternative to a 
written response to a prepenalty notice pursuant to this section, the 
respondent or respondent's representative may contact the Office of 
Foreign Assets Control as advised in the prepenalty notice to propose 
the settlement of allegations contained in the prepenalty notice and 
related matters. In the event of settlement at the prepenalty stage, the 
prepenalty notice will be withdrawn, the respondent is not required to 
take a written position on allegations contained in the prepenalty 
notice, and the Office of Foreign Assets Control will make no final 
determination as to whether a violation occurred. The amount accepted in 
settlement of allegations in a prepenalty notice may vary from the civil 
penalty that might finally be imposed in the event of a formal 
determination of violation. In the event no settlement is reached, the 
30-day period specified in paragraph (a) of this section for written 
response to the prepenalty notice remains in effect unless additional 
time is granted by the Office of Foreign Assets Control.



Sec. 536.704  Penalty notice.

    (a) No violation. If, after considering any written response to the 
prepenalty notice and any relevant facts, the Director of the Office of 
Foreign Assets

[[Page 185]]

Control determines that there was no violation by the respondent named 
in the prepenalty notice, the Director promptly shall notify the 
respondent in writing of that determination and that no monetary penalty 
will be imposed.
    (b) Violation. If, after considering any written response to the 
prepenalty notice and any relevant facts, the Director of the Office of 
Foreign Assets Control determines that there was a violation by the 
respondent named in the prepenalty notice, the Director promptly shall 
issue a written notice of the imposition of the monetary penalty or 
other available disposition on the respondent.



Sec. 536.705  Administrative collection; referral to United States Department 

of Justice.

    In the event that the respondent does not pay the penalty imposed 
pursuant to this part or make payment arrangements acceptable to the 
Director of the Office of Foreign Assets Control within 30 days of the 
mailing of the written notice of the imposition of the penalty, the 
matter may be referred for administrative collection measures or to the 
United States Department of Justice for appropriate action to recover 
the penalty in a civil suit in a Federal district court.



                          Subpart H_Procedures



Sec. 536.801  Procedures.

    For license application procedures and procedures relating to 
amendments, modifications, or revocations of licenses; administrative 
decisions; rulemaking; and requests for documents pursuant to the 
Freedom of Information and Privacy Acts (5 U.S.C. 552 and 552a), see 
part 501, subpart E, of this chapter.

[62 FR 45107, Aug. 25, 1997, as amended at 68 FR 53657, Sept. 11, 2003]



Sec. 536.802  Delegation by the Secretary of the Treasury.

    Any action which the Secretary of the Treasury is authorized to take 
pursuant to Executive Order 12978 or any further executive orders 
relating to the national emergency declared in Executive Order 12978 may 
be taken by the Director of the Office of Foreign Assets Control, or by 
any other person to whom the Secretary of the Treasury has delegated 
authority so to act.

[62 FR 9960, Mar. 5, 1997. Redesignated at 62 FR 45108, Aug. 25, 1997]



                    Subpart I_Paperwork Reduction Act



Sec. 536.901  Paperwork Reduction Act notice.

    For approval by the Office of Management and Budget (``OMB'') under 
the Paperwork Reduction Act of information collections relating to 
recordkeeping and reporting requirements, to licensing procedures 
(including those pursuant to statements of licensing policy), and to 
other procedures, see Sec. 501.901 of this chapter. An agency may not 
conduct or sponsor, and a person is not required to respond to, a 
collection of information unless it displays a valid control number 
assigned by OMB.

[62 FR 45108, Aug. 25, 1997]



PART 537_BURMESE SANCTIONS REGULATIONS--Table of Contents



      Subpart A_Relation of This Part to Other Laws and Regulations

Sec.
537.101 Relation of this part to other laws and regulations.

                         Subpart B_Prohibitions

537.201 Prohibited transactions involving certain blocked property.
537.202 Prohibited exportation or reexportation of financial services to 
          Burma.
537.203 Prohibited importation of products of Burma.
537.204 Prohibited new investment in Burma.
537.205 Prohibited facilitation.
537.206 Evasions; attempts; conspiracies.
537.207 Effect of transfers violating the provisions of this part.
537.208 Holding of funds in interest-bearing accounts; investment and 
          reinvestment.
537.209 Expenses of maintaining blocked property; liquidation of blocked 
          account.
537.210 Exempt transactions.

                      Subpart C_General Definitions

537.301 Blocked account; blocked property.
537.302 Economic development of resources located in Burma.
537.303 Effective date.

[[Page 186]]

537.304 Entity.
537.305 Exportation or reexportation of financial services to Burma.
537.306 Foreign person.
537.307 Government of Burma.
537.308 Information or informational materials.
537.309 Interest.
537.310 Licenses; general and specific.
537.311 New investment.
537.312 Nongovernmental entity in Burma.
537.313 Person.
537.314 Product of Burma.
537.315 Property; property interest.
537.316 Resources located in Burma.
537.317 Transfer.
537.318 United States.
537.319 U.S. depository institution.
537.320 U.S. financial institution.
537.321 U.S. person.
537.322 U.S. registered broker or dealer in securities.
537.323 U.S. registered money transmitter.

                        Subpart D_Interpretations

537.401 Reference to amended sections.
537.402 Effect of amendment.
537.403 Termination and acquisition of an interest in blocked property.
537.404 Transactions incidental to a licensed transaction authorized.
537.405 Provision of services.
537.406 Offshore transactions.
537.407 Payments from blocked accounts to satisfy obligations 
          prohibited.
537.408 Setoffs prohibited.
537.409 Activities under pre-May 21, 1997 agreements.
537.410 Contracts and subcontracts regarding economic development of 
          resources in Burma.
537.411 Purchase of shares in economic development projects in Burma.
537.412 Investments in entities involved in economic development 
          projects in Burma.
537.413 Sale of interest in economic development projects in Burma.

  Subpart E_Licenses, Authorizations and Statements of Licensing Policy

537.501 General and specific licensing procedures.
537.502 Effect of license or authorization.
537.503 Exclusion from licenses.
537.504 Payments and transfers to blocked accounts in U.S. financial 
          institutions.
537.505 Entries in certain accounts for normal service charges 
          authorized.
537.506 Investment and reinvestment of certain funds.
537.507 Provision of certain legal services authorized.
537.508 Authorization of emergency medical services.
537.509 Official activities of the U.S. Government and certain 
          international organizations.
537.510 Third-country diplomatic and consular funds transfers.
537.511 Importation of accompanied baggage and household effects of U.S. 
          diplomatic and consular officials.
537.512 Importation for official or personal use by foreign diplomatic 
          and consular officials.
537.513 Importation and exportation of diplomatic pouches.
537.514 Importation of certain personal and household effects.
537.515 Importation of information or informational materials.
537.516 Importation of Burmese-origin articles and incidental 
          transactions.
537.517 Noncommercial, personal remittances.
537.518 Transactions incident to exportations to Burma.
537.519 Activities undertaken pursuant to certain pre-May 21, 1997 
          agreements.
537.520 Payments for overflights of Burmese airspace.
537.521 Operation of accounts.
537.522 Certain transactions related to patents, trademarks and 
          copyrights authorized.
537.523 Authorization of nongovernmental organizations to engage in 
          humanitarian or religious activities.
537.524 Divestiture of U.S. person's investments in Burma.
537.525 Transactions related to U.S. citizens residing in Burma.
537.526 Authorized transactions necessary and ordinarily incident to 
          publishing.
537.527 Importation into the United States of Burmese-origin animals and 
          specimens.

                            Subpart F_Reports

537.601 Records and Reports.

                           Subpart G_Penalties

537.701 Penalties.
537.702 Prepenalty notice.
537.703 Response to prepenalty notice; informal settlement.
537.704 Penalty imposition or withdrawal.
537.705 Administrative collection; referral to United States Department 
          of Justice.

                          Subpart H_Procedures

537.801 Procedures.
537.802 Delegation by the Secretary of the Treasury.

                    Subpart I_Paperwork Reduction Act

537.901 Paperwork Reduction Act notice.


[[Page 187]]


    Authority: 3 U.S.C. 301; 31 U.S.C. 321(b); 50 U.S.C 1601-1651, 1701-
1706; Pub. L. 101-410, 104 Stat. 890 (28 U.S.C. 2461 note); Sec. 570, 
Pub. L. 104-208, 110 Stat. 3009; Pub. L. 108-61, 117 Stat. 864; Pub. L. 
110-96, 121 Stat. 1011; E.O. 13047, 62 FR 28301, 3 CFR, 1997 Comp., p. 
202; E.O. 13310, 68 FR 44853, 3 CFR, 2003 Comp., p. 241.

    Source: 70 FR 48241, Aug. 16, 2005, unless otherwise noted.



      Subpart A_Relation of This Part to Other Laws and Regulations



Sec. 537.101  Relation of this part to other laws and regulations.

    This part is separate from, and independent of, the other parts of 
this chapter, with the exception of part 501 of this chapter, the 
recordkeeping and reporting requirements and license application and 
other procedures of which apply to this part. Actions taken pursuant to 
part 501 of this chapter with respect to the prohibitions contained in 
this part are considered actions taken pursuant to this part. Differing 
foreign policy and national security circumstances may result in 
differing interpretations of similar language among the parts of this 
chapter. No license or authorization contained in or issued pursuant to 
those other parts authorizes any transaction prohibited by this part. No 
license or authorization contained in or issued pursuant to any other 
provision of law or regulation authorizes any transaction prohibited by 
this part. No license or authorization contained in or issued pursuant 
to this part relieves the involved parties from complying with any other 
applicable laws or regulations.



                         Subpart B_Prohibitions



Sec. 537.201  Prohibited transactions involving certain blocked property.

    (a) Except as authorized by regulations, orders, directives, 
rulings, instructions, licenses or otherwise, and notwithstanding any 
contracts entered into or any license or permit granted prior to 12:01 
a.m. eastern daylight time, July 29, 2003, all property and interests in 
property of the following persons that are in the United States, that 
hereafter come within the United States, or that are or hereafter come 
within the possession or control of U.S. persons, including their 
overseas branches, are blocked and may not be transferred, paid, 
exported, withdrawn or otherwise dealt in:
    (1) Any person listed in the Annex to Executive Order 13310 of July 
28, 2003 (68 FR 44853, July 30, 2003); and
    (2) Any person determined by the Secretary of the Treasury, in 
consultation with the Secretary of State,
    (i) To be a senior official of the Government of Burma, the State 
Peace and Development Council of Burma, the Union Solidarity and 
Development Association of Burma, or any successor entity to any of the 
foregoing, or
    (ii) To be owned or controlled by, or acting or purporting to act 
for or on behalf of, directly or indirectly, any person whose property 
or interests in property are blocked pursuant to this section.

    Note to paragraph (a) of Sec. 537.201: The names of persons whose 
property or interests in property are blocked pursuant to Sec. 
537.201(a) are announced in the Federal Register, published on OFAC's 
Web site, and incorporated on an ongoing basis with the identifier 
[BURMA]into Appendix A to this chapter V.

    (b) Unless otherwise authorized by this part or by a specific 
license expressly referring to this section, any dealing in any security 
(or evidence thereof) held within the possession or control of a U.S. 
person and either registered or inscribed in the name of or known to be 
held for the benefit of any person whose property or interests in 
property are blocked pursuant to paragraph (a) of this section is 
prohibited. This prohibition includes but is not limited to the transfer 
(including the transfer on the books of any issuer or agent thereof), 
disposition, transportation, importation, exportation, or withdrawal of 
any such security or the endorsement or guaranty of signatures on any 
such security. This prohibition applies irrespective of the fact that at 
any time (whether prior to, on, or subsequent to 12:01 a.m. eastern 
daylight time, July 29, 2003) the registered or inscribed owner of any 
such security may have or might appear to have assigned, transferred, or 
otherwise disposed of the security.

[[Page 188]]



Sec. 537.202  Prohibited exportation or reexportation of financial services to 

Burma.

    Except as authorized, and notwithstanding any contracts entered into 
or any license or permit granted prior to July 29, 2003, the exportation 
or reexportation of financial services to Burma, directly or indirectly, 
from the United States or by a U.S. person, wherever located, is 
prohibited.



Sec. 537.203  Prohibited importation of products of Burma.

    Except as otherwise authorized, and notwithstanding any contracts 
entered into or any license or permit granted prior to August 28, 2003, 
the importation into the United States of any article that is a product 
of Burma is prohibited.

    Note to Sec. 537.203: Section 3(b) of the Burmese Freedom and 
Democracy Act of 2003 provides that the prohibition contained in this 
section may be waived by the President for any or all articles that are 
a product of Burma if the President determines and notifies specified 
committees of Congress that to do so is in the national interest of the 
United States. Therefore, the Office of Foreign Assets Control will not 
issue licenses authorizing transactions prohibited under this section in 
the absence of such a waiver process. The President's waiver functions 
and authorities under section 3(b) have been delegated to the Secretary 
of State.



Sec. 537.204  Prohibited new investment in Burma.

    Except as otherwise authorized, new investment, as defined in Sec. 
537.311, in Burma by U.S. persons is prohibited.

    Note to Sec. 537.204: Section 570 of the Foreign Operations, Export 
Financing, and Related Programs Appropriations Act, 1997 (Public Law 
104-208) provides that the prohibition contained in this section may be 
waived, temporarily or permanently, by the President if he determines 
and certifies to Congress that the application of this sanction would be 
contrary to the national interests of the United States. Licenses are 
thus not available for purposes of authorizing transactions prohibited 
under this section in the absence of such a waiver determination and 
certification to Congress.



Sec. 537.205  Prohibited facilitation.

    (a) Except as otherwise authorized, U.S. persons, wherever located, 
are prohibited from approving, financing, facilitating, or guaranteeing 
a transaction by a person who is a foreign person where the transaction 
would be prohibited if performed by a U.S. person or within the United 
States.
    (b) With respect to new investment in Burma, the prohibition against 
facilitation does not include the entry into, performance of, or 
financing of a contract to sell or purchase goods, services, or 
technology unless such contract includes any of the activities described 
in Sec. 537.311(a)(2), (3) or (4).

    Note to Sec. 537.205: This section's prohibitions include, but are 
not limited to, the approval, financing, facilitation, or guarantee of 
transactions prohibited by either section 570 of the Foreign Operations, 
Export Financing, and Related Programs Appropriations Act, 1997 (Pub. L. 
104-208), or the Burmese Freedom and Democracy Act of 2003 (Pub. L. 108-
61). The prohibitions of these two statutes may be waived by the 
President upon the making of certain determinations and notification to 
Congress. Therefore, the Office of Foreign Assets Control will not issue 
licenses authorizing the approval, financing, facilitation, or guarantee 
of the transactions prohibited by these statutes in the absence of such 
waivers.



Sec. 537.206  Evasions; attempts; conspiracies.

    (a) Any transaction by a U.S. person or within the United States on 
or after the effective date that evades or avoids, has the purpose of 
evading or avoiding, or attempts to violate any of the prohibitions set 
forth in this part is prohibited.
    (b) Any conspiracy formed to violate any of the prohibitions set 
forth in this part is prohibited.

    Note to Sec. 537.206: See Sec. 537.303 for a definition of the 
term effective date.



Sec. 537.207  Effect of transfers violating the provisions of this part.

    (a) Any transfer after July 28, 2003, that is in violation of any 
provision of this part or of any regulation, order, directive, ruling, 
instruction, or license issued pursuant to this part, and that involves 
any property or interest in property blocked pursuant to Sec. 
537.201(a), is null and void and shall not be the basis for the 
assertion or recognition of any interest in or right,

[[Page 189]]

remedy, power, or privilege with respect to such property or property 
interests.
    (b) No transfer before July 29, 2003 shall be the basis for the 
assertion or recognition of any right, remedy, power, or privilege with 
respect to, or any interest in, any property or interest in property 
blocked pursuant to Sec. 537.201(a), unless the person with whom such 
property is held or maintained, prior to that date, had written notice 
of the transfer or by any written evidence had recognized such transfer.
    (c) Unless otherwise provided, an appropriate license or other 
authorization issued by or pursuant to the direction or authorization of 
the Director of the Office of Foreign Assets Control before, during, or 
after a transfer shall validate such transfer or make it enforceable to 
the same extent that it would be valid or enforceable but for the 
provisions of the International Emergency Economic Powers Act (50 U.S.C. 
1701-1706), this part, and any regulation, order, directive, ruling, 
instruction, or license issued pursuant to this part.
    (d) Transfers of property that otherwise would be null and void or 
unenforceable by virtue of the provisions of this section shall not be 
deemed to be null and void or unenforceable as to any person with whom 
such property was held or maintained (and as to such person only) in 
cases in which such person is able to establish to the satisfaction of 
the Director of the Office of Foreign Assets Control each of the 
following:
    (1) Such transfer did not represent a willful violation of the 
provisions of this part by the person with whom such property was held 
or maintained;
    (2) The person with whom such property was held or maintained did 
not have reasonable cause to know or suspect, in view of all the facts 
and circumstances known or available to such person, that such transfer 
required a license or authorization issued pursuant to this part and was 
not so licensed or authorized, or, if a license or authorization did 
purport to cover the transfer, that such license or authorization had 
been obtained by misrepresentation of a third party or withholding of 
material facts or was otherwise fraudulently obtained; and
    (3) The person with whom such property was held or maintained filed 
with the Office of Foreign Assets Control a report setting forth in full 
the circumstances relating to such transfer promptly upon discovery 
that:
    (i) Such transfer was in violation of the provisions of this part or 
any regulation, ruling, instruction, license, or other direction or 
authorization issued pursuant to this part;
    (ii) Such transfer was not licensed or authorized by the Director of 
the Office of Foreign Assets Control; or
    (iii) If a license did purport to cover the transfer, such license 
had been obtained by misrepresentation of a third party or withholding 
of material facts or was otherwise fraudulently obtained.

    Note to paragraph (d) of Sec. 537.207: The filing of a report in 
accordance with the provisions of paragraph (d)(3) of this section shall 
not be deemed evidence that the terms of paragraphs (d)(1) and (d)(2) of 
this section have been satisfied.

    (e) Except to the extent otherwise provided by law or unless 
licensed pursuant to this part, any attachment, judgment, decree, lien, 
execution, garnishment, or other judicial process is null and void with 
respect to any property in which, at or since 12:01 a.m. eastern 
daylight time, July 29, 2003, there existed an interest of a person 
whose property or interests in property are blocked pursuant to Sec. 
537.201(a).



Sec. 537.208  Holding of funds in interest-bearing accounts; investment and 

reinvestment.

    (a) Except as provided in paragraph (c) or (d) of this section, or 
as otherwise directed by the Office of Foreign Assets Control, any U.S. 
person holding funds, such as currency, bank deposits, or liquidated 
financial obligations, subject to Sec. 537.201(a) shall hold or place 
such funds in a blocked interest-bearing account located in the United 
States.
    (b)(1) For purposes of this section, the term blocked interest-
bearing account means a blocked account:
    (i) In a federally-insured U.S. bank, thrift institution, or credit 
union, provided the funds are earning interest at

[[Page 190]]

rates that are commercially reasonable; or
    (ii) With a broker or dealer registered with the Securities and 
Exchange Commission under the Securities Exchange Act of 1934, provided 
the funds are invested in a money market fund or in U.S. Treasury bills.
    (2) For purposes of this section, a rate is commercially reasonable 
if it is the rate currently offered to other depositors on deposits or 
instruments of comparable size and maturity.
    (3) Funds held or placed in a blocked account pursuant to this 
paragraph (b) may not be invested in instruments the maturity of which 
exceeds 180 days. If interest is credited to a separate blocked account 
or subaccount, the name of the account party on each account must be the 
same.
    (c) Blocked funds held in instruments the maturity of which exceeds 
180 days at the time the funds become subject to Sec. 537.201(a) may 
continue to be held until maturity in the original instrument, provided 
any interest, earnings, or other proceeds derived therefrom are paid 
into a blocked interest-bearing account in accordance with paragraph (b) 
or (d) of this section.
    (d) Blocked funds held in accounts or instruments outside the United 
States at the time the funds become subject to Sec. 537.201(a) may 
continue to be held in the same type of accounts or instruments, 
provided the funds earn interest at rates that are commercially 
reasonable.
    (e) This section does not create an affirmative obligation for the 
holder of blocked tangible property, such as chattels or real estate, or 
of other blocked property, such as debt or equity securities, to sell or 
liquidate such property at the time the property becomes subject to 
Sec. 537.201(a). However, the Office of Foreign Assets Control may 
issue licenses permitting or directing such sales in appropriate cases.
    (f) Funds subject to this section may not be held, invested, or 
reinvested in a manner that provides immediate financial or economic 
benefit or access to any person whose property or interests in property 
are blocked pursuant to Sec. 537.201(a), nor may their holder cooperate 
in or facilitate the pledging or other attempted use as collateral of 
blocked funds or other assets.



Sec. 537.209  Expenses of maintaining blocked property; liquidation of blocked 

account.

    (a) Except as otherwise authorized, and notwithstanding the 
existence of any rights or obligations conferred or imposed by any 
international agreement or contract entered into or any license or 
permit granted before 12:01 a.m. eastern daylight time, July 29, 2003, 
all expenses incident to the maintenance of physical property blocked 
pursuant to Sec. 537.201(a) shall be the responsibility of the owners 
or operators of such property, which expenses shall not be met from 
blocked funds.
    (b) Property blocked pursuant to Sec. 537.201(a) may, in the 
discretion of the Director, Office of Foreign Assets Control, be sold or 
liquidated and the net proceeds placed in a blocked interest-bearing 
account in the name of the owner of the property.



Sec. 537.210  Exempt transactions.

    (a) Personal communications. The prohibitions contained in this 
part, other than those set forth in Sec. 537.203, do not apply to any 
postal, telegraphic, telephonic, or other personal communication that 
does not involve the transfer of anything of value.
    (b) Information or informational materials. (1) The prohibitions 
contained in this part, other than those set forth in Sec. 537.203, do 
not apply to the importation from any country, or the exportation to any 
country, whether commercial or otherwise, of information or 
informational materials, regardless of format or medium of transmission.

    Note to paragraph (b)(1) of Sec. 537.210: Section 537.203 prohibits 
the importation of products of Burma into the United States pursuant to 
the Burmese Freedom and Democracy Act of 2003. Therefore, the 
importation into the United States of information or informational 
materials that are products of Burma is not exempt from the prohibition 
set forth in Sec. 537.203. However, such transactions are authorized by 
the general license set forth in Sec. 537.515.

    (2) This section does not exempt from regulation or authorize 
transactions related to information or informational materials not fully 
created and

[[Page 191]]

in existence at the date of the transactions, or to the substantive or 
artistic alteration or enhancement of informational materials, or to the 
provision of marketing and business consulting services. Such prohibited 
transactions include, but are not limited to, payment of advances for 
information or informational materials not yet created and completed 
(with the exception of prepaid subscriptions for widely-circulated 
magazines and other periodical publications); provision of services to 
market, produce or co-produce, create, or assist in the creation of 
information or informational materials; and, with respect to information 
or informational materials imported from persons whose property or 
interests in property are blocked pursuant to Sec. 537.201(a), payment 
of royalties with respect to income received for enhancements or 
alterations made by U.S. persons to such information or informational 
materials.
    (3) This section does not exempt from regulation or authorize 
transactions incident to the exportation of software subject to the 
Export Administration Regulations, 15 CFR parts 730-774, or to the 
exportation of goods, technology or software, or to the provision, sale, 
or leasing of capacity on telecommunications transmission facilities 
(such as satellite or terrestrial network connectivity) for use in the 
transmission of any data. The exportation of such items or services and 
the provision, sale, or leasing of such capacity or facilities to a 
person whose property or interests in property are blocked pursuant to 
Sec. 537.201(a) are prohibited.
    (c) Pre-1997 contracts. The prohibitions contained in this part, 
other than those set forth in Sec. 537.203, do not apply to any 
activity undertaken pursuant to an agreement, or pursuant to the 
exercise of rights under such an agreement, that was entered into by a 
U.S. person with the Government of Burma or a non-governmental entity in 
Burma prior to 12:01 a.m. eastern daylight time on May 21, 1997.
    (d) Travel exemption. The prohibitions contained in this part, other 
than the prohibition against the importation into the United States of 
products of Burma set forth in Sec. 537.203, do not apply to 
transactions ordinarily incident to travel to or from any country, 
including exportation or importation of accompanied baggage (other than 
importation of baggage that comes within the prohibition set forth in 
Sec. 537.203) for personal use, maintenance within any country, 
including payment of living expenses and acquisition of goods or 
services for personal use, and arrangement or facilitation of such 
travel, including nonscheduled air, sea, or land voyages.

    Note to Sec. 537.211: See the authorizations relating to the 
importation of certain personal and household effects set forth in 
Sec. Sec. 537.511 and 537.514.



                      Subpart C_General Definitions



Sec. 537.301  Blocked account; blocked property.

    The terms blocked account and blocked property shall mean any 
account or property subject to the prohibitions in Sec. 537.201 held in 
the name of a person whose property or interests in property are blocked 
pursuant to Sec. 537.201(a), or in which such person has an interest, 
and with respect to which payments, transfers, exportations, 
withdrawals, or other dealings may not be made or effected except 
pursuant to an authorization or license from the Office of Foreign 
Assets Control expressly authorizing such action.



Sec. 537.302  Economic development of resources located in Burma.

    (a) The term economic development of resources located in Burma 
means activities pursuant to a contract the subject of which includes 
responsibility for the development or exploitation of resources located 
in Burma, including making or attempting to make those resources 
accessible or available for exploitation or economic use. The term shall 
not be construed to include not-for-profit educational, health, or other 
humanitarian programs or activities.
    (b) Examples: The economic development of resources located in Burma 
includes a contract conferring rights to explore for, develop, extract, 
or refine petroleum, natural gas, or minerals in the ground in Burma; or 
a contract to assume control of a mining operation in Burma, acquire a 
forest or agricultural area for commercial use of the

[[Page 192]]

timber or other crops, or acquire land for the construction and 
operation of a hotel or factory.



Sec. 537.303  Effective date.

    The term effective date refers to the effective date of the 
applicable prohibitions and directives contained in this part as 
follows:
    (a) With respect to prohibited transfers or other dealings in 
blocked property or interests in property of persons listed in the Annex 
to Executive Order 13310 of July 28, 2003 (68 FR 44853, July 30, 2003), 
12:01 a.m. eastern daylight time, July 29, 2003;
    (b) With respect to prohibited transfers or other dealings in 
blocked property or interests in property of persons designated pursuant 
to Sec. 537.201(a)(2), the earlier of the date on which either actual 
notice or constructive notice is received of such person's designation;
    (c) With respect to the exportation or reexportation of financial 
services to Burma prohibited by Sec. 537.202, 12:01 a.m. eastern 
daylight time, July 29, 2003;
    (d) With respect to the importation into the United States of 
products of Burma prohibited by Sec. 537.203, 12:01 a.m. eastern 
daylight time, August 28, 2003;
    (e) With respect to new investment prohibited by Sec. 537.204, 
12:01 a.m. eastern daylight time, May 21, 1997.



Sec. 537.304  Entity.

    The term entity means a partnership, association, trust, joint 
venture, corporation, group, subgroup, or other organization.



Sec. 537.305  Exportation or reexportation of financial services to Burma.

    The term exportation or reexportation of financial services to Burma 
means:
    (a) The transfer of funds, directly or indirectly, from the United 
States or by a U.S. person, wherever located, to Burma; or
    (b) The provision, directly or indirectly, to persons in Burma of 
insurance services, investment or brokerage services (including but not 
limited to brokering or trading services regarding securities, debt, 
commodities, options or foreign exchange), banking services, money 
remittance services; loans, guarantees, letters of credit or other 
extensions of credit; or the service of selling or redeeming traveler's 
checks, money orders and stored value.

    Note to Sec. 537.305: This defined term has not appeared in other 
parts of 31 CFR chapter V and is specifically tailored to further the 
goals of the sanctions prohibitions set forth in this part.



Sec. 537.306  Foreign person.

    The term foreign person means any person that is not a U.S. person.



Sec. 537.307  Government of Burma.

    The term Government of Burma means the Government of Burma 
(sometimes referred to as Myanmar), its agencies, instrumentalities and 
controlled entities, and the Central Bank of Burma.



Sec. 537.308  Information or informational materials.

    (a) For purposes of this part, the term information or informational 
materials includes, but is not limited to, publications, films, posters, 
phonograph records, photographs, microfilms, microfiche, tapes, compact 
disks, CD ROMs, artworks, and news wire feeds.

    Note to paragraph (a) of Sec. 537.307: To be considered information 
or informational materials, artworks must be classified under chapter 
heading 9701, 9702, or 9703 of the Harmonized Tariff Schedule of the 
United States.

    (b) The term information or informational materials, with respect to 
United States exports, does not include items:
    (1) That were, as of April 30, 1994, or that thereafter become, 
controlled for export pursuant to section 5 of the Export Administration 
Act of 1979, 50 U.S.C. App. 2401-2420 (1979) (the ``EAA''), or section 6 
of the EAA to the extent that such controls promote the nonproliferation 
or antiterrorism policies of the United States; or
    (2) With respect to which acts are prohibited by 18 U.S.C. chapter 
37.



Sec. 537.309  Interest.

    Except as otherwise provided in this part, the term interest when 
used with respect to property (e.g., ``an interest in property'') means 
an interest of any nature whatsoever, direct or indirect.

[[Page 193]]



Sec. 537.310  Licenses; general and specific.

    (a) Except as otherwise specified, the term license means any 
license or authorization contained in or issued pursuant to this part.
    (b) The term general license means any license or authorization the 
terms of which are set forth in subpart E of this part.
    (c) The term specific license means any license or authorization not 
set forth in subpart E of this part but issued pursuant to this part.

    Note to Sec. 537.309: See Sec. 501.801 of this chapter on 
licensing procedures.



Sec. 537.311  New investment.

    (a) The term new investment means any of the following activities if 
such activity is undertaken pursuant to an agreement, or pursuant to the 
exercise of rights under such an agreement, that is entered into with 
the Government of Burma or a nongovernmental entity in Burma on or after 
May 21, 1997:
    (1) The entry into a contract that includes the economic development 
of resources located in Burma, as defined in Sec. 537.302;
    (2) The entry into a contract providing for the general supervision 
and guarantee of another person's performance of a contract that 
includes the economic development of resources located in Burma;
    (3) The purchase of a share of ownership, including an equity 
interest, in the economic development of resources located in Burma; or
    (4) The entry into a contract providing for the participation in 
royalties, earnings, or profits in the economic development of resources 
located in Burma, without regard to the form of the participation.
    (b) The term new investment shall not include the entry into, 
performance of, or financing of a contract to sell or purchase goods, 
services, or technology unless such contract includes any of the 
activities described in paragraph (a)(2), (a)(3) or (a)(4) of this 
section.



Sec. 537.312  Nongovernmental entity in Burma.

    The term nongovernmental entity in Burma means a partnership, 
association, trust, joint venture, corporation, or other organization, 
wherever organized, that is located in Burma or exists for the exclusive 
or predominant purpose of engaging in the economic development of 
resources located in Burma or derives its income predominantly from such 
economic development, and is not the Government of Burma.



Sec. 537.313  Person.

    The term person means an individual or entity.



Sec. 537.314  Product of Burma.

    The term product of Burma means goods of Burmese origin pursuant to 
rules of origin of U.S. Customs and Border Protection.



Sec. 537.315  Property; property interest.

    The terms property and property interest include, but are not 
limited to, money, checks, drafts, bullion, bank deposits, savings 
accounts, debts, indebtedness, obligations, notes, guarantees, 
debentures, stocks, bonds, coupons, any other financial instruments, 
bankers acceptances, mortgages, pledges, liens or other rights in the 
nature of security, warehouse receipts, bills of lading, trust receipts, 
bills of sale, any other evidences of title, ownership or indebtedness, 
letters of credit and any documents relating to any rights or 
obligations thereunder, powers of attorney, goods, wares, merchandise, 
chattels, stocks on hand, ships, goods on ships, real estate mortgages, 
deeds of trust, vendors' sales agreements, land contracts, leaseholds, 
ground rents, real estate and any other interest therein, options, 
negotiable instruments, trade acceptances, royalties, book accounts, 
accounts payable, judgments, patents, trademarks or copyrights, 
insurance policies, safe deposit boxes and their contents, annuities, 
pooling agreements, services of any nature whatsoever, contracts of any 
nature whatsoever, and any other

[[Page 194]]

property, real, personal, or mixed, tangible or intangible, or interest 
or interests therein, present, future or contingent.



Sec. 537.316  Resources located in Burma.

    The term resources located in Burma means any resources, including 
natural, agricultural, commercial, financial, industrial and human 
resources, located within the territory of Burma, including the 
territorial sea, or located within the exclusive economic zone or 
continental shelf of Burma.



Sec. 537.317  Transfer.

    The term transfer means any actual or purported act or transaction, 
whether or not evidenced by writing, and whether or not done or 
performed within the United States, the purpose, intent, or effect of 
which is to create, surrender, release, convey, transfer, or alter, 
directly or indirectly, any right, remedy, power, privilege, or interest 
with respect to any property and, without limitation upon the foregoing, 
shall include the making, execution, or delivery of any assignment, 
power, conveyance, check, declaration, deed, deed of trust, power of 
attorney, power of appointment, bill of sale, mortgage, receipt, 
agreement, contract, certificate, gift, sale, affidavit, or statement; 
the making of any payment; the setting off of any obligation or credit; 
the appointment of any agent, trustee, or fiduciary; the creation or 
transfer of any lien; the issuance, docketing, filing, or levy of or 
under any judgment, decree, attachment, injunction, execution, or other 
judicial or administrative process or order, or the service of any 
garnishment; the acquisition of any interest of any nature whatsoever by 
reason of a judgment or decree of any foreign country; the fulfillment 
of any condition; the exercise of any power of appointment, power of 
attorney, or other power; or the acquisition, disposition, 
transportation, importation, exportation, or withdrawal of any security.



Sec. 537.318  United States.

    The term United States means the United States, its territories and 
possessions, and all areas under the jurisdiction or authority thereof.



Sec. 537.319  U.S. depository institution.

    The term U.S. depository institution means any entity (including its 
foreign branches) organized under the laws of the United States or of 
any jurisdiction within the United States, or any agency, office or 
branch located in the United States of a foreign entity, that is engaged 
primarily in the business of banking (for example, banks, savings banks, 
savings associations, credit unions, trust companies and United States 
bank holding companies) and is subject to regulation by federal or state 
banking authorities.



Sec. 537.320  U.S. financial institution.

    The term U.S. financial institution means any U.S. entity (including 
foreign branches) that is engaged in the business of accepting deposits, 
making, granting, transferring, holding, or brokering loans or credits, 
or purchasing or selling foreign exchange, securities, commodity futures 
or options, or procuring purchasers and sellers thereof, as principal or 
agent; including, but not limited to, depository institutions, banks, 
savings banks, trust companies, securities brokers and dealers, 
commodity futures and options brokers and dealers, forward contract and 
foreign exchange merchants, securities and commodities exchanges, 
clearing corporations, investment companies, employee benefit plans, and 
U.S. holding companies, U.S. affiliates, or U.S. subsidiaries of any of 
the foregoing. This term includes those branches, offices and agencies 
of foreign financial institutions that are located in the United States, 
but not such institutions' foreign branches, offices, or agencies.



Sec. 537.321  U.S. person.

    The term U.S. person means any United States citizen, permanent 
resident alien, entity organized under the laws of the United States or 
any jurisdiction within the United States (including foreign branches), 
or any person in the United States.

[[Page 195]]



Sec. 537.322  U.S. registered broker or dealer in securities.

    The term U.S. registered broker or dealer in securities means any 
U.S. citizen, permanent resident alien, or entity organized under the 
laws of the United States or of any jurisdiction within the United 
States, including its foreign branches, or any agency, office or branch 
of a foreign entity located in the United States, that:
    (a) Is a ``broker'' or ``dealer'' in securities within the meanings 
set forth in the Securities Exchange Act of 1934;
    (b) Holds or clears customer accounts; and
    (c) Is registered with the Securities and Exchange Commission under 
the Securities Exchange Act of 1934.



Sec. 537.323  U.S. registered money transmitter.

    The term U.S. registered money transmitter means any U.S. citizen, 
permanent resident alien, or entity organized under the laws of the 
United States or of any jurisdiction within the United States, including 
its foreign branches, or any agency, office or branch of a foreign 
entity located in the United States, that is a money transmitter, as 
defined in 31 CFR 103.11(uu)(5), and that is registered pursuant to 31 
CFR 103.41.



                        Subpart D_Interpretations



Sec. 537.401  Reference to amended sections.

    Except as otherwise specified, reference to any provision in or 
appendix to this part or chapter or to any regulation, ruling, order, 
instruction, direction, or license issued pursuant to this part refers 
to the same as currently amended.



Sec. 537.402  Effect of amendment.

    Unless otherwise specifically provided, any amendment, modification, 
or revocation of any provision in or appendix to this part or chapter or 
of any order, regulation, ruling, instruction, or license issued by or 
under the direction of the Director of the Office of Foreign Assets 
Control does not affect any act done or omitted, or any civil or 
criminal suit or proceeding commenced or pending prior to such 
amendment, modification, or revocation. All penalties, forfeitures, and 
liabilities under any such order, regulation, ruling, instruction, or 
license continue and may be enforced as if such amendment, modification, 
or revocation had not been made.



Sec. 537.403  Termination and acquisition of an interest in blocked property.

    (a) Whenever a transaction licensed or authorized by or pursuant to 
this part results in the transfer of property (including any property 
interest) away from a person, such property shall no longer be deemed to 
be property blocked pursuant to Sec. 537.201(a), unless there exists in 
the property another interest that is blocked pursuant to Sec. 
537.201(a) or any other part of this chapter, the transfer of which has 
not been effected pursuant to license or other authorization.
    (b) Unless otherwise specifically provided in a license or 
authorization issued pursuant to this part, if property (including any 
property interest) is transferred or attempted to be transferred to a 
person whose property or interests in property are blocked pursuant to 
Sec. 537.201(a), such property shall be deemed to be property in which 
that person has an interest and therefore blocked.



Sec. 537.404  Transactions incidental to a licensed transaction authorized.

    (a) Any transaction ordinarily incident to a licensed transaction 
and necessary to give effect thereto is also authorized, except:
    (1) A transaction, not explicitly authorized within the terms of the 
license, by or with a person whose property or interests in property are 
blocked pursuant to Sec. 537.201(a), except as provided in paragraph 
(b) of this section; or
    (2) A transaction, not explicitly authorized within the terms of the 
license, involving a debit to a blocked account or a transfer of blocked 
property, except as provided in paragraph (b) of this section.
    (b) Transactions licensed pursuant to subpart E of this part and 
those transactions falling within the scope of paragraph (a) of this 
section are authorized even though they may involve

[[Page 196]]

transfers to or from an account of a financial institution whose 
property or interests in property are blocked pursuant to Sec. 
537.201(a), provided that the account is not on the books of a financial 
institution that is a U.S. person.



Sec. 537.405  Provision of services.

    (a) Except as provided in Sec. 537.210, the prohibitions on 
transactions involving blocked property contained in Sec. 537.201 apply 
to services performed in the United States or by U.S. persons, wherever 
located, including by an overseas branch of an entity located in the 
United States:
    (1) On behalf of or for the benefit of a person whose property or 
interests in property are blocked pursuant to Sec. 537.201(a); or
    (2) With respect to property interests subject to Sec. 537.201.
    (b) Example: U.S. persons may not, except as authorized by or 
pursuant to this part, provide legal, accounting, financial, brokering, 
freight forwarding, transportation, public relations, or other services 
to a person whose property or interests in property are blocked pursuant 
to Sec. 537.201(a).

    Note to Sec. 537.405: See Sec. Sec. 537.507 and 537.508 on 
licensing policy with regard to the provision of certain legal or 
medical services, respectively.



Sec. 537.406  Offshore transactions.

    The prohibitions in Sec. 537.201 on transactions involving blocked 
property apply to transactions by any U.S. person in a location outside 
the United States with respect to property that the U.S. person knows, 
or has reason to know, is held in the name of a person whose property or 
interests in property are blocked pursuant to Sec. 537.201(a) or in 
which the U.S. person knows, or has reason to know, a person whose 
property or interests in property are blocked pursuant to Sec. 
537.201(a) has or has had an interest since the effective date.



Sec. 537.407  Payments from blocked accounts to satisfy obligations 

prohibited.

    Pursuant to Sec. 537.201, no debits may be made to a blocked 
account to pay obligations to U.S. persons or other persons, except as 
authorized by or pursuant to this part.



Sec. 537.408  Setoffs prohibited.

    A setoff against blocked property (including a blocked account), 
whether by a U.S. bank or other U.S. person, is a prohibited transfer 
under Sec. 537.201 if effected after the effective date.



Sec. 537.409  Activities under pre-May 21, 1997 agreements.

    Section 537.210(c) exempts from all prohibitions contained in this 
part, except those contained in Sec. 537.203, activities undertaken by 
a U.S. person pursuant to an agreement entered into prior to May 21, 
1997, between a U.S. person and the Government of Burma or a 
nongovernmental entity in Burma. A U.S. person who is a party to a pre-
May 21, 1997 agreement falling outside the scope of Sec. 537.203 may 
enter into subsequent agreements with foreign persons where such 
agreements are pursuant to, or in exercise of rights under, the pre-May 
21, 1997 agreement and are specifically contemplated by the pre-May 21, 
1997 agreement. The exercise of rights under a pre-May 21, 1997 
agreement falling outside the scope of Sec. 537.203 may include the 
exercise of options to extend the contract, depending on such factors as 
the degree of specificity with which the option to extend is described 
in the pre-May 21, 1997 agreement, and the degree to which the party 
wishing to renew can enforce its decision to exercise the option.



Sec. 537.410  Contracts and subcontracts regarding economic development of 

resources in Burma.

    Section 537.204 prohibits new investment in Burma by U.S. persons. 
Section 537.311 defines the term new investment to include certain 
contracts providing for the general supervision and guarantee of another 
person's performance of a contract that includes the economic 
development of resources located in Burma. With respect to entry into 
such contracts, only the following will be considered new investment in 
Burma:
    (a) Entry into contracts for supervision and guarantee at the 
highest level of project management, such as

[[Page 197]]

entry into a contract with a development project's sponsor or owner to 
become a prime contractor or general manager for a development project;
    (b) Entry into subcontracts where the functional scope of the 
subcontractor's obligations is substantially similar to that of a prime 
contractor's or general manager's obligations for a development project; 
or
    (c) Entry into a contract or subcontract where the consideration 
includes a share of ownership in, or participation in the royalties, 
earnings or profits of, the economic development of resources located in 
Burma.



Sec. 537.411  Purchase of shares in economic development projects in Burma.

    The purchase, directly or indirectly, from the Government of Burma 
or a nongovernmental entity in Burma of shares of ownership, including 
an equity interest, in the economic development of resources located in 
Burma is prohibited unless the purchase is pursuant to an agreement 
entered into prior to May 21, 1997.



Sec. 537.412  Investments in entities involved in economic development 

projects in Burma.

    (a) The purchase of shares in a third-country company that is 
engaged in the economic development of resources located in Burma is 
prohibited by Sec. 537.204 where the company's profits are 
predominantly derived from the company's economic development of 
resources located in Burma.
    (b) If a U.S. person holds shares in an entity which subsequently 
engages predominantly in the economic development of resources located 
in Burma or subsequently derives its income exclusively or predominantly 
from such economic development, the U.S. person is not required to 
relinquish its shares, but may not purchase additional shares. 
Divestiture of the shares in such an entity to a foreign person--
otherwise constituting the facilitation of that foreign person's 
investment in Burma--is authorized under general license pursuant to 
Sec. 537.524.



Sec. 537.413  Sale of interest in economic development projects in Burma.

    The sale to a foreign person of a U.S. person's equity or income 
interest in a development project in Burma constitutes facilitation of 
that foreign person's investment in Burma, unless pursuant to a pre-May 
21, 1997 agreement. Such a sale, however, is authorized by general 
license under Sec. 537.524.



  Subpart E_Licenses, Authorizations and Statements of Licensing Policy



Sec. 537.501  General and specific licensing procedures.

    For provisions relating to licensing procedures, see part 501, 
subpart D, of this chapter. Licensing actions taken pursuant to part 501 
of this chapter with respect to the prohibitions contained in this part 
are considered actions taken pursuant to this part.



Sec. 537.502  Effect of license or authorization.

    (a) No license or other authorization contained in this part, or 
otherwise issued by or under the direction of the Director of the Office 
of Foreign Assets Control, authorizes or validates any transaction 
effected prior to the issuance of the license, unless specifically 
provided in such license or authorization.
    (b) No regulation, ruling, instruction, or license authorizes any 
transaction prohibited under this part unless the regulation, ruling, 
instruction or license is issued by the Office of Foreign Assets Control 
and specifically refers to this part. No regulation, ruling, 
instruction, or license referring to this part shall be deemed to 
authorize any transaction prohibited by any provision of this chapter 
unless the regulation, ruling, instruction, or license specifically 
refers to such provision.
    (c) Any regulation, ruling, instruction, or license authorizing any 
transaction otherwise prohibited by this part has the effect of removing 
a prohibition or prohibitions contained in this part from the 
transaction, but only to the extent specifically stated by its terms. 
Unless the regulation, ruling,

[[Page 198]]

instruction, or license otherwise specifies, such an authorization does 
not create any right, duty, obligation, claim, or interest in, or with 
respect to, any property which would not otherwise exist under ordinary 
principles of law.



Sec. 537.503  Exclusion from licenses.

    The Director of the Office of Foreign Assets Control reserves the 
right to exclude any person, property, or transaction from the operation 
of any license or from the privileges conferred by any license. The 
Director of the Office of Foreign Assets Control also reserves the right 
to restrict the applicability of any license to particular persons, 
property, transactions, or classes thereof. Such actions are binding 
upon all persons receiving actual or constructive notice of the 
exclusions or restrictions.



Sec. 537.504  Payments and transfers to blocked accounts in U.S. financial 

institutions.

    Any payment of funds or transfer of credit in which a person whose 
property or interests in property are blocked pursuant to Sec. 
537.201(a) has any interest, that comes within the possession or control 
of a U.S. financial institution, must be blocked in an account on the 
books of that financial institution. A transfer of funds or credit by a 
U.S. financial institution between blocked accounts in its branches or 
offices is authorized, provided that no transfer is made from an account 
within the United States to an account held outside the United States, 
and further provided that a transfer from a blocked account may only be 
made to another blocked account held in the same name.

    Note to Sec. 537.504: Please refer to Sec. 501.603 of this chapter 
for mandatory reporting requirements regarding financial transfers. See 
also Sec. 537.208 concerning the obligation to hold blocked funds in 
interest-bearing accounts.



Sec. 537.505  Entries in certain accounts for normal service charges 

authorized.

    (a) A U.S. financial institution is authorized to debit any blocked 
account held at that financial institution in payment or reimbursement 
for normal service charges owed it by the owner of that blocked account.
    (b) As used in this section, the term normal service charge shall 
include charges in payment or reimbursement for interest due; cable, 
telegraph, internet, or telephone charges; postage costs; custody fees; 
small adjustment charges to correct bookkeeping errors; and, but not by 
way of limitation, minimum balance charges, notary and protest fees, and 
charges for reference books, photocopies, credit reports, transcripts of 
statements, registered mail, insurance, stationery and supplies, and 
other similar items.



Sec. 537.506  Investment and reinvestment of certain funds.

    Subject to the requirements of Sec. 537.208, U.S. financial 
institutions are authorized to invest and reinvest assets blocked 
pursuant to Sec. 537.201, subject to the following conditions:
    (a) The assets representing such investments and reinvestments are 
credited to a blocked account or subaccount which is held in the same 
name at the same U.S. financial institution, or within the possession or 
control of a U.S. person, but funds shall not be transferred outside the 
United States for this purpose;
    (b) The proceeds of such investments and reinvestments shall not be 
credited to a blocked account or subaccount under any name or 
designation that differs from the name or designation of the specific 
blocked account or subaccount in which such funds or securities were 
held; and
    (c) No immediate financial or economic benefit accrues (e.g., 
through pledging or other use) to persons whose property or interests in 
property are blocked pursuant to Sec. 537.201(a).



Sec. 537.507  Provision of certain legal services authorized.

    (a) The provision of the following legal services to or on behalf of 
persons whose property or interests in property are blocked pursuant to 
Sec. 537.201(a) is authorized, provided that all receipts of payment of 
professional fees and reimbursement of incurred expenses must be 
specifically licensed:

[[Page 199]]

    (1) Provision of legal advice and counseling on the requirements of 
and compliance with the laws of any jurisdiction within the United 
States, provided that such advice and counseling are not provided to 
facilitate transactions in violation of this part;
    (2) Representation of persons when named as defendants in or 
otherwise made parties to domestic U.S. legal, arbitration, or 
administrative proceedings;
    (3) Initiation and conduct of domestic U.S. legal, arbitration, or 
administrative proceedings in defense of property interests subject to 
U.S. jurisdiction;
    (4) Representation of persons before any federal or state agency 
with respect to the imposition, administration, or enforcement of U.S. 
sanctions against such persons; and
    (5) Provision of legal services in any other context in which 
prevailing U.S. law requires access to legal counsel at public expense.
    (b) The provision of any other legal services to persons whose 
property or interests in property are blocked pursuant to Sec. 
537.201(a), not otherwise authorized in this part, requires the issuance 
of a specific license.
    (c) Entry into a settlement agreement affecting property or 
interests in property or the enforcement of any lien, judgment, arbitral 
award, decree, or other order through execution, garnishment, or other 
judicial process purporting to transfer or otherwise alter or affect 
property or interests in property blocked pursuant to Sec. 537.201(a) 
is prohibited except to the extent otherwise provided by law or unless 
specifically licensed in accordance with Sec. 537.207(e).



Sec. 537.508  Authorization of emergency medical services.

    The provision of nonscheduled emergency medical services in the 
United States to persons whose property or interests in property are 
blocked pursuant to Sec. 537.201(a) is authorized, provided that all 
receipt of payment for such services must be specifically licensed.



Sec. 537.509  Official activities of the U.S. Government and certain 

international organizations.

    All transactions and activities otherwise prohibited by this part 
that are for the conduct of the official business of the United States 
Government, the United Nations, the World Bank, or the International 
Monetary Fund are authorized. This section does not authorize any 
importation into the United States of any article that is a product of 
Burma.



Sec. 537.510  Third-country diplomatic and consular funds transfers.

    All transactions that are related to funds transfers otherwise 
prohibited by Sec. Sec. 537.201 and 537.202 and that are for the 
conduct of diplomatic or consular activities of third-country diplomatic 
or consular missions in Burma are authorized.



Sec. 537.511  Importation of accompanied baggage and household effects of U.S. 

diplomatic and consular officials.

    U.S. diplomatic or consular officials entering the United States 
directly or indirectly from Burma are authorized to engage in all 
transactions incident to the importation into the United States of 
products of Burma as accompanied baggage or household effects, provided 
that such products are not intended for any other person or for sale and 
are not otherwise prohibited from importation under applicable United 
States laws.



Sec. 537.512  Importation for official or personal use by foreign diplomatic 

and consular officials.

    All transactions incident to the importation into the United States 
of any article that is a product of Burma that is destined for official 
or personal use by personnel employed by a diplomatic mission or 
consulate in the United States are authorized, provided that such 
article is not intended for any other person or for sale and is not 
otherwise prohibited from importation under applicable United States 
laws.

[[Page 200]]



Sec. 537.513  Importation and exportation of diplomatic pouches.

    All transactions in connection with the importation into the United 
States or the exportation from the United States of diplomatic pouches 
and their contents are authorized.



Sec. 537.514  Importation of certain personal and household effects.

    (a) A U.S. person who maintained a residence in Burma prior to July 
28, 2003, is authorized to import into the United States personal and 
household effects that are products of Burma, including accompanied 
baggage and articles for family use, provided the imported items were 
purchased by the U.S. person prior to July 28, 2003, have been actually 
used abroad by the U.S. person or by other family members arriving from 
the same foreign household, are not intended for any other person or for 
sale, and are not otherwise prohibited from importation.
    (b) A national of Burma who arrives in the United States after July 
28, 2003, is authorized to import into the United States personal and 
household effects that are products of Burma, including accompanied 
baggage and articles for family use, provided the imported items are 
ordinarily incident to the Burmese national's arrival in the United 
States, have been actually used abroad by the Burmese national or by 
other family members arriving from the same foreign household, are not 
intended for any other person or for sale, and are not otherwise 
prohibited from importation.



Sec. 537.515  Importation of information or informational materials.

    The importation of information or informational materials that are 
products of Burma and all transactions directly incident to such 
importation are authorized.



Sec. 537.516  Importation of Burmese-origin articles and incidental 

transactions.

    (a) The importation of an article that is a product of Burma, 
otherwise prohibited by Sec. 537.203, is authorized, provided the 
article was purchased prior to July 28, 2003, shipped from Burma to the 
United States prior to August 28, 2003, and is not property in which a 
person whose property or interests in property are blocked pursuant to 
Sec. 537.201(a) has an interest.
    (b) All transactions otherwise prohibited by Sec. Sec. 537.201 and 
537.202 that are directly incident to the importation into the United 
States of an article that is a product of Burma are authorized, provided 
that:
    (1) The importation is authorized pursuant to paragraph (a) of this 
section; or
    (2) The importation occurred prior to August 28, 2003, and was not 
from a person whose property or interests in property are blocked 
pursuant to Sec. 537.201(a).
    (c) All transactions otherwise prohibited by Sec. Sec. 537.201 and 
537.202 that are directly incident to the importation into a country 
other than the United States or Burma of an article that is a product of 
Burma are authorized, provided that:
    (1) The article was purchased prior to July 28, 2003, shipped from 
Burma prior to August 28, 2003, and is not property in which a person 
whose property or interests in property are blocked pursuant to Sec. 
537.201(a) has an interest; or
    (2) The importation occurred prior to August 28, 2003, and was not 
from a person whose property or interests in property are blocked 
pursuant to Sec. 537.201(a).
    (d) Financing agreements with respect to the importations described 
in paragraphs (a), (b) and (c) of this section may be performed only 
according to their terms and may not be extended or renewed.



Sec. 537.517  Noncommercial, personal remittances.

    (a)(1) U.S. depository institutions, U.S. registered brokers or 
dealers in securities, and U.S. registered money transmitters are 
authorized to process transfers of funds to or from Burma or for or on 
behalf of an individual ordinarily resident in Burma in cases in which 
the transfer involves a noncommercial, personal remittance, provided the 
following conditions are met:

[[Page 201]]

    (i) The transfer is not by, to, or through a person whose property 
or interests in property are blocked pursuant to Sec. 537.201(a), 
except as explained in Sec. 537.404 of this part; and
    (ii) Total remittances to the territory of Burma in any consecutive 
3-month period do not exceed $300 per Burmese household, regardless of 
the number of individuals comprising the household.
    (2) Noncommercial, personal remittances do not include charitable 
donations to or for the benefit of an entity or funds transfers for use 
in supporting or operating a business.

    Note to paragraph (a) of Sec. 537.517: U.S. persons may make 
charitable donations to nongovernmental organizations in Burma that are 
authorized to operate pursuant to Sec. 537.523, provided that the 
donations are made pursuant to Sec. 537.523 and the terms of the 
authorization.

    (b) The transferring institutions identified in paragraph (a) of 
this section may rely on the originator of a funds transfer with regard 
to compliance with paragraph (a) of this section, provided that the 
transferring institution does not know or have reason to know that the 
funds transfer is not in compliance with paragraph (a) of this section.
    (c) This section does not authorize transactions with respect to 
property blocked pursuant to Sec. 537.201, except as explained in Sec. 
537.404(b) of this part.



Sec. 537.518  Transactions incident to exportations to Burma.

    All transactions otherwise prohibited by Sec. Sec. 537.201 and 
537.202 that are ordinarily incident to an exportation to Burma of 
goods, technology or services, other than financial services, are 
authorized, provided the exportation is not to or on behalf of a person 
whose property or interests in property are blocked pursuant to Sec. 
537.201(a). This section does not authorize a financial institution that 
is a U.S. person to advise or confirm any financing by a person whose 
property or interests in property are blocked pursuant to Sec. 
537.201(a).



Sec. 537.519  Activities undertaken pursuant to certain pre-May 21, 1997 

agreements.

    Except as prohibited by Sec. 537.203, U.S. persons are authorized 
to engage in any activity, or any transaction incident to an activity, 
undertaken pursuant to an agreement entered into prior to 12:01 a.m., 
eastern daylight time, on May 21, 1997, or pursuant to the exercise of 
rights under such an agreement, provided that the parties to the 
agreement include:
    (a) The Government of Burma or a nongovernmental entity in Burma, 
and
    (b) An entity organized under the laws of a foreign state.

    Note to Sec. 537.519: The authorization contained in Sec. 537.519 
pertains to pre-May 21, 1997 contracts between foreign business entities 
and either the Government of Burma or a nongovernmental entity in Burma. 
Pre-May 21, 1997 contracts between U.S. persons and the Government of 
Burma or a nongovernmental entity in Burma are exempt from all 
prohibitions contained in this part except those contained in Sec. 
537.203. See Sec. 537.210 (exemptions).



Sec. 537.520  Payments for overflights of Burmese airspace.

    Payments to Burma of charges for services rendered by the Government 
of Burma in connection with the overflight of Burma or emergency landing 
in Burma of aircraft owned or operated by a U.S. person or registered in 
the United States are authorized.



Sec. 537.521  Operation of accounts.

    The operation of an account in a U.S. financial institution for an 
individual ordinarily resident in Burma, other than an individual whose 
property or interests in property are blocked pursuant to Sec. 
537.201(a), is authorized, provided that each transaction processed 
through the account:
    (a) Is of a personal nature and not for use in supporting or 
operating a business;
    (b) Does not involve a transfer directly or indirectly to Burma or 
for the benefit of individuals ordinarily resident in Burma unless 
authorized by Sec. 537.517; and
    (c) Is not otherwise prohibited by this part.

[[Page 202]]



Sec. 537.522  Certain transactions related to patents, trademarks and 

copyrights authorized.

    (a) All of the following transactions in connection with patent, 
trademark, copyright or other intellectual property protection in the 
United States or Burma, except for those transactions prohibited by 
Sec. 537.203, are authorized:
    (1) The filing and prosecution of any application to obtain a 
patent, trademark, copyright or other form of intellectual property 
protection;
    (2) The receipt of a patent, trademark, copyright or other form of 
intellectual property protection;
    (3) The renewal or maintenance of a patent, trademark, copyright or 
other form of intellectual property protection; and
    (4) The filing and prosecution of opposition or infringement 
proceedings with respect to a patent, trademark, copyright or other form 
of intellectual property protection, or the entrance of a defense to any 
such proceedings.
    (b) This section authorizes the payment of fees currently due to the 
United States Government, or of the reasonable and customary fees and 
charges currently due to attorneys or representatives within the United 
States, in connection with the transactions authorized in paragraph (a) 
of this section. Payment effected pursuant to the terms of this 
paragraph may not be made from a blocked account.
    (c) This section authorizes the payment of fees currently due to the 
Government of Burma, or of the reasonable and customary fees and charges 
currently due to attorneys or representatives within Burma, in 
connection with the transactions authorized in paragraph (a) of this 
section.
    (d) Nothing in this section affects obligations under any other 
provision of law.



Sec. 537.523  Authorization of nongovernmental organizations to engage in 

humanitarian or religious activities.

    (a) Specific licenses may be issued on a case-by-case basis 
authorizing nongovernmental organizations to engage in transactions 
otherwise prohibited by Sec. Sec. 537.201 and 537.202 that are 
necessary for their humanitarian or religious activities in Burma. 
Applications for specific licenses must include:
    (1) The organization's name in English, in the language of origin, 
and any acronym or other names used to identify the organization;
    (2) Address and phone number of the organization's headquarters 
location;
    (3) Identification of field offices and partner offices, including 
addresses and organizational names used;
    (4) Identification of key staff, such as directors and senior 
officers, at the organization's headquarters and partner offices, 
including the nationality, citizenship, current country of residence, 
place and date of birth, and current position of each person identified;
    (5) Identification of subcontracting organizations, if any, to the 
extent known or contemplated at the time of the application;
    (6) Existing sources of income, such as official grants, private 
endowments, commercial activities;
    (7) Financial institutions that hold deposits on behalf of or extend 
lines of credit to the organization (names of individuals and 
organizations shall be provided in English, in the language of origin, 
and shall include any acronym or other names used to identify the 
individuals or organizations);
    (8) Independent accounting firms, if employed in the production of 
the organization's financial statements (names of individuals and 
organizations shall be provided in English, in the language of origin, 
and shall include any acronym or other names used to identify the 
individuals or organizations);
    (9) A detailed description of the organization's humanitarian, 
environmental or religious activities and projects in countries or 
geographic areas subject to economic sanctions pursuant to this chapter 
V, including, if applicable, a summary of all information provided in 
grant proposals or funding requests made in connection with the proposed 
activities;
    (10) Most recent official registry documents, annual reports, and 
annual filings with the pertinent government, as applicable; and
    (11) Names and addresses of organizations to which the applicant 
currently

[[Page 203]]

provides or proposes to provide funding, services or material support, 
to the extent known at the time of the application, as applicable.
    (b) This section does not authorize transfers from blocked accounts.

    Note to Sec. 537.523: Authorization pursuant to this section does 
not excuse a U.S. person from compliance with other applicable U.S. laws 
governing the exportation or reexportation of U.S.-origin goods, 
software, or technology (including technical data). See, e.g., the 
Export Administration Regulations administered by the U.S. Department of 
Commerce (15 CFR parts 730-774).



Sec. 537.524  Divestiture of U.S. person's investments in Burma.

    All transactions, except those prohibited by Sec. 537.203, related 
to the divestiture or transfer to a foreign person of a U.S. person's 
share of ownership, including an equity interest, in the economic 
development of resources located in Burma are authorized. U.S. persons 
participating in such a transaction valued at more than $10,000 are 
required, within 10 business days after the transaction takes place, to 
file a report for statistical purposes with the Office of Foreign Assets 
Control, U.S. Treasury Department, 1500 Pennsylvania Avenue NW.-Annex, 
Washington, DC 20220.



Sec. 537.525  Transactions related to U.S. citizens residing in Burma.

    To the extent otherwise prohibited, U.S. citizens who reside on a 
permanent basis in Burma are authorized to pay their personal living 
expenses and engage in other transactions in Burma ordinarily incident 
to their routine and necessary personal maintenance.



Sec. 537.526  Authorized transactions necessary and ordinarily incident to 

publishing.

    (a) To the extent that such activities are not exempt from this 
part, and subject to the restrictions set forth in paragraphs (b) 
through (d) of this section, U.S. persons are authorized to engage in 
all transactions otherwise prohibited by Sec. 537.201 or Sec. 537.202 
that are necessary and ordinarily incident to the publishing and 
marketing of manuscripts, books, journals, and newspapers in paper or 
electronic format (collectively, ``written publications''). This section 
does not apply if the parties to the transactions described in this 
paragraph include the State Peace and Development Council of Burma or 
the Union Solidarity and Development Association of Burma; any successor 
entity to any of the foregoing entities; or any person, other than 
personnel of academic and research institutions, acting or purporting to 
act directly or indirectly on behalf of the foregoing entities with 
respect to the transactions described in this paragraph. Pursuant to 
this section, transactions incident to the following activities are 
authorized, provided they do not involve any importations prohibited by 
Sec. 537.203 that are not authorized by another section of this part 
537, and further provided that U.S. persons ensure that they are not 
engaging, without separate authorization, in the activities identified 
in paragraphs (b) through (d) of this section:
    (1) Commissioning and making advance payments for identifiable 
written publications not yet in existence, to the extent consistent with 
industry practice;
    (2) Collaborating on the creation and enhancement of written 
publications;
    (3)(i) Augmenting written publications through the addition of items 
such as photographs, artwork, translation, explanatory text, and, for a 
written publication in electronic format, the addition of embedded 
software necessary for reading, browsing, navigating, or searching the 
written publication;
    (ii) Exporting embedded software necessary for reading, browsing, 
navigating, or searching a written publication in electronic format, 
provided that, to the extent a license is required under the Export 
Administration Regulations, 15 CFR parts 730 through 774 (the ``EAR''), 
the exportation is licensed or otherwise authorized by the Department of 
Commerce under the provisions of the EAR;
    (4) Substantive editing of written publications;
    (5) Payment of royalties for written publications;
    (6) Creating or undertaking a marketing campaign to promote a 
written publication; and

[[Page 204]]

    (7) Other transactions necessary and ordinarily incident to the 
publishing and marketing of written publications as described in this 
paragraph (a).
    (b) This section does not authorize transactions constituting the 
exportation or reexportation of financial services from the United 
States or by U.S. persons to Burma that are not necessary and ordinarily 
incident to the publishing and marketing of written publications as 
described paragraph (a) of this section. For example, this section does 
not authorize U.S. persons to transfer funds to Burma relating to the 
following:
    (1) The provision or receipt of individualized or customized 
services (including, but not limited to, accounting, legal, design, or 
consulting services), other than those necessary and ordinarily incident 
to the publishing and marketing of written publications, even though 
such individualized or customized services are delivered through the use 
of information and informational materials;
    (2) The creation or undertaking of a marketing campaign for any 
person with respect to any service or product other than a written 
publication, or the creation or undertaking of a marketing campaign of 
any kind for the benefit of the State Peace and Development Council of 
Burma or the Union Solidarity and Development Association of Burma; or
    (3) The operation of a publishing house, sales outlet, or other 
office in Burma.

    Note to paragraph (b): The importation of information or 
informational materials, as defined in Sec. 537.308, that are products 
of Burma is authorized by the general license set forth in Sec. 
537.515. The exportation to Burma of information or informational 
materials, as defined in Sec. 537.308, whether commercial or otherwise, 
regardless of format or medium of transmission, is exempt from the 
prohibitions and regulations of this part. See Sec. 537.210(b).

    (c) This section does not authorize U.S. persons to engage in 
transactions constituting the exportation or reexportation of financial 
services to Burma that relate to the services of publishing houses or 
translators in Burma unless such activity is primarily for the 
dissemination of written publications in Burma.
    (d) This section does not authorize:
    (1) The importation into the United States of any article that is a 
product of Burma.

    Note to paragraph (d)(1): The importation of information or 
informational materials, as defined in Sec. 537.308, that are products 
of Burma is authorized by the general license set forth in Sec. 
537.515.

    (2) Transactions constituting the exportation or reexportation of 
financial services from the United States or by U.S. persons to Burma 
that relate to the development, production, design, or marketing of 
technology specifically controlled by the International Traffic in Arms 
Regulations, 22 CFR parts 120 through 130 (the ``ITAR''), the EAR, or 
the Department of Energy Regulations set forth at 10 CFR part 810.
    (3) Transactions constituting the exportation or reexportation of 
financial services from the United States or by U.S. persons to Burma 
that relate to the exportation of information or technology subject to 
the authorization requirements of 10 CFR part 810, or Restricted Data as 
defined in section 11y. of the Atomic Energy Act of 1954, as amended, or 
of other information, data, or technology the release of which is 
controlled under the Atomic Energy Act and regulations therein;
    (4) Transactions constituting the exportation or reexportation of 
financial services from the United States or by U.S. persons to Burma 
that relate to the exportation of any item (including information) 
subject to the EAR where a U.S. person knows or has reason to know that 
the item will be used, directly or indirectly, with respect to certain 
nuclear, missile, chemical, or biological weapons or nuclear-maritime 
end-uses as set forth in part 744 of the EAR. In addition, U.S. persons 
are precluded from exporting any item subject to the EAR to certain 
restricted end-users, as set forth in part 744 of the EAR, as well as 
certain persons whose export privileges have been denied pursuant to 
parts 764 or 766 of the EAR, without authorization from the Department 
of Commerce; or
    (5) Transactions constituting the exportation or reexportation of 
financial services from the United States or by

[[Page 205]]

U.S. persons to Burma that relate to the exportation of information 
subject to licensing requirements under the ITAR or exchanges of 
information that are subject to regulation by other government agencies.

[72 FR 50049, Aug. 30, 2007]



Sec. 537.527  Importation into the United States of Burmese-origin animals and 

specimens.

    Specific licenses may be issued on a case-by-case basis authorizing 
the importation into the United States of animals and specimens of 
Burmese origin, in sample quantities only, for bona fide scientific 
research and analysis purposes.

[72 FR 34377, June 22, 2007]



                            Subpart F_Reports



Sec. 537.601  Records and reports.

    For provisions relating to required records and reports, see part 
501, subpart C, of this chapter. Recordkeeping and reporting 
requirements imposed by part 501 of this chapter with respect to the 
prohibitions contained in this part are considered requirements arising 
pursuant to this part.



                           Subpart G_Penalties



Sec. 537.701  Penalties.

    (a) Attention is directed to section 206 of the International 
Emergency Economic Powers Act (the ``Act'') (50 U.S.C. 1705), which is 
applicable to violations of the provisions of any license, ruling, 
regulation, order, direction, or instruction issued by or pursuant to 
the direction or authorization of the Secretary of the Treasury pursuant 
to this part or otherwise under the Act.
    (1) A civil penalty not to exceed the amount set forth in Section 
206 of the Act may be imposed on any person who violates, attempts to 
violate, conspires to violate, or causes a violation of any license, 
order, regulation, or prohibition issued under the Act.

    Note to paragraph (a)(1) of Sec. 537.701: As of June 10, 2008, the 
Act provides for a maximum civil penalty not to exceed the greater of 
$250,000 or an amount that is twice the amount of the transaction that 
is the basis of the violation with respect to which the penalty is 
imposed.

    (2) A person who willfully commits, willfully attempts to commit, or 
willfully conspires to commit, or aids or abets in the commission of a 
violation of any license, order, regulation, or prohibition shall, upon 
conviction, be fined not more than $1,000,000, or if a natural person, 
may be imprisoned for not more than 20 years, or both.
    (b) Adjustments to penalty amounts. (1) The civil penalties provided 
in the Act are subject to adjustment pursuant to the Federal Civil 
Penalties Inflation Adjustment Act of 1990 (Pub. L. 101-410, as amended, 
28 U.S.C. 2461 note).
    (2) The criminal penalties provided in the Act are subject to 
adjustment pursuant to 18 U.S.C. 3571.
    (c) Attention is also directed to 18 U.S.C. 1001, which provides 
that whoever, in any matter within the jurisdiction of the executive, 
legislative, or judicial branch of the Government of the United States, 
knowingly and willfully falsifies, conceals, or covers up by any trick, 
scheme, or device, a material fact, or makes any materially false, 
fictitious, or fraudulent statement or representation, or makes or uses 
any false writing or document knowing the same to contain any materially 
false, fictitious, or fraudulent statement or entry shall be fined under 
title 18, United States Code, or imprisoned not more than five years, or 
both.
    (d) Violations of this part may also be subject to relevant 
provisions of other applicable laws.

[70 FR 48241, Aug. 16, 2005, as amended at 71 FR 29252, May 22, 2006; 73 
FR 32652, June 10, 2008]



Sec. 537.702  Prepenalty notice.

    (a) When required. If the Director of the Office of Foreign Assets 
Control has reason to believe that there has occurred a violation of any 
provision of this part or a violation of the provisions of any license, 
ruling, regulation, order, direction, or instruction issued by or 
pursuant to the direction or authorization of the Secretary of the 
Treasury pursuant to this part or otherwise under the International 
Emergency Economic Powers Act, and the Director determines that further 
proceedings are warranted, the Director

[[Page 206]]

shall notify the alleged violator of the agency's intent to impose a 
monetary penalty by issuing a prepenalty notice. The prepenalty notice 
shall be in writing. The prepenalty notice may be issued whether or not 
another agency has taken any action with respect to the matter.
    (b) Contents of notice--(1) Facts of violation. The prepenalty 
notice shall describe the violation, specify the laws and regulations 
allegedly violated, and state the amount of the proposed monetary 
penalty.
    (2) Right to respond. The prepenalty notice also shall inform the 
respondent of the respondent's right to make a written presentation 
within the applicable 30-day period set forth in Sec. 537.703 as to why 
a monetary penalty should not be imposed or why, if imposed, the 
monetary penalty should be in a lesser amount than proposed.
    (c) Informal settlement prior to issuance of prepenalty notice. At 
any time prior to the issuance of a prepenalty notice, an alleged 
violator may request in writing that, for a period not to exceed 60 
days, the agency withhold issuance of the prepenalty notice for the 
exclusive purpose of effecting settlement of the agency's potential 
civil monetary penalty claims. In the event the Director grants the 
request, under terms and conditions within the Director's discretion, 
the Office of Foreign Assets Control will agree to withhold issuance of 
the prepenalty notice for a period not to exceed 60 days and will enter 
into settlement negotiations of the potential civil monetary penalty 
claim.



Sec. 537.703  Response to prepenalty notice; informal settlement.

    (a) Deadline for response. The respondent may submit a response to 
the prepenalty notice within the applicable 30-day period set forth in 
this paragraph. The Director may grant, at the Director's discretion, an 
extension of time in which to submit a response to the prepenalty 
notice. The failure to submit a response within the applicable time 
period set forth in this paragraph shall be deemed to be a waiver of the 
right to respond.
    (1) Computation of time for response. A response to the prepenalty 
notice must be postmarked or date-stamped by the U.S. Postal Service (or 
foreign postal service, if mailed abroad) or courier service provider 
(if transmitted to OFAC by courier) on or before the 30th day after the 
postmark date on the envelope in which the prepenalty notice was mailed. 
If the respondent refused delivery or otherwise avoided receipt of the 
prepenalty notice, a response must be postmarked or date-stamped on or 
before the 30th day after the date on the stamped postal receipt 
maintained at the Office of Foreign Assets Control. If the prepenalty 
notice was personally delivered to the respondent by a non-U.S. Postal 
Service agent authorized by the Director, a response must be postmarked 
or date-stamped on or before the 30th day after the date of delivery.
    (2) Extensions of time for response. If a due date falls on a 
federal holiday or weekend, that due date is extended to include the 
following business day. Any other extensions of time will be granted, at 
the Director's discretion, only upon the respondent's specific request 
to the Office of Foreign Assets Control.
    (b) Form and method of response. The response must be submitted in 
typewritten form and signed by the respondent or a representative 
thereof. The response need not be in any particular form. A copy of the 
written response may be sent by facsimile, but the original also must be 
sent to the Office of Foreign Assets Control Civil Penalties Division by 
mail or courier and must be postmarked or date-stamped, in accordance 
with paragraph (a) of this section.
    (c) Contents of response. A written response must contain 
information sufficient to indicate that it is in response to the 
prepenalty notice.
    (1) A written response must include the respondent's full name, 
address, telephone number, and facsimile number, if available, or those 
of the representative of the respondent.
    (2) A written response should either admit or deny each specific 
violation alleged in the prepenalty notice and also state if the 
respondent has no knowledge of a particular violation. If the written 
response fails to address any specific violation alleged in the 
prepenalty notice, that alleged violation shall be deemed to be 
admitted.

[[Page 207]]

    (3) A written response should include any information in defense, 
evidence in support of an asserted defense, or other factors that the 
respondent requests the Office of Foreign Assets Control to consider. 
Any defense or explanation previously made to the Office of Foreign 
Assets Control or any other agency must be repeated in the written 
response. Any defense not raised in the written response will be 
considered waived. The written response also should set forth the 
reasons why the respondent believes the penalty should not be imposed or 
why, if imposed, it should be in a lesser amount than proposed.
    (d) Failure to Respond. Where OFAC receives no response to a 
prepenalty notice within the applicable time period set forth in 
paragraph (a) of this section, a penalty notice generally will be 
issued, taking into account the mitigating and/or aggravating factors 
present in the record. If there are no mitigating factors present in the 
record, or the record contains a preponderance of aggravating factors, 
the proposed prepenalty amount generally will be assessed as the final 
penalty.
    (e) Informal settlement. In addition to or as an alternative to a 
written response to a prepenalty notice, the respondent or respondent's 
representative may contact the Office of Foreign Assets Control as 
advised in the prepenalty notice to propose the settlement of 
allegations contained in the prepenalty notice and related matters. 
However, the requirements set forth in paragraph (f) of this section as 
to oral communication by the representative must first be fulfilled. In 
the event of settlement at the prepenalty stage, the claim proposed in 
the prepenalty notice will be withdrawn, the respondent will not be 
required to take a written position on allegations contained in the 
prepenalty notice, and the Office of Foreign Assets Control will make no 
final determination as to whether a violation occurred. The amount 
accepted in settlement of allegations in a prepenalty notice may vary 
from the civil penalty that might finally be imposed in the event of a 
formal determination of violation. In the event no settlement is 
reached, the time limit specified in paragraph (a) of this section for 
written response to the prepenalty notice will remain in effect unless 
additional time is granted by the Office of Foreign Assets Control.
    (f) Guidelines. Guidelines for the imposition or settlement of civil 
penalties by the Office of Foreign Assets Control have been codified in 
the Appendix to the Reporting, Procedures and Penalties Regulations, 31 
CFR part 501.
    (g) Representation. A representative of the respondent may act on 
behalf of the respondent, but any oral communication with the Office of 
Foreign Assets Control prior to a written submission regarding the 
specific allegations contained in the prepenalty notice must be preceded 
by a written letter of representation, unless the prepenalty notice was 
served upon the respondent in care of the representative.



Sec. 537.704  Penalty imposition or withdrawal.

    (a) No violation. If, after considering any response to the 
prepenalty notice and any relevant facts, the Director of the Office of 
Foreign Assets Control determines that there was no violation by the 
respondent named in the prepenalty notice, the Director shall notify the 
respondent in writing of that determination and of the cancellation of 
the proposed monetary penalty.
    (b) Violation. (1) If, after considering any written response to the 
prepenalty notice, or default in the submission of a written response, 
and any relevant facts, the Director of the Office of Foreign Assets 
Control determines that there was a violation by the respondent named in 
the prepenalty notice, the Director is authorized to issue a written 
penalty notice to the respondent of the determination of the violation 
and the imposition of the monetary penalty.
    (2) The penalty notice shall inform the respondent that payment or 
arrangement for installment payment of the assessed penalty must be made 
within 30 days of the date of mailing of the penalty notice by the 
Office of Foreign Assets Control.
    (3) The penalty notice shall inform the respondent of the 
requirement to furnish the respondent's taxpayer identification number 
pursuant to 31 U.S.C. 7701 and that such number will be used

[[Page 208]]

for purposes of collecting and reporting on any delinquent penalty 
amount.
    (4) The issuance of the penalty notice finding a violation and 
imposing a monetary penalty shall constitute final agency action. The 
respondent has the right to seek judicial review of that final agency 
action in federal district court.



Sec. 537.705  Administrative collection; referral to United States Department 

of Justice.

    In the event that the respondent does not pay the penalty imposed 
pursuant to this part or make payment arrangements acceptable to the 
Director of the Office of Foreign Assets Control within 30 days of the 
date of mailing of the penalty notice, the matter may be referred for 
administrative collection measures by the Department of the Treasury or 
to the United States Department of Justice for appropriate action to 
recover the penalty in a civil suit in a federal district court.



                          Subpart H_Procedures



Sec. 537.801  Procedures.

    For license application procedures and procedures relating to 
amendments, modifications, or revocations of licenses; administrative 
decisions; rulemaking; and requests for documents pursuant to the 
Freedom of Information and Privacy Acts (5 U.S.C. 552 and 552a), see 
part 501, subpart D, of this chapter.



Sec. 537.802  Delegation by the Secretary of the Treasury.

    Any action that the Secretary of the Treasury is authorized to take 
pursuant to Executive Order 13047 of May 20, 1997 (62 FR 28299, May 22, 
1997) and Executive Order 13310 of July 28, 2003 (68 FR 44853, July 30, 
2003), and any further Executive orders relating to the national 
emergency declared therein, may be taken by the Director of the Office 
of Foreign Assets Control or by any other person to whom the Secretary 
of the Treasury has delegated authority so to act.



                    Subpart I_Paperwork Reduction Act



Sec. 537.901  Paperwork Reduction Act notice.

    For approval by the Office of Management and Budget (``OMB'') under 
the Paperwork Reduction Act of 1995 (44 U.S.C. 3507) of information 
collections relating to record keeping and reporting requirements, 
licensing procedures (including those pursuant to statements of 
licensing policy), and other procedures, see Sec. 501.901 of this 
chapter. An agency may not conduct or sponsor, and a person is not 
required to respond to, a collection of information unless it displays a 
valid control number assigned by OMB.



PART 538_SUDANESE SANCTIONS REGULATIONS--Table of Contents



      Subpart A_Relation of This Part to Other Laws and Regulations

Sec.
538.101 Relation of this part to other laws and regulations.

                         Subpart B_Prohibitions

538.201 Prohibited transactions involving blocked property.
538.202 Effect of transfers violating the provisions of this part.
538.203 Holding of funds in interest-bearing accounts; investment and 
          reinvestment.
538.204 Prohibited importation of goods or services from Sudan.
538.205 Prohibited exportation and reexportation of goods, technology, 
          or services to Sudan.
538.206 Prohibited facilitation.
538.207 Prohibited performance of contracts.
538.208 Prohibited grant or extension of credits or loans to the 
          Government of Sudan.
538.209 Prohibited transportation-related transactions involving Sudan.
538.210 Prohibited transactions relating to petroleum and petrochemical 
          industries.
538.211 Evasions; attempts; conspiracies.
538.212 Exempt transactions.

                      Subpart C_General Definitions

538.301 Blocked account; blocked property.
538.302 Effective date.
538.303 Entity.
538.304 General license.
538.305 Government of Sudan.
538.306 Information and informational materials.

[[Page 209]]

538.307 Interest.
538.308 License.
538.309 Person.
538.310 Property; property interest.
538.311 Specific license.
538.312 Sudanese origin.
538.313 Transfer.
538.314 United States.
538.315 United States person; U.S. person.
538.316 U.S. financial institution.
538.317 U.S. depository institution.
538.318 U.S. registered broker or dealer in securities.
538.319 U.S. registered money transmitter.
538.320 Specified Areas of Sudan.

                        Subpart D_Interpretations

538.401 Reference to amended sections.
538.402 Effect of amendment.
538.403 Termination and acquisition of an interest in blocked property.
538.404 Setoffs prohibited.
538.405 Transactions incidental to a licensed transaction authorized.
538.406 Exportation of services; performance of service contracts; legal 
          services.
538.407 Facilitation by a United States person.
538.408 Offshore transactions.
538.409 Transshipments through the United States prohibited.
538.410 Imports of Sudanese goods from third countries; transshipments.
538.411 Exports to third countries; transshipments.
538.414 Loans or extensions of credit.
538.415 Payments involving Sudan.
538.416 Payments from blocked accounts to U.S. exporters and for other 
          obligations prohibited.
538.417 Transshipments through Sudan.
538.418 Financial transactions in Sudan.

 Subpart E_Licenses, Authorizations, and Statements of Licensing Policy

538.500 Licensing procedures.
538.501 Effect of license or authorization.
538.502 Exclusion from licenses and authorizations.
538.503 Payments and transfers to blocked accounts in U.S. financial 
          institutions.
538.504 Entries in certain accounts for normal service charges 
          authorized.
538.505 Provision of certain legal services to the Government of Sudan, 
          persons in Sudan, or benefitting Sudan.
538.506 30-day delayed effective date for pre-November 4, 1997 trade 
          contracts involving Sudan.
538.507 Reexports by non-U.S. persons.
538.508 Certain payments by the Government of Sudan of obligations to 
          persons within the United States authorized.
538.509 Certain services relating to participation in various events 
          authorized.
538.510 Importation and exportation of certain gifts authorized.
538.511 Accompanied baggage authorized.
538.512 Transactions related to telecommunications authorized.
538.513 Transactions related to mail authorized.
538.514 Certain transactions related to patents, trademarks and 
          copyrights authorized.
538.515 Sudanese diplomatic missions in the United States.
538.516 Diplomatic pouches.
538.517 Allowable payments for overflights of Sudanese airspace.
538.518 Household goods and personal effects.
538.519 Aircraft and maritime safety.
538.520 Extensions or renewals of loans and credits.
538.521 Registration of nongovernmental organizations for humanitarian 
          or religious activities.
538.522 Transactions related to U.S. citizens residing in Sudan.
538.523 Commercial sales, exportation, and reexportation of agricultural 
          commodities, medicine, and medical devices.
538.524 [Reserved]
538.525 Payment for and financing of commercial sales of agricultural 
          commodities, medicine, and medical equipment.
538.526 Brokering sales of agricultural commodities, medicine, and 
          medical devices.
538.527 Operation of accounts.
538.528 Noncommercial, personal remittances.
538.529 Authorized transactions necessary and ordinarily incident to 
          publishing.
538.530 Licenses and registrations issued pursuant to Executive Order 
          13067 or this part authorized pursuant to Executive Order 
          13412.
538.531 Official activities of the United States Government and 
          international organizations.
538.532 Humanitarian transshipments to or from Southern Sudan and Darfur 
          authorized.
538.533 Exportation of certain services and software incident to 
          Internet-based communications.

                            Subpart F_Reports

538.601 Records and reports.

                           Subpart G_Penalties

538.701 Penalties.
538.702 Prepenalty notice.
538.703 Response to prepenalty notice; informal settlement.
538.704 Penalty imposition or withdrawal.
538.705 Administrative collection; referral to United States Department 
          of Justice.

[[Page 210]]

                          Subpart H_Procedures

538.801 Procedures.
538.802 Delegation by the Secretary of the Treasury.

                    Subpart I_Paperwork Reduction Act

538.901 Paperwork Reduction Act notice.

Appendix A to Part 538--Bulk Agricultural Commodities

    Authority: 3 U.S.C. 301; 18 U.S.C. 2339B, 2332d; 31 U.S.C. 321(b); 
50 U.S.C. 1601-1651, 1701-1706; Pub. L. 101-410, 104 Stat. 890 (28 
U.S.C. 2461 note); 22 U.S.C. 7201-7211; Pub. L. 109-344, 120 Stat. 1869; 
Pub. L. 110-96, 121 Stat. 1011 (50 U.S.C. 1705 note); E.O. 13067, 62 FR 
59989, 3 CFR, 1997 Comp., p. 230; E.O. 13412, 71 FR 61369, 3 CFR, 2006 
Comp., p. 244.

    Source: 63 FR 35810, July 1, 1998, unless otherwise noted.



      Subpart A_Relation of This Part to Other Laws and Regulations



Sec. 538.101  Relation of this part to other laws and regulations.

    (a) This part is separate from, and independent of, the other parts 
of this chapter with the exception of part 501 of this chapter, the 
recordkeeping and reporting requirements and license application and 
other procedures of which apply to this part. Differing foreign policy 
and national security contexts may result in differing interpretations 
of similar language among the parts of this chapter. No license or 
authorization contained in or issued pursuant to those other parts 
authorizes any transaction prohibited by this part. No license or 
authorization contained in or issued pursuant to any other provision of 
law or regulation authorizes any transaction prohibited by this part.
    (b) No license or authorization contained in or issued pursuant to 
this part relieves the involved parties from complying with any other 
applicable laws or regulations.



                         Subpart B_Prohibitions



Sec. 538.201  Prohibited transactions involving blocked property.

    (a) Except as authorized by regulations, orders, directives, 
rulings, instructions, licenses, or otherwise, no property or interests 
in property of the Government of Sudan, that are in the United States, 
that hereafter come within the United States, or that are or hereafter 
come within the possession or control of U.S. persons, including their 
overseas branches, may be transferred, paid, exported, withdrawn or 
otherwise dealt in.
    (b) Unless otherwise authorized by this part or by a specific 
license expressly referring to this section, the transfer (including the 
transfer on the books of any issuer or agent thereof), disposition, 
transportation, importation, exportation, or withdrawal of, or the 
endorsement or guaranty of signatures on, or otherwise dealing in any 
security (or evidence thereof) registered or inscribed in the name of 
the Government of Sudan, and held within the possession or control of a 
U.S. person is prohibited, irrespective of the fact that at any time 
(either prior to, on, or subsequent to the effective date) the 
registered or inscribed owner thereof may have, or appears to have, 
assigned, transferred, or otherwise disposed of any such security.
    (c) When a transaction results in the blocking of funds at a 
financial institution pursuant to this section and a party to the 
transaction believes the funds have been blocked due to mistaken 
identity, that party may seek to have such funds unblocked pursuant to 
the administrative procedures set forth in Sec. 501.806 of this 
chapter.



Sec. 538.202  Effect of transfers violating the provisions of this part.

    (a) Any transfer after the effective date, which is in violation of 
any provision of this part or of any regulation, order, directive, 
ruling, instruction, license, or other authorization hereunder and 
involves any property or interest in property blocked pursuant to Sec. 
538.201 is null and void and shall not be the basis for the assertion or 
recognition of any interest in or right, remedy, power or privilege with 
respect to such property or property interests.
    (b) No transfer before the effective date shall be the basis for the 
assertion or recognition of any right, remedy, power, or privilege with 
respect to, or interest in, any property or interest in property blocked 
pursuant to Sec. 538.201, unless the person with whom such property is 
held or maintained, prior to

[[Page 211]]

such date, had written notice of the transfer or by any written evidence 
had recognized such transfer.
    (c) Unless otherwise provided, an appropriate license or other 
authorization issued by or pursuant to the direction or authorization of 
the Director of the Office of Foreign Assets Control before, during, or 
after a transfer shall validate such transfer or render it enforceable 
to the same extent that it would be valid or enforceable but for the 
provisions of the International Emergency Economic Powers Act, this 
part, and any regulation, order, directive, ruling, instruction, or 
license issued hereunder.
    (d) Transfers of property which otherwise would be null and void or 
unenforceable by virtue of the provisions of this section shall not be 
deemed to be null and void or unenforceable as to any person with whom 
such property was held or maintained (and as to such person only) in 
cases in which such person is able to establish to the satisfaction of 
the Director of the Office of Foreign Assets Control each of the 
following:
    (1) Such transfer did not represent a willful violation of the 
provisions of this part by the person with whom such property was held 
or maintained;
    (2) The person with whom such property was held or maintained did 
not have reasonable cause to know or suspect, in view of all the facts 
and circumstances known or available to such person, that such transfer 
required a license or authorization by or pursuant to this part and was 
not so licensed or authorized, or if a license or authorization did 
purport to cover the transfer, that such license or authorization had 
been obtained by misrepresentation of a third party or the withholding 
of material facts or was otherwise fraudulently obtained; and
    (3) The person with whom such property was held or maintained filed 
with the Office of Foreign Assets Control a report setting forth in full 
the circumstances relating to such transfer promptly upon discovery 
that:
    (i) Such transfer was in violation of the provisions of this part or 
any regulation, ruling, instruction, license, or other direction or 
authorization hereunder; or
    (ii) Such transfer was not licensed or authorized by the Director of 
the Office of Foreign Assets Control; or
    (iii) If a license did purport to cover the transfer, such license 
had been obtained by misrepresentation of a third party or the 
withholding of material facts or was otherwise fraudulently obtained.

    Note to paragraph (d): The filing of a report in accordance with the 
provisions of paragraph (d)(3) of this section shall not be deemed 
evidence that the terms of paragraphs (d)(1) and (2) of this section 
have been satisfied.

    (e) Unless licensed or authorized pursuant to this part, any 
attachment, judgment, decree, lien, execution, garnishment, or other 
judicial process is null and void with respect to any property or 
interest in property blocked pursuant to Sec. 538.201.



Sec. 538.203  Holding of funds in interest-bearing accounts; investment and 

reinvestment.

    (a) Except as provided in paragraphs (c) or (d) of this section, or 
as otherwise directed by the Office of Foreign Assets Control, any U.S. 
person holding funds, such as currency, bank deposits, or liquidated 
financial obligations, subject to Sec. 538.201(a) shall hold or place 
such funds in a blocked interest-bearing account located in the United 
States.
    (b)(1) For purposes of this section, the term blocked interest-
bearing account means a blocked account:
    (i) In a federally-insured U.S. bank, thrift institution, or credit 
union, provided the funds are earning interest at rates which are 
commercially reasonable; or
    (ii) With a broker or dealer registered with the Securities and 
Exchange Commission under the Securities Exchange Act of 1934, provided 
the funds are invested in a money market fund or in U.S. Treasury Bills.
    (2) For purposes of this section, a rate is commercially reasonable 
if it is the rate currently offered to other depositors on deposits or 
instruments of comparable size and maturity.
    (3) Funds held or placed in a blocked account pursuant to this 
paragraph (b) may not be invested in instruments the maturity of which 
exceeds 180 days. If

[[Page 212]]

interest is credited to a separate blocked account or sub-account, the 
name of the account party on each account must be the same.
    (c) Blocked funds held in instruments the maturity of which exceeds 
180 days at the time the funds become subject to Sec. 538.201 may 
continue to be held until maturity in the original instrument, provided 
any interest, earnings, or other proceeds derived therefrom are paid 
into a blocked interest-bearing account in accordance with paragraph (b) 
or (d) of this section.
    (d) Blocked funds held in accounts or instruments outside the United 
States at the time the funds become subject to Sec. 538.201 may 
continue to be held in the same type of accounts or instruments, 
provided the funds earn interest at rates which are commercially 
reasonable.
    (e) This section does not create an affirmative obligation for the 
holder of blocked tangible property, such as chattels or real estate, or 
of other blocked property, such as debt or equity securities, to sell or 
liquidate such property at the time the property becomes subject to 
Sec. 538.201. However, the Office of Foreign Assets Control may issue 
licenses permitting or directing such sales in appropriate cases.
    (f) Funds subject to this section may not be held, invested, or 
reinvested in a manner which provides immediate financial or economic 
benefit or access to the Government of Sudan or its entities, nor may 
their holder cooperate in or facilitate the pledging or other attempted 
use as collateral of blocked funds or other assets.



Sec. 538.204  Prohibited importation of goods or services from Sudan.

    Except as otherwise authorized, the importation into the United 
States, directly or indirectly, of any goods or services of Sudanese 
origin, other than information or informational materials, is 
prohibited.



Sec. 538.205  Prohibited exportation and reexportation of goods, technology, 

or services to Sudan.

    Except as otherwise authorized, the exportation or reexportation, 
directly or indirectly, to Sudan of any goods, technology (including 
technical data, software, or other information) or services from the 
United States or by a United States person, wherever located, or 
requiring the issuance of a license by a Federal agency, is prohibited.

[66 FR 36688, July 12, 2001]



Sec. 538.206  Prohibited facilitation.

    Except as otherwise authorized, the facilitation by a United States 
person, including but not limited to brokering activities, of the 
exportation or reexportation of goods, technology, or services from 
Sudan to any destination, or to Sudan from any location, is prohibited.



Sec. 538.207  Prohibited performance of contracts.

    Except as otherwise authorized, the performance by any United States 
person of any contract, including a financing contract, in support of an 
industrial, commercial, public utility, or governmental project in Sudan 
is prohibited.



Sec. 538.208  Prohibited grant or extension of credits or loans to the 

Government of Sudan.

    Except as otherwise authorized, the grant or extension of credits or 
loans by any United States person to the Government of Sudan is 
prohibited.



Sec. 538.209  Prohibited transportation-related transactions involving Sudan.

    Except as otherwise authorized, the following are prohibited:
    (a) Any transaction by a U.S. person relating to transportation of 
cargo to or from Sudan;
    (b) The provision of transportation of cargo to or from the United 
States by any Sudanese person or any vessel or aircraft of Sudanese 
registration; or
    (c) The sale in the United States by any person holding authority 
under 49 U.S.C. subtitle VII of any transportation of cargo by air that 
includes any stop in Sudan.



Sec. 538.210  Prohibited transactions relating to petroleum and petrochemical 

industries.

    (a) Except as otherwise authorized, and notwithstanding any contract 
entered into or any license or permit

[[Page 213]]

granted prior to October 13, 2006, all transactions by United States 
persons relating to the petroleum or petrochemical industries in Sudan, 
including, but not limited to, oilfield services and oil or gas 
pipelines, are prohibited.
    (b) Except as otherwise authorized, the facilitation by a United 
States person, including but not limited to brokering activities, of any 
transaction relating to the petroleum or petrochemical industries in 
Sudan is prohibited.

[72 FR 61515, Oct. 31, 2007]



Sec. 538.211  Evasions; attempts; conspiracies.

    Any transaction by any United States person or within the United 
States that evades or avoids, or has the purpose of evading or avoiding, 
or attempts to violate, any of the prohibitions set forth in this part 
is prohibited. Any conspiracy formed for the purpose of engaging in a 
transaction prohibited by this part is prohibited.

[63 FR 35810, July 1, 1998. Redesignated at 72 FR 61515, Oct. 31, 2007]



Sec. 538.212  Exempt transactions.

    (a) Personal communications. The prohibitions contained in this part 
do not apply to any postal, telegraphic, telephonic, or other personal 
communication, which does not involve the transfer of anything of value.
    (b) Humanitarian donations. The prohibitions of this part do not 
apply to donations by United States persons of articles, such as food, 
clothing, and medicine, intended to be used to relieve human suffering.
    (c) Information and informational materials. (1) The importation 
from any country and the exportation to any country of information or 
informational materials as defined in Sec. 538.306, whether commercial 
or otherwise, regardless of format or medium of transmission, are exempt 
from the prohibitions and regulations of this part.
    (2) This section does not authorize transactions related to 
information and informational materials not fully created and in 
existence at the date of the transactions, or to the substantive or 
artistic alteration or enhancement of informational materials, or to the 
provision of marketing and business consulting services. Such prohibited 
transactions include, without limitation, payment of advances for 
informational materials not yet created and completed, provision of 
services to market, produce or co-produce, create or assist in the 
creation of information and informational materials, and payment of 
royalties to the Government of Sudan or a person in Sudan with respect 
to income received for enhancements or alterations made by U.S. persons 
to information or informational materials imported from the Government 
of Sudan or a person in Sudan.
    (3) This section does not authorize transactions incident to the 
exportation of software subject to the Export Administration 
Regulations, 15 CFR parts 730-774, or to the exportation of goods, 
technology or software for use in the transmission of any data. The 
exportation of such items to the Government of Sudan or to Sudan is 
prohibited, as provided in Sec. Sec. 538.201 and 538.205.
    (d) Travel. The prohibitions contained in this part do not apply to 
transactions ordinarily incident to travel to or from any country, 
including exportation or importation of accompanied baggage for personal 
use, maintenance within any country including payment of living expenses 
and acquisition of goods or services for personal use, and arrangement 
or facilitation of such travel including non-scheduled air, sea, or land 
voyages.
    (e) Official business. The prohibitions contained in this part do 
not apply to transactions for the conduct of the official business of 
the Federal Government or the United Nations by employees thereof.
    (f) Journalistic activity. The prohibitions contained in this part 
do not apply to transactions in Sudan for journalistic activity by 
persons regularly employed in such capacity by a news-gathering 
organization.
    (g)(1) Specified Areas of Sudan. Except for the provisions of 
Sec. Sec. 538.201 through 538.203, 538.210, and 538.211, and except as 
provided in paragraph (g)(2) of this section, the prohibitions contained 
in this part do not apply to activities or related transactions with 
respect to the Specified Areas of Sudan.

[[Page 214]]

    (2) The exemption in paragraph (g)(1) of this section does not apply 
to the exportation or reexportation of agricultural commodities 
(including bulk agricultural commodities listed in appendix A to this 
part 538), medicine, and medical devices.

    Note to Sec. 538.212(g)(2): See Sec. 538.523(a)(2) for a general 
license authorizing the exportation and reexportation of agricultural 
commodities, medicine, and medical devices to the Specified Areas of 
Sudan, and the conduct of related transactions.

[63 FR 35810, July 1, 1998, as amended at 66 FR 36688, July 12, 2001. 
Redesignated and amended at 72 FR 61515, Oct. 31, 2007; 74 FR 46363, 
Sept. 9, 2009]



                      Subpart C_General Definitions



Sec. 538.301  Blocked account; blocked property.

    The terms blocked account and blocked property shall mean any 
account or property subject to the prohibition in Sec. 538.201 held in 
the name of the Government of Sudan or in which the Government of Sudan 
has an interest, and with respect to which payments, transfers, 
exportations, withdrawals, or other dealings may not be made or effected 
except pursuant to an authorization or license from the Office of 
Foreign Assets Control authorizing such action.



Sec. 538.302  Effective date.

    The term effective date refers to the effective date of the 
applicable prohibitions and directives contained in this part which is 
12:01 a.m. EST, November 4, 1997.



Sec. 538.303  Entity.

    The term entity means a partnership, association, trust, joint 
venture, corporation, or other organization.



Sec. 538.304  General license.

    The term general license means any license or authorization the 
terms of which are set forth in this part.



Sec. 538.305  Government of Sudan.

    (a) The term Government of Sudan includes:
    (1) The state and the Government of Sudan, as well as any political 
subdivision, agency, or instrumentality thereof, including the Central 
Bank of Sudan;
    (2) Any entity owned or controlled by the foregoing;
    (3) Any person to the extent that such person is, or has been, or to 
the extent that there is reasonable cause to believe that such person 
is, or has been, since the effective date, acting or purporting to act 
directly or indirectly on behalf of any of the foregoing; and
    (4) Any other person determined by the Director of the Office of 
Foreign Assets Control to be included within paragraphs (a)(1) through 
(a)(3) of this section.
    (b) Effective October 13, 2006, the term Government of Sudan, as 
defined in paragraph (a) of this section, does not include the regional 
government of Southern Sudan.

    Note to Sec. 538.305: Please refer to the appendices at the end of 
this chapter for listings of persons determined to fall within this 
definition who have been designated pursuant to this part. Section 
501.807 of this chapter sets forth the procedures to be followed by 
persons seeking administrative reconsideration of their designation, or 
who wish to assert that the circumstances resulting in the designation 
are no longer applicable.

[63 FR 35810, July 1, 1998, as amended at 72 FR 61516, Oct. 31, 2007]



Sec. 538.306  Information and informational materials.

    (a)(1) For purposes of this part, the term information and 
informational materials means publications, films, posters, phonograph 
records, photographs, microfilms, microfiche, tapes, compact disks, CD 
ROMs, artworks, and news wire feeds, and other information and 
informational materials.
    (2) To be considered informational materials, artworks must be 
classified under chapter subheading 9701, 9702, or 9703 of the 
Harmonized Tariff Schedule of the United States.
    (b) The term information and informational materials with respect to 
U.S. exports does not include items:
    (1) That were, as of April 30, 1994, or that thereafter become, 
controlled for export pursuant to section 5 of the Export Administration 
Act of 1979, 50 U.S.C. App. 2401-2420 (the ``EAA''), or section 6 of the 
EAA to the extent that such controls promote nonproliferation

[[Page 215]]

or antiterrorism policies of the United States.
    (2) With respect to which acts are prohibited by 18 U.S.C. chapter 
37.



Sec. 538.307  Interest.

    Except as otherwise provided in this part, the term interest when 
used with respect to property (e.g., `` an interest in property'') means 
an interest of any nature whatsoever, direct or indirect.



Sec. 538.308  License.

    Except as otherwise specified, the term license means any license or 
authorization contained in or issued pursuant to this part.



Sec. 538.309  Person.

    The term person means an individual or entity.



Sec. 538.310  Property; property interest.

    The terms property and property interest include, but are not 
limited to, money, checks, drafts, bullion, bank deposits, savings 
accounts, debts, indebtedness, obligations, notes, guarantees, 
debentures, stocks, bonds, coupons, any other financial instruments, 
bankers acceptances, mortgages, pledges, liens or other rights in the 
nature of security, warehouse receipts, bills of lading, trust receipts, 
bills of sale, any other evidences of title, ownership or indebtedness, 
letters of credit and any documents relating to any rights or 
obligations thereunder, powers of attorney, goods, wares, merchandise, 
chattels, stocks on hand, ships, goods on ships, real estate mortgages, 
deeds of trust, vendors' sales agreements, land contracts, leaseholds, 
ground rents, real estate and any other interest therein, options, 
negotiable instruments, trade acceptances, royalties, book accounts, 
accounts payable, judgments, patents, trademarks or copyrights, 
insurance policies, safe deposit boxes and their contents, annuities, 
pooling agreements, services of any nature whatsoever, contracts of any 
nature whatsoever, and any other property, real, personal, or mixed, 
tangible or intangible, or interest or interests therein, present, 
future or contingent.



Sec. 538.311  Specific license.

    The term specific license means any license or authorization not set 
forth in this part but issued pursuant to this part.



Sec. 538.312  Sudanese origin.

    The term goods or services of Sudanese origin includes:
    (a) Goods produced, manufactured, grown, extracted, or processed 
within Sudan;
    (b) Goods which have entered into Sudanese commerce;
    (c) Services performed in Sudan or by a person ordinarily resident 
in Sudan who is acting as an agent, employee, or contractor of the 
Government of Sudan or of a business entity located in Sudan. Services 
of Sudanese origin are not imported into the United States when such 
services are provided in the United States by a Sudanese national 
employed or resident in the United States.
    (d) The term services of Sudanese origin does not include:
    (1) Diplomatic and consular services performed by or on behalf of 
the Government of Sudan;
    (2) Diplomatic and consular services performed by or on behalf of 
the Government of the United States.



Sec. 538.313  Transfer.

    The term transfer means any actual or purported act or transaction, 
whether or not evidenced by writing, and whether or not done or 
performed within the United States, the purpose, intent, or effect of 
which is to create, surrender, release, convey, transfer, or alter, 
directly or indirectly, any right, remedy, power, privilege, or interest 
with respect to any property and, without limitation upon the foregoing, 
shall include the making, execution, or delivery of any assignment, 
power, conveyance, check, declaration, deed, deed of trust, power of 
attorney, power of appointment, bill of sale, mortgage, receipt, 
agreement, contract, certificate, gift, sale, affidavit, or statement; 
the making of any payment; the setting off of any obligation or credit; 
the appointment of any agent, trustee, or fiduciary; the creation or 
transfer of any lien; the issuance, docketing, filing, or levy of or 
under any judgment, decree,

[[Page 216]]

attachment, injunction, execution, or other judicial or administrative 
process or order, or the service of any garnishment; the acquisition of 
any interest of any nature whatsoever by reason of a judgment or decree 
of any foreign country; the fulfillment of any condition; the exercise 
of any power of appointment, power of attorney, or other power; or the 
acquisition, disposition, transportation, importation, exportation, or 
withdrawal of any security.



Sec. 538.314  United States.

    The term United States means the United States, its territories and 
possessions, and all areas under the jurisdiction or authority thereof.



Sec. 538.315  United States person; U.S. person.

    The term United States person or U.S. person means any United States 
citizen, permanent resident alien, entity organized under the laws of 
the United States or any jurisdiction within the United States 
(including foreign branches), or any person in the United States.



Sec. 538.316  U.S. financial institution.

    The term U.S. financial institution means any U.S. entity (including 
foreign branches) that is engaged in the business of accepting deposits, 
making, granting, transferring, holding, or brokering loans or credits, 
or purchasing or selling foreign exchange, securities, commodity futures 
or options, or procuring purchasers and sellers thereof, as principal or 
agent; including, but not limited to, depository institutions, banks, 
savings banks, trust companies, securities brokers and dealers, 
commodity futures and options brokers and dealers, forward contract and 
foreign exchange merchants, securities and commodities exchanges, 
clearing corporations, investment companies, employee benefit plans, and 
U.S. holding companies, U.S. affiliates, or U.S. subsidiaries of any of 
the foregoing. This term includes those branches, offices and agencies 
of foreign financial institutions which are located in the United 
States, but not such institutions' foreign branches, offices, or 
agencies.



Sec. 538.317  U.S. depository institution.

    The term U.S. depository institution means any entity (including its 
foreign branches) organized under the laws of the United States or of 
any jurisdiction within the United States, or any agency, office or 
branch located in the United States of a foreign entity, that is engaged 
primarily in the business of banking (for example, banks, savings banks, 
savings associations, credit unions, trust companies and United States 
bank holding companies) and is subject to regulation by federal or state 
banking authorities.

[70 FR 34062, June 13, 2005]



Sec. 538.318  U.S. registered broker or dealer in securities.

    The term U.S. registered broker or dealer in securities means any 
U.S. citizen, permanent resident alien, or entity organized under the 
laws of the United States or of any jurisdiction within the United 
States, including its foreign branches, or any agency, office or branch 
of a foreign entity located in the United States, that:
    (a) Is a ``broker'' or ``dealer'' in securities within the meanings 
set forth in the Securities Exchange Act of 1934;
    (b) Holds or clears customer accounts; and
    (c) Is registered with the Securities and Exchange Commission under 
the Securities Exchange Act of 1934.

[70 FR 34062, June 13, 2005]



Sec. 538.319  U.S. registered money transmitter.

    The term U.S. registered money transmitter means any U.S. citizen, 
permanent resident alien, or entity organized under the laws of the 
United States or of any jurisdiction within the United States, including 
its foreign branches, or any agency, office or branch of a foreign 
entity located in the United States, that is a money transmitter, as 
defined in 31 CFR 103.11(uu)(5), that is registered pursuant to 31 CFR 
103.41.

[70 FR 34062, June 13, 2005]



Sec. 538.320  Specified Areas of Sudan.

    (a) The term Specified Areas of Sudan means Southern Sudan, Southern 
Kordofan/Nuba Mountains State, Blue

[[Page 217]]

Nile State, Abyei, Darfur, and marginalized areas in and around 
Khartoum.
    (b) The term marginalized areas in and around Khartoum means the 
following official camps for internally displaced persons: Mayo, El 
Salaam, Wad El Bashir, and Soba.

[72 FR 61516, Oct. 31, 2007]



                        Subpart D_Interpretations



Sec. 538.401  Reference to amended sections.

    Except as otherwise specified, reference to any section of this part 
or to any regulation, ruling, order, instruction, direction, or license 
issued pursuant to this part shall be deemed to refer to the same as 
currently amended.



Sec. 538.402  Effect of amendment.

    Any amendment, modification, or revocation of any section of this 
part or of any order, regulation, ruling, instruction, or license issued 
by or under the direction of the Director of the Office of Foreign 
Assets Control shall not, unless otherwise specifically provided, affect 
any act done or omitted to be done, or any civil or criminal suit or 
proceeding commenced or pending prior to such amendment, modification, 
or revocation. All penalties, forfeitures, and liabilities under any 
such order, regulation, ruling, instruction, or license continue and may 
be enforced as if such amendment, modification, or revocation had not 
been made.



Sec. 538.403  Termination and acquisition of an interest in blocked property.

    (a) Whenever a transaction licensed or authorized by or pursuant to 
this part results in the transfer of property (including any property 
interest) away from the Government of Sudan, such property shall no 
longer be deemed to be property in which the Government of Sudan has or 
has had an interest unless there exists in the property another interest 
of the Government of Sudan, the transfer of which has not been effected 
pursuant to license or other authorization.
    (b) Unless otherwise specifically provided in a license or 
authorization issued pursuant to this part, if property (including any 
property interest) is transferred or attempted to be transferred to the 
Government of Sudan, such property shall be deemed to be property in 
which there exists an interest of the Government of Sudan.



Sec. 538.404  Setoffs prohibited.

    A setoff against blocked property (including a blocked account), 
whether by a U.S. bank or other U.S. person, is a prohibited transfer 
under Sec. 538.201 if effected after the effective date.



Sec. 538.405  Transactions incidental to a licensed transaction authorized.

    Any transaction ordinarily incident to a licensed transaction and 
necessary to give effect thereto is also authorized, except:
    (a) A transaction by an unlicensed Sudanese governmental entity or 
involving a debit to a blocked account or a transfer of blocked property 
not explicitly authorized within the terms of the license;
    (b) Provision of any transportation services to or from Sudan not 
explicitly authorized in or pursuant to this part other than loading, 
transporting, and discharging licensed or exempt cargo there.
    (c) Distribution or leasing in Sudan of any containers or similar 
goods owned or controlled by United States persons after the performance 
of transportation services to Sudan; and
    (d) Financing of licensed sales for exportation or reexportation of 
agricultural commodities or products, medicine, or medical equipment to 
the Government of Sudan, to any individual or entity in an area of Sudan 
other than the Specified Areas of Sudan, or to persons in third 
countries purchasing specifically for resale to the foregoing. See Sec. 
538.525.

[64 FR 41786, Aug. 2, 1999, as amended at 66 FR 36688, July 12, 2001; 74 
FR 46363, Sept. 9, 2009]



Sec. 538.406  Exportation of services; performance of service contracts; legal 

services.

    (a) The prohibition on the exportation of services contained in 
Sec. 538.205 applies to services performed on behalf of the Government 
of Sudan, or where

[[Page 218]]

the benefit of such services is otherwise received in Sudan, when such 
services are performed:
    (1) In the United States;
    (2) By a U.S. person, wherever located;
    (3) By an entity located in the United States, including its 
overseas branches; or
    (4) Outside the United States by an individual U.S. person 
ordinarily resident in the United States.
    (b) The benefit of services performed anywhere in the world on 
behalf of the Government of Sudan, including services performed for a 
controlled entity or agent of the Government of Sudan, is presumed to be 
received in Sudan.
    (c) The prohibitions contained in Sec. Sec. 538.201 and 538.207 
apply to services performed by U.S. persons, wherever located:
    (1) On behalf of the Government of Sudan;
    (2) With respect to property interests of the Government of Sudan; 
or
    (3) In support of an industrial, commercial, public utility or 
governmental project in Sudan.
    (d) Example: U.S. persons may not, without specific authorization 
from the Office of Foreign Assets Control, represent an individual or 
entity with respect to contract negotiations, contract performance, 
commercial arbitration, or other business dealings with the Government 
of Sudan. See Sec. 538.505 on licensing policy with regard to the 
provision of certain legal services.



Sec. 538.407  Facilitation by a United States person.

    (a) The prohibition contained in Sec. 538.206 against facilitation 
by a United States person of the exportation or reexportation of goods, 
technology, or services between Sudan and any destination (including the 
United States) bars any unlicensed action by a U.S. person that assists 
or supports trading activity with Sudan by any person. Facilitation of a 
trade or financial transaction that could be engaged in directly by a 
U.S. person or from the United States consistent with the prohibitions, 
general licenses and exemptions contained in this part is not 
prohibited. Activity of a purely clerical or reporting nature that does 
not further trade or financial transactions with Sudan or the Government 
of Sudan is not considered prohibited facilitation. For example, 
reporting on the results of a subsidiary's trade with Sudan is not 
prohibited, while financing or insuring that trade or warranting the 
quality of goods sold by a subsidiary to the Government of Sudan 
constitutes prohibited facilitation.
    (b) To avoid potential liability for U.S. persons under this part, a 
U.S. parent corporation must ensure that its foreign subsidiaries act 
independently of any U.S. person with respect to all transactions and 
activities relating to the exportation or reexportation of goods, 
technology, or services between Sudan and any other location including 
but not limited to business and legal planning; decision making; 
designing, ordering or transporting goods; and financial, insurance, and 
other risks. See Sec. 538.505 with respect to exports of, inter alia, 
certain legal services benefitting Sudan.
    (c) No U.S. person may change its policies or operating procedures, 
or those of a foreign affiliate or subsidiary, in order to enable a 
foreign entity owned or controlled by U.S. persons to enter into a 
transaction that could not be entered into directly by a U.S. person or 
from the United States pursuant to this part.
    (d) No U.S. person may refer to a foreign person purchase orders, 
requests for bids, or similar business opportunities involving Sudan or 
the Government of Sudan to which the United States person could not 
directly respond as a result of the prohibitions contained in this part.



Sec. 538.408  Offshore transactions.

    (a) The prohibitions contained in Sec. Sec. 538.201 and 538.206 
apply to transactions by any U.S. person in a location outside the 
United States with respect to property in which the U.S. person knows, 
or has reason to know, the Government of Sudan has or has had an 
interest since the effective date, or with respect to goods, technology 
or services which the U.S. person knows, or has reason to know, are of 
Sudanese origin or owned or controlled by the Government of Sudan.

[[Page 219]]

    (b) Prohibited transactions include, but are not limited to, 
importation into or exportation from locations outside the United States 
of, or purchasing, selling, financing, swapping, insuring, transporting, 
lifting, storing, incorporating, transforming, brokering, or otherwise 
dealing in, within such locations, goods, technology or services of 
Sudanese origin.
    (c) Examples. (1) A U.S. person may not, within the United States or 
abroad, purchase, sell, finance, insure, transport, act as a broker for 
the sale or transport of, or otherwise deal in, Sudanese crude oil or 
sugar refined in Sudan.
    (2) A U.S. person may not, within the United States or abroad, 
conduct transactions of any nature whatsoever with an entity that the 
U.S. person knows or has reason to know is the Government of Sudan, 
including a controlled entity or agent of that Government, or which 
benefits or supports the business of an entity located in Sudan, unless 
the entity is licensed by the Office of Foreign Assets Control to 
conduct such transactions with U.S. persons or the transaction is 
generally licensed in, or exempted from the prohibitions of, this part.



Sec. 538.409  Transshipments through the United States prohibited.

    (a) The prohibitions in Sec. 538.205 apply to the importation into 
the United States, for transshipment or transit, of goods which are 
intended or destined for Sudan, or an entity operated from Sudan.
    (b) The prohibitions in Sec. 538.204 apply to the importation into 
the United States, for transshipment or transit, of goods of Sudanese 
origin which are intended or destined for third countries.
    (c) Goods in which the Government of Sudan has an interest which are 
imported into or transshipped through the United States are blocked 
pursuant to Sec. 538.201.



Sec. 538.410  Imports of Sudanese goods from third countries; transshipments.

    (a) Importation into the United States from third countries of goods 
containing raw materials or components of Sudanese origin is not 
prohibited if those raw materials or components have been incorporated 
into manufactured products or otherwise substantially transformed in a 
third country.
    (b) Importation into the United States of goods of Sudanese origin 
that have been transshipped through a third country without being 
incorporated into manufactured products or otherwise substantially 
transformed in a third country are prohibited.



Sec. 538.411  Exports to third countries; transshipments.

    Exportation of goods or technology (including technical data, 
software, information not exempted from the prohibition of this part 
pursuant to Sec. 538.211, or technical assistance) from the United 
States to third countries is prohibited if the exporter knows, or has 
reason to know, that the goods or technology are intended for 
transshipment to Sudan (including passage through, or storage in, 
intermediate destinations). The exportation of goods or technology 
intended specifically for incorporation or substantial transformation 
into a third-country product is also prohibited if the particular 
product is to be used in Sudan, is being specifically manufactured to 
fill a Sudanese order, or if the manufacturer's sales of the particular 
product are predominantly to Sudan.



Sec. 538.414  Loans or extensions of credit.

    (a) The prohibition in Sec. 538.205 applies to loans or extensions 
of credit to a person in Sudan, including overdraft protection on 
checking accounts, and the unlicensed renewal or rescheduling of credits 
or loans in existence as of the effective date, whether by affirmative 
action or operation of law.
    (b) The prohibition in Sec. 538.205 applies to financial services 
including loans or credits extended in any currency.



Sec. 538.415  Payments involving Sudan.

    Before a United States financial institution initiates a payment 
subject to the prohibitions contained in this part on behalf of any 
customer, or credits a transfer subject to such prohibitions to the 
account on its books of the ultimate beneficiary, the U.S. financial 
institution must determine

[[Page 220]]

that the transfer is not prohibited by this part.



Sec. 538.416  Payments from blocked accounts to U.S. exporters and for other 

obligations prohibited.

    No debits may be made to a blocked account to pay obligations to 
U.S. persons or other persons, including payment for goods, technology 
or services exported prior to the effective date, except as authorized 
pursuant to this part.



Sec. 538.417  Transshipments through Sudan.

    (a) The exportation or reexportation of goods, technology, or 
services to the Specified Areas of Sudan is exempt under Sec. 
538.212(g) only if such goods, technology, or services do not transit or 
transship through any area of Sudan other than the Specified Areas of 
Sudan.
    (b) The importation into the United States of goods or services 
from, or originating in, the Specified Areas of Sudan is exempt under 
Sec. 538.212(g) only if such goods or services do not transit or 
transship through any area of Sudan other than the Specified Areas of 
Sudan.

    Note to Sec. 538.417. See Sec. 538.532, which authorizes 
humanitarian transshipments to or from Southern Sudan and Darfur.

[72 FR 61516, Oct. 31, 2007]



Sec. 538.418  Financial transactions in Sudan.

    (a) Any financial transaction with a depository institution located 
in an area of Sudan other than the Specified Areas of Sudan, e.g., 
Khartoum, remains prohibited.
    (b) Financial transactions are no longer prohibited by this part if:
    (1) The underlying activity is not prohibited by this part;
    (2) The financial transaction involves a third-country depository 
institution, or a Sudanese depository institution not owned or 
controlled by the Government of Sudan, that is located in the Specified 
Areas of Sudan; and
    (3) The financial transaction is not routed through a depository 
institution that is located in an area of Sudan other than the Specified 
Areas of Sudan or that is owned or controlled by the Government of 
Sudan, wherever located.
    (c) Example. A U.S. bank is instructed to transfer funds to the 
Abyei branch of a Sudanese bank that is not owned or controlled by the 
Government of Sudan. In order for the transfer to take place, the U.S. 
bank is required to route the funds through the Sudanese bank's 
headquarters, which is located in Khartoum. Due to the routing of the 
financial transaction through Khartoum, this transaction is prohibited 
and requires authorization from the Office of Foreign Assets Control. 
However, if the U.S. bank is able to bypass the Khartoum headquarters 
and transfer the funds directly to the Abyei branch of the Sudanese 
bank, then the transaction would not be prohibited.

[72 FR 61516, Oct. 31, 2007]



 Subpart E_Licenses, Authorizations, and Statements of Licensing Policy



Sec. 538.500  Licensing procedures.

    For provisions relating to licensing procedures, see part 501, 
subpart E, of this chapter. Licensing actions taken pursuant to part 501 
of this chapter with respect to the prohibitions contained in this part 
are considered actions taken pursuant to this part.

[68 FR 53658, Sept. 11, 2003]



Sec. 538.501  Effect of license or authorization.

    (a) No license or other authorization contained in this part, or 
otherwise issued by or under the direction of the Director of the Office 
of Foreign Assets Control, authorizes or validates any transaction 
effected prior to the issuance of the license, unless specifically 
provided in such license or authorization.
    (b) No regulation, ruling, instruction, or license authorizes any 
transaction prohibited under this part unless the regulation, ruling, 
instruction, or license is issued by the Office of Foreign Assets 
Control and specifically refers to this part. No regulation, ruling, 
instruction, or license referring to this part shall be deemed to 
authorize any

[[Page 221]]

transaction prohibited by any provision of this chapter unless the 
regulation, ruling, instruction or license specifically refers to such 
provision.
    (c) Any regulation, ruling, instruction, or license authorizing any 
transaction otherwise prohibited under this part has the effect of 
removing a prohibition or prohibitions contained in this part from the 
transaction, but only to the extent specifically stated by its terms. 
Unless the regulation, ruling, instruction, or license otherwise 
specifies, such an authorization does not create any right, duty, 
obligation, claim, or interest in, or with respect to, any property 
which would not otherwise exist under ordinary principles of law.



Sec. 538.502  Exclusion from licenses and authorizations.

    The Director of the Office of Foreign Assets Control reserves the 
right to exclude any person, property, or transaction from the operation 
of any license, or from the privileges therein conferred, or to restrict 
the applicability thereof with respect to particular persons, property, 
transactions, or classes thereof. Such action shall be binding upon all 
persons receiving actual or constructive notice of such exclusion or 
restriction.



Sec. 538.503  Payments and transfers to blocked accounts in U.S. financial 

institutions.

    Any payment of funds or transfer of credit in which the Government 
of Sudan has any interest, that comes within the possession or control 
of a U.S. financial institution, must be blocked in an account on the 
books of that financial institution. A transfer of funds or credit by a 
U.S. financial institution between blocked accounts in its branches or 
offices is authorized, provided that no transfer is made from an account 
within the United States to an account held outside the United States, 
and further provided that a transfer from a blocked account may only be 
made to another blocked account held in the same name.

    Note to Sec. 538.503: Please refer to Sec. 501.603 of this chapter 
for mandatory reporting requirements regarding financial transfers. See 
also Sec. 538.203 concerning the obligation to hold blocked funds in 
interest-bearing accounts.



Sec. 538.504  Entries in certain accounts for normal service charges 

authorized.

    (a) U.S. financial institutions are hereby authorized to debit any 
blocked account with such U.S. financial institution in payment or 
reimbursement for normal service charges owed to such U.S. financial 
institution by the owner of such blocked account.
    (b) As used in this section, the term normal service charge shall 
include charges in payment or reimbursement for interest due; cable, 
telegraph, or telephone charges; postage costs; custody fees; small 
adjustment charges to correct bookkeeping errors; and, but not by way of 
limitation, minimum balance charges, notary and protest fees, and 
charges for reference books, photocopies, credit reports, transcripts of 
statements, registered mail, insurance, stationery and supplies, and 
other similar items.



Sec. 538.505  Provision of certain legal services to the Government of Sudan, 

persons in Sudan, or benefitting Sudan.

    (a) The provision to the Government of Sudan, to a person in Sudan, 
or in circumstances in which the benefit is otherwise received in Sudan, 
of the legal services set forth in paragraph (b) of this section is 
authorized, provided that all receipts of payment therefor must be 
specifically licensed. The provision of any other legal services as 
interpreted in Sec. 538.406 requires the issuance of a specific 
license.
    (b) Specific licenses may be issued, on a case-by-case basis, 
authorizing receipt, from unblocked sources, of payment of professional 
fees and reimbursement of incurred expenses for the following legal 
services by U.S. persons to the Government of Sudan or to a person in 
Sudan:
    (1) Provision of legal advice and counseling to the Government of 
Sudan, to a person in Sudan, or in circumstances in which the benefit is 
otherwise received in Sudan, on the requirements of and compliance with 
the laws of any jurisdiction within the United States, provided that 
such advice and counseling is not provided to

[[Page 222]]

facilitate transactions in violation of this part;
    (2) Representation of the Government of Sudan or a person in Sudan 
when named as a defendant in or otherwise made a party to domestic U.S. 
legal, arbitration, or administrative proceedings;
    (3) Initiation of domestic U.S. legal, arbitration, or 
administrative proceedings in defense of property interests subject to 
U.S. jurisdiction of the Government of Sudan, or of a person in Sudan;
    (4) Representation of the Government of Sudan or a person in Sudan 
before any federal agency with respect to the imposition, 
administration, or enforcement of U.S. sanctions against Sudan; and
    (5) Provision of legal services in any other context in which 
prevailing U.S. law requires access to legal counsel at public expense.
    (c) Enforcement of any lien, judgment, arbitral award, decree, or 
other order through execution, garnishment or other judicial process 
purporting to transfer or otherwise alter or affect a property interest 
of the Government of Sudan is prohibited unless specifically licensed in 
accordance with Sec. 538.202(e).



Sec. 538.506  30-day delayed effective date for pre-November 4, 1997 trade 

contracts involving Sudan.

    (a) Pre-existing trade contracts. Trade transactions required under 
a contract entered into prior to November 4, 1997 (a ``pre-existing 
trade contract''), otherwise prohibited by this part, including the 
importation of goods or services of Sudanese origin or the exportation 
of goods, services, or technology that was authorized under applicable 
Federal regulations in force immediately prior to November 4, 1997, are 
authorized without specific licensing by the Office of Foreign Assets 
Control as follows:
    (1) Exports or reexports are authorized until 12:01 a.m. EST, 
December 4, 1997, and non-financing activity by U.S. persons incidental 
to the performance of the pre-existing trade contract (such as the 
provision of transportation or insurance) is authorized through 12:01 
a.m. EST, February 2, 1998, if the pre-existing trade contract is for:
    (i) The exportation of goods, services, or technology from the 
United States or a third country that was authorized under applicable 
Federal regulations in force immediately prior to November 4, 1997; or
    (ii) The reexportation of goods or technology that was authorized 
under applicable Federal regulations in force immediately prior to 
November 4, 1997.
    (2) If the pre-existing trade contract is for the importation of 
goods or services of Sudanese origin or other trade transactions 
relating to goods or services of Sudanese origin or owned or controlled 
by the Government of Sudan, importations under the pre-existing trade 
contract are authorized until 12:01 a.m. EST, December 4, 1997.
    (3) For purposes of this section, goods are considered to be 
exported upon final loading aboard the exporting conveyance in the 
country of export. Goods are considered to be imported upon arrival in 
the jurisdiction of the country of importation.
    (b)(1) Financing for pre-existing trade contracts. In general, no 
financing services prohibited by this part may be performed after 12:01 
a.m. EST, November 4, 1997. However, letters of credit and other 
financing agreements with respect to the trade transactions authorized 
in paragraph (a) of this section may be performed according to their 
terms, and may be extended or renewed, except that:
    (i) Any payment required to be made to the Government of Sudan or 
any person blocked pursuant to this part or otherwise, including 
payments authorized with respect to trade transactions described in 
paragraph (a) of this section, must be made into a blocked account in 
the United States; and
    (ii) No payment may be made from a blocked account unless authorized 
by a specific license issued by the Office of Foreign Assets Controls.
    (2) Specific licenses may be issued by the Office of Foreign Asset 
Controls on a case-by-case basis to permit a U.S. bank to debit a 
blocked account of the Government of Sudan for funds held as collateral 
under an irrevocable letter of credit issued or confirmed by it, or a 
letter of credit reimbursement confirmed by it, for goods, services or

[[Page 223]]

technology exported, or goods or technology reexported, prior to 12:01 
a.m. EST, December 4, 1997, directly or indirectly to Sudan, or to third 
countries for an entity operated from Sudan, or for the benefit of the 
Government of Sudan. The application for a license must:
    (i) Present evidence satisfactory to the Office of Foreign Asset 
Controls that the exportation or reexportation occurred prior to 12:01 
a.m. EST, December 4, 1997; and
    (ii) Include an explanation of the facts and circumstances 
surrounding the entry and execution of the export or reexport 
transaction, including the names and addresses of all Sudanese 
participants in the transaction and all Sudanese persons having an 
ownership interest in the beneficiary of the letter of credit.
    (c) Blocked Government of Sudan accounts. Nothing in this section 
permits debits to a blocked account of the Government of Sudan absent 
the issuance of a specific license by Office of Foreign Asset Controls 
authorizing such a debit. The operation of an account of the Government 
of Sudan in a financial institution does not constitute a trade 
transaction for purposes of this section.
    (d) Existence of contract. The existence of a contract will be 
determined with reference to the principles contained in Article 2 of 
the Uniform Commercial Code.
    (e) Reporting requirement. Although a specific license from Office 
of Foreign Asset Controls is not required for any transaction authorized 
in paragraph (a) of this section, any U.S. person engaging in a 
transaction described in paragraph (a) of this section is required to 
report such transaction immediately to the Office of Foreign Asset 
Controls and provide a description of the underlying trade contract. 
Such reports should be directed to the Office of Foreign Assets Control, 
Attn: Compliance Programs Division/Sudan Contracts, 1500 Pennsylvania 
Avenue, NW., Annex-2nd Floor, Washington, DC 20220. Such reports may be 
made by facsimile transmission to 202/622-1657.
    (f) Licensing and reporting provisions. For provisions relating to 
applications to the Office of Foreign Asset Controls for specific 
licenses and reporting requirements, see Sec. Sec. 501.606 and 501.808 
of this chapter.



Sec. 538.507  Reexports by non-U.S. persons.

    (a) Goods and technology subject to export license application 
requirements under other United States regulations. The reexportation to 
Sudan or the Government of Sudan by a non-U.S. person of any goods or 
technology exported from the United States, the exportation of which to 
Sudan is subject to export or reexport license application requirements, 
is authorized under this section provided that the goods or technology:
    (1) Have been incorporated into another product outside the United 
States and constitute 10 percent or less by value of that product 
exported from a third country; or
    (2) Have been substantially transformed outside the United States.

    Note to paragraph (a) of Sec. 538.507: Notwithstanding the 
authorization set forth in paragraph (a), a non-U.S. person's 
reexportation of goods, technology or software of U.S. origin that are 
subject to the Export Administration Regulations (15 CFR parts 730 
through 774) may require specific authorization from the Department of 
Commerce, Bureau of Industry and Security.

    (b) Goods and technology not subject to export license application 
requirements under other United States regulations. The reexportation to 
Sudan or the Government of Sudan by a non-U.S. person of any goods or 
technology of U.S. origin, the exportation of which to Sudan is not 
subject to any export license application requirements under any other 
United States regulations, is authorized under this section.

    Note to paragraph (b) of Sec. 538.507: However, the reexportation 
by non-U.S. persons of U.S.-origin goods, technology or software 
classified as EAR99 under the Export Administration Regulations (15 CFR 
parts 730 through 774) may require specific authorization from the 
Department of Commerce, Bureau of Industry and Security. See, for 
example, the end-use and end-user restrictions set forth in 15 CFR part 
744.

[70 FR 34062, June 13, 2005]

[[Page 224]]



Sec. 538.508  Certain payments by the Government of Sudan of obligations to 

persons within the United States authorized.

    Specific licenses may be issued on a case-by-case basis to permit 
the transfer of funds after the effective date by, through, or to any 
U.S. financial institution or other U.S. person not blocked pursuant to 
this chapter, from a non-blocked account outside of the United States, 
solely for the purpose of payment of obligations of the Government of 
Sudan to persons or accounts within the United States, provided that the 
obligation arose prior to the effective date, and the payment requires 
no debit to a blocked account.



Sec. 538.509  Certain services relating to participation in various events 

authorized.

    The importation of Sudanese-origin services into the United States 
is authorized where such services are performed in the United States by 
a Sudanese national who enters the United States on a visa issued by the 
State Department for the purpose of participating in a public 
conference, performance, exhibition or similar event, and such services 
are consistent with that purpose.



Sec. 538.510  Importation and exportation of certain gifts authorized.

    The importation into the United States of Sudanese-origin goods, and 
the exportation from the United States of goods, is authorized for goods 
sent as gifts to persons provided that the value of the gift is not more 
than $100; the goods are of a type and in quantities normally given as 
gifts between individuals; and the goods are not controlled for chemical 
and biological weapons (CB), missile technology (MT), national security 
(NS), or nuclear proliferation (NP)(see Commerce Control List, 15 CFR 
part 774 of the Export Administration Regulations).



Sec. 538.511  Accompanied baggage authorized.

    (a) Persons entering the United States directly or indirectly from 
Sudan are authorized to import into the United States Sudanese-origin 
accompanied baggage normally incident to travel.
    (b) Persons leaving the United States for Sudan are authorized to 
export from the United States accompanied baggage normally incident to 
travel.
    (c) For purposes of this section, the term accompanied baggage 
normally incident to travel includes only baggage that:
    (1) Accompanies the traveler on the same aircraft, train, or 
vehicle;
    (2) Includes only articles that are necessary for personal use 
incident to travel, are not intended for any other person or for sale, 
and are not otherwise prohibited from importation or exportation under 
applicable United States laws.



Sec. 538.512  Transactions related to telecommunications authorized.

    All transactions with respect to the receipt and transmission of 
telecommunications involving Sudan are authorized. This section does not 
authorize the provision to the Government of Sudan or a person in Sudan 
of telecommunications equipment or technology.



Sec. 538.513  Transactions related to mail authorized.

    All transactions by U.S. persons, including payment and transfers to 
common carriers, incident to the receipt or transmission of mail between 
the United States and Sudan are authorized, provided that mail is 
limited to personal communications not involving a transfer of anything 
of value.



Sec. 538.514  Certain transactions related to patents, trademarks and 

copyrights authorized.

    (a) All of the following transactions in connection with patent, 
trademark, copyright or other intellectual property protection in the 
United States or Sudan are authorized:
    (1) The filing and prosecution of any application to obtain a 
patent, trademark, copyright or other form of intellectual property 
protection;
    (2) The receipt of a patent, trademark, copyright or other form of 
intellectual property protection;
    (3) The renewal or maintenance of a patent, trademark, copyright or 
other

[[Page 225]]

form of intellectual property protection; and
    (4) The filing and prosecution of opposition or infringement 
proceedings with respect to a patent, trademark, copyright or other form 
of intellectual property protection, or the entrance of a defense to any 
such proceedings.
    (b) This section authorizes the payment of fees currently due to the 
United States Government, or of the reasonable and customary fees and 
charges currently due to attorneys or representatives within the United 
States, in connection with the transactions authorized in paragraph (a) 
of this section. Payment effected pursuant to the terms of this 
paragraph may not be made from a blocked account.
    (c) This section authorizes the payment of fees currently due to the 
Government of Sudan, or of the reasonable and customary fees and charges 
currently due to attorneys or representatives within Sudan, in 
connection with the transactions authorized in paragraph (a) of this 
section.
    (d) Nothing in this section affects obligations under any other 
provision of law.



Sec. 538.515  Sudanese diplomatic missions in the United States.

    (a) The importation of goods or services into the United States by, 
and the provision of goods or services in the United States to, the 
diplomatic missions of the Government of Sudan to the United States and 
the United Nations are authorized, provided that:
    (1) The goods or services are for the conduct of the official 
business of the missions, or for personal use of the employees of the 
missions, and are not for resale;
    (2) The transaction does not involve the purchase, sale, financing, 
or refinancing of real property;
    (3) The transaction is not otherwise prohibited by law; and
    (4) The transaction is conducted through an account at a U.S. 
financial institution specifically licensed by OFAC.

    Note to paragraph (a)(4) of Sec. 538.515: U.S. financial 
institutions are required to obtain specific licenses to operate 
accounts for, or extend credit to, the diplomatic missions of the 
Government of Sudan to the United States and the United Nations.

    (b) The importation of goods or services into the United States by, 
and the provision of goods or services in the United States to, the 
employees of the diplomatic missions of the Government of Sudan to the 
United States and the United Nations are authorized, provided that:
    (1) The goods or services are for personal use of the employees of 
the missions, and are not for resale; and
    (2) The transaction is not otherwise prohibited by law.
    (c) The importation of goods or services into the United States by 
the regional Government of Southern Sudan and its employees that 
involves the transit or transshipment of goods from the Specified Areas 
of Sudan through areas of Sudan other than the Specified Areas of Sudan 
is authorized, provided that:
    (1) The goods or services are for the conduct of the business of the 
regional Government, or for personal use of the employees of the 
regional Government, and are not for resale; and
    (2) The transaction is not otherwise prohibited by law.

    Note to paragraph (c) of Sec. 538.515: The authorization contained 
in paragraph (c) of this section permits the regional Government of 
Southern Sudan and its employees to import into the United States goods 
or services that have transited or transshipped through areas of Sudan 
other than the Specified Areas of Sudan without the need to obtain a 
specific license under Sec. 538.417. The importation of goods and 
services into the United States by the regional Government of Southern 
Sudan not involving transit or transshipment through areas of Sudan 
other than the Specified Areas of Sudan already is exempt pursuant to 
Sec. Sec. 538.212(g) and 538.305(b) and, therefore, requires no 
authorization. Similarly, the provision of goods and services in the 
United States to the regional Government of Southern Sudan and its 
employees already is exempt pursuant to Sec. Sec. 538.212(g) and 
538.305(b) and also requires no authorization.

[74 FR 27434, June 10, 2009]



Sec. 538.516  Diplomatic pouches.

    The following transactions are authorized:
    (a) The importation into the United States from Sudan, or the 
exportation from the United States to Sudan, of

[[Page 226]]

diplomatic pouches and their contents; and
    (b) The exportation or reexportation, directly or indirectly, from 
the United States or by a U.S. person, wherever located, of any goods or 
technology to a third-country government, or to its contractors or 
agents, for shipment to Sudan via a diplomatic pouch. To the extent 
necessary, this section also authorizes the shipment of such goods or 
technology by the third-country government to Sudan via a diplomatic 
pouch.

    Note to paragraph (b) of Sec. 538.516: The exportation or 
reexportation of certain U.S.-origin goods or technology to a third-
country government, or to its contractors or agents, may require 
authorization by the U.S. Department of Commerce under the Export 
Administration Regulations (15 CFR parts 730 et seq.).

[72 FR 15832, Apr. 3, 2007]



Sec. 538.517  Allowable payments for overflights of Sudanese airspace.

    Payments to Sudan of charges for services rendered by the Government 
of Sudan in connection with the overflight of Sudan or emergency landing 
in Sudan of aircraft owned by a United States person or registered in 
the United States are authorized.



Sec. 538.518  Household goods and personal effects.

    (a) The exportation from the United States to Sudan of household and 
personal effects, including baggage and articles for family use, of 
persons departing the United States to relocate in Sudan is authorized 
provided the articles included in such effects have been actually used 
by such persons or by family members accompanying them, are not intended 
for any other person or for sale, and are not otherwise prohibited from 
exportation.
    (b) The importation of Sudanese-origin household and personal 
effects, including baggage and articles for family use, of persons 
arriving in the United States is authorized; to qualify, articles 
included in such effects must have been actually used abroad by such 
persons or by other family members arriving from the same foreign 
household, must not be intended for any other person or for sale, and 
must not be otherwise prohibited from importation.



Sec. 538.519  Aircraft and maritime safety.

    Specific licenses may be issued on a case-by-case basis for the 
exportation and reexportation of goods, services, and technology to 
insure the safety of civil aviation and safe operation of U.S.-origin 
commercial passenger aircraft, and to ensure the safety of ocean-going 
maritime traffic in international waters.



Sec. 538.520  Extensions or renewals of loans and credits.

    (a) Specific licenses may be issued on a case-by-case basis for 
rescheduling loans or otherwise extending the maturities of existing 
loans, and for charging fees or interest at commercially reasonable 
rates in connection therewith, provided that no new funds or credits are 
thereby transferred or extended to Sudan or the Government of Sudan.
    (b) Specific licenses may be issued on a case-by-case basis, at the 
request of the account party, for the extension or renewal of a letter 
of credit or a standby letter of credit issued or confirmed by a U.S. 
financial institution.



Sec. 538.521  Registration of nongovernmental organizations for humanitarian 

or religious activities.

    (a) Registration numbers may be issued on a case-by-case basis for 
the registration of nongovernmental organizations involved in 
humanitarian or religious activities in Sudan, authorizing transactions 
by such organizations otherwise prohibited by this part, including the 
exportation of services, goods, software, or technology to Sudan and the 
transfer of funds to and from Sudan for the purpose of relieving human 
suffering. Applicants for registration numbers must comply with the 
requirements of Sec. 501.801(c), 31 CFR chapter V.
    (b) This section does not authorize transfers from blocked accounts.

    Note to Sec. 538.521: Registration does not excuse a U.S. person 
from compliance with other applicable U.S. laws governing the 
exportation or reexportation of U.S.-origin goods, software, or 
technology (including

[[Page 227]]

technical data). See, e.g., the Export Administration Regulations 
administered by the U.S. Department of Commerce (15 CFR parts 730-774).

[66 FR 2728, Jan. 11, 2001]



Sec. 538.522  Transactions related to U.S. citizens residing in Sudan.

    U.S. persons are authorized to engage in transactions in Sudan 
ordinarily incident to the routine and necessary maintenance and other 
personal living expenses of U.S. citizens who reside on a permanent 
basis in Sudan.



Sec. 538.523  Commercial sales, exportation, and reexportation of agricultural 

commodities, medicine, and medical devices.

    (a)(1) One-year specific license requirement. The exportation or 
reexportation of agricultural commodities (including bulk agricultural 
commodities listed in appendix A to this part 538), medicine, or medical 
devices to the Government of Sudan, to any individual or entity in an 
area of Sudan other than the Specified Areas of Sudan, or to persons in 
third countries purchasing specifically for resale to the foregoing, 
shall only be made pursuant to a one-year specific license issued by the 
U.S. Department of the Treasury, Office of Foreign Assets Control, for 
contracts entered into during the one-year period of the license and 
shipped within the 12-month period beginning on the date of the signing 
of the contract. No specific license will be granted for the exportation 
or reexportation of agricultural commodities, medicine, or medical 
equipment to any entity or individual in Sudan promoting international 
terrorism, to any narcotics trafficking entity designated pursuant to 
Executive Order 12978 of October 21, 1995 (60 FR 54579, October 24, 
1995) or the Foreign Narcotics Kingpin Designation Act (21 U.S.C. 1901-
1908), or to any foreign organization, group, or persons subject to any 
restriction for their involvement in weapons of mass destruction or 
missile proliferation. Executory contracts entered into pursuant to 
paragraph (b)(2) of this section prior to the issuance of the one-year 
specific license described in this paragraph shall be deemed to have 
been signed on the date of issuance of that one-year specific license 
(and, therefore, the exporter is authorized to make shipments under that 
contract within the 12-month period beginning on the date of issuance of 
the one-year specific license).
    (2) General license for the Specified Areas of Sudan. The 
exportation or reexportation of agricultural commodities (including bulk 
agricultural commodities listed in appendix A to this part 538), 
medicine, and medical devices to the Specified Areas of Sudan and the 
conduct of related transactions, including, but not limited to, the 
making of shipping and cargo inspection arrangements, the obtaining of 
insurance, the arrangement of financing and payment, the entry into 
executory contracts, and the provision of brokerage services for such 
sales and exports or reexports, are hereby authorized, provided that 
such activities or transactions do not involve any property or interests 
in property of the Government of Sudan and do not relate to the 
petroleum or petrochemical industries in Sudan, and also provided that 
all such exports or reexports are shipped within the 12-month period 
beginning on the date of the signing of the contract for export or 
reexport.

    Note 1 to Sec. 538.523(a)(2): Consistent with section 906(a)(1) of 
the Trade Sanctions Reform and Export Enhancement Act of 2000 (22 U.S.C. 
7205), each year by the anniversary of its effective date of September 
9, 2009, the Office of Foreign Assets Control will determine whether to 
revoke this general license. Unless revoked, the general license will 
remain in effect.
    Note 2 to Sec. 538.523(a)(2): See Sec. Sec. 538.417 and 538.418 
for additional requirements with respect to transshipments through, and 
financial transactions in, Sudan.

    (b) General license for arrangement of exportation or reexportation 
of covered products. (1) With respect to sales pursuant to Sec. 
538.523(a)(1), the making of shipping arrangements, cargo inspection, 
obtaining of insurance, and arrangement of financing (consistent with 
Sec. 538.525) for the exportation or reexportation of agricultural 
commodities, medicine, or medical devices to the Government of Sudan, to 
any individual or entity in an area of Sudan other than the Specified 
Areas of Sudan, or to persons in third countries purchasing specifically 
for resale to the foregoing, are authorized.

[[Page 228]]

    (2) If desired, entry into executory contracts (including executory 
pro forma invoices, agreements in principle, or executory offers capable 
of acceptance such as bids in response to public tenders) for the 
exportation or reexportation of agricultural commodities, medicine, and 
medical devices to the Government of Sudan, to any individual or entity 
in an area of Sudan other than the Specified Areas of Sudan, or to 
persons in third countries purchasing specifically for resale to the 
foregoing, is authorized, provided that performance of an executory 
contract is expressly made contingent upon the prior issuance of the 
one-year specific license described in paragraph (a)(1) of this section.
    (c) Instructions for obtaining one-year specific licenses. In order 
to obtain the one-year specific license described in paragraph (a)(1) of 
this section, the exporter must provide to the Office of Foreign Assets 
Control:
    (1) The applicant's full legal name (if the applicant is a business 
entity, the state or jurisdiction of incorporation and principal place 
of business).
    (2) The applicant's mailing and street address (so that OFAC may 
reach a responsible point of contact, the applicant should also include 
the name of the individual(s) responsible for the application and 
related commercial transactions along with their telephone and fax 
numbers and, if available, e-mail addresses).
    (3) The names, mailing addresses, and if available, fax and 
telephone numbers of all parties with an interest in the transaction. If 
the goods are being exported or reexported to a purchasing agent in 
Sudan, the exporter must identify the agent's principals at the 
wholesale level for whom the purchase is being made. If the goods are 
being exported or reexported to an individual, the exporter must 
identify any organizations or entities with which the individual is 
affiliated that have an interest in the transaction.
    (4) A description of all items to be exported or reexported pursuant 
to the requested one-year license, including a statement that the item 
is classified as EAR 99, and, if necessary, documentation sufficient to 
verify that the items to be exported or reexported are classified as EAR 
99 and do not fall within any of the limitations contained in paragraph 
(d) of this section.
    (5) An Official Commodity Classification of EAR 99 issued by the 
Department of Commerce, Bureau of Industry and Security (``BIS''), 
certifying that the product is EAR 99, is required to be submitted to 
OFAC with the request for a license authorizing the exportation or 
reexportation of all fertilizers, live horses, western red cedar, and 
medical devices other than basic medical supplies, such as syringes, 
bandages, gauze and similar items, that are specifically listed on BIS's 
Web site, http:// www.bis. doc.gov/ policies and regulations/ 
tradesanctions reform export enhancementact. html. Medical supplies that 
are specifically listed on BIS's Web site may not require an Official 
Commodity Classification of EAR 99 from BIS. BIS will also provide a 
list on its Web site of medicines that are ineligible for a one-year 
license under these procedures. Exporters should seek an Official 
Commodity Classification of EAR 99 from BIS for medicines and submit a 
copy to OFAC. See 15 CFR 745.3 for instructions for obtaining Official 
Commodity Classification of EAR 99 from BIS.
    (d) Limitations. (1) Nothing in this section or in any license 
issued pursuant to paragraph (a) of this section relieves the exporter 
from compliance with the export license application requirements of 
another Federal agency.
    (2) Nothing in this section or in any license issued pursuant to 
paragraph (a) of this section authorizes the exportation or 
reexportation of any agricultural commodity, medicine, or medical device 
controlled on the United States Munitions List established under section 
38 of the Arms Export Control Act (22 U.S.C. 2778); controlled on any 
control list established under the Export Administration Act of 1979 or 
any successor statute (50 U.S.C. App. 2401 et seq.); or used to 
facilitate the development or production of a chemical or biological 
weapon or weapon of mass destruction.
    (3) Nothing in this section or in any license issued pursuant to 
paragraph (a) of this section affects prohibitions

[[Page 229]]

on the sale or supply of U.S. technology or software used to manufacture 
agricultural commodities, medicine, or medical devices, such as 
technology to design or produce biotechnological items or medical 
devices.
    (4) Nothing in this section or in any license issued pursuant to 
paragraph (a) of this section affects U.S. nonproliferation export 
controls, including end-user and end-use controls maintained under the 
Enhanced Proliferation Control Initiative.
    (5) This section does not apply to any transaction or dealing 
involving property blocked pursuant to this chapter or to any other 
activity prohibited by this chapter that is not otherwise authorized in 
this part.
    (e) Covered items. For the purposes of this part, agricultural 
commodities, medicine, and medical devices are defined below.
    (1) Agricultural commodities. For the purposes of this section, 
agricultural commodities are:
    (i) Products that are not listed on the Commerce Control List in the 
Export Administration Regulations, 15 CFR part 774, supplement no. 1, 
and that fall within the term ``agricultural commodity'' as defined in 
section 102 of the Agricultural Trade Act of 1978 (7 U.S.C. 5602); and
    (ii) Products not listed on the Commerce Control List in the Export 
Administration Regulations, 15 CFR part 774, supplement no. 1, that are 
intended for ultimate use in Sudan as:
    (A) Food for humans (including raw, processed, and packaged foods; 
live animals; vitamins and minerals; food additives or supplements; and 
bottled drinking water) or animals (including animal feeds);
    (B) Seeds for food crops;
    (C) Fertilizers or organic fertilizers; or
    (D) Reproductive materials (such as live animals, fertilized eggs, 
embryos, and semen) for the production of food animals.
    (2) Medicine. For the purposes of this section, the term medicine 
has the same meaning given the term ``drug'' in section 201 of the 
Federal Food, Drug, and Cosmetic Act (21 U.S.C. 321) but does not 
include any item listed on the Commerce Control List in the Export 
Administration Regulations, 15 CFR part 774, supplement no. 1 (excluding 
items classified as EAR 99).
    (3) Medical device. For the purposes of this section, the term 
medical device has the meaning given the term ``device'' in section 201 
of the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 321) but does not 
include any item listed on the Commerce Control List in the Export 
Administration Regulations, 15 CFR part 774, supplement no. 1 (excluding 
items classified as EAR 99).

[74 FR 61032, Nov. 23, 2009]



Sec. 538.524  [Reserved]



Sec. 538.525  Payment for and financing of commercial sales of agricultural 

commodities, medicine, and medical equipment.

    (a) General license for payment terms. The following payment terms 
for sales, pursuant to Sec. 538.523(a)(1), of agricultural commodities 
and products, medicine, and medical equipment to the Government of 
Sudan, to any individual or entity in an area of Sudan other than the 
Specified Areas, or to persons in third countries purchasing 
specifically for resale to the foregoing are authorized:
    (1) Payment of cash in advance;
    (2) Sales on open account, provided that the account receivable may 
not be transferred by the person extending the credit; or
    (3) Financing by third-country financial institutions that are 
neither United States persons nor Government of Sudan entities. Such 
financing may be confirmed or advised by U.S. financial institutions.
    (b) Specific licenses for alternate payment terms. Specific licenses 
may be issued on a case-by-case basis for payment terms and trade 
financing not authorized by the general license in paragraph (a) of this 
section for sales pursuant to Sec. 538.523(a)(1). See Sec. 501.801(b) 
of this chapter for specific licensing procedures.
    (c) No debits to blocked accounts. Nothing in this section 
authorizes payment terms or trade financing involving a debit to an 
account of the Government of Sudan blocked pursuant to this part.

[[Page 230]]

    (d) Transfers through the U.S. financial system. Before a United 
States financial institution initiates a payment on behalf of any 
customer, or credits a transfer to the account on its books of the 
ultimate beneficiary, the United States financial institution must 
determine that the underlying transaction is not prohibited by this 
part. Any payment relating to a transaction authorized in or pursuant to 
Sec. 538.523 or Sec. 538.526 that is routed through the U.S. financial 
system must reference the relevant Office of Foreign Assets Control 
license authorizing the payment to avoid the blocking or rejection of 
the transfer.
    (e) Notwithstanding any other provision of this part, no commercial 
exportation to Sudan may be made with United States Government 
assistance, including United States foreign assistance, United States 
export assistance, and any United States credit or guarantees absent a 
Presidential waiver.

[74 FR 61033, Nov. 23, 2009]



Sec. 538.526  Brokering sales of agricultural commodities, medicine, and 

medical devices.

    (a) General license for brokering sales by U.S. persons. United 
States persons are authorized to provide brokerage services on behalf of 
U.S. persons for the sale and exportation or reexportation by United 
States persons of agricultural commodities, medicine, and medical 
devices to the Government of Sudan, to any individual or entity in an 
area of Sudan other than the Specified Areas of Sudan, or to persons in 
third countries purchasing specifically for resale to the foregoing, 
provided that the sale and exportation or reexportation is authorized by 
a one-year specific license issued pursuant to Sec. 538.523(a)(1).
    (b) Specific licensing for brokering sales by non-U.S. persons of 
bulk agricultural commodities. Specific licenses may be issued on a 
case-by-case basis to permit United States persons to provide brokerage 
services on behalf of non-United States, non-Sudanese persons for the 
sale and exportation or reexportation of bulk agricultural commodities 
to the Government of Sudan, to any individual or entity in an area of 
Sudan other than the Specified Areas of Sudan, or to persons in third 
countries purchasing specifically for resale to the foregoing. Specific 
licenses issued pursuant to this section will authorize the brokering 
only of sales that:
    (1) Are limited to the bulk agricultural commodities listed in 
appendix A to this part 538;
    (2) Are to purchasers permitted pursuant to Sec. 538.523(a)(1); and

    Note to paragraph (b)(2) of Sec. 538.526: Requests for specific 
licenses to provide brokerage services under this paragraph must include 
all of the information described in Sec. 538.523(c).

    (3) Make any performance involving the exportation or reexportation 
of any goods, technology or services (including technical data, 
software, or information) that are subject to license application 
requirements of another Federal agency contingent upon the prior 
authorization of that agency. (For example, items classified EAR 99 
under the Export Administration Regulations, 15 CFR parts 730 through 
774, may in certain instances require a license from the Department of 
Commerce, Bureau of Industry and Security. See, e.g., 15 CFR 
736.2(b)(5), 744.2 through 744.4, 744.7, and 744.10; see also 22 CFR 
123.9.)
    (c) No debit to blocked accounts. Payment for any brokerage fee 
earned pursuant to this section may not involve a debit to an account 
blocked pursuant to this part.
    (d) Recordkeeping and reporting requirements. Attention is drawn to 
the recordkeeping, retention, and reporting requirements of Sec. Sec. 
501.601 and 501.602.

[74 FR 61033, Nov. 23, 2009]



Sec. 538.527  Operation of accounts.

    The operation of an account in a U.S. financial institution for an 
individual ordinarily resident in Sudan who is not included within the 
term ``Government of Sudan,'' as defined in Sec. 538.305, is 
authorized, provided that transactions processed through the account:
    (a) Are of a personal nature and not for use in supporting or 
operating a business;
    (b) Do not involve transfers directly or indirectly to Sudan or for 
the benefit of individuals ordinarily resident

[[Page 231]]

in Sudan unless authorized by Sec. 538.528; and
    (c) Are not otherwise prohibited by this part.

[70 FR 34062, June 13, 2005]



Sec. 538.528  Noncommercial, personal remittances.

    (a) U.S. depository institutions, U.S. registered brokers or dealers 
in securities, and U.S. registered money transmitters are authorized to 
process transfers of funds to or from Sudan or for or on behalf of an 
individual ordinarily resident in Sudan who is not included within the 
term ``Government of Sudan,'' as defined in Sec. 538.305, in cases in 
which the transfer involves a noncommercial, personal remittance, 
provided the transfer is not by, to, or through a person who is included 
within the term ``Government of Sudan,'' as defined in Sec. 538.305. 
Noncommercial, personal remittances do not include charitable donations 
to or for the benefit of an entity or funds transfers for use in 
supporting or operating a business.

    Note to paragraph (a) of Sec. 538.528: The institutions identified 
in paragraph (a) may transfer charitable donations made by U.S. persons 
to nongovernmental organizations in Sudan registered pursuant to Sec. 
538.521, provided that the transfer is made pursuant to Sec. 538.521 
and the terms of the registration.

    (b) The transferring institutions identified in paragraph (a) of 
this section may rely on the originator of a funds transfer with regard 
to compliance with paragraph (a), provided that the transferring 
institution does not know or have reason to know that the funds transfer 
is not in compliance with paragraph (a).
    (c) This section does not authorize transactions with respect to 
property blocked pursuant to Sec. 538.201.

[70 FR 34062, June 13, 2005]



Sec. 538.529  Authorized transactions necessary and ordinarily incident to 

publishing.

    (a) To the extent that such activities are not exempt from this 
part, and subject to the restrictions set forth in paragraphs (b) 
through (d) of this section, U.S. persons are authorized to engage in 
all transactions necessary and ordinarily incident to the publishing and 
marketing of manuscripts, books, journals, and newspapers in paper or 
electronic format (collectively, ``written publications''). This section 
does not apply if the parties to the transactions described in this 
paragraph include the Government of Sudan. For the purposes of this 
section, the term ``Government of Sudan'' includes the state and the 
Government of Sudan, as well as any political subdivision, agency, or 
instrumentality thereof, including the Central Bank of Sudan, and any 
person acting or purporting to act directly or indirectly on behalf of 
any of the foregoing with respect to the transactions described in this 
paragraph. For the purposes of this section, the term ``Government of 
Sudan'' does not include any academic and research institutions and 
their personnel. Pursuant to this section, the following activities are 
authorized, provided that U.S. persons ensure that they are not 
engaging, without separate authorization, in the activities identified 
in paragraphs (b) through (d) of this section:
    (1) Commissioning and making advance payments for identifiable 
written publications not yet in existence, to the extent consistent with 
industry practice;
    (2) Collaborating on the creation and enhancement of written 
publications;
    (3)(i) Augmenting written publications through the addition of items 
such as photographs, artwork, translation, explanatory text, and, for a 
written publication in electronic format, the addition of embedded 
software necessary for reading, browsing, navigating, or searching the 
written publication;
    (ii) Exporting embedded software necessary for reading, browsing, 
navigating, or searching a written publication in electronic format, 
provided that the software is classified as ``EAR 99'' under the Export 
Administration Regulations, 15 CFR parts 730-774 (the ``EAR''), or is 
not subject to the EAR;
    (4) Substantive editing of written publications;
    (5) Payment of royalties for written publications;

[[Page 232]]

    (6) Creating or undertaking a marketing campaign to promote a 
written publication; and
    (7) Other transactions necessary and ordinarily incident to the 
publishing and marketing of written publications as described in this 
paragraph (a).
    (b) This section does not authorize transactions involving the 
provision of goods or services not necessary and ordinarily incident to 
the publishing and marketing of written publications as described in 
paragraph (a) of this section. For example, this section does not 
authorize U.S. persons:
    (1) To provide or receive individualized or customized services 
(including, but not limited to, accounting, legal, design, or consulting 
services), other than those necessary and ordinarily incident to the 
publishing and marketing of written publications, even though such 
individualized or customized services are delivered through the use of 
information and informational materials;
    (2) To create or undertake for any person a marketing campaign with 
respect to any service or product other than a written publication, or 
to create or undertake a marketing campaign of any kind for the benefit 
of the Government of Sudan;
    (3) To engage in the exportation or importation of goods to or from 
Sudan other than the exportation of embedded software described in 
paragraph (a)(3)(ii) of this section; or
    (4) To operate a publishing house, sales outlet, or other office in 
Sudan.

    Note to paragraph (b): The importation from Sudan and the 
exportation to Sudan of information or informational materials, as 
defined in Sec. 538.306, whether commercial or otherwise, regardless of 
format or medium of transmission, are exempt from the prohibitions and 
regulations of this part. See Sec. 538.211(c).

    (c) This section does not authorize U.S. persons to engage the 
services of publishing houses or translators in Sudan unless such 
activity is primarily for the dissemination of written publications in 
Sudan.
    (d) This section does not authorize:
    (1) The exportation from or importation into the United States of 
services for the development, production, or design of software;
    (2) Transactions for the development, production, design, or 
marketing of technology specifically controlled by the International 
Traffic in Arms Regulations, 22 CFR parts 120 through 130 (the 
``ITAR''), the EAR, or the Department of Energy Regulations set forth at 
10 CFR part 810.
    (3) The exportation of information or technology subject to the 
authorization requirements of 10 CFR part 810, or Restricted Data as 
defined in section 11 y. of the Atomic Energy Act of 1954, as amended, 
or of other information, data, or technology the release of which is 
controlled under the Atomic Energy Act and regulations therein;
    (4) The exportation of any item (including information) subject to 
the EAR where a U.S. person knows or has reason to know that the item 
will be used, directly or indirectly, with respect to certain nuclear, 
missile, chemical, or biological weapons or nuclear-maritime end-uses as 
set forth in part 744 of the EAR. In addition, U.S. persons are 
precluded from exporting any item subject to the EAR to certain 
restricted end-users, as set forth in part 744 of the EAR, as well as 
certain persons whose export privileges have been denied pursuant to 
parts 764 or 766 of the EAR, without authorization from the Department 
of Commerce; or
    (5) The exportation of information subject to licensing requirements 
under the ITAR or exchanges of information that are subject to 
regulation by other government agencies.

[72 FR 50050, Aug. 30, 2007]



Sec. 538.530  Licenses and registrations issued pursuant to Executive Order 

13067 or this part authorized pursuant to Executive Order 13412.

    (a) All general licenses issued pursuant to Executive Order 13067 
are authorized pursuant to Executive Order 13412 and remain in effect.
    (b) All specific licenses and all nongovernmental organization 
registrations issued pursuant to Executive Order 13067 or this part 
prior to October 13, 2006, are authorized pursuant to Executive Order 
13412 and remain in effect until the expiration date specified in the 
license or registration or, if no

[[Page 233]]

expiration date is specified, June 30, 2008.

[72 FR 61516, Oct. 31, 2007]



Sec. 538.531  Official activities of the United States Government and 

international organizations.

    (a) Subject to the conditions of paragraphs (b), (c), and (d) of 
this section, the following transactions are authorized:
    (1) All transactions and activities otherwise prohibited by this 
part that are for the conduct of the official business of the United 
States Government or the United Nations by contractors or grantees 
thereof; and
    (2) All transactions and activities otherwise prohibited by this 
part that are for the conduct of the official business of the United 
Nations specialized agencies, programmes, and funds by employees, 
contractors, or grantees thereof.
    (b) Contractors or grantees conducting transactions authorized 
pursuant to paragraph (a) of this section must provide a copy of their 
contract or grant with the United States Government or the United 
Nations, or its specialized agencies, programmes, and funds, to any U.S. 
person before the U.S. person engages in or facilitates any transaction 
or activity prohibited by this part. If the contract or grant contains 
any sensitive or proprietary information, such information may be 
redacted or removed from the copy given to the U.S. person, provided 
that the information is not necessary to demonstrate that the 
transaction is authorized pursuant to paragraph (a) of this section.
    (c) Any U.S. person engaging in or facilitating transactions 
authorized pursuant to this section shall keep a full and accurate 
record of each such transaction, including a copy of the contract or 
grant, and such record shall be available for examination for at least 
five (5) years after the date of the transaction.
    (d) No payment pursuant to this section may involve a debit to an 
account blocked pursuant to this part.

    Note 1 to Sec. 538.531. This license does not relieve any persons 
participating in transactions authorized hereunder from compliance with 
any other U.S. legal requirements applicable to the transactions 
authorized pursuant to paragraph (a) of this section. See, e.g., the 
Export Administration Regulations (15 CFR parts 730 et seq.).
    Note 2 to Sec. 538.531. Paragraph (e) of Sec. 538.212 exempts 
transactions for the conduct of the official business of the Federal 
Government or the United Nations by employees thereof from the 
prohibitions contained in this part.

[72 FR 61516, Oct. 31, 2007]



Sec. 538.532  Humanitarian transshipments to or from Southern Sudan and Darfur 

authorized.

    The transit or transshipment to or from Southern Sudan and Darfur of 
goods, technology, or services intended for humanitarian purposes, 
through any area of Sudan not exempted by paragraph (g)(1) of Sec. 
538.212, is authorized.

[72 FR 61517, Oct. 31, 2007]



Sec. 538.533  Exportation of certain services and software incident to 

Internet-based communications.

    (a) To the extent that such transactions are not exempt from the 
prohibitions of this part and subject to the restrictions set forth in 
paragraph (b) of this section, the following transactions are 
authorized:
    (1) The exportation from the United States or by U.S. persons, 
wherever located, to persons in Sudan of services incident to the 
exchange of personal communications over the Internet, such as instant 
messaging, chat and email, social networking, sharing of photos and 
movies, web browsing, and blogging, provided that such services are 
publicly available at no cost to the user.
    (2) The exportation from the United States or by U.S. persons, 
wherever located, to persons in Sudan of software necessary to enable 
the services described in paragraph (a)(1) of this section, provided 
that such software is classified as ``EAR99'' under the Export 
Administration Regulations, 15 CFR parts 730 through 774 (the ``EAR''), 
is not subject to the EAR, or is classified by the U.S. Department of 
Commerce (``Commerce'') as mass market software under export control 
classification number (``ECCN'') 5D992 of the EAR, and provided further 
that such software is publicly available at no cost to the user.

[[Page 234]]

    (b) This section does not authorize:
    (1) The direct or indirect exportation of services or software with 
knowledge or reason to know that such services or software are intended 
for the Government of Sudan.
    (2) The direct or indirect exportation of any goods or technology 
listed on the Commerce Control List in the EAR, 15 CFR part 774, 
supplement No. 1 (``CCL''), except for software necessary to enable the 
services described in paragraph (a)(1) of this section that is 
classified by Commerce as mass market software under ECCN 5D992 of the 
EAR.
    (3) The direct or indirect exportation of Internet connectivity 
services or telecommunications transmission facilities (such as 
satellite links or dedicated lines).
    (4) The direct or indirect exportation of web-hosting services that 
are for purposes other than personal communications (e.g., web-hosting 
services for commercial endeavors) or of domain name registration 
services.
    (c) Specific licenses may be issued on a case-by-case basis for the 
exportation of other services and software incident to the sharing of 
information over the Internet, provided the software is classified as 
``EAR99,'' not subject to the EAR, or classified by Commerce as mass 
market software under ECCN 5D992 of the EAR.
    (d) Nothing in this section or in any license issued pursuant to 
paragraph (c) of this section relieves the exporter from compliance with 
the export license application requirements of another Federal agency.

[75 FR 10999, Mar. 10, 2010]



                            Subpart F_Reports



Sec. 538.601  Records and reports.

    For additional provisions relating to records and reports, see 
subpart C of part 501 of this chapter.



                           Subpart G_Penalties



Sec. 538.701  Penalties.

    (a) Attention is directed to section 206 of the International 
Emergency Economic Powers Act (the ``Act'')(50 U.S.C. 1705), which is 
applicable to violations of the provisions of any license, ruling, 
regulation, order, direction or instruction issued by or pursuant to the 
direction or authorization of the Secretary of the Treasury pursuant to 
this part or otherwise under the Act.
    (1) A civil penalty not to exceed the amount set forth in Section 
206 of the Act may be imposed on any person who violates, attempts to 
violate, conspires to violate, or causes a violation of any license, 
order, regulation, or prohibition issued under the Act.

    Note to paragraph (a)(1) of Sec. 538.701: As of June 10, 2008, the 
Act provides for a maximum civil penalty not to exceed the greater of 
$250,000 or an amount that is twice the amount of the transaction that 
is the basis of the violation with respect to which the penalty is 
imposed.

    (2) A person who willfully commits, willfully attempts to commit, or 
willfully conspires to commit, or aids or abets in the commission of a 
violation of any license, order, regulation, or prohibition shall, upon 
conviction, be fined not more than $1,000,000, or if a natural person, 
may be imprisoned for not more than 20 years, or both.
    (b) Adjustments to penalty amounts. (1) The civil penalties provided 
in the Act are subject to adjustment pursuant to the Federal Civil 
Penalties Inflation Adjustment Act of 1990 (Pub. L. 101-410, as amended, 
28 U.S.C. 2461 note).
    (2) The criminal penalties provided in the Act are subject to 
adjustment pursuant to 18 U.S.C. 3571.
    (c) Attention is also directed to 18 U.S.C. 1001, which provides 
that whoever, in any matter within the jurisdiction of the executive, 
legislative, or judicial branch of the United States, knowingly and 
willfully falsifies, conceals or covers up by any trick, scheme, or 
device a material fact, or makes any materially false, fictitious or 
fraudulent statement or representation or makes or uses any false 
writing or document knowing the same to contain any materially false, 
fictitious or fraudulent statement or entry, shall be fined under title 
18, United States Code, or imprisoned not more than five years, or both.

[[Page 235]]

    (d) Violations of this part may also be subject to relevant 
provisions of other applicable laws.

[63 FR 35810, July 1, 1998, as amended at 70 FR 34063, June 13, 2005; 71 
FR 29253, May 22, 2006; 73 FR 32652, June 10, 2008]



Sec. 538.702  Prepenalty notice.

    (a) When required. If the Director of the Office of Foreign Assets 
Control has reason to believe that there has occurred a violation of any 
provision of this part or a violation of the provisions of any license, 
ruling, regulation, order, direction or instruction issued by or 
pursuant to the direction or authorization of the Secretary of the 
Treasury pursuant to this part or otherwise under the International 
Emergency Economic Powers Act, and the Director determines that further 
proceedings are warranted, the Director shall notify the alleged 
violator of the agency's intent to impose a monetary penalty by issuing 
a prepenalty notice. The prepenalty notice shall be in writing. The 
prepenalty notice may be issued whether or not another agency has taken 
any action with respect to the matter.
    (b) Contents of notice--(1) Facts of violation. The prepenalty 
notice shall describe the violation, specify the laws and regulations 
allegedly violated, and state the amount of the proposed monetary 
penalty.
    (2) Right to respond. The prepenalty notice also shall inform the 
respondent of the respondent's right to make a written presentation 
within the applicable 30-day period set forth in Sec. 538.703 as to why 
a monetary penalty should not be imposed or why, if imposed, the 
monetary penalty should be in a lesser amount than proposed.
    (c) Informal settlement prior to issuance of prepenalty notice. At 
any time prior to the issuance of a prepenalty notice, an alleged 
violator may request in writing that, for a period not to exceed sixty 
(60) days, the agency withhold issuance of the prepenalty notice for the 
exclusive purpose of effecting settlement of the agency's potential 
civil monetary penalty claims. In the event the Director grants the 
request, under terms and conditions within the Director's discretion, 
the Office of Foreign Assets Control will agree to withhold issuance of 
the prepenalty notice for a period not to exceed 60 days and will enter 
into settlement negotiations with respect to the potential civil 
monetary penalty claim.

[70 FR 34063, June 13, 2005]



Sec. 538.703  Response to prepenalty notice; informal settlement.

    (a) Deadline for response. The respondent may submit a response to 
the prepenalty notice within the applicable 30-day period set forth in 
this paragraph. The Director may grant, at the Director's discretion, an 
extension of time in which to submit a response to the prepenalty 
notice. The failure to submit a response within the applicable time 
period set forth in this paragraph shall be deemed to be a waiver of the 
right to respond.
    (1) Computation of time for response. A response to the prepenalty 
notice must be postmarked or date-stamped by the U.S. Postal Service (or 
foreign postal service, if mailed abroad) or courier service provider 
(if transmitted to OFAC by courier) on or before the 30th day after the 
postmark date on the envelope in which the prepenalty notice was mailed. 
If the respondent refused delivery or otherwise avoided receipt of the 
prepenalty notice, a response must be postmarked or date-stamped on or 
before the 30th day after the date on the stamped postal receipt 
maintained at the Office of Foreign Assets Control. If the prepenalty 
notice was personally delivered to the respondent by a non-U.S. Postal 
Service agent authorized by the Director, a response must be postmarked 
or date-stamped on or before the 30th day after the date of delivery.
    (2) Extensions of time for response. If a due date falls on a 
federal holiday or weekend, that due date is extended to include the 
following business day. Any other extensions of time will be granted, at 
the Director's discretion, only upon the respondent's specific request 
to the Office of Foreign Assets Control.
    (b) Form and method of response. The response must be submitted in 
typewritten form and signed by the respondent or a representative 
thereof. The response need not be in any particular form. A copy of the 
written response may be sent by facsimile, but

[[Page 236]]

the original also must be sent to the Office of Foreign Assets Control 
Civil Penalties Division by mail or courier and must be postmarked or 
date-stamped, in accordance with paragraph (a) of this section.
    (c) Contents of response. A written response must contain 
information sufficient to indicate that it is in response to the 
prepenalty notice and must identify the Office of Foreign Assets Control 
identification number listed on the prepenalty notice.
    (1) A written response must include the respondent's full name, 
address, telephone number, and facsimile number, if available, or those 
of the representative of the respondent.
    (2) A written response should either admit or deny each specific 
violation alleged in the prepenalty notice and also state if the 
respondent has no knowledge of a particular violation. If the written 
response fails to address any specific violation alleged in the 
prepenalty notice, that alleged violation shall be deemed to be 
admitted.
    (3) A written response should include any information in defense, 
evidence in support of an asserted defense, or other factors that the 
respondent requests the Office of Foreign Assets Control to consider. 
Any defense or explanation previously made to the Office of Foreign 
Assets Control or any other agency must be repeated in the written 
response. Any defense not raised in the written response will be 
considered waived. The written response also should set forth the 
reasons why the respondent believes the penalty should not be imposed or 
why, if imposed, it should be in a lesser amount than proposed.
    (d) Failure to respond. Where OFAC receives no response to a 
prepenalty notice within the applicable time period set forth in 
paragraph (a) of this section, a penalty notice generally will be 
issued, taking into account the mitigating and/or aggravating factors 
present in the record. If there are no mitigating factors present in the 
record, or the record contains a preponderance of aggravating factors, 
the proposed prepenalty amount generally will be assessed as the final 
penalty.
    (e) Informal settlement. In addition to or as an alternative to a 
written response to a prepenalty notice, the respondent or respondent's 
representative may contact the Office of Foreign Assets Control's Civil 
Penalties Division as advised in the prepenalty notice to propose the 
settlement of allegations contained in the prepenalty notice and related 
matters. However, the requirements set forth in paragraph (g) of this 
section as to oral communication by the representative must first be 
fulfilled. In the event of settlement at the prepenalty stage, the claim 
proposed in the prepenalty notice will be withdrawn, the respondent will 
not be required to take a written position on allegations contained in 
the prepenalty notice, and the Office of Foreign Assets Control will 
make no final determination as to whether a violation occurred. The 
amount accepted in settlement of allegations in a prepenalty notice may 
vary from the civil penalty that might finally be imposed in the event 
of a formal determination of violation. In the event no settlement is 
reached, the time limit specified in paragraph (a) of this section for 
written response to the prepenalty notice will remain in effect, unless 
additional time is granted by the Office of Foreign Assets Control.
    (f) Guidelines. Guidelines for the imposition or settlement of civil 
penalties by the Office of Foreign Assets Control have been codified in 
the Appendix to 31 CFR part 501, the Reporting, Procedures and Penalties 
Regulations.
    (g) Representation. A representative of the respondent may act on 
behalf of the respondent, but any oral communication with the Office of 
Foreign Assets Control prior to a written submission regarding the 
specific allegations contained in the prepenalty notice must be preceded 
by a written letter of representation, unless the prepenalty notice was 
served upon the respondent in care of the representative.

[70 FR 34063, June 13, 2005]



Sec. 538.704  Penalty imposition or withdrawal.

    (a) No violation. If, after considering any response to the 
prepenalty notice and any relevant facts, the Director of the Office of 
Foreign Assets Control determines that there was no violation

[[Page 237]]

by the respondent named in the prepenalty notice, the Director shall 
notify the respondent in writing of that determination and of the 
cancellation of the proposed monetary penalty.
    (b) Violation. (1) If, after considering any written response to the 
prepenalty notice, or default in the submission of a written response, 
and any relevant facts, the Director of the Office of Foreign Assets 
Control determines that there was a violation by the respondent named in 
the prepenalty notice, the Director is authorized to issue a written 
penalty notice to the respondent of the determination of the violation 
and the imposition of the monetary penalty.
    (2) The penalty notice shall inform the respondent that payment or 
arrangement for installment payment of the assessed penalty must be made 
within 30 days of the date of mailing of the penalty notice by the 
Office of Foreign Assets Control.
    (3) The penalty notice shall inform the respondent of the 
requirement to furnish the respondent's taxpayer identification number 
pursuant to 31 U.S.C. 7701 and that such number will be used for 
purposes of collecting and reporting on any delinquent penalty amount.
    (4) The issuance of the penalty notice finding a violation and 
imposing a monetary penalty shall constitute final agency action. The 
respondent has the right to seek judicial review of that agency action 
in federal district court.

[70 FR 34064, June 13, 2005]



Sec. 538.705  Administrative collection; referral to United States Department 

of Justice.

    In the event that the respondent does not pay the penalty imposed 
pursuant to this part or make payment arrangements acceptable to the 
Director of the Office of Foreign Assets Control within 30 days of the 
mailing of the written notice of the imposition of the penalty, the 
matter may be referred for administrative collection measures by the 
Department of the Treasury or to the United States Department of Justice 
for appropriate action to recover the penalty in a civil suit in a 
Federal district court.



                          Subpart H_Procedures



Sec. 538.801  Procedures.

    For license application procedures and procedures relating to 
amendments, modifications, or revocations of licenses; administrative 
decisions; rulemaking; and requests for documents pursuant to the 
Freedom of Information and Privacy Acts (5 U.S.C. 552 and 552a), see 
part 501, subpart E, of this chapter.

[63 FR 35810, July 1, 1998, as amended at 68 FR 53658, Sept. 11, 2003]



Sec. 538.802  Delegation by the Secretary of the Treasury.

    Any action which the Secretary of the Treasury is authorized to take 
pursuant to Executive Order 13067 (3 CFR, 1997 Comp., p. 230), and any 
further Executive orders relating to the national emergency declared 
with respect to Sudan in Executive Order 13067, may be taken by the 
Director of the Office of Foreign Assets Control, or by any other person 
to whom the Secretary of the Treasury has delegated authority so to act.



                    Subpart I_Paperwork Reduction Act



Sec. 538.901  Paperwork Reduction Act notice.

    The information collection requirements in Sec. Sec. 538.506 and 
538.521 have been approved by the Office of Management and Budget 
(``OMB'') and assigned control number 1505-0169. For approval by OMB 
under the Paperwork Reduction Act of other information collections 
relating to recordkeeping and reporting requirements, to licensing 
procedures (including those pursuant to statements of licensing policy), 
and to other procedures, see Sec. 501.901 of this chapter. An agency 
may not conduct or sponsor, and a person is not required to respond to, 
a collection of information unless it displays a valid control number 
assigned by OMB.



       Sec. Appendix A to Part 538--Bulk Agricultural Commodities

    Notes:

[[Page 238]]

    1. Appendix A sets forth those agricultural commodities eligible for 
the bulk agricultural commodity sales licensing procedures in Sec. 
538.524.
    2. Commodities are identified by their classification numbers in the 
Harmonized Tariff Schedule of the United States (see 19 U.S.C. 1202) 
(``HTS'').

------------------------------------------------------------------------
     HTS Number                            Commodity
------------------------------------------------------------------------
1001.10               Durum Wheat
1001.90               Other Wheat and Meslin, including seed, Red Spring
                       Wheat, White Winter Wheat, ``Canadian'' Western
                       Red Winter Wheat, Soft White Spring Wheat, and
                       Wheat not elsewhere specified
1101.00               Wheat or Meslin Flour
1006.10               Rice in the husk (paddy or rough)
1006.20               Husked (brown) Rice
1006.30               Semi-milled or wholly milled Rice, whether or not
                       polished or glazed
1006.40               Broken Rice
1102.30               Rice Flour
1103.14               Rice Groats, Meal and Pellets
1002.00               Rye
1003.00               Barley
1004.00               Oats
1007.00               Grain Sorghum
1005.00               Corn (Maize)
0713.31               Dried Beans including Vigna mungo (L.), Hepper,
                       and Vigna radiata (L.) Wilczek
0713.32               Small red (adzuki) beans
0713.33               Kidney beans, including white pea beans
0713.39               Beans, other
0713.50               Broad beans and horse beans
0713.10               Dried Peas (Pisum sativum)
0713.20               Chickpeas (garbanzos)
0713.40               Lentils
0713.90               Dried leguminous vegetables, shelled, not
                       elsewhere specified
1201.00               Soybeans, whether or not broken
2304.00               Soybean cake, meal and pellets
1507.10               Soybean oil, crude
1507.90               Soybean oil, other
1514.10               Rapeseed, colza and mustard oil, crude
1514.90               Rapeseed, colza and mustard oil, other
1515.21               Corn (Maize) oil, crude
1515.29               Corn (Maize) oil, other
1512.21               Cottonseed oil, crude
1512.29               Cottonseed oil, other
1517.90               Cottonseed oil, hydrogenated
1508.10               Peanut (ground-nut) oil, crude
1508.90               Peanut (ground-nut) oil, other
1515.50               Sesame oil
1512.11               Sunflower-seed oil, crude
1512.19               Sunflower-seed oil, other
1212.91               Sugar Beets, fresh, chilled, frozen or dried
1212.92               Sugar Cane, fresh, chilled, frozen or dried
1701.11               Cane Sugar, raw, solid form
1701.12               Beet Sugar, raw, solid form
1701.91               Cane or Beet Sugar, solid form, containing added
                       coloring or flavoring
1701.99               Cane or Beet Sugar, other, not elsewhere specified
------------------------------------------------------------------------


[65 FR 41789, Aug. 2, 1999]



PART 539_WEAPONS OF MASS DESTRUCTION TRADE CONTROL REGULATIONS--Table of 

Contents



      Subpart A_Relation of This Part to Other Laws and Regulations

Sec.
539.101 Relation of this part to other laws and regulations.

                         Subpart B_Prohibitions

539.201 Prohibited importation of goods, technology, or services.
539.202 Prohibition on import-related transactions.
539.203 Evasions; attempts; conspiracies.
539.204 Exempt transactions.

                      Subpart C_General Definitions

539.301 Designated foreign person.
539.302 Effective date.
539.303 Entity.
539.304 Entity owned or controlled by a person listed in appendix I to 
          this part.
539.305 General license.
539.306 Goods, technology, or services produced or provided by a 
          designated foreign person.
539.307 Importation into the United States.
539.308 Information or informational materials.
539.309 License.
539.310 Person.
539.311 Specific license.
539.312 United States.
539.313 United States person; U.S. person.

                        Subpart D_Interpretations

539.401 Reference to amended sections.
539.402 Effect of amendment.
539.403 Transactions incidental to a licensed transaction.
539.404 Transshipments through the United States prohibited.
539.405 Importation of goods or technology from third countries.
539.406 Importation into and release from a bonded warehouse or foreign 
          trade zone.

  Subpart E_Licenses, Authorizations and Statements of Licensing Policy

539.501 General and specific licensing procedures.
539.502 Effect of license.
539.503 Exclusion from licenses.
539.504 Departments and agencies of the United States Government.

                            Subpart F_Reports

539.601 Records and reports.

[[Page 239]]

                           Subpart G_Penalties

539.701 Penalties.
539.702 Prepenalty notice.
539.703 Response to prepenalty notice; informal settlement.
539.704 Penalty imposition or withdrawal.
539.705 Administrative collection; referral to United States Department 
          of Justice.

                          Subpart H_Procedures

539.801 Procedures.
539.802 Delegation by the Secretary of the Treasury.

                    Subpart I_Paperwork Reduction Act

539.901 Paperwork Reduction Act notice.

Appendix I to Part 539--Designated Foreign Persons

    Authority: 3 U.S.C. 301; 22 U.S.C. 2751-2799aa-2; 31 U.S.C. 321(b); 
50 U.S.C. 1601-1651, 1701-1706; Pub. L. 101-410, 104 Stat. 890 (28 
U.S.C. 2461 note); Pub. L. 110-96, 121 Stat. 1011; E.O. 12938, 59 FR 
59099, 3 CFR, 1994 Comp., p. 950; E.O. 13094, 63 FR 40803, 3 CFR, 1998 
Comp., p. 200.

    Source: 64 FR 8716, Feb. 23, 1999, unless otherwise noted.



      Subpart A_Relation of This Part to Other Laws and Regulations



Sec. 539.101  Relation of this part to other laws and regulations.

    (a) This part is separate from, and independent of, the other parts 
of this chapter, with the exception of part 501 of this chapter, the 
provisions of which apply to this part. Actions taken pursuant to part 
501 of this chapter with respect to the prohibitions contained in this 
part are considered actions taken pursuant to this part. Differing 
foreign policy and national security contexts may result in differing 
interpretations of similar language among the parts of this chapter. No 
license or authorization contained in or issued pursuant to those other 
parts authorizes any transaction prohibited by this part. No license or 
authorization contained in or issued pursuant to any other provision of 
law or regulation authorizes any transaction prohibited by this part.
    (b) No license contained in or issued pursuant to this part relieves 
the involved parties from complying with any other applicable laws or 
regulations.



                         Subpart B_Prohibitions



Sec. 539.201  Prohibited importation of goods, technology, or services.

    Except as otherwise authorized, the importation into the United 
States, on or after the effective date, directly or indirectly, of any 
goods, technology, or services produced or provided by a designated 
foreign person, other than information or informational materials, is 
prohibited.



Sec. 539.202  Prohibition on import-related transactions.

    Except as otherwise authorized, no United States person may finance, 
act as broker for, transfer, transport, or otherwise participate in the 
importation into the United States on or after the effective date of any 
goods, technology, or services produced or provided by a designated 
foreign person, other than information or informational materials.



Sec. 539.203  Evasions; attempts; conspiracies.

    Any transaction by any United States person or within the United 
States on or after the effective date that evades or avoids, has the 
purpose of evading or avoiding, or attempts to violate any of the 
prohibitions set forth in this part is prohibited. Any conspiracy formed 
for the purpose of engaging in a transaction prohibited by this part is 
prohibited.



Sec. 539.204  Exempt transactions.

    (a) Personal communications. The prohibitions contained in this part 
do not apply to any postal, telegraphic, telephonic, or other personal 
communication, which does not involve the transfer of anything of value.
    (b) Information or informational materials. (1) The prohibitions 
contained in this part do not apply to the importation from any country, 
or to the exportation to any country, whether commercial or otherwise, 
regardless of format or medium of transmission, of any information or 
informational materials as defined in Sec. 539.308, or any transaction 
directly incident to such importation or exportation.

[[Page 240]]

    (2) Paragraph (b)(1) of this section does not exempt from regulation 
or authorize transactions related to information or informational 
materials not fully created and in existence at the date of the 
transaction, or to the substantive or artistic alteration or enhancement 
of information or informational materials, or to the provision of 
marketing and business consulting services. Examples of prohibited 
transactions include, but are not limited to, payment of advances for 
information or informational materials not yet created and completed 
(with the exception of prepaid subscriptions for mass-market magazines 
and other periodical publications that are widely-circulated); 
importation into the United States of services to market, produce or co-
produce, create, or assist in the creation of information or 
informational materials; and payment of royalties to a designated 
foreign person with respect to income received for enhancements or 
alterations made by U.S. persons to informational or informational 
materials imported from a designated foreign person.
    (3) Paragraph (b)(1) of this section does not exempt from regulation 
or authorize the importation into the United States of or transactions 
incident to the importation into the United States or leasing of 
telecommunications transmission facilities (such as satellite links or 
dedicated lines) for use in the transmission of any data.
    (c) Travel. The prohibitions contained in this part do not apply to 
transactions ordinarily incident to travel to or from any country, 
including importation of accompanied baggage for personal use, 
maintenance within any country including payment of living expenses and 
acquisition of goods or services for personal use, and arrangement or 
facilitation of such travel including nonscheduled air, sea, or land 
voyages.



                      Subpart C_General Definitions



Sec. 539.301  Designated foreign person.

    The term designated foreign person means any person determined by 
the Secretary of State pursuant to section 4(a) of Executive Order 12938 
of November 14, 1994 (59 FR 59099, 3 CFR, 1994 Comp., p. 950), as 
amended by section 1(a) of Executive Order 13094 of July 28, 1998 (63 FR 
40803, July 30, 1998), to be subject to import measures. Designated 
foreign persons are any persons listed in appendix I to this part and 
any entities owned or controlled by any person listed in appendix I to 
this part unless otherwise indicated in appendix I to this part.



Sec. 539.302  Effective date.

    The term effective date means the ``effective date'' specified in 
the relevant Federal Register notice issued by the Department of State 
identifying a designated foreign person. This date is listed after the 
name of each designated foreign person in appendix I to this part.



Sec. 539.303  Entity.

    The term entity means a partnership, association, trust, joint 
venture, corporation, or other organization.



Sec. 539.304  Entity owned or controlled by a person listed in appendix I to 

this part.

    The term entity owned or controlled by a person listed in appendix I 
to this part includes any subsidiaries and branches, wherever located, 
of entities listed in appendix I to this part, any successors to such 
entities, and any persons acting or purporting to act for or on behalf 
of any of the foregoing.



Sec. 539.305  General license.

    The term general license means any license the terms of which are 
set forth in this part.



Sec. 539.306  Goods, technology, or services produced or provided by a 

designated foreign person.

    With respect to the prohibitions in Sec. Sec. 539.201 and 539.202, 
the term goods, technology, or services produced or provided by a 
designated foreign person includes but is not limited to the following:
    (a) Goods grown, manufactured, extracted, or processed by a 
designated foreign person;
    (b) Technology developed, owned, licensed, or otherwise controlled 
by a designated foreign person;

[[Page 241]]

    (c) Services performed by or on behalf of a designated foreign 
person, or by a third party under contract, directly or indirectly, to a 
designated foreign person, regardless of location.



Sec. 539.307  Importation into the United States.

    The term importation into the United States means:
    (a) With respect to goods or technology, the bringing of any goods 
or technology into the United States, except that in the case of goods 
or technology being transported by vessel, importation into the United 
States means the bringing of any goods or technology into the United 
States with the intent to unlade. See also Sec. 539.404.
    (b) With respect to services, the receipt in the United States of 
services or of the benefit of services wherever such services may be 
performed. The benefit of services is received in the United States if 
the services are:
    (1) Performed on behalf of or for the benefit of a person located in 
the United States;
    (2) Received by a person located in the United States;
    (3) Received by a person located outside the United States on behalf 
of or for the benefit of an entity organized in the United States; or
    (4) Received by an individual temporarily located outside the United 
States for the purpose of obtaining such services for use in the United 
States.
    (c) The following example illustrates the provisions of paragraph 
(b) of this section:

    Example: An employee of an entity organized in the United States may 
not, without specific authorization from the Office of Foreign Assets 
Control, receive from a designated foreign person consulting services 
for use in the United States.



Sec. 539.308  Information or informational materials.

    (a) For purposes of this part, the term information or informational 
materials includes, but is not limited to, publications, films, posters, 
phonograph records, photographs, microfilms, microfiche, tapes, compact 
disks, CD ROMs, artworks, and news wire feeds.
    (b) To be considered information or informational materials, 
artworks must be classified under chapter heading 9701, 9702, or 9703 of 
the Harmonized Tariff Schedule of the United States.



Sec. 539.309  License.

    Except as otherwise specified, the term license means any license or 
authorization contained in or issued pursuant to this part.



Sec. 539.310  Person.

    The term person means an individual or entity.



Sec. 539.311  Specific license.

    The term specific license means any license not set forth in this 
part but issued pursuant to this part.



Sec. 539.312  United States.

    The term United States means the United States, its territories and 
possessions, and all areas under the jurisdiction or authority thereof.



Sec. 539.313  United States person; U.S. person.

    The term United States person or U.S. person means any United States 
citizen, permanent resident alien, entity organized under the laws of 
the United States (including foreign branches), or any person in the 
United States.



                        Subpart D_Interpretations



Sec. 539.401  Reference to amended sections.

    Except as otherwise specified, reference to any provision in or 
appendix to this part or chapter or to any regulation, ruling, order, 
instruction, direction, or license issued pursuant to this part refers 
to the same as currently amended.



Sec. 539.402  Effect of amendment.

    Unless otherwise specifically provided, any amendment, modification, 
or revocation of any provision in or appendix to this part or chapter or 
of any order, regulation, ruling, instruction, or license issued by or 
under the direction of the Director of the Office of Foreign Assets 
Control does not affect any act done or omitted, or any civil or

[[Page 242]]

criminal suit or proceeding commenced or pending prior to such 
amendment, modification, or revocation. All penalties, forfeitures, and 
liabilities under any such order, regulation, ruling, instruction, or 
license continue and may be enforced as if such amendment, modification, 
or revocation had not been made.



Sec. 539.403  Transactions incidental to a licensed transaction.

    Any transaction ordinarily incident to a licensed transaction and 
necessary to give effect to the licensed transaction is also authorized 
by the license. Except as specifically authorized by the terms of the 
license, prohibited transactions involving designated foreign persons 
not named in the license are not considered incidental to a licensed 
transaction and therefore remain prohibited.



Sec. 539.404  Transshipments through the United States prohibited.

    (a) The prohibitions in Sec. Sec. 539.201 and 539.202 apply to the 
importation into the United States, for transshipment or transit, of 
goods, technology, or services produced or provided by a designated 
foreign person that are intended or destined for third countries.
    (b) In the case of goods or technology transported by vessel, the 
prohibitions in Sec. Sec. 539.201 and 539.202 apply to the unlading in 
the United States and the intent to unlade in the United States of goods 
or technology produced or provided by a designated foreign person that 
is intended or destined for third countries.



Sec. 539.405  Importation of goods or technology from third countries.

    Importation into the United States from third countries of goods or 
technology is prohibited if undertaken with knowledge or reason to know 
that those goods contain raw materials or components produced or 
provided by a designated foreign person or technology produced or 
provided by a designated foreign person.



Sec. 539.406  Importation into and release from a bonded warehouse or foreign 

trade zone.

    The prohibitions in Sec. Sec. 539.201 and 539.202 apply to 
importation into a bonded warehouse or a foreign trade zone of the 
United States.



  Subpart E_Licenses, Authorizations and Statements of Licensing Policy



Sec. 539.501  General and specific licensing procedures.

    For provisions relating to licensing procedures, see part 501, 
subpart E, of this chapter. Licensing actions taken pursuant to part 501 
of this chapter with respect to the prohibitions contained in this part 
are considered actions taken pursuant to this part.

[64 FR 8716, Feb. 23, 1999, as amended at 68 FR 53658, Sept. 11, 2003]



Sec. 539.502  Effect of license.

    (a) No license contained in this part, or otherwise issued by or 
under the direction of the Director of the Office of Foreign Assets 
Control pursuant to this part, authorizes or validates any transaction 
effected prior to the issuance of the license, unless the prior 
transaction is specifically authorized in such license.
    (b) No regulation, ruling, instruction, or license authorizes any 
transaction prohibited by this part unless the regulation, ruling, 
instruction, or license is issued by the Office of Foreign Assets 
Control and specifically refers to this part. No regulation, ruling, 
instruction, or license referring to this part authorizes any 
transaction prohibited by any provision of this chapter unless the 
regulation, ruling, instruction, or license specifically refers to such 
provision.
    (c) Any regulation, ruling, instruction, or license authorizing any 
transaction otherwise prohibited by this part has the effect of removing 
from the transaction a prohibition or prohibitions contained in this 
part, but only to the extent specifically stated by its terms. Unless 
the regulation, ruling, instruction, or license otherwise specifies, 
such an authorization does not create any right, duty, obligation,

[[Page 243]]

claim, or interest that would not otherwise exist under ordinary 
principles of law in or with respect to any property.



Sec. 539.503  Exclusion from licenses.

    The Director of the Office of Foreign Assets Control reserves the 
right to exclude any person, property, or transaction from the operation 
of any license or from the privileges conferred by any license. The 
Director of the Office of Foreign Assets Control also reserves the right 
to restrict the applicability of any license to particular persons, 
property, transactions, or classes thereof. Such actions are binding 
upon all persons receiving actual or constructive notice of the 
exclusions or restrictions.



Sec. 539.504  Departments and agencies of the United States Government.

    (a) Departments and agencies of the United States Government may by 
written authorization signed by the head of the Department or Agency or 
his designee provide for:
    (1) Procurement contracts necessary to meet U.S. operational 
military requirements or requirements under defense production 
agreements; intelligence requirements; sole source suppliers, spare 
parts, components, routine servicing and maintenance of products for the 
United States Government; and medical and humanitarian items; and
    (2) Performance pursuant to contracts in force as of 12:01 a.m. EDT, 
July 29, 1998, under appropriate circumstances.
    (b) Such written authorization shall:
    (1) Include details about the goods, technology, and services which 
have been approved for importation; the rationale for such approval; and 
24-hour-a-day contact information for the approving official or designee 
for use by the U.S. Customs Service should questions arise about an 
approved import;
    (2) Be in the form of license, regulation, order, directive, or 
exception;
    (3) Include information about the results of prior written 
consultation with the Under Secretary of State for Arms Control and 
International Security Affairs (through the Office of Chemical, 
Biological and Missile Nonproliferation and the Office of the Assistant 
Legal Adviser for Political-Military Affairs); and
    (4) Be provided to U.S. Customs Service officials upon the 
importation of any goods or technology covered by an authorization 
described in paragraph (a) of this section in a form which clearly 
establishes that the imported goods or technology is covered by the 
authorization.



                            Subpart F_Reports



Sec. 539.601  Records and reports.

    For provisions relating to required records and reports, see part 
501, subpart C, of this chapter. Recordkeeping and reporting 
requirements imposed by part 501 of this chapter with respect to the 
prohibitions contained in this part are considered requirements arising 
pursuant to this part.



                           Subpart G_Penalties



Sec. 539.701  Penalties.

    (a) Attention is directed to section 206 of the International 
Emergency Economic Powers Act (the ``Act'') (50 U.S.C. 1705), which is 
applicable to violations of the provisions of any license, ruling, 
regulation, order, direction, or instruction issued by or pursuant to 
the direction or authorization of the Secretary of the Treasury pursuant 
to this part or otherwise under the Act.
    (1) A civil penalty not to exceed the amount set forth in Section 
206 of the Act may be imposed on any person who violates, attempts to 
violate, conspires to violate, or causes a violation of any license, 
order, regulation, or prohibition issued under the Act.

    Note to paragraph (a)(1) of Sec. 539.701: As of June 10, 2008, the 
Act provides for a maximum civil penalty not to exceed the greater of 
$250,000 or an amount that is twice the amount of the transaction that 
is the basis of the violation with respect to which the penalty is 
imposed.

    (2) A person who willfully commits, willfully attempts to commit, or 
willfully conspires to commit, or aids or abets in the commission of a 
violation of any license, order, regulation, or prohibition shall, upon 
conviction, be fined not more than $1,000,000, or if a

[[Page 244]]

natural person, may be imprisoned for not more than 20 years, or both.
    (b) Adjustments to penalty amounts. (1) The civil penalties provided 
in the Act are subject to adjustment pursuant to the Federal Civil 
Penalties Inflation Adjustment Act of 1990 (Pub. L. 101-410, as amended, 
28 U.S.C. 2461 note).
    (2) The criminal penalties provided in the Act are subject to 
adjustment pursuant to 18 U.S.C. 3571.
    (c) Attention is also directed to 18 U.S.C. 1001, which provides 
that whoever, in any matter within the jurisdiction of any department or 
agency of the United States, knowingly and willfully falsifies, 
conceals, or covers up by any trick, scheme, or device a material fact, 
or makes any false, fictitious, or fraudulent statement or 
representation or makes or uses any false writing or document knowing 
the same to contain any false, fictitious, or fraudulent statement or 
entry shall be fined under title 18, United States Code, or imprisoned 
not more than five years, or both.
    (d) Violations of this part may also be subject to relevant 
provisions of other applicable laws.

[64 FR 8716, Feb. 23, 1999, as amended at 71 FR 29253, May 22, 2006; 73 
FR 32653, June 10, 2008]



Sec. 539.702  Prepenalty notice.

    (a) When required. If the Director of the Office of Foreign Assets 
Control has reasonable cause to believe that there has occurred a 
violation of any provision of this part or a violation of the provisions 
of any license, ruling, regulation, order, direction, or instruction 
issued by or pursuant to the direction or authorization of the Secretary 
of the Treasury pursuant to this part or otherwise under the 
International Emergency Economic Powers Act, and the Director determines 
that further proceedings are warranted, the Director shall issue to the 
person concerned a notice of intent to impose a monetary penalty. This 
prepenalty notice shall be issued whether or not another agency has 
taken any action with respect to this matter.
    (b) Contents--(1) Facts of violation. The prepenalty notice shall 
describe the violation, specify the laws and regulations allegedly 
violated, and state the amount of the proposed monetary penalty.
    (2) Right to respond. The prepenalty notice also shall inform the 
respondent of respondent's right to make a written presentation within 
30 days of the date of mailing of the notice as to why a monetary 
penalty should not be imposed or why, if imposed, the monetary penalty 
should be in a lesser amount than proposed.



Sec. 539.703  Response to prepenalty notice; informal settlement.

    (a) Deadline for response. The respondent shall have 30 days from 
the date of mailing of the prepenalty notice to make a written response 
to the Director of the Office of Foreign Assets Control.
    (b) Form and contents of response. The written response need not be 
in any particular form, but must contain information sufficient to 
indicate that it is in response to the prepenalty notice. It should 
contain responses to the allegations in the prepenalty notice and set 
forth the reasons why the respondent believes the penalty should not be 
imposed or why, if imposed, it should be in a lesser amount than 
proposed.
    (c) Informal settlement. In addition or as an alternative to a 
written response to a prepenalty notice issued pursuant to this section, 
the respondent or respondent's representative may contact the Office of 
Foreign Assets Control as advised in the prepenalty notice to propose 
the settlement of allegations contained in the prepenalty notice and 
related matters. In the event of settlement at the prepenalty stage, the 
claim proposed in the prepenalty notice will be withdrawn, the 
respondent is not required to take a written position on allegations 
contained in the prepenalty notice, and the Office of Foreign Assets 
Control will make no final determination as to whether a violation 
occurred. The amount accepted in settlement of allegations in a 
prepenalty notice may vary from the civil penalty that might finally be 
imposed in the event of a formal determination of violation. In the 
event no settlement is reached, the 30-day period specified in paragraph 
(a) of this section for written response to the

[[Page 245]]

prepenalty notice remains in effect unless additional time is granted by 
the Office of Foreign Assets Control.



Sec. 539.704  Penalty imposition or withdrawal.

    (a) No violation. If, after considering any response to a prepenalty 
notice and any relevant facts, the Director of the Office of Foreign 
Assets Control determines that there was no violation by the respondent 
named in the prepenalty notice, the Director promptly shall notify the 
respondent in writing of that determination and that no monetary penalty 
will be imposed.
    (b) Violation. If, after considering any response to a prepenalty 
notice and any relevant facts, the Director of the Office of Foreign 
Assets Control determines that there was a violation by the respondent 
named in the prepenalty notice, the Director promptly shall issue a 
written notice of the imposition of the monetary penalty to the 
respondent.
    (1) The penalty notice shall inform the respondent that payment of 
the assessed penalty must be made within 30 days of the date of mailing 
of the penalty notice.
    (2) The penalty notice shall inform the respondent of the 
requirement to furnish the respondent's taxpayer identification number 
pursuant to 31 U.S.C. 7701 and that such number will be used for 
purposes of collecting and reporting on any delinquent penalty amount.



Sec. 539.705  Administrative collection; referral to United States Department 

of Justice.

    In the event that the respondent does not pay the penalty imposed 
pursuant to this part or make payment arrangements acceptable to the 
Director of the Office of Foreign Assets Control within 30 days of the 
date of mailing of the penalty notice, the matter may be referred for 
administrative collection measures by the Department of the Treasury or 
to the United States Department of Justice for appropriate action to 
recover the penalty in a civil suit in a Federal district court.



                          Subpart H_Procedures



Sec. 539.801  Procedures.

    For license application procedures and procedures relating to 
amendments, modifications, or revocations of licenses; administrative 
decisions; rulemaking; and requests for documents pursuant to the 
Freedom of Information and Privacy Acts (5 U.S.C. 552 and 552a), see 
part 501, subpart E, of this chapter.

[64 FR 8716, Feb. 23, 1999, as amended at 68 FR 53658, Sept. 11, 2003]



Sec. 539.802  Delegation by the Secretary of the Treasury.

    Any action that the Secretary of the Treasury is authorized to take 
pursuant to Executive Order 12938 of November 14, 1994 (59 FR 59099, 3 
CFR, 1994 Comp., p. 950), as amended by Executive Order 13094 of July 
28, 1998 (63 FR 40803, July 30, 1998), and any further Executive orders 
relating to the national emergency declared in Executive Order 12938 may 
be taken by the Director of the Office of Foreign Assets Control or by 
any other person to whom the Secretary of the Treasury has delegated 
authority so to act.



                    Subpart I_Paperwork Reduction Act



Sec. 539.901  Paperwork Reduction Act notice.

    For approval by the Office of Management and Budget (``OMB'') under 
the Paperwork Reduction Act of 1995 (44 U.S.C. 3507) of information 
collections relating to recordkeeping and reporting requirements, 
licensing procedures (including those pursuant to statements of 
licensing policy), and other procedures, see Sec. 501.901 of this 
chapter. An agency may not conduct or sponsor, and a person is not 
required to respond to, a collection of information unless it displays a 
valid control number assigned by OMB.



         Sec. Appendix I to Part 539--Designated Foreign Persons

    The following foreign persons have been determined by the Secretary 
of State to have materially contributed or attempted to contribute 
materially to the efforts of a foreign

[[Page 246]]

country, project, or entity of proliferation concern to use, acquire, 
design, develop, produce, or stockpile weapons of mass destruction or 
missiles capable of delivering such weapons, for purposes of section 
4(a) of Executive Order 12938, as amended by section 1(a) of Executive 
Order 13094, and to be subject to import measures authorized in 
Executive Orders 12938 and 13094. They, and any entities owned or 
controlled by them, unless indicated otherwise, are designated foreign 
persons for purposes of this part. The applicable effective date and 
citation to the Federal Register for each such person is given in 
brackets after that person's name and identifying information:
1. Baltic State Technical University, including at 1/21, 1-ya 
Krasnoarmeiskaya Ul., 198005 St. Petersburg, Russia [July 30, 1998; 63 
FR 42089, August 6, 1998].
2. Europalace 2000, including at Moscow, Russia [July 30, 1998; 63 FR 
42089, August 6, 1998].
3. Glavkosmos, including at 9 Krasnoproletarskaya St., 103030 Moscow, 
Russia [July 30, 1998; 63 FR 42089, August 6, 1998].
4. Grafit, also known as (``aka'') State Scientific Research Institute 
of Graphite or NIIGRAFIT, including at 2 Ulitsa Elektrodnaya, 111524 
Moscow, Russia [July 30, 1998; 63 FR 42089, August 6, 1998].
5. MOSO Company, including at Moscow, Russia [July 30, 1998; 63 FR 
42089, August 6, 1998].
6. D. Mendeleyev University of Chemical Technology of Russia, including 
at 9 Miusskaya Sq., Moscow 125047, Russia [January 8, 1999; 64 FR 2935, 
January 19, 1999].
7. Moscow Aviation Institute (MAI), including at 4 Volokolamskoye 
Shosse, Moscow 125871, Russia [January 8, 1999; 64 FR 2935, January 19, 
1999].
8. The Scientific Research and Design Institute of Power Technology, aka 
NIKIET, Research and Development Institute of Power Engineering [RDIPE], 
and ENTEK, including at 101000, P.O. Box 788, Moscow, Russia.

[64 FR 8716, Feb. 23, 1999, as amended at 66 FR 57381, Nov. 15, 2001]



PART 540_HIGHLY ENRICHED URANIUM (HEU) AGREEMENT ASSETS CONTROL REGULATIONS--

Table of Contents



      Subpart A_Relation of This Part to Other Laws and Regulations

Sec.
540.101 Relation of this part to other laws and regulations.

                         Subpart B_Prohibitions

540.201 Prohibited transactions involving blocked property.
540.202 Effect of transfers violating the provisions of this part.
540.203 Holding of funds in interest-bearing accounts; investment and 
          reinvestment.

                      Subpart C_General Definitions

540.301 Blocked account; blocked property.
540.302 Effective date.
540.303 Entity.
540.304 Government of the Russian Federation.
540.305 HEU Agreements.
540.306 Highly Enriched Uranium (HEU).
540.307 Licenses; general and specific.
540.308 Low Enriched Uranium (LEU).
540.309 Natural uranium.
540.310 Person.
540.311 Property; property interest.
540.312 Transfer.
540.313 United States.
540.314 United States person; U.S. person.
540.315 Uranium-235 (U235).
540.316 Uranium enrichment.
540.317 Uranium feed; natural uranium feed.
540.318 Uranium Hexafluoride (UF6).
540.319 U.S. financial institution.

                        Subpart D_Interpretations

540.401 Reference to amended sections.
540.402 Effect of amendment.
540.403 Termination and acquisition of an interest in blocked property.
540.404 Setoffs prohibited.
540.405 Transactions incidental to a licensed transaction.

 Subpart E_Licenses, Authorizations, and Statements of Licensing Policy

540.500 Licensing procedures.
540.501 Effect of license or authorization.
540.502 Exclusion from licenses.
540.503 Payments and transfers to blocked accounts in U.S. financial 
          institutions.
540.504 Entries in certain accounts for normal service charges 
          authorized.

                            Subpart F_Reports

540.601 Records and reports.

                           Subpart G_Penalties

540.701 Penalties.
540.702 Prepenalty notice.
540.703 Response to prepenalty notice; informal settlement.
540.704 Penalty imposition or withdrawal.
540.705 Administrative collection; referral to United States Department 
          of Justice.

[[Page 247]]

                          Subpart H_Procedures

540.801 Procedures.
540.802 Delegation by the Secretary of the Treasury.

                    Subpart I_Paperwork Reduction Act

540.901 Paperwork Reduction Act notice.

    Authority: 3 U.S.C. 301; 31 U.S.C. 321(b); 50 U.S.C. 1601-1651, 
1701-1706; Pub. L. 101-410, 104 Stat. 890 (28 U.S.C. 2461 note); Pub. L. 
110-96, 121 Stat. 1011; E.O. 13159, 65 FR 39279, 3 CFR, 2000 Comp., p. 
277.

    Source: 66 FR 38555, July 25, 2001, unless otherwise noted.



      Subpart A_Relation of This Part to Other Laws and Regulations



Sec. 540.101  Relation of this part to other laws and regulations.

    (a) This part is separate from, and independent of, the other parts 
of this chapter, with the exception of part 501 of this chapter, the 
recordkeeping and reporting requirements and license application and 
other procedures of which apply to this part. Actions taken pursuant to 
part 501 of this chapter with respect to the prohibitions contained in 
this part are considered actions taken pursuant to this part. Differing 
foreign policy and national security circumstances may result in 
differing interpretations of similar language among the parts of this 
chapter. No license or authorization contained in or issued pursuant to 
those other parts authorizes any transaction prohibited by this part. No 
license or authorization contained in or issued pursuant to any other 
provision of law or regulation authorizes any transaction prohibited by 
this part.
    (b) Nothing contained in these regulations shall relieve a person 
from any requirement to obtain a license or other authorization from any 
department or agency of the United States Government in compliance with 
applicable laws and regulations subject to the jurisdiction of that 
department or agency, and no license contained in or issued pursuant to 
this part relieves the involved parties from complying with any other 
applicable laws or regulations.



                         Subpart B_Prohibitions



Sec. 540.201  Prohibited transactions involving blocked property.

    (a) Except as otherwise authorized by regulations, orders, 
directives, rulings, instructions, licenses, or otherwise, the property 
or property interests of the Government of the Russian Federation that 
are directly related to the implementation of the Highly Enriched 
Uranium (HEU) Agreements, that are in the United States, that hereafter 
come within the United States, or that are or hereafter come within the 
possession or control of U.S. persons are blocked and may not be 
transferred, paid, exported, withdrawn or otherwise dealt in.
    (b) Unless otherwise authorized by this part or by a specific 
license expressly referring to this part, any attachment, judgment, 
decree, lien, execution, garnishment, or other judicial process is null 
and void with respect to any blocked property or interest in blocked 
property covered by this part.



Sec. 540.202  Effect of transfers violating the provisions of this part.

    (a) Any transfer after the effective date (see Sec. 540.302) that 
is in violation of any provision of this part or of any regulation, 
order, directive, ruling, instruction, or license issued pursuant to 
this part, and that involves any property or interest in property 
blocked pursuant to Sec. 540.201(a) is null and void and shall not be 
the basis for the assertion or recognition of any interest in or right, 
remedy, power, or privilege with respect to such property or property 
interests.
    (b) No transfer before the effective date shall be the basis for the 
assertion or recognition of any right, remedy, power, or privilege with 
respect to, or any interest in, any property or interest in property 
blocked pursuant to Sec. 540.201, unless the person with whom such 
property is held or maintained, prior to that date, had written notice 
of the transfer or by any written evidence had recognized such transfer.
    (c) Unless otherwise provided, an appropriate license or other 
authorization issued by or pursuant to the direction or authorization of 
the Director of

[[Page 248]]

the Office of Foreign Assets Control before, during, or after a transfer 
shall validate such transfer or render it enforceable to the same extent 
that it would be valid or enforceable but for the provisions of the 
International Emergency Economic Powers Act, this part, and any 
regulation, order, directive, ruling, instruction, or license issued 
pursuant to this part.
    (d) The Director of the Office of Foreign Assets Control may, in his 
discretion, retroactively license a transfer of property that is null 
and void or unenforceable by virtue of the provisions of this section so 
that such a transfer shall not be deemed to be null and void or 
unenforceable as to any person with whom such property was held or 
maintained (and as to such person only) in cases in which such person is 
able to establish to the satisfaction of the Director of the Office of 
Foreign Assets Control each of the following:
    (1) Such transfer did not represent a willful violation of the 
provisions of this part by the person with whom such property was held 
or maintained;
    (2) The person with whom such property was held or maintained did 
not have reasonable cause to know or suspect, in view of all the facts 
and circumstances known or available to such person, that such transfer 
required a license or authorization issued pursuant to this part and was 
not so licensed or authorized, or if a license or authorization did 
purport to cover the transfer, that such license or authorization had 
been obtained by misrepresentation of a third party or withholding of 
material facts or was otherwise fraudulently obtained; and
    (3) The person with whom such property was held or maintained filed 
with the Office of Foreign Assets Control a report setting forth in full 
the circumstances relating to such transfer promptly upon discovery 
that:
    (i) Such transfer was in violation of the provisions of this part or 
any regulation, ruling, instruction, license or other direction, or 
authorization issued pursuant to this part;
    (ii) Such transfer was not licensed or authorized by the Director of 
the Office of Foreign Assets Control; or
    (iii) If a license did purport to cover the transfer, such license 
had been obtained by misrepresentation of a third party or withholding 
of material facts or was otherwise fraudulently obtained.

    Note to paragraph (d) of Sec. 540.202: The filing of a report in 
accordance with the provisions of paragraph (d)(3) of this section shall 
not be deemed evidence that the terms of paragraphs (d)(1) and (d)(2) of 
this section have been satisfied.



Sec. 540.203  Holding of funds in interest-bearing accounts; investment and 

reinvestment.

    (a) Except as provided in paragraphs (c) or (d) of this section, or 
as otherwise directed by the Office of Foreign Assets Control, any U.S. 
person holding funds, such as currency, bank deposits, or liquidated 
financial obligations subject to Sec. 540.201 shall hold or place such 
funds in a blocked interest-bearing account located in the United 
States.
    (b)(1) For purposes of this section the term blocked interest-
bearing account means a blocked account:
    (i) In a federally-insured U.S. bank, thrift institution, or credit 
union, provided the funds are earning interest at rates which are 
commercially reasonable; or
    (ii) With a broker or dealer registered with the Securities and 
Exchange Commission under the Securities Exchange Act of 1934, provided 
the funds are invested in a money market fund or U.S. Treasury Bills.
    (2) For purposes of this section, a rate is commercially reasonable 
if it is the rate currently offered to other depositors on deposits or 
instruments of comparable size and maturity.
    (3) Funds held or placed in a blocked account pursuant to this 
paragraph (b) may not be invested in instruments the maturity of which 
exceeds 180 days. If interest is credited to a separate blocked account 
or sub-account, the name of the account party on each account must be 
the same.
    (c) Blocked funds held in instruments the maturity of which exceeds 
180 days at the time the funds become subject to Sec. 540.201 may 
continue to be held until maturity in the original instrument, provided 
any interest, earnings, or other proceeds derived therefrom are

[[Page 249]]

paid into a blocked interest-bearing account in accordance with 
paragraph (b) or (d) or this section.
    (d) Blocked funds held in accounts or instruments outside the United 
States at the time the funds become subject to Sec. 540.201 may 
continue to be held in the same type of accounts or instruments, 
provided the funds earn interest at rates which are commercially 
reasonable.
    (e) This section does not create an affirmative obligation for the 
holder of blocked tangible property, such as chattels or real estate, or 
of other blocked property, such as debt or equity securities, to sell or 
liquidate such property at the time the property becomes subject to 
Sec. 540.201. However, the Office of Foreign Assets Control may issue 
licenses permitting or directing such sales in appropriate cases.
    (f) Except as otherwise licensed, authorized or directed by OFAC, 
funds subject to this section may not be invested, used for collateral 
or reinvested in a manner which provides immediate financial or economic 
benefit or access to the Government of the Russian Federation or its 
entities, nor may their holder cooperate in or facilitate the pledging 
or other attempted use as collateral of blocked funds or other assets.



                      Subpart C_General Definitions



Sec. 540.301  Blocked account; blocked property.

    The terms blocked account and blocked property shall mean any 
account or property subject to the prohibition in Sec. 540.201 and with 
respect to which payments, transfers, exportations, withdrawals, or 
other dealings may not be made or effected except pursuant to an 
authorization or license from the Office of Foreign Assets Control 
expressly authorizing such action.



Sec. 540.302  Effective date.

    The term effective date refers to the effective date of the 
applicable prohibitions and directives contained in this part which is 
12:01 a.m., Eastern Daylight Time, June 22, 2000.



Sec. 540.303  Entity.

    The term entity means a partnership, association, trust, joint 
venture, corporation, or other organization.



Sec. 540.304  Government of the Russian Federation.

    (a) The term Government of the Russian Federation means the 
Government of the Russian Federation, any political subdivision, agency, 
or instrumentality thereof, and any person owned or controlled by, or 
acting for or on behalf of, the Government of the Russian Federation.
    (b) Any person or entity to the extent such person or entity is or 
has been, or to the extent that there is reasonable cause to believe 
that such person or entity is, or has been, since the effective date 
(see Sec. 540.302), acting or purporting to act directly or indirectly 
for or on behalf of any of the foregoing.



Sec. 540.305  HEU Agreements.

    The term HEU Agreements means the Agreement Between the Government 
of the United States of America and the Government of the Russian 
Federation Concerning the Disposition of Highly Enriched Uranium 
Extracted from Nuclear Weapons, dated February 18, 1993; the Initial 
Implementing Contract, Contract Number DE-AC01-93NE50067, dated January 
14, 1994; and all current and future amendments thereto; as well as the 
related current and future implementing agreements, memoranda of 
understanding, protocols, and contracts, including all current and 
future amendments thereto, to include without limitation the following:
    (a) Memorandum of Agreement Between the United States, Acting By and 
Through the United States Department of State, and the United States 
Department of Energy and the United States Enrichment Corporation 
(USEC), for USEC to Serve as the United States Government's Executive 
Agent under the Agreement Between the United States and the Russian 
Federation Concerning the Disposition of Highly Enriched Uranium 
Extracted from Nuclear Weapons, dated April 18, 1997;
    (b) Agreement Between the United States Department of Energy and the

[[Page 250]]

Ministry of the Russian Federation for Atomic Energy Concerning the 
Transfer of Source Material to the Russian Federation signed at 
Washington on March 24, 1999, with Implementing Agreement and 
Administrative Arrangement, dated March 24, 1999, and related letter 
agreements; and
    (c) UF6 Feed Component Implementing Contract Among Cameco Europe 
S.A. and Compagnie G[eacute]n[eacute]ral des Mati[egrave]res 
Nucl[eacute]aires and Nukem, Inc. and Nukem Nuklear Gmbh and OAO 
Techsnabexport, and Tenex Contract  08843672/90100-02D, dated 
March 24, 1999.



Sec. 540.306  Highly Enriched Uranium (HEU).

    The term highly enriched uranium or HEU means uranium enriched to 
twenty (20) percent or greater in the isotope U235.



Sec. 540.307  Licenses; general and specific.

    (a) Except as otherwise specified, the term license means any 
license or authorization contained in or issued pursuant to this part.
    (b) The term general license means any license or authorization the 
terms of which are set forth in subpart E of this part.
    (c) The term specific license means any license or authorization not 
set forth in subpart E of this part but issued pursuant to this part.

    Note to Sec. 540.307. See Sec. 501.801 of this chapter on 
licensing procedures.



Sec. 540.308  Low Enriched Uranium (LEU).

    The term low enriched uranium or LEU means uranium enriched to less 
than twenty (20) percent in the isotope U235.



Sec. 540.309  Natural uranium.

    The term natural uranium means uranium found in nature, with an 
average concentration of 0.711 percent by weight of the isotope U235.



Sec. 540.310  Person.

    The term person means an individual or entity.



Sec. 540.311  Property; property interest.

    The terms property and property interest include, but are not 
limited to, money, checks, drafts, bullion, bank deposits, savings 
accounts, debts, indebtedness, obligations, notes, guarantees, 
debentures, stocks, bonds, coupons, any other financial instruments, 
bankers acceptances, mortgages, pledges, liens or other rights in the 
nature of security, warehouse receipts, bills of lading, trust receipts, 
bills of sale, any other evidences of title, ownership, or indebtedness, 
letters of credit and any documents relating to any rights or 
obligations thereunder, powers of attorney, goods, wares, merchandise, 
chattels, stocks on hand, ships, goods on ships, real estate mortgages, 
deeds of trust, vendors' sales agreements, land contracts, leaseholds, 
ground rents, real estate and any other interest therein, options, 
negotiable instruments, trade acceptances, royalties, book accounts, 
accounts payable, judgments, patents, trademarks, copyrights, insurance 
policies, safe deposit boxes and their contents, annuities, pooling 
agreements, services of any nature whatsoever, contracts of whatever 
nature whatsoever, and any other property, real, personal, or mixed, 
tangible or intangible, or interests therein, present, future, or 
contingent.



Sec. 540.312  Transfer.

    The term transfer means any actual or purported act or transaction, 
whether or not evidenced by writing, and whether or not done or 
performed within the United States, the purpose, intent, or effect of 
which is to create, surrender, release, convey, transfer, or alter, 
directly or indirectly, any right, remedy, power, privilege, or interest 
with respect to any property and, without limitation upon the foregoing, 
shall include the making, execution, or delivery of any assignment, 
power, conveyance, check, declaration, deed, deed of trust, power of 
attorney, power of appointment, bill of sale, mortgage, receipt, 
agreement, contract, certificate, gift, sale, affidavit, or statement; 
the making of any payment; the setting off of any obligation or credit; 
the appointment of any agent, trustee, or fiduciary; the creation or 
transfer of any lien; the issuance, docketing, filing, or

[[Page 251]]

levy of or under any judgment, decree, attachment, injunction, 
execution, or other judicial or administrative process or order, or the 
service of any garnishment; the acquisition of any interest of any 
nature whatsoever by reason of a judgment or decree of any foreign 
country; the fulfillment of any condition; the exercise of any power of 
appointment, power of attorney, or other power; or the acquisition, 
disposition, transportation, importation, exportation, or withdrawal of 
any security.



Sec. 540.313  United States.

    The term United States means the United States, its territories and 
possessions, and all areas under the jurisdiction or authority thereof.



Sec. 540.314  United States person; U.S. person.

    The term United States person or U.S. person means any United States 
citizen, permanent resident alien, juridical person organized und