[Federal Register Volume 77, Number 217 (Thursday, November 8, 2012)]
[Rules and Regulations]
[Pages 66918-66920]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-27420]


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DEPARTMENT OF THE TREASURY

Office of Foreign Assets Control

31 CFR Part 561


Iranian Financial Sanctions Regulations

AGENCY: Office of Foreign Assets Control, Treasury.

ACTION: Final rule.

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SUMMARY: The Department of the Treasury's Office of Foreign Assets 
Control is amending the Iranian Financial Sanctions Regulations in 
order to implement sections 214 through 216 of the Iran Threat 
Reduction and Syria Human Rights Act of 2012.

DATES: Effective Date: November 8, 2012.

FOR FURTHER INFORMATION CONTACT: Assistant Director for Sanctions 
Compliance & Evaluation, tel.: 202/622-2490, Assistant Director for 
Licensing, tel.: 202/622-2480, Assistant Director for Policy, tel: 202/
622-4855, Office of Foreign Assets Control, or Chief Counsel (Foreign 
Assets Control), tel.: 202/622-2410, Office of the General Counsel, 
Department of the Treasury (not toll free numbers).

SUPPLEMENTARY INFORMATION:

Electronic and Facsimile Availability

    This document and additional information concerning OFAC are 
available from OFAC's Web site (www.treas.gov/ofac). Certain general 
information pertaining to OFAC's sanctions programs also is available 
via facsimile through a 24-hour fax-on-demand service, tel.: 202/622-
0077.

Background

    On August 10, 2012, the President signed into law the Iran Threat 
Reduction and Syria Human Rights Act of 2012 (Pub. L. 112-158) (the 
``TRA''), in order to strengthen the sanctions imposed against Iran. 
Sections 214 and 215 of the TRA amend section 104(c)(2) of the 
Comprehensive Iran Sanctions, Accountability, and Divestment Act of 
2010 (Pub. L. 111-195) (22 U.S.C. 8501-8551) (``CISADA'') by expanding 
the categories of sanctionable activities set forth in that section.
    Section 104(c)(2) of CISADA sets forth the activities for which the 
Secretary of the Treasury is authorized to prohibit or impose strict 
conditions on the opening or maintaining in the United States of a 
correspondent account or a payable-through account by a foreign 
financial institution if the Secretary finds that the foreign financial 
institution knowingly engages in one or more of those activities. Under 
section 104(c)(2)(B) of CISADA, facilitating the activities of a person 
subject to financial sanctions pursuant to a United Nations Security 
Council resolution that imposes sanctions with respect to Iran is 
listed as a sanctionable activity. Section 214 of the TRA amends 
section 104(c)(2)(B) of CISADA by expanding this sanctionable category 
to include facilitating the activities of ``a person acting on behalf 
of or at the direction of, or owned or controlled by,'' a person 
sanctioned under such United Nations Security Council resolutions.
    Section 215 of the TRA amends section 104(c)(2)(E) of CISADA to 
authorize the imposition of CISADA sanctions on a foreign financial 
institution that knowingly facilitates significant transactions or 
provides significant financial services for a ``person'' (formerly, a 
``financial institution'') whose property and interests in property are 
blocked pursuant to the International Emergency Economic Powers Act (50 
U.S.C. 1701 et seq.) in connection with Iran's proliferation of weapons 
of mass destruction (``WMD'') or delivery systems for WMD or Iran's 
support for international terrorism.
    Section 216 of the TRA amends CISADA by adding new section 104A 
after section 104 of CISADA. That new section requires the Secretary of 
the Treasury to revise the regulations prescribed under CISADA section 
104(c) to apply, to the same extent that they apply to a foreign 
financial institution found to knowingly engage in an activity 
described in CISADA section

[[Page 66919]]

104(c)(2), to a foreign financial institution that the Secretary of the 
Treasury finds (1) Knowingly facilitates, or participates or assists 
in, an activity described in section 104(c)(2) of CISADA; (2) attempts 
or conspires to facilitate or participate in such an activity; or (3) 
is owned or controlled by a foreign financial institution that the 
Secretary finds knowingly engages in such an activity.
    The Department of the Treasury's Office of Foreign Assets Control 
(``OFAC'') originally published the Iranian Financial Sanctions 
Regulations, 31 CFR part 561 (the ``IFSR''), on August 16, 2010, to 
implement sections 104(c) and (d) and other related provisions of 
CISADA (75 FR 49836). On February 27, 2012, OFAC amended the IFSR and 
reissued them in their entirety, in order to implement section 1245(d) 
of the National Defense Authorization Act for Fiscal Year 2012 (Pub. L. 
112-81), which provides for the imposition of sanctions with respect to 
the Central Bank of Iran and designated Iranian financial institutions 
(77 FR 11724).
    Today, OFAC is further amending the IFSR to implement the changes 
to CISADA made by sections 214 through 216 of the TRA. OFAC is revising 
section 561.201(a)(2) of the IFSR to incorporate the change made by 
section 214 of the TRA. Section 561.201(a)(5)(ii) and the note to 
paragraph (a)(5) are being revised to incorporate the change made by 
section 215 of the TRA. OFAC is revising the chapeau of section 561.201 
and adding new paragraph (a)(6) to incorporate the change made by 
section 216 of the TRA.
    In addition, OFAC is amending the definitions of foreign financial 
institution and Iranian financial institution in, respectively, 
sections 561.308 and 561.320 of the IFSR. OFAC is amending these 
definitions to add ``dealers in precious metals, stones, or jewels'' to 
the examples of entities included in the definitions.

Public Participation

    Because the amendment of the IFSR involves a foreign affairs 
function, the provisions of Executive Order 12866 and the 
Administrative Procedure Act (5 U.S.C. 553) requiring notice of 
proposed rulemaking, opportunity for public participation, and delay in 
effective date are inapplicable. Because no notice of proposed 
rulemaking is required for this rule, the Regulatory Flexibility Act (5 
U.S.C. 601-612) does not apply.

Paperwork Reduction Act

    The collection of information in section 561.601 of the IFSR is 
made pursuant to OFAC's Reporting, Procedures and Penalties 
Regulations, 31 CFR part 501. Pursuant to the Paperwork Reduction Act 
of 1995 (44 U.S.C. 3507), those collections of information have been 
approved by the Office of Management and Budget (``OMB'') under control 
number 1505-0164. See 31 CFR 501.901. The collection of information in 
section 561.504(b) of the IFSR has been approved by OMB under control 
number 1505-0243. An agency may not conduct or sponsor, and a person is 
not required to respond to, a collection of information unless the 
collection of information displays a valid control number.

List of Subjects in 31 CFR Part 561

    Administrative practice and procedure, Banking, Banks, Brokers, 
Electronic funds transfers, Financial institutions, Foreign banking, 
Foreign trade, International organizations, Investments, Iran, Jewels, 
Loans, Precious metals, Securities.

    For the reasons set forth in the preamble, the Department of the 
Treasury's Office of Foreign Assets Control amends part 561 of 31 CFR 
chapter V as follows:

PART 561--IRANIAN FINANCIAL SANCTIONS REGULATIONS

0
1. The authority citation for part 561 is revised to read as follows:

    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 (50 U.S.C. 1705 note); Pub. L. 111-
195, 124 Stat. 1312 (22 U.S.C. 8501-8551); Pub. L. 112-81, 125 Stat. 
1298; Pub. L. 112-158, 126 Stat. 1214; E.O. 12957, 60 FR 14615, 3 
CFR, 1995 Comp., p. 332; E.O. 13553, 75 FR 60567, 3 CFR, 2010 Comp., 
p. 253; E.O. 13599, 77 FR 6659, February 8, 2012.

Subpart B--Prohibitions

0
2. Amend Sec.  561.201 by revising the introductory text, paragraphs 
(a)(2), (a)(4), and (a)(5)(ii), and the Note to paragraph (a)(5) of 
Sec.  561.201 and adding new paragraph (a)(6) to read as follows:


Sec.  561.201  CISADA-based sanctions on certain foreign financial 
institutions.

    Upon a finding by the Secretary of the Treasury that a foreign 
financial institution knowingly engages in one or more of the 
activities described in paragraphs (a)(1) through (a)(6) of this 
section, attempts or conspires to facilitate or participate in one or 
more of such activities, or is owned or controlled by a foreign 
financial institution that the Secretary finds knowingly engages in one 
or more of such activities, consistent with the Secretary of the 
Treasury's authorities under the Comprehensive Iran Sanctions, 
Accountability, and Divestment Act of 2010 (Pub. L. 111-195) (22 U.S.C. 
8501-8551) (``CISADA''), as amended by the Iran Threat Reduction and 
Syria Human Rights Act of 2012 (Pub. L. 112-158), either the Secretary 
of the Treasury will impose one or more strict conditions, as set forth 
in paragraph (b) of this section, on the opening or maintaining of a 
correspondent account or a payable-through account in the United States 
for that foreign financial institution, or, as set forth in paragraph 
(c) of this section, the Secretary of the Treasury will prohibit a U.S. 
financial institution from opening or maintaining a correspondent 
account or a payable-through account in the United States for that 
foreign financial institution. The name of the foreign financial 
institution and the relevant prohibition or strict condition(s) will be 
added to the List of Foreign Financial Institutions Subject to Part 561 
(the ``Part 561 List'') on the Office of Foreign Assets Control's Web 
site (www.treasury.gov/ofac) on the Iran Sanctions page and published 
in the Federal Register.
    (a) * * *
    (2) Facilitates the activities of--
    (i) A person subject to financial sanctions pursuant to United 
Nations Security Council Resolutions 1737, 1747, 1803, or 1929, or any 
other resolution adopted by the Security Council that imposes sanctions 
with respect to Iran; or
    (ii) A person acting on behalf of or at the direction of, or owned 
or controlled by, a person described in paragraph (a)(2)(i) of this 
section;
* * * * *
    (4) Facilitates efforts by the Central Bank of Iran or any other 
Iranian financial institution to carry out an activity described in 
paragraphs (a)(1) or (a)(2) of this section;
    (5) * * *
    (ii) A person whose property and interests in property are blocked 
pursuant to parts 544 or 594 of this chapter in connection with Iran's 
proliferation of weapons of mass destruction or delivery systems for 
weapons of mass destruction or Iran's support for international 
terrorism; or

    Note to paragraph (a)(5) of Sec.  561.201: The names of persons 
whose property and interests in property are blocked pursuant to 
IEEPA are published in the Federal Register and incorporated into 
the Office of Foreign Assets Control's Specially Designated 
Nationals and Blocked Persons List (the ``SDN List''). The SDN List 
is accessible through the following page on the Office of

[[Page 66920]]

Foreign Assets Control's Web site: www.treasury.gov/sdn. Additional 
information pertaining to the SDN List can be found in appendix A to 
this chapter. Agents or affiliates of Iran's Islamic Revolutionary 
Guard Corps (``IRGC'') whose property and interests in property are 
blocked pursuant to IEEPA are identified by a special reference to 
the ``IRGC'' at the end of their entries on the SDN List, in 
addition to the reference to the regulatory part of this chapter 
pursuant to which their property and interests in property are 
blocked. For example, an affiliate of the IRGC whose property and 
interests in property are blocked pursuant to the Weapons of Mass 
Destruction Proliferators Sanctions Regulations, 31 CFR part 544, 
will have the tags ``[NPWMD][IRGC]'' at the end of its entry on the 
SDN List. Persons whose property and interests in property are 
blocked pursuant to parts 544 or 594 of this chapter in connection 
with Iran's proliferation of weapons of mass destruction or delivery 
systems for weapons of mass destruction or Iran's support for 
international terrorism also are identified by the tag ``[IFSR]'' in 
addition to the tag referencing part 544 or part 594, as the case 
may be, located at the end of their entries on the SDN List (e.g., 
[NPWMD][IFSR] or [SDGT][IFSR]). In addition, see Sec.  561.405 
concerning entities that may not be listed on the SDN List but whose 
property and interests in property are nevertheless blocked.

    (6) Facilitates, or participates or assists in, an activity 
described in paragraphs (a)(1) through (a)(5) of this section, 
including by acting on behalf of, at the direction of, or as an 
intermediary for, or otherwise assisting, another person with respect 
to the activity.
* * * * *

Subpart C--General Definitions

0
3. Revise Sec.  561.308 to read as follows:


Sec.  561.308  Foreign financial institution.

    The term foreign financial institution means any foreign entity 
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. It includes but is not limited to depository institutions, 
banks, savings banks, money service businesses, 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, dealers in precious metals, stones, 
or jewels, and holding companies, affiliates, or subsidiaries of any of 
the foregoing. The term does not include the international financial 
institutions identified in 22 U.S.C. 262r(c)(2), the International Fund 
for Agricultural Development, the North American Development Bank, or 
any other international financial institution so notified by the Office 
of Foreign Assets Control.

0
4. Revise Sec.  561.320 to read as follows:


Sec.  561.320  Iranian financial institution.

    The term Iranian financial institution means any entity (including 
foreign branches), wherever located, organized under the laws of Iran 
or any jurisdiction within Iran, or owned or controlled by the 
Government of Iran, or in Iran, or owned or controlled by any of the 
foregoing, 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. It includes but is not limited to depository 
institutions, banks, savings banks, money service businesses, trust 
companies, insurance 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, 
dealers in precious metals, stones, or jewels, and holding companies, 
affiliates, or subsidiaries of any of the foregoing.

    Dated: November 6, 2012.
Adam J. Szubin,
Director, Office of Foreign Assets Control.
[FR Doc. 2012-27420 Filed 11-7-12; 8:45 am]
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