[Federal Register Volume 77, Number 217 (Thursday, November 8, 2012)]
[Rules and Regulations]
[Pages 66918-66920]
From the Federal Register Online via the Government Publishing 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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