[Federal Register Volume 78, Number 124 (Thursday, June 27, 2013)]
[Rules and Regulations]
[Pages 38574-38577]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-15424]


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DEPARTMENT OF THE TREASURY

Office of Foreign Assets Control

31 CFR Parts 594, 595, and 597


Technical Amendments to Counter-Terrorism Sanctions Regulations 
Implemented by OFAC

AGENCY: Office of Foreign Assets Control, Treasury.

ACTION: Final rule.

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SUMMARY: The Office of Foreign Assets Control (``OFAC'') of the U.S. 
Department of the Treasury is amending the Global Terrorism Sanctions 
Regulations and the Terrorism Sanctions Regulations (the ``TSR'') to 
clarify the scope of prohibitions on the making of donations contained 
in the underlying Executive orders and that a person whose property and 
interests in property are blocked pursuant to those programs has an 
interest in all property and interests in property of an entity in 
which it owns, directly or indirectly, a 50 percent or greater 
interest. In addition, OFAC is amending the TSR to add a definition of 
the term ``financial, material, or technological support'' and to set 
at 180 days the maximum term of maturity for instruments in which funds 
may be invested or held within a blocked interest-bearing account. 
Finally, OFAC is correcting a clerical error within the Foreign 
Terrorist Organizations Sanctions Regulations.

DATES: Effective: June 27, 2013.

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.: 
202-622-2746, Assistant Director for Regulatory Affairs, 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, Washington, DC 20220 (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.treasury.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

    The Office of Foreign Assets Control (``OFAC'') administers three 
sanctions programs with respect to terrorists and terrorist 
organizations. The Terrorism Sanctions Regulations, 31 CFR part 595 
(the ``TSR''), implement Executive Order 12947 of January 23, 1995, in 
which the President declared a national emergency with respect to 
``grave acts of violence committed by foreign terrorists that disrupt 
the Middle East peace process.'' The Global Terrorism Sanctions 
Regulations, 31 CFR part 594 (the ``GTSR''), implement Executive Order 
13224 of September 23, 2001, in which the President declared a national 
emergency more generally with respect to ``grave acts of terrorism and 
threats of terrorism committed by foreign terrorists.'' The Foreign 
Terrorist Organizations Sanctions Regulations, 31 CFR part 597 (the 
``FTOSR''), implement provisions of the Antiterrorism and Effective 
Death Penalty Act of 1996.
    Executive Order 13372 of February 16, 2005, amended section 3 of 
Executive Order 12947 and section 4 of Executive Order 13224 to clarify 
that the prohibitions contained in those sections on the making of 
donations of the types of articles specified in section 203(b)(2) of 
the International Emergency Economic Powers Act (50 U.S.C. 1702(b)(2)) 
apply to donations ``by, to, or for the benefit of'' and not just 
``to'' persons whose property and interests in property are blocked 
pursuant to those orders. OFAC is amending sections 594.204 and 594.409 
of the GTSR and sections 595.204 and 595.408 of the TSR to incorporate 
this clarification into its regulations.
    OFAC also is adding new interpretive sections 594.412 and 595.410 
to the GTSR and TSR, respectively, to clarify that a person whose 
property and interests in property are blocked pursuant to those 
programs has an interest in all property and interests in property of 
an entity in which it owns, directly or indirectly, a 50 percent or 
greater interest. The property and interests in property of such an 
entity, therefore, are blocked, and such an entity is a person whose 
property and interests in property are blocked pursuant to the relevant 
sanctions

[[Page 38575]]

program, regardless of whether the entity itself is listed in an annex 
to an Executive order or designated pursuant to statutory or regulatory 
authorities. Further, OFAC is adding references to these new 
interpretive sections to note 2 to paragraph (a) of section 594.201 of 
the GTSR and new note 1 to section 595.311 of the TSR.
    OFAC is amending the TSR to define the term ``financial, material, 
or technological support,'' as used in those regulations. Paragraph 
(a)(2)(ii) of section 595.311 of the TSR implements section 1(a)(ii)(B) 
of Executive Order 12947 by including within the definition of 
``specially designated terrorist'' foreign persons designated by the 
Secretary of State, in coordination with the Secretary of the Treasury 
and the Attorney General, because they are found to have assisted in, 
sponsored, or provided financial, material, or technological support 
for, or services in support of, acts of violence that have the purpose 
or effect of disrupting the Middle East peace process.
    New section 595.317 in subpart C of the TSR defines the term 
``financial, material, or technological support'' to mean any property, 
tangible or intangible, and includes a list of specific examples. The 
corresponding definition already appears in the GTSR, in existing 
section 594.317. The term is not used in the FTOSR.
    In addition, OFAC is revising paragraph (b) of section 595.203 of 
the TSR to set at 180 days the maximum term of maturity for instruments 
in which funds within an interest-bearing account, as defined within 
that paragraph, may be invested or held. Previously, the maximum term 
of maturity for such instruments was set at 90 days, which is not 
consistent with the maximum term of maturity set out in analogous 
provisions under the regulations for other OFAC-administered sanctions 
programs contained in the various parts of 31 CFR chapter V.
    Finally, OFAC is making certain technical edits to definitions 
contained in the GTSR and TSR and revising the note to section 597.301 
of the FTOSR to correct a clerical error.

Public Participation

    Because these amendments to 31 CFR parts 594, 595, and 597 involve 
a foreign affairs function, Executive Order 12866 and the provisions of 
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.

List of Subjects 31 CFR Parts 594, 595, and 597

    Administrative practice and procedure, Banks, Banking, Blocking of 
assets, Terrorism.

    For the reasons set forth in the preamble, the Department of the 
Treasury's Office of Foreign Assets Control amends 31 CFR parts 594, 
595, and 597 as follows:

PART 594--GLOBAL TERRORISM SANCTIONS REGULATIONS

0
1. The authority citation for part 594 is revised to read as follows:

    Authority:  3 U.S.C. 301; 22 U.S.C. 287c; 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. 13224, 66 FR 
49079, 3 CFR, 2001 Comp., p. 786; E.O. 13268, 67 FR 44751, 3 CFR, 
2002 Comp., p. 240; E.O. 13284, 68 FR 4075, 3 CFR, 2003 Comp., p. 
161; E.O. 13372, 70 FR 8499, 3 CFR, 2006 Comp., p. 159.

Subpart B--Prohibitions

0
2. In Sec.  594.201, revise Note 2 to paragraph (a) to read as follows:


Sec.  594.201  Prohibited transactions involving blocked property.

* * * * *

    Note 2 to paragraph (a) of Sec.  594.201: The names of persons 
whose property and interests in property are blocked pursuant to 
Sec.  594.201(a) are published in the Federal Register and 
incorporated into the Office of Foreign Assets Control's Specially 
Designated Nationals and Blocked Persons List (``SDN List'') with 
the identifier ``[SDGT].'' The SDN List is accessible through the 
following page on the Office of Foreign Assets Control's Web site: 
http://www.treasury.gov/sdn. Additional information pertaining to 
the SDN List can be found in appendix A to this chapter. See Sec.  
594.412 concerning entities that may not be listed on the SDN List 
but whose property and interests in property are nevertheless 
blocked pursuant to paragraph (a) of this section.

* * * * *

0
3. Revise Sec.  594.204 to read as follows:


Sec.  594.204  Prohibited transaction or dealing in property; 
contributions of funds, goods, or services.

    Except as otherwise authorized, no U.S. person may engage in any 
transaction or dealing in property or interests in property of persons 
whose property and interests in property are blocked pursuant to Sec.  
594.201(a), including but not limited to the following transactions:
    (a) The making of any contribution or provision of funds, goods, or 
services by, to, or for the benefit of any person whose property and 
interests in property are blocked pursuant to Sec.  594.201(a); and
    (b) The receipt of any contribution or provision of funds, goods, 
or services from any person whose property and interests in property 
are blocked pursuant to Sec.  594.201(a).

Subpart C--General Definitions

0
4. Revise Sec.  594.310 to read as follows:


Sec.  594.310  Specially designated global terrorist; SDGT.

    The term specially designated global terrorist or SDGT means any 
person whose property and interests in property are blocked pursuant to 
Sec.  594.201(a).

Subpart D--Interpretations

0
5. Revise Sec.  594.409 to read as follows:


Sec.  594.409  Charitable contributions.

    Unless specifically authorized by the Office of Foreign Assets 
Control pursuant to this part, no charitable contribution or donation 
of funds, goods, services, or technology, including contributions or 
donations to relieve human suffering, such as food, clothing, or 
medicine, may be made by, to, or for the benefit of, or received from, 
any person whose property and interests in property are blocked 
pursuant to Sec.  594.201(a). For the purposes of this part, a 
contribution or donation is made by, to, or for the benefit of, or 
received from, any person whose property and interests in property are 
blocked pursuant to Sec.  594.201(a) if made by, to, or in the name of, 
or received from or in the name of, such a person; if made by, to, or 
in the name of, or received from or in the name of, an entity or 
individual acting for or on behalf of, or owned or controlled by, such 
a person; or if made in an attempt to violate, to evade, or to avoid 
the bar on the provision of contributions or donations by, to, or for 
the benefit of such a person, or the receipt of contributions or 
donations from any such person.

0
6. Add Sec.  594.412 to subpart D to read as follows:


Sec.  594.412  Entities owned by a person whose property and interests 
in property are blocked.

    A person whose property and interests in property are blocked 
pursuant to Sec.  594.201(a) has an interest in all property and 
interests in property of an entity in which it owns, directly or 
indirectly, a 50 percent or greater interest. The property and 
interests in property of such an entity, therefore, are

[[Page 38576]]

blocked, and such an entity is a person whose property and interests in 
property are blocked pursuant to Sec.  594.201(a), regardless of 
whether the entity itself is listed in the Annex to Executive Order 
13224, as amended, or designated pursuant to Sec.  594.201(a).

PART 595--TERRORISM SANCTIONS REGULATIONS

0
7. The authority citation for part 595 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; E.O. 12947, 60 FR 5079, 3 CFR, 1995 
Comp., p. 319; E.O. 13099, 63 FR 45167, 3 CFR, 1998 Comp., p. 208; 
E.O. 13372, 70 FR 8499, 3 CFR, 2006 Comp., p. 159.

Subpart B--Prohibitions

0
8. In Sec.  595.203, revise paragraph (b) to read as follows:


Sec.  595.203  Holding of certain types of blocked property in 
interest-bearing accounts.

* * * * *
    (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 180 
days.
* * * * *

0
9. Revise Sec.  595.204 to read as follows:


Sec.  595.204  Prohibited transaction or dealing in property; 
contributions of funds, goods, or services.

    Except as otherwise authorized, no U.S. person may deal in property 
or interests in property of a specially designated terrorist, including 
but not limited to the following transactions:
    (a) The making of any contribution or provision of funds, goods, or 
services by, to, or for the benefit of a specially designated 
terrorist; and
    (b) The receipt of any contribution or provision of funds, goods, 
or services from a specially designated terrorist.

Subpart C--General Definitions

0
10. In Sec.  595.311, revise paragraph (a)(1), remove the Note to Sec.  
595.311, and add Notes 1, 2, and 3 to read as follows:


Sec.  595.311  Specially designated terrorist.

    (a) * * *
    (1) Persons listed in the Annex to Executive Order 12947 of January 
23, 1995, as amended;
* * * * *

    Note 1 to Sec.  595.311: The names of persons determined to fall 
within this definition, whose property and interests in property 
therefore are blocked pursuant to this part, are published in the 
Federal Register and incorporated into the Office of Foreign Assets 
Control's Specially Designated Nationals and Blocked Persons List 
(``SDN List'') with the identifier ``[SDT].'' The SDN List is 
accessible through the following page on the Office of Foreign 
Assets Control's Web site: http://www.treasury.gov/sdn. Additional 
information pertaining to the SDN List can be found in appendix A to 
this chapter. See Sec.  595.410 concerning entities that may not be 
listed on the SDN List but whose property and interests in property 
are nevertheless blocked pursuant to this part.


    Note 2 to Sec.  595.311:  The International Emergency Economic 
Powers Act (50 U.S.C. 1701-1706), in Section 203 (50 U.S.C. 1702), 
authorizes the blocking of property and interests in property of a 
person during the pendency of an investigation. The names of persons 
whose property and interests in property are blocked pending 
investigation pursuant to this part also are published in the 
Federal Register and incorporated into the SDN List with the 
identifier ``[BPI-SDT].''


    Note 3 to Sec.  595.311: 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.


0
11. Add Sec.  595.317 to subpart C to read as follows:


Sec.  595.317  Financial, material, or technological support.

    The term financial, material, or technological support, as used in 
Sec.  595.311(a)(2)(ii) of this part, means any property, tangible or 
intangible, including but not limited to currency, financial 
instruments, securities, or any other transmission of value; weapons or 
related materiel; chemical or biological agents; explosives; false 
documentation or identification; communications equipment; computers; 
electronic or other devices or equipment; technologies; lodging; safe 
houses; facilities; vehicles or other means of transportation; or 
goods. ``Technologies'' as used in this definition means specific 
information necessary for the development, production, or use of a 
product, including related technical data such as blueprints, plans, 
diagrams, models, formulae, tables, engineering designs and 
specifications, manuals, or other recorded instructions.

Subpart D--Interpretations

0
12. Revise Sec.  595.408 to read as follows:


Sec.  595.408  Charitable contributions.

    (a) Unless specifically authorized by the Office of Foreign Assets 
Control pursuant to this part, no charitable contribution or donation 
of funds, goods, services, or technology, including contributions or 
donations to relieve human suffering, such as food, clothing, or 
medicine, may be made by, to, or for the benefit of, or received from, 
any specially designated terrorist. For the purposes of this part, a 
contribution or donation is made by, to, or for the benefit of, or 
received from, a specially designated terrorist if made by, to, or in 
the name of, or received from or in the name of, a specially designated 
terrorist; if made by, to, or in the name of, or received from or in 
the name of, an entity or individual acting for or on behalf of, or 
owned or controlled by, a specially designated terrorist; or if made in 
an attempt to violate, to evade, or to avoid the bar on the provision 
of contributions or donations by, to, or for the benefit of a specially 
designated terrorist, or the receipt of contributions or donations from 
a specially designated terrorist.
    (b) Individuals and organizations who donate or contribute funds, 
goods, services, or technology without knowledge or reason to know that 
the donation or contribution is destined to or for the benefit of a 
specially designated terrorist shall not be subject to penalties for 
such donation or contribution.

0
13. Add Sec.  595.410 to subpart D to read as follows:


Sec.  595.410  Entities owned by a person whose property and interests 
in property are blocked.

    A person who is determined to fall within the definition of 
specially designated terrorist as set forth in Sec.  595.311, whose 
property and interests in property therefore are blocked pursuant to 
this part, has an interest in all property and interests in property of 
an entity in which it owns, directly or indirectly, a 50 percent or 
greater interest. The property and interests in property of such an 
entity, therefore, are blocked, and such an entity is a person whose 
property and interests in property are blocked pursuant to this part, 
regardless of whether the entity itself is listed in the Annex to 
Executive Order 12947, as amended, or designated pursuant to this part.

PART 597--FOREIGN TERRORIST ORGANIZATIONS SANCTIONS REGULATIONS

0
14. The authority citation for part 597 continues to read as follows:


[[Page 38577]]


    Authority:  31 U.S.C. 321(b); Pub. L. 101-410, 104 Stat. 890 (28 
U.S.C. 2461 note); Pub. L. 104-132, 110 Stat. 1214, 1248-53 (8 
U.S.C. 1189, 18 U.S.C. 2339B).

Subpart C--General Definitions

0
15. In Sec.  597.301, revise the Note to read as follows:


Sec.  597.301  Agent.

* * * * *

    Note to Sec.  597.301: The names of persons designated as 
foreign terrorist organizations or determined to fall within this 
definition are published in the Federal Register and incorporated 
into the Office of Foreign Assets Control's Specially Designated 
Nationals and Blocked Persons List (``SDN List'') with the 
identifier ``[FTO].'' The SDN List is accessible through the 
following page on the Office of Foreign Assets Control's Web site: 
http://www.treasury.gov/sdn. Additional information pertaining to 
the SDN List can be found in appendix A to this chapter. Section 
501.807 of this chapter sets forth the procedures to be followed by 
a person seeking administrative reconsideration of a determination 
that the person falls within this definition, or who wishes to 
assert that the circumstances resulting in such a determination are 
no longer applicable.


    Dated: June 21, 2013.
Adam J. Szubin,
Director, Office of Foreign Assets Control.
[FR Doc. 2013-15424 Filed 6-26-13; 8:45 am]
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