[Federal Register Volume 83, Number 221 (Thursday, November 15, 2018)]
[Rules and Regulations]
[Pages 57308-57318]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-24696]
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DEPARTMENT OF THE TREASURY
Office of Foreign Assets Control
31 CFR Part 547
Democratic Republic of the Congo 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 (OFAC) is adopting a final rule amending the Democratic
Republic of the Congo Sanctions Regulations to implement Executive
Order 13671 of July 8, 2014 (``Taking Additional Steps to Address the
National Emergency With Respect to the Conflict in the Democratic
Republic of the Congo''). This rule also incorporates other technical
and conforming changes.
DATES: Effective: November 15, 2018.
FOR FURTHER INFORMATION CONTACT: The Department of the Treasury's
Office of Foreign Assets Control: Assistant Director for Licensing,
tel.: 202-622-2480; Assistant Director for Regulatory Affairs, tel:
202-622-4855; Assistant Director for Sanctions Compliance & Evaluation,
tel.: 202-622-2490; or the Department of the Treasury's Office of the
Chief Counsel (Foreign Assets Control), Office of the General Counsel,
tel.: 202-622-2410.
SUPPLEMENTARY INFORMATION:
Electronic Availability
This document and additional information concerning OFAC are
available from OFAC's website (www.treasury.gov/ofac).
Background
On May 28, 2009, OFAC issued the Democratic Republic of the Congo
Sanctions Regulations, 31 CFR part 547 (the ``Regulations'') (74 FR
25439, May 28, 2009) to implement Executive Order 13413 of October 27,
2006 (71 FR 64105, October 31, 2006) (E.O. 13413).
Executive Order 13671
On July 8, 2014, the President, invoking the authority of, inter
alia, the International Emergency Economic Powers Act (50 U.S.C. 1701-
1706) (IEEPA) and section 5 of the United Nations Participation Act (22
U.S.C. 287c) (UNPA), issued Executive Order 13671 (79 FR 39949, July
10, 2014) (E.O. 13671). In E.O. 13671, the President amended E.O. 13413
to take additional steps to deal with the national emergency with
respect to the situation in or in relation to the Democratic Republic
of the Congo declared in E.O. 13413, in view of multiple United Nations
Security Council Resolutions, including Resolution 2136 of January 30,
2014, and in light of the continuation of activities that threaten the
peace, security, or stability of the Democratic Republic of the Congo
and the surrounding region, including operations by armed groups,
widespread violence and atrocities, human rights abuses, recruitment
and use of child soldiers, attacks on peacekeepers, obstruction of
humanitarian operations, and exploitation of natural resources to
finance persons engaged in these activities.
E.O. 13671 amends several sections of E.O. 13413 but does not amend
the Annex to E.O. 13413 as originally issued. Section 1 of E.O. 13671
amends E.O. 13413 by replacing subsection 1(a) of E.O. 13413 in its
entirety. New subsection 1(a) of E.O. 13413 as amended by E.O. 13671
(``amended E.O. 13413'') \1\ blocks all property and interests in
property that are in the United States, that come within the United
States, or that are or come within the possession or control of any
U.S. person, of: (i) The persons listed in the Annex to amended E.O.
13413; and (ii) any person determined by the Secretary of the Treasury,
in consultation with the Secretary of State:
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\1\ For the purposes of this subsection, the term ``amended E.O.
13413'' refers to E.O. 13413 as amended by E.O. 13671. Because E.O.
13671 did not amend the Annex, the term ``Annex to amended E.O.
13413'' refers to the Annex as originally issued to E.O. 13413.
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(A) To be a political or military leader of a foreign armed group
operating in the Democratic Republic of the Congo that impedes the
disarmament, demobilization, voluntary repatriation, resettlement, or
reintegration of combatants;
(B) to be a political or military leader of a Congolese armed group
that impedes the disarmament, demobilization, voluntary repatriation,
resettlement, or reintegration of combatants;
(C) to be responsible for or complicit in, or to have engaged in,
directly or indirectly, any of the following in or in relation to the
Democratic Republic of the Congo: (1) Actions or policies that threaten
the peace, security, or stability of the Democratic Republic of the
Congo; (2) actions or policies that undermine democratic processes or
institutions in the Democratic Republic of the Congo; (3) the targeting
of women, children, or any civilians through the commission of acts of
violence (including killing, maiming, torture, or rape or other sexual
violence), abduction, forced displacement, or attacks on schools,
hospitals, religious sites, or locations where civilians are seeking
refuge, or through conduct that would constitute a serious abuse or
violation of human rights or a violation of international humanitarian
law; (4) the use or recruitment of children by armed groups or armed
forces in the context of the conflict in the Democratic Republic of the
Congo; (5) the obstruction of the delivery or distribution of, or
access to, humanitarian assistance; (6) attacks
[[Page 57309]]
against United Nations missions, international security presences, or
other peacekeeping operations; or (7) support to persons, including
armed groups, involved in activities that threaten the peace, security,
or stability of the Democratic Republic of the Congo or that undermine
democratic processes or institutions in the Democratic Republic of the
Congo, through the illicit trade in natural resources of the Democratic
Republic of the Congo;
(D) except where intended for the authorized support of
humanitarian activities or the authorized use by or support of
peacekeeping, international, or government forces, to have directly or
indirectly supplied, sold, or transferred to the Democratic Republic of
the Congo, or been the recipient in the territory of the Democratic
Republic of the Congo, of arms and related materiel, including military
aircraft and equipment, or advice, training, or assistance, including
financing and financial assistance, related to military activities;
(E) to be a leader of (i) an entity, including any armed group,
that has, or whose members have, engaged in any of the activities
described in paragraphs (A) through (D) above or (ii) an entity whose
property and interests in property are blocked pursuant to amended E.O.
13413;
(F) to have materially assisted, sponsored, or provided financial,
material, logistical, or technological support for, or goods or
services in support of: (i) Any of the activities described in (A)
through (D) above; or (ii) any person whose property and interests in
property are blocked pursuant to amended E.O. 13413; or
(G) to be owned or controlled by, or to have acted or purported to
act for or on behalf of, directly or indirectly, any person whose
property and interests in property are blocked pursuant to amended E.O.
13413.
The property and interests in property of the persons described
above may not be transferred, paid, exported, withdrawn, or otherwise
dealt in.
Section 2 of E.O. 13671 adds new subsection (d) to section 1 of
E.O. 13413. This new subsection provides that the prohibitions in
subsection 1(a) of amended E.O. 13413 apply except to the extent
provided by statutes, or in regulations, orders, directives, or
licenses that may be issued pursuant to amended E.O. 13413, and
notwithstanding any contract entered into or any license or permit
granted prior to the effective date of the order.
Section 3 of E.O. 13671 amends section 2 of E.O. 13413 by adding a
prohibition. Section 2 of E.O. 13413 prohibited any transaction by a
U.S. person or within the United States that evades or avoids, has the
purpose of evading or avoiding, or attempts to violate any of the
prohibitions set forth in E.O. 13413, as well as any conspiracy formed
to violate such prohibitions. Section 3 of E.O. 13671 adds a
prohibition on causing a violation of any prohibitions set forth in
amended E.O. 13413 to the existing prohibitions.
Section 4 of E.O. 13671 authorizes the Secretary of the Treasury,
in consultation with the Secretary of State, to take such actions,
including the promulgation of rules and regulations, and to employ all
powers granted to the President by IEEPA and the UNPA as may be
necessary to carry out the purposes of E.O. 13671 and amended E.O.
13413. Section 4 of E.O. 13671 also provides that the Secretary of the
Treasury may redelegate any of these functions to other officers and
agencies of the U.S. government.
Current Regulatory Action
This rule amends the Regulations to implement the relevant
provisions of E.O. 13671, as well as to update certain provisions and
to make other technical and conforming changes. OFAC is revising and
republishing in its entirety subpart B of the Regulations, which sets
forth the prohibitions contained in sections 1 and 2 of amended E.O.
13413. See, e.g., Sec. Sec. 547.201 and 547.205. In particular, OFAC
is revising Sec. 547.201 of subpart B to incorporate the new
designation criteria provided for in E.O. 13671. OFAC is also adding
Sec. 547.206 to subpart B to clarify which transactions are exempt
from the prohibitions in this part.
This rule also amends several sections in subpart C, which defines
key terms used throughout the Regulations. New Sec. 547.300 is being
added to clarify that the definitions contained in subpart C apply
throughout the entire part, and Sec. Sec. 547.314 and 547.315 are
being added to define key terms used in the Regulations. Also, certain
existing definitions in subpart C are being updated or revised to take
account of new provisions and to provide greater clarity with respect
to the terms being used.
This rule also revises and republishes in its entirety subpart D,
which contains interpretive sections regarding the Regulations. Section
547.411 of subpart D is being amended to clarify that the property and
interests in property of an entity are blocked if the entity is
directly or indirectly owned, whether individually or in the aggregate,
50 percent or more by one or more persons whose property and interests
in property are blocked, whether or not the entity itself is listed in
or designated pursuant to amended E.O. 13413 or incorporated into
OFAC's Specially Designated Nationals and Blocked Persons List (SDN
List). Other sections within subpart D are being amended to reflect
current OFAC interpretations.
Transactions otherwise prohibited by the Regulations but found to
be consistent with U.S. policy may be authorized by one of the general
licenses contained in subpart E of the Regulations or by a specific
license issued pursuant to the procedures described in subpart E of 31
CFR part 501. This rule also amends subpart E of the Regulations. In
particular, a general license is being added in Sec. 547.508,
authorizing payments from outside the United States for the provision
of legal services authorized in Sec. 547.507. The general license
authorizing certain emergency medical services that was formerly at
Sec. 547.508 has been moved to Sec. 547.509 and updated to reflect
current licensing policies. Updates to reflect current licensing
policies have also been made to several other general licenses. General
licenses and statements of licensing policy relating to this part also
may be available through the Democratic Republic of the Congo sanctions
page on OFAC's website: www.treasury.gov/ofac.
This rule revises subpart G of the Regulations and republishes it
in its entirety. Subpart G of the Regulations describes the civil and
criminal penalties applicable to violations of the Regulations, as well
as the procedures governing the potential imposition of a civil
monetary penalty or issuance of a Finding of Violation. Subpart G also
refers to appendix A of part 501 for a more complete description of
these procedures. Finally, this rule updates the delegation of
authority by the Secretary of the Treasury in subpart H of the
Regulations.
Public Participation
Because the Regulations involve 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, as well as the
provisions of Executive Order 13771 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 collections of information related to the Regulations are
contained in 31
[[Page 57310]]
CFR part 501 (the ``Reporting, Procedures and Penalties Regulations'').
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 under 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 the collection of information displays
a valid control number.
List of Subjects in 31 CFR Part 547
Administrative practice and procedure, Banks, Banking, Blocking of
assets, Credit, Democratic Republic of the Congo, Foreign trade,
Penalties, Reporting and recordkeeping requirements, Securities,
Services.
For the reasons set forth in the preamble, the Department of the
Treasury's Office of Foreign Assets Control amends 31 CFR part 547 as
follows:
PART 547--DEMOCRATIC REPUBLIC OF THE CONGO SANCTIONS REGULATIONS
0
1. Revise the authority citation for part 547 to read as follows:
Authority: 3 U.S.C. 301; 31 U.S.C. 321(b); 50 U.S.C. 1601-1651,
1701-1706; 22 U.S.C. 287c; 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);
E.O. 13413, 71 FR 64105, 3 CFR, 2006 Comp., p. 247; E.O. 13671, 79
FR 39949, 3 CFR, 2015 Comp., p. 280.
0
2. Revise subpart B to read as follows:
Subpart B--Prohibitions
Sec.
547.201 Prohibited transactions involving blocked property.
547.202 Effect of transfers violating the provisions of this part.
547.203 Holding of funds in interest-bearing accounts; investment
and reinvestment.
547.204 Expenses of maintaining blocked tangible property;
liquidation of blocked property.
547.205 Evasions; attempts; causing violations; conspiracies.
547.206 Exempt transactions.
Sec. 547.201 Prohibited transactions involving blocked property.
(a) All property and interests in property that are in the United
States, that come within the United States, or that are or come within
the possession or control of any U.S. person of the following persons
are blocked and may not be transferred, paid, exported, withdrawn, or
otherwise dealt in:
(1) The persons listed in the Annex to Executive Order 13413 of
October 27, 2006; and
(2) Any person determined by the Secretary of the Treasury, in
consultation with the Secretary of State:
(i) To be a political or military leader of a foreign armed group
operating in the Democratic Republic of the Congo that impedes the
disarmament, demobilization, voluntary repatriation, resettlement, or
reintegration of combatants;
(ii) To be a political or military leader of a Congolese armed
group that impedes the disarmament, demobilization, voluntary
repatriation, resettlement, or reintegration of combatants;
(iii) To be responsible for or complicit in, or to have engaged in,
directly or indirectly, any of the following in or in relation to the
Democratic Republic of the Congo:
(A) Actions or policies that threaten the peace, security, or
stability of the Democratic Republic of the Congo;
(B) Actions or policies that undermine democratic processes or
institutions in the Democratic Republic of the Congo;
(C) The targeting of women, children, or any civilians through the
commission of acts of violence (including killing, maiming, torture, or
rape or other sexual violence), abduction, forced displacement, or
attacks on schools, hospitals, religious sites, or locations where
civilians are seeking refuge, or through conduct that would constitute
a serious abuse or violation of human rights or a violation of
international humanitarian law;
(D) The use or recruitment of children by armed groups or armed
forces in the context of the conflict in the Democratic Republic of the
Congo;
(E) The obstruction of the delivery or distribution of, or access
to, humanitarian assistance;
(F) Attacks against United Nations missions, international security
presences, or other peacekeeping operations; or
(G) Support to persons, including armed groups, involved in
activities that threaten the peace, security, or stability of the
Democratic Republic of the Congo or that undermine democratic processes
or institutions in the Democratic Republic of the Congo, through the
illicit trade in natural resources of the Democratic Republic of the
Congo;
(iv) Except where intended for the authorized support of
humanitarian activities or the authorized use by or support of
peacekeeping, international, or government forces, to have directly or
indirectly supplied, sold, or transferred to the Democratic Republic of
the Congo, or been the recipient in the territory of the Democratic
Republic of the Congo of, arms and related materiel, including military
aircraft and equipment, or advice, training, or assistance, including
financing and financial assistance, related to military activities;
(v) To be a leader of:
(A) An entity, including any armed group, that has, or whose
members have, engaged in any of the activities described in paragraphs
(a)(2)(i) through (iv) of this section; or
(B) An entity whose property and interests in property are blocked
pursuant to paragraph (a) of this section;
(vi) To have materially assisted, sponsored, or provided financial,
material, logistical, or technological support for, or goods or
services in support of any of the activities described in paragraphs
(a)(2)(i) through (iv) of this section or any person whose property and
interests in property are blocked pursuant to paragraph (a) of this
section; or
(vii) To be owned or controlled by, or to have acted or purported
to act for or on behalf of, directly or indirectly, any person whose
property and interests in property are blocked pursuant to paragraph
(a) of this section.
Note 1 to paragraph (a): The names of persons listed in or
designated pursuant to Executive Order 13413, both as originally
issued and as amended by Executive Order 13671, whose property and
interests in property therefore are blocked pursuant to paragraph
(a) of this section, are published in the Federal Register and
incorporated into OFAC's Specially Designated Nationals and Blocked
Persons List (SDN List) with the identifier ``[DRCONGO].'' The SDN
List is accessible through the following page on OFAC's website:
www.treasury.gov/sdn. Additional information pertaining to the SDN
List can be found in appendix A to this chapter. See Sec. 547.411
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.
Note 2 to paragraph (a): 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 paragraph (a) of this section also are
published in the Federal Register and incorporated into the SDN List
with the identifier ``[BPI-DRCONGO].''
Note 3 to paragraph (a): Sections 501.806 and 501.807 of this
chapter describe the procedures to be followed by persons seeking,
respectively, the unblocking of funds that they believe were blocked
due to mistaken identity, and administrative reconsideration of
their status as persons whose property and interests in property are
[[Page 57311]]
blocked pursuant to paragraph (a) of this section.
(b) The prohibitions in paragraph (a) of this section include
prohibitions on the following transactions:
(1) 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 paragraph (a) of this
section; and
(2) 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 paragraph (a) of this section.
(c) Unless authorized by this part or by a specific license
expressly referring to this part, any dealing in securities (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, or issued by, any person whose property and
interests in property are blocked pursuant to paragraph (a) of this
section is prohibited. This prohibition includes 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, any securities on
or after the effective date. This prohibition applies irrespective of
the fact that at any time (whether prior to, on, or subsequent to the
effective date) the registered or inscribed owner of any such
securities may have or might appear to have assigned, transferred, or
otherwise disposed of the securities.
(d) The prohibitions in paragraph (a) of this section apply except
to the extent provided by regulations, orders, directives, or licenses
that may be issued pursuant to this part, and notwithstanding any
contract entered into or any license or permit granted prior to the
effective date.
Sec. 547.202 Effect of transfers violating the provisions of this
part.
(a) Any transfer after the effective date 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.
547.201(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 interests in 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 any interest in, any property or interests in
property blocked pursuant to Sec. 547.201(a), unless the person who
holds or maintains such property, prior to that date, had written
notice of the transfer or by any written evidence had recognized such
transfer.
(c) Unless otherwise provided, a license or other authorization
issued by OFAC 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 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 is or was held or maintained (and as to such person only)
in cases in which such person is able to establish to the satisfaction
of OFAC 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 is or was
held or maintained (and as to such person only);
(2) The person with whom such property is or 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 is or was held or maintained
filed with OFAC 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 directive or
authorization issued pursuant to this part;
(ii) Such transfer was not licensed or authorized by OFAC; 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 1 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 pursuant to this part, any attachment,
judgment, decree, lien, execution, garnishment, or other judicial
process is null and void with respect to any property and interests in
property blocked pursuant to Sec. 547.201(a).
Sec. 547.203 Holding of funds in interest-bearing accounts;
investment and reinvestment.
(a) Except as provided in paragraph (e) or (f) of this section, or
as otherwise directed or authorized by OFAC, any U.S. person holding
funds, such as currency, bank deposits, or liquidated financial
obligations, subject to Sec. 547.201(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 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 (15
U.S.C. 78a et seq.), provided the funds are invested in a money market
fund or in U.S. Treasury bills.
(2) Funds held or placed in a blocked account pursuant to paragraph
(a) of this section may not be invested in instruments the maturity of
which exceeds 180 days.
(c) 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.
(d) For purposes of this section, if interest is credited to a
separate blocked account or subaccount, the name of the account party
on each account must be the same.
(e) Blocked funds held in instruments the maturity of which exceeds
180 days at the time the funds become subject to Sec. 547.201(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
(a) or (f) of this section.
(f) Blocked funds held in accounts or instruments outside the
United States at the time the funds become subject to Sec. 547.201(a)
may continue to be held in the same type of accounts or instruments,
provided the funds earn
[[Page 57312]]
interest at rates that are commercially reasonable.
(g) This section does not create an affirmative obligation for the
holder of blocked tangible property, such as real or personal property,
or of other blocked property, such as debt or equity securities, to
sell or liquidate such property. However, OFAC may issue licenses
permitting or directing such sales or liquidation in appropriate cases.
(h) 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 and interests in
property are blocked pursuant to Sec. 547.201(a), nor may their holder
cooperate in or facilitate the pledging or other attempted use as
collateral of blocked funds or other assets.
Sec. 547.204 Expenses of maintaining blocked tangible property;
liquidation of blocked property.
(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 prior to the effective date, all expenses incident to
the maintenance of tangible property blocked pursuant to Sec.
547.201(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. 547.201(a) may, in the
discretion of OFAC, 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. 547.205 Evasions; attempts; causing violations; conspiracies.
(a) Any transaction on or after the effective date that evades or
avoids, has the purpose of evading or avoiding, causes a violation of,
or attempts to violate any of the prohibitions set forth in this part
is prohibited.
(b) Any conspiracy formed to violate the prohibitions set forth in
this part is prohibited.
Sec. 547.206 Exempt transactions.
(a) United Nations Participation Act. The exemptions described in
this section do not apply to transactions involving property or
interests in property of persons whose property and interests in
property are blocked pursuant to the authority of the United Nations
Participation Act, as amended (22 U.S.C. 287c(b)) (UNPA).
Note 1 to paragraph (a): Persons whose property and interests
in property are blocked pursuant to the authority of the UNPA
include those listed on both OFAC's Specially Designated Nationals
and Blocked Persons List (SDN List) and the Consolidated United
Nations Security Council Sanctions List (UN List) (see https://www.un.org) as well as persons listed on the SDN List for being
owned or controlled by, or acting for or on behalf of, persons
listed on both the SDN List and the UN List.
(b) Personal communications. The prohibitions contained in this
part do not apply to any postal, telegraphic, telephonic, or other
personal communication that does not involve the transfer of anything
of value.
(c) Information or informational materials. (1) The prohibitions
contained in this part do not apply to the importation from any country
and the exportation to any country of any information or informational
materials, as defined in Sec. 547.314, whether commercial or
otherwise, regardless of format or medium of transmission.
(2) This section does not exempt from regulation transactions
related to information or informational materials not fully created and
in existence at the date of the transactions, or to the substantive or
artistic alteration or enhancement of information or informational
materials, or to the provision of marketing and business consulting
services. Such prohibited transactions include 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 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 transactions incident to the
exportation of software subject to the Export Administration
Regulations, 15 CFR parts 730 through 774, or to the exportation of
goods (including software) or technology for use in the transmission of
any data, 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 and interests in property are blocked pursuant to Sec.
547.201(a) are prohibited.
(d) Travel. The prohibitions contained in this part do not apply to
transactions ordinarily incident to travel to or from any country,
including importation or exportation 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
0
3. Add Sec. 547.300 to read as follows:
Sec. 547.300 Applicability of definitions.
The definitions in this subpart apply throughout the entire part.
Sec. 547.301 [Amended]
0
4. In the heading and introductory text of Sec. 547.301, remove ``or
any'' and add in its place ``and''.
0
5. Revise Sec. 547.302 to read as follows:
Sec. 547.302 Blocked account; blocked property.
The terms blocked account and blocked property shall mean any
account or property subject to the prohibitions in Sec. 547.201 held
in the name of a person whose property and interests in property are
blocked pursuant to Sec. 547.201(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 a license or other authorization from OFAC expressly
authorizing such action.
Note 1 to Sec. 547.302: See Sec. 547.411 concerning the
blocked status of property and interests in property of an entity
that is directly or indirectly owned, whether individually or in the
aggregate, 50 percent or more by one or more persons whose property
and interests in property are blocked pursuant to Sec. 547.201(a).
0
6. Revise Sec. 547.303 to read as follows:
Sec. 547.303 Effective date.
(a) The term effective date refers to the effective date of the
applicable prohibitions and directives contained in this part as
follows:
(1) With respect to a person whose property and interests in
property are blocked pursuant to Sec. 547.201(a)(1), 12:01 a.m.
eastern standard time on October 30, 2006; and
(2) With respect to a person whose property and interests in
property are otherwise blocked pursuant to Sec. 547.201(a), the
earlier of the date of actual or constructive notice that such person's
property and interests in property are blocked.
[[Page 57313]]
(b) For the purposes of this section, constructive notice is the
date that a notice of the blocking of the relevant person's property
and interests in property is published in the Federal Register.
0
7. Revise Sec. 547.306 to read as follows:
Sec. 547.306 Licenses; general and specific.
(a) Except as otherwise provided in this part, 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 or made
available on OFAC's website: www.treasury.gov/ofac.
(c) The term specific license means any license or authorization
issued pursuant to this part, but not set forth in subpart E of this
part or made available on OFAC's website: www.treasury.gov/ofac.
Note 1 to Sec. 547.306: See Sec. 501.801 of this chapter on
licensing procedures.
0
8. Revise Sec. 547.311 to read as follows:
Sec. 547.311 U.S. financial institution.
The term U.S. financial institution means any U.S. entity
(including its foreign branches) that is engaged in the business of
accepting deposits, making, granting, transferring, holding, or
brokering loans or other extensions of credit, or purchasing or selling
foreign exchange, securities, commodity futures or options, or
procuring purchasers and sellers thereof, as principal or agent. It
includes depository institutions, banks, savings banks, trust
companies, securities brokers and dealers, 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.
0
9. Revise Sec. 547.313 to read as follows:
Sec. 547.313 Financial, material, logistical, or technological
support.
The term financial, material, logistical, or technological support,
as used in Sec. 547.201(a)(2)(vi), means any property, tangible or
intangible, including 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.
0
10. Add Sec. 547.314 to read as follows:
Sec. 547.314 Information or informational materials.
(a)(1) The term information or informational materials includes
publications, films, posters, phonograph records, photographs,
microfilms, microfiche, tapes, compact disks, CD ROMs, artworks, and
news wire feeds.
(2) To be considered information or informational materials,
artworks must be classified under heading 9701, 9702, or 9703 of the
Harmonized Tariff Schedule of the United States.
(b) The term information or informational materials, with respect
to 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) (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.
0
11. Add Sec. 547.315 to read as follows:
Sec. 547.315 OFAC.
The term OFAC means the Department of the Treasury's Office of
Foreign Assets Control.
0
12. Revise subpart D to read as follows:
Subpart D--Interpretations
Sec.
547.401 Reference to amended sections.
547.402 Effect of amendment.
547.403 Termination and acquisition of an interest in blocked
property.
547.404 Transactions ordinarily incident to a licensed transaction.
547.405 Provision of services.
547.406 Offshore transactions involving blocked property.
547.407 Payments from blocked accounts to satisfy obligations
prohibited.
547.408 Charitable contributions.
547.409 Credit extended and cards issued by financial institutions
to a person whose property and interests in property are blocked.
547.410 Setoffs prohibited.
547.411 Entities owned by one or more persons whose property and
interests in property are blocked.
Sec. 547.401 Reference to amended sections.
(a) Reference to any section in this part is a reference to the
same as currently amended, unless the reference includes a specific
date. See 44 U.S.C. 1510.
(b) Reference to any ruling, order, instruction, direction, or
license issued pursuant to this part is a reference to the same as
currently amended unless otherwise so specified.
Sec. 547.402 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 OFAC does not affect any act done or omitted, or any
civil or criminal 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. 547.403 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 whose property and interests in property
are blocked pursuant to Sec. 547.201(a), such property shall no longer
be deemed to be property blocked pursuant to Sec. 547.201(a), unless
there exists in the property another interest that is blocked pursuant
to Sec. 547.201(a), 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 and interests in property are blocked pursuant to
Sec. 547.201(a), such property shall be deemed to be property in which
such person has an interest and therefore blocked.
Sec. 547.404 Transactions ordinarily incident to a licensed
transaction.
(a) Any transaction ordinarily incident to a licensed transaction
and
[[Page 57314]]
necessary to give effect thereto is also authorized, except:
(1) An ordinarily incident transaction, not explicitly authorized
within the terms of the license, by or with a person whose property and
interests in property are blocked pursuant to Sec. 547.201(a); or
(2) An ordinarily incident transaction, not explicitly authorized
within the terms of the license, involving a debit to a blocked account
or a transfer of blocked property.
(b) For example, a license authorizing a person to complete a
securities sale involving Company A, whose property and interests in
property are blocked pursuant to Sec. 547.201(a), also authorizes
other persons to engage in activities that are ordinarily incident and
necessary to complete the sale, including transactions by the buyer,
broker, transfer agents, and banks, provided that such other persons
are not themselves persons whose property and interests in property are
blocked pursuant to Sec. 547.201(a).
Sec. 547.405 Provision of services.
(a) The prohibitions on transactions contained in Sec. 547.201
apply to services performed in the United States or by U.S. persons,
wherever located, including by a foreign branch of an entity located in
the United States:
(1) On behalf of or for the benefit of a person whose property and
interests in property are blocked pursuant to Sec. 547.201(a); or
(2) With respect to property interests of any person whose property
and interests in property are blocked pursuant to Sec. 547.201(a).
(b) For 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 and interests in property are blocked
pursuant to Sec. 547.201(a).
Note 1 to Sec. 547.405: See Sec. Sec. 547.507 and 547.509 on
licensing policy with regard to the provision of certain legal and
emergency medical services.
Sec. 547.406 Offshore transactions involving blocked property.
The prohibitions in Sec. 547.201 on transactions or dealings
involving blocked property, as defined in Sec. 547.302, apply to
transactions by any U.S. person in a location outside the United
States.
Sec. 547.407 Payments from blocked accounts to satisfy obligations
prohibited.
Pursuant to Sec. 547.201, 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.
Note 1 to Sec. 547.407: See also Sec. 547.502(e), which
provides that no license or other authorization contained in or
issued pursuant to this part authorizes transfers of or payments
from blocked property or debits to blocked accounts unless the
license or other authorization explicitly authorizes the transfer of
or payment from blocked property or the debit to a blocked account.
Sec. 547.408 Charitable contributions.
Unless specifically authorized by OFAC pursuant to this part, no
charitable contribution of funds, goods, services, or technology,
including contributions to relieve human suffering, such as food,
clothing, or medicine, may be made by, to, or for the benefit of, or
received from, a person whose property and interests in property are
blocked pursuant to Sec. 547.201(a). For the purposes of this part, a
contribution is made by, to, or for the benefit of, or received from, a
person whose property and interests in property are blocked pursuant to
Sec. 547.201(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 by, to, or for the benefit of such a person, or the
receipt of contributions from such a person.
Sec. 547.409 Credit extended and cards issued by financial
institutions to a person whose property and interests in property are
blocked.
The prohibition in Sec. 547.201 on dealing in property subject to
that section prohibits U.S. financial institutions from performing
under any existing credit agreements, including charge cards, debit
cards, or other credit facilities issued by a financial institution to
a person whose property and interests in property are blocked pursuant
to Sec. 547.201(a).
Sec. 547.410 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. 547.201 if effected after the effective date.
Sec. 547.411 Entities owned by one or more persons whose property and
interests in property are blocked.
Persons whose property and interests in property are blocked
pursuant to Sec. 547.201(a) have an interest in all property and
interests in property of an entity in which such persons directly or
indirectly own, whether individually or in the aggregate, 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 Sec.
547.201(a), regardless of whether the name of the entity is
incorporated into OFAC's Specially Designated Nationals and Blocked
Persons List (SDN List).
Subpart E--Licenses, Authorizations, and Statements of Licensing
Policy
0
13. Revise Sec. 547.501 to read as follows:
Sec. 547.501 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. General
licenses and statements of licensing policy relating to this part also
may be available through the Democratic Republic of the Congo sanctions
page on OFAC's website: www.treasury.gov/ofac.
0
14. Revise Sec. 547.502 to read as follows:
Sec. 547.502 Effect of license or other authorization.
(a) No license or other authorization contained in this part, or
otherwise issued by OFAC, authorizes or validates any transaction
effected prior to the issuance of such license or other authorization,
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 OFAC 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 other part of this chapter unless the regulation, ruling,
instruction, or license specifically refers to such part.
(c) Any regulation, ruling, instruction, or license authorizing any
transaction otherwise prohibited under this part has the effect of
removing a prohibition 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,
[[Page 57315]]
duty, obligation, claim, or interest in, or with respect to, any
property that would not otherwise exist under ordinary principles of
law.
(d) Nothing contained in this part shall be construed to supersede
the requirements established under any other provision of law or to
relieve a person from any requirement to obtain a license or other
authorization from another department or agency of the U.S. Government
in compliance with applicable laws and regulations subject to the
jurisdiction of that department or agency. For example, exports of
goods, services, or technical data that are not prohibited by this part
or that do not require a license by OFAC nevertheless may require
authorization by the U.S. Department of Commerce, the U.S. Department
of State, or other agencies of the U.S. Government.
(e) No license or other authorization contained in or issued
pursuant to this part authorizes transfers of or payments from blocked
property or debits to blocked accounts unless the license or other
authorization explicitly authorizes the transfer of or payment from
blocked property or the debit to a blocked account.
(f) Any payment relating to a transaction authorized in or pursuant
to this part that is routed through the U.S. financial system should
reference the relevant OFAC general or specific license authorizing the
payment to avoid the blocking or rejection of the transfer.
0
15. Revise Sec. 547.503 to read as follows:
Sec. 547.503 Exclusion from licenses.
OFAC reserves the right to exclude any person, property,
transaction, or class thereof from the operation of any license or from
the privileges conferred by any license. OFAC also reserves the right
to restrict the applicability of any license to particular persons,
property, transactions, or classes thereof. Such actions are binding
upon actual or constructive notice of the exclusions or restrictions.
0
16. Revise Sec. 547.507 to read as follows:
Sec. 547.507 Provision of certain legal services.
(a) The provision of the following legal services to or on behalf
of persons whose property and interests in property are blocked
pursuant to Sec. 547.201(a) or any further Executive orders relating
to the national emergency declared in E.O. 13413 of October 27, 2006,
is authorized, provided that receipt of payment of professional fees
and reimbursement of incurred expenses must be authorized: Pursuant to
Sec. 547.508, which authorizes certain payments for legal services
from funds originating outside the United States; via specific license;
or otherwise pursuant to this part:
(1) Provision of legal advice and counseling on the requirements of
and compliance with the laws of the United States or 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 named as defendants in or otherwise
made parties to legal, arbitration, or administrative proceedings
before any U.S. federal, state, or local court or agency;
(3) Initiation and conduct of legal, arbitration, or administrative
proceedings before any U.S. federal, state, or local court or agency;
(4) Representation of persons before any U.S. federal, state, or
local court or 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 or on behalf of
persons whose property and interests in property are blocked pursuant
to Sec. 547.201(a) or any further Executive orders relating to the
national emergency declared in E.O. 13413 of October 27, 2006, not
otherwise authorized in this part, requires the issuance of a specific
license.
(c) U.S. persons do not need to obtain specific authorization to
provide related services, such as making filings and providing other
administrative services, that are ordinarily incident to the provision
of services authorized by paragraph (a) of this section. Additionally,
U.S. persons who provide services authorized by paragraph (a) of this
section do not need to obtain specific authorization to contract for
related services that are ordinarily incident to the provision of those
legal services, such as those provided by private investigators or
expert witnesses, or to pay for such services. See Sec. 510.404.
(d) Entry into a settlement agreement 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. 547.201(a) or any further Executive orders
relating to the national emergency declared in E.O. 13413 of October
27, 2006, is prohibited unless licensed pursuant to this part.
Note 1 to Sec. 547.507: Pursuant to part 501, subpart E, of
this chapter, U.S. persons seeking administrative reconsideration or
judicial review of their designation or the blocking of their
property and interests in property may apply for a specific license
from OFAC to authorize the release of certain blocked funds for the
payment of professional fees and reimbursement of incurred expenses
for the provision of such legal services where alternative funding
sources are not available. For more information, see OFAC's Guidance
on the Release of Limited Amounts of Blocked Funds for Payment of
Legal Fees and Costs Incurred in Challenging the Blocking of U.S.
Persons in Administrative or Civil Proceedings, which is available
on OFAC's website at: www.treasury.gov/ofac.
Sec. 547.508 [Redesignated as Sec. 547.509]
0
17. Redesignate Sec. 547.508 as Sec. 547.509.
0
18. Add new Sec. 547.508 to read as follows:
Sec. 547.508 Payments for legal services from funds originating
outside the United States.
(a) Professional fees and incurred expenses. (1) Receipt of payment
of professional fees and reimbursement of incurred expenses for the
provision of legal services authorized pursuant to Sec. 547.507(a) to
or on behalf of any person whose property and interests in property are
blocked pursuant to Sec. 547.201 or any further Executive orders
relating to the national emergency declared in E.O. 13413 of October
27, 2006, is authorized from funds originating outside the United
States, provided that the funds do not originate from:
(i) A source within the United States;
(ii) Any source, wherever located, within the possession or control
of a U.S. person; or
(iii) Any individual or entity, other than the person on whose
behalf the legal services authorized pursuant to Sec. 547.507(a) are
to be provided, whose property and interests in property are blocked
pursuant to any part of this chapter or any Executive order or statute.
(2) Nothing in this paragraph (a) authorizes payments for legal
services using funds in which any other person whose property and
interests in property are blocked pursuant to Sec. 547.201(a), any
other part of this chapter, or any Executive order has an interest.
(b) Reports. (1) U.S. persons who receive payments pursuant to
paragraph (a) of this section must submit annual
[[Page 57316]]
reports no later than 30 days following the end of the calendar year
during which the payments were received providing information on the
funds received. Such reports shall specify:
(i) The individual or entity from whom the funds originated and the
amount of funds received; and
(ii) If applicable:
(A) The names of any individuals or entities providing related
services to the U.S. person receiving payment in connection with
authorized legal services, such as private investigators or expert
witnesses;
(B) A general description of the services provided; and
(C) The amount of funds paid in connection with such services.
(2) The reports, which must reference this section, are to be
submitted to OFAC using one of the following methods:
(i) Email: (preferred method)
[email protected]; or
(ii) U.S. mail: OFAC Regulations Reports, Office of Foreign Assets
Control, U.S. Department of the Treasury, 1500 Pennsylvania Avenue NW,
Freedman's Bank Building, Washington, DC 20220.
0
19. Revise newly redesignated Sec. 547.509 to read as follows:
Sec. 547.509 Emergency medical services.
The provision and receipt of nonscheduled emergency medical
services that are otherwise prohibited by this part or any further
Executive orders relating to the national emergency declared in
Executive Order 13413 of October 27, 2006 are authorized.
0
20. Revise subpart G to read as follows:
Subpart G--Penalties and Finding of Violation
Sec.
547.701 Penalties.
547.702 Pre-Penalty Notice; settlement.
547.703 Penalty imposition.
547.704 Administrative collection; referral to United States
Department of Justice.
547.705 Finding of Violation.
Sec. 547.701 Penalties.
(a) Section 206 of the International Emergency Economic Powers Act
(50 U.S.C. 1705) (IEEPA) is applicable to violations of the provisions
of any license, ruling, regulation, order, directive, or instruction
issued by or pursuant to the direction or authorization of the
Secretary of the Treasury pursuant to this part or otherwise under
IEEPA.
(1) A civil penalty not to exceed the amount set forth in section
206 of IEEPA 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 IEEPA.
Note 1 to paragraph (a)(1): IEEPA provides for a maximum civil
penalty not to exceed the greater of $295,141 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,
willfully conspires to commit, or aids or abets in the commission of a
violation of any license, order, regulation, or prohibition may, upon
conviction, be fined not more than $1,000,000, or if a natural person,
be imprisoned for not more than 20 years, or both.
(b)(1) The civil penalties provided in IEEPA 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 IEEPA are subject to
adjustment pursuant to 18 U.S.C. 3571.
(c) Pursuant to 18 U.S.C. 1001, 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,
imprisoned, or both.
(d) Section 5 of the United Nations Participation Act, as amended
(22 U.S.C. 287c(b)) (UNPA) provides that any person who willfully
violates or evades or attempts to violate or evade any order, rule, or
regulation issued by the President pursuant to the authority granted in
that section, upon conviction, shall be fined not more than $10,000
and, if a natural person, may also be imprisoned for not more than 10
years; and the officer, director, or agent of any corporation who
knowingly participates in such violation or evasion shall be punished
by a like fine, imprisonment, or both and any property, funds,
securities, papers, or other articles or documents, or any vessel,
together with her tackle, apparel, furniture, and equipment, or
vehicle, or aircraft, concerned in such violation shall be forfeited to
the United States.
(e) Violations involving transactions described at section
203(b)(1), (3), and (4) of IEEPA shall be subject only to the penalties
set forth in paragraph (d) of this section.
(f) Violations of this part may also be subject to other applicable
laws.
Sec. 547.702 Pre-Penalty Notice; settlement.
(a) When required. If OFAC 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, directive, 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 (50 U.S.C. 1701-1706)
and determines that a civil monetary penalty is warranted, OFAC will
issue a Pre-Penalty Notice informing the alleged violator of the
agency's intent to impose a monetary penalty. A Pre-Penalty Notice
shall be in writing. The Pre-Penalty Notice may be issued whether or
not another agency has taken any action with respect to the matter. For
a description of the contents of a Pre-Penalty Notice, see appendix A
to part 501 of this chapter.
(b) Response--(1) Right to respond. An alleged violator has the
right to respond to a Pre-Penalty Notice by making a written
presentation to OFAC. For a description of the information that should
be included in such a response, see appendix A to part 501 of this
chapter.
(2) Deadline for response. A response to a Pre-Penalty Notice must
be made within 30 days as set forth in paragraphs (b)(2)(i) and (ii) of
this section. The failure to submit a response within 30 days shall be
deemed to be a waiver of the right to respond.
(i) Computation of time for response. A response to a Pre-Penalty
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 Pre-Penalty Notice
was mailed. If the Pre-Penalty Notice was personally delivered by a
non-U.S. Postal Service agent authorized by OFAC, a response must be
postmarked or date-stamped on or before the 30th day after the date of
delivery.
(ii) 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 discretion of OFAC, only upon specific request to OFAC.
(3) Form and method of response. A response to a Pre-Penalty Notice
need
[[Page 57317]]
not be in any particular form, but it must be typewritten and signed by
the alleged violator or a representative thereof, contain information
sufficient to indicate that it is in response to the Pre-Penalty
Notice, and include the OFAC identification number listed on the Pre-
Penalty Notice. A copy of the written response may be sent by
facsimile, but the original also must be sent to OFAC's Office of
Compliance and Enforcement by mail or courier and must be postmarked or
date-stamped in accordance with paragraph (b)(2) of this section.
(c) Settlement. Settlement discussion may be initiated by OFAC, the
alleged violator, or the alleged violator's authorized representative.
For a description of practices with respect to settlement, see appendix
A to part 501 of this chapter.
(d) Guidelines. Guidelines for the imposition or settlement of
civil penalties by OFAC are contained in appendix A to part 501 of this
chapter.
(e) Representation. A representative of the alleged violator may
act on behalf of the alleged violator, but any oral communication with
OFAC prior to a written submission regarding the specific allegations
contained in the Pre-Penalty Notice must be preceded by a written
letter of representation, unless the Pre-Penalty Notice was served upon
the alleged violator in care of the representative.
Sec. 547.703 Penalty imposition.
If, after considering any written response to the Pre-Penalty
Notice and any relevant facts, OFAC determines that there was a
violation by the alleged violator named in the Pre-Penalty Notice and
that a civil monetary penalty is appropriate, OFAC may issue a Penalty
Notice to the violator containing a determination of the violation and
the imposition of the monetary penalty. For additional details
concerning issuance of a Penalty Notice, see appendix A to part 501 of
this chapter. The issuance of the Penalty Notice shall constitute final
agency action. The violator has the right to seek judicial review of
that final agency action in federal district court.
Sec. 547.704 Administrative collection; referral to United States
Department of Justice.
In the event that the violator does not pay the penalty imposed
pursuant to this part or make payment arrangements acceptable to OFAC,
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.
Sec. 547.705 Finding of Violation
(a) When issued. (1) OFAC may issue an initial Finding of Violation
that identifies a violation if OFAC:
(i) Determines that there has occurred a violation of any provision
of this part, or a violation of the provisions of any license, ruling,
regulation, order, directive, 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 (50 U.S.C. 1701-1706);
(ii) Considers it important to document the occurrence of a
violation; and
(iii) Based on the Guidelines contained in appendix A to part 501
of this chapter, concludes that an administrative response is warranted
but that a civil monetary penalty is not the most appropriate response.
(2) An initial Finding of Violation shall be in writing and may be
issued whether or not another agency has taken any action with respect
to the matter. For additional details concerning issuance of a Finding
of Violation, see appendix A to part 501 of this chapter.
(b) Response--(1) Right to respond. An alleged violator has the
right to contest an initial Finding of Violation by providing a written
response to OFAC.
(2) Deadline for response; Default determination. A response to an
initial Finding of Violation must be made within 30 days as set forth
in paragraphs (b)(2)(i) and (ii) of this section. The failure to submit
a response within 30 days shall be deemed to be a waiver of the right
to respond, and the initial Finding of Violation will become final and
will constitute final agency action. The violator has the right to seek
judicial review of that final agency action in federal district court.
(i) Computation of time for response. A response to an initial
Finding of Violation 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 initial
Finding of Violation was served. If the initial Finding of Violation
was personally delivered by a non-U.S. Postal Service agent authorized
by OFAC, a response must be postmarked or date-stamped on or before the
30th day after the date of delivery.
(ii) 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 discretion of OFAC, only upon specific request to OFAC.
(3) Form and method of response. A response to an initial Finding
of Violation need not be in any particular form, but it must be
typewritten and signed by the alleged violator or a representative
thereof, contain information sufficient to indicate that it is in
response to the initial Finding of Violation, and include the OFAC
identification number listed on the initial Finding of Violation. A
copy of the written response may be sent by facsimile, but the original
also must be sent to OFAC by mail or courier and must be postmarked or
date-stamped in accordance with paragraph (b)(2) of this section.
(4) Information that should be included in response. Any response
should set forth in detail why the alleged violator either believes
that a violation of the regulations did not occur and/or why a Finding
of Violation is otherwise unwarranted under the circumstances, with
reference to the General Factors Affecting Administrative Action set
forth in the Guidelines contained in appendix A to part 501 of this
chapter. The response should include all documentary or other evidence
available to the alleged violator that supports the arguments set forth
in the response. OFAC will consider all relevant materials submitted in
the response.
(c) Determination--(1) Determination that a Finding of Violation is
warranted. If, after considering the response, OFAC determines that a
final Finding of Violation should be issued, OFAC will issue a final
Finding of Violation that will inform the violator of its decision. A
final Finding of Violation shall constitute final agency action. The
violator has the right to seek judicial review of that final agency
action in federal district court.
(2) Determination that a Finding of Violation is not warranted. If,
after considering the response, OFAC determines a Finding of Violation
is not warranted, then OFAC will inform the alleged violator of its
decision not to issue a final Finding of Violation.
Note to paragraph (c)(2): A determination by OFAC that a final
Finding of Violation is not warranted does not preclude OFAC from
pursuing other enforcement actions consistent with the Guidelines
contained in appendix A to part 501 of this chapter.
(d) Representation. A representative of the alleged violator may
act on behalf
[[Page 57318]]
of the alleged violator, but any oral communication with OFAC prior to
a written submission regarding the specific alleged violations
contained in the initial Finding of Violation must be preceded by a
written letter of representation, unless the initial Finding of
Violation was served upon the alleged violator in care of the
representative.
Subpart H--Procedures
0
21. Revise Sec. 547.802 to read as follows:
Sec. 547.802 Delegation of certain authorities by the Secretary of
the Treasury.
Any action that the Secretary of the Treasury is authorized to take
pursuant to Executive Order 13413 of October 27, 2006 (E.O. 13413),
Executive Order 13671 of July 8, 2014, and any further Executive orders
relating to the national emergency declared in E.O. 13413, may be taken
by the Director of OFAC or by any other person to whom the Secretary of
the Treasury has delegated authority so to act.
Dated: November 7, 2018.
Andrea Gacki,
Director, Office of Foreign Assets Control.
[FR Doc. 2018-24696 Filed 11-14-18; 8:45 am]
BILLING CODE 4810-AL-P