[Title 31 CFR ]
[Code of Federal Regulations (annual edition) - July 1, 2010 Edition]
[From the U.S. Government Printing Office]
[[Page i]]
31
Part 500 to End
Revised as of July 1, 2010
Money and Finance: Treasury
________________________
Containing a codification of documents of general
applicability and future effect
As of July 1, 2010
With Ancillaries
Published by
Office of the Federal Register
National Archives and Records
Administration
A Special Edition of the Federal Register
[[Page ii]]
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Table of Contents
Page
Explanation................................................. v
Title 31:
SUBTITLE B--Regulations Relating to Money and Finance
(Continued)
Chapter V--Office of Foreign Assets Control,
Department of the Treasury 5
Chapter VI--Bureau of Engraving and Printing,
Department of the Treasury 809
Chapter VII--Federal Law Enforcement Training
Center, Department of the Treasury 815
Chapter VIII--Office of Investment Security,
Department of the Treasury 819
Chapter IX--Federal Claims Collection Standards
(Department of the Treasury--Department of Justice) 845
Finding Aids:
Table of CFR Titles and Chapters........................ 867
Alphabetical List of Agencies Appearing in the CFR...... 887
List of CFR Sections Affected........................... 897
[[Page iv]]
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Cite this Code: CFR
To cite the regulations in
this volume use title,
part and section number.
Thus, 31 CFR 500.101
refers to title 31, part
500, section 101.
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[[Page v]]
EXPLANATION
The Code of Federal Regulations is a codification of the general and
permanent rules published in the Federal Register by the Executive
departments and agencies of the Federal Government. The Code is divided
into 50 titles which represent broad areas subject to Federal
regulation. Each title is divided into chapters which usually bear the
name of the issuing agency. Each chapter is further subdivided into
parts covering specific regulatory areas.
Each volume of the Code is revised at least once each calendar year
and issued on a quarterly basis approximately as follows:
Title 1 through Title 16.................................as of January 1
Title 17 through Title 27..................................as of April 1
Title 28 through Title 41...................................as of July 1
Title 42 through Title 50................................as of October 1
The appropriate revision date is printed on the cover of each
volume.
LEGAL STATUS
The contents of the Federal Register are required to be judicially
noticed (44 U.S.C. 1507). The Code of Federal Regulations is prima facie
evidence of the text of the original documents (44 U.S.C. 1510).
HOW TO USE THE CODE OF FEDERAL REGULATIONS
The Code of Federal Regulations is kept up to date by the individual
issues of the Federal Register. These two publications must be used
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To determine whether a Code volume has been amended since its
revision date (in this case, July 1, 2010), consult the ``List of CFR
Sections Affected (LSA),'' which is issued monthly, and the ``Cumulative
List of Parts Affected,'' which appears in the Reader Aids section of
the daily Federal Register. These two lists will identify the Federal
Register page number of the latest amendment of any given rule.
EFFECTIVE AND EXPIRATION DATES
Each volume of the Code contains amendments published in the Federal
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those instances where a regulation published in the Federal Register
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inserted following the text.
OMB CONTROL NUMBERS
The Paperwork Reduction Act of 1980 (Pub. L. 96-511) requires
Federal agencies to display an OMB control number with their information
collection request.
[[Page vi]]
Many agencies have begun publishing numerous OMB control numbers as
amendments to existing regulations in the CFR. These OMB numbers are
placed as close as possible to the applicable recordkeeping or reporting
requirements.
OBSOLETE PROVISIONS
Provisions that become obsolete before the revision date stated on
the cover of each volume are not carried. Code users may find the text
of provisions in effect on a given date in the past by using the
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January 1, 2001, consult either the List of CFR Sections Affected, 1949-
1963, 1964-1972, 1973-1985, or 1986-2000, published in eleven separate
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``[RESERVED]'' TERMINOLOGY
The term ``[Reserved]'' is used as a place holder within the Code of
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``[Reserved]'' location at any time. Occasionally ``[Reserved]'' is used
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INCORPORATION BY REFERENCE
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This material, like any other properly issued regulation, has the force
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What is a proper incorporation by reference? The Director of the
Federal Register will approve an incorporation by reference only when
the requirements of 1 CFR part 51 are met. Some of the elements on which
approval is based are:
(a) The incorporation will substantially reduce the volume of
material published in the Federal Register.
(b) The matter incorporated is in fact available to the extent
necessary to afford fairness and uniformity in the administrative
process.
(c) The incorporating document is drafted and submitted for
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CFR INDEXES AND TABULAR GUIDES
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alphabetical list of agencies publishing in the CFR are also included in
this volume.
An index to the text of ``Title 3--The President'' is carried within
that volume.
[[Page vii]]
The Federal Register Index is issued monthly in cumulative form.
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the revision dates of the 50 CFR titles.
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INQUIRIES
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Raymond A. Mosley,
Director,
Office of the Federal Register.
July 1, 2010.
[[Page ix]]
THIS TITLE
Title 31--Money and Finance: Treasury is composed of three volumes.
The parts in these volumes are arranged in the following order: parts 0-
199, parts 200-499, and part 500 to end. The contents of these volumes
represent all current regulations codified under this title of the CFR
as of July 1, 2010.
For this volume, Robert J. Sheehan, III was Chief Editor. The Code
of Federal Regulations publication program is under the direction of
Michael L. White, assisted by Ann Worley.
[[Page 1]]
TITLE 31--MONEY AND FINANCE: TREASURY
(This book contains part 500 to end)
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SUBTITLE B--Regulations Relating to Money and Finance (Continued)
Part
chapter v--Office of Foreign Assets Control, Department of
the Treasury.............................................. 500
chapter vi--Bureau of Engraving and Printing, Department of
the Treasury.............................................. 601
chapter vii--Federal Law Enforcement Training Center,
Department of the Treasury................................ 700
chapter viii--Office of Investment Security, Department of
the Treasury.............................................. 800
chapter ix--Federal Claims Collection Standards (Department
of the Treasury--Department of Justice)................... 900
[[Page 3]]
Subtitle B--Regulations Relating to Money and Finance (Continued)
[[Page 5]]
CHAPTER V--OFFICE OF FOREIGN ASSETS CONTROL, DEPARTMENT OF THE TREASURY
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Part Page
500 Foreign assets control regulations.......... 7
501 Reporting, procedures and penalties
regulations............................. 47
505 Regulations prohibiting transactions
involving the shipment of certain
merchandise between foreign countries... 94
515 Cuban assets control regulations............ 95
535 Iranian assets control regulations.......... 148
536 Narcotics trafficking sanctions regulations. 174
537 Burmese sanctions regulations............... 185
538 Sudanese sanctions regulations.............. 208
539 Weapons of mass destruction trade control
regulations............................. 238
540 Highly Enriched Uranium (HEU) Agreement
assets control regulations.............. 246
541 Zimbabwe sanctions regulations.............. 256
542 Syrian sanctions regulations................ 269
543 C[ocirc]te D'Ivoire sanctions regulations... 283
544 Weapons of mass destruction proliferators
sanctions regulations................... 296
545 Taliban (Afghanistan) sanctions regulations. 309
546 Darfur sanctions regulations................ 330
547 Democratic Republic of the Congo sanctions
regulations............................. 342
548 Belarus sanctions regulations............... 355
551 Somalia sanctions regulations............... 368
560 Iranian transactions regulations............ 377
575 Iraqi sanctions regulations................. 414
585 Federal Republic of Yugoslavia (Serbia and
Montenegro) and Bosnian Serb-controlled
areas of the Republic of Bosnia and
Herzegovina sanctions regulations....... 431
586 Federal Republic of Yugoslavia (Serbia &
Montenegro) Kosovo sanctions regulations 457
587 Federal Republic of Yugoslavia (Serbia and
Montenegro) Milosevic sanctions
regulations............................. 475
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588 Western Balkans stabilization regulations... 489
592 Rough diamonds control regulations.......... 502
593 Former Liberian regime of Charles Taylor
sanctions regulations................... 510
594 Global terrorism sanctions regulations...... 524
595 Terrorism sanctions regulations............. 541
596 Terrorism List Governments sanctions
regulations............................. 554
597 Foreign terrorist organizations sanctions
regulations............................. 559
598 Foreign narcotics kingpin sanctions
regulations............................. 572
Appendixes to Chapter V--Note............................... 583
Appendix A to Chapter V--Alphabetical Listing of Blocked
Persons, Blocked Vessels, Specially Designated Nationals,
Specially Designated Terrorists, Specially Designated
Global Terrorists, Foreign Terrorist Organizations, and
Specially Designated Narcotics Traffickers (as of May 13,
2010)..................................................... 585
Appendix B to Chapter V--Alphabetical listing of vessels
that are the property of blocked persons or specially
designated nationals...................................... 802
[[Page 7]]
PART 500_FOREIGN ASSETS CONTROL REGULATIONS--Table of Contents
Subpart A_Relation of This Part to Other Laws and Regulations
Sec.
500.101 Relation of this part to other laws and regulations.
Subpart B_Prohibitions
500.201 Transactions involving designated foreign countries or their
nationals; effective date.
500.202 Transactions with respect to securities registered or inscribed
in the name of a designated national.
500.203 Effect of transfers violating the provisions of this chapter.
500.204 Importation of and dealings in certain merchandise.
500.205 Holding of certain types of blocked property in interest-bearing
accounts.
500.206 Exemption of information and informational materials.
Subpart C_General Definitions
500.301 Foreign country.
500.302 National.
500.303 Nationals of more than one foreign country.
500.305 Designated national.
500.306 Specially designated national.
500.307 Unblocked national.
500.308 Person.
500.309 Transactions.
500.310 Transfer.
500.311 Property; property interests.
500.312 Interest.
500.313 Property subject to the jurisdiction of the United States.
500.314 Banking institution.
500.316 License.
500.317 General license.
500.318 Specific license.
500.319 Blocked account.
500.320 Domestic bank.
500.321 United States; continental United States.
500.322 Authorized trade territory; member of the authorized trade
territory.
500.323 Occupied area.
500.325 National securities exchange.
500.326 Custody of safe deposit boxes.
500.327 Blocked estate of a decedent.
500.328 Status of those portions of Korea under control of the
government of the Republic of Korea; and of the diplomatic and
consular representatives of those countries.
500.329 Person subject to the jurisdiction of the United States.
500.330 Person within the United States.
500.331 Merchandise.
500.332 Information and informational materials.
Subpart D_Interpretations
500.401 Reference to amended sections.
500.402 Effect of amendment of sections of this chapter or of other
orders, etc.
500.403 Termination and acquisition of the interest of a designated
national.
500.404 Transactions between principal and agent.
500.405 Exportation of securities, etc. to designated foreign countries.
500.406 Drafts under irrevocable letters of credit; documentary drafts.
500.407 Administration of blocked estates of decedents.
500.408 Access to certain safe deposit boxes prohibited.
500.409 Certain payments to designated foreign countries and nationals
through third countries.
500.410 Currency, coins, and postage and other stamps.
500.411 Dealings abroad in commodities subject to the Regulations.
500.412 Process vs. manufacture.
500.413 Participation in certain development projects in Vietnam.
Subpart E_Licenses, Authorizations and Statements of Licensing Policy
500.501 General and specific licensing procedures.
500.502 Effect of subsequent license or authorization.
500.503 Exclusion from licenses and authorizations.
500.504 Certain judicial proceedings with respect to property of
designated nationals.
500.505 Certain persons unblocked.
500.506-500.507 [Reserved]
500.508 Payments to blocked accounts in domestic banks.
500.509 Entries in certain accounts for normal service charges.
500.510 Payments to the United States, States and political
subdivisions.
500.511 Transactions by certain business enterprises.
500.513 Purchase and sale of certain securities.
500.514 Payment of dividends and interest on and redemption and
collection of securities.
500.515 Transfers of securities to blocked accounts in domestic banks.
500.516 Voting and soliciting of proxies on securities.
500.517 Access to safe deposit boxes under certain conditions.
500.518 Payments for living, traveling, and similar personal expenses in
the United States.
[[Page 8]]
500.519 Limited payments from accounts of United States citizens abroad.
500.520 Payments from accounts of United States citizens in employ of
United States in foreign countries and certain other persons.
500.521 Certain remittances for necessary living expenses.
500.522 Certain remittances to United States citizens in foreign
countries.
500.523 Transactions incident to the administration of decedents'
estates.
500.524 Payment from, and transactions in the administration of certain
trusts and estates.
500.525 Certain transfers by operation of law.
500.526 Transactions involving blocked life insurance policies.
500.527 Certain transactions with respect to United States patents,
trademarks, and copyrights.
500.528 Certain transactions with respect to blocked foreign patents,
trademarks and copyrights authorized.
500.529 Powers of attorney.
500.530 Exportation of powers of attorney or instructions relating to
certain types of transactions.
500.533 Exportations, reexportations, and incidental transactions.
500.535 Exchange of certain securities.
500.536 Certain transactions with respect to merchandise affected by
Sec. 500.204.
500.549 Proof of origin.
500.550 Transactions related to information and informational materials.
500.551 Reimports.
500.552 Research samples.
500.553 Prior contractual commitments not a basis for licensing.
500.554 Gifts of North Korean, North Vietnamese, Cambodian, or South
Vietnamese origin.
500.556 Joint bank accounts.
500.557 Proceeds of insurance policies.
500.558 Accounts of blocked partnerships.
500.559 Accounts of North Korean, North Vietnamese, Cambodian or South
Vietnamese sole proprietorships.
500.560 Bank accounts of official representatives of foreign governments
in North Korea, North Viet-Nam, Cambodia, or South Viet-Nam.
500.561 Transfers of abandoned property under State laws.
500.562 [Reserved]
500.563 Transactions incident to travel to and within North Korea.
500.564 [Reserved]
500.565 Family remittances to nationals of Vietnam and Cambodia.
500.566 Certain transactions authorized on behalf of North Korean
nationals incident to their travel and maintenance expenses.
500.567 U.S. assets of certain designated country corporations.
500.568 U.S. assets of blocked decedents.
500.569 [Reserved]
500.570 Cambodian property unblocked.
500.571 Transactions related to telecommunications authorized.
500.572 Humanitarian projects authorized.
500.573 Certain donations of funds and goods to meet basic human needs
authorized.
500.574 Executory contracts and related transactions authorized.
500.575 Certain services to Vietnamese nationals authorized.
500.576 Authorization of transactions concerning certain development
projects in Vietnam.
500.577 Authorization of bank transactions with respect to Vietnam by
certain international organizations.
500.578 Vietnamese property unblocked.
500.579 Authorization for release of certain blocked transfers by
banking institutions subject to U.S. jurisdiction.
500.580 Authorization of U.S. dollar clearing transactions involving
North Korea.
500.581 Financial transactions related to diplomatic missions
authorized.
500.582 Importation of North Korean-origin magnesite and magnesia.
500.583 News organization offices.
500.584 Energy sector projects in North Korea.
500.585 Payments for services rendered by North Korea to United States
aircraft authorized.
500.586 Authorization of new transactions concerning certain North
Korean property.
Subpart F_Reports
500.601 Records and reports.
500.602 Reporting of claims of U.S. nationals against North Korea.
Subpart G_Penalties
500.701 Penalties.
Subpart H_Procedures
500.801 Procedures.
500.802 Delegation by the Secretary of the Treasury.
500.803 Customs procedures; merchandise specified in Sec. 500.204.
Subpart I_Miscellaneous Provisions
500.901 Paperwork Reduction Act notice.
Appendix A to Part 500--Qualifying International Institutions
Authority: 18 U.S.C. 2332d; 31 U.S.C. 321(b); 50 U.S.C. App. 1-44;
Pub. L. 101-410, 104 Stat. 890 (28 U.S.C. 2461 note); E.O. 9193, 7 FR
5205,
[[Page 9]]
3 CFR, 1938-1943 Comp., p. 1174; E.O. 9989, 13 FR 4891, 3 CFR, 1943-1948
Comp., p.748.
Source: 15 FR 9040, Dec. 19, 1950, unless otherwise noted.
Subpart A_Relation of This Part to Other Laws and Regulations
Sec. 500.101 Relation of this part to other laws and regulations.
(a) This part is separate from, and independent of, the other parts
of this chapter with the exception of part 501 of this chapter, the
recordkeeping and reporting requirements and license application and
other procedures of which apply to this part. No license or
authorization contained in or issued pursuant to one of those parts, or
any other provision of law, authorizes any transaction prohibited by
this part.
(b) No license or authorization contained in or issued pursuant to
this part shall be deemed to authorize any transaction prohibited by any
law other than the Trading With the Enemy Act, 50 U.S.C. App. 5(b), as
amended, the Foreign Assistance Act of 1961, 22 U.S.C. 2370, or any
proclamation, order, regulation or license issued pursuant thereto.
[50 FR 27436, July 3, 1985, as amended at 62 FR 45101, Aug. 25, 1997]
Subpart B_Prohibitions
Sec. 500.201 Transactions involving designated foreign countries or their
nationals; effective date.
(a) All of the following transactions are prohibited, except as
specifically authorized by the Secretary of the Treasury (or any person,
agency, or instrumentality designated by him) by means of regulations,
rulings, instructions, licenses, or otherwise, if either such
transactions are by, or on behalf of, or pursuant to the direction of
any designated foreign country, or any national thereof, or such
transactions involve property in which any designated foreign country,
or any national thereof, has at any time on or since the effective date
of this section had any interest of any nature whatsoever, direct or
indirect:
(1) All transfers of credit and all payments between, by, through,
or to any banking institution or banking institutions wheresoever
located, with respect to any property subject to the jurisdiction of the
United States or by any person (including a banking institution) subject
to the jurisdiction of the United States;
(2) All transactions in foreign exchange by any person within the
United States; and
(3) The exportation or withdrawal from the United States of gold or
silver coin or bullion, currency or securities, or the earmarking of any
such property, by any person within the United States.
(b) All of the following transactions are prohibited, except as
specifically authorized by the Secretary of the Treasury (or any person,
agency, or instrumentality designated by him) by means of regulations,
rulings, instructions, licenses, or otherwise, if such transactions
involve property in which any designated foreign country, or any
national thereof, has at any time on or since the effective date of this
section had any interest of any nature whatsoever, direct or indirect:
(1) All dealings in, including, without limitation, transfers,
withdrawals, or exportations of, any property or evidences of
indebtedness or evidences of ownership of property by any person subject
to the jurisdiction of the United States; and
(2) All transfers outside the United States with regard to any
property or property interest subject to the jurisdiction of the United
States.
(c) Any transaction for the purpose or which has the effect of
evading or avoiding any of the prohibitions set forth in paragraph (a)
or (b) of this section is hereby prohibited.
(d) The term ``designated foreign country'' means a foreign country
in the following schedule, and the terms ``effective date'' and
``effective date of this section'' mean with respect to any designated
foreign country, or any national thereof, 12:01 a.m. eastern standard
time of the date specified in the following schedule, except as
specifically noted after the country or area.
[[Page 10]]
Schedule
(1) North Korea, i.e., Korea north of the 38th parallel of north
latitude: December 17, 1950.
(2) Cambodia: April 17, 1975.
(3) North Vietnam; i.e., Vietnam north of the 17th parallel of north
latitude: May 5, 1964.
(4) South Vietnam, i.e., Vietnam south of the 17th parallel of north
latitude: April 30, 1975, at 12:00 p.m. e.d.t.
(e) When a transaction results in the blocking of funds at a banking
institution pursuant to this section and a party to the transaction
believes the funds have been blocked due to mistaken identity, that
party may seek to have such funds unblocked pursuant to the
administrative procedures set forth in Sec. 501.806 of this chapter.
[15 FR 9040, Dec. 19, 1950, as amended at 18 FR 2079, Apr. 14, 1953; 50
FR 27436, July 3, 1985; 62 FR 45101, Aug. 25, 1997]
Sec. 500.202 Transactions with respect to securities registered or inscribed
in the name of a designated national.
Unless authorized by a license expressly referring to this section,
the acquisition, transfer (including the transfer on the books of any
issuer or agent thereof), disposition, transportation, importation,
exportation, or withdrawal of, or the endorsement or guaranty of
signatures on, or otherwise dealing in any security (or evidence
thereof) registered or inscribed in the name of any designated national
is prohibited irrespective of the fact that at any time (either prior
to, on or subsequent to the ``effective date'') the registered or
inscribed owner thereof may have, or appears to have, assigned,
transferred or otherwise disposed of any such security.
Sec. 500.203 Effect of transfers violating the provisions of this chapter.
(a) Any transfer after the ``effective date'' which is in violation
of any provision of this chapter or of any regulation, ruling,
instruction, license, or other direction or authorization thereunder and
involves any property in which a designated national has or has had an
interest since such ``effective date'' is null and void and shall not be
the basis for the assertion or recognition of any interest in or right,
remedy, power or privilege with respect to such property.
(b) No transfer before the ``effective date'' shall be the basis for
the assertion or recognition of any right, remedy, power, or privilege
with respect to, or interest in, any property in which a designated
national has or has had an interest since the ``effective date'' unless
the person with whom such property is held or maintained had written
notice of the transfer or by any written evidence had recognized such
transfer prior to such ``effective date.''
(c) Unless otherwise provided, an appropriate license or other
authorization issued by or pursuant to the direction or authorization of
the Secretary of the Treasury before, during or after a transfer shall
validate such transfer or render it enforceable to the same extent as it
would be valid or enforceable but for the provisions of section 5(b) of
the Trading With the Enemy Act, as amended, and this chapter and any
ruling, order, regulation, direction or instruction issued thereunder.
(d) Transfers of property which otherwise would be null and void, or
unenforceable, by virtue of the provisions of this section shall not be
deemed to be null and void, or unenforceable pursuant to such
provisions, as to any person with whom such property was held or
maintained (and as to such person, only) in cases in which such person
is able to establish each of the following:
(1) Such transfer did not represent a willful violation of the
provisions of this chapter by the person with whom such property was
held or maintained;
(2) The person with whom such property was held or maintained did
not have reasonable cause to know or suspect, in view of all the facts
and circumstances known or available to such person, that such transfer
required a license or authorization by or pursuant to the provisions of
this chapter and was not so licensed or authorized or if a license or
authorization did purport to cover the transfer, that such license or
authorization had been obtained by misrepresentation or the withholding
of material facts or was otherwise fraudulently obtained; and
(3) Promptly upon discovery that:
[[Page 11]]
(i) Such transfer was in violation of the provisions of this chapter
or any regulation, ruling, instruction, license or other direction or
authorization thereunder, or
(ii) Such transfer was not licensed or authorized by the Secretary
of the Treasury, or
(iii) If a license did purport to cover the transfer, such license
had been obtained by misrepresentation or the withholding of material
facts or was otherwise fraudulently obtained;
the person with whom such property was held or maintained filed with the
Treasury Department, Washington, DC 20220, a report in triplicate
setting forth in full the circumstances relating to such transfer. The
filing of a report in accordance with the provisions of this paragraph
shall not be deemed to be compliance or evidence of compliance with
paragraphs (d) (1) and (2) of this section.
(e) Unless licensed or authorized by Sec. 500.504 or otherwise
licensed or authorized pursuant to this chapter any attachment,
judgment, decree, lien, execution, garnishment, or other judicial
process is null and void with respect to any property in which on or
since the ``effective date'' there existed the interest of a designated
foreign country or national thereof.
(f) For the purpose of this section the term ``property'' includes
gold, silver, bullion, currency, coin, credit, securities (as that term
is defined in section 2(1) of the Securities Act of 1933, as amended)
(48 Stat. 74; 15 U.S.C. 77(b)), bills of exchange, notes, drafts,
acceptances, checks, letters of credit, book credits, debts, claims,
contracts, negotiable documents of title, mortgages, liens, annuities,
insurance policies, options and futures in commodities, and evidences of
any of the foregoing. The term ``property'' shall not, except to the
extent indicated, be deemed to include chattels or real property.
[15 FR 9040, Dec. 19, 1950, as amended at 41 FR 16553, Apr. 20, 1976]
Sec. 500.204 Importation of and dealings in certain merchandise.
(a) Except as specifically authorized by the Secretary of the
Treasury (or any person, agency, or instrumentality designated by him)
by means of regulations, or rulings, instructions, licenses, or
otherwise, persons subject to the jurisdiction of the United States may
not purchase, transport, import, or otherwise deal in or engage in any
transaction with respect to any merchandise outside the United States
specified in following paragraph (a)(1) of this section.
(1) Merchandise the country of origin of which is North Korea, North
Viet-Nam, Cambodia, or South Viet-Nam. Articles which are the growth,
produce or manufacture of these areas shall be deemed for the purposes
of this chapter to be merchandise whose country of origin is North
Korea, North Viet-Nam, Cambodia, or South Viet-Nam, notwithstanding that
they may have been subjected to one or any combination of the following
processes in another country:
(i) Grading;
(ii) Testing;
(iii) Checking;
(iv) Shredding;
(v) Slicing;
(vi) Peeling or splitting;
(vii) Scraping;
(viii) Cleaning;
(ix) Washing;
(x) Soaking;
(xi) Drying;
(xii) Cooling, chilling or refrigerating;
(xiii) Roasting;
(xiv) Steaming;
(xv) Cooking;
(xvi) Curing;
(xvii) Combining of fur skins into plates;
(xviii) Blending;
(xix) Flavoring;
(xx) Preserving;
(xxi) Pickling;
(xxii) Smoking;
(xxiii) Dressing;
(xxiv) Salting;
(xxv) Dyeing;
(xxvi) Bleaching;
(xxvii) Tanning;
(xxviii) Packing;
(xxix) Canning;
(xxx) Labeling;
(xxxi) Carding;
(xxxii) Combing;
(xxxiii) Pressing;
(xxxiv) Any process similar to any of the foregoing.
[[Page 12]]
Any article wheresoever manufactured shall be deemed for the purposes of
this chapter to be merchandise whose country of origin is North Korea,
North Viet-Nam, Cambodia, or South Viet-Nam, if there shall have been
added to such articles any embroidery, needle point, petit point, lace
or any other article of adornment which is the product of North Korea,
North Viet-Nam, Cambodia, or South Viet-Nam, notwithstanding that such
addition to the merchandise may have occurred in a country other than
North Korea, North Viet-Nam, Cambodia, or South Viet-Nam.
[40 FR 19202, May 2, 1975, as amended at 41 FR 16553, Apr. 20, 1976; 45
FR 7224, Jan. 31, 1980]
Sec. 500.205 Holding of certain types of blocked property in interest-bearing
accounts.
(a) Except as provided by paragraphs (d), (e) and (f) of this
section, or as authorized by the Secretary of the Treasury or his
delegate by specific license, any person holding any property included
in paragraph (h) of this section is prohibited from holding,
withholding, using, transferring, engaging in any transactions
involving, or exercising any right, power, or privilege with respect to
any such property, unless it is held in an interest-bearing account in a
domestic bank.
(b) Any person presently holding property subject to the provisions
of paragraph (a) of this section which, as of the effective date of this
section, is not being held in accordance with the provisions of that
paragraph, shall transfer such property to or hold such property or
cause such property to be held in an interest-bearing account in any
domestic bank within 30 days of the effective date of this section.
(c) Any person holding any checks or drafts subject to the
provisions of Sec. 500.201 is authorized and directed, wherever
possible consistent with state law (except as otherwise specifically
provided in paragraph (c)(3) of this section), to negotiate or present
for collection or payment such instruments and credit the proceeds to
interest-bearing accounts. Any transaction by any person incident to the
negotiation, processing, presentment, collection or payment of such
instruments and deposit of the proceeds into an interest-bearing account
is hereby authorized: Provided, That:
(1) The transaction does not represent, directly or indirectly, a
transfer of the interest of a designated national to any other country
or person;
(2) The proceeds are held in a blocked account indicating the
designated national who is the payee or owner of the instrument; and,
(3) In the case of a blocked check or draft which has been purchased
by the maker/drawer from the drawee bank (e.g., cashier's check, money
order, or traveler's check) or which is drawn against a presently
existing account, such bank, on presentment of the instrument in
accordance with the provisions of this section, shall either:
(i) Pay the instrument (subject to paragraphs (c) (1) and (2) of
this section) or
(ii) Credit a blocked account on its books with the amount payable
on the instrument.
In either event, the blocked account shall be identified as resulting
from the proceeds of a blocked check or draft, and the identification
shall include a reference to the names of both the maker and payee of
the instrument.
(d) Property subject to the provisions of paragraph (a) or (b) of
this section, held by a person claiming a set-off against such property,
is exempt from the provisions of paragraphs (a), (b) and (c) of this
section to the extent of the set-off: Provided however, That interest
shall be due from 30 days after the effective date of this section if it
should ultimately be determined that the claim to a set-off is without
merit.
(e) Property subject to the provisions of paragraphs (a) and (b) of
this section, held in a customer's account by a registered broker/dealer
in securities, may continue to be held for the customer by the broker/
dealer provided interest is credited to the account on any balance not
invested in securities in accordance with Sec. 500.513. The interest
paid on such accounts by a broker/dealer who does not elect to hold such
property for a customer's account in a domestic bank shall not be less
than the maximum rate payable on the
[[Page 13]]
shortest time deposit available in any domestic bank in the jurisdiction
in which the broker/dealer holds the account.
(f) Property subject to the provisions of paragraphs (a) and (b) of
this section, held by a state agency charged with the custody of
abandoned or unclaimed property under Sec. 500.561 may continue to be
held by the agency provided interest is credited to the blocked account
in which the property is held by the agency, or the property is held by
the agency in a blocked account in a domestic bank. The interest
credited to such accounts by an agency which does not elect to hold such
property in a domestic bank shall not be less than the maximum rate
payable on the shortest time deposit available in any domestic bank in
the state.
(g) For purposes of this section, the term ``interest-bearing
account'' means a blocked account earning interest at no less than the
maximum rate payable on the shortest time deposit in the domestic bank
where the account is held, provided however, that such an account may
include six-month Treasury bills or insured certificates, with a
maturity not exceeding six-months, appropriate to the amounts involved.
(h) The following types of property are subject to paragraphs (a)
and (b) of this section:
(1) Any currency, bank deposit and bank accounts subject to the
provisions of Sec. 500.201;
(2) Any property subject to the provisions of Sec. 500.201 which
consists, in whole or in part, of undisputed and either liquidated or
matured debts, claims, obligations or other evidence of indebtedness, to
the extent of any amount that is undisputed and liquidated or matured;
and,
(3) Any proceeds resulting from the payment of an obligation under
paragraph (c) of this section.
(i) For purposes of this section, the term ``domestic bank''
includes any FSLIC-insured institution (as defined in 12 CFR 561.1).
(j) For the purposes of this section the term ``person'' includes
the United States Government or any agency or instrumentality thereof,
except where the agency or instrumentality submits to the Office of
Foreign Assets Control an opinion of its General Counsel that either:
(1) It lacks statutory authority to comply with this section, or
(2) The requirements of paragraphs (a) and (b) of this section are
inconsistent with the statutory program under which it operates.
[44 FR 11766, Mar. 2, 1979]
Sec. 500.206 Exemption of information and informational materials.
(a) The importation from any country and the exportation to any
country of information or informational materials as defined in Sec.
500.332, whether commercial or otherwise, regardless of format or medium
of transmission, are exempt from the prohibitions and regulations of
this part.
(b) All transactions of common carriers incident to the importation
or exportation of information or informational materials, including
mail, between the United States and any foreign country designated under
Sec. 500.201, are exempt from the prohibitions and regulations of this
part.
(c) This section does not authorize transactions related to
information or informational materials not fully created and in
existence at the date of the transaction, or to the substantive or
artistic alteration or enhancement of information or informational
materials, or to the provision of marketing and business consulting
services by a person subject to the jurisdiction of the United States.
Such prohibited transactions include, without limitation, payment of
advances for information or informational materials not yet created and
completed, provision of services to market, produce or co-produce,
create or assist in the creation of information or informational
materials, and payment or royalties to a designated national with
respect to income received for enhancements or alterations made by
persons subject to the jurisdiction of the United States to information
or informational materials imported from a designated national.
(d) This section does not authorize transactions incident to the
exportation of restricted technical data as defined in section 799 of
the Export Administration Regulations, 15 CFR parts 768-799, or to the
exportation of goods
[[Page 14]]
for use in the transmission of any data. The exportation of such goods
to designated foreign countries is prohibited, as provided in Sec.
500.201 of this part and Sec. 785.1 of the Export Administration
Regulations.
Example #1: A U.S. publisher ships 500 copies of a book to Vietnam
directly from San Francisco aboard a chartered aircraft, and receives
payment by means of a letter of credit issued by a Vietnamese bank and
confirmed by an American bank. These are permissible transactions under
this section.
Example #2: A Vietnamese party exports a single master copy of a
Vietnamese motion picture to a U.S. party and licenses the U.S. party to
duplicate, distribute, show and exploit in the United States the
Vietnamese film in any medium, including home video distribution, for
five years, with the Vietnamese party receiving 40% of the net income.
All transactions relating to the activities described in this example
are authorized under this section or Sec. 500.550.
Example #3: A U.S. recording company proposes to contract with a
Vietnamese musician to create certain musical compositions, and to
advance royalties of $10,000 to the musician. The music written in
Vietnam is to be recorded in a studio that the recording company owns in
the Bahamas. These are all prohibited transactions. The U.S. party is
prohibited under Sec. 500.201 from contracting for the Vietnamese
musician's services, from transferring $10,000 to Vietnam to pay for
those services, and from providing the Vietnamese with production
services through the use of its studio in the Bahamas. No informational
materials are in being at the time of these proposed transactions.
However, the U.S. recording company may contract to purchase and import
preexisting recordings by the Vietnamese musician, or to copy the
recordings in the United States and pay negotiated royalties to Vietnam
under this section or Sec. 500.550.
Example #4: A Vietnamese party enters into a subpublication
agreement licensing a U.S. party to print and publish copies of a
musical composition and to sub-license rights of public performance,
adaptation, and arrangement of the musical composition, with payment to
be a percentage of income received. All transactions related to the
activities described in this example are authorized under this section
and Sec. 500.550, except for adaption and arrangement, which constitute
artistic enhancement of the Vietnamese composition. Payment to the
Vietnamese party may not reflect income received as a result of these
enhancements.
[54 FR 5231, Feb. 2, 1989, as amended at 60 FR 8934, Feb. 16, 1995]
Subpart C_General Definitions
Sec. 500.301 Foreign country.
The term foreign country also includes, but not by way of
limitation:
(a) The state and the government of any such territory on or after
the ``effective date'' as well as any political subdivision, agency, or
instrumentality thereof or any territory, dependency, colony,
protectorate, mandate, dominion possession or place subject to the
jurisdiction thereof,
(b) Any other government (including any political subdivision,
agency, or instrumentality thereof) to the extent and only to the extent
that such government exercises or claims to exercise control, authority,
jurisdiction or sovereignty over territory which on the ``effective
date'' constituted such foreign country,
(c) Any person to the extent that such person is, or has been, or to
the extent that there is reasonable cause to believe that such person
is, or has been, since the ``effective date'', acting or purporting to
act directly or indirectly for the benefit or on behalf of any of the
foregoing, and
(d) Any territory which on or since the ``effective date'' is
controlled or occupied by the military, naval or police forces or other
authority of such foreign country.
Sec. 500.302 National.
(a) The term national shall include:
(1) A subject or citizen of a country or any person who has been
domiciled in or a permanent resident of that country at any time on or
since the ``effective date,'' except persons who were resident or
domiciled there in the service of the U.S. Government.
(2) Any partnership, association, corporation, or other
organization, organized under the laws of, or which on or since the
``effective date'' had or has had its principal place of business in a
foreign country, or which on or since such effective date was or has
been controlled by, or a substantial part of the stock, shares, bonds,
debentures, notes, drafts, or other securities or obligations of which,
was or has been owned or controlled by, directly or indirectly, a
foreign country and/or one
[[Page 15]]
or more nationals thereof as defined in this section.
(3) Any person to the extent that such person is, or has been, since
the ``effective date'' acting or purporting to act directly or
indirectly for the benefit or on behalf of any national of a foreign
country.
(4) Any other person who there is reasonable cause to believe is a
``national'' as defined in this section.
(b) The Secretary of the Treasury retains full power to determine
that any person is or shall be deemed to be a ``national'' within the
meaning of this section, and to specify the foreign country of which
such person is or shall be deemed to be a national.
[17 FR 5343, June 12, 1952, as amended at 50 FR 27436, July 3, 1985]
Sec. 500.303 Nationals of more than one foreign country.
(a) Any person who by virtue of any provision in this chapter is a
national of more than one foreign country shall be deemed to be a
national of each of such foreign countries.
(b) In any case in which a person is a national of two or more
designated foreign countries, a license or authorization with respect to
nationals of one of such designated foreign countries shall not be
deemed to apply to such person unless a license or authorization of
equal or greater scope is outstanding with respect to nationals of each
other designated foreign country of which such person is a national.
(c) In any case in which the combined interests of two or more
designated foreign countries and/or nationals thereof are sufficient in
the aggregate to constitute control or ownership of 25 per centum or
more of the stock, shares, bonds, debentures, notes, drafts, or other
securities or obligations of a partnership, association, corporation or
other organization, but such control or a substantial part of such
stock, shares, bonds, debentures, notes, drafts, or other securities or
obligations is not held by any one such foreign country and/or national
thereof, such partnership, association, corporation or other
organization shall be deemed to be a national of each of such foreign
countries.
Sec. 500.305 Designated national.
The term designated national shall mean any country designated in
Sec. 500.201 and any national thereof including any person who is a
specially designated national.
Sec. 500.306 Specially designated national.
(a) The term specially designated national shall mean:
(1) Any person who is determined by the Secretary of the Treasury to
be a specially designated national,
(2) Any person who on or since the ``effective date'' has acted for
or on behalf of the Government or authorities exercising control over
any designated foreign country, or
(3) Any partnership, association, corporation or other organization
which on or since the ``effective date'' has been owned or controlled
directly or indirectly by the Government or authorities exercising
control over any designated foreign country or by any specially
designated national.
(b) [Reserved]
Note to Sec. 500.306: Please refer to the appendices at the end of
this chapter for listings of persons designated pursuant to this part.
Section 501.807 of this chapter sets forth the procedures to be followed
by persons seeking administrative reconsideration of their designation
or that of a vessel as blocked, or who wish to assert that the
circumstances resulting in the designation are no longer applicable.
[15 FR 9040, Dec. 19, 1950, as amended at 41 FR 16554, Apr. 20, 1976; 61
FR 32938, June 26, 1996; 62 FR 45101, Aug. 25, 1997]
Sec. 500.307 Unblocked national.
Any person licensed pursuant to Sec. 500.505 as an unblocked
national shall, while so licensed, be regarded as a person within the
United States who is not a national of any designated foreign country:
Provided, however, That the licensing of any person as an ``unblocked
national'' shall not be deemed to suspend in any way the requirements of
any section of this chapter relating to reports, and the production of
books, documents, records, etc.
[15 FR 9040, Dec. 19, 1950, as amended at 54 FR 5231, Feb. 2, 1989]
[[Page 16]]
Sec. 500.308 Person.
The term person means an individual, partnership, association,
corporation, or other organization.
Sec. 500.309 Transactions.
The phrase transactions which involve property in which any
designated foreign country, or any national thereof, has any interest of
any nature whatsoever, direct or indirect, includes, but not by way of
limitation:
(a) Any payment or transfer to any such designated foreign country
or national thereof,
(b) Any export or withdrawal from the United States to such
designated foreign country, and
(c) Any transfer of credit, or payment of an obligation, expressed
in terms of the currency of such designated foreign country.
Sec. 500.310 Transfer.
The term transfer shall mean any actual or purported act or
transaction, whether or not evidenced by writing, and whether or not
done or performed within the United States, the purpose, intent, or
effect of which is to create, surrender, release, transfer, or alter,
directly or indirectly, any right, remedy, power, privilege, or interest
with respect to any property and without limitation upon the foregoing
shall include the making, execution, or delivery of any assignment,
power, conveyance, check, declaration, deed, deed of trust, power of
attorney, power of appointment, bill of sale, mortgage, receipt,
agreement, contract, certificate, gift, sale, affidavit or statement;
the appointment of any agent trustee, or other fiduciary; the creation
or transfer of any lien; the issuance, docketing, filing, or the levy of
or under any judgment, decree, attachment, execution, or other judicial
or administrative process or order, or the service of any garnishment;
the acquisition of any interest of any nature whatsoever by reason of a
judgment or decree of any foreign country; the fulfillment of any
condition, or the exercise of any power of appointment, power of
attorney, or other power.
Sec. 500.311 Property; property interests.
Except as defined in Sec. 500.203(f) for the purposes of that
section the terms property and property interest or property interests
shall include, but not by way of limitation, money, checks, drafts,
bullion, bank deposits, savings accounts, any debts, indebtedness
obligations, notes, debentures, stocks, bonds, coupons, any other
financial securities, bankers' acceptances, mortgages, pledges, liens or
other right in the nature of security, warehouse receipts, bills of
lading, trust receipts, bills of sale, any other evidences of title,
ownership or indebtedness, powers of attorney, goods, wares,
merchandise, chattels, stocks on hand, ships, goods on ships, real
estate mortgages, deeds of trust, vendors' sales agreements, land
contracts, real estate and any interest therein, leaseholds, ground
rents, options, negotiable instruments, trade acceptances, royalties,
book accounts, accounts payable, judgments, patents, trademarks,
copyrights, contracts or licenses affecting or involving patents,
trademarks or copyrights, insurance policies, safe deposit boxes and
their contents, annuities, pooling agreements, contracts of any nature
whatsoever, services, and any other property, real, personal, or mixed,
tangible or intangible, or interest or interests therein, present,
future, or contingent.
[15 FR 9040, Dec. 19, 1950, as amended at 55 FR 31179, Aug. 1, 1990]
Sec. 500.312 Interest.
The term interest when used with respect to property shall mean an
interest of any nature whatsoever, direct or indirect.
Sec. 500.313 Property subject to the jurisdiction of the United States.
(a) The phrase property subject to the jurisdiction of the United
States includes, without limitation, securities, whether registered or
bearer, issued by:
(1) The United States or any State, district, territory, possession,
county, municipality, or any other subdivision or agency or
instrumentality of any thereof; or
(2) Any person within the United States whether the certificate
which evidences such property or interest is
[[Page 17]]
physically located within or outside the United States.
(b) The phrase property subject to the jurisdiction of the United
States also includes, without limitation, securities, whether registered
or bearer, by whomsoever issued, if the certificate evidencing such
property or interest is physically located within the United States.
Sec. 500.314 Banking institution.
The term banking institution shall include any person engaged
primarily or incidentally in the business of banking, of granting or
transferring credits, or of purchasing or selling foreign exchange or
procuring purchasers and sellers thereof, as principal or agent, or any
person holding credits for others as a direct or incidental part of his
business, or any broker; and, each principal, agent, home office, branch
or correspondent of any person so engaged shall be regarded as a
separate ``banking institution.''
Sec. 500.316 License.
Except as otherwise specified, the term license shall mean any
license or authorization contained in or issued pursuant to this
chapter.
[28 FR 6973, July 9, 1963]
Sec. 500.317 General license.
A general license is any license or authorization the terms of which
are set forth in this chapter.
Sec. 500.318 Specific license.
A specific license is any license or authorization issued pursuant
to this chapter but not set forth in this chapter.
Sec. 500.319 Blocked account.
The term blocked account shall mean an account in which any
designated national has an interest, with respect to which account
payments, transfers or withdrawals of other dealings may not be made or
effected except pursuant to an authorization or license authorizing such
action. The term blocked account shall not be deemed to include accounts
of unblocked nationals.
Sec. 500.320 Domestic bank.
The term domestic bank shall mean any branch or office within the
United States of any of the following which is not a national of any
designated foreign country: Any bank or trust company incorporated under
the banking laws of the United States or of any State, territory, or
district of the United States, or any private bank or banker subject to
supervision and examination under the banking laws of the United States,
or of any state, territory or district of the United States. The
Secretary of the Treasury may also authorize any other banking
institution to be treated as a ``domestic bank'' for the purpose of this
definition or for the purpose of any or all sections of this chapter.
Sec. 500.321 United States; continental United States.
The term United States means the United States and all areas under
the jurisdiction or authority thereof, including U.S. trust territories
and commonwealths. The term continental United States means the states
of the United States and the District of Columbia.
[50 FR 27436, July 3, 1985]
Sec. 500.322 Authorized trade territory; member of the authorized trade
territory.
(a) The term authorized trade territory shall include:
(1) North, South and Central America, including the Caribbean
region, except Cuba;
(2) Africa;
(3) Australia and Oceania, including Indonesia, New Zealand, and the
Philippines;
(4) Andorra, Austria, Belgium, Cyprus, Denmark, Ireland, the Federal
Republic of Germany and the Western Sector of Berlin, Finland, France
(including Monaco), Greece, Iceland, Italy, Liechtenstein, Luxembourg,
Malta, the Netherlands, Norway, Portugal, San Marino, Spain, Sweden,
Switzerland, Turkey, the United Kingdom, Vatican City, and Yugoslavia.
(5) Afghanistan, Bangladesh, Bhutan, Burma, Hong Kong, India, Iran,
Iraq, Israel, Japan, Jordan, Kuwait, Laos,
[[Page 18]]
Lebanon, Macao, Malaysia, Nepal, Oman, Pakistan, Qatar, Saudi Arabia,
Singapore, South Korea, Sri Lanka (Ceylon), Syrian Arab Republic,
Taiwan, Thailand, United Arab Emirates, and Yemen.
(6) Any colony, territory, possession, or protectorate of any
country included within this paragraph; but the term shall not include
the United States.
(b) The term member of the authorized trade territory shall mean any
of the foreign countries or political subdivisions comprising the
authorized trade territory.
(50 U.S.C. App. 5(b); E.O. 9193, 3 CFR 1943 Cum. Supp.; Treas. Dept.
Order No. 128, 32 FR 3472)
[40 FR 19202, May 2, 1975, as amended at 41 FR 16554, Apr. 20, 1976; 42
FR 27199, May 27, 1977; 54 FR 5231, Feb. 2, 1989]
Sec. 500.323 Occupied area.
The term occupied area shall mean any territory occupied by a
designated foreign country which was not occupied by such country prior
to June 25, 1950.
Sec. 500.325 National securities exchange.
The term national securities exchange shall mean an exchange
registered as a national securities exchange under section 6 of the
Securities Exchange Act of 1934 (48 Stat. 885, 15 U.S.C. 78f).
Sec. 500.326 Custody of safe deposit boxes.
Safe deposit boxes shall be deemed to be in the custody not only of
all persons having access thereto but also of the lessors of such boxes
whether or not such lessors have access to such boxes. The foregoing
shall not in any way be regarded as a limitation upon the meaning of the
term custody.
Sec. 500.327 Blocked estate of a decedent.
The term blocked estate of a decedent shall mean any decedent's
estate in which a designated national has an interest. A person shall be
deemed to have an interest in a decedent's estate if he:
(a) Was the decedent;
(b) Is a personal representative; or
(c) Is a creditor, heir, legatee, devisee, distributee, or
beneficiary.
Sec. 500.328 Status of those portions of Korea under control of the
government of the Republic of Korea; and of the diplomatic and consular
representatives of those countries.
(a) Those portions of Korea which are under the control of the
government of the Republic of Korea are not included within the term
designated foreign country.
(b) The diplomatic and consular representatives of the Republic of
Korea are not deemed to be acting or purporting to act directly or
indirectly for the benefit or on the behalf of any designated foreign
country.
[41 FR 16554, Apr. 20, 1976, as amended at 45 FR 7224, Jan. 31, 1980]
Sec. 500.329 Person subject to the jurisdiction of the United States.
The term, person subject to the jurisdiction of the United States,
includes:
(a) Any individual, wherever located, who is a citizen or resident
of the United States;
(b) Any person within the United States as defined in Sec. 500.330;
(c) Any corporation organized under the laws of the United States or
of any state, territory, possession, or district of the United States;
and
(d) Any corporation, partnership, or association, wherever organized
or doing business, that is owned or controlled by persons specified in
paragraph (a) or (c) of this section.
[50 FR 27436, July 3, 1985]
Sec. 500.330 Person within the United States.
(a) The term, person within the United States, includes:
(1) Any person, wheresoever located, who is a resident of the United
States;
(2) Any person actually within the United States;
(3) Any corporation organized under the laws of the United States or
of any state, territory, possession, or district of the United States;
and
(4) Any partnership, association, corporation, or other
organization, wheresoever organized or doing business, which is owned or
controlled by any person or persons specified in paragraph (a) (1), (2),
or (3) of this section.
[[Page 19]]
(b) [Reserved]
[20 FR 1379, Mar. 8, 1955]
Sec. 500.331 Merchandise.
The term merchandise means all goods, wares and chattels of every
description without limitation of any kind.
[24 FR 1984, Mar. 18, 1959]
Sec. 500.332 Information and informational materials.
(a) For purposes of this part, the term informational materials
includes, without limitation:
(1) Publications, films, posters, phonograph records, photographs,
microfilms, microfiche, tapes, compact disks, CD ROMs, artworks, and
news wire feeds.
(2) To be considered informational materials, artworks must be
classified under chapter subheading 9701, 9702, or 9703 of the
Harmonized Tariff Schedule of the United States.
(b) The terms information and informational materials with respect
to U.S. exports do not include items:
(1) That would be controlled for export pursuant to section 5 of the
Export Administration Act of 1979, 50 U.S.C. App. 2401-2420 (1979) (the
``EAA''), or section 6 of the EAA to the extent that such controls
promote the nonproliferation or antiterrorism policies of the United
States, including ``software'' that is not ``publicly available'' as
these terms are defined in 15 CFR parts 779 and 799.1 (1994); or
(2) With respect to which acts are prohibited by 18 U.S.C. chapter
37.
[60 FR 8934, Feb. 16, 1995]
Subpart D_Interpretations
Sec. 500.401 Reference to amended sections.
Reference to any section of this chapter or to any regulation,
ruling, order, instruction, direction or license issued pursuant to this
chapter shall be deemed to refer to the same as currently amended unless
otherwise so specified.
Sec. 500.402 Effect of amendment of sections of this chapter or of other
orders, etc.
Any amendment, modification, or revocation of any section of this
chapter or of any order, regulation, ruling, instruction, or license
issued by or under the direction of the Secretary of the Treasury
pursuant to section 3(a) or 5(b) of the Trading With the Enemy Act, as
amended, shall not unless otherwise specifically provided be deemed to
affect any act done or omitted to be done, or any suit or proceeding had
or commenced in any civil or criminal case, prior to such amendment,
modification, or revocation, and all penalties, forfeitures, and
liabilities under any such section, order, regulation, ruling,
instruction or license shall continue and may be enforced as if such
amendment, modification, or revocation had not been made.
Sec. 500.403 Termination and acquisition of the interest of a designated
national.
(a) Except as provided in Sec. 500.525, whenever a transaction
licensed or authorized by or pursuant to this chapter results in the
transfer of property (including any property interest) away from a
designated national, such property shall no longer be deemed to be
property in which a designated national has or has had an interest
unless there exists in such property an interest of a designated
national, the transfer of which has not been effected pursuant to
license or other authorization.
(b) Unless otherwise specifically provided in a license or
authorization contained in or issued pursuant to this chapter, if
property (including any property interest) is transferred to a
designated national such property shall be deemed to be property in
which there exists the interest of a designated national.
Sec. 500.404 Transactions between principal and agent.
A transaction between any person within the United States and any
principal, agent, home office, branch, or correspondent, outside the
United States of such person is a transaction prohibited by Sec.
500.201 to the same extent as if the parties to the transaction
[[Page 20]]
were in no way affiliated or associated with each other.
Sec. 500.405 Exportation of securities, etc. to designated foreign countries.
Section 500.201 prohibits the exportation of securities, currency,
checks, drafts and promissory notes to designated foreign countries.
Sec. 500.406 Drafts under irrevocable letters of credit; documentary drafts.
Section 500.201 prohibits the presentation, acceptance or payment
of:
(a) Drafts or other orders for payment drawn under irrevocable
letters of credit issued in favor or on behalf of any designated
national;
(b) Drafts or other orders for payment, in which any designated
national has on or since the ``effective date'' had any interest, drawn
under any irrevocable letter of credit; and
(c) Documentary drafts in which any designated national has on or
since the ``effective date'' had any interest.
Sec. 500.407 Administration of blocked estates of decedents.
Section 500.201 prohibits all transactions incident to the
administration of the blocked estate of a decedent, including the
appointment and qualification of personal representatives, the
collection and liquidation of assets, the payment of claims, and
distribution to beneficiaries. Attention is directed to Sec. 500.523
which authorizes certain transactions in connection with the
administration of blocked estates of decedents and Sec. 500.568 which
authorizes the unblocking by specific license of estate assets to
certain heirs under certain circumstances.
[15 FR 9040, Dec. 19, 1950, as amended at 54 FR 5231, Feb. 2, 1989]
Sec. 500.408 Access to certain safe deposit boxes prohibited.
Section 500.201 prohibits access to any safe deposit box within the
United States in the custody of any designated national or containing
any property in which any designated national has any interest or which
there is reasonable cause to believe contains property in which any such
designated national has any interest. Attention is directed to Sec.
500.517 which authorizes access to such safe deposit boxes under certain
conditions.
Sec. 500.409 Certain payments to designated foreign countries and nationals
through third countries.
Section 500.201 prohibits any request or authorization made by or on
behalf of a bank or other person within the United States to a bank or
other person outside of the United States as a result of which request
or authorization such latter bank or person makes a payment or transfer
of credit either directly or indirectly to a designated national.
[18 FR 2080, Apr. 14, 1953]
Sec. 500.410 Currency, coins, and postage and other stamps.
Currency, coins, and postage and other stamps issued by North Korea,
North Viet-Nam, Cambodia, or South Viet-Nam are merchandise of North
Korean, North Vietnamese, Cambodian, or South Vietnamese origin subject
to Sec. 500.204(a)(1).
[41 FR 16554, Apr. 20, 1976]
Sec. 500.411 Dealings abroad in commodities subject to the Regulations.
Section 500.204 prohibits the unlicensed importation into the United
States of commodities of North Korean, North Vietnamese, Cambodian, or
South Vietnamese origin. It also prohibits, unless licensed, persons
subject to the jurisdiction of the United States from purchasing,
transporting or otherwise dealing with such commodities which are
outside the United States.
[41 FR 16554, Apr. 20, 1976]
Sec. 500.412 Process vs. manufacture.
A commodity subject to Sec. 500.204 remains subject howsoever it
has been processed. It should not be assumed that a commodity which has
undergone operations other than those listed in Sec. 500.204(a)(1), has
become a manufactured form of the commodity rather than a processed form
thereof. In case of question, a ruling should be requested from the
Office of Foreign Assets Control. Requests for rulings in the form of
license applications or otherwise should include adequate technical
detail. It should be noted that it
[[Page 21]]
is quite possible for merchandise to have North Korea, North Viet-Nam,
Cambodia, or South Viet-Nam as its ``country of origin'' for Foreign
Assets Control purposes while having some other country as its ``country
of origin'' for marking or statistical purposes.
[41 FR 16554, Apr. 20, 1976]
Sec. 500.413 Participation in certain development projects in Vietnam.
The following examples illustrate the scope of the authorization in
Sec. 500.576 for dealings in property in which Vietnam or a Vietnamese
national has an interest with respect to development projects in Vietnam
formally proposed or approved for execution, funding or sponsorship by a
qualified international institution listed in appendix A to this part
(``Qualified Projects'').
Example # 1: The Government of Vietnam (``Vietnam'') approaches a
U.S. financial consulting firm (the ``U.S. Consulting Firm'') for advice
on building cement plants in Hanoi and Ho Chi Minh City. The project
might be eligible for funding by the Asian Development Bank (the
``ADB''), and Vietnam wants the U.S. Consulting Firm's assistance in
conducting a feasibility study for submission to the ADB. Since the
project has not yet been formally proposed or approved for funding by
the ADB, no involvement of the U.S. Consulting Firm is authorized
pursuant to Sec. 500.576. However, had the ADB formally proposed the
project in its monthly ADB Business Opportunities as a project being
considered for funding, or had it funded the feasibility study, Sec.
500.576 would authorize the U.S. Consulting Firm's transactions.
Example # 2: Upon ADB approval of funding for the cement plant
project, a U.S. company (the ``U.S. Company'') forms a joint venture
with a Vietnamese company to bid on construction of the cement plants in
Hanoi and Ho Chi Minh City. The joint venture's bid is successful, and
it purchases construction equipment from the United States, financed by
a U.S. bank and insured by a U.S. company. Several items are sourced
from the United States during construction, including cement equipment,
which is covered by a ten-year service and maintenance agreement. The
joint venture agreement calls for the continued management and operation
of the plants by the U.S. Company after completion, and for the
insurance of the plants by a U.S. insurance company. Each of these
transactions with respect to the Qualified Project is authorized by
Sec. 500.576.
Example # 3: The International Finance Corporation (``IFC'') offers
equity investment in a Vietnamese company to finance environmental
safeguards for drilling operations in offshore oil fields. Various U.S.
investors, including venture capital companies, brokerage firms, and
investment banks contribute capital and receive shares in the Vietnamese
company. This equity investment in a Qualified Project is authorized by
Sec. 500.576. The U.S. companies purchasing these shares as part of the
IFC-sponsored development project may hold or resell them, including
resale to other persons subject to U.S. jurisdiction. Shares acquired by
entities not subject to U.S. jurisdiction may not then be purchased or
repurchased by a person subject to U.S. jurisdiction.
Example # 4: (a) An Indonesian company (the ``Contractor'') is a
successful bidder on a Qualified Project, and hires a U.S. law firm to
represent it in contract negotiations with Vietnam to build a fish
processing and canning facility in Vietnam funded by the World Bank. The
law firm may represent the Contractor throughout the course of the
project pursuant to Sec. 500.576, once the project has been formally
proposed or approved for funding by the World Bank.
(b) Once the Qualified Project is underway, the Contractor purchases
equipment manufactured in France by a French company. The long-term
servicing of the equipment, however, will be provided by the French
company's U.S. subsidiary. The service transactions are authorized
pursuant to Sec. 500.576.
(c) After the processing facility is completed, Vietnam hires a U.S.
marketing firm to develop marketing strategies for the product
worldwide. It further asks the marketing firm to execute the strategies
it devises and to represent the product in South-East Asia, including
the domestic market in Vietnam. The marketing firm in turn would hire
the brokerage services of a U.S. citizen domiciled in Thailand for the
sale of the product to that country. These transactions are outside the
scope of Sec. 500.576, and violate Sec. 500.201, because they are not
directly incident to the Qualified Project funded by the World Bank.
[58 FR 68530, Dec. 28, 1993]
[[Page 22]]
Subpart E_Licenses, Authorizations and Statements of Licensing Policy
Sec. 500.501 General and specific licensing procedures.
For provisions relating to licensing procedures, see part 501,
subpart E, of this chapter. Licensing actions taken pursuant to part 501
of this chapter with respect to the prohibitions contained in this part
are considered actions taken pursuant to this part.
[68 FR 53641, Sept. 11, 2003]
Sec. 500.502 Effect of subsequent license or authorization.
No license or other authorization contained in this chapter or
otherwise issued by or under the direction of the Secretary of the
Treasury pursuant to section 3(a) or 5(b) of the Trading With the Enemy
Act, as amended, shall be deemed to authorize or validate any
transaction effected prior to the issuance thereof, unless such license
or other authorization specifically so provides.
Sec. 500.503 Exclusion from licenses and authorizations.
The Secretary of the Treasury reserves the right to exclude from the
operation of any license or from the privilege therein conferred or to
restrict the applicability thereof with respect to particular persons,
transactions or property or classes thereof. Such action shall be
binding upon all persons receiving actual notice or constructive notice
thereof.
Sec. 500.504 Certain judicial proceedings with respect to property of
designated nationals.
(a) Subject to the limitations of paragraphs (b), (c) and (d) of
this section judicial proceedings are authorized with respect to
property in which on or since the ``effective date'' there has existed
the interest of a designated national.
(b) A judicial proceeding is authorized by this section only if it
is based upon a cause of action which accrued prior to the ``effective
date.''
(c) This section does not authorize or license:
(1) The entry of any judgment or of any decree or order of similar
or analogous effect upon any judgment book, minute book, journal or
otherwise, or the docketing of any judgment in any docket book, or the
filing of any judgment roll or the taking of any other similar or
analogous action.
(2) Any payment or delivery out of a blocked account based upon a
judicial proceeding nor does it authorize the enforcement or carrying
out of any judgment or decree or order of similar or analogous effect
with regard to any property in which a designated national has an
interest.
(d) If a judicial proceeding relates to property in which there
exists the interest of any designated national other than a person who
would not have been a designated national except for his relationship to
an occupied area, such proceeding is authorized only if it is based upon
a claim in which no person other than any of the following has had an
interest since the ``effective date'':
(1) A citizen of the United States;
(2) A corporation organized under the laws of the United States or
any State, territory or possession thereof, or the District of Columbia;
(3) A natural person who is and has been since the ``effective
date'' a resident of the United States and who has not been a specially
designated national;
(4) A legal representative (whether or not appointed by a court of
the United States) or successor in interest by inheritance, device,
bequest, or operation of law, who falls within any of the categories
specified in paragraphs (d) (1), (2) and (3) of this section but only to
the same extent that their principals or predecessors would be qualified
by such paragraph.
Sec. 500.505 Certain persons unblocked.
(a) The following persons are hereby licensed as unblocked
nationals:
(1) Any person resident in, or organized under the laws of a
jurisdiction in, the United States or the authorized trade territory who
or which has never been a designated national;
(2) Any individual resident in the United States who is not a
specially designated national; and
[[Page 23]]
(3) Any corporation, partnership or association that would be a
designated national solely because of the interest therein of an
individual licensed in paragraph (a) or (b) of this section as an
unblocked national.
(b) Individual nationals of a designated country who take up
residence in the authorized trade territory may apply to the Office of
Foreign Assets Control to be specifically licensed as unblocked
nationals.
(c) The licensing of any person as an unblocked national shall not
suspend the requirements of any section of this chapter relating to the
maintenance or production of records.
[50 FR 27436, July 3, 1985, as amended at 54 FR 5232, Feb. 2, 1989]
Sec. Sec. 500.506-500.507 [Reserved]
Sec. 500.508 Payments to blocked accounts in domestic banks.
(a) Any payment or transfer of credit to a blocked account in a
domestic bank in the name of any designated national is hereby
authorized providing such payment or transfer shall not be made from any
blocked account if such payment or transfer represents, directly or
indirectly, a transfer of the interest of a designated national to any
other country or person.
(b) This section does not authorize:
(1) Any payment or transfer to any blocked account held in a name
other than that of the designated national who is the ultimate
beneficiary of such payment or transfer; or
(2) Any foreign exchange transaction including, but not by way of
limitation, any transfer of credit, or payment of an obligation,
expressed in terms of the currency of any foreign country.
(c) This section does not authorize any payment or transfer of
credit comprising an integral part of a transaction which cannot be
effected without the subsequent issuance of a further license.
(d) This section does not authorize the crediting of the proceeds of
the sale of securities held in a blocked account or a sub-account
thereof, or the income derived from such securities, to a blocked
account or sub-account under any name or designation which differs from
the name or designation of the specific blocked account or sub-account
in which such securities are held.
(e) This section does not authorize any payment or transfer from a
blocked account in a domestic bank to a blocked account in another
domestic bank held under any name or designation which differs from the
name or designation of the specific blocked account or sub-account from
which the payment or transfer is made.
Note to Sec. 500.508: Please refer to Sec. 501.603 of this chapter
for mandatory reporting requirements regarding financial transfers.
[40 FR 7649, Feb. 21, 1975, as amended at 58 FR 47644, Sept. 10, 1993;
62 FR 45101, Aug. 25, 1997]
Sec. 500.509 Entries in certain accounts for normal service charges.
(a) Any banking institution within the United States is hereby
authorized to:
(1) Debit any blocked account with such banking institution (or with
another office within the United States of such banking institution) in
payment or reimbursement for normal service charges owed to such banking
institution by the owner of such blocked account.
(2) Make book entries against any foreign currency account
maintained by it with a banking institution in any designated foreign
country for the purpose of responding to debits to such account for
normal service charges in connection therewith.
(b) As used in this section, the term normal service charge shall
include charges in payment or reimbursement for interest due; cable,
telegraph, or telephone charges; postage costs; custody fees; small
adjustment charges to correct bookkeeping errors; and, but not by way of
limitation, minimum balance charges, account carrying charges, notary
and protest fees, and charges for reference books, photostats, credit
reports, transcripts of statements, registered mail insurance,
stationery and supplies, check books, and other similar items.
Sec. 500.510 Payments to the United States, States and political
subdivisions.
(a) The payment from any blocked account to the United States or any
[[Page 24]]
agency or instrumentality thereof or to any State, territory, district,
county, municipality or other political subdivision in the United
States, of customs duties, taxes, and fees payable thereto by the owner
of such blocked account is hereby authorized.
(b) This section also authorizes transactions incident to the
payment of customs duties, taxes, and fees from blocked accounts, such
as the levying of assessment, the creation and enforcement of liens, and
the sale of blocked property in satisfaction of liens for customs
duties, taxes, and fees.
Sec. 500.511 Transactions by certain business enterprises.
(a) Except as provided in paragraphs (b), (c) and (d) of this
section any partnership, association, corporation or other organization
which on the ``effective date'' was actually engaged in a commercial,
banking or financial business within the United States and which is a
national of any designated foreign country, is hereby authorized to
engage in all transactions ordinarily incidental to the normal conduct
of its business activities within the United States.
(b) This section does not authorize any transaction which would
require a license if such organization were not a national of any
designated foreign country.
(c) This section does not authorize any transaction by a specially
designated national.
(d) Any organization engaging in business pursuant to this section
shall not engage in any transaction, pursuant to this section or any
other license or authorization contained in this chapter, which,
directly or indirectly, substantially diminishes or imperils the assets
of such organization or otherwise prejudicially affects the financial
position of such organization.
(e) No dealings with regard to any account shall be evidence that
any person having an interest therein is actually engaged in commercial,
banking or financial business within the United States.
Sec. 500.513 Purchase and sale of certain securities.
(a) The bona fide purchase and sale of securities on a national
securities exchange by banking institutions within the United States for
the account, and pursuant to the authorization, of nationals of any
designated foreign country and the making and receipt of payments,
transfers of credit, and transfers of such securities which are
necessary incidents of any such purchase or sale are hereby authorized
provided the following terms and conditions are complied with:
(1) In the case of the purchase of securities, the securities
purchased shall be held in an account in a banking institution within
the United States in the name of the national whose account was debited
to purchase such securities; and
(2) In the case of the sale of securities, the proceeds of the sale
shall be credited to an account in the name of the national for whose
account the sale was made and in the banking institution within the
United States which held the securities of such national.
(b) This section does not authorize the crediting of the proceeds of
the sale of securities held in a blocked account or a subaccount
thereof, to a blocked account or subaccount under any name or
designation which differs from the name or designation of the specific
blocked account or subaccount in which such securities were held.
(c) Securities issued or guaranteed by the Government of the United
States or any State, territory, district, county, municipality, or other
political subdivision thereof (including agencies and instrumentalities
of the foregoing) need not be purchased or sold on a national securities
exchange, but purchases or sales of such securities shall be made at
market value and pursuant to all other terms and conditions prescribed
in this section.
Sec. 500.514 Payment of dividends and interest on and redemption and
collection of securities.
(a) The payment to, and receipt by, a banking institution within the
United States of funds or other property representing dividends or
interest on securities held by such banking institution
[[Page 25]]
in a blocked account is hereby authorized provided the funds or other
property are credited to or deposited in a blocked account in such
banking institution in the name of the national for whose account the
securities were held. Not withstanding Sec. 500.202, this paragraph
authorizes the foregoing transactions although such securities are
registered or inscribed in the name of any designated national and
although the national in whose name the securities are registered or
inscribed may not be the owner of such blocked account.
(b) The payment to, and receipt by, a banking institution within the
United States of funds payable in respect of securities (including
coupons) presented by such banking institution to the proper paying
agents within the United States for redemption or collection for the
account and pursuant to the authorization of nationals of any designated
country is hereby authorized provided the proceeds of the redemption or
collection are credited to a blocked account in such banking institution
in the name of the national for whose account the redemption or
collection was made.
(c) The performance of such other acts, and the effecting of such
other transactions, as may be necessarily incident to any of the
foregoing, are also hereby authorized.
(d) This section does not authorize the crediting of the proceeds of
the redemption or collection of securities (including coupons) held a
blocked account or a subaccount thereof, or the income derived from such
securities to a blocked account or subaccount under any name or
designation which differs from the name or designation of the specific
blocked account or subaccount in which such securities were held.
(e) This section does not authorize any issuer or other obligor,
with respect to a security, who is a designated national, to make any
payment, transfer or withdrawal.
Sec. 500.515 Transfers of securities to blocked accounts in domestic banks.
(a) Transactions ordinarily incident to the transfer of securities
from a blocked account in the name of any person to a blocked account in
the same name in a domestic bank are hereby authorized provided such
securities shall not be transferred from any blocked account if such
transfer represents, directly or indirectly, a transfer of the interest
of a designated national to any other country or person.
(b) This section does not authorize the transfer of securities held
in a blocked account or subaccount thereof to a blocked account or
subaccount under any name or designation which differs from the name or
designation of the specific blocked account or sub- account in which
such securities were held.
[32 FR 10846, July 25, 1967]
Sec. 500.516 Voting and soliciting of proxies on securities.
Notwithstanding Sec. 500.202, the voting and the soliciting of
proxies or other authorizations is authorized with respect to the voting
of securities issued by a corporation organized under the laws of the
United States or of any State, territory, or district thereof, in which
a designated national has any interest.
Sec. 500.517 Access to safe deposit boxes under certain conditions.
(a) Access to any safe deposit box leased to a designated national
or containing property in which any designated national has an interest,
and the deposit therein or removal therefrom of any property is hereby
authorized, provided the following terms and conditions are complied
with:
(1) Access shall be permitted only in the presence of an authorized
representative of the lessor of such box; and
(2) In the event that any property in which any designated national
has any interest is to be removed from such box, access shall be
permitted only in the presence of an authorized representative of a
banking institution within the United States, which may be the lessor of
such box, which shall receive such property into its custody immediately
upon removal from such box and which shall hold the same in a blocked
account under an appropriate designation indicating the interest therein
of designated nationals.
[[Page 26]]
(b) The terms and conditions set forth in paragraph (a) of this
section shall not apply to access granted to a representative of the
Office of Alien Property pursuant to any rule, regulation or order of
such Office.
(c) The lessee or other person granted access to any safe deposit
box pursuant to this section (except an agent or representative of the
Office of Alien Property) shall furnish to the lessor a certificate in
triplicate that he has filed or will promptly file a report with respect
to such box, if leased to a designated national, and with respect to all
property contained in the box to which access is had in which any
designated national has an interest. The lessor shall transmit two
copies of such certificate to the Treasury Department, Washington, D.C.
The certificate is required only on the first access to the box. In case
a report on Form TFR-603 was not made, a report is hereby required to be
filed. All reports made pursuant to this section shall bear on their
face or have securely attached to them a statement reading, ``this
report is filed pursuant to 31 CFR 500.517''.
[15 FR 9040, Dec. 19, 1950, as amended at 35 FR 4045, Mar. 4, 1970]
Sec. 500.518 Payments for living, traveling, and similar personal expenses in
the United States.
(a) Payments and transfers of credit in the United States from
blocked accounts in domestic banking institutions held in the name of an
individual within the United States to or upon the order of such
individual are hereby authorized provided the following terms and
conditions are complied with:
(1) Such payments and transfers of credit may be made only for the
living, traveling, and similar personal expenses in the United States of
such individual or his family; and
(2) The total of all such payments and transfers of credit made
under this section from the accounts of such individual may not exceed
$250 in any one calendar month.
(b) This section does not authorize any payment or transfer from an
account in which a specially designated national has an interest.
[28 FR 6973, July 9, 1963]
Sec. 500.519 Limited payments from accounts of United States citizens abroad.
(a) Payments and transfers of credit from blocked accounts for
expenditures within the United States or the authorized trade territory
of any citizen of the United States who is within any foreign country
are hereby authorized provided the following terms and conditions are
complied with:
(1) Such payments and transfers shall be made only from blocked
accounts in the name of, or in which the beneficial interest is held by,
such citizen or his family; and
(2) The total of all such payments and transfers made under this
section shall not exceed $1,000 in any one calendar month for any such
citizen or his family.
(b) This section does not authorize any remittance to any designated
foreign country or, any payment, transfer, or withdrawal which could not
be effected without a license by a person within the United States who
is not a national of any designated foreign country.
Sec. 500.520 Payments from accounts of United States citizens in employ of
United States in foreign countries and certain other persons.
(a) Banking institutions within the United States are hereby
authorized to make all payments, transfers and withdrawals from accounts
in the name of citizens of the United States while such citizens are
within any foreign country in the course of their employment by the
Government of the United States.
(b) Banking institutions within the United States are also hereby
authorized to make all payments, transfers and withdrawals from accounts
in the name of members of the armed forces of the United States and of
citizens of the United States accompanying such armed forces in the
course of their employment by any organization acting on behalf of the
Government of the United States while such persons are within any
foreign country.
(c) This section is deemed to apply to the accounts of members of
the armed
[[Page 27]]
forces of the United States and of citizens of the United States
accompanying such armed forces in the course of their employment by the
Government of the United States or by any organization acting on its
behalf even though they are captured or reported missing.
Sec. 500.521 Certain remittances for necessary living expenses.
(a) Remittances by any person to any individual who is a resident of
a foreign country and is within that foreign country are hereby
authorized on the following terms and conditions:
(1) Such remittances are made only for the necessary living expenses
of the payee and his household and do not exceed $100 in any one
calendar month to any one household;
(2) Such remittances are not made from a blocked account other than
from an account in a banking institution within the United States in the
name of, or in which the beneficial interest is held by, the payee or
members of his household;
(3) Such remittances are not made from a blocked account which is
blocked pursuant to Executive order 8389, as amended;
(4) If the payee is within any designated foreign country, such
remittances must be made through a domestic bank and any domestic bank
is authorized to effect such remittances which, however, may be effected
only by the payment of the dollar amount of the remittance to a domestic
bank for credit to a blocked account in the name of a banking
institution within such country.
(b) This section does not authorize any remittance to, or for the
benefit of, a specially designated national who is not within a
designated foreign country.
(c) This section does not authorize any remittance to an individual
for the purpose of defraying the expenses of a person not constituting
part of his household.
(d) As used in this section, the term household shall mean:
(1) Those individuals sharing a common dwelling as a family; or
(2) Any individual not sharing a common dwelling with others as a
family.
[28 FR 6974, July 9, 1963]
Sec. 500.522 Certain remittances to United States citizens in foreign
countries.
(a) Remittances by any person through any domestic bank to any
individual who is a citizen of the United States within any foreign
country are hereby authorized and any domestic bank is authorized to
effect such remittances, on the following terms and conditions:
(1) Such remittances do not exceed $1,000 in any one calendar month
to any payee and his household and are made only for the necessary
living and traveling expenses of the payee and his household, except
that an additional sum not exceeding $1,000 may be remitted once to such
payee if such sum will be used for the purpose of enabling the payee or
his household to return to the United States;
(2) Such remittances are not made from a blocked account other than
from an account in a banking institution within the United States in the
name of, or in which the beneficial interest is held by, the payee or
members of his household;
(3) If the payee is within any designated foreign country, such
remittances must be made through a domestic bank and must be effected by
the payment of the dollar amount of remittance to a domestic bank for
credit to a blocked account in the name of a banking institution within
such country.
(b) This section does not authorize any remittance to an individual
for the purpose of defraying the expenses of a person not constituting
part of his household.
(c) As used in this section, the term household shall mean:
(1) Those individuals sharing a common dwelling as a family; or
(2) Any individual not sharing a common dwelling with others as a
family.
[[Page 28]]
Sec. 500.523 Transactions incident to the administration of decedents'
estates.
(a) The following transactions are authorized in connection with the
administration of the assets in the United States of any blocked estate
of a decedent:
(1) The appointment and qualification of a personal representative;
(2) The collection and preservation of such assets by such personal
representative and the payment of all costs, fees and charges in
connection therewith; and
(3) The payment by such personal representative of funeral expenses
and expenses of the last illness.
(4) Any transfer of title pursuant to a valid testamentary
disposition.
This paragraph does not authorize any unblocking or distribution of
estate assets to a designated national.
(b) In addition to the authorization contained in paragraph (a) of
this section, all other transactions incident to the administration of
assets situated in the United States of any blocked estate of a decedent
are authorized if:
(1) The decedent was not a national of a designated foreign country
at the time of his death;
(2) The decedent was a citizen of the United States and a national
of a designated foreign country at the time of his death solely by
reason of his presence in a designated foreign country as a result of
his employment by, or service with the United States Government; or
(3) The assets are unblocked under a specific license issued
pursuant to Sec. 500.568.
(c) Any property or interest therein distributed pursuant to this
section to a designated national shall be regarded for the purpose of
this chapter as property in which such national has an interest and
shall accordingly be subject to all the pertinent sections of this
chapter. Any payment or distribution of any funds, securities or other
choses in action to a designated national shall be made by deposit in a
blocked account in a domestic bank or with a public officer, agency, or
instrumentality designated by a court having jurisdiction of the estate.
Any such deposit shall be made in one of the following ways:
(1) In the name of the national who is the ultimate beneficiary
thereof;
(2) In the name of a person who is not a national of a designated
foreign country in trust for the national who is the ultimate
beneficiary; or
(3) Under some other designation which clearly shows the interest
therein of such national.
(d) Any distribution of property authorized pursuant to this section
may be made to a trustee of any testamentary trust or to the guardian of
an estate of a minor or of an incompetent.
(e) This section does not authorize:
(1) Any designated national to act as personal representative or co-
representative of any estate;
(2) Any designated national to represent, directly or indirectly,
any person who has an interest in an estate;
(3) Any designated national to take distribution of any property as
the trustee of any testamentary trust or as the guardian of an estate of
a minor or of an incompetent; or
(4) Any transaction which could not be effected if no designated
national had any interest in such estate.
(f) Any payment or distribution authorized by this section may be
deposited in a blocked account in a domestic bank or with a public
officer, agency, or instrumentality designated by the court having
jurisdiction of the estate in one of the ways prescribed in paragraphs
(c) (1), (2) or (3) of this section, but this section does not authorize
any other transaction directly or indirectly at the request, or upon the
instructions of any designated national.
[15 FR 9040, Dec. 19, 1950, as amended at 54 FR 5232, Feb. 2, 1989]
Sec. 500.524 Payment from, and transactions in the administration of certain
trusts and estates.
(a) Any bank or trust company incorporated under the laws of the
United States, or of any State, territory, possession, or district of
the United States, or any private bank subject to supervision and
examination under the banking laws of any State of the United States,
acting as trustee of a trust created by gift, donation or bequest and
administered in the United
[[Page 29]]
States, or as legal representative of an estate of an infant or
incompetent administered in the United States, in which trust or estate
one or more persons who are designated nationals have an interest,
beneficial or otherwise, or are co-trustees or co-representatives, is
hereby authorized to engage in the following transactions:
(1) Payments of distributive shares of principal or income to all
persons legally entitled thereto upon the condition prescribed in
paragraph (b) of this section.
(2) Other transactions arising in the administration of such trust
or estate which might be engaged in if no national of a designated
foreign country were a beneficiary, co-trustee or co-representative of
such trust or estate upon the condition prescribed in paragraph (b) of
this section.
(b) Any payment or distribution of any funds, securities or other
choses in action to a national of a designated foreign country under
this section shall be made by deposit in a blocked account in a domestic
bank in the name of the national who is the ultimate beneficiary
thereof.
(c) Any payment or distribution into a blocked account in a domestic
bank in the name of any such national of a designated foreign country
who is the ultimate beneficiary of and legally entitled to any such
payment or distribution is authorized by this section, but this section
does not authorize such trustee or legal representative to engage in any
other transaction at the request, or upon the instructions, of any
beneficiary, co-trustee or co-representative of such trust or estate or
other person who is a national of any designated foreign country.
(d) The application of this section to trusts is limited to trusts
established by gift, donation, or bequest from individuals or entities
to benefit specific heirs, charitable causes, and similar beneficiaries.
This section does not apply to trusts established for business or
commercial purposes, such as sinking funds established by an insurer of
securities in order to secure payment of interest or principal due on
such securities.
[15 FR 9040, Dec. 19, 1950, as amended at 54 FR 5232, Feb. 2, 1989]
Sec. 500.525 Certain transfers by operation of law.
(a) The following transfers by operation of law are hereby
authorized:
(1) Any transfer of any dower, curtesy, community property, or other
interest of any nature whatsoever provided that such transfer arises
solely as a consequence of the existence or change of marital status;
(2) Any transfer to any person by intestate succession.
(3) Any transfer to any person as administrator, executor, or other
fiduciary by reason of any testamentary disposition; and
(4) Any transfer to any person as administrator, executor, or
fiduciary by reason of judicial appointment or approval in connection
with any testamentary disposition or intestate succession.
(b) Except to the extent authorized by Sec. 500.523, Sec. 500.568
or by any other license or authorization contained in or issued pursuant
to this chapter no transfer to any person by intestate succession and no
transfer to any person as administrator, executor, or other fiduciary by
reason of any testamentary disposition, and no transfer to any person as
administrator, executor, or fiduciary by reason of judicial appointment
or approval in connection with any testamentary disposition or intestate
succession shall be deemed to terminate the interest of the decedent in
the property transferred if the decedent was a designated national.
(c) This section does not authorize any dealings in property by any
person.
[25 FR 1910, Mar. 4, 1960, as amended at 54 FR 5232, Feb. 2, 1989]
Sec. 500.526 Transactions involving blocked life insurance policies.
(a) The following transactions are hereby authorized:
(1) The payment of premiums and interest on policy loans with
respect to any blocked life insurance policy;
(2) The issuance, servicing or transfer of any blocked life
insurance policy in which the only blocked interest is that of one or
more of the following:
[[Page 30]]
(i) A member of the armed forces of the United States or a person
accompanying such forces (including personnel of the American Red Cross,
and similar organizations);
(ii) An officer or employee of the United States; or
(iii) A citizen of the United States resident in a designated
foreign country; and
(3) The issuance, servicing or transfer of any blocked life
insurance policy in which the only blocked interest (other than that of
a person specified in paragraph (a) (2) of this section) is that of a
beneficiary.
(b) Paragraph (a) of this section does not authorize:
(1) Any payment to the insurer from any blocked account except a
blocked account of the insured or beneficiary, or
(2) Any payment by the insurer to a national of a designated foreign
country unless payment is made by deposit in a blocked account in a
domestic bank in the name of the national who is the ultimate
beneficiary thereof.
(c) The application, in accordance with the provisions of the policy
or the established practice of the insurer, of the dividends, cash
surrender value, or loan value, of any blocked life insurance policy is
also hereby authorized for the purposes of:
(1) Paying premiums;
(2) Paying policy loans and interest thereon;
(3) Establishing paid-up insurance; or
(4) Accumulating such dividends or values to the credit of the
policy on the books of the insurer.
(d) As used in this section:
(1) The term blocked life insurance policy shall mean any life
insurance policy or annuity contract, or contract supplementary thereto,
in which there is a blocked interest.
(2) Any interest of a national of a designated foreign country shall
be deemed to be a ``blocked interest.''
(3) The term servicing shall mean the following transactions with
respect to any blocked life insurance policy:
(i) The payment of premiums, the payment of loan interest, and the
repayment of policy loans;
(ii) The effecting by a life insurance company or other insurer of
loans to an insured;
(iii) The effecting on behalf of an insured of surrenders,
conversions, modifications, and reinstatements; and
(iv) The exercise or election by an insured of non-forfeiture
options, optional modes of settlement, optional disposition of
dividends, and other policy options and privileges not involving payment
by the insurer.
(4) The term transfer shall mean the change of beneficiary, or the
assignment or pledge of the interest of an insured in any blocked life
insurance policy subsequent to the issuance thereof.
(e) This section does not authorize any transaction with respect to
any blocked life insurance policy issued by a life insurance company or
other insurer which is a national of a designated foreign country or
which is not doing business or effecting insurance in the United States.
Sec. 500.527 Certain transactions with respect to United States patents,
trademarks, and copyrights.
(a) There are hereby authorized:
(1) The filing in the United States Patent Office of applications
for letters patent and for trademarks registration;
(2) The making and filing in the United States Copyright Office of
applications for registration or renewal of copyrights;
(3) The prosecution in the United States Patent Office of
applications for letters patent and for trademarks registration;
(4) The receipt of letters patent or trademark registration
certificates or copyright registration or renewal certificates granted
pursuant to any such applications in which any designated national has
at any time on or since the ``effective date'' had any interest.
(b) This section further authorizes, subject to the terms and
conditions prescribed in paragraphs (c) and (d) of this section, the
execution and recording of any instrument recordable in the United
States Patent Office or the United States Copyright Office which affects
title to or grants any interest in, including licenses under, any
[[Page 31]]
United States letters patent, trademark registration, copyright or
renewal thereof, or application therefor, in which a designated
national, who is such a national solely by reason of his relationship to
an occupied area, has at any time on or since the ``effective date'' had
any interest, or which constitutes or evidences a transaction made by,
or on behalf of, or pursuant to the direction of or with such a
designated national, or if any of the parties to such instrument is such
a designated national.
(c) Any such instrument the recording or the execution and recording
of which is authorized by paragraph (b) of this section shall be
recorded in the United States Patent Office or in the United States
Copyright Office within ninety days of the date of execution thereof or
ninety days from the ``effective date'' whichever is the longer period,
or within such further time as may be allowed by the Secretary of the
Treasury. The person presenting such instrument for recording shall file
therewith in the United States Patent Office or United States Copyright
Office a statement that such instrument is being recorded in accordance
with the provisions of this section.
(d) Any such instrument the recording or the execution and recording
of which is authorized by paragraph (b) of this section may be set aside
by the Secretary of the Treasury at any time within a period of three
years from the date of recording except that the Secretary of the
Treasury may in his discretion reduce such period of time with respect
to any such instrument after the recording thereof, and further, the
patents, trademarks, interests, applications, or rights thereunder so
transferred may be vested by the Secretary of the Treasury.
(e) This section also authorizes the payment from blocked accounts
or otherwise, of fees currently due to the United States Government in
connection with any transactions authorized by this section.
(f) This section further authorizes the payment from blocked
accounts or otherwise of the reasonable and customary fees and charges
currently due to attorneys or representatives within the United States
in connection with the transactions referred to in paragraphs (a), (b),
and (e) of this section, provided that such payment shall not exceed (1)
$100 for the preparation, filing, and prosecution of any letters patent;
or (2) $50 for the preparation, filing and prosecution of any
application for a trademark registration; or (3) $25 for the securing
and registration of any copyright; or (4) $35 for the preparation and
filing of any amendment to a pending application for letters patent or
for a trademark registration.
(g) This section also authorizes the payment of a nominal
consideration not exceeding one dollar, to any party to an instrument
executed or recorded hereunder with respect to the property affected by
such instrument, as long as such instrument is subject to being set
aside in accordance with paragraph (d) of this section.
Sec. 500.528 Certain transactions with respect to blocked foreign patents,
trademarks and copyrights authorized.
(a) The following transactions by any person who is not a designated
national are hereby authorized:
(1) The filing and prosecution of any application for a blocked
foreign patent, trademark or copyright, or for the renewal thereof;
(2) The receipt of any blocked foreign patent, trademark or
copyright;
(3) The filing and prosecution of opposition or infringement
proceedings with respect to any blocked foreign patent, trademark, or
copyright, and the prosecution of a defense to any such proceedings;
(4) The payment of fees currently due to the government of any
foreign country, either directly or through an attorney or
representative, in connection with any of the transactions authorized by
paragraphs (a) (1), (2) and (3) of this section or for the maintenance
of any blocked foreign patent, trademark or copyright; and
(5) The payment of reasonable and customary fees currently due to
attorneys or representatives in any foreign country incurred in
connection with any of the transactions authorized by paragraphs (a)
(1), (2), (3) or (4) of this section.
[[Page 32]]
(b) Payments effected pursuant to the terms of paragraphs (a) (4)
and (5) of this section may not be made from any blocked account.
(c) As used in this section the term blocked foreign patent,
trademark, or copyright shall mean any patent, petty patent, design
patent, trademark or copyright issued by any foreign country, in which a
designated foreign country or national thereof has an interest,
including any patent, petty patent, design patent, trademark, or
copyright issued by a designated foreign country.
[15 FR 9040, Dec. 19, 1950, as amended at 50 FR 27437, July 3, 1985]
Sec. 500.529 Powers of attorney.
(a) No power of attorney, whether granted before or after the
``effective date'' shall be invalid by reason of any of the provisions
of this chapter with respect to any transaction licensed by or pursuant
to the provisions of this chapter.
(b) This section does not authorize any transaction pursuant to a
power of attorney if such transaction is prohibited by Sec. 500.201 and
is not otherwise licensed or authorized by or pursuant to this chapter.
(c) This section does not authorize the creation of any power of
attorney in favor of any person outside of the United States or the
exportation from the United States of any power of attorney.
Sec. 500.530 Exportation of powers of attorney or instructions relating to
certain types of transactions.
(a) The exportation to any foreign country of powers of attorney or
other instruments executed or issued by any person within the United
States who is not a national of a designated foreign country, which are
limited to authorizations or instructions to effect transactions
incident to the following, are hereby authorized upon the condition
prescribed in paragraph (b) of this section:
(1) The representation of the interest of such person in a
decedent's estate which is being administered in any designated foreign
country and the collection of the distributive share of such person in
such estate;
(2) The maintenance, preservation, supervision or management of any
property located in any designated foreign country in which such person
has an interest; and
(3) The conveyance, transfer, release, sale or other disposition of
any property specified in paragraph (a)(1) of this section or any real
estate or tangible personal property if the value thereof does not
exceed the sum of $5,000 or its equivalent in foreign currency.
(b) No instrument which authorizes the conveyance, transfer,
release, sale or other disposition of any property may be exported under
this section unless it contains an express stipulation that such
authority may not be exercised if the value of such property exceeds the
sum of $5,000 or the equivalent thereof in foreign currency.
(c) As used in this section, the term ``tangible personal property''
shall not include cash, bullion, deposits, credits, securities, patents,
trademarks, or copyrights.
Sec. 500.533 Exportations, reexportations, and incidental transactions.
(a) All transactions ordinarily incident to the exportation of
goods, software, or technology (including technical data) from the
United States or reexportation of U.S.-origin goods, software, or
technology from a foreign country to any person in a designated foreign
country or to the government of a designated foreign country, are hereby
authorized, provided that the exportation or reexportation is licensed
or otherwise authorized by the Department of Commerce under the Export
Administration Regulations (15 CFR parts 730-799).
(b) The general license does not authorize the financing of any
transaction from a blocked account.
Note to Sec. 500.533: See note to Sec. 500.586(b).
[65 FR 38165, June 19, 2000]
Sec. 500.535 Exchange of certain securities.
(a) Subject to the limitations and conditions of paragraph (b) of
this section and notwithstanding Sec. 500.202 of this chapter, any
banking institution within the United States is authorized
[[Page 33]]
to engage in the following transactions with respect to securities
listed on a national securities exchange, including the withdrawal of
such securities from blocked accounts:
(1) Exchange of certificates necessitated by reason of changes in
corporate name, par value or capitalization,
(2) Exchanges of temporary for permanent certificates,
(3) Exchanges or deposits under plans of reorganization,
(4) Exchanges under refunding plans, or
(5) Exchanges pursuant to conversion privileges accruing to
securities held.
(b) This section does not authorize the following transactions:
(1) Any exchange of securities unless the new securities and other
proceeds, if any, received are deposited in the blocked account in which
the original securities were held immediately prior to the exchange.
(2) Any exchange of securities registered in the name of any
designated national, unless the new securities received are registered
in the same name in which the securities exchanged were registered prior
to the exchange.
(3) Any exchange of securities issued by a person engaged in the
business of offering, buying, selling, or otherwise dealing, or trading
in securities, or evidences thereof, issued by another person.
(4) Any transaction with respect to any security by an issuer or
other obligor who is a designated national.
[16 FR 767, Jan. 27, 1951]
Sec. 500.536 Certain transactions with respect to merchandise affected by
Sec. 500.204.
(a) With respect to merchandise the importation of which is
prohibited by Sec. 500.204, all Customs transactions are authorized
except the following:
(1) Entry for consumption (including any appraisement entry, any
entry of goods imported in the mails, regardless of value, and any other
informal entries);
(2) Entry for immediate exportation;
(3) Entry for transportation and exportation;
(4) Withdrawal from warehouse;
(5) Transfer or withdrawal from a foreign-trade zone; or
(6) Manipulation or manufacture in a warehouse or in a foreign-trade
zone.
(b) Paragraph (a) of this section is intended solely to allow
certain restricted disposition of merchandise which is imported without
proper authorization. Paragraph (a) does not authorize the purchase or
importation of any merchandise.
(c) The purchase outside the United States for importation into the
United States of merchandise specified in Sec. 500.204 (other than
merchandise to which Sec. 500.204(a)(1) is applicable) and the
importation of such merchandise into the United States (including
transactions listed in paragraph (a) of this section) are authorized if
there is presented to the collector of customs in connection with such
importation the original of an appropriate certificate of origin as
defined in paragraph (d) of this section and provided that the
merchandise was shipped to the United States directly, or on a through
bill of lading, from the country issuing the appropriate certificate of
origin.
(d) A certificate of origin is appropriate for the purposes of this
section only if:
(1) It is a certificate of origin the availability of which for
Foreign Assets Control purposes has been announced in the Federal
Register by the Office of Foreign Assets Control; and
(2) It bears a statement by the issuing agency referring to the
Foreign Assets Control Regulations and stating that the certificate has
been issued under procedures agreed upon with the United States
Government.
[18 FR 2080, Apr. 14, 1953, as amended at 19 FR 5483, Aug. 27, 1954; 20
FR 1379, Mar. 8, 1955; 40 FR 7649, Feb. 21, 1975; 50 FR 5753, Feb. 12,
1985; 54 FR 5232, Feb. 2, 1989]
Sec. 500.549 Proof of origin.
Specific licenses for importation of goods the origin of which is
North Korea, North Viet-Nam, Cambodia, or South Viet-Nam are generally
not issued unless the applicant submits satisfactory documentary proof
of the location of the goods outside North Korea, North Viet-Nam,
Cambodia, or South Viet-Nam prior to the applicable
[[Page 34]]
effective date and of the absence of any interest of North Korea, North
Viet-Nam, Cambodia, or South Viet-Nam in the goods at all times on or
since that date. Since the type of documents which would constitute
satisfactory proof varies depending upon the facts of the particular
case, it is not possible to state in advance the type of documents
required. However, it has been found that affidavits, statements,
invoices, and other documents prepared by manufacturers, processors,
sellers or shippers cannot be relied on and are therefore not by
themselves accepted by the Office of Foreign Assets Control as
satisfactory proof of origin. Independent corroborating documentary
evidence, such as insurance documents, bills of lading, etc., may be
accepted as satisfactory proof.
[41 FR 16555, Apr. 20, 1976]
Sec. 500.550 Transactions related to information and informational materials.
(a) All financial and other transactions directly incident to the
importation or exportation of information or informational materials as
defined in Sec. 500.332 of this part are authorized.
(b) Transactions relating to the dissemination of information or
informational materials are authorized, including remittance of
royalties paid for information or informational materials that are
reproduced, translated, subtitled, or dubbed. This section does not
authorize the remittance of royalties or other payments relating to
works not yet in being, or for marketing and business consulting
services, or artistic or other substantive alteration or enhancements to
information or informational materials, as provided in Sec. 500.206(c).
[54 FR 5232, Feb. 2, 1989, as amended at 60 FR 8934, Feb. 16, 1995]
Sec. 500.551 Reimports.
Specific licenses are issued for reimportation of merchandise
subject to Sec. 500.204 on proof of the export of the identical
merchandise from the United States. Persons planning to export any such
merchandise for exhibition, repair, or for any other purpose should
first ascertain that reimportation will be authorized. Generally,
reimportation is authorized only if Customs Form 4455 was completed at
the time of export.
[40 FR 7650, Feb. 21, 1975]
Sec. 500.552 Research samples.
Specific licenses are issued for importation of commodities subject
to Sec. 500.204 for bona fide research purposes in sample quantities
only.
[40 FR 7650, Feb. 21, 1975]
Sec. 500.553 Prior contractual commitments not a basis for licensing.
Specific licenses are not issued on the basis that an unlicensed
firm commitment or payment has been made in connection with a
transaction prohibited by Sec. 500.204. Contractual commitments to
engage in transactions subject to the prohibitions in Sec. 500.204
should not be made, unless the contract specifies that the transaction
is authorized by a general license or that it is subject to the issuance
of a specific Foreign Assets Control license.
[40 FR 7650, Feb. 21, 1975]
Sec. 500.554 Gifts of North Korean, North Vietnamese, Cambodian, or South
Vietnamese origin.
(a) Except as stated in paragraph (b) of this section and in Sec.
500.550, specific licenses are not issued for the importation of North
Korean, North Vietnamese, Cambodian, or South Vietnamese origin goods
sent as gifts to persons in the United States or acquired abroad as
gifts by persons entering the United States. However, licenses are
issued, upon request, for the return of such goods to the donors in
countries other than North Korea, North Viet-Nam, Cambodia, or South
Viet-Nam.
(b) Specific licenses are issued for the importation directly from
North Korea, North Viet-Nam, Cambodia, or South Viet-Nam:
(1) Of goods which are claimed by the importer to have been sent as
a bona fide gift and
(2) Of goods which are claimed to have been acquired in North Korea,
North Viet-Nam, Cambodia, or South Viet-Nam as a bona fide gift, subject
to the conditions that:
[[Page 35]]
(i) The goods are of small value, and
(ii) There is no reason to believe that there is, or has been since
the applicable effective date, any direct or indirect financial or
commercial benefit to North Korea, North Viet-Nam, Cambodia, or South
Viet-Nam or nationals thereof from the importation.
[41 FR 16555, Apr. 20, 1976]
Sec. 500.556 Joint bank accounts.
Specific licenses are issued unblocking a portion of or all of a
blocked joint bank account where a non-blocked applicant claims
beneficial ownership, as follows:
(a) Joint bank account, without survivorship provisions. Specific
licenses are issued unblocking only that amount with respect to which
the applicant is able to prove beneficial ownership by documentary
evidence independent of his assertions of interest.
(b) Joint bank account, with survivorship provision. Specific
licenses are issued unblocking an amount equivalent to that portion of
the total amount to which the applicant would be entitled if the total
were divided evenly among the persons in whose names the account is held
(e.g. 50 percent where there are two names; 33\1/3\ percent where there
are three names). Such licenses are issued on the basis of applicant's
assertions of beneficial ownership interest without the requirement of
independent evidence.
[40 FR 7650, Feb. 21, 1975]
Sec. 500.557 Proceeds of insurance policies.
(a) Specific licenses are issued authorizing payment of the proceeds
of blocked life insurance policies issued on the life of a North Korean,
North Vietnamese, Cambodian, or South Vietnamese national, who died in
one of those countries after the applicable effective date to certain
beneficiaries licensed as unblocked nationals pursuant to Sec. 500.505,
as follows:
(1) The applicant is a permanent resident of the United States or
the authorized trade territory and is not a specially designated
national; and
(2) No interest on the part of a designated national not licensed as
an unblocked national exists in that portion of the funds to which the
applicant is entitled.
(b) Applications for specific licenses under this section must
include all of the following information:
(1) Proof of permanent residence in the United States or the
authorized trade territory, to be established by the submission of
documentation issued by relevant government authorities that must
include at least two of the following documents:
(i) Passport;
(ii) Voter registration card;
(iii) Permanent resident alien card; or
(iv) National identity card.
Other documents tending to show residency, such as income tax returns,
may also be submitted in support of government documentation, but will
not suffice in and of themselves; and
(2) Proof of entitlement under the insurance policy to be
established by a copy of the policy and an affidavit from an appropriate
officer of a recognized insurance company acknowledging the legitimacy
of the beneficiary's claim and the amount of the payment.
(c) Any document provided pursuant to this section that is not
written in the English language must be accompanied by a translation
into English, as well as a certification by the translator that he is
not an interested party to the proceeding, is qualified to make the
translation, and has made an accurate translation of the document in
question.
[54 FR 5232, Feb. 2, 1989]
Sec. 500.558 Accounts of blocked partnerships.
Specific licenses are issued unblocking partnerships established
under the laws of North Korea, North Viet-Nam, Cambodia, or South Viet-
Nam, as follows:
(a) Where all of the general partners and limited partners, if any,
have emigrated from North Korea, North Viet-Nam, Cambodia, or South
Viet-Nam and have established residence in the United States or in a
country in the authorized trade territory, specific licenses are issued
unblocking the assets of the partnership after deducting the total debt
due creditors wherever located.
[[Page 36]]
(b) Where one or more partners, whether general or limited, is in
North Korea, North Viet-Nam, Cambodia, or South Viet-Nam (or elsewhere
but still blocked), specific licenses are issued unblocking only the net
pro rata shares of those partners who are resident in the United States
or in a country in the authorized trade territory after deducting the
total debt due creditors wherever located.
(c) The issuance of licensees is conditioned on the applicant
furnishing the following information:
(1) Detailed information as to the status of all debts and other
obligations of the blocked partnership, specifying the citizenship and
residence of each creditor as of the applicable effective date, and as
of the date of the application;
(2) The current status of the blocked partnership e.g., liquidated,
nationalized, inoperative, etc.;
(3) A detailed description of all the partnership's assets, wherever
located; and,
(4) A list of all partners, indicating whether they are general,
limited, etc. and giving their citizenship and residence as of the
applicable effective date and as of the date of filing of the
application.
[40 FR 7651, Feb. 21, 1975, as amended at 41 FR 16555, Apr. 20, 1976; 45
FR 7225, Jan. 31, 1980]
Sec. 500.559 Accounts of North Korean, North Vietnamese, Cambodian or South
Vietnamese sole proprietorships.
Specific licenses are issued unblocking sole proprietorships
established under the laws of North Korea, North Viet-Nam, Cambodia, or
South Viet-Nam if the proprietor has emigrated from those countries and
established residence in the United States or a country in the
authorized trade territory. Such licenses do not unblock any
indebtedness of the proprietorship due to persons in North Korea, North
Viet-Nam, Cambodia, or South Viet-Nam.
[41 FR 16556, Apr. 20, 1976, as amended at 45 FR 7225, Jan. 31, 1980]
Sec. 500.560 Bank accounts of official representatives of foreign governments
in North Korea, North Viet-Nam, Cambodia, or South Viet-Nam.
Specific licenses are issued authorizing payments from accounts of
official representatives of foreign governments in North Korea, North
Viet-Nam, Cambodia, or South Viet-Nam for transactions which are not
inconsistent with the purposes of any of the regulations in this
chapter.
[41 FR 16556, Apr. 20, 1976, as amended at 45 FR 7225, Jan. 31, 1980]
Sec. 500.561 Transfers of abandoned property under State laws.
(a) Except as stated in paragraphs (b) and (c) of this section,
specific licenses are not issued authorizing the transfer of blocked
property to State agencies under State laws governing abandoned
property.
(b) Specific licenses are issued authorizing the transfer of blocked
property, pursuant to the laws of the State governing abandoned
property, to the appropriate State agency. Provided, That the State's
laws are custodial in nature, i.e., there is no permanent transfer of
beneficial interest to the State. Licenses require the property to be
held by the State in accounts which are identified as blocked under the
regulations. A separate index of these blocked assets is required to be
maintained by the State agency. The requirements of this section for
identification and separate indexing of blocked assets apply to all
blocked assets held by State agencies and any licenses issued prior to
the effective date of this section hereby are amended by the
incorporation of such requirements.
(c) To be eligible for a specific license under this section, the
state agency must demonstrate that it has the statutory authority under
appropriate state law to comply with the requirements of Sec. 500.205.
Such a showing shall include an opinion of the State Attorney General
that such statutory authority exists.
[44 FR 11767, Mar. 2, 1979, as amended at 50 FR 27437, July 3, 1985]
[[Page 37]]
Sec. 500.562 [Reserved]
Sec. 500.563 Transactions incident to travel to and within North Korea.
(a) All transactions of persons subject to U.S. jurisdiction,
including travel service providers, ordinarily incident to travel to,
from, and within North Korea and to maintenance within North Korea are
authorized. This authorization extends to transactions with North Korean
carriers and those involving group tours, payment of living expenses,
the acquisition of goods in North Korea for personal use, and normal
banking transactions involving currency drafts, charge, debit or credit
cards, traveler's checks, or other financial instruments negotiated
incident to personal travel.
(b) The purchase of merchandise in North Korea by persons subject to
U.S. jurisdiction, and importation as accompanied baggage, is limited to
goods with a foreign market value not to exceed $100 per person for
personal use only. Such merchandise may not be resold. This
authorization may be used only once in every six consecutive months. As
provided in Sec. 500.206 of this part, information and informational
materials are exempt from this restriction.
(c) This section does not authorize any debit to a blocked account.
[60 FR 8935, Feb. 16, 1995]
Sec. 500.564 [Reserved]
Sec. 500.565 Family remittances to nationals of Vietnam and Cambodia.
(a) The remittances specified in this section are authorized to be
made to any close relative of the remitter or of the remitter's spouse,
provided that the relative is a national of Vietnam or Cambodia, is a
resident of Vietnam, Cambodia, or a country to which private remittances
to nationals are not generally prohibited pursuant to this chapter, and
is not a specially designated national.
(b) Remittances made pursuant to this section may be made only as
follows:
(1) For the support of the payee, or for the support of the payee
and members of his household, in amounts not exceeding $300 in any
consecutive 3-month period to any one payee or to any household; and
(2) For the purpose of enabling the payee to emigrate from Vietnam
or Cambodia, in an amount not exceeding $750, to be made only once to
any one payee, provided that the payee is a resident of and within
Vietnam or Cambodia.
(c) The term close relative used with respect to any person means
spouse, child, grandchild, parent, grandparent, uncle, aunt, brother,
sister, nephew, niece or spouse, widow, or widower of any of the
foregoing.
(d) The term member of a household used with respect to any person
means a close relative sharing a common dwelling with such person.
(e) This section does not authorize remittances from blocked
accounts.
(f) Specific licenses may be issued authorizing a U.S. financial
institution to establish direct correspondent banking relations with a
Vietnamese or Cambodian bank or banks for the sole purpose of
facilitating the remittance of funds authorized by this section.
[56 FR 20349, May 3, 1991]
Sec. 500.566 Certain transactions authorized on behalf of North Korean
nationals incident to their travel and maintenance expenses.
(a) Except as provided in paragraph (b) of this section, the
following transactions are authorized by or on behalf of a national of
North Korea who enters the United States on a visa issued by the
Department of State:
(1) All transactions ordinarily incident to travel to, from, and
within the United States are authorized, including the importation into
the United States of accompanied baggage for personal use;
(2) All transactions ordinarily incident to travel and maintenance
within the United States, including payment of living expenses and the
acquisition of goods in the United States for personal use; and
(3) Normal banking transactions involving foreign currency drafts,
traveler's checks, or other instruments negotiated incident to personal
travel in the United States,
[[Page 38]]
(b) This section does not authorize any debit to a blocked account.
(Sec. 5, 40 Stat. 415, as amended, 50 U.S.C. App. 5(b); 75 Stat. 445, 22
U.S.C. 2370(a); Proc. 3447, 27 FR 1065, 3 CFR, 1959-1963 Comp.; E.O.
9193, 7 FR 5205, 3 CFR, Cum. Supp., p. 1174; E.O. 9989, 13 FR 4891, 3
CFR, 1943-1948 Comp., p. 748)
[49 FR 24994, June 19, 1984, as amended at 55 FR 31179, Aug. 1, 1990; 58
FR 63084, Nov. 30, 1993; 60 FR 8935, Feb. 16, 1995]
Sec. 500.567 U.S. assets of certain designated country corporations.
(a) Specific licenses may be issued unblocking the net pro rata
shares of individuals who are permanent residents of the United States
or the authorized trade territory, and who are not specially designated
nationals, in U.S.-located assets of corporations formed under the laws
of countries designated in this part, after deducting the total debt due
creditors for claims that accrued prior to the effectiveness date, in
cases where all of the following conditions are met:
(1) The assets were owned by, or accrued to, the corporation before
the effective date of the regulations;
(2) The corporation did not carry on substantial business in the
designated country under the management or control of the applicant(s)
after the effective date;
(3) In cases where the blocked assets purportedly have been
nationalized by the designated country, compensation has not been paid
to the applicant(s).
(b) Applications for specific licenses under this section must
include all of the following information:
(1) A detailed description of the corporation, its by-laws,
activities, distribution of shares, and its current status;
(2) Proof of the permanent residence of the applicant(s) in the
United States or the authorized trade territory.
(3) A list of all officers, directors and shareholders of the
corporation, giving the citizenship and the residence of each person as
of the date of application;
(4) A detailed description of all of the assets of the corporation,
wherever located, including a statement of all known encumbrances or
claims against them; and
(5) Detailed information regarding the status of all debts and other
obligations of the corporation, specifying the citizenship and residence
of each creditor on the effective date and on the date of the
application.
[50 FR 33720, Aug. 21, 1985]
Sec. 500.568 U.S. assets of blocked decedents.
(a) Specific licenses may be issued unblocking the net pro rata
shares of certain heirs of designated nationals in U.S.-located estate
assets, after deducting the total debt due creditors for claims that
accrued prior to the effective date, in cases where all of the following
conditions are met:
(1) The applicant is a permanent resident of the United States or
the authorized trade territory and is not a specially designated
national; and
(2) No interest on the part of a designated national not licensed as
an unblocked national pursuant to Sec. 500.505 exists in that portion
of the assets to which the applicant is entitled.
(b) Applications for specific licenses under this section must
include all of the following information:
(1) Proof of permanent residence in the United States or the
authorized trade territory, to be established by the submission of
documentation issued by relevant government authorities that must
include at least two of the following documents:
(i) Passport;
(ii) Voter registration card;
(iii) Permanent resident alien card; or
(iv) National identity card. Other documents tending to show
residency, such as income tax returns, may also be submitted in support
of government documentation, but will not suffice in and of themselves;
(2) Proof of death of the designated national to be established by a
death certificate;
(3) Proof of heirship, to be established by a copy of the decedent's
duly executed will certified by a probate court, a court decree
determining the heirs, or, failing the availability of such documents,
copies of certificates establishing the relationship of the heir to the
deceased, e.g., birth or marriage certificates; and
[[Page 39]]
(4) A description of the assets involved, including interest due on
blocked funds since April 1, 1979, the name and address of the
institution in which the assets are held, the account or safe deposit
box number, the name in which the assets are held and a statement of all
known encumbrances or claims against them.
(c) Any document provided pursuant to this section that is not
written in the English language must be accompanied by a translation
into English, as well as a certification by the translator that he is
not an interested party to the proceeding, is qualified to make the
translation, and has made an accurate translation of the document in
question.
[54 FR 5232, Feb. 2, 1989]
Sec. 500.569 [Reserved]
Sec. 500.570 Cambodian property unblocked.
All transactions otherwise prohibited by this part which involve
property in which Cambodia or a national thereof has an interest, other
than property blocked in the name of the Exchange Support Fund for the
Khmer Republic, are authorized.
[59 FR 60559, Nov. 25, 1994]
Sec. 500.571 Transactions related to telecommunications authorized.
All transactions of U.S. common carriers incident to the receipt or
transmission of telecommunications involving North Korea are authorized.
Note: Exports or reexports to North Korea of goods and technical
data, or of the direct products of technical data (regardless of U.S.
content), not prohibited by this part may require authorization from the
U.S. Department of Commerce pursuant to the Export Administration
Regulations, 15 CFR parts 768-799.
[57 FR 58986, Dec. 14, 1992, as amended at 60 FR 8935, Feb. 16, 1995]
Sec. 500.572 Humanitarian projects authorized.
(a) All transactions by non-governmental organizations incident to
carrying out humanitarian projects in Vietnam are authorized. For
purposes of this section, the term ``non-governmental organization''
shall mean any private voluntary organization accorded tax exempt status
under Sec. 501(c)(3) of the Internal Revenue Code, as well as any other
organization engaged in voluntary charitable assistance activities that
receives funding from private sources, including but not limited to
accredited degree-granting institutes of education, private foundations
and research institutions.
(b) The non-governmental organization carrying out humanitarian
projects in Vietnam pursuant to this authorization shall file an initial
report within 10 business days after the formal commencement of U.S.
activities on the project with the Office of Foreign Assets Control,
Compliance Division, U.S. Department of the Treasury, 1500 Pennsylvania
Avenue NW.--Annex, Washington, DC 20220, stating:
(1) The name, address, and telephone number of the non-governmental
organization, and the officer charged with supervision of the project in
Vietnam; and
(2) The nature, scope, purpose, and location of the project in
Vietnam.
[57 FR 20766, May 15, 1992]
Sec. 500.573 Certain donations of funds and goods to meet basic human needs
authorized.
(a) The donation of funds for the purpose of contributing to the
provision of humanitarian assistance to victims of natural disasters in
North Korea is authorized, provided that such donations may only be made
through the United Nations, related UN programs and specialized
agencies, the American Red Cross and the International Committee of the
Red Cross.
(b) With respect to transactions not within the scope of the general
license contained in Sec. 500.533 of this part, all transactions
incident to the donation to North Korea of goods to meet basic human
needs are authorized. For purposes of this section, goods to meet basic
human needs shall be defined by reference to the Humanitarian License
Procedure set forth in 15 CFR 773.5 (c) and (d) and supplement no. 7 to
part 773 of the Export Administration Regulations.
Note: Exports from the United States to North Korea or reexports to
North Korea of
[[Page 40]]
U.S.-origin goods, or foreign goods containing U.S.-origin content or
produced from U.S.-origin technical data, to meet basic human needs in
North Korea may require authorization from the U.S. Department of
Commerce.
[61 FR 9344, Mar. 8, 1996]
Sec. 500.574 Executory contracts and related transactions authorized.
(a) Executory contracts. (1) Persons subject to U.S. jurisdiction
are authorized to enter into executory contracts with Vietnam or
Vietnamese nationals, or executory contracts in which Vietnam or a
Vietnamese national has an interest, the performance of which is
contingent upon the lifting or modification of the embargo on Vietnam to
permit such performance.
(2) Within 10 business days of signing an executory contract
authorized pursuant to paragraph (a) of this section, the person subject
to U.S. jurisdiction must file a copy of the contract with the Office of
Foreign Assets Control, Compliance Programs Division, 1500 Pennsylvania
Avenue, NW.--Annex 2131, Washington, DC 20220, referencing the fact that
the contract was entered into pursuant to 31 CFR 500.574(a).
(3) Specific licenses will be issued on a case-by-case basis to
authorize financial transactions such as the payment of deposits,
earnest money, signing bonuses, and administrative and registration fees
incident to the signature of specific executory contracts authorized
pursuant to paragraph (a)(1) of this section. The number of the
pertinent license must be referenced in all funds transfers and other
banking transactions through banks subject to U.S. jurisdiction made in
connection with the contract.
(b) Preparatory transactions. (1) Specific licenses will be issued
authorizing commercial and financial transactions necessary to obtaining
and preparing to perform executory contracts authorized pursuant to
paragraph (a)(1) of this section. These commercial and financial
transactions include:
(i) Opening offices in Vietnam;
(ii) Hiring staff;
(iii) Writing and designing plans;
(iv) Carrying out preliminary feasibility studies and engineering
and technical surveys; and
(v) Import, export, and service transactions incident to the
foregoing.
(2) Specific licenses issued pursuant to paragraph (b)(1) of this
section will, to the extent feasible, encompass commercial and financial
transactions incident to the licensed commercial purpose or activity.
Note: Exports or reexports to Vietnam of goods and technical data,
or of the direct products of technical data (regardless of U.S.
content), in connection with activities licensed by FAC may require
authorization from the U.S. Department of Commerce pursuant to the
Export Administration Regulations, 15 CFR parts 768-799.
(3) The number of the pertinent license must be referenced in all
funds transfers and other banking transactions through banks subject to
U.S. jurisdiction in connection with preparatory transactions under
paragraphs (b) (1) and (2) of this section.
[57 FR 62230, Dec. 30, 1992]
Sec. 500.575 Certain services to Vietnamese nationals authorized.
(a) Specific licenses may be issued on a case-by-case basis for the
provision in the United States or a third country of business
orientation or training services to Vietnamese nationals. The
orientation or training program may pertain only to industrial or
commercial processes, or to specific equipment and related technical
data both of which are eligible for export under a general license to
Country Group Y, as set forth in Supplement No. 1 to part 770 of the
Export Administration Regulations, 15 CFR parts 768-799. Licenses issued
pursuant to this section will not authorize Vietnamese participation in
orientation and training programs with respect to specific equipment and
related technical data that may not be exported under a general license
to Country Group Y pursuant to the Export Administration Regulations.
Training programs may involve instruction on the maintenance or
operation of a particular product, but may not involve instruction in a
product's design or manufacture.
Note: The transfer of mass-market software and certain technical
data eligible for export to most destinations under General License GTDU
to Vietnamese nationals may require additional authorization from the
[[Page 41]]
U.S. Department of Commerce pursuant to the Export Administration
Regulations.
(b) Transactions directly incident to the travel and maintenance
expenses of the Vietnamese nationals for purposes of orientation or
training programs are authorized pursuant to Sec. 500.566. Payment of
salaries or other fees to Vietnamese nationals participating in
orientation or training programs is not authorized.
(c) Applications for specific licenses should be submitted by the
orientation or training program sponsor and should include a full
description of the program to be offered, including the participants,
the identity of their employers, and the capacities in which the
participants are employed.
[58 FR 63084, Nov. 30, 1993]
Sec. 500.576 Authorization of transactions concerning certain development
projects in Vietnam.
(a) All transactions by persons subject to U.S. jurisdiction in
connection with participation in development projects in Vietnam
formally proposed or approved for execution, funding or sponsorship by
the international institutions listed in appendix A to this part
(``Qualified Projects'') are authorized. For purposes of this section,
Qualified Projects include investment projects, structural adjustment
lending, sector adjustment lending, International Monetary Fund balance-
of-payments support, and general development assistance including
grants, technical assistance, and loans.
(b) Persons subject to U.S. jurisdiction may provide both goods and
services to any party contracting to participate in a Qualified Project
pursuant to the authorization contained in this section.
(1) Services may include financial, legal, consulting, insurance,
shipping and other services.
(2) Persons subject to U.S jurisdiction may participate in Qualified
Projects as suppliers, contractors, or subcontractors, and through joint
ventures with third-country nationals and Vietnamese nationals.
(3) Persons subject to U.S. jurisdiction may finance, or guarantee
the performance of, activities of U.S. participants in a Qualified
Project; co-financing of or lending to the Qualified Project itself by a
person subject to U.S. jurisdiction may be authorized by specific
license pursuant to Sec. 500.801.
Illustrative examples of transactions covered by this section are set
forth in Sec. 500.413.
(c) Except as otherwise authorized, persons subject to U.S.
jurisdiction may not participate in development projects in Vietnam that
are bilaterally funded and administered, or in projects or feasibility
studies prior to formal proposal or approval by a qualified
international institution for its involvement in the project or study.
If a qualified international institution formally proposes but
thereafter rejects, terminates, or abandons a project, the project shall
no longer constitute a Qualified Project for purposes of this section.
Except as otherwise specifically authorized pursuant to this part,
persons subject to U.S. jurisdiction may not enter into any new
commitments with respect to the project after the date of such
rejection, termination, or abandonment. In addition, this section does
not authorize:
(1) The importation of Vietnamese-origin goods into the United
States, except as required to honor service or warranty contracts
associated with Qualified Projects;
(2) Offshore transactions of persons subject to U.S. jurisdiction
involving the sale of Vietnamese-origin goods between Vietnam and third
countries, or among third countries;
(3) Flights into or out of Vietnam by aircraft owned or controlled
by persons subject to U.S. jurisdiction, except when such persons
transport, on aircraft they own, only passengers or cargo associated
with a Qualified Project in which such persons are participating
pursuant to this section;
(4) The use in Vietnam of credit cards issued by a U.S. banking
institution; or
(5) A debit to a blocked account.
Example: A Vietnamese highway project feasibility study financed by
a third-country development agency is not a Qualified Project for
purposes of this section. However, the feasibility study would be a
Qualified Project, notwithstanding the bilateral funding, if the
International Development Association had formally proposed the highway
project as one under consideration for
[[Page 42]]
funding in its Monthly Operational Summary of World Bank and IDA
Proposed Projects.
(d) Within 10 business days after entering into an agreement for
goods, services, financing, investment, or other participation in or
related to a Qualified Project, the person(s) subject to U.S.
jurisdiction entering into the agreement must register with the Office
of Foreign Assets Control, Compliance Division, U.S. Department of the
Treasury, 1500 Pennsylvania Avenue, NW.--Annex, Washington, DC 20220.
The registration shall reference the fact that the agreement was entered
into pursuant to 31 CFR 500.576(a), and shall provide:
(1) The name, address, telephone and facsimile numbers, and
nationality of the person(s) subject to U.S. jurisdiction;
(2) If the reporting party is not an individual, the name, address,
telephone and facsimile numbers of the individual to contact for further
information,
(3) The name of the international institution listed in appendix A
formally proposing, approving, executing, funding, or sponsoring the
project;
(4) The name and a brief description of the project in Vietnam (with
any contract, project, request for bid, or other identifying number);
(5) A brief description of the activity covered by the agreement,
and the contract value; and
(6) If the reporting party is a subcontractor, the prime
contractor's name, address, and nationality, and those of all
intermediate subcontractors.
Registration is not required of agencies of the Federal Government
participating in Qualified Projects.
(e) Upon registration meeting the requirements of paragraph (d) of
this section, the Office of Foreign Assets Control will assign a
registration number to the contract involved. This number should be
referenced in all funds transfers and other banking transactions that
take place through banks subject to U.S. jurisdiction, and in all U.S.
export documents, in connection with the Qualified Project in Vietnam in
order to avoid the blocking of such funds and to facilitate export
transactions.
(f) Annual reports must be filed with the Office of Foreign Assets
Control on the anniversary of the issuance of a contract registration
number, briefly describing the status of the project and any material
changes in the information originally provided.
Note to Sec. 500.576: Exports or reexports to Vietnam of goods and
technical data, or of the direct products of technical data (regardless
of U.S. content), in connection with activities licensed by FAC may
require authorization from the U.S. Department of Commerce pursuant to
the Export Administration Regulations, 15 CFR parts 768-799.
[58 FR 68531, Dec. 28, 1993]
Sec. 500.577 Authorization of bank transactions with respect to Vietnam by
certain international organizations.
All transactions by banking institutions subject to U.S.
jurisdiction incidental to the processing of transactions of the
international institutions identified in appendix A with reference to
Vietnam are authorized.
Example: A transfer to Vietnam or a Vietnamese national of funds
from the U.S. account of a qualified international institution listed in
appendix A to this part, for a program, rent or salary payment, is not
blocked under this part.
[58 FR 68532, Dec. 28, 1993]
Sec. 500.578 Vietnamese property unblocked.
All transactions otherwise prohibited by this part which involve
property in which a designated national of Vietnam has an interest are
authorized.
[60 FR 12886, Mar. 9, 1995]
Sec. 500.579 Authorization for release of certain blocked transfers by
banking institutions subject to U.S. jurisdiction.
(a) Banking institutions subject to the jurisdiction of the United
States are authorized to unblock and return to the remitting party funds
that were blocked pursuant to this part because of an interest of
Vietnam or a Vietnamese national and that came into their possession or
control by wire transfer or check remittance received after December 31,
1989, provided that no funds are released to the Government of Vietnam
or any person in Vietnam.
(b) Specific licenses may be issued authorizing the return to the
remitting
[[Page 43]]
party of funds that were blocked by banking institutions subject to the
jurisdiction of the United States pursuant to this part because of an
interest of North Korea or a national thereof and that came into the
banking institution's possession or control by wire transfer or check
remittance, provided that no funds are released to the Government of
North Korea, any entity controlled by the Government of North Korea, or
any person located in, controlled from, or organized under the laws of
North Korea.
[59 FR 26602, May 23, 1994, as amended at 60 FR 8935, Feb. 16, 1995]
Sec. 500.580 Authorization of U.S. dollar clearing transactions involving
North Korea.
Banking institutions organized under the laws of or located in the
United States are authorized to process the transfer of funds in which
North Korea or a national thereof has an interest. Persons subject to
U.S. jurisdiction who are originators or ultimate beneficiaries of funds
transfers, however, including U.S. banking institutions that are
themselves originators or beneficiaries, may not initiate or receive
such transfers if the underlying transactions to which they relate are
prohibited pursuant to this part.
[60 FR 8935, Feb. 16, 1995]
Sec. 500.581 Financial transactions related to diplomatic missions
authorized.
All financial transactions related to activities of North Korean
diplomatic missions in the United States and U.S. diplomatic missions in
North Korea are authorized, with the exception of transactions involving
the North Korean mission to the United Nations in New York, which are
subject to approval by specific license.
[60 FR 8935, Feb. 16, 1995]
Sec. 500.582 Importation of North Korean-origin magnesite and magnesia.
Specific licenses may be issued authorizing the importation into the
United States of North Korean-origin magnesite or magnesia.
[60 FR 8935, Feb. 16, 1995]
Sec. 500.583 News organization offices.
(a) Specific licenses may be issued authorizing all transactions
necessary for the establishment and operation of news bureaus in North
Korea by U.S. organizations whose primary purpose is the gathering and
dissemination of news to the general public.
(b) Transactions that will be authorized include but are not limited
to those incident to the following:
(1) Leasing office space and securing related goods and services;
(2) Hiring North Korean nationals to serve as support staff;
(3) Purchasing North Korean-origin goods for use in the operation of
the office; and
(4) Paying fees related to the operation of the office in North
Korea.
(c) Specific licenses may be issued authorizing transactions
necessary for the establishment and operation of news bureaus in the
United States by North Korean organizations whose primary purpose is the
gathering and dissemination of news to the general public.
(d) The number assigned to a specific license issued pursuant to
this section should be referenced in all import documents, and in all
funds transfers and other banking transactions through banking
institutions organized or located in the United States, in connection
with the licensed transactions to avoid the blocking of goods imported
from North Korea and the interruption of the financial transactions with
North Korea.
[60 FR 8935, Feb. 16, 1995]
Sec. 500.584 Energy sector projects in North Korea.
Specific licenses may be issued to permit persons subject to U.S.
jurisdiction to participate in certain energy sector projects in North
Korea in connection with that country's transition to light-water
reactor (``LWR'') power plants. Transactions that may be licensed
include those related to LWR power plant design, site preparation,
excavation, delivery of essential nonnuclear components including
turbines and generators, building construction, the disposition of
spentnuclear fuel, and the provision of heavy oil to North
[[Page 44]]
Korea for heating and electricity generation pending completion of the
first LWR unit.
[60 FR 8935, Feb. 16, 1995]
Sec. 500.585 Payments for services rendered by North Korea to United States \
aircraft authorized.
Payments to North Korea of charges for services rendered by the
Government of North Korea in connection with the overflight of North
Korea or emergency landing in North Korea by aircraft owned or
controlled by a person subject to the jurisdiction of the United States
or registered in the United States are authorized.
[62 FR 17548, Apr. 10, 1997]
Sec. 500.586 Authorization of new transactions concerning certain North
Korean property.
(a) Subject to the limitations in paragraph (b) of this section,
transactions in which North Korea or a national thereof has an interest
are authorized where:
(1) The property comes within the jurisdiction of the United States
or into the control or possession of a person subject to the
jurisdiction of the United States on or after June 19, 2000; or
(2) The interest in the property of North Korea or a North Korean
national arises on or after June 19, 2000.
(b)(1) Unless otherwise authorized by the Office of Foreign Assets
Control, all property and interests in property of North Korea or its
nationals that were blocked pursuant to subpart B of this part as of
June 16, 2000, remain blocked and subject to the prohibitions and
requirements of this part;
(2)(i) The importation of products into the United States from North
Korea requires approval from the Office of Foreign Assets Control. The
person seeking to import products into the United States must provide
information relevant to the determination whether the product was
produced by
(A) A foreign person whose actions triggered import sanctions under
sections 73 and 74 of the Arms Export Control Act;
(B) An activity of the government of North Korea relating to the
development or production of any missile equipment or technology; or
(C) An activity of the government of North Korea affecting the
development or production of electronics, space systems or equipment,
and military aircraft.
(ii) Those seeking to import products from North Korea into the
United States must submit all available information satisfying the
requirements of paragraph (b)(2)(i) of this section; the name, address,
telephone number, facsimile number, and e-mail address of the importer;
a description of the product to be imported, including quantity and
cost; the name and address of the producer of the product; the name of
the location where the product was produced; and the name and address of
the North Korean exporter. Requests for import review should be
submitted by mail to North Korea Unit, Office of Foreign Assets Control,
U.S. Department of the Treasury, 1500 Pennsylvania Avenue, NW, Annex,
Washington, DC 20220. Upon review of the submitted information, the
Office of Foreign Assets Control will issue a letter indicating the
results of the review to the person seeking to import the product.
(3) Except as authorized by Sec. 500.580 or unless otherwise
authorized by the Office of Foreign Assets Control, persons subject to
the jurisdiction of the United States are prohibited from engaging in
any transfer from the government of North Korea:
(i) Constituting a donation to a person subject to the jurisdiction
of the United States; or
(ii) With respect to which a person subject to the jurisdiction of
the United States knows (including knowledge based on advice from an
agent of the United States Government), or has reasonable cause to
believe, that the transfer poses a risk of furthering terrorist acts in
the United States.
(4) This section does not affect any open enforcement action
initiated by the U.S. government prior to June 19, 2000 or any seizure,
forfeiture, penalty, or liquidated damages case that is considered
closed in accordance with U.S. Customs or other agency regulations. This
section also does not authorize the importation into the United States
[[Page 45]]
of goods that are under seizure or detention by U.S. Customs officials
pursuant to Customs laws or other applicable provision of law, until any
applicable penalties, charges, duties or other conditions are satisfied.
This section does not authorize importation into the United States of
goods for which forfeiture proceedings have been commenced or of goods
that have been forfeited to the U.S. Government, other than though U.S.
Customs disposition by selling at auction.
(5)(i) Effective May 8, 2006, United States persons are prohibited
from owning, leasing, operating, or insuring any vessel flagged by North
Korea.
(ii) Effective February 2, 2007, United States persons are
prohibited from registering vessels in North Korea, or from otherwise
obtaining authorization for a vessel to fly the North Korean flag.
(iii) For purposes of this section, the term United States person
means any United States citizen, permanent resident alien, entity
organized under the laws of the United States or any jurisdiction within
the United States (including foreign branches), or any person in the
United States.
Note to Sec. 500.586: The exportation and reexportation of items
may be subject to license application requirements under regulations
administered by other federal agencies (see e.g., the Export
Administration Regulations administered by the Department of Commerce).
It should also be noted that the shipment of strategic goods from a
foreign country to North Korea by persons subject to the jurisdiction of
the United States remains prohibited by 31 CFR part 505. The application
requirements for a specific license relating to such goods are found in
31 CFR 501.801.
[65 FR 38165, June 19, 2000, as amended at 71 FR 17346, Apr. 6, 2006; 72
FR 4961, Feb. 2, 2007]
Subpart F_Reports
Sec. 500.601 Records and reports.
For provisions relating to records and reports, see subpart C of
part 501 of this chapter.
[62 FR 45101, Aug. 25, 1997]
Sec. 500.602 Reporting of claims of U.S. nationals against North Korea.
(a) Requirement for reports. Reports are required to be filed on or
before March 9, 1998, in the manner prescribed in this section, with
respect to all outstanding claims held by United States nationals
against the Government of North Korea or any North Korean government
entity.
(b) Who must report. A report must be submitted by each U.S.
national having a claim outstanding against the Government of North
Korea or any North Korean government entity. Reports should be submitted
only by persons who were U.S. citizens or entities organized under the
laws of a U.S. jurisdiction on the date of the loss.
(c) How to register. U.S. nationals filing reports of claims must
submit a letter containing the information required by paragraph (f) of
this section. The letter must be sent to the Blocked Assets Division,
Office of Foreign Assets Control, Department of the Treasury, 1500
Pennsylvania Ave., NW.--Annex, Washington, DC 20220, to arrive by March
9, 1998. A copy of the submission should be kept by the claimant.
(d) Certification. Every report shall bear the signature of the
claimant or a person authorized by the claimant to sign the report. The
signature will certify that, to the best of the reporter's knowledge,
the statements set forth in the report, including any papers attached to
or filed with the report, are true and accurate, and that all material
facts in connection with the report have been set forth.
(e) Confidentiality of reports. Reports submitted pursuant to this
section are regarded as privileged and confidential.
(f) Contents of report. The report must contain the following
information (with responses numbered to correspond with the numbers used
below):
(1) Identification of claimant.
(i) Claimant's Legal Name.
(ii) Claimant's Address.
(iii) Telephone number of individual to contact regarding the
report.
(iv) If claimant is a naturalized citizen of the United States,
state the place and date of naturalization.
(v) If claimant is a corporation or business, state the place of
incorporation and principal place of business.
(2) Information concerning claim.
(i) Amount of loss in U.S. dollars (indicate exchange or interest
rates and
[[Page 46]]
relevant dates utilized for any currency translation or interest
calculation).
(ii) Describe the circumstances of the loss. Include the date of the
loss and a description of the property, business, obligation, injury or
other damage which is the subject of the claim.
(g) Definition of United States national. For purposes of this
section, the term United States national or U.S. national means:
(1) An individual who is a citizen of the United States;
(2) An individual who, though not a citizen of the United States,
owes permanent allegiance to the United States, and is not an alien; or
(3) A partnership, corporation, or other juridical entity organized
under the laws of the United States or any jurisdiction within the
United States.
(h) Definition of the Government of North Korea; North Korean
government entity. For purposes of this section:
(1) The term Government of North Korea means the government of the
territory of Korea north of the 38th parallel of north latitude, as well
as any political subdivision, agency, or instrumentality thereof, or any
territory, dependency, colony, protectorate, mandate, dominion,
possession, or place subject to the jurisdiction thereof as of the
``effective date.''
(2) The term North Korean government entity means any corporation,
partnership, or association, or other organization, wherever organized
or doing business, that is owned or controlled by the Government of
North Korea.
[62 FR 64721, Dec. 9, 1997]
Subpart G_Penalties
Source: 63 FR 10324, Mar. 3, 1998, unless otherwise noted.
Sec. 500.701 Penalties.
For provisions relating to penalties, see part 501, subpart D, of
this chapter.
[68 FR 53641, Sept. 11, 2003]
Subpart H_Procedures
Sec. 500.801 Procedures.
For license application procedures and procedures relating to
amendments, modifications, or revocations of licenses; administrative
decisions; rulemaking; and requests for documents pursuant to the
Freedom of Information and Privacy Acts (5 U.S.C. 552 and 552a), see
part 501, subpart E, of this chapter.
[62 FR 45101, Aug. 25, 1997, as amended at 68 FR 53641, Sept. 11, 2003]
Sec. 500.802 Delegation by the Secretary of the Treasury.
Any action which the Secretary of the Treasury is authorized to take
pursuant to the Trading With the Enemy Act may be taken by any person to
whom the Secretary of the Treasury has delegated authority so to act.
[15 FR 9040, Dec. 19, 1950. Redesignated at 62 FR 45101, Aug. 25, 1997]
Sec. 500.803 Customs procedures; merchandise specified in Sec. 500.204.
(a) With respect to merchandise specified in Sec. 500.204, whether
or not such merchandise has been imported into the United States,
directors of customs shall not accept or allow any:
(1) Entry for consumption (including any appraisement entry, any
entry of goods imported in the mails, regardless of value, or any other
informal entries);
(2) Entry for immediate exportation;
(3) Entry for transportation and exportation;
(4) Withdrawal from warehouse;
(5) Transfer or withdrawal from a foreign-trade zone; or
(6) Manipulation or manufacture in a warehouse or in a foreign-trade
zone, until either;
(i) A specific license pursuant to this chapter is presented; or,
(ii) Instructions from the Foreign Assets Control, authorizing the
transaction are received.
(b) Whenever a specific license is presented to a director of
customs in accordance with this section, one additional legible copy of
the entry, withdrawal or other appropriate document with respect to the
merchandise involved shall be filed with the director of customs at the
port where the transaction is to take place. Each copy of any such
entry, withdrawal or other appropriate document, including the
additional copy, shall bear plainly on
[[Page 47]]
its face the number of the license pursuant to which it is filed. The
original copy of the specific license shall be presented to the director
in respect to each such transaction and shall bear a notation in ink by
the licensee or person presenting the license showing the description,
quantity, and value of the merchandise to be entered, withdrawn or
otherwise dealt with. This notation should be so placed and so written
that there will exist no possibility of confusing it with anything
placed on the license at the time of its issuance. If the license in
fact authorizes the entry, withdrawal or other transaction with regard
to the merchandise, the director, or other authorized customs employee,
shall verify the notation by signing or initialing it after first
assuring himself that it accurately describes the merchandise it
purports to represent. The license shall thereafter be returned to the
person presenting it and the additional copy of the entry, withdrawal or
other appropriate document shall be forwarded by the director to the
Office of Foreign Assets Control, Treasury Department, Washington, DC
20220.
(c) Whenever a person shall present an entry, withdrawal or other
appropriate document affected by this section and shall assert that no
specific Foreign Assets Control license is required in connection
therewith, the director of customs shall withhold action thereon and
shall advise such person to communicate directly with the Office of
Foreign Assets Control to request that instructions be issued to the
director to authorize him to take action with regard thereto.
[40 FR 7651, Feb. 21, 1975, as amended at 57 FR 1387, Jan. 14, 1992.
Redesignated at 62 FR 45101, Aug. 25, 1997]
Subpart I_Miscellaneous Provisions
Sec. 500.901 Paperwork Reduction Act notice.
For approval by the Office of Management and Budget (``OMB'') under
the Paperwork Reduction Act of information collections relating to
recordkeeping and reporting requirements, to licensing procedures
(including those pursuant to statements of licensing policy), and to
other procedures, see Sec. 501.901 of this chapter. An agency may not
conduct or sponsor, and a person is not required to respond to, a
collection of information unless it displays a valid control number
assigned by OMB. The information collection requirement in Sec. 500.602
has been approved by the Office of Management and Budget and assigned
control number 1505-0160.
[62 FR 45101, Aug. 25, 1997, as amended at 62 FR 64722, Dec. 9, 1997]
Sec. Appendix A to Part 500--Qualifying International Institutions
Asian Development Bank (ADB)
Food and Agricultural Organization (FAO)
International Bank for Reconstruction and Development (IBRD, the ``World
Bank'')
International Civil Aviation Organization (ICAO)
International Development Association (IDA)
International Finance Corporation (IFC)
International Fund for Agricultural Development (IFAD)
International Labor Organization (ILO)
International Maritime Organization (IMO)
International Monetary Fund (IMF)
Multilateral Investment Guarantee Association (MIGA)
UN Capital Development Fund (UNCDF)
UN Children's Fund (UNICEF)
UN Development Fund for Women (UNDFW)
UN Development Program (UNDP)
UN Economic & Social Commission for Asian and the Pacific (UNESCAP)
UN Education, Scientific and Cultural Organization (UNESCO)
UN Environment Program (UNEP)
UN Food Program (UNFP)
UN Industrial Development Organization (UNIDO)
UN International Drug Control Program (UNIDCP)
UN Population Fund (UNPF)
World Health Organization (WHO)
World Meteorological Organization (WMO)
[58 FR 68532, Dec. 28, 1993]
PART 501_REPORTING, PROCEDURES AND PENALTIES REGULATIONS--Table of Contents
Subpart A_Relation of This Part to Other Parts in This Chapter
Sec.
501.101 Relation of this part to other parts in this chapter.
[[Page 48]]
Subpart B_Definitions
501.301 Definitions.
Subpart C_Reports
501.601 Records and recordkeeping requirements.
501.602 Reports to be furnished on demand.
501.603 Reports on blocked property.
501.604 Reports by U.S. financial institutions on rejected funds
transfers.
501.605 Reports on litigation, arbitration, and dispute resolution
proceedings.
501.606 Reporting and recordkeeping requirements applicable to economic
sanctions programs.
Subpart D_Trading With the Enemy Act (TWEA) Penalties
501.700 Applicability.
501.701 Penalties.
501.702 Definitions.
501.703 Overview of civil penalty process and construction of rules.
501.704 Appearance and practice.
501.705 Service and filing.
501.706 Prepenalty Notice; issuance by Director.
501.707 Response to Prepenalty Notice.
501.708 Director's finding of no penalty warranted.
501.709 Penalty Notice.
501.710 Settlement.
501.711 Hearing request.
501.712 Acknowledgment of hearing request.
501.713 Order Instituting Proceedings.
501.714 Answer to Order Instituting Proceedings.
501.715 Notice of hearing.
501.716 Default.
501.717 Consolidation of proceedings.
501.718 Conduct and order of hearings.
501.719 Ex parte communications.
501.720 Separation of functions.
501.721 Hearings to be public.
501.722 Prehearing conferences.
501.723 Prehearing disclosures; methods to discover additional matter.
501.724 Documents that may be withheld.
501.725 Confidential treatment of information in certain filings.
501.726 Motions.
501.727 Motion for summary disposition.
501.728 Subpoenas.
501.729 Sanctions.
501.730 Depositions upon oral examination.
501.731 Depositions upon written questions.
501.732 Evidence.
501.733 Evidence: confidential information; protective orders.
501.734 Introducing prior sworn statements of witnesses into the record.
501.735 Proposed findings, conclusions and supporting briefs.
501.736 Authority of Administrative Law Judge.
501.737 Adjustments of time, postponements and adjournments.
501.738 Disqualification and withdrawal of Administrative Law Judge.
501.739 Record in proceedings before Administrative Law Judge; retention
of documents; copies.
501.740 Decision of Administrative Law Judge.
501.741 Review of decision or ruling.
501.742 Secretary's designee's consideration of decisions by
Administrative Law Judge.
501.743 Briefs filed with the Secretary's designee.
501.744 Record before the Secretary's designee.
501.745 Orders and decisions: signature, date and public availability.
501.746 Referral to United States Department of Justice; administrative
collection measures.
501.747 Procedures on remand of decisions.
Subpart E_Procedures
501.801 Licensing.
501.802 Decisions.
501.803 Amendment, modification, or revocation.
501.804 Rulemaking.
501.805 Rules governing availability of information.
501.806 Procedures for unblocking funds believed to have been blocked
due to mistaken identity.
501.807 Procedures governing removal of names from appendices A, B, and
C to this chapter.
501.808 License application and other procedures applicable to economic
sanctions programs.
Subpart F_Paperwork Reduction Act
501.901 Paperwork Reduction Act notice.
Appendix A to Part 501--Economic Sanctions Enforcement Guidelines
Authority: 8 U.S.C. 1189; 18 U.S.C. 2332d, 2339B; 19 U.S.C. 3901-
3913; 21 U.S.C. 1901-1908; 22 U.S.C. 287c; 22 U.S.C. 2370(a), 6009,
6032, 7205; 28 U.S.C. 2461 note; 31 U.S.C. 321(b); 50 U.S.C. 1701-1706;
50 U.S.C. App. 1-44.
Source: 62 FR 45101, Aug. 25, 1997, unless otherwise noted.
Subpart A_Relation of This Part to Other Parts in This Chapter
Sec. 501.101 Relation of this part to other parts in this chapter.
This part sets forth standard reporting and recordkeeping
requirements
[[Page 49]]
and license application and other procedures governing transactions
regulated pursuant to other parts codified in this chapter, as well as
to economic sanctions programs for which implementation and
administration are delegated to the Office of Foreign Assets Control.
Substantive prohibitions and policies particular to each economic
sanctions program are not contained in this part but are set forth in
the particular part of this chapter dedicated to that program, or, in
the case of economic sanctions programs not yet implemented in
regulations, in the applicable executive order or other authority.
License application procedures and reporting requirements set forth in
this part govern transactions undertaken pursuant to general or specific
licenses. The criteria for general and specific licenses pertaining to a
particular economic sanctions program are set forth in subpart E of the
individual parts in this chapter. Statements of licensing policy
contained in subpart E of the individual parts in this chapter, however,
may contain additional information collection provisions that require
production of specified documentation unique to a given general license
or statement of licensing policy.
[62 FR 52494, Oct. 8, 1997]
Subpart B_Definitions
Sec. 501.301 Definitions.
Definitions of terms used in this part are found in subpart C of the
part within this chapter applicable to the relevant application, record,
report, procedure or transaction. In the case of economic sanctions
programs for which implementation and administration are delegated to
the Office of Foreign Assets Control but for which regulations have not
yet been issued, the definitions of terms in this part are governed by
definitions contained in the implementing statute or Executive order.
Subpart C_Reports
Sec. 501.601 Records and recordkeeping requirements.
Except as otherwise provided, every person engaging in any
transaction subject to the provisions of this chapter shall keep a full
and accurate record of each such transaction engaged in, regardless of
whether such transaction is effected pursuant to license or otherwise,
and such record shall be available for examination for at least 5 years
after the date of such transaction. Except as otherwise provided, every
person holding property blocked pursuant to the provisions of this
chapter or funds transfers retained pursuant to Sec. 596.504(b) of this
chapter shall keep a full and accurate record of such property, and such
record shall be available for examination for the period of time that
such property is blocked and for at least 5 years after the date such
property is unblocked.
Note: See subpart F of part 597 for the relationship between this
section and part 597.
[62 FR 45101, Aug. 25, 1997, as amended at 62 FR 52494, Oct. 8, 1997]
Sec. 501.602 Reports to be furnished on demand.
Every person is required to furnish under oath, in the form of
reports or otherwise, from time to time and at any time as may be
required by the Director, Office of Foreign Assets Control, complete
information relative to any transaction, regardless of whether such
transaction is effected pursuant to license or otherwise, subject to the
provisions of this chapter or relative to any property in which any
foreign country or any national thereof has any interest of any nature
whatsoever, direct or indirect. The Director may require that such
reports include the production of any books of account, contracts,
letters or other papers connected with any such transaction or property,
in the custody or control of the persons required to make such reports.
Reports with respect to transactions may be required either before or
after such transactions are completed. Except as provided in parts 596
and 597, the Director may, through any
[[Page 50]]
person or agency, conduct investigations, hold hearings, administer
oaths, examine witnesses, receive evidence, take depositions, and
require by subpoena the attendance and testimony of witnesses and the
production of all books, papers, and documents relating to any matter
under investigation, regardless of whether any report has been required
or filed in connection therewith.
Note: See subpart F of part 597 for the relationship between this
section and part 597.
[62 FR 45101, Aug. 25, 1997, as amended at 62 FR 52494, Oct. 8, 1997]
Sec. 501.603 Reports on blocked property.
(a) Who must report--(1) Holders of blocked property. Any person,
including a financial institution, holding property blocked pursuant to
this chapter must report. The requirement includes financial
institutions that receive and block payments or transfers. This
requirement is mandatory and applies to all U.S. persons (or persons
subject to U.S. jurisdiction in the case of parts 500 and 515 of this
chapter) who have in their possession or control any property or
interests in property blocked pursuant to this chapter.
(2) Primary responsibility to report. A report may be filed on
behalf of a holder of blocked property by an attorney, agent, or other
person. Primary responsibility for reporting blocked property, however,
rests with the actual holder of the property, or the person exercising
control over property located outside the United States, with the
following exceptions: primary responsibility for reporting any trust
assets rest with the trustee; and primary responsibility for reporting
real property rests with any U.S. co-owner, legal representative, agent,
or property manager in the United States. No person is excused from
filing a report by reason of the fact that another person has submitted
a report with regard to the same property, except upon actual knowledge
of the report filed by such other person. Reports filed are regarded as
privileged and confidential.
(3) Financial institutions. For purposes of this section, the term
``financial institution'' shall include a banking institution, domestic
bank, United States depository institution, financial institution, or
U.S. financial institution, as those terms are defined in the applicable
part of this chapter.
(b) What must be reported--(1) Initial reports--(i) When reports are
due. Reports are required to be filed within 10 business days from the
date that property becomes blocked. This reporting requirement includes
payments or transfers that are received and blocked by financial
institutions.
(ii) Contents of reports. Initial reports on blocked property shall
describe the owner or account party, the property, its location, any
existing or new account number or similar reference necessary to
identify the property, actual or estimated value and the date it was
blocked, and shall include the name and address of the holder, along
with the name and telephone number of a contact person from whom
compliance information can be obtained. If the report is filed by a
financial institution and involves the receipt of a payment or transfer
of funds which are blocked by the financial institution, the report
shall also include a photocopy of the payment or transfer instructions
received and shall confirm that the payment has been deposited into a
new or existing blocked account which is labeled as such and is
established in the name of, or contains a means of clearly identifying
the interest of, the individual or entity subject to blocking pursuant
to the requirements of this chapter.
(2) Annual reports--(i) When reports are due. A comprehensive report
on all blocked property held as of June 30 of the current year shall be
filed annually by September 30. The first annual report is due September
30, 1997.
(ii) Contents of reports. Annual reports shall be filed using Form
TDF 90-22.50, Annual Report of Blocked Property. Copies of Form TDF 90-
22.50 may be obtained directly from the Office of Foreign Assets
Control, by calling the fax-on-demand service maintained by the Office
of Foreign Assets Control at 202/622-0077, or by downloading the form
from the ``OFAC Press Releases and Miscellaneous Documents'' file
library (``FAC--MISC'') located on the Government Printing Office's
Federal Bulletin Board Online via GPO Access (Internet site: http://
fedbbs.access.gpo.gov/libs/
[[Page 51]]
fac--misc.htm). Photocopies of the report form may be used. Requests to
submit the information required on Form TDF 90-22.50 in an alternative
format developed by the reporter are invited and will be considered by
the Office of Foreign Assets Control on a case-by-case basis. A copy of
reports filed using form TDF 90-22.50 or in alternative formats must be
retained for the reporter's records.
(c) Reports on retained funds pursuant to Sec. 596.504(b) of this
chapter. The reporting requirements set forth in this section are
applicable to any financial institution retaining funds pursuant to
Sec. 596.504(b) of this chapter, except that the account name shall
reflect the name of the person whose interest required retention of the
funds.
(d) Where to report. All reports must be filed with the Office of
Foreign Assets Control, Compliance Programs Division, U.S. Treasury
Department, 1500 Pennsylvania Avenue NW.--Annex, Washington, DC 20220.
Note: See subpart F of part 597 for the relationship between this
section and part 597.
[62 FR 45101, Aug. 25, 1997, as amended at 62 FR 52495, Oct. 8, 1997]
Sec. 501.604 Reports by U.S. financial institutions on rejected funds
transfers.
(a) Who must report. Any financial institution that rejects a funds
transfer where the funds are not blocked under the provisions of this
chapter, but where processing the transfer would nonetheless violate, or
facilitate an underlying transaction that is prohibited under, other
provisions contained in this chapter, must report. For purposes of this
section, the term ``financial institution'' shall include a banking
institution, depository institution or United States depository
institution, domestic bank, financial institution or U.S. financial
institution, as those terms are defined in the applicable part of this
chapter.
(b) Rejected transfers. Examples of transactions involving rejected
funds transfers include funds transfer instructions:
(1) Referencing a blocked vessel but where none of the parties or
financial institutions involved in the transaction is a blocked person;
(2) Sending funds to a person in Iraq;
(3) Transferring unlicensed gifts or charitable donations from the
Government of Syria to a U.S. person;
(4) Crediting Iranian accounts on the books of a U.S. financial
institution; and
(5) Making unauthorized transfers from U.S. persons to Iran or the
Government of Iran.
(c) When reports are due. Reports are required to be filed within 10
business days by any financial institution rejecting instructions to
execute payments or transfers involving underlying transactions
prohibited by the provisions of this chapter.
(d) What must be reported. The report shall include the name and
address of the transferee financial institution, the date of the
transfer, the amount of the payment transfer, and a photocopy of the
payment or transfer instructions received, and shall state the basis for
the rejection of the transfer instructions. The report shall also
provide the name and telephone number of a contact person at the
transferee financial institution from whom compliance information may be
obtained.
(e) Where to report. Reports must be filed with the Office of
Foreign Assets Control, Compliance Programs Division, U.S. Treasury
Department, 1500 Pennsylvania Avenue NW.--Annex, Washington, DC 20220.
[62 FR 45101, Aug. 25, 1997, as amended 70 FR 34061, June 13, 2005]
Sec. 501.605 Reports on litigation, arbitration, and dispute resolution
proceedings.
(a) U.S. persons (or persons subject to the jurisdiction of the
United States in the case of parts 500 and 515 of this chapter)
participating in litigation, arbitration, or other binding alternative
dispute resolution proceedings in the United States on behalf of or
against persons whose property or interests in property are blocked or
whose funds have been retained pursuant to Sec. 596.504(b) of this
chapter, or when the outcome of any proceeding may affect blocked
property or retained funds, must:
[[Page 52]]
(1) Provide notice of such proceedings upon their commencement or
upon submission or receipt of documents bringing the proceedings within
the terms of the introductory text to this paragraph (a);
(2) Submit copies of all pleadings, motions, memoranda, exhibits,
stipulations, correspondence, and proposed orders or judgments
(including any proposed final judgment or default judgment) submitted to
the court or other adjudicatory body, and all orders, decisions,
opinions, or memoranda issued by the court, to the Chief Counsel, Office
of Foreign Assets Control, U.S. Department of the Treasury, 1500
Pennsylvania Avenue, NW.--Annex, Washington, DC 20220, within 10 days of
filing, submission or issuance. This paragraph (a)(2) shall not apply to
discovery requests or responses, documents filed under seal, or requests
for procedural action not seeking action dispositive of the proceedings
(such as requests for extension of time to file); and
(3) Report by immediate facsimile transmission to the Chief Counsel,
Office of Foreign Assets Control, at facsimile number 202/622-1911, the
scheduling of any hearing or status conference in the proceedings
whenever it appears that the court or other adjudicatory body may issue
an order or judgment in the proceedings (including a final judgment or
default judgment) or is considering or may decide any pending request
dispositive of the merits of the proceedings or of any claim raised in
the proceedings.
(b) The reporting requirements of paragraph (a) of this section do
not apply to proceedings to which the Office of Foreign Assets Control
is a party.
(c) Persons initiating proceedings subject to the reporting
requirements of this section must notify the court or other adjudicatory
body of the restrictions set forth under the applicable part in this
chapter governing the transfer of blocked property or funds retained
pursuant to Sec. 596.504(b) of this chapter, including the prohibition
on any unlicensed attachment, judgment, decree, lien, execution,
garnishment or other judicial process with respect to any property in
which, on or after the applicable effective date, there existed an
interest of any person whose property and property interests were
subject to blocking pursuant to this chapter or were subject to
retention pursuant to Sec. 596.504(b) of this chapter.
Sec. 501.606 Reporting and recordkeeping requirements applicable to economic
sanctions programs.
The reporting and recordkeeping requirements set forth in this
subpart are applicable to economic sanctions programs for which
implementation and administration have been delegated to the Office of
Foreign Assets Control.
Subpart D_Trading With the Enemy Act (TWEA) Penalties
Source: 68 FR 53642, Sept. 11, 2003, unless otherwise noted.
Sec. 501.700 Applicability.
This subpart is applicable only to those parts of chapter V
promulgated pursuant to the TWEA, which include parts 500, 505, and 515.
Sec. 501.701 Penalties.
(a) Attention is directed to section 16 of the TWEA, as adjusted
pursuant to the Federal Civil Penalties Inflation Adjustment Act of 1990
(Pub. L. 101-410, as amended, 28 U.S.C. 2461 note), which provides that:
(1) Persons who willfully violate any provision of TWEA or any
license, rule, or regulation issued thereunder, and persons who
willfully violate, neglect, or refuse to comply with any order of the
President issued in compliance with the provisions of TWEA shall, upon
conviction, be fined not more than $1,000,000 or, if an individual, be
fined not more than $100,000 or imprisoned for not more than 10 years,
or both; and an officer, director, or agent of any corporation who
knowingly participates in such violation shall, upon conviction, be
fined not more than $100,000 or imprisoned for not more than 10 years,
or both.
(2) Any property, funds, securities, papers, or other articles or
documents, or any vessel, together with its tackle, apparel, furniture,
and equipment, concerned in a violation of TWEA may
[[Page 53]]
upon conviction be forfeited to the United States Government.
(3) The Secretary of the Treasury may impose a civil penalty of not
more than $65,000 per violation on any person who violates any license,
order, or regulation issued under TWEA.
Note to paragraph (a)(3). The current $65,000 civil penalty cap may
be adjusted for inflation pursuant to the Federal Civil Penalties
Inflation Adjustment Act of 1990.
(4) Any property, funds, securities, papers, or other articles or
documents, or any vessel, together with its tackle, apparel, furniture,
and equipment, that is the subject of a violation subject to a civil
penalty issued pursuant to TWEA shall, at the discretion of the
Secretary of the Treasury, be forfeited to the United States Government.
(b) The criminal penalties provided in TWEA are subject to increase
pursuant to 18 U.S.C. 3571 which, when read in conjunction with section
16 of TWEA, provides that persons convicted of violating TWEA may be
fined up to the greater of either $250,000 for individuals and
$1,000,000 for organizations or twice the pecuniary gain or loss from
the violation.
(c) Attention is directed to 18 U.S.C. 1001, which provides that
whoever, in any matter within the jurisdiction of any department or
agency of the United States, knowingly and willfully falsifies, conceals
or covers up by any trick, scheme, or device a material fact, or makes
any false, fictitious or fraudulent statements or representations, or
makes or uses any false writing or document knowing the same to contain
any false, fictitious or fraudulent statement or entry, shall be fined
under title 18, United States Code, or imprisoned not more than 5 years,
or both.
[68 FR 53642, Sept. 11, 2003, as amended at 68 FR 61361, Oct. 28, 2003]
Sec. 501.702 Definitions.
(a) Chief Counsel means the Chief Counsel (Foreign Assets Control),
Office of the General Counsel, Department of the Treasury.
(b) Day means calendar day. In computing any period of time
prescribed in or allowed by this subpart, the day of the act, event, or
default from which the designated period of time begins to run shall not
be included. The last day of the period so computed shall be included
unless it is a Saturday, Sunday, or Federal legal holiday, in which
event the period runs until the end of the next day that is not a
Saturday, Sunday, or Federal legal holiday. Intermediate Saturdays,
Sundays, and Federal legal holidays shall be excluded from the
computation when the period of time prescribed or allowed is seven days
or less, not including any additional time allowed for service by mail.
If on the day a filing is to be made, weather or other conditions have
caused the designated filing location to close, the filing deadline
shall be extended to the end of the next day that the filing location is
not closed and that is not a Saturday, a Sunday, or a Federal legal
holiday. If service is made by mail, three days shall be added to the
prescribed period for response.
(c) Department means the Department of the Treasury.
(d) Director means the Director of the Office of Foreign Assets
Control, Department of the Treasury.
(e) Ex Parte Communication means any material oral or written
communication not on the public record concerning the merits of a
proceeding with respect to which reasonable prior notice to all parties
is not given, on any material matter or proceeding covered by these
rules, that takes place between: A party to the proceeding, a party's
counsel, or any other interested individual; and the Administrative Law
Judge or Secretary's designee handling that proceeding. A request to
learn the status of a proceeding does not constitute an ex parte
communication; and settlement inquiries and discussions do not
constitute ex parte communications.
(f) General Counsel means the General Counsel of the U.S. Department
of the Treasury.
(g) Order of Settlement means a written order issued by the Director
terminating a civil penalty action. An Order of Settlement does not
constitute an agency decision that any violation took place.
[[Page 54]]
(h) Order Instituting Proceedings means a written order issued by
the Director to initiate a civil penalty hearing.
(i) Prepenalty Notice means a written notification from the Director
informing a respondent of the alleged violation(s) and the respondent's
right to respond.
(j) Penalty Notice means a written notification from the Director
informing a respondent that the Director has made a finding of violation
and, absent a request for a hearing, will impose a civil monetary
penalty.
(k) Proceeding means any agency process initiated by an ``Order
Instituting Proceedings,'' or by the filing of a petition for review of
an Administrative Law Judge's decision or ruling.
(l) Respondent means any individual alleged by the Director to have
violated a TWEA-based sanctions regulation.
(m) Secretary's designee means a U.S. Treasury Department official
delegated responsibility by the Secretary of the Treasury to consider
petitions for review of Administrative Law Judge decisions made in civil
penalty hearings conducted pursuant to this subpart.
(n) Secretary means the Secretary of the Treasury.
Sec. 501.703 Overview of civil penalty process and construction of rules.
(a) The administrative process for enforcing TWEA sanctions programs
proceeds as follows:
(1) The Director of the Office of Foreign Assets Control will notify
a suspected violator (hereinafter ``respondent'') of an alleged
violation by issuing a ``Prepenalty Notice.'' The Prepenalty Notice
shall describe the alleged violation(s) and include a proposed civil
penalty amount.
(2) The respondent will have 60 days from the date the Prepenalty
Notice is served to make a written presentation either defending against
the alleged violation or admitting the violation. A respondent who
admits a violation may offer information as to why a monetary penalty
should not be imposed or why, if imposed, the monetary penalty should be
in a lesser amount than proposed.
(3) Absent a settlement agreement or a finding that no violation
occurred, the Director of the Office of Foreign Assets Control will
issue a ``Penalty Notice.'' The respondent will have 30 days from the
date of service to either pay the penalty or request a hearing.
(4) If the respondent requests a hearing, the Director of the Office
of Foreign Assets Control will have two options:
(i) The Director may issue an ``Order Instituting Proceedings'' and
refer the matter to an Administrative Law Judge for a hearing and
decision; or
(ii) The Director may determine to discontinue the penalty action
based on information presented by the respondent.
(5) Absent review by a Secretary's designee, the decision of the
Administrative Law Judge will become the final decision of the
Department without further proceedings.
(6) If review is taken by a Secretary's designee, the Secretary's
designee reaches the final decision of the Department.
(7) A respondent may seek judicial review of the final decision of
the Department.
(b) Construction of rules. The rules contained in this subpart shall
be construed and administered to promote the just, speedy, and
inexpensive determination of every action. To the extent there is a
conflict between the rules contained in this subpart and a procedural
requirement contained in any statute, the requirement in the statute
shall control.
Sec. 501.704 Appearance and practice.
No person shall be represented before the Director in any civil
penalty matter, or an Administrative Law Judge or the Secretary's
designee in a civil penalty hearing, under this subpart except as
provided in this section.
(a) Representing oneself. In any proceeding, an individual may
appear on his or her own behalf.
(b) Representative. Upon written notice to the Director,
(1) A respondent may be represented by a personal representative. If
a respondent wishes to be represented by counsel, such counsel must be
an attorney at law admitted to practice before
[[Page 55]]
the Supreme Court of the United States, the highest court of any State,
commonwealth, possession, or territory of the United States, or the
District of Columbia;
(2) A duly authorized member of a partnership may represent the
partnership; and
(3) A bona fide officer, director, or employee of a corporation,
trust or association may represent the corporation, trust or
association.
(c) Director representation. The Director shall be represented by
members of the Office of Chief Counsel or any other counsel specifically
assigned by the General Counsel.
(d) Conflicts of interest--(1) Conflict of interest in
representation. No individual shall appear as representative for a
respondent in a proceeding conducted pursuant to this subpart if it
reasonably appears that such representation may be materially limited by
that representative's responsibilities to a third person, or by that
representative's own interests.
(2) Corrective measures. An Administrative Law Judge may take
corrective measures at any stage of a proceeding to cure a conflict of
interest in representation, including the issuance of an order limiting
the scope of representation or disqualifying an individual from
appearing in a representative capacity for the duration of the
proceeding.
Sec. 501.705 Service and filing.
(a) Service of Prepenalty Notice, Penalty Notice, Acknowledgment of
Hearing Request and Order Instituting Proceedings. The Director shall
cause any Prepenalty Notice, Penalty Notice, Acknowledgment of Hearing
Request, Order Instituting Proceedings, and other related orders and
decisions, or any amendments or supplements thereto, to be served upon
the respondent.
(1) Service on individuals. Service shall be complete:
(i) Upon the date of mailing by first class (regular) mail to the
respondent at the respondent's last known address, or to a
representative authorized to receive service, including qualified
representatives noticed to the Director pursuant to Sec. 501.704.
Absent satisfactory evidence in the administrative record to the
contrary, the Director may presume that the date of mailing is the date
stamped on the first page of the notice or order. The respondent may
rebut the presumption that a notice or order was mailed on the stamped
mailing date only by presenting evidence of the postmark date on the
envelope in which the notice or order was mailed;
(ii) Upon personal service on the respondent; or leaving a copy at
the respondent's place of business with a clerk or other person in
charge thereof; or leaving a copy at the respondent's dwelling house or
usual place of abode with a person at least 18 years of age then
residing therein; or with any other representative authorized by
appointment or by law to accept or receive service for the respondent,
including representatives noticed to the Director pursuant to Sec.
501.704; and evidenced by a certificate of service signed and dated by
the individual making such service, stating the method of service and
the identity of the individual with whom the notice or order was left;
or
(iii) Upon proof of service on a respondent who is not resident in
the United States by any method of service permitted by the law of the
jurisdiction in which the respondent resides or is located, provided the
requirements of such foreign law satisfy due process requirements under
United States law with respect to notice of administrative proceedings,
and where applicable laws or intergovernmental agreements or
understandings make the methods of service set forth in paragraphs
(a)(1)(i) and (ii) of this section inappropriate or ineffective for
service upon the nonresident respondent.
(2) Service on corporations and other entities. Service is complete
upon delivering a copy of the notice or order to a partner, bona fide
officer, director, managing or general agent, or any other agent
authorized by appointment or by law to receive such notice, by any
method specified in paragraph (a)(1) of this section.
(b) Service of responses to Prepenalty Notice, Penalty Notice, and
requests for a hearing. A respondent shall serve a response to a
Prepenalty Notice and any request for a hearing on the Director
[[Page 56]]
through the Chief of Civil Penalties, Office of Foreign Assets Control,
U.S. Treasury Department, 1500 Pennsylvania Avenue, NW., Washington DC
20220, with the envelope prominently marked ``Urgent: Part 501 Action.''
Service shall be complete upon the date of mailing, as evidenced by the
post-mark date on the envelope, by first class (regular) mail.
(c) Service or filing of papers in connection with any hearing by an
Administrative Law Judge or review by the Secretary's designee--(1)
Service on the Director and/or each respondent. (i) Each paper,
including each notice of appearance, written motion, brief, petition for
review, statement in opposition to petition for review, or other written
communication, shall be served upon the Director and/or each respondent
in the proceeding in accordance with paragraph (a) of this section;
provided, however, that no service shall be required in the case of
documents that are the subject of a motion seeking a protective order to
limit or prevent disclosure to another party.
(ii) Service upon the Director shall be made through the Chief
Counsel (Foreign Assets Control), U.S. Treasury Department, 1500
Pennsylvania Avenue, NW., Washington, DC 20220, with the envelope
prominently marked ``Urgent: Part 501 Proceeding.''
(iii) Service may be made:
(A) As provided in paragraph (a) of this section;
(B) By mailing the papers through the U.S. Postal Service by Express
Mail; or
(C) By transmitting the papers by facsimile machine where the
following conditions are met:
(1) The persons serving each other by facsimile transmission have
agreed to do so in a writing, signed by each party, which specifies such
terms as they deem necessary with respect to facsimile machine telephone
numbers to be used, hours of facsimile machine operation, the provision
of non-facsimile original or copy, and any other such matters; and
(2) Receipt of each document served by facsimile is confirmed by a
manually signed receipt delivered by facsimile machine or other means
agreed to by the parties.
(iv) Service by U.S. Postal Service Express Mail is complete upon
delivery as evidenced by the sender's receipt. Service by facsimile is
complete upon confirmation of transmission by delivery of a manually
signed receipt.
(2) Filing with the Administrative Law Judge. Unless otherwise
provided, all briefs, motions, objections, applications or other filings
made during a proceeding before an Administrative Law Judge, and all
requests for review by the Secretary's designee, shall be filed with the
Administrative Law Judge.
(3) Filing with the Secretary's designee. And all briefs, motions,
objections, applications or other filings made during a proceeding
before the Secretary's designee shall be filed with the Secretary's
designee.
(4) Certificate of service. Papers filed with an Administrative Law
Judge or Secretary's designee shall be accompanied by a certificate
stating the name of each person served, the date of service, the method
of service and the mailing address or facsimile telephone number to
which service was made, if not made in person. If the method of service
to any person is different from the method of service to any other
person, the certificate shall state why a different means of service was
used.
(5) Form of briefs. All briefs containing more than 10 pages shall,
to the extent applicable, include a table of contents, an alphabetized
table of cases, a table of statutes, and a table of other authorities
cited, with references to the pages of the brief wherein they are cited.
(6) Specifications. All original documents shall be filed with the
Administrative Law Judge or Secretary's designee, as appropriate. Papers
filed in connection with any proceeding shall:
(i) Be on one grade of unglazed white paper measuring 8.5x11 inches,
except that, to the extent that the reduction of larger documents would
render them illegible, such documents may be filed on larger paper;
(ii) Be typewritten or printed in either 10- or 12-point typeface or
otherwise reproduced by a process that produces permanent and plainly
legible copies;
[[Page 57]]
(iii) Include at the head of the paper, or on a title page, the
title of the proceeding, the name(s) of each respondent, the subject of
the particular paper or pleading, and the file number assigned to the
proceeding;
(iv) Be formatted with all margins at least 1 inch wide;
(v) Be double-spaced, with single-spaced footnotes and single-spaced
indented quotations; and
(vi) Be stapled, clipped or otherwise fastened in the upper left
corner.
(7) Signature requirement and effect. All papers must be dated and
signed by a member of the Office of Chief Counsel, or other counsel
assigned by the General Counsel to represent the Director, or a
respondent or respondent's representative, as appropriate. If a filing
is signed by a respondent's representative it shall state that
representative's mailing address and telephone number. A respondent who
represents himself or herself shall sign his or her individual name and
state his or her address and telephone number on every filing. A witness
deposition shall be signed by the witness.
(i) Effect of signature. The signature shall constitute a
certification that:
(A) The person signing the filing has read the filing;
(B) To the best of his or her knowledge, information, and belief,
formed after reasonable inquiry, the filing is well grounded in fact and
is warranted by existing law or a good faith argument for the extension,
modification, or reversal of existing law; and
(C) The filing is not made for any improper purpose, such as to
harass or to cause unnecessary delay or needless increase in the cost of
adjudication.
(ii) If a filing is not signed, the Administrative Law Judge (or the
Secretary's designee) shall strike the filing, unless it is signed
promptly after the omission is called to the attention of the person
making the filing.
(d) Service of written orders or decisions issued by the
Administrative Law Judge or Secretary's designee. Written orders or
decisions issued by the Administrative Law Judge or the Secretary's
designee shall be served promptly on each respondent and the Director
pursuant to any method of service authorized under paragraph (a) of this
section. Service of such orders or decisions shall be made by the
Administrative Law Judge or the Secretary's designee, as appropriate.
Sec. 501.706 Prepenalty Notice; issuance by Director.
(a) When required. If the Director has reason to believe there has
occurred a violation of any provision of parts 500 or 515 of this
chapter or a violation of the provisions of any license, ruling,
regulation, order, direction or instruction issued by or pursuant to the
direction or authorization of the Secretary pursuant to parts 500 or 515
of this chapter or otherwise under the Trading With the Enemy Act, and
the Director determines that further civil proceedings are warranted,
the Director shall issue a Prepenalty Notice. The Prepenalty Notice may
be issued whether or not another agency has taken any action with
respect to the matter.
(b) Contents of notice--(1) Facts of violation. The Prepenalty
Notice shall describe the alleged violation, specify the laws and
regulations allegedly violated, and state the amount of the proposed
monetary penalty.
(2) Right to respond. The Prepenalty Notice shall inform the
respondent of respondent's right to make a written presentation within
the time prescribed in Sec. 501.707 as to why the respondent believes
there should be no finding of a violation or why, if the respondent
admits the violation, a monetary penalty should not be imposed or why,
if imposed, the monetary penalty should be in a lesser amount than
proposed. The Prepenalty Notice shall also inform the respondent that:
(i) The act of submitting a written response by the respondent is a
factor that may result in a lower penalty absent any aggravating
factors; and
(ii) If the respondent fails to respond to the Prepenalty Notice
within the applicable 60-day period set forth in Sec. 501.707, the
Director may proceed with the issuance of a Penalty Notice.
(3) Right to request a hearing. The Prepenalty Notice shall inform
the respondent of respondent's right, if a subsequent Penalty Notice is
issued, to request an administrative hearing. The Director will not
consider any request
[[Page 58]]
for an administrative hearing until a Penalty Notice has been issued.
Sec. 501.707 Response to Prepenalty Notice.
(a) Deadline for response.
(1) The respondent shall have 60 days after the date of service of
the Prepenalty Notice pursuant to Sec. 501.705(a) to respond thereto.
The response, signed and dated, shall be served as provided in Sec.
501.705(b).
(2) In response to a written request by the respondent, the Director
may, at his or her discretion for the purpose of conducting settlement
negotiations or for other valid reasons, grant additional time for a
respondent to submit a response to the Prepenalty Notice.
(3) The failure to submit a response within the time period set
forth in this paragraph (a), including any additional time granted by
the Director, shall be deemed to be a waiver of the right to respond to
the Prepenalty Notice.
(b) Form and contents of response.
(1) In general. The response need not be in any particular form, but
must be typewritten and contain the heading ``Response to Prepenalty
Notice'' and the Office of Foreign Assets Control identification number
shown near the top of the Prepenalty Notice. It should be responsive to
the allegations contained therein and set forth the nature of the
respondent's admission of the violation, or defenses and claims for
mitigation, if any.
(i) The response must admit or deny specifically each separate
allegation of violation made in the Prepenalty Notice. If the respondent
is without knowledge as to an allegation, the response shall so state,
and such statement shall constitute a denial. Any allegation not
specifically addressed in the response shall be deemed admitted.
(ii) The response must set forth any additional or new matter or
arguments the respondent seeks, or shall seek, to use in support of all
defenses or claims for mitigation. Any defense the respondent wishes to
assert must be included in the response.
(iii) The response must accurately state (for each respondent, if
applicable) the respondent's full name and address for future service,
together with a current telephone and, if applicable, facsimile machine
number. If respondent is represented, the representative's full name and
address, together with telephone and facsimile numbers, may be provided
instead of service information for the respondent. The respondent or
respondent's representative of record is responsible for providing
timely written notice to the Director of any subsequent changes in the
information provided.
(iv) Financial disclosure statement requirement. Any respondent who
asserts financial hardship or an inability to pay a penalty shall
include with the response a financial disclosure statement setting forth
in detail the basis for asserting the financial hardship or inability to
pay a penalty, subject to 18 U.S.C. 1001.
(2) Settlement. In addition, or as an alternative, to a written
response to a Prepenalty Notice, the respondent or respondent's
representative may seek settlement of the alleged violation(s). See
Sec. 501.710. In the event of settlement prior to the issuance of a
Penalty Notice, the claim proposed in the Prepenalty Notice will be
withdrawn and the respondent will not be required to make a written
response to the Prepenalty Notice. In the event no settlement is
reached, a written response to the Prepenalty Notice is required
pursuant to paragraph (c) of this section.
Sec. 501.708 Director's finding of no penalty warranted.
If after considering any written response to the Prepenalty Notice
submitted pursuant to Sec. 501.707 and any other relevant facts, the
Director determines that there was no violation or that the violation
does not warrant the imposition of a civil monetary penalty, the
Director promptly shall notify the respondent in writing of that
determination and that no civil monetary penalty pursuant to this
subpart will be imposed.
Sec. 501.709 Penalty notice.
(a) If, after considering any written response to the Prepenalty
Notice, and any other relevant facts, the Director determines that there
was a violation by the respondent and that a monetary penalty is
warranted, the Director
[[Page 59]]
promptly shall issue a Penalty Notice informing the respondent that,
absent a timely request for an administrative hearing, the Director will
impose the civil monetary penalty described in the Penalty Notice. The
Penalty Notice shall inform the respondent:
(1) Of the respondent's right to submit a written request for an
administrative hearing not later than 30 days after the date of service
of the Penalty Notice;
(2) That in the absence of a timely request for a hearing, the
issuance of the Penalty Notice constitutes final agency action;
(3) That, absent a timely request for a hearing, payment (or
arrangement with the Financial Management Service of the Department for
installment payment) of the assessed penalty must be made not later than
30 days after the date of service of the Penalty Notice; and
(4) That absent a timely request for a hearing, the respondent must
furnish respondent's taxpayer identification number pursuant to 31
U.S.C. 7701 and that the Director intends to use such information for
the purposes of collecting and reporting on any delinquent penalty
amount in the event of a failure to pay the penalty imposed.
Sec. 501.710 Settlement.
(a) Availability. Either the Director or any respondent may, at any
time during the administrative civil penalty process described in this
subpart, propose an offer of settlement. The amount accepted in
settlement may be less than the civil penalty that might be imposed in
the event of a formal determination of violation. Upon mutual agreement
by the Director and a respondent on the terms of a settlement, the
Director shall issue an Order of Settlement.
(b) Procedure--(1) Prior to issuance of Penalty Notice. Any offer of
settlement made by a respondent prior to the issuance of a Penalty
Notice shall be submitted, in writing, to the Chief of Civil Penalties,
Office of Foreign Assets Control, U.S. Department of the Treasury, 1500
Pennsylvania Avenue, NW., Washington, DC 20220.
(2) After issuance of Penalty Notice. Any offer of settlement made
by a respondent after issuance of a Penalty Notice shall state that it
is made pursuant to this section; shall recite or incorporate as a part
of the offer the provisions of paragraphs (b)(5)(ii) and (b)(6) of this
section; shall be signed by the respondent making the offer, and not
only by his or her representative; and shall be submitted to the Chief
Counsel.
(3) Extensions of time. The submission of any settlement offer does
not provide a basis for adjourning or otherwise delaying all or any
portion of the administrative civil penalty process.
(i) Prior to issuance of Order Instituting Proceedings. Any
respondent (or potential respondent in the case of a pending Prepenalty
Notice) may request, in writing, that the Director withhold issuance of
any such notice, or grant an extension of time to respond to any such
Notice, for a period not to exceed 60 days for the exclusive purpose of
effecting settlement. The Director may grant any such request, in
writing, under terms and conditions within his or her discretion.
(ii) After issuance of Order Instituting Proceedings. Upon mutual
agreement of the Director and a respondent, the Administrative Law Judge
may grant an extension of time, for a period not to exceed 60 days, for
the exclusive purpose of effecting settlement.
(4) Views of Administrative Law Judge. Where an Administrative Law
Judge is assigned to a proceeding, the Director or the respondent may
request that the Administrative Law Judge express his or her views
regarding the appropriateness of the offer of settlement. A request for
the Administrative Law Judge to express his or her views on an offer of
settlement or otherwise to participate in a settlement conference
constitutes a waiver by the party making the request of any right to
claim bias or prejudgment by the Administrative Law Judge based on the
views expressed.
(5) Waivers. (i) By submitting an offer of settlement, a respondent
making the offer waives, subject to acceptance of the offer:
(A) All hearings pursuant to section 16 of the Trading with the
Enemy Act (50 U.S.C. App. 16);
[[Page 60]]
(B) The filing of proposed findings of fact and conclusions of law;
(C) Proceedings before, and a decision by, an Administrative Law
Judge;
(D) All post-hearing procedures; and
(E) Judicial review by any court.
(ii) By submitting an offer of settlement the respondent further
waives:
(A) Such provisions of this subpart or other requirements of law as
may be construed to prevent any member of the Director's staff, or
members of the Office of Chief Counsel or other counsel assigned by the
General Counsel, from participating in or advising the Director as to
any order, opinion, finding of fact, or conclusion of law to be entered
pursuant to the offer; and
(B) Any right to claim bias or prejudgment by the Director based on
the consideration of or discussions concerning settlement of all or any
part of the proceeding.
(6) If the Director rejects the offer of settlement, the respondent
shall be so notified in writing and the offer of settlement shall be
deemed withdrawn. The rejected offer shall not constitute a part of the
record in any proceeding against the respondent making the offer,
provided, however, that rejection of an offer of settlement does not
affect the continued validity of waivers pursuant to paragraph (b)(5) of
this section with respect to any discussions concerning the rejected
offer of settlement.
(7) No settlement offer or proposal, or any subsequent negotiation
or resolution, is admissible as evidence in any administrative
proceeding initiated by the Director.
Sec. 501.711 Hearing request.
(a) Deadline for request. A request for an agency hearing shall be
served on the Director not later than 30 days after the date of service
of the Penalty Notice. See Sec. 501.705(b). A respondent may not
reserve the right to request a hearing after expiration of the 30
calendar day period. A request for a hearing that is not made as
required by this paragraph shall constitute a waiver of the respondent's
right to a hearing.
(b) Form and contents of request. The request need not be in any
particular form, but must be typewritten and contain the heading
``Request for Agency Hearing''. The request must include the Office of
Foreign Assets Control identification number shown near the top of the
Penalty Notice. It should be responsive to the determination contained
in the Penalty Notice and set forth the nature of the respondent's
defenses or claims for mitigation, if any.
(1) The request must admit or deny specifically each separate
determination of violation made in the Penalty Notice. If the respondent
is without knowledge as to a determination, the request shall so state,
and such statement shall constitute a denial. Any determination not
specifically addressed in the response shall be deemed admitted.
(2) The request must set forth any additional or new matter or
arguments the respondent seeks, or shall seek, to use in support of all
defenses or claims for mitigation. Any defense the respondent wishes to
assert must be included in the request.
(3) The request must accurately state, for each respondent (if
applicable), the respondent's full name and address for future service,
together with current telephone and, if applicable, a facsimile machine
number. If respondent is represented, the representative's full name and
address, together with telephone and facsimile numbers, may be provided
in lieu of service information for the respondent. The respondent or
respondent's representative is responsible for providing timely written
notice to the Director of any subsequent changes in the information
provided.
(c) Signature requirement. The respondent or, if represented, the
respondent's representative, must sign the hearing request.
Sec. 501.712 Acknowledgment of hearing request.
No later than 60 days after service of any hearing request, the
Director shall acknowledge receipt and inform a respondent, in writing,
whether an Order Instituting Proceedings shall be issued.
Sec. 501.713 Order Instituting Proceedings.
If a respondent makes a timely request for a hearing, the Director
shall
[[Page 61]]
determine, at his or her option, whether to dismiss the violation(s) set
forth in the Penalty Notice or to issue an Order Instituting Proceedings
to initiate the hearing process. The Order shall be served on the
respondent(s) as provided in Sec. 501.705(c)(1). The Director may, in
his or her discretion, withdraw an Order Instituting Proceedings at any
time prior to the issuance of a decision by the Administrative Law
Judge.
(a) Content of Order. The Order Instituting Proceedings shall:
(1) Be prepared by the Office of the Chief Counsel or other counsel
assigned by the General Counsel and based on information provided by the
Director;
(2) State the legal authority under which the hearing is to be held;
(3) Contain a short and plain statement of the alleged violation(s)
to be considered and determined (including the matters of fact and law
asserted) in such detail as will permit a specific response thereto;
(4) State the amount of the penalty sought in the proceeding; and
(5) Be signed by the Director.
(b) Combining penalty actions. The Director may combine claims
contained in two or more Penalty Notices involving the same respondent,
and for which hearings have been requested, into a single Order
Instituting Proceedings.
(c) Amendment to Order Instituting Proceedings. Upon motion by the
Director, the Administrative Law Judge may, at any time prior to
issuance of a decision, permit the Director to amend an Order
Instituting Proceedings to include new matters of fact or law that are
within the scope of the original Order Instituting Proceedings.
Sec. 501.714 Answer to Order Instituting Proceedings.
(a) When required. Not later than 45 days after service of the Order
Instituting Proceedings, the respondent shall file, with the
Administrative Law Judge and the Office of Chief Counsel, an answer to
each of the allegations contained therein. If the Order Instituting
Proceedings is amended, the Administrative Law Judge may require that an
amended answer be filed and, if such an answer is required, shall
specify a date for the filing thereof.
(b) Contents; effect of failure to deny. Unless otherwise directed
by the Administrative Law Judge, an answer shall specifically admit,
deny, or state that the respondent does not have, and is unable to
obtain, sufficient information to admit or deny each allegation in the
Order Instituting Proceedings. When a respondent intends to deny only a
part of an allegation, the respondent shall specify so much of it as is
true and shall deny only the remainder. A statement of lack of
information shall have the effect of a denial. A defense of res
judicata, statute of limitations or any other matter constituting an
affirmative defense shall be asserted in the answer. Any allegation not
specifically addressed in the answer shall be deemed admitted.
(c) Motion for more definite statement. A respondent may file with
an answer a motion for a more definite statement of specified matters of
fact or law to be considered or determined. Such motion shall state the
respects in which, and the reasons why, each such matter of fact or law
should be required to be made more definite. If the motion is granted,
the order granting such motion shall set the periods for filing such a
statement and any answer thereto.
(d) Amendments. A respondent may amend its answer at any time by
written consent of the Director or with permission of the Administrative
Law Judge. Permission shall be freely granted when justice so requires.
(e) Failure to file answer: default. If a respondent fails to file
an answer required by this subpart within the time prescribed, such
respondent may be deemed in default pursuant to Sec. 501.716(a). A
party may make a motion to set aside a default pursuant to Sec.
501.726(e).
Sec. 501.715 Notice of Hearing.
(a) If the Director issues an Order Instituting Proceedings, the
respondent shall receive not less than 45 days notice of the time and
place of the hearing.
(b) Time and place of hearing. All hearings shall be held in the
Washington, DC metropolitan area unless, based on extraordinary reasons,
otherwise mutually agreed by the respondent and the Director. The time
for any
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hearing shall be fixed with due regard for the public interest and the
convenience and necessity of the parties or their representatives.
Requests to change the time of a hearing may be submitted to the
Administrative Law Judge, who may modify the hearing date(s) and/or
time(s) and place. All requests for a change in the date and time and/or
place of a hearing must be received by the Administrative Law Judge and
served upon the parties no later than 15 days before the scheduled
hearing date.
(c) Failure to appear at hearings: default. Any respondent named in
an order instituting proceedings as a person against whom findings may
be made or penalties imposed who fails to appear (in person or through a
representative) at a hearing of which he or she has been duly notified
may be deemed to be in default pursuant to Sec. 501.716(a). Without
further proceedings or notice to the respondent, the Administrative Law
Judge may enter a finding that the right to a hearing was waived, and
the Penalty Notice shall constitute final agency action as provided in
Sec. 501.709(a)(2). A respondent may make a motion to set aside a
default pursuant to Sec. 501.726(e).
Sec. 501.716 Default.
(a) A party to a proceeding may be deemed to be in default and the
Administrative Law Judge (or the Secretary's designee during review
proceedings) may determine the proceeding against that party upon
consideration of the record if that party fails:
(1) To appear, in person or through a representative, at any hearing
or conference of which the party has been notified;
(2) To answer, to respond to a dispositive motion within the time
provided, or otherwise to prosecute or defend the proceeding; or
(3) To cure a deficient filing within the time specified by the
Administrative Law Judge (or the Secretary's designee) pursuant to Sec.
501.729(b).
(b) In deciding whether to determine the proceedings against a party
deemed to be in default, the Administrative Law Judge shall consider the
record of the proceedings (including the Order Instituting Proceedings)
and shall construe contested matters of fact and law against the party
deemed to be in default.
(c) For information and procedures pertaining to a motion to set
aside a default, see Sec. 501.726(e).
Sec. 501.717 Consolidation of proceedings.
By order of the Administrative Law Judge, proceedings involving
common questions of law and fact may be consolidated for hearing of any
or all the matters at issue in such proceedings. The Administrative Law
Judge may make such orders concerning the conduct of such proceedings as
he or she deems appropriate to avoid unnecessary cost or delay.
Consolidation shall not prejudice any rights under this subpart and
shall not affect the right of any party to raise issues that could have
been raised if consolidation had not occurred.
Sec. 501.718 Conduct and order of hearings.
All hearings shall be conducted in a fair, impartial, expeditious
and orderly manner. Each party has the right to present its case or
defense by oral and documentary evidence and to conduct such cross
examination as may be required for full disclosure of the relevant
facts. The Director shall present his or her case-in-chief first. The
Director shall be the first party to present an opening statement and a
closing statement and may make a rebuttal statement after the
respondent's closing statement.
Sec. 501.719 Ex parte communications.
(a) Prohibition. (1) From the time the Director issues an Order
Instituting Proceedings until the date of final decision, no party,
interested person, or representative thereof shall knowingly make or
cause to be made an ex parte communication.
(2) Except to the extent required for the disposition of ex parte
communication matters as authorized by law, the Secretary's designee and
the Administrative Law Judge presiding over any proceeding may not:
(i) Consult a person or party on an issue, unless on notice and
opportunity for all parties to participate; or
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(ii) Be responsible to or subject to the supervision, direction of,
or evaluation by, an employee engaged in the performance of
investigative or prosecutorial functions for the Department.
(b) Procedure upon occurrence of ex parte communication. If an ex
parte communication is received by the Administrative Law Judge or the
Secretary's designee, the Administrative Law Judge or the Secretary's
designee, as appropriate, shall cause all of such written communication
(or, if the communication is oral, a memorandum stating the substance of
the communication) to be placed on the record of the proceeding and
served on all parties. A party may, not later than 10 days after the
date of service, file a response thereto and may recommend that the
person making the prohibited communication be sanctioned pursuant to
paragraph (c) of this section.
(c) Sanctions. Any party to the proceeding, a party's
representative, or any other interested individual, who makes a
prohibited ex parte communication, or who encourages or solicits another
to make any such communication, may be subject to any appropriate
sanction or sanctions imposed by the Administrative Law Judge or the
Secretary's designee, as appropriate, for good cause shown, including,
but not limited to, exclusion from the hearing and an adverse ruling on
the issue that is the subject of the prohibited communication.
Sec. 501.720 Separation of functions.
Any officer or employee engaged in the performance of investigative
or prosecutorial functions for the Department in a proceeding as defined
in Sec. 501.702 may not, in that proceeding or one that is factually
related, participate or advise in the decision pursuant to Section 557
of the Administrative Procedure Act, 5 U.S.C. 557, except as a witness
or counsel in the proceeding.
Sec. 501.721 Hearings to be public.
All hearings, except hearings on applications for confidential
treatment filed pursuant to Sec. 501.725(b), shall be public unless
otherwise ordered by the Administrative Law Judge or the Secretary's
designee, as appropriate, on his or her own motion or the motion of a
party.
Sec. 501.722 Prehearing conferences.
(a) Purposes of conferences. The purposes of prehearing conferences
include, but are not limited to:
(1) Expediting the disposition of the proceeding;
(2) Establishing early and continuing control of the proceeding by
the Administrative Law Judge; and
(3) Improving the quality of the hearing through more thorough
preparation.
(b) Procedure. On his or her own motion or at the request of a
party, the Administrative Law Judge may direct a representative or any
party to attend one or more prehearing conferences. Such conferences may
be held with or without the Administrative Law Judge present as the
Administrative Law Judge deems appropriate. Where such a conference is
held outside the presence of the Administrative Law Judge, the
Administrative Law Judge shall be advised promptly by the parties of any
agreements reached. Such conferences also may be held with one or more
persons participating by telephone or other remote means.
(c) Subjects to be discussed. At a prehearing conference
consideration may be given and action taken with respect to the
following:
(1) Simplification and clarification of the issues;
(2) Exchange of witness and exhibit lists and copies of exhibits;
(3) Admissions of fact and stipulations concerning the contents,
authenticity, or admissibility into evidence of documents;
(4) Matters of which official notice may be taken;
(5) The schedule for exchanging prehearing motions or briefs, if
any;
(6) The method of service for papers;
(7) Summary disposition of any or all issues;
(8) Settlement of any or all issues;
(9) Determination of hearing dates (when the Administrative Law
Judge is present);
(10) Amendments to the Order Instituting Proceedings or answers
thereto;
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(11) Production of documents as set forth in Sec. 501.723, and
prehearing production of documents in response to subpoenas duces tecum
as set forth in Sec. 501.728; and
(12) Such other matters as may aid in the orderly and expeditious
disposition of the proceeding.
(d) Timing of conferences. Unless the Administrative Law Judge
orders otherwise, an initial prehearing conference shall be held not
later than 14 days after service of an answer. A final conference, if
any, should be held as close to the start of the hearing as reasonable
under the circumstances.
(e) Prehearing orders. At or following the conclusion of any
conference held pursuant to this rule, the Administrative Law Judge
shall enter written rulings or orders that recite the agreement(s)
reached and any procedural determinations made by the Administrative Law
Judge.
(f) Failure to appear: default. A respondent who fails to appear, in
person or through a representative, at a prehearing conference of which
he or she has been duly notified may be deemed in default pursuant to
Sec. 501.716(a). A respondent may make a motion to set aside a default
pursuant to Sec. 501.726(e).
Sec. 501.723 Prehearing disclosures; methods to discover additional matter.
(a) Initial disclosures. (1) Except to the extent otherwise
stipulated or directed by order of the Administrative Law Judge, a party
shall, without awaiting a discovery request, provide to the opposing
party:
(i) The name and, if known, the address and telephone number of each
individual likely to have discoverable information that the disclosing
party may use to support its claims or defenses, unless solely for
impeachment of a witness appearing in person or by deposition,
identifying the subjects of the information; and
(ii) A copy, or a description by category and location, of all
documents, data compilations, and tangible things that are in the
possession, custody, or control of the party and that the disclosing
party may use to support its claims or defenses, unless solely for
impeachment of a witness appearing in person or by deposition;
(2) The disclosures described in paragraph (a)(1)(i) of this section
shall be made not later than 30 days after the issuance of an Order
Instituting Proceedings, unless a different time is set by stipulation
or by order of the Administrative Law Judge.
(b) Prehearing disclosures. (1) In addition to the disclosures
required by paragraph (a) of this section, a party must provide to the
opposing party, and promptly file with the Administrative Law Judge, the
following information regarding the evidence that it may present at
hearing for any purpose other than solely for impeachment of a witness
appearing in person or by deposition:
(i) An outline or narrative summary of its case or defense (the
Order Instituting Proceedings will usually satisfy this requirement for
the Director and the answer thereto will usually satisfy this
requirement for the respondent);
(ii) The legal theories upon which it will rely;
(iii) Copies and a list of documents or exhibits that it intends to
introduce at the hearing; and
(iv) A list identifying each witness who will testify on its behalf,
including the witness's name, occupation, address, phone number, and a
brief summary of the expected testimony.
(2) Unless otherwise directed by the Administrative Law Judge, the
disclosures required by paragraph (b)(1) of this section shall be made
not later than 30 days before the date of the hearing.
(c) Disclosure of expert testimony. A party who intends to call an
expert witness shall submit, in addition to the information required by
paragraph (b)(1)(iv) of this section, a statement of the expert's
qualifications, a list of other proceedings in which the expert has
given expert testimony, and a list of publications authored or co-
authored by the expert.
(d) Form of disclosures. Unless the Administrative Law Judge orders
otherwise, all disclosures under paragraphs (a) through (c) of this
section shall be made in writing, signed, and served as provided in
Sec. 501.705.
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(e) Methods to discover additional matter. Parties may obtain
discovery by one or more of the following methods: Depositions of
witnesses upon oral examination or written questions; written
interrogatories to another party; production of documents or other
evidence for inspection; and requests for admission. All depositions of
Federal employees must take place in Washington, DC, at the Department
of the Treasury or at the location where the Federal employee to be
deposed performs his or her duties, whichever the Federal employee's
supervisor or the Office of Chief Counsel shall deem appropriate. All
depositions shall be held at a date and time agreed by the Office of
Chief Counsel and the respondent or respondent's representative, and for
an agreed length of time.
(f) Discovery scope and limits. Unless otherwise limited by order of
the Administrative Law Judge in accordance with paragraph (f)(2) of this
section, the scope of discovery is as follows:
(1) In general. The availability of information and documents
through discovery is subject to the assertion of privileges available to
the parties and witnesses. Privileges available to the Director and the
Department include exemptions afforded pursuant to the Freedom of
Information Act (5 U.S.C. 552(b)(1) through (9)) and the Privacy Act (5
U.S.C. 552a). Parties may obtain discovery regarding any matter, not
privileged, that is relevant to the merits of the pending action,
including the existence, description, nature, custody, condition, and
location of any books, documents, or other tangible things and the
identity and location of any persons having knowledge of any
discoverable matter. For good cause, the Administrative Law Judge may
order discovery of any matter relevant to the subject matter involved in
the proceeding. Relevant information need not be admissible at the
hearing if the discovery appears reasonably calculated to lead to the
discovery of admissible evidence.
(2) Limitations. The Administrative Law Judge may issue any order
that justice requires to ensure that discovery requests are not
unreasonable, oppressive, excessive in scope or unduly burdensome,
including an order to show cause why a particular discovery request is
justified upon motion of the objecting party. The frequency or extent of
use of the discovery methods otherwise permitted under this section may
be limited by the Administrative Law Judge if he or she determines that:
(i) The discovery sought is unreasonably cumulative or duplicative,
or is obtainable from some other source that is more convenient, less
burdensome, or less expensive;
(ii) The party seeking discovery has had ample opportunity by
discovery in the action to obtain the information sought; or
(iii) The burden or expense of the proposed discovery outweighs its
likely benefit, taking into account the needs of the hearing, the
importance of the issues at stake, and the importance of the proposed
discovery in resolving the issues.
(3) Interrogatories. Respondent's interrogatories shall be served
upon the Office of the Chief Counsel not later than 30 days after
issuance of the Order Instituting Proceedings. The Director's
interrogatories shall be served by the later of 30 days after the
receipt of service of respondent's interrogatories or 40 days after
issuance of the Order Instituting Proceedings if no interrogatories are
filed by respondent. Parties shall respond to interrogatories not later
than 30 days after the date interrogatories are received.
Interrogatories shall be limited to 20 questions only. Each subpart,
section, or other designation of a part of a question shall be counted
as one complete question in computing the permitted 20 question total.
Where more than 20 questions are served upon a party, the receiving
party may determine which of the 20 questions the receiving party shall
answer. The limitation on the number of questions in an interrogatory
may be waived by the Administrative Law Judge.
(4) Privileged matter. Privileged documents are not discoverable.
Privileges include, but are not limited to, the attorney-client
privilege, attorney work-product privilege, any government's or
government agency's deliberative-process or classified information
privilege, including materials classified pursuant
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to Executive Order 12958 (3 CFR, 1995 Comp., p. 333) and any future
Executive orders that may be issued relating to the treatment of
national security information, and all materials and information
exempted from release to the public pursuant to the Privacy Act (5
U.S.C. 552a) or the Freedom of Information Act (5 U.S.C. 552(b)(1)
through (9)).
(g) Updating discovery. A party who has made an initial disclosure
under paragraph (a) of this section or responded to a request for
discovery with a disclosure or response is under a duty to supplement or
correct the disclosure or response to include information thereafter
acquired whenever:
(1) The party learns that in some material respect the information
disclosed is incomplete or incorrect, if the additional or corrective
information has not otherwise been made known to the other party during
the discovery process or in writing; or
(2) Ordered by the Administrative Law Judge. The Administrative Law
Judge may impose sanctions for failure to supplement or correct
discovery.
(h) Time limits. All discovery, including all responses to discovery
requests, shall be completed not later than 20 days prior to the date
scheduled for the commencement of the hearing, unless the Administrative
Law Judge finds on the record that good cause exists to grant additional
time to complete discovery.
(i) Effect of failure to comply. No witness may testify and no
document or exhibit may be introduced at the hearing if such witness,
document, or exhibit is not listed in the prehearing submissions
pursuant to paragraphs (b) and (c) of this section, except for good
cause shown.
Sec. 501.724 Documents that may be withheld.
(a) Notwithstanding Sec. 501.723(f), the Director or respondent may
withhold a document if:
(1) The document is privileged;
(2) The document would disclose the identity of a confidential
source; or
(3) The Administrative Law Judge grants leave to withhold a document
or category of documents as not relevant to the subject matter of the
proceeding or otherwise, for good cause shown.
(b) Nothing in paragraph (a) of this section authorizes the Director
to withhold documents that contain material exculpatory evidence.
(c) Withheld document list. The Director and respondent shall
provide the Administrative Law Judge, for review, a list of documents
withheld pursuant to paragraphs (a)(1)-(3) of this section. The
Administrative Law Judge shall determine whether any such document
should be made available for inspection and copying.
Sec. 501.725 Confidential treatment of information in certain filings.
(a) Filing document under seal. (1) The Director may file any
document or any part of a document under seal and/or seek a protective
order concerning any document if disclosure of the document would be
inconsistent with the protection of the public interest or if justice
requires protection of any person, including a source or a party, from
annoyance, threat, oppression, or undue burden or expense, or the
disclosure of the information would be, or might reasonably lead to a
disclosure, contrary to Executive Order 12958, as amended by Executive
Order 13292, or other Executive orders concerning disclosure of
information, Department regulations, or the Privacy Act, or information
exempt from release under the Freedom of Information Act. The
Administrative Law Judge shall allow placement of any such document
under seal and/or grant a protective order upon a showing that the
disclosure would be inconsistent with any such statute or Executive
order, or that the harm resulting from disclosure would outweigh the
benefits of disclosure.
(2) A respondent may file any document or any part of a document
under seal and/or seek a protective order to limit such document from
disclosure to other parties or to the public. The Administrative Law
Judge shall allow placement of any document under seal and/or grant a
protective order upon a showing that the harm resulting from disclosure
would outweigh the benefits of disclosure.
(3) The Administrative Law Judge shall safeguard the security and
integrity of any documents under seal or
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protective order and shall take all appropriate steps to preserve the
confidentiality of such documents or any parts thereof, including
closing a hearing or portions of a hearing to the public. Release of any
information under seal or to the extent inconsistent with a protective
order, in any form or manner, is subject to the sanctions and the
exercise of the authorities as are provided with respect to ex parte
communications under Sec. 501.719.
(4) If the Administrative Law Judge denies placement of any document
under seal or under protective order, any party, and any person whose
document or material is at issue, may obtain interlocutory review by the
Secretary's designee. In such cases the Administrative Law Judge shall
not release or expose any of the records or documents in question to the
public or to any person for a period of 20 days from the date of the
Administrative Law Judge's ruling, in order to permit a party the
opportunity either to withdraw the records and documents or obtain
interlocutory review by the Secretary's designee and an order that the
records be placed under seal or a protective order.
(5) Upon settlement, final decision, or motion to the Administrative
Law Judge for good cause shown, all materials (including all copies)
under seal or protective order shall be returned to the submitting
parties, except when it may be necessary to retain a record until any
judicial process is completed.
(6)(i) Written notice of each request for release of documents or
materials under seal or subject to a protective order shall be given to
the parties at least 20 days prior to any permitted release or prior to
any access not specifically authorized under a protective order. A copy
of each request for information, including the name, address, and
telephone number of the requester, shall be provided to the parties.
(ii) Each request for access to protected material shall include the
names, addresses, and telephone numbers of all persons on whose behalf
the requester seeks access to protected information. The Administrative
Law Judge may impose sanctions as provided under Sec. 501.729 for
failure to provide this information.
(b) Application. An application for a protective order or to place
under seal shall be filed with the Administrative Law Judge. The
application shall be accompanied by a sealed copy of the materials as to
which confidential treatment is sought.
(1) Procedure for supplying additional information. The person
making the application may be required to furnish in writing additional
information with respect to the grounds for objection to public
disclosure. Failure to supply the information so requested within 14
days from the date of receipt of a notice of the information required
shall be deemed a waiver of the objection to public disclosure of that
portion of the information to which the additional information relates,
unless the Administrative Law Judge shall otherwise order for good cause
shown at or before the expiration of such 14-day period.
(2) Confidentiality of materials pending final decision. Pending the
determination of the application for confidential treatment,
transcripts, non-final orders including an initial decision, if any, and
other materials in connection with the application shall be placed under
seal; shall be for the confidential use only of the Administrative Law
Judge, the Secretary's designee, the applicant, the Director, and any
other respondent and representative; and shall be made available to the
public only in accordance with orders of the Administrative Law Judge or
the Secretary's designee.
(3) Public availability of orders. Any final order of the
Administrative Law Judge or the Secretary's designee denying or
sustaining an application for confidential treatment shall be made
public. Any prior findings or opinions relating to an application for
confidential treatment under this section shall be made public at such
time as the material as to which confidentiality was requested is made
public.
Sec. 501.726 Motions.
(a) Generally. Unless made during a hearing or conference, a motion
shall be in writing, shall state with particularity the grounds
therefor, shall set forth the relief or order sought, and shall be
accompanied by a written brief of the points and authorities relied
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upon. Motions by a respondent must be filed with the Administrative Law
Judge and served upon the Director through the Office of Chief Counsel
and with any other party respondent or respondent's representative,
unless otherwise directed by the Administrative Law Judge. Motions by
the Director must be filed with the Administrative Law Judge and served
upon each party respondent or respondent's representative. All written
motions must be served in accordance with, and otherwise meet the
requirements of, Sec. 501.705. The Administrative Law Judge may order
that an oral motion be submitted in writing. No oral argument shall be
heard on any motion unless the Administrative Law Judge otherwise
directs.
(b) Opposing and reply briefs. Except as provided in Sec.
501.741(e), briefs in opposition to a motion shall be filed not later
than 15 days after service of the motion. Reply briefs shall be filed
not later than 3 days after service of the opposition. The failure of a
party to oppose a written motion or an oral motion made on the record
shall be deemed a waiver of objection by that party to the entry of an
order substantially in the form of any proposed order accompanying the
motion.
(c) Dilatory motions. Frivolous, dilatory, or repetitive motions are
prohibited. The filing of such motions may form the basis for sanctions.
(d) Length limitation. Except as otherwise ordered by the
Administrative Law Judge, a brief in support of, or in opposition to, a
motion shall not exceed 15 pages, exclusive of pages containing any
table of contents, table of authorities, or addendum.
(e) A motion to set aside a default shall be made within a
reasonable time as determined by the Administrative Law Judge, state the
reasons for the failure to appear or defend, and, if applicable, specify
the nature of the proposed defense in the proceeding. In order to
prevent injustice and on such conditions as may be appropriate, the
Administrative Law Judge, at any time prior to the filing of his or her
decision, or the Secretary's designee, at any time during the review
process, may for good cause shown set aside a default.
Sec. 501.727 Motion for summary disposition.
(a) At any time after a respondent's answer has been filed, the
respondent or the Director may make a motion for summary disposition of
any or all allegations contained in the Order Instituting Proceedings.
If the Director has not completed presentation of his or her case-in-
chief, a motion for summary disposition shall be made only with
permission of the Administrative Law Judge. The facts of the pleadings
of the party against whom the motion is made shall be taken as true,
except as modified by stipulations or admissions made by that party, by
uncontested affidavits, or by facts officially noticed pursuant to Sec.
501.732(b).
(b) Decision on motion. The Administrative Law Judge may promptly
decide the motion for summary disposition or may defer decision on the
motion. The Administrative Law Judge shall issue an order granting a
motion for summary disposition if the record shows there is no genuine
issue with regard to any material fact and the party making the motion
is entitled to a summary disposition as a matter of law.
(c) A motion for summary disposition must be accompanied by a
statement of the material facts as to which the moving party contends
there is no genuine issue. Such motion must be supported by documentary
evidence, which may take the form of admissions in pleadings,
stipulations, depositions, transcripts, affidavits, and any other
evidentiary materials that the moving party contends support its
position. The motion must also be accompanied by a brief containing the
points and authorities in support of the moving party's arguments. Any
party opposing a motion for summary disposition must file a statement
setting forth those material facts as to which such party contends a
genuine dispute exists. The opposition must be supported by evidence of
the same type as that submitted with the motion for summary disposition
and a brief containing the points and authorities in support of the
contention that summary disposition would be inappropriate.
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Sec. 501.728 Subpoenas.
(a) Availability; procedure. In connection with any hearing before
an Administrative Law Judge, either the respondent or the Director may
request the issuance of subpoenas requiring the attendance and testimony
of witnesses at the designated time and place of hearing, and subpoenas
requiring the production of documentary or other tangible evidence
returnable at a designated time and place. Unless made on the record at
a hearing, requests for issuance of a subpoena shall be made in writing
and served on each party pursuant to Sec. 501.705.
(b) Standards for issuance. If it appears to the Administrative Law
Judge that a subpoena sought may be unreasonable, oppressive, excessive
in scope, or unduly burdensome, he or she may, in his or her discretion,
as a condition precedent to the issuance of the subpoena, require the
person seeking the subpoena to show the general relevance and reasonable
scope of the testimony or other evidence sought. If after consideration
of all the circumstances, the Administrative Law Judge determines that
the subpoena or any of its terms is unreasonable, oppressive, excessive
in scope, or unduly burdensome, he or she may refuse to issue the
subpoena, or issue a modified subpoena as fairness requires. In making
the foregoing determination, the Administrative Law Judge may inquire of
the other participants whether they will stipulate to the facts sought
to be proved.
(c) Service. Service of a subpoena shall be made pursuant to the
provisions of Sec. 501.705.
(d) Application to quash or modify--(1) Procedure. Any person to
whom a subpoena is directed or who is an owner, creator or the subject
of the documents or materials that are to be produced pursuant to a
subpoena may, prior to the time specified therein for compliance, but
not later than 15 days after the date of service of such subpoena,
request that the subpoena be quashed or modified. Such request shall be
made by application filed with the Administrative Law Judge and served
on all parties pursuant to Sec. 501.705. The party on whose behalf the
subpoena was issued may, not later than 5 days after service of the
application, file an opposition to the application.
(2) Standards governing application to quash or modify. If the
Administrative Law Judge determines that compliance with the subpoena
would be unreasonable, oppressive or unduly burdensome, the
Administrative Law Judge may quash or modify the subpoena, or may order
return of the subpoena only upon specified conditions. These conditions
may include, but are not limited to, a requirement that the party on
whose behalf the subpoena was issued shall make reasonable compensation
to the person to whom the subpoena was addressed for the cost of copying
or transporting evidence to the place for return of the subpoena.
(e) Witness fees and mileage. Witnesses summoned to appear at a
proceeding shall be paid the same fees and mileage that are paid to
witnesses in the courts of the United States, and witnesses whose
depositions are taken and the persons taking the same shall severally be
entitled to the same fees as are paid for like services in the courts of
the United States. Witness fees and mileage shall be paid by the party
at whose instance the witnesses appear.
Sec. 501.729 Sanctions.
(a) Contemptuous conduct--(1) Subject to exclusion or suspension.
Contemptuous conduct by any person before an Administrative Law Judge or
the Secretary's designee during any proceeding, including any
conference, shall be grounds for the Administrative Law Judge or the
Secretary's designee to:
(i) Exclude that person from such hearing or conference, or any
portion thereof; and/or
(ii) If a representative, summarily suspend that person from
representing others in the proceeding in which such conduct occurred for
the duration, or any portion, of the proceeding.
(2) Adjournment. Upon motion by a party represented by a
representative subject to an order of exclusion or suspension, an
adjournment shall be granted to allow the retention of a new
representative. In determining the length of an adjournment, the
Administrative Law Judge or the Secretary's designee shall consider, in
addition to
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the factors set forth in Sec. 501.737, the availability of another
representative for the party or, if the representative was a counsel, of
other members of a suspended counsel's firm.
(b) Deficient filings; leave to cure deficiencies. The
Administrative Law Judge, or the Secretary's designee in the case of a
request for review, may in his or her discretion, reject, in whole or in
part, any filing that fails to comply with any requirements of this
subpart or of any order issued in the proceeding in which the filing was
made. Any such filings shall not be part of the record. The
Administrative Law Judge or the Secretary's designee may direct a party
to cure any deficiencies and to resubmit the filing within a fixed time
period.
(c) Failure to make required filing or to cure deficient filing. The
Administrative Law Judge (or the Secretary's designee during review
proceedings) may enter a default pursuant to Sec. 501.716, dismiss the
case, decide the particular matter at issue against that person, or
prohibit the introduction of evidence or exclude testimony concerning
that matter if a person fails:
(1) To make a filing required under this subpart; or
(2) To cure a deficient filing within the time specified by the
Administrative Law Judge or the Secretary's designee pursuant to
paragraph (b) of this section.
(d) Failure to make required filing or to cure deficient filing in
the case of a request for review. The Secretary's designee, in any case
of a request for review, may decide the issue against that person, or
prohibit the introduction of evidence or exclude testimony concerning
that matter if a person fails:
(1) To make a filing required under this subpart; or
(2) To cure a deficient filing within the time specified by the
Secretary's designee pursuant to paragraph (b) of this section.
Sec. 501.730 Depositions upon oral examination.
(a) Procedure. Any party desiring to take the testimony of a witness
by deposition shall make a written motion setting forth the reasons why
such deposition should be taken including the specific reasons why the
party believes the witness may be unable to attend or testify at the
hearing; the name and address of the prospective witness; the matters
concerning which the prospective witness is expected to be questioned;
and the proposed time and place for the taking of the deposition.
(b) Required finding when ordering a deposition. In the discretion
of the Administrative Law Judge, an order for deposition may be issued
upon a finding that the prospective witness will likely give testimony
material to the proceeding, that it is likely the prospective witness
will be unable to attend or testify at the hearing because of age,
sickness, infirmity, imprisonment or other disability, and that the
taking of a deposition will serve the interests of justice.
(c) Contents of order. An order for deposition shall designate by
name a deposition officer. The designated officer may be the
Administrative Law Judge or any other person authorized to administer
oaths by the laws of the United States or of the place where the
deposition is to be held. An order for deposition also shall state:
(1) The name of the witness whose deposition is to be taken;
(2) The scope of the testimony to be taken;
(3) The time and place of the deposition;
(4) The manner of recording, preserving and filing the deposition;
and
(5) The number of copies, if any, of the deposition and exhibits to
be filed upon completion of the deposition.
(d) Procedure at depositions. A witness whose testimony is taken by
deposition shall swear or affirm before any questions are put to him or
her. Examination and cross-examination of witnesses may proceed as
permitted at a hearing. A witness being deposed may have counsel or a
representative present during the deposition.
(e) Objections to questions or evidence. Objections to questions or
evidence shall be in short form, stating the grounds of objection relied
upon. Objections to questions or evidence shall be noted by the
deposition officer upon the deposition, but a deposition officer (other
than an Administrative Law
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Judge) shall not have the power to decide on the competency, materiality
or relevance of evidence. Failure to object to questions or evidence
before the deposition officer shall not be deemed a waiver unless the
ground of the objection is one that might have been obviated or removed
if presented at that time.
(f) Filing of depositions. The questions asked and all answers or
objections shall be recorded or transcribed verbatim, and a transcript
shall be prepared by the deposition officer, or under his or her
direction. The transcript shall be subscribed by the witness and
certified by the deposition officer. The original deposition transcript
and exhibits shall be filed with the Administrative Law Judge. A copy of
the deposition transcript and exhibits shall be served on the opposing
party or parties. The cost of the transcript (including copies) shall be
paid by the party requesting the deposition.
Sec. 501.731 Depositions upon written questions.
(a) Availability. Depositions may be taken and submitted on written
questions upon motion of any party. The motion shall include the
information specified in Sec. 501.730(a). A decision on the motion
shall be governed by Sec. 501.730(b).
(b) Procedure. Written questions shall be filed with the motion. Not
later than 10 days after service of the motion and written questions,
any party may file objections to such written questions and any party
may file cross-questions. When a deposition is taken pursuant to this
section no persons other than the witness, representative or counsel to
the witness, the deposition officer, and, if the deposition officer does
not act as reporter, a reporter, shall be present at the examination of
the witness. No party shall be present or represented unless otherwise
permitted by order. The deposition officer shall propound the questions
and cross-questions to the witness in the order submitted.
(c) Additional requirements. The order for deposition, filing of the
deposition, form of the deposition and use of the deposition in the
record shall be governed by paragraphs (b) through (g) of Sec. 501.730,
except that no cross-examination shall be made.
Sec. 501.732 Evidence.
The applicable evidentiary standard for proceedings under this
subpart is proof by a preponderance of reliable, probative, and
substantial evidence. The Administrative Law Judge shall admit any
relevant and material oral, documentary, or demonstrative evidence. The
Federal Rules of Evidence do not apply, by their own force, to
proceedings under this subpart, but shall be employed as general
guidelines. The fact that evidence submitted by a party is hearsay goes
only to the weight of the evidence and does not affect its
admissibility.
(a) Objections and offers of proof--(1) Objections. Objections to
the admission or exclusion of evidence must be made on the record and
shall be in short form, stating the grounds relied upon. Exceptions to
any ruling thereon by the Administrative Law Judge need not be noted at
the time of the ruling. Such exceptions will be deemed waived on review
by the Secretary's designee, however, unless raised:
(i) Pursuant to interlocutory review in accordance with Sec.
501.741;
(ii) In a proposed finding or conclusion filed pursuant to Sec.
501.738; or
(iii) In a petition for the Secretary's designee's review of an
Administrative Law Judge's decision filed in accordance with Sec.
501.741.
(2) Offers of proof. Whenever evidence is excluded from the record,
the party offering such evidence may make an offer of proof, which shall
be included in the record. Excluded material shall be retained pursuant
to Sec. 501.739(b).
(b) Official notice. An Administrative Law Judge or Secretary's
designee may take official notice of any material fact that might be
judicially noticed by a district court of the United States, any matter
in the public official records of the Secretary, or any matter that is
particularly within the knowledge of the Department as an expert body.
If official notice is requested or taken of a material fact not
appearing in the evidence in the record, a party, upon timely request to
the Administrative Law Judge, shall be afforded an opportunity to
establish the contrary.
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(c) Stipulations. The parties may, by stipulation, at any stage of
the proceeding agree upon any pertinent fact in the proceeding. A
stipulation may be received in evidence and, when accepted by the
Administrative Law Judge, shall be binding on the parties to the
stipulation.
(d) Presentation under oath or affirmation. A witness at a hearing
for the purpose of taking evidence shall testify under oath or
affirmation.
(e) Presentation, rebuttal and cross-examination. A party is
entitled to present its case or defense by oral or documentary evidence,
to submit rebuttal evidence, and to conduct such cross-examination as,
in the discretion of the Administrative Law Judge, may be required for a
full and true disclosure of the facts.
Sec. 501.733 Evidence: confidential information, protective orders.
(a) Procedure. In any proceeding as defined in Sec. 501.702, a
respondent; the Director; any person who is the owner, subject or
creator of a document subject to subpoena or which may be introduced as
evidence; or any witness who testifies at a hearing may file a motion
requesting a protective order to limit from disclosure to other parties
or to the public documents or testimony containing confidential
information. The motion should include a general summary or extract of
the documents without revealing confidential details. If a person seeks
a protective order against disclosure to other parties as well as the
public, copies of the documents shall not be served on other parties.
Unless the documents are unavailable, the person shall file for
inspection by the Administrative Law Judge a sealed copy of the
documents as to which the order is sought.
(b) Basis for issuance. Documents and testimony introduced in a
public hearing are presumed to be public. A motion for a protective
order shall be granted only upon a finding that the harm resulting from
disclosure would outweigh the benefits of disclosure.
(c) Requests for additional information supporting confidentiality.
A person seeking a protective order under paragraph (a) of this section
may be required to furnish in writing additional information with
respect to the grounds for confidentiality. Failure to supply the
information so requested not later than 5 days from the date of receipt
by the person of a notice of the information required shall be deemed a
waiver of the objection to public disclosure of that portion of the
documents to which the additional information relates, unless the
Administrative Law Judge shall otherwise order for good cause shown at
or before the expiration of such 5-day period.
(d) Confidentiality of documents pending decision. Pending a
determination of a motion under this section, the documents as to which
confidential treatment is sought and any other documents that would
reveal the confidential information in those documents shall be
maintained under seal and shall be disclosed only in accordance with
orders of the Administrative Law Judge. Any order issued in connection
with a motion under this section shall be made public unless the order
would disclose information as to which a protective order has been
granted, in which case that portion of the order that would reveal the
protected information shall not be made public.
Sec. 501.734 Introducing prior sworn statements of witnesses into the record.
(a) At a hearing, any person wishing to introduce a prior, sworn
statement of a witness who is not a party to the proceeding, that is
otherwise admissible in the proceeding, may make a motion setting forth
the reasons therefor. If only part of a statement is offered in
evidence, the Administrative Law Judge may require that all relevant
portions of the statement be introduced. If all of a statement is
offered in evidence, the Administrative Law Judge may require that
portions not relevant to the proceeding be excluded. A motion to
introduce a prior sworn statement may be granted if:
(1) The witness is dead;
(2) The witness is out of the United States, unless it appears that
the absence of the witness was procured by the party offering the prior
sworn statement;
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(3) The witness is unable to attend or testify because of age,
sickness, infirmity, imprisonment or other disability;
(4) The party offering the prior sworn statement has been unable to
procure the attendance of the witness by subpoena; or,
(5) In the discretion of the Administrative Law Judge, it would be
desirable, in the interests of justice, to allow the prior sworn
statement to be used. In making this determination, due regard shall be
given to the presumption that witnesses will testify orally in an open
hearing. If the parties have stipulated to accept a prior sworn
statement in lieu of live testimony, consideration shall also be given
to the convenience of the parties in avoiding unnecessary expense.
Sec. 501.735 Proposed findings, conclusions and supporting briefs.
(a) Opportunity to file. Before a decision is issued by the
Administrative Law Judge, each party shall have an opportunity,
reasonable in light of all the circumstances, to file in writing
proposed findings and conclusions.
(b) Procedure. Proposed findings of fact must be supported by
citations to specific portions of the record. If successive filings are
directed, the proposed findings and conclusions of the party assigned to
file first shall be set forth in serially numbered paragraphs, and any
counter statement of proposed findings and conclusions shall, in
addition to any other matter presented, indicate those paragraphs of the
proposals already filed as to which there is no dispute. A reply brief
may be filed by the party assigned to file first, or, where simultaneous
filings are directed, reply briefs may be filed by each party, within
the period prescribed therefor by the Administrative Law Judge. No
further briefs may be filed except with permission of the Administrative
Law Judge.
(c) Time for filing. In any proceeding in which a decision is to be
issued:
(1) At the close of each hearing, the Administrative Law Judge
shall, by order, after consultation with the parties, prescribe the
period within which proposed findings and conclusions and supporting
briefs are to be filed. The party directed to file first shall make its
initial filing not later than 30 days after the end of the hearing
unless the Administrative Law Judge, for good cause shown, permits a
different period and sets forth in the order the reasons why the
different period is necessary.
(2) The total period within which all such proposed findings and
conclusions and supporting briefs and any counter statements of proposed
findings and conclusions and reply briefs are to be filed shall be no
longer than 90 days after the close of the hearing unless the
Administrative Law Judge, for good cause shown, permits a different
period and sets forth in an order the reasons why the different period
is necessary.
Sec. 501.736 Authority of Administrative Law Judge.
The Administrative Law Judge shall have authority to do all things
necessary and appropriate to discharge his or her duties. No provision
of these rules shall be construed to limit the powers of the
Administrative Law Judge provided by the Administrative Procedure Act, 5
U.S.C. 556, 557. The powers of the Administrative Law Judge include, but
are not limited to:
(a) Administering oaths and affirmations;
(b) Issuing subpoenas authorized by law and revoking, quashing, or
modifying any such subpoena;
(c) Receiving relevant evidence and ruling upon the admission of
evidence and offers of proof;
(d) Regulating the course of a proceeding and the conduct of the
parties and their representatives;
(e) Holding prehearing and other conferences as set forth in Sec.
501.726 and requiring the attendance at any such conference of at least
one representative of each party who has authority to negotiate
concerning the resolution of issues in controversy;
(f) Subject to any limitations set forth elsewhere in this subpart,
considering and ruling on all procedural and other motions;
(g) Upon notice to all parties, reopening any hearing prior to the
issuance of a decision;
(h) Requiring production of records or any information relevant to
any act
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or transaction subject to a hearing under this subpart, and imposing
sanctions available under Federal Rule of Civil Procedure 37(b)(2) (Fed.
R. Civ. P. 37(b)(2), 28 U.S.C.) for a party's failure to comply with
discovery requests;
(i) Establishing time, place, and manner limitations on the
attendance of the public and the media for any hearing; and
(j) Setting fees and expenses for witnesses, including expert
witnesses.
Sec. 501.737 Adjustments of time, postponements and adjournments.
(a) Availability. Except as otherwise provided by law, the
Administrative Law Judge or the Secretary's designee, as appropriate, at
any time prior to the filing of his or her decision, may, for good cause
and in the interest of justice, modify any time limit prescribed by this
subpart and may, consistent with paragraph (b) of this section, postpone
or adjourn any hearing.
(b) Limitations on postponements, adjournments and adjustments. A
hearing shall begin at the time and place ordered, provided that, within
the limits provided, the Administrative Law Judge or the Secretary's
designee, as appropriate, may for good cause shown postpone the
commencement of the hearing or adjourn a convened hearing for a
reasonable period of time.
(1) Additional considerations. In considering a motion for
postponement of the start of a hearing, adjournment once a hearing has
begun, or extensions of time for filing papers, the Administrative Law
Judge or the Secretary's designee, as appropriate, shall consider, in
addition to any other factors:
(i) The length of the proceeding to date;
(ii) The number of postponements, adjournments or extensions already
granted;
(iii) The stage of the proceedings at the time of the request; and
(iv) Any other matter as justice may require.
(2) Time limit. Postponements, adjournments or extensions of time
for filing papers shall not exceed 21 days unless the Administrative Law
Judge or the Secretary's designee, as appropriate, states on the record
or sets forth in a written order the reasons why a longer period of time
is necessary.
Sec. 501.738 Disqualification and withdrawal of Administrative Law Judge.
(a) Notice of disqualification. If at any time an Administrative Law
Judge or Secretary's designee believes himself or herself to be
disqualified from considering a matter, the Administrative Law Judge or
Secretary's designee, as appropriate, shall issue a notice stating that
he or she is withdrawing from the matter and setting forth the reasons
therefor.
(b) Motion for Withdrawal. Any party who has a reasonable, good
faith basis to believe an Administrative Law Judge or Secretary's
designee has a personal bias, or is otherwise disqualified from hearing
a case, may make a motion to the Administrative Law Judge or Secretary's
designee, as appropriate, that the Administrative Law Judge or
Secretary's designee withdraw. The motion shall be accompanied by a
statement subject to 18 U.S.C. 1001 setting forth in detail the facts
alleged to constitute grounds for disqualification. If the
Administrative Law Judge or Secretary's designee finds himself or
herself qualified, he or she shall so rule and shall continue to preside
over the proceeding.
Sec. 501.739 Record in proceedings before Administrative Law Judge; retention
of documents; copies.
(a) Recordation. Unless otherwise ordered by the Administrative Law
Judge, all hearings shall be recorded and a written transcript thereof
shall be prepared.
(1) Availability of a transcript. Transcripts of hearings shall be
available for purchase.
(2) Transcript correction. Prior to the filing of post-hearing
briefs or proposed findings and conclusions, or within such earlier time
as directed by the Administrative Law Judge, a party or witness may make
a motion to correct the transcript. Proposed corrections of the
transcript may be submitted to the Administrative Law Judge by
stipulation pursuant to Sec. 501.732(c), or by motion. Upon notice to
all parties to the proceeding, the Administrative Law
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Judge may, by order, specify corrections to the transcript.
(b) Contents of the record. The record of each hearing shall consist
of:
(1) The Order Instituting Proceedings, Answer to Order Instituting
Proceedings, Notice of Hearing and any amendments thereto;
(2) Each application, motion, submission or other paper, and any
amendments, motions, objections, and exceptions to or regarding them;
(3) Each stipulation, transcript of testimony, interrogatory,
deposition, and document or other item admitted into evidence;
(4) With respect to a request to disqualify an Administrative Law
Judge or to allow the Administrative Law Judge's withdrawal under Sec.
501.738, each affidavit or transcript of testimony taken and the
decision made in connection with the request;
(5) All proposed findings and conclusions;
(6) Each written order issued by the Administrative Law Judge; and
(7) Any other document or item accepted into the record by the
Administrative Law Judge.
(c) Retention of documents not admitted. Any document offered as
evidence but excluded, and any document marked for identification but
not offered as an exhibit, shall not be part of the record. The
Administrative Law Judge shall retain any such document until the later
of the date the proceeding becomes final, or the date any judicial
review of the final proceeding is no longer available.
(d) Substitution of copies. A true copy of a document may be
substituted for any document in the record or any document retained
pursuant to paragraph (c) of this section.
Sec. 501.740 Decision of Administrative Law Judge.
The Administrative Law Judge shall prepare a decision that
constitutes his or her final disposition of the proceedings.
(a) Content. (1) The Administrative Law Judge shall determine
whether or not the respondent has violated any provision of parts 500
and 515 of this chapter or the provisions of any license, ruling,
regulation, order, direction or instruction issued by or under the
authority of the Secretary pursuant to part 500 or 515 of this chapter
or otherwise under the Trading with the Enemy Act.
(2) The Administrative Law Judge's decision shall include findings
and conclusions, and the reasons or basis therefor, as to all the
material issues of fact, law or discretion presented on the record.
(3) (i) Upon a finding of violation, the Administrative Law Judge
shall award an appropriate monetary civil penalty in an amount
consistent with the Penalty Guidelines published by the Director.
(ii) Notwithstanding paragraph (a)(3)(i) of this section, the
Administrative Law Judge:
(A) Shall provide an opportunity for a respondent to assert his or
her inability to pay a penalty, or financial hardship, by filing with
the Administrative Law Judge a financial disclosure statement subject to
18 U.S.C. 1001 that sets forth in detail the basis for the financial
hardship or the inability to pay; and
(B) Shall consider any such filing in determining the appropriate
monetary civil penalty.
(b) Administrative Law Judge's decision--(1) Service. The
Administrative Law Judge shall serve his or her decision on the
respondent and on the Director through the Office of Chief Counsel, and
shall file a copy of the decision with the Secretary's designee.
(2) Filing of report with the Secretary's designee. If the
respondent or Director files a petition for review pursuant to Sec.
501.741, or upon a request from the Secretary's designee, the
Administrative Law Judge shall file his or her report with the
Secretary's designee not later than 20 days after service of his or her
decision on the parties. The report shall consist of the record,
including the Administrative Law Judge's decision, and any petition from
the respondent or the Director seeking review.
(3) Correction of errors. Until the Administrative Law Judge's
report has been directed for review by the Secretary's designee or, in
the absence of a direction for review, until the decision
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has become a final order, the Administrative Law Judge may correct
clerical errors and errors arising through oversight or inadvertence in
decisions, orders, or other parts of the record.
(c) Administrative Law Judge's decision final unless review
directed. Unless the Secretary's designee determines to review a
decision in accordance with Sec. 501.741(a)(1), the decision of the
Administrative Law Judge shall become the final decision of the
Department.
(d) Penalty awarded. The Director is charged with implementing all
final decisions of the Department and, upon a finding of violation and/
or award of a civil monetary penalty, shall carry out the necessary
steps to close the action.
Sec. 501.741 Review of decision or ruling.
(a) Availability. (1)(i) Review of the decision of the
Administrative Law Judge by the Secretary's designee is not a right. The
Secretary's designee may, in his or her discretion, review the decision
of the Administrative Law Judge on the petition of either the respondent
or the Director, or upon his or her own motion. The Secretary's designee
shall determine whether to review a decision:
(A) If a petition for review has been filed by the respondent or the
Director, not later than 30 days after that date the Administrative Law
Judge filed his or her report with the Secretary's designee pursuant to
paragraph (b)(2) of this section; or
(B) If no petition for review has been filed by the respondent or
the Director, not later than 40 days after the date the Administrative
Law Judge filed his or her decision with the Secretary's designee
pursuant to paragraph (b)(1) of this section.
(ii) In determining whether to review a decision upon petition of
the respondent or the Director, the Secretary's designee shall consider
whether the petition for review makes a reasonable showing that:
(A) A prejudicial error was committed in the conduct of the
proceeding; or
(B) The decision embodies:
(1) A finding or conclusion of material fact that is clearly
erroneous;
(2) A conclusion of law that is erroneous; or
(3) An exercise of discretion or decision of law or policy that is
important and that the Secretary's designee should review.
(2) Interlocutory review of ruling. The Secretary's designee shall
review any ruling of an Administrative Law Judge involving privileged or
confidential material that is the subject of a petition for review. See
Sec. 501.725.
(b) Filing. Either the respondent or the Director, when adversely
affected or aggrieved by the decision or ruling of the Administrative
Law Judge, may seek review by the Secretary's designee by filing a
petition for review. Any petition for review shall be filed with the
Administrative Law Judge within 10 days after service of the
Administrative Law Judge's decision or the issuance of a ruling
involving privileged or confidential material.
(c) Contents. The petition shall state why the Secretary's designee
should review the Administrative Law Judge's decision or ruling,
including: Whether the Administrative Law Judge's decision or ruling
raises an important question of law, policy or discretion; whether
review by the Secretary's designee will resolve a question about which
the Department's Administrative Law Judges have rendered differing
opinions; whether the Administrative Law Judge's decision or ruling is
contrary to law or Department precedent; whether a finding of material
fact is not supported by a preponderance of the evidence; or whether a
prejudicial error of procedure or an abuse of discretion was committed.
A petition should concisely state the portions of the decision or ruling
for which review is sought. A petition shall not incorporate by
reference a brief or legal memorandum.
(d) When filing effective. A petition for review is filed when
received by the Administrative Law Judge.
(e) Statements in opposition to petition. Not later than 8 days
after the filing of a petition for review, either the respondent or the
Director may file a statement in opposition to a petition. A statement
in opposition to a petition for review shall be filed in the manner
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specified in this section for filing of petitions for review. Statements
in opposition shall concisely state why the Administrative Law Judge's
decision or ruling should not be reviewed with respect to each portion
of the petition to which it is addressed.
(f) Number of copies. An original and three copies of a petition or
a statement in opposition to a petition shall be filed with the
Administrative Law Judge.
(g) Prerequisite to judicial review. Pursuant to section 704 of the
Administrative Procedure Act, 5 U.S.C. 704, a petition for review by the
Secretary's designee of an Administrative Law Judge decision or ruling
is a prerequisite to the seeking of judicial review of a final order
entered pursuant to such decision or ruling.
Sec. 501.742 Secretary's designee's consideration of decisions by
Administrative Law Judges.
(a) Scope of review. The Secretary's designee may affirm, reverse,
modify, set aside or remand for further proceedings, in whole or in
part, a decision or ruling by an Administrative Law Judge and may make
any findings or conclusions that in his or her judgment are proper and
on the basis of the record and such additional evidence as the
Secretary's designee may receive in his or her discretion.
(b) Summary affirmance. The Secretary's designee may summarily
affirm an Administrative Law Judge's decision or ruling based upon the
petition for review and any response thereto, without further briefing,
if he or she finds that no issue raised in the petition for review
warrants further consideration.
Sec. 501.743 Briefs filed with the Secretary's designee.
(a) Briefing schedule order. If review of a determination is
mandated by judicial order or whenever the Secretary's designee reviews
a decision or ruling, the Secretary's designee shall, unless such review
results in summary affirmance pursuant to Sec. 501.742(b), issue a
briefing schedule order directing the parties to file opening briefs and
specifying particular issues, if any, as to which briefing should be
limited or directed. Unless otherwise provided, opening briefs shall be
filed not later than 40 days after the date of the briefing schedule
order. Opposition briefs shall be filed not later than 30 days after the
date opening briefs are due. Reply briefs shall be filed not later than
14 days after the date opposition briefs are due. No briefs in addition
to those specified in the briefing schedule order may be filed without
permission of the Secretary's designee. The briefing schedule order
shall be issued not later than 21 days after the later of:
(1) The last day permitted for filing a brief in opposition to a
petition for review pursuant to Sec. 501.741(e); or
(2) Receipt by the Secretary's designee of the mandate of a court
with respect to a judicial remand.
(b) Contents of briefs. Briefs shall be confined to the particular
matters at issue. Each exception to the findings or conclusions being
reviewed shall be stated succinctly. Exceptions shall be supported by
citation to the relevant portions of the record, including references to
the specific pages relied upon, and by concise argument including
citation of such statutes, decisions and other authorities as may be
relevant. If the exception relates to the admission or exclusion of
evidence, the substance of the evidence admitted or excluded shall be
set forth in the brief, in an appendix thereto, or by citation to the
record. If the exception relates to interlocutory review, there is no
requirement to reference pages of the transcript. Reply briefs shall be
confined to matters in opposition briefs of other parties.
(c) Length limitation. Opening and opposition briefs shall not
exceed 30 pages and reply briefs shall not exceed 20 pages, exclusive of
pages containing the table of contents, table of authorities, and any
addendum, except with permission of the Secretary's designee.
Sec. 501.744 Record before the Secretary's designee.
The Secretary's designee shall determine each matter on the basis of
the record and such additional evidence as the Secretary's designee may
receive in his or her discretion. In any case of interlocutory review,
the Administrative Law Judge shall direct that a
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transcript of the relevant proceedings be prepared and forwarded to the
Secretary's designee.
(a) Contents of the record. In proceedings for final decision before
the Secretary's designee the record shall consist of:
(1) All items that are part of the record in accordance with Sec.
501.739;
(2) Any petitions for review, cross-petitions or oppositions;
(3) All briefs, motions, submissions and other papers filed on
appeal or review; and
(4) Any other material of which the Secretary's designee may take
administrative notice.
(b) Review of documents not admitted. Any document offered in
evidence but excluded by the Administrative Law Judge and any document
marked for identification but not offered as an exhibit shall not be
considered a part of the record before the Secretary's designee on
review but shall be transmitted to the Secretary's designee if he or she
so requests. In the event that the Secretary's designee does not request
the document, the Administrative Law Judge shall retain the document not
admitted into the record until the later of:
(1) The date upon which the Secretary's designee's order becomes
final; or
(2) The conclusion of any judicial review of that order.
Sec. 501.745 Orders and decisions: signature, date and public availability.
(a) Signature required. All orders and decisions of the
Administrative Law Judge or Secretary's designee shall be signed.
(b) Date of entry of orders. The date of entry of an order by the
Administrative Law Judge or Secretary's designee shall be the date the
order is signed. Such date shall be reflected in the caption of the
order, or if there is no caption, in the order itself.
(c) Public availability of orders. (1) In general, any final order
of the Department shall be made public. Any supporting findings or
opinions relating to a final order shall be made public at such time as
the final order is made public.
(2) Exception. Any final order of the Administrative Law Judge or
Secretary's designee pertaining to an application for confidential
treatment shall only be available to the public in accordance with Sec.
501.725(b)(3).
Sec. 501.746 Referral to United States Department of Justice; administrative
collection measures.
In the event that the respondent does not pay any penalty imposed
pursuant to this part within 30 calendar days of the mailing of the
written notice of the imposition of the penalty, the matter may be
referred for administrative collection measures or to the United States
Department of Justice for appropriate action to recover the penalty in a
civil suit in a Federal district court.
Sec. 501.747 Procedures on remand of decisions.
Either an Administrative Law Judge or a Secretary's designee, as
appropriate, shall reconsider any Department decision on judicial remand
to the Department. The rules of practice contained in this subpart shall
apply to all proceedings held on judicial remand.
Subpart E_Procedures
Source: 62 FR 45101, Aug. 25, 1997, unless otherwise noted.
Redesignated at 68 FR 53642, Sept. 11, 2003.
Sec. 501.801 Licensing.
(a) General licenses. General licenses have been issued authorizing
under appropriate terms and conditions certain types of transactions
which are subject to the prohibitions contained in this chapter. All
such licenses are set forth in subpart E of each part contained in this
chapter. General licenses may also be issued authorizing under
appropriate terms and conditions certain types of transactions which are
subject to prohibitions contained in economic sanctions programs the
implementation and administration of which have been delegated to the
Director of the Office of Foreign Assets Control but
[[Page 79]]
which are not yet codified in this chapter. It is the policy of the
Office of Foreign Assets Control not to grant applications for specific
licenses authorizing transactions to which the provisions of an
outstanding general license are applicable. Persons availing themselves
of certain general licenses may be required to file reports and
statements in accordance with the instructions specified in those
licenses. Failure to file such reports or statements will nullify the
authority of the general license.
(b) Specific licenses--(1) General course of procedure. Transactions
subject to the prohibitions contained in this chapter, or to
prohibitions the implementation and administration of which have been
delegated to the Director of the Office of Foreign Assets Control, which
are not authorized by general license may be effected only under
specific licenses.
(2) Applications for specific licenses. Original signed applications
for specific licenses to engage in any transactions prohibited by or
pursuant to this chapter or sanctions programs that have been delegated
to the Director of the Office of Foreign Assets Control for
implementation and administration must be filed by mail or courier.
Applications will not be accepted by fax or electronically, unless
otherwise authorized. Applications may be submitted in letter form with
the exception of license applications for the unblocking of funds
transfers. Applications for the unblocking of funds transfers must be
submitted using TD-F 90-22.54, ``Application for the Release of Blocked
Funds,'' accompanied by two complete copies of the entire submission.
The form, which requires information regarding the date of the blocking,
the financial institutions involved in the transfer, and the beneficiary
and amount of the transfer, may be obtained from the OFAC Internet Home
Page: http://www.treas.gov/ofac, the OFAC fax-on-demand service: 202/
622-0077, or the Compliance Programs Division, Office of Foreign Assets
Control, Department of the Treasury, Washington, DC 20220. Any person
having an interest in a transaction or proposed transaction may file an
application for a license authorizing such transaction.
(3) Information to be supplied. The applicant must supply all
information specified by relevant instructions and/or forms, and must
fully disclose the names of all parties who are concerned with or
interested in the proposed transaction. If the application is filed by
an agent, the agent must disclose the name of his principal(s). Such
documents as may be relevant shall be attached to each application as a
part of such application, except that documents previously filed with
the Office of Foreign Assets Control may, where appropriate, be
incorporated by reference in such application. Applicants are required
to supply their taxpayer identifying number pursuant to 31 U.S.C. 7701,
which number may be used for purposes of collecting and reporting on any
delinquent amounts arising out of the applicant's relationship with the
United States Government. Applicants may be required to furnish such
further information as is deemed necessary to a proper determination by
the Office of Foreign Assets Control. Any applicant or other party in
interest desiring to present additional information may do so at any
time before or after decision. Arrangements for oral presentation should
be made with the Office of Foreign Assets Control.
(4) Effect of denial. The denial of a license does not preclude the
reopening of an application or the filing of a further application. The
applicant or any other party in interest may at any time request
explanation of the reasons for a denial by correspondence or personal
interview.
(5) Reports under specific licenses. As a condition for the issuance
of any license, the licensee may be required to file reports with
respect to the transaction covered by the license, in such form and at
such times and places as may be prescribed in the license or otherwise.
(6) Issuance of license. Licenses will be issued by the Office of
Foreign Assets Control acting on behalf of the Secretary of the Treasury
or licenses may be issued by the Secretary of the Treasury acting
directly or through any specifically designated person, agency, or
instrumentality.
[[Page 80]]
(7) Address. License applications, reports, and inquiries should be
addressed to the appropriate division or individual within the Office of
Foreign Assets Control, or to its Director, at the following address:
Office of Foreign Assets Control, U.S. Department of the Treasury, 1500
Pennsylvania Avenue, NW.--Annex, Washington, DC 20220.
(c) Registration of nongovernmental organizations--(1) Purpose of
registration. For those parts of this chapter specifically authorizing
the registration of nongovernmental organizations (``NGOs''),
registration numbers may be issued on a case-by-case basis to NGOs
involved in humanitarian or religious activities in countries or
geographic areas subject to economic sanctions pursuant to this chapter
V. A registration number authorizes certain transactions by or on behalf
of the registered NGO otherwise prohibited by the specific part with
respect to which the registration number is issued, including the
exportation of goods, services, and funds to the country or geographic
area subject to such part for the purpose of relieving human suffering.
The transactions authorized for registered NGOs either will be specified
by the statement of licensing policy in the part under which the
registration number is issued or by the Office of Foreign Assets Control
letter issuing the registration number.
(2) Application information to be supplied. Applications for
registration numbers should be submitted to the Compliance Programs
Division, Office of Foreign Assets Control, U.S. Department of the
Treasury, 1500 Pennsylvania Avenue, NW., Annex, Washington, DC 20220, or
by facsimile to (202) 622-2426, and must include:
(i) The organization's name in English, in the language of origin,
and any acronym or other names used to identify the organization;
(ii) Address and phone number of the organization's headquarters
location;
(iii) Full name in English, in the language of origin, and any
acronym or other names used, as well as nationality, citizenship,
current country of residence, place and date of birth for key staff at
the organization's headquarters, such as the chairman and board members,
president, director, etc.;
(iv) Identification of field offices or partner offices elsewhere,
including addresses, phone numbers, and organizational names used, as
well as the identification of the senior officer(s) at these locations,
including the person's name, position, nationality, citizenship, and
date of birth (names of individuals and organizations shall be provided
in English, in the language of origin, and shall include any acronym or
other names used to identify the individuals or organizations);
(v) Identification of subcontracting organizations, if any, to the
extent known or contemplated at the time of the application;
(vi) Existing sources of income, such as official grants, private
endowments, commercial activities;
(vii) Financial institutions that hold deposits on behalf of or
extend lines of credit to the organization (names of individuals and
organizations shall be provided in English, in the language of origin,
and shall include any acronym or other names used to identify the
individuals or organizations);
(viii) Independent accounting firms, if employed in the production
of the organization's financial statements (names of individuals and
organizations shall be provided in English, in the language of origin,
and shall include any acronym or other names used to identify the
individuals or organizations);
(ix) A detailed description of the organization's humanitarian or
religious activities and projects in countries or geographic areas
subject to economic sanctions pursuant to this chapter V;
(x) Most recent official registry documents, annual reports, and
annual filings with the pertinent government, as applicable; and
(xi) Names and addresses of organizations to which the applicant
currently provides or proposes to provide funding, services or material
support, to the extent known at the time of the vetting, as applicable.
(3) Use of registration number. Registered NGOs conducting
transactions authorized by their registrations to support their
humanitarian or religious activities pursuant to any part of
[[Page 81]]
this chapter should reference the registration number on all payments
and funds transfers and on all related documentation, including all
purchasing, shipping, and financing documents.
(4) Limitations. Registered NGOs are not authorized to make
remittances from blocked accounts. Registration numbers are not
transferable and may be revoked or modified at any time at the
discretion of the Director, Office of Foreign Assets Control.
Registration numbers do not excuse compliance with any law or regulation
administered by the Office of Foreign Assets Control or any other agency
(including reporting requirements) applicable to the transaction(s)
herein authorized, nor does it release the Registrant or third parties
from civil or criminal liability for violation of any law or regulation.
(5) Prior numbers. Registration numbers already issued remain in
effect.
[62 FR 45101, Aug. 25, 1997, as amended at 65 FR 10708, Feb. 29, 2000;
66 FR 2728, Jan. 11, 2001]
Sec. 501.802 Decisions.
The Office of Foreign Assets Control will advise each applicant of
the decision respecting filed applications. The decision of the Office
of Foreign Assets Control acting on behalf of the Secretary of the
Treasury with respect to an application shall constitute final agency
action.
Sec. 501.803 Amendment, modification, or revocation.
Except as otherwise provided by law, the provisions of each part of
this chapter and any rulings, licenses (whether general or specific),
authorizations, instructions, orders, or forms issued thereunder may be
amended, modified or revoked at any time.
[63 FR 35809, July 1, 1998]
Sec. 501.804 Rulemaking.
(a) All rules and other public documents are issued by the Director
of the Office of Foreign Assets Control. In general, rulemaking by the
Office of Foreign Assets Control involves foreign affairs functions of
the United States, and for that reason is exempt from the requirements
under the Administrative Procedure Act (5 U.S.C. 553) for notice of
proposed rulemaking, opportunity for public comment, and delay in
effective date.
(b) Any interested person may petition the Director of the Office of
Foreign Assets Control in writing for the issuance, amendment, or repeal
of any rule.
Sec. 501.805 Rules governing availability of information.
(a) The records of the Office of Foreign Assets Control which are
required by the Freedom of Information Act (5 U.S.C. 552) to be made
available to the public shall be made available in accordance with the
definitions, procedures, payment of fees, and other provisions of the
regulations on the Disclosure of Records of the Departmental Offices and
of other bureaus and offices of the Department of the Treasury issued
under 5 U.S.C. 552 and published at 31 CFR part 1.
Note to paragraph Sec. 501.805(a): Records or information obtained
or created in the implementation of part 598 of this chapter are not
subject to disclosure under section 552(a)(3) of the Freedom of
Information Act. See Sec. 598.802 of this chapter.
(b) The records of the Office of Foreign Assets Control which are
required by the Privacy Act (5 U.S.C. 552a) to be made available to an
individual shall be made available in accordance with the definitions,
procedures, requirements for payment of fees, and other provisions of
the Regulations on the Disclosure of Records of the Departmental Offices
and of other bureaus and offices of the Department of the Treasury
issued under 5 U.S.C. 552a and published at 31 CFR part 1.
(c) Any form issued for use in connection with this chapter may be
obtained in person or by writing to the Office of Foreign Assets
Control, U.S. Department of the Treasury, 1500 Pennsylvania Avenue,
NW.--Annex, Washington, DC 20220, or by calling 202/622-2480.
(d) Certain Civil Penalties Information. (1) After the conclusion of
a civil penalties proceeding that results in either the imposition of a
civil monetary penalty or an informal settlement, OFAC shall make
available to the public certain information on a routine basis,
[[Page 82]]
not less frequently than monthly, as follows:
(i) In each such proceeding against an entity, OFAC shall make
available to the public
(A) The name and address of the entity involved,
(B) The sanctions program involved,
(C) A brief description of the violation or alleged violation,
(D) A clear indication whether the proceeding resulted in an
informal settlement or in the imposition of a penalty,
(E) An indication whether the entity voluntarily disclosed the
violation or alleged violation to OFAC, and
(F) The amount of the penalty imposed or the amount of the agreed
settlement.
(ii) In such proceedings against individuals, OFAC shall release on
an aggregate basis
(A) The number of penalties imposed and informal settlements
reached,
(B) The sanctions programs involved,
(C) A brief description of the violations or alleged violations,
(D) A clear indication whether the proceedings resulted in informal
settlements, in the imposition of penalties, or in administrative
hearing requests pursuant to the Trading With the Enemy Act (TWEA), 50
U.S.C. 5(b), and
(E) The amounts of the penalties imposed and the amounts of the
agreed settlements.
(2) The medium through which information will be released is OFAC's
website at http://www.treas.gov/ofac.
(3) The information made available pursuant to paragraph (d)(1) of
this section shall not include the following:
(i) The name of any violator or alleged violator who is an
individual.
(ii) Records or information obtained or created in the
implementation of part 598 of this chapter.
(4) On a case-by-case basis, OFAC may release additional information
concerning a particular civil penalties proceeding.
[62 FR 45101, Aug. 25, 1997, as amended at 65 FR 41335, July 5, 2000; 68
FR 6822, Feb. 11, 2003]
Sec. 501.806 Procedures for unblocking funds believed to have been blocked
due to mistaken identity.
When a transaction results in the blocking of funds at a financial
institution pursuant to the applicable regulations of this chapter and a
party to the transaction believes the funds have been blocked due to
mistaken identity, that party may seek to have such funds unblocked
pursuant to the following administrative procedures:
(a) Any person who is a party to the transaction may request the
release of funds which the party believes to have been blocked due to
mistaken identity.
(b) Requests to release funds which a party believes to have been
blocked due to mistaken identity must be made in writing and addressed
to the Office of Foreign Assets Control, Compliance Programs Division,
1500 Pennsylvania Avenue, NW.--Annex, Washington, DC 20220, or sent by
facsimile transmission to the Compliance Programs Division at 202/622-
1657.
(c) The written request to release funds must include the name,
address, telephone number, and (where available) fax number of the party
seeking the release of the funds. For individuals, the inclusion of a
social security number is voluntary but will facilitate resolution of
the request. For corporations or other entities, the application should
include its principal place of business, the state of incorporation or
organization, and the name and telephone number of the appropriate
person to contact regarding the application.
(d) A request to release funds should include the following
information, where known, concerning the transaction:
(1) The name of the financial institution in which the funds are
blocked;
(2) The amount blocked;
(3) The date of the blocking;
(4) The identity of the original remitter of the funds and any
intermediary financial institutions;
(5) The intended beneficiary of the blocked transfer;
(6) A description of the underlying transaction including copies of
related documents (e.g., invoices, bills of lading, promissory notes,
etc.);
[[Page 83]]
(7) The nature of the applicant's interest in the funds; and
(8) A statement of the reasons why the applicant believes the funds
were blocked due to mistaken identity.
(e) Upon receipt of the materials required by paragraph (d) of this
section, OFAC may request additional material from the applicant
concerning the transaction pursuant to Sec. 501.602.
(f) Following review of all applicable submissions, the Director of
the Office of Foreign Assets Control will determine whether to release
the funds. In the event the Director determines that the funds should be
released, the Office of Foreign Assets Control will direct the financial
institution to return the funds to the appropriate party.
(g) For purposes of this section, the term ``financial institution''
shall include a banking institution, depository institution or United
States depository institution, domestic bank, financial institution or
U.S. financial institution, as those terms are defined in the applicable
part of this chapter.
[62 FR 45101, Aug. 25, 1997, as amended at 62 FR 52495, Oct. 8, 1997]
Sec. 501.807 Procedures governing removal of names from appendices A, B, and
C to this chapter.
A person may seek administrative reconsideration of his, her or its
designation or that of a vessel as blocked, or assert that the
circumstances resulting in the designation no longer apply, and thus
seek to have the designation rescinded pursuant to the following
administrative procedures:
(a) A person blocked under the provisions of any part of this
chapter, including a specially designated national, specially designated
terrorist, or specially designated narcotics trafficker
(collectively,``a blocked person''), or a person owning a majority
interest in a blocked vessel may submit arguments or evidence that the
person believes establishes that insufficient basis exists for the
designation. The blocked person also may propose remedial steps on the
person's part, such as corporate reorganization, resignation of persons
from positions in a blocked entity, or similar steps, which the person
believes would negate the basis for designation. A person owning a
majority interest in a blocked vessel may propose the sale of the
vessel, with the proceeds to be placed into a blocked interest-bearing
account after deducting the costs incurred while the vessel was blocked
and the costs of the sale. This submission must be made in writing and
addressed to the Director, Office of Foreign Assets Control, U.S.
Department of the Treasury, 1500 Pennsylvania Avenue, NW.--Annex,
Washington, DC 20220.
(b) The information submitted by the blocked person seeking
unblocking or by a person seeking the unblocking of a vessel will be
reviewed by the Office of Foreign Assets Control, which may request
clarifying, corroborating, or other additional information.
(c) A blocked person seeking unblocking or a person seeking the
unblocking of a vessel may request a meeting with the Office of Foreign
Assets Control; however, such meetings are not required, and the office
may, at its discretion, decline to conduct such meetings prior to
completing a review pursuant to this section.
(d) After the Office of Foreign Assets Control has conducted a
review of the request for reconsideration, it will provide a written
decision to the blocked person or person seeking the unblocking of a
vessel.
[64 FR 5614, Feb. 4, 1999]
Sec. 501.808 License application and other procedures applicable to economic
sanctions programs.
Upon submission to the Office of Management and Budget of an
amendment to the overall burden hours for the information collections
imposed under this part, the license application and other procedures
set forth in this subpart are applicable to economic sanctions programs
for which implementation and administration have been delegated to the
Office of Foreign Assets Control.
Subpart F_Paperwork Reduction Act
Source: 62 FR 45101, Aug. 25, 1997, unless otherwise noted.
Redesignated at 68 FR 53642, Sept. 11, 2003.
[[Page 84]]
Sec. 501.901 Paperwork Reduction Act notice.
The information collection requirements in subparts C and D have
been approved by the Office of Management and Budget (``OMB'') under the
Paperwork Reduction Act (44 U.S.C. 3507(j)) and assigned control number
1505-0164. An agency may not conduct or sponsor, and a person is not
required to respond to, a collection of information unless it displays a
valid control number assigned by OMB.
Sec. Appendix A to Part 501--Economic Sanctions Enforcement Guidelines.
Note: This appendix provides a general framework for the enforcement
of all economic sanctions programs administered by the Office of Foreign
Assets Control (OFAC).
I. Definitions
A. Apparent violation means conduct that constitutes an actual or
possible violation of U.S. economic sanctions laws, including the
International Emergency Economic Powers Act (IEEPA), the Trading With
the Enemy Act (TWEA), the Foreign Narcotics Kingpin Designation Act, and
other statutes administered or enforced by OFAC, as well as Executive
orders, regulations, orders, directives, or licenses issued pursuant
thereto.
B. Applicable schedule amount means:
1. $1,000 with respect to a transaction valued at less than $1,000;
2. $10,000 with respect to a transaction valued at $1,000 or more
but less than $10,000;
3. $25,000 with respect to a transaction valued at $10,000 or more
but less than $25,000;
4. $50,000 with respect to a transaction valued at $25,000 or more
but less than $50,000;
5. $100,000 with respect to a transaction valued at $50,000 or more
but less than $100,000;
6. $170,000 with respect to a transaction valued at $100,000 or more
but less than $170,000;
7. $250,000 with respect to a transaction valued at $170,000 or
more, except that where the applicable schedule amount as defined above
exceeds the statutory maximum civil penalty amount applicable to an
apparent violation, the applicable schedule amount shall equal such
applicable statutory maximum civil penalty amount.
C. OFAC means the Department of the Treasury's Office of Foreign
Assets Control.
D. Penalty is the final civil penalty amount imposed in a Penalty
Notice.
E. Proposed penalty is the civil penalty amount set forth in a Pre-
Penalty Notice.
F. Regulator means any Federal, State, local or foreign official or
agency that has authority to license or examine an entity for compliance
with federal, state, or foreign law.
G. Subject Person means an individual or entity subject to any of
the sanctions programs administered or enforced by OFAC.
H. Transaction value means the dollar value of a subject
transaction. In export and import cases, the transaction value generally
will be the domestic value in the United States of the goods,
technology, or services sought to be exported from or imported into the
United States, as demonstrated by commercial invoices, bills of lading,
signed Customs declarations, or similar documents. In cases involving
seizures by U.S. Customs and Border Protection (CBP), the transaction
value generally will be the domestic value as determined by CBP. If the
apparent violation at issue is a prohibited dealing in blocked property
by a Subject Person, the transaction value generally will be the dollar
value of the underlying transaction involved, such as the value of the
property dealt in or the amount of the funds transfer that a financial
institution failed to block or reject. Where the transaction value is
not otherwise ascertainable, OFAC may consider the market value of the
goods or services that were the subject of the transaction, the economic
benefit conferred on the sanctioned party, and/or the economic benefit
derived by the Subject Person from the transaction, in determining
transaction value. For purposes of these Guidelines, ``transaction
value'' will not necessarily have the same meaning, nor be applied in
the same manner, as that term is used for import valuation purposes at
19 CFR 152.103.
I. Voluntary self-disclosure means self-initiated notification to
OFAC of an apparent violation by a Subject Person that has committed, or
otherwise participated in, an apparent violation of a statute, Executive
order, or regulation administered or enforced by OFAC, prior to or at
the same time that OFAC, or any other federal, state, or local
government agency or official, discovers the apparent violation or
another substantially similar apparent violation. For these purposes,
``substantially similar apparent violation'' means an apparent violation
that is part of a series of similar apparent violations or is related to
the same pattern or practice of conduct. Notification of an apparent
violation to another government agency (but not to OFAC) by a Subject
Person, which is considered a voluntary self-disclosure by that agency,
may be considered a voluntary self-disclosure by OFAC, based on a case-
by-case assessment. Notification to OFAC of an apparent violation is not
a voluntary self-disclosure if: a third party is required to and does
notify OFAC of the apparent violation or a substantially similar
apparent violation because a transaction was blocked or rejected by that
third party (regardless of when OFAC receives such notice from the
[[Page 85]]
third party and regardless of whether the Subject Person was aware of
the third party's disclosure); the disclosure includes false or
misleading information; the disclosure (when considered along with
supplemental information provided by the Subject Person) is materially
incomplete; the disclosure is not self-initiated (including when the
disclosure results from a suggestion or order of a federal or state
agency or official); or, when the Subject Person is an entity, the
disclosure is made by an individual in a Subject Person entity without
the authorization of the entity's senior management. Responding to an
administrative subpoena or other inquiry from, or filing a license
application with, OFAC is not a voluntary self-disclosure. In addition
to notification, a voluntary self-disclosure must include, or be
followed within a reasonable period of time by, a report of sufficient
detail to afford a complete understanding of an apparent violation's
circumstances, and should also be followed by responsiveness to any
follow-up inquiries by OFAC. (As discussed further below, a Subject
Person's level of cooperation with OFAC is an important factor in
determining the appropriate enforcement response to an apparent
violation even in the absence of a voluntary self-disclosure as defined
herein; disclosure by a Subject Person generally will result in
mitigation insofar as it represents cooperation with OFAC's
investigation.)
II. Types of Responses to Apparent Violations
Depending on the facts and circumstances of a particular case, an
OFAC investigation may lead to one or more of the following actions:
A. No Action. If OFAC determines that there is insufficient evidence
to conclude that a violation has occurred and/or, based on an analysis
of the General Factors outlined in Section III of these Guidelines,
concludes that the conduct does not rise to a level warranting an
administrative response, then no action will be taken. In those cases in
which OFAC is aware that the Subject Person has knowledge of OFAC's
investigation, OFAC generally will issue a letter to the Subject Person
indicating that the investigation is being closed with no administrative
action being taken. A no-action determination represents a final
determination as to the apparent violation, unless OFAC later learns of
additional related violations or other relevant facts.
B. Request Additional Information. If OFAC determines that
additional information regarding the apparent violation is needed, it
may request further information from the Subject Person or third
parties, including through an administrative subpoena issued pursuant to
31 CFR 501.602. In the case of an institution subject to regulation
where OFAC has entered into a Memorandum of Understanding (MOU) with the
Subject Person's regulator, OFAC will follow the procedures set forth in
such MOU regarding consultation with the regulator. Even in the absence
of an MOU, OFAC may seek relevant information about a regulated
institution and/or the conduct constituting the apparent violation from
the institution's federal, state, or foreign regulator. Upon receipt of
information determined to be sufficient to assess the apparent
violation, OFAC will decide, based on an analysis of the General Factors
outlined in Section III of these Guidelines, whether to pursue further
enforcement action or whether some other response to the apparent
violation is appropriate.
C. Cautionary Letter: If OFAC determines that there is insufficient
evidence to conclude that a violation has occurred or that a Finding of
Violation or a civil monetary penalty is not warranted under the
circumstances, but believes that the underlying conduct could lead to a
violation in other circumstances and/or that a Subject Person does not
appear to be exercising due diligence in assuring compliance with the
statutes, Executive orders, and regulations that OFAC enforces, OFAC may
issue a cautionary letter, which may convey OFAC's concerns about the
underlying conduct and/or the Subject Person's OFAC compliance policies,
practices and/or procedures. A cautionary letter represents a final
enforcement response to the apparent violation, unless OFAC later learns
of additional related violations or other relevant facts, but does not
constitute a final agency determination as to whether a violation has
occurred.
D. Finding of Violation: If OFAC determines that a violation has
occurred and considers it important to document the occurrence of a
violation and, based on an analysis of the General Factors outlined in
Section III of these Guidelines, concludes that the Subject Person's
conduct warrants an administrative response but that a civil monetary
penalty is not the most appropriate response, OFAC may issue a Finding
of Violation that identifies the violation. A Finding of Violation may
also convey OFAC's concerns about the violation and/or the Subject
Person's OFAC compliance policies, practices and/or procedures, and/or
identify the need for further compliance steps to be taken. A Finding of
Violation represents a final enforcement response to the violation,
unless OFAC later learns of additional related violations or other
relevant facts, and constitutes a final agency determination that a
violation has occurred. A Finding of Violation will afford the Subject
Person an opportunity to respond to OFAC's determination that a
violation has occurred before that determination becomes final. In the
event a Subject Person so responds, the initial Finding of Violation
[[Page 86]]
will not constitute a final agency determination that a violation has
occurred. In such cases, after considering the response received, OFAC
will inform the Subject Person of its final enforcement response to the
apparent violation.
E. Civil Monetary Penalty. If OFAC determines that a violation has
occurred and, based on an analysis of the General Factors outlined in
Section III of these Guidelines, concludes that the Subject Person's
conduct warrants the imposition of a monetary penalty, OFAC may impose a
civil monetary penalty. Civil monetary penalty amounts will be
determined as discussed in Section V of these Guidelines. The imposition
of a civil monetary penalty constitutes a final agency determination
that a violation has occurred and represents a final civil enforcement
response to the violation. OFAC will afford the Subject Person an
opportunity to respond to OFAC's determination that a violation has
occurred before a final penalty is imposed.
F. Criminal Referral. In appropriate circumstances, OFAC may refer
the matter to appropriate law enforcement agencies for criminal
investigation and/or prosecution. Apparent sanctions violations that
OFAC has referred for criminal investigation and/or prosecution also may
be subject to OFAC civil penalty or other administrative action.
G. Other Administrative Actions. In addition to or in lieu of other
administrative actions, OFAC may also take the following administrative
actions in response to an apparent violation:
1. License Denial, Suspension, Modification, or Revocation. OFAC
authorizations to engage in a transaction (including the release of
blocked funds) pursuant to a general or specific license may be
withheld, denied, suspended, modified, or revoked in response to an
apparent violation.
2. Cease and Desist Order. OFAC may order the Subject Person to
cease and desist from conduct that is prohibited by any of the sanctions
programs enforced by OFAC when OFAC has reason to believe that a Subject
Person has engaged in such conduct and/or that such conduct is ongoing
or may recur.
III. General Factors Affecting Administrative Action
As a general matter, OFAC will consider some or all of the following
General Factors in determining the appropriate administrative action in
response to an apparent violation of U.S. sanctions by a Subject Person,
and, where a civil monetary penalty is imposed, in determining the
appropriate amount of any such penalty:
A. Willful or Reckless Violation of Law: a Subject Person's
willfulness or recklessness in violating, attempting to violate,
conspiring to violate, or causing a violation of the law. Generally, to
the extent the conduct at issue is the result of willful conduct or a
deliberate intent to violate, attempt to violate, conspire to violate,
or cause a violation of the law, the OFAC enforcement response will be
stronger. Among the factors OFAC may consider in evaluating willfulness
or recklessness are:
1. Willfulness. Was the conduct at issue the result of a decision to
take action with the knowledge that such action would constitute a
violation of U.S. law? Did the Subject Person know that the underlying
conduct constituted, or likely constituted, a violation of U.S. law at
the time of the conduct?
2. Recklessness. Did the Subject Person demonstrate reckless
disregard for U.S. sanctions requirements or otherwise fail to exercise
a minimal degree of caution or care in avoiding conduct that led to the
apparent violation? Were there warning signs that should have alerted
the Subject Person that an action or failure to act would lead to an
apparent violation?
3. Concealment. Was there an effort by the Subject Person to hide or
purposely obfuscate its conduct in order to mislead OFAC, Federal,
State, or foreign regulators, or other parties involved in the conduct
about an apparent violation?
4. Pattern of Conduct. Did the apparent violation constitute or
result from a pattern or practice of conduct or was it relatively
isolated and atypical in nature?
5. Prior Notice. Was the Subject Person on notice, or should it
reasonably have been on notice, that the conduct at issue, or similar
conduct, constituted a violation of U.S. law?
6. Management Involvement. In cases of entities, at what level
within the organization did the willful or reckless conduct occur? Were
supervisory or managerial level staff aware, or should they reasonably
have been aware, of the willful or reckless conduct?
B. Awareness of Conduct at Issue: the Subject Person's awareness of
the conduct giving rise to the apparent violation. Generally, the
greater a Subject Person's actual knowledge of, or reason to know about,
the conduct constituting an apparent violation, the stronger the OFAC
enforcement response will be. In the case of a corporation, awareness
will focus on supervisory or managerial level staff in the business unit
at issue, as well as other senior officers and managers. Among the
factors OFAC may consider in evaluating the Subject Person's awareness
of the conduct at issue are:
1. Actual Knowledge. Did the Subject Person have actual knowledge
that the conduct giving rise to an apparent violation took place? Was
the conduct part of a business process, structure or arrangement that
was designed or implemented with the intent to prevent or shield the
Subject Person from having such actual knowledge, or was the conduct
part of a business process, structure or arrangement implemented for
other legitimate reasons that made it difficult or
[[Page 87]]
impossible for the Subject Person to have actual knowledge?
2. Reason to Know. If the Subject Person did not have actual
knowledge that the conduct took place, did the Subject Person have
reason to know, or should the Subject Person reasonably have known,
based on all readily available information and with the exercise of
reasonable due diligence, that the conduct would or might take place?
3. Management Involvement. In the case of an entity, was the conduct
undertaken with the explicit or implicit knowledge of senior management,
or was the conduct undertaken by personnel outside the knowledge of
senior management? If the apparent violation was undertaken without the
knowledge of senior management, was there oversight intended to detect
and prevent violations, or did the lack of knowledge by senior
management result from disregard for its responsibility to comply with
applicable sanctions laws?
C. Harm to Sanctions Program Objectives: the actual or potential
harm to sanctions program objectives caused by the conduct giving rise
to the apparent violation. Among the factors OFAC may consider in
evaluating the harm to sanctions program objectives are:
1. Economic or Other Benefit to the Sanctioned Individual, Entity,
or Country: the economic or other benefit conferred or attempted to be
conferred to sanctioned individuals, entities, or countries as a result
of an apparent violation, including the number, size, and impact of the
transactions constituting an apparent violation(s), the length of time
over which they occurred, and the nature of the economic or other
benefit conferred. OFAC may also consider the causal link between the
Subject Person's conduct and the economic benefit conferred or attempted
to be conferred.
2. Implications for U.S. Policy: the effect that the circumstances
of the apparent violation had on the integrity of the U.S. sanctions
program and the related policy objectives involved.
3. License Eligibility: whether the conduct constituting the
apparent violation likely would have been licensed by OFAC under
existing licensing policy.
4. Humanitarian activity: whether the conduct at issue was in
support of a humanitarian activity.
D. Individual Characteristics: the particular circumstances and
characteristics of a Subject Person. Among the factors OFAC may consider
in evaluating individual characteristics are:
1. Commercial Sophistication: the commercial sophistication and
experience of the Subject Person. Is the Subject Person an individual or
an entity? If an individual, was the conduct constituting the apparent
violation for personal or business reasons?
2. Size of Operations and Financial Condition: the size of a Subject
Person's business operations and overall financial condition, where such
information is available and relevant. Qualification of the Subject
Person as a small business or organization for the purposes of the Small
Business Regulatory Enforcement Fairness Act, as determined by reference
to the applicable regulations of the Small Business Administration, may
also be considered.
3. Volume of Transactions: the total volume of transactions
undertaken by the Subject Person on an annual basis, with attention
given to the apparent violations as compared with the total volume.
4. Sanctions History: the Subject Person's sanctions history,
including OFAC's issuance of prior penalties, findings of violations or
cautionary, warning or evaluative letters, or other administrative
actions (including settlements). As a general matter, OFAC will only
consider a Subject Person's sanctions history for the five years
preceding the date of the transaction giving rise to the apparent
violation.
E. Compliance Program: the existence, nature and adequacy of a
Subject Person's risk-based OFAC compliance program at the time of the
apparent violation, where relevant. In the case of an institution
subject to regulation where OFAC has entered into a Memorandum of
Understanding (MOU) with the Subject Person's regulator, OFAC will
follow the procedures set forth in such MOU regarding consultation with
the regulator with regard to the quality and effectiveness of the
Subject Person's compliance program. Even in the absence of an MOU, OFAC
may take into consideration the views of federal, state, or foreign
regulators, where relevant. Further information about risk-based
compliance programs for financial institutions is set forth in the annex
hereto.
F. Remedial Response: the Subject Person's corrective action taken
in response to the apparent violation. Among the factors OFAC may
consider in evaluating the remedial response are:
1. The steps taken by the Subject Person upon learning of the
apparent violation. Did the Subject Person immediately stop the conduct
at issue?
2. In the case of an entity, the processes followed to resolve
issues related to the apparent violation. Did the Subject Person
discover necessary information to ascertain the causes and extent of the
apparent violation, fully and expeditiously? Was senior management fully
informed? If so, when?
3. In the case of an entity, whether the Subject Person adopted new
and more effective internal controls and procedures to prevent a
recurrence of the apparent violation. If the Subject Person did not have
an OFAC compliance program in place at the time of the apparent
violation, did it implement one
[[Page 88]]
upon discovery of the apparent violations? If it did have an OFAC
compliance program, did it take appropriate steps to enhance the program
to prevent the recurrence of similar violations? Did the entity provide
the individual(s) responsible for the apparent violation with additional
training, and/or take other appropriate action, to ensure that similar
violations do not occur in the future?
4. Where applicable, whether the Subject Person undertook a thorough
review to identify other possible violations.
G. Cooperation with OFAC: the nature and extent of the Subject
Person's cooperation with OFAC. Among the factors OFAC may consider in
evaluating cooperation with OFAC are:
1. Did the Subject Person voluntarily self-disclose the apparent
violation to OFAC?
2. Did the Subject Person provide OFAC with all relevant information
regarding an apparent violation (whether or not voluntarily self-
disclosed)?
3. Did the Subject Person research and disclose to OFAC relevant
information regarding any other apparent violations caused by the same
course of conduct?
4. Was information provided voluntarily or in response to an
administrative subpoena?
5. Did the Subject Person cooperate with, and promptly respond to,
all requests for information?
6. Did the Subject Person enter into a statute of limitations
tolling agreement, if requested by OFAC (particularly in situations
where the apparent violations were not immediately notified to or
discovered by OFAC, in particularly complex cases, and in cases in which
the Subject Person has requested and received additional time to respond
to a request for information from OFAC)? If so, the Subject Person's
entering into a tolling agreement will be deemed a mitigating factor.
Note: a Subject Person's refusal to enter into a tolling agreement will
not be considered by OFAC as an aggravating factor in assessing a
Subject Person's cooperation or otherwise under the Guidelines.
Where appropriate, OFAC will publicly note substantial cooperation
provided by a Subject Person.
H. Timing of apparent violation in relation to imposition of
sanctions: the timing of the apparent violation in relation to the
adoption of the applicable prohibitions, particularly if the apparent
violation took place immediately after relevant changes in the sanctions
program regulations or the addition of a new name to OFAC's List of
Specially Designated Nationals and Blocked Persons (SDN List).
I. Other enforcement action: other enforcement actions taken by
federal, state, or local agencies against the Subject Person for the
apparent violation or similar apparent violations, including whether the
settlement of alleged violations of OFAC regulations is part of a
comprehensive settlement with other federal, state, or local agencies.
J. Future Compliance/Deterrence Effect: the impact administrative
action may have on promoting future compliance with U.S. economic
sanctions by the Subject Person and similar Subject Persons,
particularly those in the same industry sector.
K. Other relevant factors on a case-by-case basis: such other
factors that OFAC deems relevant on a case-by-case basis in determining
the appropriate enforcement response and/or the amount of any civil
monetary penalty. OFAC will consider the totality of the circumstances
to ensure that its enforcement response is proportionate to the nature
of the violation.
IV. Civil Penalties for Failure To Comply With a Requirement To Furnish
Information or Keep Records
As a general matter, the following civil penalty amounts shall apply
to a Subject Person's failure to comply with a requirement to furnish
information or maintain records:
A. The failure to comply with a requirement to furnish information
pursuant to 31 CFR 501.602 may result in a penalty in an amount up to
$20,000, irrespective of whether any other violation is alleged. Where
OFAC has reason to believe that the apparent violation(s) that is the
subject of the requirement to furnish information involves a
transaction(s) valued at greater than $500,000, a failure to comply with
a requirement to furnish information may result in a penalty in an
amount up to $50,000, irrespective of whether any other violation is
alleged. A failure to comply with a requirement to furnish information
may be considered a continuing violation, and the penalties described
above may be imposed each month that a party has continued to fail to
comply with the requirement to furnish information. OFAC may also seek
to have a requirement to furnish information judicially enforced.
Imposition of a civil monetary penalty for failure to comply with a
requirement to furnish information does not preclude OFAC from seeking
such judicial enforcement of the requirement to furnish information.
B. The late filing of a required report, whether set forth in
regulations or in a specific license, may result in a civil monetary
penalty in an amount up to $2,500, if filed within the first 30 days
after the report is due, and a penalty in an amount up to $5,000 if
filed more than 30 days after the report is due. If the report relates
to blocked assets, the penalty may include an additional $1,000 for
every 30 days that the report is overdue, up to five years.
C. The failure to maintain records in conformance with the
requirements of OFAC's
[[Page 89]]
regulations or of a specific license may result in a penalty in an
amount up to $50,000.
V. Civil Penalties
OFAC will review the facts and circumstances surrounding an apparent
violation and apply the General Factors for Taking Administrative Action
in Section III above in determining whether to initiate a civil penalty
proceeding and in determining the amount of any civil monetary penalty.
OFAC will give careful consideration to the appropriateness of issuing a
cautionary letter or Finding of Violation in lieu of the imposition of a
civil monetary penalty.
A. Civil Penalty Process
1. Pre-Penalty Notice. If OFAC has reason to believe that a
sanctions violation has occurred and believes that a civil monetary
penalty is appropriate, it will issue a Pre-Penalty Notice in accordance
with the procedures set forth in the particular regulations governing
the conduct giving rise to the apparent violation. The amount of the
proposed penalty set forth in the Pre-Penalty Notice will reflect OFAC's
preliminary assessment of the appropriate penalty amount, based on
information then in OFAC's possession. The amount of the final penalty
may change as OFAC learns additional relevant information. If, after
issuance of a Pre-Penalty Notice, OFAC determines that a penalty in an
amount that represents an increase of more than 10 percent from the
proposed penalty set forth in the Pre-Penalty Notice is appropriate, or
if OFAC intends to allege additional violations, it will issue a revised
Pre-Penalty Notice setting forth the new proposed penalty amount and/or
alleged violations.
a. In general, the Pre-Penalty Notice will set forth the following
with respect to the specific violations alleged and the proposed
penalties:
i. Description of the alleged violations, including the number of
violations and their value, for which a penalty is being proposed;
ii. Identification of the regulatory or other provisions alleged to
have been violated;
iii. Identification of the base category (defined below) according
to which the proposed penalty amount was calculated and the General
Factors that were most relevant to the determination of the proposed
penalty amount;
iv. The maximum amount of the penalty to which the Subject Person
could be subject under applicable law; and
v. The proposed penalty amount, determined in accordance with the
provisions set forth in these Guidelines.
b. The Pre-Penalty Notice will also include information regarding
how to respond to the Pre-Penalty Notice including:
i. A statement that the Subject Person may submit a written response
to the Pre-Penalty Notice by a date certain addressing the alleged
violation(s), the General Factors Affecting Administrative Action set
forth in Section III of these Guidelines, and any other information or
evidence that the Subject Person deems relevant to OFAC's consideration.
ii. A statement that a failure to respond to the Pre-Penalty Notice
may result in the imposition of a civil monetary penalty.
2. Response to Pre-Penalty Notice. A Subject Person may submit a
written response to the Pre-Penalty Notice in accordance with the
procedures set forth in the particular regulations governing the conduct
giving rise to the apparent violation. Generally, the response should
either agree to the proposed penalty set forth in the Pre-Penalty Notice
or set forth reasons why a penalty should not be imposed or, if imposed,
why it should be a lesser amount than proposed, with particular
attention paid to the General Factors Affecting Administrative Action
set forth in Section III of these Guidelines. The response should
include all documentary or other evidence available to the Subject
Person that supports the arguments set forth in the response. OFAC will
consider all relevant materials submitted.
3. Penalty Notice. If OFAC receives no response to a Pre-Penalty
Notice within the time prescribed in the Pre-Penalty Notice, or if
following the receipt of a response to a Pre-Penalty Notice and a review
of the information and evidence contained therein OFAC concludes that a
civil monetary penalty is warranted, a Penalty Notice generally will be
issued in accordance with the procedures set forth in the particular
regulations governing the conduct giving rise to the violation. A
Penalty Notice constitutes a final agency determination that a violation
has occurred. The penalty amount set forth in the Penalty Notice will
take into account relevant additional information provided in response
to a Pre-Penalty Notice. In the absence of a response to a Pre-Penalty
Notice, the penalty amount set forth in the Penalty Notice will
generally be the same as the proposed penalty set forth in the Pre-
Penalty Notice.
4. Referral to Financial Management Division. The imposition of a
civil monetary penalty pursuant to a Penalty Notice creates a debt due
the U.S. Government. OFAC will advise Treasury's Financial Management
Division upon the imposition of a penalty. The Financial Management
Division may take follow-up action to collect the penalty assessed if it
is not paid within the prescribed time period set forth in the Penalty
Notice. In addition or instead, the matter may be referred to the U.S.
Department of Justice for appropriate action to recover the penalty.
[[Page 90]]
5. Final Agency Action. The issuance of a Penalty Notice constitutes
final agency action with respect to the violation(s) for which the
penalty is assessed.
B. Amount of Civil Penalty
1. Egregious case. In those cases in which a civil monetary penalty
is deemed appropriate, OFAC will make a determination as to whether a
case is deemed ``egregious'' for purposes of the base penalty
calculation. This determination will be based on an analysis of the
applicable General Factors. In making the egregiousness determination,
OFAC generally will give substantial weight to General Factors A
(``willful or reckless violation of law''), B (``awareness of conduct at
issue''), C (``harm to sanctions program objectives'') and D
(``individual characteristics''), with particular emphasis on General
Factors A and B. A case will be considered an ``egregious case'' where
the analysis of the applicable General Factors, with a focus on those
General Factors identified above, indicates that the case represents a
particularly serious violation of the law calling for a strong
enforcement response. A determination that a case is ``egregious'' will
be made by the Director or Deputy Director.
2. Pre-Penalty Notice. The penalty amount proposed in a Pre-Penalty
Notice shall generally be calculated as follows, except that neither the
base amount nor the proposed penalty will exceed the applicable
statutory maximum amount: \6\
---------------------------------------------------------------------------
\6\ For apparent violations identified in the Cuba Penalty Schedule,
68 Fed. Reg. 4429 (Jan. 29, 2003), for which a civil monetary penalty
has been deemed appropriate, the base penalty amount shall equal the
amount set forth in the Schedule for such violation, except that the
base penalty amount shall be reduced by 50% in cases of voluntary self-
disclosure.
---------------------------------------------------------------------------
a. Base Category Calculation
i. In a non-egregious case, if the apparent violation is disclosed
through a voluntary self-disclosure by the Subject Person, the base
amount of the proposed civil penalty in the Pre-Penalty Notice shall be
one-half of the transaction value, capped at a maximum base amount of
$125,000 per violation (except in the case of transactions subject to
the Trading With the Enemy Act, in which case the base amount of the
proposed civil penalty will be capped at the lesser of $125,000 or one-
half of the maximum statutory penalty under TWEA, which at the time of
publication of these Guidelines equaled $32,500 per violation).
ii. In a non-egregious case, if the apparent violation comes to
OFAC's attention by means other than a voluntary self-disclosure, the
base amount of the proposed civil penalty in the Pre-Penalty Notice
shall be the ``applicable schedule amount,'' as defined above (capped at
a maximum base amount of $250,000 per violation, or, in the case of
transactions subject to the Trading With the Enemy Act, capped at the
lesser of $250,000 or the maximum statutory penalty under TWEA, which at
the time of publication of these Guidelines equaled a maximum of $65,000
per violation).
iii. In an egregious case, if the apparent violation is disclosed
through a voluntary self-disclosure by a Subject Person, the base amount
of the proposed civil penalty in the Pre-Penalty Notice shall be one-
half of the applicable statutory maximum penalty applicable to the
violation.
iv. In an egregious case, if the apparent violation comes to OFAC's
attention by means other than a voluntary self-disclosure, the base
amount of the proposed civil penalty in the Pre-Penalty Notice shall be
the applicable statutory maximum penalty amount applicable to the
violation.
The following matrix represents the base amount of the proposed
civil penalty for each category of violation:
[[Page 91]]
[GRAPHIC] [TIFF OMITTED] TR09NO09.016
b. Adjustment for Applicable Relevant General Factors
The base amount of the proposed civil penalty may be adjusted to
reflect applicable General Factors for Administrative Action set forth
in Section III of these Guidelines. Each factor may be considered
mitigating or aggravating, resulting in a lower or higher proposed
penalty amount. As a general matter, in those cases where the following
General Factors are present, OFAC will adjust the base proposed penalty
amount in the following manner:
i. In cases involving substantial cooperation with OFAC but no
voluntary self-disclosure as defined herein, including cases in which an
apparent violation is reported to OFAC by a third party but the Subject
Person provides substantial additional information regarding the
apparent violation and/or other related violations, the base penalty
amount generally will be reduced between 25 and 40 percent. Substantial
cooperation in cases involving voluntary self-disclosure may also be
considered as a further mitigating factor.
ii. In cases involving a Subject Person's first violation, the base
penalty amount generally will be reduced up to 25 percent. An apparent
violation generally will be considered a ``first violation'' if the
Subject Person has not received a penalty notice or Finding of Violation
from OFAC in the five years preceding the date of the transaction giving
rise to the apparent violation. A group of substantially similar
apparent violations addressed in a single Pre-Penalty Notice shall be
considered as a single violation for purposes of this subsection. In
those cases where a prior penalty notice or Finding of Violation within
the preceding five years involved conduct of a substantially different
nature
[[Page 92]]
from the apparent violation at issue, OFAC may consider the apparent
violation at issue a ``first violation.'' In determining the extent of
any mitigation for a first violation, OFAC may consider any prior OFAC
enforcement action taken with respect to the Subject Person, including
any cautionary, warning or evaluative letters issued, or any civil
monetary settlements entered into with OFAC.
In all cases, the proposed penalty amount will not exceed the
applicable statutory maximum.
In cases involving a large number of apparent violations, where the
transaction value of all apparent violations is either unknown or would
require a disproportionate allocation of resources to determine, OFAC
may estimate or extrapolate the transaction value of the total universe
of apparent violations in determining the amount of any proposed civil
monetary penalty.
3. Penalty Notice. The amount of the proposed civil penalty in the
Pre-Penalty Notice will be the presumptive starting point for
calculation of the civil penalty amount in the Penalty Notice. OFAC may
adjust the penalty amount in the Penalty Notice based on:
a. Evidence presented by the Subject Person in response to the Pre-
Penalty Notice, or otherwise received by OFAC with respect to the
underlying violation(s); and/or
b. Any modification resulting from further review and
reconsideration by OFAC of the proposed civil monetary penalty in light
of the General Factors for Administrative Action set forth in Section
III above.
In no event will the amount of the civil monetary penalty in the
Penalty Notice exceed the proposed penalty set forth in the Pre-Penalty
Notice by more than 10 percent, or include additional alleged
violations, unless a revised Pre-Penalty Notice has first been sent to
the Subject Person as set forth above. In the event that OFAC determines
upon further review that no penalty is appropriate, it will so inform
the Subject Person in a no-action letter, a cautionary letter, or a
Finding of Violation.
C. Settlements
A settlement does not constitute a final agency determination that a
violation has occurred.
1. Settlement Process. Settlement discussions may be initiated by
OFAC, the Subject Person or the Subject Person's authorized
representative. Settlements generally will be negotiated in accordance
with the principles set forth in these Guidelines with respect to
appropriate penalty amounts. OFAC may condition the entry into or
continuation of settlement negotiations on the execution of a tolling
agreement with respect to the statute of limitations.
2. Settlement Prior to Issuance of Pre-Penalty Notice. Where
settlement discussions occur prior to the issuance of a Pre-Penalty
Notice, the Subject Person may request in writing that OFAC withhold
issuance of a Pre-Penalty Notice pending the conclusion of settlement
discussions. OFAC will generally agree to such a request as long as
settlement discussions are continuing in good faith and the statute of
limitations is not at risk of expiring.
3. Settlement Following Issuance of Pre-Penalty Notice. If a matter
is settled after a Pre-Penalty Notice has been issued, but before a
final Penalty Notice is issued, OFAC will not make a final determination
as to whether a sanctions violation has occurred. In the event no
settlement is reached, the period specified for written response to the
Pre-Penalty Notice remains in effect unless additional time is granted
by OFAC.
4. Settlements of Multiple Apparent Violations. A settlement
initiated for one apparent violation may also involve a comprehensive or
global settlement of multiple apparent violations covered by other Pre-
Penalty Notices, apparent violations for which a Pre-Penalty Notice has
not yet been issued by OFAC, or previously unknown apparent violations
reported to OFAC during the pendency of an investigation of an apparent
violation.
Annex
The following matrix can be used by financial institutions to
evaluate their compliance programs:
[[Page 93]]
OFAC Risk Matrix
----------------------------------------------------------------------------------------------------------------
Low Moderate High
----------------------------------------------------------------------------------------------------------------
Stable, well-known customer base in Customer base changing due to A large, fluctuating client base in
a localized environment. branching, merger, or acquisition an international environment.
in the domestic market.
Few high-risk customers; these may A moderate number of high-risk A large number of high-risk
include nonresident aliens, foreign customers. customers.
customers (including accounts with
U.S. powers of attorney), and
foreign commercial customers.
No overseas branches and no Overseas branches or correspondent Overseas branches or multiple
correspondent accounts with foreign accounts with foreign banks. correspondent accounts with foreign
banks. banks.
No electronic services (e.g., e- The institution offers limited The institution offers a wide array
banking) offered, or products electronic (e.g., e-banking) of electronic (e.g., e-banking)
available are purely informational products and services. products and services (i.e.,
or non-transactional. account transfers, e-bill payment,
or accounts opened via the
Internet).
Limited number of funds transfers A moderate number of funds A high number of customer and non-
for customers and non-customers, transfers, mostly for customers. customer funds transfers, including
limited third-party transactions, Possibly, a few international funds international funds transfers.
and no international funds transfers from personal or business
transfers. accounts.
No other types of international Limited other types of international A high number of other types of
transactions, such as trade transactions. international transactions.
finance, cross-border ACH, and
management of sovereign debt.
No history of OFAC actions. No A small number of recent actions Multiple recent actions by OFAC,
evidence of apparent violation or (i.e., actions within the last five where the institution has not
circumstances that might lead to a years) by OFAC, including notice addressed the issues, thus leading
violation. letters, or civil money penalties, to an increased risk of the
with evidence that the institution institution undertaking similar
addressed the issues and is not at violations in the future.
risk of similar violations in the
future.
Management has fully assessed the Management exhibits a reasonable Management does not understand, or
institution's level of risk based understanding of the key aspects of has chosen to ignore, key aspects
on its customer base and product OFAC compliance and its commitment of OFAC compliance risk. The
lines. This understanding of risk is generally clear and importance of compliance is not
and strong commitment to OFAC satisfactorily communicated emphasized or communicated
compliance is satisfactorily throughout the organization, but it throughout the organization.
communicated throughout the may lack a program appropriately
organization. tailored to risk.
The board of directors, or board The board has approved an OFAC The board has not approved an OFAC
committee, has approved an OFAC compliance program that includes compliance program, or policies,
compliance program that includes most of the appropriate policies, procedures, controls, and
policies, procedures, controls, and procedures, controls, and information systems are
information systems that are information systems necessary to significantly deficient.
adequate, and consistent with the ensure compliance, but some
institution's OFAC risk profile. weaknesses are noted.
Staffing levels appear adequate to Staffing levels appear generally Management has failed to provide
properly execute the OFAC adequate, but some deficiencies are appropriate staffing levels to
compliance program. noted. handle workload.
Authority and accountability for Authority and accountability are Authority and accountability for
OFAC compliance are clearly defined defined, but some refinements are compliance have not been clearly
and enforced, including the needed. A qualified OFAC officer established. No OFAC compliance
designation of a qualified OFAC has been designated. officer, or an unqualified one, has
officer. been appointed. The role of the
OFAC officer is unclear.
Training is appropriate and Training is conducted and management Training is sporadic and does not
effective based on the provides adequate resources given cover important regulatory and risk
institution's risk profile, covers the risk profile of the areas or is nonexistent.
applicable personnel, and provides organization; however, some areas
necessary up-to-date information are not covered within the training
and resources to ensure compliance. program.
The institution employs strong The institution employs limited The institution does not employ
quality control methods. quality control methods. quality control methods.
----------------------------------------------------------------------------------------------------------------
[[Page 94]]
[74 FR 57601, Nov. 9, 2009]
PART 505_REGULATIONS PROHIBITING TRANSACTIONS INVOLVING THE SHIPMENT OF
CERTAIN MERCHANDISE BETWEEN FOREIGN COUNTRIES--Table of Contents
Sec.
505.01 Short title.
505.10 Prohibitions.
505.20 Definitions.
505.30 Licenses.
505.31 General license for offshore transactions from certain countries.
505.40 Records and reports.
505.50 Penalties.
505.60 Procedures.
Authority: 31 U.S.C. 321(b); 50 U.S.C. App. 1-44; Pub. L. 101-410,
104 Stat. 890 (28 U.S.C. 2461 note); E.O. 9193, 7 FR 5205, 3 CFR, 1938-
1943 Comp., p. 1174; E.O. 9989, 13 FR 4891, 3 CFR, 1943-1948 Comp., p.
748.
Source: 18 FR 4291, July 23, 1953, unless otherwise noted.
Sec. 505.01 Short title.
The regulations in this part may be referred to as the Transaction
Control Regulations.
[19 FR 5483, Aug. 27, 1954]
Sec. 505.10 Prohibitions.
Except as specifically authorized by the Secretary of the Treasury
(or any person, agency, or instrumentality designated by him) by means
of regulations, rulings, instructions, licenses, or otherwise, no person
within the United States, for his own account or that of another, may
purchase or sell or arrange the purchase or sale of any merchandise in
any foreign country or obtain from any banking institution a credit or
payment in connection therewith, or attempt to do any of the foregoing,
if:
(a) The transaction involves the shipment from any foreign country
of any merchandise directly or indirectly to any destination within a
country on the attached schedule, and
(b) The merchandise is of a type the unauthorized exportation of
which from the United States is prohibited by regulations issued under
the Arms Export Control Act of 1976, 22 U.S.C. 2778, or the Atomic
Energy Act of 1954, 42 U.S.C. 2011-2297g-4, or successor acts
restricting the esportation of strategic goods.
Schedule
Albania
Bulgaria
Cambodia
The Czech Republic
Estonia
Latvia
Lithuania
North Korea
Mongolia
People's Republic of China
Poland
Romania
The Slovak Republic
The geographic area formerly known as the Union of Soviet Socialist
Republics
Vietnam
[30 FR 1284, Feb. 6, 1965, as amended at 50 FR 27437, July 3, 1985; 56
FR 45895, Sept. 9, 1991; 58 FR 13198, Mar. 10, 1993; 60 FR 34144, June
30, 1995]
Sec. 505.20 Definitions.
The definitions contained in subpart C, part 500 of this chapter are
applicable to any terms therein defined which are used in this part.
[19 FR 5483, Aug. 27, 1954]
Sec. 505.30 Licenses.
No regulation, ruling, instruction or license authorizes a
transaction prohibited by Sec. 505.10 unless the regulation, ruling,
instruction or license is issued by the Treasury Department and
specifically refers to that section. For provisions relating to
licensing procedures, see part 501, subpart E, of this chapter.
Licensing actions taken pursuant to part 501 of this chapter with
respect to the prohibitions contained in this part are considered
actions taken pursuant to this part.
[18 FR 4291, July 23, 1953, as amended at 68 FR 53657, Sept. 11, 2003]
Sec. 505.31 General license for offshore transactions from certain countries.
(a) Except as provided in paragraph (b) of this section, all
transactions prohibited by Sec. 505.10 are hereby authorized provided:
(1) Shipment is to a country listed in the schedule to Sec. 505.10,
other than North Korea; and
[[Page 95]]
(2) Shipment is made from and licensed by one of the following
foreign countries: Australia, Austria, Belgium, Canada, Denmark, France,
Finland, Germany, Greece, Hong Kong, Ireland, Italy, Japan, Luxembourg,
The Netherlands, New Zealand, Norway, Portugal, Spain, Sweden,
Switzerland, Turkey, or the United Kingdom.
(b) This section does not authorize any transactions otherwise
prohibited by this chapter.
[37 FR 3520, Feb. 17, 1972, as amended at 41 FR 16557, Apr. 20, 1976; 56
FR 45895, Sept. 9, 1991; 58 FR 13198, Mar. 10, 1993]
Sec. 505.40 Records and reports.
For provisions relating to records and reports, see Sec. Sec.
501.601 and 501.602 of this chapter.
[18 FR 4291, July 23, 1953, as amended at 62 FR 45106, Aug. 25, 1997]
Sec. 505.50 Penalties.
For provisions relating to penalties, see part 501, subpart D, of
this chapter.
[63 FR 10331, Mar. 3, 1998, as amended at 68 FR 53657, Sept. 11, 2003]
Sec. 505.60 Procedures.
For license application procedures and procedures relating to
amendments, modifications, or revocations of licenses; administrative
decisions; rulemaking; and requests for documents pursuant to the
Freedom of Information and Privacy Acts (5 U.S.C. 552 and 552a), see
part 501, subpart E, of this chapter.
[62 FR 45106, Aug. 25, 1997, as amended at 68 FR 53657, Sept. 11, 2003]
PART 515_CUBAN ASSETS CONTROL REGULATIONS--Table of Contents
Subpart A_Relation of This Part to Other Laws and Regulations
Sec.
515.101 Relation of this part to other laws and regulations.
Subpart B_Prohibitions
515.201 Transactions involving designated foreign countries or their
nationals; effective date.
515.202 Transactions with respect to securities registered or inscribed
in the name of a designated national.
515.203 Effect of transfers violating the provisions of this part.
515.204 Importation of and dealings in certain merchandise.
515.205 Holding of certain types of blocked property in interest-bearing
accounts.
515.206 Exempt transactions.
515.207 Entry of vessels engaged in trade with Cuba.
515.208 Restrictions on loans, credits and other financing.
Subpart C_General Definitions
515.301 Foreign country.
515.302 National.
515.303 Nationals of more than one foreign country.
515.305 Designated national.
515.306 Specially designated national.
515.307 Unblocked national.
515.308 Person.
515.309 Transactions.
515.310 Transfer.
515.311 Property; property interests.
515.312 Interest.
515.313 Property subject to the jurisdiction of the United States.
515.314 Banking institution.
515.316 License.
515.317 General license.
515.318 Specific license.
515.319 Blocked account.
515.320 Domestic bank.
515.321 United States; continental United States.
515.322 Authorized trade territory; member of the authorized trade
territory.
515.323 Occupied area.
515.325 National securities exchange.
515.326 Custody of safe deposit boxes.
515.327 Blocked estate of a decedent.
515.329 Person subject to the jurisdiction of the United States.
515.330 Person within the United States.
515.331 Merchandise.
515.332 Information and informational materials.
515.333 Depository institution.
515.334 United States national.
515.335 Permanent resident alien.
515.336 Confiscated.
515.337 Prohibited officials of the Government of Cuba.
515.338 Prohibited members of the Cuban Communist Party.
515.339 Close relative.
Subpart D_Interpretations
515.401 Reference to amended sections.
515.402 Effect of amendment of sections of this part or of other orders,
etc.
515.403 Termination and acquisition of the interest of a designated
national.
[[Page 96]]
515.404 Transactions between principal and agent.
515.405 Exportation of securities, currency, checks, drafts and
promissory notes.
515.406 Drafts under irrevocable letters of credit; documentary drafts.
515.407 Administration of blocked estates of decedents.
515.408 Access to certain safe deposit boxes prohibited.
515.409 Certain payments to a designated foreign country and nationals
through third countries.
515.410 Dealing abroad in Cuban origin commodities.
515.411--515.413 [Reserved]
515.415 Travel to Cuba; transportation of certain Cuban nationals.
515.416-515.419 [Reserved]
515.420 Travel to Cuba.
Subpart E_Licenses, Authorizations, and Statements of Licensing Policy
515.501 General and specific licensing procedures.
515.502 Effect of subsequent license or authorization.
515.503 Exclusion from licenses and authorizations.
515.504 Certain judicial proceedings with respect to property of
designated nationals.
515.505 Certain Cuban nationals unblocked; transactions of certain other
Cuban nationals lawfully present in the United States.
515.506-515.507 [Reserved]
515.508 Payments to blocked accounts in domestic banks.
515.509 Entries in certain accounts for normal service charges.
515.510 Payments to the United States, States and political
subdivisions.
515.511 Transactions by certain business enterprises.
515.512 Provision of certain legal services authorized.
515.513 Purchase and sale of certain securities.
515.514 Payment of dividends and interest on and redemption and
collection of securities.
515.515 Transfers of securities to blocked accounts in domestic banks.
515.516 Voting and soliciting of proxies on securities.
515.517 Access to safe deposit boxes under certain conditions.
515.518 [Reserved]
515.519 Limited payments from accounts of United States citizens abroad.
515.520 Payments from accounts of United States citizens in employ of
United States in foreign countries and certain other persons.
515.521 U.S. assets of certain Cuban corporations.
515.522 U.S. assets of certain Cuban decedents.
515.523 Transactions incident to the administration of decedents'
estates.
515.524 Payment from, and transactions in the administration of certain
trusts and estates.
515.525 Certain transfers by operation of law.
515.526 Transactions involving blocked life insurance policies.
515.527 Certain transactions with respect to United States intellectual
property.
515.528 Certain transactions with respect to blocked foreign
intellectual property.
515.529 Powers of attorney.
515.530 Exportation of powers of attorney or instructions relating to
certain types of transactions.
515.531 Payment of certain checks and drafts.
515.532 Completion of certain securities transactions.
515.533 Transactions incident to exportations from the United States and
reexportations of 100% U.S.-origin items to Cuba; negotiation
of executory contracts.
515.535 Exchange of certain securities.
515.536 Certain transactions with respect to merchandise affected by
Sec. 515.204.
515.540 [Reserved]
515.542 Mail and telecommunications-related transactions.
515.543 Proof of origin.
515.544 Gifts of Cuban origin goods.
515.545 Transactions related to information and informational materials.
515.546 Accounts of Cuban sole proprietorships.
515.547 Research samples.
515.548 Services rendered by Cuba to United States aircraft.
515.549 Bank accounts and other property of non-Cuban citizens who were
in Cuba on or after July 8, 1963.
515.550 Certain vessel transactions authorized.
515.551 Joint bank accounts.
515.552 Proceeds of insurance policies.
515.553 Bank accounts of official representatives in Cuba of foreign
governments.
515.554 Transfers of abandoned property under State laws.
515.555 Assets of Cuban firms wholly or substantially owned by U.S.
citizens.
515.556 [Reserved]
515.557 Accounts of Cuban partnerships.
515.558 Bunkering of Cuban vessels and fueling of Cuban aircraft by
American-owned or controlled foreign firms.
515.559 Certain transactions by U.S.-owned or controlled foreign firms
with Cuba.
[[Page 97]]
515.560 Travel-related transactions to, from, and within Cuba by persons
subject to U.S. jurisdiction.
515.561 Persons visiting close relatives in Cuba.
515.562 Officials of the U.S. government, foreign governments, and
certain intergovernmental organizations traveling to, from,
and within Cuba on official business.
515.563 Journalistic activities in Cuba.
515.564 Professional research and professional meetings in Cuba.
515.565 Educational activities.
515.566 Religious activities in Cuba.
515.567 Public performances, athletic and other competitions, and
exhibitions.
515.568 [Reserved]
515.569 Foreign passengers' baggage.
515.570 Remittances to nationals of Cuba.
515.571 Certain transactions incident to travel to, from, and within the
United States by Cuban nationals.
515.572 Authorization of transactions incident to the provision of
travel services, carrier services, and remittance forwarding
services.
515.573 Transactions by news organizations.
515.574 Support for the Cuban people.
515.575 Humanitarian projects.
515.576 Activities of private foundations or research or educational
institutes.
515.577 Authorized transactions necessary and ordinarily incident to
publishing.
Subpart F_Reports
515.601 Records and reports.
Subpart G_Penalties
515.701 Penalties.
Subpart H_Procedures
515.801 Procedures.
515.802 Delegation by the Secretary of the Treasury.
515.803 Customs procedures; merchandise specified in Sec. 515.204.
Subpart I_Miscellaneous Provisions
515.901 Paperwork Reduction Act notice.
Authority: 18 U.S.C. 2332d; 22 U.S.C. 2370(a), 6001-6010; 22 U.S.C.
7201-7211; 31 U.S.C. 321(b); 50 U.S.C. App 1-44; Pub. L. 101-410, 104
Stat. 890 (28 U.S.C. 2461 note); Pub. L. 104-114, 110 Stat. 785 (22
U.S.C. 6082); Pub. L. 105-277, 112 Stat. 2681; Pub. L. 111-8, 123 Stat.
524; Pub. L. 111-117, 123 Stat. 3034; E.O. 9193, 7 FR 5205, 3 CFR, 1938-
1943 Comp., p. 1174; E.O. 9989, 13 FR 4891, 3 CFR, 1943-1948 Comp., p.
748; Proc. 3447, 27 FR 1085, 3 CFR, 1959-1963 Comp., p. 157; E.O. 12854,
58 FR 36587, 3 CFR, 1993 Comp., p. 614.
Source: 28 FR 6974, July 9, 1963, unless otherwise noted.
Subpart A_Relation of This Part to Other Laws and Regulations
Sec. 515.101 Relation of this part to other laws and regulations.
(a) This part is separate from, and independent of, the other parts
of this chapter with the exception of part 501 of this chapter, the
recordkeeping and reporting requirements and license application and
other procedures of which apply to this part. No license or
authorization contained in or issued pursuant to one of those parts, or
any other provision of law, authorizes any transaction prohibited by
this part.
(b) No license or authorization contained in or issued pursuant to
this part shall be deemed to authorize any transaction prohibited by any
law other than the Trading With the Enemy Act, 50 U.S.C. App. 5(b), as
amended, the Foreign Assistance Act of 1961, 22 U.S.C. 2370, or any
proclamation, order, regulation or license issued pursuant thereto.
[50 FR 27437, July 3, 1985, as amended at 62 FR 45106, Aug. 25, 1997]
Subpart B_Prohibitions
Sec. 515.201 Transactions involving designated foreign countries or their
nationals; effective date.
(a) All of the following transactions are prohibited, except as
specifically authorized by the Secretary of the Treasury (or any person,
agency, or instrumentality designated by him) by means of regulations,
rulings, instructions, licenses, or otherwise, if either such
transactions are by, or on behalf of, or pursuant to the direction of a
foreign country designated under this part, or any national thereof, or
such transactions involve property in which a foreign country designated
under this part, or any national thereof, has at any time on or since
the effective date of this section had any interest of any nature
whatsoever, direct or indirect:
(1) All transfers of credit and all payments between, by, through,
or to any banking institution or banking institutions wheresoever
located, with respect
[[Page 98]]
to any property subject to the jurisdiction of the United States or by
any person (including a banking institution) subject to the jurisdiction
of the United States;
(2) All transactions in foreign exchange by any person within the
United States; and
(3) The exportation or withdrawal from the United States of gold or
silver coin or bullion, currency or securities, or the earmarking of any
such property, by any person within the United States.
(b) All of the following transactions are prohibited, except as
specifically authorized by the Secretary of the Treasury (or any person,
agency, or instrumentality designated by him) by means of regulations,
rulings, instructions, licenses, or otherwise, if such transactions
involve property in which any foreign country designated under this
part, or any national thereof, has at any time on or since the effective
date of this section had any interest of any nature whatsoever, direct
or indirect:
(1) All dealings in, including, without limitation, transfers,
withdrawals, or exportations of, any property or evidences of
indebtedness or evidences of ownership of property by any person subject
to the jurisdiction of the United States; and
(2) All transfers outside the United States with regard to any
property or property interest subject to the jurisdiction of the United
States.
(c) Any transaction for the purpose or which has the effect of
evading or avoiding any of the prohibitions set forth in paragraph (a)
or (b) of this section is hereby prohibited.
(d) For the purposes of this part, the term foreign country
designated under this part and the term designated foreign country mean
Cuba and the term effective date and the term effective date of this
section mean with respect to Cuba, or any national thereof, 12:01 a.m.,
e.s.t., July 8, 1963.
(e) When a transaction results in the blocking of funds at a banking
institution pursuant to this section and a party to the transaction
believes the funds have been blocked due to mistaken identity, that
party may seek to have such funds unblocked pursuant to the
administrative procedures set forth in Sec. 501.806 of this chapter.
[28 FR 6974, July 9, 1963, as amended at 62 FR 45106, Aug. 25, 1997]
Sec. 515.202 Transactions with respect to securities registered or inscribed
in the name of a designated national.
Unless authorized by a license expressly referring to this section,
the acquisition, transfer (including the transfer on the books of any
issuer or agent thereof), disposition, transportation, importation,
exportation, or withdrawal of, or the endorsement or guaranty of
signatures on or otherwise dealing in any security (or evidence thereof)
registered or inscribed in the name of any designated national is
prohibited irrespective of the fact that at any time (either prior to,
on, or subsequent to the ``effective date'') the registered or inscribed
owner thereof may have, or appears to have, assigned, transferred or
otherwise disposed of any such security.
Sec. 515.203 Effect of transfers violating the provisions of this part.
(a) Any transfer after the ``effective date'' which is in violation
of any provision of this part or of any regulation, ruling, instruction,
license, or other direction or authorization thereunder and involves any
property in which a designated national has or has had an interest since
such ``effective date'' is null and void and shall not be the basis for
the assertion or recognition of any interest in or right, remedy, power
or privilege with respect to such property.
(b) No transfer before the ``effective date'' shall be the basis for
the assertion or recognition of any right, remedy, power, or privilege
with respect to, or interest in, any property in which a designated
national has or has had an interest since the ``effective date'' unless
the person with whom such property is held or maintained had written
notice of the transfer or by any written evidence had recognized such
transfer prior to such ``effective date.''
(c) Unless otherwise provided, an appropriate license or other
authorization issued by or pursuant to the direction or authorization of
the Secretary of the Treasury before, during or after
[[Page 99]]
a transfer shall validate such transfer or render it enforceable to the
same extent as it would be valid or enforceable but for the provisions
of section 5(b) of the Trading With the Enemy Act, as amended, and this
part and any ruling, order, regulation, direction or instruction issued
hereunder.
(d) Transfers of property which otherwise would be null and void, or
unenforceable by virtue of the provisions of this section shall not be
deemed to be null and void, or unenforceable pursuant to such
provisions, as to any person with whom such property was held or
maintained (and as to such person only) in cases in which such person is
able to establish each of the following:
(1) Such transfer did not represent a willful violation of the
provisions of this part by the person with whom such property was held
or maintained;
(2) The person with whom such property was held or maintained did
not have reasonable cause to know or suspect, in view of all the facts
and circumstances known or available to such person, that such transfer
required a license or authorization by or pursuant to the provisions of
this part and was not so licensed or authorized or if a license or
authorization did purport to cover the transfer, that such license or
authorization had been obtained by misrepresentation or the withholding
of material facts or was otherwise fraudulently obtained; and
(3) Promptly upon discovery that:
(i) Such transfer was in violation of the provisions of this part or
any regulation, ruling, instruction, license or other direction or
authorization thereunder, or
(ii) Such transfer was not licensed or authorized by the Secretary
of the Treasury, or
(iii) If a license did purport to cover the transfer, such license
had been obtained by misrepresentation or the withholding of material
facts or was otherwise fraudulently obtained;
the person with whom such property was held or maintained filed with the
Treasury Department, Washington, D.C., a report in triplicate setting
forth in full the circumstances relating to such transfer. The filing of
a report in accordance with the provisions of this paragraph shall not
be deemed to be compliance or evidence of compliance with paragraphs (d)
(1) and (2) of this section.
(e) Unless licensed or authorized by Sec. 515.504 or otherwise
licensed or authorized pursuant to this chapter any attachment,
judgment, decree, lien, execution, garnishment, or other judicial
process is null and void with respect to any property in which on or
since the ``effective date'' there existed the interest of a designated
foreign country or national thereof.
(f) For the purpose of this section the term property includes gold,
silver, bullion, currency, coin, credit, securities (as that term is
defined in section 2(1) of the Securities Act of 1933, as amended),
bills of exchange, notes, drafts, acceptances, checks, letters of
credit, book credits, debts, claims, contracts, negotiable documents of
title, mortgages, liens, annuities, insurance policies, options and
futures in commodities, and evidences of any of the foregoing. The term
property shall not, except to the extent indicated, be deemed to include
chattels or real property.
[28 FR 6974, July 9, 1963, as amended at 28 FR 7941, Aug. 3, 1963]
Sec. 515.204 Importation of and dealings in certain merchandise.
(a) Except as specifically authorized by the Secretary of the
Treasury (or any person, agency, or instrumentality designated by him)
by means of regulations, rulings, instructions, licenses, or otherwise,
no person subject to the jurisdiction of the United States may purchase,
transport, import, or otherwise deal in or engage in any transaction
with respect to any merchandise outside the United States if such
merchandise:
(1) Is of Cuban origin; or
(2) Is or has been located in or transported from or through Cuba;
or
(3) Is made or derived in whole or in part of any article which is
the growth, produce or manufacture of Cuba.
(b) [Reserved]
[[Page 100]]
Sec. 515.205 Holding of certain types of blocked property in interest-bearing
accounts.
(a) Except as provided by paragraphs (d), (e) and (f) of this
section, or as authorized by the Secretary of the Treasury or his
delegate by specific license, any person holding any property included
in paragraph (h) of this section is prohibited from holding,
withholding, using, transferring, engaging in any transactions
involving, or exercising any right, power, or privilege with respect to
any such property, unless it is held in an interest-bearing account in a
domestic bank.
(b) Any person presently holding property subject to the provisions
of paragraph (a) of this section which, as of the effective date of this
section, is not being held in accordance with the provisions of that
paragraph shall transfer such property to or hold such property or cause
such property to be held in an interest-bearing account in any domestic
bank within 30 days of the effective date of this section.
(c) Any person holding any checks or drafts subject to the
provisions of Sec. 515.201 is authorized and directed, wherever
possible consistent with state law (except as otherwise specifically
provided in paragraph (c)(3) of this section), to negotiate or present
for collection or payment such instruments and credit the proceeds to
interest-bearing accounts. Any transaction by any person incident to the
negotiation, processing. presentment, collection or payment of such
instruments and deposit of the proceeds into an interest-bearing account
is hereby authorized: Provided that:
(1) The transaction does not represent, directly or indirectly, a
transfer of the interest of a designated national to any other country
or person;
(2) The proceeds are held in a blocked account indicating the
designated national who is the payee or owner of the instrument; and,
(3) In the case of a blocked check or draft which has been purchased
by the maker/drawer from the drawee bank (e.g., cashier's check, money
order, or traveler's check) or which is drawn against a presently
existing account, such bank, on presentment of the instrument in
accordance with the provisions of this section, shall either:
(i) Pay the instrument (subject to paragraphs (c)(1) and (2) of this
section) or
(ii) Credit a blocked account on its books with the amount payable
on the instrument.
In either event, the blocked account shall be identified as resulting
from the proceeds of a blocked check or draft, and the identification
shall include a reference to the names of both the maker and payee of
the instrument.
(d) Property subject to the provisions of paragraph (a) or (b) of
this section, held by a person claiming a set-off against such property,
is exempt from the provisions of paragraphs (a), (b) and (c) of this
section to the extent of the set-off: Provided however, That interest
shall be due from 30 days after the effective date of this section if it
should ultimately be determined that the claim to a set-off is without
merit.
(e) Property subject to the provisions of paragraphs (a) and (b) of
this section, held in a customer's account by a registered broker/dealer
in securities, may continue to be held for the customer by the broker/
dealer provided interest is credited to the account on any balance not
invested in securities in accordance with Sec. 515.513. The interest
paid on such accounts by a broker/dealer who does not elect to hold such
property for a customer's account in a domestic bank shall not be less
than the maximum rate payable on the shortest time deposit available in
any domestic bank in the jurisdiction in which the broker/dealer holds
the account.
(f) Property subject to the provisions of paragraphs (a) and (b) of
this section, held by a state agency charged with the custody of
abandoned or unclaimed property under Sec. 515.554 may continue to be
held by the agency provided interest is credited to the blocked account
in which the property is held by the agency, or the property is held by
the agency in a blocked account in a domestic bank. The interest
credited to such accounts by an agency which does not elect to hold such
property in a domestic bank shall not be less than the maximum rate
payable on
[[Page 101]]
the shortest time deposit available in any domestic bank in the state.
(g) For purposes of this section, the term interest-bearing account
means a blocked account earning interest at no less than the maximum
rate payable on the shortest time deposit in the domestic bank where the
account is held: Provided however, That such an account may include six-
month Treasury bills or insured certificates, with a maturity not
exceeding six-months, appropriate to the amounts involved.
(h) The following types of property are subject to paragraphs (a)
and (b) of this section:
(1) Any currency, bank deposit and bank accounts subject to the
provisions of Sec. 515.201;
(2) Any property subject to the provisions of Sec. 515.201 which
consists, in whole or in part, of undisputed and either liquidated or
matured debts, claims, obligations or other evidence of indebtedness, to
the extent of any amount that is undisputed and liquidated or matured;
and
(3) Any proceeds resulting from the payment of an obligation under
paragraph (c) of this section.
(i) For purposes of this section, the term domestic bank includes
any FSLIC-insured institution (as defined in 12 CFR 561.1).
(j) For the purposes of this section the term person includes the
United States Government or any agency or instrumentality thereof,
except where the agency or instrumentality submits to the Office of
Foreign Assets Control an opinion of its General Counsel that either:
(1) It lacks statutory authority to comply with this section, or
(2) The requirements of paragraphs (a) and (b) of this section are
inconsistent with the statutory program under which it operates.
[44 FR 11770, Mar. 2, 1979]
Sec. 515.206 Exempt transactions.
(a) Information and informational materials. (1) The importation
from any country and the exportation to any country of information or
informational materials as defined in Sec. 515.332, whether commercial
or otherwise, regardless of format or medium of transmission, are exempt
from the prohibitions and regulations of this part except for payments
owed to Cuba for telecommunications services between Cuba and the United
States, which are subject to the provisions of Sec. 515.542.
(2) This section does not authorize transactions related to
information or informational materials not fully created and in
existence at the date of the transaction, or to the substantive or
artistic alteration or enhancement of information or informational
materials, or to the provision of marketing and business consulting
services by a person subject to the jurisdiction of the United States.
Such prohibited transactions include, without limitation, payment of
advances for information or informational materials not yet created and
completed, provision of services to market, produce or co-produce,
create or assist in the creation of information or informational
materials, and payment of royalties to a designated national with
respect to income received for enhancements or alterations made by
persons subject to the jurisdiction of the United States to information
or informational materials imported from a designated national.
(3) This section does not authorize transactions incident to the
transmission of restricted technical data as defined in the Export
Administration Regulations, 15 CFR parts 730-774, or to the exportation
of goods for use in the transmission of any data. The exportation of
such goods to designated foreign countries is prohibited, as provided in
Sec. 515.201 of this part and Sec. 785.1 of the Export Administration
Regulations.
(4) This section does not authorize transactions related to travel
to Cuba when such travel is not otherwise authorized under Sec.
515.545.
Example #1: A U.S. publisher ships 500 copies of a book to Cuba
directly from Miami aboard a chartered aircraft, and receives payment by
means of a letter of credit issued by a Cuban bank and confirmed by an
American bank. These are permissible transactions under this section.
Example #2: A Cuban party exports a single master copy of a Cuban
motion picture to a U.S. party and licenses the U.S. party to duplicate,
distribute, show and exploit in the United States the Cuban film in any
medium, including home video distribution, for five years, with the
Cuban party receiving
[[Page 102]]
40% of the net income. All transactions relating to the activities
described in this example are authorized under this section or Sec.
515.545.
Example #3: A U.S. recording company proposes to contract with a
Cuban musician to create certain musical compositions, and to advance
royalties of $10,000 to the musician. The music written in Cuba is to be
recorded in a studio that the recording company owns in the Bahamas.
These are all prohibited transactions. The U.S. party is prohibited
under Sec. 515.201 from contracting for the Cuban musician's services,
from transferring $10,000 to Cuba to pay for those services, and from
providing the Cuban with production services through the use of its
studio in the Bahamas. No information or informational materials are in
being at the time of these proposed transactions. However, the U.S.
recording company may contract to purchase and import preexisting
recordings by the Cuban musician, or to copy the recordings in the
United States and pay negotiated royalties to Cuba under this section or
Sec. 515.545.
Example #4: A Cuban party enters into a subpublication agreement
licensing a U.S. party to print and publish copies of a musicial
composition and to sub-license rights of public performance, adaptation,
and arrangement of the musical composition, with payment to be a
percentage of income received. All transactions related to the
activities described in this example are authorized under this section
and Sec. 515.545, except for adaptation, and arrangement, which
constitute artistic enhancement of the Cuban composition. Payment to the
Cuban party may not reflect income received as a result of these
enhancements.
(b) Donation of food. The prohibitions contained in this part do not
apply to transactions incident to the donation of food to
nongovernmental organizations or individuals in Cuba.
[54 FR 5233, Feb. 2, 1989, as amended at 60 FR 39256, Aug. 2, 1995; 64
FR 25812, May 13, 1999]
Sec. 515.207 Entry of vessels engaged in trade with Cuba.
Except as specifically authorized by the Secretary of the Treasury
(or any person, agency or instrumentality designated by him), by means
of regulations, rulings, instructions, licenses or otherwise,
(a) No vessel that enters a port or place in Cuba to engage in the
trade of goods or the purchase or provision of services, may enter a
U.S. port for the purpose of loading or unloading freight for a period
of 180 days from the date the vessel departed from a port or place in
Cuba; and
(b) No vessel carrying goods or passengers to or from Cuba or
carrying goods in which Cuba or a Cuban national has an interest may
enter a U.S. port with such goods or passengers on board.
Note to Sec. 515.207: For the waiver of the prohibitions contained
in this section for certain vessels engaged in licensed or exempt trade
with Cuba, see Sec. 515.550.
[58 FR 34710, June 29, 1993, as amended at 66 FR 36687, July 12, 2001]
Sec. 515.208 Restrictions on loans, credits and other financing.
No United States national, permanent resident alien, or United
States agency may knowingly make a loan, extend credit or provide other
financing for the purpose of financing transactions involving
confiscated property the claim to which is owned by a United States
national, except for financing by a United States national owning such a
claim for a transaction permitted under United States law.
[61 FR 37386, July 18, 1996]
Subpart C_General Definitions
Sec. 515.301 Foreign country.
The term foreign country also includes, but not by way of
limitation:
(a) The state and the government of any such territory on or after
the ``effective date'' as well as any political subdivision, agency, or
instrumentality thereof or any territory, dependency, colony,
protectorate, mandate, dominion, possession or place subject to the
jurisdiction thereof,
(b) Any other government (including any political subdivision,
agency, or instrumentality thereof) to the extent and only to the extent
that such government exercises or claims to exercise control, authority,
jurisdiction or sovereignty over territory which on the ``effective
date'' constituted such foreign country,
(c) Any person to the extent that such person is, or has been, or to
the extent that there is reasonable cause to believe that such person
is, or has been, since the ``effective date,'' acting
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or purporting to act directly or indirectly for the benefit or on behalf
of any of the foregoing, and
(d) Any territory which on or since the ``effective date'' is
controlled or occupied by the military, naval or police forces or other
authority of such foreign country.
Sec. 515.302 National.
(a) The term national when used with respect to a country shall
include:
(1) A subject or citizen of that country or any person who has been
domiciled in or a permanent resident of that country at any time on or
since the ``effective date,'' except persons who were permanent
residents of or domiciled in that country in the service of the U.S.
Government and persons whose transactions in that country were
authorized by the Office of Foreign Assets Control.
(2) Any partnership, association, corporation, or other organization
that, on or since the effective date:
(i) Was or has been organized under the laws of that country;
(ii) Had or has had its principal place of business in that country;
or
(iii) Was or has been controlled by, or a substantial part of the
stocks, share, bonds, debentures, notes, drafts, or other securities or
obligations of which was or has been controlled by, directly or
indirectly, that country and/or one or more nationals thereof.
(3) Any organization's office or other sub-unit that is located
within that country.
(4) Any person to the extent that such person, on or since the
``effective date'' was or has been acting or purporting to act directly
or indirectly for the benefit or on behalf of any national of that
country.
(5) Any other person who there is reasonable cause to believe is a
``national'' as defined in this section.
(b) Persons who travel in Cuba do not become nationals of Cuba
solely because of such travel.
(c) The Secretary of the Treasury retains full power to determine
that any person is or shall be deemed to be a ``national'' within the
meaning of this section, and to specify the foreign country of which
such person is or shall be deemed to be a national.
[28 FR 6974, July 9, 1963, as amended at 50 FR 27437, July 3, 1985; 64
FR 25812, May 13, 1999; 68 FR 14144, Mar. 24, 2003]
Sec. 515.303 Nationals of more than one foreign country.
(a) Any person who by virtue of any provision in this chapter is a
national of more than one foreign country shall be deemed to be a
national of each of such foreign countries.
(b) In any case in which a person is a national of two or more
designated foreign countries, as defined in this chapter, a license or
authorization with respect to nationals of one of such designated
foreign countries shall not be deemed to apply to such person unless a
license or authorization of equal or greater scope is outstanding with
respect to nationals of each other designated foreign country of which
such person is a national.
(c) In any case in which the combined interests of two or more
designated foreign countries, as defined in this chapter, and/or
nationals thereof are sufficient in the aggregate to constitute control
or ownership of 25 per centum or more of the stock, shares, bonds,
debentures, notes, drafts, or other securities or obligations of a
partnership, association, corporation or other organization, but such
control or a substantial part of such stock, shares, bonds, debentures,
notes, drafts, or other securities or obligations is not held by any one
such foreign country and/or national thereof, such partnership,
association, corporation or other organization shall be deemed to be a
national of each of such foreign countries.
Sec. 515.305 Designated national.
For the purposes of this part, the term designated national shall
mean Cuba and any national thereof including any person who is a
specially designated national.
Sec. 515.306 Specially designated national.
(a) The term specially designated national shall mean:
(1) Any person who is determined by the Secretary of the Treasury to
be a specially designated national,
[[Page 104]]
(2) Any person who on or since the ``effective date'' has acted for
or on behalf of the Government or authorities exercising control over a
designated foreign country, or
(3) Any partnership, association, corporation or other organization
which on or since the ``effective date'' has been owned or controlled
directly or indirectly by the Government or authorities exercising
control over a designated foreign country or by any specially designated
national.
(b) [Reserved]
Note to Sec. 515.306: Please refer to the appendices at the end of
this chapter for listings of persons designated pursuant to this part.
Section 501.807 of this chapter sets forth the procedures to be followed
by persons seeking administrative reconsideration of their designation
or that of a vessel as blocked, or who wish to assert that the
circumstances resulting in the designation are no longer applicable.
[28 FR 6974, July 9, 1963, as amended at 61 FR 32938, June 26, 1996; 62
FR 45106, Aug. 25, 1997]
Sec. 515.307 Unblocked national.
Any person licensed pursuant to Sec. 515.505 licensed as an
unblocked national shall, while so licensed, be regarded as a person
within the United States who is not a national of any designated foreign
country: Provided, however, That the licensing of any person as an
unblocked national shall not be deemed to suspend in any way the
requirements of any section of this chapter relating to reports, or the
production of books, documents, and records specified therein.
[28 FR 6974, July 9, 1963, as amended at 54 FR 5233, Feb. 2, 1989]
Sec. 515.308 Person.
The term person means an individual, partnership, association,
corporation, or other organization.
Sec. 515.309 Transactions.
The phrase transactions which involve property in which a designated
foreign country, or any national thereof, has any interest of any nature
whatsoever, direct or indirect, includes, but not by way of limitation:
(a) Any payment or transfer to such designated foreign country or
national thereof,
(b) Any export or withdrawal from the United States to such
designated foreign country, and
(c) Any transfer of credit, or payment of an obligation, expressed
in terms of the currency of such designated foreign country.
Sec. 515.310 Transfer.
The term transfer shall mean any actual or purported act or
transaction, whether or not evidenced by writing, and whether or not
done or preformed within the United States, the purpose, intent, or
effect of which is to create, surrender, release, transfer, or alter,
directly or indirectly, any right, remedy, power, privilege, or interest
with respect to any property and without limitation upon the foregoing
shall include the making, execution, or delivery of any assignment,
power, conveyance, check, declaration, deed, deed of trust, power of
attorney, power of appointment, bill of sale, mortgage, receipt,
agreement, contract, certificate, gift, sale, affidavit, or statement;
the appointment of any agent, trustee, or other fiduciary; the creation
or transfer of any lien; the issuance, docketing, filing, or the levy of
or under any judgment, decree, attachment, execution, or other judicial
or administrative process or order, or the service of any garnishment;
the acquisition of any interest of any nature whatsoever by reason of a
judgment or decree of any foreign country; the fulfillment of any
condition, or the exercise of any power of appointment, power of
attorney, or other power.
Sec. 515.311 Property; property interests.
(a) Except as defined in Sec. 515.203(f) for the purposes of that
section the terms property and property interest or property interests
shall include, but not by way of limitation, money, checks, drafts,
bullion, bank deposits, savings accounts, debts, indebtedness
obligations, notes, debentures, stocks, bonds, coupons, and other
financial securities, bankers' acceptances, mortgages, pledges, liens or
other rights in the nature of security, warehouse receipts, bills of
lading, trust receipts, bills of
[[Page 105]]
sale, any other evidences of title, ownership or indebtedness, powers of
attorney, goods, wares, merchandise, chattels, stocks on hand, ships,
goods on ships, real estate mortgages, deeds of trust, vendors' sales
agreements, land contracts, real estate and any interest therein,
leaseholds, ground rents, options, negotiable instruments, trade
acceptances, royalties, book accounts, accounts payable, judgments,
patents, trademarks, copyrights, contracts or licenses affecting or
involving patents, trademarks or copyrights, insurance policies, safe
deposit boxes and their contents, annuities, pooling agreements,
contracts of any nature whatsoever, services, and any other property,
real, personal, or mixed, tangible or intangible, or interest or
interests therein, present, future or contingent.
(b) As used in Sec. 515.208, the term property means any property
(including patents, copyrights, trademarks, and any other form of
intellectual property), whether real, personal, or mixed, and any
present, future, or contingent right, security, or other interest
therein, including any leasehold interest.
[28 FR 6974, July 9, 1963, as amended at 50 FR 27437, July 3, 1985; 56
FR 49847, Oct. 2, 1991; 61 FR 37386, July 18, 1996]
Sec. 515.312 Interest.
The term interest when used with respect to property shall mean an
interest of any nature whatsoever, direct or indirect.