Reporting, Procedures and Penalties Regulations and Sudanese Sanctions Regulations, 34060-34064 [05-11637]

Download as PDF 34060 Federal Register / Vol. 70, No. 112 / Monday, June 13, 2005 / Rules and Regulations (e) * * * (7) The vessel does not fish for, possess or land NE multispecies, except that Category 1 herring vessels may possess and land haddock consistent with the incidental catch allowance and bycatch cap specified in § 648.86(a)(3). (8) All Category 1 herring vessels must notify NMFS Office of Law Enforcement through VMS of the time and place of offloading at least 12 hours prior to crossing the VMS demarcation line on their return trip to port, or, for vessels that have not fished seaward of the VMS demarcation line, at least 12 hours prior to landing. If a fishing trip is less than 12 hours in length, Category 1 herring vessels must notify NMFS Office of Law Enforcement through VMS of the time and place of offloading at least 6 hours prior to crossing the VMS demarcation line on their return trip to port, or, for vessels that have not fished seaward of the VMS demarcation line, at least 6 hours prior to landing. The Regional Administrator may adjust the prior notification minimum time through publication of a notice in the Federal Register consistent with the Administrative Procedure Act. * * * * * I 6. In § 648.83, paragraph (b)(4) is added to read as follows: § 648.83 Multispecies minimum fish sizes. * * * * * (b) * * * (4) Category 1 herring vessels may possess and land haddock that measure less than the minimum fish size, consistent with the haddock incidental catch allowance and bycatch cap specified in § 648.86(a)(3). * * * * * I 7. In § 648.86, paragraph (a)(3) is added to read as follows: § 648.86 Multispecies possession restrictions. * * * * * (a) * * * (3)(i) Incidental catch allowance for herring Category 1 vessels. Category 1 herring vessels defined in § 648.2 may possess and land up to 1,000 lb (454 kg) of haddock per trip, subject to the requirements specified in § 648.80(d) and (e). (ii) Bycatch cap. (A) When the Regional Administrator has determined that 270,000 lb (122,470 kg) of observed and reported haddock have been landed, NMFS shall prohibit Category 1 herring vessels from entering or fishing in the GB haddock stock area defined by the coordinates specified in paragraph (b)(6)(v)(B) of this section for GB cod through a notice in the Federal Register VerDate jul<14>2003 15:44 Jun 10, 2005 Jkt 205001 consistent with rulemaking requirements of the Administrative Procedure Act. In making this determination, the Regional Administrator shall use only haddock landings observed by NMFS approved observers and law enforcement officials, and reports of haddock bycatch submitted by vessels and dealers pursuant to the reporting requirements of this part. (B) Upon the effective date of prohibiting Category 1 herring vessels from entering or fishing in the GB haddock stock area as described in paragraph (a)(3)(ii)(A) of this section, the haddock possession limit is reduced to 0 lb (0 kg) for all Category 1 herring vessels. * * * * * [FR Doc. 05–11593 Filed 6–7–05; 4:49 pm] BILLING CODE 3510–22–S DEPARTMENT OF THE TREASURY Office of Foreign Assets Control 31 CFR Parts 501 and 538 Reporting, Procedures and Penalties Regulations and Sudanese Sanctions Regulations Office of Foreign Assets Control, Treasury. ACTION: Final rule. AGENCY: SUMMARY: The Office of Foreign Assets Control (‘‘OFAC’’) of the U.S. Department of the Treasury is revising the Reporting, Procedures and Penalties Regulations (the ‘‘RPPR’’) to make a technical change in order to remove a reference to the Government of Sudan that was used prior to the promulgation of Executive Order 13067 and the Sudanese Sanctions Regulations. OFAC is also amending the Sudanese Sanctions Regulations, (the ‘‘SSR’’). The amendments to the SSR include the issuance of two general licenses, effective June 13, 2005. One general license authorizes the operation of accounts in U.S. financial institutions under certain circumstances for individuals ordinarily resident in Sudan. The other general license authorizes U.S. depository institutions, U.S. registered brokers and dealers in securities, and U.S. registered money transmitters to process transfers of funds constituting noncommercial, personal remittances to or from Sudan or for or on behalf of individuals ordinarily resident in Sudan. Other amendments to the SSR include the removal of two regulatory provisions and the revision of a provision regarding reexportation of PO 00000 Frm 00006 Fmt 4700 Sfmt 4700 U.S.-origin goods, technology or software by non-U.S. persons, and another revision of to reflect changes in OFAC’s procedure for imposing civil penalties. DATES: Effective Date: June 13, 2005. FOR FURTHER INFORMATION CONTACT: Chief of Compliance Programs, tel.: 202/ 622–2490, Chief of Civil Penalties, tel.: 202/622–6140, Chief of Licensing, tel.: 202/622–2480, Chief of Policy Planning and Program Management, tel.: 202/ 622–4855, or Chief Counsel, tel.: 202/ 622–2410, Office of Foreign Assets Control, Department of the Treasury, Washington, DC 20220. SUPPLEMENTARY INFORMATION: Electronic and Facsimile Availability This file is available for download without charge in ASCII and Adobe Acrobat readable (*.PDF) formats at GPO Access. GPO Access supports HTTP, FTP, and Telnet at fedbbs.access.gpo.gov. It may also be accessed by modem dialup at 202/512– 1387 followed by typing ‘‘/GO/FAC.’’ Paper copies of this document can be obtained by calling the Government Printing Office at 202–512–1530. Additional information concerning the programs of the Office of Foreign Assets Control is available for download from the Office’s Internet Home Page at: http://www.treas.gov/ofac or via FTP at ofacftp.treas.gov. Facsimiles of information are available through the Office’s 24-hour fax-on-demand service: call 202/622–0077 using a fax machine, a fax modem, or (within the United States) a touch-tone telephone. Background On November 3, 1997, President Clinton, invoking the authority, inter alia, of the International Emergency Economic Powers Act (50 U.S.C. 1701– 1706), issued Executive Order 13067 (62 FR 59989, November 5, 1997). The order declared a national emergency with respect to the policies and actions of the Government of Sudan, ‘‘including continued support for international terrorism; ongoing efforts to destabilize neighboring governments; and the prevalence of human rights violations, including slavery and the denial of religious freedom.’’ To deal with this national emergency, Executive Order 13067 imposed trade sanctions with respect to Sudan and blocked all property and interests in property of the Government of Sudan in the United States or within the possession or control of U.S. persons. The Sudanese Sanctions Regulations, 31 CFR part 538 (the ‘‘SSR’’), implement Executive Order 13067. E:\FR\FM\13JNR1.SGM 13JNR1 Federal Register / Vol. 70, No. 112 / Monday, June 13, 2005 / Rules and Regulations The Reporting, Procedures and Penalties Regulations, 31 CFR part 501 (the ‘‘RPPR’’), set forth uniform reporting and procedural requirements applicable to all OFAC sanctions programs. OFAC is amending the RPPR to make a technical change to § 501.604 by removing a reference to the Government of Sudan from that section. Section 501.604(b) uses the Government of Sudan in an example of transactions involving funds transfers that are rejected, but not blocked. This example, however, was published before the issuance of Executive Order 13067 and OFAC’s promulgation of the SSR. Executive Order 13067 and the SSR require U.S. financial institutions to block unlicensed funds transfers involving the Government of Sudan. OFAC is also amending provisions of the SSR dealing with the transfer of funds to Sudan. First, the SSR are being amended by the removal of § 538.413, an interpretive provision stating that the transfer of funds to Sudan from the United States does not constitute an exportation of services pursuant to § 538.205. As a result of the removal of § 538.413, money transmittal services to Sudan are prohibited except as otherwise authorized. Second, to authorize a means by which noncommercial, personal transmittals of money to Sudan may take place in a manner consistent with Executive Order 13067, OFAC is amending the SSR by issuing a general license, effective June 13, 2005. This general license, new § 538.528, authorizes U.S. depository institutions, U.S. registered brokers and dealers in securities, and U.S. registered money transmitters to process transfers of funds constituting noncommercial, personal remittances under certain circumstances to or from Sudan or for or on behalf of individuals ordinarily resident in Sudan. The general license does not authorize transfers if the underlying transaction is otherwise prohibited by subpart B of the SSR. Definitions of ‘‘U.S. depository institution,’’ ‘‘U.S. registered broker or dealer in securities,’’ and ‘‘U.S. registered money transmitter’’ are added to subpart C of the SSR to clarify the scope of the general license. Third, § 538.412, an interpretive provision stating that the operation of accounts in financial institutions for private Sudanese persons does not constitute the exportation of a service to Sudan, is removed from subpart D of the SSR. The content of this section appears in revised form in subpart E as a new general license, § 538.527, effective June 13, 2005. Section 538.527 authorizes the operation of accounts in U.S. financial VerDate jul<14>2003 15:44 Jun 10, 2005 Jkt 205001 institutions for individuals ordinarily resident in Sudan, provided that transactions through the accounts are of a personal nature. The section does not authorize account transactions for use in supporting or operating a business; nor does it authorize transfers of funds to Sudan or to or for the benefit of individuals ordinarily resident in Sudan unless authorized by § 538.528. The section also does not authorize transactions that are otherwise prohibited by subpart B of the SSR. In addition to the changes described above, § 538.507 of the SSR is also revised to clarify the circumstances under which the reexportation of goods, technology or software of U.S. origin to Sudan or the Government of Sudan by a non-U.S. person is authorized. Finally, §§ 538.701–.704 of the SSR are amended to reflect changes in OFAC’s procedure for imposing or settling civil penalties. Sections 538.701–.704 set forth the procedure by which civil penalties will be issued or settled, as well as guidelines for responding to a prepenalty notice. The amendments do not affect the maximum penalty amounts that the SSR authorize. Public Participation Because the Regulations involve a foreign affairs function, the provisions of Executive Order 12866 and the Administrative Procedure Act (5 U.S.C. 553) (the ‘‘APA’’) requiring notice of proposed rulemaking, opportunity for public participation, and delay in effective date are inapplicable. Because no notice of proposed rulemaking is required for this rule, the Regulatory Flexibility Act (5 U.S.C. 601–612) does not apply. However, OFAC encourages interested persons who wish to comment to do so in writing by any of the following methods: • Agency Web site: http:// www.treas.gov/offices/enforcement/ ofac/comment.html. • Fax: Chief of Records, 202/622– 1657. • Mail: Chief of Records, Attn: Request for Comments, Office of Foreign Assets Control, Department of the Treasury, 1500 Pennsylvania Avenue, NW., Washington, DC 20220. OFAC will not accept public comments in languages other than English or accompanied by a request that a part or all of the submission be treated confidentially because of its business proprietary nature or for any other reason. OFAC will return any such submission to the originator. All public comments on these Regulations will be a matter of public record. Copies of the public record concerning these Regulations will be made available not PO 00000 Frm 00007 Fmt 4700 Sfmt 4700 34061 sooner than September 12, 2005 and will be obtainable from OFAC’s Web site (http://www.treas.gov/ofac). If that service is unavailable, written requests for copies may be sent to: Office of Foreign Assets Control, U.S. Department of the Treasury, 1500 Pennsylvania Ave., NW., Washington, DC 20220, Attn: Chief, Records Division. Paperwork Reduction Act The collections of information related to 31 CFR part 501 and 31 CFR part 538 are contained in 31 CFR part 501 (the ‘‘Reporting, Procedures and Penalties Regulations’’). Pursuant to the Paperwork Reduction Act of 1995 (44 U.S.C. 3507), those collections of information have been approved by the Office of Management and Budget under control number 1505–0164. An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless the collection of information displays a valid control number. List of Subjects 31 CFR Part 501 Administrative practice and procedure, Banks, Banking, Blocking of assets, Information, Investments, Loans, Penalties, Reporting and recordkeeping requirements, Services, Specially designated nationals, Sudan, Terrorism. 31 CFR Part 538 Administrative practice and procedure, Agricultural commodities, Banks, Banking, Blocking of assets, Drugs, Exports, Foods, Foreign trade, Humanitarian aid, Imports, Information, Investments, Loans, Medical devices, Medicine, Penalties, Reporting and recordkeeping requirements, Services, Specially designated nationals, Sudan, Terrorism, Transportation. For the reasons set forth in the Preamble, 31 CFR parts 501 and 538 are amended as follows: I PART 501—REPORTING, PROCEDURES AND PENALTIES REGULATIONS 1. The authority citation for part 501 continues to read as follows: I Authority: 21 U.S.C. 1901–1908; 22 U.S.C. 287c; 31 U.S.C. 321(b); 50 U.S.C. 1701–1706; 50 U.S.C. App. 1–44. 2. Section 501.604 is amended by revising paragraph (b) (3) to read as follows: I § 501.604 Reports by U.S. financial institutions on rejected funds transfers. * * * (b) * * * E:\FR\FM\13JNR1.SGM 13JNR1 * * 34062 Federal Register / Vol. 70, No. 112 / Monday, June 13, 2005 / Rules and Regulations (3) Transferring unlicensed gifts or charitable donations from the Government of Syria to a U.S. person; PART 538—SUDANESE SANCTIONS REGULATIONS United States, that is a money transmitter, as defined in 31 CFR 103.11(uu)(5), that is registered pursuant to 31 CFR 103.41. Subpart D—Interpretations 3. The authority citation for part 538 continues to read as follows: I Authority: 3 U.S.C. 301; 31 U.S.C. 321(b); 18 U.S.C. 2339B, 2332d; 50 U.S.C. 1601– 1651, 1701–1706; Pub. L. 106–387, 114 Stat. 1549; E.O. 13067, 62 FR 59989, 3 CFR, 1997 Comp., p. 230. Subpart C—General Definitions 4. Section 538.317 is added to subpart C as follows: I § 538.317 U.S. depository institution. The term U.S. depository institution means any entity (including its foreign branches) organized under the laws of the United States or of any jurisdiction within the United States, or any agency, office or branch located in the United States of a foreign entity, that is engaged primarily in the business of banking (for example, banks, savings banks, savings associations, credit unions, trust companies and United States bank holding companies) and is subject to regulation by federal or state banking authorities. I 5. Section 538.318 is added to subpart C as follows: § 538.318 U.S. registered broker or dealer in securities. The term U.S. registered broker or dealer in securities means any U.S. citizen, permanent resident alien, or entity organized under the laws of the United States or of any jurisdiction within the United States, including its foreign branches, or any agency, office or branch of a foreign entity located in the United States, that: (a) Is a ‘‘broker’’ or ‘‘dealer’’ in securities within the meanings set forth in the Securities Exchange Act of 1934; (b) Holds or clears customer accounts; and (c) Is registered with the Securities and Exchange Commission under the Securities Exchange Act of 1934. I 3. Section 538.319 is added to subpart C as follows: § 538.412 7. Section 538.412 is removed from subpart D. [Removed] 8. Section 538.413 is removed from subpart D. I Subpart E—Licenses, Authorizations, and Statements of Licensing Policy 9. Section 538.507 is revised to read as follows: I § 538.507 Reexports by non-U.S. persons. (a) Goods and technology subject to export license application requirements under other United States regulations. The reexportation to Sudan or the Government of Sudan by a non-U.S. person of any goods or technology exported from the United States, the exportation of which to Sudan is subject to export or reexport license application requirements, is authorized under this section provided that the goods or technology: (1) Have been incorporated into another product outside the United States and constitute 10 percent or less by value of that product exported from a third country; or (2) Have been substantially transformed outside the United States. Note to paragraph (a) of § 538.507: Notwithstanding the authorization set forth in paragraph (a), a non-U.S. person’s reexportation of goods, technology or software of U.S. origin that are subject to the Export Administration Regulations (15 CFR parts 730 through 774) may require specific authorization from the Department of Commerce, Bureau of Industry and Security. § 538.319 U.S. registered money transmitter. The term U.S. registered money transmitter means any U.S. citizen, permanent resident alien, or entity organized under the laws of the United States or of any jurisdiction within the United States, including its foreign branches, or any agency, office or branch of a foreign entity located in the (b) Goods and technology not subject to export license application requirements under other United States regulations. The reexportation to Sudan or the Government of Sudan by a nonU.S. person of any goods or technology of U.S. origin, the exportation of which to Sudan is not subject to any export license application requirements under any other United States regulations, is authorized under this section. Note to paragraph (b) of § 538.507: However, the reexportation by non-U.S. persons of U.S.-origin goods, technology or software classified as EAR99 under the Export Administration Regulations (15 CFR parts 730 through 774) may require specific authorization from the Department of Commerce, Bureau of Industry and Security. VerDate jul<14>2003 15:44 Jun 10, 2005 Jkt 205001 PO 00000 Frm 00008 Fmt 4700 Sfmt 4700 10. Section 538.527 is added to subpart E to read as follows: I § 538.527 [Removed] I § 538.413 See, for example, the end-use and end-user restrictions set forth in 15 CFR part 744. Operation of accounts. The operation of an account in a U.S. financial institution for an individual ordinarily resident in Sudan who is not included within the term ‘‘Government of Sudan,’’ as defined in § 538.305, is authorized, provided that transactions processed through the account: (a) Are of a personal nature and not for use in supporting or operating a business; (b) Do not involve transfers directly or indirectly to Sudan or for the benefit of individuals ordinarily resident in Sudan unless authorized by § 538.528; and (c) Are not otherwise prohibited by this part. 11. Section 538.528 is added to subpart E to read as follows: I § 538.528 Noncommercial, personal remittances. (a) U.S. depository institutions, U.S. registered brokers or dealers in securities, and U.S. registered money transmitters are authorized to process transfers of funds to or from Sudan or for or on behalf of an individual ordinarily resident in Sudan who is not included within the term ‘‘Government of Sudan,’’ as defined in § 538.305, in cases in which the transfer involves a noncommercial, personal remittance, provided the transfer is not by, to, or through a person who is included within the term ‘‘Government of Sudan,’’ as defined in § 538.305. Noncommercial, personal remittances do not include charitable donations to or for the benefit of an entity or funds transfers for use in supporting or operating a business. Note to paragraph (a) of § 538.528: The institutions identified in paragraph (a) may transfer charitable donations made by U.S. persons to nongovernmental organizations in Sudan registered pursuant to § 538.521, provided that the transfer is made pursuant to § 538.521 and the terms of the registration. (b) The transferring institutions identified in paragraph (a) of this section may rely on the originator of a funds transfer with regard to compliance with paragraph (a), provided that the transferring institution does not know or have reason to know that the funds transfer is not in compliance with paragraph (a). (c) This section does not authorize transactions with respect to property blocked pursuant to § 538.201. E:\FR\FM\13JNR1.SGM 13JNR1 Federal Register / Vol. 70, No. 112 / Monday, June 13, 2005 / Rules and Regulations Subpart G—Penalties 12. Section 538.701(c) is amended by revising paragraph (c) as follows: I § 538.701 Penalties. * * * * * (c) Attention is also directed to 18 U.S.C. 1001, which provides that whoever, in any matter within the jurisdiction of the executive, legislative, or judicial branch of the United States, knowingly and willfully falsifies, conceals or covers up by any trick, scheme, or device a material fact, or makes any materially false, fictitious or fraudulent statement or representation or makes or uses any false writing or document knowing the same to contain any materially false, fictitious or fraudulent statement or entry, shall be fined under title 18, United States Code, or imprisoned not more than five years, or both. I 13. Section 538.702 is revised to read as follows: § 538.702 Prepenalty notice. (a) When required. If the Director of the Office of Foreign Assets Control has reason to believe that there has occurred a violation of any provision of this part or a violation of the provisions of any license, ruling, regulation, order, direction or instruction issued by or pursuant to the direction or authorization of the Secretary of the Treasury pursuant to this part or otherwise under the International Emergency Economic Powers Act, and the Director determines that further proceedings are warranted, the Director shall notify the alleged violator of the agency’s intent to impose a monetary penalty by issuing a prepenalty notice. The prepenalty notice shall be in writing. 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 violation, specify the laws and regulations allegedly violated, and state the amount of the proposed monetary penalty. (2) Right to respond. The prepenalty notice also shall inform the respondent of the respondent’s right to make a written presentation within the applicable 30-day period set forth in § 538.703 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. (c) Informal settlement prior to issuance of prepenalty notice. At any time prior to the issuance of a prepenalty notice, an alleged violator VerDate jul<14>2003 15:44 Jun 10, 2005 Jkt 205001 may request in writing that, for a period not to exceed sixty (60) days, the agency withhold issuance of the prepenalty notice for the exclusive purpose of effecting settlement of the agency’s potential civil monetary penalty claims. In the event the Director grants the request, under terms and conditions within the Director’s discretion, the Office of Foreign Assets Control will agree to withhold issuance of the prepenalty notice for a period not to exceed 60 days and will enter into settlement negotiations with respect to the potential civil monetary penalty claim. I 14. Section 538.703 is revised to read as follows: § 538.703 Response to prepenalty notice; informal settlement. (a) Deadline for response. The respondent may submit a response to the prepenalty notice within the applicable 30-day period set forth in this paragraph. The Director may grant, at the Director’s discretion, an extension of time in which to submit a response to the prepenalty notice. The failure to submit a response within the applicable time period set forth in this paragraph shall be deemed to be a waiver of the right to respond. (1) Computation of time for response. A response to the prepenalty notice must be postmarked or date-stamped by the U.S. Postal Service (or foreign postal service, if mailed abroad) or courier service provider (if transmitted to OFAC by courier) on or before the 30th day after the postmark date on the envelope in which the prepenalty notice was mailed. If the respondent refused delivery or otherwise avoided receipt of the prepenalty notice, a response must be postmarked or date-stamped on or before the 30th day after the date on the stamped postal receipt maintained at the Office of Foreign Assets Control. If the prepenalty notice was personally delivered to the respondent by a nonU.S. Postal Service agent authorized by the Director, a response must be postmarked or date-stamped on or before the 30th day after the date of delivery. (2) Extensions of time for response. If a due date falls on a federal holiday or weekend, that due date is extended to include the following business day. Any other extensions of time will be granted, at the Director’s discretion, only upon the respondent’s specific request to the Office of Foreign Assets Control. (b) Form and method of response. The response must be submitted in typewritten form and signed by the respondent or a representative thereof. The response need not be in any PO 00000 Frm 00009 Fmt 4700 Sfmt 4700 34063 particular form. A copy of the written response may be sent by facsimile, but the original also must be sent to the Office of Foreign Assets Control Civil Penalties Division by mail or courier and must be postmarked or datestamped, in accordance with paragraph (a) of this section. (c) Contents of response. A written response must contain information sufficient to indicate that it is in response to the prepenalty notice and must identify the Office of Foreign Assets Control identification number listed on the prepenalty notice. (1) A written response must include the respondent’s full name, address, telephone number, and facsimile number, if available, or those of the representative of the respondent. (2) A written response should either admit or deny each specific violation alleged in the prepenalty notice and also state if the respondent has no knowledge of a particular violation. If the written response fails to address any specific violation alleged in the prepenalty notice, that alleged violation shall be deemed to be admitted. (3) A written response should include any information in defense, evidence in support of an asserted defense, or other factors that the respondent requests the Office of Foreign Assets Control to consider. Any defense or explanation previously made to the Office of Foreign Assets Control or any other agency must be repeated in the written response. Any defense not raised in the written response will be considered waived. The written response also should set forth the reasons why the respondent believes the penalty should not be imposed or why, if imposed, it should be in a lesser amount than proposed. (d) Failure to respond. Where OFAC receives no response to a prepenalty notice within the applicable time period set forth in paragraph (a) of this section, a penalty notice generally will be issued, taking into account the mitigating and/or aggravating factors present in the record. If there are no mitigating factors present in the record, or the record contains a preponderance of aggravating factors, the proposed prepenalty amount generally will be assessed as the final penalty. (e) Informal settlement. In addition to or as an alternative to a written response to a prepenalty notice, the respondent or respondent’s representative may contact the Office of Foreign Assets Control’s Civil Penalties Division as advised in the prepenalty notice to propose the settlement of allegations contained in the prepenalty notice and related matters. However, the requirements set forth in paragraph (g) of this section as E:\FR\FM\13JNR1.SGM 13JNR1 34064 Federal Register / Vol. 70, No. 112 / Monday, June 13, 2005 / Rules and Regulations to oral communication by the representative must first be fulfilled. In the event of settlement at the prepenalty stage, the claim proposed in the prepenalty notice will be withdrawn, the respondent will not be required to take a written position on allegations contained in the prepenalty notice, and the Office of Foreign Assets Control will make no final determination as to whether a violation occurred. The amount accepted in settlement of allegations in a prepenalty notice may vary from the civil penalty that might finally be imposed in the event of a formal determination of violation. In the event no settlement is reached, the time limit specified in paragraph (a) of this section for written response to the prepenalty notice will remain in effect, unless additional time is granted by the Office of Foreign Assets Control. (f) Guidelines. Guidelines for the imposition or settlement of civil penalties by the Office of Foreign Assets Control have been codified in the Appendix to 31 CFR part 501, the Reporting, Procedures and Penalties Regulations. (g) Representation. A representative of the respondent may act on behalf of the respondent, but any oral communication with the Office of Foreign Assets Control prior to a written submission regarding the specific allegations contained in the prepenalty notice must be preceded by a written letter of representation, unless the prepenalty notice was served upon the respondent in care of the representative. I 15. Section 538.704 is revised to read as follows: § 538.704 Penalty imposition or withdrawal. (a) No violation. If, after considering any response to the prepenalty notice and any relevant facts, the Director of the Office of Foreign Assets Control determines that there was no violation by the respondent named in the prepenalty notice, the Director shall notify the respondent in writing of that determination and of the cancellation of the proposed monetary penalty. (b) Violation.—(1) If, after considering any written response to the prepenalty notice, or default in the submission of a written response, and any relevant facts, the Director of the Office of Foreign Assets Control determines that there was a violation by the respondent named in the prepenalty notice, the Director is authorized to issue a written penalty notice to the respondent of the determination of the violation and the imposition of the monetary penalty. (2) The penalty notice shall inform the respondent that payment or VerDate jul<14>2003 15:44 Jun 10, 2005 Jkt 205001 arrangement for installment payment of the assessed penalty must be made within 30 days of the date of mailing of the penalty notice by the Office of Foreign Assets Control. (3) The penalty notice shall inform the respondent of the requirement to furnish the respondent’s taxpayer identification number pursuant to 31 U.S.C. 7701 and that such number will be used for purposes of collecting and reporting on any delinquent penalty amount. (4) The issuance of the penalty notice finding a violation and imposing a monetary penalty shall constitute final agency action. The respondent has the right to seek judicial review of that agency action in federal district court. Dated: April 26, 2005. Robert W. Werner, Director, Office of Foreign Assets Control. Approved: May 9, 2005. Juan C. Zarate, Assistant Secretary (Terrorist Financing and Financial Crimes), Department of the Treasury. [FR Doc. 05–11637 Filed 6–8–05; 3:22 pm] BILLING CODE 4810–25–P DEPARTMENT OF HOMELAND SECURITY Coast Guard 33 CFR Part 165 [CGD09–05–014] RIN 2115–AA87 Security Zone; Duluth Harbor, Duluth, MN Coast Guard, DHS. Temporary final rule. AGENCY: ACTION: SUMMARY: The Coast Guard is establishing a temporary security zone in Duluth’s inner harbor for the Commissioning ceremony of the Coast Guard Cutter ALDER. The security zone is necessary to ensure the security of dignitaries attending this ceremony on June 10, 2005. The security zone is intended to restrict vessels from a portion of Duluth Harbor in Duluth, Minnesota. DATES: This rule is effective from 10 a.m. (local) until 3 p.m., June 10, 2005. ADDRESSES: Comments and material received from the public, as well as documents indicated in this preamble as being available in the docket, are part of docket (CGD09–05–014) and are available for inspection or copying at the U.S. Coast Guard Marine Safety Office Duluth, 600 South Lake Avenue, PO 00000 Frm 00010 Fmt 4700 Sfmt 4700 Canal Park, Duluth, Minnesota 55802, between the hours of 7:30 a.m. and 3:30 p.m., Monday through Friday, except Federal holidays. FOR FURTHER INFORMATION CONTACT: LT Greg Schultz, U.S. Coast Guard Marine Safety Office Duluth, at (218) 720–5285. SUPPLEMENTARY INFORMATION: Regulatory Information On May 13, 2005, we published a notice of proposed rulemaking in the Federal Register (70 FR 25514). We received no comments on the proposed rule. No public hearing was requested, and none was held. Under 5 U.S.C. 553 (d)(3), the Coast Guard finds that good cause exists for making this rule effective less than 30 days after publication in the Federal Register. The regulation is needed to protect dignitaries during the event and a delay would be contrary to the public interest. Background and Purpose The security zone will encompass the waters of Duluth Harbor, within a 500 foot radius from a fixed point located at 46°46′17″ N, 92°05′26″ W. These coordinates are based upon North American Datum (NAD 1983). Entry into, transit through, or anchoring within this security zone is prohibited unless authorized by the Captain of the Port Duluth or his designated on-scene representative. The designated on-scene representative will be the Coast Guard Patrol Commander. The Coast Guard Patrol Commander may be contacted via VHF Channel 16. Regulatory Evaluation This rule is not a ‘‘significant regulatory action’’ under section 3(f) of Executive Order 12866, Regulatory Planning and Review, and does not require an assessment of potential costs and benefits under section 6(a)(3) of that Order. The Office of Management and Budget has not reviewed it under that Order. It is not ‘‘significant’’ under the regulatory policies and procedures of the Department of Homeland Security (DHS). The security zone will only be in effect for a few hours on the day of the event and vessels may easily still transit inside the Duluth Harbor. Small Entities Under the Regulatory Flexibility Act (5 U.S.C. 601–612), we have considered whether this rule would have a significant economic impact on a substantial number of small entities. The term ‘‘small entities’’ comprises small businesses, not-for-profit organizations that are independently owned and operated and are not E:\FR\FM\13JNR1.SGM 13JNR1

Agencies

[Federal Register Volume 70, Number 112 (Monday, June 13, 2005)]
[Rules and Regulations]
[Pages 34060-34064]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 05-11637]


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DEPARTMENT OF THE TREASURY

Office of Foreign Assets Control

31 CFR Parts 501 and 538


Reporting, Procedures and Penalties Regulations and Sudanese 
Sanctions Regulations

AGENCY: Office of Foreign Assets Control, Treasury.

ACTION: Final rule.

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SUMMARY: The Office of Foreign Assets Control (``OFAC'') of the U.S. 
Department of the Treasury is revising the Reporting, Procedures and 
Penalties Regulations (the ``RPPR'') to make a technical change in 
order to remove a reference to the Government of Sudan that was used 
prior to the promulgation of Executive Order 13067 and the Sudanese 
Sanctions Regulations.
    OFAC is also amending the Sudanese Sanctions Regulations, (the 
``SSR''). The amendments to the SSR include the issuance of two general 
licenses, effective June 13, 2005. One general license authorizes the 
operation of accounts in U.S. financial institutions under certain 
circumstances for individuals ordinarily resident in Sudan. The other 
general license authorizes U.S. depository institutions, U.S. 
registered brokers and dealers in securities, and U.S. registered money 
transmitters to process transfers of funds constituting noncommercial, 
personal remittances to or from Sudan or for or on behalf of 
individuals ordinarily resident in Sudan. Other amendments to the SSR 
include the removal of two regulatory provisions and the revision of a 
provision regarding reexportation of U.S.-origin goods, technology or 
software by non-U.S. persons, and another revision of to reflect 
changes in OFAC's procedure for imposing civil penalties.

DATES: Effective Date: June 13, 2005.

FOR FURTHER INFORMATION CONTACT: Chief of Compliance Programs, tel.: 
202/622-2490, Chief of Civil Penalties, tel.: 202/622-6140, Chief of 
Licensing, tel.: 202/622-2480, Chief of Policy Planning and Program 
Management, tel.: 202/622-4855, or Chief Counsel, tel.: 202/622-2410, 
Office of Foreign Assets Control, Department of the Treasury, 
Washington, DC 20220.

SUPPLEMENTARY INFORMATION:

Electronic and Facsimile Availability

    This file is available for download without charge in ASCII and 
Adobe Acrobat readable (*.PDF) formats at GPO Access. GPO Access 
supports HTTP, FTP, and Telnet at fedbbs.access.gpo.gov. It may also be 
accessed by modem dialup at 202/512-1387 followed by typing ``/GO/
FAC.'' Paper copies of this document can be obtained by calling the 
Government Printing Office at 202-512-1530. Additional information 
concerning the programs of the Office of Foreign Assets Control is 
available for download from the Office's Internet Home Page at: http://
www.treas.gov/ofac or via FTP at ofacftp.treas.gov. Facsimiles of 
information are available through the Office's 24-hour fax-on-demand 
service: call 202/622-0077 using a fax machine, a fax modem, or (within 
the United States) a touch-tone telephone.

Background

    On November 3, 1997, President Clinton, invoking the authority, 
inter alia, of the International Emergency Economic Powers Act (50 
U.S.C. 1701-1706), issued Executive Order 13067 (62 FR 59989, November 
5, 1997). The order declared a national emergency with respect to the 
policies and actions of the Government of Sudan, ``including continued 
support for international terrorism; ongoing efforts to destabilize 
neighboring governments; and the prevalence of human rights violations, 
including slavery and the denial of religious freedom.'' To deal with 
this national emergency, Executive Order 13067 imposed trade sanctions 
with respect to Sudan and blocked all property and interests in 
property of the Government of Sudan in the United States or within the 
possession or control of U.S. persons. The Sudanese Sanctions 
Regulations, 31 CFR part 538 (the ``SSR''), implement Executive Order 
13067.

[[Page 34061]]

    The Reporting, Procedures and Penalties Regulations, 31 CFR part 
501 (the ``RPPR''), set forth uniform reporting and procedural 
requirements applicable to all OFAC sanctions programs. OFAC is 
amending the RPPR to make a technical change to Sec.  501.604 by 
removing a reference to the Government of Sudan from that section. 
Section 501.604(b) uses the Government of Sudan in an example of 
transactions involving funds transfers that are rejected, but not 
blocked. This example, however, was published before the issuance of 
Executive Order 13067 and OFAC's promulgation of the SSR. Executive 
Order 13067 and the SSR require U.S. financial institutions to block 
unlicensed funds transfers involving the Government of Sudan.
    OFAC is also amending provisions of the SSR dealing with the 
transfer of funds to Sudan. First, the SSR are being amended by the 
removal of Sec.  538.413, an interpretive provision stating that the 
transfer of funds to Sudan from the United States does not constitute 
an exportation of services pursuant to Sec.  538.205. As a result of 
the removal of Sec.  538.413, money transmittal services to Sudan are 
prohibited except as otherwise authorized.
    Second, to authorize a means by which noncommercial, personal 
transmittals of money to Sudan may take place in a manner consistent 
with Executive Order 13067, OFAC is amending the SSR by issuing a 
general license, effective June 13, 2005. This general license, new 
Sec.  538.528, authorizes U.S. depository institutions, U.S. registered 
brokers and dealers in securities, and U.S. registered money 
transmitters to process transfers of funds constituting noncommercial, 
personal remittances under certain circumstances to or from Sudan or 
for or on behalf of individuals ordinarily resident in Sudan. The 
general license does not authorize transfers if the underlying 
transaction is otherwise prohibited by subpart B of the SSR. 
Definitions of ``U.S. depository institution,'' ``U.S. registered 
broker or dealer in securities,'' and ``U.S. registered money 
transmitter'' are added to subpart C of the SSR to clarify the scope of 
the general license.
    Third, Sec.  538.412, an interpretive provision stating that the 
operation of accounts in financial institutions for private Sudanese 
persons does not constitute the exportation of a service to Sudan, is 
removed from subpart D of the SSR. The content of this section appears 
in revised form in subpart E as a new general license, Sec.  538.527, 
effective June 13, 2005. Section 538.527 authorizes the operation of 
accounts in U.S. financial institutions for individuals ordinarily 
resident in Sudan, provided that transactions through the accounts are 
of a personal nature. The section does not authorize account 
transactions for use in supporting or operating a business; nor does it 
authorize transfers of funds to Sudan or to or for the benefit of 
individuals ordinarily resident in Sudan unless authorized by Sec.  
538.528. The section also does not authorize transactions that are 
otherwise prohibited by subpart B of the SSR.
    In addition to the changes described above, Sec.  538.507 of the 
SSR is also revised to clarify the circumstances under which the 
reexportation of goods, technology or software of U.S. origin to Sudan 
or the Government of Sudan by a non-U.S. person is authorized.
    Finally, Sec. Sec.  538.701-.704 of the SSR are amended to reflect 
changes in OFAC's procedure for imposing or settling civil penalties. 
Sections 538.701-.704 set forth the procedure by which civil penalties 
will be issued or settled, as well as guidelines for responding to a 
prepenalty notice. The amendments do not affect the maximum penalty 
amounts that the SSR authorize.

Public Participation

    Because the Regulations involve a foreign affairs function, the 
provisions of Executive Order 12866 and the Administrative Procedure 
Act (5 U.S.C. 553) (the ``APA'') requiring notice of proposed 
rulemaking, opportunity for public participation, and delay in 
effective date are inapplicable. Because no notice of proposed 
rulemaking is required for this rule, the Regulatory Flexibility Act (5 
U.S.C. 601-612) does not apply. However, OFAC encourages interested 
persons who wish to comment to do so in writing by any of the following 
methods:
     Agency Web site: http://www.treas.gov/offices/enforcement/
ofac/comment.html.
     Fax: Chief of Records, 202/622-1657.
     Mail: Chief of Records, Attn: Request for Comments, Office 
of Foreign Assets Control, Department of the Treasury, 1500 
Pennsylvania Avenue, NW., Washington, DC 20220.
    OFAC will not accept public comments in languages other than 
English or accompanied by a request that a part or all of the 
submission be treated confidentially because of its business 
proprietary nature or for any other reason. OFAC will return any such 
submission to the originator. All public comments on these Regulations 
will be a matter of public record. Copies of the public record 
concerning these Regulations will be made available not sooner than 
September 12, 2005 and will be obtainable from OFAC's Web site (http://
www.treas.gov/ofac). If that service is unavailable, written requests 
for copies may be sent to: Office of Foreign Assets Control, U.S. 
Department of the Treasury, 1500 Pennsylvania Ave., NW., Washington, DC 
20220, Attn: Chief, Records Division.

Paperwork Reduction Act

    The collections of information related to 31 CFR part 501 and 31 
CFR part 538 are contained in 31 CFR part 501 (the ``Reporting, 
Procedures and Penalties Regulations''). Pursuant to the Paperwork 
Reduction Act of 1995 (44 U.S.C. 3507), those collections of 
information have been approved by the Office of Management and Budget 
under control number 1505-0164. An agency may not conduct or sponsor, 
and a person is not required to respond to, a collection of information 
unless the collection of information displays a valid control number.

List of Subjects

31 CFR Part 501

    Administrative practice and procedure, Banks, Banking, Blocking of 
assets, Information, Investments, Loans, Penalties, Reporting and 
recordkeeping requirements, Services, Specially designated nationals, 
Sudan, Terrorism.

31 CFR Part 538

    Administrative practice and procedure, Agricultural commodities, 
Banks, Banking, Blocking of assets, Drugs, Exports, Foods, Foreign 
trade, Humanitarian aid, Imports, Information, Investments, Loans, 
Medical devices, Medicine, Penalties, Reporting and recordkeeping 
requirements, Services, Specially designated nationals, Sudan, 
Terrorism, Transportation.


0
For the reasons set forth in the Preamble, 31 CFR parts 501 and 538 are 
amended as follows:

PART 501--REPORTING, PROCEDURES AND PENALTIES REGULATIONS

0
1. The authority citation for part 501 continues to read as follows:

    Authority: 21 U.S.C. 1901-1908; 22 U.S.C. 287c; 31 U.S.C. 
321(b); 50 U.S.C. 1701-1706; 50 U.S.C. App. 1-44.


0
2. Section 501.604 is amended by revising paragraph (b) (3) to read as 
follows:


Sec.  501.604  Reports by U.S. financial institutions on rejected funds 
transfers.

* * * * *
    (b) * * *

[[Page 34062]]

    (3) Transferring unlicensed gifts or charitable donations from the 
Government of Syria to a U.S. person;

PART 538--SUDANESE SANCTIONS REGULATIONS

0
3. The authority citation for part 538 continues to read as follows:

    Authority: 3 U.S.C. 301; 31 U.S.C. 321(b); 18 U.S.C. 2339B, 
2332d; 50 U.S.C. 1601-1651, 1701-1706; Pub. L. 106-387, 114 Stat. 
1549; E.O. 13067, 62 FR 59989, 3 CFR, 1997 Comp., p. 230.

Subpart C--General Definitions

0
4. Section 538.317 is added to subpart C as follows:


Sec.  538.317  U.S. depository institution.

    The term U.S. depository institution means any entity (including 
its foreign branches) organized under the laws of the United States or 
of any jurisdiction within the United States, or any agency, office or 
branch located in the United States of a foreign entity, that is 
engaged primarily in the business of banking (for example, banks, 
savings banks, savings associations, credit unions, trust companies and 
United States bank holding companies) and is subject to regulation by 
federal or state banking authorities.

0
5. Section 538.318 is added to subpart C as follows:


Sec.  538.318  U.S. registered broker or dealer in securities.

    The term U.S. registered broker or dealer in securities means any 
U.S. citizen, permanent resident alien, or entity organized under the 
laws of the United States or of any jurisdiction within the United 
States, including its foreign branches, or any agency, office or branch 
of a foreign entity located in the United States, that:
    (a) Is a ``broker'' or ``dealer'' in securities within the meanings 
set forth in the Securities Exchange Act of 1934;
    (b) Holds or clears customer accounts; and
    (c) Is registered with the Securities and Exchange Commission under 
the Securities Exchange Act of 1934.

0
3. Section 538.319 is added to subpart C as follows:


Sec.  538.319  U.S. registered money transmitter.

    The term U.S. registered money transmitter means any U.S. citizen, 
permanent resident alien, or entity organized under the laws of the 
United States or of any jurisdiction within the United States, 
including its foreign branches, or any agency, office or branch of a 
foreign entity located in the United States, that is a money 
transmitter, as defined in 31 CFR 103.11(uu)(5), that is registered 
pursuant to 31 CFR 103.41.

Subpart D--Interpretations


Sec.  538.412  [Removed]

0
7. Section 538.412 is removed from subpart D.


Sec.  538.413  [Removed]

0
8. Section 538.413 is removed from subpart D.

Subpart E--Licenses, Authorizations, and Statements of Licensing 
Policy

0
9. Section 538.507 is revised to read as follows:


Sec.  538.507  Reexports by non-U.S. persons.

    (a) Goods and technology subject to export license application 
requirements under other United States regulations. The reexportation 
to Sudan or the Government of Sudan by a non-U.S. person of any goods 
or technology exported from the United States, the exportation of which 
to Sudan is subject to export or reexport license application 
requirements, is authorized under this section provided that the goods 
or technology:
    (1) Have been incorporated into another product outside the United 
States and constitute 10 percent or less by value of that product 
exported from a third country; or
    (2) Have been substantially transformed outside the United States.


    Note to paragraph (a) of Sec.  538.507: Notwithstanding the 
authorization set forth in paragraph (a), a non-U.S. person's 
reexportation of goods, technology or software of U.S. origin that 
are subject to the Export Administration Regulations (15 CFR parts 
730 through 774) may require specific authorization from the 
Department of Commerce, Bureau of Industry and Security.


    (b) Goods and technology not subject to export license application 
requirements under other United States regulations. The reexportation 
to Sudan or the Government of Sudan by a non-U.S. person of any goods 
or technology of U.S. origin, the exportation of which to Sudan is not 
subject to any export license application requirements under any other 
United States regulations, is authorized under this section.


    Note to paragraph (b) of Sec.  538.507: However, the 
reexportation by non-U.S. persons of U.S.-origin goods, technology 
or software classified as EAR99 under the Export Administration 
Regulations (15 CFR parts 730 through 774) may require specific 
authorization from the Department of Commerce, Bureau of Industry 
and Security. See, for example, the end-use and end-user 
restrictions set forth in 15 CFR part 744.



0
10. Section 538.527 is added to subpart E to read as follows:


Sec.  538.527  Operation of accounts.

    The operation of an account in a U.S. financial institution for an 
individual ordinarily resident in Sudan who is not included within the 
term ``Government of Sudan,'' as defined in Sec.  538.305, is 
authorized, provided that transactions processed through the account:
    (a) Are of a personal nature and not for use in supporting or 
operating a business;
    (b) Do not involve transfers directly or indirectly to Sudan or for 
the benefit of individuals ordinarily resident in Sudan unless 
authorized by Sec.  538.528; and
    (c) Are not otherwise prohibited by this part.

0
11. Section 538.528 is added to subpart E to read as follows:


Sec.  538.528  Noncommercial, personal remittances.

    (a) U.S. depository institutions, U.S. registered brokers or 
dealers in securities, and U.S. registered money transmitters are 
authorized to process transfers of funds to or from Sudan or for or on 
behalf of an individual ordinarily resident in Sudan who is not 
included within the term ``Government of Sudan,'' as defined in Sec.  
538.305, in cases in which the transfer involves a noncommercial, 
personal remittance, provided the transfer is not by, to, or through a 
person who is included within the term ``Government of Sudan,'' as 
defined in Sec.  538.305. Noncommercial, personal remittances do not 
include charitable donations to or for the benefit of an entity or 
funds transfers for use in supporting or operating a business.


    Note to paragraph (a) of Sec.  538.528: The institutions 
identified in paragraph (a) may transfer charitable donations made 
by U.S. persons to nongovernmental organizations in Sudan registered 
pursuant to Sec.  538.521, provided that the transfer is made 
pursuant to Sec.  538.521 and the terms of the registration.


    (b) The transferring institutions identified in paragraph (a) of 
this section may rely on the originator of a funds transfer with regard 
to compliance with paragraph (a), provided that the transferring 
institution does not know or have reason to know that the funds 
transfer is not in compliance with paragraph (a).
    (c) This section does not authorize transactions with respect to 
property blocked pursuant to Sec.  538.201.

[[Page 34063]]

Subpart G--Penalties

0
12. Section 538.701(c) is amended by revising paragraph (c) as follows:


Sec.  538.701  Penalties.

* * * * *
    (c) Attention is also directed to 18 U.S.C. 1001, which provides 
that whoever, in any matter within the jurisdiction of the executive, 
legislative, or judicial branch of the United States, knowingly and 
willfully falsifies, conceals or covers up by any trick, scheme, or 
device a material fact, or makes any materially false, fictitious or 
fraudulent statement or representation or makes or uses any false 
writing or document knowing the same to contain any materially false, 
fictitious or fraudulent statement or entry, shall be fined under title 
18, United States Code, or imprisoned not more than five years, or 
both.

0
13. Section 538.702 is revised to read as follows:


Sec.  538.702  Prepenalty notice.

    (a) When required. If the Director of the Office of Foreign Assets 
Control has reason to believe that there has occurred a violation of 
any provision of this part or a violation of the provisions of any 
license, ruling, regulation, order, direction or instruction issued by 
or pursuant to the direction or authorization of the Secretary of the 
Treasury pursuant to this part or otherwise under the International 
Emergency Economic Powers Act, and the Director determines that further 
proceedings are warranted, the Director shall notify the alleged 
violator of the agency's intent to impose a monetary penalty by issuing 
a prepenalty notice. The prepenalty notice shall be in writing. 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 violation, specify the laws and regulations 
allegedly violated, and state the amount of the proposed monetary 
penalty.
    (2) Right to respond. The prepenalty notice also shall inform the 
respondent of the respondent's right to make a written presentation 
within the applicable 30-day period set forth in Sec.  538.703 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.
    (c) Informal settlement prior to issuance of prepenalty notice. At 
any time prior to the issuance of a prepenalty notice, an alleged 
violator may request in writing that, for a period not to exceed sixty 
(60) days, the agency withhold issuance of the prepenalty notice for 
the exclusive purpose of effecting settlement of the agency's potential 
civil monetary penalty claims. In the event the Director grants the 
request, under terms and conditions within the Director's discretion, 
the Office of Foreign Assets Control will agree to withhold issuance of 
the prepenalty notice for a period not to exceed 60 days and will enter 
into settlement negotiations with respect to the potential civil 
monetary penalty claim.

0
14. Section 538.703 is revised to read as follows:


Sec.  538.703  Response to prepenalty notice; informal settlement.

    (a) Deadline for response. The respondent may submit a response to 
the prepenalty notice within the applicable 30-day period set forth in 
this paragraph. The Director may grant, at the Director's discretion, 
an extension of time in which to submit a response to the prepenalty 
notice. The failure to submit a response within the applicable time 
period set forth in this paragraph shall be deemed to be a waiver of 
the right to respond.
    (1) Computation of time for response. A response to the prepenalty 
notice must be postmarked or date-stamped by the U.S. Postal Service 
(or foreign postal service, if mailed abroad) or courier service 
provider (if transmitted to OFAC by courier) on or before the 30th day 
after the postmark date on the envelope in which the prepenalty notice 
was mailed. If the respondent refused delivery or otherwise avoided 
receipt of the prepenalty notice, a response must be postmarked or 
date-stamped on or before the 30th day after the date on the stamped 
postal receipt maintained at the Office of Foreign Assets Control. If 
the prepenalty notice was personally delivered to the respondent by a 
non-U.S. Postal Service agent authorized by the Director, a response 
must be postmarked or date-stamped on or before the 30th day after the 
date of delivery.
    (2) Extensions of time for response. If a due date falls on a 
federal holiday or weekend, that due date is extended to include the 
following business day. Any other extensions of time will be granted, 
at the Director's discretion, only upon the respondent's specific 
request to the Office of Foreign Assets Control.
    (b) Form and method of response. The response must be submitted in 
typewritten form and signed by the respondent or a representative 
thereof. The response need not be in any particular form. A copy of the 
written response may be sent by facsimile, but the original also must 
be sent to the Office of Foreign Assets Control Civil Penalties 
Division by mail or courier and must be postmarked or date-stamped, in 
accordance with paragraph (a) of this section.
    (c) Contents of response. A written response must contain 
information sufficient to indicate that it is in response to the 
prepenalty notice and must identify the Office of Foreign Assets 
Control identification number listed on the prepenalty notice.
    (1) A written response must include the respondent's full name, 
address, telephone number, and facsimile number, if available, or those 
of the representative of the respondent.
    (2) A written response should either admit or deny each specific 
violation alleged in the prepenalty notice and also state if the 
respondent has no knowledge of a particular violation. If the written 
response fails to address any specific violation alleged in the 
prepenalty notice, that alleged violation shall be deemed to be 
admitted.
    (3) A written response should include any information in defense, 
evidence in support of an asserted defense, or other factors that the 
respondent requests the Office of Foreign Assets Control to consider. 
Any defense or explanation previously made to the Office of Foreign 
Assets Control or any other agency must be repeated in the written 
response. Any defense not raised in the written response will be 
considered waived. The written response also should set forth the 
reasons why the respondent believes the penalty should not be imposed 
or why, if imposed, it should be in a lesser amount than proposed.
    (d) Failure to respond. Where OFAC receives no response to a 
prepenalty notice within the applicable time period set forth in 
paragraph (a) of this section, a penalty notice generally will be 
issued, taking into account the mitigating and/or aggravating factors 
present in the record. If there are no mitigating factors present in 
the record, or the record contains a preponderance of aggravating 
factors, the proposed prepenalty amount generally will be assessed as 
the final penalty.
    (e) Informal settlement. In addition to or as an alternative to a 
written response to a prepenalty notice, the respondent or respondent's 
representative may contact the Office of Foreign Assets Control's Civil 
Penalties Division as advised in the prepenalty notice to propose the 
settlement of allegations contained in the prepenalty notice and 
related matters. However, the requirements set forth in paragraph (g) 
of this section as

[[Page 34064]]

to oral communication by the representative must first be fulfilled. In 
the event of settlement at the prepenalty stage, the claim proposed in 
the prepenalty notice will be withdrawn, the respondent will not be 
required to take a written position on allegations contained in the 
prepenalty notice, and the Office of Foreign Assets Control will make 
no final determination as to whether a violation occurred. The amount 
accepted in settlement of allegations in a prepenalty notice may vary 
from the civil penalty that might finally be imposed in the event of a 
formal determination of violation. In the event no settlement is 
reached, the time limit specified in paragraph (a) of this section for 
written response to the prepenalty notice will remain in effect, unless 
additional time is granted by the Office of Foreign Assets Control.
    (f) Guidelines. Guidelines for the imposition or settlement of 
civil penalties by the Office of Foreign Assets Control have been 
codified in the Appendix to 31 CFR part 501, the Reporting, Procedures 
and Penalties Regulations.
    (g) Representation. A representative of the respondent may act on 
behalf of the respondent, but any oral communication with the Office of 
Foreign Assets Control prior to a written submission regarding the 
specific allegations contained in the prepenalty notice must be 
preceded by a written letter of representation, unless the prepenalty 
notice was served upon the respondent in care of the representative.

0
15. Section 538.704 is revised to read as follows:


Sec.  538.704  Penalty imposition or withdrawal.

    (a) No violation. If, after considering any response to the 
prepenalty notice and any relevant facts, the Director of the Office of 
Foreign Assets Control determines that there was no violation by the 
respondent named in the prepenalty notice, the Director shall notify 
the respondent in writing of that determination and of the cancellation 
of the proposed monetary penalty.
    (b) Violation.--(1) If, after considering any written response to 
the prepenalty notice, or default in the submission of a written 
response, and any relevant facts, the Director of the Office of Foreign 
Assets Control determines that there was a violation by the respondent 
named in the prepenalty notice, the Director is authorized to issue a 
written penalty notice to the respondent of the determination of the 
violation and the imposition of the monetary penalty.
    (2) The penalty notice shall inform the respondent that payment or 
arrangement for installment payment of the assessed penalty must be 
made within 30 days of the date of mailing of the penalty notice by the 
Office of Foreign Assets Control.
    (3) The penalty notice shall inform the respondent of the 
requirement to furnish the respondent's taxpayer identification number 
pursuant to 31 U.S.C. 7701 and that such number will be used for 
purposes of collecting and reporting on any delinquent penalty amount.
    (4) The issuance of the penalty notice finding a violation and 
imposing a monetary penalty shall constitute final agency action. The 
respondent has the right to seek judicial review of that agency action 
in federal district court.

    Dated: April 26, 2005.
Robert W. Werner,
Director, Office of Foreign Assets Control.

    Approved: May 9, 2005.
Juan C. Zarate,
Assistant Secretary (Terrorist Financing and Financial Crimes), 
Department of the Treasury.
[FR Doc. 05-11637 Filed 6-8-05; 3:22 pm]
BILLING CODE 4810-25-P