Darfur Sanctions Regulations, 25430-25439 [E9-11952]

Download as PDF 25430 Federal Register / Vol. 74, No. 101 / Thursday, May 28, 2009 / Rules and Regulations in § 1.6045–4. This information is required by the IRS to verify compliance with income reporting obligations with respect to lump-sum sales of timber. This information will be used to enable the IRS to verify that a taxpayer is reporting the correct amount of income. 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 OMB control number. Books or records relating to a collection of information must be retained as long as their contents may become material in the administration of any internal revenue law. Generally, tax returns and return information are confidential, as required by 26 U.S.C. 6103. Background This document contains amendments to the Income Tax Regulations under section 6045(e) of the Code. These amendments provide that sales or exchanges of standing timber for lumpsum payments are ‘‘reportable real estate’’ transactions under § 1.6045– 4(b)(2) and, thus, shall be reported as provided in section 6045(e) and the regulations. On November 29, 2007, a notice of proposed rulemaking (REG–155669–04) was published in the Federal Register (72 FR 67589). No comments were received from the public in response to the notice of proposed rulemaking and no public hearing was requested or held. Accordingly, the proposed regulations are adopted by this Treasury decision. The final regulations make certain minor clarifying changes to the rules of the proposed regulations. Special Analyses It has been determined that this Treasury decision is not a significant regulatory action as defined in Executive Order 12866. Therefore, a regulatory assessment is not required. It has also been determined that section 553(b) of the Administrative Procedure Act (5 U.S.C. chapter 5) does not apply to these regulations. It is hereby certified that these regulations will not have a significant economic impact on a substantial number of small entities. This certification is based on the fact that the collection of information burden imposed by these regulations flows directly from section 6045(e) of the Code. Moreover, requiring information reporting as described in the preamble with regard to sales or exchanges of standing timber for lumpsum payments imposes minimal burden in time or expense. Therefore, a Regulatory Flexibility Analysis under VerDate Nov<24>2008 16:39 May 27, 2009 Jkt 217001 the Regulatory Flexibility Act (5 U.S.C. Chapter 6) is not required. Pursuant to section 7805(f) of the Code, the notice of proposed rulemaking preceding this regulation has been submitted to the Chief Counsel for Advocacy of the Small Business Administration for comment on its impact on small business. Drafting Information The principal author of these regulations is Timothy S. Sheppard of the Office of Associate Chief Counsel (Procedure and Administration). However, other personnel from the IRS and the Treasury Department participated in their development. List of Subjects in 26 CFR Part 1 Income taxes, Reporting and recordkeeping requirements. Adoption of Amendments to the Regulations Accordingly, 26 CFR part 1 is amended as follows: ■ PART 1—INCOME TAXES Paragraph 1. The authority citation for part 1 continues to read in part as follows: ■ Authority: 26 U.S.C. 7805 * * * Par. 2. Section 1.6045–4 is amended by: ■ 1. Redesignating paragraph (b)(2) introductory text as (b)(2)(i) introductory text. ■ 2. In redesignated paragraph (b)(2)(i), further redesignating paragraphs (2)(i), (2)(ii), (2)(iii), and (2)(iv) as paragraphs (2)(i)(A), (2)(i)(B), (2)(i)(C), and (2)(i)(D), respectively. ■ 3. Redesignating the undesignated text after newly designated paragraph (b)(2)(i)(D) as paragraph (b)(2)(ii) and adding a sentence at the end of newlydesignated paragraph (b)(2)(ii). ■ 4. Adding new paragraph (b)(2)(i)(E). ■ 5. Revising paragraphs (c)(2)(i) and (s). The revisions and additions read as follows: (c) * * * (2) * * * (i) An interest in surface or subsurface natural resources (for example, water, ores, and other natural deposits) or crops, whether or not such natural resources or crops are severed from the land. For purposes of this section, the terms ‘‘natural resources’’ and ‘‘crops’’ do not include standing timber. * * * * * (s) Effective/applicability date. This section applies for real estate transactions with dates of closing (as determined under paragraph (h)(2)(ii) of this section) that occur on or after January 1, 1991. The amendments to paragraphs (b)(2)(i)(E), (b)(2)(ii) and (c)(2)(i) of this section shall apply to sales or exchanges of standing timber for lump-sum payments completed after May 28, 2009. Linda E. Stiff, Deputy Commissioner for Services and Enforcement. Approved: May 15, 2009. Bernard J. Knight, Jr., Acting General Counsel of the Treasury. [FR Doc. E9–12298 Filed 5–27–09; 8:45 am] BILLING CODE P ■ § 1.6045–4 Information reporting on real estate transactions with dates of closing on or after January 1, 1991. * * * * * (b) * * * (2) * * * (i) * * * (E) Any non-contingent interest in standing timber. (ii) * * * Further, the term ‘‘ownership interest’’ includes any contractual interest in a sale or exchange of standing timber for a lumpsum payment that is fixed and not contingent. * * * * * PO 00000 Frm 00044 Fmt 4700 Sfmt 4700 DEPARTMENT OF THE TREASURY Office of Foreign Assets Control 31 CFR Part 546 Darfur Sanctions Regulations AGENCY: Office of Foreign Assets Control, Treasury. ACTION: Final rule. SUMMARY: The Department of the Treasury’s Office of Foreign Assets Control (‘‘OFAC’’) is adding a new part to the Code of Federal Regulations to implement Executive Order 13400 of April 26, 2006, ‘‘Blocking Property of Persons in Connection With the Conflict in Sudan’s Darfur Region.’’ DATES: Effective Date: May 28, 2009. FOR FURTHER INFORMATION CONTACT: Assistant Director for Compliance, Outreach & Implementation, tel.: 202/ 622–2490, Assistant Director for Licensing, tel.: 202/622–2480, Assistant Director for Policy, tel.: 202/622–4855, Office of Foreign Assets Control, or Chief Counsel (Foreign Assets Control), tel.: 202/622–2410, Office of the General Counsel, Department of the Treasury (not toll free numbers). SUPPLEMENTARY INFORMATION: E:\FR\FM\28MYR1.SGM 28MYR1 Federal Register / Vol. 74, No. 101 / Thursday, May 28, 2009 / Rules and Regulations Electronic and Facsimile Availability This document and additional information concerning OFAC are available from OFAC’s Web site (http://www.treas.gov/ofac) or via facsimile through a 24-hour fax-on demand service, tel.: (202) 622–0077. Background On November 3, 1997, the President, invoking the authority of, inter alia, the International Emergency Economic Powers Act, 50 U.S.C. 1701–1706 (‘‘IEEPA’’), issued Executive Order 13067 (62 FR 59989, November 5, 1997) (‘‘E.O. 13067’’) declaring a national emergency with respect to the Government of Sudan’s policies and actions. These policies and actions included supporting international terrorism, destabilizing neighboring governments, and committing widespread human rights violations. Subsequently, on October 13, 2006, the President issued Executive Order 13412 (71 FR 61369, October 17, 2006) (‘‘E.O. 13412’’) to take additional steps with respect to the emergency declared in E.O. 13067 and to implement the Darfur Peace and Accountability Act of 2006. The Office of Foreign Assets Control (‘‘OFAC’’) promulgated the Sudanese Sanctions Regulations, 31 CFR part 538 (the ‘‘SSR’’), on July 1, 1998, to implement the provisions of E.O. 13067. A final rule amending the SSR to implement the provisions of E.O. 13412 was published in the Federal Register on October 31, 2007 (72 FR 61513). On April 26, 2006, under the authority of, inter alia, IEEPA and section 5 of the United Nations Participation Act, 22 U.S.C. 287c (‘‘UNPA’’), the President issued Executive Order 13400 (71 FR 25483, May 1, 2006) (‘‘E.O. 13400’’), effective at 12:01 a.m. eastern daylight time on April 27, 2006. At the time that he issued E.O. 13400, the President condemned the continued violations of the N’djamena Ceasefire Agreement of April 8, 2004, and the Abuja Humanitarian and Security Protocols of November 9, 2004, by all sides in Darfur, as well as the deterioration of the security situation in Darfur and the negative impact this had on humanitarian assistance efforts. The President also strongly condemned the continued violence against civilians, including sexual violence against women and girls, as noted by the United Nations Security Council in Resolution 1591 of March 29, 2005. To deal with the threat to the national security and foreign policy of the United States posed by this situation, E.O. 13400 expanded the scope of the national VerDate Nov<24>2008 16:39 May 27, 2009 Jkt 217001 emergency declared in E.O. 13067 with respect to the policies and actions of the Government of Sudan. It also took the additional steps of blocking all property and interests in property of certain persons in connection with the conflict in Darfur. Section 1(a) of E.O. 13400 blocks, with certain exceptions, all property and interests in property that are in the United States, that come within the United States, or that are or come within the possession or control of United States persons of: (1) the persons listed in the Annex to E.O. 13400; and (2) any person determined by the Secretary of the Treasury, after consultation with the Secretary of State: • To have constituted a threat to the peace process in Darfur; • To have constituted a threat to stability in Darfur and the region; • To be responsible for conduct related to the conflict in Darfur that violates international law; • To be responsible for heinous conduct with respect to human life or limb related to the conflict in Darfur; • To have directly or indirectly supplied, sold, or transferred arms or any related materiel, or any assistance, advice, or training related to military activities to: (i) The Government of Sudan; (ii) the Sudan Liberation Movement/Army; (iii) the Justice and Equality Movement; (iv) the Janjaweed; or (v) any person (other than a person listed in (i)–(iv) above) operating in the states of North Darfur, South Darfur, or West Darfur that is a belligerent, a nongovernmental entity, or an individual; • To be responsible for offensive military overflights in and over the Darfur region; • To have materially assisted, sponsored, or provided financial, material, or technological support for, or goods or services in support of, the activities described above, or any person listed in or designated pursuant to E.O. 13400; or • To be owned or controlled by, or acting or purporting to act for or on behalf of, directly or indirectly, any person listed in or designated pursuant to E.O. 13400. In Section 1(b) of E.O. 13400, the President determined that the making of donations of certain articles, such as food, clothing, and medicine intended to be used to relieve human suffering, as specified in section 203(b)(2) of IEEPA, 50 U.S.C. 1702(b)(2), by, to, or for the benefit of any person listed in or designated pursuant to E.O. 13400 would seriously impair his ability to deal with the national emergency declared in E.O. 13067 and expanded in PO 00000 Frm 00045 Fmt 4700 Sfmt 4700 25431 E.O. 13400, and the President therefore prohibited such donations. Accordingly, the donation of such items is prohibited, unless authorized by OFAC. Section 1(c) of E.O. 13400 provides that the prohibition on any transaction or dealing by a United States person or within the United States in blocked property and interests in property includes, but is not limited to, the making of any contribution or provision of funds, goods, or services by, to, or for the benefit of any person listed in or designated pursuant to E.O. 13400, and the receipt of any contribution or provision of funds, goods, or services from any such person. Section 2 of E.O. 13400 prohibits any transaction by a United States person or within the United States that evades or avoids, or has the purpose of evading or avoiding, or attempts to violate any of the prohibitions set forth in E.O. 13400, as well as any conspiracy formed to violate such prohibitions. Section 5 of E.O. 13400 authorizes the Secretary of the Treasury, after consultation with the Secretary of State, to take such actions, including the promulgation of rules and regulations, as may be necessary to carry out the purposes of E.O. 13400. In furtherance of these purposes, OFAC is promulgating these Darfur Sanctions Regulations, 31 CFR part 546 (the ‘‘Regulations’’). As described above, these sanctions are targeted sanctions directed at certain actors in connection with the conflict in Darfur, and are separate from the Sudanese Sanctions Regulations, 31 CFR part 538. Subpart B of the Regulations implements the prohibitions contained in sections 1 and 2 of E.O. 13400. See, e.g., §§ 546.201 and 546.205. Persons identified in the Annex to E.O. 13400, designated by or under the authority of the Secretary of the Treasury pursuant to E.O. 13400, or otherwise subject to the blocking provisions of E.O. 13400 are referred to throughout the Regulations as ‘‘persons whose property and interests in property are blocked pursuant to § 546.201(a).’’ The names of persons listed in or designated pursuant to E.O. 13400 are or will be published on OFAC’s Specially Designated Nationals and Blocked Persons List, which is accessible via OFAC’s Web site, and can be found at Appendix A to 31 CFR chapter V. Those names also have been or will be published in the Federal Register. Sections 546.202 and 546.203 of subpart B detail the effect of transfers of blocked property in violation of the Regulations and set forth the requirement to hold blocked funds, such as currency, bank deposits, and E:\FR\FM\28MYR1.SGM 28MYR1 25432 Federal Register / Vol. 74, No. 101 / Thursday, May 28, 2009 / Rules and Regulations liquidated financial obligations, in interest-bearing blocked accounts. Section 546.204 of subpart B provides that all expenses incident to the maintenance of blocked physical property shall be the responsibility of the owners or operators of such property, and that such expenses shall not be met from blocked funds, unless otherwise authorized. The section further provides that blocked property may, in OFAC’s discretion, be sold or liquidated and the net proceeds placed in a blocked interest-bearing account in the name of the owner of the property. Section 546.205 implements the prohibitions in sections 2(a) and 2(b) of E.O. 13400 on any transaction by a United States person or within the United States that evades or avoids, has the purpose of evading or avoiding, or attempts to violate any of the prohibitions set forth in E.O. 13400, and on any conspiracy formed to violate such prohibitions. Subpart C of the Regulations defines key terms used throughout the Regulations, and subpart D sets forth interpretive sections regarding the general prohibitions contained in subpart B. Section 546.411 sets out the rule that the property and interests in property of an entity are blocked if the entity is 50 percent or more owned by a person whose property and interests in property are blocked, whether or not the entity itself is listed in or designated pursuant to E.O. 13400. Transactions otherwise prohibited under the Regulations but found to be consistent with U.S. policy may be authorized by one of the general licenses contained in subpart E or by a specific license issued pursuant to the procedures described in subpart E of part 501 of 31 CFR chapter V. Subpart E of part 546 also contains certain statements of licensing policy, in addition to the general licenses. Subpart F of the Regulations refers to subpart C of part 501 for applicable recordkeeping and reporting requirements. Subpart G describes the civil and criminal penalties applicable to violations of the Regulations, as well as the procedures governing the potential imposition of a civil monetary penalty. Subpart G also refers to Appendix A of part 501 for a more complete description of these procedures. Subpart H of the Regulations refers to subpart E of part 501 for applicable provisions relating to administrative procedures and contains a delegation of authority by the Secretary of the Treasury. Subpart I of the Regulations sets forth a Paperwork Reduction Act notice. VerDate Nov<24>2008 16:39 May 27, 2009 Jkt 217001 Public Participation Because the Regulations involve a foreign affairs function, the provisions of Executive Order 12866 and the Administrative Procedure Act (5 U.S.C. 553) requiring notice of proposed rulemaking, opportunity for public participation, and delay in effective date are inapplicable. Because no notice of proposed rulemaking is required for this rule, the Regulatory Flexibility Act (5 U.S.C. 601–612) does not apply. Paperwork Reduction Act The collections of information related to the Regulations are contained in 31 CFR part 501 (the ‘‘Reporting, Procedures and Penalties Regulations’’). Pursuant to the Paperwork Reduction Act of 1995 (44 U.S.C. 3507), those collections of information have been approved by the Office of Management and Budget under control number 1505– 0164. An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless the collection of information displays a valid control number. List of Subjects in 31 CFR Part 546 Administrative practice and procedure, Banks, Banking, Blocking of assets, Credit, Darfur, Penalties, Reporting and recordkeeping requirements, Securities, Services, Sudan. ■ For the reasons set forth in the preamble, the Department of the Treasury’s Office of Foreign Assets Control adds part 546 to 31 CFR Chapter V to read as follows: PART 546—DARFUR SANCTIONS REGULATIONS Subpart A—Relation of This Part to Other Laws and Regulations Sec. 546.101 Relation of this part to other laws and regulations. Subpart B—Prohibitions 546.201 Prohibited transactions involving blocked property. 546.202 Effect of transfers violating the provisions of this part. 546.203 Holding of funds in interestbearing accounts; investment and reinvestment. 546.204 Expenses of maintaining blocked physical property; liquidation of blocked property. 546.205 Evasions; attempts; conspiracies. Subpart C—General Definitions 546.301 Arms or any related materiel. 546.302 Blocked account; blocked property. 546.303 Effective date. 546.304 Entity. 546.305 Interest. 546.306 Licenses; general and specific. PO 00000 Frm 00046 Fmt 4700 Sfmt 4700 546.307 546.308 546.309 546.310 546.311 546.312 Person. Property; property interest. Transfer. United States. U.S. financial institution. United States person; U.S. person. Subpart D—Interpretations 546.401 Reference to amended sections. 546.402 Effect of amendment. 546.403 Termination and acquisition of an interest in blocked property. 546.404 Transactions ordinarily incident to a licensed transaction. 546.405 Provision of services. 546.406 Offshore transactions. 546.407 Payments from blocked accounts to satisfy obligations prohibited. 546.408 Charitable contributions. 546.409 Credit extended and cards issued by U.S. financial institutions. 546.410 Setoffs prohibited. 546.411 Entities owned by a person whose property and interests in property are blocked. Subpart E—Licenses, Authorizations, and Statements of Licensing Policy 546.501 General and specific licensing procedures. 546.502 Effect of license or authorization. 546.503 Exclusion from licenses. 546.504 Payments and transfers to blocked accounts in U.S. financial institutions. 546.505 Entries in certain accounts for normal service charges authorized. 546.506 Investment and reinvestment of certain funds. 546.507 Provision of certain legal services authorized. 546.508 Authorization of emergency medical services. Subpart F—Reports 546.601 Records and reports. Subpart G—Penalties 546.701 Penalties. 546.702 Pre-Penalty Notice; settlement. 546.703 Penalty imposition. 546.704 Administrative collection; referral to United States Department of Justice. Subpart H—Procedures 546.801 Procedures. 546.802 Delegation by the Secretary of the Treasury. Subpart I—Paperwork Reduction Act 546.901 Paperwork Reduction Act notice. Authority: 3 U.S.C. 301; 31 U.S.C. 321(b); 50 U.S.C. 1601–1651, 1701–1706; 22 U.S.C. 287c; Pub. L. 101–410, 104 Stat. 890 (28 U.S.C. 2461 note); Pub. L. 110–96, 121 Stat. 1011; E.O. 13067, 62 FR 59989, 3 CFR, 1997 Comp., p. 230; E.O. 13400, 71 FR 25483, 3 CFR, 2006 Comp., p. 220. Subpart A—Relation of This Part to Other Laws and Regulations § 546.101 Relation of this part to other laws and regulations. This part is separate from, and independent of, the other parts of this chapter, with the exception of part 501 E:\FR\FM\28MYR1.SGM 28MYR1 Federal Register / Vol. 74, No. 101 / Thursday, May 28, 2009 / Rules and Regulations of this chapter, the recordkeeping and reporting requirements and license application and other procedures of which apply to this part. 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. Differing foreign policy and national security circumstances may result in differing interpretations of similar language among the parts of this chapter. No license or authorization contained in or issued pursuant to those other parts authorizes any transaction prohibited by this part. No license or authorization contained in or issued pursuant to any other provision of law or regulation authorizes any transaction prohibited by this part. No license or authorization contained in or issued pursuant to this part relieves the involved parties from complying with any other applicable laws or regulations. Subpart B—Prohibitions § 546.201 Prohibited transactions involving blocked property. (a) Except as authorized by regulations, orders, directives, rulings, instructions, licenses, or otherwise, and notwithstanding any contracts entered into or any license or permit granted prior to the effective date, all property and interests in property that are in the United States, that hereafter come within the United States, or that are or hereafter come within the possession or control of U.S. persons, including their overseas branches, of the following persons are blocked and may not be transferred, paid, exported, withdrawn, or otherwise dealt in: (1) Any person listed in the Annex to Executive Order 13400 of April 26, 2006; and (2) Any person determined by the Secretary of the Treasury, after consultation with the Secretary of State: (i) To have constituted a threat to the peace process in Darfur; (ii) To have constituted a threat to stability in Darfur and the region; (iii) To be responsible for conduct related to the conflict in Darfur that violates international law; (iv) To be responsible for heinous conduct with respect to human life or limb related to the conflict in Darfur; (v) To have directly or indirectly supplied, sold, or transferred arms or any related materiel, or any assistance, advice, or training related to military activities to: (A) The Government of Sudan; (B) The Sudan Liberation Movement/ Army; (C) The Justice and Equality Movement; VerDate Nov<24>2008 16:39 May 27, 2009 Jkt 217001 (D) The Janjaweed; or (E) Any person (other than a person listed in paragraph (a)(2)(v)(A) through (a)(2)(v)(D) of this section) operating in the states of North Darfur, South Darfur, or West Darfur that is a belligerent, a nongovernmental entity, or an individual; (vi) To be responsible for offensive military overflights in and over the Darfur region; (vii) To have materially assisted, sponsored, or provided financial, material, or technological support for, or goods or services in support of, the activities described in paragraphs (a)(2)(i) through (a)(2)(vi) of this section or any person whose property and interests in property are blocked pursuant to this paragraph (a); or (viii) To be owned or controlled by, or acting or purporting to act for or on behalf of, directly or indirectly, any person whose property and interests in property are blocked pursuant to this paragraph (a). Note 1 to paragraph (a) of § 546.201: The names of persons listed in or designated pursuant to Executive Order 13400, whose property and interests in property are blocked pursuant to paragraph (a) of this section, are published on the Office of Foreign Assets Control’s Specially Designated Nationals and Blocked Persons List (‘‘SDN List’’) (which is accessible via the Office of Foreign Assets Control’s Web site), published in the Federal Register, and incorporated into Appendix A to this chapter with the identifier ‘‘[DARFUR].’’ See § 546.411 concerning entities that may not be listed on the SDN list but whose property and interests in property are nevertheless blocked pursuant to paragraph (a) of this section. Note 2 to paragraph (a) of § 546.201: Section 203 of the International Emergency Economic Powers Act (50 U.S.C. 1701–1706) (‘‘IEEPA’’) explicitly authorizes the blocking of property and interests in property of a person during the pendency of an investigation. The names of persons whose property and interests in property are blocked pending investigation pursuant to this part also are published on the SDN List, published in the Federal Register, and incorporated into Appendix A to this chapter with the identifier ‘‘[BPI–DARFUR].’’ Note 3 to paragraph (a) of § 546.201: Sections 501.806 and 501.807 of this chapter V describe the procedures to be followed by persons seeking, respectively, the unblocking of funds that they believe were blocked due to mistaken identity, or administrative reconsideration of their status as persons whose property and interests in property are blocked pursuant to paragraph (a) of this section. (b) The prohibitions in paragraph (a) of this section include, but are not limited to, prohibitions on the following PO 00000 Frm 00047 Fmt 4700 Sfmt 4700 25433 transactions when engaged in by a United States person or within the United States: (1) The making of any contribution or provision of funds, goods, or services by, to, or for the benefit of any person whose property and interests in property are blocked pursuant to paragraph (a) of this section; and (2) The receipt of any contribution or provision of funds, goods, or services from any person whose property and interests in property are blocked pursuant to paragraph (a) of this section. (c) Unless otherwise authorized by this part or by a specific license expressly referring to this section, any dealing in any security (or evidence thereof) held within the possession or control of a U.S. person and either registered or inscribed in the name of, or known to be held for the benefit of, or issued by, any person whose property and interests in property are blocked pursuant to paragraph (a) of this section is prohibited. This prohibition includes but is not limited to the transfer (including the transfer on the books of any issuer or agent thereof), disposition, transportation, importation, exportation, or withdrawal of, or the endorsement or guaranty of signatures on, any such security on or after the effective date. This prohibition applies irrespective of the fact that at any time (whether prior to, on, or subsequent to the effective date) the registered or inscribed owner of any such security may have or might appear to have assigned, transferred, or otherwise disposed of the security. § 546.202 Effect of transfers violating the provisions of this part. (a) Any transfer after the effective date that is in violation of any provision of this part or of any regulation, order, directive, ruling, instruction, or license issued pursuant to this part, and that involves any property or interest in property blocked pursuant to § 546.201(a), is null and void and shall not be the basis for the assertion or recognition of any interest in or right, remedy, power, or privilege with respect to such property or property interests. (b) No transfer before the effective date shall be the basis for the assertion or recognition of any right, remedy, power, or privilege with respect to, or any interest in, any property or interest in property blocked pursuant to § 546.201(a), unless the person who holds or maintains such property, prior to that date, had written notice of the transfer or by any written evidence had recognized such transfer. (c) Unless otherwise provided, an appropriate license or other authorization issued by or pursuant to E:\FR\FM\28MYR1.SGM 28MYR1 25434 Federal Register / Vol. 74, No. 101 / Thursday, May 28, 2009 / Rules and Regulations the direction or authorization of the Director of the Office of Foreign Assets Control before, during, or after a transfer shall validate such transfer or make it enforceable to the same extent that it would be valid or enforceable but for the provisions of IEEPA, Executive Order 13400, this part, and any regulation, order, directive, ruling, instruction, or license issued pursuant to this part. (d) Transfers of property that otherwise would be null and void or unenforceable by virtue of the provisions of this section shall not be deemed to be null and void or unenforceable as to any person with whom such property is or was held or maintained (and as to such person only) in cases in which such person is able to establish to the satisfaction of the Director of the Office of Foreign Assets Control each of the following: (1) Such transfer did not represent a willful violation of the provisions of this part by the person with whom such property is or was held or maintained (and as to such person only); (2) The person with whom such property is or was held or maintained did not have reasonable cause to know or suspect, in view of all the facts and circumstances known or available to such person, that such transfer required a license or authorization issued pursuant to this part and was not so licensed or authorized, or, if a license or authorization did purport to cover the transfer, that such license or authorization had been obtained by misrepresentation of a third party or withholding of material facts or was otherwise fraudulently obtained; and (3) The person with whom such property is or was held or maintained filed with the Office of Foreign Assets Control a report setting forth in full the circumstances relating to such transfer promptly upon discovery that: (i) Such transfer was in violation of the provisions of this part or any regulation, ruling, instruction, license, or other directive or authorization issued pursuant to this part; (ii) Such transfer was not licensed or authorized by the Director of the Office of Foreign Assets Control; or (iii) If a license did purport to cover the transfer, such license had been obtained by misrepresentation of a third party or withholding of material facts or was otherwise fraudulently obtained. Note to paragraph (d) of § 546.202: The filing of a report in accordance with the provisions of paragraph (d)(3) of this section shall not be deemed evidence that the terms of paragraphs (d)(1) and (d)(2) of this section have been satisfied. VerDate Nov<24>2008 16:39 May 27, 2009 Jkt 217001 (e) Unless licensed pursuant to this part, any attachment, judgment, decree, lien, execution, garnishment, or other judicial process is null and void with respect to any property in which, on or since the effective date, there existed an interest of a person whose property and interests in property are blocked pursuant to § 546.201(a). § 546.203 Holding of funds in interestbearing accounts; investment and reinvestment. (a) Except as provided in paragraph (c) or (d) of this section, or as otherwise directed by the Office of Foreign Assets Control, any U.S. person holding funds, such as currency, bank deposits, or liquidated financial obligations, subject to § 546.201(a) shall hold or place such funds in a blocked interest-bearing account located in the United States. (b)(1) For purposes of this section, the term blocked interest-bearing account means a blocked account: (i) In a federally-insured U.S. bank, thrift institution, or credit union, provided the funds are earning interest at rates that are commercially reasonable; or (ii) With a broker or dealer registered with the Securities and Exchange Commission under the Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.), provided the funds are invested in a money market fund or in U.S. Treasury bills. (2) For purposes of this section, a rate is commercially reasonable if it is the rate currently offered to other depositors on deposits or instruments of comparable size and maturity. (3) Funds held or placed in a blocked account pursuant to this paragraph (b) may not be invested in instruments the maturity of which exceeds 180 days. If interest is credited to a separate blocked account or subaccount, the name of the account party on each account must be the same. (c) Blocked funds held in instruments the maturity of which exceeds 180 days at the time the funds become subject to § 546.201(a) may continue to be held until maturity in the original instrument, provided any interest, earnings, or other proceeds derived therefrom are paid into a blocked interest-bearing account in accordance with paragraph (b) or (d) of this section. (d) Blocked funds held in accounts or instruments outside the United States at the time the funds become subject to § 546.201(a) may continue to be held in the same type of accounts or instruments, provided the funds earn interest at rates that are commercially reasonable. PO 00000 Frm 00048 Fmt 4700 Sfmt 4700 (e) This section does not create an affirmative obligation for the holder of blocked tangible property, such as chattels or real estate, or of other blocked property, such as debt or equity securities, to sell or liquidate such property. However, the Office of Foreign Assets Control may issue licenses permitting or directing such sales or liquidation in appropriate cases. (f) Funds subject to this section may not be held, invested, or reinvested in a manner that provides immediate financial or economic benefit or access to any person whose property and interests in property are blocked pursuant to § 546.201(a), nor may their holder cooperate in or facilitate the pledging or other attempted use as collateral of blocked funds or other assets. § 546.204 Expenses of maintaining blocked physical property; liquidation of blocked property. (a) Except as otherwise authorized, and notwithstanding the existence of any rights or obligations conferred or imposed by any international agreement or contract entered into or any license or permit granted prior to the effective date, all expenses incident to the maintenance of physical property blocked pursuant to § 546.201(a) shall be the responsibility of the owners or operators of such property, which expenses shall not be met from blocked funds. (b) Property blocked pursuant to § 546.201(a) may, in the discretion of the Office of Foreign Assets Control, be sold or liquidated and the net proceeds placed in a blocked interest-bearing account in the name of the owner of the property. § 546.205 Evasions; attempts; conspiracies. (a) Except as otherwise authorized, and notwithstanding any contract entered into or any license or permit granted prior to the effective date, any transaction by a U.S. person or within the United States on or after the effective date that evades or avoids, has the purpose of evading or avoiding, or attempts to violate any of the prohibitions set forth in this part is prohibited. (b) Except as otherwise authorized, and notwithstanding any contract entered into or any license or permit granted prior to the effective date, any conspiracy formed to violate the prohibitions set forth in this part is prohibited. E:\FR\FM\28MYR1.SGM 28MYR1 Federal Register / Vol. 74, No. 101 / Thursday, May 28, 2009 / Rules and Regulations Subpart C—General Definitions § 546.301 Arms or any related materiel. The term arms or any related materiel shall mean arms or related materiel of all types, military aircraft, and equipment, but excludes: (a) Supplies and technical assistance, including training, intended solely for use in authorized monitoring, verification, or peace support operations, including such operations led by regional organizations; (b) Supplies of non-lethal military equipment intended solely for humanitarian use, human rights monitoring use, or protective use, and related technical assistance, including training; (c) Supplies of protective clothing, including flak jackets and military helmets, for use by United Nations personnel, representatives of the media, and humanitarian and development workers and associated personnel, for their personal use only; (d) Assistance and supplies provided in support of implementation of the Comprehensive Peace Agreement signed January 9, 2005, by the Government of Sudan and the People’s Liberation Movement/Army; and (e) Other movements of military equipment and supplies into the Darfur region by the United States or that are permitted by a rule or decision of the Secretary of State, after consultation with the Secretary of the Treasury. § 546.302 property. Blocked account; blocked The terms blocked account and blocked property shall mean any account or property subject to the prohibitions in § 546.201 held in the name of a person whose property and interests in property are blocked pursuant to § 546.201(a), or in which such person has an interest, and with respect to which payments, transfers, exportations, withdrawals, or other dealings may not be made or effected except pursuant to an authorization or license from the Office of Foreign Assets Control expressly authorizing such action. Note to § 546.302: See § 546.411 concerning the blocked status of property and interests in property of an entity that is 50 percent or more owned by a person whose property and interests in property are blocked pursuant to § 546.201(a). § 546.303 Effective date. The term effective date refers to the effective date of the applicable prohibitions and directives contained in this part as follows: VerDate Nov<24>2008 16:39 May 27, 2009 Jkt 217001 25435 (a) With respect to a person whose property and interests in property are blocked pursuant to § 546.201(a)(1), 12:01 a.m. eastern daylight time, April 27, 2006; (b) With respect to a person whose property and interests in property are blocked pursuant to § 546.201(a)(2), the earlier of the date of actual or constructive notice of such person’s designation. royalties, book accounts, accounts payable, judgments, patents, trademarks or copyrights, insurance policies, safe deposit boxes and their contents, annuities, pooling agreements, services of any nature whatsoever, contracts of any nature whatsoever, and any other property, real, personal, or mixed, tangible or intangible, or interest or interests therein, present, future, or contingent. § 546.304 § 546.309 Entity. The term entity means a partnership, association, trust, joint venture, corporation, group, subgroup, or other organization. § 546.305 Interest. Except as otherwise provided in this part, the term interest, when used with respect to property (e.g., ‘‘an interest in property’’), means an interest of any nature whatsoever, direct or indirect. § 546.306 Licenses; general and specific. (a) Except as otherwise specified, the term license means any license or authorization contained in or issued pursuant to this part. (b) The term general license means any license or authorization the terms of which are set forth in subpart E of this part. (c) The term specific license means any license or authorization not set forth in subpart E of this part but issued pursuant to this part. Note to § 546.306: See § 501.801 of this chapter on licensing procedures. § 546.307 Person. The term person means an individual or entity. § 546.308 Property; property interest. The terms property and property interest include, but are not limited to, money, checks, drafts, bullion, bank deposits, savings accounts, debts, indebtedness, obligations, notes, guarantees, debentures, stocks, bonds, coupons, any other financial instruments, bankers acceptances, mortgages, pledges, liens or other rights in the nature of security, warehouse receipts, bills of lading, trust receipts, bills of sale, any other evidences of title, ownership or indebtedness, letters of credit and any documents relating to any rights or obligations thereunder, 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, leaseholds, ground rents, real estate and any other interest therein, options, negotiable instruments, trade acceptances, PO 00000 Frm 00049 Fmt 4700 Sfmt 4700 Transfer. The term transfer means 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, convey, 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 making of any payment; the setting off of any obligation or credit; the appointment of any agent, trustee, or fiduciary; the creation or transfer of any lien; the issuance, docketing, filing, or levy of or under any judgment, decree, attachment, injunction, 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; the exercise of any power of appointment, power of attorney, or other power; or the acquisition, disposition, transportation, importation, exportation, or withdrawal of any security. § 546.310 United States. The term United States means the United States, its territories and possessions, and all areas under the jurisdiction or authority thereof. § 546.311 U.S. financial institution. The term U.S. financial institution means any U.S. entity (including its foreign branches) that is engaged in the business of accepting deposits, making, granting, transferring, holding, or brokering loans or credits, or purchasing or selling foreign exchange, securities, commodity futures or options, or procuring purchasers and sellers thereof, as principal or agent; including but not limited to, depository E:\FR\FM\28MYR1.SGM 28MYR1 25436 Federal Register / Vol. 74, No. 101 / Thursday, May 28, 2009 / Rules and Regulations institutions, banks, savings banks, trust companies, securities brokers and dealers, commodity futures and options brokers and dealers, forward contract and foreign exchange merchants, securities and commodities exchanges, clearing corporations, investment companies, employee benefit plans, and U.S. holding companies, U.S. affiliates, or U.S. subsidiaries of any of the foregoing. This term includes those branches, offices, and agencies of foreign financial institutions that are located in the United States, but not such institutions’ foreign branches, offices, or agencies. § 546.312 person. United States person; U.S. The term United States person or U.S. 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. Subpart D—Interpretations § 546.401 Reference to amended sections. Except as otherwise specified, reference to any provision in or appendix to this part or chapter or to any regulation, ruling, order, instruction, directive, or license issued pursuant to this part refers to the same as currently amended. § 546.402 Effect of amendment. Unless otherwise specifically provided, any amendment, modification, or revocation of any provision in or appendix to this part or chapter or of any order, regulation, ruling, instruction, or license issued by or under the direction of the Director of the Office of Foreign Assets Control does not affect any act done or omitted, or any civil or criminal suit or proceeding commenced or pending prior to such amendment, modification, or revocation. All penalties, forfeitures, and liabilities under any such order, regulation, ruling, instruction, or license continue and may be enforced as if such amendment, modification, or revocation had not been made. § 546.403 Termination and acquisition of an interest in blocked property. (a) Whenever a transaction licensed or authorized by or pursuant to this part results in the transfer of property (including any property interest) away from a person, such property shall no longer be deemed to be property blocked pursuant to § 546.201(a), unless there exists in the property another interest that is blocked pursuant to VerDate Nov<24>2008 16:39 May 27, 2009 Jkt 217001 § 546.201(a) or any other part of this chapter, the transfer of which has not been effected pursuant to license or other authorization. (b) Unless otherwise specifically provided in a license or authorization issued pursuant to this part, if property (including any property interest) is transferred or attempted to be transferred to a person whose property and interests in property are blocked pursuant to § 546.201(a), such property shall be deemed to be property in which that person has an interest and therefore blocked. § 546.404 Transactions ordinarily incident to a licensed transaction. Any transaction ordinarily incident to a licensed transaction and necessary to give effect thereto is also authorized, except: (a) An ordinarily incident transaction, not explicitly authorized within the terms of the license, by or with a person whose property and interests in property are blocked pursuant to § 546.201(a); or (b) An ordinarily incident transaction, not explicitly authorized within the terms of the license, involving a debit to a blocked account or a transfer of blocked property. (c) Example. A license authorizing Company A, whose property and interests in property are blocked pursuant to § 546.201(a), to complete a securities sale also authorizes all activities by other parties required to complete the sale, including transactions by the buyer, broker, transfer agents, banks, etc., provided that such other parties are not themselves persons whose property and interests in property are blocked pursuant to § 546.201(a). § 546.405 Provision of services. (a) The prohibitions on transactions involving blocked property contained in § 546.201 apply to services performed in the United States or by U.S. persons, wherever located, including by an overseas branch of an entity located in the United States: (1) On behalf of or for the benefit of a person whose property and interests in property are blocked pursuant to § 546.201(a); or (2) With respect to property interests subject to § 546.201. (b) Example. U.S. persons may not, except as authorized by or pursuant to this part, provide legal, accounting, financial, brokering, freight forwarding, transportation, public relations, or other services to a person whose property and interests in property are blocked pursuant to § 546.201(a). PO 00000 Frm 00050 Fmt 4700 Sfmt 4700 Note to § 546.405: See §§ 546.507 and 546.508 on licensing policy with regard to the provision of certain legal or medical services. § 546.406 Offshore transactions. The prohibitions in § 546.201 on transactions or dealings involving blocked property apply to transactions by any U.S. person in a location outside the United States with respect to property held in the name of a person whose property and interests in property are blocked pursuant to § 546.201(a), or property in which a person whose property and interests in property are blocked pursuant to § 546.201(a) has or has had an interest since the effective date. § 546.407 Payments from blocked accounts to satisfy obligations prohibited. Pursuant to § 546.201, no debits may be made to a blocked account to pay obligations to U.S. persons or other persons, except as authorized by or pursuant to this part. § 546.408 Charitable contributions. Unless specifically authorized by the Office of Foreign Assets Control pursuant to this part, no charitable contribution of funds, goods, services, or technology, including contributions to relieve human suffering, such as food, clothing, or medicine, may be made by, to, or for the benefit of a person whose property and interests in property are blocked pursuant to § 546.201(a). For the purposes of this part, a contribution is made by, to, or for the benefit of a person whose property and interests in property are blocked pursuant to § 546.201(a) if made by, to, or in the name of such a person; if made by, to, or in the name of an entity or individual acting for or on behalf of, or owned or controlled by, such a person; or if made in an attempt to violate, to evade, or to avoid the bar on the provision of contributions by, to, or for the benefit of such a person. § 546.409 Credit extended and cards issued by U.S. financial institutions. The prohibition in § 546.201 on dealing in property subject to that section prohibits U.S. financial institutions from performing under any existing credit agreements, including, but not limited to, charge cards, debit cards, or other credit facilities issued by a U.S. financial institution to a person whose property and interests in property are blocked pursuant to § 546.201(a). § 546.410 Setoffs prohibited. A setoff against blocked property (including a blocked account), whether E:\FR\FM\28MYR1.SGM 28MYR1 Federal Register / Vol. 74, No. 101 / Thursday, May 28, 2009 / Rules and Regulations by a U.S. bank or other U.S. person, is a prohibited transfer under § 546.201 if effected after the effective date. § 546.411 Entities owned by a person whose property and interests in property are blocked. § 546.503 A person whose property and interests in property are blocked pursuant to § 546.201(a) has an interest in all property and interests in property of an entity in which it owns, directly or indirectly, a 50 percent or greater interest. The property and interests in property of such an entity, therefore, are blocked, and such an entity is a person whose property and interests in property are blocked pursuant to § 546.201(a), regardless of whether the entity itself is listed in the Annex to Executive Order 13400 or designated pursuant to § 546.201(a). Subpart E—Licenses, Authorizations, and Statements of Licensing Policy § 546.501 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. § 546.502 Effect of license or authorization. (a) No license or other authorization contained in this part, or otherwise issued by or under the direction of the Director of the Office of Foreign Assets Control, authorizes or validates any transaction effected prior to the issuance of such license or other authorization, unless specifically provided in such license or authorization. (b) No regulation, ruling, instruction, or license authorizes any transaction prohibited under this part unless the regulation, ruling, instruction, or license is issued by the Office of Foreign Assets Control and specifically refers to this part. No regulation, ruling, instruction, or license referring to this part shall be deemed to authorize any transaction prohibited by any other provision of this chapter unless the regulation, ruling, instruction, or license specifically refers to such provision. (c) Any regulation, ruling, instruction, or license authorizing any transaction otherwise prohibited under this part has the effect of removing a prohibition contained in this part from the transaction, but only to the extent specifically stated by its terms. Unless the regulation, ruling, instruction, or license otherwise specifies, such an authorization does not create any right, VerDate Nov<24>2008 16:39 May 27, 2009 Jkt 217001 duty, obligation, claim, or interest in, or with respect to, any property which would not otherwise exist under ordinary principles of law. Exclusion from licenses. The Director of the Office of Foreign Assets Control reserves the right to exclude any person, property, or transaction from the operation of any license or from the privileges conferred by any license. The Director of the Office of Foreign Assets Control also reserves the right to restrict the applicability of any license to particular persons, property, transactions, or classes thereof. Such actions are binding upon actual or constructive notice of the exclusions or restrictions. § 546.504 Payments and transfers to blocked accounts in U.S. financial institutions. Any payment of funds or transfer of credit in which a person whose property and interests in property are blocked pursuant to § 546.201(a) has any interest that comes within the possession or control of a U.S. financial institution must be blocked in an account on the books of that financial institution. A transfer of funds or credit by a U.S. financial institution between blocked accounts in its branches or offices is authorized, provided that no transfer is made from an account within the United States to an account held outside the United States, and further provided that a transfer from a blocked account may be made only to another blocked account held in the same name. Note to § 546.504: See § 501.603 of this chapter for mandatory reporting requirements regarding financial transfers. See also § 546.203 concerning the obligation to hold blocked funds in interest-bearing accounts. § 546.505 Entries in certain accounts for normal service charges authorized. (a) A U.S. financial institution is authorized to debit any blocked account held at that financial institution in payment or reimbursement for normal service charges owed it by the owner of that blocked account. (b) As used in this section, the term normal service charges shall include charges in payment or reimbursement for interest due; cable, telegraph, Internet, or telephone charges; postage costs; custody fees; small adjustment charges to correct bookkeeping errors; and, but not by way of limitation, minimum balance charges, notary and protest fees, and charges for reference books, photocopies, credit reports, transcripts of statements, registered PO 00000 Frm 00051 Fmt 4700 Sfmt 4700 25437 mail, insurance, stationery and supplies, and other similar items. § 546.506 Investment and reinvestment of certain funds. Subject to the requirements of § 546.203, U.S. financial institutions are authorized to invest and reinvest assets blocked pursuant to § 546.201, subject to the following conditions: (a) The assets representing such investments and reinvestments are credited to a blocked account or subaccount that is held in the same name at the same U.S. financial institution, or within the possession or control of a U.S. person, but funds shall not be transferred outside the United States for this purpose; (b) The proceeds of such investments and reinvestments shall not be credited to a blocked account or subaccount under any name or designation that differs from the name or designation of the specific blocked account or subaccount in which such funds or securities were held; and (c) No immediate financial or economic benefit accrues (e.g., through pledging or other use) to persons whose property and interests in property are blocked pursuant to § 546.201(a). § 546.507 Provision of certain legal services authorized. (a) The provision of the following legal services to or on behalf of persons whose property and interests in property are blocked pursuant to § 546.201(a) is authorized, provided that all receipts of payment of professional fees and reimbursement of incurred expenses must be specifically licensed: (1) Provision of legal advice and counseling on the requirements of and compliance with the laws of the United States or any jurisdiction within the United States, provided that such advice and counseling are not provided to facilitate transactions in violation of this part; (2) Representation of persons named as defendants in or otherwise made parties to domestic U.S. legal, arbitration, or administrative proceedings; (3) Initiation and conduct of domestic U.S. legal, arbitration, or administrative proceedings in defense of property interests subject to U.S. jurisdiction; (4) Representation of persons before any federal or state agency with respect to the imposition, administration, or enforcement of U.S. sanctions against such persons; and (5) Provision of legal services in any other context in which prevailing U.S. law requires access to legal counsel at public expense. E:\FR\FM\28MYR1.SGM 28MYR1 25438 Federal Register / Vol. 74, No. 101 / Thursday, May 28, 2009 / Rules and Regulations (b) The provision of any other legal services to persons whose property and interests in property are blocked pursuant to § 546.201(a), not otherwise authorized in this part, requires the issuance of a specific license. (c) Entry into a settlement agreement or the enforcement of any lien, judgment, arbitral award, decree, or other order through execution, garnishment, or other judicial process purporting to transfer or otherwise alter or affect property or interests in property blocked pursuant to § 546.201(a) is prohibited unless specifically licensed in accordance with § 546.202(e). § 546.508 Authorization of emergency medical services. The provision of nonscheduled emergency medical services in the United States to persons whose property and interests in property are blocked pursuant to § 546.201(a) is authorized, provided that all receipt of payment for such services must be specifically licensed. Subpart F—Reports § 546.601 Records and reports. For provisions relating to required records and reports, see part 501, subpart C, of this chapter. Recordkeeping and reporting requirements imposed by part 501 of this chapter with respect to the prohibitions contained in this part are considered requirements arising pursuant to this part. Subpart G—Penalties § 546.701 Penalties. (a) Attention is directed to section 206 of the International Emergency Economic Powers Act (50 U.S.C. 1705) (‘‘IEEPA’’), which is applicable to violations of the provisions of any license, ruling, regulation, order, directive, or instruction issued by or pursuant to the direction or authorization of the Secretary of the Treasury pursuant to this part or otherwise under IEEPA. (1) A civil penalty not to exceed the amount set forth in section 206 of IEEPA may be imposed on any person who violates, attempts to violate, conspires to violate, or causes a violation of any license, order, regulation, or prohibition issued under IEEPA. Note to paragraph (a)(1) of § 546.701: As of the date of publication in the Federal Register of the final rule adding this part to 31 CFR chapter V (May 28, 2009), IEEPA provides for a maximum civil penalty not to exceed the greater of $250,000 or an amount that is twice the amount of the transaction VerDate Nov<24>2008 16:39 May 27, 2009 Jkt 217001 that is the basis of the violation with respect to which the penalty is imposed. (2) A person who willfully commits, willfully attempts to commit, or willfully conspires to commit, or aids or abets in the commission of a violation of any license, order, regulation, or prohibition may, upon conviction, be fined not more than $1,000,000, or if a natural person, be imprisoned for not more than 20 years, or both. (b) Adjustments to Penalty Amounts. (1) The civil penalties provided in IEEPA are subject to adjustment pursuant to the Federal Civil Penalties Inflation Adjustment Act of 1990 (Pub. L. 101–410, as amended, 28 U.S.C. 2461 note). (2) The criminal penalties provided in IEEPA are subject to adjustment pursuant to 18 U.S.C. 3571. (c) Attention is directed to section 5 of the United Nations Participation Act, as amended (22 U.S.C. 287c(b)) (‘‘UNPA’’), which provides that any person who willfully violates or evades or attempts to violate or evade any order, rule, or regulation issued by the President pursuant to the authority granted in that section, upon conviction, shall be fined not more than $10,000 and, if a natural person, may also be imprisoned for not more than 10 years; and the officer, director, or agent of any corporation who knowingly participates in such violation or evasion shall be punished by a like fine, imprisonment, or both and any property, funds, securities, papers, or other articles or documents, or any vessel, together with her tackle, apparel, furniture, and equipment, or vehicle, or aircraft, concerned in such violation shall be forfeited to the United States. (d) Violations involving transactions described at section 203(b)(1), (3), and (4) of IEEPA shall be subject only to the penalties set forth in paragraph (c) of this section. (e) 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 Government of the United States, knowingly and willfully falsifies, conceals, or covers up by any trick, scheme, or device a material fact; or makes any materially false, fictitious, or fraudulent statement or representation; or makes or uses any false writing or document knowing the same to contain any materially false, fictitious, or fraudulent statement or entry; shall be fined under title 18, United States Code, imprisoned not more than five years, or both. (f) Violations of this part may also be subject to relevant provisions of other applicable laws. PO 00000 Frm 00052 Fmt 4700 Sfmt 4700 § 546.702 Pre-Penalty Notice; settlement. (a) When required. If 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 IEEPA and determines that a civil monetary penalty is warranted, the Office of Foreign Assets Control will issue a Pre-Penalty Notice informing the alleged violator of the agency’s intent to impose a monetary penalty. A Pre-Penalty Notice shall be in writing. The Pre-Penalty Notice may be issued whether or not another agency has taken any action with respect to the matter. For a description of the contents of a Pre-Penalty Notice, see Appendix A to part 501 of this chapter. (b)(1) Right to respond. An alleged violator has the right to respond to a Pre-Penalty Notice by making a written presentation to the Office of Foreign Assets Control. For a description of the information that should be included in such a response, see Appendix A to part 501 of this chapter. (2) Deadline for response. A response to the Pre-Penalty Notice must be made within the applicable 30-day period set forth in this paragraph. 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. (i) Computation of time for response. A response to a Pre-Penalty Notice must be postmarked or date-stamped by the U.S. Postal Service (or foreign postal service, if mailed abroad) or courier service provider (if transmitted to the Office of Foreign Assets Control by courier) on or before the 30th day after the postmark date on the envelope in which the Pre-Penalty Notice was mailed. If the Pre-Penalty Notice was personally delivered by a non-U.S. Postal Service agent authorized by the Office of Foreign Assets Control, a response must be postmarked or datestamped on or before the 30th day after the date of delivery. (ii) Extensions of time for response. If a due date falls on a federal holiday or weekend, that due date is extended to include the following business day. Any other extensions of time will be granted, at the discretion of the Office of Foreign Assets Control, only upon specific request to the Office of Foreign Assets Control. (3) Form and method of response. A response to a Pre-Penalty Notice need not be in any particular form, but it E:\FR\FM\28MYR1.SGM 28MYR1 Federal Register / Vol. 74, No. 101 / Thursday, May 28, 2009 / Rules and Regulations must be typewritten and signed by the alleged violator or a representative thereof, must contain information sufficient to indicate that it is in response to the Pre-Penalty Notice, and must include the Office of Foreign Assets Control identification number listed on the Pre-Penalty Notice. A copy of the written response may be sent by facsimile, but the original also must be sent to the Office of Foreign Assets Control Civil Penalties Division by mail or courier and must be postmarked or date-stamped, in accordance with paragraph (b)(2) of this section. (c) Settlement. Settlement discussion may be initiated by the Office of Foreign Assets Control, the alleged violator, or the alleged violator’s authorized representative. For a description of practices with respect to settlement, see Appendix A to part 501 of this chapter. (d) Guidelines. Guidelines for the imposition or settlement of civil penalties by the Office of Foreign Assets Control are contained in Appendix A to part 501 of this chapter. (e) Representation. A representative of the alleged violator may act on behalf of the alleged violator, but any oral communication with the Office of Foreign Assets Control prior to a written submission regarding the specific allegations contained in the Pre-Penalty Notice must be preceded by a written letter of representation, unless the PrePenalty Notice was served upon the alleged violator in care of the representative. § 546.703 Penalty imposition. If, after considering any written response to the Pre-Penalty Notice and any relevant facts, the Office of Foreign Assets Control determines that there was a violation by the alleged violator named in the Pre-Penalty Notice and that a civil monetary penalty is appropriate, the Office of Foreign Assets Control may issue a written Penalty Notice to the violator containing a determination of the violation and the imposition of the monetary penalty. For additional details concerning issuance of a Penalty Notice, see Appendix A to part 501 of this chapter. The issuance of the Penalty Notice shall constitute final agency action. The violator has the right to seek judicial review of that final agency action in Federal district court. § 546.704 Administrative collection; referral to United States Department of Justice. In the event that the violator does not pay the penalty imposed pursuant to this part or make payment arrangements acceptable to the Director of the Office of Foreign Assets Control, the matter VerDate Nov<24>2008 16:39 May 27, 2009 Jkt 217001 may be referred for administrative collection measures by the Department of the Treasury or to the United States Department of Justice for appropriate action to recover the penalty in a civil suit in a Federal district court. Subpart H—Procedures § 546.801 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. § 546.802 Delegation by the Secretary of the Treasury. Any action that the Secretary of the Treasury is authorized to take pursuant to Executive Order 13400, and any further Executive orders relating to the national emergency declared in Executive Order 13067, may be taken by the Director of the Office of Foreign Assets Control or by any other person to whom the Secretary of the Treasury has delegated authority so to act. Subpart I—Paperwork Reduction Act § 546.901 Paperwork Reduction Act notice. For approval by the Office of Management and Budget (‘‘OMB’’) under the Paperwork Reduction Act of 1995 (44 U.S.C. 3507) of information collections relating to record keeping and reporting requirements, licensing procedures (including those pursuant to statements of licensing policy), and other procedures, see § 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. Dated: May 12, 2009. Barbara C. Hammerle, Acting Director, Office of Foreign Assets Control. Approved: May 13, 2009. Stuart A. Levey, Under Secretary, Office of Terrorism and Financial Intelligence, Department of the Treasury. [FR Doc. E9–11952 Filed 5–27–09; 8:45 am] BILLING CODE 4811–45–P PO 00000 Frm 00053 Fmt 4700 Sfmt 4700 25439 DEPARTMENT OF THE TREASURY Office of Foreign Assets Control 31 CFR Part 547 Democratic Republic of the Congo Sanctions Regulations AGENCY: Office of Foreign Assets Control, Treasury. ACTION: Final rule. SUMMARY: The Department of the Treasury’s Office of Foreign Assets Control (‘‘OFAC’’) is adding a new part to the Code of Federal Regulations to implement Executive Order 13413 of October 27, 2006, ‘‘Blocking Property of Certain Persons Contributing to the Conflict in the Democratic Republic of the Congo.’’ DATES: Effective Date: May 28, 2009. FOR FURTHER INFORMATION CONTACT: Assistant Director for Compliance, Outreach & Implementation, tel.: 202/ 622–2490, Assistant Director for Licensing, tel.: 202/622–2480, Assistant Director for Policy, tel.: 202/622–4855, Office of Foreign Assets Control, or Chief Counsel (Foreign Assets Control), tel.: 202/622–2410, Office of the General Counsel, Department of the Treasury (not toll free numbers). SUPPLEMENTARY INFORMATION: Electronic and Facsimile Availability This document and additional information concerning the OFAC are available from OFAC’s Web site (http://www.treas.gov/ofac) or via facsimile through a 24-hour fax-ondemand service, tel.: (202) 622–0077. Background On October 27, 2006, the President, invoking the authority of, inter alia, the International Emergency Economic Powers Act (50 U.S.C. 1701–1706) (‘‘IEEPA’’) and section 5 of the United Nations Participation Act (22 U.S.C. 287c), issued Executive Order 13413 (71 FR 64105, October 31, 2006) (‘‘E.O. 13413’’), effective at 12:01 a.m. eastern standard time on October 30, 2006. In E.O. 13413, the President determined that the situation in or in relation to the Democratic Republic of the Congo (the ‘‘DRC’’) constitutes an unusual and extraordinary threat to the national security and foreign policy of the United States, and declared a national emergency to deal with that threat. E.O. 13413 noted United Nations Security Council Resolutions 1596 of April 18, 2005, 1649 of December 21, 2005, and 1698 of July 31, 2006, which, inter alia, expressed serious concern over the destabilizing presence of armed groups E:\FR\FM\28MYR1.SGM 28MYR1

Agencies

[Federal Register Volume 74, Number 101 (Thursday, May 28, 2009)]
[Rules and Regulations]
[Pages 25430-25439]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E9-11952]


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DEPARTMENT OF THE TREASURY

Office of Foreign Assets Control

31 CFR Part 546


Darfur Sanctions Regulations

AGENCY: Office of Foreign Assets Control, Treasury.

ACTION: Final rule.

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SUMMARY: The Department of the Treasury's Office of Foreign Assets 
Control (``OFAC'') is adding a new part to the Code of Federal 
Regulations to implement Executive Order 13400 of April 26, 2006, 
``Blocking Property of Persons in Connection With the Conflict in 
Sudan's Darfur Region.''

DATES: Effective Date: May 28, 2009.

FOR FURTHER INFORMATION CONTACT: Assistant Director for Compliance, 
Outreach & Implementation, tel.: 202/622-2490, Assistant Director for 
Licensing, tel.: 202/622-2480, Assistant Director for Policy, tel.: 
202/622-4855, Office of Foreign Assets Control, or Chief Counsel 
(Foreign Assets Control), tel.: 202/622-2410, Office of the General 
Counsel, Department of the Treasury (not toll free numbers).

SUPPLEMENTARY INFORMATION: 

[[Page 25431]]

Electronic and Facsimile Availability

    This document and additional information concerning OFAC are 
available from OFAC's Web site (http://www.treas.gov/ofac) or via 
facsimile through a 24-hour fax-on demand service, tel.: (202) 622-
0077.

Background

    On November 3, 1997, the President, invoking the authority of, 
inter alia, the International Emergency Economic Powers Act, 50 U.S.C. 
1701-1706 (``IEEPA''), issued Executive Order 13067 (62 FR 59989, 
November 5, 1997) (``E.O. 13067'') declaring a national emergency with 
respect to the Government of Sudan's policies and actions. These 
policies and actions included supporting international terrorism, 
destabilizing neighboring governments, and committing widespread human 
rights violations. Subsequently, on October 13, 2006, the President 
issued Executive Order 13412 (71 FR 61369, October 17, 2006) (``E.O. 
13412'') to take additional steps with respect to the emergency 
declared in E.O. 13067 and to implement the Darfur Peace and 
Accountability Act of 2006. The Office of Foreign Assets Control 
(``OFAC'') promulgated the Sudanese Sanctions Regulations, 31 CFR part 
538 (the ``SSR''), on July 1, 1998, to implement the provisions of E.O. 
13067. A final rule amending the SSR to implement the provisions of 
E.O. 13412 was published in the Federal Register on October 31, 2007 
(72 FR 61513).
    On April 26, 2006, under the authority of, inter alia, IEEPA and 
section 5 of the United Nations Participation Act, 22 U.S.C. 287c 
(``UNPA''), the President issued Executive Order 13400 (71 FR 25483, 
May 1, 2006) (``E.O. 13400''), effective at 12:01 a.m. eastern daylight 
time on April 27, 2006. At the time that he issued E.O. 13400, the 
President condemned the continued violations of the N'djamena Ceasefire 
Agreement of April 8, 2004, and the Abuja Humanitarian and Security 
Protocols of November 9, 2004, by all sides in Darfur, as well as the 
deterioration of the security situation in Darfur and the negative 
impact this had on humanitarian assistance efforts. The President also 
strongly condemned the continued violence against civilians, including 
sexual violence against women and girls, as noted by the United Nations 
Security Council in Resolution 1591 of March 29, 2005. To deal with the 
threat to the national security and foreign policy of the United States 
posed by this situation, E.O. 13400 expanded the scope of the national 
emergency declared in E.O. 13067 with respect to the policies and 
actions of the Government of Sudan. It also took the additional steps 
of blocking all property and interests in property of certain persons 
in connection with the conflict in Darfur.
    Section 1(a) of E.O. 13400 blocks, with certain exceptions, all 
property and interests in property that are in the United States, that 
come within the United States, or that are or come within the 
possession or control of United States persons of: (1) the persons 
listed in the Annex to E.O. 13400; and (2) any person determined by the 
Secretary of the Treasury, after consultation with the Secretary of 
State:
     To have constituted a threat to the peace process in 
Darfur;
     To have constituted a threat to stability in Darfur and 
the region;
     To be responsible for conduct related to the conflict in 
Darfur that violates international law;
     To be responsible for heinous conduct with respect to 
human life or limb related to the conflict in Darfur;
     To have directly or indirectly supplied, sold, or 
transferred arms or any related materiel, or any assistance, advice, or 
training related to military activities to: (i) The Government of 
Sudan; (ii) the Sudan Liberation Movement/Army; (iii) the Justice and 
Equality Movement; (iv) the Janjaweed; or (v) any person (other than a 
person listed in (i)-(iv) above) operating in the states of North 
Darfur, South Darfur, or West Darfur that is a belligerent, a 
nongovernmental entity, or an individual;
     To be responsible for offensive military overflights in 
and over the Darfur region;
     To have materially assisted, sponsored, or provided 
financial, material, or technological support for, or goods or services 
in support of, the activities described above, or any person listed in 
or designated pursuant to E.O. 13400; or
     To be owned or controlled by, or acting or purporting to 
act for or on behalf of, directly or indirectly, any person listed in 
or designated pursuant to E.O. 13400.
    In Section 1(b) of E.O. 13400, the President determined that the 
making of donations of certain articles, such as food, clothing, and 
medicine intended to be used to relieve human suffering, as specified 
in section 203(b)(2) of IEEPA, 50 U.S.C. 1702(b)(2), by, to, or for the 
benefit of any person listed in or designated pursuant to E.O. 13400 
would seriously impair his ability to deal with the national emergency 
declared in E.O. 13067 and expanded in E.O. 13400, and the President 
therefore prohibited such donations. Accordingly, the donation of such 
items is prohibited, unless authorized by OFAC.
    Section 1(c) of E.O. 13400 provides that the prohibition on any 
transaction or dealing by a United States person or within the United 
States in blocked property and interests in property includes, but is 
not limited to, the making of any contribution or provision of funds, 
goods, or services by, to, or for the benefit of any person listed in 
or designated pursuant to E.O. 13400, and the receipt of any 
contribution or provision of funds, goods, or services from any such 
person.
    Section 2 of E.O. 13400 prohibits any transaction by a United 
States person or within the United States that evades or avoids, or has 
the purpose of evading or avoiding, or attempts to violate any of the 
prohibitions set forth in E.O. 13400, as well as any conspiracy formed 
to violate such prohibitions.
    Section 5 of E.O. 13400 authorizes the Secretary of the Treasury, 
after consultation with the Secretary of State, to take such actions, 
including the promulgation of rules and regulations, as may be 
necessary to carry out the purposes of E.O. 13400. In furtherance of 
these purposes, OFAC is promulgating these Darfur Sanctions 
Regulations, 31 CFR part 546 (the ``Regulations''). As described above, 
these sanctions are targeted sanctions directed at certain actors in 
connection with the conflict in Darfur, and are separate from the 
Sudanese Sanctions Regulations, 31 CFR part 538.
    Subpart B of the Regulations implements the prohibitions contained 
in sections 1 and 2 of E.O. 13400. See, e.g., Sec. Sec.  546.201 and 
546.205. Persons identified in the Annex to E.O. 13400, designated by 
or under the authority of the Secretary of the Treasury pursuant to 
E.O. 13400, or otherwise subject to the blocking provisions of E.O. 
13400 are referred to throughout the Regulations as ``persons whose 
property and interests in property are blocked pursuant to Sec.  
546.201(a).'' The names of persons listed in or designated pursuant to 
E.O. 13400 are or will be published on OFAC's Specially Designated 
Nationals and Blocked Persons List, which is accessible via OFAC's Web 
site, and can be found at Appendix A to 31 CFR chapter V. Those names 
also have been or will be published in the Federal Register.
    Sections 546.202 and 546.203 of subpart B detail the effect of 
transfers of blocked property in violation of the Regulations and set 
forth the requirement to hold blocked funds, such as currency, bank 
deposits, and

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liquidated financial obligations, in interest-bearing blocked accounts. 
Section 546.204 of subpart B provides that all expenses incident to the 
maintenance of blocked physical property shall be the responsibility of 
the owners or operators of such property, and that such expenses shall 
not be met from blocked funds, unless otherwise authorized. The section 
further provides that blocked property may, in OFAC's discretion, be 
sold or liquidated and the net proceeds placed in a blocked interest-
bearing account in the name of the owner of the property.
    Section 546.205 implements the prohibitions in sections 2(a) and 
2(b) of E.O. 13400 on any transaction by a United States person or 
within the United States that evades or avoids, has the purpose of 
evading or avoiding, or attempts to violate any of the prohibitions set 
forth in E.O. 13400, and on any conspiracy formed to violate such 
prohibitions.
    Subpart C of the Regulations defines key terms used throughout the 
Regulations, and subpart D sets forth interpretive sections regarding 
the general prohibitions contained in subpart B. Section 546.411 sets 
out the rule that the property and interests in property of an entity 
are blocked if the entity is 50 percent or more owned by a person whose 
property and interests in property are blocked, whether or not the 
entity itself is listed in or designated pursuant to E.O. 13400.
    Transactions otherwise prohibited under the Regulations but found 
to be consistent with U.S. policy may be authorized by one of the 
general licenses contained in subpart E or by a specific license issued 
pursuant to the procedures described in subpart E of part 501 of 31 CFR 
chapter V. Subpart E of part 546 also contains certain statements of 
licensing policy, in addition to the general licenses.
    Subpart F of the Regulations refers to subpart C of part 501 for 
applicable recordkeeping and reporting requirements. Subpart G 
describes the civil and criminal penalties applicable to violations of 
the Regulations, as well as the procedures governing the potential 
imposition of a civil monetary penalty. Subpart G also refers to 
Appendix A of part 501 for a more complete description of these 
procedures.
    Subpart H of the Regulations refers to subpart E of part 501 for 
applicable provisions relating to administrative procedures and 
contains a delegation of authority by the Secretary of the Treasury. 
Subpart I of the Regulations sets forth a Paperwork Reduction Act 
notice.

Public Participation

    Because the Regulations involve a foreign affairs function, the 
provisions of Executive Order 12866 and the Administrative Procedure 
Act (5 U.S.C. 553) requiring notice of proposed rulemaking, opportunity 
for public participation, and delay in effective date are inapplicable. 
Because no notice of proposed rulemaking is required for this rule, the 
Regulatory Flexibility Act (5 U.S.C. 601-612) does not apply.

Paperwork Reduction Act

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

List of Subjects in 31 CFR Part 546

    Administrative practice and procedure, Banks, Banking, Blocking of 
assets, Credit, Darfur, Penalties, Reporting and recordkeeping 
requirements, Securities, Services, Sudan.

0
For the reasons set forth in the preamble, the Department of the 
Treasury's Office of Foreign Assets Control adds part 546 to 31 CFR 
Chapter V to read as follows:

PART 546--DARFUR SANCTIONS REGULATIONS

Subpart A--Relation of This Part to Other Laws and Regulations
Sec.
546.101 Relation of this part to other laws and regulations.
Subpart B--Prohibitions
546.201 Prohibited transactions involving blocked property.
546.202 Effect of transfers violating the provisions of this part.
546.203 Holding of funds in interest-bearing accounts; investment 
and reinvestment.
546.204 Expenses of maintaining blocked physical property; 
liquidation of blocked property.
546.205 Evasions; attempts; conspiracies.
Subpart C--General Definitions
546.301 Arms or any related materiel.
546.302 Blocked account; blocked property.
546.303 Effective date.
546.304 Entity.
546.305 Interest.
546.306 Licenses; general and specific.
546.307 Person.
546.308 Property; property interest.
546.309 Transfer.
546.310 United States.
546.311 U.S. financial institution.
546.312 United States person; U.S. person.
Subpart D--Interpretations
546.401 Reference to amended sections.
546.402 Effect of amendment.
546.403 Termination and acquisition of an interest in blocked 
property.
546.404 Transactions ordinarily incident to a licensed transaction.
546.405 Provision of services.
546.406 Offshore transactions.
546.407 Payments from blocked accounts to satisfy obligations 
prohibited.
546.408 Charitable contributions.
546.409 Credit extended and cards issued by U.S. financial 
institutions.
546.410 Setoffs prohibited.
546.411 Entities owned by a person whose property and interests in 
property are blocked.
Subpart E--Licenses, Authorizations, and Statements of Licensing Policy
546.501 General and specific licensing procedures.
546.502 Effect of license or authorization.
546.503 Exclusion from licenses.
546.504 Payments and transfers to blocked accounts in U.S. financial 
institutions.
546.505 Entries in certain accounts for normal service charges 
authorized.
546.506 Investment and reinvestment of certain funds.
546.507 Provision of certain legal services authorized.
546.508 Authorization of emergency medical services.
Subpart F--Reports
546.601 Records and reports.
Subpart G--Penalties
546.701 Penalties.
546.702 Pre-Penalty Notice; settlement.
546.703 Penalty imposition.
546.704 Administrative collection; referral to United States 
Department of Justice.
Subpart H--Procedures
546.801 Procedures.
546.802 Delegation by the Secretary of the Treasury.
Subpart I--Paperwork Reduction Act
546.901 Paperwork Reduction Act notice.

    Authority: 3 U.S.C. 301; 31 U.S.C. 321(b); 50 U.S.C. 1601-1651, 
1701-1706; 22 U.S.C. 287c; Pub. L. 101-410, 104 Stat. 890 (28 U.S.C. 
2461 note); Pub. L. 110-96, 121 Stat. 1011; E.O. 13067, 62 FR 59989, 
3 CFR, 1997 Comp., p. 230; E.O. 13400, 71 FR 25483, 3 CFR, 2006 
Comp., p. 220.

Subpart A--Relation of This Part to Other Laws and Regulations


Sec.  546.101  Relation of this part to other laws and regulations.

    This part is separate from, and independent of, the other parts of 
this chapter, with the exception of part 501

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of this chapter, the recordkeeping and reporting requirements and 
license application and other procedures of which apply to this part. 
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. Differing foreign policy and national security 
circumstances may result in differing interpretations of similar 
language among the parts of this chapter. No license or authorization 
contained in or issued pursuant to those other parts authorizes any 
transaction prohibited by this part. No license or authorization 
contained in or issued pursuant to any other provision of law or 
regulation authorizes any transaction prohibited by this part. No 
license or authorization contained in or issued pursuant to this part 
relieves the involved parties from complying with any other applicable 
laws or regulations.

Subpart B--Prohibitions


Sec.  546.201  Prohibited transactions involving blocked property.

    (a) Except as authorized by regulations, orders, directives, 
rulings, instructions, licenses, or otherwise, and notwithstanding any 
contracts entered into or any license or permit granted prior to the 
effective date, all property and interests in property that are in the 
United States, that hereafter come within the United States, or that 
are or hereafter come within the possession or control of U.S. persons, 
including their overseas branches, of the following persons are blocked 
and may not be transferred, paid, exported, withdrawn, or otherwise 
dealt in:
    (1) Any person listed in the Annex to Executive Order 13400 of 
April 26, 2006; and
    (2) Any person determined by the Secretary of the Treasury, after 
consultation with the Secretary of State:
    (i) To have constituted a threat to the peace process in Darfur;
    (ii) To have constituted a threat to stability in Darfur and the 
region;
    (iii) To be responsible for conduct related to the conflict in 
Darfur that violates international law;
    (iv) To be responsible for heinous conduct with respect to human 
life or limb related to the conflict in Darfur;
    (v) To have directly or indirectly supplied, sold, or transferred 
arms or any related materiel, or any assistance, advice, or training 
related to military activities to:
    (A) The Government of Sudan;
    (B) The Sudan Liberation Movement/Army;
    (C) The Justice and Equality Movement;
    (D) The Janjaweed; or
    (E) Any person (other than a person listed in paragraph 
(a)(2)(v)(A) through (a)(2)(v)(D) of this section) operating in the 
states of North Darfur, South Darfur, or West Darfur that is a 
belligerent, a nongovernmental entity, or an individual;
    (vi) To be responsible for offensive military overflights in and 
over the Darfur region;
    (vii) To have materially assisted, sponsored, or provided 
financial, material, or technological support for, or goods or services 
in support of, the activities described in paragraphs (a)(2)(i) through 
(a)(2)(vi) of this section or any person whose property and interests 
in property are blocked pursuant to this paragraph (a); or
    (viii) To be owned or controlled by, or acting or purporting to act 
for or on behalf of, directly or indirectly, any person whose property 
and interests in property are blocked pursuant to this paragraph (a).

    Note 1 to paragraph (a) of Sec.  546.201: The names of persons 
listed in or designated pursuant to Executive Order 13400, whose 
property and interests in property are blocked pursuant to paragraph 
(a) of this section, are published on the Office of Foreign Assets 
Control's Specially Designated Nationals and Blocked Persons List 
(``SDN List'') (which is accessible via the Office of Foreign Assets 
Control's Web site), published in the Federal Register, and 
incorporated into Appendix A to this chapter with the identifier 
``[DARFUR].'' See Sec.  546.411 concerning entities that may not be 
listed on the SDN list but whose property and interests in property 
are nevertheless blocked pursuant to paragraph (a) of this section.


    Note 2 to paragraph (a) of Sec.  546.201: Section 203 of the 
International Emergency Economic Powers Act (50 U.S.C. 1701-1706) 
(``IEEPA'') explicitly authorizes the blocking of property and 
interests in property of a person during the pendency of an 
investigation. The names of persons whose property and interests in 
property are blocked pending investigation pursuant to this part 
also are published on the SDN List, published in the Federal 
Register, and incorporated into Appendix A to this chapter with the 
identifier ``[BPI-DARFUR].''


    Note 3 to paragraph (a) of Sec.  546.201: Sections 501.806 and 
501.807 of this chapter V describe the procedures to be followed by 
persons seeking, respectively, the unblocking of funds that they 
believe were blocked due to mistaken identity, or administrative 
reconsideration of their status as persons whose property and 
interests in property are blocked pursuant to paragraph (a) of this 
section.

    (b) The prohibitions in paragraph (a) of this section include, but 
are not limited to, prohibitions on the following transactions when 
engaged in by a United States person or within the United States:
    (1) The making of any contribution or provision of funds, goods, or 
services by, to, or for the benefit of any person whose property and 
interests in property are blocked pursuant to paragraph (a) of this 
section; and
    (2) The receipt of any contribution or provision of funds, goods, 
or services from any person whose property and interests in property 
are blocked pursuant to paragraph (a) of this section.
    (c) Unless otherwise authorized by this part or by a specific 
license expressly referring to this section, any dealing in any 
security (or evidence thereof) held within the possession or control of 
a U.S. person and either registered or inscribed in the name of, or 
known to be held for the benefit of, or issued by, any person whose 
property and interests in property are blocked pursuant to paragraph 
(a) of this section is prohibited. This prohibition includes but is not 
limited to the transfer (including the transfer on the books of any 
issuer or agent thereof), disposition, transportation, importation, 
exportation, or withdrawal of, or the endorsement or guaranty of 
signatures on, any such security on or after the effective date. This 
prohibition applies irrespective of the fact that at any time (whether 
prior to, on, or subsequent to the effective date) the registered or 
inscribed owner of any such security may have or might appear to have 
assigned, transferred, or otherwise disposed of the security.


Sec.  546.202  Effect of transfers violating the provisions of this 
part.

    (a) Any transfer after the effective date that is in violation of 
any provision of this part or of any regulation, order, directive, 
ruling, instruction, or license issued pursuant to this part, and that 
involves any property or interest in property blocked pursuant to Sec.  
546.201(a), is null and void and shall not be the basis for the 
assertion or recognition of any interest in or right, remedy, power, or 
privilege with respect to such property or property interests.
    (b) No transfer before the effective date shall be the basis for 
the assertion or recognition of any right, remedy, power, or privilege 
with respect to, or any interest in, any property or interest in 
property blocked pursuant to Sec.  546.201(a), unless the person who 
holds or maintains such property, prior to that date, had written 
notice of the transfer or by any written evidence had recognized such 
transfer.
    (c) Unless otherwise provided, an appropriate license or other 
authorization issued by or pursuant to

[[Page 25434]]

the direction or authorization of the Director of the Office of Foreign 
Assets Control before, during, or after a transfer shall validate such 
transfer or make it enforceable to the same extent that it would be 
valid or enforceable but for the provisions of IEEPA, Executive Order 
13400, this part, and any regulation, order, directive, ruling, 
instruction, or license issued pursuant to this part.
    (d) Transfers of property that otherwise would be null and void or 
unenforceable by virtue of the provisions of this section shall not be 
deemed to be null and void or unenforceable as to any person with whom 
such property is or was held or maintained (and as to such person only) 
in cases in which such person is able to establish to the satisfaction 
of the Director of the Office of Foreign Assets Control each of the 
following:
    (1) Such transfer did not represent a willful violation of the 
provisions of this part by the person with whom such property is or was 
held or maintained (and as to such person only);
    (2) The person with whom such property is or was held or maintained 
did not have reasonable cause to know or suspect, in view of all the 
facts and circumstances known or available to such person, that such 
transfer required a license or authorization issued pursuant to this 
part and was not so licensed or authorized, or, if a license or 
authorization did purport to cover the transfer, that such license or 
authorization had been obtained by misrepresentation of a third party 
or withholding of material facts or was otherwise fraudulently 
obtained; and
    (3) The person with whom such property is or was held or maintained 
filed with the Office of Foreign Assets Control a report setting forth 
in full the circumstances relating to such transfer promptly upon 
discovery that:
    (i) Such transfer was in violation of the provisions of this part 
or any regulation, ruling, instruction, license, or other directive or 
authorization issued pursuant to this part;
    (ii) Such transfer was not licensed or authorized by the Director 
of the Office of Foreign Assets Control; or
    (iii) If a license did purport to cover the transfer, such license 
had been obtained by misrepresentation of a third party or withholding 
of material facts or was otherwise fraudulently obtained.

    Note to paragraph (d) of Sec.  546.202: The filing of a report 
in accordance with the provisions of paragraph (d)(3) of this 
section shall not be deemed evidence that the terms of paragraphs 
(d)(1) and (d)(2) of this section have been satisfied.

    (e) Unless licensed pursuant to this part, any attachment, 
judgment, decree, lien, execution, garnishment, or other judicial 
process is null and void with respect to any property in which, on or 
since the effective date, there existed an interest of a person whose 
property and interests in property are blocked pursuant to Sec.  
546.201(a).


Sec.  546.203  Holding of funds in interest-bearing accounts; 
investment and reinvestment.

    (a) Except as provided in paragraph (c) or (d) of this section, or 
as otherwise directed by the Office of Foreign Assets Control, any U.S. 
person holding funds, such as currency, bank deposits, or liquidated 
financial obligations, subject to Sec.  546.201(a) shall hold or place 
such funds in a blocked interest-bearing account located in the United 
States.
    (b)(1) For purposes of this section, the term blocked interest-
bearing account means a blocked account:
    (i) In a federally-insured U.S. bank, thrift institution, or credit 
union, provided the funds are earning interest at rates that are 
commercially reasonable; or
    (ii) With a broker or dealer registered with the Securities and 
Exchange Commission under the Securities Exchange Act of 1934 (15 
U.S.C. 78a et seq.), provided the funds are invested in a money market 
fund or in U.S. Treasury bills.
    (2) For purposes of this section, a rate is commercially reasonable 
if it is the rate currently offered to other depositors on deposits or 
instruments of comparable size and maturity.
    (3) Funds held or placed in a blocked account pursuant to this 
paragraph (b) may not be invested in instruments the maturity of which 
exceeds 180 days. If interest is credited to a separate blocked account 
or subaccount, the name of the account party on each account must be 
the same.
    (c) Blocked funds held in instruments the maturity of which exceeds 
180 days at the time the funds become subject to Sec.  546.201(a) may 
continue to be held until maturity in the original instrument, provided 
any interest, earnings, or other proceeds derived therefrom are paid 
into a blocked interest-bearing account in accordance with paragraph 
(b) or (d) of this section.
    (d) Blocked funds held in accounts or instruments outside the 
United States at the time the funds become subject to Sec.  546.201(a) 
may continue to be held in the same type of accounts or instruments, 
provided the funds earn interest at rates that are commercially 
reasonable.
    (e) This section does not create an affirmative obligation for the 
holder of blocked tangible property, such as chattels or real estate, 
or of other blocked property, such as debt or equity securities, to 
sell or liquidate such property. However, the Office of Foreign Assets 
Control may issue licenses permitting or directing such sales or 
liquidation in appropriate cases.
    (f) Funds subject to this section may not be held, invested, or 
reinvested in a manner that provides immediate financial or economic 
benefit or access to any person whose property and interests in 
property are blocked pursuant to Sec.  546.201(a), nor may their holder 
cooperate in or facilitate the pledging or other attempted use as 
collateral of blocked funds or other assets.


Sec.  546.204  Expenses of maintaining blocked physical property; 
liquidation of blocked property.

    (a) Except as otherwise authorized, and notwithstanding the 
existence of any rights or obligations conferred or imposed by any 
international agreement or contract entered into or any license or 
permit granted prior to the effective date, all expenses incident to 
the maintenance of physical property blocked pursuant to Sec.  
546.201(a) shall be the responsibility of the owners or operators of 
such property, which expenses shall not be met from blocked funds.
    (b) Property blocked pursuant to Sec.  546.201(a) may, in the 
discretion of the Office of Foreign Assets Control, be sold or 
liquidated and the net proceeds placed in a blocked interest-bearing 
account in the name of the owner of the property.


Sec.  546.205  Evasions; attempts; conspiracies.

    (a) Except as otherwise authorized, and notwithstanding any 
contract entered into or any license or permit granted prior to the 
effective date, any transaction by a U.S. person or within the United 
States on or after the effective date that evades or avoids, has the 
purpose of evading or avoiding, or attempts to violate any of the 
prohibitions set forth in this part is prohibited.
    (b) Except as otherwise authorized, and notwithstanding any 
contract entered into or any license or permit granted prior to the 
effective date, any conspiracy formed to violate the prohibitions set 
forth in this part is prohibited.

[[Page 25435]]

Subpart C--General Definitions


Sec.  546.301  Arms or any related materiel.

    The term arms or any related materiel shall mean arms or related 
materiel of all types, military aircraft, and equipment, but excludes:
    (a) Supplies and technical assistance, including training, intended 
solely for use in authorized monitoring, verification, or peace support 
operations, including such operations led by regional organizations;
    (b) Supplies of non-lethal military equipment intended solely for 
humanitarian use, human rights monitoring use, or protective use, and 
related technical assistance, including training;
    (c) Supplies of protective clothing, including flak jackets and 
military helmets, for use by United Nations personnel, representatives 
of the media, and humanitarian and development workers and associated 
personnel, for their personal use only;
    (d) Assistance and supplies provided in support of implementation 
of the Comprehensive Peace Agreement signed January 9, 2005, by the 
Government of Sudan and the People's Liberation Movement/Army; and
    (e) Other movements of military equipment and supplies into the 
Darfur region by the United States or that are permitted by a rule or 
decision of the Secretary of State, after consultation with the 
Secretary of the Treasury.


Sec.  546.302  Blocked account; blocked property.

    The terms blocked account and blocked property shall mean any 
account or property subject to the prohibitions in Sec.  546.201 held 
in the name of a person whose property and interests in property are 
blocked pursuant to Sec.  546.201(a), or in which such person has an 
interest, and with respect to which payments, transfers, exportations, 
withdrawals, or other dealings may not be made or effected except 
pursuant to an authorization or license from the Office of Foreign 
Assets Control expressly authorizing such action.

    Note to Sec.  546.302: See Sec.  546.411 concerning the blocked 
status of property and interests in property of an entity that is 50 
percent or more owned by a person whose property and interests in 
property are blocked pursuant to Sec.  546.201(a).

Sec.  546.303  Effective date.

    The term effective date refers to the effective date of the 
applicable prohibitions and directives contained in this part as 
follows:
    (a) With respect to a person whose property and interests in 
property are blocked pursuant to Sec.  546.201(a)(1), 12:01 a.m. 
eastern daylight time, April 27, 2006;
    (b) With respect to a person whose property and interests in 
property are blocked pursuant to Sec.  546.201(a)(2), the earlier of 
the date of actual or constructive notice of such person's designation.


Sec.  546.304  Entity.

    The term entity means a partnership, association, trust, joint 
venture, corporation, group, subgroup, or other organization.


Sec.  546.305  Interest.

    Except as otherwise provided in this part, the term interest, when 
used with respect to property (e.g., ``an interest in property''), 
means an interest of any nature whatsoever, direct or indirect.


Sec.  546.306  Licenses; general and specific.

    (a) Except as otherwise specified, the term license means any 
license or authorization contained in or issued pursuant to this part.
    (b) The term general license means any license or authorization the 
terms of which are set forth in subpart E of this part.
    (c) The term specific license means any license or authorization 
not set forth in subpart E of this part but issued pursuant to this 
part.

    Note to Sec.  546.306: See Sec.  501.801 of this chapter on 
licensing procedures.

Sec.  546.307  Person.

    The term person means an individual or entity.


Sec.  546.308  Property; property interest.

    The terms property and property interest include, but are not 
limited to, money, checks, drafts, bullion, bank deposits, savings 
accounts, debts, indebtedness, obligations, notes, guarantees, 
debentures, stocks, bonds, coupons, any other financial instruments, 
bankers acceptances, mortgages, pledges, liens or other rights in the 
nature of security, warehouse receipts, bills of lading, trust 
receipts, bills of sale, any other evidences of title, ownership or 
indebtedness, letters of credit and any documents relating to any 
rights or obligations thereunder, 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, leaseholds, ground rents, real estate and any other interest 
therein, options, negotiable instruments, trade acceptances, royalties, 
book accounts, accounts payable, judgments, patents, trademarks or 
copyrights, insurance policies, safe deposit boxes and their contents, 
annuities, pooling agreements, services of any nature whatsoever, 
contracts of any nature whatsoever, and any other property, real, 
personal, or mixed, tangible or intangible, or interest or interests 
therein, present, future, or contingent.


Sec.  546.309  Transfer.

    The term transfer means 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, convey, 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 making of any payment; the setting off of any obligation 
or credit; the appointment of any agent, trustee, or fiduciary; the 
creation or transfer of any lien; the issuance, docketing, filing, or 
levy of or under any judgment, decree, attachment, injunction, 
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; the exercise of any power of 
appointment, power of attorney, or other power; or the acquisition, 
disposition, transportation, importation, exportation, or withdrawal of 
any security.


Sec.  546.310  United States.

    The term United States means the United States, its territories and 
possessions, and all areas under the jurisdiction or authority thereof.


Sec.  546.311  U.S. financial institution.

    The term U.S. financial institution means any U.S. entity 
(including its foreign branches) that is engaged in the business of 
accepting deposits, making, granting, transferring, holding, or 
brokering loans or credits, or purchasing or selling foreign exchange, 
securities, commodity futures or options, or procuring purchasers and 
sellers thereof, as principal or agent; including but not limited to, 
depository

[[Page 25436]]

institutions, banks, savings banks, trust companies, securities brokers 
and dealers, commodity futures and options brokers and dealers, forward 
contract and foreign exchange merchants, securities and commodities 
exchanges, clearing corporations, investment companies, employee 
benefit plans, and U.S. holding companies, U.S. affiliates, or U.S. 
subsidiaries of any of the foregoing. This term includes those 
branches, offices, and agencies of foreign financial institutions that 
are located in the United States, but not such institutions' foreign 
branches, offices, or agencies.


Sec.  546.312  United States person; U.S. person.

    The term United States person or U.S. 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.

Subpart D--Interpretations


Sec.  546.401  Reference to amended sections.

    Except as otherwise specified, reference to any provision in or 
appendix to this part or chapter or to any regulation, ruling, order, 
instruction, directive, or license issued pursuant to this part refers 
to the same as currently amended.


Sec.  546.402  Effect of amendment.

    Unless otherwise specifically provided, any amendment, 
modification, or revocation of any provision in or appendix to this 
part or chapter or of any order, regulation, ruling, instruction, or 
license issued by or under the direction of the Director of the Office 
of Foreign Assets Control does not affect any act done or omitted, or 
any civil or criminal suit or proceeding commenced or pending prior to 
such amendment, modification, or revocation. All penalties, 
forfeitures, and liabilities under any such order, regulation, ruling, 
instruction, or license continue and may be enforced as if such 
amendment, modification, or revocation had not been made.


Sec.  546.403  Termination and acquisition of an interest in blocked 
property.

    (a) Whenever a transaction licensed or authorized by or pursuant to 
this part results in the transfer of property (including any property 
interest) away from a person, such property shall no longer be deemed 
to be property blocked pursuant to Sec.  546.201(a), unless there 
exists in the property another interest that is blocked pursuant to 
Sec.  546.201(a) or any other part of this chapter, the transfer of 
which has not been effected pursuant to license or other authorization.
    (b) Unless otherwise specifically provided in a license or 
authorization issued pursuant to this part, if property (including any 
property interest) is transferred or attempted to be transferred to a 
person whose property and interests in property are blocked pursuant to 
Sec.  546.201(a), such property shall be deemed to be property in which 
that person has an interest and therefore blocked.


Sec.  546.404  Transactions ordinarily incident to a licensed 
transaction.

    Any transaction ordinarily incident to a licensed transaction and 
necessary to give effect thereto is also authorized, except:
    (a) An ordinarily incident transaction, not explicitly authorized 
within the terms of the license, by or with a person whose property and 
interests in property are blocked pursuant to Sec.  546.201(a); or
    (b) An ordinarily incident transaction, not explicitly authorized 
within the terms of the license, involving a debit to a blocked account 
or a transfer of blocked property.
    (c) Example. A license authorizing Company A, whose property and 
interests in property are blocked pursuant to Sec.  546.201(a), to 
complete a securities sale also authorizes all activities by other 
parties required to complete the sale, including transactions by the 
buyer, broker, transfer agents, banks, etc., provided that such other 
parties are not themselves persons whose property and interests in 
property are blocked pursuant to Sec.  546.201(a).


Sec.  546.405  Provision of services.

    (a) The prohibitions on transactions involving blocked property 
contained in Sec.  546.201 apply to services performed in the United 
States or by U.S. persons, wherever located, including by an overseas 
branch of an entity located in the United States:
    (1) On behalf of or for the benefit of a person whose property and 
interests in property are blocked pursuant to Sec.  546.201(a); or
    (2) With respect to property interests subject to Sec.  546.201.
    (b) Example. U.S. persons may not, except as authorized by or 
pursuant to this part, provide legal, accounting, financial, brokering, 
freight forwarding, transportation, public relations, or other services 
to a person whose property and interests in property are blocked 
pursuant to Sec.  546.201(a).

    Note to Sec.  546.405: See Sec. Sec.  546.507 and 546.508 on 
licensing policy with regard to the provision of certain legal or 
medical services.

Sec.  546.406  Offshore transactions.

    The prohibitions in Sec.  546.201 on transactions or dealings 
involving blocked property apply to transactions by any U.S. person in 
a location outside the United States with respect to property held in 
the name of a person whose property and interests in property are 
blocked pursuant to Sec.  546.201(a), or property in which a person 
whose property and interests in property are blocked pursuant to Sec.  
546.201(a) has or has had an interest since the effective date.


Sec.  546.407  Payments from blocked accounts to satisfy obligations 
prohibited.

    Pursuant to Sec.  546.201, no debits may be made to a blocked 
account to pay obligations to U.S. persons or other persons, except as 
authorized by or pursuant to this part.


Sec.  546.408  Charitable contributions.

    Unless specifically authorized by the Office of Foreign Assets 
Control pursuant to this part, no charitable contribution of funds, 
goods, services, or technology, including contributions to relieve 
human suffering, such as food, clothing, or medicine, may be made by, 
to, or for the benefit of a person whose property and interests in 
property are blocked pursuant to Sec.  546.201(a). For the purposes of 
this part, a contribution is made by, to, or for the benefit of a 
person whose property and interests in property are blocked pursuant to 
Sec.  546.201(a) if made by, to, or in the name of such a person; if 
made by, to, or in the name of an entity or individual acting for or on 
behalf of, or owned or controlled by, such a person; or if made in an 
attempt to violate, to evade, or to avoid the bar on the provision of 
contributions by, to, or for the benefit of such a person.


Sec.  546.409  Credit extended and cards issued by U.S. financial 
institutions.

    The prohibition in Sec.  546.201 on dealing in property subject to 
that section prohibits U.S. financial institutions from performing 
under any existing credit agreements, including, but not limited to, 
charge cards, debit cards, or other credit facilities issued by a U.S. 
financial institution to a person whose property and interests in 
property are blocked pursuant to Sec.  546.201(a).


Sec.  546.410  Setoffs prohibited.

    A setoff against blocked property (including a blocked account), 
whether

[[Page 25437]]

by a U.S. bank or other U.S. person, is a prohibited transfer under 
Sec.  546.201 if effected after the effective date.


Sec.  546.411  Entities owned by a person whose property and interests 
in property are blocked.

    A person whose property and interests in property are blocked 
pursuant to Sec.  546.201(a) has an interest in all property and 
interests in property of an entity in which it owns, directly or 
indirectly, a 50 percent or greater interest. The property and 
interests in property of such an entity, therefore, are blocked, and 
such an entity is a person whose property and interests in property are 
blocked pursuant to Sec.  546.201(a), regardless of whether the entity 
itself is listed in the Annex to Executive Order 13400 or designated 
pursuant to Sec.  546.201(a).

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


Sec.  546.501  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.


Sec.  546.502  Effect of license or authorization.

    (a) No license or other authorization contained in this part, or 
otherwise issued by or under the direction of the Director of the 
Office of Foreign Assets Control, authorizes or validates any 
transaction effected prior to the issuance of such license or other 
authorization, unless specifically provided in such license or 
authorization.
    (b) No regulation, ruling, instruction, or license authorizes any 
transaction prohibited under this part unless the regulation, ruling, 
instruction, or license is issued by the Office of Foreign Assets 
Control and specifically refers to this part. No regulation, ruling, 
instruction, or license referring to this part shall be deemed to 
authorize any transaction prohibited by any other provision of this 
chapter unless the regulation, ruling, instruction, or license 
specifically refers to such provision.
    (c) Any regulation, ruling, instruction, or license authorizing any 
transaction otherwise prohibited under this part has the effect of 
removing a prohibition contained in this part from the transaction, but 
only to the extent specifically stated by its terms. Unless the 
regulation, ruling, instruction, or license otherwise specifies, such 
an authorization does not create any right, duty, obligation, claim, or 
interest in, or with respect to, any property which would not otherwise 
exist under ordinary principles of law.


Sec.  546.503  Exclusion from licenses.

    The Director of the Office of Foreign Assets Control reserves the 
right to exclude any person, property, or transaction from the 
operation of any license or from the privileges conferred by any 
license. The Director of the Office of Foreign Assets Control also 
reserves the right to restrict the applicability of any license to 
particular persons, property, transactions, or classes thereof. Such 
actions are binding upon actual or constructive notice of the 
exclusions or restrictions.


Sec.  546.504  Payments and transfers to blocked accounts in U.S. 
financial institutions.

    Any payment of funds or transfer of credit in which a person whose 
property and interests in property are blocked pursuant to Sec.  
546.201(a) has any interest that comes within the possession or control 
of a U.S. financial institution must be blocked in an account on the 
books of that financial institution. A transfer of funds or credit by a 
U.S. financial institution between blocked accounts in its branches or 
offices is authorized, provided that no transfer is made from an 
account within the United States to an account held outside the United 
States, and further provided that a transfer from a blocked account may 
be made only to another blocked account held in the same name.


    Note to Sec.  546.504: See Sec.  501.603 of this chapter for 
mandatory reporting requirements regarding financial transfers. See 
also Sec.  546.203 concerning the obligation to hold blocked funds 
in interest-bearing accounts.

Sec.  546.505  Entries in certain accounts for normal service charges 
authorized.

    (a) A U.S. financial institution is authorized to debit any blocked 
account held at that financial institution in payment or reimbursement 
for normal service charges owed it by the owner of that blocked 
account.
    (b) As used in this section, the term normal service charges shall 
include charges in payment or reimbursement for interest due; cable, 
telegraph, Internet, or telephone charges; postage costs; custody fees; 
small adjustment charges to correct bookkeeping errors; and, but not by 
way of limitation, minimum balance charges, notary and protest fees, 
and charges for reference books, photocopies, credit reports, 
transcripts of statements, registered mail, insurance, stationery and 
supplies, and other similar items.


Sec.  546.506  Investment and reinvestment of certain funds.

    Subject to the requirements of Sec.  546.203, U.S. financial 
institutions are authorized to invest and reinvest assets blocked 
pursuant to Sec.  546.201, subject to the following conditions:
    (a) The assets representing such investments and reinvestments are 
credited to a blocked account or subaccount that is held in the same 
name at the same U.S. financial institution, or within the possession 
or control of a U.S. person, but funds shall not be transferred outside 
the United States for this purpose;
    (b) The proceeds of such investments and reinvestments shall not be 
credited to a blocked account or subaccount under any name or 
designation that differs from the name or designation of the specific 
blocked account or subaccount in which such funds or securities were 
held; and
    (c) No immediate financial or economic benefit accrues (e.g., 
through pledging or other use) to persons whose property and interests 
in property are blocked pursuant to Sec.  546.201(a).


Sec.  546.507  Provision of certain legal services authorized.

    (a) The provision of the following legal services to or on behalf 
of persons whose property and interests in property are blocked 
pursuant to Sec.  546.201(a) is authorized, provided that all receipts 
of payment of professional fees and reimbursement of incurred expenses 
must be specifically licensed:
    (1) Provision of legal advice and counseling on the requirements of 
and compliance with the laws of the United States or any jurisdiction 
within the United States, provided that such advice and counseling are 
not provided to facilitate transactions in violation of this part;
    (2) Representation of persons named as defendants in or otherwise 
made parties to domestic U.S. legal, arbitration, or administrative 
proceedings;
    (3) Initiation and conduct of domestic U.S. legal, arbitration, or 
administrative proceedings in defense of property interests subject to 
U.S. jurisdiction;
    (4) Representation of persons before any federal or state agency 
with respect to the imposition, administration, or enforcement of U.S. 
sanctions against such persons; and
    (5) Provision of legal services in any other context in which 
prevailing U.S. law requires access to legal counsel at public expense.

[[Page 25438]]

    (b) The provision of any other legal services to persons whose 
property and interests in property are blocked pursuant to Sec.  
546.201(a), not otherwise authorized in this part, requires the 
issuance of a specific license.
    (c) Entry into a settlement agreement or the enforcement of any 
lien, judgment, arbitral award, decree, or other order through 
execution, garnishment, or other judicial process purporting to 
transfer or otherwise alter or affect property or interests in property 
blocked pursuant to Sec.  546.201(a) is prohibited unless specifically 
licensed in accordance with Sec.  546.202(e).


Sec.  546.508  Authorization of emergency medical services.

    The provision of nonscheduled emergency medical services in the 
United States to persons whose property and interests in property are 
blocked pursuant to Sec.  546.201(a) is authorized, provided that all 
receipt of payment for such services must be specifically licensed.

Subpart F--Reports


Sec.  546.601  Records and reports.

    For provisions relating to required records and reports, see part 
501, subpart C, of this chapter. Recordkeeping and reporting 
requirements imposed by part 501 of this chapter with respect to the 
prohibitions contained in this part are considered requirements arising 
pursuant to this part.

Subpart G--Penalties


Sec.  546.701  Penalties.

    (a) Attention is directed to section 206 of the International 
Emergency Economic Powers Act (50 U.S.C. 1705) (``IEEPA''), which is 
applicable to violations of the provisions of any license, ruling, 
regulation, order, directive, or instruction issued by or pursuant to 
the direction or authorization of the Secretary of the Treasury 
pursuant to this part or otherwise under IEEPA.
    (1) A civil penalty not to exceed the amount set forth in section 
206 of IEEPA may be imposed on any person who violates, attempts to 
violate, conspires to violate, or causes a violation of any license, 
order, regulation, or prohibition issued under IEEPA.

    Note to paragraph (a)(1) of Sec.  546.701: As of the date of 
publication in the Federal Register of the final rule adding this 
part to 31 CFR chapter V (May 28, 2009), IEEPA provides for a 
maximum civil penalty not to exceed the greater of $250,000 or an 
amount that is twice the amount of the transaction that is the basis 
of the violation with respect to which the penalty is imposed.

    (2) A person who willfully commits, willfully attempts to commit, 
or willfully conspires to commit, or aids or abets in the commission of 
a violation of any license, order, regulation, or prohibition may, upon 
conviction, be fined not more than $1,000,000, or if a natural person, 
be imprisoned for not more than 20 years, or both.
    (b) Adjustments to Penalty Amounts. (1) The civil penalties 
provided in IEEPA are subject to adjustment pursuant to the Federal 
Civil Penalties Inflation Adjustment Act of 1990 (Pub. L. 101-410, as 
amended, 28 U.S.C. 2461 note).
    (2) The criminal penalties provided in IEEPA are subject to 
adjustment pursuant to 18 U.S.C. 3571.
    (c) Attention is directed to section 5 of the United Nations 
Participation Act, as amended (22 U.S.C. 287c(b)) (``UNPA''), which 
provides that any person who willfully violates or evades or attempts 
to violate or evade any order, rule, or regulation issued by the 
President pursuant to the authority granted in that section, upon 
conviction, shall be fined not more than $10,000 and, if a natural 
person, may also be imprisoned for not more than 10 years; and the 
officer, director, or agent of any corporation who knowingly 
participates in such violation or evasion shall be punished by a like 
fine, imprisonment, or both and any property, funds, securities, 
papers, or other articles or documents, or any vessel, together with 
her tackle, apparel, furniture, and equipment, or vehicle, or aircraft, 
concerned in such violation shall be forfeited to the United States.
    (d) Violations involving transactions described at section 
203(b)(1), (3), and (4) of IEEPA shall be subject only to the penalties 
set forth in paragraph (c) of this section.
    (e) 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 Government of the United States, 
knowingly and willfully falsifies, conceals, or covers up by any trick, 
scheme, or device a material fact; or makes any materially false, 
fictitious, or fraudulent statement or representation; or makes or uses 
any false writing or document knowing the same to contain any 
materially false, fictitious, or fraudulent statement or entry; shall 
be fined under title 18, United States Code, imprisoned not more than 
five years, or both.
    (f) Violations of this part may also be subject to relevant 
provisions of other applicable laws.


Sec.  546.702  Pre-Penalty Notice; settlement.

    (a) When required. If 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 IEEPA and determines that a 
civil monetary penalty is warranted, the Office of Foreign Assets 
Control will issue a Pre-Penalty Notice informing the alleged violator 
of the agency's intent to impose a monetary penalty. A Pre-Penalty 
Notice shall be in writing. The Pre-Penalty Notice may be issued 
whether or not another agency has taken any action with respect to the 
matter. For a description of the contents of a Pre-Penalty Notice, see 
Appendix A to part 501 of this chapter.
    (b)(1) Right to respond. An alleged violator has the right to 
respond to a Pre-Penalty Notice by making a written presentation to the 
Office of Foreign Assets Control. For a description of the information 
that should be included in such a response, see Appendix A to part 501 
of this chapter.
    (2) Deadline for response. A response to the Pre-Penalty Notice 
must be made within the applicable 30-day period set forth in this 
paragraph. 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.
    (i) Computation of time for response. A response to a Pre-Penalty 
Notice must be postmarked or date-stamped by the U.S. Postal Service 
(or foreign postal service, if mailed abroad) or courier service 
provider (if transmitted to the Office of Foreign Assets Control by 
courier) on or before the 30th day after the postmark date on the 
envelope in which the Pre-Penalty Notice was mailed. If the Pre-Penalty 
Notice was personally delivered by a non-U.S. Postal Service agent 
authorized by the Office of Foreign Assets Control, a response must be 
postmarked or date-stamped on or before the 30th day after the date of 
delivery.
    (ii) Extensions of time for response. If a due date falls on a 
federal holiday or weekend, that due date is extended to include the 
following business day. Any other extensions of time will be granted, 
at the discretion of the Office of Foreign Assets Control, only upon 
specific request to the Office of Foreign Assets Control.
    (3) Form and method of response. A response to a Pre-Penalty Notice 
need not be in any particular form, but it

[[Page 25439]]

must be typewritten and signed by the alleged violator or a 
representative thereof, must contain information sufficient to indicate 
that it is in response to the Pre-Penalty Notice, and must include the 
Office of Foreign Assets Control identification number listed on the 
Pre-Penalty Notice. A copy of the written response may be sent by 
facsimile, but the original also must be sent to the Office of Foreign 
Assets Control Civil Penalties Division by mail or courier and must be 
postmarked or date-stamped, in accordance with paragraph (b)(2) of this 
section.
    (c) Settlement. Settlement discussion may be initiated by the 
Office of Foreign Assets Control, the alleged violator, or the alleged 
violator's authorized representative. For a description of practices 
with respect to settlement, see Appendix A to part 501 of this chapter.
    (d) Guidelines. Guidelines for the imposition or settlement of 
civil penalties by the Office of Foreign Assets Control are contained 
in Appendix A to part 501 of this chapter.
    (e) Representation. A representative of the alleged violator may 
act on behalf of the alleged violator, but any oral communication with 
the Office of Foreign Assets Control prior to a written submission 
regarding the specific allegations contained in the Pre-Penalty Notice 
must be preceded by a written letter of representation, unless the Pre-
Penalty Notice was served upon the alleged violator in care of the 
representative.


Sec.  546.703  Penalty imposition.

    If, after considering any written response to the Pre-Penalty 
Notice and any relevant facts, the Office of Foreign Assets Control 
determines that there was a violation by the alleged violator named in 
the Pre-Penalty Notice and that a civil monetary penalty is 
appropriate, the Office of Foreign Assets Control may issue a written 
Penalty Notice to the violator containing a determination of the 
violation and the imposition of the monetary penalty. For additional 
details concerning issuance of a Penalty Notice, see Appendix A to part 
501 of this chapter. The issuance of the Penalty Notice shall 
constitute final agency action. The violator has the right to seek 
judicial review of that final agency action in Federal district court.


Sec.  546.704  Administrative collection; referral to United States 
Department of Justice.

    In the event that the violator does not pay the penalty imposed 
pursuant to this part or make payment arrangements acceptable to the 
Director of the Office of Foreign Assets Control, the matter may be 
referred for administrative collection measures by the Department of 
the Treasury or to the United States Department of Justice for 
appropriate action to recover the penalty in a civil suit in a Federal 
district court.

Subpart H--Procedures


Sec.  546.801  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.


Sec.  546.802  Delegation by the Secretary of the Treasury.

    Any action that the Secretary of the Treasury is authorized to take 
pursuant to Executive Order 13400, and any further Executive orders 
relating to the national emergency declared in Executive Order 13067, 
may be taken by the Director of the Office of Foreign Assets Control or 
by any other person to whom the Secretary of the Treasury has delegated 
authority so to act.

Subpart I--Paperwork Reduction Act


Sec.  546.901  Paperwork Reduction Act notice.

    For approval by the Office of Management and Budget (``OMB'') under 
the Paperwork Reduction Act of 1995 (44 U.S.C. 3507) of information 
collections relating to record keeping and reporting requirements, 
licensing procedures (including those pursuant to statements of 
licensing policy), and 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.

    Dated: May 12, 2009.
Barbara C. Hammerle,
Acting Director, Office of Foreign Assets Control.
    Approved: May 13, 2009.
Stuart A. Levey,
Under Secretary, Office of Terrorism and Financial Intelligence, 
Department of the Treasury.
[FR Doc. E9-11952 Filed 5-27-09; 8:45 am]
BILLING CODE 4811-45-P