Darfur Sanctions Regulations, 25430-25439 [E9-11952]
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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
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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.
*
*
*
*
*
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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.
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:
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Electronic and Facsimile Availability
This document and additional
information concerning OFAC are
available from OFAC’s Web site
(https://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
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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
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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
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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.
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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.
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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
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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
§ 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;
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(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
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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
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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.
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(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.
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(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.
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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:
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(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,
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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
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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
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§ 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).
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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
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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,
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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
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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.
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(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
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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.
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§ 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
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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
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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
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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
(https://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
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]]>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]
-----------------------------------------------------------------------
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:
[[Page 25431]]
Electronic and Facsimile Availability
This document and additional information concerning OFAC are
available from OFAC's Web site (https://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
[[Page 25432]]
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
[[Page 25433]]
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
