Western Balkans Stabilization Regulations, 38002-38011 [2011-15643]

Agencies

• DEPARTMENT OF THE TREASURY
• Office of Foreign Assets Control
• Foreign Assets Control Office

[Federal Register Volume 76, Number 125 (Wednesday, June 29, 2011)]
[Rules and Regulations]
[Pages 38002-38011]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-15643]


-----------------------------------------------------------------------

DEPARTMENT OF THE TREASURY

Office of Foreign Assets Control

31 CFR Part 588


Western Balkans Stabilization 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 amending and reissuing in their entirety the 
Western Balkans Stabilization Regulations, part 588 of 31 CFR chapter 
V, to implement Executive Order 13304 of May 28, 2003, and to make 
additional conforming and technical changes to the regulations.

DATES: Effective Date: June 29, 2011.

FOR FURTHER INFORMATION CONTACT: Assistant Director for Sanctions 
Compliance & Evaluation, 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 OFAC are 
available from OFAC's Web site (https://www.treasury.gov/ofac). Certain 
general information pertaining to OFAC's sanctions programs also is 
available via facsimile through a 24-hour fax-on-demand service, tel.: 
202/622-0077.

Background

    On June 26, 2001, the President issued Executive Order 13219 (66 FR 
34777, June 29, 2001) (``E.O. 13219''), invoking the authority of, 
inter alia, the International Emergency Economic Powers Act (50 U.S.C. 
1701-1706) (``IEEPA'') and the National Emergencies Act (50 U.S.C. 1601 
et seq.) (the ``NEA''). In E.O. 13219, the President determined that 
the actions of persons engaged in, or assisting, sponsoring, or 
supporting, (i) extremist violence in the former Yugoslav Republic of 
Macedonia, southern Serbia, the Federal Republic of Yugoslavia, and 
elsewhere in the Western Balkans region, or (ii) acts obstructing 
implementation of the Dayton Accords in Bosnia or United Nations 
Security Council Resolution (``UNSCR'') 1244 of June 10, 1999, in 
Kosovo, constitute 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. 13219 blocked, with 
certain exceptions, all property and interests in property that were in 
the United States, that came within the United States, or that were or 
came within the possession or control of United States persons, of 
persons listed in the Annex to E.O. 13219 or designated by the 
Secretary of the Treasury, in consultation with the Secretary of State, 
pursuant to criteria set forth in E.O. 13219. E.O. 13219 also 
prohibited any transaction by a U.S. person that evades or avoids, has 
the purpose of evading or avoiding, or

[[Page 38003]]

attempts to violate any of the prohibitions set forth in E.O. 13219, as 
well as any conspiracy formed to violate such prohibitions.
    Acting under authority delegated by the Secretary of the Treasury, 
OFAC promulgated the Western Balkans Stabilization Regulations, 31 CFR 
part 588 (67 FR 37671, May 30, 2002) (the ``WBSR''), to implement E.O. 
13219.
    On May 28, 2003, the President issued Executive Order 13304 (68 FR 
32315, May 29, 2003) (``E.O. 13304''), invoking the authority of, inter 
alia, IEEPA, the NEA, and section 5 of the United Nations Participation 
Act (22 U.S.C. 287c) (the ``UNPA''). In E.O. 13304, the President first 
determined that the situations that gave rise to the national 
emergencies declared in Executive Order 12808 of May 30, 1992 (57 FR 
23299, June 2, 1992), and Executive Order 13088 of June 9, 1998 (63 FR 
32109, June 12, 1998), with respect to the former Socialist Federal 
Republic of Yugoslavia had been significantly altered by the peaceful 
transition to democracy and other positive developments in Serbia and 
Montenegro, terminated the national emergencies declared in those 
orders, and revoked those and all related orders. Section 1 of E.O. 
13304 invokes certain residual authorities of the NEA and IEEPA with 
respect to the terminated national emergencies. In a separate final 
rule also published today, OFAC is removing from the Code of Federal 
Regulations those regulations that implemented the orders revoked by 
E.O. 13304, parts 585 through 587 of 31 CFR chapter V.
    In E.O. 13304, the President then took additional steps with 
respect to continuing, widespread, and illicit actions obstructing 
implementation of the Ohrid Framework Agreement of 2001 relating to 
Macedonia, UNSCR 1244 relating to Kosovo, or the Dayton Accords 
relating to Bosnia and Herzegovina, including the harboring of 
individuals indicted by the International Criminal Tribunal for the 
former Yugoslavia, and with respect to the national emergency described 
and declared in E.O. 13219. E.O. 13304 amended E.O. 13219 to expand and 
clarify the scope of persons targeted by the blocking sanctions.
    Section 2 of E.O. 13304 provides that the Annex to E.O. 13219 is 
replaced and superseded in its entirety by the Annex to E.O. 13304. 
Section 3 of E.O. 13304 revises section 1(a) and 1(b) of E.O. 13219. As 
so amended, section 1(a) of E.O. 13219 now 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: (i) 
Persons listed in the Annex to the order, as amended by E.O. 13304, and 
(ii) persons determined by the Secretary of the Treasury, in 
consultation with the Secretary of State, because they are determined: 
(A) To be under open indictment by the International Criminal Tribunal 
for the former Yugoslavia (the ``ICTY''), unless circumstances warrant 
otherwise; (B) to have committed, or to pose a significant risk of 
committing, acts of violence that have the purpose or effect of 
threatening the peace in or diminishing the stability or security of 
any area or state in the Western Balkans region, undermining the 
authority, efforts, or objectives of international organizations or 
entities present in the region, or endangering the safety of persons 
participating in or providing support to the activities of those 
international organizations or entities; (C) to have actively 
obstructed, or pose a significant risk of actively obstructing, the 
Ohrid Framework Agreement of 2001 relating to Macedonia, UNSCR 1244 
relating to Kosovo, or the Dayton Accords or the Conclusions of the 
Peace Implementation Conference held in London on December 8-9, 1995, 
including the decisions or conclusions of the High Representative, the 
Peace Implementation Council or its Steering Board, relating to Bosnia 
and Herzegovina; (D) to have materially assisted in, sponsored, or 
provided financial, material, or technological support for, or goods or 
services in support of, such acts of violence or obstructionism or any 
person listed in or designated pursuant to E.O. 13219, as amended by 
E.O. 13304; or (E) to be owned or controlled by, or acting or 
purporting to act directly or indirectly for or on behalf of, any 
person listed in or designated pursuant to E.O. 13219, as amended by 
E.O. 13304.
    Section 1(b) of E.O. 13219, as amended by section 3 of E.O. 13304, 
clarifies that the President's determination--that the making of 
donations of the type specified in section 203(b)(2) of IEEPA (50 
U.S.C. 1702(b)(2)) (i.e., donations of certain articles, such as food, 
clothing, and medicine, intended to be used to relieve human suffering) 
would seriously impair the ability to deal with the national emergency 
declared in E.O. 13219--applies to such donations by or to persons 
whose property and interests in property are blocked pursuant to E.O. 
13219, as amended by E.O. 13304, and that such donations therefore are 
prohibited.
    Section 5 of E.O. 13304 authorizes the Secretary of the Treasury, 
in consultation with the Secretary of State, to take such actions, 
including the promulgation of rules and regulations, and to employ all 
powers granted to the President by IEEPA and the UNPA, as may be 
necessary to carry out the purposes of E.O. 13304. Section 5 of E.O. 
13304 also provides that the Secretary of the Treasury may redelgate 
any of these functions to other officers and agencies of the U.S. 
Government.
    Acting under authority delegated by the Secretary of the Treasury, 
OFAC today is amending the WBSR to implement E.O. 13304 and to make 
additional conforming and technical changes to the regulations. Due to 
the extensive nature of these amendments, OFAC is reissuing the WBSR in 
their entirety.
    Section 588.201 of subpart B of the WBSR has been revised to make 
it consistent with section 1 of E.O. 13219, as amended by section 3 of 
E.O. 13304.
    New section 588.312, has been added to subpart C of the WBSR, to 
define the term ``financial, material, or technological support,'' as 
used in revised section 588.201(a)(2)(iv) of the WBSR, to mean any 
property, tangible or intangible, and to include a list of specific 
examples. Please note that, in adding new section 588.312 to the WBSR, 
OFAC does not imply any limitation on the scope of paragraphs (a)(1), 
(a)(2)(i), (a)(2)(ii), (a)(2)(iii), or (a)(2)(v) of section 588.201. 
Furthermore, the designation criteria in these paragraphs, as well as 
in paragraph (a)(2)(iv) of section 588.201, will be applied in a manner 
consistent with pertinent federal law, including, where applicable, the 
First Amendment to the United States Constitution.
    A new section 588.411 has been added to subpart D of the WBSR to 
incorporate guidance, issued by OFAC on February 14, 2008, titled 
``Entities Owned by Persons Whose Property and Interests in Property 
Are Blocked.'' A note referencing this section has been added to 
section 588.301 of subpart C.
    Section 588.507 of Subpart E of the WBSR has been revised to 
incorporate the provisions of General License No. 1, issued by OFAC on 
July 9, 2003, which authorized the provision of professional legal 
services relating to the representation of persons in matters pending 
before the International Criminal Tribunal for the former Yugoslavia.
    This final rule also makes additional conforming and technical 
changes to the WBSR.

[[Page 38004]]

Public Participation

    Because the Regulations involve a foreign affairs function, the 
provisions of Executive Order 12866 of September 30, 1993, 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 588

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

    For the reasons set forth in the preamble, the Department of the 
Treasury's Office of Foreign Assets Control revises part 588 of 31 CFR 
chapter V to read as follows:

PART 588--WESTERN BALKANS STABILIZATION REGULATIONS

Subpart A--Relation of This Part to Other Laws and Regulations
Sec.
588.101 Relation of this part to other laws and regulations.
Subpart B--Prohibitions
588.201 Prohibited transactions involving blocked property.
588.202 Effect of transfers violating the provisions of this part.
588.203 Holding of funds in interest-bearing accounts; investment 
and reinvestment.
588.204 Expenses of maintaining blocked physical property; 
liquidation of blocked property.
588.205 Evasions; attempts; conspiracies.
Subpart C--General Definitions
588.301 Blocked account; blocked property.
588.302 Effective date.
588.303 Entity.
588.304 Interest.
588.305 Licenses; general and specific.
588.306 Person.
588.307 Property; property interest.
588.308 Transfer.
588.309 United States.
588.310 U.S. financial institution.
588.311 United States person; U.S. person.
588.312 Financial, material, or technological support.
Subpart D--Interpretations
588.401 Reference to amended sections.
588.402 Effect of amendment.
588.403 Termination and acquisition of an interest in blocked 
property.
588.404 Transactions ordinarily incident to a licensed transaction.
588.405 Provision of services.
588.406 Offshore transactions.
588.407 Payments from blocked accounts to satisfy obligations 
prohibited.
588.408 Charitable contributions.
588.409 Credit extended and cards issued by U.S. financial 
institutions.
588.410 Setoffs prohibited.
588.411 Entities owned by a person whose property and interests in 
property are blocked.
Subpart E--Licenses, Authorizations, and Statements of Licensing Policy
588.501 General and specific licensing procedures.
588.502 Effect of license or authorization.
588.503 Exclusion from licenses.
588.504 Payments and transfers to blocked accounts in U.S. financial 
institutions.
588.505 Entries in certain accounts for normal service charges 
authorized.
588.506 Investment and reinvestment of certain funds.
588.507 Provision of certain legal services authorized.
588.508 Authorization of emergency medical services.
Subpart F--Reports
588.601 Records and reports.
Subpart G--Penalties
588.701 Penalties.
588.702 Pre-Penalty Notice; settlement.
588.703 Penalty imposition.
588.704 Administrative collection; referral to United States 
Department of Justice.
Subpart H--Procedures
588.801 Procedures.
588.802 Delegation by the Secretary of the Treasury.
Subpart I--Paperwork Reduction Act
588.901 Paperwork Reduction Act notice.

    Authority: 3 U.S.C. 301; 31 U.S.C. 321(b); 50 U.S.C. 1601-1651, 
1701-1706; Pub. L. 101-410, 104 Stat. 890 (28 U.S.C. 2461 note); 
Pub. L. 110-96, 121 Stat. 1011 (50 U.S.C. 1705 note); E.O. 13219, 66 
FR 34777, 3 CFR, 2001 Comp., p. 778; E.O. 13304, 68 FR 32315, 3 CFR, 
2004 Comp. p. 229.

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


Sec.  588.101  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 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.  588.201  Prohibited transactions involving blocked property.

    (a) 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 13219 of June 
26, 2001 (66 FR 34777, 3 CFR, 2001 Comp., p.778), as amended by 
Executive Order 13304 of May 28, 2003 (68 FR 32315, 3 CFR, 2004 Comp. 
p. 229); and
    (2) Any person determined by the Secretary of the Treasury, in 
consultation with the Secretary of State:
    (i) To be under open indictment by the International Criminal 
Tribunal for the former Yugoslavia, unless circumstances warrant 
otherwise; or
    (ii) To have committed, or to pose a significant risk of 
committing, acts of violence that have the purpose or effect of 
threatening the peace in or diminishing the stability or security of 
any area or state in the Western Balkans region, undermining the 
authority, efforts, or objectives of international organizations or 
entities present in the region, or endangering the safety of persons 
participating in or providing support to the activities of those 
international organizations or entities; or
    (iii) To have actively obstructed, or pose a significant risk of 
actively

[[Page 38005]]

obstructing, the Ohrid Framework Agreement of 2001 relating to 
Macedonia, United Nations Security Council Resolution 1244 relating to 
Kosovo, or the Dayton Accords or the Conclusions of the Peace 
Implementation Conference held in London on December 8-9, 1995, 
including the decisions or conclusions of the High Representative, the 
Peace Implementation Council or its Steering Board, relating to Bosnia 
and Herzegovina; or
    (iv) To have materially assisted in, sponsored, or provided 
financial, material, or technological support for, or goods or services 
in support of, such acts of violence or obstructionism or any person 
whose property and interests in property are blocked pursuant to this 
paragraph (a); or
    (v) To be owned or controlled by, or acting or purporting to act 
directly or indirectly for or on behalf of, any person whose property 
and interests in property are blocked pursuant to this paragraph (a).

    Note 1 to paragraph (a) of Sec.  588.201:  The names of persons 
listed in or designated pursuant to Executive Order 13219, as 
amended by Executive Order 13304, 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 ``[BALKANS].'' See Sec.  588.411 
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.  588.201:  The International 
Emergency Economic Powers Act (50 U.S.C. 1701-1706) (``IEEPA''), in 
Section 203 (50 U.S.C. 1702), authorizes the blocking of property 
and interests in property of a person during the pendency of an 
investigation. The names of persons whose property and interests in 
property are blocked pending investigation pursuant to paragraph (a) 
of this section also are published on the SDN list, published in the 
Federal Register, and incorporated into Appendix A to this chapter 
with the identifier ``[BPI-BALKANS].''


    Note 3 to paragraph (a) of Sec.  588.201:  Sections 501.806 and 
501.807 of this chapter describe the procedures to be followed by 
persons seeking, respectively, the unblocking of funds that they 
believe were blocked due to mistaken identity, 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:
    (1) The making of any contribution or provision of funds, goods, or 
services by, to, or for the benefit of any person whose property and 
interests in property are blocked pursuant to paragraph (a) of this 
section; and
    (2) The receipt of any contribution or provision of funds, goods, 
or services from any person whose property and interests in property 
are blocked pursuant to paragraph (a) of this section.
    (c) Unless authorized by this part or by a specific license 
expressly referring to this 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.
    (d) The prohibitions in paragraph (a) of this section apply except 
to the extent transactions are 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.


Sec.  588.202  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.  
588.201(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.  588.201(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 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 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 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 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.


[[Page 38006]]


    Note to paragraph (d) of Sec.  588.202: 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.  
588.201(a).


Sec.  588.203  Holding of funds in interest-bearing accounts; 
investment and reinvestment.

    (a) Except as provided in paragraphs (e) or (f) 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.  588.201(a) shall hold or place 
such funds in a blocked interest-bearing account located in the United 
States.
    (b)(1) For purposes of this section, the term blocked interest-
bearing account means a blocked account:
    (i) In a federally-insured U.S. bank, thrift institution, or credit 
union, provided the funds are earning interest at rates that are 
commercially reasonable; or
    (ii) With a broker or dealer registered with the Securities and 
Exchange Commission under the Securities Exchange Act of 1934 (15 
U.S.C. 78a et seq.), provided the funds are invested in a money market 
fund or in U.S. Treasury bills.
    (2) Funds held or placed in a blocked account pursuant to paragraph 
(a) of this section may not be invested in instruments the maturity of 
which exceeds 180 days.
    (c) For purposes of this section, a rate is commercially reasonable 
if it is the rate currently offered to other depositors on deposits or 
instruments of comparable size and maturity.
    (d) For purposes of this section, if interest is credited to a 
separate blocked account or subaccount, the name of the account party 
on each account must be the same.
    (e) Blocked funds held in instruments the maturity of which exceeds 
180 days at the time the funds become subject to Sec.  588.201(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 paragraphs 
(a) or (f) of this section.
    (f) Blocked funds held in accounts or instruments outside the 
United States at the time the funds become subject to Sec.  588.201(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.
    (g) 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.
    (h) Funds subject to this section may not be held, invested, or 
reinvested in a manner that provides immediate financial or economic 
benefit or access to any person whose property and interests in 
property are blocked pursuant to Sec.  588.201(a), nor may their holder 
cooperate in or facilitate the pledging or other attempted use as 
collateral of blocked funds or other assets.


Sec.  588.204  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.  
588.201(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.  588.201(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.  588.205  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.

Subpart C--General Definitions


Sec.  588.301  Blocked account; blocked property.

    The terms blocked account and blocked property shall mean any 
account or property subject to the prohibitions in Sec.  588.201 held 
in the name of a person whose property and interests in property are 
blocked pursuant to Sec.  588.201(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.  588.301:  See Sec.  588.411 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.  588.201(a).

Sec.  588.302  Effective date.

    The term effective date refers to the effective date of the 
applicable prohibitions and directives contained in this part as 
follows:
    (a)(1) With respect to a person whose property and interests in 
property are blocked pursuant to Sec.  588.201(a)(1), whose name 
appeared on the Annex to Executive Order 13219 as originally issued and 
also appeared on the Annex to Executive Order 13304, 12:01 a.m. eastern 
daylight time on June 27, 2001;
    (2) With respect to a person whose property and interests in 
property are blocked pursuant to Sec.  588.201(a)(1), whose name first 
appeared on the Annex to Executive Order 13304, which replaced and 
superseded the Annex to Executive Order 13219, 12:01 a.m. eastern 
daylight time on May 29, 2003; and
    (b) With respect to a person whose property and interests in 
property are blocked pursuant to Sec.  588.201(a)(2), the earlier of 
the date of actual or constructive notice that such person's property 
and interests in property are blocked.


Sec.  588.303  Entity.

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


Sec.  588.304  Interest.

    Except as otherwise provided in this part, the term interest, when 
used with respect to property (e.g., ``an interest in

[[Page 38007]]

property''), means an interest of any nature whatsoever, direct or 
indirect.


Sec.  588.305  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.  588.305:  See Sec.  501.801 of this chapter on 
licensing procedures.

Sec.  588.306  Person.

    The term person means an individual or entity.


Sec.  588.307  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.  588.308  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. Without limitation on the 
foregoing, it 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.  588.309  United States.

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


Sec.  588.310  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, or commodity futures or options, or procuring purchasers 
and sellers thereof, as principal or agent. It includes but is not 
limited to depository 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.  588.311  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.


Sec.  588.312  Financial, material, or technological support.

    The term financial, material, or technological support, as used in 
Sec.  588.201(a)(2)(iv) of this part, means any property, tangible or 
intangible, including but not limited to currency, financial 
instruments, securities, or any other transmission of value; weapons or 
related materiel; chemical or biological agents; explosives; false 
documentation or identification; communications equipment; computers; 
electronic or other devices or equipment; technologies; lodging; safe 
houses; facilities; vehicles or other means of transportation; or 
goods. ``Technologies'' as used in this definition means specific 
information necessary for the development, production, or use of a 
product, including related technical data such as blueprints, plans, 
diagrams, models, formulae, tables, engineering designs and 
specifications, manuals, or other recorded instructions.

Subpart D--Interpretations


Sec.  588.401  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.  588.402  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 the Office of Foreign Assets Control does not affect 
any act done or omitted, or any civil or criminal proceeding commenced 
or pending, prior to such amendment, modification, or revocation. All 
penalties, forfeitures, and liabilities under any such order, 
regulation, ruling, instruction, or license continue and may be 
enforced as if such amendment, modification, or revocation had not been 
made.


Sec.  588.403  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

[[Page 38008]]

longer be deemed to be property blocked pursuant to Sec.  588.201(a), 
unless there exists in the property another interest that is blocked 
pursuant to Sec.  588.201(a), the transfer of which has not been 
effected pursuant to license or other authorization.
    (b) Unless otherwise specifically provided in a license or 
authorization issued pursuant to this part, if property (including any 
property interest) is transferred or attempted to be transferred to a 
person whose property and interests in property are blocked pursuant to 
Sec.  588.201(a), such property shall be deemed to be property in which 
that person has an interest and therefore blocked.


Sec.  588.404  Transactions ordinarily incident to a licensed 
transaction.

    (a) Any transaction ordinarily incident to a licensed transaction 
and necessary to give effect thereto is also authorized, except:
    (1) An ordinarily incident transaction, not explicitly authorized 
within the terms of the license, by or with a person whose property and 
interests in property are blocked pursuant to Sec.  588.201(a); or
    (2) An ordinarily incident transaction, not explicitly authorized 
within the terms of the license, involving a debit to a blocked account 
or a transfer of blocked property.
    (b) Example. A license authorizing Company A, whose property and 
interests in property are blocked pursuant to Sec.  588.201(a), to 
complete a securities sale also authorizes other parties to engage in 
activities that are ordinarily incident and necessary to complete the 
sale, including transactions by the buyer, broker, transfer agents, and 
banks, provided that such other parties are not themselves persons 
whose property and interests in property are blocked pursuant to Sec.  
588.201(a).


Sec.  588.405  Provision of services.

    (a) Except as provided in Sec.  588.206, the prohibitions on 
transactions involving blocked property contained in Sec.  588.201 
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.  588.201(a); or
    (2) With respect to property interests subject to Sec.  588.201.
    (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.  588.201(a).

    Note to Sec.  588.405:  See Sec. Sec.  588.507 and 588.508 on 
licensing policy with regard to the provision of certain legal and 
medical services.

Sec.  588.406  Offshore transactions.

    The prohibitions in Sec.  588.201 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.  588.201(a), or property in which a person 
whose property and interests in property are blocked pursuant to Sec.  
588.201(a) has or has had an interest since the effective date.


Sec.  588.407  Payments from blocked accounts to satisfy obligations 
prohibited.

    Pursuant to Sec.  588.201, 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.  588.408  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, or received from, a person whose property 
and interests in property are blocked pursuant to Sec.  588.201(a). For 
the purposes of this part, a contribution is made by, to, or for the 
benefit of, or received from, a person whose property and interests in 
property are blocked pursuant to Sec.  588.201(a) if made by, to, or in 
the name of, or received from or in the name of, such a person; if made 
by, to, or in the name of, or received from or in the name of, an 
entity or individual acting for or on behalf of, or owned or controlled 
by, such a person; or if made in an attempt to violate, to evade, or to 
avoid the bar on the provision of contributions by, to, or for the 
benefit of such a person, or the receipt of contributions from any such 
person.


Sec.  588.409  Credit extended and cards issued by U.S. financial 
institutions.

    The prohibition in Sec.  588.201 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.  588.201(a).


Sec.  588.410  Setoffs prohibited.

    A setoff against blocked property (including a blocked account), 
whether by a U.S. bank or other U.S. person, is a prohibited transfer 
under Sec.  588.201 if effected after the effective date.


Sec.  588.411  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.  588.201(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.  588.201(a), regardless of whether the entity 
itself is listed in the Annex to Executive Order 13219, as amended by 
Executive Order 13304, or designated pursuant to Sec.  588.201(a)(2).

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


Sec.  588.501  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.  588.502  Effect of license or authorization.

    (a) No license or other authorization contained in this part, or 
otherwise issued by 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 part of this chapter 
unless the regulation, ruling, instruction, or license specifically 
refers to such part.

[[Page 38009]]

    (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.  588.503  Exclusion from licenses.

    The Office of Foreign Assets Control reserves the right to exclude 
any person, property, transaction, or class thereof from the operation 
of any license or from the privileges conferred by any license. 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.  588.504  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.  
588.201(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.  588.504:  See Sec.  501.603 of this chapter for 
mandatory reporting requirements regarding financial transfers. See 
also Sec.  588.203 concerning the obligation to hold blocked funds 
in interest-bearing accounts.

Sec.  588.505  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.  588.506  Investment and reinvestment of certain funds.

    Subject to the requirements of Sec.  588.203, U.S. financial 
institutions are authorized to invest and reinvest assets blocked 
pursuant to Sec.  588.201, 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 a person whose property and interests 
in property are blocked pursuant to Sec.  588.201(a).


Sec.  588.507  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.  588.201(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 legal, arbitration, or administrative 
proceedings before any U.S. federal, state, or local court or agency;
    (4) Representation of persons before any U.S. federal, state, or 
local court or agency with respect to the imposition, administration, 
or enforcement of U.S. sanctions against such persons; and
    (5) Provision of legal services in any other context in which 
prevailing U.S. law requires access to legal counsel at public expense.
    (b) The provision by a U.S. person of professional legal services 
relating to the representation of persons whose property and interests 
in property are blocked pursuant to Sec.  588.201(a) in matters pending 
before the International Criminal Tribunal for the former Yugoslavia 
(the ``ICTY'') is authorized. With respect to such representation, 
receipt of payment of professional fees and reimbursement of incurred 
expenses are authorized if such payments and reimbursements are made by 
the ICTY. Such payments and reimbursements from any other source must 
be specifically licensed.
    (c) The provision of any other legal services to persons whose 
property and interests in property are blocked pursuant to Sec.  
588.201(a), not otherwise authorized in this part, requires the 
issuance of a specific license.
    (d) Entry into a settlement agreement or the enforcement of any 
lien, judgment, arbitral award, decree, or other order through 
execution, garnishment, or other judicial process purporting to 
transfer or otherwise alter or affect property or interests in property 
blocked pursuant to Sec.  588.201(a) is prohibited unless licensed 
pursuant to this part.


Sec.  588.508  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.  588.201(a) is authorized, provided that all 
receipt of payment for such services must be specifically licensed.

Subpart F--Reports


Sec.  588.601  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.

[[Page 38010]]

Subpart G--Penalties


Sec.  588.701  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.  588.701:  As of the date of 
publication in the Federal Register of the final rule amending this 
part, inter alia, to implement Executive Order 13304 (June 29, 
2011), 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 (1) falsifies, conceals, or covers up by any 
trick, scheme, or device a material fact; (2) makes any materially 
false, fictitious, or fraudulent statement or representation; or (3) 
makes or uses any false writing or document knowing the same to contain 
any materially false, fictitious, or fraudulent statement or entry'' 
shall be fined under title 18, United States Code, imprisoned, or both.
    (f) Violations of this part may also be subject to relevant 
provisions of other applicable laws.


Sec.  588.702  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 a 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 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

[[Page 38011]]

alleged violator in care of the representative.


Sec.  588.703  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 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.  588.704  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 
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.  588.801  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.  588.802  Delegation by the Secretary of the Treasury.

    Any action that the Secretary of the Treasury is authorized to take 
pursuant to Executive Order 13219 of June 26, 2001 (66 FR 34777, June 
29, 2001), Executive Order 13304 of May 28, 2003 (68 FR 32315, May 29, 
2003), and any further Executive orders relating to the national 
emergency declared in Executive Order 13219, 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.  588.901  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 recordkeeping 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: June 16, 2011.
Adam J.