Iranian Transactions and Sanctions Regulations, 75845-75850 [2012-30680]
Download as PDF
<![CDATA[
Federal Register / Vol. 77, No. 247 / Wednesday, December 26, 2012 / Rules and Regulations
Authority: 26 U.S.C. 7805 * * *
Par. 2. Section 1.304–4 is revised to
read as follows:
■
§ 1.304–4 Special rules for the use of
related corporations to avoid the
application of section 304.
tkelley on DSK3SPTVN1PROD with
(a) Scope and purpose. This section
applies to determine the amount of a
property distribution constituting a
dividend (and the source thereof) under
section 304(b)(2), for certain
transactions involving controlled
corporations. The purpose of this
section is to prevent the avoidance of
the application of section 304 to a
controlled corporation.
(b) Amount and source of dividend.
For purposes of determining the amount
constituting a dividend (and source
thereof) under section 304(b)(2), the
following rules shall apply:
(1) Deemed acquiring corporation. A
corporation (deemed acquiring
corporation) shall be treated as
acquiring for property the stock of a
corporation (issuing corporation)
acquired for property by another
corporation (acquiring corporation) that
is controlled by the deemed acquiring
corporation, if a principal purpose for
creating, organizing, or funding the
acquiring corporation by any means
(including through capital contributions
or debt) is to avoid the application of
section 304 to the deemed acquiring
corporation. See paragraph (c) Example
1 of this section for an illustration of
this paragraph.
(2) Deemed issuing corporation. The
acquiring corporation shall be treated as
acquiring for property the stock of a
corporation (deemed issuing
corporation) controlled by the issuing
corporation if, in connection with the
acquisition for property of stock of the
issuing corporation by the acquiring
corporation, the issuing corporation
acquired stock of the deemed issuing
corporation with a principal purpose of
avoiding the application of section 304
to the deemed issuing corporation. See
paragraph (c) Example 2 of this section
for an illustration of this paragraph.
(c) Examples. The rules of this section
are illustrated by the following
examples:
Example 1. (i) Facts. P, a domestic
corporation, wholly owns CFC1, a controlled
foreign corporation with substantial
accumulated earnings and profits. CFC1 is
organized in Country X, which imposes a
high rate of tax on the income of CFC1. P also
wholly owns CFC2, a controlled foreign
corporation with accumulated earnings and
profits of $200x. CFC2 is organized in
Country Y, which imposes a low rate of tax
on the income of CFC2. P wishes to own all
of its foreign corporations in a direct chain
and to repatriate the cash of CFC2. In order
VerDate Mar<15>2010
04:58 Dec 22, 2012
Jkt 229001
to avoid having to obtain Country X approval
for the acquisition of CFC1 (a Country X
corporation) by CFC2 (a Country Y
corporation) and to avoid the dividend
distribution from CFC2 to P that would result
if CFC2 were the acquiring corporation, P
causes CFC2 to form CFC3 in Country X and
to contribute $100x to CFC3. CFC3 then
acquires all of the stock of CFC1 from P for
$100x.
(ii) Result. Because a principal purpose for
creating, organizing, or funding CFC3
(acquiring corporation) is to avoid the
application of section 304 to CFC2 (deemed
acquiring corporation), under paragraph
(b)(1) of this section, for purposes of
determining the amount of the $100x
distribution constituting a dividend (and
source thereof) under section 304(b)(2), CFC2
shall be treated as acquiring the stock of
CFC1 (issuing corporation) from P for $100x.
As a result, P receives a $100x distribution
out of the earnings and profits of CFC2 to
which section 301(c)(1) applies.
Example 2. (i) Facts. P, a domestic
corporation, wholly owns CFC1, a controlled
foreign corporation with substantial
accumulated earnings and profits. The CFC1
stock has a basis of $100x. CFC1 is organized
in Country X. P also wholly owns CFC2, a
controlled foreign corporation with zero
accumulated earnings and profits. CFC2 is
organized in Country Y. P wishes to own all
of its foreign corporations in a direct chain
and to repatriate the cash of CFC2. In order
to avoid having to obtain Country X approval
for the acquisition of CFC1 (a Country X
corporation) by CFC2 (a Country Y
corporation) and to avoid a dividend
distribution from CFC1 to P, P forms a new
corporation (CFC3) in Country X and
transfers the stock of CFC1 to CFC3 in
exchange for CFC3 stock. P then transfers the
stock of CFC3 to CFC2 in exchange for $100x.
(ii) Result. Because a principal purpose for
the transfer of the stock of CFC1 (deemed
issuing corporation) by P to CFC3 (issuing
corporation) is to avoid the application of
section 304 to CFC1, under paragraph (b)(2)
of this section, for purposes of determining
the amount of the $100x distribution
constituting a dividend (and source thereof)
under section 304(b)(2), CFC2 (acquiring
corporation) shall be treated as acquiring the
stock of CFC1 from P for $100x . As a result,
P receives a $100x distribution out of the
earnings and profits of CFC1 to which section
301(c)(1) applies.
(d) Effective/applicability date. This
section applies to acquisitions of stock
occurring on or after December 29, 2009.
§ 1.304–4T
■
[Removed]
Par. 3. Section 1.304–4T is removed.
Steven T. Miller,
Deputy Commissioner for Services and
Enforcement.
Approved: December 12, 2012.
Mark J. Mazur,
Assistant Secretary of the Treasury (Tax
Policy).
[FR Doc. 2012–30967 Filed 12–21–12; 8:45 am]
BILLING CODE 4830–01–P
PO 00000
Frm 00023
Fmt 4700
Sfmt 4700
75845
DEPARTMENT OF THE TREASURY
Office of Foreign Assets Control
31 CFR Part 560
Iranian Transactions and Sanctions
Regulations
Office of Foreign Assets
Control, Treasury.
ACTION: Final rule.
AGENCY:
The Department of the
Treasury’s Office of Foreign Assets
Control (‘‘OFAC’’) is amending the
Iranian Transactions and Sanctions
Regulations (the ‘‘ITSR’’) to implement
section 218 and portions of sections 602
and 603 of the Iran Threat Reduction
and Syria Human Rights Act of 2012;
section 5, portions of section 6, and
other related provisions of Executive
Order 13622 of July 30, 2012; and
section 4 of Executive Order 13628 of
October 9, 2012. These amendments,
inter alia, add a new section to the ITSR
to prohibit certain transactions by
entities owned or controlled by a U.S.
person and established or maintained
outside the United States. They also
expand the categories of persons whose
property and interests in property are
blocked to include any person
determined by the Secretary of the
Treasury, in consultation with the
Secretary of State, to have provided
material support for certain Government
of Iran-related entities or certain
activities by the Government of Iran.
DATES: Effective Date: December 26,
2012.
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:
SUMMARY:
Electronic and Facsimile Availability
This document and additional
information concerning OFAC are
available from OFAC’s Web site
(www.treas.gov/ofac). Certain general
information pertaining to OFAC’s
sanctions programs also is available via
facsimile through a 24-hour fax-ondemand service, tel.: 202/622–0077.
Background
On October 22, 2012, the Department
of the Treasury’s Office of Foreign
Assets Control (‘‘OFAC’’) published a
E:\FR\FM\26DER1.SGM
26DER1
tkelley on DSK3SPTVN1PROD with
75846
Federal Register / Vol. 77, No. 247 / Wednesday, December 26, 2012 / Rules and Regulations
final rule in the Federal Register (77 FR
64664) changing the heading of the
former Iranian Transactions Regulations
to the Iranian Transactions and
Sanctions Regulations, 31 CFR part 560
(the ‘‘ITSR’’), amending the renamed
ITSR, and reissuing them in their
entirety, to implement Executive Order
13599 of February 5, 2012 (‘‘E.O.
13599’’), and sections 1245(c) and
(d)(1)(B) of the National Defense
Authorization Act for Fiscal Year 2012
(Pub. L. 112–81). This final rule made
many significant amendments, as well
as technical and conforming changes, to
the ITSR. OFAC is now amending the
ITSR to implement the sections
discussed below of Executive Order
13622 of July 30, 2012, ‘‘Authorizing
Additional Sanctions With Respect to
Iran’’ (‘‘E.O. 13622’’), the Iran Threat
Reduction and Syria Human Rights Act
of 2012 (Pub. L. 112–158) (the ‘‘TRA’’),
and Executive Order 13628 of October 9,
2012, ‘‘Authorizing the Implementation
of Certain Sanctions Set Forth in the
Iran Threat Reduction and Syria Human
Rights Act of 2012 and Additional
Sanctions With Respect to Iran’’ (‘‘E.O.
13628’’).
On July 30, 2012, the President,
invoking the authority of, inter alia, the
International Emergency Economic
Powers Act (50 U.S.C. 1701 et seq.)
(‘‘IEEPA’’), issued E.O. 13622. The
President issued E.O. 13622 to take
additional steps with respect to the
national emergency declared in
Executive Order 12957 of March 15,
1995 (‘‘E.O. 12957’’), particularly in
light of the Government of Iran’s use of
revenues from petroleum, petroleum
products, and petrochemicals for illicit
purposes, Iran’s continued attempts to
evade international sanctions through
deceptive practices, and the
unacceptable risk posed to the
international financial system by Iran’s
activities.
Section 5 of E.O. 13622 blocks 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 any U.S.
person, including any foreign branch, of
any person determined by the Secretary
of the Treasury, in consultation with the
Secretary of State, to have materially
assisted, sponsored, or provided
financial, material, or technological
support for, or goods or services in
support of, the National Iranian Oil
Company (‘‘NIOC’’), the Naftiran
Intertrade Company (‘‘NICO’’), or the
Central Bank of Iran, or the purchase or
acquisition of U.S. bank notes or
precious metals by the Government of
Iran. Section 10 of E.O. 13622 defines
VerDate Mar<15>2010
04:58 Dec 22, 2012
Jkt 229001
the terms NIOC and NICO as including
any entity owned or controlled by, or
operating for or on behalf of,
respectively, NIOC and NICO.
Section 6 of E.O. 13622 provides that
section 5(a) of the order, among other
specified provisions, shall not apply to
any person for conducting or facilitating
a transaction involving a natural gas
development and pipeline project
initiated prior to July 31, 2012, to bring
gas from Azerbaijan to Europe and
Turkey, as described in section 6.
Although it is not named in the section,
section 6 refers to the Shah Deniz
natural gas field in Azerbaijan’s sector
of the Caspian Sea and related pipeline
projects to bring the gas from Azerbaijan
to Europe and Turkey.
On August 10, 2012, the President
signed into law the TRA. Section 218 of
the TRA directs the President to
prohibit entities owned or controlled by
a United States person and established
or maintained outside the United States
from knowingly engaging in any
transaction directly or indirectly with
the Government of Iran or any person
subject to the jurisdiction of the
Government of Iran that would be
prohibited by an order or regulation
issued pursuant to IEEPA if the
transaction were engaged in by a United
States person or in the United States.
Section 218 also extends civil penalty
liability under IEEPA to U.S. parent
companies if the foreign entities they
own or control violate, attempt to
violate, conspire to violate, or cause a
violation of any order or regulation
issued to implement this section. The
law allows the U.S. person to avoid civil
penalties for violations if it divests or
terminates its business with the foreign
entity by February 6, 2013.
Sections 602 and 603 of the TRA
provide that nothing in that law,
including section 218, shall apply to,
respectively, the authorized intelligence
activities of the United States and any
activity relating to a project for the
development of natural gas and the
construction and operation of a pipeline
to transport natural gas from Azerbaijan
to Turkey and Europe that meets certain
specified criteria. The project that meets
the criteria in section 603 is the project
to develop the Shah Deniz natural gas
field in Azerbaijan’s sector of the
Caspian Sea and related pipeline
projects to bring the gas from Azerbaijan
to Europe and Turkey, as discussed
above in connection with section 6 of
E.O. 13622. The exemption in section
603 will not apply in the event that the
President makes certain certifications to
Congress to the effect that an Iranian
entity’s share of the project has
increased relative to its share on January
PO 00000
Frm 00024
Fmt 4700
Sfmt 4700
1, 2002, or that an Iranian entity has
assumed an operational role in the
project, as described in section 603(b) of
the TRA.
On October 9, 2012, the President,
invoking the authority of, inter alia,
IEEPA and the TRA, issued E.O. 13628,
in order to take additional steps to deal
with the national emergency declared in
E.O. 12957 with respect to Iran. In
implementation of section 218 of the
TRA, section 4(a) of E.O. 13628
prohibits entities owned or controlled
by a United States person and
established or maintained outside the
United States from knowingly engaging
in any transactions, directly or
indirectly, with the Government of Iran
or any person subject to the jurisdiction
of the Government of Iran, if the
transactions would be prohibited by
E.O. 12957, Executive Order 12959 of
May 6, 1995, Executive Order 13059 of
August 19, 1997, E.O. 13599, section 5
of E.O. 13622, or section 12 of E.O.
13628, or any regulation issued
pursuant to the foregoing, if the
transaction were engaged in by a United
States person or in the United States.
Section 4(d) of E.O. 13628 provides that
the prohibition in section 4(a) applies
except to the extent provided by
statutes, or in regulations, orders
directives, or licenses that may be
issued pursuant to this order.
Section 4(b) of E.O. 13628 provides
that penalties for violations of the
prohibition in section 4(a) may be
assessed against the United States
person that owns or controls the foreign
entity that engaged in the prohibited
transaction. Section 4(c) provides that
such penalties shall not apply if the
United States person that owns or
controls the foreign entity divests or
terminates its business with that entity
not later than February 6, 2013.
Today, OFAC is amending the ITSR to
implement sections 5 and 6 of E.O.
13622, sections 218, 602, and 603 of the
TRA, and section 4 of E.O. 13628. To
implement the relevant provisions of
E.O. 13622, OFAC is amending
paragraph (c) of section 560.211 of the
ITSR to add the new blocking criteria
set forth in section 5(a) of the order, as
well as the exemption from this new
authority for a natural gas development
and pipeline project described in
section 6 of the order.
OFAC is making a number of changes
to the ITSR to implement the relevant
provisions of the TRA and E.O. 13628.
First, new section 560.215 is being
added to subpart B of the ITSR to
prohibit entities owned or controlled by
a United States person and established
or maintained outside the United States
from knowingly engaging in any
E:\FR\FM\26DER1.SGM
26DER1
tkelley on DSK3SPTVN1PROD with
Federal Register / Vol. 77, No. 247 / Wednesday, December 26, 2012 / Rules and Regulations
transaction directly or indirectly with
the Government of Iran or any person
subject to the jurisdiction of the
Government of Iran that would be
prohibited by the ITSR if the transaction
were engaged in by a United States
person or in the United States. This new
section also contains the exemptions set
forth in sections 602 and 603 of the TRA
for, respectively, U.S. intelligence
activities and a natural gas-related
project, as described above.
Second, new section 560.555 is being
added to subpart E of the ITSR to
authorize, from October 9, 2012,
through March 8, 2013, all transactions
ordinarily incident and necessary to the
winding-down of transactions
prohibited by new section 560.215,
provided that the authorized
transactions do not involve a U.S.
person or occur in the United States.
Paragraph (b) of section 560.555
specifies that this new general license
does not authorize any transactions
prohibited by section 560.205.
Paragraph (c) of section 560.555
provides that transactions involving
Iranian financial institutions are
authorized pursuant to this new general
license only if the property and interests
in property of the Iranian financial
institution are blocked solely pursuant
to this part.
Third, another general license, new
section 560.556, is being added to
subpart E of the ITSR to authorize an
entity owned or controlled by a United
States person and established or
maintained outside the United States (a
‘‘U.S.-owned or -controlled foreign
entity’’) to engage in a transaction
otherwise prohibited by section 560.215
that would be authorized by a general
license set forth in or issued pursuant to
this part if engaged in by a U.S. person
or in the United States. Paragraph (b) of
new section 560.556 provides that this
section does not authorize any
transaction by a U.S.-owned or
-controlled foreign entity otherwise
prohibited by section 560.215 if the
transaction would be prohibited by any
other part of chapter V of 31 CFR if
engaged in by a U.S. person or in the
United States.
Fourth, OFAC is amending several
existing general licenses that, by their
terms, apply to transactions by U.S.owned or -controlled foreign entities to
exclude from the scope of each
authorization any transaction by a U.S.owned or -controlled foreign entity
otherwise prohibited by section 560.215
if the transaction would be prohibited
by any other part of chapter V of 31 CFR
if engaged in by a U.S. person or in the
United States. This change is being
made to sections 560.508, 560.509,
VerDate Mar<15>2010
04:58 Dec 22, 2012
Jkt 229001
560.510, 560.522, 560.525, 560.530,
560.532, 560.539, and 560.553. OFAC is
making further conforming changes to
sections 560.532 and 560.539 to account
for the new prohibition in section
560.215.
Fifth, OFAC is amending section
560.701 of subpart G of the ITSR by
adding new paragraph (a)(3), which
provides for civil penalties under
section 206(b) of IEEPA (50 U.S.C.
1705(b)) to be imposed on a United
States person if an entity owned or
controlled by the United States person
and established or maintained outside
the United States violates, attempts to
violate, conspires to violate, or causes a
violation of the prohibition set forth in
section 560.215, unless the United
States person divests or terminates its
business with the entity by February 6,
2013, such that the U.S. person no
longer owns or controls the entity, as
defined in new section 560.215.
Finally, OFAC is making two
technical corrections to section 560.505
of subpart E of the ITSR.
Public Participation
Because the amendment of the ITSR
involves 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 ITSR 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 560
Administrative practice and
procedure, Banks, Banking, Blocking of
Assets, Brokers, Credit, Foreign Trade,
Investments, Loans, Securities, Services,
Iran.
For the reasons set forth in the
preamble, the Department of the
Treasury’s Office of Foreign Assets
Control amends part 560 of 31 CFR
chapter V as follows:
PO 00000
Frm 00025
Fmt 4700
Sfmt 4700
75847
PART 560—IRANIAN TRANSACTIONS
AND SANCTIONS REGULATIONS
1. The authority citation for part 560
is revised to read as follows:
■
Authority: 3 U.S.C. 301; 18 U.S.C. 2339B,
2332d; 22 U.S.C. 2349aa–9; 22 U.S.C. 7201–
7211; 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); Pub. L. 111–
195, 124 Stat. 1312 (22 U.S.C. 8501–8551);
Pub. L. 112–81, 125 Stat. 1298; Pub. L. 112–
158, 126 Stat. 1214; E.O. 12613, 52 FR 41940,
3 CFR, 1987 Comp., p. 256; E.O. 12957, 60
FR 14615, 3 CFR, 1995 Comp., p. 332; E.O.
12959, 60 FR 24757, 3 CFR, 1995 Comp., p.
356; E.O. 13059, 62 FR 44531, 3 CFR, 1997
Comp., p. 217; E.O. 13599, 77 FR 6659,
February 8, 2012; E.O. 13622, 77 FR 45897,
August 2, 2012; E.O. 13628, 77 FR 62139,
October 12, 2012.
Subpart B—Prohibitions
2. Amend § 560.210 by revising
paragraph (e) to read as follows:
■
§ 560.210
Exempt transactions.
*
*
*
*
*
(e) Official Business. The prohibitions
in § 560.211(a) through (c)(1) do not
apply to transactions for the conduct of
the official business of the Federal
Government by employees, grantees, or
contractors thereof.
*
*
*
*
*
■ 3. Amend § 560.211 by revising
paragraph (c) and Note 1 to paragraphs
(a) through (c) of § 560.211 to read as
follows:
§ 560.211 Prohibited transactions
involving blocked property.
*
*
*
*
*
(c) 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 any
United States person, including any
foreign branch, of the following persons
are blocked and may not be transferred,
paid, exported, withdrawn, or otherwise
dealt in:
(1) Any person determined by the
Secretary of the Treasury, in
consultation with the Secretary of State,
to be owned or controlled by, or to have
acted or purported to act for or on behalf
of, directly or indirectly, any person
whose property and interests in
property are blocked pursuant to
paragraphs (a) through (c)(1) of this
section; or
(2) Any person determined by the
Secretary of the Treasury, in
consultation with the Secretary of State,
to have materially assisted, sponsored,
or provided financial, material, or
technological support for, or goods or
E:\FR\FM\26DER1.SGM
26DER1
75848
Federal Register / Vol. 77, No. 247 / Wednesday, December 26, 2012 / Rules and Regulations
services in support of, the National
Iranian Oil Company (‘‘NIOC’’); the
Naftiran Intertrade Company (‘‘NICO’’);
any entity owned or controlled by, or
operating for or on behalf of, NIOC or
NICO; the Central Bank of Iran; or the
purchase or acquisition of U.S. bank
notes or precious metals by the
Government of Iran. This paragraph
shall not apply with respect to any
person for conducting or facilitating a
transaction that involves a natural gas
development and pipeline project
initiated prior to July 31, 2012, to bring
gas from Azerbaijan to Europe and
Turkey in furtherance of a production
sharing agreement or license awarded
by a sovereign government other than
the Government of Iran before July 31,
2012.
Note to Paragraph (c)(2) of § 560.211: The
natural gas development and pipeline project
referred to in this paragraph is the project to
develop the Shah Deniz natural gas field in
Azerbaijan’s sector of the Caspian Sea and
related pipeline projects to bring the gas from
Azerbaijan to Europe and Turkey.
Note 1 to Paragraphs (a) Through (c) of
§ 560.211: The names of persons identified as
already blocked or designated for blocking
pursuant to Executive Order 13599 of
February 5, 2012, and Executive Order 13622
of July 30, 2012, whose property and
interests in property therefore are blocked
pursuant to this section, are published in the
Federal Register and incorporated into the
Office of Foreign Assets Control’s Specially
Designated Nationals and Blocked Persons
List (‘‘SDN List’’) with the identifier
‘‘[IRAN].’’ The SDN List is accessible through
the following page on the Office of Foreign
Control’s Web site: www.treasury.gov/sdn.
Additional information pertaining to the SDN
List can be found in Appendix A to this
chapter. See § 560.425 concerning entities
that may not be listed on the SDN List but
whose property and interests in property are
nevertheless blocked pursuant to this section.
Executive Order 13599 blocks the property
and interests in property of the Government
of Iran and Iranian financial institutions, as
defined in § 560.304 and § 560.324,
respectively. The property and interests in
property of persons falling within the
definitions of the terms Government of Iran
and Iranian financial institution are blocked
pursuant to this section regardless of whether
the names of such persons are published in
the Federal Register or incorporated into the
SDN List.
*
*
*
*
*
4. Add new section § 560.215 to read
as follows:
tkelley on DSK3SPTVN1PROD with
§ 560.215 Prohibitions on foreign entities
owned or controlled by U.S. persons.
(a) Except as otherwise authorized
pursuant to this part, an entity that is
owned or controlled by a United States
person and established or maintained
outside the United States is prohibited
04:58 Dec 22, 2012
Jkt 229001
Note to Paragraph (a) of § 560.215: If a
transaction is exempt from the prohibitions
of this part if engaged in by a U.S. person,
it would not be prohibited for an entity that
is owned or controlled by a United States
person and established or maintained outside
the United States (a ‘‘U.S.-owned or
-controlled foreign entity’’) to engage in the
transaction to the same extent that it would
not be prohibited for the U.S. person to
engage in the transaction and provided that
the U.S.-owned or -controlled foreign entity
satisfies all the requirements of the
exemption. See also § 560.556 of this part for
a general license authorizing a U.S.-owned or
-controlled foreign entity to engage in a
transaction otherwise prohibited by § 560.215
that would be authorized by a general license
set forth in or issued pursuant to this part if
engaged in by a U.S. person or in the United
States, subject to certain exclusions. Finally,
if a transaction prohibited by § 560.215 is one
for which a U.S. person might apply for a
specific license—for example, the
exportation of medical devices to Iran—a
U.S.-owned or -controlled foreign entity may
apply for a specific license to engage in the
transaction.
(b) Definitions: (1) For purposes of
paragraph (a) of this section, an entity
is ‘‘owned or controlled’’ by a United
States person if the United States
person:
(i) Holds a 50 percent or greater equity
interest by vote or value in the entity;
(ii) Holds a majority of seats on the
board of directors of the entity; or
(iii) Otherwise controls the actions,
policies, or personnel decisions of the
entity.
(2) For purposes of paragraph (a) of
this section, the term knowingly means
that the person engages in the
transaction with actual knowledge or
reason to know.
(3) For purposes of paragraph (a) of
this section, a person is ‘‘subject to the
jurisdiction of the Government of Iran’’
if the person is organized under the
laws of Iran or any jurisdiction within
Iran, ordinarily resident in Iran, or in
Iran, or owned or controlled by any of
the foregoing.
Note to Paragraph (b) of § 560.215: See
§ 560.304 of this part for the definition of the
term Government of Iran.
■
VerDate Mar<15>2010
from knowingly engaging in any
transaction, directly or indirectly, with
the Government of Iran or any person
subject to the jurisdiction of the
Government of Iran that would be
prohibited pursuant to this part if
engaged in by a United States person or
in the United States.
(c) The prohibition in paragraph (a) of
this section does not apply to any
activity relating to a project:
(1) For the development of natural gas
and the construction and operation of a
pipeline to transport natural gas from
Azerbaijan to Turkey and Europe;
PO 00000
Frm 00026
Fmt 4700
Sfmt 4700
(2) That provides to Turkey and
countries in Europe energy security and
energy independence from the
Government of the Russian Federation
and the Government of Iran; and
(3) That was initiated before August
10, 2012, pursuant to a productionsharing agreement, or an ancillary
agreement necessary to further a
production-sharing agreement, entered
into with, or a license granted by, the
government of a country other than Iran
before August 10, 2012.
Note to Paragraph (c) of § 560.215: The
exemption in paragraph (c) of this section
applies to the Shah Deniz natural gas field in
Azerbaijan’s sector of the Caspian Sea and
related pipeline projects to bring the gas from
Azerbaijan to Europe and Turkey.
(d) The prohibition in paragraph (a) of
this section does not apply to the
authorized intelligence activities of the
United States Government.
Note to § 560.215: A U.S. person is subject
to the civil penalties provided for in section
206(b) of the International Emergency
Economic Powers Act (‘‘IEEPA’’) (50 U.S.C.
1705(b)) if any foreign entity that it owns or
controls violates the prohibition set forth in
this section. See § 560.701(a)(3) of this part
for civil penalties.
Subpart E—Licenses, Authorizations,
and Statements of Licensing Policy
5. Amend § 560.505 by revising
paragraph (a)(2) and the Note to
§ 560.505 to read as follows:
■
§ 560.505 Activities and services related to
certain nonimmigrant and immigrant
categories authorized.
(a)(1) * * *
(2) U.S. persons are authorized to
export services to Iran in connection
with the filing of an individual’s
application for the non-immigrant visa
categories listed in paragraph (a)(1) of
this section.
*
*
*
*
*
Note to § 560.505: See § 560.554 of this part
for general licenses authorizing the
importation and exportation of services
related to conferences in the United States or
third countries.
6. Amend § 560.508 by redesignating
paragraph (b) as paragraph (c) and
adding new paragraph (b) to read as
follows:
■
§ 560.508 Telecommunications and mail
transactions authorized.
*
*
*
*
*
(b) Paragraph (a) of this section does
not authorize any transaction by an
entity owned or controlled by a United
States person and established or
maintained outside the United States
otherwise prohibited by § 560.215 if the
E:\FR\FM\26DER1.SGM
26DER1
Federal Register / Vol. 77, No. 247 / Wednesday, December 26, 2012 / Rules and Regulations
transaction would be prohibited by any
other part of this chapter V if engaged
in by a U.S. person or in the United
States.
*
*
*
*
*
■ 7. Add new paragraph (c) to § 560.509
to read as follows:
§ 560.509 Certain transactions related to
patents, trademarks, and copyrights
authorized.
*
*
*
*
*
(c) This section does not authorize
any transaction by an entity owned or
controlled by a United States person
and established or maintained outside
the United States otherwise prohibited
by § 560.215 if the transaction would be
prohibited by any other part of this
chapter V if engaged in by a U.S. person
or in the United States.
■ 8. Add new paragraph (e) to § 560.510
to read as follows:
§ 560.510 Transactions related to the
resolution of disputes between the United
States or United States nationals and the
Government of Iran.
*
*
*
*
*
(e) This section does not authorize
any transaction by an entity owned or
controlled by a United States person
and established or maintained outside
the United States otherwise prohibited
by § 560.215 if the transaction would be
prohibited by any other part of this
chapter V if engaged in by a U.S. person
or in the United States.
■ 9. Amend § 560.522 by redesignating
the existing text as paragraph (a) and
adding new paragraph (b) to read as
follows:
§ 560.522 Allowable payments for
overflights of Iranian airspace.
*
*
*
*
*
(b) This section does not authorize
any transaction by an entity owned or
controlled by a United States person
and established or maintained outside
the United States otherwise prohibited
by § 560.215 if the transaction would be
prohibited by any other part of this
chapter V if engaged in by a U.S. person
or in the United States.
■ 10. Add new paragraph (e) to
§ 560.525 to read as follows:
§ 560.525
services.
Provision of certain legal
tkelley on DSK3SPTVN1PROD with
*
*
*
*
*
(e) This section does not authorize
any transaction by an entity owned or
controlled by a United States person
and established or maintained outside
the United States otherwise prohibited
by § 560.215 if the transaction would be
prohibited by any other part of this
chapter V if engaged in by a U.S. person
or in the United States.
VerDate Mar<15>2010
04:58 Dec 22, 2012
Jkt 229001
11. Add new paragraph (g) to
§ 560.530 to read as follows:
■
§ 560.530 Commercial sales, exportation,
and reexportation of agricultural
commodities, medicine, and medical
devices.
*
*
*
*
*
(g) Excluded transactions by U.S.owned or -controlled foreign entities.
Nothing in this section or in any general
license set forth in or issued pursuant to
this section authorizes any transaction
by an entity owned or controlled by a
United States person and established or
maintained outside the United States
otherwise prohibited by § 560.215 if the
transaction would be prohibited by any
other part of this chapter V if engaged
in by a U.S. person or in the United
States.
■ 12. Amend § 560.532 by revising
paragraphs (a)(3) and (a)(4) and adding
new paragraph (e) to read as follows:
§ 560.532 Payment for and financing of
exports and reexports of agricultural
commodities, medicine, and medical
devices.
(a) * * *
(3) Financing by third-country
financial institutions that are not United
States persons, entities owned or
controlled by United States persons and
established or maintained outside the
United States, Iranian financial
institutions, or the Government of Iran.
Such financing may be confirmed or
advised by U.S. financial institutions
and by financial institutions that are
entities owned or controlled by United
States persons and established or
maintained outside the United States; or
(4) Letter of credit issued by an
Iranian financial institution whose
property and interests in property are
blocked solely pursuant to this part.
Such letter of credit must be initially
advised, confirmed, or otherwise dealt
in by a third-country financial
institution that is not a United States
person, an entity owned or controlled
by a United States person and
established or maintained outside the
United States, an Iranian financial
institution, or the Government of Iran
before it is advised, confirmed, or dealt
in by a U.S. financial institution or a
financial institution that is an entity
owned or controlled by a United States
person and established or maintained
outside the United States.
*
*
*
*
*
(e) Nothing in this section authorizes
any transaction by an entity owned or
controlled by a United States person
and established or maintained outside
the United States otherwise prohibited
by § 560.215 if the transaction would be
PO 00000
Frm 00027
Fmt 4700
Sfmt 4700
75849
prohibited by any other part of this
chapter V if engaged in by a U.S. person
or in the United States.
■ 13. Amend § 560.539 by revising
paragraphs (a)(4), (a)(5), (b)(2), and (b)(3)
and adding new paragraph (b)(4) to read
as follows:
§ 560.539 Official activities of certain
international organizations.
(a) * * *
(4) Funds transfers to or from
accounts of the international
organizations covered in this section,
provided that funds transfers to or from
Iran are not routed through an account
of an Iranian bank on the books of a U.S.
financial institution or a financial
institution that is an entity owned or
controlled by a United States person
and established or maintained outside
the United States; and
(5) The operation of accounts for
employees, contractors, and grantees
located in Iran of the international
organizations covered in this section.
Transactions conducted through these
accounts must be solely for the
employee’s, contractor’s, or grantee’s
personal use and not for any
commercial purposes in or involving
Iran. Any funds transfers to or from an
Iranian bank must be routed through a
third-country bank that is not a United
States person or an entity owned or
controlled by a United States person
and established or maintained outside
the United States.
(b) * * *
(2) The reexportation to Iran of any
U.S.-origin goods or technology listed
on the CCL;
(3) The exportation or reexportation
from the United States or by a U.S.
person, wherever located, to Iran of any
services not necessary and ordinarily
incident to the official business in Iran.
Such transactions require separate
authorization from OFAC; or
(4) Any transaction by an entity
owned or controlled by a United States
person and established or maintained
outside the United States otherwise
prohibited by § 560.215 if the
transaction would be prohibited by any
other part of this chapter V if engaged
in by a U.S. person or in the United
States.
*
*
*
*
*
■ 14. Add new paragraph (d) to
§ 560.553 to read as follows:
§ 560.553 Payments from funds originating
outside the United States authorized.
*
*
*
*
*
(d) Nothing in this section authorizes
any transaction by an entity owned or
controlled by a United States person
and established or maintained outside
E:\FR\FM\26DER1.SGM
26DER1
75850
Federal Register / Vol. 77, No. 247 / Wednesday, December 26, 2012 / Rules and Regulations
the United States otherwise prohibited
by § 560.215 if the transaction would be
prohibited by any other part of this
chapter V if engaged in by a U.S. person
or in the United States.
*
*
*
*
*
15. Add new § 560.555 to read as
follows:
■
§ 560.555 Winding-down of transactions
prohibited by § 560.215.
(a) Except as set forth in paragraphs
(b) and (c) of this section, all
transactions ordinarily incident and
necessary to the winding-down of
transactions prohibited by § 560.215 are
authorized from October 9, 2012,
through March 8, 2013, provided that
those ordinarily incident and necessary
transactions do not involve a U.S.
person or occur in the United States.
(b) Nothing in this section authorizes
any transactions prohibited by
§ 560.205.
(c) Transactions involving Iranian
financial institutions are authorized
pursuant to paragraph (a) of this section
only if the property and interests in
property of the Iranian financial
institution are blocked solely pursuant
to this part.
16. Add new § 560.556 to read as
follows:
■
tkelley on DSK3SPTVN1PROD with
§ 560.556 Foreign entities owned or
controlled by U.S. persons authorized to
engage in transactions that are authorized
by general license if engaged in by a U.S.
person or in the United States.
(a) Except as set forth in paragraph (b)
of this section, an entity owned or
controlled by a United States person
and established or maintained outside
the United States (a ‘‘U.S.-owned or
-controlled foreign entity’’) is authorized
to engage in a transaction otherwise
prohibited by § 560.215 that would be
authorized by a general license set forth
in or issued pursuant to this part if
engaged in by a U.S. person or in the
United States, provided the U.S.-owned
or -controlled foreign entity is
authorized to engage in the transaction
only to the same extent as the U.S.
person is authorized to engage in the
transaction and subject to all the
conditions and requirements set forth in
the general license for the U.S. person.
(b) This section does not authorize
any transaction by a U.S.-owned or
-controlled foreign entity otherwise
prohibited by § 560.215 if the
transaction would be prohibited by any
other part of this chapter V if engaged
in by a U.S. person or in the United
States.
VerDate Mar<15>2010
04:58 Dec 22, 2012
Jkt 229001
Subpart G—Civil Penalties
17. Amend § 560.701 by adding new
paragraph (a)(3) to read as follows:
■
§ 560.701
Penalties.
(a) * * *
(3) As set forth in section 218 of the
Iran Threat Reduction and Syria Human
Rights Act of 2012 (Pub. L. 112–158), a
civil penalty not to exceed the amount
set forth in section 206 of IEEPA may be
imposed on a United States person if an
entity owned or controlled by the
United States person and established or
maintained outside the United States
violates, attempts to violate, conspires
to violate, or causes a violation of the
prohibition set forth in § 560.215 or of
any order, regulation, or license set forth
in or issued pursuant to this part
concerning such prohibition. The
penalties set forth in this paragraph
shall not apply with respect to a
transaction described in § 560.215 by an
entity owned or controlled by the
United States person and established or
maintained outside the United States if
the United States person divests or
terminates its business with the entity
not later than February 6, 2013, such
that the U.S. person no longer owns or
controls the entity, as defined in
§ 560.215(b)(1).
*
*
*
*
*
Dated: December 14, 2012.
Adam J. Szubin,
Director, Office of Foreign Assets Control.
[FR Doc. 2012–30680 Filed 12–21–12; 4:15 pm]
BILLING CODE P
DEPARTMENT OF HOMELAND
SECURITY
Coast Guard
33 CFR Part 165
[Docket Number USCG–2012–1044]
RIN 1625–AA11
Regulated Navigation Area; Upper
Mississippi River MM 0.0 to MM 185.0;
Cairo, IL to St. Louis, MO
Coast Guard, DHS.
Temporary final rule.
AGENCY:
ACTION:
The Coast Guard is
establishing a temporary regulated
navigation area (RNA) for all waters of
the Upper Mississippi River between
miles 0.0 and 185.0. This RNA is
needed to protect persons, property, and
infrastructure from potential damage
and safety hazards associated with
extreme low water conditions on the
Upper Mississippi River. Any deviation
SUMMARY:
PO 00000
Frm 00028
Fmt 4700
Sfmt 4700
from the conditions and requirements
put into place are prohibited unless
specifically authorized by the cognizant
Captain of the Port (COTP) (COTP Ohio
Valley for MM 0.0 to MM 109.9 or COTP
Upper Mississippi River for MM 109.9
to MM 185.0) or their designated
representatives.
DATES: This rule is effective in the CFR
on December 26, 2012 and effective
with actual notice for purposes of
enforcement on December 1, 2012, until
March 31, 2013.
ADDRESSES: Documents mentioned in
this preamble are part of docket [USCG–
2012–1044]. To view documents
mentioned in this preamble as being
available in the docket, go to https://
www.regulations.gov, type the docket
number in the ‘‘SEARCH’’ box and click
‘‘SEARCH.’’ Click on Open Docket
Folder on the line associated with this
rulemaking. You may also visit the
Docket Management Facility in Room
W12–140 on the ground floor of the
Department of Transportation West
Building, 1200 New Jersey Avenue SE.,
Washington, DC 20590, between 9 a.m.
and 5 p.m., Monday through Friday,
except Federal holidays.
FOR FURTHER INFORMATION CONTACT: If
you have questions on this rule, call or
email LT Dan McQuate, U.S. Coast
Guard; telephone 270–442–1621, email
daniel.j.mcquate@uscg.mil or CWO
Scott Coder, U.S. Coast Guard;
telephone 314–269–2575, email
justin.s.coder@uscg.mil. If you have
questions on viewing or submitting
material to the docket, call Renee V.
Wright, Program Manager, Docket
Operations, telephone (202) 366–9826.
SUPPLEMENTARY INFORMATION:
Table of Acronyms
AIS Automatic Identification System
COTP Captain of the Port
DHS Department of Homeland Security
FR Federal Register
MM Mile Marker
M/V Motor Vessel
NPRM Notice of Proposed Rulemaking
RIAC River Industry Action Committee
RNA Regulated Navigation Area
UMR Upper Mississippi River
USACE United States Army Corps of
Engineers
A. Regulatory History and Information
The Coast Guard is issuing this
temporary final rule without prior
notice and opportunity to comment
pursuant to authority under section 4(a)
of the Administrative Procedure Act
(APA) (5 U.S.C. 553(b)). This provision
authorizes an agency to issue a rule
without prior notice and opportunity to
comment when the agency for good
cause finds that those procedures are
E:\FR\FM\26DER1.SGM
26DER1
]]>Agencies
[Federal Register Volume 77, Number 247 (Wednesday, December 26, 2012)]
[Rules and Regulations]
[Pages 75845-75850]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-30680]
-----------------------------------------------------------------------
DEPARTMENT OF THE TREASURY
Office of Foreign Assets Control
31 CFR Part 560
Iranian Transactions and 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 amending the Iranian Transactions and Sanctions
Regulations (the ``ITSR'') to implement section 218 and portions of
sections 602 and 603 of the Iran Threat Reduction and Syria Human
Rights Act of 2012; section 5, portions of section 6, and other related
provisions of Executive Order 13622 of July 30, 2012; and section 4 of
Executive Order 13628 of October 9, 2012. These amendments, inter alia,
add a new section to the ITSR to prohibit certain transactions by
entities owned or controlled by a U.S. person and established or
maintained outside the United States. They also expand the categories
of persons whose property and interests in property are blocked to
include any person determined by the Secretary of the Treasury, in
consultation with the Secretary of State, to have provided material
support for certain Government of Iran-related entities or certain
activities by the Government of Iran.
DATES: Effective Date: December 26, 2012.
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 (www.treas.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 October 22, 2012, the Department of the Treasury's Office of
Foreign Assets Control (``OFAC'') published a
[[Page 75846]]
final rule in the Federal Register (77 FR 64664) changing the heading
of the former Iranian Transactions Regulations to the Iranian
Transactions and Sanctions Regulations, 31 CFR part 560 (the ``ITSR''),
amending the renamed ITSR, and reissuing them in their entirety, to
implement Executive Order 13599 of February 5, 2012 (``E.O. 13599''),
and sections 1245(c) and (d)(1)(B) of the National Defense
Authorization Act for Fiscal Year 2012 (Pub. L. 112-81). This final
rule made many significant amendments, as well as technical and
conforming changes, to the ITSR. OFAC is now amending the ITSR to
implement the sections discussed below of Executive Order 13622 of July
30, 2012, ``Authorizing Additional Sanctions With Respect to Iran''
(``E.O. 13622''), the Iran Threat Reduction and Syria Human Rights Act
of 2012 (Pub. L. 112-158) (the ``TRA''), and Executive Order 13628 of
October 9, 2012, ``Authorizing the Implementation of Certain Sanctions
Set Forth in the Iran Threat Reduction and Syria Human Rights Act of
2012 and Additional Sanctions With Respect to Iran'' (``E.O. 13628'').
On July 30, 2012, the President, invoking the authority of, inter
alia, the International Emergency Economic Powers Act (50 U.S.C. 1701
et seq.) (``IEEPA''), issued E.O. 13622. The President issued E.O.
13622 to take additional steps with respect to the national emergency
declared in Executive Order 12957 of March 15, 1995 (``E.O. 12957''),
particularly in light of the Government of Iran's use of revenues from
petroleum, petroleum products, and petrochemicals for illicit purposes,
Iran's continued attempts to evade international sanctions through
deceptive practices, and the unacceptable risk posed to the
international financial system by Iran's activities.
Section 5 of E.O. 13622 blocks 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 any U.S. person, including any foreign branch, of any person
determined by the Secretary of the Treasury, in consultation with the
Secretary of State, to have materially assisted, sponsored, or provided
financial, material, or technological support for, or goods or services
in support of, the National Iranian Oil Company (``NIOC''), the
Naftiran Intertrade Company (``NICO''), or the Central Bank of Iran, or
the purchase or acquisition of U.S. bank notes or precious metals by
the Government of Iran. Section 10 of E.O. 13622 defines the terms NIOC
and NICO as including any entity owned or controlled by, or operating
for or on behalf of, respectively, NIOC and NICO.
Section 6 of E.O. 13622 provides that section 5(a) of the order,
among other specified provisions, shall not apply to any person for
conducting or facilitating a transaction involving a natural gas
development and pipeline project initiated prior to July 31, 2012, to
bring gas from Azerbaijan to Europe and Turkey, as described in section
6. Although it is not named in the section, section 6 refers to the
Shah Deniz natural gas field in Azerbaijan's sector of the Caspian Sea
and related pipeline projects to bring the gas from Azerbaijan to
Europe and Turkey.
On August 10, 2012, the President signed into law the TRA. Section
218 of the TRA directs the President to prohibit entities owned or
controlled by a United States person and established or maintained
outside the United States from knowingly engaging in any transaction
directly or indirectly with the Government of Iran or any person
subject to the jurisdiction of the Government of Iran that would be
prohibited by an order or regulation issued pursuant to IEEPA if the
transaction were engaged in by a United States person or in the United
States. Section 218 also extends civil penalty liability under IEEPA to
U.S. parent companies if the foreign entities they own or control
violate, attempt to violate, conspire to violate, or cause a violation
of any order or regulation issued to implement this section. The law
allows the U.S. person to avoid civil penalties for violations if it
divests or terminates its business with the foreign entity by February
6, 2013.
Sections 602 and 603 of the TRA provide that nothing in that law,
including section 218, shall apply to, respectively, the authorized
intelligence activities of the United States and any activity relating
to a project for the development of natural gas and the construction
and operation of a pipeline to transport natural gas from Azerbaijan to
Turkey and Europe that meets certain specified criteria. The project
that meets the criteria in section 603 is the project to develop the
Shah Deniz natural gas field in Azerbaijan's sector of the Caspian Sea
and related pipeline projects to bring the gas from Azerbaijan to
Europe and Turkey, as discussed above in connection with section 6 of
E.O. 13622. The exemption in section 603 will not apply in the event
that the President makes certain certifications to Congress to the
effect that an Iranian entity's share of the project has increased
relative to its share on January 1, 2002, or that an Iranian entity has
assumed an operational role in the project, as described in section
603(b) of the TRA.
On October 9, 2012, the President, invoking the authority of, inter
alia, IEEPA and the TRA, issued E.O. 13628, in order to take additional
steps to deal with the national emergency declared in E.O. 12957 with
respect to Iran. In implementation of section 218 of the TRA, section
4(a) of E.O. 13628 prohibits entities owned or controlled by a United
States person and established or maintained outside the United States
from knowingly engaging in any transactions, directly or indirectly,
with the Government of Iran or any person subject to the jurisdiction
of the Government of Iran, if the transactions would be prohibited by
E.O. 12957, Executive Order 12959 of May 6, 1995, Executive Order 13059
of August 19, 1997, E.O. 13599, section 5 of E.O. 13622, or section 12
of E.O. 13628, or any regulation issued pursuant to the foregoing, if
the transaction were engaged in by a United States person or in the
United States. Section 4(d) of E.O. 13628 provides that the prohibition
in section 4(a) applies except to the extent provided by statutes, or
in regulations, orders directives, or licenses that may be issued
pursuant to this order.
Section 4(b) of E.O. 13628 provides that penalties for violations
of the prohibition in section 4(a) may be assessed against the United
States person that owns or controls the foreign entity that engaged in
the prohibited transaction. Section 4(c) provides that such penalties
shall not apply if the United States person that owns or controls the
foreign entity divests or terminates its business with that entity not
later than February 6, 2013.
Today, OFAC is amending the ITSR to implement sections 5 and 6 of
E.O. 13622, sections 218, 602, and 603 of the TRA, and section 4 of
E.O. 13628. To implement the relevant provisions of E.O. 13622, OFAC is
amending paragraph (c) of section 560.211 of the ITSR to add the new
blocking criteria set forth in section 5(a) of the order, as well as
the exemption from this new authority for a natural gas development and
pipeline project described in section 6 of the order.
OFAC is making a number of changes to the ITSR to implement the
relevant provisions of the TRA and E.O. 13628. First, new section
560.215 is being added to subpart B of the ITSR to prohibit entities
owned or controlled by a United States person and established or
maintained outside the United States from knowingly engaging in any
[[Page 75847]]
transaction directly or indirectly with the Government of Iran or any
person subject to the jurisdiction of the Government of Iran that would
be prohibited by the ITSR if the transaction were engaged in by a
United States person or in the United States. This new section also
contains the exemptions set forth in sections 602 and 603 of the TRA
for, respectively, U.S. intelligence activities and a natural gas-
related project, as described above.
Second, new section 560.555 is being added to subpart E of the ITSR
to authorize, from October 9, 2012, through March 8, 2013, all
transactions ordinarily incident and necessary to the winding-down of
transactions prohibited by new section 560.215, provided that the
authorized transactions do not involve a U.S. person or occur in the
United States. Paragraph (b) of section 560.555 specifies that this new
general license does not authorize any transactions prohibited by
section 560.205. Paragraph (c) of section 560.555 provides that
transactions involving Iranian financial institutions are authorized
pursuant to this new general license only if the property and interests
in property of the Iranian financial institution are blocked solely
pursuant to this part.
Third, another general license, new section 560.556, is being added
to subpart E of the ITSR to authorize an entity owned or controlled by
a United States person and established or maintained outside the United
States (a ``U.S.-owned or -controlled foreign entity'') to engage in a
transaction otherwise prohibited by section 560.215 that would be
authorized by a general license set forth in or issued pursuant to this
part if engaged in by a U.S. person or in the United States. Paragraph
(b) of new section 560.556 provides that this section does not
authorize any transaction by a U.S.-owned or -controlled foreign entity
otherwise prohibited by section 560.215 if the transaction would be
prohibited by any other part of chapter V of 31 CFR if engaged in by a
U.S. person or in the United States.
Fourth, OFAC is amending several existing general licenses that, by
their terms, apply to transactions by U.S.-owned or -controlled foreign
entities to exclude from the scope of each authorization any
transaction by a U.S.-owned or -controlled foreign entity otherwise
prohibited by section 560.215 if the transaction would be prohibited by
any other part of chapter V of 31 CFR if engaged in by a U.S. person or
in the United States. This change is being made to sections 560.508,
560.509, 560.510, 560.522, 560.525, 560.530, 560.532, 560.539, and
560.553. OFAC is making further conforming changes to sections 560.532
and 560.539 to account for the new prohibition in section 560.215.
Fifth, OFAC is amending section 560.701 of subpart G of the ITSR by
adding new paragraph (a)(3), which provides for civil penalties under
section 206(b) of IEEPA (50 U.S.C. 1705(b)) to be imposed on a United
States person if an entity owned or controlled by the United States
person and established or maintained outside the United States
violates, attempts to violate, conspires to violate, or causes a
violation of the prohibition set forth in section 560.215, unless the
United States person divests or terminates its business with the entity
by February 6, 2013, such that the U.S. person no longer owns or
controls the entity, as defined in new section 560.215.
Finally, OFAC is making two technical corrections to section
560.505 of subpart E of the ITSR.
Public Participation
Because the amendment of the ITSR involves 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 ITSR 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 560
Administrative practice and procedure, Banks, Banking, Blocking of
Assets, Brokers, Credit, Foreign Trade, Investments, Loans, Securities,
Services, Iran.
For the reasons set forth in the preamble, the Department of the
Treasury's Office of Foreign Assets Control amends part 560 of 31 CFR
chapter V as follows:
PART 560--IRANIAN TRANSACTIONS AND SANCTIONS REGULATIONS
0
1. The authority citation for part 560 is revised to read as follows:
Authority: 3 U.S.C. 301; 18 U.S.C. 2339B, 2332d; 22 U.S.C.
2349aa-9; 22 U.S.C. 7201-7211; 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); Pub. L.
111-195, 124 Stat. 1312 (22 U.S.C. 8501-8551); Pub. L. 112-81, 125
Stat. 1298; Pub. L. 112-158, 126 Stat. 1214; E.O. 12613, 52 FR
41940, 3 CFR, 1987 Comp., p. 256; E.O. 12957, 60 FR 14615, 3 CFR,
1995 Comp., p. 332; E.O. 12959, 60 FR 24757, 3 CFR, 1995 Comp., p.
356; E.O. 13059, 62 FR 44531, 3 CFR, 1997 Comp., p. 217; E.O. 13599,
77 FR 6659, February 8, 2012; E.O. 13622, 77 FR 45897, August 2,
2012; E.O. 13628, 77 FR 62139, October 12, 2012.
Subpart B--Prohibitions
0
2. Amend Sec. 560.210 by revising paragraph (e) to read as follows:
Sec. 560.210 Exempt transactions.
* * * * *
(e) Official Business. The prohibitions in Sec. 560.211(a) through
(c)(1) do not apply to transactions for the conduct of the official
business of the Federal Government by employees, grantees, or
contractors thereof.
* * * * *
0
3. Amend Sec. 560.211 by revising paragraph (c) and Note 1 to
paragraphs (a) through (c) of Sec. 560.211 to read as follows:
Sec. 560.211 Prohibited transactions involving blocked property.
* * * * *
(c) 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 any United States
person, including any foreign branch, of the following persons are
blocked and may not be transferred, paid, exported, withdrawn, or
otherwise dealt in:
(1) Any person determined by the Secretary of the Treasury, in
consultation with the Secretary of State, to be owned or controlled by,
or to have acted or purported to act for or on behalf of, directly or
indirectly, any person whose property and interests in property are
blocked pursuant to paragraphs (a) through (c)(1) of this section; or
(2) Any person determined by the Secretary of the Treasury, in
consultation with the Secretary of State, to have materially assisted,
sponsored, or provided financial, material, or technological support
for, or goods or
[[Page 75848]]
services in support of, the National Iranian Oil Company (``NIOC'');
the Naftiran Intertrade Company (``NICO''); any entity owned or
controlled by, or operating for or on behalf of, NIOC or NICO; the
Central Bank of Iran; or the purchase or acquisition of U.S. bank notes
or precious metals by the Government of Iran. This paragraph shall not
apply with respect to any person for conducting or facilitating a
transaction that involves a natural gas development and pipeline
project initiated prior to July 31, 2012, to bring gas from Azerbaijan
to Europe and Turkey in furtherance of a production sharing agreement
or license awarded by a sovereign government other than the Government
of Iran before July 31, 2012.
Note to Paragraph (c)(2) of Sec. 560.211: The natural gas
development and pipeline project referred to in this paragraph is
the project to develop the Shah Deniz natural gas field in
Azerbaijan's sector of the Caspian Sea and related pipeline projects
to bring the gas from Azerbaijan to Europe and Turkey.
Note 1 to Paragraphs (a) Through (c) of Sec. 560.211: The names
of persons identified as already blocked or designated for blocking
pursuant to Executive Order 13599 of February 5, 2012, and Executive
Order 13622 of July 30, 2012, whose property and interests in
property therefore are blocked pursuant to this section, are
published in the Federal Register and incorporated into the Office
of Foreign Assets Control's Specially Designated Nationals and
Blocked Persons List (``SDN List'') with the identifier ``[IRAN].''
The SDN List is accessible through the following page on the Office
of Foreign Control's Web site: www.treasury.gov/sdn. Additional
information pertaining to the SDN List can be found in Appendix A to
this chapter. See Sec. 560.425 concerning entities that may not be
listed on the SDN List but whose property and interests in property
are nevertheless blocked pursuant to this section. Executive Order
13599 blocks the property and interests in property of the
Government of Iran and Iranian financial institutions, as defined in
Sec. 560.304 and Sec. 560.324, respectively. The property and
interests in property of persons falling within the definitions of
the terms Government of Iran and Iranian financial institution are
blocked pursuant to this section regardless of whether the names of
such persons are published in the Federal Register or incorporated
into the SDN List.
* * * * *
0
4. Add new section Sec. 560.215 to read as follows:
Sec. 560.215 Prohibitions on foreign entities owned or controlled by
U.S. persons.
(a) Except as otherwise authorized pursuant to this part, an entity
that is owned or controlled by a United States person and established
or maintained outside the United States is prohibited from knowingly
engaging in any transaction, directly or indirectly, with the
Government of Iran or any person subject to the jurisdiction of the
Government of Iran that would be prohibited pursuant to this part if
engaged in by a United States person or in the United States.
Note to Paragraph (a) of Sec. 560.215: If a transaction is
exempt from the prohibitions of this part if engaged in by a U.S.
person, it would not be prohibited for an entity that is owned or
controlled by a United States person and established or maintained
outside the United States (a ``U.S.-owned or -controlled foreign
entity'') to engage in the transaction to the same extent that it
would not be prohibited for the U.S. person to engage in the
transaction and provided that the U.S.-owned or -controlled foreign
entity satisfies all the requirements of the exemption. See also
Sec. 560.556 of this part for a general license authorizing a U.S.-
owned or -controlled foreign entity to engage in a transaction
otherwise prohibited by Sec. 560.215 that would be authorized by a
general license set forth in or issued pursuant to this part if
engaged in by a U.S. person or in the United States, subject to
certain exclusions. Finally, if a transaction prohibited by Sec.
560.215 is one for which a U.S. person might apply for a specific
license--for example, the exportation of medical devices to Iran--a
U.S.-owned or -controlled foreign entity may apply for a specific
license to engage in the transaction.
(b) Definitions: (1) For purposes of paragraph (a) of this section,
an entity is ``owned or controlled'' by a United States person if the
United States person:
(i) Holds a 50 percent or greater equity interest by vote or value
in the entity;
(ii) Holds a majority of seats on the board of directors of the
entity; or
(iii) Otherwise controls the actions, policies, or personnel
decisions of the entity.
(2) For purposes of paragraph (a) of this section, the term
knowingly means that the person engages in the transaction with actual
knowledge or reason to know.
(3) For purposes of paragraph (a) of this section, a person is
``subject to the jurisdiction of the Government of Iran'' if the person
is organized under the laws of Iran or any jurisdiction within Iran,
ordinarily resident in Iran, or in Iran, or owned or controlled by any
of the foregoing.
Note to Paragraph (b) of Sec. 560.215: See Sec. 560.304 of
this part for the definition of the term Government of Iran.
(c) The prohibition in paragraph (a) of this section does not apply
to any activity relating to a project:
(1) For the development of natural gas and the construction and
operation of a pipeline to transport natural gas from Azerbaijan to
Turkey and Europe;
(2) That provides to Turkey and countries in Europe energy security
and energy independence from the Government of the Russian Federation
and the Government of Iran; and
(3) That was initiated before August 10, 2012, pursuant to a
production-sharing agreement, or an ancillary agreement necessary to
further a production-sharing agreement, entered into with, or a license
granted by, the government of a country other than Iran before August
10, 2012.
Note to Paragraph (c) of Sec. 560.215: The exemption in
paragraph (c) of this section applies to the Shah Deniz natural gas
field in Azerbaijan's sector of the Caspian Sea and related pipeline
projects to bring the gas from Azerbaijan to Europe and Turkey.
(d) The prohibition in paragraph (a) of this section does not apply
to the authorized intelligence activities of the United States
Government.
Note to Sec. 560.215: A U.S. person is subject to the civil
penalties provided for in section 206(b) of the International
Emergency Economic Powers Act (``IEEPA'') (50 U.S.C. 1705(b)) if any
foreign entity that it owns or controls violates the prohibition set
forth in this section. See Sec. 560.701(a)(3) of this part for
civil penalties.
Subpart E--Licenses, Authorizations, and Statements of Licensing
Policy
0
5. Amend Sec. 560.505 by revising paragraph (a)(2) and the Note to
Sec. 560.505 to read as follows:
Sec. 560.505 Activities and services related to certain nonimmigrant
and immigrant categories authorized.
(a)(1) * * *
(2) U.S. persons are authorized to export services to Iran in
connection with the filing of an individual's application for the non-
immigrant visa categories listed in paragraph (a)(1) of this section.
* * * * *
Note to Sec. 560.505: See Sec. 560.554 of this part for
general licenses authorizing the importation and exportation of
services related to conferences in the United States or third
countries.
0
6. Amend Sec. 560.508 by redesignating paragraph (b) as paragraph (c)
and adding new paragraph (b) to read as follows:
Sec. 560.508 Telecommunications and mail transactions authorized.
* * * * *
(b) Paragraph (a) of this section does not authorize any
transaction by an entity owned or controlled by a United States person
and established or maintained outside the United States otherwise
prohibited by Sec. 560.215 if the
[[Page 75849]]
transaction would be prohibited by any other part of this chapter V if
engaged in by a U.S. person or in the United States.
* * * * *
0
7. Add new paragraph (c) to Sec. 560.509 to read as follows:
Sec. 560.509 Certain transactions related to patents, trademarks, and
copyrights authorized.
* * * * *
(c) This section does not authorize any transaction by an entity
owned or controlled by a United States person and established or
maintained outside the United States otherwise prohibited by Sec.
560.215 if the transaction would be prohibited by any other part of
this chapter V if engaged in by a U.S. person or in the United States.
0
8. Add new paragraph (e) to Sec. 560.510 to read as follows:
Sec. 560.510 Transactions related to the resolution of disputes
between the United States or United States nationals and the Government
of Iran.
* * * * *
(e) This section does not authorize any transaction by an entity
owned or controlled by a United States person and established or
maintained outside the United States otherwise prohibited by Sec.
560.215 if the transaction would be prohibited by any other part of
this chapter V if engaged in by a U.S. person or in the United States.
0
9. Amend Sec. 560.522 by redesignating the existing text as paragraph
(a) and adding new paragraph (b) to read as follows:
Sec. 560.522 Allowable payments for overflights of Iranian airspace.
* * * * *
(b) This section does not authorize any transaction by an entity
owned or controlled by a United States person and established or
maintained outside the United States otherwise prohibited by Sec.
560.215 if the transaction would be prohibited by any other part of
this chapter V if engaged in by a U.S. person or in the United States.
0
10. Add new paragraph (e) to Sec. 560.525 to read as follows:
Sec. 560.525 Provision of certain legal services.
* * * * *
(e) This section does not authorize any transaction by an entity
owned or controlled by a United States person and established or
maintained outside the United States otherwise prohibited by Sec.
560.215 if the transaction would be prohibited by any other part of
this chapter V if engaged in by a U.S. person or in the United States.
0
11. Add new paragraph (g) to Sec. 560.530 to read as follows:
Sec. 560.530 Commercial sales, exportation, and reexportation of
agricultural commodities, medicine, and medical devices.
* * * * *
(g) Excluded transactions by U.S.-owned or -controlled foreign
entities. Nothing in this section or in any general license set forth
in or issued pursuant to this section authorizes any transaction by an
entity owned or controlled by a United States person and established or
maintained outside the United States otherwise prohibited by Sec.
560.215 if the transaction would be prohibited by any other part of
this chapter V if engaged in by a U.S. person or in the United States.
0
12. Amend Sec. 560.532 by revising paragraphs (a)(3) and (a)(4) and
adding new paragraph (e) to read as follows:
Sec. 560.532 Payment for and financing of exports and reexports of
agricultural commodities, medicine, and medical devices.
(a) * * *
(3) Financing by third-country financial institutions that are not
United States persons, entities owned or controlled by United States
persons and established or maintained outside the United States,
Iranian financial institutions, or the Government of Iran. Such
financing may be confirmed or advised by U.S. financial institutions
and by financial institutions that are entities owned or controlled by
United States persons and established or maintained outside the United
States; or
(4) Letter of credit issued by an Iranian financial institution
whose property and interests in property are blocked solely pursuant to
this part. Such letter of credit must be initially advised, confirmed,
or otherwise dealt in by a third-country financial institution that is
not a United States person, an entity owned or controlled by a United
States person and established or maintained outside the United States,
an Iranian financial institution, or the Government of Iran before it
is advised, confirmed, or dealt in by a U.S. financial institution or a
financial institution that is an entity owned or controlled by a United
States person and established or maintained outside the United States.
* * * * *
(e) Nothing in this section authorizes any transaction by an entity
owned or controlled by a United States person and established or
maintained outside the United States otherwise prohibited by Sec.
560.215 if the transaction would be prohibited by any other part of
this chapter V if engaged in by a U.S. person or in the United States.
0
13. Amend Sec. 560.539 by revising paragraphs (a)(4), (a)(5), (b)(2),
and (b)(3) and adding new paragraph (b)(4) to read as follows:
Sec. 560.539 Official activities of certain international
organizations.
(a) * * *
(4) Funds transfers to or from accounts of the international
organizations covered in this section, provided that funds transfers to
or from Iran are not routed through an account of an Iranian bank on
the books of a U.S. financial institution or a financial institution
that is an entity owned or controlled by a United States person and
established or maintained outside the United States; and
(5) The operation of accounts for employees, contractors, and
grantees located in Iran of the international organizations covered in
this section. Transactions conducted through these accounts must be
solely for the employee's, contractor's, or grantee's personal use and
not for any commercial purposes in or involving Iran. Any funds
transfers to or from an Iranian bank must be routed through a third-
country bank that is not a United States person or an entity owned or
controlled by a United States person and established or maintained
outside the United States.
(b) * * *
(2) The reexportation to Iran of any U.S.-origin goods or
technology listed on the CCL;
(3) The exportation or reexportation from the United States or by a
U.S. person, wherever located, to Iran of any services not necessary
and ordinarily incident to the official business in Iran. Such
transactions require separate authorization from OFAC; or
(4) Any transaction by an entity owned or controlled by a United
States person and established or maintained outside the United States
otherwise prohibited by Sec. 560.215 if the transaction would be
prohibited by any other part of this chapter V if engaged in by a U.S.
person or in the United States.
* * * * *
0
14. Add new paragraph (d) to Sec. 560.553 to read as follows:
Sec. 560.553 Payments from funds originating outside the United
States authorized.
* * * * *
(d) Nothing in this section authorizes any transaction by an entity
owned or controlled by a United States person and established or
maintained outside
[[Page 75850]]
the United States otherwise prohibited by Sec. 560.215 if the
transaction would be prohibited by any other part of this chapter V if
engaged in by a U.S. person or in the United States.
* * * * *
0
15. Add new Sec. 560.555 to read as follows:
Sec. 560.555 Winding-down of transactions prohibited by Sec.
560.215.
(a) Except as set forth in paragraphs (b) and (c) of this section,
all transactions ordinarily incident and necessary to the winding-down
of transactions prohibited by Sec. 560.215 are authorized from October
9, 2012, through March 8, 2013, provided that those ordinarily incident
and necessary transactions do not involve a U.S. person or occur in the
United States.
(b) Nothing in this section authorizes any transactions prohibited
by Sec. 560.205.
(c) Transactions involving Iranian financial institutions are
authorized pursuant to paragraph (a) of this section only if the
property and interests in property of the Iranian financial institution
are blocked solely pursuant to this part.
0
16. Add new Sec. 560.556 to read as follows:
Sec. 560.556 Foreign entities owned or controlled by U.S. persons
authorized to engage in transactions that are authorized by general
license if engaged in by a U.S. person or in the United States.
(a) Except as set forth in paragraph (b) of this section, an entity
owned or controlled by a United States person and established or
maintained outside the United States (a ``U.S.-owned or -controlled
foreign entity'') is authorized to engage in a transaction otherwise
prohibited by Sec. 560.215 that would be authorized by a general
license set forth in or issued pursuant to this part if engaged in by a
U.S. person or in the United States, provided the U.S.-owned or -
controlled foreign entity is authorized to engage in the transaction
only to the same extent as the U.S. person is authorized to engage in
the transaction and subject to all the conditions and requirements set
forth in the general license for the U.S. person.
(b) This section does not authorize any transaction by a U.S.-owned
or -controlled foreign entity otherwise prohibited by Sec. 560.215 if
the transaction would be prohibited by any other part of this chapter V
if engaged in by a U.S. person or in the United States.
Subpart G--Civil Penalties
0
17. Amend Sec. 560.701 by adding new paragraph (a)(3) to read as
follows:
Sec. 560.701 Penalties.
(a) * * *
(3) As set forth in section 218 of the Iran Threat Reduction and
Syria Human Rights Act of 2012 (Pub. L. 112-158), a civil penalty not
to exceed the amount set forth in section 206 of IEEPA may be imposed
on a United States person if an entity owned or controlled by the
United States person and established or maintained outside the United
States violates, attempts to violate, conspires to violate, or causes a
violation of the prohibition set forth in Sec. 560.215 or of any
order, regulation, or license set forth in or issued pursuant to this
part concerning such prohibition. The penalties set forth in this
paragraph shall not apply with respect to a transaction described in
Sec. 560.215 by an entity owned or controlled by the United States
person and established or maintained outside the United States if the
United States person divests or terminates its business with the entity
not later than February 6, 2013, such that the U.S. person no longer
owns or controls the entity, as defined in Sec. 560.215(b)(1).
* * * * *
Dated: December 14, 2012.
Adam J. Szubin,
Director, Office of Foreign Assets Control.
[FR Doc. 2012-30680 Filed 12-21-12; 4:15 pm]
BILLING CODE P
