Cyber-Related Sanctions Regulations, 81752-81759 [2015-32881]
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Federal Register / Vol. 80, No. 251 / Thursday, December 31, 2015 / Rules and Regulations
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Shippers’ claim that oil pipeline index
increases exceed the CPI does not
support changes to the index because
Liquids Shippers have not demonstrated
that historic, industry-wide oil pipeline
cost changes have corresponded to the
CPI.92
49. Liquids Shippers’ arguments that
the Commission should change its
regulations governing indexing are
beyond the scope of this proceeding.
The June 2015 NOI sought comment
regarding two narrow issues, (a) the
proposed index level and (b) possible
changes to the Kahn Methodology used
to calculate the index level.93 Liquids
Shippers’ comments regarding the
Commission’s indexing policies,
committed shipper contracts,94 and
other issues are beyond the scope of this
limited inquiry.
50. Further, Liquids Shippers’
comments have not persuaded us to
reexamine the Commission-approved
indexing methodology.95 In general
terms, Liquids Shippers have not
substantiated their claims of unchecked
oil pipeline over-recoveries. For
example, of the 20 pipelines (out of
Liquids Shippers’ sample of 42) that
Liquids Shippers allege are overrecovering, evidence provided in this
proceeding indicates that 15 actually
under-recovered their cost-of-service in
one (and in many cases more) of the
years between 2009 and 2014.96
92 Similarly, Liquids Shippers’ comparison to
natural gas pipeline rate changes is misleading
because Liquids Shippers’ data only includes a
portion of natural gas pipelines (not all natural gas
pipelines) and does not include all rate changes
proposed by those pipelines. Shehadeh October
2015 Affidavit at 31. The underlying economic
premise of this analysis is also flawed. First, as Dr.
Shehadeh explains, the analogy to natural gas
pipelines depends upon a misunderstanding of
prices—as price levels, not price growth, are
determined by the level of competition in an
industry. Id. at 30. Second, Liquids Shippers do not
establish that the same market forces determining
natural gas pipeline prices apply to oil pipelines.
Id.
93 June 2015 NOI, 151 FERC ¶ 61,278 at P 1.
94 This five-year review addresses the calculation
of the industry-wide index-level. Negotiated
committed shipper contracts only incorporate
indexing when both the pipeline and the committed
shippers accept such terms. Any objections to these
negotiated provisions (including the application of
indexing) may be raised during the applicable
petition for declaratory order process.
95 The Commission’s indexing methodology was
affirmed on appeal following Order No. 561. AOPL
I, 281 F.3d 239. The dissents and other materials
from that proceeding cited by Liquids Shippers
were part of the record at that time. In addition,
Liquids Shippers cite a Congressional letter which
was written before the indexing regulations were
finalized, and does not accurately portray how
those regulations have been implemented. For
example, the letter implies that the index may only
increase rates, when, in fact, under Commission
regulations the index may require rates to go down.
See 18 CFR 342.3(e) (2015).
96 See Shehadeh September 2015 Affidavit at 32.
Further, the industry as a whole continues to show
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Furthermore, to the extent issues arise
on a particular pipeline, a shipper may
file complaints or protests against
indexed rate increases 97 or complaints
against an oil pipeline’s underlying base
rates. In addition to being beyond the
scope of the June 2015 NOI, Liquids
Shippers have not substantiated their
claims.98
F. Suncor’s Proposals
51. The Commission will not adopt
the various proposals advanced by
Suncor. The Commission’s adoption of
page 700 data addresses several of these
proposals, which were advanced as
alternatives should the Commission not
adopt page 700 data. In addition, the
Commission also will not adopt
Suncor’s proposed alternative
methodology to trim the data set based
upon anomalous years (as opposed to
trimming pipelines reporting anomalous
data) because the justification for this
proposal, including the use of broader
data set, was based upon the previously
used Form No. 6 accounting data, not
the page 700 data. Moreover, AOPL has
presented evidence that Suncor’s
proposal included significant
computational errors.99
spurious data, we trim the data set to
those pipelines in the middle 50 percent
of cost changes. Fourth, as shown in
Attachment A (Exhibit 15) we calculate
three measures of the middle 50
percent’s central tendency: The median,
the mean, and a weighted mean. Fifth,
we calculate a composite by taking a
simple average of those three measures
of central tendency, as shown in
Attachment A (Exhibit 1). Finally, this
composite is compared to the value of
the PPI–FG index data over the same
period. The index level is then set at
PPI–FG plus (or minus) this differential.
Using these calculations, the
Commission establishes an index level
of PPI–FG plus 1.23 percent (PPI–
FG+1.23) for the five-year period
commencing July 1, 2016.
The Commission Orders
Consistent with the discussion in this
order, the Commission determines that
the appropriate oil pricing index for the
next five years, July 1, 2016 through
June 30, 2021, is PPI–FG+1.23.
By the Commission.
Issued: December 17, 2015.
Nathaniel J. Davis, Sr.,
Deputy Secretary.
IV. 2016–2021 Oil Pipeline Index
[FR Doc. 2015–32701 Filed 12–30–15; 8:45 am]
52. Based on the foregoing, the
Commission calculates the five-year
review of the index level used to
determine annual changes to oil
pipeline rate ceilings for the five-year
period commencing July 1, 2016 as
follows. First, as shown in Attachment
A (Exhibit 13, Exhibit 14) we remove
those pipelines that did not provide
Form No. 6, page 700 data or provided
incomplete data. Second, as shown in
Attachment A (Exhibit 15) we look at
the data on Form No. 6, page 700 to
calculate each pipeline’s cost change on
a per barrel-mile basis over the prior
five-year period (e.g. the years 2009–
2014 in this proceeding). Third, in order
to remove statistical outliers and
BILLING CODE 6717–01–P
an under-recovery of the aggregate page 700 costof-service. Moreover, as has been recognized from
the inception of indexing, some pipelines costs will
exceed the rate increases allowed by indexing
whereas efficient pipelines may benefit from
controlling their costs. Order No. 561, FERC Stats.
& Regs. ¶ 30,985 at 30,948–49.
97 Liquids Shippers argue that pipelines with
page 700 revenues exceeding page 700 cost of
service should not receive index increases. To the
extent that index rate filings of particular pipelines
substantially exacerbate pre-existing overrecoveries, current Commission policies allow
shippers to file complaints against those index
increases. BP West Coast Products, LLC v. SFPP,
L.P., 121 FERC ¶ 61,141 (2007).
98 Remaining issues regarding the Commission’s
regulatory policies may be raised in an adjudicatory
context or another, more appropriate forum.
99 Shehadeh September 2015 Affidavit at 38.
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DEPARTMENT OF THE TREASURY
Office of Foreign Assets Control
31 CFR Part 578
Cyber-Related 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 issuing regulations to
implement Executive Order 13694 of
April 1, 2015 (‘‘Blocking the Property of
Certain Persons Engaging in Significant
Malicious Cyber-Enabled Activities’’).
OFAC intends to supplement this part
578 with a more comprehensive set of
regulations, which may include
additional interpretive and definitional
guidance and additional general
licenses and statements of licensing
policy.
SUMMARY:
Effective: December 31, 2015.
The
Department of the Treasury’s Office of
Foreign Assets Control: Assistant
Director for Licensing, tel.: 202–622–
2480, Assistant Director for Regulatory
Affairs, tel.: 202–622–4855, Assistant
DATES:
FOR FURTHER INFORMATION CONTACT:
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Director for Sanctions Compliance &
Evaluation, tel.: 202–622–2490; or the
Department of the Treasury’s Office of
the Chief Counsel (Foreign Assets
Control), Office of the General Counsel,
tel.: 202–622–2410.
SUPPLEMENTARY INFORMATION:
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.
Electronic and Facsimile Availability
This document and additional
information concerning OFAC are
available from OFAC’s Web site
(www.treasury.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.
List of Subjects in 31 CFR Part 578
Administrative practice and
procedure, Banking, Banks, Blocking of
assets, Brokers, Credit, Critical
infrastructure, Cyber, Cybersecurity,
Foreign trade, Investments, Loans,
Securities, Services, Trade secrets.
For the reasons set forth in the
preamble, the Department of the
Treasury’s Office of Foreign Assets
Control adds part 578 to 31 CFR chapter
V to read as follows:
Background
On April 1, 2015, the President issued
Executive Order 13694 (80 FR 18077,
April 2, 2015) (E.O. 13694), invoking the
authority of, inter alia, the International
Emergency Economic Powers Act (50
U.S.C. 1701–1706). OFAC is issuing the
Cyber-Related Sanctions Regulations, 31
CFR part 578 (the ‘‘Regulations’’), to
implement E.O. 13694, pursuant to
authorities delegated to the Secretary of
the Treasury in E.O. 13694. A copy of
E.O. 13694 appears in Appendix A to
this part.
The Regulations are being published
in abbreviated form at this time for the
purpose of providing immediate
guidance to the public. OFAC intends to
supplement this part 578 with a more
comprehensive set of regulations, which
may include additional interpretive and
definitional guidance, including
regarding ‘‘cyber-enabled’’ activities,
and additional general licenses and
statements of licensing policy. The
appendix to the Regulations will be
removed when OFAC supplements this
part with a more comprehensive set of
regulations.
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Public Participation
Because the Regulations involve a
foreign affairs function, the provisions
of Executive Order 12866 and the
Administrative Procedure Act (5 U.S.C.
553) requiring notice of proposed
rulemaking, opportunity for public
participation, and delay in effective date
are inapplicable. Because no notice of
proposed rulemaking is required for this
rule, the Regulatory Flexibility Act (5
U.S.C. 601–612) does not apply.
Paperwork Reduction Act
The collections of information related
to the Regulations are contained in 31
CFR part 501 (the ‘‘Reporting,
Procedures and Penalties Regulations’’).
Pursuant to the Paperwork Reduction
Act of 1995 (44 U.S.C. 3507), those
collections of information have been
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PART 578—CYBER-RELATED
SANCTIONS REGULATIONS
Subpart A—Relation of This Part to Other
Laws and Regulations
Sec.
578.101 Relation of this part to other laws
and regulations.
Subpart B—Prohibitions
578.201 Prohibited transactions.
578.202 Effect of transfers violating the
provisions of this part.
578.203 Holding of funds in interestbearing accounts; investment and
reinvestment.
578.204 Expenses of maintaining blocked
property; liquidation of blocked
property.
Subpart C—General Definitions
578.300 Applicability of definitions.
578.301 Blocked account; blocked property.
578.302 Effective date.
578.303 Entity.
578.304 Financial, material, or
technological support.
578.305 Interest.
578.306 Licenses; general and specific.
578.307 OFAC.
578.308 Person.
578.309 Property; property interest.
578.310 Transfer.
578.311 United States.
578.312 United States person; U.S. person.
578.313 U.S. financial institution.
Subpart D—Interpretations
578.401 [Reserved]
578.402 Effect of amendment.
578.403 Termination and acquisition of an
interest in blocked property.
578.404 Transactions ordinarily incident to
a licensed transaction.
578.405 Setoffs prohibited.
578.406 Entities owned by persons whose
property and interests in property are
blocked.
Subpart E—Licenses, Authorizations, and
Statements of Licensing Policy
578.501 General and specific licensing
procedures.
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578.502 [Reserved]
578.503 Exclusion from licenses.
578.504 Payments and transfers to blocked
accounts in U.S. financial institutions.
578.505 Entries in certain accounts for
normal service charges authorized.
578.506 Provision of certain legal services
authorized.
578.507 Payments for legal services from
funds originating outside the United
States authorized.
578.508 Authorization of emergency
medical services.
Subparts F–G—[Reserved]
Subpart H—Procedures
578.801 [Reserved]
578.802 Delegation by the Secretary of the
Treasury.
Subpart I—Paperwork Reduction Act
578.901 Paperwork Reduction Act notice.
Appendix A to Part 578—Executive Order
13694
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. 13694, 80 FR 18077, April
2, 2015.
Subpart A—Relation of This Part to
Other Laws and Regulations
§ 578.101 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.
Note to § 578.101: This part has been
published in abbreviated form for the
purpose of providing immediate guidance to
the public. OFAC intends to supplement this
part with a more comprehensive set of
regulations, which may include additional
interpretive and definitional guidance,
including regarding ‘‘cyber-enabled’’
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activities, and additional general licenses and
statements of licensing policy.
Subpart B—Prohibitions
§ 578.201
Prohibited transactions.
All transactions prohibited pursuant
to Executive Order 13694 of April 1,
2015, are also prohibited pursuant to
this part.
Note 1 to § 578.201: The names of persons
designated pursuant to Executive Order
13694, whose property and interests in
property therefore are blocked pursuant to
this section, are published in the Federal
Register and incorporated into OFAC’s
Specially Designated Nationals and Blocked
Persons List (SDN List) with the identifier
‘‘[CYBER].’’ The SDN List is accessible
through the following page on OFAC’s Web
site: www.treasury.gov/sdn. Additional
information pertaining to the SDN List can be
found in Appendix A to this chapter. See
§ 578.406 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.
Note 2 to § 578.201: The International
Emergency Economic Powers Act (50 U.S.C.
1701–1706), 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 this section also are published in
the Federal Register and incorporated into
the SDN List with the identifier ‘‘[BPI–
CYBER]’’.
Note 3 to § 578.201: 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 this section.
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§ 578.202 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 § 578.201,
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 interest.
(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
§ 578.201, unless the person who holds
or maintains such property, prior to that
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date, had written notice of the transfer
or by any written evidence had
recognized such transfer.
(c) Unless otherwise provided, a
license or other authorization issued by
OFAC 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 OFAC
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 OFAC 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 OFAC; or
(iii) If a license did purport to cover
the transfer, such license had been
obtained by misrepresentation of a third
party or withholding of material facts or
was otherwise fraudulently obtained.
Note to paragraph (d): 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 (2) of this section have
been satisfied.
(e) Unless licensed pursuant to this
part, any attachment, judgment, decree,
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lien, execution, garnishment, or other
judicial process is null and void with
respect to any property and interests in
property blocked pursuant to § 578.201.
§ 578.203 Holding of funds in interestbearing accounts; investment and
reinvestment.
(a) Except as provided in paragraphs
(e) or (f) of this section, or as otherwise
directed by OFAC, any U.S. person
holding funds, such as currency, bank
deposits, or liquidated financial
obligations, subject to § 578.201 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
§ 578.201 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
§ 578.201 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
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securities, to sell or liquidate such
property. However, OFAC 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 § 578.201, nor may their
holder cooperate in or facilitate the
pledging or other attempted use as
collateral of blocked funds or other
assets.
§ 578.204 Expenses of maintaining
blocked property; liquidation of blocked
property.
Subpart C—General Definitions
Applicability of definitions.
The definitions in this subpart apply
throughout the entire part.
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§ 578.301
property.
The terms blocked account and
blocked property shall mean any
account or property subject to the
prohibitions in § 578.201 held in the
name of a person whose property and
interests in property are blocked
pursuant to § 578.201, 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 a license or other
authorization from OFAC expressly
authorizing such action.
Note to § 578.301: See § 578.406
concerning the blocked status of property
and interests in property of an entity that is
50 percent or more owned by persons whose
property and interests in property are
blocked pursuant to § 578.201.
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§ 578.303
The term financial, material, or
technological support, as used in
Executive Order 13694 of April 1, 2015,
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.
Interest.
Except as otherwise provided in this
part, the term interest, when used with
respect to property (e.g., ‘‘an interest in
property’’), means an interest of any
nature whatsoever, direct or indirect.
§ 578.306
Licenses; general and specific.
(a) Except as otherwise provided in
this part, 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 or made available on OFAC’s Web
site: www.treasury.gov/ofac.
(c) The term specific license means
any license or authorization issued
pursuant to this part but not set forth in
subpart E of this part or made available
on OFAC’s Web site: www.treasury.gov/
ofac.
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Note to § 578.306: See § 501.801 of this
chapter on licensing procedures.
§ 578.307
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OFAC.
The term OFAC means the
Department of the Treasury’s Office of
Foreign Assets Control.
§ 578.308
Person.
The term person means an individual
or entity.
§ 578.309
Entity.
The term entity means a partnership,
association, trust, joint venture,
corporation, group, subgroup, or other
organization.
§ 578.305
Blocked account; blocked
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Effective date.
The term effective date refers to the
effective date of the applicable
prohibitions and directives contained in
this part, and, with respect to a person
whose property and interests in
property are blocked pursuant to
§ 578.201, is the earlier of the date of
actual or constructive notice that such
person’s property and interests in
property are blocked.
§ 578.304 Financial, material, or
technological support.
(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 § 578.201 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
§ 578.201 may, in the discretion of
OFAC, be sold or liquidated and the net
proceeds placed in a blocked interestbearing account in the name of the
owner of the property.
§ 578.300
§ 578.302
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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.
§ 578.310
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
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any agent, trustee, or fiduciary; the
creation or transfer of any lien; the
issuance, docketing, or filing of, 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.
§ 578.311
United States.
The term United States means the
United States, its territories and
possessions, and all areas under the
jurisdiction or authority thereof.
§ 578.312
person.
United States person; U.S.
The term United States person or U.S.
person means any United States citizen,
permanent resident alien, entity
organized under the laws of the United
States or any jurisdiction within the
United States (including foreign
branches), or any person in the United
States.
§ 578.313
U.S. financial institution.
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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
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.
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
OFAC 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.
§ 578.403 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 whose property and
interests in property are blocked
pursuant to § 578.201, such property
shall no longer be deemed to be
property blocked pursuant to § 578.201,
unless there exists in the property
another interest that is blocked pursuant
to § 578.201, the transfer of which has
not been effected pursuant to license or
other authorization.
(b) Unless otherwise specifically
provided in a license or other
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 § 578.201, such
property shall be deemed to be property
in which such a person has an interest
and therefore blocked.
§ 578.404 Transactions ordinarily incident
to a licensed transaction.
Any transaction ordinarily incident to
a licensed transaction and necessary to
give effect thereto is also authorized,
except:
(a) An ordinarily incident transaction,
not explicitly authorized within the
terms of the license, by or with a person
whose property and interests in
property are blocked pursuant to
§ 578.201; or
(b) An ordinarily incident transaction,
not explicitly authorized within the
terms of the license, involving a debit to
a blocked account or a transfer of
blocked property.
Subpart D—Interpretations
§ 578.405
§ 578.401
[Reserved]
§ 578.402
Effect of amendment.
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 § 578.201 if
effected after the effective date.
Unless otherwise specifically
provided, any amendment,
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§ 578.406 Entities owned by persons
whose property and interests in property
are blocked.
Persons whose property and interests
in property are blocked pursuant to
§ 578.201 have an interest in all
property and interests in property of an
entity in which such blocked persons
own, whether individually or in the
aggregate, 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 § 578.201, regardless of
whether the name of the entity is
incorporated into OFAC’s Specially
Designated Nationals and Blocked
Persons List (SDN List).
Subpart E—Licenses, Authorizations,
and Statements of Licensing Policy
§ 578.501 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. General licenses
and statements of licensing policy
relating to this part also may be
available through the Cyber-Related
sanctions page on OFAC’s Web site:
www.treasury.gov/ofac.
§ 578.502
[Reserved]
§ 578.503
Exclusion from licenses.
OFAC 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. OFAC 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.
§ 578.504 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 § 578.201 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
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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 § 578.504: See § 501.603 of this
chapter for mandatory reporting
requirements regarding financial transfers.
See also § 578.203 concerning the obligation
to hold blocked funds in interest-bearing
accounts.
§ 578.505 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.
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§ 578.506 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
§ 578.201 or any further Executive
orders relating to the national
emergency declared in Executive Order
13694 of April 1, 2015, is authorized,
provided that receipt of payment of
professional fees and reimbursement of
incurred expenses must be specifically
licensed, authorized pursuant to
§ 578.507, which authorizes certain
payments for legal services from funds
originating outside the United States, or
otherwise authorized pursuant to this
part:
(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 legal, arbitration, or
administrative proceedings before any
U.S. federal, state, or local court or
agency;
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(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 of any other legal
services to persons whose property and
interests in property are blocked
pursuant to § 578.201 or any further
Executive orders relating to the national
emergency declared in Executive Order
13694 of April 1, 2015, not otherwise
authorized in this part, requires the
issuance of a specific license.
(c) Entry into a settlement agreement
or the enforcement of any lien,
judgment, arbitral award, decree, or
other order through execution,
garnishment, or other judicial process
purporting to transfer or otherwise alter
or affect property or interests in
property blocked pursuant to § 578.201
or any further Executive orders relating
to the national emergency declared in
Executive Order 13694 of April 1, 2015,
is prohibited unless licensed pursuant
to this part.
Note to § 578.506: U.S. persons seeking
administrative reconsideration or judicial
review of their designation or the blocking of
their property and interests in property may
apply for a specific license from OFAC to
authorize the release of a limited amount of
blocked funds for the payment of legal fees
where alternative funding sources are not
available. For more information, see OFAC’s
Guidance on the Release of Limited Amounts
of Blocked Funds for Payment of Legal Fees
and Costs Incurred in Challenging the
Blocking of U.S. Persons in Administrative or
Civil Proceedings, which is available on
OFAC’s Web site: www.treasury.gov/ofac.
§ 578.507 Payments for legal services from
funds originating outside the United States
authorized.
(a) Receipts of payment of
professional fees and reimbursement of
incurred expenses for the provision of
legal services authorized pursuant to
§ 578.506(a) to or on behalf of any
person whose property and interests in
property are blocked pursuant to
§ 578.201 or any further Executive
orders relating to the national
emergency declared in Executive Order
13694, of April 1, 2015, are authorized
from funds originating outside the
United States, provided that the funds
received by U.S. persons as payment of
professional fees and reimbursement of
incurred expenses for the provision of
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81757
legal services authorized pursuant to
§ 578.506(a) do not originate from:
(1) A source within the United States;
(2) Any source, wherever located,
within the possession or control of a
U.S. person; or
(3) Any individual or entity, other
than the person on whose behalf the
legal services authorized pursuant to
§ 578.506(a) are to be provided, whose
property and interests in property are
blocked pursuant to any part of this
chapter or any Executive order.
Note to paragraph (a) of § 578.507: This
paragraph authorizes the blocked person on
whose behalf the legal services authorized
pursuant to § 578.506(a) are to be provided to
make payments for authorized legal services
using funds originating outside the United
States that were not previously blocked.
Nothing in this paragraph authorizes
payments for legal services using funds in
which any other person whose property and
interests in property are blocked pursuant to
§ 578.201, any other part of this chapter, or
any Executive order has an interest.
(b) Reports. (1) U.S. persons who
receive payments in connection with
legal services authorized pursuant to
§ 578.506(a) must submit annual reports
no later than 30 days following the end
of the calendar year during which the
payments were received providing
information on the funds received. Such
reports shall specify:
(i) The individual or entity from
whom the funds originated and the
amount of funds received; and
(ii) If applicable:
(A) The names of any individuals or
entities providing related services to the
U.S. person receiving payment in
connection with authorized legal
services, such as private investigators or
expert witnesses;
(B) A general description of the
services provided; and
(C) The amount of funds paid in
connection with such services.
(2) The reports, which must reference
this section, are to be mailed to:
Licensing Division, Office of Foreign
Assets Control, U.S. Department of the
Treasury, 1500 Pennsylvania Avenue
NW., Annex, Washington, DC 20220.
Note to § 578.507: U.S. persons who
receive payments in connection with legal
services authorized pursuant to § 578.506(a)
do not need to obtain specific authorization
to contract for related services that are
ordinarily incident to the provision of those
legal services, such as those provided by
private investigators or expert witnesses, or
to pay for such services. Additionally, U.S.
persons do not need to obtain specific
authorization to provide related services that
are ordinarily incident to the provision of
legal services authorized pursuant to
§ 578.506(a).
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§ 578.508 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 § 578.201 or any further
Executive orders relating to the national
emergency declared in Executive Order
13694 of April 1, 2015 and all receipt
of payment for such services are
authorized.
Subparts F–G—[Reserved]
Subpart H—Procedures
§ 578.801
[Reserved]
§ 578.802 Delegation by the Secretary of
the Treasury.
Any action that the Secretary of the
Treasury is authorized to take pursuant
to Executive Order 13694 of April 1,
2015, and any further Executive orders
relating to the national emergency
declared therein, may be taken by the
Director of OFAC or by any other person
to whom the Secretary of the Treasury
has delegated authority so to act.
Subpart I—Paperwork Reduction Act
§ 578.901
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 § 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.
Appendix A to Part 578—Executive
Order 13694
Executive Order 13694 of April 1, 2015
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Blocking the Property of Certain
Persons Engaging in Significant
Malicious Cyber-Enabled Activities
By the authority vested in me as President
by the Constitution and the laws of the
United States of America, including the
International Emergency Economic Powers
Act (50 U.S.C. 1701 et seq.) (IEEPA), the
National Emergencies Act (50 U.S.C. 1601 et
seq.) (NEA), section 212(f) of the Immigration
and Nationality Act of 1952 (8 U.S.C.
1182(f)), and section 301 of title 3, United
States Code,
I, BARACK OBAMA, President of the
United States of America, find that the
increasing prevalence and severity of
malicious cyber-enabled activities originating
from, or directed by persons located, in
whole or in substantial part, outside the
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United States constitute an unusual and
extraordinary threat to the national security,
foreign policy, and economy of the United
States. I hereby declare a national emergency
to deal with this threat.
Accordingly, I hereby order:
Section 1. (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 any United States
person of the following persons are blocked
and may not be transferred, paid, exported,
withdrawn, or otherwise dealt in:
(i) any person determined by the Secretary
of the Treasury, in consultation with the
Attorney General and the Secretary of State,
to be responsible for or complicit in, or to
have engaged in, directly or indirectly, cyberenabled activities originating from, or
directed by persons located, in whole or in
substantial part, outside the United States
that are reasonably likely to result in, or have
materially contributed to, a significant threat
to the national security, foreign policy, or
economic health or financial stability of the
United States and that have the purpose or
effect of:
(A) harming, or otherwise significantly
compromising the provision of services by, a
computer or network of computers that
support one or more entities in a critical
infrastructure sector;
(B) significantly compromising the
provision of services by one or more entities
in a critical infrastructure sector;
(C) causing a significant disruption to the
availability of a computer or network of
computers; or
(D) causing a significant misappropriation
of funds or economic resources, trade secrets,
personal identifiers, or financial information
for commercial or competitive advantage or
private financial gain; or
(ii) any person determined by the Secretary
of the Treasury, in consultation with the
Attorney General and the Secretary of State:
(A) to be responsible for or complicit in, or
to have engaged in, the receipt or use for
commercial or competitive advantage or
private financial gain, or by a commercial
entity, outside the United States of trade
secrets misappropriated through cyberenabled means, knowing they have been
misappropriated, where the misappropriation
of such trade secrets is reasonably likely to
result in, or has materially contributed to, a
significant threat to the national security,
foreign policy, or economic health or
financial stability of the United States;
(B) to have materially assisted, sponsored,
or provided financial, material, or
technological support for, or goods or
services in support of, any activity described
in subsections (a)(i) or (a)(ii)(A) of this
section or any person whose property and
interests in property are blocked pursuant to
this order;
(C) 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 this order; or
(D) to have attempted to engage in any of
the activities described in subsections (a)(i)
and (a)(ii)(A)–(C) of this section.
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(b) The prohibitions in subsection (a) of
this section apply except to the extent
provided by statutes, or in regulations,
orders, directives, or licenses that may be
issued pursuant to this order, and
notwithstanding any contract entered into or
any license or permit granted prior to the
effective date of this order.
Sec. 2. I hereby determine that the making
of donations of the type of articles specified
in section 203(b)(2) of IEEPA (50 U.S.C.
1702(b)(2)) by, to, or for the benefit of any
person whose property and interests in
property are blocked pursuant to section 1 of
this order would seriously impair my ability
to deal with the national emergency declared
in this order, and I hereby prohibit such
donations as provided by section 1 of this
order.
Sec. 3. The prohibitions in section 1 of this
order include but are not limited to:
(a) 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 this order; and
(b) the receipt of any contribution or
provision of funds, goods, or services from
any such person.
Sec. 4. I hereby find that the unrestricted
immigrant and nonimmigrant entry into the
United States of aliens determined to meet
one or more of the criteria in section 1(a) of
this order would be detrimental to the
interests of the United States, and I hereby
suspend entry into the United States, as
immigrants or nonimmigrants, of such
persons. Such persons shall be treated as
persons covered by section 1 of Proclamation
8693 of July 24, 2011 (Suspension of Entry
of Aliens Subject to United Nations Security
Council Travel Bans and International
Emergency Economic Powers Act Sanctions).
Sec. 5. (a) Any transaction that evades or
avoids, has the purpose of evading or
avoiding, causes a violation of, or attempts to
violate any of the prohibitions set forth in
this order is prohibited.
(b) Any conspiracy formed to violate any
of the prohibitions set forth in this order is
prohibited.
Sec. 6. For the purposes of this order:
(a) the term ‘‘person’’ means an individual
or entity;
(b) the term ‘‘entity’’ means a partnership,
association, trust, joint venture, corporation,
group, subgroup, or other organization;
(c) the term ‘‘United States 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;
(d) the term ‘‘critical infrastructure sector’’
means any of the designated critical
infrastructure sectors identified in
Presidential Policy Directive 21; and
(e) the term ‘‘misappropriation’’ includes
any taking or obtaining by improper means,
without permission or consent, or under false
pretenses.
Sec. 7. For those persons whose property
and interests in property are blocked
pursuant to this order who might have a
constitutional presence in the United States,
I find that because of the ability to transfer
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funds or other assets instantaneously, prior
notice to such persons of measures to be
taken pursuant to this order would render
those measures ineffectual. I therefore
determine that for these measures to be
effective in addressing the national
emergency declared in this order, there need
be no prior notice of a listing or
determination made pursuant to section 1 of
this order.
Sec. 8. The Secretary of the Treasury, in
consultation with the Attorney General and
the Secretary of State, is hereby authorized to
take such actions, including the
promulgation of rules and regulations, and to
employ all powers granted to the President
by IEEPA as may be necessary to carry out
the purposes of this order. The Secretary of
the Treasury may redelegate any of these
functions to other officers and agencies of the
United States Government consistent with
applicable law. All agencies of the United
States Government are hereby directed to
take all appropriate measures within their
authority to carry out the provisions of this
order.
Sec. 9. The Secretary of the Treasury, in
consultation with the Attorney General and
the Secretary of State, is hereby authorized to
submit the recurring and final reports to the
Congress on the national emergency declared
in this order, consistent with section 401(c)
of the NEA (50 U.S.C. 1641(c)) and section
204(c) of IEEPA (50 U.S.C. 1703(c)).
Sec. 10. This order is not intended to, and
does not, create any right or benefit,
substantive or procedural, enforceable at law
or in equity by any party against the United
States, its departments, agencies, or entities,
its officers, employees, or agents, or any other
person.
Barack Obama
THE WHITE HOUSE,
April 1, 2015
Dated: December 11, 2015.
John E. Smith,
Acting Director, Office of Foreign Assets
Control.
Approved:
Dated: December 16, 2015.
Adam J. Szubin,
Acting Under Secretary, Office of Terrorism
and Financial Intelligence, Department of the
Treasury.
[FR Doc. 2015–32881 Filed 12–30–15; 8:45 am]
BILLING CODE P
DEPARTMENT OF DEFENSE
Office of the Secretary
32 CFR Part 217
[Docket ID: DOD–2007–OS–0001]
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RIN 0790–AI19
Service Academies
Office of the Under Secretary of
Defense for Personnel and Readiness,
DoD.
ACTION: Final rule.
AGENCY:
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This rule establishes policy,
assigns responsibilities, and prescribes
procedures for DoD oversight of the
Service academies (referred to in this
rule as ‘‘the academies’’). It implements
the United States Code for the
establishment and operation of the
United States Military Academy, the
United States Naval Academy, and the
United States Air Force Academy.
DATES: Effective Date: This rule is
effective December 31, 2015.
FOR FURTHER INFORMATION CONTACT: Lt.
Col. Keithen Washington, 703 695–
5529.
SUMMARY:
SUPPLEMENTARY INFORMATION:
Executive Summary
I. Purpose of the Regulatory Action
a. Purpose. This rule provides
required updates to DoD policy and
procedures because some policy
changes and court decisions have had a
great impact on the eligibility of
potential applicants’ entry into a
military academy. All language
addressing homosexuality, homosexual
acts, homosexual statements and
homosexual marriage has been removed
in accordance with the December 22,
2010 repeal of Don’t Ask, Don’t Tell
policy, which opened military service to
homosexuals, and the subsequent
United States v. Windsor decision (570
U.S. 12, 133 S. Ct. 2675 (2013), 1 U.S.C.
7; 28 U.S.C. 1738c) which found section
3 of the Defense of Marriage Act
(DOMA) unconstitutional. By removing
all references to homosexual conduct,
acts or marriage as grounds for
discharge, otherwise qualified
applicants are now free to apply and
enroll in a military academy without
prejudice or fear of reprisal regardless of
their sexual orientation. This rule is
required immediately to remove any
legal and policy restrictions which
would prevent a potential applicant
from entry into a military academy
based solely on their sexual orientation.
Additionally, the academies must
attract, recruit and retain high achieving
citizens who are pursuing
undergraduate degrees critical to the
DoD’s national security mission. A
highly qualified and diverse pool of
citizens is needed to replenish and
fortify DoD’s workforce. The academies
finance higher education and provide
opportunities to individuals who may
not otherwise have the means nor the
opportunity to pursue. Furthermore,
because the Military Services provide
critical national security, providing
them with a skilled and talented
workforce is vitally necessary to defend
the United States. Updating these
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policies and procedures is vital to the
DoD meeting its mission to man an allvolunteer force with qualified citizens.
b. Succinct statement of legal
authority for the regulatory action.
Authority: 10 U.S.C. Chapters 403, 603,
and 903.
II. Summary of the Major Provisions of
the Regulatory Action
The academies annually provide
newly commissioned officers to each
Service who have been immersed in the
history, traditions, and professional
values of the Military Services and
developed to be leaders of character,
dedicated to a career of professional
excellence in service to the Nation. The
accession of these officers generates a
core group of innovative leaders capable
of thinking critically who will exert
positive peer influence to convey and
sustain these traditions, attitudes,
values, and beliefs essential to the longterm readiness and success of the
Military Services.
III. Costs and Benefits
Administrative costs are negligible
and the benefits would be clear, concise
rules that enable the Secretary of
Defense to ensure that the Service
Academies operate efficiently and meet
the needs of the armed forces.
Retrospective Review
This rule is part of DoD’s
retrospective plan, completed in August
2011, under Executive Order 13563,
‘‘Improving Regulation and Regulatory
Review,’’ DoD’s full plan and updates
can be accessed at: https://
www.regulations.gov/#!docketDetail;
dct=FR+PR+N+O+SR;rpp=10;po=
0;D=DOD-2011-OS-0036.
Public Comment
Notice and comment are not required
for this rule under the Administrative
Procedure Act because, as the rule
establishes policy, assigns
responsibility, and prescribes
procedures for DoD oversight of the
academies, it directly relates to a
military function of the United States
(See 5 U.S.C. 553(a)(1)). However, DoD
previously published a proposed rule on
October 18, 2007 (72 FR 59053–59064),
but that version was never finalized.
One public comment was received that
was provided as a means for
improvement.
Comment: The comment received
concerned the protocol requiring that all
new cadets and midshipmen to undergo
Human Immunodeficiency Virus (HIV),
drug, and alcohol testing within 72
hours of reception, and the requirement
that any appointment as a cadet or
E:\FR\FM\31DER1.SGM
31DER1
]]>Agencies
[Federal Register Volume 80, Number 251 (Thursday, December 31, 2015)]
[Rules and Regulations]
[Pages 81752-81759]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-32881]
=======================================================================
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DEPARTMENT OF THE TREASURY
Office of Foreign Assets Control
31 CFR Part 578
Cyber-Related 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 issuing regulations to implement Executive Order
13694 of April 1, 2015 (``Blocking the Property of Certain Persons
Engaging in Significant Malicious Cyber-Enabled Activities''). OFAC
intends to supplement this part 578 with a more comprehensive set of
regulations, which may include additional interpretive and definitional
guidance and additional general licenses and statements of licensing
policy.
DATES: Effective: December 31, 2015.
FOR FURTHER INFORMATION CONTACT: The Department of the Treasury's
Office of Foreign Assets Control: Assistant Director for Licensing,
tel.: 202-622-2480, Assistant Director for Regulatory Affairs, tel.:
202-622-4855, Assistant
[[Page 81753]]
Director for Sanctions Compliance & Evaluation, tel.: 202-622-2490; or
the Department of the Treasury's Office of the Chief Counsel (Foreign
Assets Control), Office of the General Counsel, tel.: 202-622-2410.
SUPPLEMENTARY INFORMATION:
Electronic and Facsimile Availability
This document and additional information concerning OFAC are
available from OFAC's Web site (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 April 1, 2015, the President issued Executive Order 13694 (80 FR
18077, April 2, 2015) (E.O. 13694), invoking the authority of, inter
alia, the International Emergency Economic Powers Act (50 U.S.C. 1701-
1706). OFAC is issuing the Cyber-Related Sanctions Regulations, 31 CFR
part 578 (the ``Regulations''), to implement E.O. 13694, pursuant to
authorities delegated to the Secretary of the Treasury in E.O. 13694. A
copy of E.O. 13694 appears in Appendix A to this part.
The Regulations are being published in abbreviated form at this
time for the purpose of providing immediate guidance to the public.
OFAC intends to supplement this part 578 with a more comprehensive set
of regulations, which may include additional interpretive and
definitional guidance, including regarding ``cyber-enabled''
activities, and additional general licenses and statements of licensing
policy. The appendix to the Regulations will be removed when OFAC
supplements this part with a more comprehensive set of regulations.
Public Participation
Because the Regulations involve a foreign affairs function, the
provisions of Executive Order 12866 and the Administrative Procedure
Act (5 U.S.C. 553) requiring notice of proposed rulemaking, opportunity
for public participation, and delay in effective date are inapplicable.
Because no notice of proposed rulemaking is required for this rule, the
Regulatory Flexibility Act (5 U.S.C. 601-612) does not apply.
Paperwork Reduction Act
The collections of information related to the Regulations are
contained in 31 CFR part 501 (the ``Reporting, Procedures and Penalties
Regulations''). Pursuant to the Paperwork Reduction Act of 1995 (44
U.S.C. 3507), those collections of information have been approved by
the Office of Management and Budget under control number 1505-0164. An
agency may not conduct or sponsor, and a person is not required to
respond to, a collection of information unless the collection of
information displays a valid control number.
List of Subjects in 31 CFR Part 578
Administrative practice and procedure, Banking, Banks, Blocking of
assets, Brokers, Credit, Critical infrastructure, Cyber, Cybersecurity,
Foreign trade, Investments, Loans, Securities, Services, Trade secrets.
For the reasons set forth in the preamble, the Department of the
Treasury's Office of Foreign Assets Control adds part 578 to 31 CFR
chapter V to read as follows:
PART 578--CYBER-RELATED SANCTIONS REGULATIONS
Subpart A--Relation of This Part to Other Laws and Regulations
Sec.
578.101 Relation of this part to other laws and regulations.
Subpart B--Prohibitions
578.201 Prohibited transactions.
578.202 Effect of transfers violating the provisions of this part.
578.203 Holding of funds in interest-bearing accounts; investment
and reinvestment.
578.204 Expenses of maintaining blocked property; liquidation of
blocked property.
Subpart C--General Definitions
578.300 Applicability of definitions.
578.301 Blocked account; blocked property.
578.302 Effective date.
578.303 Entity.
578.304 Financial, material, or technological support.
578.305 Interest.
578.306 Licenses; general and specific.
578.307 OFAC.
578.308 Person.
578.309 Property; property interest.
578.310 Transfer.
578.311 United States.
578.312 United States person; U.S. person.
578.313 U.S. financial institution.
Subpart D--Interpretations
578.401 [Reserved]
578.402 Effect of amendment.
578.403 Termination and acquisition of an interest in blocked
property.
578.404 Transactions ordinarily incident to a licensed transaction.
578.405 Setoffs prohibited.
578.406 Entities owned by persons whose property and interests in
property are blocked.
Subpart E--Licenses, Authorizations, and Statements of Licensing Policy
578.501 General and specific licensing procedures.
578.502 [Reserved]
578.503 Exclusion from licenses.
578.504 Payments and transfers to blocked accounts in U.S. financial
institutions.
578.505 Entries in certain accounts for normal service charges
authorized.
578.506 Provision of certain legal services authorized.
578.507 Payments for legal services from funds originating outside
the United States authorized.
578.508 Authorization of emergency medical services.
Subparts F-G--[Reserved]
Subpart H--Procedures
578.801 [Reserved]
578.802 Delegation by the Secretary of the Treasury.
Subpart I--Paperwork Reduction Act
578.901 Paperwork Reduction Act notice.
Appendix A to Part 578--Executive Order 13694
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. 13694, 80
FR 18077, April 2, 2015.
Subpart A--Relation of This Part to Other Laws and Regulations
Sec. 578.101 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.
Note to Sec. 578.101: This part has been published in
abbreviated form for the purpose of providing immediate guidance to
the public. OFAC intends to supplement this part with a more
comprehensive set of regulations, which may include additional
interpretive and definitional guidance, including regarding ``cyber-
enabled''
[[Page 81754]]
activities, and additional general licenses and statements of
licensing policy.
Subpart B--Prohibitions
Sec. 578.201 Prohibited transactions.
All transactions prohibited pursuant to Executive Order 13694 of
April 1, 2015, are also prohibited pursuant to this part.
Note 1 to Sec. 578.201: The names of persons designated
pursuant to Executive Order 13694, whose property and interests in
property therefore are blocked pursuant to this section, are
published in the Federal Register and incorporated into OFAC's
Specially Designated Nationals and Blocked Persons List (SDN List)
with the identifier ``[CYBER].'' The SDN List is accessible through
the following page on OFAC'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. 578.406 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.
Note 2 to Sec. 578.201: The International Emergency Economic
Powers Act (50 U.S.C. 1701-1706), 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 this section also are published in the
Federal Register and incorporated into the SDN List with the
identifier ``[BPI-CYBER]''.
Note 3 to Sec. 578.201: 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 this section.
Sec. 578.202 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.
578.201, 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 interest.
(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. 578.201, 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, a license or other authorization
issued by OFAC 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 OFAC 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 OFAC 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 OFAC; or
(iii) If a license did purport to cover the transfer, such license
had been obtained by misrepresentation of a third party or withholding
of material facts or was otherwise fraudulently obtained.
Note to paragraph (d): 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 (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 and interests in
property blocked pursuant to Sec. 578.201.
Sec. 578.203 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 OFAC, any U.S. person holding funds, such as
currency, bank deposits, or liquidated financial obligations, subject
to Sec. 578.201 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. 578.201 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. 578.201 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
[[Page 81755]]
securities, to sell or liquidate such property. However, OFAC 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. 578.201, nor may their holder
cooperate in or facilitate the pledging or other attempted use as
collateral of blocked funds or other assets.
Sec. 578.204 Expenses of maintaining blocked 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. 578.201
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. 578.201 may, in the
discretion of OFAC, be sold or liquidated and the net proceeds placed
in a blocked interest-bearing account in the name of the owner of the
property.
Subpart C--General Definitions
Sec. 578.300 Applicability of definitions.
The definitions in this subpart apply throughout the entire part.
Sec. 578.301 Blocked account; blocked property.
The terms blocked account and blocked property shall mean any
account or property subject to the prohibitions in Sec. 578.201 held
in the name of a person whose property and interests in property are
blocked pursuant to Sec. 578.201, 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 a license or other authorization from OFAC expressly
authorizing such action.
Note to Sec. 578.301: See Sec. 578.406 concerning the blocked
status of property and interests in property of an entity that is 50
percent or more owned by persons whose property and interests in
property are blocked pursuant to Sec. 578.201.
Sec. 578.302 Effective date.
The term effective date refers to the effective date of the
applicable prohibitions and directives contained in this part, and,
with respect to a person whose property and interests in property are
blocked pursuant to Sec. 578.201, is the earlier of the date of actual
or constructive notice that such person's property and interests in
property are blocked.
Sec. 578.303 Entity.
The term entity means a partnership, association, trust, joint
venture, corporation, group, subgroup, or other organization.
Sec. 578.304 Financial, material, or technological support.
The term financial, material, or technological support, as used in
Executive Order 13694 of April 1, 2015, 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.
Sec. 578.305 Interest.
Except as otherwise provided in this part, the term interest, when
used with respect to property (e.g., ``an interest in property''),
means an interest of any nature whatsoever, direct or indirect.
Sec. 578.306 Licenses; general and specific.
(a) Except as otherwise provided in this part, 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 or made
available on OFAC's Web site: www.treasury.gov/ofac.
(c) The term specific license means any license or authorization
issued pursuant to this part but not set forth in subpart E of this
part or made available on OFAC's Web site: www.treasury.gov/ofac.
Note to Sec. 578.306: See Sec. 501.801 of this chapter on
licensing procedures.
Sec. 578.307 OFAC.
The term OFAC means the Department of the Treasury's Office of
Foreign Assets Control.
Sec. 578.308 Person.
The term person means an individual or entity.
Sec. 578.309 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. 578.310 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
[[Page 81756]]
any agent, trustee, or fiduciary; the creation or transfer of any lien;
the issuance, docketing, or filing of, 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. 578.311 United States.
The term United States means the United States, its territories and
possessions, and all areas under the jurisdiction or authority thereof.
Sec. 578.312 United States person; U.S. person.
The term United States person or U.S. person means any United
States citizen, permanent resident alien, entity organized under the
laws of the United States or any jurisdiction within the United States
(including foreign branches), or any person in the United States.
Sec. 578.313 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 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.
Subpart D--Interpretations
Sec. 578.401 [Reserved]
Sec. 578.402 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 OFAC 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. 578.403 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 whose property and interests in property
are blocked pursuant to Sec. 578.201, such property shall no longer be
deemed to be property blocked pursuant to Sec. 578.201, unless there
exists in the property another interest that is blocked pursuant to
Sec. 578.201, the transfer of which has not been effected pursuant to
license or other authorization.
(b) Unless otherwise specifically provided in a license or other
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. 578.201, such property shall be deemed to be property in which
such a person has an interest and therefore blocked.
Sec. 578.404 Transactions ordinarily incident to a licensed
transaction.
Any transaction ordinarily incident to a licensed transaction and
necessary to give effect thereto is also authorized, except:
(a) An ordinarily incident transaction, not explicitly authorized
within the terms of the license, by or with a person whose property and
interests in property are blocked pursuant to Sec. 578.201; or
(b) An ordinarily incident transaction, not explicitly authorized
within the terms of the license, involving a debit to a blocked account
or a transfer of blocked property.
Sec. 578.405 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. 578.201 if effected after the effective date.
Sec. 578.406 Entities owned by persons whose property and interests
in property are blocked.
Persons whose property and interests in property are blocked
pursuant to Sec. 578.201 have an interest in all property and
interests in property of an entity in which such blocked persons own,
whether individually or in the aggregate, 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.
578.201, regardless of whether the name of the entity is incorporated
into OFAC's Specially Designated Nationals and Blocked Persons List
(SDN List).
Subpart E--Licenses, Authorizations, and Statements of Licensing
Policy
Sec. 578.501 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. General licenses
and statements of licensing policy relating to this part also may be
available through the Cyber-Related sanctions page on OFAC's Web site:
www.treasury.gov/ofac.
Sec. 578.502 [Reserved]
Sec. 578.503 Exclusion from licenses.
OFAC 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. OFAC 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. 578.504 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.
578.201 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
[[Page 81757]]
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. 578.504: See Sec. 501.603 of this chapter for
mandatory reporting requirements regarding financial transfers. See
also Sec. 578.203 concerning the obligation to hold blocked funds
in interest-bearing accounts.
Sec. 578.505 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. 578.506 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. 578.201 or any further Executive orders relating to
the national emergency declared in Executive Order 13694 of April 1,
2015, is authorized, provided that receipt of payment of professional
fees and reimbursement of incurred expenses must be specifically
licensed, authorized pursuant to Sec. 578.507, which authorizes
certain payments for legal services from funds originating outside the
United States, or otherwise authorized pursuant to this part:
(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 legal, arbitration, or administrative proceedings
before any U.S. federal, state, or local court or agency;
(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 of any other legal services to persons whose
property and interests in property are blocked pursuant to Sec.
578.201 or any further Executive orders relating to the national
emergency declared in Executive Order 13694 of April 1, 2015, not
otherwise authorized in this part, requires the issuance of a specific
license.
(c) Entry into a settlement agreement or the enforcement of any
lien, judgment, arbitral award, decree, or other order through
execution, garnishment, or other judicial process purporting to
transfer or otherwise alter or affect property or interests in property
blocked pursuant to Sec. 578.201 or any further Executive orders
relating to the national emergency declared in Executive Order 13694 of
April 1, 2015, is prohibited unless licensed pursuant to this part.
Note to Sec. 578.506: U.S. persons seeking administrative
reconsideration or judicial review of their designation or the
blocking of their property and interests in property may apply for a
specific license from OFAC to authorize the release of a limited
amount of blocked funds for the payment of legal fees where
alternative funding sources are not available. For more information,
see OFAC's Guidance on the Release of Limited Amounts of Blocked
Funds for Payment of Legal Fees and Costs Incurred in Challenging
the Blocking of U.S. Persons in Administrative or Civil Proceedings,
which is available on OFAC's Web site: www.treasury.gov/ofac.
Sec. 578.507 Payments for legal services from funds originating
outside the United States authorized.
(a) Receipts of payment of professional fees and reimbursement of
incurred expenses for the provision of legal services authorized
pursuant to Sec. 578.506(a) to or on behalf of any person whose
property and interests in property are blocked pursuant to Sec.
578.201 or any further Executive orders relating to the national
emergency declared in Executive Order 13694, of April 1, 2015, are
authorized from funds originating outside the United States, provided
that the funds received by U.S. persons as payment of professional fees
and reimbursement of incurred expenses for the provision of legal
services authorized pursuant to Sec. 578.506(a) do not originate from:
(1) A source within the United States;
(2) Any source, wherever located, within the possession or control
of a U.S. person; or
(3) Any individual or entity, other than the person on whose behalf
the legal services authorized pursuant to Sec. 578.506(a) are to be
provided, whose property and interests in property are blocked pursuant
to any part of this chapter or any Executive order.
Note to paragraph (a) of Sec. 578.507: This paragraph
authorizes the blocked person on whose behalf the legal services
authorized pursuant to Sec. 578.506(a) are to be provided to make
payments for authorized legal services using funds originating
outside the United States that were not previously blocked. Nothing
in this paragraph authorizes payments for legal services using funds
in which any other person whose property and interests in property
are blocked pursuant to Sec. 578.201, any other part of this
chapter, or any Executive order has an interest.
(b) Reports. (1) U.S. persons who receive payments in connection
with legal services authorized pursuant to Sec. 578.506(a) must submit
annual reports no later than 30 days following the end of the calendar
year during which the payments were received providing information on
the funds received. Such reports shall specify:
(i) The individual or entity from whom the funds originated and the
amount of funds received; and
(ii) If applicable:
(A) The names of any individuals or entities providing related
services to the U.S. person receiving payment in connection with
authorized legal services, such as private investigators or expert
witnesses;
(B) A general description of the services provided; and
(C) The amount of funds paid in connection with such services.
(2) The reports, which must reference this section, are to be
mailed to: Licensing Division, Office of Foreign Assets Control, U.S.
Department of the Treasury, 1500 Pennsylvania Avenue NW., Annex,
Washington, DC 20220.
Note to Sec. 578.507: U.S. persons who receive payments in
connection with legal services authorized pursuant to Sec.
578.506(a) do not need to obtain specific authorization to contract
for related services that are ordinarily incident to the provision
of those legal services, such as those provided by private
investigators or expert witnesses, or to pay for such services.
Additionally, U.S. persons do not need to obtain specific
authorization to provide related services that are ordinarily
incident to the provision of legal services authorized pursuant to
Sec. 578.506(a).
[[Page 81758]]
Sec. 578.508 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. 578.201 or any further Executive orders
relating to the national emergency declared in Executive Order 13694 of
April 1, 2015 and all receipt of payment for such services are
authorized.
Subparts F-G--[Reserved]
Subpart H--Procedures
Sec. 578.801 [Reserved]
Sec. 578.802 Delegation by the Secretary of the Treasury.
Any action that the Secretary of the Treasury is authorized to take
pursuant to Executive Order 13694 of April 1, 2015, and any further
Executive orders relating to the national emergency declared therein,
may be taken by the Director of OFAC or by any other person to whom the
Secretary of the Treasury has delegated authority so to act.
Subpart I--Paperwork Reduction Act
Sec. 578.901 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.
Appendix A to Part 578--Executive Order 13694
Executive Order 13694 of April 1, 2015
Blocking the Property of Certain Persons Engaging in Significant
Malicious Cyber-Enabled Activities
By the authority vested in me as President by the Constitution
and the laws of the United States of America, including the
International Emergency Economic Powers Act (50 U.S.C. 1701 et seq.)
(IEEPA), the National Emergencies Act (50 U.S.C. 1601 et seq.)
(NEA), section 212(f) of the Immigration and Nationality Act of 1952
(8 U.S.C. 1182(f)), and section 301 of title 3, United States Code,
I, BARACK OBAMA, President of the United States of America, find
that the increasing prevalence and severity of malicious cyber-
enabled activities originating from, or directed by persons located,
in whole or in substantial part, outside the United States
constitute an unusual and extraordinary threat to the national
security, foreign policy, and economy of the United States. I hereby
declare a national emergency to deal with this threat.
Accordingly, I hereby order:
Section 1. (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
any United States person of the following persons are blocked and
may not be transferred, paid, exported, withdrawn, or otherwise
dealt in:
(i) any person determined by the Secretary of the Treasury, in
consultation with the Attorney General and the Secretary of State,
to be responsible for or complicit in, or to have engaged in,
directly or indirectly, cyber-enabled activities originating from,
or directed by persons located, in whole or in substantial part,
outside the United States that are reasonably likely to result in,
or have materially contributed to, a significant threat to the
national security, foreign policy, or economic health or financial
stability of the United States and that have the purpose or effect
of:
(A) harming, or otherwise significantly compromising the
provision of services by, a computer or network of computers that
support one or more entities in a critical infrastructure sector;
(B) significantly compromising the provision of services by one
or more entities in a critical infrastructure sector;
(C) causing a significant disruption to the availability of a
computer or network of computers; or
(D) causing a significant misappropriation of funds or economic
resources, trade secrets, personal identifiers, or financial
information for commercial or competitive advantage or private
financial gain; or
(ii) any person determined by the Secretary of the Treasury, in
consultation with the Attorney General and the Secretary of State:
(A) to be responsible for or complicit in, or to have engaged
in, the receipt or use for commercial or competitive advantage or
private financial gain, or by a commercial entity, outside the
United States of trade secrets misappropriated through cyber-enabled
means, knowing they have been misappropriated, where the
misappropriation of such trade secrets is reasonably likely to
result in, or has materially contributed to, a significant threat to
the national security, foreign policy, or economic health or
financial stability of the United States;
(B) to have materially assisted, sponsored, or provided
financial, material, or technological support for, or goods or
services in support of, any activity described in subsections (a)(i)
or (a)(ii)(A) of this section or any person whose property and
interests in property are blocked pursuant to this order;
(C) 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 this
order; or
(D) to have attempted to engage in any of the activities
described in subsections (a)(i) and (a)(ii)(A)-(C) of this section.
(b) The prohibitions in subsection (a) of this section apply
except to the extent provided by statutes, or in regulations,
orders, directives, or licenses that may be issued pursuant to this
order, and notwithstanding any contract entered into or any license
or permit granted prior to the effective date of this order.
Sec. 2. I hereby determine that the making of donations of the
type of articles specified in section 203(b)(2) of IEEPA (50 U.S.C.
1702(b)(2)) by, to, or for the benefit of any person whose property
and interests in property are blocked pursuant to section 1 of this
order would seriously impair my ability to deal with the national
emergency declared in this order, and I hereby prohibit such
donations as provided by section 1 of this order.
Sec. 3. The prohibitions in section 1 of this order include but
are not limited to:
(a) 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 this order; and
(b) the receipt of any contribution or provision of funds,
goods, or services from any such person.
Sec. 4. I hereby find that the unrestricted immigrant and
nonimmigrant entry into the United States of aliens determined to
meet one or more of the criteria in section 1(a) of this order would
be detrimental to the interests of the United States, and I hereby
suspend entry into the United States, as immigrants or
nonimmigrants, of such persons. Such persons shall be treated as
persons covered by section 1 of Proclamation 8693 of July 24, 2011
(Suspension of Entry of Aliens Subject to United Nations Security
Council Travel Bans and International Emergency Economic Powers Act
Sanctions).
Sec. 5. (a) Any transaction that evades or avoids, has the
purpose of evading or avoiding, causes a violation of, or attempts
to violate any of the prohibitions set forth in this order is
prohibited.
(b) Any conspiracy formed to violate any of the prohibitions set
forth in this order is prohibited.
Sec. 6. For the purposes of this order:
(a) the term ``person'' means an individual or entity;
(b) the term ``entity'' means a partnership, association, trust,
joint venture, corporation, group, subgroup, or other organization;
(c) the term ``United States 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;
(d) the term ``critical infrastructure sector'' means any of the
designated critical infrastructure sectors identified in
Presidential Policy Directive 21; and
(e) the term ``misappropriation'' includes any taking or
obtaining by improper means, without permission or consent, or under
false pretenses.
Sec. 7. For those persons whose property and interests in
property are blocked pursuant to this order who might have a
constitutional presence in the United States, I find that because of
the ability to transfer
[[Page 81759]]
funds or other assets instantaneously, prior notice to such persons
of measures to be taken pursuant to this order would render those
measures ineffectual. I therefore determine that for these measures
to be effective in addressing the national emergency declared in
this order, there need be no prior notice of a listing or
determination made pursuant to section 1 of this order.
Sec. 8. The Secretary of the Treasury, in consultation with the
Attorney General and the Secretary of State, is hereby authorized to
take such actions, including the promulgation of rules and
regulations, and to employ all powers granted to the President by
IEEPA as may be necessary to carry out the purposes of this order.
The Secretary of the Treasury may redelegate any of these functions
to other officers and agencies of the United States Government
consistent with applicable law. All agencies of the United States
Government are hereby directed to take all appropriate measures
within their authority to carry out the provisions of this order.
Sec. 9. The Secretary of the Treasury, in consultation with the
Attorney General and the Secretary of State, is hereby authorized to
submit the recurring and final reports to the Congress on the
national emergency declared in this order, consistent with section
401(c) of the NEA (50 U.S.C. 1641(c)) and section 204(c) of IEEPA
(50 U.S.C. 1703(c)).
Sec. 10. This order is not intended to, and does not, create any
right or benefit, substantive or procedural, enforceable at law or
in equity by any party against the United States, its departments,
agencies, or entities, its officers, employees, or agents, or any
other person.
Barack Obama
THE WHITE HOUSE,
April 1, 2015
Dated: December 11, 2015.
John E. Smith,
Acting Director, Office of Foreign Assets Control.
Approved:
Dated: December 16, 2015.
Adam J. Szubin,
Acting Under Secretary, Office of Terrorism and Financial Intelligence,
Department of the Treasury.
[FR Doc. 2015-32881 Filed 12-30-15; 8:45 am]
BILLING CODE P
