Magnitsky Act Sanctions Regulations, 60507-60517 [2017-27499]

Agencies

• DEPARTMENT OF THE TREASURY

[Federal Register Volume 82, Number 244 (Thursday, December 21, 2017)]
[Rules and Regulations]
[Pages 60507-60517]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-27499]


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DEPARTMENT OF THE TREASURY

Office of Foreign Assets Control

31 CFR Part 584


Magnitsky Act Sanctions Regulations

AGENCY: Office of Foreign Assets Control, Treasury.

ACTION: Final rule.

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SUMMARY: The Department of the Treasury's Office of Foreign Assets 
Control (OFAC) is adding regulations to implement certain provisions of 
the Sergei Magnitsky Rule of Law Accountability Act of 2012.

DATES: Effective: December 21, 2017.

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 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 Availability

    This document and additional information concerning OFAC are 
available from OFAC's website (www.treasury.gov/ofac).

Background

    On December 14, 2012, the President signed into law the Sergei 
Magnitsky Rule of Law Accountability Act of 2012, Public Law 112-208, 
title IV, 126 Stat. 1502 (2012) (the ``Act''). The Act provides 
authority for the identification of and imposition of sanctions on 
certain persons related to the detention, abuse, and death of Sergei 
Magnitsky or responsible for certain gross violations of human rights 
in the Russian Federation.
    Section 404(a) of the Act requires the President to submit to 
certain congressional committees a list of each person the President 
has determined meets certain criteria set forth in the Act. Section 406 
of the Act requires the President, with certain exceptions, to exercise 
powers granted by the International Emergency Economic Powers Act (50 
U.S.C. 1701 et seq.) to the extent necessary to freeze, and prohibit 
all transactions in, all property and interests in property that are in 
the United States, that come within the United States, or that are or 
come within the possession or control of any United States person of 
persons on the list required by Section 404(a) of the Act.
    Section 404(a) of the Act sets out criteria for inclusion on the 
list, namely, certain persons who the President determines:
    (1) Are responsible for the detention, abuse, or death of Sergei 
Magnitsky, participated in efforts to conceal the legal liability for 
the detention, abuse, or death of Sergei Magnitsky, financially 
benefitted from the detention, abuse, or death of Sergei Magnitsky, or 
were involved in the criminal conspiracy uncovered by Sergei Magnitsky;
    (2) Are responsible for extrajudicial killings, torture, or other 
gross violations of internationally recognized human rights committed 
against individuals seeking: To expose illegal activity carried out by 
officials of the Government of the Russian Federation; or to obtain, 
exercise, defend, or promote internationally recognized human rights 
and freedoms, such as the freedoms of religion, expression, 
association, and assembly, and the rights to a fair trial and 
democratic elections, in Russia; or
    (3) Acted as agents of or on behalf of a person in a matter 
relating to an

[[Page 60508]]

activity described in paragraph (1) or (2).
    Pursuant to Presidential Memorandum of April 5, 2013: Delegation of 
Functions Under Section 404 and 406 of Public Law 112-208 (78 FR 22761, 
April 16, 2013), the President delegated certain functions and 
authorities, including the functions and authorities set forth in 
section 404(a) of the Act, with respect to the determinations provided 
for therein, and section 406(a)(1) of the Act, with respect to the 
freezing, and prohibiting all transactions in, property, to the 
Secretary of the Treasury, in consultation with the Secretary of State.
    Section 406(d) of the Act requires the Secretary of the Treasury to 
issue regulations, licenses, and orders as are necessary to carry out 
Section 406 of the Act. In furtherance of this requirement and the 
Presidential delegation of functions and authorities noted above, OFAC 
is promulgating the Magnitsky Act Sanctions Regulations, 31 CFR part 
584 (the ``Regulations'').
    The Regulations implement targeted sanctions that are directed at 
persons determined to meet the criteria set forth above. The sanctions 
do not generally prohibit trade or the provision of banking or other 
financial services to the Russian Federation. Instead, the sanctions 
apply where the transaction or service in question involves property or 
interests in property that are blocked pursuant to these sanctions.
    Subpart A of the Regulations clarifies the relation of this part to 
other laws and regulations. Subpart B of the Regulations implements the 
prohibitions contained in section 406 of the Act. See, e.g., Sec. Sec.  
584.201 and 584.205. Persons designated by or under the authority of 
the Secretary of the Treasury pursuant to the Magnitsky Act or 
otherwise subject to blocking pursuant to the Act are referred to 
throughout the Regulations as ``persons whose property and interests in 
property are blocked pursuant to Sec.  584.201(a).'' The names of 
persons designated pursuant to the Act are published on OFAC's 
Specially Designated Nationals and Blocked Persons List, which is 
accessible via OFAC's website. Those names also are published in the 
Federal Register as they are added to the List.
    Sections 584.202 and 584.203 of subpart B detail the effect of 
transfers of blocked property in violation of the Regulations and set 
forth the requirement to hold blocked funds, such as currency, bank 
deposits, or liquidated financial obligations, in interest-bearing 
blocked accounts. Section 584.204 of subpart B provides that all 
expenses incident to the maintenance of blocked physical property shall 
be the responsibility of the owners and operators of such property, and 
that such expenses shall not be met from blocked funds, unless 
otherwise authorized. The section further provides that blocked 
property may, in OFAC's discretion, be sold or liquidated and the net 
proceeds placed in a blocked interest-bearing account in the name of 
the owner of the property.
    Section 584.205 of subpart B prohibits any transaction by a United 
States person or within the United States that evades or avoids, has 
the purpose of evading or avoiding, or attempts to violate any of the 
prohibitions set forth in this part, and any conspiracy formed to 
violate such prohibitions.
    Section 584.206 of subpart B details transactions that are exempt 
from the prohibitions of the Regulations pursuant to sections 
203(b)(1)-(4) of IEEPA (50 U.S.C. 1702(b)(1)-(4)). These exempt 
transactions relate to personal communications, donations of articles 
intended to be used to relieve human suffering, the importation and 
exportation of information or informational materials, and transactions 
ordinarily incident to travel.
    Subpart C of the Regulations defines key terms used throughout the 
Regulations, and subpart D contains interpretive sections regarding the 
Regulations. Section 584.410 of subpart D explains that the property 
and interests in property of an entity are blocked if the entity is 
directly or indirectly owned, whether individually or in the aggregate, 
50 percent or more by one or more persons whose property and interests 
in property are blocked, whether or not the entity itself is designated 
pursuant to the Act.
    Transactions otherwise prohibited under the Regulations but found 
to be consistent with U.S. policy may be authorized by one of the 
general licenses contained in subpart E of the Regulations or by a 
specific license issued pursuant to the procedures described in subpart 
E of 31 CFR part 501. Subpart E of the Regulations also contains 
certain statements of specific licensing policy in addition to the 
general licenses. General licenses and statements of licensing policy 
relating to this part also may be available through the Magnitsky 
Sanctions page on OFAC's website: www.treasury.gov/ofac.
    Subpart F of the Regulations refers to subpart C of part 501 for 
recordkeeping and reporting requirements. Subpart G of the Regulations 
describes the civil and criminal penalties applicable to violations of 
the Regulations, as well as the procedures governing the potential 
imposition of a civil monetary penalty or issuance of a Finding of 
Violation. Subpart G also refers to appendix A of part 501 for a more 
complete description of these procedures.
    Subpart H of the Regulations refers to subpart E of part 501 for 
applicable provisions relating to administrative procedures and 
contains a delegation of authority by the Secretary of the Treasury. 
Subpart I of the Regulations sets forth a Paperwork Reduction Act 
notice.

Public Participation

    Because the Regulations involve a foreign affairs function, the 
provisions of Executive Order 12866 and the Administrative Procedure 
Act (5 U.S.C. 553) requiring notice of proposed rulemaking, opportunity 
for public participation, and delay in effective date, as well as the 
provisions of Executive Order 13771, 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 584

    Administrative practice and procedure, Banking, Banks, Blocking of 
assets, Brokers, Credit, Foreign Trade, Investments, Loans, Magnitsky, 
Russia, Penalties, Reporting and recordkeeping requirements, 
Securities, Services.

0
For the reasons set forth in the preamble, the Department of the 
Treasury's Office of Foreign Assets Control adds part 584 to 31 CFR 
chapter V to read as follows:

PART 584--MAGNITSKY ACT SANCTIONS REGULATIONS

Subpart A--Relation of This Part to Other Laws and Regulations
Sec.
584.101 Relation of this part to other laws and regulations.

[[Page 60509]]

Subpart B--Prohibitions
584.201 Prohibited transactions involving blocked property.
584.202 Effect of transfers violating the provisions of this part.
584.203 Holding of funds in interest-bearing accounts; investment 
and reinvestment.
584.204 Expenses of maintaining blocked physical property; 
liquidation of blocked property.
584.205 Evasions; attempts; causing violations; conspiracies.
584.206 Exempt transactions.
Subpart C--General Definitions
584.300 Applicability of definitions.
584.301 Blocked account; blocked property.
584.302 Effective date.
584.303 Entity.
584.304 Information or informational materials.
584.305 Interest.
584.306 Licenses; general and specific.
584.307 OFAC.
584.308 Participated in efforts to conceal the legal liability for 
the detention, abuse, or death of Sergei Magnitsky.
584.309 Person.
584.310 Property; property interest.
584.311 Magnitsky Act.
584.312 Transfer.
584.313 United States.
584.314 United States person; U.S. person.
584.315 U.S. financial institution.
Subpart D--Interpretations
584.401 Reference to amended sections.
584.402 Effect of amendment.
584.403 Termination and acquisition of an interest in blocked 
property.
584.404 Transactions ordinarily incident to a licensed transaction.
584.405 Provision of services.
584.406 Offshore transactions involving blocked property.
584.407 Payments from blocked accounts to satisfy obligations 
prohibited.
584.408 Credit extended and cards issued by financial institutions 
to a person whose property and interests in property are blocked.
584.409 Setoffs prohibited.
584.410 Entities owned by one or more persons whose property and 
interests in property are blocked.
Subpart E--Licenses, Authorizations, and Statements of Licensing Policy
584.501 General and specific licensing procedures.
584.502 Effect of license or other authorization.
584.503 Exclusion from licenses.
584.504 Payments and transfers to blocked accounts in U.S. financial 
institutions.
584.505 Entries in certain accounts for normal service charges.
584.506 Investment and reinvestment of certain funds.
584.507 Provision of certain legal services.
584.508 Payments for legal services from funds originating outside 
the United States.
584.509 Emergency medical services.
Subpart F--Reports
584.601 Records and reports.
Subpart G--Penalties and Finding of Violation
584.701 Penalties.
584.702 Pre-Penalty Notice; settlement.
584.703 Penalty imposition.
584.704 Administrative collection; referral to United States 
Department of Justice.
584.705 Finding of Violation.
Subpart H--Procedures
584.801 Procedures.
584.802 Delegation by the Secretary of the Treasury.
Subpart I--Paperwork Reduction Act
584.901 Paperwork Reduction Act notice.

    Authority: 3 U.S.C. 301; 31 U.S.C. 321(b); 50 U.S.C. 1601-1651, 
1701-1706; Public Law 101-410, 104 Stat. 890 (28 U.S.C. 2461 note); 
Public Law 110-96, 121 Stat. 1011 (50 U.S.C. 1705 note); Public Law 
112-208, 126 Stat. 1502, (22 U.S.C. 5811 note).

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


Sec.  584.101  Relation of this part to other laws and regulations.

    This part is separate from, and independent of, the other parts of 
this chapter, with the exception of part 501 of this chapter, the 
recordkeeping and reporting requirements and license application and 
other procedures of which apply to this part. Actions taken pursuant to 
part 501 of this chapter with respect to the prohibitions contained in 
this part are considered actions taken pursuant to this part. Differing 
foreign policy and national security circumstances may result in 
differing interpretations of similar language among the parts of this 
chapter. No license or authorization contained in or issued pursuant to 
those other parts authorizes any transaction prohibited by this part. 
No license or authorization contained in or issued pursuant to any 
other provision of law or regulation authorizes any transaction 
prohibited by this part. No license or authorization contained in or 
issued pursuant to this part relieves the involved parties from 
complying with any other applicable laws or regulations.

Subpart B--Prohibitions


Sec.  584.201  Prohibited transactions involving blocked property.

    (a) All property and interests in property that are in the United 
States, that come within the United States, or that are or come within 
the possession or control of any United States person of the following 
persons are blocked and may not be transferred, paid, exported, 
withdrawn, or otherwise dealt in: Any person who the Secretary of the 
Treasury, in consultation with the Secretary of State, determines:
    (1) Is responsible for the detention, abuse, or death of Sergei 
Magnitsky, participated in efforts to conceal the legal liability for 
the detention, abuse, or death of Sergei Magnitsky, financially 
benefitted from the detention, abuse, or death of Sergei Magnitsky, or 
was involved in the criminal conspiracy uncovered by Sergei Magnitsky;
    (2) Is responsible for extrajudicial killings, torture, or other 
gross violations of internationally recognized human rights committed 
against individuals seeking:
    (i) To expose illegal activity carried out by officials of the 
Government of the Russian Federation; or
    (ii) To obtain, exercise, defend, or promote internationally 
recognized human rights and freedoms, such as the freedoms of religion, 
expression, association, and assembly, and the rights to a fair trial 
and democratic elections, in Russia; or
    (3) Acted as an agent of or on behalf of a person in a matter 
relating to an activity described in paragraph (a)(1) or (2) of this 
section.

    Note 1 to paragraph (a): The names of persons who meet the 
criteria in paragraph (a) of this section and are designated 
pursuant to the Magnitsky Act, whose property and interests in 
property are therefore blocked pursuant to this paragraph (a), are 
published in the Federal Register and incorporated into OFAC's 
Specially Designated Nationals and Blocked Persons List (SDN List) 
with the identifier ``MAGNIT.'' The SDN List is accessible through 
the following page on OFAC's website: www.treasury.gov/sdn. 
Additional information pertaining to the SDN List can be found in 
appendix A to this chapter. See Sec.  584.410 concerning entities 
that may not be listed on the SDN List but whose property and 
interests in property are nevertheless blocked pursuant to this 
paragraph (a).


    Note 2 to paragraph (a): The International Emergency Economic 
Powers Act (50 U.S.C. 1701-1706), in Section 203 (50 U.S.C. 1702), 
authorizes the blocking of the 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 paragraph (a) also are published in 
the Federal Register and incorporated into the SDN List with the 
identifier ``[BPI-MAGNIT].''


    Note 3 to paragraph (a): 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, and administrative reconsideration of 
their status as persons whose property and interests in property are 
blocked pursuant to this paragraph (a).



[[Page 60510]]


    Note 4 to paragraph (a): The Magnitsky Act requires the 
President to submit to certain congressional committees a list of 
each person the President has determined meet the Act's criteria, 
which correspond to the criteria set forth in this section. The 
Magnitsky Act provides that the President shall exercise all powers 
granted by the International Emergency Economic Powers Act, 50 
U.S.C. 1701-1706 (except that the requirements of Section 202 of 
such act requiring the declaration of a national emergency (50 
U.S.C. 1701) shall not apply), to the extent necessary to freeze and 
prohibit all transactions in all property and interests in property 
of a person on this list if such property and interests in property 
are in the United States, come within the United States, or are or 
come within the possession or control of a United States person. The 
Magnitsky Act also provides for an exception from the above 
prohibitions for persons included on a classified annex if the 
President determines that such an exception is vital for the 
national security interests of the United States, and for a waiver 
of the above prohibitions if the Secretary of the Treasury 
determines that such a waiver is in the national interests of the 
United States.

    (b) The prohibitions in paragraph (a) of this section include 
prohibitions on the following transactions:
    (1) The making of any contribution or provision of funds, goods, or 
services by, to, or for the benefit of any person whose property and 
interests in property are blocked pursuant to paragraph (a) of this 
section, except for donations by United States persons of articles, 
such as food, clothing, and medicine, intended to be used to relieve 
human suffering; and
    (2) The receipt of any contribution or provision of funds, goods, 
or services from any person whose property and interests in property 
are blocked pursuant to paragraph (a) of this section.
    (c) Unless authorized by this part or by a specific license 
expressly referring to this section, any dealing in any securities (or 
evidence thereof) held within the possession or control of a U.S. 
person and either registered or inscribed in the name of, or known to 
be held for the benefit of, or issued by, any person whose property and 
interests in property are blocked pursuant to paragraph (a) of this 
section is prohibited. This prohibition includes the transfer 
(including the transfer on the books of any issuer or agent thereof), 
disposition, transportation, importation, exportation, or withdrawal 
of, or the endorsement or guaranty of signatures on, any securities on 
or after the effective date. This prohibition applies irrespective of 
the fact that at any time (whether prior to, on, or subsequent to the 
effective date) the registered or inscribed owner of any such 
securities may have or might appear to have assigned, transferred, or 
otherwise disposed of the securities.
    (d) The prohibitions in paragraph (a) of this section apply except 
to the extent transactions are authorized by regulations, orders, 
directives, rulings, instructions, licenses, or otherwise, and 
notwithstanding any contract entered into or any license or permit 
granted prior to the effective date.


Sec.  584.202  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.  
584.201(a), is null and void and shall not be the basis for the 
assertion or recognition of any interest in or right, remedy, power, or 
privilege with respect to such property or property 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.  584.201(a), unless the person who 
holds or maintains such property, prior to that date, had written 
notice of the transfer or by any written evidence had recognized such 
transfer.
    (c) Unless otherwise provided, 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.  584.201(a).


Sec.  584.203  Holding of funds in interest-bearing accounts; 
investment and reinvestment.

    (a) Except as provided in paragraph (e) or (f) of this section, or 
as otherwise directed or authorized by OFAC, any U.S. person holding 
funds, such as currency, bank deposits, or liquidated financial 
obligations, subject to Sec.  584.201(a) shall hold or place such funds 
in a blocked interest-bearing account located in the United States.
    (b)(1) For purposes of this section, the term blocked interest-
bearing account means a blocked account:
    (i) In a federally-insured U.S. bank, thrift institution, or credit 
union, provided the funds are earning interest at rates that are 
commercially reasonable; or
    (ii) With a broker or dealer registered with the Securities and 
Exchange Commission under the Securities Exchange Act of 1934 (15 
U.S.C. 78a et seq.), provided the funds are invested in a money market 
fund or in U.S. Treasury bills.
    (2) Funds held or placed in a blocked account pursuant to paragraph 
(a) of this section may not be invested in

[[Page 60511]]

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.  584.201(a) may 
continue to be held until maturity in the original instrument, provided 
any interest, earnings, or other proceeds derived therefrom are paid 
into a blocked interest-bearing account in accordance with paragraph 
(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.  584.201(a) 
may continue to be held in the same type of accounts or instruments, 
provided the funds earn interest at rates that are commercially 
reasonable.
    (g) This section does not create an affirmative obligation for the 
holder of blocked tangible property, such as chattels or real estate, 
or of other blocked property, such as debt or equity securities, to 
sell or liquidate such property. However, 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.  584.201(a), nor may their holder 
cooperate in or facilitate the pledging or other attempted use as 
collateral of blocked funds or other assets.


Sec.  584.204  Expenses of maintaining blocked physical property; 
liquidation of blocked property.

    (a) Except as otherwise authorized, and notwithstanding the 
existence of any rights or obligations conferred or imposed by any 
international agreement or contract entered into or any license or 
permit granted prior to the effective date, all expenses incident to 
the maintenance of physical property blocked pursuant to Sec.  
584.201(a) shall be the responsibility of the owners or operators of 
such property, which expenses shall not be met from blocked funds.
    (b) Property blocked pursuant to Sec.  584.201(a) 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.


Sec.  584.205  Evasions; attempts; causing violations; conspiracies.

    (a) Any transaction on or after the effective date 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 part 
is prohibited.
    (b) Any conspiracy formed to violate the prohibitions set forth in 
this part is prohibited.


Sec.  584.206  Exempt transactions.

    (a) Personal communications. The prohibitions contained in this 
part do not apply to any postal, telegraphic, telephonic, or other 
personal communication that does not involve the transfer of anything 
of value.
    (b) Information or informational materials. (1) The prohibitions 
contained in this part do not apply to the importation from any country 
and the exportation to any country of any information or informational 
materials, as defined in Sec.  584.304, whether commercial or 
otherwise, regardless of format or medium of transmission.
    (2) This section does not exempt from regulation transactions 
related to information or informational materials not fully created and 
in existence at the date of the transactions, or to the substantive or 
artistic alteration or enhancement of information or informational 
materials, or to the provision of marketing and business consulting 
services. Such prohibited transactions include payment of advances for 
information or informational materials not yet created and completed 
(with the exception of prepaid subscriptions for widely circulated 
magazines and other periodical publications); provision of services to 
market, produce or co-produce, create, or assist in the creation of 
information or informational materials; and payment of royalties with 
respect to income received for enhancements or alterations made by U.S. 
persons to such information or informational materials.
    (3) This section does not exempt transactions incident to the 
exportation of software subject to the Export Administration 
Regulations, 15 CFR parts 730-774, or to the exportation of goods 
(including software) or technology for use in the transmission of any 
data, or to the provision, sale, or leasing of capacity on 
telecommunications transmission facilities (such as satellite or 
terrestrial network connectivity) for use in the transmission of any 
data. The exportation of such items or services and the provision, 
sale, or leasing of such capacity or facilities to a person whose 
property and interests in property are blocked pursuant to Sec.  
584.201(a) are prohibited.
    (c) Travel. The prohibitions contained in this part do not apply to 
transactions ordinarily incident to travel to or from any country, 
including importation or exportation of accompanied baggage for 
personal use, maintenance within any country including payment of 
living expenses and acquisition of goods or services for personal use, 
and arrangement or facilitation of such travel including nonscheduled 
air, sea, or land voyages.
    (d) Humanitarian donations. The prohibitions of this part do not 
apply to donations by United States persons of articles, such as food, 
clothing, and medicine, intended to be used to relieve human suffering.

Subpart C--General Definitions


Sec.  584.300  Applicability of definitions.

    The definitions in this subpart apply throughout the entire part.


Sec.  584.301  Blocked account; blocked property.

    The terms blocked account and blocked property mean any account or 
property subject to the prohibitions in Sec.  584.201 held in the name 
of a person whose property and interests in property are blocked 
pursuant to Sec.  584.201(a), or in which such person has an interest, 
and with respect to which payments, transfers, exportations, 
withdrawals, or other dealings may not be made or effected except 
pursuant to a license or other authorization from OFAC expressly 
authorizing such action.

    Note to Sec.  584.301: See Sec.  584.410 concerning the blocked 
status of property and interests in property of an entity that is 
directly or indirectly owned, whether individually or in the 
aggregate, 50 percent or more by one or more persons whose property 
and interests in property are blocked pursuant to Sec.  584.201(a).

Sec.  584.302   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.  584.201(a), is the earlier of the date of 
actual or constructive notice that such person's property and interests 
in property are blocked.

[[Page 60512]]

Sec.  584.303  Entity.

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


Sec.  584.304  Information or informational materials.

    (a) The term information or informational materials includes 
publications, films, posters, phonograph records, photographs, 
microfilms, microfiche, tapes, compact disks, CD ROMs, artworks, and 
news wire feeds.

    Note to paragraph (a): To be considered information or 
informational materials, artworks must be classified under heading 
9701, 9702, or 9703 of the Harmonized Tariff Schedule of the United 
States.

    (b) The term information or informational materials, with respect 
to exports, does not include items:
    (1) That were, as of April 30, 1994, or that thereafter become, 
controlled for export pursuant to section 5 of the Export 
Administration Act of 1979, 50 U.S.C. App. 2401-2420 (1979) (EAA), or 
section 6 of the EAA to the extent that such controls promote the 
nonproliferation or antiterrorism policies of the United States; or
    (2) With respect to which acts are prohibited by 18 U.S.C. chapter 
37.


Sec.  584.305  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.  584.306  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 website: 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 website: www.treasury.gov/ofac.

    Note to Sec.  584.306: See Sec.  501.801 of this chapter on 
licensing procedures.

Sec.  584.307  OFAC.

    The term OFAC means the Department of the Treasury's Office of 
Foreign Assets Control.


Sec.  584.308  Participated in efforts to conceal the legal liability 
for the detention, abuse, or death of Sergei Magnitsky.

    The term participated in efforts to conceal the legal liability for 
the detention, abuse, or death of Sergei Magnitsky includes direct or 
indirect, knowing or unknowing, involvement in, among others:
    (a) Actions with the intent or effect of obstructing the release of 
evidence regarding Sergei Magnitsky's treatment during his detention;
    (b) Posthumous legal proceedings against Sergei Magnitsky; or
    (c) The making of any false or misleading reports or accounts by 
officials of the Russian Federation concerning Sergei Magnitsky's 
detention, abuse, or death, or the fraudulent tax scheme he discovered, 
including official statements or findings regarding Sergei Magnitsky's 
treatment during his detention that contradict the July 6, 2011, 
findings of the independent investigation by the Presidential Council 
on the Development of Civil Society and Human Rights, or the December 
28, 2009, report of the Public Oversight Commission for the City of 
Moscow for the Control of the Observance of Human Rights in Places of 
Forced Detention.


Sec.  584.309  Person.

    The term person means an individual or entity.


Sec.  584.310  Property; property interest.

    The terms property and property interest include 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.  584.311  Magnitsky Act.

    The term Magnitsky Act means the Sergei Magnitsky Rule of Law 
Accountability Act of 2012, Public Law 112-208, title IV, 126 Stat. 
1502 (2012).


Sec.  584.312  Transfer.

    The term transfer means any actual or purported act or transaction, 
whether or not evidenced by writing, and whether or not done or 
performed within the United States, the purpose, intent, or effect of 
which is to create, surrender, release, convey, transfer, or alter, 
directly or indirectly, any right, remedy, power, privilege, or 
interest with respect to any property. Without limitation on the 
foregoing, it shall include the making, execution, or delivery of any 
assignment, power, conveyance, check, declaration, deed, deed of trust, 
power of attorney, power of appointment, bill of sale, mortgage, 
receipt, agreement, contract, certificate, gift, sale, affidavit, or 
statement; the making of any payment; the setting off of any obligation 
or credit; the appointment of any agent, trustee, or fiduciary; the 
creation or transfer of any lien; the issuance, docketing, filing, or 
levy of or under any judgment, decree, attachment, injunction, 
execution, or other judicial or administrative process or order, or the 
service of any garnishment; the acquisition of any interest of any 
nature whatsoever by reason of a judgment or decree of any foreign 
country; the fulfillment of any condition; the exercise of any power of 
appointment, power of attorney, or other power; or the acquisition, 
disposition, transportation, importation, exportation, or withdrawal of 
any security.


Sec.  584.313  United States.

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


Sec.  584.314  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.  584.315  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 other extensions of

[[Page 60513]]

credit, or purchasing or selling foreign exchange, securities, 
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.  584.401  Reference to amended sections.

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


Sec.  584.402  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.  584.403  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.  584.201(a), such property shall no longer 
be deemed to be property blocked pursuant to Sec.  584.201(a), unless 
there exists in the property another interest that is blocked pursuant 
to Sec.  584.201(a), the transfer of which has not been effected 
pursuant to license or other authorization.
    (b) Unless otherwise specifically provided in a license or 
authorization issued pursuant to this part, if property (including any 
property interest) is transferred or attempted to be transferred to a 
person whose property and interests in property are blocked pursuant to 
Sec.  584.201(a), such property shall be deemed to be property in which 
such person has an interest and therefore blocked.


Sec.  584.404  Transactions ordinarily incident to a licensed 
transaction.

    (a) Any transaction ordinarily incident to a licensed transaction 
and necessary to give effect thereto is also authorized, except:
    (1) An ordinarily incident transaction, not explicitly authorized 
within the terms of the license, by or with a person whose property and 
interests in property are blocked pursuant to Sec.  584.201(a); or
    (2) An ordinarily incident transaction, not explicitly authorized 
within the terms of the license, involving a debit to a blocked account 
or a transfer of blocked property.
    (b) Example. A license authorizing a person to complete a 
securities sale involving Company A, whose property and interests in 
property are blocked pursuant to Sec.  584.201(a), also authorizes 
other persons to engage in activities that are ordinarily incident and 
necessary to complete the sale, including transactions by the buyer, 
broker, transfer agents, and banks, provided that such other persons 
are not themselves persons whose property and interests in property are 
blocked pursuant to Sec.  584.201(a).


Sec.  584.405  Provision of services.

    (a) The prohibitions on transactions contained in Sec.  584.201 
apply to services performed in the United States or by U.S. persons, 
wherever located, including by a foreign branch of an entity located in 
the United States:
    (1) On behalf of or for the benefit of a person whose property and 
interests in property are blocked pursuant to Sec.  584.201(a); or
    (2) With respect to property interests of any person whose property 
and interests in property are blocked pursuant to Sec.  584.201(a).
    (b) Example. U.S. persons may not, except as authorized by or 
pursuant to this part, provide legal, accounting, financial, brokering, 
freight forwarding, transportation, public relations, or other services 
to a person whose property and interests in property are blocked 
pursuant to Sec.  584.201(a).

    Note to Sec.  584.405: See Sec. Sec.  584.507 and 584.509 on 
licensing policy with regard to the provision of certain legal and 
emergency medical services.

Sec.  584.406  Offshore transactions involving blocked property.

    The prohibitions in Sec.  584.201 on transactions or dealings 
involving blocked property apply to transactions by any U.S. person in 
a location outside the United States with respect to property held in 
the name of a person whose property and interests in property are 
blocked pursuant to Sec.  584.201(a).


Sec.  584.407  Payments from blocked accounts to satisfy obligations 
prohibited.

    Pursuant to Sec.  584.201, no debits may be made to a blocked 
account to pay obligations to U.S. persons or other persons, except as 
authorized by or pursuant to this part.

    Note to Sec.  584.407:  See also Sec.  584.502(e), which 
provides that no license or other authorization contained in or 
issued pursuant to this part authorizes transfers of or payments 
from blocked property or debits to blocked accounts unless the 
license or other authorization explicitly authorizes the transfer of 
or payment from blocked property or the debit to a blocked account.

Sec.  584.408  Credit extended and cards issued by financial 
institutions to a person whose property and interests in property are 
blocked.

    The prohibition in Sec.  584.201 on dealing in property subject to 
that section prohibits U.S. financial institutions from performing 
under any existing credit agreements, including charge cards, debit 
cards, or other credit facilities issued by a financial institution to 
a person whose property and interests in property are blocked pursuant 
to Sec.  584.201(a).


Sec.  584.409  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.  584.201 if effected after the effective date.


Sec.  584.410  Entities owned by one or more persons whose property and 
interests in property are blocked.

    Persons whose property and interests in property are blocked 
pursuant to Sec.  584.201(a) have an interest in all property and 
interests in property in which such blocked persons directly or 
indirectly own, whether individually or in the aggregate, 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.  
584.201(a), regardless of whether the name of the entity is 
incorporated into OFAC's Specially Designated Nationals and Blocked 
Persons List (SDN List).

[[Page 60514]]

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


Sec.  584.501  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 Magnitsky Sanctions page on OFAC's website: 
www.treasury.gov/ofac.


Sec.  584.502  Effect of license or other authorization.

    (a) No license or other authorization contained in this part, or 
otherwise issued by OFAC, authorizes or validates any transaction 
effected prior to the issuance of such license or other authorization, 
unless specifically provided in such license or authorization.
    (b) No regulation, ruling, instruction, or license authorizes any 
transaction prohibited under this part unless the regulation, ruling, 
instruction, or license is issued by OFAC and specifically refers to 
this part. No regulation, ruling, instruction, or license referring to 
this part shall be deemed to authorize any transaction prohibited by 
any other part of this chapter unless the regulation, ruling, 
instruction, or license specifically refers to such part.
    (c) Any regulation, ruling, instruction, or license authorizing any 
transaction otherwise prohibited under this part has the effect of 
removing a prohibition contained in this part from the transaction, but 
only to the extent specifically stated by its terms. Unless the 
regulation, ruling, instruction, or license otherwise specifies, such 
an authorization does not create any right, duty, obligation, claim, or 
interest in, or with respect to, any property that would not otherwise 
exist under ordinary principles of law.
    (d) Nothing contained in this part shall be construed to supersede 
the requirements established under any other provision of law or to 
relieve a person from any requirement to obtain a license or other 
authorization from another department or agency of the U.S. Government 
in compliance with applicable laws and regulations subject to the 
jurisdiction of that department or agency. For example, exports of 
goods, services, or technical data that are not prohibited by this part 
or that do not require a license by OFAC nevertheless may require 
authorization by the U.S. Department of Commerce, the U.S. Department 
of State, or other agencies of the U.S. Government.
    (e) No license or other authorization contained in or issued 
pursuant to this part authorizes transfers of or payments from blocked 
property or debits to blocked accounts unless the license or other 
authorization explicitly authorizes the transfer of or payment from 
blocked property or the debit to a blocked account.
    (f) Any payment relating to a transaction authorized in or pursuant 
to this part that is routed through the U.S. financial system should 
reference the relevant OFAC general or specific license authorizing the 
payment to avoid the blocking or rejection of the transfer.


Sec.  584.503  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.  584.504  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.  
584.201(a) has any interest that comes within the possession or control 
of a U.S. financial institution must be blocked in an account on the 
books of that financial institution. A transfer of funds or credit by a 
U.S. financial institution between blocked accounts in its branches or 
offices is authorized, provided that no transfer is made from an 
account within the United States to an account held outside the United 
States, and further provided that a transfer from a blocked account may 
be made only to another blocked account held in the same name.

    Note to Sec.  584.504: See Sec.  501.603 of this chapter for 
mandatory reporting requirements regarding financial transfers. See 
also Sec.  584.203 concerning the obligation to hold blocked funds 
in interest-bearing accounts.

Sec.  584.505  Entries in certain accounts for normal service charges.

    (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.  584.506  Investment and reinvestment of certain funds.

    Subject to the requirements of Sec.  584.203, U.S. financial 
institutions are authorized to invest and reinvest assets blocked 
pursuant to Sec.  584.201, subject to the following conditions:
    (a) The assets representing such investments and reinvestments are 
credited to a blocked account or subaccount that is held in the same 
name at the same U.S. financial institution, or within the possession 
or control of a U.S. person, but funds shall not be transferred outside 
the United States for this purpose;
    (b) The proceeds of such investments and reinvestments shall not be 
credited to a blocked account or subaccount under any name or 
designation that differs from the name or designation of the specific 
blocked account or subaccount in which such funds or securities were 
held; and
    (c) No immediate financial or economic benefit accrues (e.g., 
through pledging or other use) to a person whose property and interests 
in property are blocked pursuant to Sec.  584.201(a).


Sec.  584.507  Provision of certain legal services.

    (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.  584.201(a) or any Executive orders or further 
Presidential action relating to the Magnitsky Act is authorized, 
provided that receipt of payment of professional fees and reimbursement 
of incurred expenses must be specifically licensed, authorized pursuant 
to Sec.  584.508, 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

[[Page 60515]]

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.

    Note to paragraph (a): Consistent with Sec.  584.404, U.S. 
persons do not need to obtain specific authorization to provide 
related services, such as making filings and providing other 
administrative services, that are ordinarily incident to the 
provision of services authorized by this paragraph. Additionally, 
U.S. persons who provide services authorized by this paragraph 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.

    (b) The provision of any other legal services to persons whose 
property and interests in property are blocked pursuant to Sec.  
584.201(a) or any Executive orders or further Presidential action 
relating to the Magnitsky Act, 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.  584.201(a) or any Executive orders or further 
Presidential action relating to the Magnitsky Act is prohibited unless 
licensed pursuant to this part.

    Note to Sec.  584.507: 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 certain 
blocked funds necessary for the payment of professional fees and 
reimbursement of incurred expenses for the provision of such legal 
services 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 
website: www.treasury.gov/ofac.

Sec.  584.508  Payments for legal services from funds originating 
outside the United States.

    (a) Receipt of payment of professional fees and reimbursement of 
incurred expenses for the provision of legal services authorized 
pursuant to Sec.  584.507(a) to or on behalf of any person whose 
property and interests in property are blocked pursuant to Sec.  
584.201(a) or any Executive orders or further Presidential action 
relating to the Magnitsky Act is authorized from funds originating 
outside the United States, provided that the funds 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.  584.507(a) are to be 
provided, whose property and interests in property are blocked pursuant 
to any part of this chapter or any Executive order or statute.

    Note to paragraph (a): This paragraph authorizes the blocked 
person on whose behalf the legal services authorized pursuant to 
Sec.  584.507(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.  584.201(a), any other part of this chapter, or any 
Executive order has an interest.

    (b) Reports. (1) U.S. persons who receive payments pursuant to 
paragraph (a) of this section 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) All required reports must reference this section and are to be 
submitted to OFAC using one of the below methods:
    (i) Email: [email protected]; or
    (ii) U.S. mail: OFAC Regulations Reports, Office of Foreign Assets 
Control, U.S. Department of the Treasury, 1500 Pennsylvania Avenue NW, 
Freedman's Bank Building, Washington, DC 20220.

    Note to Sec.  584.508: U.S. persons who receive payments in 
connection with legal services authorized pursuant to Sec.  
584.507(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.  584.507(a).

Sec.  584.509  Emergency medical services.

    The provision and receipt of nonscheduled emergency medical 
services that are otherwise prohibited by this part or any Executive 
orders or further Presidential action relating to the Magnitsky Act are 
authorized.

Subpart F--Reports


Sec.  584.601  Records and reports.

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

Subpart G--Penalties and Finding of Violation


Sec.  584.701  Penalties.

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

    Note to paragraph (a)(1): As of December 21, 2017, IEEPA 
provides for a maximum civil penalty not to exceed the greater of 
$289,238 or an amount that is twice the amount of the transaction 
that is the basis of

[[Page 60516]]

the violation with respect to which the penalty is imposed.

    (2) A person who willfully commits, willfully attempts to commit, 
or willfully conspires to commit, or aids or abets in the commission of 
a violation of any license, order, regulation, or prohibition may, upon 
conviction, be fined not more than $1,000,000, or if a natural person, 
be imprisoned for not more than 20 years, or both.
    (b) Adjustments to penalty amounts. (1) The civil penalties 
provided in IEEPA are subject to adjustment pursuant to the Federal 
Civil Penalties Inflation Adjustment Act of 1990 (Pub. L. 101-410, as 
amended, 28 U.S.C. 2461 note).
    (2) The criminal penalties provided in IEEPA are subject to 
adjustment pursuant to 18 U.S.C. 3571.
    (c) Pursuant to 18 U.S.C. 1001, whoever, in any matter within the 
jurisdiction of the executive, legislative, or judicial branch of the 
Government of the United States, knowingly and willfully falsifies, 
conceals, or covers up by any trick, scheme, or device a material fact; 
or makes any materially false, fictitious, or fraudulent statement or 
representation; or makes or uses any false writing or document knowing 
the same to contain any materially false, fictitious, or fraudulent 
statement or entry shall be fined under title 18, United States Code, 
imprisoned, or both.
    (d) Violations of this part may also be subject to other applicable 
laws.


Sec.  584.702  Pre-Penalty Notice; settlement.

    (a) When required. If OFAC has reason to believe that there has 
occurred a violation of any provision of this part or a violation of 
the provisions of any license, ruling, regulation, order, directive, or 
instruction issued by or pursuant to the direction or authorization of 
the Secretary of the Treasury pursuant to this part or otherwise under 
the International Emergency Economic Powers Act (50 U.S.C. 1705) 
(IEEPA) and determines that a civil monetary penalty is warranted, OFAC 
will issue a Pre-Penalty Notice informing the alleged violator of the 
agency's intent to impose a monetary penalty. A Pre-Penalty Notice 
shall be in writing. The Pre-Penalty Notice may be issued whether or 
not another agency has taken any action with respect to the matter. For 
a description of the contents of a Pre-Penalty Notice, see appendix A 
to part 501 of this chapter.
    (b) Response--(1) Right to respond. An alleged violator has the 
right to respond to a Pre-Penalty Notice by making a written 
presentation to OFAC. For a description of the information that should 
be included in such a response, see appendix A to part 501 of this 
chapter.
    (2) Deadline for response. A response to a Pre-Penalty Notice must 
be made within 30 days as set forth in this paragraph (b). The failure 
to submit a response within 30 days shall be deemed to be a waiver of 
the right to respond.
    (i) Computation of time for response. A response to a Pre-Penalty 
Notice must be postmarked or date-stamped by the U.S. Postal Service 
(or foreign postal service, if mailed abroad) or courier service 
provider (if transmitted to OFAC by courier) on or before the 30th day 
after the postmark date on the envelope in which the Pre-Penalty Notice 
was mailed. If the Pre-Penalty Notice was personally delivered by a 
non-U.S. Postal Service agent authorized by OFAC, a response must be 
postmarked or date-stamped on or before the 30th day after the date of 
delivery.
    (ii) Extensions of time for response. If a due date falls on a 
Federal holiday or weekend, that due date is extended to include the 
following business day. Any other extensions of time will be granted, 
at the discretion of OFAC, only upon specific request to OFAC.
    (3) Form and method of response. A response to a Pre-Penalty Notice 
need not be in any particular form, but it must be typewritten and 
signed by the alleged violator or a representative thereof, must 
contain information sufficient to indicate that it is in response to 
the Pre-Penalty Notice, and must include the OFAC identification number 
listed on the Pre-Penalty Notice. A copy of the written response may be 
sent by facsimile, but the original also must be sent to OFAC's 
Enforcement Division by mail or courier and must be postmarked or date-
stamped in accordance with paragraph (b)(2) of this section.
    (c) Settlement. Settlement discussion may be initiated by OFAC, the 
alleged violator, or the alleged violator's authorized representative. 
For a description of practices with respect to settlement, see appendix 
A to part 501 of this chapter.
    (d) Guidelines. Guidelines for the imposition or settlement of 
civil penalties by OFAC are contained in appendix A to part 501 of this 
chapter.
    (e) Representation. A representative of the alleged violator may 
act on behalf of the alleged violator, but any oral communication with 
OFAC prior to a written submission regarding the specific allegations 
contained in the Pre-Penalty Notice must be preceded by a written 
letter of representation, unless the Pre-Penalty Notice was served upon 
the alleged violator in care of the representative.


Sec.  584.703  Penalty imposition.

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


Sec.  584.704  Administrative collection; referral to United States 
Department of Justice.

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


Sec.  584.705  Finding of Violation.

    (a) When issued. (1) OFAC may issue an initial Finding of Violation 
that identifies a violation if OFAC:
    (i) Determines that there has occurred a violation of any provision 
of this part, or a violation of the provisions of any license, ruling, 
regulation, order, directive, or instruction issued by or pursuant to 
the direction or authorization of the Secretary of the Treasury 
pursuant to this part or otherwise under the International Emergency 
Economic Powers Act;
    (ii) Considers it important to document the occurrence of a 
violation; and,
    (iii) Based on the Guidelines contained in appendix A to part 501 
of this chapter, concludes that an administrative response is warranted 
but that a civil monetary penalty is not the most appropriate response.
    (2) An initial Finding of Violation shall be in writing and may be 
issued whether or not another agency has taken any action with respect 
to the matter. For additional details concerning issuance of a Finding 
of Violation, see appendix A to part 501 of this chapter.
    (b) Response--(1) Right to respond. An alleged violator has the 
right to

[[Page 60517]]

contest an initial Finding of Violation by providing a written response 
to OFAC.
    (2) Deadline for response; Default determination. A response to an 
initial Finding of Violation must be made within 30 days as set forth 
in this paragraph (b). The failure to submit a response within 30 days 
shall be deemed to be a waiver of the right to respond, and the initial 
Finding of Violation will become final and will constitute final agency 
action. The violator has the right to seek judicial review of that 
final agency action in Federal district court.
    (i) Computation of time for response. A response to an initial 
Finding of Violation must be postmarked or date-stamped by the U.S. 
Postal Service (or foreign postal service, if mailed abroad) or courier 
service provider (if transmitted to OFAC by courier) on or before the 
30th day after the postmark date on the envelope in which the initial 
Finding of Violation was served. If the initial Finding of Violation 
was personally delivered by a non-U.S. Postal Service agent authorized 
by OFAC, a response must be postmarked or date-stamped on or before the 
30th day after the date of delivery.
    (ii) Extensions of time for response. If a due date falls on a 
Federal holiday or weekend, that due date is extended to include the 
following business day. Any other extensions of time will be granted, 
at the discretion of OFAC, only upon specific request to OFAC.
    (3) Form and method of response. A response to an initial Finding 
of Violation need not be in any particular form, but it must be 
typewritten and signed by the alleged violator or a representative 
thereof, must contain information sufficient to indicate that it is in 
response to the initial Finding of Violation, and must include the OFAC 
identification number listed on the initial Finding of Violation. A 
copy of the written response may be sent by facsimile, but the original 
also must be sent to OFAC by mail or courier and must be postmarked or 
date-stamped in accordance with paragraph (b)(2) of this section.
    (4) Information that should be included in response. Any response 
should set forth in detail why the alleged violator either believes 
that a violation of the regulations did not occur and/or why a Finding 
of Violation is otherwise unwarranted under the circumstances, with 
reference to the General Factors Affecting Administrative Action set 
forth in the Guidelines contained in appendix A to part 501. The 
response should include all documentary or other evidence available to 
the alleged violator that supports the arguments set forth in the 
response. OFAC will consider all relevant materials submitted in the 
response.
    (c)(1) Determination. If, after considering the response, OFAC 
determines that a final Finding of Violation should be issued, OFAC 
will issue a final Finding of Violation that will inform the violator 
of its decision. A final Finding of Violation shall constitute final 
agency action. The violator has the right to seek judicial review of 
that final agency action in Federal district court.
    (2) Determination that a Finding of Violation is not warranted. If, 
after considering the response, OFAC determines a Finding of Violation 
is not warranted, then OFAC will inform the alleged violator of its 
decision not to issue a final Finding of Violation.

    Note to paragraph (c)(2): A determination by OFAC that a final 
Finding of Violation is not warranted does not preclude OFAC from 
pursuing other enforcement actions consistent with the Guidelines 
contained in appendix A to part 501 of this chapter.

    (d) Representation. A representative of the alleged violator may 
act on behalf of the alleged violator, but any oral communication with 
OFAC prior to a written submission regarding the specific alleged 
violations contained in the initial Finding of Violation must be 
preceded by a written letter of representation, unless the initial 
Finding of Violation was served upon the alleged violator in care of 
the representative.

Subpart H--Procedures


Sec.  584.801  Procedures.

    For license application procedures and procedures relating to 
amendments, modifications, or revocations of licenses; administrative 
decisions; rulemaking; and requests for documents pursuant to the 
Freedom of Information and Privacy Acts (5 U.S.C. 552 and 552a), see 
part 501, subpart E, of this chapter.


Sec.  584.802  Delegation by the Secretary of the Treasury.

    Any action that the Secretary of the Treasury is authorized to take 
pursuant to the Magnitsky Act; Presidential Memorandum of April 5, 
2013: Delegation of Functions Under Section 404 and 406 of Public Law 
112-208 (78 FR 22761, April 16, 2013); or any Executive orders or 
further Presidential action relating to the Magnitsky Act, 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.  584.901  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, and other procedures, see Sec.  501.901 of this 
chapter. An agency may not conduct or sponsor, and a person is not 
required to respond to, a collection of information unless it displays 
a valid control number assigned by OMB.

    Dated: December 11, 2017.
John E. Smith,
Director, Office of Foreign Assets Control.
    Approved: December 11, 2017.
Sigal P. Mandelker,
Under Secretary, Office of Terrorism and Financial Intelligence, 
Department of the Treasury.
[FR Doc. 2017-27499 Filed 12-20-17; 8:45 am]
 BILLING CODE 4810-AL-P