Democratic Republic of the Congo Sanctions Regulations, 57308-57318 [2018-24696]

Agencies

• DEPARTMENT OF THE TREASURY
• Office of Foreign Assets Control

[Federal Register Volume 83, Number 221 (Thursday, November 15, 2018)]
[Rules and Regulations]
[Pages 57308-57318]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-24696]


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DEPARTMENT OF THE TREASURY

Office of Foreign Assets Control

31 CFR Part 547


Democratic Republic of the Congo Sanctions Regulations

AGENCY: Office of Foreign Assets Control, Treasury.

ACTION: Final rule.

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SUMMARY: The Department of the Treasury's Office of Foreign Assets 
Control (OFAC) is adopting a final rule amending the Democratic 
Republic of the Congo Sanctions Regulations to implement Executive 
Order 13671 of July 8, 2014 (``Taking Additional Steps to Address the 
National Emergency With Respect to the Conflict in the Democratic 
Republic of the Congo''). This rule also incorporates other technical 
and conforming changes.

DATES: Effective: November 15, 2018.

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 May 28, 2009, OFAC issued the Democratic Republic of the Congo 
Sanctions Regulations, 31 CFR part 547 (the ``Regulations'') (74 FR 
25439, May 28, 2009) to implement Executive Order 13413 of October 27, 
2006 (71 FR 64105, October 31, 2006) (E.O. 13413).

Executive Order 13671

    On July 8, 2014, the President, invoking the authority of, inter 
alia, the International Emergency Economic Powers Act (50 U.S.C. 1701-
1706) (IEEPA) and section 5 of the United Nations Participation Act (22 
U.S.C. 287c) (UNPA), issued Executive Order 13671 (79 FR 39949, July 
10, 2014) (E.O. 13671). In E.O. 13671, the President amended E.O. 13413 
to take additional steps to deal with the national emergency with 
respect to the situation in or in relation to the Democratic Republic 
of the Congo declared in E.O. 13413, in view of multiple United Nations 
Security Council Resolutions, including Resolution 2136 of January 30, 
2014, and in light of the continuation of activities that threaten the 
peace, security, or stability of the Democratic Republic of the Congo 
and the surrounding region, including operations by armed groups, 
widespread violence and atrocities, human rights abuses, recruitment 
and use of child soldiers, attacks on peacekeepers, obstruction of 
humanitarian operations, and exploitation of natural resources to 
finance persons engaged in these activities.
    E.O. 13671 amends several sections of E.O. 13413 but does not amend 
the Annex to E.O. 13413 as originally issued. Section 1 of E.O. 13671 
amends E.O. 13413 by replacing subsection 1(a) of E.O. 13413 in its 
entirety. New subsection 1(a) of E.O. 13413 as amended by E.O. 13671 
(``amended E.O. 13413'') \1\ blocks 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 
U.S. person, of: (i) The persons listed in the Annex to amended E.O. 
13413; and (ii) any person determined by the Secretary of the Treasury, 
in consultation with the Secretary of State:
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    \1\ For the purposes of this subsection, the term ``amended E.O. 
13413'' refers to E.O. 13413 as amended by E.O. 13671. Because E.O. 
13671 did not amend the Annex, the term ``Annex to amended E.O. 
13413'' refers to the Annex as originally issued to E.O. 13413.
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    (A) To be a political or military leader of a foreign armed group 
operating in the Democratic Republic of the Congo that impedes the 
disarmament, demobilization, voluntary repatriation, resettlement, or 
reintegration of combatants;
    (B) to be a political or military leader of a Congolese armed group 
that impedes the disarmament, demobilization, voluntary repatriation, 
resettlement, or reintegration of combatants;
    (C) to be responsible for or complicit in, or to have engaged in, 
directly or indirectly, any of the following in or in relation to the 
Democratic Republic of the Congo: (1) Actions or policies that threaten 
the peace, security, or stability of the Democratic Republic of the 
Congo; (2) actions or policies that undermine democratic processes or 
institutions in the Democratic Republic of the Congo; (3) the targeting 
of women, children, or any civilians through the commission of acts of 
violence (including killing, maiming, torture, or rape or other sexual 
violence), abduction, forced displacement, or attacks on schools, 
hospitals, religious sites, or locations where civilians are seeking 
refuge, or through conduct that would constitute a serious abuse or 
violation of human rights or a violation of international humanitarian 
law; (4) the use or recruitment of children by armed groups or armed 
forces in the context of the conflict in the Democratic Republic of the 
Congo; (5) the obstruction of the delivery or distribution of, or 
access to, humanitarian assistance; (6) attacks

[[Page 57309]]

against United Nations missions, international security presences, or 
other peacekeeping operations; or (7) support to persons, including 
armed groups, involved in activities that threaten the peace, security, 
or stability of the Democratic Republic of the Congo or that undermine 
democratic processes or institutions in the Democratic Republic of the 
Congo, through the illicit trade in natural resources of the Democratic 
Republic of the Congo;
    (D) except where intended for the authorized support of 
humanitarian activities or the authorized use by or support of 
peacekeeping, international, or government forces, to have directly or 
indirectly supplied, sold, or transferred to the Democratic Republic of 
the Congo, or been the recipient in the territory of the Democratic 
Republic of the Congo, of arms and related materiel, including military 
aircraft and equipment, or advice, training, or assistance, including 
financing and financial assistance, related to military activities;
    (E) to be a leader of (i) an entity, including any armed group, 
that has, or whose members have, engaged in any of the activities 
described in paragraphs (A) through (D) above or (ii) an entity whose 
property and interests in property are blocked pursuant to amended E.O. 
13413;
    (F) to have materially assisted, sponsored, or provided financial, 
material, logistical, or technological support for, or goods or 
services in support of: (i) Any of the activities described in (A) 
through (D) above; or (ii) any person whose property and interests in 
property are blocked pursuant to amended E.O. 13413; or
    (G) 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 amended E.O. 
13413.
    The property and interests in property of the persons described 
above may not be transferred, paid, exported, withdrawn, or otherwise 
dealt in.
    Section 2 of E.O. 13671 adds new subsection (d) to section 1 of 
E.O. 13413. This new subsection provides that the prohibitions in 
subsection 1(a) of amended E.O. 13413 apply except to the extent 
provided by statutes, or in regulations, orders, directives, or 
licenses that may be issued pursuant to amended E.O. 13413, and 
notwithstanding any contract entered into or any license or permit 
granted prior to the effective date of the order.
    Section 3 of E.O. 13671 amends section 2 of E.O. 13413 by adding a 
prohibition. Section 2 of E.O. 13413 prohibited any transaction by a 
U.S. person or within the United States that evades or avoids, has the 
purpose of evading or avoiding, or attempts to violate any of the 
prohibitions set forth in E.O. 13413, as well as any conspiracy formed 
to violate such prohibitions. Section 3 of E.O. 13671 adds a 
prohibition on causing a violation of any prohibitions set forth in 
amended E.O. 13413 to the existing prohibitions.
    Section 4 of E.O. 13671 authorizes the Secretary of the Treasury, 
in consultation with the Secretary of State, to take such actions, 
including the promulgation of rules and regulations, and to employ all 
powers granted to the President by IEEPA and the UNPA as may be 
necessary to carry out the purposes of E.O. 13671 and amended E.O. 
13413. Section 4 of E.O. 13671 also provides that the Secretary of the 
Treasury may redelegate any of these functions to other officers and 
agencies of the U.S. government.

Current Regulatory Action

    This rule amends the Regulations to implement the relevant 
provisions of E.O. 13671, as well as to update certain provisions and 
to make other technical and conforming changes. OFAC is revising and 
republishing in its entirety subpart B of the Regulations, which sets 
forth the prohibitions contained in sections 1 and 2 of amended E.O. 
13413. See, e.g., Sec. Sec.  547.201 and 547.205. In particular, OFAC 
is revising Sec.  547.201 of subpart B to incorporate the new 
designation criteria provided for in E.O. 13671. OFAC is also adding 
Sec.  547.206 to subpart B to clarify which transactions are exempt 
from the prohibitions in this part.
    This rule also amends several sections in subpart C, which defines 
key terms used throughout the Regulations. New Sec.  547.300 is being 
added to clarify that the definitions contained in subpart C apply 
throughout the entire part, and Sec. Sec.  547.314 and 547.315 are 
being added to define key terms used in the Regulations. Also, certain 
existing definitions in subpart C are being updated or revised to take 
account of new provisions and to provide greater clarity with respect 
to the terms being used.
    This rule also revises and republishes in its entirety subpart D, 
which contains interpretive sections regarding the Regulations. Section 
547.411 of subpart D is being amended to clarify 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 listed in 
or designated pursuant to amended E.O. 13413 or incorporated into 
OFAC's Specially Designated Nationals and Blocked Persons List (SDN 
List). Other sections within subpart D are being amended to reflect 
current OFAC interpretations.
    Transactions otherwise prohibited by 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. This rule also amends subpart E of the Regulations. In 
particular, a general license is being added in Sec.  547.508, 
authorizing payments from outside the United States for the provision 
of legal services authorized in Sec.  547.507. The general license 
authorizing certain emergency medical services that was formerly at 
Sec.  547.508 has been moved to Sec.  547.509 and updated to reflect 
current licensing policies. Updates to reflect current licensing 
policies have also been made to several other general licenses. General 
licenses and statements of licensing policy relating to this part also 
may be available through the Democratic Republic of the Congo sanctions 
page on OFAC's website: www.treasury.gov/ofac.
    This rule revises subpart G of the Regulations and republishes it 
in its entirety. 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. Finally, this rule updates the delegation of 
authority by the Secretary of the Treasury in subpart H of the 
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, 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

[[Page 57310]]

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 547

    Administrative practice and procedure, Banks, Banking, Blocking of 
assets, Credit, Democratic Republic of the Congo, Foreign trade, 
Penalties, Reporting and recordkeeping requirements, Securities, 
Services.

    For the reasons set forth in the preamble, the Department of the 
Treasury's Office of Foreign Assets Control amends 31 CFR part 547 as 
follows:

PART 547--DEMOCRATIC REPUBLIC OF THE CONGO SANCTIONS REGULATIONS

0
1. Revise the authority citation for part 547 to read as follows:

    Authority:  3 U.S.C. 301; 31 U.S.C. 321(b); 50 U.S.C. 1601-1651, 
1701-1706; 22 U.S.C. 287c; Pub. L. 101-410, 104 Stat. 890 (28 U.S.C. 
2461 note); Pub. L. 110-96, 121 Stat. 1011 (50 U.S.C. 1705 note); 
E.O. 13413, 71 FR 64105, 3 CFR, 2006 Comp., p. 247; E.O. 13671, 79 
FR 39949, 3 CFR, 2015 Comp., p. 280.

0
2. Revise subpart B to read as follows:

Subpart B--Prohibitions

Sec.
547.201 Prohibited transactions involving blocked property.
547.202 Effect of transfers violating the provisions of this part.
547.203 Holding of funds in interest-bearing accounts; investment 
and reinvestment.
547.204 Expenses of maintaining blocked tangible property; 
liquidation of blocked property.
547.205 Evasions; attempts; causing violations; conspiracies.
547.206 Exempt transactions.


Sec.  547.201  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 U.S. person of the following persons 
are blocked and may not be transferred, paid, exported, withdrawn, or 
otherwise dealt in:
    (1) The persons listed in the Annex to Executive Order 13413 of 
October 27, 2006; and
    (2) Any person determined by the Secretary of the Treasury, in 
consultation with the Secretary of State:
    (i) To be a political or military leader of a foreign armed group 
operating in the Democratic Republic of the Congo that impedes the 
disarmament, demobilization, voluntary repatriation, resettlement, or 
reintegration of combatants;
    (ii) To be a political or military leader of a Congolese armed 
group that impedes the disarmament, demobilization, voluntary 
repatriation, resettlement, or reintegration of combatants;
    (iii) To be responsible for or complicit in, or to have engaged in, 
directly or indirectly, any of the following in or in relation to the 
Democratic Republic of the Congo:
    (A) Actions or policies that threaten the peace, security, or 
stability of the Democratic Republic of the Congo;
    (B) Actions or policies that undermine democratic processes or 
institutions in the Democratic Republic of the Congo;
    (C) The targeting of women, children, or any civilians through the 
commission of acts of violence (including killing, maiming, torture, or 
rape or other sexual violence), abduction, forced displacement, or 
attacks on schools, hospitals, religious sites, or locations where 
civilians are seeking refuge, or through conduct that would constitute 
a serious abuse or violation of human rights or a violation of 
international humanitarian law;
    (D) The use or recruitment of children by armed groups or armed 
forces in the context of the conflict in the Democratic Republic of the 
Congo;
    (E) The obstruction of the delivery or distribution of, or access 
to, humanitarian assistance;
    (F) Attacks against United Nations missions, international security 
presences, or other peacekeeping operations; or
    (G) Support to persons, including armed groups, involved in 
activities that threaten the peace, security, or stability of the 
Democratic Republic of the Congo or that undermine democratic processes 
or institutions in the Democratic Republic of the Congo, through the 
illicit trade in natural resources of the Democratic Republic of the 
Congo;
    (iv) Except where intended for the authorized support of 
humanitarian activities or the authorized use by or support of 
peacekeeping, international, or government forces, to have directly or 
indirectly supplied, sold, or transferred to the Democratic Republic of 
the Congo, or been the recipient in the territory of the Democratic 
Republic of the Congo of, arms and related materiel, including military 
aircraft and equipment, or advice, training, or assistance, including 
financing and financial assistance, related to military activities;
    (v) To be a leader of:
    (A) An entity, including any armed group, that has, or whose 
members have, engaged in any of the activities described in paragraphs 
(a)(2)(i) through (iv) of this section; or
    (B) An entity whose property and interests in property are blocked 
pursuant to paragraph (a) of this section;
    (vi) To have materially assisted, sponsored, or provided financial, 
material, logistical, or technological support for, or goods or 
services in support of any of the activities described in paragraphs 
(a)(2)(i) through (iv) of this section or any person whose property and 
interests in property are blocked pursuant to paragraph (a) of this 
section; or
    (vii) 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 paragraph 
(a) of this section.

    Note 1 to paragraph (a):  The names of persons listed in or 
designated pursuant to Executive Order 13413, both as originally 
issued and as amended by Executive Order 13671, whose property and 
interests in property therefore are blocked pursuant to paragraph 
(a) of 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 ``[DRCONGO].'' 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.  547.411 
concerning entities that may not be listed on the SDN List but whose 
property and interests in property are nevertheless blocked pursuant 
to paragraph (a) of this section.


    Note 2 to paragraph (a):  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 paragraph (a) of this section also are 
published in the Federal Register and incorporated into the SDN List 
with the identifier ``[BPI-DRCONGO].''


    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

[[Page 57311]]

blocked pursuant to paragraph (a) of this section.

    (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; 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 part, any dealing in 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 provided by regulations, orders, directives, or licenses 
that may be issued pursuant to this part, and notwithstanding any 
contract entered into or any license or permit granted prior to the 
effective date.


Sec.  547.202  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.  
547.201(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 interests in property.
    (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 interests in 
property blocked pursuant to Sec.  547.201(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 1 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.  547.201(a).


Sec.  547.203  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.  547.201(a) shall hold or place such funds 
in a blocked interest-bearing account located in the United States.
    (b)(1) For purposes of this section, the term blocked interest-
bearing account means a blocked account:
    (i) In a federally-insured U.S. bank, thrift institution, or credit 
union, provided the funds are earning interest at rates that are 
commercially reasonable; or
    (ii) With a broker or dealer registered with the Securities and 
Exchange Commission under the Securities Exchange Act of 1934 (15 
U.S.C. 78a et seq.), provided the funds are invested in a money market 
fund or in U.S. Treasury bills.
    (2) Funds held or placed in a blocked account pursuant to paragraph 
(a) of this section may not be invested in instruments the maturity of 
which exceeds 180 days.
    (c) For purposes of this section, a rate is commercially reasonable 
if it is the rate currently offered to other depositors on deposits or 
instruments of comparable size and maturity.
    (d) For purposes of this section, if interest is credited to a 
separate blocked account or subaccount, the name of the account party 
on each account must be the same.
    (e) Blocked funds held in instruments the maturity of which exceeds 
180 days at the time the funds become subject to Sec.  547.201(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.  547.201(a) 
may continue to be held in the same type of accounts or instruments, 
provided the funds earn

[[Page 57312]]

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 real or personal property, 
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.  547.201(a), nor may their holder 
cooperate in or facilitate the pledging or other attempted use as 
collateral of blocked funds or other assets.


Sec.  547.204  Expenses of maintaining blocked tangible 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 tangible property blocked pursuant to Sec.  
547.201(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.  547.201(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.  547.205  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.  547.206  Exempt transactions.

    (a) United Nations Participation Act. The exemptions described in 
this section do not apply to transactions involving property or 
interests in property of persons whose property and interests in 
property are blocked pursuant to the authority of the United Nations 
Participation Act, as amended (22 U.S.C. 287c(b)) (UNPA).

    Note 1 to paragraph (a):  Persons whose property and interests 
in property are blocked pursuant to the authority of the UNPA 
include those listed on both OFAC's Specially Designated Nationals 
and Blocked Persons List (SDN List) and the Consolidated United 
Nations Security Council Sanctions List (UN List) (see https://www.un.org) as well as persons listed on the SDN List for being 
owned or controlled by, or acting for or on behalf of, persons 
listed on both the SDN List and the UN List.

    (b) 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.
    (c) 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.  547.314, 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 through 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.  
547.201(a) are prohibited.
    (d) 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.

Subpart C--General Definitions

0
3. Add Sec.  547.300 to read as follows:


Sec.  547.300  Applicability of definitions.

    The definitions in this subpart apply throughout the entire part.


Sec.  547.301  [Amended]

0
4. In the heading and introductory text of Sec.  547.301, remove ``or 
any'' and add in its place ``and''.

0
5. Revise Sec.  547.302 to read as follows:


Sec.  547.302  Blocked account; blocked property.

    The terms blocked account and blocked property shall mean any 
account or property subject to the prohibitions in Sec.  547.201 held 
in the name of a person whose property and interests in property are 
blocked pursuant to Sec.  547.201(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 1 to Sec.  547.302:  See Sec.  547.411 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.  547.201(a).


0
6. Revise Sec.  547.303 to read as follows:


Sec.  547.303  Effective date.

    (a) The term effective date refers to the effective date of the 
applicable prohibitions and directives contained in this part as 
follows:
    (1) With respect to a person whose property and interests in 
property are blocked pursuant to Sec.  547.201(a)(1), 12:01 a.m. 
eastern standard time on October 30, 2006; and
    (2) With respect to a person whose property and interests in 
property are otherwise blocked pursuant to Sec.  547.201(a), the 
earlier of the date of actual or constructive notice that such person's 
property and interests in property are blocked.

[[Page 57313]]

    (b) For the purposes of this section, constructive notice is the 
date that a notice of the blocking of the relevant person's property 
and interests in property is published in the Federal Register.

0
7. Revise Sec.  547.306 to read as follows:


 Sec.  547.306  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 1 to Sec.  547.306:  See Sec.  501.801 of this chapter on 
licensing procedures.



0
8. Revise Sec.  547.311 to read as follows:


Sec.  547.311  U.S. financial institution.

    The term U.S. financial institution means any U.S. entity 
(including its foreign branches) that is engaged in the business of 
accepting deposits, making, granting, transferring, holding, or 
brokering loans or other extensions of 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, 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.

0
9. Revise Sec.  547.313 to read as follows:


Sec.  547.313  Financial, material, logistical, or technological 
support.

    The term financial, material, logistical, or technological support, 
as used in Sec.  547.201(a)(2)(vi), means any property, tangible or 
intangible, including 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.

0
10. Add Sec.  547.314 to read as follows:


Sec.  547.314  Information or informational materials.

    (a)(1) 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.
    (2) 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.

0
11. Add Sec.  547.315 to read as follows:


Sec.  547.315  OFAC.

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

0
12. Revise subpart D to read as follows:

Subpart D--Interpretations

Sec.
547.401 Reference to amended sections.
547.402 Effect of amendment.
547.403 Termination and acquisition of an interest in blocked 
property.
547.404 Transactions ordinarily incident to a licensed transaction.
547.405 Provision of services.
547.406 Offshore transactions involving blocked property.
547.407 Payments from blocked accounts to satisfy obligations 
prohibited.
547.408 Charitable contributions.
547.409 Credit extended and cards issued by financial institutions 
to a person whose property and interests in property are blocked.
547.410 Setoffs prohibited.
547.411 Entities owned by one or more persons whose property and 
interests in property are blocked.


Sec.  547.401  Reference to amended sections.

    (a) Reference to any section in this part is a reference to the 
same as currently amended, unless the reference includes a specific 
date. See 44 U.S.C. 1510.
    (b) Reference to any ruling, order, instruction, direction, or 
license issued pursuant to this part is a reference to the same as 
currently amended unless otherwise so specified.


Sec.  547.402  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.  547.403  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.  547.201(a), such property shall no longer 
be deemed to be property blocked pursuant to Sec.  547.201(a), unless 
there exists in the property another interest that is blocked pursuant 
to Sec.  547.201(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.  547.201(a), such property shall be deemed to be property in which 
such person has an interest and therefore blocked.


Sec.  547.404  Transactions ordinarily incident to a licensed 
transaction.

    (a) Any transaction ordinarily incident to a licensed transaction 
and

[[Page 57314]]

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.  547.201(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) For 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.  547.201(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.  547.201(a).


Sec.  547.405  Provision of services.

    (a) The prohibitions on transactions contained in Sec.  547.201 
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.  547.201(a); or
    (2) With respect to property interests of any person whose property 
and interests in property are blocked pursuant to Sec.  547.201(a).
    (b) For 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.  547.201(a).

     Note 1 to Sec.  547.405:  See Sec. Sec.  547.507 and 547.509 on 
licensing policy with regard to the provision of certain legal and 
emergency medical services.

Sec.  547.406  Offshore transactions involving blocked property.

    The prohibitions in Sec.  547.201 on transactions or dealings 
involving blocked property, as defined in Sec.  547.302, apply to 
transactions by any U.S. person in a location outside the United 
States.


Sec.  547.407  Payments from blocked accounts to satisfy obligations 
prohibited.

    Pursuant to Sec.  547.201, 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 1 to Sec.  547.407:  See also Sec.  547.502(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.  547.408  Charitable contributions.

    Unless specifically authorized by OFAC pursuant to this part, no 
charitable contribution of funds, goods, services, or technology, 
including contributions to relieve human suffering, such as food, 
clothing, or medicine, may be made by, to, or for the benefit of, or 
received from, a person whose property and interests in property are 
blocked pursuant to Sec.  547.201(a). For the purposes of this part, a 
contribution is made by, to, or for the benefit of, or received from, a 
person whose property and interests in property are blocked pursuant to 
Sec.  547.201(a) if made by, to, or in the name of, or received from or 
in the name of, such a person; if made by, to, or in the name of, or 
received from or in the name of, an entity or individual acting for or 
on behalf of, or owned or controlled by, such a person; or if made in 
an attempt to violate, to evade, or to avoid the bar on the provision 
of contributions by, to, or for the benefit of such a person, or the 
receipt of contributions from such a person.


Sec.  547.409  Credit extended and cards issued by financial 
institutions to a person whose property and interests in property are 
blocked.

    The prohibition in Sec.  547.201 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.  547.201(a).


Sec.  547.410  Setoffs prohibited.

    A setoff against blocked property (including a blocked account), 
whether by a U.S. bank or other U.S. person, is a prohibited transfer 
under Sec.  547.201 if effected after the effective date.


Sec.  547.411  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.  547.201(a) have an interest in all property and 
interests in property of an entity in which such 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.  
547.201(a), 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

0
13. Revise Sec.  547.501 to read as follows:


Sec.  547.501  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 Democratic Republic of the Congo sanctions 
page on OFAC's website: www.treasury.gov/ofac.

0
14. Revise Sec.  547.502 to read as follows:


Sec.  547.502  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,

[[Page 57315]]

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.

0
15. Revise Sec.  547.503 to read as follows:


Sec.  547.503  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.

0
16. Revise Sec.  547.507 to read as follows:


Sec.  547.507  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.  547.201(a) or any further Executive orders relating 
to the national emergency declared in E.O. 13413 of October 27, 2006, 
is authorized, provided that receipt of payment of professional fees 
and reimbursement of incurred expenses must be authorized: Pursuant to 
Sec.  547.508, which authorizes certain payments for legal services 
from funds originating outside the United States; via specific license; 
or otherwise 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 or on behalf of 
persons whose property and interests in property are blocked pursuant 
to Sec.  547.201(a) or any further Executive orders relating to the 
national emergency declared in E.O. 13413 of October 27, 2006, not 
otherwise authorized in this part, requires the issuance of a specific 
license.
    (c) 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 paragraph (a) of this section. Additionally, 
U.S. persons who provide services authorized by paragraph (a) of this 
section 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. See Sec.  510.404.
    (d) Entry into a settlement agreement or the enforcement of any 
lien, judgment, arbitral award, decree, or other order through 
execution, garnishment, or other judicial process purporting to 
transfer or otherwise alter or affect property or interests in property 
blocked pursuant to Sec.  547.201(a) or any further Executive orders 
relating to the national emergency declared in E.O. 13413 of October 
27, 2006, is prohibited unless licensed pursuant to this part.

    Note 1 to Sec.  547.507:  Pursuant to part 501, subpart E, of 
this chapter, 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 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 at: www.treasury.gov/ofac.

Sec.  547.508  [Redesignated as Sec.  547.509]

0
17. Redesignate Sec.  547.508 as Sec.  547.509.

0
18. Add new Sec.  547.508 to read as follows:


Sec.  547.508  Payments for legal services from funds originating 
outside the United States.

    (a) Professional fees and incurred expenses. (1) Receipt of payment 
of professional fees and reimbursement of incurred expenses for the 
provision of legal services authorized pursuant to Sec.  547.507(a) to 
or on behalf of any person whose property and interests in property are 
blocked pursuant to Sec.  547.201 or any further Executive orders 
relating to the national emergency declared in E.O. 13413 of October 
27, 2006, is authorized from funds originating outside the United 
States, provided that the funds do not originate from:
    (i) A source within the United States;
    (ii) Any source, wherever located, within the possession or control 
of a U.S. person; or
    (iii) Any individual or entity, other than the person on whose 
behalf the legal services authorized pursuant to Sec.  547.507(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.
    (2) Nothing in this paragraph (a) authorizes payments for legal 
services using funds in which any other person whose property and 
interests in property are blocked pursuant to Sec.  547.201(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

[[Page 57316]]

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 
submitted to OFAC using one of the following methods:
    (i) Email: (preferred method) 
[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.

0
19. Revise newly redesignated Sec.  547.509 to read as follows:


Sec.  547.509  Emergency medical services.

    The provision and receipt of nonscheduled emergency medical 
services that are otherwise prohibited by this part or any further 
Executive orders relating to the national emergency declared in 
Executive Order 13413 of October 27, 2006 are authorized.

0
20. Revise subpart G to read as follows:

Subpart G--Penalties and Finding of Violation

Sec.
547.701 Penalties.
547.702 Pre-Penalty Notice; settlement.
547.703 Penalty imposition.
547.704 Administrative collection; referral to United States 
Department of Justice.
547.705 Finding of Violation.


Sec.  547.701  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 1 to paragraph (a)(1): IEEPA provides for a maximum civil 
penalty not to exceed the greater of $295,141 or an amount that is 
twice the amount of the transaction that is the basis of the 
violation with respect to which the penalty is imposed.

    (2) A person who willfully commits, willfully attempts to commit, 
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)(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) Section 5 of the United Nations Participation Act, as amended 
(22 U.S.C. 287c(b)) (UNPA) provides that any person who willfully 
violates or evades or attempts to violate or evade any order, rule, or 
regulation issued by the President pursuant to the authority granted in 
that section, upon conviction, shall be fined not more than $10,000 
and, if a natural person, may also be imprisoned for not more than 10 
years; and the officer, director, or agent of any corporation who 
knowingly participates in such violation or evasion shall be punished 
by a like fine, imprisonment, or both and any property, funds, 
securities, papers, or other articles or documents, or any vessel, 
together with her tackle, apparel, furniture, and equipment, or 
vehicle, or aircraft, concerned in such violation shall be forfeited to 
the United States.
    (e) Violations involving transactions described at section 
203(b)(1), (3), and (4) of IEEPA shall be subject only to the penalties 
set forth in paragraph (d) of this section.
    (f) Violations of this part may also be subject to other applicable 
laws.


Sec.  547.702  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. 1701-1706) 
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 paragraphs (b)(2)(i) and (ii) of 
this section. 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

[[Page 57317]]

not be in any particular form, but it must be typewritten and signed by 
the alleged violator or a representative thereof, contain information 
sufficient to indicate that it is in response to the Pre-Penalty 
Notice, and 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 Office of 
Compliance and Enforcement 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.  547.703  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.  547.704  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.  547.705  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 (50 U.S.C. 1701-1706);
    (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 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 paragraphs (b)(2)(i) and (ii) of this section. 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, contain information sufficient to indicate that it is in 
response to the initial Finding of Violation, and 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 of this 
chapter. 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) Determination--(1) Determination that a Finding of Violation is 
warranted. 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

[[Page 57318]]

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

0
21. Revise Sec.  547.802 to read as follows:


Sec.  547.802  Delegation of certain authorities by the Secretary of 
the Treasury.

    Any action that the Secretary of the Treasury is authorized to take 
pursuant to Executive Order 13413 of October 27, 2006 (E.O. 13413), 
Executive Order 13671 of July 8, 2014, and any further Executive orders 
relating to the national emergency declared in E.O. 13413, 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.

    Dated: November 7, 2018.
Andrea Gacki,
Director, Office of Foreign Assets Control.
[FR Doc. 2018-24696 Filed 11-14-18; 8:45 am]
BILLING CODE 4810-AL-P