[Title 31 CFR ]
[Code of Federal Regulations (annual edition) - July 1, 2012 Edition]
[From the U.S. Government Printing Office]



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          Title 31

Money and Finance:Treasury


________________________

Parts 500 to End

                         Revised as of July 1, 2012

          Containing a codification of documents of general 
          applicability and future effect

          As of July 1, 2012
                    Published by the Office of the Federal Register 
                    National Archives and Records Administration as a 
                    Special Edition of the Federal Register

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                            Table of Contents



                                                                    Page
  Explanation.................................................       v

  Title 31:
    SUBTITLE B--Regulations Relating to Money and Finance 
      (Continued)
          Chapter V--Office of Foreign Assets Control, 
          Department of the Treasury                                 5
          Chapter VI--Bureau of Engraving and Printing, 
          Department of the Treasury                               547
          Chapter VII--Federal Law Enforcement Training 
          Center, Department of the Treasury                       553
          Chapter VIII--Office of Investment Security, 
          Department of the Treasury                               557
          Chapter IX--Federal Claims Collection Standards 
          (Department of the Treasury--Department of Justice)      583
          Chapter X--Financial Crimes Enforcement Network, 
          Department of the Treasury                               603
  Finding Aids:
      Table of CFR Titles and Chapters........................     743
      Alphabetical List of Agencies Appearing in the CFR......     763
      List of CFR Sections Affected...........................     773

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

                     Cite this Code: CFR
                     To cite the regulations in 
                       this volume use title, 
                       part and section number. 
                       Thus, 31 CFR 500.101 
                       refers to title 31, part 
                       500, section 101.

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

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                               EXPLANATION

    The Code of Federal Regulations is a codification of the general and 
permanent rules published in the Federal Register by the Executive 
departments and agencies of the Federal Government. The Code is divided 
into 50 titles which represent broad areas subject to Federal 
regulation. Each title is divided into chapters which usually bear the 
name of the issuing agency. Each chapter is further subdivided into 
parts covering specific regulatory areas.
    Each volume of the Code is revised at least once each calendar year 
and issued on a quarterly basis approximately as follows:

Title 1 through Title 16.................................as of January 1
Title 17 through Title 27..................................as of April 1
Title 28 through Title 41...................................as of July 1
Title 42 through Title 50................................as of October 1

    The appropriate revision date is printed on the cover of each 
volume.

LEGAL STATUS

    The contents of the Federal Register are required to be judicially 
noticed (44 U.S.C. 1507). The Code of Federal Regulations is prima facie 
evidence of the text of the original documents (44 U.S.C. 1510).

HOW TO USE THE CODE OF FEDERAL REGULATIONS

    The Code of Federal Regulations is kept up to date by the individual 
issues of the Federal Register. These two publications must be used 
together to determine the latest version of any given rule.
    To determine whether a Code volume has been amended since its 
revision date (in this case, July 1, 2012), consult the ``List of CFR 
Sections Affected (LSA),'' which is issued monthly, and the ``Cumulative 
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Register page number of the latest amendment of any given rule.

EFFECTIVE AND EXPIRATION DATES

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Register since the last revision of that volume of the Code. Source 
citations for the regulations are referred to by volume number and page 
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dates and effective dates are usually not the same and care must be 
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instances where the effective date is beyond the cut-off date for the 
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inserted following the text.

OMB CONTROL NUMBERS

    The Paperwork Reduction Act of 1980 (Pub. L. 96-511) requires 
Federal agencies to display an OMB control number with their information 
collection request.

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Many agencies have begun publishing numerous OMB control numbers as 
amendments to existing regulations in the CFR. These OMB numbers are 
placed as close as possible to the applicable recordkeeping or reporting 
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OBSOLETE PROVISIONS

    Provisions that become obsolete before the revision date stated on 
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of provisions in effect on a given date in the past by using the 
appropriate numerical list of sections affected. For the period before 
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Sections Affected'' is published at the end of each CFR volume.

``[RESERVED]'' TERMINOLOGY

    The term ``[Reserved]'' is used as a place holder within the Code of 
Federal Regulations. An agency may add regulatory information at a 
``[Reserved]'' location at any time. Occasionally ``[Reserved]'' is used 
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INCORPORATION BY REFERENCE

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This material, like any other properly issued regulation, has the force 
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    What is a proper incorporation by reference? The Director of the 
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    An index to the text of ``Title 3--The President'' is carried within 
that volume.

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    The Federal Register Index is issued monthly in cumulative form. 
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the revision dates of the 50 CFR titles.

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in the Code of Federal Regulations.

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    Charles A. Barth,
    Director,
    Office of the Federal Register.
    July 1, 2012.







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                               THIS TITLE

    Title 31--Money and Finance: Treasury is composed of three volumes. 
The parts in these volumes are arranged in the following order: Parts 0-
199, parts 200-499, and part 500 to end. The contents of these volumes 
represent all current regulations codified under this title of the CFR 
as of July 1, 2012.

    For this volume, Robert J. Sheehan, III was Chief Editor. The Code 
of Federal Regulations publication program is under the direction of 
Michael L. White, assisted by Ann Worley.

[[Page 1]]



                  TITLE 31--MONEY AND FINANCE: TREASURY




                  (This book contains part 500 to end)

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

    SUBTITLE B--Regulations Relating to Money and Finance (Continued)

                                                                    Part

chapter v--Office of Foreign Assets Control, Department of 
  the Treasury..............................................         500

chapter vi--Bureau of Engraving and Printing, Department of 
  the Treasury..............................................         601

chapter vii--Federal Law Enforcement Training Center, 
  Department of the Treasury................................         700

chapter viii--Office of Investment Security, Department of 
  the Treasury..............................................         800

chapter ix--Federal Claims Collection Standards (Department 
  of the Treasury--Department of Justice)...................         900

chapter x--Financial Crimes Enforcement Network, Department 
  of the Treasury...........................................        1010

[[Page 3]]

    Subtitle B--Regulations Relating to Money and Finance (Continued)

[[Page 5]]



 CHAPTER V--OFFICE OF FOREIGN ASSETS CONTROL, DEPARTMENT OF THE TREASURY




  --------------------------------------------------------------------
Part                                                                Page
501             Reporting, procedures and penalties 
                    regulations.............................           7
510             North Korea sanctions regulations...........          53
515             Cuban assets control regulations............          64
535             Iranian assets control regulations..........         119
536             Narcotics trafficking sanctions regulations.         144
537             Burmese sanctions regulations...............         156
538             Sudanese sanctions regulations..............         179
539             Weapons of mass destruction trade control 
                    regulations.............................         211
540             Highly Enriched Uranium (HEU) Agreement 
                    assets control regulations..............         219
541             Zimbabwe sanctions regulations..............         230
542             Syrian sanctions regulations................         243
543             C[ocirc]te D'Ivoire sanctions regulations...         256
544             Weapons of mass destruction proliferators 
                    sanctions regulations...................         269
546             Darfur sanctions regulations................         282
547             Democratic Republic of the Congo sanctions 
                    regulations.............................         295
548             Belarus sanctions regulations...............         308
549             Lebanon sanctions regulations...............         321
551             Somalia sanctions regulations...............         334
560             Iranian transactions regulations............         343
561             Iranian financial sanctions regulations.....         382
562             Iranian human rights abuses sanctions 
                    regulations.............................         398
570             Libyan sanctions regulations................         407
576             Iraq stabilization and insurgency sanctions 
                    regulations.............................         417
588             Western Balkans stabilization regulations...         433
590             Transnational criminal organizations 
                    sanctions regulations...................         445
592             Rough diamonds control regulations..........         454
593             Former Liberian regime of Charles Taylor 
                    sanctions regulations...................         463
594             Global terrorism sanctions regulations......         476
595             Terrorism sanctions regulations.............         496

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596             Terrorism List Governments sanctions 
                    regulations.............................         512
597             Foreign terrorist organizations sanctions 
                    regulations.............................         516
598             Foreign narcotics kingpin sanctions 
                    regulations.............................         532
Appendix A to Chapter V--Information Pertaining to the 
  Specially Designated Nationals and Blocked Persons List...         544

[[Page 7]]



PART 501_REPORTING, PROCEDURES AND PENALTIES REGULATIONS--Table of
Contents



     Subpart A_Relation of This Part to Other Parts in This Chapter

Sec.
501.101 Relation of this part to other parts in this chapter.

                          Subpart B_Definitions

501.301 Definitions.

                            Subpart C_Reports

501.601 Records and recordkeeping requirements.
501.602 Reports to be furnished on demand.
501.603 Reports on blocked property.
501.604 Reports by U.S. financial institutions on rejected funds 
          transfers.
501.605 Reports on litigation, arbitration, and dispute resolution 
          proceedings.
501.606 Reporting and recordkeeping requirements applicable to economic 
          sanctions programs.

          Subpart D_Trading With the Enemy Act (TWEA) Penalties

501.700 Applicability.
501.701 Penalties.
501.702 Definitions.
501.703 Overview of civil penalty process and construction of rules.
501.704 Appearance and practice.
501.705 Service and filing.
501.706 Prepenalty Notice; issuance by Director.
501.707 Response to Prepenalty Notice.
501.708 Director's finding of no penalty warranted.
501.709 Penalty Notice.
501.710 Settlement.
501.711 Hearing request.
501.712 Acknowledgment of hearing request.
501.713 Order Instituting Proceedings.
501.714 Answer to Order Instituting Proceedings.
501.715 Notice of hearing.
501.716 Default.
501.717 Consolidation of proceedings.
501.718 Conduct and order of hearings.
501.719 Ex parte communications.
501.720 Separation of functions.
501.721 Hearings to be public.
501.722 Prehearing conferences.
501.723 Prehearing disclosures; methods to discover additional matter.
501.724 Documents that may be withheld.
501.725 Confidential treatment of information in certain filings.
501.726 Motions.
501.727 Motion for summary disposition.
501.728 Subpoenas.
501.729 Sanctions.
501.730 Depositions upon oral examination.
501.731 Depositions upon written questions.
501.732 Evidence.
501.733 Evidence: confidential information; protective orders.
501.734 Introducing prior sworn statements of witnesses into the record.
501.735 Proposed findings, conclusions and supporting briefs.
501.736 Authority of Administrative Law Judge.
501.737 Adjustments of time, postponements and adjournments.
501.738 Disqualification and withdrawal of Administrative Law Judge.
501.739 Record in proceedings before Administrative Law Judge; retention 
          of documents; copies.
501.740 Decision of Administrative Law Judge.
501.741 Review of decision or ruling.
501.742 Secretary's designee's consideration of decisions by 
          Administrative Law Judge.
501.743 Briefs filed with the Secretary's designee.
501.744 Record before the Secretary's designee.
501.745 Orders and decisions: signature, date and public availability.
501.746 Referral to United States Department of Justice; administrative 
          collection measures.
501.747 Procedures on remand of decisions.

                          Subpart E_Procedures

501.801 Licensing.
501.802 Decisions.
501.803 Amendment, modification, or revocation.
501.804 Rulemaking.
501.805 Rules governing availability of information.
501.806 Procedures for unblocking funds believed to have been blocked 
          due to mistaken identity.
501.807 Procedures governing delisting from the Specially Designated 
          Nationals and Blocked Persons List.
501.808 License application and other procedures applicable to economic 
          sanctions programs.

                    Subpart F_Paperwork Reduction Act

501.901 Paperwork Reduction Act notice.

Appendix A to Part 501--Economic Sanctions Enforcement Guidelines

    Authority: 8 U.S.C. 1189; 18 U.S.C. 2332d, 2339B; 19 U.S.C. 3901-
3913; 21 U.S.C. 1901-1908; 22 U.S.C. 287c; 22 U.S.C. 2370(a), 6009, 
6032, 7205; 28 U.S.C. 2461 note; 31 U.S.C. 321(b); 50 U.S.C. 1701-1706; 
50 U.S.C. App. 1-44.

[[Page 8]]


    Source: 62 FR 45101, Aug. 25, 1997, unless otherwise noted.



     Subpart A_Relation of This Part to Other Parts in This Chapter



Sec. 501.101  Relation of this part to other parts in this chapter.

    This part sets forth standard reporting and recordkeeping 
requirements and license application and other procedures governing 
transactions regulated pursuant to other parts codified in this chapter, 
as well as to economic sanctions programs for which implementation and 
administration are delegated to the Office of Foreign Assets Control. 
Substantive prohibitions and policies particular to each economic 
sanctions program are not contained in this part but are set forth in 
the particular part of this chapter dedicated to that program, or, in 
the case of economic sanctions programs not yet implemented in 
regulations, in the applicable executive order or other authority. 
License application procedures and reporting requirements set forth in 
this part govern transactions undertaken pursuant to general or specific 
licenses. The criteria for general and specific licenses pertaining to a 
particular economic sanctions program are set forth in subpart E of the 
individual parts in this chapter. Statements of licensing policy 
contained in subpart E of the individual parts in this chapter, however, 
may contain additional information collection provisions that require 
production of specified documentation unique to a given general license 
or statement of licensing policy.

[62 FR 52494, Oct. 8, 1997]



                          Subpart B_Definitions



Sec. 501.301  Definitions.

    Definitions of terms used in this part are found in subpart C of the 
part within this chapter applicable to the relevant application, record, 
report, procedure or transaction. In the case of economic sanctions 
programs for which implementation and administration are delegated to 
the Office of Foreign Assets Control but for which regulations have not 
yet been issued, the definitions of terms in this part are governed by 
definitions contained in the implementing statute or Executive order.



                            Subpart C_Reports



Sec. 501.601  Records and recordkeeping requirements.

    Except as otherwise provided, every person engaging in any 
transaction subject to the provisions of this chapter shall keep a full 
and accurate record of each such transaction engaged in, regardless of 
whether such transaction is effected pursuant to license or otherwise, 
and such record shall be available for examination for at least 5 years 
after the date of such transaction. Except as otherwise provided, every 
person holding property blocked pursuant to the provisions of this 
chapter or funds transfers retained pursuant to Sec. 596.504(b) of this 
chapter shall keep a full and accurate record of such property, and such 
record shall be available for examination for the period of time that 
such property is blocked and for at least 5 years after the date such 
property is unblocked.

    Note: See subpart F of part 597 for the relationship between this 
section and part 597.

[62 FR 45101, Aug. 25, 1997, as amended at 62 FR 52494, Oct. 8, 1997]



Sec. 501.602  Reports to be furnished on demand.

    Every person is required to furnish under oath, in the form of 
reports or otherwise, from time to time and at any time as may be 
required by the Director, Office of Foreign Assets Control, complete 
information relative to any transaction, regardless of whether such 
transaction is effected pursuant to license or otherwise, subject to the 
provisions of this chapter or relative to any property in which any 
foreign country or any national thereof has any interest of any nature 
whatsoever, direct or indirect. The Director may require that such 
reports include the production of any books of account, contracts, 
letters or other papers connected with any such transaction or property, 
in the custody or control of

[[Page 9]]

the persons required to make such reports. Reports with respect to 
transactions may be required either before or after such transactions 
are completed. Except as provided in parts 596 and 597, the Director 
may, through any person or agency, conduct investigations, hold 
hearings, administer oaths, examine witnesses, receive evidence, take 
depositions, and require by subpoena the attendance and testimony of 
witnesses and the production of all books, papers, and documents 
relating to any matter under investigation, regardless of whether any 
report has been required or filed in connection therewith.

    Note: See subpart F of part 597 for the relationship between this 
section and part 597.

[62 FR 45101, Aug. 25, 1997, as amended at 62 FR 52494, Oct. 8, 1997]



Sec. 501.603  Reports on blocked property.

    (a) Who must report--(1) Holders of blocked property. Any person, 
including a financial institution, holding property blocked pursuant to 
this chapter must report. The requirement includes financial 
institutions that receive and block payments or transfers. This 
requirement is mandatory and applies to all U.S. persons (or persons 
subject to U.S. jurisdiction in the case of parts 500 and 515 of this 
chapter) who have in their possession or control any property or 
interests in property blocked pursuant to this chapter.
    (2) Primary responsibility to report. A report may be filed on 
behalf of a holder of blocked property by an attorney, agent, or other 
person. Primary responsibility for reporting blocked property, however, 
rests with the actual holder of the property, or the person exercising 
control over property located outside the United States, with the 
following exceptions: primary responsibility for reporting any trust 
assets rest with the trustee; and primary responsibility for reporting 
real property rests with any U.S. co-owner, legal representative, agent, 
or property manager in the United States. No person is excused from 
filing a report by reason of the fact that another person has submitted 
a report with regard to the same property, except upon actual knowledge 
of the report filed by such other person. Reports filed are regarded as 
privileged and confidential.
    (3) Financial institutions. For purposes of this section, the term 
``financial institution'' shall include a banking institution, domestic 
bank, United States depository institution, financial institution, or 
U.S. financial institution, as those terms are defined in the applicable 
part of this chapter.
    (b) What must be reported--(1) Initial reports--(i) When reports are 
due. Reports are required to be filed within 10 business days from the 
date that property becomes blocked. This reporting requirement includes 
payments or transfers that are received and blocked by financial 
institutions.
    (ii) Contents of reports. Initial reports on blocked property shall 
describe the owner or account party, the property, its location, any 
existing or new account number or similar reference necessary to 
identify the property, actual or estimated value and the date it was 
blocked, and shall include the name and address of the holder, along 
with the name and telephone number of a contact person from whom 
compliance information can be obtained. If the report is filed by a 
financial institution and involves the receipt of a payment or transfer 
of funds which are blocked by the financial institution, the report 
shall also include a photocopy of the payment or transfer instructions 
received and shall confirm that the payment has been deposited into a 
new or existing blocked account which is labeled as such and is 
established in the name of, or contains a means of clearly identifying 
the interest of, the individual or entity subject to blocking pursuant 
to the requirements of this chapter.
    (2) Annual reports--(i) When reports are due. A comprehensive report 
on all blocked property held as of June 30 of the current year shall be 
filed annually by September 30. The first annual report is due September 
30, 1997.
    (ii) Contents of reports. Annual reports shall be filed using Form 
TDF 90-22.50, Annual Report of Blocked Property. Copies of Form TDF 90-
22.50 may be obtained directly from the Office of Foreign Assets 
Control, by calling the fax-on-demand service maintained by the Office 
of Foreign Assets Control at 202/

[[Page 10]]

622-0077, or by downloading the form from the ``OFAC Press Releases and 
Miscellaneous Documents'' file library (``FAC--MISC'') located on the 
Government Printing Office's Federal Bulletin Board Online via GPO 
Access (Internet site: http://fedbbs.access.gpo.gov/libs/fac--misc.htm). 
Photocopies of the report form may be used. Requests to submit the 
information required on Form TDF 90-22.50 in an alternative format 
developed by the reporter are invited and will be considered by the 
Office of Foreign Assets Control on a case-by-case basis. A copy of 
reports filed using form TDF 90-22.50 or in alternative formats must be 
retained for the reporter's records.
    (c) Reports on retained funds pursuant to Sec. 596.504(b) of this 
chapter. The reporting requirements set forth in this section are 
applicable to any financial institution retaining funds pursuant to 
Sec. 596.504(b) of this chapter, except that the account name shall 
reflect the name of the person whose interest required retention of the 
funds.
    (d) Where to report. All reports must be filed with the Office of 
Foreign Assets Control, Compliance Programs Division, U.S. Treasury 
Department, 1500 Pennsylvania Avenue NW.--Annex, Washington, DC 20220.

    Note: See subpart F of part 597 for the relationship between this 
section and part 597.

[62 FR 45101, Aug. 25, 1997, as amended at 62 FR 52495, Oct. 8, 1997]



Sec. 501.604  Reports by U.S. financial institutions on rejected funds
transfers.

    (a) Who must report. Any financial institution that rejects a funds 
transfer where the funds are not blocked under the provisions of this 
chapter, but where processing the transfer would nonetheless violate, or 
facilitate an underlying transaction that is prohibited under, other 
provisions contained in this chapter, must report. For purposes of this 
section, the term ``financial institution'' shall include a banking 
institution, depository institution or United States depository 
institution, domestic bank, financial institution or U.S. financial 
institution, as those terms are defined in the applicable part of this 
chapter.
    (b) Rejected transfers. Examples of transactions involving rejected 
funds transfers include funds transfer instructions:
    (1) Referencing a blocked vessel but where none of the parties or 
financial institutions involved in the transaction is a blocked person;
    (2) Sending funds to a person in Iraq;
    (3) Transferring unlicensed gifts or charitable donations from the 
Government of Syria to a U.S. person;
    (4) Crediting Iranian accounts on the books of a U.S. financial 
institution; and
    (5) Making unauthorized transfers from U.S. persons to Iran or the 
Government of Iran.
    (c) When reports are due. Reports are required to be filed within 10 
business days by any financial institution rejecting instructions to 
execute payments or transfers involving underlying transactions 
prohibited by the provisions of this chapter.
    (d) What must be reported. The report shall include the name and 
address of the transferee financial institution, the date of the 
transfer, the amount of the payment transfer, and a photocopy of the 
payment or transfer instructions received, and shall state the basis for 
the rejection of the transfer instructions. The report shall also 
provide the name and telephone number of a contact person at the 
transferee financial institution from whom compliance information may be 
obtained.
    (e) Where to report. Reports must be filed with the Office of 
Foreign Assets Control, Compliance Programs Division, U.S. Treasury 
Department, 1500 Pennsylvania Avenue NW.--Annex, Washington, DC 20220.

[62 FR 45101, Aug. 25, 1997, as amended 70 FR 34061, June 13, 2005]



Sec. 501.605  Reports on litigation, arbitration, and dispute resolution
proceedings.

    (a) U.S. persons (or persons subject to the jurisdiction of the 
United States in the case of parts 500 and 515 of this chapter) 
participating in litigation, arbitration, or other binding alternative 
dispute resolution proceedings in the United States on behalf of or 
against persons whose property or interests in property are blocked or 
whose funds

[[Page 11]]

have been retained pursuant to Sec. 596.504(b) of this chapter, or when 
the outcome of any proceeding may affect blocked property or retained 
funds, must:
    (1) Provide notice of such proceedings upon their commencement or 
upon submission or receipt of documents bringing the proceedings within 
the terms of the introductory text to this paragraph (a);
    (2) Submit copies of all pleadings, motions, memoranda, exhibits, 
stipulations, correspondence, and proposed orders or judgments 
(including any proposed final judgment or default judgment) submitted to 
the court or other adjudicatory body, and all orders, decisions, 
opinions, or memoranda issued by the court, to the Chief Counsel, Office 
of Foreign Assets Control, U.S. Department of the Treasury, 1500 
Pennsylvania Avenue, NW.--Annex, Washington, DC 20220, within 10 days of 
filing, submission or issuance. This paragraph (a)(2) shall not apply to 
discovery requests or responses, documents filed under seal, or requests 
for procedural action not seeking action dispositive of the proceedings 
(such as requests for extension of time to file); and
    (3) Report by immediate facsimile transmission to the Chief Counsel, 
Office of Foreign Assets Control, at facsimile number 202/622-1911, the 
scheduling of any hearing or status conference in the proceedings 
whenever it appears that the court or other adjudicatory body may issue 
an order or judgment in the proceedings (including a final judgment or 
default judgment) or is considering or may decide any pending request 
dispositive of the merits of the proceedings or of any claim raised in 
the proceedings.
    (b) The reporting requirements of paragraph (a) of this section do 
not apply to proceedings to which the Office of Foreign Assets Control 
is a party.
    (c) Persons initiating proceedings subject to the reporting 
requirements of this section must notify the court or other adjudicatory 
body of the restrictions set forth under the applicable part in this 
chapter governing the transfer of blocked property or funds retained 
pursuant to Sec. 596.504(b) of this chapter, including the prohibition 
on any unlicensed attachment, judgment, decree, lien, execution, 
garnishment or other judicial process with respect to any property in 
which, on or after the applicable effective date, there existed an 
interest of any person whose property and property interests were 
subject to blocking pursuant to this chapter or were subject to 
retention pursuant to Sec. 596.504(b) of this chapter.



Sec. 501.606  Reporting and recordkeeping requirements applicable to
economic sanctions programs.

    The reporting and recordkeeping requirements set forth in this 
subpart are applicable to economic sanctions programs for which 
implementation and administration have been delegated to the Office of 
Foreign Assets Control.



          Subpart D_Trading With the Enemy Act (TWEA) Penalties

    Source: 68 FR 53642, Sept. 11, 2003, unless otherwise noted.



Sec. 501.700  Applicability.

    This subpart is applicable only to those parts of chapter V 
promulgated pursuant to the TWEA, which include parts 500, 505, and 515.



Sec. 501.701  Penalties.

    (a) Attention is directed to section 16 of the TWEA, as adjusted 
pursuant to the Federal Civil Penalties Inflation Adjustment Act of 1990 
(Pub. L. 101-410, as amended, 28 U.S.C. 2461 note), which provides that:
    (1) Persons who willfully violate any provision of TWEA or any 
license, rule, or regulation issued thereunder, and persons who 
willfully violate, neglect, or refuse to comply with any order of the 
President issued in compliance with the provisions of TWEA shall, upon 
conviction, be fined not more than $1,000,000 or, if an individual, be 
fined not more than $100,000 or imprisoned for not more than 10 years, 
or both; and an officer, director, or agent of any corporation who 
knowingly participates in such violation shall, upon conviction, be 
fined not more than $100,000 or imprisoned for not more than 10 years, 
or both.

[[Page 12]]

    (2) Any property, funds, securities, papers, or other articles or 
documents, or any vessel, together with its tackle, apparel, furniture, 
and equipment, concerned in a violation of TWEA may upon conviction be 
forfeited to the United States Government.
    (3) The Secretary of the Treasury may impose a civil penalty of not 
more than $65,000 per violation on any person who violates any license, 
order, or regulation issued under TWEA.

    Note to paragraph (a)(3). The current $65,000 civil penalty cap may 
be adjusted for inflation pursuant to the Federal Civil Penalties 
Inflation Adjustment Act of 1990.

    (4) Any property, funds, securities, papers, or other articles or 
documents, or any vessel, together with its tackle, apparel, furniture, 
and equipment, that is the subject of a violation subject to a civil 
penalty issued pursuant to TWEA shall, at the discretion of the 
Secretary of the Treasury, be forfeited to the United States Government.
    (b) The criminal penalties provided in TWEA are subject to increase 
pursuant to 18 U.S.C. 3571 which, when read in conjunction with section 
16 of TWEA, provides that persons convicted of violating TWEA may be 
fined up to the greater of either $250,000 for individuals and 
$1,000,000 for organizations or twice the pecuniary gain or loss from 
the violation.
    (c) Attention is directed to 18 U.S.C. 1001, which provides that 
whoever, in any matter within the jurisdiction of any department or 
agency of the United States, knowingly and willfully falsifies, conceals 
or covers up by any trick, scheme, or device a material fact, or makes 
any false, fictitious or fraudulent statements or representations, or 
makes or uses any false writing or document knowing the same to contain 
any false, fictitious or fraudulent statement or entry, shall be fined 
under title 18, United States Code, or imprisoned not more than 5 years, 
or both.

[68 FR 53642, Sept. 11, 2003, as amended at 68 FR 61361, Oct. 28, 2003]



Sec. 501.702  Definitions.

    (a) Chief Counsel means the Chief Counsel (Foreign Assets Control), 
Office of the General Counsel, Department of the Treasury.
    (b) Day means calendar day. In computing any period of time 
prescribed in or allowed by this subpart, the day of the act, event, or 
default from which the designated period of time begins to run shall not 
be included. The last day of the period so computed shall be included 
unless it is a Saturday, Sunday, or Federal legal holiday, in which 
event the period runs until the end of the next day that is not a 
Saturday, Sunday, or Federal legal holiday. Intermediate Saturdays, 
Sundays, and Federal legal holidays shall be excluded from the 
computation when the period of time prescribed or allowed is seven days 
or less, not including any additional time allowed for service by mail. 
If on the day a filing is to be made, weather or other conditions have 
caused the designated filing location to close, the filing deadline 
shall be extended to the end of the next day that the filing location is 
not closed and that is not a Saturday, a Sunday, or a Federal legal 
holiday. If service is made by mail, three days shall be added to the 
prescribed period for response.
    (c) Department means the Department of the Treasury.
    (d) Director means the Director of the Office of Foreign Assets 
Control, Department of the Treasury.
    (e) Ex Parte Communication means any material oral or written 
communication not on the public record concerning the merits of a 
proceeding with respect to which reasonable prior notice to all parties 
is not given, on any material matter or proceeding covered by these 
rules, that takes place between: A party to the proceeding, a party's 
counsel, or any other interested individual; and the Administrative Law 
Judge or Secretary's designee handling that proceeding. A request to 
learn the status of a proceeding does not constitute an ex parte 
communication; and settlement inquiries and discussions do not 
constitute ex parte communications.
    (f) General Counsel means the General Counsel of the U.S. Department 
of the Treasury.

[[Page 13]]

    (g) Order of Settlement means a written order issued by the Director 
terminating a civil penalty action. An Order of Settlement does not 
constitute an agency decision that any violation took place.
    (h) Order Instituting Proceedings means a written order issued by 
the Director to initiate a civil penalty hearing.
    (i) Prepenalty Notice means a written notification from the Director 
informing a respondent of the alleged violation(s) and the respondent's 
right to respond.
    (j) Penalty Notice means a written notification from the Director 
informing a respondent that the Director has made a finding of violation 
and, absent a request for a hearing, will impose a civil monetary 
penalty.
    (k) Proceeding means any agency process initiated by an ``Order 
Instituting Proceedings,'' or by the filing of a petition for review of 
an Administrative Law Judge's decision or ruling.
    (l) Respondent means any individual alleged by the Director to have 
violated a TWEA-based sanctions regulation.
    (m) Secretary's designee means a U.S. Treasury Department official 
delegated responsibility by the Secretary of the Treasury to consider 
petitions for review of Administrative Law Judge decisions made in civil 
penalty hearings conducted pursuant to this subpart.
    (n) Secretary means the Secretary of the Treasury.



Sec. 501.703  Overview of civil penalty process and construction of rules.

    (a) The administrative process for enforcing TWEA sanctions programs 
proceeds as follows:
    (1) The Director of the Office of Foreign Assets Control will notify 
a suspected violator (hereinafter ``respondent'') of an alleged 
violation by issuing a ``Prepenalty Notice.'' The Prepenalty Notice 
shall describe the alleged violation(s) and include a proposed civil 
penalty amount.
    (2) The respondent will have 60 days from the date the Prepenalty 
Notice is served to make a written presentation either defending against 
the alleged violation or admitting the violation. A respondent who 
admits a violation may offer information as to why a monetary penalty 
should not be imposed or why, if imposed, the monetary penalty should be 
in a lesser amount than proposed.
    (3) Absent a settlement agreement or a finding that no violation 
occurred, the Director of the Office of Foreign Assets Control will 
issue a ``Penalty Notice.'' The respondent will have 30 days from the 
date of service to either pay the penalty or request a hearing.
    (4) If the respondent requests a hearing, the Director of the Office 
of Foreign Assets Control will have two options:
    (i) The Director may issue an ``Order Instituting Proceedings'' and 
refer the matter to an Administrative Law Judge for a hearing and 
decision; or
    (ii) The Director may determine to discontinue the penalty action 
based on information presented by the respondent.
    (5) Absent review by a Secretary's designee, the decision of the 
Administrative Law Judge will become the final decision of the 
Department without further proceedings.
    (6) If review is taken by a Secretary's designee, the Secretary's 
designee reaches the final decision of the Department.
    (7) A respondent may seek judicial review of the final decision of 
the Department.
    (b) Construction of rules. The rules contained in this subpart shall 
be construed and administered to promote the just, speedy, and 
inexpensive determination of every action. To the extent there is a 
conflict between the rules contained in this subpart and a procedural 
requirement contained in any statute, the requirement in the statute 
shall control.



Sec. 501.704  Appearance and practice.

    No person shall be represented before the Director in any civil 
penalty matter, or an Administrative Law Judge or the Secretary's 
designee in a civil penalty hearing, under this subpart except as 
provided in this section.
    (a) Representing oneself. In any proceeding, an individual may 
appear on his or her own behalf.
    (b) Representative. Upon written notice to the Director,

[[Page 14]]

    (1) A respondent may be represented by a personal representative. If 
a respondent wishes to be represented by counsel, such counsel must be 
an attorney at law admitted to practice before the Supreme Court of the 
United States, the highest court of any State, commonwealth, possession, 
or territory of the United States, or the District of Columbia;
    (2) A duly authorized member of a partnership may represent the 
partnership; and
    (3) A bona fide officer, director, or employee of a corporation, 
trust or association may represent the corporation, trust or 
association.
    (c) Director representation. The Director shall be represented by 
members of the Office of Chief Counsel or any other counsel specifically 
assigned by the General Counsel.
    (d) Conflicts of interest--(1) Conflict of interest in 
representation. No individual shall appear as representative for a 
respondent in a proceeding conducted pursuant to this subpart if it 
reasonably appears that such representation may be materially limited by 
that representative's responsibilities to a third person, or by that 
representative's own interests.
    (2) Corrective measures. An Administrative Law Judge may take 
corrective measures at any stage of a proceeding to cure a conflict of 
interest in representation, including the issuance of an order limiting 
the scope of representation or disqualifying an individual from 
appearing in a representative capacity for the duration of the 
proceeding.



Sec. 501.705  Service and filing.

    (a) Service of Prepenalty Notice, Penalty Notice, Acknowledgment of 
Hearing Request and Order Instituting Proceedings. The Director shall 
cause any Prepenalty Notice, Penalty Notice, Acknowledgment of Hearing 
Request, Order Instituting Proceedings, and other related orders and 
decisions, or any amendments or supplements thereto, to be served upon 
the respondent.
    (1) Service on individuals. Service shall be complete:
    (i) Upon the date of mailing by first class (regular) mail to the 
respondent at the respondent's last known address, or to a 
representative authorized to receive service, including qualified 
representatives noticed to the Director pursuant to Sec. 501.704. 
Absent satisfactory evidence in the administrative record to the 
contrary, the Director may presume that the date of mailing is the date 
stamped on the first page of the notice or order. The respondent may 
rebut the presumption that a notice or order was mailed on the stamped 
mailing date only by presenting evidence of the postmark date on the 
envelope in which the notice or order was mailed;
    (ii) Upon personal service on the respondent; or leaving a copy at 
the respondent's place of business with a clerk or other person in 
charge thereof; or leaving a copy at the respondent's dwelling house or 
usual place of abode with a person at least 18 years of age then 
residing therein; or with any other representative authorized by 
appointment or by law to accept or receive service for the respondent, 
including representatives noticed to the Director pursuant to Sec. 
501.704; and evidenced by a certificate of service signed and dated by 
the individual making such service, stating the method of service and 
the identity of the individual with whom the notice or order was left; 
or
    (iii) Upon proof of service on a respondent who is not resident in 
the United States by any method of service permitted by the law of the 
jurisdiction in which the respondent resides or is located, provided the 
requirements of such foreign law satisfy due process requirements under 
United States law with respect to notice of administrative proceedings, 
and where applicable laws or intergovernmental agreements or 
understandings make the methods of service set forth in paragraphs 
(a)(1)(i) and (ii) of this section inappropriate or ineffective for 
service upon the nonresident respondent.
    (2) Service on corporations and other entities. Service is complete 
upon delivering a copy of the notice or order to a partner, bona fide 
officer, director, managing or general agent, or any other agent 
authorized by appointment or by law to receive such notice, by any 
method specified in paragraph (a)(1) of this section.

[[Page 15]]

    (b) Service of responses to Prepenalty Notice, Penalty Notice, and 
requests for a hearing. A respondent shall serve a response to a 
Prepenalty Notice and any request for a hearing on the Director through 
the Chief of Civil Penalties, Office of Foreign Assets Control, U.S. 
Treasury Department, 1500 Pennsylvania Avenue, NW., Washington DC 20220, 
with the envelope prominently marked ``Urgent: Part 501 Action.'' 
Service shall be complete upon the date of mailing, as evidenced by the 
post-mark date on the envelope, by first class (regular) mail.
    (c) Service or filing of papers in connection with any hearing by an 
Administrative Law Judge or review by the Secretary's designee--(1) 
Service on the Director and/or each respondent. (i) Each paper, 
including each notice of appearance, written motion, brief, petition for 
review, statement in opposition to petition for review, or other written 
communication, shall be served upon the Director and/or each respondent 
in the proceeding in accordance with paragraph (a) of this section; 
provided, however, that no service shall be required in the case of 
documents that are the subject of a motion seeking a protective order to 
limit or prevent disclosure to another party.
    (ii) Service upon the Director shall be made through the Chief 
Counsel (Foreign Assets Control), U.S. Treasury Department, 1500 
Pennsylvania Avenue, NW., Washington, DC 20220, with the envelope 
prominently marked ``Urgent: Part 501 Proceeding.''
    (iii) Service may be made:
    (A) As provided in paragraph (a) of this section;
    (B) By mailing the papers through the U.S. Postal Service by Express 
Mail; or
    (C) By transmitting the papers by facsimile machine where the 
following conditions are met:
    (1) The persons serving each other by facsimile transmission have 
agreed to do so in a writing, signed by each party, which specifies such 
terms as they deem necessary with respect to facsimile machine telephone 
numbers to be used, hours of facsimile machine operation, the provision 
of non-facsimile original or copy, and any other such matters; and
    (2) Receipt of each document served by facsimile is confirmed by a 
manually signed receipt delivered by facsimile machine or other means 
agreed to by the parties.
    (iv) Service by U.S. Postal Service Express Mail is complete upon 
delivery as evidenced by the sender's receipt. Service by facsimile is 
complete upon confirmation of transmission by delivery of a manually 
signed receipt.
    (2) Filing with the Administrative Law Judge. Unless otherwise 
provided, all briefs, motions, objections, applications or other filings 
made during a proceeding before an Administrative Law Judge, and all 
requests for review by the Secretary's designee, shall be filed with the 
Administrative Law Judge.
    (3) Filing with the Secretary's designee. And all briefs, motions, 
objections, applications or other filings made during a proceeding 
before the Secretary's designee shall be filed with the Secretary's 
designee.
    (4) Certificate of service. Papers filed with an Administrative Law 
Judge or Secretary's designee shall be accompanied by a certificate 
stating the name of each person served, the date of service, the method 
of service and the mailing address or facsimile telephone number to 
which service was made, if not made in person. If the method of service 
to any person is different from the method of service to any other 
person, the certificate shall state why a different means of service was 
used.
    (5) Form of briefs. All briefs containing more than 10 pages shall, 
to the extent applicable, include a table of contents, an alphabetized 
table of cases, a table of statutes, and a table of other authorities 
cited, with references to the pages of the brief wherein they are cited.
    (6) Specifications. All original documents shall be filed with the 
Administrative Law Judge or Secretary's designee, as appropriate. Papers 
filed in connection with any proceeding shall:
    (i) Be on one grade of unglazed white paper measuring 8.5x11 inches, 
except that, to the extent that the reduction of larger documents would 
render them illegible, such documents may be filed on larger paper;

[[Page 16]]

    (ii) Be typewritten or printed in either 10- or 12-point typeface or 
otherwise reproduced by a process that produces permanent and plainly 
legible copies;
    (iii) Include at the head of the paper, or on a title page, the 
title of the proceeding, the name(s) of each respondent, the subject of 
the particular paper or pleading, and the file number assigned to the 
proceeding;
    (iv) Be formatted with all margins at least 1 inch wide;
    (v) Be double-spaced, with single-spaced footnotes and single-spaced 
indented quotations; and
    (vi) Be stapled, clipped or otherwise fastened in the upper left 
corner.
    (7) Signature requirement and effect. All papers must be dated and 
signed by a member of the Office of Chief Counsel, or other counsel 
assigned by the General Counsel to represent the Director, or a 
respondent or respondent's representative, as appropriate. If a filing 
is signed by a respondent's representative it shall state that 
representative's mailing address and telephone number. A respondent who 
represents himself or herself shall sign his or her individual name and 
state his or her address and telephone number on every filing. A witness 
deposition shall be signed by the witness.
    (i) Effect of signature. The signature shall constitute a 
certification that:
    (A) The person signing the filing has read the filing;
    (B) To the best of his or her knowledge, information, and belief, 
formed after reasonable inquiry, the filing is well grounded in fact and 
is warranted by existing law or a good faith argument for the extension, 
modification, or reversal of existing law; and
    (C) The filing is not made for any improper purpose, such as to 
harass or to cause unnecessary delay or needless increase in the cost of 
adjudication.
    (ii) If a filing is not signed, the Administrative Law Judge (or the 
Secretary's designee) shall strike the filing, unless it is signed 
promptly after the omission is called to the attention of the person 
making the filing.
    (d) Service of written orders or decisions issued by the 
Administrative Law Judge or Secretary's designee. Written orders or 
decisions issued by the Administrative Law Judge or the Secretary's 
designee shall be served promptly on each respondent and the Director 
pursuant to any method of service authorized under paragraph (a) of this 
section. Service of such orders or decisions shall be made by the 
Administrative Law Judge or the Secretary's designee, as appropriate.



Sec. 501.706  Prepenalty Notice; issuance by Director.

    (a) When required. If the Director has reason to believe there has 
occurred a violation of any provision of parts 500 or 515 of this 
chapter or a violation of the provisions of any license, ruling, 
regulation, order, direction or instruction issued by or pursuant to the 
direction or authorization of the Secretary pursuant to parts 500 or 515 
of this chapter or otherwise under the Trading With the Enemy Act, and 
the Director determines that further civil proceedings are warranted, 
the Director shall issue a Prepenalty Notice. The Prepenalty Notice may 
be issued whether or not another agency has taken any action with 
respect to the matter.
    (b) Contents of notice--(1) Facts of violation. The Prepenalty 
Notice shall describe the alleged violation, specify the laws and 
regulations allegedly violated, and state the amount of the proposed 
monetary penalty.
    (2) Right to respond. The Prepenalty Notice shall inform the 
respondent of respondent's right to make a written presentation within 
the time prescribed in Sec. 501.707 as to why the respondent believes 
there should be no finding of a violation or why, if the respondent 
admits the violation, a monetary penalty should not be imposed or why, 
if imposed, the monetary penalty should be in a lesser amount than 
proposed. The Prepenalty Notice shall also inform the respondent that:
    (i) The act of submitting a written response by the respondent is a 
factor that may result in a lower penalty absent any aggravating 
factors; and
    (ii) If the respondent fails to respond to the Prepenalty Notice 
within the applicable 60-day period set forth in Sec. 501.707, the 
Director may proceed with the issuance of a Penalty Notice.

[[Page 17]]

    (3) Right to request a hearing. The Prepenalty Notice shall inform 
the respondent of respondent's right, if a subsequent Penalty Notice is 
issued, to request an administrative hearing. The Director will not 
consider any request for an administrative hearing until a Penalty 
Notice has been issued.



Sec. 501.707  Response to Prepenalty Notice.

    (a) Deadline for response.
    (1) The respondent shall have 60 days after the date of service of 
the Prepenalty Notice pursuant to Sec. 501.705(a) to respond thereto. 
The response, signed and dated, shall be served as provided in Sec. 
501.705(b).
    (2) In response to a written request by the respondent, the Director 
may, at his or her discretion for the purpose of conducting settlement 
negotiations or for other valid reasons, grant additional time for a 
respondent to submit a response to the Prepenalty Notice.
    (3) The failure to submit a response within the time period set 
forth in this paragraph (a), including any additional time granted by 
the Director, shall be deemed to be a waiver of the right to respond to 
the Prepenalty Notice.
    (b) Form and contents of response.
    (1) In general. The response need not be in any particular form, but 
must be typewritten and contain the heading ``Response to Prepenalty 
Notice'' and the Office of Foreign Assets Control identification number 
shown near the top of the Prepenalty Notice. It should be responsive to 
the allegations contained therein and set forth the nature of the 
respondent's admission of the violation, or defenses and claims for 
mitigation, if any.
    (i) The response must admit or deny specifically each separate 
allegation of violation made in the Prepenalty Notice. If the respondent 
is without knowledge as to an allegation, the response shall so state, 
and such statement shall constitute a denial. Any allegation not 
specifically addressed in the response shall be deemed admitted.
    (ii) The response must set forth any additional or new matter or 
arguments the respondent seeks, or shall seek, to use in support of all 
defenses or claims for mitigation. Any defense the respondent wishes to 
assert must be included in the response.
    (iii) The response must accurately state (for each respondent, if 
applicable) the respondent's full name and address for future service, 
together with a current telephone and, if applicable, facsimile machine 
number. If respondent is represented, the representative's full name and 
address, together with telephone and facsimile numbers, may be provided 
instead of service information for the respondent. The respondent or 
respondent's representative of record is responsible for providing 
timely written notice to the Director of any subsequent changes in the 
information provided.
    (iv) Financial disclosure statement requirement. Any respondent who 
asserts financial hardship or an inability to pay a penalty shall 
include with the response a financial disclosure statement setting forth 
in detail the basis for asserting the financial hardship or inability to 
pay a penalty, subject to 18 U.S.C. 1001.
    (2) Settlement. In addition, or as an alternative, to a written 
response to a Prepenalty Notice, the respondent or respondent's 
representative may seek settlement of the alleged violation(s). See 
Sec. 501.710. In the event of settlement prior to the issuance of a 
Penalty Notice, the claim proposed in the Prepenalty Notice will be 
withdrawn and the respondent will not be required to make a written 
response to the Prepenalty Notice. In the event no settlement is 
reached, a written response to the Prepenalty Notice is required 
pursuant to paragraph (c) of this section.



Sec. 501.708  Director's finding of no penalty warranted.

    If after considering any written response to the Prepenalty Notice 
submitted pursuant to Sec. 501.707 and any other relevant facts, the 
Director determines that there was no violation or that the violation 
does not warrant the imposition of a civil monetary penalty, the 
Director promptly shall notify the respondent in writing of that 
determination and that no civil monetary penalty pursuant to this 
subpart will be imposed.

[[Page 18]]



Sec. 501.709  Penalty notice.

    (a) If, after considering any written response to the Prepenalty 
Notice, and any other relevant facts, the Director determines that there 
was a violation by the respondent and that a monetary penalty is 
warranted, the Director promptly shall issue a Penalty Notice informing 
the respondent that, absent a timely request for an administrative 
hearing, the Director will impose the civil monetary penalty described 
in the Penalty Notice. The Penalty Notice shall inform the respondent:
    (1) Of the respondent's right to submit a written request for an 
administrative hearing not later than 30 days after the date of service 
of the Penalty Notice;
    (2) That in the absence of a timely request for a hearing, the 
issuance of the Penalty Notice constitutes final agency action;
    (3) That, absent a timely request for a hearing, payment (or 
arrangement with the Financial Management Service of the Department for 
installment payment) of the assessed penalty must be made not later than 
30 days after the date of service of the Penalty Notice; and
    (4) That absent a timely request for a hearing, the respondent must 
furnish respondent's taxpayer identification number pursuant to 31 
U.S.C. 7701 and that the Director intends to use such information for 
the purposes of collecting and reporting on any delinquent penalty 
amount in the event of a failure to pay the penalty imposed.



Sec. 501.710  Settlement.

    (a) Availability. Either the Director or any respondent may, at any 
time during the administrative civil penalty process described in this 
subpart, propose an offer of settlement. The amount accepted in 
settlement may be less than the civil penalty that might be imposed in 
the event of a formal determination of violation. Upon mutual agreement 
by the Director and a respondent on the terms of a settlement, the 
Director shall issue an Order of Settlement.
    (b) Procedure--(1) Prior to issuance of Penalty Notice. Any offer of 
settlement made by a respondent prior to the issuance of a Penalty 
Notice shall be submitted, in writing, to the Chief of Civil Penalties, 
Office of Foreign Assets Control, U.S. Department of the Treasury, 1500 
Pennsylvania Avenue, NW., Washington, DC 20220.
    (2) After issuance of Penalty Notice. Any offer of settlement made 
by a respondent after issuance of a Penalty Notice shall state that it 
is made pursuant to this section; shall recite or incorporate as a part 
of the offer the provisions of paragraphs (b)(5)(ii) and (b)(6) of this 
section; shall be signed by the respondent making the offer, and not 
only by his or her representative; and shall be submitted to the Chief 
Counsel.
    (3) Extensions of time. The submission of any settlement offer does 
not provide a basis for adjourning or otherwise delaying all or any 
portion of the administrative civil penalty process.
    (i) Prior to issuance of Order Instituting Proceedings. Any 
respondent (or potential respondent in the case of a pending Prepenalty 
Notice) may request, in writing, that the Director withhold issuance of 
any such notice, or grant an extension of time to respond to any such 
Notice, for a period not to exceed 60 days for the exclusive purpose of 
effecting settlement. The Director may grant any such request, in 
writing, under terms and conditions within his or her discretion.
    (ii) After issuance of Order Instituting Proceedings. Upon mutual 
agreement of the Director and a respondent, the Administrative Law Judge 
may grant an extension of time, for a period not to exceed 60 days, for 
the exclusive purpose of effecting settlement.
    (4) Views of Administrative Law Judge. Where an Administrative Law 
Judge is assigned to a proceeding, the Director or the respondent may 
request that the Administrative Law Judge express his or her views 
regarding the appropriateness of the offer of settlement. A request for 
the Administrative Law Judge to express his or her views on an offer of 
settlement or otherwise to participate in a settlement conference 
constitutes a waiver by the party making the request of any right to 
claim bias or prejudgment by the Administrative Law Judge based on the 
views expressed.

[[Page 19]]

    (5) Waivers. (i) By submitting an offer of settlement, a respondent 
making the offer waives, subject to acceptance of the offer:
    (A) All hearings pursuant to section 16 of the Trading with the 
Enemy Act (50 U.S.C. App. 16);
    (B) The filing of proposed findings of fact and conclusions of law;
    (C) Proceedings before, and a decision by, an Administrative Law 
Judge;
    (D) All post-hearing procedures; and
    (E) Judicial review by any court.
    (ii) By submitting an offer of settlement the respondent further 
waives:
    (A) Such provisions of this subpart or other requirements of law as 
may be construed to prevent any member of the Director's staff, or 
members of the Office of Chief Counsel or other counsel assigned by the 
General Counsel, from participating in or advising the Director as to 
any order, opinion, finding of fact, or conclusion of law to be entered 
pursuant to the offer; and
    (B) Any right to claim bias or prejudgment by the Director based on 
the consideration of or discussions concerning settlement of all or any 
part of the proceeding.
    (6) If the Director rejects the offer of settlement, the respondent 
shall be so notified in writing and the offer of settlement shall be 
deemed withdrawn. The rejected offer shall not constitute a part of the 
record in any proceeding against the respondent making the offer, 
provided, however, that rejection of an offer of settlement does not 
affect the continued validity of waivers pursuant to paragraph (b)(5) of 
this section with respect to any discussions concerning the rejected 
offer of settlement.
    (7) No settlement offer or proposal, or any subsequent negotiation 
or resolution, is admissible as evidence in any administrative 
proceeding initiated by the Director.



Sec. 501.711  Hearing request.

    (a) Deadline for request. A request for an agency hearing shall be 
served on the Director not later than 30 days after the date of service 
of the Penalty Notice. See Sec. 501.705(b). A respondent may not 
reserve the right to request a hearing after expiration of the 30 
calendar day period. A request for a hearing that is not made as 
required by this paragraph shall constitute a waiver of the respondent's 
right to a hearing.
    (b) Form and contents of request. The request need not be in any 
particular form, but must be typewritten and contain the heading 
``Request for Agency Hearing''. The request must include the Office of 
Foreign Assets Control identification number shown near the top of the 
Penalty Notice. It should be responsive to the determination contained 
in the Penalty Notice and set forth the nature of the respondent's 
defenses or claims for mitigation, if any.
    (1) The request must admit or deny specifically each separate 
determination of violation made in the Penalty Notice. If the respondent 
is without knowledge as to a determination, the request shall so state, 
and such statement shall constitute a denial. Any determination not 
specifically addressed in the response shall be deemed admitted.
    (2) The request must set forth any additional or new matter or 
arguments the respondent seeks, or shall seek, to use in support of all 
defenses or claims for mitigation. Any defense the respondent wishes to 
assert must be included in the request.
    (3) The request must accurately state, for each respondent (if 
applicable), the respondent's full name and address for future service, 
together with current telephone and, if applicable, a facsimile machine 
number. If respondent is represented, the representative's full name and 
address, together with telephone and facsimile numbers, may be provided 
in lieu of service information for the respondent. The respondent or 
respondent's representative is responsible for providing timely written 
notice to the Director of any subsequent changes in the information 
provided.
    (c) Signature requirement. The respondent or, if represented, the 
respondent's representative, must sign the hearing request.



Sec. 501.712  Acknowledgment of hearing request.

    No later than 60 days after service of any hearing request, the 
Director shall

[[Page 20]]

acknowledge receipt and inform a respondent, in writing, whether an 
Order Instituting Proceedings shall be issued.



Sec. 501.713  Order Instituting Proceedings.

    If a respondent makes a timely request for a hearing, the Director 
shall determine, at his or her option, whether to dismiss the 
violation(s) set forth in the Penalty Notice or to issue an Order 
Instituting Proceedings to initiate the hearing process. The Order shall 
be served on the respondent(s) as provided in Sec. 501.705(c)(1). The 
Director may, in his or her discretion, withdraw an Order Instituting 
Proceedings at any time prior to the issuance of a decision by the 
Administrative Law Judge.
    (a) Content of Order. The Order Instituting Proceedings shall:
    (1) Be prepared by the Office of the Chief Counsel or other counsel 
assigned by the General Counsel and based on information provided by the 
Director;
    (2) State the legal authority under which the hearing is to be held;
    (3) Contain a short and plain statement of the alleged violation(s) 
to be considered and determined (including the matters of fact and law 
asserted) in such detail as will permit a specific response thereto;
    (4) State the amount of the penalty sought in the proceeding; and
    (5) Be signed by the Director.
    (b) Combining penalty actions. The Director may combine claims 
contained in two or more Penalty Notices involving the same respondent, 
and for which hearings have been requested, into a single Order 
Instituting Proceedings.
    (c) Amendment to Order Instituting Proceedings. Upon motion by the 
Director, the Administrative Law Judge may, at any time prior to 
issuance of a decision, permit the Director to amend an Order 
Instituting Proceedings to include new matters of fact or law that are 
within the scope of the original Order Instituting Proceedings.



Sec. 501.714  Answer to Order Instituting Proceedings.

    (a) When required. Not later than 45 days after service of the Order 
Instituting Proceedings, the respondent shall file, with the 
Administrative Law Judge and the Office of Chief Counsel, an answer to 
each of the allegations contained therein. If the Order Instituting 
Proceedings is amended, the Administrative Law Judge may require that an 
amended answer be filed and, if such an answer is required, shall 
specify a date for the filing thereof.
    (b) Contents; effect of failure to deny. Unless otherwise directed 
by the Administrative Law Judge, an answer shall specifically admit, 
deny, or state that the respondent does not have, and is unable to 
obtain, sufficient information to admit or deny each allegation in the 
Order Instituting Proceedings. When a respondent intends to deny only a 
part of an allegation, the respondent shall specify so much of it as is 
true and shall deny only the remainder. A statement of lack of 
information shall have the effect of a denial. A defense of res 
judicata, statute of limitations or any other matter constituting an 
affirmative defense shall be asserted in the answer. Any allegation not 
specifically addressed in the answer shall be deemed admitted.
    (c) Motion for more definite statement. A respondent may file with 
an answer a motion for a more definite statement of specified matters of 
fact or law to be considered or determined. Such motion shall state the 
respects in which, and the reasons why, each such matter of fact or law 
should be required to be made more definite. If the motion is granted, 
the order granting such motion shall set the periods for filing such a 
statement and any answer thereto.
    (d) Amendments. A respondent may amend its answer at any time by 
written consent of the Director or with permission of the Administrative 
Law Judge. Permission shall be freely granted when justice so requires.
    (e) Failure to file answer: default. If a respondent fails to file 
an answer required by this subpart within the time prescribed, such 
respondent may be deemed in default pursuant to Sec. 501.716(a). A 
party may make a motion to set aside a default pursuant to Sec. 
501.726(e).



Sec. 501.715  Notice of Hearing.

    (a) If the Director issues an Order Instituting Proceedings, the 
respondent

[[Page 21]]

shall receive not less than 45 days notice of the time and place of the 
hearing.
    (b) Time and place of hearing. All hearings shall be held in the 
Washington, DC metropolitan area unless, based on extraordinary reasons, 
otherwise mutually agreed by the respondent and the Director. The time 
for any hearing shall be fixed with due regard for the public interest 
and the convenience and necessity of the parties or their 
representatives. Requests to change the time of a hearing may be 
submitted to the Administrative Law Judge, who may modify the hearing 
date(s) and/or time(s) and place. All requests for a change in the date 
and time and/or place of a hearing must be received by the 
Administrative Law Judge and served upon the parties no later than 15 
days before the scheduled hearing date.
    (c) Failure to appear at hearings: default. Any respondent named in 
an order instituting proceedings as a person against whom findings may 
be made or penalties imposed who fails to appear (in person or through a 
representative) at a hearing of which he or she has been duly notified 
may be deemed to be in default pursuant to Sec. 501.716(a). Without 
further proceedings or notice to the respondent, the Administrative Law 
Judge may enter a finding that the right to a hearing was waived, and 
the Penalty Notice shall constitute final agency action as provided in 
Sec. 501.709(a)(2). A respondent may make a motion to set aside a 
default pursuant to Sec. 501.726(e).



Sec. 501.716  Default.

    (a) A party to a proceeding may be deemed to be in default and the 
Administrative Law Judge (or the Secretary's designee during review 
proceedings) may determine the proceeding against that party upon 
consideration of the record if that party fails:
    (1) To appear, in person or through a representative, at any hearing 
or conference of which the party has been notified;
    (2) To answer, to respond to a dispositive motion within the time 
provided, or otherwise to prosecute or defend the proceeding; or
    (3) To cure a deficient filing within the time specified by the 
Administrative Law Judge (or the Secretary's designee) pursuant to Sec. 
501.729(b).
    (b) In deciding whether to determine the proceedings against a party 
deemed to be in default, the Administrative Law Judge shall consider the 
record of the proceedings (including the Order Instituting Proceedings) 
and shall construe contested matters of fact and law against the party 
deemed to be in default.
    (c) For information and procedures pertaining to a motion to set 
aside a default, see Sec. 501.726(e).



Sec. 501.717  Consolidation of proceedings.

    By order of the Administrative Law Judge, proceedings involving 
common questions of law and fact may be consolidated for hearing of any 
or all the matters at issue in such proceedings. The Administrative Law 
Judge may make such orders concerning the conduct of such proceedings as 
he or she deems appropriate to avoid unnecessary cost or delay. 
Consolidation shall not prejudice any rights under this subpart and 
shall not affect the right of any party to raise issues that could have 
been raised if consolidation had not occurred.



Sec. 501.718  Conduct and order of hearings.

    All hearings shall be conducted in a fair, impartial, expeditious 
and orderly manner. Each party has the right to present its case or 
defense by oral and documentary evidence and to conduct such cross 
examination as may be required for full disclosure of the relevant 
facts. The Director shall present his or her case-in-chief first. The 
Director shall be the first party to present an opening statement and a 
closing statement and may make a rebuttal statement after the 
respondent's closing statement.



Sec. 501.719  Ex parte communications.

    (a) Prohibition. (1) From the time the Director issues an Order 
Instituting Proceedings until the date of final decision, no party, 
interested person, or representative thereof shall knowingly make or 
cause to be made an ex parte communication.

[[Page 22]]

    (2) Except to the extent required for the disposition of ex parte 
communication matters as authorized by law, the Secretary's designee and 
the Administrative Law Judge presiding over any proceeding may not:
    (i) Consult a person or party on an issue, unless on notice and 
opportunity for all parties to participate; or
    (ii) Be responsible to or subject to the supervision, direction of, 
or evaluation by, an employee engaged in the performance of 
investigative or prosecutorial functions for the Department.
    (b) Procedure upon occurrence of ex parte communication. If an ex 
parte communication is received by the Administrative Law Judge or the 
Secretary's designee, the Administrative Law Judge or the Secretary's 
designee, as appropriate, shall cause all of such written communication 
(or, if the communication is oral, a memorandum stating the substance of 
the communication) to be placed on the record of the proceeding and 
served on all parties. A party may, not later than 10 days after the 
date of service, file a response thereto and may recommend that the 
person making the prohibited communication be sanctioned pursuant to 
paragraph (c) of this section.
    (c) Sanctions. Any party to the proceeding, a party's 
representative, or any other interested individual, who makes a 
prohibited ex parte communication, or who encourages or solicits another 
to make any such communication, may be subject to any appropriate 
sanction or sanctions imposed by the Administrative Law Judge or the 
Secretary's designee, as appropriate, for good cause shown, including, 
but not limited to, exclusion from the hearing and an adverse ruling on 
the issue that is the subject of the prohibited communication.



Sec. 501.720  Separation of functions.

    Any officer or employee engaged in the performance of investigative 
or prosecutorial functions for the Department in a proceeding as defined 
in Sec. 501.702 may not, in that proceeding or one that is factually 
related, participate or advise in the decision pursuant to Section 557 
of the Administrative Procedure Act, 5 U.S.C. 557, except as a witness 
or counsel in the proceeding.



Sec. 501.721  Hearings to be public.

    All hearings, except hearings on applications for confidential 
treatment filed pursuant to Sec. 501.725(b), shall be public unless 
otherwise ordered by the Administrative Law Judge or the Secretary's 
designee, as appropriate, on his or her own motion or the motion of a 
party.



Sec. 501.722  Prehearing conferences.

    (a) Purposes of conferences. The purposes of prehearing conferences 
include, but are not limited to:
    (1) Expediting the disposition of the proceeding;
    (2) Establishing early and continuing control of the proceeding by 
the Administrative Law Judge; and
    (3) Improving the quality of the hearing through more thorough 
preparation.
    (b) Procedure. On his or her own motion or at the request of a 
party, the Administrative Law Judge may direct a representative or any 
party to attend one or more prehearing conferences. Such conferences may 
be held with or without the Administrative Law Judge present as the 
Administrative Law Judge deems appropriate. Where such a conference is 
held outside the presence of the Administrative Law Judge, the 
Administrative Law Judge shall be advised promptly by the parties of any 
agreements reached. Such conferences also may be held with one or more 
persons participating by telephone or other remote means.
    (c) Subjects to be discussed. At a prehearing conference 
consideration may be given and action taken with respect to the 
following:
    (1) Simplification and clarification of the issues;
    (2) Exchange of witness and exhibit lists and copies of exhibits;
    (3) Admissions of fact and stipulations concerning the contents, 
authenticity, or admissibility into evidence of documents;
    (4) Matters of which official notice may be taken;
    (5) The schedule for exchanging prehearing motions or briefs, if 
any;
    (6) The method of service for papers;

[[Page 23]]

    (7) Summary disposition of any or all issues;
    (8) Settlement of any or all issues;
    (9) Determination of hearing dates (when the Administrative Law 
Judge is present);
    (10) Amendments to the Order Instituting Proceedings or answers 
thereto;
    (11) Production of documents as set forth in Sec. 501.723, and 
prehearing production of documents in response to subpoenas duces tecum 
as set forth in Sec. 501.728; and
    (12) Such other matters as may aid in the orderly and expeditious 
disposition of the proceeding.
    (d) Timing of conferences. Unless the Administrative Law Judge 
orders otherwise, an initial prehearing conference shall be held not 
later than 14 days after service of an answer. A final conference, if 
any, should be held as close to the start of the hearing as reasonable 
under the circumstances.
    (e) Prehearing orders. At or following the conclusion of any 
conference held pursuant to this rule, the Administrative Law Judge 
shall enter written rulings or orders that recite the agreement(s) 
reached and any procedural determinations made by the Administrative Law 
Judge.
    (f) Failure to appear: default. A respondent who fails to appear, in 
person or through a representative, at a prehearing conference of which 
he or she has been duly notified may be deemed in default pursuant to 
Sec. 501.716(a). A respondent may make a motion to set aside a default 
pursuant to Sec. 501.726(e).



Sec. 501.723  Prehearing disclosures; methods to discover additional matter.

    (a) Initial disclosures. (1) Except to the extent otherwise 
stipulated or directed by order of the Administrative Law Judge, a party 
shall, without awaiting a discovery request, provide to the opposing 
party:
    (i) The name and, if known, the address and telephone number of each 
individual likely to have discoverable information that the disclosing 
party may use to support its claims or defenses, unless solely for 
impeachment of a witness appearing in person or by deposition, 
identifying the subjects of the information; and
    (ii) A copy, or a description by category and location, of all 
documents, data compilations, and tangible things that are in the 
possession, custody, or control of the party and that the disclosing 
party may use to support its claims or defenses, unless solely for 
impeachment of a witness appearing in person or by deposition;
    (2) The disclosures described in paragraph (a)(1)(i) of this section 
shall be made not later than 30 days after the issuance of an Order 
Instituting Proceedings, unless a different time is set by stipulation 
or by order of the Administrative Law Judge.
    (b) Prehearing disclosures. (1) In addition to the disclosures 
required by paragraph (a) of this section, a party must provide to the 
opposing party, and promptly file with the Administrative Law Judge, the 
following information regarding the evidence that it may present at 
hearing for any purpose other than solely for impeachment of a witness 
appearing in person or by deposition:
    (i) An outline or narrative summary of its case or defense (the 
Order Instituting Proceedings will usually satisfy this requirement for 
the Director and the answer thereto will usually satisfy this 
requirement for the respondent);
    (ii) The legal theories upon which it will rely;
    (iii) Copies and a list of documents or exhibits that it intends to 
introduce at the hearing; and
    (iv) A list identifying each witness who will testify on its behalf, 
including the witness's name, occupation, address, phone number, and a 
brief summary of the expected testimony.
    (2) Unless otherwise directed by the Administrative Law Judge, the 
disclosures required by paragraph (b)(1) of this section shall be made 
not later than 30 days before the date of the hearing.
    (c) Disclosure of expert testimony. A party who intends to call an 
expert witness shall submit, in addition to the information required by 
paragraph (b)(1)(iv) of this section, a statement of the expert's 
qualifications, a list of other proceedings in which the expert has 
given expert testimony, and a list of publications authored or co-
authored by the expert.

[[Page 24]]

    (d) Form of disclosures. Unless the Administrative Law Judge orders 
otherwise, all disclosures under paragraphs (a) through (c) of this 
section shall be made in writing, signed, and served as provided in 
Sec. 501.705.
    (e) Methods to discover additional matter. Parties may obtain 
discovery by one or more of the following methods: Depositions of 
witnesses upon oral examination or written questions; written 
interrogatories to another party; production of documents or other 
evidence for inspection; and requests for admission. All depositions of 
Federal employees must take place in Washington, DC, at the Department 
of the Treasury or at the location where the Federal employee to be 
deposed performs his or her duties, whichever the Federal employee's 
supervisor or the Office of Chief Counsel shall deem appropriate. All 
depositions shall be held at a date and time agreed by the Office of 
Chief Counsel and the respondent or respondent's representative, and for 
an agreed length of time.
    (f) Discovery scope and limits. Unless otherwise limited by order of 
the Administrative Law Judge in accordance with paragraph (f)(2) of this 
section, the scope of discovery is as follows:
    (1) In general. The availability of information and documents 
through discovery is subject to the assertion of privileges available to 
the parties and witnesses. Privileges available to the Director and the 
Department include exemptions afforded pursuant to the Freedom of 
Information Act (5 U.S.C. 552(b)(1) through (9)) and the Privacy Act (5 
U.S.C. 552a). Parties may obtain discovery regarding any matter, not 
privileged, that is relevant to the merits of the pending action, 
including the existence, description, nature, custody, condition, and 
location of any books, documents, or other tangible things and the 
identity and location of any persons having knowledge of any 
discoverable matter. For good cause, the Administrative Law Judge may 
order discovery of any matter relevant to the subject matter involved in 
the proceeding. Relevant information need not be admissible at the 
hearing if the discovery appears reasonably calculated to lead to the 
discovery of admissible evidence.
    (2) Limitations. The Administrative Law Judge may issue any order 
that justice requires to ensure that discovery requests are not 
unreasonable, oppressive, excessive in scope or unduly burdensome, 
including an order to show cause why a particular discovery request is 
justified upon motion of the objecting party. The frequency or extent of 
use of the discovery methods otherwise permitted under this section may 
be limited by the Administrative Law Judge if he or she determines that:
    (i) The discovery sought is unreasonably cumulative or duplicative, 
or is obtainable from some other source that is more convenient, less 
burdensome, or less expensive;
    (ii) The party seeking discovery has had ample opportunity by 
discovery in the action to obtain the information sought; or
    (iii) The burden or expense of the proposed discovery outweighs its 
likely benefit, taking into account the needs of the hearing, the 
importance of the issues at stake, and the importance of the proposed 
discovery in resolving the issues.
    (3) Interrogatories. Respondent's interrogatories shall be served 
upon the Office of the Chief Counsel not later than 30 days after 
issuance of the Order Instituting Proceedings. The Director's 
interrogatories shall be served by the later of 30 days after the 
receipt of service of respondent's interrogatories or 40 days after 
issuance of the Order Instituting Proceedings if no interrogatories are 
filed by respondent. Parties shall respond to interrogatories not later 
than 30 days after the date interrogatories are received. 
Interrogatories shall be limited to 20 questions only. Each subpart, 
section, or other designation of a part of a question shall be counted 
as one complete question in computing the permitted 20 question total. 
Where more than 20 questions are served upon a party, the receiving 
party may determine which of the 20 questions the receiving party shall 
answer. The limitation on the number of questions in an interrogatory 
may be waived by the Administrative Law Judge.
    (4) Privileged matter. Privileged documents are not discoverable. 
Privileges

[[Page 25]]

include, but are not limited to, the attorney-client privilege, attorney 
work-product privilege, any government's or government agency's 
deliberative-process or classified information privilege, including 
materials classified pursuant to Executive Order 12958 (3 CFR, 1995 
Comp., p. 333) and any future Executive orders that may be issued 
relating to the treatment of national security information, and all 
materials and information exempted from release to the public pursuant 
to the Privacy Act (5 U.S.C. 552a) or the Freedom of Information Act (5 
U.S.C. 552(b)(1) through (9)).
    (g) Updating discovery. A party who has made an initial disclosure 
under paragraph (a) of this section or responded to a request for 
discovery with a disclosure or response is under a duty to supplement or 
correct the disclosure or response to include information thereafter 
acquired whenever:
    (1) The party learns that in some material respect the information 
disclosed is incomplete or incorrect, if the additional or corrective 
information has not otherwise been made known to the other party during 
the discovery process or in writing; or
    (2) Ordered by the Administrative Law Judge. The Administrative Law 
Judge may impose sanctions for failure to supplement or correct 
discovery.
    (h) Time limits. All discovery, including all responses to discovery 
requests, shall be completed not later than 20 days prior to the date 
scheduled for the commencement of the hearing, unless the Administrative 
Law Judge finds on the record that good cause exists to grant additional 
time to complete discovery.
    (i) Effect of failure to comply. No witness may testify and no 
document or exhibit may be introduced at the hearing if such witness, 
document, or exhibit is not listed in the prehearing submissions 
pursuant to paragraphs (b) and (c) of this section, except for good 
cause shown.



Sec. 501.724  Documents that may be withheld.

    (a) Notwithstanding Sec. 501.723(f), the Director or respondent may 
withhold a document if:
    (1) The document is privileged;
    (2) The document would disclose the identity of a confidential 
source; or
    (3) The Administrative Law Judge grants leave to withhold a document 
or category of documents as not relevant to the subject matter of the 
proceeding or otherwise, for good cause shown.
    (b) Nothing in paragraph (a) of this section authorizes the Director 
to withhold documents that contain material exculpatory evidence.
    (c) Withheld document list. The Director and respondent shall 
provide the Administrative Law Judge, for review, a list of documents 
withheld pursuant to paragraphs (a)(1)-(3) of this section. The 
Administrative Law Judge shall determine whether any such document 
should be made available for inspection and copying.



Sec. 501.725  Confidential treatment of information in certain filings.

    (a) Filing document under seal. (1) The Director may file any 
document or any part of a document under seal and/or seek a protective 
order concerning any document if disclosure of the document would be 
inconsistent with the protection of the public interest or if justice 
requires protection of any person, including a source or a party, from 
annoyance, threat, oppression, or undue burden or expense, or the 
disclosure of the information would be, or might reasonably lead to a 
disclosure, contrary to Executive Order 12958, as amended by Executive 
Order 13292, or other Executive orders concerning disclosure of 
information, Department regulations, or the Privacy Act, or information 
exempt from release under the Freedom of Information Act. The 
Administrative Law Judge shall allow placement of any such document 
under seal and/or grant a protective order upon a showing that the 
disclosure would be inconsistent with any such statute or Executive 
order, or that the harm resulting from disclosure would outweigh the 
benefits of disclosure.
    (2) A respondent may file any document or any part of a document 
under seal and/or seek a protective order to limit such document from 
disclosure to other parties or to the public. The Administrative Law 
Judge shall allow placement of any document under seal and/or grant a 
protective order upon a

[[Page 26]]

showing that the harm resulting from disclosure would outweigh the 
benefits of disclosure.
    (3) The Administrative Law Judge shall safeguard the security and 
integrity of any documents under seal or protective order and shall take 
all appropriate steps to preserve the confidentiality of such documents 
or any parts thereof, including closing a hearing or portions of a 
hearing to the public. Release of any information under seal or to the 
extent inconsistent with a protective order, in any form or manner, is 
subject to the sanctions and the exercise of the authorities as are 
provided with respect to ex parte communications under Sec. 501.719.
    (4) If the Administrative Law Judge denies placement of any document 
under seal or under protective order, any party, and any person whose 
document or material is at issue, may obtain interlocutory review by the 
Secretary's designee. In such cases the Administrative Law Judge shall 
not release or expose any of the records or documents in question to the 
public or to any person for a period of 20 days from the date of the 
Administrative Law Judge's ruling, in order to permit a party the 
opportunity either to withdraw the records and documents or obtain 
interlocutory review by the Secretary's designee and an order that the 
records be placed under seal or a protective order.
    (5) Upon settlement, final decision, or motion to the Administrative 
Law Judge for good cause shown, all materials (including all copies) 
under seal or protective order shall be returned to the submitting 
parties, except when it may be necessary to retain a record until any 
judicial process is completed.
    (6)(i) Written notice of each request for release of documents or 
materials under seal or subject to a protective order shall be given to 
the parties at least 20 days prior to any permitted release or prior to 
any access not specifically authorized under a protective order. A copy 
of each request for information, including the name, address, and 
telephone number of the requester, shall be provided to the parties.
    (ii) Each request for access to protected material shall include the 
names, addresses, and telephone numbers of all persons on whose behalf 
the requester seeks access to protected information. The Administrative 
Law Judge may impose sanctions as provided under Sec. 501.729 for 
failure to provide this information.
    (b) Application. An application for a protective order or to place 
under seal shall be filed with the Administrative Law Judge. The 
application shall be accompanied by a sealed copy of the materials as to 
which confidential treatment is sought.
    (1) Procedure for supplying additional information. The person 
making the application may be required to furnish in writing additional 
information with respect to the grounds for objection to public 
disclosure. Failure to supply the information so requested within 14 
days from the date of receipt of a notice of the information required 
shall be deemed a waiver of the objection to public disclosure of that 
portion of the information to which the additional information relates, 
unless the Administrative Law Judge shall otherwise order for good cause 
shown at or before the expiration of such 14-day period.
    (2) Confidentiality of materials pending final decision. Pending the 
determination of the application for confidential treatment, 
transcripts, non-final orders including an initial decision, if any, and 
other materials in connection with the application shall be placed under 
seal; shall be for the confidential use only of the Administrative Law 
Judge, the Secretary's designee, the applicant, the Director, and any 
other respondent and representative; and shall be made available to the 
public only in accordance with orders of the Administrative Law Judge or 
the Secretary's designee.
    (3) Public availability of orders. Any final order of the 
Administrative Law Judge or the Secretary's designee denying or 
sustaining an application for confidential treatment shall be made 
public. Any prior findings or opinions relating to an application for 
confidential treatment under this section shall be made public at such 
time as the material as to which confidentiality was requested is made 
public.

[[Page 27]]



Sec. 501.726  Motions.

    (a) Generally. Unless made during a hearing or conference, a motion 
shall be in writing, shall state with particularity the grounds 
therefor, shall set forth the relief or order sought, and shall be 
accompanied by a written brief of the points and authorities relied 
upon. Motions by a respondent must be filed with the Administrative Law 
Judge and served upon the Director through the Office of Chief Counsel 
and with any other party respondent or respondent's representative, 
unless otherwise directed by the Administrative Law Judge. Motions by 
the Director must be filed with the Administrative Law Judge and served 
upon each party respondent or respondent's representative. All written 
motions must be served in accordance with, and otherwise meet the 
requirements of, Sec. 501.705. The Administrative Law Judge may order 
that an oral motion be submitted in writing. No oral argument shall be 
heard on any motion unless the Administrative Law Judge otherwise 
directs.
    (b) Opposing and reply briefs. Except as provided in Sec. 
501.741(e), briefs in opposition to a motion shall be filed not later 
than 15 days after service of the motion. Reply briefs shall be filed 
not later than 3 days after service of the opposition. The failure of a 
party to oppose a written motion or an oral motion made on the record 
shall be deemed a waiver of objection by that party to the entry of an 
order substantially in the form of any proposed order accompanying the 
motion.
    (c) Dilatory motions. Frivolous, dilatory, or repetitive motions are 
prohibited. The filing of such motions may form the basis for sanctions.
    (d) Length limitation. Except as otherwise ordered by the 
Administrative Law Judge, a brief in support of, or in opposition to, a 
motion shall not exceed 15 pages, exclusive of pages containing any 
table of contents, table of authorities, or addendum.
    (e) A motion to set aside a default shall be made within a 
reasonable time as determined by the Administrative Law Judge, state the 
reasons for the failure to appear or defend, and, if applicable, specify 
the nature of the proposed defense in the proceeding. In order to 
prevent injustice and on such conditions as may be appropriate, the 
Administrative Law Judge, at any time prior to the filing of his or her 
decision, or the Secretary's designee, at any time during the review 
process, may for good cause shown set aside a default.



Sec. 501.727  Motion for summary disposition.

    (a) At any time after a respondent's answer has been filed, the 
respondent or the Director may make a motion for summary disposition of 
any or all allegations contained in the Order Instituting Proceedings. 
If the Director has not completed presentation of his or her case-in-
chief, a motion for summary disposition shall be made only with 
permission of the Administrative Law Judge. The facts of the pleadings 
of the party against whom the motion is made shall be taken as true, 
except as modified by stipulations or admissions made by that party, by 
uncontested affidavits, or by facts officially noticed pursuant to Sec. 
501.732(b).
    (b) Decision on motion. The Administrative Law Judge may promptly 
decide the motion for summary disposition or may defer decision on the 
motion. The Administrative Law Judge shall issue an order granting a 
motion for summary disposition if the record shows there is no genuine 
issue with regard to any material fact and the party making the motion 
is entitled to a summary disposition as a matter of law.
    (c) A motion for summary disposition must be accompanied by a 
statement of the material facts as to which the moving party contends 
there is no genuine issue. Such motion must be supported by documentary 
evidence, which may take the form of admissions in pleadings, 
stipulations, depositions, transcripts, affidavits, and any other 
evidentiary materials that the moving party contends support its 
position. The motion must also be accompanied by a brief containing the 
points and authorities in support of the moving party's arguments. Any 
party opposing a motion for summary disposition must file a statement 
setting forth those material facts as to which such party contends a 
genuine dispute exists. The

[[Page 28]]

opposition must be supported by evidence of the same type as that 
submitted with the motion for summary disposition and a brief containing 
the points and authorities in support of the contention that summary 
disposition would be inappropriate.



Sec. 501.728  Subpoenas.

    (a) Availability; procedure. In connection with any hearing before 
an Administrative Law Judge, either the respondent or the Director may 
request the issuance of subpoenas requiring the attendance and testimony 
of witnesses at the designated time and place of hearing, and subpoenas 
requiring the production of documentary or other tangible evidence 
returnable at a designated time and place. Unless made on the record at 
a hearing, requests for issuance of a subpoena shall be made in writing 
and served on each party pursuant to Sec. 501.705.
    (b) Standards for issuance. If it appears to the Administrative Law 
Judge that a subpoena sought may be unreasonable, oppressive, excessive 
in scope, or unduly burdensome, he or she may, in his or her discretion, 
as a condition precedent to the issuance of the subpoena, require the 
person seeking the subpoena to show the general relevance and reasonable 
scope of the testimony or other evidence sought. If after consideration 
of all the circumstances, the Administrative Law Judge determines that 
the subpoena or any of its terms is unreasonable, oppressive, excessive 
in scope, or unduly burdensome, he or she may refuse to issue the 
subpoena, or issue a modified subpoena as fairness requires. In making 
the foregoing determination, the Administrative Law Judge may inquire of 
the other participants whether they will stipulate to the facts sought 
to be proved.
    (c) Service. Service of a subpoena shall be made pursuant to the 
provisions of Sec. 501.705.
    (d) Application to quash or modify--(1) Procedure. Any person to 
whom a subpoena is directed or who is an owner, creator or the subject 
of the documents or materials that are to be produced pursuant to a 
subpoena may, prior to the time specified therein for compliance, but 
not later than 15 days after the date of service of such subpoena, 
request that the subpoena be quashed or modified. Such request shall be 
made by application filed with the Administrative Law Judge and served 
on all parties pursuant to Sec. 501.705. The party on whose behalf the 
subpoena was issued may, not later than 5 days after service of the 
application, file an opposition to the application.
    (2) Standards governing application to quash or modify. If the 
Administrative Law Judge determines that compliance with the subpoena 
would be unreasonable, oppressive or unduly burdensome, the 
Administrative Law Judge may quash or modify the subpoena, or may order 
return of the subpoena only upon specified conditions. These conditions 
may include, but are not limited to, a requirement that the party on 
whose behalf the subpoena was issued shall make reasonable compensation 
to the person to whom the subpoena was addressed for the cost of copying 
or transporting evidence to the place for return of the subpoena.
    (e) Witness fees and mileage. Witnesses summoned to appear at a 
proceeding shall be paid the same fees and mileage that are paid to 
witnesses in the courts of the United States, and witnesses whose 
depositions are taken and the persons taking the same shall severally be 
entitled to the same fees as are paid for like services in the courts of 
the United States. Witness fees and mileage shall be paid by the party 
at whose instance the witnesses appear.



Sec. 501.729  Sanctions.

    (a) Contemptuous conduct--(1) Subject to exclusion or suspension. 
Contemptuous conduct by any person before an Administrative Law Judge or 
the Secretary's designee during any proceeding, including any 
conference, shall be grounds for the Administrative Law Judge or the 
Secretary's designee to:
    (i) Exclude that person from such hearing or conference, or any 
portion thereof; and/or
    (ii) If a representative, summarily suspend that person from 
representing others in the proceeding in which such conduct occurred for 
the duration, or any portion, of the proceeding.
    (2) Adjournment. Upon motion by a party represented by a 
representative

[[Page 29]]

subject to an order of exclusion or suspension, an adjournment shall be 
granted to allow the retention of a new representative. In determining 
the length of an adjournment, the Administrative Law Judge or the 
Secretary's designee shall consider, in addition to the factors set 
forth in Sec. 501.737, the availability of another representative for 
the party or, if the representative was a counsel, of other members of a 
suspended counsel's firm.
    (b) Deficient filings; leave to cure deficiencies. The 
Administrative Law Judge, or the Secretary's designee in the case of a 
request for review, may in his or her discretion, reject, in whole or in 
part, any filing that fails to comply with any requirements of this 
subpart or of any order issued in the proceeding in which the filing was 
made. Any such filings shall not be part of the record. The 
Administrative Law Judge or the Secretary's designee may direct a party 
to cure any deficiencies and to resubmit the filing within a fixed time 
period.
    (c) Failure to make required filing or to cure deficient filing. The 
Administrative Law Judge (or the Secretary's designee during review 
proceedings) may enter a default pursuant to Sec. 501.716, dismiss the 
case, decide the particular matter at issue against that person, or 
prohibit the introduction of evidence or exclude testimony concerning 
that matter if a person fails:
    (1) To make a filing required under this subpart; or
    (2) To cure a deficient filing within the time specified by the 
Administrative Law Judge or the Secretary's designee pursuant to 
paragraph (b) of this section.
    (d) Failure to make required filing or to cure deficient filing in 
the case of a request for review. The Secretary's designee, in any case 
of a request for review, may decide the issue against that person, or 
prohibit the introduction of evidence or exclude testimony concerning 
that matter if a person fails:
    (1) To make a filing required under this subpart; or
    (2) To cure a deficient filing within the time specified by the 
Secretary's designee pursuant to paragraph (b) of this section.



Sec. 501.730  Depositions upon oral examination.

    (a) Procedure. Any party desiring to take the testimony of a witness 
by deposition shall make a written motion setting forth the reasons why 
such deposition should be taken including the specific reasons why the 
party believes the witness may be unable to attend or testify at the 
hearing; the name and address of the prospective witness; the matters 
concerning which the prospective witness is expected to be questioned; 
and the proposed time and place for the taking of the deposition.
    (b) Required finding when ordering a deposition. In the discretion 
of the Administrative Law Judge, an order for deposition may be issued 
upon a finding that the prospective witness will likely give testimony 
material to the proceeding, that it is likely the prospective witness 
will be unable to attend or testify at the hearing because of age, 
sickness, infirmity, imprisonment or other disability, and that the 
taking of a deposition will serve the interests of justice.
    (c) Contents of order. An order for deposition shall designate by 
name a deposition officer. The designated officer may be the 
Administrative Law Judge or any other person authorized to administer 
oaths by the laws of the United States or of the place where the 
deposition is to be held. An order for deposition also shall state:
    (1) The name of the witness whose deposition is to be taken;
    (2) The scope of the testimony to be taken;
    (3) The time and place of the deposition;
    (4) The manner of recording, preserving and filing the deposition; 
and
    (5) The number of copies, if any, of the deposition and exhibits to 
be filed upon completion of the deposition.
    (d) Procedure at depositions. A witness whose testimony is taken by 
deposition shall swear or affirm before any questions are put to him or 
her. Examination and cross-examination of witnesses may proceed as 
permitted at a hearing. A witness being deposed may have counsel or a 
representative present during the deposition.
    (e) Objections to questions or evidence. Objections to questions or 
evidence

[[Page 30]]

shall be in short form, stating the grounds of objection relied upon. 
Objections to questions or evidence shall be noted by the deposition 
officer upon the deposition, but a deposition officer (other than an 
Administrative Law Judge) shall not have the power to decide on the 
competency, materiality or relevance of evidence. Failure to object to 
questions or evidence before the deposition officer shall not be deemed 
a waiver unless the ground of the objection is one that might have been 
obviated or removed if presented at that time.
    (f) Filing of depositions. The questions asked and all answers or 
objections shall be recorded or transcribed verbatim, and a transcript 
shall be prepared by the deposition officer, or under his or her 
direction. The transcript shall be subscribed by the witness and 
certified by the deposition officer. The original deposition transcript 
and exhibits shall be filed with the Administrative Law Judge. A copy of 
the deposition transcript and exhibits shall be served on the opposing 
party or parties. The cost of the transcript (including copies) shall be 
paid by the party requesting the deposition.



Sec. 501.731  Depositions upon written questions.

    (a) Availability. Depositions may be taken and submitted on written 
questions upon motion of any party. The motion shall include the 
information specified in Sec. 501.730(a). A decision on the motion 
shall be governed by Sec. 501.730(b).
    (b) Procedure. Written questions shall be filed with the motion. Not 
later than 10 days after service of the motion and written questions, 
any party may file objections to such written questions and any party 
may file cross-questions. When a deposition is taken pursuant to this 
section no persons other than the witness, representative or counsel to 
the witness, the deposition officer, and, if the deposition officer does 
not act as reporter, a reporter, shall be present at the examination of 
the witness. No party shall be present or represented unless otherwise 
permitted by order. The deposition officer shall propound the questions 
and cross-questions to the witness in the order submitted.
    (c) Additional requirements. The order for deposition, filing of the 
deposition, form of the deposition and use of the deposition in the 
record shall be governed by paragraphs (b) through (g) of Sec. 501.730, 
except that no cross-examination shall be made.



Sec. 501.732  Evidence.

    The applicable evidentiary standard for proceedings under this 
subpart is proof by a preponderance of reliable, probative, and 
substantial evidence. The Administrative Law Judge shall admit any 
relevant and material oral, documentary, or demonstrative evidence. The 
Federal Rules of Evidence do not apply, by their own force, to 
proceedings under this subpart, but shall be employed as general 
guidelines. The fact that evidence submitted by a party is hearsay goes 
only to the weight of the evidence and does not affect its 
admissibility.
    (a) Objections and offers of proof--(1) Objections. Objections to 
the admission or exclusion of evidence must be made on the record and 
shall be in short form, stating the grounds relied upon. Exceptions to 
any ruling thereon by the Administrative Law Judge need not be noted at 
the time of the ruling. Such exceptions will be deemed waived on review 
by the Secretary's designee, however, unless raised:
    (i) Pursuant to interlocutory review in accordance with Sec. 
501.741;
    (ii) In a proposed finding or conclusion filed pursuant to Sec. 
501.738; or
    (iii) In a petition for the Secretary's designee's review of an 
Administrative Law Judge's decision filed in accordance with Sec. 
501.741.
    (2) Offers of proof. Whenever evidence is excluded from the record, 
the party offering such evidence may make an offer of proof, which shall 
be included in the record. Excluded material shall be retained pursuant 
to Sec. 501.739(b).
    (b) Official notice. An Administrative Law Judge or Secretary's 
designee may take official notice of any material fact that might be 
judicially noticed by a district court of the United States, any matter 
in the public official records of the Secretary, or any matter

[[Page 31]]

that is particularly within the knowledge of the Department as an expert 
body. If official notice is requested or taken of a material fact not 
appearing in the evidence in the record, a party, upon timely request to 
the Administrative Law Judge, shall be afforded an opportunity to 
establish the contrary.
    (c) Stipulations. The parties may, by stipulation, at any stage of 
the proceeding agree upon any pertinent fact in the proceeding. A 
stipulation may be received in evidence and, when accepted by the 
Administrative Law Judge, shall be binding on the parties to the 
stipulation.
    (d) Presentation under oath or affirmation. A witness at a hearing 
for the purpose of taking evidence shall testify under oath or 
affirmation.
    (e) Presentation, rebuttal and cross-examination. A party is 
entitled to present its case or defense by oral or documentary evidence, 
to submit rebuttal evidence, and to conduct such cross-examination as, 
in the discretion of the Administrative Law Judge, may be required for a 
full and true disclosure of the facts.



Sec. 501.733  Evidence: confidential information, protective orders.

    (a) Procedure. In any proceeding as defined in Sec. 501.702, a 
respondent; the Director; any person who is the owner, subject or 
creator of a document subject to subpoena or which may be introduced as 
evidence; or any witness who testifies at a hearing may file a motion 
requesting a protective order to limit from disclosure to other parties 
or to the public documents or testimony containing confidential 
information. The motion should include a general summary or extract of 
the documents without revealing confidential details. If a person seeks 
a protective order against disclosure to other parties as well as the 
public, copies of the documents shall not be served on other parties. 
Unless the documents are unavailable, the person shall file for 
inspection by the Administrative Law Judge a sealed copy of the 
documents as to which the order is sought.
    (b) Basis for issuance. Documents and testimony introduced in a 
public hearing are presumed to be public. A motion for a protective 
order shall be granted only upon a finding that the harm resulting from 
disclosure would outweigh the benefits of disclosure.
    (c) Requests for additional information supporting confidentiality. 
A person seeking a protective order under paragraph (a) of this section 
may be required to furnish in writing additional information with 
respect to the grounds for confidentiality. Failure to supply the 
information so requested not later than 5 days from the date of receipt 
by the person of a notice of the information required shall be deemed a 
waiver of the objection to public disclosure of that portion of the 
documents to which the additional information relates, unless the 
Administrative Law Judge shall otherwise order for good cause shown at 
or before the expiration of such 5-day period.
    (d) Confidentiality of documents pending decision. Pending a 
determination of a motion under this section, the documents as to which 
confidential treatment is sought and any other documents that would 
reveal the confidential information in those documents shall be 
maintained under seal and shall be disclosed only in accordance with 
orders of the Administrative Law Judge. Any order issued in connection 
with a motion under this section shall be made public unless the order 
would disclose information as to which a protective order has been 
granted, in which case that portion of the order that would reveal the 
protected information shall not be made public.



Sec. 501.734  Introducing prior sworn statements of witnesses into the
record.

    (a) At a hearing, any person wishing to introduce a prior, sworn 
statement of a witness who is not a party to the proceeding, that is 
otherwise admissible in the proceeding, may make a motion setting forth 
the reasons therefor. If only part of a statement is offered in 
evidence, the Administrative Law Judge may require that all relevant 
portions of the statement be introduced. If all of a statement is 
offered in evidence, the Administrative Law Judge may require that 
portions not relevant to the proceeding be excluded. A motion to 
introduce a prior sworn statement may be granted if:

[[Page 32]]

    (1) The witness is dead;
    (2) The witness is out of the United States, unless it appears that 
the absence of the witness was procured by the party offering the prior 
sworn statement;
    (3) The witness is unable to attend or testify because of age, 
sickness, infirmity, imprisonment or other disability;
    (4) The party offering the prior sworn statement has been unable to 
procure the attendance of the witness by subpoena; or,
    (5) In the discretion of the Administrative Law Judge, it would be 
desirable, in the interests of justice, to allow the prior sworn 
statement to be used. In making this determination, due regard shall be 
given to the presumption that witnesses will testify orally in an open 
hearing. If the parties have stipulated to accept a prior sworn 
statement in lieu of live testimony, consideration shall also be given 
to the convenience of the parties in avoiding unnecessary expense.



Sec. 501.735  Proposed findings, conclusions and supporting briefs.

    (a) Opportunity to file. Before a decision is issued by the 
Administrative Law Judge, each party shall have an opportunity, 
reasonable in light of all the circumstances, to file in writing 
proposed findings and conclusions.
    (b) Procedure. Proposed findings of fact must be supported by 
citations to specific portions of the record. If successive filings are 
directed, the proposed findings and conclusions of the party assigned to 
file first shall be set forth in serially numbered paragraphs, and any 
counter statement of proposed findings and conclusions shall, in 
addition to any other matter presented, indicate those paragraphs of the 
proposals already filed as to which there is no dispute. A reply brief 
may be filed by the party assigned to file first, or, where simultaneous 
filings are directed, reply briefs may be filed by each party, within 
the period prescribed therefor by the Administrative Law Judge. No 
further briefs may be filed except with permission of the Administrative 
Law Judge.
    (c) Time for filing. In any proceeding in which a decision is to be 
issued:
    (1) At the close of each hearing, the Administrative Law Judge 
shall, by order, after consultation with the parties, prescribe the 
period within which proposed findings and conclusions and supporting 
briefs are to be filed. The party directed to file first shall make its 
initial filing not later than 30 days after the end of the hearing 
unless the Administrative Law Judge, for good cause shown, permits a 
different period and sets forth in the order the reasons why the 
different period is necessary.
    (2) The total period within which all such proposed findings and 
conclusions and supporting briefs and any counter statements of proposed 
findings and conclusions and reply briefs are to be filed shall be no 
longer than 90 days after the close of the hearing unless the 
Administrative Law Judge, for good cause shown, permits a different 
period and sets forth in an order the reasons why the different period 
is necessary.



Sec. 501.736  Authority of Administrative Law Judge.

    The Administrative Law Judge shall have authority to do all things 
necessary and appropriate to discharge his or her duties. No provision 
of these rules shall be construed to limit the powers of the 
Administrative Law Judge provided by the Administrative Procedure Act, 5 
U.S.C. 556, 557. The powers of the Administrative Law Judge include, but 
are not limited to:
    (a) Administering oaths and affirmations;
    (b) Issuing subpoenas authorized by law and revoking, quashing, or 
modifying any such subpoena;
    (c) Receiving relevant evidence and ruling upon the admission of 
evidence and offers of proof;
    (d) Regulating the course of a proceeding and the conduct of the 
parties and their representatives;
    (e) Holding prehearing and other conferences as set forth in Sec. 
501.726 and requiring the attendance at any such conference of at least 
one representative of each party who has authority to negotiate 
concerning the resolution of issues in controversy;

[[Page 33]]

    (f) Subject to any limitations set forth elsewhere in this subpart, 
considering and ruling on all procedural and other motions;
    (g) Upon notice to all parties, reopening any hearing prior to the 
issuance of a decision;
    (h) Requiring production of records or any information relevant to 
any act or transaction subject to a hearing under this subpart, and 
imposing sanctions available under Federal Rule of Civil Procedure 
37(b)(2) (Fed. R. Civ. P. 37(b)(2), 28 U.S.C.) for a party's failure to 
comply with discovery requests;
    (i) Establishing time, place, and manner limitations on the 
attendance of the public and the media for any hearing; and
    (j) Setting fees and expenses for witnesses, including expert 
witnesses.



Sec. 501.737  Adjustments of time, postponements and adjournments.

    (a) Availability. Except as otherwise provided by law, the 
Administrative Law Judge or the Secretary's designee, as appropriate, at 
any time prior to the filing of his or her decision, may, for good cause 
and in the interest of justice, modify any time limit prescribed by this 
subpart and may, consistent with paragraph (b) of this section, postpone 
or adjourn any hearing.
    (b) Limitations on postponements, adjournments and adjustments. A 
hearing shall begin at the time and place ordered, provided that, within 
the limits provided, the Administrative Law Judge or the Secretary's 
designee, as appropriate, may for good cause shown postpone the 
commencement of the hearing or adjourn a convened hearing for a 
reasonable period of time.
    (1) Additional considerations. In considering a motion for 
postponement of the start of a hearing, adjournment once a hearing has 
begun, or extensions of time for filing papers, the Administrative Law 
Judge or the Secretary's designee, as appropriate, shall consider, in 
addition to any other factors:
    (i) The length of the proceeding to date;
    (ii) The number of postponements, adjournments or extensions already 
granted;
    (iii) The stage of the proceedings at the time of the request; and
    (iv) Any other matter as justice may require.
    (2) Time limit. Postponements, adjournments or extensions of time 
for filing papers shall not exceed 21 days unless the Administrative Law 
Judge or the Secretary's designee, as appropriate, states on the record 
or sets forth in a written order the reasons why a longer period of time 
is necessary.



Sec. 501.738  Disqualification and withdrawal of Administrative Law Judge.

    (a) Notice of disqualification. If at any time an Administrative Law 
Judge or Secretary's designee believes himself or herself to be 
disqualified from considering a matter, the Administrative Law Judge or 
Secretary's designee, as appropriate, shall issue a notice stating that 
he or she is withdrawing from the matter and setting forth the reasons 
therefor.
    (b) Motion for Withdrawal. Any party who has a reasonable, good 
faith basis to believe an Administrative Law Judge or Secretary's 
designee has a personal bias, or is otherwise disqualified from hearing 
a case, may make a motion to the Administrative Law Judge or Secretary's 
designee, as appropriate, that the Administrative Law Judge or 
Secretary's designee withdraw. The motion shall be accompanied by a 
statement subject to 18 U.S.C. 1001 setting forth in detail the facts 
alleged to constitute grounds for disqualification. If the 
Administrative Law Judge or Secretary's designee finds himself or 
herself qualified, he or she shall so rule and shall continue to preside 
over the proceeding.



Sec. 501.739  Record in proceedings before Administrative Law Judge;
retention of documents; copies.

    (a) Recordation. Unless otherwise ordered by the Administrative Law 
Judge, all hearings shall be recorded and a written transcript thereof 
shall be prepared.
    (1) Availability of a transcript. Transcripts of hearings shall be 
available for purchase.
    (2) Transcript correction. Prior to the filing of post-hearing 
briefs or proposed findings and conclusions, or within

[[Page 34]]

such earlier time as directed by the Administrative Law Judge, a party 
or witness may make a motion to correct the transcript. Proposed 
corrections of the transcript may be submitted to the Administrative Law 
Judge by stipulation pursuant to Sec. 501.732(c), or by motion. Upon 
notice to all parties to the proceeding, the Administrative Law Judge 
may, by order, specify corrections to the transcript.
    (b) Contents of the record. The record of each hearing shall consist 
of:
    (1) The Order Instituting Proceedings, Answer to Order Instituting 
Proceedings, Notice of Hearing and any amendments thereto;
    (2) Each application, motion, submission or other paper, and any 
amendments, motions, objections, and exceptions to or regarding them;
    (3) Each stipulation, transcript of testimony, interrogatory, 
deposition, and document or other item admitted into evidence;
    (4) With respect to a request to disqualify an Administrative Law 
Judge or to allow the Administrative Law Judge's withdrawal under Sec. 
501.738, each affidavit or transcript of testimony taken and the 
decision made in connection with the request;
    (5) All proposed findings and conclusions;
    (6) Each written order issued by the Administrative Law Judge; and
    (7) Any other document or item accepted into the record by the 
Administrative Law Judge.
    (c) Retention of documents not admitted. Any document offered as 
evidence but excluded, and any document marked for identification but 
not offered as an exhibit, shall not be part of the record. The 
Administrative Law Judge shall retain any such document until the later 
of the date the proceeding becomes final, or the date any judicial 
review of the final proceeding is no longer available.
    (d) Substitution of copies. A true copy of a document may be 
substituted for any document in the record or any document retained 
pursuant to paragraph (c) of this section.



Sec. 501.740  Decision of Administrative Law Judge.

    The Administrative Law Judge shall prepare a decision that 
constitutes his or her final disposition of the proceedings.
    (a) Content. (1) The Administrative Law Judge shall determine 
whether or not the respondent has violated any provision of parts 500 
and 515 of this chapter or the provisions of any license, ruling, 
regulation, order, direction or instruction issued by or under the 
authority of the Secretary pursuant to part 500 or 515 of this chapter 
or otherwise under the Trading with the Enemy Act.
    (2) The Administrative Law Judge's decision shall include findings 
and conclusions, and the reasons or basis therefor, as to all the 
material issues of fact, law or discretion presented on the record.
    (3) (i) Upon a finding of violation, the Administrative Law Judge 
shall award an appropriate monetary civil penalty in an amount 
consistent with the Penalty Guidelines published by the Director.
    (ii) Notwithstanding paragraph (a)(3)(i) of this section, the 
Administrative Law Judge:
    (A) Shall provide an opportunity for a respondent to assert his or 
her inability to pay a penalty, or financial hardship, by filing with 
the Administrative Law Judge a financial disclosure statement subject to 
18 U.S.C. 1001 that sets forth in detail the basis for the financial 
hardship or the inability to pay; and
    (B) Shall consider any such filing in determining the appropriate 
monetary civil penalty.
    (b) Administrative Law Judge's decision--(1) Service. The 
Administrative Law Judge shall serve his or her decision on the 
respondent and on the Director through the Office of Chief Counsel, and 
shall file a copy of the decision with the Secretary's designee.
    (2) Filing of report with the Secretary's designee. If the 
respondent or Director files a petition for review pursuant to Sec. 
501.741, or upon a request from the Secretary's designee, the 
Administrative Law Judge shall file his or her report with the 
Secretary's designee not later than 20 days after service of his

[[Page 35]]

or her decision on the parties. The report shall consist of the record, 
including the Administrative Law Judge's decision, and any petition from 
the respondent or the Director seeking review.
    (3) Correction of errors. Until the Administrative Law Judge's 
report has been directed for review by the Secretary's designee or, in 
the absence of a direction for review, until the decision has become a 
final order, the Administrative Law Judge may correct clerical errors 
and errors arising through oversight or inadvertence in decisions, 
orders, or other parts of the record.
    (c) Administrative Law Judge's decision final unless review 
directed. Unless the Secretary's designee determines to review a 
decision in accordance with Sec. 501.741(a)(1), the decision of the 
Administrative Law Judge shall become the final decision of the 
Department.
    (d) Penalty awarded. The Director is charged with implementing all 
final decisions of the Department and, upon a finding of violation and/
or award of a civil monetary penalty, shall carry out the necessary 
steps to close the action.



Sec. 501.741  Review of decision or ruling.

    (a) Availability. (1)(i) Review of the decision of the 
Administrative Law Judge by the Secretary's designee is not a right. The 
Secretary's designee may, in his or her discretion, review the decision 
of the Administrative Law Judge on the petition of either the respondent 
or the Director, or upon his or her own motion. The Secretary's designee 
shall determine whether to review a decision:
    (A) If a petition for review has been filed by the respondent or the 
Director, not later than 30 days after that date the Administrative Law 
Judge filed his or her report with the Secretary's designee pursuant to 
paragraph (b)(2) of this section; or
    (B) If no petition for review has been filed by the respondent or 
the Director, not later than 40 days after the date the Administrative 
Law Judge filed his or her decision with the Secretary's designee 
pursuant to paragraph (b)(1) of this section.
    (ii) In determining whether to review a decision upon petition of 
the respondent or the Director, the Secretary's designee shall consider 
whether the petition for review makes a reasonable showing that:
    (A) A prejudicial error was committed in the conduct of the 
proceeding; or
    (B) The decision embodies:
    (1) A finding or conclusion of material fact that is clearly 
erroneous;
    (2) A conclusion of law that is erroneous; or
    (3) An exercise of discretion or decision of law or policy that is 
important and that the Secretary's designee should review.
    (2) Interlocutory review of ruling. The Secretary's designee shall 
review any ruling of an Administrative Law Judge involving privileged or 
confidential material that is the subject of a petition for review. See 
Sec. 501.725.
    (b) Filing. Either the respondent or the Director, when adversely 
affected or aggrieved by the decision or ruling of the Administrative 
Law Judge, may seek review by the Secretary's designee by filing a 
petition for review. Any petition for review shall be filed with the 
Administrative Law Judge within 10 days after service of the 
Administrative Law Judge's decision or the issuance of a ruling 
involving privileged or confidential material.
    (c) Contents. The petition shall state why the Secretary's designee 
should review the Administrative Law Judge's decision or ruling, 
including: Whether the Administrative Law Judge's decision or ruling 
raises an important question of law, policy or discretion; whether 
review by the Secretary's designee will resolve a question about which 
the Department's Administrative Law Judges have rendered differing 
opinions; whether the Administrative Law Judge's decision or ruling is 
contrary to law or Department precedent; whether a finding of material 
fact is not supported by a preponderance of the evidence; or whether a 
prejudicial error of procedure or an abuse of discretion was committed. 
A petition should concisely state the portions of the decision or ruling 
for which review is sought. A petition shall not incorporate by 
reference a brief or legal memorandum.

[[Page 36]]

    (d) When filing effective. A petition for review is filed when 
received by the Administrative Law Judge.
    (e) Statements in opposition to petition. Not later than 8 days 
after the filing of a petition for review, either the respondent or the 
Director may file a statement in opposition to a petition. A statement 
in opposition to a petition for review shall be filed in the manner 
specified in this section for filing of petitions for review. Statements 
in opposition shall concisely state why the Administrative Law Judge's 
decision or ruling should not be reviewed with respect to each portion 
of the petition to which it is addressed.
    (f) Number of copies. An original and three copies of a petition or 
a statement in opposition to a petition shall be filed with the 
Administrative Law Judge.
    (g) Prerequisite to judicial review. Pursuant to section 704 of the 
Administrative Procedure Act, 5 U.S.C. 704, a petition for review by the 
Secretary's designee of an Administrative Law Judge decision or ruling 
is a prerequisite to the seeking of judicial review of a final order 
entered pursuant to such decision or ruling.



Sec. 501.742  Secretary's designee's consideration of decisions by
Administrative Law Judges.

    (a) Scope of review. The Secretary's designee may affirm, reverse, 
modify, set aside or remand for further proceedings, in whole or in 
part, a decision or ruling by an Administrative Law Judge and may make 
any findings or conclusions that in his or her judgment are proper and 
on the basis of the record and such additional evidence as the 
Secretary's designee may receive in his or her discretion.
    (b) Summary affirmance. The Secretary's designee may summarily 
affirm an Administrative Law Judge's decision or ruling based upon the 
petition for review and any response thereto, without further briefing, 
if he or she finds that no issue raised in the petition for review 
warrants further consideration.



Sec. 501.743  Briefs filed with the Secretary's designee.

    (a) Briefing schedule order. If review of a determination is 
mandated by judicial order or whenever the Secretary's designee reviews 
a decision or ruling, the Secretary's designee shall, unless such review 
results in summary affirmance pursuant to Sec. 501.742(b), issue a 
briefing schedule order directing the parties to file opening briefs and 
specifying particular issues, if any, as to which briefing should be 
limited or directed. Unless otherwise provided, opening briefs shall be 
filed not later than 40 days after the date of the briefing schedule 
order. Opposition briefs shall be filed not later than 30 days after the 
date opening briefs are due. Reply briefs shall be filed not later than 
14 days after the date opposition briefs are due. No briefs in addition 
to those specified in the briefing schedule order may be filed without 
permission of the Secretary's designee. The briefing schedule order 
shall be issued not later than 21 days after the later of:
    (1) The last day permitted for filing a brief in opposition to a 
petition for review pursuant to Sec. 501.741(e); or
    (2) Receipt by the Secretary's designee of the mandate of a court 
with respect to a judicial remand.
    (b) Contents of briefs. Briefs shall be confined to the particular 
matters at issue. Each exception to the findings or conclusions being 
reviewed shall be stated succinctly. Exceptions shall be supported by 
citation to the relevant portions of the record, including references to 
the specific pages relied upon, and by concise argument including 
citation of such statutes, decisions and other authorities as may be 
relevant. If the exception relates to the admission or exclusion of 
evidence, the substance of the evidence admitted or excluded shall be 
set forth in the brief, in an appendix thereto, or by citation to the 
record. If the exception relates to interlocutory review, there is no 
requirement to reference pages of the transcript. Reply briefs shall be 
confined to matters in opposition briefs of other parties.
    (c) Length limitation. Opening and opposition briefs shall not 
exceed 30 pages and reply briefs shall not exceed 20 pages, exclusive of 
pages containing

[[Page 37]]

the table of contents, table of authorities, and any addendum, except 
with permission of the Secretary's designee.



Sec. 501.744  Record before the Secretary's designee.

    The Secretary's designee shall determine each matter on the basis of 
the record and such additional evidence as the Secretary's designee may 
receive in his or her discretion. In any case of interlocutory review, 
the Administrative Law Judge shall direct that a transcript of the 
relevant proceedings be prepared and forwarded to the Secretary's 
designee.
    (a) Contents of the record. In proceedings for final decision before 
the Secretary's designee the record shall consist of:
    (1) All items that are part of the record in accordance with Sec. 
501.739;
    (2) Any petitions for review, cross-petitions or oppositions;
    (3) All briefs, motions, submissions and other papers filed on 
appeal or review; and
    (4) Any other material of which the Secretary's designee may take 
administrative notice.
    (b) Review of documents not admitted. Any document offered in 
evidence but excluded by the Administrative Law Judge and any document 
marked for identification but not offered as an exhibit shall not be 
considered a part of the record before the Secretary's designee on 
review but shall be transmitted to the Secretary's designee if he or she 
so requests. In the event that the Secretary's designee does not request 
the document, the Administrative Law Judge shall retain the document not 
admitted into the record until the later of:
    (1) The date upon which the Secretary's designee's order becomes 
final; or
    (2) The conclusion of any judicial review of that order.



Sec. 501.745  Orders and decisions: signature, date and public
availability.

    (a) Signature required. All orders and decisions of the 
Administrative Law Judge or Secretary's designee shall be signed.
    (b) Date of entry of orders. The date of entry of an order by the 
Administrative Law Judge or Secretary's designee shall be the date the 
order is signed. Such date shall be reflected in the caption of the 
order, or if there is no caption, in the order itself.
    (c) Public availability of orders. (1) In general, any final order 
of the Department shall be made public. Any supporting findings or 
opinions relating to a final order shall be made public at such time as 
the final order is made public.
    (2) Exception. Any final order of the Administrative Law Judge or 
Secretary's designee pertaining to an application for confidential 
treatment shall only be available to the public in accordance with Sec. 
501.725(b)(3).



Sec. 501.746  Referral to United States Department of Justice; 
administrative collection measures.

    In the event that the respondent does not pay any penalty imposed 
pursuant to this part within 30 calendar days of the mailing of the 
written notice of the imposition of the penalty, the matter may be 
referred for administrative collection measures 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. 501.747  Procedures on remand of decisions.

    Either an Administrative Law Judge or a Secretary's designee, as 
appropriate, shall reconsider any Department decision on judicial remand 
to the Department. The rules of practice contained in this subpart shall 
apply to all proceedings held on judicial remand.



                          Subpart E_Procedures

    Source: 62 FR 45101, Aug. 25, 1997, unless otherwise noted. 
Redesignated at 68 FR 53642, Sept. 11, 2003.



Sec. 501.801  Licensing.

    (a) General licenses. General licenses have been issued authorizing 
under appropriate terms and conditions certain types of transactions 
which are subject to the prohibitions contained in this chapter. General 
licenses are set forth in subpart E of each part contained in

[[Page 38]]

this chapter, and they also may be available through the following page 
on OFAC's Web site: http://www.treasury.gov/resource-center/sanctions/
programs/Pages/Programs.aspx. General licenses may also be issued 
authorizing under appropriate terms and conditions certain types of 
transactions which are subject to prohibitions contained in economic 
sanctions programs the implementation and administration of which have 
been delegated to the Director of the Office of Foreign Assets Control 
but which are not yet codified in this chapter. It is the policy of the 
Office of Foreign Assets Control not to grant applications for specific 
licenses authorizing transactions to which the provisions of an 
outstanding general license are applicable. Persons availing themselves 
of certain general licenses may be required to file reports and 
statements in accordance with the instructions specified in those 
licenses. Failure to file such reports or statements will nullify the 
authority of the general license.
    (b) Specific licenses--(1) General course of procedure. Transactions 
subject to the prohibitions contained in this chapter, or to 
prohibitions the implementation and administration of which have been 
delegated to the Director of the Office of Foreign Assets Control, which 
are not authorized by general license may be effected only under 
specific licenses.
    (2) Applications for specific licenses. Original signed applications 
for specific licenses to engage in any transactions prohibited by or 
pursuant to this chapter or sanctions programs that have been delegated 
to the Director of the Office of Foreign Assets Control for 
implementation and administration must be filed by mail or courier. 
Applications will not be accepted by fax or electronically, unless 
otherwise authorized. Applications may be submitted in letter form with 
the exception of license applications for the unblocking of funds 
transfers. Applications for the unblocking of funds transfers must be 
submitted using TD-F 90-22.54, ``Application for the Release of Blocked 
Funds,'' accompanied by two complete copies of the entire submission. 
The form, which requires information regarding the date of the blocking, 
the financial institutions involved in the transfer, and the beneficiary 
and amount of the transfer, may be obtained from the OFAC Internet Home 
Page: http://www.treas.gov/ofac, the OFAC fax-on-demand service: 202/
622-0077, or the Compliance Programs Division, Office of Foreign Assets 
Control, Department of the Treasury, Washington, DC 20220. Any person 
having an interest in a transaction or proposed transaction may file an 
application for a license authorizing such transaction.
    (3) Information to be supplied. The applicant must supply all 
information specified by relevant instructions and/or forms, and must 
fully disclose the names of all parties who are concerned with or 
interested in the proposed transaction. If the application is filed by 
an agent, the agent must disclose the name of his principal(s). Such 
documents as may be relevant shall be attached to each application as a 
part of such application, except that documents previously filed with 
the Office of Foreign Assets Control may, where appropriate, be 
incorporated by reference in such application. Applicants are required 
to supply their taxpayer identifying number pursuant to 31 U.S.C. 7701, 
which number may be used for purposes of collecting and reporting on any 
delinquent amounts arising out of the applicant's relationship with the 
United States Government. Applicants may be required to furnish such 
further information as is deemed necessary to a proper determination by 
the Office of Foreign Assets Control. Any applicant or other party in 
interest desiring to present additional information may do so at any 
time before or after decision. Arrangements for oral presentation should 
be made with the Office of Foreign Assets Control.
    (4) Effect of denial. The denial of a license does not preclude the 
reopening of an application or the filing of a further application. The 
applicant or any other party in interest may at any time request 
explanation of the reasons for a denial by correspondence or personal 
interview.
    (5) Reports under specific licenses. As a condition for the issuance 
of any license, the licensee may be required to file reports with 
respect to the transaction covered by the license, in such

[[Page 39]]

form and at such times and places as may be prescribed in the license or 
otherwise.
    (6) Issuance of license. Licenses will be issued by the Office of 
Foreign Assets Control acting on behalf of the Secretary of the Treasury 
or licenses may be issued by the Secretary of the Treasury acting 
directly or through any specifically designated person, agency, or 
instrumentality.
    (7) Address. License applications, reports, and inquiries should be 
addressed to the appropriate division or individual within the Office of 
Foreign Assets Control, or to its Director, at the following address: 
Office of Foreign Assets Control, U.S. Department of the Treasury, 1500 
Pennsylvania Avenue, NW.--Annex, Washington, DC 20220.
    (c) Registration of nongovernmental organizations--(1) Purpose of 
registration. For those parts of this chapter specifically authorizing 
the registration of nongovernmental organizations (``NGOs''), 
registration numbers may be issued on a case-by-case basis to NGOs 
involved in humanitarian or religious activities in countries or 
geographic areas subject to economic sanctions pursuant to this chapter 
V. A registration number authorizes certain transactions by or on behalf 
of the registered NGO otherwise prohibited by the specific part with 
respect to which the registration number is issued, including the 
exportation of goods, services, and funds to the country or geographic 
area subject to such part for the purpose of relieving human suffering. 
The transactions authorized for registered NGOs either will be specified 
by the statement of licensing policy in the part under which the 
registration number is issued or by the Office of Foreign Assets Control 
letter issuing the registration number.
    (2) Application information to be supplied. Applications for 
registration numbers should be submitted to the Compliance Programs 
Division, Office of Foreign Assets Control, U.S. Department of the 
Treasury, 1500 Pennsylvania Avenue, NW., Annex, Washington, DC 20220, or 
by facsimile to (202) 622-2426, and must include:
    (i) The organization's name in English, in the language of origin, 
and any acronym or other names used to identify the organization;
    (ii) Address and phone number of the organization's headquarters 
location;
    (iii) Full name in English, in the language of origin, and any 
acronym or other names used, as well as nationality, citizenship, 
current country of residence, place and date of birth for key staff at 
the organization's headquarters, such as the chairman and board members, 
president, director, etc.;
    (iv) Identification of field offices or partner offices elsewhere, 
including addresses, phone numbers, and organizational names used, as 
well as the identification of the senior officer(s) at these locations, 
including the person's name, position, nationality, citizenship, and 
date of birth (names of individuals and organizations shall be provided 
in English, in the language of origin, and shall include any acronym or 
other names used to identify the individuals or organizations);
    (v) Identification of subcontracting organizations, if any, to the 
extent known or contemplated at the time of the application;
    (vi) Existing sources of income, such as official grants, private 
endowments, commercial activities;
    (vii) Financial institutions that hold deposits on behalf of or 
extend lines of credit to the organization (names of individuals and 
organizations shall be provided in English, in the language of origin, 
and shall include any acronym or other names used to identify the 
individuals or organizations);
    (viii) Independent accounting firms, if employed in the production 
of the organization's financial statements (names of individuals and 
organizations shall be provided in English, in the language of origin, 
and shall include any acronym or other names used to identify the 
individuals or organizations);
    (ix) A detailed description of the organization's humanitarian or 
religious activities and projects in countries or geographic areas 
subject to economic sanctions pursuant to this chapter V;
    (x) Most recent official registry documents, annual reports, and 
annual filings with the pertinent government, as applicable; and

[[Page 40]]

    (xi) Names and addresses of organizations to which the applicant 
currently provides or proposes to provide funding, services or material 
support, to the extent known at the time of the vetting, as applicable.
    (3) Use of registration number. Registered NGOs conducting 
transactions authorized by their registrations to support their 
humanitarian or religious activities pursuant to any part of this 
chapter should reference the registration number on all payments and 
funds transfers and on all related documentation, including all 
purchasing, shipping, and financing documents.
    (4) Limitations. Registered NGOs are not authorized to make 
remittances from blocked accounts. Registration numbers are not 
transferable and may be revoked or modified at any time at the 
discretion of the Director, Office of Foreign Assets Control. 
Registration numbers do not excuse compliance with any law or regulation 
administered by the Office of Foreign Assets Control or any other agency 
(including reporting requirements) applicable to the transaction(s) 
herein authorized, nor does it release the Registrant or third parties 
from civil or criminal liability for violation of any law or regulation.
    (5) Prior numbers. Registration numbers already issued remain in 
effect.

[62 FR 45101, Aug. 25, 1997, as amended at 65 FR 10708, Feb. 29, 2000; 
66 FR 2728, Jan. 11, 2001; 77 FR 1864, Jan. 12, 2012]



Sec. 501.802  Decisions.

    The Office of Foreign Assets Control will advise each applicant of 
the decision respecting filed applications. The decision of the Office 
of Foreign Assets Control acting on behalf of the Secretary of the 
Treasury with respect to an application shall constitute final agency 
action.



Sec. 501.803  Amendment, modification, or revocation.

    Except as otherwise provided by law, the provisions of each part of 
this chapter and any rulings, licenses (whether general or specific), 
authorizations, instructions, orders, or forms issued thereunder may be 
amended, modified or revoked at any time.

[63 FR 35809, July 1, 1998]



Sec. 501.804  Rulemaking.

    (a) All rules and other public documents are issued by the Director 
of the Office of Foreign Assets Control. In general, rulemaking by the 
Office of Foreign Assets Control involves foreign affairs functions of 
the United States, and for that reason is exempt from the requirements 
under the Administrative Procedure Act (5 U.S.C. 553) for notice of 
proposed rulemaking, opportunity for public comment, and delay in 
effective date.
    (b) Any interested person may petition the Director of the Office of 
Foreign Assets Control in writing for the issuance, amendment, or repeal 
of any rule.



Sec. 501.805  Rules governing availability of information.

    (a) The records of the Office of Foreign Assets Control which are 
required by the Freedom of Information Act (5 U.S.C. 552) to be made 
available to the public shall be made available in accordance with the 
definitions, procedures, payment of fees, and other provisions of the 
regulations on the Disclosure of Records of the Departmental Offices and 
of other bureaus and offices of the Department of the Treasury issued 
under 5 U.S.C. 552 and published at 31 CFR part 1.

    Note to paragraph Sec. 501.805(a): Records or information obtained 
or created in the implementation of part 598 of this chapter are not 
subject to disclosure under section 552(a)(3) of the Freedom of 
Information Act. See Sec. 598.802 of this chapter.

    (b) The records of the Office of Foreign Assets Control which are 
required by the Privacy Act (5 U.S.C. 552a) to be made available to an 
individual shall be made available in accordance with the definitions, 
procedures, requirements for payment of fees, and other provisions of 
the Regulations on the Disclosure of Records of the Departmental Offices 
and of other bureaus and offices of the Department of the Treasury 
issued under 5 U.S.C. 552a and published at 31 CFR part 1.

[[Page 41]]

    (c) Any form issued for use in connection with this chapter may be 
obtained in person or by writing to the Office of Foreign Assets 
Control, U.S. Department of the Treasury, 1500 Pennsylvania Avenue, 
NW.--Annex, Washington, DC 20220, or by calling 202/622-2480.
    (d) Certain Civil Penalties Information. (1) After the conclusion of 
a civil penalties proceeding that results in either the imposition of a 
civil monetary penalty or an informal settlement, OFAC shall make 
available to the public certain information on a routine basis, not less 
frequently than monthly, as follows:
    (i) In each such proceeding against an entity, OFAC shall make 
available to the public
    (A) The name and address of the entity involved,
    (B) The sanctions program involved,
    (C) A brief description of the violation or alleged violation,
    (D) A clear indication whether the proceeding resulted in an 
informal settlement or in the imposition of a penalty,
    (E) An indication whether the entity voluntarily disclosed the 
violation or alleged violation to OFAC, and
    (F) The amount of the penalty imposed or the amount of the agreed 
settlement.
    (ii) In such proceedings against individuals, OFAC shall release on 
an aggregate basis
    (A) The number of penalties imposed and informal settlements 
reached,
    (B) The sanctions programs involved,
    (C) A brief description of the violations or alleged violations,
    (D) A clear indication whether the proceedings resulted in informal 
settlements, in the imposition of penalties, or in administrative 
hearing requests pursuant to the Trading With the Enemy Act (TWEA), 50 
U.S.C. 5(b), and
    (E) The amounts of the penalties imposed and the amounts of the 
agreed settlements.
    (2) The medium through which information will be released is OFAC's 
website at http://www.treas.gov/ofac.
    (3) The information made available pursuant to paragraph (d)(1) of 
this section shall not include the following:
    (i) The name of any violator or alleged violator who is an 
individual.
    (ii) Records or information obtained or created in the 
implementation of part 598 of this chapter.
    (4) On a case-by-case basis, OFAC may release additional information 
concerning a particular civil penalties proceeding.

[62 FR 45101, Aug. 25, 1997, as amended at 65 FR 41335, July 5, 2000; 68 
FR 6822, Feb. 11, 2003]



Sec. 501.806  Procedures for unblocking funds believed to have been
blocked due to mistaken identity.

    When a transaction results in the blocking of funds at a financial 
institution pursuant to the applicable regulations of this chapter and a 
party to the transaction believes the funds have been blocked due to 
mistaken identity, that party may seek to have such funds unblocked 
pursuant to the following administrative procedures:
    (a) Any person who is a party to the transaction may request the 
release of funds which the party believes to have been blocked due to 
mistaken identity.
    (b) Requests to release funds which a party believes to have been 
blocked due to mistaken identity must be made in writing and addressed 
to the Office of Foreign Assets Control, Compliance Programs Division, 
1500 Pennsylvania Avenue, NW.--Annex, Washington, DC 20220, or sent by 
facsimile transmission to the Compliance Programs Division at 202/622-
1657.
    (c) The written request to release funds must include the name, 
address, telephone number, and (where available) fax number of the party 
seeking the release of the funds. For individuals, the inclusion of a 
social security number is voluntary but will facilitate resolution of 
the request. For corporations or other entities, the application should 
include its principal place of business, the state of incorporation or 
organization, and the name and telephone number of the appropriate 
person to contact regarding the application.
    (d) A request to release funds should include the following 
information, where known, concerning the transaction:

[[Page 42]]

    (1) The name of the financial institution in which the funds are 
blocked;
    (2) The amount blocked;
    (3) The date of the blocking;
    (4) The identity of the original remitter of the funds and any 
intermediary financial institutions;
    (5) The intended beneficiary of the blocked transfer;
    (6) A description of the underlying transaction including copies of 
related documents (e.g., invoices, bills of lading, promissory notes, 
etc.);
    (7) The nature of the applicant's interest in the funds; and
    (8) A statement of the reasons why the applicant believes the funds 
were blocked due to mistaken identity.
    (e) Upon receipt of the materials required by paragraph (d) of this 
section, OFAC may request additional material from the applicant 
concerning the transaction pursuant to Sec. 501.602.
    (f) Following review of all applicable submissions, the Director of 
the Office of Foreign Assets Control will determine whether to release 
the funds. In the event the Director determines that the funds should be 
released, the Office of Foreign Assets Control will direct the financial 
institution to return the funds to the appropriate party.
    (g) For purposes of this section, the term ``financial institution'' 
shall include a banking institution, depository institution or United 
States depository institution, domestic bank, financial institution or 
U.S. financial institution, as those terms are defined in the applicable 
part of this chapter.

[62 FR 45101, Aug. 25, 1997, as amended at 62 FR 52495, Oct. 8, 1997]



Sec. 501.807  Procedures governing delisting from the Specially 
Designated Nationals and Blocked Persons List.

    A person may seek administrative reconsideration of his, her or its 
designation or that of a vessel as blocked, or assert that the 
circumstances resulting in the designation no longer apply, and thus 
seek to have the designation rescinded pursuant to the following 
administrative procedures:
    (a) A person blocked under the provisions of any part of this 
chapter, including a specially designated national, specially designated 
terrorist, or specially designated narcotics trafficker 
(collectively,``a blocked person''), or a person owning a majority 
interest in a blocked vessel may submit arguments or evidence that the 
person believes establishes that insufficient basis exists for the 
designation. The blocked person also may propose remedial steps on the 
person's part, such as corporate reorganization, resignation of persons 
from positions in a blocked entity, or similar steps, which the person 
believes would negate the basis for designation. A person owning a 
majority interest in a blocked vessel may propose the sale of the 
vessel, with the proceeds to be placed into a blocked interest-bearing 
account after deducting the costs incurred while the vessel was blocked 
and the costs of the sale. This submission must be made in writing and 
addressed to the Director, Office of Foreign Assets Control, U.S. 
Department of the Treasury, 1500 Pennsylvania Avenue, NW.--Annex, 
Washington, DC 20220.
    (b) The information submitted by the blocked person seeking 
unblocking or by a person seeking the unblocking of a vessel will be 
reviewed by the Office of Foreign Assets Control, which may request 
clarifying, corroborating, or other additional information.
    (c) A blocked person seeking unblocking or a person seeking the 
unblocking of a vessel may request a meeting with the Office of Foreign 
Assets Control; however, such meetings are not required, and the office 
may, at its discretion, decline to conduct such meetings prior to 
completing a review pursuant to this section.
    (d) After the Office of Foreign Assets Control has conducted a 
review of the request for reconsideration, it will provide a written 
decision to the blocked person or person seeking the unblocking of a 
vessel.

[64 FR 5614, Feb. 4, 1999]



Sec. 501.808  License application and other procedures applicable to
economic sanctions programs.

    Upon submission to the Office of Management and Budget of an 
amendment to the overall burden hours for the information collections 
imposed under this part, the license application and other procedures 
set forth in this

[[Page 43]]

subpart are applicable to economic sanctions programs for which 
implementation and administration have been delegated to the Office of 
Foreign Assets Control.



                    Subpart F_Paperwork Reduction Act

    Source: 62 FR 45101, Aug. 25, 1997, unless otherwise noted. 
Redesignated at 68 FR 53642, Sept. 11, 2003.



Sec. 501.901  Paperwork Reduction Act notice.

    The information collection requirements in subparts C and D have 
been approved by the Office of Management and Budget (``OMB'') under the 
Paperwork Reduction Act (44 U.S.C. 3507(j)) and assigned 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 it displays a 
valid control number assigned by OMB.



 Sec. Appendix A to Part 501--Economic Sanctions Enforcement Guidelines.

    Note: This appendix provides a general framework for the enforcement 
of all economic sanctions programs administered by the Office of Foreign 
Assets Control (OFAC).

                             I. Definitions

    A. Apparent violation means conduct that constitutes an actual or 
possible violation of U.S. economic sanctions laws, including the 
International Emergency Economic Powers Act (IEEPA), the Trading With 
the Enemy Act (TWEA), the Foreign Narcotics Kingpin Designation Act, and 
other statutes administered or enforced by OFAC, as well as Executive 
orders, regulations, orders, directives, or licenses issued pursuant 
thereto.
    B. Applicable schedule amount means:
    1. $1,000 with respect to a transaction valued at less than $1,000;
    2. $10,000 with respect to a transaction valued at $1,000 or more 
but less than $10,000;
    3. $25,000 with respect to a transaction valued at $10,000 or more 
but less than $25,000;
    4. $50,000 with respect to a transaction valued at $25,000 or more 
but less than $50,000;
    5. $100,000 with respect to a transaction valued at $50,000 or more 
but less than $100,000;
    6. $170,000 with respect to a transaction valued at $100,000 or more 
but less than $170,000;
    7. $250,000 with respect to a transaction valued at $170,000 or 
more, except that where the applicable schedule amount as defined above 
exceeds the statutory maximum civil penalty amount applicable to an 
apparent violation, the applicable schedule amount shall equal such 
applicable statutory maximum civil penalty amount.
    C. OFAC means the Department of the Treasury's Office of Foreign 
Assets Control.
    D. Penalty is the final civil penalty amount imposed in a Penalty 
Notice.
    E. Proposed penalty is the civil penalty amount set forth in a Pre-
Penalty Notice.
    F. Regulator means any Federal, State, local or foreign official or 
agency that has authority to license or examine an entity for compliance 
with federal, state, or foreign law.
    G. Subject Person means an individual or entity subject to any of 
the sanctions programs administered or enforced by OFAC.
    H. Transaction value means the dollar value of a subject 
transaction. In export and import cases, the transaction value generally 
will be the domestic value in the United States of the goods, 
technology, or services sought to be exported from or imported into the 
United States, as demonstrated by commercial invoices, bills of lading, 
signed Customs declarations, or similar documents. In cases involving 
seizures by U.S. Customs and Border Protection (CBP), the transaction 
value generally will be the domestic value as determined by CBP. If the 
apparent violation at issue is a prohibited dealing in blocked property 
by a Subject Person, the transaction value generally will be the dollar 
value of the underlying transaction involved, such as the value of the 
property dealt in or the amount of the funds transfer that a financial 
institution failed to block or reject. Where the transaction value is 
not otherwise ascertainable, OFAC may consider the market value of the 
goods or services that were the subject of the transaction, the economic 
benefit conferred on the sanctioned party, and/or the economic benefit 
derived by the Subject Person from the transaction, in determining 
transaction value. For purposes of these Guidelines, ``transaction 
value'' will not necessarily have the same meaning, nor be applied in 
the same manner, as that term is used for import valuation purposes at 
19 CFR 152.103.
    I. Voluntary self-disclosure means self-initiated notification to 
OFAC of an apparent violation by a Subject Person that has committed, or 
otherwise participated in, an apparent violation of a statute, Executive 
order, or regulation administered or enforced by OFAC, prior to or at 
the same time that OFAC, or any other federal, state, or local 
government agency or official, discovers the apparent violation or 
another substantially similar apparent violation. For these purposes, 
``substantially similar apparent violation'' means an apparent violation 
that is part of a series of similar apparent violations

[[Page 44]]

or is related to the same pattern or practice of conduct. Notification 
of an apparent violation to another government agency (but not to OFAC) 
by a Subject Person, which is considered a voluntary self-disclosure by 
that agency, may be considered a voluntary self-disclosure by OFAC, 
based on a case-by-case assessment. Notification to OFAC of an apparent 
violation is not a voluntary self-disclosure if: a third party is 
required to and does notify OFAC of the apparent violation or a 
substantially similar apparent violation because a transaction was 
blocked or rejected by that third party (regardless of when OFAC 
receives such notice from the third party and regardless of whether the 
Subject Person was aware of the third party's disclosure); the 
disclosure includes false or misleading information; the disclosure 
(when considered along with supplemental information provided by the 
Subject Person) is materially incomplete; the disclosure is not self-
initiated (including when the disclosure results from a suggestion or 
order of a federal or state agency or official); or, when the Subject 
Person is an entity, the disclosure is made by an individual in a 
Subject Person entity without the authorization of the entity's senior 
management. Responding to an administrative subpoena or other inquiry 
from, or filing a license application with, OFAC is not a voluntary 
self-disclosure. In addition to notification, a voluntary self-
disclosure must include, or be followed within a reasonable period of 
time by, a report of sufficient detail to afford a complete 
understanding of an apparent violation's circumstances, and should also 
be followed by responsiveness to any follow-up inquiries by OFAC. (As 
discussed further below, a Subject Person's level of cooperation with 
OFAC is an important factor in determining the appropriate enforcement 
response to an apparent violation even in the absence of a voluntary 
self-disclosure as defined herein; disclosure by a Subject Person 
generally will result in mitigation insofar as it represents cooperation 
with OFAC's investigation.)

              II. Types of Responses to Apparent Violations

    Depending on the facts and circumstances of a particular case, an 
OFAC investigation may lead to one or more of the following actions:
    A. No Action. If OFAC determines that there is insufficient evidence 
to conclude that a violation has occurred and/or, based on an analysis 
of the General Factors outlined in Section III of these Guidelines, 
concludes that the conduct does not rise to a level warranting an 
administrative response, then no action will be taken. In those cases in 
which OFAC is aware that the Subject Person has knowledge of OFAC's 
investigation, OFAC generally will issue a letter to the Subject Person 
indicating that the investigation is being closed with no administrative 
action being taken. A no-action determination represents a final 
determination as to the apparent violation, unless OFAC later learns of 
additional related violations or other relevant facts.
    B. Request Additional Information. If OFAC determines that 
additional information regarding the apparent violation is needed, it 
may request further information from the Subject Person or third 
parties, including through an administrative subpoena issued pursuant to 
31 CFR 501.602. In the case of an institution subject to regulation 
where OFAC has entered into a Memorandum of Understanding (MOU) with the 
Subject Person's regulator, OFAC will follow the procedures set forth in 
such MOU regarding consultation with the regulator. Even in the absence 
of an MOU, OFAC may seek relevant information about a regulated 
institution and/or the conduct constituting the apparent violation from 
the institution's federal, state, or foreign regulator. Upon receipt of 
information determined to be sufficient to assess the apparent 
violation, OFAC will decide, based on an analysis of the General Factors 
outlined in Section III of these Guidelines, whether to pursue further 
enforcement action or whether some other response to the apparent 
violation is appropriate.
    C. Cautionary Letter: If OFAC determines that there is insufficient 
evidence to conclude that a violation has occurred or that a Finding of 
Violation or a civil monetary penalty is not warranted under the 
circumstances, but believes that the underlying conduct could lead to a 
violation in other circumstances and/or that a Subject Person does not 
appear to be exercising due diligence in assuring compliance with the 
statutes, Executive orders, and regulations that OFAC enforces, OFAC may 
issue a cautionary letter, which may convey OFAC's concerns about the 
underlying conduct and/or the Subject Person's OFAC compliance policies, 
practices and/or procedures. A cautionary letter represents a final 
enforcement response to the apparent violation, unless OFAC later learns 
of additional related violations or other relevant facts, but does not 
constitute a final agency determination as to whether a violation has 
occurred.
    D. Finding of Violation: If OFAC determines that a violation has 
occurred and considers it important to document the occurrence of a 
violation and, based on an analysis of the General Factors outlined in 
Section III of these Guidelines, concludes that the Subject Person's 
conduct warrants an administrative response but that a civil monetary 
penalty is not the most appropriate response, OFAC may issue a Finding 
of Violation that identifies the violation. A Finding of Violation may 
also convey OFAC's concerns about the

[[Page 45]]

violation and/or the Subject Person's OFAC compliance policies, 
practices and/or procedures, and/or identify the need for further 
compliance steps to be taken. A Finding of Violation represents a final 
enforcement response to the violation, unless OFAC later learns of 
additional related violations or other relevant facts, and constitutes a 
final agency determination that a violation has occurred. A Finding of 
Violation will afford the Subject Person an opportunity to respond to 
OFAC's determination that a violation has occurred before that 
determination becomes final. In the event a Subject Person so responds, 
the initial Finding of Violation will not constitute a final agency 
determination that a violation has occurred. In such cases, after 
considering the response received, OFAC will inform the Subject Person 
of its final enforcement response to the apparent violation.
    E. Civil Monetary Penalty. If OFAC determines that a violation has 
occurred and, based on an analysis of the General Factors outlined in 
Section III of these Guidelines, concludes that the Subject Person's 
conduct warrants the imposition of a monetary penalty, OFAC may impose a 
civil monetary penalty. Civil monetary penalty amounts will be 
determined as discussed in Section V of these Guidelines. The imposition 
of a civil monetary penalty constitutes a final agency determination 
that a violation has occurred and represents a final civil enforcement 
response to the violation. OFAC will afford the Subject Person an 
opportunity to respond to OFAC's determination that a violation has 
occurred before a final penalty is imposed.
    F. Criminal Referral. In appropriate circumstances, OFAC may refer 
the matter to appropriate law enforcement agencies for criminal 
investigation and/or prosecution. Apparent sanctions violations that 
OFAC has referred for criminal investigation and/or prosecution also may 
be subject to OFAC civil penalty or other administrative action.
    G. Other Administrative Actions. In addition to or in lieu of other 
administrative actions, OFAC may also take the following administrative 
actions in response to an apparent violation:
    1. License Denial, Suspension, Modification, or Revocation. OFAC 
authorizations to engage in a transaction (including the release of 
blocked funds) pursuant to a general or specific license may be 
withheld, denied, suspended, modified, or revoked in response to an 
apparent violation.
    2. Cease and Desist Order. OFAC may order the Subject Person to 
cease and desist from conduct that is prohibited by any of the sanctions 
programs enforced by OFAC when OFAC has reason to believe that a Subject 
Person has engaged in such conduct and/or that such conduct is ongoing 
or may recur.

          III. General Factors Affecting Administrative Action

    As a general matter, OFAC will consider some or all of the following 
General Factors in determining the appropriate administrative action in 
response to an apparent violation of U.S. sanctions by a Subject Person, 
and, where a civil monetary penalty is imposed, in determining the 
appropriate amount of any such penalty:
    A. Willful or Reckless Violation of Law: a Subject Person's 
willfulness or recklessness in violating, attempting to violate, 
conspiring to violate, or causing a violation of the law. Generally, to 
the extent the conduct at issue is the result of willful conduct or a 
deliberate intent to violate, attempt to violate, conspire to violate, 
or cause a violation of the law, the OFAC enforcement response will be 
stronger. Among the factors OFAC may consider in evaluating willfulness 
or recklessness are:
    1. Willfulness. Was the conduct at issue the result of a decision to 
take action with the knowledge that such action would constitute a 
violation of U.S. law? Did the Subject Person know that the underlying 
conduct constituted, or likely constituted, a violation of U.S. law at 
the time of the conduct?
    2. Recklessness. Did the Subject Person demonstrate reckless 
disregard for U.S. sanctions requirements or otherwise fail to exercise 
a minimal degree of caution or care in avoiding conduct that led to the 
apparent violation? Were there warning signs that should have alerted 
the Subject Person that an action or failure to act would lead to an 
apparent violation?
    3. Concealment. Was there an effort by the Subject Person to hide or 
purposely obfuscate its conduct in order to mislead OFAC, Federal, 
State, or foreign regulators, or other parties involved in the conduct 
about an apparent violation?
    4. Pattern of Conduct. Did the apparent violation constitute or 
result from a pattern or practice of conduct or was it relatively 
isolated and atypical in nature?
    5. Prior Notice. Was the Subject Person on notice, or should it 
reasonably have been on notice, that the conduct at issue, or similar 
conduct, constituted a violation of U.S. law?
    6. Management Involvement. In cases of entities, at what level 
within the organization did the willful or reckless conduct occur? Were 
supervisory or managerial level staff aware, or should they reasonably 
have been aware, of the willful or reckless conduct?
    B. Awareness of Conduct at Issue: the Subject Person's awareness of 
the conduct giving rise to the apparent violation. Generally, the 
greater a Subject Person's actual knowledge of, or reason to know about, 
the conduct constituting an apparent violation, the stronger the OFAC 
enforcement response

[[Page 46]]

will be. In the case of a corporation, awareness will focus on 
supervisory or managerial level staff in the business unit at issue, as 
well as other senior officers and managers. Among the factors OFAC may 
consider in evaluating the Subject Person's awareness of the conduct at 
issue are:
    1. Actual Knowledge. Did the Subject Person have actual knowledge 
that the conduct giving rise to an apparent violation took place? Was 
the conduct part of a business process, structure or arrangement that 
was designed or implemented with the intent to prevent or shield the 
Subject Person from having such actual knowledge, or was the conduct 
part of a business process, structure or arrangement implemented for 
other legitimate reasons that made it difficult or impossible for the 
Subject Person to have actual knowledge?
    2. Reason to Know. If the Subject Person did not have actual 
knowledge that the conduct took place, did the Subject Person have 
reason to know, or should the Subject Person reasonably have known, 
based on all readily available information and with the exercise of 
reasonable due diligence, that the conduct would or might take place?
    3. Management Involvement. In the case of an entity, was the conduct 
undertaken with the explicit or implicit knowledge of senior management, 
or was the conduct undertaken by personnel outside the knowledge of 
senior management? If the apparent violation was undertaken without the 
knowledge of senior management, was there oversight intended to detect 
and prevent violations, or did the lack of knowledge by senior 
management result from disregard for its responsibility to comply with 
applicable sanctions laws?
    C. Harm to Sanctions Program Objectives: the actual or potential 
harm to sanctions program objectives caused by the conduct giving rise 
to the apparent violation. Among the factors OFAC may consider in 
evaluating the harm to sanctions program objectives are:
    1. Economic or Other Benefit to the Sanctioned Individual, Entity, 
or Country: the economic or other benefit conferred or attempted to be 
conferred to sanctioned individuals, entities, or countries as a result 
of an apparent violation, including the number, size, and impact of the 
transactions constituting an apparent violation(s), the length of time 
over which they occurred, and the nature of the economic or other 
benefit conferred. OFAC may also consider the causal link between the 
Subject Person's conduct and the economic benefit conferred or attempted 
to be conferred.
    2. Implications for U.S. Policy: the effect that the circumstances 
of the apparent violation had on the integrity of the U.S. sanctions 
program and the related policy objectives involved.
    3. License Eligibility: whether the conduct constituting the 
apparent violation likely would have been licensed by OFAC under 
existing licensing policy.
    4. Humanitarian activity: whether the conduct at issue was in 
support of a humanitarian activity.
    D. Individual Characteristics: the particular circumstances and 
characteristics of a Subject Person. Among the factors OFAC may consider 
in evaluating individual characteristics are:
    1. Commercial Sophistication: the commercial sophistication and 
experience of the Subject Person. Is the Subject Person an individual or 
an entity? If an individual, was the conduct constituting the apparent 
violation for personal or business reasons?
    2. Size of Operations and Financial Condition: the size of a Subject 
Person's business operations and overall financial condition, where such 
information is available and relevant. Qualification of the Subject 
Person as a small business or organization for the purposes of the Small 
Business Regulatory Enforcement Fairness Act, as determined by reference 
to the applicable regulations of the Small Business Administration, may 
also be considered.
    3. Volume of Transactions: the total volume of transactions 
undertaken by the Subject Person on an annual basis, with attention 
given to the apparent violations as compared with the total volume.
    4. Sanctions History: the Subject Person's sanctions history, 
including OFAC's issuance of prior penalties, findings of violations or 
cautionary, warning or evaluative letters, or other administrative 
actions (including settlements). As a general matter, OFAC will only 
consider a Subject Person's sanctions history for the five years 
preceding the date of the transaction giving rise to the apparent 
violation.
    E. Compliance Program: the existence, nature and adequacy of a 
Subject Person's risk-based OFAC compliance program at the time of the 
apparent violation, where relevant. In the case of an institution 
subject to regulation where OFAC has entered into a Memorandum of 
Understanding (MOU) with the Subject Person's regulator, OFAC will 
follow the procedures set forth in such MOU regarding consultation with 
the regulator with regard to the quality and effectiveness of the 
Subject Person's compliance program. Even in the absence of an MOU, OFAC 
may take into consideration the views of federal, state, or foreign 
regulators, where relevant. Further information about risk-based 
compliance programs for financial institutions is set forth in the annex 
hereto.
    F. Remedial Response: the Subject Person's corrective action taken 
in response to the apparent violation. Among the factors OFAC may 
consider in evaluating the remedial response are:

[[Page 47]]

    1. The steps taken by the Subject Person upon learning of the 
apparent violation. Did the Subject Person immediately stop the conduct 
at issue?
    2. In the case of an entity, the processes followed to resolve 
issues related to the apparent violation. Did the Subject Person 
discover necessary information to ascertain the causes and extent of the 
apparent violation, fully and expeditiously? Was senior management fully 
informed? If so, when?
    3. In the case of an entity, whether the Subject Person adopted new 
and more effective internal controls and procedures to prevent a 
recurrence of the apparent violation. If the Subject Person did not have 
an OFAC compliance program in place at the time of the apparent 
violation, did it implement one upon discovery of the apparent 
violations? If it did have an OFAC compliance program, did it take 
appropriate steps to enhance the program to prevent the recurrence of 
similar violations? Did the entity provide the individual(s) responsible 
for the apparent violation with additional training, and/or take other 
appropriate action, to ensure that similar violations do not occur in 
the future?
    4. Where applicable, whether the Subject Person undertook a thorough 
review to identify other possible violations.
    G. Cooperation with OFAC: the nature and extent of the Subject 
Person's cooperation with OFAC. Among the factors OFAC may consider in 
evaluating cooperation with OFAC are:
    1. Did the Subject Person voluntarily self-disclose the apparent 
violation to OFAC?
    2. Did the Subject Person provide OFAC with all relevant information 
regarding an apparent violation (whether or not voluntarily self-
disclosed)?
    3. Did the Subject Person research and disclose to OFAC relevant 
information regarding any other apparent violations caused by the same 
course of conduct?
    4. Was information provided voluntarily or in response to an 
administrative subpoena?
    5. Did the Subject Person cooperate with, and promptly respond to, 
all requests for information?
    6. Did the Subject Person enter into a statute of limitations 
tolling agreement, if requested by OFAC (particularly in situations 
where the apparent violations were not immediately notified to or 
discovered by OFAC, in particularly complex cases, and in cases in which 
the Subject Person has requested and received additional time to respond 
to a request for information from OFAC)? If so, the Subject Person's 
entering into a tolling agreement will be deemed a mitigating factor. 
Note: a Subject Person's refusal to enter into a tolling agreement will 
not be considered by OFAC as an aggravating factor in assessing a 
Subject Person's cooperation or otherwise under the Guidelines.
    Where appropriate, OFAC will publicly note substantial cooperation 
provided by a Subject Person.
    H. Timing of apparent violation in relation to imposition of 
sanctions: the timing of the apparent violation in relation to the 
adoption of the applicable prohibitions, particularly if the apparent 
violation took place immediately after relevant changes in the sanctions 
program regulations or the addition of a new name to OFAC's List of 
Specially Designated Nationals and Blocked Persons (SDN List).
    I. Other enforcement action: other enforcement actions taken by 
federal, state, or local agencies against the Subject Person for the 
apparent violation or similar apparent violations, including whether the 
settlement of alleged violations of OFAC regulations is part of a 
comprehensive settlement with other federal, state, or local agencies.
    J. Future Compliance/Deterrence Effect: the impact administrative 
action may have on promoting future compliance with U.S. economic 
sanctions by the Subject Person and similar Subject Persons, 
particularly those in the same industry sector.
    K. Other relevant factors on a case-by-case basis: such other 
factors that OFAC deems relevant on a case-by-case basis in determining 
the appropriate enforcement response and/or the amount of any civil 
monetary penalty. OFAC will consider the totality of the circumstances 
to ensure that its enforcement response is proportionate to the nature 
of the violation.

IV. Civil Penalties for Failure To Comply With a Requirement To Furnish 
                       Information or Keep Records

    As a general matter, the following civil penalty amounts shall apply 
to a Subject Person's failure to comply with a requirement to furnish 
information or maintain records:
    A. The failure to comply with a requirement to furnish information 
pursuant to 31 CFR 501.602 may result in a penalty in an amount up to 
$20,000, irrespective of whether any other violation is alleged. Where 
OFAC has reason to believe that the apparent violation(s) that is the 
subject of the requirement to furnish information involves a 
transaction(s) valued at greater than $500,000, a failure to comply with 
a requirement to furnish information may result in a penalty in an 
amount up to $50,000, irrespective of whether any other violation is 
alleged. A failure to comply with a requirement to furnish information 
may be considered a continuing violation, and the penalties described 
above may be imposed each month that a party has continued to fail to 
comply with the requirement to furnish information. OFAC may also seek 
to have a requirement to furnish information judicially

[[Page 48]]

enforced. Imposition of a civil monetary penalty for failure to comply 
with a requirement to furnish information does not preclude OFAC from 
seeking such judicial enforcement of the requirement to furnish 
information.
    B. The late filing of a required report, whether set forth in 
regulations or in a specific license, may result in a civil monetary 
penalty in an amount up to $2,500, if filed within the first 30 days 
after the report is due, and a penalty in an amount up to $5,000 if 
filed more than 30 days after the report is due. If the report relates 
to blocked assets, the penalty may include an additional $1,000 for 
every 30 days that the report is overdue, up to five years.
    C. The failure to maintain records in conformance with the 
requirements of OFAC's regulations or of a specific license may result 
in a penalty in an amount up to $50,000.

                           V. Civil Penalties

    OFAC will review the facts and circumstances surrounding an apparent 
violation and apply the General Factors for Taking Administrative Action 
in Section III above in determining whether to initiate a civil penalty 
proceeding and in determining the amount of any civil monetary penalty. 
OFAC will give careful consideration to the appropriateness of issuing a 
cautionary letter or Finding of Violation in lieu of the imposition of a 
civil monetary penalty.

                        A. Civil Penalty Process

    1. Pre-Penalty Notice. If OFAC has reason to believe that a 
sanctions violation has occurred and believes that a civil monetary 
penalty is appropriate, it will issue a Pre-Penalty Notice in accordance 
with the procedures set forth in the particular regulations governing 
the conduct giving rise to the apparent violation. The amount of the 
proposed penalty set forth in the Pre-Penalty Notice will reflect OFAC's 
preliminary assessment of the appropriate penalty amount, based on 
information then in OFAC's possession. The amount of the final penalty 
may change as OFAC learns additional relevant information. If, after 
issuance of a Pre-Penalty Notice, OFAC determines that a penalty in an 
amount that represents an increase of more than 10 percent from the 
proposed penalty set forth in the Pre-Penalty Notice is appropriate, or 
if OFAC intends to allege additional violations, it will issue a revised 
Pre-Penalty Notice setting forth the new proposed penalty amount and/or 
alleged violations.
    a. In general, the Pre-Penalty Notice will set forth the following 
with respect to the specific violations alleged and the proposed 
penalties:
    i. Description of the alleged violations, including the number of 
violations and their value, for which a penalty is being proposed;
    ii. Identification of the regulatory or other provisions alleged to 
have been violated;
    iii. Identification of the base category (defined below) according 
to which the proposed penalty amount was calculated and the General 
Factors that were most relevant to the determination of the proposed 
penalty amount;
    iv. The maximum amount of the penalty to which the Subject Person 
could be subject under applicable law; and
    v. The proposed penalty amount, determined in accordance with the 
provisions set forth in these Guidelines.
    b. The Pre-Penalty Notice will also include information regarding 
how to respond to the Pre-Penalty Notice including:
    i. A statement that the Subject Person may submit a written response 
to the Pre-Penalty Notice by a date certain addressing the alleged 
violation(s), the General Factors Affecting Administrative Action set 
forth in Section III of these Guidelines, and any other information or 
evidence that the Subject Person deems relevant to OFAC's consideration.
    ii. A statement that a failure to respond to the Pre-Penalty Notice 
may result in the imposition of a civil monetary penalty.
    2. Response to Pre-Penalty Notice. A Subject Person may submit a 
written response to the Pre-Penalty Notice in accordance with the 
procedures set forth in the particular regulations governing the conduct 
giving rise to the apparent violation. Generally, the response should 
either agree to the proposed penalty set forth in the Pre-Penalty Notice 
or set forth reasons why a penalty should not be imposed or, if imposed, 
why it should be a lesser amount than proposed, with particular 
attention paid to the General Factors Affecting Administrative Action 
set forth in Section III of these Guidelines. The response should 
include all documentary or other evidence available to the Subject 
Person that supports the arguments set forth in the response. OFAC will 
consider all relevant materials submitted.
    3. Penalty Notice. If OFAC receives no response to a Pre-Penalty 
Notice within the time prescribed in the Pre-Penalty Notice, or if 
following the receipt of a response to a Pre-Penalty Notice and a review 
of the information and evidence contained therein OFAC concludes that a 
civil monetary penalty is warranted, a Penalty Notice generally will be 
issued in accordance with the procedures set forth in the particular 
regulations governing the conduct giving rise to the violation. A 
Penalty Notice constitutes a final agency determination that a violation 
has occurred. The penalty amount set forth in the Penalty Notice will 
take into account relevant additional information provided in

[[Page 49]]

response to a Pre-Penalty Notice. In the absence of a response to a Pre-
Penalty Notice, the penalty amount set forth in the Penalty Notice will 
generally be the same as the proposed penalty set forth in the Pre-
Penalty Notice.
    4. Referral to Financial Management Division. The imposition of a 
civil monetary penalty pursuant to a Penalty Notice creates a debt due 
the U.S. Government. OFAC will advise Treasury's Financial Management 
Division upon the imposition of a penalty. The Financial Management 
Division may take follow-up action to collect the penalty assessed if it 
is not paid within the prescribed time period set forth in the Penalty 
Notice. In addition or instead, the matter may be referred to the U.S. 
Department of Justice for appropriate action to recover the penalty.
    5. Final Agency Action. The issuance of a Penalty Notice constitutes 
final agency action with respect to the violation(s) for which the 
penalty is assessed.

                       B. Amount of Civil Penalty

    1. Egregious case. In those cases in which a civil monetary penalty 
is deemed appropriate, OFAC will make a determination as to whether a 
case is deemed ``egregious'' for purposes of the base penalty 
calculation. This determination will be based on an analysis of the 
applicable General Factors. In making the egregiousness determination, 
OFAC generally will give substantial weight to General Factors A 
(``willful or reckless violation of law''), B (``awareness of conduct at 
issue''), C (``harm to sanctions program objectives'') and D 
(``individual characteristics''), with particular emphasis on General 
Factors A and B. A case will be considered an ``egregious case'' where 
the analysis of the applicable General Factors, with a focus on those 
General Factors identified above, indicates that the case represents a 
particularly serious violation of the law calling for a strong 
enforcement response. A determination that a case is ``egregious'' will 
be made by the Director or Deputy Director.
    2. Pre-Penalty Notice. The penalty amount proposed in a Pre-Penalty 
Notice shall generally be calculated as follows, except that neither the 
base amount nor the proposed penalty will exceed the applicable 
statutory maximum amount: \6\
---------------------------------------------------------------------------

    \6\ For apparent violations identified in the Cuba Penalty Schedule, 
68 Fed. Reg. 4429 (Jan. 29, 2003), for which a civil monetary penalty 
has been deemed appropriate, the base penalty amount shall equal the 
amount set forth in the Schedule for such violation, except that the 
base penalty amount shall be reduced by 50% in cases of voluntary self-
disclosure.
---------------------------------------------------------------------------

                      a. Base Category Calculation

    i. In a non-egregious case, if the apparent violation is disclosed 
through a voluntary self-disclosure by the Subject Person, the base 
amount of the proposed civil penalty in the Pre-Penalty Notice shall be 
one-half of the transaction value, capped at a maximum base amount of 
$125,000 per violation (except in the case of transactions subject to 
the Trading With the Enemy Act, in which case the base amount of the 
proposed civil penalty will be capped at the lesser of $125,000 or one-
half of the maximum statutory penalty under TWEA, which at the time of 
publication of these Guidelines equaled $32,500 per violation).
    ii. In a non-egregious case, if the apparent violation comes to 
OFAC's attention by means other than a voluntary self-disclosure, the 
base amount of the proposed civil penalty in the Pre-Penalty Notice 
shall be the ``applicable schedule amount,'' as defined above (capped at 
a maximum base amount of $250,000 per violation, or, in the case of 
transactions subject to the Trading With the Enemy Act, capped at the 
lesser of $250,000 or the maximum statutory penalty under TWEA, which at 
the time of publication of these Guidelines equaled a maximum of $65,000 
per violation).
    iii. In an egregious case, if the apparent violation is disclosed 
through a voluntary self-disclosure by a Subject Person, the base amount 
of the proposed civil penalty in the Pre-Penalty Notice shall be one-
half of the applicable statutory maximum penalty applicable to the 
violation.
    iv. In an egregious case, if the apparent violation comes to OFAC's 
attention by means other than a voluntary self-disclosure, the base 
amount of the proposed civil penalty in the Pre-Penalty Notice shall be 
the applicable statutory maximum penalty amount applicable to the 
violation.
    The following matrix represents the base amount of the proposed 
civil penalty for each category of violation:

[[Page 50]]

[GRAPHIC] [TIFF OMITTED] TR09NO09.016

          b. Adjustment for Applicable Relevant General Factors

    The base amount of the proposed civil penalty may be adjusted to 
reflect applicable General Factors for Administrative Action set forth 
in Section III of these Guidelines. Each factor may be considered 
mitigating or aggravating, resulting in a lower or higher proposed 
penalty amount. As a general matter, in those cases where the following 
General Factors are present, OFAC will adjust the base proposed penalty 
amount in the following manner:
    i. In cases involving substantial cooperation with OFAC but no 
voluntary self-disclosure as defined herein, including cases in which an 
apparent violation is reported to OFAC by a third party but the Subject 
Person provides substantial additional information regarding the 
apparent violation and/or other related violations, the base penalty 
amount generally will be reduced between 25 and 40 percent. Substantial 
cooperation in cases involving voluntary self-disclosure may also be 
considered as a further mitigating factor.
    ii. In cases involving a Subject Person's first violation, the base 
penalty amount generally will be reduced up to 25 percent. An apparent 
violation generally will be considered a ``first violation'' if the 
Subject Person has not received a penalty notice or Finding of Violation 
from OFAC in the five years preceding the date of the transaction giving 
rise to the apparent violation. A group of substantially similar 
apparent violations addressed in a single Pre-Penalty Notice shall be 
considered as a single violation for purposes of this subsection. In 
those cases where a prior penalty notice or Finding of Violation within 
the preceding five years involved conduct of a substantially different 
nature

[[Page 51]]

from the apparent violation at issue, OFAC may consider the apparent 
violation at issue a ``first violation.'' In determining the extent of 
any mitigation for a first violation, OFAC may consider any prior OFAC 
enforcement action taken with respect to the Subject Person, including 
any cautionary, warning or evaluative letters issued, or any civil 
monetary settlements entered into with OFAC.
    In all cases, the proposed penalty amount will not exceed the 
applicable statutory maximum.
    In cases involving a large number of apparent violations, where the 
transaction value of all apparent violations is either unknown or would 
require a disproportionate allocation of resources to determine, OFAC 
may estimate or extrapolate the transaction value of the total universe 
of apparent violations in determining the amount of any proposed civil 
monetary penalty.
    3. Penalty Notice. The amount of the proposed civil penalty in the 
Pre-Penalty Notice will be the presumptive starting point for 
calculation of the civil penalty amount in the Penalty Notice. OFAC may 
adjust the penalty amount in the Penalty Notice based on:
    a. Evidence presented by the Subject Person in response to the Pre-
Penalty Notice, or otherwise received by OFAC with respect to the 
underlying violation(s); and/or
    b. Any modification resulting from further review and 
reconsideration by OFAC of the proposed civil monetary penalty in light 
of the General Factors for Administrative Action set forth in Section 
III above.
    In no event will the amount of the civil monetary penalty in the 
Penalty Notice exceed the proposed penalty set forth in the Pre-Penalty 
Notice by more than 10 percent, or include additional alleged 
violations, unless a revised Pre-Penalty Notice has first been sent to 
the Subject Person as set forth above. In the event that OFAC determines 
upon further review that no penalty is appropriate, it will so inform 
the Subject Person in a no-action letter, a cautionary letter, or a 
Finding of Violation.

                             C. Settlements

    A settlement does not constitute a final agency determination that a 
violation has occurred.
    1. Settlement Process. Settlement discussions may be initiated by 
OFAC, the Subject Person or the Subject Person's authorized 
representative. Settlements generally will be negotiated in accordance 
with the principles set forth in these Guidelines with respect to 
appropriate penalty amounts. OFAC may condition the entry into or 
continuation of settlement negotiations on the execution of a tolling 
agreement with respect to the statute of limitations.
    2. Settlement Prior to Issuance of Pre-Penalty Notice. Where 
settlement discussions occur prior to the issuance of a Pre-Penalty 
Notice, the Subject Person may request in writing that OFAC withhold 
issuance of a Pre-Penalty Notice pending the conclusion of settlement 
discussions. OFAC will generally agree to such a request as long as 
settlement discussions are continuing in good faith and the statute of 
limitations is not at risk of expiring.
    3. Settlement Following Issuance of Pre-Penalty Notice. If a matter 
is settled after a Pre-Penalty Notice has been issued, but before a 
final Penalty Notice is issued, OFAC will not make a final determination 
as to whether a sanctions violation has occurred. In the event no 
settlement is reached, the period specified for written response to the 
Pre-Penalty Notice remains in effect unless additional time is granted 
by OFAC.
    4. Settlements of Multiple Apparent Violations. A settlement 
initiated for one apparent violation may also involve a comprehensive or 
global settlement of multiple apparent violations covered by other Pre-
Penalty Notices, apparent violations for which a Pre-Penalty Notice has 
not yet been issued by OFAC, or previously unknown apparent violations 
reported to OFAC during the pendency of an investigation of an apparent 
violation.

                                  Annex

    The following matrix can be used by financial institutions to 
evaluate their compliance programs:

[[Page 52]]



                                                OFAC Risk Matrix
----------------------------------------------------------------------------------------------------------------
                 Low                                Moderate                                High
----------------------------------------------------------------------------------------------------------------
Stable, well-known customer base in   Customer base changing due to         A large, fluctuating client base in
 a localized environment.              branching, merger, or acquisition     an international environment.
                                       in the domestic market.
Few high-risk customers; these may    A moderate number of high-risk        A large number of high-risk
 include nonresident aliens, foreign   customers.                            customers.
 customers (including accounts with
 U.S. powers of attorney), and
 foreign commercial customers.
No overseas branches and no           Overseas branches or correspondent    Overseas branches or multiple
 correspondent accounts with foreign   accounts with foreign banks.          correspondent accounts with foreign
 banks.                                                                      banks.
No electronic services (e.g., e-      The institution offers limited        The institution offers a wide array
 banking) offered, or products         electronic (e.g., e-banking)          of electronic (e.g., e-banking)
 available are purely informational    products and services.                products and services (i.e.,
 or non-transactional.                                                       account transfers, e-bill payment,
                                                                             or accounts opened via the
                                                                             Internet).
Limited number of funds transfers     A moderate number of funds            A high number of customer and non-
 for customers and non-customers,      transfers, mostly for customers.      customer funds transfers, including
 limited third-party transactions,     Possibly, a few international funds   international funds transfers.
 and no international funds            transfers from personal or business
 transfers.                            accounts.
No other types of international       Limited other types of international  A high number of other types of
 transactions, such as trade           transactions.                         international transactions.
 finance, cross-border ACH, and
 management of sovereign debt.
No history of OFAC actions. No        A small number of recent actions      Multiple recent actions by OFAC,
 evidence of apparent violation or     (i.e., actions within the last five   where the institution has not
 circumstances that might lead to a    years) by OFAC, including notice      addressed the issues, thus leading
 violation.                            letters, or civil money penalties,    to an increased risk of the
                                       with evidence that the institution    institution undertaking similar
                                       addressed the issues and is not at    violations in the future.
                                       risk of similar violations in the
                                       future.
Management has fully assessed the     Management exhibits a reasonable      Management does not understand, or
 institution's level of risk based     understanding of the key aspects of   has chosen to ignore, key aspects
 on its customer base and product      OFAC compliance and its commitment    of OFAC compliance risk. The
 lines. This understanding of risk     is generally clear and                importance of compliance is not
 and strong commitment to OFAC         satisfactorily communicated           emphasized or communicated
 compliance is satisfactorily          throughout the organization, but it   throughout the organization.
 communicated throughout the           may lack a program appropriately
 organization.                         tailored to risk.
The board of directors, or board      The board has approved an OFAC        The board has not approved an OFAC
 committee, has approved an OFAC       compliance program that includes      compliance program, or policies,
 compliance program that includes      most of the appropriate policies,     procedures, controls, and
 policies, procedures, controls, and   procedures, controls, and             information systems are
 information systems that are          information systems necessary to      significantly deficient.
 adequate, and consistent with the     ensure compliance, but some
 institution's OFAC risk profile.      weaknesses are noted.
Staffing levels appear adequate to    Staffing levels appear generally      Management has failed to provide
 properly execute the OFAC             adequate, but some deficiencies are   appropriate staffing levels to
 compliance program.                   noted.                                handle workload.
Authority and accountability for      Authority and accountability are      Authority and accountability for
 OFAC compliance are clearly defined   defined, but some refinements are     compliance have not been clearly
 and enforced, including the           needed. A qualified OFAC officer      established. No OFAC compliance
 designation of a qualified OFAC       has been designated.                  officer, or an unqualified one, has
 officer.                                                                    been appointed. The role of the
                                                                             OFAC officer is unclear.
Training is appropriate and           Training is conducted and management  Training is sporadic and does not
 effective based on the                provides adequate resources given     cover important regulatory and risk
 institution's risk profile, covers    the risk profile of the               areas or is nonexistent.
 applicable personnel, and provides    organization; however, some areas
 necessary up-to-date information      are not covered within the training
 and resources to ensure compliance.   program.
The institution employs strong        The institution employs limited       The institution does not employ
 quality control methods.              quality control methods.              quality control methods.
----------------------------------------------------------------------------------------------------------------


[[Page 53]]


[74 FR 57601, Nov. 9, 2009]



PART 510_NORTH KOREA SANCTIONS REGULATIONS--Table of Contents



      Subpart A_Relation of This Part to Other Laws and Regulations

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

                         Subpart B_Prohibitions

510.201 Prohibited transactions.
510.202 Effect of transfers violating the provisions of this part.
510.203 Holding of funds in interest-bearing accounts; investment and 
          reinvestment.

                      Subpart C_General Definitions

510.301 Blocked account; blocked property.
510.302 Effective date.
510.303 Entity.
510.304 Interest.
510.305 Licenses; general and specific.
510.306 Person.
510.307 Property; property interest.
510.308 Transfer.
510.309 United States.
510.310 U.S. financial institution.
510.311 United States person; U.S. person.

                        Subpart D_Interpretations

510.401 [Reserved]
510.402 Effect of amendment.
510.403 Termination and acquisition of an interest in blocked property.
510.404 Transactions ordinarily incident to a licensed transaction 
          authorized.
510.405 Setoffs prohibited.
510.406 Entities owned by a person whose property and interests in 
          property are blocked.

 Subpart E_Licenses, Authorizations, and Statements of Licensing Policy

510.501 General and specific licensing procedures.
510.502 [Reserved]
510.503 Exclusion from licenses.
510.504 Payments and transfers to blocked accounts in U.S. financial 
          institutions.
510.505 Entries in certain accounts for normal service charges 
          authorized.
510.506 Provision of certain legal services authorized.
510.507 Authorization of emergency medical services.

Subparts F-G [Reserved]

                          Subpart H_Procedures

510.801 Procedures.
510.802 Delegation by the Secretary of the Treasury.

                    Subpart I_Paperwork Reduction Act

510.901 Paperwork Reduction Act notice.

Appendix A to Part 510--Executive Order 13466
Appendix B to Part 510--Executive Order 13551
Appendix C to Part 510--Executive Order 13570

    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. 
13466, 73 FR 36787, June 27, 2008, 3 CFR, 2008 Comp., p. 195; E.O. 
13551, 75 FR 53837, September 1, 2010; E.O. 13570, 76 FR 22291, April 
20, 2011.

    Source: 75 FR 67913, Nov. 4, 2010, unless otherwise noted.



      Subpart A_Relation of This Part to Other Laws and Regulations



Sec. 510.101  Relation of this part to other laws and regulations.

    This part is separate from, and independent of, the other parts of 
this chapter, with the exception of part 501 of this chapter, the 
recordkeeping and reporting requirements and license application and 
other procedures of which apply to this part. Actions taken pursuant to 
part 501 of this chapter with respect to the prohibitions contained in 
this part are considered actions taken pursuant to this part. Differing 
foreign policy and national security circumstances may result in 
differing interpretations of similar language among the parts of this 
chapter. No license or authorization contained in or issued pursuant to 
those other parts authorizes any transaction prohibited by this part. No 
license or authorization contained in or issued pursuant to any other 
provision of law or regulation authorizes any transaction prohibited by 
this part. No license or authorization contained in or issued pursuant 
to this part relieves the involved parties from complying with any other 
applicable laws or regulations.
    Note to Sec. 510.101: This part has been published in abbreviated 
form for the purpose of providing immediate guidance to the public.

[[Page 54]]

OFAC intends to supplement this part with a more comprehensive set of 
regulations, which may include additional interpretive and definitional 
guidance and additional general licenses and statements of licensing 
policy.



                         Subpart B_Prohibitions



Sec. 510.201  Prohibited transactions.

    (a) All transactions prohibited pursuant to Executive Order 13466 
are also prohibited pursuant to this part.

    Note to Sec. 510.201(a): The property and interests in property of 
North Korea or a North Korean national blocked pursuant to this 
paragraph are referred to throughout this part as ``property and 
interests in property blocked pursuant to Sec. 510.201(a).''

    (b) All transactions prohibited pursuant to Executive Order 13551 
are also prohibited pursuant to this part.

    Note 1 to Sec. 510.201(b): The names of persons listed in or 
designated pursuant to Executive Order 13551, whose property and 
interests in property therefore are blocked pursuant to paragraph (b) of 
this section, are published in the Federal Register and incorporated 
into the Office of Foreign Assets Control's Specially Designated 
Nationals and Blocked Persons List (``SDN List'') with the identifier 
``[DPRK].'' The SDN List is accessible through the following page on the 
Office of Foreign Assets Control's Web site: http://www.treasury.gov/
sdn. Additional information pertaining to the SDN List can be found in 
appendix A to this chapter. See Sec. 510.406 concerning entities that 
may not be listed on the SDN List but whose property and interests in 
property are nevertheless blocked pursuant to paragraph (b) of this 
section.
    Note 2 to Sec. 510.201(b): 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 (b) of this section also are 
published in the Federal Register and incorporated into the SDN List 
with the identifier ``[BPI-DPRK].''

    (c) All transactions prohibited pursuant to Executive Order 13570 
are also prohibited pursuant to this part.

    Note to Sec. 510.201: Sections 501.806 and 501.807 of this chapter 
describe the procedures to be followed by persons seeking, respectively, 
the unblocking of funds that they believe were blocked due to mistaken 
identity, or administrative reconsideration of the status of their 
property and interests in property as blocked pursuant to Sec. 
501.201(a) or of their status as persons whose property and interests in 
property are blocked pursuant to Sec. 510.201(b).

[75 FR 67913, Nov. 4, 2010, as amended at 76 FR 35741, June 20, 2011; 76 
FR 38535, June 30, 2011]



Sec. 510.202  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. 
510.201 is null and void and shall not be the basis for the assertion or 
recognition of any interest in or right, remedy, power, or privilege 
with respect to such property or property interest.
    (b) No transfer before the effective date shall be the basis for the 
assertion or recognition of any right, remedy, power, or privilege with 
respect to, or any interest in, any property or interest in property 
blocked pursuant to Sec. 510.201, unless the person who holds or 
maintains such property, prior to that date, had written notice of the 
transfer or by any written evidence had recognized such transfer.
    (c) Unless otherwise provided, an appropriate license or other 
authorization issued by the Office of Foreign Assets Control before, 
during, or after a transfer shall validate such transfer or make it 
enforceable to the same extent that it would be valid or enforceable but 
for the provisions of IEEPA, Executive Order 13466, Executive Order 
13551, this part, and any regulation, order, directive, ruling, 
instruction, or license issued pursuant to this part.
    (d) Transfers of property that otherwise would be null and void or 
unenforceable by virtue of the provisions of this section shall not be 
deemed to be null and void or unenforceable as to any person with whom 
such property is or was held or maintained (and as to such person only) 
in cases in which such person is able to establish to the satisfaction 
of the Office of Foreign Assets Control each of the following:
    (1) Such transfer did not represent a willful violation of the 
provisions of

[[Page 55]]

this part by the person with whom such property is or was held or 
maintained (and as to such person only);
    (2) The person with whom such property is or was held or maintained 
did not have reasonable cause to know or suspect, in view of all the 
facts and circumstances known or available to such person, that such 
transfer required a license or authorization issued pursuant to this 
part and was not so licensed or authorized, or, if a license or 
authorization did purport to cover the transfer, that such license or 
authorization had been obtained by misrepresentation of a third party or 
withholding of material facts or was otherwise fraudulently obtained; 
and
    (3) The person with whom such property is or was held or maintained 
filed with the Office of Foreign Assets Control a report setting forth 
in full the circumstances relating to such transfer promptly upon 
discovery that:
    (i) Such transfer was in violation of the provisions of this part or 
any regulation, ruling, instruction, license, or other directive or 
authorization issued pursuant to this part;
    (ii) Such transfer was not licensed or authorized by the Office of 
Foreign Assets Control; or
    (iii) If a license did purport to cover the transfer, such license 
had been obtained by misrepresentation of a third party or withholding 
of material facts or was otherwise fraudulently obtained.

    Note to paragraph (d) of Sec. 510.202: The filing of a report in 
accordance with the provisions of paragraph (d)(3) of this section shall 
not be deemed evidence that the terms of paragraphs (d)(1) and (d)(2) of 
this section have been satisfied.

    (e) Unless licensed pursuant to this part, any attachment, judgment, 
decree, lien, execution, garnishment, or other judicial process is null 
and void with respect to any property or interest in property blocked 
pursuant to Sec. 510.201.



Sec. 510.203  Holding of funds in interest-bearing accounts; investment
and reinvestment.

    (a) Except as provided in paragraphs (c) or (d) of this section, or 
as otherwise directed by the Office of Foreign Assets Control, any U.S. 
person holding funds, such as currency, bank deposits, or liquidated 
financial obligations, subject to Sec. 510.201 shall hold or place such 
funds in a blocked interest-bearing account located in the United 
States.
    (b)(1) For purposes of this section, the term blocked interest-
bearing account means a blocked account:
    (i) In a federally insured U.S. bank, thrift institution, or credit 
union, provided the funds are earning interest at rates that are 
commercially reasonable; or
    (ii) With a broker or dealer registered with the Securities and 
Exchange Commission under the Securities Exchange Act of 1934 (15 U.S.C. 
78a et seq.), provided the funds are invested in a money market fund or 
in U.S. Treasury bills.
    (2) 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.
    (3) Funds held or placed in a blocked account pursuant to this 
paragraph (b) may not be invested in instruments the maturity of which 
exceeds 180 days. If interest is credited to a separate blocked account 
or subaccount, the name of the account party on each account must be the 
same.
    (c) Blocked funds held in instruments the maturity of which exceeds 
180 days at the time the funds become subject to Sec. 510.201 may 
continue to be held until maturity in the original instrument, provided 
any interest, earnings, or other proceeds derived therefrom are paid 
into a blocked interest-bearing account in accordance with paragraphs 
(b) or (d) of this section.
    (d) Blocked funds held in accounts or instruments outside the United 
States at the time the funds become subject to Sec. 510.201 may 
continue to be held in the same type of accounts or instruments, 
provided the funds earn interest at rates that are commercially 
reasonable.
    (e) This section does not create an affirmative obligation for the 
holder of blocked tangible property, such as chattels or real estate, or 
of other blocked property, such as debt or equity securities, to sell or 
liquidate such property. However, the Office of Foreign Assets Control 
may issue licenses

[[Page 56]]

permitting or directing such sales or liquidation in appropriate cases.
    (f) 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 North Korea or any North Korean national who has 
property or interests in property blocked pursuant to Sec. 510.201(a) 
or any person whose property and interests in property are blocked 
pursuant to Sec. 510.201(b), nor may their holder cooperate in or 
facilitate the pledging or other attempted use as collateral of blocked 
funds or other assets.



                      Subpart C_General Definitions



Sec. 510.301  Blocked account; blocked property.

    The terms blocked account and blocked property shall mean any 
account or property subject to the prohibitions in Sec. 510.201, and 
either blocked pursuant to Sec. 510.201(a) or held in the name of a 
person whose property and interests in property are blocked pursuant to 
Sec. 510.201(b), or in which such person has an interest, and with 
respect to which payments, transfers, exportations, withdrawals, or 
other dealings may not be made or effected except pursuant to an 
authorization or license from the Office of Foreign Assets Control 
expressly authorizing such action.

    Note to Sec. 510.301: See Sec. 510.406 concerning the blocked 
status of property and interests in property of an entity that is 50 
percent or more owned by a person whose property and interests in 
property are blocked pursuant to Sec. 510.201.



Sec. 510.302  Effective date.

    The term effective date refers to the effective date of the 
applicable prohibitions and directives contained in this part as 
follows:
    (a) With respect to property and interests in property blocked 
pursuant to E.O. 13466, June 26, 2008;

    Note to paragraph (a): Prior to June 26, 2008, all property and 
interests in property currently blocked pursuant to E.O. 13466 were 
blocked pursuant to 31 CFR part 500.

    (b) With respect to a person listed in the Annex to E.O. 13551, 
12:01 p.m. eastern daylight time, August 30, 2010;
    (c) With respect to a person whose property and interests in 
property are otherwise blocked pursuant to E.O. 13551, the earlier of 
the date of actual or constructive notice that such person's property 
and interests in property are blocked; or
    (d) With respect to E.O. 13570, 12:01 a.m. eastern daylight time, 
April 19, 2011.

[75 FR 67913, Nov. 4, 2010, as amended at 76 FR 35741, June 20, 2011]



Sec. 510.303  Entity.

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



Sec. 510.304  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. 510.305  Licenses; general and specific.

    (a) Except as otherwise specified, the term license means any 
license or authorization contained in or issued pursuant to this part.
    (b) The term general license means any license or authorization the 
terms of which are set forth in subpart E of this part.
    (c) The term specific license means any license or authorization not 
set forth in subpart E of this part but issued pursuant to this part.

    Note to Sec. 510.305: See Sec. 501.801 of this chapter on 
licensing procedures.



Sec. 510.306  Person.

    The term person means an individual or entity.



Sec. 510.307  Property; property interest.

    The terms property and property interest include, but are not 
limited to, money, checks, drafts, bullion, bank deposits, savings 
accounts, debts, indebtedness, obligations, notes, guarantees, 
debentures, stocks, bonds, coupons, any other financial instruments, 
bankers acceptances, mortgages, pledges, liens or other rights in the 
nature of security, warehouse receipts,

[[Page 57]]

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. 510.308  Transfer.

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



Sec. 510.309  United States.

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



Sec. 510.310  U.S. financial institution.

    The term U.S. financial institution means any U.S. entity (including 
its foreign branches) that is engaged in the business of accepting 
deposits, making, granting, transferring, holding, or brokering loans or 
credits, or purchasing or selling foreign exchange, securities, 
commodity futures or options, or procuring purchasers and sellers 
thereof, as principal or agent. It includes but is not limited to 
depository institutions, banks, savings banks, trust companies, 
securities brokers and dealers, commodity futures and options brokers 
and dealers, forward contract and foreign exchange merchants, securities 
and commodities exchanges, clearing corporations, investment companies, 
employee benefit plans, and U.S. holding companies, U.S. affiliates, or 
U.S. subsidiaries of any of the foregoing. This term includes those 
branches, offices and agencies of foreign financial institutions that 
are located in the United States, but not such institutions' foreign 
branches, offices, or agencies.



Sec. 510.311  United States person; U.S. person.

    The term United States person or U.S. person means any United States 
citizen, permanent resident alien, entity organized under the laws of 
the United States or any jurisdiction within the United States 
(including foreign branches), or any person in the United States.



                        Subpart D_Interpretations



Sec. 510.401  [Reserved]



Sec. 510.402  Effect of amendment.

    Unless otherwise specifically provided, any amendment, modification, 
or revocation of any provision in this part, any provision in or 
appendix to

[[Page 58]]

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



Sec. 510.403  Termination and acquisition of an interest in blocked
property.

    (a) Whenever a transaction licensed or authorized by or pursuant to 
this part results in the transfer of property (including any property 
interest) away from a person, such property shall no longer be deemed to 
be property blocked pursuant to Sec. 510.201, unless there exists in 
the property another interest that is blocked pursuant to Sec. 510.201 
or any other part of this chapter, 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. 510.201(b), such property shall be deemed to be property in which 
that person has an interest and therefore blocked.



Sec. 510.404  Transactions ordinarily incident to a licensed transaction
authorized.

    Any transaction ordinarily incident to a licensed transaction and 
necessary to give effect thereto is also authorized, except:
    (a) An ordinarily incident transaction, not explicitly authorized 
within the terms of the license, by or with a person whose property and 
interests in property are blocked pursuant to Sec. 510.201(b); or
    (b) An ordinarily incident transaction, not explicitly authorized 
within the terms of the license, involving a debit to a blocked account 
or a transfer of blocked property.



Sec. 510.405  Setoffs prohibited.

    A setoff against blocked property (including a blocked account), 
whether by a U.S. bank or other U.S. person, is a prohibited transfer 
under Sec. 510.201 if effected after the effective date.



Sec. 510.406  Entities owned by a person whose property and interests
in property are blocked.

    A person whose property and interests in property are blocked 
pursuant to Sec. 510.201(b) has an interest in all property and 
interests in property of an entity in which it owns, directly or 
indirectly, a 50 percent or greater interest. The property and interests 
in property of such an entity, therefore, are blocked, and such an 
entity is a person whose property and interests in property are blocked 
pursuant to Sec. 510.201(b), regardless of whether the entity itself is 
listed in the Annex or designated pursuant to Executive Order 13551.



 Subpart E_Licenses, Authorizations, and Statements of Licensing Policy



Sec. 510.501  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.

[76 FR 35741, June 20, 2011]



Sec. 510.502  [Reserved]



Sec. 510.503  Exclusion from licenses.

    The Office of Foreign Assets Control reserves the right to exclude 
any person, property, or transaction from the operation of any license 
or from the privileges conferred by any license. The Office of Foreign 
Assets Control also reserves the right to restrict the applicability of 
any license to particular persons, property, transactions, or classes 
thereof. Such actions are binding upon actual or constructive notice of 
the exclusions or restrictions.

[[Page 59]]



Sec. 510.504  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. 
510.201(b) 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. 510.504: See Sec. 501.603 of this chapter for 
mandatory reporting requirements regarding financial transfers. See also 
Sec. 510.203 concerning the obligation to hold blocked funds in 
interest-bearing accounts.



Sec. 510.505  Entries in certain accounts for normal service charges 
authorized.

    (a) A U.S. financial institution is authorized to debit any blocked 
account held at that financial institution in payment or reimbursement 
for normal service charges owed it by the owner of that blocked account.
    (b) As used in this section, the term normal service charges shall 
include charges in payment or reimbursement for interest due; cable, 
telegraph, Internet, or telephone charges; postage costs; custody fees; 
small adjustment charges to correct bookkeeping errors; and, but not by 
way of limitation, minimum balance charges, notary and protest fees, and 
charges for reference books, photocopies, credit reports, transcripts of 
statements, registered mail, insurance, stationery and supplies, and 
other similar items.



Sec. 510.506  Provision of certain legal services authorized.

    (a) The provision of the following legal services to or on behalf of 
persons whose property and interests in property are blocked pursuant to 
Sec. 510.201(b) is authorized, provided that all receipts of payment of 
professional fees and reimbursement of incurred expenses must be 
specifically licensed:
    (1) Provision of legal advice and counseling on the requirements of 
and compliance with the laws of the United States or any jurisdiction 
within the United States, provided that such advice and counseling are 
not provided to facilitate transactions in violation of this part;
    (2) Representation of persons named as defendants in or otherwise 
made parties to domestic U.S. legal, arbitration, or administrative 
proceedings;
    (3) Initiation and conduct of domestic U.S. legal, arbitration, or 
administrative proceedings in defense of property interests subject to 
U.S. jurisdiction;
    (4) Representation of persons before any federal or state agency 
with respect to the imposition, administration, or enforcement of U.S. 
sanctions against such persons; and
    (5) Provision of legal services in any other context in which 
prevailing U.S. law requires access to legal counsel at public expense.
    (b) The provision of any other legal services to persons whose 
property and interests in property are blocked pursuant to Sec. 
510.201(b), 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. 510.201 is prohibited unless licensed pursuant to this 
part.



Sec. 510.507  Authorization of emergency medical services.

    The provision of nonscheduled emergency medical services in the 
United States to persons whose property and interests in property are 
blocked pursuant to Sec. 510.201(b) is authorized, provided that all 
receipt of payment for such services must be specifically licensed.

Subparts F-G [Reserved]

[[Page 60]]



                          Subpart H_Procedures



Sec. 510.801  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.

[76 FR 35741, June 20, 2011]



Sec. 510.802  Delegation by the Secretary of the Treasury.

    Any action that the Secretary of the Treasury is authorized to take 
pursuant to Executive Order 13466 of June 26, 2008 (73 FR 36787, June 
27, 2008), Executive Order 13551 of August 30, 2010 (75 FR 53837, 
September 1, 2010), Executive Order 13570 of April 18, 2011 (76 FR 
22291, April 20, 2011), and any further Executive orders relating to the 
national emergency declared in Executive Order 13466 may be taken by the 
Director of the Office of Foreign Assets Control or by any other person 
to whom the Secretary of the Treasury has delegated authority so to act.

[76 FR 35741, June 20, 2011]



                    Subpart I_Paperwork Reduction Act



Sec. 510.901  Paperwork Reduction Act notice.

    For approval by the Office of Management and Budget (``OMB'') under 
the Paperwork Reduction Act of 1995 (44 U.S.C. 3507) of information 
collections relating to recordkeeping and reporting requirements, 
licensing procedures (including those pursuant to statements of 
licensing policy), and other procedures, see Sec. 501.901 of this 
chapter. An agency may not conduct or sponsor, and a person is not 
required to respond to, a collection of information unless it displays a 
valid control number assigned by OMB.



           Sec. Appendix A to Part 510--Executive Order 13466

                 Executive Order 13466 of June 26, 2008

 Continuing Certain Restrictions With Respect to North Korea and North 
                            Korean Nationals

    By the authority vested in me as President by the Constitution and 
the laws of the United States of America, including the International 
Emergency Economic Powers Act (50 U.S.C. 1701 et seq.) (IEEPA), the 
National Emergencies Act (50 U.S.C. 1601 et seq.) (NEA), and section 301 
of title 3, United States Code, I, GEORGE W. BUSH, President of the 
United States of America, find that the current existence and risk of 
the proliferation of weapons-usable fissile material on the Korean 
Peninsula constitute an unusual and extraordinary threat to the national 
security and foreign policy of the United States, and I hereby declare a 
national emergency to deal with that threat. I further find that, as we 
deal with that threat through multilateral diplomacy, it is necessary to 
continue certain restrictions with respect to North Korea that would 
otherwise be lifted pursuant to a forthcoming proclamation that will 
terminate the exercise of authorities under the Trading With the Enemy 
Act (50 U.S.C. App. 1 et seq.) (TWEA) with respect to North Korea.
    Accordingly, I hereby order:
    Section 1. Except to the extent provided in statutes or in 
regulations, orders, directives, or licenses that may be issued pursuant 
to this order, and notwithstanding any contract entered into or any 
license or permit granted prior to the date of this order, the following 
are blocked and may not be transferred, paid, exported, withdrawn, or 
otherwise dealt in:
    All property and interests in property of North Korea or a North 
Korean national that, pursuant to the President's authorities under the 
TWEA, the exercise of which has been continued in accordance with 
section 101(b) of Public Law 95-223 (91 Stat. 1625; 50 U.S.C. App. 5(b) 
note), were blocked as of June 16, 2000, and remained blocked 
immediately prior to the date of this order.
    Sec. 2. Except to the extent provided in statutes or in regulations, 
orders, directives, or licenses that may be issued pursuant to this 
order, and notwithstanding any contract entered into or any license or 
permit granted prior to the date of this order, United States persons 
may not register a vessel in North Korea, obtain authorization for a 
vessel to fly the North Korean flag, or own, lease, operate, or insure 
any vessel flagged by North Korea.
    Sec. 3. (a) 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

[[Page 61]]

any of the prohibitions set forth in this order is prohibited.
    (b) Any conspiracy formed to violate any of the prohibitions set 
forth in this order is prohibited.
    Sec. 4. For the purposes of this order:
    (a) The term ``person'' means an individual or entity;
    (b) The term ``entity'' means a partnership, association, trust, 
joint venture, corporation, group, subgroup, or other organization; and
    (c) The term ``United States person'' means any United States 
citizen, permanent resident alien, entity organized under the laws of 
the United States or any jurisdiction within the United States 
(including foreign branches), or any person in the United States.
    Sec. 5. The Secretary of the Treasury, after consultation with the 
Secretary of State, is hereby authorized to take such actions, including 
the promulgation of rules and regulations, and to employ all powers 
granted to the President by IEEPA as may be necessary to carry out the 
purposes of this order. The Secretary of the Treasury may redelegate any 
of these functions to other officers and agencies of the United States 
Government consistent with applicable law. All agencies of the United 
States Government are hereby directed to take all appropriate measures 
within their authority to carry out the provisions of this order.
    Sec. 6. The Secretary of the Treasury, after consultation with the 
Secretary of State, is hereby authorized to submit the recurring and 
final reports to the Congress on the national emergency declared in this 
order, consistent with section 401(c) of the NEA (50 U.S.C. 1641(c)) and 
section 204(c) of IEEPA (50 U.S.C. 1703(c)).
    Sec. 7. This order is not intended to, and does not, create any 
right or benefit, substantive or procedural, enforceable at law or in 
equity by any party against the United States, its departments, 
agencies, instrumentalities, or entities, its officers or employees, or 
any other person.

George W. Bush,
THE WHITE HOUSE,
June 26, 2008.



           Sec. Appendix B to Part 510--Executive Order 13551

                Executive Order 13551 of August 30, 2010

    Blocking Property of Certain Persons With Respect to North Korea

    By the authority vested in me as President by the Constitution and 
the laws of the United States of America, including the International 
Emergency Economic Powers Act (50 U.S.C. 1701 et seq.) (IEEPA), the 
National Emergencies Act (50 U.S.C. 1601 et seq.), section 5 of the 
United Nations Participation Act of 1945 (22 U.S.C. 287c) (UNPA), and 
section 301 of title 3, United States Code; in view of United Nations 
Security Council Resolution (UNSCR) 1718 of October 14, 2006, and UNSCR 
1874 of June 12, 2009; and to take additional steps with respect to the 
situation in North Korea.
    I, BARACK OBAMA, President of the United States of America, hereby 
expand the scope of the national emergency declared in Executive Order 
13466 of June 26, 2008, finding that the continued actions and policies 
of the Government of North Korea, manifested most recently by its 
unprovoked attack that resulted in the sinking of the Republic of Korea 
Navy ship Cheonan and the deaths of 46 sailors in March 2010; its 
announced test of a nuclear device and its missile launches in 2009; its 
actions in violation of UNSCRs 1718 and 1874, including the procurement 
of luxury goods; and its illicit and deceptive activities in 
international markets through which it obtains financial and other 
support, including money laundering, the counterfeiting of goods and 
currency, bulk cash smuggling, and narcotics trafficking, destabilize 
the Korean peninsula and imperil U.S. Armed Forces, allies, and trading 
partners in the region, and thereby constitute an unusual and 
extraordinary threat to the national security, foreign policy, and 
economy of the United States.
    I hereby order:
    Section 1. (a) All property and interests in property that are in 
the United States, that hereafter come within the United States, or that 
are or hereafter come within the possession or control of any United 
States person, including any overseas branch, of the following persons 
are blocked and may not be transferred, paid, exported, withdrawn, or 
otherwise dealt in:
    (i) The persons listed in the Annex to this order; and
    (ii) Any person determined by the Secretary of the Treasury, in 
consultation with the Secretary of State:
    (A) To have, directly or indirectly, imported, exported, or 
reexported to, into, or from North Korea any arms or related materiel;
    (B) To have, directly or indirectly, provided training, advice, or 
other services or assistance, or engaged in financial transactions, 
related to the manufacture, maintenance, or use of any arms or related 
materiel to be imported, exported, or reexported to, into, or from North 
Korea, or following their importation, exportation, or reexportation to, 
into, or from North Korea;
    (C) To have, directly or indirectly, imported, exported, or 
reexported luxury goods to or into North Korea;
    (D) To have, directly or indirectly, engaged in money laundering, 
the counterfeiting of

[[Page 62]]

goods or currency, bulk cash smuggling, narcotics trafficking, or other 
illicit economic activity that involves or supports the Government of 
North Korea or any senior official thereof;
    (E) To have materially assisted, sponsored, or provided financial, 
material, or technological support for, or goods or services to or in 
support of, the activities described in subsections (a)(ii)(A)-(D) of 
this section or any person whose property and interests in property are 
blocked pursuant to this order;
    (F) To be owned or controlled by, or to have acted or purported to 
act for or on behalf of, directly or indirectly, any person whose 
property and interests in property are blocked pursuant to this order; 
or (G) to have attempted to engage in any of the activities described in 
subsections (a)(ii)(A)-(F) of this section.
    (b) I hereby determine that, to the extent section 203(b)(2) of 
IEEPA (50 U.S.C. 1702(b)(2)) may apply, the making of donations of the 
types of articles specified in such section by, to, or for the benefit 
of any person whose property and interests in property are blocked 
pursuant to this order would seriously impair my ability to deal with 
the national emergency declared in Executive Order 13466 and expanded in 
scope in this order, and I hereby prohibit such donations as provided by 
subsection (a) of this section.
    (c) The prohibitions in subsection (a) of this section include, but 
are not limited to:
    (i) The making of any contribution or provision of funds, goods, or 
services by, to, or for the benefit of any person whose property and 
interests in property are blocked pursuant to this order; and
    (ii) The receipt of any contribution or provision of funds, goods, 
or services from any such person.
    (d) The prohibitions in subsection (a) of this section apply except 
to the extent provided by statutes, or in regulations, orders, 
directives, or licenses that may be issued pursuant to this order, and 
notwithstanding any contract entered into or any license or permit 
granted prior to the effective date of this order.
    Sec. 2. (a) Any transaction by a United States person or within the 
United States that evades or avoids, has the purpose of evading or 
avoiding, causes a violation of, or attempts to violate any of the 
prohibitions set forth in this order is prohibited.
    (b) Any conspiracy formed to violate any of the prohibitions set 
forth in this order is prohibited.
    Sec. 3. The provisions of Executive Order 13466 remain in effect, 
and this order does not affect any action taken pursuant to that order.
    Sec. 4. For the purposes of this order:
    (a) The term ``person'' means an individual or entity;
    (b) The term ``entity'' means a partnership, association, trust, 
joint venture, corporation, group, subgroup, or other organization;
    (c) The term ``United States person'' means any United States 
citizen, permanent resident alien, entity organized under the laws of 
the United States or any jurisdiction within the United States 
(including foreign branches), or any person in the United States;
    (d) The term ``North Korea'' includes the territory of the 
Democratic People's Republic of Korea and the Government of North Korea;
    (e) The term ``Government of North Korea'' means the Government of 
the Democratic People's Republic of Korea, its agencies, 
instrumentalities, and controlled entities; and
    (f) The term ``luxury goods'' includes those items listed in 15 CFR 
746.4(b)(l) and Supplement No. 1 to part 746 and similar items.
    Sec. 5. For those persons whose property and interests in property 
are blocked pursuant to this order who might have a constitutional 
presence in the United States, I find that because of the ability to 
transfer funds or other assets instantaneously, prior notice to such 
persons of measures to be taken pursuant to this order would render 
these measures ineffectual. I therefore determine that for these 
measures to be effective in addressing the national emergency declared 
in Executive Order 13466 and expanded in scope in this order, there need 
be no prior notice of a listing or determination made pursuant to 
section 1(a) of this order.
    Sec. 6. The Secretary of the Treasury, in consultation with the 
Secretary of State, is hereby authorized to take such actions, including 
the promulgation of rules and regulations, and to employ all powers 
granted to the President by IEEPA and the UNPA, as may be necessary to 
carry out the purposes of this order. The Secretary of the Treasury may 
redelegate any of these functions to other officers and agencies of the 
United States Government consistent with applicable law. All agencies of 
the United States Government are hereby directed to take all appropriate 
measures within their authority to carry out the provisions of this 
order.
    Sec. 7. The Secretary of the Treasury, in consultation with the 
Secretary of State, is hereby authorized to determine that circumstances 
no longer warrant the blocking of the property and interests in property 
of a person listed in the Annex to this order, and to take necessary 
action to give effect to that determination.
    Sec. 8. This order is not intended to, and does not, create any 
right or benefit, substantive or procedural, enforceable at law or in 
equity by any party against the United

[[Page 63]]

States, its departments, agencies, or entities, its officers, employees, 
agents, or any other person.
    Sec. 9. This order is effective at 12:01 p.m., eastern daylight time 
on August 30, 2010.

Barack Obama,
THE WHITE HOUSE,
August 30, 2010.

                                  ANNEX

                               Individual

1. KIM Yong Chol [born 1946 or 1947]

                                Entities

1. Green Pine Associated Corporation
2. Reconnaissance General Bureau
3. Office 39



           Sec. Appendix C to Part 510--Executive Order 13570

                 Executive Order 13570 of April 18, 2011

      Prohibiting Certain Transactions With Respect to North Korea

    By the authority vested in me as President by the Constitution and 
the laws of the United States of America, including the International 
Emergency Economic Powers Act (50 U.S.C. 1701 et seq.) (IEEPA), the 
National Emergencies Act (50 U.S.C. 1601 et seq.), section 5 of the 
United Nations Participation Act of 1945 (22 U.S.C. 287c) (UNPA), and 
section 301 of title 3, United States Code, and in view of United 
Nations Security Council Resolution (UNSCR) 1718 of October 14, 2006, 
and UNSCR 1874 of June 12, 2009,
    I, BARACK OBAMA, President of the United States of America, in order 
to take additional steps to address the national emergency declared in 
Executive Order 13466 of June 26, 2008, and expanded in Executive Order 
13551 of August 30, 2010, that will ensure implementation of the import 
restrictions contained in UNSCRs 1718 and 1874 and complement the import 
restrictions provided for in the Arms Export Control Act (22 U.S.C. 2751 
et seq.), hereby order:
    Section 1. Except to the extent provided in statutes or in licenses, 
regulations, orders, or directives that may be issued pursuant to this 
order, and notwithstanding any contract entered into or any license or 
permit granted prior to the date of this order, the importation into the 
United States, directly or indirectly, of any goods, services, or 
technology from North Korea is prohibited.
    Sec. 2. (a) Any transaction by a United States person or within the 
United States that evades or avoids, has the purpose of evading or 
avoiding, causes a violation of, or attempts to violate any of the 
prohibitions set forth in this order is prohibited.
    (b) Any conspiracy formed to violate any of the prohibitions set 
forth in this order is prohibited.
    Sec. 3. The provisions of Executive Orders 13466 and 13551 remain in 
effect, and this order does not affect any action taken pursuant to 
those orders.
    Sec. 4. For the purposes of this order:
    (a) The term ``person'' means an individual or entity;
    (b) The term ``entity'' means a partnership, association, trust, 
joint venture, corporation, group, subgroup, or other organization;
    (c) The term ``United States person'' means any United States 
citizen, permanent resident alien, entity organized under the laws of 
the United States or any jurisdiction within the United States 
(including foreign branches), or any person in the United States;
    (d) The term ``North Korea'' includes the territory of the 
Democratic People's Republic of Korea and the Government of North Korea; 
and
    (e) The term ``Government of North Korea'' means the Government of 
the Democratic People's Republic of Korea, its agencies, 
instrumentalities, and controlled entities.
    Sec. 5. The Secretary of the Treasury, in consultation with the 
Secretary of State, is hereby authorized to take such actions, including 
the promulgation of rules and regulations, and to employ all powers 
granted to the President by IEEPA and the UNPA as may be necessary to 
carry out the purposes of this order. The Secretary of the Treasury may 
redelegate any of these functions to other officers and agencies of the 
United States Government consistent with applicable law. All agencies of 
the United States Government are hereby directed to take all appropriate 
measures within their authority to carry out the provisions of this 
order.
    Sec. 6. This order is not intended to, and does not, create any 
right or benefit, substantive or procedural, enforceable at law or in 
equity by any party against the United States, its departments, 
agencies, or entities, its officers, employees, or agents, or any other 
person.
    Sec. 7. This order is effective at 12:01 a.m. eastern daylight time 
on April 19, 2011.

Barack Obama,

THE WHITE HOUSE,

April 18, 2011.

[76 FR 35741, June 20, 2011]

[[Page 64]]



PART 515_CUBAN ASSETS CONTROL REGULATIONS--Table of Contents



      Subpart A_Relation of This Part to Other Laws and Regulations

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

                         Subpart B_Prohibitions

515.201 Transactions involving designated foreign countries or their 
          nationals; effective date.
515.202 Transactions with respect to securities registered or inscribed 
          in the name of a designated national.
515.203 Effect of transfers violating the provisions of this part.
515.204 Importation of and dealings in certain merchandise.
515.205 Holding of certain types of blocked property in interest-bearing 
          accounts.
515.206 Exempt transactions.
515.207 Entry of vessels engaged in trade with Cuba.
515.208 Restrictions on loans, credits and other financing.

                      Subpart C_General Definitions

515.301 Foreign country.
515.302 National.
515.303 Nationals of more than one foreign country.
515.305 Designated national.
515.306 Specially designated national.
515.307 Unblocked national.
515.308 Person.
515.309 Transactions.
515.310 Transfer.
515.311 Property; property interests.
515.312 Interest.
515.313 Property subject to the jurisdiction of the United States.
515.314 Banking institution.
515.316 License.
515.317 General license.
515.318 Specific license.
515.319 Blocked account.
515.320 Domestic bank.
515.321 United States; continental United States.
515.322 Authorized trade territory; member of the authorized trade 
          territory.
515.323 Occupied area.
515.325 National securities exchange.
515.326 Custody of safe deposit boxes.
515.327 Blocked estate of a decedent.
515.329 Person subject to the jurisdiction of the United States.
515.330 Person within the United States.
515.331 Merchandise.
515.332 Information and informational materials.
515.333 Depository institution.
515.334 United States national.
515.335 Permanent resident alien.
515.336 Confiscated.
515.337 Prohibited officials of the Government of Cuba.
515.338 Prohibited members of the Cuban Communist Party.
515.339 Close relative.

                        Subpart D_Interpretations

515.401 Reference to amended sections.
515.402 Effect of amendment of sections of this part or of other orders, 
          etc.
515.403 Termination and acquisition of the interest of a designated 
          national.
515.404 Transactions between principal and agent.
515.405 Exportation of securities, currency, checks, drafts and 
          promissory notes.
515.406 Drafts under irrevocable letters of credit; documentary drafts.
515.407 Administration of blocked estates of decedents.
515.408 Access to certain safe deposit boxes prohibited.
515.409 Certain payments to a designated foreign country and nationals 
          through third countries.
515.410 Dealing abroad in Cuban origin commodities.
515.411-515.413 [Reserved]
515.415 Travel to Cuba; transportation of certain Cuban nationals.
515.416-515.419 [Reserved]
515.420 Travel to Cuba.

 Subpart E_Licenses, Authorizations, and Statements of Licensing Policy

515.501 General and specific licensing procedures.
515.502 Effect of subsequent license or authorization.
515.503 Exclusion from licenses and authorizations.
515.504 Certain judicial proceedings with respect to property of 
          designated nationals.
515.505 Certain Cuban nationals unblocked; transactions of certain other 
          Cuban nationals lawfully present in the United States; 
          transactions with Cuban nationals who have taken up permanent 
          residence outside of Cuba.
515.506-515.507 [Reserved]
515.508 Payments to blocked accounts in domestic banks.
515.509 Entries in certain accounts for normal service charges.
515.510 Payments to the United States, States and political 
          subdivisions.
515.511 Transactions by certain business enterprises.
515.512 Provision of certain legal services authorized.

[[Page 65]]

515.513 Purchase and sale of certain securities.
515.514 Payment of dividends and interest on and redemption and 
          collection of securities.
515.515 Transfers of securities to blocked accounts in domestic banks.
515.516 Voting and soliciting of proxies on securities.
515.517 Access to safe deposit boxes under certain conditions.
515.518 [Reserved]
515.519 Limited payments from accounts of United States citizens abroad.
515.520 Payments from accounts of United States citizens in employ of 
          United States in foreign countries and certain other persons.
515.521 U.S. assets of certain Cuban corporations.
515.522 U.S. assets of certain Cuban decedents.
515.523 Transactions incident to the administration of decedents' 
          estates.
515.524 Payment from, and transactions in the administration of certain 
          trusts and estates.
515.525 Certain transfers by operation of law.
515.526 Transactions involving blocked life insurance policies.
515.527 Certain transactions with respect to United States intellectual 
          property.
515.528 Certain transactions with respect to blocked foreign 
          intellectual property.
515.529 Powers of attorney.
515.530 Exportation of powers of attorney or instructions relating to 
          certain types of transactions.
515.531 Payment of certain checks and drafts.
515.532 Completion of certain securities transactions.
515.533 Transactions incident to exportations from the United States and 
          reexportations of 100% U.S.-origin items to Cuba; negotiation 
          of executory contracts.
515.535 Exchange of certain securities.
515.536 Certain transactions with respect to merchandise affected by 
          Sec. 515.204.
515.540 [Reserved]
515.542 Mail and telecommunications-related transactions.
515.543 Proof of origin.
515.544 Gifts of Cuban origin goods.
515.545 Transactions related to information and informational materials.
515.546 Accounts of Cuban sole proprietorships.
515.547 Research samples.
515.548 Services rendered by Cuba to United States aircraft.
515.549 Bank accounts and other property of non-Cuban citizens who were 
          in Cuba on or after July 8, 1963.
515.550 Certain vessel transactions authorized.
515.551 Joint bank accounts.
515.552 Proceeds of insurance policies.
515.553 Bank accounts of official representatives in Cuba of foreign 
          governments.
515.554 Transfers of abandoned property under State laws.
515.555 Assets of Cuban firms wholly or substantially owned by U.S. 
          citizens.
515.556 [Reserved]
515.557 Accounts of Cuban partnerships.
515.558 Bunkering of Cuban vessels and fueling of Cuban aircraft by 
          American-owned or controlled foreign firms.
515.559 Certain transactions by U.S.-owned or controlled foreign firms 
          with Cuba.
515.560 Travel-related transactions to, from, and within Cuba by persons 
          subject to U.S. jurisdiction.
515.561 Persons visiting close relatives in Cuba.
515.562 Officials of the U.S. government, foreign governments, and 
          certain intergovernmental organizations traveling to, from, 
          and within Cuba on official business.
515.563 Journalistic activities in Cuba.
515.564 Professional research and professional meetings in Cuba.
515.565 Educational activities.
515.566 Religious activities in Cuba.
515.567 Public performances, clinics, workshops, athletic and other 
          competitions, and exhibitions.
515.568 [Reserved]
515.569 Foreign passengers' baggage.
515.570 Remittances.
515.571 Certain transactions incident to travel to, from, and within the 
          United States by Cuban nationals.
515.572 Authorization of transactions incident to the provision of 
          travel services, carrier services, and remittance forwarding 
          services.
515.573 Transactions by news organizations.
515.574 Support for the Cuban people.
515.575 Humanitarian projects.
515.576 Activities of private foundations or research or educational 
          institutes.
515.577 Authorized transactions necessary and ordinarily incident to 
          publishing.
515.578 Exportation of certain services incident to Internet-based 
          communications.

                            Subpart F_Reports

515.601 Records and reports.

                           Subpart G_Penalties

515.701 Penalties.

                          Subpart H_Procedures

515.801 Procedures.
515.802 Delegation by the Secretary of the Treasury.

[[Page 66]]

515.803 Customs procedures; merchandise specified in Sec. 515.204.

                   Subpart I_Miscellaneous Provisions

515.901 Paperwork Reduction Act notice.

    Authority: 18 U.S.C. 2332d; 22 U.S.C. 2370(a), 6001-6010, 7201-7211; 
31 U.S.C. 321(b); 50 U.S.C. App 1-44; Pub. L. 101-410, 104 Stat. 890 (28 
U.S.C. 2461 note); Pub. L. 104-114, 110 Stat. 785 (22 U.S.C. 6021-6091); 
Pub. L. 105-277, 112 Stat. 2681; Pub. L. 111-8, 123 Stat. 524; Pub. L. 
111-117, 123 Stat. 3034; E.O. 9193, 7 FR 5205, 3 CFR, 1938-1943 Comp., 
p. 1174; E.O. 9989, 13 FR 4891, 3 CFR, 1943-1948 Comp., p. 748; Proc. 
3447, 27 FR 1085, 3 CFR, 1959-1963 Comp., p. 157; E.O. 12854, 58 FR 
36587, 3 CFR, 1993 Comp., p. 614.

    Source: 28 FR 6974, July 9, 1963, unless otherwise noted.



      Subpart A_Relation of This Part to Other Laws and Regulations



Sec. 515.101  Relation of this part to other laws and regulations.

    (a) 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. No license or 
authorization contained in or issued pursuant to one of those parts, or 
any other provision of law, authorizes any transaction prohibited by 
this part.
    (b) No license or authorization contained in or issued pursuant to 
this part shall be deemed to authorize any transaction prohibited by any 
law other than the Trading With the Enemy Act, 50 U.S.C. App. 5(b), as 
amended, the Foreign Assistance Act of 1961, 22 U.S.C. 2370, or any 
proclamation, order, regulation or license issued pursuant thereto.

[50 FR 27437, July 3, 1985, as amended at 62 FR 45106, Aug. 25, 1997]



                         Subpart B_Prohibitions



Sec. 515.201  Transactions involving designated foreign countries or
their nationals; effective date.

    (a) All of the following transactions are prohibited, except as 
specifically authorized by the Secretary of the Treasury (or any person, 
agency, or instrumentality designated by him) by means of regulations, 
rulings, instructions, licenses, or otherwise, if either such 
transactions are by, or on behalf of, or pursuant to the direction of a 
foreign country designated under this part, or any national thereof, or 
such transactions involve property in which a foreign country designated 
under this part, or any national thereof, has at any time on or since 
the effective date of this section had any interest of any nature 
whatsoever, direct or indirect:
    (1) All transfers of credit and all payments between, by, through, 
or to any banking institution or banking institutions wheresoever 
located, with respect to any property subject to the jurisdiction of the 
United States or by any person (including a banking institution) subject 
to the jurisdiction of the United States;
    (2) All transactions in foreign exchange by any person within the 
United States; and
    (3) The exportation or withdrawal from the United States of gold or 
silver coin or bullion, currency or securities, or the earmarking of any 
such property, by any person within the United States.
    (b) All of the following transactions are prohibited, except as 
specifically authorized by the Secretary of the Treasury (or any person, 
agency, or instrumentality designated by him) by means of regulations, 
rulings, instructions, licenses, or otherwise, if such transactions 
involve property in which any foreign country designated under this 
part, or any national thereof, has at any time on or since the effective 
date of this section had any interest of any nature whatsoever, direct 
or indirect:
    (1) All dealings in, including, without limitation, transfers, 
withdrawals, or exportations of, any property or evidences of 
indebtedness or evidences of ownership of property by any person subject 
to the jurisdiction of the United States; and
    (2) All transfers outside the United States with regard to any 
property or property interest subject to the jurisdiction of the United 
States.
    (c) Any transaction for the purpose or which has the effect of 
evading or avoiding any of the prohibitions set

[[Page 67]]

forth in paragraph (a) or (b) of this section is hereby prohibited.
    (d) For the purposes of this part, the term foreign country 
designated under this part and the term designated foreign country mean 
Cuba and the term effective date and the term effective date of this 
section mean with respect to Cuba, or any national thereof, 12:01 a.m., 
e.s.t., July 8, 1963.
    (e) When a transaction results in the blocking of funds at a banking 
institution pursuant to this section and a party to the transaction 
believes the funds have been blocked due to mistaken identity, that 
party may seek to have such funds unblocked pursuant to the 
administrative procedures set forth in Sec. 501.806 of this chapter.

[28 FR 6974, July 9, 1963, as amended at 62 FR 45106, Aug. 25, 1997]



Sec. 515.202  Transactions with respect to securities registered or 
inscribed in the name of a designated national.

    Unless authorized by a license expressly referring to this section, 
the acquisition, 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 or otherwise dealing in any security (or evidence thereof) 
registered or inscribed in the name of any designated national is 
prohibited irrespective of the fact that at any time (either prior to, 
on, or subsequent to the ``effective date'') the registered or inscribed 
owner thereof may have, or appears to have, assigned, transferred or 
otherwise disposed of any such security.



Sec. 515.203  Effect of transfers violating the provisions of this part.

    (a) Any transfer after the ``effective date'' which is in violation 
of any provision of this part or of any regulation, ruling, instruction, 
license, or other direction or authorization thereunder and involves any 
property in which a designated national has or has had an interest since 
such ``effective date'' 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.
    (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 interest in, any property in which a designated 
national has or has had an interest since the ``effective date'' unless 
the person with whom such property is held or maintained had written 
notice of the transfer or by any written evidence had recognized such 
transfer prior to such ``effective date.''
    (c) Unless otherwise provided, an appropriate license or other 
authorization issued by or pursuant to the direction or authorization of 
the Secretary of the Treasury before, during or after a transfer shall 
validate such transfer or render it enforceable to the same extent as it 
would be valid or enforceable but for the provisions of section 5(b) of 
the Trading With the Enemy Act, as amended, and this part and any 
ruling, order, regulation, direction or instruction issued hereunder.
    (d) Transfers of property which 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 pursuant to such 
provisions, as to any person with whom such property was held or 
maintained (and as to such person only) in cases in which such person is 
able to establish 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 was held 
or maintained;
    (2) The person with whom such property 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 by or pursuant to the provisions of 
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 or the withholding 
of material facts or was otherwise fraudulently obtained; and
    (3) Promptly upon discovery that:
    (i) Such transfer was in violation of the provisions of this part or 
any regulation, ruling, instruction, license or

[[Page 68]]

other direction or authorization thereunder, or
    (ii) Such transfer was not licensed or authorized by the Secretary 
of the Treasury, or
    (iii) If a license did purport to cover the transfer, such license 
had been obtained by misrepresentation or the withholding of material 
facts or was otherwise fraudulently obtained;

the person with whom such property was held or maintained filed with the 
Treasury Department, Washington, D.C., a report in triplicate setting 
forth in full the circumstances relating to such transfer. The filing of 
a report in accordance with the provisions of this paragraph shall not 
be deemed to be compliance or evidence of compliance with paragraphs (d) 
(1) and (2) of this section.
    (e) Unless licensed or authorized by Sec. 515.504 or otherwise 
licensed or authorized pursuant to this chapter any attachment, 
judgment, decree, lien, execution, garnishment, or other judicial 
process is null and void with respect to any property in which on or 
since the ``effective date'' there existed the interest of a designated 
foreign country or national thereof.
    (f) For the purpose of this section the term property includes gold, 
silver, bullion, currency, coin, credit, securities (as that term is 
defined in section 2(1) of the Securities Act of 1933, as amended), 
bills of exchange, notes, drafts, acceptances, checks, letters of 
credit, book credits, debts, claims, contracts, negotiable documents of 
title, mortgages, liens, annuities, insurance policies, options and 
futures in commodities, and evidences of any of the foregoing. The term 
property shall not, except to the extent indicated, be deemed to include 
chattels or real property.

[28 FR 6974, July 9, 1963, as amended at 28 FR 7941, Aug. 3, 1963]



Sec. 515.204  Importation of and dealings in certain merchandise.

    (a) Except as specifically authorized by the Secretary of the 
Treasury (or any person, agency, or instrumentality designated by him) 
by means of regulations, rulings, instructions, licenses, or otherwise, 
no person subject to the jurisdiction of the United States may purchase, 
transport, import, or otherwise deal in or engage in any transaction 
with respect to any merchandise outside the United States if such 
merchandise:
    (1) Is of Cuban origin; or
    (2) Is or has been located in or transported from or through Cuba; 
or
    (3) Is made or derived in whole or in part of any article which is 
the growth, produce or manufacture of Cuba.
    (b) [Reserved]



Sec. 515.205  Holding of certain types of blocked property in 
interest-bearing accounts.

    (a) Except as provided by paragraphs (d), (e) and (f) of this 
section, or as authorized by the Secretary of the Treasury or his 
delegate by specific license, any person holding any property included 
in paragraph (h) of this section is prohibited from holding, 
withholding, using, transferring, engaging in any transactions 
involving, or exercising any right, power, or privilege with respect to 
any such property, unless it is held in an interest-bearing account in a 
domestic bank.
    (b) Any person presently holding property subject to the provisions 
of paragraph (a) of this section which, as of the effective date of this 
section, is not being held in accordance with the provisions of that 
paragraph shall transfer such property to or hold such property or cause 
such property to be held in an interest-bearing account in any domestic 
bank within 30 days of the effective date of this section.
    (c) Any person holding any checks or drafts subject to the 
provisions of Sec. 515.201 is authorized and directed, wherever 
possible consistent with state law (except as otherwise specifically 
provided in paragraph (c)(3) of this section), to negotiate or present 
for collection or payment such instruments and credit the proceeds to 
interest-bearing accounts. Any transaction by any person incident to the 
negotiation, processing. presentment, collection or payment of such 
instruments and deposit of the proceeds into an interest-bearing account 
is hereby authorized: Provided that:
    (1) The transaction does not represent, directly or indirectly, a 
transfer of the interest of a designated national to any other country 
or person;

[[Page 69]]

    (2) The proceeds are held in a blocked account indicating the 
designated national who is the payee or owner of the instrument; and,
    (3) In the case of a blocked check or draft which has been purchased 
by the maker/drawer from the drawee bank (e.g., cashier's check, money 
order, or traveler's check) or which is drawn against a presently 
existing account, such bank, on presentment of the instrument in 
accordance with the provisions of this section, shall either:
    (i) Pay the instrument (subject to paragraphs (c)(1) and (2) of this 
section) or
    (ii) Credit a blocked account on its books with the amount payable 
on the instrument.

In either event, the blocked account shall be identified as resulting 
from the proceeds of a blocked check or draft, and the identification 
shall include a reference to the names of both the maker and payee of 
the instrument.
    (d) Property subject to the provisions of paragraph (a) or (b) of 
this section, held by a person claiming a set-off against such property, 
is exempt from the provisions of paragraphs (a), (b) and (c) of this 
section to the extent of the set-off: Provided however, That interest 
shall be due from 30 days after the effective date of this section if it 
should ultimately be determined that the claim to a set-off is without 
merit.
    (e) Property subject to the provisions of paragraphs (a) and (b) of 
this section, held in a customer's account by a registered broker/dealer 
in securities, may continue to be held for the customer by the broker/
dealer provided interest is credited to the account on any balance not 
invested in securities in accordance with Sec. 515.513. The interest 
paid on such accounts by a broker/dealer who does not elect to hold such 
property for a customer's account in a domestic bank shall not be less 
than the maximum rate payable on the shortest time deposit available in 
any domestic bank in the jurisdiction in which the broker/dealer holds 
the account.
    (f) Property subject to the provisions of paragraphs (a) and (b) of 
this section, held by a state agency charged with the custody of 
abandoned or unclaimed property under Sec. 515.554 may continue to be 
held by the agency provided interest is credited to the blocked account 
in which the property is held by the agency, or the property is held by 
the agency in a blocked account in a domestic bank. The interest 
credited to such accounts by an agency which does not elect to hold such 
property in a domestic bank shall not be less than the maximum rate 
payable on the shortest time deposit available in any domestic bank in 
the state.
    (g) For purposes of this section, the term interest-bearing account 
means a blocked account earning interest at no less than the maximum 
rate payable on the shortest time deposit in the domestic bank where the 
account is held: Provided however, That such an account may include six-
month Treasury bills or insured certificates, with a maturity not 
exceeding six-months, appropriate to the amounts involved.
    (h) The following types of property are subject to paragraphs (a) 
and (b) of this section:
    (1) Any currency, bank deposit and bank accounts subject to the 
provisions of Sec. 515.201;
    (2) Any property subject to the provisions of Sec. 515.201 which 
consists, in whole or in part, of undisputed and either liquidated or 
matured debts, claims, obligations or other evidence of indebtedness, to 
the extent of any amount that is undisputed and liquidated or matured; 
and
    (3) Any proceeds resulting from the payment of an obligation under 
paragraph (c) of this section.
    (i) For purposes of this section, the term domestic bank includes 
any FSLIC-insured institution (as defined in 12 CFR 561.1).
    (j) For the purposes of this section the term person includes the 
United States Government or any agency or instrumentality thereof, 
except where the agency or instrumentality submits to the Office of 
Foreign Assets Control an opinion of its General Counsel that either:
    (1) It lacks statutory authority to comply with this section, or

[[Page 70]]

    (2) The requirements of paragraphs (a) and (b) of this section are 
inconsistent with the statutory program under which it operates.

[44 FR 11770, Mar. 2, 1979]



Sec. 515.206  Exempt transactions.

    (a) Information and informational materials. (1) The importation 
from any country and the exportation to any country of information or 
informational materials as defined in Sec. 515.332, whether commercial 
or otherwise, regardless of format or medium of transmission, are exempt 
from the prohibitions and regulations of this part except for payments 
owed to Cuba for telecommunications services between Cuba and the United 
States, which are subject to the provisions of Sec. 515.542.
    (2) This section does not authorize transactions related to 
information or informational materials not fully created and in 
existence at the date of the transaction, or to the substantive or 
artistic alteration or enhancement of information or informational 
materials, or to the provision of marketing and business consulting 
services by a person subject to the jurisdiction of the United States. 
Such prohibited transactions include, without limitation, payment of 
advances for information or informational materials not yet created and 
completed, provision of services to market, produce or co-produce, 
create or assist in the creation of information or informational 
materials, and payment of royalties to a designated national with 
respect to income received for enhancements or alterations made by 
persons subject to the jurisdiction of the United States to information 
or informational materials imported from a designated national.
    (3) This section does not authorize transactions incident to the 
transmission of restricted technical data as defined in the Export 
Administration Regulations, 15 CFR parts 730-774, or to the exportation 
of goods for use in the transmission of any data. The exportation of 
such goods to designated foreign countries is prohibited, as provided in 
Sec. 515.201 of this part and Sec. 785.1 of the Export Administration 
Regulations.
    (4) This section does not authorize transactions related to travel 
to Cuba when such travel is not otherwise authorized under Sec. 
515.545.

    Example #1: A U.S. publisher ships 500 copies of a book to Cuba 
directly from Miami aboard a chartered aircraft, and receives payment by 
means of a letter of credit issued by a Cuban bank and confirmed by an 
American bank. These are permissible transactions under this section.
    Example #2: A Cuban party exports a single master copy of a Cuban 
motion picture to a U.S. party and licenses the U.S. party to duplicate, 
distribute, show and exploit in the United States the Cuban film in any 
medium, including home video distribution, for five years, with the 
Cuban party receiving 40% of the net income. All transactions relating 
to the activities described in this example are authorized under this 
section or Sec. 515.545.
    Example #3: A U.S. recording company proposes to contract with a 
Cuban musician to create certain musical compositions, and to advance 
royalties of $10,000 to the musician. The music written in Cuba is to be 
recorded in a studio that the recording company owns in the Bahamas. 
These are all prohibited transactions. The U.S. party is prohibited 
under Sec. 515.201 from contracting for the Cuban musician's services, 
from transferring $10,000 to Cuba to pay for those services, and from 
providing the Cuban with production services through the use of its 
studio in the Bahamas. No information or informational materials are in 
being at the time of these proposed transactions. However, the U.S. 
recording company may contract to purchase and import preexisting 
recordings by the Cuban musician, or to copy the recordings in the 
United States and pay negotiated royalties to Cuba under this section or 
Sec. 515.545.
    Example #4: A Cuban party enters into a subpublication agreement 
licensing a U.S. party to print and publish copies of a musicial 
composition and to sub-license rights of public performance, adaptation, 
and arrangement of the musical composition, with payment to be a 
percentage of income received. All transactions related to the 
activities described in this example are authorized under this section 
and Sec. 515.545, except for adaptation, and arrangement, which 
constitute artistic enhancement of the Cuban composition. Payment to the 
Cuban party may not reflect income received as a result of these 
enhancements.

    (b) Donation of food. The prohibitions contained in this part do not 
apply to transactions incident to the donation of food to 
nongovernmental organizations or individuals in Cuba.

[54 FR 5233, Feb. 2, 1989, as amended at 60 FR 39256, Aug. 2, 1995; 64 
FR 25812, May 13, 1999]

[[Page 71]]



Sec. 515.207  Entry of vessels engaged in trade with Cuba.

    Except as specifically authorized by the Secretary of the Treasury 
(or any person, agency or instrumentality designated by him), by means 
of regulations, rulings, instructions, licenses or otherwise,
    (a) No vessel that enters a port or place in Cuba to engage in the 
trade of goods or the purchase or provision of services, may enter a 
U.S. port for the purpose of loading or unloading freight for a period 
of 180 days from the date the vessel departed from a port or place in 
Cuba; and
    (b) No vessel carrying goods or passengers to or from Cuba or 
carrying goods in which Cuba or a Cuban national has an interest may 
enter a U.S. port with such goods or passengers on board.

    Note to Sec. 515.207: For the waiver of the prohibitions contained 
in this section for certain vessels engaged in licensed or exempt trade 
with Cuba, see Sec. 515.550.

[58 FR 34710, June 29, 1993, as amended at 66 FR 36687, July 12, 2001]



Sec. 515.208  Restrictions on loans, credits and other financing.

    No United States national, permanent resident alien, or United 
States agency may knowingly make a loan, extend credit or provide other 
financing for the purpose of financing transactions involving 
confiscated property the claim to which is owned by a United States 
national, except for financing by a United States national owning such a 
claim for a transaction permitted under United States law.

[61 FR 37386, July 18, 1996]



                      Subpart C_General Definitions



Sec. 515.301  Foreign country.

    The term foreign country also includes, but not by way of 
limitation:
    (a) The state and the government of any such territory on or after 
the ``effective date'' as well as any political subdivision, agency, or 
instrumentality thereof or any territory, dependency, colony, 
protectorate, mandate, dominion, possession or place subject to the 
jurisdiction thereof,
    (b) Any other government (including any political subdivision, 
agency, or instrumentality thereof) to the extent and only to the extent 
that such government exercises or claims to exercise control, authority, 
jurisdiction or sovereignty over territory which on the ``effective 
date'' constituted such foreign country,
    (c) Any person to the extent that such person is, or has been, or to 
the extent that there is reasonable cause to believe that such person 
is, or has been, since the ``effective date,'' acting or purporting to 
act directly or indirectly for the benefit or on behalf of any of the 
foregoing, and
    (d) Any territory which on or since the ``effective date'' is 
controlled or occupied by the military, naval or police forces or other 
authority of such foreign country.



Sec. 515.302  National.

    (a) The term national when used with respect to a country shall 
include:
    (1) A subject or citizen of that country or any person who has been 
domiciled in or a permanent resident of that country at any time on or 
since the ``effective date,'' except persons who were permanent 
residents of or domiciled in that country in the service of the U.S. 
Government and persons whose transactions in that country were 
authorized by the Office of Foreign Assets Control.
    (2) Any partnership, association, corporation, or other organization 
that, on or since the effective date:
    (i) Was or has been organized under the laws of that country;
    (ii) Had or has had its principal place of business in that country; 
or
    (iii) Was or has been controlled by, or a substantial part of the 
stocks, share, bonds, debentures, notes, drafts, or other securities or 
obligations of which was or has been controlled by, directly or 
indirectly, that country and/or one or more nationals thereof.
    (3) Any organization's office or other sub-unit that is located 
within that country.
    (4) Any person to the extent that such person, on or since the 
``effective date'' was or has been acting or purporting to act directly 
or indirectly for

[[Page 72]]

the benefit or on behalf of any national of that country.
    (5) Any other person who there is reasonable cause to believe is a 
``national'' as defined in this section.
    (b) Persons who travel in Cuba do not become nationals of Cuba 
solely because of such travel.
    (c) The Secretary of the Treasury retains full power to determine 
that any person is or shall be deemed to be a ``national'' within the 
meaning of this section, and to specify the foreign country of which 
such person is or shall be deemed to be a national.

[28 FR 6974, July 9, 1963, as amended at 50 FR 27437, July 3, 1985; 64 
FR 25812, May 13, 1999; 68 FR 14144, Mar. 24, 2003]



Sec. 515.303  Nationals of more than one foreign country.

    (a) Any person who by virtue of any provision in this chapter is a 
national of more than one foreign country shall be deemed to be a 
national of each of such foreign countries.
    (b) In any case in which a person is a national of two or more 
designated foreign countries, as defined in this chapter, a license or 
authorization with respect to nationals of one of such designated 
foreign countries shall not be deemed to apply to such person unless a 
license or authorization of equal or greater scope is outstanding with 
respect to nationals of each other designated foreign country of which 
such person is a national.
    (c) In any case in which the combined interests of two or more 
designated foreign countries, as defined in this chapter, and/or 
nationals thereof are sufficient in the aggregate to constitute control 
or ownership of 25 per centum or more of the stock, shares, bonds, 
debentures, notes, drafts, or other securities or obligations of a 
partnership, association, corporation or other organization, but such 
control or a substantial part of such stock, shares, bonds, debentures, 
notes, drafts, or other securities or obligations is not held by any one 
such foreign country and/or national thereof, such partnership, 
association, corporation or other organization shall be deemed to be a 
national of each of such foreign countries.



Sec. 515.305  Designated national.

    For the purposes of this part, the term designated national shall 
mean Cuba and any national thereof including any person who is a 
specially designated national.



Sec. 515.306  Specially designated national.

    (a) The term specially designated national shall mean:
    (1) Any person who is determined by the Secretary of the Treasury to 
be a specially designated national,
    (2) Any person who on or since the ``effective date'' has acted for 
or on behalf of the Government or authorities exercising control over a 
designated foreign country, or
    (3) Any partnership, association, corporation or other organization 
which on or since the ``effective date'' has been owned or controlled 
directly or indirectly by the Government or authorities exercising 
control over a designated foreign country or by any specially designated 
national.
    (b) [Reserved]

    Note to Sec. 515.306: Please refer to the Office of Foreign Assets 
Control's Specially Designated Nationals and Blocked Persons List (``SDN 
List'') for a non-exhaustive listing of persons determined to fall 
within this definition, whose property and interests in property 
therefore are blocked pursuant to this part. The SDN List entries for 
such persons include the identifier ``[CUBA].'' The SDN List is 
accessible through the following page on the Office of Foreign Assets 
Control's Web site: http://www.treasury.gov/sdn. Additional information 
pertaining to the SDN List can be found in appendix A to this chapter. 
Section 501.807 of this chapter sets forth the procedures to be followed 
by persons seeking administrative reconsideration of their designation 
or that of a vessel as blocked, or who wish to assert that the 
circumstances resulting in the designation are no longer applicable.

[28 FR 6974, July 9, 1963, as amended at 61 FR 32938, June 26, 1996; 62 
FR 45106, Aug. 25, 1997; 76 FR 38585, June 30, 2011]



Sec. 515.307  Unblocked national.

    Any person licensed pursuant to Sec. 515.505 licensed as an 
unblocked national shall, while so licensed, be regarded as a person 
within the United

[[Page 73]]

States who is not a national of any designated foreign country: 
Provided, however, That the licensing of any person as an unblocked 
national shall not be deemed to suspend in any way the requirements of 
any section of this chapter relating to reports, or the production of 
books, documents, and records specified therein.

[28 FR 6974, July 9, 1963, as amended at 54 FR 5233, Feb. 2, 1989]



Sec. 515.308  Person.

    The term person means an individual, partnership, association, 
corporation, or other organization.



Sec. 515.309  Transactions.

    The phrase transactions which involve property in which a designated 
foreign country, or any national thereof, has any interest of any nature 
whatsoever, direct or indirect, includes, but not by way of limitation:
    (a) Any payment or transfer to such designated foreign country or 
national thereof,
    (b) Any export or withdrawal from the United States to such 
designated foreign country, and
    (c) Any transfer of credit, or payment of an obligation, expressed 
in terms of the currency of such designated foreign country.



Sec. 515.310  Transfer.

    The term transfer shall mean any actual or purported act or 
transaction, whether or not evidenced by writing, and whether or not 
done or preformed within the United States, the purpose, intent, or 
effect of which is to create, surrender, release, transfer, or alter, 
directly or indirectly, any right, remedy, power, privilege, or interest 
with respect to any property and without limitation upon the foregoing 
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 appointment of any agent, trustee, or other fiduciary; the creation 
or transfer of any lien; the issuance, docketing, filing, or the levy of 
or under any judgment, decree, attachment, 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, or the exercise of any power of appointment, power of 
attorney, or other power.



Sec. 515.311  Property; property interests.

    (a) Except as defined in Sec. 515.203(f) for the purposes of that 
section the terms property and property interest or property interests 
shall include, but not by way of limitation, money, checks, drafts, 
bullion, bank deposits, savings accounts, debts, indebtedness 
obligations, notes, debentures, stocks, bonds, coupons, and other 
financial securities, 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, 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, real estate and any interest therein, leaseholds, ground 
rents, options, negotiable instruments, trade acceptances, royalties, 
book accounts, accounts payable, judgments, patents, trademarks, 
copyrights, contracts or licenses affecting or involving patents, 
trademarks or copyrights, insurance policies, safe deposit boxes and 
their contents, annuities, pooling agreements, contracts of any nature 
whatsoever, services, and any other property, real, personal, or mixed, 
tangible or intangible, or interest or interests therein, present, 
future or contingent.
    (b) As used in Sec. 515.208, the term property means any property 
(including patents, copyrights, trademarks, and any other form of 
intellectual property), whether real, personal, or mixed, and any 
present, future, or contingent right, security, or other interest 
therein, including any leasehold interest.

[28 FR 6974, July 9, 1963, as amended at 50 FR 27437, July 3, 1985; 56 
FR 49847, Oct. 2, 1991; 61 FR 37386, July 18, 1996]

[[Page 74]]



Sec. 515.312  Interest.

    The term interest when used with respect to property shall mean an 
interest of any nature whatsoever, direct or indirect.



Sec. 515.313  Property subject to the jurisdiction of the United States.

    (a) The phrase property subject to the jurisdiction of the United 
States includes, without limitation, securities, whether registered or 
bearer, issued by:
    (1) The United States or any State, district, territory, possession, 
county, municipality, or any other subdivision or agency or 
instrumentality of any thereof; or
    (2) Any person with the United States whether the certificate which 
evidences such property or interest is physically located within or 
outside the United States.
    (b) The phrase property subject to the jurisdiction of the United 
States also includes, without limitation, securities, whether registered 
or bearer, by whomsoever issued, if the instrument evidencing such 
property or interest is physically located within the United States.



Sec. 515.314  Banking institution.

    The term banking institution shall include any person engaged 
primarily or incidentally in the business of banking, of granting or 
transferring credits, or of purchasing or selling foreign exchange or 
procuring purchases and sellers thereof, as principal or agent, or any 
person holding credits for others as a direct or incidental part of his 
business, or any broker; and, each principal, agent, home office, branch 
or correspondent of any person so engaged shall be regarded as a 
separate ``banking institution.''



Sec. 515.316  License.

    Except as otherwise specified, the term license shall mean any 
license or authorization contained in or issued pursuant to this part.



Sec. 515.317  General license.

    A general license is any license or authorization the terms of which 
are set forth in this part.



Sec. 515.318  Specific license.

    A specific license is any license or authorization issued pursuant 
to this part but not set forth in this part.

[28 FR 6974, July 9, 1963; 28 FR 7427, July 20, 1963]



Sec. 515.319  Blocked account.

    The term blocked account shall mean an account in which any 
designated national has an interest, with respect to which account 
payments, transfers or withdrawals or other dealings may not be made or 
effected except pursuant to an authorization or license authorizing such 
action. The term blocked account shall not be deemed to include accounts 
of unblocked nationals.

[28 FR 6974, July 9, 1963; 28 FR 7427, July 20, 1963]



Sec. 515.320  Domestic bank.

    The term domestic bank shall mean any branch or office within the 
United States of any of the following which is not a national of a 
designated foreign country; any bank or trust company incorporated under 
the banking laws of the United States or any State, territory, or 
district of the United States, or any private bank or banker subject to 
supervision and examination under the banking laws of the United States 
or of any State, territory or district of the United States. The 
Secretary of the Treasury may also authorize any other banking 
institution to be treated as a ``domestic bank'' for the purpose of this 
definition or for the purpose of any or all sections of this part.



Sec. 515.321  United States; continental United States.

    The term United States means the United States and all areas under 
the jurisdiction or authority thereof, including the Trust Territory of 
the Pacific Islands. The term continental United States means the States 
of the United States and the District of Columbia.

[49 FR 27144, July 2, 1984]



Sec. 515.322  Authorized trade territory; member of the authorized 
trade territory.

    (a) The term authorized trade territory includes all countries, 
including any

[[Page 75]]

colony, territory, possession, or protectorate, except those countries 
subject to sanctions pursuant to this chapter. The term does not include 
the United States.
    (b) The term member of the authorized trade territory shall mean any 
of the foreign countries or political subdivisions comprising the 
authorized trade territory.

[43 FR 51762, Nov. 7, 1978, as amended at 60 FR 54195, Oct. 20, 1995]



Sec. 515.323  Occupied area.

    The term occupied area shall mean any territory occupied by a 
designated foreign country which was not occupied by such country prior 
to the ``effective date'' of this part.



Sec. 515.325  National securities exchange.

    The term national securities exchange shall mean an exchange 
registered as a national securities exchange under section 6 of the 
Securities Exchange Act of 1934 (48 Stat. 885, 15 U.S.C. 78f).



Sec. 515.326  Custody of safe deposit boxes.

    Safe deposit boxes shall be deemed to be in the custody not only of 
all persons having access thereto but also of the lessors of such boxes 
whether or not such lessors have access to such boxes. The foregoing 
shall not in any way be regarded as a limitation upon the meaning of the 
term custody.



Sec. 515.327  Blocked estate of a decedent.

    The term blocked estate of a decedent shall mean any decedent's 
estate in which a designated national has an interest. A person shall be 
deemed to have an interest in a decedent's estate if he:
    (a) Was the decedent;
    (b) Is a personal representative; or
    (c) Is a creditor, heir, legatee, devisee, distributee, or 
beneficiary.



Sec. 515.329  Person subject to the jurisdiction of the United States.

    The term person subject to the jurisdiction of the United States 
includes:
    (a) Any individual, wherever located, who is a citizen or resident 
of the United States;
    (b) Any person within the United States as defined in Sec. 515.330;
    (c) Any corporation, partnership, association, or other organization 
organized under the laws of the United States or of any State, 
territory, possession, or district of the United States; and
    (d) Any corporation, partnership, association, or other 
organization, wherever organized or doing business, that is owned or 
controlled by persons specified in paragraphs (a) or (c) of this 
section.]

[50 FR 27437, July 3, 1985, as amended at 68 FR 14145, Mar. 24, 2003]



Sec. 515.330  Person within the United States.

    (a) The term person within the United States, includes:
    (1) Any person, wheresoever located, who is a resident of the United 
States;
    (2) Any person actually within the United States;
    (3) Any corporation, partnership, association, or other organization 
organized under the laws of the United States or of any State, 
territory, possession, or district of the United States; and
    (4) Any corporation, partnership, association, or other 
organization, wherever organized or doing business, which is owned or 
controlled by any person or persons specified in paragraphs (a)(1) or 
(a)(3) of this section.
    (b) [Reserved]

[28 FR 6974, July 9, 1963, as amended at 68 FR 14145, Mar. 24, 2003]



Sec. 515.331  Merchandise.

    The term merchandise means all goods, wares and chattels of every 
description without limitation of any kind.



Sec. 515.332  Information and informational materials.

    (a) For purposes of this part, the term information and 
informational materials means:
    (1) Publications, films, posters, phonograph records, photographs, 
microfilms, microfiche, tapes, compact disks, CD ROMs, artworks, news 
wire feeds, and other information and informational articles.
    (2) To be considered informational materials, artworks must be 
classified under Chapter subheading 9701, 9702, or

[[Page 76]]

9703 of the Harmonized Tariff Schedule of the United States.
    (b) The term information and informational materials does not 
include items:
    (1) That would be controlled for export pursuant to section 5 of the 
Export Administration Act of 1979, 50 U.S.C. App. 2401-2420 (1993) (the 
``EAA''), or section 6 of the EAA to the extent that such controls 
promote nonproliferation of antiterrorism policies of the United States, 
including ``software'' that is not ``publicly available'' as these terms 
are defined in 15 CFR parts 779 and 799.1 (1994); or
    (2) With respect to which acts are prohibited by 18 U.S.C. chapter 
37.

[60 FR 39256, Aug. 2, 1995]



Sec. 515.333  Depository institution.

    The term depository institution means any of the following:
    (a) An insured bank as defined in section 3 of the Federal Deposit 
Insurance Act;
    (b) An insured institution as defined in section 408(a) of the 
National Housing Act;
    (c) An insured credit union as defined in section 101 of the Federal 
Credit Union Act; or
    (d) Any other institution that is carrying on banking activities 
pursuant to a charter from a Federal or state banking authority.

[57 FR 53997, Nov. 16, 1992]



Sec. 515.334  United States national.

    As used in Sec. 515.208, the term United States national means:
    (a) Any United States citizen; or
    (b) Any other legal entity which is organized under the laws of the 
United States, or of any State, the District of Columbia, or any 
commonwealth, territory, or possession of the United States, and which 
has its principal place of business in the United States.

[61 FR 37386, July 18, 1996]



Sec. 515.335  Permanent resident alien.

    As used in Sec. 515.208, the term permanent resident alien means an 
alien lawfully admitted for permanent residence into the United States.

[61 FR 37386, July 18, 1996]



Sec. 515.336  Confiscated.

    As used in Sec. 515.208, the term confiscated refers to:
    (a) The nationalization, expropriation, or other seizure by the 
Cuban Government of ownership or control of property, on or after 
January 1, 1959:
    (1) Without the property having been returned or adequate and 
effective compensation provided; or
    (2) Without the claim to the property having been settled pursuant 
to an international claims settlement agreement or other mutually 
accepted settlement procedure; and
    (b) The repudiation by the Cuban Government of, the default by the 
Cuban Government on, or the failure of the Cuban Government to pay, on 
or after January 1, 1959:
    (1) A debt of any enterprise which has been nationalized, 
expropriated, or otherwise taken by the Cuban Government;
    (2) A debt which is a charge on property nationalized, expropriated, 
or otherwise taken by the Cuban Government; or
    (3) A debt which was incurred by the Cuban Government in 
satisfaction or settlement of a confiscated property claim.

[61 FR 37386, July 18, 1996]



Sec. 515.337  Prohibited officials of the Government of Cuba.

    For purposes of this part, the term prohibited officials of the 
Government of Cuba means Ministers and Vice-ministers, members of the 
Council of State and the Council of Ministers; members and employees of 
the National Assembly of People's Power; members of any provincial 
assembly; local sector chiefs of the Committees for the Defense of the 
Revolution; Director Generals and sub-Director Generals and higher of 
all Cuban ministries and state agencies; employees of the Ministry of 
the Interior (MININT); employees of the Ministry of Defense (MINFAR); 
secretaries and first secretaries of the Confederation of Labor of Cuba 
(CTC) and its component unions; chief editors, editors, and deputy 
editors of Cuban

[[Page 77]]

state-run media organizations and programs, including newspapers, 
television, and radio; and members and employees of the Supreme Court 
(Tribuno Supremo Nacional).

[74 FR 46003, Sept. 8, 2009]



Sec. 515.338  Prohibited members of the Cuban Communist Party.

    For purposes of this part, the term prohibited members of the Cuban 
Communist Party means members of the Politburo, the Central Committee, 
Department Heads of the Central Committee, employees of the Central 
Committee, and secretaries and first secretaries of the provincial Party 
central committees.

[74 FR 46003, Sept. 8, 2009]



Sec. 515.339  Close relative.

    (a) For purposes of this part, the term close relative used with 
respect to any person means any individual related to that person by 
blood, marriage, or adoption who is no more than three generations 
removed from that person or from a common ancestor with that person.
    (b) Example. Your mother's first cousin is your close relative for 
purposes of this part, because you are both no more than three 
generations removed from your great-grandparents, who are the ancestors 
you have in common. Similarly, your husband's great-grandson is your 
close relative for purposes of this part, because he is no more than 
three generations removed from your husband. Your daughter's father-in-
law is not your close relative for purposes of this part, because you 
have no common ancestor.

[74 FR 46003, Sept. 8, 2009]



                        Subpart D_Interpretations



Sec. 515.401  Reference to amended sections.

    Reference to any section of this part or to any regulation, ruling, 
order, instruction, direction or license issued pursuant to this part 
shall be deemed to refer to the same as currently amended unless 
otherwise so specified.



Sec. 515.402  Effect of amendment of sections of this part or of other
orders, etc.

    Any amendment, modification, or revocation of any section of this 
part or of any order, regulation, ruling, instruction, or license issued 
by or under the direction of the Secretary of the Treasury pursuant to 
section 3(a) or 5(b) of the Trading With the Enemy Act, as amended, or 
pursuant to Proclamation 3447, shall not unless otherwise specifically 
provided be deemed to affect any act done or omitted to be done, or any 
suit or proceeding had or commenced in any civil or criminal case, prior 
to such amendment, modification, or revocation, and all penalties, 
forfeitures, and liabilities under any such section, order, regulation, 
ruling, instruction or license shall continue and may be enforced as if 
such amendment, modification, or revocation had not been made.



Sec. 515.403  Termination and acquisition of the interest of a 
designated national.

    (a) Except as provided in Sec. 515.525, 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 
designated national, such property shall no longer be deemed to be 
property in which a designated national has or has had an interest 
unless there exists in such property an interest of a designated 
national, the transfer of which has not been effected pursuant to 
license or other authorization.
    (b) Unless otherwise specifically provided in a license or 
authorization contained in or issued pursuant to this part, if property 
(including any property interest) is transferred to a designated 
national such property shall be deemed to be property in which there 
exists the interest of a designated national.



Sec. 515.404  Transactions between principal and agent.

    A transaction between any person within the United States and any 
principal, agent, home office, branch, or correspondent, outside the 
United States of such person is a transaction

[[Page 78]]

prohibited by Sec. 515.201 to the same extent as if the parties to the 
transaction were in no way affiliated or associated with each other.



Sec. 515.405  Exportation of securities, currency, checks, drafts and
promissory notes.

    Section 515.201 prohibits the exportation of securities, currency, 
checks, drafts and promissory notes to a designated foreign country.



Sec. 515.406  Drafts under irrevocable letters of credit; documentary drafts.

    Section 515.201 prohibits the presentation, acceptance or payment 
of:
    (a) Drafts or other orders for payment drawn under irrevocable 
letters of credit issued in favor or on behalf of any designated 
national;
    (b) Drafts or other orders for payment, in which any designated 
national has on or since the ``effective date'' had any interest, drawn 
under any irrevocable letter of credit; and
    (c) Documentary drafts in which any designated national has on or 
since the ``effective date'' had any interest.



Sec. 515.407  Administration of blocked estates of decedents.

    Section 515.201 prohibits all transactions incident to the 
administration of the blocked estate of a decedent, including the 
appointment and qualification of personal representatives, the 
collection and liquidation of assets, the payment of claims, and 
distribution to beneficiaries. Attention is directed to Sec. 515.523 
which authorizes certain transactions in connection with the 
administration of blocked estates of decedents, and Sec. 515.522 which 
authorizes the unblocking by specific license of estate assets to 
certain heirs under certain circumstances.

[28 FR 6974, July 9, 1963, as amended at 54 FR 5234, Feb. 2, 1989; 64 FR 
25812, May 13, 1999]



Sec. 515.408  Access to certain safe deposit boxes prohibited.

    Section 515.201 prohibits access to any safe deposit box within the 
United States in the custody of any designated national or containing 
any property in which any designated national has any interest or which 
there is reasonable cause to believe contains property in which any such 
designated national has any interest. Attention is directed to Sec. 
515.517 which authorizes access to such safe deposit boxes under certain 
conditions.



Sec. 515.409  Certain payments to a designated foreign country and 
nationals through third countries.

    Section 515.201 prohibits any request or authorization made by or on 
behalf of a bank or other person within the United States to a bank or 
other person outside of the United States as a result of which request 
or authorization such latter bank or person makes a payment or transfer 
of credit either directly or indirectly to a designated national.



Sec. 515.410  Dealing abroad in Cuban origin commodities.

    Section 515.204 prohibits, unless licensed, the importation of 
commodities of Cuban origin. It also prohibits, unless licensed, persons 
subject to the jurisdiction of the United States from purchasing, 
transporting or otherwise dealing in commodities of Cuban origin which 
are outside the United States.

[39 FR 25317, July 10, 1974]



Sec. Sec. 515.411-515.413  [Reserved]



Sec. 515.415  Travel to Cuba; transportation of certain Cuban nationals.

    (a) The following transactions are prohibited by Sec. 515.201 when 
in connection with the transportation of any Cuban national, except a 
Cuban national holding an unexpired immigrant or non-immigrant visa or a 
returning resident of the United States, from Cuba to the United States, 
unless otherwise licensed:
    (1) Transactions incident to travel to, from, or within Cuba;
    (2) The transportation to Cuba of a vessel or aircraft;
    (3) The transportation into the United States of any vessel or 
aircraft which has been in Cuba since the effective date, regardless of 
registry;
    (4) The provision of any services to a Cuban national, regardless of 
whether any consideration for such services is furnished by the Cuban 
national;

[[Page 79]]

    (5) The transportation or importation of baggage or other property 
of a Cuban national;
    (6) The transfer of funds or other property to any person where such 
transfer involves the provision of services to a Cuban national or the 
transportation or importation of, or any transactions involving, 
property in which Cuba or any Cuban national has any interest, including 
baggage or other such property;
    (7) Any other transaction such as payment of port fees and charges 
in Cuba and payment for fuel, meals, lodging; and
    (8) The receipt or acceptance of any gratuity, grant, or support in 
the form of meals, lodging, fuel, payments of travel or maintenance 
expenses, or otherwise, in connection with travel to or from Cuba or 
travel or maintenance within Cuba.
    (b) Transactions incident to the travel to the United States of 
Cuban nationals traveling without a visa issued by the Department of 
State are not authorized under the provisions of Sec. 515.571.
    (c) Transactions described in paragraph (a) of this section are not 
``transactions ordinarily incident to travel to and from Cuba'' as set 
forth in Sec. 515.560(c).

[45 FR 32671, May 19, 1980, as amended at 64 FR 25812, May 13, 1999]



Sec. Sec. 515.416-515.419  [Reserved]



Sec. 515.420  Travel to Cuba.

    The prohibition on dealing in property in which Cuba or a Cuban 
national has an interest set forth in Sec. 515.201(b)(1) includes a 
prohibition on the receipt of goods or services in Cuba, even if 
provided free-of-charge by the Government of Cuba or a national of Cuba 
or paid for by a third-country national who is not subject to U.S. 
jurisdiction. The prohibition set forth in Sec. 515.201(b)(1) also 
prohibits payment for air travel to Cuba on a third-country carrier 
unless the travel is pursuant to an OFAC general or specific license.

[69 FR 33771, June 16, 2004]



 Subpart E_Licenses, Authorizations, and Statements of Licensing Policy



Sec. 515.501  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.

[68 FR 53657, Sept. 11, 2003]



Sec. 515.502  Effect of subsequent license or authorization.

    (a) No license or other authorization contained in this part or 
otherwise issued by or under the direction of the Secretary of the 
Treasury pursuant to section 3(a) or 5(b) of the Trading With the Enemy 
Act, as amended, or section 620(a), Pub. L. 87-195, or Proclamation 
3447, shall be deemed to authorize or validate any transaction effected 
prior to the issuance thereof, unless such license or other 
authorization specifically so provides.
    (b) No regulation, ruling, instruction, or license authorizes a 
transaction prohibited under this part unless the regulation, ruling, 
instruction, or license is issued by the Treasury Department 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 part 500 of this chapter unless the 
regulation, ruling, instruction or license specifically refers to part 
500.



Sec. 515.503  Exclusion from licenses and authorizations.

    The Secretary of the Treasury reserves the right to exclude from the 
operation of any license or from the privileges therein conferred or to 
restrict the applicability thereof with respect to particular persons, 
transactions or property or classes thereof. Such action shall be 
binding upon all persons receiving actual notice or constructive notice 
thereof.

[[Page 80]]



Sec. 515.504  Certain judicial proceedings with respect to property of
designated nationals.

    (a) Subject to the limitations of paragraphs (b), (c) and (d) of 
this section judicial proceedings are authorized with respect to 
property in which on or since the ``effective date'' there has existed 
the interest of a designated national.
    (b) A judicial proceeding is authorized by this section only if it 
is based upon a cause of action which accrued prior to the ``effective 
date''.
    (c) This section does not authorize or license:
    (1) The entry of any judgment or of any decree or order of similar 
or analogous effect upon any judgment book, minute book, journal or 
otherwise, or the docketing of any judgment in any docket book, or the 
filing of any judgment roll or the taking of any other similar or 
analogous action.
    (2) Any payment or delivery out of a blocked account based upon a 
judicial proceeding nor does it authorize the enforcement or carrying 
out of any judgment or decree or order of similar or analogous effect 
with regard to any property in which a designated national has an 
interest.
    (d) If a judicial proceeding relates to property in which there 
exists the interest of any designated national other than a person who 
would not have been a designated national except for his relationship to 
an occupied area, such proceeding is authorized only if it is based upon 
a claim in which no person other than any of the following has had an 
interest since the ``effective date'':
    (1) A citizen of the United States;
    (2) A corporation organized under the laws of the United States or 
any State, territory or possession thereof, or the District of Columbia;
    (3) A natural person who is and has been since the ``effective 
date'' a resident of the United States and who has not been a specially 
designated national;
    (4) A legal representative (whether or not appointed by a court of 
the United States) or successor in interest by inheritance, device, 
bequest, or operation of law, who falls within any of the categories 
specified in paragraphs (a) (1), (2), and (3) of this section but only 
to the same extent that their principals or predecessors would be 
qualified by such paragraphs.



Sec. 515.505  Certain Cuban nationals unblocked; transactions of certain
other Cuban nationals lawfully present in the United States; 

transactions with Cuban nationals who have taken up permanent residence
outside of Cuba.

    (a) General license unblocking certain persons. The following 
persons are licensed as unblocked nationals, as that term is defined in 
Sec. 515.307 of this part:
    (1) Any individual who:
    (i) Has taken up residence in the United States;
    (ii) Is a United States citizen, a permanent resident alien of the 
United States, or has applied to become a permanent resident alien of 
the United States and has an adjustment of status application pending; 
and
    (iii) Is not a specially designated national; and
    (2) Any entity that otherwise would be a national of Cuba solely 
because of the interest therein of an individual licensed in paragraph 
(a)(1) of this section as an unblocked national.

    Note to paragraph (a): An individual unblocked pursuant to this 
paragraph does not become blocked again merely by leaving the United 
States. An individual unblocked national remains unblocked unless and 
until the individual thereafter becomes domiciled in or a permanent 
resident of Cuba, meets any of the criteria in Sec. 515.302(a)(2) 
through (5), or is a ``specially designated national'' of Cuba, as that 
term is defined in Sec. 515.306 of this part.

    (b) Specific licenses unblocking certain individuals who have taken 
up permanent residence outside of Cuba. Individual nationals of Cuba who 
have taken up permanent residence outside of Cuba may apply to the 
Office of Foreign Assets Control to be specifically licensed as 
unblocked nationals. Applications for specific licenses under this 
paragraph should include copies of at least two documents indicating 
permanent residence issued by the government authorities of the new 
country of permanent residence, such as a passport, voter registration 
card, permanent resident alien card, or national identity card. In cases 
where two of such

[[Page 81]]

documents are not available, other information will be considered, such 
as evidence that the individual has been resident for the past two years 
without interruption in a single country outside of Cuba or evidence 
that the individual does not intend to, or would not be welcome to, 
return to Cuba.
    (c) General license authorizing certain transactions of individuals 
who are lawfully present in the United States in a non-visitor status. 
An individual national of Cuba who is lawfully present in the United 
States in a non-visitor status is authorized to engage in all 
transactions available to an unblocked national, as that term is defined 
in Sec. 515.307 of this part, except that all property in which the 
individual has an interest that was blocked pursuant to this part prior 
to the date on which the individual became lawfully present in the 
United States in a non-visitor status shall remain blocked. Such an 
individual is further authorized to withdraw a total amount not to 
exceed $250 in any one calendar month from any blocked accounts held in 
the individual's name. For the purposes of this section, the term ``non-
visitor status'' does not apply to an individual who is present in the 
United States on a non-immigrant visa valid only for a specified period 
of time.
    (d) General license authorizing certain transactions with 
individuals who have taken up permanent residence outside of Cuba. 
Persons subject to U.S. jurisdiction are authorized to engage in any 
transaction with an individual national of Cuba who has taken up 
permanent residence outside of Cuba as if the individual national of 
Cuba were an unblocked national, as defined in Sec. 515.307 of this 
part, except that all property in which the individual national of Cuba 
has an interest that was blocked pursuant to this part prior to the 
later of the date on which the individual took up permanent residence 
outside of Cuba or January 28, 2011 shall remain blocked. In determining 
whether an individual national of Cuba has taken up permanent residence 
outside of Cuba, persons subject to U.S. jurisdiction must obtain from 
the individual copies of at least two documents indicating permanent 
residence issued by the government authorities of the new country of 
permanent residence, such as a passport, voter registration card, 
permanent resident alien card, or national identity card.
    (e) The licensing of any person pursuant to this section shall not 
suspend the requirements of any section of this chapter relating to the 
maintenance or production of records.
    (f) The following examples illustrate the application of this 
section:

    (1) Example 1: A national of Cuba with a blocked U.S. bank account 
receives a U.S immigration visa. Upon arrival in the United States, she 
is issued a permanent resident alien card and thereby is licensed as an 
unblocked national pursuant to paragraph (a) of this section. She can 
apply immediately to OFAC for a specific license to have her bank 
account unblocked.
    (2) Example 2: A national of Cuba with a blocked U.S. bank account 
arrives in the United States without a valid visa but is allowed by the 
U.S. Government to remain in the United States in a non-visitor status. 
One year later, he applies for and receives permanent resident alien 
status. From the date he was permitted to remain in the United States in 
a non-visitor status until the date he applies for permanent resident 
alien status, he qualifies for the general license contained in 
paragraph (c) of this section. During this time he can engage in all 
transactions as if he is an unblocked national, with the exception that 
he cannot gain access to his blocked bank account other than to withdraw 
$250 each month. Beginning at the point in time when he applies for 
permanent resident alien status, he is licensed as an unblocked national 
pursuant to paragraph (a) of this section. At this time, he can apply to 
OFAC for a specific license to have his blocked bank account unblocked.
    (3) Example 3: A national of Cuba with a blocked U.S. bank account 
arrives in the United States on a temporary visa valid for six months. 
After her visa expires, she remains in the United States for an 
additional six months and then applies to become a permanent resident 
alien. She has an adjustment of status application pending until she 
receives permanent resident alien status one year later. From her 
arrival in the United States until her application for permanent 
resident alien status, she does not qualify for any of the 
authorizations contained in this section. Instead, she is authorized by 
Sec. 515.571 only to engage in transactions ordinarily incident to her 
travel and maintenance in the United States and to withdraw $250 each 
month from her blocked account to cover her living expenses. Beginning 
with her application to become a permanent resident alien, she is 
licensed as an unblocked national pursuant to paragraph (a) of this 
section. At

[[Page 82]]

this time, she can apply to OFAC for a specific license to have her bank 
account unblocked.
    (4) Example 4: An individual national of Cuba who has taken up 
permanent residence outside of Cuba wishes to open a bank account at a 
branch of a U.S. bank in Spain and then withdraw a portion of her 
previously blocked funds held by the same U.S. bank's New York branch. 
The individual provides the Spanish branch with a copy of her third-
country passport and voter registration card demonstrating her permanent 
residence status in the third country. The Spanish branch may open an 
account for the individual and provide her with banking services. The 
New York branch may also handle any transactions related to this new 
account processed through the United States but may not unblock her 
funds that had been blocked prior to the later of the date on which the 
individual took up permanent residence outside of Cuba or January 28, 
2011. Those funds remain blocked unless and until the individual is 
licensed as an unblocked national pursuant to paragraph (a) or (b) of 
this section or the funds are otherwise unblocked by a separate Office 
of Foreign Assets Control authorization.

    Note to Sec. 515.505: See Sec. 515.571 for the authorization of 
certain limited transactions incident to travel to, from, and within the 
United States by Cuban nationals who enter the United States on a non-
immigrant visa or other non-immigrant travel authorization issued by the 
State Department.

[68 FR 14145, Mar. 24, 2003, as amended at 74 FR 46004, Sept. 8, 2009; 
76 FR 5074, Jan. 28, 2011]



Sec. Sec. 515.506-515.507  [Reserved]



Sec. 515.508  Payments to blocked accounts in domestic banks.

    (a) Any payment or transfer of credit to a blocked account in a 
domestic bank in the name of any designated national is hereby 
authorized providing such payment or transfer shall not be made from any 
blocked account if such payment or transfer represents, directly or 
indirectly, a transfer of the interest of a designated national to any 
other country or person.
    (b) This section does not authorize:
    (1) Any payment or transfer to any blocked account held in a name 
other than that of the designated national who is the ultimate 
beneficiary of such payment or transfer; or
    (2) Any foreign exchange transaction including, but not by way of 
limitation, any transfer of credit, or payment of an obligation, 
expressed in terms of the currency of any foreign country.
    (c) This section does not authorize any payment or transfer of 
credit comprising an integral part of a transaction which cannot be 
effected without the subsequent issuance of a further license.
    (d) This section does not authorize the crediting of the proceeds of 
the sale of securities held in a blocked account or a subaccount 
thereof, or the income derived from such securities to a blocked account 
or subaccount under any name or designation which differs from the name 
or designation of the specific blocked account or subaccount in which 
such securities were held.
    (e) This section does not authorize any payment or transfer from a 
blocked account in a domestic bank to a blocked account held under any 
name or designation which differs from the name or designation of the 
blocked account from which the payment or transfer is made.

    Note to Sec. 515.508: Please refer to Sec. 501.603 of this chapter 
for mandatory reporting requirements regarding financial transfers.

[32 FR 10846, July 25, 1967, as amended at 58 FR 47645, Sept. 10, 1993; 
62 FR 45106, Aug. 25, 1997]



Sec. 515.509  Entries in certain accounts for normal service charges.

    (a) Any banking institution within the United States is hereby 
authorized to:
    (1) Debit any blocked account with such banking institution (or with 
another office within the United States of such banking institution) in 
payment or reimbursement for normal service charges owed to such banking 
institution by the owner of such blocked account.
    (2) Make book entries against any foreign currency account 
maintained by it with a banking institution in a designated foreign 
country for the purpose of responding to debits to such account for 
normal service charges in connection therewith.
    (b) As used in this section, the term normal service charge shall 
include charges in payment or reimbursement for interest due; cable, 
telegraph, or telephone charges; postage costs; custody fees; small 
adjustment charges to

[[Page 83]]

correct bookkeeping errors; and, but not by way of limitation, minimum 
balance charges, account carrying charges, notary and protest fees, and 
charges for reference books, photostats, credit reports, transcripts of 
statements, registered mail insurance, stationery and supplies, check 
books, and other similar items.



Sec. 515.510  Payments to the United States, States and political
subdivisions.

    (a) The payment from any blocked account to the United States or any 
agency or instrumentality thereof or to any State, territory, district, 
county, municipality or other political subdivision in the United 
States, of customs duties, taxes, and fees payable thereto by the owner 
of such blocked account is hereby authorized.
    (b) This section also authorizes transactions incident to the 
payment of customs duties, taxes, and fees from blocked accounts, such 
as the levying of assessments, the creation and enforcement of liens, 
and the sale of blocked property in satisfaction of liens for customs 
duties, taxes, and fees.



Sec. 515.511  Transactions by certain business enterprises.

    (a) Except as provided in paragraphs (b), (c) and (d) of this 
section any partnership, association, corporation or other organization 
which on the ``effective date'' was actually engaged in a commercial, 
banking or financial business within the United States and which is a 
national of a designated foreign country, is hereby authorized to engage 
in all transactions ordinarily incidental to the normal conduct of its 
business activities within the United States.
    (b) This section does not authorize any transaction which would 
require a license if such organization were not a national of a 
designated foreign country.
    (c) This section does not authorize any transaction by a specially 
designated national.
    (d) Any organization engaging in business pursuant to this section 
shall not engage in any transaction, pursuant to this section or any 
other license or authorization contained in this part, which, directly 
or indirectly, substantially diminishes or imperils the assets of such 
organization or otherwise prejudicially affects the financial position 
of such organization.
    (e) No dealings with regard to any account shall be evidence that 
any person having an interest therein is actually engaged in commercial, 
banking or financial business within the United States.



Sec. 515.512  Provision of certain legal services authorized.

    (a) The provision of the following legal services to or on behalf of 
Cuba or a Cuban national is authorized, provided that all receipts of 
payment of professional fees and reimbursement of incurred expenses must 
be specifically licensed:
    (1) Provision of legal advice and counseling on the requirements of 
and compliance with the laws of 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 when named as defendants in or 
otherwise made parties to domestic U.S. legal, arbitration, or 
administrative proceedings;
    (3) Initiation and conduct of domestic U.S. legal, arbitration, or 
administrative proceedings in defense of property interests subject to 
U.S. jurisdiction;
    (4) Representation of persons before any federal or state 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 Cuba or a Cuban 
national, not otherwise authorized in this part, requires the issuance 
of a specific license.
    (c) Entry into a settlement agreement affecting property or 
interests in property 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

[[Page 84]]

or affect property in which Cuba or a Cuban national has had an interest 
at any time on or since 12:01 a.m., e.s.t., July 8, 1963, is prohibited 
except to the extent otherwise provided by law or unless otherwise 
authorized by or pursuant to this part.

[68 FR 14146, Mar. 24, 2003]



Sec. 515.513  Purchase and sale of certain securities.

    (a) The bona fide purchase and sale of securities on a national 
securities exchange by banking institutions within the United States for 
the account, and pursuant to the authorization, of nationals of a 
designated foreign country and the making and receipt of payments, 
transfers of credit, and transfers of such securities which are 
necessary incidents of any such purchase or sale are hereby authorized 
provided the following terms and conditions are complied with:
    (1) In the case of the purchase of securities, the securities 
purchased shall be held in an account in a banking institution within 
the United States in the name of the national whose account was debited 
to purchase such securities; and
    (2) In the case of the sale of securities, the proceeds of the sale 
shall be credited to an account in the name of the national for whose 
account the sale was made and in the banking institution within the 
United States which held the securities for such national.
    (b) This section does not authorize the crediting of the proceeds of 
the sale of securities held in a blocked account or a subaccount 
thereof, to a blocked account or subaccount under any name or 
designation which differs from the name or designation of the specific 
blocked account or subaccount in which such securities were held.
    (c) Securities issued or guaranteed by the Government of the United 
States or any State, territory, district, county, municipality, or other 
political subdivision thereof (including agencies and instrumentalities 
of the foregoing) need not be purchased or sold on a national securities 
exchange, but purchases or sales of such securities shall be made at 
market value and pursuant to all other terms and conditions prescribed 
in this section.



Sec. 515.514  Payment of dividends and interest on and redemption and
collection of securities.

    (a) The payment to, and receipt by, a banking institution within the 
United States of funds or other property representing dividends or 
interest on securities held by such banking institution in a blocked 
account is hereby authorized provided the funds or other property are 
credited to or deposited in a blocked account in such banking 
institution in the name of the national for whose account the securities 
were held. Notwithstanding Sec. 515.202, this paragraph authorizes the 
foregoing transactions although such securities are registered or 
inscribed in the name of any designated national and although the 
national in whose name the securities are registered or inscribed may 
not be the owner of such blocked account.
    (b) The payment to, and receipt by, a banking institution within the 
United States of funds payable in respect of securities (including 
coupons) presented by such banking institution to the proper paying 
agents within the United States for redemption or collection for the 
account and pursuant to the authorization of nationals of a designated 
country is hereby authorized provided the proceeds of the redemption or 
collection are credited to a blocked account in such banking institution 
in the name of the national for whose account the redemption or 
collection was made.
    (c) The performance of such other acts, and the effecting of such 
other transactions, as may be necessarily incident to any of the 
foregoing, are also hereby authorized.
    (d) This section does not authorize the crediting of the proceeds of 
the redemption or collection of securities (including coupons) held in a 
blocked account or a subaccount thereof, or the income derived from such 
securities to a blocked account or subaccount under any name or 
designation which differs from the name or designation of the specific 
blocked account or subaccount in which such securities were held.
    (e) This section does not authorize any issuer or other obligor, 
with respect to a security, who is a designated national, to make any 
payment, transfer or withdrawal.

[[Page 85]]



Sec. 515.515  Transfers of securities to blocked accounts in domestic
banks.

    (a) Transactions ordinarily incident to the transfer of securities 
from a blocked account in the name of any person to a blocked account in 
the same name in a domestic bank are hereby authorized provided such 
securities shall not be transferred from any blocked account if such 
transfer represents, directly or indirectly, a transfer of the interest 
of a designated national to any other country or person.
    (b) This section does not authorize the transfer of securities held 
in a blocked account or subaccount thereof to a blocked account or 
subaccount under any name or designation which differs from the name or 
designation of the specific blocked account or subaccount in which such 
securities were held.

[32 FR 10847, July 25, 1967]



Sec. 515.516  Voting and soliciting of proxies on securities.

    Notwithstanding Sec. 515.202, the voting and the soliciting of 
proxies or other authorizations is authorized with respect to the voting 
of securities issued by a corporation organized under the laws of the 
United States or of any State, territory, or district thereof, in which 
a designated national has any interest.



Sec. 515.517  Access to safe deposit boxes under certain conditions.

    (a) Access to any safe deposit box leased to a designated national 
or containing property in which any designated national has an interest, 
and the deposit therein or removal therefrom of any property is hereby 
authorized, provided the following terms and conditions are complied 
with:
    (1) Access shall be permitted only in the presence of an authorized 
representative of the lessor of such box; and
    (2) In the event that any property in which any designated national 
has any interest is to be removed from such box, access shall be 
permitted only in the presence of an authorized representative of a 
banking institution within the United States, which may be the lessor of 
such box, which shall receive such property into its custody immediately 
upon removal from such box and which shall hold the same in a blocked 
account under an appropriate designation indicating the interest therein 
of designated nationals.
    (b) The terms and conditions set forth in paragraph (a) of this 
section shall not apply to access granted to a representative of the 
Office of Alien Property pursuant to any rule, regulation or order of 
such Office.



Sec. 515.518  [Reserved]



Sec. 515.519  Limited payments from accounts of United States citizens
abroad.

    (a) Payments and transfers of credit from blocked accounts for 
expenditures within the United States or the authorized trade territory 
of any citizens of the United States who are within any foreign country 
are hereby authorized provided the following terms and conditions are 
complied with:
    (1) Such payments and transfers shall be made only from blocked 
accounts in the name, or in which the beneficial interest is held by, 
such citizen or his family; and
    (2) The total of all such payments and transfers made under this 
section shall not exceed $1,000 in any one calendar month for any such 
citizen or his family.
    (b) This section does not authorize any remittance to a designated 
foreign country or, any payment, transfer, or withdrawal which could not 
be effected without a license by a person within the United States who 
is not a national of a designated foreign country.

[28 FR 6974, July 9, 1963, as amended at 49 FR 27144, July 2, 1984]



Sec. 515.520  Payments from accounts of United States citizens in employ
of United States in foreign countries and certain other persons.

    (a) Banking institutions within the United States are hereby 
authorized to make all payments, transfers and withdrawals from accounts 
in the name of citizens of the United States while such citizens are 
within any foreign country in the course of their employment by the 
Government of the United States.

[[Page 86]]

    (b) Banking institutions within the United States are also hereby 
authorized to make all payments, transfers and withdrawals from accounts 
in the name of members of the armed forces of the United States and of 
citizens of the United States accompanying such armed forces in the 
course of their employment by any organization acting on behalf of the 
Government of the United States while such persons are within any 
foreign country.
    (c) This section is deemed to apply to the accounts of members of 
the armed forces of the United States and of citizens of the United 
States accompanying such armed forces in the course of their employment 
by the Government of the United States or by any organization acting on 
its behalf even though they are captured or reported missing.



Sec. 515.521  U.S. assets of certain Cuban corporations.

    (a) Specific licenses may be issued unblocking the net pro rata 
shares of individuals who are permanent residents of the United States 
or the authorized trade territory, and who are not specially designated 
nationals, in U.S.-located assets of corporations formed under the laws 
of Cuba, after deducting the total debt due creditors for claims that 
accrued prior to the effective date, in cases where all of the following 
conditions are met:
    (1) The assets were owned by, or accrued to, the corporation before 
the effective date of the regulations;
    (2) The corporation did not carry on substantial business in Cuba 
under the management or control of the applicant(s) after the effective 
date;
    (3) In cases where the blocked assets purportedly have been 
nationalized by Cuba, compensation has not been paid to the 
applicant(s).
    (b) Applications for specific licenses under this section must 
include all of the following information:
    (1) A detailed description of the corporation, its by-laws, 
activities, distribution of shares, and its current status;
    (2) Proof of the permanent residence of the applicant(s) in the 
United States or the authorized trade territory;
    (3) A list of all officers, directors and shareholders of the 
corporation, giving the citizenship and the residence of each person as 
of the date of the application;
    (4) A detailed description of all of the assets of the corporation, 
wherever located, including a statement of all known encumbrances or 
claims against them; and
    (5) Detailed information regarding the status of all debts and other 
obligations of the corporation, specifying the citizenship and residence 
of each creditor on the effective date and on the date of the 
application.

[50 FR 33720, Aug. 21, 1985. Redesignated at 64 FR 25813, May 13, 1999]



Sec. 515.522  U.S. assets of certain Cuban decedents.

    (a) Specific licenses may be issued unblocking the net pro rata 
shares of certain heirs of designated nationals in U.S.-located estate 
assets, after deducting the total debt due creditors for claims that 
accrued prior to the effective date, in cases where all of the following 
conditions are met:
    (1) The applicant is a permanent resident of the United States or 
the authorized trade territory and is not a specially designated 
national; and
    (2) No interest on the part of a designated national not licensed as 
an unblocked national pursuant to Sec. 515.505 exists in that portion 
of the assets to which the applicant is entitled.
    (b) Applications for specific licenses under this section must 
include all of the following information:
    (1) Proof of permanent residence in the United States or the 
authorized trade territory, to be established by the submission of 
documentation issued by relevant government authorities that must 
include at least two of the following documents: (i) passport; (ii) 
voter registration card; (iii) permanent resident alien card; or (iv) 
national identity card. Other documents tending to show residency, such 
as income tax returns, may also be submitted in support of government 
documentation, but will not suffice in and of themselves;
    (2) Proof of death of the designated national to be established by a 
death certificate;

[[Page 87]]

    (3) Proof of heirship, to be established by a copy of the decedent's 
duly executed will certified by a probate court, a court decree 
determining the heirs, or, failing the availability of such documents, 
copies of certificates establishing the relationship of the heir to the 
deceased, e.g., birth or marriage certificates;
    (4) A description of the assets involved, including interest due on 
blocked funds since April 1, 1979, the name and address of the 
institution in which the assets are held, the account or safe deposit 
box number, the name in which the assets are held and a statement of all 
known encumbrances or claims against them; and
    (c) Any document provided pursuant to this section that is not 
written in the English language must be accompanied by a translation 
into English, as well as a certification by the translator that he is 
not an interested party to the proceeding, is qualified to make the 
translation, and has made an accurate translation of the document in 
question.

[54 FR 5235, Feb. 2, 1989. Redesignated at 64 FR 25813, May 13, 1999]



Sec. 515.523  Transactions incident to the administration of decedents' 
estates.

    (a) The following transactions are authorized in connection with the 
administration of the assets in the United States of any blocked estate 
of a decedent:
    (1) The appointment and qualification of a personal representative;
    (2) The collection and preservation of such assets by such personal 
representative and the payment of all costs, fees and charges in 
connection therewith; and
    (3) The payment by such personal representative of funeral expenses 
and expenses of the last illness.
    (4) Any transfer of title pursuant to a valid testamentary 
disposition.

This paragraph does not authorize any unblocking or distribution of 
estate assets to a designated national.
    (b) In addition to the authorization contained in paragraph (a) of 
this section, all other transactions incident to the administration of 
assets situated in the United States of any blocked estate of a decedent 
are authorized if:
    (1) The decedent was not a national of a designated foreign country 
at the time of his death;
    (2) The decedent was a citizen of the United States and a national 
of a designated foreign country at the time of his death solely by 
reason of his presence in a designated foreign country as a result of 
his employment by, or service with the United States Government; or
    (3) The assets are unblocked under a specific license issued 
pursuant to Sec. 515.522.
    (c) Any property or interest therein distributed pursuant to this 
section to a designated national shall be regarded for the purpose of 
this chapter as property in which such national has an interest and 
shall accordingly be subject to all the pertinent sections of this 
chapter. Any payment or distribution of any funds, securities or other 
choses in action to a designated national shall be made by deposit in a 
blocked account in a domestic bank or with a public officer, agency, or 
instrumentality designated by a court having jurisdiction of the estate. 
Any such deposit shall be made in one of the following ways:
    (1) In the name of the national who is the ultimate beneficiary 
thereof;
    (2) In the name of a person who is not a national of a designated 
foreign country in trust for the national who is the ultimate 
beneficiary; or
    (3) Under some other designation which clearly shows the interest 
therein of such national.
    (d) Any distribution of property authorized pursuant to this section 
may be made to a trustee of any testamentary trust or to the guardian of 
an estate of a minor or of an incompetent.
    (e) This section does not authorize:
    (1) Any designated national to act as personal representative or co-
representative of any estate;
    (2) Any designated national to represent, directly or indirectly, 
any person who has an interest in an estate;
    (3) Any designated national to take distribution of any property as 
the trustee of any testamentary trust or as the guardian of an estate of 
a minor or of an incompetent; or

[[Page 88]]

    (4) Any transaction which could not be effected if no designated 
national had any interest in such estate.
    (f) Any payment or distribution authorized by this section may be 
deposited in a blocked account in a domestic bank or with a public 
officer, agency, or instrumentality designated by the court having 
jurisdiction of the estate in one of the ways prescribed in paragraph 
(c) (1), (2) or (3) of this section, but this section does not authorize 
any other transaction directly or indirectly at the request, or upon the 
instructions of any designated national.

[28 FR 6974, July 9, 1963, as amended at 54 FR 5234, Feb. 2, 1989; 64 FR 
25813, May 13, 1999]



Sec. 515.524  Payment from, and transactions in the administration of
certain trusts and estates.

    (a) Any bank or trust company incorporated under the laws of the 
United States, or of any State, territory, possession, or district of 
the United States, or any private bank subject to supervision and 
examination under the banking laws of any State of the United States, 
acting as trustee of a trust created by gift, donation or bequest and 
administered in the United States, or as legal representative of an 
estate of an infant or incompetent administered in the United States, in 
which trust or estate one or more persons who are designated nationals 
have an interest, beneficial or otherwise, or are co-trustees or co-
representatives, is hereby authorized to engage in the following 
transactions:
    (1) Payments of distributive shares of principal or income to all 
persons legally entitled thereto upon the condition prescribed in 
paragraph (b) of this section.
    (2) Other transactions arising in the administration of such trust 
or estate which might be engaged in if no national of a designated 
foreign country were a beneficiary, co-trustee or co-representative of 
such trust or estate upon the condition prescribed in paragraph (b) of 
this section.
    (b) Any payment or distribution of any funds, securities or other 
choses in action to a national of a designated foreign country under 
this section shall be made by deposit in a blocked account in a domestic 
bank in the name of the national who is the ultimate beneficiary 
thereof.
    (c) Any payment or distribution into a blocked account in a domestic 
bank in the name of any such national of a designated foreign country 
who is the ultimate beneficiary of and legally entitled to any such 
payment or distribution is authorized by this section, but this section 
does not authorize such trustee or legal representative to engage in any 
other transaction at the request, or upon the instructions, of any 
beneficiary, co-trustee or co-representative of such trust or estate or 
other person who is a national of any designated foreign country.
    (d) The application of this section to trusts is limited to trusts 
established by gift, donation, or bequest from individuals or entities 
to benefit specific heirs, charitable causes, and similar beneficiaries. 
This section does not apply to trusts established for business or 
commercial purposes, such as sinking funds established by an issuer of 
securities in order to secure payment of interest or principal due on 
such securities.

[28 FR 6974, July 9, 1963, as amended at 49 FR 27144, July 2, 1984; 54 
FR 5234, Feb. 2, 1989]



Sec. 515.525  Certain transfers by operation of law.

    (a) The following are hereby authorized:
    (1) Any transfer of any dower, curtesy, community property, or other 
interest of any nature whatsoever, provided that such transfer arises 
solely as a consequence of the existence or change of marital status;
    (2) Any transfer to any person by intestate succession;
    (3) Any transfer to any person as administrator, executor, or other 
fiduciary by reason of any testamentary disposition; and
    (4) Any transfer to any person as administrator, executor, or 
fiduciary by reason of judicial appointment or approval in connection 
with any testamentary disposition or intestate succession.
    (b) Except to the extent authorized by Sec. 515.522, Sec. 515.523 
or by any other license or authorization contained in or issued pursuant 
to this part no transfer to any person by intestate succession

[[Page 89]]

and no transfer to any person as administrator, executor, or other 
fiduciary by reason of any testamentary disposition, and no transfer to 
any person as administrator, executor, or fiduciary by reason of 
judicial appointment or approval in connection with any testamentary 
disposition or intestate succession shall be deemed to terminate the 
interest of the decedent in the property transferred if the decedent was 
a designated national.

[28 FR 6974, July 9, 1963, as amended at 54 FR 5234, Feb. 2, 1989; 64 FR 
25813, May 13, 1999]



Sec. 515.526  Transactions involving blocked life insurance policies.

    (a) The following transactions are hereby authorized:
    (1) The payment of premiums and interest on policy loans with 
respect to any blocked life insurance policy;
    (2) The issuance, servicing or transfer of any blocked life 
insurance policy in which the only blocked interest is that of one or 
more of the following:
    (i) A member of the armed forces of the United States or a person 
accompanying such forces (including personnel of the American Red Cross, 
and similar organizations);
    (ii) An officer or employee of the United States; or
    (iii) A citizen of the United States resident in a designated 
foreign country; and
    (3) The issuance, servicing or transfer of any blocked life 
insurance policy in which the only blocked interest (other than that of 
a person specified in paragraph (a)(2) of this section) is that of a 
beneficiary.
    (b) Paragraph (a) of this section does not authorize:
    (1) Any payment to the insurer from any blocked account except a 
blocked account of the insured or beneficiary, or
    (2) Any payment by the insurer to a national of a designated foreign 
country unless payment is made by deposit in a blocked account in a 
domestic bank in the name of the national who is the ultimate 
beneficiary thereof.
    (c) The application, in accordance with the provisions of the policy 
or the established practice of the insurer of the dividends, cash 
surrender value, or loan value, of any blocked life insurance policy is 
also hereby authorized for the purpose of:
    (1) Paying premiums;
    (2) Paying policy loans and interest thereon;
    (3) Establishing paid-up insurance; or
    (4) Accumulating such dividends or values to the credit of the 
policy on the books of the insurer.
    (d) As used in this section:
    (1) The term blocked life insurance policy shall mean any life 
insurance policy or annuity contract, or contract supplementary thereto, 
in which there is a blocked interest.
    (2) Any interest of a national of a designated foreign country shall 
be deemed to be a ``blocked interest.''
    (3) The term servicing shall mean the following transactions with 
respect to any blocked life insurance policy:
    (i) The payment of premiums, the payment of loan interest, and the 
repayment of policy loans;
    (ii) The effecting by a life insurance company or other insurer of 
loans to an insured;
    (iii) The effecting on behalf of an insured or surrenders, 
conversions, modifications, and reinstatements; and
    (iv) The exercise or election by an insured of nonforfeiture 
options, optional modes of settlement, optional disposition of 
dividends, and other policy options and privileges not involving payment 
by the insurer.
    (4) The term transfer shall mean the change of beneficiary, or the 
assignment or pledge of the interest of an insured in any blocked life 
insurance policy subsequent to the issuance thereof.
    (e) This section does not authorize any transaction with respect to 
any blocked life insurance policy issued by a life insurance company or 
other insurer which is a national of a designated foreign country or 
which is not doing business or effecting insurance in the United States.



Sec. 515.527  Certain transactions with respect to United States 
intellectual property.

    (a)(1) Transactions related to the registration and renewal in the 
United States Patent and Trademark Office or the United States Copyright 
Office of patents, trademarks, and copyrights in which the Government of 
Cuba or a

[[Page 90]]

Cuban national has an interest are authorized.
    (2) No transaction or payment is authorized or approved pursuant to 
paragraph (a)(1) of this section with respect to a mark, trade name, or 
commercial name that is the same as or substantially similar to a mark, 
trade name, or commercial name that was used in connection with a 
business or assets that were confiscated, as that term is defined in 
Sec. 515.336, unless the original owner of the mark, trade name, or 
commercial name, or the bona fide successor-in-interest has expressly 
consented.
    (b) This section authorizes the payment from blocked accounts or 
otherwise of fees currently due to the United States Government in 
connection with any transaction authorized in paragraph (a) of this 
section.
    (c) This section further authorizes the payment from blocked 
accounts or otherwise of the reasonable and customary fees and charges 
currently due to attorneys or representatives within the United States 
in connection with the transactions authorized in paragraph (a) of this 
section.

[60 FR 54196, Oct. 20, 1995, as amended at 64 FR 25813, May 13, 1999]



Sec. 515.528  Certain transactions with respect to blocked foreign
intellectual property.

    (a) The following transactions by any person who is not a designated 
national are hereby authorized:
    (1) The filing and prosecution of any application for a blocked 
foreign patent, trademark or copyright, or for the renewal thereof;
    (2) The receipt of any blocked foreign patent, trademark or 
copyright;
    (3) The filing and prosecution of opposition or infringement 
proceedings with respect to any blocked foreign patent, trademark, or 
copyright, and the prosecution of a defense to any such proceedings;
    (4) The payment of fees currently due to the government of any 
foreign country, either directly or through an attorney or 
representative, in connection with any of the transactions authorized by 
paragraphs (a) (1), (2), and (3) of this section or for the maintenance 
of any blocked foreign patent, trademark or copyright; and
    (5) The payment of reasonable and customary fees currently due to 
attorneys or representatives in any foreign country incurred in 
connection with any of the transactions authorized by paragraphs (a) 
(1), (2), (3), or (4) of this section.
    (b) Payments effected pursuant to the terms of paragraphs (a) (4) 
and (5) of this section may not be made from any blocked account.
    (c) As used in this section the term blocked foreign patent, 
trademark, or copyright shall mean any patent, petty patent, design 
patent, trademark or copyright issued by any foreign country in which a 
designated foreign country or national thereof has an interest, 
including any patent, petty patent, design patent, trademark, or 
copyright issued by a designated foreign country.

[28 FR 6974, July 9, 1963, as amended at 60 FR 54196, Oct. 20, 1995]



Sec. 515.529  Powers of attorney.

    (a) No power of attorney, whether granted before or after the 
``effective date'' shall be invalid by reason of any of the provisions 
of this part with respect to any transaction licensed by or pursuant to 
the provisions of this part.
    (b) This section does not authorize any transaction pursuant to a 
power of attorney if such transaction is prohibited by Sec. 515.201 and 
is not otherwise licensed or authorized by or pursuant to this part.
    (c) This section does not authorize the creation of any power of 
attorney in favor of any person outside of the United States or the 
exportation from the United States of any power of attorney.



Sec. 515.530  Exportation of powers of attorney or instructions relating
to certain types of transactions.

    (a) The exportation to any foreign country of powers of attorney or 
other instruments executed or issued by any person within the United 
States who is not a national of a designated foreign country, which are 
limited to authorizations or instructions to effect transactions 
incident to the following, are hereby authorized upon the condition

[[Page 91]]

prescribed in paragraph (b) of this section:
    (1) The representation of the interest of such person in a 
decedent's estate which is being administered in a designated foreign 
country and the collection of the distributive share of such person in 
such estate;
    (2) The maintenance, preservation, supervision or management of any 
property located in a designated foreign country in which such person 
has an interest; and
    (3) The conveyance, transfer, release, sale or other disposition of 
any property specified in paragraph (a)(1) of this section or any real 
estate or tangible personal property if the value thereof does not 
exceed the sum of $5,000 or its equivalent in foreign currency.
    (b) No instrument which authorizes the conveyance, transfer, 
release, sale or other disposition of any property may be exported under 
this section unless it contains an express stipulation that such 
authority may not be exercised if the value of such property exceeds the 
sum of $5,000 or the equivalent thereof in foreign currency.
    (c) As used in this section, the term tangible personal property 
shall not include cash, bullion, deposits, credits, securities, patents, 
trademarks, or copyrights.



Sec. 515.531  Payment of certain checks and drafts.

    (a) Any banking institution within the United States is hereby 
authorized to make payments from blocked accounts with such banking 
institution:
    (1) Of checks and drafts drawn or issued prior to the ``effective 
date'' provided:
    (i) The amount involved in any one payment, acceptance, or debit 
does not exceed $500; or
    (ii) The check or draft was within the United States in process of 
collection by a domestic bank on or prior to the ``effective date.''
    (2) [Reserved]
    (b) This section does not authorize any payment to a designated 
foreign country or any designated national thereof except payments into 
a blocked account in a domestic bank, unless such designated national is 
otherwise licensed to receive such payment.
    (c) The authorization contained in this section shall expire at the 
close of business on August 8, 1963.



Sec. 515.532  Completion of certain securities transactions.

    (a) Banking institutions within the United States are hereby 
authorized to complete, on or before July 12, 1963 purchases and sales 
made prior to the ``effective date'' of securities purchased or sold for 
the account of a designated foreign country or any designated national 
thereof provided the following terms and conditions are complied with, 
respectively:
    (1) The proceeds of such sale are credited to a blocked account in a 
banking institution in the name of the person for whose account the sale 
was made; and
    (2) The securities so purchased are held in a blocked account in a 
banking institution in the name of the person for whose account the 
purchase was made.
    (b) This section does not authorize the crediting of the proceeds of 
the sale of securities held in a blocked account or a subaccount 
thereof, to a blocked account or subaccount under any name or 
designation which differs from the name or designation of the specific 
blocked account or subaccount in which such securities were held.



Sec. 515.533  Transactions incident to exportations from the United
States and reexportations of 100% U.S.-origin items to Cuba; negotiation

of executory contracts.

    (a) All transactions ordinarily incident to the exportation of items 
from the United States, or the reexportation of 100% U.S.-origin items 
from a third country, to any person within Cuba are authorized, provided 
that:
    (1) The exportation or reexportation is licensed or otherwise 
authorized by the Department of Commerce under the provisions of the 
Export Administration Act of 1979, as amended (50 U.S.C. app. 2401-0420) 
(see the Export Administration Regulations, 15 CFR 730-774); and
    (2) Only the following payment and financing terms may be used:

[[Page 92]]

    (i)(A) Payment of cash in advance. Except as provided in paragraph 
(a)(2)(i)(B) of this section, for the purposes of this section, the term 
``payment of cash in advance'' means that payment is received by the 
seller or the seller's agent prior to shipment of the goods from the 
port at which they are loaded;
    (B) Payment of cash in advance during Fiscal Year 2010. For sales of 
agricultural items delivered to Cuba between October 1, 2009, and 
September 30, 2010, or delivered pursuant to a contract entered into 
between October 1, 2009, and September 30, 2010, and shipped within 
twelve months from the signing of the contract, the term ``payment of 
cash in advance'' shall mean payment before the transfer of title to, 
and control of, the exported items to the Cuban purchaser;

    Note to Sec. 515.533(a)(2)(i)(B): The payment rule set forth in 
this paragraph is required by Section 619 of the Omnibus Appropriations 
Act, 2010 (Pub. L. 111-117).

    (ii) For authorized sales of agricultural items, financing by a 
banking institution located in a third country provided the banking 
institution is not a designated national, U.S. citizen, U.S. permanent 
resident alien, or an entity organized under the laws of the United 
States or any jurisdiction within the United States (including foreign 
branches). Such financing may be confirmed or advised by a U.S. banking 
institution; or
    (iii) For all other authorized sales, financing by a banking 
institution located in a third country provided the banking institution 
is not a designated national or a person subject to the jurisdiction of 
the United States. Such financing may be confirmed or advised by a U.S. 
banking institution.

    Note to paragraph (a): The transactions authorized by this paragraph 
include, but are not limited to, all transactions that are directly 
incident to the shipping of specific exports or reexports (e.g., 
insurance and transportation of the exports to Cuba). Transactions that 
are not tied to specific exports or reexports, such as transactions 
involving future (non-specific) shipments, must be separately licensed 
by OFAC. For the waiver of the prohibitions on entry into U.S. ports 
contained in Sec. 515.207 for vessels transporting shipments of items 
between the United States and Cuba pursuant to this section, see Sec. 
515.550.

    (b) Persons subject to the jurisdiction of the United States are 
authorized to engage in all transactions ordinarily incident to 
negotiation of and entry into executory contracts for the sale of items 
that may be exported from the United States to Cuba or 100% U.S.-origin 
items that may be reexported from a third country to Cuba consistent 
with the export licensing policy of the Department of Commerce, provided 
that performance of such executory contracts is expressly made 
contingent on the prior authorization by the Department of Commerce.

    Note to paragraph (b): This paragraph does not authorize 
transactions related to travel to, from, or within Cuba. See paragraphs 
(e) and (f) for general licenses, and paragraph (g) for a statement of 
specific licensing policy, with respect to such transactions.

    (c) This section does not authorize:
    (1) The financing of any transactions from any blocked account.
    (2) Any transaction involving, directly or indirectly, property in 
which any designated national, other than a person located in the 
country to which the exportation or reexportation is consigned, has an 
interest or has had an interest since the effective date set forth in 
Sec. 515.201 of this part.
    (d) In addition to those transactions authorized pursuant to 
paragraph (a) of this section, all transactions ordinarily incident to 
the processing of payments received for items exported from the United 
States to any person within Cuba are authorized, provided that:
    (1) The exportation is licensed or otherwise authorized by the 
Department of Commerce under the provisions of the Export Administration 
Act of 1979, as amended (50 U.S.C. App. 2401-2420) (see the Export 
Administration Regulations, 15 CFR 730-774);
    (2) The items are shipped from the port at which they are loaded on 
or before March 24, 2005; and
    (3) Payment is received by a U.S. banking institution on or before 
March 24, 2005, and prior to the transfer of title to, and control of, 
the exported items to the Cuban purchaser.

[[Page 93]]

    (e) General license for travel-related transactions incident to 
sales of agricultural commodities, medicine, or medical devices. The 
travel-related transactions set forth in Sec. 515.560(c) and additional 
transactions that are directly incident to the commercial marketing, 
sales negotiation, accompanied delivery, or servicing in Cuba of 
agricultural commodities, medicine, or medical devices that appear 
consistent with the export or re-export licensing policy of the 
Department of Commerce are authorized, provided that:
    (1) The traveler is regularly employed by a producer or distributor 
of the agricultural commodities, medicine, or medical devices or by an 
entity duly appointed to represent such a producer or distributor;
    (2) The traveler's schedule of activities does not include free 
time, travel, or recreation in excess of that consistent with a full 
work schedule; and
    (3) The traveler submits to OFAC at least 14 days in advance of each 
departure to Cuba a written report identifying both the traveler and the 
producer or distributor and describing the purpose and scope of such 
travel. Within 14 days of return from Cuba, the traveler shall submit a 
written report describing the business activities conducted, the persons 
with whom the traveler met in the course of such activities, and the 
expenses incurred. Such reports must be captioned ``Section 515.533(e) 
Report'' and faxed to 202/622-1657 or mailed to the Office of Foreign 
Assets Control, Attn: Licensing Division, 1500 Pennsylvania Avenue, NW., 
Annex-2nd Floor, Washington, DC 20220. If more than one traveler is 
traveling on the same trip for or on behalf of the same producer or 
distributor, one combined pre-trip and one combined post-trip report may 
be filed covering all such travelers.
    (f) General license for travel-related transactions incident to 
sales of telecommunications-related items. The travel-related 
transactions set forth in Sec. 515.560(c) and additional transactions 
that are directly incident to the commercial marketing, sales 
negotiation, accompanied delivery, or servicing in Cuba of 
telecommunications-related items that have been authorized for 
commercial export or re-export to Cuba by the Department of Commerce are 
authorized, provided that:
    (1) The traveler is regularly employed by a telecommunications 
services provider that is a person subject to U.S. jurisdiction or by an 
entity duly appointed to represent such a provider;
    (2) The traveler's schedule of activities does not include free 
time, travel, or recreation in excess of that consistent with a full 
work schedule; and
    (3) The traveler submits to OFAC at least 14 days in advance of each 
departure to Cuba a written report identifying both the traveler and the 
telecommunications services provider that is a person subject to U.S. 
jurisdiction and describing the purpose and scope of such travel. Within 
14 days of return from Cuba, the traveler shall submit a written report 
describing the business activities conducted, the persons with whom the 
traveler met in the course of such activities, and the expenses 
incurred. Such reports must be captioned ``Section 515.533(f) Report'' 
and faxed to 202/622-1657 or mailed to the Office of Foreign Assets 
Control, Attn: Licensing Division, 1500 Pennsylvania Avenue, NW., Annex-
2nd Floor, Washington, DC 20220. If more than one traveler is traveling 
on the same trip for or on behalf of the same telecommunications 
services provider that is a person subject to U.S. jurisdiction, one 
combined pre-trip and one combined post-trip report may be filed 
covering all such travelers.
    (g) Specific licenses for travel-related transactions incident to 
exports. Specific licenses may be issued on a case-by-case basis 
authorizing the travel-related transactions set forth in Sec. 
515.560(c) and additional transactions that are directly incident to the 
marketing, sales negotiation, accompanied delivery, or servicing in Cuba 
of exports that appear consistent with the export or re-export licensing 
policy of the Department of Commerce and are not authorized by the 
general licenses in paragraphs (e) and (f) of this section.

[68 FR 14146, Mar. 24, 2003, as amended at 70 FR 9225, Feb. 25, 2005; 74 
FR 46004, Sept. 8, 2009; 75 FR 10997, Mar. 10, 2010]

[[Page 94]]



Sec. 515.535  Exchange of certain securities.

    (a) Subject to the limitations and conditions of paragraph (b) of 
this section and notwithstanding Sec. 515.202, any banking institution 
within the United States is authorized to engage in the following 
transactions with respect to securities listed on a national securities 
exchange, including the withdrawal of such securities from blocked 
accounts:
    (1) Exchange of certificates necessitated by reason of changes in 
corporate name, par value or capitalization,
    (2) Exchanges of temporary for permanent certificates,
    (3) Exchanges or deposits under plans of reorganization,
    (4) Exchanges under refunding plans, or
    (5) Exchanges pursuant to conversion privileges accruing to 
securities held.
    (b) This section does not authorize the following transactions:
    (1) Any exchange of securities unless the new securities and other 
proceeds, if any, received are deposited in the blocked account in which 
the original securities were held immediately prior to the exchange.
    (2) Any exchange of securities registered in the name of any 
designated national, unless the new securities received are registered 
in the same name in which the securities exchanged were registered prior 
to the exchange.
    (3) Any exchange of securities issued by a person engaged in the 
business of offering, buying, selling, or otherwise dealing, or trading 
in securities, or evidences thereof, issued by another person.
    (4) Any transaction with respect to any security by an issuer or 
other obligor who is a designated national.



Sec. 515.536  Certain transactions with respect to merchandise affected
by Sec. 515.204.

    (a) With respect to merchandise the importation of which is 
prohibited by Sec. 515.204, all Customs transactions are authorized 
except the following:
    (1) Entry for consumption (including any appraisement entry, any 
entry of goods imported in the mails, regardless of value, and any other 
informal entries);
    (2) Entry for immediate exportation;
    (3) Entry for transportation and exportation;
    (4) Withdrawal from warehouse;
    (5) Transfer or withdrawal from a foreign-trade zone; or
    (6) Manipulation or manufacture in a warehouse or in a foreign-trade 
zone.
    (b) Paragraph (a) of this section is intended solely to allow 
certain restricted disposition of merchandise which is imported without 
proper authorization. Paragraph (a) of this section does not authorize 
the purchase or importation of any merchandise.
    (c) The purchase outside the United States for importation into the 
United States of nickel-bearing materials presumptively subject to Sec. 
515.204 and the importation of such merchandise into the United States 
(including transactions listed in paragraph (a) of this section) are 
authorized if there is presented to the collector of customs in 
connection with such importation the original of an appropriate 
certificate of origin as defined in paragraph (d) of this section and 
provided that the merchandise was shipped to the United States directly, 
or on a through bill of lading, from the country issuing the appropriate 
certificate of origin.
    (d) A certificate of origin is appropriate for the purposes of this 
section only if
    (1) It is a certificate of origin the availability of which for 
Cuban Assets Control purposes has been announced in the Federal Register 
by the Office of Foreign Assets Control; and
    (2) It bears a statement by the issuing agency referring to the 
Cuban Assets Control Regulations or stating that the certificate has 
been issued under procedures agreed upon with the U.S. Government.

[30 FR 15371, Dec. 14, 1965, as amended at 47 FR 4254, Jan. 29, 1982; 50 
FR 5753, Feb. 12, 1985; 54 FR 5234, Feb. 2, 1989]

[[Page 95]]



Sec. 515.540  [Reserved]



Sec. 515.542  Mail and telecommunications-related transactions.

    (a) All transactions of common carriers incident to the receipt or 
transmission of mail between the United States and Cuba are authorized.
    (b) All transactions, including but not limited to payments, 
incident to the provision of telecommunications services between the 
United States and Cuba, the provision of satellite radio or satellite 
television services to Cuba, or the entry into and performance under 
roaming service agreements with telecommunications services providers in 
Cuba, by a telecommunications services provider that is a person subject 
to U.S. jurisdiction are authorized. This paragraph does not authorize 
any transactions addressed in paragraphs (c), (d), (f) or (g) of this 
section, nor does it authorize the entry into or performance of a 
contract with or for the benefit of any particular individual in Cuba.
    (c) All persons subject to U.S. jurisdiction are authorized to enter 
into, and make payments under, contracts with non-Cuban 
telecommunications services providers, or particular individuals in 
Cuba, for telecommunications services provided to particular individuals 
in Cuba, provided that such individuals in Cuba are not prohibited 
officials of the Government of Cuba, as defined in Sec. 515.337 of this 
part, or prohibited members of the Cuban Communist Party, as defined in 
Sec. 515.338 of this part. The authorization in this paragraph 
includes, but is not limited to, payment for activation, installation, 
usage (monthly, pre-paid, intermittent, or other), roaming, maintenance, 
and termination fees.
    (d)(1) General license for telecommunications facilities linking the 
United States and Cuba. Transactions incident to the establishment of 
facilities to provide telecommunications services linking the United 
States and Cuba, including but not limited to fiber-optic cable and 
satellite facilities, are authorized.
    (2) Specific licenses for telecommunications facilities linking 
third countries and Cuba. Specific licenses may be issued on a case-by-
case basis authorizing transactions incident to the establishment of 
facilities to provide telecommunications services linking third 
countries and Cuba, including but not limited to fiber-optic cable and 
satellite facilities, provided that such facilities are necessary to 
provide efficient and adequate telecommunications services between the 
United States and Cuba.
    (e) Any entity subject to U.S. jurisdiction relying on paragraph 
(b), (c), (d)(1), or (d)(2) of this section shall notify OFAC in writing 
within 30 days after commencing or ceasing to offer such services, as 
applicable, and shall furnish by January 15 and July 15 of each year 
semiannual reports providing the total amount of all payments made to 
Cuba or a third country related to any of the services authorized by 
this section during the prior six months. These notifications and 
reports must be captioned ``Section 515.542 Notification'' or ``Section 
515.542 Report'' and faxed to 202/622-6931 or mailed to the Office of 
Foreign Assets Control, Attn: Policy Division, 1500 Pennsylvania Avenue, 
NW., Annex-4th Floor, Washington, DC 20220.
    (f) For the purposes of this section, the term telecommunications 
services includes but is not limited to telephone, telegraph, and 
similar services and the transmission of satellite radio and satellite 
television broadcasts and news wire feeds.
    (g) Nothing in this section authorizes the exportation or re-
exportation of any items to Cuba. For the rules related to authorization 
of exports and re-exports to Cuba, see Sec. Sec. 515.533 and 515.559 of 
this part.
    (h) For an authorization of travel-related transactions that are 
directly incident to the commercial marketing, sales negotiation, 
accompanied delivery, or servicing in Cuba of telecommunications-related 
items that have been authorized for commercial export to Cuba by the 
U.S. Department of Commerce, see Sec. 515.533(f) of this part. For an 
authorization of travel-related transactions that are directly incident 
to participation in professional meetings for the commercial marketing 
of, sales negotiation for, or performance under contracts for the 
provision of the telecommunications services, or the establishment of 
facilities

[[Page 96]]

to provide telecommunications services, authorized by paragraphs (b), 
(c), or (d)(1) of this section, see paragraph (a)(3) of Sec. 515.564 of 
this part. Nothing in this Sec. 515.542 authorizes transactions related 
to travel to, from, or within Cuba.

[74 FR 46005, Sept. 8, 2009]



Sec. 515.543  Proof of origin.

    Specific licenses for importation of goods of Cuban origin are 
generally not issued unless the applicant submits satisfactory 
documentary proof of the location of the goods outside Cuba prior to 
July 8, 1963 and of the absence of any Cuban interest in the goods at 
all times on or since that date. Since the type of document which would 
constitute satisfactory proof varies depending upon the facts of the 
particular case, it is not possible to state in advance the type of 
documents required. However, it has been found that affidavits, 
statements, invoices, and other documents prepared by manufacturers, 
processors, sellers or shippers cannot be relied on and are therefore 
not by themselves accepted by the Office of Foreign Assets Control as 
satisfactory proof of origin. Independent corroborating documentary 
evidence, such as insurance documents, bills of lading, etc., may be 
accepted as satisfactory proof.

[39 FR 25317, July 10, 1974]



Sec. 515.544  Gifts of Cuban origin goods.

    (a) Except as stated in paragraph (b) of this section, specific 
licenses are not issued for the importation of Cuban-origin goods sent 
as gifts to persons in the United States or acquired abroad as gifts by 
persons entering the United States. However, licenses are issued upon 
request for the return of such goods to the donors in countries other 
than Cuba.
    (b) Specific licenses are issued for the importation directly from 
Cuba:
    (1) Of goods which are claimed by the importer to have been sent as 
a bona fide gift or
    (2) Of goods which are imported by a person entering the U.S., which 
are claimed to have been acquired in Cuba as a bona fide gift, subject 
to the conditions that:
    (i) The goods are of small value, and
    (ii) There is no reason to believe that there is, or has been since 
July 8, 1963, any direct or indirect financial or commercial benefit to 
Cuba or nationals thereof from the importation.

[39 FR 25317, July 10, 1974; 39 FR 28434, Aug. 7, 1974, as amended at 49 
FR 27144, July 2, 1984]



Sec. 515.545  Transactions related to information and informational 
materials.

    (a) Transactions relating to the dissemination of informational 
materials are authorized, including remittance of royalties paid for 
informational materials that are reproduced, translated, subtitled, or 
dubbed. This section does not authorize the remittance of royalties or 
other payments relating to works not yet in being, or for marketing and 
business consulting services, or artistic or other substantive 
alteration or enhancements to informational materials, as provided in 
Sec. 515.206(a)(3).
    (b) Specific licenses may be issued on a case-by-case basis 
authorizing the travel-related transactions set forth in Sec. 
515.560(c) for purposes related to the exportation, importation, or 
transmission of information or informational materials as defined in 
Sec. 515.332.

    Note to Sec. 515.545. With respect to transactions necessary and 
ordinarily incident to the publishing and marketing of manuscripts, 
books, journals and newspapers, see Sec. 515.577.

[54 FR 5234, Feb. 2, 1989, as amended at 60 FR 39257, Aug. 2, 1995; 64 
FR 25813, May 13, 1999; 69 FR 75469, Dec. 17, 2004; 74 FR 46006, Sept. 
8, 2009]



Sec. 515.546  Accounts of Cuban sole proprietorships.

    Specific licenses are issued unblocking sole proprietorships 
established under the laws of Cuba if the proprietor has emigrated from 
Cuba and established residence in the United States or a country in the 
authorized trade territory.

[39 FR 25319, July 10, 1974. Redesignated at 64 FR 25813, May 13, 1999]



Sec. 515.547  Research samples.

    Specific licenses are issued for importation of Cuban-origin 
commodities for

[[Page 97]]

bona-fide research purposes in sample quantities only.

[39 FR 25318, July 10, 1974]



Sec. 515.548  Services rendered by Cuba to United States aircraft.

    Specific licenses are issued for payment to Cuba of charges for 
services rendered by Cuba in connection with overflights of Cuba or 
emergency landings in Cuba, of private, commercial or government-owned 
United States aircraft.

[39 FR 25318, July 10, 1974, as amended at 49 FR 27144, July 2, 1984]



Sec. 515.549  Bank accounts and other property of non-Cuban citizens 
who were in Cuba on or after July 8, 1963.

    (a) Citizens of foreign countries. Specific licenses are issued 
unblocking the accounts and other property of non-Cuban citizens who 
have left Cuba, provided that they submit evidence satisfactorily 
demonstrating that they have established residence in a foreign country 
in the authorized trade territory.
    (b) Decedents who died in Cuba on or after July 8, 1963. Specific 
licenses are issued authorizing the administration of the estates of 
non-Cuban decedents who died in Cuba, provided that any distribution to 
a blocked national of Cuba is made by deposit in a blocked account in a 
domestic bank in the name of the blocked national.

[39 FR 25318, July 10, 1974]



Sec. 515.550  Certain vessel transactions authorized.

    Unless a vessel has otherwise engaged in transactions that would 
prohibit entry pursuant to Sec. 515.207, Sec. 515.207 shall not apply 
to a vessel that is:
    (a) Engaging in trade with Cuba authorized by licenses issued 
pursuant to Sec. 515.533 or Sec. 515.559; or
    (b) Engaging in trade with Cuba that is exempt from the prohibitions 
of this part (see Sec. 515.206).

[64 FR 25813, May 13, 1999]



Sec. 515.551  Joint bank accounts.

    (a) Specific licenses are issued unblocking a portion of or all of a 
joint bank account blocked by reason of the fact that one or more of the 
persons in whose names the account is held is a blocked national, where 
a non-blocked applicant claims beneficial ownership, as follows:
    (1) Joint bank account, without survivorship provisions. Specific 
licenses are issued unblocking only that amount with respect to which 
the applicant is able to prove beneficial ownership by documentary 
evidence independent of his assertions of interest.
    (2) Joint bank account, with survivorship provisions. Specific 
licenses are issued unblocking an amount equivalent to that portion of 
the total amount to which the applicant would be entitled if the total 
were divided evenly among the persons in whose names the account is held 
(e.g. 50 percent where there are two names; 33\1/3\ percent where there 
are three names). Such licenses generally are issued on the basis of 
applicant's assertions of beneficial ownership interest without the 
requirement of independent evidence.
    (3) Joint bank account in the names of a husband and wife, with 
survivorship provision. Specific licenses are issued unblocking portions 
of such accounts blocked by reason of the residence of one spouse in 
Cuba in favor of the non-blocked spouse under the policy stated in 
paragraph (a)(2) of this section. However, if 50 percent of the account 
has been unblocked under that policy, and the spouse who is the blocked 
Cuban national subsequently dies, the surviving spouse may be entitled 
to a license unblocking the remainder of the assets under Sec. 515.522.
    (b) [Reserved]

[39 FR 25318, July 10, 1974, as amended at 49 FR 27145, July 2, 1984; 54 
FR 5234, Feb. 2, 1989; 64 FR 25813, May 13, 1999]



Sec. 515.552  Proceeds of insurance policies.

    (a) Specific licenses are issued authorizing payment of the proceeds 
of blocked life insurance policies issued on the life of a Cuban 
national who died in Cuba after July 8, 1963, to certain beneficiaries 
licensed as unblocked nationals pursuant to Sec. 515.505, as follows:

[[Page 98]]

    (1) The applicant is a permanent resident of the United States or 
the authorized trade territory and is not a specially designated 
national; and
    (2) No interest on the part of a designated national not licensed as 
an unblocked national exists in that portion of the funds to which the 
applicant is entitled.
    (b) Applications for specific licenses under this section must 
include all of the following information:
    (1) Proof of permanent residence in the United States or the 
authorized trade territory, to be established by the submission of 
documentation issued by relevant government authorities that must 
include at least two of the following documents:
    (i) Passport;
    (ii) Voter registration card;
    (iii) Permanent resident alien card; or
    (iv) National identity card.

Other documents tending to show residency, such as income tax returns, 
may also be submitted in support of government documentation, but will 
not suffice in and of themselves;
    (2) Proof of entitlement under the insurance policy to be 
established by a copy of the policy and an affidavit from an appropriate 
officer of a recognized insurance company acknowledging the legitimacy 
of the beneficiary's claim and the amount of the payment; and
    (c) Any document provided pursuant to this section that is not 
written in the English language must be accompanied by a translation 
into English, as well as a certification by the translator that he is 
not an interested party to the proceeding, is qualified to make the 
translation, and has made an accurate translation of the document in 
question.

[54 FR 5234, Feb. 2, 1989]



Sec. 515.553  Bank accounts of official representatives in Cuba of 
foreign governments.

    Specific licenses are issued authorizing payments from accounts of 
official representatives in Cuba of foreign governments for transactions 
which are not inconsistent with the purposes of any of the regulations 
in this chapter.

[39 FR 25319, July 10, 1974]



Sec. 515.554  Transfers of abandoned property under State laws.

    (a) Except as stated in paragraphs (b) and (c) of this section, 
specific licenses are not issued authorizing the transfer of blocked 
property to State agencies under State laws governing abandoned 
property.
    (b) Specific licenses are issued authorizing the transfer of blocked 
property, pursuant to the laws of the State governing abandoned 
property, to the appropriate State agency: Provided, That the State's 
laws are custodial in nature, i.e., there is no permanent transfer of 
beneficial interest to the State. Licenses require the property to be 
held by the State in accounts which are identified as blocked under the 
regulations. A separate index of these blocked assets is required to be 
maintained by the State agency. The requirements of this section for 
identification and separate indexing of blocked assets apply to all 
blocked assets held by State agencies and any licenses issued prior to 
the effective date of this section hereby are amended by the 
incorporation of such requirements.
    (c) To be eligible for a specific license under this section, the 
state agency must demonstrate that it has the statutory authority under 
appropriate state law to comply with the requirements of Sec. 515.205. 
Such a showing shall include an opinion of the State Attorney General 
that such statutory authority exists.

[44 FR 11771, Mar. 2, 1979]



Sec. 515.555  Assets of Cuban firms wholly or substantially owned by
U.S. citizens.

    (a) Specific licenses are issued to applicants requesting the 
unblocking of their stock in Cuban corporations if:
    (1) The corporation was wholly or substantially owned by United 
States citizens on July 8, 1963;
    (2) The assets are in the United States and either;
    (3) The applicant is a stockholder who was a United States citizen 
on

[[Page 99]]

July 8, 1963 and owned the stock interests on that date; or,
    (4) The applicant is a non-blocked person who acquired such stock 
interest after July 8, 1963 from a person specified in paragraph (a)(3) 
of this section.
    (b) The issuance of licenses is conditioned on the applicant's 
furnishing the following information:
    (1) Detailed information as to the status of all debts and other 
obligations of the Cuban corporation, specifying the citizenship and 
residence of each creditor as of July 8, 1963, and as of the date of 
filing of the application;
    (2) Current status of the Cuban corporation, e.g., liquidated, 
nationalized, inoperative, etc.;
    (3) A detailed description of all the corporation's assets, wherever 
located;
    (4) A list of all officers, directors, and stockholders giving the 
citizenship and the residence of each such person as of July 8, 1963; 
and,
    (5) Satisfactory proof that such stock was owned by U.S. citizens as 
of July 8, 1963. Such proof may consist of sworn statements by the 
persons in question attesting to their citizenship. The Office of 
Foreign Assets Control reserves the right to require additional proof of 
citizenship.

[39 FR 25319, July 10, 1974]



Sec. 515.556  [Reserved]



Sec. 515.557  Accounts of Cuban partnerships.

    Specific licenses are issued unblocking partnerships established 
under the laws of Cuba as follows:
    (a) Where all of the general partners and limited partners, if any, 
have emigrated from Cuba and have established residence in the United 
States or in a country in the authorized trade territory, specific 
licenses are issued unblocking the assets of the partnership after 
deducting the total debt due creditors wherever located.
    (b) Where one or more partners, whether general or limited, is still 
in Cuba (or elsewhere but still blocked), specific licenses are issued 
unblocking only the net pro-rata shares of those partners who are 
resident in the United States or in a country in the authorized trade 
territory after deducting the total debt due creditors wherever located.
    (c) The issuance of licenses is conditioned on the applicant's 
furnishing the following information:
    (1) Detailed information as to the status of all debts and other 
obligations of the blocked partnership, specifying the citizenship and 
residence of each creditor as of July 8, 1963, and as of the date of the 
application;
    (2) Current status of the Cuban partnership, e.g., liquidated, 
nationalized, inoperative, etc.;
    (3) A detailed description of all the partnership's assets, wherever 
located; and,
    (4) A list of all partners, indicating whether they are general, 
limited, etc. and giving their citizenship and residence as of July 8, 
1963, and as of the date of filing of the application.

[39 FR 25319, July 10, 1974]



Sec. 515.558  Bunkering of Cuban vessels and fueling of Cuban aircraft
by American-owned or controlled foreign firms.

    Foreign firms owned or controlled by United States persons are 
authorized to engage in transactions ordinarily incident to the 
bunkering of vessels and to the fueling of aircraft owned or controlled 
by, or chartered to, Cuba or nationals thereof.

(50 U.S.C. App. 5(b); 22 U.S.C. 2370(a); E. O. 9193, 3 CFR 1943 Cum. 
Supp.; Treas. Dept. Order No. 128, 32 FR 3472)

[42 FR 58518, Nov. 10, 1977; 43 FR 19852, May 9, 1978. Redesignated at 
64 FR 25813, May 13, 1999]



Sec. 515.559  Certain transactions by U.S.-owned or controlled foreign
firms with Cuba.

    (a) Effective October 23, 1992, no specific licenses will be issued 
pursuant to paragraph (b) of this section for transactions between U.S.-
owned or controlled firms in third countries and Cuba for the 
exportation to Cuba of commodities produced in the authorized trade zone 
or for the importation of goods of Cuban origin into countries in the 
authorized trade zone, unless, in addition to meeting all requirements 
of paragraph (b), one or more of the following conditions are satisfied:

[[Page 100]]

    (1) The contract underlying the proposed transaction was entered 
into prior to October 23, 1992;
    (2) The transaction is for the exportation of medicine or medical 
supplies from a third country to Cuba, which shall not be restricted:
    (i) Except to the extent such restrictions would be permitted under 
section 5(m) of the Export Administration Act of 1979 or section 
203(b)(2) of the International Emergency Economic Powers Act if the 
exportation were subject to these provisions;
    (ii) Except in a case in which there is a reasonable likelihood that 
the item to be exported will be used for purposes of torture or other 
human rights abuses;
    (iii) Except in a case in which there is a reasonable likelihood 
that the item to be exported will be reexported; or
    (iv) Except in a case in which the item to be exported could be used 
in the production of any biotechnological product; and
    (v) Except in a case where it is determined that the United States 
Government is unable to verify, by on-site inspection or other means, 
that the item to be exported will be used for the purpose for which it 
was intended and only for the use and benefit of the Cuban people, but 
this exception shall not apply to donations for humanitarian purposes to 
a nongovernmental organization in Cuba.
    (3) The transaction is for the exportation of telecommunications 
equipment from a third country, when the equipment is determined to be 
necessary for efficient and adequate telecommunications service between 
the United States and Cuba.
    (b) Specific licenses will be issued in appropriate cases for 
certain categories of transactions between U.S.-owned or controlled 
firms in third countries and Cuba, where local law requires, or policy 
in the third country favors, trade with Cuba. The categories include:
    (1) Exportation to Cuba of commodities produced in the authorized 
trade territory, provided:
    (i) The commodities to be exported are non-strategic;
    (ii) United States-origin technical data (other than maintenance, 
repair and operations data) will not be transferred;
    (iii) If any U.S.-origin parts and components are included therein, 
such inclusion has been authorized by the Department of Commerce;
    (iv) If any U.S.-origin spares are to be reexported to Cuba in 
connection with a licensed transaction, such reexport has been 
authorized by the Department of Commerce;
    (v) No U.S. dollar accounts are involved; and
    (vi) Any financing or other extension of credit by a U.S.-owned or 
controlled firm is granted on normal short-term conditions which are 
appropriate for the commodity to be exported.
    (2) Travel-related transactions set forth in Sec. 515.560(c) and 
other transactions that are directly incident to marketing, sales 
negotiation, accompanied delivery, or servicing of exports that are 
consistent with the licensing policy under this section.
    (3) Importation of goods of Cuban origin into countries in the 
authorized trade territory.

    Note to paragraph (b): On October 23, 1992, sections 1705 and 1706 
of the Cuban Democracy Act of 1992, Pub. L. 102-484 (Oct. 23, 1992) 
(codified at 22 U.S.C. 6004 and 6005, respectively), prohibited OFAC 
from issuing licenses for any transaction described in this paragraph 
other than those transactions currently set forth in paragraph (a).

    (c) The term strategic goods means any item, regardless of origin, 
of a type included in the Commodity Control List of the U.S. Department 
of Commerce (15 CFR part 399) and identified by the code letter ``A'' 
following the Export Control Commodity Numbers, or of a type the 
unauthorized exportation of which from the United States is prohibited 
by regulations issued under the Arms Export Control Act of 1976, 22 
U.S.C. 2778, or under the Atomic Energy Act of 1954, 42 U.S.C. 2011, et 
seq., or successor acts restricting the export of strategic goods.

    Note to Sec. 515.559: For reexportation of U.S.-origin goods, 
wares, or merchandise by U.S.-owned or controlled foreign firms, see 
Sec. 515.533. Transactions by U.S.-owned or controlled foreign firms 
directly incident to the exportation of information or informational 
materials or the donation of food to nongovernmental entities or 
individuals in Cuba are exempt from the prohibitions of this

[[Page 101]]

part. See Sec. 515.206. For the waiver of the prohibitions contained in 
Sec. 515.207 with respect to vessels transporting shipments of goods, 
wares, or merchandise pursuant to this section, see Sec. 515.550.

[40 FR 47108, Oct. 8, 1975, as amended at 42 FR 1472, Jan. 7, 1977; 42 
FR 16621, Mar. 29, 1977; 50 FR 27438, July 3, 1985; 53 FR 47527, Nov. 
23, 1988; 58 FR 34710, June 29, 1993; 64 FR 25814, May 13, 1999; 66 FR 
36687, July 12, 2001; 68 FR 14146, Mar. 24, 2003]



Sec. 515.560  Travel-related transactions to, from, and within Cuba by
persons subject to U.S. jurisdiction.

    (a) The travel-related transactions listed in paragraph (c) of this 
section may be authorized either by a general license or on a case-by-
case basis by a specific license for travel related to the following 
activities (see the referenced sections for the applicable general and 
specific licensing criteria):
    (1) Family visits (general and specific licenses) (see Sec. 
515.561);
    (2) Official business of the U.S. government, foreign governments, 
and certain intergovernmental organizations (general license) (see Sec. 
515.562);
    (3) Journalistic activity (general and specific licenses) (see Sec. 
515.563);
    (4) Professional research and professional meetings (general and 
specific licenses) (see Sec. 515.564);
    (5) Educational activities (general and specific licenses) (see 
Sec. 515.565);
    (6) Religious activities (general and specific licenses) (see Sec. 
515.566);
    (7) Public performances, clinics, workshops, athletic and other 
competitions, and exhibitions (specific licenses) (see Sec. 515.567);
    (8) Support for the Cuban people (specific licenses) (see Sec. 
515.574);
    (9) Humanitarian projects (specific licenses) (see Sec. 515.575);
    (10) Activities of private foundations or research or educational 
institutes (specific licenses) (see Sec. 515.576);
    (11) Exportation, importation, or transmission of information or 
informational materials (specific licenses) (see Sec. 515.545); and
    (12) Certain export transactions that may be considered for 
authorization under existing Department of Commerce regulations and 
guidelines with respect to Cuba or engaged in by U.S.-owned or -
controlled foreign firms (general and specific licenses) (see Sec. Sec. 
515.533 and 515.559).
    (b) Effective October 28, 2000, no specific licenses will be issued 
authorizing the travel-related transactions in paragraph (c) of this 
section in connection with activities other than those referenced in 
paragraph (a) of this section.
    (c) Persons generally or specifically licensed under this part to 
engage in transactions in connection with travel to, from, and within 
Cuba may engage in the following transactions:
    (1) Transportation to and from Cuba. All transportation-related 
transactions ordinarily incident to travel to and from (not within) Cuba 
are authorized.
    (2) Living expenses in Cuba. All transactions ordinarily incident to 
travel anywhere within Cuba, including payment of living expenses and 
the acquisition in Cuba of goods for personal consumption there, are 
authorized, provided that, unless otherwise authorized, the total for 
such expenses does not exceed the ``maximum per diem rate'' for Havana, 
Cuba, in effect during the period that the travel takes place. The 
maximum per diem rate is published in the Department of State's 
``Maximum Travel per Diem Allowances for Foreign Areas,'' a supplement 
to section 925, Department of State Standardized Regulations (Government 
Civilians, Foreign Areas), which is available from the Government 
Printing Office, Superintendent of Documents, P.O. Box 371945, 
Pittsburgh, PA 1520-7954, and on the Department of State's Office of 
Allowances Web site (http://aoprals.state.gov).
    (3) Importation of Cuban merchandise prohibited. Nothing in this 
section authorizes the importation into the United States of any 
merchandise purchased or otherwise acquired in Cuba, including but not 
limited to any importation of such merchandise as accompanied baggage. 
The importation of Cuban-origin information and informational materials 
is exempt from the prohibitions of this part, as described in Sec. 
515.206.
    (4) Carrying remittances to Cuba. The carrying to Cuba of any 
remittances that the licensed traveler is authorized to remit pursuant 
to Sec. 515.570 is authorized, provided that:

[[Page 102]]

    (i) The total of all remittances authorized by Sec. 515.570(a) 
through (d) does not exceed $3,000; and
    (ii) No emigration remittances authorized by Sec. 515.570(e) are 
carried to Cuba unless a U.S. immigration visa has been issued for each 
payee and the licensed traveler can produce the visa recipients' full 
names, dates of birth, visa numbers, and visa dates of issuance.

    Note to paragraph (c)(4): This paragraph does not authorize a 
traveler to carry remittances on behalf of other remitters.

    (5) Processing certain financial instruments. All transactions 
incident to the processing and payment of checks, drafts, travelers' 
checks, and similar instruments negotiated in Cuba by any person 
authorized pursuant to this part to engage in financial transactions in 
Cuba. For purposes of this section, the authorized transactions may be 
conducted using currency, which is defined as money, cash, drafts, 
notes, travelers' checks, negotiable instruments, or scrip having a 
specified or readily determinable face value or worth, but which does 
not include gold or other precious metals in any form.
    (d) A blocked Cuban national permanently resident outside the United 
States who is departing the United States may carry currency, as that 
term is defined in paragraph (c)(5) of this section, as follows:
    (1) The amount of any currency brought into the United States by the 
Cuban national and registered with U.S. Customs and Border Protection 
upon entry;
    (2) Up to $3,000 in funds received as remittances by the Cuban 
national during his or her stay in the United States; and
    (3) Compensation earned by a Cuban national from a U.S. academic 
institution up to any amount that can be substantiated through payment 
receipts from such institution as authorized pursuant to Sec. 
515.565(a)(5).
    (e) The following transactions by persons generally or specifically 
licensed to engage in travel-related transactions to, from, and within 
Cuba are prohibited by Sec. 515.201 unless specifically authorized:
    (1) All transactions by persons subject to U.S. jurisdiction related 
to the utilization of charge cards, including but not limited to debit 
or credit cards, for expenditures in Cuba.
    (2) All transactions related to the processing and payment by 
persons subject to U.S. jurisdiction, such as charge card issuers or 
intermediary banks, of charge card instruments (e.g., vouchers, drafts, 
or sales receipts) for expenditures in Cuba. The issuer of a charge 
card, or a foreign charge card firm owned or controlled by persons 
subject to U.S. jurisdiction, is not authorized to deal with a Cuban 
enterprise, a Cuban national, or a third-country person, such as a 
franchisee, in connection with the extension of charge card services to 
any person in Cuba.
    (f) Nothing in this section authorizes transactions in connection 
with tourist travel to Cuba.

[64 FR 25814, May 13, 1999, as amended at 66 FR 36688, July 12, 2001; 68 
FR 14146, Mar. 24, 2003; 69 FR 33771 and 33773, June 16, 2004; 74 FR 
46006, Sept. 8, 2009; 76 FR 5074, Jan. 28, 2011]



Sec. 515.561  Persons visiting close relatives in Cuba.

    (a) General license. (1) Persons subject to the jurisdiction of the 
United States and persons traveling with them who share a common 
dwelling as a family with them are authorized to engage in the travel-
related transactions set forth in Sec. 515.560(c) and additional 
transactions directly incident to visiting a close relative, as defined 
in Sec. 515.339 of this part, who is a national of Cuba, as defined in 
Sec. 515.302 of this part.
    (2) Persons subject to the jurisdiction of the United States and 
persons traveling with them who share a common dwelling as a family with 
them are authorized to engage in the travel-related transactions set 
forth in Sec. 515.560(c) and additional transactions directly incident 
to visiting a close relative, as defined in Sec. 515.339 of this part, 
who is a U.S. Government employee assigned to the U.S. Interests Section 
in Havana.
    (b) Specific licenses. Specific licenses may be issued on a case-by-
case basis authorizing persons subject to the jurisdiction of the United 
States and persons traveling with them who share a common dwelling as a 
family with

[[Page 103]]

them to engage in the travel-related transactions set forth in Sec. 
515.560(c) and additional transactions directly incident to visiting a 
close relative, as defined in Sec. 515.339 of this part, who is neither 
a national of Cuba, as defined in Sec. 515.302 of this part, nor a U.S. 
Government employee assigned to the U.S. Interests Section in Havana.

[74 FR 46006, Sept. 8, 2009]



Sec. 515.562  Officials of the U.S. government, foreign governments,
and certain intergovernmental organizations traveling to, from, and 

within Cuba on official business.

    The travel-related transactions set forth in Sec. 515.560(c) and 
such additional transactions as are directly incident to activities in 
their official capacities by persons who are officials of the United 
States Government, any foreign government, or any intergovernmental 
organization of which the United States is a member and who are 
traveling on the official business of their government or international 
organization are authorized.

[64 FR 25815, May 13, 1999]



Sec. 515.563  Journalistic activities in Cuba.

    (a) General license. The travel-related transactions set forth in 
Sec. 515.560(c) and such additional transactions as are directly 
incident to journalistic activities in Cuba by persons regularly 
employed as journalists by a news reporting organization or by persons 
regularly employed as supporting broadcast or technical personnel are 
authorized.

    Note to paragraph (a): See Sec. Sec. 501.601 and 501.602 of this 
chapter for applicable recordkeeping and reporting requirements. The 
exportation of equipment and other items to be used in journalistic 
activities may require separate licensing by the Department of Commerce.

    (b) Specific licenses. (1) Specific licenses may be issued on a 
case-by-case basis authorizing the travel-related transactions set forth 
in Sec. 515.560(c) and other transactions that are directly incident to 
journalistic activities in Cuba for a free-lance journalistic project 
upon submission of an adequate written application including the 
following documentation:
    (i) A detailed itinerary and a detailed description of the proposed 
journalistic activities; and
    (ii) A resume or similar document showing a record of journalism.
    (2) To qualify for a specific license pursuant to this section, the 
itinerary in Cuba for a free-lance journalistic project must demonstrate 
that the journalistic activities constitute a full work schedule that 
could not be accomplished in a shorter period of time.
    (3) Specific licenses may be issued pursuant to this section 
authorizing transactions for multiple trips to Cuba over an extended 
period of time by applicants demonstrating a significant record of 
journalism.

[64 FR 25815, May 13, 1999, as amended at 76 FR 5075, Jan. 28, 2011]



Sec. 515.564  Professional research and professional meetings in Cuba.

    (a) General license--(1) Professional research. The travel-related 
transactions set forth in Sec. 515.560(c) and such additional 
transactions that are directly incident to professional research by 
full-time professionals who travel to Cuba to conduct professional 
research in their professional areas are authorized, provided that:
    (i) The research is of a noncommercial, academic nature;
    (ii) The research comprises a full work schedule in Cuba;
    (iii) The research has a substantial likelihood of public 
dissemination; and
    (iv) The research does not fall within the categories of activities 
described in paragraph (c), (d), or (e) of this section.

    Note to paragraph (a)(1): This general license does not authorize as 
professional research any travel-related transactions incident to 
attendance at professional meetings or conferences. Such transactions 
must either qualify under the general license set forth in paragraph 
(a)(2) of this section or be the subject of a request for a specific 
license under paragraph (b) of this section.

    (2) Professional meetings organized by an international professional 
organization. The travel-related transactions set forth in Sec. 
515.560(c) and such additional transactions as are directly incident to 
travel to Cuba by full-time professionals to attend professional 
meetings or conferences in Cuba organized

[[Page 104]]

by an international professional organization, institution, or 
association that regularly sponsors meetings or conferences in other 
countries are authorized, provided that:
    (i) The international professional organization, institution, or 
association is not headquartered in the United States unless that 
organization, institution, or association has been specifically licensed 
to sponsor the meeting in Cuba;
    (ii) The purpose of the meeting or conference is not the promotion 
of tourism in Cuba or other commercial activities involving Cuba that 
are inconsistent with this part; and
    (iii) The meeting or conference is not intended primarily for the 
purpose of fostering production of any biotechnological products.
    (3) Professional meetings for commercial telecommunications 
transactions. The travel-related transactions set forth in Sec. 
515.560(c) and additional transactions directly incident to 
participation in professional meetings for the commercial marketing of, 
sales negotiation for, or performance under contracts for the provision 
of the telecommunications services, or the establishment of facilities 
to provide telecommunications services, authorized by paragraphs (b), 
(c), or (d)(1) of Sec. 515.542 of this part by a telecommunications 
services provider that is a person subject to U.S. jurisdiction are 
authorized, provided that:
    (i) The traveler is regularly employed by a telecommunications 
services provider that is a person subject to U.S. jurisdiction or by an 
entity duly appointed to represent such a provider; and
    (ii) The traveler's schedule of activities does not include free 
time, travel, or recreation in excess of that consistent with a full 
work schedule.

    Note to paragraph (a): See Sec. Sec. 501.601 and 501.602 of this 
chapter for applicable recordkeeping and reporting requirements. 
Exportation of equipment and other items, including the transfer of 
technology or software to foreign persons (``deemed exportation'') and 
items not eligible for Department of Commerce GFT or BAG License 
Exceptions, 15 CFR 740.12 and 740.14, may require separate authorization 
by the Department of Commerce.

    (b) Specific licensing. Specific licenses may be issued on a case-
by-case basis authorizing the travel-related transactions set forth in 
Sec. 515.560(c) and other transactions that are directly incident to 
professional research and professional meetings that do not qualify for 
the general license in paragraph (a) of this section. Specific licenses 
may be issued pursuant to this section authorizing transactions for 
multiple trips to Cuba over an extended period of time by applicants 
demonstrating a significant record of research. Specific licenses will 
not be issued for travel-related transactions for purposes of attendance 
at meetings or conferences in Cuba organized by the Cuban government 
where such meetings or conferences could be intended primarily for the 
purpose of fostering the production of any biotechnological products.
    (c) Categories of activities that do not qualify for the general 
license in paragraph (a) of this section and for which the specific 
licenses described in paragraph (b) of this section will not be issued 
include recreational travel; tourist travel; travel in pursuit of a 
hobby; research for personal satisfaction only; and any travel for an 
authorized professional research purpose if the schedule of activities 
includes free time, travel, or recreation in excess of that consistent 
with a full work schedule of professional research or attendance at 
professional meetings or conferences.
    (d) An entire group does not qualify for the general license in 
paragraph (a) of this section and will not be issued a specific license 
under paragraph (b) of this section merely because some members of the 
group could qualify individually for such licenses.

    Example 1 to paragraph (d): A musicologist travels to Cuba to do 
research on Cuban music pursuant to the general license for professional 
researchers set forth in paragraph (a) of this section. Others who are 
simply interested in music but who do not research music as part of 
their careers may not engage in travel-related transactions with the 
musicologist in reliance on this general license. For example, an art 
historian who plays in the same band with the musicologist would not 
qualify as a professional researcher of Cuban music for purposes of this 
general license.

[[Page 105]]

    Example 2 to paragraph (d): A specific license issued pursuant to 
paragraph (b) of this section authorizing travel-related transactions by 
a fish biologist who travels to Cuba to engage in professional research 
does not authorize transactions by other persons who might travel with 
the fish biologist but whose principal purpose in travel is to engage in 
recreational or trophy fishing. The fact that such persons may engage in 
certain activities with or under the direction of the professional fish 
biologist, such as measuring or recording facts about their catch, does 
not bring these individuals' activities within the scope of professional 
research and similar activities.

    (e) A person will not qualify as engaging in professional research 
merely because that person is a professional who plans to travel to 
Cuba.

    Example 1 to paragraph (e): A professor of history interested in 
traveling to Cuba for the principal purpose of learning or practicing 
Spanish or attending general purpose lectures devoted to Cuban culture 
and contemporary life does not qualify for the general license in 
paragraph (a) of this section or for a specific license issued pursuant 
to paragraph (b) of this section.
    Example 2 to paragraph (e): A professional photographer who wishes 
to take photographs in Cuba that will become the basis for creating post 
cards, paintings, and other secondary products or that merely document 
the photographer's travel does not qualify for the general license in 
paragraph (a) of this section or for a specific license issued pursuant 
to paragraph (b) of this section.

[64 FR 25815, May 13, 1999, as amended at 69 FR 33772, June 16, 2004; 74 
FR 46006, Sept. 8, 2009]



Sec. 515.565  Educational activities.

    (a) General license. Accredited U.S. graduate and undergraduate 
degree-granting academic institutions, including faculty, staff, and 
students of such institutions, are authorized to engage in the travel-
related transactions set forth in Sec. 515.560(c) and such additional 
transactions that are directly incident to:
    (1) Participation in a structured educational program in Cuba as 
part of a course offered for credit by the sponsoring U.S. academic 
institution. An individual traveling to engage in such transactions must 
carry a letter on official letterhead, signed by a designated 
representative of the sponsoring U.S. academic institution, stating that 
the Cuba-related travel is part of a structured educational program of 
the sponsoring U.S. academic institution, and stating that the 
individual is a member of the faculty or staff of that institution or is 
a student currently enrolled in a graduate or undergraduate degree 
program at an accredited U.S. academic institution and that the study in 
Cuba will be accepted for credit toward that degree;
    (2) Noncommercial academic research in Cuba specifically related to 
Cuba and for the purpose of obtaining a graduate degree. A student 
traveling to engage in such transactions must carry a letter on official 
letterhead, signed by a designated representative of the sponsoring U.S. 
academic institution, stating that the individual is a student currently 
enrolled in a graduate degree program at an accredited U.S. academic 
institution, and stating that the research in Cuba will be accepted for 
credit toward that degree;
    (3) Participation in a formal course of study at a Cuban academic 
institution, provided the formal course of study in Cuba will be 
accepted for credit toward the student's graduate or undergraduate 
degree. An individual traveling to engage in such transactions must 
carry a letter on official letterhead, signed by a designated 
representative of the sponsoring U.S. academic institution, stating that 
the individual is a student currently enrolled in a graduate or 
undergraduate degree program at an accredited U.S. academic institution 
and that the study in Cuba will be accepted for credit toward that 
degree;
    (4) Teaching at a Cuban academic institution by an individual 
regularly employed in a teaching capacity at the sponsoring U.S. 
academic institution, provided the teaching activities are related to an 
academic program at the Cuban institution and provided that the duration 
of the teaching will be no shorter than 10 weeks. An individual 
traveling to engage in such transactions must carry a letter on official 
letterhead, signed by a designated representative of the sponsoring U.S. 
academic institution, stating that the individual is regularly employed 
in a teaching capacity at that institution;
    (5) Sponsorship, including the payment of a stipend or salary, of a 
Cuban

[[Page 106]]

scholar to teach or engage in other scholarly activity at the sponsoring 
U.S. academic institution (in addition to those transactions authorized 
by the general license contained in Sec. 515.571). Such earnings may be 
remitted to Cuba as provided in Sec. 515.570 or carried on the person 
of the Cuban scholar returning to Cuba as provided in Sec. 
515.560(d)(3); or
    (6) The organization of, and preparation for, activities described 
in paragraphs (a)(1) through (a)(5) of this section by members of the 
faculty and staff of the sponsoring U.S. academic institution. An 
individual engaging in such transactions must carry a letter on official 
letterhead, signed by a designated representative of the sponsoring U.S. 
academic institution, stating that the individual is a member of the 
faculty or staff of that institution, and is traveling to engage in the 
transactions authorized by this paragraph on behalf of that institution.

    Note 1 to paragraph (a): U.S. academic institutions and individual 
travelers must retain records related to the travel transactions 
authorized pursuant to this paragraph. See Sec. Sec. 501.601 and 
501.602 of this chapter for applicable recordkeeping and reporting 
requirements. Exportation of equipment and other items, including the 
transfer of technology or software to foreign persons (``deemed 
exportation''), may require separate authorization from the Department 
of Commerce.
    Note 2 to paragraph (a): This paragraph authorizes all members of 
the faculty and staff (including but not limited to adjunct faculty and 
part-time staff) of the sponsoring U.S. academic institution to 
participate in the activities described in this paragraph. A student 
currently enrolled in a graduate or undergraduate degree program at any 
accredited U.S. academic institution is authorized pursuant to this 
paragraph to participate in the academic activities in Cuba described 
above through any sponsoring U.S. academic institution, not only through 
the institution at which the student is pursuing a degree.

    (b) Specific licenses. Specific licenses may be issued on a case-by-
case basis authorizing the travel-related transactions set forth in 
Sec. 515.560(c) and other transactions directly incident to:
    (1) An individual's educational activities of the types described in 
paragraphs (a)(2) through (a)(4) of this section but not authorized by 
the general license contained in paragraph (a) of this section;
    (2) Educational exchanges not involving academic study pursuant to a 
degree program when those exchanges take place under the auspices of an 
organization that sponsors and organizes such programs to promote 
people-to-people contact; or
    (3) Sponsorship or co-sponsorship by an accredited U.S. graduate or 
undergraduate degree-granting academic institution of academic seminars, 
conferences, and workshops related to Cuba or global issues involving 
Cuba and attendance at such events by faculty, staff, and students of 
the licensed institution.
    (c) Transactions related to activities that are primarily tourist-
oriented, including self-directed educational activities that are 
intended only for personal enrichment, will not be authorized pursuant 
to this section.
    (d) For the purposes of this section, the term designated 
representative of the sponsoring U.S. academic institution means a 
person designated by the relevant dean or the academic vice-president, 
provost, or president of the institution as the official responsible for 
overseeing the institution's Cuba travel program.

    Note to Sec. 515.565: Accredited U.S. academic institutions 
engaging in activities authorized pursuant to this section are permitted 
to open and maintain accounts at Cuban financial institutions for the 
purpose of accessing funds in Cuba for transactions authorized pursuant 
to this section.

[76 FR 5075, Jan. 28, 2011]



Sec. 515.566  Religious activities in Cuba.

    (a) General license. Religious organizations located in the United 
States, including members and staff of such organizations, are 
authorized to engage in the travel-related transactions set forth in 
Sec. 515.560(c) and such additional transactions as are directly 
incident to religious activities in Cuba under the auspices of the 
organization. Travel-related transactions pursuant to this authorization 
must be for the purpose of engaging, while in Cuba, in a full-time 
program of religious activities. Financial and material donations to 
Cuba or Cuban nationals are not authorized by this paragraph (a). All 
individuals who

[[Page 107]]

engage in transactions in which Cuba or Cuban nationals have an interest 
(including travel-related transactions) pursuant to this paragraph (a) 
must carry with them a letter on official letterhead, signed by a 
designated representative of the U.S. religious organization, confirming 
that they are members or staff of the organization and are traveling to 
Cuba to engage in religious activities under the auspices of the 
organization.

    Note to paragraph (a): U.S. religious organizations and individual 
travelers must retain records related to the travel transactions 
authorized pursuant to this paragraph. See Sec. Sec. 501.601 and 
501.602 of this chapter for applicable recordkeeping and reporting 
requirements. Financial donations require separate authorization under 
Sec. 515.570. See Sec. 515.533 for an authorization of the exportation 
of items from the United States to Cuba. Exportation of items to be used 
in Cuba may require separate licensing by the Department of Commerce.

    (b) Specific licenses. Specific licenses may be issued on a case-by-
case basis authorizing the travel-related transactions set forth in 
Sec. 515.560(c) and other transactions that are directly incident to 
religious activities not authorized by the general license contained in 
paragraph (a) of this section. The application for the specific license 
must set forth examples of religious activities to be undertaken in 
Cuba. Specific licenses may be issued pursuant to this section 
authorizing transactions for multiple trips over an extended period of 
time to engage in a full-time program of religious activities in Cuba.
    (c) For the purposes of this section, the term designated 
representative of the U.S. religious organization means a person 
designated as the official responsible for overseeing the organization's 
Cuba travel program.

    Note to Sec. 515.566: Religious organizations engaging in 
activities authorized pursuant to this section are permitted to open and 
maintain accounts at Cuban financial institutions for the purpose of 
accessing funds in Cuba for transactions authorized pursuant to this 
section.

[76 FR 5076, Jan. 28, 2011]



Sec. 515.567  Public performances, clinics, workshops, athletic and 
other competitions, and exhibitions.

    (a) Amateur and semi-professional international sports federation 
competitions. Specific licenses, including for multiple trips to Cuba 
over an extended period of time, may be issued on a case-by-case basis 
authorizing the travel-related transactions set forth in Sec. 
515.560(c) and other transactions that are directly incident to athletic 
competition by amateur or semi-professional athletes or athletic teams 
wishing to travel to participate in athletic competition in Cuba, 
provided that:
    (1) The athletic competition in Cuba is held under the auspices of 
the international sports federation for the relevant sport;
    (2) The U.S. participants in the athletic competition are selected 
by the U.S. federation for the relevant sport; and
    (3) The competition is open for attendance, and in relevant 
situations participation, by the Cuban public.
    (b) Public performances, clinics, workshops, other athletic or non-
athletic competitions, and exhibitions. Specific licenses, including for 
multiple trips to Cuba over an extended period of time, may be issued on 
a case-by-case basis authorizing the travel-related transactions set 
forth in Sec. 515.560(c) and other transactions that are directly 
incident to participation in a public performance, clinic, workshop, 
athletic competition not covered by paragraph (a) of this section, non-
athletic competition, or exhibition in Cuba by participants in such 
activities, provided that:
    (1) The event is open for attendance, and in relevant situations 
participation, by the Cuban public;
    (2) All U.S. profits from the event after costs are donated to an 
independent nongovernmental organization in Cuba or a U.S.-based 
charity, with the objective, to the extent possible, of promoting 
people-to-people contacts or otherwise benefiting the Cuban people; and
    (3) Any clinics or workshops in Cuba must be organized and run, at 
least in part, by the licensee.

[[Page 108]]

    (c) Specific licenses will not be issued pursuant to this section 
authorizing any debit to a blocked account.

    Note to Sec. 515.567: See Sec. 515.571 for the authorization of 
certain transactions related to the activities of nationals of Cuba 
traveling in the United States.

[69 FR 33772, June 16, 2004, as amended at 76 FR 5076, Jan. 28, 2011]]



Sec. 515.568  [Reserved]



Sec. 515.569  Foreign passengers' baggage.

    The importation of Cuban-origin goods, otherwise prohibited by this 
part, brought into the United States as baggage by any person arriving 
in the United States other than a citizen or resident of the United 
States is hereby authorized, notwithstanding the provisions of Sec. 
515.803, provided that such goods are not in commercial quantities and 
are not imported for resale. This authorization does not apply to the 
importation of Cuban-origin alcohol or tobacco products.

[64 FR 25818, May 13, 1999]



Sec. 515.570  Remittances.

    (a) Family remittances authorized. Persons subject to the 
jurisdiction of the United States who are 18 years of age or older are 
authorized to make remittances to nationals of Cuba who are close 
relatives, as defined in Sec. 515.339 of this part, of the remitter, 
provided that:
    (1) The remittances are not made from a blocked source. Certain 
remittances from blocked accounts are authorized pursuant to paragraph 
(f) of this section;
    (2) The recipient is not a prohibited official of the Government of 
Cuba, as defined in Sec. 515.337 of this part, or a prohibited member 
of the Cuban Communist Party, as defined in Sec. 515.338 of this part; 
and
    (3) The remittances are not made for emigration-related purposes. 
Remittances for emigration-related purposes are addressed by paragraph 
(e) of this section.
    (b) Periodic $500 remittances authorized. Persons subject to the 
jurisdiction of the United States are authorized to make remittances to 
Cuban nationals, including, but not limited to, remittances to support 
the development of private businesses, provided that:
    (1) The remitter's total remittances pursuant to paragraph (b) of 
this section to any one Cuban national do not exceed $500 in any 
consecutive three-month period;
    (2) The remittances are not made from a blocked source;
    (3) The recipient is not a prohibited official of the Government of 
Cuba, as defined in Sec. 515.337 of this part, or a prohibited member 
of the Cuban Communist Party, as defined in Sec. 515.338 of this part;
    (4) The remittances are not made for emigration-related purposes. 
Remittances for emigration-related purposes are addressed by paragraph 
(e) of this section; and
    (5) The remitter, if an individual, is 18 years of age or older.
    (c) Remittances to religious organizations in Cuba authorized. 
Persons subject to the jurisdiction of the United States are authorized 
to make remittances to religious organizations in Cuba in support of 
religious activities, provided that the remittances are not made from a 
blocked source and that the remitter, if an individual, is 18 years of 
age or older.
    (d) Remittances to students in Cuba pursuant to an educational 
license authorized. Persons subject to the jurisdiction of the United 
States who are 18 years of age or older are authorized to make 
remittances to close relatives, as defined in Sec. 515.339 of this 
part, who are students in Cuba pursuant to the general license 
authorizing certain educational activities in Sec. 515.565(a) of this 
part or a specific license issued pursuant to Sec. 515.565(b) of this 
part, provided that the remittances are not made from a blocked source 
and are for the purpose of funding transactions authorized by the 
general license in Sec. 515.565(a) of this part or the specific license 
issued pursuant to Sec. 515.565(b) of this part under which the student 
is traveling.
    (e) Two one-time $1,000 emigration-related remittances authorized. 
Persons subject to the jurisdiction of the United States are authorized 
to remit the following amounts:
    (1) Up to $1,000 per payee on a one-time basis to Cuban nationals 
for the

[[Page 109]]

purpose of covering the payees' preliminary expenses associated with 
emigrating from Cuba to the United States. These remittances may be sent 
before the payees have received valid visas issued by the State 
Department or other approved U.S. immigration documents, but may not be 
carried by a licensed traveler to Cuba until the payees have received 
valid visas issued by the State Department or other approved U.S. 
immigration documents. See Sec. 515.560(c)(4) of this part for the 
rules regarding the carrying of authorized remittances to Cuba. These 
remittances may not be made from a blocked source unless authorized 
pursuant to paragraph (f) of this section.
    (2) Up to an additional $1,000 per payee on a one-time basis to 
Cuban nationals for the purpose of enabling the payees to emigrate from 
Cuba to the United States, including for the purchase of airline tickets 
and payment of exit or third-country visa fees or other travel-related 
fees. These remittances may be sent only once the payees have received 
valid visas issued by the State Department or other approved U.S. 
immigration documents. A remitter must be able to provide the visa 
recipients' full names, dates of birth, visa numbers, and visa dates of 
issuance. See Sec. 515.560(c)(4) of this part for the rules regarding 
the carrying of authorized remittances to Cuba. These remittances may 
not be made from a blocked source unless authorized pursuant to 
paragraph (f) of this section.
    (f) Certain remittances from blocked sources authorized. Provided 
the recipient is not a prohibited official of the Government of Cuba, as 
defined in Sec. 515.337 of this part, or a prohibited member of the 
Cuban Communist Party, as defined in Sec. 515.338 of this part, certain 
remittances from blocked sources are authorized as follows:
    (1) Funds deposited in a blocked account in a banking institution in 
the United States held in the name of, or in which the beneficial 
interest is held by, a national of Cuba as a result of a valid 
testamentary disposition, intestate succession, or payment from a life 
insurance policy or annuity contract triggered by the death of the 
policy or contract holder may be remitted:
    (i) To that national of Cuba, provided that s/he is a close 
relative, as defined in Sec. 515.339 of this part, of the decedent;
    (ii) To that national of Cuba as emigration-related remittances in 
the amounts and consistent with the criteria set forth in paragraph (e) 
of this section.
    (2) Up to $300 in any consecutive three-month period may be remitted 
from any blocked account in a banking institution in the United States 
to a Cuban national in a third country who is an individual in whose 
name, or for whose beneficial interest, the account is held.
    (g) Specific licenses. Specific licenses may be issued on a case-by-
case basis authorizing the following:
    (1) Remittances by persons subject to U.S. jurisdiction to 
independent non-governmental entities in Cuba, including but not limited 
to pro-democracy groups and civil society groups, and to members of such 
groups or organizations, or to individuals or independent non-
governmental entities to support the development of private businesses, 
including small farms;
    (2) Remittances from a blocked account to a Cuban national in excess 
of the amount specified in paragraph (f)(2) of this section; or
    (3) Remittances by persons subject to U.S. jurisdiction to a person 
in Cuba, directly or indirectly, for transactions to facilitate non-
immigrant travel by an individual in Cuba to the United States under 
circumstances where humanitarian need is demonstrated, including but not 
limited to illness or other medical emergency.

    Note to Sec. 515.570: For the rules relating to the carrying of 
remittances to Cuba, see Sec. 515.560(c)(4) of this part. Persons 
subject to U.S. jurisdiction are prohibited from engaging in the 
collection or forwarding of remittances to Cuba unless authorized 
pursuant to Sec. 515.572. For a list of authorized U.S. remittance 
service providers other than depository institutions, see the ``List of 
Authorized Providers of Air, Travel and Remittance Forwarding Services 
to Cuba'' available from OFAC's Web site (http://www.treasury.gov/ofac).

[76 FR 5076, Jan. 28, 2011]

[[Page 110]]



Sec. 515.571  Certain transactions incident to travel to, from, and 
within the United States by Cuban nationals.

    (a) Except as provided in paragraph (c) of this section, the 
following transactions by or on behalf of a Cuban national who enters 
the United States on a non-immigrant visa or other non-immigrant travel 
authorization issued by the State Department are authorized:
    (1) All transactions ordinarily incident to travel between the 
United States and Cuba, including the importation into the United States 
of accompanied baggage for personal use;
    (2) All transactions ordinarily incident to travel and maintenance 
within the United States, including the payment of living expenses and 
the acquisition of goods for personal consumption in the United States;
    (3) All transactions on behalf of aircraft or vessels incident to 
non-scheduled flights or voyages between the United States and Cuba, 
provided that the carrier used has a carrier service provider license 
issued pursuant to Sec. 515.572. This paragraph does not authorize the 
carriage of any merchandise into the United States except accompanied 
baggage; and
    (4) Normal banking transactions involving foreign currency drafts, 
travelers' checks, or other instruments negotiated incident to travel in 
the United States by any person under the authority of this section.
    (5) All transactions ordinarily incident to the activities for which 
a visa or other travel authorization was issued.
    (i) This paragraph (a)(5) does not authorize receipt of compensation 
in excess of amounts covering living expenses and the acquisition of 
goods for personal consumption. See Sec. 515.565(a)(5) of this part for 
an authorization of payments to certain Cuban scholars of stipends or 
salaries that exceed this limit.
    (ii) Examples of transactions authorized by this paragraph (a)(5) 
include: the payment of tuition to a U.S. educational institution by a 
national of Cuba issued a student visa; the payment of compensation 
covering only living expenses and the purchase of goods for personal 
consumption to a national of Cuba issued a performance-related visa; and 
the rental of a stage by a Cuban group issued a performance visa.
    (b) Payments and transfers of credit in the United States from 
blocked accounts in domestic banking institutions held in the name of a 
Cuban national who enters the United States on a visa or other travel 
authorization issued by the State Department to or upon the order of 
such Cuban national are authorized provided that:
    (1) Such payments and transfers of credit are made only for the 
living, traveling, and similar personal expenses in the United States of 
such Cuban national or his or her family;
    (2) The total of all such payments and transfers of credit made 
under this section from the accounts of such Cuban national do not 
exceed $250 in any one calendar month; and
    (3) No payment or transfer is made from a blocked account in which a 
specially designated national has an interest.
    (c) This section does not authorize any transfer of property to 
Cuba, or, except as otherwise authorized in paragraph (b) of this 
section, any debit to a blocked account.

    Note to Sec. 515.571: For the authorization of certain transactions 
by Cuban nationals who become U.S. citizens, apply for or receive U.S. 
permanent resident alien status, or are lawfully present in the United 
States in a non-visitor status, see Sec. 515.505 of this part.

[64 FR 25819, May 13, 1999, as amended at 68 FR 14148, Mar. 24, 2003; 69 
FR 33773, June 16, 2004; 76 FR 5077, Jan. 28, 2011]



Sec. 515.572  Authorization of transactions incident to the provision
of travel services, carrier services, and remittance forwarding 

services.

    (a)(1) Authorization of travel service provider. The following 
persons wishing to provide services in connection with travel to Cuba 
are ``travel service providers'' for purposes of this part: Travel 
agents, ticket agents, commercial and noncommercial organizations that 
arrange travel to Cuba; tour operators; persons arranging through 
transportation to Cuba; persons chartering an aircraft or vessel on 
behalf of others in Cuba; and persons arranging hotel accommodations, 
ground transportation,

[[Page 111]]

local tours, and similar travel activities on behalf of others in Cuba. 
Travel service providers must obtain authorization from the Office of 
Foreign Assets Control before providing services with respect to travel 
to Cuba. The list stated above should not be considered exhaustive, as 
other persons may be ``travel service providers'' within the meaning of 
this part. Opinions may be obtained from the Office of Foreign Assets 
Control concerning the applicability of this licensing requirement in 
individual cases.
    (2) Authorization of carrier service provider. Persons subject to 
U.S. jurisdiction wishing to provide carrier services by aircraft or 
vessels incidental to their non-scheduled flights or voyages to, from, 
or within Cuba are ``carrier service providers'' for purposes of this 
part. Carrier service providers must obtain authorization from the 
Office of Foreign Assets Control before providing services with respect 
to non-scheduled flights or voyages to, from, or within Cuba. Carriage 
to or from Cuba of any merchandise, cargo or gifts, other than those 
permitted to individual travelers as accompanied baggage, must also be 
authorized by licenses issued by the U.S. Department of Commerce.
    (3) Authorization of remittance forwarders. Persons subject to U.S. 
jurisdiction, including persons that provide payment forwarding services 
and noncommercial organizations acting on behalf of donors, that wish to 
provide services in connection with the collection or forwarding of 
remittances authorized pursuant to this part must obtain specific 
authorization from OFAC. Depository institutions, as defined in Sec. 
515.333, are hereby authorized to provide these services without 
obtaining specific authorization from OFAC. However, all licensed 
remittance forwarders, including depository institutions, that forward 
remittances authorized pursuant to this part are required to collect 
from persons who use their services information showing compliance with 
the relevant remittance provisions of this part. Depository institutions 
are permitted to set up testing arrangements and exchange authenticator 
keys with Cuban financial institutions to forward remittances authorized 
by or pursuant to Sec. 515.570, but may not open or use direct 
correspondent accounts of their own with Cuban financial institutions.

    Note to paragraph (a)(3): A suggested form for the collection of 
information showing compliance with the remittance provisions in Sec. 
515.570 is available from OFAC's Web site (www.treas.gov/ofac).

    (b) Terms and conditions of authorization to engage in service 
transactions. Authorization to engage in service transactions will be 
issued only upon the applicant's written affirmation and subsequent 
demonstration that it does not participate in discriminatory practices 
of the Cuban government against certain residents and citizens of the 
United States. Examples of such practices include, but are not limited 
to, charging discriminatory rates for air travel or requiring payment 
for services, such as hotel accommodations and meals, not desired, 
planned to be utilized, or actually utilized, based on such 
characteristics as race, color, religion, sex, citizenship, place of 
birth, or national origin. Authorization, whether a grant of provisional 
authorization or a license issued pursuant to this part, does not permit 
a travel or carrier service provider to provide services in connection 
with any individual's transactions incident to travel which are 
prohibited by this part.
    (c) Initial applications for licenses. The initial application for a 
license shall contain:
    (1) The applicant organization's name, address, telephone number, 
and the name of an official of the applicant organization responsible 
for its licensed services;
    (2) The state of applicant's organization, if a juridical entity, 
the address of its principal place of business and all branch offices, 
the identity and ownership percentages of all shareholders or partners, 
and the identity and position of all principal officers and directors;
    (3) Copies of any bylaws, articles of incorporation, partnership 
agreements, management agreements, or other documents pertaining to the 
organization, ownership, control, or management of the applicant; and
    (4)(i) In the case of applications for authorization to serve as 
travel or carrier service providers, a report on the

[[Page 112]]

forms and other procedures used to establish that each customer is in 
full compliance with U.S. law implementing the Cuban embargo and either 
qualifies for one of the general licenses contained in this part 
authorizing travel-related transactions in connection with travel to 
Cuba or has received a specific license from the Office of Foreign 
Assets Control issued pursuant to this part. In the case of a customer 
traveling pursuant to a general license, the applicant must demonstrate 
that it requires each customer to attest, in a signed statement, to his 
or her qualification for the particular general license claimed. The 
statement must provide facts supporting the customer's belief that he or 
she qualifies for the general license claimed. In the case of a customer 
traveling under a specific license, the applicant must demonstrate that 
it requires the customer to furnish it with a copy of the license. The 
copy of the signed statement or the specific license must be maintained 
on file with the applicant.
    (ii) In the case of applications for authorization as remittance 
forwarders, a report on the forms, account books, and other 
recordkeeping procedures used to determine whether each customer has 
violated the terms of any authorization for remittances contained in or 
issued pursuant to this part, or sent remittances to persons ineligible 
to receive them under Sec. 515.570; and the method by which remittances 
are sent to Cuba and the procedures used by the applicant to ensure that 
the remittances are received by the persons intended.
    (d) Required reports and recordkeeping. (1) Each specific license or 
grant of provisional authority shall require that the service provider 
furnish annual reports to the Department of the Treasury, Office of 
Foreign Assets Control, Washington, DC 20220, during the term of the 
license. The required content of such reports and their due dates shall 
be provided to the service provider in a letter authorizing the provider 
to commence services. Each such report will cover only the one-year 
period immediately preceding the date of the report.
    (2) While the names and addresses of individual travelers or 
remitters, the number and amount of each remittance, and the name and 
address of each recipient, as applicable, need not be submitted with 
annual reports, this information must be retained on file with all other 
information required by Sec. 515.601 of this chapter. These records 
must be furnished to the Office of Foreign Assets Control on demand 
pursuant to Sec. 515.602 of this chapter.
    (3) Presentation of passenger lists. Tour operators, persons 
operating an aircraft or vessel, or persons chartering an aircraft or 
vessel on behalf of others, for travel to, from, and within Cuba must 
furnish the U.S. Customs Service on demand a list of passengers on each 
flight or voyage to, from, and within Cuba.
    (e) Procedures governing the grant of provisional authority, denial, 
suspension, or revocation of authority to engage in service 
transactions--(1) Grant of provisional authority. Following submission 
of a complete application as described in paragraph (c) of this section, 
the submission of any additional relevant information, and a preliminary 
evaluation by the Office of Foreign Assets Control, the applicant will 
be notified in writing that provisional authority has been granted to 
provide the services contemplated in the application. This provisional 
authority to provide services will remain in effect pending a final 
decision to grant or deny the license.
    (2) Denial of license--(i) Notice of denial. If the Director, Office 
of Foreign Assets Control, determines that the application for a license 
to engage in service transactions related to travel to Cuba, carrier 
service transactions related to travel to Cuba, or transactions related 
to remittance forwarding should be denied for any reason, notice of 
denial shall be given to the applicant. The notice of denial shall state 
the reasons for the denial.
    (ii) Grounds for denial. The causes sufficient to justify denial of 
an application for a license may include, but need not be limited to:
    (A) Any cause which would justify suspension or revocation of the 
authority of a service provider pursuant to paragraph (e)(3) of this 
section;
    (B) Failure to file a full and complete application;

[[Page 113]]

    (C) Any willful misstatement of pertinent facts in the application;
    (D) Evidence indicating that the applicant participates in 
discriminatory practices of the Cuban Government against certain 
residents and citizens of the United States as described in paragraph 
(b) of this section; or
    (E) A reputation imputing to the applicant criminal, dishonest, or 
unethical conduct, or a record of such conduct.
    (3) Suspension or revocation of a license or provisional 
authorization. A license or provisional authorization issued pursuant to 
this section may be suspended for a specific period of time, or revoked, 
for the following reasons:
    (i) The service provider has willfully made or caused to be made in 
any application for any license, request for a ruling or opinion, or 
report be filed with the Office of Foreign Assets Control, any statement 
that was, at the time and in light of the circumstances under which it 
was made, false or misleading with respect to any material fact, or has 
omitted to state in any application, request for ruling or opinion, or 
report any material fact that was required;
    (ii) The service provider has failed to file timely reports or 
comply with the recordkeeping requirements of his license or provisional 
authorization.
    (iii) The service provider has been convicted, at any time after 
filing an application for a license under this section, of any felony or 
misdemeanor that:
    (A) Involved the importation, exportation, or transfer of property 
in violation of any law or regulation administered by the Office of 
Foreign Assets Control;
    (B) Arose directly out of the conduct of the business covered by the 
license; or
    (C) Involved larceny, extortion, forgery, counterfeiting, fraudulent 
concealment, embezzlement, fraudulent conversion, misappropriation of 
funds, or a violation of the Customs laws, export or import control 
laws, or banking laws.
    (iv) The service provider has violated any provision of law enforced 
by the Office of Foreign Assets Control or the rules or regulations 
issued under any such provision;
    (v) The service provider has counseled, commanded, induced, 
procured, or knowingly aided or abetted the violation by any other 
person of any provision of any law or regulation referred to above;
    (vi) The service provider has, in the course of the business covered 
by the license, with felonious intent, in any manner willfully and 
knowingly deceived, defrauded, misled, threatened, or coerced any client 
or prospective client; or
    (vii) The service provider has committed any other act or omission 
that demonstrates unfitness to conduct the business covered by the 
license.

[57 FR 53999, Nov. 16, 1992, as amended at 59 FR 31142, June 17, 1994; 
59 FR 44886, Aug. 30, 1994; 63 FR 27349, May 18, 1998. Redesignated and 
amended at 64 FR 25813, 25819, May 13, 1999; 68 FR 14148, Mar. 24, 2003; 
69 FR 33773, June, 16, 2004; 74 FR 46007, Sept. 8, 2009]



Sec. 515.573  Transactions by news organizations.

    (a) Specific licenses may be issued authorizing all transactions 
necessary for the establishment and operation of news bureaus in Cuba 
whose primary purpose is the gathering and dissemination of news to the 
general public. Transactions that may be authorized include, but are not 
limited to, those incident to the following:
    (1) Leasing office space and securing related goods and services;
    (2) Hiring Cuban nationals to serve as support staff;
    (3) Purchasing Cuban-origin goods for use in the operation of the 
office; and
    (4) Paying fees related to the operation of the office in Cuba.
    (b) Specific licenses may be issued authorizing transactions 
necessary for the establishment and operation of news bureaus in the 
United States by Cuban organizations whose primary purpose is the 
gathering and dissemination of news to the general public.
    (c) Specific licenses may be issued authorizing transactions related 
to hiring Cuban nationals to provide reporting services or other 
services related to the gathering and dissemination of news.

[[Page 114]]

    (d) Note: The number assigned to a specific license issued pursuant 
to this section should be referenced in all import documents, and in all 
funds transfers and other banking transactions through banks organized 
or located in the United States, in connection with the licensed 
transaction to avoid the blocking of goods imported from Cuba and the 
interruption of the financial transactions with Cuba.

[60 FR 54197, Oct. 20, 1995. Redesignated at 64 FR 25813, May 13, 1999]



Sec. 515.574  Support for the Cuban People.

    (a) Specific licenses may be issued on a case-by-case basis 
authorizing the travel-related transactions set forth in Sec. 
515.560(c) and other transactions that are intended to provide support 
for the Cuban people including, but not limited to, the following:
    (1) Activities of recognized human rights organizations,
    (2) Activities of independent organizations designed to promote a 
rapid, peaceful transition to democracy, and
    (3) Activities of individuals and non-governmental organizations 
that promote independent activity intended to strengthen civil society 
in Cuba.
    (b) Licenses will be issued pursuant to this section once the 
applicant shows that the proposed transactions are consistent with the 
purposes of this section and provides an explanation that no significant 
accumulation of funds or financial benefit will accrue to the government 
of Cuba.

[68 FR 14148, Mar. 24, 2003]



Sec. 515.575  Humanitarian projects.

    Specific licenses may be issued on a case-by-case basis authorizing 
the travel-related transactions set forth in Sec. 515.560(c) and such 
additional transactions as are directly incident to certain humanitarian 
projects in or related to Cuba not otherwise covered by this part that 
are designed to directly benefit the Cuban people. Such projects may 
include, but are not limited to: medical and health-related projects; 
construction projects intended to benefit legitimately independent civil 
society groups; environmental projects; projects involving formal or 
non-formal educational training, within Cuba or off-island, on topics 
including civil education, journalism, advocacy and organizing, adult 
literacy, and vocational skills; community-based grassroots projects; 
projects suitable to the development of small scale private enterprise; 
projects that are related to agricultural and rural development that 
promote independent activity; and projects to meet basic human needs. 
Specific licenses may be issued authorizing transactions for multiple 
visits for the same project over an extended period of time by 
applicants demonstrating a significant record of overseas humanitarian 
projects.

[68 FR 14148, Mar. 24, 2003]



Sec. 515.576  Activities of private foundations or research or
educational institutes.

    Specific licenses may be issued on a case-by-case basis authorizing 
the travel-related transactions set forth in Sec. 515.560(c) and such 
additional transactions as are directly incident to activities by 
private foundations or research or educational institutes that have an 
established interest in international relations to collect information 
related to Cuba for noncommercial purposes, not otherwise covered by the 
general license for professional research contained in Sec. 515.564 or 
more properly issued under Sec. 515.575, relating to humanitarian 
projects. Specific licenses may be issued pursuant to this section 
authorizing transactions for multiple trips to Cuba for the same project 
over an extended period of time.

[64 FR 25820, May 13, 1999]



Sec. 515.577  Authorized transactions necessary and ordinarily incident
to publishing.

    (a) To the extent that such activities are not exempt from this 
part, and subject to the restrictions set forth in paragraphs (b) 
through (d) of this section, persons subject to the jurisdiction of the 
United States are authorized to engage in all transactions necessary and 
ordinarily incident to the publishing and marketing of manuscripts, 
books, journals, and newspapers in paper or electronic format 
(collectively, ``written publications''). This

[[Page 115]]

section does not apply if the parties to the transactions described in 
this paragraph include the Government of Cuba. For the purposes of this 
section, the term ``Government of Cuba'' includes the state and the 
Government of Cuba, as well as any political subdivision, agency, or 
instrumentality thereof, including the Central Bank of Cuba; prohibited 
officials of the Government of Cuba, as defined in Sec. 515.337 of this 
part; prohibited members of the Cuban Communist Party, as defined in 
Sec. 515.338 of this part; employees of the Ministry of Justice; and 
any person acting or purporting to act directly or indirectly on behalf 
of any of the foregoing with respect to the transactions described in 
this paragraph. For the purposes of this section, the term ``Government 
of Cuba'' does not include any academic and research institutions and 
their personnel. Pursuant to this section, the following activities are 
authorized, provided that persons subject to the jurisdiction of the 
United States ensure that they are not engaging, without separate 
authorization, in the activities identified in paragraphs (b) through 
(d) of this section:
    (1) Commissioning and making advance payments for identifiable 
written publications not yet in existence, to the extent consistent with 
industry practice;
    (2) Collaborating on the creation and enhancement of written 
publications;
    (3)(i) Augmenting written publications through the addition of items 
such as photographs, artwork, translation, explanatory text, and, for a 
written publication in electronic format, the addition of embedded 
software necessary for reading, browsing, navigating, or searching the 
written publication;
    (ii) Exporting embedded software necessary for reading, browsing, 
navigating, or searching a written publication in electronic format, 
provided that, to the extent a license is required under the Export 
Administration Regulations, 15 CFR parts 730 through 774 (the ``EAR''), 
the exportation is licensed or otherwise authorized by the Department of 
Commerce under the provisions of the EAR;
    (4) Substantive editing of written publications;
    (5) Payment of royalties for written publications;
    (6) Creating or undertaking a marketing campaign to promote a 
written publication; and
    (7) Other transactions necessary and ordinarily incident to the 
publishing and marketing of written publications as described in this 
paragraph (a).
    (b) This section does not authorize transactions involving the 
provision of goods or services not necessary and ordinarily incident to 
the publishing and marketing of written publications as described in 
paragraph (a) of this section. For example, this section does not 
authorize persons subject to the jurisdiction of the United States:
    (1) To provide or receive individualized or customized services 
(including, but not limited to, accounting, legal, design, or consulting 
services), other than those necessary and ordinarily incident to the 
publishing and marketing of written publications, even though such 
individualized or customized services are delivered through the use of 
information and informational materials;
    (2) To create or undertake for any person a marketing campaign with 
respect to any service or product other than a written publication, or 
to create or undertake a marketing campaign of any kind for the benefit 
of the Government of Cuba;
    (3) To engage in the exportation or importation of goods to or from 
Cuba other than the exportation of embedded software described in 
paragraph (a)(3)(ii) of this section;
    (4) To operate a publishing house, sales outlet, or other office in 
Cuba; or
    (5) To engage in transactions related to travel to, from, or within 
Cuba.

    Note to paragraph (b): The importation from Cuba and the exportation 
to Cuba of information or informational materials, as defined in Sec. 
515.332, whether commercial or otherwise, regardless of format or medium 
of transmission, are exempt from the prohibitions and regulations of 
this part. See Sec. 515.206(a).

    (c) This section does not authorize persons subject to the 
jurisdiction of the United States to engage the services of publishing 
houses or translators

[[Page 116]]

in Cuba unless such activity is primarily for the dissemination of 
written publications in Cuba.
    (d) This section does not authorize:
    (1) Transactions for the development, production, or design of 
software;
    (2) Transactions for the development, production, design, or 
marketing of technology specifically controlled by the International 
Traffic in Arms Regulations, 22 CFR parts 120 through 130 (the 
``ITAR''), the EAR, or the Department of Energy Regulations set forth at 
10 CFR part 810.
    (3) The exportation of information or technology subject to the 
authorization requirements of 10 CFR part 810, or Restricted Data as 
defined in section 11 y. of the Atomic Energy Act of 1954, as amended, 
or of other information, data, or technology the release of which is 
controlled under the Atomic Energy Act and regulations therein;
    (4) The exportation of any item (including information) subject to 
the EAR where a U.S. person knows or has reason to know that the item 
will be used, directly or indirectly, with respect to certain nuclear, 
missile, chemical, or biological weapons or nuclear-maritime end-uses as 
set forth in part 744 of the EAR. In addition, U.S. persons are 
precluded from exporting any item subject to the EAR to certain 
restricted end-users, as set forth in part 744 of the EAR, as well as 
certain persons whose export privileges have been denied pursuant to 
parts 764 or 766 of the EAR, without authorization from the Department 
of Commerce; or
    (5) The exportation of information subject to licensing requirements 
under the ITAR, or exchanges of information that are subject to 
regulation by other government agencies.
    (e) Pursuant to Sec. 515.564, specific licenses may be issued on a 
case-by-case basis authorizing the travel-related transactions set forth 
in Sec. 515.560(c) and such additional transactions that are directly 
incident to attendance of professional meetings that are necessary and 
ordinarily incident to the publishing and marketing of written 
publications.

[72 FR 50048, Aug. 30, 2007, as amended at 76 FR 5077, Jan. 28, 2011]



Sec. 515.578  Exportation of certain services incident to Internet-based
communications.

    (a) Except as provided in paragraph (b) of this section, the 
exportation from the United States or by persons subject to U.S. 
jurisdiction to persons in Cuba of services incident to the exchange of 
personal communications over the Internet, such as instant messaging, 
chat and email, social networking, sharing of photos and movies, web 
browsing, and blogging, is authorized, provided that such services are 
publicly available at no cost to the user.
    (b) This section does not authorize:
    (1) The direct or indirect exportation of services with knowledge or 
reason to know that such services are intended for a prohibited official 
of the Government of Cuba, as defined in Sec. 515.337 of this part, or 
a prohibited member of the Cuban Communist Party, as defined in Sec. 
515.338 of this part.
    (2) The direct or indirect exportation of Internet connectivity 
services or telecommunications transmission facilities (such as 
satellite links or dedicated lines).

    Note to Sec. 515.578(b)(2): For general licenses related to the 
provision of telecommunications services between the United States and 
Cuba and contracts for telecommunications services provided to 
particular individuals in Cuba, see Sec. 515.542(b) and Sec. 
515.542(c), respectively, of this part. For a general license and a 
statement of specific licensing policy related to the establishment of 
telecommunications facilities linking the United States or third 
countries and Cuba, see Sec. 515.542(d) of this part.

    (3) The direct or indirect exportation of web-hosting services that 
are for purposes other than personal communications (e.g., web-hosting 
services for commercial endeavors) or of domain name registration 
services.
    (4) The direct or indirect exportation of any items to Cuba.

    Note to Sec. 515.578(b)(4): For the rules related to transactions 
ordinarily incident to the exportation or reexportation of items, 
including software, to Cuba, see Sec. Sec. 515.533 and 515.559 of this 
part.

    (c) Specific licenses may be issued on a case-by-case basis for the 
exportation

[[Page 117]]

of other services incident to the sharing of information over the 
Internet.

[75 FR 10999, Mar. 10, 2010]



                            Subpart F_Reports



Sec. 515.601  Records and reports.

    For provisions relating to records and reports, see subpart C of 
part 501 of this chapter.

[62 FR 45106, Aug. 25, 1997]



                           Subpart G_Penalties

    Source: 63 FR 10331, Mar. 3, 1998, unless otherwise noted.



Sec. 515.701  Penalties.

    For provisions relating to penalties, see part 501, subpart D, of 
this chapter.

[68 FR 53657, Sept. 11, 2003]



                          Subpart H_Procedures



Sec. 515.801  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.

[62 FR 45106, Aug. 25, 1997, as amended at 68 FR 53657, Sept. 11, 2003]



Sec. 515.802  Delegation by the Secretary of the Treasury.

    Any action under Sec. 515.201 which the Secretary of the Treasury 
is authorized to take pursuant to Proclamation 3447 or the Trading With 
the Enemy Act may be taken by the Director, Office of Foreign Assets 
Control, or by any other person to whom the Secretary of the Treasury 
has delegated authority so to act.

[28 FR 6974, July 9, 1963. Redesignated at 62 FR 45106, Aug. 25, 1997]



Sec. 515.803  Customs procedures; merchandise specified in Sec. 515.204.

    (a) With respect to merchandise specified in Sec. 515.204 
(including nickel-bearing materials presumptively subject thereto) 
whether or not such merchandise has been imported into the United 
States, collectors of customs shall not accept or allow any:
    (1) Entry for consumption (including any appraisement entry, any 
entry of goods imported in the mails, regardless of value, and any other 
informal entries);
    (2) Entry for immediate exportation;
    (3) Entry for transportation and exportation;
    (4) Withdrawal from warehouse;
    (5) Transfer or withdrawal from a foreign-trade zone; or
    (6) Manipulation or manufacture in a warehouse or in a foreign-trade 
zone, unless either:
    (i) The merchandise was imported prior to 12:01 a.m., February 7, 
1962, or
    (ii) A specific license pursuant to this part is presented, or
    (iii) Instructions from the Office of Foreign Assets Control, 
authorizing the transaction are received, or
    (iv) The original of an appropriate certificate of origin as defined 
in Sec. 515.536(d) is presented.
    (b) Whenever a specific license is presented to a collector of 
customs in accordance with this section, one additional legible copy of 
the entry, withdrawal or other appropriate document with respect to the 
merchandise involved shall be filed with the collector of customs at the 
port where the transaction is to take place. Each copy of any such 
entry, withdrawal or other appropriate document, including the 
additional copy, shall bear plainly on its face the number of the 
license pursuant to which it is filed. The original copy of the specific 
license shall be presented to the collector in respect of each such 
transaction and shall bear a notation in ink by the licensee or person 
presenting the license showing the description, quantity and value of 
the merchandise to be entered, withdrawn or otherwise dealt with. This 
notation should be so placed and so written that there will exist no 
possibility of confusing it with anything placed on the license at the 
time of its issuance. If the license in fact authorizes the entry, 
withdrawal or other transaction with regard to the merchandise the 
collector, or other authorized customs employee, shall verify the 
notation by

[[Page 118]]

signing or initialing it after first assuring himself that it accurately 
describes the merchandise it purports to represent. The license shall 
thereafter be returned to the person presenting it and the additional 
copy of the entry, withdrawal or other appropriate document shall be 
forwarded by the collector to the Foreign Assets Control.
    (c)(1) Whenever the original of an appropriate certificate or origin 
as defined in Sec. 515.536(d) is presented to a collector of customs in 
accordance with this section, an additional legible copy of the entry, 
withdrawal or other appropriate document with respect to the merchandise 
involved shall be filed with the collector of customs at the port where 
the transaction is to take place. Each copy of the entry, withdrawal, or 
other appropriate document, including the additional copy, shall bear 
plainly on its face the following statement: ``This document is 
presented under the provisions of Sec. 515.536 (c) of the Cuban Assets 
Control Regulations.'' The original of the certificate of origin shall 
not be returned to the person presenting it. It shall be securely 
attached to the additional copy required by this subparagraph and shall 
be forwarded by the collector to the Office of Foreign Assets Control, 
Treasury Department, Washington, DC 20220. Collectors may forward such 
documents weekly or more often if the volume warrants.
    (2) If the original of an appropriate certificate of origin is 
properly presented to a collector of customs with respect to a 
transaction which is the first of a series of transactions which may be 
allowed in connection therewith under paragraph (a)(6)(iv) of this 
section (as, for example, where merchandise has been entered in a bonded 
warehouse and an appropriate certificate of origin is presented which 
relates to all of the merchandise entered therein but the importer 
desires to withdraw only part of the merchandise in the first 
transaction), the collector shall so note on the original of the 
appropriate certificate of origin and return it to the importer. In 
addition, the collector shall endorse his pertinent records so as to 
record what merchandise is covered by the appropriate certificate of 
origin presented. The collector may thereafter allow subsequent 
authorized transactions on presentation of the certificate of origin. 
The collector shall, with respect to each such transaction, demand an 
additional copy of each withdrawal or other appropriate document, which 
copy shall be promptly forwarded by the collector to the Office of 
Foreign Assets Control, Treasury Department, Washington, DC 20220, with 
an endorsement thereon reading:

    This document has been accepted pursuant to Sec. 515.808(c) (2) of 
the Cuban Assets Control Regulations. Appropriate certificate of origin 
No.--------------from (country).


When the final transaction has been effected under the certificate of 
origin, the original shall be taken up and attached to the entry and 
forwarded as in this paragraph.
    (d) Whenever a person shall present an entry, withdrawal or other 
appropriate document affected by this section and shall assert that no 
specific Foreign Assets Control license or appropriate certificate of 
origin as defined in Sec. 515.536 (d) is required in connection 
therewith, the collector of customs shall withhold action thereon and 
shall advise such person to communicate directly with the Office of 
Foreign Assets Control to request that instructions be issued to the 
collector to authorize him to take action with regard thereto.

[30 FR 15371, Dec. 14, 1965, as amended at 57 FR 1388, Jan. 14, 1992. 
Redesignated at 62 FR 45106, Aug. 25, 1997]



                   Subpart I_Miscellaneous Provisions



Sec. 515.901  Paperwork Reduction Act notice.

    Collection of information on TDF 90-22.39, ``Declaration, Travel to 
Cuba,'' has been approved by the Office of Management and Budget 
(``OMB'') under the Paperwork Reduction Act (44 U.S.C. 3507(j)) and 
assigned control number 1505-0118. For approval by OMB under the 
Paperwork Reduction Act of

[[Page 119]]

information collections relating to recordkeeping and reporting 
requirements, to licensing procedures (including those pursuant to 
statements of licensing policy), and to 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.

[62 FR 45106, Aug. 25, 1997]



PART 535_IRANIAN ASSETS CONTROL REGULATIONS--Table of Contents



      Subpart A_Relation of This Part to Other Laws and Regulations

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

                         Subpart B_Prohibitions

535.201 Transactions involving property in which Iran or Iranian 
          entities have an interest.
535.202 Transactions with respect to securities registered or inscribed 
          in the name of Iran.
535.203 Effect of transfers violating the provisions of this part.
535.208 Evasions; effective date.
535.210 Direction for establishing an escrow agreement.
535.211 Direction involving transfers by the Federal Reserve Bank 
          concerning certain Iranian property.
535.212 Direction to transfer property in which Iran or an Iranian 
          entity has an interest by branches and offices of United 
          States banks located outside the United States.
535.213 Direction involving property held by offices of banks in the 
          United States in which Iran or an Iranian entity has an 
          interest.
535.214 Direction involving other financial assets in which Iran or an 
          Iranian entity has an interest held by any person subject to 
          the jurisdiction of the United States.
535.215 Direction involving other properties in which Iran or an Iranian 
          entity has an interest held by any person subject to the 
          jurisdiction of the United States.
535.216 Prohibition against prosecution of certain claims.
535.217 Blocking of property of the former Shah of Iran and of certain 
          other Iranian nationals.
535.218 Prohibitions and nullifications with respect to property 
          described in Sec. Sec. 535.211, 535.212, 535.213, 535.214 and 
          535.215 and standby letters of credit.
535.219 Discharge of obligation by compliance with this part.
535.220 Timing of transfers required by Sec. 535.212.
535.221 Compliance with directive provisions.
535.222 Suspension of claims eligible for Claims Tribunal.

                      Subpart C_General Definitions

535.301 Iran; Iranian Entity.
535.308 Person.
535.310 Transfer.
535.311 Property; property interests.
535.312 Interest.
535.316 License.
535.317 General license.
535.318 Specific license.
535.320 Domestic bank.
535.321 United States; continental United States.
535.329 Person subject to the jurisdiction of the United States.
535.333 Properties.
535.334 Act of the Government of Iran.
535.335 Claim arising out of events in Iran.
535.337 Funds.

                        Subpart D_Interpretations

535.401 Reference to amended sections.
535.402 Effect of amendment of sections of this part or of other orders, 
          etc.
535.403 Termination and acquisition of an interest of Iran or an Iranian 
          entity.
535.413 Transfers between dollar accounts held for foreign banks.
535.414 Payments to blocked accounts under Sec. 535.508.
535.415 Payment by Iranian entities of obligations to persons within the 
          United States.
535.416 Letters of credit.
535.420 Transfers of accounts under Sec. 535.508 from demand to 
          interest-bearing status.
535.421 Prior contractual commitments not a basis for licensing.
535.433 Central Bank of Iran.
535.437 Effect on other authorities.
535.438 Standby letters of credit, performance or payment bonds and 
          similar obligations.
535.440 Commercially reasonable interest rates.
535.441 Settlement Agreement regarding small claims.

  Subpart E_Licenses, Authorizations and Statements of Licensing Policy

535.501 General and specific licensing procedures.
535.502 Effect of license or authorization.
535.503 Exclusion from licenses and authorizations.

[[Page 120]]

535.504 Certain judicial proceedings with respect to property of Iran or 
          Iranian entities.
535.508 Payments to blocked accounts in domestic banks.
535.528 Certain transactions with respect to Iranian patents, trademarks 
          and copyrights authorized.
535.531 Payment of certain checks and drafts.
535.532 Completion of certain securities transactions.
535.540 Disposition of certain tangible property.
535.566 Unblocking of foreign currency deposits held by U.S.-owned or 
          controlled foreign firms.
535.567 Payment under advised letters of credit.
535.568 Certain standby letters of credit and performance bonds.
535.569 Licensed letter of credit transactions; forwarding of documents.
535.576 Payment of non-dollar letters of credit to Iran.
535.579 Authorization of new transactions concerning certain Iranian 
          property.
535.580 Necessary living expenses of relatives of the former Shah of 
          Iran.

                            Subpart F_Reports

535.601 Records and reports.

                           Subpart G_Penalties

535.701 Penalties.
535.702 Prepenalty notice.
535.703 Presentation responding to pre penalty notice.
535.704 Penalty notice.
535.705 Administrative collection; referral to United States Department 
          of Justice.

                          Subpart H_Procedures

535.801 Procedures.

                   Subpart I_Miscellaneous Provisions

535.901 Dollar accounts at banks abroad.
535.902 Set-offs by U.S. owned or controlled firms abroad.
535.904 Payment by Iranian entities of obligations to persons within the 
          United States.
535.905 Paperwork Reduction Act notice.

    Authority: 3 U.S.C. 301; 18 U.S.C. 2332d; 31 U.S.C. 321(b); 50 
U.S.C. 1601-1651, 1701-1706; Pub. L. 101-410, 104 Stat. 890 (28 U.S.C. 
2461 note); Pub. L. 110-96, 121 Stat. 1011; E.O. 12170, 44 FR 65729, 3 
CFR, 1979 Comp., p. 457; E.O. 12205, 45 FR 24099, 3 CFR, 1980 Comp., p. 
248; E.O. 12211, 45 FR 26685, 3 CFR, 1980 Comp., p. 253; E.O. 12276, 46 
FR 7913, 3 CFR, 1981 Comp., p. 104; E.O. 12279, 46 FR 7919, 3 CFR, 1981 
Comp., p. 109; E.O. 12280, 46 FR 7921, 3 CFR, 1981 Comp., p. 110; E.O. 
12281, 46 FR 7923, 3 CFR, 1981 Comp., p. 110; E.O. 12282, 46 FR 7925, 3 
CFR, 1981 Comp., p. 113; E.O. 12283, 46 FR 7927, 3 CFR, 1981 Comp., p. 
114; and E.O. 12294, 46 FR 14111, 3 CFR, 1981 Comp., p. 139.

    Source: 44 FR 65956, Nov. 15, 1979, unless otherwise noted.



      Subpart A_Relation of This Part to Other Laws and Regulations



Sec. 535.101  Relation of this part to other laws and regulations.

    (a) 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. No license or 
authorization contained in or issued pursuant to such parts shall be 
deemed to authorize any transaction prohibited by this part, nor shall 
any license or authorization issued pursuant to any other provision of 
law (except this part) be deemed to authorize any transaction so 
prohibited.
    (b) No license or authorization contained in or issued pursuant to 
this part shall be deemed to authorize any transaction to the extent 
that it is prohibited by reason of the provisions of any law or any 
statute other than the International Emergency Economic Powers Act, as 
amended, or any proclamation order or regulation other than those 
contained in or issued pursuant to this part.

[44 FR 65956, Nov. 15, 1979, as amended at 62 FR 45107, Aug. 25, 1997]



                         Subpart B_Prohibitions



Sec. 535.201  Transactions involving property in which Iran or Iranian
entities have an interest.

    No property subject to the jurisdiction of the United States or 
which is in the possession of or control of persons subject to the 
jurisdiction of the United States in which on or after the effective 
date Iran has any interest of any nature whatsoever may be transferred, 
paid, exported, withdrawn or

[[Page 121]]

otherwise dealt in except as authorized.

[45 FR 24432, Apr. 9, 1980]



Sec. 535.202  Transactions with respect to securities registered or 
inscribed in the name of Iran.

    Unless authorized by a license expressly referring to this section, 
the acquisition, 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 or otherwise dealing in any security (or evidence thereof) 
registered or inscribed in the name of any Iranian entity is prohibited 
irrespective of the fact that at any time (either prior to, on, or 
subsequent to the effective date) the registered or inscribed owner 
thereof may have, or appears to have, assigned, transferred or otherwise 
disposed of any such security.



Sec. 535.203  Effect of transfers violating the provisions of this part.

    (a) Any transfer after the effective date which is in violation of 
any provision of this part or of any regulation, ruling, instruction, 
license, or other direction or authorization thereunder and involves any 
property in which Iran has or has had an interest since such effective 
date 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.
    (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 interest in, any property in which Iran has or has had an 
interest since the effective date unless the person with whom such 
property is held or maintained had written notice of the transfer or by 
any written evidence had recognized such transfer prior to such 
effective date.
    (c) Unless otherwise provided, an appropriate license or other 
authorization issued by or pursuant to the direction or authorization of 
the Secretary of the Treasury before, during or after a transfer shall 
validate such transfer or render it enforceable to the same extent as it 
would be valid or enforceable but for the provisions of the 
International Emergency Economic Powers Act and this part and any 
ruling, order, regulation, direction or instruction issued hereunder.
    (d) Transfers of property which 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 pursuant to such 
provisions, as to any person with whom such property was held or 
maintained (and as to such person only) in cases in which such person is 
able to establish 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 was held 
or maintained;
    (2) The person with whom such property 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 by or pursuant to the provision of 
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 or the withholding 
of material facts or was otherwise fraudulently obtained; and
    (3) Promptly upon discovery that:
    (i) Such transfer was in violation of the provisions of this part or 
any regulation, ruling, instruction, license or other direction or 
authorization thereunder, or
    (ii) Such transfer was not licensed or authorized by the Secretary 
of the Treasury, or
    (iii) If a license did purport to cover the transfer, such license 
had been obtained by misrepresentation or the withholding of material 
facts or was otherwise fraudulently obtained; the person with whom such 
property was held or maintained filed with the Treasury Department, 
Washington, D.C., a report in triplicate setting forth in full the 
circumstances relating to such transfer. The filing of a report in 
accordance with the provisions of this paragraph shall not be deemed to 
be compliance or evidence of compliance

[[Page 122]]

with paragraphs (d) (1) and (2) of this section.
    (e) Unless licensed or authorized pursuant to this part any 
attachment, judgment, decree, lien, execution, garnishment, or other 
judicial process is null and void with respect to any property in which 
on or since the effective date there existed an interest of Iran.
    (f) For the purpose of this section the term property includes gold, 
silver, bullion, currency, coin, credit, securities (as that term is 
defined in section 2(l) of the Securities Act of 1933, as amended), 
bills of exchange, notes, drafts, acceptances, checks, letters of 
credit, book credits, debts, claims, contracts, negotiable documents of 
title, mortgages, liens, annuities, insurance policies, options and 
futures in commodities, and evidences of any of the foregoing. The term 
property shall not, except to the extent indicated, be deemed to include 
chattels or real property.

[44 FR 65956, Nov. 15, 1979, as amended at 45 FR 24432, Apr. 9, 1980]



Sec. 535.208  Evasions; effective date.

    (a) Any transaction for the purpose of, or which has the effect of, 
evading or avoiding any of the prohibitions set forth in this subpart is 
hereby prohibited.
    (b) The term effective date means, with respect to transactions 
prohibited in Sec. 535.201, 8:10 a.m. eastern standard time, November 
14, 1979, and with respect to the transactions prohibited in Sec. Sec. 
535.206 and 535.207, 4:19 p.m. eastern standard time, April 7, 1980.
    (c) With respect to any amendments of the foregoing sections or any 
other amendments to this part the term ``effective date'' shall mean the 
date of filing with the Federal Register.

[45 FR 24433, Apr. 9, 1980, as amended at 45 FR 26940, Apr. 21, 1980]



Sec. 535.210  Direction for establishing an escrow agreement.

    (a) The Federal Reserve Bank of New York, as fiscal agent of the 
United States, is licensed, authorized, directed and compelled to enter 
into escrow and related agreements under which certain money and other 
assets shall be credited to escrow accounts by the Bank of England or 
the N.V. Settlement Bank of the Netherlands.
    (b) The Federal Reserve Bank of New York is licensed, authorized, 
directed and compelled, as fiscal agent of the United States, to receive 
certain money and other assets in which Iran or its agencies, 
instrumentalities or controlled entities have an interest and to hold or 
transfer such money and other assets, and any earnings or interest 
payable thereon, in such manner and at such times as the Secretary of 
the Treasury deems necessary to fulfill the rights and obligations of 
the United States under the Declaration of the government of the 
Democratic and Popular Republic of Algeria dated January 19, 1981, and 
the Undertakings of the Government of the United States of America and 
the Government of Islamic Republic of Iran with respect to the 
Declaration of the Government of the Democratic and Popular Republic of 
Algeria, and the escrow and related agreements described in paragraph 
(a) of this section. Such money and other assets may be invested, or 
not, at the discretion of the Federal Reserve Bank of New York, as 
fiscal agent of the United States.

(Secs. 201-207, 91 Stat. 1626, 50 U.S.C. 1701-1706; E.O. 12170, 44 FR 
65729; E.O. 12205, 45 FR 24099; E.O. 12211, 45 FR 26685; E.O. 12276, 46 
FR 7913; E.O. 12279, 46 FR 7919; E.O. 12280, 46 FR 7921; E.O. 12281, 46 
FR 7923; E.O. 12282, 46 FR 7925; E.O. 12283, 46 FR 7927, and E.O. 12294, 
46 FR 14111)

[46 FR 14333, Feb. 26, 1981, as amended at 46 FR 42063, Aug. 19, 1981]



Sec. 535.211  Direction involving transfers by the Federal Reserve Bank
concerning certain Iranian property.

    The Federal Reserve Bank of New York is licensed, authorized, 
directed and compelled to transfer to its account at the Bank of 
England, and subsequently to transfer to accounts in the name of the 
Central Bank of Algeria as Escrow Agent at the Bank of England that are 
established pursuant to an escrow and related agreements approved by the 
Secretary of the Treasury, all gold bullion, together with all other 
assets in its custody (or the cash equivalent thereof), of Iran or its 
agencies, instrumentalities or controlled entities. Such transfers, and

[[Page 123]]

whatever further related transactions are deemed appropriate by the 
Secretary of the Treasury, shall be executed when and in the manner 
directed by the Secretary of the Treasury.

(Secs. 201-207, 91 Stat. 1626, 50 U.S.C. 1701-1706; E.O. 12170, 44 FR 
65729; E.O. 12205, 45 FR 24099; E.O. 12211, 45 FR 26685; E.O. 12276, 46 
FR 7913; E.O. 12279, 46 FR 7919; E.O. 12280, 46 FR 7921; E.O. 12281, 46 
FR 7923; E.O. 12282, 46 FR 7925; E.O. 12283, 46 FR 7927, and E.O. 12294, 
46 FR 14111)

[46 FR 14333, Feb. 26, 1981]



Sec. 535.212  Direction to transfer property in which Iran or an Iranian
entity has an interest by branches and offices of United States banks 

located outside the United States.

    (a) Any branch or office of a United States bank or subsidiary 
thereof, which branch, office or subsidiary is located outside the 
territory of the United States, and which, on or after 8:10 a.m., 
e.s.t., on November 14, 1979:
    (1) Has been or is in possession of funds or securities legally or 
beneficially owned by the Government of Iran or its agencies, 
instrumentalities, or controlled entities, or
    (2) Has carried or is carrying on its books deposits standing to the 
credit of or beneficially owned by such government, its agencies, 
instrumentalities or controlled entities, is licensed, authorized, 
directed and compelled to transfer such funds, securities and deposits, 
held on January 19, 1981, including interest from November 14, 1979, at 
commercially reasonable rates, to the account of the Federal Reserve 
Bank of New York, as fiscal agent of the U.S., at the Bank of England, 
to be held or transferred as directed by the Secretary of the Treasury. 
The funds, securities and deposits described in this section shall be 
further transferred as provided for in the Declarations of the 
Government of the Democratic and Popular Republic of Algeria and the 
Undertakings of the Government of the United States of America and the 
Government of the Islamic Republic of Iran with respect to the 
Declaration.
    (b) Any banking institution subject to the jurisdiction of the 
United States that has executed a set-off on or after 8:10 a.m., e.s.t., 
November 14, 1979, against Iranian funds, securities or deposits 
referred to in paragraph (a) of this section is hereby licensed, 
authorized, directed and compelled to cancel such set-off and to 
transfer all funds, securities and deposits which have been subject to 
such set-off, including interest from November 14, 1979, at commercially 
reasonable rates, pursuant to the provisions of paragraph (a) of this 
section.

(Secs. 201-207, 91 Stat. 1626, 50 U.S.C. 1701-1706; E.O. 12170, 44 FR 
65729; E.O. 12205, 45 FR 24099; E.O. 12211, 45 FR 26685; E.O. 12276, 46 
FR 7913; E.O. 12279, 46 FR 7919; E.O. 12280, 46 FR 7921; E.O. 12281, 46 
FR 7923; E.O. 12282, 46 FR 7925; E.O. 12283, 46 FR 7927, and E.O. 12294, 
46 FR 14111)

[46 FR 14333, Feb. 26, 1981]



Sec. 535.213  Direction involving property held by offices of banks in
the United States in which Iran or an Iranian entity has an interest.

    (a) Any branch or office of a bank, which branch or office is 
located within the United States and is, on the effective date of this 
section, either:
    (1) In possession of funds or securities legally or beneficially 
owned by the Government of Iran or its agencies, instrumentalities or 
controlled entities, or
    (2) Carrying on its books deposits standing to the credit of or 
beneficially owned by such government or its agencies, instrumentalities 
or controlled entities, is licensed, authorized, directed and compelled 
to transfer such funds, securities and deposits, held on January 19, 
1981, including interest from November 14, 1979, at commercially 
reasonable rates, to the Federal Reserve Bank of New York, as fiscal 
agent of the U.S., to be held or transferred as directed by the 
Secretary of the Treasury.
    (b) Transfer of funds, securities or deposits under paragraph (a) of 
this section shall be in accordance with the provisions of Sec. 535.221 
of this part, and such funds, securities or deposits, plus interest at 
commercially reasonable rates from November 14, 1979, to the transfer 
date, shall be received by the Federal Reserve Bank of New York by 11 
a.m., E.D.T., July 10, 1981. For periods for which rates are to be 
determined in the future, whether by agreement between Iran and the bank 
or

[[Page 124]]

otherwise (see Sec. 535.440), interest for such periods shall be 
transferred to the Federal Reserve Bank of New York promptly upon such 
determination. Such interest shall include interest at commercially 
reasonable rates from July 19, 1981, on the interest which would have 
accrued by July 19, 1981.
    (c) Any funds, securities or deposits subject to a valid attachment, 
injunction or other like proceeding or process not affected by Sec. 
535.218 need not be transferred as otherwise required by this section.
    (d) The transfers of securities required by this section shall be 
made notwithstanding Sec. 535.202.

(Secs. 201-207, 91 Stat. 1626, 50 U.S.C. 1701-1706; E.O. 12170, 44 FR 
65729; E.O. 12205, 45 FR 24099; E.O. 12211, 45 FR 26685; E.O. 12276, 46 
FR 7913; E.O. 12279, 46 FR 7919; E.O. 12280, 46 FR 7921; E.O. 12281, 46 
FR 7923; E.O. 12282, 46 FR 7925; E.O. 12283, 46 FR 7927, and E.O. 12294, 
46 FR 14111)

[46 FR 26477, May 13, 1981, as amended at 46 FR 30341, June 8, 1981; 46 
FR 35106, July 7, 1981; 48 FR 253, Jan. 4, 1983]



Sec. 535.214  Direction involving other financial assets in which Iran
or an Iranian entity has an interest held by any person subject to the 

jurisdiction of the United States.

    (a) Any person subject to the jurisdiction of the United States 
which is not a banking institution and is on January 19, 1981, in 
possession or control of funds or securities of Iran or its agencies, 
instrumentalities or controlled entities is licensed, authorized, 
directed and compelled to transfer such funds or securities to the 
Federal Reserve Bank of New York, as fiscal agent of the U.S. to be held 
or transferred as directed by the Secretary of the Treasury. However, 
such funds and securities need not be transferred until any disputes 
(not relating to any attachment, injunction or similar order) as to the 
entitlement of Iran and its entities to them are resolved.
    (b) Transfers of funds and securities under paragraph (a) of this 
section shall be in accordance with the provisions of Sec. 535.221 of 
this part, and such funds and securities shall be received by the 
Federal Reserve Bank of New York by 11 a.m., E.D.T., July 10, 1981.
    (c) Any funds, securities or deposits subject to a valid attachment, 
injunction or other like proceeding or process not affected by Sec. 
535.218 need not be transferred as otherwise required by this section.
    (d) The transfers of securities required by this section shall be 
made notwithstanding Sec. 535.202.

(Secs. 201-207, 91 Stat. 1626, 50 U.S.C. 1701-1706; E.O. 12170, 44 FR 
65729; E.O. 12205, 45 FR 24099; E.O. 12211, 45 FR 26685; E.O. 12276, 46 
FR 7913; E.O. 12279, 46 FR 7919; E.O. 12280, 46 FR 7921; E.O. 12281, 46 
FR 7923; E.O. 12282, 46 FR 7925; E.O. 12283, 46 FR 7927, and E.O. 12294, 
46 FR 14111)

[46 FR 26447, May 13, 1981, as amended at 46 FR 30341, June 8, 1981; 46 
FR 35107, July 7, 1981]



Sec. 535.215  Direction involving other properties in which Iran or an
Iranian entity has an interest held by any person subject to the 

jurisdiction of the United States.

    (a) Except as provided in paragraphs (b) and (c) of this section, 
all persons subject to the jurisdiction of the United States in 
possession or control of properties, as defined in Sec. 535.333 of this 
part, not including funds and securities owned by Iran or its agencies, 
instrumentalities or controlled entities, are licensed, authorized, 
directed and compelled to transfer such properties held on January 18, 
1981 as directed after that day by the Government of Iran, acting 
through its authorized agent. Such directions shall include arrangements 
for payment of the costs of transporting the properties, unless the 
possessors of the properties were required to pay such costs by contract 
or applicable law on January 19, 1981. Except where specifically stated, 
this license, authorization and direction does not relieve persons 
subject to the jurisdiction of the United States from existing legal 
requirements other than those based upon the International Emergency 
Economic Powers Act.
    (b) Any properties subject to a valid attachment, injunction or 
other like proceeding or process not affected by Sec. 535.218 need not 
be transferred as otherwise required by this section.
    (c) Notwithstanding paragraph (a) of this section, persons subject 
to the jurisdiction of the United States, including agencies, 
instrumentalities and entities controlled by the Government of Iran, who 
have possession, custody or

[[Page 125]]

control of blocked tangible property covered by Sec. 535.201, shall not 
transfer such property without a specific Treasury license, if the 
export of such property requires a specific license or authorization 
pursuant to the provisions of any of the following acts, as amended, or 
regulations in force with respect to them: the Export Administration 
Act, 50 U.S.C. App. 2403, et seq., the Aims Export Control Act, 22 
U.S.C. 2751, et seq., the Atomic Energy Act, 42 U.S.C. 2011, et seq., or 
any other act prohibiting the export of such property, except as 
licensed.

(Secs. 201-207, 91 Stat. 1626, 50 U.S.C. 1701-1706; E.O. 12170, 44 FR 
65729; E.O. 12205, 45 FR 24099; E.O. 12211, 45 FR 26685; E.O. 12276, 46 
FR 7913; E.O. 12279, 46 FR 7919; E.O. 12280, 46 FR 7921; E.O. 12281, 46 
FR 7923; E.O. 12282, 46 FR 7925; E.O. 12283, 46 FR 7927, and E.O. 12294, 
46 FR 14111)

[46 FR 14334, Feb. 26, 1981, as amended at 46 FR 26477, May 13, 1981; 49 
FR 21322, May 21, 1984; 66 FR 38554, July 25, 2001]



Sec. 535.216  Prohibition against prosecution of certain claims.

    (a) Persons subject to the jurisdiction of the United States are 
prohibited from prosecuting in any court within the United States or 
elsewhere, whether or not litigation was commenced before or after 
January 19, 1981, any claim against the Government of Iran arising out 
of events occurring before January 19, 1981 relating to:
    (1) The seizure of the hostages on November 4, 1979;
    (2) The subsequent detention of such hostages;
    (3) Injury to United States property or property of United States 
nationals within the United States Embassy compound in Tehran after 
November 3, 1979; or
    (4) Injury to United States nationals or their property as a result 
of popular movements in the course of the Islamic Revolution in Iran 
which were not an act of the Government of Iran.
    (b) Any persons who are not United States nationals are prohibited 
from prosecuting any claim described in paragraph (a) of this section in 
any court within the United States.
    (c) No further action, measure or process shall be taken after the 
effective date of this section in any judicial proceeding instituted 
before the effective date of this section which is based upon any claim 
described in paragraph (a) of this section, and all such proceedings 
shall be terminated.
    (d) No judicial order issued in the course of the proceedings 
described in paragraph (c) of this section shall be enforced in any way.

(Secs. 201-207, 91 Stat. 1626, 50 U.S.C. 1701-1706; E.O. 12170, 44 FR 
65729; E.O. 12205, 45 FR 24099; E.O. 12211, 45 FR 26685; E.O. 12276, 46 
FR 7913; E.O. 12279, 46 FR 7919; E.O. 12280, 46 FR 7921; E.O. 12281, 46 
FR 7923; E.O. 12282, 46 FR 7925; E.O. 12283, 46 FR 7927, and E.O. 12294, 
46 FR 14111)

[46 FR 14334, Feb. 26, 1981]



Sec. 535.217  Blocking of property of the former Shah of Iran and of
certain other Iranian nationals.

    (a) For the purpose of protecting the rights of litigants in courts 
within the United States, all property and assets located in the United 
States in the control of the estate of Mohammad Reza Pahlavi, the former 
Shah of Iran, or any close relative of the former Shah served as a 
defendant in litigation in such courts brought by Iran seeking the 
return of property alleged to belong to Iran, is blocked as to each such 
estate or person, until all such litigation against such estate or 
person is finally terminated. This provision shall apply only to such 
estate or persons as to which Iran has furnished proof of service to the 
Office of Foreign Assets Control and which the Office has identified in 
paragraph (b) of this section.
    (b) [No persons presently listed].
    (c) The effective date of this section is January 19, 1981, except 
as otherwise specified after the name of a person identified in 
paragraph (b) of this section.

(Secs. 201-207, 91 Stat. 1626, 50 U.S.C. 1701-1706; E.O. 12170, 44 FR 
65729; E.O. 12205, 45 FR 24099; E.O. 12211, 45 FR 26685; E.O. 12276, 46 
FR 7913; E.O. 12279, 46 FR 7919; E.O. 12280, 46 FR 7921; E.O. 12281, 46 
FR 7923; E.O. 12282, 46 FR 7925; E.O. 12283, 46 FR 7927, and E.O. 12294, 
46 FR 14111)

[46 FR 26478, May 13, 1981, as amended at 61 FR 8216, Mar. 4, 1996; 61 
FR 15382, Apr. 8, 1996]

[[Page 126]]



Sec. 535.218  Prohibitions and nullifications with respect to property 
described in Sec. Sec. 535.211, 535.212, 535.213, 535.214 and 535.215 

and standby letters of credit.

    (a) All licenses and authorizations for acquiring or exercising any 
right, power or privilege, by court order, attachment, or otherwise, 
including the license contained in Sec. 535.504, with respect to the 
property described in Sec. Sec. 535.211, 535.212, 535.213, 535.214 and 
535.215 are revoked and withdrawn.
    (b) All rights, powers and privileges relating to the property 
described in Sec. Sec. 535.211, 535.212, 535.213, 535.214 and 535.215 
and which derive from any attachment, injunction, other like proceedings 
or process, or other action in any litigation after November 14, 1979, 
at 8:10 a.m., e.s.t., including those derived from Sec. 535.504, other 
than rights, powers and privileges of the Government of Iran and its 
agencies, instrumentalities and controlled entities, whether acquired by 
court order or otherwise, are nullified, and all persons claiming any 
such right, power or privilege are hereafter barred from exercising the 
same.
    (c) All persons subject to the jurisdiction of the United States are 
prohibited from acquiring or exercising any right, power or privilege, 
whether by court order or otherwise, with respect to property (and any 
income earned thereon) referred to in Sec. Sec. 535.211, 535.212, 
535.213, 535.214 and 535.215.
    (d) The prohibitions contained in paragraph (c) of this section 
shall not apply to Iran, its agencies, instrumentalities or controlled 
entities.
    (e) Paragraph (a) of this section does not revoke or withdraw 
specific licenses authorizing the operation of blocked accounts which 
were issued prior to January 19, 1981, and which do not relate to 
litigation. Such licenses shall be deemed to be revoked as of May 31, 
1981, unless extended by general or specific license issued subsequent 
to February 26, 1981.
    (f) The provisions of paragraphs (a), (b) and (c) of this section 
shall apply to contested and contingent liabilities and property 
interests of the Government of Iran, its agencies, instrumentalities or 
controlled entities, including debts.
    (g) All existing attachments on standby letters of credit, 
performance bonds and similar obligations and on substitute blocked 
accounts established under Sec. 535.568 relating to standby letters of 
credit, performance bonds and similar obligations are nullified and all 
future attachments on them are hereafter prohibited. All rights, powers 
and privileges relating to such attachments are nullified and all 
persons hereafter are barred from asserting or exercising any rights, 
powers or privileges derived therefrom.

(Secs. 201-207, 91 Stat. 1626, 50 U.S.C. 1701-1706; E.O. 12170, 44 FR 
65729; E.O. 12205, 45 FR 24099; E.O. 12211, 45 FR 26685; E.O. 12276, 46 
FR 7913; E.O. 12279, 46 FR 7919; E.O. 12280, 46 FR 7921; E.O. 12281, 46 
FR 7923; E.O. 12282, 46 FR 7925; E.O. 12283, 46 FR 7927, and E.O. 12294, 
46 FR 14111)

[46 FR 14334, Feb. 26, 1981, as amended at 46 FR 26477, May 13, 1981]



Sec. 535.219  Discharge of obligation by compliance with this part.

    Compliance with Sec. Sec. 535.210, 535.211, 535.212, 535.213, 
535.214 and 535.215, or any other orders, regulations, instructions or 
directions issued pursuant to this part licensing, authorizing, 
directing or compelling the transfer of the assets described in those 
sections, shall, to the extent thereof, be a full acquittance and 
discharge for all purposes of the obligation of the person making the 
same. No person shall be held liable in any court for or with respect to 
anything done or omitted in good faith in connection with the 
administration of, or pursuant to and in reliance on, such orders, 
regulations, instructions or directions.

(Secs. 201-207, 91 Stat. 1626, 50 U.S.C. 1701-1706; E.O. 12170, 44 FR 
65729; E.O. 12205, 45 FR 24099; E.O. 12211, 45 FR 26685; E.O. 12276, 46 
FR 7913; E.O. 12279, 46 FR 7919; E.O. 12280, 46 FR 7921; E.O. 12281, 46 
FR 7923; E.O. 12282, 46 FR 7925; E.O. 12283, 46 FR 7927, and E.O. 12294, 
46 FR 14111)

[46 FR 14334, Feb. 26, 1981]



Sec. 535.220  Timing of transfers required by Sec. 535.212.

    Transfers required by Sec. 535.212 to the account of the Federal 
Reserve Bank of New York, as fiscal agent of the U.S.,

[[Page 127]]

at the Bank of England shall be executed no later than 6 a.m., e.s.t., 
January 20, 1981, when the banking institution had knowledge of the 
terms of Executive Order 12278 of January 19, 1981.

(Secs. 201-207, 91 Stat. 1626, 50 U.S.C. 1701-1706; E.O. 12170, 44 FR 
65729; E.O. 12205, 45 FR 24099; E.O. 12211, 45 FR 26685; E.O. 12276, 46 
FR 7913; E.O. 12279, 46 FR 7919; E.O. 12280, 46 FR 7921; E.O. 12281, 46 
FR 7923; E.O. 12282, 46 FR 7925; E.O. 12283, 46 FR 7927, and E.O. 12294, 
46 FR 14111)

[46 FR 14335, Feb. 26, 1981]



Sec. 535.221  Compliance with directive provisions.

    (a) Transfers of deposits or funds required by Sec. Sec. 535.213 
and 535.214 of this part shall be effected by means of wire transfer to 
the Federal Reserve Bank of New York for credit to the following 
accounts: with respect to transfers required by Sec. 535.213, to the 
Federal Reserve Bank of New York, as fiscal agent of the United States, 
Special Deposit Account A, and with respect to transfers required by 
Sec. 535.214, to the Federal Reserve Bank of New York, as fiscal agent 
of the United States, Special Deposit Account B.
    (b) Securities to be transferred as required by Sec. Sec. 535.213 
and 535.214 of this part that are not presently registered in the name 
of Iran or an Iranian entity shall be delivered to the Federal Reserve 
Bank of New York in fully transferable form (bearer or endorsed in 
blank), accompanied by all necessary transfer documentation, e.g., stock 
or bond powers or powers of attorney. All securities transferred, 
including those presently registered in the name of Iran or an Iranian 
entity, shall be accompanied by instructions to deposit such securities 
to the following accounts: with respect to transfers required by Sec. 
535.213, to the Federal Reserve Bank of New York, as fiscal agent of the 
United States, Special Custody Account A, and with respect to transfers 
required by Sec. 535.214, to the Federal Reserve Bank of New York, as 
fiscal agent of the United States, Special Custody Account B.
    (1) Securities which are in book-entry form shall be transferred by 
wire transfer to the Federal Reserve Bank of New York to the appropriate 
account named in this paragraph.
    (2) Definitive securities which are in bearer or registered form 
shall be hand delivered or forwarded by registered mail, insured, to the 
Federal Reserve Bank of New York, Safekeeping Department, to the 
appropriate account named in this paragraph.
    (c) If a security in which Iran or an Iranian entity has an interest 
is evidenced by a depositary receipt or other evidence of a security, 
the legal owner of such security shall arrange to have the security 
placed in fully transferable form (bearer or endorsed in blank) as 
provided in paragraph (b) of this section, and transferred pursuant to 
paragraph (b)(2) of this section.
    (d) Any person delivering a security or securities to the Federal 
Reserve Bank of New York under paragraph (b) of this section, shall 
provide the Bank at least 2 business days prior written notice of such 
delivery, specifically identifying the sending person, the face or par 
amount and type of security, and whether the security is in bearer, 
registered or book-entry form.

(Secs. 201-207, 91 Stat. 1626, 50 U.S.C. 1701-1706; E.O. 12170, 44 FR 
65729; E.O. 12205, 45 FR 24099; E.O. 12211, 45 FR 26685; E.O. 12276, 46 
FR 7913; E.O. 12279, 46 FR 7919; E.O. 12280, 46 FR 7921; E.O. 12281, 46 
FR 7923; E.O. 12282, 46 FR 7925; E.O. 12283, 46 FR 7927, and E.O. 12294, 
46 FR 14111)

[46 FR 30341, June 8, 1981]



Sec. 535.222  Suspension of claims eligible for Claims Tribunal.

    (a) All claims which may be presented to the Iran-United States 
Claims Tribunal under the terms of Article II of the Declaration of the 
Government of the Democratic and Popular Republic of Algeria Concerning 
the Settlement of Claims by the Government of the United States of 
America and the Government of the Islamic Republic of Iran, dated 
January 19, 1981, and all claims for equitable or other judicial relief 
in connection with such claims, are hereby suspended, except as they may 
be presented to the Tribunal. During the period of this suspension, all 
such claims shall have no legal effect in any action now pending in any 
court in the United States, including the courts of any state and any 
locality thereof, the District of Columbia and Puerto Rico, or in any 
action

[[Page 128]]

commenced in any such court after the effective date of this section.
    (b) Nothing in paragraph (a) of this section shall prohibit the 
assertion of a defense, set-off or counterclaim in any pending or 
subsequent judicial proceeding commenced by the Government of Iran, any 
political subdivision of Iran, or any agency, instrumentality or entity 
controlled by the Government of Iran or any political subdivision 
thereof.
    (c) Nothing in this section precludes the commencement of an action 
after the effective date of this section for the purpose of tolling the 
period of limitations for commencement of such action.
    (d) Nothing in this section shall require dismissal of any action 
for want of prosecution.
    (e) Suspension under this section of a claim or a portion thereof 
submitted to the Iran-United States Claims Tribunal for adjudication 
shall terminate upon a determination by the Tribunal that it does not 
have jurisdiction over such claim or portion thereof.
    (f) A determination by the Iran-United States Claims Tribunal on the 
merits that a claimant is not entitled to recover on a claim or part 
thereof shall operate as a final resolution and discharge of such claim 
or part thereof for all purposes. A determination by the Tribunal that a 
claimant shall have recovery on a claim or part thereof in a specified 
amount shall operate as a final resolution and discharge of such claim 
or part thereof for all purposes upon payment to the claimant of the 
full amount of the award including any interest awarded by the Tribunal.
    (g) Nothing in this section shall apply to any claim concerning the 
validity or payment of a standby letter of credit, performance or 
payment bond, or other similar instrument that is not the subject of a 
determination by the Iran-United States Claims Tribunal on the merits 
thereof. However, assertion of such a claim through judicial proceedings 
is governed by the general license in Sec. 535.504. A determination by 
the Iran-United States Claims Tribunal on the merits that a standby 
letter of credit, performance bond or similar obligation is invalid, has 
been paid or otherwise discharged, or has no further purpose, or any 
similar determination shall operate as a final resolution and discharge 
or Iran's interest therein and, notwithstanding the provisions of Sec. 
535.504, may be enforced by a judicial proceeding to obtain a final 
judicial judgment or order permanently disposing of that interest.
    (h) The effective date of this section is February 24, 1981.

(Secs. 201-207, 91 Stat. 1626, 50 U.S.C. 1701-1706; E.O. 12170, 44 FR 
65729; E.O. 12205, 45 FR 24099; E.O. 12211, 45 FR 26685; E.O. 12276, 46 
FR 7913; E.O. 12279, 46 FR 7919; E.O. 12280, 46 FR 7921; E.O. 12281, 46 
FR 7923; E.O. 12282, 46 FR 7925; E.O. 12283, 46 FR 7927, and E.O. 12294, 
46 FR 14111)

[46 FR 14335, Feb. 26, 1981, as amended at 47 FR 29529, July 7, 1982; 56 
FR 6546, Feb. 15, 1991]



                      Subpart C_General Definitions



Sec. 535.301  Iran; Iranian Entity.

    (a) The term Iran and Iranian Entity includes:
    (1) The state and the Government of Iran as well as any political 
subdivision, agency, or instrumentality thereof or any territory, 
dependency, colony, protectorate, mandate, dominion, possession or place 
subject to the jurisdiction thereof;
    (2) Any partnership, association, corporation, or other organization 
substantially owned or controlled by any of the foregoing;
    (3) Any person to the extent that such person is, or has been, or to 
the extent that there is reasonable cause to believe that such person 
is, or has been, since the effective date acting or purporting to act 
directly or indirectly on behalf of any of the foregoing;
    (4) Any territory which on or since the effective date is controlled 
or occupied by the military, naval or police forces or other authority 
of Iran; and
    (5) Any other person or organization determined by the Secretary of 
the Treasury to be included within paragraph (a) of this section.
    (b) A person specified in paragraph (a)(2) of this section shall not 
be deemed to fall within the definition of Iran solely by reason of 
being located in, organized under the laws of, or having its principal 
place of business in, Iran.

[[Page 129]]



Sec. 535.308  Person.

    The term person means an individual, partnership, association, 
corporation or other organization.

[45 FR 24433, Apr. 9, 1980]



Sec. 535.310  Transfer.

    The term transfer shall mean 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, transfer, or alter, 
directly or indirectly, any right, remedy, power, privilege, or interest 
with respect to any property and, without limitation upon the foregoing, 
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 appointment of any agent, trustee, or fiduciary; the creation or 
transfer of any lien; the issuance, docketing, filing, or the levy of or 
under any judgement, decree, attachment, 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, or the exercise of any power of appointment, power of 
attorney, or other power.

[44 FR 75352, Dec. 19, 1979]



Sec. 535.311  Property; property interests.

    Except as defined in Sec. 535.203(f) for the purposes of that 
section, the terms property and property interest or property interests 
shall include, but not by way of limitation, money, checks, drafts, 
bullion, bank deposits, savings accounts, debts, indebtedness, 
obligations, notes, debentures, stocks, bonds, coupons, any other 
financial securities, 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, 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, real estate and any interest therein, leaseholds, grounds 
rents, 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, 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. 535.312  Interest.

    Except as otherwise provided in this part, the term interest when 
used with respect to property shall mean an interest of any nature 
whatsoever, direct or indirect.

[44 FR 75352, Dec. 19, 1979]



Sec. 535.316  License.

    Except as otherwise specified, the term license shall mean any 
license or authorization contained in or issued pursuant to this part.

[44 FR 66832, Nov. 21, 1979]



Sec. 535.317  General license.

    A general license is any license or authorization the terms of which 
are set forth in this part.

[44 FR 66832, Nov. 21, 1979]



Sec. 535.318  Specific license.

    A specific license is any license or authorization issued pursuant 
to this part but not set forth in this part.

[44 FR 66832, Nov. 21, 1979]



Sec. 535.320  Domestic bank.

    (a) The term domestic bank shall mean any branch or office within 
the United States of any of the following which is not Iran or an 
Iranian entity: any bank or trust company incorporated under the banking 
laws of the United States or of any state, territory, or district of the 
United States, or any private bank or banker subject to supervision and 
examination under the banking laws of the United States or of any state, 
territory or district of

[[Page 130]]

the United States. The Secretary of the Treasury may also authorize any 
other banking institution to be treated as a ``domestic bank'' for the 
purpose of this definition or for the purpose of any or all sections of 
this part.
    (b) For purposes of Sec. Sec. 535.413, 535.508, 535.531 and 
535.901, the term domestic bank includes any branch or office within the 
United States of a non-Iranian foreign bank.

[44 FR 66832, Nov. 21, 1979]



Sec. 535.321  United States; continental United States.

    The term United States means the United States and all areas under 
the jurisdiction or authority thereof including the Trust Territory of 
the Pacific Islands. The term continental United States means the states 
of the United States and the District of Columbia.

[44 FR 66833, Nov. 21, 1979]



Sec. 535.329  Person subject to the jurisdiction of the United States.

    The term person subject to the jurisdiction of the United States 
includes:
    (a) Any person wheresoever located who is a citizen or resident of 
the United States;
    (b) Any person actually within the United States;
    (c) Any corporation organized under the laws of the United States or 
of any state, territory, possession, or district of the United States; 
and
    (d) Any partnership, association, corporation, or other organization 
wheresoever organized or doing business which is owned or controlled by 
persons specified in paragraph (a), (b), or (c) of this section.



Sec. 535.333  Properties.

    (a) The term properties as used in Sec. 535.215 means all 
uncontested and non-contingent liabilities and property interests of the 
Government of Iran, its agencies, instrumentalities, or controlled 
entities, including debts. It does not include bank deposits or funds 
and securities. It also does not include obligations under standby 
letters of credit or similar instruments in the nature of performance 
bonds, including accounts established pursuant to Sec. 535.568.
    (b) Properties do not cease to fall within the definition in 
paragraph (a), above, merely due to the existence of unpaid obligations, 
charges or fees relating to such properties, or undischarged liens 
against such properties.
    (c) Liabilities and property interests of the Government of Iran, 
its agencies, instrumentalities, or controlled entities may be 
considered contested only if the holder thereof reasonably believes that 
Iran does not have title or has only partial title to the asset. After 
October 23, 2001, such a belief may be considered reasonable only if it 
is based upon a bona fide opinion, in writing, of an attorney licensed 
to practice within the United States stating that Iran does not have 
title or has only partial title to the asset. For purposes of this 
paragraph, the term holder shall include any person who possesses the 
property, or who, although not in physical possession of the property, 
has, by contract or otherwise, control over a third party who does in 
fact have physical possession of the property. A person is not a holder 
by virtue of being the beneficiary of an attachment, injunction or 
similar order.
    (d) Liabilities and property interests shall not be deemed to be 
contested solely because they are subject to an attachment, injunction, 
or other similar order.

[66 FR 38554, July 25, 2001]



Sec. 535.334  Act of the Government of Iran.

    For purposes of Sec. 535.216, an act of the Government of Iran, 
includes any acts ordered, authorized, allowed, approved, or ratified by 
the Government of Iran, its agencies, instrumentalities or controlled 
entities.

(Secs. 201-207, 91 Stat. 1626, 50 U.S.C. 1701-1706; E.O. 12170, 44 FR 
65729; E.O. 12205, 45 FR 24099; E.O. 12211, 45 FR 26685; E.O. 12276, 46 
FR 7913; E.O. 12279, 46 FR 7919; E.O. 12280, 46 FR 7921; E.O. 12281, 46 
FR 7923; E.O. 12282, 46 FR 7925; E.O. 12283, 46 FR 7927, and E.O. 12294, 
46 FR 14111)

[46 FR 14336, Feb. 26, 1981]



Sec. 535.335  Claim arising out of events in Iran.

    For purposes of Sec. 535.216, a claim is one ``arising out of 
events'' of the type

[[Page 131]]

specified only if such event is the specific act that is the basis of 
the claim.

(Secs. 201-207, 91 Stat. 1626, 50 U.S.C. 1701-1706; E.O. 12170, 44 FR 
65729; E.O. 12205, 45 FR 24099; E.O. 12211, 45 FR 26685; E.O. 12276, 46 
FR 7913; E.O. 12279, 46 FR 7919; E.O. 12280, 46 FR 7921; E.O. 12281, 46 
FR 7923; E.O. 12282, 46 FR 7925; E.O. 12283, 46 FR 7927, and E.O. 12294, 
46 FR 14111)

[46 FR 14336, Feb. 26, 1981]



Sec. 535.337  Funds.

    For purposes of this part, the term funds shall mean monies in 
trust, escrow and similar special funds held by non-banking 
institutions, currency and coins. It does not include accounts created 
under Sec. 535.568.

(Secs. 201-207, 91 Stat. 1626, 50 U.S.C. 1701-1706; E.O. 12170, 44 FR 
65729; E.O. 12205, 45 FR 24099; E.O. 12211, 45 FR 26685; E.O. 12276, 46 
FR 7913; E.O. 12279, 46 FR 7919; E.O. 12280, 46 FR 7921; E.O. 12281, 46 
FR 7923; E.O. 12282, 46 FR 7925; E.O. 12283, 46 FR 7927, and E.O. 12294, 
46 FR 14111)

[46 FR 30341, June 8, 1981]



                        Subpart D_Interpretations



Sec. 535.401  Reference to amended sections.

    Reference to any section of this part or to any regulation, ruling, 
order, instruction, direction or license issued pursuant to this part 
shall be deemed to refer to the same as currently amended unless 
otherwise so specified.

[45 FR 24433, Apr. 9, 1980]



Sec. 535.402  Effect of amendment of sections of this part or of other orders, etc.

    Any amendment, modification, or revocation of any section of this 
part or of any order, regulation, ruling, instruction, or license issued 
by or under the direction of the Secretary of the Treasury pursuant to 
section 203 of the International Emergency Economic Powers Act shall 
not, unless otherwise specifically provided, be deemed to affect any act 
done or omitted to be done, or any suit or proceeding had or commenced 
in any civil or criminal case, prior to such amendment, modification, or 
revocation and all penalties, forfeitures, and liabilities under any 
such order, regulation, ruling, instruction or license shall continue 
and may be enforced as if such amendment, modification, or revocation 
had not been made.

[45 FR 24433, Apr. 9, 1980]



Sec. 535.403  Termination and acquisition of an interest of Iran or an 
Iranian entity.

    (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 Iran or an Iranian entity, such property shall no 
longer be deemed to be property in which Iran or an Iranian entity has 
or has had an interest, unless there exists in the property another such 
interest the transfer of which has not been effected pursuant to license 
or other authorization.
    (b) Unless otherwise specifically provided in a license or 
authorization contained in or issued pursuant to this part, if property 
(including any property interest) is transferred to Iran or an Iranian 
interest, such property shall be deemed to be property in which there 
exists an interest of Iran or an Iranian entity.

[45 FR 24433, Apr. 9, 1980]



Sec. 535.413  Transfers between dollar accounts held for foreign banks.

    Transfers authorized by Sec. 535.901 include transfers by order of 
a non-Iranian foreign bank from its account in a domestic bank (directly 
or through a foreign branch or subsidiary of a domestic bank) to an 
account held by a domestic bank (directly or through a foreign branch or 
subsidiary) for a second non-Iranian foreign bank which in turn credits 
an account held by it abroad for Iran. For the purposes of this section, 
a non-Iranian foreign bank means a bank which is not a person subject to 
the jurisdiction of the United States.

[44 FR 66833, Nov. 21, 1979]



Sec. 535.414  Payments to blocked accounts under Sec. 535.508.

    (a) Section 535.508 does not authorize any transfer from a blocked 
account within the United States to an account held by any bank outside 
the United States or any other payment into a

[[Page 132]]

blocked account outside the United States.
    (b) Section 535.508 only authorizes payment into a blocked account 
held by a domestic bank as defined by Sec. 535.320.

[44 FR 67617, Nov. 26, 1979]



Sec. 535.415  Payment by Iranian entities of obligations to persons 
within the United States.

    A person receiving payment under Sec. 535.904 may distribute all or 
part of that payment to anyone: Provided, That any such payment to Iran 
or an Iranian entity must be to a blocked account in a domestic bank.

[44 FR 67617, Nov. 26, 1979]



Sec. 535.416  Letters of credit.

    (a) Question. Prior to the effective date, a bank subject to the 
jurisdiction of the United States has issued or confirmed a documentary 
letter of credit for a non-Iranian account party in favor of an Iranian 
entity. Can payment be made upon presentation of documentary drafts?
    Answer. Yes, provided payment is made into a blocked account in a 
domestic bank.
    (b) Question. Prior to the effective date, a domestic branch of a 
bank organized or incorporated under the laws of the United States has 
issued or confirmed a documentary letter of credit for a non-Iranian 
account party in favor of an Iranian entity. Payment is to be made 
through a foreign branch of the bank. Can payment be made upon 
presentation of documentary drafts?
    Answer. Yes, provided payment is made into a blocked account in a 
domestic bank.
    (c) Question. Prior to the effective date, a foreign bank confirms a 
documentary letter of credit issued by its U.S. agency or branch for a 
non-Iranian account party in favor of an Iranian entity. Can the U.S. 
agency or branch of the foreign bank transfer funds to the foreign bank 
in connection with that foreign bank's payment under the letter of 
credit?
    Answer. No, the U.S. agency's payment is blocked, unless the foreign 
bank made payment to the Iranian entity prior to the effective date.
    (d) Question. Prior to the effective date, a bank subject to the 
jurisdiction of the United States has issued or confirmed a documentary 
letter of credit for a non-Iranian account party in favor of an Iranian 
entity. The Iranian entity presents documentry drafts which are 
deficient in some detail. May the non-Iranian account party waive the 
documentary deficiency and authorize the bank to make payment?
    Answer. Yes, provided payment is made into a blocked account in a 
domestic bank. However, the non-Iranian account party is not obligated 
by these Regulations to exercise a waiver of documentary deficiencies. 
In cases where such a waiver is not exercised, the bank's payment 
obligation, if any, under the letter of credit remains blocked, as does 
any obligation, contingent or otherwise, of the account party. The 
documents are also blocked.
    (e) Question. Prior to the effective date, a bank subject to the 
jurisdiction of the United States has issued or confirmed a documentary 
letter of credit for a non-Iranian account party in favor of an Iranian 
entity. The Iranian entity does not make timely, complete, or proper 
presentation of documents, and the letter of credit expires. Does there 
remain a blocked payment obligation held by the bank?
    Answer. No, but any documents held by the bank continue to be 
blocked. It is also possible that the account party still has a related 
obligation to the Iranian entity and any such obligation would be 
blocked.
    (f) Question. A bank subject to the jurisdiction of the United 
States has issued a letter of credit for a U.S. account party in favor 
of an Iranian entity. The letter of credit is confirmed by a foreign 
bank. Prior to or after the effective date, the Iranian entity presents 
documents to the U.S. issuing bank. Payment is deferred. After the 
effective date, the Iranian entity requests that the issuing bank either 
return the documents to the Iranian entity or transfer them to the 
confirming bank. Can the issuing bank do so?
    Answer. No. The U.S. issuing bank can neither return nor transfer 
the documents without a license. The documents constitute blocked 
property under the Regulations.

[[Page 133]]

    (g) Question. Prior to the effective date, a bank subject to the 
jurisdiction of the United States has issued or confirmed a documentary 
letter of credit for a non-Iranian account party in favor of an Iranian 
entity. The Iranian entity presents documentary drafts which are 
deficient in some detail. May the non-Iranian account party waive the 
documentary deficiency and make payment?
    Answer. Yes, provided payment is made into a blocked account in a 
domestic bank. However, the non-Iranian account party is not obligated 
by these Regulations to exercise a waiver of documentary deficiencies. 
In cases where such a waiver is not exercised, the amount of the payment 
held by the account party is blocked.

[44 FR 69287, Dec. 3, 1979, as amended at 44 FR 75353, Dec. 19, 1979]



Sec. 535.420  Transfers of accounts under Sec. 535.508 from demand to 
interest-bearing status.

    Section 535.508 authorizes transfer of a blocked demand deposit 
account to interest-bearing status at the instruction of the Iranian 
depositor at any time.

[44 FR 76784, Dec. 28, 1979]



Sec. 535.421  Prior contractual commitments not a basis for licensing.

    Specific licenses are not issued on the basis that an unlicensed 
firm commitment or payment has been made in connection with a 
transaction prohibited by this part. Contractual commitments to engage 
in transactions subject to the prohibitions of this part should not be 
made, unless the contract specifically states that the transaction is 
authorized by general license or that it is subject to the issuance of a 
specific license.

[45 FR 24433, Apr. 9, 1980]



Sec. 535.433  Central Bank of Iran.

    The Central Bank of Iran (Bank Markazi Iran) is an agency, 
instrumentality and controlled entity of the Government of Iran for all 
purposes under this part.

(Secs. 201-207, 91 Stat. 1626, 50 U.S.C. 1701-1706; E.O. 12170, 44 FR 
65729; E.O. 12205, 45 FR 24099; E.O. 12211, 45 FR 26685; E.O. 12276, 46 
FR 7913; E.O. 12279, 46 FR 7919; E.O. 12280, 46 FR 7921; E.O. 12281, 46 
FR 7923; E.O. 12282, 46 FR 7925; E.O. 12283, 46 FR 7927, and E.O. 12294, 
46 FR 14111)

[46 FR 14336, Feb. 26, 1981]



Sec. 535.437  Effect on other authorities.

    Nothing in this part in any way relieves any persons subject to the 
jurisdiction of the United States from securing licenses or other 
authorizations as required from the Secretary of State, the Secretary of 
Commerce or other relevant agency prior to executing the transactions 
authorized or directed by this part. This includes licenses for 
transactions involving military equipment.

(Secs. 201-207, 91 Stat. 1626, 50 U.S.C. 1701-1706; E.O. 12170, 44 FR 
65729; E.O. 12205, 45 FR 24099; E.O. 12211, 45 FR 26685; E.O. 12276, 46 
FR 7913; E.O. 12279, 46 FR 7919; E.O. 12280, 46 FR 7921; E.O. 12281, 46 
FR 7923; E.O. 12282, 46 FR 7925; E.O. 12283, 46 FR 7927, and E.O. 12294, 
46 FR 14111)

[46 FR 14336, Feb. 26, 1981]



Sec. 535.438  Standby letters of credit, performance or payment bonds 
and similar obligations.

    (a) Nothing contained in Sec. Sec. 535.212, 535.213 and 535.214 or 
in any other provision or revocation or amendment of any provision in 
this part affects the prohibition in Sec. 535.201 and the licensing 
procedure in Sec. 535.568 relating to certain standby letters of 
credit, performance bonds and similar obligations. The term funds and 
securities as used in this part does not include substitute blocked 
accounts established under section 535.568 relating to standby letters 
of credit, performance or payment bonds and similar obligations.
    (b) No transfer requirement under Sec. 535.213 or Sec. 535.214 
shall be deemed to authorize or compel any payment or transfer of any 
obligation under a standby letter of credit, performance bond or similar 
obligation as to which a blocked account has been established

[[Page 134]]

pursuant to Sec. 535.568 or as to which payment is prohibited under an 
injunction obtained by the account party.

(Secs. 201-207, 91 Stat. 1626, 50 U.S.C. 1701-1706; E.O. 12170, 44 FR 
65729; E.O. 12205, 45 FR 24099; E.O. 12211, 45 FR 26685; E.O. 12276, 46 
FR 7913; E.O. 12279, 46 FR 7919; E.O. 12280, 46 FR 7921; E.O. 12281, 46 
FR 7923; E.O. 12282, 46 FR 7925; E.O. 12283, 46 FR 7927, and E.O. 12294, 
46 FR 14111)

[46 FR 14336, Feb. 26, 1981, as amended at 46 FR 30341, June 8, 1981]



Sec. 535.440  Commercially reasonable interest rates.

    (a) For purposes of Sec. Sec. 535.212 and 535.213, what is meant by 
``commercially reasonable rates'' depends on the particular 
circumstances. In the case of time or savings deposits, the 
``commercially reasonable rate'' is that rate provided for by the 
deposit agreement or applicable law. With respect to other obligations 
where the rate remains to be determined, it is presently expected that 
the ``commercially reasonable rate'' will be the rate agreed upon by the 
bank and Iran. However, where a deposit has in fact operated as a demand 
account under Treasury license, it would be appropriate to treat the 
deposit for purposes of Sec. Sec. 535.212 and 535.213 as a non-interest 
bearing account. Furthermore, in the event that the Iran-U.S Claims 
Tribunal (the ``Tribunal'') determines that interest additional to that 
agreed upon between the bank and Iran, or compensation or damages in 
lieu of interest, is due Iran, then that amount determined by the 
Tribunal to be owing to Iran shall be transferred as, or as part of, the 
interest at ``commercially reasonable rates'' required to be transferred 
pursuant to Sec. Sec. 535.212 and 535.213, regardless of any settlement 
between the bank and Iran or any release or discharge that Iran may have 
given the bank.
    (b) The contingent interest of Iran in any liability for further or 
additional interest, or compensation or damages in lieu of interest, 
that may be claimed in, and determined by the Tribunal, constitutes an 
interest of Iran in property for purposes of this part, and no agreement 
between Iran and any person subject to the jurisdiction of the United 
States is effective to extinguish such Iranian interest in property 
unless so specifically licensed by the Treasury Department.
    (c) For deposits held as time deposits, no penalty shall be imposed 
for early withdrawal. (In this connection, the Board of Governors of the 
Federal Reserve System has determined that application of the penalty 
for early withdrawal of time deposits transferred before maturity, 
pursuant to Sec. 535.213 is not required.)

(Secs. 201-207, 91 Stat. 1626, 50 U.S.C. 1701-1706; E.O. 12170, 44 FR 
65729; E.O. 12205; 45 FR 24099; E.O. 12211, 45 FR 26605; E.O. 12276, 46 
FR 7913; E.O. 12277, 46 FR 7915; E.O. 12278, 46 FR 7917; E.O. 12279, 46 
FR 7919; E.O. 12280, 46 FR 7921; E.O. 12281, 46 FR 7923; E.O. 12282, 46 
FR 7925; and E.O. 12294, 46 FR 14111)

[48 FR 253, Jan. 4, 1983]



Sec. 535.441  Settlement Agreement regarding small claims.

    (a) Award No. 483 of June 22, 1990 of the Iran-United States Claims 
Tribunal, approving and giving effect to the Settlement Agreement in 
Claims of Less Than $250,000, Case No. 86 and Case No. B38, dated May 
13, 1990 (the ``Settlement Agreement''), constitutes a determination by 
the Iran-United States Claims Tribunal of all claims encompassed therein 
within the meaning of Sec. 535.222(f) of this part. In accordance with 
Sec. 535.222(f), upon payment from the Security Account to the United 
States, the Settlement Agreement shall operate as a final resolution and 
discharge of all claims encompassed by the Settlement Agreement for all 
purposes. All such claims shall be subject to the exclusive jurisdiction 
of the Foreign Claims Settlement Commission on the terms established in 
the Settlement Agreement and by the provisions of Public Law 99-93, 
Title V, Aug. 16, 1985, 99 Stat. 437, applicable to en bloc settlements 
of claims of U.S. nationals against Iran.
    (b) Pursuant to the Settlement Agreement, the private claims subject 
to that agreement and this part are ``* * * claims of less than $250,000 
each, which have been filed with the Tribunal by the United States on 
behalf of U.S. nationals, which claims are included in Cases Nos. 10001 
through 12785, and which are still pending, * * * ,'' and ``* * * claims 
of U.S. nationals for less than $250,000 which have been

[[Page 135]]

submitted to the United States Department of State but were not timely 
filed with the Tribunal, as well as claims of U.S. nationals for less 
than $250,000 which have been either withdrawn by the Claimants or 
dismissed by the Tribunal for lack of jurisdiction, * * * .'' Settlement 
Agreement, Art. I(A).

[55 FR 40831, Oct. 5, 1990]



  Subpart E_Licenses, Authorizations and Statements of Licensing Policy



Sec. 535.501  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.

[68 FR 53657, Sept. 11, 2003]



Sec. 535.502  Effect of license or authorization.

    (a) No license or other authorization contained in this part or 
otherwise issued by or under the direction of the Secretary of the 
Treasury pursuant to section 203 of the International Emergency Economic 
Powers Act, shall be deemed to authorize or validate any transaction 
effected prior to the issuance thereof, unless such license or other 
authorization specifically so provides.
    (b) No regulation, ruling, instruction, or license authorizes a 
transaction prohibited under this part unless the regulation, ruling, 
instruction, or license is issued by the Treasury Department 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 provision of parts 500, 505, 515, 520 or 
530 of this chapter unless the regulation, ruling, instruction or 
license specifically refers to such provision.
    (c) Any regulation, ruling, instruction or license authorizing a 
transaction otherwise prohibited under this part has the effect of 
removing a prohibition or prohibitions in subpart B from the 
transaction, but only to the extent specifically stated by its terms. 
Unless the regulation, ruling, instruction or license otherwise 
specifies, such an authorization does not create any right, duty, 
obligation, claim, or interest in, or with respect to, any property 
which would not otherwise exist under ordinary principles of law.

[44 FR 66833, Nov. 21, 1979, as amended at 44 FR 75353, Dec. 19, 1979]



Sec. 535.503  Exclusion from licenses and authorizations.

    The Secretary of the Treasury reserves the right to exclude any 
person from the operation of any license or from the privileges therein 
conferred or to restrict the applicability thereof with respect to 
particular persons, transactions or property or classes thereof. Such 
action shall be binding upon all persons receiving actual notice or 
constructive notice thereof.

[44 FR 66833, Nov. 21, 1979]



Sec. 535.504  Certain judicial proceedings with respect to property of
Iran or Iranian entities.

    (a) Subject to the limitations of paragraphs (b) and (c) of this 
section and Sec. 535.222, judicial proceedings are authorized with 
respect to property in which on or after 8:10 a.m., e.s.t., November 14, 
1979, there has existed an interest of Iran or an Iranian entity.
    (b) This section does not authorize:
    (1) Any pre-judgment attachment or any other proceeding of similar 
or analogous effect pertaining to any property (and any income earned 
thereon) subject to the provisions of Sec. Sec. 535.211, 535.212, 
535.213, 535.214 or 535.215 on January 19, 1981, including, but not 
limited to, a temporary restraining order or preliminary injunction, 
which operates as a restraint on property, for purposes of holding it 
within the jurisdiction of a court, or otherwise;
    (2) Any payment or delivery out of a blocked account based upon a 
judicial proceeding, pertaining to any property subject to the 
provisions of Sec. 535.211, Sec. 535.212, Sec. 535.213, Sec. 535.214 
or Sec. 535.215 on January 19, 1981;
    (3)(i) Any final judicial judgment or order (A) permanently 
enjoining, (B) terminating or nullifying, or (C) otherwise permanently 
disposing of any interest of Iran in any standby letter of

[[Page 136]]

credit, performance bond or similar obligation. Any license authorizing 
such action is hereby revoked and withdrawn. This revocation and 
withdrawal of prior licenses prohibits judgments or orders that are 
within the terms of this paragraph (b)(3)(i), including any such 
judgments or orders which may have been previously entered but which had 
not become final by July 2, 1982, through the conclusion of appellate 
proceedings or the expiration of the time for appeal.
    (ii) Nothing in this paragraph (b)(3) shall prohibit the assertion 
of any defense, set-off or counterclaim in any pending or subsequent 
judicial proceeding commenced by the Government of Iran, any political 
subdivision of Iran, or any agency, instrumentality or entity owned or 
controlled by the Government of Iran or any political subdivision 
thereof.
    (iii) Nothing in this paragraph (b)(3) shall preclude the 
commencement of an action for the purpose of tolling the period of 
limitations for commencement of such action.
    (iv) Nothing in this paragraph (b)(3) shall require dismissal of any 
action for want of prosecution.
    (c) For purposes of this section, contested and contingent 
liabilities and property interests of the Government of Iran, its 
agencies, instrumentalities, or controlled entities, including debts, 
shall be deemed to be subject to Sec. 535.215.
    (d) A judicial proceeding is not authorized by this section if it is 
based on transactions which violated the prohibitions of this part.
    (e) Judicial proceedings to obtain attachments on standby letters of 
credit, performance bonds or similar obligations and on substitute 
blocked accounts established under Sec. 535.568 relating to standby 
letters of credit, performance bonds and similar obligations are not 
authorized or licensed.

(Secs. 201-207, 91 Stat. 1626, 50 U.S.C. 1701-1706; E.O. 12170, 44 FR 
65729; E.O. 12205, 45 FR 24099; E.O. 12211, 45 FR 26685; E.O. 12276, 46 
FR 7913; E.O. 12279, 46 FR 7919; E.O. 12280, 46 FR 7921; E.O. 12281, 46 
FR 7923; E.O. 12282, 46 FR 7925; E.O. 12283, 46 FR 7927, and E.O. 12294, 
46 FR 14111)

[46 FR 14336, Feb. 26, 1981, as amended at 46 FR 26477, May 13, 1981; 47 
FR 29529, July 7, 1982; 47 FR 55482, Dec. 10, 1982; 48 FR 57129, Dec. 
28, 1983]



Sec. 535.508  Payments to blocked accounts in domestic banks.

    (a) Any payment or transfer of credit, including any payment or 
transfer by any U.S.-owned or controlled foreign firm or branch to a 
blocked account in a domestic bank in the name of Iran or any Iranian 
entity is hereby authorized: Provided, Such payment or transfer shall 
not be made from any blocked account if such payment or transfer 
represents, directly or indirectly, a transfer of the interest of Iran 
or an Iranian entity to any other country or person.
    (b) This section does not authorize:
    (1) Any payment or transfer to any blocked account held in a name 
other than that of Iran or the Iranian entity who is the ultimate 
beneficiary of such payment or transfer; or
    (2) Any foreign exchange transaction including, but not by way of 
limitation, any transfer of credit, or payment of an obligation, 
expressed in terms of the currency of any foreign country.
    (c) This section does not authorize any payment or transfer of 
credit comprising an integral part of a transaction which cannot be 
effected without the subsequent issuance of a further license.
    (d) This section does not authorize the crediting of the proceeds of 
the sale of securities held in a blocked account or a sub-account 
thereof, or the income derived from such securities to a blocked account 
or sub-account under any name or designation which differs from the name 
or designation of the specific blocked account or sub-account in which 
such securities were held.
    (e) This section does not authorize any payment or transfer from a

[[Page 137]]

blocked account in a domestic bank to a blocked account held under any 
name or designation which differs from the name or designation of the 
specified blocked account or sub-account from which the payment or 
transfer is made.

    Note to Sec. 535.508: Please refer to Sec. 501.603 of this chapter 
for mandatory reporting requirements regarding financial transfers.

[44 FR 66590, Nov. 20, 1979, as amended at 62 FR 45107, Aug. 25, 1997]



Sec. 535.528  Certain transactions with respect to Iranian patents,
trademarks and copyrights authorized.

    (a) The following transactions by any person subject to the 
jurisdiction of the United States are authorized:
    (1) The filing and prosecution of any application for an Iranian 
patent, trademark or copyright, or for the renewal thereof;
    (2) The receipt of any Iranian patent, trademark or copyright;
    (3) The filing and prosecution of opposition or infringement 
proceedings with respect to any Iranian patent, trademark, or copyright, 
and the prosecution of a defense to any such proceedings;
    (4) The payment of fees currently due to the government of Iran, 
either directly or through an attorney or representative, in connection 
with any of the transactions authorized by paragraphs (a)(1), (2), and 
(3) of this section or for the maintenance of any Iranian patent, 
trademark or copyright; and
    (5) The payment of reasonable and customary fees currently due to 
attorneys or representatives in Iran incurred in connection with any of 
the transactions authorized by paragraphs (a)(1), (2), (3) or (4) of 
this section.
    (b) Payments effected pursuant to the terms of paragraphs (a)(4) and 
(5) of this section may not be made from any blocked account.
    (c) As used in this section the term Iranian patent, trademark, or 
copyright shall mean any patent, petty patent, design patent, trademark 
or copyright issued by Iran.

[45 FR 29288, May 2, 1980]



Sec. 535.531  Payment of certain checks and drafts.

    (a) A bank subject to the jurisdiction of the United States is 
hereby authorized to make payments from blocked accounts with such 
banking institution of checks and drafts drawn or issued prior to the 
effective date, Provided, That:
    (1) The amount involved in any one payment, acceptance, or debit 
does not exceed $3000; or
    (2) The check or draft was within the United States in process of 
collection by a domestic bank on or prior to the effective date and does 
not exceed $50,000.
    (3) The authorization contained in this paragraph shall expire at 
the close of business on January 14, 1980.
    (b) A bank subject to the jurisdiction of the United States as its 
own obligation may make payment to a person subject to the jurisdiction 
of the United States who is the beneficiary of any letter of credit 
issued or confirmed by it, or on a draft accepted by it, prior to the 
effective date, where the letter of credit was issued or confirmed on 
behalf of Iran or an Iranian entity, Provided, That:
    (1) Notwithstanding the provisions of Sec. 535.902, no blocked 
account may at any time be debited in connection with such a payment.
    (2) Such a payment shall give the bank making payment no special 
priority or other right to blocked accounts it holds in the event that 
such blocked accounts are vested or otherwise lawfully used in 
connection with a settlement of claims.
    (3) Nothing in this paragraph prevents payment being made to the 
beneficiary of any draft or letter of credit or to any banking 
institution pursuant to Sec. 535.904.
    (c) The office will consider on a case-by-case basis, without any 
commitment on its part to authorize any transaction or class of 
transactions, applications for specific licenses to make payments from 
blocked accounts of documentary drafts drawn under irrevocable letters 
of credit issued or confirmed by a domestic bank prior to the effective 
date, in favor of any person subject to the jurisdiction of the United 
States. Any bank or payee submitting such an application should include 
data on all such letters of credit in which it is involved. Applications

[[Page 138]]

should be submitted not later than January 10, 1980.
    (d) Paragraphs (a) and (b) of this section do not authorize any 
payment to Iran or an Iranian entity except payments into a blocked 
account in a domestic bank unless Iran or the Iranian entity is 
otherwise licensed to receive such payment.

[44 FR 75352, Dec. 19, 1979]



Sec. 535.532  Completion of certain securities transactions.

    (a) Banking institutions within the United States are hereby 
authorized to complete, on or before November 21, 1979, purchases and 
sales made prior to the effective date of securities purchased or sold 
for the account of Iran or an Iranian entity provided the following 
terms and conditions are complied with, respectively.
    (1) The proceeds of such sale are credited to a blocked account in a 
banking institution in the name of the person for whose account the sale 
was made; and
    (2) The securities so purchased are held in a blocked account in a 
banking institution in the name of the person for whose account the 
purchase was made.
    (b) This section does not authorize the crediting of the proceeds of 
the sale of securities held in a blocked account or a sub-account 
thereof, to a blocked account or sub-account under any name or 
designation which differs from the name or designation of the specific 
blocked account or sub-account in which such securities were held.



Sec. 535.540  Disposition of certain tangible property.

    (a) Specific licenses may be issued in appropriate cases at the 
discretion of the Secretary of the Treasury for the public sale and 
transfer of certain tangible property that is encumbered or contested 
within the meaning of Sec. 535.333 (b) and (c) and that, because it is 
blocked by Sec. 535.201, may not be sold or transferred without a 
specific license, provided that each of the following conditions is met:
    (1) The holder or supplier of the property has made a good faith 
effort over a reasonable period of time to obtain payment of any amounts 
owed by Iran or the Iranian entity, or adequate assurance of such 
payment;
    (2) Neither payment nor adequate assurance of payment has been 
received;
    (3) The license applicant has, under provisions of law applicable 
prior to November 14, 1979, a right to sell, or reclaim and sell, such 
property by methods not requiring judicial proceedings, and would be 
able to exercise such right under applicable law, but for the 
prohibitions in this part, and
    (4) The license applicant shall enter into an indemnification 
agreement acceptable to the United States providing for the applicant to 
indemnify the United States, in an amount up to 150 percent of the 
proceeds of sale, for any monetary loss which may accrue to the United 
States from a decision by the Iran-U.S. Claims Tribunal that the United 
States is liable to Iran for damages that are in any way attributable to 
the issuance of such license. In the event the applicant and those 
acting for or on its behalf are the only bidders on the property, the 
United States shall have the right to establish a reasonable 
indemnification amount.
    (b) An applicant for a license under this section shall provide the 
Office of Foreign Assets Control with documentation on the points 
enumerated in paragraph (a) of this section. The applicant normally will 
be required to submit an opinion of legal counsel regarding the legal 
right claimed under paragraph (a)(3) of this section.
    (c) Any sale of property licensed under this section shall be at 
public auction and shall be made in good faith in a commercially 
reasonable manner. Notwithstanding any provision of State law, the 
license applicant shall give detailed notice to the appropriate Iranian 
entity of the proposed sale or transfer at least 30 days prior to the 
sale or other transfer. In addition, if the license applicant has filed 
a claim with the Iran-U.S. Claims Tribunal, the license applicant shall 
give at least 30 days' advance notice of the sale to the Tribunal.
    (d) The disposition of the proceeds of any sale licensed under this 
section, minus such reasonable costs of sale as are authorized by 
applicable law (which will be licensed to be deducted), shall

[[Page 139]]

be in accordance with either of the following methods:
    (1) Deposit into a separate blocked, interest-bearing account at a 
domestic bank in the name of the licensed applicant; or
    (2) Any reasonable disposition in accordance with provisions of law 
applicable prior to November 14, 1979, which may include unrestricted 
use of all or a portion of the proceeds, provided that the applicant 
shall post a bond or establish a standby letter of credit, subject to 
the prior approval of the Secretary of the Treasury, in favor of the 
United States in the amount of the proceeds of sale, prior to any such 
disposition.
    (e) For purposes of this section, the term proceeds means any gross 
amount of money or other value realized from the sale. The proceeds 
shall include any amount equal to any debt owed by Iran which may have 
constituted all or part of a successful bid at the licensed sale.
    (f) The proceeds of any such sale shall be deemed to be property 
governed by Sec. 535.215 of this part. Any part of the proceeds that 
constitutes Iranian property which under Sec. 535.215 is to be 
transferred to Iran shall be so transferred in accordance with that 
section.
    (g) Any license pursuant to this section may be granted subject to 
conditions deemed appropriate by the Secretary of the Treasury.
    (h) Any person licensed pursuant to this section is required to 
submit a report to the Chief of Licensing, Office of Foreign Assets 
Control, within ten business days of the licensed sale or other 
transfer, providing a full accounting of the transaction, including the 
costs, any payment to lienholders or others, including payments to Iran 
or Iranian entities, and documentation concerning any blocked account 
established or payments made.

(Sec. 201-207, 91 Stat. 1626, 50 U.S.C. 1701-1706; E.O. 12170, 44 FR 
65729; E.O. 12205, 45 FR 24099; E.O. 12211, 45 FR 26605; E.O. 12276, 46 
FR 7913; E.O. 12279, 46 FR 7919; E.O. 12280, 46 FR 7921; E.O. 12281, 46 
FR 7923; E.O. 12282, 46 FR 7925; and E.O. 12294, 46 FR 14111)

[47 FR 31683, July 22, 1982]



Sec. 535.566  Unblocking of foreign currency deposits held by U.S.-owned
or controlled foreign firms.

    Deposits held abroad in currencies other than U.S. dollars by 
branches and subsidiaries of persons subject to the jurisdiction of the 
United States are unblocked, provided however that conversions of 
blocked dollar deposits into foreign currencies are not authorized.

[44 FR 66833, Nov. 21, 1979]



Sec. 535.567  Payment under advised letters of credit.

    (a) Specific licenses may be issued for presentation, acceptance, or 
payment of documentary drafts under a letter of credit opened by an 
Iranian entity and advised by a domestic bank or an Iranian bank subject 
to the jurisdiction of the United States, provided, That:
    (1) The letter of credit was advised prior to the effective date;
    (2) The property which is the subject of the payment under the 
letter of credit was not in the possession or control of the exporter on 
or after the effective date;
    (3) The Beneficiary is a person subject to the jurisdiction of the 
United States.
    (b) As a general matter, licenses will not be issued if the amount 
to be paid to a single payee exceeds $500,000, or if hardship cannot be 
shown.

[44 FR 75354, Dec. 19, 1979]



Sec. 535.568  Certain standby letters of credit and performance bonds.

    (a) Notwithstanding any other provision of law, payment into a 
blocked account in a domestic bank by an issuing or confirming bank 
under a standby letter of credit in favor of an Iranian entity is 
prohibited by Sec. 535.201 and not authorized, notwithstanding the 
provisions of Sec. 535.508, if either:
    (1) A specific license has been issued pursuant to the provisions of 
paragraph (b) of this section, or
    (2) Eight business days have not expired after notice to the account 
party pursuant to paragraph (b) of this section.
    (b) Whenever an issuing or confirming bank shall receive such demand 
for payment under a standby letter of credit, it shall promptly notify

[[Page 140]]

the person for whose account the credit was opened. Such person may then 
apply within five business days for a specific license authorizing the 
account party to establish a blocked account on its books in the name of 
the Iranian entity in the amount payable under the credit, in lieu of 
payment by the issuing or confirming bank into a blocked account and 
reimbursement therefor by the account party.
    (c) Where there is outstanding a demand for payment under a standby 
letter of credit, and the issuing or confirming bank has been enjoined 
from making payment, upon removal of the injunction, the person for 
whose account the credit was opened may apply for a specific license for 
the same purpose and in the same manner as that set forth in paragraph 
(b) of this section. The issuing or confirming bank shall not make 
payment under the standby letter of credit unless:
    (1) Eight business days have expired since the bank has received 
notice of the removal of the injunction and;
    (2) A specific license issued to the account party pursuant to the 
provisions of this paragraph has not been presented to the bank.
    (d) If necessary to assure the availability of the funds blocked, 
the Secretary may at any time require the payment of the amounts due 
under any letter of credit described in paragraph (a) of this section 
into a blocked account in a domestic bank or the supplying of any form 
of security deemed necessary.
    (e) Nothing in this section precludes any person for whose account a 
standby letter of credit was opened or any other person from at any time 
contesting the legality of the demand from the Iranian entity or from 
raising any other legal defense to payment under the standby letter of 
credit.
    (f) This section does not affect the obligation of the various 
parties of the instruments covered by this section if the instruments 
and payment thereunder are subsequently unblocked.
    (g) For the purposes of this section, the term standby letter of 
credit shall mean a letter of credit securing performance of, or 
repayment of, any advance payments of deposits, under a contract with 
Iran or an Iranian entity, or any similar obligation in the nature of a 
performance bond.
    (h) The regulations do not authorize any person subject to the 
jurisdiction of the United States to reimburse a non-U.S. bank for 
payment to Iran or an Iranian entity under a standby letter of credit, 
except by payment into a blocked account in accordance with Sec. 
535.508 or paragraph (b) or (c) of this section.
    (i) A person receiving a specific license under paragraph (b) or (c) 
of this section shall certify to the Office of Foreign Assets Control 
within five business days after receipt of that license that it has 
established the blocked account on its books as provided for in those 
paragraphs. However, in appropriate cases, this time may be extended 
upon application to the Office of Foreign Assets Control when the 
account party has filed a petition with an appropriate court seeking a 
judicial order barring payment by the issuing or confirming bank.
    (j) The extension or renewal of a standby letter of credit is 
authorized.
    (k) All specific licenses previously issued under this section to 
account parties to standby letters of credit are revoked, effective 
February 28, 1991, unless the license holder submits documentation to 
the Office of Foreign Assets Control establishing that the specific 
license pertains to a standby letter of credit obligation that (1) is at 
issue in any claim brought before the Iran-United States Claims Tribunal 
(``Tribunal''), (2) is or was at issue in any claim that the Tribunal 
resolves, or has resolved, on the merits in favor of the account party, 
or (3) was at issue in a matter that was settled by the parties. The 
documentation required for such a showing may include such items as a 
copy of a Tribunal Award, a copy of a signed settlement agreement, or 
copies of cover pages of recent filings in pending Tribunal cases.

[47 FR 12339, Mar. 23, 1982, as amended at 56 FR 6546, Feb. 15, 1991]



Sec. 535.569  Licensed letter of credit transactions; forwarding of 
documents.

    When payment of a letter of credit issued, advised, or confirmed by 
a bank subject to the jurisdiction of the

[[Page 141]]

United States is authorized by either general or specific license, the 
forwarding of the letter of credit documents to the account party is 
authorized.

[45 FR 1877, Jan. 9, 1980]



Sec. 535.576  Payment of non-dollar letters of credit to Iran.

    Notwithstanding the prohibitions of Sec. Sec. 535.201 and 
535.206(a)(4), payment of existing non-dollar letters of credit in favor 
of Iranian entities or any person in Iran by any foreign branch or 
subsidiary of a U.S. firm is authorized, provided that the credit was 
opened prior to the respective effective date.

[45 FR 29288, May 2, 1980]



Sec. 535.579  Authorization of new transactions concerning certain 
Iranian property.

    (a) Transactions involving property in which Iran or an Iranian 
entity has an interest are authorized where:
    (1) The property comes within the jurisdiction of the United States 
or into the control or possession of any person subject to the 
jurisdiction of the United States after January 19, 1981, or
    (2) The interest in the property of Iran or an Iranian entity (e.g. 
exports consigned to Iran or an Iranian entity) arises after January 19, 
1981.
    (b) Transactions involving standby letters of credit, performance or 
payment bonds and similar obligations, entered into prior to January 20, 
1981, described in Sec. 535.568 remain subject to the prohibitions and 
procedures contained in Sec. Sec. 535.201 and 535.568.
    (c) Property not blocked under Sec. 535.201 as of January 19, 1981, 
in which the Government of Iran or an Iranian entity has an interest, 
which after that date is or becomes subject to the jurisdiction of the 
United States or comes within the control or possession of a person 
subject to the jurisdiction of the United States for the express purpose 
of settling claims against Iran or Iranian entities, is excluded from 
any authorization in this part for any attachment, injunction or other 
order of similar or analogous effect and any such attachment, injunction 
or order is prohibited by Sec. Sec. 535.201 and 535.203.

(Secs. 201-207, 91 Stat. 1626, 50 U.S.C. 1701-1706; E.O. 12170, 44 FR 
65729; E.O. 12205, 45 FR 24099; E.O. 12211, 45 FR 26685; E.O. 12276, 46 
FR 7913; E.O. 12279, 46 FR 7919; E.O. 12280, 46 FR 7921; E.O. 12281, 46 
FR 7923; E.O. 12282, 46 FR 7925; E.O. 12283, 46 FR 7927, and E.O. 12294, 
46 FR 14111)

[46 FR 14336, Feb. 26, 1981]



Sec. 535.580  Necessary living expenses of relatives of the former Shah
of Iran.

    The transfer, payment or withdrawal of property described in Sec. 
535.217 is authorized to the extent necessary to pay living expenses of 
any individual listed in that section. Living expenses for this purpose 
shall include food, housing, transportation, security and other personal 
expenses.

(Secs. 201-207, 91 Stat. 1626, 50 U.S.C. 1701-1706; E.O. 12170, 44 FR 
65729; E.O. 12211, 45 FR 26685; E.O. 12284, 46 FR 7929)

[46 FR 14330, Feb. 26, 1981]



                            Subpart F_Reports



Sec. 535.601  Records and reports.

    For provisions relating to records and reports, see subpart C of 
part 501 of this chapter.

[62 FR 45107, Aug. 25, 1997]



                           Subpart G_Penalties



Sec. 535.701  Penalties.

    (a) Attention is directed to section 206 of the International 
Emergency Economic Powers Act (the ``Act'') (50 U.S.C. 1705), which is 
applicable to violations of the provisions of any license, ruling, 
regulation, order, direction or instruction issued by or pursuant to the 
direction or authorization of the Secretary of the Treasury pursuant to 
this part or otherwise under the Act.
    (1) A civil penalty not to exceed the amount set forth in Section 
206 of the Act 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 the Act.

    Note to paragraph (a)(1) of Sec. 535.701: As of June 10, 2008, the 
Act provides for a maximum civil penalty not to exceed the greater

[[Page 142]]

of $250,000 or an amount that is twice the amount of the transaction 
that is the basis of the violation with respect to which the penalty is 
imposed.

    (2) A person who willfully commits, willfully attempts to commit, or 
willfully conspires to commit, or aids or abets in the commission of a 
violation of any license, order, regulation, or prohibition shall, upon 
conviction, be fined not more than $1,000,000, or if a natural person, 
may be imprisoned for not more than 20 years, or both.
    (b) Adjustments to penalty amounts. (1) The civil penalties provided 
in the Act 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 the Act are subject to 
adjustment pursuant to 18 U.S.C. 3571.
    (c) Attention is also directed to 18 U.S.C. 1001, which provides 
that whoever, in any matter within the jurisdiction of any department or 
agency of the United States, knowingly and willfully falsifies, conceals 
or covers up by any trick, scheme, or device a material fact, or makes 
any false, fictitious or fraudulent statement or representation or makes 
or uses any false writing or document knowing the same to contain any 
false, fictitious or fraudulent statement or entry, shall be fined under 
title 18, United States Code, or imprisoned not more than five years, or 
both.
    (d) Attention is directed to 18 U.S.C. 2332d, as added by Public Law 
104-132, section 321, which provides that, except as provided in 
regulations issued by the Secretary of the Treasury, in consultation 
with the Secretary of State, a U.S. person, knowing or having reasonable 
cause to know that a country is designated under section 6(j) of the 
Export Administration Act, 50 U.S.C. App. 2405, as a country supporting 
international terrorism, engages in a financial transaction with the 
government of that country, shall be fined under title 18, United States 
Code, or imprisoned for not more than 10 years, or both.

[44 FR 65956, Nov. 15, 1979, as amended at 61 FR 43461, Aug. 23, 1996; 
61 FR 54938, Oct. 23, 1996; 62 FR 45107, Aug. 25, 1997; 71 FR 29252, May 
22, 2006; 73 FR 32651, June 10, 2008]



Sec. 535.702  Prepenalty notice.

    (a) When required. If the Director of the Office of Foreign Assets 
Control (hereinafter ``Director'') has reasonable cause to believe that 
there has occurred a violation of any provision of this part or a 
violation of the provisions of any license, ruling, regulation, order, 
direction or instruction issued by or pursuant to the direction or 
authorization of the Secretary of the Treasury pursuant to this part or 
otherwise under the International Emergency Economic Powers Act, and the 
Director determines that further proceedings are warranted, he shall 
issue to the person concerned a notice of his intent to impose a 
monetary penalty. The prepenalty notice shall be issued whether or not 
another agency has taken any action with respect to this matter.
    (b) Contents--(1) Facts of violation. The prepenalty notice shall:
    (i) Describe the violation.
    (ii) Specify the laws and regulations allegedly violated.
    (iii) State the amount of the proposed monetary penalty.
    (2) Right to make presentations. The prepenalty notice also shall 
inform the person of his right to make a written presentation within 
thirty (30) days of mailing of the notice as to why a monetary penalty 
should not be imposed, or, if imposed, why it should be in a lesser 
amount than proposed.

[53 FR 7356, Mar. 8, 1988]



Sec. 535.703  Presentation responding to prepenalty notice.

    (a) Time within which to respond. The named person shall have 30 
days from the date of mailing of the prepenalty notice to make a written 
presentation to the Director.
    (b) Form and contents of written presentation. The written 
presentation need not be in any particular form, but shall contain 
information sufficient to indicate that it is in response to the 
prepenalty notice. It should contain responses to the allegations in the

[[Page 143]]

prepenalty notice and set forth the reasons why the person believes the 
penalty should not be imposed or, if imposed, why it should be in a 
lesser amount than proposed.

[53 FR 7356, Mar. 8, 1988]



Sec. 535.704  Penalty notice.

    (a) No violation. If, after considering any presentations made in 
response to the prepenalty notice, the Director determines that there 
was no violation by the person named in the prepenalty notice, he 
promptly shall notify the person in writing of that determination and 
that no monetary penalty will be imposed.
    (b) Violation. If, after considering any presentations made in 
response to the prepenalty notice, the Director determines that there 
was a violation by the person named in the prepenalty notice, he 
promptly shall issue a written notice of the imposition of the monetary 
penalty to that person.

[53 FR 7356, Mar. 8, 1988]



Sec. 535.705  Administrative collection; referral to United States 
Department of Justice.

    In the event that the person named does not pay the penalty imposed 
pursuant to this part or make payment arrangements acceptable to the 
Director of the Office of Foreign Assets Control within 30 days of the 
date of mailing of the penalty notice, 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.

[70 FR 15762, Mar. 29, 2005]



                          Subpart H_Procedures



Sec. 535.801  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.

[62 FR 45107, Aug. 25, 1997, as amended at 68 FR 53657, Sept. 11, 2003]



                   Subpart I_Miscellaneous Provisions



Sec. 535.901  Dollar accounts at banks abroad.

    Any domestic bank is hereby authorized to effect withdrawals or 
other transfers from any account held in the name of a non-Iranian bank 
located in a foreign country, provided such non-Iranian foreign bank is 
not a person subject to the jurisdiction of the United States.



Sec. 535.902  Set-offs by U.S. owned or controlled firms abroad.

    (a) Branches and subsidiaries in foreign countries of persons 
subject to the jurisdiction of the United States are licensed to set-off 
their claims against Iran or Iranian entities by debit to blocked 
accounts held by them for Iran or Iranian entities.
    (b) The general license in paragraph (a) of this section is revoked 
as of January 19, 1981.
    (c) For purposes of this section, set-offs include combinations of 
accounts and any similar actions.

(Secs. 201-207, 91 Stat. 1626, 50 U.S.C. 1701-1706; E.O. 12170, 44 FR 
65729; E.O. 12205, 45 FR 24099; E.O. 12211, 45 FR 26685; E.O. 12276, 46 
FR 7913; E.O. 12279, 46 FR 7919; E.O. 12280, 46 FR 7921; E.O. 12281, 46 
FR 7923; E.O. 12282, 46 FR 7925; E.O. 12283, 46 FR 7927, and E.O. 12294, 
46 FR 14111)

[46 FR 14337, Feb. 26, 1981]



Sec. 535.904  Payment by Iranian entities of obligations to persons 
within the United States.

    The transfer of funds after the effective date by, through or to any 
U.S. banking institution or other person within the United States solely 
for purposes of payment of obligations by Iranian entities owed to 
persons within the United States is authorized: Provided, That there is 
no debit to a blocked account. Property is not blocked by virtue of 
being transferred or received pursuant to this section.

[44 FR 66591, Nov. 20, 1979]

[[Page 144]]



Sec. 535.905  Paperwork Reduction Act notice.

    For approval by the Office of Management and Budget (``OMB'') under 
the Paperwork Reduction Act of information collections relating to 
recordkeeping and reporting requirements, to licensing procedures 
(including those pursuant to statements of licensing policy), and to 
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.

[62 FR 45107, Aug. 25, 1997]



PART 536_NARCOTICS TRAFFICKING SANCTIONS REGULATIONS--Table of Contents



      Subpart A_Relation of This Part to Other Laws and Regulations

Sec.
536.100 Licensing procedures.
536.101 Relation of this part to other laws and regulations.

                         Subpart B_Prohibitions

536.201 Prohibited transactions involving blocked property.
536.202 Effect of transfers violating the provisions of this part.
536.203 Holding of certain types of blocked property in interest-bearing 
          accounts.
536.204 Evasions; attempts; conspiracies.
536.205 Exempt transactions.

                      Subpart C_General Definitions

536.301 Blocked account; blocked property.
536.302 Effective date.
536.303 Entity.
536.304 Foreign person.
536.305 General license.
536.306 Information and informational materials.
536.307 Interest.
536.308 License.
536.309 Person.
536.310 Property; property interest.
536.311 Narcotics trafficking.
536.312 Specially designated narcotics trafficker.
536.313 Specific license.
536.314 Transfer.
536.315 United States.
536.316 United States person; U.S. person.
536.317 U.S. financial institution.

                        Subpart D_Interpretations

536.401 Reference to amended sections.
536.402 Effect of amendment.
536.403 Termination and acquisition of an interest in blocked property.
536.404 Setoffs prohibited.
536.405 Transactions incidental to a licensed transaction.
536.406 Provision of services.
536.407 Offshore transactions.
536.408 Alleged change in ownership or control of an entity designated 
          as a specially designated narcotics trafficker.
536.409 Credit extended and cards issued by U.S. financial institutions.

 Subpart E_Licenses, Authorizations, and Statements of Licensing Policy

536.501 Effect of license or authorization.
536.502 Exclusion from licenses and authorizations.
536.503 Payments and transfers to blocked accounts in U.S. financial 
          institutions.
536.504 Investment and reinvestment of certain funds.
536.505 Entries in certain accounts for normal service charges 
          authorized.
536.506 Provision of certain legal services authorized.
536.507 Authorization of emergency medical services.

                            Subpart F_Reports

536.601 Records and reports.

                           Subpart G_Penalties

536.701 Penalties.
536.702 Prepenalty notice.
536.703 Response to prepenalty notice.
536.704 Penalty notice.
536.705 Administrative collection; referral to United States Department 
          of Justice.

                          Subpart H_Procedures

536.801 Procedures.
536.802 Delegation by the Secretary of the Treasury.

                    Subpart I_Paperwork Reduction Act

536.901 Paperwork Reduction Act notice.

    Authority: 3 U.S.C. 301; 31 U.S.C. 321(b); 50 U.S.C. 1601-1651, 
1701-1706; Pub. L. 101-410, 104 Stat. 890 (28 U.S.C. 2461 note); Pub. L. 
110-96, 121 Stat. 1011; E.O. 12978, 60 FR 54579, 3 CFR, 1995 Comp., p. 
415; E.O. 13286, 68 FR 10619, 3 CFR, 2003 Comp., p. 166.

    Source: 62 FR 9960, Mar. 5, 1997, unless otherwise noted.

[[Page 145]]



      Subpart A_Relation of This Part to Other Laws and Regulations



Sec. 536.100  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.

[68 FR 53657, Sept. 11, 2003]



Sec. 536.101  Relation of this part to other laws and regulations.

    (a) 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. Differing foreign policy 
and national security contexts 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.
    (b) 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.

[62 FR 9960, Mar. 5, 1997, as amended at 62 FR 45107, Aug. 25, 1997]



                         Subpart B_Prohibitions



Sec. 536.201  Prohibited transactions involving blocked property.

    (a) Except as 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, no property or interests in property of a specially 
designated narcotics trafficker that are in the United States, that 
hereafter come within the United States, or that are or hereafter come 
within the possession or control of U.S. persons, including their 
overseas branches, may be transferred, paid, exported, withdrawn or 
otherwise dealt in.
    (b) When a transaction results in the blocking of funds at a 
financial institution pursuant to this section and a party to the 
transaction believes the funds have been blocked due to mistaken 
identity, that party may seek to have such funds unblocked pursuant to 
the administrative procedures set forth in Sec. 501.806 of this 
chapter.

[62 FR 9960, Mar. 5, 1997, as amended at 62 FR 45107, Aug. 25, 1997]



Sec. 536.202  Effect of transfers violating the provisions of this part.

    (a) Any transfer after the effective date, which is in violation of 
any provision of this part or of any regulation, order, directive, 
ruling, instruction, license, or other authorization hereunder and 
involves any property held in the name of a specially designated 
narcotics trafficker or in which a specially designated narcotics 
trafficker has or has had an interest since such date, 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.
    (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 interest in, any property held in the name of a specially 
designated narcotics trafficker or in which a specially designated 
narcotics trafficker has an interest, or has had an interest since such 
date, unless the person with whom such property is held or maintained, 
prior to such date, had written notice of the transfer or by any written 
evidence had recognized such transfer.
    (c) Unless otherwise provided, an appropriate license or other 
authorization issued by or pursuant to the direction or authorization of 
the Director of the Office of Foreign Assets Control before, during, or 
after a transfer shall validate such transfer or render it enforceable 
to the same extent that it would be valid or enforceable but for the 
provisions of the International Emergency Economic Powers Act, this 
part, and any regulation, order, directive, ruling, instruction, or 
license issued hereunder.

[[Page 146]]

    (d) Transfers of property which 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 was held or maintained (and as to such person only) in 
cases in which such person is able to establish to the satisfaction of 
the Director of the Office of Foreign Assets Control each of the 
following:
    (1) Such transfer did not represent a willful violation of the 
provisions of this part by the person with whom such property was held 
or maintained;
    (2) The person with whom such property 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 by or 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 the withholding 
of material facts or was otherwise fraudulently obtained; and
    (3) The person with whom such property was held or maintained filed 
with the Office of Foreign Assets Control a report setting forth in full 
the circumstances relating to such transfer promptly upon discovery 
that:
    (i) Such transfer was in violation of the provisions of this part or 
any regulation, ruling, instruction, license, or other direction or 
authorization hereunder; or
    (ii) Such transfer was not licensed or authorized by the Director of 
the Office of Foreign Assets Control; or
    (iii) If a license did purport to cover the transfer, such license 
had been obtained by misrepresentation of a third party or the 
withholding of material facts or was otherwise fraudulently obtained.

    Note to paragraph (d)(3): The filing of a report in accordance with 
the provisions of this paragraph (d)(3) shall not be deemed evidence 
that the terms of paragraphs (d)(l) and (2) of this section have been 
satisfied.

    (e) Unless licensed or authorized pursuant to this part, any 
attachment, judgment, decree, lien, execution, garnishment, or other 
judicial process is null and void with respect to any property which, on 
or since the effective date, was held in the name of a specially 
designated narcotics trafficker or in which there existed an interest of 
a specially designated narcotics trafficker.



Sec. 536.203  Holding of certain types of blocked property in 
interest-bearing accounts.

    (a)(1) Any person, including a U.S. financial institution, currently 
holding property subject to Sec. 536.201 which, as of the effective 
date or the date of receipt if subsequent to the effective date, is not 
being held in an interest-bearing account, or otherwise invested in a 
manner authorized by the Office of Foreign Assets Control (e.g., Sec. 
536.504), shall transfer such property to, or hold such property or 
cause such property to be held in, an interest-bearing account or 
interest-bearing status in a U.S. financial institution as of the 
effective date or the date of receipt if subsequent to the effective 
date of this section, unless otherwise authorized or directed by the 
Office of Foreign Assets Control.
    (2) The requirement set forth in paragraph (a)(1) of this section 
shall apply to currency, bank deposits, accounts, obligations, and any 
other financial or economic resources or assets, and any proceeds 
resulting from the sale of tangible or intangible property. If interest 
is credited to an account separate from that in which the interest-
bearing asset is held, the name of the account party on both accounts 
must be the same and must clearly indicate the specially designated 
narcotics trafficker having an interest in the accounts. If the account 
is held in the name of a specially designated narcotics trafficker, the 
name of the account to which interest is credited must be the same.
    (b) For purposes of this section, the term interest-bearing account 
means a blocked account in a U.S. financial institution earning interest 
at rates that are commercially reasonable for the amount of funds in the 
account. Except as otherwise authorized, the funds may not be invested 
or held in instruments the maturity of which exceeds 90 days.

[[Page 147]]

    (c) This section does not apply to blocked tangible property, such 
as chattels, nor does it create an affirmative obligation on the part of 
the holder of such blocked tangible property to sell or liquidate the 
property and put the proceeds in a blocked account. However, the Office 
of Foreign Assets Control may issue licenses permitting or directing 
sales of tangible property in appropriate cases.



Sec. 536.204  Evasions; attempts; conspiracies.

    Any transaction for the purpose of, or which has the effect of, 
evading or avoiding, or which facilitates the evasion or avoidance of, 
any of the prohibitions set forth in this part, is hereby prohibited. 
Any attempt to violate the prohibitions set forth in this part is hereby 
prohibited. Any conspiracy formed for the purpose of engaging in a 
transaction prohibited by this part is hereby prohibited.



Sec. 536.205  Exempt transactions.

    (a) Personal communications. The prohibitions contained in this part 
do not apply to any postal, telegraphic, telephonic, or other personal 
communication, which does not involve the transfer of anything of value.
    (b) Information and informational materials. (1) The importation 
from any country and the exportation to any country of information or 
informational materials as defined in Sec. 536.306, whether commercial 
or otherwise, regardless of format or medium of transmission, are exempt 
from the prohibitions and regulations of this part.
    (2) This section does not authorize transactions related to 
information and informational materials not fully created and in 
existence at the date of the transactions, or to the substantive or 
artistic alteration or enhancement of informational materials, or to the 
provision of marketing and business consulting services by a U.S. 
person. Such prohibited transactions include, without limitation, 
payment of advances for informational materials not yet created and 
completed, provision of services to market, produce or co-produce, 
create or assist in the creation of information and informational 
materials, and payment of royalties to a specially designated narcotics 
trafficker with respect to income received for enhancements or 
alterations made by U.S. persons to information or informational 
materials imported from a specially designated narcotics trafficker.
    (3) This section does not authorize transactions incident to the 
exportation of technology that is not informational material as defined 
in Sec. 536.306(b)(1) or incident to the exportation of goods for use 
in the transmission of any information.
    (c) Travel. The prohibitions contained in this part do not apply to 
transactions ordinarily incident to travel to or from any country, 
including importation 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 non-scheduled air, sea, or land 
voyages. Any transactions entered into by a specially designated 
narcotics trafficker while traveling in the United States that are 
outside the scope of those set forth in this paragraph are in violation 
of Sec. 536.201.



                      Subpart C_General Definitions



Sec. 536.301  Blocked account; blocked property.

    The terms blocked account and blocked property shall mean any 
account or property subject to the prohibition in Sec. 536.201 held in 
the name of a specially designated narcotics trafficker or in which a 
specially designated narcotics trafficker has an interest, and with 
respect to which payments, transfers, exportations, withdrawals, or 
other dealings may not be made or effected except pursuant to an 
authorization or license from the Office of Foreign Assets Control 
authorizing such action.



Sec. 536.302  Effective date.

    The term effective date refers to the effective date of the 
applicable prohibitions and directives contained in this part which is 
12:01 a.m. EDT, October 22, 1995, or, in the case of specially 
designated narcotics traffickers designated after that date, the earlier 
of

[[Page 148]]

the date on which a person receives actual or constructive notice of 
such designation.



Sec. 536.303  Entity.

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



Sec. 536.304  Foreign person.

    The term foreign person means any citizen or national of a foreign 
state (including any such individual who is also a citizen or national 
of the United States), or any entity not organized solely under the laws 
of the United States or existing solely in the United States, but does 
not include a foreign state.



Sec. 536.305  General license.

    The term general license means any license or authorization the 
terms of which are set forth in this part.



Sec. 536.306  Information and informational materials.

    (a) For purposes of this part, the term information and 
informational materials means:
    (1) Publications, films, posters, phonograph records, photographs, 
microfilms, microfiche, tapes, compact disks, CD ROMs, artworks, and 
news wire feeds, and other information and informational articles.
    (2) To be considered informational materials, artworks must be 
classified under chapter subheading 9701, 9702, or 9703 of the 
Harmonized Tariff Schedule of the United States.
    (b) The terms information and informational materials with respect 
to U.S. exports do 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 (the ``EAA''), or section 6 of the 
EAA to the extent that such controls promote nonproliferation or 
antiterrorism policies of the United States, including software as 
defined in 15 CFR part 772 that is not publicly available (see 15 CFR 
parts 734 and 772); or
    (2) With respect to which acts are prohibited by 18 U.S.C. chapter 
37.



Sec. 536.307  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. 536.308  License.

    Except as otherwise specified, the term license means any license or 
authorization contained in or issued pursuant to this part.



Sec. 536.309  Person.

    The term person means an individual or entity.



Sec. 536.310  Property; property interest.

    The terms property and property interest include, but are not 
limited to, money, checks, drafts, bullion, bank deposits, savings 
accounts, debts, indebtedness, obligations, notes, guarantees, 
debentures, stocks, bonds, coupons, any other financial instruments, 
bankers acceptances, mortgages, pledges, liens or other rights in the 
nature of security, warehouse receipts, bills of lading, trust receipts, 
bills of sale, any other evidences of title, ownership or indebtedness, 
letters of credit and any documents relating to any rights or 
obligations thereunder, powers of attorney, goods, wares, merchandise, 
chattels, stocks on hand, ships, goods on ships, real estate mortgages, 
deeds of trust, vendors sales agreements, land contracts, leaseholds, 
ground rents, real estate and any other interest therein, options, 
negotiable instruments, trade acceptances, royalties, book accounts, 
accounts payable, judgments, patents, trademarks or copyrights, 
insurance policies, safe deposit boxes and their contents, annuities, 
pooling agreements, services of any nature whatsoever, contracts of any 
nature whatsoever, and any other property, real, personal, or mixed, 
tangible or intangible, or interest or interests therein, present, 
future or contingent.



Sec. 536.311  Narcotics trafficking.

    The term narcotics trafficking means any activity undertaken 
illicitly to cultivate, produce, manufacture, distribute, sell, finance 
or transport, or

[[Page 149]]

otherwise assist, abet, conspire, or collude with others in illicit 
activities relating to narcotic drugs, including, but not limited to, 
cocaine.



Sec. 536.312  Specially designated narcotics trafficker.

    The term specially designated narcotics trafficker means:
    (a) Persons listed in the annex to Executive Order 12978 (3 CFR, 
1995 Comp., p.415);
    (b) Foreign persons designated by the Secretary of Treasury, in 
consultation with the Attorney General and the Secretary of State, 
because they are found:
    (1) To play a significant role in international narcotics 
trafficking centered in Colombia; or
    (2) Materially to assist in, or provide financial or technological 
support for or goods or services in support of, the narcotics 
trafficking activities of specially designated narcotics traffickers; 
and
    (c) Persons determined by the Secretary of the Treasury, in 
consultation with the Attorney General and the Secretary of State, to be 
owned or controlled by, or to act for or on behalf of, any other 
specially designated narcotics trafficker.

    Note to Sec. 536.312: The names of persons determined to fall 
within this definition, whose property and interests in property 
therefore are blocked pursuant to this part, are published in the 
Federal Register and incorporated into the Office of Foreign Assets 
Control's Specially Designated Nationals and Blocked Persons List (``SDN 
List'') with the identifier ``[SDNT].'' The SDN List is accessible 
through the following page on the Office of Foreign Assets Control's Web 
site: http://www.treasury.gov/sdn. Additional information pertaining to 
the SDN List can be found in appendix A to this chapter. Sections 
501.806 and 501.807 of this chapter describe the procedures to be 
followed by persons seeking, respectively, the unblocking of funds that 
they believe were blocked due to mistaken identity, or administrative 
reconsideration of their status as persons whose property and interests 
in property are blocked pursuant to this part.

[62 FR 9960, Mar. 5, 1997, as amended at 62 FR 45107, Aug. 25, 1997; 76 
FR 38536, June 30, 2011]



Sec. 536.313  Specific license.

    The term specific license means any license or authorization not set 
forth in this part but issued pursuant to this part.



Sec. 536.314  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 and, without limitation upon the foregoing, 
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. 536.315  United States.

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



Sec. 536.316  United States person; U.S. person.

    The term United States person or U.S. person means any United States 
citizen or national; 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.

[[Page 150]]



Sec. 536.317  U.S. financial institution.

    The term U.S. financial institution means any U.S. person (including 
foreign branches) that is engaged in the business of accepting deposits, 
making, granting, transferring, holding, or brokering loans or credits, 
or purchasing or selling foreign exchange, securities, commodity futures 
or options, or procuring purchasers and sellers thereof, as principal or 
agent; including, but not limited to, depository institutions, banks, 
savings banks, trust companies, securities brokers and dealers, 
commodity futures and options brokers and dealers, forward contract and 
foreign exchange merchants, securities and commodities exchanges, 
clearing corporations, investment companies, employee benefit plans, and 
U.S. holding companies, U.S. affiliates, or U.S. subsidiaries of any of 
the foregoing. This term includes those branches, offices and agencies 
of foreign financial institutions which are located in the United 
States, but not such institutions' foreign branches, offices, or 
agencies.



                        Subpart D_Interpretations



Sec. 536.401  Reference to amended sections.

    Except as otherwise specified, reference to any section of this part 
or to any regulation, ruling, order, instruction, direction, or license 
issued pursuant to this part shall be deemed to refer to the same as 
currently amended.



Sec. 536.402  Effect of amendment.

    Any amendment, modification, or revocation of any section of this 
part or of any order, regulation, ruling, instruction, or license issued 
by or under the direction of the Director of the Office of Foreign 
Assets Control shall not, unless otherwise specifically provided, be 
deemed to affect any act done or omitted to be done, or any civil or 
criminal suit or 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 shall continue and may be enforced as if such amendment, 
modification, or revocation had not been made.



Sec. 536.403  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 specially designated narcotics trafficker, such 
property shall no longer be deemed to be property in which a specially 
designated narcotics trafficker has or has had an interest, or which is 
held in the name of a specially designated narcotics trafficker, unless 
there exists in the property another interest of a specially designated 
narcotics trafficker, 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 
specially designated narcotics trafficker, such property shall be deemed 
to be property in which there exists an interest of the specially 
designated narcotics trafficker.



Sec. 536.404  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. 536.201 if effected after the effective date.



Sec. 536.405  Transactions incidental to a licensed transaction.

    Any transaction ordinarily incident to a licensed transaction and 
necessary to give effect thereto is also authorized, except a 
transaction by an unlicensed, specially designated narcotics trafficker 
or involving a debit to a blocked account or a transfer of blocked 
property not explicitly authorized within the terms of the license.



Sec. 536.406  Provision of services.

    (a) Except as provided in Sec. 536.205, the prohibitions contained 
in Sec. 536.201 apply to services performed by U.S. persons, wherever 
located:
    (1) On behalf of, or for the benefit of, a specially designated 
narcotics trafficker; or

[[Page 151]]

    (2) With respect to property interests of a specially designated 
narcotics trafficker.
    (b) Example: U.S. persons may not, except as authorized by the 
Office of Foreign Assets Control by or pursuant to this part, provide 
legal, accounting, financial, brokering, freight forwarding, 
transportation, public relations, educational, or other services to a 
specially designated narcotics trafficker. See Sec. 536.506, with 
respect to certain authorized legal services.



Sec. 536.407  Offshore transactions.

    The prohibitions contained in Sec. 536.201 apply to transactions by 
U.S. persons in locations outside the United States with respect to 
property which the U.S. person knows, or has reason to know, is held in 
the name of a specially designated narcotics trafficker, or in which the 
U.S. person knows, or has reason to know, a specially designated 
narcotics trafficker has or has had an interest since the effective 
date.



Sec. 536.408  Alleged change in ownership or control of an entity 
designated as a specially designated narcotics trafficker.

    (a) A change or alleged change in ownership or control of an entity 
designated as a specially designated narcotics trafficker shall not be 
the basis for removal of that entity from the Office of Foreign Assets 
Control's Specially Designated Nationals and Blocked Persons List 
unless, upon investigation by the Office of Foreign Assets Control and 
submission of evidence by the entity, it is demonstrated to the 
satisfaction of the Director of the Office of Foreign Assets Control 
that the transfer to a bona fide purchaser at arm's length is legitimate 
and that the entity no longer meets the criteria for designation under 
Sec. 536.312. Evidence submitted must conclusively demonstrate that all 
ties with other specially designated narcotics traffickers have been 
completely severed, and may include, but is not limited to, articles of 
incorporation; identification of new directors, officers, shareholders, 
and sources of capital; and contracts evidencing the sale of the entity 
to its new owners.
    (b) Any continuing substantial financial obligations on the part of 
the new owners to any specially designated narcotics traffickers, 
including long-term payment plans, leases, or rents, will be considered 
as evidence of continuing control of the entity by the specially 
designated narcotics trafficker. Purchase of a designated entity without 
ongoing substantial financial obligations to a specially designated 
narcotics trafficker may nonetheless be a basis for subsequent 
designation of the purchaser, if the transaction is determined 
materially to assist in or provide financial support for the narcotics 
trafficking activities of specially designated narcotics traffickers for 
purposes of Sec. 536.312(b)(2). For example, any acquisition 
transaction resulting in a direct cash transfer to or other enrichment 
of a specially designated narcotics trafficker could lead to designation 
of the purchaser. Mere change in name of an entity will not be 
considered as constituting a change of the entity's status.

[62 FR 9960, Mar. 5, 1997, as amended at 76 FR 38536, June 30, 2011]



Sec. 536.409  Credit extended and cards issued by U.S. financial 
institutions.

    The prohibition in Sec. 536.201 on dealing in property in which a 
specially designated narcotics trafficker has an interest prohibits U.S. 
financial institutions from performing under any existing credit 
agreements, including, but not limited to, charge cards, debit cards, or 
other credit facilities issued by a U.S. financial institution to a 
person designated under this part.



 Subpart E_Licenses, Authorizations, and Statements of Licensing Policy



Sec. 536.501  Effect of license or authorization.

    (a) No license or other authorization contained in this part, or 
otherwise issued by or under the direction of the Director of the Office 
of Foreign Assets Control, shall be deemed to authorize or validate any 
transaction effected prior to the issuance of the license, unless 
specifically provided in such license or authorization.

[[Page 152]]

    (b) No regulation, ruling, instruction, or license authorizes any 
transaction prohibited under this part unless the regulation, ruling, 
instruction, or license is issued by the Office of Foreign Assets 
Control and specifically refers to this part. No regulation, ruling, 
instruction, or license referring to this part shall be deemed to 
authorize any transaction prohibited by any provision of this chapter 
unless the regulation, ruling, instruction or license specifically 
refers to such provision.
    (c) Any regulation, ruling, instruction, or license authorizing any 
transaction otherwise prohibited under this part has the effect of 
removing a prohibition or prohibitions contained in this part from the 
transaction, but only to the extent specifically stated by its terms. 
Unless the regulation, ruling, instruction, or license otherwise 
specifies, such an authorization does not create any right, duty, 
obligation, claim, or interest in, or with respect to, any property 
which would not otherwise exist under ordinary principles of law.



Sec. 536.502  Exclusion from licenses and authorizations.

    The Director of the Office of Foreign Assets Control reserves the 
right to exclude any person, property, or transaction from the operation 
of any license, or from the privileges therein conferred, or to restrict 
the applicability thereof with respect to particular persons, property, 
transactions, or classes thereof. Such action shall be binding upon all 
persons receiving actual or constructive notice of such exclusion or 
restriction.



Sec. 536.503  Payments and transfers to blocked accounts in U.S. 
financial institutions.

    (a) Any payment of funds or transfer of credit or other financial or 
economic resources or assets into a blocked account in a U.S. financial 
institution is authorized, provided that a transfer from a blocked 
account pursuant to this authorization may only be made to another 
blocked account held in the same name on the books of the same U.S. 
financial institution.
    (b) This section does not authorize any transfer from a blocked 
account within the United States to an account held outside the United 
States.

    Note to Sec. 536.503: Please refer to Sec. 501.603 of this chapter 
for mandatory reporting requirements regarding financial transfers.

[62 FR 9960, Mar. 5, 1997, as amended at 62 FR 45107, Aug. 25, 1997]



Sec. 536.504  Investment and reinvestment of certain funds.

    (a) U.S. financial institutions are hereby authorized and directed 
to invest and reinvest assets held in blocked accounts in the name of a 
specially designated narcotics trafficker, subject to the following 
conditions:
    (1) The assets representing such investments and reinvestments are 
credited to a blocked account or sub-account which is in the name of the 
specially designated narcotics trafficker and which is located in the 
United States or within the possession or control of a U.S. person; and
    (2) The proceeds of such investments and reinvestments are not 
credited to a blocked account or sub-account under any name or 
designation which differs from the name or designation of the specific 
blocked account or sub-account in which such funds or securities were 
held; and
    (3) No immediate financial or economic benefit or access accrues 
(e.g., through pledging or other use) to the specially designated 
narcotics trafficker.
    (b)(1) U.S. persons seeking to avail themselves of this 
authorization must register with the Office of Foreign Assets Control, 
Blocked Assets Division, before undertaking transactions authorized 
under this section.
    (2) Transactions conducted pursuant to this section must be reported 
to the Office of Foreign Assets Control, Blocked Assets Division, in a 
report filed no later than 10 business days following the last business 
day of the month in which the transactions occurred.



Sec. 536.505  Entries in certain accounts for normal service charges 
authorized.

    (a) U.S. financial institutions are hereby authorized to debit any 
blocked account with such U.S. financial institution in payment or 
reimbursement

[[Page 153]]

for normal service charges owed to such U.S. financial institution by 
the owner of such blocked account.
    (b) As used in this section, the term normal service charge shall 
include charges in payment or reimbursement for interest due; cable, 
telegraph, 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, photostats, credit reports, transcripts of 
statements, registered mail, insurance, stationery and supplies, check 
books, and other similar items.



Sec. 536.506  Provision of certain legal services authorized.

    (a) The provision to or on behalf of a specially designated 
narcotics trafficker of the legal services set forth in paragraph (b) of 
this section is authorized, provided that all receipt of payment 
therefor must be specifically licensed.
    (b) Specific licenses may be issued, on a case-by-case basis, 
authorizing receipt of payment of professional fees and reimbursement of 
incurred expenses for the following legal services by U.S. persons to a 
specially designated narcotics trafficker:
    (1) Provision of legal advice and counseling on the requirements of 
and compliance with the laws of any jurisdiction within the United 
States, provided that such advice and counseling is not provided to 
facilitate transactions that would violate any of the prohibitions 
contained in this part;
    (2) Representation of a specially designated narcotics trafficker 
when named as a defendant in or otherwise made a party to domestic 
United States legal, arbitration, or administrative proceedings;
    (3) Initiation of domestic United States legal, arbitration, or 
administrative proceedings in defense of property interests subject to 
U.S. jurisdiction of a specially designated narcotics trafficker;
    (4) Representation before any federal or state agency with respect 
to the imposition, administration, or enforcement of United States 
sanctions against significant narcotics traffickers centered in Colombia 
or specially designated narcotics traffickers; and
    (5) Provision of legal services in any other context in which 
prevailing United States law requires access to legal counsel at public 
expense.
    (c) The provision of any other legal services to a specially 
designated narcotics trafficker, not otherwise authorized in or exempted 
by this part, requires the issuance of a specific license.
    (d) Entry into a settlement agreement affecting property or 
interests in property of a specially designated narcotics trafficker 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 a property interest 
of a specially designated narcotics trafficker is prohibited unless 
specifically licensed in accordance with Sec. 536.202(e).



Sec. 536.507  Authorization of emergency medical services.

    The provision of nonscheduled emergency medical services to a 
specially designated narcotics trafficker located in the United States 
is authorized, provided that any payment for such services requires 
prior authorization by specific license.



                            Subpart F_Reports



Sec. 536.601  Records and reports.

    For provisions relating to records and reports, see subpart C of 
part 501 of this chapter.

[62 FR 45107, Aug. 25, 1997]



                           Subpart G_Penalties



Sec. 536.701  Penalties.

    (a) Attention is directed to section 206 of the International 
Emergency Economic Powers Act (50 U.S.C. 1705--the ``Act''), which is 
applicable to violations of the provisions of any license, ruling, 
regulation, order, direction or instruction issued by or pursuant to the 
direction or authorization of the Secretary of the Treasury pursuant to 
this part or otherwise under the Act.

[[Page 154]]

    (1) A civil penalty not to exceed the amount set forth in Section 
206 of the Act 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 the Act.

    Note to paragraph (a)(1) of Sec. 536.701: As of June 10, 2008, the 
Act provides for a maximum civil penalty not to exceed the greater of 
$250,000 or an amount that is twice the amount of the transaction that 
is the basis of the violation with respect to which the penalty is 
imposed.

    (2) A person who willfully commits, willfully attempts to commit, or 
willfully conspires to commit, or aids or abets in the commission of a 
violation of any license, order, regulation, or prohibition shall, upon 
conviction, be fined not more than $1,000,000, or if a natural person, 
may be imprisoned for not more than 20 years, or both.
    (b) Adjustments to penalty amounts. (1) The civil penalties provided 
in the Act 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 the Act are subject to 
adjustment pursuant to 18 U.S.C. 3571.
    (c) Attention is also directed to 18 U.S.C. 1001, which provides 
that whoever, in any matter within the jurisdiction of any department or 
agency of the United States, knowingly and willfully falsifies, conceals 
or covers up by any trick, scheme, or device a material fact, or makes 
any false, fictitious or fraudulent statements or representations or 
makes or uses any false writing or document knowing the same to contain 
any false, fictitious or fraudulent statement or entry, shall be fined 
under title 18, United States Code, or imprisoned not more than five 
years, or both.
    (d) Violations of this part may also be subject to relevant 
provisions of other applicable laws.

[62 FR 9960, Mar. 5, 1997, as amended at 71 FR 29252, May 22, 2006; 73 
FR 32652, June 10, 2008]



Sec. 536.702  Prepenalty notice.

    (a) When required. If the Director of the Office of Foreign Assets 
Control has reasonable cause to believe that there has occurred a 
violation of any provision of this part or a violation of the provisions 
of any license, ruling, regulation, order, direction or instruction 
issued by or pursuant to the direction or authorization of the Secretary 
of the Treasury pursuant to this part or otherwise under the 
International Emergency Economic Powers Act, and the Director determines 
that further proceedings are warranted, he shall issue to the person 
concerned a notice of his intent to impose a monetary penalty. The 
prepenalty notice may be issued whether or not another agency has taken 
any action with respect to this matter.
    (b) Contents--(1) Facts of violation. The prepenalty notice shall 
describe the violation, specify the laws and regulations allegedly 
violated, and state the amount of the proposed monetary penalty.
    (2) Right to respond. The prepenalty notice also shall inform the 
respondent of respondent's right to respond to the notice within 30 days 
of its mailing as to why a monetary penalty should not be imposed, or, 
if imposed, why it should be in a lesser amount than proposed.



Sec. 536.703  Response to prepenalty notice.

    (a) Time within which to respond. The respondent shall have 30 days 
from the date of mailing of the prepenalty notice to respond in writing 
to the Director of the Office of Foreign Assets Control.
    (b) Form and contents of written response. The written response need 
not be in any particular form, but shall contain information sufficient 
to indicate that it is in response to the prepenalty notice. It should 
respond to the allegations in the prepenalty notice and set forth the 
reasons why the person believes the penalty should not be imposed or, if 
imposed, why it should be in a lesser amount than proposed.
    (c) Informal settlement. In addition or as an alternative to a 
written response to a prepenalty notice pursuant to this section, the 
respondent or respondent's representative may contact the Office of 
Foreign Assets Control as advised in the prepenalty notice to propose 
the settlement of allegations contained in

[[Page 155]]

the prepenalty notice and related matters. In the event of settlement at 
the prepenalty stage, the prepenalty notice will be withdrawn, the 
respondent is not required to take a written position on allegations 
contained in the prepenalty notice, and the Office of Foreign Assets 
Control will make no final determination as to whether a violation 
occurred. The amount accepted in settlement of allegations in a 
prepenalty notice may vary from the civil penalty that might finally be 
imposed in the event of a formal determination of violation. In the 
event no settlement is reached, the 30-day period specified in paragraph 
(a) of this section for written response to the prepenalty notice 
remains in effect unless additional time is granted by the Office of 
Foreign Assets Control.



Sec. 536.704  Penalty notice.

    (a) No violation. If, after considering any written response to the 
prepenalty notice and any relevant facts, the Director of the Office of 
Foreign Assets Control determines that there was no violation by the 
respondent named in the prepenalty notice, the Director promptly shall 
notify the respondent in writing of that determination and that no 
monetary penalty will be imposed.
    (b) Violation. If, after considering any written response to the 
prepenalty notice and any relevant facts, the Director of the Office of 
Foreign Assets Control determines that there was a violation by the 
respondent named in the prepenalty notice, the Director promptly shall 
issue a written notice of the imposition of the monetary penalty or 
other available disposition on the respondent.



Sec. 536.705  Administrative collection; referral to United States
Department of Justice.

    In the event that the respondent does not pay the penalty imposed 
pursuant to this part or make payment arrangements acceptable to the 
Director of the Office of Foreign Assets Control within 30 days of the 
mailing of the written notice of the imposition of the penalty, the 
matter may be referred for administrative collection measures or to the 
United States Department of Justice for appropriate action to recover 
the penalty in a civil suit in a Federal district court.



                          Subpart H_Procedures



Sec. 536.801  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.

[62 FR 45107, Aug. 25, 1997, as amended at 68 FR 53657, Sept. 11, 2003]



Sec. 536.802  Delegation by the Secretary of the Treasury.

    Any action which the Secretary of the Treasury is authorized to take 
pursuant to Executive Order 12978 or any further executive orders 
relating to the national emergency declared in Executive Order 12978 may 
be taken by the Director of the Office of Foreign Assets Control, or by 
any other person to whom the Secretary of the Treasury has delegated 
authority so to act.

[62 FR 9960, Mar. 5, 1997. Redesignated at 62 FR 45108, Aug. 25, 1997]



                    Subpart I_Paperwork Reduction Act



Sec. 536.901  Paperwork Reduction Act notice.

    For approval by the Office of Management and Budget (``OMB'') under 
the Paperwork Reduction Act of information collections relating to 
recordkeeping and reporting requirements, to licensing procedures 
(including those pursuant to statements of licensing policy), and to 
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.

[62 FR 45108, Aug. 25, 1997]

[[Page 156]]



PART 537_BURMESE SANCTIONS REGULATIONS--Table of Contents



      Subpart A_Relation of This Part to Other Laws and Regulations

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

                         Subpart B_Prohibitions

537.201 Prohibited transactions involving certain blocked property.
537.202 Prohibited exportation or reexportation of financial services to 
          Burma.
537.203 Prohibited importation of products of Burma.
537.204 Prohibited new investment in Burma.
537.205 Prohibited facilitation.
537.206 Evasions; attempts; conspiracies.
537.207 Effect of transfers violating the provisions of this part.
537.208 Holding of funds in interest-bearing accounts; investment and 
          reinvestment.
537.209 Expenses of maintaining blocked property; liquidation of blocked 
          account.
537.210 Exempt transactions.

                      Subpart C_General Definitions

537.301 Blocked account; blocked property.
537.302 Economic development of resources located in Burma.
537.303 Effective date.
537.304 Entity.
537.305 Exportation or reexportation of financial services to Burma.
537.306 Foreign person.
537.307 Government of Burma.
537.308 Information or informational materials.
537.309 Interest.
537.310 Licenses; general and specific.
537.311 New investment.
537.312 Nongovernmental entity in Burma.
537.313 Person.
537.314 Product of Burma.
537.315 Property; property interest.
537.316 Resources located in Burma.
537.317 Transfer.
537.318 United States.
537.319 U.S. depository institution.
537.320 U.S. financial institution.
537.321 U.S. person.
537.322 U.S. registered broker or dealer in securities.
537.323 U.S. registered money transmitter.

                        Subpart D_Interpretations

537.401 Reference to amended sections.
537.402 Effect of amendment.
537.403 Termination and acquisition of an interest in blocked property.
537.404 Transactions incidental to a licensed transaction authorized.
537.405 Provision of services.
537.406 Offshore transactions.
537.407 Payments from blocked accounts to satisfy obligations 
          prohibited.
537.408 Setoffs prohibited.
537.409 Activities under pre-May 21, 1997 agreements.
537.410 Contracts and subcontracts regarding economic development of 
          resources in Burma.
537.411 Purchase of shares in economic development projects in Burma.
537.412 Investments in entities involved in economic development 
          projects in Burma.
537.413 Sale of interest in economic development projects in Burma.

  Subpart E_Licenses, Authorizations and Statements of Licensing Policy

537.501 General and specific licensing procedures.
537.502 Effect of license or authorization.
537.503 Exclusion from licenses.
537.504 Payments and transfers to blocked accounts in U.S. financial 
          institutions.
537.505 Entries in certain accounts for normal service charges 
          authorized.
537.506 Investment and reinvestment of certain funds.
537.507 Provision of certain legal services authorized.
537.508 Authorization of emergency medical services.
537.509 Official activities of the U.S. Government and certain 
          international organizations.
537.510 Third-country diplomatic and consular funds transfers.
537.511 Importation of accompanied baggage and household effects of U.S. 
          diplomatic and consular officials.
537.512 Importation for official or personal use by foreign diplomatic 
          and consular officials.
537.513 Importation and exportation of diplomatic pouches.
537.514 Importation of certain personal and household effects.
537.515 Importation of information or informational materials.
537.516 Importation of Burmese-origin articles and incidental 
          transactions.
537.517 Noncommercial, personal remittances.
537.518 Transactions incident to exportations to Burma.
537.519 Activities undertaken pursuant to certain pre-May 21, 1997 
          agreements.
537.520 Payments for overflights of Burmese airspace.
537.521 Operation of accounts.

[[Page 157]]

537.522 Certain transactions related to patents, trademarks and 
          copyrights authorized.
537.523 Authorization of nongovernmental organizations to engage in 
          humanitarian or religious activities.
537.524 Divestiture of U.S. person's investments in Burma.
537.525 Transactions related to U.S. citizens residing in Burma.
537.526 Authorized transactions necessary and ordinarily incident to 
          publishing.
537.527 Importation into the United States of Burmese-origin animals and 
          specimens.

                            Subpart F_Reports

537.601 Records and Reports.

                           Subpart G_Penalties

537.701 Penalties.
537.702 Prepenalty notice.
537.703 Response to prepenalty notice; informal settlement.
537.704 Penalty imposition or withdrawal.
537.705 Administrative collection; referral to United States Department 
          of Justice.

                          Subpart H_Procedures

537.801 Procedures.
537.802 Delegation by the Secretary of the Treasury.

                    Subpart I_Paperwork Reduction Act

537.901 Paperwork Reduction Act notice.

    Authority: 3 U.S.C. 301; 31 U.S.C. 321(b); 50 U.S.C 1601-1651, 1701-
1706; Pub. L. 101-410, 104 Stat. 890 (28 U.S.C. 2461 note); Sec. 570, 
Pub. L. 104-208, 110 Stat. 3009; Pub. L. 108-61, 117 Stat. 864; Pub. L. 
110-96, 121 Stat. 1011; E.O. 13047, 62 FR 28301, 3 CFR, 1997 Comp., p. 
202; E.O. 13310, 68 FR 44853, 3 CFR, 2003 Comp., p. 241.

    Source: 70 FR 48241, Aug. 16, 2005, unless otherwise noted.



      Subpart A_Relation of This Part to Other Laws and Regulations



Sec. 537.101  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. 537.201  Prohibited transactions involving certain blocked
property.

    (a) Except as authorized by regulations, orders, directives, 
rulings, instructions, licenses or otherwise, and notwithstanding any 
contracts entered into or any license or permit granted prior to 12:01 
a.m. eastern daylight time, July 29, 2003, all property and interests in 
property of the following persons that are in the United States, that 
hereafter come within the United States, or that are or hereafter come 
within the possession or control of U.S. persons, including their 
overseas branches, are blocked and may not be transferred, paid, 
exported, withdrawn or otherwise dealt in:
    (1) Any person listed in the Annex to Executive Order 13310 of July 
28, 2003 (68 FR 44853, July 30, 2003); and
    (2) Any person determined by the Secretary of the Treasury, in 
consultation with the Secretary of State,
    (i) To be a senior official of the Government of Burma, the State 
Peace and Development Council of Burma, the Union Solidarity and 
Development Association of Burma, or any successor entity to any of the 
foregoing, or
    (ii) To be owned or controlled by, or acting or purporting to act 
for or on behalf of, directly or indirectly, any person whose property 
or interests in property are blocked pursuant to this section.


[[Page 158]]


    Note 1 to paragraph (a) of Sec. 537.201: The names of persons whose 
property and interests in property are blocked pursuant to paragraph (a) 
of this section are published in the Federal Register and incorporated 
into the Office of Foreign Assets Control's Specially Designated 
Nationals and Blocked Persons List (``SDN List'') with the identifier 
``[BURMA].'' The SDN List is accessible through the following page on 
the Office of Foreign Assets Control's Web site: http://
www.treasury.gov/sdn. Additional information pertaining to the SDN List 
can be found in appendix A to this chapter.
    Note 2 to paragraph (a) of Sec. 537.201: The International 
Emergency Economic Powers Act (50 U.S.C. 1701-1706), in Section 203 (50 
U.S.C. 1702), authorizes the blocking of property and interests in 
property of a person during the pendency of an investigation. The names 
of persons whose property and interests in property are blocked pending 
investigation pursuant to paragraph (a) of this section also are 
published in the Federal Register and incorporated into the SDN List 
with the identifier ``[BPI-BURMA].''
    Note 3 to paragraph (a) of Sec. 537.201: Sections 501.806 and 
501.807 of this chapter describe the procedures to be followed by 
persons seeking, respectively, the unblocking of funds that they believe 
were blocked due to mistaken identity, or administrative reconsideration 
of their status as persons whose property and interests in property are 
blocked pursuant to paragraph (a) of this section.

    (b) Unless otherwise authorized by this part or by a specific 
license expressly referring to this section, any dealing in any security 
(or evidence thereof) held within the possession or control of a U.S. 
person and either registered or inscribed in the name of or known to be 
held for the benefit of any person whose property or interests in 
property are blocked pursuant to paragraph (a) of this section is 
prohibited. This prohibition includes but is not limited to the transfer 
(including the transfer on the books of any issuer or agent thereof), 
disposition, transportation, importation, exportation, or withdrawal of 
any such security or the endorsement or guaranty of signatures on any 
such security. This prohibition applies irrespective of the fact that at 
any time (whether prior to, on, or subsequent to 12:01 a.m. eastern 
daylight time, July 29, 2003) the registered or inscribed owner of any 
such security may have or might appear to have assigned, transferred, or 
otherwise disposed of the security.

[70 FR 48241, Aug. 16, 2005, as amended at 76 FR 38536, June 30, 2011]



Sec. 537.202  Prohibited exportation or reexportation of financial 
services to Burma.

    Except as authorized, and notwithstanding any contracts entered into 
or any license or permit granted prior to July 29, 2003, the exportation 
or reexportation of financial services to Burma, directly or indirectly, 
from the United States or by a U.S. person, wherever located, is 
prohibited.



Sec. 537.203  Prohibited importation of products of Burma.

    Except as otherwise authorized, and notwithstanding any contracts 
entered into or any license or permit granted prior to August 28, 2003, 
the importation into the United States of any article that is a product 
of Burma is prohibited.

    Note to Sec. 537.203: Section 3(b) of the Burmese Freedom and 
Democracy Act of 2003 provides that the prohibition contained in this 
section may be waived by the President for any or all articles that are 
a product of Burma if the President determines and notifies specified 
committees of Congress that to do so is in the national interest of the 
United States. Therefore, the Office of Foreign Assets Control will not 
issue licenses authorizing transactions prohibited under this section in 
the absence of such a waiver process. The President's waiver functions 
and authorities under section 3(b) have been delegated to the Secretary 
of State.



Sec. 537.204  Prohibited new investment in Burma.

    Except as otherwise authorized, new investment, as defined in Sec. 
537.311, in Burma by U.S. persons is prohibited.

    Note to Sec. 537.204: Section 570 of the Foreign Operations, Export 
Financing, and Related Programs Appropriations Act, 1997 (Public Law 
104-208) provides that the prohibition contained in this section may be 
waived, temporarily or permanently, by the President if he determines 
and certifies to Congress that the application of this sanction would be 
contrary to the national interests of the United States. Licenses are 
thus not available for purposes of authorizing transactions prohibited 
under this section in the absence of such a waiver determination and 
certification to Congress.

[[Page 159]]



Sec. 537.205  Prohibited facilitation.

    (a) Except as otherwise authorized, U.S. persons, wherever located, 
are prohibited from approving, financing, facilitating, or guaranteeing 
a transaction by a person who is a foreign person where the transaction 
would be prohibited if performed by a U.S. person or within the United 
States.
    (b) With respect to new investment in Burma, the prohibition against 
facilitation does not include the entry into, performance of, or 
financing of a contract to sell or purchase goods, services, or 
technology unless such contract includes any of the activities described 
in Sec. 537.311(a)(2), (3) or (4).

    Note to Sec. 537.205: This section's prohibitions include, but are 
not limited to, the approval, financing, facilitation, or guarantee of 
transactions prohibited by either section 570 of the Foreign Operations, 
Export Financing, and Related Programs Appropriations Act, 1997 (Pub. L. 
104-208), or the Burmese Freedom and Democracy Act of 2003 (Pub. L. 108-
61). The prohibitions of these two statutes may be waived by the 
President upon the making of certain determinations and notification to 
Congress. Therefore, the Office of Foreign Assets Control will not issue 
licenses authorizing the approval, financing, facilitation, or guarantee 
of the transactions prohibited by these statutes in the absence of such 
waivers.



Sec. 537.206  Evasions; attempts; conspiracies.

    (a) Any transaction by a U.S. person or within the United States on 
or after the effective date that evades or avoids, has the purpose of 
evading or avoiding, or attempts to violate any of the prohibitions set 
forth in this part is prohibited.
    (b) Any conspiracy formed to violate any of the prohibitions set 
forth in this part is prohibited.

    Note to Sec. 537.206: See Sec. 537.303 for a definition of the 
term effective date.



Sec. 537.207  Effect of transfers violating the provisions of this part.

    (a) Any transfer after July 28, 2003, 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. 
537.201(a), is null and void and shall not be the basis for the 
assertion or recognition of any interest in or right, remedy, power, or 
privilege with respect to such property or property interests.
    (b) No transfer before July 29, 2003 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. 537.201(a), unless the person with whom such 
property is held or maintained, prior to that date, had written notice 
of the transfer or by any written evidence had recognized such transfer.
    (c) Unless otherwise provided, an appropriate license or other 
authorization issued by or pursuant to the direction or authorization of 
the Director of the Office of Foreign Assets Control before, during, or 
after a transfer shall validate such transfer or make it enforceable to 
the same extent that it would be valid or enforceable but for the 
provisions of the International Emergency Economic Powers Act (50 U.S.C. 
1701-1706), 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 was held or maintained (and as to such person only) in 
cases in which such person is able to establish to the satisfaction of 
the Director of the Office of Foreign Assets Control each of the 
following:
    (1) Such transfer did not represent a willful violation of the 
provisions of this part by the person with whom such property was held 
or maintained;
    (2) The person with whom such property 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

[[Page 160]]

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 was held or maintained filed 
with the Office of Foreign Assets Control a report setting forth in full 
the circumstances relating to such transfer promptly upon discovery 
that:
    (i) Such transfer was in violation of the provisions of this part or 
any regulation, ruling, instruction, license, or other direction or 
authorization issued pursuant to this part;
    (ii) Such transfer was not licensed or authorized by the Director of 
the Office of Foreign Assets Control; or
    (iii) If a license did purport to cover the transfer, such license 
had been obtained by misrepresentation of a third party or withholding 
of material facts or was otherwise fraudulently obtained.

    Note to paragraph (d) of Sec. 537.207: The filing of a report in 
accordance with the provisions of paragraph (d)(3) of this section shall 
not be deemed evidence that the terms of paragraphs (d)(1) and (d)(2) of 
this section have been satisfied.

    (e) Except to the extent otherwise provided by law or unless 
licensed pursuant to this part, any attachment, judgment, decree, lien, 
execution, garnishment, or other judicial process is null and void with 
respect to any property in which, at or since 12:01 a.m. eastern 
daylight time, July 29, 2003, there existed an interest of a person 
whose property or interests in property are blocked pursuant to Sec. 
537.201(a).



Sec. 537.208  Holding of funds in interest-bearing accounts; investment
and reinvestment.

    (a) Except as provided in paragraph (c) or (d) of this section, or 
as otherwise directed by the Office of Foreign Assets Control, any U.S. 
person holding funds, such as currency, bank deposits, or liquidated 
financial obligations, subject to Sec. 537.201(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, provided 
the funds are invested in a money market fund or in U.S. Treasury bills.
    (2) 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.
    (3) Funds held or placed in a blocked account pursuant to this 
paragraph (b) may not be invested in instruments the maturity of which 
exceeds 180 days. If interest is credited to a separate blocked account 
or subaccount, the name of the account party on each account must be the 
same.
    (c) Blocked funds held in instruments the maturity of which exceeds 
180 days at the time the funds become subject to Sec. 537.201(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 (b) 
or (d) of this section.
    (d) Blocked funds held in accounts or instruments outside the United 
States at the time the funds become subject to Sec. 537.201(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.
    (e) 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 at the time the property becomes subject to 
Sec. 537.201(a). However, the Office of Foreign Assets Control may 
issue licenses permitting or directing such sales in appropriate cases.
    (f) 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 or interests in property 
are blocked pursuant to

[[Page 161]]

Sec. 537.201(a), nor may their holder cooperate in or facilitate the 
pledging or other attempted use as collateral of blocked funds or other 
assets.



Sec. 537.209  Expenses of maintaining blocked property; liquidation of
blocked account.

    (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 before 12:01 a.m. eastern daylight time, July 29, 2003, 
all expenses incident to the maintenance of physical property blocked 
pursuant to Sec. 537.201(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. 537.201(a) may, in the 
discretion of the Director, Office of Foreign Assets Control, be sold or 
liquidated and the net proceeds placed in a blocked interest-bearing 
account in the name of the owner of the property.



Sec. 537.210  Exempt transactions.

    (a) Personal communications. The prohibitions contained in this 
part, other than those set forth in Sec. 537.203, 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, other than those set forth in Sec. 537.203, do 
not apply to the importation from any country, or the exportation to any 
country, whether commercial or otherwise, of information or 
informational materials, regardless of format or medium of transmission.

    Note to paragraph (b)(1) of Sec. 537.210: Section 537.203 prohibits 
the importation of products of Burma into the United States pursuant to 
the Burmese Freedom and Democracy Act of 2003. Therefore, the 
importation into the United States of information or informational 
materials that are products of Burma is not exempt from the prohibition 
set forth in Sec. 537.203. However, such transactions are authorized by 
the general license set forth in Sec. 537.515.

    (2) This section does not exempt from regulation or authorize 
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 informational 
materials, or to the provision of marketing and business consulting 
services. Such prohibited transactions include, but are not limited to, 
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, 
with respect to information or informational materials imported from 
persons whose property or interests in property are blocked pursuant to 
Sec. 537.201(a), 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 from regulation or authorize 
transactions incident to the exportation of software subject to the 
Export Administration Regulations, 15 CFR parts 730-774, or to the 
exportation of goods, technology or software, 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 or interests in property are blocked pursuant to 
Sec. 537.201(a) are prohibited.
    (c) Pre-1997 contracts. The prohibitions contained in this part, 
other than those set forth in Sec. 537.203, do not apply to any 
activity undertaken pursuant to an agreement, or pursuant to the 
exercise of rights under such an agreement, that was entered into by a 
U.S. person with the Government of Burma or a non-governmental entity in 
Burma prior to 12:01 a.m. eastern daylight time on May 21, 1997.
    (d) Travel exemption. The prohibitions contained in this part, other 
than the prohibition against the importation into the United States of 
products of

[[Page 162]]

Burma set forth in Sec. 537.203, do not apply to transactions 
ordinarily incident to travel to or from any country, including 
exportation or importation of accompanied baggage (other than 
importation of baggage that comes within the prohibition set forth in 
Sec. 537.203) 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.

    Note to Sec. 537.211: See the authorizations relating to the 
importation of certain personal and household effects set forth in 
Sec. Sec. 537.511 and 537.514.



                      Subpart C_General Definitions



Sec. 537.301  Blocked account; blocked property.

    The terms blocked account and blocked property shall mean any 
account or property subject to the prohibitions in Sec. 537.201 held in 
the name of a person whose property or interests in property are blocked 
pursuant to Sec. 537.201(a), or in which such person has an interest, 
and with respect to which payments, transfers, exportations, 
withdrawals, or other dealings may not be made or effected except 
pursuant to an authorization or license from the Office of Foreign 
Assets Control expressly authorizing such action.



Sec. 537.302  Economic development of resources located in Burma.

    (a) The term economic development of resources located in Burma 
means activities pursuant to a contract the subject of which includes 
responsibility for the development or exploitation of resources located 
in Burma, including making or attempting to make those resources 
accessible or available for exploitation or economic use. The term shall 
not be construed to include not-for-profit educational, health, or other 
humanitarian programs or activities.
    (b) Examples: The economic development of resources located in Burma 
includes a contract conferring rights to explore for, develop, extract, 
or refine petroleum, natural gas, or minerals in the ground in Burma; or 
a contract to assume control of a mining operation in Burma, acquire a 
forest or agricultural area for commercial use of the timber or other 
crops, or acquire land for the construction and operation of a hotel or 
factory.



Sec. 537.303  Effective date.

    The term effective date refers to the effective date of the 
applicable prohibitions and directives contained in this part as 
follows:
    (a) With respect to prohibited transfers or other dealings in 
blocked property or interests in property of persons listed in the Annex 
to Executive Order 13310 of July 28, 2003 (68 FR 44853, July 30, 2003), 
12:01 a.m. eastern daylight time, July 29, 2003;
    (b) With respect to prohibited transfers or other dealings in 
blocked property or interests in property of persons designated pursuant 
to Sec. 537.201(a)(2), the earlier of the date on which either actual 
notice or constructive notice is received of such person's designation;
    (c) With respect to the exportation or reexportation of financial 
services to Burma prohibited by Sec. 537.202, 12:01 a.m. eastern 
daylight time, July 29, 2003;
    (d) With respect to the importation into the United States of 
products of Burma prohibited by Sec. 537.203, 12:01 a.m. eastern 
daylight time, August 28, 2003;
    (e) With respect to new investment prohibited by Sec. 537.204, 
12:01 a.m. eastern daylight time, May 21, 1997.



Sec. 537.304  Entity.

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



Sec. 537.305  Exportation or reexportation of financial services to Burma.

    The term exportation or reexportation of financial services to Burma 
means:
    (a) The transfer of funds, directly or indirectly, from the United 
States or by a U.S. person, wherever located, to Burma; or
    (b) The provision, directly or indirectly, to persons in Burma of 
insurance services, investment or brokerage services (including but not 
limited to brokering or trading services regarding securities, debt, 
commodities, options or foreign exchange), banking services, money 
remittance services; loans,

[[Page 163]]

guarantees, letters of credit or other extensions of credit; or the 
service of selling or redeeming traveler's checks, money orders and 
stored value.

    Note to Sec. 537.305: This defined term has not appeared in other 
parts of 31 CFR chapter V and is specifically tailored to further the 
goals of the sanctions prohibitions set forth in this part.



Sec. 537.306  Foreign person.

    The term foreign person means any person that is not a U.S. person.



Sec. 537.307  Government of Burma.

    The term Government of Burma means the Government of Burma 
(sometimes referred to as Myanmar), its agencies, instrumentalities and 
controlled entities, and the Central Bank of Burma.



Sec. 537.308  Information or informational materials.

    (a) For purposes of this part, the term information or informational 
materials includes, but is not limited to, publications, films, posters, 
phonograph records, photographs, microfilms, microfiche, tapes, compact 
disks, CD ROMs, artworks, and news wire feeds.

    Note to paragraph (a) of Sec. 537.307: To be considered information 
or informational materials, artworks must be classified under chapter 
heading 9701, 9702, or 9703 of the Harmonized Tariff Schedule of the 
United States.

    (b) The term information or informational materials, with respect to 
United States 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) (the ``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. 537.309  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. 537.310  Licenses; general and specific.

    (a) Except as otherwise specified, the term license means any 
license or authorization contained in or issued pursuant to this part.
    (b) The term general license means any license or authorization the 
terms of which are set forth in subpart E of this part.
    (c) The term specific license means any license or authorization not 
set forth in subpart E of this part but issued pursuant to this part.

    Note to Sec. 537.309: See Sec. 501.801 of this chapter on 
licensing procedures.



Sec. 537.311  New investment.

    (a) The term new investment means any of the following activities if 
such activity is undertaken pursuant to an agreement, or pursuant to the 
exercise of rights under such an agreement, that is entered into with 
the Government of Burma or a nongovernmental entity in Burma on or after 
May 21, 1997:
    (1) The entry into a contract that includes the economic development 
of resources located in Burma, as defined in Sec. 537.302;
    (2) The entry into a contract providing for the general supervision 
and guarantee of another person's performance of a contract that 
includes the economic development of resources located in Burma;
    (3) The purchase of a share of ownership, including an equity 
interest, in the economic development of resources located in Burma; or
    (4) The entry into a contract providing for the participation in 
royalties, earnings, or profits in the economic development of resources 
located in Burma, without regard to the form of the participation.
    (b) The term new investment shall not include the entry into, 
performance of, or financing of a contract to sell or purchase goods, 
services, or technology unless such contract includes any of the 
activities described in paragraph (a)(2), (a)(3) or (a)(4) of this 
section.

[[Page 164]]



Sec. 537.312  Nongovernmental entity in Burma.

    The term nongovernmental entity in Burma means a partnership, 
association, trust, joint venture, corporation, or other organization, 
wherever organized, that is located in Burma or exists for the exclusive 
or predominant purpose of engaging in the economic development of 
resources located in Burma or derives its income predominantly from such 
economic development, and is not the Government of Burma.



Sec. 537.313  Person.

    The term person means an individual or entity.



Sec. 537.314  Product of Burma.

    The term product of Burma means goods of Burmese origin pursuant to 
rules of origin of U.S. Customs and Border Protection.



Sec. 537.315  Property; property interest.

    The terms property and property interest include, but are not 
limited to, money, checks, drafts, bullion, bank deposits, savings 
accounts, debts, indebtedness, obligations, notes, guarantees, 
debentures, stocks, bonds, coupons, any other financial instruments, 
bankers acceptances, mortgages, pledges, liens or other rights in the 
nature of security, warehouse receipts, bills of lading, trust receipts, 
bills of sale, any other evidences of title, ownership or indebtedness, 
letters of credit and any documents relating to any rights or 
obligations thereunder, powers of attorney, goods, wares, merchandise, 
chattels, stocks on hand, ships, goods on ships, real estate mortgages, 
deeds of trust, vendors' sales agreements, land contracts, leaseholds, 
ground rents, real estate and any other interest therein, options, 
negotiable instruments, trade acceptances, royalties, book accounts, 
accounts payable, judgments, patents, trademarks or copyrights, 
insurance policies, safe deposit boxes and their contents, annuities, 
pooling agreements, services of any nature whatsoever, contracts of any 
nature whatsoever, and any other property, real, personal, or mixed, 
tangible or intangible, or interest or interests therein, present, 
future or contingent.



Sec. 537.316  Resources located in Burma.

    The term resources located in Burma means any resources, including 
natural, agricultural, commercial, financial, industrial and human 
resources, located within the territory of Burma, including the 
territorial sea, or located within the exclusive economic zone or 
continental shelf of Burma.



Sec. 537.317  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 and, without limitation upon the foregoing, 
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. 537.318  United States.

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

[[Page 165]]



Sec. 537.319  U.S. depository institution.

    The term U.S. depository institution means any entity (including its 
foreign branches) organized under the laws of the United States or of 
any jurisdiction within the United States, or any agency, office or 
branch located in the United States of a foreign entity, that is engaged 
primarily in the business of banking (for example, banks, savings banks, 
savings associations, credit unions, trust companies and United States 
bank holding companies) and is subject to regulation by federal or state 
banking authorities.



Sec. 537.320  U.S. financial institution.

    The term U.S. financial institution means any U.S. entity (including 
foreign branches) that is engaged in the business of accepting deposits, 
making, granting, transferring, holding, or brokering loans or credits, 
or purchasing or selling foreign exchange, securities, commodity futures 
or options, or procuring purchasers and sellers thereof, as principal or 
agent; including, but not limited to, depository institutions, banks, 
savings banks, trust companies, securities brokers and dealers, 
commodity futures and options brokers and dealers, forward contract and 
foreign exchange merchants, securities and commodities exchanges, 
clearing corporations, investment companies, employee benefit plans, and 
U.S. holding companies, U.S. affiliates, or U.S. subsidiaries of any of 
the foregoing. This term includes those branches, offices and agencies 
of foreign financial institutions that are located in the United States, 
but not such institutions' foreign branches, offices, or agencies.



Sec. 537.321  U.S. person.

    The term 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. 537.322  U.S. registered broker or dealer in securities.

    The term U.S. registered broker or dealer in securities means any 
U.S. citizen, permanent resident alien, or entity organized under the 
laws of the United States or of any jurisdiction within the United 
States, including its foreign branches, or any agency, office or branch 
of a foreign entity located in the United States, that:
    (a) Is a ``broker'' or ``dealer'' in securities within the meanings 
set forth in the Securities Exchange Act of 1934;
    (b) Holds or clears customer accounts; and
    (c) Is registered with the Securities and Exchange Commission under 
the Securities Exchange Act of 1934.



Sec. 537.323  U.S. registered money transmitter.

    The term U.S. registered money transmitter means any U.S. citizen, 
permanent resident alien, or entity organized under the laws of the 
United States or of any jurisdiction within the United States, including 
its foreign branches, or any agency, office or branch of a foreign 
entity located in the United States, that is a money transmitter, as 
defined in 31 CFR 103.11(uu)(5), and that is registered pursuant to 31 
CFR 103.41.



                        Subpart D_Interpretations



Sec. 537.401  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, direction, or license issued pursuant to this part refers 
to the same as currently amended.



Sec. 537.402  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 or 
under the direction of the Director of the Office of Foreign Assets 
Control does not affect any act done or omitted, or any civil or 
criminal suit or 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,

[[Page 166]]

modification, or revocation had not been made.



Sec. 537.403  Termination and acquisition of an interest in blocked
property.

    (a) Whenever a transaction licensed or authorized by or pursuant to 
this part results in the transfer of property (including any property 
interest) away from a person, such property shall no longer be deemed to 
be property blocked pursuant to Sec. 537.201(a), unless there exists in 
the property another interest that is blocked pursuant to Sec. 
537.201(a) or any other part of this chapter, 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 or interests in property are blocked pursuant to 
Sec. 537.201(a), such property shall be deemed to be property in which 
that person has an interest and therefore blocked.



Sec. 537.404  Transactions incidental to a licensed transaction authorized.

    (a) Any transaction ordinarily incident to a licensed transaction 
and necessary to give effect thereto is also authorized, except:
    (1) A transaction, not explicitly authorized within the terms of the 
license, by or with a person whose property or interests in property are 
blocked pursuant to Sec. 537.201(a), except as provided in paragraph 
(b) of this section; or
    (2) A transaction, not explicitly authorized within the terms of the 
license, involving a debit to a blocked account or a transfer of blocked 
property, except as provided in paragraph (b) of this section.
    (b) Transactions licensed pursuant to subpart E of this part and 
those transactions falling within the scope of paragraph (a) of this 
section are authorized even though they may involve transfers to or from 
an account of a financial institution whose property or interests in 
property are blocked pursuant to Sec. 537.201(a), provided that the 
account is not on the books of a financial institution that is a U.S. 
person.



Sec. 537.405  Provision of services.

    (a) Except as provided in Sec. 537.210, the prohibitions on 
transactions involving blocked property contained in Sec. 537.201 apply 
to services performed in the United States or by U.S. persons, wherever 
located, including by an overseas branch of an entity located in the 
United States:
    (1) On behalf of or for the benefit of a person whose property or 
interests in property are blocked pursuant to Sec. 537.201(a); or
    (2) With respect to property interests subject to Sec. 537.201.
    (b) Example: U.S. persons may not, except as authorized by or 
pursuant to this part, provide legal, accounting, financial, brokering, 
freight forwarding, transportation, public relations, or other services 
to a person whose property or interests in property are blocked pursuant 
to Sec. 537.201(a).

    Note to Sec. 537.405: See Sec. Sec. 537.507 and 537.508 on 
licensing policy with regard to the provision of certain legal or 
medical services, respectively.



Sec. 537.406  Offshore transactions.

    The prohibitions in Sec. 537.201 on transactions involving blocked 
property apply to transactions by any U.S. person in a location outside 
the United States with respect to property that the U.S. person knows, 
or has reason to know, is held in the name of a person whose property or 
interests in property are blocked pursuant to Sec. 537.201(a) or in 
which the U.S. person knows, or has reason to know, a person whose 
property or interests in property are blocked pursuant to Sec. 
537.201(a) has or has had an interest since the effective date.



Sec. 537.407  Payments from blocked accounts to satisfy obligations 
prohibited.

    Pursuant to Sec. 537.201, 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.

[[Page 167]]



Sec. 537.408  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. 537.201 if effected after the effective date.



Sec. 537.409  Activities under pre-May 21, 1997 agreements.

    Section 537.210(c) exempts from all prohibitions contained in this 
part, except those contained in Sec. 537.203, activities undertaken by 
a U.S. person pursuant to an agreement entered into prior to May 21, 
1997, between a U.S. person and the Government of Burma or a 
nongovernmental entity in Burma. A U.S. person who is a party to a pre-
May 21, 1997 agreement falling outside the scope of Sec. 537.203 may 
enter into subsequent agreements with foreign persons where such 
agreements are pursuant to, or in exercise of rights under, the pre-May 
21, 1997 agreement and are specifically contemplated by the pre-May 21, 
1997 agreement. The exercise of rights under a pre-May 21, 1997 
agreement falling outside the scope of Sec. 537.203 may include the 
exercise of options to extend the contract, depending on such factors as 
the degree of specificity with which the option to extend is described 
in the pre-May 21, 1997 agreement, and the degree to which the party 
wishing to renew can enforce its decision to exercise the option.



Sec. 537.410  Contracts and subcontracts regarding economic development
of resources in Burma.

    Section 537.204 prohibits new investment in Burma by U.S. persons. 
Section 537.311 defines the term new investment to include certain 
contracts providing for the general supervision and guarantee of another 
person's performance of a contract that includes the economic 
development of resources located in Burma. With respect to entry into 
such contracts, only the following will be considered new investment in 
Burma:
    (a) Entry into contracts for supervision and guarantee at the 
highest level of project management, such as entry into a contract with 
a development project's sponsor or owner to become a prime contractor or 
general manager for a development project;
    (b) Entry into subcontracts where the functional scope of the 
subcontractor's obligations is substantially similar to that of a prime 
contractor's or general manager's obligations for a development project; 
or
    (c) Entry into a contract or subcontract where the consideration 
includes a share of ownership in, or participation in the royalties, 
earnings or profits of, the economic development of resources located in 
Burma.



Sec. 537.411  Purchase of shares in economic development projects in 
Burma.

    The purchase, directly or indirectly, from the Government of Burma 
or a nongovernmental entity in Burma of shares of ownership, including 
an equity interest, in the economic development of resources located in 
Burma is prohibited unless the purchase is pursuant to an agreement 
entered into prior to May 21, 1997.



Sec. 537.412  Investments in entities involved in economic development
projects in Burma.

    (a) The purchase of shares in a third-country company that is 
engaged in the economic development of resources located in Burma is 
prohibited by Sec. 537.204 where the company's profits are 
predominantly derived from the company's economic development of 
resources located in Burma.
    (b) If a U.S. person holds shares in an entity which subsequently 
engages predominantly in the economic development of resources located 
in Burma or subsequently derives its income exclusively or predominantly 
from such economic development, the U.S. person is not required to 
relinquish its shares, but may not purchase additional shares. 
Divestiture of the shares in such an entity to a foreign person--
otherwise constituting the facilitation of that foreign person's 
investment in Burma--is authorized under general license pursuant to 
Sec. 537.524.



Sec. 537.413  Sale of interest in economic development projects in Burma.

    The sale to a foreign person of a U.S. person's equity or income 
interest in a

[[Page 168]]

development project in Burma constitutes facilitation of that foreign 
person's investment in Burma, unless pursuant to a pre-May 21, 1997 
agreement. Such a sale, however, is authorized by general license under 
Sec. 537.524.



  Subpart E_Licenses, Authorizations and Statements of Licensing Policy



Sec. 537.501  General and specific licensing procedures.

    For provisions relating to licensing procedures, see part 501, 
subpart D, of this chapter. Licensing actions taken pursuant to part 501 
of this chapter with respect to the prohibitions contained in this part 
are considered actions taken pursuant to this part.



Sec. 537.502  Effect of license or authorization.

    (a) No license or other authorization contained in this part, or 
otherwise issued by or under the direction of the Director of the Office 
of Foreign Assets Control, authorizes or validates any transaction 
effected prior to the issuance of the license, unless specifically 
provided in such license or authorization.
    (b) No regulation, ruling, instruction, or license authorizes any 
transaction prohibited under this part unless the regulation, ruling, 
instruction or license is issued by the Office of Foreign Assets Control 
and specifically refers to this part. No regulation, ruling, 
instruction, or license referring to this part shall be deemed to 
authorize any transaction prohibited by any provision of this chapter 
unless the regulation, ruling, instruction, or license specifically 
refers to such provision.
    (c) Any regulation, ruling, instruction, or license authorizing any 
transaction otherwise prohibited by this part has the effect of removing 
a prohibition or prohibitions contained in this part from the 
transaction, but only to the extent specifically stated by its terms. 
Unless the regulation, ruling, instruction, or license otherwise 
specifies, such an authorization does not create any right, duty, 
obligation, claim, or interest in, or with respect to, any property 
which would not otherwise exist under ordinary principles of law.



Sec. 537.503  Exclusion from licenses.

    The Director of the Office of Foreign Assets Control reserves the 
right to exclude any person, property, or transaction from the operation 
of any license or from the privileges conferred by any license. The 
Director of the Office of Foreign Assets Control also reserves the right 
to restrict the applicability of any license to particular persons, 
property, transactions, or classes thereof. Such actions are binding 
upon all persons receiving actual or constructive notice of the 
exclusions or restrictions.



Sec. 537.504  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 or interests in property are blocked pursuant to Sec. 
537.201(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 only be 
made to another blocked account held in the same name.

    Note to Sec. 537.504: Please refer to Sec. 501.603 of this chapter 
for mandatory reporting requirements regarding financial transfers. See 
also Sec. 537.208 concerning the obligation to hold blocked funds in 
interest-bearing accounts.



Sec. 537.505  Entries in certain accounts for normal service charges 
authorized.

    (a) A U.S. financial institution is authorized to debit any blocked 
account held at that financial institution in payment or reimbursement 
for normal service charges owed it by the owner of that blocked account.
    (b) As used in this section, the term normal service charge shall 
include

[[Page 169]]

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. 537.506  Investment and reinvestment of certain funds.

    Subject to the requirements of Sec. 537.208, U.S. financial 
institutions are authorized to invest and reinvest assets blocked 
pursuant to Sec. 537.201, subject to the following conditions:
    (a) The assets representing such investments and reinvestments are 
credited to a blocked account or subaccount which 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 persons whose property or interests in 
property are blocked pursuant to Sec. 537.201(a).



Sec. 537.507  Provision of certain legal services authorized.

    (a) The provision of the following legal services to or on behalf of 
persons whose property or interests in property are blocked pursuant to 
Sec. 537.201(a) is authorized, provided that all receipts of payment of 
professional fees and reimbursement of incurred expenses must be 
specifically licensed:
    (1) Provision of legal advice and counseling on the requirements of 
and compliance with the laws of 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 when named as defendants in or 
otherwise made parties to domestic U.S. legal, arbitration, or 
administrative proceedings;
    (3) Initiation and conduct of domestic U.S. legal, arbitration, or 
administrative proceedings in defense of property interests subject to 
U.S. jurisdiction;
    (4) Representation of persons before any federal or state agency 
with respect to the imposition, administration, or enforcement of U.S. 
sanctions against such persons; and
    (5) Provision of legal services in any other context in which 
prevailing U.S. law requires access to legal counsel at public expense.
    (b) The provision of any other legal services to persons whose 
property or interests in property are blocked pursuant to Sec. 
537.201(a), not otherwise authorized in this part, requires the issuance 
of a specific license.
    (c) Entry into a settlement agreement affecting property or 
interests in property 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. 537.201(a) 
is prohibited except to the extent otherwise provided by law or unless 
specifically licensed in accordance with Sec. 537.207(e).



Sec. 537.508  Authorization of emergency medical services.

    The provision of nonscheduled emergency medical services in the 
United States to persons whose property or interests in property are 
blocked pursuant to Sec. 537.201(a) is authorized, provided that all 
receipt of payment for such services must be specifically licensed.



Sec. 537.509  Official activities of the U.S. Government and certain
international organizations.

    All transactions and activities otherwise prohibited by this part 
that are for the conduct of the official business of the United States 
Government, the United Nations, the World Bank, or the

[[Page 170]]

International Monetary Fund are authorized. This section does not 
authorize any importation into the United States of any article that is 
a product of Burma.



Sec. 537.510  Third-country diplomatic and consular funds transfers.

    All transactions that are related to funds transfers otherwise 
prohibited by Sec. Sec. 537.201 and 537.202 and that are for the 
conduct of diplomatic or consular activities of third-country diplomatic 
or consular missions in Burma are authorized.



Sec. 537.511  Importation of accompanied baggage and household effects
of U.S. diplomatic and consular officials.

    U.S. diplomatic or consular officials entering the United States 
directly or indirectly from Burma are authorized to engage in all 
transactions incident to the importation into the United States of 
products of Burma as accompanied baggage or household effects, provided 
that such products are not intended for any other person or for sale and 
are not otherwise prohibited from importation under applicable United 
States laws.



Sec. 537.512  Importation for official or personal use by foreign 
diplomatic and consular officials.

    All transactions incident to the importation into the United States 
of any article that is a product of Burma that is destined for official 
or personal use by personnel employed by a diplomatic mission or 
consulate in the United States are authorized, provided that such 
article is not intended for any other person or for sale and is not 
otherwise prohibited from importation under applicable United States 
laws.



Sec. 537.513  Importation and exportation of diplomatic pouches.

    All transactions in connection with the importation into the United 
States or the exportation from the United States of diplomatic pouches 
and their contents are authorized.



Sec. 537.514  Importation of certain personal and household effects.

    (a) A U.S. person who maintained a residence in Burma prior to July 
28, 2003, is authorized to import into the United States personal and 
household effects that are products of Burma, including accompanied 
baggage and articles for family use, provided the imported items were 
purchased by the U.S. person prior to July 28, 2003, have been actually 
used abroad by the U.S. person or by other family members arriving from 
the same foreign household, are not intended for any other person or for 
sale, and are not otherwise prohibited from importation.
    (b) A national of Burma who arrives in the United States after July 
28, 2003, is authorized to import into the United States personal and 
household effects that are products of Burma, including accompanied 
baggage and articles for family use, provided the imported items are 
ordinarily incident to the Burmese national's arrival in the United 
States, have been actually used abroad by the Burmese national or by 
other family members arriving from the same foreign household, are not 
intended for any other person or for sale, and are not otherwise 
prohibited from importation.



Sec. 537.515  Importation of information or informational materials.

    The importation of information or informational materials that are 
products of Burma and all transactions directly incident to such 
importation are authorized.



Sec. 537.516  Importation of Burmese-origin articles and incidental 
transactions.

    (a) The importation of an article that is a product of Burma, 
otherwise prohibited by Sec. 537.203, is authorized, provided the 
article was purchased prior to July 28, 2003, shipped from Burma to the 
United States prior to August 28, 2003, and is not property in which a 
person whose property or interests in property are blocked pursuant to 
Sec. 537.201(a) has an interest.
    (b) All transactions otherwise prohibited by Sec. Sec. 537.201 and 
537.202 that are directly incident to the importation into the United 
States of an article that is a product of Burma are authorized, provided 
that:

[[Page 171]]

    (1) The importation is authorized pursuant to paragraph (a) of this 
section; or
    (2) The importation occurred prior to August 28, 2003, and was not 
from a person whose property or interests in property are blocked 
pursuant to Sec. 537.201(a).
    (c) All transactions otherwise prohibited by Sec. Sec. 537.201 and 
537.202 that are directly incident to the importation into a country 
other than the United States or Burma of an article that is a product of 
Burma are authorized, provided that:
    (1) The article was purchased prior to July 28, 2003, shipped from 
Burma prior to August 28, 2003, and is not property in which a person 
whose property or interests in property are blocked pursuant to Sec. 
537.201(a) has an interest; or
    (2) The importation occurred prior to August 28, 2003, and was not 
from a person whose property or interests in property are blocked 
pursuant to Sec. 537.201(a).
    (d) Financing agreements with respect to the importations described 
in paragraphs (a), (b) and (c) of this section may be performed only 
according to their terms and may not be extended or renewed.



Sec. 537.517  Noncommercial, personal remittances.

    (a)(1) U.S. depository institutions, U.S. registered brokers or 
dealers in securities, and U.S. registered money transmitters are 
authorized to process transfers of funds to or from Burma or for or on 
behalf of an individual ordinarily resident in Burma in cases in which 
the transfer involves a noncommercial, personal remittance, provided the 
following conditions are met:
    (i) The transfer is not by, to, or through a person whose property 
or interests in property are blocked pursuant to Sec. 537.201(a), 
except as explained in Sec. 537.404 of this part; and
    (ii) Total remittances to the territory of Burma in any consecutive 
3-month period do not exceed $300 per Burmese household, regardless of 
the number of individuals comprising the household.
    (2) Noncommercial, personal remittances do not include charitable 
donations to or for the benefit of an entity or funds transfers for use 
in supporting or operating a business.

    Note to paragraph (a) of Sec. 537.517: U.S. persons may make 
charitable donations to nongovernmental organizations in Burma that are 
authorized to operate pursuant to Sec. 537.523, provided that the 
donations are made pursuant to Sec. 537.523 and the terms of the 
authorization.

    (b) The transferring institutions identified in paragraph (a) of 
this section may rely on the originator of a funds transfer with regard 
to compliance with paragraph (a) of this section, provided that the 
transferring institution does not know or have reason to know that the 
funds transfer is not in compliance with paragraph (a) of this section.
    (c) This section does not authorize transactions with respect to 
property blocked pursuant to Sec. 537.201, except as explained in Sec. 
537.404(b) of this part.



Sec. 537.518  Transactions incident to exportations to Burma.

    All transactions otherwise prohibited by Sec. Sec. 537.201 and 
537.202 that are ordinarily incident to an exportation to Burma of 
goods, technology or services, other than financial services, are 
authorized, provided the exportation is not to or on behalf of a person 
whose property or interests in property are blocked pursuant to Sec. 
537.201(a). This section does not authorize a financial institution that 
is a U.S. person to advise or confirm any financing by a person whose 
property or interests in property are blocked pursuant to Sec. 
537.201(a).



Sec. 537.519  Activities undertaken pursuant to certain pre-May 21, 1997
agreements.

    Except as prohibited by Sec. 537.203, U.S. persons are authorized 
to engage in any activity, or any transaction incident to an activity, 
undertaken pursuant to an agreement entered into prior to 12:01 a.m., 
eastern daylight time, on May 21, 1997, or pursuant to the exercise of 
rights under such an agreement, provided that the parties to the 
agreement include:
    (a) The Government of Burma or a nongovernmental entity in Burma, 
and
    (b) An entity organized under the laws of a foreign state.


[[Page 172]]


    Note to Sec. 537.519: The authorization contained in Sec. 537.519 
pertains to pre-May 21, 1997 contracts between foreign business entities 
and either the Government of Burma or a nongovernmental entity in Burma. 
Pre-May 21, 1997 contracts between U.S. persons and the Government of 
Burma or a nongovernmental entity in Burma are exempt from all 
prohibitions contained in this part except those contained in Sec. 
537.203. See Sec. 537.210 (exemptions).



Sec. 537.520  Payments for overflights of Burmese airspace.

    Payments to Burma of charges for services rendered by the Government 
of Burma in connection with the overflight of Burma or emergency landing 
in Burma of aircraft owned or operated by a U.S. person or registered in 
the United States are authorized.



Sec. 537.521  Operation of accounts.

    The operation of an account in a U.S. financial institution for an 
individual ordinarily resident in Burma, other than an individual whose 
property or interests in property are blocked pursuant to Sec. 
537.201(a), is authorized, provided that each transaction processed 
through the account:
    (a) Is of a personal nature and not for use in supporting or 
operating a business;
    (b) Does not involve a transfer directly or indirectly to Burma or 
for the benefit of individuals ordinarily resident in Burma unless 
authorized by Sec. 537.517; and
    (c) Is not otherwise prohibited by this part.



Sec. 537.522  Certain transactions related to patents, trademarks and 
copyrights authorized.

    (a) All of the following transactions in connection with patent, 
trademark, copyright or other intellectual property protection in the 
United States or Burma, except for those transactions prohibited by 
Sec. 537.203, are authorized:
    (1) The filing and prosecution of any application to obtain a 
patent, trademark, copyright or other form of intellectual property 
protection;
    (2) The receipt of a patent, trademark, copyright or other form of 
intellectual property protection;
    (3) The renewal or maintenance of a patent, trademark, copyright or 
other form of intellectual property protection; and
    (4) The filing and prosecution of opposition or infringement 
proceedings with respect to a patent, trademark, copyright or other form 
of intellectual property protection, or the entrance of a defense to any 
such proceedings.
    (b) This section authorizes the payment of fees currently due to the 
United States Government, or of the reasonable and customary fees and 
charges currently due to attorneys or representatives within the United 
States, in connection with the transactions authorized in paragraph (a) 
of this section. Payment effected pursuant to the terms of this 
paragraph may not be made from a blocked account.
    (c) This section authorizes the payment of fees currently due to the 
Government of Burma, or of the reasonable and customary fees and charges 
currently due to attorneys or representatives within Burma, in 
connection with the transactions authorized in paragraph (a) of this 
section.
    (d) Nothing in this section affects obligations under any other 
provision of law.



Sec. 537.523  Authorization of nongovernmental organizations to engage
in humanitarian or religious activities.

    (a) Specific licenses may be issued on a case-by-case basis 
authorizing nongovernmental organizations to engage in transactions 
otherwise prohibited by Sec. Sec. 537.201 and 537.202 that are 
necessary for their humanitarian or religious activities in Burma. 
Applications for specific licenses must include:
    (1) The organization's name in English, in the language of origin, 
and any acronym or other names used to identify the organization;
    (2) Address and phone number of the organization's headquarters 
location;
    (3) Identification of field offices and partner offices, including 
addresses and organizational names used;
    (4) Identification of key staff, such as directors and senior 
officers, at the organization's headquarters and partner offices, 
including the nationality, citizenship, current country of residence, 
place and date of birth, and current position of each person identified;

[[Page 173]]

    (5) Identification of subcontracting organizations, if any, to the 
extent known or contemplated at the time of the application;
    (6) Existing sources of income, such as official grants, private 
endowments, commercial activities;
    (7) Financial institutions that hold deposits on behalf of or extend 
lines of credit to the organization (names of individuals and 
organizations shall be provided in English, in the language of origin, 
and shall include any acronym or other names used to identify the 
individuals or organizations);
    (8) Independent accounting firms, if employed in the production of 
the organization's financial statements (names of individuals and 
organizations shall be provided in English, in the language of origin, 
and shall include any acronym or other names used to identify the 
individuals or organizations);
    (9) A detailed description of the organization's humanitarian, 
environmental or religious activities and projects in countries or 
geographic areas subject to economic sanctions pursuant to this chapter 
V, including, if applicable, a summary of all information provided in 
grant proposals or funding requests made in connection with the proposed 
activities;
    (10) Most recent official registry documents, annual reports, and 
annual filings with the pertinent government, as applicable; and
    (11) Names and addresses of organizations to which the applicant 
currently provides or proposes to provide funding, services or material 
support, to the extent known at the time of the application, as 
applicable.
    (b) This section does not authorize transfers from blocked accounts.

    Note to Sec. 537.523: Authorization pursuant to this section does 
not excuse a U.S. person from compliance with other applicable U.S. laws 
governing the exportation or reexportation of U.S.-origin goods, 
software, or technology (including technical data). See, e.g., the 
Export Administration Regulations administered by the U.S. Department of 
Commerce (15 CFR parts 730-774).



Sec. 537.524  Divestiture of U.S. person's investments in Burma.

    All transactions, except those prohibited by Sec. 537.203, related 
to the divestiture or transfer to a foreign person of a U.S. person's 
share of ownership, including an equity interest, in the economic 
development of resources located in Burma are authorized. U.S. persons 
participating in such a transaction valued at more than $10,000 are 
required, within 10 business days after the transaction takes place, to 
file a report for statistical purposes with the Office of Foreign Assets 
Control, U.S. Treasury Department, 1500 Pennsylvania Avenue NW.-Annex, 
Washington, DC 20220.



Sec. 537.525  Transactions related to U.S. citizens residing in Burma.

    To the extent otherwise prohibited, U.S. citizens who reside on a 
permanent basis in Burma are authorized to pay their personal living 
expenses and engage in other transactions in Burma ordinarily incident 
to their routine and necessary personal maintenance.



Sec. 537.526  Authorized transactions necessary and ordinarily incident
to publishing.

    (a) To the extent that such activities are not exempt from this 
part, and subject to the restrictions set forth in paragraphs (b) 
through (d) of this section, U.S. persons are authorized to engage in 
all transactions otherwise prohibited by Sec. 537.201 or Sec. 537.202 
that are necessary and ordinarily incident to the publishing and 
marketing of manuscripts, books, journals, and newspapers in paper or 
electronic format (collectively, ``written publications''). This section 
does not apply if the parties to the transactions described in this 
paragraph include the State Peace and Development Council of Burma or 
the Union Solidarity and Development Association of Burma; any successor 
entity to any of the foregoing entities; or any person, other than 
personnel of academic and research institutions, acting or purporting to 
act directly or indirectly on behalf of the foregoing entities with 
respect to the transactions described in this paragraph. Pursuant to 
this section, transactions incident to the following activities are 
authorized, provided they do not involve any importations prohibited by

[[Page 174]]

Sec. 537.203 that are not authorized by another section of this part 
537, and further provided that U.S. persons ensure that they are not 
engaging, without separate authorization, in the activities identified 
in paragraphs (b) through (d) of this section:
    (1) Commissioning and making advance payments for identifiable 
written publications not yet in existence, to the extent consistent with 
industry practice;
    (2) Collaborating on the creation and enhancement of written 
publications;
    (3)(i) Augmenting written publications through the addition of items 
such as photographs, artwork, translation, explanatory text, and, for a 
written publication in electronic format, the addition of embedded 
software necessary for reading, browsing, navigating, or searching the 
written publication;
    (ii) Exporting embedded software necessary for reading, browsing, 
navigating, or searching a written publication in electronic format, 
provided that, to the extent a license is required under the Export 
Administration Regulations, 15 CFR parts 730 through 774 (the ``EAR''), 
the exportation is licensed or otherwise authorized by the Department of 
Commerce under the provisions of the EAR;
    (4) Substantive editing of written publications;
    (5) Payment of royalties for written publications;
    (6) Creating or undertaking a marketing campaign to promote a 
written publication; and
    (7) Other transactions necessary and ordinarily incident to the 
publishing and marketing of written publications as described in this 
paragraph (a).
    (b) This section does not authorize transactions constituting the 
exportation or reexportation of financial services from the United 
States or by U.S. persons to Burma that are not necessary and ordinarily 
incident to the publishing and marketing of written publications as 
described paragraph (a) of this section. For example, this section does 
not authorize U.S. persons to transfer funds to Burma relating to the 
following:
    (1) The provision or receipt of individualized or customized 
services (including, but not limited to, accounting, legal, design, or 
consulting services), other than those necessary and ordinarily incident 
to the publishing and marketing of written publications, even though 
such individualized or customized services are delivered through the use 
of information and informational materials;
    (2) The creation or undertaking of a marketing campaign for any 
person with respect to any service or product other than a written 
publication, or the creation or undertaking of a marketing campaign of 
any kind for the benefit of the State Peace and Development Council of 
Burma or the Union Solidarity and Development Association of Burma; or
    (3) The operation of a publishing house, sales outlet, or other 
office in Burma.

    Note to paragraph (b): The importation of information or 
informational materials, as defined in Sec. 537.308, that are products 
of Burma is authorized by the general license set forth in Sec. 
537.515. The exportation to Burma of information or informational 
materials, as defined in Sec. 537.308, whether commercial or otherwise, 
regardless of format or medium of transmission, is exempt from the 
prohibitions and regulations of this part. See Sec. 537.210(b).

    (c) This section does not authorize U.S. persons to engage in 
transactions constituting the exportation or reexportation of financial 
services to Burma that relate to the services of publishing houses or 
translators in Burma unless such activity is primarily for the 
dissemination of written publications in Burma.
    (d) This section does not authorize:
    (1) The importation into the United States of any article that is a 
product of Burma.

    Note to paragraph (d)(1): The importation of information or 
informational materials, as defined in Sec. 537.308, that are products 
of Burma is authorized by the general license set forth in Sec. 
537.515.

    (2) Transactions constituting the exportation or reexportation of 
financial services from the United States or by U.S. persons to Burma 
that relate to the development, production, design, or marketing of 
technology specifically controlled by the International Traffic in Arms 
Regulations, 22 CFR parts 120

[[Page 175]]

through 130 (the ``ITAR''), the EAR, or the Department of Energy 
Regulations set forth at 10 CFR part 810.
    (3) Transactions constituting the exportation or reexportation of 
financial services from the United States or by U.S. persons to Burma 
that relate to the exportation of information or technology subject to 
the authorization requirements of 10 CFR part 810, or Restricted Data as 
defined in section 11y. of the Atomic Energy Act of 1954, as amended, or 
of other information, data, or technology the release of which is 
controlled under the Atomic Energy Act and regulations therein;
    (4) Transactions constituting the exportation or reexportation of 
financial services from the United States or by U.S. persons to Burma 
that relate to the exportation of any item (including information) 
subject to the EAR where a U.S. person knows or has reason to know that 
the item will be used, directly or indirectly, with respect to certain 
nuclear, missile, chemical, or biological weapons or nuclear-maritime 
end-uses as set forth in part 744 of the EAR. In addition, U.S. persons 
are precluded from exporting any item subject to the EAR to certain 
restricted end-users, as set forth in part 744 of the EAR, as well as 
certain persons whose export privileges have been denied pursuant to 
parts 764 or 766 of the EAR, without authorization from the Department 
of Commerce; or
    (5) Transactions constituting the exportation or reexportation of 
financial services from the United States or by U.S. persons to Burma 
that relate to the exportation of information subject to licensing 
requirements under the ITAR or exchanges of information that are subject 
to regulation by other government agencies.

[72 FR 50049, Aug. 30, 2007]



Sec. 537.527  Importation into the United States of Burmese-origin 
animals and specimens.

    Specific licenses may be issued on a case-by-case basis authorizing 
the importation into the United States of animals and specimens of 
Burmese origin, in sample quantities only, for bona fide scientific 
research and analysis purposes.

[72 FR 34377, June 22, 2007]



                            Subpart F_Reports



Sec. 537.601  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



Sec. 537.701  Penalties.

    (a) Attention is directed to section 206 of the International 
Emergency Economic Powers Act (the ``Act'') (50 U.S.C. 1705), which is 
applicable to violations of the provisions of any license, ruling, 
regulation, order, direction, or instruction issued by or pursuant to 
the direction or authorization of the Secretary of the Treasury pursuant 
to this part or otherwise under the Act.
    (1) A civil penalty not to exceed the amount set forth in Section 
206 of the Act 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 the Act.

    Note to paragraph (a)(1) of Sec. 537.701: As of June 10, 2008, the 
Act provides for a maximum civil penalty not to exceed the greater of 
$250,000 or an amount that is twice the amount of the transaction that 
is the basis of the violation with respect to which the penalty is 
imposed.

    (2) A person who willfully commits, willfully attempts to commit, or 
willfully conspires to commit, or aids or abets in the commission of a 
violation of any license, order, regulation, or prohibition shall, upon 
conviction, be fined not more than $1,000,000, or if a natural person, 
may be imprisoned for not more than 20 years, or both.
    (b) Adjustments to penalty amounts. (1) The civil penalties provided 
in the Act 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).

[[Page 176]]

    (2) The criminal penalties provided in the Act are subject to 
adjustment pursuant to 18 U.S.C. 3571.
    (c) Attention is also directed to 18 U.S.C. 1001, which provides 
that whoever, in any matter within the jurisdiction of the executive, 
legislative, or judicial branch of the Government of the United States, 
knowingly and willfully 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, or imprisoned not more than five years, or 
both.
    (d) Violations of this part may also be subject to relevant 
provisions of other applicable laws.

[70 FR 48241, Aug. 16, 2005, as amended at 71 FR 29252, May 22, 2006; 73 
FR 32652, June 10, 2008]



Sec. 537.702  Prepenalty notice.

    (a) When required. If the Director of the Office of Foreign Assets 
Control has reason to believe that there has occurred a violation of any 
provision of this part or a violation of the provisions of any license, 
ruling, regulation, order, direction, or instruction issued by or 
pursuant to the direction or authorization of the Secretary of the 
Treasury pursuant to this part or otherwise under the International 
Emergency Economic Powers Act, and the Director determines that further 
proceedings are warranted, the Director shall notify the alleged 
violator of the agency's intent to impose a monetary penalty by issuing 
a prepenalty notice. The prepenalty notice shall be in writing. The 
prepenalty notice may be issued whether or not another agency has taken 
any action with respect to the matter.
    (b) Contents of notice--(1) Facts of violation. The prepenalty 
notice shall describe the violation, specify the laws and regulations 
allegedly violated, and state the amount of the proposed monetary 
penalty.
    (2) Right to respond. The prepenalty notice also shall inform the 
respondent of the respondent's right to make a written presentation 
within the applicable 30-day period set forth in Sec. 537.703 as to why 
a monetary penalty should not be imposed or why, if imposed, the 
monetary penalty should be in a lesser amount than proposed.
    (c) Informal settlement prior to issuance of prepenalty notice. At 
any time prior to the issuance of a prepenalty notice, an alleged 
violator may request in writing that, for a period not to exceed 60 
days, the agency withhold issuance of the prepenalty notice for the 
exclusive purpose of effecting settlement of the agency's potential 
civil monetary penalty claims. In the event the Director grants the 
request, under terms and conditions within the Director's discretion, 
the Office of Foreign Assets Control will agree to withhold issuance of 
the prepenalty notice for a period not to exceed 60 days and will enter 
into settlement negotiations of the potential civil monetary penalty 
claim.



Sec. 537.703  Response to prepenalty notice; informal settlement.

    (a) Deadline for response. The respondent may submit a response to 
the prepenalty notice within the applicable 30-day period set forth in 
this paragraph. The Director may grant, at the Director's discretion, an 
extension of time in which to submit a response to the prepenalty 
notice. The failure to submit a response within the applicable time 
period set forth in this paragraph shall be deemed to be a waiver of the 
right to respond.
    (1) Computation of time for response. A response to the prepenalty 
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 prepenalty notice was mailed. 
If the respondent refused delivery or otherwise avoided receipt of the 
prepenalty notice, a response must be postmarked or date-stamped on or 
before the 30th day after the date on the stamped postal receipt 
maintained at the Office of Foreign Assets Control. If the prepenalty 
notice was personally delivered to the respondent by a non-U.S. Postal 
Service agent authorized by the Director, a response must be

[[Page 177]]

postmarked or date-stamped on or before the 30th day after the date of 
delivery.
    (2) 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 Director's discretion, only upon the respondent's specific request 
to the Office of Foreign Assets Control.
    (b) Form and method of response. The response must be submitted in 
typewritten form and signed by the respondent or a representative 
thereof. The response need not be in any particular form. A copy of the 
written response may be sent by facsimile, but the original also must be 
sent to the Office of Foreign Assets Control Civil Penalties Division by 
mail or courier and must be postmarked or date-stamped, in accordance 
with paragraph (a) of this section.
    (c) Contents of response. A written response must contain 
information sufficient to indicate that it is in response to the 
prepenalty notice.
    (1) A written response must include the respondent's full name, 
address, telephone number, and facsimile number, if available, or those 
of the representative of the respondent.
    (2) A written response should either admit or deny each specific 
violation alleged in the prepenalty notice and also state if the 
respondent has no knowledge of a particular violation. If the written 
response fails to address any specific violation alleged in the 
prepenalty notice, that alleged violation shall be deemed to be 
admitted.
    (3) A written response should include any information in defense, 
evidence in support of an asserted defense, or other factors that the 
respondent requests the Office of Foreign Assets Control to consider. 
Any defense or explanation previously made to the Office of Foreign 
Assets Control or any other agency must be repeated in the written 
response. Any defense not raised in the written response will be 
considered waived. The written response also should set forth the 
reasons why the respondent believes the penalty should not be imposed or 
why, if imposed, it should be in a lesser amount than proposed.
    (d) Failure to Respond. Where OFAC receives no response to a 
prepenalty notice within the applicable time period set forth in 
paragraph (a) of this section, a penalty notice generally will be 
issued, taking into account the mitigating and/or aggravating factors 
present in the record. If there are no mitigating factors present in the 
record, or the record contains a preponderance of aggravating factors, 
the proposed prepenalty amount generally will be assessed as the final 
penalty.
    (e) Informal settlement. In addition to or as an alternative to a 
written response to a prepenalty notice, the respondent or respondent's 
representative may contact the Office of Foreign Assets Control as 
advised in the prepenalty notice to propose the settlement of 
allegations contained in the prepenalty notice and related matters. 
However, the requirements set forth in paragraph (f) of this section as 
to oral communication by the representative must first be fulfilled. In 
the event of settlement at the prepenalty stage, the claim proposed in 
the prepenalty notice will be withdrawn, the respondent will not be 
required to take a written position on allegations contained in the 
prepenalty notice, and the Office of Foreign Assets Control will make no 
final determination as to whether a violation occurred. The amount 
accepted in settlement of allegations in a prepenalty notice may vary 
from the civil penalty that might finally be imposed in the event of a 
formal determination of violation. In the event no settlement is 
reached, the time limit specified in paragraph (a) of this section for 
written response to the prepenalty notice will remain in effect unless 
additional time is granted by the Office of Foreign Assets Control.
    (f) Guidelines. Guidelines for the imposition or settlement of civil 
penalties by the Office of Foreign Assets Control have been codified in 
the Appendix to the Reporting, Procedures and Penalties Regulations, 31 
CFR part 501.
    (g) Representation. A representative of the respondent may act on 
behalf of the respondent, but any oral communication with the Office of 
Foreign Assets Control prior to a written submission regarding the 
specific allegations

[[Page 178]]

contained in the prepenalty notice must be preceded by a written letter 
of representation, unless the prepenalty notice was served upon the 
respondent in care of the representative.



Sec. 537.704  Penalty imposition or withdrawal.

    (a) No violation. If, after considering any response to the 
prepenalty notice and any relevant facts, the Director of the Office of 
Foreign Assets Control determines that there was no violation by the 
respondent named in the prepenalty notice, the Director shall notify the 
respondent in writing of that determination and of the cancellation of 
the proposed monetary penalty.
    (b) Violation. (1) If, after considering any written response to the 
prepenalty notice, or default in the submission of a written response, 
and any relevant facts, the Director of the Office of Foreign Assets 
Control determines that there was a violation by the respondent named in 
the prepenalty notice, the Director is authorized to issue a written 
penalty notice to the respondent of the determination of the violation 
and the imposition of the monetary penalty.
    (2) The penalty notice shall inform the respondent that payment or 
arrangement for installment payment of the assessed penalty must be made 
within 30 days of the date of mailing of the penalty notice by the 
Office of Foreign Assets Control.
    (3) The penalty notice shall inform the respondent of the 
requirement to furnish the respondent's taxpayer identification number 
pursuant to 31 U.S.C. 7701 and that such number will be used for 
purposes of collecting and reporting on any delinquent penalty amount.
    (4) The issuance of the penalty notice finding a violation and 
imposing a monetary penalty shall constitute final agency action. The 
respondent has the right to seek judicial review of that final agency 
action in federal district court.



Sec. 537.705  Administrative collection; referral to United States
Department of Justice.

    In the event that the respondent does not pay the penalty imposed 
pursuant to this part or make payment arrangements acceptable to the 
Director of the Office of Foreign Assets Control within 30 days of the 
date of mailing of the penalty notice, the matter may be referred for 
administrative collection measures by the Department of the Treasury or 
to the United States Department of Justice for appropriate action to 
recover the penalty in a civil suit in a federal district court.



                          Subpart H_Procedures



Sec. 537.801  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 D, of this chapter.



Sec. 537.802  Delegation by the Secretary of the Treasury.

    Any action that the Secretary of the Treasury is authorized to take 
pursuant to Executive Order 13047 of May 20, 1997 (62 FR 28299, May 22, 
1997) and Executive Order 13310 of July 28, 2003 (68 FR 44853, July 30, 
2003), and any further Executive orders relating to the national 
emergency declared therein, may be taken by the Director of the Office 
of Foreign Assets Control or by any other person to whom the Secretary 
of the Treasury has delegated authority so to act.



                    Subpart I_Paperwork Reduction Act



Sec. 537.901  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 record keeping and reporting requirements, 
licensing procedures (including those pursuant to statements of 
licensing policy), and other procedures, see Sec. 501.901 of this 
chapter. An agency may not conduct or sponsor, and a person is not 
required to respond to, a collection of information unless it displays a 
valid control number assigned by OMB.

[[Page 179]]



PART 538_SUDANESE SANCTIONS REGULATIONS--Table of Contents



      Subpart A_Relation of This Part to Other Laws and Regulations

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

                         Subpart B_Prohibitions

538.201 Prohibited transactions involving blocked property.
538.202 Effect of transfers violating the provisions of this part.
538.203 Holding of funds in interest-bearing accounts; investment and 
          reinvestment.
538.204 Prohibited importation of goods or services from Sudan.
538.205 Prohibited exportation and reexportation of goods, technology, 
          or services to Sudan.
538.206 Prohibited facilitation.
538.207 Prohibited performance of contracts.
538.208 Prohibited grant or extension of credits or loans to the 
          Government of Sudan.
538.209 Prohibited transportation-related transactions involving Sudan.
538.210 Prohibited transactions relating to petroleum and petrochemical 
          industries.
538.211 Evasions; attempts; conspiracies.
538.212 Exempt transactions.

                      Subpart C_General Definitions

538.301 Blocked account; blocked property.
538.302 Effective date.
538.303 Entity.
538.304 General license.
538.305 Government of Sudan.
538.306 Information and informational materials.
538.307 Interest.
538.308 License.
538.309 Person.
538.310 Property; property interest.
538.311 Specific license.
538.312 Sudanese origin.
538.313 Transfer.
538.314 United States.
538.315 United States person; U.S. person.
538.316 U.S. financial institution.
538.317 U.S. depository institution.
538.318 U.S. registered broker or dealer in securities.
538.319 U.S. registered money transmitter.
538.320 Specified Areas of Sudan.

                        Subpart D_Interpretations

538.401 Reference to amended sections.
538.402 Effect of amendment.
538.403 Termination and acquisition of an interest in blocked property.
538.404 Setoffs prohibited.
538.405 Transactions incidental to a licensed transaction authorized.
538.406 Exportation of services; performance of service contracts; legal 
          services.
538.407 Facilitation by a United States person.
538.408 Offshore transactions.
538.409 Transshipments through the United States prohibited.
538.410 Imports of Sudanese goods from third countries; transshipments.
538.411 Exports to third countries; transshipments.
538.414 Loans or extensions of credit.
538.415 Payments involving Sudan.
538.416 Payments from blocked accounts to U.S. exporters and for other 
          obligations prohibited.
538.417 Transshipments through Sudan.
538.418 Financial transactions in Sudan.

 Subpart E_Licenses, Authorizations, and Statements of Licensing Policy

538.500 Licensing procedures.
538.501 Effect of license or authorization.
538.502 Exclusion from licenses and authorizations.
538.503 Payments and transfers to blocked accounts in U.S. financial 
          institutions.
538.504 Entries in certain accounts for normal service charges 
          authorized.
538.505 Provision of certain legal services to the Government of Sudan, 
          persons in Sudan, or benefitting Sudan.
538.506 30-day delayed effective date for pre-November 4, 1997 trade 
          contracts involving Sudan.
538.507 Reexports by non-U.S. persons.
538.508 Certain payments by the Government of Sudan of obligations to 
          persons within the United States authorized.
538.509 Importation of certain Sudanese-origin services authorized; 
          activities related to travel to the United States by Sudanese 
          persons authorized.
538.510 Importation and exportation of certain gifts authorized.
538.511 Accompanied baggage authorized.
538.512 Transactions related to telecommunications authorized.
538.513 Transactions related to mail authorized.
538.514 Certain transactions related to patents, trademarks and 
          copyrights authorized.
538.515 Sudanese diplomatic missions in the United States.
538.516 Diplomatic pouches.
538.517 Allowable payments for overflights of Sudanese airspace.
538.518 Household goods and personal effects.
538.519 Aircraft and maritime safety.
538.520 Extensions or renewals of loans and credits.

[[Page 180]]

538.521 Registration of nongovernmental organizations for humanitarian 
          or religious activities.
538.522 Transactions related to U.S. citizens residing in Sudan.
538.523 Commercial sales, exportation, and reexportation of agricultural 
          commodities, medicine, and medical devices.
538.524 [Reserved]
538.525 Payment for and financing of commercial sales of certain 
          agricultural commodities, medicine, and medical devices.
538.526 Brokering commercial sales of agricultural commodities, 
          medicine, and medical devices.
538.527 Operation of accounts.
538.528 Noncommercial, personal remittances.
538.529 Authorized transactions necessary and ordinarily incident to 
          publishing.
538.530 Licenses and registrations issued pursuant to Executive Order 
          13067 or this part authorized pursuant to Executive Order 
          13412.
538.531 Official activities of the United States Government and 
          international organizations.
538.532 Humanitarian transshipments to or from the Specified Areas of 
          Sudan.
538.533 Exportation of certain services and software incident to 
          Internet-based communications.
538.534 Third-country diplomatic and consular funds transfers.
538.535 Importation and exportation of human remains for burial, 
          cremation, or interment authorized.
538.536 Activities relating to the petroleum and petrochemical 
          industries in the Republic of South Sudan.
538.537 Transshipment of goods, technology, and services to or from the 
          Republic of South Sudan.

                            Subpart F_Reports

538.601 Records and reports.

                           Subpart G_Penalties

538.701 Penalties.
538.702 Prepenalty notice.
538.703 Response to prepenalty notice; informal settlement.
538.704 Penalty imposition or withdrawal.
538.705 Administrative collection; referral to United States Department 
          of Justice.

                          Subpart H_Procedures

538.801 Procedures.
538.802 Delegation by the Secretary of the Treasury.

                    Subpart I_Paperwork Reduction Act

538.901 Paperwork Reduction Act notice.

Appendix A to Part 538--Bulk Agricultural Commodities

    Authority: 3 U.S.C. 301; 18 U.S.C. 2339B, 2332d; 31 U.S.C. 321(b); 
50 U.S.C. 1601-1651, 1701-1706; Pub. L. 101-410, 104 Stat. 890 (28 
U.S.C. 2461 note); 22 U.S.C. 7201-7211; Pub. L. 109-344, 120 Stat. 1869; 
Pub. L. 110-96, 121 Stat. 1011 (50 U.S.C. 1705 note); E.O. 13067, 62 FR 
59989, 3 CFR, 1997 Comp., p. 230; E.O. 13412, 71 FR 61369, 3 CFR, 2006 
Comp., p. 244.

    Source: 63 FR 35810, July 1, 1998, unless otherwise noted.



      Subpart A_Relation of This Part to Other Laws and Regulations



Sec. 538.101  Relation of this part to other laws and regulations.

    (a) 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. Differing foreign policy 
and national security contexts 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.
    (b) 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. 538.201  Prohibited transactions involving blocked property.

    (a) Except as authorized by regulations, orders, directives, 
rulings, instructions, licenses, or otherwise, no property or interests 
in property of the Government of Sudan, that are in the United States, 
that hereafter come within the United States, or that are or hereafter 
come within the possession or control of U.S. persons, including their 
overseas branches, may be transferred, paid, exported, withdrawn or 
otherwise dealt in.

[[Page 181]]

    (b) Unless otherwise authorized by this part or by a specific 
license expressly referring to this section, 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, or otherwise dealing in any 
security (or evidence thereof) registered or inscribed in the name of 
the Government of Sudan, and held within the possession or control of a 
U.S. person is prohibited, irrespective of the fact that at any time 
(either prior to, on, or subsequent to the effective date) the 
registered or inscribed owner thereof may have, or appears to have, 
assigned, transferred, or otherwise disposed of any such security.
    (c) When a transaction results in the blocking of funds at a 
financial institution pursuant to this section and a party to the 
transaction believes the funds have been blocked due to mistaken 
identity, that party may seek to have such funds unblocked pursuant to 
the administrative procedures set forth in Sec. 501.806 of this 
chapter.



Sec. 538.202  Effect of transfers violating the provisions of this part.

    (a) Any transfer after the effective date, which is in violation of 
any provision of this part or of any regulation, order, directive, 
ruling, instruction, license, or other authorization hereunder and 
involves any property or interest in property blocked pursuant to Sec. 
538.201 is null and void and shall not be the basis for the assertion or 
recognition of any interest in or right, remedy, power or privilege with 
respect to such property or property interests.
    (b) No transfer before the effective date shall be the basis for the 
assertion or recognition of any right, remedy, power, or privilege with 
respect to, or interest in, any property or interest in property blocked 
pursuant to Sec. 538.201, unless the person with whom such property is 
held or maintained, prior to such date, had written notice of the 
transfer or by any written evidence had recognized such transfer.
    (c) Unless otherwise provided, an appropriate license or other 
authorization issued by or pursuant to the direction or authorization of 
the Director of the Office of Foreign Assets Control before, during, or 
after a transfer shall validate such transfer or render it enforceable 
to the same extent that it would be valid or enforceable but for the 
provisions of the International Emergency Economic Powers Act, this 
part, and any regulation, order, directive, ruling, instruction, or 
license issued hereunder.
    (d) Transfers of property which 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 was held or maintained (and as to such person only) in 
cases in which such person is able to establish to the satisfaction of 
the Director of the Office of Foreign Assets Control each of the 
following:
    (1) Such transfer did not represent a willful violation of the 
provisions of this part by the person with whom such property was held 
or maintained;
    (2) The person with whom such property 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 by or 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 the withholding 
of material facts or was otherwise fraudulently obtained; and
    (3) The person with whom such property was held or maintained filed 
with the Office of Foreign Assets Control a report setting forth in full 
the circumstances relating to such transfer promptly upon discovery 
that:
    (i) Such transfer was in violation of the provisions of this part or 
any regulation, ruling, instruction, license, or other direction or 
authorization hereunder; or
    (ii) Such transfer was not licensed or authorized by the Director of 
the Office of Foreign Assets Control; or
    (iii) If a license did purport to cover the transfer, such license 
had been obtained by misrepresentation of a third party or the 
withholding of material

[[Page 182]]

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 or authorized pursuant to this part, any 
attachment, judgment, decree, lien, execution, garnishment, or other 
judicial process is null and void with respect to any property or 
interest in property blocked pursuant to Sec. 538.201.



Sec. 538.203  Holding of funds in interest-bearing accounts; investment
and reinvestment.

    (a) Except as provided in paragraphs (c) or (d) of this section, or 
as otherwise directed by the Office of Foreign Assets Control, any U.S. 
person holding funds, such as currency, bank deposits, or liquidated 
financial obligations, subject to Sec. 538.201(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 which are 
commercially reasonable; or
    (ii) With a broker or dealer registered with the Securities and 
Exchange Commission under the Securities Exchange Act of 1934, provided 
the funds are invested in a money market fund or in U.S. Treasury Bills.
    (2) 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.
    (3) Funds held or placed in a blocked account pursuant to this 
paragraph (b) may not be invested in instruments the maturity of which 
exceeds 180 days. If interest is credited to a separate blocked account 
or sub-account, the name of the account party on each account must be 
the same.
    (c) Blocked funds held in instruments the maturity of which exceeds 
180 days at the time the funds become subject to Sec. 538.201 may 
continue to be held until maturity in the original instrument, provided 
any interest, earnings, or other proceeds derived therefrom are paid 
into a blocked interest-bearing account in accordance with paragraph (b) 
or (d) of this section.
    (d) Blocked funds held in accounts or instruments outside the United 
States at the time the funds become subject to Sec. 538.201 may 
continue to be held in the same type of accounts or instruments, 
provided the funds earn interest at rates which are commercially 
reasonable.
    (e) 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 at the time the property becomes subject to 
Sec. 538.201. However, the Office of Foreign Assets Control may issue 
licenses permitting or directing such sales in appropriate cases.
    (f) Funds subject to this section may not be held, invested, or 
reinvested in a manner which provides immediate financial or economic 
benefit or access to the Government of Sudan or its entities, nor may 
their holder cooperate in or facilitate the pledging or other attempted 
use as collateral of blocked funds or other assets.



Sec. 538.204  Prohibited importation of goods or services from Sudan.

    Except as otherwise authorized, the importation into the United 
States, directly or indirectly, of any goods or services of Sudanese 
origin, other than information or informational materials, is 
prohibited.



Sec. 538.205  Prohibited exportation and reexportation of goods, 
technology, or services to Sudan.

    Except as otherwise authorized, the exportation or reexportation, 
directly or indirectly, to Sudan of any goods, technology (including 
technical data, software, or other information) or services from the 
United States or by a United States person, wherever located, or 
requiring the issuance of a license by a Federal agency, is prohibited.

[66 FR 36688, July 12, 2001]

[[Page 183]]



Sec. 538.206  Prohibited facilitation.

    Except as otherwise authorized, the facilitation by a United States 
person, including but not limited to brokering activities, of the 
exportation or reexportation of goods, technology, or services from 
Sudan to any destination, or to Sudan from any location, is prohibited.



Sec. 538.207  Prohibited performance of contracts.

    Except as otherwise authorized, the performance by any United States 
person of any contract, including a financing contract, in support of an 
industrial, commercial, public utility, or governmental project in Sudan 
is prohibited.



Sec. 538.208  Prohibited grant or extension of credits or loans to the
Government of Sudan.

    Except as otherwise authorized, the grant or extension of credits or 
loans by any United States person to the Government of Sudan is 
prohibited.



Sec. 538.209  Prohibited transportation-related transactions involving
Sudan.

    Except as otherwise authorized, the following are prohibited:
    (a) Any transaction by a U.S. person relating to transportation of 
cargo to or from Sudan;
    (b) The provision of transportation of cargo to or from the United 
States by any Sudanese person or any vessel or aircraft of Sudanese 
registration; or
    (c) The sale in the United States by any person holding authority 
under 49 U.S.C. subtitle VII of any transportation of cargo by air that 
includes any stop in Sudan.



Sec. 538.210  Prohibited transactions relating to petroleum and 
petrochemical industries.

    (a) Except as otherwise authorized, and notwithstanding any contract 
entered into or any license or permit granted prior to October 13, 2006, 
all transactions by United States persons relating to the petroleum or 
petrochemical industries in Sudan, including, but not limited to, 
oilfield services and oil or gas pipelines, are prohibited.
    (b) Except as otherwise authorized, the facilitation by a United 
States person, including but not limited to brokering activities, of any 
transaction relating to the petroleum or petrochemical industries in 
Sudan is prohibited.

[72 FR 61515, Oct. 31, 2007]



Sec. 538.211  Evasions; attempts; conspiracies.

    Any transaction by any United States person or within the United 
States that evades or avoids, or has the purpose of evading or avoiding, 
or attempts to violate, any of the prohibitions set forth in this part 
is prohibited. Any conspiracy formed for the purpose of engaging in a 
transaction prohibited by this part is prohibited.

[63 FR 35810, July 1, 1998. Redesignated at 72 FR 61515, Oct. 31, 2007]



Sec. 538.212  Exempt transactions.

    (a) Personal communications. The prohibitions contained in this part 
do not apply to any postal, telegraphic, telephonic, or other personal 
communication, which does not involve the transfer of anything of value.
    (b) 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.
    (c) Information and informational materials. (1) The importation 
from any country and the exportation to any country of information or 
informational materials as defined in Sec. 538.306, whether commercial 
or otherwise, regardless of format or medium of transmission, are exempt 
from the prohibitions and regulations of this part.
    (2) This section does not authorize transactions related to 
information and informational materials not fully created and in 
existence at the date of the transactions, or to the substantive or 
artistic alteration or enhancement of informational materials, or to the 
provision of marketing and business consulting services. Such prohibited 
transactions include, without limitation, payment of advances for 
informational materials not yet created and completed, provision of 
services to market, produce or co-produce, create or assist in the 
creation of information

[[Page 184]]

and informational materials, and payment of royalties to the Government 
of Sudan or a person in Sudan with respect to income received for 
enhancements or alterations made by U.S. persons to information or 
informational materials imported from the Government of Sudan or a 
person in Sudan.
    (3) This section does not authorize transactions incident to the 
exportation of software subject to the Export Administration 
Regulations, 15 CFR parts 730-774, or to the exportation of goods, 
technology or software for use in the transmission of any data. The 
exportation of such items to the Government of Sudan or to Sudan is 
prohibited, as provided in Sec. Sec. 538.201 and 538.205.
    (d) Travel. The prohibitions contained in this part do not apply to 
transactions ordinarily incident to travel to or from any country, 
including exportation or importation 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 non-scheduled air, sea, or land 
voyages.
    (e) Official business. The prohibitions contained in this part do 
not apply to transactions for the conduct of the official business of 
the Federal Government or the United Nations by employees thereof.
    (f) Journalistic activity. The prohibitions contained in this part 
do not apply to transactions in Sudan for journalistic activity by 
persons regularly employed in such capacity by a news-gathering 
organization.
    (g)(1) Specified Areas of Sudan. Except for the provisions of 
Sec. Sec. 538.201 through 538.203, 538.210, and 538.211, and except as 
provided in paragraph (g)(2) of this section, the prohibitions contained 
in this part do not apply to activities or related transactions with 
respect to the Specified Areas of Sudan.
    (2) The exemption in paragraph (g)(1) of this section does not apply 
to the exportation or reexportation of agricultural commodities 
(including bulk agricultural commodities listed in appendix A to this 
part 538), medicine, and medical devices.

    Note to Sec. 538.212(g)(2): See Sec. 538.523(a)(2) for a general 
license authorizing the exportation and reexportation of agricultural 
commodities, medicine, and medical devices to the Specified Areas of 
Sudan, and the conduct of related transactions.

[63 FR 35810, July 1, 1998, as amended at 66 FR 36688, July 12, 2001. 
Redesignated and amended at 72 FR 61515, Oct. 31, 2007; 74 FR 46363, 
Sept. 9, 2009]



                      Subpart C_General Definitions



Sec. 538.301  Blocked account; blocked property.

    The terms blocked account and blocked property shall mean any 
account or property subject to the prohibition in Sec. 538.201 held in 
the name of the Government of Sudan or in which the Government of Sudan 
has an interest, and with respect to which payments, transfers, 
exportations, withdrawals, or other dealings may not be made or effected 
except pursuant to an authorization or license from the Office of 
Foreign Assets Control authorizing such action.



Sec. 538.302  Effective date.

    The term effective date refers to the effective date of the 
applicable prohibitions and directives contained in this part which is 
12:01 a.m. EST, November 4, 1997.



Sec. 538.303  Entity.

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



Sec. 538.304  General license.

    The term general license means any license or authorization the 
terms of which are set forth in this part.



Sec. 538.305  Government of Sudan.

    The term Government of Sudan includes:
    (a) The state and the Government of Sudan, as well as any political 
subdivision, agency, or instrumentality thereof, including the Central 
Bank of Sudan;
    (b) Any entity owned or controlled by the foregoing;
    (c) Any person to the extent that such person is, or has been, or to 
the extent that there is reasonable cause

[[Page 185]]

to believe that such person is, or has been, since the effective date, 
acting or purporting to act directly or indirectly on behalf of any of 
the foregoing; and
    (d) Any other person determined by the Director of the Office of 
Foreign Assets Control to be included within paragraphs (a)(1) through 
(a)(3) of this section.

    Note 1 to Sec. 538.305: The term Government of Sudan does not 
include the Government of the Republic of South Sudan or the central 
bank of the Republic of South Sudan.
    Note 2 to Sec. 538.305: Please refer to the Office of Foreign 
Assets Control's Specially Designated Nationals and Blocked Persons List 
(``SDN List'') for a non-exhaustive listing of persons determined to 
fall within this definition, whose property and interests in property 
therefore are blocked pursuant to this part. The SDN List entries for 
such persons include the identifier ``[SUDAN].'' The SDN List is 
accessible through the following page on the Office of Foreign Assets 
Control's Web site: http://www.treasury.gov/sdn. Additional information 
pertaining to the SDN List can be found in appendix A to this chapter. 
Sections 501.806 and 501.807 of this chapter describe the procedures to 
be followed by persons seeking, respectively, the unblocking of funds 
that they believe were blocked due to mistaken identity, or 
administrative reconsideration of their status as persons whose property 
and interests in property are blocked pursuant to this part.

[63 FR 35810, July 1, 1998, as amended at 72 FR 61516, Oct. 31, 2007; 76 
FR 38536, June 30, 2011; 76 FR 76618, Dec. 8, 2011]



Sec. 538.306  Information and informational materials.

    (a)(1) For purposes of this part, the term information and 
informational materials means publications, films, posters, phonograph 
records, photographs, microfilms, microfiche, tapes, compact disks, CD 
ROMs, artworks, and news wire feeds, and other information and 
informational materials.
    (2) To be considered informational materials, artworks must be 
classified under chapter subheading 9701, 9702, or 9703 of the 
Harmonized Tariff Schedule of the United States.
    (b) The term information and informational materials with respect to 
U.S. 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 (the ``EAA''), or section 6 of the 
EAA to the extent that such controls promote nonproliferation or 
antiterrorism policies of the United States.
    (2) With respect to which acts are prohibited by 18 U.S.C. chapter 
37.



Sec. 538.307  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. 538.308  License.

    Except as otherwise specified, the term license means any license or 
authorization contained in or issued pursuant to this part.



Sec. 538.309  Person.

    The term person means an individual or entity.



Sec. 538.310  Property; property interest.

    The terms property and property interest include, but are not 
limited to, money, checks, drafts, bullion, bank deposits, savings 
accounts, debts, indebtedness, obligations, notes, guarantees, 
debentures, stocks, bonds, coupons, any other financial instruments, 
bankers acceptances, mortgages, pledges, liens or other rights in the 
nature of security, warehouse receipts, bills of lading, trust receipts, 
bills of sale, any other evidences of title, ownership or indebtedness, 
letters of credit and any documents relating to any rights or 
obligations thereunder, powers of attorney, goods, wares, merchandise, 
chattels, stocks on hand, ships, goods on ships, real estate mortgages, 
deeds of trust, vendors' sales agreements, land contracts, leaseholds, 
ground rents, real estate and any other interest therein, options, 
negotiable instruments, trade acceptances, royalties, book accounts, 
accounts payable, judgments, patents, trademarks or copyrights, 
insurance policies, safe deposit boxes and their contents, annuities, 
pooling agreements, services of any nature whatsoever, contracts of any 
nature whatsoever, and any other

[[Page 186]]

property, real, personal, or mixed, tangible or intangible, or interest 
or interests therein, present, future or contingent.



Sec. 538.311  Specific license.

    The term specific license means any license or authorization not set 
forth in this part but issued pursuant to this part.



Sec. 538.312  Sudanese origin.

    The term goods or services of Sudanese origin includes:
    (a) Goods produced, manufactured, grown, extracted, or processed 
within Sudan;
    (b) Goods which have entered into Sudanese commerce;
    (c) Services performed in Sudan or by a person ordinarily resident 
in Sudan who is acting as an agent, employee, or contractor of the 
Government of Sudan or of a business entity located in Sudan. Services 
of Sudanese origin are not imported into the United States when such 
services are provided in the United States by a Sudanese national 
employed or resident in the United States.
    (d) The term services of Sudanese origin does not include:
    (1) Diplomatic and consular services performed by or on behalf of 
the Government of Sudan;
    (2) Diplomatic and consular services performed by or on behalf of 
the Government of the United States.
    (e) The term goods or services of Sudanese origin does not include 
goods or services that have transshipped through Sudan to or from the 
Republic of South Sudan pursuant to the authorization in Sec. 538.537 
of this part.

[63 FR 35810, July 1, 1998, as amended at 76 FR 76618, Dec. 8, 2011]



Sec. 538.313  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 and, without limitation upon the foregoing, 
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. 538.314  United States.

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



Sec. 538.315  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. 538.316  U.S. financial institution.

    The term U.S. financial institution means any U.S. entity (including 
foreign branches) that is engaged in the business of accepting deposits, 
making, granting, transferring, holding, or brokering loans or credits, 
or purchasing or selling foreign exchange, securities, commodity futures 
or options, or procuring purchasers and sellers thereof, as principal or 
agent; including, but not limited to, depository institutions, banks, 
savings banks, trust companies, securities brokers and dealers, 
commodity futures and options brokers and dealers, forward contract

[[Page 187]]

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 which are located in the United 
States, but not such institutions' foreign branches, offices, or 
agencies.



Sec. 538.317  U.S. depository institution.

    The term U.S. depository institution means any entity (including its 
foreign branches) organized under the laws of the United States or of 
any jurisdiction within the United States, or any agency, office or 
branch located in the United States of a foreign entity, that is engaged 
primarily in the business of banking (for example, banks, savings banks, 
savings associations, credit unions, trust companies and United States 
bank holding companies) and is subject to regulation by federal or state 
banking authorities.

[70 FR 34062, June 13, 2005]



Sec. 538.318  U.S. registered broker or dealer in securities.

    The term U.S. registered broker or dealer in securities means any 
U.S. citizen, permanent resident alien, or entity organized under the 
laws of the United States or of any jurisdiction within the United 
States, including its foreign branches, or any agency, office or branch 
of a foreign entity located in the United States, that:
    (a) Is a ``broker'' or ``dealer'' in securities within the meanings 
set forth in the Securities Exchange Act of 1934;
    (b) Holds or clears customer accounts; and
    (c) Is registered with the Securities and Exchange Commission under 
the Securities Exchange Act of 1934.

[70 FR 34062, June 13, 2005]



Sec. 538.319  U.S. registered money transmitter.

    The term U.S. registered money transmitter means any U.S. citizen, 
permanent resident alien, or entity organized under the laws of the 
United States or of any jurisdiction within the United States, including 
its foreign branches, or any agency, office or branch of a foreign 
entity located in the United States, that is a money transmitter, as 
defined in 31 CFR 103.11(uu)(5), that is registered pursuant to 31 CFR 
103.41.

[70 FR 34062, June 13, 2005]



Sec. 538.320  Specified Areas of Sudan.

    (a) The term Specified Areas of Sudan means Southern Kordofan/Nuba 
Mountains State, Blue Nile State, Abyei, Darfur, and marginalized areas 
in and around Khartoum.
    (b) The term marginalized areas in and around Khartoum means the 
following official camps for internally displaced persons: Mayo, El 
Salaam, Wad El Bashir, and Soba.

[72 FR 61516, Oct. 31, 2007, as amended at 76 FR 76618, Dec. 8, 2011]



                        Subpart D_Interpretations



Sec. 538.401  Reference to amended sections.

    Except as otherwise specified, reference to any section of this part 
or to any regulation, ruling, order, instruction, direction, or license 
issued pursuant to this part shall be deemed to refer to the same as 
currently amended.



Sec. 538.402  Effect of amendment.

    Any amendment, modification, or revocation of any section of this 
part or of any order, regulation, ruling, instruction, or license issued 
by or under the direction of the Director of the Office of Foreign 
Assets Control shall not, unless otherwise specifically provided, affect 
any act done or omitted to be done, or any civil or criminal suit or 
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. 538.403  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

[[Page 188]]

(including any property interest) away from the Government of Sudan, 
such property shall no longer be deemed to be property in which the 
Government of Sudan has or has had an interest unless there exists in 
the property another interest of the Government of Sudan, 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 the 
Government of Sudan, such property shall be deemed to be property in 
which there exists an interest of the Government of Sudan.



Sec. 538.404  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. 538.201 if effected after the effective date.



Sec. 538.405  Transactions incidental to a licensed transaction
authorized.

    Any transaction ordinarily incident to a licensed transaction and 
necessary to give effect thereto is also authorized, except:
    (a) A transaction by an unlicensed Sudanese governmental entity or 
involving a debit to a blocked account or a transfer of blocked property 
not explicitly authorized within the terms of the license;
    (b) Provision of any transportation services to or from Sudan not 
explicitly authorized in or pursuant to this part other than loading, 
transporting, and discharging licensed or exempt cargo there;
    (c) Distribution or leasing in Sudan of any containers or similar 
goods owned or controlled by United States persons after the performance 
of transportation services to Sudan;
    (d) Financing of licensed sales for exportation or reexportation of 
the excluded food items specified in Sec. 538.523(a)(3)(iii), other 
agricultural commodities not included in the definition of food set 
forth in Sec. 538.523(a)(3)(ii), food (as defined in Sec. 
538.523(a)(3)(ii)) intended for military or law enforcement purchasers 
or importers, medicine, and medical devices to the Government of Sudan, 
to an area of Sudan other than the Specified Areas of Sudan, or to 
persons in third countries purchasing specifically for resale to any of 
the foregoing. See Sec. 538.525; and
    (e) All financial transactions ordinarily incident to the activities 
authorized by Sec. Sec. 538.536 and 538.537 of this part.

[64 FR 41786, Aug. 2, 1999, as amended at 66 FR 36688, July 12, 2001; 74 
FR 46363, Sept. 9, 2009; 76 FR 76618, Dec. 8, 2011]



Sec. 538.406  Exportation of services; performance of service contracts;
legal services.

    (a) The prohibition on the exportation of services contained in 
Sec. 538.205 applies to services performed on behalf of the Government 
of Sudan, or where the benefit of such services is otherwise received in 
Sudan, when such services are performed:
    (1) In the United States;
    (2) By a U.S. person, wherever located;
    (3) By an entity located in the United States, including its 
overseas branches; or
    (4) Outside the United States by an individual U.S. person 
ordinarily resident in the United States.
    (b) The benefit of services performed anywhere in the world on 
behalf of the Government of Sudan, including services performed for a 
controlled entity or agent of the Government of Sudan, is presumed to be 
received in Sudan.
    (c) The prohibitions contained in Sec. Sec. 538.201 and 538.207 
apply to services performed by U.S. persons, wherever located:
    (1) On behalf of the Government of Sudan;
    (2) With respect to property interests of the Government of Sudan; 
or
    (3) In support of an industrial, commercial, public utility or 
governmental project in Sudan.
    (d) Example: U.S. persons may not, without specific authorization 
from the Office of Foreign Assets Control, represent an individual or 
entity with respect to contract negotiations, contract performance, 
commercial arbitration, or other business dealings with the Government 
of Sudan. See Sec. 538.505

[[Page 189]]

on licensing policy with regard to the provision of certain legal 
services.



Sec. 538.407  Facilitation by a United States person.

    (a) The prohibition contained in Sec. 538.206 against facilitation 
by a United States person of the exportation or reexportation of goods, 
technology, or services between Sudan and any destination (including the 
United States) bars any unlicensed action by a U.S. person that assists 
or supports trading activity with Sudan by any person. Facilitation of a 
trade or financial transaction that could be engaged in directly by a 
U.S. person or from the United States consistent with the prohibitions, 
general licenses and exemptions contained in this part is not 
prohibited. Activity of a purely clerical or reporting nature that does 
not further trade or financial transactions with Sudan or the Government 
of Sudan is not considered prohibited facilitation. For example, 
reporting on the results of a subsidiary's trade with Sudan is not 
prohibited, while financing or insuring that trade or warranting the 
quality of goods sold by a subsidiary to the Government of Sudan 
constitutes prohibited facilitation.
    (b) To avoid potential liability for U.S. persons under this part, a 
U.S. parent corporation must ensure that its foreign subsidiaries act 
independently of any U.S. person with respect to all transactions and 
activities relating to the exportation or reexportation of goods, 
technology, or services between Sudan and any other location including 
but not limited to business and legal planning; decision making; 
designing, ordering or transporting goods; and financial, insurance, and 
other risks. See Sec. 538.505 with respect to exports of, inter alia, 
certain legal services benefitting Sudan.
    (c) No U.S. person may change its policies or operating procedures, 
or those of a foreign affiliate or subsidiary, in order to enable a 
foreign entity owned or controlled by U.S. persons to enter into a 
transaction that could not be entered into directly by a U.S. person or 
from the United States pursuant to this part.
    (d) No U.S. person may refer to a foreign person purchase orders, 
requests for bids, or similar business opportunities involving Sudan or 
the Government of Sudan to which the United States person could not 
directly respond as a result of the prohibitions contained in this part.



Sec. 538.408  Offshore transactions.

    (a) The prohibitions contained in Sec. Sec. 538.201 and 538.206 
apply to transactions by any U.S. person in a location outside the 
United States with respect to property in which the U.S. person knows, 
or has reason to know, the Government of Sudan has or has had an 
interest since the effective date, or with respect to goods, technology 
or services which the U.S. person knows, or has reason to know, are of 
Sudanese origin or owned or controlled by the Government of Sudan.
    (b) Prohibited transactions include, but are not limited to, 
importation into or exportation from locations outside the United States 
of, or purchasing, selling, financing, swapping, insuring, transporting, 
lifting, storing, incorporating, transforming, brokering, or otherwise 
dealing in, within such locations, goods, technology or services of 
Sudanese origin.
    (c) Examples. (1) A U.S. person may not, within the United States or 
abroad, purchase, sell, finance, insure, transport, act as a broker for 
the sale or transport of, or otherwise deal in, Sudanese crude oil or 
sugar refined in Sudan.
    (2) A U.S. person may not, within the United States or abroad, 
conduct transactions of any nature whatsoever with an entity that the 
U.S. person knows or has reason to know is the Government of Sudan, 
including a controlled entity or agent of that Government, or which 
benefits or supports the business of an entity located in Sudan, unless 
the entity is licensed by the Office of Foreign Assets Control to 
conduct such transactions with U.S. persons or the transaction is 
generally licensed in, or exempted from the prohibitions of, this part.



Sec. 538.409  Transshipments through the United States prohibited.

    (a) The prohibitions in Sec. 538.205 apply to the importation into 
the United States, for transshipment or transit, of

[[Page 190]]

goods which are intended or destined for Sudan, or an entity operated 
from Sudan.
    (b) The prohibitions in Sec. 538.204 apply to the importation into 
the United States, for transshipment or transit, of goods of Sudanese 
origin which are intended or destined for third countries.
    (c) Goods in which the Government of Sudan has an interest which are 
imported into or transshipped through the United States are blocked 
pursuant to Sec. 538.201.



Sec. 538.410  Imports of Sudanese goods from third countries;
transshipments.

    (a) Importation into the United States from third countries of goods 
containing raw materials or components of Sudanese origin is not 
prohibited if those raw materials or components have been incorporated 
into manufactured products or otherwise substantially transformed in a 
third country.
    (b) Importation into the United States of goods of Sudanese origin 
that have been transshipped through a third country without being 
incorporated into manufactured products or otherwise substantially 
transformed in a third country are prohibited.



Sec. 538.411  Exports to third countries; transshipments.

    Exportation of goods or technology (including technical data, 
software, information not exempted from the prohibition of this part 
pursuant to Sec. 538.211, or technical assistance) from the United 
States to third countries is prohibited if the exporter knows, or has 
reason to know, that the goods or technology are intended for 
transshipment to Sudan (including passage through, or storage in, 
intermediate destinations). The exportation of goods or technology 
intended specifically for incorporation or substantial transformation 
into a third-country product is also prohibited if the particular 
product is to be used in Sudan, is being specifically manufactured to 
fill a Sudanese order, or if the manufacturer's sales of the particular 
product are predominantly to Sudan.



Sec. 538.414  Loans or extensions of credit.

    (a) The prohibition in Sec. 538.205 applies to loans or extensions 
of credit to a person in Sudan, including overdraft protection on 
checking accounts, and the unlicensed renewal or rescheduling of credits 
or loans in existence as of the effective date, whether by affirmative 
action or operation of law.
    (b) The prohibition in Sec. 538.205 applies to financial services 
including loans or credits extended in any currency.



Sec. 538.415  Payments involving Sudan.

    Before a United States financial institution initiates a payment 
subject to the prohibitions contained in this part on behalf of any 
customer, or credits a transfer subject to such prohibitions to the 
account on its books of the ultimate beneficiary, the U.S. financial 
institution must determine that the transfer is not prohibited by this 
part.



Sec. 538.416  Payments from blocked accounts to U.S. exporters and for
other obligations prohibited.

    No debits may be made to a blocked account to pay obligations to 
U.S. persons or other persons, including payment for goods, technology 
or services exported prior to the effective date, except as authorized 
pursuant to this part.



Sec. 538.417  Transshipments through Sudan.

    (a) The exportation or reexportation of goods, technology, or 
services to the Specified Areas of Sudan is exempt under Sec. 
538.212(g) only if such goods, technology, or services do not transit or 
transship through any area of Sudan other than the Specified Areas of 
Sudan.
    (b) The importation into the United States of goods or services 
from, or originating in, the Specified Areas of Sudan is exempt under 
Sec. 538.212(g) only if such goods or services do not transit or 
transship through any area of Sudan other than the Specified Areas of 
Sudan.

    Note 1 to Sec. 538.417: See Sec. 538.537 for a general license 
authorizing the transshipment of goods, technology, and services through 
Sudan to or from the Republic of South Sudan, and related transactions.

[[Page 191]]

    Note 2 to Sec. 538.417: See Sec. 538.532 for a general license 
authorizing humanitarian transshipments through areas of Sudan other 
than the Specified Areas of Sudan to or from the Specified Areas of 
Sudan.

[72 FR 61516, Oct. 31, 2007, as amended at 76 FR 76618, Dec. 8, 2011]



Sec. 538.418  Financial transactions in Sudan.

    (a) Any financial transaction with a depository institution located 
in an area of Sudan other than the Specified Areas of Sudan, e.g., 
Khartoum, remains prohibited.
    (b) Financial transactions are no longer prohibited by this part if:
    (1) The underlying activity is not prohibited by this part;
    (2) The financial transaction involves a third-country depository 
institution, or a Sudanese depository institution not owned or 
controlled by the Government of Sudan, that is located in the Specified 
Areas of Sudan; and
    (3) The financial transaction is not routed through a depository 
institution that is located in an area of Sudan other than the Specified 
Areas of Sudan or that is owned or controlled by the Government of 
Sudan, wherever located.
    (c) Example. A U.S. bank is instructed to transfer funds to the 
Abyei branch of a Sudanese bank that is not owned or controlled by the 
Government of Sudan. In order for the transfer to take place, the U.S. 
bank is required to route the funds through the Sudanese bank's 
headquarters, which is located in Khartoum. Due to the routing of the 
financial transaction through Khartoum, this transaction is prohibited 
and requires authorization from the Office of Foreign Assets Control. 
However, if the U.S. bank is able to bypass the Khartoum headquarters 
and transfer the funds directly to the Abyei branch of the Sudanese 
bank, then the transaction would not be prohibited.

[72 FR 61516, Oct. 31, 2007]



 Subpart E_Licenses, Authorizations, and Statements of Licensing Policy



Sec. 538.500  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.

[68 FR 53658, Sept. 11, 2003]



Sec. 538.501  Effect of license or authorization.

    (a) No license or other authorization contained in this part, or 
otherwise issued by or under the direction of the Director of the Office 
of Foreign Assets Control, authorizes or validates any transaction 
effected prior to the issuance of the license, unless specifically 
provided in such license or authorization.
    (b) No regulation, ruling, instruction, or license authorizes any 
transaction prohibited under this part unless the regulation, ruling, 
instruction, or license is issued by the Office of Foreign Assets 
Control and specifically refers to this part. No regulation, ruling, 
instruction, or license referring to this part shall be deemed to 
authorize any transaction prohibited by any provision of this chapter 
unless the regulation, ruling, instruction or license specifically 
refers to such provision.
    (c) Any regulation, ruling, instruction, or license authorizing any 
transaction otherwise prohibited under this part has the effect of 
removing a prohibition or prohibitions contained in this part from the 
transaction, but only to the extent specifically stated by its terms. 
Unless the regulation, ruling, instruction, or license otherwise 
specifies, such an authorization does not create any right, duty, 
obligation, claim, or interest in, or with respect to, any property 
which would not otherwise exist under ordinary principles of law.



Sec. 538.502  Exclusion from licenses and authorizations.

    The Director of the Office of Foreign Assets Control reserves the 
right to exclude any person, property, or transaction from the operation 
of any license, or from the privileges therein conferred, or to restrict 
the applicability thereof with respect to particular persons, property, 
transactions, or classes thereof. Such action shall be

[[Page 192]]

binding upon all persons receiving actual or constructive notice of such 
exclusion or restriction.



Sec. 538.503  Payments and transfers to blocked accounts in U.S. 
financial institutions.

    Any payment of funds or transfer of credit in which the Government 
of Sudan 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 only be 
made to another blocked account held in the same name.

    Note to Sec. 538.503: Please refer to Sec. 501.603 of this chapter 
for mandatory reporting requirements regarding financial transfers. See 
also Sec. 538.203 concerning the obligation to hold blocked funds in 
interest-bearing accounts.



Sec. 538.504  Entries in certain accounts for normal service charges 
authorized.

    (a) U.S. financial institutions are hereby authorized to debit any 
blocked account with such U.S. financial institution in payment or 
reimbursement for normal service charges owed to such U.S. financial 
institution by the owner of such blocked account.
    (b) As used in this section, the term normal service charge shall 
include charges in payment or reimbursement for interest due; cable, 
telegraph, 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. 538.505  Provision of certain legal services to the Government of
Sudan, persons in Sudan, or benefitting Sudan.

    (a) The provision to the Government of Sudan, to a person in Sudan, 
or in circumstances in which the benefit is otherwise received in Sudan, 
of the legal services set forth in paragraph (b) of this section is 
authorized, provided that all receipts of payment therefor must be 
specifically licensed. The provision of any other legal services as 
interpreted in Sec. 538.406 requires the issuance of a specific 
license.
    (b) Specific licenses may be issued, on a case-by-case basis, 
authorizing receipt, from unblocked sources, of payment of professional 
fees and reimbursement of incurred expenses for the following legal 
services by U.S. persons to the Government of Sudan or to a person in 
Sudan:
    (1) Provision of legal advice and counseling to the Government of 
Sudan, to a person in Sudan, or in circumstances in which the benefit is 
otherwise received in Sudan, on the requirements of and compliance with 
the laws of any jurisdiction within the United States, provided that 
such advice and counseling is not provided to facilitate transactions in 
violation of this part;
    (2) Representation of the Government of Sudan or a person in Sudan 
when named as a defendant in or otherwise made a party to domestic U.S. 
legal, arbitration, or administrative proceedings;
    (3) Initiation of domestic U.S. legal, arbitration, or 
administrative proceedings in defense of property interests subject to 
U.S. jurisdiction of the Government of Sudan, or of a person in Sudan;
    (4) Representation of the Government of Sudan or a person in Sudan 
before any federal agency with respect to the imposition, 
administration, or enforcement of U.S. sanctions against Sudan; and
    (5) Provision of legal services in any other context in which 
prevailing U.S. law requires access to legal counsel at public expense.
    (c) Enforcement of any lien, judgment, arbitral award, decree, or 
other order through execution, garnishment

[[Page 193]]

or other judicial process purporting to transfer or otherwise alter or 
affect a property interest of the Government of Sudan is prohibited 
unless specifically licensed in accordance with Sec. 538.202(e).



Sec. 538.506  30-day delayed effective date for pre-November 4, 1997
trade contracts involving Sudan.

    (a) Pre-existing trade contracts. Trade transactions required under 
a contract entered into prior to November 4, 1997 (a ``pre-existing 
trade contract''), otherwise prohibited by this part, including the 
importation of goods or services of Sudanese origin or the exportation 
of goods, services, or technology that was authorized under applicable 
Federal regulations in force immediately prior to November 4, 1997, are 
authorized without specific licensing by the Office of Foreign Assets 
Control as follows:
    (1) Exports or reexports are authorized until 12:01 a.m. EST, 
December 4, 1997, and non-financing activity by U.S. persons incidental 
to the performance of the pre-existing trade contract (such as the 
provision of transportation or insurance) is authorized through 12:01 
a.m. EST, February 2, 1998, if the pre-existing trade contract is for:
    (i) The exportation of goods, services, or technology from the 
United States or a third country that was authorized under applicable 
Federal regulations in force immediately prior to November 4, 1997; or
    (ii) The reexportation of goods or technology that was authorized 
under applicable Federal regulations in force immediately prior to 
November 4, 1997.
    (2) If the pre-existing trade contract is for the importation of 
goods or services of Sudanese origin or other trade transactions 
relating to goods or services of Sudanese origin or owned or controlled 
by the Government of Sudan, importations under the pre-existing trade 
contract are authorized until 12:01 a.m. EST, December 4, 1997.
    (3) For purposes of this section, goods are considered to be 
exported upon final loading aboard the exporting conveyance in the 
country of export. Goods are considered to be imported upon arrival in 
the jurisdiction of the country of importation.
    (b)(1) Financing for pre-existing trade contracts. In general, no 
financing services prohibited by this part may be performed after 12:01 
a.m. EST, November 4, 1997. However, letters of credit and other 
financing agreements with respect to the trade transactions authorized 
in paragraph (a) of this section may be performed according to their 
terms, and may be extended or renewed, except that:
    (i) Any payment required to be made to the Government of Sudan or 
any person blocked pursuant to this part or otherwise, including 
payments authorized with respect to trade transactions described in 
paragraph (a) of this section, must be made into a blocked account in 
the United States; and
    (ii) No payment may be made from a blocked account unless authorized 
by a specific license issued by the Office of Foreign Assets Controls.
    (2) Specific licenses may be issued by the Office of Foreign Asset 
Controls on a case-by-case basis to permit a U.S. bank to debit a 
blocked account of the Government of Sudan for funds held as collateral 
under an irrevocable letter of credit issued or confirmed by it, or a 
letter of credit reimbursement confirmed by it, for goods, services or 
technology exported, or goods or technology reexported, prior to 12:01 
a.m. EST, December 4, 1997, directly or indirectly to Sudan, or to third 
countries for an entity operated from Sudan, or for the benefit of the 
Government of Sudan. The application for a license must:
    (i) Present evidence satisfactory to the Office of Foreign Asset 
Controls that the exportation or reexportation occurred prior to 12:01 
a.m. EST, December 4, 1997; and
    (ii) Include an explanation of the facts and circumstances 
surrounding the entry and execution of the export or reexport 
transaction, including the names and addresses of all Sudanese 
participants in the transaction and all Sudanese persons having an 
ownership interest in the beneficiary of the letter of credit.
    (c) Blocked Government of Sudan accounts. Nothing in this section 
permits debits to a blocked account of the Government of Sudan absent 
the issuance

[[Page 194]]

of a specific license by Office of Foreign Asset Controls authorizing 
such a debit. The operation of an account of the Government of Sudan in 
a financial institution does not constitute a trade transaction for 
purposes of this section.
    (d) Existence of contract. The existence of a contract will be 
determined with reference to the principles contained in Article 2 of 
the Uniform Commercial Code.
    (e) Reporting requirement. Although a specific license from Office 
of Foreign Asset Controls is not required for any transaction authorized 
in paragraph (a) of this section, any U.S. person engaging in a 
transaction described in paragraph (a) of this section is required to 
report such transaction immediately to the Office of Foreign Asset 
Controls and provide a description of the underlying trade contract. 
Such reports should be directed to the Office of Foreign Assets Control, 
Attn: Compliance Programs Division/Sudan Contracts, 1500 Pennsylvania 
Avenue, NW., Annex-2nd Floor, Washington, DC 20220. Such reports may be 
made by facsimile transmission to 202/622-1657.
    (f) Licensing and reporting provisions. For provisions relating to 
applications to the Office of Foreign Asset Controls for specific 
licenses and reporting requirements, see Sec. Sec. 501.606 and 501.808 
of this chapter.



Sec. 538.507  Reexports by non-U.S. persons.

    (a) Goods and technology subject to export license application 
requirements under other United States regulations. The reexportation to 
Sudan or the Government of Sudan by a non-U.S. person of any goods or 
technology exported from the United States, the exportation of which to 
Sudan is subject to export or reexport license application requirements, 
is authorized under this section provided that the goods or technology:
    (1) Have been incorporated into another product outside the United 
States and constitute 10 percent or less by value of that product 
exported from a third country; or
    (2) Have been substantially transformed outside the United States.

    Note to paragraph (a) of Sec. 538.507: Notwithstanding the 
authorization set forth in paragraph (a), a non-U.S. person's 
reexportation of goods, technology or software of U.S. origin that are 
subject to the Export Administration Regulations (15 CFR parts 730 
through 774) may require specific authorization from the Department of 
Commerce, Bureau of Industry and Security.

    (b) Goods and technology not subject to export license application 
requirements under other United States regulations. The reexportation to 
Sudan or the Government of Sudan by a non-U.S. person of any goods or 
technology of U.S. origin, the exportation of which to Sudan is not 
subject to any export license application requirements under any other 
United States regulations, is authorized under this section.

    Note to paragraph (b) of Sec. 538.507: However, the reexportation 
by non-U.S. persons of U.S.-origin goods, technology or software 
classified as EAR99 under the Export Administration Regulations (15 CFR 
parts 730 through 774) may require specific authorization from the 
Department of Commerce, Bureau of Industry and Security. See, for 
example, the end-use and end-user restrictions set forth in 15 CFR part 
744.

[70 FR 34062, June 13, 2005]



Sec. 538.508  Certain payments by the Government of Sudan of obligations
to persons within the United States authorized.

    Specific licenses may be issued on a case-by-case basis to permit 
the transfer of funds after the effective date by, through, or to any 
U.S. financial institution or other U.S. person not blocked pursuant to 
this chapter, from a non-blocked account outside of the United States, 
solely for the purpose of payment of obligations of the Government of 
Sudan to persons or accounts within the United States, provided that the 
obligation arose prior to the effective date, and the payment requires 
no debit to a blocked account.



Sec. 538.509  Importation of certain Sudanese-origin services 
authorized; activities related to travel to the United States by 

Sudanese persons authorized.

    (a) The importation of Sudanese-origin services into the United 
States or

[[Page 195]]

other dealing in such services is authorized where such services are 
performed in the United States by a Sudanese citizen or national and 
either are for the purpose of or directly relate to participating in a 
public conference, performance, exhibition or similar event.
    (b) Persons otherwise qualified for a non-immigrant visa under 
categories A-3 and G-5 (attendants, servants, and personal employees of 
aliens in the United States on diplomatic status), D (crewmen), F 
(students), I (information media representatives), J (exchange 
visitors), M (non-academic students), O and P (aliens with extraordinary 
ability, athletes, artists and entertainers), Q (international cultural 
exchange visitors), R (religious workers), or S (witnesses) are 
authorized to carry out in the United States those activities for which 
such a visa has been granted by the U.S. State Department.
    (c) Persons otherwise qualified for a visa under categories E-2 
(treaty investor), H (temporary worker), or L (intra-company transferee) 
and all immigrant visa categories are authorized to carry out in the 
United States those activities for which such a visa has been granted by 
the U.S. State Department, provided that the persons are not coming to 
the United States to work as an agent, employee or contractor of the 
Government of Sudan or a business entity or other organization in Sudan.
    (d) U.S. persons are authorized to provide services to persons in 
Sudan in connection with the filing of visa applications with the U.S. 
Department of State or the Department of Homeland Security's U.S. 
Citizenship and Immigration Services for the visa categories listed in 
paragraphs (b) and (c) of this section.

[76 FR 76619, Dec. 8, 2011]



Sec. 538.510  Importation and exportation of certain gifts authorized.

    The importation into the United States of Sudanese-origin goods, and 
the exportation from the United States of goods, is authorized for goods 
sent as gifts to persons provided that the value of the gift is not more 
than $100; the goods are of a type and in quantities normally given as 
gifts between individuals; and the goods are not controlled for chemical 
and biological weapons (CB), missile technology (MT), national security 
(NS), or nuclear proliferation (NP)(see Commerce Control List, 15 CFR 
part 774 of the Export Administration Regulations).



Sec. 538.511  Accompanied baggage authorized.

    (a) Persons entering the United States directly or indirectly from 
Sudan are authorized to import into the United States Sudanese-origin 
accompanied baggage normally incident to travel.
    (b) Persons leaving the United States for Sudan are authorized to 
export from the United States accompanied baggage normally incident to 
travel.
    (c) For purposes of this section, the term accompanied baggage 
normally incident to travel includes only baggage that:
    (1) Accompanies the traveler on the same aircraft, train, or 
vehicle;
    (2) Includes only articles that are necessary for personal use 
incident to travel, are not intended for any other person or for sale, 
and are not otherwise prohibited from importation or exportation under 
applicable United States laws.



Sec. 538.512  Transactions related to telecommunications authorized.

    All transactions with respect to the receipt and transmission of 
telecommunications involving Sudan are authorized. This section does not 
authorize the provision to the Government of Sudan or a person in Sudan 
of telecommunications equipment or technology.



Sec. 538.513  Transactions related to mail authorized.

    All transactions by U.S. persons, including payment and transfers to 
common carriers, incident to the receipt or transmission of mail between 
the United States and Sudan are authorized, provided that mail is 
limited to personal communications not involving a transfer of anything 
of value.

[[Page 196]]



Sec. 538.514  Certain transactions related to patents, trademarks and
copyrights authorized.

    (a) All of the following transactions in connection with patent, 
trademark, copyright or other intellectual property protection in the 
United States or Sudan are authorized:
    (1) The filing and prosecution of any application to obtain a 
patent, trademark, copyright or other form of intellectual property 
protection;
    (2) The receipt of a patent, trademark, copyright or other form of 
intellectual property protection;
    (3) The renewal or maintenance of a patent, trademark, copyright or 
other form of intellectual property protection; and
    (4) The filing and prosecution of opposition or infringement 
proceedings with respect to a patent, trademark, copyright or other form 
of intellectual property protection, or the entrance of a defense to any 
such proceedings.
    (b) This section authorizes the payment of fees currently due to the 
United States Government, or of the reasonable and customary fees and 
charges currently due to attorneys or representatives within the United 
States, in connection with the transactions authorized in paragraph (a) 
of this section. Payment effected pursuant to the terms of this 
paragraph may not be made from a blocked account.
    (c) This section authorizes the payment of fees currently due to the 
Government of Sudan, or of the reasonable and customary fees and charges 
currently due to attorneys or representatives within Sudan, in 
connection with the transactions authorized in paragraph (a) of this 
section.
    (d) Nothing in this section affects obligations under any other 
provision of law.



Sec. 538.515  Sudanese diplomatic missions in the United States.

    (a) The importation of goods or services into the United States by, 
and the provision of goods or services in the United States to, the 
diplomatic missions of the Government of Sudan to the United States and 
the United Nations are authorized, provided that:
    (1) The goods or services are for the conduct of the official 
business of the missions, or for personal use of the employees of the 
missions, and are not for resale;
    (2) The transaction does not involve the purchase, sale, financing, 
or refinancing of real property;
    (3) The transaction is not otherwise prohibited by law; and
    (4) The transaction is conducted through an account at a U.S. 
financial institution specifically licensed by OFAC.

    Note to paragraph (a)(4) of Sec. 538.515: U.S. financial 
institutions are required to obtain specific licenses to operate 
accounts for, or extend credit to, the diplomatic missions of the 
Government of Sudan to the United States and the United Nations.

    (b) The importation of goods or services into the United States by, 
and the provision of goods or services in the United States to, the 
employees of the diplomatic missions of the Government of Sudan to the 
United States and the United Nations are authorized, provided that:
    (1) The goods or services are for personal use of the employees of 
the missions, and are not for resale; and
    (2) The transaction is not otherwise prohibited by law.

    Note to Sec. 538.515: The importation of goods and services into 
the United States by the Government of the Republic of South Sudan not 
involving transit or transshipment through Sudan is not prohibited and 
therefore requires no authorization. Similarly, the provision of goods, 
technology, and services in the United States to the Government of the 
Republic of South Sudan and its employees is not prohibited and also 
requires no authorization. See Sec. 538.537 for a general license 
authorizing the transshipment of goods, technology, and services through 
Sudan to or from the Republic of South Sudan, and related transactions.

[74 FR 27434, June 10, 2009, as amended at 76 FR 76619, Dec. 8, 2011]



Sec. 538.516  Diplomatic pouches.

    The following transactions are authorized:
    (a) The importation into the United States from Sudan, or the 
exportation from the United States to Sudan, of diplomatic pouches and 
their contents; and
    (b) The exportation or reexportation, directly or indirectly, from 
the United

[[Page 197]]

States or by a U.S. person, wherever located, of any goods or technology 
to a third-country government, or to its contractors or agents, for 
shipment to Sudan via a diplomatic pouch. To the extent necessary, this 
section also authorizes the shipment of such goods or technology by the 
third-country government to Sudan via a diplomatic pouch.

    Note to paragraph (b) of Sec. 538.516: The exportation or 
reexportation of certain U.S.-origin goods or technology to a third-
country government, or to its contractors or agents, may require 
authorization by the U.S. Department of Commerce under the Export 
Administration Regulations (15 CFR parts 730 et seq.).

[72 FR 15832, Apr. 3, 2007]



Sec. 538.517  Allowable payments for overflights of Sudanese airspace.

    Payments to Sudan of charges for services rendered by the Government 
of Sudan in connection with the overflight of Sudan or emergency landing 
in Sudan of aircraft owned by a United States person or registered in 
the United States are authorized.



Sec. 538.518  Household goods and personal effects.

    (a) The exportation from the United States to Sudan of household and 
personal effects, including baggage and articles for family use, of 
persons departing the United States to relocate in Sudan is authorized 
provided the articles included in such effects have been actually used 
by such persons or by family members accompanying them, are not intended 
for any other person or for sale, and are not otherwise prohibited from 
exportation.
    (b) The importation of Sudanese-origin household and personal 
effects, including baggage and articles for family use, of persons 
arriving in the United States is authorized; to qualify, articles 
included in such effects must have been actually used abroad by such 
persons or by other family members arriving from the same foreign 
household, must not be intended for any other person or for sale, and 
must not be otherwise prohibited from importation.



Sec. 538.519  Aircraft and maritime safety.

    Specific licenses may be issued on a case-by-case basis for the 
exportation and reexportation of goods, services, and technology to 
insure the safety of civil aviation and safe operation of U.S.-origin 
commercial passenger aircraft, and to ensure the safety of ocean-going 
maritime traffic in international waters.



Sec. 538.520  Extensions or renewals of loans and credits.

    (a) Specific licenses may be issued on a case-by-case basis for 
rescheduling loans or otherwise extending the maturities of existing 
loans, and for charging fees or interest at commercially reasonable 
rates in connection therewith, provided that no new funds or credits are 
thereby transferred or extended to Sudan or the Government of Sudan.
    (b) Specific licenses may be issued on a case-by-case basis, at the 
request of the account party, for the extension or renewal of a letter 
of credit or a standby letter of credit issued or confirmed by a U.S. 
financial institution.



Sec. 538.521  Registration of nongovernmental organizations for
humanitarian or religious activities.

    (a) Registration numbers may be issued on a case-by-case basis for 
the registration of nongovernmental organizations involved in 
humanitarian or religious activities in Sudan, authorizing transactions 
by such organizations otherwise prohibited by this part, including the 
exportation of services, goods, software, or technology to Sudan and the 
transfer of funds to and from Sudan for the purpose of relieving human 
suffering. Applicants for registration numbers must comply with the 
requirements of Sec. 501.801(c), 31 CFR chapter V.
    (b) This section does not authorize transfers from blocked accounts.

    Note to Sec. 538.521: Registration does not excuse a U.S. person 
from compliance with other applicable U.S. laws governing the 
exportation or reexportation of U.S.-origin goods, software, or 
technology (including technical data). See, e.g., the Export 
Administration Regulations administered by the

[[Page 198]]

U.S. Department of Commerce (15 CFR parts 730-774).

[66 FR 2728, Jan. 11, 2001]



Sec. 538.522  Transactions related to U.S. citizens residing in Sudan.

    U.S. persons are authorized to engage in transactions in Sudan 
ordinarily incident to the routine and necessary maintenance and other 
personal living expenses of U.S. citizens who reside on a permanent 
basis in Sudan.



Sec. 538.523  Commercial sales, exportation, and reexportation of 
agricultural commodities, medicine, and medical devices.

    (a)(1) One-year specific license requirement. The exportation or 
reexportation of the excluded food items specified in paragraph 
(a)(3)(iii) of this section, agricultural commodities that do not fall 
within the definition of food set forth in paragraph (a)(3)(ii) of this 
section, food (as defined in paragraph (a)(3)(ii) of this section) 
intended for military or law enforcement purchasers or importers, 
medicine or medical devices to the Government of Sudan, to any 
individual or entity in an area of Sudan other than the Specified Areas 
of Sudan, or to persons in third countries purchasing specifically for 
resale to any of the foregoing, shall only be made pursuant to a one-
year specific license issued by the Office of Foreign Assets Control for 
contracts entered into during the one-year period of the license and 
shipped within the 12-month period beginning on the date of the signing 
of the contract. No specific license will be granted for the exportation 
or reexportation of agricultural commodities, medicine, or medical 
devices to any entity or individual in Sudan promoting international 
terrorism, to any narcotics trafficking entity designated pursuant to 
Executive Order 12978 of October 21, 1995 (60 FR 54579, October 24, 
1995) or the Foreign Narcotics Kingpin Designation Act (21 U.S.C. 1901-
1908), or to any foreign organization, group, or persons subject to any 
restriction for its or their involvement in weapons of mass destruction 
or missile proliferation. Executory contracts entered into pursuant to 
paragraph (b)(2) of this section prior to the issuance of the one-year 
specific license described in this paragraph shall be deemed to have 
been signed on the date of issuance of that one-year specific license 
(and, therefore, the exporter is authorized to make shipments under that 
contract within the 12-month period beginning on the date of issuance of 
the one-year specific license).
    (2) General license for the Specified Areas of Sudan. The 
exportation or reexportation of agricultural commodities (including bulk 
agricultural commodities listed in appendix A to this part), medicine, 
and medical devices to any individual or entity in the Specified Areas 
of Sudan, or to persons in third countries purchasing specifically for 
resale to any of the foregoing, and the conduct of related transactions, 
including, but not limited to, the making of shipping and cargo 
inspection arrangements, the obtaining of insurance, the arrangement of 
financing and payment, shipping of the goods, receipt of payment, and 
the entry into contracts (including executory contracts), are hereby 
authorized, provided that all such exports or reexports are shipped 
within the 12-month period beginning on the date of the signing of the 
contract for export or reexport, and provided that such activities or 
transactions relating to the exportation or reexportation of the 
excluded food items specified in paragraph (a)(3)(iii) of this section, 
agricultural commodities that do not fall within the definition of food 
set forth in paragraph (a)(3)(ii) of this section, food (as defined in 
paragraph (a)(3)(ii) of this section) intended for military or law 
enforcement purchasers or importers, medicine, and medical devices do 
not involve any property or interests in property of the Government of 
Sudan and do not relate to the petroleum or petrochemical industries in 
Sudan. The transshipment of agricultural commodities that fall within 
the definition of food set forth in paragraph (a)(3)(ii) of this 
section, other than the excluded food items specified in paragraph 
(a)(3)(iii) of this section and other than food intended for military or 
law enforcement purchasers or importers, through an area of Sudan other 
than the Specified Areas of Sudan destined for the Specified Areas of 
Sudan also is

[[Page 199]]

authorized by this general license. Nothing in this general license 
authorizes the transshipment of the excluded food items specified in 
paragraph (a)(3)(iii) of this section, agricultural commodities that do 
not fall within the definition of food set forth in paragraph (a)(3)(ii) 
of this section, food (as defined in paragraph (a)(3)(ii) of this 
section) intended for military or law enforcement purchasers or 
importers, medicine, and medical devices through an area of Sudan other 
than the Specified Areas of Sudan destined for the Specified Areas of 
Sudan. See Sec. 538.417.

    Note 1 to Sec. 538.523(a)(2): Consistent with section 906(a)(1) of 
the Trade Sanctions Reform and Export Enhancement Act of 2000 (22 U.S.C. 
7205), each year by the anniversary of its effective date of September 
9, 2009, the Office of Foreign Assets Control will determine whether to 
revoke this general license. Unless revoked, the general license will 
remain in effect.
    Note 2 to Sec. 538.523(a)(2): See Sec. Sec. 538.417 and 538.418 
for additional requirements with respect to transshipments through, and 
financial transactions in, Sudan.

    (3)(i) General license for the exportation or reexportation of food. 
Except as provided in paragraphs (a)(3)(iii) and (a)(3)(iv) of this 
section, the exportation or reexportation of food (including bulk 
agricultural commodities listed in appendix A to this part) to the 
Government of Sudan, to any individual or entity in an area of Sudan 
other than the Specified Areas of Sudan, or to persons in third 
countries purchasing specifically for resale to any of the foregoing, 
and the conduct of related transactions, including, but not limited to, 
the making of shipping and cargo inspection arrangements, the obtaining 
of insurance, the arrangement of financing and payment, shipping of the 
goods, receipt of payment, and the entry into contracts (including 
executory contracts), are hereby authorized, provided that all such 
exports or reexports are shipped within the 12-month period beginning on 
the date of the signing of the contract for export or reexport.
    (ii) Definition of food. For purposes of this general license, the 
term food means items that are intended to be consumed by and provide 
nutrition to humans or animals in Sudan, including vitamins and 
minerals, food additives and supplements, and bottled drinking water, 
and seeds that germinate into items that are intended to be consumed by 
and provide nutrition to humans or animals in Sudan. For purposes of 
this general license, the term food does not include alcoholic 
beverages, cigarettes, gum, or fertilizer.
    (iii) Excluded food items. Paragraph (a)(3)(i) of this section does 
not authorize the exportation or reexportation of the following food 
items: castor beans, castor bean seeds, raw eggs, fertilized eggs (other 
than fish and shrimp roe), dried egg albumin, live animals, Rosary/
Jequirity peas, non-food-grade gelatin powder, and peptones and their 
derivatives.
    (iv) Excluded persons. Paragraph (a)(3)(i) of this section does not 
authorize the exportation or reexportation of food to military or law 
enforcement purchasers or importers.

    Note 1 to Sec. 538.523(a)(3): Consistent with section 906(a)(1) of 
the Trade Sanctions Reform and Export Enhancement Act of 2000 (22 U.S.C. 
7205), each year by the anniversary of its effective date on October 12, 
2011, the Office of Foreign Assets Control will determine whether to 
revoke this general license. Unless revoked, the general license will 
remain in effect.
    Note 2 to Sec. 538.523(a)(3): See Sec. 538.418 for additional 
requirements with respect to financial transactions in Sudan.

    (b) General license for arrangement of exportation or reexportation 
of covered products. (1) With respect to sales pursuant to paragraph 
(a)(1) of this section, the making of shipping arrangements, cargo 
inspection, obtaining of insurance, and arrangement of financing 
(consistent with Sec. 538.525) for the exportation or reexportation of 
the excluded food items specified in paragraph (a)(3)(iii) of this 
section, agricultural commodities that do not fall within the definition 
of food set forth in paragraph (a)(3)(ii) of this section, food (as 
defined in paragraph (a)(3)(ii) of this section) intended for military 
or law enforcement purchasers or importers, medicine, or medical devices 
to the Government of Sudan, to any individual or entity in an area of 
Sudan other than the Specified Areas of Sudan, or to persons in third 
countries purchasing specifically for resale to any of the foregoing, 
are authorized.

[[Page 200]]

    (2) Entry into executory contracts (including executory pro forma 
invoices, agreements in principle, or executory offers capable of 
acceptance such as bids in response to public tenders) for the 
exportation or reexportation of the excluded food items specified in 
paragraph (a)(3)(iii) of this section, agricultural commodities that do 
not fall within the definition of food set forth in paragraph (a)(3)(ii) 
of this section, food (as defined in paragraph (a)(3)(ii) of this 
section) intended for military or law enforcement purchasers or 
importers, medicine, or medical devices to the Government of Sudan, to 
any individual or entity in an area of Sudan other than the Specified 
Areas of Sudan, or to persons in third countries purchasing specifically 
for resale to any of the foregoing, is authorized, provided that the 
performance of an executory contract is expressly made contingent upon 
the prior issuance of the one-year specific license described in 
paragraph (a)(1) of this section.
    (c) Instructions for obtaining one-year specific licenses. In order 
to obtain the one-year specific license described in paragraph (a)(1) of 
this section, the exporter must provide to the Office of Foreign Assets 
Control:
    (1) The applicant's full legal name (if the applicant is a business 
entity, the state or jurisdiction of incorporation and principal place 
of business).
    (2) The applicant's mailing and street address (so that OFAC may 
reach a responsible point of contact, the applicant should also include 
the name of the individual(s) responsible for the application and 
related commercial transactions along with their telephone and fax 
numbers and, if available, e-mail addresses).
    (3) The names, mailing addresses, and if available, fax and 
telephone numbers of all parties with an interest in the transaction. If 
the goods are being exported or reexported to a purchasing agent in 
Sudan, the exporter must identify the agent's principals at the 
wholesale level for whom the purchase is being made. If the goods are 
being exported or reexported to an individual, the exporter must 
identify any organizations or entities with which the individual is 
affiliated that have an interest in the transaction.
    (4) A description of all items to be exported or reexported pursuant 
to the requested one-year license, including a statement that the item 
is classified as EAR 99, and, if necessary, documentation sufficient to 
verify that the items to be exported or reexported are classified as EAR 
99 and do not fall within any of the limitations contained in paragraph 
(d) of this section.
    (5) An Official Commodity Classification of EAR 99 issued by the 
Department of Commerce, Bureau of Industry and Security (``BIS''), 
certifying that the product is EAR 99, is required to be submitted to 
OFAC with the request for a license authorizing the exportation or 
reexportation of all fertilizers, live horses, western red cedar, and 
medical devices other than basic medical supplies, such as syringes, 
bandages, gauze and similar items, that are specifically listed on BIS's 
Web site, http://www.bis.doc.gov/policiesand

regulations/tradesanctionsreformexport

enhancementact.html. Medical supplies that are specifically listed on 
BIS's Web site may not require an Official Commodity Classification of 
EAR 99 from BIS. BIS will also provide a list on its Web site of 
medicines that are ineligible for a one-year license under these 
procedures. Exporters should seek an Official Commodity Classification 
of EAR 99 from BIS for medicines and submit a copy to OFAC. See 15 CFR 
745.3 for instructions for obtaining Official Commodity Classification 
of EAR 99 from BIS.
    (d) Limitations. (1) Nothing in this section or in any license 
issued pursuant to paragraph (a) of this section relieves the exporter 
from compliance with the export license application requirements of 
another Federal agency.
    (2) Nothing in this section or in any license issued pursuant to 
paragraph (a) of this section authorizes the exportation or 
reexportation of any agricultural commodity, medicine, or medical device 
controlled on the United States Munitions List established under section 
38 of the Arms Export Control Act (22 U.S.C. 2778); controlled on any 
control list established under the Export Administration Act of 1979 or 
any successor statute (50 U.S.C. App. 2401 et

[[Page 201]]

seq.); or used to facilitate the development or production of a chemical 
or biological weapon or weapon of mass destruction.
    (3) Nothing in this section or in any license issued pursuant to 
paragraph (a) of this section affects prohibitions on the sale or supply 
of U.S. technology or software used to manufacture agricultural 
commodities, medicine, or medical devices, such as technology to design 
or produce biotechnological items or medical devices.
    (4) Nothing in this section or in any license issued pursuant to 
paragraph (a) of this section affects U.S. nonproliferation export 
controls, including end-user and end-use controls maintained under the 
Enhanced Proliferation Control Initiative.
    (5) Nothing in this section authorizes any transaction or dealing 
with a person whose property and interests in property are blocked 
under, or who is designated or otherwise subject to any sanction under, 
the terrorism, proliferation of weapons of mass destruction, or 
narcotics trafficking programs administered by OFAC, 31 CFR parts 536, 
544, 594, 595, 597, and 598, or with any foreign organization, group, or 
person subject to any restriction for its involvement in weapons of mass 
destruction or missile proliferation, or involving property blocked 
pursuant to this chapter or any other activity prohibited by this 
chapter not otherwise authorized in or pursuant to this part.
    (e) Covered items. For the purposes of this part, agricultural 
commodities, medicine, and medical devices are defined below.
    (1) Agricultural commodities. For the purposes of this part, 
agricultural commodities are:
    (i) Products that are not listed on the Commerce Control List in the 
Export Administration Regulations, 15 CFR part 774, supplement no. 1, 
and that fall within the term ``agricultural commodity'' as defined in 
section 102 of the Agricultural Trade Act of 1978 (7 U.S.C. 5602); and
    (ii) Products not listed on the Commerce Control List in the Export 
Administration Regulations, 15 CFR part 774, supplement no. 1, that are 
intended for ultimate use in Sudan as:
    (A) Food for humans (including raw, processed, and packaged foods; 
live animals; vitamins and minerals; food additives or supplements; and 
bottled drinking water) or animals (including animal feeds);
    (B) Seeds for food crops;
    (C) Fertilizers or organic fertilizers; or
    (D) Reproductive materials (such as live animals, fertilized eggs, 
embryos, and semen) for the production of food animals.
    (2) Medicine. For the purposes of this part, the term medicine has 
the same meaning given the term ``drug'' in section 201 of the Federal 
Food, Drug, and Cosmetic Act (21 U.S.C. 321) but does not include any 
item listed on the Commerce Control List in the Export Administration 
Regulations, 15 CFR part 774, supplement no. 1 (excluding items 
classified as EAR 99).
    (3) Medical device. For the purposes of this part, the term medical 
device has the meaning given the term ``device'' in section 201 of the 
Federal Food, Drug, and Cosmetic Act (21 U.S.C. 321) but does not 
include any item listed on the Commerce Control List in the Export 
Administration Regulations, 15 CFR part 774, supplement no. 1 (excluding 
items classified as EAR 99).
    (f) Excluded items. For the purposes of this part, agricultural 
commodities do not include furniture made from wood; clothing 
manufactured from plant or animal materials; agricultural equipment 
(whether hand tools or motorized equipment); pesticides, insecticides, 
or herbicides; or cosmetics (unless derived entirely from plant 
materials).

[74 FR 61032, Nov. 23, 2009, as amended at 76 FR 63194, Oct. 12, 2011]



Sec. 538.524  [Reserved]



Sec. 538.525  Payment for and financing of commercial sales of certain 
agricultural commodities, medicine, and medical devices.

    (a) General license for payment terms. The following payment terms 
for sales, pursuant to Sec. 538.523(a)(1), of the excluded food items 
specified in Sec. 538.523(a)(3)(iii), agricultural commodities that do 
not fall within the definition of food set forth in Sec. 
538.523(a)(3)(ii), food (as defined in

[[Page 202]]

Sec. 538.523(a)(3)(ii)) intended for military or law enforcement 
purchasers or importers, medicine, or medical devices to the Government 
of Sudan, to any individual or entity in an area of Sudan other than the 
Specified Areas, or to persons in third countries purchasing 
specifically for resale to any of the foregoing are authorized:
    (1) Payment of cash in advance;
    (2) Sales on open account, provided that the account receivable may 
not be transferred by the person extending the credit; or
    (3) Financing by third-country financial institutions that are 
neither United States persons nor Government of Sudan entities. Such 
financing may be confirmed or advised by U.S. financial institutions.
    (b) Specific licenses for alternate payment terms. Specific licenses 
may be issued on a case-by-case basis for payment terms and trade 
financing not authorized by the general license in paragraph (a) of this 
section for sales pursuant to Sec. 538.523(a)(1). See Sec. 501.801(b) 
of this chapter for specific licensing procedures.
    (c) No debits to blocked accounts. Nothing in this section 
authorizes payment terms or trade financing involving a debit to an 
account of the Government of Sudan blocked pursuant to this part.
    (d) Transfers through the U.S. financial system. Before a United 
States financial institution initiates a payment on behalf of any 
customer, or credits a transfer to the account on its books of the 
ultimate beneficiary, the United States financial institution must 
determine that the underlying transaction is not prohibited by this 
part. Any payment relating to a transaction authorized in or pursuant to 
Sec. 538.523 or Sec. 538.526 that is routed through the U.S. financial 
system must reference the relevant Office of Foreign Assets Control 
license authorizing the payment to avoid the blocking or rejection of 
the transfer.
    (e) Notwithstanding any other provision of this part, no commercial 
exportation to Sudan may be made with United States Government 
assistance, including United States foreign assistance, United States 
export assistance, and any United States credit or guarantees absent a 
Presidential waiver.

[74 FR 61033, Nov. 23, 2009, as amended at 76 FR 63195, Oct. 12, 2011]



Sec. 538.526  Brokering commercial sales of agricultural commodities, 
medicine, and medical devices.

    (a) General license for brokering sales by U.S. persons. United 
States persons are authorized to provide brokerage services on behalf of 
U.S. persons for the sales and exportations or reexportations by United 
States persons that are described in paragraphs (a)(1), (a)(2), and 
(a)(3) of Sec. 538.523, provided that the sale and exportation or 
reexportation is authorized, as applicable, by a one-year specific 
license issued pursuant to paragraph (a)(1) of Sec. 538.523 or by one 
of the general licenses set forth in paragraphs (a)(2) and (3) of Sec. 
538.523.
    (b) Specific licensing for brokering sales by non-U.S. persons of 
bulk agricultural commodities. Specific licenses may be issued on a 
case-by-case basis to permit United States persons to provide brokerage 
services on behalf of non-United States, non-Sudanese persons for the 
sale and exportation or reexportation of bulk agricultural commodities 
to the Government of Sudan, to any individual or entity in an area of 
Sudan other than the Specified Areas of Sudan, or to persons in third 
countries purchasing specifically for resale to the foregoing. Specific 
licenses issued pursuant to this section will authorize the brokering 
only of sales that:
    (1) Are limited to the bulk agricultural commodities listed in 
appendix A to this part 538;
    (2) Are to purchasers permitted pursuant to Sec. 538.523(a)(1); and

    Note to paragraph (b)(2) of Sec. 538.526: Requests for specific 
licenses to provide brokerage services under this paragraph must include 
all of the information described in Sec. 538.523(c).

    (3) Make any performance involving the exportation or reexportation 
of any goods, technology or services (including technical data, 
software, or information) that are subject to license application 
requirements of another Federal agency contingent upon the prior 
authorization of that agency. (For example, items classified EAR 99 
under

[[Page 203]]

the Export Administration Regulations, 15 CFR parts 730 through 774, may 
in certain instances require a license from the Department of Commerce, 
Bureau of Industry and Security. See, e.g., 15 CFR 736.2(b)(5), 744.2 
through 744.4, 744.7, and 744.10; see also 22 CFR 123.9.)
    (c) No debit to blocked accounts. Payment for any brokerage fee 
earned pursuant to this section may not involve a debit to an account 
blocked pursuant to this part.
    (d) Recordkeeping and reporting requirements. Attention is drawn to 
the recordkeeping, retention, and reporting requirements of Sec. Sec. 
501.601 and 501.602.

[74 FR 61033, Nov. 23, 2009, as amended at 76 FR 63195, Oct. 12, 2011]



Sec. 538.527  Operation of accounts.

    The operation of an account in a U.S. financial institution for an 
individual ordinarily resident in Sudan who is not included within the 
term ``Government of Sudan,'' as defined in Sec. 538.305, is 
authorized, provided that transactions processed through the account:
    (a) Are of a personal nature and not for use in supporting or 
operating a business;
    (b) Do not involve transfers directly or indirectly to Sudan or for 
the benefit of individuals ordinarily resident in Sudan unless 
authorized by Sec. 538.528; and
    (c) Are not otherwise prohibited by this part.

[70 FR 34062, June 13, 2005]



Sec. 538.528  Noncommercial, personal remittances.

    (a) U.S. depository institutions, U.S. registered brokers or dealers 
in securities, and U.S. registered money transmitters are authorized to 
process transfers of funds to or from Sudan or for or on behalf of an 
individual ordinarily resident in Sudan who is not included within the 
term ``Government of Sudan,'' as defined in Sec. 538.305, in cases in 
which the transfer involves a noncommercial, personal remittance, 
provided the transfer is not by, to, or through a person who is included 
within the term ``Government of Sudan,'' as defined in Sec. 538.305. 
Noncommercial, personal remittances do not include charitable donations 
to or for the benefit of an entity or funds transfers for use in 
supporting or operating a business.

    Note to paragraph (a) of Sec. 538.528: The institutions identified 
in paragraph (a) may transfer charitable donations made by U.S. persons 
to nongovernmental organizations in Sudan registered pursuant to Sec. 
538.521, provided that the transfer is made pursuant to Sec. 538.521 
and the terms of the registration.

    (b) The transferring institutions identified in paragraph (a) of 
this section may rely on the originator of a funds transfer with regard 
to compliance with paragraph (a), provided that the transferring 
institution does not know or have reason to know that the funds transfer 
is not in compliance with paragraph (a).
    (c) This section does not authorize transactions with respect to 
property blocked pursuant to Sec. 538.201.

[70 FR 34062, June 13, 2005]



Sec. 538.529  Authorized transactions necessary and ordinarily incident
to publishing.

    (a) To the extent that such activities are not exempt from this 
part, and subject to the restrictions set forth in paragraphs (b) 
through (d) of this section, U.S. persons are authorized to engage in 
all transactions necessary and ordinarily incident to the publishing and 
marketing of manuscripts, books, journals, and newspapers in paper or 
electronic format (collectively, ``written publications''). This section 
does not apply if the parties to the transactions described in this 
paragraph include the Government of Sudan. For the purposes of this 
section, the term ``Government of Sudan'' includes the state and the 
Government of Sudan, as well as any political subdivision, agency, or 
instrumentality thereof, including the Central Bank of Sudan, and any 
person acting or purporting to act directly or indirectly on behalf of 
any of the foregoing with respect to the transactions described in this 
paragraph. For the purposes of this section, the term ``Government of 
Sudan'' does not include any academic and research institutions and 
their personnel. Pursuant to this section, the following activities are 
authorized, provided that U.S. persons ensure that they are not

[[Page 204]]

engaging, without separate authorization, in the activities identified 
in paragraphs (b) through (d) of this section:
    (1) Commissioning and making advance payments for identifiable 
written publications not yet in existence, to the extent consistent with 
industry practice;
    (2) Collaborating on the creation and enhancement of written 
publications;
    (3)(i) Augmenting written publications through the addition of items 
such as photographs, artwork, translation, explanatory text, and, for a 
written publication in electronic format, the addition of embedded 
software necessary for reading, browsing, navigating, or searching the 
written publication;
    (ii) Exporting embedded software necessary for reading, browsing, 
navigating, or searching a written publication in electronic format, 
provided that the software is classified as ``EAR 99'' under the Export 
Administration Regulations, 15 CFR parts 730-774 (the ``EAR''), or is 
not subject to the EAR;
    (4) Substantive editing of written publications;
    (5) Payment of royalties for written publications;
    (6) Creating or undertaking a marketing campaign to promote a 
written publication; and
    (7) Other transactions necessary and ordinarily incident to the 
publishing and marketing of written publications as described in this 
paragraph (a).
    (b) This section does not authorize transactions involving the 
provision of goods or services not necessary and ordinarily incident to 
the publishing and marketing of written publications as described in 
paragraph (a) of this section. For example, this section does not 
authorize U.S. persons:
    (1) To provide or receive individualized or customized services 
(including, but not limited to, accounting, legal, design, or consulting 
services), other than those necessary and ordinarily incident to the 
publishing and marketing of written publications, even though such 
individualized or customized services are delivered through the use of 
information and informational materials;
    (2) To create or undertake for any person a marketing campaign with 
respect to any service or product other than a written publication, or 
to create or undertake a marketing campaign of any kind for the benefit 
of the Government of Sudan;
    (3) To engage in the exportation or importation of goods to or from 
Sudan other than the exportation of embedded software described in 
paragraph (a)(3)(ii) of this section; or
    (4) To operate a publishing house, sales outlet, or other office in 
Sudan.

    Note to paragraph (b): The importation from Sudan and the 
exportation to Sudan of information or informational materials, as 
defined in Sec. 538.306, whether commercial or otherwise, regardless of 
format or medium of transmission, are exempt from the prohibitions and 
regulations of this part. See Sec. 538.211(c).

    (c) This section does not authorize U.S. persons to engage the 
services of publishing houses or translators in Sudan unless such 
activity is primarily for the dissemination of written publications in 
Sudan.
    (d) This section does not authorize:
    (1) The exportation from or importation into the United States of 
services for the development, production, or design of software;
    (2) Transactions for the development, production, design, or 
marketing of technology specifically controlled by the International 
Traffic in Arms Regulations, 22 CFR parts 120 through 130 (the 
``ITAR''), the EAR, or the Department of Energy Regulations set forth at 
10 CFR part 810.
    (3) The exportation of information or technology subject to the 
authorization requirements of 10 CFR part 810, or Restricted Data as 
defined in section 11 y. of the Atomic Energy Act of 1954, as amended, 
or of other information, data, or technology the release of which is 
controlled under the Atomic Energy Act and regulations therein;
    (4) The exportation of any item (including information) subject to 
the EAR where a U.S. person knows or has reason to know that the item 
will be used, directly or indirectly, with respect to certain nuclear, 
missile, chemical, or biological weapons or nuclear-maritime end-uses as 
set forth in part

[[Page 205]]

744 of the EAR. In addition, U.S. persons are precluded from exporting 
any item subject to the EAR to certain restricted end-users, as set 
forth in part 744 of the EAR, as well as certain persons whose export 
privileges have been denied pursuant to parts 764 or 766 of the EAR, 
without authorization from the Department of Commerce; or
    (5) The exportation of information subject to licensing requirements 
under the ITAR or exchanges of information that are subject to 
regulation by other government agencies.

[72 FR 50050, Aug. 30, 2007]



Sec. 538.530  Licenses and registrations issued pursuant to Executive
Order 13067 or this part authorized pursuant to Executive Order 13412.

    (a) All general licenses issued pursuant to Executive Order 13067 
are authorized pursuant to Executive Order 13412 and remain in effect.
    (b) All specific licenses and all nongovernmental organization 
registrations issued pursuant to Executive Order 13067 or this part 
prior to October 13, 2006, are authorized pursuant to Executive Order 
13412 and remain in effect until the expiration date specified in the 
license or registration or, if no expiration date is specified, June 30, 
2008.

[72 FR 61516, Oct. 31, 2007]



Sec. 538.531  Official activities of the United States Government and
international organizations.

    (a) Subject to the conditions of paragraphs (b), (c), and (d) of 
this section, the following transactions are authorized:
    (1) All transactions and activities otherwise prohibited by this 
part that are for the conduct of the official business of the United 
States Government or the United Nations by contractors or grantees 
thereof; and
    (2) All transactions and activities otherwise prohibited by this 
part that are for the conduct of the official business of the United 
Nations specialized agencies, programmes, and funds by employees, 
contractors, or grantees thereof.
    (b) Contractors or grantees conducting transactions authorized 
pursuant to paragraph (a) of this section must provide a copy of their 
contract or grant with the United States Government or the United 
Nations, or its specialized agencies, programmes, and funds, to any U.S. 
person before the U.S. person engages in or facilitates any transaction 
or activity prohibited by this part. If the contract or grant contains 
any sensitive or proprietary information, such information may be 
redacted or removed from the copy given to the U.S. person, provided 
that the information is not necessary to demonstrate that the 
transaction is authorized pursuant to paragraph (a) of this section.
    (c) Any U.S. person engaging in or facilitating transactions 
authorized pursuant to this section shall keep a full and accurate 
record of each such transaction, including a copy of the contract or 
grant, and such record shall be available for examination for at least 
five (5) years after the date of the transaction.
    (d) No payment pursuant to this section may involve a debit to an 
account blocked pursuant to this part.

    Note 1 to Sec. 538.531. This license does not relieve any persons 
participating in transactions authorized hereunder from compliance with 
any other U.S. legal requirements applicable to the transactions 
authorized pursuant to paragraph (a) of this section. See, e.g., the 
Export Administration Regulations (15 CFR parts 730 et seq.).
    Note 2 to Sec. 538.531. Paragraph (e) of Sec. 538.212 exempts 
transactions for the conduct of the official business of the Federal 
Government or the United Nations by employees thereof from the 
prohibitions contained in this part.

[72 FR 61516, Oct. 31, 2007]



Sec. 538.532  Humanitarian transshipments to or from the Specified Areas
of Sudan.

    The transit or transshipment to or from the Specified Areas of Sudan 
of goods, technology, or services intended for humanitarian purposes, 
through areas of Sudan other than the Specified Areas of Sudan, is 
authorized.

[76 FR 76619, Dec. 8, 2011]



Sec. 538.533  Exportation of certain services and software incident to
Internet-based communications.

    (a) To the extent that such transactions are not exempt from the 
prohibitions of this part and subject to the

[[Page 206]]

restrictions set forth in paragraph (b) of this section, the following 
transactions are authorized:
    (1) The exportation from the United States or by U.S. persons, 
wherever located, to persons in Sudan of services incident to the 
exchange of personal communications over the Internet, such as instant 
messaging, chat and email, social networking, sharing of photos and 
movies, web browsing, and blogging, provided that such services are 
publicly available at no cost to the user.
    (2) The exportation from the United States or by U.S. persons, 
wherever located, to persons in Sudan of software necessary to enable 
the services described in paragraph (a)(1) of this section, provided 
that such software is classified as ``EAR99'' under the Export 
Administration Regulations, 15 CFR parts 730 through 774 (the ``EAR''), 
is not subject to the EAR, or is classified by the U.S. Department of 
Commerce (``Commerce'') as mass market software under export control 
classification number (``ECCN'') 5D992 of the EAR, and provided further 
that such software is publicly available at no cost to the user.
    (b) This section does not authorize:
    (1) The direct or indirect exportation of services or software with 
knowledge or reason to know that such services or software are intended 
for the Government of Sudan.
    (2) The direct or indirect exportation of any goods or technology 
listed on the Commerce Control List in the EAR, 15 CFR part 774, 
supplement No. 1 (``CCL''), except for software necessary to enable the 
services described in paragraph (a)(1) of this section that is 
classified by Commerce as mass market software under ECCN 5D992 of the 
EAR.
    (3) The direct or indirect exportation of Internet connectivity 
services or telecommunications transmission facilities (such as 
satellite links or dedicated lines).
    (4) The direct or indirect exportation of web-hosting services that 
are for purposes other than personal communications (e.g., web-hosting 
services for commercial endeavors) or of domain name registration 
services.
    (c) Specific licenses may be issued on a case-by-case basis for the 
exportation of other services and software incident to the sharing of 
information over the Internet, provided the software is classified as 
``EAR99,'' not subject to the EAR, or classified by Commerce as mass 
market software under ECCN 5D992 of the EAR.
    (d) Nothing in this section or in any license issued pursuant to 
paragraph (c) of this section relieves the exporter from compliance with 
the export license application requirements of another Federal agency.

[75 FR 10999, Mar. 10, 2010]



Sec. 538.534  Third-country diplomatic and consular funds transfers.

    U.S. depository institutions, U.S. registered brokers or dealers in 
securities, and U.S. registered money transmitters are authorized to 
process funds transfers for the operating expenses or other official 
business of third-country diplomatic or consular missions in Sudan, 
provided such transfers are not by, to, or through a person who is 
included within the term Government of Sudan, as defined in Sec. 
538.305.

[76 FR 63198, Oct. 12, 2011]



Sec. 538.535  Importation and exportation of human remains for burial,
cremation, or interment authorized.

    (a) The importation into the United States of human remains for 
burial, cremation, or interment, as well as of coffins or other 
receptacles containing such human remains, from Sudan is authorized.
    (b) The importation into the United States for non-commercial 
purposes of finished tombstones or grave markers of Sudanese origin is 
authorized.
    (c) The direct or indirect exportation from the United States, or by 
a United States person, wherever located, of human remains for burial, 
cremation, or interment, as well as of coffins or other receptacles 
containing such human remains, to Sudan is authorized.
    (d) This section does not authorize the importation into the United 
States of Sudanese-origin cultural property or other items of 
archaeological, historical, or rare scientific importance.


[[Page 207]]


    Note 1 to Sec. 538.535: See Sec. 538.418 for additional 
restrictions on financial transactions involving Sudan, including the 
Specified Areas of Sudan.

[76 FR 63198, Oct. 12, 2011]



Sec. 538.536  Activities relating to the petroleum and petrochemical 
industries in the Republic of South Sudan.

    (a) To the extent they are not exempt from the prohibitions of this 
part, all activities and transactions relating to the petroleum and 
petrochemical industries in the Republic of South Sudan are authorized, 
including but not limited to the transshipment of goods, technology, and 
services to or from the Republic of South Sudan through Sudan; 
exploration; development; production; field auditing services; oilfield 
services; activities related to oil and gas pipelines; investment; 
payment to the Government of Sudan or to entities owned or controlled by 
the Government of Sudan of pipeline, port, and other fees; and 
downstream activities such as refining, sale, and transport of petroleum 
from the Republic of South Sudan, except for the refining in Sudan of 
petroleum from the Republic of South Sudan.
    (b) All financial transactions ordinarily incident to the activities 
authorized by paragraph (a) of this section also are authorized, 
including but not limited to financial transactions with a depository 
institution owned or controlled by the Government of Sudan or located in 
Sudan, provided that any transaction between a U.S. depository 
institution and a depository institution owned or controlled by the 
Government of Sudan must first transit through a depository institution 
not owned or controlled by the Government of Sudan.
    (c) This section does not authorize exports of goods, services, or 
technology that are not used in connection with the Republic of South 
Sudan's petroleum or petrochemical industries.

[76 FR 76619, Dec. 8, 2011]



Sec. 538.537  Transshipment of goods, technology, and services to or
from the Republic of South Sudan.

    (a) To the extent they are not exempt from the prohibitions of this 
part, the transit or transshipment of goods, technology, and services 
through Sudan to or from the Republic of South Sudan are authorized.
    (b) All financial transactions ordinarily incident to the activities 
authorized by paragraph (a) of this section also are authorized, 
including but not limited to financial transactions with a depository 
institution owned or controlled by the Government of Sudan or located in 
Sudan, provided that any transaction between a U.S. depository 
institution and a depository institution owned or controlled by the 
Government of Sudan must first transit through a depository institution 
not owned or controlled by the Government of Sudan.

[76 FR 76619, Dec. 8, 2011]



                            Subpart F_Reports



Sec. 538.601  Records and reports.

    For additional provisions relating to records and reports, see 
subpart C of part 501 of this chapter.



                           Subpart G_Penalties



Sec. 538.701  Penalties.

    (a) Attention is directed to section 206 of the International 
Emergency Economic Powers Act (the ``Act'')(50 U.S.C. 1705), which is 
applicable to violations of the provisions of any license, ruling, 
regulation, order, direction or instruction issued by or pursuant to the 
direction or authorization of the Secretary of the Treasury pursuant to 
this part or otherwise under the Act.
    (1) A civil penalty not to exceed the amount set forth in Section 
206 of the Act 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 the Act.

    Note to paragraph (a)(1) of Sec. 538.701: As of June 10, 2008, the 
Act provides for a maximum civil penalty not to exceed the greater of 
$250,000 or an amount that is twice the amount of the transaction that 
is the basis of the violation with respect to which the penalty is 
imposed.

    (2) A person who willfully commits, willfully attempts to commit, or 
willfully conspires to commit, or aids or

[[Page 208]]

abets in the commission of a violation of any license, order, 
regulation, or prohibition shall, upon conviction, be fined not more 
than $1,000,000, or if a natural person, may be imprisoned for not more 
than 20 years, or both.
    (b) Adjustments to penalty amounts. (1) The civil penalties provided 
in the Act 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 the Act are subject to 
adjustment pursuant to 18 U.S.C. 3571.
    (c) Attention is also directed to 18 U.S.C. 1001, which provides 
that whoever, in any matter within the jurisdiction of the executive, 
legislative, or judicial branch of the 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, or imprisoned not more than five years, or both.
    (d) Violations of this part may also be subject to relevant 
provisions of other applicable laws.

[63 FR 35810, July 1, 1998, as amended at 70 FR 34063, June 13, 2005; 71 
FR 29253, May 22, 2006; 73 FR 32652, June 10, 2008]



Sec. 538.702  Prepenalty notice.

    (a) When required. If the Director of the Office of Foreign Assets 
Control has reason to believe that there has occurred a violation of any 
provision of this part or a violation of the provisions of any license, 
ruling, regulation, order, direction or instruction issued by or 
pursuant to the direction or authorization of the Secretary of the 
Treasury pursuant to this part or otherwise under the International 
Emergency Economic Powers Act, and the Director determines that further 
proceedings are warranted, the Director shall notify the alleged 
violator of the agency's intent to impose a monetary penalty by issuing 
a prepenalty notice. The prepenalty notice shall be in writing. The 
prepenalty notice may be issued whether or not another agency has taken 
any action with respect to the matter.
    (b) Contents of notice--(1) Facts of violation. The prepenalty 
notice shall describe the violation, specify the laws and regulations 
allegedly violated, and state the amount of the proposed monetary 
penalty.
    (2) Right to respond. The prepenalty notice also shall inform the 
respondent of the respondent's right to make a written presentation 
within the applicable 30-day period set forth in Sec. 538.703 as to why 
a monetary penalty should not be imposed or why, if imposed, the 
monetary penalty should be in a lesser amount than proposed.
    (c) Informal settlement prior to issuance of prepenalty notice. At 
any time prior to the issuance of a prepenalty notice, an alleged 
violator may request in writing that, for a period not to exceed sixty 
(60) days, the agency withhold issuance of the prepenalty notice for the 
exclusive purpose of effecting settlement of the agency's potential 
civil monetary penalty claims. In the event the Director grants the 
request, under terms and conditions within the Director's discretion, 
the Office of Foreign Assets Control will agree to withhold issuance of 
the prepenalty notice for a period not to exceed 60 days and will enter 
into settlement negotiations with respect to the potential civil 
monetary penalty claim.

[70 FR 34063, June 13, 2005]



Sec. 538.703  Response to prepenalty notice; informal settlement.

    (a) Deadline for response. The respondent may submit a response to 
the prepenalty notice within the applicable 30-day period set forth in 
this paragraph. The Director may grant, at the Director's discretion, an 
extension of time in which to submit a response to the prepenalty 
notice. The failure to submit a response within the applicable time 
period set forth in this paragraph shall be deemed to be a waiver of the 
right to respond.
    (1) Computation of time for response. A response to the prepenalty 
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

[[Page 209]]

OFAC by courier) on or before the 30th day after the postmark date on 
the envelope in which the prepenalty notice was mailed. If the 
respondent refused delivery or otherwise avoided receipt of the 
prepenalty notice, a response must be postmarked or date-stamped on or 
before the 30th day after the date on the stamped postal receipt 
maintained at the Office of Foreign Assets Control. If the prepenalty 
notice was personally delivered to the respondent by a non-U.S. Postal 
Service agent authorized by the Director, a response must be postmarked 
or date-stamped on or before the 30th day after the date of delivery.
    (2) 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 Director's discretion, only upon the respondent's specific request 
to the Office of Foreign Assets Control.
    (b) Form and method of response. The response must be submitted in 
typewritten form and signed by the respondent or a representative 
thereof. The response need not be in any particular form. A copy of the 
written response may be sent by facsimile, but the original also must be 
sent to the Office of Foreign Assets Control Civil Penalties Division by 
mail or courier and must be postmarked or date-stamped, in accordance 
with paragraph (a) of this section.
    (c) Contents of response. A written response must contain 
information sufficient to indicate that it is in response to the 
prepenalty notice and must identify the Office of Foreign Assets Control 
identification number listed on the prepenalty notice.
    (1) A written response must include the respondent's full name, 
address, telephone number, and facsimile number, if available, or those 
of the representative of the respondent.
    (2) A written response should either admit or deny each specific 
violation alleged in the prepenalty notice and also state if the 
respondent has no knowledge of a particular violation. If the written 
response fails to address any specific violation alleged in the 
prepenalty notice, that alleged violation shall be deemed to be 
admitted.
    (3) A written response should include any information in defense, 
evidence in support of an asserted defense, or other factors that the 
respondent requests the Office of Foreign Assets Control to consider. 
Any defense or explanation previously made to the Office of Foreign 
Assets Control or any other agency must be repeated in the written 
response. Any defense not raised in the written response will be 
considered waived. The written response also should set forth the 
reasons why the respondent believes the penalty should not be imposed or 
why, if imposed, it should be in a lesser amount than proposed.
    (d) Failure to respond. Where OFAC receives no response to a 
prepenalty notice within the applicable time period set forth in 
paragraph (a) of this section, a penalty notice generally will be 
issued, taking into account the mitigating and/or aggravating factors 
present in the record. If there are no mitigating factors present in the 
record, or the record contains a preponderance of aggravating factors, 
the proposed prepenalty amount generally will be assessed as the final 
penalty.
    (e) Informal settlement. In addition to or as an alternative to a 
written response to a prepenalty notice, the respondent or respondent's 
representative may contact the Office of Foreign Assets Control's Civil 
Penalties Division as advised in the prepenalty notice to propose the 
settlement of allegations contained in the prepenalty notice and related 
matters. However, the requirements set forth in paragraph (g) of this 
section as to oral communication by the representative must first be 
fulfilled. In the event of settlement at the prepenalty stage, the claim 
proposed in the prepenalty notice will be withdrawn, the respondent will 
not be required to take a written position on allegations contained in 
the prepenalty notice, and the Office of Foreign Assets Control will 
make no final determination as to whether a violation occurred. The 
amount accepted in settlement of allegations in a prepenalty notice may 
vary from the civil penalty that might finally be imposed in the event 
of a formal determination of violation. In the event no settlement is 
reached, the time limit specified in

[[Page 210]]

paragraph (a) of this section for written response to the prepenalty 
notice will remain in effect, unless additional time is granted by the 
Office of Foreign Assets Control.
    (f) Guidelines. Guidelines for the imposition or settlement of civil 
penalties by the Office of Foreign Assets Control have been codified in 
the Appendix to 31 CFR part 501, the Reporting, Procedures and Penalties 
Regulations.
    (g) Representation. A representative of the respondent may act on 
behalf of the respondent, but any oral communication with the Office of 
Foreign Assets Control prior to a written submission regarding the 
specific allegations contained in the prepenalty notice must be preceded 
by a written letter of representation, unless the prepenalty notice was 
served upon the respondent in care of the representative.

[70 FR 34063, June 13, 2005]



Sec. 538.704  Penalty imposition or withdrawal.

    (a) No violation. If, after considering any response to the 
prepenalty notice and any relevant facts, the Director of the Office of 
Foreign Assets Control determines that there was no violation by the 
respondent named in the prepenalty notice, the Director shall notify the 
respondent in writing of that determination and of the cancellation of 
the proposed monetary penalty.
    (b) Violation. (1) If, after considering any written response to the 
prepenalty notice, or default in the submission of a written response, 
and any relevant facts, the Director of the Office of Foreign Assets 
Control determines that there was a violation by the respondent named in 
the prepenalty notice, the Director is authorized to issue a written 
penalty notice to the respondent of the determination of the violation 
and the imposition of the monetary penalty.
    (2) The penalty notice shall inform the respondent that payment or 
arrangement for installment payment of the assessed penalty must be made 
within 30 days of the date of mailing of the penalty notice by the 
Office of Foreign Assets Control.
    (3) The penalty notice shall inform the respondent of the 
requirement to furnish the respondent's taxpayer identification number 
pursuant to 31 U.S.C. 7701 and that such number will be used for 
purposes of collecting and reporting on any delinquent penalty amount.
    (4) The issuance of the penalty notice finding a violation and 
imposing a monetary penalty shall constitute final agency action. The 
respondent has the right to seek judicial review of that agency action 
in federal district court.

[70 FR 34064, June 13, 2005]



Sec. 538.705  Administrative collection; referral to United States 
Department of Justice.

    In the event that the respondent does not pay the penalty imposed 
pursuant to this part or make payment arrangements acceptable to the 
Director of the Office of Foreign Assets Control within 30 days of the 
mailing of the written notice of the imposition of the penalty, the 
matter may be referred for administrative collection measures by the 
Department of the Treasury or to the United States Department of Justice 
for appropriate action to recover the penalty in a civil suit in a 
Federal district court.



                          Subpart H_Procedures



Sec. 538.801  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.

[63 FR 35810, July 1, 1998, as amended at 68 FR 53658, Sept. 11, 2003]



Sec. 538.802  Delegation by the Secretary of the Treasury.

    Any action which the Secretary of the Treasury is authorized to take 
pursuant to Executive Order 13067 (3 CFR, 1997 Comp., p. 230), and any 
further Executive orders relating to the national emergency declared 
with respect to Sudan in Executive Order 13067, may be taken by the 
Director of the Office of Foreign Assets Control, or by any other person 
to whom the Secretary of

[[Page 211]]

the Treasury has delegated authority so to act.



                    Subpart I_Paperwork Reduction Act



Sec. 538.901  Paperwork Reduction Act notice.

    The information collection requirements in Sec. Sec. 538.506 and 
538.521 have been approved by the Office of Management and Budget 
(``OMB'') and assigned control number 1505-0169. For approval by OMB 
under the Paperwork Reduction Act of other information collections 
relating to recordkeeping and reporting requirements, to licensing 
procedures (including those pursuant to statements of licensing policy), 
and to 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.



       Sec. Appendix A to Part 538--Bulk Agricultural Commodities

    Notes:
    1. Appendix A sets forth bulk agricultural commodities eligible for 
sale pursuant to the licensing procedures and general licenses in Sec. 
538.523.
    2. Commodities are identified by their classification numbers in the 
Harmonized Tariff Schedule of the United States (see 19 U.S.C. 1202) 
(``HTS'').

------------------------------------------------------------------------
     HTS Number                            Commodity
------------------------------------------------------------------------
1001.10               Durum Wheat
1001.90               Other Wheat and Meslin, including seed, Red Spring
                       Wheat, White Winter Wheat, ``Canadian'' Western
                       Red Winter Wheat, Soft White Spring Wheat, and
                       Wheat not elsewhere specified
1101.00               Wheat or Meslin Flour
1006.10               Rice in the husk (paddy or rough)
1006.20               Husked (brown) Rice
1006.30               Semi-milled or wholly milled Rice, whether or not
                       polished or glazed
1006.40               Broken Rice
1102.30               Rice Flour
1103.14               Rice Groats, Meal and Pellets
1002.00               Rye
1003.00               Barley
1004.00               Oats
1007.00               Grain Sorghum
1005.00               Corn (Maize)
0713.31               Dried Beans including Vigna mungo (L.), Hepper,
                       and Vigna radiata (L.) Wilczek
0713.32               Small red (adzuki) beans
0713.33               Kidney beans, including white pea beans
0713.39               Beans, other
0713.50               Broad beans and horse beans
0713.10               Dried Peas (Pisum sativum)
0713.20               Chickpeas (garbanzos)
0713.40               Lentils
0713.90               Dried leguminous vegetables, shelled, not
                       elsewhere specified
1201.00               Soybeans, whether or not broken
2304.00               Soybean cake, meal and pellets
1507.10               Soybean oil, crude
1507.90               Soybean oil, other
1514.10               Rapeseed, colza and mustard oil, crude
1514.90               Rapeseed, colza and mustard oil, other
1515.21               Corn (Maize) oil, crude
1515.29               Corn (Maize) oil, other
1512.21               Cottonseed oil, crude
1512.29               Cottonseed oil, other
1517.90               Cottonseed oil, hydrogenated
1508.10               Peanut (ground-nut) oil, crude
1508.90               Peanut (ground-nut) oil, other
1515.50               Sesame oil
1512.11               Sunflower-seed oil, crude
1512.19               Sunflower-seed oil, other
1212.91               Sugar Beets, fresh, chilled, frozen or dried
1212.92               Sugar Cane, fresh, chilled, frozen or dried
1701.11               Cane Sugar, raw, solid form
1701.12               Beet Sugar, raw, solid form
1701.91               Cane or Beet Sugar, solid form, containing added
                       coloring or flavoring
1701.99               Cane or Beet Sugar, other, not elsewhere specified
------------------------------------------------------------------------


[65 FR 41789, Aug. 2, 1999, as amended at 76 FR 63195, Oct. 12, 2011]



PART 539_WEAPONS OF MASS DESTRUCTION TRADE CONTROL REGULATIONS--Table
of Contents



      Subpart A_Relation of This Part to Other Laws and Regulations

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

                         Subpart B_Prohibitions

539.201 Prohibited importation of goods, technology, or services.
539.202 Prohibition on import-related transactions.
539.203 Evasions; attempts; conspiracies.
539.204 Exempt transactions.

                      Subpart C_General Definitions

539.301 Designated foreign person.
539.302 Effective date.
539.303 Entity.
539.304 Entity owned or controlled by a person listed in appendix I to 
          this part.
539.305 General license.
539.306 Goods, technology, or services produced or provided by a 
          designated foreign person.
539.307 Importation into the United States.
539.308 Information or informational materials.

[[Page 212]]

539.309 License.
539.310 Person.
539.311 Specific license.
539.312 United States.
539.313 United States person; U.S. person.

                        Subpart D_Interpretations

539.401 Reference to amended sections.
539.402 Effect of amendment.
539.403 Transactions incidental to a licensed transaction.
539.404 Transshipments through the United States prohibited.
539.405 Importation of goods or technology from third countries.
539.406 Importation into and release from a bonded warehouse or foreign 
          trade zone.

  Subpart E_Licenses, Authorizations and Statements of Licensing Policy

539.501 General and specific licensing procedures.
539.502 Effect of license.
539.503 Exclusion from licenses.
539.504 Departments and agencies of the United States Government.

                            Subpart F_Reports

539.601 Records and reports.

                           Subpart G_Penalties

539.701 Penalties.
539.702 Prepenalty notice.
539.703 Response to prepenalty notice; informal settlement.
539.704 Penalty imposition or withdrawal.
539.705 Administrative collection; referral to United States Department 
          of Justice.

                          Subpart H_Procedures

539.801 Procedures.
539.802 Delegation by the Secretary of the Treasury.

                    Subpart I_Paperwork Reduction Act

539.901 Paperwork Reduction Act notice.

Appendix I to Part 539--Designated Foreign Persons

    Authority: 3 U.S.C. 301; 22 U.S.C. 2751-2799aa-2; 31 U.S.C. 321(b); 
50 U.S.C. 1601-1651, 1701-1706; Pub. L. 101-410, 104 Stat. 890 (28 
U.S.C. 2461 note); Pub. L. 110-96, 121 Stat. 1011; E.O. 12938, 59 FR 
59099, 3 CFR, 1994 Comp., p. 950; E.O. 13094, 63 FR 40803, 3 CFR, 1998 
Comp., p. 200.

    Source: 64 FR 8716, Feb. 23, 1999, unless otherwise noted.



      Subpart A_Relation of This Part to Other Laws and Regulations



Sec. 539.101  Relation of this part to other laws and regulations.

    (a) This part is separate from, and independent of, the other parts 
of this chapter, with the exception of part 501 of this chapter, the 
provisions 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 contexts 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.
    (b) No license 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. 539.201  Prohibited importation of goods, technology, or services.

    Except as otherwise authorized, the importation into the United 
States, on or after the effective date, directly or indirectly, of any 
goods, technology, or services produced or provided by a designated 
foreign person, other than information or informational materials, is 
prohibited.



Sec. 539.202  Prohibition on import-related transactions.

    Except as otherwise authorized, no United States person may finance, 
act as broker for, transfer, transport, or otherwise participate in the 
importation into the United States on or after the effective date of any 
goods, technology, or services produced or provided by a designated 
foreign person, other than information or informational materials.

[[Page 213]]



Sec. 539.203  Evasions; attempts; conspiracies.

    Any transaction by any United States person or within the United 
States on or after the effective date that evades or avoids, has the 
purpose of evading or avoiding, or attempts to violate any of the 
prohibitions set forth in this part is prohibited. Any conspiracy formed 
for the purpose of engaging in a transaction prohibited by this part is 
prohibited.



Sec. 539.204  Exempt transactions.

    (a) Personal communications. The prohibitions contained in this part 
do not apply to any postal, telegraphic, telephonic, or other personal 
communication, which 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, 
or to the exportation to any country, whether commercial or otherwise, 
regardless of format or medium of transmission, of any information or 
informational materials as defined in Sec. 539.308, or any transaction 
directly incident to such importation or exportation.
    (2) Paragraph (b)(1) of this section does not exempt from regulation 
or authorize transactions related to information or informational 
materials not fully created and in existence at the date of the 
transaction, or to the substantive or artistic alteration or enhancement 
of information or informational materials, or to the provision of 
marketing and business consulting services. Examples of prohibited 
transactions include, but are not limited to, payment of advances for 
information or informational materials not yet created and completed 
(with the exception of prepaid subscriptions for mass-market magazines 
and other periodical publications that are widely-circulated); 
importation into the United States of services to market, produce or co-
produce, create, or assist in the creation of information or 
informational materials; and payment of royalties to a designated 
foreign person with respect to income received for enhancements or 
alterations made by U.S. persons to informational or informational 
materials imported from a designated foreign person.
    (3) Paragraph (b)(1) of this section does not exempt from regulation 
or authorize the importation into the United States of or transactions 
incident to the importation into the United States or leasing of 
telecommunications transmission facilities (such as satellite links or 
dedicated lines) for use in the transmission of any data.
    (c) Travel. The prohibitions contained in this part do not apply to 
transactions ordinarily incident to travel to or from any country, 
including importation 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



Sec. 539.301  Designated foreign person.

    The term designated foreign person means any person determined by 
the Secretary of State pursuant to section 4(a) of Executive Order 12938 
of November 14, 1994 (59 FR 59099, 3 CFR, 1994 Comp., p. 950), as 
amended by section 1(a) of Executive Order 13094 of July 28, 1998 (63 FR 
40803, July 30, 1998), to be subject to import measures. Designated 
foreign persons are any persons listed in appendix I to this part and 
any entities owned or controlled by any person listed in appendix I to 
this part unless otherwise indicated in appendix I to this part.



Sec. 539.302  Effective date.

    The term effective date means the ``effective date'' specified in 
the relevant Federal Register notice issued by the Department of State 
identifying a designated foreign person. This date is listed after the 
name of each designated foreign person in appendix I to this part.



Sec. 539.303  Entity.

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

[[Page 214]]



Sec. 539.304  Entity owned or controlled by a person listed in appendix
I to this part.

    The term entity owned or controlled by a person listed in appendix I 
to this part includes any subsidiaries and branches, wherever located, 
of entities listed in appendix I to this part, any successors to such 
entities, and any persons acting or purporting to act for or on behalf 
of any of the foregoing.



Sec. 539.305  General license.

    The term general license means any license the terms of which are 
set forth in this part.



Sec. 539.306  Goods, technology, or services produced or provided by a
designated foreign person.

    With respect to the prohibitions in Sec. Sec. 539.201 and 539.202, 
the term goods, technology, or services produced or provided by a 
designated foreign person includes but is not limited to the following:
    (a) Goods grown, manufactured, extracted, or processed by a 
designated foreign person;
    (b) Technology developed, owned, licensed, or otherwise controlled 
by a designated foreign person;
    (c) Services performed by or on behalf of a designated foreign 
person, or by a third party under contract, directly or indirectly, to a 
designated foreign person, regardless of location.



Sec. 539.307  Importation into the United States.

    The term importation into the United States means:
    (a) With respect to goods or technology, the bringing of any goods 
or technology into the United States, except that in the case of goods 
or technology being transported by vessel, importation into the United 
States means the bringing of any goods or technology into the United 
States with the intent to unlade. See also Sec. 539.404.
    (b) With respect to services, the receipt in the United States of 
services or of the benefit of services wherever such services may be 
performed. The benefit of services is received in the United States if 
the services are:
    (1) Performed on behalf of or for the benefit of a person located in 
the United States;
    (2) Received by a person located in the United States;
    (3) Received by a person located outside the United States on behalf 
of or for the benefit of an entity organized in the United States; or
    (4) Received by an individual temporarily located outside the United 
States for the purpose of obtaining such services for use in the United 
States.
    (c) The following example illustrates the provisions of paragraph 
(b) of this section:

    Example: An employee of an entity organized in the United States may 
not, without specific authorization from the Office of Foreign Assets 
Control, receive from a designated foreign person consulting services 
for use in the United States.



Sec. 539.308  Information or informational materials.

    (a) For purposes of this part, the term information or informational 
materials includes, but is not limited to, publications, films, posters, 
phonograph records, photographs, microfilms, microfiche, tapes, compact 
disks, CD ROMs, artworks, and news wire feeds.
    (b) To be considered information or informational materials, 
artworks must be classified under chapter heading 9701, 9702, or 9703 of 
the Harmonized Tariff Schedule of the United States.



Sec. 539.309  License.

    Except as otherwise specified, the term license means any license or 
authorization contained in or issued pursuant to this part.



Sec. 539.310  Person.

    The term person means an individual or entity.



Sec. 539.311  Specific license.

    The term specific license means any license not set forth in this 
part but issued pursuant to this part.

[[Page 215]]



Sec. 539.312  United States.

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



Sec. 539.313  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 (including foreign branches), or any person in the 
United States.



                        Subpart D_Interpretations



Sec. 539.401  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, direction, or license issued pursuant to this part refers 
to the same as currently amended.



Sec. 539.402  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 or 
under the direction of the Director of the Office of Foreign Assets 
Control does not affect any act done or omitted, or any civil or 
criminal suit or 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. 539.403  Transactions incidental to a licensed transaction.

    Any transaction ordinarily incident to a licensed transaction and 
necessary to give effect to the licensed transaction is also authorized 
by the license. Except as specifically authorized by the terms of the 
license, prohibited transactions involving designated foreign persons 
not named in the license are not considered incidental to a licensed 
transaction and therefore remain prohibited.



Sec. 539.404  Transshipments through the United States prohibited.

    (a) The prohibitions in Sec. Sec. 539.201 and 539.202 apply to the 
importation into the United States, for transshipment or transit, of 
goods, technology, or services produced or provided by a designated 
foreign person that are intended or destined for third countries.
    (b) In the case of goods or technology transported by vessel, the 
prohibitions in Sec. Sec. 539.201 and 539.202 apply to the unlading in 
the United States and the intent to unlade in the United States of goods 
or technology produced or provided by a designated foreign person that 
is intended or destined for third countries.



Sec. 539.405  Importation of goods or technology from third countries.

    Importation into the United States from third countries of goods or 
technology is prohibited if undertaken with knowledge or reason to know 
that those goods contain raw materials or components produced or 
provided by a designated foreign person or technology produced or 
provided by a designated foreign person.



Sec. 539.406  Importation into and release from a bonded warehouse or
foreign trade zone.

    The prohibitions in Sec. Sec. 539.201 and 539.202 apply to 
importation into a bonded warehouse or a foreign trade zone of the 
United States.



  Subpart E_Licenses, Authorizations and Statements of Licensing Policy



Sec. 539.501  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.

[64 FR 8716, Feb. 23, 1999, as amended at 68 FR 53658, Sept. 11, 2003]

[[Page 216]]



Sec. 539.502  Effect of license.

    (a) No license contained in this part, or otherwise issued by or 
under the direction of the Director of the Office of Foreign Assets 
Control pursuant to this part, authorizes or validates any transaction 
effected prior to the issuance of the license, unless the prior 
transaction is specifically authorized in such license.
    (b) No regulation, ruling, instruction, or license authorizes any 
transaction prohibited by this part unless the regulation, ruling, 
instruction, or license is issued by the Office of Foreign Assets 
Control and specifically refers to this part. No regulation, ruling, 
instruction, or license referring to this part authorizes any 
transaction prohibited by any provision of this chapter unless the 
regulation, ruling, instruction, or license specifically refers to such 
provision.
    (c) Any regulation, ruling, instruction, or license authorizing any 
transaction otherwise prohibited by this part has the effect of removing 
from the transaction a prohibition or prohibitions contained in this 
part, 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 that would not otherwise exist under ordinary 
principles of law in or with respect to any property.



Sec. 539.503  Exclusion from licenses.

    The Director of the Office of Foreign Assets Control reserves the 
right to exclude any person, property, or transaction from the operation 
of any license or from the privileges conferred by any license. The 
Director of the Office of Foreign Assets Control also reserves the right 
to restrict the applicability of any license to particular persons, 
property, transactions, or classes thereof. Such actions are binding 
upon all persons receiving actual or constructive notice of the 
exclusions or restrictions.



Sec. 539.504  Departments and agencies of the United States Government.

    (a) Departments and agencies of the United States Government may by 
written authorization signed by the head of the Department or Agency or 
his designee provide for:
    (1) Procurement contracts necessary to meet U.S. operational 
military requirements or requirements under defense production 
agreements; intelligence requirements; sole source suppliers, spare 
parts, components, routine servicing and maintenance of products for the 
United States Government; and medical and humanitarian items; and
    (2) Performance pursuant to contracts in force as of 12:01 a.m. EDT, 
July 29, 1998, under appropriate circumstances.
    (b) Such written authorization shall:
    (1) Include details about the goods, technology, and services which 
have been approved for importation; the rationale for such approval; and 
24-hour-a-day contact information for the approving official or designee 
for use by the U.S. Customs Service should questions arise about an 
approved import;
    (2) Be in the form of license, regulation, order, directive, or 
exception;
    (3) Include information about the results of prior written 
consultation with the Under Secretary of State for Arms Control and 
International Security Affairs (through the Office of Chemical, 
Biological and Missile Nonproliferation and the Office of the Assistant 
Legal Adviser for Political-Military Affairs); and
    (4) Be provided to U.S. Customs Service officials upon the 
importation of any goods or technology covered by an authorization 
described in paragraph (a) of this section in a form which clearly 
establishes that the imported goods or technology is covered by the 
authorization.



                            Subpart F_Reports



Sec. 539.601  Records and reports.

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

[[Page 217]]



                           Subpart G_Penalties



Sec. 539.701  Penalties.

    (a) Attention is directed to section 206 of the International 
Emergency Economic Powers Act (the ``Act'') (50 U.S.C. 1705), which is 
applicable to violations of the provisions of any license, ruling, 
regulation, order, direction, or instruction issued by or pursuant to 
the direction or authorization of the Secretary of the Treasury pursuant 
to this part or otherwise under the Act.
    (1) A civil penalty not to exceed the amount set forth in Section 
206 of the Act 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 the Act.

    Note to paragraph (a)(1) of Sec. 539.701: As of June 10, 2008, the 
Act provides for a maximum civil penalty not to exceed the greater of 
$250,000 or an amount that is twice the amount of the transaction that 
is the basis of the violation with respect to which the penalty is 
imposed.

    (2) A person who willfully commits, willfully attempts to commit, or 
willfully conspires to commit, or aids or abets in the commission of a 
violation of any license, order, regulation, or prohibition shall, upon 
conviction, be fined not more than $1,000,000, or if a natural person, 
may be imprisoned for not more than 20 years, or both.
    (b) Adjustments to penalty amounts. (1) The civil penalties provided 
in the Act 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 the Act are subject to 
adjustment pursuant to 18 U.S.C. 3571.
    (c) Attention is also directed to 18 U.S.C. 1001, which provides 
that whoever, in any matter within the jurisdiction of any department or 
agency of the United States, knowingly and willfully falsifies, 
conceals, or covers up by any trick, scheme, or device a material fact, 
or makes any false, fictitious, or fraudulent statement or 
representation or makes or uses any false writing or document knowing 
the same to contain any false, fictitious, or fraudulent statement or 
entry shall be fined under title 18, United States Code, or imprisoned 
not more than five years, or both.
    (d) Violations of this part may also be subject to relevant 
provisions of other applicable laws.

[64 FR 8716, Feb. 23, 1999, as amended at 71 FR 29253, May 22, 2006; 73 
FR 32653, June 10, 2008]



Sec. 539.702  Prepenalty notice.

    (a) When required. If the Director of the Office of Foreign Assets 
Control has reasonable cause to believe that there has occurred a 
violation of any provision of this part or a violation of the provisions 
of any license, ruling, regulation, order, direction, or instruction 
issued by or pursuant to the direction or authorization of the Secretary 
of the Treasury pursuant to this part or otherwise under the 
International Emergency Economic Powers Act, and the Director determines 
that further proceedings are warranted, the Director shall issue to the 
person concerned a notice of intent to impose a monetary penalty. This 
prepenalty notice shall be issued whether or not another agency has 
taken any action with respect to this matter.
    (b) Contents--(1) Facts of violation. The prepenalty notice shall 
describe the violation, specify the laws and regulations allegedly 
violated, and state the amount of the proposed monetary penalty.
    (2) Right to respond. The prepenalty notice also shall inform the 
respondent of respondent's right to make a written presentation within 
30 days of the date of mailing of the notice as to why a monetary 
penalty should not be imposed or why, if imposed, the monetary penalty 
should be in a lesser amount than proposed.



Sec. 539.703  Response to prepenalty notice; informal settlement.

    (a) Deadline for response. The respondent shall have 30 days from 
the date of mailing of the prepenalty notice to make a written response 
to the Director of the Office of Foreign Assets Control.
    (b) Form and contents of response. The written response need not be 
in any particular form, but must contain information sufficient to 
indicate that it is in response to the prepenalty notice.

[[Page 218]]

It should contain responses to the allegations in the prepenalty notice 
and set forth the reasons why the respondent believes the penalty should 
not be imposed or why, if imposed, it should be in a lesser amount than 
proposed.
    (c) Informal settlement. In addition or as an alternative to a 
written response to a prepenalty notice issued pursuant to this section, 
the respondent or respondent's representative may contact the Office of 
Foreign Assets Control as advised in the prepenalty notice to propose 
the settlement of allegations contained in the prepenalty notice and 
related matters. In the event of settlement at the prepenalty stage, the 
claim proposed in the prepenalty notice will be withdrawn, the 
respondent is not required to take a written position on allegations 
contained in the prepenalty notice, and the Office of Foreign Assets 
Control will make no final determination as to whether a violation 
occurred. The amount accepted in settlement of allegations in a 
prepenalty notice may vary from the civil penalty that might finally be 
imposed in the event of a formal determination of violation. In the 
event no settlement is reached, the 30-day period specified in paragraph 
(a) of this section for written response to the prepenalty notice 
remains in effect unless additional time is granted by the Office of 
Foreign Assets Control.



Sec. 539.704  Penalty imposition or withdrawal.

    (a) No violation. If, after considering any response to a prepenalty 
notice and any relevant facts, the Director of the Office of Foreign 
Assets Control determines that there was no violation by the respondent 
named in the prepenalty notice, the Director promptly shall notify the 
respondent in writing of that determination and that no monetary penalty 
will be imposed.
    (b) Violation. If, after considering any response to a prepenalty 
notice and any relevant facts, the Director of the Office of Foreign 
Assets Control determines that there was a violation by the respondent 
named in the prepenalty notice, the Director promptly shall issue a 
written notice of the imposition of the monetary penalty to the 
respondent.
    (1) The penalty notice shall inform the respondent that payment of 
the assessed penalty must be made within 30 days of the date of mailing 
of the penalty notice.
    (2) The penalty notice shall inform the respondent of the 
requirement to furnish the respondent's taxpayer identification number 
pursuant to 31 U.S.C. 7701 and that such number will be used for 
purposes of collecting and reporting on any delinquent penalty amount.



Sec. 539.705  Administrative collection; referral to United States 
Department of Justice.

    In the event that the respondent does not pay the penalty imposed 
pursuant to this part or make payment arrangements acceptable to the 
Director of the Office of Foreign Assets Control within 30 days of the 
date of mailing of the penalty notice, the matter may be referred for 
administrative collection measures by the Department of the Treasury or 
to the United States Department of Justice for appropriate action to 
recover the penalty in a civil suit in a Federal district court.



                          Subpart H_Procedures



Sec. 539.801  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.

[64 FR 8716, Feb. 23, 1999, as amended at 68 FR 53658, Sept. 11, 2003]



Sec. 539.802  Delegation by the Secretary of the Treasury.

    Any action that the Secretary of the Treasury is authorized to take 
pursuant to Executive Order 12938 of November 14, 1994 (59 FR 59099, 3 
CFR, 1994 Comp., p. 950), as amended by Executive Order 13094 of July 
28, 1998 (63 FR 40803, July 30, 1998), and any further Executive orders 
relating to the national emergency declared in Executive Order 12938 may 
be taken by the Director of the Office of Foreign Assets Control or by 
any other person to whom

[[Page 219]]

the Secretary of the Treasury has delegated authority so to act.



                    Subpart I_Paperwork Reduction Act



Sec. 539.901  Paperwork Reduction Act notice.

    For approval by the Office of Management and Budget (``OMB'') under 
the Paperwork Reduction Act of 1995 (44 U.S.C. 3507) of information 
collections relating to recordkeeping and reporting requirements, 
licensing procedures (including those pursuant to statements of 
licensing policy), and other procedures, see Sec. 501.901 of this 
chapter. An agency may not conduct or sponsor, and a person is not 
required to respond to, a collection of information unless it displays a 
valid control number assigned by OMB.



         Sec. Appendix I to Part 539--Designated Foreign Persons

    The following foreign persons have been determined by the Secretary 
of State to have materially contributed or attempted to contribute 
materially to the efforts of a foreign country, project, or entity of 
proliferation concern to use, acquire, design, develop, produce, or 
stockpile weapons of mass destruction or missiles capable of delivering 
such weapons, for purposes of section 4(a) of Executive Order 12938, as 
amended by section 1(a) of Executive Order 13094, and to be subject to 
import measures authorized in Executive Orders 12938 and 13094. They, 
and any entities owned or controlled by them, unless indicated 
otherwise, are designated foreign persons for purposes of this part. The 
applicable effective date and citation to the Federal Register for each 
such person is given in brackets after that person's name and 
identifying information:
1. Baltic State Technical University, including at 1/21, 1-ya 
Krasnoarmeiskaya Ul., 198005 St. Petersburg, Russia [July 30, 1998; 63 
FR 42089, August 6, 1998].
2. Europalace 2000, including at Moscow, Russia [July 30, 1998; 63 FR 
42089, August 6, 1998].
3. Glavkosmos, including at 9 Krasnoproletarskaya St., 103030 Moscow, 
Russia [July 30, 1998; 63 FR 42089, August 6, 1998].
4. Grafit, also known as (``aka'') State Scientific Research Institute 
of Graphite or NIIGRAFIT, including at 2 Ulitsa Elektrodnaya, 111524 
Moscow, Russia [July 30, 1998; 63 FR 42089, August 6, 1998].
5. MOSO Company, including at Moscow, Russia [July 30, 1998; 63 FR 
42089, August 6, 1998].
6. D. Mendeleyev University of Chemical Technology of Russia, including 
at 9 Miusskaya Sq., Moscow 125047, Russia [January 8, 1999; 64 FR 2935, 
January 19, 1999].
7. Moscow Aviation Institute (MAI), including at 4 Volokolamskoye 
Shosse, Moscow 125871, Russia [January 8, 1999; 64 FR 2935, January 19, 
1999].
8. The Scientific Research and Design Institute of Power Technology, aka 
NIKIET, Research and Development Institute of Power Engineering [RDIPE], 
and ENTEK, including at 101000, P.O. Box 788, Moscow, Russia.

[64 FR 8716, Feb. 23, 1999, as amended at 66 FR 57381, Nov. 15, 2001]



PART 540_HIGHLY ENRICHED URANIUM (HEU) AGREEMENT ASSETS CONTROL 
REGULATIONS--Table of Contents



      Subpart A_Relation of This Part to Other Laws and Regulations

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

                         Subpart B_Prohibitions

540.201 Prohibited transactions involving blocked property.
540.202 Effect of transfers violating the provisions of this part.
540.203 Holding of funds in interest-bearing accounts; investment and 
          reinvestment.

                      Subpart C_General Definitions

540.301 Blocked account; blocked property.
540.302 Effective date.
540.303 Entity.
540.304 Government of the Russian Federation.
540.305 HEU Agreements.
540.306 Highly Enriched Uranium (HEU).
540.307 Licenses; general and specific.
540.308 Low Enriched Uranium (LEU).
540.309 Natural uranium.
540.310 Person.
540.311 Property; property interest.
540.312 Transfer.
540.313 United States.
540.314 United States person; U.S. person.
540.315 Uranium-235 (U235).
540.316 Uranium enrichment.
540.317 Uranium feed; natural uranium feed.
540.318 Uranium Hexafluoride (UF6).
540.319 U.S. financial institution.

[[Page 220]]

                        Subpart D_Interpretations

540.401 Reference to amended sections.
540.402 Effect of amendment.
540.403 Termination and acquisition of an interest in blocked property.
540.404 Setoffs prohibited.
540.405 Transactions incidental to a licensed transaction.

 Subpart E_Licenses, Authorizations, and Statements of Licensing Policy

540.500 Licensing procedures.
540.501 Effect of license or authorization.
540.502 Exclusion from licenses.
540.503 Payments and transfers to blocked accounts in U.S. financial 
          institutions.
540.504 Entries in certain accounts for normal service charges 
          authorized.

                            Subpart F_Reports

540.601 Records and reports.

                           Subpart G_Penalties

540.701 Penalties.
540.702 Prepenalty notice.
540.703 Response to prepenalty notice; informal settlement.
540.704 Penalty imposition or withdrawal.
540.705 Administrative collection; referral to United States Department 
          of Justice.

                          Subpart H_Procedures

540.801 Procedures.
540.802 Delegation by the Secretary of the Treasury.

                    Subpart I_Paperwork Reduction Act

540.901 Paperwork Reduction Act notice.

    Authority: 3 U.S.C. 301; 31 U.S.C. 321(b); 50 U.S.C. 1601-1651, 
1701-1706; Pub. L. 101-410, 104 Stat. 890 (28 U.S.C. 2461 note); Pub. L. 
110-96, 121 Stat. 1011; E.O. 13159, 65 FR 39279, 3 CFR, 2000 Comp., p. 
277.

    Source: 66 FR 38555, July 25, 2001, unless otherwise noted.



      Subpart A_Relation of This Part to Other Laws and Regulations



Sec. 540.101  Relation of this part to other laws and regulations.

    (a) 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.
    (b) Nothing contained in these regulations shall relieve a person 
from any requirement to obtain a license or other authorization from any 
department or agency of the United States Government in compliance with 
applicable laws and regulations subject to the jurisdiction of that 
department or agency, and no license 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. 540.201  Prohibited transactions involving blocked property.

    (a) Except as otherwise authorized by regulations, orders, 
directives, rulings, instructions, licenses, or otherwise, the property 
or property interests of the Government of the Russian Federation that 
are directly related to the implementation of the Highly Enriched 
Uranium (HEU) Agreements, that are in the United States, that hereafter 
come within the United States, or that are or hereafter come within the 
possession or control of U.S. persons are blocked and may not be 
transferred, paid, exported, withdrawn or otherwise dealt in.
    (b) Unless otherwise authorized by this part or by a specific 
license expressly referring to this part, any attachment, judgment, 
decree, lien, execution, garnishment, or other judicial process is null 
and void with respect to any blocked property or interest in blocked 
property covered by this part.

[[Page 221]]



Sec. 540.202  Effect of transfers violating the provisions of this part.

    (a) Any transfer after the effective date (see Sec. 540.302) 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. 540.201(a) is null and void and shall not be 
the basis for the assertion or recognition of any interest in or right, 
remedy, power, or privilege with respect to such property or property 
interests.
    (b) No transfer before the effective date shall be the basis for the 
assertion or recognition of any right, remedy, power, or privilege with 
respect to, or any interest in, any property or interest in property 
blocked pursuant to Sec. 540.201, unless the person with whom such 
property is held or maintained, prior to that date, had written notice 
of the transfer or by any written evidence had recognized such transfer.
    (c) Unless otherwise provided, an appropriate license or other 
authorization issued by or pursuant to the direction or authorization of 
the Director of the Office of Foreign Assets Control before, during, or 
after a transfer shall validate such transfer or render it enforceable 
to the same extent that it would be valid or enforceable but for the 
provisions of the International Emergency Economic Powers Act, this 
part, and any regulation, order, directive, ruling, instruction, or 
license issued pursuant to this part.
    (d) The Director of the Office of Foreign Assets Control may, in his 
discretion, retroactively license a transfer of property that is null 
and void or unenforceable by virtue of the provisions of this section so 
that such a transfer shall not be deemed to be null and void or 
unenforceable as to any person with whom such property was held or 
maintained (and as to such person only) in cases in which such person is 
able to establish to the satisfaction of the Director of the Office of 
Foreign Assets Control each of the following:
    (1) Such transfer did not represent a willful violation of the 
provisions of this part by the person with whom such property was held 
or maintained;
    (2) The person with whom such property 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 was held or maintained filed 
with the Office of Foreign Assets Control a report setting forth in full 
the circumstances relating to such transfer promptly upon discovery 
that:
    (i) Such transfer was in violation of the provisions of this part or 
any regulation, ruling, instruction, license or other direction, or 
authorization issued pursuant to this part;
    (ii) Such transfer was not licensed or authorized by the Director of 
the Office of Foreign Assets Control; or
    (iii) If a license did purport to cover the transfer, such license 
had been obtained by misrepresentation of a third party or withholding 
of material facts or was otherwise fraudulently obtained.

    Note to paragraph (d) of Sec. 540.202: The filing of a report in 
accordance with the provisions of paragraph (d)(3) of this section shall 
not be deemed evidence that the terms of paragraphs (d)(1) and (d)(2) of 
this section have been satisfied.



Sec. 540.203  Holding of funds in interest-bearing accounts; investment
and reinvestment.

    (a) Except as provided in paragraphs (c) or (d) of this section, or 
as otherwise directed by the Office of Foreign Assets Control, any U.S. 
person holding funds, such as currency, bank deposits, or liquidated 
financial obligations subject to Sec. 540.201 shall hold or place such 
funds in a blocked interest-bearing account located in the United 
States.
    (b)(1) For purposes of this section the term blocked interest-
bearing account means a blocked account:

[[Page 222]]

    (i) In a federally-insured U.S. bank, thrift institution, or credit 
union, provided the funds are earning interest at rates which are 
commercially reasonable; or
    (ii) With a broker or dealer registered with the Securities and 
Exchange Commission under the Securities Exchange Act of 1934, provided 
the funds are invested in a money market fund or U.S. Treasury Bills.
    (2) 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.
    (3) Funds held or placed in a blocked account pursuant to this 
paragraph (b) may not be invested in instruments the maturity of which 
exceeds 180 days. If interest is credited to a separate blocked account 
or sub-account, the name of the account party on each account must be 
the same.
    (c) Blocked funds held in instruments the maturity of which exceeds 
180 days at the time the funds become subject to Sec. 540.201 may 
continue to be held until maturity in the original instrument, provided 
any interest, earnings, or other proceeds derived therefrom are paid 
into a blocked interest-bearing account in accordance with paragraph (b) 
or (d) or this section.
    (d) Blocked funds held in accounts or instruments outside the United 
States at the time the funds become subject to Sec. 540.201 may 
continue to be held in the same type of accounts or instruments, 
provided the funds earn interest at rates which are commercially 
reasonable.
    (e) 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 at the time the property becomes subject to 
Sec. 540.201. However, the Office of Foreign Assets Control may issue 
licenses permitting or directing such sales in appropriate cases.
    (f) Except as otherwise licensed, authorized or directed by OFAC, 
funds subject to this section may not be invested, used for collateral 
or reinvested in a manner which provides immediate financial or economic 
benefit or access to the Government of the Russian Federation or its 
entities, nor may their holder cooperate in or facilitate the pledging 
or other attempted use as collateral of blocked funds or other assets.



                      Subpart C_General Definitions



Sec. 540.301  Blocked account; blocked property.

    The terms blocked account and blocked property shall mean any 
account or property subject to the prohibition in Sec. 540.201 and with 
respect to which payments, transfers, exportations, withdrawals, or 
other dealings may not be made or effected except pursuant to an 
authorization or license from the Office of Foreign Assets Control 
expressly authorizing such action.



Sec. 540.302  Effective date.

    The term effective date refers to the effective date of the 
applicable prohibitions and directives contained in this part which is 
12:01 a.m., Eastern Daylight Time, June 22, 2000.



Sec. 540.303  Entity.

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



Sec. 540.304  Government of the Russian Federation.

    (a) The term Government of the Russian Federation means the 
Government of the Russian Federation, any political subdivision, agency, 
or instrumentality thereof, and any person owned or controlled by, or 
acting for or on behalf of, the Government of the Russian Federation.
    (b) Any person or entity to the extent such person or entity is or 
has been, or to the extent that there is reasonable cause to believe 
that such person or entity is, or has been, since the effective date 
(see Sec. 540.302), acting or purporting to act directly or indirectly 
for or on behalf of any of the foregoing.



Sec. 540.305  HEU Agreements.

    The term HEU Agreements means the Agreement Between the Government 
of the United States of America and the Government of the Russian 
Federation Concerning the Disposition of Highly Enriched Uranium 
Extracted

[[Page 223]]

from Nuclear Weapons, dated February 18, 1993; the Initial Implementing 
Contract, Contract Number DE-AC01-93NE50067, dated January 14, 1994; and 
all current and future amendments thereto; as well as the related 
current and future implementing agreements, memoranda of understanding, 
protocols, and contracts, including all current and future amendments 
thereto, to include without limitation the following:
    (a) Memorandum of Agreement Between the United States, Acting By and 
Through the United States Department of State, and the United States 
Department of Energy and the United States Enrichment Corporation 
(USEC), for USEC to Serve as the United States Government's Executive 
Agent under the Agreement Between the United States and the Russian 
Federation Concerning the Disposition of Highly Enriched Uranium 
Extracted from Nuclear Weapons, dated April 18, 1997;
    (b) Agreement Between the United States Department of Energy and the 
Ministry of the Russian Federation for Atomic Energy Concerning the 
Transfer of Source Material to the Russian Federation signed at 
Washington on March 24, 1999, with Implementing Agreement and 
Administrative Arrangement, dated March 24, 1999, and related letter 
agreements; and
    (c) UF6 Feed Component Implementing Contract Among Cameco Europe 
S.A. and Compagnie G[eacute]n[eacute]ral des Mati[egrave]res 
Nucl[eacute]aires and Nukem, Inc. and Nukem Nuklear Gmbh and OAO 
Techsnabexport, and Tenex Contract  08843672/90100-02D, dated 
March 24, 1999.



Sec. 540.306  Highly Enriched Uranium (HEU).

    The term highly enriched uranium or HEU means uranium enriched to 
twenty (20) percent or greater in the isotope U235.



Sec. 540.307  Licenses; general and specific.

    (a) Except as otherwise specified, the term license means any 
license or authorization contained in or issued pursuant to this part.
    (b) The term general license means any license or authorization the 
terms of which are set forth in subpart E of this part.
    (c) The term specific license means any license or authorization not 
set forth in subpart E of this part but issued pursuant to this part.

    Note to Sec. 540.307. See Sec. 501.801 of this chapter on 
licensing procedures.



Sec. 540.308  Low Enriched Uranium (LEU).

    The term low enriched uranium or LEU means uranium enriched to less 
than twenty (20) percent in the isotope U235.



Sec. 540.309  Natural uranium.

    The term natural uranium means uranium found in nature, with an 
average concentration of 0.711 percent by weight of the isotope U235.



Sec. 540.310  Person.

    The term person means an individual or entity.



Sec. 540.311  Property; property interest.

    The terms property and property interest include, but are not 
limited to, money, checks, drafts, bullion, bank deposits, savings 
accounts, debts, indebtedness, obligations, notes, guarantees, 
debentures, stocks, bonds, coupons, any other financial instruments, 
bankers acceptances, mortgages, pledges, liens or other rights in the 
nature of security, warehouse receipts, bills of lading, trust receipts, 
bills of sale, any other evidences of title, ownership, or indebtedness, 
letters of credit and any documents relating to any rights or 
obligations thereunder, powers of attorney, goods, wares, merchandise, 
chattels, stocks on hand, ships, goods on ships, real estate mortgages, 
deeds of trust, vendors' sales agreements, land contracts, leaseholds, 
ground rents, real estate and any other interest therein, options, 
negotiable instruments, trade acceptances, royalties, book accounts, 
accounts payable, judgments, patents, trademarks, copyrights, insurance 
policies, safe deposit boxes and their contents, annuities, pooling 
agreements, services of any nature whatsoever, contracts of whatever 
nature whatsoever, and any other property, real, personal, or mixed, 
tangible

[[Page 224]]

or intangible, or interests therein, present, future, or contingent.



Sec. 540.312  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 and, without limitation upon the foregoing, 
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. 540.313  United States.

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



Sec. 540.314  United States person; U.S. person.

    The term United States person or U.S. person means any United States 
citizen, permanent resident alien, juridical person 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. 540.315  Uranium-235 (U235).

    The term uranium-235 or U235 means the fissile isotope found in 
natural uranium.



Sec. 540.316  Uranium enrichment.

    The term uranium enrichment means the process of increasing the 
concentration of the isotope U235 relative to that of the isotope U238.



Sec. 540.317  Uranium feed; natural uranium feed.

    The term uranium feed or natural uranium feed means natural uranium 
in the form of UF6 suitable for uranium enrichment.



Sec. 540.318  Uranium Hexafluoride (UF6).

    The term uranium hexafluoride or UF6 means a compound of uranium and 
fluorine.



Sec. 540.319  U.S. financial institution.

    The term U.S. financial institution means any U.S. entity (including 
its foreign branches) that is engaged in the business of accepting 
deposits, making, granting, transferring, holding, or brokering loans or 
credits, or purchasing or selling foreign exchange, securities, 
commodity futures or options, or procuring purchasers and sellers 
thereof, as principal or agent; including but not limited to, depository 
institutions, banks, savings banks, trust companies, securities brokers 
and dealers, commodity futures and options brokers and dealers, forward 
contract and foreign exchange merchants, securities and commodities 
exchanges, clearing corporations, investment companies, employee benefit 
plans, and U.S. holding companies, U.S. affiliates, or U.S. subsidiaries 
of any of the foregoing. This term includes those branches, offices and 
agencies of foreign financial institutions that are located in the 
United States, but not such institutions' foreign branches, offices, or 
agencies.



                        Subpart D_Interpretations



Sec. 540.401  Reference to amended sections.

    Except as otherwise specified, reference to any section of this part 
or to

[[Page 225]]

any regulation, ruling, order, instruction, direction, or license issued 
pursuant to this part shall be deemed to refer to the same as currently 
amended.



Sec. 540.402  Effect of amendment.

    Any amendment, modification, or revocation of any section of this 
part or of any order, regulation, ruling, instruction, or license issued 
by or under the direction of the Director of the Office of Foreign 
Assets Control shall not, unless otherwise specifically provided, affect 
any act done or omitted to be done, or any civil or criminal suit or 
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. 540.403  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 the Government of the Russian Federation, such 
property shall no longer be deemed to be property in which the 
Government of the Russian Federation has or has had an interest unless 
there exists in the property another interest of the Government of the 
Russian Federation, 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 the 
Government of the Russian Federation, such property shall be deemed to 
be property in which there exists an interest of the Government of the 
Russian Federation.



Sec. 540.404  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. 540.201 if effected after the effective date (see Sec. 
540.302).



Sec. 540.405  Transactions incidental to a licensed transaction.

    Any transaction ordinarily incident to a licensed transaction and 
necessary to give effect thereto is also authorized, except for any 
attachment, judgment, decree, lien, execution, garnishment, or other 
judicial process which has the effect of encumbering the property or 
interest in property of the Government of the Russian Federation 
directly related to the implementation of the HEU agreements, or any 
transaction involving a debit to a blocked account or transfer of 
blocked property not explicitly authorized within the terms of a 
license.



 Subpart E_Licenses, Authorizations, and Statements of Licensing Policy



Sec. 540.500  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.

[68 FR 53658, Sept. 11, 2003]



Sec. 540.501  Effect of license or authorization.

    (a) No license or other authorization contained in this part, or 
otherwise issued by or under the direction of the Director of the Office 
of Foreign Assets Control, authorizes or validates any transaction 
effected prior to the issuance of the license, unless specifically 
provided in such license or authorization.
    (b) No regulation, ruling, instruction, or license authorizes any 
transaction prohibited under this part unless the regulation, ruling, 
instruction or license is issued by the Office of Foreign Assets Control 
and specifically refers to this part. No regulation, ruling, 
instruction, or license referring to this part shall be deemed to 
authorize any transaction prohibited by any provision of this chapter 
unless the regulation, ruling, instruction, or licenses specifically 
refers to such provision.

[[Page 226]]

    (c) Any regulation, ruling, instruction, or license authorizing any 
transaction otherwise prohibited under this part has the effect of 
removing a prohibition contained in this part from the transaction, but 
only to the extent specifically stated by its terms. Unless the 
regulation, ruling, instruction, or license otherwise specifies, such an 
authorization does not create any right, duty, obligation, claim, or 
interest in, or with respect to, any property which would not otherwise 
exist under ordinary principles of law.



Sec. 540.502  Exclusion from licenses.

    The Director of the Office of Foreign Assets Control reserves the 
right to exclude any person, property, or transaction from the operation 
of any license or from the privileges conferred by any license. The 
Director of the Office of Foreign Assets Control also reserves the right 
to restrict the applicability of any license to particular persons, 
property, transactions, or classes thereof. Such actions are binding 
upon all persons receiving actual or constructive notice of the 
exclusions or restrictions.



Sec. 540.503  Payments and transfers to blocked accounts in U.S. 
financial institutions.

    Except as otherwise authorized, licensed or directed by the Office 
of Foreign Assets Control, any payment of funds or transfer of credit in 
which the Government of the Russian Federation has any interest that is 
directly related to the implementation of the HEU Agreements and 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 only be made to 
another blocked account held in the same name. U.S. financial 
institutions are authorized to engage in routine currency exchange 
transfers involving funds directly associated with the implementation of 
the HEU agreements that flow through correspondence accounts in U.S. 
financial institutions.

    Note to Sec. 540.503. Please refer to Sec. 501.603 of this chapter 
for mandatory reporting requirements regarding financial transfers. See 
also Sec. 501.203 concerning the obligation to hold blocked funds in 
interest-bearing accounts.



Sec. 540.504  Entries in certain accounts for normal service charges 
authorized.

    (a) A U.S. financial institution is authorized to debit any blocked 
account held by that financial institution in payment or reimbursement 
for normal service charges owed to it by the owner of the blocked 
account.
    (b) As used in this section, the term normal service charge 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.



                            Subpart F_Reports



Sec. 540.601  Records and reports.

    For additional provisions relating to required records and reports, 
see part 501, subpart C, of this chapter.



                           Subpart G_Penalties



Sec. 540.701  Penalties.

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

[[Page 227]]

to violate, or causes a violation of any license, order, regulation, or 
prohibition issued under the Act.

    Note to paragraph (a)(1) of Sec. 540.701: As of June 10, 2008, the 
Act provides for a maximum civil penalty not to exceed the greater of 
$250,000 or an amount that is twice the amount of the transaction that 
is the basis of the violation with respect to which the penalty is 
imposed.

    (2) A person who willfully commits, willfully attempts to commit, or 
willfully conspires to commit, or aids or abets in the commission of a 
violation of any license, order, regulation, or prohibition shall, upon 
conviction, be fined not more than $1,000,000, or if a natural person, 
may be imprisoned for not more than 20 years, or both.
    (b) Adjustments to penalty amounts. (1) The civil penalties provided 
in the Act 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 the Act are subject to 
adjustment pursuant to 18 U.S.C. 3571.
    (c) Attention is also directed to 18 U.S.C. 1001, which provides 
that whoever, in any matter within the jurisdiction of the executive, 
legislative, or judicial branch of the Government of the United States, 
knowingly and willfully 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, or imprisoned not more than five years, or 
both.
    (d) Violations of this part may also be subject to relevant 
provisions of other applicable laws.

[66 FR 38555, July 25, 2001, as amended at 71 FR 29253, May 22, 2006; 73 
FR 32653, June 10, 2008]



Sec. 540.702  Prepenalty notice.

    (a) When required. If the Director of the Office of Foreign Assets 
Control has reasonable cause to believe that there has occurred a 
violation of any provision of this part or a violation of the provisions 
of any license, ruling, regulation, order, direction, or instruction 
issued by or pursuant to the direction or authorization of the Secretary 
of the Treasury pursuant to this part or otherwise under the 
International Emergency Economic Powers Act, and the Director determines 
that further proceedings are warranted, the Director shall notify the 
alleged violator of the agency's intent to impose a monetary penalty by 
issuing a prepenalty notice. The prepenalty notice shall be in writing. 
The prepenalty notice may be issued whether or not another agency has 
taken any action with respect to the matter.
    (b) Contents of notice--(1) Facts of violation. The prepenalty 
notice shall describe the violation, specify the laws and regulations 
allegedly violated, and state the amount of the proposed monetary 
penalty.
    (2) Right to respond. The prepenalty notice also shall inform the 
respondent of respondent's right to make a written presentation within 
the applicable 30 day period set forth in Sec. 540.703 as to why a 
monetary penalty should not be imposed or why, if imposed, the monetary 
penalty should be in a lesser amount than proposed.
    (c) Informal settlement prior to issuance of prepenalty notice. At 
any time prior to the issuance of a prepenalty notice, an alleged 
violator may request in writing that, for a period not to exceed sixty 
(60) days, the agency withhold issuance of the prepenalty notice for the 
exclusive purpose of effecting settlement of the agency's potential 
civil monetary penalty claims. In the event the Director grants the 
request, under terms and conditions within his discretion, the Office of 
Foreign Assets Control will agree to withhold issuance of the prepenalty 
notice for a period not to exceed 60 days and will enter into settlement 
negotiations of the potential civil monetary penalty claim.



Sec. 540.703  Response to prepenalty notice; informal settlement.

    (a) Deadline for response. The respondent may submit a response to 
the prepenalty notice within the applicable 30 day period set forth in 
this paragraph. The Director may grant, at his discretion, an extension 
of time in which to submit a response to the

[[Page 228]]

prepenalty notice. The failure to submit a response within the 
applicable time period set forth in this paragraph shall be deemed to be 
a waiver of the right to respond.
    (1) Computation of time for response. A response to the prepenalty 
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 prepenalty notice was mailed. 
If the respondent refused delivery or otherwise avoided receipt of the 
prepenalty notice, a response must be postmarked or date-stamped on or 
before the 30th day after the date on the stamped postal receipt 
maintained at the Office of Foreign Assets Control. If the prepenalty 
notice was personally delivered to the respondent by a non-U.S. Postal 
Service agent authorized by the Director, a response must be postmarked 
or date-stamped on or before the 30th day after the date of delivery.
    (2) 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 Director's discretion, only upon the respondent's specific request 
to the Office of Foreign Assets Control.
    (b) Form and method of response. The response must be submitted in 
writing and may be handwritten or typed. The response need not be in any 
particular form. A copy of the written response may be sent by 
facsimile, but the original must also be sent to the Office of Foreign 
Assets Control Civil Penalties Division by mail or courier and must be 
postmarked or date-stamped, in accordance with paragraph (a) of this 
section.
    (c) Contents of response. A written response must contain 
information sufficient to indicate that it is in response to the 
prepenalty notice.
    (1) A written response must include the respondent's full name, 
address, telephone number, and facsimile number, if available, or those 
of the representative of the respondent.
    (2) A written response should either admit or deny each specific 
violation alleged in the prepenalty notice and also state if the 
respondent has no knowledge of a particular violation. If the written 
response fails to address any specific violation alleged in the 
prepenalty notice, that alleged violation shall be deemed to be 
admitted.
    (3) A written response should include any information in defense, 
evidence in support of an asserted defense, or other factors that the 
respondent requests the Office of Foreign Assets Control to consider. 
Any defense or explanation previously made to the Office of Foreign 
Assets Control or any other agency must be repeated in the written 
response. Any defense not raised in the written response will be 
considered waived. The written response should also set forth the 
reasons why the respondent believes the penalty should not be imposed or 
why, if imposed, it should be in a lesser amount than proposed.
    (d) Default. If the respondent elects not to submit a written 
response within the time limit set forth in paragraph (a) of this 
section, the Office of Foreign Assets Control will conclude that the 
respondent has decided not to respond to the prepenalty notice. The 
agency generally will then issue a written penalty notice imposing the 
penalty proposed in the prepenalty notice.
    (e) Informal settlement. In addition to or as an alternative to a 
written response to a prepenalty notice, the respondent or respondent's 
representative may contact the Office of Foreign Assets Control as 
advised in the prepenalty notice to propose the settlement of 
allegations contained in the prepenalty notice and related matters. 
However, the requirements set forth in paragraph (f) of this section as 
to oral communication by the representative must first be fulfilled. In 
the event of settlement at the prepenalty stage, the claim proposed in 
the prepenalty notice will be withdrawn, the respondent will not be 
required to take a written position on allegations contained in the 
prepenalty notice, and the Office of Foreign Assets Control will make no 
final determination as to whether a violation occurred. The amount 
accepted in settlement of allegations in a prepenalty notice may vary 
from the

[[Page 229]]

civil penalty that might finally be imposed in the event of a formal 
determination of violation. In the event no settlement is reached, the 
time limit specified in paragraph (a) of this section for written 
response to the prepenalty notice remains in effect unless additional 
time is granted by the Office of Foreign Assets Control.
    (f) Representation. A representative of the respondent may act on 
behalf of the respondent, but any oral communication with the Office of 
Foreign Assets Control prior to a written submission regarding the 
specific allegations contained in the prepenalty notice must be preceded 
by a written letter of representation, unless the prepenalty notice was 
served upon the respondent in care of the representative.



Sec. 540.704  Penalty imposition or withdrawal.

    (a) No violation. If, after considering any response to the 
prepenalty notice and any relevant facts, the Director of the Office of 
Foreign Assets Control determines that there was no violation by the 
respondent named in the prepenalty notice, the Director shall notify the 
respondent in writing of that determination and the cancellation of the 
proposed monetary penalty.
    (b) Violation. (1) If, after considering any written response to the 
prepenalty notice, or default in the submission of a written response, 
and any relevant facts, the Director of the Office of Foreign Assets 
Control determines that there was a violation by the respondent named in 
the prepenalty notice, the Director is authorized to issue a written 
penalty notice to the respondent of the determination of violation and 
the imposition of the monetary penalty.
    (2) The penalty notice shall inform the respondent that payment or 
arrangement for installment payment of the assessed penalty must be made 
within 30 days of the date of mailing of the penalty notice by the 
Office of Foreign Assets Control.
    (3) The penalty notice shall inform the respondent of the 
requirement to furnish the respondent's taxpayer identification number 
pursuant to 31 U.S.C. 7701 and that such number will be used for 
purposes of collecting and reporting on any delinquent penalty amount.
    (4) The issuance of the penalty notice finding a violation and 
imposing a monetary penalty shall constitute final agency action. The 
respondent has the right to seek judicial review of that final agency 
action in a federal district court.



Sec. 540.705  Administrative collection; referral to United States 
Department of Justice.

    In the event that the respondent does not pay the penalty imposed 
pursuant to this part or make payment arrangements acceptable to the 
Director of the Office of Foreign Assets Control within 30 days of the 
date of mailing of the penalty notice, the matter may be referred for 
administrative collection measures by the Department of the Treasury or 
to the United States Department of Justice for appropriate action to 
recover the penalty in a civil suit in a federal district court.



                          Subpart H_Procedures



Sec. 540.801  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 
subpart E of part 501 of this chapter.

[66 FR 38555, July 25, 2001, as ameded at 68 FR 53658, Sept. 11, 2003]



Sec. 540.802  Delegation by the Secretary of the Treasury.

    Any action that the Secretary of the Treasury is authorized to take 
pursuant to Executive Order 13159 of June 21, 2000 (65 FR 39279, June 
26, 2000) and any further executive orders relating to the national 
emergency declared in Executive Order 13159 may be taken by the Director 
of the Office of Foreign Assets Control or by any other person to whom 
the Secretary of the Treasury has delegated authority so to act.

[[Page 230]]



                    Subpart I_Paperwork Reduction Act



Sec. 540.901  Paperwork Reduction Act notice.

    For approval by the Office of Management and Budget (``OMB'') under 
the Paperwork Reduction Act of 1995 (44 U.S.C. 3507) of information 
collections relating to recordkeeping and reporting requirements, 
licensing procedures (including those pursuant to statements of 
licensing policy), and other procedures, see 501.901 of this chapter. An 
agency may not conduct or sponsor, and a person is not required to 
respond to, a collection of information unless it displays a valid 
control number assigned by OMB.



PART 541_ZIMBABWE SANCTIONS REGULATIONS--Table of Contents



      Subpart A_Relation of This Part to Other Laws and Regulations

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

                         Subpart B_Prohibitions

541.201 Prohibited transactions involving blocked property.
541.202 Effect of transfers violating the provisions of this part.
541.203 Holding of funds in interest-bearing accounts; investment and 
          reinvestment.
541.204 Evasions; attempts; conspiracies.
541.205 Expenses of maintaining blocked property; liquidation of blocked 
          account.
541.206 Exempt transactions.

                      Subpart C_General Definitions

541.301 Blocked account; blocked property.
541.302 Effective date.
541.303 Entity.
541.304 Information or informational materials.
541.305 Interest.
541.306 Licenses; general and specific.
541.307 Person.
541.308 Property; property interest.
541.309 Transfer.
541.310 United States.
541.311 U.S. financial institution.
541.312 United States person; U.S. person.

                        Subpart D_Interpretations

541.401 Reference to amended sections.
541.402 Effect of amendment.
541.403 Termination and acquisition of an interest in blocked property.
541.404 Transactions incidental to a licensed transaction authorized.
541.405 Provision of services.
541.406 Offshore transactions.
541.407 Payments from blocked accounts to satisfy obligations 
          prohibited.
541.408 Credit extended and cards issued by U.S. financial institutions.
541.409 Setoffs prohibited.

  Subpart E_Licenses, Authorizations and Statements of Licensing Policy

541.501 General and specific licensing procedures.
541.502 Effect of license or authorization.
541.503 Exclusion from licenses.
541.504 Payments and transfers to blocked accounts in U.S. financial 
          institutions.
541.505 Entries in certain accounts for normal service charges 
          authorized.
541.506 Investment and reinvestment of certain funds.
541.507 Provision of certain legal services authorized.
541.508 Authorization of emergency medical services.

                            Subpart F_Reports

541.601 Records and reports.

                           Subpart G_Penalties

541.701 Penalties.
541.702 Prepenalty notice.
541.703 Response to prepenalty notice; informal settlement.
541.704 Penalty imposition or withdrawal.
541.705 Administrative collection; referral to United States Department 
          of Justice.

                          Subpart H_Procedures

541.801 Procedures.
541.802 Delegation by the Secretary of the Treasury.

                    Subpart I_Paperwork Reduction Act

541.901 Paperwork Reduction Act notice.

    Authority: 3 U.S.C. 301; 31 U.S.C. 321(b); 50 U.S.C. 1601-1651, 
1701-1706; Pub. L. 101-410, 104 Stat. 890 (28 U.S.C. 2461 note); Pub. L. 
110-96, 121 Stat. 1011; E.O. 13288, 68 FR 11457, 3 CFR, 2003 Comp., p. 
186.

    Source: 69 FR 45248, July 29, 2004, unless otherwise noted.

[[Page 231]]



      Subpart A_Relation of This Part to Other Laws and Regulations



Sec. 541.101  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 record 
keeping 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. 541.201  Prohibited transactions involving blocked property.

    (a) Except as authorized by regulations, orders, directives, 
rulings, instructions, licenses or otherwise, and notwithstanding any 
contracts entered into or any license or permit granted prior to the 
effective date, property or interests in property of the following 
persons that are in the United States, that hereafter come within the 
United States, or that are or hereafter come within the possession or 
control of U.S. persons, including their overseas branches, are blocked 
and may not be transferred, paid, exported, withdrawn or otherwise dealt 
in:
    (1) Any person listed in the Annex to Executive Order 13288 of March 
6, 2003 (68 FR 11457, March 10, 2003); and
    (2) Any person determined by the Secretary of the Treasury, in 
consultation with the Secretary of State, to be owned or controlled by, 
or acting or purporting to act directly or indirectly for or on behalf 
of, any person listed in the Annex to Executive Order 13288.

    Note 1 to paragraph (a) of Sec. 541.201: The names of persons whose 
property and interests in property are blocked pursuant to paragraph (a) 
of this section are published in the Federal Register and incorporated 
into the Office of Foreign Assets Control's Specially Designated 
Nationals and Blocked Persons List (``SDN List'') with the identifier 
``[ZIMBABWE].'' The SDN List is accessible through the following page on 
the Office of Foreign Assets Control's Web site: http://
www.treasury.gov/sdn. Additional information pertaining to the SDN List 
can be found in appendix A to this chapter.
    Note 2 to paragraph (a) of Sec. 541.201: The International 
Emergency Economic Powers Act (50 U.S.C. 1701-1706), in Section 203 (50 
U.S.C. 1702), authorizes the blocking of property and interests in 
property of a person during the pendency of an investigation. The names 
of persons whose property and interests in property are blocked pending 
investigation pursuant to paragraph (a) of this section also are 
published in the Federal Register and incorporated into the SDN List 
with the identifier ``[BPI-ZIMBABWE].''
    Note 3 to paragraph (a) of Sec. 541.201: Sections 501.806 and 
501.807 of this chapter describe the procedures to be followed by 
persons seeking, respectively, the unblocking of funds that they believe 
were blocked due to mistaken identity, or administrative reconsideration 
of their status as persons whose property and interests in property are 
blocked pursuant to paragraph (a) of this section.

    (b) Unless otherwise authorized by this part or by a specific 
license expressly referring to this section, any dealing in any security 
(or evidence thereof) held within the possession or control of a U.S. 
person and either registered or inscribed in the name of or known to be 
held for the benefit of any person whose property or interests in 
property are blocked pursuant to paragraph (a) of this section is 
prohibited. This prohibition includes but is not limited to the transfer 
(including the transfer on the books of any issuer or agent thereof), 
disposition, transportation, importation, exportation, or withdrawal of 
any such security or the endorsement or guaranty of signatures on any 
such security. 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

[[Page 232]]

security may have or might appear to have assigned, transferred, or 
otherwise disposed of the security.

[69 FR 45248, July 29, 2004, as amended at 76 FR 38537, June 30, 2011]



Sec. 541.202  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. 
541.201(a), is null and void and shall not be the basis for the 
assertion or recognition of any interest in or right, remedy, power, or 
privilege with respect to such property or property interests.
    (b) No transfer before the effective date shall be the basis for the 
assertion or recognition of any right, remedy, power, or privilege with 
respect to, or any interest in, any property or interest in property 
blocked pursuant to Sec. 541.201(a), unless the person with whom such 
property is held or maintained, prior to that date, had written notice 
of the transfer or by any written evidence had recognized such transfer.
    (c) Unless otherwise provided, an appropriate license or other 
authorization issued by or pursuant to the direction or authorization of 
the Director of the Office of Foreign Assets Control before, during, or 
after a transfer shall validate such transfer or make it enforceable to 
the same extent that it would be valid or enforceable but for the 
provisions of the International Emergency Economic Powers Act (50 U.S.C. 
1701 et seq.), 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 was held or maintained (and as to such person only) in 
cases in which such person is able to establish to the satisfaction of 
the Director of the Office of Foreign Assets Control each of the 
following:
    (1) Such transfer did not represent a willful violation of the 
provisions of this part by the person with whom such property was held 
or maintained;
    (2) The person with whom such property 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 was held or maintained filed 
with the Office of Foreign Assets Control a report setting forth in full 
the circumstances relating to such transfer promptly upon discovery 
that:
    (i) Such transfer was in violation of the provisions of this part or 
any regulation, ruling, instruction, license, or other direction or 
authorization issued pursuant to this part;
    (ii) Such transfer was not licensed or authorized by the Director of 
the Office of Foreign Assets Control; or
    (iii) If a license did purport to cover the transfer, such license 
had been obtained by misrepresentation of a third party or withholding 
of material facts or was otherwise fraudulently obtained.

    Note to paragraph (d) of Sec. 541.202: The filing of a report in 
accordance with the provisions of paragraph (d)(3) of this section shall 
not be deemed evidence that the terms of paragraphs (d)(1) and (d)(2) of 
this section have been satisfied.

    (e) Except to the extent otherwise provided by law or unless 
licensed pursuant to this part, any attachment, judgment, decree, lien, 
execution, garnishment, or other judicial process is null and void with 
respect to any property in which on or since the effective date there 
existed an interest of a person whose property or interests in property 
are blocked pursuant to Sec. 541.201(a).

[[Page 233]]



Sec. 541.203  Holding of funds in interest-bearing accounts; investment
and reinvestment.

    (a) Except as provided in paragraph (c) or (d) of this section, or 
as otherwise directed by the Office of Foreign Assets Control, any U.S. 
person holding funds, such as currency, bank deposits, or liquidated 
financial obligations, subject to Sec. 541.201(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) 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.
    (3) Funds held or placed in a blocked account pursuant to this 
paragraph (b) may not be invested in instruments the maturity of which 
exceeds 180 days. If interest is credited to a separate blocked account 
or subaccount, the name of the account party on each account must be the 
same.
    (c) Blocked funds held in instruments the maturity of which exceeds 
180 days at the time the funds become subject to Sec. 541.201(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 (b) 
or (d) of this section.
    (d) Blocked funds held in accounts or instruments outside the United 
States at the time the funds become subject to Sec. 541.201(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.
    (e) 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 at the time the property becomes subject to 
Sec. 541.201(a). However, the Office of Foreign Assets Control may 
issue licenses permitting or directing such sales in appropriate cases.
    (f) 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 or interests in property 
are blocked pursuant to Sec. 541.201(a), nor may their holder cooperate 
in or facilitate the pledging or other attempted use of blocked funds or 
other assets as collateral.



Sec. 541.204  Evasions; attempts; conspiracies.

    (a) Except as otherwise authorized, and notwithstanding any contract 
entered into or any license or permit granted prior to the effective 
date, any transaction by any U.S. person or within the United States on 
or after the effective date that evades or avoids, has the purpose of 
evading or avoiding, or attempts to violate any of the prohibitions set 
forth in this part is prohibited.
    (b) Except as otherwise authorized, and notwithstanding any contract 
entered into or any license or permit granted prior to the effective 
date, any conspiracy formed to violate the prohibitions set forth in 
this part is prohibited.



Sec. 541.205  Expenses of maintaining blocked property; liquidation of
blocked account.

    (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 before 12:01 eastern standard time, March 7, 2003, all 
expenses incident to the maintenance of physical property blocked 
pursuant to Sec. 541.201(a) shall be the responsibility of the owners 
or operators of such property, which expenses shall not be met from 
blocked funds.

[[Page 234]]

    (b) Property blocked pursuant to Sec. 541.201(a) may, in the 
discretion of the Director, Office of Foreign Assets Control, be sold or 
liquidated and the net proceeds placed in a blocked interest-bearing 
account in the name of the owner of the property.



Sec. 541.206  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 importation from 
any country and the exportation to any country of information or 
informational materials, as defined in Sec. 541.304, whether commercial 
or otherwise, regardless of format or medium of transmission, are exempt 
from the prohibitions of this part.
    (2) This section does not exempt from regulation or authorize 
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 informational 
materials, or to the provision of marketing and business consulting 
services. Such prohibited transactions include, but are not limited to, 
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, 
with respect to information or informational materials imported from 
persons whose property or interests in property are blocked pursuant to 
Sec. 541.201(a), 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 from regulation or authorize 
transactions incident to the exportation of software subject to the 
Export Administration Regulations, 15 CFR parts 730-774, or to the 
exportation of goods, technology or software, 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 or interests in property are blocked pursuant to 
Sec. 541.201(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 exportation or importation 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



Sec. 541.301  Blocked account; blocked property.

    The terms blocked account and blocked property shall mean any 
account or property subject to the prohibitions in Sec. 541.201 held in 
the name of a person whose property or interests in property are blocked 
pursuant to Sec. 541.201(a), or in which such person has an interest, 
and with respect to which payments, transfers, exportations, 
withdrawals, or other dealings may not be made or effected except 
pursuant to an authorization or license from the Office of Foreign 
Assets Control expressly authorizing such action.



Sec. 541.302  Effective date.

    The term effective date refers to the effective date of the 
applicable prohibitions and directives contained in this part as 
follows:
    (a) With respect to a person whose property or interests in property 
are blocked pursuant to Sec. 541.201(a)(1), 12:01 eastern standard 
time, March 7, 2003;
    (b) With respect to a person whose property or interests in property 
are blocked pursuant to Sec. 541.201(a)(2), the earlier of the date on 
which either actual notice or constructive notice is received of such 
person's designation by the Secretary of the Treasury.

[[Page 235]]



Sec. 541.303  Entity.

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



Sec. 541.304  Information or informational materials.

    (a) For purposes of this part, the term information or informational 
materials includes, but is not limited to, publications, films, posters, 
phonograph records, photographs, microfilms, microfiche, tapes, compact 
disks, CD ROMs, artworks, and news wire feeds.

    Note to paragraph (a) of Sec. 541.304: To be considered information 
or informational materials, artworks must be classified under chapter 
heading 9701, 9702, or 9703 of the Harmonized Tariff Schedule of the 
United States.

    (b) The term information or informational materials, with respect to 
United States 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) (the ``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. 541.305  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. 541.306  Licenses; general and specific.

    (a) Except as otherwise specified, the term license means any 
license or authorization contained in or issued pursuant to this part.
    (b) The term general license means any license or authorization the 
terms of which are set forth in subpart E of this part.
    (c) The term specific license means any license or authorization not 
set forth in subpart E of this part but issued pursuant to this part.

    Note to Sec. 541.306: See Sec. 501.801 of this chapter on 
licensing procedures.



Sec. 541.307  Person.

    The term person means an individual or entity.



Sec. 541.308  Property; property interest.

    The terms property and property interest include, but are not 
limited to, money, checks, drafts, bullion, bank deposits, savings 
accounts, debts, indebtedness, obligations, notes, guarantees, 
debentures, stocks, bonds, coupons, any other financial instruments, 
bankers acceptances, mortgages, pledges, liens or other rights in the 
nature of security, warehouse receipts, bills of lading, trust receipts, 
bills of sale, any other evidences of title, ownership or indebtedness, 
letters of credit and any documents relating to any rights or 
obligations thereunder, powers of attorney, goods, wares, merchandise, 
chattels, stocks on hand, ships, goods on ships, real estate mortgages, 
deeds of trust, vendors' sales agreements, land contracts, leaseholds, 
ground rents, real estate and any other interest therein, options, 
negotiable instruments, trade acceptances, royalties, book accounts, 
accounts payable, judgments, patents, trademarks or copyrights, 
insurance policies, safe deposit boxes and their contents, annuities, 
pooling agreements, services of any nature whatsoever, contracts of any 
nature whatsoever, and any other property, real, personal, or mixed, 
tangible or intangible, or interest or interests therein, present, 
future or contingent.



Sec. 541.309  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 and, without limitation upon the foregoing, 
shall include the making, execution, or delivery of any assignment, 
power, conveyance, check, declaration, deed, deed of trust, power of 
attorney, power of

[[Page 236]]

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. 541.310  United States.

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



Sec. 541.311  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 
credits, or purchasing or selling foreign exchange, securities, 
commodity futures or options, or procuring purchasers and sellers 
thereof, as principal or agent; including but not limited to, depository 
institutions, banks, savings banks, trust companies, securities brokers 
and dealers, commodity futures and options brokers and dealers, forward 
contract and foreign exchange merchants, securities and commodities 
exchanges, clearing corporations, investment companies, employee benefit 
plans, and U.S. holding companies, U.S. affiliates, or U.S. subsidiaries 
of any of the foregoing. This term includes those branches, offices and 
agencies of foreign financial institutions that are located in the 
United States, but not such institutions' foreign branches, offices, or 
agencies.



Sec. 541.312  United States person; U.S. person.

    The term United States person or U.S. person means any United States 
citizen, permanent resident alien, entity organized under the laws of 
the United States or any jurisdiction within the United States 
(including foreign branches), or any person in the United States.



                        Subpart D_Interpretations



Sec. 541.401  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, direction, or license issued pursuant to this part refers 
to the same as currently amended.



Sec. 541.402  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 or 
under the direction of the Director of the Office of Foreign Assets 
Control does not affect any act done or omitted, or any civil or 
criminal suit or 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. 541.403  Termination and acquisition of an interest in blocked 
property.

    (a) Whenever a transaction licensed or authorized by or pursuant to 
this part results in the transfer of property (including any property 
interest) away from a person, such property shall no longer be deemed to 
be property blocked pursuant to Sec. 541.201(a), unless there exists in 
the property another interest that is blocked pursuant to Sec. 
541.201(a) or any other part of this chapter, the transfer of which has 
not been effected pursuant to license or other authorization.

[[Page 237]]

    (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 or interests in property are blocked pursuant to 
Sec. 541.201(a), such property shall be deemed to be property in which 
that person has an interest and therefore blocked.



Sec. 541.404  Transactions incidental to a licensed transaction authorized.

    Any transaction ordinarily incident to a licensed transaction and 
necessary to give effect thereto is also authorized, except:
    (a) An incidental transaction, not explicitly authorized within the 
terms of the license, by or with a person whose property or interests in 
property are blocked pursuant to Sec. 541.201(a); or
    (b) An incidental transaction, not explicitly authorized within the 
terms of the license, involving a debit to a blocked account or a 
transfer of blocked property.



Sec. 541.405  Provision of services.

    (a) Except as provided in Sec. 541.206, the prohibitions on 
transactions involving blocked property contained in Sec. 541.201 apply 
to services performed in the United States or by U.S. persons, wherever 
located, including by an overseas branch of an entity located in the 
United States:
    (1) On behalf of or for the benefit of a person whose property or 
interests in property are blocked pursuant to Sec. 541.201(a); or
    (2) With respect to property interests subject to Sec. 541.201.
    (b) Example: U.S. persons may not, except as authorized by or 
pursuant to this part, provide legal, accounting, financial, brokering, 
freight forwarding, transportation, public relations, or other services 
to a person whose property or interests in property are blocked pursuant 
to Sec. 541.201(a).

    Note to Sec. 541.405: See Sec. Sec. 541.507 and 541.508 on 
licensing policy with regard to the provision of, respectively, certain 
legal or medical services.



Sec. 541.406  Offshore transactions.

    The prohibitions in Sec. 541.201 on transactions involving blocked 
property apply to transactions by any U.S. person in a location outside 
the United States with respect to property that the U.S. person knows, 
or has reason to know, is held in the name of a person whose property or 
interests in property are blocked pursuant to Sec. 541.201(a) or in 
which the U.S. person knows, or has reason to know, a person whose 
property or interests in property are blocked pursuant to Sec. 
541.201(a) has or has had an interest since the effective date.



Sec. 541.407  Payments from blocked accounts to satisfy obligations 
prohibited.

    Pursuant to Sec. 541.201, no debits may be made to a blocked 
account to pay obligations to U.S. persons or other persons, except as 
authorized pursuant to this part.



Sec. 541.408  Credit extended and cards issued by U.S. financial 
institutions.

    The prohibition in Sec. 541.201 on dealing in property subject to 
that section prohibits U.S. financial institutions from performing under 
any existing credit agreements, including, but not limited to, charge 
cards, debit cards, or other credit facilities issued by a U.S. 
financial institution to a person whose property or interests in 
property are blocked pursuant to Sec. 541.201(a).



Sec. 541.409  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. 541.201 if effected after the effective date.



  Subpart E_Licenses, Authorizations and Statements of Licensing Policy



Sec. 541.501  General and specific licensing procedures.

    For provisions relating to licensing procedures, see part 501, 
subpart D, of this chapter. Licensing actions taken pursuant to part 501 
of this chapter

[[Page 238]]

with respect to the prohibitions contained in this part are considered 
actions taken pursuant to this part.



Sec. 541.502  Effect of license or authorization.

    (a) No license or other authorization contained in this part, or 
otherwise issued by or under the direction of the Director of the Office 
of Foreign Assets Control, authorizes or validates any transaction 
effected prior to the issuance of the license, unless specifically 
provided in such license or authorization.
    (b) No regulation, ruling, instruction, or license authorizes any 
transaction prohibited under this part unless the regulation, ruling, 
instruction or license is issued by the Office of Foreign Assets Control 
and specifically refers to this part. No regulation, ruling, 
instruction, or license referring to this part shall be deemed to 
authorize any transaction prohibited by any provision of this chapter 
unless the regulation, ruling, instruction, or license specifically 
refers to such provision.
    (c) Any regulation, ruling, instruction, or license authorizing any 
transaction otherwise prohibited under this part has the effect of 
removing a prohibition contained in this part from the transaction, but 
only to the extent specifically stated by its terms. Unless the 
regulation, ruling, instruction, or license otherwise specifies, such an 
authorization does not create any right, duty, obligation, claim, or 
interest in, or with respect to, any property which would not otherwise 
exist under ordinary principles of law.



Sec. 541.503  Exclusion from licenses.

    The Director of the Office of Foreign Assets Control reserves the 
right to exclude any person, property, or transaction from the operation 
of any license or from the privileges conferred by any license. The 
Director of the Office of Foreign Assets Control also reserves the right 
to restrict the applicability of any license to particular persons, 
property, transactions, or classes thereof. Such actions are binding 
upon all persons receiving actual or constructive notice of the 
exclusions or restrictions.



Sec. 541.504  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 or interests in property are blocked pursuant to Sec. 
541.201(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 only be 
made to another blocked account held in the same name.

    Note to Sec. 541.504: Refer to Sec. 501.603 of this chapter for 
mandatory reporting requirements regarding financial transfers. See also 
Sec. 541.203 concerning the obligation to hold blocked funds in 
interest-bearing accounts.



Sec. 541.505  Entries in certain accounts for normal service charges
authorized.

    (a) A U.S. financial institution is authorized to debit any blocked 
account held at that financial institution in payment or reimbursement 
for normal service charges owed it by the owner of that blocked account.
    (b) As used in this section, the term normal service charge 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. 541.506  Investment and reinvestment of certain funds.

    Subject to the requirements of Sec. 541.203, U.S. financial 
institutions are authorized to invest and reinvest assets blocked 
pursuant to Sec. 541.201, subject to the following conditions:

[[Page 239]]

    (a) The assets representing such investments and reinvestments are 
credited to a blocked account or subaccount which 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 persons whose property or interests in 
property are blocked pursuant to Sec. 541.201(a).



Sec. 541.507  Provision of certain legal services authorized.

    (a) The provision of the following legal services to or on behalf of 
persons whose property or interests in property are blocked pursuant to 
Sec. 541.201(a) is authorized, provided that all receipts of payment of 
professional fees and reimbursement of incurred expenses must be 
specifically licensed:
    (1) Provision of legal advice and counseling on the requirements of 
and compliance with the laws of 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 when named as defendants in or 
otherwise made parties to domestic U.S. legal, arbitration, or 
administrative proceedings;
    (3) Initiation and conduct of domestic U.S. legal, arbitration, or 
administrative proceedings in defense of property interests subject to 
U.S. jurisdiction;
    (4) Representation of persons before any federal or state agency 
with respect to the imposition, administration, or enforcement of U.S. 
sanctions against such persons; and
    (5) Provision of legal services in any other context in which 
prevailing U.S. law requires access to legal counsel at public expense.
    (b) The provision of any other legal services to persons whose 
property or interests in property are blocked pursuant to Sec. 
541.201(a), not otherwise authorized in this part, requires the issuance 
of a specific license.
    (c) Entry into a settlement agreement affecting property or 
interests in property 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. 541.201(a) 
is prohibited except to the extent otherwise provided by law or unless 
specifically licensed in accordance with Sec. 541.202(e).



Sec. 541.508  Authorization of emergency medical services.

    The provision of nonscheduled emergency medical services in the 
United States to persons whose property or interests in property are 
blocked pursuant to Sec. 541.201(a) is authorized, provided that all 
receipt of payment for such services must be specifically licensed.



                            Subpart F_Reports



Sec. 541.601  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



Sec. 541.701  Penalties.

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

[[Page 240]]

violates, attempts to violate, conspires to violate, or causes a 
violation of any license, order, regulation, or prohibition issued under 
the Act.

    Note to paragraph (a)(1) of Sec. 541.701: As of June 10, 2008, the 
Act provides for a maximum civil penalty not to exceed the greater of 
$250,000 or an amount that is twice the amount of the transaction that 
is the basis of the violation with respect to which the penalty is 
imposed.

    (2) A person who willfully commits, willfully attempts to commit, or 
willfully conspires to commit, or aids or abets in the commission of a 
violation of any license, order, regulation, or prohibition shall, upon 
conviction, be fined not more than $1,000,000, or if a natural person, 
may be imprisoned for not more than 20 years, or both.
    (b) Adjustments to penalty amounts. (1) The civil penalties provided 
in the Act 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 the Act are subject to 
adjustment pursuant to 18 U.S.C. 3571.
    (c) Attention is also directed to 18 U.S.C. 1001, which provides 
that whoever, in any matter within the jurisdiction of the executive, 
legislative, or judicial branch of the Government of the United States, 
knowingly and willfully 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, or imprisoned not more than five years, or 
both.
    (d) Violations of this part may also be subject to relevant 
provisions of other applicable laws.

[69 FR 45248, July 29, 2004, as amended at 71 FR 29253, May 22, 2006; 73 
FR 32653, June 10, 2008]



Sec. 541.702  Prepenalty notice.

    (a) When required. If the Director of the Office of Foreign Assets 
Control has reason to believe that there has occurred a violation of any 
provision of this part or a violation of the provisions of any license, 
ruling, regulation, order, direction, or instruction issued by or 
pursuant to the direction or authorization of the Secretary of the 
Treasury pursuant to this part or otherwise under the International 
Emergency Economic Powers Act, and the Director determines that further 
proceedings are warranted, the Director shall notify the alleged 
violator of the agency's intent to impose a monetary penalty by issuing 
a prepenalty notice. The prepenalty notice shall be in writing. The 
prepenalty notice may be issued whether or not another agency has taken 
any action with respect to the matter.
    (b) Contents of notice--(1) Facts of violation. The prepenalty 
notice shall describe the violation, specify the laws and regulations 
allegedly violated, and state the amount of the proposed monetary 
penalty.
    (2) Right to respond. The prepenalty notice also shall inform the 
respondent of the respondent's right to make a written presentation 
within the applicable 30 day period set forth in Sec. 541.703 as to why 
a monetary penalty should not be imposed or why, if imposed, the 
monetary penalty should be in a lesser amount than proposed.
    (c) Informal settlement prior to issuance of prepenalty notice. At 
any time prior to the issuance of a prepenalty notice, an alleged 
violator may request in writing that, for a period not to exceed sixty 
(60) days, the agency withhold issuance of the prepenalty notice for the 
exclusive purpose of effecting settlement of the agency's potential 
civil monetary penalty claims. In the event the Director grants the 
request, under terms and conditions within his discretion, the Office of 
Foreign Assets Control will agree to withhold issuance of the prepenalty 
notice for a period not to exceed 60 days and will enter into settlement 
negotiations of the potential civil monetary penalty claim.



Sec. 541.703  Response to prepenalty notice; informal settlement.

    (a) Deadline for response. The respondent may submit a response to 
the prepenalty notice within the applicable 30-day period set forth in 
this paragraph. The Director may grant, at his discretion, an extension 
of time in

[[Page 241]]

which to submit a response to the prepenalty notice. The failure to 
submit a response within the applicable time period set forth in this 
paragraph shall be deemed to be a waiver of the right to respond.
    (1) Computation of time for response. A response to the prepenalty 
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 prepenalty notice was mailed. 
If the respondent refused delivery or otherwise avoided receipt of the 
prepenalty notice, a response must be postmarked or date-stamped on or 
before the 30th day after the date on the stamped postal receipt 
maintained at the Office of Foreign Assets Control. If the prepenalty 
notice was personally delivered to the respondent by a non-U.S. Postal 
Service agent authorized by the Director, a response must be postmarked 
or date-stamped on or before the 30th day after the date of delivery.
    (2) 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 Director's discretion, only upon the respondent's specific request 
to the Office of Foreign Assets Control.
    (b) Form and method of response. The response must be submitted in 
typewritten form and signed by the respondent or a representative 
thereof. The response need not be in any particular form. A copy of the 
written response may be sent by facsimile, but the original also must be 
sent to the Office of Foreign Assets Control Civil Penalties Division by 
mail or courier and must be postmarked or date-stamped in accordance 
with paragraph (a) of this section.
    (c) Contents of response. A written response must contain 
information sufficient to indicate that it is in response to the 
prepenalty notice.
    (1) A written response must include the respondent's full name, 
address, telephone number, and facsimile number, if available, or those 
of the representative of the respondent.
    (2) A written response should either admit or deny each specific 
violation alleged in the prepenalty notice and also state if the 
respondent has no knowledge of a particular violation. If the written 
response fails to address any specific violation alleged in the 
prepenalty notice, that alleged violation shall be deemed to be 
admitted.
    (3) A written response should include any information in defense, 
evidence in support of an asserted defense, or other factors that the 
respondent requests the Office of Foreign Assets Control to consider. 
Any defense or explanation previously made to the Office of Foreign 
Assets Control or any other agency must be repeated in the written 
response. Any defense not raised in the written response will be 
considered waived. The written response also should set forth the 
reasons why the respondent believes the penalty should not be imposed or 
why, if imposed, it should be in a lesser amount than proposed.
    (d) Failure to respond. Where OFAC receives no response to a 
prepenalty notice within the applicable time period set forth in 
paragraph (a) of this section, a penalty notice generally will be 
issued, taking into account the mitigating and/or aggravating factors 
present in the record. If there are no mitigating factors present in the 
record, or the record contains a preponderance of aggravating factors, 
the proposed prepenalty amount generally will be assessed as the final 
penalty.
    (e) Informal settlement. In addition to or as an alternative to a 
written response to a prepenalty notice, the respondent or respondent's 
representative may contact the Office of Foreign Assets Control as 
advised in the prepenalty notice to propose the settlement of 
allegations contained in the prepenalty notice and related matters. 
However, the requirements set forth in paragraph (f) of this section as 
to oral communication by the representative must first be fulfilled. In 
the event of settlement at the prepenalty stage, the claim proposed in 
the prepenalty notice will be withdrawn, the respondent will not be 
required to take a written position on allegations contained in the 
prepenalty notice, and the Office of Foreign Assets Control will make no

[[Page 242]]

final determination as to whether a violation occurred. The amount 
accepted in settlement of allegations in a prepenalty notice may vary 
from the civil penalty that might finally be imposed in the event of a 
formal determination of violation. In the event no settlement is 
reached, the time limit specified in paragraph (a) of this section for 
written response to the prepenalty notice will remain in effect unless 
additional time is granted by the Office of Foreign Assets Control.
    (f) Representation. A representative of the respondent may act on 
behalf of the respondent, but any oral communication with the Office of 
Foreign Assets Control prior to a written submission regarding the 
specific allegations contained in the prepenalty notice must be preceded 
by a written letter of representation, unless the prepenalty notice was 
served upon the respondent in care of the representative.



Sec. 541.704  Penalty imposition or withdrawal.

    (a) No violation. If, after considering any response to the 
prepenalty notice and any relevant facts, the Director of the Office of 
Foreign Assets Control determines that there was no violation by the 
respondent named in the prepenalty notice, the Director shall notify the 
respondent in writing of that determination and of the cancellation of 
the proposed monetary penalty.
    (b) Violation. (1) If, after considering any written response to the 
prepenalty notice, or default in the submission of a written response, 
and any relevant facts, the Director of the Office of Foreign Assets 
Control determines that there was a violation by the respondent named in 
the prepenalty notice, the Director is authorized to issue a written 
penalty notice to the respondent of the determination of the violation 
and the imposition of the monetary penalty.
    (2) The penalty notice shall inform the respondent that payment or 
arrangement for installment payment of the assessed penalty must be made 
within 30 days of the date of mailing of the penalty notice by the 
Office of Foreign Assets Control.
    (3) The penalty notice shall inform the respondent of the 
requirement to furnish the respondent's taxpayer identification number 
pursuant to 31 U.S.C. 7701 and that such number will be used for 
purposes of collecting and reporting on any delinquent penalty amount.
    (4) The issuance of the penalty notice finding a violation and 
imposing a monetary penalty shall constitute final agency action. The 
respondent has the right to seek judicial review of that final agency 
action in federal district court.



Sec. 541.705  Administrative collection; referral to United States 
Department of Justice.

    In the event that the respondent does not pay the penalty imposed 
pursuant to this part or make payment arrangements acceptable to the 
Director of the Office of Foreign Assets Control within 30 days of the 
date of mailing of the penalty notice, the matter may be referred for 
administrative collection measures by the Department of the Treasury or 
to the United States Department of Justice for appropriate action to 
recover the penalty in a civil suit in a federal district court.



                          Subpart H_Procedures



Sec. 541.801  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 D, of this chapter.



Sec. 541.802  Delegation by the Secretary of the Treasury.

    Any action that the Secretary of the Treasury is authorized to take 
pursuant to Executive Order 13288 of March 6, 2003 (68 FR 11457, March 
10, 2003), and any further Executive orders relating to the national 
emergency declared therein, may be taken by the Director of the Office 
of Foreign Assets Control or by any other person to whom the Secretary 
of the Treasury has delegated authority so to act.

[[Page 243]]



                    Subpart I_Paperwork Reduction Act



Sec. 541.901  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 record keeping and reporting requirements, 
licensing procedures (including those pursuant to statements of 
licensing policy), and other procedures, see Sec. 501.901 of this 
chapter. An agency may not conduct or sponsor, and a person is not 
required to respond to, a collection of information unless it displays a 
valid control number assigned by OMB.



PART 542_SYRIAN SANCTIONS REGULATIONS--Table of Contents



      Subpart A_Relation of This Part to Other Laws and Regulations

Sec.
542.101 Relation of this part to other laws and regulations.
542.102 Relation of this part to part 596 of this chapter.

                         Subpart B_Prohibitions

542.201 Prohibited transactions involving blocked property.
542.202 Effect of transfers violating the provisions of this part.
542.203 Holding of funds in interest-bearing accounts; investment and 
          reinvestment.
542.204 Expenses of maintaining blocked property; liquidation of blocked 
          property.
542.205 Evasions; attempts; conspiracies.
542.206 Exempt transactions.

                      Subpart C_General Definitions

542.301 Blocked account; blocked property.
542.302 Effective date.
542.303 Entity.
542.304 Information or informational materials.
542.305 Interest.
542.306 Licenses; general and specific.
542.307 Person.
542.308 Property; property interest.
542.309 Transfer.
542.310 United States.
542.311 U.S. financial institution.
542.312 United States person; U.S. person.

                        Subpart D_Interpretations

542.401 Reference to amended sections.
542.402 Effect of amendment.
542.403 Termination and acquisition of an interest in blocked property.
542.404 Transactions incidental to a licensed transaction.
542.405 Provision of services.
542.406 Offshore transactions.
542.407 Payments from blocked accounts to satisfy obligations 
          prohibited.
542.408 Charitable contributions.
542.409 Credit extended and cards issued by U.S. financial institutions.
542.410 Setoffs prohibited.

  Subpart E_Licenses, Authorizations and Statements of Licensing Policy

542.501 General and specific licensing procedures.
542.502 Effect of license or authorization.
542.503 Exclusion from licenses.
542.504 Payments and transfers to blocked accounts in U.S. financial 
          institutions.
542.505 Entries in certain accounts for normal service charges 
          authorized.
542.506 Investment and reinvestment of certain funds.
542.507 Provision of certain legal services authorized.
542.508 Authorization of emergency medical services.

                            Subpart F_Reports

542.601 Records and reports.

                           Subpart G_Penalties

542.701 Penalties.
542.702 Prepenalty notice.
542.703 Response to prepenalty notice; informal settlement.
542.704 Penalty imposition or withdrawal.
542.705 Administrative collection; referral to United States Department 
          of Justice.

                          Subpart H_Procedures

542.801 Procedures.
542.802 Delegation by the Secretary of the Treasury.

                    Subpart I_Paperwork Reduction Act

542.901 Paperwork Reduction Act notice.

    Authority: 3 U.S.C. 301; 31 U.S.C. 321(b); 50 U.S.C. 1601-1651, 
1701-1706; Pub. L. 101-410, 104 Stat. 890 (28 U.S.C. 2461 note); Pub. L. 
110-96, 121 Stat. 1011; E.O. 13338, 69 FR 26751, 3 CFR, 2004 Comp., p. 
168.

    Source: 70 FR 17203, Apr. 5, 2005, unless otherwise noted.

[[Page 244]]



      Subpart A_Relation of This Part to Other Laws and Regulations



Sec. 542.101  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.



Sec. 542.102  Relation of this part to part 596 of this chapter.

    For the purposes of the Terrorism List Government Sanctions 
Regulations set forth in part 596 of this chapter, the Government of 
Syria in its entirety is not subject to the regulations set forth in 
this part. Consequently, 31 CFR 596.503 does not apply to financial 
transactions with the Government of Syria, while 31 CFR 596.504 and 
596.505 continue to apply.



                         Subpart B_Prohibitions



Sec. 542.201  Prohibited transactions involving blocked property.

    (a) Except as authorized by regulations, orders, directives, 
rulings, instructions, licenses or otherwise, and notwithstanding any 
contracts entered into or any license or permit granted prior to the 
effective date, all property and interests in property of the following 
persons that are in the United States, that hereafter come within the 
United States, or that are or hereafter come within the possession or 
control of United States persons, including their overseas branches, are 
blocked and may not be transferred, paid, exported, withdrawn, or 
otherwise dealt in:
    (1) [Reserved]
    (2) Any person determined by the Secretary of the Treasury, in 
consultation with the Secretary of State:
    (i) To be or to have been directing or otherwise significantly 
contributing to the Government of Syria's provision of safe haven to or 
other support for any person whose property or interests in property are 
blocked under United States law for terrorism-related reasons, 
including, but not limited to, Hamas, Hizballah, Palestinian Islamic 
Jihad, the Popular Front for the Liberation of Palestine, the Popular 
Front for the Liberation of Palestine-General Command, and any persons 
designated pursuant to Executive Order 13224 of September 23, 2001;
    (ii) To be or to have been directing or otherwise significantly 
contributing to the Government of Syria's military or security presence 
in Lebanon;
    (iii) To be or to have been directing or otherwise significantly 
contributing to the Government of Syria's pursuit of the development and 
production of chemical, biological, or nuclear weapons and medium- and 
long-range surface-to-surface missiles;
    (iv) To be or to have been directing or otherwise significantly 
contributing to any steps taken by the Government of Syria to undermine 
United States and international efforts with respect to the 
stabilization and reconstruction of Iraq; or
    (v) To be owned or controlled by, or acting or purporting to act for 
or on behalf of, directly or indirectly, any person whose property or 
interests in property are blocked pursuant to this section.

    Note 1 to paragraph (a) of Sec. 542.201: The names of persons whose 
property and interests in property are blocked pursuant to paragraph (a) 
of this section are published in the Federal Register and incorporated 
into the Office of Foreign Assets Control's Specially Designated 
Nationals and Blocked Persons List (``SDN List'') with the identifier 
``[SYRIA].'' The SDN List is accessible through the following page on 
the Office of

[[Page 245]]

Foreign Assets Control's Web site: http://www.treasury.gov/sdn. 
Additional information pertaining to the SDN List can be found in 
appendix A to this chapter.
    Note 2 to paragraph (a) of Sec. 542.201: The International 
Emergency Economic Powers Act (50 U.S.C. 1701-1706), in Section 203 (50 
U.S.C. 1702), authorizes the blocking of property and interests in 
property of a person during the pendency of an investigation. The names 
of persons whose property and interests in property are blocked pending 
investigation pursuant to paragraph (a) of this section also are 
published in the Federal Register and incorporated into the SDN List 
with the identifier ``[BPI-SYRIA].''
    Note 3 to paragraph (a) of Sec. 542.201: Sections 501.806 and 
501.807 of this chapter describe the procedures to be followed by 
persons seeking, respectively, the unblocking of funds that they believe 
were blocked due to mistaken identity, or administrative reconsideration 
of their status as persons whose property and interests in property are 
blocked pursuant to paragraph (a) of this section.

    (b) The blocking of property and interests in property pursuant to 
Sec. 542.201(a) includes, but is not limited to, the prohibition of:
    (1) The making of any contribution of funds, goods, or services by, 
to, or for the benefit of any person whose property or interests in 
property are blocked pursuant to this section; and
    (2) The receipt of any contribution or provision of funds, goods, or 
services from any such person.
    (c) Unless otherwise authorized by this part or by a specific 
license expressly referring to this section, any dealing in any security 
(or evidence thereof) held within the possession or control of a U.S. 
person and either registered or inscribed in the name of or known to be 
held for the benefit of any person whose property or interests in 
property are blocked pursuant to Sec. 542.201(a) is prohibited. This 
prohibition includes but is not limited to the transfer (including the 
transfer on the books of any issuer or agent thereof), disposition, 
transportation, importation, exportation, or withdrawal of any such 
security or the endorsement or guaranty of signatures on any such 
security. This prohibition applies irrespective of the fact that at any 
time (whether prior to, on, or subsequent to the effective date) the 
registered or inscribed owner of any such security may have or might 
appear to have assigned, transferred, or otherwise disposed of the 
security.

[70 FR 17203, Apr. 5, 2005, as amended at 76 FR 38357, June 30, 2011]



Sec. 542.202  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. 
542.201(a), is null and void and shall not be the basis for the 
assertion or recognition of any interest in, or right, remedy, power, or 
privilege with respect to, such property or property interests.
    (b) No transfer before the effective date shall be the basis for the 
assertion or recognition of any right, remedy, power, or privilege with 
respect to, or any interest in, any property or interest in property 
blocked pursuant to Sec. 542.201(a), unless the person with whom such 
property is held or maintained, prior to that date, had written notice 
of the transfer or by any written evidence had recognized such transfer.
    (c) Unless otherwise provided, an appropriate license or other 
authorization issued by or pursuant to the direction or authorization of 
the Director of the Office of Foreign Assets Control before, during, or 
after a transfer shall validate such transfer or make it enforceable to 
the same extent that it would be valid or enforceable but for the 
provisions of the International Emergency Economic Powers Act, 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 was held or maintained (and as to such person only) in 
cases in which such person is able to establish to the satisfaction of 
the Director of the Office of Foreign Assets Control each of the 
following:
    (1) Such transfer did not represent a willful violation of the 
provisions of

[[Page 246]]

this part by the person with whom such property was held or maintained;
    (2) The person with whom such property 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 was held or maintained filed 
with the Office of Foreign Assets Control a report setting forth in full 
the circumstances relating to such transfer promptly upon discovery 
that:
    (i) Such transfer was in violation of the provisions of this part or 
any regulation, ruling, instruction, license, or other direction or 
authorization issued pursuant to this part;
    (ii) Such transfer was not licensed or authorized by the Director of 
the Office of Foreign Assets Control; or
    (iii) If a license did purport to cover the transfer, such license 
had been obtained by misrepresentation of a third party or withholding 
of material facts or was otherwise fraudulently obtained.

    Note to paragraph (d) of Sec. 542.202: The filing of a report in 
accordance with the provisions of paragraph (d)(3) of this section shall 
not be deemed evidence that the terms of paragraphs (d)(1) and (d)(2) of 
this section have been satisfied.

    (e) Except to the extent otherwise provided by law or unless 
licensed pursuant to this part, any attachment, judgment, decree, lien, 
execution, garnishment, or other judicial process is null and void with 
respect to any property in which, on or since the effective date, there 
existed an interest of a person whose property or interests in property 
are blocked pursuant to Sec. 542.201(a).



Sec. 542.203  Holding of funds in interest-bearing accounts; investment
and reinvestment.

    (a) Except as provided in paragraph (c) or (d) of this section, or 
as otherwise directed by the Office of Foreign Assets Control, any U.S. 
person holding funds, such as currency, bank deposits, or liquidated 
financial obligations subject to Sec. 542.201(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, provided 
the funds are invested in a money market fund or in U.S. Treasury Bills.
    (2) 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.
    (3) Funds held or placed in a blocked account pursuant to this 
paragraph (b) may not be invested in instruments the maturity of which 
exceeds 180 days. If interest is credited to a separate blocked account 
or subaccount, the name of the account party on each account must be the 
same.
    (c) Blocked funds held in instruments the maturity of which exceeds 
180 days at the time the funds become subject to Sec. 542.201(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 (b) 
or (d) of this section.
    (d) Blocked funds held in accounts or instruments outside the United 
States at the time the funds become subject to Sec. 542.201(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.

[[Page 247]]

    (e) 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 at the time the property becomes subject to 
Sec. 542.201(a). However, the Office of Foreign Assets Control may 
issue licenses permitting or directing such sales in appropriate cases.
    (f) 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 or interests in property 
are blocked pursuant to Sec. 542.201(a), nor may their holder cooperate 
in or facilitate the pledging or other attempted use of blocked funds or 
other assets as collateral.

    Note to Sec. 542.203: See Sec. 542.506 regarding investment and 
reinvestment of certain funds.



Sec. 542.204  Expenses of maintaining blocked property; liquidation 
of blocked property.

    (a) Except as otherwise authorized, and notwithstanding the 
existence of any rights or obligations conferred or imposed by any 
international agreement or contract entered into or any license or 
permit granted before 12:01 a.m., eastern daylight time, May 12, 2004, 
all expenses incident to the maintenance of physical property blocked 
pursuant to Sec. 542.201(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. 542.201(a) may, in the 
discretion of the Director, Office of Foreign Assets Control, be sold or 
liquidated and the net proceeds placed in a blocked interest-bearing 
account in the name of the owner of the property.



Sec. 542.205  Evasions; attempts; conspiracies.

    (a) Except as otherwise authorized, and notwithstanding any contract 
entered into or any license or permit granted prior to the effective 
date, any transaction by any U.S. person or within the United States on 
or after the effective date that evades or avoids, has the purpose of 
evading or avoiding, or attempts to violate any of the prohibitions set 
forth in this part is prohibited.
    (b) Except as otherwise authorized, and notwithstanding any contract 
entered into or any license or permit granted prior to the effective 
date, any conspiracy formed for the purpose of engaging in a transaction 
prohibited by this part is prohibited.



Sec. 542.206  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 importation from 
any country and the exportation to any country of information or 
informational materials, as defined in Sec. 542.304, whether commercial 
or otherwise, regardless of format or medium of transmission, are exempt 
from the prohibitions of this part.
    (2) This section does not exempt from regulation or authorize 
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 informational 
materials, or to the provision of marketing and business consulting 
services. Such prohibited transactions include, but are not limited to, 
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, 
with respect to information or informational materials imported from 
persons whose property or interests in property are blocked pursuant to 
Sec. 542.201(a), 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 from regulation or authorize 
transactions incident to the exportation of software subject to the 
Export Administration

[[Page 248]]

Regulations, 15 CFR parts 730 through 799, or to the exportation of 
goods, technology or software, 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 or interests in property are blocked pursuant to 
Sec. 542.201(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 exportation or importation 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



Sec. 542.301  Blocked account; blocked property.

    The terms blocked account and blocked property shall mean any 
account or property subject to the prohibitions in Sec. 542.201 held in 
the name of a person whose property or interests in property are blocked 
pursuant to Sec. 542.201(a), or in which such person has an interest, 
and with respect to which payments, transfers, exportations, 
withdrawals, or other dealings may not be made or effected except 
pursuant to an authorization or license from the Office of Foreign 
Assets Control expressly authorizing such action.



Sec. 542.302  Effective date.

    With respect to a person whose property or interests in property are 
blocked pursuant to a designation under Sec. 542.201(a), the effective 
date is the earlier of the date on which either actual notice or 
constructive notice is received of such person's designation.



Sec. 542.303  Entity.

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



Sec. 542.304  Information or informational materials.

    (a) For purposes of this part, the term information or informational 
materials includes, but is not limited to publications, films, posters, 
phonograph records, photographs, microfilms, microfiche, tapes, compact 
disks, CD ROMs, artworks, and news wire feeds.

    Note to paragraph (a) of Sec. 542.304. To be considered information 
or informational materials, artworks must be classified under chapter 
heading 9701, 9702, or 9703 of the Harmonized Tariff Schedule of the 
United States.

    (b) The term information or informational materials, with respect to 
United States 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) (the ``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. 542.305  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. 542.306  Licenses; general and specific.

    (a) Except as otherwise specified, the term license means any 
license or authorization contained in or issued pursuant to this part.
    (b) The term general license means any license or authorization the 
terms of which are set forth in subpart E of this part.
    (c) The term specific license means any license or authorization not 
set forth in subpart E of this part but issued pursuant to this part.

    Note to Sec. 542.306: See Sec. 501.801 of this chapter on 
licensing procedures.

[[Page 249]]



Sec. 542.307  Person.

    The term person means an individual or entity.



Sec. 542.308  Property; property interest.

    The terms property and property interest include, but are not 
limited to, money, checks, drafts, bullion, bank deposits, savings 
accounts, debts, indebtedness, obligations, notes, guarantees, 
debentures, stocks, bonds, coupons, any other financial instruments, 
bankers acceptances, mortgages, pledges, liens or other rights in the 
nature of security, warehouse receipts, bills of lading, trust receipts, 
bills of sale, any other evidences of title, ownership or indebtedness, 
letters of credit and any documents relating to any rights or 
obligations thereunder, powers of attorney, goods, wares, merchandise, 
chattels, stocks on hand, ships, goods on ships, real estate mortgages, 
deeds of trust, vendors' sales agreements, land contracts, leaseholds, 
ground rents, real estate and any other interest therein, options, 
negotiable instruments, trade acceptances, royalties, book accounts, 
accounts payable, judgments, patents, trademarks or copyrights, 
insurance policies, safe deposit boxes and their contents, annuities, 
pooling agreements, services of any nature whatsoever, contracts of any 
nature whatsoever, and any other property, real, personal, or mixed, 
tangible or intangible, or interest or interests therein, present, 
future or contingent.



Sec. 542.309  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 and, without limitation upon the foregoing, 
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. 542.310  United States.

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



Sec. 542.311  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 
credits, or purchasing or selling foreign exchange, securities, 
commodity futures or options, or procuring purchasers and sellers 
thereof, as principal or agent, including but not limited to: Depository 
institutions; banks; savings banks; trust companies; securities brokers 
and dealers; commodity futures and options brokers and dealers; forward 
contract and foreign exchange merchants; securities and commodities 
exchanges; clearing corporations; investment companies; employee benefit 
plans; and U.S. holding companies, U.S. affiliates, or U.S. subsidiaries 
of any of the foregoing. This term includes those branches, offices and 
agencies of foreign financial institutions that are located in the 
United States, but not such institutions' foreign branches, offices, or 
agencies.



Sec. 542.312  United States person; U.S. person.

    The term United States person or U.S. person means any United States 
citizen, permanent resident alien, entity

[[Page 250]]

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.



                        Subpart D_Interpretations



Sec. 542.401  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, direction, or license issued pursuant to this part refers 
to the same as currently amended.



Sec. 542.402  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 or 
under the direction of the Director of the Office of Foreign Assets 
Control does not affect any act done or omitted, or any civil or 
criminal suit or 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. 542.403  Termination and acquisition of an interest in blocked 
property.

    (a) Whenever a transaction licensed or authorized by or pursuant to 
this part results in the transfer of property (including any property 
interest) away from a person, such property shall no longer be deemed to 
be property blocked pursuant to Sec. 542.201(a), unless there exists in 
the property another interest that is blocked pursuant to Sec. 
542.201(a) or any other part of this chapter, 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 or interests in property are blocked pursuant to 
Sec. 542.201(a), such property shall be deemed to be property in which 
that person has an interest and therefore blocked.



Sec. 542.404  Transactions incidental to a licensed transaction.

    Any transaction ordinarily incident to a licensed transaction and 
necessary to give effect thereto is also authorized, except:
    (a) An incidental transaction, not explicitly authorized within the 
terms of the license, by or with a person whose property or interests in 
property are blocked pursuant to Sec. 542.201(a); or
    (b) An incidental transaction, not explicitly authorized within the 
terms of the license, involving a debit to a blocked account or a 
transfer of blocked property.



Sec. 542.405  Provision of services.

    (a) Except as provided in Sec. 542.206, the prohibitions on 
transactions involving blocked property contained in Sec. 542.201 apply 
to services performed in the United States or by U.S. persons, wherever 
located, including by an overseas branch of an entity located in the 
United States:
    (1) On behalf of or for the benefit of a person whose property or 
interests in property are blocked pursuant to Sec. 542.201(a); or
    (2) With respect to property interests subject to Sec. 542.201.
    (b) Example: U.S. persons may not, except as authorized by or 
pursuant to this part, provide legal, accounting, financial, brokering, 
freight forwarding, transportation, public relations, or other services 
to a person whose property or interests in property are blocked pursuant 
to Sec. 542.201(a).

    Note to Sec. 542.405: See Sec. Sec. 542.507 and 542.508, 
respectively, on licensing policy with regard to the provision of 
certain legal or medical services.



Sec. 542.406  Offshore transactions.

    The prohibitions in Sec. 542.201 on transactions involving blocked 
property apply to transactions by any U.S. person in a location outside 
the United States with respect to property that the U.S. person knows, 
or has reason to know, is held in the name of a person

[[Page 251]]

whose property or interests in property are blocked pursuant to Sec. 
542.201(a) or in which the U.S. person knows, or has reason to know, a 
person whose property or interests in property are blocked pursuant to 
Sec. 542.201(a) has or has had an interest since the effective date.



Sec. 542.407  Payments from blocked accounts to satisfy obligations
prohibited.

    Pursuant to Sec. 542.201, no debits may be made to a blocked 
account to pay obligations to U.S. persons or other persons, except as 
authorized pursuant to this part.



Sec. 542.408  Charitable contributions.

    Unless otherwise specifically authorized by the Office of Foreign 
Assets Control by or pursuant to this part, no charitable contribution 
or donation of funds, goods, services, or technology, including those to 
relieve human suffering, such as food, clothing or medicine, may be made 
by, to, or for the benefit of a person whose property or interests in 
property are blocked pursuant to Sec. 542.201(a). For purposes of this 
part, a contribution or donation is made by, to, or for the benefit of a 
person whose property or interests in property are blocked pursuant to 
Sec. 542.201(a) if made by, to, or in the name of such a person; if 
made by, to, 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 or donations by, to, or for such a person.



Sec. 542.409  Credit extended and cards issued by U.S. financial 
institutions.

    The prohibition in Sec. 542.201 on dealing in property subject to 
that section prohibits U.S. financial institutions from performing under 
any existing credit agreements, including, but not limited to, charge 
cards, debit cards, or other credit facilities issued by a U.S. 
financial institution to a person whose property or interests in 
property are blocked pursuant to Sec. 542.201(a).



Sec. 542.410  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. 542.201 if effected after the effective date.



  Subpart E_Licenses, Authorizations and Statements of Licensing Policy



Sec. 542.501  General and specific licensing procedures.

    For provisions relating to licensing procedures, see part 501, 
subpart E of this chapter. Licensing actions taken pursuant to part 501 
of this chapter with respect to the prohibitions contained in this part 
are considered actions taken pursuant to this part.



Sec. 542.502  Effect of license or authorization.

    (a) No license or other authorization contained in this part, or 
otherwise issued by or under the direction of the Director of the Office 
of Foreign Assets Control, authorizes or validates any transaction 
effected prior to the issuance of the license, unless specifically 
provided in such licenses or authorization.
    (b) No regulation, ruling, instruction, or license authorizes any 
transaction prohibited under this part unless the regulation, ruling, 
instruction or license is issued by the Office of Foreign Assets Control 
and specifically refers to this part. No regulation, ruling, 
instruction, or license referring to this part shall be deemed to 
authorize any transaction prohibited by any provision of this chapter 
unless the regulation, ruling, instruction, or license specifically 
refers to such provision.
    (c) Any regulation, ruling, instruction, or license authorizing any 
transaction otherwise prohibited under this part has the effect of 
removing a prohibition contained in this part from the transaction, but 
only to the extent specifically stated by its terms. Unless the 
regulation, ruling, instruction, or license otherwise specifies, such an 
authorization does not create any right, duty, obligation, claim, or 
interest in, or with respect to, any property which

[[Page 252]]

would not otherwise exist under ordinary principles of law.



Sec. 542.503  Exclusion from licenses.

    The Director of the Office of Foreign Assets Control reserves the 
right to exclude any person, property, or transaction from the operation 
of any license or from the privileges conferred by any license. The 
Director of the Office of Foreign Assets Control also reserves the right 
to restrict the applicability of any license to particular persons, 
property, transactions, or classes thereof. Such actions are binding 
upon all persons receiving actual or constructive notice of the 
exclusions or restrictions.



Sec. 542.504  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 or interests in property are blocked pursuant to Sec. 
542.201(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 only be 
made to another blocked account held in the same name.

    Note to Sec. 542.504. Please refer to Sec. 501.603 of this chapter 
for mandatory reporting requirements regarding financial transfers. See 
also Sec. 542.203 concerning the obligation to hold blocked funds in 
interest-bearing accounts.



Sec. 542.505  Entries in certain accounts for normal service charges 
authorized.

    (a) A U.S. financial institution is authorized to debit any blocked 
account held at that financial institution in payment or reimbursement 
for normal service charges owed it by the owner of that blocked account.
    (b) As used in this section, the term normal service charge 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. 542.506  Investment and reinvestment of certain funds.

    Subject to the requirements of Sec. 542.203, U.S. financial 
institutions are authorized to invest and reinvest assets blocked 
pursuant to Sec. 542.201, subject to the following conditions:
    (a) The assets representing such investments and reinvestments are 
credited to a blocked account or subaccount which 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 persons whose property or interests in 
property are blocked pursuant to Sec. 542.201(a).



Sec. 542.507  Provision of certain legal services authorized.

    (a) The provision of the following legal services to or on behalf of 
persons whose property or interests in property are blocked pursuant to 
Sec. 542.201(a) is authorized, provided that all receipts of payment of 
professional fees and reimbursement of incurred expenses must be 
specifically licensed:
    (1) Provision of legal advice and counseling on the requirements of 
and compliance with the laws of any jurisdiction within the United 
States, provided that such advice and counseling

[[Page 253]]

is not provided to facilitate transactions in violation of this part;
    (2) Representation of persons when named as defendants in or 
otherwise made parties to domestic U.S. legal, arbitration, or 
administrative proceedings;
    (3) Initiation and conduct of domestic U.S. legal, arbitration, or 
administrative proceedings in defense of property interests subject to 
U.S. jurisdiction;
    (4) Representation of persons before any Federal or State agency 
with respect to the imposition, administration, or enforcement of U.S. 
sanctions against such persons; and
    (5) Provision of legal services in any other context in which 
prevailing U.S. law requires access to legal counsel at public expense.
    (b) The provision of any other legal services to persons whose 
property or interests in property are blocked pursuant to Sec. 
542.201(a), not otherwise authorized in this part, requires the issuance 
of a specific license.
    (c) Entry into a settlement agreement affecting property or 
interests in property 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. 542.201(a) 
is prohibited unless specifically licensed in accordance with Sec. 
542.202(e).



Sec. 542.508  Authorization of emergency medical services.

    The provision of nonscheduled emergency medical services in the 
United States to persons whose property or interests in property are 
blocked pursuant to Sec. 542.201(a) is authorized, provided that all 
receipt of payment for such services must be specifically licensed.



                            Subpart F_Reports



Sec. 542.601  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



Sec. 542.701  Penalties.

    (a) Attention is directed to section 206 of the International 
Emergency Economic Powers Act (the ``Act'') (50 U.S.C. 1705), which is 
applicable to violations of the provisions of any license, ruling, 
regulation, order, direction, or instruction issued by or pursuant to 
the direction or authorization of the Secretary of the Treasury pursuant 
to this part or otherwise under the Act.
    (1) A civil penalty not to exceed the amount set forth in Section 
206 of the Act 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 the Act.

    Note to paragraph (a)(1) of Sec. 542.701: As of June 10, 2008, the 
Act provides for a maximum civil penalty not to exceed the greater of 
$250,000 or an amount that is twice the amount of the transaction that 
is the basis of the violation with respect to which the penalty is 
imposed.

    (2) A person who willfully commits, willfully attempts to commit, or 
willfully conspires to commit, or aids or abets in the commission of a 
violation of any license, order, regulation, or prohibition shall, upon 
conviction, be fined not more than $1,000,000, or if a natural person, 
may be imprisoned for not more than 20 years, or both.
    (b) Adjustments to penalty amounts. (1) The civil penalties provided 
in the Act 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 the Act are subject to 
adjustment pursuant to 18 U.S.C. 3571.
    (c) Attention is also directed to 18 U.S.C. 1001, which provides 
that whoever, in any matter within the jurisdiction of the executive, 
legislative, or judicial branch of the Government of the United States, 
knowingly and willfully 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

[[Page 254]]

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, or imprisoned not more than five years, or 
both.
    (d) Violations of this part may also be subject to relevant 
provisions of other applicable laws.

[70 FR 17203, Apr. 5, 2005, as amended at 71 FR 29253, May 22, 2006; 73 
FR 32653, June 10, 2008]



Sec. 542.702  Prepenalty notice.

    (a) When required. If the Director of the Office of Foreign Assets 
Control has reason to believe that there has occurred a violation of any 
provision of this part or a violation of the provisions of any license, 
ruling, regulation, order, direction, or instruction issued by or 
pursuant to the direction or authorization of the Secretary of the 
Treasury pursuant to this part or otherwise under the International 
Emergency Economic Powers Act, and the Director determines that further 
civil proceedings are warranted, the Director shall notify the alleged 
violator of the agency's intent to impose a monetary penalty by issuing 
a prepenalty notice. The prepenalty notice shall be in writing. The 
prepenalty notice may be issued whether or not another agency has taken 
any action with respect to the matter.
    (b) Contents of notice--(1) Facts of violation. The prepenalty 
notice shall describe the violation, specify the laws and regulations 
allegedly violated, and state the amount of the proposed monetary 
penalty.
    (2) Right to respond. The prepenalty notice also shall inform the 
respondent of the respondent's right to make a written presentation 
within the applicable 30 day period set forth in Sec. 542.703 as to why 
a monetary penalty should not be imposed or why, if imposed, the 
monetary penalty should be in a lesser amount than proposed.
    (c) Informal settlement prior to issuance of prepenalty notice. At 
any time prior to the issuance of a prepenalty notice, an alleged 
violator may request in writing that, for a period not to exceed sixty 
(60) days, the agency withhold issuance of the prepenalty notice for the 
exclusive purpose of effecting settlement of the agency's potential 
civil monetary penalty claims. In the event the Director of the Office 
of Foreign Assets Control grants the request, under terms and conditions 
within his discretion, the Office of Foreign Assets Control will agree 
to withhold issuance of the prepenalty notice for a period not to exceed 
60 days and will enter into settlement negotiations of the potential 
civil monetary penalty claim.



Sec. 542.703  Response to prepenalty notice; informal settlement.

    (a) Deadline for response. The respondent may submit a response to 
the prepenalty notice within the applicable 30-day period set forth in 
this paragraph. The Director of the Office of Foreign Assets Control may 
grant, at his discretion, an extension of time in which to submit a 
response to the prepenalty notice. The failure to submit a response 
within the applicable time period set forth in this paragraph shall be 
deemed to be a waiver of the right to respond.
    (1) Computation of time for response. A response to the prepenalty 
notice must be postmarked or date-stamped by the U.S. Postal Service (or 
foreign postal service, if mailed abroad) or courier service provider 
(if transmitted to the Office of Foreign Assets Control by courier) on 
or before the 30th day after the postmark date on the envelope in which 
the prepenalty notice was mailed. If the respondent refused delivery or 
otherwise avoided receipt of the prepenalty notice, a response must be 
postmarked or date-stamped on or before the 30th day after the date on 
the stamped postal receipt maintained at the Office of Foreign Assets 
Control. If the prepenalty notice was personally delivered to the 
respondent by a non-U.S. Postal Service agent authorized by the 
Director, a response must be postmarked or date-stamped on or before the 
30th day after the date of delivery.
    (2) Extensions of time for response. If a due date falls on a 
Federal holiday or weekend, that due date is extended to include the 
following business day. Any other extensions of time will be granted, at 
the discretion of the Director of the Office of Foreign Assets Control,

[[Page 255]]

only upon the respondent's specific request to the Office of Foreign 
Assets Control.
    (b) Form and method of response. The response must be submitted in 
handwritten or typed form and signed by the respondent or a 
representative thereof. The response need not be in any particular form. 
A copy of the written response may be sent by facsimile, but the 
original also must be sent to the Office of Foreign Assets Control Civil 
Penalties Division by mail or courier and must be postmarked or date-
stamped, in accordance with paragraph (a) of this section.
    (c) Contents of response. A written response must contain 
information sufficient to indicate that it is in response to the 
prepenalty notice and must include the Office of Foreign Assets Control 
identification number listed on the prepenalty notice.
    (1) A written response must include the respondent's full name, 
address, telephone number, and facsimile number, if available, or those 
of the representative of the respondent.
    (2) A written response should either admit or deny each specific 
violation alleged in the prepenalty notice and also state if the 
respondent has no knowledge of a particular violation. If the written 
response fails to address any specific violation alleged in the 
prepenalty notice, that alleged violation shall be deemed to be 
admitted.
    (3) A written response should include any information in defense, 
evidence in support of an asserted defense, or other factors that the 
respondent requests the Office of Foreign Assets Control to consider. 
Any defense or explanation previously made to the Office of Foreign 
Assets Control or any other agency must be repeated in the written 
response. Any defense not raised in the written response will be 
considered waived. The written response also should set forth the 
reasons why the respondent believes the penalty should not be imposed or 
why, if imposed, it should be in a lesser amount than proposed.
    (d) Failure to respond. Where the Office of Foreign Assets Control 
receives no response to a prepenalty notice within the applicable time 
period set forth in paragraph (a) of this section, a penalty notice 
generally will be issued, taking into account the mitigating and/or 
aggravating factors present in the record. If there are no mitigating 
factors present in the record, or the record contains a preponderance of 
aggravating factors, the proposed prepenalty amount generally will be 
assessed as the final penalty.
    (e) Informal settlement. In addition to or as an alternative to a 
written response to a prepenalty notice, the respondent or respondent's 
representative may contact the Office of Foreign Assets Control as 
advised in the prepenalty notice to propose the settlement of 
allegations contained in the prepenalty notice and related matters. 
However, the requirements set forth in paragraph (f) of this section as 
to oral communication by the representative must first be fulfilled. In 
the event of settlement at the prepenalty stage, the claim proposed in 
the prepenalty notice will be withdrawn, the respondent will not be 
required to take a written position on allegations contained in the 
prepenalty notice, and the Office of Foreign Assets Control will make no 
final determination as to whether a violation occurred. The amount 
accepted in settlement of allegations in a prepenalty notice may vary 
from the civil penalty that might finally be imposed in the event of a 
formal determination of violation. In the event no settlement is 
reached, the time limit specified in paragraph (a) of this section for 
written response to the prepenalty notice will remain in effect unless 
additional time is granted by the Office of Foreign Assets Control.
    (f) Representation. A representative of the respondent may act on 
behalf of the respondent, but any oral communication with the Office of 
Foreign Assets Control prior to a written submission regarding the 
specific allegations contained in the prepenalty notice must be preceded 
by a written letter of representation, unless the prepenalty notice was 
served upon the respondent in care of the representative.



Sec. 542.704  Penalty imposition or withdrawal.

    (a) No violation. If, after considering any response to the 
prepenalty notice and any relevant facts, the Director of

[[Page 256]]

the Office of Foreign Assets Control determines that there was no 
violation by the respondent named in the prepenalty notice, the Director 
shall notify the respondent in writing of that determination and of the 
cancellation of the proposed monetary penalty.
    (b) Violation. (1) If, after considering any written response to the 
prepenalty notice, or default in the submission of a written response, 
and any relevant facts, the Director of the Office of Foreign Assets 
Control determines that there was a violation by the respondent named in 
the prepenalty notice, the Director is authorized to issue a written 
penalty notice to the respondent of the determination of the violation 
and the imposition of the monetary penalty.
    (2) The penalty notice shall inform the respondent that payment or 
arrangement for installment payment of the assessed penalty must be made 
within 30 days of the date of mailing of the penalty notice by the 
Office of Foreign Assets Control.
    (3) The penalty notice shall inform the respondent of the 
requirement to furnish the respondent's taxpayer identification number 
pursuant to 31 U.S.C. 7701 and that such number will be used for 
purposes of collecting and reporting on any delinquent penalty amount.
    (4) The issuance of the penalty notice finding a violation and 
imposing a monetary penalty shall constitute final agency action. The 
respondent has the right to seek judicial review of that final agency 
action in Federal District Court.



Sec. 542.705  Administrative collection; referral to United States
Department of Justice.

    In the event that the respondent does not pay the penalty imposed 
pursuant to this part or make payment arrangements acceptable to the 
Director of the Office of Foreign Assets Control within 30 days of the 
date of mailing of the penalty notice, the matter may be referred for 
administrative collection measures by the Department of the Treasury or 
to the United States Department of Justice for appropriate action to 
recover the penalty in a civil suit in a Federal District Court.



                          Subpart H_Procedures



Sec. 542.801  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. 542.802  Delegation by the Secretary of the Treasury.

    Any action that the Secretary of the Treasury is authorized to take 
pursuant to Executive Order 13338 of May 11, 2004 (69 FR 26751, May 13, 
2004), and any further Executive orders relating to the national 
emergency declared therein, may be taken by the Director of the Office 
of Foreign Assets Control or by any other person to whom the Secretary 
of the Treasury has delegated authority so to act.



                    Subpart I_Paperwork Reduction Act



Sec. 542.901  Paperwork Reduction Act notice.

    For approval by the Office of Management and Budget (``OMB'') under 
the Paperwork Reduction Act of 1995 (44 U.S.C. 3507) of information 
collections relating to recordkeeping and reporting requirements, 
licensing procedures (including those pursuant to statements of 
licensing policy), and other procedures, see Sec. 501.901 of this 
chapter. An agency may not conduct or sponsor, and a person is not 
required to respond to, a collection of information unless it displays a 
valid control number assigned by OMB.



PART 543_C[ocirc]TE D'IVOIRE SANCTIONS REGULATIONS--Table of Contents



      Subpart A_Relation of This Part to Other Laws and Regulations

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

[[Page 257]]

                         Subpart B_Prohibitions

543.201 Prohibited transactions involving blocked property.
543.202 Effect of transfers violating the provisions of this part.
543.203 Holding of funds in interest-bearing accounts; investment and 
          reinvestment.
543.204 Expenses of maintaining blocked physical property; liquidation 
          of blocked property.
543.205 Evasions; attempts; conspiracies.

                      Subpart C_General Definitions

543.301 Arms or any related materiel.
543.302 Blocked account; blocked property.
543.303 Effective date.
543.304 Entity.
543.305 Interest.
543.306 Licenses; general and specific.
543.307 Person.
543.308 Property; property interest.
543.309 Transfer.
543.310 United States.
543.311 U.S. financial institution.
543.312 United States person; U.S. person.
543.313 Financial, material, or technological support.

                        Subpart D_Interpretations

543.401 Reference to amended sections.
543.402 Effect of amendment.
543.403 Termination and acquisition of an interest in blocked property.
543.404 Transactions ordinarily incident to a licensed transaction.
543.405 Provision of services.
543.406 Offshore transactions.
543.407 Payments from blocked accounts to satisfy obligations 
          prohibited.
543.408 Charitable contributions.
543.409 Credit extended and cards issued by U.S. financial institutions.
543.410 Setoffs prohibited.
543.411 Entities owned by a person whose property and interests in 
          property are blocked.

 Subpart E_Licenses, Authorizations, and Statements of Licensing Policy

543.501 General and specific licensing procedures.
543.502 Effect of license or authorization.
543.503 Exclusion from licenses.
543.504 Payments and transfers to blocked accounts in U.S. financial 
          institutions.
543.505 Entries in certain accounts for normal service charges 
          authorized.
543.506 Investment and reinvestment of certain funds.
543.507 Provision of certain legal services authorized.
543.508 Authorization of emergency medical services.

                            Subpart F_Reports

543.601 Records and reports.

                           Subpart G_Penalties

543.701 Penalties.
543.702 Pre-Penalty Notice; settlement.
543.703 Penalty imposition.
543.704 Administrative collection; referral to United States Department 
          of Justice.

                          Subpart H_Procedures

543.801 Procedures.
543.802 Delegation by the Secretary of the Treasury.

                    Subpart I_Paperwork Reduction Act

543.901 Paperwork Reduction Act notice.

    Authority: 3 U.S.C. 301; 31 U.S.C. 321(b); 50 U.S.C. 1601-1651, 
1701-1706; 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. 
13396, 71 FR 7389, 3 CFR, 2006 Comp., p. 209.

    Source: 74 FR 16764, Apr. 13, 2009, unless otherwise noted.



      Subpart A_Relation of This Part to Other Laws and Regulations



Sec. 543.101  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.

[[Page 258]]



                         Subpart B_Prohibitions



Sec. 543.201  Prohibited transactions involving blocked property.

    (a) Except as authorized by regulations, orders, directives, 
rulings, instructions, licenses, or otherwise, and notwithstanding any 
contracts entered into or any license or permit granted prior to the 
effective date, all property and interests in property that are in the 
United States, that hereafter come within the United States, or that are 
or hereafter come within the possession or control of U.S. persons, 
including their overseas branches, of the following persons are blocked 
and may not be transferred, paid, exported, withdrawn, or otherwise 
dealt in:
    (1) Any person listed in the Annex to Executive Order 13396 of 
February 7, 2006 (71 FR 7389, February 10, 2006); and
    (2) Any person determined by the Secretary of the Treasury, after 
consultation with the Secretary of State:
    (i) To constitute a threat to the peace and national reconciliation 
process in C[ocirc]te d'Ivoire, such as by blocking the implementation 
of the Linas-Marcoussis Agreement of January 24, 2003, the Accra III 
Agreement of July 30, 2004, and the Pretoria Agreement of April 6, 2005;
    (ii) To be responsible for serious violations of international law 
in C[ocirc]te d'Ivoire;
    (iii) To have directly or indirectly supplied, sold, or transferred 
to C[ocirc]te d'Ivoire arms or any related materiel or any assistance, 
advice, or training related to military activities;
    (iv) To have publicly incited violence and hatred contributing to 
the conflict in C[ocirc]te d'Ivoire;
    (v) To have materially assisted, sponsored, or provided financial, 
material, or technological support for, or goods or services in support 
of, the activities described in paragraphs (a)(2)(i) through (a)(2)(iv) 
of this section or any person whose property or interests in property 
are blocked pursuant to this paragraph (a); or
    (vi) To be owned or controlled by, or acting or purporting to act 
for or on behalf of, directly or indirectly, any person whose property 
and interests in property are blocked pursuant to this paragraph (a).

    Note 1 to paragraph (a) of Sec. 543.201: The names of persons 
listed in or designated pursuant to Executive Order 13396, 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 the Office of Foreign Assets Control's Specially 
Designated Nationals and Blocked Persons List (``SDN List'') with the 
identifier ``[COTED].'' The SDN List is accessible through the following 
page on the Office of Foreign Assets Control's Web site: http://
www.treasury.gov/sdn. Additional information pertaining to the SDN List 
can be found in appendix A to this chapter. See Sec. 543.411 concerning 
entities that may not be listed on the SDN List but whose property and 
interests in property are nevertheless blocked pursuant to paragraph (a) 
of this section.
    Note 2 to paragraph (a) of Sec. 543.201: The International 
Emergency Economic Powers Act (50 U.S.C. 1701-1706), in Section 203 (50 
U.S.C. 1702), authorizes the blocking of property and interests in 
property of a person during the pendency of an investigation. The names 
of persons whose property and interests in property are blocked pending 
investigation pursuant to paragraph (a) of this section also are 
published in the Federal Register and incorporated into the SDN List 
with the identifier ``[BPI-COTED].''
    Note 3 to paragraph (a) of Sec. 543.201: Sections 501.806 and 
501.807 of this chapter describe the procedures to be followed by 
persons seeking, respectively, the unblocking of funds that they believe 
were blocked due to mistaken identity, or administrative reconsideration 
of their status as persons whose property and interests in property are 
blocked pursuant to paragraph (a) of this section.

    (b) The prohibitions in paragraph (a) of this section include, but 
are not limited to, prohibitions on the following transactions when 
engaged in by a United States person or within the United States:
    (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 otherwise authorized by this part or by a specific 
license expressly referring to this section, any dealing in any security 
(or evidence

[[Page 259]]

thereof) held within the possession or control of a U.S. person and 
either registered or inscribed in the name of, or known to be held for 
the benefit of, or issued by, any person whose property and interests in 
property are blocked pursuant to paragraph (a) of this section is 
prohibited. This prohibition includes but is not limited to the transfer 
(including the transfer on the books of any issuer or agent thereof), 
disposition, transportation, importation, exportation, or withdrawal of, 
or the endorsement or guaranty of signatures on, any such security on or 
after the effective date. This prohibition applies irrespective of the 
fact that at any time (whether prior to, on, or subsequent to the 
effective date) the registered or inscribed owner of any such security 
may have or might appear to have assigned, transferred, or otherwise 
disposed of the security.

[74 FR 16764, Apr. 13, 2009, as amended at 76 FR 38537, June 30, 2011]



Sec. 543.202  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. 
543.201(a), is null and void and shall not be the basis for the 
assertion or recognition of any interest in or right, remedy, power, or 
privilege with respect to such property or property interests.
    (b) No transfer before the effective date shall be the basis for the 
assertion or recognition of any right, remedy, power, or privilege with 
respect to, or any interest in, any property or interest in property 
blocked pursuant to Sec. 543.201(a), unless the person who holds or 
maintains such property, prior to that date, had written notice of the 
transfer or by any written evidence had recognized such transfer.
    (c) Unless otherwise provided, an appropriate license or other 
authorization issued by or pursuant to the direction or authorization of 
the Director of the Office of Foreign Assets Control before, during, or 
after a transfer shall validate such transfer or make it enforceable to 
the same extent that it would be valid or enforceable but for the 
provisions of IEEPA, Executive Order 13396, this part, and any 
regulation, order, directive, ruling, instruction, or license issued 
pursuant to this part.
    (d) Transfers of property that otherwise would be null and void or 
unenforceable by virtue of the provisions of this section shall not be 
deemed to be null and void or unenforceable as to any person with whom 
such property is or was held or maintained (and as to such person only) 
in cases in which such person is able to establish to the satisfaction 
of the Director of the Office of Foreign Assets Control each of the 
following:
    (1) Such transfer did not represent a willful violation of the 
provisions of this part by the person with whom such property is or was 
held or maintained (and as to such person only);
    (2) The person with whom such property is or was held or maintained 
did not have reasonable cause to know or suspect, in view of all the 
facts and circumstances known or available to such person, that such 
transfer required a license or authorization issued pursuant to this 
part and was not so licensed or authorized, or, if a license or 
authorization did purport to cover the transfer, that such license or 
authorization had been obtained by misrepresentation of a third party or 
withholding of material facts or was otherwise fraudulently obtained; 
and
    (3) The person with whom such property is or was held or maintained 
filed with the Office of Foreign Assets Control a report setting forth 
in full the circumstances relating to such transfer promptly upon 
discovery that:
    (i) Such transfer was in violation of the provisions of this part or 
any regulation, ruling, instruction, license, or other directive or 
authorization issued pursuant to this part;
    (ii) Such transfer was not licensed or authorized by the Director of 
the Office of Foreign Assets Control; or
    (iii) If a license did purport to cover the transfer, such license 
had been obtained by misrepresentation of a third party or withholding 
of material facts or was otherwise fraudulently obtained.


[[Page 260]]


    Note to paragraph (d) of Sec. 543.202: The filing of a report in 
accordance with the provisions of paragraph (d)(3) of this section shall 
not be deemed evidence that the terms of paragraphs (d)(1) and (d)(2) of 
this section have been satisfied.

    (e) Unless licensed pursuant to this part, any attachment, judgment, 
decree, lien, execution, garnishment, or other judicial process is null 
and void with respect to any property in which, on or since the 
effective date, there existed an interest of a person whose property and 
interests in property are blocked pursuant to Sec. 543.201(a).



Sec. 543.203  Holding of funds in interest-bearing accounts; investment
and reinvestment.

    (a) Except as provided in paragraphs (c) or (d) of this section, or 
as otherwise directed by the Office of Foreign Assets Control, any U.S. 
person holding funds, such as currency, bank deposits, or liquidated 
financial obligations, subject to Sec. 543.201(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) 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.
    (3) Funds held or placed in a blocked account pursuant to this 
paragraph (b) may not be invested in instruments the maturity of which 
exceeds 180 days. If interest is credited to a separate blocked account 
or subaccount, the name of the account party on each account must be the 
same.
    (c) Blocked funds held in instruments the maturity of which exceeds 
180 days at the time the funds become subject to Sec. 543.201(a) may 
continue to be held until maturity in the original instrument, provided 
any interest, earnings, or other proceeds derived therefrom are paid 
into a blocked interest-bearing account in accordance with paragraphs 
(b) or (d) of this section.
    (d) Blocked funds held in accounts or instruments outside the United 
States at the time the funds become subject to Sec. 543.201(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.
    (e) This section does not create an affirmative obligation for the 
holder of blocked tangible property, such as chattels or real estate, or 
of other blocked property, such as debt or equity securities, to sell or 
liquidate such property. However, the Office of Foreign Assets Control 
may issue licenses permitting or directing such sales or liquidation in 
appropriate cases.
    (f) 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. 543.201(a), nor may their holder cooperate 
in or facilitate the pledging or other attempted use as collateral of 
blocked funds or other assets.



Sec. 543.204  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. 543.201(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. 543.201(a) may, in the 
discretion of the Office of Foreign Assets Control, be sold or 
liquidated and the net proceeds placed in a blocked interest-bearing 
account in the name of the owner of the property.

[[Page 261]]



Sec. 543.205  Evasions; attempts; conspiracies.

    (a) Except as otherwise authorized, and notwithstanding any contract 
entered into or any license or permit granted prior to the effective 
date, any transaction by a U.S. person or within the United States on or 
after the effective date that evades or avoids, has the purpose of 
evading or avoiding, or attempts to violate any of the prohibitions set 
forth in this part is prohibited.
    (b) Except as otherwise authorized, and notwithstanding any contract 
entered into or any license or permit granted prior to the effective 
date, any conspiracy formed to violate the prohibitions set forth in 
this part is prohibited.



                      Subpart C_General Definitions



Sec. 543.301  Arms or any related materiel.

    The term arms or any related materiel means arms or related materiel 
of all types, including military aircraft and equipment, but excludes:
    (a) Supplies and technical assistance intended solely for the 
support of or use by the United Nations Operation in C[ocirc]te d'Ivoire 
and forces of France who support them;
    (b) Supplies of non-lethal military equipment intended solely for 
humanitarian or protective use, and related technical assistance and 
training;
    (c) Supplies of protective clothing, including flak jackets and 
military helmets, temporarily exported to C[ocirc]te d'Ivoire for use by 
United Nations personnel, representatives of the media, and humanitarian 
and development workers and associated personnel, for their personal use 
only;
    (d) Supplies temporarily exported to C[ocirc]te d'Ivoire to the 
forces of a country that is taking action solely and directly to 
facilitate the evacuation of its nationals and those for whom it has 
consular responsibility in C[ocirc]te d'Ivoire; and
    (e) Supplies of arms and related materiel and technical training and 
assistance intended solely for support of or use in the process of 
restructuring defense and security forces pursuant to paragraph 3, 
subparagraph (f) of the Linas-Marcoussis Agreement.



Sec. 543.302  Blocked account; blocked property.

    The terms blocked account and blocked property shall mean any 
account or property subject to the prohibitions in Sec. 543.201 held in 
the name of a person whose property and interests in property are 
blocked pursuant to Sec. 543.201(a), or in which such person has an 
interest, and with respect to which payments, transfers, exportations, 
withdrawals, or other dealings may not be made or effected except 
pursuant to an authorization or license from the Office of Foreign 
Assets Control expressly authorizing such action.

    Note to Sec. 543.302: See Sec. 543.411 concerning the blocked 
status of property and interests in property of an entity that is 50 
percent or more owned by a person whose property and interests in 
property are blocked pursuant to Sec. 543.201(a).



Sec. 543.303  Effective date.

    The term effective date refers to the effective date of the 
applicable prohibitions and directives contained in this part as 
follows:
    (a) With respect to a person whose property and interests in 
property are blocked pursuant to Sec. 543.201(a)(1), 12:01 a.m. eastern 
standard time, February 8, 2006;
    (b) With respect to a person whose property and interests in 
property are blocked pursuant to Sec. 543.201(a)(2), the earlier of the 
date of actual or constructive notice of such person's designation.



Sec. 543.304  Entity.

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



Sec. 543.305  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. 543.306  Licenses; general and specific.

    (a) Except as otherwise specified, the term license means any 
license or authorization contained in or issued pursuant to this part.

[[Page 262]]

    (b) The term general license means any license or authorization the 
terms of which are set forth in subpart E of this part.
    (c) The term specific license means any license or authorization not 
set forth in subpart E of this part but issued pursuant to this part.

    Note to Sec. 543.306: See Sec. 501.801 of this chapter on 
licensing procedures.



Sec. 543.307  Person.

    The term person means an individual or entity.



Sec. 543.308  Property; property interest.

    The terms property and property interest include, but are not 
limited to, money, checks, drafts, bullion, bank deposits, savings 
accounts, debts, indebtedness, obligations, notes, guarantees, 
debentures, stocks, bonds, coupons, any other financial instruments, 
bankers acceptances, mortgages, pledges, liens or other rights in the 
nature of security, warehouse receipts, bills of lading, trust receipts, 
bills of sale, any other evidences of title, ownership or indebtedness, 
letters of credit and any documents relating to any rights or 
obligations thereunder, powers of attorney, goods, wares, merchandise, 
chattels, stocks on hand, ships, goods on ships, real estate mortgages, 
deeds of trust, vendors' sales agreements, land contracts, leaseholds, 
ground rents, real estate and any other interest therein, options, 
negotiable instruments, trade acceptances, royalties, book accounts, 
accounts payable, judgments, patents, trademarks or copyrights, 
insurance policies, safe deposit boxes and their contents, annuities, 
pooling agreements, services of any nature whatsoever, contracts of any 
nature whatsoever, and any other property, real, personal, or mixed, 
tangible or intangible, or interest or interests therein, present, 
future or contingent.



Sec. 543.309  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 and, without limitation upon the foregoing, 
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. 543.310  United States.

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



Sec. 543.311  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 
credits, or purchasing or selling foreign exchange, securities, 
commodity futures or options, or procuring purchasers and sellers 
thereof, as principal or agent; including but not limited to depository 
institutions, banks, savings banks, trust companies, securities brokers 
and dealers, commodity futures and options brokers and dealers, forward 
contract and foreign exchange merchants, securities and commodities 
exchanges, clearing corporations, investment companies, employee benefit 
plans, and U.S. holding companies, U.S. affiliates, or U.S. subsidiaries 
of any of the foregoing. This term includes those

[[Page 263]]

branches, offices and agencies of foreign financial institutions that 
are located in the United States, but not such institutions' foreign 
branches, offices, or agencies.



Sec. 543.312  United States person; U.S. person.

    The term United States person or U.S. person means any United States 
citizen, permanent resident alien, entity organized under the laws of 
the United States or any jurisdiction within the United States 
(including foreign branches), or any person in the United States.



Sec. 543.313  Financial, material, or technological support.

    The term financial, material, or technological support, as used in 
Sec. 543.201(a)(2)(v) of this part, means any property, tangible or 
intangible, including but not limited to currency, financial 
instruments, securities, or any other transmission of value; weapons or 
related materiel; chemical or biological agents; explosives; false 
documentation or identification; communications equipment; computers; 
electronic or other devices or equipment; technologies; lodging; safe 
houses; facilities; vehicles or other means of transportation; or goods. 
``Technologies'' as used in this definition means specific information 
necessary for the development, production, or use of a product, 
including related technical data such as blueprints, plans, diagrams, 
models, formulae, tables, engineering designs and specifications, 
manuals, or other recorded instructions.

[77 FR 6464, Feb. 8, 2012]



                        Subpart D_Interpretations



Sec. 543.401  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. 543.402  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 or 
under the direction of the Director of the Office of Foreign Assets 
Control does not affect any act done or omitted, or any civil or 
criminal suit or 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. 543.403  Termination and acquisition of an interest in blocked 
property.

    (a) Whenever a transaction licensed or authorized by or pursuant to 
this part results in the transfer of property (including any property 
interest) away from a person, such property shall no longer be deemed to 
be property blocked pursuant to Sec. 543.201(a), unless there exists in 
the property another interest that is blocked pursuant to Sec. 
543.201(a) or any other part of this chapter, 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. 543.201(a), such property shall be deemed to be property in which 
that person has an interest and therefore blocked.



Sec. 543.404  Transactions ordinarily incident to a licensed transaction.

    Any transaction ordinarily incident to a licensed transaction and 
necessary to give effect thereto is also authorized, except:
    (a) An ordinarily incident transaction, not explicitly authorized 
within the terms of the license, by or with a person whose property and 
interests in property are blocked pursuant to Sec. 543.201(a); or

[[Page 264]]

    (b) An ordinarily incident transaction, not explicitly authorized 
within the terms of the license, involving a debit to a blocked account 
or a transfer of blocked property.
    (c) Example. A license authorizing Company A, whose property and 
interests in property are blocked pursuant to Sec. 543.201(a), to 
complete a securities sale also authorizes all activities by other 
parties required to complete the sale, including transactions by the 
buyer, broker, transfer agents, banks, etc., provided that such other 
parties are not themselves persons whose property and interests in 
property are blocked pursuant to Sec. 543.201(a).



Sec. 543.405  Provision of services.

    (a) The prohibitions on transactions involving blocked property 
contained in Sec. 543.201 apply to services performed in the United 
States or by U.S. persons, wherever located, including by an overseas 
branch of an entity located in the United States:
    (1) On behalf of or for the benefit of a person whose property and 
interests in property are blocked pursuant to Sec. 543.201(a); or
    (2) With respect to property interests subject to Sec. 543.201.
    (b) Example. U.S. persons may not, except as authorized by or 
pursuant to this part, provide legal, accounting, financial, brokering, 
freight forwarding, transportation, public relations, or other services 
to a person whose property and interests in property are blocked 
pursuant to Sec. 543.201(a).

    Note to Sec. 543.405: See Sec. Sec. 543.507 and 543.508 on 
licensing policy with regard to the provision of certain legal and 
medical services.



Sec. 543.406  Offshore transactions.

    The prohibitions in Sec. 543.201 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. 543.201(a), or property in which a person whose 
property and interests in property are blocked pursuant to Sec. 
543.201(a) has or has had an interest since the effective date.



Sec. 543.407  Payments from blocked accounts to satisfy obligations
prohibited.

    Pursuant to Sec. 543.201, no debits may be made to a blocked 
account to pay obligations to U.S. persons or other persons, except as 
authorized by or pursuant to this part.



Sec. 543.408  Charitable contributions.

    Unless specifically authorized by the Office of Foreign Assets 
Control pursuant to this part, no charitable contribution of funds, 
goods, services, or technology, including contributions to relieve human 
suffering, such as food, clothing or medicine, may be made by, to, or 
for the benefit of a person whose property and interests in property are 
blocked pursuant to Sec. 543.201(a). For the purposes of this part, a 
contribution is made by, to, or for the benefit of a person whose 
property and interests in property are blocked pursuant to Sec. 
543.201(a) if made by, to, or in the name of such a person; if made by, 
to, 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.



Sec. 543.409  Credit extended and cards issued by U.S. financial 
institutions.

    The prohibition in Sec. 543.201 on dealing in property subject to 
that section prohibits U.S. financial institutions from performing under 
any existing credit agreements, including, but not limited to, charge 
cards, debit cards, or other credit facilities issued by a U.S. 
financial institution to a person whose property and interests in 
property are blocked pursuant to Sec. 543.201(a).



Sec. 543.410  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. 543.201 if effected after the effective date.



Sec. 543.411  Entities owned by a person whose property and interests
in property are blocked.

    A person whose property and interests in property are blocked 
pursuant

[[Page 265]]

to Sec. 543.201(a) has an interest in all property and interests in 
property of an entity in which it owns, directly or indirectly, a 50 
percent or greater interest. The property and interests in property of 
such an entity, therefore, are blocked, and such an entity is a person 
whose property and interests in property are blocked pursuant to Sec. 
543.201(a), regardless of whether the entity itself is listed in the 
Annex to Executive Order 13396 or designated pursuant to Sec. 
543.201(a).



  Subpart E_Licenses, Authorizations and Statements of Licensing Policy



Sec. 543.501  General and specific licensing procedures.

    For provisions relating to licensing procedures, see part 501, 
subpart E of this chapter. Licensing actions taken pursuant to part 501 
of this chapter with respect to the prohibitions contained in this part 
are considered actions taken pursuant to this part.



Sec. 543.502  Effect of license or authorization.

    (a) No license or other authorization contained in this part, or 
otherwise issued by or under the direction of the Director of the Office 
of Foreign Assets Control, authorizes or validates any transaction 
effected prior to the issuance of such license or other authorization, 
unless specifically provided in such license or authorization.
    (b) No regulation, ruling, instruction, or license authorizes any 
transaction prohibited under this part unless the regulation, ruling, 
instruction, or license is issued by the Office of Foreign Assets 
Control and specifically refers to this part. No regulation, ruling, 
instruction, or license referring to this part shall be deemed to 
authorize any transaction prohibited by any other provision of this 
chapter unless the regulation, ruling, instruction, or license 
specifically refers to such provision.
    (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.



Sec. 543.503  Exclusion from licenses.

    The Director of the Office of Foreign Assets Control reserves the 
right to exclude any person, property, or transaction from the operation 
of any license or from the privileges conferred by any license. The 
Director of the Office of Foreign Assets Control also reserves the right 
to restrict the applicability of any license to particular persons, 
property, transactions, or classes thereof. Such actions are binding 
upon actual or constructive notice of the exclusions or restrictions.



Sec. 543.504  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. 
543.201(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. 543.504: See Sec. 501.603 of this chapter for 
mandatory reporting requirements regarding financial transfers. See also 
Sec. 543.203 concerning the obligation to hold blocked funds in 
interest-bearing accounts.



Sec. 543.505  Entries in certain accounts for normal service charges 
authorized.

    (a) A U.S. financial institution is authorized to debit any blocked 
account held at that financial institution in payment or reimbursement 
for normal

[[Page 266]]

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. 543.506  Investment and reinvestment of certain funds.

    Subject to the requirements of Sec. 543.203, U.S. financial 
institutions are authorized to invest and reinvest assets blocked 
pursuant to Sec. 543.201, 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. 543.201(a).



Sec. 543.507  Provision of certain legal services authorized.

    (a) The provision of the following legal services to or on behalf of 
persons whose property and interests in property are blocked pursuant to 
Sec. 543.201(a) is authorized, provided that all receipts of payment of 
professional fees and reimbursement of incurred expenses must be 
specifically licensed:
    (1) Provision of legal advice and counseling on the requirements of 
and compliance with the laws of the United States or any jurisdiction 
within the United States, provided that such advice and counseling are 
not provided to facilitate transactions in violation of this part;
    (2) Representation of persons named as defendants in or otherwise 
made parties to domestic U.S. legal, arbitration, or administrative 
proceedings;
    (3) Initiation and conduct of domestic U.S. legal, arbitration, or 
administrative proceedings in defense of property interests subject to 
U.S. jurisdiction;
    (4) Representation of persons before any federal or state agency 
with respect to the imposition, administration, or enforcement of U.S. 
sanctions against such persons; and
    (5) Provision of legal services in any other context in which 
prevailing U.S. law requires access to legal counsel at public expense.
    (b) The provision of any other legal services to persons whose 
property and interests in property are blocked pursuant to Sec. 
543.201(a), 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. 543.201(a) is prohibited unless specifically licensed 
in accordance with Sec. 543.202(e).



Sec. 543.508  Authorization of emergency medical services.

    The provision of nonscheduled emergency medical services in the 
United States to persons whose property and interests in property are 
blocked pursuant to Sec. 543.201(a) is authorized, provided that all 
receipt of payment for such services must be specifically licensed.



                            Subpart F_Reports



Sec. 543.601  Records and reports.

    For provisions relating to required records and reports, see part 
501, subpart C, of this chapter. Recordkeeping

[[Page 267]]

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



Sec. 543.701  Penalties.

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

    Note to paragraph (a)(1) of Sec. 543.701: As of the date of 
publication in the Federal Register of the final rule adding this part 
to 31 CFR chapter V (April 13, 2009), IEEPA provides for a maximum civil 
penalty not to exceed the greater of $250,000 or an amount that is twice 
the amount of the transaction that is the basis of the violation with 
respect to which the penalty is imposed.

    (2) A person who willfully commits, willfully attempts to commit, or 
willfully conspires to commit, or aids or abets in the commission of a 
violation of any license, order, regulation, or prohibition may, upon 
conviction, be fined not more than $1,000,000, or if a natural person, 
be imprisoned for not more than 20 years, or both.
    (b) Adjustments to penalty amounts. (1) The civil penalties provided 
in IEEPA are subject to adjustment pursuant to the Federal Civil 
Penalties Inflation Adjustment Act of 1990 (Pub. L. 101-410, as amended, 
28 U.S.C. 2461 note).
    (2) The criminal penalties provided in IEEPA are subject to 
adjustment pursuant to 18 U.S.C. 3571.
    (c) Attention is directed to section 5 of the United Nations 
Participation Act, as amended (22 U.S.C. 287c(b)) (``UNPA''), which 
provides that any person who willfully violates or evades or attempts to 
violate or evade any order, rule, or regulation issued by the President 
pursuant to the authority granted in that section, upon conviction, 
shall be fined not more than $10,000 and, if a natural person, may also 
be imprisoned for not more than 10 years; and the officer, director, or 
agent of any corporation who knowingly participates in such violation or 
evasion shall be punished by a like fine, imprisonment, or both and any 
property, funds, securities, papers, or other articles or documents, or 
any vessel, together with her tackle, apparel, furniture, and equipment, 
or vehicle, or aircraft, concerned in such violation shall be forfeited 
to the United States.
    (d) Violations involving transactions described at section 
203(b)(1),(3), and (4) of IEEPA shall be subject only to the penalties 
set forth in paragraph (c) of this section.
    (e) Attention is also directed to 18 U.S.C. 1001, which provides 
that whoever, in any matter within the jurisdiction of the executive, 
legislative, or judicial branch of the Government of the United States, 
knowingly and willfully 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 not more than five years, or 
both.
    (f) Violations of this part may also be subject to relevant 
provisions of other applicable laws.



Sec. 543.702  Pre-Penalty Notice; settlement.

    (a) When required. If the Office of Foreign Assets Control has 
reason to believe that there has occurred a violation of any provision 
of this part or a violation of the provisions of any license, ruling, 
regulation, order, direction, or instruction issued by or pursuant to 
the direction or authorization of the Secretary of the Treasury pursuant 
to this part or otherwise under IEEPA and determines that a civil 
monetary penalty is warranted, the Office of Foreign Assets Control will 
issue a Pre-

[[Page 268]]

Penalty Notice informing the alleged violator of the agency's intent to 
impose a monetary penalty. A Pre-Penalty Notice shall be in writing. The 
Pre-Penalty Notice may be issued whether or not another agency has taken 
any action with respect to the matter. For a description of the contents 
of a Pre-Penalty Notice, see Appendix A to part 501 of this chapter.
    (b)(1) Right to respond. An alleged violator has the right to 
respond to a Pre-Penalty Notice by making a written presentation to the 
Office of Foreign Assets Control. For a description of the information 
that should be included in such a response, see appendix A to part 501 
of this chapter.
    (2) Deadline for response. A response to a Pre-Penalty Notice must 
be made within the applicable 30-day period set forth in this paragraph. 
The failure to submit a response within the applicable time period set 
forth in this paragraph shall be deemed to be a waiver of the right to 
respond.
    (i) Computation of time for response. A response to a Pre-Penalty 
Notice must be postmarked or date-stamped by the U.S. Postal Service (or 
foreign postal service, if mailed abroad) or courier service provider 
(if transmitted to the Office of Foreign Assets Control by courier) on 
or before the 30th day after the postmark date on the envelope in which 
the Pre-Penalty Notice was mailed. If the Pre-Penalty Notice was 
personally delivered by a non-U.S. Postal Service agent authorized by 
the Office of Foreign Assets Control, a response must be postmarked or 
date-stamped on or before the 30th day after the date of delivery.
    (ii) Extensions of time for response. If a due date falls on a 
federal holiday or weekend, that due date is extended to include the 
following business day. Any other extensions of time will be granted, at 
the discretion of the Office of Foreign Assets Control, only upon 
specific request to the Office of Foreign Assets Control.
    (3) Form and method of response. A response to a Pre-Penalty Notice 
need not be in any particular form, but it must be typewritten and 
signed by the alleged violator or a representative thereof, must contain 
information sufficient to indicate that it is in response to the Pre-
Penalty Notice, and must include the Office of Foreign Assets Control 
identification number listed on the Pre-Penalty Notice. A copy of the 
written response may be sent by facsimile, but the original also must be 
sent to the Office of Foreign Assets Control Civil Penalties Division by 
mail or courier and must be postmarked or date-stamped, in accordance 
with paragraph (b)(2) of this section.
    (c) Settlement. Settlement discussion may be initiated by the Office 
of Foreign Assets Control, the alleged violator, or the alleged 
violator's authorized representative. For a description of practices 
with respect to settlement, see appendix A to part 501 of this chapter.
    (d) Guidelines. Guidelines for the imposition or settlement of civil 
penalties by the Office of Foreign Assets Control are contained in 
Appendix A to part 501 of this chapter.
    (e) Representation. A representative of the alleged violator may act 
on behalf of the alleged violator, but any oral communication with the 
Office of Foreign Assets Control prior to a written submission regarding 
the specific allegations contained in the Pre-Penalty Notice must be 
preceded by a written letter of representation, unless the Pre-Penalty 
Notice was served upon the alleged violator in care of the 
representative.



Sec. 543.703  Penalty imposition.

    If, after considering any written response to the Pre-Penalty Notice 
and any relevant facts, the Office of Foreign Assets Control determines 
that there was a violation by the alleged violator named in the Pre-
Penalty Notice and that a civil monetary penalty is appropriate, the 
Office of Foreign Assets Control may issue a written 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.

[[Page 269]]



Sec. 543.704  Administrative collection; referral to United States
Department of Justice.

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



                          Subpart H_Procedures



Sec. 543.801  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. 543.802  Delegation by the Secretary of the Treasury.

    Any action that the Secretary of the Treasury is authorized to take 
pursuant to Executive Order 13396 of February 7, 2006 (71 FR 7389, 
February 10, 2006), and any further Executive orders relating to the 
national emergency declared in Executive Order 13396, may be taken by 
the Director of the Office of Foreign Assets Control or by any other 
person to whom the Secretary of the Treasury has delegated authority so 
to act.



                    Subpart I_Paperwork Reduction Act



Sec. 543.901  Paperwork Reduction Act notice.

    For approval by the Office of Management and Budget (``OMB'') under 
the Paperwork Reduction Act of 1995 (44 U.S.C. 3507) of information 
collections relating to recordkeeping and reporting requirements, 
licensing procedures (including those pursuant to statements of 
licensing policy), and other procedures, see Sec. 501.901 of this 
chapter. An agency may not conduct or sponsor, and a person is not 
required to respond to, a collection of information unless it displays a 
valid control number assigned by OMB.



PART 544_WEAPONS OF MASS DESTRUCTION PROLIFERATORS SANCTIONS 
REGULATIONS--Table of Contents



      Subpart A_Relation of This Part to Other Laws and Regulations

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

                         Subpart B_Prohibitions

544.201 Prohibited transactions involving blocked property.
544.202 Effect of transfers violating the provisions of this part.
544.203 Holding of funds in interest-bearing accounts; investment and 
          reinvestment.
544.204 Expenses of maintaining blocked physical property; liquidation 
          of blocked property.
544.205 Evasions; attempts; conspiracies.
544.206 Exempt transactions.

                      Subpart C_General Definitions

544.301 Blocked account; blocked property.
544.302 Effective date.
544.303 Entity.
544.304 Information or informational materials.
544.305 Interest.
544.306 Licenses; general and specific.
544.307 Person.
544.308 Property; property interest.
544.309 Transfer.
544.310 United States.
544.311 U.S. financial institution.
544.312 United States person; U.S. person.

                        Subpart D_Interpretations

544.401 Reference to amended sections.
544.402 Effect of amendment.
544.403 Termination and acquisition of an interest in blocked property.
544.404 Transactions ordinarily incident to a licensed transaction.
544.405 Provision of services.
544.406 Offshore transactions.
544.407 Payments from blocked accounts to satisfy obligations 
          prohibited.
544.408 Charitable contributions.
544.409 Credit extended and cards issued by U.S. financial institutions.
544.410 Setoffs prohibited.
544.411 Entities owned by a person whose property and interests in 
          property are blocked.

[[Page 270]]

  Subpart E_Licenses, Authorizations and Statements of Licensing Policy

544.501 General and specific licensing procedures.
544.502 Effect of license or authorization.
544.503 Exclusion from licenses.
544.504 Payments and transfers to blocked accounts in U.S. financial 
          institutions.
544.505 Entries in certain accounts for normal service charges 
          authorized.
544.506 Investment and reinvestment of certain funds.
544.507 Provision of certain legal services authorized.
544.508 Authorization of emergency medical services.

                            Subpart F_Reports

544.601 Records and reports.

                           Subpart G_Penalties

544.701 Penalties.
544.702 Pre-Penalty Notice; settlement.
544.703 Penalty imposition.
544.704 Administrative collection; referral to United States Department 
          of Justice.

                          Subpart H_Procedures

544.801 Procedures.
544.802 Delegation by the Secretary of the Treasury.

                    Subpart I_Paperwork Reduction Act

544.901 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; E.O. 12938, 59 FR 59099, 3 CFR, 1994 
Comp., p. 950; E.O. 13094, 63 FR 40803, 3 CFR, 1998 Comp., p. 200; E.O. 
13382, 70 FR 38567, 3 CFR, 2005 Comp., p. 170.

    Source: 74 FR 16773, Apr. 13, 2009, unless otherwise noted.



      Subpart A_Relation of This Part to Other Laws and Regulations



Sec. 544.101  Relation of this part to other laws and regulations.

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

    Note to Sec. 544.101: The sanctions implemented pursuant to the 
Weapons of Mass Destruction Trade Control Regulations set forth in part 
539 of this chapter are separate and distinct from the sanctions 
implemented pursuant to this part, even though both programs have been 
imposed pursuant to the same declaration of national emergency in 
Executive Order 12938 of November 14, 1994. Accordingly, a ``designated 
foreign person'' whose goods, technology, or services are prohibited 
from being imported into the United States under part 539 is not 
necessarily a person whose property and interests in property are 
blocked pursuant to Sec. 544.201(a). Consequently, the property and 
interests in property of a ``designated foreign person'' under part 539 
are not blocked, unless the ``designated foreign person'' has separately 
become a person whose property and interests in property are blocked 
pursuant to Sec. 544.201(a) or any other part of 31 CFR chapter V. 
Note, however, that the importation into the United States of goods, 
technology, or services (other than information or informational 
materials) produced or provided by a ``designated foreign person'' under 
part 539 is prohibited by that part.



                         Subpart B_Prohibitions



Sec. 544.201  Prohibited transactions involving blocked property.

    (a) Except as authorized by regulations, orders, directives, 
rulings, instructions, licenses or otherwise, and notwithstanding any 
contracts entered into or any license or permit granted prior to the 
effective date, all property and interests in property that are in the 
United States, that hereafter come within the United States, or that are 
or hereafter come within the possession or control of U.S. persons, 
including

[[Page 271]]

their overseas branches, of the following persons are blocked and may 
not be transferred, paid, exported, withdrawn, or otherwise dealt in:
    (1) Any person listed in the Annex to Executive Order 13382 of June 
28, 2005 (70 FR 38567, July 1, 2005);
    (2) Any foreign person determined by the Secretary of State, in 
consultation with the Secretary of the Treasury, the Attorney General, 
and other relevant agencies, to have engaged, or attempted to engage, in 
activities or transactions that have materially contributed to, or pose 
a risk of materially contributing to, the proliferation of weapons of 
mass destruction or their means of delivery (including missiles capable 
of delivering such weapons), including any efforts to manufacture, 
acquire, possess, develop, transport, transfer or use such items, by any 
person or foreign country of proliferation concern;
    (3) Any person determined by the Secretary of the Treasury, in 
consultation with the Secretary of State, the Attorney General, and 
other relevant agencies, to have provided, or attempted to provide, 
financial, material, technological or other support for, or goods or 
services in support of, any activity or transaction described in 
paragraph (a)(2) of this section, or any person whose property and 
interests in property are blocked pursuant to this section; and
    (4) Any person determined by the Secretary of the Treasury, in 
consultation with the Secretary of State, the Attorney General, and 
other relevant agencies, to be owned or controlled by, or acting or 
purporting to act for or on behalf of, directly or indirectly, any 
person whose property and interests in property are blocked pursuant to 
this section.

    Note 1 to paragraph (a) of Sec. 544.201: The names of persons 
listed in or designated pursuant to Executive Order 13382, 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 the Office of Foreign Assets Control's Specially 
Designated Nationals and Blocked Persons List (``SDN List'') with the 
identifier ``[NPWMD].'' The SDN List is accessible through the following 
page on the Office of Foreign Assets Control's Web site: http://
www.treasury.gov/sdn. Additional information pertaining to the SDN List 
can be found in appendix A to this chapter. See Sec. 544.411 concerning 
entities that may not be listed on the SDN List but whose property and 
interests in property are nevertheless blocked pursuant to paragraph (a) 
of this section.
    Note 2 to paragraph (a) of Sec. 544.201: The International 
Emergency Economic Powers Act (50 U.S.C. 1701-1706), in Section 203 (50 
U.S.C. 1702), authorizes the blocking of property and interests in 
property of a person during the pendency of an investigation. The names 
of persons whose property and interests in property are blocked pending 
investigation pursuant to paragraph (a) of this section also are 
published in the Federal Register and incorporated into the SDN List 
with the identifier ``[BPI-NPWMD].''
    Note 3 to paragraph (a) of Sec. 544.201: Sections 501.806 and 
501.807 of this chapter describe the procedures to be followed by 
persons seeking, respectively, the unblocking of funds that they believe 
were blocked due to mistaken identity, or administrative reconsideration 
of their status as persons whose property and interests in property are 
blocked pursuant to paragraph (a) of this section.

    (b) The prohibitions in paragraph (a) of this section include, but 
are not limited to, prohibitions on the following transactions when 
engaged in by a United States person or within the United States:
    (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 otherwise authorized by this part or by a specific 
license expressly referring to this section, any dealing in any security 
(or evidence thereof) held within the possession or control of a U.S. 
person and either registered or inscribed in the name of, or known to be 
held for the benefit of, or issued by, any person whose property and 
interests in property are blocked pursuant to paragraph (a) of this 
section is prohibited. This prohibition includes but is not limited to 
the transfer (including the transfer on the books

[[Page 272]]

of any issuer or agent thereof), disposition, transportation, 
importation, exportation, or withdrawal of, or the endorsement or 
guaranty of signatures on, any such security on or after the effective 
date. This prohibition applies irrespective of the fact that at any time 
(whether prior to, on, or subsequent to the effective date) the 
registered or inscribed owner of any such security may have or might 
appear to have assigned, transferred, or otherwise disposed of the 
security.

[74 FR 16773, Apr. 13, 2009, as amended at 76 FR 38537, June 30, 2011]



Sec. 544.202  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. 
544.201(a), is null and void and shall not be the basis for the 
assertion or recognition of any interest in or right, remedy, power, or 
privilege with respect to such property or property interests.
    (b) No transfer before the effective date shall be the basis for the 
assertion or recognition of any right, remedy, power, or privilege with 
respect to, or any interest in, any property or interest in property 
blocked pursuant to Sec. 544.201(a), unless the person who holds or 
maintains such property, prior to that date, had written notice of the 
transfer or by any written evidence had recognized such transfer.
    (c) Unless otherwise provided, an appropriate license or other 
authorization issued by or pursuant to the direction or authorization of 
the Director of the Office of Foreign Assets Control before, during, or 
after a transfer shall validate such transfer or make it enforceable to 
the same extent that it would be valid or enforceable but for the 
provisions of IEEPA, Executive Order 13382, this part, and any 
regulation, order, directive, ruling, instruction, or license issued 
pursuant to this part.
    (d) Transfers of property that otherwise would be null and void or 
unenforceable by virtue of the provisions of this section shall not be 
deemed to be null and void or unenforceable as to any person with whom 
such property is or was held or maintained (and as to such person only) 
in cases in which such person is able to establish to the satisfaction 
of the Director of the Office of Foreign Assets Control each of the 
following:
    (1) Such transfer did not represent a willful violation of the 
provisions of this part by the person with whom such property is or was 
held or maintained (and as to such person only);
    (2) The person with whom such property is or was held or maintained 
did not have reasonable cause to know or suspect, in view of all the 
facts and circumstances known or available to such person, that such 
transfer required a license or authorization issued pursuant to this 
part and was not so licensed or authorized, or, if a license or 
authorization did purport to cover the transfer, that such license or 
authorization had been obtained by misrepresentation of a third party or 
withholding of material facts or was otherwise fraudulently obtained; 
and
    (3) The person with whom such property is or was held or maintained 
filed with the Office of Foreign Assets Control a report setting forth 
in full the circumstances relating to such transfer promptly upon 
discovery that:
    (i) Such transfer was in violation of the provisions of this part or 
any regulation, ruling, instruction, license, or other directive or 
authorization issued pursuant to this part;
    (ii) Such transfer was not licensed or authorized by the Director of 
the Office of Foreign Assets Control; or
    (iii) If a license did purport to cover the transfer, such license 
had been obtained by misrepresentation of a third party or withholding 
of material facts or was otherwise fraudulently obtained.

    Note to paragraph (d) of Sec. 544.202: The filing of a report in 
accordance with the provisions of paragraph (d)(3) of this section shall 
not be deemed evidence that the terms of paragraphs (d)(1) and (d)(2) of 
this section have been satisfied.

    (e) Unless licensed pursuant to this part, any attachment, judgment, 
decree, lien, execution, garnishment, or other judicial process is null 
and void

[[Page 273]]

with respect to any property in which, on or since the effective date, 
there existed an interest of a person whose property and interests in 
property are blocked pursuant to Sec. 544.201(a).



Sec. 544.203  Holding of funds in interest-bearing accounts; investment
and reinvestment.

    (a) Except as provided in paragraphs (c) or (d) of this section, or 
as otherwise directed by the Office of Foreign Assets Control, any U.S. 
person holding funds, such as currency, bank deposits, or liquidated 
financial obligations, subject to Sec. 544.201(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) 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.
    (3) Funds held or placed in a blocked account pursuant to this 
paragraph (b) may not be invested in instruments the maturity of which 
exceeds 180 days. If interest is credited to a separate blocked account 
or subaccount, the name of the account party on each account must be the 
same.
    (c) Blocked funds held in instruments the maturity of which exceeds 
180 days at the time the funds become subject to Sec. 544.201(a) may 
continue to be held until maturity in the original instrument, provided 
any interest, earnings, or other proceeds derived therefrom are paid 
into a blocked interest-bearing account in accordance with paragraphs 
(b) or (d) of this section.
    (d) Blocked funds held in accounts or instruments outside the United 
States at the time the funds become subject to Sec. 544.201(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.
    (e) This section does not create an affirmative obligation for the 
holder of blocked tangible property, such as chattels or real estate, or 
of other blocked property, such as debt or equity securities, to sell or 
liquidate such property. However, the Office of Foreign Assets Control 
may issue licenses permitting or directing such sales or liquidation in 
appropriate cases.
    (f) 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. 544.201(a), nor may their holder cooperate 
in or facilitate the pledging or other attempted use as collateral of 
blocked funds or other assets.



Sec. 544.204  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. 544.201(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. 544.201(a) may, in the 
discretion of the Office of Foreign Assets Control, be sold or 
liquidated and the net proceeds placed in a blocked interest-bearing 
account in the name of the owner of the property.



Sec. 544.205  Evasions; attempts; conspiracies.

    (a) Except as otherwise authorized, and notwithstanding any contract 
entered into or any license or permit granted prior to the effective 
date, any transaction by a U.S. person or within the United States on or 
after the effective date that evades or avoids, has the

[[Page 274]]

purpose of evading or avoiding, or attempts to violate any of the 
prohibitions set forth in this part is prohibited.
    (b) Except as otherwise authorized, and notwithstanding any contract 
entered into or any license or permit granted prior to the effective 
date, any conspiracy formed to violate the prohibitions set forth in 
this part is prohibited.



Sec. 544.206  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 importation from 
any country and the exportation to any country of any information or 
informational materials, as defined in Sec. 544.304, whether commercial 
or otherwise, regardless of format or medium of transmission, are exempt 
from the prohibitions of this part.
    (2) This section does not exempt from regulation or authorize 
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 informational 
materials, or to the provision of marketing and business consulting 
services. Such prohibited transactions include, but are not limited to, 
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, 
with respect to information or informational materials imported from 
persons whose property and interests in property are blocked pursuant to 
Sec. 544.201(a), 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 or authorize transactions incident 
to the exportation of software subject to the Export Administration 
Regulations, 15 CFR parts 730-774, or to the exportation of goods, 
technology, or software 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. 544.201(a) are prohibited.
    (c) Travel. The prohibitions contained in this part do not apply to 
any transactions ordinarily incident to travel to or from any country, 
including importation 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



Sec. 544.301  Blocked account; blocked property.

    The terms blocked account and blocked property shall mean any 
account or property subject to the prohibitions in Sec. 544.201 held in 
the name of a person whose property and interests in property are 
blocked pursuant to Sec. 544.201(a), or in which such person has an 
interest, and with respect to which payments, transfers, exportations, 
withdrawals, or other dealings may not be made or effected except 
pursuant to an authorization or license from the Office of Foreign 
Assets Control expressly authorizing such action.

    Note to Sec. 544.301: See Sec. 544.411 concerning the blocked 
status of property and interests in property of an entity that is 50 
percent or more owned by a person whose property and interests in 
property are blocked pursuant to Sec. 544.201(a).



Sec. 544.302  Effective date.

    The term effective date refers to the effective date of the 
applicable prohibitions and directives contained in this part as 
follows:

[[Page 275]]

    (a) With respect to a person whose property and interests in 
property are blocked pursuant to Sec. 544.201(a)(1), 12:01 a.m. eastern 
daylight time, June 29, 2005; and
    (b) With respect to a person whose property and interests in 
property are blocked pursuant to Sec. 544.201(a)(2), (a)(3), or (a)(4), 
the earlier of the date of actual or constructive notice of such 
person's designation.



Sec. 544.303  Entity.

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



Sec. 544.304  Information or informational materials.

    (a) For purposes of this part, the term information or informational 
materials includes, but is not limited to, publications, films, posters, 
phonograph records, photographs, microfilms, microfiche, tapes, compact 
disks, CD-ROMs, artworks, and news wire feeds.

    Note to paragraph (a) of Sec. 544.304: To be considered information 
or informational materials, artworks must be classified under chapter 
heading 9701, 9702, or 9703 of the Harmonized Tariff Schedule of the 
United States.

    (b) The term information or informational materials, with respect to 
United States 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) (the ``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. 544.305  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. 544.306  Licenses; general and specific.

    (a) Except as otherwise specified, the term license means any 
license or authorization contained in or issued pursuant to this part.
    (b) The term general license means any license or authorization the 
terms of which are set forth in subpart E of this part.
    (c) The term specific license means any license or authorization not 
set forth in subpart E of this part but issued pursuant to this part.

    Note to Sec. 544.306: See Sec. 501.801 of this chapter on 
licensing procedures.



Sec. 544.307  Person.

    The term person means an individual or entity.



Sec. 544.308  Property; property interest.

    The terms property and property interest include, but are not 
limited to, money, checks, drafts, bullion, bank deposits, savings 
accounts, debts, indebtedness, obligations, notes, guarantees, 
debentures, stocks, bonds, coupons, any other financial instruments, 
bankers acceptances, mortgages, pledges, liens or other rights in the 
nature of security, warehouse receipts, bills of lading, trust receipts, 
bills of sale, any other evidences of title, ownership or indebtedness, 
letters of credit and any documents relating to any rights or 
obligations thereunder, powers of attorney, goods, wares, merchandise, 
chattels, stocks on hand, ships, goods on ships, real estate mortgages, 
deeds of trust, vendors' sales agreements, land contracts, leaseholds, 
ground rents, real estate and any other interest therein, options, 
negotiable instruments, trade acceptances, royalties, book accounts, 
accounts payable, judgments, patents, trademarks or copyrights, 
insurance policies, safe deposit boxes and their contents, annuities, 
pooling agreements, services of any nature whatsoever, contracts of any 
nature whatsoever, and any other property, real, personal, or mixed, 
tangible or intangible, or interest or interests therein, present, 
future or contingent.

[[Page 276]]



Sec. 544.309  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 and, without limitation upon the foregoing, 
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. 544.310  United States.

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



Sec. 544.311  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 
credits, or purchasing or selling foreign exchange, securities, 
commodity futures or options, or procuring purchasers and sellers 
thereof, as principal or agent; including but not limited to depository 
institutions, banks, savings banks, trust companies, securities brokers 
and dealers, commodity futures and options brokers and dealers, forward 
contract and foreign exchange merchants, securities and commodities 
exchanges, clearing corporations, investment companies, employee benefit 
plans, and U.S. holding companies, U.S. affiliates, or U.S. subsidiaries 
of any of the foregoing. This term includes those branches, offices and 
agencies of foreign financial institutions that are located in the 
United States, but not such institutions' foreign branches, offices, or 
agencies.



Sec. 544.312  United States person; U.S. person.

    The term United States person or U.S. person means any United States 
citizen, permanent resident alien, entity organized under the laws of 
the United States or any jurisdiction within the United States 
(including foreign branches), or any person in the United States.



                        Subpart D_Interpretations



Sec. 544.401  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. 544.402  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 or 
under the direction of the Director of the Office of Foreign Assets 
Control does not affect any act done or omitted, or any civil or 
criminal suit or 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.

[[Page 277]]



Sec. 544.403  Termination and acquisition of an interest in blocked
property.

    (a) Whenever a transaction licensed or authorized by or pursuant to 
this part results in the transfer of property (including any property 
interest) away from a person, such property shall no longer be deemed to 
be property blocked pursuant to Sec. 544.201(a), unless there exists in 
the property another interest that is blocked pursuant to Sec. 
544.201(a) or any other part of this chapter, 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. 544.201(a), such property shall be deemed to be property in which 
that person has an interest and therefore blocked.



Sec. 544.404  Transactions ordinarily incident to a licensed transaction.

    Any transaction ordinarily incident to a licensed transaction and 
necessary to give effect thereto is also authorized, except:
    (a) An ordinarily incident transaction, not explicitly authorized 
within the terms of the license, by or with a person whose property and 
interests in property are blocked pursuant to Sec. 544.201(a); or
    (b) An ordinarily incident transaction, not explicitly authorized 
within the terms of the license, involving a debit to a blocked account 
or a transfer of blocked property.
    (c) Example. A license authorizing Company A, whose property and 
interests in property are blocked pursuant to Sec. 544.201(a), to 
complete a securities sale also authorizes all activities by other 
parties required to complete the sale, including transactions by the 
buyer, broker, transfer agents, banks, etc., provided that such other 
parties are not themselves persons whose property and interests in 
property are blocked pursuant to Sec. 544.201(a).



Sec. 544.405  Provision of services.

    (a) Except as provided in Sec. 544.206, the prohibitions on 
transactions involving blocked property contained in Sec. 544.201 apply 
to services performed in the United States or by U.S. persons, wherever 
located, including by an overseas branch of an entity located in the 
United States:
    (1) On behalf of or for the benefit of a person whose property and 
interests in property are blocked pursuant to Sec. 544.201(a); or
    (2) With respect to property interests subject to Sec. 544.201.
    (b) Example: U.S. persons may not, except as authorized by or 
pursuant to this part, provide legal, accounting, financial, brokering, 
freight forwarding, transportation, public relations, or other services 
to a person whose property and interests in property are blocked 
pursuant to Sec. 544.201(a).

    Note to Sec. 544.405: See Sec. Sec. 544.507 and 544.508 on 
licensing policy with regard to the provision of certain legal and 
medical services.



Sec. 544.406  Offshore transactions.

    The prohibitions in Sec. 544.201 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. 544.201(a), or property in which a person whose 
property and interests in property are blocked pursuant to Sec. 
544.201(a) has or has had an interest since the effective date.



Sec. 544.407  Payments from blocked accounts to satisfy obligations
prohibited.

    Pursuant to Sec. 544.201, no debits may be made to a blocked 
account to pay obligations to U.S. persons or other persons, except as 
authorized by or pursuant to this part.



Sec. 544.408  Charitable contributions.

    Unless specifically authorized by the Office of Foreign Assets 
Control pursuant to this part, no charitable contribution of funds, 
goods, services, or technology, including contributions to relieve human 
suffering, such as food,

[[Page 278]]

clothing, or medicine, may be made by, to, or for the benefit of a 
person whose property and interests in property are blocked pursuant to 
Sec. 544.201(a). For the purposes of this part, a contribution is made 
by, to, or for the benefit of a person whose property and interests in 
property are blocked pursuant to Sec. 544.201(a) if made by, to, or in 
the name of such a person; if made by, to, 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.



Sec. 544.409  Credit extended and cards issued by U.S. financial
institutions.

    The prohibition in Sec. 544.201 on dealing in property subject to 
that section prohibits U.S. financial institutions from performing under 
any existing credit agreements, including, but not limited to, charge 
cards, debit cards, or other credit facilities issued by a U.S. 
financial institution to a person whose property and interests in 
property are blocked pursuant to Sec. 544.201(a).



Sec. 544.410  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. 544.201 if effected after the effective date.



Sec. 544.411  Entities owned by a person whose property and interests
in property are blocked.

    A person whose property and interests in property are blocked 
pursuant to Sec. 544.201(a) has an interest in all property and 
interests in property of an entity in which it owns, directly or 
indirectly, a 50 percent or greater interest. The property and interests 
in property of such an entity, therefore, are blocked, and such an 
entity is a person whose property and interests in property are blocked 
pursuant to Sec. 544.201(a), regardless of whether the entity itself is 
listed in the Annex to Executive Order 13382 or designated pursuant to 
Sec. 544.201(a).



  Subpart E_Licenses, Authorizations and Statements of Licensing Policy



Sec. 544.501  General and specific licensing procedures.

    For provisions relating to licensing procedures, see part 501, 
subpart E of this chapter. Licensing actions taken pursuant to part 501 
of this chapter with respect to the prohibitions contained in this part 
are considered actions taken pursuant to this part.



Sec. 544.502  Effect of license or authorization.

    (a) No license or other authorization contained in this part, or 
otherwise issued by or under the direction of the Director of the Office 
of Foreign Assets Control, authorizes or validates any transaction 
effected prior to the issuance of such license or other authorization, 
unless specifically provided in such license or authorization.
    (b) No regulation, ruling, instruction, or license authorizes any 
transaction prohibited under this part unless the regulation, ruling, 
instruction or license is issued by the Office of Foreign Assets Control 
and specifically refers to this part. No regulation, ruling, 
instruction, or license referring to this part shall be deemed to 
authorize any transaction prohibited by any other provision of this 
chapter unless the regulation, ruling, instruction, or license 
specifically refers to such provision.
    (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.

[[Page 279]]



Sec. 544.503  Exclusion from licenses.

    The Director of the Office of Foreign Assets Control reserves the 
right to exclude any person, property, or transaction from the operation 
of any license or from the privileges conferred by any license. The 
Director of the Office of Foreign Assets Control also reserves the right 
to restrict the applicability of any license to particular persons, 
property, transactions, or classes thereof. Such actions are binding 
upon actual or constructive notice of the exclusions or restrictions.



Sec. 544.504  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. 
544.201(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. 544.504: See Sec. 501.603 of this chapter for 
mandatory reporting requirements regarding financial transfers. See also 
Sec. 544.203 concerning the obligation to hold blocked funds in 
interest-bearing accounts.



Sec. 544.505  Entries in certain accounts for normal service charges 
authorized.

    (a) A U.S. financial institution is authorized to debit any blocked 
account held at that financial institution in payment or reimbursement 
for normal service charges owed it by the owner of that blocked account.
    (b) As used in this section, the term normal service charges shall 
include charges in payment or reimbursement for interest due; cable, 
telegraph, internet, or telephone charges; postage costs; custody fees; 
small adjustment charges to correct bookkeeping errors; and, but not by 
way of limitation, minimum balance charges, notary and protest fees, and 
charges for reference books, photocopies, credit reports, transcripts of 
statements, registered mail, insurance, stationery and supplies, and 
other similar items.



Sec. 544.506  Investment and reinvestment of certain funds.

    Subject to the requirements of Sec. 544.203, U.S. financial 
institutions are authorized to invest and reinvest assets blocked 
pursuant to Sec. 544.201, 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 persons whose property and interests 
in property are blocked pursuant to Sec. 544.201(a).



Sec. 544.507  Provision of certain legal services authorized.

    (a) The provision of the following legal services to or on behalf of 
persons whose property and interests in property are blocked pursuant to 
Sec. 544.201(a) is authorized, provided that all receipts of payment of 
professional fees and reimbursement of incurred expenses must be 
specifically licensed:
    (1) Provision of legal advice and counseling on the requirements of 
and compliance with the laws of the United States or any jurisdiction 
within the United States, provided that such advice and counseling are 
not provided to facilitate transactions in violation of this part;
    (2) Representation of persons named as defendants in or otherwise 
made

[[Page 280]]

parties to domestic U.S. legal, arbitration, or administrative 
proceedings;
    (3) Initiation and conduct of domestic U.S. legal, arbitration, or 
administrative proceedings in defense of property interests subject to 
U.S. jurisdiction;
    (4) Representation of persons before any federal or state agency 
with respect to the imposition, administration, or enforcement of U.S. 
sanctions against such persons; and
    (5) Provision of legal services in any other context in which 
prevailing U.S. law requires access to legal counsel at public expense.
    (b) The provision of any other legal services to persons whose 
property and interests in property are blocked pursuant to Sec. 
544.201(a), 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. 544.201(a) is prohibited unless specifically licensed 
in accordance with Sec. 544.202(e).



Sec. 544.508  Authorization of emergency medical services.

    The provision of nonscheduled emergency medical services in the 
United States to persons whose property and interests in property are 
blocked pursuant to Sec. 544.201(a) is authorized, provided that all 
receipt of payment for such services must be specifically licensed.



                            Subpart F_Reports



Sec. 544.601  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



Sec. 544.701  Penalties.

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

    Note to paragraph (a)(1) of Sec. 544.701: As of the date of 
publication in the Federal Register of the final rule adding this part 
to 31 CFR chapter V (April 13, 2009), IEEPA provides for a maximum civil 
penalty not to exceed the greater of $250,000 or an amount that is twice 
the amount of the transaction that is the basis of the violation with 
respect to which the penalty is imposed.

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

[[Page 281]]

to contain any materially false, fictitious, or fraudulent statement or 
entry; shall be fined under title 18, United States Code, imprisoned not 
more than five years, or both.
    (d) Violations of this part may also be subject to relevant 
provisions of other applicable laws.



Sec. 544.702  Pre-Penalty Notice; settlement.

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

[[Page 282]]

the alleged violator in care of the representative.



Sec. 544.703  Penalty imposition.

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



Sec. 544.704  Administrative collection; referral to United States 
Department of Justice.

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



                          Subpart H_Procedures



Sec. 544.801  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. 544.802  Delegation by the Secretary of the Treasury.

    Any action that the Secretary of the Treasury is authorized to take 
pursuant to Executive Order 13382 of June 28, 2005 (70 FR 38567, July 1, 
2005), and any further Executive Orders relating to the national 
emergency declared in Executive Order 12938 of November 14, 1994, as 
expanded by Executive Order 13094 of July 28, 1998, and with respect to 
which additional steps were taken in Executive Order 13382 of June 28, 
2005, may be taken by the Director of the Office of Foreign Assets 
Control or by any other person to whom the Secretary of the Treasury has 
delegated authority so to act.



                    Subpart I_Paperwork Reduction Act



Sec. 544.901  Paperwork Reduction Act notice.

    For approval by the Office of Management and Budget (``OMB'') under 
the Paperwork Reduction Act of 1995 (44 U.S.C. 3507) of information 
collections relating to recordkeeping and reporting requirements, 
licensing procedures (including those pursuant to statements of 
licensing policy), and other procedures, see Sec. 501.901 of this 
chapter. An agency may not conduct or sponsor, and a person is not 
required to respond to, a collection of information unless it displays a 
valid control number assigned by OMB.



PART 546_DARFUR SANCTIONS REGULATIONS--Table of Contents



      Subpart A_Relation of This Part to Other Laws and Regulations

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

                         Subpart B_Prohibitions

546.201 Prohibited transactions involving blocked property.
546.202 Effect of transfers violating the provisions of this part.
546.203 Holding of funds in interest-bearing accounts; investment and 
          reinvestment.
546.204 Expenses of maintaining blocked physical property; liquidation 
          of blocked property.
546.205 Evasions; attempts; conspiracies.

                      Subpart C_General Definitions

546.301 Arms or any related materiel.
546.302 Blocked account; blocked property.
546.303 Effective date.

[[Page 283]]

546.304 Entity.
546.305 Interest.
546.306 Licenses; general and specific.
546.307 Person.
546.308 Property; property interest.
546.309 Transfer.
546.310 United States.
546.311 U.S. financial institution.
546.312 United States person; U.S. person.
546.313 Financial, material, or technological support.

                        Subpart D_Interpretations

546.401 Reference to amended sections.
546.402 Effect of amendment.
546.403 Termination and acquisition of an interest in blocked property.
546.404 Transactions ordinarily incident to a licensed transaction.
546.405 Provision of services.
546.406 Offshore transactions.
546.407 Payments from blocked accounts to satisfy obligations 
          prohibited.
546.408 Charitable contributions.
546.409 Credit extended and cards issued by U.S. financial institutions.
546.410 Setoffs prohibited.
546.411 Entities owned by a person whose property and interests in 
          property are blocked.

 Subpart E_Licenses, Authorizations, and Statements of Licensing Policy

546.501 General and specific licensing procedures.
546.502 Effect of license or authorization.
546.503 Exclusion from licenses.
546.504 Payments and transfers to blocked accounts in U.S. financial 
          institutions.
546.505 Entries in certain accounts for normal service charges 
          authorized.
546.506 Investment and reinvestment of certain funds.
546.507 Provision of certain legal services authorized.
546.508 Authorization of emergency medical services.

                            Subpart F_Reports

546.601 Records and reports.

                           Subpart G_Penalties

546.701 Penalties.
546.702 Pre-Penalty Notice; settlement.
546.703 Penalty imposition.
546.704 Administrative collection; referral to United States Department 
          of Justice.

                          Subpart H_Procedures

546.801 Procedures.
546.802 Delegation by the Secretary of the Treasury.

                    Subpart I_Paperwork Reduction Act

546.901 Paperwork Reduction Act notice.

    Authority: 3 U.S.C. 301; 31 U.S.C. 321(b); 50 U.S.C. 1601-1651, 
1701-1706; 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. 
13067, 62 FR 59989, 3 CFR, 1997 Comp., p. 230; E.O. 13400, 71 FR 25483, 
3 CFR, 2006 Comp.,p. 220.

    Source: 74 FR 25432, May 28, 2009, unless otherwise noted.



      Subpart A_Relation of This Part to Other Laws and Regulations



Sec. 546.101  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. 546.201  Prohibited transactions involving blocked property.

    (a) Except as authorized by regulations, orders, directives, 
rulings, instructions, licenses, or otherwise, and notwithstanding any 
contracts entered into or any license or permit granted prior to the 
effective date, all property and interests in property that are in the 
United States, that hereafter come within the United States, or that are 
or

[[Page 284]]

hereafter come within the possession or control of U.S. persons, 
including their overseas branches, of the following persons are blocked 
and may not be transferred, paid, exported, withdrawn, or otherwise 
dealt in:
    (1) Any person listed in the Annex to Executive Order 13400 of April 
26, 2006; and
    (2) Any person determined by the Secretary of the Treasury, after 
consultation with the Secretary of State:
    (i) To have constituted a threat to the peace process in Darfur;
    (ii) To have constituted a threat to stability in Darfur and the 
region;
    (iii) To be responsible for conduct related to the conflict in 
Darfur that violates international law;
    (iv) To be responsible for heinous conduct with respect to human 
life or limb related to the conflict in Darfur;
    (v) To have directly or indirectly supplied, sold, or transferred 
arms or any related materiel, or any assistance, advice, or training 
related to military activities to:
    (A) The Government of Sudan;
    (B) The Sudan Liberation Movement/Army;
    (C) The Justice and Equality Movement;
    (D) The Janjaweed; or
    (E) Any person (other than a person listed in paragraph (a)(2)(v)(A) 
through (a)(2)(v)(D) of this section) operating in the states of North 
Darfur, South Darfur, or West Darfur that is a belligerent, a 
nongovernmental entity, or an individual;
    (vi) To be responsible for offensive military overflights in and 
over the Darfur region;
    (vii) To have materially assisted, sponsored, or provided financial, 
material, or technological support for, or goods or services in support 
of, the activities described in paragraphs (a)(2)(i) through (a)(2)(vi) 
of this section or any person whose property and interests in property 
are blocked pursuant to this paragraph (a); or
    (viii) To be owned or controlled by, or acting or purporting to act 
for or on behalf of, directly or indirectly, any person whose property 
and interests in property are blocked pursuant to this paragraph (a).

    Note 1 to paragraph (a) of Sec. 546.201: The names of persons 
listed in or designated pursuant to Executive Order 13400, 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 the Office of Foreign Assets Control's Specially 
Designated Nationals and Blocked Persons List (``SDN List'') with the 
identifier ``[DARFUR].'' The SDN List is accessible through the 
following page on the Office of Foreign Assets Control's Web site: 
http://www.treasury.gov/sdn. Additional information pertaining to the 
SDN List can be found in appendix A to this chapter. See Sec. 546.411 
concerning entities that may not be listed on the SDN List but whose 
property and interests in property are nevertheless blocked pursuant to 
paragraph (a) of this section.
    Note 2 to paragraph (a) of Sec. 546.201: The International 
Emergency Economic Powers Act (50 U.S.C. 1701-1706), in Section 203 (50 
U.S.C. 1702), authorizes the blocking of property and interests in 
property of a person during the pendency of an investigation. The names 
of persons whose property and interests in property are blocked pending 
investigation pursuant to paragraph (a) of this section also are 
published in the Federal Register and incorporated into the SDN List 
with the identifier ``[BPI-DARFUR].''
    Note 3 to paragraph (a) of Sec. 546.201: Sections 501.806 and 
501.807 of this chapter V describe the procedures to be followed by 
persons seeking, respectively, the unblocking of funds that they believe 
were blocked due to mistaken identity, or administrative reconsideration 
of their status as persons whose property and interests in property are 
blocked pursuant to paragraph (a) of this section.

    (b) The prohibitions in paragraph (a) of this section include, but 
are not limited to, prohibitions on the following transactions when 
engaged in by a United States person or within the United States:
    (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 otherwise authorized by this part or by a specific 
license expressly referring to this section, any dealing in any security 
(or evidence

[[Page 285]]

thereof) held within the possession or control of a U.S. person and 
either registered or inscribed in the name of, or known to be held for 
the benefit of, or issued by, any person whose property and interests in 
property are blocked pursuant to paragraph (a) of this section is 
prohibited. This prohibition includes but is not limited to the transfer 
(including the transfer on the books of any issuer or agent thereof), 
disposition, transportation, importation, exportation, or withdrawal of, 
or the endorsement or guaranty of signatures on, any such security on or 
after the effective date. This prohibition applies irrespective of the 
fact that at any time (whether prior to, on, or subsequent to the 
effective date) the registered or inscribed owner of any such security 
may have or might appear to have assigned, transferred, or otherwise 
disposed of the security.

[74 FR 25432, May 28, 2009, as amended at 76 FR 38538, June 30, 2011]



Sec. 546.202  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. 
546.201(a), is null and void and shall not be the basis for the 
assertion or recognition of any interest in or right, remedy, power, or 
privilege with respect to such property or property interests.
    (b) No transfer before the effective date shall be the basis for the 
assertion or recognition of any right, remedy, power, or privilege with 
respect to, or any interest in, any property or interest in property 
blocked pursuant to Sec. 546.201(a), unless the person who holds or 
maintains such property, prior to that date, had written notice of the 
transfer or by any written evidence had recognized such transfer.
    (c) Unless otherwise provided, an appropriate license or other 
authorization issued by or pursuant to the direction or authorization of 
the Director of the Office of Foreign Assets Control before, during, or 
after a transfer shall validate such transfer or make it enforceable to 
the same extent that it would be valid or enforceable but for the 
provisions of IEEPA, Executive Order 13400, this part, and any 
regulation, order, directive, ruling, instruction, or license issued 
pursuant to this part.
    (d) Transfers of property that otherwise would be null and void or 
unenforceable by virtue of the provisions of this section shall not be 
deemed to be null and void or unenforceable as to any person with whom 
such property is or was held or maintained (and as to such person only) 
in cases in which such person is able to establish to the satisfaction 
of the Director of the Office of Foreign Assets Control each of the 
following:
    (1) Such transfer did not represent a willful violation of the 
provisions of this part by the person with whom such property is or was 
held or maintained (and as to such person only);
    (2) The person with whom such property is or was held or maintained 
did not have reasonable cause to know or suspect, in view of all the 
facts and circumstances known or available to such person, that such 
transfer required a license or authorization issued pursuant to this 
part and was not so licensed or authorized, or, if a license or 
authorization did purport to cover the transfer, that such license or 
authorization had been obtained by misrepresentation of a third party or 
withholding of material facts or was otherwise fraudulently obtained; 
and
    (3) The person with whom such property is or was held or maintained 
filed with the Office of Foreign Assets Control a report setting forth 
in full the circumstances relating to such transfer promptly upon 
discovery that:
    (i) Such transfer was in violation of the provisions of this part or 
any regulation, ruling, instruction, license, or other directive or 
authorization issued pursuant to this part;
    (ii) Such transfer was not licensed or authorized by the Director of 
the Office of Foreign Assets Control; or
    (iii) If a license did purport to cover the transfer, such license 
had been obtained by misrepresentation of a third party or withholding 
of material facts or was otherwise fraudulently obtained.


[[Page 286]]


    Note to paragraph (d) of Sec. 546.202: The filing of a report in 
accordance with the provisions of paragraph (d)(3) of this section shall 
not be deemed evidence that the terms of paragraphs (d)(1) and (d)(2) of 
this section have been satisfied.

    (e) Unless licensed pursuant to this part, any attachment, judgment, 
decree, lien, execution, garnishment, or other judicial process is null 
and void with respect to any property in which, on or since the 
effective date, there existed an interest of a person whose property and 
interests in property are blocked pursuant to Sec. 546.201(a).



Sec. 546.203  Holding of funds in interest-bearing accounts; investment
and reinvestment.

    (a) Except as provided in paragraph (c) or (d) of this section, or 
as otherwise directed by the Office of Foreign Assets Control, any U.S. 
person holding funds, such as currency, bank deposits, or liquidated 
financial obligations, subject to Sec. 546.201(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) 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.
    (3) Funds held or placed in a blocked account pursuant to this 
paragraph (b) may not be invested in instruments the maturity of which 
exceeds 180 days. If interest is credited to a separate blocked account 
or subaccount, the name of the account party on each account must be the 
same.
    (c) Blocked funds held in instruments the maturity of which exceeds 
180 days at the time the funds become subject to Sec. 546.201(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 (b) 
or (d) of this section.
    (d) Blocked funds held in accounts or instruments outside the United 
States at the time the funds become subject to Sec. 546.201(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.
    (e) This section does not create an affirmative obligation for the 
holder of blocked tangible property, such as chattels or real estate, or 
of other blocked property, such as debt or equity securities, to sell or 
liquidate such property. However, the Office of Foreign Assets Control 
may issue licenses permitting or directing such sales or liquidation in 
appropriate cases.
    (f) 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. 546.201(a), nor may their holder cooperate 
in or facilitate the pledging or other attempted use as collateral of 
blocked funds or other assets.



Sec. 546.204  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. 546.201(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. 546.201(a) may, in the 
discretion of the Office of Foreign Assets Control, be sold or 
liquidated and the net proceeds placed in a blocked interest-bearing 
account in the name of the owner of the property.

[[Page 287]]



Sec. 546.205  Evasions; attempts; conspiracies.

    (a) Except as otherwise authorized, and notwithstanding any contract 
entered into or any license or permit granted prior to the effective 
date, any transaction by a U.S. person or within the United States on or 
after the effective date that evades or avoids, has the purpose of 
evading or avoiding, or attempts to violate any of the prohibitions set 
forth in this part is prohibited.
    (b) Except as otherwise authorized, and notwithstanding any contract 
entered into or any license or permit granted prior to the effective 
date, any conspiracy formed to violate the prohibitions set forth in 
this part is prohibited.



                      Subpart C_General Definitions



Sec. 546.301  Arms or any related materiel.

    The term arms or any related materiel shall mean arms or related 
materiel of all types, military aircraft, and equipment, but excludes:
    (a) Supplies and technical assistance, including training, intended 
solely for use in authorized monitoring, verification, or peace support 
operations, including such operations led by regional organizations;
    (b) Supplies of non-lethal military equipment intended solely for 
humanitarian use, human rights monitoring use, or protective use, and 
related technical assistance, including training;
    (c) Supplies of protective clothing, including flak jackets and 
military helmets, for use by United Nations personnel, representatives 
of the media, and humanitarian and development workers and associated 
personnel, for their personal use only;
    (d) Assistance and supplies provided in support of implementation of 
the Comprehensive Peace Agreement signed January 9, 2005, by the 
Government of Sudan and the People's Liberation Movement/Army; and
    (e) Other movements of military equipment and supplies into the 
Darfur region by the United States or that are permitted by a rule or 
decision of the Secretary of State, after consultation with the 
Secretary of the Treasury.



Sec. 546.302  Blocked account; blocked property.

    The terms blocked account and blocked property shall mean any 
account or property subject to the prohibitions in Sec. 546.201 held in 
the name of a person whose property and interests in property are 
blocked pursuant to Sec. 546.201(a), or in which such person has an 
interest, and with respect to which payments, transfers, exportations, 
withdrawals, or other dealings may not be made or effected except 
pursuant to an authorization or license from the Office of Foreign 
Assets Control expressly authorizing such action.

    Note to Sec. 546.302: See Sec. 546.411 concerning the blocked 
status of property and interests in property of an entity that is 50 
percent or more owned by a person whose property and interests in 
property are blocked pursuant to Sec. 546.201(a).



Sec. 546.303  Effective date.

    The term effective date refers to the effective date of the 
applicable prohibitions and directives contained in this part as 
follows:
    (a) With respect to a person whose property and interests in 
property are blocked pursuant to Sec. 546.201(a)(1), 12:01 a.m. eastern 
daylight time, April 27, 2006;
    (b) With respect to a person whose property and interests in 
property are blocked pursuant to Sec. 546.201(a)(2), the earlier of the 
date of actual or constructive notice of such person's designation.



Sec. 546.304  Entity.

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



Sec. 546.305  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. 546.306  Licenses; general and specific.

    (a) Except as otherwise specified, the term license means any 
license or authorization contained in or issued pursuant to this part.

[[Page 288]]

    (b) The term general license means any license or authorization the 
terms of which are set forth in subpart E of this part.
    (c) The term specific license means any license or authorization not 
set forth in subpart E of this part but issued pursuant to this part.

    Note to Sec. 546.306: See Sec. 501.801 of this chapter on 
licensing procedures.



Sec. 546.307  Person.

    The term person means an individual or entity.



Sec. 546.308  Property; property interest.

    The terms property and property interest include, but are not 
limited to, money, checks, drafts, bullion, bank deposits, savings 
accounts, debts, indebtedness, obligations, notes, guarantees, 
debentures, stocks, bonds, coupons, any other financial instruments, 
bankers acceptances, mortgages, pledges, liens or other rights in the 
nature of security, warehouse receipts, bills of lading, trust receipts, 
bills of sale, any other evidences of title, ownership or indebtedness, 
letters of credit and any documents relating to any rights or 
obligations thereunder, powers of attorney, goods, wares, merchandise, 
chattels, stocks on hand, ships, goods on ships, real estate mortgages, 
deeds of trust, vendors' sales agreements, land contracts, leaseholds, 
ground rents, real estate and any other interest therein, options, 
negotiable instruments, trade acceptances, royalties, book accounts, 
accounts payable, judgments, patents, trademarks or copyrights, 
insurance policies, safe deposit boxes and their contents, annuities, 
pooling agreements, services of any nature whatsoever, contracts of any 
nature whatsoever, and any other property, real, personal, or mixed, 
tangible or intangible, or interest or interests therein, present, 
future, or contingent.



Sec. 546.309  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 and, without limitation upon the foregoing, 
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. 546.310  United States.

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



Sec. 546.311  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 
credits, or purchasing or selling foreign exchange, securities, 
commodity futures or options, or procuring purchasers and sellers 
thereof, as principal or agent; including but not limited to, depository 
institutions, banks, savings banks, trust companies, securities brokers 
and dealers, commodity futures and options brokers and dealers, forward 
contract and foreign exchange merchants, securities and commodities 
exchanges, clearing corporations, investment companies, employee benefit 
plans, and U.S. holding companies, U.S. affiliates, or U.S. subsidiaries 
of any of the foregoing. This term includes those

[[Page 289]]

branches, offices, and agencies of foreign financial institutions that 
are located in the United States, but not such institutions' foreign 
branches, offices, or agencies.



Sec. 546.312  United States person; U.S. person.

    The term United States person or U.S. person means any United States 
citizen, permanent resident alien, entity organized under the laws of 
the United States or any jurisdiction within the United States 
(including foreign branches), or any person in the United States.



Sec. 546.313  Financial, material, or technological support.

    The term financial, material, or technological support, as used in 
Sec. 546.201(a)(2)(vii) of this part, means any property, tangible or 
intangible, including but not limited to currency, financial 
instruments, securities, or any other transmission of value; weapons or 
related materiel; chemical or biological agents; explosives; false 
documentation or identification; communications equipment; computers; 
electronic or other devices or equipment; technologies; lodging; safe 
houses; facilities; vehicles or other means of transportation; or goods. 
``Technologies'' as used in this definition means specific information 
necessary for the development, production, or use of a product, 
including related technical data such as blueprints, plans, diagrams, 
models, formulae, tables, engineering designs and specifications, 
manuals, or other recorded instructions.

[77 FR 6465, Feb. 8, 2012]



                        Subpart D_Interpretations



Sec. 546.401  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. 546.402  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 or 
under the direction of the Director of the Office of Foreign Assets 
Control does not affect any act done or omitted, or any civil or 
criminal suit or 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. 546.403  Termination and acquisition of an interest in blocked 
property.

    (a) Whenever a transaction licensed or authorized by or pursuant to 
this part results in the transfer of property (including any property 
interest) away from a person, such property shall no longer be deemed to 
be property blocked pursuant to Sec. 546.201(a), unless there exists in 
the property another interest that is blocked pursuant to Sec. 
546.201(a) or any other part of this chapter, 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. 546.201(a), such property shall be deemed to be property in which 
that person has an interest and therefore blocked.



Sec. 546.404  Transactions ordinarily incident to a licensed transaction.

    Any transaction ordinarily incident to a licensed transaction and 
necessary to give effect thereto is also authorized, except:
    (a) An ordinarily incident transaction, not explicitly authorized 
within the terms of the license, by or with a person whose property and 
interests in property are blocked pursuant to Sec. 546.201(a); or

[[Page 290]]

    (b) An ordinarily incident transaction, not explicitly authorized 
within the terms of the license, involving a debit to a blocked account 
or a transfer of blocked property.
    (c) Example. A license authorizing Company A, whose property and 
interests in property are blocked pursuant to Sec. 546.201(a), to 
complete a securities sale also authorizes all activities by other 
parties required to complete the sale, including transactions by the 
buyer, broker, transfer agents, banks, etc., provided that such other 
parties are not themselves persons whose property and interests in 
property are blocked pursuant to Sec. 546.201(a).



Sec. 546.405  Provision of services.

    (a) The prohibitions on transactions involving blocked property 
contained in Sec. 546.201 apply to services performed in the United 
States or by U.S. persons, wherever located, including by an overseas 
branch of an entity located in the United States:
    (1) On behalf of or for the benefit of a person whose property and 
interests in property are blocked pursuant to Sec. 546.201(a); or
    (2) With respect to property interests subject to Sec. 546.201.
    (b) Example. U.S. persons may not, except as authorized by or 
pursuant to this part, provide legal, accounting, financial, brokering, 
freight forwarding, transportation, public relations, or other services 
to a person whose property and interests in property are blocked 
pursuant to Sec. 546.201(a).

    Note to Sec. 546.405: See Sec. Sec. 546.507 and 546.508 on 
licensing policy with regard to the provision of certain legal or 
medical services.



Sec. 546.406  Offshore transactions.

    The prohibitions in Sec. 546.201 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. 546.201(a), or property in which a person whose 
property and interests in property are blocked pursuant to Sec. 
546.201(a) has or has had an interest since the effective date.



Sec. 546.407  Payments from blocked accounts to satisfy obligations 
prohibited.

    Pursuant to Sec. 546.201, no debits may be made to a blocked 
account to pay obligations to U.S. persons or other persons, except as 
authorized by or pursuant to this part.



Sec. 546.408  Charitable contributions.

    Unless specifically authorized by the Office of Foreign Assets 
Control pursuant to this part, no charitable contribution of funds, 
goods, services, or technology, including contributions to relieve human 
suffering, such as food, clothing, or medicine, may be made by, to, or 
for the benefit of a person whose property and interests in property are 
blocked pursuant to Sec. 546.201(a). For the purposes of this part, a 
contribution is made by, to, or for the benefit of a person whose 
property and interests in property are blocked pursuant to Sec. 
546.201(a) if made by, to, or in the name of such a person; if made by, 
to, 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.



Sec. 546.409  Credit extended and cards issued by U.S. financial
institutions.

    The prohibition in Sec. 546.201 on dealing in property subject to 
that section prohibits U.S. financial institutions from performing under 
any existing credit agreements, including, but not limited to, charge 
cards, debit cards, or other credit facilities issued by a U.S. 
financial institution to a person whose property and interests in 
property are blocked pursuant to Sec. 546.201(a).



Sec. 546.410  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. 546.201 if effected after the effective date.



Sec. 546.411  Entities owned by a person whose property and interests
in property are blocked.

    A person whose property and interests in property are blocked 
pursuant

[[Page 291]]

to Sec. 546.201(a) has an interest in all property and interests in 
property of an entity in which it owns, directly or indirectly, a 50 
percent or greater interest. The property and interests in property of 
such an entity, therefore, are blocked, and such an entity is a person 
whose property and interests in property are blocked pursuant to Sec. 
546.201(a), regardless of whether the entity itself is listed in the 
Annex to Executive Order 13400 or designated pursuant to Sec. 
546.201(a).



 Subpart E_Licenses, Authorizations, and Statements of Licensing Policy



Sec. 546.501  General and specific licensing procedures.

    For provisions relating to licensing procedures, see part 501, 
subpart E of this chapter. Licensing actions taken pursuant to part 501 
of this chapter with respect to the prohibitions contained in this part 
are considered actions taken pursuant to this part.



Sec. 546.502  Effect of license or authorization.

    (a) No license or other authorization contained in this part, or 
otherwise issued by or under the direction of the Director of the Office 
of Foreign Assets Control, authorizes or validates any transaction 
effected prior to the issuance of such license or other authorization, 
unless specifically provided in such license or authorization.
    (b) No regulation, ruling, instruction, or license authorizes any 
transaction prohibited under this part unless the regulation, ruling, 
instruction, or license is issued by the Office of Foreign Assets 
Control and specifically refers to this part. No regulation, ruling, 
instruction, or license referring to this part shall be deemed to 
authorize any transaction prohibited by any other provision of this 
chapter unless the regulation, ruling, instruction, or license 
specifically refers to such provision.
    (c) Any regulation, ruling, instruction, or license authorizing any 
transaction otherwise prohibited under this part has the effect of 
removing a prohibition contained in this part from the transaction, but 
only to the extent specifically stated by its terms. Unless the 
regulation, ruling, instruction, or license otherwise specifies, such an 
authorization does not create any right, duty, obligation, claim, or 
interest in, or with respect to, any property which would not otherwise 
exist under ordinary principles of law.



Sec. 546.503  Exclusion from licenses.

    The Director of the Office of Foreign Assets Control reserves the 
right to exclude any person, property, or transaction from the operation 
of any license or from the privileges conferred by any license. The 
Director of the Office of Foreign Assets Control also reserves the right 
to restrict the applicability of any license to particular persons, 
property, transactions, or classes thereof. Such actions are binding 
upon actual or constructive notice of the exclusions or restrictions.



Sec. 546.504  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. 
546.201(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. 546.504: See Sec. 501.603 of this chapter for 
mandatory reporting requirements regarding financial transfers. See also 
Sec. 546.203 concerning the obligation to hold blocked funds in 
interest-bearing accounts.



Sec. 546.505  Entries in certain accounts for normal service charges 
authorized.

    (a) A U.S. financial institution is authorized to debit any blocked 
account held at that financial institution in payment or reimbursement 
for normal

[[Page 292]]

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. 546.506  Investment and reinvestment of certain funds.

    Subject to the requirements of Sec. 546.203, U.S. financial 
institutions are authorized to invest and reinvest assets blocked 
pursuant to Sec. 546.201, 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 persons whose property and interests 
in property are blocked pursuant to Sec. 546.201(a).



Sec. 546.507  Provision of certain legal services authorized.

    (a) The provision of the following legal services to or on behalf of 
persons whose property and interests in property are blocked pursuant to 
Sec. 546.201(a) is authorized, provided that all receipts of payment of 
professional fees and reimbursement of incurred expenses must be 
specifically licensed:
    (1) Provision of legal advice and counseling on the requirements of 
and compliance with the laws of the United States or any jurisdiction 
within the United States, provided that such advice and counseling are 
not provided to facilitate transactions in violation of this part;
    (2) Representation of persons named as defendants in or otherwise 
made parties to domestic U.S. legal, arbitration, or administrative 
proceedings;
    (3) Initiation and conduct of domestic U.S. legal, arbitration, or 
administrative proceedings in defense of property interests subject to 
U.S. jurisdiction;
    (4) Representation of persons before any federal or state agency 
with respect to the imposition, administration, or enforcement of U.S. 
sanctions against such persons; and
    (5) Provision of legal services in any other context in which 
prevailing U.S. law requires access to legal counsel at public expense.
    (b) The provision of any other legal services to persons whose 
property and interests in property are blocked pursuant to Sec. 
546.201(a), 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. 546.201(a) is prohibited unless specifically licensed 
in accordance with Sec. 546.202(e).



Sec. 546.508  Authorization of emergency medical services.

    The provision of nonscheduled emergency medical services in the 
United States to persons whose property and interests in property are 
blocked pursuant to Sec. 546.201(a) is authorized, provided that all 
receipt of payment for such services must be specifically licensed.



                            Subpart F_Reports



Sec. 546.601  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

[[Page 293]]

the prohibitions contained in this part are considered requirements 
arising pursuant to this part.



                           Subpart G_Penalties



Sec. 546.701  Penalties.

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

    Note to paragraph (a)(1) of Sec. 546.701: As of the date of 
publication in the Federal Register of the final rule adding this part 
to 31 CFR chapter V (May 28, 2009), IEEPA provides for a maximum civil 
penalty not to exceed the greater of $250,000 or an amount that is twice 
the amount of the transaction that is the basis of the violation with 
respect to which the penalty is imposed.

    (2) A person who willfully commits, willfully attempts to commit, or 
willfully conspires to commit, or aids or abets in the commission of a 
violation of any license, order, regulation, or prohibition may, upon 
conviction, be fined not more than $1,000,000, or if a natural person, 
be imprisoned for not more than 20 years, or both.
    (b) Adjustments to penalty amounts. (1) The civil penalties provided 
in IEEPA are subject to adjustment pursuant to the Federal Civil 
Penalties Inflation Adjustment Act of 1990 (Pub. L. 101-410, as amended, 
28 U.S.C. 2461 note).
    (2) The criminal penalties provided in IEEPA are subject to 
adjustment pursuant to 18 U.S.C. 3571.
    (c) Attention is directed to section 5 of the United Nations 
Participation Act, as amended (22 U.S.C. 287c(b)) (``UNPA''), which 
provides that any person who willfully violates or evades or attempts to 
violate or evade any order, rule, or regulation issued by the President 
pursuant to the authority granted in that section, upon conviction, 
shall be fined not more than $10,000 and, if a natural person, may also 
be imprisoned for not more than 10 years; and the officer, director, or 
agent of any corporation who knowingly participates in such violation or 
evasion shall be punished by a like fine, imprisonment, or both and any 
property, funds, securities, papers, or other articles or documents, or 
any vessel, together with her tackle, apparel, furniture, and equipment, 
or vehicle, or aircraft, concerned in such violation shall be forfeited 
to the United States.
    (d) Violations involving transactions described at section 
203(b)(1), (3), and (4) of IEEPA shall be subject only to the penalties 
set forth in paragraph (c) of this section.
    (e) Attention is also directed to 18 U.S.C. 1001, which provides 
that whoever, in any matter within the jurisdiction of the executive, 
legislative, or judicial branch of the Government of the United States, 
knowingly and willfully 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 not more than five years, 
or both.
    (f) Violations of this part may also be subject to relevant 
provisions of other applicable laws.



Sec. 546.702  Pre-Penalty Notice; settlement.

    (a) When required. If the Office of Foreign Assets Control has 
reason to believe that there has occurred a violation of any provision 
of this part or a violation of the provisions of any license, ruling, 
regulation, order, direction, or instruction issued by or pursuant to 
the direction or authorization of the Secretary of the Treasury pursuant 
to this part or otherwise under IEEPA and determines that a civil 
monetary penalty is warranted, the Office of Foreign Assets Control will 
issue a Pre-Penalty Notice informing the alleged

[[Page 294]]

violator of the agency's intent to impose a monetary penalty. A Pre-
Penalty Notice shall be in writing. The Pre-Penalty Notice may be issued 
whether or not another agency has taken any action with respect to the 
matter. For a description of the contents of a Pre-Penalty Notice, see 
appendix A to part 501 of this chapter.
    (b)(1) Right to respond. An alleged violator has the right to 
respond to a Pre-Penalty Notice by making a written presentation to the 
Office of Foreign Assets Control. For a description of the information 
that should be included in such a response, see appendix A to part 501 
of this chapter.
    (2) Deadline for response. A response to the Pre-Penalty Notice must 
be made within the applicable 30-day period set forth in this paragraph. 
The failure to submit a response within the applicable time period set 
forth in this paragraph shall be deemed to be a waiver of the right to 
respond.
    (i) Computation of time for response. A response to a Pre-Penalty 
Notice must be postmarked or date-stamped by the U.S. Postal Service (or 
foreign postal service, if mailed abroad) or courier service provider 
(if transmitted to the Office of Foreign Assets Control by courier) on 
or before the 30th day after the postmark date on the envelope in which 
the Pre-Penalty Notice was mailed. If the Pre-Penalty Notice was 
personally delivered by a non-U.S. Postal Service agent authorized by 
the Office of Foreign Assets Control, a response must be postmarked or 
date-stamped on or before the 30th day after the date of delivery.
    (ii) Extensions of time for response. If a due date falls on a 
federal holiday or weekend, that due date is extended to include the 
following business day. Any other extensions of time will be granted, at 
the discretion of the Office of Foreign Assets Control, only upon 
specific request to the Office of Foreign Assets Control.
    (3) Form and method of response. A response to a Pre-Penalty Notice 
need not be in any particular form, but it must be typewritten and 
signed by the alleged violator or a representative thereof, must contain 
information sufficient to indicate that it is in response to the Pre-
Penalty Notice, and must include the Office of Foreign Assets Control 
identification number listed on the Pre-Penalty Notice. A copy of the 
written response may be sent by facsimile, but the original also must be 
sent to the Office of Foreign Assets Control Civil Penalties Division by 
mail or courier and must be postmarked or date-stamped, in accordance 
with paragraph (b)(2) of this section.
    (c) Settlement. Settlement discussion may be initiated by the Office 
of Foreign Assets Control, the alleged violator, or the alleged 
violator's authorized representative. For a description of practices 
with respect to settlement, see Appendix A to part 501 of this chapter.
    (d) Guidelines. Guidelines for the imposition or settlement of civil 
penalties by the Office of Foreign Assets Control are contained in 
appendix A to part 501 of this chapter.
    (e) Representation. A representative of the alleged violator may act 
on behalf of the alleged violator, but any oral communication with the 
Office of Foreign Assets Control prior to a written submission regarding 
the specific allegations contained in the Pre-Penalty Notice must be 
preceded by a written letter of representation, unless the Pre-Penalty 
Notice was served upon the alleged violator in care of the 
representative.



Sec. 546.703  Penalty imposition.

    If, after considering any written response to the Pre-Penalty Notice 
and any relevant facts, the Office of Foreign Assets Control determines 
that there was a violation by the alleged violator named in the Pre-
Penalty Notice and that a civil monetary penalty is appropriate, the 
Office of Foreign Assets Control may issue a written 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.

[[Page 295]]



Sec. 546.704  Administrative collection; referral to United States 
Department of Justice.

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



                          Subpart H_Procedures



Sec. 546.801  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. 546.802  Delegation by the Secretary of the Treasury.

    Any action that the Secretary of the Treasury is authorized to take 
pursuant to Executive Order 13400, and any further Executive orders 
relating to the national emergency declared in Executive Order 13067, 
may be taken by the Director of the Office of Foreign Assets Control or 
by any other person to whom the Secretary of the Treasury has delegated 
authority so to act.



                    Subpart I_Paperwork Reduction Act



Sec. 546.901  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 record keeping and reporting requirements, 
licensing procedures (including those pursuant to statements of 
licensing policy), and other procedures, see Sec. 501.901 of this 
chapter. An agency may not conduct or sponsor, and a person is not 
required to respond to, a collection of information unless it displays a 
valid control number assigned by OMB.



PART 547_DEMOCRATIC REPUBLIC OF THE CONGO SANCTIONS REGULATIONS--Table
of Contents



      Subpart A_Relation of This Part to Other Laws and Regulations

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

                         Subpart B_Prohibitions

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 physical property; liquidation 
          of blocked property.
547.205 Evasions; attempts; conspiracies.

                      Subpart C_General Definitions

547.301 Arms or any related materiel.
547.302 Blocked account; blocked property.
547.303 Effective date.
547.304 Entity.
547.305 Interest.
547.306 Licenses; general and specific.
547.307 Person.
547.308 Property; property interest.
547.309 Transfer.
547.310 United States.
547.311 U.S. financial institution.
547.312 United States person; U.S. person.
547.313 Financial, material, or technological support.

                        Subpart D_Interpretations

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.
547.407 Payments from blocked accounts to satisfy obligations 
          prohibited.
547.408 Charitable contributions.
547.409 Credit extended and cards issued by U.S. financial institutions.
547.410 Setoffs prohibited.
547.411 Entities owned by a person whose property and interests in 
          property are blocked.

[[Page 296]]

 Subpart E_Licenses, Authorizations, and Statements of Licensing Policy

547.501 General and specific licensing procedures.
547.502 Effect of license or authorization.
547.503 Exclusion from licenses.
547.504 Payments and transfers to blocked accounts in U.S. financial 
          institutions.
547.505 Entries in certain accounts for normal service charges 
          authorized.
547.506 Investment and reinvestment of certain funds.
547.507 Provision of certain legal services authorized.
547.508 Authorization of emergency medical services.

                            Subpart F_Reports

547.601 Records and reports.

                           Subpart G_Penalties

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

                          Subpart H_Procedures

547.801 Procedures.
547.802 Delegation by the Secretary of the Treasury.

                    Subpart I_Paperwork Reduction Act

547.901 Paperwork Reduction Act notice.

    Authority: 3 U.S.C. 301; 31 U.S.C. 321(b); 50 U.S.C. 1601-1651, 
1701-1706; 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.

    Source: 74 FR 25441, May 28, 2009, unless otherwise noted.



      Subpart A_Relation of This Part to Other Laws and Regulations



Sec. 547.101  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. 547.201  Prohibited transactions involving blocked property.

    (a) Except as authorized by regulations, orders, directives, 
rulings, instructions, licenses, or otherwise, and notwithstanding any 
contracts entered into or any license or permit granted prior to the 
effective date, all property and interests in property that are in the 
United States, that hereafter come within the United States, or that are 
or hereafter come within the possession or control of U.S. persons, 
including their overseas branches, of the following persons are blocked 
and may not be transferred, paid, exported, withdrawn, or otherwise 
dealt in:
    (1) Any person listed in the Annex to Executive Order 13413 of 
October 27, 2006; and
    (2) Any person determined by the Secretary of the Treasury, after 
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, repatriation, or resettlement of combatants;
    (ii) To be a political or military leader of a Congolese armed group 
that impedes the disarmament, demobilization, or reintegration of 
combatants;
    (iii) To be a political or military leader recruiting or using 
children in armed conflict in the Democratic Republic of the Congo in 
violation of applicable international law;
    (iv) To have committed serious violations of international law 
involving the

[[Page 297]]

targeting of children in situations of armed conflict in the Democratic 
Republic of the Congo, including killing and maiming, sexual violence, 
abduction, and forced displacement;
    (v) 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;
    (vi) To have materially assisted, sponsored, or provided financial, 
material, or technological support for, or goods or services in support 
of, the activities described in paragraphs (a)(2)(i) through (a)(2)(v) 
of this section or any person whose property and interests in property 
are blocked pursuant to this paragraph (a); or
    (vii) To be owned or controlled by, or acting or purporting to act 
for or on behalf of, directly or indirectly, any person whose property 
and interests in property are blocked pursuant to this paragraph (a).

    Note 1 to paragraph (a) of Sec. 547.201: The names of persons 
listed in or designated pursuant to Executive Order 13413, 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 the Office of Foreign Assets Control's Specially 
Designated Nationals and Blocked Persons List (``SDN List'') with the 
identifier ``[DRCONGO].'' The SDN List is accessible through the 
following page on the Office of Foreign Assets Control's Web site: 
http://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) of Sec. 547.201: The International 
Emergency Economic Powers Act (50 U.S.C. 1701-1706), in Section 203 (50 
U.S.C. 1702), authorizes the blocking of property and interests in 
property of a person during the pendency of an investigation. The names 
of persons whose property and interests in property are blocked pending 
investigation pursuant to 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) of Sec. 547.201. Sections 501.806 and 
501.807 of this chapter describe the procedures to be followed by 
persons seeking, respectively, the unblocking of funds that they believe 
were blocked due to mistaken identity, or administrative reconsideration 
of their status as persons whose property and interests in property are 
blocked pursuant to paragraph (a) of this section.

    (b) The prohibitions in paragraph (a) of this section include, but 
are not limited to, prohibitions on the following transactions when 
engaged in by a United States person or within the United States:
    (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 otherwise authorized by this part or by a specific 
license expressly referring to this section, any dealing in any security 
(or evidence thereof) held within the possession or control of a U.S. 
person and either registered or inscribed in the name of, or known to be 
held for the benefit of, or issued by, any person whose property and 
interests in property are blocked pursuant to paragraph (a) of this 
section is prohibited. This prohibition includes but is not limited to 
the transfer (including the transfer on the books of any issuer or agent 
thereof), disposition, transportation, importation, exportation, or 
withdrawal of, or the endorsement or guaranty of signatures on, any such 
security on or after the effective date. This prohibition applies 
irrespective of the fact that at any time (whether prior to, on, or 
subsequent to the effective date) the registered or inscribed owner of 
any such security may have or might appear to have assigned, 
transferred, or otherwise disposed of the security.

[74 FR 25441, May 28, 2009, as amended at 76 FR 38538, June 30, 2011]

[[Page 298]]



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 property interests.
    (b) No transfer before the effective date shall be the basis for the 
assertion or recognition of any right, remedy, power, or privilege with 
respect to, or any interest in, any property or interest in property 
blocked pursuant to Sec. 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, an appropriate license or other 
authorization issued by or pursuant to the direction or authorization of 
the Director of the Office of Foreign Assets Control before, during, or 
after a transfer shall validate such transfer or make it enforceable to 
the same extent that it would be valid or enforceable but for the 
provisions of IEEPA, Executive Order 13413, this part, and any 
regulation, order, directive, ruling, instruction, or license issued 
pursuant to this part.
    (d) Transfers of property that otherwise would be null and void or 
unenforceable by virtue of the provisions of this section shall not be 
deemed to be null and void or unenforceable as to any person with whom 
such property is or was held or maintained (and as to such person only) 
in cases in which such person is able to establish to the satisfaction 
of the Director of the Office of Foreign Assets Control each of the 
following:
    (1) Such transfer did not represent a willful violation of the 
provisions of this part by the person with whom such property is or was 
held or maintained (and as to such person only);
    (2) The person with whom such property is or was held or maintained 
did not have reasonable cause to know or suspect, in view of all the 
facts and circumstances known or available to such person, that such 
transfer required a license or authorization issued pursuant to this 
part and was not so licensed or authorized, or, if a license or 
authorization did purport to cover the transfer, that such license or 
authorization had been obtained by misrepresentation of a third party or 
withholding of material facts or was otherwise fraudulently obtained; 
and
    (3) The person with whom such property is or was held or maintained 
filed with the Office of Foreign Assets Control a report setting forth 
in full the circumstances relating to such transfer promptly upon 
discovery that:
    (i) Such transfer was in violation of the provisions of this part or 
any regulation, ruling, instruction, license, or other direction or 
authorization issued pursuant to this part;
    (ii) Such transfer was not licensed or authorized by the Director of 
the Office of Foreign Assets Control; or
    (iii) If a license did purport to cover the transfer, such license 
had been obtained by misrepresentation of a third party or withholding 
of material facts or was otherwise fraudulently obtained.

    Note to paragraph (d) of Sec. 547.202: The filing of a report in 
accordance with the provisions of paragraph (d)(3) of this section shall 
not be deemed evidence that the terms of paragraphs (d)(1) and (d)(2) of 
this section have been satisfied.

    (e) Unless licensed pursuant to this part, any attachment, judgment, 
decree, lien, execution, garnishment, or other judicial process is null 
and void with respect to any property in which, on or since the 
effective date, there existed an interest of a person whose property and 
interests in property are blocked pursuant to Sec. 547.201(a).



Sec. 547.203  Holding of funds in interest-bearing accounts; investment
and reinvestment.

    (a) Except as provided in paragraph (c) or (d) of this section, or 
as otherwise directed by the Office of Foreign Assets Control, any U.S. 
person holding funds, such as currency, bank deposits, or liquidated 
financial obligations, subject to Sec. 547.201(a) shall hold

[[Page 299]]

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) 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.
    (3) Funds held or placed in a blocked account pursuant to this 
paragraph (b) may not be invested in instruments the maturity of which 
exceeds 180 days. If interest is credited to a separate blocked account 
or subaccount, the name of the account party on each account must be the 
same.
    (c) 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 (b) 
or (d) of this section.
    (d) 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 interest at rates that are commercially 
reasonable.
    (e) This section does not create an affirmative obligation for the 
holder of blocked tangible property, such as chattels or real estate, or 
of other blocked property, such as debt or equity securities, to sell or 
liquidate such property. However, the Office of Foreign Assets Control 
may issue licenses permitting or directing such sales or liquidation in 
appropriate cases.
    (f) 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 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. 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 the Office of Foreign Assets Control, be sold or 
liquidated and the net proceeds placed in a blocked interest-bearing 
account in the name of the owner of the property.



Sec. 547.205  Evasions; attempts; conspiracies.

    (a) Except as otherwise authorized, and notwithstanding any contract 
entered into or any license or permit granted prior to the effective 
date, any transaction by a U.S. person or within the United States on or 
after the effective date that evades or avoids, has the purpose of 
evading or avoiding, or attempts to violate any of the prohibitions set 
forth in this part is prohibited.
    (b) Except as otherwise authorized, and notwithstanding any contract 
entered into or any license or permit granted prior to the effective 
date, any conspiracy formed to violate the prohibitions set forth in 
this part is prohibited.

[[Page 300]]



                      Subpart C_General Definitions



Sec. 547.301  Arms or any related materiel.

    The term arms or any related materiel means arms or related materiel 
of all types, including military aircraft and equipment, but excludes:
    (a) Supplies of arms and related materiel, technical training, and 
assistance intended solely for support of or use by units of the army 
and police of the Democratic Republic of the Congo, provided that said 
units:
    (1) Have completed the process of their integration; or
    (2) Operate under the command, respectively, of the [eacute]tat-
major int[eacute]gr[eacute] of the Armed Forces or of the National 
Police of the Democratic Republic of the Congo;
    (3) Are in the process of their integration in the territory of the 
Democratic Republic of the Congo outside the provinces of North and 
South Kivu and the Ituri district; and
    (4) The supplies of arms and related materiel, technical training, 
and assistance described in paragraphs (a)(1) through (a)(3) of this 
section are delivered or provided only to receiving sites as designated 
by the Government of National Unity and Transition, in coordination with 
the United Nations Organization Mission in the Democratic Republic of 
the Congo (MONUC), and advance notification of such delivery or 
provision is provided to the Secretary of State;
    (b) Supplies of arms and related materiel, as well as technical 
training and assistance intended solely for support of or use by MONUC;
    (c) Supplies of non-lethal military equipment, and related technical 
assistance and training, intended solely for humanitarian or protective 
use, following advance notification to the Secretary of State; and
    (d) Supplies of arms and related materiel, training, and technical 
assistance intended solely for support of or use by the European Union 
force deployed to support MONUC.



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 an authorization or license from the Office of Foreign 
Assets Control expressly authorizing such action.

    Note to Sec. 547.302: See Sec. 547.411 concerning the blocked 
status of property and interests in property of an entity that is 50 
percent or more owned by a person whose property and interests in 
property are blocked pursuant to Sec. 547.201(a).



Sec. 547.303  Effective date.

    The term effective date refers to the effective date of the 
applicable prohibitions and directives contained in this part as 
follows:
    (a) 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;
    (b) With respect to a person whose property and interests in 
property are blocked pursuant to Sec. 547.201(a)(2), the earlier of the 
date of actual or constructive notice of such person's designation.



Sec. 547.304  Entity.

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



Sec. 547.305  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. 547.306  Licenses; general and specific.

    (a) Except as otherwise specified, the term license means any 
license or authorization contained in or issued pursuant to this part.
    (b) The term general license means any license or authorization the 
terms of which are set forth in subpart E of this part.

[[Page 301]]

    (c) The term specific license means any license or authorization not 
set forth in subpart E of this part but issued pursuant to this part.

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



Sec. 547.307  Person.

    The term person means an individual or entity.



Sec. 547.308  Property; property interest.

    The terms property and property interest include, but are not 
limited to, money, checks, drafts, bullion, bank deposits, savings 
accounts, debts, indebtedness, obligations, notes, guarantees, 
debentures, stocks, bonds, coupons, any other financial instruments, 
bankers' acceptances, mortgages, pledges, liens or other rights in the 
nature of security, warehouse receipts, bills of lading, trust receipts, 
bills of sale, any other evidences of title, ownership or indebtedness, 
letters of credit and any documents relating to any rights or 
obligations thereunder, powers of attorney, goods, wares, merchandise, 
chattels, stocks on hand, ships, goods on ships, real estate mortgages, 
deeds of trust, vendors' sales agreements, land contracts, leaseholds, 
ground rents, real estate and any other interest therein, options, 
negotiable instruments, trade acceptances, royalties, book accounts, 
accounts payable, judgments, patents, trademarks or copyrights, 
insurance policies, safe deposit boxes and their contents, annuities, 
pooling agreements, services of any nature whatsoever, contracts of any 
nature whatsoever, and any other property, real, personal, or mixed, 
tangible or intangible, or interest or interests therein, present, 
future or contingent.



Sec. 547.309  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 and, without limitation upon the foregoing, 
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. 547.310  United States.

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



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 
credits, or purchasing or selling foreign exchange, securities, 
commodity futures or options, or procuring purchasers and sellers 
thereof, as principal or agent; including but not limited to depository 
institutions, banks, savings banks, trust companies, securities brokers 
and dealers, commodity futures and options brokers and dealers, forward 
contract and foreign exchange merchants, securities and commodities 
exchanges, clearing corporations, investment companies, employee benefit 
plans, and U.S. holding companies, U.S. affiliates, or U.S. subsidiaries 
of any of the foregoing. This term includes those branches, offices and 
agencies of foreign financial institutions that are located in the 
United States, but not

[[Page 302]]

such institutions' foreign branches, offices, or agencies.



Sec. 547.312  United States person; U.S. person.

    The term United States person or U.S. person means any United States 
citizen, permanent resident alien, entity organized under the laws of 
the United States or any jurisdiction within the United States 
(including foreign branches), or any person in the United States.



Sec. 547.313  Financial, material, or technological support.

    The term financial, material, or technological support, as used in 
Sec. 547.201(a)(2)(vi) of this part, means any property, tangible or 
intangible, including but not limited to currency, financial 
instruments, securities, or any other transmission of value; weapons or 
related materiel; chemical or biological agents; explosives; false 
documentation or identification; communications equipment; computers; 
electronic or other devices or equipment; technologies; lodging; safe 
houses; facilities; vehicles or other means of transportation; or goods. 
``Technologies'' as used in this definition means specific information 
necessary for the development, production, or use of a product, 
including related technical data such as blueprints, plans, diagrams, 
models, formulae, tables, engineering designs and specifications, 
manuals, or other recorded instructions.

[77 FR 6465, Feb. 8, 2012]



                        Subpart D_Interpretations



Sec. 547.401  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, direction, or license issued pursuant to this part refers 
to the same as currently amended.



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 or 
under the direction of the Director of the Office of Foreign Assets 
Control does not affect any act done or omitted, or any civil or 
criminal suit or 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, 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) or any other part of this chapter, 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 
that person has an interest and therefore blocked.



Sec. 547.404  Transactions ordinarily incident to a licensed transaction.

    Any transaction ordinarily incident to a licensed transaction and 
necessary to give effect thereto is also authorized, except:
    (a) An ordinarily incident transaction, not explicitly authorized 
within the terms of the license, by or with a person whose property and 
interests in property are blocked pursuant to Sec. 547.201(a); or
    (b) An ordinarily incident transaction, not explicitly authorized 
within the terms of the license, involving a

[[Page 303]]

debit to a blocked account or a transfer of blocked property.
    (c) Example. A license authorizing Company A, whose property and 
interests in property are blocked pursuant to Sec. 547.201(a), to 
complete a securities sale also authorizes all activities by other 
parties required to complete the sale, including transactions by the 
buyer, broker, transfer agents, banks, etc., provided that such other 
parties 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 involving blocked property 
contained in Sec. 547.201 apply to services performed in the United 
States or by U.S. persons, wherever located, including by an overseas 
branch of an entity located in the United States:
    (1) On behalf of or for the benefit of a person whose property and 
interests in property are blocked pursuant to Sec. 547.201(a); or
    (2) With respect to property interests subject to Sec. 547.201.
    (b) Example. U.S. persons may not, except as authorized by or 
pursuant to this part, provide legal, accounting, financial, brokering, 
freight forwarding, transportation, public relations, or other services 
to a person whose property and interests in property are blocked 
pursuant to Sec. 547.201(a).

    Note to Sec. 547.405: See Sec. Sec. 547.507 and 547.508 on 
licensing policy with regard to the provision of certain legal or 
medical services.



Sec. 547.406  Offshore transactions.

    The prohibitions in Sec. 547.201 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. 547.201(a), or property in which a person whose 
property and interests in property are blocked pursuant to Sec. 
547.201(a) has or has had an interest since the effective date.



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.



Sec. 547.408  Charitable contributions.

    Unless specifically authorized by the Office of Foreign Assets 
Control pursuant to this part, no charitable contribution of funds, 
goods, services, or technology, including contributions to relieve human 
suffering, such as food, clothing or medicine, may be made by, to, or 
for the benefit of 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 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 such a person; if made by, 
to, 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.



Sec. 547.409  Credit extended and cards issued by U.S. financial
institutions.

    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, but not limited to, charge 
cards, debit cards, or other credit facilities issued by a U.S. 
financial institution to a person whose property and interests in 
property are blocked pursuant to Sec. 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 a person whose property and interests
in property are blocked.

    A person whose property and interests in property are blocked 
pursuant

[[Page 304]]

to Sec. 547.201(a) has an interest in all property and interests in 
property of an entity in which it owns, directly or indirectly, a 50 
percent or greater interest. The property and interests in property of 
such an entity, therefore, are blocked, and such an entity is a person 
whose property and interests in property are blocked pursuant to Sec. 
547.201(a), regardless of whether the entity itself is listed in the 
Annex to Executive Order 13413 or designated pursuant to Sec. 
547.201(a).



 Subpart E_Licenses, Authorizations, and Statements of Licensing Policy



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.



Sec. 547.502  Effect of license or authorization.

    (a) No license or other authorization contained in this part, or 
otherwise issued by or under the direction of the Director of the Office 
of Foreign Assets Control, authorizes or validates any transaction 
effected prior to the issuance of such license or other authorization, 
unless specifically provided in such license or authorization.
    (b) No regulation, ruling, instruction, or license authorizes any 
transaction prohibited under this part unless the regulation, ruling, 
instruction, or license is issued by the Office of Foreign Assets 
Control and specifically refers to this part. No regulation, ruling, 
instruction, or license referring to this part shall be deemed to 
authorize any transaction prohibited by any other provision of this 
chapter unless the regulation, ruling, instruction, or license 
specifically refers to such provision.
    (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.



Sec. 547.503  Exclusion from licenses.

    The Director of the Office of Foreign Assets Control reserves the 
right to exclude any person, property, or transaction from the operation 
of any license or from the privileges conferred by any license. The 
Director of the Office of Foreign Assets Control also reserves the right 
to restrict the applicability of any license to particular persons, 
property, transactions, or classes thereof. Such actions are binding 
upon actual or constructive notice of the exclusions or restrictions.



Sec. 547.504  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. 
547.201(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. 547.504: See Sec. 501.603 of this chapter for 
mandatory reporting requirements regarding financial transfers. See also 
Sec. 547.203 concerning the obligation to hold blocked funds in 
interest-bearing accounts.



Sec. 547.505  Entries in certain accounts for normal service charges 
authorized.

    (a) A U.S. financial institution is authorized to debit any blocked 
account held at that financial institution in payment or reimbursement 
for normal

[[Page 305]]

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. 547.506  Investment and reinvestment of certain funds.

    Subject to the requirements of Sec. 547.203, U.S. financial 
institutions are authorized to invest and reinvest assets blocked 
pursuant to Sec. 547.201, 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 persons whose property and interests 
in property are blocked pursuant to Sec. 547.201(a).



Sec. 547.507  Provision of certain legal services authorized.

    (a) The provision of the following legal services to or on behalf of 
persons whose property and interests in property are blocked pursuant to 
Sec. 547.201(a) is authorized, provided that all receipts of payment of 
professional fees and reimbursement of incurred expenses must be 
specifically licensed:
    (1) Provision of legal advice and counseling on the requirements of 
and compliance with the laws of the United States or any jurisdiction 
within the United States, provided that such advice and counseling are 
not provided to facilitate transactions in violation of this part;
    (2) Representation of persons named as defendants in or otherwise 
made parties to domestic U.S. legal, arbitration, or administrative 
proceedings;
    (3) Initiation and conduct of domestic U.S. legal, arbitration, or 
administrative proceedings in defense of property interests subject to 
U.S. jurisdiction;
    (4) Representation of persons before any federal or state agency 
with respect to the imposition, administration, or enforcement of U.S. 
sanctions against such persons; and
    (5) Provision of legal services in any other context in which 
prevailing U.S. law requires access to legal counsel at public expense.
    (b) The provision of any other legal services to persons whose 
property and interests in property are blocked pursuant to Sec. 
547.201(a), 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. 547.201(a) is prohibited unless specifically licensed 
in accordance with Sec. 547.202(e).



Sec. 547.508  Authorization of emergency medical services.

    The provision of nonscheduled emergency medical services in the 
United States to persons whose property and interests in property are 
blocked pursuant to Sec. 547.201(a) is authorized, provided that all 
receipt of payment for such services must be specifically licensed.



                            Subpart F_Reports



Sec. 547.601  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

[[Page 306]]

the prohibitions contained in this part are considered requirements 
arising pursuant to this part.



                           Subpart G_Penalties



Sec. 547.701  Penalties.

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

    Note to paragraph (a)(1) of Sec. 547.701: As of the date of 
publication in the Federal Register of the final rule adding this part 
to 31 CFR chapter V (May 28, 2009), IEEPA provides for a maximum civil 
penalty not to exceed the greater of $250,000 or an amount that is twice 
the amount of the transaction that is the basis of the violation with 
respect to which the penalty is imposed.

    (2) A person who willfully commits, willfully attempts to commit, or 
willfully conspires to commit, or aids or abets in the commission of a 
violation of any license, order, regulation, or prohibition may, upon 
conviction, be fined not more than $1,000,000, or if a natural person, 
be imprisoned for not more than 20 years, or both.
    (b) Adjustments to penalty amounts. (1) The civil penalties provided 
in IEEPA are subject to adjustment pursuant to the Federal Civil 
Penalties Inflation Adjustment Act of 1990 (Pub. L. 101-410, as amended, 
28 U.S.C. 2461 note).
    (2) The criminal penalties provided in IEEPA are subject to 
adjustment pursuant to 18 U.S.C. 3571.
    (c) Attention is directed to section 5 of the United Nations 
Participation Act, as amended (22 U.S.C. 287c(b)) (``UNPA''), which 
provides that any person who willfully violates or evades or attempts to 
violate or evade any order, rule, or regulation issued by the President 
pursuant to the authority granted in that section, upon conviction, 
shall be fined not more than $10,000 and, if a natural person, may also 
be imprisoned for not more than 10 years; and the officer, director, or 
agent of any corporation who knowingly participates in such violation or 
evasion shall be punished by a like fine, imprisonment, or both and any 
property, funds, securities, papers, or other articles or documents, or 
any vessel, together with her tackle, apparel, furniture, and equipment, 
or vehicle, or aircraft, concerned in such violation shall be forfeited 
to the United States.
    (d) Violations involving transactions described at section 
203(b)(1), (3), and (4) of IEEPA shall be subject only to the penalties 
set forth in paragraph (c) of this section.
    (e) Attention is also directed to 18 U.S.C. 1001, which provides 
that whoever, in any matter within the jurisdiction of the executive, 
legislative, or judicial branch of the Government of the United States, 
knowingly and willfully falsifies, conceals, or covers up by any trick, 
scheme, or device a material fact; 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 not more than five years, or 
both.
    (f) Violations of this part may also be subject to relevant 
provisions of other applicable laws.



Sec. 547.702  Pre-Penalty Notice; settlement.

    (a) When required. If the Office of Foreign Assets Control has 
reason to believe that there has occurred a violation of any provision 
of this part or a violation of the provisions of any license, ruling, 
regulation, order, direction, or instruction issued by or pursuant to 
the direction or authorization of the Secretary of the Treasury pursuant 
to this part or otherwise under IEEPA and determines that a civil 
monetary penalty is warranted, the Office of Foreign Assets Control will 
issue a Pre-Penalty Notice informing the alleged

[[Page 307]]

violator of the agency's intent to impose a monetary penalty. A Pre-
Penalty Notice shall be in writing. The Pre-Penalty Notice may be issued 
whether or not another agency has taken any action with respect to the 
matter. For a description of the contents of a Pre-Penalty Notice, see 
Appendix A to part 501 of this chapter.
    (b)(1) Right to respond. An alleged violator has the right to 
respond to a Pre-Penalty Notice by making a written presentation to the 
Office of Foreign Assets Control. For a description of the information 
that should be included in such a response, see Appendix A to part 501 
of this chapter.
    (2) Deadline for response. A response to a Pre-Penalty Notice must 
be made within the applicable 30-day period set forth in this paragraph. 
The failure to submit a response within the applicable time period set 
forth in this paragraph shall be deemed to be a waiver of the right to 
respond.
    (i) Computation of time for response. A response to a Pre-Penalty 
Notice must be postmarked or date-stamped by the U.S. Postal Service (or 
foreign postal service, if mailed abroad) or courier service provider 
(if transmitted to the Office of Foreign Assets Control by courier) on 
or before the 30th day after the postmark date on the envelope in which 
the Pre-Penalty Notice was mailed. If the Pre-Penalty Notice was 
personally delivered by a non-U.S. Postal Service agent authorized by 
the Office of Foreign Assets Control, a response must be postmarked or 
date-stamped on or before the 30th day after the date of delivery.
    (ii) Extensions of time for response. If a due date falls on a 
federal holiday or weekend, that due date is extended to include the 
following business day. Any other extensions of time will be granted, at 
the discretion of the Office of Foreign Assets Control, only upon 
specific request to the Office of Foreign Assets Control.
    (3) Form and method of response. A response to a Pre-Penalty Notice 
need not be in any particular form, but it must be typewritten and 
signed by the alleged violator or a representative thereof, must contain 
information sufficient to indicate that it is in response to the Pre-
Penalty Notice, and must include the Office of Foreign Assets Control 
identification number listed on the Pre-Penalty Notice. A copy of the 
written response may be sent by facsimile, but the original also must be 
sent to the Office of Foreign Assets Control Civil Penalties Division by 
mail or courier and must be postmarked or date-stamped, in accordance 
with paragraph (b)(2) of this section.
    (c) Settlement. Settlement discussion may be initiated by the Office 
of Foreign Assets Control, the alleged violator, or the alleged 
violator's authorized representative. For a description of practices 
with respect to settlement, see Appendix A to part 501 of this chapter.
    (d) Guidelines. Guidelines for the imposition or settlement of civil 
penalties by the Office of Foreign Assets Control are contained in 
appendix A to part 501 of this chapter.
    (e) Representation. A representative of the alleged violator may act 
on behalf of the alleged violator, but any oral communication with the 
Office of Foreign Assets Control prior to a written submission regarding 
the specific allegations contained in the Pre-Penalty Notice must be 
preceded by a written letter of representation, unless the Pre-Penalty 
Notice was served upon the 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, the Office of Foreign Assets Control determines 
that there was a violation by the alleged violator named in the Pre-
Penalty Notice and that a civil monetary penalty is appropriate, the 
Office of Foreign Assets Control may issue a Penalty Notice to the 
violator containing a determination of the violation and the imposition 
of the monetary penalty. For additional details concerning issuance of a 
Penalty Notice, see appendix A to part 501 of this chapter. The issuance 
of the Penalty Notice shall constitute final agency action. The violator 
has the right to seek judicial review of that final agency action in 
federal district court.

[[Page 308]]



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 the 
Director of the Office of Foreign Assets Control, the matter may be 
referred for administrative collection measures by the Department of the 
Treasury or to the United States Department of Justice for appropriate 
action to recover the penalty in a civil suit in a federal district 
court.



                          Subpart H_Procedures



Sec. 547.801  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. 547.802  Delegation 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, and any further 
Executive orders relating to the national emergency declared in 
Executive Order 13413, may be taken by the Director of the Office of 
Foreign Assets Control or by any other person to whom the Secretary of 
the Treasury has delegated authority so to act.



                    Subpart I_Paperwork Reduction Act



Sec. 547.901  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 record keeping and reporting requirements, 
licensing procedures (including those pursuant to statements of 
licensing policy), and other procedures, see Sec. 501.901 of this 
chapter. An agency may not conduct or sponsor, and a person is not 
required to respond to, a collection of information unless it displays a 
valid control number assigned by OMB.



PART 548_BELARUS SANCTIONS REGULATIONS--Table of Contents



      Subpart A_Relation of This Part to Other Laws and Regulations

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

                         Subpart B_Prohibitions

548.201 Prohibited transactions involving blocked property.
548.202 Effect of transfers violating the provisions of this part.
548.203 Holding of funds in interest-bearing accounts; investment and 
          reinvestment.
548.204 Expenses of maintaining blocked physical property; liquidation 
          of blocked property.
548.205 Evasions; attempts; conspiracies.
548.206 Exempt transactions.

                      Subpart C_General Definitions

548.301 Blocked account; blocked property.
548.302 Effective date.
548.303 Entity.
548.304 Information or informational materials.
548.305 Interest.
548.306 Licenses; general and specific.
548.307 Person.
548.308 Property; property interest.
548.309 Transfer.
548.310 United States.
548.311 U.S. financial institution.
548.312 United States person; U.S. person.
548.313 Financial, material, or technological support.

                        Subpart D_Interpretations

548.401 Reference to amended sections.
548.402 Effect of amendment.
548.403 Termination and acquisition of an interest in blocked property.
548.404 Transactions ordinarily incident to a licensed transaction.
548.405 Provision of services.
548.406 Offshore transactions.
548.407 Payments from blocked accounts to satisfy obligations 
          prohibited.
548.408 Charitable contributions.
548.409 Credit extended and cards issued by U.S. financial institutions.
548.410 Setoffs prohibited.
548.411 Entities owned by a person whose property and interests in 
          property are blocked.

[[Page 309]]

 Subpart E_Licenses, Authorizations, and Statements of Licensing Policy

548.501 General and specific licensing procedures.
548.502 Effect of license or authorization.
548.503 Exclusion from licenses.
548.504 Payments and transfers to blocked accounts in U.S. financial 
          institutions.
548.505 Entries in certain accounts for normal service charges 
          authorized.
548.506 Investment and reinvestment of certain funds.
548.507 Provision of certain legal services authorized.
548.508 Authorization of emergency medical services.

                            Subpart F_Reports

548.601 Records and reports.

                           Subpart G_Penalties

548.701 Penalties.
548.702 Pre-penalty notice; settlement.
548.703 Penalty imposition.
548.704 Administrative collection; referral to United States Department 
          of Justice.

                          Subpart H_Procedures

548.801 Procedures.
548.802 Delegation by the Secretary of the Treasury.

                    Subpart I_Paperwork Reduction Act

548.901 Paperwork Reduction Act notice.

    Authority: 3 U.S.C. 301; 31 U.S.C. 321(b); 50 U.S.C. 1601-1651, 
1701-1706; Pub. L. 101-410, 104 Stat. 890 (28 U.S.C. 2461 note); Pub. L. 
110-96, 121 Stat. 1011 (50 U.S.C. 1705 note); E.O. 13405, 71 FR 35485; 3 
CFR, 2007 Comp., p. 231.

    Source: 75 FR 5503, Feb. 3, 2010, unless otherwise noted.



      Subpart A_Relation of This Part to Other Laws and Regulations



Sec. 548.101  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. 548.201  Prohibited transactions involving blocked property.

    (a) All property and interests in property that are in the United 
States, that hereafter come within the United States, or that are or 
hereafter come within the possession or control of U.S. persons, 
including their overseas branches, of the following persons are blocked 
and may not be transferred, paid, exported, withdrawn, or otherwise 
dealt in:
    (1) Any person listed in the Annex to Executive Order 13405 of June 
16, 2006 (71 FR 35485, June 20, 2006); and
    (2) Any person determined by the Secretary of the Treasury, after 
consultation with the Secretary of State:
    (i) To be responsible for, or to have participated in, actions or 
policies that undermine democratic processes or institutions in Belarus;
    (ii) To be responsible for, or to have participated in, human rights 
abuses related to political repression in Belarus;
    (iii) To be a senior-level official, a family member of such an 
official, or a person closely linked to such an official who is 
responsible for or has engaged in public corruption related to Belarus;
    (iv) To have materially assisted, sponsored, or provided financial, 
material, or technological support for, or goods or services in support 
of, the activities described in paragraphs (a)(2)(i) through (a)(2)(iii) 
of this section or any person whose property or interests in property 
are blocked pursuant to this paragraph (a); or

[[Page 310]]

    (v) To be owned or controlled by, or acting or purporting to act for 
or on behalf of, directly or indirectly, any person whose property or 
interests in property are blocked pursuant to this paragraph (a).

    Note 1 to paragraph (a) of Sec. 548.201: The names of persons 
listed in or designated pursuant to Executive Order 13405, 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 the Office of Foreign Assets Control's Specially 
Designated Nationals and Blocked Persons List (``SDN List'') with the 
identifier ``[BELARUS].'' The SDN List is accessible through the 
following page on the Office of Foreign Assets Control's Web site: 
http://www.treasury.gov/sdn. Additional information pertaining to the 
SDN List can be found in appendix A to this chapter. See Sec. 548.411 
concerning entities that may not be listed on the SDN List but whose 
property and interests in property are nevertheless blocked pursuant to 
paragraph (a) of this section.
    Note 2 to paragraph (a) of Sec. 548.201: The International 
Emergency Economic Powers Act (50 U.S.C. 1701-1706), in Section 203 (50 
U.S.C. 1702), authorizes the blocking of property and interests in 
property of a person during the pendency of an investigation. The names 
of persons whose property and interests in property are blocked pending 
investigation pursuant to paragraph (a) of this section also are 
published in the Federal Register and incorporated into the SDN List 
with the identifier ``[BPI-BELARUS].''
    Note 3 to paragraph (a) of Sec. 548.201: Sections 501.806 and 
501.807 of this chapter describe the procedures to be followed by 
persons seeking, respectively, the unblocking of funds that they believe 
were blocked due to mistaken identity, or administrative reconsideration 
of their status as persons whose property and interests in property are 
blocked pursuant to paragraph (a) of this section.

    (b) The prohibitions in paragraph (a) of this section include, but 
are not limited to, prohibitions on the following transactions:
    (1) The making of any contribution or provision of funds, goods, or 
services by, to, or for the benefit of any person whose property and 
interests in property are blocked pursuant to paragraph (a) of this 
section; and
    (2) The receipt of any contribution or provision of funds, goods, or 
services from any person whose property and interests in property are 
blocked pursuant to paragraph (a) of this section.
    (c) Unless otherwise authorized by this part or by a specific 
license expressly referring to this section, any dealing in any security 
(or evidence thereof) held within the possession or control of a U.S. 
person and either registered or inscribed in the name of, or known to be 
held for the benefit of, or issued by, any person whose property and 
interests in property are blocked pursuant to paragraph (a) of this 
section is prohibited. This prohibition includes but is not limited to 
the transfer (including the transfer on the books of any issuer or agent 
thereof), disposition, transportation, importation, exportation, or 
withdrawal of, or the endorsement or guaranty of signatures on, any such 
security on or after the effective date. This prohibition applies 
irrespective of the fact that at any time (whether prior to, on, or 
subsequent to the effective date) the registered or inscribed owner of 
any such security may have or might appear to have assigned, 
transferred, or otherwise disposed of the security.
    (d) The prohibitions in paragraph (a) of this section apply except 
to the extent transactions are authorized by regulations, orders, 
directives, rulings, instructions, licenses, or otherwise, and 
notwithstanding any contracts entered into or any license or permit 
granted prior to the effective date.

[75 FR 5503, Feb. 3, 2010, as amended at 76 FR 38538, June 30, 2011]



Sec. 548.202  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. 
548.201(a), is null and void and shall not be the basis for the 
assertion or recognition of any interest in or right, remedy, power, or 
privilege with respect to such property or property interests.
    (b) No transfer before the effective date shall be the basis for the 
assertion or recognition of any right, remedy, power, or privilege with 
respect to, or any interest in, any property or interest in property 
blocked pursuant to

[[Page 311]]

Sec. 548.201(a), unless the person who holds or maintains such 
property, prior to that date, had written notice of the transfer or by 
any written evidence had recognized such transfer.
    (c) Unless otherwise provided, an appropriate license or other 
authorization issued by the Office of Foreign Assets Control before, 
during, or after a transfer shall validate such transfer or make it 
enforceable to the same extent that it would be valid or enforceable but 
for the provisions of IEEPA, Executive Order 13405, this part, and any 
regulation, order, directive, ruling, instruction, or license issued 
pursuant to this part.
    (d) Transfers of property that otherwise would be null and void or 
unenforceable by virtue of the provisions of this section shall not be 
deemed to be null and void or unenforceable as to any person with whom 
such property is or was held or maintained (and as to such person only) 
in cases in which such person is able to establish to the satisfaction 
of the Office of Foreign Assets Control each of the following:
    (1) Such transfer did not represent a willful violation of the 
provisions of this part by the person with whom such property is or was 
held or maintained (and as to such person only);
    (2) The person with whom such property is or was held or maintained 
did not have reasonable cause to know or suspect, in view of all the 
facts and circumstances known or available to such person, that such 
transfer required a license or authorization issued pursuant to this 
part and was not so licensed or authorized, or, if a license or 
authorization did purport to cover the transfer, that such license or 
authorization had been obtained by misrepresentation of a third party or 
withholding of material facts or was otherwise fraudulently obtained; 
and
    (3) The person with whom such property is or was held or maintained 
filed with the Office of Foreign Assets Control a report setting forth 
in full the circumstances relating to such transfer promptly upon 
discovery that:
    (i) Such transfer was in violation of the provisions of this part or 
any regulation, ruling, instruction, license, or other directive or 
authorization issued pursuant to this part;
    (ii) Such transfer was not licensed or authorized by the Office of 
Foreign Assets Control; or
    (iii) If a license did purport to cover the transfer, such license 
had been obtained by misrepresentation of a third party or withholding 
of material facts or was otherwise fraudulently obtained.

    Note to paragraph (d) of Sec. 548.202: The filing of a report in 
accordance with the provisions of paragraph (d)(3) of this section shall 
not be deemed evidence that the terms of paragraphs (d)(1) and (d)(2) of 
this section have been satisfied.

    (e) Unless licensed pursuant to this part, any attachment, judgment, 
decree, lien, execution, garnishment, or other judicial process is null 
and void with respect to any property in which, on or since the 
effective date, there existed an interest of a person whose property and 
interests in property are blocked pursuant to Sec. 548.201(a).



Sec. 548.203  Holding of funds in interest-bearing accounts; investment
and reinvestment.

    (a) Except as provided in paragraphs (c) or (d) of this section, or 
as otherwise directed by the Office of Foreign Assets Control, any U.S. 
person holding funds, such as currency, bank deposits, or liquidated 
financial obligations, subject to Sec. 548.201(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) 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.
    (3) Funds held or placed in a blocked account pursuant to this 
paragraph (b)

[[Page 312]]

may not be invested in instruments the maturity of which exceeds 180 
days. If interest is credited to a separate blocked account or 
subaccount, the name of the account party on each account must be the 
same.
    (c) Blocked funds held in instruments the maturity of which exceeds 
180 days at the time the funds become subject to Sec. 548.201(a) may 
continue to be held until maturity in the original instrument, provided 
any interest, earnings, or other proceeds derived therefrom are paid 
into a blocked interest-bearing account in accordance with paragraphs 
(b) or (d) of this section.
    (d) Blocked funds held in accounts or instruments outside the United 
States at the time the funds become subject to Sec. 548.201(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.
    (e) This section does not create an affirmative obligation for the 
holder of blocked tangible property, such as chattels or real estate, or 
of other blocked property, such as debt or equity securities, to sell or 
liquidate such property. However, the Office of Foreign Assets Control 
may issue licenses permitting or directing such sales or liquidation in 
appropriate cases.
    (f) 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. 548.201(a), nor may their holder cooperate 
in or facilitate the pledging or other attempted use as collateral of 
blocked funds or other assets.



Sec. 548.204  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. 548.201(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. 548.201(a) may, in the 
discretion of the Office of Foreign Assets Control, be sold or 
liquidated and the net proceeds placed in a blocked interest-bearing 
account in the name of the owner of the property.



Sec. 548.205  Evasions; attempts; conspiracies.

    (a) Except as otherwise authorized, and notwithstanding any contract 
entered into or any license or permit granted prior to the effective 
date, any transaction by a U.S. person or within the United States on or 
after the effective date that evades or avoids, has the purpose of 
evading or avoiding, or attempts to violate any of the prohibitions set 
forth in this part is prohibited.
    (b) Except as otherwise authorized, and notwithstanding any contract 
entered into or any license or permit granted prior to the effective 
date, any conspiracy formed to violate the prohibitions set forth in 
this part is prohibited.



Sec. 548.206  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 importation from 
any country and the exportation to any country of any information or 
informational materials, as defined in Sec. 548.304, whether commercial 
or otherwise, regardless of format or medium of transmission, are exempt 
from the prohibitions of this part.
    (2) This section does not exempt from regulation or authorize 
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 informational 
materials, or to the provision of marketing and business consulting 
services. Such prohibited transactions

[[Page 313]]

include, but are not limited to, 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, with respect to information or 
informational materials imported from persons whose property and 
interests in property are blocked pursuant to Sec. 548.201(a), 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 or authorize transactions incident 
to the exportation of software subject to the Export Administration 
Regulations, 15 CFR parts 730-774, or to the exportation of goods, 
technology, or software 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. 548.201(a) are prohibited.
    (c) Travel. The prohibitions contained in this part do not apply to 
any transactions ordinarily incident to travel to or from any country, 
including importation 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



Sec. 548.301  Blocked account; blocked property.

    The terms blocked account and blocked property shall mean any 
account or property subject to the prohibitions in Sec. 548.201 held in 
the name of a person whose property and interests in property are 
blocked pursuant to Sec. 548.201(a), or in which such person has an 
interest, and with respect to which payments, transfers, exportations, 
withdrawals, or other dealings may not be made or effected except 
pursuant to an authorization or license from the Office of Foreign 
Assets Control expressly authorizing such action.

    Note to Sec. 548.301: See Sec. 548.411 concerning the blocked 
status of property and interests in property of an entity that is 50 
percent or more owned by a person whose property and interests in 
property are blocked pursuant to Sec. 548.201(a).



Sec. 548.302  Effective date.

    The term effective date refers to the effective date of the 
applicable prohibitions and directives contained in this part as 
follows:
    (a) With respect to a person whose property and interests in 
property are blocked pursuant to Sec. 548.201(a)(1), 12:01 a.m. eastern 
daylight time on June 19, 2006; and
    (b) With respect to a person whose property and interests in 
property are otherwise blocked pursuant to Sec. 548.201(a), the earlier 
of the date of actual or constructive notice that such person's property 
and interests in property are blocked.



Sec. 548.303  Entity.

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



Sec. 548.304  Information or informational materials.

    (a) For purposes of this part, the term information or informational 
materials includes, but is not limited to, publications, films, posters, 
phonograph records, photographs, microfilms, microfiche, tapes, compact 
disks, CD-ROMs, artworks, and news wire feeds.

    Note to paragraph (a) of Sec. 548.304: To be considered information 
or informational materials, artworks must be classified under chapter 
heading 9701, 9702, or 9703 of the Harmonized Tariff Schedule of the 
United States.

    (b) The term information or informational materials, with respect to 
United States exports, does not include items:

[[Page 314]]

    (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) (the ``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. 548.305  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. 548.306  Licenses; general and specific.

    (a) Except as otherwise specified, the term license means any 
license or authorization contained in or issued pursuant to this part.
    (b) The term general license means any license or authorization the 
terms of which are set forth in subpart E of this part.
    (c) The term specific license means any license or authorization not 
set forth in subpart E of this part but issued pursuant to this part.

    Note to Sec. 548.306: See Sec. 501.801 of this chapter on 
licensing procedures.



Sec. 548.307  Person.

    The term person means an individual or entity.



Sec. 548.308  Property; property interest.

    The terms property and property interest include, but are not 
limited to, money, checks, drafts, bullion, bank deposits, savings 
accounts, debts, indebtedness, obligations, notes, guarantees, 
debentures, stocks, bonds, coupons, any other financial instruments, 
bankers acceptances, mortgages, pledges, liens or other rights in the 
nature of security, warehouse receipts, bills of lading, trust receipts, 
bills of sale, any other evidences of title, ownership or indebtedness, 
letters of credit and any documents relating to any rights or 
obligations thereunder, powers of attorney, goods, wares, merchandise, 
chattels, stocks on hand, ships, goods on ships, real estate mortgages, 
deeds of trust, vendors' sales agreements, land contracts, leaseholds, 
ground rents, real estate and any other interest therein, options, 
negotiable instruments, trade acceptances, royalties, book accounts, 
accounts payable, judgments, patents, trademarks or copyrights, 
insurance policies, safe deposit boxes and their contents, annuities, 
pooling agreements, services of any nature whatsoever, contracts of any 
nature whatsoever, and any other property, real, personal, or mixed, 
tangible or intangible, or interest or interests therein, present, 
future, or contingent.



Sec. 548.309  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.

[[Page 315]]



Sec. 548.310  United States.

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



Sec. 548.311  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 
credits, or purchasing or selling foreign exchange, securities, 
commodity futures or options, or procuring purchasers and sellers 
thereof, as principal or agent. It includes but is not limited to 
depository institutions, banks, savings banks, trust companies, 
securities brokers and dealers, commodity futures and options brokers 
and dealers, forward contract and foreign exchange merchants, securities 
and commodities exchanges, clearing corporations, investment companies, 
employee benefit plans, and U.S. holding companies, U.S. affiliates, or 
U.S. subsidiaries of any of the foregoing. This term includes those 
branches, offices, and agencies of foreign financial institutions that 
are located in the United States, but not such institutions' foreign 
branches, offices, or agencies.



Sec. 548.312  United States person; U.S. person.

    The term United States person or U.S. person means any United States 
citizen, permanent resident alien, entity organized under the laws of 
the United States or any jurisdiction within the United States 
(including foreign branches), or any person in the United States.



Sec. 548.313  Financial, material, or technological support.

    The term financial, material, or technological support, as used in 
Sec. 548.201(a)(2)(iv) of this part, means any property, tangible or 
intangible, including but not limited to currency, financial 
instruments, securities, or any other transmission of value; weapons or 
related materiel; chemical or biological agents; explosives; false 
documentation or identification; communications equipment; computers; 
electronic or other devices or equipment; technologies; lodging; safe 
houses; facilities; vehicles or other means of transportation; or goods. 
``Technologies'' as used in this definition means specific information 
necessary for the development, production, or use of a product, 
including related technical data such as blueprints, plans, diagrams, 
models, formulae, tables, engineering designs and specifications, 
manuals, or other recorded instructions.



                        Subpart D_Interpretations



Sec. 548.401  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. 548.402  Effect of amendment.

    Unless otherwise specifically provided, any amendment, modification, 
or revocation of any provision in or appendix to this part or chapter or 
of any order, regulation, ruling, instruction, or license issued by the 
Office of Foreign Assets Control does not affect any act done or 
omitted, or any civil or criminal proceeding commenced or pending, prior 
to such amendment, modification, or revocation. All penalties, 
forfeitures, and liabilities under any such order, regulation, ruling, 
instruction, or license continue and may be enforced as if such 
amendment, modification, or revocation had not been made.



Sec. 548.403  Termination and acquisition of an interest in blocked 
property.

    (a) Whenever a transaction licensed or authorized by or pursuant to 
this part results in the transfer of property (including any property 
interest) away from a person, such property shall no longer be deemed to 
be property blocked pursuant to Sec. 548.201(a), unless there exists in 
the property another interest that is blocked pursuant to Sec. 
548.201(a) or any other part of this chapter, the transfer of which has 
not

[[Page 316]]

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. 548.201(a), such property shall be deemed to be property in which 
that person has an interest and therefore blocked.



Sec. 548.404  Transactions ordinarily incident to a licensed transaction.

    Any transaction ordinarily incident to a licensed transaction and 
necessary to give effect thereto is also authorized, except:
    (a) An ordinarily incident transaction, not explicitly authorized 
within the terms of the license, by or with a person whose property and 
interests in property are blocked pursuant to Sec. 548.201(a); or
    (b) An ordinarily incident transaction, not explicitly authorized 
within the terms of the license, involving a debit to a blocked account 
or a transfer of blocked property.
    (c) Example. A license authorizing Company A, whose property and 
interests in property are blocked pursuant to Sec. 548.201(a), to 
complete a securities sale also authorizes all activities by other 
parties required to complete the sale, including transactions by the 
buyer, broker, transfer agents, banks, etc., provided that such other 
parties are not themselves persons whose property and interests in 
property are blocked pursuant to Sec. 548.201(a).



Sec. 548.405  Provision of services.

    (a) Except as provided in Sec. 548.206, the prohibitions on 
transactions involving blocked property contained in Sec. 548.201 apply 
to services performed in the United States or by U.S. persons, wherever 
located, including by an overseas branch of an entity located in the 
United States:
    (1) On behalf of or for the benefit of a person whose property and 
interests in property are blocked pursuant to Sec. 548.201(a); or
    (2) With respect to property interests subject to Sec. 548.201.
    (b) Example. U.S. persons may not, except as authorized by or 
pursuant to this part, provide legal, accounting, financial, brokering, 
freight forwarding, transportation, public relations, or other services 
to a person whose property and interests in property are blocked 
pursuant to Sec. 548.201(a).

    Note to Sec. 548.405: See Sec. Sec. 548.507 and 548.508 on 
licensing policy with regard to the provision of certain legal and 
medical services.



Sec. 548.406  Offshore transactions.

    The prohibitions in Sec. 548.201 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. 548.201(a), or property in which a person whose 
property and interests in property are blocked pursuant to Sec. 
548.201(a) has or has had an interest since the effective date.



Sec. 548.407  Payments from blocked accounts to satisfy obligations 
prohibited.

    Pursuant to Sec. 548.201, no debits may be made to a blocked 
account to pay obligations to U.S. persons or other persons, except as 
authorized by or pursuant to this part.



Sec. 548.408  Charitable contributions.

    Unless specifically authorized by the Office of Foreign Assets 
Control pursuant to this part, no charitable contribution of funds, 
goods, services, or technology, including contributions to relieve human 
suffering, such as food, clothing or medicine, may be made by, to, or 
for the benefit of, or received from, a person whose property and 
interests in property are blocked pursuant to Sec. 548.201(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. 548.201(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

[[Page 317]]

in an attempt to violate, to evade, or to avoid the bar on the provision 
of contributions by, to, or for the benefit of such a person, or the 
receipt of contributions from any such person.



Sec. 548.409  Credit extended and cards issued by U.S. financial 
institutions.

    The prohibition in Sec. 548.201 on dealing in property subject to 
that section prohibits U.S. financial institutions from performing under 
any existing credit agreements, including, but not limited to, charge 
cards, debit cards, or other credit facilities issued by a U.S. 
financial institution to a person whose property and interests in 
property are blocked pursuant to Sec. 548.201(a).



Sec. 548.410  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. 548.201 if effected after the effective date.



Sec. 548.411  Entities owned by a person whose property and interests 
in property are blocked.

    A person whose property and interests in property are blocked 
pursuant to Sec. 548.201(a) has an interest in all property and 
interests in property of an entity in which it owns, directly or 
indirectly, a 50 percent or greater interest. The property and interests 
in property of such an entity, therefore, are blocked, and such an 
entity is a person whose property and interests in property are blocked 
pursuant to Sec. 548.201(a), regardless of whether the entity itself is 
listed in the Annex to Executive Order 13405 or designated pursuant to 
Sec. 548.201(a).



 Subpart E_Licenses, Authorizations, and Statements of Licensing Policy



Sec. 548.501  General and specific licensing procedures.

    For provisions relating to licensing procedures, see part 501, 
subpart E of this chapter. Licensing actions taken pursuant to part 501 
of this chapter with respect to the prohibitions contained in this part 
are considered actions taken pursuant to this part.



Sec. 548.502  Effect of license or authorization.

    (a) No license or other authorization contained in this part, or 
otherwise issued by the Office of Foreign Assets Control, authorizes or 
validates any transaction effected prior to the issuance of such license 
or other authorization, unless specifically provided in such license or 
authorization.
    (b) No regulation, ruling, instruction, or license authorizes any 
transaction prohibited under this part unless the regulation, ruling, 
instruction, or license is issued by the Office of Foreign Assets 
Control and specifically refers to this part. No regulation, ruling, 
instruction, or license referring to this part shall be deemed to 
authorize any transaction prohibited by any other part of this chapter 
unless the regulation, ruling, instruction, or license specifically 
refers to such part.
    (c) Any regulation, ruling, instruction, or license authorizing any 
transaction otherwise prohibited under this part has the effect of 
removing a prohibition contained in this part from the transaction, but 
only to the extent specifically stated by its terms. Unless the 
regulation, ruling, instruction, or license otherwise specifies, such an 
authorization does not create any right, duty, obligation, claim, or 
interest in, or with respect to, any property which would not otherwise 
exist under ordinary principles of law.



Sec. 548.503  Exclusion from licenses.

    The Office of Foreign Assets Control reserves the right to exclude 
any person, property, or transaction from the operation of any license 
or from the privileges conferred by any license. The Office of Foreign 
Assets Control also reserves the right to restrict the applicability of 
any license to particular persons, property, transactions, or classes 
thereof. Such actions are binding upon actual or constructive notice of 
the exclusions or restrictions.



Sec. 548.504  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. 
548.201(a) has any

[[Page 318]]

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. 548.504: See Sec. 501.603 of this chapter for 
mandatory reporting requirements regarding financial transfers. See also 
Sec. 548.203 concerning the obligation to hold blocked funds in 
interest-bearing accounts.



Sec. 548.505  Entries in certain accounts for normal service charges 
authorized.

    (a) A U.S. financial institution is authorized to debit any blocked 
account held at that financial institution in payment or reimbursement 
for normal service charges owed it by the owner of that blocked account.
    (b) As used in this section, the term normal service charges shall 
include charges in payment or reimbursement for interest due; cable, 
telegraph, internet, or telephone charges; postage costs; custody fees; 
small adjustment charges to correct bookkeeping errors; and, but not by 
way of limitation, minimum balance charges, notary and protest fees, and 
charges for reference books, photocopies, credit reports, transcripts of 
statements, registered mail, insurance, stationery and supplies, and 
other similar items.



Sec. 548.506  Investment and reinvestment of certain funds.

    Subject to the requirements of Sec. 548.203, U.S. financial 
institutions are authorized to invest and reinvest assets blocked 
pursuant to Sec. 548.201, 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. 548.201(a).



Sec. 548.507  Provision of certain legal services authorized.

    (a) The provision of the following legal services to or on behalf of 
persons whose property and interests in property are blocked pursuant to 
Sec. 548.201(a) is authorized, provided that all receipts of payment of 
professional fees and reimbursement of incurred expenses must be 
specifically licensed:
    (1) Provision of legal advice and counseling on the requirements of 
and compliance with the laws of the United States or any jurisdiction 
within the United States, provided that such advice and counseling are 
not provided to facilitate transactions in violation of this part;
    (2) Representation of persons named as defendants in or otherwise 
made parties to domestic U.S. legal, arbitration, or administrative 
proceedings;
    (3) Initiation and conduct of domestic U.S. legal, arbitration, or 
administrative proceedings in defense of property interests subject to 
U.S. jurisdiction;
    (4) Representation of persons before any federal or state agency 
with respect to the imposition, administration, or enforcement of U.S. 
sanctions against such persons; and
    (5) Provision of legal services in any other context in which 
prevailing U.S. law requires access to legal counsel at public expense.
    (b) The provision of any other legal services to persons whose 
property and interests in property are blocked pursuant to Sec. 
548.201(a), not otherwise authorized in this part, requires the issuance 
of a specific license.

[[Page 319]]

    (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. 548.201(a) is prohibited unless licensed pursuant to 
this part.



Sec. 548.508  Authorization of emergency medical services.

    The provision of nonscheduled emergency medical services in the 
United States to persons whose property and interests in property are 
blocked pursuant to Sec. 548.201(a) is authorized, provided that all 
receipt of payment for such services must be specifically licensed.



                            Subpart F_Reports



Sec. 548.601  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



Sec. 548.701  Penalties.

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

    Note to paragraph (a)(1) of Sec. 548.701: As of the date of 
publication in the Federal Register of the final rule adding this part 
to 31 CFR chapter V (February 3, 2010), IEEPA provides for a maximum 
civil penalty not to exceed the greater of $250,000 or an amount that is 
twice the amount of the transaction that is the basis of the violation 
with respect to which the penalty is imposed.

    (2) A person who willfully commits, willfully attempts to commit, or 
willfully conspires to commit, or aids or abets in the commission of a 
violation of any license, order, regulation, or prohibition may, upon 
conviction, be fined not more than $1,000,000, or if a natural person, 
be imprisoned for not more than 20 years, or both.
    (b) Adjustments to penalty amounts. (1) The civil penalties provided 
in IEEPA are subject to adjustment pursuant to the Federal Civil 
Penalties Inflation Adjustment Act of 1990 (Pub. L. 101-410, as amended, 
28 U.S.C. 2461 note).
    (2) The criminal penalties provided in IEEPA are subject to 
adjustment pursuant to 18 U.S.C. 3571.
    (c) Attention is also directed to 18 U.S.C. 1001, which provides 
that whoever, in any matter within the jurisdiction of the executive, 
legislative, or judicial branch of the Government of the United States, 
knowingly and willfully falsifies, conceals, or covers up by any trick, 
scheme, or device a material fact; 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 relevant 
provisions of other applicable laws.



Sec. 548.702  Pre-Penalty Notice; settlement.

    (a) When required. If the Office of Foreign Assets Control has 
reason to believe that there has occurred a violation of any provision 
of this part or a violation of the provisions of any license, ruling, 
regulation, order, direction, or instruction issued by or pursuant to 
the direction or authorization of the Secretary of the Treasury pursuant 
to this part or otherwise under IEEPA and determines that a civil 
monetary penalty is warranted, the Office of Foreign Assets Control will 
issue a Pre-Penalty Notice informing the alleged

[[Page 320]]

violator of the agency's intent to impose a monetary penalty. A Pre-
Penalty Notice shall be in writing. The Pre-Penalty Notice may be issued 
whether or not another agency has taken any action with respect to the 
matter. For a description of the contents of a Pre-Penalty Notice, see 
appendix A to part 501 of this chapter.
    (b)(1) Right to respond. An alleged violator has the right to 
respond to a Pre-Penalty Notice by making a written presentation to the 
Office of Foreign Assets Control. For a description of the information 
that should be included in such a response, see Appendix A to part 501 
of this chapter.
    (2) Deadline for response. A response to a Pre-Penalty Notice must 
be made within the applicable 30-day period set forth in this paragraph. 
The failure to submit a response within the applicable time period set 
forth in this paragraph shall be deemed to be a waiver of the right to 
respond.
    (i) Computation of time for response. A response to a Pre-Penalty 
Notice must be postmarked or date-stamped by the U.S. Postal Service (or 
foreign postal service, if mailed abroad) or courier service provider 
(if transmitted to the Office of Foreign Assets Control by courier) on 
or before the 30th day after the postmark date on the envelope in which 
the Pre-Penalty Notice was mailed. If the Pre-Penalty Notice was 
personally delivered by a non-U.S. Postal Service agent authorized by 
the Office of Foreign Assets Control, a response must be postmarked or 
date-stamped on or before the 30th day after the date of delivery.
    (ii) Extensions of time for response. If a due date falls on a 
federal holiday or weekend, that due date is extended to include the 
following business day. Any other extensions of time will be granted, at 
the discretion of the Office of Foreign Assets Control, only upon 
specific request to the Office of Foreign Assets Control.
    (3) Form and method of response. A response to a Pre-Penalty Notice 
need not be in any particular form, but it must be typewritten and 
signed by the alleged violator or a representative thereof, must contain 
information sufficient to indicate that it is in response to the Pre-
Penalty Notice, and must include the Office of Foreign Assets Control 
identification number listed on the Pre-Penalty Notice. A copy of the 
written response may be sent by facsimile, but the original also must be 
sent to the Office of Foreign Assets Control Civil Penalties Division by 
mail or courier and must be postmarked or date-stamped in accordance 
with paragraph (b)(2) of this section.
    (c) Settlement. Settlement discussion may be initiated by the Office 
of Foreign Assets Control, the alleged violator, or the alleged 
violator's authorized representative. For a description of practices 
with respect to settlement, see appendix A to part 501 of this chapter.
    (d) Guidelines. Guidelines for the imposition or settlement of civil 
penalties by the Office of Foreign Assets Control are contained in 
Appendix A to part 501 of this chapter.
    (e) Representation. A representative of the alleged violator may act 
on behalf of the alleged violator, but any oral communication with the 
Office of Foreign Assets Control prior to a written submission regarding 
the specific allegations contained in the Pre-Penalty Notice must be 
preceded by a written letter of representation, unless the Pre-Penalty 
Notice was served upon the alleged violator in care of the 
representative.



Sec. 548.703  Penalty imposition.

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

[[Page 321]]



Sec. 548.704  Administrative collection; referral to United States
Department of Justice.

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



                          Subpart H_Procedures



Sec. 548.801  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. 548.802  Delegation by the Secretary of the Treasury.

    Any action that the Secretary of the Treasury is authorized to take 
pursuant to Executive Order 13405 of June 16, 2006 (71 FR 35485, June 
20, 2006), and any further Executive orders relating to the national 
emergency declared therein, may be taken by the Director of the Office 
of Foreign Assets Control or by any other person to whom the Secretary 
of the Treasury has delegated authority so to act.



                    Subpart I_Paperwork Reduction Act



Sec. 548.901  Paperwork Reduction Act notice.

    For approval by the Office of Management and Budget (``OMB'') under 
the Paperwork Reduction Act of 1995 (44 U.S.C. 3507) of information 
collections relating to recordkeeping and reporting requirements, 
licensing procedures (including those pursuant to statements of 
licensing policy), and other procedures, see Sec. 501.901 of this 
chapter. An agency may not conduct or sponsor, and a person is not 
required to respond to, a collection of information unless it displays a 
valid control number assigned



PART 549_LEBANON SANCTIONS REGULATIONS--Table of Contents



      Subpart A_Relation of This Part to Other Laws and Regulations

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

                         Subpart B_Prohibitions

549.201 Prohibited transactions involving blocked property.
549.202 Effect of transfers violating the provisions of this part.
549.203 Holding of funds in interest-bearing accounts; investment and 
          reinvestment.
549.204 Expenses of maintaining blocked physical property; liquidation 
          of blocked property.
549.205 Evasions; attempts; conspiracies.
549.206 Exempt transactions.

                      Subpart C_General Definitions

549.301 Blocked account; blocked property.
549.302 Effective date.
549.303 Entity.
549.304 Information or informational materials.
549.305 Interest.
549.306 Licenses; general and specific.
549.307 Person.
549.308 Property; property interest.
549.309 Transfer.
549.310 United States.
549.311 U.S. financial institution.
549.312 United States person; U.S. person.
549.313 Financial, material, or technological support.

                        Subpart D_Interpretations

549.401 Reference to amended sections.
549.402 Effect of amendment.
549.403 Termination and acquisition of an interest in blocked property.
549.404 Transactions ordinarily incident to a licensed transaction.
549.405 Provision of services.
549.406 Offshore transactions.
549.407 Payments from blocked accounts to satisfy obligations 
          prohibited.
549.408 Charitable contributions.
549.409 Credit extended and cards issued by U.S. financial institutions.
549.410 Setoffs prohibited.
549.411 Entities owned by a person whose property and interests in 
          property are blocked.

[[Page 322]]

 Subpart E_Licenses, Authorizations, and Statements of Licensing Policy

549.501 General and specific licensing procedures.
549.502 Effect of license or authorization.
549.503 Exclusion from licenses.
549.504 Payments and transfers to blocked accounts in U.S. financial 
          institutions.
549.505 Entries in certain accounts for normal service charges 
          authorized.
549.506 Investment and reinvestment of certain funds.
549.507 Provision of certain legal services authorized.
549.508 Authorization of emergency medical services.

                            Subpart F_Reports

549.601 Records and reports.

                           Subpart G_Penalties

549.701 Penalties.
549.702 Pre-Penalty Notice; settlement.
549.703 Penalty imposition.
549.704 Administrative collection; referral to United States Department 
          of Justice.

                          Subpart H_Procedures

549.801 Procedures.
549.802 Delegation by the Secretary of the Treasury.

                    Subpart I_Paperwork Reduction Act

549.901 Paperwork Reduction Act notice.

    Authority: 3 U.S.C. 301; 31 U.S.C. 321(b); 50 U.S.C. 1601-1651, 
1701-1706; Pub. L. 101-410, 104 Stat. 890 (28 U.S.C. 2461 note); Pub. L. 
110-96, 121 Stat. 1011 (50 U.S.C. 1705 note); E.O. 13441, 72 FR 43499, 3 
CFR, 2008 Comp., p. 232.

    Source: 75 FR 44909, July 30, 2010, unless otherwise noted.



      Subpart A_Relation of This Part to Other Laws and Regulations



Sec. 549.101  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. 549.201  Prohibited transactions involving blocked property.

    (a) All property and interests in property that are in the United 
States, that hereafter come within the United States, or that are or 
hereafter come within the possession or control of U.S. persons, 
including their overseas branches, of the following persons are blocked 
and may not be transferred, paid, exported, withdrawn, or otherwise 
dealt in: Any person determined by the Secretary of the Treasury, in 
consultation with the Secretary of State:
    (1) To have taken, or to pose a significant risk of taking, actions, 
including acts of violence, that have the purpose or effect of 
undermining Lebanon's democratic processes or institutions, contributing 
to the breakdown of the rule of law in Lebanon, supporting the 
reassertion of Syrian control or otherwise contributing to Syrian 
interference in Lebanon, or infringing upon or undermining Lebanese 
sovereignty;
    (2) To have materially assisted, sponsored, or provided financial, 
material, or technological support for, or goods or services in support 
of, the activities described in paragraph (a)(1) of this section, 
including acts of violence, or any person whose property and interests 
in property are blocked pursuant to this paragraph (a);
    (3) To be a spouse or dependent child of any person whose property 
and interests in property are blocked pursuant to this paragraph (a); or
    (4) To be owned or controlled by, or acting or purporting to act for 
or on

[[Page 323]]

behalf of, directly or indirectly, any person whose property and 
interests in property are blocked pursuant to this paragraph (a).

    Note 1 to paragraph (a) of Sec. 549.201: The names of persons 
designated pursuant to Executive Order 13441, 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 the Office of Foreign Assets Control's Specially Designated 
Nationals and Blocked Persons List (``SDN List'') with the identifier 
``[LEBANON].'' The SDN List is accessible through the following page on 
the Office of Foreign Assets Control's Web site: http://
www.treasury.gov/sdn. Additional information pertaining to the SDN List 
can be found in appendix A to this chapter. See Sec. 549.411 concerning 
entities that may not be listed on the SDN List but whose property and 
interests in property are nevertheless blocked pursuant to paragraph (a) 
of this section.
    Note 2 to paragraph (a) of Sec. 549.201: The International 
Emergency Economic Powers Act (50 U.S.C. 1701-1706), in Section 203 (50 
U.S.C. 1702), authorizes the blocking of property and interests in 
property of a person during the pendency of an investigation. The names 
of persons whose property and interests in property are blocked pending 
investigation pursuant to paragraph (a) of this section also are 
published in the Federal Register and incorporated into the SDN List 
with the identifier ``[BPI-LEBANON].''
    Note 3 to paragraph (a) of Sec. 549.201: Sections 501.806 and 
501.807 of this chapter describe the procedures to be followed by 
persons seeking, respectively, the unblocking of funds that they believe 
were blocked due to mistaken identity, or administrative reconsideration 
of their status as persons whose property and interests in property are 
blocked pursuant to paragraph (a) of this section.

    (b) The prohibitions in paragraph (a) of this section include, but 
are not limited to, prohibitions on the following transactions:
    (1) The making of any contribution or provision of funds, goods, or 
services by, to, or for the benefit of any person whose property and 
interests in property are blocked pursuant to paragraph (a) of this 
section; and
    (2) The receipt of any contribution or provision of funds, goods, or 
services from any person whose property and interests in property are 
blocked pursuant to paragraph (a) of this section.
    (c) Unless otherwise authorized by this part or by a specific 
license expressly referring to this section, any dealing in any security 
(or evidence thereof) held within the possession or control of a U.S. 
person and either registered or inscribed in the name of, or known to be 
held for the benefit of, or issued by, any person whose property and 
interests in property are blocked pursuant to paragraph (a) of this 
section is prohibited. This prohibition includes but is not limited to 
the transfer (including the transfer on the books of any issuer or agent 
thereof), disposition, transportation, importation, exportation, or 
withdrawal of, or the endorsement or guaranty of signatures on, any such 
security on or after the effective date. This prohibition applies 
irrespective of the fact that at any time (whether prior to, on, or 
subsequent to the effective date) the registered or inscribed owner of 
any such security may have or might appear to have assigned, 
transferred, or otherwise disposed of the security.
    (d) The prohibitions in paragraph (a) of this section apply except 
to the extent transactions are authorized by regulations, orders, 
directives, rulings, instructions, licenses, or otherwise, and 
notwithstanding any contracts entered into or any license or permit 
granted prior to the effective date.

[75 FR 44909, July 30, 2010, as amended at 76 FR 38538, June 30, 2011]



Sec. 549.202  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. 
549.201(a), is null and void and shall not be the basis for the 
assertion or recognition of any interest in or right, remedy, power, or 
privilege with respect to such property or property interests.
    (b) No transfer before the effective date shall be the basis for the 
assertion or recognition of any right, remedy, power, or privilege with 
respect to, or any interest in, any property or interest in property 
blocked pursuant to Sec. 549.201(a), unless the person who holds or 
maintains such property, prior to

[[Page 324]]

that date, had written notice of the transfer or by any written evidence 
had recognized such transfer.
    (c) Unless otherwise provided, an appropriate license or other 
authorization issued by the Office of Foreign Assets Control before, 
during, or after a transfer shall validate such transfer or make it 
enforceable to the same extent that it would be valid or enforceable but 
for the provisions of IEEPA, Executive Order 13441, this part, and any 
regulation, order, directive, ruling, instruction, or license issued 
pursuant to this part.
    (d) Transfers of property that otherwise would be null and void or 
unenforceable by virtue of the provisions of this section shall not be 
deemed to be null and void or unenforceable as to any person with whom 
such property is or was held or maintained (and as to such person only) 
in cases in which such person is able to establish to the satisfaction 
of the Office of Foreign Assets Control each of the following:
    (1) Such transfer did not represent a willful violation of the 
provisions of this part by the person with whom such property is or was 
held or maintained (and as to such person only);
    (2) The person with whom such property is or was held or maintained 
did not have reasonable cause to know or suspect, in view of all the 
facts and circumstances known or available to such person, that such 
transfer required a license or authorization issued pursuant to this 
part and was not so licensed or authorized, or, if a license or 
authorization did purport to cover the transfer, that such license or 
authorization had been obtained by misrepresentation of a third party or 
withholding of material facts or was otherwise fraudulently obtained; 
and
    (3) The person with whom such property is or was held or maintained 
filed with the Office of Foreign Assets Control a report setting forth 
in full the circumstances relating to such transfer promptly upon 
discovery that:
    (i) Such transfer was in violation of the provisions of this part or 
any regulation, ruling, instruction, license, or other directive or 
authorization issued pursuant to this part;
    (ii) Such transfer was not licensed or authorized by the Office of 
Foreign Assets Control; or
    (iii) If a license did purport to cover the transfer, such license 
had been obtained by misrepresentation of a third party or withholding 
of material facts or was otherwise fraudulently obtained.

    Note to paragraph (d) of Sec. 549.202: The filing of a report in 
accordance with the provisions of paragraph (d)(3) of this section shall 
not be deemed evidence that the terms of paragraphs (d)(1) and (d)(2) of 
this section have been satisfied.

    (e) Unless licensed pursuant to this part, any attachment, judgment, 
decree, lien, execution, garnishment, or other judicial process is null 
and void with respect to any property in which, on or since the 
effective date, there existed an interest of a person whose property and 
interests in property are blocked pursuant to Sec. 549.201(a).



Sec. 549.203  Holding of funds in interest-bearing accounts; investment
and reinvestment.

    (a) Except as provided in paragraphs (c) or (d) of this section, or 
as otherwise directed by the Office of Foreign Assets Control, any U.S. 
person holding funds, such as currency, bank deposits, or liquidated 
financial obligations, subject to Sec. 549.201(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) 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.
    (3) Funds held or placed in a blocked account pursuant to this 
paragraph (b)

[[Page 325]]

may not be invested in instruments the maturity of which exceeds 180 
days. If interest is credited to a separate blocked account or 
subaccount, the name of the account party on each account must be the 
same.
    (c) Blocked funds held in instruments the maturity of which exceeds 
180 days at the time the funds become subject to Sec. 549.201(a) may 
continue to be held until maturity in the original instrument, provided 
any interest, earnings, or other proceeds derived therefrom are paid 
into a blocked interest-bearing account in accordance with paragraphs 
(b) or (d) of this section.
    (d) Blocked funds held in accounts or instruments outside the United 
States at the time the funds become subject to Sec. 549.201(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.
    (e) This section does not create an affirmative obligation for the 
holder of blocked tangible property, such as chattels or real estate, or 
of other blocked property, such as debt or equity securities, to sell or 
liquidate such property. However, the Office of Foreign Assets Control 
may issue licenses permitting or directing such sales or liquidation in 
appropriate cases.
    (f) 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. 549.201(a), nor may their holder cooperate 
in or facilitate the pledging or other attempted use as collateral of 
blocked funds or other assets.



Sec. 549.204  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. 549.201(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. 549.201(a) may, in the 
discretion of the Office of Foreign Assets Control, be sold or 
liquidated and the net proceeds placed in a blocked interest-bearing 
account in the name of the owner of the property.



Sec. 549.205  Evasions; attempts; conspiracies.

    (a) Except as otherwise authorized, and notwithstanding any contract 
entered into or any license or permit granted prior to the effective 
date, any transaction by a U.S. person or within the United States on or 
after the effective date that evades or avoids, has the purpose of 
evading or avoiding, or attempts to violate any of the prohibitions set 
forth in this part is prohibited.
    (b) Except as otherwise authorized, and notwithstanding any contract 
entered into or any license or permit granted prior to the effective 
date, any conspiracy formed to violate the prohibitions set forth in 
this part is prohibited.



Sec. 549.206  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 importation from 
any country and the exportation to any country of any information or 
informational materials, as defined in Sec. 549.304, whether commercial 
or otherwise, regardless of format or medium of transmission, are exempt 
from the prohibitions of this part.
    (2) This section does not exempt from regulation or authorize 
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 informational 
materials, or to the provision of marketing and business consulting 
services. Such prohibited transactions

[[Page 326]]

include, but are not limited to, 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, with respect to information or 
informational materials imported from persons whose property and 
interests in property are blocked pursuant to Sec. 549.201(a), 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 or authorize 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, technology, or software 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. 549.201(a) are prohibited.
    (c) Travel. The prohibitions contained in this part do not apply to 
any transactions ordinarily incident to travel to or from any country, 
including importation 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



Sec. 549.301  Blocked account; blocked property.

    The terms blocked account and blocked property shall mean any 
account or property subject to the prohibitions in Sec. 549.201 held in 
the name of a person whose property and interests in property are 
blocked pursuant to Sec. 549.201(a), or in which such person has an 
interest, and with respect to which payments, transfers, exportations, 
withdrawals, or other dealings may not be made or effected except 
pursuant to an authorization or license from the Office of Foreign 
Assets Control expressly authorizing such action.

    Note to Sec. 549.301: See Sec. 549.411 concerning the blocked 
status of property and interests in property of an entity that is 50 
percent or more owned by a person whose property and interests in 
property are blocked pursuant to Sec. 549.201(a).



Sec. 549.302  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. 549.201(a), refers to the earlier of the date of 
actual or constructive notice that such person's property and interests 
in property are blocked.



Sec. 549.303  Entity.

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



Sec. 549.304  Information or informational materials.

    (a) For purposes of this part, the term information or informational 
materials includes, but is not limited to, publications, films, posters, 
phonograph records, photographs, microfilms, microfiche, tapes, compact 
disks, CD ROMs, artworks, and news wire feeds.

    Note to paragraph (a) of Sec. 549.304: To be considered information 
or informational materials, artworks must be classified under chapter 
heading 9701, 9702, or 9703 of the Harmonized Tariff Schedule of the 
United States.

    (b) The term information or informational materials, with respect to 
United States 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) (the ``EAA''), or section 6 
of the EAA to the

[[Page 327]]

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. 549.305  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. 549.306  Licenses; general and specific.

    (a) Except as otherwise specified, the term license means any 
license or authorization contained in or issued pursuant to this part.
    (b) The term general license means any license or authorization the 
terms of which are set forth in subpart E of this part.
    (c) The term specific license means any license or authorization not 
set forth in subpart E of this part but issued pursuant to this part.

    Note to Sec. 549.306: See Sec. 501.801 of this chapter on 
licensing procedures.



Sec. 549.307  Person.

    The term person means an individual or entity.



Sec. 549.308  Property; property interest.

    The terms property and property interest include, but are not 
limited to, money, checks, drafts, bullion, bank deposits, savings 
accounts, debts, indebtedness, obligations, notes, guarantees, 
debentures, stocks, bonds, coupons, any other financial instruments, 
bankers acceptances, mortgages, pledges, liens or other rights in the 
nature of security, warehouse receipts, bills of lading, trust receipts, 
bills of sale, any other evidences of title, ownership or indebtedness, 
letters of credit and any documents relating to any rights or 
obligations thereunder, powers of attorney, goods, wares, merchandise, 
chattels, stocks on hand, ships, goods on ships, real estate mortgages, 
deeds of trust, vendors' sales agreements, land contracts, leaseholds, 
ground rents, real estate and any other interest therein, options, 
negotiable instruments, trade acceptances, royalties, book accounts, 
accounts payable, judgments, patents, trademarks or copyrights, 
insurance policies, safe deposit boxes and their contents, annuities, 
pooling agreements, services of any nature whatsoever, contracts of any 
nature whatsoever, and any other property, real, personal, or mixed, 
tangible or intangible, or interest or interests therein, present, 
future, or contingent.



Sec. 549.309  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. 549.310  United States.

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



Sec. 549.311  U.S. financial institution.

    The term U.S. financial institution means any U.S. entity (including 
its foreign branches) that is engaged in

[[Page 328]]

the business of accepting deposits, making, granting, transferring, 
holding, or brokering loans or credits, or purchasing or selling foreign 
exchange, securities, commodity futures or options, or procuring 
purchasers and sellers thereof, as principal or agent. It includes but 
is not limited to depository institutions, banks, savings banks, trust 
companies, securities brokers and dealers, commodity futures and options 
brokers and dealers, forward contract and foreign exchange merchants, 
securities and commodities exchanges, clearing corporations, investment 
companies, employee benefit plans, and U.S. holding companies, U.S. 
affiliates, or U.S. subsidiaries of any of the foregoing. This term 
includes those branches, offices, and agencies of foreign financial 
institutions that are located in the United States, but not such 
institutions' foreign branches, offices, or agencies.



Sec. 549.312  United States person; U.S. person.

    The term United States person or U.S. person means any United States 
citizen, permanent resident alien, entity organized under the laws of 
the United States or any jurisdiction within the United States 
(including foreign branches), or any person in the United States.



Sec. 549.313  Financial, material, or technological support.

    The term financial, material, or technological support, as used in 
Sec. 549.201(a)(2) of this part, means any property, tangible or 
intangible, including but not limited to currency, financial 
instruments, securities, or any other transmission of value; weapons or 
related materiel; chemical or biological agents; explosives; false 
documentation or identification; communications equipment; computers; 
electronic or other devices or equipment; technologies; lodging; safe 
houses; facilities; vehicles or other means of transportation; or goods. 
``Technologies'' as used in this definition means specific information 
necessary for the development, production, or use of a product, 
including related technical data such as blueprints, plans, diagrams, 
models, formulae, tables, engineering designs and specifications, 
manuals, or other recorded instructions.



                        Subpart D_Interpretations



Sec. 549.401  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. 549.402  Effect of amendment.

    Unless otherwise specifically provided, any amendment, modification, 
or revocation of any provision in or appendix to this part or chapter or 
of any order, regulation, ruling, instruction, or license issued by the 
Office of Foreign Assets Control does not affect any act done or 
omitted, or any civil or criminal proceeding commenced or pending, prior 
to such amendment, modification, or revocation. All penalties, 
forfeitures, and liabilities under any such order, regulation, ruling, 
instruction, or license continue and may be enforced as if such 
amendment, modification, or revocation had not been made.



Sec. 549.403  Termination and acquisition of an interest in blocked
property.

    (a) Whenever a transaction licensed or authorized by or pursuant to 
this part results in the transfer of property (including any property 
interest) away from a person, such property shall no longer be deemed to 
be property blocked pursuant to Sec. 549.201(a), unless there exists in 
the property another interest that is blocked pursuant to Sec. 
549.201(a) or any other part of this chapter, 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. 549.201(a), such property shall be deemed to be property in which 
that

[[Page 329]]

person has an interest and therefore blocked.



Sec. 549.404  Transactions ordinarily incident to a licensed
transaction.

    Any transaction ordinarily incident to a licensed transaction and 
necessary to give effect thereto is also authorized, except:
    (a) An ordinarily incident transaction, not explicitly authorized 
within the terms of the license, by or with a person whose property and 
interests in property are blocked pursuant to Sec. 549.201(a); or
    (b) An ordinarily incident transaction, not explicitly authorized 
within the terms of the license, involving a debit to a blocked account 
or a transfer of blocked property.
    (c) Example. A license authorizing Company A, whose property and 
interests in property are blocked pursuant to Sec. 549.201(a), to 
complete a securities sale also authorizes all activities by other 
parties required to complete the sale, including transactions by the 
buyer, broker, transfer agents, banks, etc., provided that such other 
parties are not themselves persons whose property and interests in 
property are blocked pursuant to Sec. 549.201(a).



Sec. 549.405  Provision of services.

    (a) Except as provided in Sec. 549.206, the prohibitions on 
transactions involving blocked property contained in Sec. 549.201 apply 
to services performed in the United States or by U.S. persons, wherever 
located, including by an overseas branch of an entity located in the 
United States:
    (1) On behalf of or for the benefit of a person whose property and 
interests in property are blocked pursuant to Sec. 549.201(a); or
    (2) With respect to property interests subject to Sec. 549.201.
    (b) Example. U.S. persons may not, except as authorized by or 
pursuant to this part, provide legal, accounting, financial, brokering, 
freight forwarding, transportation, public relations, or other services 
to a person whose property and interests in property are blocked 
pursuant to Sec. 549.201(a).

    Note to Sec. 549.405: See Sec. Sec. 549.507 and 549.508 on 
licensing policy with regard to the provision of certain legal and 
medical services.



Sec. 549.406  Offshore transactions.

    The prohibitions in Sec. 549.201 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. 549.201(a), or property in which a person whose 
property and interests in property are blocked pursuant to Sec. 
549.201(a) has or has had an interest since the effective date.



Sec. 549.407  Payments from blocked accounts to satisfy obligations 
prohibited.

    Pursuant to Sec. 549.201, no debits may be made to a blocked 
account to pay obligations to U.S. persons or other persons, except as 
authorized by or pursuant to this part.



Sec. 549.408  Charitable contributions.

    Unless specifically authorized by the Office of Foreign Assets 
Control pursuant to this part, no charitable contribution of funds, 
goods, services, or technology, including contributions to relieve human 
suffering, such as food, clothing or medicine, may be made by, to, or 
for the benefit of, or received from, a person whose property and 
interests in property are blocked pursuant to Sec. 549.201(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. 549.201(a) if made by, to, or in the name 
of, or received from or in the name of, such a person; if made by, to, 
or in the name of, or received from or in the name of, an entity or 
individual acting for or on behalf of, or owned or controlled by, such a 
person; or if made in an attempt to violate, to evade, or to avoid the 
bar on the provision of contributions by, to, or for the benefit of such 
a person, or the receipt of contributions from any such person.



Sec. 549.409  Credit extended and cards issued by U.S. financial 
institutions.

    The prohibition in Sec. 549.201 on dealing in property subject to 
that section prohibits U.S. financial institutions from performing under 
any existing credit

[[Page 330]]

agreements, including, but not limited to, charge cards, debit cards, or 
other credit facilities issued by a U.S. financial institution to a 
person whose property and interests in property are blocked pursuant to 
Sec. 549.201(a).



Sec. 549.410  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. 549.201 if effected after the effective date.



Sec. 549.411  Entities owned by a person whose property and interests 
in property are blocked.

    A person whose property and interests in property are blocked 
pursuant to Sec. 549.201(a) has an interest in all property and 
interests in property of an entity in which it owns, directly or 
indirectly, a 50 percent or greater interest. The property and interests 
in property of such an entity, therefore, are blocked, and such an 
entity is a person whose property and interests in property are blocked 
pursuant to Sec. 549.201(a), regardless of whether the entity itself is 
designated pursuant to Sec. 549.201(a).



 Subpart E_Licenses, Authorizations, and Statements of Licensing Policy



Sec. 549.501  General and specific licensing procedures.

    For provisions relating to licensing procedures, see part 501, 
subpart E of this chapter. Licensing actions taken pursuant to part 501 
of this chapter with respect to the prohibitions contained in this part 
are considered actions taken pursuant to this part.



Sec. 549.502  Effect of license or authorization.

    (a) No license or other authorization contained in this part, or 
otherwise issued by the Office of Foreign Assets Control, authorizes or 
validates any transaction effected prior to the issuance of such license 
or other authorization, unless specifically provided in such license or 
authorization.
    (b) No regulation, ruling, instruction, or license authorizes any 
transaction prohibited under this part unless the regulation, ruling, 
instruction, or license is issued by the Office of Foreign Assets 
Control and specifically refers to this part. No regulation, ruling, 
instruction, or license referring to this part shall be deemed to 
authorize any transaction prohibited by any other part of this chapter 
unless the regulation, ruling, instruction, or license specifically 
refers to such part.
    (c) Any regulation, ruling, instruction, or license authorizing any 
transaction otherwise prohibited under this part has the effect of 
removing a prohibition contained in this part from the transaction, but 
only to the extent specifically stated by its terms. Unless the 
regulation, ruling, instruction, or license otherwise specifies, such an 
authorization does not create any right, duty, obligation, claim, or 
interest in, or with respect to, any property which would not otherwise 
exist under ordinary principles of law.



Sec. 549.503  Exclusion from licenses.

    The Office of Foreign Assets Control reserves the right to exclude 
any person, property, or transaction from the operation of any license 
or from the privileges conferred by any license. The Office of Foreign 
Assets Control also reserves the right to restrict the applicability of 
any license to particular persons, property, transactions, or classes 
thereof. Such actions are binding upon actual or constructive notice of 
the exclusions or restrictions.



Sec. 549.504  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. 
549.201(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

[[Page 331]]

blocked account held in the same name.

    Note to Sec. 549.504: See Sec. 501.603 of this chapter for 
mandatory reporting requirements regarding financial transfers. See also 
Sec. 549.203 concerning the obligation to hold blocked funds in 
interest-bearing accounts.



Sec. 549.505  Entries in certain accounts for normal service charges 
authorized.

    (a) A U.S. financial institution is authorized to debit any blocked 
account held at that financial institution in payment or reimbursement 
for normal service charges owed it by the owner of that blocked account.
    (b) As used in this section, the term normal service charges shall 
include charges in payment or reimbursement for interest due; cable, 
telegraph, Internet, or telephone charges; postage costs; custody fees; 
small adjustment charges to correct bookkeeping errors; and, but not by 
way of limitation, minimum balance charges, notary and protest fees, and 
charges for reference books, photocopies, credit reports, transcripts of 
statements, registered mail, insurance, stationery and supplies, and 
other similar items.



Sec. 549.506  Investment and reinvestment of certain funds.

    Subject to the requirements of Sec. 549.203, U.S. financial 
institutions are authorized to invest and reinvest assets blocked 
pursuant to Sec. 549.201, 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. 549.201(a).



Sec. 549.507  Provision of certain legal services authorized.

    (a) The provision of the following legal services to or on behalf of 
persons whose property and interests in property are blocked pursuant to 
Sec. 549.201(a) is authorized, provided that all receipts of payment of 
professional fees and reimbursement of incurred expenses must be 
specifically licensed:
    (1) Provision of legal advice and counseling on the requirements of 
and compliance with the laws of the United States or any jurisdiction 
within the United States, provided that such advice and counseling are 
not provided to facilitate transactions in violation of this part;
    (2) Representation of persons named as defendants in or otherwise 
made parties to domestic U.S. legal, arbitration, or administrative 
proceedings;
    (3) Initiation and conduct of domestic U.S. legal, arbitration, or 
administrative proceedings in defense of property interests subject to 
U.S. jurisdiction;
    (4) Representation of persons before any Federal or State agency 
with respect to the imposition, administration, or enforcement of U.S. 
sanctions against such persons; and
    (5) Provision of legal services in any other context in which 
prevailing U.S. law requires access to legal counsel at public expense.
    (b) The provision of any other legal services to persons whose 
property and interests in property are blocked pursuant to Sec. 
549.201(a), 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. 549.201(a) is prohibited unless licensed pursuant to 
this part.

[[Page 332]]



Sec. 549.508  Authorization of emergency medical services.

    The provision of nonscheduled emergency medical services in the 
United States to persons whose property and interests in property are 
blocked pursuant to Sec. 549.201(a) is authorized, provided that all 
receipt of payment for such services must be specifically licensed.



                            Subpart F_Reports



Sec. 549.601  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



Sec. 549.701  Penalties.

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

    Note to paragraph (a)(1) of Sec. 549.701: As of the date of 
publication in the Federal Register of the final rule adding this part 
to 31 CFR chapter V (July 30, 2010), IEEPA provides for a maximum civil 
penalty not to exceed the greater of $250,000 or an amount that is twice 
the amount of the transaction that is the basis of the violation with 
respect to which the penalty is imposed.

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



Sec. 549.702  Pre-Penalty Notice; settlement.

    (a) When required. If the Office of Foreign Assets Control has 
reason to believe that there has occurred a violation of any provision 
of this part or a violation of the provisions of any license, ruling, 
regulation, order, direction, or instruction issued by or pursuant to 
the direction or authorization of the Secretary of the Treasury pursuant 
to this part or otherwise under IEEPA and determines that a civil 
monetary penalty is warranted, the Office of Foreign Assets Control will 
issue a Pre-Penalty Notice informing the alleged violator of the 
agency's intent to impose a monetary penalty. A Pre-Penalty Notice shall 
be in writing. The Pre-Penalty Notice may be issued whether or not 
another agency has taken any action with respect to the matter. For a 
description of the contents of a Pre-Penalty Notice, see Appendix A to 
part 501 of this chapter.

[[Page 333]]

    (b)(1) Right to respond. An alleged violator has the right to 
respond to a Pre-Penalty Notice by making a written presentation to the 
Office of Foreign Assets Control. For a description of the information 
that should be included in such a response, see Appendix A to part 501 
of this chapter.
    (2) Deadline for response. A response to a Pre-Penalty Notice must 
be made within the applicable 30-day period set forth in this paragraph. 
The failure to submit a response within the applicable time period set 
forth in this paragraph shall be deemed to be a waiver of the right to 
respond.
    (i) Computation of time for response. A response to a Pre-Penalty 
Notice must be postmarked or date-stamped by the U.S. Postal Service (or 
foreign postal service, if mailed abroad) or courier service provider 
(if transmitted to the Office of Foreign Assets Control by courier) on 
or before the 30th day after the postmark date on the envelope in which 
the Pre-Penalty Notice was mailed. If the Pre-Penalty Notice was 
personally delivered by a non-U.S. Postal Service agent authorized by 
the Office of Foreign Assets Control, a response must be postmarked or 
date-stamped on or before the 30th day after the date of delivery.
    (ii) Extensions of time for response. If a due date falls on a 
Federal holiday or weekend, that due date is extended to include the 
following business day. Any other extensions of time will be granted, at 
the discretion of the Office of Foreign Assets Control, only upon 
specific request to the Office of Foreign Assets Control.
    (3) Form and method of response. A response to a Pre-Penalty Notice 
need not be in any particular form, but it must be typewritten and 
signed by the alleged violator or a representative thereof, must contain 
information sufficient to indicate that it is in response to the Pre-
Penalty Notice, and must include the Office of Foreign Assets Control 
identification number listed on the Pre-Penalty Notice. A copy of the 
written response may be sent by facsimile, but the original also must be 
sent to the Office of Foreign Assets Control Civil Penalties Division by 
mail or courier and must be postmarked or date-stamped in accordance 
with paragraph (b)(2) of this section.
    (c) Settlement. Settlement discussion may be initiated by the Office 
of Foreign Assets Control, the alleged violator, or the alleged 
violator's authorized representative. For a description of practices 
with respect to settlement, see appendix A to part 501 of this chapter.
    (d) Guidelines. Guidelines for the imposition or settlement of civil 
penalties by the Office of Foreign Assets Control are contained in 
Appendix A to part 501 of this chapter.
    (e) Representation. A representative of the alleged violator may act 
on behalf of the alleged violator, but any oral communication with the 
Office of Foreign Assets Control prior to a written submission regarding 
the specific allegations contained in the Pre-Penalty Notice must be 
preceded by a written letter of representation, unless the Pre-Penalty 
Notice was served upon the alleged violator in care of the 
representative.



Sec. 549.703  Penalty imposition.

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



Sec. 549.704  Administrative collection; referral to United States
Department of Justice.

    In the event that the violator does not pay the penalty imposed 
pursuant to this part or make payment arrangements acceptable to the 
Office of Foreign Assets Control, the matter may be referred for 
administrative collection

[[Page 334]]

measures by the Department of the Treasury or to the United States 
Department of Justice for appropriate action to recover the penalty in a 
civil suit in a Federal district court.



                          Subpart H_Procedures



Sec. 549.801  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. 549.802  Delegation by the Secretary of the Treasury.

    Any action that the Secretary of the Treasury is authorized to take 
pursuant to Executive Order 13441 of August 1, 2007 (72 FR 43499, Aug. 
3, 2007), and any further Executive orders relating to the national 
emergency declared therein, may be taken by the Director of the Office 
of Foreign Assets Control or by any other person to whom the Secretary 
of the Treasury has delegated authority so to act.



                    Subpart I_Paperwork Reduction Act



Sec. 549.901  Paperwork Reduction Act notice.

    For approval by the Office of Management and Budget (``OMB'') under 
the Paperwork Reduction Act of 1995 (44 U.S.C. 3507) of information 
collections relating to recordkeeping and reporting requirements, 
licensing procedures (including those pursuant to statements of 
licensing policy), and other procedures, see Sec. 501.901 of this 
chapter. An agency may not conduct or sponsor, and a person is not 
required to respond to, a collection of information unless it displays a 
valid control number assigned by OMB.



PART 551_SOMALIA SANCTIONS REGULATIONS--Table of Contents



      Subpart A_Relation of This Part to Other Laws and Regulations

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

                         Subpart B_Prohibitions

551.201 Prohibited transactions.
551.202 Effect of transfers violating the provisions of this part.
551.203 Holding of funds in interest-bearing accounts; investment and 
          reinvestment.

                      Subpart C_General Definitions

551.301 Blocked account; blocked property.
551.302 Effective date.
551.303 Entity.
551.304 Interest.
551.305 Licenses; general and specific.
551.306 Person.
551.307 Property; property interest.
551.308 Transfer.
551.309 United States.
551.310 U.S. financial institution.
551.311 United States person; U.S. person.

                        Subpart D_Interpretations

551.401 [Reserved]
551.402 Effect of amendment.
551.403 Termination and acquisition of an interest in blocked property.
551.404 Transactions ordinarily incident to a licensed transaction 
          authorized.
551.405 Setoffs prohibited.
551.406 Entities owned by a person whose property and interests in 
          property are blocked.

 Subpart E_Licenses, Authorizations, and Statements of Licensing Policy

551.501-551.502 [Reserved]
551.503 Exclusion from licenses.
551.504 Payments and transfers to blocked accounts in U.S. financial 
          institutions.
551.505 Entries in certain accounts for normal service charges 
          authorized.
551.506 Provision of certain legal services authorized.
551.507 Authorization of emergency medical services.

Subparts F-G [Reserved]

                          Subpart H_Procedures

551.801 [Reserved]
551.802 Delegation by the Secretary of the Treasury.

[[Page 335]]

                    Subpart I_Paperwork Reduction Act

551.901 Paperwork Reduction Act notice.

Appendix A to Part 551--Executive Order 13536

    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; E.O. 13536, 75 FR 19869, 
April 15, 2010.

    Source: 75 FR 24395, May. 5, 2010, unless otherwise noted.



      Subpart A_Relation of This Part to Other Laws and Regulations



Sec. 551.101  Relation of this part to other laws and regulations.

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

    Note to Sec. 551.101: This part has been published in abbreviated 
form for the purpose of providing immediate guidance to the public. OFAC 
intends to supplement this part with a more comprehensive set of 
regulations, which may include additional interpretive and definitional 
guidance and additional general licenses and statements of licensing 
policy.



                         Subpart B_Prohibitions



Sec. 551.201  Prohibited transactions.

    All transactions prohibited pursuant to Executive Order 13536 are 
also prohibited pursuant to this part.

    Note 1 to Sec. 551.201: The names of persons listed in or 
designated pursuant to Executive Order 13536, whose property and 
interests in property therefore are blocked pursuant to this section, 
are published in the Federal Register and incorporated into the Office 
of Foreign Assets Control's Specially Designated Nationals and Blocked 
Persons List (``SDN List'') with the identifier ``[SOMALIA].'' The SDN 
List is accessible through the following page on the Office of Foreign 
Assets Control's Web site: http://www.treasury.gov/sdn. Additional 
information pertaining to the SDN List can be found in appendix A to 
this chapter. See Sec. 551.406 concerning entities that may not be 
listed on the SDN List but whose property and interests in property are 
nevertheless blocked pursuant to this section.
    Note 2 to Sec. 551.201: The International Emergency Economic Powers 
Act (50 U.S.C. 1701-1706), in Section 203 (50 U.S.C. 1702), authorizes 
the blocking of property and interests in property of a person during 
the pendency of an investigation. The names of persons whose property 
and interests in property are blocked pending investigation pursuant to 
this section also are published in the Federal Register and incorporated 
into the SDN List with the identifier ``[BPI-SOMALIA].''
    Note 3 to Sec. 551.201: Sections 501.806 and 501.807 of this 
chapter describe the procedures to be followed by persons seeking, 
respectively, the unblocking of funds that they believe were blocked due 
to mistaken identity, or administrative reconsideration of their status 
as persons whose property and interests in property are blocked pursuant 
to this section.

[75 FR 24395, May. 5, 2010, as amended at 76 FR 38538, June 30, 2011]



Sec. 551.202  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. 
551.201, is null and void and shall not be the basis for the assertion 
or recognition of any interest in or right,

[[Page 336]]

remedy, power, or privilege with respect to such property or property 
interests.
    (b) No transfer before the effective date shall be the basis for the 
assertion or recognition of any right, remedy, power, or privilege with 
respect to, or any interest in, any property or interest in property 
blocked pursuant to Sec. 551.201, unless the person who holds or 
maintains such property, prior to that date, had written notice of the 
transfer or by any written evidence had recognized such transfer.
    (c) Unless otherwise provided, an appropriate license or other 
authorization issued by the Office of Foreign Assets Control before, 
during, or after a transfer shall validate such transfer or make it 
enforceable to the same extent that it would be valid or enforceable but 
for the provisions of IEEPA, Executive Order 13536, this part, and any 
regulation, order, directive, ruling, instruction, or license issued 
pursuant to this part.
    (d) Transfers of property that otherwise would be null and void or 
unenforceable by virtue of the provisions of this section shall not be 
deemed to be null and void or unenforceable as to any person with whom 
such property is or was held or maintained (and as to such person only) 
in cases in which such person is able to establish to the satisfaction 
of the Office of Foreign Assets Control each of the following paragraphs 
(d)(1) through (3):
    (1) Such transfer did not represent a willful violation of the 
provisions of this part by the person with whom such property is or was 
held or maintained (and as to such person only);
    (2) The person with whom such property is or was held or maintained 
did not have reasonable cause to know or suspect, in view of all the 
facts and circumstances known or available to such person, that such 
transfer required a license or authorization issued pursuant to this 
part and was not so licensed or authorized, or, if a license or 
authorization did purport to cover the transfer, that such license or 
authorization had been obtained by misrepresentation of a third party or 
withholding of material facts or was otherwise fraudulently obtained; 
and
    (3) The person with whom such property is or was held or maintained 
filed with the Office of Foreign Assets Control a report setting forth 
in full the circumstances relating to such transfer promptly upon 
discovery that:
    (i) Such transfer was in violation of the provisions of this part or 
any regulation, ruling, instruction, license, or other directive or 
authorization issued pursuant to this part;
    (ii) Such transfer was not licensed or authorized by the Office of 
Foreign Assets Control; or
    (iii) If a license did purport to cover the transfer, such license 
had been obtained by misrepresentation of a third party or withholding 
of material facts or was otherwise fraudulently obtained.

    Note to paragraph (d) of Sec. 551.202: The filing of a report in 
accordance with the provisions of paragraph (d)(3) of this section shall 
not be deemed evidence that the terms of paragraphs (d)(1) and (d)(2) of 
this section have been satisfied.

    (e) Unless licensed pursuant to this part, any attachment, judgment, 
decree, lien, execution, garnishment, or other judicial process is null 
and void with respect to any property in which, on or since the 
effective date, there existed an interest of a person whose property and 
interests in property are blocked pursuant to Sec. 551.201.



Sec. 551.203  Holding of funds in interest-bearing accounts; investment
and reinvestment.

    (a) Except as provided in paragraphs (c) or (d) of this section, or 
as otherwise directed by the Office of Foreign Assets Control, any U.S. 
person holding funds, such as currency, bank deposits, or liquidated 
financial obligations, subject to Sec. 551.201 shall hold or place such 
funds in a blocked interest-bearing account located in the United 
States.
    (b)(1) For purposes of this section, the term blocked interest-
bearing account means a blocked account:
    (i) In a federally-insured U.S. bank, thrift institution, or credit 
union, provided the funds are earning interest at rates that are 
commercially reasonable; or

[[Page 337]]

    (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) 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.
    (3) Funds held or placed in a blocked account pursuant to this 
paragraph (b) may not be invested in instruments the maturity of which 
exceeds 180 days. If interest is credited to a separate blocked account 
or subaccount, the name of the account party on each account must be the 
same.
    (c) Blocked funds held in instruments the maturity of which exceeds 
180 days at the time the funds become subject to Sec. 551.201 may 
continue to be held until maturity in the original instrument, provided 
any interest, earnings, or other proceeds derived therefrom are paid 
into a blocked interest-bearing account in accordance with paragraphs 
(b) or (d) of this section.
    (d) Blocked funds held in accounts or instruments outside the United 
States at the time the funds become subject to Sec. 551.201 may 
continue to be held in the same type of accounts or instruments, 
provided the funds earn interest at rates that are commercially 
reasonable.
    (e) This section does not create an affirmative obligation for the 
holder of blocked tangible property, such as chattels or real estate, or 
of other blocked property, such as debt or equity securities, to sell or 
liquidate such property. However, the Office of Foreign Assets Control 
may issue licenses permitting or directing such sales or liquidation in 
appropriate cases.
    (f) 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. 551.201, nor may their holder cooperate in 
or facilitate the pledging or other attempted use as collateral of 
blocked funds or other assets.



                      Subpart C_General Definitions



Sec. 551.301  Blocked account; blocked property.

    The terms blocked account and blocked property shall mean any 
account or property subject to the prohibitions in Sec. 551.201 held in 
the name of a person whose property and interests in property are 
blocked pursuant to Sec. 551.201, or in which such person has an 
interest, and with respect to which payments, transfers, exportations, 
withdrawals, or other dealings may not be made or effected except 
pursuant to an authorization or license from the Office of Foreign 
Assets Control expressly authorizing such action.

    Note to Sec. 551.301: See Sec. 551.406 concerning the blocked 
status of property and interests in property of an entity that is 50 
percent or more owned by a person whose property and interests in 
property are blocked pursuant to Sec. 551.201.



Sec. 551.302  Effective date.

    The term effective date refers to the effective date of the 
applicable prohibitions and directives contained in this part as 
follows:
    (a) With respect to a person listed in the Annex to E.O. 13536, 
12:01 a.m. eastern daylight time, April 13, 2010; or
    (b) With respect to a person whose property and interests in 
property are otherwise blocked pursuant to E.O. 13536, the earlier of 
the date of actual or constructive notice that such person's property 
and interests in property are blocked.



Sec. 551.303  Entity.

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



Sec. 551.304  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.

[[Page 338]]



Sec. 551.305  Licenses; general and specific.

    (a) Except as otherwise specified, the term license means any 
license or authorization contained in or issued pursuant to this part.
    (b) The term general license means any license or authorization the 
terms of which are set forth in subpart E of this part.
    (c) The term specific license means any license or authorization not 
set forth in subpart E of this part but issued pursuant to this part.

    Note to Sec. 551.305: See Sec. 501.801 of this chapter on 
licensing procedures.



Sec. 551.306  Person.

    The term person means an individual or entity.



Sec. 551.307  Property; property interest.

    The terms property and property interest include, but are not 
limited to, money, checks, drafts, bullion, bank deposits, savings 
accounts, debts, indebtedness, obligations, notes, guarantees, 
debentures, stocks, bonds, coupons, any other financial instruments, 
bankers acceptances, mortgages, pledges, liens or other rights in the 
nature of security, warehouse receipts, bills of lading, trust receipts, 
bills of sale, any other evidences of title, ownership or indebtedness, 
letters of credit and any documents relating to any rights or 
obligations thereunder, powers of attorney, goods, wares, merchandise, 
chattels, stocks on hand, ships, goods on ships, real estate mortgages, 
deeds of trust, vendors' sales agreements, land contracts, leaseholds, 
ground rents, real estate and any other interest therein, options, 
negotiable instruments, trade acceptances, royalties, book accounts, 
accounts payable, judgments, patents, trademarks or copyrights, 
insurance policies, safe deposit boxes and their contents, annuities, 
pooling agreements, services of any nature whatsoever, contracts of any 
nature whatsoever, and any other property, real, personal, or mixed, 
tangible or intangible, or interest or interests therein, present, 
future, or contingent.



Sec. 551.308  Transfer.

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



Sec. 551.309  United States.

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



Sec. 551.310  U.S. financial institution.

    The term U.S. financial institution means any U.S. entity (including 
its foreign branches) that is engaged in the business of accepting 
deposits, making, granting, transferring, holding, or brokering loans or 
credits, or purchasing or selling foreign exchange, securities, 
commodity futures or options, or procuring purchasers and sellers 
thereof, as principal or agent. It includes but is not limited to 
depository institutions, banks, savings banks, trust companies, 
securities brokers and dealers, commodity futures and options

[[Page 339]]

brokers and dealers, forward contract and foreign exchange merchants, 
securities and commodities exchanges, clearing corporations, investment 
companies, employee benefit plans, and U.S. holding companies, U.S. 
affiliates, or U.S. subsidiaries of any of the foregoing. This term 
includes those branches, offices and agencies of foreign financial 
institutions that are located in the United States, but not such 
institutions' foreign branches, offices, or agencies.



Sec. 551.311  United States person; U.S. person.

    The term United States person or U.S. person means any United States 
citizen, permanent resident alien, entity organized under the laws of 
the United States or any jurisdiction within the United States 
(including foreign branches), or any person in the United States.



                        Subpart D_Interpretations



Sec. 551.401  [Reserved]



Sec. 551.402  Effect of amendment.

    Unless otherwise specifically provided, any amendment, modification, 
or revocation of any provision in this part, any provision in or 
appendix to this chapter, or any order, regulation, ruling, instruction, 
or license issued by the Office of Foreign Assets Control does not 
affect any act done or omitted, or any civil or criminal proceeding 
commenced or pending, prior to such amendment, modification, or 
revocation. All penalties, forfeitures, and liabilities under any such 
order, regulation, ruling, instruction, or license continue and may be 
enforced as if such amendment, modification, or revocation had not been 
made.



Sec. 551.403  Termination and acquisition of an interest in blocked
property.

    (a) Whenever a transaction licensed or authorized by or pursuant to 
this part results in the transfer of property (including any property 
interest) away from a person, such property shall no longer be deemed to 
be property blocked pursuant to Sec. 551.201, unless there exists in 
the property another interest that is blocked pursuant to Sec. 551.201 
or any other part of this chapter, 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. 551.201, such property shall be deemed to be property in which 
that person has an interest and therefore blocked.



Sec. 551.404  Transactions ordinarily incident to a licensed transaction
authorized.

    Any transaction ordinarily incident to a licensed transaction and 
necessary to give effect thereto is also authorized, except:
    (a) An ordinarily incident transaction, not explicitly authorized 
within the terms of the license, by or with a person whose property and 
interests in property are blocked pursuant to Sec. 551.201; or
    (b) An ordinarily incident transaction, not explicitly authorized 
within the terms of the license, involving a debit to a blocked account 
or a transfer of blocked property.



Sec. 551.405  Setoffs prohibited.

    A setoff against blocked property (including a blocked account), 
whether by a U.S. bank or other U.S. person, is a prohibited transfer 
under Sec. 551.201 if effected after the effective date.



Sec. 551.406  Entities owned by a person whose property and interests in
property are blocked.

    A person whose property and interests in property are blocked 
pursuant to Sec. 551.201 has an interest in all property and interests 
in property of an entity in which it owns, directly or indirectly, a 50 
percent or greater interest. The property and interests in property of 
such an entity, therefore, are blocked, and such an entity is a person 
whose property and interests in property are blocked pursuant to Sec. 
551.201, regardless of whether the entity itself is listed in the Annex 
or designated pursuant to Executive Order 13536.

[[Page 340]]



 Subpart E_Licenses, Authorizations, and Statements of Licensing Policy



Sec. Sec. 551.501-551.502  [Reserved]



Sec. 551.503  Exclusion from licenses.

    The Office of Foreign Assets Control reserves the right to exclude 
any person, property, or transaction from the operation of any license 
or from the privileges conferred by any license. The Office of Foreign 
Assets Control also reserves the right to restrict the applicability of 
any license to particular persons, property, transactions, or classes 
thereof. Such actions are binding upon actual or constructive notice of 
the exclusions or restrictions.



Sec. 551.504  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. 551.201 
has any interest that comes within the possession or control of a U.S. 
financial institution must be blocked in an account on the books of that 
financial institution. A transfer of funds or credit by a U.S. financial 
institution between blocked accounts in its branches or offices is 
authorized, provided that no transfer is made from an account within the 
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. 551.504: See Sec. 501.603 of this chapter for 
mandatory reporting requirements regarding financial transfers. See also 
Sec. 551.203 concerning the obligation to hold blocked funds in 
interest-bearing accounts.



Sec. 551.505  Entries in certain accounts for normal service charges 
authorized.

    (a) A U.S. financial institution is authorized to debit any blocked 
account held at that financial institution in payment or reimbursement 
for normal service charges owed it by the owner of that blocked account.
    (b) As used in this section, the term normal service charges shall 
include charges in payment or reimbursement for interest due; cable, 
telegraph, internet, or telephone charges; postage costs; custody fees; 
small adjustment charges to correct bookkeeping errors; and, but not by 
way of limitation, minimum balance charges, notary and protest fees, and 
charges for reference books, photocopies, credit reports, transcripts of 
statements, registered mail, insurance, stationery and supplies, and 
other similar items.



Sec. 551.506  Provision of certain legal services authorized.

    (a) The provision of the following legal services to or on behalf of 
persons whose property and interests in property are blocked pursuant to 
Sec. 551.201 is authorized, provided that all receipts of payment of 
professional fees and reimbursement of incurred expenses must be 
specifically licensed:
    (1) Provision of legal advice and counseling on the requirements of 
and compliance with the laws of the United States or any jurisdiction 
within the United States, provided that such advice and counseling are 
not provided to facilitate transactions in violation of this part;
    (2) Representation of persons named as defendants in or otherwise 
made parties to domestic U.S. legal, arbitration, or administrative 
proceedings;
    (3) Initiation and conduct of domestic U.S. legal, arbitration, or 
administrative proceedings in defense of property interests subject to 
U.S. jurisdiction;
    (4) Representation of persons before any federal or state agency 
with respect to the imposition, administration, or enforcement of U.S. 
sanctions against such persons; and
    (5) Provision of legal services in any other context in which 
prevailing U.S. law requires access to legal counsel at public expense.
    (b) The provision of any other legal services to persons whose 
property and interests in property are blocked pursuant to Sec. 
551.201, 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

[[Page 341]]

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. 551.201 is prohibited 
unless licensed pursuant to this part.



Sec. 551.507  Authorization of emergency medical services.

    The provision of nonscheduled emergency medical services in the 
United States to persons whose property and interests in property are 
blocked pursuant to Sec. 551.201 is authorized, provided that all 
receipt of payment for such services must be specifically licensed.

Subparts F-G [Reserved]



                          Subpart H_Procedures



Sec. 551.801  [Reserved]



Sec. 551.802  Delegation by the Secretary of the Treasury.

    Any action that the Secretary of the Treasury is authorized to take 
pursuant to Executive Order 13536 of April 12, 2010 (75 FR 19869, April 
15, 2010), and any further Executive orders relating to the national 
emergency declared therein, may be taken by the Director of the Office 
of Foreign Assets Control or by any other person to whom the Secretary 
of the Treasury has delegated authority so to act.



                    Subpart I_Paperwork Reduction Act



Sec. 551.901  Paperwork Reduction Act notice.

    For approval by the Office of Management and Budget (``OMB'') under 
the Paperwork Reduction Act of 1995 (44 U.S.C. 3507) of information 
collections relating to recordkeeping and reporting requirements, 
licensing procedures (including those pursuant to statements of 
licensing policy), and other procedures, see Sec. 501.901 of this 
chapter. An agency may not conduct or sponsor, and a person is not 
required to respond to, a collection of information unless it displays a 
valid control number assigned by OMB.



           Sec. Appendix A TO Part 551--Executive Order 13536

Executive Order Blocking Property of Certain Persons Contributing to the 
                           Conflict In Somalia

    By the authority vested in me as President by the Constitution and 
the laws of the United States of America, including the International 
Emergency Economic Powers Act (50 U.S.C. 1701 et seq.) (IEEPA), the 
National Emergencies Act (50 U.S.C. 1601 et seq.) (NEA), section 5 of 
the United Nations Participation Act, as amended (22 U.S.C. 287c) 
(UNPA), and section 301 of title 3, United States Code,
    I, BARACK OBAMA, President of the United States of America, find 
that the deterioration of the security situation and the persistence of 
violence in Somalia, and acts of piracy and armed robbery at sea off the 
coast of Somalia, which have repeatedly been the subject of United 
Nations Security Council resolutions (including Resolution 1844 of 
November 20, 2008; Resolution 1846 of December 2, 2008; Resolution 1851 
of December 16, 2008; and Resolution 1897 of November 30, 2009), and 
violations of the arms embargo imposed by the United Nations Security 
Council in Resolution 733 of January 23, 1992, and elaborated upon and 
amended by subsequent resolutions (including Resolution 1356 of June 19, 
2001; Resolution 1725 of December 6, 2006; Resolution 1744 of February 
20, 2007; Resolution 1772 of August 20, 2007; Resolution 1816 of June 2, 
2008; and Resolution 1872 of May 26, 2009), constitute an unusual and 
extraordinary threat to the national security and foreign policy of the 
United States, and I hereby declare a national emergency to deal with 
that threat.
    I hereby order:
    Section 1. (a) All property and interests in property that are in 
the United States, that hereafter come within the United States, or that 
are or hereafter come within the possession or control of any United 
States person, including any overseas branch, of the following persons 
are blocked and may not be transferred, paid, exported, withdrawn, or 
otherwise dealt in:
    (i) the persons listed in the Annex to this order; and
    (ii) any person determined by the Secretary of the Treasury, in 
consultation with the Secretary of State:
    (A) to have engaged in acts that directly or indirectly threaten the 
peace, security, or stability of Somalia, including but not limited to:
    (1) acts that threaten the Djibouti Agreement of August 18, 2008, or 
the political process; or

[[Page 342]]

    (2) acts that threaten the Transitional Federal Institutions, the 
African Union Mission in Somalia (AMISOM), or other international 
peacekeeping operations related to Somalia;
    (B) to have obstructed the delivery of humanitarian assistance to 
Somalia, or access to, or distribution of, humanitarian assistance in 
Somalia;
    (C) to have directly or indirectly supplied, sold, or transferred to 
Somalia, or to have been the recipient in the territory of Somalia of, 
arms or any related material, or any technical advice, training, or 
assistance, including financing and financial assistance, related to 
military activities;
    (D) to have materially assisted, sponsored, or provided financial, 
material, logistical, or technical support for, or goods or services in 
support of, the activities described in subsections (a)(ii)(A), 
(a)(ii)(B), or (a)(ii)(C) of this section or any person whose property 
and interests in property are blocked pursuant to this order; or
    (E) to be owned or controlled by, or to have acted or purported to 
act for or on behalf of, directly or indirectly, any person whose 
property and interests in property are blocked pursuant to this order.
    (b) I hereby determine that, among other threats to the peace, 
security, or stability of Somalia, acts of piracy or armed robbery at 
sea off the coast of Somalia threaten the peace, security, or stability 
of Somalia.
    (c) I hereby determine that, to the extent section 203(b)(2) of 
IEEPA (50 U.S.C. 1702(b)(2)) may apply, the making of donations of the 
type of articles specified in such section by, to, or for the benefit of 
any person whose property and interests in property are blocked pursuant 
to subsection (a) of this section would seriously impair my ability to 
deal with the national emergency declared in this order, and I hereby 
prohibit such donations as provided by subsection (a) of this section.
    (d) The prohibitions in subsection (a) of this section include but 
are not limited to:
    (i) the making of any contribution or provision of funds, goods, or 
services by, to, or for the benefit of any person whose property and 
interests in property are blocked pursuant to this order; and
    (ii) the receipt of any contribution or provision of funds, goods, 
or services from any such person.
    (e) The prohibitions in subsection (a) of this section apply except 
to the extent provided by statutes, or in regulations, orders, 
directives, or licenses that may be issued pursuant to this order, and 
notwithstanding any contract entered into or any license or permit 
granted prior to the effective date of this order.
    Sec. 2. (a) Any transaction by a United States person or within the 
United States that evades or avoids, has the purpose of evading or 
avoiding, causes a violation of, or attempts to violate any of the 
prohibitions set forth in this order is prohibited.
    (b) Any conspiracy formed to violate any of the prohibitions set 
forth in this order is prohibited.
    Sec. 3. For the purposes of this order:
    (a) the term ``person'' means an individual or entity;
    (b) the term ``entity'' means a partnership, association, trust, 
joint venture, corporation, group, subgroup, or other organization;
    (c) the term ``United States person'' means any United States 
citizen, permanent resident alien, entity organized under the laws of 
the United States or any 5 jurisdiction within the United States 
(including foreign branches), or any person in the United States;
    (d) the term ``Transitional Federal Institutions'' means the 
Transitional Federal Charter of the Somali Republic adopted in February 
2004 and the Somali federal institutions established pursuant to such 
charter, and includes their agencies, instrumentalities, and controlled 
entities; and
    (e) the term ``African Union Mission in Somalia'' means the mission 
authorized by the United Nations Security Council in Resolution 1744 of 
February 20, 2007, and reauthorized in subsequent resolutions, and 
includes its agencies, instrumentalities, and controlled entities.
    Sec. 4. For those persons whose property and interests in property 
are blocked pursuant to this order who might have a constitutional 
presence in the United States, I find that because of the ability to 
transfer funds or other assets instantaneously, prior notice to such 
persons of measures to be taken pursuant to this order would render 
those measures ineffectual. I therefore determine that for these 
measures to be effective in addressing the national emergency declared 
in this order, there need be no prior notice of a listing or 
determination made pursuant to section 1(a) of this order.
    Sec. 5. The Secretary of the Treasury, in consultation with the 
Secretary of State, is hereby authorized to take such actions, including 
the promulgation of rules and regulations, and to employ all powers 
granted to the President by IEEPA and the UNPA, as may be necessary to 
carry out the purposes of this order. The Secretary of the Treasury may 
redelegate any of these functions to other officers and agencies of the 
United States Government consistent with applicable law. All 6 agencies 
of the United States Government are hereby directed to take all 
appropriate measures within their authority to carry out the provisions 
of this order.
    Sec. 6. The Secretary of the Treasury, in consultation with the 
Secretary of State, is hereby authorized to submit the recurring

[[Page 343]]

and final reports to the Congress on the national emergency declared in 
this order, consistent with section 401(c) of the NEA (50 U.S.C. 
1641(c)) and section 204(c) of IEEPA (50 U.S.C. 1703(c)).
    Sec. 7. The Secretary of the Treasury, in consultation with the 
Secretary of State, is hereby authorized to determine that circumstances 
no longer warrant the blocking of the property and interests in property 
of a person listed in the Annex to this order, and to take necessary 
action to give effect to that determination.
    Sec. 8. This order is not intended to, and does not, create any 
right or benefit, substantive or procedural, enforceable at law or in 
equity by any party against the United States, its departments, 
agencies, or entities, its officers, employees, or agents, or any other 
person.
    Sec. 9. This order is effective at 12:01 a.m. eastern standard time 
on April 13, 2010.

Barack Obama,
THE WHITE HOUSE,
April 12, 2010.

                                  ANNEX

                               Individuals

    1. Abshir ABDILLAHI [born circa 1966]
    2. Hassan Abdullah Hersi AL-TURKI [born circa 1944]
    3. Hassan Dahir AWEYS [born 1935]
    4. Ahmed Abdi AW-MOHAMED [born 10 July 1977]
    5. Yasin Ali BAYNAH [born circa 1966]
    6. Mohamed Abdi GARAAD [born circa 1973]
    7. Yemane GHEBREAB [born 21 July 1951]
    8. Fuad Mohamed KHALAF [born circa 1965]
    9. Bashir Mohamed MAHAMOUD [born circa 1979-1982]
    10. Fares Mohammed MANA'A [born 8 February 1965]
    11. Mohamed SA'ID [born circa 1966]

                                 Entity

    1. al-Shabaab



PART 560_IRANIAN TRANSACTIONS REGULATIONS--Table of Contents



      Subpart A_Relation of This Part to Other Laws and Regulations

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

                         Subpart B_Prohibitions

560.201 Prohibited importation of goods or services from Iran.
560.202 [Reserved]
560.203 Evasions; attempts.
560.204 Prohibited exportation, reexportation, sale or supply of goods, 
          technology, or services to Iran.
560.205 Prohibited reexportation of goods, technology or services to 
          Iran or the Government of Iran by persons other than United 
          States persons; exceptions.
560.206 Prohibited trade-related transactions with Iran; goods, 
          technology, or services.
560.207 Prohibited investment.
560.208 Prohibited facilitation by United States persons of transactions 
          by foreign persons.
560.209 Prohibited transactions with respect to the development of 
          Iranian petroleum resources.
560.210 Exempt transactions.

                      Subpart C_General Definitions

560.301 Effective date.
560.302 [Reserved]
560.303 Iran; Iranian.
560.304 Government of Iran.
560.305 Person; entity.
560.306 Iranian-origin goods or services; goods or services owned or 
          controlled by the Government of Iran.
560.307 United States.
560.308 Importation of goods.
560.309 [Reserved]
560.310 License.
560.311 General license.
560.312 Specific license.
560.313 Entity owned or controlled by the Government of Iran.
560.314 United States person.
560.315 Information and informational materials.
560.316 New investment.
560.317 Credits or loans.
560.318 [Reserved]
560.319 United States depository institution.
560.320 Iranian accounts.
560.321 United States registered broker or dealer in securities.

                        Subpart D_Interpretations

560.401 Reference to amended sections.
560.402 Effect of amendment.
560.403 Transshipment through Iran.
560.404 [Reserved]
560.405 Transactions incidental to a licensed transaction authorized.
560.406 Transshipment or transit through United States prohibited.
560.407 Transactions related to Iranian-origin goods.
560.408 Importation into and release from a bonded warehouse or foreign 
          trade zone.
560.409 [Reserved]
560.410 Exportation, reexportation, sale or supply of services.
560.411 [Reserved]

[[Page 344]]

560.412 Extensions of credit or loans to Iran.
560.413 Letter of credit payments by Iranian banks in the United States.
560.414 Reexportation of certain U.S.-origin goods exported prior to May 
          7, 1995.
560.416 Brokering services.
560.417 Facilitation; change of policies and procedures; referral of 
          business opportunities offshore.
560.418 Release of technology or software in the United States or a 
          third country.
560.419 U.S. employment of persons normally located in Iran.
560.420 Reexportation by non-U.S. persons of certain foreign-made 
          products containing U.S.-origin goods or technology.

  Subpart E_Licenses, Authorizations and Statements of Licensing Policy

560.500 Licensing procedures.
560.501 Effect of license or authorization.
560.502 Exclusion from licenses and authorizations.
560.503-560.504 [Reserved]
560.505 Importation of certain Iranian-origin services authorized; 
          activities related to certain visa categories authorized.
560.506 Importation and exportation of certain gifts authorized.
560.507 Accompanied baggage authorized.
560.508 Telecommunications and mail transactions authorized.
560.509 Certain transactions related to patents, trademarks and 
          copyrights authorized.
560.510 Transactions related to the resolution of disputes between the 
          United States or United States nationals and the Government of 
          Iran.
560.511 Exportation or supply of insubstantial United States content for 
          use in foreign-made products or technology.
560.512 Iranian Government missions in the United States.
560.513 Importation of Iranian-origin oil.
560.514 [Reserved]
560.515 30-day delayed effective date for pre-May 7, 1995 trade 
          contracts involving Iran.
560.516 Payment and United States dollar clearing transactions involving 
          Iran.
560.517 Exportation of services: Iranian accounts at United States 
          depository institutions or United States registered brokers or 
          dealers in securities.
560.518 Transactions in Iranian-origin and Iranian Government property.
560.519 Policy governing news organization offices.
560.520 Exportation of agricultural commodities on contracts entered 
          into prior to May 7, 1995.
560.521 Diplomatic pouches.
560.522 Allowable payments for overflights of Iranian airspace.
560.523 Exportation of equipment and services relating to information 
          and informational materials.
560.524 Household goods and personal effects.
560.525 Exportation of certain legal services.
560.526 Commodities trading and related transactions.
560.527 Rescheduling existing loans.
560.528 Aircraft safety.
560.529 Bunkering and emergency repairs.
560.530 Commercial sales, exportation, and reexportation of agricultural 
          commodities, medicine, and medical equipment.
560.531 [Reserved]
560.532 Payment for and financing of commercial sales of certain 
          agricultural commodities, medicine, and medical devices.
560.533 Brokering commercial sales of agricultural commodities, 
          medicine, and medical devices.
560.534-560.535 [Reserved]
560.536 Humanitarian activities in and around Iraq.
560.537 Authorization of certain survey or assessment missions in Iran.
560.538 Authorized transactions necessary and ordinarily incident to 
          publishing.
560.539 Official activities of certain international organizations.
560.540 Exportation of certain services and software incident to 
          Internet-based communications.
560.541 Third-country diplomatic and consular funds transfers.
560.542 Importation and exportation of human remains for burial, 
          cremation, or interment authorized.

                            Subpart F_Reports

560.601 Records and reports.
560.602 [Reserved]
560.603 Reports on oil transactions engaged in by foreign affiliates.

                           Subpart G_Penalties

560.701 Penalties.
560.702 Detention of shipments.
560.703 Prepenalty notice.
560.704 Presentation responding to prepenalty notice.
560.705 Penalty notice.
560.706 Referral for administrative collection measures or to United 
          States Department of Justice.

                          Subpart H_Procedures

560.801 Procedures.
560.802 Delegation by the Secretary of the Treasury.
560.803 Customs procedures: Goods specified in Sec. 560.201.

[[Page 345]]

                    Subpart I_Paperwork Reduction Act

560.901 Paperwork Reduction Act notice.

Appendix A to Part 560--Persons Determined to be the Government of Iran, 
          as defined in Sec. 560.304 of This Part
Appendix B to Part 560--Bulk Agricultural Commodities
Appendix C to Part 560--Eligible Procurement Bodies

    Authority: 3 U.S.C. 301; 18 U.S.C. 2339B, 2332d; 22 U.S.C. 2349aa-9; 
22 U.S.C. 7201-7211; 31 U.S.C. 321(b); 50 U.S.C. 1601-1651, 1701-1706; 
Pub. L. 101-410, 104 Stat. 890 (28 U.S.C. 2461 note); Pub. L. 110-96, 
121 Stat. 1011 (50 U.S.C. 1705 note); Pub. L. 111-195, 124 Stat. 1312 
(22 U.S.C. 8501-8551); E.O. 12613, 52 FR 41940, 3 CFR, 1987 Comp., p. 
256; E.O. 12957, 60 FR 14615, 3 CFR, 1995 Comp., p. 332; E.O. 12959, 60 
FR 24757, 3 CFR, 1995 Comp., p. 356; E.O. 13059, 62 FR 44531, 3 CFR, 
1997 Comp., p. 217.

    Source: 60 FR 47063, Sept. 11, 1995, unless otherwise noted.



      Subpart A_Relation of This Part to Other Laws and Regulations



Sec. 560.101  Relation of this part to other laws and regulations.

    (a) This part is separate from, and independent of, the other parts 
of this chapter, including part 535 of this chapter, ``Iranian Assets 
Control Regulations,'' 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. 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 regulations authorizes any transaction prohibited by this part.
    (b) 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.

[60 FR 47063, Sept. 11, 1995, as amended at 62 FR 45109, Aug. 25, 1997]



                         Subpart B_Prohibitions



Sec. 560.201  Prohibited importation of goods or services from Iran.

    Except as otherwise authorized pursuant to this part, and 
notwithstanding any contract entered into or any license or permit 
granted prior to May 7, 1995, the importation into the United States of 
any goods or services of Iranian origin or owned or controlled by the 
Government of Iran, other than information and informational materials 
within the meaning of section 203(b)(3) of the International Emergency 
Economic Powers Act (50 U.S.C. 1702(b)(3)), is prohibited.

[64 FR 20170, Apr. 26, 1999]



Sec. 560.202  [Reserved]



Sec. 560.203  Evasions; attempts.

    Any transaction by any United States person or within the United 
States that evades or avoids, or has the purpose of evading or avoiding, 
or attempts to violate, any of the prohibitions contained in this part 
is hereby prohibited.



Sec. 560.204  Prohibited exportation, reexportation, sale or supply 
of goods, technology, or services to Iran.

    Except as otherwise authorized pursuant to this part, including 
Sec. 560.511, and notwithstanding any contract entered into or any 
license or permit granted prior to May 7, 1995, the exportation, 
reexportation, sale, or supply, directly or indirectly, from the United 
States, or by a United States person, wherever located, of any goods, 
technology, or services to Iran or the Government of Iran is prohibited, 
including the exportation, reexportation, sale, or supply of any goods, 
technology, or services to a person in a third country undertaken with 
knowledge or reason to know that:
    (a) Such goods, technology, or services are intended specifically 
for supply, transshipment, or reexportation, directly or indirectly, to 
Iran or the Government of Iran; or
    (b) Such goods, technology, or services are intended specifically 
for use in the production of, for commingling with, or for incorporation 
into goods, technology, or services to be directly or indirectly 
supplied, transshipped, or reexported exclusively or predominantly to 
Iran or the Government of Iran.

[64 FR 20170, Apr. 26, 1999]

[[Page 346]]



Sec. 560.205  Prohibited reexportation of goods, technology or services
to Iran or the Government of Iran by persons other than United States 

persons; exceptions.

    (a) Except as otherwise authorized pursuant to this part, and 
notwithstanding any contract entered into or any license or permit 
granted prior to May 7, 1995, the reexportation from a third country, 
directly or indirectly, by a person other than a United States person, 
of any goods, technology or services that have been exported from the 
United States is prohibited, if:
    (1) Undertaken with knowledge or reason to know that the 
reexportation is intended specifically for Iran or the Government of 
Iran; and
    (2) The exportation of such goods, technology, or services from the 
United States to Iran was subject to export license application 
requirements under any United States regulations in effect on May 6, 
1995, or thereafter is made subject to such requirements imposed 
independently of this part (see Sec. 560.414).
    (b) The prohibitions of paragraph (a) of this section shall not 
apply to those goods or that technology subject to export license 
application requirements if such goods or technology have been:
    (1) Substantially transformed into a foreign-made product outside 
the United States; or
    (2) Incorporated into a foreign-made product outside the United 
States if the aggregate value of such goods and technology described in 
paragraph (a)(2) of this section constitutes less than 10 percent of the 
total value of the foreign-made product to be exported from a third 
country (see Sec. 560.420).
    (c) Reexportation by United States persons or from the United States 
is governed by other sections in this part, including Sec. Sec. 560.204 
and 560.206.

    Note to Sec. 560.205. The reexportation of U.S.-origin goods or 
technology, including U.S.-origin goods or technology that have been 
incorporated or substantially transformed into a foreign-made product, 
not prohibited by this section, may require authorization by the U.S. 
Department of Commerce under the Export Administration Regulations (15 
CFR parts 740-774) or by the U.S. State Department under the 
International Traffic in Arms Regulations (22 CFR 123.9).

[64 FR 20170, Apr. 26, 1999]



Sec. 560.206  Prohibited trade-related transactions with Iran; goods,
technology, or services.

    (a) Except as otherwise authorized pursuant to this part, and 
notwithstanding any contract entered into or any license or permit 
granted prior to May 7, 1995, no United States person, wherever located, 
may engage in any transaction or dealing in or related to:
    (1) Goods or services of Iranian origin or owned or controlled by 
the Government of Iran; or
    (2) Goods, technology, or services for exportation, reexportation, 
sale or supply, directly or indirectly, to Iran or the Government of 
Iran.
    (b) For purposes of paragraph (a) of this section, the term 
transaction or dealing includes but is not limited to purchasing, 
selling, transporting, swapping, brokering, approving, financing, 
facilitating, or guaranteeing.

[64 FR 20170, Apr. 26, 1999]



Sec. 560.207  Prohibited investment.

    Except as otherwise authorized pursuant to this part, and 
notwithstanding any contract entered into or any license or permit 
granted prior to May 7, 1995, any new investment by a United States 
person in Iran or in property (including entities) owned or controlled 
by the Government of Iran is prohibited.

[64 FR 20170, Apr. 26, 1999]



Sec. 560.208  Prohibited facilitation by United States persons of 
transactions by foreign persons.

    Except as otherwise authorized pursuant to this part, and 
notwithstanding any contract entered into or any license or permit 
granted prior to May 7, 1995, no United States person, wherever located, 
may approve, finance, facilitate, or guarantee any transaction by a 
foreign person where the transaction by that foreign person would be 
prohibited by this part if performed by a United States person or within 
the United States.

[64 FR 20171, Apr. 26, 1999]

[[Page 347]]



Sec. 560.209  Prohibited transactions with respect to the development
of Iranian petroleum resources.

    Except as otherwise authorized, and notwithstanding any contract 
entered into or any license or permit granted prior to March 16, 1995, 
the following are prohibited:
    (a) The entry into or performance by a United States person, or the 
approval by a United States person of the entry into or performance by 
an entity owned or controlled by a United States person, of:
    (1) A contract that includes overall supervision and management 
responsibility for the development of petroleum resources located in 
Iran, or
    (2) A guaranty of another person's performance under such contract; 
or
    (b) The entry into or performance by a United States person, or the 
approval by a United States person of the entry into or performance by 
an entity owned or controlled by a United States person, of
    (1) A contract for the financing of the development of petroleum 
resources located in Iran, or
    (2) A guaranty of another person's performance under such a 
contract.



Sec. 560.210  Exempt transactions.

    (a) Personal communications. The prohibitions of Sec. Sec. 560.204 
and 560.206 do not apply to any postal, telegraphic, telephonic, or 
other personal communication, which does not involve the transfer of 
anything of value.
    (b) Humanitarian donations. The prohibitions of Sec. Sec. 560.204 
and 560.206 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.
    (c) Information and informational materials. (1) The importation 
from any country and the exportation to any country of information and 
informational materials as defined in Sec. 560.315, whether commercial 
or otherwise, regardless of format or medium of transmission, are exempt 
from the prohibitions and regulations of this part.
    (2) This section does not exempt from regulation or authorize 
transactions related to information and informational materials not 
fully created and in existence at the date of the transactions, or to 
the substantive or artistic alteration or enhancement of informational 
materials, or to the provision of marketing and business consulting 
services. Transactions that are prohibited notwithstanding this section 
include, but are not limited to, payment of advances for information and 
informational materials not yet created and completed (with the 
exception of prepaid subscriptions for widely circulated magazines and 
other periodical publications), and provision of services to market, 
produce or co-produce, create or assist in the creation of information 
and informational materials.
    (3) This section does not exempt from regulation or authorize 
transactions incident to the exportation of software subject to the 
Export Administration Regulations (15 CFR parts 730-774).
    (4) This section does not exempt from regulation or authorize the 
exportation of goods (including software) or technology or the sale or 
leasing of telecommunications transmission facilities (such as satellite 
links or dedicated lines) where such exportation, sale or leasing is for 
use in the transmission of any data.
    (d) Travel. The prohibitions contained in this part do not apply to 
transactions ordinarily incident to travel to or from any country, 
including importation 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. This exemption extends to transactions with Iranian carriers 
and those involving group tours and payments in Iran made for 
transactions directly incident to travel.
    (e) Letters of credit. Letters of credit and other financing 
agreements with respect to trade contracts in force as of May 6, 1995, 
may be performed pursuant to their terms with respect to underlying 
trade transactions occurring prior to 12:01 a.m. EDT, June 6, 1995. See 
Sec. 560.413.

[60 FR 47063, Sept. 11, 1995, as amended at 64 FR 20171, Apr. 26, 1999; 
64 FR 58791, Nov. 1, 1999]

[[Page 348]]



                      Subpart C_General Definitions



Sec. 560.301  Effective date.

    The effective date of the prohibitions and directives contained in 
subpart B of this part is 12:01 a.m., Eastern Daylight Time, August 20, 
1997. For the effective date of pre-existing regulations and directives, 
see the Executive orders in the Authority citation for this part and 
implementing regulations.

[64 FR 20171, Apr. 26, 1999]



Sec. 560.302  [Reserved]



Sec. 560.303  Iran; Iranian.

    The term Iran means the territory of Iran, and any other territory 
or marine area, including the exclusive economic zone and continental 
shelf, over which the Government of Iran claims sovereignty, sovereign 
rights or jurisdiction, provided that the Government of Iran exercises 
partial or total de facto control over the area or derives a benefit 
from economic activity in the area pursuant to an international 
agreement. The term Iranian means pertaining to Iran as defined in this 
section.



Sec. 560.304  Government of Iran.

    The term Government of Iran includes:
    (a) The state and the Government of Iran, as well as any political 
subdivision, agency, or instrumentality thereof;
    (b) Any entity owned or controlled directly or indirectly by the 
foregoing;
    (c) Any person to the extent that such person is, or has been, or to 
the extent that there is reasonable cause to believe that such person 
is, or has been, since the applicable effective date, acting or 
purporting to act directly or indirectly on behalf of any of the 
foregoing; and
    (d) Any person or entity designated by the Secretary of the Treasury 
as included within paragraphs (a) through (c) of this section.



Sec. 560.305  Person; entity.

    (a) The term person means an individual or entity.
    (b) The term entity means a partnership, association, trust, joint 
venture, corporation or other organization.



Sec. 560.306  Iranian-origin goods or services; goods or services owned
or controlled by the Government of Iran.

    (a) The terms goods of Iranian origin and Iranian-origin goods 
include:
    (1) Goods grown, produced, manufactured, extracted, or processed in 
Iran; and
    (2) Goods which have entered into Iranian commerce.
    (b) The terms services of Iranian origin and Iranian-origin services 
include:
    (1) Services performed in Iran or by an entity organized under the 
laws of Iran, or a person residing in Iran; and
    (2) Services performed outside Iran by a citizen, national or 
permanent resident of Iran who is ordinarily resident in Iran, or by an 
entity organized under the laws of Iran.
    (c) The term goods or services owned or controlled by the Government 
of Iran includes:
    (1) Goods grown, produced, manufactured, extracted or processed by 
the Government of Iran or goods in its possession or control; and
    (2) Services performed by the Government of Iran.
    (d) The terms services of Iranian-origin, Iranian-origin services, 
and services owned or controlled by the Government of Iran do not 
include:
    (1) Diplomatic and consular services performed by or on behalf of 
the Government of Iran;
    (2) Diplomatic and consular services performed by or on behalf of 
the Government of the United States; or
    (3) Services performed outside Iran by an Iranian citizen or 
national who is resident in the United States or a third country, 
provided such services are not performed by or on behalf of the 
Government of Iran (other than diplomatic and consular services), an 
entity organized under the laws of Iran, or a person located in Iran.

[64 FR 20171, Apr. 26, 1999]



Sec. 560.307  United States.

    The term United States means the United States, including its 
territories and possessions.



Sec. 560.308  Importation of goods.

    With respect to goods (including software), the term importation 
means the

[[Page 349]]

bringing of any goods into the United States, except that in the case of 
goods transported by vessel, importation means the bringing of any goods 
into the United States with the intent to unlade them.

[64 FR 20171, Apr. 26, 1999]



Sec. 560.309  [Reserved]



Sec. 560.310  License.

    Except as otherwise specified, the term license means any license or 
authorization contained in or issued pursuant to this part.



Sec. 560.311  General license.

    The term general license means any license or authorization the 
terms of which are set forth in this part.



Sec. 560.312  Specific license.

    The term specific license means any license or authorization not set 
forth in this part but issued pursuant to this part.



Sec. 560.313  Entity owned or controlled by the Government of Iran.

    The term entity owned or controlled by the Government of Iran 
includes any corporation, partnership, association, or other entity in 
which the Government of Iran owns a 50 percent or greater interest or a 
controlling interest, and any entity which is otherwise controlled by 
that government.

[77 FR 16170, Mar. 20, 2012]



Sec. 560.314  United States person.

    The term United States person means any United States citizen, 
permanent resident alien, entity organized under the laws of the United 
States (including foreign branches), or any person in the United States.



Sec. 560.315  Information and informational materials.

    (a) The term information and informational materials includes:
    (1) 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 chapter subheading 9701, 9702, or 9703 
of the Harmonized Tariff Schedule of the United States.
    (b) The term information and 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, the ``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.

[60 FR 47063, Sept. 11, 1995, as amended at 64 FR 20171, Apr. 26, 1999]



Sec. 560.316  New investment.

    The term new investment means a transaction after 12:01 EDT, May 7, 
1995, that constitutes:
    (a) A commitment or contribution of funds or other assets; or
    (b) A loan or other extension of credit, as defined in Sec. 
560.317.



Sec. 560.317  Credits or loans.

    The term credits or loans means any transfer or extension of funds 
or credit on the basis of an obligation to repay, or any assumption or 
guarantee of the obligation of another to repay an extension of funds or 
credit, including but not limited to: overdrafts; currency swaps; 
purchases of debt securities issued by the Government of Iran; purchases 
of a loan made by another person; sales of financial assets subject to 
an agreement to repurchase; renewals or refinancings whereby funds or 
credits are transferred to or extended to a prohibited borrower or 
prohibited recipient; the issuance of standby letters of credit; and 
drawdowns on existing lines of credit.



Sec. 560.318  [Reserved]



Sec. 560.319  United States depository institution.

    The term United States depository institution means any entity 
(including its foreign branches) organized under the laws of any 
jurisdiction within the United States, or any agency, office or branch 
located in the United States of

[[Page 350]]

a foreign entity, that is engaged primarily in the business of banking 
(for example, banks, savings banks, savings associations, credit unions, 
trust companies and United States bank holding companies).

[64 FR 20171, Apr. 26, 1999]



Sec. 560.320  Iranian accounts.

    The term Iranian accounts means accounts of persons who are 
ordinarily resident in Iran, except when such persons are not located in 
Iran, or of the Government of Iran maintained on the books of either a 
United States depository institution or a United States registered 
broker or dealer in securities.

[74 FR 36398, July 23, 2009]



Sec. 560.321  United States registered broker or dealer in securities.

    The term United States registered broker or dealer in securities 
means any U.S. citizen, permanent resident alien, or entity organized 
under the laws of the United States or of any jurisdiction within the 
United States, including its foreign branches, or any agency, office or 
branch of a foreign entity located in the United States, that:
    (a) Is a ``broker'' or ``dealer'' in securities within the meanings 
set forth in the Securities Exchange Act of 1934;
    (b) Holds or clears customer accounts; and
    (c) Is registered with the Securities and Exchange Commission under 
the Securities Exchange Act of 1934.

[70 FR 15584, Mar. 28, 2005]



                        Subpart D_Interpretations



Sec. 560.401  Reference to amended sections.

    Except as otherwise specified, reference to any section of this part 
or to any regulation, ruling, order, instruction, direction, or license 
issued pursuant to this part refers to the same as currently amended.



Sec. 560.402  Effect of amendment.

    Any amendment, modification, or revocation of any section of this 
part or of any order, regulation, ruling, instruction, or license issued 
by or under the direction of the Director of the Office of Foreign 
Assets Control does not, unless otherwise specifically provided, affect 
any act done or omitted to be done, or any civil or criminal suit or 
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. 560.403  Transshipment through Iran.

    The prohibitions in Sec. Sec. 560.204, 560.206 and 560.208 apply to 
export, reexport or supply transactions which require a transshipment or 
transit of goods or technology through Iran to third countries.

[64 FR 20172, Apr. 26, 1999]



Sec. 560.404  [Reserved]



Sec. 560.405  Transactions incidental to a licensed transaction authorized.

    Any transaction ordinarily incident to a licensed transaction and 
necessary to give effect thereto is also authorized, except:
    (a) A transaction by an unlicensed Iranian governmental entity or 
involving a debit or credit to an Iranian account not explicitly 
authorized within the terms of the license;
    (b) Provision of any transportation services to or from Iran not 
explicitly authorized in or pursuant to this part other than loading, 
transporting, and discharging licensed or exempt cargo there;
    (c) Distribution or leasing in Iran of any containers or similar 
goods owned or controlled by United States persons after the performance 
of transportation services to Iran;
    (d) Financing of licensed sales for exportation or reexportation of 
the excluded food items specified in Sec. 560.530(a)(2)(iii), other 
agricultural commodities not included in the definition of food set 
forth in Sec. 560.530(a)(2)(ii), food (as defined in Sec. 
560.530(a)(2)(ii)) intended for military or law enforcement purchasers 
or importers, medicine, or medical devices to Iran, to the Government of 
Iran, or

[[Page 351]]

to persons in third countries purchasing specifically for resale to any 
of the foregoing (see Sec. 560.532); and

    Note to Sec. 560.405(d): See Sec. 560.530(a)(2) for a general 
license authorizing the exportation or reexportation of food (including 
bulk agricultural commodities listed in appendix B to this part) to the 
Government of Iran, individuals or entities in Iran, or persons in third 
countries purchasing specifically for resale to any of the foregoing, 
and the conduct of related transactions.

    (e) Letter of credit services relating to transactions authorized in 
Sec. 560.534. See Sec. 560.535(a).

[73 FR 66542, Nov. 10, 2008, as amended at 76 FR 63196, Oct. 12, 2011]



Sec. 560.406  Transshipment or transit through United States prohibited.

    (a) The prohibitions in Sec. 560.201 apply to the importation into 
the United States, for transshipment or transit, of Iranian-origin goods 
or goods owned or controlled by the Government of Iran which are 
intended or destined for third countries.
    (b) The prohibitions in Sec. 560.204 apply to the transshipment or 
transit of foreign goods through the United States which are intended or 
destined for Iran or the Government of Iran, including entities owned or 
controlled by the Government of Iran.

[64 FR 20172, Apr. 26, 1999]



Sec. 560.407  Transactions related to Iranian-origin goods.

    (a) Importation into the United States from third countries of goods 
containing Iranian-origin raw materials or components is not prohibited 
if those raw materials or components have been incorporated into 
manufactured products or substantially transformed in a third country by 
a person other than a United States person.
    (b) Transactions relating to Iranian-origin goods that have not been 
incorporated into manufactured products or substantially transformed in 
a third country are prohibited.
    (c) Transactions relating to goods containing Iranian-origin raw 
materials or components are not prohibited if those raw materials or 
components have been incorporated into manufactured products or 
substantially transformed in a third country by a person other than a 
United States person.



Sec. 560.408  Importation into and release from a bonded warehouse or
foreign trade zone.

    The prohibitions in Sec. 560.201 apply to importation into a bonded 
warehouse or a foreign trade zone of the United States. However, Sec. 
560.201 does not prohibit the release from a bonded warehouse or a 
foreign trade zone of Iranian-origin goods imported into a bonded 
warehouse or a foreign trade zone prior to October 29, 1987.



Sec. 560.409  [Reserved]



Sec. 560.410  Exportation, reexportation, sale or supply of services.

    (a) The prohibition on the exportation, reexportation, sale or 
supply of services contained in Sec. 560.204 applies to services 
performed on behalf of a person in Iran or the Government of Iran or 
where the benefit of such services is otherwise received in Iran, if 
such services are performed:
    (1) In the United States, or
    (2) Outside the United States by a United States person, including 
by an overseas branch of an entity located in the United States.
    (b) The benefit of services performed anywhere in the world on 
behalf of the Government of Iran is presumed to be received in Iran.
    (c) Example. A United States person is engaged in a prohibited 
exportation of services to Iran when it extends credit to a third-
country firm specifically to enable that firm to manufacture goods for 
sale to Iran or for an entity of the Government of Iran. See also Sec. 
560.416.

[64 FR 20172, Apr. 26, 1999]



Sec. 560.411  [Reserved]



Sec. 560.412  Extensions of credit or loans to Iran.

    (a) The prohibitions contained in Sec. Sec. 560.204 and 560.207 
apply to but are not limited to the unauthorized renewal or rescheduling 
of credits or loans in existence as of May 6, 1995, such as the 
extension of a standby letter of credit.

[[Page 352]]

    (b) The prohibitions contained in Sec. 560.209 apply, among other 
things, to the unauthorized renewal or rescheduling of credits or loans 
in existence as of March 15, 1995.
    (c) The prohibitions contained in Sec. Sec. 560.204, 560.207 and 
560.209 apply to, among other things, credits or loans in any currency.

[64 FR 20172, Apr. 26, 1999]



Sec. 560.413  Letter of credit payments by Iranian banks in the United States.

    (a) For purposes of the exemption in Sec. 560.210(e), payment of 
letters of credit and other financing agreements according to their 
terms includes, in the case of payments made by an Iranian bank's branch 
or agency located in the United States, payments that such branch or 
agency is:
    (1) Legally obligated to make pursuant to the terms of letters of 
credit and other financing agreements relating to pre-May 7, 1995 trade 
contracts; or
    (2) Licensed to make by the Office of Foreign Assets Control with 
respect to pre-May 7, 1995 trade contracts.
    (b) Payments that are not binding legal obligations of an Iranian 
bank's branch or agency pursuant to the terms of the letter of credit or 
other financing agreement are not covered by this exemption.



Sec. 560.414  Reexportation of certain U.S.-origin goods exported prior
to May 7, 1995.

    The prohibitions on reexportation in Sec. 560.205 do not apply to 
United States-origin goods or technology that were exported from the 
United States prior to 12:01 a.m., Eastern Daylight Time, May 7, 1995, 
if:
    (a) Such goods or technology were not the property of a United 
States person as of 12:01 a.m. Eastern Daylight Time, May 7, 1995; and
    (b) The reexportation of the U.S.-origin goods or technology to Iran 
or the Government of Iran was not subject to reexport (as opposed to 
export) license application requirements under U.S. regulations in 
effect prior to May 6, 1995.

    Notes to Sec. 560.414. 1. The exclusion in this section applies, 
among other things, to goods that were as of May 6, 1995, classified 
under the U.S. Department of Commerce's Export Administration 
Regulations (15 CFR parts 730-774) as ECCNs 2A994; 3A993; 5A992; 5A995; 
6A990; 6A994; 7A994; 8A992; 8A994; 9A990; 9A992; and 9A994, that were 
exported from the United States prior to 12:01 a.m. Eastern Daylight 
Time, May 7, 1995, and were not the property of a United States person 
as of 12:01 a.m. Eastern Daylight Time, May 7, 1995. As of April 26, 
1999, items covered by this note are classified under ECCNs 2A994; 
3A992.a; 5A991.f; 5A992; 6A991; 6A998; 7A994; 8A992.d, .e, .f and .g; 
9A990.a and .b; and 9A991.d and .e.
    2. A reexportation of U.S.-origin goods or technology which meets 
the conditions of paragraph (a) of this section, or which is not within 
the scope of Sec. 560.205, nevertheless may require specific 
authorization by other agencies of the U.S. Government for reexportation 
to Iran or the Government of Iran. For example, items which meet the 
conditions of paragraph (a) may nevertheless require an export license 
under the Enhanced Proliferation Control Initiative provisions of the 
Export Administration Regulations (15 CFR part 744).

[64 FR 20172, Apr. 26, 1999]



Sec. 560.416  Brokering services.

    (a) For purposes of the prohibitions in Sec. Sec. 560.201, 560.204, 
560.205, 560.206 and 560.208, the term services includes performing a 
brokering function.
    (b) Examples. A person within the United States, or a United States 
person, wherever located, may not:
    (1) Act as broker for the provision of goods, services or 
technology, from whatever source, to or from Iran or the Government of 
Iran;
    (2) Act as broker for the purchase or swap of crude oil of Iranian 
origin or owned or controlled by the Government of Iran;
    (3) Act as broker for the provision of financing, a financial 
guarantee or an extension of credit by any person to Iran or the 
Government of Iran;
    (4) Act as a broker for the provision of financing, a financial 
guarantee or an extension of credit to any person specifically to enable 
that person to construct or operate a facility in Iran or owned or 
controlled by the Government of Iran; or
    (5) Act as a broker for the provision of financing, a financial 
guarantee, or an extension of credit to any person specifically to 
enable that person to provide goods, services, or technology

[[Page 353]]

intended for Iran or the Government of Iran.

[64 FR 20172, Apr. 26, 1999]



Sec. 560.417  Facilitation; change of policies and procedures; referral
of business opportunities offshore.

    With respect to Sec. 560.208, a prohibited facilitation or approval 
of a transaction by a foreign person occurs, among other instances, when 
a United States person:
    (a) Alters its operating policies or procedures, or those of a 
foreign affiliate, to permit a foreign affiliate to accept or perform a 
specific contract, engagement or transaction involving Iran or the 
Government of Iran without the approval of the United States person, 
where such transaction previously required approval by the United States 
person and such transaction by the foreign affiliate would be prohibited 
by this part if performed directly by a United States person or from the 
United States;
    (b) Refers to a foreign person purchase orders, requests for bids, 
or similar business opportunities involving Iran or the Government of 
Iran to which the United States person could not directly respond as a 
result of the prohibitions contained in this part; or
    (c) Changes the operating policies and procedures of a particular 
affiliate with the specific purpose of facilitating transactions that 
would be prohibited by this part if performed by a United States person 
or from the United States.

[64 FR 20172, Apr. 26, 1999]



Sec. 560.418  Release of technology or software in the United States
or a third country.

    The release of technology or software in the United States, or by a 
United States person wherever located, to any person violates the 
prohibitions of this part if made with knowledge or reason to know the 
technology is intended for Iran or the Government of Iran, unless that 
technology or software meets the definition of information and 
informational materials in Sec. 560.315. See Sec. 560.511.

    Notes to Sec. 560.418. 1. The U.S. Department of Commerce's Bureau 
of Export Administration requires a license for the release in the 
United States (or in a third country) to a foreign national of 
technology if both of the following conditions are met:
    (a) That technology would require a license for exportation (or 
reexportation) to the home country of the foreign national; and
    (b) The foreign national is not a citizen or permanent resident of 
the United States (or of the third country) or is not a protected 
individual under the Immigration and Naturalization Act (8 U.S.C. Sec. 
1324(b)(a)(3)). See 15 CFR 734.2(b)(2)(ii) and 734.2(b)(5).
    2. The transfer to a foreign national of technology subject to 
regulations administered by the U.S. Department of State or other 
agencies of the U.S. Government may require authorization by those 
agencies.

[64 FR 20173, Apr. 26, 1999]



Sec. 560.419  U.S. employment of persons normally located in Iran.

    The prohibitions in Sec. 560.201 make it unlawful to hire an 
Iranian national normally located in Iran to come to the United States 
solely or for the principal purpose of engaging in employment on behalf 
of an entity in Iran or as the employee of a U.S. person, unless that 
employment is authorized pursuant to a visa issued by the U.S. State 
Department or by Sec. 560.505. See also Sec. 560.418 with respect to 
the release of technology and software.

[64 FR 20173, Apr. 26, 1999]



Sec. 560.420  Reexportation by non-U.S. persons of certain foreign-made
products containing U.S.-origin goods or technology.

    For purposes of satisfying the de minimis content rule in Sec. 
560.205(b)(2):
    (a) U.S.-origin goods (excluding software) falling within the 
definition in Sec. 560.205 must comprise less than 10 percent of the 
foreign-made good (excluding software);
    (b) U.S.-origin software falling within the definition in Sec. 
560.205 must comprise less than 10 percent of the foreign-made software;
    (c) U.S.-origin technology falling within the definition in Sec. 
560.205 must comprise less than 10 percent of the foreign-made 
technology; and,
    (d) In cases involving a complex product made of a combination of 
U.S.-origin goods (including software) and technology falling within the 
definition in Sec. 560.205, the aggregate value of all such U.S.-origin 
goods (including

[[Page 354]]

software) and such technology contained in the foreign-made product must 
be less than 10 percent of the total value of the foreign-made product.

    Notes to Sec. 560.420. 1. Notwithstanding the exceptions contained 
in Sec. 560.205(b)(1) and (b)(2) and this section, a reexportation to 
Iran or the Government of Iran of U.S.-origin items falling within the 
definition in Sec. 560.205 is prohibited if those U.S.-origin goods 
(including software) or that technology have been substantially 
transformed or incorporated into a foreign-made end product which is 
destined to end uses or end users prohibited under regulations 
administered by other U.S. Government agencies. See, e.g., the Export 
Administration Regulations (31 CFR 736.2(b)(5), 744.2, 744.3, 744.4, 
744.7, and 744.10); International Traffic in Arms Regulations (22 CFR 
123.9).
    2. A reexportation not prohibited by Sec. 560.205 may nevertheless 
require authorization by the U.S. Department of Commerce, the U.S. 
Department of State or other agencies of the U.S. Government.
    3. The provisions of Sec. 560.205 and this section apply only to 
persons other than United States persons.

[64 FR 20173, Apr. 26, 1999]



  Subpart E_Licenses, Authorizations and Statements of Licensing Policy



Sec. 560.500  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.

[68 FR 53659, Sept. 11, 2003]



Sec. 560.501  Effect of license or authorization.

    (a) No license or other authorization contained in this part, or 
otherwise issued by or under the direction of the Director of the Office 
of Foreign Assets Control, authorizes or validates any transaction 
effected prior to the issuance of the license, unless specifically 
provided in such license or other authorization.
    (b) No regulation, ruling, instruction, or license authorizes a 
transaction prohibited under this part unless the regulation, ruling, 
instruction, or license is issued by the Office of Foreign Assets 
Control and specifically refers to this part. No regulation, ruling, 
instruction, or license referring to this part authorizes any 
transactions prohibited by any provision of this chapter unless the 
regulation, ruling, instruction or license specifically refers to such 
provision.
    (c) Any regulation, ruling, instruction or license authorizing any 
transaction otherwise prohibited under this part has the effect of 
removing a prohibition or prohibitions contained in this part from the 
transaction, but only to the extent specifically stated by its terms. 
Unless the regulation, ruling, instruction or license otherwise 
specifies, such an authorization does not create any right, duty, 
obligation, claim, or interest in, or with respect to, any property 
which would not otherwise exist under ordinary principles of law.
    (d) Specific licenses issued prior to 12:01 a.m., Eastern Daylight 
Time, August 20, 1997, continue in effect in accordance with their terms 
except to the extent specifically revoked, amended, or modified by the 
Office of Foreign Assets Control.
    (e) 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 which are not prohibited by this part 
or which do not require a license by the Office of Foreign Assets 
Control, 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. See also Sec. 560.701(d).

[60 FR 47063, Sept. 11, 1995, as amended at 64 FR 20173, Apr. 26, 1999]

[[Page 355]]



Sec. 560.502  Exclusion from licenses and authorizations.

    The Director of the Office of Foreign Assets Control reserves the 
right to exclude any person, property, or transaction from the operation 
of any license, or from the privileges therein conferred, or to restrict 
the applicability thereof with respect to particular persons, property, 
transactions, or classes thereof. Such action is binding upon all 
persons receiving actual or constructive notice of such exclusion or 
restriction.



Sec. Sec. 560.503-560.504  [Reserved]



Sec. 560.505  Importation of certain Iranian-origin services authorized;
activities related to certain visa categories authorized.

    (a) The importation of Iranian-origin services into the United 
States or other dealing in such services is authorized where such 
services are performed in the United States by an Iranian citizen or 
national for the purpose of, or which directly relate to, participating 
in a public conference, performance, exhibition or similar event, and 
such services are consistent with that purpose.
    (b) Persons otherwise qualified for a non-immigrant visa under 
categories A-3 and G-5 (attendants, servants and personal employees of 
aliens in the United States on diplomatic status), D (crewmen), F 
(students), I (information media representatives), J (exchange 
visitors), M (non-academic students), O and P (aliens with extraordinary 
ability, athletes, artists and entertainers), Q (international cultural 
exchange visitors), R (religious workers), or S (witnesses) are 
authorized to carry out in the United States those activities for which 
such a visa has been granted by the U.S. State Department.
    (c) Persons otherwise qualified for a visa under categories E-2 
(treaty investor), H (temporary worker), or L (intra-company transferee) 
and all immigrant visa categories are authorized to carry out in the 
United States those activities for which such a visa has been granted by 
the U.S. State Department, provided that the persons are not coming to 
the United States to work as an agent, employee or contractor of the 
Government of Iran or a business entity or other organization in Iran.

[64 FR 20173, Apr. 26, 1999, as amended at 64 FR 58791, Nov. 1, 1999]



Sec. 560.506  Importation and exportation of certain gifts authorized.

    The importation into the United States of Iranian-origin goods from 
Iran or a third country, and the exportation from the United States to 
Iran of goods, are authorized for goods sent as gifts to persons 
provided that the value of the gift is not more than $100; the goods are 
of a type and in quantities normally given as gifts between individuals; 
and the goods are not controlled for chemical and biological weapons 
(CB), missile technology (MT), national security (NS), or nuclear 
proliferation (NP). See Commerce Control List, Export Administration 
Regulations (15 CFR part 774).

[64 FR 20174, Apr. 26, 1999]



Sec. 560.507  Accompanied baggage authorized.

    (a) Persons entering the United States directly or indirectly from 
Iran are authorized to import into the United States Iranian-origin 
accompanied baggage normally incident to travel.
    (b) Persons leaving the United States for Iran are authorized to 
export from the United States accompanied baggage normally incident to 
travel.
    (c) This authorization applies to accompanied baggage that includes 
only articles that are necessary for personal use incident to travel, 
not intended for any other person or for sale, and are not otherwise 
prohibited from importation or exportation under applicable United 
States laws.



Sec. 560.508  Telecommunications and mail transactions authorized.

    All transactions of common carriers incident to the receipt or 
transmission of telecommunications and mail between the United States 
and Iran are authorized. For purposes of this section, the term mail 
includes parcels only to the extent the parcels contain goods exempted 
from the prohibitions

[[Page 356]]

contained in this part or otherwise eligible for importation from or 
exportation to Iran under a general or specific license.



Sec. 560.509  Certain transactions related to patents, trademarks and 
copyrights authorized.

    (a) All of the following transactions in connection with patent, 
trademark, copyright or other intellectual property protection in the 
United States or Iran are authorized:
    (1) The filing and prosecution of any application to obtain a 
patent, trademark, copyright or other form of intellectual property 
protection, including importation of or dealing in Iranian-origin 
services, payment for such services, and payment to persons in Iran 
directly connected to such intellectual property protection;
    (2) The receipt of a patent, trademark, copyright or other form of 
intellectual property protection;
    (3) The renewal or maintenance of a patent, trademark, copyright or 
other form of intellectual property protection; and
    (4) The filing and prosecution of opposition or infringement 
proceedings with respect to a patent, trademark, copyright or other form 
of intellectual property protection, or the entrance of a defense to any 
such proceedings.
    (b) Nothing in this section affects obligations under any other 
provision of law.

[60 FR 47063, Sept. 11, 1995, as amended at 64 FR 20174, Apr. 26, 1999]



Sec. 560.510  Transactions related to the resolution of disputes between
the United States or United States nationals and the Government of Iran.

    (a) Except as otherwise authorized, specific licenses may be issued 
on a case-by-case basis to authorize transactions in connection with 
awards, decisions or orders of the Iran-United States Claims Tribunal in 
The Hague, the International Court of Justice, or other international 
tribunals (collectively, ``tribunals''); agreements settling claims 
brought before tribunals; and awards, orders, or decisions of an 
administrative, judicial or arbitral proceeding in the United States or 
abroad, where the proceeding involves the enforcement of awards, 
decisions or orders of tribunals, or is contemplated under an 
international agreement, or involves claims arising before 12:01 a.m. 
EDT, May 7, 1995, that resolve disputes between the Government of Iran 
and the United States or United States nationals, including the 
following transactions:
    (1) Importation into the United States of, or any transaction 
related to, goods and services of Iranian origin or owned or controlled 
by the Government of Iran;
    (2) Exportation or reexportation to Iran or the Government of Iran 
of any goods, technology, or services, except to the extent that such 
exportation or reexportation is also subject to export licensing 
application requirements of another agency of the United States 
Government and the granting of such a license by that agency would be 
prohibited by law;
    (3) Financial transactions related to the resolution of disputes at 
tribunals, including transactions related to the funding of proceedings 
or of accounts related to proceedings or to a tribunal; participation, 
representation, or testimony before a tribunal; and the payment of 
awards of a tribunal; and
    (4) Other transactions otherwise prohibited by this part which are 
necessary to permit implementation of the foregoing awards, decisions, 
orders, or agreements.
    (b) Specific licenses may be issued on a case-by-case basis to 
authorize payment of costs related to the storage or maintenance of 
goods in which the Government of Iran has title, and to authorize the 
transfer of title to such goods, provided that such goods are in the 
United States and that such goods are the subject of a proceeding 
pending before a tribunal.
    (c)(1) All transactions are authorized with respect to the 
importation of Iranian-origin goods and services necessary to the 
initiation and conduct of legal proceedings, in the United States or 
abroad, including administrative, judicial and arbitral proceedings and 
proceedings before tribunals.
    (2) Specific licenses may be issued on a case-by-case basis to 
authorize the exportation to Iran or the Government of Iran of goods, 
and of services not

[[Page 357]]

otherwise authorized by Sec. 560.525, necessary to the initiation and 
conduct of legal proceedings, in the United States or abroad, including 
administrative, judicial and arbitral proceedings and proceedings before 
tribunals, except to the extent that the exportation is also subject to 
export licensing application requirements of another agency of the 
United States Government and the granting of such a license by that 
agency would be prohibited by law.
    (3) Representation of United States persons or of third country 
persons in legal proceedings, in the United States or abroad, including 
administrative, judicial and arbitral proceedings and proceedings before 
tribunals, against Iran or the Government of Iran is not prohibited by 
this part. The exportation of certain legal services to a person in Iran 
or the Government of Iran is authorized in Sec. 560.525.
    (d) The following are authorized:
    (1) All transactions related to payment of awards of the Iran-United 
States Claims Tribunal in The Hague against Iran.
    (2) All transactions necessary to the payment and implementation of 
awards (other than exports or reexports subject to export license 
application requirements of other agencies of the United States 
Government) in a legal proceeding to which the United States Government 
is a party, or to payments pursuant to settlement agreements entered 
into by the United States Government in such a legal proceeding.

[60 FR 47063, Sept. 11, 1995, as amended at 62 FR 41852, Aug. 4, 1997]



Sec. 560.511  Exportation or supply of insubstantial United States 
content for use in foreign-made products or technology.

    (a) Except as provided in paragraph (b) of this section and 
notwithstanding the prohibitions in Sec. 560.204, the exportation or 
supply of goods or technology from the United States, or by a United 
States person wherever located, for substantial transformation or 
incorporation into a foreign-made end product in a country other than 
the United States or Iran, intended specifically or predominantly for 
Iran or the Government of Iran, is permitted under this part where the 
exporter has ascertained that all of the following are the case:
    (1) The U.S.-origin goods or technology being exported for 
substantial transformation or incorporation abroad were not subject to 
export license application requirements under any United States 
regulations in effect on May 6, 1995, or were not thereafter made 
subject to such regulations imposed independently of this part;
    (2) With respect to the foreign-made end product:
    (i) U.S.-origin goods (excluding software) comprise less than 10 
percent of the foreign-made good (excluding software);
    (ii) U.S.-origin software comprises less than 10 percent of the 
foreign-made software;
    (iii) U.S.-origin technology comprises less than 10 percent of the 
foreign-made technology; and
    (iv) In cases involving a complex product made of a combination of 
goods (including software) and technology, the aggregate value of all 
U.S.-origin goods (including software) and technology contained in the 
foreign-made end product is less than 10 percent of the total value of 
the foreign-made product;
    (3) The foreign-made end product is not destined to end uses or end 
users prohibited under regulations administered by other U.S. Government 
agencies. See, e.g., the Export Administration Regulations (31 CFR 
736.2(b)(5), 744.2, 744.3, 744.4, 744.7, and 744.10); International 
Traffic in Arms Regulations (22 CFR 123.9);
    (4) The foreign-made end product is not intended for use in the 
Iranian petroleum or petrochemical industry. For this purpose, products 
intended for use in the Iranian petroleum or petrochemical industry 
include not only products uniquely suited for use in those industries, 
such as oilfield services equipment, but also goods and technology for 
use in products, such as computers, office equipment, construction 
equipment, or building materials, which are suitable for use in other 
industries but which are intended specifically for use in the petroleum 
or petrochemical industries.

[[Page 358]]

    (b) The authorization contained in this section is not available if 
the foreign-made end product is of a type which other U.S. Government 
agencies make ineligible for de minimis U.S.-origin content. See, e.g., 
the Export Administration Regulations (15 CFR 734.4(a) and (b)); 
International Traffic in Arms Regulations (22 CFR 123.9).

    Note to Sec. 560.511. An exportation authorized by this section may 
nevertheless require authorization by the U.S. Department of Commerce, 
the U.S. Department of State or other agencies of the U.S. Government.

[64 FR 20174, Apr. 26, 1999]



Sec. 560.512  Iranian Government missions in the United States.

    (a) All transactions ordinarily incident to the importation of goods 
or services into the United States by, the exportation of goods or 
services from the United States by, or the provision of goods or 
services in the United States to, the missions of the Government of Iran 
to international organizations in the United States, and Iranians 
admitted to the United States under section 101(a)(15)(G) of the 
Immigration and Nationality Act (``INA''), 8 U.S.C. 1101(a)(15)(G), are 
authorized, provided that:
    (1) The goods or services are for the conduct of the official 
business of the mission, or for personal use of personnel admitted to 
the United States under INA section 101(a)(15)(G), and are not for 
resale; and
    (2) The transaction is not otherwise prohibited by law.
    (b) All transactions ordinarily incident to the importation of goods 
or services into the United States by, the exportation of goods or 
services from the United States by, or the provision of goods or 
services in the United States to, the Iranian Interests Section of the 
Embassy of Pakistan (or any successor protecting power) in the United 
States, are authorized, provided that:
    (1) The goods or services are for the conduct of the official 
business of the Iranian Interests Section, and are not for resale; and
    (2) The transaction is not otherwise prohibited by law.
    (c) All transactions ordinarily incident to the provision of goods 
or services in the United States to the employees of Iranian missions to 
international organizations in the United States, and to employees of 
the Iranian Interests Section of the Embassy of Pakistan (or any 
successor protecting power) in the United States, are authorized, 
provided that the transaction is not otherwise prohibited by law.



Sec. 560.513  Importation of Iranian-origin oil.

    (a) Specific licenses will be issued on a case-by-case basis to 
permit the importation of Iranian-origin oil in connection with the 
resolution or settlement of cases before the Iran-United States Claims 
Tribunal in The Hague, established pursuant to the Declaration of the 
Government of the Democratic and Popular Republic of Algeria Concerning 
the Settlement of Claims by the Government of the United States of 
America and the Government of the Islamic Republic of Iran of January 
19, 1981, or where the proceeds are otherwise to be deposited in the 
Tribunal's Security Account.
    (b) License applications submitted pursuant to this section must 
contain the importer's certification that the oil is of Iranian origin 
with all relevant supporting documentation, including specification of 
the production site at which the oil was extracted, and that the sale or 
transfer of the oil is by or for the account of the Government of Iran. 
Licenses will not be issued for importations of Iranian-origin oil which 
is not sold or transferred by or for the account of the Government of 
Iran. In cases where the oil is being imported either in whole or in 
part in resolution or settlement of a case pending before the Tribunal, 
applicants are required to identify the case and submit a copy of the 
settlement agreement and the Award on Agreed Terms issued by the 
Tribunal. In cases where any proceeds are generated for the account of 
the Government of Iran from the importation of Iranian-origin oil, the 
importer must demonstrate that irrevocable arrangements are in place 
that will ensure that the proceeds will be deposited in the Tribunal's 
Security Account.

[[Page 359]]



Sec. 560.514  [Reserved]



Sec. 560.515  30-day delayed effective date for pre-May 7, 1995 trade
contracts involving Iran.

    (a) All transactions necessary to complete performance of a trade 
contract entered into prior to May 7, 1995, and involving Iran (a pre-
existing trade contract), including the exportation of goods, services 
(including financial services), or technology from the United States 
that was authorized pursuant to Federal regulations in force immediately 
prior to May 6, 1995, or performance under a pre-existing trade contract 
for transactions in Iranian-origin or Government of Iran-owned or 
controlled goods or services that do not involve importation into the 
United States, are authorized without specific licensing by the Office 
of Foreign Assets Control if the conditions in paragraph (a)(1) or 
(a)(2) of this section are met:
    (1) If the pre-existing trade contract is for an exportation of 
goods or technology from the United States that was authorized pursuant 
to Federal regulations in force immediately prior to May 6, 1995, the 
goods or technology must be exported from the United States prior to 
12:01 a.m. Eastern Daylight Time, June 6, 1995, and all other activity 
by U.S. persons that is necessary and incidental to the performance of 
the pre-existing trade contract (other than payment under a financing 
contract) must be completed prior to 12:01 a.m. Eastern Daylight Time, 
August 6, 1995; or
    (2) All obligations under a pre-existing trade contract (other than 
payment under a financing contract) must be fully completed prior to 
12:01 a.m. Eastern Daylight Time, June 6, 1995, if the pre-existing 
trade contract is for one of the following:
    (i) The exportation of services from the United States benefitting a 
person in Iran or the Government of Iran;
    (ii) The reexportation of goods or technology to Iran, the 
Government of Iran, or an entity owned or controlled by the Government 
of Iran that was authorized pursuant to Federal regulations in force 
immediately prior to May 6, 1995; or
    (iii) Transactions relating to goods or services of Iranian origin 
or owned or controlled by the Government of Iran other than transactions 
relating to importation into the United States of such goods or 
services.
    (b) In order to complete performance of a pre-existing trade 
contract, the arrangement or renegotiation of contracts for transactions 
necessary and incidental to performance of the pre-existing trade 
contract is authorized. Such incidental transactions may include, for 
example, financing, shipping and insurance arrangements. Amendments to a 
pre-existing trade contract for the purpose of accelerating a 
previously-specified delivery schedule under a contract for a fixed 
quantity or value of goods, technology or services, or curtailing or 
canceling required performance, are authorized without specific 
licensing. Any other alteration of the trade contract must be 
specifically licensed by the Office of Foreign Assets Control.
    (c) The existence of a contract will be determined with reference to 
the principles contained in Article 2 of the Uniform Commercial Code.

[60 FR 47063, Sept. 11, 1995, as amended at 64 FR 20174, Apr. 26, 1999]



Sec. 560.516  Payment and United States dollar clearing transactions
involving Iran.

    (a) United States depository institutions are authorized to process 
transfers of funds to or from Iran, or for the direct or indirect 
benefit of persons in Iran or the Government of Iran, if the transfer is 
covered in full by any of the following conditions and does not involve 
debiting or crediting an Iranian account:
    (1) The transfer arises from an underlying transaction that has been 
authorized by a specific or general license issued pursuant to this 
part;
    (2) The transfer arises from an underlying transaction that is not 
prohibited by this part, such as a non-commercial remittance to or from 
Iran (e.g., a family remittance not related to a family-owned 
enterprise); or
    (3) The transfer arises from an underlying transaction that is 
exempted from regulation pursuant to Sec. 203(b) of

[[Page 360]]

the International Emergency Economic Powers Act (50 U.S.C. 1702(b)), 
such as an exportation to Iran or importation from Iran of information 
and informational materials, a travel-related remittance, or payment for 
the shipment of a donation of articles to relieve human suffering.
    (b) United States registered brokers or dealers in securities are 
authorized to process transfers of funds to or from Iran, or for the 
direct or indirect benefit of persons in Iran or the Government of Iran, 
if the transfer is covered in full by any of the conditions set forth in 
paragraph (a) of this section and does not involve the debiting or 
crediting of an Iranian account.
    (c) Before a United States depository institution or a United States 
registered broker or dealer in securities initiates a payment on behalf 
of any customer, or credits a transfer to the account on its books of 
the ultimate beneficiary, the United States depository institution or 
United States registered broker or dealer in securities must determine 
that the underlying transaction is not prohibited by this part.
    (d) Pursuant to the prohibitions contained in Sec. 560.208, a 
United States depository institution or a United States registered 
broker or dealer in securities may not make transfers to or for the 
benefit of a foreign-organized entity owned or controlled by it if the 
underlying transaction would be prohibited if engaged in directly by the 
U.S. depository institution or U.S. registered broker or dealer in 
securities.
    (e) This section does not authorize transactions with respect to 
property blocked pursuant to part 535.

[73 FR 66542, Nov. 10, 2008]



Sec. 560.517  Exportation of services: Iranian accounts at United States
depository institutions or United States registered brokers or dealers

in securities.

    (a) United States depository institutions are prohibited from 
performing services with respect to Iranian accounts, as defined in 
Sec. 560.320, except that United States depository institutions are 
authorized to provide and be compensated for services and incidental 
transactions with respect to:
    (1) The maintenance of Iranian accounts, including the payment of 
interest and the debiting of service charges;
    (2) The processing of transfers arising from underlying transactions 
that are exempted from regulation pursuant to section 203(b) of the 
International Emergency Economic Powers Act, 50 U.S.C. 1702(b), such as 
an exportation of information or informational materials to Iran, a 
travel-related remittance, or payment for the shipment of a donation of 
articles to relieve human suffering; and
    (3) At the request of the account party, the closing of Iranian 
accounts and the lump sum transfer only to the account party of all 
remaining funds and other assets in the account.
    (b) United States registered brokers or dealers in securities are 
prohibited from performing services with respect to Iranian accounts, as 
defined in Sec. 560.320, except that United States registered brokers 
or dealers in securities are authorized to provide and be compensated 
for services and incidental transactions with respect to:
    (1) The limited maintenance of an Iranian account, including only 
the payment into such account of interest, cash dividends, and stock 
dividends; the debiting of service charges; and the execution of stock 
splits and dividend reinvestment plans; and
    (2) At the request of the account party, the closing of Iranian 
accounts through the one-time liquidation of all assets in the account 
at fair market value and the lump sum transfer only to the account party 
of all proceeds derived therefrom and all remaining funds in the 
account.
    (c) Specific licenses may be issued with respect to the operation of 
Iranian accounts that constitute accounts of:
    (1) Foreign government missions and their personnel in Iran; or
    (2) Missions of the Government of Iran in the United States.

[60 FR 47063, Sept. 11, 1995, as amended at 70 FR 15584, Mar. 28, 2005; 
74 FR 36398, July 23, 2009]

[[Page 361]]



Sec. 560.518  Transactions in Iranian-origin and Iranian Government 
property.

    (a) Except for transactions involving the Government of Iran, all 
domestic transactions with respect to Iranian-origin goods located in 
the United States are authorized, provided that this paragraph (a) does 
not affect the status of property blocked pursuant to part 535 or 
detained or seized, or subject to detention or seizure, pursuant to this 
part.
    (b) All transactions necessary and incidental to a United States 
person's sale or other disposition of goods or services of Iranian 
origin or owned or controlled by the Government of Iran that are located 
or to be performed outside the United States and were acquired by that 
United States person in transactions not prohibited by part 535 or this 
part are authorized, provided:
    (1) The sale or other disposition does not result in the importation 
of such goods or services into the United States, and
    (2) The sale or other disposition is completed no later than 12:01 
a.m. EDT, August 6, 1995.
    (c) Except as provided in paragraphs (a) and (b) of this section, 
United States persons may not deal in goods or services of Iranian 
origin or owned or controlled by the Government of Iran, except that the 
following transactions are authorized:
    (1) Transactions by a United States person with third-country 
nationals incidental to the storage and maintenance in third countries 
of Iranian-origin goods owned prior to May 7, 1995, by that United 
States person or acquired thereafter by that United States person 
consistent with the provisions of this part;
    (2) Exportation of Iranian-origin household and personal effects 
from the United States incident to the relocation of United States 
persons outside the United States; and
    (3) Purchase for personal use or consumption in Iran of Iranian-
origin goods or services.
    (d) In addition to transactions authorized by paragraph (c)(1) of 
this section, a United States person is authorized after 12:01 a.m. EDT, 
May 7, 1995, to use or dispose of Iranian-origin household and personal 
effects that are located outside the United States and that have been 
acquired by the United States person in transactions not prohibited by 
part 535 or this part.



Sec. 560.519  Policy governing news organization offices.

    (a) Specific licenses may be issued on a case-by-case basis 
authorizing transactions necessary for the establishment and operation 
of news bureaus in Iran by United States organizations whose primary 
purpose is the gathering and dissemination of news to the general 
public.
    (b) Transactions that may be authorized include but are not limited 
to those incident to the following:
    (1) Leasing office space and securing related goods and services;
    (2) Hiring support staff;
    (3) Purchasing Iranian-origin goods for use in the operation of the 
office; and
    (4) Paying fees related to the operation of the office in Iran.
    (c) Specific licenses may be issued on a case-by-case basis 
authorizing transactions necessary for the establishment and operation 
of news bureaus in the United States by Iranian organizations whose 
primary purpose is the gathering and dissemination of news to the 
general public.
    (d) The number assigned to such specific licenses should be 
referenced in all import and export documents and in all funds transfers 
and other banking transactions through banking institutions organized or 
located in the United States in connection with the licensed 
transactions to avoid disruption of the trade and financial 
transactions.



Sec. 560.520  Exportation of agricultural commodities on contracts 
entered into prior to May 7, 1995.

    (a) All transactions by United States persons in connection with the 
exportation from the United States to Iran of any agricultural commodity 
under an export sales contract are authorized, provided:
    (1) Such contract was entered into prior to 12:01 a.m. EDT, May 7, 
1995; and

[[Page 362]]

    (2) The terms of such contract require delivery of the commodity 
prior to February 2, 1996.
    (b) The performance of letters of credit and other financing 
agreements with respect to exports authorized by this section is 
authorized pursuant to their terms.
    (c) For purposes of this section, the term agricultural commodity 
means feed grains, rice, wheat, cotton, peanuts, tobacco, dairy 
products, and oilseeds (including vegetable oil).
    (d) Specific licenses may be granted on a case-by-case basis for 
transactions by United States persons in connection with the exportation 
of other agricultural articles from the United States to Iran that do 
not fall within the definition of ``agricultural commodity'' contained 
in paragraph (c) of this section, provided such exportation is pursuant 
to an export sales contract and the conditions contained in paragraphs 
(a)(1) and (a)(2) of this section are met.



Sec. 560.521  Diplomatic pouches.

    The following transactions are authorized:
    (a) The importation into the United States from Iran, or the 
exportation from the United States to Iran, of diplomatic pouches and 
their contents; and
    (b) The exportation, reexportation, sale, or supply, directly or 
indirectly, from the United States or by a U.S. person, wherever 
located, of any goods or technology to a third-country government, or to 
its contractors or agents, for shipment to Iran via a diplomatic pouch. 
To the extent necessary, this section also authorizes the shipment of 
such goods or technology by the third-country government to Iran via a 
diplomatic pouch.

    Note to paragraph (b) of Sec. 560.521: The exportation or 
reexportation of certain U.S.-origin goods or technology to a third-
country government, or to its contractors or agents, may require 
authorization by the U.S. Department of Commerce under the Export 
Administration Regulations (15 CFR parts 730 et seq.).

[72 FR 15832, Apr. 3, 2007]



Sec. 560.522  Allowable payments for overflights of Iranian airspace.

    Payments to Iran of charges for services rendered by the Government 
of Iran in connection with the overflight of Iran or emergency landing 
in Iran of aircraft owned by a United States person or registered in the 
United States are authorized.



Sec. 560.523  Exportation of equipment and services relating to 
information and informational materials.

    Specific licenses may be issued on a case-by-case basis for the 
exportation of equipment and services necessary for the establishment of 
news wire feeds or other transmissions of information and informational 
materials.

[64 FR 20175, Apr. 26, 1999]



Sec. 560.524  Household goods and personal effects.

    (a) The exportation from the United States to Iran of household and 
personal effects, including baggage and articles for family use, of 
persons departing the United States to relocate in Iran is authorized 
provided the articles included in such effects have been actually used 
by such persons or by family members accompanying them, are not intended 
for any other person or for sale, and are not otherwise prohibited from 
exportation. See also, Sec. 560.518(c)(2).
    (b) The importation of Iranian-origin household and personal 
effects, including baggage and articles for family use, of persons 
arriving in the United States is authorized; to qualify, articles 
included in such effects must have been actually used abroad by such 
persons or by other family members arriving from the same foreign 
household, must not be intended for any other person or for sale, and 
must not be otherwise prohibited from importation. For purposes of this 
paragraph, household and personal effects include all articles meeting 
the criteria stated in this paragraph regardless of the time elapsed 
since the importer's arrival in the United States from Iran.

[60 FR 47063, Sept. 11, 1995, as amended at 65 FR 25643, May 3, 2000]

[[Page 363]]



Sec. 560.525  Exportation of certain legal services.

    (a) The provision of the following legal services to the Government 
of Iran or to a person in Iran, and receipt of payment of professional 
fees and reimbursement of incurred expenses, are authorized:
    (1) Provision of legal advice and counselling on the requirements of 
and compliance with the laws of any jurisdiction within the United 
States, provided that such advice and counselling is not provided to 
facilitate transactions that would violate any of the prohibitions 
contained in this part;
    (2) Representation when a person in Iran or the Government of Iran 
has been named as a defendant in or otherwise made a party to domestic 
United States legal, arbitration, or administrative proceedings;
    (3) Initiation and conduct of domestic United States legal, 
arbitration, or administrative proceedings on behalf of the Government 
of Iran or a person in Iran;
    (4) Representation before any federal or state agency with respect 
to the imposition, administration, or enforcement of United States 
sanctions against Iran;
    (5) Initiation and conduct of legal proceedings, in the United 
States or abroad, including administrative, judicial and arbitral 
proceedings and proceedings before international tribunals (including 
the Iran-United States Claims Tribunal in The Hague and the 
International Court of Justice):
    (i) To resolve disputes between the Government of Iran or an Iranian 
national and the United States or a United States national;
    (ii) Where the proceeding is contemplated under an international 
agreement; or
    (iii) Where the proceeding involves the enforcement of awards, 
decisions, or orders resulting from legal proceedings within the scope 
of paragraph (a)(5)(i) or (a)(5)(ii) of this section, provided that any 
transaction, unrelated to the provision of legal services or the payment 
therefor, that is necessary or related to the execution of an award, 
decision or order resulting from such legal proceeding, or otherwise 
necessary for the conduct of such proceeding, and which would otherwise 
be prohibited by this part requires a specific license in accordance 
with Sec. Sec. 560.510 and 560.801;
    (6) Provision of legal advice and counselling in connection with 
settlement or other resolution of matters described in paragraph (a)(5) 
of this section; and
    (7) Provision of legal services in any other context in which 
prevailing United States law requires access to legal counsel at public 
expense.
    (b) The provision of any other legal services to a person in Iran or 
the Government of Iran, not otherwise authorized in or exempted by this 
part, requires the issuance of a specific license.

[60 FR 47063, Sept. 11, 1995, as amended at 62 FR 41852, Aug. 4, 1997]



Sec. 560.526  Commodities trading and related transactions.

    (a) Trading in Iranian-origin commodities. With respect to Sec. 
560.206, specific licenses may be issued on a case-by-case basis to 
authorize certain commodities trading by a United States person in 
Iranian-origin goods, or transactions incidental to such trading, where:
    (1) No party to the transaction with the United States person is a 
person in Iran or the Government of Iran, and
    (2) It was impossible for the United States person to determine at 
the time of entry into the transaction, given all circumstances of the 
transaction, that the goods would be of Iranian origin or would be owned 
or controlled by the Government of Iran.
    (b) Trading in commodities destined for Iran or the Government of 
Iran. With respect to Sec. 560.204, specific licenses may be issued on 
a case-by-case basis to authorize certain trading by United States 
persons in commodities of U.S. or third-country origin destined for Iran 
or the Government of Iran, or transactions incidental to such trading, 
where:
    (1) It was impossible for the United States person to determine at 
the time of entry into the transaction, given all circumstances of the 
transaction, that the goods would be for delivery to Iran or to the 
Government of Iran;

[[Page 364]]

    (2) The United States person did not contract with a person in Iran 
or the Government of Iran; and
    (3) The United States person did not initiate the nomination of the 
commodity's destination as Iran or the Government of Iran.



Sec. 560.527  Rescheduling existing loans.

    Specific licenses may be issued on a case-by-case basis for 
rescheduling loans or otherwise extending the maturities of existing 
loans, and for charging fees or interest at commercially reasonable 
rates, in connection therewith, provided that no new funds or credits 
are thereby transferred or extended to Iran or the Government of Iran.



Sec. 560.528  Aircraft safety.

    Specific licenses may be issued on a case-by-case basis for the 
exportation and reexportation of goods, services, and technology to 
insure the safety of civil aviation and safe operation of U.S.-origin 
commercial passenger aircraft.



Sec. 560.529  Bunkering and emergency repairs.

    Goods or services provided in the United States to a non-Iranian 
carrier transporting passengers or goods to or from Iran are permissible 
if they are:
    (a) Bunkers or bunkering services;
    (b) Supplied or performed in the course of emergency repairs; or
    (c) Supplied or performed under circumstances which could not be 
anticipated prior to the carrier's departure for the United States.

[64 FR 20175, Apr. 26, 1999]



Sec. 560.530  Commercial sales, exportation, and reexportation of 
agricultural commodities, medicine, and medical devices.

    (a)(1) One-year specific license requirement. The exportation or 
reexportation of the excluded food items specified in paragraph 
(a)(2)(iii) of this section, agricultural commodities that do not fall 
within the definition of food set forth in paragraph (a)(2)(ii) of this 
section, food (as defined in paragraph (a)(2)(ii) of this section) 
intended for military or law enforcement purchasers or importers, 
medicine, or medical devices to the Government of Iran, to any 
individual or entity in Iran, or to persons in third countries 
purchasing specifically for resale to any of the foregoing, shall only 
be made pursuant to a one-year specific license issued by the Office of 
Foreign Assets Control for contracts entered into during the one-year 
period of the license and shipped within the 12-month period beginning 
on the date of the signing of the contract. No specific license will be 
granted for the exportation or reexportation of agricultural 
commodities, medicine, or medical devices to any entity or individual in 
Iran promoting international terrorism, to any narcotics trafficking 
entity designated pursuant to Executive Order 12978 of October 21, 1995 
(60 FR 54579, October 24, 1995) or the Foreign Narcotics Kingpin 
Designation Act (21 U.S.C. 1901-1908), or to any foreign organization, 
group, or persons subject to any restriction for its or their 
involvement in weapons of mass destruction or missile proliferation. 
Executory contracts entered into pursuant to paragraph (b)(2) of this 
section prior to the issuance of the one-year specific license described 
in this paragraph shall be deemed to have been signed on the date of 
issuance of that one-year specific license (and, therefore, the exporter 
is authorized to make shipments under that contract within the 12-month 
period beginning on the date of issuance of the one-year specific 
license).
    (2)(i) General license for the exportation or reexportation of food. 
Except as provided in paragraphs (a)(2)(iii) and (a)(2)(iv) of this 
section, the exportation or reexportation of food (including bulk 
agricultural commodities listed in appendix B to this part) to the 
Government of Iran, to any individual or entity in Iran, or to persons 
in third countries purchasing specifically for resale to any of the 
foregoing, and the conduct of related transactions, including, but not 
limited to, the making of shipping and cargo inspection arrangements, 
the obtaining of insurance, the arrangement of financing and payment, 
shipping of the goods, receipt of payment, and the entry into contracts 
(including executory contracts), are hereby authorized, provided that 
all such exports or reexports are shipped within

[[Page 365]]

the 12-month period beginning on the date of the signing of the contract 
for export or reexport.
    (ii) Definition of Food. For purposes of this general license, the 
term food means items that are intended to be consumed by and provide 
nutrition to humans or animals in Iran, including vitamins and minerals, 
food additives and supplements, and bottled drinking water, and seeds 
that germinate into items that are intended to be consumed by and 
provide nutrition to humans or animals in Iran. For purposes of this 
general license, the term food does not include alcoholic beverages, 
cigarettes, gum, or fertilizer.
    (iii) Excluded food items. Paragraph (a)(2)(i) of this section does 
not authorize the exportation or reexportation of the following food 
items: castor beans, castor bean seeds, raw eggs, fertilized eggs (other 
than fish and shrimp roe), dried egg albumin, live animals, Rosary/
Jequirity peas, non-food-grade gelatin powder, and peptones and their 
derivatives.
    (iv) Excluded persons. Paragraph (a)(2)(i) of this section does not 
authorize the exportation or reexportation of food to military or law 
enforcement purchasers or importers.

    Note to Sec. 560.530(a)(2): Consistent with section 906(a)(1) of 
the Trade Sanctions Reform and Export Enhancement Act of 2000 (22 U.S.C. 
7205), each year by the anniversary of its effective date on October 12, 
2011, the Office of Foreign Assets Control will determine whether to 
revoke this general license. Unless revoked, the general license will 
remain in effect.

    (b) General licensefor arrangement of exportation or reexportation 
of covered products subject to the one-year specific license requirement 
of paragraph (a)(1) of this section.
    (1) With respect to sales pursuant to paragraph (a)(1) of this 
section, the making of shipping arrangements, cargo inspections, 
obtaining of insurance, and arrangement of financing (consistent with 
Sec. 560.532) for the exportation or reexportation of the excluded food 
items specified in paragraph (a)(2)(iii) of this section, agricultural 
commodities that do not fall within the definition of food set forth in 
paragraph (a)(2)(ii) of this section, food (as defined in paragraph 
(a)(2)(ii) of this section) intended for military or law enforcement 
purchasers or importers, medicine, or medical devices to the Government 
of Iran, to any individual or entity in Iran, or to persons in third 
countries purchasing specifically for resale to any of the foregoing, 
are authorized.
    (2) Entry into executory contracts (including executory pro forma 
invoices, agreements in principle, or executory offers capable of 
acceptance such as bids in response to public tenders) for the 
exportation or reexportation of the excluded food items specified in 
paragraph (a)(2)(iii) of this section, agricultural commodities that do 
not fall within the definition of food set forth in paragraph (a)(2)(ii) 
of this section, food (as defined in paragraph (a)(2)(ii) of this 
section) intended for military or law enforcement purchasers or 
importers, medicine, or medical devices to the Government of Iran, to 
any individual or entity in Iran, or to persons in third countries 
purchasing specifically for resale to any of the foregoing, is 
authorized, provided that the performance of an executory contract is 
expressly made contingent upon the prior issuance of the one-year 
specific license described in paragraph (a)(1) of this section.
    (c) Instructions for obtaining one-year specific licenses. In order 
to obtain the one-year specific license described in paragraph (a)(1) of 
this section, the exporter must provide to the Office of Foreign Assets 
Control:
    (1) The applicant's full legal name (if the applicant is a business 
entity, the state or jurisdiction of incorporation and principal place 
of business).
    (2) The applicant's mailing and street address (so that OFAC may 
reach a responsible point of contact, the applicant should also include 
the name of the individual(s) responsible for the application and 
related commercial transactions along with their telephone and fax 
numbers and, if available, e-mail addresses).
    (3) The names, mailing addresses, and, if available, fax and 
telephone numbers of all parties with an interest in the transaction. If 
the goods are being exported or reexported to a purchasing agent in 
Iran, the exporter must identify the agent's principals at

[[Page 366]]

the wholesale level for whom the purchase is being made. If the goods 
are being exported or reexported to an individual, the exporter must 
identify any organizations or entities with which the individual is 
affiliated that have an interest in the transaction.
    (4) A description of all items to be exported or reexported pursuant 
to the requested one-year license, including a statement that the item 
is classified as EAR 99, and, if necessary, documentation sufficient to 
verify that the items to be exported or reexported are classified as EAR 
99 and do not fall within any of the limitations contained in paragraph 
(d) of this section.
    (5) An Official Commodity Classification of EAR 99 issued by the 
Department of Commerce, Bureau of Industry and Security (``BIS''), 
certifying that the product is EAR 99, is required to be submitted to 
OFAC with the request for a license authorizing the exportation or 
reexportation of all fertilizers, live horses, western red cedar, and 
medical devices other than basic medical supplies, such as syringes, 
bandages, gauze and similar items, that are specifically listed on BIS's 
Web site, http://www.bis.doc.gov/policiesand

regulations/tradesanctionsreformexport

enhancementact.html. Medical supplies that are specifically listed on 
BIS's Web site may not require an Official Commodity Classification of 
EAR 99 from BIS. BIS will also provide a list on its Web site of 
medicines that are ineligible for a one-year license under these 
procedures. Exporters should seek an Official Commodity Classification 
of EAR 99 from BIS for medicines and submit a copy to OFAC. See 15 CFR 
745.3 for instructions for obtaining Official Commodity Classification 
of EAR 99 from BIS.
    (d) Limitations. (1) Nothing in this section or in any license 
issued pursuant to paragraph (a) of this section relieves the exporter 
from compliance with the export license application requirements of 
another Federal agency.
    (2) Nothing in this section or in any license issued pursuant to 
paragraph (a) of this section authorizes the exportation or 
reexportation of any agricultural commodity, medicine, or medical device 
controlled on the United States Munitions List established under section 
38 of the Arms Export Control Act (22 U.S.C. 2778); controlled on any 
control list established under the Export Administration Act of 1979 or 
any successor statute (50 U.S.C. App. 2401 et seq.); or used to 
facilitate the development or production of a chemical or biological 
weapon or weapon of mass destruction.
    (3) Nothing in this section or in any license issued pursuant to 
paragraph (a) of this section affects prohibitions on the sale or supply 
of U.S. technology or software used to manufacture agricultural 
commodities, medicine, or medical devices, such as technology to design 
or produce biotechnological items or medical devices.
    (4) Nothing in this section or in any license issued pursuant to 
paragraph (a) of this section affects U.S. nonproliferation export 
controls, including end-user and end-use controls maintained under the 
Enhanced Proliferation Control Initiative.
    (5) Nothing in this section authorizes any transaction or dealing 
with a person whose property and interests in property are blocked 
under, or who is designated or otherwise subject to any sanctions under, 
the terrorism, proliferation of weapons of mass destruction, or 
narcotics trafficking programs administered by OFAC, 31 CFR parts 536, 
544, 594, 595, 597, and 598, or with any foreign organization, group, or 
person subject to any restriction for its involvement in weapons of mass 
destruction or missile proliferation, or involving property blocked 
pursuant to this chapter or any other activity prohibited by this 
chapter not otherwise authorized in or pursuant to this part.
    (e) Covered items. For the purposes of this part, agricultural 
commodities, medicine, and medical devices are defined below.
    (1) Agricultural commodities. For the purposes of this part, 
agricultural commodities are:
    (i) Products not listed on the Commerce Control List in the Export 
Administration Regulations, 15 CFR part 774, supplement no. 1, and that 
fall within the term ``agricultural commodity'' as defined in section 
102 of the Agricultural Trade Act of 1978 (7 U.S.C. 5602); and

[[Page 367]]

    (ii) Products not listed on the Commerce Control List in the Export 
Administration Regulations, 15 CFR part 774, supplement no. 1, that are 
intended for ultimate use in Iran as:
    (A) Food for humans (including raw, processed, and packaged foods; 
live animals; vitamins and minerals; food additives or supplements; and 
bottled drinking water) or animals (including animal feeds);
    (B) Seeds for food crops;
    (C) Fertilizers or organic fertilizers; or
    (D) Reproductive materials (such as live animals, fertilized eggs, 
embryos, and semen) for the production of food animals.
    (2) Medicine. For the purposes of this part, the term medicine has 
the same meaning given the term ``drug'' in section 201 of the Federal 
Food, Drug, and Cosmetic Act (21 U.S.C. 321) but does not include any 
item listed on the Commerce Control List in the Export Administration 
Regulations, 15 CFR part 774, supplement no. 1 (excluding items 
classified as EAR 99).
    (3) Medical device. For the purposes of this part, the term medical 
device has the meaning given the term ``device'' in section 201 of the 
Federal Food, Drug, and Cosmetic Act (21 U.S.C. 321) but does not 
include any item listed on the Commerce Control List in the Export 
Administration Regulations, 15 CFR part 774, supplement no. 1 (excluding 
items classified as EAR 99).
    (f) Excluded items. For the purposes of this part, agricultural 
commodities do not include furniture made from wood; clothing 
manufactured from plant or animal materials; agricultural equipment 
(whether hand tools or motorized equipment); pesticides, insecticides, 
or herbicides; or cosmetics (unless derived entirely from plant 
materials).

[74 FR 61034, Nov. 23, 2009, as amended at 76 FR 63196, Oct. 12, 2011]



Sec. 560.531  [Reserved]



Sec. 560.532  Payment for and financing of commercial sales of certain
agricultural commodities, medicine, and medical devices.

    (a) General license for payment terms. The following payment terms 
for sales, pursuant to Sec. 560.530(a)(1), of the excluded food items 
specified in Sec. 560.530(a)(2)(iii), agricultural commodities that do 
not fall within the definition of food set forth in Sec. 
560.530(a)(2)(ii), food (as defined in Sec. 560.530(a)(2)(ii)) intended 
for military or law enforcement purchasers or importers, medicine, or 
medical devices to the Government of Iran, to any individual or entity 
in Iran, or to persons in third countries purchasing specifically for 
resale to any of the foregoing are authorized:
    (1) Payment of cash in advance;
    (2) Sales on open account, provided that the account receivable may 
not be transferred by the person extending the credit; or
    (3) Financing by third-country financial institutions that are 
neither United States persons nor Government of Iran entities. Such 
financing may be confirmed or advised by U.S. financial institutions.
    (b) Specific licenses for alternate payment terms. Specific licenses 
may be issued on a case-by-case basis for payment terms and trade 
financing not authorized by the general license in paragraph (a) of this 
section for sales pursuant to Sec. 560.530(a)(1). See Sec. 501.801(b) 
of this chapter for specific licensing procedures.
    (c) No debits or credits to Iranian accounts on the books of U.S. 
depository institutions. Nothing in this section authorizes payment 
terms or trade financing involving debits or credits to Iranian 
accounts, as defined in Sec. 560.320.
    (d) Transfers through the U.S. financial system. Any payment 
relating to a transaction authorized in or pursuant to Sec. 560.530 or 
Sec. 560.533 that is routed through the U.S. financial system must 
reference the relevant Office of Foreign Assets Control license 
authorizing the payment to avoid the rejection of the transfer. See 
Sec. 560.516(c).
    (e) Notwithstanding any other provision of this part, no commercial 
exportation to Iran may be made with United States Government 
assistance, including United States foreign assistance, United States 
export assistance, and any United States credit or guarantees absent a 
Presidential waiver.

[74 FR 61035, Nov. 23, 2009, as amended at 76 FR 63197, Oct. 12, 2011]

[[Page 368]]



Sec. 560.533  Brokering commercial sales of agricultural commodities,
medicine, and medical devices.

    (a) General license for brokering sales by U.S. persons. United 
States persons are authorized to provide brokerage services on behalf of 
U.S. persons for the sales and exportations or reexportations by United 
States persons that are described in paragraphs (a)(1) and (a)(2) of 
Sec. 560.530, provided that the sale and exportation or reexportation 
is authorized, as applicable, by a one-year specific license issued 
pursuant to paragraph (a)(1) of Sec. 560.530 or by the general license 
set forth in paragraph (a)(2) of Sec. 560.530.
    (b) Specific licensing for brokering sales by non-U.S. persons of 
bulk agricultural commodities. Specific licenses may be issued on a 
case-by-case basis to permit United States persons to provide brokerage 
services on behalf of non-United States, non-Iranian persons for the 
sale and exportation or reexportation of bulk agricultural commodities 
to the Government of Iran, entities in Iran or individuals in Iran. 
Specific licenses issued pursuant to this section will authorize the 
brokering only of sales that:
    (1) Are limited to the bulk agricultural commodities listed in 
appendix B to this part 560;
    (2) Are to purchasers permitted pursuant to Sec. 560.530; and

    Note to Sec. 560.533(b)(2): Requests for specific licenses to 
provide brokerage services under this paragraph must include all of the 
information described in Sec. 560.530(c).

    (3) Make any performance involving the exportation or reexportation 
of any goods, technology or services (including technical data, 
software, or information) that are subject to license application 
requirements of another Federal agency contingent upon the prior 
authorization of that agency. (For example, items classified EAR 99 
under the Export Administration Regulations, 15 CFR parts 730 through 
774, may in certain instances require a license from the Department of 
Commerce, Bureau of Industry and Security. See, e.g., 15 CFR 
736.2(b)(5), 744.2 through 744.4, 744.7, and 744.10; see also 22 CFR 
123.9.)
    (c) No debits or credits to Iranian accounts on the books of U.S. 
depository institutions. Payment for any brokerage fee earned pursuant 
to this section may not involve debits or credits to Iranian accounts, 
as defined in Sec. 560.320.
    (d) Recordkeeping and reporting requirements. Attention is drawn to 
the recordkeeping, retention, and reporting requirements of Sec. Sec. 
501.601 and 501.602.

[74 FR 61035, Nov. 23, 2009, as amended at 76 FR 63197, Oct. 12, 2011]



Sec. Sec. 560.534-560.535  [Reserved]



Sec. 560.536  Humanitarian activities in and around Iraq.

    (a) A nongovernmental organization specifically licensed pursuant to 
31 CFR part 575 or otherwise authorized pursuant to 31 CFR 575.527 to 
conduct certain humanitarian activities in and around Iraq is authorized 
to conduct activities in Iran that are directly incidental and essential 
to its authorized humanitarian activities in and around Iraq, subject to 
all conditions and restrictions imposed on the organization pursuant to 
31 CFR 575.527 and the terms of its license or registration. This 
section does not authorize the actual provision of humanitarian support 
in Iran.
    (b) No exportations or re-exportations of goods or technology, 
whether U.S. or foreign origin, to Iran are permitted pursuant to this 
section, except for articles, such as food, clothing, and medicine, 
intended to be used to relieve human suffering or items intended for 
temporary use, as personal baggage, by representatives of the authorized 
nongovernmental organization, provided that:
    (1) Any such goods or technology are not of the type controlled 
under the Department of Commerce's Export Administration Regulations for 
exportation or re-exportation to Iran or controlled on the United States 
Munitions List, and
    (2) Any such personal items are either consumed by representatives 
of that organization during the visit or removed from Iran at the end of 
each visit.
    (c) This section does not authorize the shipment or transshipment of 
goods or technology, whether U.S. or

[[Page 369]]

foreign origin, from Iran to any other country, including Iraq, except 
for the shipment or transshipment to Iraq of articles, such as food, 
clothing, and medicine, intended to be used to relieve human suffering. 
Nongovernmental organizations that wish to transport other types of 
goods or technology from Iran to Iraq must apply for specific 
authorization from the Office of Foreign Assets Control pursuant to 
Sec. 501.801(b), 31 CFR chapter V.
    (d) U.S. financial institutions are authorized to engage in funds 
transfers in connection with transactions authorized pursuant to this 
section consistent with the provisions of 31 CFR 560.516.
    (e) Nongovernmental organizations conducting transactions under this 
section based on a specific license or a registration issued pursuant to 
31 CFR part 575 must reference their license or registration number on 
all payments and funds transfers and on all related documentation.

[68 FR 11742, Mar. 12, 2003]



Sec. 560.537  Authorization of certain survey or assessment missions
in Iran.

    (a) Subject to the conditions of paragraphs (b), (c), and (d) of 
this section, nongovernmental organizations are authorized to conduct 
survey or assessment missions in Iran related to the planning or 
preparation for the provision of humanitarian support to the Iraqi 
people. This section does not authorize the actual provision of such 
humanitarian support in Iran.
    (b) The authorization of paragraph (a) of this section is available 
only to the following types of nongovernmental organizations:
    (1) Nongovernmental organizations registered pursuant to 31 CFR 
575.527; or
    (2) Nongovernmental organizations that have been issued specific 
licenses under 31 CFR part 575 to carry out humanitarian activities in 
Iraq, but not including organizations that have been issued specific 
licenses solely to export goods to Iraq.
    (c) This section does not authorize nongovernmental organizations to 
open offices or to establish permanent facilities of any kind or to 
purchase any goods, services, or technology in Iran of any kind, except 
those described in paragraph (d)(3) of this section.
    (d) The authorization of this section is subject to the following 
conditions:
    (1) U.S. financial institutions are authorized to engage in funds 
transfers in connection with transactions authorized pursuant to this 
section consistent with the provisions of 31 CFR 560.516.
    (2) Nongovernmental organizations conducting transactions under this 
section based on a specific license or a registration issued pursuant to 
31 CFR part 575 must reference their license or registration number on 
all payments and funds transfers and on all related documentation.
    (3) Any funds transferred to Iran pursuant to this section may be 
used only for the purchase of services and goods necessary and essential 
to the conduct of the assessment mission and, whether U.S. or foreign 
origin, not of the type controlled under the Department of Commerce's 
Export Administration Regulations for exportation or re-exportation to 
Iran or controlled on the United States Munitions List.
    (4)(i) No exportations or re-exportations of goods or technology, 
whether U.S. or foreign origin, to Iran are permitted pursuant to this 
section, except for those items intended for temporary use, as personal 
baggage, by mission representatives, provided that such items are either 
consumed by mission representatives during the visit or removed from 
Iran at the end of each visit, and further provided that any such 
personal items are not of the type controlled under the Department of 
Commerce's Export Administration Regulations for exportation or re-
exportation to Iran or controlled on the United States Munitions List.
    (ii) Nongovernmental organizations that wish to export or re-export 
goods or technology to Iran, beyond personal baggage items described in 
paragraph (d)(4)(i) of this section, as part of a survey or assessment 
mission must apply for specific authorization from the Office of Foreign 
Assets Control pursuant to Sec. 501.801(b), 31 CFR chapter V.
    (5) Nongovernmental organizations acting under this section shall 
take adequate measures to prevent any items authorized for exportation, 
re-exportation, or local purchase from being

[[Page 370]]

obtained or acquired by the Government of Iran.

[68 FR 11743, Mar. 12, 2003]



Sec. 560.538  Authorized transactions necessary and ordinarily incident
to publishing.

    (a) To the extent that such activities are not exempt from this 
part, and subject to the restrictions set forth in paragraphs (b) 
through (d) of this section, U.S. persons are authorized to engage in 
all transactions necessary and ordinarily incident to the publishing and 
marketing of manuscripts, books, journals, and newspapers in paper or 
electronic format (collectively, ``written publications''). This section 
does not apply if the parties to the transactions described in this 
paragraph include the Government of Iran. For the purposes of this 
section, the term ``Government of Iran'' includes the state and the 
Government of Iran, as well as any political subdivision, agency, or 
instrumentality thereof, which includes the Central Bank of Islamic 
Republic of Iran, and any person acting or purporting to act directly or 
indirectly on behalf of any of the foregoing with respect to the 
transactions described in this paragraph. For the purposes of this 
section, the term ``Government of Iran'' does not include any academic 
and research institutions and their personnel. Pursuant to this section, 
the following activities are authorized, provided that U.S. persons 
ensure that they are not engaging, without separate authorization, in 
the activities identified in paragraphs (b) through (d) of this section:
    (1) Commissioning and making advance payments for identifiable 
written publications not yet in existence, to the extent consistent with 
industry practice;
    (2) Collaborating on the creation and enhancement of written 
publications;
    (3)(i) Augmenting written publications through the addition of items 
such as photographs, artwork, translation, explanatory text, and, for a 
written publication in electronic format, the addition of embedded 
software necessary for reading, browsing, navigating, or searching the 
written publication;
    (ii) Exporting embedded software necessary for reading, browsing, 
navigating, or searching a written publication in electronic format, 
provided that the software is classified as ``EAR 99'' under the Export 
Administration Regulations, 15 CFR parts 730 through 774 (the ``EAR''), 
or is not subject to the EAR;
    (4) Substantive editing of written publications;
    (5) Payment of royalties for written publications;
    (6) Creating or undertaking a marketing campaign to promote a 
written publication; and
    (7) Other transactions necessary and ordinarily incident to the 
publishing and marketing of written publications as described in this 
paragraph (a).
    (b) This section does not authorize transactions involving the 
provision of goods or services not necessary and ordinarily incident to 
the publishing and marketing of written publications as described in 
paragraph (a) of this section. For example, this section does not 
authorize U.S. persons:
    (1) To provide or receive individualized or customized services 
(including, but not limited to, accounting, legal, design, or consulting 
services), other than those necessary and ordinarily incident to the 
publishing and marketing of written publications, even though such 
individualized or customized services are delivered through the use of 
information and informational materials;
    (2) To create or undertake for any person a marketing campaign with 
respect to any service or product other than a written publication, or 
to create or undertake a marketing campaign of any kind for the benefit 
of the Government of Iran;
    (3) To engage in the exportation or importation of goods to or from 
Iran other than the exportation of embedded software described in 
paragraph (a)(3)(ii); or
    (4) To operate a publishing house, sales outlet, or other office in 
Iran.

    Note to paragraph (b): The importation from Iran and the exportation 
to Iran of information or informational materials, as defined in Sec. 
560.315, whether commercial or otherwise, regardless of format or medium 
of

[[Page 371]]

transmission, are exempt from the prohibitions and regulations of this 
part. See Sec. 560.210(c).

    (c) This section does not authorize U.S. persons to engage the 
services of publishing houses or translators in Iran unless such 
activity is primarily for the dissemination of written publications in 
Iran.
    (d) This section does not authorize:
    (1) The exportation from or importation into the United States of 
services for the development, production, or design of software;
    (2) Transactions for the development, production, design, or 
marketing of technology specifically controlled by the International 
Traffic in Arms Regulations, 22 CFR parts 120 through 130 (the 
``ITAR''), the EAR, or the Department of Energy Regulations set forth at 
10 CFR part 810.
    (3) The exportation of information or technology subject to the 
authorization requirements of 10 CFR part 810, or Restricted Data as 
defined in section 11 y. of the Atomic Energy Act of 1954, as amended, 
or of other information, data, or technology the release of which is 
controlled under the Atomic Energy Act and regulations therein;
    (4) The exportation of any item (including information) subject to 
the EAR where a U.S. person knows or has reason to know that the item 
will be used, directly or indirectly, with respect to certain nuclear, 
missile, chemical, or biological weapons or nuclear-maritime end-uses as 
set forth in part 744 of the EAR. In addition, U.S. persons are 
precluded from exporting any item subject to the EAR to certain 
restricted end-users, as set forth in part 744 of the EAR, as well as 
certain persons whose export privileges have been denied pursuant to 
parts 764 or 766 of the EAR, without authorization from the Department 
of Commerce; or
    (5) The exportation of information subject to licensing requirements 
under the ITAR or exchanges of information that are subject to 
regulation by other government agencies.

[72 FR 50051, Aug. 30, 2007]



Sec. 560.539  Official activities of certain international organizations.

    (a) General license. Except as provided in paragraph (b) of this 
section, the performance of transactions for the conduct of the official 
business of the United Nations, the World Bank, the International 
Monetary Fund, the International Atomic Energy Agency, the International 
Labor Organization or the World Health Organization in or involving Iran 
by U.S. persons who are employees or contractors thereof is hereby 
authorized. Authorized transactions include, but are not limited to:
    (1) The provision of services involving Iran necessary for carrying 
out the official business;
    (2) Purchasing Iranian-origin goods and services for use in carrying 
out the official business;
    (3) Leasing office space and securing related goods and services;
    (4) Funds transfers to or from accounts of the international 
organizations covered in this paragraph, provided that funds transfers 
to or from Iran are not routed through an account of an Iranian bank on 
the books of a U.S. financial institution; and
    (5) The operation of accounts for employees and contractors located 
in Iran who are described in this paragraph. Transactions conducted 
through these accounts must be solely for the employee's or contractor's 
personal use and not for any commercial purposes in or involving Iran. 
Any funds transfers to or from an Iranian bank must be routed through a 
third-country bank that is not a U.S. person.
    (b) Limitations. This section does not authorize:
    (1) the exportation from the United States to Iran of any goods or 
technology listed on the Commerce Control List in the Export 
Administration Regulations, 15 CFR part 774, supplement No. 1 (CCL);
    (2) the reexportation to Iran of any U.S.-origin goods or technology 
listed on the CCL; or
    (3) the exportation or reexportation from the United States or by a 
U.S. person, wherever located, to Iran of any services not necessary and 
ordinarily incident to the official business in Iran. Such transactions 
require separate authorization from OFAC.

    Note to paragraph (b): The CCL includes items such as laptops, 
personal computers, cell phones, personal digital assistants and other 
wireless handheld devices/blackberries,

[[Page 372]]

and other similar items. The exportation of these items to Iran, even on 
a temporary basis, is prohibited, unless specifically authorized in a 
license issued pursuant to this part in a manner consistent with the 
Iran-Iraq Arms Nonproliferation Act of 1992 and other relevant law.

    (c) Other requirements. The general license set forth in this 
section shall not operate to relieve any persons authorized hereunder 
from compliance with any other U.S. legal requirements applicable to the 
transactions authorized pursuant to paragraph (a) of this section.

[71 FR 48796, Aug. 22, 2006]



Sec. 560.540  Exportation of certain services and software incident to
Internet-based communications.

    (a) To the extent that such transactions are not exempt from the 
prohibitions of this part and subject to the restrictions set forth in 
paragraph (b) of this section, the following transactions are 
authorized:
    (1) The exportation from the United States or by U.S. persons, 
wherever located, to persons in Iran of services incident to the 
exchange of personal communications over the Internet, such as instant 
messaging, chat and email, social networking, sharing of photos and 
movies, web browsing, and blogging, provided that such services are 
publicly available at no cost to the user.
    (2) The exportation from the United States or by U.S. persons, 
wherever located, to persons in Iran of software necessary to enable the 
services described in paragraph (a)(1) of this section, provided that 
such software is classified as ``EAR99'' under the Export Administration 
Regulations, 15 CFR parts 730 through 774 (the ``EAR''), is not subject 
to the EAR, or is classified by the U.S. Department of Commerce 
(``Commerce'') as mass market software under export control 
classification number (``ECCN'') 5D992 of the EAR, and provided further 
that such software is publicly available at no cost to the user.
    (b) This section does not authorize:
    (1) The direct or indirect exportation of services or software with 
knowledge or reason to know that such services or software are intended 
for the Government of Iran.
    (2) The direct or indirect exportation of any goods or technology 
listed on the Commerce Control List in the EAR, 15 CFR part 774, 
supplement No. 1 (``CCL''), except for software necessary to enable the 
services described in paragraph (a)(1) of this section that is 
classified by Commerce as mass market software under ECCN 5D992 of the 
EAR.
    (3) The direct or indirect exportation of Internet connectivity 
services or telecommunications transmission facilities (such as 
satellite links or dedicated lines).
    (4) The direct or indirect exportation of web-hosting services that 
are for purposes other than personal communications (e.g., web-hosting 
services for commercial endeavors) or of domain name registration 
services.
    (c) Specific licenses may be issued on a case-by-case basis for the 
exportation of other services and software incident to the sharing of 
information over the Internet, provided the software is classified as 
``EAR99,'' not subject to the EAR, or classified by Commerce as mass 
market software under ECCN 5D992 of the EAR.

[75 FR 11000, Mar. 10, 2010]



Sec. 560.541  Third-country diplomatic and consular funds transfers.

    United States depository institutions and United States registered 
brokers or dealers in securities are authorized to process funds 
transfers, in a manner consistent with Sec. 560.516, for the operating 
expenses or other official business of third-country diplomatic or 
consular missions in Iran.

[76 FR 63199, Oct. 12, 2011]



Sec. 560.542  Importation and exportation of human remains for burial,
cremation, or interment authorized.

    (a) The importation into the United States of human remains for 
burial, cremation, or interment, as well as of coffins or other 
receptacles containing such human remains, from Iran is authorized.
    (b) The importation into the United States for non-commercial 
purposes of

[[Page 373]]

finished tombstones or grave markers of Iranian origin is authorized.
    (c) The direct or indirect exportation from the United States, or by 
a United States person, wherever located, of human remains for burial, 
cremation, or interment, as well as of coffins or other receptacles 
containing such human remains, to Iran is authorized.
    (d) This section does not authorize the importation into the United 
States of Iranian-origin cultural property or other items of 
archaeological, historical, or rare scientific importance.

    Note 1 to Sec. 560.542: United States depository institutions and 
United States registered brokers or dealers in securities may transfer 
funds in connection with transactions authorized pursuant to this 
section in a manner consistent with Sec. 560.516.

[76 FR 63199, Oct. 12, 2011]



                            Subpart F_Reports



Sec. 560.601  Records and reports.

    For provisions relating to records and reports, see subpart C of 
part 501 of this chapter.

[62 FR 45109, Aug. 25, 1997]



Sec. 560.602  [Reserved]



Sec. 560.603  Reports on oil transactions engaged in by foreign 
affiliates.

    (a) Requirement for reports. A report must be filed with the Office 
of Foreign Assets Control with respect to each foreign affiliate of a 
United States person that engaged in a reportable transaction, as 
defined in paragraph (b) of this section, during the calendar quarter. 
Reports are due within 60 days after the end of each calendar quarter.
    (b) Definitions. For purposes of this section:
    (1) The term reportable transaction means any purchase, sale, or 
swap of Iranian-origin crude oil or natural gas. For purposes of this 
paragraph (b), a purchase, sale, or swap is deemed to have occurred as 
of the date of the bill of lading used in connection with such 
transaction.
    (2) The term foreign affiliate means a person or entity other than a 
United States person (see Sec. 560.314) which is organized or located 
outside the United States and which is owned or controlled by a United 
States person or persons.
    (c) Who must report. A United States person must file a report with 
respect to each foreign affiliate owned or controlled by it which 
engaged in a reportable transaction or transactions during the calendar 
quarter. For the calendar quarter beginning October 1, 1996, and all 
subsequent quarters, a United States person must file a report only as 
to each foreign affiliate owned or controlled by it which engaged in a 
reportable transaction or transactions totaling $1,000,000 or more 
during the calendar quarter. A single United States entity within a 
consolidated or affiliated group may be designated to report on each 
foreign affiliate of the United States members of the group. Such 
centralized reporting may be done by the United States person who owns 
or controls, or has been delegated authority to file on behalf of, the 
remaining United States persons in the group.
    (d) What must be reported. (1) Part I of the report must provide the 
name, address, and principal place of business of the United States 
person; its place of incorporation or organization if an entity; and the 
name, title, and telephone number of the individual to contact 
concerning the report.
    (2) Part II of the report must provide, with respect to the foreign 
affiliate, its name and address; the type of entity, e.g, corporation, 
partnership, limited liability company; the country of its incorporation 
or organization; and its principal place of business.
    (3) Part III of the report must include the following information 
with respect to each reportable transaction (a separate Part III must be 
submitted for each reportable transaction):
    (i) The nature of the transaction, e.g., purchase, sale, swap;
    (ii) A description of the product involved;
    (iii) The name of the Iranian or third country party or parties 
involved in the transaction;
    (iv) The currency and amount of the transaction, and corresponding 
United States dollar value of the transaction if not denominated in 
United States dollars.
    (e) Where to report. Reports must be filed with the Compliance 
Programs

[[Page 374]]

Division, Office of Foreign Assets Control, Department of the Treasury, 
1500 Pennsylvania Avenue, NW--Annex, Washington, DC 20220. Reports may 
be submitted by facsimile transmission at 202/622-1657. A copy must be 
retained for the reporter's records.
    (f) Whom to contact. Blocked Assets Division, Office of Foreign 
Assets Control, Department of the Treasury, 1500 Pennsylvania Avenue, 
NW.--Annex, Washington, DC 20220; telephone: 202/622-2440.

[63 FR 62941, Nov. 10, 1998]



                           Subpart G_Penalties



Sec. 560.701  Penalties.

    (a) Attention is directed to section 206 of the International 
Emergency Economic Powers Act (the ``Act'') (50 U.S.C. 1705), which is 
applicable to violations of the provisions of any license, ruling, 
regulation, order, direction or instruction issued by or pursuant to the 
direction or authorization of the Secretary of the Treasury pursuant to 
this part or otherwise under the Act.
    (1) A civil penalty not to exceed the amount set forth in Section 
206 of the Act 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 the Act.

    Note to paragraph (a)(1) of Sec. 560.701: As of June 10, 2008, the 
Act provides for a maximum civil penalty not to exceed the greater of 
$250,000 or an amount that is twice the amount of the transaction that 
is the basis of the violation with respect to which the penalty is 
imposed.

    (2) A person who willfully commits, willfully attempts to commit, or 
willfully conspires to commit, or aids or abets in the commission of a 
violation of any license, order, regulation, or prohibition shall, upon 
conviction, be fined not more than $1,000,000, or if a natural person, 
may be imprisoned for not more than 20 years, or both.
    (b) Adjustments to penalty amounts. (1) The civil penalties provided 
in the Act 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 the Act are subject to 
adjustment pursuant to 18 U.S.C. 3571.
    (c) Attention is also directed to 18 U.S.C. 1001, which provides 
that whoever, in any matter within the jurisdiction of any department or 
agency of the United States, knowingly and willfully falsifies, conceals 
or covers up by any trick, scheme, or device a material fact, or makes 
any false, fictitious or fraudulent statement or representation or makes 
or uses any false writing or document knowing the same to contain any 
false, fictitious or fraudulent statement or entry, shall be fined under 
title 18, United States Code, or imprisoned not more than five years, or 
both.
    (d) Attention is directed to 18 U.S.C. 2332d, as added by Public Law 
104-132, section 321, which provides that, except as provided in 
regulations issued by the Secretary of the Treasury, in consultation 
with the Secretary of State, a U.S. person, knowing or having reasonable 
cause to know that a country is designated under section 6(j) of the 
Export Administration Act, 50 U.S.C. App. 2405, as a country supporting 
international terrorism, engages in a financial transaction with the 
government of that country, shall be fined under title 18, United States 
Code, or imprisoned for not more than 10 years, or both.
    (e) Violations of this part may also be subject to relevant 
provisions of the Customs laws and other applicable laws.

[60 FR 47063, Sept. 11, 1995, as amended at 61 FR 43461, Aug. 23, 1996; 
61 FR 54939, Oct. 23, 1996; 62 FR 45109, Aug. 25, 1997; 71 FR 29253, May 
22, 2006; 73 FR 32654, June 10, 2008]



Sec. 560.702  Detention of shipments.

    Import shipments into the United States of Iranian-origin goods in 
violation of Sec. 560.201 and export shipments from the United States 
of goods destined for Iran in violation of Sec. 560.202 or 560.204 
shall be detained. No such import, export, or reexport will be permitted 
to proceed, except as specifically authorized by the Secretary of the 
Treasury. Unless licensed, such shipments are subject to penalty or 
seizure and forfeiture action, under the

[[Page 375]]

Customs laws or other applicable provisions of law, depending on the 
circumstances.



Sec. 560.703  Prepenalty notice.

    (a) When required. If the Director of the Office of Foreign Assets 
Control has reasonable cause to believe that there has occurred a 
violation of any provision of this part or a violation of the provisions 
of any license, ruling, regulation, order, direction or instruction 
issued by or pursuant to the direction or authorization of the Secretary 
of the Treasury pursuant to this part or otherwise under the 
International Emergency Economic Powers Act, and the Director determines 
that further proceedings are warranted, he may issue to the person 
concerned a notice of his intent to impose a monetary penalty. The 
prepenalty notice may be issued whether or not another agency has taken 
any action with respect to this matter.
    (b) Contents--(1) Facts of violation. The prepenalty notice will 
describe the violation, specify the laws and regulations allegedly 
violated, and state the amount of the proposed monetary penalty.
    (2) Right to make presentations. The prepenalty notice also shall 
inform the person of his right to make a written presentation within 30 
days of mailing of the notice as to why a monetary penalty should not be 
imposed, or, if imposed, why it should be in a lesser amount than 
proposed.



Sec. 560.704  Presentation responding to prepenalty notice.

    (a) Time within which to respond. The named person shall have 30 
days from the date of mailing of the prepenalty notice to make a written 
presentation to the Director.
    (b) Form and contents of the written presentation. The written 
presentation need not be in any particular form, but shall contain 
information sufficient to indicate that it is in response to the 
prepenalty notice. It should contain responses to the allegations in the 
prepenalty notice and set forth the reasons why the person believes the 
penalty should not be imposed or, if imposed, why it should be in a 
lesser amount than proposed.



Sec. 560.705  Penalty notice.

    (a) No violation. If, after considering any presentations made in 
response to the prepenalty notice and any relevant facts, the Director 
determines that there was no violation by the person named in the 
prepenalty notice, he shall promptly notify the person in writing of the 
determination and that no monetary penalty will be imposed.
    (b) Violation. If, after considering any presentations made in 
response to the prepenalty notice, the Director determines that there 
was a violation by the person named in the prepenalty notice, he may 
issue a written notice of the imposition of the monetary penalty to that 
person.



Sec. 560.706  Referral for administrative collection measures or to 
United States Department of Justice.

    In the event that the person named does not pay the penalty imposed 
pursuant to this part or make payment arrangements acceptable to the 
Director within 30 days of the mailing of the written notice of the 
imposition of the penalty, the matter may be referred for administrative 
collection measures or to the United States Department of Justice for 
appropriate action to recover the penalty in a civil suit in a Federal 
district court.



                          Subpart H_Procedures



Sec. 560.801  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.

[62 FR 45109, Aug. 25, 1997, as amended at 68 FR 53659, Sept. 11, 2003]



Sec. 560.802  Delegation by the Secretary of the Treasury.

    Any action which the Secretary of the Treasury is authorized to take 
pursuant to Executive Order 12613, Executive Order 12957, Executive 
Order 12959, and any further Executive orders relating to the national 
emergency declared

[[Page 376]]

in Executive Order 12957 may be taken by the Director, Office of Foreign 
Assets Control, or by any other person to whom the Secretary of the 
Treasury has delegated authority so to act.

[60 FR 47063, Sept. 11, 1995. Redesignated at 62 FR 45109, Aug. 25, 
1997]



Sec. 560.803  Customs procedures: Goods specified in Sec. 560.201.

    (a) With respect to goods specified in Sec. 560.201, and not 
otherwise licensed or excepted from the scope of that section, 
appropriate Customs officers shall not accept or allow any:
    (1) Entry for consumption or warehouse (including any appraisement 
entry, any entry of goods imported in the mails, regardless of value, 
and any informal entries);
    (2) Entry for immediate exportation;
    (3) Entry for transportation and exportation;
    (4) Withdrawal from warehouse;
    (5) Admission, entry, transfer or withdrawal to or from a foreign 
trade zone; or
    (6) Manipulation or manufacture in a warehouse or in a foreign trade 
zone.
    (b) Customs officers may accept or allow the importation of Iranian-
origin goods under the procedures listed in paragraph (a) if:
    (1) A specific license pursuant to this part is presented; or
    (2) Instructions authorizing the transaction are received from the 
Office of Foreign Assets Control.
    (c) Whenever a specific license is presented to an appropriate 
Customs officer in accordance with this section, one additional legible 
copy of the entry, withdrawal or other appropriate document with respect 
to the merchandise involved must be filed with the appropriate Customs 
officers at the port where the transaction is to take place. Each copy 
of any such entry, withdrawal or other appropriate document, including 
the additional copy, must bear plainly on its face the number of the 
license pursuant to which it is filed. The original copy of the specific 
license must be presented to the appropriate Customs officers in respect 
of each such transaction and must bear a notation in ink by the licensee 
or person presenting the license showing the description, quantity and 
value of the merchandise to be entered, withdrawn or otherwise dealt 
with. This notation must be so placed and so written that there will 
exist no possibility of confusing it with anything placed on the license 
at the time of its issuance. If the license in fact authorizes the 
entry, withdrawal, or other transaction with regard to the merchandise, 
the appropriate Customs officer, or other authorized Customs employee, 
shall verify the notation by signing or initialing it after first 
assuring himself that it accurately describes the merchandise it 
purports to represent. The license shall thereafter be returned to the 
person presenting it and the additional copy of the entry, withdrawal or 
other appropriate document shall be forwarded by the appropriate Customs 
officer to the Office of Foreign Assets Control.
    (d) If it is unclear whether an entry, withdrawal or other action 
affected by this section requires a specific license from the Office of 
Foreign Assets Control, the appropriate Customs officer may withhold any 
action thereon and shall advise such person to communicate directly with 
the Office of Foreign Assets Control to request that instructions be 
sent to the Customs officer to authorize him to take action with regard 
thereto.

[60 FR 47063, Sept. 11, 1995. Redesignated at 62 FR 45109, Aug. 25, 
1997]



                    Subpart I_Paperwork Reduction Act



Sec. 560.901  Paperwork Reduction Act notice.

    The specific information collection requirements in Sec. 560.603 
have been approved by the Office of Management and Budget (``OMB'') 
under the Paperwork Reduction Act (44 U.S.C. 3507(j)) and assigned 
control number 1505-0106. For approval by OMB under the Paperwork 
Reduction Act of information collections relating to recordkeeping and 
reporting requirements, to licensing procedures (including those 
pursuant to statements of licensing policy), and to 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

[[Page 377]]

unless it displays a valid control number assigned by OMB.

[62 FR 45109, Aug. 25, 1997]



Sec. Appendix A to Part 560--Persons Determined To Be the Government of 
             Iran, as Defined in Sec. 560.304 of This Part

    This non-exhaustive appendix lists persons determined by the Office 
of Foreign Assets Control (``OFAC'') to be the Government of Iran, as 
defined in Sec. 560.304 of this part. The persons listed below are 
considered to be the Government of Iran not only when they operate from 
the locations listed below, but also when they operate from any other 
location. The names and addresses are subject to change. This part 560 
contains prohibitions against engaging in most transactions with persons 
that meet the definition of the Government of Iran, whether such persons 
are located or incorporated inside or outside of Iran. Moreover, 
regardless of whether a person is listed below, if the person comes 
within the definition of Government of Iran in Sec. 560.304, the 
prohibitions on engaging in transactions with the person, wherever 
located worldwide, apply to the same extent they would apply if the 
person were listed in this appendix. Note that the prohibitions in this 
part 560 also apply to most transactions with persons located in Iran 
that are not the Government of Iran.
    The names of persons listed in this appendix also are included on 
OFAC's Specially Designated Nationals and Blocked Persons List (``SDN 
List'') with the identifier ``[IRAN].'' Although there is no requirement 
to block the property and interests of property of persons listed in 
this appendix, U.S. persons are cautioned that entities identified as 
owned or controlled by the Government of Iran also may be designated or 
blocked pursuant to additional sanctions programs administered by OFAC. 
The entry for a person's name in this appendix and on the SDN List may 
include--in addition to the identifier ``[IRAN]''--identifier(s) for the 
other sanctions program(s) pursuant to which the person is listed on the 
SDN List (e.g., ``[IRAN] [NPWMD]'' or ``[IRAN] [SDGT]'').

    Notes to Appendix A to Part 560: 1. The alphabetical list below 
provides the following information concerning persons determined by OFAC 
to be the Government of Iran: The name (including known former or 
alternate names), address, the identifier ``[IRAN]'', and, if 
applicable, the identifier(s) denoting other sanctions program(s) 
pursuant to which the person is blocked.
    2. The abbreviations used in this appendix are ``a.k.a.'' (also 
known as) and ``f.k.a.'' (formerly known as).
    3. The references to sanctions programs in 31 CFR chapter V include: 
[IRAN] (Iranian Transactions Regulations, part 560); [IFSR] (Iranian 
Financial Sanctions Regulations, part 561); [ISA] (Executive Order 
13574, 76 FR 30505, May 25, 2011; Iran Sanctions Act of 1996 (Pub. L. 
104-172) (50 U.S.C. 1701 note), as amended by, inter alia, the 
Comprehensive Iran Sanctions, Accountability, and Divestment Act of 2010 
(Pub. L. 111-195)); [NPWMD] (Weapons of Mass Destruction Proliferators 
Sanctions Regulations, part 544); and [SDGT] (Global Terrorism Sanctions 
Regulations, part 594).
    4. The names of persons listed in Appendix A to part 560 are 
published in the Federal Register and included on the SDN List. The SDN 
List is accessible through the following page on OFAC's Web site: http:/
/www.treasury.gov/sdn. Additional information pertaining to the SDN List 
can be found in Appendix A to this chapter. New names of persons 
determined to be the Government of Iran and changes to existing listings 
also are published in the Federal Register.
    This document and additional information concerning OFAC are 
available from OFAC's Web site: http://www.treasury.gov/ofac. Certain 
general information pertaining to OFAC's sanctions programs also is 
available via facsimile through a 24-hour fax-on-demand service, tel.: 
202/622-0077. Please consult OFAC's Web site prior to engaging in 
transactions that may be subject to the prohibitions contained in part 
560. If you have further questions, please contact OFAC's Sanctions 
Compliance & Evaluation Division at 202/622-2490 or 800/540-6322 (toll-
free).

ASCOTEC HOLDING GMBH (f.k.a. AHWAZ STEEL COMMERCIAL & TECHNICAL SERVICE 
GMBH ASCOTEC; f.k.a. AHWAZ STEEL COMMERCIAL AND TECHNICAL SERVICE GMBH 
ASCOTEC; a.k.a. ASCOTEC GMBH), Tersteegen Strasse 10, Dusseldorf 40474, 
Germany; Registration ID HRB 26136 (Germany); all offices worldwide 
[IRAN]
ASCOTEC JAPAN K.K., 8th Floor, Shiba East Building, 2-3-9 Shiba, Minato-
ku, Tokyo 105-0014, Japan; all offices worldwide [IRAN]
ASCOTEC MINERAL & MACHINERY GMBH (a.k.a. ASCOTEC MINERAL AND MACHINERY 
GMBH; f.k.a. BREYELLER KALTBAND GMBH), Tersteegenstr. 10, Dusseldorf 
40474, Germany; Registration ID HRB 55668 (Germany); all offices 
worldwide [IRAN]
ASCOTEC SCIENCE & TECHNOLOGY GMBH (a.k.a. ASCOTEC SCIENCE AND TECHNOLOGY 
GMBH), Tersteegenstrasse 10, Dusseldorf D 40474, Germany; Registration 
ID HRB 58745 (Germany); all offices worldwide [IRAN]
ASCOTEC STEEL TRADING GMBH (a.k.a. ASCOTEC STEEL), Tersteegenstr. 10, 
Dusseldorf 40474, Germany; Georg-Glock-Str. 3,

[[Page 378]]

Dusseldorf 40474, Germany; Registration ID HRB 48319 (Germany); all 
offices worldwide [IRAN]
BANK KESHAVARZI IRAN (a.k.a. AGRICULTURAL BANK OF IRAN; a.k.a. BANK 
KESHAVARZI), PO Box 14155-6395, 129 Patrice Lumumba St, Jalal-al-Ahmad 
Expressway, Tehran 14454, Iran; all offices worldwide [IRAN]
BANK MARKAZI JOMHOURI ISLAMI IRAN (a.k.a. BANK MARKAZI IRAN; a.k.a. 
CENTRAL BANK OF IRAN; a.k.a. CENTRAL BANK OF THE ISLAMIC REPUBLIC OF 
IRAN), 213 Ferdowsi Avenue, Tehran 11365, Iran; PO Box 15875/7177, 144 
Mirdamad Blvd, Tehran, Iran [IRAN]
BANK MASKAN (a.k.a. HOUSING BANK (OF IRAN)), PO Box 11365/5699, No 247 
3rd Floor Fedowsi Ave, Cross Sarhang Sakhaei St, Tehran, Iran; all 
offices worldwide [IRAN]
BANK MELLAT, Cumhuriyet Bulvari No 88/A, PK 7103521, Konak, Izmir, 
Turkey; PO Box 375010, Amiryan Str 6, P/N-24, Yerevan, Armenia; 
PO Box 79106425, Ziya Gokalp Bulvari No 12, Kizilay, Ankara, Ankara, 
Turkey; 327 Forsat and Taleghani Avenue, Tehran 15817, Iran; Buyukdere 
Cad, Cicek Sokak No 1--1 Levent, Levent, Istanbul, Turkey; Keumkang 
Tower--13th & 14th Floor, 889-13 Daechi-Dong, Gangnam-Ku, Seoul 135-280, 
Korea, South; Head Office Bldg, 327 Taleghani Ave, Tehran 15817, Iran; 
all offices worldwide [IRAN] [NPWMD] [IFSR]
BANK MELLI IRAN (a.k.a. BANK MELLI; a.k.a. NATIONAL BANK OF IRAN), PO 
Box 2656, Liva Street, Abu Dhabi, United Arab Emirates; PO Box 459, Al 
Borj St, Sharjah, United Arab Emirates; Room 704-6, Wheelock Hse, 20 
Pedder St, Central, Hong Kong; PO Box 1894, Baniyas St, Deira, Dubai 
City, United Arab Emirates; PO Box 1894, Al Wasl Rd, Jumeirah, Dubai, 
United Arab Emirates; 43 Avenue Montaigne, Paris 75008, France; PO Box 
1888, Clock Tower, Industrial Rd, Al Ain Club Bldg, Al Ain, Abu Dhabi, 
United Arab Emirates; Postfach 112 129, Holzbruecke 2, D-20459, Hamburg, 
Germany; PO Box 2643, Ruwi, Muscat 112, Oman; Unit 1703-4, 17th Floor, 
Hong Kong Club Building, 3 A Chater Road Central, Hong Kong; PO Box 
11365-171, Ferdowsi Avenue, Tehran, Iran; Bank Melli Iran Bldg, 111 St 
24, 929 Arasat, Baghdad, Iraq; PO Box 248, Hamad Bin Abdulla St, 
Fujairah, United Arab Emirates; PO Box 5270, Oman Street Al Nakheel, Ras 
Al-Khaimah, United Arab Emirates; PO Box 3093, Ahmed Seddiqui Bldg, 
Khalid Bin El-Walid St, Bur-Dubai, Dubai City 3093, United Arab 
Emirates; Nobel Ave. 14, Baku, Azerbaijan; all offices worldwide [IRAN] 
[NPWMD] [IFSR]
BANK OF INDUSTRY AND MINE (OF IRAN) (a.k.a. BANK SANAD VA MADAN; a.k.a. 
``BIM''), No 1655, Firouzeh Building, Mahmoudiye Street, Valiasr Ave, 
Tehran, Iran; PO Box 15875-4456, Firouzeh Tower, No 1655 Vali-Asr Ave 
after Chamran Crossroads, Tehran 1965643511, Iran; all offices worldwide 
[IRAN] [NPWMD] [IFSR]
BANK REFAH KARGARAN (a.k.a. BANK REFAH; a.k.a. WORKERS' WELFARE BANK (OF 
IRAN)), No. 40 North Shiraz Street, Mollasadra Ave, Vanak Sq, Tehran 
19917, Iran; all offices worldwide [IRAN] [NPWMD] [IFSR]
BANK SADERAT IRAN (a.k.a. IRAN EXPORT BANK), PO Box 4308, 25-29 
Venizelou St, Athens, Attica GR 105 64, Greece; 1st Floor, Alrose Bldg, 
Verdun--Rashid Karame St, Beirut, Lebanon; PO Box 700, Abu Dhabi, United 
Arab Emirates; Bur Dubai, Khaled Bin Al Walid St, Dubai City, United 
Arab Emirates; Sheikh Zayed Rd, Dubai City, United Arab Emirates; PO Box 
316, Bank Saderat Bldg, Alaroda St, Borj Ave, Sharjah, United Arab 
Emirates; 16 rue de la Paix, Paris 75002, France; Alghobeiri Branch--
Aljawhara Bldg, Ghobeiry Blvd, Beirut, Lebanon; PO Box 4425, Salwa Rd, 
Doha, Qatar; PO Box 1140, Al-Am Road, Al-Ein, Al Ain, Abu Dhabi, United 
Arab Emirates; Postfach 112227, Deichstrasse 11, 20459, Hamburg, 
Germany; PO Box 5126, Beirut, Lebanon; PO Box 1269, Muscat 112, Oman; PO 
Box 4182, Murshid Bazar Branch, Dubai City, United Arab Emirates; 5 
Lothbury, London EC2R 7HD, United Kingdom; Postfach 160151, Friedenstr 
4, D-60311, Frankfurt am Main, Germany; 3rd Floor, Aliktisad Bldg, Ras 
El Ein Street Baalbak, Baalbak, Lebanon; Saida Branch, Sida Riad Elsoleh 
St, Martyrs Sq, Saida, Lebanon; Borj Albarajneh Branch--20 Alholom Bldg, 
Sahat Mreijeh, Kafaat St, Beirut, Lebanon; PO Box 16, Liwara Street, 
Ajman, United Arab Emirates; Ground Floor Business Room, Building Banke 
Khoon Road, Harat, Afghanistan; No. 56, Opposite of Security Department, 
Toraboz Khan Str., Kabul, Afghanistan; 3rd Floor, Mteco Centre, Mar 
Elias, Facing Al Hellow Barrak, POB 5126, Beirut, Lebanon; 2nd Floor, No 
181 Makhtoomgholi Ave, Ashgabat, Turkmenistan; PO Box 4182, Almaktoum 
Rd, Dubai City, United Arab Emirates; PO Box 15745-631, Bank Saderat 
Tower, 43 Somayeh Avenue, Tehran, Iran; PO Box 2256, Doha, Qatar; all 
offices worldwide [SDGT] [IRAN] [IFSR]
BANK SADERAT PLC (f.k.a. IRAN OVERSEAS INVESTMENT BANK LIMITED; f.k.a. 
IRAN OVERSEAS INVESTMENT BANK PLC; f.k.a. IRAN OVERSEAS INVESTMENT 
CORPORATION LIMITED), 5 Lothbury, London EC2R 7HD, United Kingdom; PO 
Box 15175/584, 6th Floor, Sadaf Bldg, 1137 Vali Asr Ave, Tehran 15119-
43885, Iran; UK Company Number 01126618 (United Kingdom); all offices 
worldwide [SDGT] [IRAN] [IFSR]
BANK SEPAH, Imam Khomeini Square, Tehran 1136953412, Iran; Hafenstrasse 
54, D-

[[Page 379]]

60327, Frankfurt am Main, Germany; 64 Rue de Miromesnil, Paris 75008, 
France; Via Barberini 50, Rome, RM 00187, Italy; 17 Place Vendome, Paris 
75008, France; all offices worldwide [IRAN] [NPWMD] [IFSR]
BANK TEJARAT, PO Box 734001, Rudaki Ave 88, Dushanbe 734001, Tajikistan; 
c/o Persia International Bank, 6 Lothbury, London EC2R 7HH, United 
Kingdom; c/o Europaisch-Iranische Handelsbank AG, Depenau 2, D-20095, 
Hamburg, Germany; PO Box 119871, 4th Floor, c/o Persia International 
Bank PLC, The Gate Bldg, Dubai City, United Arab Emirates; PO Box 11365-
5416, 152 Taleghani Avenue, Tehran 15994, Iran; 124-126 Rue de Provence, 
Angle 76 bd Haussman, Paris 75008, France; 130, Zandi Alley, Taleghani 
Avenue, No 152, Ostad Nejat Ollahi Cross, Tehran 14567, Iran; Office 
C208, Beijing Lufthansa Center No 50, Liangmaqiao Rd, Chaoyang District, 
Beijing 100016, China; all offices worldwide [IRAN]
BANK TORGOVOY KAPITAL ZAO (a.k.a. TC BANK; a.k.a. TK BANK; a.k.a. TK 
BANK ZAO; a.k.a. TORGOVY KAPITAL (TK BANK); a.k.a. TRADE CAPITAL BANK; 
a.k.a. TRADE CAPITAL BANK (TC BANK); a.k.a. ZAO BANK TORGOVY KAPITAL), 3 
Kozlova Street, Minsk 220005, Belarus; Registration ID 30 (Belarus); all 
offices worldwide [IRAN]
BIMEH IRAN INSURANCE COMPANY (U.K.) LIMITED (a.k.a. BIUK), \4/5\ 
Fenchurch Buildings, London EC3M 5HN, United Kingdom; UK Company Number 
01223433 (United Kingdom); all offices worldwide [IRAN]
BREYELLER STAHL TECHNOLOGY GMBH & CO. KG (a.k.a. BREYELLER STAHL 
TECHNOLOGY GMBH AND CO. KG; f.k.a. ROETZEL-STAHL GMBH & CO. KG; f.k.a. 
ROETZEL-STAHL GMBH AND CO. KG), Josefstrasse 82, Nettetal 41334, 
Germany; Registration ID HRA 4528 (Germany); all offices worldwide 
[IRAN]
EUROPAISCH-IRANISCHE HANDELSBANK AG (f.k.a. DEUTSCH-IRANISCHE 
HANDELSBANK AG; a.k.a. EUROPAEISCH-IRANISCHE HANDELSBANK; a.k.a. 
EUROPAESCH-IRANISCHE HANDELSBANK AKTIENGESELLSCHAFT; a.k.a. GERMAN-
IRANIAN TRADE BANK), Tehran Branch, No. 1655/1, Valiasr Avenue, PO Box 
19656 43 511, Tehran, Iran; Kish Branch, Sanaee Avenue, PO Box 79415/
148, Kish Island 79415, Iran; Hamburg Head Office, Depenau 2, D-20095 
Hamburg, P.O. Box 101304, D-20008 Hamburg, Hamburg, Germany; all offices 
worldwide [IRAN] [NPWMD] [IFSR]
EXPORT DEVELOPMENT BANK OF IRAN (a.k.a. BANK TOSEH SADERAT IRAN; a.k.a. 
BANK TOWSEEH SADERAT IRAN; a.k.a. BANK TOWSEH SADERAT IRAN; a.k.a. 
EDBI), No. 129, 21's Khaled Eslamboli, No. 1 Building, Tehran, Iran; 
Export Development Building, Next to the 15th Alley, Bokharest Street, 
Argentina Square, Tehran, Iran; No. 26, Tosee Tower, Arzhantine Square, 
P.O. Box 15875-5964, Tehran 15139, Iran; No. 4, Gandi Ave., Tehran 
1516747913, Iran; Tose'e Tower, Corner of 15th St., Ahmed Qasir Ave., 
Argentine Square, Tehran, Iran; Registration ID 86936 (Iran) issued 10 
Jul 1991; all offices worldwide [IRAN] [NPWMD] [IFSR]
IFIC HOLDING AG (a.k.a. IHAG), Koenigsallee 60 D, Dusseldorf 40212, 
Germany; Registration ID HRB 48032 (Germany); all offices worldwide 
[IRAN]
IHAG TRADING GMBH, Koenigsallee 60 D, Dusseldorf 40212, Germany; 
Registration ID HRB 37918 (Germany); all offices worldwide [IRAN]
INDUSTRIAL DEVELOPMENT AND RENOVATION ORGANIZATION OF IRAN (a.k.a. IDRO; 
a.k.a. IRAN DEVELOPMENT & RENOVATION ORGANIZATION COMPANY; a.k.a. IRAN 
DEVELOPMENT AND RENOVATION ORGANIZATION COMPANY; a.k.a. SAWZEMANE 
GOSTARESH VA NOWSAZI SANAYE IRAN), Vali Asr Building, Jam e Jam Street, 
Vali Asr Avenue, Tehran 15815-3377, Iran; all offices worldwide [IRAN]
INTRA CHEM TRADING GMBH (a.k.a. INTRA-CHEM TRADING CO. (GMBH)), 
Schottweg 3, Hamburg 22087, Germany; Registration ID HRB48416 (Germany); 
all offices worldwide [IRAN]
IRAN FOREIGN INVESTMENT COMPANY (a.k.a. IFIC), No. 4, Saba Blvd., Africa 
Blvd., Tehran 19177, Iran; P.O. Box 19395-6947, Tehran, Iran; all 
offices worldwide [IRAN]
IRAN INSURANCE COMPANY (a.k.a. BIMEH IRAN), P.O. Box 1867, Al Ain, Abu 
Dhabi, United Arab Emirates; P.O. Box 3281, Abu Dhabi, United Arab 
Emirates; P.O. Box 849, Ras-Al-Khaimah, United Arab Emirates; P.O. Box 
417, Muscat 113, Oman; Al Alia Center, Salaheddine Rd., Al Malaz, P.O. 
Box 21944, Riyadh 11485, Saudi Arabia; Al-Lami Center, Ali-Bin-Abi Taleb 
St. Sharafia, P.O. Box 11210, Jeddah 21453, Saudi Arabia; Abdolaziz-Al-
Masaeed Building, Sheikh Maktoom St., Deira, P.O. Box 2004, Dubai, 
United Arab Emirates; 107 Dr Fatemi Avenue, Tehran 14155/6363, Iran; 
P.O. Box 995, Manama, Bahrain; P.O. Box 1666, Sharjah, United Arab 
Emirates; P.O. Box 676, Salalah 211, Oman; Al Rajhi Bldg., 3rd Floor, 
Suite 23, Dhahran St., P.O. Box 1305, Dammam 31431, Saudi Arabia; all 
offices worldwide [IRAN]
IRAN PETROCHEMICAL COMMERCIAL COMPANY (a.k.a. PETROCHEMICAL COMMERCIAL 
COMPANY; a.k.a. SHERKATE BASARGANI PETROCHEMIE (SAHAMI KHASS); a.k.a. 
SHERKATE BAZARGANI PETRCHEMIE; a.k.a. ``IPCC''; a.k.a. ``PCC''), Topcu 
Ibrahim Sokak No: 13 D: 7 Icerenkoy-Kadikoy, Istanbul, Turkey; No. 1014, 
Doosan We've

[[Page 380]]

Pavilion, 58, Soosong-Dong, Jongno-Gu, Seoul, Korea, South; 99-A, Maker 
Tower F, 9th Floor, Cuffe Parade, Colabe, Mumbai 400 005, India; No. 
1339, Vali Nejad Alley, Vali-e-Asr St., Vanak Sq., Tehran, Iran; Office 
No. 707, No. 10, Chao Waidajie, Chao Tang District, Beijing 100020, 
China; INONU CAD. SUMER Sok., Zitas Bloklari C.2 Bloc D.H, Kozyatagi, 
Kadikoy, Istanbul, Turkey; all offices worldwide [IRAN]
IRANIAN MINES AND MINING INDUSTRIES DEVELOPMENT AND RENOVATION 
ORGANIZATION (a.k.a. IMIDRO; a.k.a. IRAN MINING INDUSTRIES DEVELOPMENT 
AND RENOVATION ORGANIZATION; a.k.a. IRANIAN MINES AND MINERAL INDUSTRIES 
DEVELOPMENT AND RENOVATION), No. 39, Sepahbod Gharani Avenue, Ferdousi 
Square, Tehran, Iran; all offices worldwide [IRAN]
IRANIAN OIL COMPANY (U.K.) LIMITED (a.k.a. IOC UK LTD), Riverside House, 
Riverside Drive, Aberdeen AB11 7LH, United Kingdom; UK Company Number 
01019769 (United Kingdom); all offices worldwide [IRAN]
IRASCO S.R.L. (a.k.a. IRASCO ITALY), Via Di Francia 3, Genoa 16149, 
Italy; Registration ID GE 348075 (Italy); all offices worldwide [IRAN]
KALA LIMITED (a.k.a. KALA NAFT LONDON LTD), NIOC House, 4 Victoria 
Street, Westminster, London SW1H 0NE, United Kingdom; UK Company Number 
01517853 (United Kingdom); all offices worldwide [IRAN]
KALA PENSION TRUST LIMITED, C/O Kala Limited, N.I.O.C. House, 4 Victoria 
Street, London SW1H 0NE, United Kingdom; UK Company Number 01573317 
(United Kingdom); all offices worldwide [IRAN]
MACHINE SAZI ARAK CO. LTD. (a.k.a. MACHINE SAZI ARAK COMPANY P J S C; 
a.k.a. MACHINE SAZI ARAK SSA; a.k.a. MASHIN SAZI ARAK; a.k.a. ``MSA''), 
P.O. Box 148, Arak 351138, Iran; Arak, Km 4 Tehran Road, Arak, Markazi 
Province, Iran; No. 1, Northern Kargar Street, Tehran 14136, Iran; all 
offices worldwide [IRAN]
MAHAB GHODSS CONSULTING ENGINEERING COMPANY (a.k.a. MAHAB GHODSS 
CONSULTING ENGINEERING CO.; a.k.a. MAHAB GHODSS CONSULTING ENGINEERS 
SSK; a.k.a. MAHAB QODS ENGINEERING CONSULTING CO.), 16 Takharestan 
Alley, Dastgerdy Avenue, P.O. Box 19395-6875, Tehran 19187 81185, Iran; 
No. 17, Dastgerdy Avenue, Takharestan Alley, 19395-6875, Tehran 
1918781185, Iran; Registration ID 48962 (Iran) issued 1983; all offices 
worldwide [IRAN]
METAL & MINERAL TRADE S.A.R.L. (a.k.a. METAL & MINERAL TRADE (MMT); 
a.k.a. METAL AND MINERAL TRADE (MMT); a.k.a. METAL AND MINERAL TRADE 
S.A.R.L.; a.k.a. MMT LUXEMBURG; a.k.a. MMT SARL), 11b, Boulevard Joseph 
II L-1840, Luxembourg; Registration ID B 59411 (Luxembourg); all offices 
worldwide [IRAN]
MINES AND METALS ENGINEERING GMBH (M.M.E.), Georg-Glock-Str. 3, 
Dusseldorf 40474, Germany; Registration ID HRB 34095 (Germany); all 
offices worldwide [IRAN]
MSP KALA NAFT CO. TEHRAN (a.k.a. KALA NAFT CO SSK; a.k.a. KALA NAFT 
COMPANY LTD; a.k.a. KALA NAFT TEHRAN; a.k.a. KALA NAFT TEHRAN COMPANY; 
a.k.a. KALAYEH NAFT CO; a.k.a. M.S.P.-KALA; a.k.a. MANUFACTURING SUPPORT 
& PROCUREMENT CO.-KALA NAFT; a.k.a. MANUFACTURING SUPPORT AND 
PROCUREMENT (M.S.P.) KALA NAFT CO. TEHRAN; a.k.a. MANUFACTURING, SUPPORT 
AND PROCUREMENT KALA NAFT COMPANY; a.k.a. MSP KALA NAFT TEHRAN COMPANY; 
a.k.a. MSP KALANAFT; a.k.a. MSP-KALANAFT COMPANY; a.k.a. SHERKAT SAHAMI 
KHASS KALA NAFT; a.k.a. SHERKAT SAHAMI KHASS POSHTIBANI VA TEHIYEH 
KALAYE NAFT TEHRAN; a.k.a. SHERKATE POSHTIBANI SAKHT VA TAHEIH KALAIE 
NAFTE TEHRAN), Head Office Tehran, Sepahbod Gharani Ave., P.O. Box 
15815/1775 15815/3446, Tehran, Iran; Chekhov St., 24.2, AP 57, Moscow, 
Russia; Sanaee Ave., P.O. Box 79417-76349, N.I.O.C., Kish, Iran; 10th 
Floor, Sadaf Tower, Kish Island, Iran; 242 Sepahbod Gharani Street, 
Karim Khan Zand Bridge, Corner Kalantari Street, 8th Floor, P.O. Box 
15815-1775/15815-3446, Tehran 15988, Iran; Building No. 226, Corner of 
Shahid Kalantari Street, Sepahbod Gharani Avenue, Karimkhan Avenue, 
Tehran 1598844815, Iran; No. 242, Shahid Kalantari St., Near Karimkhan 
Bridge, Sepahbod Gharani Avenue, Tehran, Iran; 333 7th Ave SW 
1102, Calgary, AB T2P 2Z1, Canada; Room No. 704--No. 10 Chao 
Waidajie Chao Yang District, Beijing 10020, China; P.O. Box 2965, 
Sharjah, United Arab Emirates; all offices worldwide [IRAN]
NAFTIRAN INTERTRADE CO. (NICO) LIMITED (a.k.a. NAFT IRAN INTERTRADE 
COMPANY LTD; a.k.a. NAFTIRAN INTERTRADE COMPANY (NICO); a.k.a. NAFTIRAN 
INTERTRADE COMPANY LTD; a.k.a. NICO), Petro Pars Building, Saadat Abad 
Ave, No. 35, Farhang Blvd, Tehran, Iran; 41, 1st Floor, International 
House, The Parade, St Helier JE2 3QQ, Jersey; all offices worldwide 
[IRAN]
NAFTIRAN INTERTRADE CO. (NICO) SARL (a.k.a. NICO), 6, Avenue de la Tour-
Haldimand, Pully, VD 1009, Switzerland; all offices worldwide [IRAN]

[[Page 381]]

NAFTIRAN TRADING SERVICES CO. (NTS) LIMITED, 47 Queen Anne Street, 
London W1G 9JG, United Kingdom; 6th Floor NIOC Ho, 4 Victoria St, London 
SW1H 0NE, United Kingdom; UK Company Number 02600121 (United Kingdom); 
all offices worldwide [IRAN]
NATIONAL IRANIAN OIL COMPANY (a.k.a. NIOC), Hafez Crossing, Taleghani 
Avenue, P.O. Box 1863 and 2501, Tehran, Iran; all offices worldwide 
[IRAN]
NATIONAL IRANIAN OIL COMPANY PTE LTD, 7 Temasek Boulevard 07-
02, Suntec Tower One 038987, Singapore; Registration ID 199004388C 
(Singapore); all offices worldwide [IRAN]
NATIONAL PETROCHEMICAL COMPANY (a.k.a. ``NPC''), No. 104, North Sheikh 
Bahaei Blvd., Molla Sadra Ave., Tehran, Iran; all offices worldwide 
[IRAN]
NICO ENGINEERING LIMITED, 41, 1st Floor, International House, The 
Parade, St. Helier JE2 3QQ, Jersey; Registration ID 75797 (Jersey); all 
offices worldwide [IRAN]
NIOC INTERNATIONAL AFFAIRS (LONDON) LIMITED, NIOC House, 4 Victoria 
Street, London SW1H ONE, United Kingdom; UK Company Number 02772297 
(United Kingdom); all offices worldwide [IRAN]
NPC INTERNATIONAL LIMITED (a.k.a. N P C INTERNATIONAL LTD; a.k.a. NPC 
INTERNATIONAL COMPANY), 5th Floor NIOC House, 4 Victoria Street, London 
SW1H ONE, United Kingdom; UK Company Number 02696754 (United Kingdom); 
all offices worldwide [IRAN]
ONERBANK ZAO (a.k.a. EFTEKHAR BANK; a.k.a. HONOR BANK; a.k.a. HONORBANK; 
a.k.a. HONORBANK ZAO; a.k.a. ONER BANK; a.k.a. ONERBANK; a.k.a. ONER-
BANK), Ulitsa Klary Tsetkin 51, Minsk 220004, Belarus; Registration ID 
807000227 (Belarus) issued 16 Oct 2009; SWIFT/BIC HNRBBY2X (Belarus); 
all offices worldwide [IRAN]
P.C.C. (SINGAPORE) PRIVATE LIMITED (a.k.a. P.C.C. SINGAPORE BRANCH; 
a.k.a. PCC SINGAPORE PTE LTD), 78 Shenton Way, 08-02 079120, 
Singapore; 78 Shenton Way, 26-02A Lippo Centre 079120, Singapore; 
Registration ID 199708410K (Singapore); all offices worldwide [IRAN]
PARS OIL AND GAS COMPANY (a.k.a. POGC), No. 1 Parvin Etesami Street, 
Fatemi Avenue, Tehran, Iran; No. 133, Side of Parvin Etesami Alley, 
opposite Sazman Ab--Dr. Fatemi Avenue, Tehran, Iran [IRAN]
PETROCHEMICAL COMMERCIAL COMPANY (U.K.) LIMITED (a.k.a. PCC (UK); a.k.a. 
PCC UK; a.k.a. PCC UK LTD), 4 Victoria Street, London SW1H ONE, United 
Kingdom; UK Company Number 02647333 (United Kingdom); all offices 
worldwide [IRAN]
PETROCHEMICAL COMMERCIAL COMPANY FZE (a.k.a. PCC FZE), 1703, 17th Floor, 
Dubai World Trade Center Tower, Sheikh Zayed Road, Dubai, United Arab 
Emirates; Office No. 99-A, Maker Tower ``F'' 9th Floor Cutte Pavade, 
Colabe, Bumbai 700005, India; all offices worldwide [IRAN]
PETROCHEMICAL COMMERCIAL COMPANY INTERNATIONAL (a.k.a. PETROCHEMICAL 
COMMERCIAL COMPANY INTERNATIONAL LIMITED; a.k.a. PETROCHEMICAL 
COMMERCIAL COMPANY INTERNATIONAL LTD; a.k.a. PETROCHEMICAL TRADING 
COMPANY LIMITED; a.k.a. ``PCCI''), P.O. Box 261539, Jebel Ali, Dubai, 
United Arab Emirates; 41, 1st Floor, International House, The Parade, 
St. Helier JE2 3QQ, Jersey; Ave. 54, Yimpash Business Center, No. 506, 
507, Ashkhabad 744036, Turkmenistan; No. 21 End of 9th St, Gandi Ave, 
Tehran, Iran; 21, Africa Boulevard, Tehran, Iran; Registration ID 77283 
(Jersey); all offices worldwide [ISA] [IRAN]
PETROIRAN DEVELOPMENT COMPANY (PEDCO) LIMITED (a.k.a. PETRO IRAN 
DEVELOPMENT COMPANY; a.k.a. ``PEDCO''), 41, 1st Floor, International 
House, The Parade, St. Helier JE2 3QQ, Jersey; No. 102, Next to Shahid 
Amir Soheil Tabrizian Alley, Shahid Dastgerdi (Ex Zafar) Street, 
Shariati Street, Tehran 19199/45111, Iran; Kish Harbour, Bazargan Ferdos 
Warehouses, Kish Island, Iran; No. 22, 7th Lane, Khalid Eslamboli 
Street, Shahid Beheshti Avenue, Tehran, Iran; National Iranian Oil 
Company--PEDCO, P.O. Box 2965, Al Bathaa Tower, 9th Floor, Apt. 905, Al 
Buhaira Corniche, Sharjah, United Arab Emirates; P.O. Box 15875-6731, 
Tehran, Iran; Registration ID 67493 (Jersey); all offices worldwide 
[IRAN]
PETROPARS INTERNATIONAL FZE (a.k.a. PPI FZE), P.O. Box 72146, Dubai, 
United Arab Emirates; all offices worldwide [IRAN]
PETROPARS LTD. (a.k.a. PETROPARS LIMITED; a.k.a. ``PPL''), No. 35, 
Farhang Blvd., Saadat Abad, Tehran, Iran; Calle La Guairita, Centro 
Profesional Eurobuilding, Piso 8, Oficina 8E, Chuao, Caracas 1060, 
Venezuela; P.O. Box 3136, Road Town, Tortola, Virgin Islands, British; 
all offices worldwide [IRAN]
PETROPARS UK LIMITED, 47 Queen Anne Street, London W1G 9JG, United 
Kingdom; UK Company Number 03503060 (United Kingdom); all offices 
worldwide [IRAN]
SINA BANK (f.k.a. BFCC; f.k.a. BONYAD FINANCE AND CREDIT COMPANY; f.k.a. 
SINA FINANCE AND CREDIT COMPANY), 187 Motahhari Avenue, P.O. Box 
1587998411, Tehran, Iran; Kish Financial Center, Sahel, Kish Island, 
Iran; SWIFT/BIC SINAIRTH418 (Iran); alt. SWIFT/BIC SINAIRTH (Iran); all 
offices worldwide [IRAN]

[[Page 382]]

WEST SUN TRADE GMBH (a.k.a. WEST SUN TRADE), Mundsburger Damm 16, 
Hamburg 22087, Germany; Arak Machine Mfg. Bldg., 2nd Floor, opp. of 
College Economy, Northern Kargar Ave., Tehran 14136, Iran; Winterhuder 
Weg 8, Hamburg 22085, Germany; Registration ID HRB 45757 (Germany); all 
offices worldwide [IRAN]

[76 FR 38538, June 30, 2011, as amended at 76 FR 63197, Oct. 12, 2011]



       Sec. Appendix B to Part 560--Bulk Agricultural Commodities

    Notes: 1. Appendix B sets forth bulk agricultural commodities 
eligible for sale pursuant to the licensing procedures and the general 
license in Sec. 560.530.
    2. Commodities are identified by their classification numbers in the 
Harmonized Tariff Schedule of the United States (see 19 U.S.C. 1202) 
(``HTS'').

------------------------------------------------------------------------
     HTS Number                            Commodity
------------------------------------------------------------------------
1001.10               Durum Wheat
1001.90               Other Wheat and Meslin, including seed, Red Spring
                       Wheat, White Winter Wheat, ``Canadian'' Western
                       Red Winter Wheat, Soft White Spring Wheat, and
                       Wheat not elsewhere specified
1101.00               Wheat or Meslin Flour
1006.10               Rice in the husk (paddy or rough)
1006.20               Husked (brown) Rice
1006.30               Semi-milled or wholly milled Rice, whether or not
                       polished or glazed
1006.40               Broken Rice
1102.30               Rice Flour
1103.14               Rice Groats, Meal and Pellets
1002.00               Rye
1003.00               Barley
1004.00               Oats
1007.00               Grain Sorghum
1005.00               Corn (Maize)
0713.31               Dried Beans including Vigna mungo (L.), Hepper,
                       and Vigna radiata (L.) Wilczek
0713.32               Small red (adzuki) beans
0713.33               Kidney beans, including white pea beans
0713.39               Beans, other
0713.50               Broad beans and horse beans
0713.10               Dried Peas (Pisum sativum)
0713.20               Chickpeas (garbanzos)
0713.40               Lentils
0713.90               Dried leguminous vegetables, shelled, not
                       elsewhere specified
1201.00               Soybeans, whether or not broken
2304.00               Soybean cake, meal and pellets
1507.10               Soybean oil, crude
1507.90               Soybean oil, other
1514.10               Rapeseed, colza and mustard oil, crude
1514.90               Rapeseed, colza and mustard oil, other
1515.21               Corn (Maize) oil, crude
1515.29               Corn (Maize) oil, other
1512.21               Cottonseed oil, crude
1512.29               Cottonseed oil, other
1517.90               Cottonseed oil, hydrogenated
1508.10               Peanut (ground-nut) oil, crude
1508.90               Peanut (ground-nut) oil, other
1515.50               Sesame oil
1512.11               Sunflower-seed oil, crude
1512.19               Sunflower-seed oil, other
1212.91               Sugar Beets, fresh, chilled, frozen or dried
1212.92               Sugar Cane, fresh, chilled, frozen or dried
1701.11               Cane Sugar, raw, solid form
1701.12               Beet Sugar, raw, solid form
1701.91               Cane or Beet Sugar, solid form, containing added
                       coloring or flavoring
1701.99               Cane or Beet Sugar, other, not elsewhere specified
------------------------------------------------------------------------


[64 FR 41793, Aug. 2, 1999]



        Sec. Appendix C to Part 560--Eligible Procurement Bodies

    This appendix C sets forth eligible procurement bodies of the 
Government of Iran identified by the Office of Foreign Assets Control as 
not being affiliated with the coercive organs of the state. See Sec. 
560.531(e).
    Government Trading Corporation (a.k.a. GTC).
    State Livestock and Logistics Co. (a.k.a. State Livestock Affairs 
Logistics; a.k.a. SLAL).

[64 FR 58792, Nov. 1, 1999]



PART 561_IRANIAN FINANCIAL SANCTIONS REGULATIONS--Table of Contents



      Subpart A_Relation of This Part to Other Laws and Regulations

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

                         Subpart B_Prohibitions

561.201 CISADA-based sanctions on certain foreign financial 
          institutions.
561.202 Prohibitions on persons owned or controlled by U.S. financial 
          institutions.
561.203 NDAA-based sanctions on certain foreign financial institutions.

                      Subpart C_General Definitions

561.301 Effective date.
561.302 UNSC Resolution 1737.
561.303 UNSC Resolution 1747.
561.304 UNSC Resolution 1803.
561.305 UNSC Resolution 1929.
561.306 Correspondent account.
561.307 Payable-through account.
561.308 Foreign financial institution.
561.309 U.S. financial institution.
561.310 Money laundering.
561.311 Agent.
561.312 Act of international terrorism.
561.313 Financial services.
561.314 Knowingly.
561.315 Person.
561.316 Entity.
561.317 Money service businesses.
561.318 Petroleum.

[[Page 383]]

561.319 Petroleum products.
561.320 Iranian financial institution.
561.321 Government of Iran.
561.322 Entity owned or controlled by the Government of Iran.
561.323 Foreign financial institution owned or controlled by the 
          government of a foreign country.
561.324 Designated Iranian financial institution.
561.325 Financial transaction.
561.326 Privately owned foreign financial institution.
561.327 Food, medicine, and medical devices.

                        Subpart D_Interpretations

561.401 Reference to amended sections.
561.402 Effect of amendment.
561.403 Facilitation of certain efforts, activities, or transactions by 
          foreign financial institutions.
561.404 Significant transaction or transactions; significant financial 
          services; significant financial transaction.
561.405 Entities owned by a person whose property and interests in 
          property are blocked.
561.406 Country with primary jurisdiction over the foreign financial 
          institution.
561.407 Conducting or facilitating a financial transaction with the 
          Central Bank of Iran or a designated Iranian financial 
          institution.

 Subpart E_Licenses, Authorizations, and Statements of Licensing Policy

561.501 General and specific licensing procedures.
561.502 Effect of license or authorization.
561.503 Exclusion from licenses.
561.504 Transactions related to closing a correspondent account or 
          payable-through account.

                            Subpart F_Reports

561.601 Records and reports.

                           Subpart G_Penalties

561.701 Penalties.
561.702 Pre-Penalty Notice; settlement.
561.703 Penalty imposition.
561.704 Administrative collection; referral to United States Department 
          of Justice.

                          Subpart H_Procedures

561.801 Procedures.
561.802 Delegation by the Secretary of the Treasury.
561.803 Consultations.

                    Subpart I_Paperwork Reduction Act

561.901 Paperwork Reduction Act notice.

    Authority: 3 U.S.C. 301; 31 U.S.C. 321(b); 50 U.S.C. 1601-1651, 
1701-1706; Pub. L. 101-410, 104 Stat. 890 (28 U.S.C. 2461 note); Pub. L. 
110-96, 121 Stat. 1011 (50 U.S.C. 1705 note); Pub. L. 111-195, 124 Stat. 
1312 (22 U.S.C. 8501-8551); Pub. L. 112-81, 125 Stat. 1298; E.O. 12957, 
60 FR 14615, 3 CFR, 1995 Comp., p. 332; E.O. 13553, 75 FR 60567, 3 CFR, 
2010 Comp., p. 253; E.O. 13599, 77 FR 6659, February 8, 2012.

    Source: 77 FR 11726, Feb. 27, 2012, unless otherwise noted.



      Subpart A_Relation of This Part to Other Laws and Regulations



Sec. 561.101  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 or the conditions imposed pursuant to 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. 561.201  CISADA-based sanctions on certain foreign financial
institutions.

    Upon a finding by the Secretary of the Treasury that a foreign 
financial institution knowingly engages in one or more of the activities 
described in paragraphs (a)(1) through (5) of this section, consistent 
with the Secretary of the Treasury's authorities under the

[[Page 384]]

Comprehensive Iran Sanctions, Accountability, and Divestment Act of 2010 
(Pub. L. 111-195) (22 U.S.C. 8501-8551) (``CISADA''), either the 
Secretary of the Treasury will impose one or more strict conditions, as 
set forth in paragraph (b) of this section, on the opening or 
maintaining of a correspondent account or a payable-through account in 
the United States for that foreign financial institution, or, as set 
forth in paragraph (c) of this section, the Secretary of the Treasury 
will prohibit a U.S. financial institution from opening or maintaining a 
correspondent account or a payable-through account in the United States 
for that foreign financial institution. The name of the foreign 
financial institution and the relevant prohibition or strict 
condition(s) will be added to the List of Foreign Financial Institutions 
Subject to Part 561 (the ``Part 561 List'') on the Office of Foreign 
Assets Control's Web site (www.treasury.gov/ofac) on the Iran Sanctions 
page and published in the Federal Register.
    (a) A foreign financial institution engages in an activity described 
in this paragraph if, in any location or currency, the foreign financial 
institution knowingly:
    (1) Facilitates the efforts of the Government of Iran (including 
efforts of Iran's Islamic Revolutionary Guard Corps or any of its agents 
or affiliates)--
    (i) To acquire or develop weapons of mass destruction or delivery 
systems for weapons of mass destruction; or
    (ii) To provide support for organizations designated as foreign 
terrorist organizations under section 219(a) of the Immigration and 
Nationality Act (8 U.S.C. 1189(a)) or support for acts of international 
terrorism, as defined in Sec. 561.312 of this part;
    (2) Facilitates the activities of a person subject to financial 
sanctions pursuant to United Nations Security Council Resolutions 1737, 
1747, 1803, or 1929, or any other resolution adopted by the Security 
Council that imposes sanctions with respect to Iran;

    Note to paragraph (a)(2) of Sec. 561.201: Persons subject to 
financial sanctions pursuant to the United Nations Security Council 
resolutions listed in Sec. 561.201(a)(2) include individuals and 
entities listed in the Annex to UNSC Resolution 1737, Annex I of UNSC 
Resolution 1747, Annexes I and III of UNSC Resolution 1803, and Annexes 
I, II, and III of UNSC Resolution 1929; and individuals and entities 
designated by the Security Council or by the Committee established 
pursuant to UNSC Resolution 1737 (the ``Committee'') as being engaged 
in, directly associated with or providing support for Iran's 
proliferation sensitive nuclear activities, or the development of 
nuclear weapon delivery systems; and individuals and entities acting on 
behalf of or at the direction of those so listed or designated; and 
entities owned or controlled by those so listed or designated; and 
individuals and entities determined by the Security Council or the 
Committee to have assisted listed or designated individuals or entities 
in evading sanctions of, or in violating the provisions of, UNSC 
Resolutions 1737, 1747, 1803, or 1929.

    (3) Engages in money laundering to carry out an activity described 
in paragraphs (a)(1) or (2) of this section;
    (4) Facilitates efforts by the Central Bank of Iran or any other 
Iranian financial institution to carry out an activity described in 
paragraphs (a)(1) or (2) of this section; or
    (5) Facilitates a significant transaction or transactions or 
provides significant financial services for--
    (i) Iran's Islamic Revolutionary Guard Corps or any of its agents or 
affiliates whose property and interests in property are blocked pursuant 
to the International Emergency Economic Powers Act (50 U.S.C. 1701 et 
seq.) (``IEEPA''); or
    (ii) A financial institution whose property and interests in 
property are blocked pursuant to parts 544 or 594 of this chapter in 
connection with Iran's proliferation of weapons of mass destruction or 
delivery systems for weapons of mass destruction or Iran's support for 
international terrorism.

    Note to paragraph (a)(5) of Sec. 561.201: The names of persons 
whose property and interests in property are blocked pursuant to IEEPA 
are published in the Federal Register and incorporated into the Office 
of Foreign Assets Control's Specially Designated Nationals and Blocked 
Persons List (the ``SDN List''). The SDN List is accessible through the 
following page on the Office of Foreign Assets Control's Web site: 
www.treasury.gov/sdn. Additional information pertaining to the SDN List 
can be found in appendix A to this chapter. Agents or affiliates of 
Iran's Islamic Revolutionary Guard Corps (``IRGC'') whose property and

[[Page 385]]

interests in property are blocked pursuant to IEEPA are identified by a 
special reference to the ``IRGC'' at the end of their entries on the SDN 
List, in addition to the reference to the regulatory part of this 
chapter pursuant to which their property and interests in property are 
blocked. For example, an affiliate of the IRGC whose property and 
interests in property are blocked pursuant to the Weapons of Mass 
Destruction Proliferators Sanctions Regulations, 31 CFR part 544, will 
have the tag ``[NPWMD] [IRGC]'' at the end of its entry on the SDN List. 
Financial institutions whose property and interests in property are 
blocked pursuant to parts 544 or 594 of this chapter in connection with 
Iran's proliferation of weapons of mass destruction or delivery systems 
for weapons of mass destruction or Iran's support for international 
terrorism also are identified by the tag ``[IFSR]'' in addition to the 
tag referencing part 544 or part 594, as the case may be, located at the 
end of their entries on the SDN List (e.g., [NPWMD] [IFSR] or [SDGT] 
[IFSR]). In addition, see Sec. 561.405 concerning entities that may not 
be listed on the SDN List but whose property and interests in property 
are nevertheless blocked.

    (b) The Secretary of the Treasury may impose one or more strict 
conditions on the opening or maintaining by a U.S. financial institution 
of a correspondent account or a payable-through account in the United 
States for a foreign financial institution that the Secretary finds 
engages in one or more of the activities described in paragraph (a) of 
this section. Except as otherwise authorized pursuant to this part, a 
U.S. financial institution shall not open or maintain a correspondent 
account or payable-through account in the United States in a manner that 
is inconsistent with any strict condition imposed and in effect pursuant 
to this paragraph. Such conditions may include, but are not limited to, 
the following:
    (1) Prohibiting or restricting any provision of trade finance 
through the correspondent account or payable-through account of the 
foreign financial institution;
    (2) Restricting the transactions that may be processed through the 
correspondent account or payable-through account of the foreign 
financial institution to certain types of transactions, such as personal 
remittances;
    (3) Placing monetary limits on, or limiting the volume of, the 
transactions that may be processed through the correspondent account or 
payable-through account of the foreign financial institution;
    (4) Requiring pre-approval from the U.S. financial institution for 
all transactions processed through the correspondent account or payable-
through account of the foreign financial institution; or
    (5) Prohibiting or restricting the processing of foreign exchange 
transactions through the correspondent account or payable-through 
account of the foreign financial institution.

    Note to paragraph (b) of Sec. 561.201: The name of the foreign 
financial institution, together with the actual strict condition or 
conditions to be imposed, will be added to the Part 561 List on the 
Office of Foreign Assets Control's Web site (www.treasury.gov/ofac) on 
the Iran Sanctions page, and published in the Federal Register.

    (c) If the Secretary of the Treasury does not impose one or more 
strict conditions, pursuant to paragraph (b) of this section, on the 
opening or maintaining of a correspondent account or a payable-through 
account in the United States for a foreign financial institution that 
the Secretary finds engages in one or more of the activities described 
in paragraph (a) of this section, the Secretary, consistent with CISADA, 
will prohibit the opening or maintaining by a U.S. financial institution 
of a correspondent account or a payable-through account in the United 
States for that foreign financial institution. Except as otherwise 
authorized pursuant to this part, a U.S. financial institution shall not 
open or maintain a correspondent account or a payable-through account in 
the United States for a foreign financial institution for which the 
opening or maintaining of such an account is prohibited pursuant to this 
paragraph.

    Note to paragraph (c) of Sec. 561.201: The names of foreign 
financial institutions for which the opening or maintaining of a 
correspondent account or a payable-through account in the United States 
is prohibited will be listed on the Part 561 List on the Office of 
Foreign Assets Control's Web site (www.treasury.gov/ofac) on the Iran 
Sanctions page, and published in the Federal Register.
    Note to Sec. 561.201: The Part 561 List will specify whether U.S. 
financial institutions are required to:

[[Page 386]]

    (1) Impose strict conditions on the opening or maintaining of a 
correspondent account or a payable-through account for a particular 
foreign financial institution pursuant to paragraph (b) of this section;
    (2) Prohibit the opening or maintaining of a correspondent account 
or a payable-through account for a particular foreign financial 
institution pursuant to paragraph (c) of this section;
    (3) Prohibit the opening or maintaining of a correspondent account 
or a payable-through account for a particular foreign financial 
institution pursuant to Sec. 561.203(a)(1) and (a)(2)(i); or
    (4) Prohibit the opening of a correspondent account or a payable-
through account and impose strict conditions on maintaining a 
preexisting correspondent account or a payable-through account for a 
particular foreign financial institution pursuant to Sec. 561.203(a)(1) 
and (a)(2)(ii). Where applicable, the Part 561 List also will specify 
the strict condition or conditions to be imposed on the correspondent 
account or the payable-through account.



Sec. 561.202  Prohibitions on persons owned or controlled by U.S.
financial institutions.

    Except as otherwise authorized pursuant to this part, any person 
that is owned or controlled by a U.S. financial institution is 
prohibited from knowingly engaging in any transaction with or 
benefitting Iran's Islamic Revolutionary Guard Corps or any of its 
agents or affiliates whose property and interests in property are 
blocked pursuant to the International Emergency Economic Powers Act (50 
U.S.C. 1701 et seq.) (``IEEPA'').

    Note 1 to Sec. 561.202: The names of persons whose property and 
interests in property are blocked pursuant to IEEPA are published in the 
Federal Register and incorporated into the Office of Foreign Assets 
Control's Specially Designated Nationals and Blocked Persons List (the 
``SDN List''). The SDN List is accessible through the following page on 
the Office of Foreign Assets Control's Web site: www.treasury.gov/sdn. 
Additional information pertaining to the SDN List can be found in 
appendix A to this chapter. Agents or affiliates of Iran's Islamic 
Revolutionary Guard Corps (``IRGC'') whose property and interests in 
property are blocked pursuant to IEEPA are identified by a special 
reference to the ``IRGC'' at the end of their entries on the SDN List, 
in addition to the reference to the regulatory part of this chapter 
pursuant to which their property and interests in property are blocked. 
For example, an affiliate of the IRGC whose property and interests in 
property are blocked pursuant to the Weapons of Mass Destruction 
Proliferators Sanctions Regulations, 31 CFR part 544, will have the tag 
``[NPWMD] [IRGC]'' at the end of its entry on the SDN List. In addition, 
see Sec. 561.405 concerning entities that may not be listed on the SDN 
List but whose property and interests in property are nevertheless 
blocked.
    Note 2 to Sec. 561.202: A U.S. financial institution is subject to 
the civil penalties provided for in section 206(b) of IEEPA if any 
person that it owns or controls violates the prohibition set forth in 
this section and the U.S. financial institution knew or should have 
known of such violation. See Sec. 561.701(a)(2).



Sec. 561.203  NDAA-based sanctions on certain foreign financial 
institutions.

    (a) Imposition of sanctions. Subject to the limitations, exceptions, 
and conditions set forth in paragraphs (d) through (h) of this section, 
upon a determination by the Secretary of the Treasury that a foreign 
financial institution has knowingly conducted or facilitated any 
significant financial transaction with the Central Bank of Iran or a 
designated Iranian financial institution, consistent with section 1245 
of the National Defense Authorization Act for Fiscal Year 2012 (Pub. L. 
112-81), the Secretary of the Treasury:
    (1) Will prohibit U.S. financial institutions from opening a 
correspondent account or a payable-through account in the United States 
for the foreign financial institution with respect to which the 
determination has been made; and either
    (2)(i) Will prohibit U.S. financial institutions from maintaining a 
correspondent account or a payable-through account in the United States 
for the foreign financial institution with respect to which the 
determination has been made; or
    (ii) Will impose one or more strict conditions on the maintaining of 
any correspondent account or payable-through account that had been 
opened in the United States for the foreign financial institution prior 
to the Secretary of the Treasury's determination with respect to the 
foreign financial institution.

    Note 1 to paragraph (a) of Sec. 561.203: The names of designated 
Iranian financial institutions are identified on the Specially 
Designated Nationals and Blocked Persons List

[[Page 387]]

(the ``SDN List'') on the Office of Foreign Assets Control's Web site 
with the tag ``[NDAA]'' at the end of their entries, in addition to the 
reference to the regulatory part of this chapter pursuant to which their 
property and interests in property are blocked. The SDN List is 
accessible through the following page on the Office of Foreign Assets 
Control's Web site: www.treasury.gov/sdn.
    Note 2 to paragraph (a) of Sec. 561.203: The name of any foreign 
financial institution with respect to which a determination has been 
made pursuant to this paragraph (a), along with the relevant sanctions 
to be imposed (prohibition(s) and/or strict condition(s)), will be added 
to the List of Foreign Financial Institutions Subject to Part 561 (the 
``Part 561 List''), which is maintained on the Office of Foreign Assets 
Control's Web site (www.treasury.gov/ofac) on the Iran Sanctions page, 
and published in the Federal Register.
    (b) Strict conditions. The strict conditions that might be imposed 
on the maintaining of a pre-existing correspondent account or payable-
through account for a foreign financial institution pursuant to 
paragraph (a)(2)(ii) of this section include, but are not limited to, 
the following:
    (1) Prohibiting or restricting any provision of trade finance 
through the correspondent account or payable-through account of the 
foreign financial institution;

    (2) Restricting the transactions that may be processed through the 
correspondent account or payable-through account of the foreign 
financial institution to certain types of transactions, such as personal 
remittances;
    (3) Placing monetary limits on, or limiting the volume of, the 
transactions that may be processed through the correspondent account or 
payable-through account of the foreign financial institution;
    (4) Requiring pre-approval from the U.S. financial institution for 
all transactions processed through the correspondent account or payable-
through account of the foreign financial institution; or
    (5) Prohibiting or restricting the processing of foreign exchange 
transactions through the correspondent account or payable-through 
account of the foreign financial institution.
    (c) Prohibitions. (1) Except as otherwise authorized pursuant to 
this part, a U.S. financial institution shall not open a correspondent 
account or payable-through account in the United States for a foreign 
financial institution for which the opening of such an account is 
prohibited pursuant to paragraph (a)(1) of this section.
    (2) Except as otherwise authorized pursuant to this part, a U.S. 
financial institution shall not maintain a correspondent account or 
payable-through account in the United States for a foreign financial 
institution for which the maintaining of such an account is prohibited 
pursuant to paragraph (a)(2)(i) of this section.
    (3) Except as otherwise authorized pursuant to this part, a U.S. 
financial institution shall not maintain a correspondent account or 
payable-through account in the United States for a foreign financial 
institution in a manner that is inconsistent with any strict condition 
imposed and in effect pursuant to paragraph (a)(2)(ii) of this section.
    (d) Privately owned foreign financial institutions. (1) Subject to 
the exceptions set forth in paragraphs (f) and (h) of this section, 
sanctions may be imposed pursuant to paragraph (a) of this section 
beginning on February 29, 2012, with respect to any significant 
financial transaction conducted or facilitated by a privately owned 
foreign financial institution that is not for the purchase of petroleum 
or petroleum products from Iran.
    (2) Subject to the exceptions and conditions set forth in paragraphs 
(g) and (h) of this section, sanctions may be imposed pursuant to 
paragraph (a) of this section with respect to any significant financial 
transaction conducted or facilitated by a privately owned foreign 
financial institution on or after June 28, 2012, for the purchase of 
petroleum or petroleum products from Iran.
    (e) Government-owned or -controlled foreign financial institutions, 
including foreign central banks. Subject to the exceptions and 
conditions set forth in paragraphs (g) and (h) of this section, 
sanctions may be imposed pursuant to paragraph (a) of this section on a 
foreign financial institution owned or controlled by the government of a 
foreign country, including a central bank of a foreign country, only 
insofar as it engages in a significant financial

[[Page 388]]

transaction on or after June 28, 2012, for the sale or purchase of 
petroleum or petroleum products to or from Iran.
    (f) Sanctions will not be imposed under paragraph (a) of this 
section with respect to any foreign financial institution for conducting 
or facilitating a transaction for the sale of food, medicine, or medical 
devices to Iran.
    (g) The Secretary of the Treasury may impose sanctions pursuant to 
paragraph (a) of this section with respect to any significant financial 
transaction conducted or facilitated by a foreign financial institution 
on or after June 28, 2012, for the purchase of petroleum or petroleum 
products from Iran only if the President determines, not later than 
March 30, 2012, and every 180 days thereafter, that there is a 
sufficient supply of petroleum and petroleum products from countries 
other than Iran to permit a significant reduction in the volume of 
petroleum and petroleum products purchased from Iran by or through 
foreign financial institutions. Such successive sufficiency 
determinations by the President shall render subject to sanctions under 
paragraph (a) of this section those financial transactions conducted or 
facilitated by a foreign financial institution for the purchase of 
petroleum or petroleum products from Iran during each successive 180-day 
period beginning 90 days after the President's determination.

    Note to paragraph (g) of Sec. 561.203: Under Section 1245(d)(4)(B) 
of the NDAA, the President is to make a determination, not later than 
March 30, 2012, and every 180 days thereafter, of whether the price and 
supply of petroleum and petroleum products produced in countries other 
than Iran is sufficient to permit purchasers of petroleum and petroleum 
products from Iran to reduce significantly in volume their purchases 
from Iran. This determination is to be based on reports on the 
availability and price of petroleum and petroleum products produced in 
countries other than Iran that, pursuant to section 1245(d)(4)(A) of the 
NDAA, the Administrator of the Energy Information Administration, in 
consultation with the Secretary of the Treasury, the Secretary of State, 
and the Director of National Intelligence, is to submit to Congress 
beginning not later than February 29, 2012, and every 60 days 
thereafter.

    (h) Sanctions will not be imposed under paragraph (a) of this 
section on a foreign financial institution if the Secretary of State 
determines and reports to Congress not later than 90 days after the date 
on which the President makes the initial determination referenced in 
paragraph (g) of this section, and every 180 days thereafter, that the 
country with primary jurisdiction over the foreign financial institution 
has significantly reduced its volume of crude oil purchases from Iran 
during the period prior to the initial determination, and during 
successive 180-day periods.

    Note to Sec. 561.203: The sanctions regime described in Sec. 
561.203 is separate from the sanctions regime described in Sec. 561.201 
and applies in addition to, and independently of, the sanctions regime 
imposed under Sec. 561.201.



                      Subpart C_General Definitions



Sec. 561.301  Effective date.

    (a) The effective date of a prohibition or condition imposed 
pursuant to Sec. 561.201 or Sec. 561.203 on the opening or maintaining 
of a correspondent account or a payable-through account in the United 
States by a U.S. financial institution for a particular foreign 
financial institution is the earlier of the date the U.S. financial 
institution receives actual or constructive notice of such prohibition 
or condition.
    (b) The effective date of the prohibition contained in Sec. 561.202 
with respect to Iran's Islamic Revolutionary Guard Corps and any of its 
agents or affiliates whose property and interests in property are 
blocked as of August 16, 2010, is August 16, 2010.
    (c) The effective date of the prohibition contained in Sec. 561.202 
with respect to an agent or affiliate of Iran's Islamic Revolutionary 
Guard Corps whose property and interests in property become blocked 
after August 16, 2010, is the earlier of the date of actual or 
constructive notice that such person's property and interests in 
property are blocked.



Sec. 561.302  UNSC Resolution 1737.

    The term UNSC Resolution 1737 means United Nations Security Council 
Resolution 1737, adopted December 23, 2006.

[[Page 389]]



Sec. 561.303  UNSC Resolution 1747.

    The term UNSC Resolution 1747 means United Nations Security Council 
Resolution 1747, adopted March 24, 2007.



Sec. 561.304  UNSC Resolution 1803.

    The term UNSC Resolution 1803 means United Nations Security Council 
Resolution 1803, adopted March 3, 2008.



Sec. 561.305  UNSC Resolution 1929.

    The term UNSC Resolution 1929 means United Nations Security Council 
Resolution 1929, adopted June 9, 2010.



Sec. 561.306  Correspondent account.

    The term correspondent account means an account established by a 
U.S. financial institution for a foreign financial institution to 
receive deposits from, or to make payments on behalf of, the foreign 
financial institution, or to handle other financial transactions related 
to such foreign financial institution.



Sec. 561.307  Payable-through account.

    The term payable-through account means a correspondent account 
maintained by a U.S. financial institution for a foreign financial 
institution by means of which the foreign financial institution permits 
its customers to engage, either directly or through a subaccount, in 
banking activities usual in connection with the business of banking in 
the United States.



Sec. 561.308  Foreign financial institution.

    The term foreign financial institution means any foreign entity that 
is engaged in the business of accepting deposits, making, granting, 
transferring, holding, or brokering loans or credits, or purchasing or 
selling foreign exchange, securities, commodity futures or options, or 
procuring purchasers and sellers thereof, as principal or agent. It 
includes but is not limited to depository institutions, banks, savings 
banks, money service businesses, 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 holding companies, affiliates, or subsidiaries of any of the 
foregoing. The term does not include the international financial 
institutions identified in 22 U.S.C. 262r(c)(2), the International Fund 
for Agricultural Development, the North American Development Bank, or 
any other international financial institution so notified by the Office 
of Foreign Assets Control.



Sec. 561.309  U.S. financial institution.

    The term U.S. financial institution means any U.S. entity that is 
engaged in the business of accepting deposits, making, granting, 
transferring, holding, or brokering loans or credits, or purchasing or 
selling foreign exchange, securities, commodity futures or options, or 
procuring purchasers and sellers thereof, as principal or agent. It 
includes but is not limited to depository institutions, banks, savings 
banks, money service businesses, trust companies, insurance companies, 
securities brokers and dealers, commodity futures and options brokers 
and dealers, forward contract and foreign exchange merchants, securities 
and commodities exchanges, clearing corporations, investment companies, 
employee benefit plans, and U.S. holding companies, U.S. affiliates, or 
U.S. subsidiaries of any of the foregoing. This term includes those 
branches, offices, and agencies of foreign financial institutions that 
are located in the United States, but not such institutions' foreign 
branches, offices, or agencies.



Sec. 561.310  Money laundering.

    The term money laundering means engaging in deceptive practices to 
obscure the nature of transactions involving the movement of illicit 
cash or illicit cash equivalent proceeds into, out of, or through a 
country, or into, out of, or through a financial institution, such that 
the transactions are made to appear legitimate.



Sec. 561.311  Agent.

    The term agent includes an entity established by a person for 
purposes of conducting transactions on behalf of the person in order to 
conceal the identity of the person.

[[Page 390]]



Sec. 561.312  Act of international terrorism.

    The term act of international terrorism has the same definition as 
that provided under section 14 of the Iran Sanctions Act of 1996 (50 
U.S.C. 1701 note). As of February 27, 2012, the term act of 
international terrorism means an act which is violent or dangerous to 
human life and that is a violation of the criminal laws of the United 
States or of any state or that would be a criminal violation if 
committed within the jurisdiction of the United States or any state and 
which appears to be intended to intimidate or coerce a civilian 
population; to influence the policy of a government by intimidation or 
coercion; or to affect the conduct of a government by assassination or 
kidnapping.



Sec. 561.313  Financial services.

    The term financial services includes loans, transfers, accounts, 
insurance, investments, securities, guarantees, foreign exchange, 
letters of credit, and commodity futures or options.



Sec. 561.314  Knowingly.

    The term knowingly, with respect to conduct, a circumstance, or a 
result, means that a person has actual knowledge, or should have known, 
of the conduct, the circumstance, or the result.



Sec. 561.315  Person.

    The term person means an individual or entity.



Sec. 561.316  Entity.

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



Sec. 561.317  Money service businesses.

    The term money service businesses means any agent, agency, branch, 
or office of any person doing business, whether or not on a regular 
basis or as an organized business concern, in one or more of the 
capacities listed in 31 CFR 103.11(uu)(1) through (5). The term does not 
include a bank or a person registered with, and regulated or examined 
by, the Securities and Exchange Commission or the Commodity Futures 
Trading Commission.



Sec. 561.318  Petroleum.

    A mixture of hydrocarbons that exists in liquid phase in natural 
underground reservoirs and remains liquid at atmospheric pressure after 
passing through surface separating facilities. Also known as crude oil.



Sec. 561.319  Petroleum products.

    The term petroleum products includes unfinished oils, liquefied 
petroleum gases, pentanes plus, aviation gasoline, motor gasoline, 
naphtha-type jet fuel, kerosene-type jet fuel, kerosene, distillate fuel 
oil, residual fuel oil, petrochemical feedstocks, special naphthas, 
lubricants, waxes, petroleum coke, asphalt, road oil, still gas, and 
miscellaneous products obtained from the processing of crude oil 
(including lease condensate), natural gas, and other hydrocarbon 
compounds. The term does not include natural gas, liquefied natural gas, 
biofuels, methanol, and other non-petroleum fuels.



Sec. 561.320  Iranian financial institution.

    The term Iranian financial institution means any entity (including 
foreign branches), wherever located, organized under the laws of Iran or 
any jurisdiction within Iran, or owned or controlled by the Government 
of Iran, or in Iran, or owned or controlled by any of the foregoing, 
that is engaged in the business of accepting deposits, making, granting, 
transferring, holding, or brokering loans or credits, or purchasing or 
selling foreign exchange, securities, commodity futures or options, or 
procuring purchasers and sellers thereof, as principal or agent. It 
includes but is not limited to depository institutions, banks, savings 
banks, money service businesses, trust companies, insurance 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 holding companies, affiliates, or 
subsidiaries of any of the foregoing.



Sec. 561.321  Government of Iran.

    The term Government of Iran includes:

[[Page 391]]

    (a) The state and the Government of Iran, as well as any political 
subdivision, agency, or instrumentality thereof;
    (b) Any entity owned or controlled directly or indirectly by the 
foregoing;
    (c) Any person to the extent that such person is, or has been, or to 
the extent that there is reasonable cause to believe that such person 
is, or has been, acting or purporting to act directly or indirectly on 
behalf of any of the foregoing; and
    (d) Any person or entity identified by the Secretary of the Treasury 
to be the Government of Iran under 31 CFR part 560.



Sec. 561.322  Entity owned or controlled by the Government of Iran.

    The phrase entity owned or controlled by the Government of Iran 
means any entity, including a financial institution, in which the 
Government of Iran owns a 50 percent or greater interest or a 
controlling interest, and any entity, including a financial institution, 
which is otherwise controlled by that government.



Sec. 561.323  Foreign financial institution owned or controlled by the
government of a foreign country.

    The phrase foreign financial institution owned or controlled by the 
government of a foreign country means any foreign financial institution, 
including a central bank of a foreign country, in which a government of 
a foreign country owns a 50 percent or greater interest and any foreign 
financial institution which is otherwise controlled by a government of a 
foreign country.



Sec. 561.324  Designated Iranian financial institution.

    The term designated Iranian financial institution means any Iranian 
financial institution whose property and interests in property are 
blocked by the Department of the Treasury pursuant to any part of this 
chapter or any Executive order issued pursuant to the International 
Emergency Economic Powers Act (50 U.S.C. 1701 et seq.) and whose name is 
listed on the Specially Designated Nationals and Blocked Persons List on 
the Office of Foreign Assets Control's Web site, except for any Iranian 
financial institution whose property and interests in property are 
blocked solely pursuant to Executive Order 13599 of February 5, 2012.

    Note to Sec. 561.324: Facilitating significant transactions or 
providing significant financial services for a financial institution 
whose property and interests in property are blocked pursuant to parts 
544 or 594 of this chapter in connection with Iran's proliferation of 
weapons of mass destruction or delivery systems for weapons of mass 
destruction or Iran's support for international terrorism has, since the 
enactment of CISADA on July 1, 2010, constituted an activity that could 
subject a foreign financial institution to prohibitions or strict 
conditions on correspondent accounts or payable-through accounts in the 
United States. See Sec. 561.201.



Sec. 561.325  Financial transaction.

    The term financial transaction means any transfer of value involving 
a financial institution.



Sec. 561.326  Privately owned foreign financial institution.

    The phrase privately owned foreign financial institution means any 
foreign financial institution that is not owned or controlled by the 
government of a foreign country.



Sec. 561.327  Food, medicine, and medical devices.

    (a) The term food means items that are intended to be consumed by 
and provide nutrition to humans or animals in Iran, including vitamins 
and minerals, food additives and supplements, and bottled drinking 
water, and seeds that germinate into items that are intended to be 
consumed by and provide nutrition to humans or animals in Iran. For 
purposes of this definition, the term food does not include:
    (1) Alcoholic beverages, cigarettes, gum, or fertilizer; and
    (2) The following excluded food items: castor beans, castor bean 
seeds, raw eggs, fertilized eggs (other than fish and shrimp roe), dried 
egg albumin, live animals, Rosary/Jequirity peas, non-food-grade gelatin 
powder, and peptones and their derivatives.
    (b) The term medicine has the same meaning given the term ``drug'' 
in section 201 of the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 
321) but does not include any item listed on the

[[Page 392]]

Commerce Control List in the Export Administration Regulations, 15 CFR 
part 774, supplement no. 1 (excluding items classified as EAR 99).
    (c) The term medical devices has the meaning given the term 
``device'' in section 201 of the Federal Food, Drug, and Cosmetic Act 
(21 U.S.C. 321) but does not include any item listed on the Commerce 
Control List in the Export Administration Regulations, 15 CFR part 774, 
supplement no. 1 (excluding items classified as EAR 99).



                        Subpart D_Interpretations



Sec. 561.401  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. 561.402  Effect of amendment.

    Unless otherwise specifically provided, any amendment, modification, 
or revocation of any provision in or appendix to this part or chapter or 
of any order, regulation, ruling, instruction, or license issued by the 
Office of Foreign Assets Control does not affect any act done or 
omitted, or any civil or criminal proceeding commenced or pending, prior 
to such amendment, modification, or revocation. All penalties, 
forfeitures, and liabilities under any such order, regulation, ruling, 
instruction, or license continue and may be enforced as if such 
amendment, modification, or revocation had not been made.



Sec. 561.403  Facilitation of certain efforts, activities, or
transactions by foreign financial institutions.

    For purposes of Sec. Sec. 561.201 and 561.203 of this part, the 
term facilitate or facilitated used with respect to certain efforts, 
activities, or transactions refers to the provision of assistance by a 
foreign financial institution for those efforts, activities, or 
transactions, including, but not limited to, the provision of currency, 
financial instruments, securities, or any other transmission of value; 
purchasing; selling; transporting; swapping; brokering; financing; 
approving; guaranteeing; or the provision of other services of any kind; 
or the provision of personnel; or the provision of software, technology, 
or goods of any kind.



Sec. 561.404  Significant transaction or transactions; significant
financial services; significant financial transaction.

    In determining, for purposes of Sec. 561.201(a)(5), whether a 
transaction is significant, whether transactions are significant, or 
whether financial services are significant, or, for purposes Sec. 
561.203(a), whether a financial transaction is significant, the 
Secretary of the Treasury may consider the totality of the facts and 
circumstances. As a general matter, the Secretary may consider some or 
all of the following factors:
    (a) Size, number, and frequency. The size, number, and frequency of 
transactions, financial services, or financial transactions performed 
over a period of time, including whether the transactions, financial 
services, or financial transactions are increasing or decreasing over 
time and the rate of increase or decrease.
    (b) Nature. The nature of the transaction(s), financial services, or 
financial transaction, including the type, complexity, and commercial 
purpose of the transaction(s), financial services, or financial 
transaction.
    (c) Level of Awareness; Pattern of Conduct. (1) Whether the 
transaction(s), financial services, or financial transaction is 
performed with the involvement or approval of management or only by 
clerical personnel; and (2) Whether the transaction(s), financial 
services, or financial transaction is part of a pattern of conduct or 
the result of a business development strategy.
    (d) Nexus. The proximity between the foreign financial institution 
engaging in the transaction(s) or providing the financial services and a 
blocked person described in Sec. 561.201(a)(5), or between the foreign 
financial institution conducting or facilitating the financial 
transaction described in Sec. 561.203 and the Central Bank of Iran or a 
designated Iranian financial institution,

[[Page 393]]

as defined in Sec. 561.324. For example, a transaction or financial 
service in which a foreign financial institution provides brokerage or 
clearing services to, or maintains an account or makes payments for a 
blocked person described in paragraph (a)(5) of Sec. 561.201, the 
Central Bank of Iran, or a designated Iranian financial institution in a 
direct customer relationship generally would be of greater significance 
than a transaction or financial service a foreign financial institution 
conducts for or provides to a blocked person described in Sec. 
561.201(a)(5), the Central Bank of Iran, or a designated Iranian 
financial institution indirectly or in a tertiary relationship.
    (e) Impact. The impact of the transaction(s) or financial services 
on the objectives of the Comprehensive Iran Sanctions, Accountability, 
and Divestment Act of 2010, or of the financial transaction on the 
objectives of the National Defense Authorization Act for Fiscal Year 
2012, including:
    (1) The economic or other benefit conferred or attempted to be 
conferred on a blocked person described in Sec. 561.201(a)(5), or on 
the Central Bank of Iran or designated Iranian financial institution, as 
described or defined in Sec. Sec. 561.203 and 561.324;
    (2) Whether and how the transaction(s), financial services, or 
financial transaction contributes to the proliferation of weapons of 
mass destruction or delivery systems for such weapons, to support for 
international terrorism, to the suppression of human rights, to an 
increase in Iran's crude oil revenues, or to connecting the Central Bank 
of Iran or a designated Iranian financial institution to the 
international financial system; and
    (3) Whether the transaction(s), financial services, or financial 
transaction supports humanitarian activity or involves the payment of 
basic expenses as specified in and authorized pursuant to UNSC 
Resolution 1737 or the payment of extraordinary expenses that have been 
authorized by the Sanctions Committee established pursuant to UNSC 
Resolution 1737, or the payment for the sale of food, medicine, or 
medical devices to Iran.
    (f) Deceptive practices: Whether the transaction(s), financial 
services, or financial transaction involves an attempt to obscure or 
conceal the actual parties or true nature of the transaction(s), 
financial services, or financial transaction or to evade sanctions; for 
example, whether the transaction enabled the Central Bank of Iran to 
facilitate the evasion of sanctions by a blocked person described in 
Sec. 561.201(a)(5) or a designated Iranian financial institution, as 
defined in Sec. 561.324.
    (g) Central Bank of Iran Reserves, Settlement Services, Foreign 
Currency Exchanges, and Official Development Assistance Repayment: Other 
factors involved in making a determination of whether a transaction(s), 
financial service, or financial transaction is significant are whether 
the transaction solely involves the passive holding of Central Bank of 
Iran reserves by a foreign financial institution; whether the Central 
Bank of Iran's role is limited to providing settlement services or 
foreign currency exchanges in transactions between a non-designated 
Iranian financial institution and a foreign financial institution; and 
whether the transaction involves only the repayment of official 
development assistance by the Central Bank of Iran or the transfer of 
funds required as a condition of Iran's membership in an international 
financial institution.
    (h) Other relevant factors. Such other factors that the Secretary 
deems relevant on a case-by-case basis in determining the significance 
of a transaction(s), financial services, or financial transaction.



Sec. 561.405  Entities owned by a person whose property and interests
in property are blocked.

    A person whose property and interests in property are blocked 
pursuant to the International Emergency Economic Powers Act (50 U.S.C. 
1701 et seq.) has an interest in all property and interests in property 
of an entity in which it owns, directly or indirectly, a 50 percent or 
greater interest. The property and interests in property of such an 
entity, therefore, are blocked, and such an entity is a person whose 
property and interests in property are blocked pursuant to the 
International Emergency Economic Powers Act (50

[[Page 394]]

U.S.C. 1701 et seq.), regardless of whether the entity itself is listed 
on the Office of Foreign Assets Control's Specially Designated Nationals 
and Blocked Persons List.



Sec. 561.406  Country with primary jurisdiction over the foreign 
financial institution.

    For purposes of Sec. 561.203(h), a country includes any 
jurisdiction that has its own central bank or contains a separate 
financial sector authority, and a foreign financial institution 
(including its foreign branches outside of the United States) is under a 
country's primary jurisdiction if the foreign financial institution is 
organized under the laws of the country or any jurisdiction within that 
country.



Sec. 561.407  Conducting or facilitating a financial transaction with
the Central Bank of Iran or a designated Iranian financial institution.

    A foreign financial institution conducts or facilitates a financial 
transaction with the Central Bank of Iran or a designated Iranian 
financial institution if it maintains an account for such entities or 
engages in a financial transaction directly or indirectly with such 
entities.

    Note to Sec. 561.407: See Sec. 561.404 for factors that may be 
considered in determining whether a financial transaction is 
significant, as required for the imposition of certain sanctions 
pursuant to this part.



 Subpart E_Licenses, Authorizations, and Statements of Licensing Policy



Sec. 561.501  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 
or conditions imposed pursuant to this part are considered actions taken 
pursuant to this part.



Sec. 561.502  Effect of license or authorization.

    (a) No license or other authorization contained in this part, or 
otherwise issued by the Office of Foreign Assets Control, authorizes or 
validates any transaction effected prior to the issuance of such license 
or other authorization, unless specifically provided in such license or 
authorization.
    (b) No regulation, ruling, instruction, or license authorizes any 
transaction prohibited under this part unless the regulation, ruling, 
instruction, or license is issued by the Office of Foreign Assets 
Control and specifically refers to this part. No regulation, ruling, 
instruction, or license referring to this part shall be deemed to 
authorize any transaction prohibited by any other part of this chapter 
unless the regulation, ruling, instruction, or license specifically 
refers to such part.
    (c) Any regulation, ruling, instruction, or license authorizing any 
transaction otherwise prohibited under this part has the effect of 
removing a prohibition contained in this part from the transaction, but 
only to the extent specifically stated by its terms. Unless the 
regulation, ruling, instruction, or license otherwise specifies, such an 
authorization does not create any right, duty, obligation, claim, or 
interest in, or with respect to, any property which would not otherwise 
exist under ordinary principles of law.



Sec. 561.503  Exclusion from licenses.

    The Office of Foreign Assets Control reserves the right to exclude 
any person, property, or transaction from the operation of any license 
or from the privileges conferred by any license. The Office of Foreign 
Assets Control also reserves the right to restrict the applicability of 
any license to particular persons, property, transactions, or classes 
thereof. Such actions are binding upon actual or constructive notice of 
the exclusions or restrictions.



Sec. 561.504  Transactions related to closing a correspondent account
or payable-through account.

    (a) During the 10-day period beginning on the effective date of the 
prohibition in Sec. 561.201(c) or Sec. 561.203(c)(2) on the 
maintaining of a correspondent account or a payable-through account for 
a foreign financial institution whose name is added to the Part 561 
List,

[[Page 395]]

maintained on the Office of Foreign Assets Control's Web site 
(www.treasury.gov/ofac) on the Iran Sanctions page, U.S. financial 
institutions that maintain correspondent accounts or payable-through 
accounts for the foreign financial institution are authorized to:
    (1) Process only those transactions through the account, or permit 
the foreign financial institution to execute only those transactions 
through the account, that are for the purpose of, and necessary for, 
closing the account; and
    (2) Transfer the funds remaining in the correspondent account or the 
payable-through account to an account of the foreign financial 
institution located outside of the United States and close the 
correspondent account or the payable-through account.
    (b) A report must be filed with the Office of Foreign Assets Control 
within 30 days of the closure of an account, providing full details on 
the closing of each correspondent account or payable-through account 
maintained by a U.S. financial institution for a foreign financial 
institution whose name is added to the Part 561 List, maintained on the 
Office of Foreign Assets Control's Web site (www.treasury.gov/ofac) on 
the Iran Sanctions page. Such report must include complete information 
on the closing of the account and on all transactions processed or 
executed through the account pursuant to this section, including the 
account outside of the United States to which funds remaining in the 
account were transferred. Reports should be addressed to the attention 
of the Sanctions, Compliance & Evaluations Division, Office of Foreign 
Assets Control, U.S. Department of the Treasury, 1500 Pennsylvania 
Avenue NW., Washington, DC 20220.
    (c) Specific licenses may be issued on a case-by-case basis to 
authorize transactions by a U.S. financial institution with respect to a 
correspondent account or a payable-through account maintained by the 
U.S. financial institution for a foreign financial institution whose 
name is added to the Part 561 List, that are outside the scope of the 
transactions authorized in paragraph (a) of this section and/or that 
occur beyond the 10-day period authorized in that paragraph. License 
applications should be filed in conformance with Sec. 501.801 of the 
Reporting, Procedures and Penalties Regulations, 31 CFR part 501.
    (d) Nothing in this section authorizes the opening of a 
correspondent account or a payable-through account for a foreign 
financial institution whose name appears on the Part 561 List.

    Note to Sec. 561.504: This section does not authorize a U.S. 
financial institution to unblock property or interests in property, or 
to engage in any transaction or dealing in property or interests in 
property, blocked pursuant to any other part of this chapter, in the 
process of closing a correspondent account or a payable-through account 
for a foreign financial institution whose name has been added to the 
Part 561 List, maintained on the Office of Foreign Assets Control's Web 
site (www.treasury.gov/ofac) on the Iran Sanctions page. See Sec. 
561.101.



                            Subpart F_Reports



Sec. 561.601  Records and reports.

    For provisions relating to required records and reports, see part 
501, subpart C, of this chapter.



                           Subpart G_Penalties



Sec. 561.701  Penalties.

    (a) Civil Penalties. (1) As set forth in section 104(c) of the 
Comprehensive Iran Sanctions, Accountability, and Divestment Act of 2010 
(Pub. L. 111-195) (``CISADA'') and section 1245(g)(2) of the National 
Defense Authorization Act for Fiscal Year 2012 (Pub. L. 112-81) 
(``NDAA''), a civil penalty not to exceed the amount set forth in 
section 206(b) of the International Emergency Economic Powers Act 
(``IEEPA'') (50 U.S.C. 1705(b)) may be imposed on any person who 
violates, attempts to violate, conspires to violate, or causes a 
violation of any prohibition contained in Sec. 561.201 or Sec. 561.203 
or of any license set forth in or issued pursuant to this part.
    (2) As set forth in section 104(d) of CISADA, a civil penalty not to 
exceed the amount set forth in section 206(b) of IEEPA may be imposed on 
a U.S. financial institution if:

[[Page 396]]

    (i) A person owned or controlled by the U.S. financial institution 
violates, attempts to violate, conspires to violate, or causes a 
violation of the prohibition in Sec. 561.202 or of any order, 
regulation, or license set forth in or issued pursuant to this part 
concerning such prohibition; and
    (ii) The U.S. financial institution knew or should have known that 
the person violated, attempted to violate, conspired to violate, or 
caused a violation of such prohibition.

    Note to paragraph (a) of Sec. 561.701: As of February 27, 2012, 
IEEPA provides for a maximum civil penalty not to exceed the greater of 
$250,000 or an amount that is twice the amount of the transaction that 
is the basis of the violation with respect to which the penalty is 
imposed.

    (b) Criminal Penalty. As set forth in section 104(c) of CISADA and 
section 1245(g)(2) of the NDAA, 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 prohibition contained 
in Sec. Sec. 561.201 or 561.203 shall, 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.
    (c) 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.
    (d) Attention is also directed to 18 U.S.C. 1001, which provides 
that ``whoever, in any matter within the jurisdiction of the executive, 
legislative, or judicial branch of the Government of the United States, 
knowingly and willfully falsifies, conceals, or covers up by any trick, 
scheme, or device a material fact; 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.
    (e) Violations of this part may also be subject to relevant 
provisions of other applicable laws.



Sec. 561.702  Pre-Penalty Notice; settlement.

    (a) When required. If the Office of Foreign Assets Control has 
reason to believe that there has occurred a violation of any provision 
of this part or a violation of the provisions of any license, ruling, 
regulation, order, direction, or instruction issued by or pursuant to 
the direction or authorization of the Secretary of the Treasury pursuant 
to this part or otherwise under IEEPA and determines that a civil 
monetary penalty may be warranted, the Office of Foreign Assets Control 
may issue a Pre-Penalty Notice informing the alleged violator of the 
agency's intent to impose a monetary penalty. A Pre-Penalty Notice shall 
be in writing. The Pre-Penalty Notice may be issued whether or not 
another agency has taken any action with respect to the matter. For a 
description of the contents of a Pre-Penalty Notice, see appendix A to 
part 501 of this chapter.
    (b)(1) Right to respond. An alleged violator has the right to 
respond to a Pre-Penalty Notice by making a written presentation to the 
Office of Foreign Assets Control. For a description of the information 
that should be included in such a response, see appendix A to part 501 
of this chapter.
    (2) Deadline for response. A response to a Pre-Penalty Notice must 
be made within 30 days of the date of service of the Pre-Penalty Notice. 
The failure to submit a response within the applicable time period set 
forth in this paragraph shall be deemed to be a waiver of the right to 
respond.
    (i) Computation of time for response. A response to a Pre-Penalty 
Notice must be postmarked or date-stamped by the U.S. Postal Service (or 
foreign postal service, if mailed abroad) or courier service provider 
(if transmitted to the Office of Foreign Assets Control by courier) on 
or before the 30th day after the postmark date on the envelope in which 
the Pre-Penalty Notice was mailed. If the Pre-Penalty Notice was 
personally delivered by a non-U.S. Postal Service agent authorized by 
the

[[Page 397]]

Office of Foreign Assets Control, a response must be postmarked or date-
stamped on or before the 30th day after the date of delivery.
    (ii) Extensions of time for response. If a due date falls on a 
federal holiday or weekend, that due date is extended to include the 
following business day. Any other extensions of time will be granted, at 
the discretion of the Office of Foreign Assets Control, only upon 
specific request to the Office of Foreign Assets Control.
    (3) Form and method of response. A response to a Pre-Penalty Notice 
need not be in any particular form, but it must be typewritten and 
signed by the alleged violator or a representative thereof, must contain 
information sufficient to indicate that it is in response to the Pre-
Penalty Notice, and must include the Office of Foreign Assets Control 
identification number listed on the Pre-Penalty Notice. A copy of the 
written response may be sent by facsimile, but the original also must be 
sent to the Office of Foreign Assets Control 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 the Office 
of Foreign Assets Control, the alleged violator, or the alleged 
violator's authorized representative. For a description of practices 
with respect to settlement, see appendix A to part 501 of this chapter.
    (d) Guidelines. Guidelines for the imposition or settlement of civil 
penalties by the Office of Foreign Assets Control are contained in 
appendix A to part 501 of this chapter.
    (e) Representation. A representative of the alleged violator may act 
on behalf of the alleged violator, but any oral communication with the 
Office of Foreign Assets Control prior to a written submission regarding 
the specific allegations contained in the Pre-Penalty Notice must be 
preceded by a written letter of representation, unless the Pre-Penalty 
Notice was served upon the alleged violator in care of the 
representative.



Sec. 561.703  Penalty imposition.

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



Sec. 561.704  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, the matter may be referred for administrative 
collection measures by the Department of the Treasury or to the United 
States Department of Justice for appropriate action to recover the 
penalty in a civil suit in a federal district court.



                          Subpart H	Procedures



Sec. 561.801  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. 561.802  Delegation by the Secretary of the Treasury.

    Any action that the Secretary of the Treasury is authorized to take 
pursuant to subsections 104(c), (d), (h), or (i) of the Comprehensive 
Iran Sanctions, Accountability, and Divestment Act of 2010 (Pub. L. 111-
195) (22 U.S.C. 8501-8551), pursuant to section 8 of Executive Order 
13553 of September 28, 2010 (3 CFR, 2010 Comp., p. 253), or pursuant to

[[Page 398]]

section 10 of Executive Order 13599 of February 5, 2012, and any action 
of the Secretary of the Treasury described in this part, may be taken by 
the Director of the Office of Foreign Assets Control or by any other 
person to whom the Secretary of the Treasury has delegated authority so 
to act.



Sec. 561.803  Consultations.

    In implementing section 104 of the Comprehensive Iran Sanctions, 
Accountability, and Divestment Act of 2010 (Pub. L. 111-195) (22 U.S.C. 
8501-8551), the Secretary of the Treasury shall consult with the 
Secretary of State and may, in the sole discretion of the Secretary of 
the Treasury, consult with such other agencies and departments and such 
other interested parties as the Secretary considers appropriate.



                    Subpart I_Paperwork Reduction Act



Sec. 561.901  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 the information 
collections relating to the recordkeeping and reporting requirements of 
Sec. 561.601, licensing procedures (including those pursuant to 
statements of licensing policy), and other procedures, see Sec. 501.901 
of this chapter. The information collection in Sec. 561.504(b) has been 
approved by OMB and assigned control number 1505-0243. 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.



PART 562_IRANIAN HUMAN RIGHTS ABUSES SANCTIONS REGULATIONS--Table of
Contents



      Subpart A_Relation of This Part to Other Laws and Regulations

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

                         Subpart B_Prohibitions

562.201 Prohibited transactions.
562.202 Effect of transfers violating the provisions of this part.
562.203 Holding of funds in interest-bearing accounts; investment and 
          reinvestment.

                      Subpart C_General Definitions

562.301 Blocked account; blocked property.
562.302 Effective date.
562.303 Entity.
562.304 Interest.
562.305 Licenses; general and specific.
562.306 Person.
562.307 Property; property interest.
562.308 Transfer.
562.309 United States.
562.310 U.S. financial institution.
562.311 United States person; U.S. person.

                        Subpart D_Interpretations

562.401 [Reserved]
562.402 Effect of amendment.
562.403 Termination and acquisition of an interest in blocked property.
562.404 Transactions ordinarily incident to a licensed transaction 
          authorized.
562.405 Setoffs prohibited.
562.406 Entities owned by a person whose property and interests in 
          property are blocked.

 Subpart E_Licenses, Authorizations, and Statements of Licensing Policy

562.501-562.502 [Reserved]
562.503 Exclusion from licenses.
562.504 Payments and transfers to blocked accounts in U.S. financial 
          institutions.
562.505 Entries in certain accounts for normal service charges 
          authorized.
562.506 Provision of certain legal services authorized.
562.507 Authorization of emergency medical services.

Subparts F-G [Reserved]

                          Subpart H_Procedures

562.801 [Reserved]
562.802 Delegation by the Secretary of the Treasury.

                    Subpart I_Paperwork Reduction Act

562.901 Paperwork Reduction Act notice.

Appendix A to Part 562--Executive Order 13553 of September 28, 2010

    Authority: 3 U.S.C. 301; 18 U.S.C. 2332d; 31 U.S.C. 321(b); 50 
U.S.C. 1601-1651, 1701-1706; Pub. L. 101-410, 104 Stat. 890 (28 U.S.C. 
2461 note); Pub. L. 110-96, 121 Stat. 1011 (50 U.S.C. 1705 note); Pub. 
L. 111-195, 124 Stat. 1312 (22 U.S.C. 8501-8551); E.O. 12957, 60 FR 
14615, 3 CFR, 1995 Comp., p. 332; E.O. 13553, 75 FR 60567, October 1, 
2010.

[[Page 399]]


    SOURCE: 76 FR 7695, Feb. 11, 2011, unless otherwise noted.



      Subpart A_Relation of This Part to Other Laws and Regulations



Sec. 562.101  Relation of this part to other laws and regulations.

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

    Note to Sec. 562.101: This part has been published in abbreviated 
form for the purpose of providing immediate guidance to the public. OFAC 
intends to supplement this part with a more comprehensive set of 
regulations, which may include additional interpretive and definitional 
guidance and additional general licenses and statements of licensing 
policy.



                         Subpart B_Prohibitions



Sec. 562.201  Prohibited transactions.

    All transactions prohibited pursuant to Executive Order 13553 are 
also prohibited pursuant to this part.

    Note 1 to Sec. 562.201: The names of persons listed in or 
designated pursuant to Executive Order 13553, whose property and 
interests in property therefore are blocked pursuant to this section, 
are published in the Federal Register and incorporated into the Office 
of Foreign Assets Control's Specially Designated Nationals and Blocked 
Persons List (``SDN List'') with the identifier ``[IRAN-HR].'' The SDN 
List is accessible through the following page on the Office of Foreign 
Assets Control's Web site: http://www.treasury.gov/sdn. Additional 
information pertaining to the SDN List can be found in appendix A to 
this chapter. See Sec. 562.406 concerning entities that may not be 
listed on the SDN List but whose property and interests in property are 
nevertheless blocked pursuant to this section.
    Note 2 to Sec. 562.201: The International Emergency Economic Powers 
Act (50 U.S.C. 1701-1706), in Section 203 (50 U.S.C. 1702), authorizes 
the blocking of property and interests in property of a person during 
the pendency of an investigation. The names of persons whose property 
and interests in property are blocked pending investigation pursuant to 
this section also are published in the Federal Register and incorporated 
into the SDN List with the identifier ``[BPI-IRAN-HR].''
    Note 3 to Sec. 562.201: Sections 501.806 and 501.807 of this 
chapter describe the procedures to be followed by persons seeking, 
respectively, the unblocking of funds that they believe were blocked due 
to mistaken identity, or administrative reconsideration of their status 
as persons whose property and interests in property are blocked pursuant 
to this section.

[76 FR 7695, Feb. 11, 2011, as amended at 76 FR 38542, June 30, 2011]



Sec. 562.202  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. 
562.201, is null and void and shall not be the basis for the assertion 
or recognition of any interest in or right, remedy, power, or privilege 
with respect to such property or property interests.
    (b) No transfer before the effective date shall be the basis for the 
assertion or recognition of any right, remedy, power, or privilege with 
respect to, or any interest in, any property or interest in property 
blocked pursuant to Sec. 562.201, unless the person who holds or 
maintains such property, prior to that date, had written notice of the 
transfer or by any written evidence had recognized such transfer.

[[Page 400]]

    (c) Unless otherwise provided, an appropriate license or other 
authorization issued by the Office of Foreign Assets Control before, 
during, or after a transfer shall validate such transfer or make it 
enforceable to the same extent that it would be valid or enforceable but 
for the provisions of IEEPA, Executive Order 13553, this part, and any 
regulation, order, directive, ruling, instruction, or license issued 
pursuant to this part.
    (d) Transfers of property that otherwise would be null and void or 
unenforceable by virtue of the provisions of this section shall not be 
deemed to be null and void or unenforceable as to any person with whom 
such property is or was held or maintained (and as to such person only) 
in cases in which such person is able to establish to the satisfaction 
of the Office of Foreign Assets Control each of the following:
    (1) Such transfer did not represent a willful violation of the 
provisions of this part by the person with whom such property is or was 
held or maintained (and as to such person only);
    (2) The person with whom such property is or was held or maintained 
did not have reasonable cause to know or suspect, in view of all the 
facts and circumstances known or available to such person, that such 
transfer required a license or authorization issued pursuant to this 
part and was not so licensed or authorized, or, if a license or 
authorization did purport to cover the transfer, that such license or 
authorization had been obtained by misrepresentation of a third party or 
withholding of material facts or was otherwise fraudulently obtained; 
and
    (3) The person with whom such property is or was held or maintained 
filed with the Office of Foreign Assets Control a report setting forth 
in full the circumstances relating to such transfer promptly upon 
discovery that:
    (i) Such transfer was in violation of the provisions of this part or 
any regulation, ruling, instruction, license, or other directive or 
authorization issued pursuant to this part;
    (ii) Such transfer was not licensed or authorized by the Office of 
Foreign Assets Control; or
    (iii) If a license did purport to cover the transfer, such license 
had been obtained by misrepresentation of a third party or withholding 
of material facts or was otherwise fraudulently obtained.

    Note to paragraph (d) of Sec. 562.202: The filing of a report in 
accordance with the provisions of paragraph (d)(3) of this section shall 
not be deemed evidence that the terms of paragraphs (d)(1) and (d)(2) of 
this section have been satisfied.

    (e) Unless licensed pursuant to this part, any attachment, judgment, 
decree, lien, execution, garnishment, or other judicial process is null 
and void with respect to any property in which, on or since the 
effective date, there existed an interest of a person whose property and 
interests in property are blocked pursuant to Sec. 562.201.



Sec. 562.203  Holding of funds in interest-bearing accounts; investment
and reinvestment.

    (a) Except as provided in paragraphs (c) or (d) of this section, or 
as otherwise directed by the Office of Foreign Assets Control, any U.S. 
person holding funds, such as currency, bank deposits, or liquidated 
financial obligations, subject to Sec. 562.201 shall hold or place such 
funds in a blocked interest-bearing account located in the United 
States.
    (b)(1) For purposes of this section, the term blocked interest-
bearing account means a blocked account:
    (i) In a Federally-insured U.S. bank, thrift institution, or credit 
union, provided the funds are earning interest at rates that are 
commercially reasonable; or
    (ii) With a broker or dealer registered with the Securities and 
Exchange Commission under the Securities Exchange Act of 1934 (15 U.S.C. 
78a et seq.), provided the funds are invested in a money market fund or 
in U.S. Treasury bills.
    (2) 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.
    (3) Funds held or placed in a blocked account described in paragraph 
(b) of this section may not be invested in instruments the maturity of 
which exceeds 180 days. If interest is credited to

[[Page 401]]

a separate blocked account or subaccount, the name of the account party 
on each account must be the same.
    (c) Blocked funds held in instruments the maturity of which exceeds 
180 days at the time the funds become subject to Sec. 562.201 may 
continue to be held until maturity in the original instrument, provided 
any interest, earnings, or other proceeds derived therefrom are paid 
into a blocked interest-bearing account as described in paragraphs (b) 
or (d) of this section.
    (d) Blocked funds held in accounts or instruments outside the United 
States at the time the funds become subject to Sec. 562.201 may 
continue to be held in the same type of accounts or instruments, 
provided the funds earn interest at rates that are commercially 
reasonable.
    (e) This section does not create an affirmative obligation for the 
holder of blocked tangible property, such as chattels or real estate, or 
of other blocked property, such as debt or equity securities, to sell or 
liquidate such property. However, the Office of Foreign Assets Control 
may issue licenses permitting or directing such sales or liquidation in 
appropriate cases.
    (f) 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. 562.201, nor may their holder cooperate in 
or facilitate the pledging or other attempted use as collateral of 
blocked funds or other assets.



                      Subpart C_General Definitions



Sec. 562.301  Blocked account; blocked property.

    The terms blocked account and blocked property shall mean any 
account or property subject to the prohibitions in Sec. 562.201 held in 
the name of a person whose property and interests in property are 
blocked pursuant to Sec. 562.201, or in which such person has an 
interest, and with respect to which payments, transfers, exportations, 
withdrawals, or other dealings may not be made or effected except 
pursuant to an authorization or license from the Office of Foreign 
Assets Control expressly authorizing such action.

    Note to Sec. 562.301: See Sec. 562.406 concerning the blocked 
status of property and interests in property of an entity that is 50 
percent or more owned by a person whose property and interests in 
property are blocked pursuant to Sec. 562.201.



Sec. 562.302  Effective date.

    The term effective date refers to the effective date of the 
applicable prohibitions and directives contained in this part as 
follows:
    (a) With respect to a person listed in the Annex to Executive Order 
13553, 12:01 a.m. eastern daylight time, September 29, 2010; or
    (b) With respect to a person whose property and interests in 
property are otherwise blocked pursuant to Executive Order 13553, the 
earlier of the date of actual or constructive notice that such person's 
property and interests in property are blocked.



Sec. 562.303  Entity.

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



Sec. 562.304  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. 562.305  Licenses; general and specific.

    (a) Except as otherwise specified, the term license means any 
license or authorization contained in or issued pursuant to this part.
    (b) The term general license means any license or authorization the 
terms of which are set forth in subpart E of this part.
    (c) The term specific license means any license or authorization not 
set forth in subpart E of this part but issued pursuant to this part.

    Note to Sec. 562.305: See Sec. 501.801 of this chapter on 
licensing procedures.



Sec. 562.306  Person.

    The term person means an individual or entity.

[[Page 402]]



Sec. 562.307  Property; property interest.

    The terms property and property interest include, but are not 
limited to, money, checks, drafts, bullion, bank deposits, savings 
accounts, debts, indebtedness, obligations, notes, guarantees, 
debentures, stocks, bonds, coupons, any other financial instruments, 
bankers acceptances, mortgages, pledges, liens or other rights in the 
nature of security, warehouse receipts, bills of lading, trust receipts, 
bills of sale, any other evidences of title, ownership or indebtedness, 
letters of credit and any documents relating to any rights or 
obligations thereunder, powers of attorney, goods, wares, merchandise, 
chattels, stocks on hand, ships, goods on ships, real estate mortgages, 
deeds of trust, vendors' sales agreements, land contracts, leaseholds, 
ground rents, real estate and any other interest therein, options, 
negotiable instruments, trade acceptances, royalties, book accounts, 
accounts payable, judgments, patents, trademarks or copyrights, 
insurance policies, safe deposit boxes and their contents, annuities, 
pooling agreements, services of any nature whatsoever, contracts of any 
nature whatsoever, and any other property, real, personal, or mixed, 
tangible or intangible, or interest or interests therein, present, 
future, or contingent.



Sec. 562.308  Transfer.

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



Sec. 562.309  United States.

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



Sec. 562.310  U.S. financial institution.

    The term U.S. financial institution means any U.S. entity (including 
its foreign branches) that is engaged in the business of accepting 
deposits, making, granting, transferring, holding, or brokering loans or 
credits, or purchasing or selling foreign exchange, securities, 
commodity futures or options, or procuring purchasers and sellers 
thereof, as principal or agent. It includes but is not limited to 
depository institutions, banks, savings banks, trust companies, 
securities brokers and dealers, commodity futures and options brokers 
and dealers, forward contract and foreign exchange merchants, securities 
and commodities exchanges, clearing corporations, investment companies, 
employee benefit plans, and U.S. holding companies, U.S. affiliates, or 
U.S. subsidiaries of any of the foregoing. This term includes those 
branches, offices, and agencies of foreign financial institutions that 
are located in the United States, but not such institutions' foreign 
branches, offices, or agencies.



Sec. 562.311  United States person; U.S. person.

    The term United States person or U.S. person means any United States 
citizen, permanent resident alien, entity organized under the laws of 
the United States or any jurisdiction within the United States 
(including foreign

[[Page 403]]

branches), or any person in the United States.



                        Subpart D_Interpretations



Sec. 562.401  [Reserved]



Sec. 562.402  Effect of amendment.

    Unless otherwise specifically provided, any amendment, modification, 
or revocation of any provision in this part, any provision in or 
appendix to this chapter, or any order, regulation, ruling, instruction, 
or license issued by the Office of Foreign Assets Control does not 
affect any act done or omitted, or any civil or criminal proceeding 
commenced or pending, prior to such amendment, modification, or 
revocation. All penalties, forfeitures, and liabilities under any such 
order, regulation, ruling, instruction, or license continue and may be 
enforced as if such amendment, modification, or revocation had not been 
made.



Sec. 562.403  Termination and acquisition of an interest in blocked
property.

    (a) Whenever a transaction licensed or authorized by or pursuant to 
this part results in the transfer of property (including any property 
interest) away from a person, such property shall no longer be deemed to 
be property blocked pursuant to Sec. 562.201, unless there exists in 
the property another interest that is blocked pursuant to Sec. 562.201 
or any other part of this chapter, 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. 562.201, such property shall be deemed to be property in which 
that person has an interest and therefore blocked.



Sec. 562.404  Transactions ordinarily incident to a licensed transaction 
authorized.

    Any transaction ordinarily incident to a licensed transaction and 
necessary to give effect thereto is also authorized, except:
    (a) An ordinarily incident transaction, not explicitly authorized 
within the terms of the license, by or with a person whose property and 
interests in property are blocked pursuant to Sec. 562.201; or
    (b) An ordinarily incident transaction, not explicitly authorized 
within the terms of the license, involving a debit to a blocked account 
or a transfer of blocked property.



Sec. 562.405  Setoffs prohibited.

    A setoff against blocked property (including a blocked account), 
whether by a U.S. bank or other U.S. person, is a prohibited transfer 
under Sec. 562.201 if effected after the effective date.



Sec. 562.406  Entities owned by a person whose property and interests 
in property are blocked.

    A person whose property and interests in property are blocked 
pursuant to Sec. 562.201 has an interest in all property and interests 
in property of an entity in which it owns, directly or indirectly, a 50 
percent or greater interest. The property and interests in property of 
such an entity, therefore, are blocked, and such an entity is a person 
whose property and interests in property are blocked pursuant to Sec. 
562.201, regardless of whether the entity itself is listed in the Annex 
or designated pursuant to Executive Order 13553.



 Subpart E_Licenses, Authorizations, and Statements of Licensing Policy



Sec. Sec. 562.501-562.502  [Reserved]



Sec. 562.503  Exclusion from licenses.

    The Office of Foreign Assets Control reserves the right to exclude 
any person, property, transaction, or class thereof from the operation 
of any license or from the privileges conferred by any license. The 
Office of Foreign Assets Control also reserves the right to restrict the 
applicability of any license to particular persons, property, 
transactions, or classes thereof. Such actions are binding upon actual 
or constructive notice of the exclusions or restrictions.

[[Page 404]]



Sec. 562.504  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. 562.201 
has any interest that comes within the possession or control of a U.S. 
financial institution must be blocked in an account on the books of that 
financial institution. A transfer of funds or credit by a U.S. financial 
institution between blocked accounts in its branches or offices is 
authorized, provided that no transfer is made from an account within the 
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. 562.504: See Sec. 501.603 of this chapter for 
mandatory reporting requirements regarding financial transfers. See also 
Sec. 562.203 concerning the obligation to hold blocked funds in 
interest-bearing accounts.



Sec. 562.505  Entries in certain accounts for normal service charges
authorized.

    (a) A U.S. financial institution is authorized to debit any blocked 
account held at that financial institution in payment or reimbursement 
for normal service charges owed it by the owner of that blocked account.
    (b) As used in this section, the term normal service charges shall 
include charges in payment or reimbursement for interest due; cable, 
telegraph, Internet, or telephone charges; postage costs; custody fees; 
small adjustment charges to correct bookkeeping errors; and, but not by 
way of limitation, minimum balance charges, notary and protest fees, and 
charges for reference books, photocopies, credit reports, transcripts of 
statements, registered mail, insurance, stationery and supplies, and 
other similar items.



Sec. 562.506  Provision of certain legal services authorized.

    (a) The provision of the following legal services to or on behalf of 
persons whose property and interests in property are blocked pursuant to 
Sec. 562.201 is authorized, provided that all receipts of payment of 
professional fees and reimbursement of incurred expenses must be 
specifically licensed:
    (1) Provision of legal advice and counseling on the requirements of 
and compliance with the laws of the United States or any jurisdiction 
within the United States, provided that such advice and counseling are 
not provided to facilitate transactions in violation of this part;
    (2) Representation of persons named as defendants in or otherwise 
made parties to domestic U.S. legal, arbitration, or administrative 
proceedings;
    (3) Initiation and conduct of domestic U.S. legal, arbitration, or 
administrative proceedings in defense of property interests subject to 
U.S. jurisdiction;
    (4) Representation of persons before any Federal or State agency 
with respect to the imposition, administration, or enforcement of U.S. 
sanctions against such persons; and
    (5) Provision of legal services in any other context in which 
prevailing U.S. law requires access to legal counsel at public expense.
    (b) The provision of any other legal services to persons whose 
property and interests in property are blocked pursuant to Sec. 
562.201, 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. 562.201 is prohibited unless licensed pursuant to this 
part.



Sec. 562.507  Authorization of emergency medical services.

    The provision of nonscheduled emergency medical services in the 
United States to persons whose property and interests in property are 
blocked pursuant to Sec. 562.201 is authorized, provided that all 
receipt of payment for such services must be specifically licensed.

Subparts F-G [Reserved]

[[Page 405]]



                          Subpart H_Procedures



Sec. 562.801  [Reserved]



Sec. 562.802  Delegation by the Secretary of the Treasury.

    Any action that the Secretary of the Treasury is authorized to take 
pursuant to Executive Order 13553 of September 28, 2010 (75 FR 60567, 
October 1, 2010), and any further Executive orders relating to the 
national emergency declared in Executive Order 12957, may be taken by 
the Director of the Office of Foreign Assets Control or by any other 
person to whom the Secretary of the Treasury has delegated authority so 
to act.



                    Subpart I_Paperwork Reduction Act



Sec. 562.901  Paperwork Reduction Act notice.

    For approval by the Office of Management and Budget (``OMB'') under 
the Paperwork Reduction Act of 1995 (44 U.S.C. 3507) of information 
collections relating to recordkeeping and reporting requirements, 
licensing procedures (including those pursuant to statements of 
licensing policy), and other procedures, see Sec. 501.901 of this 
chapter. An agency may not conduct or sponsor, and a person is not 
required to respond to, a collection of information unless it displays a 
valid control number assigned by OMB.



Sec. Appendix A to Part 562--Executive Order 13553 of September 28, 2010

                             EXECUTIVE ORDER

________________________________________________________________________

   BLOCKING PROPERTY OF CERTAIN PERSONS WITH RESPECT TO SERIOUS HUMAN 
RIGHTS ABUSES BY THE GOVERNMENT OF IRAN AND TAKING CERTAIN OTHER ACTIONS

    By the authority vested in me as President by the Constitution and 
the laws of the United States of America, including the International 
Emergency Economic Powers Act (50 U.S.C. 1701 et seq.) (IEEPA), the 
National Emergencies Act (50 U.S.C. 1601 et seq.), the Comprehensive 
Iran Sanctions, Accountability, and Divestment Act of 2010 (Pub. L. 111-
195) (CISADA), and section 301 of title 3, United States Code, and in 
order to take additional steps with respect to the national emergency 
declared in Executive Order 12957 of March 15, 1995,
    I, BARACK OBAMA, President of the United States of America, hereby 
order:
    Section 1. (a) All property and interests in property that are in 
the United States, that hereafter come within the United States, or that 
are or hereafter come within the possession or control of any United 
States person, including any overseas branch, of the following persons 
are blocked and may not be transferred, paid, exported, withdrawn, or 
otherwise dealt in:
    (i) the persons listed in the Annex to this order; and
    (ii) any person determined by the Secretary of the Treasury, in 
consultation with or at the recommendation of the Secretary of State:
    (A) to be an official of the Government of Iran or a person acting 
on behalf of the Government of Iran (including members of paramilitary 
organizations) who is responsible for or complicit in, or responsible 
for ordering, controlling, or otherwise directing, the commission of 
serious human rights abuses against persons in Iran or Iranian citizens 
or residents, or the family members of the foregoing, on or after June 
12, 2009, regardless of whether such abuses occurred in Iran;
    (B) to have materially assisted, sponsored, or provided financial, 
material, or technological support for, or goods or services to or in 
support of, the activities described in subsection (a)(ii)(A) of this 
section or any person whose property and interests in property are 
blocked pursuant to this order; or
    (C) to be owned or controlled by, or to have acted or purported to 
act for or on behalf of, directly or indirectly, any person whose 
property and interests in property are blocked pursuant to this order.
    (b) I hereby determine that the making of donations of the type of 
articles specified in section 203(b)(2) of IEEPA (50 U.S.C. 1702(b)(2)) 
by, to, or for the benefit of any person whose property and interests in 
property are blocked pursuant to subsection (a) of this section would 
seriously impair my ability to deal with the national emergency declared 
in Executive Order 12957, and I hereby prohibit such donations as 
provided by subsection (a) of this section.
    (c) The prohibitions in subsection (a) of this section include but 
are not limited to:
    (i) the making of any contribution or provision of funds, goods, or 
services by, to, or for the benefit of any person whose property and 
interests in property are blocked pursuant to this order; and
    (ii) the receipt of any contribution or provision of funds, goods, 
or services from any such person.
    (d) The prohibitions in subsection (a) of this section apply except 
to the extent provided by statutes, or in regulations, orders,

[[Page 406]]

directives, or licenses that may be issued pursuant to this order, and 
notwithstanding any contract entered into or any license or permit 
granted prior to the effective date of this order.
    Sec. 2. (a) Any transaction by a United States person or within the 
United States that evades or avoids, has the purpose of evading or 
avoiding, causes a violation of, or attempts to violate any of the 
prohibitions set forth in this order is prohibited.
    (b) Any conspiracy formed to violate any of the prohibitions set 
forth in this order is prohibited.
    Sec. 3. For the purposes of this order:
    (a) the term ``person'' means an individual or entity;
    (b) the term ``entity'' means a partnership, association, trust, 
joint venture, corporation, group, subgroup, or other organization;
    (c) the term ``United States person'' means any United States 
citizen, permanent resident alien, entity organized under the laws of 
the United States or any jurisdiction within the United States 
(including foreign branches), or any person in the United States;
    (d) the term ``Government of Iran'' includes the Government of Iran, 
any political subdivision, agency, or instrumentality thereof, and any 
person owned or controlled by, or acting for or on behalf of, the 
Government of Iran; and
    (e) the term ``family member'' means, with respect to an individual, 
a spouse, child, parent, sibling, grandchild, or grandparent of the 
individual.
    Sec. 4. For those persons whose property and interests in property 
are blocked pursuant to this order who might have a constitutional 
presence in the United States, I find that because of the ability to 
transfer funds or other assets instantaneously, prior notice to such 
persons of measures to be taken pursuant to this order would render 
those measures ineffectual. I therefore determine that for these 
measures to be effective in addressing the national emergency declared 
in Executive Order 12957, there need be no prior notice of a listing or 
determination made pursuant to section 1(a) of this order.
    Sec. 5. The Secretary of the Treasury, in consultation with the 
Secretary of State, is hereby authorized to take such actions, including 
the promulgation of rules and regulations, and to employ all powers 
granted to the President by IEEPA and sections 105(a)-(c) of CISADA (22 
U.S.C. 8514(a)-(c)), other than as described in sections 6 and 7 of this 
order, as may be necessary to carry out the purposes of this order other 
than the purposes of sections 6 and 7. The Secretary of the Treasury may 
redelegate any of these functions to other officers and agencies of the 
United States Government consistent with applicable law. The Secretary 
of the Treasury, in consultation with the Secretary of State, is hereby 
further authorized to exercise the functions and waiver authorities 
conferred upon the President by section 401(b) of CISADA (22 U.S.C. 
8551(b)) with respect to the requirement to impose or maintain sanctions 
pursuant to IEEPA under section 105(a) of CISADA (22 U.S.C. 8514(a)) and 
to redelegate these functions and waiver authorities consistent with 
applicable law. All agencies of the United States Government are hereby 
directed to take all appropriate measures within their authority to 
carry out the provisions of this order.
    Sec. 6. The Secretary of State is hereby authorized to exercise the 
functions and authorities conferred upon the President by section 105(a) 
of CISADA (22 U.S.C. 8514(a)) with respect to imposition of the visa 
sanctions described in section 105(c) of CISADA (22 U.S.C. 8514(c)) and 
to redelegate these functions and authorities consistent with applicable 
law. The Secretary of State is hereby further authorized to exercise the 
functions and authorities conferred upon the President by section 105(c) 
of CISADA (22 U.S.C. 8514(c)) with respect to the promulgation of rules 
and regulations related to the visa sanctions described therein and to 
redelegate these functions and authorities consistent with applicable 
law. The Secretary of State is hereby further authorized to exercise the 
functions and waiver authorities conferred upon the President by section 
401(b) of CISADA (22 U.S.C. 8551(b)) with respect to the requirement to 
impose or maintain visa sanctions under section 105(a) of CISADA (22 
U.S.C. 8514(a)) and to redelegate these functions and waiver authorities 
consistent with applicable law. In exercising the functions and 
authorities in the previous sentence, the Secretary of State shall 
consult the Secretary of Homeland Security on matters related to 
admissibility or inadmissibility within the authority of the Secretary 
of Homeland Security.
    Sec. 7. The Secretary of State, in consultation with the Secretary 
of the Treasury, is hereby authorized to submit the initial and updated 
lists of persons who are subject to visa sanctions and whose property 
and interests in property are blocked pursuant to this order to the 
appropriate congressional committees as required by section 105(b) of 
CISADA (22 U.S.C. 8514(b)) and to redelegate these functions consistent 
with applicable law. The Secretary of State, in consultation with the 
Secretary of the Treasury, is hereby further authorized to exercise the 
functions and waiver authorities conferred upon the President by section 
401(b) of CISADA (22 U.S.C. 8551(b)) with respect to the requirement to 
include a person on the list required by section 105(b) of CISADA (22 
U.S.C. 8514(b)) and to redelegate these functions and waiver authorities 
consistent with applicable law.

[[Page 407]]

    Sec. 8. The Secretary of the Treasury, in consultation with the 
Secretary of State, is hereby authorized to take such actions, including 
the promulgation of rules and regulations, and to employ all powers 
granted to the President by IEEPA, as may be necessary to carry out 
section 104 of CISADA (22 U.S.C. 8513). The Secretary of the Treasury 
may redelegate any of these functions to other officers and agencies of 
the United States Government consistent with applicable law.
    Sec. 9. The Secretary of the Treasury, in consultation with the 
Secretary of State, is hereby authorized to determine that circumstances 
no longer warrant the blocking of the property and interests in property 
of a person listed in the Annex to this order, and to take necessary 
action to give effect to that determination.
    Sec. 10. This order is not intended to, and does not, create any 
right or benefit, substantive or procedural, enforceable at law or in 
equity by any party against the United States, its departments, 
agencies, or entities, its officers, employees, or agents, or any other 
person.
    Sec. 11. The measures taken pursuant to this order are in response 
to actions of the Government of Iran occurring after the conclusion of 
the 1981 Algiers Accords, and are intended solely as response to those 
later actions.
    Sec. 12. This order is effective at 12:01 a.m. eastern daylight time 
on September 29, 2010.

                                  ANNEX

                               Individuals

1. Mohammad Ali JAFARI [Commander of the Islamic Revolutionary Guard 
          Corps, born September 1, 1957]
2. Sadeq MAHSOULI [Minister of Welfare and Social Security, former 
          Minister of the Interior and Deputy Commander-in-Chief of the 
          Armed Forces for Law Enforcement, born 1959]
3. Qolam-Hossein MOHSENI-EJEI [Prosecutor-General of Iran, former 
          Minister of Intelligence, born circa 1956]
4. Saeed MORTAZAVI [Head of Iranian Anti-Smuggling Task Force, former 
          Prosecutor-General of Tehran, born 1967]
5. Heydar MOSLEHI [Minister of Intelligence, born 1956]
6. Mostafa Mohammad NAJJAR [Minister of the Interior and Deputy 
          Commander-in-Chief of the Armed Forces for Law Enforcement, 
          born 1956]
7. Ahmad-Reza RADAN [Deputy Chief of the National Police, born 1963 or 
          1964]
8. Hossein TAEB [Deputy Islamic Revolutionary Guard Corps Commander for 
          Intelligence, former Commander of the Basij Forces, born 1963]



PART 570_LIBYAN SANCTIONS REGULATIONS--Table of Contents



      Subpart A_Relation of This Part to Other Laws and Regulations

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

                         Subpart B_Prohibitions

570.201 Prohibited transactions.
570.202 Effect of transfers violating the provisions of this part.
570.203 Holding of funds in interest-bearing accounts; investment and 
          reinvestment.

                      Subpart C_General Definitions

570.301 Blocked account; blocked property.
570.302 Effective date.
570.303 Entity.
570.304 Government of Libya.
570.305 [Reserved]
570.306 Interest.
570.307 Licenses; general and specific.
570.308 Person.
570.309 Property; property interest.
570.310 Transfer.
570.311 United States.
570.312 U.S. financial institution.
570.313 United States person; U.S. person.

                        Subpart D_Interpretations

570.401 [Reserved]
570.402 Effect of amendment.
570.403 Termination and acquisition of an interest in blocked property.
570.404 Transactions ordinarily incident to a licensed transaction 
          authorized.
570.405 Setoffs prohibited.
570.406 Entities owned by a person whose property and interests in 
          property are blocked.

 Subpart E_Licenses, Authorizations, and Statements of Licensing Policy

570.501 General and specific licensing procedures.
570.502 [Reserved]
570.503 Exclusion from licenses.
570.504 Payments and transfers to blocked accounts in U.S. financial 
          institutions.
570.505 Entries in certain accounts for normal service charges 
          authorized.
570.506 Provision of certain legal services authorized.
570.507 Authorization of emergency medical services.
570.508 Libyan diplomatic missions in the United States.

Subparts F-G [Reserved]

[[Page 408]]

                          Subpart H_Procedures

570.801 [Reserved]
570.802 Delegation by the Secretary of the Treasury.

                    Subpart I_Paperwork Reduction Act

570.901 Paperwork Reduction Act notice.

Appendix A to Part 570--Executive Order 13566

    Authority: 3 U.S.C. 301; 31 U.S.C. 321(b); 50 U.S.C. 1601-1651, 
1701-1706; Pub. L. 101-410, 104 Stat. 890 (28 U.S.C. 2461 note); Pub. L. 
110-96, 121 Stat. 1011 (50 U.S.C. 1705 note); E.O. 13566, 76 FR 11315, 
March 2, 2011.

    Source: 76 FR 38562, July 1, 2011, unless otherwise noted.



      Subpart A_Relation of This Part to Other Laws and Regulations



Sec. 570.101  Relation of this part to other laws and regulations.

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

    Note to Sec. 570.101: This part has been published in abbreviated 
form for the purpose of providing immediate guidance to the public. OFAC 
intends to supplement this part with a more comprehensive set of 
regulations, which may include additional interpretive and definitional 
guidance and additional general licenses and statements of licensing 
policy.



                         Subpart B_Prohibitions



Sec. 570.201  Prohibited transactions.

    All transactions prohibited pursuant to Executive Order 13566 of 
February 25, 2011 (76 FR 11315, March 2, 2011), are also prohibited 
pursuant to this part.

    Note 1 to Sec. 570.201: The names of persons listed in or 
designated pursuant to Executive Order 13566, whose property and 
interests in property therefore are blocked pursuant to this section, 
are published in the Federal Register and incorporated into the Office 
of Foreign Assets Control's Specially Designated Nationals and Blocked 
Persons List (``SDN List'') with the identifier ``[LIBYA2].'' The SDN 
List is accessible through the following page on the Office of Foreign 
Assets Control's Web site: http://www.treasury.gov/sdn. Additional 
information pertaining to the SDN List can be found in Appendix A to 
this chapter. See Sec. 570.406 concerning entities that may not be 
listed on the SDN List but whose property and interests in property are 
nevertheless blocked pursuant to this section. Executive Order 13566 
also blocks the property and interests in property of the Government of 
Libya. See Sec. 570.304 of this part for the definition of the term 
Government of Libya. The property and interests in property of persons 
falling within the definition of the term Government of Libya are 
blocked pursuant to this section regardless of whether the names of such 
persons are published in the Federal Register or incorporated into the 
SDN List.
    Note 2 to Sec. 570.201: The International Emergency Economic Powers 
Act (50 U.S.C. 1701-1706), in Section 203 (50 U.S.C. 1702), authorizes 
the blocking of property and interests in property of a person during 
the pendency of an investigation. The names of persons whose property 
and interests in property are blocked pending investigation pursuant to 
this section also are published in the Federal Register and incorporated 
into the SDN List with the identifier ``[BPI-LIBYA2].''
    Note 3 to Sec. 570.201: Sections 501.806 and 501.807 of this 
chapter describe the procedures to be followed by persons seeking, 
respectively, the unblocking of funds that they believe were blocked due 
to mistaken identity, or administrative reconsideration of their status 
as the Government of Libya or persons whose property and interests in 
property are blocked pursuant to this section.



Sec. 570.202  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,

[[Page 409]]

order, directive, ruling, instruction, or license issued pursuant to 
this part, and that involves any property or interest in property 
blocked pursuant to Sec. 570.201, is null and void and shall not be the 
basis for the assertion or recognition of any interest in or right, 
remedy, power, or privilege with respect to such property or property 
interests.
    (b) No transfer before the effective date shall be the basis for the 
assertion or recognition of any right, remedy, power, or privilege with 
respect to, or any interest in, any property or interest in property 
blocked pursuant to Sec. 570.201, unless the person who holds or 
maintains such property, prior to that date, had written notice of the 
transfer or by any written evidence had recognized such transfer.
    (c) Unless otherwise provided, an appropriate license or other 
authorization issued by the Office of Foreign Assets Control before, 
during, or after a transfer shall validate such transfer or make it 
enforceable to the same extent that it would be valid or enforceable but 
for the provisions of the International Emergency Economic Powers Act, 
Executive Order 13566, this part, and any regulation, order, directive, 
ruling, instruction, or license issued pursuant to this part.
    (d) Transfers of property that otherwise would be null and void or 
unenforceable by virtue of the provisions of this section shall not be 
deemed to be null and void or unenforceable as to any person with whom 
such property is or was held or maintained (and as to such person only) 
in cases in which such person is able to establish to the satisfaction 
of the Office of Foreign Assets Control each of the following:
    (1) Such transfer did not represent a willful violation of the 
provisions of this part by the person with whom such property is or was 
held or maintained (and as to such person only);
    (2) The person with whom such property is or was held or maintained 
did not have reasonable cause to know or suspect, in view of all the 
facts and circumstances known or available to such person, that such 
transfer required a license or authorization issued pursuant to this 
part and was not so licensed or authorized, or, if a license or 
authorization did purport to cover the transfer, that such license or 
authorization had been obtained by misrepresentation of a third party or 
withholding of material facts or was otherwise fraudulently obtained; 
and
    (3) The person with whom such property is or was held or maintained 
filed with the Office of Foreign Assets Control a report setting forth 
in full the circumstances relating to such transfer promptly upon 
discovery that:
    (i) Such transfer was in violation of the provisions of this part or 
any regulation, ruling, instruction, license, or other directive or 
authorization issued pursuant to this part;
    (ii) Such transfer was not licensed or authorized by the Office of 
Foreign Assets Control; or
    (iii) If a license did purport to cover the transfer, such license 
had been obtained by misrepresentation of a third party or withholding 
of material facts or was otherwise fraudulently obtained.
    Note to paragraph (d) of Sec. 570.202: The filing of a report in 
accordance with the provisions of paragraph (d)(3) of this section shall 
not be deemed evidence that the terms of paragraphs (d)(1) and (d)(2) of 
this section have been satisfied.
    (e) Unless licensed pursuant to this part, any attachment, judgment, 
decree, lien, execution, garnishment, or other judicial process is null 
and void with respect to any property in which, on or since the 
effective date, there existed an interest of a person whose property and 
interests in property are blocked pursuant to Sec. 570.201.



Sec. 570.203  Holding of funds in interest-bearing accounts; investment
and reinvestment.

    (a) Except as provided in paragraphs (e) or (f) of this section, or 
as otherwise directed by the Office of Foreign Assets Control, any U.S. 
person holding funds, such as currency, bank deposits, or liquidated 
financial obligations, subject to Sec. 570.201 shall hold or place such 
funds in a blocked interest-bearing account located in the United 
States.
    (b)(1) For purposes of this section, the term blocked interest-
bearing account means a blocked account:
    (i) In a Federally-insured U.S. bank, thrift institution, or credit 
union, provided the funds are earning interest at

[[Page 410]]

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. 570.201 may 
continue to be held until maturity in the original instrument, provided 
any interest, earnings, or other proceeds derived therefrom are paid 
into a blocked interest-bearing account in accordance with paragraphs 
(a) or (f) of this section.
    (f) Blocked funds held in accounts or instruments outside the United 
States at the time the funds become subject to Sec. 570.201 may 
continue to be held in the same type of accounts or instruments, 
provided the funds earn interest at rates that are commercially 
reasonable.
    (g) This section does not create an affirmative obligation for the 
holder of blocked tangible property, such as chattels or real estate, or 
of other blocked property, such as debt or equity securities, to sell or 
liquidate such property. However, the Office of Foreign Assets Control 
may issue licenses permitting or directing such sales or liquidation in 
appropriate cases.
    (h) Funds subject to this section may not be held, invested, or 
reinvested in a manner that provides immediate financial or economic 
benefit or access to any person whose property and interests in property 
are blocked pursuant to Sec. 570.201, nor may their holder cooperate in 
or facilitate the pledging or other attempted use as collateral of 
blocked funds or other assets.



                      Subpart C_General Definitions



Sec. 570.301  Blocked account; blocked property.

    The terms blocked account and blocked property shall mean any 
account or property subject to the prohibitions in Sec. 570.201 held in 
the name of the Government of Libya or any other person whose property 
and interests in property are blocked pursuant to Sec. 570.201, or in 
which the Government of Libya or such person has an interest, and with 
respect to which payments, transfers, exportations, withdrawals, or 
other dealings may not be made or effected except pursuant to an 
authorization or license from the Office of Foreign Assets Control 
expressly authorizing such action.

    Note to Sec. 570.301: See Sec. 570.406 concerning the blocked 
status of property and interests in property of an entity that is 50 
percent or more owned by a person whose property and interests in 
property are blocked pursuant to Sec. 570.201.



Sec. 570.302  Effective date.

    The term effective date refers to the effective date of the 
applicable prohibitions and directives contained in this part as 
follows:
    (a) With respect to the Government of Libya, as defined in Sec. 
570.304, or a person listed in the Annex to Executive Order 13566, 8 
p.m. eastern standard time, February 25, 2011; or
    (b) With respect to a person whose property and interests in 
property are otherwise blocked pursuant to Executive Order 13566, the 
earlier of the date of actual or constructive notice that such person's 
property and interests in property are blocked.



Sec. 570.303  Entity.

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



Sec. 570.304  Government of Libya.

    The term Government of Libya includes:

[[Page 411]]

    (a) The state and the Government of Libya, as well as any political 
subdivision, agency, or instrumentality thereof, and the Central Bank of 
Libya;
    (b) Any entity owned or controlled, directly or indirectly, by the 
foregoing;
    (c) Any person to the extent that such person is, or has been, or to 
the extent that there is reasonable cause to believe that such person 
is, or has been, since the effective date, acting or purporting to act 
directly or indirectly on behalf of any of the foregoing; and
    (d) Any other person determined by the Office of Foreign Assets 
Control to be included within paragraphs (a) through (c) of this 
section.

    Note 1 to Sec. 570.304: The names of some of the persons that fall 
within this definition are published in the Federal Register and 
incorporated into the Office of Foreign Assets Control's Specially 
Designated Nationals and Blocked Persons List (``SDN List'') with the 
identifier ``[LIBYA2].'' The SDN List is accessible through the 
following page on OFAC's Web site: http://www.treasury.gov/sdn. However, 
the property and interests in property of persons falling within the 
definition of the term Government of Libya are blocked pursuant to Sec. 
570.201 regardless of whether the names of such persons are published in 
the Federal Register or incorporated into the SDN List.
    Note 2 to Sec. 570.304: Section 501.807 of this chapter describes 
the procedures to be followed by persons seeking administrative 
reconsideration of their status as the Government of Libya.



Sec. 570.305  [Reserved]



Sec. 570.306  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. 570.307  Licenses; general and specific.

    (a) Except as otherwise specified, the term license means any 
license or authorization contained in or issued pursuant to this part.
    (b) The term general license means any license or authorization the 
terms of which are set forth in subpart E of this part.
    (c) The term specific license means any license or authorization not 
set forth in subpart E of this part but issued pursuant to this part.

    Note to Sec. 570.307: See Sec. 501.801 of this chapter on 
licensing procedures.



Sec. 570.308  Person.

    The term person means an individual or entity.



Sec. 570.309  Property; property interest.

    The terms property and property interest include, but are not 
limited to, money, checks, drafts, bullion, bank deposits, savings 
accounts, debts, indebtedness, obligations, notes, guarantees, 
debentures, stocks, bonds, coupons, any other financial instruments, 
bankers acceptances, mortgages, pledges, liens or other rights in the 
nature of security, warehouse receipts, bills of lading, trust receipts, 
bills of sale, any other evidences of title, ownership or indebtedness, 
letters of credit and any documents relating to any rights or 
obligations thereunder, powers of attorney, goods, wares, merchandise, 
chattels, stocks on hand, ships, goods on ships, real estate mortgages, 
deeds of trust, vendors' sales agreements, land contracts, leaseholds, 
ground rents, real estate and any other interest therein, options, 
negotiable instruments, trade acceptances, royalties, book accounts, 
accounts payable, judgments, patents, trademarks or copyrights, 
insurance policies, safe deposit boxes and their contents, annuities, 
pooling agreements, services of any nature whatsoever, contracts of any 
nature whatsoever, and any other property, real, personal, or mixed, 
tangible or intangible, or interest or interests therein, present, 
future, or contingent.



Sec. 570.310  Transfer.

    The term transfer means any actual or purported act or transaction, 
whether or not evidenced by writing, and whether or not done or 
performed within the United States, the purpose, intent, or effect of 
which is to create, surrender, release, convey, transfer, or alter, 
directly or indirectly, any right, remedy, power, privilege, or interest 
with respect to any property. Without

[[Page 412]]

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, or filing of, or levy of or under, any judgment, decree, 
attachment, injunction, execution, or other judicial or administrative 
process or order, or the service of any garnishment; the acquisition of 
any interest of any nature whatsoever by reason of a judgment or decree 
of any foreign country; the fulfillment of any condition; the exercise 
of any power of appointment, power of attorney, or other power; or the 
acquisition, disposition, transportation, importation, exportation, or 
withdrawal of any security.



Sec. 570.311  United States.

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



Sec. 570.312  U.S. financial institution.

    The term U.S. financial institution means any U.S. entity (including 
its foreign branches) that is engaged in the business of accepting 
deposits, making, granting, transferring, holding, or brokering loans or 
credits, or purchasing or selling foreign exchange, securities, or 
commodity futures or options, or procuring purchasers and sellers 
thereof, as principal or agent. It includes but is not limited to 
depository institutions, banks, savings banks, trust companies, 
securities brokers and dealers, commodity futures and options brokers 
and dealers, forward contract and foreign exchange merchants, securities 
and commodities exchanges, clearing corporations, investment companies, 
employee benefit plans, and U.S. holding companies, U.S. affiliates, or 
U.S. subsidiaries of any of the foregoing. This term includes those 
branches, offices, and agencies of foreign financial institutions that 
are located in the United States, but not such institutions' foreign 
branches, offices, or agencies.



Sec. 570.313  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.



                        Subpart D_Interpretations



Sec. 570.401  [Reserved]



Sec. 570.402  Effect of amendment.

    Unless otherwise specifically provided, any amendment, modification, 
or revocation of any provision in this part, any provision in or 
appendix to this chapter, or any order, regulation, ruling, instruction, 
or license issued by the Office of Foreign Assets Control does not 
affect any act done or omitted, or any 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. 570.403  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 the Government of Libya or a person, such property 
shall no longer be deemed to be property blocked pursuant to Sec. 
570.201, unless there exists in the property another interest that is 
blocked pursuant to Sec. 570.201, 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 the 
Government of Libya or any other person whose property and interests in 
property are blocked pursuant to Sec. 570.201, such property shall

[[Page 413]]

be deemed to be property in which the Government of Libya or that person 
has an interest and therefore blocked.



Sec. 570.404  Transactions ordinarily incident to a licensed transaction
authorized.

    Any transaction ordinarily incident to a licensed transaction and 
necessary to give effect thereto is also authorized, except:
    (a) An ordinarily incident transaction, not explicitly authorized 
within the terms of the license, by or with the Government of Libya or 
any other person whose property and interests in property are blocked 
pursuant to Sec. 570.201; or
    (b) An ordinarily incident transaction, not explicitly authorized 
within the terms of the license, involving a debit to a blocked account 
or a transfer of blocked property.



Sec. 570.405  Setoffs prohibited.

    A setoff against blocked property (including a blocked account), 
whether by a U.S. bank or other U.S. person, is a prohibited transfer 
under Sec. 570.201 if effected after the effective date.



Sec. 570.406  Entities owned by a person whose property and interests in
property are blocked.

    A person whose property and interests in property are blocked 
pursuant to Sec. 570.201 has an interest in all property and interests 
in property of an entity in which it owns, directly or indirectly, a 50 
percent or greater interest. The property and interests in property of 
such an entity, therefore, are blocked, and such an entity is a person 
whose property and interests in property are blocked pursuant to Sec. 
570.201, regardless of whether the entity itself is listed in the Annex 
or designated pursuant to Executive Order 13566.

    Note to Sec. 570.406: This section, which deals with the 
consequences of ownership of entities, in no way limits section 
570.304's definition of the term Government of Libya.



 Subpart E_Licenses, Authorizations, and Statements of Licensing Policy



Sec. 570.501  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. Additional general 
licenses and statements of licensing policy relating to this part may be 
available through the following page on OFAC's Web site: http://
www.treasury.gov/resource-center/sanctions/programs/pages/libya.aspx.



Sec. 570.502  [Reserved]



Sec. 570.503  Exclusion from licenses.

    The Office of Foreign Assets Control reserves the right to exclude 
any person, property, transaction, or class thereof from the operation 
of any license or from the privileges conferred by any license. The 
Office of Foreign Assets Control also reserves the right to restrict the 
applicability of any license to particular persons, property, 
transactions, or classes thereof. Such actions are binding upon actual 
or constructive notice of the exclusions or restrictions.



Sec. 570.504  Payments and transfers to blocked accounts in U.S.
financial institutions.

    Any payment of funds or transfer of credit in which the Government 
of Libya or any other person whose property and interests in property 
are blocked pursuant to Sec. 570.201 has any interest that comes within 
the possession or control of a U.S. financial institution must be 
blocked in an account on the books of that financial institution. A 
transfer of funds or credit by a U.S. financial institution between 
blocked accounts in its branches or offices is authorized, provided that 
no transfer is made from an account within the 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

[[Page 414]]

blocked account held in the same name.

    Note to Sec. 570.504: See Sec. 501.603 of this chapter for 
mandatory reporting requirements regarding financial transfers. See also 
Sec. 570.203 concerning the obligation to hold blocked funds in 
interest-bearing accounts.



Sec. 570.505  Entries in certain accounts for normal service charges 
authorized.

    (a) A U.S. financial institution is authorized to debit any blocked 
account held at that financial institution in payment or reimbursement 
for normal service charges owed it by the owner of that blocked account.
    (b) As used in this section, the term normal service charges shall 
include charges in payment or reimbursement for interest due; cable, 
telegraph, Internet, or telephone charges; postage costs; custody fees; 
small adjustment charges to correct bookkeeping errors; and, but not by 
way of limitation, minimum balance charges, notary and protest fees, and 
charges for reference books, photocopies, credit reports, transcripts of 
statements, registered mail, insurance, stationery and supplies, and 
other similar items.



Sec. 570.506  Provision of certain legal services authorized.

    (a) The provision of the following legal services to or on behalf of 
the Government of Libya or any other persons whose property and 
interests in property are blocked pursuant to Sec. 570.201 is 
authorized, provided that all receipts of payment of professional fees 
and reimbursement of incurred expenses must be specifically licensed:
    (1) Provision of legal advice and counseling on the requirements of 
and compliance with the laws of the United States or any jurisdiction 
within the United States, provided that such advice and counseling are 
not provided to facilitate transactions in violation of this part;
    (2) Representation of the Government of Libya or persons named as 
defendants in or otherwise made parties to domestic U.S. legal, 
arbitration, or administrative proceedings;
    (3) Initiation and conduct of legal, arbitration, or administrative 
proceedings before any U.S. Federal, state, or local court or agency;
    (4) Representation of the Government of Libya or 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 the 
Government of Libya or 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 the Government of 
Libya or any other persons whose property and interests in property are 
blocked pursuant to Sec. 570.201, not otherwise authorized by this 
section, 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. 570.201 is prohibited unless licensed pursuant to this 
part.

    Note to Sec. 570.506: Effective July 1, 2011, this section replaces 
and supersedes General License No. 3, dated March 9, 2011, which was 
issued pursuant to Executive Order 13566, and posted on OFAC's Web site, 
to authorize provision of certain legal services.



Sec. 570.507  Authorization of emergency medical services.

    The provision of nonscheduled emergency medical services in the 
United States to persons whose property and interests in property are 
blocked pursuant to Sec. 570.201 is authorized, provided that all 
receipt of payment for such services must be specifically licensed.



Sec. 570.508  Libyan diplomatic missions in the United States.

    (a) The provision of goods or services in the United States to the 
diplomatic missions of the Government of Libya to the United States and 
the United Nations is authorized, provided that:
    (1) The goods or services are for the conduct of the official 
business of the

[[Page 415]]

missions, or for personal use of the employees of the missions, and are 
not for resale;
    (2) The transaction does not involve the purchase, sale, financing, 
or refinancing of real property;
    (3) The transaction is not otherwise prohibited by law; and
    (4) The transaction is conducted through an account at a U.S. 
financial institution specifically licensed by OFAC.

    Note to paragraph (a)(4) of Sec. 570.508: U.S. financial 
institutions are required to obtain specific licenses to operate 
accounts for, or extend credit to, the diplomatic missions of the 
Government of Libya to the United States and the United Nations.

    (b) The provision of goods or services in the United States to the 
employees of the diplomatic missions of the Government of Libya to the 
United States and the United Nations is authorized, provided that:
    (1) The goods or services are for personal use of the employees of 
the missions, and are not for resale; and
    (2) The transaction is not otherwise prohibited by law.

    Note 1 to Sec. 570.508: See Sec. 570.404 for authorization, with 
certain exceptions, of any transaction ordinarily incident to a licensed 
transaction and necessary to give effect thereto.
    Note 2 to Sec. 570.508: Effective July 1, 2011, this section 
replaces and supersedes General License No. 2, dated March 1, 2011, 
which was issued pursuant to Executive Order 13566 and posted on OFAC's 
Web site.

Subparts F-G [Reserved]



                          Subpart H_Procedures



Sec. 570.801  [Reserved]



Sec. 570.802  Delegation by the Secretary of the Treasury.

    Any action that the Secretary of the Treasury is authorized to take 
pursuant to Executive Order 13566 of February 25, 2011 (76 FR 11315, 
March 2, 2011), and any further Executive orders relating to the 
national emergency declared therein, may be taken by the Director of the 
Office of Foreign Assets Control or by any other person to whom the 
Secretary of the Treasury has delegated authority so to act.



                    Subpart I_Paperwork Reduction Act



Sec. 570.901  Paperwork Reduction Act notice.

    For approval by the Office of Management and Budget (``OMB'') under 
the Paperwork Reduction Act of 1995 (44 U.S.C. 3507) of information 
collections relating to recordkeeping and reporting requirements, 
licensing procedures (including those pursuant to statements of 
licensing policy), and other procedures, see Sec. 501.901 of this 
chapter. An agency may not conduct or sponsor, and a person is not 
required to respond to, a collection of information unless it displays a 
valid control number assigned by OMB.



           Sec. Appendix A to Part 570--Executive Order 13566

               Executive Order 13566 of February 25, 2011

 Blocking Property and Prohibiting Certain Transactions Related to Libya

    By the authority vested in me as President by the Constitution and 
the laws of the United States of America, including the International 
Emergency Economic Powers Act (50 U.S.C. 1701 et seq.) (IEEPA), the 
National Emergencies Act (50 U.S.C. 1601 et seq.) (NEA), and section 301 
of title 3, United States Code, I, BARACK OBAMA, President of the United 
States of America, find that Colonel Muammar Qadhafi, his government, 
and close associates have taken extreme measures against the people of 
Libya, including by using weapons of war, mercenaries, and wanton 
violence against unarmed civilians. I further find that there is a 
serious risk that Libyan state assets will be misappropriated by 
Qadhafi, members of his government, members of his family, or his close 
associates if those assets are not protected. The foregoing 
circumstances, the prolonged attacks, and the increased numbers of 
Libyans seeking refuge in other countries from the attacks, have caused 
a deterioration in the security of Libya and pose a serious risk to its 
stability, thereby constituting an unusual and extraordinary threat to 
the national security and foreign policy of the United States, and I 
hereby declare a national emergency to deal with that threat.
    I hereby order:
    Section 1. All property and interests in property that are in the 
United States, that hereafter come within the United States, or that are 
or hereafter come within the possession or control of any United States 
person, including any overseas branch, of the following persons are 
blocked and may not be

[[Page 416]]

transferred, paid, exported, withdrawn, or otherwise dealt in:
    (a) The persons listed in the Annex to this order; and
    (b) Any person determined by the Secretary of the Treasury, in 
consultation with the Secretary of State:
    (i) To be a senior official of the Government of Libya;
    (ii) To be a child of Colonel Muammar Qadhafi;
    (iii) To be responsible for or complicit in, or responsible for 
ordering, controlling, or otherwise directing, or to have participated 
in, the commission of human rights abuses related to political 
repression in Libya;
    (iv) To have materially assisted, sponsored, or provided financial, 
material, logistical, or technical support for, or goods or services in 
support of the activities described in subsection (b)(iii) of this 
section or any person whose property and interests in property are 
blocked pursuant to this order;
    (v) To be owned or controlled by, or to have acted or purported to 
act for or on behalf of, any person whose property and interests in 
property are blocked pursuant to this order; or
    (vi) To be a spouse or dependent child of any person whose property 
and interests in property are blocked pursuant to this order.
    Sec. 2. All property and interests in property that are in the 
United States, that hereafter come within the United States, or that are 
or hereafter come within the possession or control of any United States 
person, including any overseas branch, of the Government of Libya, its 
agencies, instrumentalities, and controlled entities, and the Central 
Bank of Libya, are blocked and may not be transferred, paid, exported, 
withdrawn, or otherwise dealt in.
    Sec. 3. For those persons whose property and interests in property 
are blocked pursuant to this order who might have a constitutional 
presence in the United States, I find that because of the ability to 
transfer funds or other assets instantaneously, prior notice to such 
persons of measures to be taken pursuant to this order would render 
those measures ineffectual. I therefore determine that for these 
measures to be effective in addressing the national emergency declared 
in this order, there need be no prior notice of a listing or 
determination made pursuant to section 1 of this order.
    Sec. 4. I hereby determine that, to the extent section 203(b)(2) of 
IEEPA (50 U.S.C. 1702(b)(2)) may apply, the making of donations of the 
type of articles specified in such section by, to, or for the benefit of 
any person whose property and interests in property are blocked pursuant 
to sections 1 and 2 of this order would seriously impair my ability to 
deal with the national emergency declared in this order, and I hereby 
prohibit such donations as provided by sections 1 and 2 of this order.
    Sec. 5. The prohibitions in sections 1 and 2 of this order include 
but are not limited to:
    (a) The making of any contribution or provision of funds, goods, or 
services by, to, or for the benefit of any person whose property and 
interests in property are blocked pursuant to this order; and
    (b) The receipt of any contribution or provision of funds, goods, or 
services from any such person.
    Sec. 6. The prohibitions in sections 1 and 2 of this order apply 
except to the extent provided by statutes, or in regulations, orders, 
directives, or licenses that may be issued pursuant to this order, and 
notwithstanding any contract entered into or any license or permit 
granted prior to the effective date of this order.
    Sec. 7. (a) Any transaction by a United States person or within the 
United States that evades or avoids, has the purpose of evading or 
avoiding, causes a violation of, or attempts to violate any of the 
prohibitions set forth in this order is prohibited.
    (b) Any conspiracy formed to violate any of the prohibitions set 
forth in this order is prohibited.
    Sec. 8. Nothing in this order shall prohibit transactions for the 
conduct of the official business of the Federal Government by employees, 
grantees, or contractors thereof.
    Sec. 9. For the purposes of this order:
    (a) The term ``person'' means an individual or entity;
    (b) The term ``entity'' means a partnership, association, trust, 
joint venture, corporation, group, subgroup, or other organization; and
    (c) The term ``United States person'' means any United States 
citizen or national, 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. 10. The Secretary of the Treasury, in consultation with the 
Secretary of State, is hereby authorized to take such actions, including 
the promulgation of rules and regulations, and to employ all powers 
granted to the President by IEEPA as may be necessary to carry out the 
purposes of this order. The Secretary of the Treasury may redelegate any 
of these functions to other officers and agencies of the United States 
Government consistent with applicable law. All agencies of the United 
States Government are hereby directed to take all appropriate measures 
within their authority to carry out the provisions of this order.
    Sec. 11. The Secretary of the Treasury, in consultation with the 
Secretary of State, is hereby authorized to determine that circumstances 
no longer warrant the blocking of the property and interests in property 
of

[[Page 417]]

a person listed in the Annex to this order, and to take necessary action 
to give effect to that determination.
    Sec. 12. The Secretary of the Treasury, in consultation with the 
Secretary of State, is hereby authorized to submit the recurring and 
final reports to the Congress on the national emergency declared in this 
order, consistent with section 401(c) of the NEA (50 U.S.C. 1641(c)) and 
section 204(c) of IEEPA (50 U.S.C. 1703(c)).
    Sec. 13. This order is not intended to, and does not, create any 
right or benefit, substantive or procedural, enforceable at law or in 
equity by any party against the United States, its departments, 
agencies, or entities, its officers, employees, or agents, or any other 
person.
    Sec. 14. This order is effective at 8 p.m. eastern standard time on 
February 25, 2011.

Barack Obama

THE WHITE HOUSE,

February 25, 2011.



PART 576_IRAQ STABILIZATION AND INSURGENCY SANCTIONS REGULATIONS--Table 
of Contents



      Subpart A_Relation of This Part to Other Laws and Regulations

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

                         Subpart B_Prohibitions

576.201 Prohibited transactions involving blocked property.
576.202 Effect of transfers violating the provisions of this part.
576.203 Holding of funds in interest-bearing accounts; investment and 
          reinvestment.
576.204 Expenses of maintaining blocked physical property; liquidation 
          of blocked property.
576.205 Evasions; attempts; conspiracies.
576.206 Protection granted to the Development Fund for Iraq, Iraqi 
          Petroleum and Petroleum Products, and the Central Bank of 
          Iraq.
576.207 Exemption for property controlled by the military forces of the 
          United States and their coalition partners in Iraq.
576.208 Prohibited transactions related to certain Iraqi cultural 
          property.
576.209 Exempt transactions.

                      Subpart C_General Definitions

576.301 Blocked account; blocked property.
576.302 Development Fund for Iraq.
576.303 Effective date.
576.304 Entity.
576.305 Former Iraqi regime.
576.306 Information or informational materials.
576.307 Interest.
576.308 Iraqi petroleum and petroleum products.
576.309 Licenses; general and specific.
576.310 Government of Iraq.
576.311 Person.
576.312 Property; property interest.
576.313 Transfer.
576.314 UNSC Resolution 1483.
576.315 United States.
576.316 U.S. financial institution.
576.317 United States person; U.S. person.

                        Subpart D_Interpretations

576.401 Reference to amended sections.
576.402 Effect of amendment.
576.403 Setoffs prohibited.
576.404 Termination and acquisition of an interest in property.
576.405 Transactions ordinarily incident to a licensed transaction.
576.406 Provision of services.
576.407 Offshore transactions.
576.408 Payments from blocked accounts to satisfy obligations 
          prohibited.
576.409 Charitable contributions.
576.410 Credit extended and cards issued by U.S. financial institutions.
576.411 Prohibited transactions involving certain Iraqi cultural 
          property.
576.412 Entities owned by a person whose property and interests in 
          property are blocked.

 Subpart E_Licenses, Authorizations, and Statements of Licensing Policy

576.501 General and specific licensing procedures.
576.502 Effect of license or authorization.
576.503 Exclusion from licenses.
576.504 Payments and transfers to blocked accounts in U.S. financial 
          institutions.
576.505 Entries in certain accounts for normal service charges 
          authorized.
576.506 Investment and reinvestment of certain funds.
576.507 Provision of certain legal services authorized.
576.508 Judicial process in legal proceedings involving ecological 
          accidents.
576.509 Authorization of emergency medical services.
576.510 Unblocking certain blocked property.
576.511 Property controlled by the military forces of the United States 
          and their coalition partners in Iraq.
576.512 Transactions with certain blocked persons authorized.

                            Subpart F_Reports

576.601 Records and reports.

[[Page 418]]

                           Subpart G_Penalties

576.701 Penalties.
576.702 Pre-Penalty Notice; settlement.
576.703 Penalty imposition.
576.704 Administrative collection; referral to United States Department 
          of Justice.

                          Subpart H_Procedures

576.801 Procedures.
576.802 Delegation by the Secretary of the Treasury.

                    Subpart I_Paperwork Reduction Act

576.901 Paperwork Reduction Act notice.

    Authority: 3 U.S.C. 301; 22 U.S.C. 287c; 31 U.S.C. 321(b); 50 U.S.C. 
1601-1651, 1701-1706; Pub. L. 110-96, 121 Stat. 1011; E.O. 13303, 68 FR 
31931, 3 CFR, 2003 Comp., p. 227; E.O. 13315, 68 FR 52315, 3 CFR, 2003 
Comp., p. 252; E.O. 13350, 69 FR 46055, 3 CFR, 2004 Comp., p. 196; E.O. 
13364, 69 FR 70177, 3 CFR, 2004 Comp., p. 236; E.O. 13438, 72 FR 39719, 
3 CFR, 2007 Comp., p. 224.

    Source: 75 FR 55466, Sept. 13, 2010, unless otherwise noted.



      Subpart A_Relation of This Part to Other Laws and Regulations



Sec. 576.101  Relation of this part to other laws and regulations.

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

    Note to Sec. 576.101: The Iraqi Sanctions Regulations, 31 CFR part 
575, have been removed from 31 CFR chapter V.



                         Subpart B_Prohibitions



Sec. 576.201  Prohibited transactions involving blocked property.

    (a) All property and interests in property that are in the United 
States, that hereafter come within the United States, or that are or 
hereafter come within the possession or control of U.S. persons, 
including their overseas branches, of the former Iraqi regime or its 
state bodies, corporations, or agencies, or of the following persons are 
blocked and may not be transferred, paid, exported, withdrawn, or 
otherwise dealt in:
    (1) Persons listed in the Annex to Executive Order 13315 of August 
28, 2003, as amended by Executive Order 13350 of July 29, 2004; and
    (2) Persons determined by the Secretary of the Treasury, in 
consultation with the Secretary of State,
    (i) To be senior officials of the former Iraqi regime or their 
immediate family members; or
    (ii) To be owned or controlled by, or acting or purporting to act 
for or on behalf of, directly or indirectly, any of the persons whose 
property and interests in property are blocked pursuant to paragraphs 
(a)(1) or (a)(2) of this section; and
    (3) Persons determined by the Secretary of the Treasury, in 
consultation with the Secretary of State and the Secretary of Defense,
    (i) To have committed, or to pose a significant risk of committing, 
an act or acts of violence that have the purpose or effect of:
    (A) Threatening the peace or stability of Iraq or the Government of 
Iraq; or
    (B) Undermining efforts to promote economic reconstruction and 
political reform in Iraq or to provide humanitarian assistance to the 
Iraqi people;
    (ii) To have materially assisted, sponsored, or provided financial, 
material, logistical, or technical support for, or goods or services in 
support of, such an act or acts of violence or any person whose property 
and interests in

[[Page 419]]

property are blocked pursuant to paragraph (a)(3) of this section; or
    (iii) 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)(3) of this section.

    Note 1 to paragraph (a) of Sec. 576.201: The names of persons 
listed in or designated pursuant to Executive Order 13315, as amended by 
Executive Order 13350, or designated pursuant to Executive Order 13438, 
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 the Office of Foreign Assets Control's Specially 
Designated Nationals and Blocked Persons List (``SDN List'') with the 
identifier ``[IRAQ2]'' (for persons designated pursuant to paragraphs 
(a)(1) and (a)(2) of this section) or ``[IRAQ3]'' (for persons 
designated pursuant to paragraph (a)(3) of this section). The SDN List 
is accessible through the following page on the Office of Foreign Assets 
Control's Web site: http://www.treasury.gov/sdn. Additional information 
pertaining to the SDN List can be found in appendix A to this chapter. 
See Sec. 576.412 concerning entities that may not be listed on the SDN 
List but whose property and interests in property are nevertheless 
blocked pursuant to paragraph (a) of this section.
    Note 2 to paragraph (a) of Sec. 576.201: The International 
Emergency Economic Powers Act (50 U.S.C. 1701-1706), in Section 203 (50 
U.S.C. 1702), authorizes the blocking of property and interests in 
property of a person during the pendency of an investigation. The names 
of persons whose property and interests in property are blocked pending 
investigation pursuant to paragraph (a) of this section also are 
published in the Federal Register and incorporated into the SDN List 
with the identifier ``[BPI-IRAQ2]'' or ``[BPI-IRAQ3].''
    Note 3 to paragraph (a) of Sec. 576.201: Sections 501.806 and 
501.807 of this chapter describe the procedures to be followed by 
persons seeking, respectively, the unblocking of funds that they believe 
were blocked due to mistaken identity, or administrative reconsideration 
of their status as persons whose property and interests in property are 
blocked pursuant to paragraph (a) of this section.

    (b) All property and interests in property blocked pursuant to 
Executive Order 12722 of August 2, 1990, or Executive Order 12724 of 
August 9, 1990, that continued to be blocked as of July 30, 2004, remain 
blocked and may not be transferred, paid, exported, withdrawn, or 
otherwise dealt in, except as authorized by regulations, orders, 
directives, rulings, instructions, licenses or otherwise, and 
notwithstanding any contracts entered into or any license or permit 
granted prior to the effective date.

    Note to paragraph (b) of Sec. 576.201: In Sec. 576.510 of this 
part, the Office of Foreign Assets Control authorizes all transactions 
involving property and interests in property blocked solely pursuant to 
Executive Orders 12722 or 12724. The Iraqi Sanctions Regulations, 31 CFR 
part 575, which implemented Executive Orders 12722 and 12724, have been 
removed from 31 CFR chapter V.

    (c) The prohibitions in paragraphs (a) and (b) of this section 
include, but are not limited to, prohibitions on the following 
transactions:
    (1) The making of any contribution or provision of funds, goods, or 
services by, to, or for the benefit of any person whose property and 
interests in property are blocked pursuant to paragraphs (a) or (b) 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 paragraphs (a) or (b) of this section.
    (d) Unless otherwise authorized by this part or by a specific 
license expressly referring to this section, any dealing in any security 
(or evidence thereof) held within the possession or control of a U.S. 
person and either registered or inscribed in the name of, or known to be 
held for the benefit of, or issued by, any person whose property and 
interests in property are blocked pursuant to paragraph (a) of this 
section is prohibited. This prohibition includes but is not limited to 
the transfer (including the transfer on the books of any issuer or agent 
thereof), disposition, transportation, importation, exportation, or 
withdrawal of, or the endorsement or guaranty of signatures on, any such 
security on or after the effective date. This prohibition applies 
irrespective of the fact that at any time (whether prior to, on, or 
subsequent to the effective date) the registered or inscribed owner of 
any such security may have or might appear to have assigned, 
transferred, or otherwise disposed of the security.

[[Page 420]]

    (e) The prohibitions in paragraphs (a) and (b) of this section apply 
except to the extent transactions are authorized by regulations, orders, 
directives, rulings, instructions, licenses, or otherwise, and 
notwithstanding any contracts entered into or any license or permit 
granted prior to the effective date.

[75 FR 55466, Sept. 13, 2010, as amended at FR 38543, June 30, 2011]



Sec. 576.202  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. 
576.201(a) or Sec. 576.201(b), is null and void and shall not be the 
basis for the assertion or recognition of any interest in or right, 
remedy, power, or privilege with respect to such property or property 
interests.
    (b) No transfer before the effective date shall be the basis for the 
assertion or recognition of any right, remedy, power, or privilege with 
respect to, or any interest in, any property or interest in property 
blocked pursuant to Sec. 576.201(a) or Sec. 576.201(b), unless the 
person who holds or maintains such property, prior to that date, had 
written notice of the transfer or by any written evidence had recognized 
such transfer.
    (c) Unless otherwise provided, an appropriate license or other 
authorization issued by the Office of Foreign Assets Control before, 
during, or after a transfer shall validate such transfer or make it 
enforceable to the same extent that it would be valid or enforceable but 
for the provisions of IEEPA, Executive Orders 13315, 13350, or 13438, 
this part, and any regulation, order, directive, ruling, instruction, or 
license issued pursuant to this part.
    (d) Transfers of property that otherwise would be null and void or 
unenforceable by virtue of the provisions of this section shall not be 
deemed to be null and void or unenforceable as to any person with whom 
such property is or was held or maintained (and as to such person only) 
in cases in which such person is able to establish to the satisfaction 
of the Office of Foreign Assets Control each of the following:
    (1) Such transfer did not represent a willful violation of the 
provisions of this part by the person with whom such property is or was 
held or maintained (and as to such person only);
    (2) The person with whom such property was held or maintained did 
not have reasonable cause to know or suspect, in view of all the facts 
and circumstances known or available to such person, that such transfer 
required a license or authorization issued pursuant to this part and was 
not so licensed or authorized, or, if a license or authorization did 
purport to cover the transfer, that such license or authorization had 
been obtained by misrepresentation of a third party or withholding of 
material facts or was otherwise fraudulently obtained; and
    (3) The person with whom such property is or was held or maintained 
filed with the Office of Foreign Assets Control a report setting forth 
in full the circumstances relating to such transfer promptly upon 
discovery that:
    (i) Such transfer was in violation of the provisions of this part or 
any regulation, ruling, instruction, license, or other direction or 
authorization issued pursuant to this part;
    (ii) Such transfer was not licensed or authorized by the Office of 
Foreign Assets Control; or
    (iii) If a license did purport to cover the transfer, such license 
had been obtained by misrepresentation of a third party or withholding 
of material facts or was otherwise fraudulently obtained.

    Note to paragraph (d) of Sec. 576.202: The filing of a report in 
accordance with the provisions of paragraph (d)(3) of this section shall 
not be deemed evidence that the terms of paragraphs (d)(1) and (d)(2) of 
this section have been satisfied.

    (e) Unless licensed pursuant to this part, any attachment, judgment, 
decree, lien, execution, garnishment, or other judicial process is null 
and void with respect to any property in which, on or since the 
effective date, there existed an interest of a person whose property and 
interests in property are blocked pursuant to Sec. 576.201(a), or with 
respect to any property and interests

[[Page 421]]

in property blocked pursuant to Sec. 576.201(b).



Sec. 576.203  Holding of funds in interest-bearing accounts; investment
and reinvestment.

    (a) Except as provided in paragraph (c) or (d) of this section, or 
as otherwise directed by the Office of Foreign Assets Control, any U.S. 
person holding funds, such as currency, bank deposits, or liquidated 
financial obligations, subject to Sec. 576.201(a) or Sec. 576.201(b) 
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) 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.
    (3) Funds held or placed in a blocked account pursuant to this 
paragraph (b) may not be invested in instruments the maturity of which 
exceeds 180 days. If interest is credited to a separate blocked account 
or subaccount, the name of the account party on each account must be the 
same.
    (c) Blocked funds held in instruments the maturity of which exceeds 
180 days at the time the funds become subject to Sec. 576.201(a) or 
Sec. 576.201(b) 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 (b) or (d) of this section.
    (d) Blocked funds held in accounts or instruments outside the United 
States at the time the funds become subject to Sec. 576.201(a) or Sec. 
576.201(b) may continue to be held in the same type of accounts or 
instruments, provided the funds earn interest at rates that are 
commercially reasonable.
    (e) This section does not create an affirmative obligation for the 
holder of blocked tangible property, such as chattels or real estate, or 
other blocked property, such as debt or equity securities, to sell or 
liquidate such property. However, the Office of Foreign Assets Control 
may issue licenses permitting or directing such sales or liquidation in 
appropriate cases.
    (f) 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. 576.201(a), nor may their holder cooperate 
in or facilitate the pledging or other attempted use as collateral of 
blocked funds or other assets.



Sec. 576.204  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. 576.201(a) or 
Sec. 576.201(b) 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. 576.201(a) or Sec. 
576.201(b) may, in the discretion of the Office of Foreign Assets 
Control, be sold or liquidated and the net proceeds placed in a blocked 
interest-bearing account in the name of the owner of the property.



Sec. 576.205  Evasions; attempts; conspiracies.

    (a) Except as otherwise authorized, and notwithstanding any contract 
entered into or any license or permit granted prior to the effective 
date, any transaction by any U.S. person or within the United States on 
or after the effective date that evades or avoids, has the purpose of 
evading or avoiding, or

[[Page 422]]

attempts to violate any of the prohibitions set forth in this part is 
prohibited.
    (b) Except as otherwise authorized, and notwithstanding any contract 
entered into or any license or permit granted prior to the effective 
date, any conspiracy formed to violate the prohibitions set forth in 
this part is prohibited.



Sec. 576.206  Protection granted to the Development Fund for Iraq,
Iraqi Petroleum and Petroleum Products, and the Central Bank of Iraq.

    (a) Unless licensed or otherwise authorized pursuant to this part, 
and except as provided in paragraph (b) of this section, any attachment, 
judgment, decree, lien, execution, garnishment, or other judicial 
process on or after the effective date is prohibited, and shall be 
deemed null and void, with respect to the following:
    (1) The Development Fund for Iraq;
    (2) All Iraqi petroleum and petroleum products, and interests 
therein, but only until title passes to the initial purchaser, and 
proceeds, obligations, or any financial instruments of any nature 
whatsoever arising from or related to the sale or marketing thereof, and 
interests therein, in which any foreign country or a national thereof 
has any interest, that are in the United States, that hereafter come 
within the United States, or that are or hereafter come within the 
possession or control of United States persons; and
    (3) Any accounts, assets, investments, or any other property of any 
kind owned by, belonging to, or held by the Central Bank of Iraq, or 
held, maintained, or otherwise controlled by any financial institution 
of any kind in the name of, on behalf of, or otherwise for the Central 
Bank of Iraq.
    (b) The prohibitions in paragraph (a) of this section shall not 
apply with respect to any final judgment arising out of a contractual 
obligation entered into by the Government of Iraq, including any agency 
or instrumentality thereof, after June 30, 2004.



Sec. 576.207  Exemption for property controlled by the military forces 
of the United States and their coalition partners in Iraq.

    The prohibitions in Sec. 576.201(a)(1) and (a)(2) shall not apply 
to property and interests in property that come under the control of the 
military forces of the United States and their coalition partners 
present in Iraq and acting in their official capacity under the command 
or operational control of the commander of United States Central 
Command.



Sec. 576.208  Prohibited transactions related to certain Iraqi cultural
property.

    Unless licensed or otherwise authorized pursuant to this part or 
otherwise consistent with U.S. law, the trade in or transfer of 
ownership or possession of Iraqi cultural property or other items of 
archeological, historical, cultural, rare scientific, and religious 
importance that were illegally removed, or for which a reasonable 
suspicion exists that they were illegally removed, from the Iraq 
National Museum, the National Library, and other locations in Iraq since 
August 6, 1990, is prohibited.

    Note to Sec. 576.208: See Sec. 576.411 for interpretive guidance 
on this section. Questions concerning whether particular Iraqi cultural 
property or other items are subject to this section should be directed 
to the Cultural Heritage Center, U.S. Department of State, tel. 202-632-
6301, fax 202-632-6300, Web site http://culturalheritage.state.gov, e-
mail [email protected].



Sec. 576.209  Exempt transactions.

    (a) Personal communications. The prohibitions contained in Sec. 
576.201(a)(3) 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 importation from 
any country and the exportation to any country of any information or 
informational materials, as defined in Sec. 576.306, whether commercial 
or otherwise, regardless of format or medium of transmission, are exempt 
from the prohibitions of Sec. 576.201(a)(3).
    (2) This section does not exempt from regulation or authorize 
transactions

[[Page 423]]

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 informational materials, or to the 
provision of marketing and business consulting services. Such prohibited 
transactions include, but are not limited to, 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, with respect to information 
or informational materials imported from persons whose property and 
interests in property are blocked pursuant to Sec. 576.201(a)(3), 
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 or authorize transactions incident 
to the exportation of software subject to the Export Administration 
Regulations, 15 CFR parts 730-774, or to the exportation of goods, 
technology, or software 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. 576.201(a) are prohibited.
    (c) Travel. The prohibitions contained in Sec. 576.201(a)(3) do not 
apply to any transactions ordinarily incident to travel to or from any 
country, including importation 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



Sec. 576.301  Blocked account; blocked property.

    The terms blocked account and blocked property shall mean:
    (a) (1) Any account or property subject to the prohibitions in Sec. 
576.201(a) held in the name of a person whose property and interests in 
property are blocked pursuant to Sec. 576.201(a), or in which such 
person has an interest, or
    (2) Any account or property subject to the prohibitions in Sec. 
576.201(b), and
    (b) With respect to which payments, transfers, exportations, 
withdrawals, or other dealings may not be made or effected except 
pursuant to an authorization or license from the Office of Foreign 
Assets Control expressly authorizing such action.

    Note to Sec. 576.301: See Sec. 576.412 concerning the blocked 
status of property and interests in property of an entity that is 50 
percent or more owned by a person whose property and interests in 
property are blocked pursuant to Sec. 576.201(a).



Sec. 576.302  Development Fund for Iraq.

    The term Development Fund for Iraq means the fund established on or 
about May 22, 2003, on the books of the Central Bank of Iraq, by the 
Administrator of the Coalition Provisional Authority responsible for the 
temporary governance of Iraq and all accounts held for the fund or for 
the Central Bank of Iraq in the name of the fund.



Sec. 576.303  Effective date.

    The term effective date refers to the effective date of the 
applicable prohibitions and directives contained in this part as 
follows:
    (a) With respect to a person whose property and interests in 
property are blocked pursuant to Sec. 576.201(a)(1), 12:01 a.m. Eastern 
Daylight Time (``e.d.t.''), August 29, 2003, for those persons listed on 
the Annex to Executive Order 13315, and 12:01 a.m., e.d.t., July 30, 
2004, for those persons added to the Annex to Executive Order 13315 by 
Executive Order 13350;
    (b) With respect to a person whose property and interests in 
property are otherwise blocked pursuant to Sec. 576.201(a)(2) or 
(a)(3), the earlier of the date of actual or constructive notice

[[Page 424]]

that such person's property and interests in property are blocked;
    (c) With respect to the transactions prohibited by Sec. 
576.206(a)(1) and (a)(2), 12:01 a.m. e.d.t., May 23, 2003;
    (d) With respect to the transactions prohibited by Sec. 
576.206(a)(3), 12:01 a.m. Eastern Standard Time (``e.s.t.''), November 
30, 2004.
    (e) With respect to the transactions prohibited by Sec. 576.201(b) 
or Sec. 576.208, 12:01 a.m. e.d.t., July 30, 2004.



Sec. 576.304  Entity.

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



Sec. 576.305  Former Iraqi regime.

    The term former Iraqi regime means the Saddam Hussein regime that 
governed Iraq until on or about May 1, 2003.



Sec. 576.306  Information or informational materials.

    (a) For purposes of this part, the term information or informational 
materials includes, but is not limited to, publications, films, posters, 
phonograph records, photographs, microfilms, microfiche, tapes, compact 
disks, CD ROMs, artworks, and news wire feeds.

    Note to paragraph (a) of Sec. 576.307: To be considered information 
or informational materials, artworks must be classified under chapter 
heading 9701, 9702, or 9703 of the Harmonized Tariff Schedule of the 
United States.

    (b) The term information or informational materials, with respect to 
United States exports, does not include items:
    (1) That were, as of April 30, 1994, or that thereafter become, 
controlled for export pursuant to sections 5 of the Export 
Administration Act of 1979, 50 U.S.C. App. 2401-2420 (1979) (the 
``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. 576.307  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. 576.308  Iraqi petroleum and petroleum products.

    The term Iraqi petroleum and petroleum products means any petroleum, 
petroleum products, or natural gas originating in Iraq, including any 
Iraqi-origin oil inventories, wherever located.



Sec. 576.309  Licenses; general and specific.

    (a) Except as otherwise specified, the term license means any 
license or authorization contained in or issued pursuant to this part.
    (b) The term general license means any license or authorization the 
terms of which are set forth in subpart E of this part.
    (c) The term specific license means any license or authorization not 
set forth in subpart E of this part but issued pursuant to this part.

    Note to Sec. 576.309: See Sec. 501.801 of this chapter for 
licensing procedures.



Sec. 576.310  Government of Iraq.

    The term Government of Iraq means:
    (a) Any interim or permanent Iraqi government in authority after 
June 30, 2004, and any subdivision, agency, or instrumentality thereof; 
and
    (b) Any partnership, association, corporation, or other organization 
substantially owned or controlled by the foregoing.



Sec. 576.311  Person.

    The term person means an individual or entity.



Sec. 576.312  Property; property interest.

    The terms property and property interest include, but are not 
limited to, money, checks, drafts, bullion, bank deposits, savings 
accounts, debts, indebtedness, obligations, notes, guarantees, 
debentures, stocks, bonds, coupons, any other financial instruments, 
bankers acceptances, mortgages, pledges, liens or other rights in the 
nature of security, warehouse receipts, bills of lading, trust receipts, 
bills of sale, any other evidences of title, ownership or indebtedness, 
letters of credit and any documents relating to any

[[Page 425]]

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. 576.313  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. 576.314  UNSC Resolution 1483.

    The term UNSC Resolution 1483 means United Nations Security Council 
Resolution No. 1483, adopted May 22, 2003.



Sec. 576.315  United States.

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



Sec. 576.316  U.S. financial institution.

    The term U.S. financial institution means any U.S. entity (including 
its foreign branches) that is engaged in the business of accepting 
deposits, making, granting, transferring, holding, or brokering loans or 
credits, or purchasing or selling foreign exchange, securities, 
commodity futures or options, or procuring purchasers and sellers 
thereof, as principal or agent. It includes but is not limited to 
depository institutions, banks, savings banks, trust companies, 
securities brokers and dealers, commodity futures and options brokers 
and dealers, forward contract and foreign exchange merchants, securities 
and commodities exchanges, clearing corporations, investment companies, 
employee benefit plans, and U.S. holding companies, U.S. affiliates, or 
U.S. subsidiaries of any of the foregoing. This term includes those 
branches, offices, and agencies of foreign financial institutions that 
are located in the United States, but not such institutions' foreign 
branches, offices, or agencies.



Sec. 576.317  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.



                        Subpart D_Interpretations



Sec. 576.401  Reference to amended sections.

    Except as otherwise specified, reference to any provision in or 
appendix

[[Page 426]]

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. 576.402  Effect of amendment.

    Unless otherwise specifically provided, any amendment, modification, 
or revocation of any provision in or appendix to this part or chapter or 
of any order, regulation, ruling, instruction, or license issued by the 
Office of Foreign Assets Control does not affect any act done or 
omitted, or any civil or criminal proceeding commenced or pending, prior 
to such amendment, modification, or revocation. All penalties, 
forfeitures, and liabilities under any such order, regulation, ruling, 
instruction, or license continue and may be enforced as if such 
amendment, modification, or revocation had not been made.



Sec. 576.403  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. 576.201 if made after the effective date.



Sec. 576.404  Termination and acquisition of an interest in property.

    (a) Whenever a transaction licensed or authorized by or pursuant to 
this part results in the transfer of property (including any property 
interest) away from a person, such property shall no longer be deemed to 
be property blocked pursuant to Sec. 576.201, unless there exists in 
the property another interest that is blocked pursuant to Sec. 576.201 
or any other part of this chapter, 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. 576.201(a), such property shall be deemed to be property in which 
that person has an interest and therefore blocked.
    (c) Unless otherwise provided in a license or authorization issued 
pursuant to this part, Iraqi petroleum and petroleum products shall 
enjoy the protections of Sec. 576.206 until title passes to the initial 
purchaser. For purposes of this part, an initial purchaser is a 
purchaser other than the Government of Iraq or persons acting for it or 
on its behalf in the marketing or sale of Iraqi petroleum and petroleum 
products.



Sec. 576.405  Transactions ordinarily incident to a licensed transaction.

    Any transaction ordinarily incident to a licensed transaction and 
necessary to give effect thereto is also authorized, except:
    (a) An ordinarily incident transaction, not explicitly authorized 
within the terms of the license, by or with a person whose property and 
interests in property are blocked pursuant to Sec. 576.201(a); or
    (b) An ordinarily incident transaction, not explicitly authorized 
within the terms of the license, involving a debit to a blocked account 
or a transfer of blocked property.
    (c)

    Example. A license authorizing Company A, whose property and 
interests in property are blocked pursuant to Sec. 576.201(a), to 
complete a securities sale also authorizes all activities by other 
parties required to complete the sale, including transactions by the 
buyer, broker, transfer agents, banks, etc., provided that such other 
parties are not themselves persons whose property and interests in 
property are blocked pursuant to Sec. 576.201(a).



Sec. 576.406  Provision of services.

    (a) Except as provided in Sec. 576.209, the prohibitions on 
transactions involving blocked property contained in Sec. 576.201 apply 
to services performed in the United States or by U.S. persons, wherever 
located, including by an overseas branch of an entity located in the 
United States:
    (1) On behalf of or for the benefit of a person whose property and 
interests in property are blocked pursuant to Sec. 576.201(a); or
    (2) With respect to property interests subject to Sec. 576.201.
    (b)


[[Page 427]]


    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. 576.201(a).

    Note to Sec. 576.406: See Sec. Sec. 576.507 and 576.509 on 
licensing policy with regard to the provision of certain legal and 
medical services.



Sec. 576.407  Offshore transactions.

    The prohibitions in Sec. 576.201 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. 576.201, or property in which a person whose property 
and interests in property are blocked pursuant to Sec. 576.201 has or 
has had an interest since the effective date.



Sec. 576.408  Payments from blocked accounts to satisfy obligations
prohibited.

    Pursuant to Sec. 576.201, no debits may be made to a blocked 
account to pay obligations to U.S. persons or other persons, except as 
authorized by or pursuant to this part.



Sec. 576.409  Charitable contributions.

    Unless specifically authorized by the Office of Foreign Assets 
Control pursuant to this part, no charitable contribution of funds, 
goods, services, or technology, including contributions to relieve human 
suffering, such as food, clothing or medicine, may be made by, to, or 
for the benefit of, or received from, a person whose property and 
interests in property are blocked pursuant to Sec. 576.201(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. 576.201(a) if made by, to, or in the name 
of, or received from or in the name of, such a person; if made by, to, 
or in the name of, or received from or in the name of, an entity or 
individual acting for or on behalf of, or owned or controlled by, such a 
person; or if made in an attempt to violate, to evade, or to avoid the 
bar on the provision of contributions by, to, or for the benefit of such 
a person, or the receipt of contributions from any such person.



Sec. 576.410  Credit extended and cards issued by U.S. financial
institutions.

    The prohibition in Sec. 576.201 on dealing in property subject to 
that section prohibits U.S. financial institutions from performing under 
any existing credit agreements, including, but not limited to, charge 
cards, debit cards, or other credit facilities issued by a U.S. 
financial institution to a person whose property and interests in 
property are blocked pursuant to Sec. 576.201(a).



Sec. 576.411  Prohibited transactions involving certain Iraqi cultural
property.

    (a) The prohibition on trade in or transfer of ownership or 
possession of certain Iraqi cultural property in Sec. 576.208 is 
separate from, and independent of, other laws and regulations that may 
also prohibit the same conduct.
    (b) The mere compliance with certain legal, administrative, or 
procedural requirements, such as the filing of a U.S. Customs and Border 
Protection Form 3461 (Entry/Immediate Delivery) or U.S. Customs and 
Border Protection Form 7501 (Entry Summary), does not render the trade 
in or transfer of Iraqi cultural property otherwise consistent with U.S. 
law for purposes of Sec. 576.208. The trade in or transfer of Iraqi 
cultural property as described in Sec. 576.208 would violate Sec. 
576.208 regardless of whether the U.S. Customs and Border Protection 
forms were truthfully and accurately completed.

    Note to Sec. 576.411: Other laws and regulations potentially 
applicable to the unlawful trade in or transfer of Iraqi cultural 
property include, but are not limited to, the transportation of stolen 
goods, 18 U.S.C. 2314; the receipt of stolen goods, 18 U.S.C. 2315; the 
importation of goods contrary to law, 18 U.S.C. 545 and 19 U.S.C. 
1595a(a), (b), and (c); the exportation of goods contrary to law, 19 
U.S.C. 1595a(d); the importation of stolen cultural property, 19 U.S.C. 
2607; the importation of cultural property pertaining to the inventory 
of a museum or religious or secular public monument, 19 CFR 12.104a; and 
the emergency protection of Iraqi cultural antiquities, 19 CFR 12.104j.

[[Page 428]]



Sec. 576.412  Entities owned by a person whose property and interests
in property are blocked.

    A person whose property and interests in property are blocked 
pursuant to Sec. 576.201(a) has an interest in all property and 
interests in property of an entity in which it owns, directly or 
indirectly, a 50 percent or greater interest. The property and interests 
in property of such an entity, therefore, are blocked, and such an 
entity is a person whose property and interests in property are blocked 
pursuant to Sec. 576.201(a), regardless of whether the entity itself is 
listed in the Annex to Executive Order 13315, as amended, or designated 
pursuant to Sec. 576.201(a)(2) or (3).



 Subpart E_Licenses, Authorizations, and Statements of Licensing Policy



Sec. 576.501  General and specific licensing procedures.

    For provisions relating to licensing procedures, see part 501, 
subpart E, of this chapter. Licensing actions taken pursuant to part 501 
of this chapter with respect to the prohibitions contained in this part 
are considered actions taken pursuant to this part.



Sec. 576.502  Effect of license or authorization.

    (a) No license or other authorization contained in this part, or 
otherwise issued by the Office of Foreign Assets Control, authorizes or 
validates any transaction effected prior to the issuance of such license 
or other authorization, unless specifically provided in such license or 
authorization.
    (b) No regulation, ruling, instruction, or license authorizes any 
transaction prohibited under this part unless the regulation, ruling, 
instruction or license is issued by the Office of Foreign Assets Control 
and specifically refers to this part. No regulation, ruling, 
instruction, or license referring to this part shall be deemed to 
authorize any transaction prohibited by any other part of this chapter 
unless the regulation, ruling, instruction, or license specifically 
refers to such part.
    (c) Any regulation, ruling, instruction, or license authorizing any 
transaction otherwise prohibited under this part has the effect of 
removing a prohibition contained in this part from the transaction, but 
only to the extent specifically stated by its terms. Unless the 
regulation, ruling, instruction, or license otherwise specifies, such an 
authorization does not create any right, duty, obligation, claim, or 
interest in, or with respect to, any property which would not otherwise 
exist under ordinary principles of law.



Sec. 576.503  Exclusion from licenses.

    The Office of Foreign Assets Control reserves the right to exclude 
any person, property, or transaction from the operation of any license 
or from the privileges conferred by any license. The Office of Foreign 
Assets Control also reserves the right to restrict the applicability of 
any license to particular persons, property, transactions, or classes 
thereof. Such actions are binding upon actual or constructive notice of 
the exclusions or restrictions.



Sec. 576.504  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. 
576.201(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. 576.504: See Sec. 501.603 of this chapter for 
mandatory reporting requirements regarding financial transfers. See also 
Sec. 576.203 concerning the obligation to hold blocked funds in 
interest-bearing accounts.

[[Page 429]]



Sec. 576.505  Entries in certain accounts for normal service charges 
authorized.

    (a) A U.S. financial institution is authorized to debit any blocked 
account held at that financial institution in payment or reimbursement 
for normal service charges owed it by the owner of that blocked account.
    (b) As used in this section, the term normal service charge 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. 576.506  Investment and reinvestment of certain funds.

    Subject to the requirements of Sec. 576.203, U.S. financial 
institutions are authorized to invest and reinvest assets blocked 
pursuant to Sec. 576.201, 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. 576.201(a).



Sec. 576.507  Provision of certain legal services authorized.

    (a) The provision of the following legal services to or on behalf of 
persons whose property and interests in property are blocked pursuant to 
Sec. 576.201(a) is authorized, provided that all receipts of payment of 
professional fees and reimbursement of incurred expenses must be 
specifically licensed:
    (1) Provision of legal advice and counseling on the requirements of 
and compliance with the laws of the United States or any jurisdiction 
within the United States, provided that such advice and counseling are 
not provided to facilitate transactions in violation of this part;
    (2) Representation of persons named as defendants in or otherwise 
made parties to domestic U.S. legal, arbitration, or administrative 
proceedings;
    (3) Initiation and conduct of domestic U.S. legal, arbitration, or 
administrative proceedings in defense of property interests subject to 
U.S. jurisdiction;
    (4) Representation of persons before any federal or state agency 
with respect to the imposition, administration, or enforcement of U.S. 
sanctions against such persons; and
    (5) Provision of legal services in any other context in which 
prevailing U.S. law requires access to legal counsel at public expense.
    (b) The provision of any other legal services to persons whose 
property or interests in property are blocked pursuant to Sec. 
576.201(a), 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. 576.201(a) is prohibited unless licensed pursuant to 
this part.



Sec. 576.508  Judicial process in legal proceedings involving ecological
accidents.

    The Office of Foreign Assets Control may issue specific licenses on 
a case-by-case basis to authorize the attachment, judgment, decree, 
lien, execution, garnishment, or other judicial process against property 
and interests in property protected by Sec. 576.206 to satisfy 
liability for damages assessed in

[[Page 430]]

connection with an ecological accident (including an oil spill) that 
occurred after May 22, 2003.



Sec. 576.509  Authorization of emergency medical services.

    The provision of nonscheduled emergency medical services in the 
United States to persons whose property and interests in property are 
blocked pursuant to Sec. 576.201(a) is authorized, provided that all 
receipt of payment for such services must be specifically licensed.



Sec. 576.510  Unblocking certain blocked property.

    (a) Except for such property and interests in property described in 
paragraph (b) of this section, all transactions involving property and 
interests in property blocked pursuant to Sec. 576.201(b) of this part 
are authorized.
    (b) The authorization in paragraph (a) of this section does not 
apply to blocked property and interests in property of persons subject 
to sanctions pursuant to Sec. 576.201(a) of this part or any other part 
of 31 CFR chapter V.



Sec. 576.511  Property controlled by the military forces of the United
States and their coalition partners in Iraq.

    The prohibition in Sec. 576.201(a)(3) that deals with blocked 
property and interests in property shall not apply to property and 
interests in property controlled by the military forces of the United 
States and their coalition partners present in Iraq and acting in their 
official capacity under the command or operational control of the 
commander of United States Central Command.

    Note to Sec. 576.511: See Sec. 576.207 of this part, which exempts 
property and interests in property that come under the control of the 
military forces of the United States and their coalition partners 
present in Iraq and acting in their official capacity from the 
prohibitions in Sec. 576.201(a)(1) and (2).



Sec. 576.512  Transactions with certain blocked persons authorized.

    (a) All transactions with state bodies, corporations, or agencies of 
the former Iraqi regime that are otherwise prohibited by Sec. 
576.201(a) are authorized.
    (b) The authorization in paragraph (a) of this section does not 
apply to any transactions with state bodies, corporations, or agencies 
of the former Iraqi regime listed on the Office of Foreign Assets 
Control's Specially Designated Nationals and Blocked Persons List.

[75 FR 55466, Sept. 13, 2010, as amended at 76 FR 38542, June 30, 2011]



                            Subpart F_Reports



Sec. 576.601  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



Sec. 576.701  Penalties.

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

    Note to paragraph (a)(1) of Sec. 576.701: As of the date of 
publication in the Federal Register of the final rule adding this part 
to 31 CFR chapter V September 13, 2010, IEEPA provides for a maximum 
civil penalty not to exceed the greater of $250,000 or an amount that is 
twice the amount of the transaction that is the basis of the violation 
with respect to which the penalty is imposed.

    (2) A person who willfully commits, willfully attempts to commit, or 
willfully conspires to commit, or aids or abets in the commission of a 
violation of any license, order, regulation, or prohibition may, upon 
conviction, be fined not more than $1,000,000, or if a

[[Page 431]]

natural person, may be imprisoned for not more than 20 years, or both.
    (b) Adjustments to penalty amounts. (1) The civil penalties provided 
in IEEPA are subject to adjustment pursuant to the Federal Civil 
Penalties Inflation Adjustment Act of 1990 (Pub. L. 101-410, as amended, 
28 U.S.C. 2461 note).
    (2) The criminal penalties provided in IEEPA are subject to 
adjustment pursuant to 18 U.S.C. 3571.
    (c) Attention is also directed to 18 U.S.C. 1001, which provides 
that whoever, in any matter within the jurisdiction of the executive, 
legislative, or judicial branch of the Government of the United States, 
knowingly and willfully falsifies, conceals, or covers up by any trick, 
scheme, or device a material fact; 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 relevant 
provisions of other applicable laws.



Sec. 576.702  Pre-Penalty Notice; settlement.

    (a) When required. If the Office of Foreign Assets Control has 
reason to believe that there has occurred a violation of any provision 
of this part or a violation of the provisions of any license, ruling, 
regulation, order, direction, or instruction issued by or pursuant to 
the direction or authorization of the Secretary of the Treasury pursuant 
to this part or otherwise under IEEPA and determines that a civil 
monetary penalty is warranted, the Office of Foreign Assets Control will 
issue a Pre-Penalty Notice informing the alleged violator of the 
agency's intent to impose a monetary penalty. A Pre-Penalty Notice shall 
be in writing. The Pre-Penalty Notice may be issued whether or not 
another agency has taken any action with respect to the matter. For a 
description of the contents of a Pre-Penalty Notice, see Appendix A to 
part 501 of this chapter.
    (b)(1) Right to respond. An alleged violator has the right to 
respond to a Pre-Penalty Notice by making a written presentation to the 
Office of Foreign Assets Control. For a description of the information 
that should be included in such a response, see Appendix A to part 501 
of this chapter.
    (2) Deadline for response. A response to a Pre-Penalty Notice must 
be made within the applicable 30-day period set forth in this paragraph. 
The failure to submit a response within the applicable time period set 
forth in this paragraph shall be deemed to be a waiver of the right to 
respond.
    (i) Computation of time for response. A response to a Pre-Penalty 
Notice must be postmarked or date-stamped by the U.S. Postal Service (or 
foreign postal service, if mailed abroad) or courier service provider 
(if transmitted to the Office of Foreign Assets Control by courier) on 
or before the 30th day after the postmark date on the envelope in which 
the Pre-Penalty Notice was mailed. If the Pre-Penalty Notice was 
personally delivered by a non-U.S. Postal Service agent authorized by 
the Office of Foreign Assets Control, a response must be postmarked or 
date-stamped on or before the 30th day after the date of delivery.
    (ii) Extensions of time for response. If a due date falls on a 
Federal holiday or weekend, that due date is extended to include the 
following business day. Any other extensions of time will be granted, at 
the discretion of the Office of Foreign Assets Control, only upon 
specific request to the Office of Foreign Assets Control.
    (3) Form and method of response. A response to a Pre-Penalty Notice 
need not be in any particular form, but it must be typewritten and 
signed by the alleged violator or a representative thereof, must contain 
information sufficient to indicate that it is in response to the Pre-
Penalty Notice, and must include the Office of Foreign Assets Control 
identification number listed on the Pre-Penalty Notice. A copy of the 
written response may be sent by facsimile, but the original also must be 
sent to the Office of Foreign Assets Control Civil Penalties Division by 
mail or courier and must be postmarked or date-stamped in accordance 
with paragraph (b)(2) of this section.

[[Page 432]]

    (c) Settlement. Settlement discussion may be initiated by the Office 
of Foreign Assets Control, the alleged violator, or the alleged 
violator's authorized representative. For a description of practices 
with respect to settlement, see Appendix A to part 501 of this chapter.
    (d) Guidelines. Guidelines for the imposition or settlement of civil 
penalties by the Office of Foreign Assets Control are contained in 
Appendix A to part 501 of this chapter.
    (e) Representation. A representative of the alleged violator may act 
on behalf of the alleged violator, but any oral communication with the 
Office of Foreign Assets Control prior to a written submission regarding 
the specific allegations contained in the Pre-Penalty Notice must be 
preceded by a written letter of representation, unless the Pre-Penalty 
Notice was served upon the alleged violator in care of the 
representative.



Sec. 576.703  Penalty imposition.

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



Sec. 576.704  Administrative collection; referral to United States 
Department of Justice.

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



                          Subpart H_Procedures



Sec. 576.801  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. 576.802  Delegation by the Secretary of the Treasury.

    (a) Except as provided in paragraph (b) of this section, any action 
that the Secretary of the Treasury is authorized to take pursuant to 
Executive Order 13303 of May 22, 2003, and any subsequent Executive 
orders relating to the national emergency declared therein, including 
but not limited to Executive Order 13315 of August 28, 2003, and 
Executive Order 13438 of July 17, 2007, may be taken by the Director of 
the Office of Foreign Assets Control or by any other person to whom the 
Secretary of the Treasury has delegated the authority so to act.
    (b) Unless otherwise delegated, the authority provided in section 2 
of Executive Order 13315 to confiscate property blocked pursuant to this 
part and transfer all vested right, title, and interest in such property 
to the Development Fund for Iraq shall be exercised only by the 
Secretary of the Treasury, in consultation with the Secretary of State.



                    Subpart I_Paperwork Reduction Act



Sec. 576.901  Paperwork Reduction Act notice.

    For approval by the Office of Management and Budget (``OMB'') under 
the Paperwork Reduction Act of 1995 (44 U.S.C. 3507) of information 
collections relating to recordkeeping and reporting requirements, 
licensing procedures (including those pursuant to statements of 
licensing policy), and other procedures, see 501.901 of this

[[Page 433]]

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.



PART 588_WESTERN BALKANS STABILIZATION REGULATIONS--Table of Contents



      Subpart A_Relation of This Part to Other Laws and Regulations

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

                         Subpart B_Prohibitions

588.201 Prohibited transactions involving blocked property.
588.202 Effect of transfers violating the provisions of this part.
588.203 Holding of funds in interest-bearing accounts; investment and 
          reinvestment.
588.204 Expenses of maintaining blocked physical property; liquidation 
          of blocked property.
588.205 Evasions; attempts; conspiracies.

                      Subpart C_General Definitions

588.301 Blocked account; blocked property.
588.302 Effective date.
588.303 Entity.
588.304 Interest.
588.305 Licenses; general and specific.
588.306 Person.
588.307 Property; property interest.
588.308 Transfer.
588.309 United States.
588.310 U.S. financial institution.
588.311 United States person; U.S. person.
588.312 Financial, material, or technological support.

                        Subpart D_Interpretations

588.401 Reference to amended sections.
588.402 Effect of amendment.
588.403 Termination and acquisition of an interest in blocked property.
588.404 Transactions ordinarily incident to a licensed transaction.
588.405 Provision of services.
588.406 Offshore transactions.
588.407 Payments from blocked accounts to satisfy obligations 
          prohibited.
588.408 Charitable contributions.
588.409 Credit extended and cards issued by U.S. financial institutions.
588.410 Setoffs prohibited.
588.411 Entities owned by a person whose property and interests in 
          property are blocked.

 Subpart E_Licenses, Authorizations, and Statements of Licensing Policy

588.501 General and specific licensing procedures.
588.502 Effect of license or authorization.
588.503 Exclusion from licenses.
588.504 Payments and transfers to blocked accounts in U.S. financial 
          institutions.
588.505 Entries in certain accounts for normal service charges 
          authorized.
588.506 Investment and reinvestment of certain funds.
588.507 Provision of certain legal services authorized.
588.508 Authorization of emergency medical services.

                            Subpart F_Reports

588.601 Records and reports.

                           Subpart G_Penalties

588.701 Penalties.
588.702 Pre-Penalty Notice; settlement.
588.703 Penalty imposition.
588.704 Administrative collection; referral to United States Department 
          of Justice.

                          Subpart H_Procedures

588.801 Procedures.
588.802 Delegation by the Secretary of the Treasury.

                    Subpart I_Paperwork Reduction Act

588.901 Paperwork Reduction Act notice.

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

    Source: 76 FR 38004, June 29, 2011, unless otherwise noted.



      Subpart A_Relation of This Part to Other Laws and Regulations



Sec. 588.101  Relation of this part to other laws and regulations.

    This part is separate from, and independent of, the other parts of 
this chapter, with the exception of part 501 of this chapter, the 
recordkeeping and reporting requirements and license application and 
other procedures of which apply to this part. Actions taken pursuant to 
part 501 of this chapter with respect to the prohibitions contained in 
this part are considered actions taken pursuant to this part. Differing

[[Page 434]]

foreign policy and national security circumstances may result in 
differing interpretations of similar language among the parts of this 
chapter. No license or authorization contained in or issued pursuant to 
those other parts authorizes any transaction prohibited by this part. No 
license or authorization contained in or issued pursuant to any other 
provision of law or regulation authorizes any transaction prohibited by 
this part. No license or authorization contained in or issued pursuant 
to this part relieves the involved parties from complying with any other 
applicable laws or regulations.



                         Subpart B_Prohibitions



Sec. 588.201  Prohibited transactions involving blocked property.

    (a) All property and interests in property that are in the United 
States, that hereafter come within the United States, or that are or 
hereafter come within the possession or control of U.S. persons, 
including their overseas branches, of the following persons are blocked 
and may not be transferred, paid, exported, withdrawn, or otherwise 
dealt in:
    (1) Any person listed in the Annex to Executive Order 13219 of June 
26, 2001 (66 FR 34777, 3 CFR, 2001 Comp., p.778), as amended by 
Executive Order 13304 of May 28, 2003 (68 FR 32315, 3 CFR, 2004 Comp. p. 
229); and
    (2) Any person determined by the Secretary of the Treasury, in 
consultation with the Secretary of State:
    (i) To be under open indictment by the International Criminal 
Tribunal for the former Yugoslavia, unless circumstances warrant 
otherwise; or
    (ii) To have committed, or to pose a significant risk of committing, 
acts of violence that have the purpose or effect of threatening the 
peace in or diminishing the stability or security of any area or state 
in the Western Balkans region, undermining the authority, efforts, or 
objectives of international organizations or entities present in the 
region, or endangering the safety of persons participating in or 
providing support to the activities of those international organizations 
or entities; or
    (iii) To have actively obstructed, or pose a significant risk of 
actively obstructing, the Ohrid Framework Agreement of 2001 relating to 
Macedonia, United Nations Security Council Resolution 1244 relating to 
Kosovo, or the Dayton Accords or the Conclusions of the Peace 
Implementation Conference held in London on December 8-9, 1995, 
including the decisions or conclusions of the High Representative, the 
Peace Implementation Council or its Steering Board, relating to Bosnia 
and Herzegovina; or
    (iv) To have materially assisted in, sponsored, or provided 
financial, material, or technological support for, or goods or services 
in support of, such acts of violence or obstructionism or any person 
whose property and interests in property are blocked pursuant to this 
paragraph (a); or
    (v) To be owned or controlled by, or acting or purporting to act 
directly or indirectly for or on behalf of, any person whose property 
and interests in property are blocked pursuant to this paragraph (a).

    Note 1 to paragraph (a) of Sec. 588.201: The names of persons 
listed in or designated pursuant to Executive Order 13219, as amended by 
Executive Order 13304, whose property and interests in property 
therefore are blocked pursuant to paragraph (a) of this section, are 
published in the Federal Register and incorporated into the Office of 
Foreign Assets Control's Specially Designated Nationals and Blocked 
Persons List (``SDN List'') with the identifier ``[BALKANS].'' The SDN 
List is accessible through the following page on the Office of Foreign 
Assets Control's Web site: http://www.treasury.gov/sdn. Additional 
information pertaining to the SDN List can be found in appendix A to 
this chapter. See Sec. 588.411 concerning entities that may not be 
listed on the SDN List but whose property and interests in property are 
nevertheless blocked pursuant to paragraph (a) of this section.
    Note 2 to paragraph (a) of Sec. 588.201: The International 
Emergency Economic Powers Act (50 U.S.C. 1701-1706), 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-BALKANS].''
    Note 3 to paragraph (a) of Sec. 588.201: Sections 501.806 and 
501.807 of this chapter describe the procedures to be followed by 
persons seeking, respectively, the unblocking of

[[Page 435]]

funds that they believe were blocked due to mistaken identity, or 
administrative reconsideration of their status as persons whose property 
and interests in property are blocked pursuant to paragraph (a) of this 
section.

    (b) The prohibitions in paragraph (a) of this section include, but 
are not limited to, prohibitions on the following transactions:
    (1) The making of any contribution or provision of funds, goods, or 
services by, to, or for the benefit of any person whose property and 
interests in property are blocked pursuant to paragraph (a) of this 
section; and
    (2) The receipt of any contribution or provision of funds, goods, or 
services from any person whose property and interests in property are 
blocked pursuant to paragraph (a) of this section.
    (c) Unless authorized by this part or by a specific license 
expressly referring to this section, any dealing in any security (or 
evidence thereof) held within the possession or control of a U.S. person 
and either registered or inscribed in the name of, or known to be held 
for the benefit of, or issued by, any person whose property and 
interests in property are blocked pursuant to paragraph (a) of this 
section is prohibited. This prohibition includes but is not limited to 
the transfer (including the transfer on the books of any issuer or agent 
thereof), disposition, transportation, importation, exportation, or 
withdrawal of, or the endorsement or guaranty of signatures on, any such 
security on or after the effective date. This prohibition applies 
irrespective of the fact that at any time (whether prior to, on, or 
subsequent to the effective date) the registered or inscribed owner of 
any such security may have or might appear to have assigned, 
transferred, or otherwise disposed of the security.
    (d) The prohibitions in paragraph (a) of this section apply except 
to the extent transactions are authorized by regulations, orders, 
directives, rulings, instructions, licenses, or otherwise, and 
notwithstanding any contracts entered into or any license or permit 
granted prior to the effective date.

[76 FR 38004, June 29, 2011, as amended at 76 FR 38543, June 30, 2011]



Sec. 588.202  Effect of transfers violating the provisions of this part.

    (a) Any transfer after the effective date that is in violation of 
any provision of this part or of any regulation, order, directive, 
ruling, instruction, or license issued pursuant to this part, and that 
involves any property or interest in property blocked pursuant to Sec. 
588.201(a), is null and void and shall not be the basis for the 
assertion or recognition of any interest in or right, remedy, power, or 
privilege with respect to such property or property interests.
    (b) No transfer before the effective date shall be the basis for the 
assertion or recognition of any right, remedy, power, or privilege with 
respect to, or any interest in, any property or interest in property 
blocked pursuant to Sec. 588.201(a), unless the person who holds or 
maintains such property, prior to that date, had written notice of the 
transfer or by any written evidence had recognized such transfer.
    (c) Unless otherwise provided, an appropriate license or other 
authorization issued by the Office of Foreign Assets Control before, 
during, or after a transfer shall validate such transfer or make it 
enforceable to the same extent that it would be valid or enforceable but 
for the provisions of this part and any regulation, order, directive, 
ruling, instruction, or license issued pursuant to this part.
    (d) Transfers of property that otherwise would be null and void or 
unenforceable by virtue of the provisions of this section shall not be 
deemed to be null and void or unenforceable as to any person with whom 
such property is or was held or maintained (and as to such person only) 
in cases in which such person is able to establish to the satisfaction 
of the Office of Foreign Assets Control each of the following:
    (1) Such transfer did not represent a willful violation of the 
provisions of this part by the person with whom such property is or was 
held or maintained (and as to such person only);
    (2) The person with whom such property is or was held or maintained 
did not have reasonable cause to know or suspect, in view of all the 
facts and circumstances known or available to such

[[Page 436]]

person, that such transfer required a license or authorization issued 
pursuant to this part and was not so licensed or authorized, or, if a 
license or authorization did purport to cover the transfer, that such 
license or authorization had been obtained by misrepresentation of a 
third party or withholding of material facts or was otherwise 
fraudulently obtained; and
    (3) The person with whom such property is or was held or maintained 
filed with the Office of Foreign Assets Control a report setting forth 
in full the circumstances relating to such transfer promptly upon 
discovery that:
    (i) Such transfer was in violation of the provisions of this part or 
any regulation, ruling, instruction, license, or other directive or 
authorization issued pursuant to this part;
    (ii) Such transfer was not licensed or authorized by the Office of 
Foreign Assets Control; or
    (iii) If a license did purport to cover the transfer, such license 
had been obtained by misrepresentation of a third party or withholding 
of material facts or was otherwise fraudulently obtained.

    Note to paragraph (d) of Sec. 588.202: The filing of a report in 
accordance with the provisions of paragraph (d)(3) of this section shall 
not be deemed evidence that the terms of paragraphs (d)(1) and (d)(2) of 
this section have been satisfied.

    (e) Unless licensed pursuant to this part, any attachment, judgment, 
decree, lien, execution, garnishment, or other judicial process is null 
and void with respect to any property in which, on or since the 
effective date, there existed an interest of a person whose property and 
interests in property are blocked pursuant to Sec. 588.201(a).



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

    (a) Except as provided in paragraphs (e) or (f) of this section, or 
as otherwise directed by the Office of Foreign Assets Control, any U.S. 
person holding funds, such as currency, bank deposits, or liquidated 
financial obligations, subject to Sec. 588.201(a) shall hold or place 
such funds in a blocked interest-bearing account located in the United 
States.
    (b)(1) For purposes of this section, the term blocked interest-
bearing account means a blocked account:
    (i) In a federally-insured U.S. bank, thrift institution, or credit 
union, provided the funds are earning interest at rates that are 
commercially reasonable; or
    (ii) With a broker or dealer registered with the Securities and 
Exchange Commission under the Securities Exchange Act of 1934 (15 U.S.C. 
78a et seq.), provided the funds are invested in a money market fund or 
in U.S. Treasury bills.
    (2) Funds held or placed in a blocked account pursuant to paragraph 
(a) of this section may not be invested in instruments the maturity of 
which exceeds 180 days.
    (c) For purposes of this section, a rate is commercially reasonable 
if it is the rate currently offered to other depositors on deposits or 
instruments of comparable size and maturity.
    (d) For purposes of this section, if interest is credited to a 
separate blocked account or subaccount, the name of the account party on 
each account must be the same.
    (e) Blocked funds held in instruments the maturity of which exceeds 
180 days at the time the funds become subject to Sec. 588.201(a) may 
continue to be held until maturity in the original instrument, provided 
any interest, earnings, or other proceeds derived therefrom are paid 
into a blocked interest-bearing account in accordance with paragraphs 
(a) or (f) of this section.
    (f) Blocked funds held in accounts or instruments outside the United 
States at the time the funds become subject to Sec. 588.201(a) may 
continue to be held in the same type of accounts or instruments, 
provided the funds earn interest at rates that are commercially 
reasonable.
    (g) This section does not create an affirmative obligation for the 
holder of blocked tangible property, such as chattels or real estate, or 
of other blocked property, such as debt or equity securities, to sell or 
liquidate such property. However, the Office of Foreign Assets Control 
may issue licenses permitting or directing such sales or liquidation in 
appropriate cases.
    (h) Funds subject to this section may not be held, invested, or 
reinvested in a

[[Page 437]]

manner that provides immediate financial or economic benefit or access 
to any person whose property and interests in property are blocked 
pursuant to Sec. 588.201(a), nor may their holder cooperate in or 
facilitate the pledging or other attempted use as collateral of blocked 
funds or other assets.



Sec. 588.204  Expenses of maintaining blocked physical property; 
liquidation of blocked property.

    (a) Except as otherwise authorized, and notwithstanding the 
existence of any rights or obligations conferred or imposed by any 
international agreement or contract entered into or any license or 
permit granted prior to the effective date, all expenses incident to the 
maintenance of physical property blocked pursuant to Sec. 588.201(a) 
shall be the responsibility of the owners or operators of such property, 
which expenses shall not be met from blocked funds.
    (b) Property blocked pursuant to Sec. 588.201(a) may, in the 
discretion of the Office of Foreign Assets Control, be sold or 
liquidated and the net proceeds placed in a blocked interest-bearing 
account in the name of the owner of the property.



Sec. 588.205  Evasions; attempts; conspiracies.

    (a) Except as otherwise authorized, and notwithstanding any contract 
entered into or any license or permit granted prior to the effective 
date, any transaction by a U.S. person or within the United States on or 
after the effective date that evades or avoids, has the purpose of 
evading or avoiding, or attempts to violate any of the prohibitions set 
forth in this part is prohibited.
    (b) Except as otherwise authorized, and notwithstanding any contract 
entered into or any license or permit granted prior to the effective 
date, any conspiracy formed to violate the prohibitions set forth in 
this part is prohibited.



                      Subpart C_General Definitions



Sec. 588.301  Blocked account; blocked property.

    The terms blocked account and blocked property shall mean any 
account or property subject to the prohibitions in Sec. 588.201 held in 
the name of a person whose property and interests in property are 
blocked pursuant to Sec. 588.201(a), or in which such person has an 
interest, and with respect to which payments, transfers, exportations, 
withdrawals, or other dealings may not be made or effected except 
pursuant to an authorization or license from the Office of Foreign 
Assets Control expressly authorizing such action.

    Note to Sec. 588.301: See Sec. 588.411 concerning the blocked 
status of property and interests in property of an entity that is 50 
percent or more owned by a person whose property and interests in 
property are blocked pursuant to Sec. 588.201(a).



Sec. 588.302  Effective date.

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



Sec. 588.303  Entity.

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

[[Page 438]]



Sec. 588.304  Interest.

    Except as otherwise provided in this part, the term interest, when 
used with respect to property (e.g., ``an interest in property''), means 
an interest of any nature whatsoever, direct or indirect.



Sec. 588.305  Licenses; general and specific.

    (a) Except as otherwise specified, the term license means any 
license or authorization contained in or issued pursuant to this part.
    (b) The term general license means any license or authorization the 
terms of which are set forth in subpart E of this part.
    (c) The term specific license means any license or authorization not 
set forth in subpart E of this part but issued pursuant to this part.

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



Sec. 588.306  Person.

    The term person means an individual or entity.



Sec. 588.307  Property; property interest.

    The terms property and property interest include, but are not 
limited to, money, checks, drafts, bullion, bank deposits, savings 
accounts, debts, indebtedness, obligations, notes, guarantees, 
debentures, stocks, bonds, coupons, any other financial instruments, 
bankers acceptances, mortgages, pledges, liens or other rights in the 
nature of security, warehouse receipts, bills of lading, trust receipts, 
bills of sale, any other evidences of title, ownership or indebtedness, 
letters of credit and any documents relating to any rights or 
obligations thereunder, powers of attorney, goods, wares, merchandise, 
chattels, stocks on hand, ships, goods on ships, real estate mortgages, 
deeds of trust, vendors' sales agreements, land contracts, leaseholds, 
ground rents, real estate and any other interest therein, options, 
negotiable instruments, trade acceptances, royalties, book accounts, 
accounts payable, judgments, patents, trademarks or copyrights, 
insurance policies, safe deposit boxes and their contents, annuities, 
pooling agreements, services of any nature whatsoever, contracts of any 
nature whatsoever, and any other property, real, personal, or mixed, 
tangible or intangible, or interest or interests therein, present, 
future, or contingent.



Sec. 588.308  Transfer.

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



Sec. 588.309  United States.

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



Sec. 588.310  U.S. financial institution.

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

[[Page 439]]

securities, or commodity futures or options, or procuring purchasers and 
sellers thereof, as principal or agent. It includes but is not limited 
to depository institutions, banks, savings banks, trust companies, 
securities brokers and dealers, commodity futures and options brokers 
and dealers, forward contract and foreign exchange merchants, securities 
and commodities exchanges, clearing corporations, investment companies, 
employee benefit plans, and U.S. holding companies, U.S. affiliates, or 
U.S. subsidiaries of any of the foregoing. This term includes those 
branches, offices, and agencies of foreign financial institutions that 
are located in the United States, but not such institutions' foreign 
branches, offices, or agencies.



Sec. 588.311  United States person; U.S. person.

    The term United States person or U.S. person means any United States 
citizen, permanent resident alien, entity organized under the laws of 
the United States or any jurisdiction within the United States 
(including foreign branches), or any person in the United States.



Sec. 588.312  Financial, material, or technological support.

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



                        Subpart D_Interpretations



Sec. 588.401  Reference to amended sections.

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



Sec. 588.402  Effect of amendment.

    Unless otherwise specifically provided, any amendment, modification, 
or revocation of any provision in or appendix to this part or chapter or 
of any order, regulation, ruling, instruction, or license issued by the 
Office of Foreign Assets Control does not affect any act done or 
omitted, or any civil or criminal proceeding commenced or pending, prior 
to such amendment, modification, or revocation. All penalties, 
forfeitures, and liabilities under any such order, regulation, ruling, 
instruction, or license continue and may be enforced as if such 
amendment, modification, or revocation had not been made.



Sec. 588.403  Termination and acquisition of an interest in blocked
property.

    (a) Whenever a transaction licensed or authorized by or pursuant to 
this part results in the transfer of property (including any property 
interest) away from a person, such property shall no longer be deemed to 
be property blocked pursuant to Sec. 588.201(a), unless there exists in 
the property another interest that is blocked pursuant to Sec. 
588.201(a), the transfer of which has not been effected pursuant to 
license or other authorization.
    (b) Unless otherwise specifically provided in a license or 
authorization issued pursuant to this part, if property (including any 
property interest) is transferred or attempted to be transferred to a 
person whose property and interests in property are blocked pursuant to 
Sec. 588.201(a), such property shall be deemed to be property in which 
that person has an interest and therefore blocked.

[[Page 440]]



Sec. 588.404  Transactions ordinarily incident to a licensed transaction.

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



Sec. 588.405  Provision of services.

    (a) Except as provided in Sec. 588.206, the prohibitions on 
transactions involving blocked property contained in Sec. 588.201 apply 
to services performed in the United States or by U.S. persons, wherever 
located, including by an overseas branch of an entity located in the 
United States:
    (1) On behalf of or for the benefit of a person whose property and 
interests in property are blocked pursuant to Sec. 588.201(a); or
    (2) With respect to property interests subject to Sec. 588.201.
    (b) Example. U.S. persons may not, except as authorized by or 
pursuant to this part, provide legal, accounting, financial, brokering, 
freight forwarding, transportation, public relations, or other services 
to a person whose property and interests in property are blocked 
pursuant to Sec. 588.201(a).

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



Sec. 588.406  Offshore transactions.

    The prohibitions in Sec. 588.201 on transactions or dealings 
involving blocked property apply to transactions by any U.S. person in a 
location outside the United States with respect to property held in the 
name of a person whose property and interests in property are blocked 
pursuant to Sec. 588.201(a), or property in which a person whose 
property and interests in property are blocked pursuant to Sec. 
588.201(a) has or has had an interest since the effective date.



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

    Pursuant to Sec. 588.201, no debits may be made to a blocked 
account to pay obligations to U.S. persons or other persons, except as 
authorized by or pursuant to this part.



Sec. 588.408  Charitable contributions.

    Unless specifically authorized by the Office of Foreign Assets 
Control pursuant to this part, no charitable contribution of funds, 
goods, services, or technology, including contributions to relieve human 
suffering, such as food, clothing or medicine, may be made by, to, or 
for the benefit of, or received from, a person whose property and 
interests in property are blocked pursuant to Sec. 588.201(a). For the 
purposes of this part, a contribution is made by, to, or for the benefit 
of, or received from, a person whose property and interests in property 
are blocked pursuant to Sec. 588.201(a) if made by, to, or in the name 
of, or received from or in the name of, such a person; if made by, to, 
or in the name of, or received from or in the name of, an entity or 
individual acting for or on behalf of, or owned or controlled by, such a 
person; or if made in an attempt to violate, to evade, or to avoid the 
bar on the provision of contributions by, to, or for the benefit of such 
a person, or the receipt of contributions from any such person.



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

    The prohibition in Sec. 588.201 on dealing in property subject to 
that section prohibits U.S. financial institutions from performing under 
any existing credit

[[Page 441]]

agreements, including, but not limited to, charge cards, debit cards, or 
other credit facilities issued by a U.S. financial institution to a 
person whose property and interests in property are blocked pursuant to 
Sec. 588.201(a).



Sec. 588.410  Setoffs prohibited.

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



Sec. 588.411  Entities owned by a person whose property and interests
in property are blocked.

    A person whose property and interests in property are blocked 
pursuant to Sec. 588.201(a) has an interest in all property and 
interests in property of an entity in which it owns, directly or 
indirectly, a 50 percent or greater interest. The property and interests 
in property of such an entity, therefore, are blocked, and such an 
entity is a person whose property and interests in property are blocked 
pursuant to Sec. 588.201(a), regardless of whether the entity itself is 
listed in the Annex to Executive Order 13219, as amended by Executive 
Order 13304, or designated pursuant to Sec. 588.201(a)(2).



 Subpart E_Licenses, Authorizations, and Statements of Licensing Policy



Sec. 588.501  General and specific licensing procedures.

    For provisions relating to licensing procedures, see part 501, 
subpart E of this chapter. Licensing actions taken pursuant to part 501 
of this chapter with respect to the prohibitions contained in this part 
are considered actions taken pursuant to this part.



Sec. 588.502  Effect of license or authorization.

    (a) No license or other authorization contained in this part, or 
otherwise issued by the Office of Foreign Assets Control, authorizes or 
validates any transaction effected prior to the issuance of such license 
or other authorization, unless specifically provided in such license or 
authorization.
    (b) No regulation, ruling, instruction, or license authorizes any 
transaction prohibited under this part unless the regulation, ruling, 
instruction, or license is issued by the Office of Foreign Assets 
Control and specifically refers to this part. No regulation, ruling, 
instruction, or license referring to this part shall be deemed to 
authorize any transaction prohibited by any other part of this chapter 
unless the regulation, ruling, instruction, or license specifically 
refers to such part.
    (c) Any regulation, ruling, instruction, or license authorizing any 
transaction otherwise prohibited under this part has the effect of 
removing a prohibition contained in this part from the transaction, but 
only to the extent specifically stated by its terms. Unless the 
regulation, ruling, instruction, or license otherwise specifies, such an 
authorization does not create any right, duty, obligation, claim, or 
interest in, or with respect to, any property which would not otherwise 
exist under ordinary principles of law.



Sec. 588.503  Exclusion from licenses.

    The Office of Foreign Assets Control reserves the right to exclude 
any person, property, transaction, or class thereof from the operation 
of any license or from the privileges conferred by any license. The 
Office of Foreign Assets Control also reserves the right to restrict the 
applicability of any license to particular persons, property, 
transactions, or classes thereof. Such actions are binding upon actual 
or constructive notice of the exclusions or restrictions.



Sec. 588.504  Payments and transfers to blocked accounts in U.S.
financial institutions.

    Any payment of funds or transfer of credit in which a person whose 
property and interests in property are blocked pursuant to Sec. 
588.201(a) has any interest that comes within the possession or control 
of a U.S. financial institution must be blocked in an account on the 
books of that financial institution. A transfer of funds or credit by a 
U.S. financial institution between blocked accounts in its branches or 
offices is authorized, provided that no

[[Page 442]]

transfer is made from an account within the United States to an account 
held outside the United States, and further provided that a transfer 
from a blocked account may be made only to another blocked account held 
in the same name.

    Note to Sec. 588.504: See Sec. 501.603 of this chapter for 
mandatory reporting requirements regarding financial transfers. See also 
Sec. 588.203 concerning the obligation to hold blocked funds in 
interest-bearing accounts.



Sec. 588.505  Entries in certain accounts for normal service charges 
authorized.

    (a) A U.S. financial institution is authorized to debit any blocked 
account held at that financial institution in payment or reimbursement 
for normal service charges owed it by the owner of that blocked account.
    (b) As used in this section, the term normal service charges shall 
include charges in payment or reimbursement for interest due; cable, 
telegraph, internet, or telephone charges; postage costs; custody fees; 
small adjustment charges to correct bookkeeping errors; and, but not by 
way of limitation, minimum balance charges, notary and protest fees, and 
charges for reference books, photocopies, credit reports, transcripts of 
statements, registered mail, insurance, stationery and supplies, and 
other similar items.



Sec. 588.506  Investment and reinvestment of certain funds.

    Subject to the requirements of Sec. 588.203, U.S. financial 
institutions are authorized to invest and reinvest assets blocked 
pursuant to Sec. 588.201, subject to the following conditions:
    (a) The assets representing such investments and reinvestments are 
credited to a blocked account or subaccount that is held in the same 
name at the same U.S. financial institution, or within the possession or 
control of a U.S. person, but funds shall not be transferred outside the 
United States for this purpose;
    (b) The proceeds of such investments and reinvestments shall not be 
credited to a blocked account or subaccount under any name or 
designation that differs from the name or designation of the specific 
blocked account or subaccount in which such funds or securities were 
held; and
    (c) No immediate financial or economic benefit accrues (e.g., 
through pledging or other use) to a person whose property and interests 
in property are blocked pursuant to Sec. 588.201(a).



Sec. 588.507  Provision of certain legal services authorized.

    (a) The provision of the following legal services to or on behalf of 
persons whose property and interests in property are blocked pursuant to 
Sec. 588.201(a) is authorized, provided that all receipts of payment of 
professional fees and reimbursement of incurred expenses must be 
specifically licensed:
    (1) Provision of legal advice and counseling on the requirements of 
and compliance with the laws of the United States or any jurisdiction 
within the United States, provided that such advice and counseling are 
not provided to facilitate transactions in violation of this part;
    (2) Representation of persons named as defendants in or otherwise 
made parties to domestic U.S. legal, arbitration, or administrative 
proceedings;
    (3) Initiation and conduct of legal, arbitration, or administrative 
proceedings before any U.S. federal, state, or local court or agency;
    (4) Representation of persons before any U.S. federal, state, or 
local court or agency with respect to the imposition, administration, or 
enforcement of U.S. sanctions against such persons; and
    (5) Provision of legal services in any other context in which 
prevailing U.S. law requires access to legal counsel at public expense.
    (b) The provision by a U.S. person of professional legal services 
relating to the representation of persons whose property and interests 
in property are blocked pursuant to Sec. 588.201(a) in matters pending 
before the International Criminal Tribunal for the former Yugoslavia 
(the ``ICTY'') is authorized. With respect to such representation, 
receipt of payment of professional fees and reimbursement of incurred 
expenses are authorized if such payments and reimbursements are made by 
the ICTY. Such payments and reimbursements

[[Page 443]]

from any other source must be specifically licensed.
    (c) The provision of any other legal services to persons whose 
property and interests in property are blocked pursuant to Sec. 
588.201(a), not otherwise authorized in this part, requires the issuance 
of a specific license.
    (d) Entry into a settlement agreement or the enforcement of any 
lien, judgment, arbitral award, decree, or other order through 
execution, garnishment, or other judicial process purporting to transfer 
or otherwise alter or affect property or interests in property blocked 
pursuant to Sec. 588.201(a) is prohibited unless licensed pursuant to 
this part.



Sec. 588.508  Authorization of emergency medical services.

    The provision of nonscheduled emergency medical services in the 
United States to persons whose property and interests in property are 
blocked pursuant to Sec. 588.201(a) is authorized, provided that all 
receipt of payment for such services must be specifically licensed.



                            Subpart F_Reports



Sec. 588.601  Records and reports.

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



                           Subpart G_Penalties



Sec. 588.701  Penalties.

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

    Note to paragraph (a)(1) of Sec. 588.701: As of the date of 
publication in the Federal Register of the final rule amending this 
part, inter alia, to implement Executive Order 13304 (June 29, 2011), 
IEEPA provides for a maximum civil penalty not to exceed the greater of 
$250,000 or an amount that is twice the amount of the transaction that 
is the basis of the violation with respect to which the penalty is 
imposed.

    (2) A person who willfully commits, willfully attempts to commit, or 
willfully conspires to commit, or aids or abets in the commission of a 
violation of any license, order, regulation, or prohibition may, upon 
conviction, be fined not more than $1,000,000, or if a natural person, 
be imprisoned for not more than 20 years, or both.
    (b) Adjustments to penalty amounts. (1) The civil penalties provided 
in IEEPA are subject to adjustment pursuant to the Federal Civil 
Penalties Inflation Adjustment Act of 1990 (Pub. L. 101-410, as amended, 
28 U.S.C. 2461 note).
    (2) The criminal penalties provided in IEEPA are subject to 
adjustment pursuant to 18 U.S.C. 3571.
    (c) Attention is directed to section 5 of the United Nations 
Participation Act, as amended (22 U.S.C. 287c(b)) (``UNPA''), which 
provides that any person who willfully violates or evades or attempts to 
violate or evade any order, rule, or regulation issued by the President 
pursuant to the authority granted in that section, upon conviction, 
shall be fined not more than $10,000 and, if a natural person, may also 
be imprisoned for not more than 10 years; and the officer, director, or 
agent of any corporation who knowingly participates in such violation or 
evasion shall be punished by a like fine, imprisonment, or both and any 
property, funds, securities, papers, or other articles or documents, or 
any vessel, together with her tackle, apparel, furniture, and equipment, 
or vehicle, or aircraft, concerned in such violation shall be forfeited 
to the United States.
    (d) Violations involving transactions described at section 
203(b)(1), (3), and (4) of IEEPA shall be subject only to

[[Page 444]]

the penalties set forth in paragraph (c) of this section.
    (e) Attention is also directed to 18 U.S.C. 1001, which provides 
that ``whoever, in any matter within the jurisdiction of the executive, 
legislative, or judicial branch of the Government of the United States, 
knowingly and willfully (1) falsifies, conceals, or covers up by any 
trick, scheme, or device a material fact; (2) makes any materially 
false, fictitious, or fraudulent statement or representation; or (3) 
makes or uses any false writing or document knowing the same to contain 
any materially false, fictitious, or fraudulent statement or entry'' 
shall be fined under title 18, United States Code, imprisoned, or both.
    (f) Violations of this part may also be subject to relevant 
provisions of other applicable laws.



Sec. 588.702  Pre-Penalty Notice; settlement.

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

[[Page 445]]

    (d) Guidelines. Guidelines for the imposition or settlement of civil 
penalties by the Office of Foreign Assets Control are contained in 
Appendix A to part 501 of this chapter.
    (e) Representation. A representative of the alleged violator may act 
on behalf of the alleged violator, but any oral communication with the 
Office of Foreign Assets Control prior to a written submission regarding 
the specific allegations contained in the Pre-Penalty Notice must be 
preceded by a written letter of representation, unless the Pre-Penalty 
Notice was served upon the alleged violator in care of the 
representative.



Sec. 588.703  Penalty imposition.

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



Sec. 588.704  Administrative collection; referral to United States 
Department of Justice.

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



                          Subpart H_Procedures



Sec. 588.801  Procedures.

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



Sec. 588.802  Delegation by the Secretary of the Treasury.

    Any action that the Secretary of the Treasury is authorized to take 
pursuant to Executive Order 13219 of June 26, 2001 (66 FR 34777, June 
29, 2001), Executive Order 13304 of May 28, 2003 (68 FR 32315, May 29, 
2003), and any further Executive orders relating to the national 
emergency declared in Executive Order 13219, may be taken by the 
Director of the Office of Foreign Assets Control or by any other person 
to whom the Secretary of the Treasury has delegated authority so to act.



                    Subpart I_Paperwork Reduction Act



Sec. 588.901  Paperwork Reduction Act notice.

    For approval by the Office of Management and Budget (``OMB'') under 
the Paperwork Reduction Act of 1995 (44 U.S.C. 3507) of information 
collections relating to recordkeeping and reporting requirements, 
licensing procedures (including those pursuant to statements of 
licensing policy), and other procedures, see Sec. 501.901 of this 
chapter. An agency may not conduct or sponsor, and a person is not 
required to respond to, a collection of information unless it displays a 
valid control number assigned by OMB.



PART 590_TRANSNATIONAL CRIMINAL ORGANIZATIONS SANCTIONS 
REGULATIONS--Table of Contents



      Subpart A_Relation of This Part to Other Laws and Regulations

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

[[Page 446]]

                         Subpart B_Prohibitions

590.201 Prohibited transactions.
590.202 Effect of transfers violating the provisions of this part.
590.203 Holding of funds in interest-bearing accounts; investment and 
          reinvestment.

                      Subpart C_General Definitions

590.301 Blocked account; blocked property.
590.302 Effective date.
590.303 Entity.
590.304-590.305 [Reserved]
590.306 Interest.
590.307 Licenses; general and specific.
590.308 Person.
590.309 Property; property interest.
590.310 [Reserved]
590.311 Transfer.
590.312 United States.
590.313 U.S. financial institution.
590.314 United States person; U.S. person.

                        Subpart D_Interpretations

590.401 [Reserved]
590.402 Effect of amendment.
590.403 Termination and acquisition of an interest in blocked property.
590.404 Transactions ordinarily incident to a licensed transaction.
590.405 Setoffs prohibited.
590.406 Entities owned by a person whose property and interests in 
          property are blocked.

 Subpart E_Licenses, Authorizations, and Statements of Licensing Policy

590.501 General and specific licensing procedures.
590.502 [Reserved]
590.503 Exclusion from licenses.
590.504 Payments and transfers to blocked accounts in U.S. financial 
          institutions.
590.505 Entries in certain accounts for normal service charges 
          authorized.
590.506 Provision of certain legal services authorized.
590.507 Authorization of emergency medical services.

Subparts F-G [Reserved]

                          Subpart H_Procedures

590.801 [Reserved]
590.802 Delegation by the Secretary of the Treasury.

                    Subpart I_Paperwork Reduction Act

590.901 Paperwork Reduction Act notice.

Appendix A to Part 590--Executive Order 13581 of July 24, 2011

    Authority: 3 U.S.C. 301; 31 U.S.C. 321(b); 50 U.S.C. 1601-1651, 
1701-1706; Pub. L. 101-410, 104 Stat. 890 (28 U.S.C. 2461 note); Pub. L. 
110-96, 121 Stat. 1011 (50 U.S.C. 1705 note); E.O. 13581, 76 FR 44757, 
July 27, 2011.

    Source: 77 FR 1865, Jan. 12, 2012, unless otherwise noted.



      Subpart A_Relation of This Part to Other Laws and Regulations



Sec. 590.101  Relation of this part to other laws and regulations.

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

    Note to Sec. 590.101: This part has been published in abbreviated 
form for the purpose of providing immediate guidance to the public. OFAC 
intends to supplement this part with a more comprehensive set of 
regulations, which may include additional interpretive and definitional 
guidance and additional general licenses and statements of licensing 
policy.



                         Subpart B_Prohibitions



Sec. 590.201  Prohibited transactions.

    All transactions prohibited pursuant to Executive Order 13581 of 
July 24, 2011 (76 FR 44757, July 27, 2011) are also prohibited pursuant 
to this part.

    Note 1 to Sec. 590.201: The names of persons listed in or 
designated pursuant to Executive Order 13581, whose property and 
interests in property therefore are blocked pursuant to

[[Page 447]]

this section, are published in the Federal Register and incorporated 
into the Office of Foreign Assets Control's Specially Designated 
Nationals and Blocked Persons List (``SDN List'') with the identifier 
``[TCO].'' The SDN List is accessible through the following page on the 
Office of Foreign Assets Control's Web site: www.treasury.gov/sdn. 
Additional information pertaining to the SDN List can be found in 
appendix A to this chapter. See Sec. 590.406 concerning entities that 
may not be listed on the SDN List but whose property and interests in 
property are nevertheless blocked pursuant to this section.
    Note 2 to Sec. 590.201: The International Emergency Economic Powers 
Act (50 U.S.C. 1701-1706), in Section 203 (50 U.S.C. 1702), authorizes 
the blocking of property and interests in property of a person during 
the pendency of an investigation. The names of persons whose property 
and interests in property are blocked pending investigation pursuant to 
this section also are published in the Federal Register and incorporated 
into the SDN List with the identifier ``[BPI-TCO].''
    Note 3 to Sec. 590.201: Sections 501.806 and 501.807 of this 
chapter describe the procedures to be followed by persons seeking, 
respectively, the unblocking of funds that they believe were blocked due 
to mistaken identity, or administrative reconsideration of their status 
as persons whose property and interests in property are blocked pursuant 
to this section.



Sec. 590.202  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. 
590.201, is null and void and shall not be the basis for the assertion 
or recognition of any interest in or right, remedy, power, or privilege 
with respect to such property or property interests.
    (b) No transfer before the effective date shall be the basis for the 
assertion or recognition of any right, remedy, power, or privilege with 
respect to, or any interest in, any property or interest in property 
blocked pursuant to Sec. 590.201, unless the person who holds or 
maintains such property, prior to that date, had written notice of the 
transfer or by any written evidence had recognized such transfer.
    (c) Unless otherwise provided, an appropriate license or other 
authorization issued by the Office of Foreign Assets Control before, 
during, or after a transfer shall validate such transfer or make it 
enforceable to the same extent that it would be valid or enforceable but 
for the provisions of the International Emergency Economic Powers Act, 
Executive Order 13581, this part, and any regulation, order, directive, 
ruling, instruction, or license issued pursuant to this part.
    (d) Transfers of property that otherwise would be null and void or 
unenforceable by virtue of the provisions of this section shall not be 
deemed to be null and void or unenforceable as to any person with whom 
such property is or was held or maintained (and as to such person only) 
in cases in which such person is able to establish to the satisfaction 
of the Office of Foreign Assets Control each of the following:
    (1) Such transfer did not represent a willful violation of the 
provisions of this part by the person with whom such property is or was 
held or maintained (and as to such person only);
    (2) The person with whom such property is or was held or maintained 
did not have reasonable cause to know or suspect, in view of all the 
facts and circumstances known or available to such person, that such 
transfer required a license or authorization issued pursuant to this 
part and was not so licensed or authorized, or, if a license or 
authorization did purport to cover the transfer, that such license or 
authorization had been obtained by misrepresentation of a third party or 
withholding of material facts or was otherwise fraudulently obtained; 
and
    (3) The person with whom such property is or was held or maintained 
filed with the Office of Foreign Assets Control a report setting forth 
in full the circumstances relating to such transfer promptly upon 
discovery that:
    (i) Such transfer was in violation of the provisions of this part or 
any regulation, ruling, instruction, license, or other directive or 
authorization issued pursuant to this part;
    (ii) Such transfer was not licensed or authorized by the Office of 
Foreign Assets Control; or

[[Page 448]]

    (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) of Sec. 590.202: The filing of a report in 
accordance with the provisions of paragraph (d)(3) of this section shall 
not be deemed evidence that the terms of paragraphs (d)(1) and (d)(2) of 
this section have been satisfied.

    (e) Unless licensed pursuant to this part, any attachment, judgment, 
decree, lien, execution, garnishment, or other judicial process is null 
and void with respect to any property in which, on or since the 
effective date, there existed an interest of a person whose property and 
interests in property are blocked pursuant to Sec. 590.201.



Sec. 590.203  Holding of funds in interest-bearing accounts; investment
and reinvestment.

    (a) Except as provided in paragraphs (e) or (f) of this section, or 
as otherwise directed by the Office of Foreign Assets Control, any U.S. 
person holding funds, such as currency, bank deposits, or liquidated 
financial obligations, subject to Sec. 590.201 shall hold or place such 
funds in a blocked interest-bearing account located in the United 
States.
    (b)(1) For purposes of this section, the term blocked interest-
bearing account means a blocked account:
    (i) In a federally-insured U.S. bank, thrift institution, or credit 
union, provided the funds are earning interest at rates that are 
commercially reasonable; or
    (ii) With a broker or dealer registered with the Securities and 
Exchange Commission under the Securities Exchange Act of 1934 (15 U.S.C. 
78a et seq.), provided the funds are invested in a money market fund or 
in U.S. Treasury bills.
    (2) Funds held or placed in a blocked account pursuant to paragraph 
(a) of this section may not be invested in instruments the maturity of 
which exceeds 180 days.
    (c) For purposes of this section, a rate is commercially reasonable 
if it is the rate currently offered to other depositors on deposits or 
instruments of comparable size and maturity.
    (d) For purposes of this section, if interest is credited to a 
separate blocked account or subaccount, the name of the account party on 
each account must be the same.
    (e) Blocked funds held in instruments the maturity of which exceeds 
180 days at the time the funds become subject to Sec. 590.201 may 
continue to be held until maturity in the original instrument, provided 
any interest, earnings, or other proceeds derived therefrom are paid 
into a blocked interest-bearing account in accordance with paragraphs 
(a) or (f) of this section.
    (f) Blocked funds held in accounts or instruments outside the United 
States at the time the funds become subject to Sec. 590.201 may 
continue to be held in the same type of accounts or instruments, 
provided the funds earn interest at rates that are commercially 
reasonable.
    (g) This section does not create an affirmative obligation for the 
holder of blocked tangible property, such as chattels or real estate, or 
of other blocked property, such as debt or equity securities, to sell or 
liquidate such property. However, the Office of Foreign Assets Control 
may issue licenses permitting or directing such sales or liquidation in 
appropriate cases.
    (h) Funds subject to this section may not be held, invested, or 
reinvested in a manner that provides immediate financial or economic 
benefit or access to any person whose property and interests in property 
are blocked pursuant to Sec. 590.201, nor may their holder cooperate in 
or facilitate the pledging or other attempted use as collateral of 
blocked funds or other assets.



                      Subpart C_General Definitions



Sec. 590.301  Blocked account; blocked property.

    The terms blocked account and blocked property shall mean any 
account or property subject to the prohibitions in Sec. 590.201 held in 
the name of a person whose property and interests in property are 
blocked pursuant to Sec. 590.201, or in which such person has an 
interest, and with respect to which payments, transfers, exportations, 
withdrawals, or other dealings may not be made or effected except 
pursuant to an

[[Page 449]]

authorization or license from the Office of Foreign Assets Control 
expressly authorizing such action.

    Note to Sec. 590.301: See Sec. 590.406 concerning the blocked 
status of property and interests in property of an entity that is 50 
percent or more owned by a person whose property and interests in 
property are blocked pursuant to Sec. 590.201.



Sec. 590.302  Effective date.

    The term effective date refers to the effective date of the 
applicable prohibitions and directives contained in this part as 
follows:
    (a) With respect to a person listed in the Annex to Executive Order 
13581, 12:01 a.m. eastern daylight time, July 25, 2011; or
    (b) With respect to a person whose property and interests in 
property are otherwise blocked pursuant to Executive Order 13581, the 
earlier of the date of actual or constructive notice that such person's 
property and interests in property are blocked.



Sec. 590.303  Entity.

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



Sec. Sec. 590.304-590.305  [Reserved]



Sec. 590.306  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. 590.307  Licenses; general and specific.

    (a) Except as otherwise specified, the term license means any 
license or authorization contained in or issued pursuant to this part.
    (b) The term general license means any license or authorization the 
terms of which are set forth in subpart E of this part.
    (c) The term specific license means any license or authorization not 
set forth in subpart E of this part but issued pursuant to this part.

    Note to Sec. 590.307: See Sec. 501.801 of this chapter on 
licensing procedures.



Sec. 590.308  Person.

    The term person means an individual or entity.



Sec. 590.309  Property; property interest.

    The terms property and property interest include, but are not 
limited to, money, checks, drafts, bullion, bank deposits, savings 
accounts, debts, indebtedness, obligations, notes, guarantees, 
debentures, stocks, bonds, coupons, any other financial instruments, 
bankers acceptances, mortgages, pledges, liens or other rights in the 
nature of security, warehouse receipts, bills of lading, trust receipts, 
bills of sale, any other evidences of title, ownership or indebtedness, 
letters of credit and any documents relating to any rights or 
obligations thereunder, powers of attorney, goods, wares, merchandise, 
chattels, stocks on hand, ships, goods on ships, real estate mortgages, 
deeds of trust, vendors' sales agreements, land contracts, leaseholds, 
ground rents, real estate and any other interest therein, options, 
negotiable instruments, trade acceptances, royalties, book accounts, 
accounts payable, judgments, patents, trademarks or copyrights, 
insurance policies, safe deposit boxes and their contents, annuities, 
pooling agreements, services of any nature whatsoever, contracts of any 
nature whatsoever, and any other property, real, personal, or mixed, 
tangible or intangible, or interest or interests therein, present, 
future, or contingent.



Sec. 590.310  [Reserved]



Sec. 590.311  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

[[Page 450]]

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, or filing of, 
or levy of or under, any judgment, decree, attachment, injunction, 
execution, or other judicial or administrative process or order, or the 
service of any garnishment; the acquisition of any interest of any 
nature whatsoever by reason of a judgment or decree of any foreign 
country; the fulfillment of any condition; the exercise of any power of 
appointment, power of attorney, or other power; or the acquisition, 
disposition, transportation, importation, exportation, or withdrawal of 
any security.



Sec. 590.312  United States.

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



Sec. 590.313  U.S. financial institution.

    The term U.S. financial institution means any U.S. entity (including 
its foreign branches) that is engaged in the business of accepting 
deposits, making, granting, transferring, holding, or brokering loans or 
credits, or purchasing or selling foreign exchange, securities, or 
commodity futures or options, or procuring purchasers and sellers 
thereof, as principal or agent. It includes but is not limited to 
depository institutions, banks, savings banks, trust companies, 
securities brokers and dealers, commodity futures and options brokers 
and dealers, forward contract and foreign exchange merchants, securities 
and commodities exchanges, clearing corporations, investment companies, 
employee benefit plans, and U.S. holding companies, U.S. affiliates, or 
U.S. subsidiaries of any of the foregoing. This term includes those 
branches, offices, and agencies of foreign financial institutions that 
are located in the United States, but not such institutions' foreign 
branches, offices, or agencies.



Sec. 590.314  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.



                        Subpart D_Interpretations



Sec. 590.401  [Reserved]



Sec. 590.402  Effect of amendment.

    Unless otherwise specifically provided, any amendment, modification, 
or revocation of any provision in or appendix to this part or chapter or 
of any order, regulation, ruling, instruction, or license issued by the 
Office of Foreign Assets Control does not affect any act done or 
omitted, or any civil or criminal proceeding commenced or pending, prior 
to such amendment, modification, or revocation. All penalties, 
forfeitures, and liabilities under any such order, regulation, ruling, 
instruction, or license continue and may be enforced as if such 
amendment, modification, or revocation had not been made.



Sec. 590.403  Termination and acquisition of an interest in blocked 
property.

    (a) Whenever a transaction licensed or authorized by or pursuant to 
this part results in the transfer of property (including any property 
interest) away from a person, such property shall no longer be deemed to 
be property blocked pursuant to Sec. 590.201, unless there exists in 
the property another interest that is blocked pursuant to Sec. 590.201, 
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. 590.201, such property shall be deemed to be property in which 
that person has an interest and therefore blocked.

[[Page 451]]



Sec. 590.404  Transactions ordinarily incident to a licensed transaction.

    Any transaction ordinarily incident to a licensed transaction and 
necessary to give effect thereto is also authorized, except:
    (a) An ordinarily incident transaction, not explicitly authorized 
within the terms of the license, by or with a person whose property and 
interests in property are blocked pursuant to Sec. 590.201; or
    (b) An ordinarily incident transaction, not explicitly authorized 
within the terms of the license, involving a debit to a blocked account 
or a transfer of blocked property.



Sec. 590.405  Setoffs prohibited.

    A setoff against blocked property (including a blocked account), 
whether by a U.S. bank or other U.S. person, is a prohibited transfer 
under Sec. 590.201 if effected after the effective date.



Sec. 590.406  Entities owned by a person whose property and interests
in property are blocked.

    A person whose property and interests in property are blocked 
pursuant to Sec. 590.201 has an interest in all property and interests 
in property of an entity in which it owns, directly or indirectly, a 50 
percent or greater interest. The property and interests in property of 
such an entity, therefore, are blocked, and such an entity is a person 
whose property and interests in property are blocked pursuant to Sec. 
590.201, regardless of whether the entity itself is listed in the Annex 
or designated pursuant to Executive Order 13581.



 Subpart E_Licenses, Authorizations, and Statements of Licensing Policy



Sec. 590.501  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 following page on OFAC's Web site: http://
www.treasury.gov/resource-center/sanctions/programs/pages/tco.aspx.



Sec. 590.502  [Reserved]



Sec. 590.503  Exclusion from licenses.

    The Office of Foreign Assets Control reserves the right to exclude 
any person, property, transaction, or class thereof from the operation 
of any license or from the privileges conferred by any license. The 
Office of Foreign Assets Control also reserves the right to restrict the 
applicability of any license to particular persons, property, 
transactions, or classes thereof. Such actions are binding upon actual 
or constructive notice of the exclusions or restrictions.



Sec. 590.504  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. 590.201 
has any interest that comes within the possession or control of a U.S. 
financial institution must be blocked in an account on the books of that 
financial institution. A transfer of funds or credit by a U.S. financial 
institution between blocked accounts in its branches or offices is 
authorized, provided that no transfer is made from an account within the 
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. 590.504: See Sec. 501.603 of this chapter for 
mandatory reporting requirements regarding financial transfers. See also 
Sec. 590.203 concerning the obligation to hold blocked funds in 
interest-bearing accounts.



Sec. 590.505  Entries in certain accounts for normal service charges 
authorized.

    (a) A U.S. financial institution is authorized to debit any blocked 
account held at that financial institution in payment or reimbursement 
for normal service charges owed it by the owner of that blocked account.

[[Page 452]]

    (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. 590.506  Provision of certain legal services authorized.

    (a) The provision of the following legal services to or on behalf of 
persons whose property and interests in property are blocked pursuant to 
Sec. 590.201 is authorized, provided that all receipts of payment of 
professional fees and reimbursement of incurred expenses must be 
specifically licensed:
    (1) Provision of legal advice and counseling on the requirements of 
and compliance with the laws of the United States or any jurisdiction 
within the United States, provided that such advice and counseling are 
not provided to facilitate transactions in violation of this part;
    (2) Representation of persons named as defendants in or otherwise 
made parties to domestic U.S. legal, arbitration, or administrative 
proceedings;
    (3) Initiation and conduct of legal, arbitration, or administrative 
proceedings before any U.S. federal, state, or local court or agency;
    (4) Representation of persons before any U.S. federal, state, or 
local court or agency with respect to the imposition, administration, or 
enforcement of U.S. sanctions against such persons; and
    (5) Provision of legal services in any other context in which 
prevailing U.S. law requires access to legal counsel at public expense.
    (b) The provision of any other legal services to persons whose 
property and interests in property are blocked pursuant to Sec. 
590.201, 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. 590.201 is prohibited unless licensed pursuant to this 
part.



Sec. 590.507  Authorization of emergency medical services.

    The provision of nonscheduled emergency medical services in the 
United States to persons whose property and interests in property are 
blocked pursuant to Sec. 590.201 is authorized, provided that all 
receipt of payment for such services must be specifically licensed.

Subparts F-G [Reserved]



                          Subpart H_Procedures



Sec. 590.801  [Reserved]



Sec. 590.802  Delegation by the Secretary of the Treasury.

    Any action that the Secretary of the Treasury is authorized to take 
pursuant to Executive Order 13581 of July 24, 2011 (76 FR 44757, July 
27, 2011), and any further Executive orders relating to the national 
emergency declared therein, may be taken by the Director of the Office 
of Foreign Assets Control or by any other person to whom the Secretary 
of the Treasury has delegated authority so to act.



                    Subpart I_Paperwork Reduction Act



Sec. 590.901  Paperwork Reduction Act notice.

    For approval by the Office of Management and Budget (``OMB'') under 
the Paperwork Reduction Act of 1995 (44 U.S.C. 3507) of information 
collections relating to recordkeeping and reporting requirements, 
licensing procedures (including those pursuant to statements of 
licensing policy), and other procedures, see Sec. 501.901 of this 
chapter. An agency may not conduct or sponsor, and a person is not 
required to respond to, a collection of information unless it displays a 
valid control number assigned by OMB.

[[Page 453]]



   Sec. Appendix A to Part 590--Executive Order 13581 of July 24, 2011

                             EXECUTIVE ORDER

                                * * * * *

        Blocking Property of Transnational Criminal Organizations

    By the authority vested in me as President by the Constitution and 
the laws of the United States of America, including the International 
Emergency Economic Powers Act (50 U.S.C. 1701 et seq.) (IEEPA), the 
National Emergencies Act (50 U.S.C. 1601 et seq.) (NEA), and section 301 
of title 3, United States Code,
    I, BARACK OBAMA, President of the United States of America, find 
that the activities of significant transnational criminal organizations, 
such as those listed in the Annex to this order, have reached such scope 
and gravity that they threaten the stability of international political 
and economic systems.
    Such organizations are becoming increasingly sophisticated and 
dangerous to the United States; they are increasingly entrenched in the 
operations of foreign governments and the international financial 
system, thereby weakening democratic institutions, degrading the rule of 
law, and undermining economic markets. These organizations facilitate 
and aggravate violent civil conflicts and increasingly facilitate the 
activities of other dangerous persons. I therefore determine that 
significant transnational criminal organizations constitute an unusual 
and extraordinary threat to the national security, foreign policy, and 
economy of the United States, and hereby declare a national emergency to 
deal with that threat.
    Accordingly, I hereby order:
    Section 1. (a) All property and interests in property that are in 
the United States, that hereafter come within the United States, or that 
are or hereafter come within the possession or control of any United 
States person, including any overseas branch, of the following persons 
are blocked and may not be transferred, paid, exported, withdrawn, or 
otherwise dealt in:
    (i) the persons listed in the Annex to this order and
    (ii) any person determined by the Secretary of the Treasury, in 
consultation with the Attorney General and the Secretary of State:
    (A) to be a foreign person that constitutes a significant 
transnational criminal organization;
    (B) to have materially assisted, sponsored, or provided financial, 
material, or technological support for, or goods or services to or in 
support of, any person whose property and interests in property are 
blocked pursuant to this order; or
    (C) to be owned or controlled by, or to have acted or purported to 
act for or on behalf of, directly or indirectly, any person whose 
property and interests in property are blocked pursuant to this order.
    (b) I hereby determine that the making of donations of the types of 
articles specified in section 203(b)(2) of IEEPA (50 U.S.C. 1702(b)(2)) 
by, to, or for the benefit of any person whose property and interests in 
property are blocked pursuant to this order would seriously impair my 
ability to deal with the national emergency declared in this order, and 
I hereby prohibit such donations as provided by subsection (a) of this 
section.
    (c) The prohibitions in subsection (a) of this section include, but 
are not limited to:
    (i) the making of any contribution or provision of funds, goods, or 
services by, to, or for the benefit of any person whose property and 
interests in property are blocked pursuant to this order; and
    (ii) the receipt of any contribution or provision of funds, goods, 
or services from any such person.
    (d) The prohibitions in subsection (a) of this section apply except 
to the extent provided by statutes, or in regulations, orders, 
directives, or licenses that may be issued pursuant to this order, and 
notwithstanding any contract entered into or any license or permit 
granted prior to the effective date of this order.
    Sec. 2. (a) Any transaction by a United States person or within the 
United States that evades or avoids, has the purpose of evading or 
avoiding, causes a violation of, or attempts to violate any of the 
prohibitions set forth in this order is prohibited.
    (b) Any conspiracy formed to violate any of the prohibitions set 
forth in this order is prohibited.
    Sec. 3. For the purposes of this order:
    (a) the term ``person'' means an individual or entity;
    (b) the term ``entity'' means a partnership, association, trust, 
joint venture, corporation, group, subgroup, or other organization;
    (c) the term ``United States person'' means any United States 
citizen, permanent resident alien, entity organized under the laws of 
the United States or any jurisdiction within the United States 
(including foreign branches), or any person in the United States;
    (d) the term ``foreign person'' means any citizen or national of a 
foreign state, or any entity organized under the laws of a foreign state 
or existing in a foreign state, including any such individual or entity 
who is also a United States person; and
    (e) the term ``significant transnational criminal organization'' 
means a group of persons, such as those listed in the Annex to this 
order, that includes one or more foreign

[[Page 454]]

persons; that engages in an ongoing pattern of serious criminal activity 
involving the jurisdictions of at least two foreign states; and that 
threatens the national security, foreign policy, or economy of the 
United States.
    Sec. 4. For those persons whose property and interests in property 
are blocked pursuant to this order who might have a constitutional 
presence in the United States, I find that because of the ability to 
transfer funds or other assets instantaneously, prior notice to such 
persons of measures to be taken pursuant to this order would render 
these measures ineffectual. I therefore determine that for these 
measures to be effective in addressing the national emergency declared 
in this order, there need be no prior notice of a listing or 
determination made pursuant to section 1(a) of this order.
    Sec. 5. The Secretary of the Treasury, in consultation with the 
Attorney General and the Secretary of State, is hereby authorized to 
take such actions, including the promulgation of rules and regulations, 
and to employ all powers granted to the President by IEEPA, as may be 
necessary to carry out the purposes of this order. The Secretary of the 
Treasury may redelegate any of these functions to other officers and 
agencies of the United States Government consistent with applicable law. 
All agencies of the United States Government are hereby directed to take 
all appropriate measures within their authority to carry out the 
provisions of this order.
    Sec. 6. The Secretary of the Treasury, in consultation with the 
Attorney General and the Secretary of State, is hereby authorized to 
submit the recurring and final reports to the Congress on the national 
emergency declared in this order, consistent with section 401(c) of the 
NEA (50 U.S.C. 1641(c)) and section 204(c) of IEEPA (50 U.S.C. 1703(c)).
    Sec. 7. The Secretary of the Treasury, in consultation with the 
Attorney General and the Secretary of State, is hereby authorized to 
determine that circumstances no longer warrant the blocking of the 
property and interests in property of a person listed in the Annex to 
this order, and to take necessary action to give effect to that 
determination.
    Sec. 8. This order is not intended to, and does not, create any 
right or benefit, substantive or procedural, enforceable at law or in 
equity by any party against the United States, its departments, 
agencies, or entities, its officers, employees, or agents, or any other 
person.
    Sec. 9. This order is effective at 12:01 a.m. eastern daylight time 
on July 25, 2011.

Barack Obama

THE WHITE HOUSE,
July 24, 2011.

                                  ANNEX

                                Entities

    1. THE BROTHERS' CIRCLE (f.k.a. FAMILY OF ELEVEN; f.k.a. THE TWENTY)
    2. CAMORRA
    3. YAKUZA (a.k.a. BORYOKUDAN; a.k.a. GOKUDO)
    4. LOS ZETAS



PART 592_ROUGH DIAMONDS CONTROL REGULATIONS--Table of Contents



      Subpart A_Relation of This Part to Other Laws and Regulations

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

                         Subpart B_Prohibitions

592.201 Prohibited importation and exportation of any rough diamond; 
          permitted importation and exportation of any rough diamond.
592.202 Evasions; attempts; conspiracies.

                      Subpart C_General Definitions

592.301 Controlled through the Kimberley Process Certification Scheme.
592.302 Effective date.
592.303 Entity.
592.304 Exporting authority.
592.305 Importation into the United States.
592.306 Importing authority.
592.307 Kimberley Process Certificate.
592.308 Participant.
592.309 Person.
592.310 Rough diamond.
592.311 United States.
592.312 United States person; U.S. person.

                        Subpart D_Interpretations

592.401 Reference to amended sections.
592.402 Effect of amendment.
592.403 Transshipment or transit through the United States.
592.404 Importation into or release from a bonded warehouse or foreign 
          trade zone.

                      Subpart E_Records and Reports

592.501 Records and reports.
592.502 Annual reports by rough diamond importers and exporters.

                           Subpart F_Penalties

592.601 Penalties.
592.602 Prepenalty notice.
592.603 Response to prepenalty notice; informal settlement.
592.604 Penalty imposition or withdrawal.

[[Page 455]]

592.605 Administrative collection; referral to United States Department 
          of Justice.

                          Subpart G_Procedures

592.701 Procedures.
592.702 Delegation by the Secretary of the Treasury.

                    Subpart H_Paperwork Reduction Act

592.801 Paperwork Reduction Act notice.

    Authority: 3 U.S.C. 301; 31 U.S.C. 321(b); Pub. L. 108-19, 117 Stat. 
631 (19 U.S.C. 3901-3913); E.O. 13312, 68 FR 45151 3 CFR, 2003 Comp., p. 
246.

    Source: 69 FR 56938, Sept. 23, 2004, unless otherwise noted.



      Subpart A_Relation of This Part to Other Laws and Regulations



Sec. 592.101  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 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.



                         Subpart B_Prohibitions



Sec. 592.201  Prohibited importation and exportation of any rough 
diamond; permitted importation or exportation of any rough diamond.

    (a) Except to the extent provided in paragraph (b) of this section, 
and notwithstanding the existence of any rights or obligations conferred 
or imposed by any contract entered into or any license or permit granted 
prior to the effective date, the importation into, or exportation from, 
the United States on or after July 30, 2003, of any rough diamond, from 
whatever source, is prohibited, unless the rough diamond has been 
controlled through the Kimberley Process Certification Scheme.
    (b) The prohibitions in paragraph (a) of this section regarding the 
importation into, or exportation from, the United States of any rough 
diamond not controlled through the Kimberley Process Certification 
Scheme do not apply to an importation from, or exportation to, any 
country with respect to which the Secretary of State has granted a 
waiver pursuant to section 4(b) of the Clean Diamond Trade Act (Pub. L. 
108-19) and section 2(a)(i) of Executive Order 13312.

    Note to Sec. 592.201. An importation of any rough diamond from, or 
an exportation of any rough diamond to, a non-Participant is not 
controlled through the Kimberley Process Certification Scheme and thus 
is not permitted, except in the following circumstance. The Secretary of 
State may, pursuant to section 4(b) of the Clean Diamond Trade Act, 
waive the prohibitions contained in section 4(a) of that Act with 
respect to a particular country for periods of not more than one year 
each. The Secretary of State will publish a notice in the Federal 
Register identifying any country with respect to which a waiver applies 
and specifying the relevant time period during which the waiver will 
apply.



Sec. 592.202  Evasions; attempts; conspiracies.

    (a) Notwithstanding the existence of any rights or obligations 
conferred or imposed by any contract entered into or any license or 
permit granted prior to July 30, 2003, any transaction by a United 
States person anywhere, or any transaction that occurs in whole or in 
part within the United States, on or after the effective date that 
evades or avoids, or has the purpose of evading or avoiding, or attempts 
to violate, any of the prohibitions set forth in this part is 
prohibited.
    (b) Notwithstanding the existence of any rights or obligations 
conferred or imposed by any contract entered into or any license or 
permit granted prior to July 30, 2003, any conspiracy formed to violate 
any of the prohibitions of this part is prohibited.

[[Page 456]]



                      Subpart C_General Definitions



Sec. 592.301  Controlled through the Kimberley Process Certification
Scheme.

    (a) Except as otherwise provided in paragraph (b) of this section, 
the term controlled through the Kimberley Process Certification Scheme 
refers to the following requirements that apply, as appropriate, to the 
importation into the United States from a Participant, or to the 
exportation from the United States to a Participant, of any shipment 
including any rough diamond:
    (1) Kimberley Process Certificate. A shipment of rough diamonds 
imported into, or exported from, the United States must be accompanied 
by an original Kimberley Process Certificate. The certificate must be 
presented in connection with an importation or exportation of rough 
diamonds if demanded by United States customs officials. Pursuant to 31 
CFR Sec. Sec. 501.601 and 501.602, the person identified as the 
ultimate consignee (see Customs Directive 3550-079A) on the Customs Form 
7501 Entry Summary or its electronic equivalent filed with U.S. Customs 
and Border Protection in connection with an importation of rough 
diamonds must retain the original Kimberley Process Certificate for a 
period of at least five years from the date of importation and must make 
such certificate available for examination upon demand.
    (2) Tamper-resistant container. A shipment of rough diamonds 
imported into, or exported, from the United States must be sealed in a 
tamper-resistant container;
    (3) Notification requirements for importations into the United 
States. The person identified as the ultimate consignee (see Customs 
Directive 3550-079A) on the Customs Form 7501 Entry Summary or its 
electronic equivalent filed with U.S. Customs and Border Protection in 
connection with an importation of rough diamonds must report that 
person's receipt of a shipment of rough diamonds to the relevant foreign 
exporting authority within 15 calendar days of the date that the 
shipment arrived at the U.S. port of entry. The report must refer to the 
relevant Kimberley Process Certificate by its unique identifying number; 
specify the number of parcels in the shipment; specify the total carat 
weight of the shipment; and identify the importer and exporter of the 
shipment. The report need not be in any particular form and may be 
submitted electronically or by mail or courier; and
    (4) Validation of Kimberley Process Certificate for exportations 
from the United States. With respect to the exportation of rough 
diamonds from the United States and regardless of the destination, the 
U.S. Census Bureau requires the filing of export information through the 
Automated Export System. Submission of export information through the 
Automated Export System must be done in advance and must be confirmed by 
the return of an Internal Transaction Number. The return to the filer of 
the Internal Transaction Number shall constitute the validation of the 
Kimberley Process Certificate for an exportation of rough diamonds from 
the United States to a Participant. The exporter is required to report 
the Internal Transaction Number on the Kimberley Process Certificate 
accompanying any exportation from the United States. The Internal 
Transaction Number is a unique confirmation number generated by the 
Automated Export System to the filer who provides in a timely manner the 
complete commodity shipment data when such data have been accepted by 
the system.
    (b) The Secretary of State, consistent with section 3(2)(B) of the 
Clean Diamond Trade Act (Pub. L. 108-19), may modify the requirements 
set forth in paragraph (a) of this section upon making a determination 
that a Participant has established an alternative system of control for 
rough diamonds that meets substantially the standards, practices, and 
procedures of the Kimberley Process Certification Scheme.

    Note 1 to Sec. 592.301. The Secretary of State will periodically 
publish in the Federal Register an up-to-date listing of all 
Participants and their importing and exporting authorities. Where 
appropriate, such listing also will describe any modification of the 
requirements set forth in paragraph (a) of this section.
    Note 2 to Sec. 592.301. Pursuant to 31 CFR Sec. Sec. 501.601 and 
501.602, the recordkeeping and

[[Page 457]]

reporting requirements imposed by Sec. 592.501 apply to all U.S. 
persons engaged in the importation into, or exportation from, the United 
States of any shipment of rough diamonds.
    Note 3 to Sec. 592.301. Effective November 1, 2004, customs 
brokers, importers, and filers making entry of a shipment of rough 
diamonds must either submit through U.S. Customs' Automated Broker 
Interface (ABI) system the unique identifying number of the Kimberley 
Process Certificate accompanying the shipment or, for non-ABI entries, 
indicate the certificate number on the Customs Form 7501 Entry Summary 
at each entry line.
    Note 4 to Sec. 592.301. As of May 21, 2008, any diamond, regardless 
of value, that is described in subheadings 7102.10, 7102.21 or 7102.31, 
Harmonized Tariff Schedule of the United States and is imported into the 
United States shall not be released from the custody of U.S. Customs and 
Border Protection (CBP) except by a formal entry for consumption, as 
defined in Sec. 141.0a(f) of the CBP regulations. See 19 CFR 141.0a(f).

[69 FR 56938, Sept. 23, 2004, as amended at 73 FR 29433, May 21, 2008]



Sec. 592.302  Effective date.

    The term effective date refers to the effective date of the 
applicable prohibitions and directives contained in this part as 
follows:
    (a) With respect to all provisions of this part except for Sec. 
592.301(a)(3), 12:01 a.m., eastern daylight time, July 30, 2003; and
    (b) With respect to Sec. 592.301(a)(3), September 23, 2004.



Sec. 592.303  Entity.

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



Sec. 592.304  Exporting authority.

    (a) The term exporting authority means one or more entities 
designated by a Participant from whose territory a shipment of rough 
diamonds is being exported as having the authority to validate the 
Kimberley Process Certificate.
    (b) The exporting authority for the United States is the U.S. Bureau 
of the Census.

    Note to Sec. 592.304. The Secretary of State will periodically 
publish in the Federal Register an up-to-date listing of the exporting 
authorities of all Participants.



Sec. 592.305  Importation into the United States.

    The term importation into the United States means the bringing of 
goods into the United States.



Sec. 592.306  Importing authority.

    (a) The term importing authority means one or more entities 
designated by a Participant into whose territory a shipment of rough 
diamonds is being imported as having the authority to enforce the laws 
and regulations of the Participant regulating imports, including the 
verification of the Kimberley Process Certificate accompanying the 
shipment.
    (b) The importing authorities for the United States are the U.S. 
Bureau of Customs and Border Protection or, in the case of a territory 
or possession of the United States with its own customs administration, 
analogous officials.

    Note to Sec. 592.306. The Secretary of State will periodically 
publish in the Federal Register an up-to-date listing of the importing 
authorities of all Participants.



Sec. 592.307  Kimberley Process Certificate.

    The term Kimberley Process Certificate means a tamper- and forgery-
resistant document that bears the following information in any language, 
provided that an English translation is incorporated:
    (a) The title ``Kimberley Process Certificate'' and the statement: 
``The rough diamonds in this shipment have been handled in accordance 
with the provisions of the Kimberley Process Certification Scheme for 
rough diamonds'';
    (b) Country of origin for shipment of parcels of unmixed (i.e., from 
the same) origin;

    Note to paragraph (b). A shipment including a parcel of mixed-origin 
rough diamonds is to be entered into the United States with the 
Kimberley Process Certificate accompanying the shipment, and the 
certificate need not indicate the countries of origin of the diamonds. 
With respect to such a shipment, the country-of-origin field on the 
certificate must be filled in with asterisks. The shipment must, 
however, still comply with all other country-of-origin reporting 
requirements imposed by statute or regulation.


[[Page 458]]


    (c) Unique numbering with the Alpha 2 country code, according to ISO 
3166-1;
    (d) Date of issuance;
    (e) Date of expiry;
    (f) Name of issuing authority;
    (g) Identification of exporter and importer;
    (h) Carat weight/mass;
    (i) Value in U.S. dollars;
    (j) Number of parcels in the shipment;
    (k) Relevant Harmonized Commodity Description and Coding System; and
    (l) Validation by the exporting authority.

    Note to paragraph (l): See Sec. 592.301(a)(4) for procedures 
governing the validation of the Kimberley Process Certificate when 
exporting from the United States.



Sec. 592.308  Participant.

    The term Participant means a state, customs territory, or regional 
economic integration organization identified by the Secretary of State 
as one for which rough diamonds are controlled through the Kimberley 
Process Certification Scheme.

    Note to Sec. 592.308. The Secretary of State will periodically 
publish in the Federal Register an up-to-date listing of all 
Participants.



Sec. 592.309  Person.

    The term person means an individual or entity.



Sec. 592.310  Rough diamond.

    The term rough diamond means any diamond that is unworked or simply 
sawn, cleaved, or bruted and classifiable under subheading 7102.10, 
7102.21, or 7102.31 of the Harmonized Tariff Schedule of the United 
States.



Sec. 592.311  United States.

    The term United States, when used in the geographic sense, means the 
several States, the District of Columbia, and any commonwealth, 
territory, or possession of the United States.



Sec. 592.312  United States person; U.S. person.

    The term United States person or U.S. person means any United States 
citizen; any alien admitted for permanent residence into the United 
States; any entity organized under the laws of the United States or any 
jurisdiction within the United States (including its foreign branches); 
or any person in the United States.



                        Subpart D_Interpretations



Sec. 592.401  Reference to amended sections.

    Except as otherwise specified, reference to any provision in this 
part or chapter or to any other regulation refers to the same as 
currently amended.



Sec. 592.402  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, or instruction issued by or under the 
direction of the Director of the Office of Foreign Assets Control does 
not affect any act done or omitted, or any civil or criminal suit or 
proceeding commenced or pending prior to such amendment, modification, 
or revocation. All penalties, forfeitures, and liabilities under any 
such order, regulation, ruling, or instruction continue and may be 
enforced as if such amendment, modification, or revocation had not been 
made.



Sec. 592.403  Transshipment or transit through the United States.

    The prohibitions in Sec. 592.201 apply to the importation into, or 
exportation from, the United States, for transshipment or transit, of 
any rough diamond intended or destined for any country other than the 
United States, unless the shipment is sealed in a tamper-resistant 
container, accompanied by a Kimberley Process Certificate, and leaves 
the United States in the identical state in which it entered. The 
validation, recordkeeping, and reporting procedures applicable to 
importations and exportations do not apply in this case.



Sec. 592.404  Importation into or release from a bonded warehouse or 
foreign trade zone.

    The requirements of the Kimberley Process Certification Scheme apply 
to all imported shipments of a rough diamond, regardless of whether they 
are

[[Page 459]]

destined for entry into, or withdrawal from, a bonded warehouse or a 
foreign trade zone of the United States.



                      Subpart E_Records and Reports



Sec. 592.501  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.



Sec. 592.502  Annual reports by rough diamond importers and exporters.

    (a) Requirement for reports. Reports shall be filed annually, by 
April 1 of each year, covering the preceding calendar year (January 1-
December 31), except the first annual report, covering the period 
January 1-December 31, 2007, shall be filed by September 1, 2008.
    (b) Who must report; reporting period. All persons who import rough 
diamonds into the United States or export rough diamonds from the United 
States during the reporting period (January 1-December 31).
    (c) What must be reported. The report need not be in any specified 
format but must include the following information:
    (1) The contact information of the U.S. importer or exporter, 
including name, address, telephone number, fax number, and e-mail 
address;
    (2) Identification of total import and/or export activity for each 
of the three Harmonized Tariff Schedule classifications of rough 
diamonds during the reporting year, including:
    (A) Total amount of carats of each classification of rough diamonds 
imported and/or exported; and
    (B) Total of all shipments of each classification of rough diamonds 
imported and/or exported.
    (3) Information on stockpiles of rough diamonds, if any, for each of 
the three Harmonized Tariff Schedule classifications, as of the end of 
the reporting year, reported in both total carats and approximate total 
value. For the purposes of this section, stockpiles are defined as the 
amount of rough diamonds held unsold at the end of the reporting period.
    (d) Where to send report. Reports must be filed with the Office of 
the Special Advisor for Conflict Diamonds, U.S. Department of State via 
e-mail at [email protected]. For further information, please 
call that office at 202/647-1713.
    (e) Failure to file report. Any importer or exporter who fails to 
file a required report shall be subject to the penalties set forth in 
Subpart F of this part.

[73 FR 29434, May 21, 2008]



                           Subpart F_Penalties



Sec. 592.601  Penalties.

    (a) Attention is directed to section 8 of the Clean Diamond Trade 
Act (the ``Act'') (Pub. L. 108-19), which provides that:
    (1) A civil penalty not to exceed $10,000 per violation may be 
imposed on any person who violates, or attempts to violate, any order or 
regulation issued under the Act;
    (2) Whoever willfully violates, or willfully attempts to violate, 
any order or regulation issued under this Act shall, upon conviction, be 
fined not more than $50,000, or, if a natural person, may be imprisoned 
for not more than 10 years, or both; and any officer, director, or agent 
of any corporation who willfully participates in such violation may be 
punished by a like fine, imprisonment, or both; and
    (3) Those customs laws of the United States, both civil and 
criminal, including those laws relating to seizure and forfeiture, that 
apply to articles imported in violation of such laws shall apply with 
respect to any rough diamond imported in violation of the Act.

    Note to paragraph (a). As reflected in paragraphs (a)(1) and (2) of 
this section, section 8(a) of the Clean Diamond Trade Act (Pub. L. 108-
19) establishes penalties with respect to any violation of any 
regulation issued under the Act. OFAC prepenalty, penalty, and 
administrative collection procedures relating to such violations are set 
forth below in Sec. Sec. 592.602 through 592.605. Section 8(c) of the 
Act also authorizes the U.S. Bureau of Customs and Border Protection and 
the U.S. Bureau of Immigration and Customs Enforcement, as appropriate, 
to enforce the penalty provisions set forth in paragraph (a) of this 
section and to enforce the laws

[[Page 460]]

and regulations governing exports of rough diamonds, including with 
respect to the validation of the Kimberley Process Certificate by the 
U.S. Bureau of the Census. The Office of Foreign Assets Control civil 
penalty procedures set forth below are separate from, and independent 
of, any penalty procedures that may be followed by the U.S. Bureau of 
Customs and Border Protection and the U.S. Bureau of Immigration and 
Customs Enforcement in their exercise of the authorities set forth in 
section 8(c) of the Clean Diamond Trade Act.

    (b) The criminal penalties provided in the Act are subject to 
increase pursuant to 18 U.S.C. 3571.
    (c) Attention is also directed to 18 U.S.C. 1001, which provides 
that whoever, in any matter within the jurisdiction of the executive, 
legislative, or judicial branch of the Government of the United States, 
knowingly and willfully 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, or imprisoned not more than five years, or 
both.
    (d) Violations of this part may also be subject to relevant 
provisions of other applicable laws.



Sec. 592.602  Prepenalty notice.

    (a) When required. If the Director of the Office of Foreign Assets 
Control has reason to believe that there has occurred a violation of any 
provision of this part or a violation of the provisions of any 
regulation or order issued by or pursuant to the direction or 
authorization of the Secretary of the Treasury pursuant to this part or 
otherwise under the Clean Diamond Trade Act, and the Director determines 
that further civil proceedings are warranted, the Director shall notify 
the alleged violator of the agency's intent to impose a monetary penalty 
by issuing a prepenalty notice. The prepenalty notice shall be in 
writing. The prepenalty notice may be issued whether or not another 
agency has taken any action with respect to the matter.
    (b) Contents of notice--(1) Facts of violation. The prepenalty 
notice shall describe the violation, specify the laws and regulations 
allegedly violated, and state the amount of the proposed monetary 
penalty.
    (2) Right to respond. The prepenalty notice also shall inform the 
respondent of the respondent's right to make a written presentation 
within the applicable 30-day period set forth in Sec. 592.603 as to why 
a monetary penalty should not be imposed or why, if imposed, the 
monetary penalty should be in a lesser amount than proposed.
    (c) Informal settlement prior to issuance of prepenalty notice. At 
any time prior to the issuance of a prepenalty notice, an alleged 
violator may request in writing that, for a period not to exceed sixty 
(60) days, the agency withhold issuance of the prepenalty notice for the 
exclusive purpose of effecting settlement of the agency's potential 
civil monetary penalty claims. In the event the Director grants the 
request, under terms and conditions within his discretion, the Office of 
Foreign Assets Control will agree to withhold issuance of the prepenalty 
notice for a period not to exceed 60 days and will enter into settlement 
negotiations of the potential civil monetary penalty claim.



Sec. 592.603  Response to prepenalty notice; informal settlement.

    (a) Deadline for response. The respondent may submit a response to 
the prepenalty notice within the applicable 30-day period set forth in 
this paragraph. The Director of the Office of Foreign Assets Control may 
grant, at his discretion, an extension of time in which to submit a 
response to the prepenalty notice. The failure to submit a response 
within the applicable time period set forth in this paragraph shall be 
deemed to be a waiver of the right to respond.
    (1) Computation of time for response. A response to the prepenalty 
notice must be postmarked or date-stamped by the U.S. Postal Service (or 
foreign postal service, if mailed abroad) or courier service provider 
(if transmitted to the Office of Foreign Assets Control by courier) on 
or before the 30th day after the postmark date on the envelope in which 
the prepenalty notice was mailed. If the respondent refused delivery or 
otherwise avoided receipt of the

[[Page 461]]

prepenalty notice, a response must be postmarked or date-stamped on or 
before the 30th day after the date on the stamped postal receipt 
maintained at the Office of Foreign Assets Control. If the prepenalty 
notice was personally delivered to the respondent by a non-U.S. Postal 
Service agent authorized by the Director, a response must be postmarked 
or date-stamped on or before the 30th day after the date of delivery.
    (2) 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 Director's discretion, only upon the respondent's specific request 
to the Office of Foreign Assets Control.
    (b) Form and method of response. The response must be submitted in 
writing and may be handwritten or typed. The response need not be in any 
particular form. A copy of the written response may be sent by 
facsimile, but the original also must be sent to the Office of Foreign 
Assets Control Civil Penalties Division by mail or courier and must be 
postmarked or date-stamped, in accordance with paragraph (a) of this 
section.
    (c) Contents of response. A written response must contain 
information sufficient to indicate that it is in response to the 
prepenalty notice and must include the Office of Foreign Assets Control 
identification number listed on the prepenalty notice.
    (1) A written response must include the respondent's full name, 
address, telephone number, and facsimile number, if available, or those 
of the representative of the respondent.
    (2) A written response should either admit or deny each specific 
violation alleged in the prepenalty notice and also state if the 
respondent has no knowledge of a particular violation. If the written 
response fails to address any specific violation alleged in the 
prepenalty notice, that alleged violation shall be deemed to be 
admitted.
    (3) A written response should include any information in defense, 
evidence in support of an asserted defense, or other factors that the 
respondent requests the Office of Foreign Assets Control to consider. 
Any defense or explanation previously made to the Office of Foreign 
Assets Control or any other agency must be repeated in the written 
response. Any defense not raised in the written response will be 
considered waived. The written response also should set forth the 
reasons why the respondent believes the penalty should not be imposed or 
why, if imposed, it should be in a lesser amount than proposed.
    (d) Failure to respond. Where the Office of Foreign Assets Control 
receives no response to a prepenalty notice within the applicable time 
period set forth in paragraph (a) of this section, a penalty notice 
generally will be issued, taking into account the mitigating and/or 
aggravating factors present in the record. If there are no mitigating 
factors present in the record, or the record contains a preponderance of 
aggravating factors, the proposed prepenalty amount generally will be 
assessed as the final penalty.
    (e) Informal settlement. In addition to or as an alternative to a 
written response to a prepenalty notice, the respondent or respondent's 
representative may contact the Office of Foreign Assets Control as 
advised in the prepenalty notice to propose the settlement of 
allegations contained in the prepenalty notice and related matters. 
However, the requirements set forth in paragraph (f) of this section as 
to oral communication by the representative must first be fulfilled. In 
the event of settlement at the prepenalty stage, the claim proposed in 
the prepenalty notice will be withdrawn, the respondent will not be 
required to take a written position on allegations contained in the 
prepenalty notice, and the Office of Foreign Assets Control will make no 
final determination as to whether a violation occurred. The amount 
accepted in settlement of allegations in a prepenalty notice may vary 
from the civil penalty that might finally be imposed in the event of a 
formal determination of violation. In the event no settlement is 
reached, the time limit specified in paragraph (a) of this section for 
written response to the prepenalty notice will remain in effect unless 
additional time is granted by the Office of Foreign Assets Control.

[[Page 462]]

    (f) Representation. A representative of the respondent may act on 
behalf of the respondent, but any oral communication with the Office of 
Foreign Assets Control prior to a written submission regarding the 
specific allegations contained in the prepenalty notice must be preceded 
by a written letter of representation, unless the prepenalty notice was 
served upon the respondent in care of the representative.



Sec. 592.604  Penalty imposition or withdrawal.

    (a) No violation. If, after considering any response to the 
prepenalty notice and any relevant facts, the Director of the Office of 
Foreign Assets Control determines that there was no violation by the 
respondent named in the prepenalty notice, the Director shall notify the 
respondent in writing of that determination and of the cancellation of 
the proposed monetary penalty.
    (b) Violation. (1) If, after considering any written response to the 
prepenalty notice, or default in the submission of a written response, 
and any relevant facts, the Director of the Office of Foreign Assets 
Control determines that there was a violation by the respondent named in 
the prepenalty notice, the Director is authorized to issue a written 
penalty notice to the respondent of the determination of the violation 
and the imposition of the monetary penalty.
    (2) The penalty notice shall inform the respondent that payment or 
arrangement for installment payment of the assessed penalty must be made 
within 30 days of the date of mailing of the penalty notice by the 
Office of Foreign Assets Control.
    (3) The penalty notice shall inform the respondent of the 
requirement to furnish the respondent's taxpayer identification number 
pursuant to 31 U.S.C. 7701 and that such number will be used for 
purposes of collecting and reporting on any delinquent penalty amount.
    (4) The issuance of the penalty notice finding a violation and 
imposing a monetary penalty shall constitute final agency action. The 
respondent has the right to seek judicial review of that final agency 
action in federal district court.



Sec. 592.605  Administrative collection; referral to United States 
Department of Justice.

    In the event that the respondent does not pay the penalty imposed 
pursuant to this part or make payment arrangements acceptable to the 
Director of the Office of Foreign Assets Control within 30 days of the 
date of mailing of the penalty notice, the matter may be referred for 
administrative collection measures by the Department of the Treasury or 
to the United States Department of Justice for appropriate action to 
recover the penalty in a civil suit in a federal district court.



                          Subpart G_Procedures



Sec. 592.701  Procedures.

    For procedures relating to 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. 592.702  Delegation by the Secretary of the Treasury.

    Any action that the Secretary of the Treasury is authorized to take 
pursuant to Executive Order 13312 (FR vol. 68, No. 147, July 31, 2003) 
and any further Executive orders relating to the Clean Diamond Trade Act 
(Pub. L. 108-19) may be taken by the Director of the Office of Foreign 
Assets Control or by any other person to whom the Secretary of the 
Treasury has delegated authority so to act.



                    Subpart H_Paperwork Reduction Act



Sec. 592.801  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 the information 
collections relating to the recordkeeping and reporting requirements of 
Sec. Sec. 592.301(a)(1), subpart C, Sec. 592.501, subpart E, and 
592.603, subpart F, see Sec. 501.901 of this chapter. The information 
collection requirements in Sec. Sec. 592.301(a)(3) and (a)(4), subpart 
C,

[[Page 463]]

have been approved by the OMB and assigned control numbers 1505-0198 and 
0607-0152, respectively. 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.



PART 593_FORMER LIBERIAN REGIME OF CHARLES TAYLOR SANCTIONS 
REGULATIONS--Table of Contents



      Subpart A_Relation of This Part to Other Laws and Regulations

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

                         Subpart B_Prohibitions

593.201 Prohibited transactions involving blocked property.
593.202 Effect of transfers violating the provisions of this part.
593.203 Holding of blocked physical funds in interest-bearing accounts; 
          investment and reinvestment.
593.204 Expenses of maintaining blocked physical property; liquidation 
          of blocked account.
593.205 Prohibition on the importation of any round log or timber 
          product originating in Liberia.
593.206 Evasions; attempts; conspiracies.

                      Subpart C_General Definitions

593.301 Blocked account; blocked property.
593.302 Effective date.
593.303 Entity.
593.304 Interest.
593.305 Licenses; general and specific.
593.306 Originating in Liberia.
593.307 Person.
593.308 Property; property interest.
593.309 Round log or timber product.
593.310 Transfer.
593.311 United States.
593.312 U.S. financial institution.
593.313 United States person; U.S. person.

                        Subpart D_Interpretations

593.401 Reference to amended sections.
593.402 Effect of amendment.
593.403 Termination and acquisition of an interest in blocked property.
593.404 Transactions ordinarily incident to a licensed transaction.
593.405 Provision of services.
593.406 Offshore transactions.
593.407 Payments from blocked accounts to satisfy obligations 
          prohibited.
593.408 Charitable Contributions.
593.409 Credit extended and cards issued by U.S. financial institutions.
593.410 Setoffs prohibited.
593.411 Importation into the United States.
593.412 Release of any round log or timber product originating in 
          Liberia from a bonded warehouse or foreign trade zone.
593.413 Transshipments or transit through the United States prohibited.

  Subpart E_Licenses, Authorizations and Statements of Licensing Policy

593.501 General and specific licensing procedures.
593.502 Effect of license or authorization.
593.503 Exclusion from licenses.
593.504 Payments and transfers to blocked accounts in U.S. financial 
          institutions.
593.505 Entries in certain accounts for normal service charges 
          authorized.
593.506 Investment and reinvestment of certain funds.
593.507 Provision of certain legal services authorized.
593.508 Authorization of emergency medical services.
593.509 Transactions related to mail authorized.
593.510 Transactions related to the importation of any round log and 
          timber product originating in Liberia authorized.

                            Subpart F_Reports

593.601 Records and reports.

                           Subpart G_Penalties

593.701 Penalties.
593.702 Prepenalty notice.
593.703 Response to prepenalty notice; informal settlement.
593.704 Penalty imposition or withdrawal.
593.705 Administrative collection; referral to United States Department 
          of Justice.

                          Subpart H_Procedures

593.801 Procedures.
593.802 Delegation by the Secretary of the Treasury.

                    Subpart I_Paperwork Reduction Act

593.901 Paperwork Reduction Act notice.

    Authority: 3 U.S.C. 301; 31 U.S.C. 321(b); 50 U.S.C. 1601-1651, 
1701-1706; 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; E.O. 13348, 69 FR 44885, 3 
CFR, 2004 Comp., p. 189.

    Source: 72 FR 28856, May 23, 2007, unless otherwise noted.

[[Page 464]]



      Subpart A_Relation of This Part to Other Laws and Regulations



Sec. 593.101  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 
any other provision of law or regulation authorizes any transaction 
prohibited by this part. No license 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. 593.201  Prohibited transactions involving blocked property.

    (a) Except as authorized by regulations, orders, directives, 
rulings, instructions, licenses or otherwise, and notwithstanding any 
contracts entered into or any license or permit granted prior to the 
effective date, property and interests in property that are in the 
United States, that hereafter come within the United States, or that are 
or hereafter come within the possession or control of U.S. persons, 
including their overseas branches, of the following persons are blocked 
and may not be transferred, paid, exported, withdrawn, or otherwise 
dealt in:
    (1) Any person listed in the Annex to Executive Order 13348 of July 
22, 2004 (69 FR 44885, July 27, 2004); and
    (2) Any person determined by the Secretary of the Treasury, in 
consultation with the Secretary of State:
    (i) To be or have been an immediate family member of Charles Taylor;
    (ii) To have been a senior official of the former Liberian regime 
headed by Charles Taylor or otherwise to have been or be a close ally or 
associate of Charles Taylor or the former Liberian regime;
    (iii) To have materially assisted, sponsored, or provided financial, 
material, or technological support for, or goods or services in support 
of, the unlawful depletion of Liberian resources, the removal of 
Liberian resources from that country, and the secreting of Liberian 
funds and property by any person whose property and interests in 
property are blocked pursuant to this paragraph (a); or
    (iv) To be owned or controlled by, or acting or purporting to act 
for or on behalf of, directly or indirectly, any person whose property 
and interests in property are blocked pursuant to this paragraph (a).

    Note 1 to paragraph (a) of Sec. 593.201: The names of persons 
listed in or designated pursuant to Executive Order 13348, 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 the Office of Foreign Assets Control's Specially 
Designated Nationals and Blocked Persons List (``SDN List'') with the 
identifier ``[LIBERIA].'' The SDN List is accessible through the 
following page on the Office of Foreign Assets Control's Web site: 
http://www.treasury.gov/sdn. Additional information pertaining to the 
SDN List can be found in appendix A to this chapter.
    Note 2 to paragraph (a) of Sec. 593.201: The International 
Emergency Economic Powers Act (50 U.S.C. 1701-1706), in Section 203 (50 
U.S.C. 1702), authorizes the blocking of property and interests in 
property of a person during the pendency of an investigation. The names 
of persons whose property and interests in property are blocked pending 
investigation pursuant to paragraph (a) of this section also are 
published in the Federal Register and incorporated into the SDN List 
with the identifier ``[BPI-LIBERIA].''
    Note 3 to paragraph (a) of Sec. 593.201: Sections 501.806 and 
501.807 of this chapter describe the procedures to be followed by 
persons seeking, respectively, the unblocking of funds that they believe 
were blocked due to mistaken identity, or administrative reconsideration 
of their status as persons whose property and interests in property are 
blocked pursuant to paragraph (a) of this section.

    (b) The blocking of property and interests in property pursuant to 
Sec. 593.201(a) includes, but is not limited

[[Page 465]]

to, the prohibition of the making or receiving by a United States person 
of any contribution or provision of funds, goods, or services by, to, or 
for the benefit of a person whose property and interests in property are 
blocked pursuant to Sec. 593.201(a).
    (c) Unless otherwise authorized by this part or by a specific 
license expressly referring to this section, any dealing in any security 
(or evidence thereof) held within the possession or control of a U.S. 
person and either registered or inscribed in the name of, or known to be 
held for the benefit of, or issued by, any person whose property and 
interests in property are blocked pursuant to Sec. 593.201(a) is 
prohibited. This prohibition includes but is not limited to the transfer 
(including the transfer on the books of any issuer or agent thereof), 
disposition, transportation, importation, exportation, or withdrawal of, 
or the endorsement or guaranty of signatures on, any such security on or 
after the effective date. This prohibition applies irrespective of the 
fact that at any time (whether prior to, on, or subsequent to the 
effective date) the registered or inscribed owner of any such security 
may have or might appear to have assigned, transferred, or otherwise 
disposed of the security.

[72 FR 28856, May 23, 2007, as amended at 76 FR 38543, June 30, 2011]



Sec. 593.202  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. 
593.201(a), is null and void and shall not be the basis for the 
assertion or recognition of any interest in or right, remedy, power, or 
privilege with respect to such property or property interests.
    (b) No transfer before the effective date shall be the basis for the 
assertion or recognition of any right, remedy, power, or privilege with 
respect to, or any interest in, any property or interest in property 
blocked pursuant to Sec. 593.201(a), unless the person with whom such 
property is held or maintained, prior to that date, had written notice 
of the transfer or by any written evidence had recognized such transfer.
    (c) Unless otherwise provided, an appropriate license or other 
authorization issued by or pursuant to the direction or authorization of 
the Director of the Office of Foreign Assets Control before, during, or 
after a transfer shall validate such transfer or make it enforceable to 
the same extent that it would be valid or enforceable but for the 
provisions of IEEPA, Executive Order 13348, this part, and any 
regulation, order, directive, ruling, instruction, or license issued 
pursuant to this part.
    (d) Transfers of property that otherwise would be null and void or 
unenforceable by virtue of the provisions of this section shall not be 
deemed to be null and void or unenforceable as to any person with whom 
such property is or was held or maintained (and as to such person only) 
in cases in which such person is able to establish to the satisfaction 
of the Director of the Office of Foreign Assets Control each of the 
following:
    (1) Such transfer did not represent a willful violation of the 
provisions of this part by the person with whom such property is or was 
held or maintained;
    (2) The person with whom such property is or was held or maintained 
did not have reasonable cause to know or suspect, in view of all the 
facts and circumstances known or available to such person, that such 
transfer required a license or authorization issued pursuant to this 
part and was not so licensed or authorized, or, if a license or 
authorization did purport to cover the transfer, that such license or 
authorization had been obtained by misrepresentation of a third party or 
withholding of material facts or was otherwise fraudulently obtained; 
and
    (3) The person with whom such property is or was held or maintained 
filed with the Office of Foreign Assets Control a report setting forth 
in full the circumstances relating to such transfer promptly upon 
discovery that:
    (i) Such transfer was in violation of the provisions of this part or 
any regulation, ruling, instruction, license, or

[[Page 466]]

other direction or authorization issued pursuant to this part;
    (ii) Such transfer was not licensed or authorized by the Director of 
the Office of Foreign Assets Control; or
    (iii) If a license did purport to cover the transfer, such license 
had been obtained by misrepresentation of a third party or withholding 
of material facts or was otherwise fraudulently obtained.

    Note to paragraph (d) of Sec. 593.202: The filing of a report in 
accordance with the provisions of paragraph (d)(3) of this section shall 
not be deemed evidence that the terms of paragraphs (d)(1) and (d)(2) of 
this section have been satisfied.

    (e) Except to the extent otherwise provided by law, unless licensed 
pursuant to this part, any attachment, judgment, decree, lien, 
execution, garnishment, or other judicial process is null and void with 
respect to any property in which, on or since the effective date, there 
existed an interest of a person whose property and interests in property 
are blocked pursuant to Sec. 593.201(a).



Sec. 593.203  Holding of blocked funds in interest-bearing accounts;
investment and reinvestment.

    (a) Except as provided in paragraph (c) or (d) of this section, or 
as otherwise directed by the Office of Foreign Assets Control, any U.S. 
person holding funds, such as currency, bank deposits, or liquidated 
financial obligations, subject to Sec. 593.201(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) 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.
    (3) Funds held or placed in a blocked account pursuant to this 
paragraph (b) may not be invested in instruments the maturity of which 
exceeds 180 days. If interest is credited to a separate blocked account 
or subaccount, the name of the account party on each account must be the 
same.
    (c) Blocked funds held in instruments the maturity of which exceeds 
180 days at the time the funds become subject to Sec. 593.201(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 (b) 
or (d) of this section.
    (d) Blocked funds held in accounts or instruments outside the United 
States at the time the funds become subject to Sec. 593.201(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.
    (e) 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 at the time the property becomes subject to 
Sec. 593.201(a). However, the Office of Foreign Assets Control may 
issue licenses permitting or directing such sales in appropriate cases.
    (f) 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. 593.201(a), nor may their holder cooperate 
in or facilitate the pledging or other attempted use as collateral of 
blocked funds or other assets.



Sec. 593.204  Expenses of maintaining blocked physical property;
liquidation of blocked account.

    (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

[[Page 467]]

effective date, all expenses incident to the maintenance of physical 
property blocked pursuant to Sec. 593.201(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. 593.201(a) may, in the 
discretion of the Director of the Office of Foreign Assets Control, be 
sold or liquidated and the net proceeds placed in a blocked interest-
bearing account in the name of the owner of the property.



Sec. 593.205  Prohibition on the importation of any round log or timber
product originating in Liberia.

    Except as otherwise 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 of this section, the importation into the United States, 
directly or indirectly, of any round log or timber product originating 
in Liberia is prohibited.

    Note to Sec. 593.205: See section 593.510, which authorizes 
transactions related to the importation of any round log or timber 
product originating in Liberia. This general license has been issued in 
accordance with United Nations Security Council Resolution 1689 of June 
20, 2006.



Sec. 593.206  Evasions; attempts; conspiracies.

    (a) Except as otherwise authorized, and notwithstanding any contract 
entered into or any license or permit granted prior to the effective 
date, any transaction by any U.S. person or within the United States on 
or after the effective date that evades or avoids, has the purpose of 
evading or avoiding, or attempts to violate any of the prohibitions set 
forth in this part is prohibited.
    (b) Except as otherwise authorized, and notwithstanding any contract 
entered into or any license or permit granted prior to the effective 
date, any conspiracy formed to violate the prohibitions set forth in 
this part is prohibited.



                      Subpart C_General Definitions



Sec. 593.301  Blocked account; blocked property.

    The terms blocked account and blocked property shall mean any 
account or property subject to the prohibitions in Sec. 593.201 held in 
the name of a person whose property and interests in property are 
blocked pursuant to Sec. 593.201(a), or in which such person has an 
interest, and with respect to which payments, transfers, exportations, 
withdrawals, or other dealings may not be made or effected except 
pursuant to an authorization or license from the Office of Foreign 
Assets Control expressly authorizing such action.



Sec. 593.302  Effective date.

    The term effective date refers to the effective date of the 
applicable prohibitions and directives contained in this part as 
follows:
    (a) With respect to a person whose property and interests in 
property are blocked pursuant to Sec. 593.201(a)(1), or with respect to 
the prohibitions set forth at Sec. 593.205, 12:01 a.m. eastern daylight 
time, July 23, 2004;
    (b) With respect to a person whose property and interests in 
property are blocked pursuant to Sec. 593.201(a)(2), the earlier of the 
date of actual or constructive notice of such person's designation.



Sec. 593.303  Entity.

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



Sec. 593.304  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. 593.305  Licenses; general and specific.

    (a) Except as otherwise specified, the term license means any 
license or authorization contained in or issued pursuant to this part.
    (b) The term general license means any license or authorization the 
terms

[[Page 468]]

of which are set forth in subpart E of this part.
    (c) The term specific license means any license or authorization not 
set forth in subpart E of this part but issued pursuant to this part.

    Note to Sec. 593.305: See Sec. 501.801 of this chapter on 
licensing procedures.



Sec. 593.306  Originating in Liberia.

    The term originating in Liberia means:
    (a) Any product determined to be a good of Liberian origin pursuant 
to the rules of origin of U.S. Customs and Border Protection; or
    (b) Any product that has entered into Liberian commerce.



Sec. 593.307  Person.

    The term person means an individual or entity.



Sec. 593.308  Property; property interest.

    The terms property and property interest include, but are not 
limited to, money, checks, drafts, bullion, bank deposits, savings 
accounts, debts, indebtedness, obligations, notes, guarantees, 
debentures, stocks, bonds, coupons, any other financial instruments, 
bankers acceptances, mortgages, pledges, liens or other rights in the 
nature of security, warehouse receipts, bills of lading, trust receipts, 
bills of sale, any other evidences of title, ownership or indebtedness, 
letters of credit and any documents relating to any rights or 
obligations there under, 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. 593.309  Round log or timber product.

    The term round log or timber product means any product classifiable 
in Chapter 44 of the Harmonized Tariff Schedule of the United States.



Sec. 593.310  Transfer.

    The term transfer means any actual or purported act or transaction, 
whether or not evidenced by writing, and whether or not done or 
performed within the United States, the purpose, intent, or effect of 
which is to create, surrender, release, convey, transfer, or alter, 
directly or indirectly, any right, remedy, power, privilege, or interest 
with respect to any property and, without limitation upon the foregoing, 
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. 593.311  United States.

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



Sec. 593.312  U.S. financial institution.

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

[[Page 469]]

securities, commodity futures or options, or procuring purchasers and 
sellers thereof, as principal or agent; including but not limited to, 
depository institutions, banks, savings banks, trust companies, 
securities brokers and dealers, commodity futures and options brokers 
and dealers, forward contract and foreign exchange merchants, securities 
and commodities exchanges, clearing corporations, investment companies, 
employee benefit plans, and U.S. holding companies, U.S. affiliates, or 
U.S. subsidiaries of any of the foregoing. This term includes those 
branches, offices and agencies of foreign financial institutions that 
are located in the United States, but not such institutions' foreign 
branches, offices, or agencies.



Sec. 593.313  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.



                        Subpart D_Interpretations



Sec. 593.401  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, direction, or license issued pursuant to this part refers 
to the same as currently amended.



Sec. 593.402  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 or 
under the direction of the Director of the Office of Foreign Assets 
Control does not affect any act done or omitted, or any civil or 
criminal suit or 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. 593.403  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 blocked property (including any 
property interest) away from a person, such property shall no longer be 
deemed to be property blocked pursuant to Sec. 593.201(a), unless there 
exists in the property another interest that is blocked pursuant to 
Sec. 593.201(a) or any other part of this chapter, 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. 593.201(a), such property shall be deemed to be property in which 
that person has an interest and therefore blocked.



Sec. 593.404  Transactions ordinarily incident to a licensed transaction.

    Any transaction ordinarily incident to a licensed transaction and 
necessary to give effect thereto is also authorized, except:
    (a) An ordinarily incident transaction, not explicitly authorized 
within the terms of the license, by or with a person whose property and 
interests in property are blocked pursuant to Sec. 593.201(a); or
    (b) An ordinarily incident transaction, not explicitly authorized 
within the terms of the license, involving a debit to a blocked account 
or a transfer of blocked property.



Sec. 593.405  Provision of services.

    (a) The prohibitions on transactions involving blocked property 
contained in Sec. 593.201 apply to services performed in the United 
States or by U.S. persons, wherever located, including by an overseas 
branch of an entity located in the United States:

[[Page 470]]

    (1) On behalf of or for the benefit of a person whose property and 
interests in property are blocked pursuant to Sec. 593.201(a); or
    (2) With respect to property interests subject to Sec. 593.201.
    (b) Example. U.S. persons may not, except as authorized by or 
pursuant to this part, provide legal, accounting, financial, brokering, 
freight forwarding, transportation, public relations, or other services 
to a person whose property and interests in property are blocked 
pursuant to Sec. 593.201(a).

    Note to Sec. 593.405. See Sec. Sec. 593.507 and 593.508, 
respectively, on licensing policy with regard to the provision of 
certain legal or medical services.



Sec. 593.406  Offshore transactions.

    The prohibitions in Sec. 593.201 on transactions 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. 
593.201(a), or property in which a person whose property and interests 
in property are blocked pursuant to Sec. 593.201(a) has or has had an 
interest since the effective date.



Sec. 593.407  Payments from blocked accounts to satisfy obligations 
prohibited.

    Pursuant to Sec. 593.201, no debits may be made to a blocked 
account to pay obligations to U.S. persons or other persons, except as 
authorized by or pursuant to this part.



Sec. 593.408  Charitable contributions.

    Unless otherwise specifically authorized by the Office of Foreign 
Assets Control by or pursuant to this part, no charitable contribution 
or donation of funds, goods, services, or technology, including those to 
relieve human suffering, such as food, clothing or medicine, may be made 
by, to, or for the benefit of a person whose property or interests in 
property are blocked pursuant to Sec. 593.201(a). For purposes of this 
part, a contribution or donation is made by, to, or for the benefit of a 
person whose property or interests in property are blocked pursuant to 
Sec. 593.201(a) if made by, to, or in the name of such a person; if made 
by, to, 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 or donations by, to, or for such a person.



Sec. 593.409  Credit extended and cards issued by U.S. financial
institutions.

    The prohibition in Sec. 593.201 on dealing in property subject to 
that section prohibits U.S. financial institutions from performing under 
any existing credit agreements, including, but not limited to, charge 
cards, debit cards, or other credit facilities issued by a U.S. 
financial institution to a person whose property and interests in 
property are blocked pursuant to Sec. 593.201(a).



Sec. 593.410  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. 593.201 if effected after the effective date.



Sec. 593.411  Importation into the United States.

    With respect to the prohibitions set forth in Sec. 593.205, the 
term importation into the United States generally means the bringing of 
any such products into the United States. In the case of round logs or 
timber products originating in Liberia being transported by vessel, 
importation into the United States means the bringing of any such 
products into the United States with the intent to unlade. See also 
Sec. 593.413 and Sec. 593.510.



Sec. 593.412  Release of any round log or timber product originating
in Liberia from a bonded warehouse or foreign trade zone.

    (a) The prohibitions in Sec. 593.205 apply to importation into a 
bonded warehouse or a foreign trade zone in the United States.
    (b) Section 593.205 does not prohibit the release from a bonded 
warehouse or foreign trade zone of any round log or timber product 
originating in Liberia imported into a bonded warehouse or foreign trade 
zone either prior to the

[[Page 471]]

effective date or in a transaction authorized pursuant to this part on 
or after the effective date.
    (c) Notwithstanding paragraph (b) of this section, any round log or 
timber product originating in Liberia in which persons whose property 
and interests in property are blocked pursuant to Sec. 593.201(a) have 
an interest may not be released unless authorized by the Office of 
Foreign Assets Control.

    Note to Sec. 593.412. See Sec. 593.510.



Sec. 593.413  Transshipment or transit through the United States
prohibited.

    Except as otherwise specified:
    (a) The prohibitions in Sec. 593.205 apply to the importation into 
the United States, for transshipment or transit to third countries, of 
any round log or timber product originating in Liberia.
    (b) In the case of any round log or timber product originating in 
Liberia, the prohibitions in Sec. 593.205 apply to the unlading in the 
United States and the intent to unlade in the United States of such 
products intended or destined for third countries.

    Note to Sec. 593.413. See Sec. 593.510.



  Subpart E_Licenses, Authorizations and Statements of Licensing Policy



Sec. 593.501  General and specific licensing procedures.

    For provisions relating to licensing procedures, see part 501, 
subpart E of this chapter. Licensing actions taken pursuant to part 501 
of this chapter with respect to the prohibitions contained in this part 
are considered actions taken pursuant to this part.



Sec. 593.502  Effect of license or authorization.

    (a) No license or other authorization contained in this part, or 
otherwise issued by or under the direction of the Director of the Office 
of Foreign Assets Control, authorizes or validates any transaction 
effected prior to the issuance of such license or other authorization, 
unless specifically provided in such license or authorization.
    (b) No regulation, ruling, instruction, or license authorizes any 
transaction prohibited under this part unless the regulation, ruling, 
instruction, or license is issued by the Office of Foreign Assets 
Control and specifically refers to this part. No regulation, ruling, 
instruction, or license referring to this part shall be deemed to 
authorize any transaction prohibited by any provision of this chapter 
unless the regulation, ruling, instruction, or license specifically 
refers to such provision.
    (c) Any regulation, ruling, instruction, or license authorizing any 
transaction otherwise prohibited under this part has the effect of 
removing a prohibition contained in this part from the transaction, but 
only to the extent specifically stated by its terms. Unless the 
regulation, ruling, instruction, or license otherwise specifies, such an 
authorization does not create any right, duty, obligation, claim, or 
interest in, or with respect to, any property which would not otherwise 
exist under ordinary principles of law.



Sec. 593.503  Exclusion from licenses.

    The Director of the Office of Foreign Assets Control reserves the 
right to exclude any person, property, or transaction from the operation 
of any license or from the privileges conferred by any license. The 
Director of the Office of Foreign Assets Control also reserves the right 
to restrict the applicability of any license to particular persons, 
property, transactions, or classes thereof. Such actions are binding 
upon all persons receiving actual or constructive notice of the 
exclusions or restrictions.



Sec. 593.504  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. 
593.201(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

[[Page 472]]

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. 593.504: Please refer to Sec. 501.603 of this chapter 
for mandatory reporting requirements regarding financial transfers. See 
also Sec. 593.203 concerning the obligation to hold blocked funds in 
interest-bearing accounts.



Sec. 593.505  Entries in certain accounts for normal service charges 
authorized.

    (a) A U.S. financial institution is authorized to debit any blocked 
account held at that financial institution in payment or reimbursement 
for normal service charges owed it by the owner of that blocked account.
    (b) As used in this section, the term normal service charges shall 
include charges in payment or reimbursement for interest due; cable, 
telegraph, internet, or telephone charges; postage costs; custody fees; 
small adjustment charges to correct bookkeeping errors; and, but not by 
way of limitation, minimum balance charges, notary and protest fees, and 
charges for reference books, photocopies, credit reports, transcripts of 
statements, registered mail, insurance, stationery and supplies, and 
other similar items.



Sec. 593.506  Investment and reinvestment of certain funds.

    Subject to the requirements of Sec. 593.203, U.S. financial 
institutions are authorized to invest and reinvest assets blocked 
pursuant to Sec. 593.201, subject to the following conditions:
    (a) The assets representing such investments and reinvestments are 
credited to a blocked account or subaccount which 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. 593.201(a).



Sec. 593.507  Provision of certain legal services authorized.

    (a) The provision of the following legal services to or on behalf of 
persons whose property and interests in property are blocked pursuant to 
Sec. 593.201(a) is authorized, provided that all receipts of payment of 
professional fees and reimbursement of incurred expenses must be 
specifically licensed:
    (1) Provision of legal advice and counseling on the requirements of 
and compliance with the laws of 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 when named as defendants in or 
otherwise made parties to domestic U.S. legal, arbitration, or 
administrative proceedings;
    (3) Initiation and conduct of domestic U.S. legal, arbitration, or 
administrative proceedings in defense of property interests subject to 
U.S. jurisdiction;
    (4) Representation of persons before any Federal or State agency 
with respect to the imposition, administration, or enforcement of U.S. 
sanctions against such persons; and
    (5) Provision of legal services in any other context in which 
prevailing U.S. law requires access to legal counsel at public expense.
    (b) The provision of any other legal services to persons whose 
property and interests in property are blocked pursuant to Sec. 
593.201(a), not otherwise authorized in this part, requires the issuance 
of a specific license.
    (c) Entry into a settlement agreement affecting property and 
interests in property 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 and interests in property blocked pursuant to

[[Page 473]]

Sec. 593.201(a) is prohibited unless specifically licensed in 
accordance with Sec. 593.202(e).



Sec. 593.508  Authorization of emergency medical services.

    The provision of nonscheduled emergency medical services in the 
United States to persons whose property and interests in property are 
blocked pursuant to Sec. 593.201(a) is authorized, provided that all 
receipt of payment for such services must be specifically licensed.



Sec. 593.509  Transactions related to mail authorized.

    All transactions by U.S. persons, including payment and transfers to 
common carriers, incident to the receipt or transmission of mail between 
a U.S. person and a person whose property and interests in property are 
blocked pursuant to Sec. 593.201(a) are authorized, provided the mail 
is limited to personal communications not involving a transfer of 
anything of value and not exceeding 12 ounces in weight.



Sec. 593.510  Transactions related to the importation of any round log
or timber product originating in Liberia authorized.

    Except as otherwise prohibited by Sec. 593.201, all transactions 
that are prohibited by Sec. 593.205 with respect to the importation 
into the United States of any round log or timber product originating in 
Liberia are authorized.



                            Subpart F_Reports



Sec. 593.601  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



Sec. 593.701  Penalties.

    (a) Attention is directed to section 206 of the International 
Emergency Economic Powers Act (IEEPA) (50 U.S.C. 1705), which is 
applicable to violations of the provisions of any license, ruling, 
regulation, order, direction, or instruction issued by or pursuant to 
the direction or authorization of the Secretary of the Treasury pursuant 
to this part or otherwise under IEEPA.
    (1) A civil penalty not to exceed the amount set forth in Section 
206 of the Act 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 the Act.

    Note to paragraph (a)(1) of Sec. 593.701: As of June 10, 2008, the 
Act provides for a maximum civil penalty not to exceed the greater of 
$250,000 or an amount that is twice the amount of the transaction that 
is the basis of the violation with respect to which the penalty is 
imposed.

    (2) A person who willfully commits, willfully attempts to commit, or 
willfully conspires to commit, or aids or abets in the commission of a 
violation of any license, order, regulation, or prohibition shall, upon 
conviction, be fined not more than $1,000,000, or if a natural person, 
may be imprisoned for not more than 20 years, or both.
    (b) Adjustments to penalty amounts. (1) The civil penalties provided 
in the Act 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 the Act are subject to 
adjustment pursuant to 18 U.S.C. 3571.
    (c) Violations involving transactions described at section 
203(b)(1), (3-4) of IEEPA (50 U.S.C. 1702(b)(1), (3-4)) shall be subject 
only to the penalties set forth in paragraph (b) of this section.
    (d)(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 and UNPA are subject to 
increase pursuant to 18 U.S.C. 3571.
    (e) Attention is also directed to 18 U.S.C. 1001, which provides 
that whoever, in any matter within the jurisdiction of the executive, 
legislative, or judicial branch of the United States, knowingly and 
willfully falsifies, conceals or covers up by any trick,

[[Page 474]]

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, or imprisoned not more than five years, or 
both.
    (f) Violations of this part may also be subject to relevant 
provisions of other applicable laws.

[72 FR 28856, May 23, 2007, as amended at 73 FR 32655, June 10, 2008]



Sec. 593.702  Prepenalty notice.

    (a) When required. If the Director of the Office of Foreign Assets 
Control has reason to believe that there has occurred a violation of any 
provision of this part or a violation of the provisions of any license, 
ruling, regulation, order, direction, or instruction issued by or 
pursuant to the direction or authorization of the Secretary of the 
Treasury pursuant to this part or otherwise under IEEPA, and the 
Director determines that further proceedings are warranted, the Director 
shall notify the alleged violator of the agency's intent to impose a 
monetary penalty by issuing a prepenalty notice. The prepenalty notice 
shall be in writing. The prepenalty notice may be issued whether or not 
another agency has taken any action with respect to the matter.
    (b) Contents of notice--(1) Facts of violation. The prepenalty 
notice shall describe the violation, specify the laws and regulations 
allegedly violated, and state the amount of the proposed monetary 
penalty.
    (2) Right to respond. The prepenalty notice also shall inform the 
respondent of the respondent's right to make a written presentation 
within the applicable 30-day period set forth in Sec. 593.703 as to why 
a monetary penalty should not be imposed or why, if imposed, the 
monetary penalty should be in a lesser amount than proposed.
    (c) Informal settlement prior to issuance of prepenalty notice. At 
any time prior to the issuance of a prepenalty notice, an alleged 
violator may request in writing that, for a period not to exceed 60 
days, the agency withhold issuance of the prepenalty notice for the 
exclusive purpose of effecting settlement of the agency's potential 
civil monetary penalty claims. In the event the Director grants the 
request, under terms and conditions within the Director's discretion, 
the Office of Foreign Assets Control will agree to withhold issuance of 
the prepenalty notice for a period not to exceed 60 days and will enter 
into settlement negotiations of the potential civil monetary penalty 
claim.



Sec. 593.703  Response to prepenalty notice; informal settlement.

    (a) Deadline for response. The respondent may submit a response to 
the prepenalty notice within the applicable 30-day period set forth in 
this paragraph. The Director may grant, at the Director's discretion, an 
extension of time in which to submit a response to the prepenalty 
notice. The failure to submit a response within the applicable time 
period set forth in this paragraph shall be deemed to be a waiver of the 
right to respond.
    (1) Computation of time for response. A response to the prepenalty 
notice must be postmarked or date-stamped by the U.S. Postal Service (or 
foreign postal service, if mailed abroad) or courier service provider 
(if transmitted to the Office of Foreign Assets Control by courier) on 
or before the 30th day after the postmark date on the envelope in which 
the prepenalty notice was mailed. If the prepenalty notice was 
personally delivered to the respondent by a non-U.S. Postal Service 
agent authorized by the Director, a response must be postmarked or date-
stamped on or before the 30th day after the date of delivery.
    (2) 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 Director's discretion, only upon the respondent's specific request 
to the Office of Foreign Assets Control.
    (b) Form and method of response. The response need not be in any 
particular form, but it must be typewritten and signed by the respondent 
or a representative thereof. A copy of the written response may be sent 
by facsimile, but the original also must be sent to

[[Page 475]]

the Office of Foreign Assets Control Civil Penalties Division by mail or 
courier and must be postmarked or date-stamped, in accordance with 
paragraph (a) of this section.
    (c) Contents of response. A written response must contain 
information sufficient to indicate that it is in response to the 
prepenalty notice and must identify the Office of Foreign Assets Control 
identification number listed on the prepenalty notice.
    (1) A written response must include the respondent's full name, 
address, telephone number, and facsimile number, if available, or those 
of the representative of the respondent.
    (2) A written response should either admit or deny each specific 
violation alleged in the prepenalty notice and also state if the 
respondent has no knowledge of a particular violation. If the written 
response fails to address any specific violation alleged in the 
prepenalty notice, that alleged violation shall be deemed to be 
admitted.
    (3) A written response should include any information in defense, 
evidence in support of an asserted defense, or other factors that the 
respondent requests the Office of Foreign Assets Control to consider. 
Any defense or explanation previously made to the Office of Foreign 
Assets Control or any other agency must be repeated in the written 
response. Any defense not raised in the written response will be 
considered waived. The written response also should set forth the 
reasons why the respondent believes the penalty should not be imposed or 
why, if imposed, it should be in a lesser amount than proposed.
    (d) Failure to respond. If the Office of Foreign Assets Control 
receives no response to a prepenalty notice within the applicable time 
period set forth in paragraph (a) of this section, a penalty notice 
generally will be issued, taking into account the mitigating and/or 
aggravating factors present in the record. If there are no mitigating 
factors present in the record, or the record contains a preponderance of 
aggravating factors, the proposed prepenalty amount generally will be 
assessed as the final penalty.
    (e) Informal settlement. In addition to or as an alternative to a 
written response to a prepenalty notice, the respondent or respondent's 
representative may contact the Office of Foreign Assets Control's Civil 
Penalties Division as advised in the prepenalty notice to propose the 
settlement of allegations contained in the prepenalty notice and related 
matters. However, the requirements set forth in paragraph (g) of this 
section as to oral communication by the representative must first be 
fulfilled. In the event of settlement at the prepenalty stage, the claim 
proposed in the prepenalty notice will be withdrawn, the respondent will 
not be required to take a written position on allegations contained in 
the prepenalty notice, and the Office of Foreign Assets Control will 
make no final determination as to whether a violation occurred. The 
amount accepted in settlement of allegations in a prepenalty notice may 
vary from the civil penalty that might finally be imposed in the event 
of a formal determination of violation. In the event no settlement is 
reached, the time limit specified in paragraph (a) of this section for 
written response to the prepenalty notice will remain in effect unless 
additional time is granted by the Office of Foreign Assets Control.
    (f) Guidelines. Guidelines for the imposition or settlement of civil 
penalties by the Office of Foreign Assets Control are available on 
OFAC's Web site (http://www.treas.gov/ofac).
    (g) Representation. A representative of the respondent may act on 
behalf of the respondent, but any oral communication with the Office of 
Foreign Assets Control prior to a written submission regarding the 
specific allegations contained in the prepenalty notice must be preceded 
by a written letter of representation, unless the prepenalty notice was 
served upon the respondent in care of the representative.



Sec. 593.704  Penalty imposition or withdrawal.

    (a) No violation. If, after considering any response to the 
prepenalty notice and any relevant facts, the Director of the Office of 
Foreign Assets Control determines that there was no violation by the 
respondent named in the prepenalty notice, the Director shall notify the 
respondent in writing of

[[Page 476]]

that determination and of the cancellation of the proposed monetary 
penalty.
    (b) Violation. (1) If, after considering any written response to the 
prepenalty notice, or default in the submission of a written response, 
and any relevant facts, the Director of the Office of Foreign Assets 
Control determines that there was a violation by the respondent named in 
the prepenalty notice, the Director is authorized to issue a written 
penalty notice to the respondent of the determination of the violation 
and the imposition of the monetary penalty.
    (2) The penalty notice shall inform the respondent that payment or 
arrangement for installment payment of the assessed penalty must be made 
within 30 days of the date of mailing of the penalty notice by the 
Office of Foreign Assets Control.
    (3) The penalty notice shall inform the respondent of the 
requirement to furnish the respondent's taxpayer identification number 
pursuant to 31 U.S.C. 7701 and that such number will be used for 
purposes of collecting and reporting on any delinquent penalty amount.
    (4) The issuance of the penalty notice finding a violation and 
imposing a monetary penalty shall constitute final agency action. The 
respondent has the right to seek judicial review of that final agency 
action in Federal district court.



Sec. 593.705  Administrative collection; referral to United States 
Department of Justice.

    In the event that the respondent does not pay the penalty imposed 
pursuant to this part or make payment arrangements acceptable to the 
Director of the Office of Foreign Assets Control within 30 days of the 
date of mailing of the penalty notice, the matter may be referred for 
administrative collection measures by the Department of the Treasury or 
to the United States Department of Justice for appropriate action to 
recover the penalty in a civil suit in a Federal district court.



                          Subpart H_Procedures



Sec. 593.801  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. 593.802  Delegation by the Secretary of the Treasury.

    Any action that the Secretary of the Treasury is authorized to take 
pursuant to Executive Order 13348 of July 22, 2004 (69 FR 44885, July 
27, 2004), and any further Executive orders relating to the national 
emergency declared therein, may be taken by the Director of the Office 
of Foreign Assets Control or by any other person to whom the Secretary 
of the Treasury has delegated authority so to act.



                    Subpart I_Paperwork Reduction Act



Sec. 593.901  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 record keeping and reporting requirements, 
licensing procedures (including those pursuant to statements of 
licensing policy), and other procedures, see Sec. 501.901 of this 
chapter. An agency may not conduct or sponsor, and a person is not 
required to respond to, a collection of information unless it displays a 
valid control number assigned by OMB.



PART 594_GLOBAL TERRORISM SANCTIONS REGULATIONS--Table of Contents



      Subpart A_Relation of This Part to Other Laws and Regulations

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

                         Subpart B_Prohibitions

594.201 Prohibited transactions involving blocked property.
594.202 Effect of transfers violating the provisions of this part.
594.203 Holding of funds in interest-bearing accounts; investment and 
          reinvestment.

[[Page 477]]

594.204 Prohibited transaction or dealing in property; contributions of 
          funds, goods, or services.
594.205 Evasions; attempts; conspiracies.
594.206 Expenses of maintaining blocked property; liquidation of blocked 
          property.

                      Subpart C_General Definitions

594.301 Blocked account; blocked property.
594.302 Effective date.
594.303 Entity.
594.304 Foreign person.
594.305 Information or informational materials.
594.306 Interest.
594.307 Licenses; general and specific.
594.308 Person.
594.309 Property; property interest.
594.310 Specially designated global terrorist; SDGT.
594.311 Terrorism.
594.312 Transfer.
594.313 United States.
594.314 U.S. financial institution.
594.315 United States person; U.S. person.
594.316 Otherwise associated with.
594.317 Financial, material, or technological support.

                        Subpart D_Interpretations

594.401 Reference to amended sections.
594.402 Effect of amendment.
594.403 Setoffs prohibited.
594.404 Termination and acquisition of an interest in blocked property.
594.405 Transactions incidental to a licensed transaction.
594.406 Provision of services.
594.407 Offshore transactions.
594.408 Payments from blocked accounts to satisfy obligations 
          prohibited.
594.409 Charitable contributions.
594.410 Credit extended and cards issued by U.S. financial institutions.
594.411 Palestinian Authority.

  Subpart E_Licenses, Authorizations and Statements of Licensing Policy

594.501 General and specific licensing procedures.
594.502 Effect of license or authorization.
594.503 Exclusion from licenses and other authorizations.
594.504 Payments and transfers to blocked accounts in U.S. financial 
          institutions.
594.505 Entries in certain accounts for normal service charges 
          authorized.
594.506 Provision of certain legal services authorized.
594.507 Authorization of emergency medical services.
594.508 Transactions related to telecommunications authorized.
594.509 Transactions related to mail authorized.
594.510 Official activities of certain international organizations; U.S. 
          person employees of certain governments.
594.511 Travel, employment, residence and maintenance transactions with 
          the Palestinian Authority.
594.512 Payment of taxes and incidental fees to the Palestinian 
          Authority.
594.513 Transactions with entities under the control of the Palestinian 
          President and certain other entities.
594.514 Concluding activities with the Palestinian Authority.
594.515 In-kind donations of medicine, medical devices, and medical 
          services.
594.516 Transactions with the Palestinian Authority authorized.
594.517 Payments from funds originating outside the United States and 
          the formation of legal defense funds authorized.

                            Subpart F_Reports

594.601 Records and reports.

                           Subpart G_Penalties

594.701 Penalties.
594.702 Prepenalty notice.
594.703 Response to prepenalty notice; informal settlement.
594.704 Penalty imposition or withdrawal.
594.705 Administrative collection; referral to United States Department 
          of Justice.

                          Subpart H_Procedures

594.801 Procedures.
594.802 Delegation by the Secretary of the Treasury.

                    Subpart I_Paperwork Reduction Act

594.901 Paperwork Reduction Act notice.

    Authority: 3 U.S.C. 301; 22 U.S.C. 287c; 31 U.S.C. 321(b); 50 U.S.C. 
1601-1651, 1701-1706; Pub. L. 101-410, 104 Stat. 890 (28 U.S.C. 2461 
note); Pub. L. 110-96, 121 Stat. 1011; E.O. 13224, 66 FR 49079, 3 CFR, 
2001 Comp., p. 786; E.O. 13268, 67 FR 44751, 3 CFR, 2002 Comp., p. 240; 
E.O. 13284, 68 FR 4075, 3 CFR, 2003 Comp., p. 161.

    Source: 68 FR 34197, June 6, 2003, unless otherwise noted.



      Subpart A_Relation of This Part to Other Laws and Regulations



Sec. 594.101  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

[[Page 478]]

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. 594.201  Prohibited transactions involving blocked property.

    (a) Except as authorized by statutes, regulations, orders, 
directives, rulings, instructions, licenses or otherwise, and 
notwithstanding any contracts entered into or any license or permit 
granted prior to the effective date, property and interests in property 
of the following persons that are in the United States, that hereafter 
come within the United States, or that hereafter come within the 
possession or control of U.S. persons, including their overseas 
branches, are blocked and may not be transferred, paid, exported, 
withdrawn or otherwise dealt in:
    (1) Foreign persons listed in the Annex to Executive Order 13224 of 
September 23, 2001, as may be amended;
    (2) Foreign persons determined by the Secretary of State, in 
consultation with the Secretary of the Treasury, the Secretary of 
Homeland Security and the Attorney General, to have committed, or to 
pose a significant risk of committing, acts of terrorism that threaten 
the security of U.S. nationals or the national security, foreign policy, 
or economy of the United States;
    (3) Persons determined by the Secretary of the Treasury, in 
consultation with the Secretary of State, the Secretary of Homeland 
Security and the Attorney General, to be owned or controlled by, or to 
act for or on behalf of, any person whose property or interests in 
property are blocked pursuant to paragraphs (a)(1), (a)(2), (a)(3), or 
(a)(4)(i) of this section; or
    (4) Except as provided in section 5 of Executive Order 13224, any 
person determined by the Secretary of the Treasury, in consultation with 
the Secretary of State, the Secretary of Homeland Security and the 
Attorney General:
    (i) To assist in, sponsor, or provide financial, material, or 
technological support for, or financial or other services to or in 
support of:
    (A) Acts of terrorism that threaten the security of U.S. nationals 
or the national security, foreign policy, or economy of the United 
States, or
    (B) Any person whose property or interests in property are blocked 
pursuant to paragraph (a) of this section; or
    (ii) To be otherwise associated with any person whose property or 
interests in property are blocked pursuant to paragraphs (a)(1), (a)(2), 
(a)(3), or (a)(4)(i) of this section.

    Note 1 to paragraph (a): Section 5 of Executive Order 13224, as 
amended, provides that, with respect to those persons designated 
pursuant to paragraph (a)(4) of this section, the Secretary of the 
Treasury, in the exercise of his discretion and in consultation with the 
Secretary of State, the Secretary of Homeland Security and the Attorney 
General, may take such other actions than the complete blocking of 
property or interests in property as the President is authorized to take 
under the International Emergency Economic Powers Act and the United 
Nations Participation Act if the Secretary of the Treasury, in 
consultation with the Secretary of State, the Secretary of Homeland 
Security and the Attorney General, deems such other actions to be 
consistent with the national interests of the United States, considering 
such factors as he deems appropriate.
    Note 2 to paragraph (a) of Sec. 594.201: The names of persons whose 
property and interests in property are blocked pursuant to Sec. 
594.201(a) are published in the Federal Register and incorporated into 
the Office of Foreign Assets Control's Specially Designated Nationals 
and Blocked Persons List (``SDN List'') with the identifier ``[SDGT].'' 
The SDN List is accessible through the following page on the Office of 
Foreign Assets

[[Page 479]]

Control's Web site: http://www.treasury.gov/sdn. Additional information 
pertaining to the SDN List can be found in appendix A to this chapter.
    Note 3 to paragraph (a) of Sec. 594.201: Sections 501.806 and 
501.807 of this chapter describe the procedures to be followed by 
persons seeking, respectively, the unblocking of funds that they believe 
were blocked due to mistaken identity, or administrative reconsideration 
of their status as persons whose property and interests in property are 
blocked pursuant to paragraph (a) of this section.

    (b) Unless otherwise authorized by this part or by a specific 
license expressly referring to this section, any dealing in any security 
(or evidence thereof) held within the possession or control of a U.S. 
person and either registered or inscribed in the name of or known to be 
held for the benefit of any person whose property or interests in 
property are blocked pursuant to Sec. 594.201(a) is prohibited. This 
prohibition includes but is not limited to the transfer (including the 
transfer on the books of any issuer or agent thereof), disposition, 
transportation, importation, exportation, or withdrawal of any such 
security or the endorsement or guaranty of signatures on any such 
security. This prohibition applies irrespective of the fact that at any 
time (whether prior to, on, or subsequent to the effective date) the 
registered or inscribed owner of any such security may have or might 
appear to have assigned, transferred, or otherwise disposed of the 
security.

    Note 1 to Sec. 594.201: The International Emergency Economic Powers 
Act (50 U.S.C. 1701-1706), in Section 203 (50 U.S.C. 1702), authorizes 
the blocking of property and interests in property of a person during 
the pendency of an investigation. The names of persons whose property 
and interests in property are blocked pending investigation pursuant to 
paragraph (a) of this section also are published in the Federal Register 
and incorporated into the SDN List with the identifier ``[BPI-PA]'' or 
``[BPI-SDGT].'' The scope of the property or interests in property 
blocked during the pendency of an investigation may be more limited than 
the scope of the blocking set forth in Sec. 594.201(a). Inquiries 
regarding the scope of any such blocking should be directed to OFAC's 
Sanctions Compliance & Evaluation Division at 202/622-2490.
    Note 2 to Sec. 594.201. The prohibitions set forth in this part are 
separate from and in addition to other parts of 31 CFR chapter V, 
including but not limited to the Terrorism Sanctions Regulations (part 
595), the Terrorism List Government Sanctions Regulations (part 596), 
and the Foreign Terrorist Organizations Sanctions Regulations (part 
597). The prohibitions set forth in this part also are separate and 
apart from the criminal prohibition, set forth at 18 U.S.C. 2339B, 
against providing material support or resources to foreign terrorist 
organizations designated pursuant to section 219 of the Immigration and 
Nationality Act, as amended.

[68 FR 34197, June 6, 2003, as amended at 72 FR 4206, Jan. 30, 2007; 76 
FR 38544, June 30, 2011]



Sec. 594.202  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. 
594.201(a), is null and void and shall not be the basis for the 
assertion or recognition of any interest in or right, remedy, power, or 
privilege with respect to such property or property interests.
    (b) No transfer before the effective date shall be the basis for the 
assertion or recognition of any right, remedy, power, or privilege with 
respect to, or any interest in, any property or interest in property 
blocked pursuant to Sec. 594.201(a), unless the person with whom such 
property is held or maintained, prior to that date, had written notice 
of the transfer or by any written evidence had recognized such transfer.
    (c) Unless otherwise provided, an appropriate license or other 
authorization issued by or pursuant to the direction or authorization of 
the Director of the Office of Foreign Assets Control before, during, or 
after a transfer shall validate such transfer or make it enforceable to 
the same extent that it would be valid or enforceable but for the 
provisions of the International Emergency Economic Powers Act, 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

[[Page 480]]

null and void or unenforceable as to any person with whom such property 
was held or maintained (and as to such person only) in cases in which 
such person is able to establish to the satisfaction of the Director of 
the Office of Foreign Assets Control each of the following:
    (1) Such transfer did not represent a willful violation of the 
provisions of this part by the person with whom such property was held 
or maintained;
    (2) The person with whom such property 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 was held or maintained filed 
with the Office of Foreign Assets Control a report setting forth in full 
the circumstances relating to such transfer promptly upon discovery 
that:
    (i) Such transfer was in violation of the provisions of this part or 
any regulation, ruling, instruction, license, or other direction or 
authorization issued pursuant to this part;
    (ii) Such transfer was not licensed or authorized by the Director of 
the Office of Foreign Assets Control; or
    (iii) If a license did purport to cover the transfer, such license 
had been obtained by misrepresentation of a third party or withholding 
of material facts or was otherwise fraudulently obtained.

    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 (d)(2) of this section 
have been satisfied.

    (e) Except to the extent otherwise provided by law or unless 
licensed pursuant to this part, any attachment, judgment, decree, lien, 
execution, garnishment, or other judicial process is null and void with 
respect to any property in which on or since the effective date there 
existed an interest of a person whose property or interests in property 
are blocked pursuant to Sec. 594.201(a).



Sec. 594.203  Holding of funds in interest-bearing accounts; investment
and reinvestment.

    (a) Except as provided in paragraph (c) or (d) of this section, or 
as otherwise directed by the Office of Foreign Assets Control, any U.S. 
person holding funds, such as currency, bank deposits, or liquidated 
financial obligations, subject to Sec. 594.201(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, provided 
the funds are invested in a money market fund or in U.S. Treasury bills.
    (2) 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.
    (3) Funds held or placed in a blocked account pursuant to this 
paragraph (b) may not be invested in instruments the maturity of which 
exceeds 180 days. If interest is credited to a separate blocked account 
or subaccount, the name of the account party on each account must be the 
same.
    (c) Blocked funds held in instruments the maturity of which exceeds 
180 days at the time the funds become subject to Sec. 594.201(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 (b) 
or (d) of this section.
    (d) Blocked funds held in accounts or instruments outside the United 
States at the time the funds become subject

[[Page 481]]

to Sec. 594.201(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.
    (e) 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 at the time the property becomes subject to 
Sec. 594.201(a). However, the Office of Foreign Assets Control may 
issue licenses permitting or directing such sales or liquidation in 
appropriate cases.
    (f) 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 or interests in property 
are blocked pursuant to Sec. 594.201(a), nor may their holder cooperate 
in or facilitate the pledging or other attempted use as collateral of 
blocked funds or other assets.



Sec. 594.204  Prohibited transaction or dealing in property; 
contributions of funds, goods, or services.

    Except as otherwise authorized, no U.S. person may engage in any 
transaction or dealing in property or interests in property of persons 
whose property or interests in property are blocked pursuant to Sec. 
594.201(a), including but not limited to the making or receiving of any 
contribution of funds, goods, or services to or for the benefit of 
persons whose property or interests in property are blocked pursuant to 
Sec. 594.201(a).



Sec. 594.205  Evasions; attempts; conspiracies.

    (a) Except as otherwise authorized, and notwithstanding any contract 
entered into or any license or permit granted prior to the effective 
date, any transaction by any U.S. person or within the United States on 
or after the effective date that evades or avoids, has the purpose of 
evading or avoiding, or attempts to violate any of the prohibitions set 
forth in this part is prohibited.
    (b) Except as otherwise authorized, and notwithstanding any contract 
entered into or any license or permit granted prior to the effective 
date, any conspiracy formed for the purpose of engaging in a transaction 
prohibited by this part is prohibited.



Sec. 594.206  Expenses of maintaining blocked property; liquidation
of blocked property.

    (a) Except as otherwise authorized, and notwithstanding the 
existence of any rights or obligations conferred or imposed by any 
international agreement or contract entered into or any license or 
permit granted before the effective date, all expenses incident to the 
maintenance of physical property blocked pursuant to Sec. 594.201(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. 594.201(a) may, in the 
discretion of the Director, Office of Foreign Assets Control, be sold or 
liquidated and the net proceeds placed in a blocked interest-bearing 
account in the name of the owner of the property.



                      Subpart C_General Definitions



Sec. 594.301  Blocked account; blocked property.

    The terms blocked account and blocked property shall mean any 
account or property subject to the prohibition in Sec. 594.201 held in 
the name of a person whose property or interests in property are blocked 
pursuant to Sec. 594.201(a), or in which such person has an interest, 
and with respect to which payments, transfers, exportations, 
withdrawals, or other dealings may not be made or effected except 
pursuant to an authorization or license from the Office of Foreign 
Assets Control expressly authorizing such action.



Sec. 594.302  Effective date.

    The term effective date refers to the effective date of the 
applicable prohibitions and directives contained in this part as 
follows:
    (a) With respect to a person whose property or interests in property 
are blocked pursuant to Sec. 594.201(a)(1), 12:01 a.m. eastern daylight 
time, September 24, 2001;

[[Page 482]]

    (b) With respect to a person whose property or interests in property 
are blocked pursuant to Sec. 594.201(a)(2), (a)(3), or (a)(4), the 
earlier of the date on which is received actual or constructive notice 
of such person's designation by the Secretary of State or the Secretary 
of the Treasury.



Sec. 594.303  Entity.

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



Sec. 594.304  Foreign person.

    The term foreign person means any citizen or national of a foreign 
state (including any such individual who is also a citizen or national 
of the United States), or any entity not organized solely under the laws 
of the United States or existing solely in the United States, but does 
not include a foreign state.



Sec. 594.305  Information or informational materials.

    (a) For purposes of this part, the term information or informational 
materials includes, but is not limited to, 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 chapter heading 9701, 9702, 
or 9703 of the Harmonized Tariff Schedule of the United States.

    (b) The term information or informational materials, with respect to 
United States exports, does not include items:
    (1) That were, as of April 30, 1994, or that thereafter became, 
controlled for export pursuant to section 5 of the Export Administration 
Act of 1979, 50 U.S.C. App. 2401-2420 (1979) (the ``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. 594.306  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. 594.307  Licenses; general and specific.

    (a) Except as otherwise specified, the term license means any 
license or authorization contained in or issued pursuant to this part.
    (b) The term general license means any license or authorization the 
terms of which are set forth in subpart E of this part.
    (c) The term specific license means any license or authorization not 
set forth in subpart E of this part but issued pursuant to this part.

    Note to Sec. 594.307: See Sec. 501.801 of this chapter on 
licensing procedures.



Sec. 594.308  Person.

    The term person means an individual or entity.



Sec. 594.309  Property; property interest.

    The terms property and property interest include, but are not 
limited to, money, checks, drafts, bullion, bank deposits, savings 
accounts, debts, indebtedness, obligations, notes, guarantees, 
debentures, stocks, bonds, coupons, any other financial instruments, 
bankers acceptances, mortgages, pledges, liens or other rights in the 
nature of security, warehouse receipts, bills of lading, trust receipts, 
bills of sale, any other evidences of title, ownership or indebtedness, 
letters of credit and any documents relating to any rights or 
obligations thereunder, powers of attorney, goods, wares, merchandise, 
chattels, stocks on hand, ships, goods on ships, real estate mortgages, 
deeds of trust, vendors' sales agreements, land contracts, leaseholds, 
ground rents, real estate and any other interest therein, options, 
negotiable instruments, trade acceptances, royalties, book accounts, 
accounts payable, judgments, patents, trademarks or copyrights, 
insurance policies, safe deposit boxes and their contents, annuities, 
pooling agreements, services of any nature whatsoever, contracts of any 
nature whatsoever, and any other

[[Page 483]]

property, real, personal, or mixed, tangible or intangible, or interest 
or interests therein, present, future or contingent.



Sec. 594.310  Specially designated global terrorist; SDGT.

    The term specially designated global terrorist or SDGT means any 
foreign person or person listed in the Annex or designated pursuant to 
Executive Order 13224 of September 23, 2001.



Sec. 594.311  Terrorism.

    The term terrorism means an activity that:
    (a) Involves a violent act or an act dangerous to human life, 
property, or infrastructure; and
    (b) Appears to be intended:
    (1) To intimidate or coerce a civilian population;
    (2) To influence the policy of a government by intimidation or 
coercion; or
    (3) To affect the conduct of a government by mass destruction, 
assassination, kidnapping, or hostage-taking.



Sec. 594.312  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 and, without limitation upon the foregoing, 
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. 594.313  United States.

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



Sec. 594.314  U.S. financial institution.

    The term U.S. financial institution means any U.S. person (including 
its foreign branches) that is engaged in the business of accepting 
deposits, making, granting, transferring, holding, or brokering loans or 
credits, or purchasing or selling foreign exchange, securities, 
commodity futures or options, or procuring purchasers and sellers 
thereof, as principal or agent; including but not limited to, depository 
institutions, banks, savings banks, trust companies, securities brokers 
and dealers, commodity futures and options brokers and dealers, forward 
contract and foreign exchange merchants, securities and commodities 
exchanges, clearing corporations, investment companies, employee benefit 
plans, and U.S. holding companies, U.S. affiliates, or U.S. subsidiaries 
of any of the foregoing. This term includes those branches, offices and 
agencies of foreign financial institutions that are located in the 
United States, but not such institutions' foreign branches, offices, or 
agencies.



Sec. 594.315  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 (including foreign branches), or any person in the 
United States.



Sec. 594.316  Otherwise associated with.

    The term ``to be otherwise associated with,'' as used in Sec. 
594.201(a)(4)(ii), means:
    (a) To own or control; or
    (b) To attempt, or to conspire with one or more persons, to act for 
or on

[[Page 484]]

behalf of or to provide financial, material, or technological support, 
or financial or other services, to.

[72 FR 4207, Jan. 30, 2007]



Sec. 594.317  Financial, material, or technological support.

    The term financial, material, or technological support, as used in 
Sec. 594.201(a)(4)(i) of this part, means any property, tangible or 
intangible, including but not limited to currency, financial 
instruments, securities, or any other transmission of value; weapons or 
related materiel; chemical or biological agents; explosives; false 
documentation or identification; communications equipment; computers; 
electronic or other devices or equipment; technologies; lodging; safe 
houses; facilities; vehicles or other means of transportation; or goods. 
``Technologies'' as used in this definition means specific information 
necessary for the development, production, or use of a product, 
including related technical data such as blueprints, plans, diagrams, 
models, formulae, tables, engineering designs and specifications, 
manuals, or other recorded instructions.

[74 FR 61037, Nov. 23, 2009]



                        Subpart D_Interpretations



Sec. 594.401  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, direction, or license issued pursuant to this part refers 
to the same as currently amended.



Sec. 594.402  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 or 
under the direction of the Director of the Office of Foreign Assets 
Control does not affect any act done or omitted, or any civil or 
criminal suit or 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. 594.403  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. Sec. 594.201 and 594.204 if effected after the effective 
date.



Sec. 594.404  Termination and acquisition of an interest in blocked 
property.

    (a) Whenever a transaction licensed or authorized by or pursuant to 
this part results in the transfer of property (including any property 
interest) away from a person, such property shall no longer be deemed to 
be property blocked pursuant to Sec. 594.201(a), unless there exists in 
the property another interest that is blocked pursuant to Sec. 
594.201(a) or any other part of this chapter, 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 or interests in property are blocked pursuant to 
Sec. 594.201(a), such property shall be deemed to be property in which 
that person has an interest and therefore blocked.



Sec. 594.405  Transactions incidental to a licensed transaction.

    Any transaction ordinarily incident to a licensed transaction and 
necessary to give effect thereto is also authorized, except:
    (a) An incidental transaction, not explicitly authorized within the 
terms of the license, by or with a person whose property or interests in 
property are blocked pursuant to Sec. 594.201(a); or
    (b) An incidental transaction, not explicitly authorized within the 
terms of the license, involving a debit to a blocked account or a 
transfer of blocked property.

[[Page 485]]



Sec. 594.406  Provision of services.

    (a) Except as provided in Sec. 594.207, the prohibitions on 
transactions or dealings involving blocked property contained in 
Sec. Sec. 594.201 and 594.204 apply to services performed in the United 
States or by U.S. persons, wherever located, including by an overseas 
branch of an entity located in the United States:
    (1) On behalf of or for the benefit of a person whose property or 
interests in property are blocked pursuant to Sec. 594.201(a); or
    (2) With respect to property interests subject to Sec. Sec. 594.201 
and 594.204.
    (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, educational, or 
other services to a person whose property or interests in property are 
blocked pursuant to Sec. 594.201(a).

    Note to Sec. 594.406: See Sec. Sec. 594.506 and 594.507, 
respectively, on licensing policy with regard to the provision of 
certain legal or medical services.



Sec. 594.407  Offshore transactions.

    The prohibitions in Sec. Sec. 594.201 and 594.204 on transactions 
or dealings involving blocked property apply to transactions or dealings 
by any U.S. person in a location outside the United States with respect 
to property that the U.S. person knows, or has reason to know, is held 
in the name of a person whose property or interests in property are 
blocked pursuant to Sec. 594.201(a) or in which the U.S. person knows, 
or has reason to know, a person whose property or interests in property 
are blocked pursuant to Sec. 594.201(a) has or has had an interest 
since the effective date.



Sec. 594.408  Payments from blocked accounts to satisfy obligations 
prohibited.

    Pursuant to Sec. Sec. 594.201 and 594.204, no debits may be made to 
a blocked account to pay obligations to U.S. persons or other persons, 
except as authorized pursuant to this part.



Sec. 594.409  Charitable contributions.

    Unless otherwise specifically authorized by the Office of Foreign 
Assets Control by or pursuant to this part, no charitable contribution 
or donation of funds, goods, services, or technology, including those to 
relieve human suffering, such as food, clothing, or medicine, may be 
made to or for the benefit of a person whose property or interests in 
property are blocked pursuant to Sec. 594.201(a). For purposes of this 
part, a contribution or donation is made to or for the benefit of a 
person whose property or interests in property are blocked pursuant to 
Sec. 594.201(a) if made to or in the name of such a person; if made to 
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 
or donations to such a person.



Sec. 594.410  Credit extended and cards issued by U.S. financial
institutions.

    The prohibitions in Sec. Sec. 594.201 and 594.204 on engaging in 
transactions or dealings in property subject to those sections prohibits 
U.S. financial institutions from performing under any existing credit 
agreements, including, but not limited to, charge cards, debit cards, or 
other credit facilities issued by a U.S. financial institution to a 
person whose property or interests in property are blocked pursuant to 
Sec. 594.201(a).



Sec. 594.411  Palestinian Authority.

    Following the January 2006 Palestinian elections, Hamas, a 
designated terrorist entity whose property and interests in property are 
blocked pursuant to Sec. 594.201, has been determined to have a 
property interest in the transactions of the Palestinian Authority. 
Accordingly, pursuant to Sec. Sec. 594.201 and 594.204, U.S. persons 
are prohibited from engaging in transactions with the Palestinian 
Authority unless authorized. Certain transactions with the Palestinian 
Authority may be authorized by license, see subpart E of this part.

[71 FR 27200, May 10, 2006]

[[Page 486]]



  Subpart E_Licenses, Authorizations and Statements of Licensing Policy



Sec. 594.501  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.

[68 FR 53660, Sept. 11, 2003]



Sec. 594.502  Effect of license or authorization.

    (a) No license or other authorization contained in this part, or 
otherwise issued by or under the direction of the Director of the Office 
of Foreign Assets Control, authorizes or validates any transaction 
effected prior to the issuance of the license, unless specifically 
provided in such license or authorization.
    (b) No regulation, ruling, instruction, or license authorizes any 
transaction prohibited under this part unless the regulation, ruling, 
instruction or license is issued by the Office of Foreign Assets Control 
and specifically refers to this part. No regulation, ruling, 
instruction, or license referring to this part shall be deemed to 
authorize any transaction prohibited by any provision of this chapter 
unless the regulation, ruling, instruction, or license specifically 
refers to such provision.
    (c) Any regulation, ruling, instruction, or license authorizing any 
transaction otherwise prohibited under this part has the effect of 
removing a prohibition contained in this part from the transaction, but 
only to the extent specifically stated by its terms. Unless the 
regulation, ruling, instruction, or license otherwise specifies, such an 
authorization does not create any right, duty, obligation, claim, or 
interest in, or with respect to, any property which would not otherwise 
exist under ordinary principles of law.



Sec. 594.503  Exclusion from licenses and other authorizations.

    The Director of the Office of Foreign Assets Control reserves the 
right to exclude any person, property, or transaction from the operation 
of any license or from the privileges conferred by any license. The 
Director of the Office of Foreign Assets Control also reserves the right 
to restrict the applicability of any license to particular persons, 
property, transactions, or classes thereof. Such actions are binding 
upon all persons receiving actual or constructive notice of the 
exclusions or restrictions.



Sec. 594.504  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 or interests in property are blocked pursuant to Sec. 
594.201(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 only be 
made to another blocked account held in the same name.

    Note to Sec. 594.504. Please refer to Sec. 501.603 of this chapter 
for mandatory reporting requirements regarding financial transfers. See 
also Sec. 594.203 concerning the obligation to hold blocked funds in 
interest-bearing accounts.



Sec. 594.505  Entries in certain accounts for normal service charges
authorized.

    (a) A U.S. financial institution is authorized to debit any blocked 
account held at that financial institution in payment or reimbursement 
for normal service charges owed it by the owner of that blocked account.
    (b) As used in this section, the term normal service charge 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;

[[Page 487]]

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. 594.506  Provision of certain legal services authorized.

    (a) The provision of the following legal services to or on behalf of 
persons whose property and interests in property are blocked pursuant to 
Sec. 594.201(a) is authorized, provided that all receipts of payment of 
professional fees and reimbursement of incurred expenses must be 
specifically licensed or otherwise authorized pursuant to this part:
    (1) Provision of legal advice and counseling on the requirements of 
and compliance with the laws of 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 when named as defendants in or 
otherwise made parties to domestic U.S. legal, arbitration, or 
administrative proceedings;
    (3) Initiation and conduct of domestic U.S. legal, arbitration, or 
administrative proceedings in defense of property interests subject to 
U.S. jurisdiction;
    (4) Representation of persons before any federal or state agency 
with respect to the imposition, administration, or enforcement of U.S. 
sanctions against such persons;
    (5) Representation of persons, wherever located, detained within the 
jurisdiction of the United States or by the United States government, 
with respect to either such detention or any charges made against such 
persons, including, but not limited to, the conduct of military 
commission prosecutions and the initiation and conduct of federal court 
proceedings; and
    (6) 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 legal services not otherwise authorized by 
paragraph (a) of this section to or on behalf of persons whose property 
and interests in property are blocked pursuant to Sec. 594.201(a) in 
connection with the initiation and conduct of legal, arbitration, or 
administrative proceedings before any U.S. federal, state, or local 
court or agency is authorized, provided that all receipts of payment of 
professional fees and reimbursement of incurred expenses must be 
specifically licensed.
    (c) The provision of any other legal services to persons whose 
property or interests in property are blocked pursuant to Sec. 
594.201(a), not otherwise authorized in this part, requires the issuance 
of a specific license.
    (d) Entry into a settlement agreement affecting property or 
interests in property 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. 594.201(a) 
is prohibited except to the extent otherwise provided by law or unless 
specifically licensed in accordance with Sec. 594.202(e).

[68 FR 34197, June 6, 2003, as amended at 73 FR 78632, Dec. 23, 2008; 75 
FR 75906, Dec. 7, 2010]



Sec. 594.507  Authorization of emergency medical services.

    The provision of nonscheduled emergency medical services in the 
United States to persons whose property or interests in property are 
blocked pursuant to Sec. 594.201(a) is authorized, provided that all 
receipt of payment for such services must be specifically licensed.



Sec. 594.508  Transactions related to telecommunications authorized.

    All transactions ordinarily incident to the receipt or transmission 
of telecommunications involving persons whose property or interests in 
property are blocked pursuant to Sec. 594.201(a) are authorized, 
provided that any payment owed to any such person is paid into a blocked 
account in a U.S. financial institution. This section does not authorize 
the provision, sale, or lease to persons whose property or interests in 
property are blocked pursuant to Sec. 594.201(a) of telecommunications 
equipment or technology; nor does it authorize the provision, sale, or 
leasing

[[Page 488]]

of capacity on telecommunications transmission facilities (such as 
satellite or terrestrial network connectivity).



Sec. 594.509  Transactions related to mail authorized.

    All transactions by U.S. persons, including payment and transfers to 
common carriers, incident to the receipt or transmission of mail between 
a U.S. person and a person whose property or interests in property are 
blocked pursuant to Sec. 594.201(a) are authorized, provided the mail 
is limited to personal communications not involving a transfer of 
anything of value and not exceeding 12 ounces in weight.



Sec. 594.510  Official activities of certain international 
organizations; U.S. person employees of certain governments.

    (a) Effective April 12, 2006, all transactions and activities with 
the Palestinian Authority otherwise prohibited under this part that are 
for the conduct of the official business of the United Nations are 
authorized, provided that no payment pursuant to this license may 
involve a debit to an account of the Palestinian Authority on the books 
of a U.S. financial institution or to any account blocked pursuant to 
this part.
    (b) Effective April 12, 2006, U.S. persons who are employees of the 
governments of states bordering the West Bank or Gaza are authorized to 
engage in all transactions and activities outside of the United States 
with the Palestinian Authority that are otherwise prohibited under this 
part in support of the U.S. persons' official duties, provided that no 
payment pursuant to this license may involve a debit to an account of 
the Palestinian Authority on the books of a U.S. financial institution 
or to any account blocked pursuant to this part.
    (c) For purposes of this section only, the term ``United Nations'' 
means its principal organs, including funds, bodies, commissions, 
agencies, departments and other entities of the Security Council, 
General Assembly, Economic and Social Council and Secretariat, 
specifically including, among others, the World Bank, the International 
Monetary Fund, the World Food Programme, and the World Health 
Organization.

[71 FR 27200, May 10, 2006]



Sec. 594.511  Travel, employment, residence and maintenance 
transactions with the Palestinian Authority.

    Effective April 12, 2006, U.S. persons are authorized to engage in 
all transactions with the Palestinian Authority otherwise prohibited 
under this part that are ordinarily incident to their travel to or from, 
or employment, residence or personal maintenance within, the 
jurisdiction of the Palestinian Authority, including, but not limited 
to, receipt of salaries, payment of living expenses and acquisition of 
goods or services for personal use. Nothing in this license authorizes 
any debit to an account of the Palestinian Authority on the books of a 
U.S. financial institution or to any account blocked pursuant to this 
part.

[71 FR 27200, May 10, 2006]



Sec. 594.512  Payment of taxes and incidental fees to the Palestinian 
Authority.

    Effective April 12, 2006, U.S. persons are authorized to pay taxes 
or fees to, and purchase or receive permits or public utility services 
from, the Palestinian Authority where such transactions are necessary 
and ordinarily incident to such persons' day-to-day operations. Nothing 
in this license authorizes a debit to an account of the Palestinian 
Authority on the books of a U.S. financial institution or to any account 
blocked pursuant to this part.

[71 FR 27200, May 10, 2006]



Sec. 594.513  Transactions with entities under the control of the
Palestinian President and certain other entities.

    (a) Effective April 12, 2006, U.S. persons are authorized to engage 
in all transactions otherwise prohibited under this part with the 
following entities and individuals:
    (1) The Palestinian Authority Presidency, including only the Office 
of the President, Presidential Security, General Intelligence Apparatus, 
Governors and Governorate staff, the Attorney

[[Page 489]]

General's Office, the Palestine Investment Fund (PIF), the Border 
Crossings Administration, and the Palestine Broadcasting Corporation 
(including the Voice of Palestine, Wafa News Agency, and the General 
Public Information Agency/State Information Services);
    (2) The Palestinian Judiciary, including the Higher Judicial 
Council;
    (3) Members of the Palestinian Legislative Council (PLC) who were 
not elected to the PLC on the party slate of Hamas or any other Foreign 
Terrorist Organization (FTO), Specially Designated Terrorist (SDT), or 
Specially Designated Global Terrorist (SDGT); and
    (4) The following independent agencies: The Central Elections 
Commission; the Independent Citizens Rights Commission; the General 
Audit Authority/External Audit Agency; and the Palestinian Monetary 
Authority.
    (b) Effective April 12, 2006, U.S. financial institutions are 
authorized to reject transactions with members of the Palestinian 
Legislative Council (PLC) who were elected to the PLC on the party slate 
of Hamas or any other Foreign Terrorist Organization (FTO), Specially 
Designated Terrorist (SDT), or Specially Designated Global Terrorist 
(SDGT), provided that any such individuals are not named on OFAC's list 
of Specially Designated Nationals and Blocked Persons.
    (c) Nothing in this license authorizes a debit to an account of the 
Palestinian Authority on the books of a U.S. financial institution or to 
any account blocked pursuant to this part.

[71 FR 27200, May 10, 2006]



Sec. 594.514  Concluding activities with the Palestinian Authority.

    Effective April 12, 2006, all transactions and activities with the 
Palestinian Authority otherwise prohibited under this part are 
authorized through May 12, 2006, provided that they are necessary to 
conclude ongoing contracts or programs with the Palestinian Authority, 
and further provided that no payment pursuant to this license may 
involve a debit to an account of the Palestinian Authority on the books 
of a U.S. financial institution or to any account blocked pursuant to 
this part.

[71 FR 27200, May 10, 2006]



Sec. 594.515  In-kind donations of medicine, medical devices, and 
medical services.

    (a) Effective July 6, 2006, nongovernmental organizations that are 
U.S. persons are authorized to provide in-kind donations of medicine, 
medical devices, and medical services to the Palestinian Authority 
Ministry of Health, provided that such donations are strictly for 
distribution in the West Bank or Gaza and not intended for resale, and 
provided further that no payment pursuant to this license may involve a 
debit to an account of the Palestinian Authority on the books of a U.S. 
financial institution or to any account blocked pursuant to this part.
    (b) For the purposes of this section only, the term medical device 
has the meaning given the term ``device'' in section 201 of the Federal 
Food, Drug, and Cosmetic Act (21 U.S.C. 321), including medical 
supplies, but does not include any item listed on the Commerce Control 
List in the Export Administration Regulations, 15 CFR part 774, 
supplement no. 1.

    Note to paragraph (b): Nongovernmental organizations that are 
interested in providing items listed on the Commerce Control List to the 
Palestinian Authority Ministry of Health must apply for a specific 
license from the Office of Foreign Assets Control.

[72 FR 58743, Oct. 5, 2006]



Sec. 594.516  Transactions with the Palestinian Authority authorized.

    (a) As of June 20, 2007, U.S. persons are authorized to engage in 
all transactions otherwise prohibited under this part with the 
Palestinian Authority.
    (b) For purposes of this section only, the term Palestinian 
Authority means the Palestinian Authority government of Prime Minister 
Salam Fayyad and President Mahmoud Abbas, including all branches, 
ministries, offices, and agencies (independent or otherwise) thereof.

[72 FR 61518, Oct. 31, 2007]

[[Page 490]]



Sec. 594.517  Payments from funds originating outside the United 
States and the formation of legal defense funds authorized.

    (a) Payments from funds originating outside the United States. 
Effective December 7, 2010, receipts of payment of professional fees and 
reimbursement of incurred expenses for the provision of legal services 
authorized pursuant to Sec. 594.506(a) are authorized from funds 
originating outside the United States, provided that:
    (1) Prior to receiving payment for legal services authorized 
pursuant to Sec. 594.506(a) rendered to persons whose property and 
interests in property are blocked pursuant to Sec. 594.201(a), the U.S. 
person that is an attorney, law firm, or legal services organization 
provides to the Office of Foreign Assets Control a copy of a letter of 
engagement or a letter of intent to engage specifying the services to be 
performed and signed by the individual to whom such services are to be 
provided or, where services are to be provided to an entity, by a legal 
representative of the entity. The copy of a letter of engagement or a 
letter of intent to engage, accompanied by correspondence referencing 
this paragraph (a), is to be mailed to: Licensing Division, Office of 
Foreign Assets Control, U.S. Department of the Treasury, 1500 
Pennsylvania Avenue, NW., Annex, Washington, DC 20220;
    (2) The funds received by U.S. persons as payment of professional 
fees and reimbursement of incurred expenses for the provision of legal 
services authorized pursuant to Sec. 594.506(a) must 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. 594.506(a) are to 
be provided, whose property and interests in property are blocked 
pursuant to any part of this chapter or any Executive order;

    Note to paragraph (a)(2) of Sec. 594.517: This paragraph authorizes 
the blocked person on whose behalf the legal services authorized 
pursuant to Sec. 594.506(a) are to be provided to make payments for 
authorized legal services using funds originating outside the United 
States that were not previously blocked. Nothing in this paragraph 
authorizes payments for legal services using funds in which any other 
person whose property and interests in property are blocked pursuant to 
Sec. 594.201(a) or any other part of this chapter holds an interest.

    (3) Reports. (i) U.S. persons who receive payments in connection 
with legal services authorized pursuant to Sec. 594.506(a) must submit 
quarterly reports no later than 30 days following the end of the 
calendar quarter during which the payments were received providing 
information on the funds received. Such reports shall specify:
    (A) The individual or entity from whom the funds originated and the 
amount of funds received; and
    (B) If applicable:
    (1) 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;
    (2) A general description of the services provided; and
    (3) The amount of funds paid in connection with such services.
    (ii) In the event that no transactions occur or no funds are 
received during the reporting period, a statement is to be filed to that 
effect.
    (iii) Reports, which must reference this paragraph (a), are to be 
mailed to: Licensing Division, Office of Foreign Assets Control, U.S. 
Department of the Treasury, 1500 Pennsylvania Avenue, NW., Annex, 
Washington, DC 20220; and

    Note to paragraph (a)(3) of Sec. 594.517: U.S. persons who receive 
payments in connection with legal services authorized pursuant to Sec. 
594.506(a) do not need to obtain specific authorization to contract for 
related services that are ordinarily incident to the provision of those 
legal services, such as those provided by private investigators or 
expert witnesses, or to pay for such services. Additionally, U.S. 
persons do not need to obtain specific authorization to provide related 
services that are ordinarily incident to the provision of legal services 
authorized pursuant to Sec. 594.506(a).

    (4) Nothing in this paragraph (a) authorizes the receipt of payment 
of professional fees or reimbursement of incurred expenses for the 
provision of

[[Page 491]]

legal services authorized pursuant to Sec. 594.506(b).

    Note 1 to paragraph (a) of Sec. 594.517: Any payment authorized in 
or pursuant to this paragraph that is routed through the U.S. financial 
system should reference this paragraph (a) to avoid the blocking of the 
transfer.
    Note 2 to paragraph (a) of Sec. 594.517: Nothing in this paragraph 
authorizes the transfer of any blocked property, the debiting of any 
blocked account, the entry of any judgment or order that effects a 
transfer of blocked property, or the execution of any judgment against 
property blocked pursuant to any Executive order or 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 the Office of Foreign 
Assets Control to authorize the release of a limited amount of blocked 
funds for the payment of legal fees where alternative funding sources 
are not available. For more information, see OFAC's Guidance on the 
Release of Limited Amounts of Blocked Funds for Payment of Legal Fees 
and Costs Incurred in Challenging the Blocking of U.S. Persons in 
Administrative or Civil Proceedings, which is available at: http://
www.treas.gov/resource-center/sanctions/Documents/legal--fee--guide.pdf.

    (b) Legal defense funds. Effective December 7, 2010, U.S. persons 
that are attorneys, law firms, or legal services organizations are 
authorized to form legal defense funds from which payments of 
professional fees and reimbursement for expenses incurred in connection 
with the provision of legal services authorized pursuant to Sec. 
594.506(a) may be debited provided that:
    (1) The legal defense fund must be held in a savings or checking 
account at a financial institution located in the United States;
    (2) Prior to debiting the legal defense fund, the U.S. person 
responsible for establishing the legal defense fund must submit the 
following information to the Office of Foreign Assets Control: A copy of 
a letter of engagement or a letter of intent to engage specifying the 
services to be performed and signed by the individual to whom such 
services are to be provided or, where services are to be provided to an 
entity, by a legal representative of the entity; the name of the 
individual or entity responsible for establishing the legal defense 
fund; the name of the financial institution at which the account for the 
legal defense fund will be held; a point of contact at the financial 
institution holding the account for the legal defense fund; and the 
account name and account number for the legal defense fund. The 
foregoing information must be accompanied by correspondence referencing 
this paragraph (b) and is to be mailed to: Licensing Division, Office of 
Foreign Assets Control, U.S. Department of the Treasury, 1500 
Pennsylvania Avenue, NW., Annex, Washington, DC 20220;
    (3) The legal defense fund may not receive funds from a person whose 
property and interests in property are blocked pursuant to Sec. 
594.201(a) or any other part of this chapter;
    (4) The U.S. person responsible for establishing the legal defense 
fund must notify the financial institution at which the account for the 
legal defense fund is held that the account may only be debited to make 
payments of professional fees and reimburse expenses incurred in 
connection with the provision of legal services authorized pursuant to 
Sec. 594.506(a);
    (5) Reports. (i) U.S. persons responsible for establishing legal 
defense funds from which payments of professional fees and reimbursement 
for expenses incurred in connection with the provision of legal services 
authorized pursuant to Sec. 594.506(a) may be debited must submit 
quarterly reports no later than 30 days following the end of the 
calendar quarter during which the funds were deposited with or debited 
from the account of the legal defense fund providing information on the 
funds received by the legal defense fund and debits made to the legal 
defense fund during the reporting period. Such reports shall specify:
    (A) The individual or entity from whom the funds originated and the 
amount of funds received; and
    (B) Any individual or entity to whom any payments were made, 
including, if applicable:
    (1) 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;

[[Page 492]]

    (2) A general description of the services provided; and
    (3) The amount of funds paid in connection with such services.
    (ii) In the event that no transactions occur or no funds are 
received during the reporting period, a statement is to be filed to that 
effect.
    (iii) Reports, which must reference this paragraph (b), are to be 
mailed to: Licensing Division, Office of Foreign Assets Control, U.S. 
Department of the Treasury, 1500 Pennsylvania Avenue, NW., Annex, 
Washington, DC 20220; and

    Note to paragraph (b)(5) of Sec. 594.517: U.S. persons who receive 
payments in connection with legal services authorized pursuant to Sec. 
594.506(a) do not need to obtain specific authorization to contract for 
related services that are ordinarily incident to the provision of those 
legal services, such as those provided by private investigators or 
expert witnesses, or to pay for such services. Additionally, U.S. 
persons do not need to obtain specific authorization to provide related 
services that are ordinarily incident to the provision of legal services 
authorized pursuant to Sec. 594.506(a).

    (6) Nothing in this paragraph (b) authorizes the formation or 
debiting of legal defense funds in connection with the provision of 
legal services authorized pursuant to Sec. 594.506(b).

    Note 1 to paragraph (b) of Sec. 594.517: Any payment authorized in 
or pursuant to this paragraph that is routed through the U.S. financial 
system should reference this paragraph (b) to avoid the blocking of the 
transfer.
    Note 2 to paragraph (b) of Sec. 594.517: Any funds remaining in a 
legal defense fund account after all payments of professional fees and 
reimbursement of incurred expenses authorized pursuant to this paragraph 
have been made or upon termination of the legal services for which 
payment is authorized pursuant to this paragraph are property in which 
the person to or on whose behalf the legal services were rendered has an 
interest and is subject to the prohibitions of this part. Persons in the 
possession or control of such remaining funds may apply for the 
unblocking of the funds by following the procedures set forth at Sec. 
501.801 of this chapter.

[75 FR 75906, Dec. 7, 2010]



                            Subpart F_Reports



Sec. 594.601  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



Sec. 594.701  Penalties.

    (a) Attention is directed to section 206 of the International 
Emergency Economic Powers Act (the ``Act'') (50 U.S.C. 1705), which is 
applicable to violations of the provisions of any license, ruling, 
regulation, order, direction, or instruction issued by or pursuant to 
the direction or authorization of the Secretary of the Treasury pursuant 
to this part or otherwise under the Act.
    (1) A civil penalty not to exceed the amount set forth in Section 
206 of the Act 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 the Act.

    Note to paragraph (a)(1) of Sec. 594.701: As of June 10, 2008, the 
Act provides for a maximum civil penalty not to exceed the greater of 
$250,000 or an amount that is twice the amount of the transaction that 
is the basis of the violation with respect to which the penalty is 
imposed.

    (2) A person who willfully commits, willfully attempts to commit, or 
willfully conspires to commit, or aids or abets in the commission of a 
violation of any license, order, regulation, or prohibition shall, upon 
conviction, be fined not more than $1,000,000, or if a natural person, 
may be imprisoned for not more than 20 years, or both.
    (b) Adjustments to penalty amounts. (1) The civil penalties provided 
in the Act 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 the Act are subject to 
adjustment pursuant to 18 U.S.C. 3571.
    (c) Attention is directed to section 5 of the United Nations 
Participation Act (22 U.S.C. 287c(b)), which provides that any person 
who willfully violates or evades or attempts to violate or evade any 
order, rule, or regulation issued by the President pursuant to the

[[Page 493]]

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. The criminal penalties provided in the United 
Nations Participation Act are subject to increase pursuant to 18 U.S.C. 
3571.
    (d) Attention is also directed to 18 U.S.C. 1001, which provides 
that whoever, in any matter within the jurisdiction of the executive, 
legislative, or judicial branch of the Government of the United States, 
knowingly and willfully 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, or imprisoned not more than five years, or 
both.
    (e) Violations of this part may also be subject to relevant 
provisions of other applicable laws.

[68 FR 34197, June 6, 2003, as amended at 71 FR 29253, May 22, 2006; 73 
FR 32656, June 10, 2008]



Sec. 594.702  Prepenalty notice.

    (a) When required. If the Director of the Office of Foreign Assets 
Control has reasonable cause to believe that there has occurred a 
violation of any provision of this part or a violation of the provisions 
of any license, ruling, regulation, order, direction, or instruction 
issued by or pursuant to the direction or authorization of the Secretary 
of the Treasury pursuant to this part or otherwise under the 
International Emergency Economic Powers Act, and the Director determines 
that further proceedings are warranted, the Director shall notify the 
alleged violator of the agency's intent to impose a monetary penalty by 
issuing a prepenalty notice. The prepenalty notice shall be in writing. 
The prepenalty notice may be issued whether or not another agency has 
taken any action with respect to the matter.
    (b) Contents of notice--(1) Facts of violation. The prepenalty 
notice shall describe the violation, specify the laws and regulations 
allegedly violated, and state the amount of the proposed monetary 
penalty.
    (2) Right to respond. The prepenalty notice also shall inform the 
respondent of the respondent's right to make a written presentation 
within the applicable 30-day period set forth in Sec. 594.703 as to why 
a monetary penalty should not be imposed or why, if imposed, the 
monetary penalty should be in a lesser amount than proposed.
    (c) Informal settlement prior to issuance of prepenalty notice. At 
any time prior to the issuance of a prepenalty notice, an alleged 
violator may request in writing that, for a period not to exceed sixty 
(60) days, the agency withhold issuance of the prepenalty notice for the 
exclusive purpose of effecting settlement of the agency's potential 
civil monetary penalty claims. In the event the Director grants the 
request, under terms and conditions within his discretion, the Office of 
Foreign Assets Control will agree to withhold issuance of the prepenalty 
notice for a period not to exceed 60 days and will enter into settlement 
negotiations of the potential civil monetary penalty claim.



Sec. 594.703  Response to prepenalty notice; informal settlement.

    (a) Deadline for response. The respondent may submit a response to 
the prepenalty notice within the applicable 30-day period set forth in 
this paragraph. The Director may grant, at his discretion, an extension 
of time in which to submit a response to the prepenalty notice. The 
failure to submit a response within the applicable time period set forth 
in this paragraph shall be deemed to be a waiver of the right to 
respond.
    (1) Computation of time for response. A response to the prepenalty 
notice must be postmarked or date-stamped by the U.S. Postal Service (or 
foreign postal

[[Page 494]]

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 prepenalty notice was mailed. If the 
respondent refused delivery or otherwise avoided receipt of the 
prepenalty notice, a response must be postmarked or date-stamped on or 
before the 30th day after the date on the stamped postal receipt 
maintained at the Office of Foreign Assets Control. If the prepenalty 
notice was personally delivered to the respondent by a non-U.S. Postal 
Service agent authorized by the Director, a response must be postmarked 
or date-stamped on or before the 30th day after the date of delivery.
    (2) 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 Director's discretion, only upon the respondent's specific request 
to the Office of Foreign Assets Control.
    (b) Form and method of response. The response must be submitted in 
writing and may be handwritten or typed. The response need not be in any 
particular form. A copy of the written response may be sent by 
facsimile, but the original also must be sent to the Office of Foreign 
Assets Control Civil Penalties Division by mail or courier and must be 
postmarked or date-stamped, in accordance with paragraph (a) of this 
section.
    (c) Contents of response. A written response must contain 
information sufficient to indicate that it is in response to the 
prepenalty notice.
    (1) A written response must include the respondent's full name, 
address, telephone number, and facsimile number, if available, or those 
of the representative of the respondent.
    (2) A written response should either admit or deny each specific 
violation alleged in the prepenalty notice and also state if the 
respondent has no knowledge of a particular violation. If the written 
response fails to address any specific violation alleged in the 
prepenalty notice, that alleged violation shall be deemed to be 
admitted.
    (3) A written response should include any information in defense, 
evidence in support of an asserted defense, or other factors that the 
respondent requests the Office of Foreign Assets Control to consider. 
Any defense or explanation previously made to the Office of Foreign 
Assets Control or any other agency must be repeated in the written 
response. Any defense not raised in the written response will be 
considered waived. The written response also should set forth the 
reasons why the respondent believes the penalty should not be imposed or 
why, if imposed, it should be in a lesser amount than proposed.
    (d) Default. If the respondent elects not to submit a written 
response within the time limit set forth in paragraph (a) of this 
section, the Office of Foreign Assets Control will conclude that the 
respondent has decided not to respond to the prepenalty notice. The 
agency generally will then issue a written penalty notice imposing the 
penalty proposed in the prepenalty notice.
    (e) Informal settlement. In addition to or as an alternative to a 
written response to a prepenalty notice, the respondent or respondent's 
representative may contact the Office of Foreign Assets Control as 
advised in the prepenalty notice to propose the settlement of 
allegations contained in the prepenalty notice and related matters. 
However, the requirements set forth in paragraph (f) of this section as 
to oral communication by the representative must first be fulfilled. In 
the event of settlement at the prepenalty stage, the claim proposed in 
the prepenalty notice will be withdrawn, the respondent will not be 
required to take a written position on allegations contained in the 
prepenalty notice, and the Office of Foreign Assets Control will make no 
final determination as to whether a violation occurred. The amount 
accepted in settlement of allegations in a prepenalty notice may vary 
from the civil penalty that might finally be imposed in the event of a 
formal determination of violation. In the event no settlement is 
reached, the time limit specified in paragraph (a) of this section for 
written response to the prepenalty notice will remain in effect unless 
additional time is granted by the Office of Foreign Assets Control.

[[Page 495]]

    (f) Representation. A representative of the respondent may act on 
behalf of the respondent, but any oral communication with the Office of 
Foreign Assets Control prior to a written submission regarding the 
specific allegations contained in the prepenalty notice must be preceded 
by a written letter of representation, unless the prepenalty notice was 
served upon the respondent in care of the representative.



Sec. 594.704  Penalty imposition or withdrawal.

    (a) No violation. If, after considering any response to the 
prepenalty notice and any relevant facts, the Director of the Office of 
Foreign Assets Control determines that there was no violation by the 
respondent named in the prepenalty notice, the Director shall notify the 
respondent in writing of that determination and of the cancellation of 
the proposed monetary penalty.
    (b) Violation. (1) If, after considering any written response to the 
prepenalty notice, or default in the submission of a written response, 
and any relevant facts, the Director of the Office of Foreign Assets 
Control determines that there was a violation by the respondent named in 
the prepenalty notice, the Director is authorized to issue a written 
penalty notice to the respondent of the determination of the violation 
and the imposition of the monetary penalty.
    (2) The penalty notice shall inform the respondent that payment or 
arrangement for installment payment of the assessed penalty must be made 
within 30 days of the date of mailing of the penalty notice by the 
Office of Foreign Assets Control.
    (3) The penalty notice shall inform the respondent of the 
requirement to furnish the respondent's taxpayer identification number 
pursuant to 31 U.S.C. 7701 and that such number will be used for 
purposes of collecting and reporting on any delinquent penalty amount.
    (4) The issuance of the penalty notice finding a violation and 
imposing a monetary penalty shall constitute final agency action. The 
respondent has the right to seek judicial review of that final agency 
action in a federal district court.



Sec. 594.705  Administrative collection; referral to United States
Department of Justice.

    In the event that the respondent does not pay the penalty imposed 
pursuant to this part or make payment arrangements acceptable to the 
Director of the Office of Foreign Assets Control within 30 days of the 
date of mailing of the penalty notice, the matter may be referred for 
administrative collection measures by the Department of the Treasury or 
to the United States Department of Justice for appropriate action to 
recover the penalty in a civil suit in a federal district court.



                          Subpart H_Procedures



Sec. 594.801  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.

[68 FR 53660, Sept. 11, 2003]



Sec. 594.802  Delegation by the Secretary of the Treasury.

    Any action that the Secretary of the Treasury is authorized to take 
pursuant to Executive Order 13224 of September 23, 2001 (66 FR 49079, 
September 25, 2001), and any further Executive orders relating to the 
national emergency declared therein, may be taken by the Director of the 
Office of Foreign Assets Control or by any other person to whom the 
Secretary of the Treasury has delegated authority so to act.



                    Subpart I_Paperwork Reduction Act



Sec. 594.901  Paperwork Reduction Act notice.

    For approval by the Office of Management and Budget (``OMB'') under 
the Paperwork Reduction Act of 1995 (44 U.S.C. 3507) of information 
collections relating to recordkeeping and reporting requirements, 
licensing procedures (including those pursuant to statements of 
licensing policy), and

[[Page 496]]

other procedures, see 501.901 of this chapter. An agency may not conduct 
or sponsor, and a person is not required to respond to, a collection of 
information unless it displays a valid control number assigned by OMB.



PART 595_TERRORISM SANCTIONS REGULATIONS--Table of Contents



      Subpart A_Relation of This Part to Other Laws and Regulations

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

                         Subpart B_Prohibitions

595.201 Prohibited transactions involving blocked property.
595.202 Effect of transfers violating the provisions of this part.
595.203 Holding of certain types of blocked property in interest-bearing 
          accounts.
595.204 Prohibited dealing in property; contributions of funds, goods, 
          or services.
595.205 Evasions; attempts; conspiracies.
595.206 Exempt transactions.

                      Subpart C_General Definitions

595.301 Blocked account; blocked property.
595.302 Effective date.
595.303 Entity.
595.304 Foreign person.
595.305 General license.
595.306 Information and informational materials.
595.307 Interest.
595.308 License.
595.309 Person.
595.310 Property; property interest.
595.311 Specially designated terrorist.
595.312 Specific license.
595.313 Transfer.
595.314 United States.
595.315 United States person; U.S. person.
595.316 U.S. financial institution.

                        Subpart D_Interpretations

595.401 Reference to amended sections.
595.402 Effect of amendment.
595.403 Termination and acquisition of an interest in blocked property.
595.404 Setoffs prohibited.
595.405 Transactions incidental to a licensed transaction.
595.406 Provision of services.
595.407 Offshore transactions.
595.408 Charitable contributions to specially designated terrorists.
595.409 Palestinian Authority.

 Subpart E_Licenses, Authorizations, and Statements of Licensing Policy

595.500 Licensing procedures.
595.501 Effect of license or authorization.
595.502 Exclusion from licenses and authorizations.
595.503 Payments and transfers to blocked accounts in U.S. financial 
          institutions.
595.504 Investment and reinvestment of certain funds.
595.505 Entries in certain accounts for normal service charges 
          authorized.
595.506 Provision of certain legal services authorized.
595.507 Authorization of emergency medical services.
595.508 Official activities of certain international organizations; U.S. 
          person employees of certain governments.
595.509 Travel, employment, residence and maintenance transactions with 
          the Palestinian Authority.
595.510 Payment of taxes and incidental fees to the Palestinian 
          Authority.
595.511 Transactions with entities under the control of the Palestinian 
          President and certain other entities.
595.512 Concluding activities with the Palestinian Authority.
595.513 In-kind donations of medicine, medical devices, and medical 
          services.
595.514 Transactions with the Palestinian Authority authorized.
595.515 Payments from funds originating outside the United States and 
          the formation of legal defense funds authorized.

                            Subpart F_Reports

595.601 Records and reports.

                           Subpart G_Penalties

595.701 Penalties.
595.702 Prepenalty notice.
595.703 Presentation responding to prepenalty notice.
595.704 Penalty notice.
595.705 Administrative collection; referral to United States Department 
          of Justice.

                          Subpart H_Procedures

595.801 Procedures.
595.802 Delegation by the Secretary of the Treasury.

                    Subpart I_Paperwork Reduction Act

595.901 Paperwork Reduction Act notice.

    Authority: 3 U.S.C. 301; 31 U.S.C. 321(b); 50 U.S.C. 1601-1651, 
1701-1706; Pub. L. 101-410, 104 Stat. 890 (28 U.S.C. 2461 note); Pub. L. 
110-96, 121 Stat. 1011; E.O. 12947, 60 FR 5079, 3 CFR, 1995 Comp., p. 
319; E.O. 13099, 63 FR 45167, 3 CFR, 1998 Comp., p. 208.

[[Page 497]]


    Source: 61 FR 3806, Feb. 2, 1996, unless otherwise noted.



      Subpart A_Relation of This Part to Other Laws and Regulations



Sec. 595.101  Relation of this part to other laws and regulations.

    (a) 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. Differing foreign policy 
and national security contexts 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.
    (b) 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.

[61 FR 3806, Feb. 2, 1996, as amended at 62 FR 45111, Aug. 25, 1997]



                         Subpart B_Prohibitions



Sec. 595.201  Prohibited transactions involving blocked property.

    (a) Except as authorized by regulations, orders, directives, 
rulings, instructions, licenses, or otherwise, no property or interests 
in property of a specially designated terrorist, that are in the United 
States, that hereafter come within the United States, or that are or 
hereafter come within the possession or control of U.S. persons, 
including their overseas branches, may be transferred, paid, exported, 
withdrawn or otherwise dealt in.
    (b) When a transaction results in the blocking of funds at a 
financial institution pursuant to this section and a party to the 
transaction believes the funds have been blocked due to mistaken 
identity, that party may seek to have such funds unblocked pursuant to 
the administrative procedures set forth in Sec. 501.806 of this 
chapter.

[61 FR 3806, Feb. 2, 1996, as amended at 62 FR 45111, Aug. 25, 1997]



Sec. 595.202  Effect of transfers violating the provisions of this part.

    (a) Any transfer after the effective date, which is in violation of 
any provision of this part or of any regulation, order, directive, 
ruling, instruction, license, or other authorization hereunder and 
involves any property held in the name of a specially designated 
terrorist or in which a specially designated terrorist has or has had an 
interest since such date, 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.
    (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 interest in, any property held in the name of a specially 
designated terrorist or in which a specially designated terrorist has an 
interest, or has had an interest since such date, unless the person with 
whom such property is held or maintained, prior to such date, had 
written notice of the transfer or by any written evidence had recognized 
such transfer.
    (c) Unless otherwise provided, an appropriate license or other 
authorization issued by or pursuant to the direction or authorization of 
the Director of the Office of Foreign Assets Control before, during, or 
after a transfer shall validate such transfer or render it enforceable 
to the same extent that it would be valid or enforceable but for the 
provisions of the International Emergency Economic Powers Act, this 
part, and any regulation, order, directive, ruling, instruction, or 
license issued hereunder.
    (d) Transfers of property which 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 was held or maintained (and as to such person only) in 
cases in which such person is able to establish to the satisfaction of 
the Director of the Office of

[[Page 498]]

Foreign Assets Control each of the following:
    (1) Such transfer did not represent a willful violation of the 
provisions of this part by the person with whom such property was held 
or maintained;
    (2) The person with whom such property 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 by or 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 the withholding 
of material facts or was otherwise fraudulently obtained; and
    (3) The person with whom such property was held or maintained filed 
with the Office of Foreign Assets Control a report setting forth in full 
the circumstances relating to such transfer promptly upon discovery 
that:
    (i) Such transfer was in violation of the provisions of this part or 
any regulation, ruling, instruction, license, or other direction or 
authorization hereunder; or
    (ii) Such transfer was not licensed or authorized by the Director of 
the Office of Foreign Assets Control; or
    (iii) If a license did purport to cover the transfer, such license 
had been obtained by misrepresentation of a third party or the 
withholding of material facts or was otherwise fraudulently obtained.

    Note: 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 or authorized pursuant to this part, any 
attachment, judgment, decree, lien, execution, garnishment, or other 
judicial process is null and void with respect to any property which, on 
or since the effective date, was held in the name of a specially 
designated terrorist or in which there existed an interest of a 
specially designated terrorist.



Sec. 595.203  Holding of certain types of blocked property in 
interest-bearing accounts.

    (a)(1) Any person, including a U.S. financial institution, currently 
holding property subject to Sec. 595.201 which, as of the effective 
date or the date of receipt if subsequent to the effective date, is not 
being held in an interest-bearing account, or otherwise invested in a 
manner authorized by the Office of Foreign Assets Control, shall 
transfer such property to, or hold such property or cause such property 
to be held in, an interest-bearing account or interest-bearing status in 
a U.S. financial institution as of the effective date or the date of 
receipt if subsequent to the effective date of this section, unless 
otherwise authorized or directed by the Office of Foreign Assets 
Control.
    (2) The requirement set forth in paragraph (a)(1) of this section 
shall apply to currency, bank deposits, accounts, obligations, and any 
other financial or economic resources or assets, and any proceeds 
resulting from the sale of tangible or intangible property. If interest 
is credited to an account separate from that in which the interest-
bearing asset is held, the name of the account party on both accounts 
must be the same and must clearly indicate the specially designated 
terrorist having an interest in the accounts. If the account is held in 
the name of a specially designated terrorist, the name of the account to 
which interest is credited must be the same.
    (b) For purposes of this section, the term interest-bearing account 
means a blocked account in a U.S. financial institution earning interest 
at rates that are commercially reasonable for the amount of funds in the 
account. Except as otherwise authorized, the funds may not be invested 
or held in instruments the maturity of which exceeds 90 days.
    (c) This section does not apply to blocked tangible property, such 
as chattels, nor does it create an affirmative obligation on the part of 
the holder of such blocked tangible property to sell or liquidate the 
property and put the proceeds in a blocked account. However, the Office 
of Foreign Assets Control may issue licenses permitting or directing 
sales of tangible property in appropriate cases.

[[Page 499]]



Sec. 595.204  Prohibited dealing in property; contributions of funds,
goods, or services.

    Except as otherwise authorized, no U.S. person may deal in property 
or interests in property of a specially designated terrorist, including 
the making or receiving of any contribution of funds, goods, or services 
to or for the benefit of a specially designated terrorist.



Sec. 595.205  Evasions; attempts; conspiracies.

    Any transaction for the purpose of, or which has the effect of, 
evading or avoiding, or which facilitates the evasion or avoidance of, 
any of the prohibitions set forth in this part, is hereby prohibited. 
Any attempt to violate the prohibitions set forth in this part is hereby 
prohibited. Any conspiracy formed for the purpose of engaging in a 
transaction prohibited by this part is hereby prohibited.



Sec. 595.206  Exempt transactions.

    (a) Personal communications. The prohibitions contained in this part 
do not apply to any postal, telegraphic, telephonic, or other personal 
communication, which does not involve the transfer of anything of value.
    (b) Information and informational materials. (1) The importation 
from any country and the exportation to any country of information or 
informational materials as defined in Sec. 595.306, whether commercial 
or otherwise, regardless of format or medium of transmission, are exempt 
from the prohibitions and regulations of this part.
    (2) This section does not authorize transactions related to 
information and informational materials not fully created and in 
existence at the date of the transactions, or to the substantive or 
artistic alteration or enhancement of informational materials, or to the 
provision of marketing and business consulting services by a U.S. 
person. Such prohibited transactions include, without limitation, 
payment of advances for informational materials not yet created and 
completed, provision of services to market, produce or co-produce, 
create or assist in the creation of information and informational 
materials, and payment of royalties to a specially designated terrorist 
with respect to income received for enhancements or alterations made by 
U.S. persons to information or informational materials imported from a 
specially designated terrorist.
    (3) This section does not authorize transactions incident to the 
exportation of technical data under restriction as defined in Sec. 
779.4 of the Export Administration Regulations, 15 CFR parts 768-799 
(1994), or to the exportation of goods for use in the transmission of 
any data. The exportation of such goods to specially designated 
terrorists is prohibited, as provided in Sec. 595.201 of this part.
    (c) Travel. The prohibitions contained in this part do not apply to 
transactions ordinarily incident to travel to or from any country, 
including importation 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 non scheduled air, sea, or land 
voyages.



                      Subpart C_General Definitions



Sec. 595.301  Blocked account; blocked property.

    The terms blocked account and blocked property shall mean any 
account or property subject to the prohibition in Sec. 595.201 held in 
the name of a specially designated terrorist or in which a specially 
designated terrorist has an interest, and with respect to which 
payments, transfers, exportations, withdrawals, or other dealings may 
not be made or effected except pursuant to an authorization or license 
from the Office of Foreign Assets Control authorizing such action.



Sec. 595.302  Effective date.

    The term effective date refers to the effective date of the 
applicable prohibitions and directives contained in this part which is 
12:01 a.m. EST, January 24, 1995, or, in the case of specially 
designated terrorists designated after that date, the earlier of the 
date on which a person receives actual or constructive notice of such 
designation.

[[Page 500]]



Sec. 595.303  Entity.

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



Sec. 595.304  Foreign person.

    The term foreign person means any citizen or national of a foreign 
state (including any such individual who is also a citizen or national 
of the United States), or any entity not organized solely under the laws 
of the United States or existing solely in the United States, but does 
not include a foreign state.



Sec. 595.305  General license.

    The term general license means any license or authorization the 
terms of which are set forth in this part.



Sec. 595.306  Information and informational materials.

    (a)(1) For purposes of this part, the term information and 
informational materials means publications, films, posters, phonograph 
records, photographs, microfilms, microfiche, tapes, compact disks, CD 
ROMs, artworks, and news wire feeds, and other information and 
informational articles.
    (2) To be considered informational materials, artworks must be 
classified under chapter subheading 9701, 9702, or 9703 of the 
Harmonized Tariff Schedule of the United States.
    (b) The terms information and informational materials with respect 
to U.S. exports do 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 (the ``EAA''), or section 6 of the 
EAA to the extent that such controls promote nonproliferation or 
antiterrorism policies of the United States, including ``software'' that 
is not ``publicly available'' as these terms are defined in 15 CFR Parts 
779 and 799.1; or
    (2) With respect to which acts are prohibited by 18 U.S.C. chapter 
37.



Sec. 595.307  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. 595.308  License.

    Except as otherwise specified, the term license means any license or 
authorization contained in or issued pursuant to this part.



Sec. 595.309  Person.

    The term person means an individual or entity.



Sec. 595.310  Property; property interest.

    The terms property and property interest include, but are not 
limited to, money, checks, drafts, bullion, bank deposits, savings 
accounts, debts, indebtedness, obligations, notes, guarantees, 
debentures, stocks, bonds, coupons, any other financial instruments, 
bankers acceptances, mortgages, pledges, liens or other rights in the 
nature of security, warehouse receipts, bills of lading, trust receipts, 
bills of sale, any other evidences of title, ownership or indebtedness, 
letters of credit and any documents relating to any rights or 
obligations thereunder, powers of attorney, goods, wares, merchandise, 
chattels, stocks on hand, ships, goods on ships, real estate mortgages, 
deeds of trust, vendors sales agreements, land contracts, leaseholds, 
ground rents, real estate and any other interest therein, options, 
negotiable instruments, trade acceptances, royalties, book accounts, 
accounts payable, judgments, patents, trademarks or copyrights, 
insurance policies, safe deposit boxes and their contents, annuities, 
pooling agreements, services of any nature whatsoever, contracts of any 
nature whatsoever, and any other property, real, personal, or mixed, 
tangible or intangible, or interest or interests therein, present, 
future or contingent.



Sec. 595.311  Specially designated terrorist.

    (a) The term specially designated terrorist means:
    (1) Persons listed in the Annex to Executive Order 12947;
    (2) Foreign persons designated by the Secretary of State, in 
coordination with the Secretary of the Treasury and

[[Page 501]]

the Attorney General, because they are found:
    (i) To have committed, or to pose a significant risk of committing, 
acts of violence that have the purpose or effect of disrupting the 
Middle East peace process, or
    (ii) To assist in, sponsor, or provide financial, material, or 
technological support for, or services in support of, such acts of 
violence; and
    (3) Persons determined by the Secretary of the Treasury, in 
coordination with the Secretary of State and the Attorney General, to be 
owned or controlled by, or to act for or on behalf of, any other 
specially designated terrorist.
    (b) [Reserved]

    Note to Sec. 595.311: The names of persons determined to fall 
within this definition, whose property and interests in property 
therefore are blocked pursuant to this part, are published in the 
Federal Register and incorporated into the Office of Foreign Assets 
Control's Specially Designated Nationals and Blocked Persons List (``SDN 
List'') with the identifier ``[SDT].'' The International Emergency 
Economic Powers Act (50 U.S.C. 1701-1706), in Section 203 (50 U.S.C. 
1702), authorizes the blocking of property and interests in property of 
a person during the pendency of an investigation. The names of persons 
whose property and interests in property are blocked pending 
investigation pursuant to this part also are published in the Federal 
Register and incorporated into the SDN List with the identifier ``[BPI-
SDT].'' The SDN List is accessible through the following page on the 
Office of Foreign Assets Control's Web site: http://www.treasury.gov/
sdn. Additional information pertaining to the SDN List can be found in 
appendix A to this chapter. Section 501.807 of this chapter sets forth 
the procedures to be followed by persons seeking administrative 
reconsideration of their designation, or who wish to assert that the 
circumstances resulting in the designation are no longer applicable.

[61 FR 3806, Feb. 2, 1996, as amended at 61 FR 32938, June 26, 1996; 62 
FR 45111, Aug. 25, 1997; 76 FR 38544, June 30, 2011]



Sec. 595.312  Specific license.

    The term specific license means any license or authorization not set 
forth in this part but issued pursuant to this part.



Sec. 595.313  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 and, without limitation upon the foregoing, 
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. 595.314  United States.

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



Sec. 595.315  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. 595.316  U.S. financial institution.

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

[[Page 502]]

brokering loans or credits, or purchasing or selling foreign exchange, 
securities, commodity futures or options, or procuring purchasers and 
sellers thereof, as principal or agent; including, but not limited to, 
depository institutions, banks, savings banks, trust companies, 
securities brokers and dealers, commodity futures and options brokers 
and dealers, forward contract and foreign exchange merchants, securities 
and commodities exchanges, clearing corporations, investment companies, 
employee benefit plans, and U.S. holding companies, U.S. affiliates, or 
U.S. subsidiaries of any of the foregoing. This term includes those 
branches, offices and agencies of foreign financial institutions which 
are located in the United States, but not such institutions' foreign 
branches, offices, or agencies.



                        Subpart D_Interpretations



Sec. 595.401  Reference to amended sections.

    Except as otherwise specified, reference to any section of this part 
or to any regulation, ruling, order, instruction, direction, or license 
issued pursuant to this part shall be deemed to refer to the same as 
currently amended.



Sec. 595.402  Effect of amendment.

    Any amendment, modification, or revocation of any section of this 
part or of any order, regulation, ruling, instruction, or license issued 
by or under the direction of the Director of the Office of Foreign 
Assets Control shall not, unless otherwise specifically provided, be 
deemed to affect any act done or omitted to be done, or any civil or 
criminal suit or 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 shall continue and may be enforced as if such amendment, 
modification, or revocation had not been made.



Sec. 595.403  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 specially designated terrorist, such property 
shall no longer be deemed to be property in which a specially designated 
terrorist has or has had an interest, or which is held in the name of a 
specially designated terrorist, unless there exists in the property 
another interest of a specially designated terrorist, 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 
specially designated terrorist, including by the making of any 
contribution of funds, goods, or services to or for the benefit of a 
specially designated terrorist, such property shall be deemed to be 
property in which there exists an interest of the specially designated 
terrorist.



Sec. 595.404  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. 595.201 if effected after the effective date.



Sec. 595.405  Transactions incidental to a licensed transaction.

    Any transaction ordinarily incident to a licensed transaction and 
necessary to give effect thereto is also authorized, except a 
transaction by an unlicensed, specially designated terrorist or 
involving a debit to a blocked account or a transfer of blocked property 
not explicitly authorized within the terms of the license.



Sec. 595.406  Provision of services.

    (a) Except as provided in Sec. 595.206, the prohibitions contained 
in Sec. Sec. 595.201 and 595.204 apply to services performed by U.S. 
persons, wherever located:
    (1) On behalf of, or for the benefit of, a specially designated 
terrorist; or
    (2) With respect to property interests of a specially designated 
terrorist.
    (b) Example: U.S. persons may not, except as authorized by the 
Office of Foreign Assets Control by or pursuant to this part, provide 
legal, accounting,

[[Page 503]]

public relations, educational, or other services to a specially 
designated terrorist. See Sec. 595.506.



Sec. 595.407  Offshore transactions.

    The prohibitions contained in Sec. 595.201 apply to transactions by 
U.S. persons in locations outside the United States with respect to 
property which the U.S. person knows, or has reason to know, is held in 
the name of a specially designated terrorist, or in which the U.S. 
person knows, or has reason to know, a specially designated terrorist 
has or has had an interest since the effective date.



Sec. 595.408  Charitable contributions to specially designated 
terrorists.

    (a) Unless otherwise specifically authorized by the Office of 
Foreign Assets Control by or pursuant to this part, no charitable 
contribution or donation of funds, goods, services,or technology to 
relieve human suffering, such as food, clothing or medicine, may be made 
to or for the benefit of a specially designated terrorist. For purposes 
of this part, a contribution or donation is made to or for the benefit 
of a specially designated terrorist if made to or in the name of a 
specially designated terrorist; if made to or in the name of an entity 
or individual acting for or on behalf of, or owned or controlled by, a 
specially designated terrorist; or if made in an attempt to violate, to 
evade or to avoid the bar on the provision of contributions or donations 
to specially designated terrorists.
    (b) Individuals and organizations who donate or contribute funds, 
goods, services or technology without knowledge or reason to know that 
the donation or contribution is destined to or for the benefit of a 
specially designated terrorist shall not be subject to penalties for 
such donation or contribution.



Sec. 595.409  Palestinian Authority.

    Following the January 2006 Palestinian elections, Hamas, a 
designated terrorist entity whose property and interests in property are 
blocked pursuant to Sec. Sec. 595.201 and 595.204, has been determined 
to have a property interest in the transactions of the Palestinian 
Authority. Accordingly, pursuant to Sec. Sec. 595.201 and 595.204, U.S. 
persons are prohibited from engaging in transactions with the 
Palestinian Authority unless authorized. Certain transactions with the 
Palestinian Authority may be authorized by license, see subpart E of 
this part.

[71 FR 27201, May 10, 2006]



 Subpart E_Licenses, Authorizations, and Statements of Licensing Policy



Sec. 595.500  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.

[68 FR 53660, Sept. 11, 2003]



Sec. 595.501  Effect of license or authorization.

    (a) No license or other authorization contained in this part, or 
otherwise issued by or under the direction of the Director of the Office 
of Foreign Assets Control, shall be deemed to authorize or validate any 
transaction effected prior to the issuance of the license, unless 
specifically provided in such license or authorization.
    (b) No regulation, ruling, instruction, or license authorizes any 
transaction prohibited under this part unless the regulation, ruling, 
instruction, or license is issued by the Office of Foreign Assets 
Control and specifically refers to this part. No regulation, ruling, 
instruction, or license referring to this part shall be deemed to 
authorize any transaction prohibited by any provision of this chapter 
unless the regulation, ruling, instruction or license specifically 
refers to such provision.
    (c) Any regulation, ruling, instruction, or license authorizing any 
transaction otherwise prohibited under this part has the effect of 
removing a prohibition or prohibitions 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

[[Page 504]]

to, any property which would not otherwise exist under ordinary 
principles of law.



Sec. 595.502  Exclusion from licenses and authorizations.

    The Director of the Office of Foreign Assets Control reserves the 
right to exclude any person, property, or transaction from the operation 
of any license, or from the privileges therein conferred, or to restrict 
the applicability thereof with respect to particular persons, property, 
transactions, or classes thereof. Such action shall be binding upon all 
persons receiving actual or constructive notice of such exclusion or 
restriction.



Sec. 595.503  Payments and transfers to blocked accounts in U.S. 
financial institutions.

    (a) Any payment of funds or transfer of credit or other financial or 
economic resources or assets into a blocked account in a U.S. financial 
institution is authorized, provided that a transfer from a blocked 
account pursuant to this authorization may only be made to another 
blocked account held in the same name on the books of the same U.S. 
financial institution.
    (b) This section does not authorize any transfer from a blocked 
account within the United States to an account held outside the United 
States.

    Note to Sec. 595.503: Please refer to Sec. 501.603 of this chapter 
for mandatory reporting requirements regarding financial transfers.

[61 FR 3806, Feb. 2, 1996, as amended at 62 FR 45111, Aug. 25, 1997]



Sec. 595.504  Investment and reinvestment of certain funds.

    (a) U.S. financial institutions are hereby authorized and directed 
to invest and reinvest assets held in blocked accounts in the name of a 
specially designated terrorist, subject to the following conditions:
    (1) The assets representing such investments and reinvestments are 
credited to a blocked account or sub-account which is in the name of the 
specially designated terrorist and which is located in the United States 
or within the possession or control of a U.S. person; and
    (2) The proceeds of such investments and reinvestments are not 
credited to a blocked account or sub-account under any name or 
designation which differs from the name or designation of the specific 
blocked account or sub-account in which such funds or securities were 
held; and
    (3) No immediate financial or economic benefit or access accrues 
(e.g., through pledging or other use) to the specially designated 
terrorist.
    (b)(1) U.S. persons seeking to avail themselves of this 
authorization must register with the Office of Foreign Assets Control, 
Blocked Assets Section, before undertaking transactions authorized under 
this section.
    (2) Transactions conducted pursuant to this section must be reported 
to the Office of Foreign Assets Control, Blocked Assets Division, in a 
report filed no later than 10 business days following the last business 
day of the month in which the transactions occurred.



Sec. 595.505  Entries in certain accounts for normal service charges
authorized.

    (a) U.S. financial institutions are hereby authorized to debit any 
blocked account with such U.S. financial institution in payment or 
reimbursement for normal service charges owed to such U.S. financial 
institution by the owner of such blocked account.
    (b) As used in this section, the term normal service charge shall 
include charges in payment or reimbursement for interest due; cable, 
telegraph, 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, photostats, credit reports, transcripts of 
statements, registered mail insurance, stationary and supplies, check 
books, and other similar items.



Sec. 595.506  Provision of certain legal services authorized.

    (a) The provision of the following legal services to or on behalf of 
persons whose property and interests in property are blocked pursuant to 
Sec. 595.201(a) is authorized, provided that all receipts

[[Page 505]]

of payment of professional fees and reimbursement of incurred expenses 
must be specifically licensed or otherwise authorized pursuant to this 
part:
    (1) Provision of legal advice and counseling on the requirements of 
and compliance with the laws of 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 when named as defendants in or 
otherwise made parties to domestic U.S. legal, arbitration, or 
administrative proceedings;
    (3) Initiation and conduct of domestic U.S. legal, arbitration, or 
administrative proceedings in defense of property interests subject to 
U.S. jurisdiction;
    (4) Representation of persons before any federal or state agency 
with respect to the imposition, administration, or enforcement of U.S. 
sanctions against such persons;
    (5) Representation of persons, wherever located, detained within the 
jurisdiction of the United States or by the United States government, 
with respect to either such detention or any charges made against such 
persons, including, but not limited to, the conduct of military 
commission prosecutions and the initiation and conduct of federal court 
proceedings; and
    (6) 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 legal services not otherwise authorized by 
paragraph (a) of this section to or on behalf of persons whose property 
and interests in property are blocked pursuant to Sec. 595.201(a) in 
connection with the initiation and conduct of legal, arbitration, or 
administrative proceedings before any U.S. federal, state, or local 
court or agency is authorized, provided that all receipts of payment of 
professional fees and reimbursement of incurred expenses must be 
specifically licensed.
    (c) The provision of any other legal services to persons whose 
property or interests in property are blocked pursuant to Sec. 
595.201(a), not otherwise authorized in this part, requires the issuance 
of a specific license.
    (d) Entry into a settlement agreement affecting property or 
interests in property 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. 595.201(a) 
is prohibited except to the extent otherwise provided by law or unless 
specifically licensed in accordance with Sec. 595.202(e).

[73 FR 78632, Dec. 23, 2008, as amended at 75 FR 75907, Dec. 7, 2010]



Sec. 595.507  Authorization of emergency medical services.

    The provision of nonscheduled emergency medical services to a 
specially designated terrorist located in the United States is 
authorized, provided that any payment for such services requires prior 
authorization by specific license.



Sec. 595.508  Official activities of certain international
organizations; U.S. person employees of certain governments.

    (a) Effective April 12, 2006, all transactions and activities with 
the Palestinian Authority otherwise prohibited under this part that are 
for the conduct of the official business of the United Nations are 
authorized, provided that no payment pursuant to this license may 
involve a debit to an account of the Palestinian Authority on the books 
of a U.S. financial institution or to any account blocked pursuant to 
this part.
    (b) Effective April 12, 2006, U.S. persons who are employees of the 
governments of states bordering the West Bank or Gaza are authorized to 
engage in all transactions and activities outside of the United States 
with the Palestinian Authority that are otherwise prohibited under this 
part in support of the U.S. persons' official duties, provided that no 
payment pursuant to this license may involve a debit to an account of 
the Palestinian Authority on the books of a U.S. financial institution 
or to any account blocked pursuant to this part.
    (c) For purposes of this section only, the term ``United Nations'' 
means its

[[Page 506]]

principal organs, including funds, bodies, commissions, agencies, 
departments and other entities of the Security Council, General 
Assembly, Economic and Social Council and Secretariat, specifically 
including, among others, the World Bank, the International Monetary 
Fund, the World Food Programme, and the World Health Organization.

[71 FR 27201, May 10, 2006]



Sec. 595.509  Travel, employment, residence and maintenance 
transactions with the Palestinian Authority.

    Effective April 12, 2006, U.S. persons are authorized to engage in 
all transactions with the Palestinian Authority otherwise prohibited 
under this part that are ordinarily incident to their travel to or from, 
or employment, residence or personal maintenance within, the 
jurisdiction of the Palestinian Authority, including, but not limited 
to, receipt of salaries, payment of living expenses and acquisition of 
goods or services for personal use. Nothing in this license authorizes 
any debit to an account of the Palestinian Authority on the books of a 
U.S. financial institution or to any account blocked pursuant to this 
part.

[71 FR 27201, May 10, 2006]



Sec. 595.510  Payment of taxes and incidental fees to the Palestinian
Authority.

    Effective April 12, 2006, U.S. persons are authorized to pay taxes 
or fees to, and purchase or receive permits or public utility services 
from, the Palestinian Authority where such transactions are necessary 
and ordinarily incident to such persons' day-to-day operations. Nothing 
in this license authorizes a debit to an account of the Palestinian 
Authority on the books of a U.S. financial institution or to any account 
blocked pursuant to this part.

[71 FR 27201, May 10, 2006]



Sec. 595.511  Transactions with entities under the control of the
Palestinian President and certain other entities.

    (a) Effective April 12, 2006, U.S. persons are authorized to engage 
in all transactions otherwise prohibited under this part with the 
following entities and individuals:
    (1) The Palestinian Authority Presidency, including only the Office 
of the President, Presidential Security, General Intelligence Apparatus, 
Governors and Governorate staff, the Attorney General's Office, the 
Palestine Investment Fund (PIF), the Border Crossings Administration, 
and the Palestine Broadcasting Corporation (including the Voice of 
Palestine, Wafa News Agency, and the General Public Information Agency/
State Information Services);
    (2) The Palestinian Judiciary, including the Higher Judicial 
Council;
    (3) Members of the Palestinian Legislative Council (PLC) who were 
not elected to the PLC on the party slate of Hamas or any other Foreign 
Terrorist Organization (FTO), Specially Designated Terrorist (SDT), or 
Specially Designated Global Terrorist (SDGT); and
    (4) The following independent agencies: The Central Elections 
Commission; the Independent Citizens Rights Commission; the General 
Audit Authority/External Audit Agency; and the Palestinian Monetary 
Authority.
    (b) Effective April 12, 2006, U.S. financial institutions are 
authorized to reject transactions with members of the Palestinian 
Legislative Council (PLC) who were elected to the PLC on the party slate 
of Hamas or any other Foreign Terrorist Organization (FTO), Specially 
Designated Terrorist (SDT), or Specially Designated Global Terrorist 
(SDGT), provided that any such individuals are not named on OFAC's list 
of Specially Designated Nationals and Blocked Persons.
    (c) Nothing in this license authorizes a debit to an account of the 
Palestinian Authority on the books of a U.S. financial institution or to 
any account blocked pursuant to this part.

[71 FR 27201, May 10, 2006]



Sec. 595.512  Concluding activities with the Palestinian Authority.

    Effective April 12, 2006, all transactions and activities with the 
Palestinian Authority otherwise prohibited under this part are 
authorized through May 12, 2006, provided that they are

[[Page 507]]

necessary to conclude ongoing contracts or programs with the Palestinian 
Authority, and further provided that no payment pursuant to this license 
may involve a debit to an account of the Palestinian Authority on the 
books of a U.S. financial institution or to any account blocked pursuant 
to this part.

[71 FR 27201, May 10, 2006]



Sec. 595.513  In-kind donations of medicine, medical devices, and 
medical services.

    (a) Effective July 6, 2006, nongovernmental organizations that are 
U.S. persons are authorized to provide in-kind donations of medicine, 
medical devices, and medical services to the Palestinian Authority 
Ministry of Health, provided that such donations are strictly for 
distribution in the West Bank or Gaza and not intended for resale, and 
provided further that no payment pursuant to this license may involve a 
debit to an account of the Palestinian Authority on the books of a U.S. 
financial institution or to any account blocked pursuant to this part.
    (b) For the purposes of this section only, the term medical device 
has the meaning given the term ``device'' in section 201 of the Federal 
Food, Drug, and Cosmetic Act (21 U.S.C. 321), including medical 
supplies, but does not include any item listed on the Commerce Control 
List in the Export Administration Regulations, 15 CFR part 774, 
supplement no. 1.

    Note to paragraph (b): Nongovernmental organizations that are 
interested in providing items listed on the Commerce Control List to the 
Palestinian Authority Ministry of Health must apply for a specific 
license from the Office of Foreign Assets Control.

[71 FR 58744, Oct. 5, 2006]



Sec. 595.514  Transactions with the Palestinian Authority authorized.

    (a) As of June 20, 2007, U.S. persons are authorized to engage in 
all transactions otherwise prohibited under this part with the 
Palestinian Authority.
    (b) For purposes of this section only, the term Palestinian 
Authority means the Palestinian Authority government of Prime Minister 
Salam Fayyad and President Mahmoud Abbas, including all branches, 
ministries, offices, and agencies (independent or otherwise) thereof.

[72 FR 61518, Oct. 31, 2007]



Sec. 595.515  Payments from funds originating outside the United 
States and the formation of legal defense funds authorized.

    (a) Payments from funds originating outside the United States. 
Effective December 7, 2010, receipts of payment of professional fees and 
reimbursement of incurred expenses for the provision of legal services 
authorized pursuant to Sec. 595.506(a) are authorized from funds 
originating outside the United States, provided that:
    (1) Prior to receiving payment for legal services authorized 
pursuant to Sec. 595.506(a) rendered to persons whose property and 
interests in property are blocked pursuant to Sec. 595.201(a), the U.S. 
person that is an attorney, law firm, or legal services organization 
provides to the Office of Foreign Assets Control a copy of a letter of 
engagement or a letter of intent to engage specifying the services to be 
performed and signed by the individual to whom such services are to be 
provided or, where services are to be provided to an entity, by a legal 
representative of the entity. The copy of a letter of engagement or a 
letter of intent to engage, accompanied by correspondence referencing 
this paragraph (a), is to be mailed to: Licensing Division, Office of 
Foreign Assets Control, U.S. Department of the Treasury, 1500 
Pennsylvania Avenue, NW., Annex, Washington, DC 20220;
    (2) The funds received by U.S. persons as payment of professional 
fees and reimbursement of incurred expenses for the provision of legal 
services authorized pursuant to Sec. 595.506(a) must 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. 595.506(a) are to 
be provided, whose property and interests in property are blocked 
pursuant to any part of this chapter or any Executive order;


[[Page 508]]


    Note to paragraph (a)(2) of Sec. 595.515: This paragraph authorizes 
the blocked person on whose behalf the legal services authorized 
pursuant to Sec. 595.506(a) are to be provided to make payments for 
authorized legal services using funds originating outside the United 
States that were not previously blocked. Nothing in this paragraph 
authorizes payments for legal services using funds in which any other 
person whose property and interests in property are blocked pursuant to 
Sec. 595.201(a) or any other part of this chapter holds an interest.

    (3) Reports. (i) U.S. persons who receive payments in connection 
with legal services authorized pursuant to Sec. 595.506(a) must submit 
quarterly reports no later than 30 days following the end of the 
calendar quarter during which the payments were received providing 
information on the funds received. Such reports shall specify:
    (A) The individual or entity from whom the funds originated and the 
amount of funds received; and
    (B) If applicable:
    (1) 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;
    (2) A general description of the services provided; and
    (3) The amount of funds paid in connection with such services.
    (ii) In the event that no transactions occur or no funds are 
received during the reporting period, a statement is to be filed to that 
effect.
    (iii) Reports, which must reference this paragraph (a), are to be 
mailed to: Licensing Division, Office of Foreign Assets Control, U.S. 
Department of the Treasury, 1500 Pennsylvania Avenue, NW., Annex, 
Washington, DC 20220; and

    Note to paragraph (a)(3) of Sec. 595.515: U.S. persons who receive 
payments in connection with legal services authorized pursuant to Sec. 
595.506(a) do not need to obtain specific authorization to contract for 
related services that are ordinarily incident to the provision of those 
legal services, such as those provided by private investigators or 
expert witnesses, or to pay for such services. Additionally, U.S. 
persons do not need to obtain specific authorization to provide related 
services that are ordinarily incident to the provision of legal services 
authorized pursuant to Sec. 595.506(a).

    (4) Nothing in this paragraph (a) authorizes the receipt of payment 
of professional fees or reimbursement of incurred expenses for the 
provision of legal services authorized pursuant to Sec. 595.506(b).

    Note 1 to paragraph (a) of Sec. 595.515: Any payment authorized in 
or pursuant to this paragraph that is routed through the U.S. financial 
system should reference this paragraph Sec. 595.515(a) to avoid the 
blocking of the transfer.
    Note 2 to paragraph (a) of Sec. 595.515: Nothing in this paragraph 
authorizes the transfer of any blocked property, the debiting of any 
blocked account, the entry of any judgment or order that effects a 
transfer of blocked property, or the execution of any judgment against 
property blocked pursuant to any Executive order or 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 the Office of Foreign 
Assets Control to authorize the release of a limited amount of blocked 
funds for the payment of legal fees where alternative funding sources 
are not available. For more information, see OFAC's Guidance on the 
Release of Limited Amounts of Blocked Funds for Payment of Legal Fees 
and Costs Incurred in Challenging the Blocking of U.S. Persons in 
Administrative or Civil Proceedings, which is available at: http://
www.treas.gov/resource-center/sanctions/Documents/legal--fee--guide.pdf.

    (b) Legal defense funds. Effective December 7, 2010, U.S. persons 
that are attorneys, law firms, or legal services organizations are 
authorized to form legal defense funds from which payments of 
professional fees and reimbursement for expenses incurred in connection 
with the provision of legal services authorized pursuant to Sec. 
595.506(a) may be debited provided that:
    (1) The legal defense fund must be held in a savings or checking 
account at a financial institution located in the United States;
    (2) Prior to debiting the legal defense fund, the U.S. person 
responsible for establishing the legal defense fund must submit the 
following information to the Office of Foreign Assets Control: a copy of 
a letter of engagement or a letter of intent to engage specifying the 
services to be performed and signed by the individual to whom such 
services are to be provided or, where services are to be provided to an 
entity, by a

[[Page 509]]

legal representative of the entity; the name of the individual or entity 
responsible for establishing the legal defense fund; the name of the 
financial institution at which the account for the legal defense fund 
will be held; a point of contact at the financial institution holding 
the account for the legal defense fund; and the account name and account 
number for the legal defense fund. The foregoing information must be 
accompanied by correspondence referencing this paragraph Sec. 
595.515(b) and is to be mailed to: Licensing Division, Office of Foreign 
Assets Control, U.S. Department of the Treasury, 1500 Pennsylvania 
Avenue, NW., Annex, Washington, DC 20220;
    (3) The legal defense fund may not receive funds from a person whose 
property and interests in property are blocked pursuant to Sec. 
595.201(a) or any other part of this chapter;
    (4) The U.S. person responsible for establishing the legal defense 
fund must notify the financial institution at which the account for the 
legal defense fund is held that the account may only be debited to make 
payments of professional fees and reimburse expenses incurred in 
connection with the provision of legal services authorized pursuant to 
Sec. 595.506(a);
    (5) Reports. (i) U.S. persons responsible for establishing legal 
defense funds from which payments of professional fees and reimbursement 
for expenses incurred in connection with the provision of legal services 
authorized pursuant to Sec. 595.506(a) may be debited must submit 
quarterly reports no later than 30 days following the end of the 
calendar quarter during which the funds were deposited with or debited 
from the account of the legal defense fund providing information on the 
funds received by the legal defense fund and debits made to the legal 
defense fund during the reporting period. Such reports shall specify:
    (A) The individual or entity from whom the funds originated and the 
amount of funds received; and
    (B) Any individual or entity to whom any payments were made, 
including, if applicable:
    (1) 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;
    (2) A general description of the services provided; and
    (3) The amount of funds paid in connection with such services.
    (ii) In the event that no transactions occur or no funds are 
received during the reporting period, a statement is to be filed to that 
effect.
    (iii) Reports, which must reference this paragraph (b), are to be 
mailed to: Licensing Division, Office of Foreign Assets Control, U.S. 
Department of the Treasury, 1500 Pennsylvania Avenue, NW., Annex, 
Washington, DC 20220; and

    Note to paragraph (b)(5) of Sec. 595.515: U.S. persons who receive 
payments in connection with legal services authorized pursuant to Sec. 
595.506(a) do not need to obtain specific authorization to contract for 
related services that are ordinarily incident to the provision of those 
legal services, such as those provided by private investigators or 
expert witnesses, or to pay for such services. Additionally, U.S. 
persons do not need to obtain specific authorization to provide related 
services that are ordinarily incident to the provision of legal services 
authorized pursuant to Sec. 595.506(a).

    (6) Nothing in this paragraph (b) authorizes the formation or 
debiting of legal defense funds in connection with the provision of 
legal services authorized pursuant to Sec. 595.506(b).

    Note 1 to paragraph (b) of Sec. 595.515: Any payment authorized in 
or pursuant to this paragraph that is routed through the U.S. financial 
system should reference this paragraph Sec. 595.515(b) to avoid the 
blocking of the transfer.
    Note 2 to paragraph (b) of Sec. 595.515: Any funds remaining in a 
legal defense fund account after all payments of professional fees and 
reimbursement of incurred expenses authorized pursuant to this paragraph 
have been made or upon termination of the legal services for which 
payment is authorized pursuant to this paragraph are property in which 
the person to or on whose behalf the legal services were rendered has an 
interest and is subject to the prohibitions of this part. Persons in the 
possession or control of such remaining funds may apply for the 
unblocking of the funds by following the procedures set forth at Sec. 
501.801 of this chapter.

[75 FR 75907, Dec. 7, 2010]

[[Page 510]]



                            Subpart F_Reports



Sec. 595.601  Records and reports.

    For provisions relating to records and reports, see subpart C of 
part 501 of this chapter.

[62 FR 45111, Aug. 25, 1997]



                           Subpart G_Penalties



Sec. 595.701  Penalties.

    (a) Attention is directed to section 206 of the International 
Emergency Economic Powers Act (the ``Act'') (50 U.S.C. 1705), which is 
applicable to violations of the provisions of any license, ruling, 
regulation, order, direction or instruction issued by or pursuant to the 
direction or authorization of the Secretary of the Treasury pursuant to 
this part or otherwise under the Act.
    (1) A civil penalty not to exceed the amount set forth in Section 
206 of the Act 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 the Act.

    Note to paragraph (a)(1) of Sec. 595.701: As of June 10, 2008, the 
Act provides for a maximum civil penalty not to exceed the greater of 
$250,000 or an amount that is twice the amount of the transaction that 
is the basis of the violation with respect to which the penalty is 
imposed.

    (2) A person who willfully commits, willfully attempts to commit, or 
willfully conspires to commit, or aids or abets in the commission of a 
violation of any license, order, regulation, or prohibition shall, upon 
conviction, be fined not more than $1,000,000, or if a natural person, 
may be imprisoned for not more than 20 years, or both.

    (b) Adjustments to penalty amounts. (1) The civil penalties provided 
in the Act 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 the Act are subject to 
adjustment pursuant to 18 U.S.C. 3571.
    (c) Attention is also directed to 18 U.S.C. 1001, which provides 
that whoever, in any matter within the jurisdiction of any department or 
agency of the United States, knowingly and willfully falsifies, conceals 
or covers up by any trick, scheme, or device a material fact, or makes 
any false, fictitious or fraudulent statement or representation or makes 
or uses any false writing or document knowing the same to contain any 
false, fictitious or fraudulent statement or entry, shall be fined under 
title 18, United States Code, or imprisoned not more than five years, or 
both.
    (d) Violations of this part may also be subject to relevant 
provisions of other applicable laws.

[61 FR 3806, Feb. 2, 1996, as amended at 61 FR 54940, Oct. 23, 1996; 62 
FR 45111, Aug. 25, 1997; 71 FR 29253, May 22, 2006; 73 FR 32656, June 
10, 2008]



Sec. 595.702  Prepenalty notice.

    (a) When required. If the Director of the Office of Foreign Assets 
Control has reasonable cause to believe that there has occurred a 
violation of any provision of this part or a violation of the provisions 
of any license, ruling, regulation, order, direction or instruction 
issued by or pursuant to the direction or authorization of the Secretary 
of the Treasury pursuant to this part or otherwise under the 
International Emergency Economic Powers Act, and the Director determines 
that further proceedings are warranted, he shall issue to the person 
concerned a notice of his intent to impose a monetary penalty. The 
prepenalty notice shall be issued whether or not another agency has 
taken any action with respect to this matter.
    (b) Contents--(1) Facts of violation. The prepenalty notice shall 
describe the violation, specify the laws and regulations allegedly 
violated, and state the amount of the proposed monetary penalty.
    (2) Right to make presentation. The prepenalty notice also shall 
inform the person of his right to make a written presentation within 30 
days of mailing of the notice as to why a monetary penalty should not be 
imposed, or, if imposed, why it should be in a lesser amount than 
proposed.

[[Page 511]]



Sec. 595.703  Presentation responding to prepenalty notice.

    (a) Time within which to respond. The named person shall have 30 
days from the date of mailing of the prepenalty notice to make a written 
presentation to the Director of the Office of Foreign Assets Control.
    (b) Form and contents of written presentation. The written 
presentation need not be in any particular form, but shall contain 
information sufficient to indicate that it is in response to the 
prepenalty notice. It should contain responses to the allegations in the 
prepenalty notice and set forth the reasons why the person believes the 
penalty should not be imposed or, if imposed, why it should be in a 
lesser amount than proposed.



Sec. 595.704  Penalty notice.

    (a) No violation. If, after considering any presentations made in 
response to the prepenalty notice and any relevant facts, the Director 
of the Office of Foreign Assets Control determines that there was no 
violation by the person named in the prepenalty notice, he promptly 
shall notify the person in writing of that determination and that no 
monetary penalty will be imposed.
    (b) Violation. If, after considering any presentations made in 
response to the prepenalty notice, the Director of the Office of Foreign 
Assets Control determines that there was a violation by the person named 
in the prepenalty notice, he promptly shall issue a written notice of 
the imposition of the monetary penalty to that person.



Sec. 595.705  Administrative collection; referral to United States
Department of Justice.

    In the event that the person named does not pay the penalty imposed 
pursuant to this part or make payment arrangements acceptable to the 
Director of the Office of Foreign Assets Control within 30 days of the 
mailing of the written notice of the imposition of the penalty, the 
matter may be referred for administrative collection measures by the 
Department of the Treasury or to the United States Department of Justice 
for appropriate action to recover the penalty in a civil suit in a 
Federal district court.



                          Subpart H_Procedures



Sec. 595.801  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.

[62 FR 45111, Aug. 25, 1997, as amended at 68 FR 53660, Sept. 11, 2003]



Sec. 595.802  Delegation by the Secretary of the Treasury.

    Any action which the Secretary of the Treasury is authorized to take 
pursuant to Executive Order 12947 or any further Executive orders 
relating to the national emergency declared in Executive Order 12947 may 
be taken by the Director of the Office of Foreign Assets Control, or by 
any other person to whom the Secretary of the Treasury has delegated 
authority so to act.

[61 FR 3806, Feb. 2, 1996. Redesignated at 62 FR 45111, Aug. 25, 1997]



                    Subpart I_Paperwork Reduction Act



Sec. 595.901  Paperwork Reduction Act notice.

    For approval by the Office of Management and Budget (``OMB'') under 
the Paperwork Reduction Act of information collections relating to 
recordkeeping and reporting requirements, to licensing procedures 
(including those pursuant to statements of licensing policy), and to 
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.

[62 FR 45111, Aug. 25, 1997]

[[Page 512]]



PART 596_TERRORISM LIST GOVERNMENTS SANCTIONS REGULATIONS--Table of 
Contents



      Subpart A_Relation of This Part to Other Laws and Regulations

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

                         Subpart B_Prohibitions

596.201 Prohibited financial transactions.
596.202 Evasions; attempts; conspiracies.

                      Subpart C_General Definitions

596.301 Donation.
596.302 Effective date.
596.303 Financial institution.
596.304 Financial transaction.
596.305 General license.
596.306 License.
596.307 Monetary instruments.
596.308 Person; entity.
596.309 Specific license.
596.310 Terrorism List Government.
596.311 Transaction.
596.312 United States.
596.313 United States person.

                        Subpart D_Interpretations

596.401 Reference to amended sections.
596.402 Effect of amendment.
596.403 Transactions incidental to a licensed transaction.
596.404 Financial transactions transferred through a bank of a Terrorism 
          List Government.

  Subpart E_Licenses, Authorizations and Statements of Licensing Policy

596.500 Licensing procedures.
596.501 Effect of license or authorization.
596.502 Exclusion from licenses and authorizations.
596.503 Financial transactions with a Terrorism List Government 
          otherwise subject to 31 CFR chapter V.
596.504 Certain financial transactions with Terrorism List Governments 
          authorized.
596.505 Certain transactions related to stipends and scholarships 
          authorized.

                            Subpart F_Reports

596.601 Records and reports.

                           Subpart G_Penalties

596.701 Penalties.

                          Subpart H_Procedures

596.801 Procedures.
596.802 Delegation by the Secretary of the Treasury.

                    Subpart I_Paperwork Reduction Act

596.901 Paperwork Reduction Act notice.

    Authority: 18 U.S.C. 2332d; 31 U.S.C. 321(b).

    Source: 61 FR 43463, Aug. 23, 1996, unless otherwise noted.



      Subpart A_Relation of This Part to Other Laws and Regulations



Sec. 596.101  Relation of this part to other laws and regulations.

    (a) 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. Differing foreign policy 
and national security contexts may result in differing interpretations 
of similar language among the parts of this chapter. Except as otherwise 
authorized in this part, no license or authorization contained in or 
issued pursuant to those other parts authorizes any transaction 
prohibited by this part. Except as otherwise authorized in 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. See Sec. 596.503.
    (b) 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.

[61 FR 43463, Aug. 23, 1996, as amended at 62 FR 45112, Aug. 25, 1997]



                         Subpart B_Prohibitions



Sec. 596.201  Prohibited financial transactions.

    (a) Except as authorized by regulations, orders, directives, 
rulings, instructions, licenses, or otherwise, no United States person, 
on or after the effective date, knowing or having reasonable cause to 
know that a country is designated under section 6(j) of the Export 
Administration Act, 50 U.S.C. App. 2405, as a country supporting 
international terrorism, shall engage

[[Page 513]]

in a financial transaction with the government of that country.
    (b) Countries designated under section 6(j) of the Export 
Administration Act as of May 18, 2009 are listed in the following 
schedule.

                                Schedule

    Cuba.
    Iran.
    Sudan.
    Syria.

[74 FR 23112, May 18, 2009]



Sec. 596.202  Evasions; attempts; conspiracies.

    Any transaction for the purpose of, or which has the effect of, 
evading or avoiding, or which facilitates the evasion or avoidance of, 
any of the prohibitions set forth in this part, is hereby prohibited. 
Any attempt to violate the prohibitions set forth in this part is hereby 
prohibited. Any conspiracy formed for the purpose of engaging in a 
transaction prohibited by this part is hereby prohibited.



                      Subpart C_General Definitions



Sec. 596.301  Donation.

    The term donation means a transfer made in the form of a gift or 
charitable contribution.



Sec. 596.302  Effective date.

    The term effective date refers to the effective date of the 
applicable prohibitions and directives contained in this part which is 
12:01 a.m. EDT, August 22, 1996.



Sec. 596.303  Financial institution.

    The term financial institution shall have the definition given that 
term in 31 U.S.C. 5312(a)(2) or the regulations promulgated thereunder, 
as from time to time amended.

    Note: The breadth of the definition precludes its reproduction in 
this section.



Sec. 596.304  Financial transaction.

    The term financial transaction shall have the meaning set forth in 
18 U.S.C. 1956(c)(4), as from time to time amended. As of the effective 
date, this term includes:
    (a) A transaction which in any way or degree affects interstate or 
foreign commerce;
    (1) Involving the movement of funds by wire or other means; or
    (2) Involving one or more monetary instruments; or
    (3) Involving the transfer of title to any real property, vehicle, 
vessel, or aircraft; or
    (b) A transaction involving the use of a financial institution which 
is engaged in, or the activities of which affect, interstate or foreign 
commerce in any way or degree.



Sec. 596.305  General license.

    The term general license means any license or authorization the 
terms of which are set forth in this part.



Sec. 596.306  License.

    Except as otherwise specified, the term license means any license or 
authorization contained in or issued pursuant to this part.



Sec. 596.307  Monetary instruments.

    The term monetary instruments shall have the meaning set forth in 18 
U.S.C. 1956(c)(5), as from time to time amended. As of the effective 
date, this term includes coin or currency of the United States or of any 
other country, travelers' checks, personal checks, bank checks, and 
money orders, or investment securities or negotiable instruments, in 
bearer form or otherwise in such form that title thereto passes upon 
delivery.



Sec. 596.308  Person; entity.

    (a) The term person means an individual or entity.
    (b) The term entity means a partnership, association, corporation, 
or other organization.



Sec. 596.309  Specific license.

    The term specific license means any license or authorization not set 
forth in this part but issued pursuant to this part.



Sec. 596.310  Terrorism List Government.

    The term Terrorism List Government includes:
    (a) The government of a country designated under section 6(j) of the 
Export

[[Page 514]]

Administration Act, as well as any political subdivision, agency, or 
instrumentality thereof, including the central bank of such a country;
    (b) Any entity owned or controlled by such a government.



Sec. 596.311  Transaction.

    The term transaction shall have the meaning set forth in 18 U.S.C. 
1956(c)(3), as from time to time amended. As of the effective date, this 
term includes a purchase, sale, loan, pledge, gift, transfer, delivery, 
or other disposition, and with respect to a financial institution 
includes a deposit, withdrawal, transfer between accounts, exchange of 
currency, loan, extension of credit, purchase or sale of any stock, 
bond, certificate of deposit, or other monetary instrument, use of a 
safe deposit box, or any other payment, transfer, or delivery by, 
through, or to a financial institution, by whatever means effected.



Sec. 596.312  United States.

    The term United States means the United States, including its 
territories and possessions.



Sec. 596.313  United States person.

    The term United States person means any United States citizen or 
national, permanent resident alien, juridical person organized under the 
laws of the United States, or any person in the United States.



                        Subpart D_Interpretations



Sec. 596.401  Reference to amended sections.

    Except as otherwise specified, reference to any section of this part 
or to any regulation, ruling, order, instruction, direction, or license 
issued pursuant to this part refers to the same as currently amended.



Sec. 596.402  Effect of amendment.

    Any amendment, modification, or revocation of any section of this 
part or of any order, regulation, ruling, instruction, or license issued 
by or under the direction of the Director of the Office of Foreign 
Assets Control does not, unless otherwise specifically provided, affect 
any act done or omitted to be done, or any civil or criminal suit or 
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. 596.403  Transactions incidental to a licensed transaction.

    Any transaction ordinarily incident to a licensed transaction and 
necessary to give effect thereto is also authorized.



Sec. 596.404  Financial transactions transferred through a bank of a 
Terrorism List Government.

    For the purposes of this part only, a financial transaction not 
originated by a Terrorism List Government, but transferred to the United 
States through a bank owned or controlled by a Terrorism List 
Government, shall not be deemed a financial transaction with the 
government of a country supporting international terrorism pursuant to 
Sec. 596.201.



  Subpart E_Licenses, Authorizations and Statements of Licensing Policy



Sec. 596.500  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.

[68 FR 53660, Sept. 11, 2003]



Sec. 596.501  Effect of license or authorization.

    (a) No license or other authorization contained in this part, or 
otherwise issued by or under the direction of the Director of the Office 
of Foreign Assets Control, authorizes or validates any transaction 
effected prior to the issuance of the license, unless specifically 
provided in such license or other authorization.

[[Page 515]]

    (b) No regulation, ruling, instruction, or license authorizes a 
transaction prohibited under this part unless the regulation, ruling, 
instruction, or license is issued by the Office of Foreign Assets 
Control and specifically refers to a part in 31 CFR chapter V. No 
regulation, ruling, instruction, or license referring to this part 
authorizes any transactions prohibited by any provision of this chapter 
unless the regulation, ruling, instruction or license specifically 
refers to such provision.
    (c) Any regulation, ruling, instruction or license authorizing any 
transaction otherwise prohibited under this part has the effect of 
removing a prohibition or prohibitions contained in this part from the 
transaction, but only to the extent specifically stated by its terms. 
Unless the regulation, ruling, instruction or license otherwise 
specifies, such an authorization does not create any right, duty, 
obligation, claim, or interest in, or with respect to, any property 
which would not otherwise exist under ordinary principles of law.



Sec. 596.502  Exclusion from licenses and authorizations.

    The Director of the Office of Foreign Assets Control reserves the 
right to exclude any person, property, or transaction from the operation 
of any license, or from the privileges therein conferred, or to restrict 
the applicability thereof with respect to particular persons, property, 
transactions, or classes thereof. Such action is binding upon all 
persons receiving actual or constructive notice of such exclusion or 
restriction.



Sec. 596.503  Financial transactions with a Terrorism List Government 
otherwise subject to 31 CFR chapter V.

    United States persons are authorized to engage in financial 
transactions with a Terrorism List Government that is subject to 
regulations contained in parts of 31 CFR chapter V other than this part 
to the extent and subject to the conditions stated in such other parts, 
or in any regulations, orders, directives, rulings, instructions, or 
licenses issued pursuant thereto.



Sec. 596.504  Certain financial transactions with Terrorism List 
Governments authorized.

    (a) United States persons are authorized to engage in all financial 
transactions with a Terrorism List Government that is not otherwise 
subject to 31 CFR chapter V, except for a transfer from a Terrorism List 
Government:
    (1) Constituting a donation to a United States person; or
    (2) With respect to which the United States person knows (including 
knowledge based on advice from an agent of the United States 
Government), or has reasonable cause to believe, that the transfer poses 
a risk of furthering terrorist acts in the United States.
    (b) Nothing in this section authorizes the return of a transfer 
prohibited by paragraph (a)(2) of this section.



Sec. 596.505  Certain transactions related to stipends and scholarships
authorized.

    (a) United States persons are authorized to engage in all financial 
transactions with respect to stipends and scholarships covering tuition 
and related educational, living and travel expenses provided by the 
Government of Syria to Syrian nationals or the Government of Sudan to 
Sudanese nationals who are enrolled as students in an accredited 
educational institution in the United States. Representations made by an 
accredited educational institution concerning the status of a student 
maybe relied upon in determining the applicability of this section.
    (b) Nothing in this section authorizes a transaction prohibited by 
Sec. 596.504(a)(2).

[61 FR 67944, Dec. 26, 1996]



                            Subpart F_Reports



Sec. 596.601  Records and reports.

    For provisions relating to records and reports, see subpart C of 
part 501 of this chapter.

[62 FR 45112, Aug. 25, 1997]

[[Page 516]]



                           Subpart G_Penalties



Sec. 596.701  Penalties.

    Attention is directed to 18 U.S.C. 2332d, as added by Public Law 
104-132, section 321, which provides that, except as provided in 
regulations issued by the Secretary of the Treasury, in consultation 
with the Secretary of State, a United States person, knowing or having 
reasonable cause to know that a country is designated under section 6(j) 
of the Export Administration Act, 50 U.S.C. App. 2405, as a country 
supporting international terrorism, engages in a financial transaction 
with the government of that country, shall be fined under title 18, 
United States Code, or imprisoned for not more than 10 years, or both.



                          Subpart H_Procedures



Sec. 596.801  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.

[62 FR 45112, Aug. 25, 1997, as amended at 68 FR 53660, Sept. 11, 2003]



Sec. 596.802  Delegation by the Secretary of the Treasury.

    Any action which the Secretary of the Treasury is authorized to take 
pursuant to section 321 of the Antiterrorism and Effective Death Penalty 
Act of 1996, Pub. L. 104-132, 110 Stat. 1214, 1254 (18 U.S.C. 2332d), 
may be taken by the Director, Office of Foreign Assets Control, or by 
any other person to whom the Secretary of the Treasury has delegated 
authority so to act.

[61 FR 43463, Aug. 23, 1996. Redesignated at 62 FR 45112, Aug. 25, 1997]



                    Subpart I_Paperwork Reduction Act



Sec. 596.901  Paperwork Reduction Act notice.

    For approval by the Office of Management and Budget (``OMB'') under 
the Paperwork Reduction Act of information collections relating to 
recordkeeping and reporting requirements, to licensing procedures 
(including those pursuant to statements of licensing policy), and to 
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.

[62 FR 45112, Aug. 25, 1997]



PART 597_FOREIGN TERRORIST ORGANIZATIONS SANCTIONS REGULATIONS--Table 
of Contents



      Subpart A_Relation of This Part to Other Laws and Regulations

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

                         Subpart B_Prohibitions

597.201 Prohibited transactions involving blocked assets or funds of 
          foreign terrorist organizations or their agents.
597.202 Effect of transfers violating the provisions of this part.
597.203 Holding of funds in interest-bearing accounts; investment and 
          reinvestment.
597.204 Evasions; attempts; conspiracies.

                      Subpart C_General Definitions

597.301 Agent.
597.302 Assets.
597.303 Blocked account; blocked funds.
597.304 Designation.
597.305 Effective date.
597.306 Entity.
597.307 Financial institution.
597.308 Financial transaction.
597.309 Foreign terrorist organization.
597.310 Funds.
597.311 General license.
597.312 Interest.
597.313 License.
597.314 Person.
597.315 Specific license.
597.316 Transaction.
597.317 Transfer.
597.318 United States.
597.319 U.S. financial institution.

[[Page 517]]

                        Subpart D_Interpretations

597.401 Reference to amended sections.
597.402 Effect of amendment.
597.403 Termination and acquisition of an interest in blocked funds.
597.404 Setoffs prohibited.
597.405 Transactions incidental to a licensed transaction.
597.406 Offshore transactions.
597.407 Palestinian Authority.

 Subpart E_Licenses, Authorizations, and Statements of Licensing Policy

597.500 Licensing procedures.
597.501 Effect of license or authorization.
597.502 Exclusion from licenses and authorizations.
597.503 Payments and transfers to blocked accounts in U.S. financial 
          institutions.
597.504 Entries in certain accounts for normal service charges 
          authorized.
597.505 Payment for certain legal services.
597.506 Official activities of certain international organizations; U.S. 
          person employees of certain governments.
597.507 Travel, employment, residence and maintenance transactions with 
          the Palestinian Authority.
597.508 Payment of taxes and incidental fees to the Palestinian 
          Authority.
597.509 Transactions with entities under the control of the Palestinian 
          President and certain other entities.
597.510 Concluding activities with the Palestinian Authority.
597.511 In-kind donations of medicine, medical devices, and medical 
          services.
597.512 Transactions with the Palestinian Authority authorized.
597.513 Payments from funds originating outside the United States and 
          the formation of legal defense funds authorized.

                            Subpart F_Reports

597.601 Records and reports.

                           Subpart G_Penalties

597.701 Penalties.
597.702 Prepenalty notice.
597.703 Response to prepenalty notice.
597.704 Penalty notice.
597.705 Administrative collection; referral to United States Department 
          of Justice.

                          Subpart H_Procedures

597.801 Procedures.
597.802 Delegation by the Secretary of the Treasury.

                    Subpart I_Paperwork Reduction Act

597.901 Paperwork Reduction Act notice.

    Authority: 31 U.S.C. 321(b); Pub. L. 101-410, 104 Stat. 890 (28 
U.S.C. 2461 note); Pub. L. 104-132, 110 Stat. 1214, 1248-53 (8 U.S.C. 
1189, 18 U.S.C. 2339B).

    Source: 62 FR 52495, Oct. 8, 1997, unless otherwise noted.



      Subpart A_Relation of This Part to Other Laws and Regulations



Sec. 597.101  Relation of this part to other laws and regulations.

    (a) 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. Differing statutory 
authority and foreign policy and national security contexts 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.
    (b) 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. This part does not implement, construe, 
or limit the scope of any other part of this chapter, including (but not 
limited to) the Terrorism Sanctions Regulations, part 595 of this 
chapter, and does not excuse any person from complying with any other 
part of this chapter, including (but not limited to) part 595 of this 
chapter.
    (c) This part does not implement, construe, or limit the scope of 
any criminal statute, including (but not limited to) 18 U.S.C. 
2339B(a)(1) and 2339A, and does not excuse any person from complying 
with any criminal statute, including (but not limited to) 18 U.S.C. 
2339B(a)(1) and 18 U.S.C. 2339A.

[[Page 518]]



                         Subpart B_Prohibitions



Sec. 597.201  Prohibited transactions involving blocked assets or funds
of foreign terrorist organizations or their agents.

    (a) Upon notification to Congress of the Secretary of State's intent 
to designate an organization as a foreign terrorist organization 
pursuant to 8 U.S.C. 1189(a), until the publication in the Federal 
Register as described in paragraph (c) of this section, any U.S. 
financial institution receiving notice from the Secretary of the 
Treasury by means of order, directive, instruction, regulation, ruling, 
license, or otherwise shall, except as otherwise provided in such 
notice, block all financial transactions involving any assets of such 
organization within the possession or control of such U.S. financial 
institution until further directive from the Secretary of the Treasury, 
Act of Congress, or order of court.
    (b) Except as otherwise authorized by order, directive, instruction, 
regulation, ruling, license, or otherwise, from and after the 
designation of an organization as a foreign terrorist organization 
pursuant to 8 U.S.C. 1189(a), any U.S. financial institution that 
becomes aware that it has possession of or control over any funds in 
which the designated foreign terrorist organization or its agent has an 
interest shall:
    (1) Retain possession of or maintain control over such funds; and
    (2) Report to the Secretary of the Treasury the existence of such 
funds in accordance with Sec. 501.603 of this chapter.
    (c) Publication in the Federal Register of the designation of an 
organization as a foreign terrorist organization pursuant to 8 U.S.C. 
1189(a) shall be deemed to constitute a further directive from the 
Secretary of the Treasury for purposes of paragraph (a) of this section, 
and shall require the actions contained in paragraph (b) of this 
section.
    (d) The requirements of paragraph (b) of this section shall remain 
in effect until the effective date of an administrative, judicial, or 
legislative revocation of the designation of an organization as a 
foreign terrorist organization, or until the designation lapses, 
pursuant to 8 U.S.C. 1189.
    (e) When a transaction results in the blocking of funds at a 
financial institution pursuant to this section and a party to the 
transaction believes the funds have been blocked due to mistaken 
identity, that party may seek to have such funds unblocked pursuant to 
the administrative procedures set forth in Sec. 501.806 of this 
chapter. Requests for the unblocking of funds pursuant to Sec. 501.806 
must be submitted to the attention of the Compliance Programs Division.



Sec. 597.202  Effect of transfers violating the provisions of this part.

    (a) Any transfer after the effective date which is in violation of 
Sec. 597.201 or any other provision of this part or of any regulation, 
order, directive, ruling, instruction, license, or other authorization 
hereunder and involves any funds or assets held in the name of a foreign 
terrorist organization or its agent or in which a foreign terrorist 
organization or its agent has or has had an interest since such date, 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 funds or assets.
    (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 interest in, any funds or assets held in the name of a 
foreign terrorist organization or its agent or in which a foreign 
terrorist organization or its agent has an interest, or has had an 
interest since such date, unless the financial institution with whom 
such funds or assets are held or maintained, prior to such date, had 
written notice of the transfer or by any written evidence had recognized 
such transfer.
    (c) Unless otherwise provided, an appropriate license or other 
authorization issued by or pursuant to the direction or authorization of 
the Director of the Office of Foreign Assets Control before, during, or 
after a transfer shall validate such transfer or render it enforceable 
to the same extent that it would be valid or enforceable but for the 
provisions of this part, and any

[[Page 519]]

regulation, order, directive, ruling, instruction, or license issued 
hereunder.
    (d) Transfers of funds or assets which 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 financial 
institution with whom such funds or assets were held or maintained (and 
as to such financial institution only) in cases in which such financial 
institution is able to establish to the satisfaction of the Director of 
the Office of Foreign Assets Control each of the following:
    (1) Such transfer did not represent a willful violation of the 
provisions of this part by the financial institution with whom such 
funds or assets were held or maintained;
    (2) The financial institution with which such funds or assets were 
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 
institution, that such transfer required a license or authorization by 
or 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 the withholding of material facts or was otherwise 
fraudulently obtained; and
    (3) The financial institution with which such funds or assets were 
held or maintained filed with the Office of Foreign Assets Control a 
report setting forth in full the circumstances relating to such transfer 
promptly upon discovery that:
    (i) Such transfer was in violation of the provisions of this part or 
any regulation, ruling, instruction, license, or other direction or 
authorization hereunder; or
    (ii) Such transfer was not licensed or authorized by the Director of 
the Office of Foreign Assets Control; or
    (iii) If a license did purport to cover the transfer, such license 
had been obtained by misrepresentation of a third party or the 
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) Except for exercises of judicial authority pursuant to 8 U.S.C. 
1189(b), unless licensed or authorized pursuant to this part, any 
attachment, judgment, decree, lien, execution, garnishment, or other 
judicial process is null and void with respect to any funds or assets 
which, on or since the effective date, were in the possession or control 
of a U.S. financial institution and were held in the name of a foreign 
terrorist organization or its agent or in which there existed an 
interest of a foreign terrorist organization or its agent.



Sec. 597.203  Holding of funds in interest-bearing accounts; investment 
and reinvestment.

    (a) Except as provided in paragraph (c) of this section, or as 
otherwise directed by the Office of Foreign Assets Control, any U.S. 
financial institution holding funds subject to Sec. 597.201(b) shall 
hold or place such funds in a blocked interest-bearing account which is 
in the name of the foreign terrorist organization or its agent and which 
is located in the United States.
    (b)(1) For purposes of this section, the term 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 which are 
commercially reasonable for the amount of funds in the account or 
certificate of deposit; or
    (ii) with a broker or dealer registered with the Securities and 
Exchange Commission under the Securities Exchange Act of 1934, provided 
the funds are invested in a money market fund or in U.S. Treasury Bills.
    (2) Funds held or placed in a blocked interest-bearing account 
pursuant to this paragraph may not be invested in instruments the 
maturity of which exceeds 180 days. If interest is credited to a 
separate blocked account or sub-account, the name of the account party 
on each account must be the same and must clearly indicate the foreign 
terrorist organization or agent having an interest in the accounts.

[[Page 520]]

    (c) Blocked funds held as of the effective date in the form of 
stocks, bonds, debentures, letters of credit, or instruments which 
cannot be negotiated for the purpose of placing the funds in a blocked 
interest-bearing account pursuant to paragraph (a) may continue to be 
held in the form of the existing security or instrument until 
liquidation or maturity, provided that any dividends, interest income, 
or other proceeds derived therefrom are paid into a blocked interest-
bearing account in accordance with the requirements of this section.
    (d) Funds subject to this section may not be held, invested, or 
reinvested in a manner in which an immediate financial or economic 
benefit or access accrues to the foreign terrorist organization or its 
agent.



Sec. 597.204  Evasions; attempts; conspiracies.

    Any transaction for the purpose of, or which has the effect of, 
evading or avoiding, or which facilitates the evasion or avoidance of, 
any of the prohibitions set forth in this part, is hereby prohibited. 
Any attempt to violate the prohibitions set forth in this part is hereby 
prohibited. Any conspiracy formed for the purpose of engaging in a 
transaction prohibited by this part is hereby prohibited.



                      Subpart C_General Definitions



Sec. 597.301  Agent.

    (a) The term agent means:
    (1) Any person owned or controlled by a foreign terrorist 
organization; or
    (2) Any person to the extent that such person is, or has been, or to 
the extent that there is reasonable cause to believe that such person 
is, or has been, since the effective date, acting or purporting to act 
directly or indirectly on behalf of a foreign terrorist organization.
    (b) The term agent includes, but is not limited to, any person 
determined by the Director of the Office of Foreign Assets Control to be 
an agent as defined in paragraph (a) of this section.

    Note to Sec. 597.301: The names of persons designated as foreign 
terrorist organizations or determined to fall within this definition, 
whose property and interests in property therefore are blocked pursuant 
to this part, are published in the Federal Register and incorporated 
into the Office of Foreign Assets Control's Specially Designated 
Nationals and Blocked Persons List (``SDN List'') with the identifier 
``[FTO].'' The SDN List is accessible through the following page on the 
Office of Foreign Assets Control's Web site: http://www.treasury.gov/
sdn. Additional information pertaining to the SDN List can be found in 
appendix A to this chapter. Section 501.807 of this chapter sets forth 
the procedures to be followed by a person seeking administrative 
reconsideration of a designation as an agent, or who wishes to assert 
that the circumstances resulting in the designation as an agent are no 
longer applicable.

[62 FR 52495, Oct. 8, 1997, as amended at 76 FR 38544, June 30, 2011]



Sec. 597.302  Assets.

    The term assets includes, but is not limited to, money, checks, 
drafts, bullion, bank deposits, savings accounts, debts, indebtedness, 
obligations, notes, guarantees, debentures, stocks, bonds, coupons, any 
other financial instruments, bankers acceptances, mortgages, pledges, 
liens or other rights in the nature of security, warehouse receipts, 
bills of lading, trust receipts, bills of sale, any other evidences of 
title, ownership or indebtedness, letters of credit and any documents 
relating to any rights or obligations thereunder, powers of attorney, 
goods, wares, merchandise, chattels, stocks on hand, ships, goods on 
ships, real estate mortgages, deeds of trust, vendors' sales agreements, 
land contracts, leaseholds, ground rents, real estate and any other 
interest therein, options, negotiable instruments, trade acceptances, 
royalties, book accounts, accounts payable, judgments, patents, 
trademarks or copyrights, insurance policies, safe deposit boxes and 
their contents, annuities, pooling agreements, services of any nature 
whatsoever, contracts of any nature whatsoever, and any other property, 
real, personal, or mixed, tangible or intangible, or interest or 
interests therein, present, future or contingent.



Sec. 597.303  Blocked account; blocked funds.

    The terms blocked account and blocked funds shall mean any account 
or funds subject to the prohibitions in Sec. 597.201

[[Page 521]]

held in the name of a foreign terrorist organization or its agent or in 
which a foreign terrorist organization or its agent has an interest, and 
with respect to which payments, transfers, exportations, withdrawals, or 
other dealings may not be made or effected except pursuant to an 
authorization or license from the Office of Foreign Assets Control 
authorizing such action.



Sec. 597.304  Designation.

    The term designation includes both the designation and redesignation 
of a foreign terrorist organization pursuant to 8 U.S.C. 1189.



Sec. 597.305  Effective date.

    Except as that term is used in Sec. 597.201(d), the term effective 
date refers to the effective date of the applicable prohibitions and 
directives contained in this part which is October 6, 1997, or, in the 
case of foreign terrorist organizations designated after that date and 
their agents, the earlier of the date on which a financial institution 
receives actual or constructive notice of such designation or of the 
Secretary of Treasury's exercise of his authority to block financial 
transactions pursuant to 8 U.S.C. 1189(a)(2)(C) and Sec. 597.201(a).



Sec. 597.306  Entity.

    The term entity includes a partnership, association, corporation, or 
other organization, group, or subgroup.



Sec. 597.307  Financial institution.

    The term financial institution shall have the definition given that 
term in 31 U.S.C. 5312(a)(2) as from time to time amended, 
notwithstanding the definition of that term in 31 CFR part 103.

    Note: The breadth of the statutory definition of financial 
institution precludes its reproduction in this section. Among the types 
of businesses covered are insured banks (as defined in 12 U.S.C. 
1813(h)), commercial banks or trust companies, private bankers, agencies 
or branches of a foreign bank in the United States, insured institutions 
(as defined in 12 U.S.C. 1724(a)), thrift institutions, brokers or 
dealers registered with the Securities and Exchange Commission under 15 
U.S.C. 78a et seq., securities or commodities brokers and dealers, 
investment bankers or investment companies, currency exchanges, issuers, 
redeemers, or cashiers of traveler's checks, checks, money orders, or 
similar instruments, credit card system operators, insurance companies, 
dealers in precious metals, stones or jewels, pawnbrokers, loan or 
finance companies, travel agencies, licensed senders of money, telegraph 
companies, businesses engaged in vehicle sales, including automobile, 
airplane or boat sales, persons involved in real estate closings and 
settlements, the United States Postal Service, a casino, gambling 
casino, or gaming establishment with an annual gaming revenue of more 
than $1,000,000 as further described in 31 U.S.C. 5312(a)(2), or 
agencies of the United States Government or of a State or local 
government carrying out a duty or power of any of the businesses 
described in 31 U.S.C. 5312(a)(2).



Sec. 597.308  Financial transaction.

    The term financial transaction means a transactioninvolving the 
transfer or movement of funds, whether by wire or other means.



Sec. 597.309  Foreign terrorist organization.

    The term foreign terrorist organization means an organization 
designated or redesignated as a foreign terrorist organization, or with 
respect to which the Secretary of State has notified Congress of the 
intention to designate as a foreign terrorist organization, under 8 
U.S.C. 1189(a).



Sec. 597.310  Funds.

    The term funds includes coin or currency of the United States or any 
other country, traveler's checks, personal checks, bank checks, money 
orders, stocks, bonds, debentures, drafts, letters of credit, any other 
negotiable instrument, and any electronic representation of any of the 
foregoing. An electronic representation of any of the foregoing includes 
any form of digital or electronic cash, coin, or currency in use 
currently or placed in use in the future.



Sec. 597.311  General license.

    The term general license means any license or authorization the 
terms of which are set forth in this part.



Sec. 597.312  Interest.

    Except as otherwise provided in this part, the term interest when 
used with respect to funds or assets (e.g., ``an interest in funds'') 
means an interest of

[[Page 522]]

any nature whatsoever, direct or indirect.



Sec. 597.313  License.

    Except as otherwise specified, the term license means any license or 
authorization contained in or issued pursuant to this part.



Sec. 597.314  Person.

    The term person means an individual or entity.



Sec. 597.315  Specific license.

    The term specific license means any license or authorization not set 
forth in this part but issued pursuant to this part.



Sec. 597.316  Transaction.

    The term transaction shall have the meaning set forth in 18 U.S.C. 
1956(c)(3), as from time to time amended. As of the effective date, this 
term includes a purchase, sale, loan, pledge, gift, transfer, delivery, 
or other disposition of any asset, and with respect to a financial 
institution includes a deposit, withdrawal, transfer between accounts, 
exchange of currency, loan, extension of credit, purchase or sale of any 
stock, bond, certificate of deposit, or other monetary instrument, use 
of a safe deposit box, or any other payment, transfer, or delivery by, 
through, or to a financial institution, by whatever means effected.



Sec. 597.317  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 and, without limitation upon the foregoing, 
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. 597.318  United States.

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



Sec. 597.319  U.S. financial institution.

    The term U.S. financial institution means:
    (a) Any financial institution organized under the laws of the United 
States, including such financial institution's foreign branches;
    (b) Any financial institution operating or doing business in the 
United States; or
    (c) Those branches, offices and agencies of foreign financial 
institutions which are located in the United States, but not such 
foreign financial institutions' other foreign branches, offices, or 
agencies.



                        Subpart D_Interpretations



Sec. 597.401  Reference to amended sections.

    Except as otherwise specified, reference to any section of this part 
or to any regulation, ruling, order, instruction, direction, or license 
issued pursuant to this part shall be deemed to refer to the same as 
currently amended.



Sec. 597.402  Effect of amendment.

    Any amendment, modification, or revocation of any section of this 
part or of any order, regulation, ruling, instruction, or license issued 
by or under

[[Page 523]]

the direction of the Director of the Office of Foreign Assets Control 
shall not, unless otherwise specifically provided, be deemed to affect 
any act done or omitted to be done, or any civil or criminal suit or 
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 shall continue 
and may be enforced as if such amendment, modification, or revocation 
had not been made.



Sec. 597.403  Termination and acquisition of an interest in blocked funds.

    (a) Whenever a transaction licensed or authorized by or pursuant to 
this part results in the transfer of funds (including any interest in 
funds) away from a foreign terrorist organization or its agent, such 
funds shall no longer be deemed to be funds in which the foreign 
terrorist organization or its agent has or has had an interest, or which 
are held in the name of a foreign terrorist organization or its agent, 
unless there exists in the funds another interest of a foreign terrorist 
organization or its agent, 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 funds (including any 
interest in funds) are or at any time since the effective date have been 
held by a foreign terrorist organization or its agent, or at any time 
thereafter are transferred or attempted to be transferred to a foreign 
terrorist organization or its agent, including by the making of any 
contribution to or for the benefit of a foreign terrorist organization 
or its agent, such funds shall be deemed to be funds in which there 
exists an interest of the foreign terrorist organization or its agent.



Sec. 597.404  Setoffs prohibited.

    A setoff against blocked funds (including a blocked account) by a 
U.S. financial institution is a prohibited transaction under Sec. 
597.201 if effected after the effective date.



Sec. 597.405  Transactions incidental to a licensed transaction.

    Any transaction ordinarily incident to a licensed transaction and 
necessary to give effect thereto is also authorized, except a 
transaction by an unlicensed, foreign terrorist organization or its 
agent or involving a debit to a blocked account or a transfer of blocked 
funds not explicitly authorized within the terms of the license.



Sec. 597.406  Offshore transactions.

    The prohibitions contained in Sec. 597.201 apply to transactions by 
U.S. financial institutions in locations outside the United States with 
respect to funds or assets which the U.S. financial institution knows, 
or becomes aware, are held in the name of a foreign terrorist 
organization or its agent, or in which the U.S. financial institution 
knows, or becomes aware that, a foreign terrorist organization or its 
agent has or has had an interest since the effective date.



Sec. 597.407  Palestinian Authority.

    Following the January 2006 Palestinian elections, Hamas, a 
designated terrorist entity whose property and interests in property are 
blocked pursuant to Sec. 597.201, has been determined to have a 
property interest in the transactions of the Palestinian Authority. 
Accordingly, pursuant to Sec. 597.201, U.S. persons are prohibited from 
engaging in transactions with the Palestinian Authority unless 
authorized. Certain transactions with the Palestinian Authority may be 
authorized by license, see subpart E of this part.

[71 FR 27202, May 10, 2006]



 Subpart E_Licenses, Authorizations, and Statements of Licensing Policy



Sec. 597.500  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.

[68 FR 53660, Sept. 11, 2003]

[[Page 524]]



Sec. 597.501  Effect of license or authorization.

    (a) No license or other authorization contained in this part, or 
otherwise issued by or under the direction of the Director of the Office 
of Foreign Assets Control, shall be deemed to authorize or validate any 
transaction effected prior to the issuance of the license, unless 
specifically provided in such license or authorization.
    (b) No regulation, ruling, instruction, or license authorizes any 
transaction prohibited under this part unless the regulation, ruling, 
instruction, or license is issued by the Office of Foreign Assets 
Control and specifically refers to this part. No regulation, ruling, 
instruction, or license referring to this part shall be deemed to 
authorize any transaction prohibited by any provision of this chapter 
unless the regulation, ruling, instruction or license specifically 
refers to such provision.
    (c) Any regulation, ruling, instruction, or license authorizing any 
transaction otherwise prohibited under this part has the effect of 
removing a prohibition or prohibitions contained in this part from the 
transaction, but only to the extent specifically stated by its terms. 
Unless the regulation, ruling, instruction, or license otherwise 
specifies, such an authorization does not create any right, duty, 
obligation, claim, or interest in, or with respect to, any property 
which would not otherwise exist under ordinary principles of law.



Sec. 597.502  Exclusion from licenses and authorizations.

    The Director of the Office of Foreign Assets Control reserves the 
right to exclude any person, property, or transaction from the operation 
of any license, or from the privileges therein conferred, or to restrict 
the applicability thereof with respect to particular persons, property, 
transactions, or classes thereof. Such action shall be binding upon all 
persons receiving actual or constructive notice of such exclusion or 
restriction.



Sec. 597.503  Payments and transfers to blocked accounts in U.S. 
financial institutions.

    (a) Any payment of funds or transfer of credit or other financial or 
economic resources or assets by a financial institution into a blocked 
account in a U.S. financial institution is authorized, provided that a 
transfer from a blocked account pursuant to this authorization may only 
be made to another blocked account held in the same name on the books of 
the same U.S. financial institution.
    (b) This section does not authorize any transfer from a blocked 
account within the United States to an account held outside the United 
States.

    Note to Sec. 597.503: Please refer to Sec. Sec. 501.603 and 
597.601 of this chapter for mandatory reporting requirements regarding 
financial transfers.



Sec. 597.504  Entries in certain accounts for normal service charges 
authorized.

    (a) U.S. financial institutions are hereby authorized to debit any 
blocked account with such U.S. financial institution in payment or 
reimbursement for normal service charges owed to such U.S. financial 
institution by the owner of such blocked account.
    (b) As used in this section, the term normal service charge shall 
include charges in payment or reimbursement for interest due; cable, 
telegraph, 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, photostats, credit reports, transcripts of 
statements, registered mail insurance, stationery and supplies, check 
books, and other similar items.



Sec. 597.505  Payment for certain legal services.

    Except as otherwise authorized, specific licenses may be issued, on 
a case-by-case basis, authorizing receipt of payment of professional 
fees and reimbursement of incurred expenses through a U.S. financial 
institution for the following legal services by U.S. persons:

[[Page 525]]

    (a) Provision of legal advice and counseling to a foreign terrorist 
organization or an agent thereof on the requirements of and compliance 
with the laws of any jurisdiction within the United States, provided 
that such advice and counseling is not provided to facilitate 
transactions in violation of any of the prohibitions of this part;
    (b) Representation of a foreign terrorist organization or an agent 
thereof when named as a defendant in or otherwise made a party to 
domestic U.S. legal, arbitration, or administrative proceedings;
    (c) Initiation and conduct of domestic U.S. legal, arbitration, or 
administrative proceedings on behalf of a foreign terrorist organization 
or an agent thereof;
    (d) Representation of a foreign terrorist organization or an agent 
thereof before any federal or state agency with respect to the 
imposition, administration, or enforcement of U.S. sanctions against a 
foreign terrorist organization or an agent thereof;
    (e) Representation of an agent of a foreign terrorist organization, 
wherever located, detained within the jurisdiction of the United States 
or by the United States government, with respect to either such 
detention or any charges made against such agent, including, but not 
limited to, the conduct of military commission prosecutions and the 
initiation and conduct of federal court proceedings;
    (f) Provision of legal services to a foreign terrorist organization 
or an agent thereof in any other context in which prevailing U.S. law 
requires access to legal counsel at public expense; and
    (g) Representation of a foreign terrorist organization seeking 
judicial review of a designation before the United States Court of 
Appeals for the District of Columbia Circuit pursuant to 8 U.S.C. 
1189(b)(1).

    Note to Sec. 597.505: See Sec. 597.513 of this part for authorized 
mechanisms for payment through a U.S. financial institution of 
professional fees and reimbursement of incurred expenses for legal 
services specified in this section provided by a U.S. person to or on 
behalf of a foreign terrorist organization or an agent thereof.

[62 FR 52495, Oct. 8, 1997, as amended at 73 FR 78633, Dec. 23, 2008; 75 
FR 75909, Dec. 7, 2010]



Sec. 597.506  Official activities of certain international 
organizations; U.S. person employees of certain governments.

    (a) Effective April 12, 2006, U.S. financial institutions are 
authorized to engage in all financial transactions with the Palestinian 
Authority otherwise prohibited by this part that are for the conduct of 
the official business of the United Nations, provided that no payment 
pursuant to this license may involve a debit to an account of the 
Palestinian Authority on the books of a U.S. financial institution or to 
any account blocked pursuant to this part.
    (b) For purposes of this section only, the term ``United Nations'' 
means its principal organs, including funds, bodies, commissions, 
agencies, departments and other entities of the Security Council, 
General Assembly, Economic and Social Council and Secretariat, 
specifically including, among others, the World Bank, the International 
Monetary Fund, the World Food Programme, and the World Health 
Organization.
    (c) The retention and reporting provisions of Sec. 597.201 shall 
not apply with respect to transactions authorized by paragraph (a) of 
this section.

[71 FR 27202, May 10, 2006]



Sec. 597.507  Travel, employment, residence and maintenance transactions
with the Palestinian Authority.

    (a) Effective April 12, 2006, U.S. financial institutions are 
authorized to engage in all transactions that are ordinarily incident to 
U.S. persons' travel to or from, or employment, residence or personal 
maintenance within, the jurisdiction of the Palestinian Authority, 
including, but not limited to, receipt of salaries, payment of living 
expenses and acquisition of goods or services for personal use. Nothing 
in this license authorizes any debit to an account of the Palestinian 
Authority on the books of a U.S. financial institution or to any account 
blocked pursuant to this part.

[[Page 526]]

    (b) The retention and reporting provisions of Sec. 597.201 shall 
not apply with respect to transactions authorized by paragraph (a) of 
this section.

[71 FR 27202, May 10, 2006]



Sec. 597.508  Payment of taxes and incidental fees to the Palestinian
Authority.

    (a) Effective April 12, 2006, U.S. financial institutions are 
authorized to conduct all transactions ordinarily incident to the 
following activities by U.S. persons: the payment of taxes or fees to, 
or the purchase or receipt of permits or public utility services from, 
the Palestinian Authority where such transactions are necessary and 
ordinarily incident to such persons' day-to-day operations. Nothing in 
this license authorizes a debit to an account of the Palestinian 
Authority on the books of a U.S. financial institution or to any account 
blocked pursuant to this part.
    (b) The retention and reporting provisions of Sec. 597.201 shall 
not apply with respect to transactions authorized by paragraph (a) of 
this section.

[71 FR 27202, May 10, 2006]



Sec. 597.509  Transactions with entities under the control of the
Palestinian President and certain other entities.

    (a) Effective April 12, 2006, U.S. financial institutions are 
authorized to engage in all transactions otherwise prohibited under this 
part with the following entities and individuals:
    (1) The Palestinian Authority Presidency, including only the Office 
of the President, Presidential Security, General Intelligence Apparatus, 
Governors and Governorate staff, the Attorney General's Office, the 
Palestine Investment Fund (PIF), the Border Crossings Administration, 
and the Palestine Broadcasting Corporation (including the Voice of 
Palestine, Wafa News Agency, and the General Public Information Agency/
State Information Services);
    (2) The Palestinian Judiciary, including the Higher Judicial 
Council;
    (3) Members of the Palestinian Legislative Council (PLC) who were 
not elected to the PLC on the party slate of Hamas or any other Foreign 
Terrorist Organization (FTO), Specially Designated Terrorist (SDT), or 
Specially Designated Global Terrorist (SDGT); and
    (4) The following independent agencies: The Central Elections 
Commission; the Independent Citizens Rights Commission; the General 
Audit Authority/External Audit Agency; and the Palestinian Monetary 
Authority.
    (b) Effective April 12, 2006, U.S. financial institutions are 
authorized to reject transactions with members of the Palestinian 
Legislative Council (PLC) who were elected to the PLC on the party slate 
of Hamas or any other Foreign Terrorist Organization (FTO), Specially 
Designated Terrorist (SDT), or Specially Designated Global Terrorist 
(SDGT), provided that any such individuals are not named on OFAC's list 
of Specially Designated Nationals and Blocked Persons.
    (c) Nothing in this license authorizes a debit to an account of the 
Palestinian Authority on the books of a U.S. financial institution or to 
any account blocked pursuant to this part.
    (d) The retention and reporting provisions of Sec. 597.201 shall 
not apply with respect to transactions authorized by paragraph (a) of 
this section. The retention provisions of Sec. 597.201 shall not apply 
with respect to transactions authorized by paragraph (b) of this 
section.

[71 FR 27202, May 10, 2006]



Sec. 597.510  Concluding activities with the Palestinian Authority.

    (a) Effective April 12, 2006, all transactions and activities with 
the Palestinian Authority otherwise prohibited under this part are 
authorized through May 12, 2006, provided that they are necessary to 
conclude ongoing contracts or programs with the Palestinian Authority, 
and further provided that no payment pursuant to this license may 
involve a debit to an account of the Palestinian Authority on the books 
of a U.S. financial institution or to any account blocked pursuant to 
this part.
    (b) The retention and reporting provisions of Sec. 597.201 shall 
not apply with respect to transactions authorized by paragraph (a) of 
this section.

[71 FR 27202, May 10, 2006]

[[Page 527]]



Sec. 597.511  In-kind donations of medicine, medical devices, and 
medical services.

    (a) Effective July 6, 2006, U.S. financial institutions are 
authorized to conduct all transactions ordinarily incident to the 
provision by nongovernmental organizations that are U.S. persons of in-
kind donations of medicine, medical devices, and medical services to the 
Palestinian Authority Ministry of Health, provided that such donations 
are strictly for distribution in the West Bank or Gaza and not intended 
for resale, and provided further that no payment pursuant to this 
license may involve a debit to an account of the Palestinian Authority 
on the books of a U.S. financial institution or to any account blocked 
pursuant to this part.
    (b) For the purposes of this section only, the term medical device 
has the meaning given the term ``device'' in section 201 of the Federal 
Food, Drug, and Cosmetic Act (21 U.S.C. 321), including medical 
supplies, but does not include any item listed on the Commerce Control 
List in the Export Administration Regulations, 15 CFR part 774, 
supplement no. 1.
    (c) U.S. financial institutions are authorized to conduct all 
transactions ordinarily incident to the provision by nongovernmental 
organizations that are U.S. persons of in-kind donations of medical 
devices listed on the Commerce Control List to the Palestinian Authority 
Ministry of Health, provided that
    (1) Such donation is licensed by OFAC; and
    (2) Such donation is authorized under or pursuant to the Export 
Administration Regulations.
    (d) The retention and reporting provisions of Sec. 597.201 shall 
not apply with respect to transactions authorized by paragraphs (a) and 
(c) of this section.

[71 FR 58744, Oct. 5, 2006]



Sec. 597.512  Transactions with the Palestinian Authority authorized.

    (a) As of June 20, 2007, U.S. persons are authorized to engage in 
all transactions otherwise prohibited under this part with the 
Palestinian Authority.
    (b) For purposes of this section only, the term Palestinian 
Authority means the Palestinian Authority government of Prime Minister 
Salam Fayyad and President Mahmoud Abbas, including all branches, 
ministries, offices, and agencies (independent or otherwise) thereof.

[72 FR 61518, Oct. 31, 2007]



Sec. 597.513  Payments from funds originating outside the United
States and the formation of legal defense funds authorized.

    (a) Payments from funds originating outside the United States. 
Effective December 7, 2010, receipts of payment through a U.S. financial 
institution of professional fees and reimbursement of incurred expenses 
for the provision of legal services specified in Sec. 597.505 are 
authorized from funds originating outside the United States, provided 
that:
    (1) Prior to receiving payment through a U.S. financial institution 
for legal services specified in Sec. 597.505 rendered to a foreign 
terrorist organization or agent thereof, the U.S. person that is an 
attorney, law firm, or legal services organization provides to the 
Office of Foreign Assets Control a copy of a letter of engagement or a 
letter of intent to engage specifying the services to be performed and 
signed by the individual to whom such services are to be provided or, 
where services are to be provided to an entity, by a legal 
representative of the entity. The copy of a letter of engagement or a 
letter of intent to engage, accompanied by correspondence referencing 
this paragraph Sec. 597.513(a), is to be mailed to: Licensing Division, 
Office of Foreign Assets Control, U.S. Department of the Treasury, 1500 
Pennsylvania Avenue, NW., Annex, Washington, DC 20220;
    (2) The funds received by U.S. persons through a U.S. financial 
institution as payment of professional fees and reimbursement of 
incurred expenses for the provision of legal services specified in Sec. 
597.505 must 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 specified in Sec. 597.505 are

[[Page 528]]

to be provided, whose property and interests in property are blocked 
pursuant to any part of this chapter or any Executive order;

    Note to paragraph (a)(2) of Sec. 597.513: This paragraph authorizes 
the person on whose behalf the legal services specified in Sec. 597.505 
are to be provided to make payments for specified 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 assets and funds 
are subject to the prohibitions in Sec. 597.201(a) or whose property 
and interests in property are blocked pursuant to any other part of this 
chapter holds an interest.

    (3) Reports. (i) U.S. persons who receive payments in connection 
with legal services specified in Sec. 597.505 must submit quarterly 
reports no later than 30 days following the end of the calendar quarter 
during which the payments were received providing information on the 
funds received. Such reports shall specify:
    (A) The individual or entity from whom the funds originated and the 
amount of funds received; and
    (B) If applicable:
    (1) The names of any individuals or entities providing related 
services to the U.S. person receiving payment in connection with 
specified legal services, such as private investigators or expert 
witnesses;
    (2) A general description of the services provided; and
    (3) The amount of funds paid in connection with such services.
    (ii) In the event that no transactions occur or no funds are 
received during the reporting period, a statement is to be filed to that 
effect.
    (iii) Reports, which must reference this paragraph (a), are to be 
mailed to: Licensing Division, Office of Foreign Assets Control, U.S. 
Department of the Treasury, 1500 Pennsylvania Avenue, NW., Annex, 
Washington, DC 20220; and

    Note to paragraph (a)(3) of Sec. 597.513: U.S. persons who receive 
payments in connection with legal services specified in Sec. 597.505 do 
not need to obtain specific authorization to make payments through a 
U.S. financial institution for related services that are ordinarily 
incident to the provision of those legal services, such as those 
provided by private investigators or expert witnesses.

    (4) Nothing in this paragraph (a) authorizes the receipt of payment 
through a U.S. financial institution of professional fees or 
reimbursement of incurred expenses for the provision of legal services 
not specified in Sec. 597.505.

    Note 1 to paragraph (a) of Sec. 597.513: Any payment authorized in 
or pursuant to this paragraph that is routed through the U.S. financial 
system should reference this paragraph (a) to avoid the blocking of the 
transfer.
    Note 2 to paragraph (a) of Sec. 597.513: Nothing in this paragraph 
authorizes the transfer of any blocked property, the debiting of any 
blocked account, the entry of any judgment or order that effects a 
transfer of blocked property, or the execution of any judgment against 
property blocked pursuant to any Executive order or 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 the Office of Foreign 
Assets Control to authorize the release of a limited amount of blocked 
funds for the payment of legal fees where alternative funding sources 
are not available. For more information, see OFAC's Guidance on the 
Release of Limited Amounts of Blocked Funds for Payment of Legal Fees 
and Costs Incurred in Challenging the Blocking of U.S. Persons in 
Administrative or Civil Proceedings, which is available at: http://
www.treas.gov/resource-center/sanctions/Documents/legal--fee--guide.pdf.

    (b) Legal defense funds. Effective December 7, 2010, U.S. persons 
that are attorneys, law firms, or legal services organizations are 
authorized to form legal defense funds from which payments of 
professional fees and reimbursement for expenses incurred in connection 
with the provision of legal services specified in Sec. 597.505 may be 
debited provided that:
    (1) The legal defense fund must be held in a savings or checking 
account at a financial institution located in the United States;
    (2) Prior to debiting the legal defense fund, the U.S. person 
responsible for establishing the legal defense fund must submit the 
following information to the Office of Foreign Assets Control: A copy of 
a letter of engagement or a letter of intent to engage specifying the 
services to be performed and signed by the individual to whom such 
services are to be provided or, where services are to be provided to an 
entity, by a legal representative of the entity; the

[[Page 529]]

name of the individual or entity responsible for establishing the legal 
defense fund; the name of the financial institution at which the account 
for the legal defense fund will be held; a point of contact at the 
financial institution holding the account for the legal defense fund; 
and the account name and account number for the legal defense fund. The 
foregoing information must be accompanied by correspondence referencing 
this paragraph (b) and is to be mailed to: Licensing Division, Office of 
Foreign Assets Control, U.S. Department of the Treasury, 1500 
Pennsylvania Avenue, NW., Annex, Washington, DC 20220;
    (3) The legal defense fund may not receive funds from a person whose 
assets and funds are subject to the prohibitions in Sec. 597.201(a) or 
whose property and interests in property are blocked pursuant to any 
other part of this chapter;
    (4) The U.S. person responsible for establishing the legal defense 
fund must notify the financial institution at which the account for the 
legal defense fund is held that the account may only be debited to make 
payments of professional fees and reimburse expenses incurred in 
connection with the provision of legal services specified in Sec. 
597.505;
    (5) Reports. (i) U.S. persons responsible for establishing legal 
defense funds from which payments of professional fees and reimbursement 
for expenses incurred in connection with the provision of legal services 
specified in Sec. 597.505 may be debited must submit quarterly reports 
no later than 30 days following the end of the calendar quarter during 
which the funds were deposited with or debited from the account of the 
legal defense fund providing information on the funds received by the 
legal defense fund and debits made to the legal defense fund during the 
reporting period. Such reports shall specify:
    (A) The individual or entity from whom the funds originated and the 
amount of funds received; and
    (B) Any individual or entity to whom any payments were made, 
including, if applicable:
    (1) The names of any individuals or entities providing related 
services to the U.S. person receiving payment in connection with 
specified legal services, such as private investigators or expert 
witnesses;
    (2) A general description of the services provided; and
    (3) The amount of funds paid in connection with such services.
    (ii) In the event that no transactions occur or no funds are 
received during the reporting period, a statement is to be filed to that 
effect.
    (iii) Reports, which must reference this paragraph (b), are to be 
mailed to: Licensing Division, Office of Foreign Assets Control, U.S. 
Department of the Treasury, 1500 Pennsylvania Avenue, NW., Annex, 
Washington, DC 20220; and

    Note to paragraph (b)(5) of Sec. 597.513: U.S. persons who receive 
payments in connection with legal services specified in Sec. 597.505 do 
not need to obtain specific authorization to make payments through a 
U.S. financial institution for related services that are ordinarily 
incident to the provision of those legal services, such as those 
provided by private investigators or expert witnesses.

    (6) Nothing in this paragraph (b) authorizes the formation or 
debiting of legal defense funds in connection with the provision of 
legal services not specified in Sec. 597.505.

    Note 1 to paragraph (b) of Sec. 597.513: Any payment authorized in 
or pursuant to this paragraph that is routed through the U.S. financial 
system should reference this paragraph (b) to avoid the blocking of the 
transfer.
    Note 2 to paragraph (b) of Sec. 597.513: Any funds remaining in a 
legal defense fund account after all payments of professional fees and 
reimbursement of incurred expenses authorized pursuant to this paragraph 
have been made or upon termination of the legal services for which 
payment is authorized pursuant to this paragraph are deemed to be funds 
of the foreign terrorist organization or agent thereof to or on whose 
behalf the legal services were rendered and subject to the prohibitions 
of this part. U.S. financial institutions in the possession or control 
of such remaining funds may apply for the unblocking of the funds by 
following the procedures set forth at Sec. 501.801 of this chapter.

[75 FR 75909, Dec. 7, 2010]



                            Subpart F_Reports



Sec. 597.601  Records and reports.

    For provisions relating to records and reports, see subpart C of 
part 501 of this chapter; provided, however, that

[[Page 530]]

all of the powers afforded the Director pursuant to the first 3 
sentences of Sec. 501.602 of this chapter may also be exercised by the 
Attorney General in conducting administrative investigations pursuant to 
18 U.S.C. 2339B(e); provided further, that the investigative authority 
of the Director pursuant to Sec. 501.602 of this chapter shall be 
exercised in accordance with 18 U.S.C. 2339B(e); and provided further, 
that for purposes of this part no person other than a U.S. financial 
institution and its directors, officers, employees, and agents shall be 
required to maintain records or to file any reports or furnish any 
information under Sec. Sec. 501.601, 501.602, or 501.603 of this 
chapter.



                           Subpart G_Penalties



Sec. 597.701  Penalties.

    (a) Attention is directed to 18 U.S.C. 2339B(a)(1), as added by 
Public Law 104-132, 110 Stat. 1250-1253, section 303, which provides 
that whoever, within the United States or subject to the jurisdiction of 
the United States, knowingly provides material support or resources to a 
foreign terrorist organization, or attempts or conspires to do so, shall 
be fined under title 18, United States Code, or imprisoned for not more 
than 10 years, or both.
    (b) Attention is directed to 18 U.S.C. 2339B(b), as added by Public 
Law 104-132, 110 Stat. 1250-1253, section 303, which, as adjusted 
pursuant to the Federal Civil Penalties Inflation Adjustment Act of 1990 
(Pub. L. 101-410, as amended, 28 U.S.C. 2461 note), provides that, 
except as authorized by the Secretary of the Treasury, any financial 
institution that knowingly fails to retain possession of or maintain 
control over funds in which a foreign terrorist organization or its 
agent has an interest, or to report the existence of such funds in 
accordance with these regulations, shall be subject to a civil penalty 
in an amount that is the greater of $55,000 per violation, or twice the 
amount of which the financial institution was required to retain 
possession or control.

    Note to paragraph (b). The current $55,000 civil penalty cap may be 
adjusted for inflation pursuant to the Federal Civil Penalties Inflation 
Adjustment Act of 1990.

    (c) Attention is directed to 18 U.S.C. 1001, which provides that 
whoever, in any matter within the jurisdiction of the executive, 
legislative, or judicial branch of the Government of the United States, 
knowingly and willfully 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, or imprisoned not more than 5 years, or 
both.
    (d) Conduct covered by this part may also be subject to relevant 
provisions of other applicable laws.

[62 FR 52495, Oct. 8, 1997, as amended at 68 FR 61361, Oct. 28, 2003]



Sec. 597.702  Prepenalty notice.

    (a) When required. If the Director of the Office of Foreign Assets 
Control has reasonable cause to believe that there has occurred a 
violation of any provision of this part or a violation of the provisions 
of any license, ruling, regulation, order, direction or instruction 
issued by or pursuant to the direction or authorization of the Secretary 
of the Treasury pursuant to this part, and the Director, acting in 
coordination with the Attorney General, determines that civil penalty 
proceedings are warranted, the Director shall issue to the person 
concerned a notice of intent to impose a monetary penalty. The 
prepenalty notice shall be issued whether or not another agency has 
taken any action with respect to this matter.
    (b) Contents--(1) Facts of violation. The prepenalty notice shall 
describe the violation, specify the laws and regulations allegedly 
violated, and state the amount of the proposed monetary penalty.
    (2) Right to respond. The prepenalty notice also shall inform the 
respondent of respondent's right to respond within 30 days of mailing of 
the notice as to why a monetary penalty should not be imposed, or, if 
imposed, why it should be in a lesser amount than proposed.

[[Page 531]]



Sec. 597.703  Response to prepenalty notice.

    (a) Time within which to respond. The respondent shall have 30 days 
from the date of mailing of the prepenalty notice to respond in writing 
to the Director of the Office of Foreign Assets Control.
    (b) Form and contents of written response. The written response need 
not be in any particular form, but shall contain information sufficient 
to indicate that it is in response to the prepenalty notice. It should 
respond to the allegations in the prepenalty notice and set forth the 
reasons why the respondent believes the penalty should not be imposed 
or, if imposed, why it should be in a lesser amount than proposed.
    (c) Informal settlement. In addition or as an alternative to a 
written response to a prepenalty notice pursuant to this section, the 
respondent or respondent's representative may contact the Office of 
Foreign Assets Control as advised in the prepenalty notice to propose 
the settlement of allegations contained in the prepenalty notice and 
related matters. In the event of settlement at the prepenalty stage, the 
prepenalty notice will be withdrawn, the respondent is not required to 
take a written position on allegations contained in the prepenalty 
notice, and the Office of Foreign Assets Control will make no final 
determination as to whether a violation occurred. The amount accepted in 
settlement of allegations in a prepenalty notice may vary from the civil 
penalty that might finally be imposed in the event of a formal 
determination of violation. In the event no settlement is reached, the 
30-day period specified in paragraph (a) of this section for written 
response to the prepenalty notice remains in effect unless additional 
time is granted by the Office of Foreign Assets Control.



Sec. 597.704  Penalty notice.

    (a) No violation. If, after considering any written response to the 
prepenalty notice and any relevant facts, the Director of the Office of 
Foreign Assets Control determines that there was no violation by the 
respondent, the Director promptly shall notify the respondent in writing 
of that determination and that no monetary penalty will be imposed.
    (b) Violation. (1) If, after considering any written response to the 
prepenalty notice and any relevant facts, the Director of the Office of 
Foreign Assets Control determines that there was a violation by the 
respondent, the Director promptly shall issue a written notice of the 
imposition of the monetary penalty on the respondent. The issuance of a 
written notice of the imposition of a monetary penalty shall constitute 
final agency action.
    (2) The penalty notice shall inform the respondent that payment of 
the assessed penalty must be made within 30 days of the mailing of the 
penalty notice.
    (3) The penalty notice shall inform the respondent of the 
requirement to furnish respondent's taxpayer identification number 
pursuant to 31 U.S.C. 7701 and that the Department intends to use such 
number for the purposes of collecting and reporting on any delinquent 
penalty amount in the event of a failure to pay the penalty imposed.



Sec. 597.705  Administrative collection; referral to United States
Department of Justice.

    In the event that the respondent does not pay the penalty imposed 
pursuant to this part or make payment arrangements acceptable to the 
Director of the Office of Foreign Assets Control within 30 days of the 
mailing of the written notice of the imposition of the penalty, the 
matter may be referred for administrative collection measures by the 
Department of the Treasury or to the United States Department of Justice 
for appropriate action to recover the penalty in a civil suit in a 
Federal district court.



                          Subpart H_Procedures



Sec. 597.801  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.

[[Page 532]]

552 and 552a), see part 501, subpart E, of this chapter.

[62 FR 52495, Oct. 8, 1997, as amended at 68 FR 53660, Sept. 11, 2003]



Sec. 597.802  Delegation by the Secretary of the Treasury.

    Any action which the Secretary of the Treasury is authorized to take 
pursuant to 8 U.S.C. 1189 or 18 U.S.C. 2339B, as added by Public Law 
104-132, 110 Stat. 1248-1253, sections 302 and 303, may be taken by the 
Director of the Office of Foreign Assets Control, or by any other person 
to whom the Secretary of the Treasury has delegated authority so to act.



                    Subpart I_Paperwork Reduction Act



Sec. 597.901  Paperwork Reduction Act notice.

    For approval by the Office of Management and Budget (``OMB'') under 
the Paperwork Reduction Act of information collections relating to 
recordkeeping and reporting requirements, to licensing procedures 
(including those pursuant to statements of licensing policy), and to 
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.



PART 598_FOREIGN NARCOTICS KINGPIN SANCTIONS REGULATIONS--Table of 
Contents



      Subpart A_Relation of this Part to Other Laws and Regulations

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

                         Subpart B_Prohibitions

598.201 Applicability of sanctions.
598.202 Blocking of assets.
598.203 Prohibited transactions involving blocked property.
598.204 Evasions; attempts; conspiracies.
598.205 Effect of transfers violating the provisions of this part.
598.206 Holding of funds in interest-bearing accounts; investment and 
          reinvestment.

                      Subpart C_General Definitions

598.301 Blocked account; blocked property.
598.302 Effective date.
598.303 Entity.
598.304 Foreign Narcotics Kingpin Designation Act.
598.305 Foreign person.
598.306 General license.
598.307 Interest.
598.308 License.
598.309 Narcotic drug; controlled substance; listed chemical.
598.310 Narcotics trafficking.
598.311 Person.
598.312 Property; property interest.
598.313 Significant foreign narcotics trafficker.
598.314 Specially designated narcotics trafficker.
598.315 Specific license.
598.316 Transfer.
598.317 United States.
598.318 United States person; U.S. person.
598.319 U.S. financial institution.

                        Subpart D_Interpretations

598.401 Reference to amended sections.
598.402 Effect of amendment.
598.403 Termination and acquisition of an interest in blocked property.
598.404 Setoffs prohibited.
598.405 Transactions incidental to a licensed transaction.
598.406 Provision of services.
598.407 Offshore transactions.
598.408 Alleged change in ownership or control of an entity designated 
          as a specially designated narcotics trafficker.
598.409 Credit extended and cards issued by U.S. financial institutions.
598.410 Payments from blocked accounts to U.S. exporters and for other 
          obligations prohibited.

 Subpart E_Licenses, Authorizations, and Statements of Licensing Policy

598.501 General and specific licensing procedures.
598.502 Effect of license.
598.503 Exclusion from licenses.
598.504 Payments and transfers to blocked accounts in U.S. financial 
          institutions.
598.505 Investment and reinvestment of certain funds.
598.506 Entries in certain accounts for normal service charges 
          authorized.
598.507 Provision of certain legal services authorized.

                            Subpart F_Reports

598.601 Records and reports.

[[Page 533]]

                           Subpart G_Penalties

598.701 Penalties.
598.702 Prepenalty notice.
598.703 Response to prepenalty notice; informal settlement.
598.704 Penalty imposition or withdrawal.
598.705 Administrative collection; referral to United States Department 
          of Justice.
598.706 Judicial review of civil penalty.

                          Subpart H_Procedures

598.801 Procedures.
598.802 Availability of information pursuant to the Freedom of 
          Information Act.
598.803 Delegation by the Secretary of the Treasury.

                    Subpart I_Paperwork Reduction Act

598.901 Paperwork Reduction Act notice.

    Authority: 3 U.S.C. 301; 21 U.S.C. 1901-1908; 31 U.S.C. 321(b); Pub. 
L. 101-410, 104 Stat. 890 (28 U.S.C. 2461 note).

    Source: 65 FR 41336, July 5, 2000, unless otherwise noted.



      Subpart A_Relation of This Part to Other Laws and Regulations



Sec. 598.101  Relation of this part to other laws and regulations.

    (a) This part is separate from, and independent of, the other parts 
of this chapter, including part 536 of this chapter, ``Narcotics 
Trafficking Sanctions Regulations,'' with the exception of part 501 of 
this chapter, the provisions 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 contexts 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.
    (b) No license 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. 598.201  Applicability of sanctions.

    A specially designated narcotics trafficker is subject to any and 
all sanctions authorized by the Foreign Narcotics Kingpin Designation 
Act and implemented in this part. The application of sanctions on any 
specially designated narcotics trafficker will remain in effect until 
revoked by the President pursuant to section 804(h)(2) of the Foreign 
Narcotics Kingpin Designation Act, waived by the President pursuant to 
section 804(g)(1) of that Act, or revoked by the Secretary of the 
Treasury pursuant to section 805(e)(1)(A) of that Act.



Sec. 598.202  Blocking of assets.

    Except to the extent provided in regulations, orders, instructions, 
licenses, or directives issued pursuant to this part, and 
notwithstanding any contract entered into or any license or permit 
granted prior to the effective date, there are blocked as of the 
effective date, and any date thereafter, all such property and interests 
in property within the United States, or within the possession or 
control of any United States person, which are owned or controlled by a 
specially designated narcotics trafficker.



Sec. 598.203  Prohibited transactions involving blocked property.

    (a) Except to the extent provided in regulations, orders, 
instructions, licenses, or directives issued pursuant to this part, and 
notwithstanding any contract entered into or any license or permit 
granted prior to the effective date, any transaction or dealing by a 
United States person, or within the United States, in property or 
interests in property of a specially designated narcotics trafficker is 
prohibited.
    (b) Unless otherwise authorized by this part or by a specific 
license expressly referring to this section, any dealing in any security 
(or evidence thereof) held within the possession or control of a U.S. 
person and either registered or inscribed in the name of or known to be 
held for the benefit of any specially designated narcotics trafficker is 
prohibited. This prohibition includes but is not limited to the

[[Page 534]]

transfer (including the transfer on the books of any issuer or agent 
thereof), disposition, transportation, importation, exportation, or 
withdrawal of any such security or the endorsement or guaranty of 
signatures on any such security.
    (c) When a transaction results in the blocking of funds at a 
financial institution pursuant to this section and a party to the 
transaction believes the funds have been blocked due to mistaken 
identity, that party may seek to have such funds unblocked pursuant to 
the administrative procedures set forth in Sec. 501.806 of this 
chapter.



Sec. 598.204  Evasions; attempts; conspiracies.

    Except to the extent provided in regulations, orders, instructions, 
licenses, or directives issued pursuant to this part, and 
notwithstanding any contract entered into or any license or permit 
granted prior to the effective date, any transaction or dealing by any 
United States person, or within the United States, that evades or 
avoids, or has the effect of evading or avoiding, and any endeavor, 
attempt, or conspiracy to violate any of the prohibitions set forth in 
this part is prohibited.



Sec. 598.205  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 of a specially designated 
narcotics trafficker is null and void and shall not be the basis for the 
assertion or recognition of any interest in or right, remedy, power, or 
privilege with respect to such property or property interests.
    (b) No transfer before the effective date shall be the basis for the 
assertion or recognition of any right, remedy, power, or privilege with 
respect to, or any interest in, any property or interest in property of 
a specially designated narcotics trafficker, unless the person with whom 
such property is held or maintained, prior to that date, had written 
notice of the transfer or by any written evidence had recognized such 
transfer.
    (c) Unless otherwise provided, an appropriate license or other 
authorization issued by or pursuant to the direction or authorization of 
the Director of the Office of Foreign Assets Control before, during, or 
after a transfer shall validate such transfer or make it enforceable to 
the same extent that it would be valid or enforceable but for the 
provisions of the Foreign Narcotics Kingpin Designation Act, this part, 
and any regulation, order, directive, ruling, instruction, or license 
issued pursuant to this part.
    (d) Property transfers 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 was held or maintained (and as to such person only) in 
cases in which such person is able to establish to the satisfaction of 
the Director of the Office of Foreign Assets Control each of the 
following:
    (1) Such transfer did not represent a willful violation of the 
provisions of this part by the person with whom such property was held 
or maintained;
    (2) The person with whom such property 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 issued pursuant to this part and was not so licensed, 
or if a license did purport to cover the transfer, that such license 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 was held or maintained filed 
with the Office of Foreign Assets Control a report setting forth in full 
the circumstances relating to such transfer promptly upon discovery 
that:
    (i) Such transfer was in violation of the provisions of this part or 
any regulation, ruling, instruction, direction, or license issued 
pursuant to this part;
    (ii) Such transfer was not licensed or authorized by the Director of 
the Office of Foreign Assets Control; or

[[Page 535]]

    (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) of Sec. 598.205: 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 or authorized pursuant to this part, any 
attachment, judgment, decree, lien, execution, garnishment, or other 
judicial process is null and void with respect to any property in which 
on or since the effective date there existed an interest of a specially 
designated narcotics trafficker.



Sec. 598.206  Holding of funds in interest-bearing accounts; investment
and reinvestment.

    (a) Except as provided in paragraph (c) or (d) of this section, or 
as otherwise directed by the Office of Foreign Assets Control, any U.S. 
person holding funds, such as currency, bank deposits, or liquidated 
financial obligations, subject to Sec. 598.202 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, provided 
the funds are invested in a money market fund or in U.S. Treasury bills.
    (2) 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.
    (3) Funds held or placed in a blocked account pursuant to this 
paragraph (b) may not be invested in instruments the maturity of which 
exceeds 180 days. If interest is credited to a separate blocked account 
or sub-account, the name of the account party on each account must be 
the same.
    (c) Blocked funds held in instruments the maturity of which exceeds 
180 days at the time the funds become subject to Sec. 598.202 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 (b) 
or (d) of this section.
    (d) Blocked funds held in accounts or instruments outside the United 
States at the time the funds become subject to Sec. 598.202 may 
continue to be held in the same type of accounts or instruments, 
provided the funds earn interest at rates that are commercially 
reasonable.
    (e) 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 at the time the property becomes subject to 
Sec. 598.202. However, the Office of Foreign Assets Control may issue 
licenses permitting or directing such sales in appropriate cases.
    (f) 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 specially designated narcotics traffickers, nor may 
their holder cooperate in or facilitate the pledging or other attempted 
use as collateral of blocked funds or other assets.

    Note to Sec. 598.206: Please refer to Sec. 598.505 for authorized 
investment and reinvestment of certain funds held in blocked accounts.



                      Subpart C_General Definitions



Sec. 598.301  Blocked account; blocked property.

    The terms blocked account and blocked property mean any account or 
property subject to Sec. 598.202 held in the name of a specially 
designated narcotics trafficker, or in which a specially designated 
narcotics trafficker has an interest, and with respect to which 
payments, transfers, exportations, withdrawals, or other dealings may 
not be made or effected except pursuant to an

[[Page 536]]

authorization or license from the Office of Foreign Assets Control 
authorizing such action.



Sec. 598.302  Effective date.

    The term effective date refers to the effective date of the 
applicable prohibitions and directives of this part, which is December 
3, 1999, or, in the case of specially designated narcotics traffickers 
designated after that date, the earlier of the date on which actual or 
constructive notice of such designation is received.



Sec. 598.303  Entity.

    The term entity means a partnership, joint venture, association, 
corporation, organization, network, group, or subgroup, or any form of 
business collaboration.



Sec. 598.304  Foreign Narcotics Kingpin Designation Act.

    The term Foreign Narcotics Kingpin Designation Act means the Foreign 
Narcotics Kingpin Designation Act, Pub. L. 106-120, title 8, 113 Stat. 
1606, 1626-1636 (codified at 21 U.S.C. 1901-1908, 8 U.S.C. 
1182(a)(2)(C)).



Sec. 598.305  Foreign person.

    The term foreign person means any citizen or national of a foreign 
state or any entity not organized under the laws of the United States, 
but does not include a foreign state.



Sec. 598.306  General license.

    The term general license means any license or authorization the 
terms of which are set forth in this part.



Sec. 598.307  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. 598.308  License.

    Except as otherwise specified, the term license means any license or 
authorization contained in or issued pursuant to this part.



Sec. 598.309  Narcotic drug; controlled substance; listed chemical.

    The terms narcotic drug, controlled substance, and listed chemical 
have the meanings given those terms in section 102 of the Controlled 
Substances Act (21 U.S.C. 802).



Sec. 598.310  Narcotics trafficking.

    The term narcotics trafficking means any illicit activity to 
cultivate, produce, manufacture, distribute, sell, finance, or transport 
narcotic drugs, controlled substances, or listed chemicals, or otherwise 
endeavor or attempt to do so, or to assist, abet, conspire, or collude 
with others to do so.



Sec. 598.311  Person.

    The term person means an individual or entity.



Sec. 598.312  Property; property interest.

    The terms property and property interest include but are not limited 
to money, checks, drafts, bullion, bank deposits, savings accounts, 
debts, indebtedness, obligations, notes, guarantees, debentures, stocks, 
bonds, coupons, any other financial instruments, bankers acceptances, 
mortgages, pledges, liens or other rights in the nature of security, 
warehouse receipts, bills of lading, trust receipts, bills of sale, any 
other evidences of title, ownership, or indebtedness, letters of credit 
and any documents relating to any rights or obligations thereunder, 
powers of attorney, goods, wares, merchandise, chattels, stocks on hand, 
ships, goods on ships, real estate mortgages, deeds of trust, vendors' 
sales agreements, land contracts, leaseholds, ground rents, real estate 
and any other interest therein, options, negotiable instruments, trade 
acceptances, royalties, book accounts, accounts payable, judgments, 
patents, trademarks or copyrights, insurance policies, safe deposit 
boxes and their contents, annuities, pooling agreements, services of any 
nature whatsoever, contracts of any nature whatsoever, and any other 
property, real, personal, or mixed, tangible or intangible, or interest 
or interests therein, whether present, future, or contingent.

[[Page 537]]



Sec. 598.313  Significant foreign narcotics trafficker.

    The term significant foreign narcotics trafficker means any foreign 
person that plays a significant role in international narcotics 
trafficking that the President has determined to be appropriate for 
sanctions and has publicly identified under section 804(b) or section 
804(h)(1) of the Foreign Narcotics Kingpin Designation Act.



Sec. 598.314  Specially designated narcotics trafficker.

    The term specially designated narcotics trafficker means:
    (a) Significant foreign narcotics traffickers; and
    (b) Foreign persons designated by the Secretary of the Treasury, in 
consultation with the Attorney General, the Director of Central 
Intelligence, the Director of the Federal Bureau of Investigation, the 
Administrator of the Drug Enforcement Administration, the Secretary of 
Defense, and the Secretary of State, because they are found to be:
    (1) Materially assisting in, or providing financial or technological 
support for or to, or providing goods or services in support of, the 
international narcotics trafficking activities of a specially designated 
narcotics trafficker;
    (2) Owned, controlled, or directed by, or acting for or on behalf 
of, a specially designated narcotics trafficker; or
    (3) Playing a significant role in international narcotics 
trafficking.

    Note 1 to Sec. 598.314: The names of persons determined to fall 
within this definition, whose property and interests in property 
therefore are blocked pursuant to this part, are published in the 
Federal Register and incorporated into the Office of Foreign Assets 
Control's Specially Designated Nationals and Blocked Persons List (``SDN 
List'') with the identifier ``[SDNTK].'' The SDN List is accessible 
through the following page on the Office of Foreign Assets Control's Web 
site: http://www.treasury.gov/sdn. Additional information pertaining to 
the SDN List can be found in appendix A to this chapter.
    Note 2 to Sec. 598.314: The Foreign Narcotics Kingpin Designation 
Act (21 U.S.C. 1901-1908, 8 U.S.C. 1182), in Section 806 (21 U.S.C. 
1905), authorizes the blocking of property and interests in property of 
a person during the pendency of an investigation. The names of persons 
whose property and interests in property are blocked pending 
investigation pursuant to this part also are published in the Federal 
Register and incorporated into the SDN List with the identifier ``[BPI-
SDNTK].''
    Note 3 to Sec. 598.314: Sections 501.806 and 501.807 of this 
chapter describe the procedures to be followed by persons seeking, 
respectively, the unblocking of funds that they believe were blocked due 
to mistaken identity, or administrative reconsideration of their status 
as persons whose property and interests in property are blocked pursuant 
to this part.

[65 FR 41336, July 5, 2000, as amended at 76 FR 38545, June 30, 2011]



Sec. 598.315  Specific license.

    The term specific license means any license not set forth in this 
part but issued pursuant to this part.



Sec. 598.316  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 upon the foregoing, the 
term transfer includes 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; 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.

[[Page 538]]



Sec. 598.317  United States.

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



Sec. 598.318  United States person; U.S. person.

    The term United States person or U.S. person means any United States 
citizen or national, permanent resident alien, an entity organized under 
the laws of the United States (including its foreign branches), or any 
person within the United States.



Sec. 598.319  U.S. financial institution.

    The term U.S. financial institution means any U.S. entity (including 
a foreign branch) that is engaged in the business of accepting deposits, 
making, granting, transferring, holding, or brokering loans or credits, 
or purchasing or selling foreign exchange, securities, commodity futures 
or options, as principal or agent. This terms includes but is not 
limited to depository institutions, banks, savings banks, trust 
companies, securities brokers and dealers, commodity futures and options 
brokers and dealers, forward contract and foreign exchange merchants, 
securities and commodities exchanges, clearing corporations, investment 
companies, employee benefit plans, and U.S. holding companies, U.S. 
affiliates, or U.S. subsidiaries of any of the foregoing. This term 
includes those branches, offices, and agencies of foreign financial 
institutions which are located in the United States, but not such 
institutions' foreign branches, offices, or agencies.



                        Subpart D_Interpretations



Sec. 598.401  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, direction, or license issued pursuant to this part refers 
to the same as currently amended.



Sec. 598.402  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 or 
under the direction of the Director of the Office of Foreign Assets 
Control does not affect any act done or omitted, or any civil or 
criminal suit or 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. 598.403  Termination and acquisition of an interest in blocked
property.

    (a) Whenever a transaction licensed pursuant to this part results in 
the transfer of property (including any property interest) away from a 
specially designated narcotics trafficker, the transferred property will 
no longer be considered property in which that person has or has had an 
interest. Provided no other specially designated narcotics trafficker 
has any interest in the transferred property following the transfer, the 
transferred property will no longer be considered property blocked 
pursuant to Sec. 598.202.
    (b) Unless otherwise specifically provided in a license issued 
pursuant to this part, if property (including any property interest) is 
transferred or attempted to be transferred to a specially designated 
narcotics trafficker, such property shall be deemed to be property in 
which that person has an interest, and such property is therefore 
blocked pursuant to Sec. 598.202.



Sec. 598.404  Setoffs prohibited.

    A setoff against blocked property (including a blocked account), 
whether by a U.S. financial institution or other U.S. person, is a 
prohibited transfer under Sec. 598.203 if effected after the effective 
date.



Sec. 598.405  Transactions incidental to a licensed transaction.

    Any transaction ordinarily incident to a licensed transaction and 
necessary

[[Page 539]]

to give effect to the licensed transaction is also authorized by the 
license. Except as specifically authorized by the terms of a license, 
prohibited transactions by specially designated narcotics traffickers 
and debits to accounts blocked pursuant to Sec. 598.202 are not 
considered incidental to a licensed transaction and therefore remain 
prohibited.



Sec. 598.406  Provision of services.

    (a) The prohibitions contained in Sec. 598.203 apply to services 
performed by U.S. persons, wherever located:
    (1) On behalf of or for the benefit of a specially designated 
narcotics trafficker; or
    (2) With respect to property interests of a specially designated 
narcotics trafficker.
    (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 specially designated narcotics trafficker. See Sec. 598.507 on 
licensing policy with regard to the provision of certain legal services.



Sec. 598.407  Offshore transactions.

    The prohibitions contained in Sec. 598.203 apply to transactions by 
any U.S. person in a location outside the United States with respect to 
property in which the U.S. person knows, or has reason to know, that a 
specially designated narcotics trafficker has or has had an interest 
since the effective date.



Sec. 598.408  Alleged change in ownership or control of an entity 
designated as a specially designated narcotics trafficker.

    (a) A change or alleged change in ownership or control of an entity 
designated as a specially designated narcotics trafficker shall not be 
the basis for removal of that entity from the Office of Foreign Assets 
Control's Specially Designated Nationals and Blocked Persons List (``SDN 
List'') unless, upon investigation by the Office of Foreign Control and 
submission of evidence by the entity, it is demonstrated to the 
satisfaction of the Director of the Office of Foreign Assets Control 
that the transfer to a bona fide purchaser at arm's length, or other 
means of changing ownership or control, is legitimate and that the 
entity no longer meets the criteria for designation under Sec. 598.314. 
Evidence submitted must conclusively demonstrate that all ties with 
other specially designated narcotics traffickers have been completely 
severed, and may include, but is not limited to, articles of 
incorporation; identification of new directors, officers, shareholders, 
and sources of capital; and contracts evidencing the sale of the entity 
to its new owners.
    (b) Any continuing substantial financial obligations on the part of 
the new owners to any specially designated narcotics traffickers, 
including long-term payment plans, leases, or rents, will be considered 
as evidence of continuing control of the entity by the specially 
designated narcotics trafficker. Purchase of a designated entity without 
ongoing substantial financial obligations to a specially designated 
narcotics trafficker may nonetheless be a basis for subsequent 
designation of the purchaser, if the transaction is determined 
materially to assist in or provide financial support for the 
international narcotics trafficking activities of specially designated 
narcotics traffickers for purposes of Sec. 598.314(b)(1). For example, 
any acquisition transaction resulting in a direct cash transfer to or 
other enrichment of a specially designated narcotics trafficker could 
lead to designation of the purchaser. Mere change in name of an entity 
will not be considered as constituting a change of the entity's status.

[65 FR 41336, July 5, 2000, as amended at 76 FR 38545, June 30, 2011]



Sec. 598.409  Credit extended and cards issued by U.S. financial 
institutions.

    The prohibition in Sec. 598.203 on dealing in property in which a 
specially designated narcotics trafficker has an interest prohibits U.S. 
financial institutions from performing under any existing credit 
agreements, including, but not limited to, charge cards, debit cards, or 
other credit facilities issued by a U.S. financial institution to a 
specially designated narcotics trafficker.

[[Page 540]]



Sec. 598.410  Payments from blocked accounts to U.S. exporters and 
for other obligations prohibited.

    No debits may be made to a blocked account to pay obligations to 
U.S. persons or other persons, including payment for goods or services 
exported prior to the effective date of the blocking, except as 
authorized pursuant to this part.



 Subpart E_Licenses, Authorizations, and Statements of Licensing Policy



Sec. 598.501  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.

[65 FR 41336, July 5, 2000, as amended at 68 FR 53660, Sept. 11, 2003]



Sec. 598.502  Effect of license.

    (a) No license contained in this part, or otherwise issued by or 
under the direction of the Director of the Office of Foreign Assets 
Control pursuant to this part, authorizes or validates any transaction 
effected prior to the issuance of the license, unless the prior 
transaction is specifically authorized in such license.
    (b) No regulation, ruling, instruction, or license authorizes any 
transaction prohibited by this part unless the regulation, ruling, 
instruction, or license is issued by the Office of Foreign Assets 
Control and specifically refers to this part. No regulation, ruling, 
instruction, or license referring to this part authorizes any 
transaction prohibited by any provision of this chapter unless the 
regulation, ruling, instruction, or license specifically refers to such 
provision.
    (c) Any regulation, ruling, instruction, or license authorizing any 
transaction otherwise prohibited by this part has the effect of removing 
from the transaction a prohibition or prohibitions contained in this 
part, 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 that would not otherwise exist under ordinary 
principles of law in or with respect to any property.



Sec. 598.503  Exclusion from licenses.

    The Director of the Office of Foreign Assets Control reserves the 
right to exclude any person, property, or transaction from the operation 
of any license or from the privileges conferred by any license. The 
Director of the Office of Foreign Assets Control also reserves the right 
to restrict the applicability of any license to particular persons, 
property, transactions, or classes thereof. Such actions are binding 
upon all persons receiving actual or constructive notice of the 
exclusions or restrictions.



Sec. 598.504  Payments and transfers to blocked accounts in U.S. 
financial institutions.

    Any payment of funds or transfer of credit in which a specially 
designated narcotics trafficker 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 only be made to another blocked account held in the same 
name.

    Note to Sec. 598.504: Please refer to part 501, subpart C of this 
chapter for mandatory reporting requirements regarding financial 
transfers. See also Sec. 598.206 concerning the obligation to hold 
blocked funds in interest-bearing accounts.



Sec. 598.505  Investment and reinvestment of certain funds.

    Subject to the requirements of Sec. 598.206, U.S. financial 
institutions are authorized to invest and reinvest assets held in 
blocked accounts in the

[[Page 541]]

name of a specially designated narcotics trafficker, 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 in no case may funds be transferred 
outside the United States for this purpose;
    (b) The proceeds of such investments and reinvestments are not 
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 the specially designated narcotics 
trafficker.



Sec. 598.506  Entries in certain accounts for normal service charges
authorized.

    (a) U.S. financial institutions are authorized to debit any blocked 
account with such U.S. financial institution in payment or reimbursement 
for normal service charges owed to such U.S. financial institution by 
the owner of such blocked account.
    (b) As used in this section, the term normal service charges 
includes but is not limited to charges in payment or reimbursement for 
interest due; cable, telegraph, or telephone charges; postage costs; 
custody fees; small adjustment charges to correct bookkeeping errors; 
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. 598.507  Provision of certain legal services authorized.

    (a) The provision to or on behalf of a specially designated 
narcotics trafficker of the legal services set forth in paragraph (b) of 
this section is authorized, provided that all receipt of payment for 
such services must be specifically licensed.
    (b) Specific licenses may be issued on a case-by-case basis 
authorizing receipt from unblocked sources of payment of professional 
fees and reimbursement of incurred expenses for the following legal 
services by U.S. persons to a specially designated narcotics trafficker:
    (1) Provision of legal advice and counseling on the requirements of 
and compliance with the laws of any jurisdiction within the United 
States, provided that such advice and counseling is not provided to 
facilitate transactions that would violate any prohibition contained in 
this chapter;
    (2) Representation of a specially designated narcotics trafficker 
when named as a defendant in or otherwise made a party to domestic U.S. 
legal, arbitration, or administrative proceedings;
    (3) Initiation and conduct of domestic U.S. legal, arbitration, or 
administrative proceedings in defense of property interests subject to 
U.S. jurisdiction of a specially designated narcotics trafficker;
    (4) Representation of a specially designated narcotics trafficker 
before any federal or state agency with respect to the imposition, 
administration, or enforcement of U.S. sanctions against such person; 
and
    (5) Provision of legal services in any other context in which 
prevailing U.S. law requires access to legal counsel at public expense.
    (c) The provision of any other legal services to a specially 
designated narcotics trafficker, not otherwise authorized in this part, 
requires the issuance of a specific license.
    (d) Entry into a settlement agreement affecting property or 
interests in property of a specially designated narcotics trafficker 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 of a specially designated narcotics trafficker is 
prohibited unless specifically licensed in accordance with Sec. 
598.205(e).

[[Page 542]]



                            Subpart F_Reports



Sec. 598.601  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



Sec. 598.701  Penalties.

    (a) Attention is directed to section 807 of the Foreign Narcotics 
Kingpin Designation Act, which is applicable to violations of the 
provisions of any license, rule, or regulation issued by or pursuant to 
the direction or authorization of the Secretary of Treasury pursuant to 
this part or otherwise under that Act. Section 807 of the Foreign 
Narcotics Kingpin Designation Act, as adjusted pursuant to the Federal 
Civil Penalties Inflation Adjustment Act of 1990 (Public Law 101-410, as 
amended, 28 U.S.C. 2461 note), provides that:
    (1) Whoever willfully violates the provisions of the Foreign 
Narcotics Kingpin Designation Act, or any license, rule, or regulation 
issued pursuant to that Act, or willfully neglects or refuses to comply 
with any order of the President issued under that Act, shall be 
imprisoned for not more than 10 years, fined in the amount provided in 
title 18, United States Code, or both, or, in the case of an entity, 
fined not more than $10,000,000;
    (2) Any officer, director, or agent of any entity who knowingly 
participates in a violation of the provisions of the Foreign Narcotics 
Kingpin Designation Act, shall be imprisoned for not more than 30 years, 
fined not more than $5,000,000, or both;
    (3) A civil penalty not to exceed $1,075,000 per violation may be 
imposed by the Secretary of the Treasury on any person who violates any 
license, order, rule, or regulation issued in compliance with the 
provisions of the Foreign Narcotics Kingpin Designation Act.

    Note to paragraph (a)(3). The current $1,075,000 civil penalty cap 
may be adjusted for inflation pursuant to the Federal Civil Penalties 
Inflation Adjustment Act of 1990.

    (b) The criminal penalties provided in this part are subject to 
increase pursuant to 18 U.S.C. 3571.
    (c) Attention is directed to 18 U.S.C. 1001, which provides that 
whoever, in any matter within the jurisdiction of any department or 
agency 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, or 
imprisoned not more than five years, or both.
    (d) Violations of this part may also be subject to relevant 
provisions of other applicable laws.

[65 FR 41336, July 5, 2000, as amended at 68 FR 61361, Oct. 28, 2003]



Sec. 598.702  Prepenalty notice.

    (a) When required. If the Director of the Office of Foreign Assets 
Control has reasonable cause to believe that there has occurred a 
violation of any provision of this part or a violation of the provisions 
of any license, ruling, regulation, order, direction, or instruction 
issued by or pursuant to the direction or authorization of the Secretary 
of the Treasury pursuant to this part or otherwise under the Foreign 
Narcotics Kingpin Designation Act, and the Director determines that 
further proceedings are warranted, the Director shall issue to the 
person concerned a notice of intent to impose a monetary penalty. This 
prepenalty notice shall be issued whether or not another agency has 
taken any action with respect to this matter.
    (b) Contents--(1) Facts of violation. The prepenalty notice shall 
describe the violation, specify the laws and regulations allegedly 
violated, and state the amount of the proposed monetary penalty.
    (2) Right to respond. The prepenalty notice also shall inform the 
respondent of respondent's right to make a written presentation within 
30 days of the date of mailing of the notice as to why a

[[Page 543]]

monetary penalty should not be imposed or why, if imposed, the monetary 
penalty should be in a lesser amount than proposed.



Sec. 598.703  Response to prepenalty notice; informal settlement.

    (a) Deadline for response. The respondent shall have 30 days from 
the date of mailing of the prepenalty notice to make a written response 
to the Director of the Office of Foreign Assets Control.
    (b) Form and contents of response. The written response need not be 
in any particular form, but must contain information sufficient to 
indicate that it is in response to the prepenalty notice. It should 
contain responses to the allegations in the prepenalty notice and set 
forth the reasons why the respondent believes the penalty should not be 
imposed or why, if imposed, it should be in a lesser amount than 
proposed.
    (c) Informal settlement. In addition or as an alternative to a 
written response to a prepenalty notice issued pursuant to this section, 
the respondent or respondent's representative may contact the Office of 
Foreign Assets Control as advised in the prepenalty notice to propose 
the settlement of allegations contained in the prepenalty notice and 
related matters. In the event of settlement at the prepenalty stage, the 
claim proposed in the prepenalty notice will be withdrawn, the 
respondent will not be required to take a written position on 
allegations contained in the prepenalty notice, and the Office of 
Foreign Assets Control will make no final determination as to whether a 
violation occurred. The amount accepted in settlement of allegations in 
a prepenalty notice may vary from the civil penalty that might finally 
be imposed in the event of a formal determination of violation. In the 
event no settlement is reached, the 30-day period specified in paragraph 
(a) of this section for written response to the prepenalty notice 
remains in effect unless additional time is granted by the Office of 
Foreign Assets Control.



Sec. 598.704  Penalty imposition or withdrawal.

    (a) No violation. If, after considering any response to a prepenalty 
notice and any relevant facts, the Director of the Office of Foreign 
Assets Control determines that there was no violation by the respondent 
named in the prepenalty notice, the Director promptly shall notify the 
respondent in writing of that determination and that no monetary penalty 
will be imposed.
    (b) Violation. If, after considering any response to a prepenalty 
notice and any relevant facts, the Director of the Office of Foreign 
Assets Control determines that there was a violation by the respondent 
named in the prepenalty notice, the Director promptly shall issue a 
written notice of the imposition of the monetary penalty to the 
respondent. The issuance of a written notice of the imposition of a 
monetary penalty shall constitute final agency action.
    (1) The penalty notice shall inform the respondent that payment of 
the assessed penalty must be made within 30 days of the date of mailing 
of the penalty notice.
    (2) The penalty notice shall inform the respondent of the 
requirement to furnish the respondent's taxpayer identification number 
pursuant to 31 U.S.C. 7701 and that such number will be used for 
purposes of collecting and reporting on any delinquent penalty amount.



Sec. 598.705  Administrative collection; referral to United States 
Department of Justice.

    In the event that the respondent does not pay a penalty imposed 
pursuant to this part or make payment arrangements acceptable to the 
Director of the Office of Foreign Assets Control within 30 days of the 
date of mailing of a penalty notice, 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. 598.706  Judicial review of civil penalty.

    A civil penalty imposed pursuant to this subpart G is subject to 
judicial review only to the extent provided in 5 U.S.C. 702.

[[Page 544]]



                          Subpart H_Procedures



Sec. 598.801  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 
Privacy Act (5 U.S.C. 552a), see part 501, subpart E of this chapter.

[65 FR 41336, July 5, 2000, as amended at 68 FR 53660, Sept. 11, 2003]



Sec. 598.802  Availability of information pursuant to the Freedom of
Information Act.

    Any record or information obtained or created in the implementation 
of this part is not subject to disclosure under section 552(a)(3) of the 
Freedom of Information Act. Information required to be made available to 
the public under other provisions of the Freedom of Information Act (5 
U.S.C. 552) will be made available in accordance with Sec. 501.805(a) 
of this chapter.



Sec. 598.803  Delegation by the Secretary of the Treasury.

    Any action that the Secretary of the Treasury is authorized to take 
pursuant to the Foreign Narcotics Kingpin Designation Act may be taken 
by the Director of the Office of Foreign Assets Control or by any other 
person to whom the Secretary of the Treasury has delegated authority so 
to act.



                    Subpart I_Paperwork Reduction Act



Sec. 598.901  Paperwork Reduction Act notice.

    For approval by the Office of Management and Budget (``OMB'') under 
the Paperwork Reduction Act of 1995 (44 U.S.C. 3507) of information 
collections relating to recordkeeping and reporting requirements, 
licensing procedures (including those pursuant to statements of 
licensing policy), and other procedures, see Sec. 501.901 of this 
chapter. An agency may not conduct or sponsor, and a person is not 
required to respond to, a collection of information unless it displays a 
valid control number assigned by OMB.



 Sec. Appendix A to Chapter V--Information Pertaining to the Specially 
              Designated Nationals and Blocked Persons List

    Authority: 3 U.S.C. 301; 8 U.S.C. 1182, 1189; 18 U.S.C. 2339B; 21 
U.S.C. 1901-1908; 22 U.S.C. 287c; 31 U.S.C. 321(b); 50 U.S.C. 1601-1651, 
1701-1706; 50 U.S.C. App. 1-44; Pub. L. 110-286, 122 Stat. 2632; Pub. L. 
111-195, 124 Stat. 1312 (22 U.S.C. 8501-8551).

    The Office of Foreign Assets Control (``OFAC'') maintains on its Web 
site a list of blocked persons, blocked vessels, specially designated 
nationals, specially designated terrorists, specially designated global 
terrorists, foreign terrorist organizations, and specially designated 
narcotics traffickers whose property and interests in property are 
blocked pursuant to the various economic sanctions programs administered 
by OFAC. This Specially Designated Nationals and Blocked Persons List 
(``SDN List'') is updated frequently and at irregular intervals to 
incorporate changes reflected in notices of blocking, designation, 
identification, and delisting actions, all of which are published in the 
Federal Register. The SDN List is available in a variety of formats for 
review on, or download from, the following location on OFAC's Web site: 
http://www.treasury.gov/sdn. Members of the public may also sign up 
through OFAC's Web site to receive e-mail notifications of changes to 
the SDN List.
    In addition to accessing information through OFAC's Web site, the 
public may contact OFAC's Sanctions Compliance & Evaluation Division, at 
202/622-2490 or 800/540-6322 (toll-free), for information on blocking, 
designation, identification, and delisting actions. The public also may 
contact OFAC in writing at the following address: Office of Foreign 
Assets Control, U.S. Department of the Treasury, 1500 Pennsylvania 
Avenue, NW., Washington, DC 20220.
    Finally, the public may obtain information on blocking, designation, 
identification, and delisting actions through OFAC's fax-on-demand 
service, at 202/622-0077.

    Notes: The SDN List provides the following information (to the 
extent known) concerning blocked persons, specially designated 
nationals, specially designated terrorists, specially designated global 
terrorists, foreign terrorist organizations, specially designated 
narcotics traffickers and blocked vessels:
    1. For blocked individuals: Name and title (known aliases); 
address(es); other identifying information, such as date of birth, place 
of birth, nationality, and passport or national identification number; 
the notation ``(individual)''; and [sanctions program under which the 
individual is blocked].

[[Page 545]]

    2. For blocked entities: Name (known former or alternate names); 
address(es); other identifying information, such as national tax 
identification number(s); and [sanctions program under which the entity 
is blocked].
    3. For blocked vessels: Name (known former or alternate names); 
other identifying information, such as International Maritime 
Organization number, country of registration or flag, vessel type, size 
in dead weight and/or gross tons, call sign, vessel owner; the notation 
``(vessel)''; and [sanctions program under which the vessel is blocked].
    4. Abbreviations. ``a.k.a.'' means ``also known as''; ``d.b.a.'' 
means ``doing business as''; ``f.k.a.'' means ``formerly known as''; 
``IMO'' means ``International Maritime Organization''; ``n.k.a.'' means 
``now known as''; ``DOB'' means ``date of birth''; ``DWT'' means 
``deadweight''; ``GRT'' means ``Gross Registered Tonnage''; ``POB'' 
means ``place of birth''.
    5. Notices of blocking, designation, identification, and delisting 
actions are published in the Federal Register frequently and at 
irregular intervals. Updated information on OFAC blocking, designation, 
identification, and delisting actions is provided on OFAC's Web site 
(http://www.treasury.gov/ofac). In addition, such information is 
incorporated on an ongoing basis into OFAC's SDN List, which is 
available for review on, or download from, the following location on 
OFAC's Web site: http://www.treasury.gov/sdn. Please call OFAC's 
Sanctions Compliance & Evaluation Division with questions about OFAC-
administered sanctions programs, including current electronic sources of 
OFAC information: 202/622-2490 or 800/540-6322 (toll-free). Information 
also is available by fax through OFAC's fax-on-demand service, at 202/
622-0077. Updated information on OFAC designations and other OFAC 
actions should be consulted before engaging in transactions that may be 
prohibited by the economic sanctions programs in chapter V.
    6. Specific licenses previously issued by OFAC may include 
references to appendix A or appendix B to 31 CFR chapter V. OFAC hereby 
notifies persons who have been issued specific licenses by OFAC that any 
reference to appendix A to 31 CFR chapter V or Appendix B to 31 CFR 
chapter V in an outstanding specific license shall be read to refer to 
the SDN List. The SDN List is available for review on or download from 
the following location on OFAC's Web site: http://www.treasury.gov/sdn.
    7. The SDN List incorporates the names of vessels owned by blocked 
persons, which are themselves blocked. SDN List entries for blocked 
vessels, which include the notation ``(vessel),'' are incorporated in 
alphabetical order into the SDN List. In addition, these entries are 
segregated into a separate sub-section of the SDN List under the heading 
``(vessels).'' Except in limited circumstances, financial institutions 
are instructed to reject any funds transfer referencing a blocked vessel 
and must notify OFAC, preferably via facsimile at 202/622-2426 with a 
copy of the payment instructions, that funds have been returned to 
remitter due to the possible involvement of a blocked vessel in the 
underlying transaction. See Sec. 501.604(b)(1) of this chapter. 
Financial institutions should contact OFAC's Sanctions Compliance & 
Evaluation Division, at 202/622-2490 or 800/540-6322 (toll-free), for 
further instructions should the name of a blocked vessel appear in 
shipping documents presented under a letter of credit or if noticed in a 
documentary collection. Blocked vessels must themselves be physically 
blocked should they enter U.S. jurisdiction. Freight forwarders and 
shippers may not charter, book cargo on, or otherwise deal with blocked 
vessels.
    8. The SDN List includes the names of persons identified in Appendix 
A to Part 560 as persons determined to be the Government of Iran. The 
SDN List entries for such persons include the identifier ``[IRAN].'' 
U.S. persons are advised to review 31 CFR part 560 prior to engaging in 
transactions involving the persons included on the SDN List with the 
identifier ``[IRAN].'' U.S. persons are further cautioned that persons 
identified as persons determined to be the Government of Iran also may 
be designated or blocked pursuant to other sanctions programs 
administered by OFAC. The SDN List entry for a person listed in Appendix 
A to Part 560 may include--in addition to the identifier ``[IRAN]''--
identifier(s) for the other sanctions program(s) pursuant to which the 
person is listed on the SDN List. Moreover, the compliance obligations 
with respect to persons who fall within the definition of the Government 
of Iran in Sec. 560.304 of the Iranian Transactions Regulations, 31 CFR 
part 560, apply regardless of whether such persons are identified in 
appendix A to part 560 or the SDN List.
    9. Unless otherwise specifically provided, any amendment, 
modification, or revocation of any entry on the SDN List does not affect 
any act done or omitted, or any civil or criminal proceeding commenced 
or pending, prior to such amendment, modification, or revocation.

[76 FR 38545, June 30, 2011]

[[Page 547]]



CHAPTER VI--BUREAU OF ENGRAVING AND PRINTING, DEPARTMENT OF THE TREASURY




  --------------------------------------------------------------------
Part                                                                Page
601             Distinctive paper for United States currency 
                    and other securities....................         549
605             Regulations governing conduct in Bureau of 
                    Engraving and Printing buildings and on 
                    the grounds of Washington, DC and Fort 
                    Worth, Texas............................         549

[[Page 549]]



PART 601_DISTINCTIVE PAPER FOR UNITED STATES CURRENCY AND OTHER 
SECURITIES--Table of Contents



Sec.
601.1 Notice to the public.
601.2 Description of paper.
601.3 Use of paper.
601.4 Use of paper; interest-bearing securities of the United States.
601.5 Penalty for unauthorized control or possession.

    Authority: 5 U.S.C. 301; 12 U.S.C. 418; 18 U.S.C. 474A.

    Source: 61 FR 10895, Mar. 18, 1996, unless otherwise noted.



Sec. 601.1  Notice to the public.

    The Secretary of the Treasury, by authority of law, has adopted a 
new distinctive paper for use in printing United States currency in 
addition to the existing distinctive papers for use in printing United 
States currency and other securities.



Sec. 601.2  Description of paper.

    The paper utilized in the printing of United States currency and 
public debt issues is cream-white bank note paper which must contain 
security features prescribed by the Secretary of the Treasury. All 
currency paper shall contain distinctive fibers, colored red and blue, 
incorporated in the body of the paper while in the process of 
manufacture and evenly distributed throughout. In addition to 
distinctive red and blue fibers, currency paper shall contain, for 
denominations prescribed by the Secretary of the Treasury, security 
threads embedded beneath the surface of the paper during the 
manufacturing process. Security threads shall contain graphics 
consisting of the designation ``USA'' and the denomination of the 
currency, expressed in alphabetic or numeric characters. In addition to 
the security thread, for the denominations prescribed by the Secretary 
of the Treasury, the paper will bear a watermark identical to the 
portrait to be printed on the paper.



Sec. 601.3  Use of paper.

    The new distinctive paper shall be used for printing Federal Reserve 
Notes of the denominations prescribed by the Secretary of the Treasury. 
The use of the existing distinctive papers, the distinctive features of 
which consist of distinctive fibers, colored red and blue, incorporated 
in the body of the paper while in the process of manufacture and evenly 
distributed throughout, and the security thread containing graphics 
consisting of the designation ``USA'' and the denomination of the 
currency, will be continued for printing of any currency denomination 
prescribed by the Secretary of the Treasury.



Sec. 601.4  Use of paper; interest-bearing securities of the United States.

    The existing distinctive papers shall be used for the printing of 
interest-bearing securities of the United States, and for any other 
printing where the use of distinctive paper is indicated.



Sec. 601.5  Penalty for unauthorized control or possession.

    The Secretary of the Treasury hereby gives notice that the new 
distinctive paper, together with any other distinctive papers heretofore 
adopted for the printing of paper currency or other obligations or 
securities of the United States, is and will be subject to the 
provisions of 18 U.S.C. 474A which provides, in part, that it is against 
the law to possess any paper, or facsimile thereof, designated by the 
Secretary of the Treasury for the printing of U.S. currency or any other 
security of the United States, except with the permission of the 
Secretary or the authorized official. This crime is punishable by a fine 
not to exceed five thousand dollars or imprisonment for not more than 
fifteen years, or both.



PART 605_REGULATIONS GOVERNING CONDUCT IN BUREAU OF ENGRAVING AND 
PRINTING BUILDINGS AND ON THE GROUNDS OF WASHINGTON, DC AND FORT WORTH,

TEXAS--Table of Contents



    Authority: 5 U.S.C. 301; Delegation, Administrator, General 
Services, dated December 3, 1992; Treasury Delegation, Assistant 
Secretary (Management), dated February 4, 1993.

[[Page 550]]



Sec. 605.1  Conduct on Bureau of Engraving and Printing property.

    (a) Applicability. These regulations apply to the Buildings and 
grounds of the Bureau of Engraving and Printing located in Washington, 
DC at 14th and C Streets SW., and in Fort Worth, Texas, at 9000 Blue 
Mound Road, and to all persons entering in or on such property. Unless 
otherwise stated herein, the Bureau of Engraving and Printing Buildings 
and grounds shall be referred to in these regulations as the 
``property.'' It is the responsibility of the occupant agencies to 
require observance of the regulations in this part by their employees.
    (b) Limited access. (1) The property shall, in general, be closed to 
the public. Except as specified in this subsection, access is limited to 
Bureau of Engraving and Printing (BEP) employees and those individuals 
having official business with the BEP.
    (2) Public tours of the facilities are available during authorized 
hours, or during such other times as the Director may prescribe.
    (3) Limited areas of the premises may be open to individuals, 
authorized by the Director, by prior arrangement on infrequent occasions 
that are announced in advance.
    (4) All persons entering the property, except for the public areas 
specified in paragraph (b)(2) of this section, may be required to 
present suitable identification and may be required to sign entry logs 
or registers.
    (5) All persons entering the property may be subjected to screening 
by weapons detection devices and shall submit to such screening upon 
request as a condition of entrance.
    (6) All persons entering the property may be subjected to 
inspections of their personal handbags, briefcases, and other handheld 
articles.
    (7) In the event of emergency situations, access to the property may 
be more tightly controlled and restricted.
    (8) Any entrance onto the property without official permission is 
prohibited.
    (c) Recording presence. All persons entering the property may be 
monitored by means of closed circuit television. Most internal areas of 
the property, especially production areas, are continuously monitored by 
closed circuit television. Any video image from the closed circuit 
television systems may be recorded for later use as needed.
    (d) Preservation of property. It shall be unlawful for any person 
without proper authority to willfully destroy, damage, deface, or remove 
property or any part thereof or any furnishings therein.
    (e) Compliance with signs and directions. Persons in and on the 
property shall comply with the instructions of BEP Special Police, other 
authorized officials, and posted signs or notices.
    (f) Nuisances. The use of loud, abusive, or profane language, 
unwarranted loitering, unauthorized assembly, the creation of any hazard 
to persons or property, improper disposal of rubbish, spitting, prurient 
prying, the commission of any obscene or indecent act, or any other 
disorderly conduct on the property is prohibited. The throwing of any 
articles of any kind in, upon, or from the property and climbing upon 
any part thereof is prohibited.
    (g) Gambling. (1) Participating in games for money or other 
property, the operation of gambling devices, the conduct of a lottery or 
pool, the selling or purchasing of numbers, tickets, or any other 
gambling in or on the property is prohibited.
    (2) Possession in or on the property of any numbers slip or ticket, 
record, notation, receipt or other writing of a type ordinarily used in 
any illegal form of gambling such as a tip sheet or dream book, unless 
explained to the satisfaction of the Director or his delegate, shall be 
prima facie evidence that there is participation in an illegal form of 
gambling in or on such property.
    (h) Intoxicating beverages, narcotics, and drugs. Entering or being 
on the property, or operating a motor vehicle thereon, by a person under 
the influence of intoxicating beverages, narcotics, hallucinogenic or 
dangerous drugs, or marijuana, or the consumption of such beverages or 
the use of such drugs or marijuana in or on the property is prohibited. 
Intoxicants, nonprescription narcotics, and other controlled substances 
(21 CFR part 1308) are prohibited on the property.

[[Page 551]]

    (i) Soliciting, vending, debt collection, and distribution of 
handbills. The unauthorized soliciting of alms and contributions, the 
commercial soliciting and vending of all kinds, the display or 
distribution of commercial advertising, or the collecting of private 
debts other than as provided by law, in or on the property is 
prohibited. This rule does not apply to BEP concessions or notices 
posted by authorized employees on the bulletin boards. Distribution of 
material such as pamphlets, handbills, and flyers is prohibited without 
prior approval from the Director or his delegate.
    (j) Photographs. The taking of photographs on the property is 
prohibited, without the written permission of the Director. Title 18 
United States Code, Section 474 provides, in part, that whoever 
photographs any obligation or other security of the United States, or 
any part thereof, shall be fined not more than $5,000 or imprisoned not 
more than 15 years, or both.
    (k) Dogs and other animals. Dogs and other animals, except seeing-
eye dogs, shall not be brought upon the property for other than official 
purposes.
    (l) Vehicular and pedestrian traffic. (1) Drivers of all vehicles in 
or on the property shall drive in a careful and safe manner at all times 
and shall comply with the signals and directions of BEP Special Police 
and all posted traffic signs.
    (2) The blocking of entrances, driveways, walks, loading platforms, 
fire hydrants, or standpipes in or on the property is prohibited.
    (3) Parking in or on the property is not allowed without a permit or 
specific authority. Parking without authority, parking in unauthorized 
locations or in locations reserved for other persons or continuously in 
excess of 8 hours without permission, or contrary to the direction of 
BEP Special Police or of posted signs is prohibited.
    (4) This subsection may be supplemented from time to time, with the 
approval of the Director or his delegate, by the issuance and posting of 
such specific traffic directives as may be required and when so issued 
and posted such directives shall have the same force and effect as if 
made a part hereof.
    (m) Weapons and explosives. No person while on the property shall 
carry firearms, other dangerous or deadly weapons, or explosives, either 
openly or concealed, except for official purposes. According to 18 
United States Code, Section 930, ``dangerous weapon'' means ``a weapon, 
device, instrument, material, or substance, animate or inanimate, that 
is used for, or readily capable of, causing death or serious bodily 
injury . . .''
    (n) Penalties and other law. (1) Violations of this part shall be 
punishable by a fine of not more than $50 or imprisonment of not more 
than 30 days, or both in accordance with 40 United States Code, Section 
318c.
    (2) Violations of 18 United States Code, Section 930 (dangerous 
weapon clause) shall be punishable by a fine of $100,000 or imprisonment 
for not more than a year, or both, unless there is intent to commit a 
crime with the weapon, in which case the punishment shall be a fine of 
$250,000 or imprisonment for not more than five years, or both.
    (3) Nothing contained in this part shall be construed to abrogate 
any other Federal, District of Columbia, or Texas law or regulations, or 
any Tarrant County ordinance applicable to the property.

[59 FR 41978, Aug. 16, 1994]

[[Page 553]]



CHAPTER VII--FEDERAL LAW ENFORCEMENT TRAINING CENTER, DEPARTMENT OF THE 
                                TREASURY




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Part                                                                Page
700             Regulations governing conduct in or on the 
                    Federal Law Enforcement Training Center 
                    (FLETC) buildings and grounds...........         555

[[Page 555]]



PART 700_REGULATIONS GOVERNING CONDUCT IN OR ON THE FEDERAL LAW 
ENFORCEMENT TRAINING CENTER (FLETC) BUILDINGS AND GROUNDS--Table of 

Contents



Sec.
700.2 Applicability.
700.3 Recording presence.
700.4 Preservation of property.
700.5 Compliance with signs and directions.
700.6 Nuisances.
700.7 Alcoholic beverages, narcotics, and drugs.
700.8 Soliciting, vending, debt collection, and distribution of 
          handbills.
700.9 Photographs for news, advertising, or commercial purposes.
700.10 Vehicular and pedestrian traffic.
700.11 Weapons and explosives.
700.12 Authority to search persons and vehicles.
700.13 Nondiscrimination.
700.14 Smoking.

    Authority: 5 U.S.C. 301; 31 U.S.C. 321; Treasury Department Order 
No. 140-01, dated September 20, 1994; 41 FR 5869, dated Feb. 10, 1996.

    Source: 63 FR 39730, July 24, 1998, unless otherwise noted.



Sec. 700.2  Applicability.

    The regulations in this part apply to the buildings and surrounding 
property of the FLETC, Glynco, Georgia; Artesia, New Mexico; FLECT's 
Washington Office; any other temporary site FLETC may occupy; and to all 
persons entering such buildings or property.



Sec. 700.3  Recording presence.

    Except as otherwise ordered, the property shall be closed to the 
general public. Admission to the property will be limited to authorized 
individuals who will be required to obtain a visitor's pass and/or 
display identification documents, in accordance with FLETC policy.



Sec. 700.4  Preservation of property.

    It shall be unlawful for any person without proper authority to 
willfully destroy, damage, deface, or remove property (including Federal 
records) or any part thereof or any furnishing therein.



Sec. 700.5  Compliance with signs and directions.

    Persons in and on the property shall comply with the instructions of 
uniformed FLETC security officers, other authorized officials, official 
signs of a prohibitory or directory nature, and all applicable statutes 
and regulations.



Sec. 700.6  Nuisances.

    The use of loud, abusive, or profane language, except as part of an 
authorized practical training exercise, unwarranted loitering, 
unauthorized assembly, the creation of any hazard to persons or things, 
improper disposal of rubbish, or the commission of any disorderly 
conduct on the property is prohibited. Prohibited actions in the 
preceding sentence are limited to those actions which impede, obstruct, 
or otherwise interfere with the Government's business which includes, 
among other things, the maintenance of the facility, protection of 
persons and property, and the smooth administration of academic 
activities and supporting services. The entry, without specific 
permission, upon any part of the property to which authorized visitors 
do not customarily have access, is prohibited.



Sec. 700.7  Alcoholic beverages, narcotics, and drugs.

    Entering or being on the property, or operating a motor vehicle 
thereon, by a person under the influence of alcoholic beverages, 
narcotics, hallucinogenic or dangerous drugs, or marijuana is 
prohibited. The possession or use of any unlawful drug or substance 
contrary to the provisions of Federal, State, or local law in or on the 
property is prohibited.



Sec. 700.8  Soliciting, vending, debt collection and distribution of
handbills.

    The unauthorized soliciting for charity and contributions, 
commercial soliciting and vending of all kinds, the display or 
distribution of commercial advertising, or the collecting of private 
debts, other than legal service of process, in or on the property, is 
prohibited. This prohibition does not apply to Federal Law Enforcement 
Training Center concessions or notices posted by authorized employees on 
the bulletin boards. Distribution of material such

[[Page 556]]

as pamphlets, handbills, and flyers is prohibited without prior approval 
of the Director.



Sec. 700.9  Photographs for news, advertising, or commercial purposes.

    Photographs for news, advertising, or commercial purposes may be 
taken on the property only with the prior permission of the Director. 
Taking photographs of a student is prohibited without the consent of the 
student.



Sec. 700.10  Vehicular and pedestrian traffic.

    (a) Drivers of all vehicles on the property shall drive in a careful 
and safe manner at all times and shall comply with the signals and 
directions of security officers and all posted traffic signs. All 
persons on the property must comply with all applicable Federal, State, 
and local laws. All drivers operating a vehicle on property roadways 
must possess a valid driver's license.
    (b) The blocking of entrances, driveways, walks, loading platforms, 
or fire-hydrants in or on the property is prohibited.
    (c) Parking is permitted only in authorized locations.
    (d) This section may be supplemented from time to time by the 
Director by the issuance and posting of traffic directives. When so 
issued and posted, such directives shall have the same force and effect 
as if made a part hereof.



Sec. 700.11  Weapons and explosives.

    No person, while on the property, shall carry firearms, other 
dangerous or deadly weapons, or explosives, either openly or concealed, 
except for authorized training or official purposes, in accordance with 
FLETC regulations.



Sec. 700.12  Authority to search persons and vehicles.

    Persons and vehicles entering upon FLETC facilities are subject to 
search by authorized security officers.



Sec. 700.13  Nondiscrimination.

    (a) No one entering upon FLETC property shall discriminate against 
or harass any other person on such property, on the basis of race, 
color, religion, national origin, sex, sexual orientation, age, or 
disability, Sexual harassment is a form of sex discrimination and is 
expressly prohibited.
    (b) Appropriate action will be taken against any person who violates 
any discrimination prohibition contained in paragraph (a) of this 
section. However, this section does not create any legal rights 
enforceable against the Department of the Treasury, its officers, or 
employees, or any other person. Although this section does not create 
any enforceable rights, actions in violation of the section may still 
result in civil or criminal action in accordance with applicable laws.



Sec. 700.14  Smoking.

    Smoking of cigarettes, cigars and pipes is prohibited in all FLETC 
buildings and vehicles.

[[Page 557]]



 CHAPTER VIII--OFFICE OF INVESTMENT SECURITY, DEPARTMENT OF THE TREASURY




  --------------------------------------------------------------------
Part                                                                Page
800             Regulations pertaining to mergers, 
                    acquisitions, and takeovers by foreign 
                    persons.................................         559

[[Page 559]]



PART 800_REGULATIONS PERTAINING TO MERGERS, ACQUISITIONS, AND TAKEOVERS 
BY FOREIGN PERSONS--Table of Contents



                            Subpart A_General

Sec.
800.101 Scope.
800.102 Effect on other law.
800.103 Applicability rule; prospective application of certain 
          provisions.
800.104 Transactions or devices for avoidance.

                          Subpart B_Definitions

800.201 Business day.
800.202 Certification.
800.203 Committee; Chairperson of the Committee; Staff Chairperson.
800.204 Control.
800.205 Conversion.
800.206 Convertible voting instrument.
800.207 Covered transaction.
800.208 Critical infrastructure.
800.209 Critical technologies.
800.210 Effective date.
800.211 Entity.
800.212 Foreign entity.
800.213 Foreign government.
800.214 Foreign government-controlled transaction.
800.215 Foreign national.
800.216 Foreign person.
800.217 Hold.
800.218 Lead agency.
800.219 Parent.
800.220 Party or parties to a transaction.
800.221 Person.
800.222 Section 721.
800.223 Solely for the purpose of passive investment.
800.224 Transaction.
800.225 United States.
800.226 U.S. business.
800.227 U.S. national.
800.228 Voting interest.

                           Subpart C_Coverage

800.301 Transactions that are covered transactions.
800.302 Transactions that are not covered transactions.
800.303 Lending transactions.
800.304 Timing rule for convertible voting instruments.

                            Subpart D_Notice

800.401 Procedures for notice.
800.402 Contents of voluntary notice.
800.403 Deferral, rejection, or disposition of certain voluntary 
          notices.

        Subpart E_Committee Procedures: Review and Investigation

800.501 General.
800.502 Beginning of thirty-day review period.
800.503 Determination of whether to undertake an investigation.
800.504 Determination not to undertake an investigation.
800.505 Commencement of investigation.
800.506 Completion or termination of investigation and report to the 
          President.
800.507 Withdrawal of notice.
800.508 Role of the Secretary of Labor.
800.509 Materiality.

                      Subpart F_Finality of Action

800.601 Finality of actions under section 721.

             Subpart G_Provision and Handling of Information

800.701 Obligation of parties to provide information.
800.702 Confidentiality.

                           Subpart H_Penalties

800.801 Penalties.

    Authority: 50 U.S.C. App. 2170; E.O. 11858, as amended, 73 FR 4677.

    Source: 73 FR 70716, Nov. 21, 2008, unless otherwise noted.



                            Subpart A_General



Sec. 800.101  Scope.

    The regulations in this part implement section 721 of title VII of 
the Defense Production Act of 1950 (50 U.S.C. App. 2170), as amended, 
hereinafter referred to as ``section 721.'' The definitions in this part 
are applicable to section 721 and these regulations. The principal 
purpose of section 721 is to authorize the President to suspend or 
prohibit any covered transaction when, in the President's judgment, 
there is credible evidence to believe that the foreign person exercising 
control over a U.S. business might take action that threatens to impair 
the national security, and when provisions of law other than section 721 
and the International Emergency Economic Powers Act (50 U.S.C. 1701-
1706), do not, in the judgment of the President, provide adequate and 
appropriate authority for the President to protect the national security 
in the matter before the President. It is also a purpose of section 721

[[Page 560]]

to authorize the Committee to mitigate any threat to the national 
security of the United States that arises as a result of a covered 
transaction.



Sec. 800.102  Effect on other law.

    Nothing in this part shall be construed as altering or affecting any 
other authority, process, regulation, investigation, enforcement 
measure, or review provided by or established under any other provision 
of federal law, including the International Emergency Economic Powers 
Act, or any other authority of the President or the Congress under the 
Constitution of the United States.



Sec. 800.103  Applicability rule; prospective application of certain 
provisions.

    (a) Except as provided in paragraph (b) of this section and 
otherwise in this part, the regulations in this part apply from the 
effective date (as defined in Section 800.210).
    (b) Sections 800.204 (Control), 800.205 (Conversion), 800.206 
(Convertible voting instrument), 800.211 (Entity), 800.212 (Foreign 
entity), 800.216 (Foreign person), 800.220 (Party or parties to a 
transaction), 800.223 (Solely for the purpose of passive investment), 
800.224 (Transaction), 800.226 (U.S. business), and 800.228 (Voting 
interest), and the regulations in subpart C (Coverage) do not apply to 
any transaction for which the following has occurred before the 
effective date, in which case corresponding provisions of the 
regulations in this part that were in effect the day before the 
effective date will apply:
    (1) The parties to the transaction have executed a written agreement 
or other document establishing the material terms of the transaction;
    (2) A party has made a public offer to shareholders to buy shares of 
a U.S. business;
    (3) A shareholder has solicited proxies in connection with an 
election of the board of directors of a U.S. business or has requested 
the conversion of convertible voting securities; or
    (4) The parties have, in the Committee's view, otherwise made a 
commitment to engage in a transaction.

    Note to Sec. 800.103: See subpart H of this part for specific 
applicability rules pertaining to that subpart.



Sec. 800.104  Transactions or devices for avoidance.

    Any transaction or other device entered into or employed for the 
purpose of avoiding section 721 shall be disregarded, and section 721 
and the regulations in this part shall be applied to the substance of 
the transaction.

    Example. Corporation A is organized under the laws of a foreign 
state and is wholly owned and controlled by a foreign national. With a 
view towards avoiding possible application of section 721, Corporation A 
transfers money to a U.S. citizen, who, pursuant to informal 
arrangements with Corporation A and on its behalf, purchases all the 
shares in Corporation X, a U.S. business. That transaction is subject to 
section 721.



                          Subpart B_Definitions



Sec. 800.201  Business day.

    The term business day means Monday through Friday, except the legal 
public holidays specified in 5 U.S.C. 6103 or any other day declared to 
be a holiday by federal statute or executive order.



Sec. 800.202  Certification.

    (a) The term certification means a written statement signed by the 
chief executive officer or other duly authorized designee of a party to 
a transaction filing a notice or information, certifying that the notice 
or information filed:
    (1) Fully complies with the requirements of section 721, the 
regulations in this part, and any agreement or condition entered into 
with the Committee or any member of the Committee, and
    (2) Is accurate and complete in all material respects, as it relates 
to:
    (i) The transaction, and
    (ii) The party providing the certification, including its parents, 
subsidiaries, and any other related entities described in the notice or 
information.
    (b) For purposes of this section, a duly authorized designee is:
    (1) In the case of a partnership, any general partner thereof;
    (2) In the case of a corporation, any officer or director thereof;

[[Page 561]]

    (3) In the case of any entity lacking officers, directors, or 
partners, any individual within the organization exercising executive 
functions similar to those of an officer or director of a corporation or 
a general partner of a partnership; and
    (4) In the case of an individual, such individual or his or her 
legal representative.
    (c) In each case described in paragraphs (b)(1) through (b)(4) of 
this section, such designee must possess actual authority to make the 
certification on behalf of the party to the transaction filing a notice 
or information.

    Note to Sec. 800.202: A sample certification may be found at the 
Committee's section of the Department of the Treasury Web site at http:/
/www.treas.gov/offices/international-affairs/cfius/index.shtml.



Sec. 800.203  Committee; Chairperson of the Committee; Staff Chairperson.

    The term Committee means the Committee on Foreign Investment in the 
United States. The Chairperson of the Committee is the Secretary of the 
Treasury. The Staff Chairperson of the Committee is the Department of 
the Treasury official so designated by the Secretary of the Treasury or 
by the Secretary's designee.



Sec. 800.204  Control.

    (a) The term control means the power, direct or indirect, whether or 
not exercised, through the ownership of a majority or a dominant 
minority of the total outstanding voting interest in an entity, board 
representation, proxy voting, a special share, contractual arrangements, 
formal or informal arrangements to act in concert, or other means, to 
determine, direct, or decide important matters affecting an entity; in 
particular, but without limitation, to determine, direct, take, reach, 
or cause decisions regarding the following matters, or any other 
similarly important matters affecting an entity:
    (1) The sale, lease, mortgage, pledge, or other transfer of any of 
the tangible or intangible principal assets of the entity, whether or 
not in the ordinary course of business;
    (2) The reorganization, merger, or dissolution of the entity;
    (3) The closing, relocation, or substantial alteration of the 
production, operational, or research and development facilities of the 
entity;
    (4) Major expenditures or investments, issuances of equity or debt, 
or dividend payments by the entity, or approval of the operating budget 
of the entity;
    (5) The selection of new business lines or ventures that the entity 
will pursue;
    (6) The entry into, termination, or non-fulfillment by the entity of 
significant contracts;
    (7) The policies or procedures of the entity governing the treatment 
of non-public technical, financial, or other proprietary information of 
the entity;
    (8) The appointment or dismissal of officers or senior managers;
    (9) The appointment or dismissal of employees with access to 
sensitive technology or classified U.S. Government information; or
    (10) The amendment of the Articles of Incorporation, constituent 
agreement, or other organizational documents of the entity with respect 
to the matters described in paragraphs (a)(1) through (9) of this 
section.
    (b) In examining questions of control in situations where more than 
one foreign person has an ownership interest in an entity, consideration 
will be given to factors such as whether the foreign persons are related 
or have formal or informal arrangements to act in concert, whether they 
are agencies or instrumentalities of the national or subnational 
governments of a single foreign state, and whether a given foreign 
person and another person that has an ownership interest in the entity 
are both controlled by any of the national or subnational governments of 
a single foreign state.
    (c) The following minority shareholder protections shall not in 
themselves be deemed to confer control over an entity:
    (1) The power to prevent the sale or pledge of all or substantially 
all of the assets of an entity or a voluntary filing for bankruptcy or 
liquidation;
    (2) The power to prevent an entity from entering into contracts with 
majority investors or their affiliates;

[[Page 562]]

    (3) The power to prevent an entity from guaranteeing the obligations 
of majority investors or their affiliates;
    (4) The power to purchase an additional interest in an entity to 
prevent the dilution of an investor's pro rata interest in that entity 
in the event that the entity issues additional instruments conveying 
interests in the entity;
    (5) The power to prevent the change of existing legal rights or 
preferences of the particular class of stock held by minority investors, 
as provided in the relevant corporate documents governing such shares; 
and
    (6) The power to prevent the amendment of the Articles of 
Incorporation, constituent agreement, or other organizational documents 
of an entity with respect to the matters described in paragraphs (c)(1) 
through (5) of this section.
    (d) The Committee will consider, on a case-by-case basis, whether 
minority shareholder protections other than those listed in paragraph 
(c) of this section do not confer control over an entity.
    (e) Any transaction in which a foreign person acquires an additional 
interest in a U.S. business that was previously the subject of a covered 
transaction for which the Committee concluded all action under section 
721 shall not be deemed to be a transaction that could result in foreign 
control over that U.S. business (i.e., it is not a covered transaction). 
However, if a foreign person that did not acquire control of the U.S. 
business in the prior transaction is a party to the later transaction, 
the later transaction may be a covered transaction.

    Example 1. Corporation A is a U.S. business. A U.S. investor owns 50 
percent of the voting interest in Corporation A, and the remaining 
voting interest is owned in equal shares by five unrelated foreign 
investors. The foreign investors jointly financed their investment in 
Corporation A and vote as a single block on matters affecting 
Corporation A. The foreign investors have an informal arrangement to act 
in concert with regard to Corporation A, and, as a result, the foreign 
investors control Corporation A.
    Example 2. Same facts as in Example 1 with regard to the composition 
of Corporation A's shareholders. The foreign investors in Corporation A 
have no contractual or other commitments to act in concert, and have no 
informal arrangements to do so. Assuming no other relevant facts, the 
foreign investors do not control Corporation A.
    Example 3. Corporation A, a foreign person, is a private equity fund 
that routinely acquires substantial interests in companies and manages 
them for a period of time. Corporation B is a U.S. business. In addition 
to its acquisition of seven percent of Corporation B's voting shares, 
Corporation A acquires the right to terminate significant contracts of 
Corporation B. Corporation A controls Corporation B.
    Example 4. Corporation A, a foreign person, acquires a nine percent 
interest in the shares of Corporation B, a U.S. business. As part of the 
transaction, Corporation A also acquires certain veto rights that 
determine important matters affecting Corporation B, including the right 
to veto the dismissal of senior executives of Corporation B. Corporation 
A controls Corporation B.
    Example 5. Corporation A, a foreign person, acquires a thirteen 
percent interest in the shares of Corporation B, a U.S. business, and 
the right to appoint one member of Corporation B's seven-member Board of 
Directors. Corporation A receives minority shareholder protections 
listed in Sec. 800.204(c), but receives no other positive or negative 
rights with respect to Corporation B. Assuming no other relevant facts, 
Corporation A does not control Corporation B.
    Example 6. Corporation A, a foreign person, acquires a twenty 
percent interest in the shares of Corporation B, a U.S. business. 
Corporation A has negotiated an irrevocable passivity agreement that 
completely precludes it from controlling Corporation B. Corporation A 
does, however, receive the right to prevent Corporation B from entering 
into contracts with majority investors or their affiliates and to 
prevent Corporation B from guaranteeing the obligations of majority 
investors or their affiliates. Assuming no other relevant facts, 
Corporation A does not control Corporation B.
    Example 7. Corporation A, a foreign person, acquires a 40 percent 
interest and important rights in Corporation B, a U.S. business. The 
documentation pertaining to the transaction gives no indication that 
Corporation A's interest in Corporation B may increase at a later date. 
Following its review of the transaction, the Committee informs the 
parties that the notified transaction is a covered transaction, and 
concludes action under section 721. Three years later, Corporation A 
acquires the remainder of the voting interest in Corporation B. Assuming 
no other relevant facts, because the Committee concluded all action with 
respect to Corporation A's earlier investment in the same U.S. business, 
and because no other foreign person is a party to this subsequent 
transaction, this subsequent transaction is not a covered transaction.

[[Page 563]]

    Example 8. Limited Partnership A comprises two limited partners, 
each of which holds 49 percent of the interest in the partnership, and a 
general partner, which holds two percent of the interest. The general 
partner has sole authority to determine, direct, and decide important 
matters affecting the partnership and a fund operated by the 
partnership. The general partner alone controls Limited Partnership A 
and the fund.
    Example 9. Same facts as in Example 8, except that each of the 
limited partners has the authority to veto major investments proposed by 
the general partner and to choose the fund's representatives on the 
boards of the fund's portfolio companies. The general partner and the 
limited partners each have control over Limited Partnership A and the 
fund.

    Note to Sec. 800.204: See Sec. 800.302(b) regarding the 
Committee's treatment of transactions in which a foreign person holds or 
acquires ten percent or less of the outstanding voting interest in a 
U.S. business solely for the purpose of passive investment.



Sec. 800.205  Conversion.

    The term conversion means the exercise of a right inherent in the 
ownership or holding of particular financial instruments to exchange any 
such instruments for voting instruments.



Sec. 800.206  Convertible voting instrument.

    The term convertible voting instrument means a financial instrument 
that currently does not entitle its owner or holder to voting rights but 
is convertible into a voting instrument.



Sec. 800.207  Covered transaction.

    The term covered transaction means any transaction that is proposed 
or pending after August 23, 1988, by or with any foreign person, which 
could result in control of a U.S. business by a foreign person.



Sec. 800.208  Critical infrastructure.

    The term critical infrastructure means, in the context of a 
particular covered transaction, a system or asset, whether physical or 
virtual, so vital to the United States that the incapacity or 
destruction of the particular system or asset of the entity over which 
control is acquired pursuant to that covered transaction would have a 
debilitating impact on national security.



Sec. 800.209  Critical technologies.

    The term critical technologies means:
    (a) Defense articles or defense services covered by the United 
States Munitions List (USML), which is set forth in the International 
Traffic in Arms Regulations (ITAR) (22 CFR parts 120-130);
    (b) Those items specified on the Commerce Control List (CCL) set 
forth in Supplement No. 1 to part 774 of the Export Administration 
Regulations (EAR) (15 CFR parts 730-774) that are controlled pursuant to 
multilateral regimes (i.e., for reasons of national security, chemical 
and biological weapons proliferation, nuclear nonproliferation, or 
missile technology), as well as those that are controlled for reasons of 
regional stability or surreptitious listening;
    (c) Specially designed and prepared nuclear equipment, parts and 
components, materials, software, and technology specified in the 
Assistance to Foreign Atomic Energy Activities regulations (10 CFR part 
810), and nuclear facilities, equipment, and material specified in the 
Export and Import of Nuclear Equipment and Material regulations (10 CFR 
part 110); and
    (d) Select agents and toxins specified in the Select Agents and 
Toxins regulations (7 CFR part 331, 9 CFR part 121, and 42 CFR part 73).



Sec. 800.210  Effective date.

    The term effective date means December 22, 2008.



Sec. 800.211  Entity.

    The term entity means any branch, partnership, group or sub-group, 
association, estate, trust, corporation or division of a corporation, or 
organization (whether or not organized under the laws of any State or 
foreign state); assets (whether or not organized as a separate legal 
entity) operated by any one of the foregoing as a business undertaking 
in a particular location or for particular products or services; and any 
government (including a foreign national or subnational government, the 
United States Government, a subnational government within the United

[[Page 564]]

States, and any of their respective departments, agencies, or 
instrumentalities). (See examples following Sec. Sec. 800.301(c) and 
800.302(c).)



Sec. 800.212  Foreign entity.

    (a) The term foreign entity means any branch, partnership, group or 
sub-group, association, estate, trust, corporation or division of a 
corporation, or organization organized under the laws of a foreign state 
if either its principal place of business is outside the United States 
or its equity securities are primarily traded on one or more foreign 
exchanges.
    (b) Notwithstanding paragraph (a) of this section, any branch, 
partnership, group or sub-group, association, estate, trust, corporation 
or division of a corporation, or organization that demonstrates that a 
majority of the equity interest in such entity is ultimately owned by 
U.S. nationals is not a foreign entity.



Sec. 800.213  Foreign government.

    The term foreign government means any government or body exercising 
governmental functions, other than the United States Government or a 
subnational government of the United States. The term includes, but is 
not limited to, national and subnational governments, including their 
respective departments, agencies, and instrumentalities.



Sec. 800.214  Foreign government-controlled transaction.

    The term foreign government-controlled transaction means any covered 
transaction that could result in control of a U.S. business by a foreign 
government or a person controlled by or acting on behalf of a foreign 
government.



Sec. 800.215  Foreign national.

    The term foreign national means any individual other than a U.S. 
national.



Sec. 800.216  Foreign person.

    The term foreign person means:
    (a) Any foreign national, foreign government, or foreign entity; or
    (b) Any entity over which control is exercised or exercisable by a 
foreign national, foreign government, or foreign entity.

    Example 1. Corporation A is organized under the laws of a foreign 
state and is only engaged in business outside the United States. All of 
its shares are held by Corporation X, which controls Corporation A. 
Corporation X is organized in the United States and is wholly owned and 
controlled by U.S. nationals. Assuming no other relevant facts, 
Corporation A, although organized and only operating outside the United 
States, is not a foreign person.
    Example 2. Same facts as in the first sentence of Example 1. The 
government of the foreign state under whose laws Corporation A is 
organized exercises control over Corporation A through government 
interveners. Corporation A is a foreign person.
    Example 3. Corporation A is organized in the United States, is 
engaged in interstate commerce in the United States, and is controlled 
by Corporation X. Corporation X is organized under the laws of a foreign 
state, its principal place of business is located outside the United 
States, and 50 percent of its shares are held by foreign nationals and 
50 percent of its shares are held by U.S. nationals. Both Corporation A 
and Corporation X are foreign persons. Corporation A is also a U.S. 
business.
    Example 4. Corporation A is organized under the laws of a foreign 
state and is owned and controlled by a foreign national. A branch of 
Corporation A engages in interstate commerce in the United States. 
Corporation A (including its branch) is a foreign person. The branch is 
also a U.S. business.
    Example 5. Corporation A is a corporation organized under the laws 
of a foreign state and its principal place of business is located 
outside the United States. Forty-five percent of the voting interest in 
Corporation A is owned in equal shares by numerous unrelated foreign 
investors, none of whom has control. The foreign investors have no 
formal or informal arrangement to act in concert with regard to 
Corporation A with any other holder of voting interest in Corporation A. 
Corporation A demonstrates that the remainder of the voting interest in 
Corporation A is held by U.S. nationals. Assuming no other relevant 
facts, Corporation A is not a foreign person.
    Example 6. Same facts as Example 5, except that one of the foreign 
investors controls Corporation A. Assuming no other relevant facts, 
Corporation A is not a foreign entity pursuant to Sec. 800.212(b), but 
it is a foreign person because it is controlled by a foreign person.



Sec. 800.217  Hold.

    The terms hold(s) and holding mean legal or beneficial ownership, 
whether direct or indirect, whether through fiduciaries, agents, or 
other means.

[[Page 565]]



Sec. 800.218  Lead agency.

    The term lead agency means an agency designated by the Chairperson 
of the Committee to have primary responsibility, on behalf of the 
Committee, for the specific activity for which the Chairperson 
designates it as a lead agency, including all or a portion of a review, 
an investigation, or the negotiation or monitoring of a mitigation 
agreement or condition.



Sec. 800.219  Parent.

    (a) The term parent means a person who or which directly or 
indirectly:
    (1) Holds or will hold at least 50 percent of the outstanding voting 
interest in an entity; or
    (2) Holds or will hold the right to at least 50 percent of the 
profits of an entity, or has or will have the right in the event of the 
dissolution to at least 50 percent of the assets of that entity.
    (b) Any entity that meets the conditions of paragraphs (a)(1) or (2) 
of this section with respect to another entity (i.e., the intermediate 
parent) is also a parent of any other entity of which the intermediate 
parent is a parent.

    Example 1. Corporation P holds 50 percent of the voting interest in 
Corporations R and S. Corporation R holds 40 percent of the voting 
interest in Corporation X; Corporation S holds 50 percent of the voting 
interest in Corporation Y, which in turn holds 50 percent of the voting 
interest in Corporation Z. Corporation P is a parent of Corporations R, 
S, Y, and Z, but not of Corporation X. Corporation S is a parent of 
Corporation Y and Z, and Corporation Y is a parent of Corporation Z.
    Example 2. Corporation A holds warrants which when exercised will 
entitle it to vote 50 percent of the outstanding shares of Corporation 
B. Corporation A is a parent of Corporation B.



Sec. 800.220  Party or parties to a transaction.

    The terms party to a transaction and parties to a transaction mean:
    (a) In the case of an acquisition of an ownership interest in an 
entity, the person acquiring the ownership interest, and the person from 
which such ownership interest is acquired, without regard to any person 
providing brokerage or underwriting services for the transaction;
    (b) In the case of a merger, the surviving entity, and the entity or 
entities that are merged into that entity as a result of the 
transaction;
    (c) In the case of a consolidation, the entities being consolidated, 
and the new consolidated entity;
    (d) In the case of a proxy solicitation, the person soliciting 
proxies, and the person who issued the voting interest;
    (e) In the case of the acquisition or conversion of convertible 
voting instruments, the issuer and the person holding the convertible 
voting instruments; and
    (f) In the case of any other type of transaction, any person who is 
in a role comparable to that of a person described in paragraphs (a) 
through (e) of this section.



Sec. 800.221  Person.

    The term person means any individual or entity.



Sec. 800.222  Section 721.

    The term section 721 means section 721 of title VII of the Defense 
Production Act of 1950, 50 U.S.C. App. 2170.



Sec. 800.223  Solely for the purpose of passive investment.

    Ownership interests are held or acquired solely for the purpose of 
passive investment if the person holding or acquiring such interests 
does not plan or intend to exercise control, does not possess or develop 
any purpose other than passive investment, and does not take any action 
inconsistent with holding or acquiring such interests solely for the 
purpose of passive investment. (See Sec. 800.302(b).)

    Example. Corporation A, a foreign person, acquires a voting interest 
in Corporation B, a U.S. business. In addition to the voting interest, 
Corporation A negotiates the right to appoint a member of Corporation 
B's Board of Directors. The acquisition by Corporation A of a voting 
interest in Corporation B is not solely for the purpose of passive 
investment.



Sec. 800.224  Transaction.

    The term transaction means a proposed or completed merger, 
acquisition, or takeover. It includes:
    (a) The acquisition of an ownership interest in an entity.

[[Page 566]]

    (b) The acquisition or conversion of convertible voting instruments 
of an entity.
    (c) The acquisition of proxies from holders of a voting interest in 
an entity.
    (d) A merger or consolidation.
    (e) The formation of a joint venture.
    (f) A long-term lease under which a lessee makes substantially all 
business decisions concerning the operation of a leased entity, as if it 
were the owner.

    Note to Sec. 800.224(b): See Sec. 800.304 regarding factors the 
Committee will consider in determining whether to include the rights to 
be acquired by a foreign person upon the conversion of convertible 
voting instruments as part of the Committee's assessment of whether a 
transaction that involves such instruments is a covered transaction.

    Example. Corporation A, a foreign person, signs a concession 
agreement to operate the toll road business of Corporation B, a U.S. 
business, for 99 years. Corporation B, however, is required under the 
agreement to perform safety and security functions with respect to the 
business and to monitor compliance by Corporation A with the operating 
requirements of the agreement on an ongoing basis. Corporation B may 
terminate the agreement or impose other penalties for breach of these 
operating requirements. Assuming no other relevant facts, this is not a 
transaction.



Sec. 800.225  United States.

    The term United States or U.S. means the United States of America, 
the States of the United States, the District of Columbia, and any 
commonwealth, territory, dependency, or possession of the United States, 
or any subdivision of the foregoing, and includes the Outer Continental 
Shelf, as defined in 43 U.S.C. 1331(a). For purposes of these 
regulations and their examples, an entity organized under the laws of 
the United States of America, one of the States, the District of 
Columbia, or a commonwealth, territory, dependency, or possession of the 
United States is an entity organized ``in the United States.''



Sec. 800.226  U.S. business.

    The term U.S. business means any entity, irrespective of the 
nationality of the persons that control it, engaged in interstate 
commerce in the United States, but only to the extent of its activities 
in interstate commerce.

    Example 1. Corporation A is organized under the laws of a foreign 
state and is wholly owned and controlled by a foreign national. It 
engages in interstate commerce in the United States through a branch or 
subsidiary. Its branch or subsidiary is a U.S. business. Corporation A 
and its branch or subsidiary is each also a foreign person should any of 
them engage in a transaction involving a U.S. business.
    Example 2. Same facts as in the first sentence of Example 1. 
Corporation A, however, does not have a branch office, subsidiary, or 
fixed place of business in the United States. It exports and licenses 
technology to an unrelated company in the United States. Assuming no 
other relevant facts, Corporation A is not a U.S. business.
    Example 3. Corporation A, a company organized under the laws of a 
foreign state, is wholly owned and controlled by Corporation X. 
Corporation X is organized in the United States and is wholly owned and 
controlled by U.S. nationals. Corporation A does not have a branch 
office, subsidiary, or fixed place of business in the United States. It 
exports goods to Corporation X and to unrelated companies in the United 
States. Assuming no other relevant facts, Corporation A is not a U.S. 
business.



Sec. 800.227  U.S. national.

    The term U.S. national means a citizen of the United States or an 
individual who, although not a citizen of the United States, owes 
permanent allegiance to the United States.



Sec. 800.228  Voting interest.

    The term voting interest means any interest in an entity that 
entitles the owner or holder of that interest to vote for the election 
of directors of the entity (or, with respect to unincorporated entities, 
individuals exercising similar functions) or to vote on other matters 
affecting the entity.



                           Subpart C_Coverage



Sec. 800.301  Transactions that are covered transactions.

    Transactions that are covered transactions include, without 
limitation:
    (a) A transaction which, irrespective of the actual arrangements for 
control provided for in the terms of the transaction, results or could 
result in control of a U.S. business by a foreign person.


[[Page 567]]


    Example 1. Corporation A, a foreign person, proposes to purchase all 
of the shares of Corporation X, which is a U.S. business. As the sole 
owner, Corporation A will have the right to elect directors and appoint 
other primary officers of Corporation X, and those directors will have 
the right to make decisions about the closing and relocation of 
particular production facilities and the termination of significant 
contracts. The directors also will have the right to propose to 
Corporation A, the sole shareholder, the dissolution of Corporation X 
and the sale of its principal assets. The proposed transaction is a 
covered transaction.
    Example 2. Same facts as in Example 1, except that Corporation A 
plans to retain the existing directors of Corporation X, all of whom are 
U.S. nationals. Although Corporation A may choose not to exercise its 
power to elect new directors for Corporation X, Corporation A 
nevertheless will have that exercisable power. The proposed transaction 
is a covered transaction.
    Example 3. Corporation A, a foreign person, proposes to purchase 50 
percent of the shares in Corporation X, a U.S. business, from 
Corporation B, also a U.S. business. Corporation B would retain the 
other 50 percent of the shares in Corporation X, and Corporation A and 
Corporation B would contractually agree that Corporation A would not 
exercise its voting and other rights for ten years. The proposed 
transaction is a covered transaction.

    (b) A transaction in which a foreign person conveys its control of a 
U.S. business to another foreign person.

    Example. Corporation X is a U.S. business, but is wholly owned and 
controlled by Corporation Y, a foreign person. Corporation Z, also a 
foreign person, but not related to Corporation Y, seeks to acquire 
Corporation X from Corporation Y. The proposed transaction is a covered 
transaction because it could result in control of Corporation X, a U.S. 
business, by another foreign person, Corporation Z.

    (c) A transaction that results or could result in control by a 
foreign person of any part of an entity or of assets, if such part of an 
entity or assets constitutes a U.S. business. (See Sec. 800.302(c).)

    Example 1. Corporation X, a foreign person, has a branch office 
located in the United States. Corporation A, a foreign person, proposes 
to buy that branch office. The proposed transaction is a covered 
transaction.
    Example 2. Corporation A, a foreign person, buys a branch office 
located entirely outside the United States of Corporation Y, which is 
incorporated in the United States. Assuming no other relevant facts, the 
branch office of Corporation Y is not a U.S. business, and the 
transaction is not a covered transaction.
    Example 3. Corporation A, a foreign person, makes a start-up, or 
``greenfield,'' investment in the United States. That investment 
involves such activities as separately arranging for the financing of 
and the construction of a plant to make a new product, buying supplies 
and inputs, hiring personnel, and purchasing the necessary technology. 
The investment may involve the acquisition of shares in a newly 
incorporated subsidiary. Assuming no other relevant facts, Corporation A 
will not have acquired a U.S. business, and its greenfield investment is 
not a covered transaction.
    Example 4. Corporation A, a foreign person, purchases substantially 
all of the assets of Corporation B. Corporation B, which is incorporated 
in the United States, was in the business of producing industrial 
equipment, but stopped producing and selling such equipment one week 
before Corporation A purchased substantially all of its assets. At the 
time of the transaction, Corporation B continued to have employees on 
its payroll, maintained know-how in producing the industrial equipment 
it previously produced, and maintained relationships with its prior 
customers, all of which were transferred to Corporation A. The 
acquisition of substantially all of the assets of Corporation B by 
Corporation A is a covered transaction.
    Example 5. Corporation A, a foreign person, owns businesses both 
outside the United States and in the United States. Corporation B, a 
foreign person, acquires Corporation A. The acquisition of Corporation A 
by Corporation B is a covered transaction with respect to Corporation 
A's businesses in the United States.
    Example 6. Corporation X, a foreign person, seeks to acquire from 
Corporation A, a U.S. business, an empty warehouse facility located in 
the United States. The acquisition would be limited to the physical 
facility, and would not include customer lists, intellectual property, 
or other proprietary information, or other intangible assets or the 
transfer of personnel. Assuming no other relevant facts, the facility is 
not an entity and therefore not a U.S. business, and the proposed 
acquisition of the facility is not a covered transaction.
    Example 7. Same facts as Example 6, except that, in addition to the 
proposed acquisition of Corporation A's warehouse facility, Corporation 
X would acquire the personnel, customer list, equipment, and inventory 
management software used to operate the facility. Under these facts, 
Corporation X is acquiring a U.S. business, and the proposed acquisition 
is a covered transaction.

    (d) A joint venture in which the parties enter into a contractual or 
other

[[Page 568]]

similar arrangement, including an agreement on the establishment of a 
new entity, but only if one or more of the parties contributes a U.S. 
business and a foreign person could control that U.S. business by means 
of the joint venture.

    Example 1. Corporation A, a foreign person, and Corporation X, a 
U.S. business, form a separate corporation, JV Corporation, to which 
Corporation A contributes only cash and Corporation X contributes a U.S. 
business. Each owns 50 percent of the shares of JV Corporation and, 
under the Articles of Incorporation of JV Corporation, both Corporation 
A and Corporation X have veto power over all of the matters affecting JV 
Corporation identified under Sec. 800.204(a)(1) through (10), giving 
them both control over JV Corporation. The formation of JV Corporation 
is a covered transaction.
    Example 2. Corporation A, a foreign person, and Corporation X, a 
U.S. business, form a separate corporation, JV Corporation, to which 
Corporation A contributes funding and managerial and technical 
personnel, while Corporation X contributes certain land and equipment 
that do not in this example constitute a U.S. business. Corporations A 
and B each have a 50 percent interest in the joint venture. Assuming no 
other relevant facts, the formation of JV Corporation is not a covered 
transaction.



Sec. 800.302  Transactions that are not covered transactions.

    Transactions that are not covered transactions include, without 
limitation:
    (a) A stock split or pro rata stock dividend that does not involve a 
change in control.

    Example. Corporation A, a foreign person, holds 10,000 shares of 
Corporation B, a U.S. business, constituting ten percent of the stock of 
Corporation B. Corporation B pays a 2-for-1 stock dividend. As a result 
of this stock split, Corporation A holds 20,000 shares of Corporation B, 
still constituting ten percent of the stock of Corporation B. Assuming 
no other relevant facts, the acquisition of additional shares is not a 
covered transaction.

    (b) A transaction that results in a foreign person holding ten 
percent or less of the outstanding voting interest in a U.S. business 
(regardless of the dollar value of the interest so acquired), but only 
if the transaction is solely for the purpose of passive investment. (See 
Sec. 800.223.)

    Example 1. In an open market purchase solely for the purpose of 
passive investment, Corporation A, a foreign person, acquires seven 
percent of the voting securities of Corporation X, which is a U.S. 
business. Assuming no other relevant facts, the acquisition of the 
securities is not a covered transaction.
    Example 2. Corporation A, a foreign person, acquires nine percent of 
the voting shares of Corporation X, a U.S. business. Corporation A also 
negotiates contractual rights that give it the power to control 
important matters of Corporation X. The acquisition by Corporation A of 
the voting shares of Corporation X is not solely for the purpose of 
passive investment and is a covered transaction.
    Example 3. Corporation A, a foreign person, acquires five percent of 
the voting shares in Corporation B, a U.S. business. In addition to the 
securities, Corporation A obtains the right to appoint one out of eleven 
seats on Corporation B's Board of Directors. The acquisition by 
Corporation A of Corporation B's securities is not solely for the 
purpose of passive investment. Whether the transaction is a covered 
transaction would depend on whether Corporation A obtains control of 
Corporation B as a result of the transaction.

    (c) An acquisition of any part of an entity or of assets, if such 
part of an entity or assets do not constitute a U.S. business. (See 
Sec. 800.301(c).)

    Example 1. Corporation A, a foreign person, acquires, from separate 
U.S. nationals: (a) products held in inventory, (b) land, and (c) 
machinery for export. Assuming no other relevant facts, Corporation A 
has not acquired a U.S. business, and this acquisition is not a covered 
transaction.
    Example 2. Corporation X, a U.S. business, produces armored 
personnel carriers in the United States. Corporation A, a foreign 
person, seeks to acquire the annual production of those carriers from 
Corporation X. under a long-term contract. Assuming no other relevant 
facts, this transaction is not a covered transaction.
    Example 3. Same facts as Example 2, except that Corporation X, a 
U.S. business, has developed important technology in connection with the 
production of armored personnel carriers. Corporation A seeks to 
negotiate an agreement under which it would be licensed to manufacture 
using that technology. Assuming no other relevant facts, neither the 
proposed acquisition of technology pursuant to that license agreement, 
nor the actual acquisition, is a covered transaction.
    Example 4. Same facts as Example 2, except that Corporation A enters 
into a contractual arrangement to acquire the entire armored personnel 
carrier business operations of Corporation X, including production 
facilities,

[[Page 569]]

customer lists, technology, and staff. This transaction is a covered 
transaction.
    Example 5. Same facts as Example 2, except that Corporation X 
suspended all activities of its armored personnel carrier business a 
year ago and currently is in bankruptcy proceedings. Existing equipment 
provided by Corporation X is being serviced by another company, which 
purchased the service contracts from Corporation X. The business's 
production facilities are idle but still in working condition, some of 
its key former employees have agreed to return if the business is 
resuscitated, and its technology and customer and vendor lists are still 
current. Corporation X's personnel carrier business constitutes a U.S. 
business, and its purchase by Corporation A is a covered transaction.

    (d) An acquisition of securities by a person acting as a securities 
underwriter, in the ordinary course of business and in the process of 
underwriting.
    (e) An acquisition pursuant to a condition in a contract of 
insurance relating to fidelity, surety, or casualty obligations if the 
contract was made by an insurer in the ordinary course of business.



Sec. 800.303  Lending transactions.

    (a) The extension of a loan or a similar financing arrangement by a 
foreign person to a U.S. business, regardless of whether accompanied by 
the creation in the foreign person of a secured interest in securities 
or other assets of the U.S. business, shall not, by itself, constitute a 
covered transaction.
    (1) The Committee will accept notices concerning a loan or a similar 
financing arrangement that does not, by itself, constitute a covered 
transaction only at the time that, because of imminent or actual default 
or other condition, there is a significant possibility that the foreign 
person may obtain control of a U.S. business as a result of the default 
or other condition.
    (2) Where the Committee accepts a notice concerning a loan or a 
similar financing arrangement pursuant to paragraph (a)(1) of this 
section, and a party to the transaction is a foreign person that makes 
loans in the ordinary course of business, the Committee will take into 
account whether the foreign person has made any arrangements to transfer 
management decisions and day-to-day control over the U.S. business to 
U.S. nationals for purposes of determining whether such loan or 
financing arrangement constitutes a covered transaction.
    (b) Notwithstanding paragraph (a) of this section, a loan or a 
similar financing arrangement through which a foreign person acquires an 
interest in profits of a U.S. business, the right to appoint members of 
the board of directors of the U.S. business, or other comparable 
financial or governance rights characteristic of an equity investment 
but not of a typical loan may constitute a covered transaction.
    (c) An acquisition of voting interest or assets of a U.S. business 
by a foreign person upon default or other condition involving a loan or 
a similar financing arrangement does not constitute a covered 
transaction, provided that the loan was made by a syndicate of banks in 
a loan participation where the foreign lender (or lenders) in the 
syndicate:
    (1) Needs the majority consent of the U.S. participants in the 
syndicate to take action, and cannot on its own initiate any action vis-
[agrave]-vis the debtor; or
    (2) Does not have a lead role in the syndicate, and is subject to a 
provision in the loan or financing documents limiting its ability to 
control the debtor such that control for purposes of Sec. 800.204 could 
not be acquired.

    Example 1. Corporation A, which is a U.S. business, borrows funds 
from Corporation B, a bank organized under the laws of a foreign state 
and controlled by foreign persons. As a condition of the loan, 
Corporation A agrees not to sell or pledge its principal assets to any 
person. Assuming no other relevant facts, this lending arrangement does 
not alone constitute a covered transaction.
    Example 2. Same facts as in Example 1, except that Corporation A 
defaults on its loan from Corporation B and seeks bankruptcy protection. 
Corporation A has no funds with which to satisfy Corporation B's claim, 
which is greater than the value of Corporation A's principal assets. 
Corporation B's secured claim constitutes the only secured claim against 
Corporation A's principal assets, creating a high probability that 
Corporation B will receive title to Corporation A's principal assets, 
which constitute a U.S. business. Assuming no other relevant facts, the 
Committee would accept a notice of the impending bankruptcy court 
adjudication transferring control of Corporation A's principal assets to 
Corporation B, which would constitute a covered transaction.

[[Page 570]]

    Example 3. Corporation A, a foreign bank, makes a loan to 
Corporation B, a U.S. business. The loan documentation extends to 
Corporation A rights in Corporation B that are characteristic of an 
equity investment but not of a typical loan, including dominant minority 
representation on the board of directors of Corporation B and the right 
to be paid dividends by Corporation B. This loan is a covered 
transaction.



Sec. 800.304  Timing rule for convertible voting instruments.

    (a) For purposes of determining whether to include the rights that a 
holder of convertible voting instruments will acquire upon conversion of 
those instruments in the Committee's assessment of whether a notified 
transaction is a covered transaction, the Committee will consider 
factors that include:
    (1) The imminence of conversion;
    (2) Whether conversion depends on factors within the control of the 
acquiring party; and
    (3) Whether the amount of voting interest and the rights that would 
be acquired upon conversion can be reasonably determined at the time of 
acquisition.
    (b) When the Committee, applying paragraph (a) of this section, 
determines that the rights that the holder will acquire upon conversion 
will not be included in the Committee's assessment of whether a notified 
transaction is a covered transaction, the Committee will disregard the 
convertible voting instruments for purposes of that transaction except 
to the extent that they convey immediate rights to the holder with 
respect to the governance of the entity that issued the instruments.

    Example 1. Corporation A, a foreign person, notifies the Committee 
that it intends to buy common stock and debentures of Corporation X, a 
U.S. business. By their terms, the debentures are convertible into 
common stock only upon the occurrence of an event the timing of which is 
not in the control of Corporation A, and the number of common shares 
that would be acquired upon conversion cannot now be determined. 
Assuming no other relevant facts, the Committee will disregard the 
debentures in the course of its covered transaction analysis at the time 
that Corporation A acquires the debentures. In the event that it 
determines that the acquisition of the common stock is not a covered 
transaction, the Committee will so inform the parties. Once the 
conversion of the instruments becomes imminent, it may be appropriate 
for the Committee to consider the rights that would result from the 
conversion and whether the conversion is a covered transaction. The 
conversion of those debentures into common stock could be a covered 
transaction, depending on what percentage of Corporation X's voting 
securities Corporation A would receive and what powers those securities 
would confer on Corporation A.
    Example 2. Same facts as Example 1, except that the debentures at 
issue are convertible at the sole discretion of Corporation A after six 
months, and if converted, would represent a 50 percent interest in 
Corporation X. The Committee may consider the rights that would result 
from the conversion as part of its assessment.



                            Subpart D_Notice



Sec. 800.401  Procedures for notice.

    (a) A party or parties to a proposed or completed transaction may 
file a voluntary notice of the transaction with the Committee. Voluntary 
notice to the Committee is filed by sending:
    (1) One paper copy of the notice to the Staff Chairperson, Office of 
Investment Security, Department of the Treasury, 1500 Pennsylvania 
Avenue, NW., Washington, DC 20220, that includes, in English only, the 
information set out in Sec. 800.402, including the certification 
required under paragraph (l) of that section; and
    (2) One electronic copy of the same information required in 
paragraph (a)(1) of this section. See the Committee's section of the 
Department of the Treasury Web site, at http://www.treas.gov/offices/
international-affairs/cfius/ for electronic submission instructions.
    (b) If the Committee determines that a transaction for which no 
voluntary notice has been filed under paragraph (a) of this section may 
be a covered transaction and may raise national security considerations, 
the Staff Chairperson, acting on the recommendation of the Committee, 
may request the parties to the transaction to provide to the Committee 
the information necessary to determine whether the transaction is a 
covered transaction, and if the Committee determines that the 
transaction is a covered transaction, to file a notice under paragraph 
(a) of such covered transaction.

[[Page 571]]

    (c) Any member of the Committee, or his designee at or above the 
Under Secretary or equivalent level, may file an agency notice to the 
Committee through the Staff Chairperson regarding a transaction for 
which no voluntary notice has been filed under paragraph (a) of this 
section if that member has reason to believe that the transaction is a 
covered transaction and may raise national security considerations. 
Notices filed under this paragraph are deemed accepted upon their 
receipt by the Staff Chairperson. No agency notice under this paragraph 
shall be made with respect to a transaction more than three years after 
the date of the completion of the transaction, unless the Chairperson of 
the Committee, in consultation with other members of the Committee, 
files such an agency notice.
    (d) No communications other than those described in paragraphs (a) 
and (c) of this section shall constitute the filing or submitting of a 
notice for purposes of section 721.
    (e) Upon receipt of the certification required by Sec. 800.402(l) 
and an electronic copy of a notice filed under paragraph (a) of this 
section, the Staff Chairperson shall promptly inspect such notice for 
completeness.
    (f) Parties to a transaction are encouraged to consult with the 
Committee in advance of filing a notice and, in appropriate cases, to 
file with the Committee a draft notice or other appropriate documents to 
aid the Committee's understanding of the transaction and to provide an 
opportunity for the Committee to request additional information to be 
included in the notice. Any such pre-notice consultation should take 
place, or any draft notice should be provided, at least five business 
days before the filing of a voluntary notice. All information and 
documentary material made available to the Committee pursuant to this 
paragraph shall be considered to have been filed with the President or 
the President's designee for purposes of section 721(c) and Sec. 
800.702.
    (g) Information and other documentary material provided by the 
parties to the Committee after the filing of a voluntary notice under 
Sec. 800.401 shall be part of the notice, and shall be subject to the 
certification requirements of Sec. 800.402(l).



Sec. 800.402  Contents of voluntary notice.

    (a) If the parties to a transaction file a voluntary notice, they 
shall provide in detail the information set out in this section, which 
must be accurate and complete with respect to all parties and to the 
transaction. (See also paragraph (l) of this section and Sec. 
800.701(d) regarding certification requirements.)
    (b) In the case of a hostile takeover, if fewer than all the parties 
to a transaction file a voluntary notice, each notifying party shall 
provide the information set out in this section with respect to itself 
and, to the extent known or reasonably available to it, with respect to 
each non-notifying party.
    (c) A voluntary notice filed pursuant to Sec. 800.401(a) shall 
describe or provide, as applicable:
    (1) The transaction in question, including:
    (i) A summary setting forth the essentials of the transaction, 
including a statement of the purpose of the transaction, and its scope, 
both within and outside of the United States;
    (ii) The nature of the transaction, for example, whether the 
acquisition is by merger, consolidation, the purchase of voting 
interest, or otherwise;
    (iii) The name, United States address (if any), Web site address (if 
any), nationality (for individuals) or place of incorporation or other 
legal organization (for entities), and address of the principal place of 
business of each foreign person that is a party to the transaction;
    (iv) The name, address, website address (if any), principal place of 
business, and place of incorporation or other legal organization of the 
U.S. business that is the subject of the transaction;
    (v) The name, address, and nationality (for individuals) or place of 
incorporation or other legal organization (for entities) of:
    (A) The immediate parent, the ultimate parent, and each intermediate 
parent, if any, of the foreign person that is a party to the 
transaction;

[[Page 572]]

    (B) Where the ultimate parent is a private company, the ultimate 
owner(s) of such parent; and
    (C) Where the ultimate parent is a public company, any shareholder 
with an interest of greater than five percent in such parent;
    (vi) The name, address, website address (if any), and nationality 
(for individuals) or place of incorporation or other legal organization 
(for entities) of the person that will ultimately control the U.S. 
business being acquired;
    (vii) The expected date for completion of the transaction, or the 
date it was completed;
    (viii) A good faith approximation of the net value of the interest 
acquired in the U.S. business in U.S. dollars, as of the date of the 
notice; and
    (ix) The name of any and all financial institutions involved in the 
transaction, including as advisors, underwriters, or a source of 
financing for the transaction;
    (2) With respect to a transaction structured as an acquisition of 
assets of a U.S. business, a detailed description of the assets of the 
U.S. business being acquired, including the approximate value of those 
assets in U.S. dollars;
    (3) With respect to the U.S. business that is the subject of the 
transaction and any entity of which that U.S. business is a parent 
(unless that entity is excluded from the scope of the transaction):
    (i) Their respective business activities, as, for example, set forth 
in annual reports, and the product or service categories of each, 
including an estimate of U.S. market share for such product or service 
categories and the methodology used to determine market share, and a 
list of direct competitors for those primary product or service 
categories;
    (ii) The street address (and mailing address, if different) within 
the United States and website address (if any) of each facility that is 
manufacturing classified or unclassified products or producing services 
described in paragraph (c)(3)(v) of this section, their respective 
Commercial and Government Entity Code (CAGE Code) assigned by the 
Department of Defense, their Dun and Bradstreet identification (DUNS) 
number, and their North American Industry Classification System (NAICS) 
Code, if any;
    (iii) Each contract (identified by agency and number) that is 
currently in effect or was in effect within the past five years with any 
agency of the United States Government involving any information, 
technology, or data that is classified under Executive Order 12958, as 
amended, its estimated final completion date, and the name, office, and 
telephone number of the contracting official;
    (iv) Any other contract (identified by agency and number) that is 
currently in effect or was in effect within the past three years with 
any United States Government agency or component with national defense, 
homeland security, or other national security responsibilities, 
including law enforcement responsibility as it relates to defense, 
homeland security, or national security, its estimated final completion 
date, and the name, office, and telephone number of the contracting 
official;
    (v) Any products or services (including research and development):
    (A) That it supplies, directly or indirectly, to any agency of the 
United States Government, including as a prime contractor or first tier 
subcontractor, a supplier to any such prime contractor or subcontractor, 
or, if known by the parties filing the notice, a subcontractor at any 
tier; and
    (B) If known by the parties filing the notice, for which it is a 
single qualified source (i.e., other acceptable suppliers are readily 
available to be so qualified) or a sole source (i.e., no other supplier 
has needed technology, equipment, and manufacturing process 
capabilities) for any such agencies and whether there are other 
suppliers in the market that are available to be so qualified;
    (vi) Any products or services (including research and development) 
that:
    (A) It supplies to third parties and it knows are rebranded by the 
purchaser or incorporated into the products of another entity, and the 
names or brands under which such rebranded products or services are 
sold; and

[[Page 573]]

    (B) In the case of services, it provides on behalf of, or under the 
name of, another entity, and the name of any such entities;
    (vii) For the prior three years--
    (A) The number of priority rated contracts or orders under the 
Defense Priorities and Allocations System (DPAS) regulations (15 CFR 
part 700) that the U.S. business that is the subject of the transaction 
has received and the level of priority of such contracts or orders 
(``DX'' or ``DO''); and
    (B) The number of such priority rated contracts or orders that the 
U.S. business has placed with other entities and the level of priority 
of such contracts or orders, and the acquiring party's plan to ensure 
that any new entity formed at the completion of the notified transaction 
(or the U.S. business, if no new entity is formed) complies with the 
DPAS regulations; and
    (viii) A description and copy of the cyber security plan, if any, 
that will be used to protect against cyber attacks on the operation, 
design, and development of the U.S. business's services, networks, 
systems, data storage, and facilities;
    (4) Whether the U.S. business that is being acquired produces or 
trades in:
    (i) Items that are subject to the EAR and, if so, a description 
(which may group similar items into general product categories) of the 
items and a list of the relevant commodity classifications set forth on 
the CCL (i.e., Export Control Classification Numbers (ECCNs) or EAR99 
designation);
    (ii) Defense articles and defense services, and related technical 
data covered by the USML in the ITAR, and, if so, the category of the 
USML; articles and services for which commodity jurisdiction requests 
(22 CFR 120.4) are pending; and articles and services (including those 
under development) that may be designated or determined in the future to 
be defense articles or defense services pursuant to 22 CFR 120.3;
    (iii) Products and technology that are subject to export 
authorization administered by the Department of Energy (10 CFR part 
810), or export licensing requirements administered by the Nuclear 
Regulatory Commission (10 CFR part 110); or
    (iv) Select Agents and Toxins (7 CFR part 331, 9 CFR part 121, and 
42 CFR part 73);
    (5) Whether the U.S. business that is the subject of the 
transaction:
    (i) Possesses any licenses, permits, or other authorizations other 
than those under the regulatory authorities listed in paragraph (c)(4) 
of this section that have been granted by an agency of the United States 
Government (if applicable, identification of the relevant licenses shall 
be provided); or
    (ii) Has technology that has military applications (if so, an 
identification of such technology and a description of such military 
applications shall be included); and
    (6) With respect to the foreign person engaged in the transaction 
and its parents:
    (i) The business or businesses of the foreign person and its 
ultimate parent, as such businesses are described, for example, in 
annual reports, and the CAGE codes, NAICS codes, and DUNS numbers, if 
any, for such businesses;
    (ii) The plans of the foreign person for the U.S. business with 
respect to:
    (A) Reducing, eliminating, or selling research and development 
facilities;
    (B) Changing product quality;
    (C) Shutting down or moving outside of the United States facilities 
that are within the United States;
    (D) Consolidating or selling product lines or technology;
    (E) Modifying or terminating contracts referred to in paragraphs 
(c)(3)(iii) and (iv) of this section; or
    (F) Eliminating domestic supply by selling products solely to non-
domestic markets;
    (iii) Whether the foreign person is controlled by or acting on 
behalf of a foreign government, including as an agent or representative, 
or in some similar capacity, and if so, the identity of the foreign 
government;
    (iv) Whether a foreign government or a person controlled by or 
acting on behalf of a foreign government:
    (A) Has or controls ownership interests, including convertible 
voting instruments, of the acquiring foreign person or any parent of the 
acquiring foreign person, and if so, the nature and amount of any such 
instruments, and

[[Page 574]]

with regard to convertible voting instruments, the terms and timing of 
their conversion;
    (B) Has the right or power to appoint any of the principal officers 
or the members of the board of directors of the foreign person that is a 
party to the transaction or any parent of that foreign person;
    (C) Holds any contingent interest (for example, such as might arise 
from a lending transaction) in the foreign acquiring party and, if so, 
the rights that are covered by this contingent interest, and the manner 
in which they would be enforced; or
    (D) Has any other affirmative or negative rights or powers that 
could be relevant to the Committee's determination of whether the 
notified transaction is a foreign government-controlled transaction, and 
if there are any such rights or powers, their source (for example, a 
``golden share,'' shareholders agreement, contract, statute, or 
regulation) and the mechanics of their operation;
    (v) Any formal or informal arrangements among foreign persons that 
hold an ownership interest in the foreign person that is a party to the 
transaction or between such foreign person and other foreign persons to 
act in concert on particular matters affecting the U.S. business that is 
the subject of the transaction, and provide a copy of any documents that 
establish those rights or describe those arrangements;
    (vi) For each member of the board of directors or similar body 
(including external directors) and officers (including president, senior 
vice president, executive vice president, and other persons who perform 
duties normally associated with such titles) of the acquiring foreign 
person engaged in the transaction and its immediate, intermediate, and 
ultimate parents, and for any individual having an ownership interest of 
five percent or more in the acquiring foreign person engaged in the 
transaction and in the foreign person's ultimate parent, the following 
information:
    (A) A curriculum vitae or similar professional synopsis, provided as 
part of the main notice, and
    (B) The following ``personal identifier information,'' which, for 
privacy reasons, and to ensure limited distribution, shall be set forth 
in a separate document, not in the main notice:
    (1) Full name (last, first, middle name);
    (2) All other names and aliases used;
    (3) Business address;
    (4) Country and city of residence;
    (5) Date of birth;
    (6) Place of birth;
    (7) U.S. Social Security number (where applicable);
    (8) National identity number, including nationality, date and place 
of issuance, and expiration date (where applicable);
    (9) U.S. or foreign passport number (if more than one, all must be 
fully disclosed), nationality, date and place of issuance, and 
expiration date and, if a U.S. visa holder, the visa type and number, 
date and place of issuance, and expiration date; and
    (10) Dates and nature of foreign government and foreign military 
service (where applicable), other than military service at a rank below 
the top two non-commissioned ranks of the relevant foreign country; and
    (vii) The following ``business identifier information'' for the 
immediate, intermediate, and ultimate parents of the foreign person 
engaged in the transaction, including their main offices and branches:
    (A) Business name, including all names under which the business is 
known to be or has been doing business;
    (B) Business address;
    (C) Business phone number, fax number, and e-mail address; and
    (D) Employer identification number or other domestic tax or 
corporate identification number.
    (d) The voluntary notice shall list any filings with, or reports to, 
agencies of the United States Government that have been or will be made 
with respect to the transaction prior to its closing, indicating the 
agencies concerned, the nature of the filing or report, the date on 
which it was filed or the estimated date by which it will be filed, and 
a relevant contact point and/or telephone number within the agency, if 
known.

    Example. Corporation A, a foreign person, intends to acquire 
Corporation X, which is

[[Page 575]]

wholly owned and controlled by a U.S. national and which has a Facility 
Security Clearance under the Department of Defense Industrial Security 
Program. See Department of Defense, ``Industrial Security Regulation,'' 
DOD 5220.22-R, and ``Industrial Security Manual for Safeguarding 
Classified Information,'' DOD 5220.22-M. Corporation X accordingly files 
a revised Form DD SF-328, and enters into discussions with the Defense 
Security Service about effectively insulating its facilities from the 
foreign person. Corporation X may also have made filings with the 
Securities and Exchange Commission, the Department of Commerce, the 
Department of State, or other federal departments and agencies. 
Paragraph (d) of this section requires that certain specific information 
about these filings be reported to the Committee in a voluntary notice.

    (e) In the case of the establishment of a joint venture in which one 
or more of the parties is contributing a U.S. business, information for 
the voluntary notice shall be prepared on the assumption that the 
foreign person that is party to the joint venture has made an 
acquisition of the existing U.S. business that the other party to the 
joint venture is contributing or transferring to the joint venture. The 
voluntary notice shall describe the name and address of the joint 
venture and the entities that established, or are establishing, the 
joint venture.
    (f) In the case of the acquisition of some but not all of the assets 
of an entity, Sec. 800.402(c) requires submission of the specified 
information only with respect to the assets of the entity that have been 
or are proposed to be acquired.
    (g) Persons filing a voluntary notice shall, with respect to the 
foreign person that is a party to the transaction, its immediate parent, 
the U.S. business that is the subject of the transaction, and each 
entity of which the foreign person is a parent, append to the voluntary 
notice the most recent annual report of each such entity, in English. 
Separate reports are not required for any entity whose financial results 
are included within the consolidated financial results stated in the 
annual report of any parent of any such entity, unless the transaction 
involves the acquisition of a U.S. business whose parent is not being 
acquired, in which case the notice shall include the most recent audited 
financial statement of the U.S. business that is the subject of the 
transaction. If a U.S. business does not prepare an annual report and 
its financial results are not included within the consolidated financial 
results stated in the annual report of a parent, the filing shall 
include, if available, the entity's most recent audited financial 
statement (or, if an audited financial statement is not available, the 
unaudited financial statement).
    (h) Persons filing a voluntary notice shall, during the time that 
the matter is pending before the Committee or the President, promptly 
advise the Staff Chairperson of any material changes in plans, facts and 
circumstances addressed in the notice, and information provided or 
required to be provided to the Committee under Sec. 800.402, and shall 
file amendments to the notice to reflect such material changes. Such 
amendments shall become part of the notice filed by such persons under 
Sec. 800.401, and the certification required under Sec. 800.402(l) 
shall apply to such amendments. (See also Sec. 800.701(d).)
    (i) Persons filing a voluntary notice shall include a copy of the 
most recent asset or stock purchase agreement or other document 
establishing the agreed terms of the transaction.
    (j) Persons filing a voluntary notice shall include:
    (1) An organizational chart illustrating all of the entities or 
individuals above the foreign person that is a party to the transaction 
up to the person or persons having ultimate control of that person, 
including the percentage of shares held by each; and
    (2) The opinion of the person regarding whether:
    (i) It is a foreign person;
    (ii) It is controlled by a foreign government; and
    (iii) The transaction has resulted or could result in control of a 
U.S. business by a foreign person, and the reasons for its view, 
focusing in particular on any powers (for example, by virtue of a 
shareholders agreement, contract, statute, or regulation) that the 
foreign person will have with regard to the U.S. business, and how those 
powers can or will be exercised.
    (k) Persons filing a voluntary notice shall include information as 
to whether:

[[Page 576]]

    (1) Any party to the transaction is, or has been, a party to a 
mitigation agreement entered into or condition imposed under section 
721, and if so, shall specify the date and purpose of such agreement or 
condition and the United States Government signatories; and
    (2) Any party to the transaction has been a party to a transaction 
previously notified to the Committee.
    (l) Each party filing a voluntary notice shall provide a 
certification of the notice consistent with Sec. 800.202. A sample 
certification may be found on the Committee's section of the Department 
of the Treasury Web site, available at http://www.treas.gov/offices/
international-affairs/cfius/index.shtml.
    (m) Persons filing a voluntary notice shall include with the notice 
a list identifying each document provided as part of the notice, 
including all documents provided as attachments or exhibits to the 
narrative response.



Sec. 800.403  Deferral, rejection, or disposition of certain voluntary
notices.

    (a) The Committee, acting through the Staff Chairperson, may:
    (1) Reject any voluntary notice that does not comply with Sec. 
800.402 and so inform the parties promptly in writing;
    (2) Reject any voluntary notice at any time, and so inform the 
parties promptly in writing, if, after the notice has been submitted and 
before action by the Committee or the President has been concluded:
    (i) There is a material change in the transaction as to which 
notification has been made; or
    (ii) Information comes to light that contradicts material 
information provided in the notice by the parties;
    (3) Reject any voluntary notice at any time after the notice has 
been accepted, and so inform the parties promptly in writing, if the 
party or parties that have submitted the voluntary notice do not provide 
follow-up information requested by the Staff Chairperson within three 
business days of the request, or within a longer time frame if the 
parties so request in writing and the Staff Chairperson grants that 
request in writing; or
    (4) Reject any voluntary notice before the conclusion of a review or 
investigation, and so inform the parties promptly in writing, if one of 
the parties submitting the voluntary notice has not submitted the final 
certification required by Sec. 800.701(d).
    (b) Notwithstanding the authority of the Staff Chairperson under 
paragraph (a) of this section to reject an incomplete notice, the Staff 
Chairperson may defer acceptance of the notice, and the beginning of the 
thirty-day review period, to obtain any information required under this 
section that has not been submitted by the notifying party or parties or 
other parties to the transaction. Where necessary to obtain such 
information, the Staff Chairperson may inform any non-notifying party or 
parties that notice has been filed with respect to a proposed 
transaction involving the party, and request that certain information 
required under this section, as specified by the Staff Chairperson, be 
provided to the Committee within seven days after receipt of the Staff 
Chairperson's request.
    (c) The Staff Chairperson shall notify the parties when the 
Committee has found that the transaction that is the subject of a 
voluntary notice is not a covered transaction.

    Example 1. The Staff Chairperson receives a joint notice from 
Corporation A, a foreign person, and Corporation X, a company that is 
owned and controlled by U.S. nationals, with respect to Corporation A's 
intent to purchase all of the shares of Corporation X. The joint notice 
does not contain any information described under Sec. 
800.402(c)(3)(iii) and (iv) concerning classified materials and products 
or services supplied to the U.S. military services. The Staff 
Chairperson may reject the notice or defer the start of the thirty-day 
review period until the parties have supplied the omitted information.
    Example 2. Same facts as in the first sentence of Example 1, except 
that the joint notice indicates that Corporation A does not intend to 
purchase Corporation X's Division Y, which is engaged in classified work 
for a U.S. Government agency. Corporations A and X notify the Committee 
on the 25th day of the 30-day notice period that Division Y will also be 
acquired by Corporation A. This fact constitutes a material change with 
respect to the transaction as originally notified, and the Staff 
Chairperson may reject the notice.

[[Page 577]]

    Example 3. The Staff Chairperson receives a joint notice by 
Corporation A, a foreign person, and Corporation X, a U.S. business, 
indicating that Corporation A intends to purchase five percent of the 
voting securities of Corporation X. Under the particular facts and 
circumstances presented, the Committee concludes that Corporation A's 
purchase of this interest in Corporation X could not result in foreign 
control of Corporation X. The Staff Chairperson shall advise the parties 
in writing that the transaction as presented is not subject to section 
721.
    Example 4. The Staff Chairperson receives a voluntary notice 
involving the acquisition by Company A, a foreign person, of the entire 
interest in Company X, a U.S. business. The notice mentions the 
involvement of a second foreign person in the transaction, Company B, 
but states that Company B is merely a passive investor in the 
transaction. During the course of the review, the parties provide 
information that clarifies that Company B has the right to appoint two 
members of Company X's board of directors. This information contradicts 
the material assertion in the notice that Company B is a passive 
investor. The Committee may reject this notice without concluding review 
under section 721.



        Subpart E_Committee Procedures: Review and Investigation



Sec. 800.501  General.

    (a) The Committee's review or investigation (if necessary) shall 
examine, as appropriate, whether:
    (1) The transaction is by or with any foreign person and could 
result in foreign control of a U.S. business;
    (2) There is credible evidence to support a belief that any foreign 
person exercising control of that U.S. business might take action that 
threatens to impair the national security of the United States; and
    (3) Provisions of law, other than section 721 and the International 
Emergency Economic Powers Act, provide adequate and appropriate 
authority to protect the national security of the United States.
    (b) During the thirty-day review period or during an investigation, 
the Staff Chairperson may invite the parties to a notified transaction 
to attend a meeting with the Committee staff to discuss and clarify 
issues pertaining to the transaction. During an investigation, a party 
to the transaction under investigation may request a meeting with the 
Committee staff; such a request ordinarily will be granted.
    (c) The Staff Chairperson shall be the point of contact for 
receiving material filed with the Committee, including notices.
    (d) Where more than one lead agency is designated, communications on 
material matters between a party to the transaction and a lead agency 
shall include all lead agencies designated with regard to those matters.



Sec. 800.502  Beginning of thirty-day review period.

    (a) The Staff Chairperson of the Committee shall accept a voluntary 
notice the next business day after the Staff Chairperson has:
    (1) Determined that the notice complies with Sec. 800.402; and
    (2) Disseminated the notice to all members of the Committee.
    (b) A thirty-day period for review of a transaction shall commence 
on the date on which the voluntary notice has been accepted, agency 
notice has been received by the Staff Chairperson of the Committee, or 
the Chairperson of the Committee has requested a review pursuant to 
Sec. 800.401(b). Such review shall end no later than the thirtieth day 
after it has commenced, or if the thirtieth day is not a business day, 
no later than the next business day after the thirtieth day.
    (c) The Staff Chairperson shall promptly and in writing advise all 
parties to a transaction that have filed a voluntary notice of:
    (1) The acceptance of the notice;
    (2) The date on which the review begins; and
    (3) The designation of any lead agency or agencies.
    (d) Within two business days after receipt of an agency notice by 
the Staff Chairperson, the Staff Chairperson shall send written advice 
of such notice to the parties to a covered transaction. Such written 
advice shall identify the date on which the review began.
    (e) The Staff Chairperson shall promptly circulate to all Committee 
members any draft pre-filing notice, any agency notice, any complete 
notice, and any subsequent information filed by the parties.

[[Page 578]]



Sec. 800.503  Determination of whether to undertake an investigation.

    (a) After a review of a notified transaction under Sec. 800.502, 
the Committee shall undertake an investigation of any transaction that 
it has determined to be a covered transaction if:
    (1) A member of the Committee (other than a member designated as ex 
officio under section 721(k)) advises the Staff Chairperson that the 
member believes that the transaction threatens to impair the national 
security of the United States and that the threat has not been 
mitigated; or
    (2) The lead agency recommends, and the Committee concurs, that an 
investigation be undertaken.
    (b) The Committee shall also undertake, after a review of a covered 
transaction under Sec. 800.502, an investigation to determine the 
effects on national security of any covered transaction that:
    (1) Is a foreign government-controlled transaction; or
    (2) Would result in control by a foreign person of critical 
infrastructure of or within the United States, if the Committee 
determines that the transaction could impair the national security and 
such impairment has not been mitigated.
    (c) The Committee shall undertake an investigation as described in 
paragraph (b) of this section unless the Chairperson of the Committee 
(or the Deputy Secretary of the Treasury) and the head of any lead 
agency (or his or her delegee at the deputy level or equivalent) 
designated by the Chairperson determine on the basis of the review that 
the covered transaction will not impair the national security of the 
United States.



Sec. 800.504  Determination not to undertake an investigation.

    If the Committee determines, during the review period described in 
Sec. 800.502, not to undertake an investigation of a notified covered 
transaction, action under section 721 shall be concluded. An official at 
the Department of the Treasury shall promptly send written advice to the 
parties to a covered transaction of a determination of the Committee not 
to undertake an investigation and to conclude action under section 721.



Sec. 800.505  Commencement of investigation.

    (a) If it is determined that an investigation should be undertaken, 
such investigation shall commence no later than the end of the thirty-
day review period described in Sec. 800.502.
    (b) An official of the Department of the Treasury shall promptly 
send written advice to the parties to a covered transaction of the 
commencement of an investigation.



Sec. 800.506  Completion or termination of investigation and report to 
the President.

    (a) The Committee shall complete an investigation no later than the 
45th day after the date the investigation commences, or, if the 45th day 
is not a business day, no later than the next business day after the 
45th day.
    (b) Upon completion or termination of any investigation, the 
Committee shall send a report to the President requesting the 
President's decision if:
    (1) The Committee recommends that the President suspend or prohibit 
the transaction;
    (2) The members of the Committee (other than a member designated as 
ex officio under section 721(k)) are unable to reach a decision on 
whether to recommend that the President suspend or prohibit the 
transaction; or
    (3) The Committee requests that the President make a determination 
with regard to the transaction.
    (c) In circumstances when the Committee sends a report to the 
President requesting the President's decision with respect to a covered 
transaction, such report shall include information relevant to sections 
721(d)(4)(A) and (B), and shall present the Committee's recommendation. 
If the Committee is unable to reach a decision to present a single 
recommendation to the President, the Chairperson of the Committee shall 
submit a report of the Committee to the President setting forth the 
differing views and presenting the issues for decision.
    (d) Upon completion or termination of an investigation, if the 
Committee determines to conclude all deliberative action under section 
721 with regard to a notified covered transaction without

[[Page 579]]

sending a report to the President, action under section 721 shall be 
concluded. An official at the Department of the Treasury shall promptly 
advise the parties to such a transaction in writing of a determination 
to conclude action.



Sec. 800.507  Withdrawal of notice.

    (a) A party (or parties) to a transaction that has filed notice 
under Sec. 800.401(a) may request in writing, at any time prior to 
conclusion of all action under section 721, that such notice be 
withdrawn. Such request shall be directed to the Staff Chairperson and 
shall state the reasons why the request is being made. Such requests 
will ordinarily be granted, unless otherwise determined by the 
Committee. An official of the Department of the Treasury will promptly 
advise the parties to the transaction in writing of the Committee's 
decision.
    (b) Any request to withdraw an agency notice by the agency that 
filed it shall be in writing and shall be effective only upon approval 
by the Committee. An official of the Department of the Treasury shall 
advise the parties to the transaction in writing of the Committee's 
decision to approve the withdrawal request within two business days of 
the Committee's decision.
    (c) In any case where a request to withdraw a notice is granted 
under paragraph (a) of this section:
    (1) The Staff Chairperson, in consultation with the Committee, shall 
establish, as appropriate:
    (i) A process for tracking actions that may be taken by any party to 
the covered transaction before notice is refiled under Sec. 800.401; 
and
    (ii) Interim protections to address specific national security 
concerns with the transaction identified during the review or 
investigation of the transaction.
    (2) The Staff Chairperson shall specify a time frame, as 
appropriate, for the parties to resubmit a notice and shall advise the 
parties of that time frame in writing.
    (d) A notice of a transaction that is submitted pursuant to 
paragraph (c)(2) of this section shall be deemed a new notice for 
purposes of the regulations in this part, including Sec. 800.601.



Sec. 800.508  Role of the Secretary of Labor.

    In response to a request from the Chairperson of the Committee, the 
Secretary of Labor shall identify for the Committee any risk mitigation 
provisions proposed to or by the Committee that would violate U.S. 
employment laws or require a party to violate U.S. employment laws. The 
Secretary of Labor shall serve no policy role on the Committee.



Sec. 800.509  Materiality.

    The Committee generally will not consider as material minor 
inaccuracies, omissions, or changes relating to financial or commercial 
factors not having a bearing on national security.



                      Subpart F_Finality of Action



Sec. 800.601  Finality of actions under section 721.

    (a) All authority available to the President or the Committee under 
section 721(d), including divestment authority, shall remain available 
at the discretion of the President with respect to covered transactions 
proposed or pending on or after August 23, 1988. Such authority shall 
not be exercised if:
    (1) The Committee, through its Staff Chairperson, has advised a 
party (or the parties) in writing that a particular transaction with 
respect to which voluntary notice has been filed is not a covered 
transaction;
    (2) The parties to the transaction have been advised in writing 
pursuant to Sec. 800.504 or Sec. 800.506(d) that the Committee has 
concluded all action under section 721 with respect to the covered 
transaction; or
    (3) The President has previously announced, pursuant to section 
721(d), his decision not to exercise his authority under section 721 
with respect to the covered transaction.
    (b) Divestment or other relief under section 721 shall not be 
available with respect to transactions that were completed prior to 
August 23, 1988.

[[Page 580]]



             Subpart G_Provision and Handling of Information



Sec. 800.701  Obligation of parties to provide information.

    (a) Parties to a transaction that is notified under subpart D shall 
provide information to the Staff Chairperson that will enable the 
Committee to conduct a full review and/or investigation of the proposed 
transaction, and shall promptly advise the Staff Chairperson of any 
material changes in plans or information pursuant to Sec. 800.402(h). 
If deemed necessary by the Committee, information may be obtained from 
parties to a transaction or other persons through subpoena or otherwise, 
pursuant to 50 U.S.C. App. 2155(a).
    (b) Documentary materials or information required or requested to be 
filed with the Committee under this part shall be submitted in English. 
Supplementary materials, such as annual reports, written in a foreign 
language, shall be submitted in certified English translation.
    (c) Any information filed with the Committee by a party to a covered 
transaction in connection with any action for which a report is required 
pursuant to section 721(l)(3)(B) with respect to the implementation of a 
mitigation agreement or condition described in section 721(l)(1)(A) 
shall be accompanied by a certification that complies with the 
requirements of section 721(n) and Sec. 800.202. A sample certification 
may be found at the Committee's section of the Department of the 
Treasury Web site at http://www.treas.gov/offices/international-affairs/
cfius/index.shtml.
    (d) At the conclusion of a review or investigation, each party that 
has filed additional information subsequent to the original notice shall 
file a final certification. (See Sec. 800.202.) A sample certification 
may be found at the Committee's section of the Department of the 
Treasury Web site at http://www.treas.gov/offices/international-affairs/
cfius/index.shtml.



Sec. 800.702  Confidentiality.

    (a) Any information or documentary material filed with the Committee 
pursuant to this part, including information or documentary material 
filed pursuant to Sec. 800.401(f), shall be exempt from disclosure 
under 5 U.S.C. 552 and no such information or documentary material may 
be made public, except as may be relevant to any administrative or 
judicial action or proceeding. Nothing in this part shall be construed 
to prevent disclosure to either House of Congress or to any duly 
authorized committee or subcommittee of the Congress, in accordance with 
subsections (b)(3) and (g)(2)(A) of section 721.
    (b) This section shall continue to apply with respect to information 
and documentary material filed with the Committee in any case where:
    (1) Action has concluded under section 721 concerning a notified 
transaction;
    (2) A request to withdraw notice is granted under Sec. 800.507, or 
where notice has been rejected under Sec. 800.403;
    (3) The Committee determines that a notified transaction is not a 
covered transaction; or
    (4) Such information or documentary material was filed pursuant to 
Sec. 800.401(f) and the parties do not subsequently file a notice 
pursuant to Sec. 800.401(a).
    (c) Nothing in paragraph (a) of this section shall be interpreted to 
prohibit the public disclosure by a party of documentary material or 
information that it has filed with the Committee. Any such documentary 
material or information so disclosed may subsequently be reflected in 
the public statements of the Chairperson, who is authorized to 
communicate with the public and the Congress on behalf of the Committee, 
or of the Chairperson's designee.
    (d) The provisions of 50 U.S.C. App. 2155(d) relating to fines and 
imprisonment shall apply with respect to the disclosure of information 
or documentary material filed with the Committee under these 
regulations.



                           Subpart H_Penalties



Sec. 800.801  Penalties.

    (a) Any person who, after the effective date, intentionally or 
through gross negligence, submits a material misstatement or omission in 
a notice or makes a false certification under Sec. Sec. 800.402(l) or 
800.701(c) may be liable to

[[Page 581]]

the United States for a civil penalty not to exceed $250,000 per 
violation. The amount of the penalty assessed for a violation shall be 
based on the nature of the violation.
    (b) Any person who, after the effective date, intentionally or 
through gross negligence, violates a material provision of a mitigation 
agreement entered into with, or a material condition imposed by, the 
United States under section 721(l) may be liable to the United States 
for a civil penalty not to exceed $250,000 per violation or the value of 
the transaction, whichever is greater. Any penalty assessed under this 
paragraph shall be based on the nature of the violation and shall be 
separate and apart from any damages sought pursuant to a mitigation 
agreement under section 721(l), or any action taken under section 
721(b)(1)(D).
    (c) A mitigation agreement entered into or amended under section 
721(l) after the effective date may include a provision providing for 
liquidated or actual damages for breaches of the agreement by parties to 
the transaction. The Committee shall set the amount of any liquidated 
damages as a reasonable assessment of the harm to the national security 
that could result from a breach of the agreement. Any mitigation 
agreement containing a liquidated damages provision shall include a 
provision specifying that the Committee will consider the severity of 
the breach in deciding whether to seek a lesser amount than that 
stipulated in the contract.
    (d) A determination to impose penalties under paragraph (a) or (b) 
of this section must be made by the named members of the Committee, 
except to the extent delegated by such official. Notice of the penalty, 
including a written explanation of the penalized conduct and the amount 
of the penalty, shall be sent to the penalized party by U.S. mail.
    (e) Upon receiving notice of the imposition of a penalty under 
paragraph (a) or (b) of this section, the penalized party may, within 15 
days of receipt of the notice of the penalty, submit a petition for 
reconsideration to the Staff Chairperson, including a defense, 
justification, or explanation for the penalized conduct. The Committee 
will review the petition and issue a final decision within 15 days of 
receipt of the petition.
    (f) The penalties authorized in paragraphs (a) and (b) of this 
section may be recovered in a civil action brought by the United States 
in federal district court.
    (g) The penalties available under this section are without prejudice 
to other penalties, civil or criminal, available under law.

[[Page 583]]



   CHAPTER IX--FEDERAL CLAIMS COLLECTION STANDARDS (DEPARTMENT OF THE 
                    TREASURY--DEPARTMENT OF JUSTICE)




  --------------------------------------------------------------------
Part                                                                Page
900             Scope of standards..........................         585
901             Standards for the administrative collection 
                    of claims...............................         587
902             Standards for the compromise of claims......         596
903             Standards for suspending or terminating 
                    collection activity.....................         598
904             Referrals to the Department of Justice......         600

[[Page 585]]



PART 900_SCOPE OF STANDARDS--Table of Contents



Sec.
900.1 Prescription of standards.
900.2 Definitions and construction.
900.3 Antitrust, fraud, and tax and interagency claims excluded.
900.4 Compromise, waiver, or disposition under other statutes not 
          precluded.
900.5 Form of payment.
900.6 Subdivision of claims not authorized.
900.7 Required administrative proceedings.
900.8 No private rights created.

    Authority: 31 U.S.C. 3711.

    Source: 65 FR 70395, Nov. 22, 2000, unless otherwise noted.



Sec. 900.1  Prescription of standards.

    (a) The Secretary of the Treasury and the Attorney General of the 
United States are issuing the regulations in parts 900-904 of this 
chapter under the authority contained in 31 U.S.C. 3711(d)(2). The 
regulations in this chapter prescribe standards for Federal agency use 
in the administrative collection, offset, compromise, and the suspension 
or termination of collection activity for civil claims for money, funds, 
or property, as defined by 31 U.S.C. 3701(b), unless specific Federal 
agency statutes or regulations apply to such activities or, as provided 
for by Title 11 of the United States Code, when the claims involve 
bankruptcy. Federal agencies include agencies of the executive, 
legislative, and judicial branches of the Government, including 
Government corporations. The regulations in this chapter also prescribe 
standards for referring debts to the Department of Justice for 
litigation. Additional guidance is contained in the Office of Management 
and Budget's Circular A-129 (Revised), ``Policies for Federal Credit 
Programs and Non-Tax Receivables,'' the Department of the Treasury's 
``Managing Federal Receivables,'' and other publications concerning debt 
collection and debt management. These publications are available from 
the Debt Management Services, Financial Management Service, Department 
of the Treasury, 401 14th Street SW., Room 151, Washington, DC 20227.
    (b) Additional rules governing centralized administrative offset and 
the transfer of delinquent debt to the Department of the Treasury 
(Treasury) or Treasury-designated debt collection centers for collection 
(cross-servicing) under the Debt Collection Improvement Act of 1996, 
Public Law 104-134, 110 Stat. 1321, 1358 (April 26, 1996), are issued in 
separate regulations by Treasury. Rules governing the use of certain 
debt collection tools created under the Debt Collection Improvement Act 
of 1996, such as administrative wage garnishment, also are issued in 
separate regulations by Treasury. See generally 31 CFR part 285.
    (c) Agencies are not limited to the remedies contained in parts 900-
904 of this chapter and are encouraged to use all authorized remedies, 
including alternative dispute resolution and arbitration, to collect 
civil claims, to the extent that such remedies are not inconsistent with 
the Federal Claims Collection Act, as amended, Public Law 89-508, 80 
Stat. 308 (July 19, 1966), the Debt Collection Act of 1982, Public Law 
97-365, 96 Stat. 1749 (October 25, 1982), the Debt Collection 
Improvement Act of 1996, or other relevant statutes. The regulations in 
this chapter are not intended to impair agencies' common law rights to 
collect debts.
    (d) Standards and policies regarding the classification of debt for 
accounting purposes (for example, write off of uncollectible debt) are 
contained in the Office of Management and Budget's Circular A-129 
(Revised), ``Policies for Federal Credit Programs and Non-Tax 
Receivables.''



Sec. 900.2  Definitions and construction.

    (a) For the purposes of the standards in this chapter, the terms 
``claim'' and ``debt'' are synonymous and interchangeable. They refer to 
an amount of money, funds, or property that has been determined by an 
agency official to be due the United States from any person, 
organization, or entity, except another Federal agency. For the purposes 
of administrative offset under 31 U.S.C. 3716, the terms ``claim'' and 
``debt'' include an amount of money, funds, or property owed by a person 
to a State (including past-due support being enforced by a State), the 
District of Columbia, American Samoa, Guam, the United States Virgin 
Islands, the

[[Page 586]]

Commonwealth of the Northern Mariana Islands, or the Commonwealth of 
Puerto Rico.
    (b) A debt is ``delinquent'' if it has not been paid by the date 
specified in the agency's initial written demand for payment or 
applicable agreement or instrument (including a post-delinquency payment 
agreement), unless other satisfactory payment arrangements have been 
made.
    (c) In parts 900-904 of this chapter, words in the plural form shall 
include the singular and vice versa, and words signifying the masculine 
gender shall include the feminine and vice versa. The terms ``includes'' 
and ``including'' do not exclude matters not listed but do include 
matters that are in the same general class.
    (d) Recoupment is a special method for adjusting debts arising under 
the same transaction or occurrence. For example, obligations arising 
under the same contract generally are subject to recoupment.
    (e) For purposes of the standards in this chapter, unless otherwise 
stated, ``Secretary'' means the Secretary of the Treasury or the 
Secretary's delegate.



Sec. 900.3  Antitrust, fraud, and tax and interagency claims excluded.

    (a) The standards in parts 900-904 of this chapter relating to 
compromise, suspension, and termination of collection activity do not 
apply to any debt based in whole or in part on conduct in violation of 
the antitrust laws or to any debt involving fraud, the presentation of a 
false claim, or misrepresentation on the part of the debtor or any party 
having an interest in the claim. Only the Department of Justice has the 
authority to compromise, suspend, or terminate collection activity on 
such claims. The standards in parts 900-904 of this chapter relating to 
the administrative collection of claims do apply, but only to the extent 
authorized by the Department of Justice in a particular case. Upon 
identification of a claim based in whole or in part on conduct in 
violation of the antitrust laws or any claim involving fraud, the 
presentation of a false claim, or misrepresentation on the part of the 
debtor or any party having an interest in the claim, agencies shall 
promptly refer the case to the Department of Justice for action. At its 
discretion, the Department of Justice may return the claim to the 
forwarding agency for further handling in accordance with the standards 
in parts 900-904 of this chapter.
    (b) Parts 900-904 of this chapter do not apply to tax debts.
    (c) Parts 900-904 of this chapter do not apply to claims between 
Federal agencies. Federal agencies should attempt to resolve interagency 
claims by negotiation in accordance with Executive Order 12146 (3 CFR, 
1980 Comp., pp. 409-412).



Sec. 900.4  Compromise, waiver, or disposition under other statutes not
precluded.

    Nothing in parts 900-904 of this chapter precludes agency 
disposition of any claim under statutes and implementing regulations 
other than subchapter II of chapter 37 of Title 31 of the United States 
Code (Claims of the United States Government) and the standards in this 
chapter. See, e.g., the Federal Medical Care Recovery Act, Public Law 
87-693, 76 Stat. 593 (September 25, 1962) (codified at 42 U.S.C. 2651 et 
seq.), and applicable regulations, 28 CFR part 43. In such cases, the 
laws and regulations that are specifically applicable to claims 
collection activities of a particular agency generally take precedence 
over parts 900-904 of this chapter.



Sec. 900.5  Form of payment.

    Claims may be paid in the form of money or, when a contractual basis 
exists, the Government may demand the return of specific property or the 
performance of specific services.



Sec. 900.6  Subdivision of claims not authorized.

    Debts may not be subdivided to avoid the monetary ceiling 
established by 31 U.S.C. 3711(a)(2). A debtor's liability arising from a 
particular transaction or contract shall be considered a single debt in 
determining whether the debt is one of less than $100,000 (excluding 
interest, penalties, and administrative costs) or such higher amount as 
the Attorney General shall from time to time prescribe for purposes of 
compromise

[[Page 587]]

or suspension or termination of collection activity.



Sec. 900.7  Required administrative proceedings.

    Agencies are not required to omit, foreclose, or duplicate 
administrative proceedings required by contract or other laws or 
regulations.



Sec. 900.8  No private rights created.

    The standards in this chapter do not create any right or benefit, 
substantive or procedural, enforceable at law or in equity by a party 
against the United States, its agencies, its officers, or any other 
person, nor shall the failure of an agency to comply with any of the 
provisions of parts 900-904 of this chapter be available to any debtor 
as a defense.



PART 901_STANDARDS FOR THE ADMINISTRATIVE COLLECTION OF CLAIMS--Table of
Contents



Sec.
901.1 Aggressive agency collection activity.
901.2 Demand for payment.
901.3 Collection by administrative offset.
901.4 Reporting debts.
901.5 Contracting with private collection contractors and with entities 
          that locate and recover unclaimed assets.
901.6 Suspension or revocation of eligibility for loans and loan 
          guaranties, licenses, permits, or privileges.
901.7 Liquidation of collateral.
901.8 Collection in installments.
901.9 Interest, penalties, and administrative costs.
901.10 Analysis of costs.
901.11 Use and disclosure of mailing addresses.
901.12 Exemptions.

    Authority: 31 U.S.C. 3701, 3711, 3716, 3717, 3718, and 3720B.

    Source: 65 FR 70396, Nov. 22, 2000, unless otherwise noted.



Sec. 901.1  Aggressive agency collection activity.

    (a) Federal agencies shall aggressively collect all debts arising 
out of activities of, or referred or transferred for collection services 
to, that agency. Collection activities shall be undertaken promptly with 
follow-up action taken as necessary. Nothing contained in parts 900-904 
of this chapter requires the Department of Justice, Treasury, or other 
Treasury-designated debt collection centers, to duplicate collection 
activities previously undertaken by other agencies or to perform 
collection activities that other agencies should have undertaken.
    (b) Debts referred or transferred to Treasury, or Treasury-
designated debt collection centers under the authority of 31 U.S.C. 
3711(g), shall be serviced, collected, or compromised, or the collection 
action will be suspended or terminated, in accordance with the statutory 
requirements and authorities applicable to the collection of such debts.
    (c) Agencies shall cooperate with one another in their debt 
collection activities.
    (d) Agencies should consider referring debts that are less than 180 
days delinquent to Treasury or to Treasury-designated ``debt collection 
centers'' to accomplish efficient, cost effective debt collection. 
Treasury is a debt collection center, is authorized to designate other 
Federal agencies as debt collection centers based on their performance 
in collecting delinquent debts, and may withdraw such designations. 
Referrals to debt collection centers shall be at the discretion of, and 
for a time period acceptable to, the Secretary. Referrals may be for 
servicing, collection, compromise, suspension, or termination of 
collection action.
    (e) Agencies shall transfer to the Secretary any debt that has been 
delinquent for a period of 180 days or more so that the Secretary may 
take appropriate action to collect the debt or terminate collection 
action. See 31 CFR 285.12 (Transfer of Debts to Treasury for 
Collection). This requirement does not apply to any debt that:
    (1) Is in litigation or foreclosure;
    (2) Will be disposed of under an approved asset sale program;
    (3) Has been referred to a private collection contractor for a 
period of time acceptable to the Secretary;
    (4) Is at a debt collection center for a period of time acceptable 
to the Secretary (see paragraph (d) of this section);
    (5) Will be collected under internal offset procedures within three 
years after the debt first became delinquent; or

[[Page 588]]

    (6) Is exempt from this requirement based on a determination by the 
Secretary that exemption for a certain class of debt is in the best 
interest of the United States. Agencies may request that the Secretary 
exempt specific classes of debts.
    (f) Agencies operating Treasury-designated debt collection centers 
are authorized to charge a fee for services rendered regarding referred 
or transferred debts. The fee may be paid out of amounts collected and 
may be added to the debt as an administrative cost (see Sec. 901.10).



Sec. 901.2  Demand for payment.

    (a) Written demand as described in paragraph (b) of this section 
shall be made promptly upon a debtor of the United States in terms that 
inform the debtor of the consequences of failing to cooperate with the 
agency to resolve the debt. The specific content, timing, and number of 
demand letters shall depend upon the type and amount of the debt and the 
debtor's response, if any, to the agency's letters or telephone calls. 
Generally, one demand letter should suffice. In determining the timing 
of the demand letter(s), agencies should give due regard to the need to 
refer debts promptly to the Department of Justice for litigation, in 
accordance with Sec. 904.1 of this chapter or otherwise. When necessary 
to protect the Government's interest (for example, to prevent the 
running of a statute of limitations), written demand may be preceded by 
other appropriate actions under parts 900-904 of this chapter, including 
immediate referral for litigation.
    (b) Demand letters shall inform the debtor of:
    (1) The basis for the indebtedness and the rights, if any, the 
debtor may have to seek review within the agency;
    (2) The applicable standards for imposing any interest, penalties, 
or administrative costs;
    (3) The date by which payment should be made to avoid late charges 
(i.e. interest, penalties, and administrative costs) and enforced 
collection, which generally should not be more than 30 days from the 
date that the demand letter is mailed or hand-delivered; and
    (4) The name, address, and phone number of a contact person or 
office within the agency.
    (c) Agencies should exercise care to ensure that demand letters are 
mailed or hand-delivered on the same day that they are dated. There is 
no prescribed format for demand letters. Agencies should utilize demand 
letters and procedures that will lead to the earliest practicable 
determination of whether the debt can be resolved administratively or 
must be referred for litigation.
    (d) Agencies should include in demand letters such items as the 
agency's willingness to discuss alternative methods of payment; its 
policies with respect to the use of credit bureaus, debt collection 
centers, and collection agencies; the agency's remedies to enforce 
payment of the debt (including assessment of interest, administrative 
costs and penalties, administrative garnishment, the use of collection 
agencies, Federal salary offset, tax refund offset, administrative 
offset, and litigation); the requirement that any debt delinquent for 
more than 180 days be transferred to the Department of the Treasury for 
collection; and, depending on applicable statutory authority, the 
debtor's entitlement to consideration of a waiver.
    (e) Agencies should respond promptly to communications from debtors, 
within 30 days whenever feasible, and should advise debtors who dispute 
debts to furnish available evidence to support their contentions.
    (f) Prior to the initiation of the demand process or at any time 
during or after completion of the demand process, if an agency 
determines to pursue, or is required to pursue, offset, the procedures 
applicable to offset should be followed (see Sec. 901.3). The 
availability of funds or money for debt satisfaction by offset and the 
agency's determination to pursue collection by offset shall release the 
agency from the necessity of further compliance with paragraphs (a), 
(b), (c), and (d) of this section.
    (g) Prior to referring a debt for litigation, agencies should advise 
each person determined to be liable for the debt that, unless the debt 
can be collected administratively, litigation may be initiated. This 
notification should

[[Page 589]]

comply with Executive Order 12988 (3 CFR, 1996 Comp., pp. 157-163) and 
may be given as part of a demand letter under paragraph (b) of this 
section or in a separate document. Litigation counsel for the Government 
should be advised that this notice has been given.
    (h) When an agency learns that a bankruptcy petition has been filed 
with respect to a debtor, before proceeding with further collection 
action, the agency should immediately seek legal advice from its agency 
counsel concerning the impact of the Bankruptcy Code on any pending or 
contemplated collection activities. Unless the agency determines that 
the automatic stay imposed at the time of filing pursuant to 11 U.S.C. 
362 has been lifted or is no longer in effect, in most cases collection 
activity against the debtor should stop immediately.
    (1) After seeking legal advice, a proof of claim should be filed in 
most cases with the bankruptcy court or the Trustee. Agencies should 
refer to the provisions of 11 U.S.C. 106 relating to the consequences on 
sovereign immunity of filing a proof of claim.
    (2) If the agency is a secured creditor, it may seek relief from the 
automatic stay regarding its security, subject to the provisions and 
requirements of 11 U.S.C. 362.
    (3) Offset is stayed in most cases by the automatic stay. However, 
agencies should seek legal advice from their agency counsel to determine 
whether their payments to the debtor and payments of other agencies 
available for offset may be frozen by the agency until relief from the 
automatic stay can be obtained from the bankruptcy court. Agencies also 
should seek legal advice from their agency counsel to determine whether 
recoupment is available.



Sec. 901.3  Collection by administrative offset.

    (a) Scope. (1) The term ``administrative offset'' has the meaning 
provided in 31 U.S.C. 3701(a)(1).
    (2) This section does not apply to:
    (i) Debts arising under the Social Security Act, except as provided 
in 42 U.S.C. 404;
    (ii) Payments made under the Social Security Act, except as provided 
for in 31 U.S.C. 3716(c) (see 31 CFR 285.4, Federal Benefit Offset);
    (iii) Debts arising under, or payments made under, the Internal 
Revenue Code (see 31 CFR 285.2, Tax Refund Offset) or the tariff laws of 
the United States;
    (iv) Offsets against Federal salaries to the extent these standards 
are inconsistent with regulations published to implement such offsets 
under 5 U.S.C. 5514 and 31 U.S.C. 3716 (see 5 CFR part 550, subpart K, 
and 31 CFR 285.7, Federal Salary Offset);
    (v) Offsets under 31 U.S.C. 3728 against a judgment obtained by a 
debtor against the United States;
    (vi) Offsets or recoupments under common law, State law, or Federal 
statutes specifically prohibiting offsets or recoupments of particular 
types of debts; or
    (vii) Offsets in the course of judicial proceedings, including 
bankruptcy.
    (3) Unless otherwise provided for by contract or law, debts or 
payments that are not subject to administrative offset under 31 U.S.C. 
3716 may be collected by administrative offset under the common law or 
other applicable statutory authority.
    (4) Unless otherwise provided by law, administrative offset of 
payments under the authority of 31 U.S.C. 3716 to collect a debt may not 
be conducted more than 10 years after the Government's right to collect 
the debt first accrued, unless facts material to the Government's right 
to collect the debt were not known and could not reasonably have been 
known by the official or officials of the Government who were charged 
with the responsibility to discover and collect such debts. This 
limitation does not apply to debts reduced to a judgment.
    (5) In bankruptcy cases, agencies should seek legal advice from 
their agency counsel concerning the impact of the Bankruptcy Code, 
particularly 11 U.S.C. 106, 362, and 553, on pending or contemplated 
collections by offset.
    (b) Mandatory centralized administrative offset. (1) Creditor 
agencies are required to refer past due, legally enforceable nontax 
debts which are over 180 days delinquent to the Secretary for collection 
by centralized administrative offset. Debts which are less than 180 days 
delinquent also may be

[[Page 590]]

referred to the Secretary for this purpose. See Sec. 901.3(b)(5) for 
debt certification requirements.
    (2) The names and taxpayer identifying numbers (TINs) of debtors who 
owe debts referred to the Secretary as described in paragraph (b)(1) of 
this section shall be compared to the names and TINs on payments to be 
made by Federal disbursing officials. Federal disbursing officials 
include disbursing officials of Treasury, the Department of Defense, the 
United States Postal Service, other Government corporations, and 
disbursing officials of the United States designated by the Secretary. 
When the name and TIN of a debtor match the name and TIN of a payee and 
all other requirements for offset have been met, the payment will be 
offset to satisfy the debt.
    (3) Federal disbursing officials will notify the debtor/payee in 
writing that an offset has occurred to satisfy, in part or in full, a 
past due, legally enforceable delinquent debt. The notice shall include 
a description of the type and amount of the payment from which the 
offset was taken, the amount of offset that was taken, the identity of 
the creditor agency requesting the offset, and a contact point within 
the creditor agency who will respond to questions regarding the offset.
    (4)(i) Before referring a delinquent debt to the Secretary for 
administrative offset, agencies must have prescribed administrative 
offset regulations consistent with this section or have adopted this 
section without change by cross-reference.
    (ii) Such regulations shall provide that offsets may be initiated 
only after the debtor:
    (A) Has been sent written notice of the type and amount of the debt, 
the intention of the agency to use administrative offset to collect the 
debt, and an explanation of the debtor's rights under 31 U.S.C. 3716; 
and
    (B) The debtor has been given:
    (1) The opportunity to inspect and copy agency records related to 
the debt;
    (2) The opportunity for a review within the agency of the 
determination of indebtedness; and
    (3) The opportunity to make a written agreement to repay the debt.
    (iii) Agency regulations may provide for the omission of the 
procedures set forth in paragraph (a)(4)(ii) of this section when:
    (A) The offset is in the nature of a recoupment;
    (B) The debt arises under a contract as set forth in Cecile 
Industries, Inc. v. Cheney, 995 F.2d 1052 (Fed. Cir. 1993) (notice and 
other procedural protections set forth in 31 U.S.C. 3716(a) do not 
supplant or restrict established procedures for contractual offsets 
accommodated by the Contracts Disputes Act); or
    (C) In the case of non-centralized administrative offsets conducted 
under paragraph (c) of this section, the agency first learns of the 
existence of the amount owed by the debtor when there is insufficient 
time before payment would be made to the debtor/payee to allow for prior 
notice and an opportunity for review. When prior notice and an 
opportunity for review are omitted, the agency shall give the debtor 
such notice and an opportunity for review as soon as practicable and 
shall promptly refund any money ultimately found not to have been owed 
to the Government.
    (iv) When an agency previously has given a debtor any of the 
required notice and review opportunities with respect to a particular 
debt (see, e.g., Sec. 901.2), the agency need not duplicate such notice 
and review opportunities before administrative offset may be initiated.
    (5) Agencies referring delinquent debts to the Secretary must 
certify, in a form acceptable to the Secretary, that:
    (i) The debt(s) is (are) past due and legally enforceable; and
    (ii) The agency has complied with all due process requirements under 
31 U.S.C. 3716(a) and the agency's regulations.
    (6) Payments that are prohibited by law from being offset are exempt 
from centralized administrative offset. The Secretary shall exempt 
payments under means-tested programs from centralized administrative 
offset when requested in writing by the head of the payment certifying 
or authorizing agency. Also, the Secretary may exempt other classes of 
payments from

[[Page 591]]

centralized offset upon the written request of the head of the payment 
certifying or authorizing agency.
    (7) Benefit payments made under the Social Security Act (42 U.S.C. 
301 et seq.), part B of the Black Lung Benefits Act (30 U.S.C. 921 et 
seq.), and any law administered by the Railroad Retirement Board (other 
than tier 2 benefits), may be offset only in accordance with Treasury 
regulations, issued in consultation with the Social Security 
Administration, the Railroad Retirement Board, and the Office of 
Management and Budget. See 31 CFR 285.4.
    (8) In accordance with 31 U.S.C. 3716(f), the Secretary may waive 
the provisions of the Computer Matching and Privacy Protection Act of 
1988 concerning matching agreements and post-match notification and 
verification (5 U.S.C. 552a(o) and (p)) for centralized administrative 
offset upon receipt of a certification from a creditor agency that the 
due process requirements enumerated in 31 U.S.C. 3716(a) have been met. 
The certification of a debt in accordance with paragraph (b)(5) of this 
section will satisfy this requirement. If such a waiver is granted, only 
the Data Integrity Board of the Department of the Treasury is required 
to oversee any matching activities, in accordance with 31 U.S.C. 
3716(g). This waiver authority does not apply to offsets conducted under 
paragraphs (c) and (d) of this section.
    (c) Non-centralized administrative offset. (1) Generally, non-
centralized administrative offsets are ad hoc case-by-case offsets that 
an agency conducts, at the agency's discretion, internally or in 
cooperation with the agency certifying or authorizing payments to the 
debtor. Unless otherwise prohibited by law, when centralized 
administrative offset is not available or appropriate, past due, legally 
enforceable nontax delinquent debts may be collected through non-
centralized administrative offset. In these cases, a creditor agency may 
make a request directly to a payment authorizing agency to offset a 
payment due a debtor to collect a delinquent debt. For example, it may 
be appropriate for a creditor agency to request that the Office of 
Personnel Management (OPM) offset a Federal employee's lump sum payment 
upon leaving Government service to satisfy an unpaid advance.
    (2) Before requesting a payment authorizing agency to conduct a non-
centralized administrative offset, agencies must adopt regulations 
providing that such offsets may occur only after:
    (i) The debtor has been provided due process as set forth in 
paragraph (b)(4) of this section; and
    (ii) The payment authorizing agency has received written 
certification from the creditor agency that the debtor owes the past 
due, legally enforceable delinquent debt in the amount stated, and that 
the creditor agency has fully complied with its regulations concerning 
administrative offset.
    (3) Payment authorizing agencies shall comply with offset requests 
by creditor agencies to collect debts owed to the United States, unless 
the offset would not be in the best interests of the United States with 
respect to the program of the payment authorizing agency, or would 
otherwise be contrary to law. Appropriate use should be made of the 
cooperative efforts of other agencies in effecting collection by 
administrative offset.
    (4) When collecting multiple debts by non-centralized administrative 
offset, agencies should apply the recovered amounts to those debts in 
accordance with the best interests of the United States, as determined 
by the facts and circumstances of the particular case, particularly the 
applicable statute of limitations.
    (d) Requests to OPM to offset a debtor's anticipated or future 
benefit payments under the Civil Service Retirement and Disability Fund. 
Upon providing OPM written certification that a debtor has been afforded 
the procedures provided in paragraph (b)(4) of this section, creditor 
agencies may request OPM to offset a debtor's anticipated or future 
benefit payments under the Civil Service Retirement and Disability Fund 
(Fund) in accordance with regulations codified at 5 CFR 831.1801-
831.1808. Upon receipt of such a request, OPM will identify and ``flag'' 
a debtor's account in anticipation of the time when the debtor requests, 
or becomes eligible to receive, payments from the Fund. This will 
satisfy any requirement that offset be initiated prior to the expiration 
of

[[Page 592]]

the time limitations referenced in paragraph (a)(4) of this section.
    (e) Review requirements. (1) For purposes of this section, whenever 
an agency is required to afford a debtor a review within the agency, the 
agency shall provide the debtor with a reasonable opportunity for an 
oral hearing when the debtor requests reconsideration of the debt and 
the agency determines that the question of the indebtedness cannot be 
resolved by review of the documentary evidence, for example, when the 
validity of the debt turns on an issue of credibility or veracity.
    (2) Unless otherwise required by law, an oral hearing under this 
section is not required to be a formal evidentiary hearing, although the 
agency should carefully document all significant matters discussed at 
the hearing.
    (3) This section does not require an oral hearing with respect to 
debt collection systems in which a determination of indebtedness rarely 
involves issues of credibility or veracity and the agency has determined 
that review of the written record is ordinarily an adequate means to 
correct prior mistakes.
    (4) In those cases when an oral hearing is not required by this 
section, an agency shall accord the debtor a ``paper hearing,'' that is, 
a determination of the request for reconsideration based upon a review 
of the written record.



Sec. 901.4  Reporting debts.

    (a) Agencies shall develop and implement procedures for reporting 
delinquent debts to credit bureaus and other automated databases. 
Agencies also may develop procedures to report non-delinquent debts to 
credit bureaus. See 31 U.S.C. 3711(e).
    (1) In developing procedures for reporting debts to credit bureaus, 
agencies shall comply with the Bankruptcy Code and the Privacy Act of 
1974, 5 U.S.C. 552a, as amended. The provisions of the Privacy Act do 
not apply to credit bureaus.
    (2) Agency procedures for reporting delinquent consumer debts to 
credit bureaus shall be consistent with the due process and other 
requirements contained in 31 U.S.C. 3711(e). When an agency has given a 
debtor any of the required notice and review opportunities with respect 
to a particular debt, the agency need not duplicate such notice and 
review opportunities before reporting that delinquent consumer debt to 
credit bureaus.
    (b) Agencies should report delinquent debts to the Department of 
Housing and Urban Development's Credit Alert Interactive Voice Response 
System (CAIVRS). For information about the CAIVRS program, agencies 
should contact the Director of Information Resources Management Policy 
and Management Division, Office of Information Technology, Department of 
Housing and Urban Development, 451 7th Street, SW., Washington, DC 
20410.



Sec. 901.5  Contracting with private collection contractors and with
entities that locate and recover unclaimed assets.

    (a) Subject to the provisions of paragraph (b) of this section, 
Federal agencies may contract with private collection contractors, as 
defined in 31 U.S.C. 3701(f), to recover delinquent debts provided that:
    (1) Agencies retain the authority to resolve disputes, compromise 
debts, suspend or terminate collection activity, and refer debts for 
litigation;
    (2) The private collection contractor is not allowed to offer the 
debtor, as an incentive for payment, the opportunity to pay the debt 
less the private collection contractor's fee unless the agency has 
granted such authority prior to the offer;
    (3) The contract provides that the private collection contractor is 
subject to the Privacy Act of 1974 to the extent specified in 5 U.S.C. 
552a(m), and to applicable Federal and state laws and regulations 
pertaining to debt collection practices, including but not limited to 
the Fair Debt Collection Practices Act, 15 U.S.C. 1692; and
    (4) The private collection contractor is required to account for all 
amounts collected.
    (b) Agencies shall use government-wide debt collection contracts to 
obtain debt collection services provided by private collection 
contractors. However, agencies may refer debts to private collection 
contractors pursuant to a contract between the agency and the private 
collection contractor only if

[[Page 593]]

such debts are not subject to the requirement to transfer debts to 
Treasury for debt collection. See 31 U.S.C. 3711(g); 31 CFR 285.12(e).
    (c) Agencies may fund private collection contractor contracts in 
accordance with 31 U.S.C. 3718(d), or as otherwise permitted by law.
    (d) Agencies may enter into contracts for locating and recovering 
assets of the United States, such as unclaimed assets. Agencies must 
establish procedures that are acceptable to the Secretary before 
entering into contracts to recover assets of the United States held by a 
state government or a financial institution.
    (e) Agencies may enter into contracts for debtor asset and income 
search reports. In accordance with 31 U.S.C. 3718(d), such contracts may 
provide that the fee a contractor charges the agency for such services 
may be payable from the amounts recovered, unless otherwise prohibited 
by statute.



Sec. 901.6  Suspension or revocation of eligibility for loans and
loan guaranties, licenses, permits, or privileges.

    (a) Unless waived by the head of the agency, agencies are not 
permitted to extend financial assistance in the form of a loan, loan 
guarantee, or loan insurance to any person delinquent on a nontax debt 
owed to a Federal agency. This prohibition does not apply to disaster 
loans. The authority to waive the application of this section may be 
delegated to the Chief Financial Officer and redelegated only to the 
Deputy Chief Financial Officer of the agency. Agencies may extend credit 
after the delinquency has been resolved. The Secretary may exempt 
classes of debts from this prohibition and has prescribed standards 
defining when a ``delinquency'' is ``resolved'' for purposes of this 
prohibition. See 31 CFR 285.13 (Barring Delinquent Debtors From 
Obtaining Federal Loans or Loan Insurance or Guarantees).
    (b) In non-bankruptcy cases, agencies seeking the collection of 
statutory penalties, forfeitures, or other types of claims should 
consider the suspension or revocation of licenses, permits, or other 
privileges for any inexcusable or willful failure of a debtor to pay 
such a debt in accordance with the agency's regulations or governing 
procedures. The debtor should be advised in the agency's written demand 
for payment of the agency's ability to suspend or revoke licenses, 
permits, or privileges. Any agency making, guaranteeing, insuring, 
acquiring, or participating in, loans should consider suspending or 
disqualifying any lender, contractor, or broker from doing further 
business with the agency or engaging in programs sponsored by the agency 
if such lender, contractor, or broker fails to pay its debts to the 
Government within a reasonable time or if such lender, contractor, or 
broker has been suspended, debarred, or disqualified from participation 
in a program or activity by another Federal agency. The failure of any 
surety to honor its obligations in accordance with 31 U.S.C. 9305 should 
be reported to the Treasury. The Treasury will forward to all interested 
agencies notification that a surety's certificate of authority to do 
business with the Government has been revoked by the Treasury.
    (c) The suspension or revocation of licenses, permits, or privileges 
also should extend to Federal programs or activities that are 
administered by the states on behalf of the Federal Government, to the 
extent that they affect the Federal Government's ability to collect 
money or funds owed by debtors. Therefore, states that manage Federal 
activities, pursuant to approval from the agencies, should ensure that 
appropriate steps are taken to safeguard against issuing licenses, 
permits, or privileges to debtors who fail to pay their debts to the 
Federal Government.
    (d) In bankruptcy cases, before advising the debtor of an agency's 
intention to suspend or revoke licenses, permits, or privileges, 
agencies should seek legal advice from their agency counsel concerning 
the impact of the Bankruptcy Code, particularly 11 U.S.C. 362 and 525, 
which may restrict such action.



Sec. 901.7  Liquidation of collateral.

    (a) Agencies should liquidate security or collateral through the 
exercise of a power of sale in the security instrument or a nonjudicial 
foreclosure, and apply the proceeds to the applicable debt(s), if the 
debtor fails to pay

[[Page 594]]

the debt(s) within a reasonable time after demand and if such action is 
in the best interest of the United States. Collection from other 
sources, including liquidation of security or collateral, is not a 
prerequisite to requiring payment by a surety, insurer, or guarantor 
unless such action is expressly required by statute or contract.
    (b) When an agency learns that a bankruptcy petition has been filed 
with respect to a debtor, the agency should seek legal advice from its 
agency counsel concerning the impact of the Bankruptcy Code, including, 
but not limited to, 11 U.S.C. 362, to determine the applicability of the 
automatic stay and the procedures for obtaining relief from such stay 
prior to proceeding under paragraph (a) of this section.



Sec. 901.8  Collection in installments.

    (a) Whenever feasible, agencies shall collect the total amount of a 
debt in one lump sum. If a debtor is financially unable to pay a debt in 
one lump sum, agencies may accept payment in regular installments. 
Agencies should obtain financial statements from debtors who represent 
that they are unable to pay in one lump sum and independently verify 
such representations whenever possible (see Sec. 902.2(g) of this 
chapter). Agencies that agree to accept payments in regular installments 
should obtain a legally enforceable written agreement from the debtor 
that specifies all of the terms of the arrangement and that contains a 
provision accelerating the debt in the event of default.
    (b) The size and frequency of installment payments should bear a 
reasonable relation to the size of the debt and the debtor's ability to 
pay. If possible, the installment payments should be sufficient in size 
and frequency to liquidate the debt in three years or less.
    (c) Security for deferred payments should be obtained in appropriate 
cases. Agencies may accept installment payments notwithstanding the 
refusal of the debtor to execute a written agreement or to give 
security, at the agency's option.



Sec. 901.9  Interest, penalties, and administrative costs.

    (a) Except as provided in paragraphs (g), (h), and (i) of this 
section, agencies shall charge interest, penalties, and administrative 
costs on debts owed to the United States pursuant to 31 U.S.C. 3717. An 
agency shall mail or hand-deliver a written notice to the debtor, at the 
debtor's most recent address available to the agency, explaining the 
agency's requirements concerning these charges except where these 
requirements are included in a contractual or repayment agreement. These 
charges shall continue to accrue until the debt is paid in full or 
otherwise resolved through compromise, termination, or waiver of the 
charges.
    (b) Agencies shall charge interest on debts owed the United States 
as follows:
    (1) Interest shall accrue from the date of delinquency, or as 
otherwise provided by law.
    (2) Unless otherwise established in a contract, repayment agreement, 
or by statute, the rate of interest charged shall be the rate 
established annually by the Secretary in accordance with 31 U.S.C. 3717. 
Pursuant to 31 U.S.C. 3717, an agency may charge a higher rate of 
interest if it reasonably determines that a higher rate is necessary to 
protect the rights of the United States. The agency should document the 
reason(s) for its determination that the higher rate is necessary.
    (3) The rate of interest, as initially charged, shall remain fixed 
for the duration of the indebtedness. When a debtor defaults on a 
repayment agreement and seeks to enter into a new agreement, the agency 
may require payment of interest at a new rate that reflects the current 
value of funds to the Treasury at the time the new agreement is 
executed. Interest shall not be compounded, that is, interest shall not 
be charged on interest, penalties, or administrative costs required by 
this section. If, however, a debtor defaults on a previous repayment 
agreement, charges that accrued but were not collected under the 
defaulted agreement shall be added to the principal under the new 
repayment agreement.

[[Page 595]]

    (c) Agencies shall assess administrative costs incurred for 
processing and handling delinquent debts. The calculation of 
administrative costs should be based on actual costs incurred or upon 
estimated costs as determined by the assessing agency.
    (d) Unless otherwise established in a contract, repayment agreement, 
or by statute, agencies shall charge a penalty, pursuant to 31 U.S.C. 
3717(e)(2), not to exceed six percent a year on the amount due on a debt 
that is delinquent for more than 90 days. This charge shall accrue from 
the date of delinquency.
    (e) Agencies may increase an ``administrative debt'' by the cost of 
living adjustment in lieu of charging interest and penalties under this 
section. ``Administrative debt'' includes, but is not limited to, a debt 
based on fines, penalties, and overpayments, but does not include a debt 
based on the extension of Government credit, such as those arising from 
loans and loan guaranties. The cost of living adjustment is the 
percentage by which the Consumer Price Index for the month of June of 
the calendar year preceding the adjustment exceeds the Consumer Price 
Index for the month of June of the calendar year in which the debt was 
determined or last adjusted. Increases to administrative debts shall be 
computed annually. Agencies should use this alternative only when there 
is a legitimate reason to do so, such as when calculating interest and 
penalties on a debt would be extremely difficult because of the age of 
the debt.
    (f) When a debt is paid in partial or installment payments, amounts 
received by the Government shall be applied first to any contingency 
fees added to the debt, second to outstanding penalties, third to 
administrative costs other than contingency fees, fourth to interest, 
and last to principal. For purposes of this paragraph (f), ``contingency 
fees'' are administrative costs resulting from fees paid by a Federal 
agency to other Federal agencies or private collection contractors for 
collection services rendered when the fees are paid from the amounts 
collected from a debtor.
    (g) Agencies shall waive the collection of interest and 
administrative costs imposed pursuant to this section on the portion of 
the debt that is paid within 30 days after the date on which interest 
began to accrue. Agencies may extend this 30-day period on a case-by-
case basis. In addition, agencies may waive interest, penalties, and 
administrative costs charged under this section, in whole or in part, 
without regard to the amount of the debt, either under the criteria set 
forth in these standards for the compromise of debts, or if the agency 
determines that collection of these charges is against equity and good 
conscience or is not in the best interest of the United States.
    (h) Agencies shall set forth in their regulations the circumstances 
under which interest and related charges will not be imposed for periods 
during which collection activity has been suspended pending agency 
review.
    (i) Agencies are authorized to impose interest and related charges 
on debts not subject to 31 U.S.C. 3717, in accordance with the common 
law.

[65 FR 70396, Nov. 22, 2000, as amended at 73 FR 12274, Mar. 7, 2008]



Sec. 901.10  Analysis of costs.

    Agency collection procedures should provide for periodic comparison 
of costs incurred and amounts collected. Data on costs and corresponding 
recovery rates for debts of different types and in various dollar ranges 
should be used to compare the cost effectiveness of alternative 
collection techniques, establish guidelines with respect to points at 
which costs of further collection efforts are likely to exceed 
recoveries, assist in evaluating offers in compromise, and establish 
minimum debt amounts below which collection efforts need not be taken.



Sec. 901.11  Use and disclosure of mailing addresses.

    (a) When attempting to locate a debtor in order to collect or 
compromise a debt under parts 900-904 of this chapter or other 
authority, agencies may send a request to the Secretary (or designee) to 
obtain a debtor's mailing address from the records of the Internal 
Revenue Service.

[[Page 596]]

    (b) Agencies are authorized to use mailing addresses obtained under 
paragraph (a) of this section to enforce collection of a delinquent debt 
and may disclose such mailing addresses to other agencies and to 
collection agencies for collection purposes.



Sec. 901.12  Exemptions.

    (a) The preceding sections of this part, to the extent they reflect 
remedies or procedures prescribed by the Debt Collection Act of 1982 and 
the Debt Collection Improvement Act of 1996, such as administrative 
offset, use of credit bureaus, contracting for collection agencies, and 
interest and related charges, do not apply to debts arising under, or 
payments made under, the Internal Revenue Code of 1986, as amended (26 
U.S.C. 1 et seq.); the Social Security Act (42 U.S.C. 301 et seq.), 
except to the extent provided under 42 U.S.C. 404 and 31 U.S.C. 3716(c); 
or the tariff laws of the United States. These remedies and procedures, 
however, may be authorized with respect to debts that are exempt from 
the Debt Collection Act of 1982 and the Debt Collection Improvement Act 
of 1996, to the extent that they are authorized under some other statute 
or the common law.
    (b) This section should not be construed as prohibiting the use of 
these authorities or requirements when collecting debts owed by persons 
employed by agencies administering the laws cited in paragraph (a) of 
this section unless the debt arose under those laws.



PART 902_STANDARDS FOR THE COMPROMISE OF CLAIMS--Table of Contents



Sec.
902.1 Scope and application.
902.2 Bases for compromise.
902.3 Enforcement policy.
902.4 Joint and several liability.
902.5 Further review of compromise offers.
902.6 Consideration of tax consequences to the Government.
902.7 Mutual releases of the debtor and the Government.

    Authority: 31 U.S.C. 3711.

    Source: 65 FR 70402, Nov. 22, 2000, unless otherwise noted.



Sec. 902.1  Scope and application.

    (a) The standards set forth in this part apply to the compromise of 
debts pursuant to 31 U.S.C. 3711. An agency may exercise such compromise 
authority for debts arising out of activities of, or referred or 
transferred for collection services to, that agency when the amount of 
the debt then due, exclusive of interest, penalties, and administrative 
costs, does not exceed $100,000 or any higher amount authorized by the 
Attorney General. Agency heads may designate officials within their 
respective agencies to exercise the authorities in this section.
    (b) Unless otherwise provided by law, when the principal balance of 
a debt, exclusive of interest, penalties, and administrative costs, 
exceeds $100,000 or any higher amount authorized by the Attorney 
General, the authority to accept the compromise rests with the 
Department of Justice. The agency should evaluate the compromise offer, 
using the factors set forth in this part. If an offer to compromise any 
debt in excess of $100,000 is acceptable to the agency, the agency shall 
refer the debt to the Civil Division or other appropriate litigating 
division in the Department of Justice using a Claims Collection 
Litigation Report (CCLR). Agencies may obtain the CCLR from the 
Department of Justice's National Central Intake Facility. The referral 
shall include appropriate financial information and a recommendation for 
the acceptance of the compromise offer. Justice Department approval is 
not required if the agency rejects a compromise offer.



Sec. 902.2  Bases for compromise.

    (a) Agencies may compromise a debt if the Government cannot collect 
the full amount because:
    (1) The debtor is unable to pay the full amount in a reasonable 
time, as verified through credit reports or other financial information;
    (2) The Government is unable to collect the debt in full within a 
reasonable time by enforced collection proceedings;
    (3) The cost of collecting the debt does not justify the enforced 
collection of the full amount; or

[[Page 597]]

    (4) There is significant doubt concerning the Government's ability 
to prove its case in court.
    (b) In determining the debtor's inability to pay, agencies should 
consider relevant factors such as the following:
    (1) Age and health of the debtor;
    (2) Present and potential income;
    (3) Inheritance prospects;
    (4) The possibility that assets have been concealed or improperly 
transferred by the debtor; and
    (5) The availability of assets or income that may be realized by 
enforced collection proceedings.
    (c) Agencies should verify the debtor's claim of inability to pay by 
using a credit report and other financial information as provided in 
paragraph (g) of this section. Agencies should consider the applicable 
exemptions available to the debtor under state and Federal law in 
determining the Government's ability to enforce collection. Agencies 
also may consider uncertainty as to the price that collateral or other 
property will bring at a forced sale in determining the Government's 
ability to enforce collection. A compromise effected under this section 
should be for an amount that bears a reasonable relation to the amount 
that can be recovered by enforced collection procedures, with regard to 
the exemptions available to the debtor and the time that collection will 
take.
    (d) If there is significant doubt concerning the Government's 
ability to prove its case in court for the full amount claimed, either 
because of the legal issues involved or because of a bona fide dispute 
as to the facts, then the amount accepted in compromise of such cases 
should fairly reflect the probabilities of successful prosecution to 
judgment, with due regard given to the availability of witnesses and 
other evidentiary support for the Government's claim. In determining the 
litigative risks involved, agencies should consider the probable amount 
of court costs and attorney fees pursuant to the Equal Access to Justice 
Act, 28 U.S.C. 2412, that may be imposed against the Government if it is 
unsuccessful in litigation.
    (e) Agencies may compromise a debt if the cost of collecting the 
debt does not justify the enforced collection of the full amount. The 
amount accepted in compromise in such cases may reflect an appropriate 
discount for the administrative and litigative costs of collection, with 
consideration given to the time it will take to effect collection. 
Collection costs may be a substantial factor in the settlement of small 
debts. In determining whether the cost of collecting justifies enforced 
collection of the full amount, agencies should consider whether 
continued collection of the debt, regardless of cost, is necessary to 
further an enforcement principle, such as the Government's willingness 
to pursue aggressively defaulting and uncooperative debtors.
    (f) Agencies generally should not accept compromises payable in 
installments. This is not an advantageous form of compromise in terms of 
time and administrative expense. If, however, payment of a compromise in 
installments is necessary, agencies should obtain a legally enforceable 
written agreement providing that, in the event of default, the full 
original principal balance of the debt prior to compromise, less sums 
paid thereon, is reinstated. Whenever possible, agencies also should 
obtain security for repayment in the manner set forth in part 901 of 
this chapter.
    (g) To assess the merits of a compromise offer based in whole or in 
part on the debtor's inability to pay the full amount of a debt within a 
reasonable time, agencies should obtain a current financial statement 
from the debtor, executed under penalty of perjury, showing the debtor's 
assets, liabilities, income and expenses. Agencies also may obtain 
credit reports or other financial information to assess compromise 
offers. Agencies may use their own financial information form or may 
request suitable forms from the Department of Justice or the local 
United States Attorney's Office.



Sec. 902.3  Enforcement policy.

    Pursuant to this part, agencies may compromise statutory penalties, 
forfeitures, or claims established as an aid to enforcement and to 
compel compliance, if the agency's enforcement policy in terms of 
deterrence and securing compliance, present and future, will be

[[Page 598]]

adequately served by the agency's acceptance of the sum to be agreed 
upon.



Sec. 902.4  Joint and several liability.

    (a) When two or more debtors are jointly and severally liable, 
agencies should pursue collection activity against all debtors, as 
appropriate. Agencies should not attempt to allocate the burden of 
payment between the debtors but should proceed to liquidate the 
indebtedness as quickly as possible.
    (b) Agencies should ensure that a compromise agreement with one 
debtor does not release the agency's claim against the remaining 
debtors. The amount of a compromise with one debtor shall not be 
considered a precedent or binding in determining the amount that will be 
required from other debtors jointly and severally liable on the claim.



Sec. 902.5  Further review of compromise offers.

    If an agency is uncertain whether to accept a firm, written, 
substantive compromise offer on a debt that is within the agency's 
delegated compromise authority, it may refer the offer to the Civil 
Division or other appropriate litigating division in the Department of 
Justice, using a CCLR accompanied by supporting data and particulars 
concerning the debt. The Department of Justice may act upon such an 
offer or return it to the agency with instructions or advice.



Sec. 902.6  Consideration of tax consequences to the Government.

    In negotiating a compromise, agencies should consider the tax 
consequences to the Government. In particular, agencies should consider 
requiring a waiver of tax-loss-carry-forward and tax-loss-carry-back 
rights of the debtor. For information on discharge of indebtedness 
reporting requirements see Sec. 903.5 of this chapter.



Sec. 902.7  Mutual releases of the debtor and the Government.

    In all appropriate instances, a compromise that is accepted by an 
agency should be implemented by means of a mutual release, in which the 
debtor is released from further non-tax liability on the compromised 
debt in consideration of payment in full of the compromise amount and 
the Government and its officials, past and present, are released and 
discharged from any and all claims and causes of action arising from the 
same transaction that the debtor may have. In the event a mutual release 
is not executed when a debt is compromised, unless prohibited by law, 
the debtor is still deemed to have waived any and all claims and causes 
of action against the Government and its officials related to the 
transaction giving rise to the compromised debt.



PART 903_STANDARDS FOR SUSPENDING OR TERMINATING COLLECTION 
ACTIVITY--Table of Contents



Sec.
903.1 Scope and application.
903.2 Suspension of collection activity.
903.3 Termination of collection activity.
903.4 Exception to termination.
903.5 Discharge of indebtedness; reporting requirements.

    Authority: 31 U.S.C. 3711.

    Source: 65 FR 70403, Nov. 22, 2000, unless otherwise noted.



Sec. 903.1  Scope and application.

    (a) The standards set forth in this part apply to the suspension or 
termination of collection activity pursuant to 31 U.S.C. 3711 on debts 
that do not exceed $100,000, or such other amount as the Attorney 
General may direct, exclusive of interest, penalties, and administrative 
costs, after deducting the amount of partial payments or collections, if 
any. Prior to referring a debt to the Department of Justice for 
litigation, agencies may suspend or terminate collection under this part 
with respect to debts arising out of activities of, or referred or 
transferred for collection services to, that agency.
    (b) If, after deducting the amount of any partial payments or 
collections, the principal amount of a debt exceeds $100,000, or such 
other amount as the Attorney General may direct, exclusive of interest, 
penalties, and administrative costs, the authority to suspend or 
terminate rests solely with the Department of Justice. If the agency 
believes that suspension or termination of any

[[Page 599]]

debt in excess of $100,000 may be appropriate, the agency shall refer 
the debt to the Civil Division or other appropriate litigating division 
in the Department of Justice, using the CCLR. The referral should 
specify the reasons for the agency's recommendation. If, prior to 
referral to the Department of Justice, an agency determines that a debt 
is plainly erroneous or clearly without legal merit, the agency may 
terminate collection activity regardless of the amount involved without 
obtaining Department of Justice concurrence.



Sec. 903.2  Suspension of collection activity.

    (a) Agencies may suspend collection activity on a debt when:
    (1) The agency cannot locate the debtor;
    (2) The debtor's financial condition is expected to improve; or
    (3) The debtor has requested a waiver or review of the debt.
    (b) Based on the current financial condition of the debtor, agencies 
may suspend collection activity on a debt when the debtor's future 
prospects justify retention of the debt for periodic review and 
collection activity and:
    (1) The applicable statute of limitations has not expired; or
    (2) Future collection can be effected by administrative offset, 
notwithstanding the expiration of the applicable statute of limitations 
for litigation of claims, with due regard to the 10-year limitation for 
administrative offset prescribed by 31 U.S.C. 3716(e)(1); or
    (3) The debtor agrees to pay interest on the amount of the debt on 
which collection will be suspended, and such suspension is likely to 
enhance the debtor's ability to pay the full amount of the principal of 
the debt with interest at a later date.
    (c)(1) Agencies shall suspend collection activity during the time 
required for consideration of the debtor's request for waiver or 
administrative review of the debt if the statute under which the request 
is sought prohibits the agency from collecting the debt during that 
time.
    (2) If the statute under which the request is sought does not 
prohibit collection activity pending consideration of the request, 
agencies may use discretion, on a case-by-case basis, to suspend 
collection. Further, an agency ordinarily should suspend collection 
action upon a request for waiver or review if the agency is prohibited 
by statute or regulation from issuing a refund of amounts collected 
prior to agency consideration of the debtor's request. However, an 
agency should not suspend collection when the agency determines that the 
request for waiver or review is frivolous or was made primarily to delay 
collection.
    (d) When an agency learns that a bankruptcy petition has been filed 
with respect to a debtor, in most cases the collection activity on a 
debt must be suspended, pursuant to the provisions of 11 U.S.C. 362, 
1201, and 1301, unless the agency can clearly establish that the 
automatic stay has been lifted or is no longer in effect. Agencies 
should seek legal advice immediately from their agency counsel and, if 
legally permitted, take the necessary legal steps to ensure that no 
funds or money are paid by the agency to the debtor until relief from 
the automatic stay is obtained.



Sec. 903.3  Termination of collection activity.

    (a) Agencies may terminate collection activity when:
    (1) The agency is unable to collect any substantial amount through 
its own efforts or through the efforts of others;
    (2) The agency is unable to locate the debtor;
    (3) Costs of collection are anticipated to exceed the amount 
recoverable;
    (4) The debt is legally without merit or enforcement of the debt is 
barred by any applicable statute of limitations;
    (5) The debt cannot be substantiated; or
    (6) The debt against the debtor has been discharged in bankruptcy.
    (b) Before terminating collection activity, the agency should have 
pursued all appropriate means of collection and determined, based upon 
the results of the collection activity, that the debt is uncollectible. 
Termination of collection activity ceases active collection of the debt. 
The termination of collection activity does not preclude the agency

[[Page 600]]

from retaining a record of the account for purposes of:
    (1) Selling the debt, if the Secretary determines that such sale is 
in the best interests of the United States;
    (2) Pursuing collection at a subsequent date in the event there is a 
change in the debtor's status or a new collection tool becomes 
available;
    (3) Offsetting against future income or assets not available at the 
time of termination of collection activity; or
    (4) Screening future applicants for prior indebtedness.
    (c) Generally, agencies shall terminate collection activity on a 
debt that has been discharged in bankruptcy, regardless of the amount. 
Agencies may continue collection activity, however, subject to the 
provisions of the Bankruptcy Code, for any payments provided under a 
plan of reorganization. Offset and recoupment rights may survive the 
discharge of the debtor in bankruptcy and, under some circumstances, 
claims also may survive the discharge. For example, the claims of an 
agency that it is a known creditor of a debtor may survive a discharge 
if the agency did not receive formal notice of the proceedings. Agencies 
should seek legal advice from their agency counsel if they believe they 
have claims or offsets that may survive the discharge of a debtor.



Sec. 903.4  Exception to termination.

    When a significant enforcement policy is involved, or recovery of a 
judgment is a prerequisite to the imposition of administrative 
sanctions, agencies may refer debts for litigation even though 
termination of collection activity may otherwise be appropriate.



Sec. 903.5  Discharge of indebtedness; reporting requirements.

    (a) Before discharging a delinquent debt (also referred to as a 
close out of the debt), agencies shall take all appropriate steps to 
collect the debt in accordance with 31 U.S.C. 3711(g), including, as 
applicable, administrative offset, tax refund offset, Federal salary 
offset, referral to Treasury, Treasury-designated debt collection 
centers or private collection contractors, credit bureau reporting, wage 
garnishment, litigation, and foreclosure. Discharge of indebtedness is 
distinct from termination or suspension of collection activity under 
part 903 of this title and is governed by the Internal Revenue Code. 
When collection action on a debt is suspended or terminated, the debt 
remains delinquent and further collection action may be pursued at a 
later date in accordance with the standards set forth in this chapter. 
When an agency discharges a debt in full or in part, further collection 
action is prohibited. Therefore, agencies should make the determination 
that collection action is no longer warranted before discharging a debt. 
Before discharging a debt, agencies must terminate debt collection 
action.
    (b) Section 3711(i), title 31, United States Code, requires agencies 
to sell a delinquent nontax debt upon termination of collection action 
if the Secretary determines such a sale is in the best interests of the 
United States. Since the discharge of a debt precludes any further 
collection action (including the sale of a delinquent debt), agencies 
may not discharge a debt until the requirements of 31 U.S.C. 3711(i) 
have been met.
    (c) Upon discharge of an indebtedness, agencies must report the 
discharge to the IRS in accordance with the requirements of 26 U.S.C. 
6050P and 26 CFR 1.6050P-1. An agency may request Treasury or Treasury-
designated debt collection centers to file such a discharge report to 
the IRS on the agency's behalf.
    (d) When discharging a debt, agencies must request that litigation 
counsel release any liens of record securing the debt.



PART 904_REFERRALS TO THE DEPARTMENT OF JUSTICE--Table of Contents



Sec.
904.1 Prompt referral.
904.2 Claims Collection Litigation Report.
904.3 Preservation of evidence.
904.4 Minimum amount of referrals to the Department of Justice.

    Authority: 31 U.S.C. 3711.

    Source: 65 FR 70404, Nov. 22, 2000, unless otherwise noted.

[[Page 601]]



Sec. 904.1  Prompt referral.

    (a) Agencies shall promptly refer to the Department of Justice for 
litigation debts on which aggressive collection activity has been taken 
in accordance with part 901 of this chapter and that cannot be 
compromised, or on which collection activity cannot be suspended or 
terminated, in accordance with parts 902 and 903 of this chapter. 
Agencies may refer those debts arising out of activities of, or referred 
or transferred for collection services to, that agency. Debts for which 
the principal amount is over $1,000,000, or such other amount as the 
Attorney General may direct, exclusive of interest and penalties, shall 
be referred to the Civil Division or other division responsible for 
litigating such debts at the Department of Justice, Washington, D.C. 
Debts for which the principal amount is $1,000,000, or less, or such 
other amount as the Attorney General may direct, exclusive of interest 
or penalties, shall be referred to the Department of Justice's 
Nationwide Central Intake Facility as required by the CCLR instructions. 
Debts should be referred as early as possible, consistent with 
aggressive agency collection activity and the observance of the 
standards contained in parts 900-904 of this chapter, and, in any event, 
well within the period for initiating timely lawsuits against the 
debtors. Agencies shall make every effort to refer delinquent debts to 
the Department of Justice for litigation within one year of the date 
such debts last became delinquent. In the case of guaranteed or insured 
loans, agencies should make every effort to refer these delinquent debts 
to the Department of Justice for litigation within one year from the 
date the loan was presented to the agency for payment or re-insurance.
    (b) The Department of Justice has exclusive jurisdiction over the 
debts referred to it pursuant to this section. The referring agency 
shall immediately terminate the use of any administrative collection 
activities to collect a debt at the time of the referral of that debt to 
the Department of Justice. The agency should advise the Department of 
Justice of the collection activities which have been utilized to date, 
and their result. The referring agency shall refrain from having any 
contact with the debtor and shall direct all debtor inquiries concerning 
the debt to the Department of Justice. The referring agency shall 
immediately notify the Department of Justice of any payments credited by 
the agency to the debtor's account after referral of a debt under this 
section. The Department of Justice shall notify the referring agency, in 
a timely manner, of any payments it receives from the debtor.



Sec. 904.2  Claims Collection Litigation Report.

    (a) Unless excepted by the Department of Justice, agencies shall 
complete the CCLR (see Sec. 902.1(b) of this chapter), accompanied by a 
signed Certificate of Indebtedness, to refer all administratively 
uncollectible claims to the Department of Justice for litigation. 
Referring agencies shall complete all of the sections of the CCLR 
appropriate to each claim as required by the CCLR instructions and 
furnish such other information as may be required in specific cases.
    (b) Agencies shall indicate clearly on the CCLR the actions they 
wish the Department of Justice to take with respect to the referred 
claim. The CCLR permits the agency to indicate specifically any of a 
number of litigative activities which the Department of Justice may 
pursue, including enforced collection, judgment lien only, renew 
judgment lien only, renew judgment lien and enforce collection, program 
enforcement, foreclosure only, and foreclosure and deficiency judgment.
    (c) Agencies also shall use the CCLR to refer claims to the 
Department of Justice to obtain approval of any proposals to compromise 
the claims or to suspend or terminate agency collection activity.



Sec. 904.3  Preservation of evidence.

    Referring agencies must take care to preserve all files and records 
that may be needed by the Department of Justice to prove their claims in 
court. Agencies ordinarily should include certified copies of the 
documents that form the basis for the claim in the packages referring 
their claims to the Department of Justice for litigation. Agencies shall 
provide originals of such documents

[[Page 602]]

immediately upon request by the Department of Justice.



Sec. 904.4  Minimum amount of referrals to the Department of Justice.

    (a) Agencies shall not refer for litigation claims of less than 
$2,500, exclusive of interest, penalties, and administrative costs, or 
such other amount as the Attorney General shall from time to time 
prescribe. The Department of Justice shall promptly notify referring 
agencies if the Attorney General changes this minimum amount.
    (b) Agencies shall not refer claims of less than the minimum amount 
unless:
    (1) Litigation to collect such smaller claims is important to ensure 
compliance with the agency's policies or programs;
    (2) The claim is being referred solely for the purpose of securing a 
judgment against the debtor, which will be filed as a lien against the 
debtor's property pursuant to 28 U.S.C. 3201 and returned to the 
referring agency for enforcement; or
    (3) The debtor has the clear ability to pay the claim and the 
Government effectively can enforce payment, with due regard for the 
exemptions available to the debtor under state and Federal law and the 
judicial remedies available to the Government.
    (c) Agencies should consult with the Financial Litigation Staff of 
the Executive Office for United States Attorneys in the Department of 
Justice prior to referring claims valued at less than the minimum 
amount.

[[Page 603]]



   CHAPTER X--FINANCIAL CRIMES ENFORCEMENT NETWORK, DEPARTMENT OF THE 
                                TREASURY




  --------------------------------------------------------------------
Part                                                                Page
1000-1009

 [Reserved]

1010            General provisions..........................         605
1011-1019

 [Reserved]

1020            Rule for banks..............................         662
1021            Rules for casinos and card clubs............         677
1022            Rules for money services businesses.........         685
1023            Rules for brokers or dealers in securities..         695
1024            Rules for mutual funds......................         704
1025            Rules for insurance companies...............         712
1026            Rules for futures commission merchants and 
                    introducing brokers in commodities......         717
1027            Rules for dealers in precious metals, 
                    precious stones, or jewels..............         726
1028            Rules for operators of credit card systems..         730
1029            Rules for loan or finance companies.........         733
1030-1059

 [Reserved]

1060             Provisions relating to the Comprehensive 
                    Iran Sanctions, Accountability, and 
                    Divestment Act of 2010..................         737
1061-1099

 [Reserved]

[[Page 605]]

                        PARTS 1000	1009[RESERVED]



PART 1010_GENERAL PROVISIONS--Table of Contents



                      Subpart A_General Definitions

Sec.
1010.100 General definitions.

                           Subpart B_Programs

1010.200 General.
1010.205 Exempted anti-money laundering programs for certain financial 
          institutions.
1010.210 Anti-money laundering programs.
1010.220 Customer identification program requirements.

                  Subpart C_Reports Required To Be Made

1010.300 General.
1010.301 Determination by the Secretary.
1010.305 [Reserved]
1010.306 Filing of reports.
1010.310 Reports of transactions in currency.
1010.311 Filing obligations for reports of transactions in currency.
1010.312 Identification required.
1010.313 Aggregation.
1010.314 Structured transactions.
1010.315 Exemptions for non-bank financial institutions.
1010.320 Reports of suspicious transactions.
1010.330 Reports relating to currency in excess of $10,000 received in a 
          trade or business.
1010.331 Reports relating to currency in excess of $10,000 received as 
          bail by court clerks.
1010.340 Reports of transportation of currency or monetary instruments.
1010.350 Reports of foreign financial accounts.
1010.360 Reports of transactions with foreign financial agencies.
1010.370 Reports of certain domestic coin and currency transactions.

               Subpart D_Records Required To Be Maintained

1010.400 General.
1010.401 Determination by the Secretary.
1010.405 [Reserved]
1010.410 Records to be made and retained by financial institutions.
1010.415 Purchases of bank checks and drafts, cashier's checks, money 
          orders and traveler's checks.
1010.420 Records to be made and retained by persons having financial 
          interests in foreign financial accounts.
1010.430 Nature of records and retention period.
1010.440 Person outside the United States.

    Subpart E_Special Information Sharing Procedures To Deter Money 
                    Laundering and Terrorist Activity

1010.500 General.
1010.505 Definitions.
1010.520 Information sharing between government agencies and financial 
          institutions.
1010.530 [Reserved]
1010.540 Voluntary information sharing among financial institutions.

  Subpart F_Special Standards of Diligence; Prohibitions; and Special 
                                Measures

1010.600 General.

  Special Due Diligence for Correspondent Accounts and Private Banking 
                                Accounts

1010.605 Definitions.
1010.610 Due diligence programs for correspondent accounts for foreign 
          financial institutions.
1010.620 Due diligence programs for private banking accounts.
1010.630 Prohibition on correspondent accounts for foreign shell banks; 
          records concerning owners of foreign banks and agents for 
          service of legal process.
1010.640 [Reserved]

   Special Measures Under Section 311 of the USA Patriot Act and Law 
               Enforcement Access to Foreign Bank Records

1010.651 Special measures against Burma.
1010.652 Special measures against Myanmar Mayflower Bank and Asia Wealth 
          Bank.
1010.653 Special measures against Commercial Bank of Syria.
1010.655 Special measures against Banco Delta Asia.
1010.670 Summons or subpoena of foreign bank records; termination of 
          correspondent relationship.

                    Subpart G_Administrative Rulings

1010.710 Scope.
1010.711 Submitting requests.
1010.712 Nonconforming requests.
1010.713 Oral communications.
1010.714 Withdrawing requests.
1010.715 Issuing rulings.
1010.716 Modifying or rescinding rulings.
1010.717 Disclosing information.

            Subpart H_Enforcement; Penalties; and Forfeiture

1010.810 Enforcement.
1010.820 Civil penalty.
1010.830 Forfeiture of currency or monetary instruments.
1010.840 Criminal penalty.

[[Page 606]]

1010.850 Enforcement authority with respect to transportation of 
          currency or monetary instruments.

                            Subpart I_Summons

1010.911 General.
1010.912 Persons who may issue summons.
1010.913 Contents of summons.
1010.914 Service of summons.
1010.915 Examination of witnesses and records.
1010.916 Enforcement of summons.
1010.917 Payment of expenses.

                         Subpart J_Miscellaneous

1010.920 Access to records.
1010.930 Rewards for informants.
1010.940 Photographic or other reproductions of Government obligations.
1010.950 Availability of information.
1010.960 Disclosure.
1010.970 Exceptions, exemptions, and reports.
1010.980 Dollars as including foreign currency.

    Authority: 12 U.S.C. 1829b and 1951-1959; 31 U.S.C. 5311-5314, 5316-
5332; title III, sec. 314, Pub. L. 107-56, 115 Stat. 307.

    Source: 75 FR 65812, Oct. 26, 2010, unless otherwise noted.



                      Subpart A_General Definitions



Sec. 1010.100  General definitions.

    When used in this chapter and in forms prescribed under this 
chapter, where not otherwise distinctly expressed or manifestly 
incompatible with the intent thereof, terms shall have the meanings 
ascribed in this subpart. Terms applicable to a particular type of 
financial institution or specific part or subpart of this chapter are 
located in that part or subpart. Terms may have different meanings in 
different parts or subparts.
    (a) Accept. A receiving financial institution, other than the 
recipient's financial institution, accepts a transmittal order by 
executing the transmittal order. A recipient's financial institution 
accepts a transmittal order by paying the recipient, by notifying the 
recipient of the receipt of the order or by otherwise becoming obligated 
to carry out the order.
    (b) At one time. For purposes of Sec. 1010.340 of this part, a 
person who transports, mails, ships or receives; is about to or attempts 
to transport, mail or ship; or causes the transportation, mailing, 
shipment or receipt of monetary instruments, is deemed to do so ``at one 
time'' if:
    (1) That person either alone, in conjunction with or on behalf of 
others;
    (2) Transports, mails, ships or receives in any manner; is about to 
transport, mail or ship in any manner; or causes the transportation, 
mailing, shipment or receipt in any manner of;
    (3) Monetary instruments;
    (4) Into the United States or out of the United States;
    (5) Totaling more than $10,000;
    (6)(i) On one calendar day; or
    (ii) If for the purpose of evading the reporting requirements of 
Sec. 1010.340, on one or more days.
    (c) Attorney General. The Attorney General of the United States.
    (d) Bank. Each agent, agency, branch or office within the United 
States of any person doing business in one or more of the capacities 
listed below:
    (1) A commercial bank or trust company organized under the laws of 
any State or of the United States;
    (2) A private bank;
    (3) A savings and loan association or a building and loan 
association organized under the laws of any State or of the United 
States;
    (4) An insured institution as defined in section 401 of the National 
Housing Act;
    (5) A savings bank, industrial bank or other thrift institution;
    (6) A credit union organized under the law of any State or of the 
United States;
    (7) Any other organization (except a money services business) 
chartered under the banking laws of any state and subject to the 
supervision of the bank supervisory authorities of a State;
    (8) A bank organized under foreign law;
    (9) Any national banking association or corporation acting under the 
provisions of section 25(a) of the Act of Dec. 23, 1913, as added by the 
Act of Dec. 24, 1919, ch. 18, 41 Stat. 378, as amended (12 U.S.C. 611-
32).
    (e) Bank Secrecy Act. The Currency and Foreign Transactions 
Reporting Act, its amendments, and the other statutes relating to the 
subject matter

[[Page 607]]

of that Act, have come to be referred to as the Bank Secrecy Act. These 
statutes are codified at 12 U.S.C. 1829b, 12 U.S.C. 1951-1959, 18 U.S.C. 
1956, 18 U.S.C. 1957, 18 U.S.C. 1960, and 31 U.S.C. 5311-5314 and 5316-
5332 and notes thereto.
    (f) Beneficiary. The person to be paid by the beneficiary's bank.
    (g) Beneficiary's bank. The bank or foreign bank identified in a 
payment order in which an account of the beneficiary is to be credited 
pursuant to the order or which otherwise is to make payment to the 
beneficiary if the order does not provide for payment to an account.
    (h) Broker or dealer in securities. A broker or dealer in 
securities, registered or required to be registered with the Securities 
and Exchange Commission under the Securities Exchange Act of 1934, 
except persons who register pursuant to section 15(b)(11) of the 
Securities Exchange Act of 1934.
    (i) Business day. As used in this chapter with respect to banks, 
business day means that day, as normally communicated to its depository 
customers, on which a bank routinely posts a particular transaction to 
its customer's account.
    (j) Commodity. Any good, article, service, right, or interest 
described in section 1a(4) of the Commodity Exchange Act (``CEA''), 7 
U.S.C. 1a(4).
    (k) Common carrier. Any person engaged in the business of 
transporting individuals or goods for a fee who holds himself out as 
ready to engage in such transportation for hire and who undertakes to do 
so indiscriminately for all persons who are prepared to pay the fee for 
the particular service offered.
    (l) Contract of sale. Any sale, agreement of sale, or agreement to 
sell as described in section 1a(7) of the CEA, 7 U.S.C. 1a(7).
    (m) Currency. The coin and paper money of the United States or of 
any other country that is designated as legal tender and that circulates 
and is customarily used and accepted as a medium of exchange in the 
country of issuance. Currency includes U.S. silver certificates, U.S. 
notes and Federal Reserve notes. Currency also includes official foreign 
bank notes that are customarily used and accepted as a medium of 
exchange in a foreign country.
    (n) Deposit account. Deposit accounts include transaction accounts 
described in paragraph (ccc) of this section, savings accounts, and 
other time deposits.
    (o) Domestic. When used herein, refers to the doing of business 
within the United States, and limits the applicability of the provision 
where it appears to the performance by such institutions or agencies of 
functions within the United States.
    (p) Established customer. A person with an account with the 
financial institution, including a loan account or deposit or other 
asset account, or a person with respect to which the financial 
institution has obtained and maintains on file the person's name and 
address, as well as taxpayer identification number (e.g., social 
security or employer identification number) or, if none, alien 
identification number or passport number and country of issuance, and to 
which the financial institution provides financial services relying on 
that information.
    (q) Execution date. The day on which the receiving financial 
institution may properly issue a transmittal order in execution of the 
sender's order. The execution date may be determined by instruction of 
the sender but cannot be earlier than the day the order is received, 
and, unless otherwise determined, is the day the order is received. If 
the sender's instruction states a payment date, the execution date is 
the payment date or an earlier date on which execution is reasonably 
necessary to allow payment to the recipient on the payment date.
    (r) Federal functional regulator.
    (1) The Board of Governors of the Federal Reserve System;
    (2) The Office of the Comptroller of the Currency;
    (3) The Board of Directors of the Federal Deposit Insurance 
Corporation;
    (4) The Office of Thrift Supervision;
    (5) The National Credit Union Administration;
    (6) The Securities and Exchange Commission; or
    (7) The Commodity Futures Trading Commission.
    (s) FinCEN. FinCEN means the Financial Crimes Enforcement Network,

[[Page 608]]

a bureau of the Department of the Treasury.
    (t) Financial institution. Each agent, agency, branch, or office 
within the United States of any person doing business, whether or not on 
a regular basis or as an organized business concern, in one or more of 
the capacities listed below:
    (1) A bank (except bank credit card systems);
    (2) A broker or dealer in securities;
    (3) A money services business as defined in paragraph (ff) of this 
section;
    (4) A telegraph company;
    (5)(i) Casino. A casino or gambling casino that: Is duly licensed or 
authorized to do business as such in the United States, whether under 
the laws of a State or of a Territory or Insular Possession of the 
United States, or under the Indian Gaming Regulatory Act or other 
Federal, State, or tribal law or arrangement affecting Indian lands 
(including, without limitation, a casino operating on the assumption or 
under the view that no such authorization is required for casino 
operation on Indian lands); and has gross annual gaming revenue in 
excess of $1 million. The term includes the principal headquarters and 
every domestic branch or place of business of the casino.
    (ii) For purposes of this paragraph (t)(5), ``gross annual gaming 
revenue'' means the gross gaming revenue received by a casino, during 
either the previous business year or the current business year of the 
casino. A casino or gambling casino which is a casino for purposes of 
this chapter solely because its gross annual gaming revenue exceeds 
$1,000,000 during its current business year, shall not be considered a 
casino for purposes of this chapter prior to the time in its current 
business year that its gross annual gaming revenue exceeds $1,000,000.
    (iii) Any reference in this chapter, other than in this paragraph 
(t)(5) and in paragraph (t)(6) of this section, to a casino shall also 
include a reference to a card club, unless the provision in question 
contains specific language varying its application to card clubs or 
excluding card clubs from its application;
    (6)(i) Card club. A card club, gaming club, card room, gaming room, 
or similar gaming establishment that is duly licensed or authorized to 
do business as such in the United States, whether under the laws of a 
State, of a Territory or Insular Possession of the United States, or of 
a political subdivision of any of the foregoing, or under the Indian 
Gaming Regulatory Act or other Federal, State, or tribal law or 
arrangement affecting Indian lands (including, without limitation, an 
establishment operating on the assumption or under the view that no such 
authorization is required for operation on Indian lands for an 
establishment of such type), and that has gross annual gaming revenue in 
excess of $1,000,000. The term includes the principal headquarters and 
every domestic branch or place of business of the establishment. The 
term ``casino,'' as used in this chapter shall include a reference to 
``card club'' to the extent provided in paragraph (t)(5)(iii) of this 
section.
    (ii) For purposes of this paragraph (t)(6), ``gross annual gaming 
revenue'' means the gross revenue derived from or generated by customer 
gaming activity (whether in the form of per-game or per-table fees, 
however computed, rentals, or otherwise) and received by an 
establishment, during either the establishment's previous business year 
or its current business year. A card club that is a financial 
institution for purposes of this chapter solely because its gross annual 
revenue exceeds $1,000,000 during its current business year, shall not 
be considered a financial institution for purposes of this chapter prior 
to the time in its current business year when its gross annual revenue 
exceeds $1,000,000;
    (7) A person subject to supervision by any state or Federal bank 
supervisory authority;
    (8) A futures commission merchant;
    (9) An introducing broker in commodities; or
    (10) A mutual fund.
    (u) Foreign bank. A bank organized under foreign law, or an agency, 
branch or office located outside the United States of a bank. The term 
does not include an agent, agency, branch or office within the United 
States of a bank organized under foreign law.
    (v) Foreign financial agency. A person acting outside the United 
States for a

[[Page 609]]

person (except for a country, a monetary or financial authority acting 
as a monetary or financial authority, or an international financial 
institution of which the United States Government is a member) as a 
financial institution, bailee, depository trustee, or agent, or acting 
in a similar way related to money, credit, securities, gold, or a 
transaction in money, credit, securities, or gold.
    (w) Funds transfer. The series of transactions, beginning with the 
originator's payment order, made for the purpose of making payment to 
the beneficiary of the order. The term includes any payment order issued 
by the originator's bank or an intermediary bank intended to carry out 
the originator's payment order. A funds transfer is completed by 
acceptance by the beneficiary's bank of a payment order for the benefit 
of the beneficiary of the originator's payment order. Funds transfers 
governed by the Electronic Fund Transfer Act of 1978 (Title XX, Pub. L. 
95-630, 92 Stat. 3728, 15 U.S.C. 1693, et seq.), as well as any other 
funds transfers that are made through an automated clearinghouse, an 
automated teller machine, or a point-of-sale system, are excluded from 
this definition.
    (x) Futures commission merchant. Any person registered or required 
to be registered as a futures commission merchant with the Commodity 
Futures Trading Commission (``CFTC'') under the CEA, except persons who 
register pursuant to section 4f(a)(2) of the CEA, 7 U.S.C. 6f(a)(2).
    (y) Indian Gaming Regulatory Act. The Indian Gaming Regulatory Act 
of 1988, codified at 25 U.S.C. 2701-2721 and 18 U.S.C. 1166-68.
    (z) Intermediary bank. A receiving bank other than the originator's 
bank or the beneficiary's bank.
    (aa) Intermediary financial institution. A receiving financial 
institution, other than the transmittor's financial institution or the 
recipient's financial institution. The term intermediary financial 
institution includes an intermediary bank.
    (bb) Introducing broker-commodities. Any person registered or 
required to be registered as an introducing broker with the CFTC under 
the CEA, except persons who register pursuant to section 4f(a)(2) of the 
CEA, 7 U.S.C. 6f(a)(2).
    (cc) Investment security. An instrument which:
    (1) Is issued in bearer or registered form;
    (2) Is of a type commonly dealt in upon securities exchanges or 
markets or commonly recognized in any area in which it is issued or 
dealt in as a medium for investment;
    (3) Is either one of a class or series or by its terms is divisible 
into a class or series of instruments; and
    (4) Evidences a share, participation or other interest in property 
or in an enterprise or evidences an obligation of the issuer.
    (dd) Monetary instruments. (1) Monetary instruments include:
    (i) Currency;
    (ii) Traveler's checks in any form;
    (iii) All negotiable instruments (including personal checks, 
business checks, official bank checks, cashier's checks, third-party 
checks, promissory notes (as that term is defined in the Uniform 
Commercial Code), and money orders) that are either in bearer form, 
endorsed without restriction, made out to a fictitious payee (for the 
purposes of Sec. 1010.340), or otherwise in such form that title 
thereto passes upon delivery;
    (iv) Incomplete instruments (including personal checks, business 
checks, official bank checks, cashier's checks, third-party checks, 
promissory notes (as that term is defined in the Uniform Commercial 
Code), and money orders) signed but with the payee's name omitted; and
    (v) Securities or stock in bearer form or otherwise in such form 
that title thereto passes upon delivery.
    (2) Monetary instruments do not include warehouse receipts or bills 
of lading.
    (ee) [Reserved]
    (ff) Money services business. A person wherever located doing 
business, whether or not on a regular basis or as an organized or 
licensed business concern, wholly or in substantial part within the 
United States, in one or more of the capacities listed in paragraphs 
(ff)(1) through (ff)(7) of this section. This includes but is not 
limited to maintenance of any agent, agency,

[[Page 610]]

branch, or office within the United States.
    (1) Dealer in foreign exchange. A person that accepts the currency, 
or other monetary instruments, funds, or other instruments denominated 
in the currency, of one or more countries in exchange for the currency, 
or other monetary instruments, funds, or other instruments denominated 
in the currency, of one or more other countries in an amount greater 
than $1,000 for any other person on any day in one or more transactions, 
whether or not for same-day delivery.
    (2) Check casher--(i) In general. A person that accepts checks (as 
defined in the Uniform Commercial Code), or monetary instruments (as 
defined at Sec. 1010.100(dd)(1)(ii), (iii), (iv), and (v)) in return 
for currency or a combination of currency and other monetary instruments 
or other instruments, in an amount greater than $1,000 for any person on 
any day in one or more transactions.
    (ii) Facts and circumstances; Limitations. Whether a person is a 
check casher as described in this section is a matter of facts and 
circumstances. The term ``check casher'' shall not include:
    (A) A person that sells prepaid access in exchange for a check (as 
defined in the Uniform Commercial Code), monetary instrument or other 
instrument;
    (B) A person that solely accepts monetary instruments as payment for 
goods or services other than check cashing services;
    (C) A person that engages in check cashing for the verified maker of 
the check who is a customer otherwise buying goods and services;
    (D) A person that redeems its own checks; or
    (E) A person that only holds a customer's check as collateral for 
repayment by the customer of a loan.
    (3) Issuer or seller of traveler's checks or money orders. A person 
that
    (i) Issues traveler's checks or money orders that are sold in an 
amount greater than $1,000 to any person on any day in one or more 
transactions; or
    (ii) Sells traveler's checks or money orders in an amount greater 
than $1,000 to any person on any day in one or more transactions.
    (4) Provider of prepaid access--(i) In general. A provider of 
prepaid access is the participant within a prepaid program that agrees 
to serve as the principal conduit for access to information from its 
fellow program participants. The participants in each prepaid access 
program must determine a single participant within the prepaid program 
to serve as the provider of prepaid access.
    (ii) Considerations for provider determination. In the absence of 
registration as the provider of prepaid access for a prepaid program by 
one of the participants in a prepaid access program, the provider of 
prepaid access is the person with principal oversight and control over 
the prepaid program. Which person exercises ``principal oversight and 
control'' is a matter of facts and circumstances. Activities that 
indicate ``principal oversight and control'' include:
    (A) Organizing the prepaid program;
    (B) Setting the terms and conditions of the prepaid program and 
determining that the terms have not been exceeded;
    (C) Determining the other businesses that will participate in the 
prepaid program, which may include the issuing bank, the payment 
processor, or the distributor;
    (D) Controlling or directing the appropriate party to initiate, 
freeze, or terminate prepaid access; and
    (E) Engaging in activity that demonstrates oversight and control of 
the prepaid program.
    (iii) Prepaid program. A prepaid program is an arrangement under 
which one or more persons acting together provide(s) prepaid access. 
However, an arrangement is not a prepaid program if:
    (A) It provides closed loop prepaid access to funds not to exceed 
$2,000 maximum value that can be associated with a prepaid access device 
or vehicle on any day;
    (B) It provides prepaid access solely to funds provided by a 
Federal, State, local, Territory and Insular Possession, or Tribal 
government agency;
    (C) It provides prepaid access solely to funds from pre-tax flexible 
spending arrangements for health care and dependent care expenses, or 
from Health

[[Page 611]]

Reimbursement Arrangements (as defined in 26 U.S.C. 105(b) and 125) for 
health care expenses; or
    (D) (1) It provides prepaid access solely to:
    (i) Employment benefits, incentives, wages or salaries; or
    (ii) Funds not to exceed $1,000 maximum value and from which no more 
than $1,000 maximum value can be initially or subsequently loaded, used, 
or withdrawn on any day through a device or vehicle; and
    (2) It does not permit:
    (i) Funds or value to be transmitted internationally;
    (ii) Transfers between or among users of prepaid access within a 
prepaid program; or
    (iii) Loading additional funds or the value of funds from non-
depository sources.
    (5) Money transmitter--(i) In general. (A) A person that provides 
money transmission services. The term ``money transmission services'' 
means the acceptance of currency, funds, or other value that substitutes 
for currency from one person and the transmission of currency, funds, or 
other value that substitutes for currency to another location or person 
by any means. ``Any means'' includes, but is not limited to, through a 
financial agency or institution; a Federal Reserve Bank or other 
facility of one or more Federal Reserve Banks, the Board of Governors of 
the Federal Reserve System, or both; an electronic funds transfer 
network; or an informal value transfer system; or
    (B) Any other person engaged in the transfer of funds.
    (ii) Facts and circumstances; Limitations. Whether a person is a 
money transmitter as described in this section is a matter of facts and 
circumstances. The term ``money transmitter'' shall not include a person 
that only:
    (A) Provides the delivery, communication, or network access services 
used by a money transmitter to support money transmission services;
    (B) Acts as a payment processor to facilitate the purchase of, or 
payment of a bill for, a good or service through a clearance and 
settlement system by agreement with the creditor or seller;
    (C) Operates a clearance and settlement system or otherwise acts as 
an intermediary solely between BSA regulated institutions. This includes 
but is not limited to the Fedwire system, electronic funds transfer 
networks, certain registered clearing agencies regulated by the 
Securities and Exchange Commission (``SEC''), and derivatives clearing 
organizations, or other clearinghouse arrangements established by a 
financial agency or institution;
    (D) Physically transports currency, other monetary instruments, 
other commercial paper, or other value that substitutes for currency as 
a person primarily engaged in such business, such as an armored car, 
from one person to the same person at another location or to an account 
belonging to the same person at a financial institution, provided that 
the person engaged in physical transportation has no more than a 
custodial interest in the currency, other monetary instruments, other 
commercial paper, or other value at any point during the transportation;
    (E) Provides prepaid access; or
    (F) Accepts and transmits funds only integral to the sale of goods 
or the provision of services, other than money transmission services, by 
the person who is accepting and transmitting the funds.
    (6) U.S. Postal Service. The United States Postal Service, except 
with respect to the sale of postage or philatelic products.
    (7) Seller of prepaid access. Any person that receives funds or the 
value of funds in exchange for an initial loading or subsequent loading 
of prepaid access if that person:
    (i) Sells prepaid access offered under a prepaid program that can be 
used before verification of customer identification under Sec. 
1022.210(d)(1)(iv); or
    (ii) Sells prepaid access (including closed loop prepaid access) to 
funds that exceed $10,000 to any person during any one day, and has not 
implemented policies and procedures reasonably adapted to prevent such a 
sale.
    (8) Limitation. For the purposes of this section, the term ``money 
services business'' shall not include:
    (i) A bank or foreign bank;
    (ii) A person registered with, and functionally regulated or 
examined by,

[[Page 612]]

the SEC or the CFTC, or a foreign financial agency that engages in 
financial activities that, if conducted in the United States, would 
require the foreign financial agency to be registered with the SEC or 
CFTC; or
    (iii) A natural person who engages in an activity identified in 
paragraphs (ff)(1) through (ff)(5) of this section on an infrequent 
basis and not for gain or profit.
    (gg) Mutual fund. An ``investment company'' (as the term is defined 
in section 3 of the Investment Company Act (15 U.S.C. 80a-3)) that is an 
``open-end company'' (as that term is defined in section 5 of the 
Investment Company Act (15 U.S.C. 80a-5)) that is registered or is 
required to register with the Commission under section 8 of the 
Investment Company Act (15 U.S.C. 80a-8).
    (hh) Option on a commodity. Any agreement, contract, or transaction 
described in section 1a(26) of the CEA, 7 U.S.C. 1a(26).
    (ii) Originator. The sender of the first payment order in a funds 
transfer.
    (jj) Originator's bank. The receiving bank to which the payment 
order of the originator is issued if the originator is not a bank or 
foreign bank, or the originator if the originator is a bank or foreign 
bank.
    (kk) Payment date. The day on which the amount of the transmittal 
order is payable to the recipient by the recipient's financial 
institution. The payment date may be determined by instruction of the 
sender, but cannot be earlier than the day the order is received by the 
recipient's financial institution and, unless otherwise prescribed by 
instruction, is the date the order is received by the recipient's 
financial institution.
    (ll) Payment order. An instruction of a sender to a receiving bank, 
transmitted orally, electronically, or in writing, to pay, or to cause 
another bank or foreign bank to pay, a fixed or determinable amount of 
money to a beneficiary if:
    (1) The instruction does not state a condition to payment to the 
beneficiary other than time of payment;
    (2) The receiving bank is to be reimbursed by debiting an account 
of, or otherwise receiving payment from, the sender; and
    (3) The instruction is transmitted by the sender directly to the 
receiving bank or to an agent, funds transfer system, or communication 
system for transmittal to the receiving bank.
    (mm) Person. An individual, a corporation, a partnership, a trust or 
estate, a joint stock company, an association, a syndicate, joint 
venture, or other unincorporated organization or group, an Indian Tribe 
(as that term is defined in the Indian Gaming Regulatory Act), and all 
entities cognizable as legal personalities.
    (nn) Receiving bank. The bank or foreign bank to which the sender's 
instruction is addressed.
    (oo) Receiving financial institution. The financial institution or 
foreign financial agency to which the sender's instruction is addressed. 
The term receiving financial institution includes a receiving bank.
    (pp) Recipient. The person to be paid by the recipient's financial 
institution. The term recipient includes a beneficiary, except where the 
recipient's financial institution is a financial institution other than 
a bank.
    (qq) Recipient's financial institution. The financial institution or 
foreign financial agency identified in a transmittal order in which an 
account of the recipient is to be credited pursuant to the transmittal 
order or which otherwise is to make payment to the recipient if the 
order does not provide for payment to an account. The term recipient's 
financial institution includes a beneficiary's bank, except where the 
beneficiary is a recipient's financial institution.
    (rr) Secretary. The Secretary of the Treasury or any person duly 
authorized by the Secretary to perform the function mentioned.
    (ss) Security. Security means any instrument or interest described 
in section 3(a)(10) of the Securities Exchange Act of 1934, 15 U.S.C. 
78c(a)(10).
    (tt) Self-regulatory organization:
    (1) Shall have the same meaning as provided in section 3(a)(26) of 
the Securities Exchange Act of 1934 (15 U.S.C. 78c(a)(26)); and

[[Page 613]]

    (2) Means a ``registered entity'' or a ``registered futures 
association'' as provided in section 1a(29) or 17, respectively, of the 
Commodity Exchange Act (7 U.S.C. 1a(29), 21).
    (uu) Sender. The person giving the instruction to the receiving 
financial institution.
    (vv) State. The States of the United States and, wherever necessary 
to carry out the provisions of this chapter, the District of Columbia.
    (ww) Prepaid access. Access to funds or the value of funds that have 
been paid in advance and can be retrieved or transferred at some point 
in the future through an electronic device or vehicle, such as a card, 
code, electronic serial number, mobile identification number, or 
personal identification number.
    (xx) Structure (structuring). For purposes of Sec. 1010.314, a 
person structures a transaction if that person, acting alone, or in 
conjunction with, or on behalf of, other persons, conducts or attempts 
to conduct one or more transactions in currency, in any amount, at one 
or more financial institutions, on one or more days, in any manner, for 
the purpose of evading the reporting requirements under Sec. Sec. 
1010.311, 1010.313, 1020.315, 1021.311 and 1021.313 of this chapter. 
``In any manner'' includes, but is not limited to, the breaking down of 
a single sum of currency exceeding $10,000 into smaller sums, including 
sums at or below $10,000, or the conduct of a transaction, or series of 
currency transactions at or below $10,000. The transaction or 
transactions need not exceed the $10,000 reporting threshold at any 
single financial institution on any single day in order to constitute 
structuring within the meaning of this definition.
    (yy) Taxpayer Identification Number. Taxpayer Identification Number 
(``TIN'') is defined by section 6109 of the Internal Revenue Code of 
1986 (26 U.S.C. 6109) and the Internal Revenue Service regulations 
implementing that section (e.g., social security number or employer 
identification number).
    (zz) Territories and Insular Possessions. The Commonwealth of Puerto 
Rico, the United States Virgin Islands, Guam, the Commonwealth of the 
Northern Mariana Islands, and all other territories and possessions of 
the United States other than the Indian lands and the District of 
Columbia.
    (aaa) [Reserved]
    (bbb) Transaction. (1) Except as provided in paragraph (bbb)(2) of 
this section, transaction means a purchase, sale, loan, pledge, gift, 
transfer, delivery, or other disposition, and with respect to a 
financial institution includes a deposit, withdrawal, transfer between 
accounts, exchange of currency, loan, extension of credit, purchase or 
sale of any stock, bond, certificate of deposit, or other monetary 
instrument, security, contract of sale of a commodity for future 
delivery, option on any contract of sale of a commodity for future 
delivery, option on a commodity, purchase or redemption of any money 
order, payment or order for any money remittance or transfer, purchase 
or redemption of casino chips or tokens, or other gaming instruments or 
any other payment, transfer, or delivery by, through, or to a financial 
institution, by whatever means effected.
    (2) For purposes of Sec. Sec. 1010.311, 1010.313, 1020.315, 
1021.311, 1021.313, and other provisions of this chapter relating solely 
to the report required by those sections, the term ``transaction in 
currency'' shall mean a transaction involving the physical transfer of 
currency from one person to another. A transaction which is a transfer 
of funds by means of bank check, bank draft, wire transfer, or other 
written order, and which does not include the physical transfer of 
currency, is not a transaction in currency for this purpose.
    (ccc) Transaction account. Transaction accounts include those 
accounts described in 12 U.S.C. 461(b)(1)(C), money market accounts and 
similar accounts that take deposits and are subject to withdrawal by 
check or other negotiable order.
    (ddd) Transmittal of funds. A series of transactions beginning with 
the transmittor's transmittal order, made for the purpose of making 
payment to the recipient of the order. The term includes any transmittal 
order issued by the transmittor's financial institution or an 
intermediary financial institution intended to carry out the 
transmittor's transmittal order. The

[[Page 614]]

term transmittal of funds includes a funds transfer. A transmittal of 
funds is completed by acceptance by the recipient's financial 
institution of a transmittal order for the benefit of the recipient of 
the transmittor's transmittal order. Funds transfers governed by the 
Electronic Fund Transfer Act of 1978 (Title XX, Pub. L. 95-630, 92 Stat. 
3728, 15 U.S.C. 1693, et seq.), as well as any other funds transfers 
that are made through an automated clearinghouse, an automated teller 
machine, or a point-of-sale system, are excluded from this definition.
    (eee) Transmittal order. The term transmittal order includes a 
payment order and is an instruction of a sender to a receiving financial 
institution, transmitted orally, electronically, or in writing, to pay, 
or cause another financial institution or foreign financial agency to 
pay, a fixed or determinable amount of money to a recipient if:
    (1) The instruction does not state a condition to payment to the 
recipient other than time of payment;
    (2) The receiving financial institution is to be reimbursed by 
debiting an account of, or otherwise receiving payment from, the sender; 
and
    (3) The instruction is transmitted by the sender directly to the 
receiving financial institution or to an agent or communication system 
for transmittal to the receiving financial institution.
    (fff) Transmittor. The sender of the first transmittal order in a 
transmittal of funds. The term transmittor includes an originator, 
except where the transmittor's financial institution is a financial 
institution or foreign financial agency other than a bank or foreign 
bank.
    (ggg) Transmittor's financial institution. The receiving financial 
institution to which the transmittal order of the transmittor is issued 
if the transmittor is not a financial institution or foreign financial 
agency, or the transmittor if the transmittor is a financial institution 
or foreign financial agency. The term transmittor's financial 
institution includes an originator's bank, except where the originator 
is a transmittor's financial institution other than a bank or foreign 
bank.
    (hhh) United States. The States of the United States, the District 
of Columbia, the Indian lands (as that term is defined in the Indian 
Gaming Regulatory Act), and the Territories and Insular Possessions of 
the United States.
    (iii) U.S. person. (1) A United States citizen; or (2) A person 
other than an individual (such as a corporation, partnership or trust), 
that is established or organized under the laws of a State or the United 
States. Non-U.S. person means a person that is not a U.S. person.
    (jjj) U.S. Postal Service. The United States Postal Service, except 
with respect to the sale of postage or philatelic products.
    (kkk) Closed loop prepaid access. Prepaid access to funds or the 
value of funds that can be used only for goods or services in 
transactions involving a defined merchant or location (or set of 
locations), such as a specific retailer or retail chain, a college 
campus, or a subway system.
    (lll) Loan or finance company. A person engaged in activities that 
take place wholly or in substantial part within the United States in one 
or more of the capacities listed below, whether or not on a regular 
basis or as an organized business concern. This includes but is not 
limited to maintenance of any agent, agency, branch, or office within 
the United States. For the purposes of this paragraph (lll), the term 
``loan or finance company'' shall include a sole proprietor acting as a 
loan or finance company, and shall not include: A bank, a person 
registered with and functionally regulated or examined by the Securities 
and Exchange Commission or the Commodity Futures Trading Commission, any 
government sponsored enterprise regulated by the Federal Housing Finance 
Agency, any Federal or state agency or authority administering mortgage 
or housing assistance, fraud prevention or foreclosure prevention 
programs, or an individual employed by a loan or finance company or 
financial institution under this part. A loan or finance company is not 
a financial institution as defined in the regulations in this part at 
1010.100(t).
    (1) Residential mortgage lender or originator. A residential 
mortgage lender or originator includes:

[[Page 615]]

    (i) Residential mortgage lender. The person to whom the debt arising 
from a residential mortgage loan is initially payable on the face of the 
evidence of indebtedness or, if there is no such evidence of 
indebtedness, by agreement, or to whom the obligation is initially 
assigned at or immediately after settlement. The term ``residential 
mortgage lender'' shall not include an individual who finances the sale 
of the individual's own dwelling or real property.
    (ii) Residential mortgage originator. A person who accepts a 
residential mortgage loan application or offers or negotiates terms of a 
residential mortgage loan.
    (iii) Residential mortgage loan. A loan that is secured by a 
mortgage, deed of trust, or other equivalent consensual security 
interest on:
    (A) A residential structure that contains one to four units, 
including, if used as a residence, an individual condominium unit, 
cooperative unit, mobile home or trailer; or
    (B) Residential real estate upon which such a structure is 
constructed or intended to be constructed.
    (2) [Reserved]

[75 FR 65812, Oct. 26, 2010, as amended at 76 FR 43596, July 21, 2011; 
76 FR 45419, July 29, 2011; 77 FR 8157, Feb. 14, 2012]



                           Subpart B_Programs



Sec. 1010.200  General.

    Each financial institution (as defined in 31 U.S.C. 5312(a)(2) or 
(c)(1)) should refer to subpart B of its chapter X Part for any 
additional program requirements. Unless otherwise indicated, the program 
requirements contained in this subpart B apply to all financial 
institutions (as defined in 31 U.S.C. 5312(a)(2) or (c)(1)).



Sec. 1010.205  Exempted anti-money laundering programs for certain 
financial institutions.

    (a) Exempt financial institutions. Subject to the provisions of 
paragraphs (c) and (d) of this section, the following financial 
institutions (as defined in 31 U.S.C. 5312(a)(2) or (c)(1)) are exempt 
from the requirement in 31 U.S.C. 5318(h)(1) concerning the 
establishment of anti-money laundering programs:
    (1) An agency of the United States Government, or of a State or 
local government, carrying out a duty or power of a business described 
in 31 U.S.C. 5312(a)(2); and
    (2) [Reserved]
    (b) Temporary exemption for certain financial institutions. (1) 
Subject to the provisions of paragraphs (c) and (d) of this section, the 
following financial institutions (as defined in 31 U.S.C. 5312(a)(2) or 
(c)(1)) are exempt from the requirement in 31 U.S.C. 5318(h)(1) 
concerning the establishment of anti-money laundering programs:
    (i) Pawnbroker;
    (ii) Travel agency;
    (iii) Telegraph company;
    (iv) Seller of vehicles, including automobiles, airplanes, and 
boats;
    (v) Person involved in real estate closings and settlements;
    (vi) Private banker;
    (vii) Commodity pool operator;
    (viii) Commodity trading advisor; or
    (ix) Investment company.
    (2) Subject to the provisions of paragraphs (c) and (d) of this 
section, a bank (as defined in Sec. 1010.100(d)) that is not subject to 
regulation by a Federal functional regulator (as defined in Sec. 
1010.100(r)) is exempt from the requirement in 31 U.S.C. 5318(h)(1) 
concerning the establishment of anti-money laundering programs.
    (3) Subject to the provisions of paragraphs (c) and (d) of this 
section, a person described in Sec. 1010.100(t)(7) is exempt from the 
requirement in 31 U.S.C. 5318(h)(1) concerning the establishment of 
anti-money laundering programs.
    (c) Limitation on exemption. The exemptions described in paragraph 
(b) of this section shall not apply to any financial institution that is 
otherwise required to establish an anti-money laundering program by this 
chapter.
    (d) Compliance obligations of deferred financial institutions. 
Nothing in this section shall be deemed to relieve an exempt financial 
institution from its responsibility to comply with any other applicable 
requirement of law or regulation, including title 31 of the U.S.C. and 
this chapter.

[75 FR 65812, Oct. 26, 2010, as amended at 77 FR 8157, Feb. 14, 2012]

[[Page 616]]



Sec. 1010.210  Anti-money laundering programs.

    Each financial institution (as defined in 31 U.S.C. 5312(a)(2) or 
(c)(1)) should refer to subpart B of its chapter X part for any 
additional anti-money laundering program requirements.



Sec. 1010.220  Customer identification program requirements.

    Each financial institution (as defined in 31 U.S.C. 5312(a)(2) or 
(c)(1)) should refer to subpart B of its chapter X part for any 
additional customer identification program requirements.



                  Subpart C_Reports Required To Be Made



Sec. 1010.300  General.

    Each financial institution (as defined in 31 U.S.C. 5312(a)(2) or 
(c)(1)) should refer to its chapter X part for any additional reporting 
requirements. Unless otherwise indicated, the reporting requirements 
contained in this subpart C apply to all financial institutions.



Sec. 1010.301  Determination by the Secretary.

    The Secretary hereby determines that the reports required by this 
chapter have a high degree of usefulness in criminal, tax, or regulatory 
investigations or proceedings.



Sec. 1010.305  [Reserved]



Sec. 1010.306  Filing of reports.

    (a)(1) A report required by Sec. 1010.311 or Sec. 1021.311, shall 
be filed by the financial institution within 15 days following the day 
on which the reportable transaction occurred.
    (2) A copy of each report filed pursuant to Sec. Sec. 1010.311, 
1010.313, 1020.315, 1021.311 and 1021.313, shall be retained by the 
financial institution for a period of five years from the date of the 
report.
    (3) All reports required to be filed by Sec. Sec. 1010.311, 
1010.313, 1020.315, 1021.311 and 1021.313, shall be filed with the 
Commissioner of Internal Revenue, unless otherwise specified.
    (b)(1) A report required by Sec. 1010.340(a) shall be filed at the 
time of entry into the United States or at the time of departure, 
mailing or shipping from the United States, unless otherwise specified 
by the Commissioner of Customs and Border Protection.
    (2) A report required by Sec. 1010.340(b) shall be filed within 15 
days after receipt of the currency or other monetary instruments.
    (3) All reports required by Sec. 1010.340 shall be filed with the 
Customs officer in charge at any port of entry or departure, or as 
otherwise specified by the Commissioner of Customs and Border 
Protection. Reports required by Sec. 1010.340(a) for currency or other 
monetary instruments not physically accompanying a person entering or 
departing from the United States, may be filed by mail on or before the 
date of entry, departure, mailing or shipping. All reports required by 
Sec. 1010.340(b) may also be filed by mail. Reports filed by mail shall 
be addressed to the Commissioner of Customs and Border Protection, 
Attention: Currency Transportation Reports, Washington, DC 20229.
    (c) Reports required to be filed by Sec. 1010.350 shall be filed 
with the Commissioner of Internal Revenue on or before June 30 of each 
calendar year with respect to foreign financial accounts exceeding 
$10,000 maintained during the previous calendar year.
    (d) Reports required by Sec. 1010.311, Sec. 1010.313, Sec. 
1010.340, Sec. 1010.350, Sec. 1020.315, Sec. 1021.311 or Sec. 
1021.313 of this chapter shall be filed on forms prescribed by the 
Secretary. All information called for in such forms shall be furnished.
    (e) Forms to be used in making the reports required by Sec. 
1010.311, Sec. 1010.313, Sec. 1010.350, Sec. 1020.315, Sec. 1021.311 
or Sec. 1021.313 of this chapter may be obtained from the Internal 
Revenue Service. Forms to be used in making the reports required by 
Sec. 1010.340 may be obtained from the U.S. Customs and Border 
Protection.



Sec. 1010.310  Reports of transactions in currency.

    Sections 1010.310 through 1010.314 set forth the rules for the 
reporting by financial institutions of transactions in currency. Unless 
otherwise indicated, the transactions in currency reporting requirements 
in Sec. Sec. 1010.310 through 1010.314 apply to all financial 
institutions. Each financial institution should refer to subpart C of 
its chapter X part

[[Page 617]]

for any additional transactions in currency reporting requirements.



Sec. 1010.311  Filing obligations for reports of transactions in currency.

    Each financial institution other than a casino shall file a report 
of each deposit, withdrawal, exchange of currency or other payment or 
transfer, by, through, or to such financial institution which involves a 
transaction in currency of more than $10,000, except as otherwise 
provided in this section. In the case of the U.S. Postal Service, the 
obligation contained in the preceding sentence shall not apply to 
payments or transfers made solely in connection with the purchase of 
postage or philatelic products.



Sec. 1010.312  Identification required.

    Before concluding any transaction with respect to which a report is 
required under Sec. 1010.311, Sec. 1010.313, Sec. 1020.315, Sec. 
1021.311 or Sec. 1021.313 of this chapter, a financial institution 
shall verify and record the name and address of the individual 
presenting a transaction, as well as record the identity, account 
number, and the social security or taxpayer identification number, if 
any, of any person or entity on whose behalf such transaction is to be 
effected. Verification of the identity of an individual who indicates 
that he or she is an alien or is not a resident of the United States 
must be made by passport, alien identification card, or other official 
document evidencing nationality or residence (e.g., a Provincial 
driver's license with indication of home address). Verification of 
identity in any other case shall be made by examination of a document, 
other than a bank signature card, that is normally acceptable within the 
banking community as a means of identification when cashing checks for 
nondepositors (e.g., a driver's license or credit card). A bank 
signature card may be relied upon only if it was issued after documents 
establishing the identity of the individual were examined and notation 
of the specific information was made on the signature card. In each 
instance, the specific identifying information (i.e., the account number 
of the credit card, the driver's license number, etc.) used in verifying 
the identity of the customer shall be recorded on the report, and the 
mere notation of ``known customer'' or ``bank signature card on file'' 
on the report is prohibited.



Sec. 1010.313  Aggregation.

    (a) Multiple branches. A financial institution includes all of its 
domestic branch offices, and any recordkeeping facility, wherever 
located, that contains records relating to the transactions of the 
institution's domestic offices, for purposes of the transactions in 
currency reporting requirements in this chapter.
    (b) Multiple transactions. In the case of financial institutions 
other than casinos, for purposes of the transactions in currency 
reporting requirements in this chapter, multiple currency transactions 
shall be treated as a single transaction if the financial institution 
has knowledge that they are by or on behalf of any person and result in 
either cash in or cash out totaling more than $10,000 during any one 
business day (or in the case of the U.S. Postal Service, any one day). 
Deposits made at night or over a weekend or holiday shall be treated as 
if received on the next business day following the deposit.



Sec. 1010.314  Structured transactions.

    No person shall for the purpose of evading the transactions in 
currency reporting requirements of this chapter with respect to such 
transaction:
    (a) Cause or attempt to cause a domestic financial institution to 
fail to file a report required under the transactions in currency 
reporting requirements of this chapter;
    (b) Cause or attempt to cause a domestic financial institution to 
file a report required under the transactions in currency reporting 
requirements of this chapter that contains a material omission or 
misstatement of fact; or
    (c) Structure (as that term is defined in Sec. 1010.100(xx)) or 
assist in structuring, or attempt to structure or assist in structuring, 
any transaction with one or more domestic financial institutions.

[[Page 618]]



Sec. 1010.315  Exemptions for non-bank financial institutions.

    A non-bank financial institution is not required to file a report 
otherwise required by Sec. 1010.311 with respect to a transaction in 
currency between the institution and a commercial bank.



Sec. 1010.320  Reports of suspicious transactions.

    Each financial institution (as defined in 31 U.S.C. 5312(a)(2) or 
(c)(1)) should refer to subpart C of its financial institution part in 
this chapter for any additional suspicious transaction reporting 
requirements.



Sec. 1010.330  Reports relating to currency in excess of $10,000 
received in a trade or business.

    (a) Reporting requirement--(1) Reportable transactions--(i) In 
general. Any person (solely for purposes of section 5331 of title 31, 
United States Code and this section, ``person'' shall have the same 
meaning as under 26 U.S.C. 7701(a)(1)) who, in the course of a trade or 
business in which such person is engaged, receives currency in excess of 
$10,000 in 1 transaction (or 2 or more related transactions) shall, 
except as otherwise provided, make a report of information with respect 
to the receipt of currency. This section does not apply to amounts 
received in a transaction reported under 31 U.S.C. 5313 and Sec. 
1010.311, Sec. 1010.313, Sec. 1020.315, Sec. 1021.311 or Sec. 
1021.313 of this chapter.
    (ii) Certain financial transactions. Section 6050I of title 26 of 
the United States Code requires persons to report information about 
financial transactions to the IRS, and 31 U.S.C. 5331 requires persons 
to report similar information about certain transactions to FinCEN. This 
information shall be reported on the same form as prescribed by the 
Secretary.
    (2) Currency received for the account of another. Currency in excess 
of $10,000 received by a person for the account of another must be 
reported under this section. Thus, for example, a person who collects 
delinquent accounts receivable for an automobile dealer must report with 
respect to the receipt of currency in excess of $10,000 from the 
collection of a particular account even though the proceeds of the 
collection are credited to the account of the automobile dealer (i.e., 
where the rights to the proceeds from the account are retained by the 
automobile dealer and the collection is made on a fee-for-service 
basis).
    (3) Currency received by agents-- (i) General rule. Except as 
provided in paragraph (a)(3)(ii) of this section, a person who in the 
course of a trade or business acts as an agent (or in some other similar 
capacity) and receives currency in excess of $10,000 from a principal 
must report the receipt of currency under this section.
    (ii) Exception. An agent who receives currency from a principal and 
uses all of the currency within 15 days in a currency transaction (the 
``second currency transaction'') which is reportable under section 5312 
of title 31, or 31 U.S.C. 5331 and this section, and who discloses the 
name, address, and TIN of the principal to the recipient in the second 
currency transaction need not report the initial receipt of currency 
under this section. An agent will be deemed to have met the disclosure 
requirements of this paragraph (a)(3)(ii) if the agent discloses only 
the name of the principal and the agent knows that the recipient has the 
principal's address and taxpayer identification number.
    (iii) Example. The following example illustrates the application of 
the rules in paragraphs (a)(3)(i) and (ii) of this section:

    Example. B, the principal, gives D, an attorney, $75,000 in currency 
to purchase real property on behalf of B. Within 15 days D purchases 
real property for currency from E, a real estate developer, and 
discloses to E, B's name, address, and taxpayer identification number. 
Because the transaction qualifies for the exception provided in 
paragraph (a)(3)(ii) of this section, D need not report with respect to 
the initial receipt of currency under this section. The exception does 
not apply, however, if D pays E by means other than currency, or effects 
the purchase more than 15 days following receipt of the currency from B, 
or fails to disclose B's name, address, and taxpayer identification 
number (assuming D does not know that E already has B's address and 
taxpayer identification number), or purchases the property from a person 
whose sale of the property is not in the course of that person's trade 
or business. In any such case, D is required to

[[Page 619]]

report the receipt of currency from B under this section.

    (b) Multiple payments. The receipt of multiple currency deposits or 
currency installment payments (or other similar payments or prepayments) 
relating to a single transaction (or two or more related transactions), 
is reported as set forth in paragraphs (b)(1) through (b)(3) of this 
section.
    (1) Initial payment in excess of $10,000. If the initial payment 
exceeds $10,000, the recipient must report the initial payment within 15 
days of its receipt.
    (2) Initial payment of $10,000 or less. If the initial payment does 
not exceed $10,000, the recipient must aggregate the initial payment and 
subsequent payments made within one year of the initial payment until 
the aggregate amount exceeds $10,000, and report with respect to the 
aggregate amount within 15 days after receiving the payment that causes 
the aggregate amount to exceed $10,000.
    (3) Subsequent payments. In addition to any other required report, a 
report must be made each time that previously unreportable payments made 
within a 12-month period with respect to a single transaction (or two or 
more related transactions), individually or in the aggregate, exceed 
$10,000. The report must be made within 15 days after receiving the 
payment in excess of $10,000 or the payment that causes the aggregate 
amount received in the 12-month period to exceed $10,000. (If more than 
one report would otherwise be required for multiple currency payments 
within a 15-day period that relate to a single transaction (or two or 
more related transactions), the recipient may make a single combined 
report with respect to the payments. The combined report must be made no 
later than the date by which the first of the separate reports would 
otherwise be required to be made.)
    (4) Example. The following example illustrates the application of 
the rules in paragraphs (b)(1) through (b)(3) of this section:

    Example. On January 10, Year 1, M receives an initial payment in 
currency of $11,000 with respect to a transaction. M receives subsequent 
payments in currency with respect to the same transaction of $4,000 on 
February 15, Year 1, $6,000 on March 20, Year 1, and $12,000 on May 15, 
Year 1. M must make a report with respect to the payment received on 
January 10, Year 1, by January 25, Year 1. M must also make a report 
with respect to the payments totaling $22,000 received from February 15, 
Year 1, through May 15, Year 1. This report must be made by May 30, Year 
1, that is, within 15 days of the date that the subsequent payments, all 
of which were received within a 12-month period, exceeded $10,000.

    (c) Meaning of terms. The following definitions apply for purposes 
of this section--
    (1) Currency. Solely for purposes of 31 U.S.C. 5331 and this 
section, currency means--
    (i) The coin and currency of the United States or of any other 
country, which circulate in and are customarily used and accepted as 
money in the country in which issued; and
    (ii) A cashier's check (by whatever name called, including 
``treasurer's check'' and ``bank check''), bank draft, traveler's check, 
or money order having a face amount of not more than $10,000--
    (A) Received in a designated reporting transaction as defined in 
paragraph (c)(2) of this section (except as provided in paragraphs 
(c)(3), (4), and (5) of this section), or
    (B) Received in any transaction in which the recipient knows that 
such instrument is being used in an attempt to avoid the reporting of 
the transaction under section 5331 and this section.
    (2) Designated reporting transaction. A designated reporting 
transaction is a retail sale (or the receipt of funds by a broker or 
other intermediary in connection with a retail sale) of--
    (i) A consumer durable,
    (ii) A collectible, or
    (iii) A travel or entertainment activity.
    (3) Exception for certain loans. A cashier's check, bank draft, 
traveler's check, or money order received in a designated reporting 
transaction is not treated as currency pursuant to paragraph 
(c)(1)(ii)(A) of this section if the instrument constitutes the proceeds 
of a loan from a bank. The recipient may rely on a copy of the loan 
document, a written statement from the bank, or similar documentation 
(such as a written lien instruction from the issuer of

[[Page 620]]

the instrument) to substantiate that the instrument constitutes loan 
proceeds.
    (4) Exception for certain installment sales. A cashier's check, bank 
draft, traveler's check, or money order received in a designated 
reporting transaction is not treated as currency pursuant to paragraph 
(c)(1)(ii)(A) of this section if the instrument is received in payment 
on a promissory note or an installment sales contract (including a lease 
that is considered to be a sale for Federal income tax purposes). 
However, the preceding sentence applies only if--
    (i) Promissory notes or installment sales contracts with the same or 
substantially similar terms are used in the ordinary course of the 
recipient's trade or business in connection with sales to ultimate 
consumers; and
    (ii) The total amount of payments with respect to the sale that are 
received on or before the 60th day after the date of the sale does not 
exceed 50 percent of the purchase price of the sale.
    (5) Exception for certain down payment plans. A cashier's check, 
bank draft, traveler's check, or money order received in a designated 
reporting transaction is not treated as currency pursuant to paragraph 
(c)(1)(ii)(A) of this section if the instrument is received pursuant to 
a payment plan requiring one or more down payments and the payment of 
the balance of the purchase price by a date no later than the date of 
the sale (in the case of an item of travel or entertainment, a date no 
later than the earliest date that any item of travel or entertainment 
pertaining to the same trip or event is furnished). However, the 
preceding sentence applies only if--
    (i) The recipient uses payment plans with the same or substantially 
similar terms in the ordinary course of its trade or business in 
connection with sales to ultimate consumers; and
    (ii) The instrument is received more than 60 days prior to the date 
of the sale (in the case of an item of travel or entertainment, the date 
on which the final payment is due).
    (6) Examples. The following examples illustrate the definition of 
``currency'' set forth in paragraphs (c)(1) through (c)(5) of this 
section:

    Example 1. D, an individual, purchases gold coins from M, a coin 
dealer, for $13,200. D tenders to M in payment United States currency in 
the amount of $6,200 and a cashier's check in the face amount of $7,000 
which D had purchased. Because the sale is a designated reporting 
transaction, the cashier's check is treated as currency for purposes of 
31 U.S.C. 5331 and this section. Therefore, because M has received more 
than $10,000 in currency with respect to the transaction, M must make 
the report required by 31 U.S.C. 5331 and this section.
    Example 2. E, an individual, purchases an automobile from Q, an 
automobile dealer, for $11,500. E tenders to Q in payment United States 
currency in the amount of $2,000 and a cashier's check payable to E and 
Q in the amount of $9,500. The cashier's check constitutes the proceeds 
of a loan from the bank issuing the check. The origin of the proceeds is 
evident from provisions inserted by the bank on the check that instruct 
the dealer to cause a lien to be placed on the vehicle as security for 
the loan. The sale of the automobile is a designated reporting 
transaction. However, under paragraph (c)(3) of this section, because E 
has furnished Q documentary information establishing that the cashier's 
check constitutes the proceeds of a loan from the bank issuing the 
check, the cashier's check is not treated as currency pursuant to 
paragraph (c)(1)(ii)(A) of this section.
    Example 3. F, an individual, purchases an item of jewelry from S, a 
retail jeweler, for $12,000. F gives S traveler's checks totaling $2,400 
and pays the balance with a personal check payable to S in the amount of 
$9,600. Because the sale is a designated reporting transaction, the 
traveler's checks are treated as currency for purposes of section 5331 
and this section. However, because the personal check is not treated as 
currency for purposes of section 5331 and this section, S has not 
received more than $10,000 in currency in the transaction and no report 
is required to be filed under section 5331 and this section.
    Example 4. G, an individual, purchases a boat from T, a boat dealer, 
for $16,500. G pays T with a cashier's check payable to T in the amount 
of $16,500. The cashier's check is not treated as currency because the 
face amount of the check is more than $10,000. Thus, no report is 
required to be made by T under section 5331 and this section.
    Example 5. H, an individual, arranges with W, a travel agent, for 
the chartering of a passenger aircraft to transport a group of 
individuals to a sports event in another city. H also arranges with W 
for hotel accommodations for the group and for admission tickets to the 
sports event. In payment, H tenders to

[[Page 621]]

W money orders which H had previously purchased. The total amount of the 
money orders, none of which individually exceeds $10,000 in face amount, 
exceeds $10,000. Because the transaction is a designated reporting 
transaction, the money orders are treated as currency for purposes of 
section 5331 and this section. Therefore, because W has received more 
than $10,000 in currency with respect to the transaction, W must make 
the report required by section 5331 and this section.

    (7) Consumer durable. The term consumer durable means an item of 
tangible personal property of a type that is suitable under ordinary 
usage for personal consumption or use, that can reasonably be expected 
to be useful for at least 1 year under ordinary usage, and that has a 
sales price of more than $10,000. Thus, for example, a $20,000 
automobile is a consumer durable (whether or not it is sold for business 
use), but a $20,000 dump truck or a $20,000 factory machine is not.
    (8) Collectible. The term collectible means an item described in 
paragraphs (A) through (D) of section 408 (m)(2) of title 26 of the 
United States Code (determined without regard to section 408 (m)(3) of 
title 26 of the United States Code).
    (9) Travel or entertainment activity. The term travel or 
entertainment activity means an item of travel or entertainment (within 
the meaning of 26 CFR 1.274-2(b)(1)) pertaining to a single trip or 
event where the aggregate sales price of the item and all other items 
pertaining to the same trip or event that are sold in the same 
transaction (or related transactions) exceeds $10,000.
    (10) Retail sale. The term retail sale means any sale (whether for 
resale or for any other purpose) made in the course of a trade or 
business if that trade or business principally consists of making sales 
to ultimate consumers.
    (11) Trade or business. The term trade or business has the same 
meaning as under section 162 of title 26, United States Code.
    (12) Transaction. (i) Solely for purposes of 31 U.S.C. 5331 and this 
section, the term transaction means the underlying event precipitating 
the payer's transfer of currency to the recipient. In this context, 
transactions include (but are not limited to) a sale of goods or 
services; a sale of real property; a sale of intangible property; a 
rental of real or personal property; an exchange of currency for other 
currency; the establishment or maintenance of or contribution to a 
custodial, trust, or escrow arrangement; a payment of a preexisting 
debt; a conversion of currency to a negotiable instrument; a 
reimbursement for expenses paid; or the making or repayment of a loan. A 
transaction may not be divided into multiple transactions in order to 
avoid reporting under this section.
    (ii) The term related transactions means any transaction conducted 
between a payer (or its agent) and a recipient of currency in a 24-hour 
period. Additionally, transactions conducted between a payer (or its 
agent) and a currency recipient during a period of more than 24 hours 
are related if the recipient knows or has reason to know that each 
transaction is one of a series of connected transactions.
    (iii) The following examples illustrate the definition of paragraphs 
(c)(12)(i) and (ii) of this section:

    Example 1. A person has a tacit agreement with a gold dealer to 
purchase $36,000 in gold bullion. The $36,000 purchase represents a 
single transaction under paragraph (c)(12)(i) of this section and the 
reporting requirements of this section cannot be avoided by recasting 
the single sales transaction into 4 separate $9,000 sales transactions.
    Example 2. An attorney agrees to represent a client in a criminal 
case with the attorney's fee to be determined on an hourly basis. In the 
first month in which the attorney represents the client, the bill for 
the attorney's services comes to $8,000 which the client pays in 
currency. In the second month in which the attorney represents the 
client, the bill for the attorney's services comes to $4,000, which the 
client again pays in currency. The aggregate amount of currency paid 
($12,000) relates to a single transaction as defined in paragraph 
(c)(12)(i) of this section, the sale of legal services relating to the 
criminal case, and the receipt of currency must be reported under this 
section.
    Example 3. A person intends to contribute a total of $45,000 to a 
trust fund, and the trustee of the fund knows or has reason to know of 
that intention. The $45,000 contribution is a single transaction under 
paragraph (c)(12)(i) of this section and the reporting requirement of 
this section cannot be avoided by the grantor's making five separate 
$9,000 contributions of currency to a single fund or

[[Page 622]]

by making five $9,000 contributions of currency to five separate funds 
administered by a common trustee.
    Example 4. K, an individual, attends a one day auction and purchases 
for currency two items, at a cost of $9,240 and $1,732.50 respectively 
(tax and buyer's premium included). Because the transactions are related 
transactions as defined in paragraph (c)(12)(ii) of this section, the 
auction house is required to report the aggregate amount of currency 
received from the related sales ($10,972.50), even though the auction 
house accounts separately on its books for each item sold and presents 
the purchaser with separate bills for each item purchased.
    Example 5. F, a coin dealer, sells for currency $9,000 worth of gold 
coins to an individual on three successive days. Under paragraph 
(c)(12)(ii) of this section the three $9,000 transactions are related 
transactions aggregating $27,000 if F knows, or has reason to know, that 
each transaction is one of a series of connected transactions.

    (13) Recipient. (i) The term recipient means the person receiving 
the currency. Except as provided in paragraph (c)(13)(ii) of this 
section, each store, division, branch, department, headquarters, or 
office (``branch'') (regardless of physical location) comprising a 
portion of a person's trade or business shall for purposes of this 
section be deemed a separate recipient.
    (ii) A branch that receives currency payments will not be deemed a 
separate recipient if the branch (or a central unit linking such branch 
with other branches) would in the ordinary course of business have 
reason to know the identity of payers making currency payments to other 
branches of such person.
    (iii) Examples. The following examples illustrate the application of 
the rules in paragraphs (c)(13)(i) and (ii) of this section:

    Example 1. N, an individual, purchases regulated futures contracts 
at a cost of $7,500 and $5,000, respectively, through two different 
branches of Commodities Broker X on the same day. N pays for each 
purchase with currency. Each branch of Commodities Broker X transmits 
the sales information regarding each of N's purchases to a central unit 
of Commodities Broker X (which settles the transactions against N's 
account). Under paragraph (c)(13)(ii) of this section the separate 
branches of Commodities Broker X are not deemed to be separate 
recipients; therefore, Commodities Broker X must report with respect to 
the two related regulated futures contracts sales in accordance with 
this section.
    Example 2. P, a corporation, owns and operates a racetrack. P's 
racetrack contains 100 betting windows at which pari-mutuel wagers may 
be made. R, an individual, places currency wagers of $3,000 each at five 
separate betting windows. Assuming that in the ordinary course of 
business each betting window (or a central unit linking windows) does 
not have reason to know the identity of persons making wagers at other 
betting windows, each betting window would be deemed to be a separate 
currency recipient under paragraph (c)(13)(i) of this section. As no 
individual recipient received currency in excess of $10,000, no report 
need be made by P under this section.

    (d) Exceptions to the reporting requirements of 31 U.S.C. 5331--(1) 
Receipt is made with respect to a foreign currency transaction--(i) In 
general. Generally, there is no requirement to report with respect to a 
currency transaction if the entire transaction occurs outside the United 
States (the fifty states and the District of Columbia). An entire 
transaction consists of both the transaction as defined in paragraph 
(c)(12)(i) of this section and the receipt of currency by the recipient. 
If, however, any part of an entire transaction occurs in the 
Commonwealth of Puerto Rico or a possession or territory of the United 
States and the recipient of currency in that transaction is subject to 
the general jurisdiction of the Internal Revenue Service under title 26 
of the United States Code, the recipient is required to report the 
transaction under this section.
    (ii) Example. The following example illustrates the application of 
the rules in paragraph (d)(1)(i) of this section:

    Example. W, an individual engaged in the trade or business of 
selling aircraft, reaches an agreement to sell an airplane to a U.S. 
citizen living in Mexico. The agreement, no portion of which is 
formulated in the United States, calls for a purchase price of $125,000 
and requires delivery of and payment for the airplane to be made in 
Mexico. Upon delivery of the airplane in Mexico, W receives $125,000 in 
currency. W is not required to report under 31 U.S.C. 5331 or this 
section because the exception provided in paragraph (d)(1)(i) of this 
section (``foreign transaction exception'') applies. If, however, any 
part of the agreement to sell had been formulated in the

[[Page 623]]

United States, the foreign transaction exception would not apply and W 
would be required to report the receipt of currency under 31 U.S.C. 5331 
and this section.

    (2) Receipt of currency not in the course of the recipient's trade 
or business. The receipt of currency in excess of $10,000 by a person 
other than in the course of the person's trade or business is not 
reportable under 31 U.S.C. 5331. Thus, for example, F, an individual in 
the trade or business of selling real estate, sells a motorboat for 
$12,000, the purchase price of which is paid in currency. F did not use 
the motorboat in any trade or business in which F was engaged. F is not 
required to report under 31 U.S.C. 5331 or this section because the 
exception provided in this paragraph (d)(2) applies.
    (e) Time, manner, and form of reporting--(1) In general. The reports 
required by paragraph (a) of this section must be made by filing a Form 
8300, as specified in 26 CFR 1.6050I-1(e)(2). The reports must be filed 
at the time and in the manner specified in 26 CFR 1.6050I-1(e)(1) and 
(3) respectively.
    (2) Verification. A person making a report of information under this 
section must verify the identity of the person from whom the reportable 
currency is received. Verification of the identity of a person who 
purports to be an alien must be made by examination of such person's 
passport, alien identification card, or other official document 
evidencing nationality or residence. Verification of the identity of any 
other person may be made by examination of a document normally 
acceptable as a means of identification when cashing or accepting checks 
(for example, a driver's license or a credit card). In addition, a 
report will be considered incomplete if the person required to make a 
report knows (or has reason to know) that an agent is conducting the 
transaction for a principal, and the return does not identify both the 
principal and the agent.
    (3) Retention of reports. A person required to make a report under 
this section must keep a copy of each report filed for five years from 
the date of filing.

    Effective Date Note: At 77 FR 33637, June 7, 2012, Sec. 1010.330 
was amended by revising paragraphs (a)(1)(ii) introductory text and 
(c)(1), effective July 9, 2012. For the convenience of the user, the 
revised text is set forth as follows:



Sec. 1010.330  Reports relating to currency in excess of $10,000 
          received in a trade or business.

    (a) * * *
    (1) * * *
    (ii) Certain financial transactions. Section 6050I of title 26 of 
the United States Code requires persons to report information about 
financial transactions to the IRS, and 31 U.S.C. 5331 requires persons 
to report the same information to the Financial Crimes Enforcement 
Network. This information shall be reported on the same form as 
prescribed by the Secretary.

                                * * * * *

    (c) * * *
    (1) Currency. The term currency means--

                                * * * * *



Sec. 1010.331  Reports relating to currency in excess of $10,000 
received as bail by court clerks.

    (a) Reporting requirement.--(1) In general. Any clerk of a Federal 
or State court who receives more than $10,000 in currency as bail for 
any individual charged with a specified criminal offense must make a 
report of information with respect to that receipt of currency. For 
purposes of this section, a clerk is the clerk's office or the office, 
department, division, branch, or unit of the court that is authorized to 
receive bail. If someone other than a clerk receives bail on behalf of a 
clerk, the clerk is treated as receiving the bail for purposes of this 
paragraph (a).
    (2) Certain financial transactions. Section 6050I of title 26 of the 
United States Code requires clerks to report information about financial 
transactions to the IRS, and 31 U.S.C. 5331 require clerks to report the 
same information to the Financial Crimes Enforcement Network. This 
information shall be reported on the same form as prescribed by the 
Secretary.
    (b) Meaning of terms. The following definitions apply for purposes 
of this section--
    (1) The term currency means--
    (i) The coin and currency of the United States, or of any other 
country, that circulate in and are customarily

[[Page 624]]

used and accepted as money in the country in which issued; and
    (ii) A cashier's check (by whatever name called, including 
treasurer's check and bank check), bank draft, traveler's check, or 
money order having a face amount of not more than $ 10,000.
    (2) The term specified criminal offense means--
    (i) A Federal criminal offense involving a controlled substance (as 
defined in section 802 of title 21 of the United States Code), provided 
the offense is described in Part D of Subchapter I or Subchapter II of 
title 21 of the United States Code;
    (ii) Racketeering (as defined in section 1951, 1952, or 1955 of 
title 18 of the United States Code);
    (iii) Money laundering (as defined in section 1956 or 1957 of title 
18 of the United States Code); and
    (iv) Any State criminal offense substantially similar to an offense 
described in this paragraph (b)(2) of this section.
    (c) Time, form, and manner of reporting.--(1) In general. The 
reports required by paragraph (a) of this section must be made by filing 
a Form 8300, as specified in 26 CFR 1.6050I-2(c)(2). The report must be 
filed at the time and in the manner specified in 26 CFR 1.6050I-2(c)(1) 
and (3), respectively.
    (2) Verification of identity. A clerk required to make a report 
under this section must, in accordance with 26 CFR 1.6050I-2(c)(3)(ii), 
verify the identity of each payor of bail listed in the report.

[77 FR 33637, June 7, 2012]

    Effective Date Note: At 77 FR 33637, June 7, 2012, Sec. 1010.331 
was added, effective July 9, 2012.



Sec. 1010.340  Reports of transportation of currency or monetary 
instruments.

    (a) Each person who physically transports, mails, or ships, or 
causes to be physically transported, mailed, or shipped, or attempts to 
physically transport, mail or ship, or attempts to cause to be 
physically transported, mailed or shipped, currency or other monetary 
instruments in an aggregate amount exceeding $10,000 at one time from 
the United States to any place outside the United States, or into the 
United States from any place outside the United States, shall make a 
report thereof. A person is deemed to have caused such transportation, 
mailing or shipping when he aids, abets, counsels, commands, procures, 
or requests it to be done by a financial institution or any other 
person.
    (b) Each person who receives in the U.S. currency or other monetary 
instruments in an aggregate amount exceeding $10,000 at one time which 
have been transported, mailed, or shipped to such person from any place 
outside the United States with respect to which a report has not been 
filed under paragraph (a) of this section, whether or not required to be 
filed thereunder, shall make a report thereof, stating the amount, the 
date of receipt, the form of monetary instruments, and the person from 
whom received.
    (c) This section shall not require reports by:
    (1) A Federal Reserve;
    (2) A bank, a foreign bank, or a broker or dealer in securities, in 
respect to currency or other monetary instruments mailed or shipped 
through the postal service or by common carrier;
    (3) A commercial bank or trust company organized under the laws of 
any State or of the United States with respect to overland shipments of 
currency or monetary instruments shipped to or received from an 
established customer maintaining a deposit relationship with the bank, 
in amounts which the bank may reasonably conclude do not exceed amounts 
commensurate with the customary conduct of the business, industry or 
profession of the customer concerned;
    (4) A person who is not a citizen or resident of the United States 
in respect to currency or other monetary instruments mailed or shipped 
from abroad to a bank or broker or dealer in securities through the 
postal service or by common carrier;
    (5) A common carrier of passengers in respect to currency or other 
monetary instruments in the possession of its passengers;
    (6) A common carrier of goods in respect to shipments of currency or 
monetary instruments not declared to be such by the shipper;

[[Page 625]]

    (7) A travelers' check issuer or its agent in respect to the 
transportation of travelers' checks prior to their delivery to selling 
agents for eventual sale to the public;
    (8) By a person with respect to a restrictively endorsed traveler's 
check that is in the collection and reconciliation process after the 
traveler's check has been negotiated;
    (9) Nor by a person engaged as a business in the transportation of 
currency, monetary instruments and other commercial papers with respect 
to the transportation of currency or other monetary instruments overland 
between established offices of banks or brokers or dealers in securities 
and foreign persons.
    (d) A transfer of funds through normal banking procedures which does 
not involve the physical transportation of currency or monetary 
instruments is not required to be reported by this section. This section 
does not require that more than one report be filed covering a 
particular transportation, mailing or shipping of currency or other 
monetary instruments with respect to which a complete and truthful 
report has been filed by a person. However, no person required by 
paragraph (a) or (b) of this section to file a report shall be excused 
from liability for failure to do so if, in fact, a complete and truthful 
report has not been filed.



Sec. 1010.350  Reports of foreign financial accounts.

    (a) In general. Each United States person having a financial 
interest in, or signature or other authority over, a bank, securities, 
or other financial account in a foreign country shall report such 
relationship to the Commissioner of Internal Revenue for each year in 
which such relationship exists and shall provide such information as 
shall be specified in a reporting form prescribed under 31 U.S.C. 5314 
to be filed by such persons. The form prescribed under section 5314 is 
the Report of Foreign Bank and Financial Accounts (TD-F 90-22.1), or any 
successor form. See paragraphs (g)(1) and (g)(2) of this section for a 
special rule for persons with a financial interest in 25 or more 
accounts, or signature or other authority over 25 or more accounts.
    (b) United States person. For purposes of this section, the term 
``United States person'' means--
    (1) A citizen of the United States;
    (2) A resident of the United States. A resident of the United States 
is an individual who is a resident alien under 26 U.S.C. 7701(b) and the 
regulations thereunder but using the definition of ``United States'' 
provided in 31 CFR 1010.100(hhh) rather than the definition of ``United 
States'' in 26 CFR 301.7701(b)-1(c)(2)(ii); and
    (3) An entity, including but not limited to, a corporation, 
partnership, trust, or limited liability company created, organized, or 
formed under the laws of the United States, any State, the District of 
Columbia, the Territories and Insular Possessions of the United States, 
or the Indian Tribes.
    (c) Types of reportable accounts. For purposes of this section--
    (1) Bank account. The term ``bank account'' means a savings deposit, 
demand deposit, checking, or any other account maintained with a person 
engaged in the business of banking.
    (2) Securities account. The term ``securities account'' means an 
account with a person engaged in the business of buying, selling, 
holding or trading stock or other securities.
    (3) Other financial account. The term ``other financial account'' 
means--
    (i) An account with a person that is in the business of accepting 
deposits as a financial agency;
    (ii) An account that is an insurance or annuity policy with a cash 
value;
    (iii) An account with a person that acts as a broker or dealer for 
futures or options transactions in any commodity on or subject to the 
rules of a commodity exchange or association; or
    (iv) An account with--
    (A) Mutual fund or similar pooled fund. A mutual fund or similar 
pooled fund which issues shares available to the general public that 
have a regular net asset value determination and regular redemptions; or
    (B) Other investment fund. [Reserved]
    (4) Exceptions for certain accounts. (i) An account of a department 
or agency of the United States, an Indian Tribe, or any State or any 
political subdivision of a State, or a wholly-owned entity, agency or 
instrumentality of any of

[[Page 626]]

the foregoing is not required to be reported. In addition, reporting is 
not required with respect to an account of an entity established under 
the laws of the United States, of an Indian Tribe, of any State, or of 
any political subdivision of any State, or under an intergovernmental 
compact between two or more States or Indian Tribes, that exercises 
governmental authority on behalf of the United States, an Indian Tribe, 
or any such State or political subdivision. For this purpose, an entity 
generally exercises governmental authority on behalf of the United 
States, an Indian Tribe, a State, or a political subdivision only if its 
authorities include one or more of the powers to tax, to exercise the 
power of eminent domain, or to exercise police powers with respect to 
matters within its jurisdiction.
    (ii) An account of an international financial institution of which 
the United States government is a member is not required to be reported.
    (iii) An account in an institution known as a ``United States 
military banking facility'' (or ``United States military finance 
facility'') operated by a United States financial institution designated 
by the United States Government to serve United States government 
installations abroad is not required to be reported even though the 
United States military banking facility is located in a foreign country.
    (iv) Correspondent or nostro accounts that are maintained by banks 
and used solely for bank-to-bank settlements are not required to be 
reported.
    (d) Foreign country. A foreign country includes all geographical 
areas located outside of the United States as defined in 31 CFR 
1010.100(hhh).
    (e) Financial interest. A financial interest in a bank, securities 
or other financial account in a foreign country means an interest 
described in this paragraph (e):
    (1) Owner of record or holder of legal title. A United States person 
has a financial interest in each bank, securities or other financial 
account in a foreign country for which he is the owner of record or has 
legal title whether the account is maintained for his own benefit or for 
the benefit of others. If an account is maintained in the name of more 
than one person, each United States person in whose name the account is 
maintained has a financial interest in that account.
    (2) Other financial interest. A United States person has a financial 
interest in each bank, securities or other financial account in a 
foreign country for which the owner of record or holder of legal title 
is--
    (i) A person acting as an agent, nominee, attorney or in some other 
capacity on behalf of the United States person with respect to the 
account;
    (ii) A corporation in which the United States person owns directly 
or indirectly more than 50 percent of the voting power or the total 
value of the shares, a partnership in which the United States person 
owns directly or indirectly more than 50 percent of the interest in 
profits or capital, or any other entity (other than an entity in 
paragraphs (e)(2)(iii) through (iv) of this section) in which the United 
States person owns directly or indirectly more than 50 percent of the 
voting power, total value of the equity interest or assets, or interest 
in profits;
    (iii) A trust, if the United States person is the trust grantor and 
has an ownership interest in the trust for United States Federal tax 
purposes. See 26 U.S.C. 671-679 and the regulations thereunder to 
determine if a grantor has an ownership interest in the trust for the 
year; or
    (iv) A trust in which the United States person either has a present 
beneficial interest in more than 50 percent of the assets or from which 
such person receives more than 50 percent of the current income.
    (3) Anti-avoidance rule. A United States person that causes an 
entity, including but not limited to a corporation, partnership, or 
trust, to be created for a purpose of evading this section shall have a 
financial interest in any bank, securities, or other financial account 
in a foreign country for which the entity is the owner of record or 
holder of legal title.
    (f) Signature or other authority--(1) In general. Signature or other 
authority means the authority of an individual (alone or in conjunction 
with another) to control the disposition of money, funds or other assets 
held in a financial

[[Page 627]]

account by direct communication (whether in writing or otherwise) to the 
person with whom the financial account is maintained.
    (2) Exceptions--(i) An officer or employee of a bank that is 
examined by the Office of the Comptroller of the Currency, the Board of 
Governors of the Federal Reserve System, the Federal Deposit Insurance 
Corporation, the Office of Thrift Supervision, or the National Credit 
Union Administration need not report that he has signature or other 
authority over a foreign financial account owned or maintained by the 
bank if the officer or employee has no financial interest in the 
account.
    (ii) An officer or employee of a financial institution that is 
registered with and examined by the Securities and Exchange Commission 
or Commodity Futures Trading Commission need not report that he has 
signature or other authority over a foreign financial account owned or 
maintained by such financial institution if the officer or employee has 
no financial interest in the account.
    (iii) An officer or employee of an Authorized Service Provider need 
not report that he has signature or other authority over a foreign 
financial account owned or maintained by an investment company that is 
registered with the Securities and Exchange Commission if the officer or 
employee has no financial interest in the account. ``Authorized Service 
Provider'' means an entity that is registered with and examined by the 
Securities and Exchange Commission and that provides services to an 
investment company registered under the Investment Company Act of 1940.
    (iv) An officer or employee of an entity with a class of equity 
securities listed (or American depository receipts listed) on any United 
States national securities exchange need not report that he has 
signature or other authority over a foreign financial account of such 
entity if the officer or employee has no financial interest in the 
account. An officer or employee of a United States subsidiary of a 
United States entity with a class of equity securities listed on a 
United States national securities exchange need not file a report 
concerning signature or other authority over a foreign financial account 
of the subsidiary if he has no financial interest in the account and the 
United States subsidiary is included in a consolidated report of the 
parent filed under this section.
    (v) An officer or employee of an entity that has a class of equity 
securities registered (or American depository receipts in respect of 
equity securities registered) under section 12(g) of the Securities 
Exchange Act need not report that he has signature or other authority 
over the foreign financial accounts of such entity or if he has no 
financial interest in the accounts.
    (g) Special rules--(1) Financial interest in 25 or more foreign 
financial accounts. A United States person having a financial interest 
in 25 or more foreign financial accounts need only provide the number of 
financial accounts and certain other basic information on the report, 
but will be required to provide detailed information concerning each 
account when so requested by the Secretary or his delegate.
    (2) Signature or other authority over 25 or more foreign financial 
accounts. A United States person having signature or other authority 
over 25 or more foreign financial accounts need only provide the number 
of financial accounts and certain other basic information on the report, 
but will be required to provide detailed information concerning each 
account when so requested by the Secretary or his delegate.
    (3) Consolidated reports. An entity that is a United States person 
and which owns directly or indirectly more than a 50 percent interest in 
one or more other entities required to report under this section will be 
permitted to file a consolidated report on behalf of itself and such 
other entities.
    (4) Participants and beneficiaries in certain retirement plans. 
Participants and beneficiaries in retirement plans under sections 
401(a), 403(a) or 403(b) of the Internal Revenue Code as well as owners 
and beneficiaries of individual retirement accounts under section 408 of 
the Internal Revenue Code or Roth IRAs under section 408A of the 
Internal Revenue Code are not required to file an FBAR with respect to a 
foreign financial account held by or on behalf of the retirement plan or 
IRA.

[[Page 628]]

    (5) Certain trust beneficiaries. A beneficiary of a trust described 
in paragraph (e)(2)(iv) of this section is not required to report the 
trust's foreign financial accounts if the trust, trustee of the trust, 
or agent of the trust is a United States person that files a report 
under this section disclosing the trust's foreign financial accounts.

[76 FR 10245, Feb. 24, 2011, as amended at 76 FR 37000, June 24, 2011]



Sec. 1010.360  Reports of transactions with foreign financial agencies.

    (a) Promulgation of reporting requirements. The Secretary, when he 
deems appropriate, may promulgate regulations requiring specified 
financial institutions to file reports of certain transactions with 
designated foreign financial agencies. If any such regulation is issued 
as a final rule without notice and opportunity for public comment, then 
a finding of good cause for dispensing with notice and comment in 
accordance with 5 U.S.C. 553(b) will be included in the regulation. If 
any such regulation is not published in the Federal Register, then any 
financial institution subject to the regulation will be named and 
personally served or otherwise given actual notice in accordance with 5 
U.S.C. 553(b). If a financial institution is given notice of a reporting 
requirement under this section by means other than publication in the 
Federal Register, the Secretary may prohibit disclosure of the existence 
or provisions of that reporting requirement to the designated foreign 
financial agency or agencies and to any other party.
    (b) Information subject to reporting requirements. A regulation 
promulgated pursuant to paragraph (a) of this section shall designate 
one or more of the following categories of information to be reported:
    (1) Checks or drafts, including traveler's checks, received by 
respondent financial institution for collection or credit to the account 
of a foreign financial agency, sent by respondent financial institution 
to a foreign country for collection or payment, drawn by respondent 
financial institution on a foreign financial agency, drawn by a foreign 
financial agency on respondent financial institution--including the 
following information.
    (i) Name of maker or drawer;
    (ii) Name of drawee or drawee financial institution;
    (iii) Name of payee;
    (iv) Date and amount of instrument;
    (v) Names of all endorsers.
    (2) Transmittal orders received by a respondent financial 
institution from a foreign financial agency or sent by respondent 
financial institution to a foreign financial agency, including all 
information maintained by that institution pursuant to Sec. Sec. 
1010.410 and 1020.410.
    (3) Loans made by respondent financial institution to or through a 
foreign financial agency--including the following information:
    (i) Name of borrower;
    (ii) Name of person acting for borrower;
    (iii) Date and amount of loan;
    (iv) Terms of repayment;
    (v) Name of guarantor;
    (vi) Rate of interest;
    (vii) Method of disbursing proceeds;
    (viii) Collateral for loan.
    (4) Commercial paper received or shipped by the respondent financial 
institution--including the following information:
    (i) Name of maker;
    (ii) Date and amount of paper;
    (iii) Due date;
    (iv) Certificate number;
    (v) Amount of transaction.
    (5) Stocks received or shipped by respondent financial institution--
including the following information:
    (i) Name of corporation;
    (ii) Type of stock;
    (iii) Certificate number;
    (iv) Number of shares;
    (v) Date of certificate;
    (vi) Name of registered holder;
    (vii) Amount of transaction.
    (6) Bonds received or shipped by respondent financial institution--
including the following information:
    (i) Name of issuer;
    (ii) Bond number;
    (iii) Type of bond series;
    (iv) Date issued;
    (v) Due date;
    (vi) Rate of interest;
    (vii) Amount of transaction;
    (viii) Name of registered holder.

[[Page 629]]

    (7) Certificates of deposit received or shipped by respondent 
financial institution--including the following information:
    (i) Name and address of issuer;
    (ii) Date issued;
    (iii) Dollar amount;
    (iv) Name of registered holder;
    (v) Due date;
    (vi) Rate of interest;
    (vii) Certificate number;
    (viii) Name and address of issuing agent.
    (c) Scope of reports. In issuing regulations as provided in 
paragraph (a) of this section, the Secretary will prescribe:
    (1) A reasonable classification of financial institutions subject to 
or exempt from a reporting requirement;
    (2) A foreign country to which a reporting requirement applies if 
the Secretary decides that applying the requirement to all foreign 
countries is unnecessary or undesirable;
    (3) The magnitude of transactions subject to a reporting 
requirement; and
    (4) The kind of transaction subject to or exempt from a reporting 
requirement.
    (d) Form of reports. Regulations issued pursuant to paragraph (a) of 
this section may prescribe the manner in which the information is to be 
reported. However, the Secretary may authorize a designated financial 
institution to report in a different manner if the institution 
demonstrates to the Secretary that the form of the required report is 
unnecessarily burdensome on the institution as prescribed; that a report 
in a different form will provide all the information the Secretary deems 
necessary; and that submission of the information in a different manner 
will not unduly hinder the effective administration of this chapter.
    (e) Limitations. (1) In issuing regulations under paragraph (a) of 
this section, the Secretary shall consider the need to avoid impeding or 
controlling the export or import of monetary instruments and the need to 
avoid burdening unreasonably a person making a transaction with a 
foreign financial agency.
    (2) The Secretary shall not issue a regulation under paragraph (a) 
of this section for the purpose of obtaining individually identifiable 
account information concerning a customer, as defined by the Right to 
Financial Privacy Act (12 U.S.C. 3401 et seq.), where that customer is 
already the subject of an ongoing investigation for possible violation 
of the Currency and Foreign Transactions Reporting Act, or is known by 
the Secretary to be the subject of an investigation for possible 
violation of any other Federal law.
    (3) The Secretary may issue a regulation pursuant to paragraph (a) 
of this section requiring a financial institution to report transactions 
completed prior to the date it received notice of the reporting 
requirement. However, with respect to completed transactions, a 
financial institution may be required to provide information only from 
records required to be maintained pursuant to the requirements of this 
chapter, or any other provision of state or Federal law, or otherwise 
maintained in the regular course of business.



Sec. 1010.370  Reports of certain domestic coin and currency transactions.

    (a) If the Secretary of the Treasury finds, upon the Secretary's own 
initiative or at the request of an appropriate Federal or State law 
enforcement official, that reasonable grounds exist for concluding that 
additional recordkeeping and/or reporting requirements are necessary to 
carry out the purposes of this chapter and to prevent persons from 
evading the reporting/recordkeeping requirements of this chapter, the 
Secretary may issue an order requiring any domestic financial 
institution or group of domestic financial institutions in a geographic 
area and any other person participating in the type of transaction to 
file a report in the manner and to the extent specified in such order. 
The order shall contain such information as the Secretary may describe 
concerning any transaction in which such financial institution is 
involved for the payment, receipt, or transfer of United States coins or 
currency (or such other monetary instruments as the Secretary may 
describe in such order) the total amounts or denominations of which are 
equal to or greater than an amount which the Secretary may prescribe.

[[Page 630]]

    (b) An order issued under paragraph (a) of this section shall be 
directed to the Chief Executive Officer of the financial institution and 
shall designate one or more of the following categories of information 
to be reported: Each deposit, withdrawal, exchange of currency or other 
payment or transfer, by, through or to such financial institution 
specified in the order, which involves all or any class of transactions 
in currency and/or monetary instruments equal to or exceeding an amount 
to be specified in the order.
    (c) In issuing an order under paragraph (a) of this section, the 
Secretary will prescribe:
    (1) The dollar amount of transactions subject to the reporting 
requirement in the order;
    (2) The type of transaction or transactions subject to or exempt 
from a reporting requirement in the order;
    (3) The appropriate form for reporting the transactions required in 
the order;
    (4) The address to which reports required in the order are to be 
sent or from which they will be picked up;
    (5) The starting and ending dates by which such transactions 
specified in the order are to be reported;
    (6) The name of a Treasury official to be contacted for any 
additional information or questions;
    (7) The amount of time the reports and records of reports generated 
in response to the order will have to be retained by the financial 
institution; and
    (8) Any other information deemed necessary to carry out the purposes 
of the order.
    (d)(1) No order issued pursuant to paragraph (a) of this section 
shall prescribe a reporting period of more than 60 days unless renewed 
pursuant to the requirements of paragraph (a).
    (2) Any revisions to an order issued under this section will not be 
effective until made in writing by the Secretary.
    (3) Unless otherwise specified in the order, a bank receiving an 
order under this section may continue to use the exemptions granted 
under Sec. 1020.315 of this chapter prior to the receipt of the order, 
but may not grant additional exemptions.
    (4) For purposes of this section, the term geographic area means any 
area in one or more States of the United States, the District of 
Columbia, the Commonwealth of Puerto Rico, the United States Virgin 
Islands, Guam, the Commonwealth of the Northern Mariana Islands, 
American Samoa, the Trust Territory of the Pacific Islands, the 
territories and possessions of the United States, and/or political 
subdivision or subdivisions thereof, as specified in an order issued 
pursuant to paragraph (a) of this section.



               Subpart D_Records Required To Be Maintained



Sec. 1010.400  General.

    Each financial institution (as defined in 31 U.S.C. 5312(a)(2) or 
(c)(1)) should refer to its chapter X part for any additional 
recordkeeping requirements. Unless otherwise indicated, the 
recordkeeping requirements contained in this subpart D apply to all 
financial institutions.



Sec. 1010.401  Determination by the Secretary.

    The Secretary hereby determines that the records required to be kept 
by this chapter have a high degree of usefulness in criminal, tax, or 
regulatory investigations or proceedings.



Sec. 1010.405  [Reserved]



Sec. 1010.410  Records to be made and retained by financial institutions.

    Each financial institution shall retain either the original or a 
microfilm or other copy or reproduction of each of the following:
    (a) A record of each extension of credit in an amount in excess of 
$10,000, except an extension of credit secured by an interest in real 
property, which record shall contain the name and address of the person 
to whom the extension of credit is made, the amount thereof, the nature 
or purpose thereof, and the date thereof;
    (b) A record of each advice, request, or instruction received or 
given regarding any transaction resulting (or intended to result and 
later canceled if such a record is normally made) in the transfer of 
currency or other monetary instruments, funds, checks, investment 
securities, or credit, of more than

[[Page 631]]

$10,000 to or from any person, account, or place outside the United 
States.
    (c) A record of each advice, request, or instruction given to 
another financial institution or other person located within or without 
the United States, regarding a transaction intended to result in the 
transfer of funds, or of currency, other monetary instruments, checks, 
investment securities, or credit, of more than $10,000 to a person, 
account or place outside the United States.
    (d) A record of such information for such period of time as the 
Secretary may require in an order issued under Sec. 1010.370(a), not to 
exceed five years.
    (e) Nonbank financial institutions. Each agent, agency, branch, or 
office located within the United States of a financial institution other 
than a bank is subject to the requirements of this paragraph (e) with 
respect to a transmittal of funds in the amount of $3,000 or more:
    (1) Recordkeeping requirements. (i) For each transmittal order that 
it accepts as a transmittor's financial institution, a financial 
institution shall obtain and retain either the original or a microfilm, 
other copy, or electronic record of the following information relating 
to the transmittal order:
    (A) The name and address of the transmittor;
    (B) The amount of the transmittal order;
    (C) The execution date of the transmittal order;
    (D) Any payment instructions received from the transmittor with the 
transmittal order;
    (E) The identity of the recipient's financial institution;
    (F) As many of the following items as are received with the 
transmittal order: \1\
---------------------------------------------------------------------------

    \1\ For transmittals of funds effected through the Federal Reserve's 
Fedwire funds transfer system by a domestic broker or dealers in 
securities, only one of the items is required to be retained, if 
received with the transmittal order, until such time as the bank that 
sends the order to the Federal Reserve Bank completes its conversion to 
the expanded Fedwire message format.
---------------------------------------------------------------------------

    (1) The name and address of the recipient;
    (2) The account number of the recipient; and
    (3) Any other specific identifier of the recipient; and
    (G) Any form relating to the transmittal of funds that is completed 
or signed by the person placing the transmittal order.
    (ii) For each transmittal order that it accepts as an intermediary 
financial institution, a financial institution shall retain either the 
original or a microfilm, other copy, or electronic record of the 
transmittal order.
    (iii) For each transmittal order that it accepts as a recipient's 
financial institution, a financial institution shall retain either the 
original or a microfilm, other copy, or electronic record of the 
transmittal order.
    (2) Transmittors other than established customers. In the case of a 
transmittal order from a transmittor that is not an established 
customer, in addition to obtaining and retaining the information 
required in paragraph (e)(1)(i) of this section:
    (i) If the transmittal order is made in person, prior to acceptance 
the transmittor's financial institution shall verify the identity of the 
person placing the transmittal order. If it accepts the transmittal 
order, the transmittor's financial institution shall obtain and retain a 
record of the name and address, the type of identification reviewed, and 
the number of the identification document (e.g., driver's license), as 
well as a record of the person's taxpayer identification number (e.g., 
social security or employer identification number) or, if none, alien 
identification number or passport number and country of issuance, or a 
notation in the record of the lack thereof. If the transmittor's 
financial institution has knowledge that the person placing the 
transmittal order is not the transmittor, the transmittor's financial 
institution shall obtain and retain a record of the transmittor's 
taxpayer identification number (e.g., social security or employer 
identification number) or, if none, alien identification number or 
passport number and country of issuance, if known by the person placing 
the order, or a notation in the record of the lack thereof.

[[Page 632]]

    (ii) If the transmittal order accepted by the transmittor's 
financial institution is not made in person, the transmittor's financial 
institution shall obtain and retain a record of the name and address of 
the person placing the transmittal order, as well as the person's 
taxpayer identification number (e.g., social security or employer 
identification number) or, if none, alien identification number or 
passport number and country of issuance, or a notation in the record of 
the lack thereof, and a copy or record of the method of payment (e.g., 
check or credit card transaction) for the transmittal of funds. If the 
transmittor's financial institution has knowledge that the person 
placing the transmittal order is not the transmittor, the transmittor's 
financial institution shall obtain and retain a record of the 
transmittor's taxpayer identification number (e.g., social security or 
employer identification number) or, if none, alien identification number 
or passport number and country of issuance, if known by the person 
placing the order, or a notation in the record of the lack thereof.
    (3) Recipients other than established customers. For each 
transmittal order that it accepts as a recipient's financial institution 
for a recipient that is not an established customer, in addition to 
obtaining and retaining the information required in paragraph 
(e)(1)(iii) of this section:
    (i) If the proceeds are delivered in person to the recipient or its 
representative or agent, the recipient's financial institution shall 
verify the identity of the person receiving the proceeds and shall 
obtain and retain a record of the name and address, the type of 
identification reviewed, and the number of the identification document 
(e.g., driver's license), as well as a record of the person's taxpayer 
identification number (e.g., social security or employer identification 
number) or, if none, alien identification number or passport number and 
country of issuance, or a notation in the record of the lack thereof. If 
the recipient's financial institution has knowledge that the person 
receiving the proceeds is not the recipient, the recipient's financial 
institution shall obtain and retain a record of the recipient's name and 
address, as well as the recipient's taxpayer identification number 
(e.g., social security or employer identification number) or, if none, 
alien identification number or passport number and country of issuance, 
if known by the person receiving the proceeds, or a notation in the 
record of the lack thereof.
    (ii) If the proceeds are delivered other than in person, the 
recipient's financial institution shall retain a copy of the check or 
other instrument used to effect payment, or the information contained 
thereon, as well as the name and address of the person to which it was 
sent.
    (4) Retrievability. The information that a transmittor's financial 
institution must retain under paragraphs (e)(1)(i) and (e)(2) of this 
section shall be retrievable by the transmittor's financial institution 
by reference to the name of the transmittor. If the transmittor is an 
established customer of the transmittor's financial institution and has 
an account used for transmittals of funds, then the information also 
shall be retrievable by account number. The information that a 
recipient's financial institution must retain under paragraphs 
(e)(1)(iii) and (e)(3) of this section shall be retrievable by the 
recipient's financial institution by reference to the name of the 
recipient. If the recipient is an established customer of the 
recipient's financial institution and has an account used for 
transmittals of funds, then the information also shall be retrievable by 
account number. This information need not be retained in any particular 
manner, so long as the financial institution is able to retrieve the 
information required by this paragraph, either by accessing transmittal 
of funds records directly or through reference to some other record 
maintained by the financial institution.
    (5) Verification. Where verification is required under paragraphs 
(e)(2) and (e)(3) of this section, a financial institution shall verify 
a person's identity by examination of a document (other than a customer 
signature card), preferably one that contains the person's name, 
address, and photograph, that is normally acceptable by financial 
institutions as a means of identification when cashing checks for 
persons other

[[Page 633]]

than established customers. Verification of the identity of an 
individual who indicates that he or she is an alien or is not a resident 
of the United States may be made by passport, alien identification card, 
or other official document evidencing nationality or residence (e.g., a 
foreign driver's license with indication of home address).
    (6) Exceptions. The following transmittals of funds are not subject 
to the requirements of this section:
    (i) Transmittals of funds where the transmittor and the recipient 
are any of the following:
    (A) A bank;
    (B) A wholly-owned domestic subsidiary of a bank chartered in the 
United States;
    (C) A broker or dealer in securities;
    (D) A wholly-owned domestic subsidiary of a broker or dealer in 
securities;
    (E) A futures commission merchant or an introducing broker in 
commodities;
    (F) A wholly-owned domestic subsidiary of a futures commission 
merchant or an introducing broker in commodities;
    (G) The United States;
    (H) A state or local government; or
    (I) A Federal, State or local government agency or instrumentality; 
or
    (J) A mutual fund; and
    (ii) Transmittals of funds where both the transmittor and the 
recipient are the same person and the transmittor's financial 
institution and the recipient's financial institution are the same 
broker or dealer in securities.
    (f) Any transmittor's financial institution or intermediary 
financial institution located within the United States shall include in 
any transmittal order for a transmittal of funds in the amount of $3,000 
or more, information as required in this paragraph (f):
    (1) A transmittor's financial institution shall include in a 
transmittal order, at the time it is sent to a receiving financial 
institution, the following information:
    (i) The name and, if the payment is ordered from an account, the 
account number of the transmittor;
    (ii) The address of the transmittor, except for a transmittal order 
through Fedwire until such time as the bank that sends the order to the 
Federal Reserve Bank completes its conversion to the expanded Fedwire 
format;
    (iii) The amount of the transmittal order;
    (iv) The execution date of the transmittal order;
    (v) The identity of the recipient's financial institution;
    (vi) As many of the following items as are received with the 
transmittal order: \2\
---------------------------------------------------------------------------

    \2\ For transmittals of funds effected through the Federal Reserve's 
Fedwire funds transfer system by a financial institution, only one of 
the items is required to be included in the transmittal order, if 
received with the sender's transmittal order, until such time as the 
bank that sends the order to the Federal Reserve Bank completes its 
conversion to the expanded Fedwire message format.
---------------------------------------------------------------------------

    (A) The name and address of the recipient;
    (B) The account number of the recipient;
    (C) Any other specific identifier of the recipient; and
    (vii) Either the name and address or numerical identifier of the 
transmittor's financial institution.
    (2) A receiving financial institution that acts as an intermediary 
financial institution, if it accepts a transmittal order, shall include 
in a corresponding transmittal order at the time it is sent to the next 
receiving financial institution, the following information, if received 
from the sender:
    (i) The name and the account number of the transmittor;
    (ii) The address of the transmittor, except for a transmittal order 
through Fedwire until such time as the bank that sends the order to the 
Federal Reserve Bank completes its conversion to the expanded Fedwire 
format;
    (iii) The amount of the transmittal order;
    (iv) The execution date of the transmittal order;
    (v) The identity of the recipient's financial institution;
    (vi) As many of the following items as are received with the 
transmittal order: \3\
---------------------------------------------------------------------------

    \3\ For transmittals of funds effected through the Federal Reserve's 
Fedwire funds transfer system by a financial institution, only one of 
the items is required to be included in the transmittal order, if 
received with the sender's transmittal order, until such time as the 
bank that sends the order to the Federal Reserve Bank completes its 
conversion to the expanded Fedwire message format.

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

[[Page 634]]

    (A) The name and address of the recipient;
    (B) The account number of the recipient;
    (C) Any other specific identifier of the recipient; and
    (vii) Either the name and address or numerical identifier of the 
transmittor's financial institution.
    (3) Safe harbor for transmittals of funds prior to conversion to the 
expanded Fedwire message format. The following provisions apply to 
transmittals of funds effected through the Federal Reserve's Fedwire 
funds transfer system or otherwise by a financial institution before the 
bank that sends the order to the Federal Reserve Bank or otherwise 
completes its conversion to the expanded Fedwire message format.
    (i) Transmittor's financial institution. A transmittor's financial 
institution will be deemed to be in compliance with the provisions of 
paragraph (f)(1) of this section if it:
    (A) Includes in the transmittal order, at the time it is sent to the 
receiving financial institution, the information specified in paragraphs 
(f)(1)(iii) through (v), and the information specified in paragraph 
(f)(1)(vi) of this section to the extent that such information has been 
received by the financial institution, and
    (B) Provides the information specified in paragraphs (f)(1)(i), (ii) 
and (vii) of this section to a financial institution that acted as an 
intermediary financial institution or recipient's financial institution 
in connection with the transmittal order, within a reasonable time after 
any such financial institution makes a request therefor in connection 
with the requesting financial institution's receipt of a lawful request 
for such information from a Federal, State, or local law enforcement or 
financial regulatory agency, or in connection with the requesting 
financial institution's own Bank Secrecy Act compliance program.
    (ii) Intermediary financial institution. An intermediary financial 
institution will be deemed to be in compliance with the provisions of 
paragraph (f)(2) of this section if it:
    (A) Includes in the transmittal order, at the time it is sent to the 
receiving financial institution, the information specified in paragraphs 
(f)(2)(iii) through (f)(2)(vi) of this section, to the extent that such 
information has been received by the intermediary financial institution; 
and
    (B) Provides the information specified in paragraphs (f)(2)(i), (ii) 
and (vii) of this section, to the extent that such information has been 
received by the intermediary financial institution, to a financial 
institution that acted as an intermediary financial institution or 
recipient's financial institution in connection with the transmittal 
order, within a reasonable time after any such financial institution 
makes a request therefor in connection with the requesting financial 
institution's receipt of a lawful request for such information from a 
Federal, State, or local law enforcement or regulatory agency, or in 
connection with the requesting financial institution's own Bank Secrecy 
Act compliance program.
    (iii) Obligation of requesting financial institution. Any 
information requested under paragraph (f)(3)(i)(B) or (f)(3)(ii)(B) of 
this section shall be treated by the requesting institution, once 
received, as if it had been included in the transmittal order to which 
such information relates.
    (4) Exceptions. The requirements of this paragraph (f) shall not 
apply to transmittals of funds that are listed in paragraph (e)(6) of 
this section or Sec. 1020.410(a)(6) of this chapter.



Sec. 1010.415  Purchases of bank checks and drafts, cashier's checks,
money orders and traveler's checks.

    (a) No financial institution may issue or sell a bank check or 
draft, cashier's check, money order or traveler's check for $3,000 or 
more in currency unless it maintains records of the following 
information, which must be obtained for each issuance or sale of one or 
more of these instruments to any individual purchaser which involves 
currency in amounts of $3,000-$10,000 inclusive:

[[Page 635]]

    (1) If the purchaser has a deposit account with the financial 
institution:
    (i)(A) The name of the purchaser;
    (B) The date of purchase;
    (C) The type(s) of instrument(s) purchased;
    (D) The serial number(s) of each of the instrument(s) purchased; and
    (E) The amount in dollars of each of the instrument(s) purchased.
    (ii) In addition, the financial institution must verify that the 
individual is a deposit accountholder or must verify the individual's 
identity. Verification may be either through a signature card or other 
file or record at the financial institution provided the deposit 
accountholder's name and address were verified previously and that 
information was recorded on the signature card or other file or record; 
or by examination of a document which is normally acceptable within the 
banking community as a means of identification when cashing checks for 
nondepositors and which contains the name and address of the purchaser. 
If the deposit accountholder's identity has not been verified 
previously, the financial institution shall verify the deposit 
accountholder's identity by examination of a document which is normally 
acceptable within the banking community as a means of identification 
when cashing checks for nondepositors and which contains the name and 
address of the purchaser, and shall record the specific identifying 
information (e.g., State of issuance and number of driver's license).
    (2) If the purchaser does not have a deposit account with the 
financial institution:
    (i)(A) The name and address of the purchaser;
    (B) The social security number of the purchaser, or if the purchaser 
is an alien and does not have a social security number, the alien 
identification number;
    (C) The date of birth of the purchaser;
    (D) The date of purchase;
    (E) The type(s) of instrument(s) purchased;
    (F) The serial number(s) of the instrument(s) purchased; and
    (G) The amount in dollars of each of the instrument(s) purchased.
    (ii) In addition, the financial institution shall verify the 
purchaser's name and address by examination of a document which is 
normally acceptable within the banking community as a means of 
identification when cashing checks for nondepositors and which contains 
the name and address of the purchaser, and shall record the specific 
identifying information (e.g., State of issuance and number of driver's 
license).
    (b) Contemporaneous purchases of the same or different types of 
instruments totaling $3,000 or more shall be treated as one purchase. 
Multiple purchases during one business day totaling $3,000 or more shall 
be treated as one purchase if an individual employee, director, officer, 
or partner of the financial institution has knowledge that these 
purchases have occurred.
    (c) Records required to be kept shall be retained by the financial 
institution for a period of five years and shall be made available to 
the Secretary upon request at any time.



Sec. 1010.420  Records to be made and retained by persons having
financial interests in foreign financial accounts.

    Records of accounts required by Sec. 1010.350 to be reported to the 
Commissioner of Internal Revenue shall be retained by each person having 
a financial interest in or signature or other authority over any such 
account. Such records shall contain the name in which each such account 
is maintained, the number or other designation of such account, the name 
and address of the foreign bank or other person with whom such account 
is maintained, the type of such account, and the maximum value of each 
such account during the reporting period. Such records shall be retained 
for a period of 5 years and shall be kept at all times available for 
inspection as authorized by law. In the computation of the period of 5 
years, there shall be disregarded any period beginning with a date on 
which the taxpayer is indicted or information instituted on account of 
the filing of a false or fraudulent Federal income tax return or failing 
to file

[[Page 636]]

a Federal income tax return, and ending with the date on which final 
disposition is made of the criminal proceeding.



Sec. 1010.430  Nature of records and retention period.

    (a) Wherever it is required that there be retained either the 
original or a microfilm or other copy or reproduction of a check, draft, 
monetary instrument, investment security, or other similar instrument, 
there shall be retained a copy of both front and back of each such 
instrument or document, except that no copy need be retained of the back 
of any instrument or document which is entirely blank or which contains 
only standardized printed information, a copy of which is on file.
    (b) Records required by this chapter to be retained by financial 
institutions may be those made in the ordinary course of business by a 
financial institution. If no record is made in the ordinary course of 
business of any transaction with respect to which records are required 
to be retained by this chapter, then such a record shall be prepared in 
writing by the financial institution.
    (c) The rules and regulations issued by the Internal Revenue Service 
under 26 U.S.C. 6109 determine what constitutes a taxpayer 
identification number and whose number shall be obtained in the case of 
an account maintained by one or more persons.
    (d) All records that are required to be retained by this chapter 
shall be retained for a period of five years. Records or reports 
required to be kept pursuant to an order issued under Sec. 1010.370 of 
this chapter shall be retained for the period of time specified in such 
order, not to exceed five years. All such records shall be filed or 
stored in such a way as to be accessible within a reasonable period of 
time, taking into consideration the nature of the record, and the amount 
of time expired since the record was made.



Sec. 1010.440  Person outside the United States.

    For the purposes of this chapter, a remittance or transfer of funds, 
or of currency, other monetary instruments, checks, investment 
securities, or credit to the domestic account of a person whose address 
is known by the person making the remittance or transfer, to be outside 
the United States, shall be deemed to be a remittance or transfer to a 
person outside the United States, except that, unless otherwise directed 
by the Secretary, this section shall not apply to a transaction on the 
books of a domestic financial institution involving the account of a 
customer of such institution whose address is within approximately 50 
miles of the location of the institution, or who is known to be 
temporarily outside the United States.



    Subpart E_Special Information Sharing Procedures To Deter Money 
                    Laundering and Terrorist Activity



Sec. 1010.500  General.

    Sections 1010.505 through 1010.540 of this subpart E were issued 
pursuant to the requirements of section 314 of the USA PATRIOT Act. Each 
financial institution (as defined in 31 U.S.C. 5312(a)(2) or (c)(1)) 
should refer to its chapter X part for any additional special 
information sharing procedures.



Sec. 1010.505  Definitions.

    For purposes of this subpart E, the following definitions apply:
    (a) Account means a formal banking or business relationship 
established to provide regular services, dealings, and other financial 
transactions, and includes, but is not limited to, a demand deposit, 
savings deposit, or other transaction or asset account and a credit 
account or other extension of credit.
    (b) Money laundering means an activity criminalized by 18 U.S.C. 
1956 or 1957, or an activity that would be criminalized by 18 U.S.C. 
1956 or 1957 if it occurred in the United States.
    (c) Terrorist activity means an act of domestic terrorism or 
international terrorism as those terms are defined in 18 U.S.C. 2331.
    (d) Transaction. (1) Except as provided in paragraph (d)(2) of this 
section, the term ``transaction'' shall have the same meaning as 
provided in Sec. 1010.100(bbb).

[[Page 637]]

    (2) For purposes of Sec. 1010.520, a transaction shall not mean any 
transaction conducted through an account.



Sec. 1010.520  Information sharing between government agencies and 
financial institutions.

    (a) Definitions. For purposes of this section:
    (1) Financial institution means any financial institution described 
in 31 U.S.C. 5312(a)(2).
    (2) Law enforcement agency means a Federal, State, local, or foreign 
law enforcement agency with criminal investigative authority, provided 
that in the case of a foreign law enforcement agency, such agency is 
from a jurisdiction that is a party to a treaty that provides, or in the 
determination of FinCEN is from a jurisdiction that otherwise allows, 
law enforcement agencies in the United States reciprocal access to 
information comparable to that obtained under this section.
    (b) Information requests based on credible evidence concerning 
terrorist activity or money laundering--(1) In general. A law 
enforcement agency investigating terrorist activity or money laundering 
may request that FinCEN solicit, on the investigating agency's behalf, 
certain information from a financial institution or a group of financial 
institutions. When submitting such a request to FinCEN, the law 
enforcement agency shall provide FinCEN with a written certification, in 
such form and manner as FinCEN may prescribe. At a minimum, such 
certification must: State that each individual, entity, or organization 
about which the law enforcement agency is seeking information is engaged 
in, or is reasonably suspected based on credible evidence of engaging 
in, terrorist activity or money laundering; include enough specific 
identifiers, such as date of birth, address, and social security number, 
that would permit a financial institution to differentiate between 
common or similar names; and identify one person at the agency who can 
be contacted with any questions relating to its request. Upon receiving 
the requisite certification from the requesting law enforcement agency, 
FinCEN may require any financial institution to search its records to 
determine whether the financial institution maintains or has maintained 
accounts for, or has engaged in transactions with, any specified 
individual, entity, or organization.
    (2) Requests from FinCEN. FinCEN may solicit, on its own behalf and 
on behalf of appropriate components of the Department of the Treasury, 
whether a financial institution or a group of financial institutions 
maintains or has maintained accounts for, or has engaged in transactions 
with, any specified individual, entity, or organization. Before an 
information request under this section is made to a financial 
institution, FinCEN or the appropriate Treasury component shall certify 
in writing in the same manner as a requesting law enforcement agency 
that each individual, entity or organization about which FinCEN or the 
appropriate Treasury component is seeking information is engaged in, or 
is reasonably suspected based on credible evidence of engaging in, 
terrorist activity or money laundering. The certification also must 
include enough specific identifiers, such as date of birth, address, and 
social security number, that would permit a financial institution to 
differentiate between common or similar names, and identify one person 
at FinCEN or the appropriate Treasury component who can be contacted 
with any questions relating to its request.
    (3) Obligations of a financial institution receiving an information 
request--(i) Record search. Upon receiving an information request from 
FinCEN under this section, a financial institution shall expeditiously 
search its records to determine whether it maintains or has maintained 
any account for, or has engaged in any transaction with, each 
individual, entity, or organization named in FinCEN's request. A 
financial institution may contact the law enforcement agency, FinCEN or 
requesting Treasury component representative, or U.S. law enforcement 
attach[eacute] in the case of a request by a foreign law enforcement 
agency, which has been named in the information request provided to the 
institution by FinCEN with any questions relating to the scope or terms 
of the request. Except as otherwise provided in the information request, 
a financial institution

[[Page 638]]

shall only be required to search its records for:
    (A) Any current account maintained for a named suspect;
    (B) Any account maintained for a named suspect during the preceding 
twelve months; and
    (C) Any transaction, as defined by Sec. 1010.505(d), conducted by 
or on behalf of a named suspect, or any transmittal of funds conducted 
in which a named suspect was either the transmittor or the recipient, 
during the preceding six months that is required under law or regulation 
to be recorded by the financial institution or is recorded and 
maintained electronically by the institution.
    (ii) Report to FinCEN. If a financial institution identifies an 
account or transaction identified with any individual, entity, or 
organization named in a request from FinCEN, it shall report to FinCEN, 
in the manner and in the time frame specified in FinCEN's request, the 
following information:
    (A) The name of such individual, entity, or organization;
    (B) The number of each such account, or in the case of a 
transaction, the date and type of each such transaction; and
    (C) Any Social Security number, taxpayer identification number, 
passport number, date of birth, address, or other similar identifying 
information provided by the individual, entity, or organization when 
each such account was opened or each such transaction was conducted.
    (iii) Designation of contact person. Upon receiving an information 
request under this section, a financial institution shall designate one 
person to be the point of contact at the institution regarding the 
request and to receive similar requests for information from FinCEN in 
the future. When requested by FinCEN, a financial institution shall 
provide FinCEN with the name, title, mailing address, e-mail address, 
telephone number, and facsimile number of such person, in such manner as 
FinCEN may prescribe. A financial institution that has provided FinCEN 
with contact information must promptly notify FinCEN of any changes to 
such information.
    (iv) Use and security of information request. (A) A financial 
institution shall not use information provided by FinCEN pursuant to 
this section for any purpose other than:
    (1) Reporting to FinCEN as provided in this section;
    (2) Determining whether to establish or maintain an account, or to 
engage in a transaction; or
    (3) Assisting the financial institution in complying with any 
requirement of this chapter.
    (B)(1) A financial institution shall not disclose to any person, 
other than FinCEN or the requesting Treasury component, the law 
enforcement agency on whose behalf FinCEN is requesting information, or 
U.S. law enforcement attach[eacute] in the case of a request by a 
foreign law enforcement agency, which has been named in the information 
request, the fact that FinCEN has requested or has obtained information 
under this section, except to the extent necessary to comply with such 
an information request.
    (2) Notwithstanding paragraph (b)(3)(iv)(B)(1) of this section, a 
financial institution authorized to share information under Sec. 
1010.540 may share information concerning an individual, entity, or 
organization named in a request from FinCEN in accordance with the 
requirements of such section. However, such sharing shall not disclose 
the fact that FinCEN has requested information concerning such 
individual, entity, or organization.
    (C) Each financial institution shall maintain adequate procedures to 
protect the security and confidentiality of requests from FinCEN for 
information under this section. The requirements of this paragraph 
(b)(3)(iv)(C) shall be deemed satisfied to the extent that a financial 
institution applies to such information procedures that the institution 
has established to satisfy the requirements of section 501 of the Gramm-
Leach-Bliley Act (15 U.S.C. 6801), and applicable regulations issued 
thereunder, with regard to the protection of its customers' nonpublic 
personal information.
    (v) No other action required. Nothing in this section shall be 
construed to require a financial institution to take any action, or to 
decline to take any action, with respect to an account established for, 
or a transaction engaged

[[Page 639]]

in with, an individual, entity, or organization named in a request from 
FinCEN, or to decline to establish an account for, or to engage in a 
transaction with, any such individual, entity, or organization. Except 
as otherwise provided in an information request under this section, such 
a request shall not require a financial institution to report on future 
account opening activity or transactions or to treat a suspect list 
received under this section as a government list for purposes of section 
326 of Public Law 107-56.
    (4) Relation to the Right to Financial Privacy Act and the Gramm-
Leach-Bliley Act. The information that a financial institution is 
required to report pursuant to paragraph (b)(3)(ii) of this section is 
information required to be reported in accordance with a Federal statute 
or rule promulgated thereunder, for purposes of subsection 3413(d) of 
the Right to Financial Privacy Act (12 U.S.C. 3413(d)) and subsection 
502(e)(8) of the Gramm-Leach-Bliley Act (15 U.S.C. 6802(e)(8)).
    (5) No effect on law enforcement or regulatory investigations. 
Nothing in this subpart affects the authority of a Federal, State, or 
local law enforcement agency or officer, or FinCEN or another component 
of the Department of the Treasury, to obtain information directly from a 
financial institution.



Sec. 1010.530  [Reserved]



Sec. 1010.540  Voluntary information sharing among financial
institutions.

    (a) Definitions. For purposes of this section:
    (1) Financial institution. (i) Except as provided in paragraph 
(a)(1)(ii) of this section, the term ``financial institution'' means any 
financial institution described in 31 U.S.C. 5312(a)(2) that is required 
under this chapter to establish and maintain an anti-money laundering 
program, or is treated under this chapter as having satisfied the 
requirements of 31 U.S.C. 5318(h)(1).
    (ii) For purposes of this section, a financial institution shall not 
mean any institution included within a class of financial institutions 
that FinCEN has designated as ineligible to share information under this 
section.
    (2) Association of financial institutions means a group or 
organization the membership of which is comprised entirely of financial 
institutions as defined in paragraph (a)(1) of this section.
    (b) Voluntary information sharing among financial institutions--(1) 
In general. Subject to paragraphs (b)(2), (b)(3), and (b)(4) of this 
section, a financial institution or an association of financial 
institutions may, under the protection of the safe harbor from liability 
described in paragraph (b)(5) of this section, transmit, receive, or 
otherwise share information with any other financial institution or 
association of financial institutions regarding individuals, entities, 
organizations, and countries for purposes of identifying and, where 
appropriate, reporting activities that the financial institution or 
association suspects may involve possible terrorist activity or money 
laundering.
    (2) Notice requirement. A financial institution or association of 
financial institutions that intends to share information as described in 
paragraph (b)(1) of this section shall submit to FinCEN a notice 
described on FinCEN's Internet Web site, http://www.fincen.gov. Each 
notice provided pursuant to this paragraph (b)(2) shall be effective for 
the one year period beginning on the date of the notice. In order to 
continue to engage in the sharing of information after the end of the 
one year period, a financial institution or association of financial 
institutions must submit a new notice. Completed notices may be 
submitted to FinCEN by accessing FinCEN's Internet Web site, http://
www.fincen.gov., and entering the appropriate information as directed, 
or, if a financial institution does not have Internet access, by mail 
to: FinCEN, P.O. Box 39, Vienna, VA 22183.
    (3) Verification requirement. Prior to sharing information as 
described in paragraph (b)(1) of this section, a financial institution 
or an association of financial institutions must take reasonable steps 
to verify that the other financial institution or association of 
financial institutions with which it intends to share information has 
submitted to FinCEN the notice required by paragraph (b)(2) of this 
section. A financial institution or an association of financial 
institutions may satisfy this

[[Page 640]]

paragraph (b)(3) by confirming that the other financial institution or 
association of financial institutions appears on a list that FinCEN will 
periodically make available to financial institutions or associations of 
financial institutions that have filed a notice with it, or by 
confirming directly with the other financial institution or association 
of financial institutions that the requisite notice has been filed.
    (4) Use and security of information. (i) Information received by a 
financial institution or an association of financial institutions 
pursuant to this section shall not be used for any purpose other than:
    (A) Identifying and, where appropriate, reporting on money 
laundering or terrorist activities;
    (B) Determining whether to establish or maintain an account, or to 
engage in a transaction; or
    (C) Assisting the financial institution in complying with any 
requirement of this chapter.
    (ii) Each financial institution or association of financial 
institutions that engages in the sharing of information pursuant to this 
section shall maintain adequate procedures to protect the security and 
confidentiality of such information. The requirements of this paragraph 
(b)(4)(ii) shall be deemed satisfied to the extent that a financial 
institution applies to such information procedures that the institution 
has established to satisfy the requirements of section 501 of the Gramm-
Leach-Bliley Act (15 U.S.C. 6801), and applicable regulations issued 
thereunder, with regard to the protection of its customers' nonpublic 
personal information.
    (5) Safe harbor from certain liability--(i) In general. A financial 
institution or association of financial institutions that shares 
information pursuant to paragraph (b) of this section shall be protected 
from liability for such sharing, or for any failure to provide notice of 
such sharing, to an individual, entity, or organization that is 
identified in such sharing, to the full extent provided in subsection 
314(b) of Public Law 107-56.
    (ii) Limitation. Paragraph (b)(5)(i) of this section shall not apply 
to a financial institution or association of financial institutions to 
the extent such institution or association fails to comply with 
paragraphs (b)(2), (b)(3), or (b)(4) of this section.
    (c) Information sharing between financial institutions and the 
Federal Government. If, as a result of information shared pursuant to 
this section, a financial institution knows, suspects, or has reason to 
suspect that an individual, entity, or organization is involved in, or 
may be involved in terrorist activity or money laundering, and such 
institution is subject to a suspicious activity reporting requirement 
under this chapter or other applicable regulations, the institution 
shall file a Suspicious Activity Report in accordance with those 
regulations. In situations involving violations requiring immediate 
attention, such as when a reportable violation involves terrorist 
activity or is ongoing, the financial institution shall immediately 
notify, by telephone, an appropriate law enforcement authority and 
financial institution supervisory authorities in addition to filing 
timely a Suspicious Activity Report. A financial institution that is not 
subject to a suspicious activity reporting requirement is not required 
to file a Suspicious Activity Report or otherwise to notify law 
enforcement of suspicious activity that is detected as a result of 
information shared pursuant to this section. Such a financial 
institution is encouraged, however, to voluntarily report such activity 
to FinCEN.
    (d) No effect on financial institution reporting obligations. 
Nothing in this subpart affects the obligation of a financial 
institution to file a Suspicious Activity Report pursuant to this 
chapter or any other applicable regulations, or to otherwise contact 
directly a Federal agency concerning individuals or entities suspected 
of engaging in terrorist activity or money laundering.



  Subpart F_Special Standards of Diligence; Prohibitions; and Special 
                                Measures



Sec. 1010.600  General.

    Each financial institution (as defined in 31 U.S.C. 5312(a)(2) or 
(c)(1)) should refer to its Chapter X Part for any additional special 
standards of diligence;

[[Page 641]]

prohibitions; and special measures requirements.

  Special Due Diligence for Correspondent Accounts and Private Banking 
                                Accounts



Sec. 1010.605  Definitions.

    Except as otherwise provided, the following definitions apply for 
purposes of Sec. Sec. 1010.610 through 1010.630 and Sec. 1010.670:
    (a) Beneficial owner of an account means an individual who has a 
level of control over, or entitlement to, the funds or assets in the 
account that, as a practical matter, enables the individual, directly or 
indirectly, to control, manage or direct the account. The ability to 
fund the account or the entitlement to the funds of the account alone, 
however, without any corresponding authority to control, manage or 
direct the account (such as in the case of a minor child beneficiary), 
does not cause the individual to be a beneficial owner.
    (b) Certification and recertification mean the certification and 
recertification forms regarding correspondent accounts for foreign banks 
located on FinCEN's Internet Web site, http://www.fincen.gov.
    (c) Correspondent account. (1) The term correspondent account means:
    (i) For purposes of Sec. 1010.610(a), (d) and (e), an account 
established for a foreign financial institution to receive deposits 
from, or to make payments or other disbursements on behalf of, the 
foreign financial institution, or to handle other financial transactions 
related to such foreign financial institution; and
    (ii) For purposes of Sec. Sec. 1010.610(b) and (c), 1010.630 and 
1010.670, an account established for a foreign bank to receive deposits 
from, or to make payments or other disbursements on behalf of, the 
foreign bank, or to handle other financial transactions related to such 
foreign bank.
    (2) For purposes of this definition, the term account:
    (i) As applied to banks (as set forth in paragraphs (e)(1)(i) 
through (vii) of this section):
    (A) Means any formal banking or business relationship established by 
a bank to provide regular services, dealings, and other financial 
transactions; and
    (B) Includes a demand deposit, savings deposit, or other transaction 
or asset account and a credit account or other extension of credit;
    (ii) As applied to brokers or dealers in securities (as set forth in 
paragraph (e)(1)(viii) of this section) means any formal relationship 
established with a broker or dealer in securities to provide regular 
services to effect transactions in securities, including, but not 
limited to, the purchase or sale of securities and securities loaned and 
borrowed activity, and to hold securities or other assets for 
safekeeping or as collateral;
    (iii) As applied to futures commission merchants and introducing 
brokers (as set forth in paragraph (e)(1)(ix) of this section) means any 
formal relationship established by a futures commission merchant to 
provide regular services, including, but not limited to, those 
established to effect transactions in contracts of sale of a commodity 
for future delivery, options on any contract of sale of a commodity for 
future delivery, or options on a commodity; and
    (iv) As applied to mutual funds (as set forth in paragraph (e)(1)(x) 
of this section) means any contractual or other business relationship 
established between a person and a mutual fund to provide regular 
services to effect transactions in securities issued by the mutual fund, 
including the purchase or sale of securities.
    (d) Correspondent relationship has the same meaning as correspondent 
account for purposes of Sec. Sec. 1010.630 and 1010.670.
    (e) Covered financial institution means: (1) For purposes of Sec. 
1010.610 and 1010.620:
    (i) An insured bank (as defined in section 3(h) of the Federal 
Deposit Insurance Act (12 U.S.C. 1813(h)));
    (ii) A commercial bank;
    (iii) An agency or branch of a foreign bank in the United States;
    (iv) A federally insured credit union;
    (v) A savings association;
    (vi) A corporation acting under section 25A of the Federal Reserve 
Act (12 U.S.C. 611 et seq.);

[[Page 642]]

    (vii) A trust bank or trust company that is federally regulated and 
is subject to an anti-money laundering program requirement;
    (viii) A broker or dealer in securities registered, or required to 
be registered, with the Securities and Exchange Commission under the 
Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.), except persons 
who register pursuant to section 15(b)(11) of the Securities Exchange 
Act of 1934;
    (ix) A futures commission merchant or an introducing broker 
registered, or required to be registered, with the Commodity Futures 
Trading Commission under the Commodity Exchange Act (7 U.S.C. 1 et 
seq.), except persons who register pursuant to section 4(f)(a)(2) of the 
Commodity Exchange Act; and
    (x) A mutual fund;
    (2) For purposes of Sec. Sec. 1010.630 and 1010.670:
    (i) An insured bank (as defined in section 3(h) of the Federal 
Deposit Insurance Act (12 U.S.C. 1813(h)));
    (ii) A commercial bank or trust company;
    (iii) A private banker;
    (iv) An agency or branch of a foreign bank in the United States;
    (v) A credit union;
    (vi) A savings association;
    (vii) A corporation acting under section 25A of the Federal Reserve 
Act (12 U.S.C. 611 et seq.); and
    (viii) A broker or dealer in securities registered, or required to 
be registered, with the Securities and Exchange Commission under the 
Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.), except persons 
who register pursuant to section 15(b)(11) of the Securities Exchange 
Act of 1934.
    (f) Foreign financial institution. (1) The term foreign financial 
institution means:
    (i) A foreign bank;
    (ii) Any branch or office located outside the United States of any 
covered financial institution described in paragraphs (e)(1)(viii) 
through (x) of this section;
    (iii) Any other person organized under foreign law (other than a 
branch or office of such person in the United States) that, if it were 
located in the United States, would be a covered financial institution 
described in paragraphs (e)(1)(viii) through (x) of this section; and
    (iv) Any person organized under foreign law (other than a branch or 
office of such person in the United States) that is engaged in the 
business of, and is readily identifiable as:
    (A) A dealer in foreign exchange; or
    (B) A money transmitter.
    (2) For purposes of paragraph (f)(1)(iv) of this section, a person 
is not ``engaged in the business'' of a dealer in foreign exchange or a 
money transmitter if such transactions are merely incidental to the 
person's business.
    (g) Foreign shell bank means a foreign bank without a physical 
presence in any country.
    (h) Non-United States person or non-U.S. person means a natural 
person who is neither a United States citizen nor is accorded the 
privilege of residing permanently in the United States pursuant to title 
8 of the United States Code. For purposes of this paragraph (h), the 
definition of person in Sec. 1010.100(mm) does not apply, 
notwithstanding paragraph (k) of this section.
    (i) Offshore banking license means a license to conduct banking 
activities that prohibits the licensed entity from conducting banking 
activities with the citizens of, or in the local currency of, the 
jurisdiction that issued the license.
    (j) Owner. (1) The term owner means any person who, directly or 
indirectly:
    (i) Owns, controls, or has the power to vote 25 percent or more of 
any class of voting securities or other voting interests of a foreign 
bank; or
    (ii) Controls in any manner the election of a majority of the 
directors (or individuals exercising similar functions) of a foreign 
bank.
    (2) For purposes of this definition:
    (i) Members of the same family shall be considered to be one person.
    (ii) The term same family means parents, spouses, children, 
siblings, uncles, aunts, grandparents, grandchildren, first cousins, 
stepchildren, stepsiblings, parents-in-law, and spouses of any of the 
foregoing.
    (iii) Each member of the same family who has an ownership interest 
in a foreign bank must be identified if the family is an owner as a 
result of aggregating the ownership interests of the members of the 
family. In determining

[[Page 643]]

the ownership interests of the same family, any voting interest of any 
family member shall be taken into account.
    (iv) Voting securities or other voting interests means securities or 
other interests that entitle the holder to vote for or to select 
directors (or individuals exercising similar functions).
    (k) Person has the meaning provided in Sec. 1010.100(mm).
    (l) Physical presence means a place of business that:
    (1) Is maintained by a foreign bank;
    (2) Is located at a fixed address (other than solely an electronic 
address or a post-office box) in a country in which the foreign bank is 
authorized to conduct banking activities, at which location the foreign 
bank:
    (i) Employs one or more individuals on a full-time basis; and
    (ii) Maintains operating records related to its banking activities; 
and
    (3) Is subject to inspection by the banking authority that licensed 
the foreign bank to conduct banking activities.
    (m) Private banking account means an account (or any combination of 
accounts) maintained at a covered financial institution that:
    (1) Requires a minimum aggregate deposit of funds or other assets of 
not less than $1,000,000;
    (2) Is established on behalf of or for the benefit of one or more 
non-U.S. persons who are direct or beneficial owners of the account; and
    (3) Is assigned to, or is administered or managed by, in whole or in 
part, an officer, employee, or agent of a covered financial institution 
acting as a liaison between the covered financial institution and the 
direct or beneficial owner of the account.
    (n) Regulated affiliate. (1) The term regulated affiliate means a 
foreign shell bank that:
    (i) Is an affiliate of a depository institution, credit union, or 
foreign bank that maintains a physical presence in the United States or 
a foreign country, as applicable; and
    (ii) Is subject to supervision by a banking authority in the country 
regulating such affiliated depository institution, credit union, or 
foreign bank.
    (2) For purposes of this definition:
    (i) Affiliate means a foreign bank that is controlled by, or is 
under common control with, a depository institution, credit union, or 
foreign bank.
    (ii) Control means:
    (A) Ownership, control, or power to vote 50 percent or more of any 
class of voting securities or other voting interests of another company; 
or
    (B) Control in any manner the election of a majority of the 
directors (or individuals exercising similar functions) of another 
company.
    (o) Secretary means the Secretary of the Treasury.
    (p) Senior foreign political figure. (1) The term senior foreign 
political figure means:
    (i) A current or former:
    (A) Senior official in the executive, legislative, administrative, 
military, or judicial branches of a foreign government (whether elected 
or not);
    (B) Senior official of a major foreign political party; or
    (C) Senior executive of a foreign government-owned commercial 
enterprise;
    (ii) A corporation, business, or other entity that has been formed 
by, or for the benefit of, any such individual;
    (iii) An immediate family member of any such individual; and
    (iv) A person who is widely and publicly known (or is actually known 
by the relevant covered financial institution) to be a close associate 
of such individual.
    (2) For purposes of this definition:
    (i) Senior official or executive means an individual with 
substantial authority over policy, operations, or the use of government-
owned resources; and
    (ii) Immediate family member means spouses, parents, siblings, 
children and a spouse's parents and siblings.

[75 FR 65812, Oct. 26, 2010, as amended at 76 FR 43596, July 21, 2011]



Sec. 1010.610  Due diligence programs for correspondent accounts for
foreign financial institutions.

    (a) In general. A covered financial institution shall establish a 
due diligence program that includes appropriate, specific, risk-based, 
and, where necessary, enhanced policies, procedures, and controls that 
are reasonably designed to

[[Page 644]]

enable the covered financial institution to detect and report, on an 
ongoing basis, any known or suspected money laundering activity 
conducted through or involving any correspondent account established, 
maintained, administered, or managed by such covered financial 
institution in the United States for a foreign financial institution. 
The due diligence program required by this section shall be a part of 
the anti-money laundering program otherwise required by this chapter. 
Such policies, procedures, and controls shall include:
    (1) Determining whether any such correspondent account is subject to 
paragraph (b) of this section;
    (2) Assessing the money laundering risk presented by such 
correspondent account, based on a consideration of all relevant factors, 
which shall include, as appropriate:
    (i) The nature of the foreign financial institution's business and 
the markets it serves;
    (ii) The type, purpose, and anticipated activity of such 
correspondent account;
    (iii) The nature and duration of the covered financial institution's 
relationship with the foreign financial institution (and any of its 
affiliates);
    (iv) The anti-money laundering and supervisory regime of the 
jurisdiction that issued the charter or license to the foreign financial 
institution, and, to the extent that information regarding such 
jurisdiction is reasonably available, of the jurisdiction in which any 
company that is an owner of the foreign financial institution is 
incorporated or chartered; and
    (v) Information known or reasonably available to the covered 
financial institution about the foreign financial institution's anti-
money laundering record; and
    (3) Applying risk-based procedures and controls to each such 
correspondent account reasonably designed to detect and report known or 
suspected money laundering activity, including a periodic review of the 
correspondent account activity sufficient to determine consistency with 
information obtained about the type, purpose, and anticipated activity 
of the account.
    (b) Enhanced due diligence for certain foreign banks. In the case of 
a correspondent account established, maintained, administered, or 
managed in the United States for a foreign bank described in paragraph 
(c) of this section, the due diligence program required by paragraph (a) 
of this section shall include enhanced due diligence procedures designed 
to ensure that the covered financial institution, at a minimum, takes 
reasonable steps to:
    (1) Conduct enhanced scrutiny of such correspondent account to guard 
against money laundering and to identify and report any suspicious 
transactions in accordance with applicable law and regulation. This 
enhanced scrutiny shall reflect the risk assessment of the account and 
shall include, as appropriate:
    (i) Obtaining and considering information relating to the foreign 
bank's anti-money laundering program to assess the risk of money 
laundering presented by the foreign bank's correspondent account;
    (ii) Monitoring transactions to, from, or through the correspondent 
account in a manner reasonably designed to detect money laundering and 
suspicious activity; and
    (iii)(A) Obtaining information from the foreign bank about the 
identity of any person with authority to direct transactions through any 
correspondent account that is a payable-through account, and the sources 
and beneficial owner of funds or other assets in the payable-through 
account.
    (B) For purposes of paragraph (b)(1)(iii)(A) of this section, a 
payable-through account means a correspondent account maintained by a 
covered financial institution for a foreign bank by means of which the 
foreign bank permits its customers to engage, either directly or through 
a subaccount, in banking activities usual in connection with the 
business of banking in the United States.
    (2) Determine whether the foreign bank for which the correspondent 
account is established or maintained in turn maintains correspondent 
accounts for other foreign banks that use the

[[Page 645]]

foreign correspondent account established or maintained by the covered 
financial institution and, if so, take reasonable steps to obtain 
information relevant to assess and mitigate money laundering risks 
associated with the foreign bank's correspondent accounts for other 
foreign banks, including, as appropriate, the identity of those foreign 
banks.
    (3)(i) Determine, for any correspondent account established or 
maintained for a foreign bank whose shares are not publicly traded, the 
identity of each owner of the foreign bank and the nature and extent of 
each owner's ownership interest.
    (ii) For purposes of paragraph (b)(3)(i) of this section:
    (A) Owner means any person who directly or indirectly owns, 
controls, or has the power to vote 10 percent or more of any class of 
securities of a foreign bank. For purposes of this paragraph 
(b)(3)(ii)(A):
    (1) Members of the same family shall be considered to be one person; 
and
    (2) Same family has the meaning provided in Sec. 
1010.605(j)(2)(ii).
    (B) Publicly traded means shares that are traded on an exchange or 
an organized over-the-counter market that is regulated by a foreign 
securities authority as defined in section 3(a)(50) of the Securities 
Exchange Act of 1934 (15 U.S.C. 78c(a)(50)).
    (c) Foreign banks to be accorded enhanced due diligence. The due 
diligence procedures described in paragraph (b) of this section are 
required for any correspondent account maintained for a foreign bank 
that operates under:
    (1) An offshore banking license;
    (2) A banking license issued by a foreign country that has been 
designated as non-cooperative with international anti-money laundering 
principles or procedures by an intergovernmental group or organization 
of which the United States is a member and with which designation the 
U.S. representative to the group or organization concurs; or
    (3) A banking license issued by a foreign country that has been 
designated by the Secretary as warranting special measures due to money 
laundering concerns.
    (d) Special procedures when due diligence or enhanced due diligence 
cannot be performed. The due diligence program required by paragraphs 
(a) and (b) of this section shall include procedures to be followed in 
circumstances in which a covered financial institution cannot perform 
appropriate due diligence or enhanced due diligence with respect to a 
correspondent account, including when the covered financial institution 
should refuse to open the account, suspend transaction activity, file a 
suspicious activity report, or close the account.
    (e) Applicability rules for general due diligence. The provisions of 
paragraph (a) of this section apply to covered financial institutions as 
follows:
    (1) General rules--(i) Correspondent accounts established on or 
after July 5, 2006. Effective July 5, 2006, the requirements of 
paragraph (a) of this section shall apply to each correspondent account 
established on or after that date.
    (ii) Correspondent accounts established before July 5, 2006. 
Effective October 2, 2006, the requirements of paragraph (a) of this 
section shall apply to each correspondent account established before 
July 5, 2006.
    (2) Special rules for certain banks. Until the requirements of 
paragraph (a) of this section become applicable as set forth in 
paragraph (e)(1) of this section, the due diligence requirements of 31 
U.S.C. 5318(i)(1) shall continue to apply to any covered financial 
institution listed in Sec. 1010.605(e)(1)(i) through (vi).
    (3) Special rules for all other covered financial institutions. The 
due diligence requirements of 31 U.S.C. 5318(i)(1) shall not apply to a 
covered financial institution listed in Sec. 1010.605(e)(1)(vii) 
through (x) until the requirements of paragraph (a) of this section 
become applicable as set forth in paragraph (e)(1) of this section.
    (f) Applicability rules for enhanced due diligence. The provisions 
of paragraph (b) of this section apply to covered financial institutions 
as follows:
    (1) General rules--(i) Correspondent accounts established on or 
after February 5, 2008. Effective February 5, 2008, the requirements of 
paragraph (b) of this section shall apply to each correspondent account 
established on or after such date.

[[Page 646]]

    (ii) Correspondent accounts established before February 5, 2008. 
Effective May 5, 2008, the requirements of paragraph (b) of this section 
shall apply to each correspondent account established before February 5, 
2008.
    (2) Special rules for certain banks. Until the requirements of 
paragraph (b) of this section become applicable as set forth in 
paragraph (f)(1) of this section, the enhanced due diligence 
requirements of 31 U.S.C. 5318(i)(2) shall continue to apply to any 
covered financial institutions listed in Sec. 1010.605(e)(1)(i) through 
(vi).
    (3) Special rules for all other covered financial institutions. The 
enhanced due diligence requirements of 31 U.S.C. 5318(i)(2) shall not 
apply to a covered financial institution listed in Sec. 
1010.605(e)(1)(vii) through (x) until the requirements of paragraph (b) 
of this section become applicable, as set forth in paragraph (f)(1) of 
this section.
    (g) Exemptions--(1) Exempt financial institutions. Except as 
provided in this section, a financial institution defined in 31 U.S.C. 
5312(a)(2) or (c)(1), or Sec. 1010.100(t) is exempt from the 
requirements of 31 U.S.C. 5318(i)(1) and (i)(2) pertaining to 
correspondent accounts.
    (2) Other compliance obligations of financial institutions 
unaffected. Nothing in paragraph (g) of this section shall be construed 
to relieve a financial institution from its responsibility to comply 
with any other applicable requirement of law or regulation, including 
title 31, United States Code, and this chapter.



Sec. 1010.620  Due diligence programs for private banking accounts.

    (a) In general. A covered financial institution shall maintain a due 
diligence program that includes policies, procedures, and controls that 
are reasonably designed to detect and report any known or suspected 
money laundering or suspicious activity conducted through or involving 
any private banking account that is established, maintained, 
administered, or managed in the United States by such financial 
institution. The due diligence program required by this section shall be 
a part of the anti-money laundering program otherwise required by this 
chapter.
    (b) Minimum requirements. The due diligence program required by 
paragraph (a) of this section shall be designed to ensure, at a minimum, 
that the financial institution takes reasonable steps to:
    (1) Ascertain the identity of all nominal and beneficial owners of a 
private banking account;
    (2) Ascertain whether any person identified under paragraph (b)(1) 
of this section is a senior foreign political figure;
    (3) Ascertain the source(s) of funds deposited into a private 
banking account and the purpose and expected use of the account; and
    (4) Review the activity of the account to ensure that it is 
consistent with the information obtained about the client's source of 
funds, and with the stated purpose and expected use of the account, as 
needed to guard against money laundering, and to report, in accordance 
with applicable law and regulation, any known or suspected money 
laundering or suspicious activity conducted to, from, or through a 
private banking account.
    (c) Special requirements for senior foreign political figures. (1) 
In the case of a private banking account for which a senior foreign 
political figure is a nominal or beneficial owner, the due diligence 
program required by paragraph (a) of this section shall include enhanced 
scrutiny of such account that is reasonably designed to detect and 
report transactions that may involve the proceeds of foreign corruption.
    (2) For purposes of this paragraph (c), the term proceeds of foreign 
corruption means any asset or property that is acquired by, through, or 
on behalf of a senior foreign political figure through misappropriation, 
theft, or embezzlement of public funds, the unlawful conversion of 
property of a foreign government, or through acts of bribery or 
extortion, and shall include any other property into which any such 
assets have been transformed or converted.
    (d) Special procedures when due diligence cannot be performed. The 
due diligence program required by paragraph (a) of this section shall 
include procedures to be followed in circumstances in which a covered 
financial institution cannot perform appropriate due diligence with 
respect to a private banking

[[Page 647]]

account, including when the covered financial institution should refuse 
to open the account, suspend transaction activity, file a suspicious 
activity report, or close the account.
    (e) Applicability rules. The provisions of this section apply to 
covered financial institutions as follows:
    (1) General rules--(i) Private banking accounts established on or 
after July 5, 2006. Effective July 5, 2006, the requirements of this 
section shall apply to each private banking account established on or 
after such date.
    (ii) Private banking accounts established before July 5, 2006. 
Effective October 2, 2006, the requirements of this section shall apply 
to each private banking account established before July 5, 2006.
    (2) Special rules for certain banks and for brokers or dealers in 
securities, futures commission merchants, and introducing brokers. Until 
the requirements of this section become applicable as set forth in 
paragraph (e)(1) of this section, the requirements of 31 U.S.C. 
5318(i)(3) shall continue to apply to a covered financial institution 
listed in Sec. 1010.605(e)(1)(i) through (vi), (viii), or (ix).
    (3) Special rules for federally regulated trust banks or trust 
companies, and mutual funds. Until the requirements of this section 
become applicable as set forth in paragraph (e)(1) of this section, the 
requirements of 31 U.S.C. 5318(i)(3) shall not apply to a covered 
financial institution listed in Sec. 1010.605(e)(1)(vii) or (x).
    (4) Exemptions--(i) Exempt financial institutions. Except as 
provided in this section, a financial institution defined in 31 U.S.C. 
5312(a)(2) or (c)(1) or Sec. 1010.100(t) is exempt from the 
requirements of 31 U.S.C. 5318(i)(3) pertaining to private banking 
accounts.
    (ii) Other compliance obligations of financial institutions 
unaffected. Nothing in paragraph (e)(4) of this section shall be 
construed to relieve a financial institution from its responsibility to 
comply with any other applicable requirement of law or regulation, 
including title 31, United States Code, and this chapter.



Sec. 1010.630  Prohibition on correspondent accounts for foreign shell
banks; records concerning owners of foreign banks and agents for service 

of legal process.

    (a) Requirements for covered financial institutions--(1) Prohibition 
on correspondent accounts for foreign shell banks. (i) A covered 
financial institution shall not establish, maintain, administer, or 
manage a correspondent account in the United States for, or on behalf 
of, a foreign shell bank.
    (ii) A covered financial institution shall take reasonable steps to 
ensure that any correspondent account established, maintained, 
administered, or managed by that covered financial institution in the 
United States for a foreign bank is not being used by that foreign bank 
to indirectly provide banking services to a foreign shell bank.
    (iii) Nothing in paragraph (a)(1) of this section prohibits a 
covered financial institution from providing a correspondent account or 
banking services to a regulated affiliate.
    (2) Records of owners and agents. (i) Except as provided in 
paragraph (a)(2)(ii) of this section, a covered financial institution 
that maintains a correspondent account in the United States for a 
foreign bank shall maintain records in the United States identifying the 
owners of each such foreign bank whose shares are not publicly traded 
and the name and street address of a person who resides in the United 
States and is authorized, and has agreed to be an agent to accept 
service of legal process for records regarding each such account.
    (ii) A covered financial institution need not maintain records of 
the owners of any foreign bank that is required to have on file with the 
Federal Reserve Board a Form FR Y-7 that identifies the current owners 
of the foreign bank as required by such form.
    (iii) For purposes of paragraph (a)(2)(i) of this section, publicly 
traded refers to shares that are traded on an exchange or on an 
organized over-the-counter market that is regulated by a foreign 
securities authority as defined in section 3(a)(50) of the Securities 
Exchange Act of 1934 (15 U.S.C. 78c(a)(50)).

[[Page 648]]

    (b) Safe harbor. Subject to paragraphs (c) and (d) of this section, 
a covered financial institution will be deemed to be in compliance with 
the requirements of paragraph (a) of this section with respect to a 
foreign bank if the covered financial institution obtains, at least once 
every three years, a certification or recertification from the foreign 
bank.
    (c) Interim verification. If at any time a covered financial 
institution knows, suspects, or has reason to suspect, that any 
information contained in a certification or recertification provided by 
a foreign bank, or otherwise relied upon by the covered financial 
institution for purposes of this section, is no longer correct, the 
covered financial institution shall request that the foreign bank verify 
or correct such information, or shall take other appropriate measures to 
ascertain the accuracy of the information or to obtain correct 
information, as appropriate. See paragraph (d)(3) of this section for 
additional requirements if a foreign bank fails to verify or correct the 
information or if a covered financial institution cannot ascertain the 
accuracy of the information or obtain correct information.
    (d) Closure of correspondent accounts--(1) Accounts existing on 
October 28, 2002. In the case of any correspondent account that was in 
existence on October 28, 2002, if the covered financial institution has 
not obtained a certification (or recertification) from the foreign bank, 
or has not otherwise obtained documentation of the information required 
by such certification (or recertification), on or before March 31, 2003, 
and at least once every three years thereafter, the covered financial 
institution shall close all correspondent accounts with such foreign 
bank within a commercially reasonable time, and shall not permit the 
foreign bank to establish any new positions or execute any transaction 
through any such account, other than transactions necessary to close the 
account.
    (2) Accounts established after October 28, 2002. In the case of any 
correspondent account established after October 28, 2002, if the covered 
financial institution has not obtained a certification (or 
recertification), or has not otherwise obtained documentation of the 
information required by such certification (or recertification) within 
30 calendar days after the date the account is established, and at least 
once every three years thereafter, the covered financial institution 
shall close all correspondent accounts with such foreign bank within a 
commercially reasonable time, and shall not permit the foreign bank to 
establish any new positions or execute any transaction through any such 
account, other than transactions necessary to close the account.
    (3) Verification of previously provided information. In the case of 
a foreign bank with respect to which the covered financial institution 
undertakes to verify information pursuant to paragraph (c) of this 
section, if the covered financial institution has not obtained, from the 
foreign bank or otherwise, verification of the information or corrected 
information within 90 calendar days after the date of undertaking the 
verification, the covered financial institution shall close all 
correspondent accounts with such foreign bank within a commercially 
reasonable time, and shall not permit the foreign bank to establish any 
new positions or execute any transaction through any such account, other 
than transactions necessary to close the account.
    (4) Reestablishment of closed accounts and establishment of new 
accounts. A covered financial institution shall not reestablish any 
account closed pursuant to this paragraph (d), and shall not establish 
any other correspondent account with the concerned foreign bank, until 
it obtains from the foreign bank the certification or the 
recertification, as appropriate.
    (5) Limitation on liability. A covered financial institution shall 
not be liable to any person in any court or arbitration proceeding for 
terminating a correspondent account in accordance with this paragraph 
(d).
    (e) Recordkeeping requirement. A covered financial institution shall 
retain the original of any document provided by a foreign bank, and the 
original or a copy of any document otherwise relied upon by the covered 
financial institution, for purposes of this section, for at least 5 
years after the date that

[[Page 649]]

the covered financial institution no longer maintains any correspondent 
account for such foreign bank. A covered financial institution shall 
retain such records with respect to any foreign bank for such longer 
period as the Secretary may direct.
    (f) Special rules concerning information requested prior to October 
28, 2002--(1) Definition. For purposes of this paragraph (f) the term 
``Interim Guidance'' means:
    (i) The Interim Guidance of the Department of the Treasury dated 
November 20, 2001 and published in the Federal Register on November 27, 
2001; or
    (ii) The guidance issued in a document published in the Federal 
Register on December 28, 2001.
    (2) Use of Interim Guidance certification. In the case of a 
correspondent account in existence on October 28, 2002, the term 
``certification'' as used in paragraphs (b), (c), (d)(1), and (d)(3) of 
this section shall also include the certification appended to the 
Interim Guidance, provided that such certification was requested prior 
to October 28, 2002 and obtained by the covered financial institution on 
or before December 26, 2002.
    (3) Recordkeeping requirement. Paragraph (e) of this section shall 
apply to any document provided by a foreign bank, or otherwise relied 
upon by a covered financial institution, for purposes of the Interim 
Guidance.



Sec. 1010.640  [Reserved]

   Special Measures Under Section 311 of the USA Patriot Act and Law 
               Enforcement Access to Foreign Bank Records



Sec. 1010.651  Special measures against Burma.

    (a) Definitions. For purposes of this section:
    (1) Burmese banking institution means any foreign bank, as that term 
is defined in Sec. 1010.100(u), chartered or licensed by Burma, 
including branches and offices located outside Burma.
    (2) Correspondent account has the same meaning as provided in Sec. 
1010.605(c).
    (3) Covered financial institution has the same meaning as provided 
in Sec. 1010.605(e)(2) and also includes the following:
    (i) A futures commission merchant or an introducing broker 
registered, or required to register, with the Commodity Futures Trading 
Commission under the Commodity Exchange Act (7 U.S.C. 1 et seq.); and
    (ii) An investment company (as defined in section 3 of the 
Investment Company Act of 1940 (15 U.S.C. 80a-5)) that is an open-end 
company (as defined in section 5 of the Investment Company Act (15 
U.S.C. 80a-5)) and that is registered, or required to register, with the 
Securities and Exchange Commission pursuant to that Act.
    (b) Requirements for covered financial institutions--(1) Prohibition 
on correspondent accounts. A covered financial institution shall 
terminate any correspondent account that is established, maintained, 
administered, or managed in the United States for, or on behalf of, a 
Burmese banking institution.
    (2) Prohibition on indirect correspondent accounts. (i) If a covered 
financial institution has or obtains knowledge that a correspondent 
account established, maintained, administered, or managed by that 
covered financial institution in the United States for a foreign bank is 
being used by the foreign bank to provide banking services indirectly to 
a Burmese banking institution, the covered financial institution shall 
ensure that the correspondent account is no longer used to provide such 
services, including, where necessary, terminating the correspondent 
account; and
    (ii) A covered financial institution required to terminate an 
account pursuant to paragraph (b)(2)(i) of this section:
    (A) Shall do so within a commercially reasonable time, and shall not 
permit the foreign bank to establish any new positions or execute any 
transactions through such account, other than those necessary to close 
the account; and
    (B) May reestablish an account closed pursuant to this paragraph if 
it determines that the account will not be used to provide banking 
services indirectly to a Burmese banking institution.

[[Page 650]]

    (3) Exception. The provisions of paragraphs (b)(1) and (2) of this 
section shall not apply to a correspondent account provided that the 
operation of such account is not prohibited by Executive Order 13310 and 
the transactions involving Burmese banking institutions that are 
conducted through the correspondent account are limited solely to 
transactions that are exempted from, or otherwise authorized by 
regulation, order, directive, or license pursuant to, Executive Order 
13310.
    (4) Reporting and recordkeeping not required. Nothing in this 
section shall require a covered financial institution to maintain any 
records, obtain any certification, or report any information not 
otherwise required by law or regulation.



Sec. 1010.652  Special measures against Myanmar Mayflower Bank and Asia
Wealth Bank.

    (a) Definitions. For purposes of this section:
    (1) Asia Wealth Bank means all headquarters, branches, and offices 
of Asia Wealth Bank operating in Burma or in any jurisdiction.
    (2) Correspondent account has the same meaning as provided in Sec. 
1010.605(c).
    (3) Covered financial institution has the same meaning as provided 
in Sec. 1010.605(e)(2) and also includes the following:
    (i) A futures commission merchant or an introducing broker 
registered, or required to register, with the Commodity Futures Trading 
Commission under the Commodity Exchange Act (7 U.S.C. 1 et seq.); and
    (ii) An investment company (as defined in section 3 of the 
Investment Company Act of 1940 (15 U.S.C. 80a-5)) that is an open-end 
company (as defined in section 5 of the Investment Company Act (15 
U.S.C. 80a-5)) and that is registered, or required to register, with the 
Securities and Exchange Commission pursuant to that Act.
    (4) Myanmar Mayflower Bank means all headquarters, branches, and 
offices of Myanmar Mayflower Bank operating in Burma or in any 
jurisdiction.
    (b) Requirements for covered financial institutions--(1) Prohibition 
on correspondent accounts. A covered financial institution shall 
terminate any correspondent account that is established, maintained, 
administered, or managed in the United States for, or on behalf of, 
Myanmar Mayflower Bank or Asia Wealth Bank.
    (2) Prohibition on indirect correspondent accounts. (i) If a covered 
financial institution has or obtains knowledge that a correspondent 
account established, maintained, administered, or managed by that 
covered financial institution in the United States for a foreign bank is 
being used by the foreign bank to provide banking services indirectly to 
Myanmar Mayflower Bank or Asia Wealth Bank, the covered financial 
institution shall ensure that the correspondent account is no longer 
used to provide such services, including, where necessary, terminating 
the correspondent account; and
    (ii) A covered financial institution required to terminate an 
account pursuant to paragraph (b)(2)(i) of this section:
    (A) Shall do so within a commercially reasonable time, and shall not 
permit the foreign bank to establish any new positions or execute any 
transactions through such account, other than those necessary to close 
the account; and
    (B) May reestablish an account closed pursuant to this paragraph if 
it determines that the account will not be used to provide banking 
services indirectly to Myanmar Mayflower Bank or Asia Wealth Bank.
    (3) Reporting and recordkeeping not required. Nothing in this 
section shall require a covered financial institution to maintain any 
records, obtain any certification, or to report any information not 
otherwise required by law or regulation.



Sec. 1010.653  Special measures against Commercial Bank of Syria.

    (a) Definitions. For purposes of this section:
    (1) Commercial Bank of Syria means any branch, office, or subsidiary 
of Commercial Bank of Syria operating in Syria or in any other 
jurisdiction, including Syrian Lebanese Commercial Bank.

[[Page 651]]

    (2) Correspondent account has the same meaning as provided in Sec. 
1010.605(c)(1)(ii).
    (3) Covered financial institution includes:
    (i) An insured bank (as defined in section 3(h) of the Federal 
Deposit Insurance Act (12 U.S.C. 1813(h)));
    (ii) A commercial bank;
    (iii) An agency or branch of a foreign bank in the United States;
    (iv) A federally insured credit union;
    (v) A savings association;
    (vi) A corporation acting under section 25A of the Federal Reserve 
Act (12 U.S.C. 611 et seq.);
    (vii) A trust bank or trust company that is federally regulated and 
is subject to an anti-money laundering program requirement;
    (viii) A broker or dealer in securities registered, or required to 
be registered, with the Securities and Exchange Commission under the 
Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.), except persons 
who register pursuant to section 15(b)(11) of the Securities Exchange 
Act of 1934;
    (ix) A futures commission merchant or an introducing broker 
registered, or required to be registered, with the Commodity Futures 
Trading Commission under the Commodity Exchange Act (7 U.S.C. 1 et 
seq.), except persons who register pursuant to section 4(f)(a)(2) of the 
Commodity Exchange Act; and
    (x) A mutual fund, which means an investment company (as defined in 
section 3(a)(1) of the Investment Company Act of 1940 ((``Investment 
Company Act'') (15 U.S.C. 80a-3(a)(1))) that is an open-end company (as 
defined in section 5(a)(1) of the Investment Company Act (15 U.S.C. 80a-
5(a)(1))) and that is registered, or is required to register with the 
Securities and Exchange Commission pursuant to the Investment Company 
Act.
    (4) Subsidiary means a company of which more than 50 percent of the 
voting stock or analogous equity interest is owned by another company.
    (b) Requirements for covered financial institutions--(1) Prohibition 
on direct use of correspondent accounts. A covered financial institution 
shall terminate any correspondent account that is open or maintained in 
the United States for, or on behalf of, Commercial Bank of Syria.
    (2) Due diligence of correspondent accounts to prohibit indirect 
use. (i) A covered financial institution shall apply due diligence to 
its correspondent accounts that is reasonably designed to guard against 
their indirect use by Commercial Bank of Syria. At a minimum, that due 
diligence must include:
    (A) Notifying correspondent account holders that the correspondent 
account may not be used to provide Commercial Bank of Syria with access 
to the covered financial institution; and
    (B) Taking reasonable steps to identify any indirect use of its 
correspondent accounts by Commercial Bank of Syria, to the extent that 
such indirect use can be determined from transactional records 
maintained in the covered financial institution's normal course of 
business.
    (ii) A covered financial institution shall take a risk-based 
approach when deciding what, if any, additional due diligence measures 
it should adopt to guard against the indirect use of its correspondent 
accounts by Commercial Bank of Syria.
    (iii) A covered financial institution that obtains knowledge that a 
correspondent account is being used by the foreign bank to provide 
indirect access to Commercial Bank of Syria shall take all appropriate 
steps to prevent such indirect access, including, where necessary, 
terminating the correspondent account.
    (iv) A covered financial institution required to terminate a 
correspondent account pursuant to paragraph (b)(2)(iii) of this section:
    (A) Should do so within a commercially reasonable time, and should 
not permit the foreign bank to establish any new positions or execute 
any transaction through such correspondent account, other than those 
necessary to close the correspondent account; and
    (B) May reestablish a correspondent account closed pursuant to this 
paragraph if it determines that the correspondent account will not be 
used to provide banking services indirectly to Commercial Bank of Syria.

[[Page 652]]

    (3) Recordkeeping and reporting. (i) A covered financial institution 
is required to document its compliance with the notice requirement set 
forth in paragraph (b)(2)(i)(A) of this section.
    (ii) Nothing in this section shall require a covered financial 
institution to report any information not otherwise required to be 
reported by law or regulation.



Sec. 1010.655  Special measures against Banco Delta Asia.

    (a) Definitions. For purposes of this section:
    (1) Banco Delta Asia means all branches, offices, and subsidiaries 
of Banco Delta Asia operating in any jurisdiction, including its 
subsidiaries Delta Asia Credit Limited and Delta Asia Insurance Limited.
    (2) Correspondent account has the same meaning as provided in Sec. 
1010.605(c)(1)(ii).
    (3) Covered financial institution includes:
    (i) An insured bank (as defined in section 3(h) of the Federal 
Deposit Insurance Act (12 U.S.C. 1813(h)));
    (ii) A commercial bank;
    (iii) An agency or branch of a foreign bank in the United States;
    (iv) A federally insured credit union;
    (v) A savings association;
    (vi) A corporation acting under section 25A of the Federal Reserve 
Act (12 U.S.C. 611 et seq.);
    (vii) A trust bank or trust company that is federally regulated and 
is subject to an anti-money laundering program requirement;
    (viii) A broker or dealer in securities registered, or required to 
be registered, with the U.S. Securities and Exchange Commission under 
the Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.), except 
persons who register pursuant to section 15(b)(11) of the Securities 
Exchange Act of 1934;
    (ix) A futures commission merchant or an introducing broker 
registered, or required to register, with the Commodity Futures Trading 
Commission under the Commodity Exchange Act (7 U.S.C. 1 et seq.), except 
persons who register pursuant to section 4(f)(a)(2) of the Commodity 
Exchange Act; and
    (x) A mutual fund, which means an investment company (as defined in 
section 3(a)(1) of the Investment Company Act of 1940 ((``Investment 
Company Act'') (15 U.S.C. 80a-3(a)(1))) that is an open-end company (as 
defined in section 5(a)(1) of the Investment Company Act (15 U.S.C. 80a-
5(a)(1))) and that is registered, or is required to register with the 
Securities and Exchange Commission pursuant to the Investment Company 
Act.
    (4) Subsidiary means a company of which more than 50 percent of the 
voting stock or analogous equity interest is owned by another company.
    (b) Requirements for covered financial institutions--(1) Prohibition 
on direct use of correspondent accounts. A covered financial institution 
shall terminate any correspondent account that is established, 
maintained, administered, or managed in the United States for, or on 
behalf of, Banco Delta Asia.
    (2) Due diligence of correspondent accounts to prohibit indirect 
use. (i) A covered financial institution shall apply due diligence to 
its correspondent accounts that is reasonably designed to guard against 
their indirect use by Banco Delta Asia. At a minimum, that due diligence 
must include:
    (A) Notifying correspondent accountholders the correspondent account 
may not be used to provide Banco Delta Asia with access to the covered 
financial institution; and
    (B) Taking reasonable steps to identify any indirect use of its 
correspondent accounts by Banco Delta Asia, to the extent that such 
indirect use can be determined from transactional records maintained in 
the covered financial institution's normal course of business.
    (ii) A covered financial institution shall take a risk-based 
approach when deciding what, if any, additional due diligence measures 
it should adopt to guard against the indirect use of its correspondent 
accounts by Banco Delta Asia.
    (iii) A covered financial institution that obtains knowledge that a 
correspondent account is being used by the foreign bank to provide 
indirect access to Banco Delta Asia shall take all appropriate steps to 
prevent such indirect access, including, where necessary, terminating 
the correspondent account.

[[Page 653]]

    (iv) A covered financial institution required to terminate a 
correspondent account pursuant to paragraph (b)(2)(iii) of this section:
    (A) Should do so within a commercially reasonable time, and should 
not permit the foreign bank to establish any new positions or execute 
any transaction through such correspondent account, other than those 
necessary to close the correspondent account; and
    (B) May reestablish a correspondent account closed pursuant to this 
paragraph if it determines that the correspondent account will not be 
used to provide banking services indirectly to Banco Delta Asia.
    (3) Recordkeeping and reporting. (i) A covered financial institution 
is required to document its compliance with the notice requirement set 
forth in paragraph (b)(2)(i)(A) of this section.
    (ii) Nothing in this section shall require a covered financial 
institution to report any information not otherwise required to be 
reported by law or regulation.



Sec. 1010.670  Summons or subpoena of foreign bank records; termination
of correspondent relationship.

    (a) Definitions. The definitions in Sec. 1010.605 apply to this 
section.
    (b) Issuance to foreign banks. The Secretary or the Attorney General 
may issue a summons or subpoena to any foreign bank that maintains a 
correspondent account in the United States and may request records 
related to such correspondent account, including records maintained 
outside of the United States relating to the deposit of funds into the 
foreign bank. The summons or subpoena may be served on the foreign bank 
in the United States if the foreign bank has a representative in the 
United States, or in a foreign country pursuant to any mutual legal 
assistance treaty, multilateral agreement, or other request for 
international law enforcement assistance.
    (c) Issuance to covered financial institutions. Upon receipt of a 
written request from a Federal law enforcement officer for information 
required to be maintained by a covered financial institution under 
paragraph (a)(2) of Sec. 1010.630, the covered financial institution 
shall provide the information to the requesting officer not later than 7 
days after receipt of the request.
    (d) Termination upon receipt of notice. A covered financial 
institution shall terminate any correspondent relationship with a 
foreign bank not later than 10 business days after receipt of written 
notice from the Secretary or the Attorney General (in each case, after 
consultation with the other) that the foreign bank has failed:
    (1) To comply with a summons or subpoena issued under paragraph (b) 
of this section; or
    (2) To initiate proceedings in a United States court contesting such 
summons or subpoena.
    (e) Limitation on liability. A covered financial institution shall 
not be liable to any person in any court or arbitration proceeding for 
terminating a correspondent relationship in accordance with paragraph 
(d) of this section.
    (f) Failure to terminate relationship. Failure to terminate a 
correspondent relationship in accordance with this section shall render 
the covered financial institution liable for a civil penalty of up to 
$10,000 per day until the correspondent relationship is so terminated.



                    Subpart G_Administrative Rulings



Sec. 1010.710  Scope.

    This subpart provides that the Director, FinCEN, or his designee, 
either unilaterally or upon request, may issue administrative rulings 
interpreting the application of this chapter.



Sec. 1010.711  Submitting requests.

    (a) Each request for an administrative ruling must be in writing and 
contain the following information:
    (1) A complete description of the situation for which the ruling is 
requested,
    (2) A complete statement of all material facts related to the 
subject transaction,
    (3) A concise and unambiguous question to be answered,
    (4) A statement certifying, to the best of the requestor's knowledge 
and belief, that the question to be answered is not applicable to any 
ongoing state or Federal investigation, litigation,

[[Page 654]]

grand jury proceeding, or proceeding before any other governmental body 
involving either the requestor, any other party to the subject 
transaction, or any other party with whom the requestor has an agency 
relationship,
    (5) A statement identifying any information in the request that the 
requestor considers to be exempt from disclosure under the Freedom of 
Information Act, 5 U.S.C. 552, and the reason therefor,
    (6) If the subject situation is hypothetical, a statement justifying 
why the particular situation described warrants the issuance of a 
ruling,
    (7) The signature of the person making the request, or
    (8) If an agent makes the request, the signature of the agent and a 
statement certifying the authority under which the request is made.
    (b) A request filed by a corporation shall be signed by a corporate 
officer and a request filed by a partnership shall be signed by a 
partner.
    (c) A request may advocate a particular proposed interpretation and 
may set forth the legal and factual basis for that interpretation.
    (d) Requests shall be addressed to: Director, Financial Crimes 
Enforcement Network, P.O. Box 39, Vienna, VA 22183.
    (e) The requester shall advise the Director, FinCEN, immediately in 
writing of any subsequent change in any material fact or statement 
submitted with a ruling request in conformity with paragraph (a) of this 
section.



Sec. 1010.712  Nonconforming requests.

    The Director, FinCEN, or his designee shall notify the requester if 
the ruling request does not conform with the requirements of Sec. 
1010.711. The notice shall be in writing and shall describe the 
requirements that have not been met. A request that is not brought into 
conformity with such requirements within 30 days from the date of such 
notice, unless extended for good cause by FinCEN, shall be treated as 
though it were withdrawn.



Sec. 1010.713  Oral communications.

    (a) The Director of FinCEN or his designee will not issue 
administrative rulings in response to oral requests. Oral opinions or 
advice by Treasury, Customs and Border Protection, the Internal Revenue 
Service, the Office of the Comptroller of the Currency, or any other 
bank supervisory agency personnel, regarding the interpretation and 
application of this chapter, do not bind FinCEN and carry no 
precedential value.
    (b) A person who has made a ruling request in conformity with Sec. 
1010.711 may request an opportunity for oral discussion of the issues 
presented in the request. The request should be made to the Director, 
FinCEN, and any decision to grant such a conference is wholly within the 
discretion of the Director. Personal conferences or telephone 
conferences may be scheduled only for the purpose of affording the 
requester an opportunity to discuss freely and openly the matters set 
forth in the administrative ruling request. Accordingly, the conferees 
will not be bound by any argument or position advocated or agreed to, 
expressly or impliedly, during the conference. Any new arguments or 
facts put forth by the requester at the meeting must be reduced to 
writing by the requester and submitted in conformity with Sec. 1010.711 
before they may be considered in connection with the request.



Sec. 1010.714  Withdrawing requests.

    A person may withdraw a request for an administrative ruling at any 
time before the ruling has been issued.



Sec. 1010.715  Issuing rulings.

    The Director, FinCEN, or his designee may issue a written ruling 
interpreting the relationship between this chapter and each situation 
for which such a ruling has been requested in conformity with Sec. 
1010.711. A ruling issued under this section shall bind FinCEN only in 
the event that the request describes a specifically identified actual 
situation. A ruling issued under this section shall have precedential 
value, and hence may be relied upon by others similarly situated, only 
if FinCEN makes it available to the public through publication on the 
FinCEN Web site under the heading ``Administrative rulings'' or other 
appropriate forum. All rulings with precedential value will be available 
by mail to any

[[Page 655]]

person upon written request specifically identifying the ruling sought. 
FinCEN will make every effort to respond to each requestor within 90 
days of receiving a request.

(Approved by the Office of Management and Budget under control number 
1506-0009)



Sec. 1010.716  Modifying or rescinding rulings.

    (a) The Director, FinCEN, or his designee may modify or rescind any 
ruling made pursuant to Sec. 1010.715:
    (1) When, in light of changes in the statute or regulations, the 
ruling no longer sets forth the interpretation of the Director, FinCEN 
with respect to the described situation,
    (2) When any fact or statement submitted in the original ruling 
request is found to be materially inaccurate or incomplete, or
    (3) For other good cause.
    (b) Any person may submit to the Director, FinCEN a written request 
that an administrative ruling be modified or rescinded. The request 
should conform to the requirements of Sec. 1010.711, explain why 
rescission or modification is warranted, and refer to any reasons in 
paragraph (a) of this section that are relevant. The request may 
advocate an alternative interpretation and may set forth the legal and 
factual basis for that interpretation.
    (c) FinCEN shall modify an existing administrative ruling by issuing 
a new ruling that rescinds the relevant prior ruling. Once rescinded, an 
administrative ruling shall no longer have any precedential value.
    (d) An administrative ruling may be modified or rescinded 
retroactively with respect to one or more parties to the original ruling 
request if the Director, FinCEN, determines that:
    (1) A fact or statement in the original ruling request was 
materially inaccurate or incomplete,
    (2) The requestor failed to notify in writing FinCEN of a material 
change to any fact or statement in the original request, or
    (3) A party to the original request acted in bad faith when relying 
upon the ruling.



Sec. 1010.717  Disclosing information.

    (a) Any part of any administrative ruling, including names, 
addresses, or information related to the business transactions of 
private parties, may be disclosed pursuant to a request under the 
Freedom of Information Act, 5 U.S.C. 552. If the request for an 
administrative ruling contains information which the requestor wishes to 
be considered for exemption from disclosure under the Freedom of 
Information Act, the requestor should clearly identify such portions of 
the request and the reasons why such information should be exempt from 
disclosure.
    (b) A requestor claiming an exemption from disclosure will be 
notified, at least 10 days before the administrative ruling is issued, 
of a decision not to exempt any of such information from disclosure so 
that the underlying request for an administrative ruling can be 
withdrawn if the requestor so chooses.



            Subpart H_Enforcement; Penalties; and Forfeiture



Sec. 1010.810  Enforcement.

    (a) Overall authority for enforcement and compliance, including 
coordination and direction of procedures and activities of all other 
agencies exercising delegated authority under this chapter, is delegated 
to the Director, FinCEN.
    (b) Authority to examine institutions to determine compliance with 
the requirements of this chapter is delegated as follows:
    (1) To the Comptroller of the Currency with respect to those 
financial institutions regularly examined for safety and soundness by 
national bank examiners;
    (2) To the Board of Governors of the Federal Reserve System with 
respect to those financial institutions regularly examined for safety 
and soundness by Federal Reserve bank examiners;
    (3) To the Federal Deposit Insurance Corporation with respect to 
those financial institutions regularly examined for safety and soundness 
by FDIC bank examiners;
    (4) To the Federal Home Loan Bank Board with respect to those 
financial institutions regularly examined for

[[Page 656]]

safety and soundness by FHLBB bank examiners;
    (5) To the Chairman of the Board of the National Credit Union 
Administration with respect to those financial institutions regularly 
examined for safety and soundness by NCUA examiners.
    (6) To the Securities and Exchange Commission with respect to 
brokers and dealers in securities and investment companies as that term 
is defined in the Investment Company Act of 1940 (15 U.S.C. 80-1 et 
seq.);
    (7) To the Commissioner of Customs and Border Protection with 
respect to Sec. Sec. 1010.340 and 1010.830;
    (8) To the Commissioner of Internal Revenue with respect to all 
financial institutions, except brokers or dealers in securities, mutual 
funds, futures commission merchants, introducing brokers in commodities, 
and commodity trading advisors, not currently examined by Federal bank 
supervisory agencies for soundness and safety; and
    (9) To the Commodity Futures Trading Commission with respect to 
futures commission merchants, introducing brokers in commodities, and 
commodity trading advisors.
    (c) Authority for investigating criminal violations of this chapter 
is delegated as follows:
    (1) To the Commissioner of Customs and Border Protection with 
respect to Sec. 1010.340;
    (2) To the Commissioner of Internal Revenue except with respect to 
Sec. 1010.340.
    (d) Authority for the imposition of civil penalties for violations 
of this chapter lies with the Director of FinCEN.
    (e) Periodic reports shall be made to the Director, FinCEN by each 
agency to which compliance authority has been delegated under paragraph 
(b) of this section. These reports shall be in such a form and submitted 
at such intervals as the Director, FinCEN may direct. Evidence of 
specific violations of any of the requirements of this chapter may be 
submitted to the Director, FinCEN at any time.
    (f) The Director, FinCEN or his delegate, and any agency to which 
compliance has been delegated under paragraph (b) of this section, may 
examine any books, papers, records, or other data of domestic financial 
institutions relevant to the recordkeeping or reporting requirements of 
this chapter.
    (g) The authority to enforce the provisions of 31 U.S.C. 5314 and 
Sec. Sec. 1010.350 and 1010.420 of this chapter has been redelegated 
from FinCEN to the Commissioner of Internal Revenue by means of a 
Memorandum of Agreement between FinCEN and IRS. Such authority includes, 
with respect to 31 U.S.C. 5314 and 1010.350 and 1010.420 of this 
chapter, the authority to: assess and collect civil penalties under 31 
U.S.C. 5321 and 31 CFR 1010.820; investigate possible civil violations 
of these provisions (in addition to the authority already provided at 
paragraph (c)(2)) of this section); employ the summons power of subpart 
I of this part 1010; issue administrative rulings under subpart G of 
this part 1010; and take any other action reasonably necessary for the 
enforcement of these and related provisions, including pursuit of 
injunctions.



Sec. 1010.820  Civil penalty.

    (a) For any willful violation, committed on or before October 12, 
1984, of any reporting requirement for financial institutions under this 
chapter or of any recordkeeping requirements of Sec. Sec. 1010.311, 
1010.313, 1020.315, 1021.311 or 1021.313, the Secretary may assess upon 
any domestic financial institution, and upon any partner, director, 
officer, or employee thereof who willfully participates in the 
violation, a civil penalty not to exceed $1,000.
    (b) For any willful violation committed after October 12, 1984 and 
before October 28, 1986, of any reporting requirement for financial 
institutions under this chapter or of the recordkeeping requirements of 
Sec. 1010.420, the Secretary may assess upon any domestic financial 
institution, and upon any partner, director, officer, or employee 
thereof who willfully participates in the violation, a civil penalty not 
to exceed $10,000.
    (c) For any willful violation of any recordkeeping requirement for 
financial institutions, except violations of Sec. 1010.420, under this 
chapter, the Secretary may assess upon any domestic financial 
institution, and upon any partner, director, officer, or employee 
thereof who willfully participates in

[[Page 657]]

the violation, a civil penalty not to exceed $1,000.
    (d) For any failure to file a report required under Sec. 1010.340 
or for filing such a report containing any material omission or 
misstatement, the Secretary may assess a civil penalty up to the amount 
of the currency or monetary instruments transported, mailed or shipped, 
less any amount forfeited under Sec. 1010.830.
    (e) For any willful violation of Sec. 1010.314 committed after 
January 26, 1987, the Secretary may assess upon any person a civil 
penalty not to exceed the amount of coins and currency involved in the 
transaction with respect to which such penalty is imposed. The amount of 
any civil penalty assessed under this paragraph shall be reduced by the 
amount of any forfeiture to the United States in connection with the 
transaction for which the penalty was imposed.
    (f) For any willful violation committed after October 27, 1986, of 
any reporting requirement for financial institutions under this chapter 
(except Sec. 1010.350, Sec. 1010.360 or Sec. 1010.420), the Secretary 
may assess upon any domestic financial institution, and upon any 
partner, director, officer, or employee thereof who willfully 
participates in the violation, a civil penalty not to exceed the greater 
of the amount (not to exceed $100,000) involved in the transaction or 
$25,000.
    (g) For any willful violation committed after October 27, 1986, of 
any requirement of Sec. 1010.350, Sec. 1010.360 or Sec. 1010.420, the 
Secretary may assess upon any person, a civil penalty:
    (1) In the case of a violation of Sec. 1010.360 involving a 
transaction, a civil penalty not to exceed the greater of the amount 
(not to exceed $100,000) of the transaction, or $25,000; and
    (2) In the case of a violation of Sec. 1010.350 or Sec. 1010.420 
involving a failure to report the existence of an account or any 
identifying information required to be provided with respect to such 
account, a civil penalty not to exceed the greater of the amount (not to 
exceed $100,000) equal to the balance in the account at the time of the 
violation, or $25,000.
    (h) For each negligent violation of any requirement of this chapter, 
committed after October 27, 1986, the Secretary may assess upon any 
financial institution a civil penalty not to exceed $500.



Sec. 1010.830  Forfeiture of currency or monetary instruments.

    Any currency or other monetary instruments which are in the process 
of any transportation with respect to which a report is required under 
Sec. 1010.340 are subject to seizure and forfeiture to the United 
States if such report has not been filed as required in Sec. 1010.360, 
or contains material omissions or misstatements. The Secretary may, in 
his sole discretion, remit or mitigate any such forfeiture in whole or 
in part upon such terms and conditions as he deems reasonable.



Sec. 1010.840  Criminal penalty.

    (a) Any person who willfully violates any provision of Title I of 
Public Law 91-508, or of this chapter authorized thereby may, upon 
conviction thereof, be fined not more than $1,000 or be imprisoned not 
more than 1 year, or both. Such person may in addition, if the violation 
is of any provision authorized by Title I of Public Law 91-508 and if 
the violation is committed in furtherance of the commission of any 
violation of Federal law punishable by imprisonment for more than 1 
year, be fined not more than $10,000 or be imprisoned not more than 5 
years, or both.
    (b) Any person who willfully violates any provision of Title II of 
Public Law 91-508, or of this chapter authorized thereby, may, upon 
conviction thereof, be fined not more than $250,000 or be imprisoned not 
more than 5 years, or both.
    (c) Any person who willfully violates any provision of Title II of 
Public Law 91-508, or of this chapter authorized thereby, where the 
violation is either
    (1) Committed while violating another law of the United States, or
    (2) Committed as part of a pattern of any illegal activity involving 
more than $100,000 in any 12-month period, may, upon conviction thereof, 
be fined not more than $500,000 or be imprisoned not more than 10 years, 
or both.
    (d) Any person who knowingly makes any false, fictitious or 
fraudulent

[[Page 658]]

statement or representation in any report required by this chapter may, 
upon conviction thereof, be fined not more than $10,000 or be imprisoned 
not more than 5 years, or both.



Sec. 1010.850  Enforcement authority with respect to transportation of
currency or monetary instruments.

    (a) If a customs officer has reasonable cause to believe that there 
is a monetary instrument being transported without the filing of the 
report required by Sec. Sec. 1010.340 and 1010.360 of this chapter, he 
may stop and search, without a search warrant, a vehicle, vessel, 
aircraft, or other conveyance, envelope or other container, or person 
entering or departing from the United States with respect to which or 
whom the officer reasonably believes is transporting such instrument.
    (b) If the Secretary has reason to believe that currency or monetary 
instruments are in the process of transportation and with respect to 
which a report required under Sec. 1010.340 has not been filed or 
contains material omissions or misstatements, he may apply to any court 
of competent jurisdiction for a search warrant. Upon a showing of 
probable cause, the court may issue a warrant authorizing the search of 
any or all of the following:
    (1) One or more designated persons.
    (2) One or more designated or described places or premises.
    (3) One or more designated or described letters, parcels, packages, 
or other physical objects.
    (4) One or more designated or described vehicles. Any application 
for a search warrant pursuant to this section shall be accompanied by 
allegations of fact supporting the application.
    (c) This section is not in derogation of the authority of the 
Secretary under any other law or regulation.



                            Subpart I_Summons



Sec. 1010.911  General.

    For any investigation for the purpose of civil enforcement of 
violations of the Bank Secrecy Act, or any regulation issued pursuant to 
the Bank Secrecy Act, the Secretary or delegate of the Secretary may 
summon a financial institution or an officer or employee of a financial 
institution (including a former officer or employee), or any person 
having possession, custody, or care of any of the records and reports 
required under the Bank Secrecy Act or this chapter to appear before the 
Secretary or his delegate, at a time and place named in the summons, and 
to give testimony, under oath, and be examined, and to produce such 
books, papers, records, or other data as may be relevant or material to 
such investigation.



Sec. 1010.912  Persons who may issue summons.

    For purposes of this chapter, the following officials are hereby 
designated as delegates of the Secretary who are authorized to issue a 
summons under Sec. 1010.911, solely for the purposes of civil 
enforcement of this chapter:
    (a) FinCEN. The Director, FinCEN.
    (b) Internal Revenue Service. Except with respect to Sec. 1010.340 
of this chapter, the Commissioner, the Deputy Commissioner, or a 
delegate of either official, and, for the purposes of perfecting 
seizures and forfeitures related to civil enforcement of this chapter, 
the Chief (Criminal Investigation) or a delegate.
    (c) Customs and Border Protection. With respect to Sec. 1010.340 of 
this chapter, the Commissioner, the Deputy Commissioner, the Assistant 
Commissioner (Enforcement), Regional Commissioners, Assistant Regional 
Commissioners (Enforcement), and Special Agents in Charge.



Sec. 1010.913  Contents of summons.

    (a) Summons for testimony. Any summons issued under Sec. 1010.911 
of this chapter to compel the appearance and testimony of a person shall 
state:
    (1) The name, title, address, and telephone number of the person 
before whom the appearance shall take place (who may be a person other 
than the persons who are authorized to issue such a summons under Sec. 
1010.912 of this chapter);
    (2) The address to which the person summoned shall report for the 
appearance;
    (3) The date and time of the appearance; and

[[Page 659]]

    (4) The name, title, address, and telephone number of the person who 
has issued the summons.
    (b) Summons of books, papers, records, or data. Any summons issued 
under Sec. 1010.911 of this chapter to require the production of books, 
papers, records, or other data shall describe the materials to be 
produced with reasonable specificity, and shall state:
    (1) The name, title, address, and telephone number of the person to 
whom the materials shall be produced (who may be a person other than the 
persons who are authorized to issue such a summons under Sec. 1010.912 
of this chapter);
    (2) The address at which the person summoned shall produce the 
materials, not to exceed 500 miles from any place where the financial 
institution operates or conducts business in the United States;
    (3) The specific manner of production, whether by personal delivery, 
by mail, or by messenger service;
    (4) The date and time for production; and
    (5) The name, title, address, and telephone number of the person who 
has issued the summons.



Sec. 1010.914  Service of summons.

    (a) Who may serve. Any delegate of the Secretary authorized under 
Sec. 1010.912 of this chapter to issue a summons, or any other person 
authorized by law to serve summonses or other process, is hereby 
authorized to serve a summons issued under this chapter.
    (b) Manner of service. Service of a summons may be made--
    (1) Upon any person, by registered mail, return receipt requested, 
directed to the person summoned;
    (2) Upon a natural person by personal delivery; or
    (3) Upon any other person by delivery to an officer, managing or 
general agent, or any other agent authorized to receive service of 
process.
    (c) Certificate of service. The summons shall contain a certificate 
of service to be signed by the server of the summons. On the hearing of 
an application for enforcement of the summons, the certificate of 
service signed by the person serving the summons shall be evidence of 
the facts it states.



Sec. 1010.915  Examination of witnesses and records.

    (a) General. Any delegate of the Secretary authorized under Sec. 
1010.912 of this chapter to issue a summons, or any officer or employee 
of the Treasury Department or any component thereof who is designated by 
that person (whether in the summons or otherwise), is hereby authorized 
to receive evidence and to examine witnesses pursuant to the summons. 
Any person authorized by law may administer any oaths and affirmations 
that may be required under this subpart.
    (b) Testimony taken under oath. Testimony of any person under this 
chapter may be taken under oath, and shall be taken down in writing by 
the person examining the person summoned or shall be otherwise 
transcribed. After the testimony of a witness has been transcribed, a 
copy of that transcript shall be made available to the witness upon 
request, unless for good cause the person issuing the summons 
determines, under 5 U.S.C. 555, that a copy should not be provided. If 
such a determination has been made, the witness shall be limited to 
inspection of the official transcript of the testimony.
    (c) Disclosure of summons, testimony, or records. Unless the 
Secretary or a delegate of the Secretary listed under Sec. 1010.912(a) 
of this chapter so authorizes in writing, or it is otherwise required by 
law, no delegate of the Secretary listed under Sec. 1010.912 (b) or (c) 
of this chapter or other officer or employee of the Treasury Department 
or any component thereof shall--
    (1) Make public the name of any person to whom a summons has been 
issued under this chapter, or release any information to the public 
concerning that person or the issuance of a summons to that person prior 
to the time and date set for that person's appearance or production of 
records; or
    (2) Disclose any testimony taken (including the name of the witness) 
or material presented pursuant to the summons, to any person other than 
an officer or employee of the Treasury Department or of any component 
thereof. Nothing in the preceding sentence shall preclude a delegate of 
the Secretary, or other officer or employee of the Treasury Department 
or any component

[[Page 660]]

thereof, from disclosing testimony taken, or material presented pursuant 
to a summons issued under this chapter, to any person in order to obtain 
necessary information for investigative purposes relating to the 
performance of official duties, or to any officer or employee of the 
Department of Justice in connection with a possible violation of Federal 
law.



Sec. 1010.916  Enforcement of summons.

    In the case of contumacy by, or refusal to obey a summons issued to, 
any person under this chapter, the Secretary or any delegate of the 
Secretary listed under Sec. 1010.912 of this chapter shall refer the 
matter to the Attorney General or delegate of the Attorney General 
(including any United States Attorney or Assistant United States 
Attorney, as appropriate), who may bring an action to compel compliance 
with the summons in any court of the United States within the 
jurisdiction of which the investigation which gave rise to the summons 
being or has been carried on, the jurisdiction in which the person 
summoned is a resident, or the jurisdiction in which the person summoned 
carries on business or may be found. When a referral is made by a 
delegate of the Secretary other than a delegate named in Sec. 
1010.912(a) of this chapter, prompt notification of the referral must be 
made to the Director, FinCEN. The court may issue an order requiring the 
person summoned to appear before the Secretary or delegate of the 
Secretary to produce books, papers, records, or other data, to give 
testimony as may be necessary in order to explain how such material was 
compiled and maintained, and to pay the costs of the proceeding. Any 
failure to obey the order of the court may be punished by the court as a 
contempt thereof. All process in any case under this section may be 
served in any judicial district in which such person may be found.



Sec. 1010.917  Payment of expenses.

    Persons summoned under this chapter shall be paid the same fees and 
mileage for travel in the United States that are paid witnesses in the 
courts of the United States. The United States shall not be liable for 
any other expense incurred in connection with the production of books, 
papers, records, or other data under this chapter.



                         Subpart J_Miscellaneous



Sec. 1010.920  Access to records.

    Except as provided in Sec. Sec. 1020.410(b)(1), 1021.410(a), and 
1023.410(a)(1), and except for the purpose of assuring compliance with 
the recordkeeping and reporting requirements of this chapter, this 
chapter does not authorize the Secretary or any other person to inspect 
or review the records required to be maintained by this chapter. Other 
inspection, review or access to such records is governed by other 
applicable law.



Sec. 1010.930  Rewards for informants.

    (a) If an individual provides original information which leads to a 
recovery of a criminal fine, civil penalty, or forfeiture, which exceeds 
$50,000, for a violation of the provisions of the Bank Secrecy Act or of 
this chapter, the Secretary may pay a reward to that individual.
    (b) The Secretary shall determine the amount of the reward to be 
paid under this section; however, any reward paid may not be more than 
25 percent of the net amount of the fine, penalty or forfeiture 
collected, or $150,000, whichever is less.
    (c) An officer or employee of the United States, a State, or a local 
government who provides original information described in paragraph (a) 
in the performance of official duties is not eligible for a reward under 
this section.



Sec. 1010.940  Photographic or other reproductions of Government 
obligations.

    Nothing herein contained shall require or authorize the microfilming 
or other reproduction of:
    (a) Currency or other obligation or security of the United States as 
defined in 18 U.S.C. 8, or
    (b) Any obligation or other security of any foreign government, the 
reproduction of which is prohibited by law.

[[Page 661]]



Sec. 1010.950  Availability of information.

    (a) The Secretary may within his discretion disclose information 
reported under this chapter for any reason consistent with the purposes 
of the Bank Secrecy Act, including those set forth in paragraphs (b) 
through (d) of this section.
    (b) The Secretary may make any information set forth in any report 
received pursuant to this chapter available to another agency of the 
United States, to an agency of a state or local government or to an 
agency of a foreign government, upon the request of the head of such 
department or agency made in writing and stating the particular 
information desired, the criminal, tax or regulatory purpose for which 
the information is sought, and the official need for the information.
    (c) The Secretary may make any information set forth in any report 
received pursuant to this chapter available to the Congress, or any 
committee or subcommittee thereof, upon a written request stating the 
particular information desired, the criminal, tax or regulatory purpose 
for which the information is sought, and the official need for the 
information.
    (d) The Secretary may make any information set forth in any report 
received pursuant to this chapter available to any other department or 
agency of the United States that is a member of the Intelligence 
Community, as defined by Executive Order 12333 or any succeeding 
executive order, upon the request of the head of such department or 
agency made in writing and stating the particular information desired, 
the national security matter with which the information is sought and 
the official need therefor.
    (e) Any information made available under this section to other 
department or agencies of the United States, any state or local 
government, or any foreign government shall be received by them in 
confidence, and shall not be disclosed to any person except for official 
purposes relating to the investigation, proceeding or matter in 
connection with which the information is sought.
    (f) The Secretary may require that a State or local government 
department or agency requesting information under paragraph (b) of this 
section pay fees to reimburse the Department of the Treasury for costs 
incidental to such disclosure. The amount of such fees will be set in 
accordance with the statute on fees for government services, 31 U.S.C. 
9701.



Sec. 1010.960  Disclosure.

    All reports required under this chapter and all records of such 
reports are specifically exempted from disclosure under section 552 of 
Title 5, United States Code.



Sec. 1010.970  Exceptions, exemptions, and reports.

    (a) The Secretary, in his sole discretion, may by written order or 
authorization make exceptions to or grant exemptions from the 
requirements of this chapter. Such exceptions or exemptions may be 
conditional or unconditional, may apply to particular persons or to 
classes of persons, and may apply to particular transactions or classes 
of transactions. They shall, however, be applicable only as expressly 
Stated in the order of authorization, and they shall be revocable in the 
sole discretion of the Secretary.
    (b) The Secretary shall have authority to further define all terms 
used herein.
    (c)(1) The Secretary may, as an alternative to the reporting and 
recordkeeping requirements for casinos in Sec. Sec. 1010.306(a), 
1021.311, and 1021.410, grant exemptions to the casinos in any State 
whose regulatory system substantially meets the reporting and 
recordkeeping requirements of this chapter.
    (2) In order for a State regulatory system to qualify for an 
exemption on behalf of its casinos, the State must provide:
    (i) That the Treasury Department be allowed to evaluate the 
effectiveness of the State's regulatory system by periodic oversight 
review of that system;
    (ii) That the reports required under the State's regulatory system 
be submitted to the Treasury Department within 15 days of receipt by the 
State;
    (iii) That any records required to be maintained by the casinos 
relevant to any matter under this chapter and to

[[Page 662]]

which the State has access or maintains under its regulatory system be 
made available to the Treasury Department within 30 days of request;
    (iv) That the Treasury Department be provided with periodic status 
reports on the State's compliance efforts and findings;
    (v) That all but minor violations of the State requirements be 
reported to Treasury within 15 days of discovery; and
    (vi) That the State will initiate compliance examinations of 
specific institutions at the request of Treasury within a reasonable 
time, not to exceed 90 days where appropriate, and will provide reports 
of these examinations to Treasury within 15 days of completion or 
periodically during the course of the examination upon the request of 
the Secretary. If for any reason the State were not able to conduct an 
investigation within a reasonable time, the State will permit Treasury 
to conduct the investigation.
    (3) Revocation of any exemption under this subsection shall be in 
the sole discretion of the Secretary.



Sec. 1010.980  Dollars as including foreign currency.

    Wherever in this chapter an amount is Stated in dollars, it shall be 
deemed to mean also the equivalent amount in any foreign currency.

                       PARTS 1011	1019 [RESERVED]



PART 1020_RULE FOR BANKS--Table of Contents



                          Subpart A_Definitions

Sec.
1020.100 Definitions.

                           Subpart B_Programs

1020.200 General.
1020.210 Anti-money laundering program requirements for financial 
          institutions regulated only by a Federal functional regulator, 
          including banks, savings associations, and credit unions.
1020.220 Customer identification programs for banks, savings 
          associations, credit unions, and certain non-Federally 
          regulated banks.

             Subpart C_Reports Required To Be Made by Banks

1020.300 General.
1020.310 Reports of transactions in currency.
1020.311 Filing obligations.
1020.312 Identification required.
1020.313 Aggregation.
1020.314 Structured transactions.
1020.315 Transactions of exempt persons.
1020.320 Reports by banks of suspicious transactions.

          Subpart D_Records Required To Be Maintained by Banks

1020.400 General.
1020.410 Records to be made and retained by banks.

    Subpart E_Special Information Sharing Procedures To Deter Money 
                    Laundering and Terrorist Activity

1020.500 General.
1020.520 Special information sharing procedures to deter money 
          laundering and terrorist activity for banks.
1020.530 [Reserved]
1020.540 Voluntary information sharing among financial institutions.

  Subpart F_Special Standards of Diligence; Prohibitions, and Special 
                           Measures for Banks

1020.600 General.
1020.610 Due diligence programs for correspondent accounts for foreign 
          financial institutions.
1020.620 Due diligence programs for private banking accounts.
1020.630 Prohibition on correspondent accounts for foreign shell banks; 
          records concerning owners of foreign banks and agents for 
          service of legal process.
1020.640 [Reserved]
1020.670 Summons or subpoena of foreign bank records; termination of 
          correspondent relationship.

    Authority: 12 U.S.C. 1829b and 1951-1959; 31 U.S.C. 5311-5314 and 
5316-5332; title III, sec. 314, Pub. L. 107-56, 115 Stat. 307.

    Source: 75 FR 65812, Oct. 26, 2010, unless otherwise noted



                          Subpart A_Definitions



Sec. 1020.100  Definitions.

    Refer to Sec. 1010.100 of this Chapter for general definitions not 
noted herein. To the extent there is a differing definition in Sec. 
1010.100 of this chapter, the

[[Page 663]]

definition in this Section is what applies to part 1020. Unless 
otherwise indicated, for purposes of this part:
    (a) Account. For purposes of Sec. 1020.220:
    (1) Account means a formal banking relationship established to 
provide or engage in services, dealings, or other financial transactions 
including a deposit account, a transaction or asset account, a credit 
account, or other extension of credit. Account also includes a 
relationship established to provide a safety deposit box or other 
safekeeping services, or cash management, custodian, and trust services.
    (2) Account does not include:
    (i) A product or service where a formal banking relationship is not 
established with a person, such as check-cashing, wire transfer, or sale 
of a check or money order;
    (ii) An account that the bank acquires through an acquisition, 
merger, purchase of assets, or assumption of liabilities; or
    (iii) An account opened for the purpose of participating in an 
employee benefit plan established under the Employee Retirement Income 
Security Act of 1974.
    (b) Bank. For the purposes of Sec. 1020.220, means:
    (1) A bank, as that term is defined in Sec. 1010.100(d), that is 
subject to regulation by a Federal functional regulator; and
    (2) A credit union, private bank, and trust company, as set forth in 
Sec. 1010.100(d) of this chapter, that does not have a Federal 
functional regulator.
    (c) Customer. For the purposes of Sec. 1020.220:
    (1) Customer means:
    (i) A person that opens a new account; and
    (ii) An individual who opens a new account for:
    (A) An individual who lacks legal capacity, such as a minor; or
    (B) An entity that is not a legal person, such as a civic club.
    (2) Customer does not include:
    (i) A financial institution regulated by a Federal functional 
regulator or a bank regulated by a State bank regulator;
    (ii) A person described in Sec. 1020.315(b)(2) through (b)(4); or
    (iii) A person that has an existing account with the bank, provided 
that the bank has a reasonable belief that it knows the true identity of 
the person.
    (d) Financial institution means:
    (1) For the purposes of Sec. 1020.210, a financial institution 
defined in 31 U.S.C. 5312(a)(2) or (c)(1) that is subject to regulation 
by a Federal functional regulator or a self-regulatory organization.
    (2) For the purposes of Sec. 1020.220, financial institution is 
defined at 31 U.S.C. 5312(a)(2) and (c)(1).



                           Subpart B_Programs



Sec. 1020.200  General.

    Banks are subject to the program requirements set forth and cross 
referenced in this subpart. Banks should also refer to subpart B of part 
1010 of this chapter for program requirements contained in that subpart 
which apply to banks.



Sec. 1020.210  Anti-money laundering program requirements for financial 
institutions regulated only by a Federal functional regulator, including

banks, savings associations, and credit unions.

    A financial institution regulated by a Federal functional regulator 
that is not subject to the regulations of a self regulatory organization 
shall be deemed to satisfy the requirements of 31 U.S.C. 5318(h)(1) if 
it implements and maintains an anti-money laundering program that 
complies with the requirements of Sec. Sec. 1010.610 and 1010.620 and 
the regulation of its Federal functional regulator governing such 
programs.



Sec. 1020.220  Customer identification programs for banks, savings 
associations, credit unions, and certain non-Federally regulated 

banks.

    (a) Customer Identification Program: minimum requirements--(1) In 
general. A bank must implement a written Customer Identification Program 
(CIP) appropriate for its size and type of business that, at a minimum, 
includes each of the requirements of paragraphs (a)(1) through (5) of 
this section. If a bank is required to have an anti-money laundering 
compliance program under the regulations implementing 31 U.S.C. 5318(h), 
12 U.S.C. 1818(s), or 12 U.S.C.

[[Page 664]]

1786(q)(1), then the CIP must be a part of the anti-money laundering 
compliance program. Until such time as credit unions, private banks, and 
trust companies without a Federal functional regulator are subject to 
such a program, their CIPs must be approved by their boards of 
directors.
    (2) Identity verification procedures. The CIP must include risk-
based procedures for verifying the identity of each customer to the 
extent reasonable and practicable. The procedures must enable the bank 
to form a reasonable belief that it knows the true identity of each 
customer. These procedures must be based on the bank's assessment of the 
relevant risks, including those presented by the various types of 
accounts maintained by the bank, the various methods of opening accounts 
provided by the bank, the various types of identifying information 
available, and the bank's size, location, and customer base. At a 
minimum, these procedures must contain the elements described in this 
paragraph (a)(2).
    (i) Customer information required--(A) In general. The CIP must 
contain procedures for opening an account that specify the identifying 
information that will be obtained from each customer. Except as 
permitted by paragraphs (a)(2)(i)(B) and (C) of this section, the bank 
must obtain, at a minimum, the following information from the customer 
prior to opening an account:
    (1) Name;
    (2) Date of birth, for an individual;
    (3) Address, which shall be:
    (i) For an individual, a residential or business street address;
    (ii) For an individual who does not have a residential or business 
street address, an Army Post Office (APO) or Fleet Post Office (FPO) box 
number, or the residential or business street address of next of kin or 
of another contact individual; or
    (iii) For a person other than an individual (such as a corporation, 
partnership, or trust), a principal place of business, local office, or 
other physical location; and
    (4) Identification number, which shall be:
    (i) For a U.S. person, a taxpayer identification number; or
    (ii) For a non-U.S. person, one or more of the following: A taxpayer 
identification number; passport number and country of issuance; alien 
identification card number; or number and country of issuance of any 
other government-issued document evidencing nationality or residence and 
bearing a photograph or similar safeguard.

    Note to Paragraph(a)(2)(i)(A)(4)(ii): When opening an account for a 
foreign business or enterprise that does not have an identification 
number, the bank must request alternative government-issued 
documentation certifying the existence of the business or enterprise.

    (B) Exception for persons applying for a taxpayer identification 
number. Instead of obtaining a taxpayer identification number from a 
customer prior to opening the account, the CIP may include procedures 
for opening an account for a customer that has applied for, but has not 
received, a taxpayer identification number. In this case, the CIP must 
include procedures to confirm that the application was filed before the 
customer opens the account and to obtain the taxpayer identification 
number within a reasonable period of time after the account is opened.
    (C) Credit card accounts. In connection with a customer who opens a 
credit card account, a bank may obtain the identifying information about 
a customer required under paragraph (a)(2)(i)(A) by acquiring it from a 
third-party source prior to extending credit to the customer.
    (ii) Customer verification. The CIP must contain procedures for 
verifying the identity of the customer, using information obtained in 
accordance with paragraph (a)(2)(i) of this section, within a reasonable 
time after the account is opened. The procedures must describe when the 
bank will use documents, non-documentary methods, or a combination of 
both methods as described in this paragraph (a)(2)(ii).
    (A) Verification through documents. For a bank relying on documents, 
the CIP must contain procedures that set forth the documents that the 
bank will use. These documents may include:
    (1) For an individual, unexpired government-issued identification 
evidencing nationality or residence and bearing a photograph or similar 
safeguard,

[[Page 665]]

such as a driver's license or passport; and
    (2) For a person other than an individual (such as a corporation, 
partnership, or trust), documents showing the existence of the entity, 
such as certified articles of incorporation, a government-issued 
business license, a partnership agreement, or trust instrument.
    (B) Verification through non-documentary methods. For a bank relying 
on non-documentary methods, the CIP must contain procedures that 
describe the non-documentary methods the bank will use.
    (1) These methods may include contacting a customer; independently 
verifying the customer's identity through the comparison of information 
provided by the customer with information obtained from a consumer 
reporting agency, public database, or other source; checking references 
with other financial institutions; and obtaining a financial statement.
    (2) The bank's non-documentary procedures must address situations 
where an individual is unable to present an unexpired government-issued 
identification document that bears a photograph or similar safeguard; 
the bank is not familiar with the documents presented; the account is 
opened without obtaining documents; the customer opens the account 
without appearing in person at the bank; and where the bank is otherwise 
presented with circumstances that increase the risk that the bank will 
be unable to verify the true identity of a customer through documents.
    (C) Additional verification for certain customers. The CIP must 
address situations where, based on the bank's risk assessment of a new 
account opened by a customer that is not an individual, the bank will 
obtain information about individuals with authority or control over such 
account, including signatories, in order to verify the customer's 
identity. This verification method applies only when the bank cannot 
verify the customer's true identity using the verification methods 
described in paragraphs (a)(2)(ii)(A) and (B) of this section.
    (iii) Lack of verification. The CIP must include procedures for 
responding to circumstances in which the bank cannot form a reasonable 
belief that it knows the true identity of a customer. These procedures 
should describe:
    (A) When the bank should not open an account;
    (B) The terms under which a customer may use an account while the 
bank attempts to verify the customer's identity;
    (C) When the bank should close an account, after attempts to verify 
a customer's identity have failed; and
    (D) When the bank should file a Suspicious Activity Report in 
accordance with applicable law and regulation.
    (3) Recordkeeping. The CIP must include procedures for making and 
maintaining a record of all information obtained under the procedures 
implementing paragraph (a) of this section.
    (i) Required records. At a minimum, the record must include:
    (A) All identifying information about a customer obtained under 
paragraph (a)(2)(i) of this section;
    (B) A description of any document that was relied on under paragraph 
(a)(2)(ii)(A) of this section noting the type of document, any 
identification number contained in the document, the place of issuance 
and, if any, the date of issuance and expiration date;
    (C) A description of the methods and the results of any measures 
undertaken to verify the identity of the customer under paragraph 
(a)(2)(ii)(B) or (C) of this section; and
    (D) A description of the resolution of any substantive discrepancy 
discovered when verifying the identifying information obtained.
    (ii) Retention of records. The bank must retain the information in 
paragraph (a)(3)(i)(A) of this section for five years after the date the 
account is closed or, in the case of credit card accounts, five years 
after the account is closed or becomes dormant. The bank must retain the 
information in paragraphs (a)(3)(i)(B), (C), and (D) of this section for 
five years after the record is made.
    (4) Comparison with government lists. The CIP must include 
procedures for determining whether the customer appears on any list of 
known or suspected terrorists or terrorist organizations issued by any 
Federal government

[[Page 666]]

agency and designated as such by Treasury in consultation with the 
Federal functional regulators. The procedures must require the bank to 
make such a determination within a reasonable period of time after the 
account is opened, or earlier, if required by another Federal law or 
regulation or Federal directive issued in connection with the applicable 
list. The procedures must also require the bank to follow all Federal 
directives issued in connection with such lists.
    (5)(i) Customer notice. The CIP must include procedures for 
providing bank customers with adequate notice that the bank is 
requesting information to verify their identities.
    (ii) Adequate notice. Notice is adequate if the bank generally 
describes the identification requirements of this section and provides 
the notice in a manner reasonably designed to ensure that a customer is 
able to view the notice, or is otherwise given notice, before opening an 
account. For example, depending upon the manner in which the account is 
opened, a bank may post a notice in the lobby or on its Web site, 
include the notice on its account applications, or use any other form of 
written or oral notice.
    (iii) Sample notice. If appropriate, a bank may use the following 
sample language to provide notice to its customers:

    Important Information About Procedures for Opening a New Account

    To help the government fight the funding of terrorism and money 
laundering activities, Federal law requires all financial institutions 
to obtain, verify, and record information that identifies each person 
who opens an account.
    What this means for you: When you open an account, we will ask for 
your name, address, date of birth, and other information that will allow 
us to identify you. We may also ask to see your driver's license or 
other identifying documents.

    (6) Reliance on another financial institution. The CIP may include 
procedures specifying when a bank will rely on the performance by 
another financial institution (including an affiliate) of any procedures 
of the bank's CIP, with respect to any customer of the bank that is 
opening, or has opened, an account or has established a similar formal 
banking or business relationship with the other financial institution to 
provide or engage in services, dealings, or other financial 
transactions, provided that:
    (i) Such reliance is reasonable under the circumstances;
    (ii) The other financial institution is subject to a rule 
implementing 31 U.S.C. 5318(h) and is regulated by a Federal functional 
regulator; and
    (iii) The other financial institution enters into a contract 
requiring it to certify annually to the bank that it has implemented its 
anti-money laundering program, and that it will perform (or its agent 
will perform) the specified requirements of the bank's CIP.
    (b) Exemptions. The appropriate Federal functional regulator, with 
the concurrence of the Secretary, may, by order or regulation, exempt 
any bank or type of account from the requirements of this section. The 
Federal functional regulator and the Secretary shall consider whether 
the exemption is consistent with the purposes of the Bank Secrecy Act 
and with safe and sound banking, and may consider other appropriate 
factors. The Secretary will make these determinations for any bank or 
type of account that is not subject to the authority of a Federal 
functional regulator.
    (c) Other requirements unaffected. Nothing in this section relieves 
a bank of its obligation to comply with any other provision in this 
chapter, including provisions concerning information that must be 
obtained, verified, or maintained in connection with any account or 
transaction.



             Subpart C_Reports Required To Be Made By Banks



Sec. 1020.300  General.

    Banks are subject to the reporting requirements set forth and cross 
referenced in this subpart. Banks should also refer to Subpart C of Part 
1010 of this chapter for reporting requirements contained in that 
subpart which apply to banks.

[[Page 667]]



Sec. 1020.310  Reports of transactions in currency.

    The reports of transactions in currency requirements for banks are 
located in subpart C of part 1010 of this chapter and this subpart.



Sec. 1020.311  Filing obligations.

    Refer to Sec. 1010.311 of this chapter for reports of transactions 
in currency filing obligations for banks.



Sec. 1020.312  Identification required.

    Refer to Sec. 1010.312 of this chapter for identification 
requirements for reports of transactions in currency filed by banks.



Sec. 1020.313  Aggregation.

    Refer to Sec. 1010.313 of this chapter for reports of transactions 
in currency aggregation requirements for banks.



Sec. 1020.314  Structured transactions.

    Refer to Sec. 1010.314 of this chapter for rules regarding 
structured transactions for banks.



Sec. 1020.315  Transactions of exempt persons.

    (a) General. No bank is required to file a report otherwise required 
by Sec. 1010.311 with respect to any transaction in currency between an 
exempt person and such bank, or, to the extent provided in paragraph 
(e)(6) of this section, between such exempt person and other banks 
affiliated with such bank. (A limitation on the exemption described in 
this paragraph (a) is set forth in paragraph (f) of this section.)
    (b) Exempt person. For purposes of this section, an exempt person 
is:
    (1) A bank, to the extent of such bank's domestic operations;
    (2) A department or agency of the United States, of any State, or of 
any political subdivision of any State;
    (3) Any entity established under the laws of the United States, of 
any State, or of any political subdivision of any State, or under an 
interstate compact between two or more States, that exercises 
governmental authority on behalf of the United States or any such State 
or political subdivision;
    (4) Any entity, other than a bank, whose common stock or analogous 
equity interests are listed on the New York Stock Exchange or the 
American Stock Exchange or whose common stock or analogous equity 
interests have been designated as a NASDAQ National Market Security 
listed on the NASDAQ Stock Market (except stock or interests listed 
under the separate ``NASDAQ Capital Markets Companies'' heading), 
provided that, for purposes of this paragraph (b)(4), a person that is a 
financial institution, other than a bank, is an exempt person only to 
the extent of its domestic operations;
    (5) Any subsidiary, other than a bank, of any entity described in 
paragraph (b)(4) of this section (a ``listed entity'') that is organized 
under the laws of the United States or of any State and at least 51 
percent of whose common stock or analogous equity interest is owned by 
the listed entity, provided that, for purposes of this paragraph (b)(5), 
a person that is a financial institution, other than a bank, is an 
exempt person only to the extent of its domestic operations;
    (6) To the extent of its domestic operations and only with respect 
to transactions conducted through its exemptible accounts, any other 
commercial enterprise (for purposes of this section, a ``non-listed 
business''), other than an enterprise specified in paragraph (e)(8) of 
this section, that:
    (i) Maintains a transaction account, as defined in paragraph (e)(9) 
of this section, at the bank for at least two months, except as provided 
in paragraph (c)(2)(ii) of this section;
    (ii) Frequently engages in transactions in currency with the bank in 
excess of $10,000; and
    (iii) Is incorporated or organized under the laws of the United 
States or a State, or is registered as and eligible to do business 
within the United States or a State; or
    (7) With respect solely to withdrawals for payroll purposes from 
existing exemptible accounts, any other person (for purposes of this 
section, a ``payroll customer'') that:
    (i) Maintains a transaction account, as defined in paragraph (e)(9) 
of this section, at the bank for at least two months, except as provided 
in paragraph (c)(2)(ii) of this section;

[[Page 668]]

    (ii) Operates a firm that frequently withdraws more than $10,000 in 
order to pay its United States employees in currency; and
    (iii) Is incorporated or organized under the laws of the United 
States or a State, or is registered as and eligible to do business 
within the United States or a State.
    (c) Designation of certain exempt persons--(1) General. Except as 
provided in paragraph (c)(2) of this section, a bank must designate an 
exempt person by filing FinCEN Form 110. Such designation must occur by 
the close of the 30-calendar day period beginning after the day of the 
first reportable transaction in currency with that person sought to be 
exempted from reporting under the terms of this section. The designation 
must be made separately by each bank that treats the customer as an 
exempt person, except as provided in paragraph (e)(6) of this section.
    (2) Special rules. (i) A bank is not required to file a FinCEN Form 
110 with respect to the transfer of currency to or from:
    (A) Any of the twelve Federal Reserve Banks; or
    (B) Any exempt person as described in paragraphs (b)(1) to (3) of 
this section.
    (ii) Notwithstanding subparagraphs (b)(6)(i) and (b)(7)(i) of this 
section, and if the requirements under this section are otherwise 
satisfied, a bank may designate a non-listed business or a payroll 
customer, as described in paragraphs (b)(6) and (7) of this section, as 
an exempt person before the customer has maintained a transaction 
account at the bank for at least two months if the bank conducts and 
documents a risk-based assessment of the customer and forms a reasonable 
belief that the customer has a legitimate business purpose for 
conducting frequent transactions in currency.
    (d) Annual review. At least once each year, a bank must review the 
eligibility of an exempt person described in paragraphs (b)(4) to (7) of 
this section to determine whether such person remains eligible for an 
exemption. As part of its annual review, a bank must review the 
application of the monitoring system required to be maintained by 
paragraph (h)(2) of this section to each existing account of an exempt 
person described in paragraphs (b)(6) or (b)(7) of this section.
    (e) Operating rules--(1) General rule. Subject to the specific rules 
of this section, a bank must take such steps to assure itself that a 
person is an exempt person (within the meaning of the applicable 
provision of paragraph (b) of this section), to document the basis for 
its conclusions, and document its compliance, with the terms of this 
section, that a reasonable and prudent bank would take and document to 
protect itself from loan or other fraud or loss based on 
misidentification of a person's status, and in the case of the 
monitoring system requirement set forth in paragraph (h)(2) of this 
section, such steps that a reasonable and prudent bank would take and 
document to identify suspicious transactions as required by paragraph 
(h)(2) of this section.
    (2) Governmental departments and agencies. A bank may treat a person 
as a governmental department, agency, or entity if the name of such 
person reasonably indicates that it is described in paragraph (b)(2) or 
(b)(3) of this section, or if such person is known generally in the 
community to be a State, the District of Columbia, a tribal government, 
a Territory or Insular Possession of the United States, or a political 
subdivision or a wholly-owned agency or instrumentality of any of the 
foregoing. An entity generally exercises governmental authority on 
behalf of the United States, a State, or a political subdivision, for 
purposes of paragraph (b)(3) of this section, only if its authorities 
include one or more of the powers to tax, to exercise the authority of 
eminent domain, or to exercise police powers with respect to matters 
within its jurisdiction. Examples of entities that exercise governmental 
authority include, but are not limited to, the New Jersey Turnpike 
Authority and the Port Authority of New York and New Jersey.
    (3) Stock exchange listings. In determining whether a person is 
described in paragraph (b)(4) of this section, a bank may rely on any 
New York, American, or NASDAQ Stock Market listing published in a 
newspaper of general circulation, on any commonly accepted or published 
stock symbol guide, on any

[[Page 669]]

information contained in the Securities and Exchange Commission 
``EDGAR'' System, or on any information contained on an Internet site or 
sites maintained by the New York Stock Exchange, the American Stock 
Exchange, or the NASDAQ.
    (4) Listed company subsidiaries. In determining whether a person is 
described in paragraph (b)(5) of this section, a bank may rely upon:
    (i) Any reasonably authenticated corporate officer's certificate;
    (ii) Any reasonably authenticated photocopy of Internal Revenue 
Service Form 851 (Affiliation Schedule) or the equivalent thereof for 
the appropriate tax year; or
    (iii) A person's Annual Report or Form 10-K, as filed in each case 
with the Securities and Exchange Commission.
    (5) Aggregated accounts. In determining the qualification of a 
customer as a non-listed business or a payroll customer, a bank may 
treat all exemptible accounts of the customer as a single account. If a 
bank elects to treat all exemptible accounts of a customer as a single 
account, the bank must continue to treat such accounts consistently as a 
single account for purposes of determining the qualification of the 
customer as a non-listed business or payroll customer.
    (6) Affiliated banks. The designation required by paragraph (c) of 
this section may be made by a parent bank holding company or one of its 
bank subsidiaries on behalf of all bank subsidiaries of the holding 
company, so long as the designation lists each bank subsidiary to which 
the designation shall apply.
    (7) Sole proprietorships. A sole proprietorship may be treated as a 
non-listed business if it otherwise meets the requirements of paragraph 
(b)(6) of this section, as applicable. In addition, a sole 
proprietorship may be treated as a payroll customer if it otherwise 
meets the requirements of paragraph (b)(7) of this section, as 
applicable.
    (8) Ineligible businesses. A business engaged primarily in one or 
more of the following activities may not be treated as a non-listed 
business for purposes of this section: Serving as financial institutions 
or agents of financial institutions of any type; purchase or sale to 
customers of motor vehicles of any kind, vessels, aircraft, farm 
equipment or mobile homes; the practice of law, accountancy, or 
medicine; auctioning of goods; chartering or operation of ships, buses, 
or aircraft; gaming of any kind (other than licensed parimutuel betting 
at race tracks); investment advisory services or investment banking 
services; real estate brokerage; pawn brokerage; title insurance and 
real estate closing; trade union activities; and any other activities 
that may be specified by FinCEN. A business that engages in multiple 
business activities may be treated as a non-listed business so long as 
no more than 50% of its gross revenues are derived from one or more of 
the ineligible business activities listed in this paragraph (e)(8).
    (9) Exemptible accounts of a non-listed business or payroll 
customer. The exemptible accounts of a non-listed business or payroll 
customer include transaction accounts and money market deposit accounts. 
However, money market deposit accounts maintained other than in 
connection with a commercial enterprise are not exemptible accounts. A 
transaction account, for purposes of this section, is any account 
described in section 19(b)(1)(C) of the Federal Reserve Act, 12 U.S.C. 
461(b)(1)(C), and its implementing regulations (12 CFR part 204). A 
money market deposit account, for purposes of this section, is any 
interest-bearing account that is described as a money market deposit 
account in 12 CFR 204.2(d)(2).
    (10) Documentation. The records maintained by a bank to document its 
compliance with and administration of the rules of this section shall be 
maintained in accordance with the provisions of Sec. 1010.430.
    (f) Limitation on exemption. A transaction carried out by an exempt 
person as an agent for another person who is the beneficial owner of the 
funds that are the subject of a transaction in currency is not subject 
to the exemption from reporting contained in paragraph (a) of this 
section.
    (g) Limitation on liability. (1) No bank shall be subject to penalty 
under this chapter for failure to file a report required by Sec. 
1010.311 with respect to a transaction in currency by an exempt

[[Page 670]]

person with respect to which the requirements of this section have been 
satisfied, unless the bank:
    (i) Knowingly files false or incomplete information with respect to 
the transaction or the customer engaging in the transaction; or
    (ii) Has reason to believe that the customer does not meet the 
criteria established by this section for treatment of the transactor as 
an exempt person or that the transaction is not a transaction of the 
exempt person.
    (2) Subject to the specific terms of this section, and absent any 
specific knowledge of information indicating that a customer no longer 
meets the requirements of an exempt person, a bank satisfies the 
requirements of this section to the extent it continues to treat that 
customer as an exempt person until the completion of that customer's 
next required periodic review, which as required by paragraph (d) of 
this section for an exempt person described in paragraph (b)(4) to (7) 
of this section, shall occur no less than once each year.
    (3) A bank that files a report with respect to a currency 
transaction by an exempt person rather than treating such person as 
exempt shall remain subject, with respect to each such report, to the 
rules for filing reports, and the penalties for filing false or 
incomplete reports that are applicable to reporting of transactions in 
currency by persons other than exempt persons.
    (h) Obligations to file suspicious activity reports and maintain 
system for monitoring transactions in currency. (1) Nothing in this 
section relieves a bank of the obligation, or reduces in any way such 
bank's obligation, to file a report required by Sec. 1020.320 with 
respect to any transaction, including any transaction in currency that a 
bank knows, suspects, or has reason to suspect is a transaction or 
attempted transaction that is described in Sec. 1020.320(a)(2)(i), 
(ii), or (iii), or relieves a bank of any reporting or recordkeeping 
obligation imposed by this chapter (except the obligation to report 
transactions in currency pursuant to this chapter to the extent provided 
in this section). Thus, for example, a sharp increase from one year to 
the next in the gross total of currency transactions made by an exempt 
customer, or similarly anomalous transactions trends or patterns, may 
trigger the obligation of a bank under Sec. 1020.320.
    (2) Consistent with its annual review obligations under paragraph 
(d) of this section, a bank shall establish and maintain a monitoring 
system that is reasonably designed to detect, for each account of a non-
listed business or payroll customer, those transactions in currency 
involving such account that would require a bank to file a suspicious 
transaction report. The statement in the preceding sentence with respect 
to accounts of non-listed business and payroll customers does not limit 
the obligation of banks generally to take the steps necessary to satisfy 
the terms of paragraph (h)(1) of this section and Sec. 1020.320 with 
respect to all exempt persons.
    (i) Revocation. Without any action on the part of the Department of 
the Treasury and subject to the limitation on liability contained in 
paragraph (g)(2) of this section:
    (1) The status of an entity as an exempt person under paragraph 
(b)(4) of this section ceases once such entity ceases to be listed on 
the applicable stock exchange; and
    (2) The status of a subsidiary as an exempt person under paragraph 
(b)(5) of this section ceases once such subsidiary ceases to have at 
least 51 per cent of its common stock or analogous equity interest owned 
by a listed entity.

(Approved by the Office of Management and Budget under control number 
1506-0012)

[75 FR 65812, Oct. 26, 2010, as amended at 77 FR 33640, June 7, 2012]



Sec. 1020.320  Reports by banks of suspicious transactions.

    (a) General. (1) Every bank shall file with the Treasury Department, 
to the extent and in the manner required by this section, a report of 
any suspicious transaction relevant to a possible violation of law or 
regulation. A bank may also file with the Treasury Department by using 
the Suspicious Activity Report specified in paragraph (b)(1) of this 
section or otherwise, a report of any suspicious transaction that it 
believes is relevant to the possible violation of any law or regulation 
but

[[Page 671]]

whose reporting is not required by this section.
    (2) A transaction requires reporting under the terms of this section 
if it is conducted or attempted by, at, or through the bank, it involves 
or aggregates at least $5,000 in funds or other assets, and the bank 
knows, suspects, or has reason to suspect that:
    (i) The transaction involves funds derived from illegal activities 
or is intended or conducted in order to hide or disguise funds or assets 
derived from illegal activities (including, without limitation, the 
ownership, nature, source, location, or control of such funds or assets) 
as part of a plan to violate or evade any Federal law or regulation or 
to avoid any transaction reporting requirement under Federal law or 
regulation;
    (ii) The transaction is designed to evade any requirements of this 
chapter or of any other regulations promulgated under the Bank Secrecy 
Act; or
    (iii) The transaction has no business or apparent lawful purpose or 
is not the sort in which the particular customer would normally be 
expected to engage, and the bank knows of no reasonable explanation for 
the transaction after examining the available facts, including the 
background and possible purpose of the transaction.
    (b) Filing procedures--(1) What to file. A suspicious transaction 
shall be reported by completing a Suspicious Activity Report (``SAR''), 
and collecting and maintaining supporting documentation as required by 
paragraph (d) of this section.
    (2) Where to file. The SAR shall be filed with FinCEN in a central 
location, to be determined by FinCEN, as indicated in the instructions 
to the SAR.
    (3) When to file. A bank is required to file a SAR no later than 30 
calendar days after the date of initial detection by the bank of facts 
that may constitute a basis for filing a SAR. If no suspect was 
identified on the date of the detection of the incident requiring the 
filing, a bank may delay filing a SAR for an additional 30 calendar days 
to identify a suspect. In no case shall reporting be delayed more than 
60 calendar days after the date of initial detection of a reportable 
transaction. In situations involving violations that require immediate 
attention, such as, for example, ongoing money laundering schemes, the 
bank shall immediately notify, by telephone, an appropriate law 
enforcement authority in addition to filing timely a SAR.
    (c) Exceptions. A bank is not required to file a SAR for a robbery 
or burglary committed or attempted that is reported to appropriate law 
enforcement authorities, or for lost, missing, counterfeit, or stolen 
securities with respect to which the bank files a report pursuant to the 
reporting requirements of 17 CFR 240.17f-1.
    (d) Retention of records. A bank shall maintain a copy of any SAR 
filed and the original or business record equivalent of any supporting 
documentation for a period of five years from the date of filing the 
SAR. Supporting documentation shall be identified, and maintained by the 
bank as such, and shall be deemed to have been filed with the SAR. A 
bank shall make all supporting documentation available to FinCEN or any 
Federal, State, or local law enforcement agency, or any Federal 
regulatory authority that examines the bank for compliance with the Bank 
Secrecy Act, or any State regulatory authority administering a State law 
that requires the bank to comply with the Bank Secrecy Act or otherwise 
authorizes the State authority to ensure that the institution complies 
with the Bank Secrecy Act, upon request.
    (e) Confidentiality of SARs. A SAR, and any information that would 
reveal the existence of a SAR, are confidential and shall not be 
disclosed except as authorized in this paragraph (e). For purposes of 
this paragraph (e) only, a SAR shall include any suspicious activity 
report filed with FinCEN pursuant to any regulation in this chapter.
    (1) Prohibition on disclosures by banks--(i) General rule. No bank, 
and no director, officer, employee, or agent of any bank, shall disclose 
a SAR or any information that would reveal the existence of a SAR. Any 
bank, and any director, officer, employee, or agent of any bank that is 
subpoenaed or otherwise requested to disclose a SAR or any information 
that would reveal the existence of a SAR, shall decline to

[[Page 672]]

produce the SAR or such information, citing this section and 31 U.S.C. 
5318(g)(2)(A)(i), and shall notify FinCEN of any such request and the 
response thereto.
    (ii) Rules of Construction. Provided that no person involved in any 
reported suspicious transaction is notified that the transaction has 
been reported, this paragraph (e)(1) shall not be construed as 
prohibiting:
    (A) The disclosure by a bank, or any director, officer, employee, or 
agent of a bank, of:
    (1) A SAR, or any information that would reveal the existence of a 
SAR, to FinCEN or any Federal, State, or local law enforcement agency, 
or any Federal regulatory authority that examines the bank for 
compliance with the Bank Secrecy Act, or any State regulatory authority 
administering a State law that requires the bank to comply with the Bank 
Secrecy Act or otherwise authorizes the State authority to ensure that 
the bank complies with the Bank Secrecy Act; or
    (2) The underlying facts, transactions, and documents upon which a 
SAR is based, including but not limited to, disclosures:
    (i) To another financial institution, or any director, officer, 
employee, or agent of a financial institution, for the preparation of a 
joint SAR; or
    (ii) In connection with certain employment references or termination 
notices, to the full extent authorized in 31 U.S.C. 5318(g)(2)(B); or
    (B) The sharing by a bank, or any director, officer, employee, or 
agent of the bank, of a SAR, or any information that would reveal the 
existence of a SAR, within the bank's corporate organizational structure 
for purposes consistent with Title II of the Bank Secrecy Act as 
determined by regulation or in guidance.
    (2) Prohibition on disclosures by government authorities. A Federal, 
State, local, territorial, or Tribal government authority, or any 
director, officer, employee, or agent of any of the foregoing, shall not 
disclose a SAR, or any information that would reveal the existence of a 
SAR, except as necessary to fulfill official duties consistent with 
Title II of the Bank Secrecy Act. For purposes of this section, 
``official duties'' shall not include the disclosure of a SAR, or any 
information that would reveal the existence of a SAR, in response to a 
request for disclosure of non-public information or a request for use in 
a private legal proceeding, including a request pursuant to 31 CFR 1.11.
    (f) Limitation on liability. A bank, and any director, officer, 
employee, or agent of any bank, that makes a voluntary disclosure of any 
possible violation of law or regulation to a government agency or makes 
a disclosure pursuant to this section or any other authority, including 
a disclosure made jointly with another institution, shall be protected 
from liability to any person for any such disclosure, or for failure to 
provide notice of such disclosure to any person identified in the 
disclosure, or both, to the full extent provided by 31 U.S.C. 
5318(g)(3).
    (g) Compliance. Banks shall be examined by FinCEN or its delegatees 
for compliance with this section. Failure to satisfy the requirements of 
this section may be a violation of the Bank Secrecy Act and of this 
chapter. Such failure may also violate provisions of title 12 of the 
Code of Federal Regulations.

[75 FR 65812, Oct. 26, 2010, as amended at 76 FR 10517, Feb. 25, 2011]



          Subpart D_Records Required To Be Maintained By Banks



Sec. 1020.400  General.

    Banks are subject to the recordkeeping requirements set forth and 
cross referenced in this subpart. Banks should also refer to subpart D 
of part 1010 of this chapter for recordkeeping requirements contained in 
that subpart which apply to banks.



Sec. 1020.410  Records to be made and retained by banks.

    (a) Each agent, agency, branch, or office located within the United 
States of a bank is subject to the requirements of this paragraph (a) 
with respect to a funds transfer in the amount of $3,000 or more, and is 
required to retain either the original or a microfilm or other copy or 
reproduction of each of the following:

[[Page 673]]

    (1) Recordkeeping requirements. (i) For each payment order that it 
accepts as an originator's bank, a bank shall obtain and retain either 
the original or a microfilm, other copy, or electronic record of the 
following information relating to the payment order:
    (A) The name and address of the originator;
    (B) The amount of the payment order;
    (C) The execution date of the payment order;
    (D) Any payment instructions received from the originator with the 
payment order;
    (E) The identity of the beneficiary's bank; and
    (F) As many of the following items as are received with the payment 
order: \1\
---------------------------------------------------------------------------

    \1\ For funds transfers effected through the Federal Reserve's 
Fedwire funds transfer system, only one of the items is required to be 
retained, if received with the payment order, until such time as the 
bank that sends the order to the Federal Reserve Bank completes its 
conversion to the expanded Fedwire message format.
---------------------------------------------------------------------------

    (1) The name and address of the beneficiary;
    (2) The account number of the beneficiary; and
    (3) Any other specific identifier of the beneficiary.
    (ii) For each payment order that it accepts as an intermediary bank, 
a bank shall retain either the original or a microfilm, other copy, or 
electronic record of the payment order.
    (iii) For each payment order that it accepts as a beneficiary's 
bank, a bank shall retain either the original or a microfilm, other 
copy, or electronic record of the payment order.
    (2) Originators other than established customers. In the case of a 
payment order from an originator that is not an established customer, in 
addition to obtaining and retaining the information required in 
paragraph (a)(1)(i) of this section:
    (i) If the payment order is made in person, prior to acceptance the 
originator's bank shall verify the identity of the person placing the 
payment order. If it accepts the payment order, the originator's bank 
shall obtain and retain a record of the name and address, the type of 
identification reviewed, the number of the identification document 
(e.g., driver's license), as well as a record of the person's taxpayer 
identification number (e.g., social security or employer identification 
number) or, if none, alien identification number or passport number and 
country of issuance, or a notation in the record of the lack thereof. If 
the originator's bank has knowledge that the person placing the payment 
order is not the originator, the originator's bank shall obtain and 
retain a record of the originator's taxpayer identification number 
(e.g., social security or employer identification number) or, if none, 
alien identification number or passport number and country of issuance, 
if known by the person placing the order, or a notation in the record of 
the lack thereof.
    (ii) If the payment order accepted by the originator's bank is not 
made in person, the originator's bank shall obtain and retain a record 
of name and address of the person placing the payment order, as well as 
the person's taxpayer identification number (e.g., social security or 
employer identification number) or, if none, alien identification number 
or passport number and country of issuance, or a notation in the record 
of the lack thereof, and a copy or record of the method of payment 
(e.g., check or credit card transaction) for the funds transfer. If the 
originator's bank has knowledge that the person placing the payment 
order is not the originator, the originator's bank shall obtain and 
retain a record of the originator's taxpayer identification number 
(e.g., social security or employer identification number) or, if none, 
alien identification number or passport number and country of issuance, 
if known by the person placing the order, or a notation in the record of 
the lack thereof.
    (3) Beneficiaries other than established customers. For each payment 
order that it accepts as a beneficiary's bank for a beneficiary that is 
not an established customer, in addition to obtaining and retaining the 
information required in paragraph (a)(1)(iii) of this section:
    (i) If the proceeds are delivered in person to the beneficiary or 
its representative or agent, the beneficiary's bank shall verify the 
identity of the

[[Page 674]]

person receiving the proceeds and shall obtain and retain a record of 
the name and address, the type of identification reviewed, and the 
number of the identification document (e.g., driver's license), as well 
as a record of the person's taxpayer identification number (e.g., social 
security or employer identification number) or, if none, alien 
identification number or passport number and country of issuance, or a 
notation in the record of the lack thereof. If the beneficiary's bank 
has knowledge that the person receiving the proceeds is not the 
beneficiary, the beneficiary's bank shall obtain and retain a record of 
the beneficiary's name and address, as well as the beneficiary's 
taxpayer identification number (e.g., social security or employer 
identification number) or, if none, alien identification number or 
passport number and country of issuance, if known by the person 
receiving the proceeds, or a notation in the record of the lack thereof.
    (ii) If the proceeds are delivered other than in person, the 
beneficiary's bank shall retain a copy of the check or other instrument 
used to effect payment, or the information contained thereon, as well as 
the name and address of the person to which it was sent.
    (4) Retrievability. The information that an originator's bank must 
retain under paragraphs (a)(1)(i) and (a)(2) of this section shall be 
retrievable by the originator's bank by reference to the name of the 
originator. If the originator is an established customer of the 
originator's bank and has an account used for funds transfers, then the 
information also shall be retrievable by account number. The information 
that a beneficiary's bank must retain under paragraphs (a)(1)(iii) and 
(a)(3) of this section shall be retrievable by the beneficiary's bank by 
reference to the name of the beneficiary. If the beneficiary is an 
established customer of the beneficiary's bank and has an account used 
for funds transfers, then the information also shall be retrievable by 
account number. This information need not be retained in any particular 
manner, so long as the bank is able to retrieve the information required 
by this paragraph, either by accessing funds transfer records directly 
or through reference to some other record maintained by the bank.
    (5) Verification. Where verification is required under paragraphs 
(a)(2) and (a)(3) of this section, a bank shall verify a person's 
identity by examination of a document (other than a bank signature 
card), preferably one that contains the person's name, address, and 
photograph, that is normally acceptable by financial institutions as a 
means of identification when cashing checks for persons other than 
established customers. Verification of the identity of an individual who 
indicates that he or she is an alien or is not a resident of the United 
States may be made by passport, alien identification card, or other 
official document evidencing nationality or residence (e.g., a foreign 
driver's license with indication of home address).
    (6) Exceptions. The following funds transfers are not subject to the 
requirements of this section:
    (i) Funds transfers where the originator and beneficiary are any of 
the following:
    (A) A bank;
    (B) A wholly owned domestic subsidiary of a bank chartered in the 
United States;
    (C) A broker or dealer in securities;
    (D) A wholly owned domestic subsidiary of a broker or dealer in 
securities;
    (E) A futures commission merchant or an introducing broker in 
commodities;
    (F) A wholly owned domestic subsidiary of a futures commission 
merchant or an introducing broker in commodities;
    (G) The United States;
    (H) A state or local government;
    (I) A Federal, State or local government agency or instrumentality; 
or
    (J) A mutual fund; and
    (ii) Funds transfers where both the originator and the beneficiary 
are the same person and the originator's bank and the beneficiary's bank 
are the same bank.
    (b)(1) With respect to each certificate of deposit sold or redeemed 
after May 31, 1978, and before October 1, 2003, or each deposit or share 
account opened

[[Page 675]]

with a bank after June 30, 1972, and before October 1, 2003, a bank 
shall, within 30 days from the date such a transaction occurs or an 
account is opened, secure and maintain a record of the taxpayer 
identification number of the customer involved; or where the account or 
certificate is in the names of two or more persons, the bank shall 
secure the taxpayer identification number of a person having a financial 
interest in the certificate or account. In the event that a bank has 
been unable to secure, within the 30-day period specified, the required 
identification, it shall nevertheless not be deemed to be in violation 
of this section if it has made a reasonable effort to secure such 
identification, and it maintains a list containing the names, addresses, 
and account numbers of those persons from whom it has been unable to 
secure such identification, and makes the names, addresses, and account 
numbers of those persons available to the Secretary as directed by him. 
A bank acting as an agent for another person in the purchase or 
redemption of a certificate of deposit issued by another bank is 
responsible for obtaining and recording the required taxpayer 
identification, as well as for maintaining the records referred to in 
paragraphs (c)(11) and (12) of this section. The issuing bank can 
satisfy the recordkeeping requirement by recording the name and address 
of the agent together with a description of the instrument and the date 
of the transaction. Where a person is a non-resident alien, the bank 
shall also record the person's passport number or a description of some 
other government document used to verify his identity.
    (2) The 30-day period provided for in paragraph (b)(1) of this 
section shall be extended where the person opening the account has 
applied for a taxpayer identification or social security number on Form 
SS-4 or SS-5, until such time as the person maintaining the account has 
had a reasonable opportunity to secure such number and furnish it to the 
bank.
    (3) A taxpayer identification number required under paragraph (b)(1) 
of this section need not be secured for accounts or transactions with 
the following:
    (i) Agencies and instrumentalities of Federal, State, local or 
foreign governments;
    (ii) Judges, public officials, or clerks of courts of record as 
custodians of funds in controversy or under the control of the court;
    (iii) Aliens who are ambassadors, ministers, career diplomatic or 
consular officers, or naval, military or other attach[eacute]s of 
foreign embassies and legations, and for the members of their immediate 
families;
    (iv) Aliens who are accredited representatives of international 
organizations which are entitled to enjoy privileges, exemptions and 
immunities as an international organization under the International 
Organization Immunities Act of December 29, 1945 (22 U.S.C. 288), and 
the members of their immediate families;
    (v) Aliens temporarily residing in the United States for a period 
not to exceed 180 days;
    (vi) Aliens not engaged in a trade or business in the United States 
who are attending a recognized college or university or any training 
program, supervised or conducted by any agency of the Federal 
Government;
    (vii) Unincorporated subordinate units of a tax exempt central 
organization which are covered by a group exemption letter,
    (viii) A person under 18 years of age with respect to an account 
opened as a part of a school thrift savings program, provided the annual 
interest is less than $10;
    (ix) A person opening a Christmas club, vacation club and similar 
installment savings programs, provided the annual interest is less than 
$10; and
    (x) Non-resident aliens who are not engaged in a trade or business 
in the United States.
    (4) In instances described in paragraphs (b)(3)(viii) and (ix) of 
this section, the bank shall, within 15 days following the end of any 
calendar year in which the interest accrued in that year is $10 or more 
use its best effort to secure and maintain the appropriate taxpayer 
identification number or application form therefor.
    (5) The rules and regulations issued by the Internal Revenue Service 
under section 6109 of the Internal Revenue

[[Page 676]]

Code of 1954 shall determine what constitutes a taxpayer identification 
number and whose number shall be obtained in the case of an account 
maintained by one or more persons.
    (c) Each bank shall, in addition, retain either the original or a 
microfilm or other copy or reproduction of each of the following:
    (1) Each document granting signature authority over each deposit or 
share account, including any notations, if such are normally made, of 
specific identifying information verifying the identity of the signer 
(such as a driver's license number or credit card number);
    (2) Each statement, ledger card or other record on each deposit or 
share account, showing each transaction in, or with respect to, that 
account;
    (3) Each check, clean draft, or money order drawn on the bank or 
issued and payable by it, except those drawn for $100 or less or those 
drawn on accounts which can be expected to have drawn on them an average 
of at least 100 checks per month over the calendar year or on each 
occasion on which such checks are issued, and which are:
    (i) Dividend checks,
    (ii) Payroll checks,
    (iii) Employee benefit checks,
    (iv) Insurance claim checks,
    (v) Medical benefit checks,
    (vi) Checks drawn on government agency accounts,
    (vii) Checks drawn by brokers or dealers in securities,
    (viii) Checks drawn on fiduciary accounts,
    (ix) Checks drawn on other financial institutions, or
    (x) Pension or annuity checks;
    (4) Each item in excess of $100 (other than bank charges or periodic 
charges made pursuant to agreement with the customer), comprising a 
debit to a customer's deposit or share account, not required to be kept, 
and not specifically exempted, under paragraph (c)(3) of this section;
    (5) Each item, including checks, drafts, or transfers of credit, of 
more than $10,000 remitted or transferred to a person, account or place 
outside the United States;
    (6) A record of each remittance or transfer of funds, or of 
currency, other monetary instruments, checks, investment securities, or 
credit, of more than $10,000 to a person, account or place outside the 
United States;
    (7) Each check or draft in an amount in excess of $10,000 drawn on 
or issued by a foreign bank which the domestic bank has paid or 
presented to a nonbank drawee for payment;
    (8) Each item, including checks, drafts or transfers of credit, of 
more than $10,000 received directly and not through a domestic financial 
institution, by letter, cable or any other means, from a bank, broker or 
dealer in foreign exchange outside the United States;
    (9) A record of each receipt of currency, other monetary 
instruments, investment securities or checks, and of each transfer of 
funds or credit, of more than $10,000 received on any one occasion 
directly and not through a domestic financial institution, from a bank, 
broker or dealer in foreign exchange outside the United States; and
    (10) Records prepared or received by a bank in the ordinary course 
of business, which would be needed to reconstruct a transaction account 
and to trace a check in excess of $100 deposited in such account through 
its domestic processing system or to supply a description of a deposited 
check in excess of $100. This subparagraph shall be applicable only with 
respect to demand deposits.
    (11) A record containing the name, address, and taxpayer 
identification number as determined under section 6109 of the Internal 
Revenue Code of 1986, if available, of the purchaser of each certificate 
of deposit, as well as a description of the instrument, a notation of 
the method of payment, and the date of the transaction.
    (12) A record containing the name, address and taxpayer 
identification number as determined under section 6109 of the Internal 
Revenue Code of 1986, if available, of any person presenting a 
certificate of deposit for payment, as well as a description of the 
instrument and the date of the transaction.
    (13) Each deposit slip or credit ticket reflecting a transaction in 
excess of $100 or the equivalent record for direct deposit or other wire 
transfer deposit

[[Page 677]]

transactions. The slip or ticket shall record the amount of any currency 
involved.



    Subpart E_Special Information Sharing Procedures To Deter Money 
                    Laundering and Terrorist Activity



Sec. 1020.500  General.

    Banks are subject to the special information sharing procedures to 
deter money laundering and terrorist activity requirements set forth and 
cross referenced in this subpart. Banks should also refer to subpart E 
of part 1010 of this chapter for special information sharing procedures 
to deter money laundering and terrorist activity contained in that 
subpart which apply to banks.



Sec. 1020.520  Special information sharing procedures to deter money 
laundering and terrorist activity for banks.

    (a) Refer to Sec. 1010.520 of this chapter.
    (b) [Reserved]



Sec. 1020.530  [Reserved]



Sec. 1020.540  Voluntary information sharing among financial institutions.

    (a) Refer to Sec. 1010.540 of this chapter.
    (b) [Reserved]



  Subpart F_Special Standards of Diligence; Prohibitions; and Special 
                                Measures



Sec. 1020.600  General.

    Banks are subject to the special standards of diligence; 
prohibitions; and special measures requirements set forth and cross 
referenced in this subpart. Banks should also refer to subpart F of part 
1010 of this chapter for special standards of diligence; prohibitions; 
and special measures contained in that subpart which apply to banks.



Sec. 1020.610  Due diligence programs for correspondent accounts for
foreign financial institutions.

    (a) Refer to Sec. 1010.610 of this chapter.
    (b) [Reserved]



Sec. 1020.620  Due diligence programs for private banking accounts.

    (a) Refer to Sec. 1010.620 of this chapter.
    (b) [Reserved]



Sec. 1020.630  Prohibition on correspondent accounts for foreign shell
banks; records concerning owners of foreign banks and agents for service

of legal process.

    (a) Refer to Sec. 1010.630 of this chapter.
    (b) [Reserved]



Sec. 1020.640  [Reserved]



Sec. 1020.670  Summons or subpoena of foreign bank records; termination
of correspondent relationship.

    (a) Refer to Sec. 1010.670 of this chapter.
    (b) [Reserved]



PART 1021_RULES FOR CASINOS AND CARD CLUBS--Table of Contents



                          Subpart A_Definitions

Sec.
1021.100 Definitions.

                           Subpart B_Programs

1021.200 General.
1021.210 Anti-money laundering program requirements for casinos.

     Subpart C_Reports Required To Be Made By Casinos and Card Clubs

1021.300 General.
1021.310 Reports of transactions in currency.
1021.311 Filing obligations.
1021.312 Identification required.
1021.313 Aggregation.
1021.314 Structured transactions.
1021.315 Exemptions.
1021.320 Reports by casinos of suspicious transactions.
1021.330 Exceptions to the reporting requirements of 31 U.S.C. 5331.

  Subpart D_Records Required To Be Maintained By Casinos and Card Clubs

1021.400 General.
1021.410 Additional records to be made and retained by casinos.

    Subpart E_Special Information Sharing Procedures To Deter Money 
      Laundering and Terrorist Activity for Casinos and Card Clubs

1021.500 General.

[[Page 678]]

1021.520 Special information sharing procedures to deter money 
          laundering and terrorist activity for casinos and card clubs.
1021.530 [Reserved]
1021.540 Voluntary information sharing among financial institutions.

  Subpart F_Special Standards of Diligence; Prohibitions, and Special 
                   Measures for Casinos and Card Clubs

1021.600 General.
1021.610 Due diligence programs for correspondent accounts for foreign 
          financial institutions.
1021.620 Due diligence programs for private banking accounts.
1021.630 Prohibition on correspondent accounts for foreign shell banks; 
          records concerning owners of foreign banks and agents for 
          service of legal process.
1021.640 [Reserved]
1021.670 Summons or subpoena of foreign bank records; Termination of 
          correspondent relationship.

    Authority: 12 U.S.C. 1829b and 1951-1959; 31 U.S.C. 5311-5314 and 
5316-5332; title III, sec. 314, Pub. L. 107-56, 115 Stat. 307.

    Source: 75 FR 65812, Oct. 26, 2010, unless otherwise noted.



                          Subpart A_Definitions



Sec. 1021.100  Definitions.

    Refer to Sec. 1010.100 of this chapter for general definitions not 
noted herein. To the extent there is a differing definition in Sec. 
1010.100 of this chapter, the definition in this section is what applies 
to part 1021. Unless otherwise indicated, for purposes of this part:
    (a) Business year means the annual accounting period, such as a 
calendar or fiscal year, by which a casino maintains its books and 
records for purposes of subtitle A of title 26 of the United States 
Code.
    (b) Casino account number means any and all numbers by which a 
casino identifies a customer.
    (c) Customer includes every person which is involved in a 
transaction to which this chapter applies with a casino, whether or not 
that person participates, or intends to participate, in the gaming 
activities offered by that casino.
    (d) Gaming day means the normal business day of a casino. For a 
casino that offers 24 hour gaming, the term means that 24 hour period by 
which the casino keeps its books and records for business, accounting, 
and tax purposes. For purposes of the regulations contained in this 
chapter, each casino may have only one gaming day, common to all of its 
divisions.
    (e) Machine-readable means capable of being read by an automated 
data processing system.



                           Subpart B_Programs



Sec. 1021.200  General.

    Casinos and card clubs are subject to the program requirements set 
forth and cross referenced in this subpart. Casinos and card clubs 
should also refer to subpart B of part 1010 of this chapter for program 
requirements contained in that subpart which apply to casinos and card 
clubs.



Sec. 1021.210  Anti-money laundering program requirements for casinos.

    (a) Requirements for casinos. A casino shall be deemed to satisfy 
the requirements of 31 U.S.C. 5318(h)(1) if it implements and maintains 
a compliance program described in paragraph (b) of this section.
    (b) Compliance programs. (1) Each casino shall develop and implement 
a written program reasonably designed to assure and monitor compliance 
with the requirements set forth in 31 U.S.C. chapter 53, subchapter II 
and the regulations contained in this chapter.
    (2) At a minimum, each compliance program shall provide for:
    (i) A system of internal controls to assure ongoing compliance;
    (ii) Internal and/or external independent testing for compliance. 
The scope and frequency of the testing shall be commensurate with the 
money laundering and terrorist financing risks posed by the products and 
services provided by the casino;
    (iii) Training of casino personnel, including training in the 
identification of unusual or suspicious transactions, to the extent that 
the reporting of such transactions is required by this chapter, by other 
applicable law or regulation, or by the casino's own administrative and 
compliance policies;
    (iv) An individual or individuals to assure day-to-day compliance;

[[Page 679]]

    (v) Procedures for using all available information to determine:
    (A) When required by this chapter, the name, address, social 
security number, and other information, and verification of the same, of 
a person;
    (B) The occurrence of any transactions or patterns of transactions 
required to be reported pursuant to Sec. 1021.320;
    (C) Whether any record as described in subpart D of part 1010 of 
this chapter or subpart D of this part 1021 must be made and retained; 
and
    (vi) For casinos that have automated data processing systems, the 
use of automated programs to aid in assuring compliance.



     Subpart C_Reports Required To Be Made By Casinos and Card Clubs



Sec. 1021.300  General.

    Casinos and card clubs are subject to the reporting requirements set 
forth and cross referenced in this subpart. Casinos and card clubs 
should also refer to subpart C of part 1010 of this chapter for 
reporting requirements contained in that subpart which apply to casinos 
and card clubs.



Sec. 1021.310  Reports of transactions in currency.

    The reports of transactions in currency requirements for casinos are 
located in subpart C of part 1010 of this chapter and this subpart.



Sec. 1021.311  Filing obligations.

    Each casino shall file a report of each transaction in currency, 
involving either cash in or cash out, of more than $10,000.
    (a) Transactions in currency involving cash in include, but are not 
limited to:
    (1) Purchases of chips, tokens, and other gaming instruments;
    (2) Front money deposits;
    (3) Safekeeping deposits;
    (4) Payments on any form of credit, including markers and counter 
checks;
    (5) Bets of currency, including money plays;
    (6) Currency received by a casino for transmittal of funds through 
wire transfer for a customer;
    (7) Purchases of a casino's check;
    (8) Exchanges of currency for currency, including foreign currency; 
and
    (9) Bills inserted into electronic gaming devices.
    (b) Transactions in currency involving cash out include, but are not 
limited to:
    (1) Redemptions of chips, tokens, tickets, and other gaming 
instruments;
    (2) Front money withdrawals;
    (3) Safekeeping withdrawals;
    (4) Advances on any form of credit, including markers and counter 
checks;
    (5) Payments on bets;
    (6) Payments by a casino to a customer based on receipt of funds 
through wire transfers;
    (7) Cashing of checks or other negotiable instruments;
    (8) Exchanges of currency for currency, including foreign currency;
    (9) Travel and complimentary expenses and gaming incentives; and
    (10) Payment for tournament, contests, and other promotions.
    (c) Other provisions of this chapter notwithstanding, casinos are 
exempted from the reporting obligations found in this section and Sec. 
1021.313 for the following transactions in currency or currency 
transactions:
    (1) Transactions between a casino and a dealer in foreign exchange, 
or between a casino and a check casher, as those terms are defined in 
Sec. 1010.100(ff) of this chapter, so long as such transactions are 
conducted pursuant to a contractual or other arrangement with a casino 
covering the financial services in paragraphs (a)(8), (b)(7), and (b)(8) 
of this section;
    (2) Cash out transactions to the extent the currency is won in a 
money play and is the same currency the customer wagered in the money 
play, or cash in transactions to the extent the currency is the same 
currency the customer previously wagered in a money play on the same 
table game without leaving the table;
    (3) Bills inserted into electronic gaming devices in multiple 
transactions (unless a casino has knowledge pursuant to Sec. 1021.313 
in which case this exemption would not apply); and

[[Page 680]]

    (4) Jackpots from slot machines or video lottery terminals.

[75 FR 65812, Oct. 26, 2010, as amended at 76 FR 43597, July 21, 2011]



Sec. 1021.312  Identification required.

    Refer to Sec. 1010.312 of this chapter for identification 
requirements for reports of transaction in currency filed by casinos and 
card clubs.



Sec. 1021.313  Aggregation.

    In the case of a casino, multiple currency transactions shall be 
treated as a single transaction if the casino has knowledge that they 
are by or on behalf of any person and result in either cash in or cash 
out totaling more than $10,000 during any gaming day. For purposes of 
this section, a casino shall be deemed to have the knowledge described 
in the preceding sentence, if: Any sole proprietor, partner, officer, 
director, or employee of the casino, acting within the scope of his or 
her employment, has knowledge that such multiple currency transactions 
have occurred, including knowledge from examining the books, records, 
logs, information retained on magnetic disk, tape or other machine-
readable media, or in any manual system, and similar documents and 
information, which the casino maintains pursuant to any law or 
regulation or within the ordinary course of its business, and which 
contain information that such multiple currency transactions have 
occurred.



Sec. 1021.314  Structured transactions.

    Refer to Sec. 1010.314 of this chapter for rules regarding 
structured transactions for casinos.



Sec. 1021.315  Exemptions.

    Refer to Sec. 1010.315 of this chapter for exemptions from the 
obligation to file reports of transactions in currency for casinos.



Sec. 1021.320  Reports by casinos of suspicious transactions.

    (a) General. (1) Every casino shall file with FinCEN, to the extent 
and in the manner required by this section, a report of any suspicious 
transaction relevant to a possible violation of law or regulation. A 
casino may also file with FinCEN, by using the form specified in 
paragraph (b)(1) of this section, or otherwise, a report of any 
suspicious transaction that it believes is relevant to the possible 
violation of any law or regulation but whose reporting is not required 
by this section.
    (2) A transaction requires reporting under the terms of this section 
if it is conducted or attempted by, at, or through a casino, and 
involves or aggregates at least $5,000 in funds or other assets, and the 
casino knows, suspects, or has reason to suspect that the transaction 
(or a pattern of transactions of which the transaction is a part):
    (i) Involves funds derived from illegal activity or is intended or 
conducted in order to hide or disguise funds or assets derived from 
illegal activity (including, without limitation, the ownership, nature, 
source, location, or control of such funds or assets) as part of a plan 
to violate or evade any Federal law or regulation or to avoid any 
transaction reporting requirement under Federal law or regulation;
    (ii) Is designed, whether through structuring or other means, to 
evade any requirements of this chapter or of any other regulations 
promulgated under the Bank Secrecy Act;
    (iii) Has no business or apparent lawful purpose or is not the sort 
in which the particular customer would normally be expected to engage, 
and the casino knows of no reasonable explanation for the transaction 
after examining the available facts, including the background and 
possible purpose of the transaction; or
    (iv) Involves use of the casino to facilitate criminal activity.
    (b) Filing procedures--(1) What to file. A suspicious transaction 
shall be reported by completing a Suspicious Activity Report by Casinos 
(``SARC''), and collecting and maintaining supporting documentation as 
required by paragraph (d) of this section.
    (2) Where to file. The SARC shall be filed with FinCEN in a central 
location, to be determined by FinCEN, as indicated in the instructions 
to the SARC.
    (3) When to file. A SARC shall be filed no later than 30 calendar 
days after the

[[Page 681]]

date of the initial detection by the casino of facts that may constitute 
a basis for filing a SARC under this section. If no suspect is 
identified on the date of such initial detection, a casino may delay 
filing a SARC for an additional 30 calendar days to identify a suspect, 
but in no case shall reporting be delayed more than 60 calendar days 
after the date of such initial detection. In situations involving 
violations that require immediate attention, such as ongoing money 
laundering schemes, the casino shall immediately notify by telephone an 
appropriate law enforcement authority in addition to filing timely a 
SARC. Casinos wishing voluntarily to report suspicious transactions that 
may relate to terrorist activity may call FinCEN's Financial 
Institutions Hotline at 1-866-556-3974 in addition to filing timely a 
SARC if required by this section.
    (c) Exceptions. A casino is not required to file a SARC for a 
robbery or burglary committed or attempted that is reported to 
appropriate law enforcement authorities.
    (d) Retention of records. A casino shall maintain a copy of any SARC 
filed and the original or business record equivalent of any supporting 
documentation for a period of five years from the date of filing the 
SARC. Supporting documentation shall be identified as such and 
maintained by the casino, and shall be deemed to have been filed with 
the SARC. A casino shall make all supporting documentation available to 
FinCEN or any Federal, State, or local law enforcement agency, or any 
Federal regulatory authority that examines the casino for compliance 
with the Bank Secrecy Act, or any State regulatory authority 
administering a State law that requires the casino to comply with the 
Bank Secrecy Act or otherwise authorizes the State authority to ensure 
that the casino complies with the Bank Secrecy Act, or any tribal 
regulatory authority administering a tribal law that requires the casino 
to comply with the Bank Secrecy Act or otherwise authorizes the tribal 
regulatory authority to ensure that the casino complies with the Bank 
Secrecy Act, upon request.
    (e) Confidentiality of SARs. A SAR, and any information that would 
reveal the existence of a SAR, are confidential and shall not be 
disclosed except as authorized in this paragraph (e). For purposes of 
this paragraph (e) only, a SAR shall include any suspicious activity 
report filed with FinCEN pursuant to any regulation in this chapter.
    (1) Prohibition on disclosures by casinos--(i) General rule. No 
casino, and no director, officer, employee, or agent of any casino, 
shall disclose a SAR or any information that would reveal the existence 
of a SAR. Any casino, and any director, officer, employee, or agent of 
any casino that is subpoenaed or otherwise requested to disclose a SAR 
or any information that would reveal the existence of a SAR, shall 
decline to produce the SAR or such information, citing this section and 
31 U.S.C. 5318(g)(2)(A)(i), and shall notify FinCEN of any such request 
and the response thereto.
    (ii) Rules of Construction. Provided that no person involved in any 
reported suspicious transaction is notified that the transaction has 
been reported, this paragraph (e)(1) shall not be construed as 
prohibiting:
    (A) The disclosure by a casino, or any director, officer, employee, 
or agent of a casino, of:
    (1) A SAR, or any information that would reveal the existence of a 
SAR, to FinCEN or any Federal, State, or local law enforcement agency, 
or any Federal regulatory authority that examines the casino for 
compliance with the Bank Secrecy Act, or any State regulatory authority 
administering a State law that requires the casino to comply with the 
Bank Secrecy Act or otherwise authorizes the State authority to ensure 
that the casino complies with the Bank Secrecy Act, or any tribal 
regulatory authority administering a tribal law that requires the casino 
to comply with the Bank Secrecy Act or otherwise authorizes the tribal 
regulatory authority to ensure that casino complies with the Bank 
Secrecy Act; or
    (2) The underlying facts, transactions, and documents upon which a 
SAR is based, including but not limited

[[Page 682]]

to, disclosures to another financial institution, or any director, 
officer, employee, or agent of a financial institution, for the 
preparation of a joint SAR.
    (B) The sharing by a casino, or any director, officer, employee, or 
agent of the casino, of a SAR, or any information that would reveal the 
existence of a SAR, within the casino's corporate organizational 
structure for purposes consistent with Title II of the Bank Secrecy Act 
as determined by regulation or in guidance.
    (2) Prohibition on disclosures by government authorities. A Federal, 
State, local, territorial, or Tribal government authority, or any 
director, officer, employee, or agent of any of the foregoing, shall not 
disclose a SAR, or any information that would reveal the existence of a 
SAR, except as necessary to fulfill official duties consistent with 
Title II of the Bank Secrecy Act (BSA). For purposes of this section, 
``official duties'' shall not include the disclosure of a SAR, or any 
information that would reveal the existence of a SAR, in response to a 
request for disclosure of non-public information or a request for use in 
a private legal proceeding, including a request pursuant to 31 CFR 1.11.
    (f) Limitation on liability. A casino, and any director, officer, 
employee, or agent of any casino, that makes a voluntary disclosure of 
any possible violation of law or regulation to a government agency or 
makes a disclosure pursuant to this section or any other authority, 
including a disclosure made jointly with another institution, shall be 
protected from liability to any person for any such disclosure, or for 
failure to provide notice of such disclosure to any person identified in 
the disclosure, or both, to the full extent provided by 31 U.S.C. 
5318(g)(3).
    (g) Compliance. Casinos shall be examined by FinCEN or its 
delegatees for compliance with this section. Failure to satisfy the 
requirements of this section may be a violation of the Bank Secrecy Act 
and of this chapter.
    (h) Applicability date. This section applies to transactions 
occurring after March 25, 2003.

[75 FR 65812, Oct. 26, 2010, as amended at 76 FR 10517, Feb. 25, 2011]



Sec. 1021.330  Exceptions to the reporting requirements of 31 U.S.C. 5331.

    (a) Receipt of currency by certain casinos having gross annual 
gaming revenue in excess of $1,000,000--In general. If a casino receives 
currency in excess of $10,000 and is required to report the receipt of 
such currency directly to the Treasury Department under Sec. 1010.306, 
Sec. 1021.311, or Sec. 1021.313 and is subject to the recordkeeping 
requirements of Sec. 1021.410, then the casino is not required to make 
a report with respect to the receipt of such currency under 31 U.S.C. 
5331 and this section.
    (b) Casinos exempt under Sec. 1010.970(c). Pursuant to Sec. 
1010.970, the Secretary may exempt from the reporting and recordkeeping 
requirements under Sec. 1010.306, Sec. 1021.311, Sec. 1021.313 or 
Sec. 1021.410 casinos in any state whose regulatory system 
substantially meets the reporting and recordkeeping requirements of this 
chapter. Such casinos shall not be required to report receipt of 
currency under 31 U.S.C. 5331 and this section.
    (c) Reporting of currency received in a non-gaming business. Non-
gaming businesses (such as shops, restaurants, entertainment, and 
hotels) at casino hotels and resorts are separate trades or businesses 
in which the receipt of currency in excess of $10,000 is reportable 
under section 5331 and these regulations. Thus, a casino exempt under 
paragraph (a) or (b) of this section must report with respect to 
currency in excess of $10,000 received in its non-gaming businesses.
    (d) Example. The following example illustrates the application of 
the rules in paragraphs (a) and (c) of this section:

    Example. A and B are casinos having gross annual gaming revenue in 
excess of $1,000,000. C is a casino with gross annual gaming revenue of 
less than $1,000,000. Casino A receives $15,000 in currency from a 
customer with respect to a gaming transaction which the casino reports 
to the Treasury Department under Sec. Sec. 1010.306, 1021.311, and 
1021.313. Casino B receives $15,000 in currency from a customer in 
payment for accommodations provided to that customer at Casino B's 
hotel. Casino C receives $15,000 in currency from a customer with 
respect to a gaming transaction. Casino A is not required to report the 
transaction under 31 U.S.C. 5331 or this section because the exception 
for certain casinos provided in paragraph (a) of this

[[Page 683]]

section (``the casino exception'') applies. Casino B is required to 
report under 31 U.S.C. 5331 and this section because the casino 
exception does not apply to the receipt of currency from a nongaming 
activity. Casino C is required to report under 31 U.S.C. 5331 and this 
section because the casino exception does not apply to casinos having 
gross annual gaming revenue of $1,000,000 or less which do not have to 
report to the Treasury Department under Sec. Sec. 1010.306, 1021.311, 
and 1021.313.



  Subpart D_Records Required To Be Maintained By Casinos and Card Clubs



Sec. 1021.400  General.

    Casinos and card clubs are subject to the recordkeeping requirements 
set forth and cross referenced in this subpart. Casinos and card clubs 
should also refer to subpart D of part 1010 of this chapter for 
recordkeeping requirements contained in that subpart which apply to 
casinos and card clubs.



Sec. 1021.410  Additional records to be made and retained by casinos.

    (a) With respect to each deposit of funds, account opened or line of 
credit extended after the effective date of these regulations, a casino 
shall, at the time the funds are deposited, the account is opened or 
credit is extended, secure and maintain a record of the name, permanent 
address, and social security number of the person involved. Where the 
deposit, account or credit is in the names of two or more persons, the 
casino shall secure the name, permanent address, and social security 
number of each person having a financial interest in the deposit, 
account or line of credit. The name and address of such person shall be 
verified by the casino at the time the deposit is made, account opened, 
or credit extended. The verification shall be made by examination of a 
document of the type described in Sec. 1010.312 of this chapter, and 
the specific identifying information shall be recorded in the manner 
described in Sec. 1010.312 of this chapter. In the event that a casino 
has been unable to secure the required social security number, it shall 
not be deemed to be in violation of this section if it has made a 
reasonable effort to secure such number and it maintains a list 
containing the names and permanent addresses of those persons from who 
it has been unable to obtain social security numbers and makes the names 
and addresses of those persons available to the Secretary upon request. 
Where a person is a nonresident alien, the casino shall also record the 
person's passport number or a description of some other government 
document used to verify his identity.
    (b) In addition, each casino shall retain either the original or a 
microfilm or other copy or reproduction of each of the following:
    (1) A record of each receipt (including but not limited to funds for 
safekeeping or front money) of funds by the casino for the account 
(credit or deposit) of any person. The record shall include the name, 
permanent address and social security number of the person from whom the 
funds were received, as well as the date and amount of the funds 
received. If the person from whom the funds were received is a non-
resident alien, the person's passport number or a description of some 
other government document used to verify the person's identity shall be 
obtained and recorded;
    (2) A record of each bookkeeping entry comprising a debit or credit 
to a customer's deposit account or credit account with the casino;
    (3) Each statement, ledger card or other record of each deposit 
account or credit account with the casino, showing each transaction 
(including deposits, receipts, withdrawals, disbursements or transfers) 
in or with respect to, a customer's deposit account or credit account 
with the casino;
    (4) A record of each extension of credit in excess of $2,500, the 
terms and conditions of such extension of credit, and repayments. The 
record shall include the customer's name, permanent address, social 
security number, and the date and amount of the transaction (including 
repayments). If the customer or person for whom the credit extended is a 
non-resident alien, his passport number or description of some other 
government document used to verify his identity shall be obtained and 
recorded;

[[Page 684]]

    (5) A record of each advice, request or instruction received or 
given by the casino for itself or another person with respect to a 
transaction involving a person, account or place outside the United 
States (including but not limited to communications by wire, letter, or 
telephone). If the transfer outside the United States is on behalf of a 
third party, the record shall include the third party's name, permanent 
address, social security number, signature, and the date and amount of 
the transaction. If the transfer is received from outside the United 
States on behalf of a third party, the record shall include the third 
party's name, permanent address, social security number, signature, and 
the date and amount of the transaction. If the person for whom the 
transaction is being made is a non-resident alien the record shall also 
include the person's name, his passport number or a description of some 
other government document used to verify his identity;
    (6) Records prepared or received by the casino in the ordinary 
course of business which would be needed to reconstruct a person's 
deposit account or credit account with the casino or to trace a check 
deposited with the casino through the casino's records to the bank of 
deposit;
    (7) All records, documents or manuals required to be maintained by a 
casino under state and local laws or regulations, regulations of any 
governing Indian tribe or tribal government, or terms of (or any 
regulations issued under) any Tribal-State compacts entered into 
pursuant to the Indian Gaming Regulatory Act, with respect to the casino 
in question.
    (8) All records which are prepared or used by a casino to monitor a 
customer's gaming activity.
    (9)(i) A separate record containing a list of each transaction 
between the casino and its customers involving the following types of 
instruments having a face value of $3,000 or more:
    (A) Personal checks (excluding instruments which evidence credit 
granted by a casino strictly for gaming, such as markers);
    (B) Business checks (including casino checks);
    (C) Official bank checks;
    (D) Cashier's checks;
    (E) Third-party checks;
    (F) Promissory notes;
    (G) Traveler's checks; and
    (H) Money orders.
    (ii) The list will contain the time, date, and amount of the 
transaction; the name and permanent address of the customer; the type of 
instrument; the name of the drawee or issuer of the instrument; all 
reference numbers (e.g., casino account number, personal check number, 
etc.); and the name or casino license number of the casino employee who 
conducted the transaction. Applicable transactions will be placed on the 
list in the chronological order in which they occur.
    (10) A copy of the compliance program described in Sec. 
1021.210(b).
    (11) In the case of card clubs only, records of all currency 
transactions by customers, including without limitation, records in the 
form of currency transaction logs and multiple currency transaction 
logs, and records of all activity at cages or similar facilities, 
including, without limitation, cage control logs.
    (c)(1) Casinos which input, store, or retain, in whole or in part, 
for any period of time, any record required to be maintained by Sec. 
1010.410 of this chapter or this section on computer disk, tape, or 
other machine-readable media shall retain the same on computer disk, 
tape, or machine-readable media.
    (2) All indexes, books, programs, record layouts, manuals, formats, 
instructions, file descriptions, and similar materials which would 
enable a person readily to access and review the records that are 
described in Sec. 1010.410 of this chapter and this section and that 
are input, stored, or retained on computer disk, tape, or other machine-
readable media shall be retained for the period of time such records are 
required to be retained.

[[Page 685]]



    Subpart E_Special Information Sharing Procedures To Deter Money 
      Laundering and Terrorist Activity for Casinos and Card Clubs



Sec. 1021.500  General.

    Casinos and card clubs are subject to the special information 
sharing procedures to deter money laundering and terrorist activity 
requirements set forth and cross referenced in this subpart. Casinos and 
card clubs should also refer to subpart E of part 1010 of this Chapter 
for special information sharing procedures to deter money laundering and 
terrorist activity contained in that subpart which apply to casinos and 
card clubs.



Sec. 1021.520  Special information sharing procedures to deter money
laundering and terrorist activity for casinos and card clubs.

    (a) Refer to Sec. 1010.520 of this chapter.
    (b) [Reserved]



Sec. 1021.530  [Reserved]



Sec. 1021.540  Voluntary information sharing among financial institutions.

    (a) Refer to Sec. 1010.540 of this Chapter.
    (b) [Reserved]



  Subpart F_Special Standards of Diligence; Prohibitions; and Special 
                   Measures for Casinos and Card Clubs



Sec. 1021.600  General.

    Casinos and card clubs are subject to the special standards of 
diligence; prohibitions; and special measures requirements set forth and 
cross referenced in this subpart. Casinos and card clubs should also 
refer to subpart F of part 1010 of this chapter for special standards of 
diligence; prohibitions; and special measures contained in that subpart 
which apply to casinos and card clubs.



Sec. 1021.610  Due diligence programs for correspondent accounts for
foreign financial institutions.

    (a) Refer to Sec. 1010.610 of this chapter.
    (b) [Reserved]



Sec. 1021.620  Due diligence programs for private banking accounts.

    (a) Refer to Sec. 1010.620 of this chapter.
    (b) [Reserved]



Sec. 1021.630  Prohibition on correspondent accounts for foreign shell
banks; records concerning owners of foreign banks and agents for service

of legal process.

    (a) Refer to Sec. 1010.630 of this chapter.
    (b) [Reserved]



Sec. 1021.640  [Reserved]



Sec. 1021.670  Summons or subpoena of foreign bank records; termination of 
correspondent relationship.

    (a) Refer to Sec. 1010.670 of this chapter.
    (b) [Reserved]



PART 1022_RULES FOR MONEY SERVICES BUSINESSES--Table of Contents



                          Subpart A_Definitions

Sec.
1022.100 Definitions.

                           Subpart B_Programs

1022.200 General.
1022.210 Anti-money laundering programs for money services businesses.

   Subpart C_Reports Required To Be Made By Money Services Businesses

1022.300 General.
1022.310 Reports of transactions in currency.
1022.311 Filing obligations.
1022.312 Identification required.
1022.313 Aggregation.
1022.314 Structured transactions.
1022.315 Exemptions.
1022.320 Reports by money services businesses of suspicious 
          transactions.
1022.380 Registration of money services businesses.

Subpart D_Records Required To Be Maintained By Money Services Businesses

1022.400 General.
1022.410 Additional records to be made and retained by dealers in 
          foreign exchange.

[[Page 686]]

1022.420 Additional records to be maintained by providers and sellers of 
          prepaid access.

    Subpart E_Special Information Sharing Procedures To Deter Money 
                    Laundering and Terrorist Activity

1022.500 General.
1022.520 Special information sharing procedures to deter money 
          laundering and terrorist activity for money services 
          businesses.
1022.530 [Reserved]
1022.540 Voluntary information sharing among financial institutions.

  Subpart F_Special Standards of Diligence; Prohibitions, and Special 
                 Measures for Money Services Businesses

1022.600 General.
1022.610-1022.670 [Reserved]

    Authority: 12 U.S.C. 1829b and 1951-1959; 31 U.S.C. 5311-5314 and 
5316-5332; title III, sec. 314, Pub. L. 107-56, 115 Stat. 307.

    Source: 75 FR 65812, Oct. 26, 2010, unless otherwise noted.



                          Subpart A_Definitions



Sec. 1022.100  Definitions.

    Refer to Sec. 1010.100 of this chapter for general definitions not 
noted herein.



                           Subpart B_Programs



Sec. 1022.200  General.

    Money services businesses are subject to the program requirements 
set forth and cross referenced in this subpart. Money services 
businesses should also refer to subpart B of part 1010 of this chapter 
for program requirements contained in that subpart which apply to money 
services businesses.



Sec. 1022.210  Anti-money laundering programs for money services 
businesses.

    (a) Each money services business, as defined by Sec. 1010.100(ff) 
of this chapter, shall develop, implement, and maintain an effective 
anti-money laundering program. An effective anti-money laundering 
program is one that is reasonably designed to prevent the money services 
business from being used to facilitate money laundering and the 
financing of terrorist activities.
    (b) The program shall be commensurate with the risks posed by the 
location and size of, and the nature and volume of the financial 
services provided by, the money services business.
    (c) The program shall be in writing, and a money services business 
shall make copies of the anti-money laundering program available for 
inspection to the Department of the Treasury upon request.
    (d) At a minimum, the program shall:
    (1) Incorporate policies, procedures, and internal controls 
reasonably designed to assure compliance with this chapter.
    (i) Policies, procedures, and internal controls developed and 
implemented under this section shall include provisions for complying 
with the requirements of this chapter including, to the extent 
applicable to the money services business, requirements for:
    (A) Verifying customer identification, including as set forth in 
paragraph (d)(1)(iv) of this section;
    (B) Filing Reports;
    (C) Creating and retaining records;
    (D) Responding to law enforcement requests.
    (ii) Money services businesses that have automated data processing 
systems should integrate their compliance procedures with such systems.
    (iii) A person that is a money services business solely because it 
is an agent for another money services business as set forth in Sec. 
1022.380(a)(3), and the money services business for which it serves as 
agent, may by agreement allocate between them responsibility for 
development of policies, procedures, and internal controls required by 
this paragraph (d)(1). Each money services business shall remain solely 
responsible for implementation of the requirements set forth in this 
section, and nothing in this paragraph (d)(1) relieves any money 
services business from its obligation to establish and maintain an 
effective anti-money laundering program.
    (iv) A money services business that is a provider or seller of 
prepaid access must establish procedures to verify the identity of a 
person who obtains prepaid access under a prepaid program and obtain 
identifying information concerning such a person, including

[[Page 687]]

name, date of birth, address, and identification number. Sellers of 
prepaid access must also establish procedures to verify the identity of 
a person who obtains prepaid access to funds that exceed $10,000 during 
any one day and obtain identifying information concerning such a person, 
including name, date of birth, address, and identification number. 
Providers of prepaid access must retain access to such identifying 
information for five years after the last use of the prepaid access 
device or vehicle; such information obtained by sellers of prepaid 
access must be retained for five years from the date of the sale of the 
prepaid access device or vehicle.
    (2) Designate a person to assure day to day compliance with the 
program and this chapter. The responsibilities of such person shall 
include assuring that:
    (i) The money services business properly files reports, and creates 
and retains records, in accordance with applicable requirements of this 
chapter;
    (ii) The compliance program is updated as necessary to reflect 
current requirements of this chapter, and related guidance issued by the 
Department of the Treasury; and
    (iii) The money services business provides appropriate training and 
education in accordance with paragraph (d)(3) of this section.
    (3) Provide education and/or training of appropriate personnel 
concerning their responsibilities under the program, including training 
in the detection of suspicious transactions to the extent that the money 
services business is required to report such transactions under this 
chapter.
    (4) Provide for independent review to monitor and maintain an 
adequate program. The scope and frequency of the review shall be 
commensurate with the risk of the financial services provided by the 
money services business. Such review may be conducted by an officer or 
employee of the money services business so long as the reviewer is not 
the person designated in paragraph (d)(2) of this section.
    (e) Compliance date. A money services business must develop and 
implement an anti-money laundering program that complies with the 
requirements of this section on or before the later of July 24, 2002, 
and the end of the 90-day period beginning on the day following the date 
the business is established.

[75 FR 65812, Oct. 26, 2010, as amended at 76 FR 43597, July 21, 2011; 
76 FR 45419, July 29, 2011]



   Subpart C_Reports Required To Be Made By Money Services Businesses



Sec. 1022.300  General.

    Money services businesses are subject to the reporting requirements 
set forth and cross referenced in this subpart. Money services 
businesses should also refer to subpart C of part 1010 of this chapter 
for reporting requirements contained in that subpart which apply to 
money services businesses.



Sec. 1022.310  Reports of transactions in currency.

    The reports of transactions in currency requirements for money 
services businesses are located in subpart C of part 1010 of this 
chapter and this subpart.



Sec. 1022.311  Filing obligations.

    Refer to Sec. 1010.311 of this chapter for reports of transactions 
in currency filing obligations for money services businesses.



Sec. 1022.312  Identification required.

    Refer to Sec. 1010.312 of this chapter for identification 
requirements for reports of transactions in currency filed by money 
services businesses.



Sec. 1022.313  Aggregation.

    Refer to Sec. 1010.313 of this chapter for reports of transactions 
in currency aggregation requirements for money services businesses.



Sec. 1022.314  Structured transactions.

    Refer to Sec. 1010.314 of this chapter for rules regarding 
structured transactions for money services businesses.



Sec. 1022.315  Exemptions.

    Refer to Sec. 1010.315 of this chapter for exemptions from the 
obligation to file reports of transactions in currency for money 
services businesses.

[[Page 688]]



Sec. 1022.320  Reports by money services businesses of suspicious 
transactions.

    (a) General. (1) Every money services business described in Sec. 
1010.100(ff)(1), (3), (4), (5), (6), and (7) of this chapter, shall file 
with the Treasury Department, to the extent and in the manner required 
by this section, a report of any suspicious transaction relevant to a 
possible violation of law or regulation. Any money services business may 
also file with the Treasury Department, by using the form specified in 
paragraph (b)(1) of this section, or otherwise, a report of any 
suspicious transaction that it believes is relevant to the possible 
violation of any law or regulation but whose reporting is not required 
by this section.
    (2) A transaction requires reporting under the terms of this section 
if it is conducted or attempted by, at, or through a money services 
business, involves or aggregates funds or other assets of at least 
$2,000 (except as provided in paragraph (a)(3) of this section), and the 
money services business knows, suspects, or has reason to suspect that 
the transaction (or a pattern of transactions of which the transaction 
is a part):
    (i) Involves funds derived from illegal activity or is intended or 
conducted in order to hide or disguise funds or assets derived from 
illegal activity (including, without limitation, the ownership, nature, 
source, location, or control of such funds or assets) as part of a plan 
to violate or evade any Federal law or regulation or to avoid any 
transaction reporting requirement under Federal law or regulation;
    (ii) Is designed, whether through structuring or other means, to 
evade any requirements of this chapter or of any other regulations 
promulgated under the Bank Secrecy Act; or
    (iii) Serves no business or apparent lawful purpose, and the 
reporting money services business knows of no reasonable explanation for 
the transaction after examining the available facts, including the 
background and possible purpose of the transaction.
    (iv) Involves use of the money services business to facilitate 
criminal activity.
    (3) To the extent that the identification of transactions required 
to be reported is derived from a review of clearance records or other 
similar records of money orders or traveler's checks that have been sold 
or processed, an issuer of money orders or traveler's checks shall only 
be required to report a transaction or pattern of transactions that 
involves or aggregates funds or other assets of at least $5,000.
    (4) The obligation to identify and properly and timely to report a 
suspicious transaction rests with each money services business involved 
in the transaction, provided that no more than one report is required to 
be filed by the money services businesses involved in a particular 
transaction (so long as the report filed contains all relevant facts). 
Whether, in addition to any liability on its own for failure to report, 
a money services business that issues the instrument or provides the 
funds transfer service involved in the transaction may be liable for the 
failure of another money services business involved in the transaction 
to report that transaction depends upon the nature of the contractual or 
other relationship between the businesses, and the legal effect of the 
facts and circumstances of the relationship and transaction involved, 
under general principles of the law of agency.
    (b) Filing procedures--(1) What to file. A suspicious transaction 
shall be reported by completing a Suspicious Activity Report-MSB (``SAR-
MSB''), and collecting and maintaining supporting documentation as 
required by paragraph (c) of this section.
    (2) Where to file. The SAR-MSB shall be filed in a central location 
to be determined by FinCEN, as indicated in the instructions to the SAR-
MSB.
    (3) When to file. A money services business subject to this section 
is required to file each SAR-MSB no later than 30 calendar days after 
the date of the initial detection by the money services business of 
facts that may constitute a basis for filing a SAR-MSB under this 
section. In situations involving violations that require immediate 
attention, such as ongoing money laundering schemes, the money services 
business shall immediately notify

[[Page 689]]

by telephone an appropriate law enforcement authority in addition to 
filing a SAR-MSB. Money services businesses wishing voluntarily to 
report suspicious transactions that may relate to terrorist activity may 
call FinCEN's Financial Institutions Hotline at 1-866-556-3974 in 
addition to filing timely a SAR-MSB if required by this section.
    (c) Retention of records. A money services business shall maintain a 
copy of any SAR-MSB filed and the original or business record equivalent 
of any supporting documentation for a period of five years from the date 
of filing the SAR-MSB. Supporting documentation shall be identified as 
such and maintained by the money services business, and shall be deemed 
to have been filed with the SAR-MSB. A money services business shall 
make all supporting documentation available to FinCEN or any Federal, 
State, or local law enforcement agency, or any Federal regulatory 
authority that examines the money services business for compliance with 
the Bank Secrecy Act, or any State regulatory authority administering a 
State law that requires the money services business to comply with the 
Bank Secrecy Act or otherwise authorizes the State authority to ensure 
that the money services business complies with the Bank Secrecy Act.
    (d) Confidentiality of SARs. A SAR, and any information that would 
reveal the existence of a SAR, are confidential and shall not be 
disclosed except as authorized in this paragraph (d). For purposes of 
this paragraph (d) only, a SAR shall include any suspicious activity 
report filed with FinCEN pursuant to any regulation in this chapter.
    (1) Prohibition on disclosures by money services businesses--(i) 
General rule. No money services business, and no director, officer, 
employee, or agent of any money services business, shall disclose a SAR 
or any information that would reveal the existence of a SAR. Any money 
services business, and any director, officer, employee, or agent of any 
money services business that is subpoenaed or otherwise requested to 
disclose a SAR or any information that would reveal the existence of a 
SAR, shall decline to produce the SAR or such information, citing this 
section and 31 U.S.C. 5318(g)(2)(A)(i), and shall notify FinCEN of any 
such request and the response thereto.
    (ii) Rules of Construction. Provided that no person involved in any 
reported suspicious transaction is notified that the transaction has 
been reported, this paragraph (d)(1) shall not be construed as 
prohibiting:
    (A) The disclosure by a money services business, or any director, 
officer, employee, or agent of a money services business, of:
    (1) A SAR, or any information that would reveal the existence of a 
SAR, to FinCEN or any Federal, State, or local law enforcement agency, 
or any Federal regulatory authority that examines the money services 
business for compliance with the Bank Secrecy Act, or any State 
regulatory authority administering a State law that requires the money 
services business to comply with the Bank Secrecy Act or otherwise 
authorizes the State authority to ensure that the money services 
business complies with the Bank Secrecy Act; or
    (2) The underlying facts, transactions, and documents upon which a 
SAR is based, including but not limited to, disclosures to another 
financial institution, or any director, officer, employee, or agent of a 
financial institution, for the preparation of a joint SAR.
    (B) The sharing by a money services business, or any director, 
officer, employee, or agent of the money services business, of a SAR, or 
any information that would reveal the existence of a SAR, within the 
money services business's corporate organizational structure for 
purposes consistent with Title II of the Bank Secrecy Act as determined 
by regulation or in guidance.
    (2) Prohibition on disclosures by government authorities. A Federal, 
State, local, territorial, or Tribal government authority, or any 
director, officer, employee, or agent of any of the foregoing, shall not 
disclose a SAR, or any information that would reveal the existence of a 
SAR, except as necessary to fulfill official duties consistent with 
Title II of the Bank Secrecy Act. For purposes of this section, 
``official duties'' shall not include the disclosure of

[[Page 690]]

a SAR, or any information that would reveal the existence of a SAR, in 
response to a request for disclosure of non-public information or a 
request for use in a private legal proceeding, including a request 
pursuant to 31 CFR 1.11.
    (e) Limitation on liability. A money services business, and any 
director, officer, employee, or agent of any money services business, 
that makes a voluntary disclosure of any possible violation of law or 
regulation to a government agency or makes a disclosure pursuant to this 
section or any other authority, including a disclosure made jointly with 
another institution, shall be protected from liability to any person for 
any such disclosure, or for failure to provide notice of such disclosure 
to any person identified in the disclosure, or both, to the full extent 
provided by 31 U.S.C. 5318(g)(3).
    (f) Compliance. Money services businesses shall be examined by 
FinCEN or its delegatees for compliance with this section. Failure to 
satisfy the requirements of this section may be a violation of the Bank 
Secrecy Act and of this chapter.
    (g) Applicability date. This section applies to transactions 
occurring after December 31, 2001.

[75 FR 65812, Oct. 26, 2010, as amended at 75 FR 10518, Feb. 25, 2011; 
76 FR 45420, July 29, 2011]



Sec. 1022.380  Registration of money services businesses.

    (a) Registration requirement--(1) In general. Except as provided in 
paragraph (a)(3) of this section, relating to agents, and except for 
sellers of prepaid access as defined in Sec. 1010.100(ff)(7) of this 
chapter to the extent that they are not already agents, each money 
services business (whether or not licensed as a money services business 
by any State) must register with FinCEN. Each provider of prepaid access 
must identify each prepaid program for which it is the provider of 
prepaid access. Each money services business must, as part of its 
registration, maintain a list of its agents as required by 31 U.S.C. 
5330 and this section. This section does not apply to the United States 
Postal Service, to agencies of the United States, of any State, or of 
any political subdivision of a State.
    (2) Foreign-located money services business. Each foreign-located 
person doing business, whether or not on a regular basis or as an 
organized or licensed business concern, in the United States as a money 
services business shall designate the name and address of a person who 
resides in the United States and is authorized, and has agreed, to be an 
agent to accept service of legal process with respect to compliance with 
this chapter, and shall identify the address of the location within the 
United States for records pertaining to paragraph (b)(1)(iii) of this 
section.
    (3) Agents. A person that is a money services business solely 
because that person serves as an agent of another money services 
business, see Sec. 1010.100(ff) of this chapter, is not required to 
register under this section, but a money services business that engages 
in activities described in Sec. 1010.100(ff) of this chapter both on 
its own behalf and as an agent for others must register under this 
section. For example, a supermarket corporation that acts as an agent 
for an issuer of money orders and performs no other services of a nature 
and value that would cause the corporation to be a money services 
business, is not required to register; the answer would be the same if 
the supermarket corporation served as an agent both of a money order 
issuer and of a money transmitter. However, registration would be 
required if the supermarket corporation, in addition to acting as an 
agent of an issuer of money orders, cashed checks or exchanged 
currencies (other than as an agent for another business) in an amount 
greater than $1,000 in currency or monetary or other instruments for any 
person on any day, in one or more transactions.
    (4) Agency status. The determination whether a person is an agent 
depends on all the facts and circumstances.
    (b) Registration procedures--(1) In general. (i) A money services 
business must be registered by filing such form as FinCEN may specify 
with the Enterprise Computing Center in Detroit of the Internal Revenue 
Service (or such other location as the form may specify). The 
information required by 31

[[Page 691]]

U.S.C. 5330(b) and any other information required by the form must be 
reported in the manner and to the extent required by the form.
    (ii) A branch office of a money services business is not required to 
file its own registration form. A money services business must, however, 
report information about its branch locations or offices as provided by 
the instructions to the registration form.
    (iii) A money services business must retain a copy of any 
registration form filed under this section and any registration number 
that may be assigned to the business at a location in the United States 
and for the period specified in Sec. 1010.430(d) of this Chapter.
    (2) Registration period. A money services business must be 
registered for the initial registration period and each renewal period. 
The initial registration period is the two-calendar-year period 
beginning with the calendar year in which the money services business is 
first required to be registered. However, the initial registration 
period for a money services business required to register by December 
31, 2001 (see paragraph (b)(3) of this section) is the two-calendar year 
period beginning 2002. Each two-calendar-year period following the 
initial registration period is a renewal period.
    (3) Due date. The registration form for the initial registration 
period must be filed on or before the end of the 180-day period 
beginning on the day following the date the business is established. The 
registration form for a renewal period must be filed on or before the 
last day of the calendar year preceding the renewal period.
    (4) Events requiring re-registration. If a money services business 
registered as such under the laws of any State experiences a change in 
ownership or control that requires the business to be re-registered 
under State law, the money services business must also be re-registered 
under this section. In addition, if there is a transfer of more than 10 
percent of the voting power or equity interests of a money services 
business (other than a money services business that must report such 
transfer to the Securities and Exchange Commission), the money services 
business must be re-registered under this section. Finally, if a money 
services business experiences a more than 50-per cent increase in the 
number of its agents during any registration period, the money services 
business must be re-registered under this section. The registration form 
must be filed not later than 180 days after such change in ownership, 
transfer of voting power or equity interests, or increase in agents. The 
calendar year in which the change, transfer, or increase occurs is 
treated as the first year of a new two-year registration period.
    (c) Persons required to file the registration form. Under 31 U.S.C. 
5330(a), any person who owns or controls a money services business is 
responsible for registering the business; however, only one registration 
form is required to be filed for each registration period. A person is 
treated as owning or controlling a money services business for purposes 
of filing the registration form only to the extent provided by the form. 
If more than one person owns or controls a money services business, the 
owning or controlling persons may enter into an agreement designating 
one of them to register the business. The failure of the designated 
person to register the money services business does not, however, 
relieve any of the other persons who own or control the business of 
liability for the failure to register the business. See paragraph (e) of 
this section, relating to consequences of the failure to comply with 31 
U.S.C. 5330 or this section.
    (d) List of agents--(1) In general. A money services business must 
prepare and maintain a list of its agents. The initial list of agents 
must be prepared by January 1, 2002, and must be revised each January 1, 
for the immediately preceding 12 month period; for money services 
businesses established after December 31, 2001, the initial agent list 
must be prepared by the due date of the initial registration form and 
must be revised each January 1 for the immediately preceding 12-month 
period. The list is not filed with the registration form but must be 
maintained at the location in the United States reported on the 
registration form under paragraph (b)(1) of this section. Upon request, 
a money services business must make its list of agents available to 
FinCEN and

[[Page 692]]

any other appropriate law enforcement agency (including, without 
limitation, the examination function of the Internal Revenue Service in 
its capacity as delegee of Bank Secrecy Act examination authority). 
Requests for information made pursuant to the preceding sentence shall 
be coordinated through FinCEN in the manner and to the extent determined 
by FinCEN. The original list of agents and any revised list must be 
retained for the period specified in Sec. 1010.430(d) of this chapter.
    (2) Information included on the list of agents--(i) In general. 
Except as provided in paragraph (d)(2)(ii) of this section, a money 
services business must include the following information with respect to 
each agent on the list (including any revised list) of its agents--
    (A) The name of the agent, including any trade names or doing-
business-as names;
    (B) The address of the agent, including street address, city, state, 
and ZIP code;
    (C) The telephone number of the agent;
    (D) The type of service or services (money orders, traveler's 
checks, check sales, check cashing, currency exchange, and money 
transmitting) the agent provides;
    (E) A listing of the months in the 12 months immediately preceding 
the date of the most recent agent list in which the gross transaction 
amount of the agent with respect to financial products or services 
issued by the money services business maintaining the agent list 
exceeded $100,000. For this purpose, the money services gross 
transaction amount is the agent's gross amount (excluding fees and 
commissions) received from transactions of one or more businesses 
described in Sec. 1010.100(ff) of this chapter;
    (F) The name and address of any depository institution at which the 
agent maintains a transaction account (as defined in 12 U.S.C. 
461(b)(1)(C)) for all or part of the funds received in or for the 
financial products or services issued by the money services business 
maintaining the list, whether in the agent's or the business principal's 
name;
    (G) The year in which the agent first became an agent of the money 
services business; and
    (H) The number of branches or subagents the agent has.
    (ii) Special rules. Information about agent volume must be current 
within 45 days of the due date of the agent list. The information 
described by paragraphs (d)(2)(i)(G) and (d)(2)(i)(H) of this section is 
not required to be included in an agent list with respect to any person 
that is an agent of the money services business maintaining the list 
before the first day of the month beginning after February 16, 2000 so 
long as the information described by paragraphs (d)(2)(i)(G) and 
(d)(2)(i)(H) of this section is made available upon the request of 
FinCEN and any other appropriate law enforcement agency (including, 
without limitation, the examination function of the Internal Revenue 
Service in its capacity as delegee of Bank Secrecy Act examination 
authority).
    (e) Consequences of failing to comply with 31 U.S.C. 5330 or the 
regulations thereunder. It is unlawful to do business without complying 
with 31 U.S.C. 5330 and this section. A failure to comply with the 
requirements of 31 U.S.C. 5330 or this section includes the filing of 
false or materially incomplete information in connection with the 
registration of a money services business. Any person who fails to 
comply with any requirement of 31 U.S.C. 5330 or this section shall be 
liable for a civil penalty of $5,000 for each violation. Each day a 
violation of 31 U.S.C. 5330 or this section continues constitutes a 
separate violation. In addition, under 31 U.S.C. 5320, the Secretary of 
the Treasury may bring a civil action to enjoin the violation. See 18 
U.S.C. 1960 for a criminal penalty for failure to comply with the 
registration requirements of 31 U.S.C. 5330 or this section.
    (f) Applicability date. This section is applicable as of September 
20, 1999. Registration of money services businesses under this section 
will not be required prior to December 31, 2001.

[75 FR 65812, Oct. 26, 2010, as amended at 76 FR 43597, July 21, 2011; 
76 FR 45420, July 29, 2011]

[[Page 693]]



Subpart D_Records Required To Be Maintained By Money Services Businesses



Sec. 1022.400  General.

    Money services businesses are subject to the recordkeeping 
requirements set forth and cross referenced in this subpart. Money 
services businesses should also refer to subpart D of Part 1010 of this 
chapter for recordkeeping requirements contained in that subpart which 
apply to money services businesses.



Sec. 1022.410  Additional records to be made and retained by dealers in
foreign exchange.

    (a)(1) After July 7, 1987, each dealer in foreign exchange shall 
secure and maintain a record of the taxpayer identification number of 
each person for whom a transaction account is opened or a line of credit 
is extended within 30 days after such account is opened or credit line 
extended. Where a person is a non-resident alien, the dealer in foreign 
exchange shall also record the person's passport number or a description 
of some other government document used to verify his identity. Where the 
account or credit line is in the names of two or more persons, the 
dealer in foreign exchange shall secure the taxpayer identification 
number of a person having a financial interest in the account or credit 
line. In the event that a dealer in foreign exchange has been unable to 
secure the identification required within the 30-day period specified, 
it shall nevertheless not be deemed to be in violation of this section 
if:
    (i) It has made a reasonable effort to secure such identification, 
and
    (ii) It maintains a list containing the names, addresses, and 
account or credit line numbers of those persons from whom it has been 
unable to secure such identification, and makes the names, addresses, 
and account or credit line numbers of those persons available to the 
Secretary as directed by him.
    (2) The 30-day period provided for in paragraph (a)(1) of this 
section shall be extended where the person opening the account or credit 
line has applied for a taxpayer identification or social security number 
on Form SS-4 or SS-5, until such time as the person maintaining the 
account or credit line has had a reasonable opportunity to secure such 
number and furnish it to the dealer in foreign exchange.
    (3) A taxpayer identification number for an account or credit line 
required under paragraph (a)(1) of this section need not be secured in 
the following instances:
    (i) Accounts for public funds opened by agencies and 
instrumentalities of Federal, state, local or foreign governments,
    (ii) Accounts for aliens who are--
    (A) Ambassadors, ministers, career diplomatic or consular officers, 
or
    (B) Naval, military or other attaches of foreign embassies, and 
legations, and for members of their immediate families,
    (iii) Accounts for aliens who are accredited representatives to 
international organizations which are entitled to enjoy privileges, 
exemptions, and immunities as an international organization under the 
International Organizations Immunities Act of December 29, 1945 (22 
U.S.C. 288), and for the members of their immediate families,
    (iv) Aliens temporarily residing in the United States for a period 
not to exceed 180 days,
    (v) Aliens not engaged in a trade or business in the United States 
who are attending a recognized college or any training program, 
supervised or conducted by any agency of the Federal Government, and
    (vi) Unincorporated subordinate units of a tax exempt central 
organization which are covered by a group exemption letter.
    (b) Each dealer in foreign exchange shall retain either the original 
or a microfilm or other copy or reproduction of each of the following:
    (1) Statements of accounts from banks, including paid checks, 
charges or other debit entry memoranda, deposit slips and other credit 
memoranda representing the entries reflected on such statements;
    (2) Daily work records, including purchase and sales slips or other 
memoranda needed to identify and reconstruct currency transactions with 
customers and foreign banks;
    (3) A record of each exchange of currency involving transactions in 
excess

[[Page 694]]

of $1000, including the name and address of the customer (and passport 
number or taxpayer identification number unless received by mail or 
common carrier) date and amount of the transaction and currency name, 
country, and total amount of each foreign currency;
    (4) Signature cards or other documents evidencing signature 
authority over each deposit or security account, containing the name of 
the depositor, street address, taxpayer identification number (TIN) or 
employer identification number (EIN) and the signature of the depositor 
or of a person authorized to sign on the account (if customer accounts 
are maintained in a code name, a record of the actual owner of the 
account);
    (5) Each item, including checks, drafts, or transfers of credit, of 
more than $10,000 remitted or transferred to a person, account or place 
outside the United States;
    (6) A record of each receipt of currency, other monetary 
instruments, investment securities and checks, and of each transfer of 
funds or credit, or more than $10,000 received on any one occasion 
directly and not through a domestic financial institution, from any 
person, account or place outside the United States;
    (7) Records prepared or received by a dealer in the ordinary course 
of business, that would be needed to reconstruct an account and trace a 
check in excess of $100 deposited in such account through its internal 
recordkeeping system to its depository institution, or to supply a 
description of a deposited check in excess of $100;
    (8) A record maintaining the name, address and taxpayer 
identification number, if available, of any person presenting a 
certificate of deposit for payment, as well as a description of the 
instrument and date of transaction;
    (9) A system of books and records that will enable the dealer in 
foreign exchange to prepare an accurate balance sheet and income 
statement.
    (c) This section does not apply to banks that offer services in 
dealing or changing currency to their customers as an adjunct to their 
regular service.

[75 FR 65812, Oct. 26, 2010, as amended at 76 FR 43597, July 21, 2011]



Sec. 1022.420  Additional records to be maintained by providers and
sellers of prepaid access.

    With respect to transactions relating to providers and sellers of 
prepaid access described in Sec. 1010.100(ff)(4) and (7) that are 
subject to the requirements of this chapter, each provider of prepaid 
access shall maintain access to transactional records for a period of 
five years. The provider of prepaid access, as defined in Sec. 
1010.100(ff)(4), shall maintain access to transactional records 
generated in the ordinary course of business that would be needed to 
reconstruct prepaid access activation, loads, reloads, purchases, 
withdrawals, transfers, or other prepaid-related transactions.

[76 FR 45420, July 29, 2011]



    Subpart E_Special Information Sharing Procedures To Deter Money 
                    Laundering and Terrorist Activity



Sec. 1022.500  General.

    Money services businesses are subject to the special information 
sharing procedures to deter money laundering and terrorist activity 
requirements set forth and cross referenced in this subpart. Money 
services businesses should also refer to subpart E of part 1010 of this 
chapter for special information sharing procedures to deter money 
laundering and terrorist activity contained in that subpart which apply 
to money services businesses.



Sec. 1022.520  Special information sharing procedures to deter money 
laundering and terrorist activity for money services businesses.

    (a) Refer to Sec. 1010.520 of this chapter.
    (b) [Reserved]



Sec. 1022.530  [Reserved]



Sec. 1022.540  Voluntary information sharing among financial institutions.

    (a) Refer to Sec. 1010.540 of this chapter.
    (b) [Reserved]

[[Page 695]]



  Subpart F_Special Standards of Diligence; Prohibitions; and Special 
                 Measures for Money Services Businesses



Sec. 1022.600  General.

    Money services businesses are subject to the special standards of 
diligence; prohibitions; and special measures requirements set forth and 
cross referenced in this subpart. Money services businesses should also 
refer to subpart F of part 1010 of this chapter for special standards of 
diligence; prohibitions; and special measures contained in that subpart 
which apply to money services businesses.



Sec. Sec. 1022.610-1022.670  [Reserved]



PART 1023_RULES FOR BROKERS OR DEALERS IN SECURITIES--Table of Contents



                          Subpart A_Definitions

Sec.
1023.100 Definitions.

                           Subpart B_Programs

1023.200 General.
1023.210 Anti-money laundering program requirements for brokers or 
          dealers in securities.
1023.220 Customer identification programs for broker-dealers.

     Subpart C_Reports Required To Be Made By Brokers or Dealers in 
                               Securities

1023.300 General.
1023.310 Reports of transactions in currency.
1023.311 Filing obligations.
1023.312 Identification required.
1023.313 Aggregation.
1023.314 Structured transactions.
1023.315 Exemptions
1023.320 Reports by brokers or dealers in securities of suspicious 
          transactions.

  Subpart D_Records Required To Be Maintained By Brokers or Dealers in 
                               Securities

1023.400 General.
1023.410 Additional records to be made and retained by brokers or 
          dealers in securities.

    Subpart E_Special Information Sharing Procedures To Deter Money 
                    Laundering and Terrorist Activity

1023.500 General.
1023.520 Special information sharing procedures to deter money 
          laundering and terrorist activity for brokers or dealers in 
          securities.
1023.530 [Reserved]
1023.540 Voluntary information sharing among financial institutions.

  Subpart F_Special Standards of Diligence; Prohibitions, and Special 
              Measures for Brokers or Dealers in Securities

1023.600 General.
1023.610 Due diligence programs for correspondent accounts for foreign 
          financial institutions.
1023.620 Due diligence programs for private banking accounts.
1023.630 Prohibition on correspondent accounts for foreign shell banks; 
          records concerning owners of foreign banks and agents for 
          service of legal process.
1023.640 [Reserved]
1023.670 Summons or subpoena of foreign bank account records; 
          Termination of correspondent relationship.

    Authority: 12 U.S.C. 1829b and 1951-1959; 31 U.S.C. 5311-5314 and 
5316-5332; title III, sec. 314, Pub. L. 107-56, 115 Stat. 307.

    Source: 75 FR 65812, Oct. 25, 2010, unless otherwise noted.



                          Subpart A_Definitions



Sec. 1023.100  Definitions.

    Refer to Sec. 1010.100 of this chapter for general definitions not 
noted herein. To the extent there is a differing definition in Sec. 
1010.100 of this chapter, the definition in this section is what applies 
to part 1023. Unless otherwise indicated, for purposes of this part:
    (a) Account. For purposes of Sec. 1023.220:
    (1) Account means a formal relationship with a broker-dealer 
established to effect transactions in securities, including, but not 
limited to, the purchase or sale of securities and securities loaned and 
borrowed activity, and to hold securities or other assets for 
safekeeping or as collateral.
    (2) Account does not include:
    (i) An account that the broker-dealer acquires through any 
acquisition, merger, purchase of assets, or assumption of liabilities; 
or
    (ii) An account opened for the purpose of participating in an 
employee benefit plan established under the Employee Retirement Income 
Security Act of 1974.

[[Page 696]]

    (b) Broker-dealer means a person registered or required to be 
registered as a broker or dealer with the Commission under the 
Securities Exchange Act of 1934 (15 U.S.C. 77a et seq.), except persons 
who register pursuant to 15 U.S.C. 78o(b)(11).
    (c) Commission means, for the purposes of Sec. 1023.220, the United 
States Securities and Exchange Commission.
    (d) Customer. For purposes of Sec. 1023.220:
    (1) Customer means:
    (i) A person that opens a new account; and
    (ii) An individual who opens a new account for:
    (A) An individual who lacks legal capacity; or
    (B) An entity that is not a legal person.
    (2) Customer does not include:
    (i) A financial institution regulated by a Federal functional 
regulator or a bank regulated by a state bank regulator;
    (ii) A person described in Sec. 1020.315(b)(2) through (4) of this 
Chapter; or
    (iii) A person that has an existing account with the broker-dealer, 
provided the broker-dealer has a reasonable belief that it knows the 
true identity of the person.
    (e) Financial institution is defined at 31 U.S.C. 5312(a)(2) and 
(c)(1).



                           Subpart B_Programs



Sec. 1023.200  General.

    Brokers or dealers in securities are subject to the program 
requirements set forth and cross referenced in this subpart. Brokers or 
dealers in securities should also refer to subpart B of part 1010 of 
this chapter for program requirements contained in that subpart which 
apply to brokers or dealers in securities.



Sec. 1023.210  Anti-money laundering program requirements for brokers or
dealers in securities.

    A financial institution regulated by a self-regulatory organization 
shall be deemed to satisfy the requirements of 31 U.S.C. 5318(h)(1) if:
    (a) The financial institution complies with the requirements of 
Sec. Sec. 1010.610 of this chapter and 1010.620 and any applicable 
regulation of its Federal functional regulator governing the 
establishment and implementation of anti-money laundering programs; and
    (b)(1) The financial institution implements and maintains an anti-
money laundering program that complies with the rules, regulations, or 
requirements of its self-regulatory organization governing such 
programs; and
    (2) The rules, regulations, or requirements of the self-regulatory 
organization have been approved, if required, by the appropriate Federal 
functional regulator.



Sec. 1023.220  Customer identification programs for broker-dealers.

    (a) Customer identification program: minimum requirements--(1) In 
general. A broker-dealer must establish, document, and maintain a 
written Customer Identification Program (``CIP'') appropriate for its 
size and business that, at a minimum, includes each of the requirements 
of paragraphs (a)(1) through (a)(5) of this section. The CIP must be a 
part of the broker-dealer's anti-money laundering compliance program 
required under 31 U.S.C. 5318(h).
    (2) Identity verification procedures. The CIP must include risk-
based procedures for verifying the identity of each customer to the 
extent reasonable and practicable. The procedures must enable the 
broker-dealer to form a reasonable belief that it knows the true 
identity of each customer. The procedures must be based on the broker-
dealer's assessment of the relevant risks, including those presented by 
the various types of accounts maintained by the broker-dealer, the 
various methods of opening accounts provided by the broker-dealer, the 
various types of identifying information available and the broker-
dealer's size, location and customer base. At a minimum, these 
procedures must contain the elements described in this paragraph (a)(2).
    (i)(A) Customer information required. The CIP must contain 
procedures for opening an account that specify identifying information 
that will be obtained from each customer. Except as permitted by 
paragraph (a)(2)(i)(B) of this section, the broker-dealer must obtain,

[[Page 697]]

at a minimum, the following information prior to opening an account:
    (1) Name;
    (2) Date of birth, for an individual;
    (3) Address, which shall be:
    (i) For an individual, a residential or business street address;
    (ii) for an individual who does not have a residential or business 
street address, an Army Post Office (APO) or Fleet Post Office (FPO) box 
number, or the residential or business street address of a next of kin 
or another contact individual; or
    (iii) for a person other than an individual (such as a corporation, 
partnership or trust), a principal place of business, local office or 
other physical location; and
    (4) Identification number, which shall be:
    (i) For a U.S. person, a taxpayer identification number; or
    (ii) for a non-U.S. person, one or more of the following: A taxpayer 
identification number, a passport number and country of issuance, an 
alien identification card number, or the number and country of issuance 
of any other government-issued document evidencing nationality or 
residence and bearing a photograph or similar safeguard.

    Note to Paragraph (a)(2)(i)(A)(4)(ii): When opening an account for a 
foreign business or enterprise that does not have an identification 
number, the broker-dealer must request alternative government-issued 
documentation certifying the existence of the business or enterprise.

    (B) Exception for persons applying for a taxpayer identification 
number. Instead of obtaining a taxpayer identification number from a 
customer prior to opening an account, the CIP may include procedures for 
opening an account for a customer that has applied for, but has not 
received, a taxpayer identification number. In this case, the CIP must 
include procedures to confirm that the application was filed before the 
customer opens the account and to obtain the taxpayer identification 
number within a reasonable period of time after the account is opened.
    (ii) Customer verification. The CIP must contain procedures for 
verifying the identity of each customer, using information obtained in 
accordance with paragraph (a)(2)(i) of this section, within a reasonable 
time before or after the customer's account is opened. The procedures 
must describe when the broker-dealer will use documents, non-documentary 
methods, or a combination of both methods, as described in this 
paragraph (a)(2)(ii).
    (A) Verification through documents. For a broker-dealer relying on 
documents, the CIP must contain procedures that set forth the documents 
the broker-dealer will use. These documents may include:
    (1) For an individual, an unexpired government-issued identification 
evidencing nationality or residence and bearing a photograph or similar 
safeguard, such as a driver's license or passport; and
    (2) For a person other than an individual (such as a corporation, 
partnership or trust), documents showing the existence of the entity, 
such as certified articles of incorporation, a government-issued 
business license, a partnership agreement, or a trust instrument.
    (B) Verification through non-documentary methods. For a broker-
dealer relying on non-documentary methods, the CIP must contain 
procedures that set forth the non-documentary methods the broker-dealer 
will use.
    (1) These methods may include contacting a customer; independently 
verifying the customer's identity through the comparison of information 
provided by the customer with information obtained from a consumer 
reporting agency, public database, or other source; checking references 
with other financial institutions; or obtaining a financial statement.
    (2) The broker-dealer's non-documentary procedures must address 
situations where an individual is unable to present an unexpired 
government-issued identification document that bears a photograph or 
similar safeguard; the broker-dealer is not familiar with the documents 
presented; the account is opened without obtaining documents; the 
customer opens the account without appearing in person at the broker-
dealer; and where the broker-dealer is otherwise presented with 
circumstances that increase the risk that the broker-dealer will be 
unable to verify the true identity of a customer through documents.

[[Page 698]]

    (C) Additional verification for certain customers. The CIP must 
address situations where, based on the broker-dealer's risk assessment 
of a new account opened by a customer that is not an individual, the 
broker-dealer will obtain information about individuals with authority 
or control over such account. This verification method applies only when 
the broker-dealer cannot verify the customer's true identity using the 
verification methods described in paragraphs (a)(2)(ii)(A) and (B) of 
this section.
    (iii) Lack of verification. The CIP must include procedures for 
responding to circumstances in which the broker-dealer cannot form a 
reasonable belief that it knows the true identity of a customer. These 
procedures should describe:
    (A) When the broker-dealer should not open an account;
    (B) The terms under which a customer may conduct transactions while 
the broker-dealer attempts to verify the customer's identity;
    (C) When the broker-dealer should close an account after attempts to 
verify a customer's identity fail; and
    (D) When the broker-dealer should file a Suspicious Activity Report 
in accordance with applicable law and regulation.
    (3) Recordkeeping. The CIP must include procedures for making and 
maintaining a record of all information obtained under procedures 
implementing paragraph (a) of this section.
    (i) Required records. At a minimum, the record must include:
    (A) All identifying information about a customer obtained under 
paragraph (a)(2)(i) of this section,
    (B) A description of any document that was relied on under paragraph 
(a)(2)(ii)(A) of this section noting the type of document, any 
identification number contained in the document, the place of issuance, 
and if any, the date of issuance and expiration date;
    (C) A description of the methods and the results of any measures 
undertaken to verify the identity of a customer under paragraphs 
(a)(2)(ii)(B) and (C) of this section; and
    (D) A description of the resolution of each substantive discrepancy 
discovered when verifying the identifying information obtained.
    (ii) Retention of records. The broker-dealer must retain the records 
made under paragraph (a)(3)(i)(A) of this section for five years after 
the account is closed and the records made under paragraphs 
(a)(3)(i)(B), (C) and (D) of this section for five years after the 
record is made. In all other respects, the records must be maintained 
pursuant to the provisions of 17 CFR 240.17a-4.
    (4) Comparison with government lists. The CIP must include 
procedures for determining whether a customer appears on any list of 
known or suspected terrorists or terrorist organizations issued by any 
Federal government agency and designated as such by Treasury in 
consultation with the Federal functional regulators. The procedures must 
require the broker-dealer to make such a determination within a 
reasonable period of time after the account is opened, or earlier if 
required by another Federal law or regulation or Federal directive 
issued in connection with the applicable list. The procedures also must 
require the broker-dealer to follow all Federal directives issued in 
connection with such lists.
    (5)(i) Customer notice. The CIP must include procedures for 
providing customers with adequate notice that the broker-dealer is 
requesting information to verify their identities.
    (ii) Adequate notice. Notice is adequate if the broker-dealer 
generally describes the identification requirements of this section and 
provides such notice in a manner reasonably designed to ensure that a 
customer is able to view the notice, or is otherwise given notice, 
before opening an account. For example, depending upon the manner in 
which the account is opened, a broker-dealer may post a notice in the 
lobby or on its Web site, include the notice on its account applications 
or use any other form of oral or written notice.
    (iii) Sample notice. If appropriate, a broker-dealer may use the 
following sample language to provide notice to its customers:

[[Page 699]]

    Important Information About Procedures for Opening a New Account

    To help the government fight the funding of terrorism and money 
laundering activities, Federal law requires all financial institutions 
to obtain, verify, and record information that identifies each person 
who opens an account.
    What this means for you: When you open an account, we will ask for 
your name, address, date of birth and other information that will allow 
us to identify you. We may also ask to see your driver's license or 
other identifying documents.

    (6) Reliance on another financial institution. The CIP may include 
procedures specifying when the broker-dealer will rely on the 
performance by another financial institution (including an affiliate) of 
any procedures of the broker-dealer's CIP, with respect to any customer 
of the broker-dealer that is opening an account or has established an 
account or similar business relationship with the other financial 
institution to provide or engage in services, dealings, or other 
financial transactions, provided that:
    (i) Such reliance is reasonable under the circumstances;
    (ii) The other financial institution is subject to a rule 
implementing 31 U.S.C. 5318(h), and regulated by a Federal functional 
regulator; and
    (iii) The other financial institution enters into a contract 
requiring it to certify annually to the broker-dealer that it has 
implemented its anti-money laundering program, and that it will perform 
(or its agent will perform) specified requirements of the broker-
dealer's CIP.
    (b) Exemptions. The Commission, with the concurrence of the 
Secretary, may by order or regulation exempt any broker-dealer that 
registers with the Commission pursuant to 15 U.S.C. 78o or 15 U.S.C. 
78o-4 or any type of account from the requirements of this section. The 
Secretary, with the concurrence of the Commission, may exempt any 
broker-dealer that registers with the Commission pursuant to 15 U.S.C. 
78o-5. In issuing such exemptions, the Commission and the Secretary 
shall consider whether the exemption is consistent with the purposes of 
the Bank Secrecy Act, and in the public interest, and may consider other 
necessary and appropriate factors.
    (c) Other requirements unaffected. Nothing in this section relieves 
a broker-dealer of its obligation to comply with any other provision of 
this chapter, including provisions concerning information that must be 
obtained, verified, or maintained in connection with any account or 
transaction.



     Subpart C_Reports Required To Be Made By Brokers or Dealers in 
                               Securities



Sec. 1023.300  General.

    Brokers or dealers in securities are subject to the reporting 
requirements set forth and cross referenced in this subpart. Brokers or 
dealers in securities should also refer to subpart C of part 1010 of 
this chapter for reporting requirements contained in that subpart which 
apply to brokers or dealers in securities.



Sec. 1023.310  Reports of transactions in currency.

    The reports of transactions in currency requirements for brokers or 
dealers in securities are located in subpart C of part 1010 of this 
chapter and this subpart.



Sec. 1023.311  Filing obligations.

    Refer to Sec. 1010.311 of this chapter for reports of transactions 
in currency filing obligations for brokers or dealers in securities.



Sec. 1023.312  Identification required.

    Refer to Sec. 1010.312 of this chapter for identification 
requirements for reports of transactions in currency filed by brokers or 
dealers in securities.



Sec. 1023.313  Aggregation.

    Refer to Sec. 1010.313 of this chapter for reports of transactions 
in currency aggregation requirements for brokers or dealers in 
securities.



Sec. 1023.314  Structured transactions.

    Refer to Sec. 1010.314 of this chapter for rules regarding 
structured transactions for brokers or dealers in securities.

[[Page 700]]



Sec. 1023.315  Exemptions.

    Refer to Sec. 1010.315 of this chapter for exemptions from the 
obligation to file reports of transactions in currency for brokers or 
dealers in securities.



Sec. 1023.320  Reports by brokers or dealers in securities of suspicious
transactions.

    (a) General. (1) Every broker or dealer in securities within the 
United States (for purposes of this section, a ``broker-dealer'') shall 
file with FinCEN, to the extent and in the manner required by this 
section, a report of any suspicious transaction relevant to a possible 
violation of law or regulation. A broker-dealer may also file with 
FinCEN a report of any suspicious transaction that it believes is 
relevant to the possible violation of any law or regulation but whose 
reporting is not required by this section. Filing a report of a 
suspicious transaction does not relieve a broker-dealer from the 
responsibility of complying with any other reporting requirements 
imposed by the Securities and Exchange Commission or a self-regulatory 
organization (``SRO'') (as defined in section 3(a)(26) of the Securities 
Exchange Act of 1934, 15 U.S.C. 78c(a)(26)).
    (2) A transaction requires reporting under the terms of this section 
if it is conducted or attempted by, at, or through a broker-dealer, it 
involves or aggregates funds or other assets of at least $5,000, and the 
broker-dealer knows, suspects, or has reason to suspect that the 
transaction (or a pattern of transactions of which the transaction is a 
part):
    (i) Involves funds derived from illegal activity or is intended or 
conducted in order to hide or disguise funds or assets derived from 
illegal activity (including, without limitation, the ownership, nature, 
source, location, or control of such funds or assets) as part of a plan 
to violate or evade any Federal law or regulation or to avoid any 
transaction reporting requirement under Federal law or regulation;
    (ii) Is designed, whether through structuring or other means, to 
evade any requirements of this chapter or of any other regulations 
promulgated under the Bank Secrecy Act;
    (iii) Has no business or apparent lawful purpose or is not the sort 
in which the particular customer would normally be expected to engage, 
and the broker-dealer knows of no reasonable explanation for the 
transaction after examining the available facts, including the 
background and possible purpose of the transaction; or
    (iv) Involves use of the broker-dealer to facilitate criminal 
activity.
    (3) The obligation to identify and properly and timely to report a 
suspicious transaction rests with each broker-dealer involved in the 
transaction, provided that no more than one report is required to be 
filed by the broker-dealers involved in a particular transaction (so 
long as the report filed contains all relevant facts).
    (b) Filing procedures--(1) What to file. A suspicious transaction 
shall be reported by completing a Suspicious Activity Report by the 
Securities and Futures Industry (``SAR-SF''), and collecting and 
maintaining supporting documentation as required by paragraph (d) of 
this section.
    (2) Where to file. The SAR-SF shall be filed with FinCEN in a 
central location, to be determined by FinCEN, as indicated in the 
instructions to the SAR-SF.
    (3) When to file. A SAR-SF shall be filed no later than 30 calendar 
days after the date of the initial detection by the reporting broker-
dealer of facts that may constitute a basis for filing a SAR-SF under 
this section. If no suspect is identified on the date of such initial 
detection, a broker-dealer may delay filing a SAR-SF for an additional 
30 calendar days to identify a suspect, but in no case shall reporting 
be delayed more than 60 calendar days after the date of such initial 
detection. In situations involving violations that require immediate 
attention, such as terrorist financing or ongoing money laundering 
schemes, the broker-dealer shall immediately notify by telephone an 
appropriate law enforcement authority in addition to filing timely a 
SAR-SF. Broker-dealers wishing voluntarily to report suspicious 
transactions that may relate to terrorist activity

[[Page 701]]

may call FinCEN's Financial Institutions Hotline at 1-866-556-3974 in 
addition to filing timely a SAR-SF if required by this section. The 
broker-dealer may also, but is not required to, contact the Securities 
and Exchange Commission to report in such situations.
    (c) Exceptions. (1) A broker-dealer is not required to file a SAR-SF 
to report:
    (i) A robbery or burglary committed or attempted of the broker-
dealer that is reported to appropriate law enforcement authorities, or 
for lost, missing, counterfeit, or stolen securities with respect to 
which the broker-dealer files a report pursuant to the reporting 
requirements of 17 CFR 240.17f-1;
    (ii) A violation otherwise required to be reported under this 
section of any of the Federal securities laws or rules of an SRO by the 
broker-dealer or any of its officers, directors, employees, or other 
registered representatives, other than a violation of 17 CFR 240.17a-8 
or 17 CFR 405.4, so long as such violation is appropriately reported to 
the SEC or an SRO.
    (2) A broker-dealer may be required to demonstrate that it has 
relied on an exception in paragraph (c)(1) of this section, and must 
maintain records of its determinations to do so for the period specified 
in paragraph (d) of this section. To the extent that a Form RE-3, Form 
U-4, or Form U-5 concerning the transaction is filed consistent with the 
SRO rules, a copy of that form will be a sufficient record for purposes 
of this paragraph (c)(2).
    (3) For the purposes of this paragraph (c) the term ``Federal 
securities laws'' means the ``securities laws,'' as that term is defined 
in section 3(a)(47) of the Securities Exchange Act of 1934, 15 U.S.C. 
78c(a)(47), and the rules and regulations promulgated by the Securities 
and Exchange Commission under such laws.
    (d) Retention of records. A broker-dealer shall maintain a copy of 
any SAR-SF filed and the original or business record equivalent of any 
supporting documentation for a period of five years from the date of 
filing the SAR-SF. Supporting documentation shall be identified as such 
and maintained by the broker-dealer, and shall be deemed to have been 
filed with the SAR-SF. A broker-dealer shall make all supporting 
documentation available to FinCEN or any Federal, State, or local law 
enforcement agency, or any Federal regulatory authority that examines 
the broker-dealer for compliance with the Bank Secrecy Act, upon 
request; or to any SRO that examines the broker-dealer for compliance 
with the requirements of this section, upon the request of the 
Securities and Exchange Commission.
    (e) Confidentiality of SARs. A SAR, and any information that would 
reveal the existence of a SAR, are confidential and shall not be 
disclosed except as authorized in this paragraph (e). For purposes of 
this paragraph (e) only, a SAR shall include any suspicious activity 
report filed with FinCEN pursuant to any regulation in this chapter.
    (1) Prohibition on disclosures by brokers or dealers in securities. 
(i) General rule. No broker-dealer, and no director, officer, employee, 
or agent of any broker-dealer, shall disclose a SAR or any information 
that would reveal the existence of a SAR. Any broker-dealer, and any 
director, officer, employee, or agent of any broker-dealer that is 
subpoenaed or otherwise requested to disclose a SAR or any information 
that would reveal the existence of a SAR, shall decline to produce the 
SAR or such information, citing this section and 31 U.S.C. 
5318(g)(2)(A)(i), and shall notify FinCEN of any such request and the 
response thereto.
    (ii) Rules of construction. Provided that no person involved in any 
reported suspicious transaction is notified that the transaction has 
been reported, this paragraph (e)(1) shall not be construed as 
prohibiting:
    (A) The disclosure by a broker-dealer, or any director, officer, 
employee, or agent of a broker-dealer, of:
    (1) A SAR, or any information that would reveal the existence of a 
SAR, to FinCEN or any Federal, State, or local law enforcement agency, 
or any Federal regulatory authority that examines the broker-dealer for 
compliance with the Bank Secrecy Act; or to any SRO that examines the 
broker-dealer for compliance with the requirements of this section, upon 
the request of the Securities Exchange Commission; or

[[Page 702]]

    (2) The underlying facts, transactions, and documents upon which a 
SAR is based, including but not limited to, disclosures:
    (i) To another financial institution, or any director, officer, 
employee, or agent of a financial institution, for the preparation of a 
joint SAR; or
    (ii) In connection with certain employment references or termination 
notices, to the full extent authorized in 31 U.S.C. 5318(g)(2)(B); or
    (B) The sharing by a broker-dealer, or any director, officer, 
employee, or agent of the broker-dealer, of a SAR, or any information 
that would reveal the existence of a SAR, within the broker-dealer's 
corporate organizational structure for purposes consistent with Title II 
of the Bank Secrecy Act as determined by regulation or in guidance.
    (2) Prohibition on disclosures by government authorities. A Federal, 
State, local, territorial, or Tribal government authority, or any 
director, officer, employee, or agent of any of the foregoing, shall not 
disclose a SAR, or any information that would reveal the existence of a 
SAR, except as necessary to fulfill official duties consistent with 
Title II of the Bank Secrecy Act. For purposes of this section, 
``official duties'' shall not include the disclosure of a SAR, or any 
information that would reveal the existence of a SAR, in response to a 
request for disclosure of non-public information or a request for use in 
a private legal proceeding, including a request pursuant to 31 CFR 1.11.
    (3) Prohibition on disclosures by Self-Regulatory Organizations. Any 
self-regulatory organization registered with the Securities and Exchange 
Commission, or any director, officer, employee, or agent of any of the 
foregoing, shall not disclose a SAR, or any information that would 
reveal the existence of a SAR except as necessary to fulfill self-
regulatory duties with the consent of the Securities Exchange 
Commission, in a manner consistent with Title II of the Bank Secrecy 
Act. For purposes of this section, ``self-regulatory duties'' shall not 
include the disclosure of a SAR, or any information that would reveal 
the existence of a SAR, in response to a request for disclosure of non-
public information or a request for use in a private legal proceeding.
    (f) Limitation on liability. A broker-dealer, and any director, 
officer, employee, or agent of any broker-dealer, that makes a voluntary 
disclosure of any possible violation of law or regulation to a 
government agency or makes a disclosure pursuant to this section or any 
other authority, including a disclosure made jointly with another 
institution, shall be protected from liability to any person for any 
such disclosure, or for failure to provide notice of such disclosure to 
any person identified in the disclosure, or both, to the full extent 
provided by 31 U.S.C. 5318(g)(3).
    (g) Compliance. Broker-dealers shall be examined by FinCEN or its 
delegatees for compliance with this section. Failure to satisfy the 
requirements of this section may be a violation of the Bank Secrecy Act 
and of this chapter.
    (h) Applicability date. This section applies to transactions 
occurring after December 30, 2002.

[75 FR 65812, Oct. 26, 2010, as amended at 76 FR 10519, Feb. 25, 2011]



  Subpart D_Records Required To Be Maintained by Brokers or Dealers in 
                               Securities



Sec. 1023.400  General.

    Brokers or dealers in securities are subject to the recordkeeping 
requirements set forth and cross referenced in this subpart. Brokers or 
dealers in securities should also refer to subpart D of part 1010 of 
this chapter for recordkeeping requirements contained in that subpart 
which apply to brokers or dealers in securities.



Sec. 1023.410  Additional records to be made and retained by brokers or
dealers in securities.

    (a)(1) With respect to each brokerage account opened with a broker 
or dealer in securities after June 30, 1972, and before October 1, 2003, 
by a person residing or doing business in the United States or a citizen 
of the United States, such broker or dealer shall within 30 days from 
the date such account is opened, secure and maintain a record of the 
taxpayer identification

[[Page 703]]

number of the person maintaining the account; or in the case of an 
account of one or more individuals, such broker or dealer shall secure 
and maintain a record of the social security number of an individual 
having a financial interest in that account. In the event that a broker 
or dealer has been unable to secure the identification required within 
the 30-day period specified, it shall nevertheless not be deemed to be 
in violation of this section if: It has made a reasonable effort to 
secure such identification, and it maintains a list containing the 
names, addresses, and account numbers of those persons from whom it has 
been unable to secure such identification, and makes the names, 
addresses, and account numbers of those persons available to the 
Secretary as directed by him. Where a person is a non-resident alien, 
the broker or dealer in securities shall also record the person's 
passport number or a description of some other government document used 
to verify his identity.
    (2) The 30-day period provided for in paragraph (a)(1) of this 
section shall be extended where the person opening the account has 
applied for a taxpayer identification or social security number on Form 
SS-4 or SS-5, until such time as the person maintaining the account has 
had a reasonable opportunity to secure such number and furnish it to the 
broker or dealer.
    (3) A taxpayer identification number for a deposit or share account 
required under paragraph (a)(1) of this section need not be secured in 
the following instances:
    (i) Accounts for public funds opened by agencies and 
instrumentalities of Federal, state, local, or foreign governments,
    (ii) Accounts for aliens who are ambassadors, ministers, career 
diplomatic or consular officers, or naval, military or other attaches of 
foreign embassies, and legations, and for the members of their immediate 
families,
    (iii) Accounts for aliens who are accredited representatives to 
international organizations which are entitled to enjoy privileges, 
exemptions, and immunities as an international organization under the 
International Organizations Immunities Act of December 29, 1945 (22 
U.S.C. 288), and for the members of their immediate families,
    (iv) Aliens temporarily residing in the United States for a period 
not to exceed 180 days,
    (v) Aliens not engaged in a trade or business in the United States 
who are attending a recognized college or university or any training 
program, supervised or conducted by any agency of the Federal 
Government, and
    (vi) Unincorporated subordinate units of a tax exempt central 
organization which are covered by a group exemption letter.
    (b) Every broker or dealer in securities shall, in addition, retain 
either the original or a microfilm or other copy or reproduction of each 
of the following:
    (1) Each document granting signature or trading authority over each 
customer's account;
    (2) Each record described in 17 CFR 240.17a-3(a)(1), (2), (3), (5), 
(6), (7), (8), and (9);
    (3) A record of each remittance or transfer of funds, or of 
currency, checks, other monetary instruments, investment securities, or 
credit, of more than $10,000 to a person, account, or place, outside the 
United States;
    (4) A record of each receipt of currency, other monetary 
instruments, checks, or investment securities and of each transfer of 
funds or credit, of more than $10,000 received on any one occasion 
directly and not through a domestic financial institution, from any 
person, account or place outside the United States.



    Subpart E_Special Information Sharing Procedures To Deter Money 
                    Laundering and Terrorist Activity



Sec. 1023.500  General.

    Brokers or dealers in securities are subject to the special 
information sharing procedures to deter money laundering and terrorist 
activity requirements set forth and cross referenced in this subpart. 
Brokers or dealers in securities should also refer to subpart E of part 
1010 of this chapter for special information sharing procedures to deter 
money laundering and terrorist activity contained in that subpart

[[Page 704]]

which apply to brokers or dealers in securities.



Sec. 1023.520  Special information sharing procedures to deter money
laundering and terrorist activity for brokers or dealers in securities.

    (a) Refer to Sec. 1010.520 of this chapter.
    (b) [Reserved]



Sec. 1023.530  [Reserved]



Sec. 1023.540  Voluntary information sharing among financial
institutions.

    (a) Refer to Sec. 1010.540 of this chapter.
    (b) [Reserved]



  Subpart F_Special Standards of Diligence; Prohibitions; and Special 
              Measures for Brokers or Dealers in Securities



Sec. 1023.600  General.

    Brokers or dealers in securities are subject to the special 
standards of diligence; prohibitions; and special measures requirements 
set forth and cross referenced in this subpart. Brokers or dealers in 
securities should also refer to subpart F of part 1010 of this chapter 
for special standards of diligence; prohibitions; and special measures 
contained in that subpart which apply to brokers or dealers in 
securities.



Sec. 1023.610  Due diligence programs for correspondent accounts for 
foreign financial institutions.

    (a) Refer to Sec. 1010.610 of this chapter.
    (b) [Reserved]



Sec. 1023.620  Due diligence programs for private banking accounts.

    (a) Refer to Sec. 1010.620 of this chapter.
    (b) [Reserved]



Sec. 1023.630  Prohibition on correspondent accounts for foreign shell 
banks; records concerning owners of foreign banks and agents for service 

of legal process.

    (a) Refer to Sec. 1010.630 of this chapter.
    (b) [Reserved]



Sec. 1023.640  [Reserved]



Sec. 1023.670  Summons or subpoena of foreign bank records; termination
of correspondent relationship.

    (a) Refer to Sec. 1010.670 of this chapter.
    (b) [Reserved]



PART 1024_RULES FOR MUTUAL FUNDS--Table of Contents



                          Subpart A_Definitions

Sec.
1024.100 Definitions.

                           Subpart B_Programs

1024.200 General.
1024.210 Anti-money laundering programs for mutual funds.
1024.220 Customer identification programs for mutual funds.

          Subpart C_Reports Required To Be Made By Mutual Funds

1024.300 General.
1024.310 Reports of transactions in currency.
1024.311 Filing obligations.
1024.312 Identification required.
1024.313 Aggregation.
1024.314 Structured transactions.
1024.315 Exemptions
1024.320 Reports by mutual funds of suspicious transactions.

       Subpart D_Records Required To Be Maintained By Mutual Funds

1024.400 General.
1024.410 Recordkeeping.

    Subpart E_Special Information Sharing Procedures To Deter Money 
                    Laundering and Terrorist Activity

1024.500 General.
1024.520 Special information sharing procedures to deter money 
          laundering and terrorist activity for mutual funds.
1024.530 [Reserved]
1024.540 Voluntary information sharing among financial institutions.

  Subpart F_Special Standards of Diligence; Prohibitions, and Special 
                        Measures for Mutual Funds

1024.600 General.
1024.610 Due diligence programs for correspondent accounts for foreign 
          financial institutions.
1024.620 Due diligence programs for private banking accounts.
1024.630 Prohibition on correspondent accounts for foreign shell banks; 
          records concerning owners of foreign banks and agents for 
          service of legal process.
1024.640-1024.670 [Reserved]


[[Page 705]]


    Authority: 12 U.S.C. 1829b and 1951-1959; 31 U.S.C. 5311-5314 and 
5316-5332; title III, sec. 314, Pub. L. 107-56, 115 Stat. 307.

    Source: 75 FR 65812, Oct. 26, 2010, unless otherwise noted.



                          Subpart A_Definitions



Sec. 1024.100  Definitions.

    Refer to Sec. 1010.100 of this chapter for general definitions not 
noted herein. To the extent there is a differing definition in Sec. 
1010.100 of this chapter, the definition in this section is what applies 
to part 1024. Unless otherwise indicated, for purposes of this part:
    (a) Account. For purposes of Sec. 1024.220:
    (1) Account means any contractual or other business relationship 
between a person and a mutual fund established to effect transactions in 
securities issued by the mutual fund, including the purchase or sale of 
securities.
    (2) Account does not include:
    (i) An account that a mutual fund acquires through any acquisition, 
merger, purchase of assets, or assumption of liabilities; or
    (ii) An account opened for the purpose of participating in an 
employee benefit plan established under the Employee Retirement Income 
Security Act of 1974.
    (b) Commission means the United States Securities and Exchange 
Commission.
    (c) Customer. For purposes of Sec. 1024.220:
    (1) Customer means:
    (i) A person that opens a new account; and
    (ii) An individual who opens a new account for:
    (A) An individual who lacks legal capacity, such as a minor; or
    (B) An entity that is not a legal person, such as a civic club.
    (2) Customer does not include:
    (i) A financial institution regulated by a Federal functional 
regulator or a bank regulated by a State bank regulator;
    (ii) A person described in Sec. 1020.315(b)(2) through (4) of this 
Chapter; or
    (iii) A person that has an existing account with the mutual fund, 
provided that the mutual fund has a reasonable belief that it knows the 
true identity of the person.
    (d) Financial institution is defined at 31 U.S.C. 5312(a)(2) and 
(c)(1).



                           Subpart B_Programs



Sec. 1024.200  General.

    Mutual funds are subject to the program requirements set forth and 
cross referenced in this subpart. Mutual funds should also refer to 
subpart B of part 1010 of this chapter for program requirements 
contained in that subpart which apply to mutual funds.



Sec. 1024.210  Anti-money laundering programs for mutual funds.

    (a) Effective July 24, 2002, each mutual fund shall develop and 
implement a written anti-money laundering program reasonably designed to 
prevent the mutual fund from being used for money laundering or the 
financing of terrorist activities and to achieve and monitor compliance 
with the applicable requirements of the Bank Secrecy Act (31 U.S.C. 
5311, et seq.), and the implementing regulations promulgated thereunder 
by the Department of the Treasury. Each mutual fund's anti-money 
laundering program must be approved in writing by its board of directors 
or trustees. A mutual fund shall make its anti-money laundering program 
available for inspection by the Commission.
    (b) The anti-money laundering program shall at a minimum:
    (1) Establish and implement policies, procedures, and internal 
controls reasonably designed to prevent the mutual fund from being used 
for money laundering or the financing of terrorist activities and to 
achieve compliance with the applicable provisions of the Bank Secrecy 
Act and the implementing regulations thereunder;
    (2) Provide for independent testing for compliance to be conducted 
by the mutual fund's personnel or by a qualified outside party;
    (3) Designate a person or persons responsible for implementing and 
monitoring the operations and internal controls of the program; and
    (4) Provide ongoing training for appropriate persons.

[[Page 706]]



Sec. 1024.220  Customer identification programs for mutual funds.

    (a) Customer identification program: minimum requirements--(1) In 
general. A mutual fund must implement a written Customer Identification 
Program (``CIP'') appropriate for its size and type of business that, at 
a minimum, includes each of the requirements of paragraphs (a)(1) 
through (5) of this section. The CIP must be a part of the mutual fund's 
anti-money laundering program required under the regulations 
implementing 31 U.S.C. 5318(h).
    (2) Identity verification procedures. The CIP must include risk-
based procedures for verifying the identity of each customer to the 
extent reasonable and practicable. The procedures must enable the mutual 
fund to form a reasonable belief that it knows the true identity of each 
customer. The procedures must be based on the mutual fund's assessment 
of the relevant risks, including those presented by the manner in which 
accounts are opened, fund shares are distributed, and purchases, sales 
and exchanges are effected, the various types of accounts maintained by 
the mutual fund, the various types of identifying information available, 
and the mutual fund's customer base. At a minimum, these procedures must 
contain the elements described in this paragraph (a)(2).
    (i) Customer information required--(A) In general. The CIP must 
contain procedures for opening an account that specify the identifying 
information that will be obtained with respect to each customer. Except 
as permitted by paragraph (a)(2)(i)(B) of this section, a mutual fund 
must obtain, at a minimum, the following information prior to opening an 
account:
    (1) Name;
    (2) Date of birth, for an individual;
    (3) Address, which shall be:
    (i) For an individual, a residential or business street address;
    (ii) For an individual who does not have a residential or business 
street address, an Army Post Office (APO) or Fleet Post Office (FPO) box 
number, or the residential or business street address of next of kin or 
of another contact individual; or
    (iii) For a person other than an individual (such as a corporation, 
partnership, or trust), a principal place of business, local office or 
other physical location; and
    (4) Identification number, which shall be:
    (i) For a U.S. person, a taxpayer identification number; or
    (ii) For a non-U.S. person, one or more of the following: a taxpayer 
identification number; passport number and country of issuance; alien 
identification card number; or number and country of issuance of any 
other government-issued document evidencing nationality or residence and 
bearing a photograph or similar safeguard.
    Note to Paragraph (a)(2)(i)(A)(4)(ii): When opening an account for a 
foreign business or enterprise that does not have an identification 
number, the mutual fund must request alternative government-issued 
documentation certifying the existence of the business or enterprise.

    (B) Exception for persons applying for a taxpayer identification 
number. Instead of obtaining a taxpayer identification number from a 
customer prior to opening an account, the CIP may include procedures for 
opening an account for a person that has applied for, but has not 
received, a taxpayer identification number. In this case, the CIP must 
include procedures to confirm that the application was filed before the 
person opens the account and to obtain the taxpayer identification 
number within a reasonable period of time after the account is opened.
    (ii) Customer verification. The CIP must contain procedures for 
verifying the identity of the customer, using the information obtained 
in accordance with paragraph (a)(2)(i) of this section, within a 
reasonable time after the account is opened. The procedures must 
describe when the mutual fund will use documents, non-documentary 
methods, or a combination of both methods as described in this paragraph 
(a)(2)(ii).
    (A) Verification through documents. For a mutual fund relying on 
documents, the CIP must contain procedures that set forth the documents 
that the mutual fund will use. These documents may include:
    (1) For an individual, unexpired government-issued identification 
evidencing nationality or residence and bearing a photograph or similar 
safeguard,

[[Page 707]]

such as a driver's license or passport; and
    (2) For a person other than an individual (such as a corporation, 
partnership, or trust), documents showing the existence of the entity, 
such as certified articles of incorporation, a government-issued 
business license, a partnership agreement, or trust instrument.
    (B) Verification through non-documentary methods. For a mutual fund 
relying on non-documentary methods, the CIP must contain procedures that 
describe the non-documentary methods the mutual fund will use.
    (1) These methods may include contacting a customer; independently 
verifying the customer's identity through the comparison of information 
provided by the customer with information obtained from a consumer 
reporting agency, public database, or other source; checking references 
with other financial institutions; and obtaining a financial statement.
    (2) The mutual fund's non-documentary procedures must address 
situations where an individual is unable to present an unexpired 
government-issued identification document that bears a photograph or 
similar safeguard; the mutual fund is not familiar with the documents 
presented; the account is opened without obtaining documents; the 
customer opens the account without appearing in person; and where the 
mutual fund is otherwise presented with circumstances that increase the 
risk that the mutual fund will be unable to verify the true identity of 
a customer through documents.
    (C) Additional verification for certain customers. The CIP must 
address situations where, based on the mutual fund's risk assessment of 
a new account opened by a customer that is not an individual, the mutual 
fund will obtain information about individuals with authority or control 
over such account, including persons authorized to effect transactions 
in the shareholder of record's account, in order to verify the 
customer's identity. This verification method applies only when the 
mutual fund cannot verify the customer's true identity using the 
verification methods described in paragraphs (a)(2)(ii)(A) and (B) of 
this section.
    (iii) Lack of verification. The CIP must include procedures for 
responding to circumstances in which the mutual fund cannot form a 
reasonable belief that it knows the true identity of a customer. These 
procedures should describe:
    (A) When the mutual fund should not open an account;
    (B) The terms under which a customer may use an account while the 
mutual fund attempts to verify the customer's identity;
    (C) When the mutual fund should file a Suspicious Activity Report in 
accordance with applicable law and regulation; and
    (D) When the mutual fund should close an account, after attempts to 
verify a customer's identity have failed.
    (3) Recordkeeping. The CIP must include procedures for making and 
maintaining a record of all information obtained under paragraph (a) of 
this section.
    (i) Required records. At a minimum, the record must include:
    (A) All identifying information about a customer obtained under 
paragraph (a)(2)(i) of this section;
    (B) A description of any document that was relied on under paragraph 
(a)(2)(ii)(A) of this section noting the type of document, any 
identification number contained in the document, the place of issuance, 
and if any, the date of issuance and expiration date;
    (C) A description of the methods and the results of any measures 
undertaken to verify the identity of the customer under paragraph 
(a)(2)(ii)(B) or (C) of this section; and
    (D) A description of the resolution of any substantive discrepancy 
discovered when verifying the identifying information obtained.
    (ii) Retention of records. The mutual fund must retain the 
information in paragraph (a)(3)(i)(A) of this section for five years 
after the date the account is closed. The mutual fund must retain the 
information in paragraphs (a)(3)(i)(B), (C), and (D) of this section for 
five years after the record is made.
    (4) Comparison with government lists. The CIP must include 
procedures for

[[Page 708]]

determining whether the customer appears on any list of known or 
suspected terrorists or terrorist organizations issued by any Federal 
government agency and designated as such by the Department of the 
Treasury in consultation with the Federal functional regulators. The 
procedures must require the mutual fund to make such a determination 
within a reasonable period of time after the account is opened, or 
earlier, if required by another Federal law or regulation or Federal 
directive issued in connection with the applicable list. The procedures 
must also require the mutual fund to follow all Federal directives 
issued in connection with such lists.
    (5)(i) Customer notice. The CIP must include procedures for 
providing mutual fund customers with adequate notice that the mutual 
fund is requesting information to verify their identities.
    (ii) Adequate notice. Notice is adequate if the mutual fund 
generally describes the identification requirements of this section and 
provides the notice in a manner reasonably designed to ensure that a 
customer is able to view the notice, or is otherwise given notice, 
before opening an account. For example, depending on the manner in which 
the account is opened, a mutual fund may post a notice on its Web site, 
include the notice on its account applications, or use any other form of 
written or oral notice.
    (iii) Sample notice. If appropriate, a mutual fund may use the 
following sample language to provide notice to its customers:

    Important Information About Procedures for Opening a New Account

    To help the government fight the funding of terrorism and money 
laundering activities, Federal law requires all financial institutions 
to obtain, verify, and record information that identifies each person 
who opens an account.
    What this means for you: When you open an account, we will ask for 
your name, address, date of birth, and other information that will allow 
us to identify you. We may also ask to see your driver's license or 
other identifying documents.

    (6) Reliance on other financial institutions. The CIP may include 
procedures specifying when a mutual fund will rely on the performance by 
another financial institution (including an affiliate) of any procedures 
of the mutual fund's CIP, with respect to any customer of the mutual 
fund that is opening, or has opened, an account or has established a 
similar formal business relationship with the other financial 
institution to provide or engage in services, dealings, or other 
financial transactions, provided that:
    (i) Such reliance is reasonable under the circumstances;
    (ii) The other financial institution is subject to a rule 
implementing 31 U.S.C. 5318(h) and is regulated by a Federal functional 
regulator; and
    (iii) The other financial institution enters into a contract 
requiring it to certify annually to the mutual fund that it has 
implemented its anti-money laundering program, and that it (or its 
agent) will perform the specific requirements of the mutual fund's CIP.
    (b) Exemptions. The Commission, with the concurrence of the 
Secretary, may, by order or regulation, exempt any mutual fund or type 
of account from the requirements of this section. The Commission and the 
Secretary shall consider whether the exemption is consistent with the 
purposes of the Bank Secrecy Act and is in the public interest, and may 
consider other appropriate factors.
    (c) Other requirements unaffected. Nothing in this section relieves 
a mutual fund of its obligation to comply with any other provision in 
this chapter, including provisions concerning information that must be 
obtained, verified, or maintained in connection with any account or 
transaction.



          Subpart C_Reports Required To Be Made By Mutual Funds



Sec. 1024.300  General.

    Mutual funds are subject to the reporting requirements set forth and 
cross referenced in this subpart. Mutual funds should also refer to 
subpart C of part 1010 of this chapter for reporting requirements 
contained in that subpart which apply to mutual funds.



Sec. 1024.310  Reports of transactions in currency.

    The reports of transactions in currency requirements for mutual 
funds

[[Page 709]]

are located in subpart C of part 1010 of this chapter and this subpart.



Sec. 1024.311  Filing obligations.

    Refer to Sec. 1010.311 of this chapter for reports of transactions 
in currency filing obligations for mutual funds.



Sec. 1024.312  Identification required.

    Refer to Sec. 1010.312 of this chapter for identification 
requirements for reports of transactions in currency filed by mutual 
funds.



Sec. 1024.313  Aggregation.

    Refer to Sec. 1010.313 of this chapter for reports of transactions 
in currency aggregation requirements for mutual funds.



Sec. 1024.314  Structured transactions.

    Refer to Sec. 1010.314 of this chapter for rules regarding 
structured transactions for mutual funds.



Sec. 1024.315  Exemptions.

    Refer to Sec. 1010.315 of this chapter for exemptions from the 
obligation to file reports of transactions in currency for mutual funds.



Sec. 1024.320  Reports by mutual funds of suspicious transactions.

    (a) General. (1) Every investment company (as defined in section 3 
of the Investment Company Act of 1940 (15 U.S.C. 80a-3) (``Investment 
Company Act'') that is an open-end company (as defined in section 5 of 
the Investment Company Act (15 U.S.C. 80a-5)) and that is registered, or 
is required to register, with the Securities and Exchange Commission 
pursuant to that Act (for purposes of this section, a ``mutual fund''), 
shall file with the Financial Crimes Enforcement Network, to the extent 
and in the manner required by this section, a report of any suspicious 
transaction relevant to a possible violation of law or regulation. A 
mutual fund may also file with the Financial Crimes Enforcement Network 
a report of any suspicious transaction that it believes is relevant to 
the possible violation of any law or regulation, but whose reporting is 
not required by this section. Filing a report of a suspicious 
transaction does not relieve a mutual fund from the responsibility of 
complying with any other reporting requirements imposed by the 
Securities and Exchange Commission.
    (2) A transaction requires reporting under this section if it is 
conducted or attempted by, at, or through a mutual fund, it involves or 
aggregates funds or other assets of at least $5,000, and the mutual fund 
knows, suspects, or has reason to suspect that the transaction (or a 
pattern of transactions of which the transaction is a part):
    (i) Involves funds derived from illegal activity or is intended or 
conducted in order to hide or disguise funds or assets derived from 
illegal activity (including, without limitation, the ownership, nature, 
source, location, or control of such funds or assets) as part of a plan 
to violate or evade any Federal law or regulation or to avoid any 
transaction reporting requirement under Federal law or regulation;
    (ii) Is designed, whether through structuring or other means, to 
evade any requirements of this chapter or any other regulations 
promulgated under the Bank Secrecy Act;
    (iii) Has no business or apparent lawful purpose or is not the sort 
in which the particular customer would normally be expected to engage, 
and the mutual fund knows of no reasonable explanation for the 
transaction after examining the available facts, including the 
background and possible purpose of the transaction; or
    (iv) Involves use of the mutual fund to facilitate criminal 
activity.
    (3) More than one mutual fund may have an obligation to report the 
same transaction under this section, and other financial institutions 
may have separate obligations to report suspicious activity with respect 
to the same transaction pursuant to other provisions of this chapter. In 
those instances, no more than one report is required to be filed by the 
mutual fund(s) and other financial institution(s) involved in the 
transaction, provided that the report filed contains all relevant facts, 
including the name of each financial institution and the words ``joint 
filing'' in the narrative section, and each institution maintains a copy 
of the report filed, along with any supporting documentation.

[[Page 710]]

    (b) Filing and notification procedures--(1) What to file. A 
suspicious transaction shall be reported by completing a Suspicious 
Activity Report by Securities and Futures Industries (``SAR-SF''), and 
collecting and maintaining supporting documentation as required by 
paragraph (c) of this section.
    (2) Where to file. Form SAR-SF shall be filed with the Financial 
Crimes Enforcement Network in accordance with the instructions to the 
Form SAR-SF.
    (3) When to file. A Form SAR-SF shall be filed no later than 30 
calendar days after the date of the initial detection by the reporting 
mutual fund of facts that may constitute a basis for filing a Form SAR-
SF under this section. If no suspect is identified on the date of such 
initial detection, a mutual fund may delay filing a Form SAR-SF for an 
additional 30 calendar days to identify a suspect, but in no case shall 
reporting be delayed more than 60 calendar days after the date of such 
initial detection.
    (4) Mandatory notification to law enforcement. In situations 
involving violations that require immediate attention, such as suspected 
terrorist financing or ongoing money laundering schemes, a mutual fund 
shall immediately notify by telephone an appropriate law enforcement 
authority in addition to filing timely a Form SAR-SF.
    (5) Voluntary notification to the Financial Crimes Enforcement 
Network or the Securities and Exchange Commission. Mutual funds wishing 
voluntarily to report suspicious transactions that may relate to 
terrorist activity may call the Financial Crimes Enforcement Network's 
Financial Institutions Hotline at 1-866-556-3974 in addition to filing 
timely a Form SAR-SF if required by this section. The mutual fund may 
also, but is not required to, contact the Securities and Exchange 
Commission to report in such situations.
    (c) Retention of records. A mutual fund shall maintain a copy of any 
Form SAR-SF filed by the fund or on its behalf (including joint 
reports), and the original (or business record equivalent) of any 
supporting documentation concerning any Form SAR-SF that it files (or is 
filed on its behalf), for a period of five years from the date of filing 
the Form SAR-SF. Supporting documentation shall be identified as such 
and maintained by the mutual fund, and shall be deemed to have been 
filed with the Form SAR-SF. The mutual fund shall make all supporting 
documentation available to FinCEN or any Federal, State, or local law 
enforcement agency, or any Federal regulatory authority that examines 
the mutual fund for compliance with the Bank Secrecy Act, upon request.
    (d) Confidentiality of SARs. A SAR, and any information that would 
reveal the existence of a SAR, are confidential and shall not be 
disclosed except as authorized in this paragraph (d). For purposes of 
this paragraph (d) only, a SAR shall include any suspicious activity 
report filed with FinCEN pursuant to any regulation in this chapter.
    (1) Prohibition on disclosures by mutual funds--(i) General rule. No 
mutual fund, and no director, officer, employee, or agent of any mutual 
fund, shall disclose a SAR or any information that would reveal the 
existence of a SAR. Any mutual fund, and any director, officer, 
employee, or agent of any mutual fund that is subpoenaed or otherwise 
requested to disclose a SAR or any information that would reveal the 
existence of a SAR, shall decline to produce the SAR or such 
information, citing this section and 31 U.S.C. 5318(g)(2)(A)(i), and 
shall notify FinCEN of any such request and the response thereto.
    (ii) Rules of construction. Provided that no person involved in any 
reported suspicious transaction is notified that the transaction has 
been reported, this paragraph (d)(1) shall not be construed as 
prohibiting:
    (A) The disclosure by a mutual fund, or any director, officer, 
employee, or agent of a mutual fund, of:
    (1) A SAR, or any information that would reveal the existence of a 
SAR, to FinCEN or any Federal, State, or local law enforcement agency, 
or any Federal regulatory authority that examines the mutual fund for 
compliance with the Bank Secrecy Act; or
    (2) The underlying facts, transactions, and documents upon which a 
SAR is based, including but not limited

[[Page 711]]

to, disclosures to another financial institution, or any director, 
officer, employee, or agent of a financial institution, for the 
preparation of a joint SAR; or
    (B) The sharing by a mutual fund, or any director, officer, 
employee, or agent of the mutual fund, of a SAR, or any information that 
would reveal the existence of a SAR, within the mutual fund's corporate 
organizational structure for purposes consistent with Title II of the 
Bank Secrecy Act as determined by regulation or in guidance.
    (2) Prohibition on disclosures by government authorities. A Federal, 
State, local, territorial, or Tribal government authority, or any 
director, officer, employee, or agent of any of the foregoing, shall not 
disclose a SAR, or any information that would reveal the existence of a 
SAR, except as necessary to fulfill official duties consistent with 
Title II of the Bank Secrecy Act. For purposes of this section, 
``official duties'' shall not include the disclosure of a SAR, or any 
information that would reveal the existence of a SAR, in response to a 
request for disclosure of non-public information or a request for use in 
a private legal proceeding, including a request pursuant to 31 CFR 1.11.
    (e) Limitation on liability. A mutual fund, and any director, 
officer, employee, or agent of any mutual fund, that makes a voluntary 
disclosure of any possible violation of law or regulation to a 
government agency or makes a disclosure pursuant to this section or any 
other authority, including a disclosure made jointly with another 
institution, shall be protected from liability to any person for any 
such disclosure, or for failure to provide notice of such disclosure to 
any person identified in the disclosure, or both, to the full extent 
provided by 31 U.S.C. 5318(g)(3).
    (f) Compliance. Mutual funds shall be examined by FinCEN or its 
delegatees for compliance with this section. Failure to satisfy the 
requirements of this section may be a violation of the Bank Secrecy Act 
and of this chapter.
    (g) Applicability date. This section applies to transactions 
occurring after October 31, 2006.

[75 FR 65812, Oct. 26, 2010, as amended at 76 FR 10519, Feb. 25, 2011]



       Subpart D_Records Required To Be Maintained By Mutual Funds



Sec. 1024.400  General.

    Mutual funds are subject to the recordkeeping requirements set forth 
and cross referenced in this subpart. Mutual funds should also refer to 
subpart D of part 1010 of this chapter for recordkeeping requirements 
contained in that subpart which apply to mutual funds.



Sec. 1024.410  Recordkeeping.

    Refer to Sec. 1010.410 of this chapter.



    Subpart E_Special Information Sharing Procedures To Deter Money 
                    Laundering and Terrorist Activity



Sec. 1024.500  General.

    Mutual funds are subject to the special information sharing 
procedures to deter money laundering and terrorist activity requirements 
set forth and cross referenced in this subpart. Mutual funds should also 
refer to subpart E of part 1010 of this chapter for special information 
sharing procedures to deter money laundering and terrorist activity 
contained in that subpart which apply to mutual funds.



Sec. 1024.520  Special information sharing procedures to deter money
laundering and terrorist activity for mutual funds.

    (a) Refer to Sec. 1010.520 of this chapter.
    (b) [Reserved]



Sec. 1024.530  [Reserved]



Sec. 1024.540  Voluntary information sharing among financial institutions.

    (a) Refer to Sec. 1010.540 of this chapter.
    (b) [Reserved]



  Subpart F_Special Standards of Diligence; Prohibitions; and Special 
                        Measures for Mutual Funds



Sec. 1024.600  General.

    Mutual funds are subject to the special standards of diligence; 
prohibitions; and special measures requirements set forth and cross 
referenced in

[[Page 712]]

this subpart. Mutual funds should also refer to subpart F of part 1010 
of this chapter for special standards of diligence; prohibitions; and 
special measures contained in that subpart which apply to mutual funds.



Sec. 1024.610  Due diligence programs for correspondent accounts for
foreign financial institutions.

    (a) Refer to Sec. 1010.610 of this chapter.
    (b) [Reserved]



Sec. 1024.620  Due diligence programs for private banking accounts.

    (a) Refer to Sec. 1010.620 of this chapter.
    (b) [Reserved]



Sec. 1024.630  Prohibition on correspondent accounts for foreign shell
banks; records concerning owners of foreign banks and agents for service

of legal process.

    (a) Refer to Sec. 1010.630 of this chapter.
    (b) [Reserved]



Sec. Sec. 1024.640-1024.670  [Reserved]



PART 1025_RULES FOR INSURANCE COMPANIES--Table of Contents



                          Subpart A_Definitions

Sec.
1025.100 Definitions.

                           Subpart B_Programs

1025.200 General.
1025.210 Anti-money laundering programs for insurance companies.

      Subpart C_Reports Required To Be Made By Insurance Companies

1025.300 General.
1025.310-1025.315 [Reserved]
1025.320 Reports by insurance companies of suspicious transactions.
1025.330 Reports relating to currency in excess of $10,000 received in a 
          trade or business.

   Subpart D_Records Required To Be Maintained By Insurance Companies

1025.400 General.
1025.410 Recordkeeping.

    Subpart E_Special Information Sharing Procedures To Deter Money 
                    Laundering and Terrorist Activity

1025.500 General.
1025.520 Special information sharing procedures to deter money 
          laundering and terrorist activity for insurance companies.
1025.530 [Reserved]
1025.540 Voluntary information sharing among financial institutions.

  Subpart F_Special Standards of Diligence; Prohibitions, and Special 
                    Measures for Insurance Companies

1025.600-1025.670 [Reserved]

    Authority: 12 U.S.C. 1829b and 1951-1959; 31 U.S.C. 5311-5314 and 
5316-5332; title III, sec. 314, Pub. L. 107-56, 115 Stat. 307.

    Source: 75 FR 65812, Oct. 26, 2010, unless otherwise noted.



                          Subpart A_Definitions



Sec. 1025.100  Definitions.

    Refer to Sec. 1010.100 of this chapter for general definitions not 
noted herein. To the extent there is a differing definition in Sec. 
1010.100 of this chapter, the definition in this section is what applies 
to part 1025. Unless otherwise indicated, for purposes of this part:
    (a) Annuity contract means any agreement between the insurer and the 
contract owner whereby the insurer promises to pay out a fixed or 
variable income stream for a period of time.
    (b) Covered product means:
    (1) A permanent life insurance policy, other than a group life 
insurance policy;
    (2) An annuity contract, other than a group annuity contract; or
    (3) Any other insurance product with features of cash value or 
investment.
    (c) Group annuity contract means a master contract providing 
annuities to a group of persons under a single contract.
    (d) Group life insurance policy means any life insurance policy 
under which a number of persons and their dependents, if appropriate, 
are insured under a single policy.
    (e) Insurance agent means a sales and/or service representative of 
an insurance company. The term ``insurance agent'' encompasses any 
person that sells, markets, distributes, or services an insurance 
company's covered products, including, but not limited to, a person who 
represents only one insurance company, a person who represents more than 
one insurance company, and

[[Page 713]]

a bank or broker-dealer in securities that sells any covered product of 
an insurance company.
    (f) Insurance broker means a person who, by acting as the customer's 
representative, arranges and/or services covered products on behalf of 
the customer.
    (g) Insurance company or insurer. (1) Except as provided in 
paragraph (g)(2) of this section, the term ``insurance company'' or 
``insurer'' means any person engaged within the United States as a 
business in the issuing or underwriting of any covered product.
    (2) The term ``insurance company'' or ``insurer'' does not include 
an insurance agent or insurance broker.
    (h) Permanent life insurance policy means an agreement that contains 
a cash value or investment element and that obligates the insurer to 
indemnify or to confer a benefit upon the insured or beneficiary to the 
agreement contingent upon the death of the insured.



                           Subpart B_Programs



Sec. 1025.200  General.

    Insurance companies are subject to the program requirements set 
forth and cross referenced in this subpart. Insurance companies should 
also refer to subpart B of part 1010 of this chapter for program 
requirements contained in that subpart which apply to insurance 
companies.



Sec. 1025.210  Anti-money laundering programs for insurance companies.

    (a) In general. Not later than May 2, 2006, each insurance company 
shall develop and implement a written anti-money laundering program 
applicable to its covered products that is reasonably designed to 
prevent the insurance company from being used to facilitate money 
laundering or the financing of terrorist activities. The program must be 
approved by senior management. An insurance company shall make a copy of 
its anti-money laundering program available to the Department of the 
Treasury, the Financial Crimes Enforcement Network, or their designee 
upon request.
    (b) Minimum requirements. At a minimum, the program required by 
paragraph (a) of this section shall:
    (1) Incorporate policies, procedures, and internal controls based 
upon the insurance company's assessment of the money laundering and 
terrorist financing risks associated with its covered products. 
Policies, procedures, and internal controls developed and implemented by 
an insurance company under this section shall include provisions for 
complying with the applicable requirements of subchapter II of chapter 
53 of title 31, United States Code and this chapter, integrating the 
company's insurance agents and insurance brokers into its anti-money 
laundering program, and obtaining all relevant customer-related 
information necessary for an effective anti-money laundering program.
    (2) Designate a compliance officer who will be responsible for 
ensuring that:
    (i) The anti-money laundering program is implemented effectively, 
including monitoring compliance by the company's insurance agents and 
insurance brokers with their obligations under the program;
    (ii) The anti-money laundering program is updated as necessary; and
    (iii) Appropriate persons are educated and trained in accordance 
with paragraph (b)(3) of this section.
    (3) Provide for on-going training of appropriate persons concerning 
their responsibilities under the program. An insurance company may 
satisfy this requirement with respect to its employees, insurance 
agents, and insurance brokers by directly training such persons or 
verifying that persons have received training by another insurance 
company or by a competent third party with respect to the covered 
products offered by the insurance company.
    (4) Provide for independent testing to monitor and maintain an 
adequate program, including testing to determine compliance of the 
company's insurance agents and insurance brokers with their obligations 
under the program. The scope and frequency of the testing shall be 
commensurate with the risks posed by the insurance company's covered 
products. Such testing may be conducted by a third party or by any 
officer or employee of the insurance

[[Page 714]]

company, other than the person designated in paragraph (b)(2) of this 
section.
    (c) Anti-money laundering program requirements for insurance 
companies registered or required to register with the Securities and 
Exchange Commission as broker-dealers in securities. An insurance 
company that is registered or required to register with the Securities 
and Exchange Commission as a broker-dealer in securities shall be deemed 
to have satisfied the requirements of this section for its broker-dealer 
activities to the extent that the company is required to establish and 
has established an anti-money laundering program pursuant to Sec. 
1023.210 of this chapter and complies with such program.
    (d) Compliance. Compliance with this section shall be examined by 
the Department of the Treasury, through the Financial Crimes Enforcement 
Network or its delegees, under the terms of the Bank Secrecy Act. 
Failure to comply with the requirements of this section may constitute a 
violation of the Bank Secrecy Act and of this chapter.



      Subpart C_Reports Required To Be Made By Insurance Companies



Sec. 1025.300  General.

    Insurance companies are subject to the reporting requirements set 
forth and cross referenced in this subpart. Insurance companies should 
also refer to subpart C of part 1010 of this chapter for reporting 
requirements contained in that subpart which apply to insurance 
companies.



Sec. Sec. 1025.310-1025.315  [Reserved]



Sec. 1025.320  Reports by insurance companies of suspicious transactions.

    (a) General. (1) Each insurance company shall file with the 
Financial Crimes Enforcement Network, to the extent and in the manner 
required by this section, a report of any suspicious transaction 
involving a covered product that is relevant to a possible violation of 
law or regulation. An insurance company may also file with the Financial 
Crimes Enforcement Network by using the form specified in paragraph 
(b)(1) of this section or otherwise, a report of any suspicious 
transaction that it believes is relevant to the possible violation of 
any law or regulation but the reporting of which is not required by this 
section.
    (2) A transaction requires reporting under this section if it is 
conducted or attempted by, at, or through an insurance company, and 
involves or aggregates at least $5,000 in funds or other assets, and the 
insurance company knows, suspects, or has reason to suspect that the 
transaction (or a pattern of transactions of which the transaction is a 
part):
    (i) Involves funds derived from illegal activity or is intended or 
conducted in order to hide or disguise funds or assets derived from 
illegal activity (including, without limitation, the ownership, nature, 
source, location, or control of such funds or assets) as part of a plan 
to violate or evade any Federal law or regulation or to avoid any 
transaction reporting requirement under Federal law or regulation;
    (ii) Is designed, whether through structuring or other means, to 
evade any requirements of this chapter or of any other regulations 
promulgated under the Bank Secrecy Act;
    (iii) Has no business or apparent lawful purpose or is not the sort 
in which the particular customer would normally be expected to engage, 
and the insurance company knows of no reasonable explanation for the 
transaction after examining the available facts, including the 
background and possible purpose of the transaction; or
    (iv) Involves use of the insurance company to facilitate criminal 
activity.
    (3)(i) An insurance company is responsible for reporting suspicious 
transactions conducted through its insurance agents and insurance 
brokers. Accordingly, an insurance company shall establish and implement 
policies and procedures reasonably designed to obtain customer-related 
information necessary to detect suspicious activity from all relevant 
sources, including from its insurance agents and insurance brokers, and 
shall report suspicious activity based on such information.

[[Page 715]]

    (ii) Certain insurance agents may have a separate obligation to 
report suspicious activity pursuant to other provisions of this chapter. 
In those instances, no more than one report is required to be filed by 
the financial institutions involved in the transaction, as long as the 
report filed contains all relevant facts, including the names of both 
institutions and the words ``joint filing'' in the narrative section, 
and both institutions maintain a copy of the report filed, along with 
any supporting documentation.
    (iii) An insurance company that issues variable insurance products 
funded by separate accounts that meet the definition of a mutual fund in 
Sec. 1024.320(a)(1) of this chapter shall file reports of suspicious 
transactions pursuant to Sec. 1024.320 of this chapter.
    (b) Filing procedures--(1) What to file. A suspicious transaction 
shall be reported by completing a Suspicious Activity Report by 
Insurance Companies (SAR-IC), and collecting and maintaining supporting 
documentation as required by paragraph (d) of this section.
    (2) Where to file. The SAR-IC shall be filed with the Financial 
Crimes Enforcement Network as indicated in the instructions to the SAR-
IC.
    (3) When to file. A SAR-IC shall be filed no later than 30 calendar 
days after the date of the initial detection by the insurance company of 
facts that may constitute a basis for filing a SAR-IC under this 
section. If no suspect is identified on the date of such initial 
detection, an insurance company may delay filing a SAR-IC for an 
additional 30 calendar days to identify a suspect, but in no case shall 
reporting be delayed more than 60 calendar days after the date of such 
initial detection. In situations that require immediate attention, such 
as terrorist financing or ongoing money laundering schemes, the 
insurance company shall immediately notify by telephone an appropriate 
law enforcement authority in addition to filing timely a SAR-IC. 
Insurance companies wishing voluntarily to report suspicious 
transactions that may relate to terrorist activity may call the 
Financial Crimes Enforcement Network's Financial Institutions Hotline at 
1-866-556-3974 in addition to filing timely a SAR-IC if required by this 
section.
    (c) Exception. An insurance company is not required to file a SAR-IC 
to report the submission to it of false or fraudulent information to 
obtain a policy or make a claim, unless the company has reason to 
believe that the false or fraudulent submission relates to money 
laundering or terrorist financing.
    (d) Retention of records. An insurance company shall maintain a copy 
of any SAR-IC filed and the original or business record equivalent of 
any supporting documentation for a period of five years from the date of 
filing the SAR-IC. Supporting documentation shall be identified as such 
and maintained by the insurance company and shall be deemed to have been 
filed with the SAR-IC. When an insurance company has filed or is 
identified as a filer in a joint Suspicious Activity Report, the 
insurance company shall maintain a copy of such joint report (together 
with copies of any supporting documentation) for a period of five years 
from the date of filing. An insurance company shall make all supporting 
documentation available to FinCEN or any Federal, State, or local law 
enforcement agency, or any Federal regulatory authority that examines 
the insurance company for compliance with the Bank Secrecy Act, or any 
State regulatory authority administering a State law that requires the 
insurance company to comply with the Bank Secrecy Act or otherwise 
authorizes the State authority to ensure that the institution complies 
with the Bank Secrecy Act, upon request.
    (e) Confidentiality of SARs. A SAR, and any information that would 
reveal the existence of a SAR, are confidential and shall not be 
disclosed except as authorized in this paragraph (e). For purposes of 
this paragraph (e) only, a SAR shall include any suspicious activity 
report filed with FinCEN pursuant to any regulation in this chapter.
    (1) Prohibition on disclosures by insurance companies--(i) General 
rule. No insurance company, and no director, officer, employee, or agent 
of any insurance company, shall disclose a SAR or any information that 
would reveal the existence of a SAR. Any insurance

[[Page 716]]

company, and any director, officer, employee, or agent of any insurance 
company that is subpoenaed or otherwise requested to disclose a SAR or 
any information that would reveal the existence of a SAR, shall decline 
to produce the SAR or such information, citing this section and 31 
U.S.C. 5318(g)(2)(A)(i), and shall notify FinCEN of any such request and 
the response thereto.
    (ii) Rules of Construction. Provided that no person involved in any 
reported suspicious transaction is notified that the transaction has 
been reported, this paragraph (e)(1) shall not be construed as 
prohibiting:
    (A) The disclosure by an insurance company, or any director, 
officer, employee, or agent of an insurance company, of:
    (1) A SAR, or any information that would reveal the existence of a 
SAR, to FinCEN or any Federal, State, or local law enforcement agency, 
or any Federal regulatory authority that examines the insurance company 
for compliance with the Bank Secrecy Act, or any State regulatory 
authority administering a State law that requires the insurance company 
to comply with the Bank Secrecy Act or otherwise authorizes the State 
authority to ensure that the institution complies with the Bank Secrecy 
Act; or
    (2) The underlying facts, transactions, and documents upon which a 
SAR is based, including but not limited to, disclosures to another 
financial institution, or any director, officer, employee, or agent of a 
financial institution, for the preparation of a joint SAR.
    (B) The sharing by an insurance company, or any director, officer, 
employee, or agent of the insurance company, of a SAR, or any 
information that would reveal the existence of a SAR, within the 
insurance company's corporate organizational structure for purposes 
consistent with Title II of the Bank Secrecy Act as determined by 
regulation or in guidance.
    (2) Prohibition on disclosures by government authorities. A Federal, 
State, local, territorial, or Tribal government authority, or any 
director, officer, employee, or agent of any of the foregoing, shall not 
disclose a SAR, or any information that would reveal the existence of a 
SAR, except as necessary to fulfill official duties consistent with 
Title II of the Bank Secrecy Act. For purposes of this section, 
``official duties'' shall not include the disclosure of a SAR, or any 
information that would reveal the existence of a SAR, in response to a 
request for disclosure of non-public information or a request for use in 
a private legal proceeding, including a request pursuant to 31 CFR 1.11.
    (f) Limitation on liability. An insurance company, and any director, 
officer, employee, or agent of any insurance company, that makes a 
voluntary disclosure of any possible violation of law or regulation to a 
government agency or makes a disclosure pursuant to this section or any 
other authority, including a disclosure made jointly with another 
institution, shall be protected from liability to any person for any 
such disclosure, or for failure to provide notice of such disclosure to 
any person identified in the disclosure, or both, to the full extent 
provided by 31 U.S.C. 5318(g)(3).
    (g) Compliance. Insurance companies shall be examined by FinCEN or 
its delegatees for compliance with this section. Failure to satisfy the 
requirements of this section may be a violation of the Bank Secrecy Act 
and of this chapter.
    (h) Suspicious transaction reporting requirements for insurance 
companies registered or required to register with the Securities and 
Exchange Commission as broker-dealers in securities. An insurance 
company that is registered or required to register with the Securities 
and Exchange Commission as a broker-dealer in securities shall be deemed 
to have satisfied the requirements of this section for its broker-dealer 
activities to the extent that the company complies with the reporting 
requirements applicable to such activities pursuant to Sec. 1023.320 of 
this chapter.
    (i) Applicability date. This section applies to transactions 
occurring after May 2, 2006.

[75 FR 65812, Oct. 26, 2010, as amended at 75 FR 10520, Feb. 25, 2011]

[[Page 717]]



Sec. 1025.330  Reports relating to currency in excess of $10,000
received in a trade or business.

    Refer to Sec. 1010.330 of this chapter for rules regarding the 
filing of reports relating to currency in excess of $10,000 received by 
insurance companies.



   Subpart D_Records Required To Be Maintained By Insurance Companies



Sec. 1025.400  General.

    Insurance companies are subject to the recordkeeping requirements 
set forth and cross referenced in this subpart. Insurance companies 
should also refer to subpart D of part 1010 of this chapter for 
recordkeeping requirements contained in that subpart which apply to 
insurance companies.



Sec. 1025.410  Recordkeeping.

    Refer to Sec. 1010.410.



    Subpart E_Special Information Sharing Procedures To Deter Money 
                    Laundering and Terrorist Activity



Sec. 1025.500  General.

    Insurance companies are subject to the special information sharing 
procedures to deter money laundering and terrorist activity requirements 
set forth and cross referenced in this subpart. Insurance companies 
should also refer to subpart E of part 1010 of this chapter for special 
information sharing procedures to deter money laundering and terrorist 
activity contained in that subpart which apply to insurance companies.



Sec. 1025.520  Special information sharing procedures to deter money
laundering and terrorist activity for insurance companies.

    (a) Refer to Sec. 1010.520 of this chapter.
    (b) [Reserved]



Sec. 1025.530  [Reserved]



Sec. 1025.540  Voluntary information sharing among financial 
institutions.

    (a) Refer to Sec. 1010.540 of this chapter.
    (b) [Reserved]



  Subpart F_Special Standards of Diligence; Prohibitions; and Special 
                    Measures for Insurance Companies



Sec. Sec. 1025.600-1025.670  [Reserved]



PART 1026_RULES FOR FUTURES COMMISSION MERCHANTS AND INTRODUCING BROKERS
IN COMMODITIES--Table of Contents



                          Subpart A_Definitions

Sec.
1026.100 Definitions.

                           Subpart B_Programs

1026.200 General.
1026.210 Anti-money laundering program requirements for futures 
          commission merchants and introducing brokers in commodities.
1026.220 Customer identification program requirements for futures 
          commission merchants and introducing brokers.

 Subpart C_Reports Required To Be Made By Futures Commission Merchants 
                 and Introducing Brokers in Commodities

1026.300 General.
1026.310 Reports of transactions in currency.
1026.311 Filing obligations.
1026.312 Identification required.
1026.313 Aggregation.
1026.314 Structured transactions.
1026.315 Exemptions.
1026.320 Reports by futures commission merchants and introducing brokers 
          in commodities of suspicious transactions.

   Subpart D_Records Required To Be Maintained By Futures Commission 
            Merchants and Introducing Brokers in Commodities

1026.400 General.
1026.410 Recordkeeping.

    Subpart E_Special Information Sharing Procedures To Deter Money 
                    Laundering and Terrorist Activity

1026.500 General.
1026.520 Special information sharing procedures to deter money 
          laundering and terrorist activity for futures commission 
          merchants and introducing brokers in commodities.
1026.530 [Reserved]

[[Page 718]]

1026.540 Voluntary information sharing among financial institutions.

  Subpart F_Special Standards of Diligence; Prohibitions, and Special 
  Measures for Futures Commission Merchants and Introducing Brokers in 
                               Commodities

1026.600 General.
1026.610 Due diligence programs for correspondent accounts for foreign 
          financial institutions.
1026.620 Due diligence programs for private banking accounts.
1026.630 Prohibition on correspondent accounts for foreign shell banks; 
          records concerning owners of foreign banks and agents for 
          service of legal process.
1026.640 [Reserved]
1026.670 Summons or subpoena of foreign bank records; termination of 
          correspondent relationship.

    Authority: 12 U.S.C. 1829b and 1951-1959; 31 U.S.C. 5311-5314 and 
5316-5332; title III, sec. 314, Pub. L. 107-56, 115 Stat. 307.

    Source: 75 FR 65812, Oct. 26, 2010, unless otherwise noted.



                          Subpart A_Definitions



Sec. 1026.100  Definitions.

    Refer to Sec. 1010.100 of this chapter for general definitions not 
noted herein. To the extent there is a differing definition in Sec. 
1010.100 of this chapter, the definition in this section is what applies 
to part 1026. Unless otherwise indicated, for the purposes of this part:
    (a) Account. For purposes of Sec. 1026.220:
    (1) Account means a formal relationship with a futures commission 
merchant, including, but not limited to, those established to effect 
transactions in contracts of sale of a commodity for future delivery, 
options on any contract of sale of a commodity for future delivery, or 
options on a commodity.
    (2) Account does not include:
    (i) An account that the futures commission merchant acquires through 
any acquisition, merger, purchase of assets, or assumption of 
liabilities; or
    (ii) An account opened for the purpose of participating in an 
employee benefit plan established under the Employee Retirement Income 
Security Act of 1974.
    (b) Commodity means any good, article, service, right, or interest 
described in Section 1a(4) of the Commodity Exchange Act (7 U.S.C. 
1a(4)).
    (c) Contract of sale means any sale, agreement of sale or agreement 
to sell as described in Section 1a(7) of the Commodity Exchange Act (7 
U.S.C. 1a(7)).
    (d) Customer. For purposes of Sec. 1026.220:
    (1) Customer means:
    (i) A person that opens a new account with a futures commission 
merchant; and
    (ii) An individual who opens a new account with a futures commission 
merchant for:
    (A) An individual who lacks legal capacity; or
    (B) An entity that is not a legal person.
    (2) Customer does not include:
    (i) A financial institution regulated by a Federal functional 
regulator or a bank regulated by a state bank regulator;
    (ii) A person described in Sec. 1020.315(b)(2) through (4) of this 
Chapter; or
    (iii) A person that has an existing account, provided the futures 
commission merchant or introducing broker has a reasonable belief that 
it knows the true identity of the person.
    (3) When an account is introduced to a futures commission merchant 
by an introducing broker, the person or individual opening the account 
shall be deemed to be a customer of both the futures commission merchant 
and the introducing broker for the purposes of this section.
    (e) Financial institution is defined at 31 U.S.C. 5312(a)(2) and 
(c)(1).
    (f) Futures commission merchant means any person registered or 
required to be registered as a futures commission merchant with the 
Commodity Futures Trading Commission (``CFTC'') under the Commodity 
Exchange Act (7 U.S.C. 1 et seq.), except persons who register pursuant 
to Section 4f(a)(2) of the Commodity Exchange Act (7 U.S.C. 6f(a)(2)).
    (g) Introducing broker means any person registered or required to be 
registered as an introducing broker with the CFTC under the Commodity 
Exchange Act (7 U.S.C. 1 et seq.), except persons who register pursuant 
to Section 4f(a)(2) of the Commodity Exchange Act (7 U.S.C. 6f(a)(2)).

[[Page 719]]

    (h) Option means an agreement, contract or transaction described in 
Section 1a(26) of the Commodity Exchange Act (7 U.S.C. 1a(26)).



                           Subpart B_Programs



Sec. 1026.200  General.

    Futures commission merchants and introducing brokers in commodities 
are subject to the program requirements set forth and cross referenced 
in this subpart. Futures commission merchants and introducing brokers in 
commodities should also refer to subpart B of part 1010 of this chapter 
for program requirements contained in that subpart which apply to 
futures commission merchants and introducing brokers in commodities.



Sec. 1026.210  Anti-money laundering program requirements for futures 
commission merchants and introducing brokers in commodities.

    A financial institution regulated by a self-regulatory organization 
shall be deemed to satisfy the requirements of 31 U.S.C. 5318(h)(1) if:
    (a) The financial institution complies with the requirements of 
Sec. Sec. 1010.610 and 1010.620 of this chapter and any applicable 
regulation of its Federal functional regulator governing the 
establishment and implementation of anti-money laundering programs; and
    (b)(1) The financial institution implements and maintains an anti-
money laundering program that complies with the rules, regulations, or 
requirements of its self-regulatory organization governing such 
programs; and
    (2) The rules, regulations, or requirements of the self-regulatory 
organization have been approved, if required, by the appropriate Federal 
functional regulator.



Sec. 1026.220  Customer identification programs for futures commission
merchants and introducing brokers.

    (a) Customer identification program: Minimum requirements--(1) In 
general. Each futures commission merchant and introducing broker must 
implement a written Customer Identification Program (CIP) appropriate 
for its size and business that, at a minimum, includes each of the 
requirements of paragraphs (a)(1) through (a)(5) of this section. The 
CIP must be a part of each futures commission merchant's and introducing 
broker's anti-money laundering compliance program required under 31 
U.S.C. 5318(h).
    (2) Identity verification procedures. The CIP must include risk-
based procedures for verifying the identity of each customer to the 
extent reasonable and practicable. The procedures must enable each 
futures commission merchant and introducing broker to form a reasonable 
belief that it knows the true identity of each customer. The procedures 
must be based on the futures commission merchant's or introducing 
broker's assessment of the relevant risks, including those presented by 
the various types of accounts maintained, the various methods of opening 
accounts, the various types of identifying information available, and 
the futures commission merchant's or introducing broker's size, location 
and customer base. At a minimum, these procedures must contain the 
elements described in paragraph (a)(2) of this section.
    (i)(A) Customer information required. The CIP must include 
procedures for opening an account that specify identifying information 
that will be obtained from each customer. Except as permitted by 
paragraph (a)(2)(i)(B) of this section, each futures commission merchant 
and introducing broker must obtain, at a minimum, the following 
information prior to opening an account:
    (1) Name;
    (2) Date of birth, for an individual;
    (3) Address, which shall be:
    (i) For an individual, a residential or business street address;
    (ii) For an individual who does not have a residential or business 
street address, an Army Post Office (APO) or Fleet Post Office (FPO) box 
number, or the residential or business street address of a next of kin 
or another contact individual; or
    (iii) For a person other than an individual (such as a corporation, 
partnership or trust), a principal place of business, local office or 
other physical location; and
    (4) Identification number, which shall be:

[[Page 720]]

    (i) For a U.S. person, a taxpayer identification number; or
    (ii) For a non-U.S. person, one or more of the following: A taxpayer 
identification number, a passport number and country of issuance, an 
alien identification card number, or the number and country of issuance 
of any other government-issued document evidencing nationality or 
residence and bearing a photograph or similar safeguard.

    Note to Paragraph (a)(2)(i)(A)(4)(ii): When opening an account for a 
foreign business or enterprise that does not have an identification 
number, the futures commission merchant or introducing broker must 
request alternative government-issued documentation certifying the 
existence of the business or enterprise.

    (B) Exception for persons applying for a taxpayer identification 
number. Instead of obtaining a taxpayer identification number from a 
customer prior to opening an account, the CIP may include procedures for 
opening an account for a customer that has applied for, but has not 
received, a taxpayer identification number. In this case, the CIP must 
include procedures to confirm that the application was filed before the 
customer opens the account and to obtain the taxpayer identification 
number within a reasonable period of time after the account is opened.
    (ii) Customer verification. The CIP must contain procedures for 
verifying the identity of each customer, using information obtained in 
accordance with paragraph (a)(2)(i) of this section, within a reasonable 
time before or after the customer's account is opened. The procedures 
must describe when the futures commission merchant or introducing broker 
will use documents, non-documentary methods, or a combination of both 
methods, as described in this paragraph (a)(2)(ii).
    (A) Verification through documents. For a futures commission 
merchant or introducing broker relying on documents, the CIP must 
contain procedures that set forth the documents the futures commission 
merchant or introducing broker will use. These documents may include:
    (1) For an individual, an unexpired government-issued identification 
evidencing nationality or residence and bearing a photograph or similar 
safeguard, such as a driver's license or passport; and
    (2) For a person other than an individual (such as a corporation, 
partnership or trust), documents showing the existence of the entity, 
such as certified articles of incorporation, a government-issued 
business license, a partnership agreement, or a trust instrument.
    (B) Verification through non-documentary methods. For a futures 
commission merchant or introducing broker relying on non-documentary 
methods, the CIP must contain procedures that set forth the non-
documentary methods the futures commission merchant or introducing 
broker will use.
    (1) These methods may include contacting a customer; independently 
verifying the customer's identity through the comparison of information 
provided by the customer with information obtained from a consumer 
reporting agency, public database, or other source; checking references 
with other financial institutions; or obtaining a financial statement.
    (2) The futures commission merchant's or introducing broker's non-
documentary procedures must address situations where an individual is 
unable to present an unexpired government-issued identification document 
that bears a photograph or similar safeguard; the futures commission 
merchant or introducing broker is not familiar with the documents 
presented; the account is opened without obtaining documents; the 
customer opens the account without appearing in person at the futures 
commission merchant or introducing broker; and where the futures 
commission merchant or introducing broker is otherwise presented with 
circumstances that increase the risk that the futures commission 
merchant or introducing broker will be unable to verify the true 
identity of a customer through documents.
    (C) Additional verification for certain customers. The CIP must 
address situations where, based on the futures commission merchant's or 
introducing broker's risk assessment of a new account opened by a 
customer that is not an individual, the futures commission merchant or 
introducing broker will obtain

[[Page 721]]

information about individuals with authority or control over such 
account in order to verify the customer's identity. This verification 
method applies only when the futures commission merchant or introducing 
broker cannot verify the customer's true identity after using the 
verification methods described in paragraphs (a)(2)(ii)(A) and (B) of 
this section.
    (iii) Lack of verification. The CIP must include procedures for 
responding to circumstances in which the futures commission merchant or 
introducing broker cannot form a reasonable belief that it knows the 
true identity of a customer. These procedures should describe:
    (A) When an account should not be opened;
    (B) The terms under which a customer may conduct transactions while 
the futures commission merchant or introducing broker attempts to verify 
the customer's identity;
    (C) When an account should be closed after attempts to verify a 
customer's identity have failed; and
    (D) When the futures commission merchant or introducing broker 
should file a Suspicious Activity Report in accordance with applicable 
law and regulation.
    (3) Recordkeeping. The CIP must include procedures for making and 
maintaining a record of all information obtained under procedures 
implementing paragraph (a) of this section.
    (i) Required records. At a minimum, the record must include:
    (A) All identifying information about a customer obtained under 
paragraph (a)(2)(i) of this section;
    (B) A description of any document that was relied on under paragraph 
(a)(2)(ii)(A) of this section noting the type of document, any 
identification number contained in the document, the place of issuance, 
and if any, the date of issuance and expiration date;
    (C) A description of the methods and the results of any measures 
undertaken to verify the identity of a customer under paragraphs 
(a)(2)(ii)(B) and (C) of this section; and
    (D) A description of the resolution of each substantive discrepancy 
discovered when verifying the identifying information obtained.
    (ii) Retention of records. Each futures commission merchant and 
introducing broker must retain the records made under paragraph 
(a)(3)(i)(A) of this section for five years after the account is closed 
and the records made under paragraphs (a)(3)(i)(B), (C), and (D) of this 
section for five years after the record is made. In all other respects, 
the records must be maintained pursuant to the provisions of 17 CFR 
1.31.
    (4) Comparison with government lists. The CIP must include 
procedures for determining whether a customer appears on any list of 
known or suspected terrorists or terrorist organizations issued by any 
Federal government agency and designated as such by Treasury in 
consultation with the Federal functional regulators. The procedures must 
require the futures commission merchant or introducing broker to make 
such a determination within a reasonable period of time after the 
account is opened, or earlier if required by another Federal law or 
regulation or Federal directive issued in connection with the applicable 
list. The procedures also must require the futures commission merchant 
or introducing broker to follow all Federal directives issued in 
connection with such lists.
    (5)(i) Customer notice. The CIP must include procedures for 
providing customers with adequate notice that the futures commission 
merchant or introducing broker is requesting information to verify their 
identities.
    (ii) Adequate notice. Notice is adequate if the futures commission 
merchant or introducing broker generally describes the identification 
requirements of this section and provides such notice in a manner 
reasonably designed to ensure that a customer is able to view the 
notice, or is otherwise given notice, before opening an account. For 
example, depending upon the manner in which the account is opened, a 
futures commission merchant or introducing broker may post a notice in 
the lobby or on its Web site, include the notice on its account 
applications or use any other form of written or oral notice.
    (iii) Sample notice. If appropriate, a futures commission merchant 
or introducing broker may use the following

[[Page 722]]

sample language to provide notice to its customers:

    Important Information About Procedures for Opening a New Account

    To help the government fight the funding of terrorism and money 
laundering activities, Federal law requires all financial institutions 
to obtain, verify, and record information that identifies each person 
who opens an account.
    What this means for you: When you open an account, we will ask for 
your name, address, date of birth and other information that will allow 
us to identify you. We may also ask to see your driver's license or 
other identifying documents.

    (6) Reliance on another financial institution. The CIP may include 
procedures specifying when the futures commission merchant or 
introducing broker will rely on the performance by another financial 
institution (including an affiliate) of any procedures of its CIP, with 
respect to any customer of the futures commission merchant or 
introducing broker that is opening an account, or has established an 
account or similar business relationship with the other financial 
institution to provide or engage in services, dealings, or other 
financial transactions, provided that:
    (i) Such reliance is reasonable under the circumstances;
    (ii) The other financial institution is subject to a rule 
implementing 31 U.S.C. 5318(h), and is regulated by a Federal functional 
regulator; and
    (iii) The other financial institution enters into a contract 
requiring it to certify annually to the futures commission merchant or 
introducing broker that it has implemented its anti-money laundering 
program, and that it will perform (or its agent will perform) specified 
requirements of the futures commission merchant's or introducing 
broker's CIP.
    (b) Exemptions. The CFTC, with the concurrence of the Secretary, may 
by order or regulation exempt any futures commission merchant or 
introducing broker that registers with the CFTC or any type of account 
from the requirements of this section. In issuing such exemptions, the 
CFTC and the Secretary shall consider whether the exemption is 
consistent with the purposes of the Bank Secrecy Act, and in the public 
interest, and may consider other necessary and appropriate factors.
    (c) Other requirements unaffected. Nothing in this section relieves 
a futures commission merchant or introducing broker of its obligation to 
comply with any other provision of this chapter, including provisions 
concerning information that must be obtained, verified, or maintained in 
connection with any account or transaction.



 Subpart C_Reports Required To Be Made by Futures Commission Merchants 
                 and Introducing Brokers in Commodities



Sec. 1026.300  General.

    Futures commission merchants and introducing brokers in commodities 
are subject to the reporting requirements set forth and cross referenced 
in this subpart. Futures commission merchants and introducing brokers in 
commodities should also refer to subpart C of part 1010 of this chapter 
for reporting requirements contained in that subpart which apply to 
futures commission merchants and introducing brokers in commodities.



Sec. 1026.310  Reports of transactions in currency.

    The reports of transactions in currency requirements for futures 
commission merchants and introducing brokers in commodities are located 
in subpart C of part 1010 of this chapter and this subpart



Sec. 1026.311  Filing obligations.

    Refer to Sec. 1010.311 of this chapter for reports of transactions 
in currency filing obligations for futures commission merchants and 
introducing brokers in commodities.

[76 FR 10521, Feb. 25, 2011]



Sec. 1026.312  Identification required.

    Refer to Sec. 1010.312 of this chapter for identification 
requirements for reports

[[Page 723]]

of transactions in currency filed by futures commission merchants and 
introducing brokers in commodities.

[76 FR 10521, Feb. 25, 2011]



Sec. 1026.313  Aggregation.

    Refer to Sec. 1010.313 of this chapter for reports of transactions 
in currency aggregation requirements for futures commission merchants 
and introducing brokers in commodities.

[76 FR 10521, Feb. 25, 2011]



Sec. 1026.314  Structured transactions.

    Refer to Sec. 1010.314 of this chapter for rules regarding 
structured transactions for futures commission merchants and introducing 
brokers in commodities.

[76 FR 10521, Feb. 25, 2011]



Sec. 1026.315  Exemptions.

    Refer to Sec. 1010.315 of this chapter for exemptions from the 
obligation to file reports of transactions in currency for futures 
commission merchants and introducing brokers in commodities.



Sec. 1026.320  Reports by futures commission merchants and introducing
brokers in commodities of suspicious transactions.

    (a) General--(1) Every futures commission merchant (``FCM'') and 
introducing broker in commodities (``IB-C'') within the United States 
shall file with FinCEN, to the extent and in the manner required by this 
section, a report of any suspicious transaction relevant to a possible 
violation of law or regulation. An FCM or IB-C may also file with FinCEN 
a report of any suspicious transaction that it believes is relevant to 
the possible violation of any law or regulation but whose reporting is 
not required by this section. Filing a report of a suspicious 
transaction does not relieve an FCM or IB-C from the responsibility of 
complying with any other reporting requirements imposed by the CFTC or 
any registered futures association or registered entity as those terms 
are defined in the Commodity Exchange Act (``CEA''), 7 U.S.C. 21 and 7 
U.S.C. 1a(29).
    (2) A transaction requires reporting under the terms of this section 
if it is conducted or attempted by, at, or through an FCM or IB-C, it 
involves or aggregates funds or other assets of at least $5,000, and the 
FCM or IB-C knows, suspects, or has reason to suspect that the 
transaction (or a pattern of transactions of which the transaction is a 
part):
    (i) Involves funds derived from illegal activity or is intended or 
conducted in order to hide or disguise funds or assets derived from 
illegal activity (including, without limitation, the ownership, nature, 
source, location, or control of such funds or assets) as part of a plan 
to violate or evade any Federal law or regulation or to avoid any 
transaction reporting requirement under Federal law or regulation;
    (ii) Is designed, whether through structuring or other means, to 
evade any requirements of this chapter or of any other regulations 
promulgated under the Bank Secrecy Act;
    (iii) Has no business or apparent lawful purpose or is not the sort 
in which the particular customer would normally be expected to engage, 
and the FCM or IB-C knows of no reasonable explanation for the 
transaction after examining the available facts, including the 
background and possible purpose of the transaction; or
    (iv) Involves use of the FCM or IB-C to facilitate criminal 
activity.
    (3) The obligation to identify and properly and timely to report a 
suspicious transaction rests with each FCM and IB-C involved in the 
transaction, provided that no more than one report is required to be 
filed by any of the FCMs or IB-Cs involved in a particular transaction, 
so long as the report filed contains all relevant facts.
    (b) Filing procedures--(1) What to file. A suspicious transaction 
shall be reported by completing a Suspicious Activity Report by 
Securities and Futures Industries (``SAR-SF''), and collecting and 
maintaining supporting documentation as required by paragraph (d) of 
this section.
    (2) Where to file. The SAR-SF shall be filed with FinCEN in a 
central location, to be determined by FinCEN, as indicated in the 
instructions to the SAR-SF.
    (3) When to file. A SAR-SF shall be filed no later than 30 calendar 
days after the date of the initial detection by the reporting FCM or IB-
C of facts

[[Page 724]]

that may constitute a basis for filing a SAR-SF under this section. If 
no suspect is identified on the date of such initial detection, an FCM 
or IB-C may delay filing a SAR-SF for an additional 30 calendar days to 
identify a suspect, but in no case shall reporting be delayed more than 
60 calendar days after the date of such initial detection. In situations 
involving violations that require immediate attention, such as terrorist 
financing or ongoing money laundering schemes, the FCM or IB-C shall 
immediately notify by telephone an appropriate law enforcement authority 
in addition to filing timely a SAR-SF. FCMs and IB-Cs wishing 
voluntarily to report suspicious transactions that may relate to 
terrorist activity may call FinCEN's Financial Institutions Hotline at 
1-866-556-3974 in addition to filing timely a SAR-SF if required by this 
section. The FCM or IB-C may also, but is not required to, contact the 
CFTC to report in such situations.
    (c) Exceptions--(1) An FCM or IB-C is not required to file a SAR-SF 
to report--
    (i) A robbery or burglary committed or attempted of the FCM or IB-C 
that is reported to appropriate law enforcement authorities;
    (ii) A violation otherwise required to be reported under the CEA (7 
U.S.C. 1 et seq.), the regulations of the CFTC (17 CFR chapter I), or 
the rules of any registered futures association or registered entity as 
those terms are defined in the CEA, 7 U.S.C. 21 and 7 U.S.C. 1a(29), by 
the FCM or IB-C or any of its officers, directors, employees, or 
associated persons, other than a violation of 17 CFR 42.2, as long as 
such violation is appropriately reported to the CFTC or a registered 
futures association or registered entity.
    (2) An FCM or IB-C may be required to demonstrate that it has relied 
on an exception in paragraph (c)(1) of this section, and must maintain 
records of its determinations to do so for the period specified in 
paragraph (d) of this section. To the extent that a Form 8-R, 8-T, U-5, 
or any other similar form concerning the transaction is filed consistent 
with CFTC, registered futures association, or registered entity rules, a 
copy of that form will be a sufficient record for the purposes of this 
paragraph (c)(2).
    (d) Retention of records. An FCM or IB-C shall maintain a copy of 
any SAR-SF filed and the original or business record equivalent of any 
supporting documentation for a period of five years from the date of 
filing the SAR-SF. Supporting documentation shall be identified as such 
and maintained by the FCM or IB-C, and shall be deemed to have been 
filed with the SAR-SF. An FCM or IB-C shall make all supporting 
documentation available to FinCEN or any Federal, State, or local law 
enforcement agency, or any Federal regulatory authority that examines 
the FCM or IB-C for compliance with the BSA, upon request; or to any 
registered futures association or registered entity (as defined in the 
Commodity Exchange Act, 7 U.S.C. 21 and 7 U.S.C. 1(a)(29)) 
(collectively, a self-regulatory organization (``SRO'')) that examines 
the FCM or IB-C for compliance with the requirements of this section, 
upon the request of the Commodity Futures Trading Commission.
    (e) Confidentiality of SARs. A SAR, and any information that would 
reveal the existence of a SAR, are confidential and shall not be 
disclosed except as authorized in this paragraph (e). For purposes of 
this paragraph (e) only, a SAR shall include any suspicious activity 
report filed with FinCEN pursuant to any regulation in this chapter.
    (1) Prohibition on disclosures by futures commission merchants and 
introducing brokers in commodities--(i) General rule. No FCM or IB-C, 
and no director, officer, employee, or agent of any FCM or IB-C, shall 
disclose a SAR or any information that would reveal the existence of a 
SAR. Any FCM or IB-C, and any director, officer, employee, or agent of 
any FCM or IB-C that is subpoenaed or otherwise requested to disclose a 
SAR or any information that would reveal the existence of a SAR, shall 
decline to produce the SAR or such information, citing this section and 
31 U.S.C. 5318(g)(2)(A)(i), and shall notify FinCEN of any such request 
and the response thereto.
    (ii) Rules of Construction. Provided that no person involved in any 
reported suspicious transaction is notified that

[[Page 725]]

the transaction has been reported, this paragraph (e)(1) shall not be 
construed as prohibiting:
    (A) The disclosure by an FCM or IB-C, or any director, officer, 
employee, or agent of an FCM or IB-C, of:
    (1) A SAR, or any information that would reveal the existence of a 
SAR, to FinCEN or any Federal, State, or local law enforcement agency, 
or any Federal regulatory authority that examines the FCM or IB-C for 
compliance with the BSA; or to any SRO that examines the FCM or IB-C for 
compliance with the requirements of this section, upon the request of 
the Commodity Futures Trading Commission; or
    (2) The underlying facts, transactions, and documents upon which a 
SAR is based, including but not limited to, disclosures:
    (i) To another financial institution, or any director, officer, 
employee, or agent of a financial institution, for the preparation of a 
joint SAR; or
    (ii) In connection with certain employment references or termination 
notices, to the full extent authorized in 31 U.S.C. 5318(g)(2)(B); or
    (B) The sharing by an FCM or IB-C, or any director, officer, 
employee, or agent of the FCM or IB-C, of a SAR, or any information that 
would reveal the existence of a SAR, within the FCM's or IB-C's 
corporate organizational structure for purposes consistent with Title II 
of the BSA as determined by regulation or in guidance.
    (2) Prohibition on disclosures by government authorities. A Federal, 
State, local, territorial, or Tribal government authority, or any 
director, officer, employee, or agent of any of the foregoing, shall not 
disclose a SAR, or any information that would reveal the existence of a 
SAR, except as necessary to fulfill official duties consistent with 
Title II of the BSA. For purposes of this section, ``official duties'' 
shall not include the disclosure of a SAR, or any information that would 
reveal the existence of a SAR, in response to a request for disclosure 
of non-public information or a request for use in a private legal 
proceeding, including a request pursuant to 31 CFR 1.11.
    (3) Prohibition on disclosures by Self-Regulatory Organizations. Any 
self-regulatory organization registered with or designated by the 
Commodity Futures Trading Commission, or any director, officer, 
employee, or agent of any of the foregoing, shall not disclose a SAR, or 
any information that would reveal the existence of a SAR except as 
necessary to fulfill self-regulatory duties upon the request of the 
Commodity Futures Trading Commission, in a manner consistent with Title 
II of the BSA. For purposes of this section, ``self-regulatory duties'' 
shall not include the disclosure of a SAR, or any information that would 
reveal the existence of a SAR, in response to a request for disclosure 
of non-public information or a request for use in a private legal 
proceeding.
    (f) Limitation on liability. An FCM or IB-C, and any director, 
officer, employee, or agent of any FCM or IB-C, that makes a voluntary 
disclosure of any possible violation of law or regulation to a 
government agency or makes a disclosure pursuant to this section or any 
other authority, including a disclosure made jointly with another 
institution, shall be protected from liability to any person for any 
such disclosure, or for failure to provide notice of such disclosure to 
any person identified in the disclosure, or both, to the full extent 
provided by 31 U.S.C. 5318(g)(3).
    (g) Compliance. FCMs or IB-Cs shall be examined by FinCEN or its 
delegatees for compliance with this section. Failure to satisfy the 
requirements of this section may be a violation of the Bank Secrecy Act 
and of this chapter.
    (h) Applicability date. This section applies to transactions 
occurring after May 18, 2004.

[75 FR 65812, Oct. 26, 2010, as amended at 76 FR 10521, Feb. 25, 2011]



   Subpart D_Records Required To Be Maintained By Futures Commission 
            Merchants and Introducing Brokers in Commodities



Sec. 1026.400  General.

    Futures commission merchants and introducing brokers in commodities

[[Page 726]]

are subject to the recordkeeping requirements set forth and cross 
referenced in this subpart. Futures commission merchants and introducing 
brokers in commodities should also refer to subpart D of part 1010 of 
this chapter for recordkeeping requirements contained in that subpart 
which apply to futures commission merchants and introducing brokers in 
commodities.



Sec. 1026.410  Recordkeeping.

    Refer to Sec. 1010.410 of this chapter.



    Subpart E_Special Information Sharing Procedures To Deter Money 
                    Laundering and Terrorist Activity



Sec. 1026.500  General.

    Futures commission merchants and introducing brokers in commodities 
are subject to the special information sharing procedures to deter money 
laundering and terrorist activity requirements set forth and cross 
referenced in this subpart. Futures commission merchants and introducing 
brokers in commodities should also refer to subpart E of part 1010 of 
this chapter for special information sharing procedures to deter money 
laundering and terrorist activity contained in that subpart which apply 
to futures commission merchants and introducing brokers in commodities.



Sec. 1026.520  Special information sharing procedures to deter money 
laundering and terrorist activity for futures commission merchants and 

introducing brokers in commodities.

    (a) Refer to Sec. 1010.520 of this chapter.
    (b) [Reserved]



Sec. 1026.530  [Reserved]



Sec. 1026.540  Voluntary information sharing among financial institutions.

    (a) Refer to Sec. 1010.540 of this chapter.
    (b) [Reserved]



  Subpart F_Special Standards of Diligence; Prohibitions; and Special 
  Measures for Futures Commission Merchants and Introducing Brokers in 
                               Commodities



Sec. 1026.600  General.

    Futures commission merchants and introducing brokers in commodities 
are subject to the special standards of diligence; prohibitions; and 
special measures requirements set forth and cross referenced in this 
subpart. Futures commission merchants and introducing brokers in 
commodities should also refer to subpart F of part 1010 of this chapter 
for special standards of diligence; prohibitions; and special measures 
contained in that subpart which apply to futures commission merchants 
and introducing brokers in commodities.



Sec. 1026.610  Due diligence programs for correspondent accounts for 
foreign financial institutions.

    (a) Refer to Sec. 1010.610 of this chapter.
    (b) [Reserved]



Sec. 1026.620  Due diligence programs for private banking accounts.

    (a) Refer to Sec. 1010.620 of this chapter.
    (b) [Reserved]



Sec. 1026.630  Prohibition on correspondent accounts for foreign shell
banks; records concerning owners of foreign banks and agents for service

of legal process.

    (a) Refer to Sec. 1010.630 of this chapter.
    (b) [Reserved]



Sec. 1026.640  [Reserved]



Sec. 1026.670  Summons or subpoena of foreign bank records; termination 
of correspondent relationship.

    (a) Refer to Sec. 1010.670 of this chapter.
    (b) [Reserved]



PART 1027_RULES FOR DEALERS IN PRECIOUS METALS, PRECIOUS STONES, OR 
JEWELS--Table of Contents



                          Subpart A_Definitions

Sec.
1027.100 Definitions.

[[Page 727]]

                           Subpart B_Programs

1027.200 General.
1027.210 Anti-money laundering programs for dealers in precious metals, 
          precious stones, or jewels.

  Subpart C_Reports Required To Be Made By Dealers in Precious Metals, 
                       Precious Stones, or Jewels

1027.300 General.
1027.310-1027.320 [Reserved]
1027.330 Reports relating to currency in excess of $10,000 received in a 
          trade or business.

   Subpart D_Records Required To Be Maintained By Dealers in Precious 
                   Metals, Precious Stones, or Jewels

1027.400 General.
1027.410 Recordkeeping.

    Subpart E_Special Information Sharing Procedures To Deter Money 
                    Laundering and Terrorist Activity

1027.500 General.
1027.520 Special information sharing procedures to deter money 
          laundering and terrorist activity for dealers in precious 
          metals, precious stones, or jewels.
1027.530 [Reserved]
1027.540 Voluntary information sharing among financial institutions.

  Subpart F_Special Standards of Diligence; Prohibitions, and Special 
   Measures for Dealers in Precious Metals, Precious Stones, or Jewels

1027.600-1027.670 [Reserved]

    Authority: 12 U.S.C. 1829b and 1951-1959; 31 U.S.C. 5311-5314 and 
5316-5332; title III, sec. 314, Pub. L. 107-56, 115 Stat. 307.

    Source: 75 FR 65812, Oct. 26, 2010, unless otherwise noted.



                          Subpart A_Definitions



Sec. 1027.100  Definitions.

    Refer to Sec. 1010.100 of this chapter for general definitions not 
noted herein. To the extent there is a differing definition in Sec. 
1010.100 of this chapter, the definition in this section is what applies 
to part 1027. Unless otherwise indicated, for purposes of this part:
    (a) Covered goods means:
    (1) Jewels (as defined in paragraph (c) of this section);
    (2) Precious metals (as defined in paragraph (d) of this section);
    (3) Precious stones (as defined in paragraph (e) of this section); 
and
    (4) Finished goods (including, but not limited to, jewelry, 
numismatic items, and antiques), that derive 50 percent or more of their 
value from jewels, precious metals, or precious stones contained in or 
attached to such finished goods;
    (b) Dealer. (1) Except as provided in paragraphs (b)(2) and (b)(3) 
of this section, the term ``dealer'' means a person engaged within the 
United States as a business in the purchase and sale of covered goods 
and who, during the prior calendar or tax year:
    (i) Purchased more than $50,000 in covered goods; and
    (ii) Received more than $50,000 in gross proceeds from the sale of 
covered goods.
    (2) For purposes of this section, the term ``dealer'' does not 
include:
    (i) A retailer (as defined in paragraph (f) of this section), unless 
the retailer, during the prior calendar or tax year, purchased more than 
$50,000 in covered goods from persons other than dealers or other 
retailers (such as members of the general public or foreign sources of 
supply); or
    (ii) A person licensed or authorized under the laws of any State (or 
political subdivision thereof) to conduct business as a pawnbroker, but 
only to the extent such person is engaged in pawn transactions 
(including the sale of pawn loan collateral).
    (3) For purposes of paragraph (b) of this section, the terms 
``purchase'' and ``sale'' do not include a retail transaction in which a 
retailer or a dealer accepts from a customer covered goods, the value of 
which the retailer or dealer credits to the account of the customer, and 
the retailer or dealer does not provide funds to the customer in 
exchange for such covered goods.
    (4) For purposes of paragraph (b) of this section and Sec. 
1027.210(a), the terms ``purchase'' and ``sale'' do not include the 
purchase of jewels, precious metals, or precious stones that are 
incorporated into machinery or equipment to be used for industrial 
purposes, and the purchase and sale of such machinery or equipment.

[[Page 728]]

    (5) For purposes of applying the $50,000 thresholds in paragraphs 
(b)(1) and (b)(2)(i) of this section to finished goods defined in 
paragraph (a)(4) of this section, only the value of jewels, precious 
metals, or precious stones contained in, or attached to, such goods 
shall be taken into account.
    (c) Jewel means an organic substance with gem quality market-
recognized beauty, rarity, and value, and includes pearl, amber, and 
coral.
    (d) Precious metal means:
    (1) Gold, iridium, osmium, palladium, platinum, rhodium, ruthenium, 
or silver, having a level of purity of 500 or more parts per thousand; 
and
    (2) An alloy containing 500 or more parts per thousand, in the 
aggregate, of two or more of the metals listed in paragraph (d)(1) of 
this section.
    (e) Precious stone means a substance with gem quality market-
recognized beauty, rarity, and value, and includes diamond, corundum 
(including rubies and sapphires), beryl (including emeralds and 
aquamarines), chrysoberyl, spinel, topaz, zircon, tourmaline, garnet, 
crystalline and cryptocrystalline quartz, olivine peridot, tanzanite, 
jadeite jade, nephrite jade, spodumene, feldspar, turquoise, lapis 
lazuli, and opal.
    (f) Retailer means a person engaged within the United States in the 
business of sales primarily to the public of covered goods.



                           Subpart B_Programs



Sec. 1027.200  General.

    Dealers in precious metals, precious stones, or jewels are subject 
to the program requirements set forth and cross referenced in this 
subpart. Dealers in precious metals, precious stones, or jewels should 
also refer to subpart B of part 1010 of this chapter for program 
requirements contained in that subpart which apply to dealers in 
precious metals, precious stones, or jewels.



Sec. 1027.210  Anti-money laundering programs for dealers in precious
metals, precious stones, or jewels.

    (a) Anti-money laundering program requirement. (1) Each dealer shall 
develop and implement a written anti-money laundering program reasonably 
designed to prevent the dealer from being used to facilitate money 
laundering and the financing of terrorist activities through the 
purchase and sale of covered goods. The program must be approved by 
senior management. A dealer shall make its anti-money laundering program 
available to the Department of Treasury through FinCEN or its designee 
upon request.
    (2) To the extent that a retailer's purchases from persons other 
than dealers and other retailers exceeds the $50,000 threshold contained 
in Sec. 1027.100(b)(2)(i), the anti-money laundering compliance program 
required of the retailer under this paragraph need only address such 
purchases.
    (b) Minimum requirements. At a minimum, the anti-money laundering 
program shall:
    (1) Incorporate policies, procedures, and internal controls based 
upon the dealer's assessment of the money laundering and terrorist 
financing risks associated with its line(s) of business. Policies, 
procedures, and internal controls developed and implemented by a dealer 
under this section shall include provisions for complying with the 
applicable requirements of the Bank Secrecy Act (31 U.S.C. 5311 et 
seq.), and this chapter.
    (i) For purposes of making the risk assessment required by paragraph 
(b)(1) of this section, a dealer shall take into account all relevant 
factors including, but not limited to:
    (A) The type(s) of products the dealer buys and sells, as well as 
the nature of the dealer's customers, suppliers, distribution channels, 
and geographic locations;
    (B) The extent to which the dealer engages in transactions other 
than with established customers or sources of supply, or other dealers 
subject to this rule; and
    (C) Whether the dealer engages in transactions for which payment or 
account reconciliation is routed to or from accounts located in 
jurisdictions that have been identified by the Department of State as a 
sponsor of international terrorism under 22 U.S.C. 2371; designated as 
non-cooperative with international anti-money laundering principles or 
procedures by an intergovernmental group or organization of

[[Page 729]]

which the United States is a member and with which designation the 
United States representative or organization concurs; or designated by 
the Secretary of the Treasury pursuant to 31 U.S.C. 5318A as warranting 
special measures due to money laundering concerns.
    (ii) A dealer's program shall incorporate policies, procedures, and 
internal controls to assist the dealer in identifying transactions that 
may involve use of the dealer to facilitate money laundering or 
terrorist financing, including provisions for making reasonable 
inquiries to determine whether a transaction involves money laundering 
or terrorist financing, and for refusing to consummate, withdrawing 
from, or terminating such transactions. Factors that may indicate a 
transaction is designed to involve use of the dealer to facilitate money 
laundering or terrorist financing include, but are not limited to:
    (A) Unusual payment methods, such as the use of large amounts of 
cash, multiple or sequentially numbered money orders, traveler's checks, 
or cashier's checks, or payment from third parties;
    (B) Unwillingness by a customer or supplier to provide complete or 
accurate contact information, financial references, or business 
affiliations;
    (C) Attempts by a customer or supplier to maintain an unusual degree 
of secrecy with respect to the transaction, such as a request that 
normal business records not be kept;
    (D) Purchases or sales that are unusual for the particular customer 
or supplier, or type of customer or supplier; and
    (E) Purchases or sales that are not in conformity with standard 
industry practice.
    (2) Designate a compliance officer who will be responsible for 
ensuring that:
    (i) The anti-money laundering program is implemented effectively;
    (ii) The anti-money laundering program is updated as necessary to 
reflect changes in the risk assessment, requirements of this chapter, 
and further guidance issued by the Department of the Treasury; and
    (iii) Appropriate personnel are trained in accordance with paragraph 
(b)(3) of this section.
    (3) Provide for on-going education and training of appropriate 
persons concerning their responsibilities under the program.
    (4) Provide for independent testing to monitor and maintain an 
adequate program. The scope and frequency of the testing shall be 
commensurate with the risk assessment conducted by the dealer in 
accordance with paragraph (b)(1) of this section. Such testing may be 
conducted by an officer or employee of the dealer, so long as the tester 
is not the person designated in paragraph (b)(2) of this section or a 
person involved in the operation of the program.
    (c) Implementation date. A dealer must develop and implement an 
anti-money laundering program that complies with the requirements of 
this section on or before the later of January 1, 2006, or six months 
after the date a dealer becomes subject to the requirements of this 
section.



  Subpart C_Reports Required To Be Made by Dealers in Precious Metals, 
                       Precious Stones, or Jewels



Sec. 1027.300  General.

    Dealers in precious metals, precious stones, or jewels are subject 
to the reporting requirements set forth and cross referenced in this 
subpart. Dealers in precious metals, precious stones, or jewels should 
also refer to subpart C of part 1010 of this Chapter for reporting 
requirements contained in that subpart which apply to dealers in 
precious metals, precious stones, or jewels.



Sec. Sec. 1027.310-1027.320  [Reserved]



Sec. 1027.330  Reports relating to currency in excess of $10,000 
received in a trade or business.

    Refer to Sec. 1010.330 of this chapter for rules regarding the 
filing of reports relating to currency in excess of $10,000 received by 
dealers in precious metals, precious stones, or jewels.

[[Page 730]]



   Subpart D_Records Required To Be Maintained By Dealers in Precious 
                   Metals, Precious Stones, or Jewels



Sec. 1027.400  General.

    Dealers in precious metals, precious stones, or jewels are subject 
to the recordkeeping requirements set forth and cross referenced in this 
subpart. Dealers in precious metals, precious stones, or jewels should 
also refer to subpart D of part 1010 of this chapter for recordkeeping 
requirements contained in that subpart which apply to dealers in 
precious metals, precious stones, or jewels.



Sec. 1027.410  Recordkeeping.

    Refer to Sec. 1010.410 of this chapter.



    Subpart E_Special Information Sharing Procedures To Deter Money 
                    Laundering and Terrorist Activity



Sec. 1027.500  General.

    Dealers in precious metals, precious stones, or jewels are subject 
to the special information sharing procedures to deter money laundering 
and terrorist activity requirements set forth and cross referenced in 
this subpart. Dealers in precious metals, precious stones, or jewels 
should also refer to Ssubpart E of part 1010 of this chapter for special 
information sharing procedures to deter money laundering and terrorist 
activity contained in that subpart which apply to dealers in precious 
metals, precious stones, or jewels.



Sec. 1027.520  Special information sharing procedures to deter money 
laundering and terrorist activity for dealers in precious metals, 

precious stones, or jewels.

    (a) Refer to Sec. 1010.520 of this chapter.
    (b) [Reserved]



Sec. 1027.530  [Reserved]



Sec. 1027.540  Voluntary information sharing among financial institutions.

    (a) Refer to Sec. 1010.540 of this chapter.
    (b) [Reserved]



  Subpart F_Special Standards of Diligence; Prohibitions; and Special 
   Measures for Dealers in Precious Metals, Precious Stones, or Jewels



Sec. Sec. 1027.600-1027.670  [Reserved]



PART 1028_RULES FOR OPERATORS OF CREDIT CARD SYSTEMS--Table of Contents



                          Subpart A_Definitions

Sec.
1028.100 Definitions.

                           Subpart B_Programs

1028.200 General.
1028.210 Anti-money laundering programs for operators of credit card 
          systems.

   Subpart C_Reports Required To Be Made by Operators of Credit Card 
                                 Systems

1028.300 General.
1028.310-1028.320 [Reserved]
1028.330 Reports relating to currency in excess of $10,000 received in a 
          trade or business.

Subpart D_Records Required To Be Maintained by Operators of Credit Card 
                                 Systems

1028.400 General.
1028.410 Recordkeeping.

    Subpart E_Special Information Sharing Procedures To Deter Money 
                    Laundering and Terrorist Activity

1028.500 General.
1028.520 Special information sharing procedures to deter money 
          laundering and terrorist activity for operators of credit card 
          systems.
1028.530 [Reserved]
1028.540 Voluntary information sharing among financial institutions.

  Subpart F_Special Standards of Diligence; Prohibitions, and Special 
              Measures for Operators of Credit Card Systems

1028.600-1028.670 [Reserved]

    Authority: 12 U.S.C. 1829b and 1951-1959; 31 U.S.C. 5311-5314 and 
5316-5332; title III, sec. 314, Pub. L. 107-56, 115 Stat. 307.

    Source: 75 FR 65812, Oct. 26, 2010, unless otherwise noted.

[[Page 731]]



                          Subpart A_Definitions



Sec. 1028.100  Definitions.

    Refer to Sec. 1010.100 of this chapter for general definitions not 
noted herein. To the extent there is a differing definition in Sec. 
1010.100 of this chapter, the definition in this section is what applies 
to part 1028. Unless otherwise indicated, for purposes of this part:
    (a) Acquiring institution means a person authorized by the operator 
of a credit card system to contract, directly or indirectly, with 
merchants or other persons to process transactions, including cash 
advances, involving the operator's credit card.
    (b) Credit card has the same meaning as in 15 U.S.C. 1602(k). It 
includes charge cards as defined in 12 CFR 226.2(15).
    (c) Foreign bank means any organization that is organized under the 
laws of a foreign country; engages in the business of banking; is 
recognized as a bank by the bank supervisory or monetary authority of 
the country of its organization or the country of its principal banking 
operations; and receives deposits in the regular course of its business. 
For purposes of this definition:
    (1) The term foreign bank includes a branch of a foreign bank in a 
territory of the United States, Puerto Rico, Guam, American Samoa, or 
the U.S. Virgin Islands.
    (2) The term foreign bank does not include:
    (i) A U.S. agency or branch of a foreign bank; and
    (ii) An insured bank organized under the laws of a territory of the 
United States, Puerto Rico, Guam, American Samoa, or the U.S. Virgin 
Islands.
    (d) Issuing institution means a person authorized by the operator of 
a credit card system to issue the operator's credit card.
    (e) Operator of a credit card system means any person doing business 
in the United States that operates a system for clearing and settling 
transactions in which the operator's credit card, whether acting as a 
credit or debit card, is used to purchase goods or services or to obtain 
a cash advance. To fall within this definition, the operator must also 
have authorized another person (whether located in the United States or 
not) to be an issuing or acquiring institution for the operator's credit 
card.
    (f) Operator's credit card means a credit card capable of being used 
in the United States that:
    (1) Has been issued by an issuing institution; and
    (2) Can be used in the operator's credit card system.



                           Subpart B_Programs



Sec. 1028.200  General.

    Operators of credit card systems are subject to the program 
requirements set forth and cross referenced in this subpart. Operators 
of credit card systems should also refer to Subpart B of Part 1010 of 
this Chapter for program requirements contained in that subpart which 
apply to operators of credit card systems.



Sec. 1028.210  Anti-money laundering programs for operators of credit
card systems.

    (a) Anti-money laundering program requirement. Effective July 24, 
2002, each operator of a credit card system shall develop and implement 
a written anti-money laundering program reasonably designed to prevent 
the operator of a credit card system from being used to facilitate money 
laundering and the financing of terrorist activities. The program must 
be approved by senior management. Operators of credit card systems must 
make their anti-money laundering programs available to the Department of 
the Treasury or the appropriate Federal regulator for review.
    (b) Minimum requirements. At a minimum, the program must:
    (1) Incorporate policies, procedures, and internal controls designed 
to ensure the following:
    (i) That the operator does not authorize, or maintain authorization 
for, any person to serve as an issuing or acquiring institution without 
the operator taking appropriate steps, based upon the operator's money 
laundering or terrorist financing risk assessment, to guard against that 
person issuing the operator's credit card or acquiring merchants who 
accept the operator's

[[Page 732]]

credit card in circumstances that facilitate money laundering or the 
financing of terrorist activities;
    (ii) For purposes of making the risk assessment required by 
paragraph (b)(1)(i) of this section, the following persons are presumed 
to pose a heightened risk of money laundering or terrorist financing 
when evaluating whether and under what circumstances to authorize, or to 
maintain authorization for, any such person to serve as an issuing or 
acquiring institution:
    (A) A foreign shell bank that is not a regulated affiliate, as those 
terms are defined in Sec. 1010.605(g) and (n) of this Chapter;
    (B) A person appearing on the Specially Designated Nationals List 
issued by Treasury's Office of Foreign Assets Control;
    (C) A person located in, or operating under a license issued by, a 
jurisdiction whose government has been identified by the Department of 
State as a sponsor of international terrorism under 22 U.S.C. 2371;
    (D) A foreign bank operating under an offshore banking license, 
other than a branch of a foreign bank if such foreign bank has been 
found by the Board of Governors of the Federal Reserve System under the 
Bank Holding Company Act (12 U.S.C. 1841, et seq.) or the International 
Banking Act (12 U.S.C. 3101, et seq.) to be subject to comprehensive 
supervision or regulation on a consolidated basis by the relevant 
supervisors in that jurisdiction;
    (E) A person located in, or operating under a license issued by, a 
jurisdiction that has been designated as noncooperative with 
international anti-money laundering principles or procedures by an 
intergovernmental group or organization of which the United States is a 
member, with which designation the United States representative to the 
group or organization concurs; and
    (F) A person located in, or operating under a license issued by, a 
jurisdiction that has been designated by the Secretary of the Treasury 
pursuant to 31 U.S.C. 5318A as warranting special measures due to money 
laundering concerns;
    (iii) That the operator is in compliance with all applicable 
provisions of subchapter II of chapter 53 of title 31, United States 
Code and this chapter;
    (2) Designate a compliance officer who will be responsible for 
assuring that:
    (i) The anti-money laundering program is implemented effectively;
    (ii) The anti-money laundering program is updated as necessary to 
reflect changes in risk factors or the risk assessment, current 
requirements of this chapter, and further guidance issued by the 
Department of the Treasury; and
    (iii) Appropriate personnel are trained in accordance with paragraph 
(b)(3) of this section;
    (3) Provide for education and training of appropriate personnel 
concerning their responsibilities under the program; and
    (4) Provide for an independent audit to monitor and maintain an 
adequate program. The scope and frequency of the audit shall be 
commensurate with the risks posed by the persons authorized to issue or 
accept the operator's credit card. Such audit may be conducted by an 
officer or employee of the operator, so long as the reviewer is not the 
person designated in paragraph (b)(2) of this section or a person 
involved in the operation of the program.



   Subpart C_Reports Required To Be Made by Operators of Credit Card 
                                 Systems



Sec. 1028.300  General.

    Operators of credit card systems are subject to the reporting 
requirements set forth and cross referenced in this subpart. Operators 
of credit card systems should also refer to Subpart C of Part 1010 of 
this Chapter for reporting requirements contained in that subpart which 
apply to operators of credit card systems.



Sec. Sec. 1028.310-1028.320  [Reserved]



Sec. 1028.330  Reports relating to currency in excess of $10,000
received in a trade or business.

    Refer to Sec. 1010.330 of this Chapter for rules regarding the 
filing of reports relating to currency in excess of $10,000 received by 
operators of credit card systems.

[[Page 733]]



Subpart D_Records Required To Be Maintained By Operators of Credit Card 
                                 Systems



Sec. 1028.400  General.

    Operators of credit card systems are subject to the recordkeeping 
requirements set forth and cross referenced in this subpart. Operators 
of credit card systems should also refer to Subpart D of Part 1010 of 
this Chapter for recordkeeping requirements contained in that subpart 
which apply to operators of credit card systems.



Sec. 1028.410  Recordkeeping.

    Refer to Sec. 1010.410 of this Chapter.



    Subpart E_Special Information Sharing Procedures To Deter Money 
                    Laundering and Terrorist Activity



Sec. 1028.500  General.

    Operators of credit card systems are subject to the special 
information sharing procedures to deter money laundering and terrorist 
activity requirements set forth and cross referenced in this subpart. 
Operators of credit card systems should also refer to subpart E of part 
1010 of this chapter for special information sharing procedures to deter 
money laundering and terrorist activity contained in that subpart which 
apply to operators of credit card systems.



Sec. 1028.520  Special information sharing procedures to deter money
laundering and terrorist activity for operators of credit card systems.

    (a) Refer to Sec. 1010.520.
    (b) [Reserved]



Sec. 1028.530  [Reserved]



Sec. 1028.540  Voluntary information sharing among financial 
institutions.

    (a) Refer to Sec. 1010.540 of this chapter.
    (b) [Reserved]



  Subpart F_Special Standards of Diligence; Prohibitions; and Special 
              Measures for Operators of Credit Card Systems



Sec. Sec. 1028.600-1028.670  [Reserved]



PART 1029_RULES FOR LOAN OR FINANCE COMPANIES--Table of Contents



                          Subpart A_Definitions

Sec.
1029.100 Definitions.

                           Subpart B_Programs

1029.200 General
1029.210 Anti-money laundering programs for loan or finance companies.

   Subpart C_Reports Required To Be Made By Loan or Finance Companies

1029.300 General.
1029.310-1029.315 [Reserved]
1029.320 Reports by loan or finance companies of suspicious 
          transactions.
1029.330 Reports relating to currency in excess of $10,000 received in a 
          trade or business.

Subpart D_Records Required To Be Maintained By Loan or Finance Companies

1029.400 General.

    Subpart E_Special Information Sharing Procedures To Deter Money 
                    Laundering and Terrorist Activity

1029.500 General.
1029.520 Special information sharing procedures to deter money 
          laundering and terrorist activity for loan or finance 
          companies.
1029.530 [Reserved]
1029.540 Voluntary information sharing among financial institutions.

  Subpart F_Special Standards of Diligence; Prohibitions, and Special 
                 Measures for Loan or Finance Companies

1029.600-1029.670 [Reserved]

    Authority: 12 U.S.C. 1829b and 1951-1959; 31 U.S.C. 5311-5314 and 
5316-5332; title III, sec. 314 Pub. L. 107-56, 115 Stat. 307.

    Source: 77 FR 8157, Feb. 14, 2012, unless otherwise noted.

[[Page 734]]



                          Subpart A_Definitions



Sec. 1029.100  Definitions.

    Refer to Sec. 1010.100 of this Chapter for general definitions not 
noted herein.



                           Subpart B_Programs



Sec. 1029.200  General.

    Loan or finance companies are subject to the program requirements 
set forth and cross referenced in this subpart. Loan or finance 
companies should also refer to subpart B of part 1010 of this chapter 
for program requirements contained in that subpart which apply to loan 
or finance companies.



Sec. 1029.210  Anti-money laundering programs for loan or finance
companies.

    (a) Anti-money laundering program requirements for loan or finance 
companies. Each loan or finance company shall develop and implement a 
written anti-money laundering program that is reasonably designed to 
prevent the loan or finance company from being used to facilitate money 
laundering or the financing of terrorist activities. The program must be 
approved by senior management. A loan or finance company shall make a 
copy of its anti-money laundering program available to the Financial 
Crimes Enforcement Network or its designee upon request.
    (b) Minimum requirements. At a minimum, the anti-money laundering 
program shall:
    (1) Incorporate policies, procedures, and internal controls based 
upon the loan or finance company's assessment of the money laundering 
and terrorist financing risks associated with its products and services. 
Policies, procedures, and internal controls developed and implemented by 
a loan or finance company under this section shall include provisions 
for complying with the applicable requirements of subchapter II of 
chapter 53 of title 31, United States Code and this part, integrating 
the company's agents and brokers into its anti-money laundering program, 
and obtaining all relevant customer-related information necessary for an 
effective anti-money laundering program.
    (2) Designate a compliance officer who will be responsible for 
ensuring that:
    (i) The anti-money laundering program is implemented effectively, 
including monitoring compliance by the company's agents and brokers with 
their obligations under the program;
    (ii) The anti-money laundering program is updated as necessary; and
    (iii) Appropriate persons are educated and trained in accordance 
with paragraph (b)(3) of this section.
    (3) Provide for on-going training of appropriate persons concerning 
their responsibilities under the program. A loan or finance company may 
satisfy this requirement with respect to its employees, agents, and 
brokers by directly training such persons or verifying that such persons 
have received training by a competent third party with respect to the 
products and services offered by the loan or finance company.
    (4) Provide for independent testing to monitor and maintain an 
adequate program, including testing to determine compliance of the 
company's agents and brokers with their obligations under the program. 
The scope and frequency of the testing shall be commensurate with the 
risks posed by the company's products and services. Such testing may be 
conducted by a third party or by any officer or employee of the loan or 
finance company, other than the person designated in paragraph (b)(2) of 
this section.
    (c) Compliance. Compliance with this section shall be examined by 
FinCEN or its delegates, under the terms of the Bank Secrecy Act. 
Failure to comply with the requirements of this section may constitute a 
violation of the Bank Secrecy Act and of this part.
    (d) Compliance date. A loan or finance company must develop and 
implement an anti-money laundering program that complies with the 
requirements of this section by August 13, 2012.



   Subpart C_Reports Required To Be Made by Loan or Finance Companies



Sec. 1029.300  General.

    Loan or finance companies are subject to the reporting requirements 
set

[[Page 735]]

forth and cross referenced in this subpart. Loan or finance companies 
should also refer to subpart C of part 1010 of this chapter for 
reporting requirements contained in that subpart which apply to loan or 
finance companies.



Sec. Sec. 1029.310--1029.315  [Reserved]



Sec. 1029.320  Reports by loan or finance companies of suspicious 
transactions.

    (a) General. (1) Every loan or finance company shall file with 
FinCEN, to the extent and in the manner required by this section, a 
report of any suspicious transaction relevant to a possible violation of 
law or regulation. A loan or finance company may also file with FinCEN a 
report of any suspicious transaction that it believes is relevant to the 
possible violation of any law or regulation, but whose reporting is not 
required by this section.
    (2) A transaction requires reporting under this section if it is 
conducted or attempted by, at, or through a loan or finance company, it 
involves or aggregates funds or other assets of at least $5,000, and the 
loan or finance company knows, suspects, or has reason to suspect that 
the transaction (or a pattern of transactions of which the transaction 
is a part):
    (i) Involves funds derived from illegal activity or is intended or 
conducted in order to hide or disguise funds or assets derived from 
illegal activity (including, without limitation, the ownership, nature, 
source, location, or control of such funds or assets) as part of a plan 
to violate or evade any Federal law or regulation or to avoid any 
transaction reporting requirement under Federal law or regulation;
    (ii) Is designed, whether through structuring or other means, to 
evade any requirements of this part or any other regulations promulgated 
under the Bank Secrecy Act, Public Law 91-508, as amended, codified at 
12 U.S.C. 1829b, 12 U.S.C. 1951-1959, and 31 U.S.C. 5311-5314, 5316-
5332;
    (iii) Has no business or apparent lawful purpose or is not the sort 
in which the particular customer would normally be expected to engage, 
and the loan or finance company knows of no reasonable explanation for 
the transaction after examining the available facts, including the 
background and possible purpose of the transaction; or
    (iv) Involves use of the loan or finance company to facilitate 
criminal activity.
    (3) More than one loan or finance company may have an obligation to 
report the same transaction under this section, and other financial 
institutions may have separate obligations to report suspicious activity 
with respect to the same transaction pursuant to other provisions of 
this part. In those instances, no more than one report is required to be 
filed by the loan or finance company(s) and other financial 
institution(s) involved in the transaction, provided that the report 
filed contains all relevant facts, including the name of each financial 
institution involved in the transaction, the report complies with all 
instructions applicable to joint filings, and each institution maintains 
a copy of the report filed, along with any supporting documentation.
    (b) Filing and notification procedures--(1) What to file. A 
suspicious transaction shall be reported by completing a Suspicious 
Activity Report (``SAR''), and collecting and maintaining supporting 
documentation as required by paragraph (c) of this section.
    (2) Where to file. The SAR shall be filed with FinCEN in accordance 
with the instructions to the SAR.
    (3) When to file. A SAR shall be filed no later than 30 calendar 
days after the date of the initial detection by the reporting loan or 
finance company of facts that may constitute a basis for filing a SAR 
under this section. If no suspect is identified on the date of such 
initial detection, a loan or finance company may delay filing a SAR for 
an additional 30 calendar days to identify a suspect, but in no case 
shall reporting be delayed more than 60 calendar days after the date of 
such initial detection.
    (4) Mandatory notification to law enforcement. In situations 
involving violations that require immediate attention, such as suspected 
terrorist financing or ongoing money laundering schemes, a loan or 
finance company shall immediately notify by telephone

[[Page 736]]

an appropriate law enforcement authority in addition to filing timely a 
SAR.
    (5) Voluntary notification to FinCEN. Any loan or finance company 
wishing voluntarily to report suspicious transactions that may relate to 
terrorist activity may call the FinCEN's Financial Institutions Hotline 
at 1-866-556-3974 in addition to filing timely a SAR if required by this 
section.
    (c) Retention of records. A loan or finance company shall maintain a 
copy of any SAR filed by the loan or finance company or on its behalf 
(including joint reports), and the original (or business record 
equivalent) of any supporting documentation concerning any SAR that it 
files (or is filed on its behalf), for a period of five years from the 
date of filing the SAR. Supporting documentation shall be identified as 
such and maintained by the loan or finance company, and shall be deemed 
to have been filed with the SAR. The loan or finance company shall make 
all supporting documentation available to FinCEN, or any Federal, State, 
or local law enforcement agency, or any Federal regulatory authority 
that examines the loan or finance company for compliance with the Bank 
Secrecy Act, or any State regulatory authority administering a State law 
that requires the loan or finance company to comply with the Bank 
Secrecy Act or otherwise authorizes the State authority to ensure that 
the loan or finance company complies with the Bank Secrecy Act, upon 
request.
    (d) Confidentiality of SARs. A SAR, and any information that would 
reveal the existence of a SAR, are confidential and shall not be 
disclosed except as authorized in this paragraph (d). For purposes of 
this paragraph (d) only, a SAR shall include any suspicious activity 
report filed with FinCEN pursuant to any regulation in this part.
    (1) Prohibition on disclosures by loan or finance companies--(i) 
General rule. No loan or finance company, and no director, officer, 
employee, or agent of any loan or finance company, shall disclose a SAR 
or any information that would reveal the existence of a SAR. Any loan or 
finance company, and any director, officer, employee, or agent of any 
loan or finance company that is subpoenaed or otherwise requested to 
disclose a SAR or any information that would reveal the existence of a 
SAR, shall decline to produce the SAR or such information, citing this 
section and 31 U.S.C. 5318(g)(2)(A)(i), and shall notify FinCEN of any 
such request and the response thereto.
    (ii) Rules of construction. Provided that no person involved in any 
reported suspicious transaction is notified that the transaction has 
been reported, paragraph (d)(1) of this section shall not be construed 
as prohibiting:
    (A) The disclosure by a loan or finance company, or any director, 
officer, employee, or agent of a loan or finance company of:
    (1) A SAR, or any information that would reveal the existence of a 
SAR, to FinCEN or any Federal, State, or local law enforcement agency, 
any Federal regulatory authority that examines the loan or finance 
company for compliance with the Bank Secrecy Act, or any State 
regulatory authority administering a State law that requires the loan or 
finance company to comply with the Bank Secrecy Act or otherwise 
authorizes the State authority to ensure that the loan or finance 
company complies with the Bank Secrecy Act; or
    (2) The underlying facts, transactions, and documents upon which a 
SAR is based, including, but not limited to, disclosures to another 
financial institution, or any director, officer, employee, or agent of a 
financial institution, for the preparation of a joint SAR.
    (B) The sharing by a loan or finance company, or any director, 
officer, employee, or agent of the loan or finance company, of a SAR, or 
any information that would reveal the existence of a SAR, within the 
loan or finance company's corporate organizational structure for 
purposes consistent with Title II of the Bank Secrecy Act as determined 
by regulation or in guidance.
    (2) Prohibition on disclosures by government authorities. A Federal, 
state, local, territorial, or tribal government authority, or any 
director, officer, employee, or agent of any of the foregoing, shall not 
disclose a SAR, or any information that would reveal the existence of a 
SAR, except as necessary

[[Page 737]]

to fulfill official duties consistent with Title II of the Bank Secrecy 
Act. For purposes of this section, official duties shall not include the 
disclosure of a SAR, or any information that would reveal the existence 
of a SAR, in response to a request for disclosure of non-public 
information or a request for use in a private legal proceeding, 
including a request pursuant to 31 CFR 1.11.
    (e) Limitation on liability. A loan or finance company, and any 
director, officer, employee, or agent of any loan or finance company, 
that makes a voluntary disclosure of any possible violation of law or 
regulation to a government agency or makes a disclosure pursuant to this 
section or any other authority, including a disclosure made jointly with 
another institution, shall be protected from liability for any such 
disclosure, or for failure to provide notice of such disclosure to any 
person identified in the disclosure, or both, to the full extent 
provided by 31 U.S.C. 5318(g)(3).
    (f) Compliance. Loan or finance companies shall be examined by 
FinCEN or its delegates under the terms of the Bank Secrecy Act, for 
compliance with this section. Failure to satisfy the requirements of 
this section may be a violation of the Bank Secrecy Act and of this 
part.
    (g) Compliance date. This section applies to transactions initiated 
after an anti-money laundering program required by section 1029.210 of 
this part is required to be implemented.



Sec. 1029.330  Reports relating to currency in excess of $10,000 
received in a trade or business.

    Refer to Sec. 1010.330 of this chapter for rules regarding the 
filing of reports relating to currency in excess of $10,000 received by 
loan or finance companies.



Subpart D_Records Required To Be Maintained By Loan or Finance Companies



Sec. 1029.400  General.

    Loan or finance companies are subject to the recordkeeping 
requirements set forth and cross referenced in this subpart. Loan or 
finance companies should also refer to subpart D of part 1010 of this 
chapter for recordkeeping requirements contained in that subpart which 
apply to loan or finance companies.



    Subpart E_Special Information Sharing Procedures To Deter Money 
                    Laundering and Terrorist Activity



Sec. 1029.500  General.

    Loan or finance companies are subject to the special information 
sharing procedures to deter money laundering and terrorist activity 
requirements set forth and cross referenced in this subpart. Loan or 
finance companies should also refer to subpart E of part 1010 of this 
chapter for special information sharing procedures to deter money 
laundering and terrorist activity contained in that subpart which apply 
to loan or finance companies.



Sec. 1029.520  Special information sharing procedures to deter money
laundering and terrorist activity for loan or finance companies.

    (a) Refer to Sec. 1010.520 of this chapter.
    (b) [Reserved]



Sec. 1029.530  [Reserved]



Sec. 1029.540  Voluntary information sharing among financial institutions.

    (a) Refer to Sec. 1010.540 of this chapter.
    (b) [Reserved]



  Subpart F_Special Standards of Diligence; Prohibitions, and Special 
                 Measures for Loan or Finance Companies



Sec. Sec. 1029.600--1029.670  [Reserved]

                       PARTS 1030	1059 [RESERVED]



PART 1060_PROVISIONS RELATING TO THE COMPREHENSIVE IRAN SANCTIONS,
ACCOUNTABILITY, AND DIVESTMENT ACT OF 2010--Table of Contents



Sec.
1060.100-1060.200 [Reserved]
1060.300 Reporting obligations on foreign bank relationships with 
          Iranian-linked financial institutions designated under IEEPA 
          and IRGC-linked persons designated under IEEPA.

[[Page 738]]

1060.400-1060.700 [Reserved]
1060.800 Penalties

    Authority: Pub. L. 111-195, 124 Stat. 1312.

    Source: 76 FR 62623, Oct. 11, 2011, unless otherwise noted.



Sec. Sec. 1060.100-1060.200  [Reserved]



Sec. 1060.300  Reporting obligations on foreign bank relationships with
Iranian-linked financial institutions designated under IEEPA and 

IRGC-linked persons designated under IEEPA.

    (a) General. (1) Upon receiving a written request from FinCEN, a 
bank (as defined in 31 CFR 1010.100(d)) that maintains a correspondent 
account (as defined in 31 CFR 1010.605(c)(1)(ii)) for a specified 
foreign bank (as defined in 31 CFR 1010.100(u)) shall inquire of the 
foreign bank, and report to FinCEN, with respect to any correspondent 
account maintained by such foreign bank for an Iranian-linked financial 
institution designated under IEEPA; any transfer of funds for or on 
behalf of, directly or indirectly, an Iranian-linked financial 
institution designated under IEEPA processed by such foreign bank within 
the preceding 90 calendar days, other than through a correspondent 
account; and any transfer of funds for or on behalf of, directly or 
indirectly, an IRGC-linked person designated under IEEPA processed by 
such foreign bank within the preceding 90 calendar days.
    (2) For the purposes of this section, an ``Iranian-linked financial 
institution designated under IEEPA'' means a financial institution 
designated by the United States Government pursuant to the International 
Emergency Economic Powers Act (or listed in an annex to an Executive 
order issued pursuant to such Act) in connection with Iran's 
proliferation of weapons of mass destruction or delivery systems for 
weapons of mass destruction, or in connection with Iran's support for 
international terrorism. For the purposes of this section, an ``IRGC-
linked person designated under IEEPA'' means Iran's Islamic 
Revolutionary Guard Corps or any of its agents or affiliates designated 
by the United States Government pursuant to the International Emergency 
Economic Powers Act (or listed in an annex to an Executive order issued 
pursuant to such Act).
    Note to paragraph (a)(2): Section 104(c) of the Comprehensive Iran 
Sanctions, Accountability, and Divestment Act of 2010 (``CISADA''), 
Public Law 111-195, 124 Stat. 1312, provides the Secretary of the 
Treasury with authority to prohibit, or impose strict conditions on, the 
opening or maintaining in the United States of a correspondent account 
or a payable-through account by a foreign financial institution that the 
Secretary finds knowingly engages in certain specified activities. Those 
specified activities include facilitating a significant transaction or 
transactions or providing significant financial services for a financial 
institution whose property or interests in property are blocked pursuant 
to the International Emergency Economic Powers Act (50 U.S.C. 1701 et 
seq.) in connection with Iran's proliferation of weapons of mass 
destruction or delivery systems for weapons of mass destruction, or in 
connection with Iran's support for international terrorism, or for 
Iran's Islamic Revolutionary Guard Corps or any of its agents or 
affiliates whose property or interests in property are blocked pursuant 
to that Act.
    (b) Duty to inquire. Upon receiving a written request from FinCEN, a 
bank that maintains a correspondent account for a specified foreign bank 
shall inquire of such foreign bank for the purpose of having such 
foreign bank certify: whether it maintains a correspondent account for 
an Iranian-linked financial institution designated under IEEPA; whether 
it has processed one or more transfers of funds within the preceding 90 
calendar days for or on behalf of, directly or indirectly, an Iranian-
linked financial institution designated under IEEPA, other than through 
a correspondent account; and whether it has processed one or more 
transfers of funds within the preceding 90 calendar days for or on 
behalf of, directly or indirectly, an IRGC-linked person designated 
under IEEPA. Upon such inquiry, a bank shall request that the foreign 
bank agree to notify the bank if the foreign bank subsequently 
establishes a new correspondent account for an Iranian-linked financial 
institution designated under IEEPA at any time within 365 calendar days 
from the date of the foreign bank's initial response.
    (c) Filing Procedures--(1) What to file. Upon receiving a written 
request from FinCEN, a bank shall report to FinCEN, in such format and 
manner as

[[Page 739]]

may be prescribed by FinCEN, the following information for any specified 
foreign bank:
    (i) The name of any specified foreign bank, for which the bank 
maintains a correspondent account, that certifies that it maintains a 
correspondent account for an Iranian-linked financial institution 
designated under IEEPA, and the following related information:
    (A) The name of the Iranian-linked financial institution designated 
under IEEPA;
    (B) The full name(s) on the correspondent account and the 
correspondent account number(s);
    (C) Applicable information regarding whether the correspondent 
account has been blocked or otherwise restricted;
    (D) Other applicable identifying information for the correspondent 
account; and
    (E) The approximate value in U.S. dollars of transactions processed 
through the correspondent account within the preceding 90 calendar days;
    (ii) The name of any specified foreign bank, for which the bank 
maintains a correspondent account, that certifies that it has processed 
one or more transfers of funds within the preceding 90 calendar days for 
or on behalf of, directly or indirectly, an Iranian-linked financial 
institution designated under IEEPA, other than through a correspondent 
account, and the following related information:
    (A) The name of the Iranian-linked financial institution designated 
under IEEPA;
    (B) The identity of the system or means by which such transfer(s) of 
funds was processed;
    (C) The full name on the account(s) and the account number(s), if 
applicable;
    (D) Other applicable identifying information for such transfer(s) of 
funds; and
    (E) The approximate value in U.S. dollars of such transfer(s) of 
funds processed within the preceding 90 calendar days;
    (iii) The name of any specified foreign bank, for which the bank 
maintains a correspondent account, that certifies that it has processed 
one or more transfers of funds within the preceding 90 calendar days for 
or on behalf of, directly or indirectly, an IRGC-linked person 
designated under IEEPA, and the following related information:
    (A) The name of the IRGC-linked person designated under IEEPA;
    (B) The identity of the system or means by which such transfer(s) of 
funds was processed;
    (C) The full name on the account(s) and the account number(s), if 
applicable;
    (D) Other applicable identifying information for such transfer(s) of 
funds; and
    (E) The approximate value in U.S. dollars of such transfer(s) of 
funds processed within the preceding 90 calendar days;
    (iv) The name of any specified foreign bank, for which the bank 
maintains a correspondent account, that certifies that it does not 
maintain a correspondent account for an Iranian-linked financial 
institution designated under IEEPA, that certifies that to its knowledge 
it has not processed one or more transfers of funds within the preceding 
90 calendar days for or on behalf of, directly or indirectly, an 
Iranian-linked financial institution designated under IEEPA, other than 
through a correspondent account, and/or that certifies that to its 
knowledge it has not processed one or more transfers of funds within the 
preceding 90 calendar days for or on behalf of, directly or indirectly, 
an IRGC-linked person designated under IEEPA;
    (v) The name of any specified foreign bank, for which the bank 
maintains a correspondent account, that the bank cannot determine does 
not maintain a correspondent account for an Iranian-linked financial 
institution designated under IEEPA, has not processed one or more 
transfers of funds within the preceding 90 calendar days for or on 
behalf of, directly or indirectly, an Iranian-linked financial 
institution designated under IEEPA, other than through a correspondent 
account, and/or has not processed one or more transfers of funds within 
the preceding 90 calendar days for or on behalf of, directly or 
indirectly, an IRGC-linked person designated under IEEPA, together with 
the reason(s) for this, such as the failure of the foreign bank to 
respond to the inquiry by or a request from the

[[Page 740]]

bank, the failure of the foreign bank to certify its response, or if the 
bank has information that is inconsistent with the certification;
    (vi) The name of any specified foreign bank, for which the bank 
maintains a correspondent account, that notifies the bank that it has 
established a new correspondent account for an Iranian-linked financial 
institution designated under IEEPA at any time within 365 calendar days 
from the date of the foreign bank's initial response, and the following 
related information:
    (A) The name of the Iranian-linked financial institution designated 
under IEEPA;
    (B) The full name(s) on the correspondent account and the 
correspondent account number(s);
    (C) Applicable information regarding whether the correspondent 
account has been blocked or otherwise restricted; and
    (D) Other applicable identifying information for the correspondent 
account;
    (vii) If applicable, confirmation that the bank does not maintain a 
correspondent account for the specified foreign bank(s), but only in 
instances in which FinCEN specifically requests that the bank report 
such information; and
    (viii) If applicable, the name of any specified foreign bank, for 
which the bank maintains a correspondent account, that provides a 
certification to the bank after the 45-calendar-day deadline, along with 
all applicable related information associated with that certification.
    (2) When to file. (i) A bank shall report to FinCEN within 45-
calendar-days of the date of the request from FinCEN.
    (ii) Reports based on subsequent notifications received from a 
foreign bank regarding the establishment of a new correspondent account 
for an Iranian-linked financial institution designated under IEEPA shall 
be due within 10 calendar days of receipt of the notification.
    (iii) Reports based on certifications received from a foreign bank 
after the 45 calendar day deadline shall be due within 10 calendar days 
of receipt of the certification.
    (d) Retention of records. A bank shall maintain for a period of five 
years a copy of any report filed and the original or any business record 
equivalent of any supporting documentation for a report, including a 
foreign bank certification or other responses to an inquiry under this 
section.
    (e) No other action required. Nothing in this section shall be 
construed to require a bank to take any action, or to decline to take 
any action, other than the requirements identified in this section, with 
respect to an account established for, or a transaction engaged in with, 
a foreign bank. However, nothing in this section relieves a bank of any 
other applicable regulatory obligation.



Sec. Sec. 1060.400-1060.700  [Reserved]



Sec. 1060.800  Penalties.

    A person violating any requirement under this part is subject to the 
penalties provided for in sections 5321(a) and 5322 of title 31, United 
States Code, in the same manner and to the same extent as such penalties 
would apply to any person that is otherwise subject to such section 
5321(a) or 5322.

                       PARTS 1061	1099 [RESERVED]

[[Page 741]]



                              Finding Aids




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

  A list of CFR titles, subtitles, chapters, subchapters and parts and 
an alphabetical list of agencies publishing in the CFR are included in 
the CFR Index and Finding Aids volume to the Code of Federal Regulations 
which is published separately and revised annually.

  Table of CFR Titles and Chapters
  Alphabetical List of Agencies Appearing in the CFR
  List of CFR Sections Affected

[[Page 743]]



                    Table of CFR Titles and Chapters




                      (Revised as of July 1, 2012)

                      Title 1--General Provisions

         I  Administrative Committee of the Federal Register 
                (Parts 1--49)
        II  Office of the Federal Register (Parts 50--299)
       III  Administrative Conference of the United States (Parts 
                300--399)
        IV  Miscellaneous Agencies (Parts 400--500)

                    Title 2--Grants and Agreements

            Subtitle A--Office of Management and Budget Guidance 
                for Grants and Agreements
         I  Office of Management and Budget Governmentwide 
                Guidance for Grants and Agreements (Parts 2--199)
        II  Office of Management and Budget Circulars and Guidance 
                (200--299)
            Subtitle B--Federal Agency Regulations for Grants and 
                Agreements
       III  Department of Health and Human Services (Parts 300-- 
                399)
        IV  Department of Agriculture (Parts 400--499)
        VI  Department of State (Parts 600--699)
       VII  Agency for International Development (Parts 700--799)
      VIII  Department of Veterans Affairs (Parts 800--899)
        IX  Department of Energy (Parts 900--999)
        XI  Department of Defense (Parts 1100--1199)
       XII  Department of Transportation (Parts 1200--1299)
      XIII  Department of Commerce (Parts 1300--1399)
       XIV  Department of the Interior (Parts 1400--1499)
        XV  Environmental Protection Agency (Parts 1500--1599)
     XVIII  National Aeronautics and Space Administration (Parts 
                1800--1899)
        XX  United States Nuclear Regulatory Commission (Parts 
                2000--2099)
      XXII  Corporation for National and Community Service (Parts 
                2200--2299)
     XXIII  Social Security Administration (Parts 2300--2399)
      XXIV  Housing and Urban Development (Parts 2400--2499)
       XXV  National Science Foundation (Parts 2500--2599)
      XXVI  National Archives and Records Administration (Parts 
                2600--2699)
     XXVII  Small Business Administration (Parts 2700--2799)
    XXVIII  Department of Justice (Parts 2800--2899)

[[Page 744]]

       XXX  Department of Homeland Security (Parts 3000--3099)
      XXXI  Institute of Museum and Library Services (Parts 3100--
                3199)
     XXXII  National Endowment for the Arts (Parts 3200--3299)
    XXXIII  National Endowment for the Humanities (Parts 3300--
                3399)
     XXXIV  Department of Education (Parts 3400--3499)
      XXXV  Export-Import Bank of the United States (Parts 3500--
                3599)
    XXXVII  Peace Corps (Parts 3700--3799)
     LVIII  Election Assistance Commission (Parts 5800--5899)

                        Title 3--The President

         I  Executive Office of the President (Parts 100--199)

                           Title 4--Accounts

         I  Government Accountability Office (Parts 1--199)
        II  Recovery Accountability and Transparency Board (Parts 
                200--299)

                   Title 5--Administrative Personnel

         I  Office of Personnel Management (Parts 1--1199)
        II  Merit Systems Protection Board (Parts 1200--1299)
       III  Office of Management and Budget (Parts 1300--1399)
         V  The International Organizations Employees Loyalty 
                Board (Parts 1500--1599)
        VI  Federal Retirement Thrift Investment Board (Parts 
                1600--1699)
      VIII  Office of Special Counsel (Parts 1800--1899)
        IX  Appalachian Regional Commission (Parts 1900--1999)
        XI  Armed Forces Retirement Home (Parts 2100--2199)
       XIV  Federal Labor Relations Authority, General Counsel of 
                the Federal Labor Relations Authority and Federal 
                Service Impasses Panel (Parts 2400--2499)
        XV  Office of Administration, Executive Office of the 
                President (Parts 2500--2599)
       XVI  Office of Government Ethics (Parts 2600--2699)
       XXI  Department of the Treasury (Parts 3100--3199)
      XXII  Federal Deposit Insurance Corporation (Parts 3200--
                3299)
     XXIII  Department of Energy (Parts 3300--3399)
      XXIV  Federal Energy Regulatory Commission (Parts 3400--
                3499)
       XXV  Department of the Interior (Parts 3500--3599)
      XXVI  Department of Defense (Parts 3600-- 3699)
    XXVIII  Department of Justice (Parts 3800--3899)
      XXIX  Federal Communications Commission (Parts 3900--3999)
       XXX  Farm Credit System Insurance Corporation (Parts 4000--
                4099)
      XXXI  Farm Credit Administration (Parts 4100--4199)

[[Page 745]]

    XXXIII  Overseas Private Investment Corporation (Parts 4300--
                4399)
     XXXIV  Securities and Exchange Commission (Parts 4400--4499)
      XXXV  Office of Personnel Management (Parts 4500--4599)
    XXXVII  Federal Election Commission (Parts 4700--4799)
        XL  Interstate Commerce Commission (Parts 5000--5099)
       XLI  Commodity Futures Trading Commission (Parts 5100--
                5199)
      XLII  Department of Labor (Parts 5200--5299)
     XLIII  National Science Foundation (Parts 5300--5399)
       XLV  Department of Health and Human Services (Parts 5500--
                5599)
      XLVI  Postal Rate Commission (Parts 5600--5699)
     XLVII  Federal Trade Commission (Parts 5700--5799)
    XLVIII  Nuclear Regulatory Commission (Parts 5800--5899)
      XLIX  Federal Labor Relations Authority (Parts 5900--5999)
         L  Department of Transportation (Parts 6000--6099)
       LII  Export-Import Bank of the United States (Parts 6200--
                6299)
      LIII  Department of Education (Parts 6300--6399)
       LIV  Environmental Protection Agency (Parts 6400--6499)
        LV  National Endowment for the Arts (Parts 6500--6599)
       LVI  National Endowment for the Humanities (Parts 6600--
                6699)
      LVII  General Services Administration (Parts 6700--6799)
     LVIII  Board of Governors of the Federal Reserve System 
                (Parts 6800--6899)
       LIX  National Aeronautics and Space Administration (Parts 
                6900--6999)
        LX  United States Postal Service (Parts 7000--7099)
       LXI  National Labor Relations Board (Parts 7100--7199)
      LXII  Equal Employment Opportunity Commission (Parts 7200--
                7299)
     LXIII  Inter-American Foundation (Parts 7300--7399)
      LXIV  Merit Systems Protection Board (Parts 7400--7499)
       LXV  Department of Housing and Urban Development (Parts 
                7500--7599)
      LXVI  National Archives and Records Administration (Parts 
                7600--7699)
     LXVII  Institute of Museum and Library Services (Parts 7700--
                7799)
    LXVIII  Commission on Civil Rights (Parts 7800--7899)
      LXIX  Tennessee Valley Authority (Parts 7900--7999)
       LXX  Court Services and Offender Supervision Agency for the 
                District of Columbia (Parts 8000--8099)
      LXXI  Consumer Product Safety Commission (Parts 8100--8199)
    LXXIII  Department of Agriculture (Parts 8300--8399)
     LXXIV  Federal Mine Safety and Health Review Commission 
                (Parts 8400--8499)
     LXXVI  Federal Retirement Thrift Investment Board (Parts 
                8600--8699)
    LXXVII  Office of Management and Budget (Parts 8700--8799)
      LXXX  Federal Housing Finance Agency (Parts 9000--9099)
    LXXXII  Special Inspector General for Iraq Reconstruction 
                (Parts 9200--9299)

[[Page 746]]

   LXXXIII  Special Inspector General for Afghanistan 
                Reconstruction (Parts 9300--9399)
    LXXXIV  Bureau of Consumer Financial Protection (Parts 9400--
                9499)
     XCVII  Department of Homeland Security Human Resources 
                Management System (Department of Homeland 
                Security--Office of Personnel Management) (Parts 
                9700--9799)

                      Title 6--Domestic Security

         I  Department of Homeland Security, Office of the 
                Secretary (Parts 1--99)

                         Title 7--Agriculture

            Subtitle A--Office of the Secretary of Agriculture 
                (Parts 0--26)
            Subtitle B--Regulations of the Department of 
                Agriculture
         I  Agricultural Marketing Service (Standards, 
                Inspections, Marketing Practices), Department of 
                Agriculture (Parts 27--209)
        II  Food and Nutrition Service, Department of Agriculture 
                (Parts 210--299)
       III  Animal and Plant Health Inspection Service, Department 
                of Agriculture (Parts 300--399)
        IV  Federal Crop Insurance Corporation, Department of 
                Agriculture (Parts 400--499)
         V  Agricultural Research Service, Department of 
                Agriculture (Parts 500--599)
        VI  Natural Resources Conservation Service, Department of 
                Agriculture (Parts 600--699)
       VII  Farm Service Agency, Department of Agriculture (Parts 
                700--799)
      VIII  Grain Inspection, Packers and Stockyards 
                Administration (Federal Grain Inspection Service), 
                Department of Agriculture (Parts 800--899)
        IX  Agricultural Marketing Service (Marketing Agreements 
                and Orders; Fruits, Vegetables, Nuts), Department 
                of Agriculture (Parts 900--999)
         X  Agricultural Marketing Service (Marketing Agreements 
                and Orders; Milk), Department of Agriculture 
                (Parts 1000--1199)
        XI  Agricultural Marketing Service (Marketing Agreements 
                and Orders; Miscellaneous Commodities), Department 
                of Agriculture (Parts 1200--1299)
       XIV  Commodity Credit Corporation, Department of 
                Agriculture (Parts 1400--1499)
        XV  Foreign Agricultural Service, Department of 
                Agriculture (Parts 1500--1599)
       XVI  Rural Telephone Bank, Department of Agriculture (Parts 
                1600--1699)
      XVII  Rural Utilities Service, Department of Agriculture 
                (Parts 1700--1799)

[[Page 747]]

     XVIII  Rural Housing Service, Rural Business-Cooperative 
                Service, Rural Utilities Service, and Farm Service 
                Agency, Department of Agriculture (Parts 1800--
                2099)
        XX  Local Television Loan Guarantee Board (Parts 2200--
                2299)
       XXV  Office of Advocacy and Outreach, Department of 
                Agriculture (Parts 2500--2599)
      XXVI  Office of Inspector General, Department of Agriculture 
                (Parts 2600--2699)
     XXVII  Office of Information Resources Management, Department 
                of Agriculture (Parts 2700--2799)
    XXVIII  Office of Operations, Department of Agriculture (Parts 
                2800--2899)
      XXIX  Office of Energy Policy and New Uses, Department of 
                Agriculture (Parts 2900--2999)
       XXX  Office of the Chief Financial Officer, Department of 
                Agriculture (Parts 3000--3099)
      XXXI  Office of Environmental Quality, Department of 
                Agriculture (Parts 3100--3199)
     XXXII  Office of Procurement and Property Management, 
                Department of Agriculture (Parts 3200--3299)
    XXXIII  Office of Transportation, Department of Agriculture 
                (Parts 3300--3399)
     XXXIV  National Institute of Food and Agriculture (Parts 
                3400--3499)
      XXXV  Rural Housing Service, Department of Agriculture 
                (Parts 3500--3599)
     XXXVI  National Agricultural Statistics Service, Department 
                of Agriculture (Parts 3600--3699)
    XXXVII  Economic Research Service, Department of Agriculture 
                (Parts 3700--3799)
   XXXVIII  World Agricultural Outlook Board, Department of 
                Agriculture (Parts 3800--3899)
       XLI  [Reserved]
      XLII  Rural Business-Cooperative Service and Rural Utilities 
                Service, Department of Agriculture (Parts 4200--
                4299)

                    Title 8--Aliens and Nationality

         I  Department of Homeland Security (Immigration and 
                Naturalization) (Parts 1--499)
         V  Executive Office for Immigration Review, Department of 
                Justice (Parts 1000--1399)

                 Title 9--Animals and Animal Products

         I  Animal and Plant Health Inspection Service, Department 
                of Agriculture (Parts 1--199)
        II  Grain Inspection, Packers and Stockyards 
                Administration (Packers and Stockyards Programs), 
                Department of Agriculture (Parts 200--299)

[[Page 748]]

       III  Food Safety and Inspection Service, Department of 
                Agriculture (Parts 300--599)

                           Title 10--Energy

         I  Nuclear Regulatory Commission (Parts 0--199)
        II  Department of Energy (Parts 200--699)
       III  Department of Energy (Parts 700--999)
         X  Department of Energy (General Provisions) (Parts 
                1000--1099)
      XIII  Nuclear Waste Technical Review Board (Parts 1300--
                1399)
      XVII  Defense Nuclear Facilities Safety Board (Parts 1700--
                1799)
     XVIII  Northeast Interstate Low-Level Radioactive Waste 
                Commission (Parts 1800--1899)

                      Title 11--Federal Elections

         I  Federal Election Commission (Parts 1--9099)
        II  Election Assistance Commission (Parts 9400--9499)

                      Title 12--Banks and Banking

         I  Comptroller of the Currency, Department of the 
                Treasury (Parts 1--199)
        II  Federal Reserve System (Parts 200--299)
       III  Federal Deposit Insurance Corporation (Parts 300--399)
        IV  Export-Import Bank of the United States (Parts 400--
                499)
         V  Office of Thrift Supervision, Department of the 
                Treasury (Parts 500--599)
        VI  Farm Credit Administration (Parts 600--699)
       VII  National Credit Union Administration (Parts 700--799)
      VIII  Federal Financing Bank (Parts 800--899)
        IX  Federal Housing Finance Board (Parts 900--999)
         X  Bureau of Consumer Financial Protection (Parts 1000--
                1099)
        XI  Federal Financial Institutions Examination Council 
                (Parts 1100--1199)
       XII  Federal Housing Finance Agency (Parts 1200--1299)
      XIII  Financial Stability Oversight Council (Parts 1300--
                1399)
       XIV  Farm Credit System Insurance Corporation (Parts 1400--
                1499)
        XV  Department of the Treasury (Parts 1500--1599)
       XVI  Office of Financial Research (Parts 1600--1699)
      XVII  Office of Federal Housing Enterprise Oversight, 
                Department of Housing and Urban Development (Parts 
                1700--1799)
     XVIII  Community Development Financial Institutions Fund, 
                Department of the Treasury (Parts 1800--1899)

[[Page 749]]

               Title 13--Business Credit and Assistance

         I  Small Business Administration (Parts 1--199)
       III  Economic Development Administration, Department of 
                Commerce (Parts 300--399)
        IV  Emergency Steel Guarantee Loan Board (Parts 400--499)
         V  Emergency Oil and Gas Guaranteed Loan Board (Parts 
                500--599)

                    Title 14--Aeronautics and Space

         I  Federal Aviation Administration, Department of 
                Transportation (Parts 1--199)
        II  Office of the Secretary, Department of Transportation 
                (Aviation Proceedings) (Parts 200--399)
       III  Commercial Space Transportation, Federal Aviation 
                Administration, Department of Transportation 
                (Parts 400--1199)
         V  National Aeronautics and Space Administration (Parts 
                1200--1299)
        VI  Air Transportation System Stabilization (Parts 1300--
                1399)

                 Title 15--Commerce and Foreign Trade

            Subtitle A--Office of the Secretary of Commerce (Parts 
                0--29)
            Subtitle B--Regulations Relating to Commerce and 
                Foreign Trade
         I  Bureau of the Census, Department of Commerce (Parts 
                30--199)
        II  National Institute of Standards and Technology, 
                Department of Commerce (Parts 200--299)
       III  International Trade Administration, Department of 
                Commerce (Parts 300--399)
        IV  Foreign-Trade Zones Board, Department of Commerce 
                (Parts 400--499)
       VII  Bureau of Industry and Security, Department of 
                Commerce (Parts 700--799)
      VIII  Bureau of Economic Analysis, Department of Commerce 
                (Parts 800--899)
        IX  National Oceanic and Atmospheric Administration, 
                Department of Commerce (Parts 900--999)
        XI  Technology Administration, Department of Commerce 
                (Parts 1100--1199)
      XIII  East-West Foreign Trade Board (Parts 1300--1399)
       XIV  Minority Business Development Agency (Parts 1400--
                1499)
            Subtitle C--Regulations Relating to Foreign Trade 
                Agreements
        XX  Office of the United States Trade Representative 
                (Parts 2000--2099)
            Subtitle D--Regulations Relating to Telecommunications 
                and Information
     XXIII  National Telecommunications and Information 
                Administration, Department of Commerce (Parts 
                2300--2399)

[[Page 750]]

                    Title 16--Commercial Practices

         I  Federal Trade Commission (Parts 0--999)
        II  Consumer Product Safety Commission (Parts 1000--1799)

             Title 17--Commodity and Securities Exchanges

         I  Commodity Futures Trading Commission (Parts 1--199)
        II  Securities and Exchange Commission (Parts 200--399)
        IV  Department of the Treasury (Parts 400--499)

          Title 18--Conservation of Power and Water Resources

         I  Federal Energy Regulatory Commission, Department of 
                Energy (Parts 1--399)
       III  Delaware River Basin Commission (Parts 400--499)
        VI  Water Resources Council (Parts 700--799)
      VIII  Susquehanna River Basin Commission (Parts 800--899)
      XIII  Tennessee Valley Authority (Parts 1300--1399)

                       Title 19--Customs Duties

         I  U.S. Customs and Border Protection, Department of 
                Homeland Security; Department of the Treasury 
                (Parts 0--199)
        II  United States International Trade Commission (Parts 
                200--299)
       III  International Trade Administration, Department of 
                Commerce (Parts 300--399)
        IV  U.S. Immigration and Customs Enforcement, Department 
                of Homeland Security (Parts 400--599)

                     Title 20--Employees' Benefits

         I  Office of Workers' Compensation Programs, Department 
                of Labor (Parts 1--199)
        II  Railroad Retirement Board (Parts 200--399)
       III  Social Security Administration (Parts 400--499)
        IV  Employees' Compensation Appeals Board, Department of 
                Labor (Parts 500--599)
         V  Employment and Training Administration, Department of 
                Labor (Parts 600--699)
        VI  Office of Workers' Compensation Programs, Department 
                of Labor (Parts 700--799)
       VII  Benefits Review Board, Department of Labor (Parts 
                800--899)
      VIII  Joint Board for the Enrollment of Actuaries (Parts 
                900--999)
        IX  Office of the Assistant Secretary for Veterans' 
                Employment and Training Service, Department of 
                Labor (Parts 1000--1099)

[[Page 751]]

                       Title 21--Food and Drugs

         I  Food and Drug Administration, Department of Health and 
                Human Services (Parts 1--1299)
        II  Drug Enforcement Administration, Department of Justice 
                (Parts 1300--1399)
       III  Office of National Drug Control Policy (Parts 1400--
                1499)

                      Title 22--Foreign Relations

         I  Department of State (Parts 1--199)
        II  Agency for International Development (Parts 200--299)
       III  Peace Corps (Parts 300--399)
        IV  International Joint Commission, United States and 
                Canada (Parts 400--499)
         V  Broadcasting Board of Governors (Parts 500--599)
       VII  Overseas Private Investment Corporation (Parts 700--
                799)
        IX  Foreign Service Grievance Board (Parts 900--999)
         X  Inter-American Foundation (Parts 1000--1099)
        XI  International Boundary and Water Commission, United 
                States and Mexico, United States Section (Parts 
                1100--1199)
       XII  United States International Development Cooperation 
                Agency (Parts 1200--1299)
      XIII  Millennium Challenge Corporation (Parts 1300--1399)
       XIV  Foreign Service Labor Relations Board; Federal Labor 
                Relations Authority; General Counsel of the 
                Federal Labor Relations Authority; and the Foreign 
                Service Impasse Disputes Panel (Parts 1400--1499)
        XV  African Development Foundation (Parts 1500--1599)
       XVI  Japan-United States Friendship Commission (Parts 
                1600--1699)
      XVII  United States Institute of Peace (Parts 1700--1799)

                          Title 23--Highways

         I  Federal Highway Administration, Department of 
                Transportation (Parts 1--999)
        II  National Highway Traffic Safety Administration and 
                Federal Highway Administration, Department of 
                Transportation (Parts 1200--1299)
       III  National Highway Traffic Safety Administration, 
                Department of Transportation (Parts 1300--1399)

                Title 24--Housing and Urban Development

            Subtitle A--Office of the Secretary, Department of 
                Housing and Urban Development (Parts 0--99)
            Subtitle B--Regulations Relating to Housing and Urban 
                Development
         I  Office of Assistant Secretary for Equal Opportunity, 
                Department of Housing and Urban Development (Parts 
                100--199)

[[Page 752]]

        II  Office of Assistant Secretary for Housing-Federal 
                Housing Commissioner, Department of Housing and 
                Urban Development (Parts 200--299)
       III  Government National Mortgage Association, Department 
                of Housing and Urban Development (Parts 300--399)
        IV  Office of Housing and Office of Multifamily Housing 
                Assistance Restructuring, Department of Housing 
                and Urban Development (Parts 400--499)
         V  Office of Assistant Secretary for Community Planning 
                and Development, Department of Housing and Urban 
                Development (Parts 500--599)
        VI  Office of Assistant Secretary for Community Planning 
                and Development, Department of Housing and Urban 
                Development (Parts 600--699) [Reserved]
       VII  Office of the Secretary, Department of Housing and 
                Urban Development (Housing Assistance Programs and 
                Public and Indian Housing Programs) (Parts 700--
                799)
      VIII  Office of the Assistant Secretary for Housing--Federal 
                Housing Commissioner, Department of Housing and 
                Urban Development (Section 8 Housing Assistance 
                Programs, Section 202 Direct Loan Program, Section 
                202 Supportive Housing for the Elderly Program and 
                Section 811 Supportive Housing for Persons With 
                Disabilities Program) (Parts 800--899)
        IX  Office of Assistant Secretary for Public and Indian 
                Housing, Department of Housing and Urban 
                Development (Parts 900--1699)
         X  Office of Assistant Secretary for Housing--Federal 
                Housing Commissioner, Department of Housing and 
                Urban Development (Interstate Land Sales 
                Registration Program) (Parts 1700--1799)
       XII  Office of Inspector General, Department of Housing and 
                Urban Development (Parts 2000--2099)
        XV  Emergency Mortgage Insurance and Loan Programs, 
                Department of Housing and Urban Development (Parts 
                2700--2799)
        XX  Office of Assistant Secretary for Housing--Federal 
                Housing Commissioner, Department of Housing and 
                Urban Development (Parts 3200--3899)
      XXIV  Board of Directors of the HOPE for Homeowners Program 
                (Parts 4000--4099)
       XXV  Neighborhood Reinvestment Corporation (Parts 4100--
                4199)

                           Title 25--Indians

         I  Bureau of Indian Affairs, Department of the Interior 
                (Parts 1--299)
        II  Indian Arts and Crafts Board, Department of the 
                Interior (Parts 300--399)
       III  National Indian Gaming Commission, Department of the 
                Interior (Parts 500--599)
        IV  Office of Navajo and Hopi Indian Relocation (Parts 
                700--799)
         V  Bureau of Indian Affairs, Department of the Interior, 
                and Indian Health Service, Department of Health 
                and Human Services (Part 900)

[[Page 753]]

        VI  Office of the Assistant Secretary-Indian Affairs, 
                Department of the Interior (Parts 1000--1199)
       VII  Office of the Special Trustee for American Indians, 
                Department of the Interior (Parts 1200--1299)

                      Title 26--Internal Revenue

         I  Internal Revenue Service, Department of the Treasury 
                (Parts 1--End)

           Title 27--Alcohol, Tobacco Products and Firearms

         I  Alcohol and Tobacco Tax and Trade Bureau, Department 
                of the Treasury (Parts 1--399)
        II  Bureau of Alcohol, Tobacco, Firearms, and Explosives, 
                Department of Justice (Parts 400--699)

                   Title 28--Judicial Administration

         I  Department of Justice (Parts 0--299)
       III  Federal Prison Industries, Inc., Department of Justice 
                (Parts 300--399)
         V  Bureau of Prisons, Department of Justice (Parts 500--
                599)
        VI  Offices of Independent Counsel, Department of Justice 
                (Parts 600--699)
       VII  Office of Independent Counsel (Parts 700--799)
      VIII  Court Services and Offender Supervision Agency for the 
                District of Columbia (Parts 800--899)
        IX  National Crime Prevention and Privacy Compact Council 
                (Parts 900--999)
        XI  Department of Justice and Department of State (Parts 
                1100--1199)

                            Title 29--Labor

            Subtitle A--Office of the Secretary of Labor (Parts 
                0--99)
            Subtitle B--Regulations Relating to Labor
         I  National Labor Relations Board (Parts 100--199)
        II  Office of Labor-Management Standards, Department of 
                Labor (Parts 200--299)
       III  National Railroad Adjustment Board (Parts 300--399)
        IV  Office of Labor-Management Standards, Department of 
                Labor (Parts 400--499)
         V  Wage and Hour Division, Department of Labor (Parts 
                500--899)
        IX  Construction Industry Collective Bargaining Commission 
                (Parts 900--999)
         X  National Mediation Board (Parts 1200--1299)
       XII  Federal Mediation and Conciliation Service (Parts 
                1400--1499)
       XIV  Equal Employment Opportunity Commission (Parts 1600--
                1699)

[[Page 754]]

      XVII  Occupational Safety and Health Administration, 
                Department of Labor (Parts 1900--1999)
        XX  Occupational Safety and Health Review Commission 
                (Parts 2200--2499)
       XXV  Employee Benefits Security Administration, Department 
                of Labor (Parts 2500--2599)
     XXVII  Federal Mine Safety and Health Review Commission 
                (Parts 2700--2799)
        XL  Pension Benefit Guaranty Corporation (Parts 4000--
                4999)

                      Title 30--Mineral Resources

         I  Mine Safety and Health Administration, Department of 
                Labor (Parts 1--199)
        II  Bureau of Safety and Environmental Enforcement, 
                Department of the Interior (Parts 200--299)
        IV  Geological Survey, Department of the Interior (Parts 
                400--499)
         V  Bureau of Ocean Energy Management, Department of the 
                Interior (Parts 500--599)
       VII  Office of Surface Mining Reclamation and Enforcement, 
                Department of the Interior (Parts 700--999)
       XII  Office of Natural Resources Revenue, Department of the 
                Interior (Parts 1200--1299)

                 Title 31--Money and Finance: Treasury

            Subtitle A--Office of the Secretary of the Treasury 
                (Parts 0--50)
            Subtitle B--Regulations Relating to Money and Finance
         I  Monetary Offices, Department of the Treasury (Parts 
                51--199)
        II  Fiscal Service, Department of the Treasury (Parts 
                200--399)
        IV  Secret Service, Department of the Treasury (Parts 
                400--499)
         V  Office of Foreign Assets Control, Department of the 
                Treasury (Parts 500--599)
        VI  Bureau of Engraving and Printing, Department of the 
                Treasury (Parts 600--699)
       VII  Federal Law Enforcement Training Center, Department of 
                the Treasury (Parts 700--799)
      VIII  Office of International Investment, Department of the 
                Treasury (Parts 800--899)
        IX  Federal Claims Collection Standards (Department of the 
                Treasury--Department of Justice) (Parts 900--999)
         X  Financial Crimes Enforcement Network, Department of 
                the Treasury (Parts 1000--1099)

                      Title 32--National Defense

            Subtitle A--Department of Defense
         I  Office of the Secretary of Defense (Parts 1--399)

[[Page 755]]

         V  Department of the Army (Parts 400--699)
        VI  Department of the Navy (Parts 700--799)
       VII  Department of the Air Force (Parts 800--1099)
            Subtitle B--Other Regulations Relating to National 
                Defense
       XII  Defense Logistics Agency (Parts 1200--1299)
       XVI  Selective Service System (Parts 1600--1699)
      XVII  Office of the Director of National Intelligence (Parts 
                1700--1799)
     XVIII  National Counterintelligence Center (Parts 1800--1899)
       XIX  Central Intelligence Agency (Parts 1900--1999)
        XX  Information Security Oversight Office, National 
                Archives and Records Administration (Parts 2000--
                2099)
       XXI  National Security Council (Parts 2100--2199)
      XXIV  Office of Science and Technology Policy (Parts 2400--
                2499)
     XXVII  Office for Micronesian Status Negotiations (Parts 
                2700--2799)
    XXVIII  Office of the Vice President of the United States 
                (Parts 2800--2899)

               Title 33--Navigation and Navigable Waters

         I  Coast Guard, Department of Homeland Security (Parts 
                1--199)
        II  Corps of Engineers, Department of the Army (Parts 
                200--399)
        IV  Saint Lawrence Seaway Development Corporation, 
                Department of Transportation (Parts 400--499)

                          Title 34--Education

            Subtitle A--Office of the Secretary, Department of 
                Education (Parts 1--99)
            Subtitle B--Regulations of the Offices of the 
                Department of Education
         I  Office for Civil Rights, Department of Education 
                (Parts 100--199)
        II  Office of Elementary and Secondary Education, 
                Department of Education (Parts 200--299)
       III  Office of Special Education and Rehabilitative 
                Services, Department of Education (Parts 300--399)
        IV  Office of Vocational and Adult Education, Department 
                of Education (Parts 400--499)
         V  Office of Bilingual Education and Minority Languages 
                Affairs, Department of Education (Parts 500--599)
        VI  Office of Postsecondary Education, Department of 
                Education (Parts 600--699)
       VII  Office of Educational Research and Improvement, 
                Department of Education [Reserved]
            Subtitle C--Regulations Relating to Education
        XI  National Institute for Literacy (Parts 1100--1199)
       XII  National Council on Disability (Parts 1200--1299)

[[Page 756]]

                          Title 35 [Reserved]

             Title 36--Parks, Forests, and Public Property

         I  National Park Service, Department of the Interior 
                (Parts 1--199)
        II  Forest Service, Department of Agriculture (Parts 200--
                299)
       III  Corps of Engineers, Department of the Army (Parts 
                300--399)
        IV  American Battle Monuments Commission (Parts 400--499)
         V  Smithsonian Institution (Parts 500--599)
        VI  [Reserved]
       VII  Library of Congress (Parts 700--799)
      VIII  Advisory Council on Historic Preservation (Parts 800--
                899)
        IX  Pennsylvania Avenue Development Corporation (Parts 
                900--999)
         X  Presidio Trust (Parts 1000--1099)
        XI  Architectural and Transportation Barriers Compliance 
                Board (Parts 1100--1199)
       XII  National Archives and Records Administration (Parts 
                1200--1299)
        XV  Oklahoma City National Memorial Trust (Parts 1500--
                1599)
       XVI  Morris K. Udall Scholarship and Excellence in National 
                Environmental Policy Foundation (Parts 1600--1699)

             Title 37--Patents, Trademarks, and Copyrights

         I  United States Patent and Trademark Office, Department 
                of Commerce (Parts 1--199)
        II  Copyright Office, Library of Congress (Parts 200--299)
       III  Copyright Royalty Board, Library of Congress (Parts 
                300--399)
        IV  Assistant Secretary for Technology Policy, Department 
                of Commerce (Parts 400--499)
         V  Under Secretary for Technology, Department of Commerce 
                (Parts 500--599)

           Title 38--Pensions, Bonuses, and Veterans' Relief

         I  Department of Veterans Affairs (Parts 0--199)
        II  Armed Forces Retirement Home (Parts 200--299)

                       Title 39--Postal Service

         I  United States Postal Service (Parts 1--999)
       III  Postal Regulatory Commission (Parts 3000--3099)

                  Title 40--Protection of Environment

         I  Environmental Protection Agency (Parts 1--1099)
        IV  Environmental Protection Agency and Department of 
                Justice (Parts 1400--1499)
         V  Council on Environmental Quality (Parts 1500--1599)

[[Page 757]]

        VI  Chemical Safety and Hazard Investigation Board (Parts 
                1600--1699)
       VII  Environmental Protection Agency and Department of 
                Defense; Uniform National Discharge Standards for 
                Vessels of the Armed Forces (Parts 1700--1799)

          Title 41--Public Contracts and Property Management

            Subtitle A--Federal Procurement Regulations System 
                [Note]
            Subtitle B--Other Provisions Relating to Public 
                Contracts
        50  Public Contracts, Department of Labor (Parts 50-1--50-
                999)
        51  Committee for Purchase From People Who Are Blind or 
                Severely Disabled (Parts 51-1--51-99)
        60  Office of Federal Contract Compliance Programs, Equal 
                Employment Opportunity, Department of Labor (Parts 
                60-1--60-999)
        61  Office of the Assistant Secretary for Veterans' 
                Employment and Training Service, Department of 
                Labor (Parts 61-1--61-999)
    62-100  [Reserved]
            Subtitle C--Federal Property Management Regulations 
                System
       101  Federal Property Management Regulations (Parts 101-1--
                101-99)
       102  Federal Management Regulation (Parts 102-1--102-299)
   103-104  [Reserved]
       105  General Services Administration (Parts 105-1--105-999)
       109  Department of Energy Property Management Regulations 
                (Parts 109-1--109-99)
       114  Department of the Interior (Parts 114-1--114-99)
       115  Environmental Protection Agency (Parts 115-1--115-99)
       128  Department of Justice (Parts 128-1--128-99)
   129-200  [Reserved]
            Subtitle D--Other Provisions Relating to Property 
                Management [Reserved]
            Subtitle E--Federal Information Resources Management 
                Regulations System [Reserved]
            Subtitle F--Federal Travel Regulation System
       300  General (Parts 300-1--300-99)
       301  Temporary Duty (TDY) Travel Allowances (Parts 301-1--
                301-99)
       302  Relocation Allowances (Parts 302-1--302-99)
       303  Payment of Expenses Connected with the Death of 
                Certain Employees (Part 303-1--303-99)
       304  Payment of Travel Expenses from a Non-Federal Source 
                (Parts 304-1--304-99)

                        Title 42--Public Health

         I  Public Health Service, Department of Health and Human 
                Services (Parts 1--199)

[[Page 758]]

        IV  Centers for Medicare & Medicaid Services, Department 
                of Health and Human Services (Parts 400--599)
         V  Office of Inspector General-Health Care, Department of 
                Health and Human Services (Parts 1000--1999)

                   Title 43--Public Lands: Interior

            Subtitle A--Office of the Secretary of the Interior 
                (Parts 1--199)
            Subtitle B--Regulations Relating to Public Lands
         I  Bureau of Reclamation, Department of the Interior 
                (Parts 400--999)
        II  Bureau of Land Management, Department of the Interior 
                (Parts 1000--9999)
       III  Utah Reclamation Mitigation and Conservation 
                Commission (Parts 10000--10099)

             Title 44--Emergency Management and Assistance

         I  Federal Emergency Management Agency, Department of 
                Homeland Security (Parts 0--399)
        IV  Department of Commerce and Department of 
                Transportation (Parts 400--499)

                       Title 45--Public Welfare

            Subtitle A--Department of Health and Human Services 
                (Parts 1--199)
            Subtitle B--Regulations Relating to Public Welfare
        II  Office of Family Assistance (Assistance Programs), 
                Administration for Children and Families, 
                Department of Health and Human Services (Parts 
                200--299)
       III  Office of Child Support Enforcement (Child Support 
                Enforcement Program), Administration for Children 
                and Families, Department of Health and Human 
                Services (Parts 300--399)
        IV  Office of Refugee Resettlement, Administration for 
                Children and Families, Department of Health and 
                Human Services (Parts 400--499)
         V  Foreign Claims Settlement Commission of the United 
                States, Department of Justice (Parts 500--599)
        VI  National Science Foundation (Parts 600--699)
       VII  Commission on Civil Rights (Parts 700--799)
      VIII  Office of Personnel Management (Parts 800--899) 
                [Reserved]
         X  Office of Community Services, Administration for 
                Children and Families, Department of Health and 
                Human Services (Parts 1000--1099)
        XI  National Foundation on the Arts and the Humanities 
                (Parts 1100--1199)
       XII  Corporation for National and Community Service (Parts 
                1200--1299)

[[Page 759]]

      XIII  Office of Human Development Services, Department of 
                Health and Human Services (Parts 1300--1399)
       XVI  Legal Services Corporation (Parts 1600--1699)
      XVII  National Commission on Libraries and Information 
                Science (Parts 1700--1799)
     XVIII  Harry S. Truman Scholarship Foundation (Parts 1800--
                1899)
       XXI  Commission on Fine Arts (Parts 2100--2199)
     XXIII  Arctic Research Commission (Part 2301)
      XXIV  James Madison Memorial Fellowship Foundation (Parts 
                2400--2499)
       XXV  Corporation for National and Community Service (Parts 
                2500--2599)

                          Title 46--Shipping

         I  Coast Guard, Department of Homeland Security (Parts 
                1--199)
        II  Maritime Administration, Department of Transportation 
                (Parts 200--399)
       III  Coast Guard (Great Lakes Pilotage), Department of 
                Homeland Security (Parts 400--499)
        IV  Federal Maritime Commission (Parts 500--599)

                      Title 47--Telecommunication

         I  Federal Communications Commission (Parts 0--199)
        II  Office of Science and Technology Policy and National 
                Security Council (Parts 200--299)
       III  National Telecommunications and Information 
                Administration, Department of Commerce (Parts 
                300--399)
        IV  National Telecommunications and Information 
                Administration, Department of Commerce, and 
                National Highway Traffic Safety Administration, 
                Department of Transportation (Parts 400--499)

           Title 48--Federal Acquisition Regulations System

         1  Federal Acquisition Regulation (Parts 1--99)
         2  Defense Acquisition Regulations System, Department of 
                Defense (Parts 200--299)
         3  Health and Human Services (Parts 300--399)
         4  Department of Agriculture (Parts 400--499)
         5  General Services Administration (Parts 500--599)
         6  Department of State (Parts 600--699)
         7  Agency for International Development (Parts 700--799)
         8  Department of Veterans Affairs (Parts 800--899)
         9  Department of Energy (Parts 900--999)
        10  Department of the Treasury (Parts 1000--1099)
        12  Department of Transportation (Parts 1200--1299)

[[Page 760]]

        13  Department of Commerce (Parts 1300--1399)
        14  Department of the Interior (Parts 1400--1499)
        15  Environmental Protection Agency (Parts 1500--1599)
        16  Office of Personnel Management, Federal Employees 
                Health Benefits Acquisition Regulation (Parts 
                1600--1699)
        17  Office of Personnel Management (Parts 1700--1799)
        18  National Aeronautics and Space Administration (Parts 
                1800--1899)
        19  Broadcasting Board of Governors (Parts 1900--1999)
        20  Nuclear Regulatory Commission (Parts 2000--2099)
        21  Office of Personnel Management, Federal Employees 
                Group Life Insurance Federal Acquisition 
                Regulation (Parts 2100--2199)
        23  Social Security Administration (Parts 2300--2399)
        24  Department of Housing and Urban Development (Parts 
                2400--2499)
        25  National Science Foundation (Parts 2500--2599)
        28  Department of Justice (Parts 2800--2899)
        29  Department of Labor (Parts 2900--2999)
        30  Department of Homeland Security, Homeland Security 
                Acquisition Regulation (HSAR) (Parts 3000--3099)
        34  Department of Education Acquisition Regulation (Parts 
                3400--3499)
        51  Department of the Army Acquisition Regulations (Parts 
                5100--5199)
        52  Department of the Navy Acquisition Regulations (Parts 
                5200--5299)
        53  Department of the Air Force Federal Acquisition 
                Regulation Supplement [Reserved]
        54  Defense Logistics Agency, Department of Defense (Parts 
                5400--5499)
        57  African Development Foundation (Parts 5700--5799)
        61  Civilian Board of Contract Appeals, General Services 
                Administration (Parts 6100--6199)
        63  Department of Transportation Board of Contract Appeals 
                (Parts 6300--6399)
        99  Cost Accounting Standards Board, Office of Federal 
                Procurement Policy, Office of Management and 
                Budget (Parts 9900--9999)

                       Title 49--Transportation

            Subtitle A--Office of the Secretary of Transportation 
                (Parts 1--99)
            Subtitle B--Other Regulations Relating to 
                Transportation
         I  Pipeline and Hazardous Materials Safety 
                Administration, Department of Transportation 
                (Parts 100--199)
        II  Federal Railroad Administration, Department of 
                Transportation (Parts 200--299)

[[Page 761]]

       III  Federal Motor Carrier Safety Administration, 
                Department of Transportation (Parts 300--399)
        IV  Coast Guard, Department of Homeland Security (Parts 
                400--499)
         V  National Highway Traffic Safety Administration, 
                Department of Transportation (Parts 500--599)
        VI  Federal Transit Administration, Department of 
                Transportation (Parts 600--699)
       VII  National Railroad Passenger Corporation (AMTRAK) 
                (Parts 700--799)
      VIII  National Transportation Safety Board (Parts 800--999)
         X  Surface Transportation Board, Department of 
                Transportation (Parts 1000--1399)
        XI  Research and Innovative Technology Administration, 
                Department of Transportation [Reserved]
       XII  Transportation Security Administration, Department of 
                Homeland Security (Parts 1500--1699)

                   Title 50--Wildlife and Fisheries

         I  United States Fish and Wildlife Service, Department of 
                the Interior (Parts 1--199)
        II  National Marine Fisheries Service, National Oceanic 
                and Atmospheric Administration, Department of 
                Commerce (Parts 200--299)
       III  International Fishing and Related Activities (Parts 
                300--399)
        IV  Joint Regulations (United States Fish and Wildlife 
                Service, Department of the Interior and National 
                Marine Fisheries Service, National Oceanic and 
                Atmospheric Administration, Department of 
                Commerce); Endangered Species Committee 
                Regulations (Parts 400--499)
         V  Marine Mammal Commission (Parts 500--599)
        VI  Fishery Conservation and Management, National Oceanic 
                and Atmospheric Administration, Department of 
                Commerce (Parts 600--699)

                      CFR Index and Finding Aids

            Subject/Agency Index
            List of Agency Prepared Indexes
            Parallel Tables of Statutory Authorities and Rules
            List of CFR Titles, Chapters, Subchapters, and Parts
            Alphabetical List of Agencies Appearing in the CFR

[[Page 763]]





           Alphabetical List of Agencies Appearing in the CFR




                      (Revised as of July 1, 2012)

                                                  CFR Title, Subtitle or 
                     Agency                               Chapter

Administrative Committee of the Federal Register  1, I
Administrative Conference of the United States    1, III
Advisory Council on Historic Preservation         36, VIII
Advocacy and Outreach, Office of                  7, XXV
African Development Foundation                    22, XV
  Federal Acquisition Regulation                  48, 57
Agency for International Development              2, VII; 22, II
  Federal Acquisition Regulation                  48, 7
Agricultural Marketing Service                    7, I, IX, X, XI
Agricultural Research Service                     7, V
Agriculture Department                            2, IV; 5, LXXIII
  Advocacy and Outreach, Office of                7, XXV
  Agricultural Marketing Service                  7, I, IX, X, XI
  Agricultural Research Service                   7, V
  Animal and Plant Health Inspection Service      7, III; 9, I
  Chief Financial Officer, Office of              7, XXX
  Commodity Credit Corporation                    7, XIV
  Economic Research Service                       7, XXXVII
  Energy Policy and New Uses, Office of           2, IX; 7, XXIX
  Environmental Quality, Office of                7, XXXI
  Farm Service Agency                             7, VII, XVIII
  Federal Acquisition Regulation                  48, 4
  Federal Crop Insurance Corporation              7, IV
  Food and Nutrition Service                      7, II
  Food Safety and Inspection Service              9, III
  Foreign Agricultural Service                    7, XV
  Forest Service                                  36, II
  Grain Inspection, Packers and Stockyards        7, VIII; 9, II
       Administration
  Information Resources Management, Office of     7, XXVII
  Inspector General, Office of                    7, XXVI
  National Agricultural Library                   7, XLI
  National Agricultural Statistics Service        7, XXXVI
  National Institute of Food and Agriculture      7, XXXIV
  Natural Resources Conservation Service          7, VI
  Operations, Office of                           7, XXVIII
  Procurement and Property Management, Office of  7, XXXII
  Rural Business-Cooperative Service              7, XVIII, XLII, L
  Rural Development Administration                7, XLII
  Rural Housing Service                           7, XVIII, XXXV, L
  Rural Telephone Bank                            7, XVI
  Rural Utilities Service                         7, XVII, XVIII, XLII, L
  Secretary of Agriculture, Office of             7, Subtitle A
  Transportation, Office of                       7, XXXIII
  World Agricultural Outlook Board                7, XXXVIII
Air Force Department                              32, VII
  Federal Acquisition Regulation Supplement       48, 53
Air Transportation Stabilization Board            14, VI
Alcohol and Tobacco Tax and Trade Bureau          27, I
Alcohol, Tobacco, Firearms, and Explosives,       27, II
     Bureau of
AMTRAK                                            49, VII
American Battle Monuments Commission              36, IV
American Indians, Office of the Special Trustee   25, VII
Animal and Plant Health Inspection Service        7, III; 9, I

[[Page 764]]

Appalachian Regional Commission                   5, IX
Architectural and Transportation Barriers         36, XI
     Compliance Board
Arctic Research Commission                        45, XXIII
Armed Forces Retirement Home                      5, XI
Army Department                                   32, V
  Engineers, Corps of                             33, II; 36, III
  Federal Acquisition Regulation                  48, 51
Bilingual Education and Minority Languages        34, V
     Affairs, Office of
Blind or Severely Disabled, Committee for         41, 51
     Purchase from People Who Are
Broadcasting Board of Governors                   22, V
  Federal Acquisition Regulation                  48, 19
Bureau of Ocean Energy Management, Regulation,    30, II
     and Enforcement
Census Bureau                                     15, I
Centers for Medicare & Medicaid Services          42, IV
Central Intelligence Agency                       32, XIX
Chemical Safety and Hazardous Investigation       40, VI
     Board
Chief Financial Officer, Office of                7, XXX
Child Support Enforcement, Office of              45, III
Children and Families, Administration for         45, II, III, IV, X
Civil Rights, Commission on                       5, LXVIII; 45, VII
Civil Rights, Office for                          34, I
Court Services and Offender Supervision Agency    5, LXX
     for the District of Columbia
Coast Guard                                       33, I; 46, I; 49, IV
Coast Guard (Great Lakes Pilotage)                46, III
Commerce Department                               2, XIII; 44, IV; 50, VI
  Census Bureau                                   15, I
  Economic Affairs, Under Secretary               37, V
  Economic Analysis, Bureau of                    15, VIII
  Economic Development Administration             13, III
  Emergency Management and Assistance             44, IV
  Federal Acquisition Regulation                  48, 13
  Foreign-Trade Zones Board                       15, IV
  Industry and Security, Bureau of                15, VII
  International Trade Administration              15, III; 19, III
  National Institute of Standards and Technology  15, II
  National Marine Fisheries Service               50, II, IV
  National Oceanic and Atmospheric                15, IX; 50, II, III, IV, 
       Administration                             VI
  National Telecommunications and Information     15, XXIII; 47, III, IV
       Administration
  National Weather Service                        15, IX
  Patent and Trademark Office, United States      37, I
  Productivity, Technology and Innovation,        37, IV
       Assistant Secretary for
  Secretary of Commerce, Office of                15, Subtitle A
  Technology, Under Secretary for                 37, V
  Technology Administration                       15, XI
  Technology Policy, Assistant Secretary for      37, IV
Commercial Space Transportation                   14, III
Commodity Credit Corporation                      7, XIV
Commodity Futures Trading Commission              5, XLI; 17, I
Community Planning and Development, Office of     24, V, VI
     Assistant Secretary for
Community Services, Office of                     45, X
Comptroller of the Currency                       12, I
Construction Industry Collective Bargaining       29, IX
     Commission
Consumer Financial Protection Bureau              12, X
Consumer Product Safety Commission                5, LXXI; 16, II
Copyright Office                                  37, II
Copyright Royalty Board                           37, III
Corporation for National and Community Service    2, XXII; 45, XII, XXV
Cost Accounting Standards Board                   48, 99
Council on Environmental Quality                  40, V
Court Services and Offender Supervision Agency    5, LXX; 28, VIII
   for the District of Columbia
[[Page 765]]

Customs and Border Protection                     19, I
Defense Contract Audit Agency                     32, I
Defense Department                                2, XI; 5, XXVI; 32, 
                                                  Subtitle A; 40, VII
  Advanced Research Projects Agency               32, I
  Air Force Department                            32, VII
  Army Department                                 32, V; 33, II; 36, III, 
                                                  48, 51
  Defense Acquisition Regulations System          48, 2
  Defense Intelligence Agency                     32, I
  Defense Logistics Agency                        32, I, XII; 48, 54
  Engineers, Corps of                             33, II; 36, III
  National Imagery and Mapping Agency             32, I
  Navy Department                                 32, VI; 48, 52
  Secretary of Defense, Office of                 2, XI; 32, I
Defense Contract Audit Agency                     32, I
Defense Intelligence Agency                       32, I
Defense Logistics Agency                          32, XII; 48, 54
Defense Nuclear Facilities Safety Board           10, XVII
Delaware River Basin Commission                   18, III
District of Columbia, Court Services and          5, LXX; 28, VIII
     Offender Supervision Agency for the
Drug Enforcement Administration                   21, II
East-West Foreign Trade Board                     15, XIII
Economic Affairs, Under Secretary                 37, V
Economic Analysis, Bureau of                      15, VIII
Economic Development Administration               13, III
Economic Research Service                         7, XXXVII
Education, Department of                          2, XXXIV; 5, LIII
  Bilingual Education and Minority Languages      34, V
       Affairs, Office of
  Civil Rights, Office for                        34, I
  Educational Research and Improvement, Office    34, VII
       of
  Elementary and Secondary Education, Office of   34, II
  Federal Acquisition Regulation                  48, 34
  Postsecondary Education, Office of              34, VI
  Secretary of Education, Office of               34, Subtitle A
  Special Education and Rehabilitative Services,  34, III
       Office of
  Vocational and Adult Education, Office of       34, IV
Educational Research and Improvement, Office of   34, VII
Election Assistance Commission                    2, LVIII; 11, II
Elementary and Secondary Education, Office of     34, II
Emergency Oil and Gas Guaranteed Loan Board       13, V
Emergency Steel Guarantee Loan Board              13, IV
Employee Benefits Security Administration         29, XXV
Employees' Compensation Appeals Board             20, IV
Employees Loyalty Board                           5, V
Employment and Training Administration            20, V
Employment Standards Administration               20, VI
Endangered Species Committee                      50, IV
Energy, Department of                             2, IX; 5, XXIII; 10, II, 
                                                  III, X
  Federal Acquisition Regulation                  48, 9
  Federal Energy Regulatory Commission            5, XXIV; 18, I
  Property Management Regulations                 41, 109
Energy, Office of                                 7, XXIX
Engineers, Corps of                               33, II; 36, III
Engraving and Printing, Bureau of                 31, VI
Environmental Protection Agency                   2, XV; 5, LIV; 40, I, IV, 
                                                  VII
  Federal Acquisition Regulation                  48, 15
  Property Management Regulations                 41, 115
Environmental Quality, Office of                  7, XXXI
Equal Employment Opportunity Commission           5, LXII; 29, XIV
Equal Opportunity, Office of Assistant Secretary  24, I
     for
Executive Office of the President                 3, I
  Administration, Office of                       5, XV

[[Page 766]]

  Environmental Quality, Council on               40, V
  Management and Budget, Office of                2, Subtitle A; 5, III, 
                                                  LXXVII; 14, VI; 48, 99
  National Drug Control Policy, Office of         21, III
  National Security Council                       32, XXI; 47, 2
  Presidential Documents                          3
  Science and Technology Policy, Office of        32, XXIV; 47, II
  Trade Representative, Office of the United      15, XX
       States
Export-Import Bank of the United States           2, XXXV; 5, LII; 12, IV
Family Assistance, Office of                      45, II
Farm Credit Administration                        5, XXXI; 12, VI
Farm Credit System Insurance Corporation          5, XXX; 12, XIV
Farm Service Agency                               7, VII, XVIII
Federal Acquisition Regulation                    48, 1
Federal Aviation Administration                   14, I
  Commercial Space Transportation                 14, III
Federal Claims Collection Standards               31, IX
Federal Communications Commission                 5, XXIX; 47, I
Federal Contract Compliance Programs, Office of   41, 60
Federal Crop Insurance Corporation                7, IV
Federal Deposit Insurance Corporation             5, XXII; 12, III
Federal Election Commission                       5, XXXVII; 11, I
Federal Emergency Management Agency               44, I
Federal Employees Group Life Insurance Federal    48, 21
     Acquisition Regulation
Federal Employees Health Benefits Acquisition     48, 16
     Regulation
Federal Energy Regulatory Commission              5, XXIV; 18, I
Federal Financial Institutions Examination        12, XI
     Council
Federal Financing Bank                            12, VIII
Federal Highway Administration                    23, I, II
Federal Home Loan Mortgage Corporation            1, IV
Federal Housing Enterprise Oversight Office       12, XVII
Federal Housing Finance Agency                    5, LXXX; 12, XII
Federal Housing Finance Board                     12, IX
Federal Labor Relations Authority                 5, XIV, XLIX; 22, XIV
Federal Law Enforcement Training Center           31, VII
Federal Management Regulation                     41, 102
Federal Maritime Commission                       46, IV
Federal Mediation and Conciliation Service        29, XII
Federal Mine Safety and Health Review Commission  5, LXXIV; 29, XXVII
Federal Motor Carrier Safety Administration       49, III
Federal Prison Industries, Inc.                   28, III
Federal Procurement Policy Office                 48, 99
Federal Property Management Regulations           41, 101
Federal Railroad Administration                   49, II
Federal Register, Administrative Committee of     1, I
Federal Register, Office of                       1, II
Federal Reserve System                            12, II
  Board of Governors                              5, LVIII
Federal Retirement Thrift Investment Board        5, VI, LXXVI
Federal Service Impasses Panel                    5, XIV
Federal Trade Commission                          5, XLVII; 16, I
Federal Transit Administration                    49, VI
Federal Travel Regulation System                  41, Subtitle F
Financial Crimes Enforcement Network              31, X
Financial Research Office                         12, XVI
Financial Stability Oversight Council             12, XIII
Fine Arts, Commission on                          45, XXI
Fiscal Service                                    31, II
Fish and Wildlife Service, United States          50, I, IV
Food and Drug Administration                      21, I
Food and Nutrition Service                        7, II
Food Safety and Inspection Service                9, III
Foreign Agricultural Service                      7, XV
Foreign Assets Control, Office of                 31, V
Foreign Claims Settlement Commission of the       45, V
     United States
Foreign Service Grievance Board                   22, IX

[[Page 767]]

Foreign Service Impasse Disputes Panel            22, XIV
Foreign Service Labor Relations Board             22, XIV
Foreign-Trade Zones Board                         15, IV
Forest Service                                    36, II
General Services Administration                   5, LVII; 41, 105
  Contract Appeals, Board of                      48, 61
  Federal Acquisition Regulation                  48, 5
  Federal Management Regulation                   41, 102
  Federal Property Management Regulations         41, 101
  Federal Travel Regulation System                41, Subtitle F
  General                                         41, 300
  Payment From a Non-Federal Source for Travel    41, 304
       Expenses
  Payment of Expenses Connected With the Death    41, 303
       of Certain Employees
  Relocation Allowances                           41, 302
  Temporary Duty (TDY) Travel Allowances          41, 301
Geological Survey                                 30, IV
Government Accountability Office                  4, I
Government Ethics, Office of                      5, XVI
Government National Mortgage Association          24, III
Grain Inspection, Packers and Stockyards          7, VIII; 9, II
     Administration
Harry S. Truman Scholarship Foundation            45, XVIII
Health and Human Services, Department of          2, III; 5, XLV; 45, 
                                                  Subtitle A,
  Centers for Medicare & Medicaid Services        42, IV
  Child Support Enforcement, Office of            45, III
  Children and Families, Administration for       45, II, III, IV, X
  Community Services, Office of                   45, X
  Family Assistance, Office of                    45, II
  Federal Acquisition Regulation                  48, 3
  Food and Drug Administration                    21, I
  Human Development Services, Office of           45, XIII
  Indian Health Service                           25, V
  Inspector General (Health Care), Office of      42, V
  Public Health Service                           42, I
  Refugee Resettlement, Office of                 45, IV
Homeland Security, Department of                  2, XXX; 6, I; 8, I
  Coast Guard                                     33, I; 46, I; 49, IV
  Coast Guard (Great Lakes Pilotage)              46, III
  Customs and Border Protection                   19, I
  Federal Emergency Management Agency             44, I
  Human Resources Management and Labor Relations  5, XCVII
       Systems
  Immigration and Customs Enforcement Bureau      19, IV
  Transportation Security Administration          49, XII
HOPE for Homeowners Program, Board of Directors   24, XXIV
     of
Housing and Urban Development, Department of      2, XXIV; 5, LXV; 24, 
                                                  Subtitle B
  Community Planning and Development, Office of   24, V, VI
       Assistant Secretary for
  Equal Opportunity, Office of Assistant          24, I
       Secretary for
  Federal Acquisition Regulation                  48, 24
  Federal Housing Enterprise Oversight, Office    12, XVII
       of
  Government National Mortgage Association        24, III
  Housing--Federal Housing Commissioner, Office   24, II, VIII, X, XX
       of Assistant Secretary for
  Housing, Office of, and Multifamily Housing     24, IV
       Assistance Restructuring, Office of
  Inspector General, Office of                    24, XII
  Public and Indian Housing, Office of Assistant  24, IX
       Secretary for
  Secretary, Office of                            24, Subtitle A, VII
Housing--Federal Housing Commissioner, Office of  24, II, VIII, X, XX
     Assistant Secretary for
Housing, Office of, and Multifamily Housing       24, IV
     Assistance Restructuring, Office of
Human Development Services, Office of             45, XIII
Immigration and Customs Enforcement Bureau        19, IV

[[Page 768]]

Immigration Review, Executive Office for          8, V
Independent Counsel, Office of                    28, VII
Indian Affairs, Bureau of                         25, I, V
Indian Affairs, Office of the Assistant           25, VI
     Secretary
Indian Arts and Crafts Board                      25, II
Indian Health Service                             25, V
Industry and Security, Bureau of                  15, VII
Information Resources Management, Office of       7, XXVII
Information Security Oversight Office, National   32, XX
     Archives and Records Administration
Inspector General
  Agriculture Department                          7, XXVI
  Health and Human Services Department            42, V
  Housing and Urban Development Department        24, XII, XV
Institute of Peace, United States                 22, XVII
Inter-American Foundation                         5, LXIII; 22, X
Interior Department                               2, XIV
  American Indians, Office of the Special         25, VII
       Trustee
  Bureau of Ocean Energy Management, Regulation,  30, II
       and Enforcement
  Endangered Species Committee                    50, IV
  Federal Acquisition Regulation                  48, 14
  Federal Property Management Regulations System  41, 114
  Fish and Wildlife Service, United States        50, I, IV
  Geological Survey                               30, IV
  Indian Affairs, Bureau of                       25, I, V
  Indian Affairs, Office of the Assistant         25, VI
       Secretary
  Indian Arts and Crafts Board                    25, II
  Land Management, Bureau of                      43, II
  National Indian Gaming Commission               25, III
  National Park Service                           36, I
  Natural Resource Revenue, Office of             30, XII
  Ocean Energy Management, Bureau of              30, V
  Reclamation, Bureau of                          43, I
  Secretary of the Interior, Office of            2, XIV; 43, Subtitle A
  Surface Mining Reclamation and Enforcement,     30, VII
       Office of
Internal Revenue Service                          26, I
International Boundary and Water Commission,      22, XI
     United States and Mexico, United States 
     Section
International Development, United States Agency   22, II
     for
  Federal Acquisition Regulation                  48, 7
International Development Cooperation Agency,     22, XII
     United States
International Joint Commission, United States     22, IV
     and Canada
International Organizations Employees Loyalty     5, V
     Board
International Trade Administration                15, III; 19, III
International Trade Commission, United States     19, II
Interstate Commerce Commission                    5, XL
Investment Security, Office of                    31, VIII
Iraq Reconstruction, Special Inspector General    5, LXXXVII
     for
James Madison Memorial Fellowship Foundation      45, XXIV
Japan-United States Friendship Commission         22, XVI
Joint Board for the Enrollment of Actuaries       20, VIII
Justice Department                                2, XXVIII; 5, XXVIII; 28, 
                                                  I, XI; 40, IV
  Alcohol, Tobacco, Firearms, and Explosives,     27, II
       Bureau of
  Drug Enforcement Administration                 21, II
  Federal Acquisition Regulation                  48, 28
  Federal Claims Collection Standards             31, IX
  Federal Prison Industries, Inc.                 28, III
  Foreign Claims Settlement Commission of the     45, V
       United States
  Immigration Review, Executive Office for        8, V
  Offices of Independent Counsel                  28, VI
  Prisons, Bureau of                              28, V
  Property Management Regulations                 41, 128
Labor Department                                  5, XLII

[[Page 769]]

  Employee Benefits Security Administration       29, XXV
  Employees' Compensation Appeals Board           20, IV
  Employment and Training Administration          20, V
  Employment Standards Administration             20, VI
  Federal Acquisition Regulation                  48, 29
  Federal Contract Compliance Programs, Office    41, 60
       of
  Federal Procurement Regulations System          41, 50
  Labor-Management Standards, Office of           29, II, IV
  Mine Safety and Health Administration           30, I
  Occupational Safety and Health Administration   29, XVII
  Office of Workers' Compensation Programs        20, VII
  Public Contracts                                41, 50
  Secretary of Labor, Office of                   29, Subtitle A
  Veterans' Employment and Training Service,      41, 61; 20, IX
       Office of the Assistant Secretary for
  Wage and Hour Division                          29, V
  Workers' Compensation Programs, Office of       20, I
Labor-Management Standards, Office of             29, II, IV
Land Management, Bureau of                        43, II
Legal Services Corporation                        45, XVI
Library of Congress                               36, VII
  Copyright Office                                37, II
  Copyright Royalty Board                         37, III
Local Television Loan Guarantee Board             7, XX
Management and Budget, Office of                  5, III, LXXVII; 14, VI; 
                                                  48, 99
Marine Mammal Commission                          50, V
Maritime Administration                           46, II
Merit Systems Protection Board                    5, II, LXIV
Micronesian Status Negotiations, Office for       32, XXVII
Millennium Challenge Corporation                  22, XIII
Mine Safety and Health Administration             30, I
Minority Business Development Agency              15, XIV
Miscellaneous Agencies                            1, IV
Monetary Offices                                  31, I
Morris K. Udall Scholarship and Excellence in     36, XVI
     National Environmental Policy Foundation
Museum and Library Services, Institute of         2, XXXI
National Aeronautics and Space Administration     2, XVIII; 5, LIX; 14, V
  Federal Acquisition Regulation                  48, 18
National Agricultural Library                     7, XLI
National Agricultural Statistics Service          7, XXXVI
National and Community Service, Corporation for   2, XXII; 45, XII, XXV
National Archives and Records Administration      2, XXVI; 5, LXVI; 36, XII
  Information Security Oversight Office           32, XX
National Capital Planning Commission              1, IV
National Commission for Employment Policy         1, IV
National Commission on Libraries and Information  45, XVII
     Science
National Council on Disability                    34, XII
National Counterintelligence Center               32, XVIII
National Credit Union Administration              12, VII
National Crime Prevention and Privacy Compact     28, IX
     Council
National Drug Control Policy, Office of           21, III
National Endowment for the Arts                   2, XXXII
National Endowment for the Humanities             2, XXXIII
National Foundation on the Arts and the           45, XI
     Humanities
National Highway Traffic Safety Administration    23, II, III; 47, VI; 49, V
National Imagery and Mapping Agency               32, I
National Indian Gaming Commission                 25, III
National Institute for Literacy                   34, XI
National Institute of Food and Agriculture        7, XXXIV
National Institute of Standards and Technology    15, II
National Intelligence, Office of Director of      32, XVII
National Labor Relations Board                    5, LXI; 29, I
National Marine Fisheries Service                 50, II, IV
National Mediation Board                          29, X

[[Page 770]]

National Oceanic and Atmospheric Administration   15, IX; 50, II, III, IV, 
                                                  VI
National Park Service                             36, I
National Railroad Adjustment Board                29, III
National Railroad Passenger Corporation (AMTRAK)  49, VII
National Science Foundation                       2, XXV; 5, XLIII; 45, VI
  Federal Acquisition Regulation                  48, 25
National Security Council                         32, XXI
National Security Council and Office of Science   47, II
     and Technology Policy
National Telecommunications and Information       15, XXIII; 47, III, IV
     Administration
National Transportation Safety Board              49, VIII
Natural Resources Conservation Service            7, VI
Natural Resource Revenue, Office of               30, XII
Navajo and Hopi Indian Relocation, Office of      25, IV
Navy Department                                   32, VI
  Federal Acquisition Regulation                  48, 52
Neighborhood Reinvestment Corporation             24, XXV
Northeast Interstate Low-Level Radioactive Waste  10, XVIII
     Commission
Nuclear Regulatory Commission                     2, XX; 5, XLVIII; 10, I
  Federal Acquisition Regulation                  48, 20
Occupational Safety and Health Administration     29, XVII
Occupational Safety and Health Review Commission  29, XX
Ocean Energy Management, Bureau of                30, V
Offices of Independent Counsel                    28, VI
Office of Workers' Compensation Programs          20, VII
Oklahoma City National Memorial Trust             36, XV
Operations Office                                 7, XXVIII
Overseas Private Investment Corporation           5, XXXIII; 22, VII
Patent and Trademark Office, United States        37, I
Payment From a Non-Federal Source for Travel      41, 304
     Expenses
Payment of Expenses Connected With the Death of   41, 303
     Certain Employees
Peace Corps                                       2, XXXVII; 22, III
Pennsylvania Avenue Development Corporation       36, IX
Pension Benefit Guaranty Corporation              29, XL
Personnel Management, Office of                   5, I, XXXV; 45, VIII
  Human Resources Management and Labor Relations  5, XCVII
       Systems, Department of Homeland Security
  Federal Acquisition Regulation                  48, 17
  Federal Employees Group Life Insurance Federal  48, 21
       Acquisition Regulation
  Federal Employees Health Benefits Acquisition   48, 16
       Regulation
Pipeline and Hazardous Materials Safety           49, I
     Administration
Postal Regulatory Commission                      5, XLVI; 39, III
Postal Service, United States                     5, LX; 39, I
Postsecondary Education, Office of                34, VI
President's Commission on White House             1, IV
     Fellowships
Presidential Documents                            3
Presidio Trust                                    36, X
Prisons, Bureau of                                28, V
Procurement and Property Management, Office of    7, XXXII
Productivity, Technology and Innovation,          37, IV
     Assistant Secretary
Public Contracts, Department of Labor             41, 50
Public and Indian Housing, Office of Assistant    24, IX
     Secretary for
Public Health Service                             42, I
Railroad Retirement Board                         20, II
Reclamation, Bureau of                            43, I
Recovery Accountability and Transparency Board    4, II
Refugee Resettlement, Office of                   45, IV
Relocation Allowances                             41, 302
Research and Innovative Technology                49, XI
     Administration
Rural Business-Cooperative Service                7, XVIII, XLII, L
Rural Development Administration                  7, XLII
Rural Housing Service                             7, XVIII, XXXV, L

[[Page 771]]

Rural Telephone Bank                              7, XVI
Rural Utilities Service                           7, XVII, XVIII, XLII, L
Saint Lawrence Seaway Development Corporation     33, IV
Science and Technology Policy, Office of          32, XXIV
Science and Technology Policy, Office of, and     47, II
     National Security Council
Secret Service                                    31, IV
Securities and Exchange Commission                5, XXXIV; 17, II
Selective Service System                          32, XVI
Small Business Administration                     2, XXVII; 13, I
Smithsonian Institution                           36, V
Social Security Administration                    2, XXIII; 20, III; 48, 23
Soldiers' and Airmen's Home, United States        5, XI
Special Counsel, Office of                        5, VIII
Special Education and Rehabilitative Services,    34, III
     Office of
State Department                                  2, VI; 22, I; 28, XI
  Federal Acquisition Regulation                  48, 6
Surface Mining Reclamation and Enforcement,       30, VII
     Office of
Surface Transportation Board                      49, X
Susquehanna River Basin Commission                18, VIII
Technology Administration                         15, XI
Technology Policy, Assistant Secretary for        37, IV
Technology, Under Secretary for                   37, V
Tennessee Valley Authority                        5, LXIX; 18, XIII
Thrift Supervision Office, Department of the      12, V
     Treasury
Trade Representative, United States, Office of    15, XX
Transportation, Department of                     2, XII; 5, L
  Commercial Space Transportation                 14, III
  Contract Appeals, Board of                      48, 63
  Emergency Management and Assistance             44, IV
  Federal Acquisition Regulation                  48, 12
  Federal Aviation Administration                 14, I
  Federal Highway Administration                  23, I, II
  Federal Motor Carrier Safety Administration     49, III
  Federal Railroad Administration                 49, II
  Federal Transit Administration                  49, VI
  Maritime Administration                         46, II
  National Highway Traffic Safety Administration  23, II, III; 47, IV; 49, V
  Pipeline and Hazardous Materials Safety         49, I
       Administration
  Saint Lawrence Seaway Development Corporation   33, IV
  Secretary of Transportation, Office of          14, II; 49, Subtitle A
  Surface Transportation Board                    49, X
  Transportation Statistics Bureau                49, XI
Transportation, Office of                         7, XXXIII
Transportation Security Administration            49, XII
Transportation Statistics Bureau                  49, XI
Travel Allowances, Temporary Duty (TDY)           41, 301
Treasury Department                               5, XXI; 12, XV; 17, IV; 
                                                  31, IX
  Alcohol and Tobacco Tax and Trade Bureau        27, I
  Community Development Financial Institutions    12, XVIII
       Fund
  Comptroller of the Currency                     12, I
  Customs and Border Protection                   19, I
  Engraving and Printing, Bureau of               31, VI
  Federal Acquisition Regulation                  48, 10
  Federal Claims Collection Standards             31, IX
  Federal Law Enforcement Training Center         31, VII
  Financial Crimes Enforcement Network            31, X
  Fiscal Service                                  31, II
  Foreign Assets Control, Office of               31, V
  Internal Revenue Service                        26, I
  Investment Security, Office of                  31, VIII
  Monetary Offices                                31, I
  Secret Service                                  31, IV
  Secretary of the Treasury, Office of            31, Subtitle A
  Thrift Supervision, Office of                   12, V
Truman, Harry S. Scholarship Foundation           45, XVIII

[[Page 772]]

United States and Canada, International Joint     22, IV
     Commission
United States and Mexico, International Boundary  22, XI
     and Water Commission, United States Section
Utah Reclamation Mitigation and Conservation      43, III
     Commission
Veterans Affairs Department                       2, VIII; 38, I
  Federal Acquisition Regulation                  48, 8
Veterans' Employment and Training Service,        41, 61; 20, IX
     Office of the Assistant Secretary for
Vice President of the United States, Office of    32, XXVIII
Vocational and Adult Education, Office of         34, IV
Wage and Hour Division                            29, V
Water Resources Council                           18, VI
Workers' Compensation Programs, Office of         20, I
World Agricultural Outlook Board                  7, XXXVIII

[[Page 773]]



List of CFR Sections Affected



All changes in this volume of the Code of Federal Regulations that were 
made by documents published in the Federal Register since January 1, 
2001, are enumerated in the following list. Entries indicate the nature 
of the changes effected. Page numbers refer to Federal Register pages. 
The user should consult the entries for chapters and parts as well as 
sections for revisions.
For the period before January 1, 2001, see the ``List of CFR Sections 
Affected, 1949-1963, 1964-1972, 1973-1985 and 1986-2000'' published in 
11 separate volumes.

                                  2001

31 CFR
                                                                   66 FR
                                                                    Page
Subtitle B
Chapter V
501.801 (c) added; interim..........................................2728
515 Authority citation revised.....................................36687
515.207 Note added; interim........................................36687
515.533 Heading, (a) and (e) revised; (f) removed; interim.........36687
515.559 Heading and note revised; interim..........................36687
515.560 (b) revised; interim.......................................36688
535.215 (a) revised; interim.......................................38554
535.333 Revised; interim...........................................38554
538 Authority citation revised.....................................36688
538.205 Revised; interim...........................................36688
538.211 (b) through (e) redesignated as (c) through (f); new (b) 
        added; interim.............................................36688
538.405 (b) revised; interim.......................................36688
538.521 Revised; interim............................................2729
538.523 Revised; interim...........................................36688
538.524 Removed; interim...........................................36689
538.525 Heading and (d) revised; (e) added; interim................36689
538.526 Heading, (a), (b) introductory text, (1) and (2) revised; 
        interim....................................................36689
539 Authority citation amended.....................................57381
    Appendix I amended.............................................57381
540 Added; interim..................................................3305
    Revised........................................................38555
545 Added; interim..................................................2729
550 Authority citation revised.....................................36690
550.306 Revised; interim...........................................36690
550.308 Revised; interim...........................................36690
550.318 Revised; interim...........................................36690
550.405 (b) revised; interim.......................................36690
550.569 Revised; interim...........................................36690
550.570 Removed; interim...........................................36691
550.571 Heading and (d) revised; new (e) added; interim............36691
550.572 Heading, (a), (b) introductory text, (1) and (2) revised; 
        interim....................................................36691
550.573 Revised; interim...........................................36692
560 Authority citation revised.....................................36692
560.405 (b) revised; interim.......................................36692
560.520 Heading revised; interim...................................36692
560.530 Revised; interim...........................................36692
560.531 Removed; interim...........................................36693
560.532 Heading and (d) revised; (e) added; interim................36693
560.533 Heading, (a), (b) introductory text, (1) and (2) revised; 
        interim....................................................36693
586 Authority citation revised.....................................50508
586.201 (a) note, (b) note and (d) note added; (c) and endnote 
        revised; interim...........................................50509
586.204 Note added; interim........................................50509
586.302 Revised; interim...........................................50509
586.319 Revised; interim...........................................50509
586.405 Revised; interim...........................................50509
586.406 (a) amended; interim.......................................50509
586.501 Amended; interim...........................................50509
586.517 Added; interim.............................................50509
586.518 Added; interim.............................................50509
586.519 Added; interim.............................................50510
586.701 Revised; interim...........................................50510
586.702 Revised; interim...........................................50510
586.703 Revised; interim...........................................50510
586.704 Revised; interim...........................................50511

[[Page 774]]

586.705 Revised; interim...........................................50511
587 Added; interim.................................................50511
    Chapter V Appendix A amended............29229, 54404, 57373, 57379--
                                                                   57381

                                  2002

31 CFR
                                                                   67 FR
                                                                    Page
Subtitle B
Chapter V
585.529 Added......................................................78974
586.520 Added......................................................78974
588 Added; interim.................................................37673
591 Added; interim..................................................5473
Chapter V Appendix A amended.......................................16309

                                  2003

31 CFR
                                                                   68 FR
                                                                    Page
Subtitle B
Chapter V
Chapter V Appendix A revised; Appendix B amended...................38844
500.501 Added; interim.............................................53641
500.701 Revised; interim...........................................53641
500.702 Removed; interim...........................................53641
500.703 Removed; interim...........................................53641
500.704 Removed; interim...........................................53641
500.705 Removed; interim...........................................53641
500.706 Removed; interim...........................................53641
500.707 Removed; interim...........................................53641
500.708 Removed; interim...........................................53641
500.709 Removed; interim...........................................53641
500.710 Removed; interim...........................................53641
500.711 Removed; interim...........................................53641
500.712 Removed; interim...........................................53641
500.713 Removed; interim...........................................53641
500.714 Removed; interim...........................................53641
500.715 Removed; interim...........................................53641
500.716 Removed; interim...........................................53641
500.717 Removed; interim...........................................53641
500.718 Removed; interim...........................................53641
500.801 Amended; interim...........................................53641
501 Heading and authority citation revised; interim................53641
501.700--501.747 (Subpart D) Added; interim........................53642
501.701 (a)(3) revised.............................................61361
501.801--501.808 (Subpart D) Redesignated as Subpart E; interim....53642
501.805 (d) added...................................................6822
501.901 (Subpart E) Redesignated as Subpart F; interim.............53642
505.30 Amended; interim............................................53657
505.50 Amended; interim............................................53657
505.60 Amended; interim............................................53657
515.302 (a) revised; interim.......................................14144
515.329 (c) and (d) revised; interim...............................14145
515.330 (a)(3) and (4) revised; interim............................14145
515.420 (a) introductory text revised; (a) note added; interim.....14145
515.501 Added; interim.............................................53657
515.505 Revised; interim...........................................14145
515.512 Added; interim.............................................14146
515.533 Revised; interim...........................................14146
515.559 (b) note added; (d) removed; interim.......................14146
515.560 (c)(4) revised; (c)(4) note added; interim.................14146
515.561 Revised; interim...........................................14147
515.565 (b)(1) amended; (b)(2) removed; interim....................14147
515.567 (b) and (c) revised; note added; interim...................14147
515.570 Revised; interim...........................................14147
515.571 (a) introductory text revised; (a)(5) and note added; 
        interim....................................................14148
515.572 (d) amended; interim.......................................14148
515.574 Revised; interim...........................................14148
515.575 Revised; interim...........................................14148
515.701 Revised; interim...........................................53657
515.702 Removed; interim...........................................53657
515.703 Removed; interim...........................................53657
515.704 Removed; interim...........................................53657
515.705 Removed; interim...........................................53657
515.706 Removed; interim...........................................53657
515.707 Removed; interim...........................................53657
515.708 Removed; interim...........................................53657
515.709 Removed; interim...........................................53657
515.710 Removed; interim...........................................53657
515.711 Removed; interim...........................................53657
515.712 Removed; interim...........................................53657
515.713 Removed; interim...........................................53657
515.714 Removed; interim...........................................53657
515.715 Removed; interim...........................................53657
515.716 Removed; interim...........................................53657
515.717 Removed; interim...........................................53657
515.718 Removed; interim...........................................53657
515.801 Amended; interim...........................................53657
535.501 Added; interim.............................................53657
535.801 Amended; interim...........................................53657
536 Authority citation revised.....................................53657
536.100 Added; interim.............................................53657
536.801 Amended; interim...........................................53657
537 Authority citation revised.....................................53657

[[Page 775]]

537.501 Revised; interim...........................................53658
537.801 Revised; interim...........................................53658
538.500 Added; interim.............................................53658
538.801 Amended; interim...........................................53658
539.501 Amended; interim...........................................53658
539.801 Amended; interim...........................................53658
540.500 Added; interim.............................................53658
540.801 Amended; interim...........................................53658
545.500 Added; interim.............................................53658
545.801 Amended; interim...........................................53658
550.500 Added; interim.............................................53658
550.801 Amended; interim...........................................53658
560.500 Added; interim.............................................53659
560.536 Added; interim.............................................11742
560.537 Added; interim.............................................11743
560.801 Amended; interim...........................................53659
575 Authority citation revised.....................................53659
    Policy statement...............................................60625
575.307 Removed; interim...........................................61363
575.325 Removed; interim...........................................61363
575.327 Removed; interim...........................................61363
575.328 Removed; interim...........................................61363
575.329 Added; interim.............................................11743
575.330 Added; interim.............................................11743
    Revised; interim...............................................28755
575.419 Added; interim.............................................61363
575.500 Added; interim.............................................53659
575.505 Removed; interim...........................................61363
575.506 Removed; interim...........................................61363
575.507 Removed; interim...........................................61363
575.508 Removed; interim...........................................61363
575.509 Removed; interim...........................................61363
575.510 Removed; interim...........................................61363
575.511 Removed; interim...........................................61363
575.513 Removed; interim...........................................61363
575.514 Removed; interim...........................................61363
575.517 Removed; interim...........................................61363
575.518 Removed; interim...........................................61363
575.519 Removed; interim...........................................61363
575.520 Removed; interim...........................................61363
575.521 Removed; interim...........................................61363
575.522 Removed; interim...........................................61363
575.523 Removed; interim...........................................61363
575.524 Removed; interim...........................................61363
575.525 Removed; interim...........................................61363
575.526 Removed; interim...........................................61363
575.527 Added; interim.............................................11744
    Removed; interim...............................................61363
575.528 Added; interim.............................................11744
    Removed; interim...............................................61363
575.529 Added; interim.............................................28755
    Removed; interim...............................................61363
575.530 Added; interim.............................................28755
    Removed; interim...............................................61363
575.531 Added; interim.............................................28755
    Removed; interim...............................................61363
575.532 Added; interim.............................................28756
    Removed; interim...............................................61363
575.533 Added; interim.............................................38189
575.534 Added; interim.............................................65845
575.701 (a) introductory text and (1) revised......................61361
575.801 Amended; interim...........................................53659
585 Authority citation revised.....................................53659
585.500 Added; interim.............................................53659
585.801 Amended; interim...........................................53659
586 Authority citation revised.....................................53659
586.501 Amended; interim...........................................53659
586.801 Amended; interim...........................................53659
587 Authority citation revised.....................................53659
587.501 Amended; interim...........................................53659
587.801 Amended; interim...........................................53659
588 Authority citation revised.....................................53659
588.501 Amended; interim...........................................53659
588.801 Amended; interim...........................................53659
590 Authority citation revised.....................................53659
590.501 Amended; interim...........................................53659
590.801 Amended; interim...........................................53660
591 Heading and authority citation revised.........................45779
    Authority citation revised.....................................53660
591.201 Revised....................................................45779
591.202 Removed....................................................45779
591.301 Removed....................................................45779
591.302 Revised....................................................45779
591.307 Revised....................................................45779
591.308 Revised....................................................45779
591.404 Revised....................................................45779
591.405 Revised....................................................45779
591.406 Revised....................................................45779
591.501 Amended; interim...........................................53660
591.801 Amended; interim...........................................53660
592 Added..........................................................45779
594 Added; interim.................................................34197
    Authority citation revised.....................................53660
594.501 Revised; interim...........................................53660
594.801 Revised; interim...........................................53660
595.500 Added; interim.............................................53660
595.801 Amended; interim...........................................53660
596.500 Added; interim.............................................53660
596.801 Amended; interim...........................................53660
597 Authority citation revised..............................53660, 61361
597.500 Added; interim.............................................53660
597.701 (b) revised................................................61361
597.801 Amended; interim...........................................53660
598.501 Amended; interim...........................................53660
598.701 (a) introductory text and (3) revised......................61361
598.801 Amended; interim...........................................53660
Chapter VIII
800.401 Revised....................................................16721

[[Page 776]]

                                  2004

31 CFR
                                                                   69 FR
                                                                    Page
Title 31 Nomenclature change.......................................18803
Subtitle B
Chapter V
515 Nomenclature change............................................33773
515.420 Revised....................................................33771
515.560 (a) introductory text, (1), (7), (c) introductory text, 
        (2), (3), (4) introductory text, (i) and (f) revised; (c) 
        note removed...............................................33771
515.545 Amended....................................................75469
515.561 Revised....................................................33771
515.564 (a)(1) note added..........................................33772
515.565 (a) and (b) revised........................................33772
515.567 Revised....................................................33772
515.570 (a), (d) introductory text, (1) and section note revised 
                                                                   33773
515.572 (a)(3) and (c)(4)(i) revised...............................33773
515.577 Added......................................................75469
538.529 Added......................................................75470
541 Added; interim.................................................45248
560.538 Added......................................................75471
575 Authority citation revised.....................................46092
575.533 Revised....................................................46092
592 Revised........................................................56938
Chapter V Note 6 and Appendix A revised............................30362

                                  2005

31 CFR
                                                                   70 FR
                                                                    Page
Subtitle B
Chapter V
501.604 (b)(3) revised.............................................34061
515.533 (a)(2) introductory text and (i) revised; (d) added.........9225
535.705 Revised....................................................15762
537 Revised; interim...............................................48241
538.317 Added......................................................34062
538.318 Added......................................................34062
538.319 Added......................................................34062
538.412 Removed....................................................34062
538.413 Removed....................................................34062
538.507 Revised....................................................34062
538.527 Added......................................................34062
538.528 Added......................................................34062
538.701 (c) revised................................................34063
538.702 Revised....................................................34063
538.703 Revised....................................................34063
538.704 Revised....................................................34064
542 Added..........................................................17203
550 Authority citation revised.....................................15762
550.706 Revised....................................................15762
560.320 Revised....................................................15584
560.321 Added......................................................15584
560.516 (b), (c) and (d) redesignated as (c), (d) and (e); new (b) 
        added......................................................15584
560.517 Heading and (b) revised; (c) added.........................15584
560.532 (d) amended................................................15584
575.535 Added......................................................54259
575.705 Revised....................................................15762
500--599 (Chapter V) Note 6 to Appendices revised..................38256
    Appendix A revised.............................................38257

                                  2006

31 CFR
                                                                   71 FR
                                                                    Page
Subtitle B
Chapter V
500.586 (b)(5) added...............................................17346
501 Appendix A added; interim.......................................1974
535 Authority citation revised.....................................29252
535.701 (a)(1) and (2) amended.....................................29252
536 Authority citation revised.....................................29252
536.701 (a)(1) and (2) amended.....................................29252
537 Authority citation revised.....................................29252
537.701 (a)(1) and (2) amended.....................................29252
538 Authority citation revised.....................................29252
538.701 (a)(1) and (2) amended.....................................29253
539 Authority citation revised.....................................29253
539.701 (a)(1) and (2) amended.....................................29253
540 Authority citation revised.....................................29253
540.701 (a)(1) and (2) amended.....................................29253
541 Authority citation revised.....................................29253
541.701 (a)(1) and (2) amended.....................................29253
542 Authority citation revised.....................................29253
542.701 (a)(1) and (2) amended.....................................29253
550 Removed........................................................16043
560 Authority citation revised.....................................29253
560.405 (a) through (e) redesignated as (b) through (f); new (a) 
        added......................................................53570
560.516 (a)(1) revised; (f) added..................................53570
560.532 (b) revised................................................53570
560.539 Added......................................................48796
560.701 (a)(1) and (2) amended.....................................29253
588 Authority citation revised.....................................29253
588.701 (a)(1) and (2) amended.....................................29253
590 Removed........................................................16043
591 Removed........................................................16043
594 Authority citation revised.....................................29253
594.411 Added......................................................27200
594.510 Added......................................................27200
594.511 Added......................................................27200
594.512 Added......................................................27200
594.513 Added......................................................27200
594.514 Added......................................................27200

[[Page 777]]

594.515 Added......................................................27200
    Revised........................................................58743
594.701 (a)(1) and (2) amended.....................................29253
595 Authority citation revised.....................................29253
595.409 Added......................................................27201
595.508 Added......................................................27201
595.509 Added......................................................27201
595.510 Added......................................................27201
595.511 Added......................................................27201
595.512 Added......................................................27201
595.513 Added......................................................27201
    Revised........................................................58744
595.701 (a)(1) and (2) amended.....................................29253
597.407 Added......................................................27202
597.506 Added......................................................27202
597.507 Added......................................................27202
597.508 Added......................................................27202
597.509 Added......................................................27202
597.510 Added......................................................27202
597.511 Added......................................................27203
    Revised........................................................58744
500--599 (Chapter V) Note 6 to Appendixes revised..................39708
    Appendix A revised.............................................39708

                                  2007

31 CFR
                                                                   72 FR
                                                                    Page
Subtitle B
Chapter V
500.586 (b)(5) and note revised.....................................4961
515.577 Revised....................................................50048
537 Authority citation revised..............................34377, 50049
537.526 Revised....................................................50049
537.527 Added......................................................34377
538 Policy statement...............................................12980
    Authority citation revised..............................50050, 61515
538.210 Redesignated as 538.211; new 538.210 added.................61515
538.211 Redesignated as 538.212; new 538.211 redesignated from 
        538.210....................................................61515
538.212 Redesignated from 538.211; (g) added.......................61515
538.305 Introductory text and (a) through (d) redesignated as (a) 
        introductory text and (1) through (4); new (a) revised; 
        new (b) added..............................................61516
538.320 Added......................................................61516
538.417 Added......................................................61516
538.418 Added......................................................61516
538.516 Revised....................................................15832
538.529 Revised....................................................50050
538.530 Added......................................................61516
538.531 Added......................................................61516
538.532 Added......................................................61517
560 Policy statement...............................................12980
    Authority citation revised.....................................15832
560.521 Revised....................................................15832
560.538 Revised....................................................50051
593 Added..........................................................28856
594 Authority citation revised.....................................61518
594.201 (a) Note 3 revised..........................................4206
594.316 Added.......................................................4207
594.516 Added......................................................61518
595 Authority citation revised.....................................61518
595.514 Added......................................................61518
597.512 Added......................................................61518
500--599 (Chapter V) Note 6 to Appendixes revised..................40374
    Appendix A revised.............................................40375

                                  2008

31 CFR
                                                                   73 FR
                                                                    Page
Subtitle B
Chapter V
501 Authority citation revised.....................................51936
501 Appendix A revised.............................................51936
535 Authority citation revised.....................................32651
535.701 (a) introductory text amended; (a)(1), (2) and (b) revised
                                                                   32651
536 Authority citation revised.....................................32652
536.701 (a) introductory text amended; (a)(1), (2) and (b) revised
                                                                   32652
537 Authority citation revised.....................................32652
537.701 (a) introductory text amended; (a)(1), (2) and (b) revised
                                                                   32652
538 Authority citation revised.....................................32652
538.701 (a) introductory text amended; (a)(1), (2) and (b) revised
                                                                   32652
539 Authority citation revised.....................................32652
539.701 (a) introductory text amended; (a)(1), (2) and (b) revised
                                                                   32653
540 Authority citation revised.....................................32653
540.701 (a) introductory text amended; (a)(1), (2) and (b) revised
                                                                   32653
541 Authority citation revised.....................................32653
541.701 (a) introductory text amended; (a)(1), (2) and (b) revised
                                                                   32653
542 Authority citation revised.....................................32653

[[Page 778]]

542.701 (a) introductory text amended; (a)(1), (2) and (b) revised
                                                                   32653
545 Authority citation revised.....................................32654
545.701 (a) introductory text amended; (a)(1), (2) and (b) revised
                                                                   32654
560 Authority citation revised.....................................32654
560.405 Revised....................................................66542
560.516 Revised....................................................66542
560.532 (b) revised................................................66542
560.701 (a) introductory text amended; (a)(1), (2) and (b) revised
                                                                   32654
560 Appendix A amended.............................................73789
585 Authority citation revised.....................................32654
585.701 (a) introductory text amended; (a)(1), (2) and (b) revised
                                                                   32654
586 Authority citation revised.....................................32654
586.701 (a) introductory text amended; (a)(1), (2) and (b) revised
                                                                   32654
587 Authority citation revised.....................................32655
587.701 (a) introductory text amended; (a)(1), (2) and (b) revised
                                                                   32655
588 Authority citation revised.....................................32655
588.701 (a) introductory text amended; (a)(1), (2) and (b) revised
                                                                   32655
592.301 (b) Note 4 added...........................................29433
592.502 Added......................................................29434
593 Authority citation revised.....................................32655
593.701 (a)(1), (2) and (b) revised................................32655
594 Authority citation revised.....................................32656
594.506 (a)(4) revised; (a)(5) redesignated as (a)(6); new (a)(5) 
        added......................................................78632
594.701 (a) introductory text amended; (a)(1), (2) and (b) revised
                                                                   32656
595 Authority citation revised.....................................32656
595.506 Revised....................................................78632
595.701 (a) introductory text amended; (a)(1), (2) and (b) revised
                                                                   32656
597.505 (e) and (f) redesignated as (f) and (g); new (e) added.....78633
500--599 Note 6 to Appendixes revised..............................37536
    Appendix A revised.............................................37537
Chapter VIII
Chapter VIII Heading revised.......................................70716
800 Authority citation revised.....................................15079
    Revised........................................................70716
800.504 (b) revised................................................15079
Chapter IX
901.9 (f) revised; (g) amended; interim............................12274

                                  2009

31 CFR
                                                                   74 FR
                                                                    Page
Chapter V
501 Appendix A revised.............................................57601
515 Authority citation revised.....................................46003
515.337 Added......................................................46003
515.338 Added......................................................46003
515.339 Added......................................................46003
515.411 Removed....................................................46004
515.418 Removed....................................................46004
515.505 Heading, (a) note, (b), (b) note, (c) and (e)(2) revised; 
        (a) amended................................................46004
515.533 (e) redesignated as (g); heading, (a) introductory text, 
        (b) note and new (g) revised; new (e) and (f) added........46004
515.542 Revised....................................................46005
515.545 (a) removed; (b) and (c) redesignated as new (a) and (b) 
                                                                   46006
515.560 (a)(1), (4), (12), (c)(1), (2), (4)(i) and (d) revised; 
        (f) removed; (g) redesignated as new (f)...................46006
515.561 Revised....................................................46006
515.564 (a)(1) heading, (2) heading and (3) added..................46006
515.570 Revised....................................................46006
515.572 (a)(3) revised; (a)(3) note added..........................46007
538 Authority citation revised.....................................46362
538.212 (g)(2) note revised........................................46363
538.405 (d) revised................................................46363
538.515 Revised....................................................27434
538.523 (a), (b) and (c) introductory text revised.................46363
    Revised; interim...............................................61032
538.525 (a) introductory text and (b) revised......................46363
    Revised; interim...............................................61033
538.526 (a), (b) introductory text and (2) revised.................46364
    Revised; interim...............................................61033
543 Added..........................................................16764
    Heading revised................................................35802
544 Added..........................................................16773
546 Added..........................................................25432

[[Page 779]]

547 Added..........................................................25441
560 Authority citation revised.....................................61034
560.320 Revised....................................................36398
560.517 (a) introductory text and (b) introductory text revised....36398
560.530 Revised; interim...........................................61034
560.532 Heading and (c) revised....................................36398
    Revised; interim...............................................61035
560.533 (c) revised................................................36398
    Revised; interim...............................................61035
560.534 (d) and (e)(2) revised.....................................36398
560.535 (d) revised................................................36398
594.317 Added......................................................61037
596.201 Revised....................................................23112
500--599 (Chapter V) Notes 6 and 7 to Appendixes redesignated as 
        Notes 7 and 8; new Note 6 to Appendixes added; Appendix A 
        revised....................................................29743

                                  2010

31 CFR
                                                                   75 FR
                                                                    Page
Chapter V
510 Added..........................................................67913
515 Authority citation revised..............................10997, 10999
515.533 (a)(2)(i) revised..........................................10997
515.578 Added......................................................10999
538 Authority citation revised.....................................10999
538.533 Added......................................................10999
548 Added...........................................................5503
    Authority citation revised.....................................73959
548.509 (a) revised................................................73959
549 Added..........................................................44909
551 Added..........................................................24395
560 Authority citation revised..............................11000, 59613
    Determination..................................................48562
560.534 Removed....................................................59613
560.535 Removed....................................................59613
560.540 Added......................................................11000
560 Appendix A revised.............................................34631
561 Added..........................................................49838
575 Removed........................................................55463
576 Added..........................................................55466
594.506 (a) introductory text revised; (b) and (c) redesignated as 
        (c) and (d); new (b) added.................................75906
594.517 Added......................................................75906
595.506 (a) introductory text revised; (b) and (c) redesignated as 
        (c) and (d); new (b) added.................................75907
595.515 Added......................................................75907
597.505 Introductory text revised; note added......................75909
597.513 Added......................................................75909
500--599 (Ch. V) Note 7 to Appendixes and Appendix A revised.......38213
Chapter X
Chapter X Established..............................................65812

                                  2011

31 CFR
                                                                   76 FR
                                                                    Page
Chapter V
500 Removed........................................................35740
501.807 Heading revised............................................38535
505 Removed........................................................35740
510 Authority citation revised.....................................35741
510.201 (a) Note 1 redesignated as (a) Note; section Notes 1, 2 
        and 3 redesignated as (b) Notes 1 and 2 and section Note; 
        (c) added..................................................35741
    (b) Notes 1 and 2 revised......................................38535
510.302 (b) and (c) revised; (d) added.............................35741
510.501 Added......................................................35741
510.801 Added......................................................35741
510.802 Revised....................................................35741
510 Appendix C added...............................................35741
515 Authority citation revised......................................5074
515.306 Note revised...............................................38535
515.505 Heading and (b) revised; (d) and (e) redesignated as (e) 
        and (f); new (d) and (f)(4) added...........................5074
515.560 (a)(5), (6), (7), (c)(4)(i), (ii) and (f) revised; (d)(3) 
        added.......................................................5074
515.563 (b) revised.................................................5075
515.565 Revised.....................................................5075
515.566 Revised.....................................................5076
515.567 Heading and (b) revised.....................................5076
515.570 Revised.....................................................5076
515.571 (a)(5)(i) and note revised..................................5077
515.577 (a) introductory text revised...............................5077
536.312 Note revised...............................................38536
536.408 (a) revised................................................38536
537.201 (a) Note removed; (a) Notes 1, 2 and 3 added...............38536
538.305 Note revised...............................................38536
    (b) removed; (a), (1) through (4) and Note redesignated as 
introductory text, (a) through (d) and Note 2; Note 1 added........76618

[[Page 780]]

538.312 (e) added..................................................76618
538.320 (a) revised................................................76618
538.405 (d) revised; (d) note added................................63194
    (b), (c) and (d) revised; (e) added............................76618
538.417 Note redesignated as Note 2 and revised; Note 1 added......76618
538.509 Revised....................................................76619
538.515 (c) removed; (c) Note redesignated as section Note and 
        revised....................................................76619
538.523 (a)(1) amended; (a)(2), (b)(1), (2), (d)(5), (e)(1) 
        introductory text, (2) and (3) revised; (a)(3), notes 1 
        and 2 and (f) added........................................63194
538.525 Heading and (a) introductory text revised..................63195
538.526 Heading and (a) revised....................................63195
538.532 Revised....................................................76619
538.534 Added......................................................63198
538.535 Added......................................................63198
538.536 Added......................................................76619
538.537 Added......................................................76619
538 Appendix A amended.............................................63195
541.201 (a) Note removed; (a) Notes 1, 2 and 3 added..