[Title 31 CFR ]
[Code of Federal Regulations (annual edition) - July 1, 2018 Edition]
[From the U.S. Government Publishing Office]
[[Page i]]
Title 31
Money and Finance:Treasury
________________________
Parts 500 to End
Revised as of July 1, 2018
Containing a codification of documents of general
applicability and future effect
As of July 1, 2018
Published by the Office of the Federal Register
National Archives and Records Administration as a
Special Edition of the Federal Register
[[Page ii]]
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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 633
Chapter VII--Federal Law Enforcement Training
Center, Department of the Treasury 639
Chapter VIII--Office of Investment Security,
Department of the Treasury 643
Chapter IX--Federal Claims Collection Standards
(Department of the Treasury--Department of Justice) 669
Chapter X--Financial Crimes Enforcement Network,
Department of the Treasury 689
Finding Aids:
Table of CFR Titles and Chapters........................ 845
Alphabetical List of Agencies Appearing in the CFR...... 865
List of CFR Sections Affected........................... 875
[[Page iv]]
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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.
----------------------------
[[Page v]]
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
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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
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To determine whether a Code volume has been amended since its
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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.
[[Page vi]]
Many agencies have begun publishing numerous OMB control numbers as
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PAST PROVISIONS OF THE CODE
Provisions of the Code that are no longer in force and effect as of
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``[RESERVED]'' TERMINOLOGY
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This material, like any other properly issued regulation, has the force
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this volume.
[[Page vii]]
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Oliver A. Potts,
Director,
Office of the Federal Register
July 1, 2018
[[Page ix]]
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, 2018.
For this volume, Robert J. Sheehan, III was Chief Editor. The Code
of Federal Regulations publication program is under the direction of
John Hyrum Martinez, assisted by Stephen J. Frattini.
[[Page 1]]
TITLE 31--MONEY AND FINANCE: TREASURY
(This book contains part 500 to end)
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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
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Part Page
500
[Reserved]
501 Reporting, procedures and penalties
regulations............................. 7
510 North Korea sanctions regulations........... 52
515 Cuban assets control regulations............ 82
535 Iranian assets control regulations.......... 146
536 Narcotics trafficking sanctions regulations. 171
539 Weapons of mass destruction trade control
regulations............................. 183
541 Zimbabwe sanctions regulations.............. 191
542 Syrian sanctions regulations................ 207
544 Weapons of mass destruction proliferators
sanctions regulations................... 237
546 Darfur sanctions regulations................ 250
547 Democratic Republic of the Congo sanctions
regulations............................. 263
548 Belarus sanctions regulations............... 276
549 Lebanon sanctions regulations............... 289
551 Somalia sanctions regulations............... 302
552 Yemen sanctions regulations................. 310
553 Central African Republic sanctions
regulations............................. 319
554 Burundi sanctions regulations............... 329
558 South Sudan Sanctions Regulations........... 340
560 Iranian transactions and sanctions
regulations............................. 350
561 Iranian financial sanctions regulations..... 403
562 Iranian human rights abuses sanctions
regulations............................. 424
566 Hizballah financial sanctions regulations... 433
570 Libyan sanctions regulations................ 443
576 Iraq stabilization and insurgency sanctions
regulations............................. 453
578 Cyber-related sanctions regulations......... 468
583 Global Magnitsky sanctions regulations...... 478
584 Magnitsky Act sanctions regulations......... 490
588 Western Balkans stabilization regulations... 506
589 Ukraine related sanctions regulations....... 519
590 Transnational criminal organizations
sanctions regulations................... 532
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591 Venezuela sanctions regulations............. 540
592 Rough diamonds control regulations.......... 551
594 Global terrorism sanctions regulations...... 560
595 Terrorism sanctions regulations............. 580
596 Terrorism List Governments sanctions
regulations............................. 596
597 Foreign terrorist organizations sanctions
regulations............................. 601
598 Foreign narcotics kingpin sanctions
regulations............................. 617
599
[Reserved]
Appendix A to Chapter V--Information Pertaining to the
Specially Designated Nationals and Blocked Persons List... 629
[[Page 7]]
PART 500 [RESERVED]
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,
[[Page 8]]
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.
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 downloading the form from the OFAC Reporting and License Application
Forms page on
[[Page 10]]
OFAC's Web site (https://www.treasury.gov/resource-center/sanctions/
Pages/forms-index.aspx). 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; 81
FR 76863, Nov. 4, 2016]
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) Transferring unlicensed gifts or charitable donations from the
Government of Syria to a U.S. person;
(3) Crediting Iranian accounts on the books of a U.S. financial
institution; and
(4) 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; 81
FR 43073, July 1, 2016]
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 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);
[[Page 11]]
(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.
Note to paragraph (a)(1):
TWEA provides for a maximum civil penalty not to exceed $86,976.
(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.
[[Page 12]]
(3) The Secretary of the Treasury may impose a civil penalty of not
more than $86,976 per violation on any person who violates any license,
order, or regulation issued under TWEA.
Note to paragraph (a)(3):
The current civil penalty cap may be adjusted for inflation pursuant
to the Federal Civil Penalties Inflation Adjustment Act of 1990 (Pub. L.
101-410, as amended, 28 U.S.C. 2461 note).
(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;
81 FR 43073, July 1, 2016; 82 FR 10435, Feb. 10, 2017; 83 FR 11877, Mar.
19, 2018]
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.
(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.
[[Page 13]]
(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,
(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
[[Page 14]]
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.
(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
[[Page 15]]
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 8.5 x 11
inches, except that, to the extent that the reduction of larger
documents would render them illegible, such documents may be filed on
larger paper;
(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;
[[Page 16]]
(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.
(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
[[Page 17]]
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.
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
[[Page 18]]
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.
(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);
[[Page 19]]
(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 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
[[Page 20]]
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 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
[[Page 21]]
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.
(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
[[Page 22]]
(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;
(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;
[[Page 23]]
(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.
(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.
[[Page 24]]
(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 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
[[Page 25]]
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 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
[[Page 26]]
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.
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
[[Page 27]]
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 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.
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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 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
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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 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
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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 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.
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(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:
(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;
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(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;
(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
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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 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
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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 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
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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.
(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
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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 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
[[Page 37]]
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 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
[[Page 38]]
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 Reporting and
License Application Forms page on OFAC's Web site (https://
www.treasury.gov/resource-center/sanctions/Pages/forms-index.aspx) or
the Office of Foreign Assets Control, Licensing Division, U.S.
Department of the Treasury, 1500 Pennsylvania Avenue NW., Freedman's
Bank Building, 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 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
[[Page 39]]
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
(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
[[Page 40]]
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; 81 FR 76863, Nov.
4, 2016]
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.
(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
[[Page 41]]
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:
(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.);
[[Page 42]]
(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 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.
[[Page 43]]
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 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
[[Page 44]]
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 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
[[Page 45]]
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 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
[[Page 46]]
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:
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
[[Page 47]]
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 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.
[[Page 48]]
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 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.
[[Page 49]]
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
$147,571 per violation, except where the statutory maximum penalty
applicable to the apparent violation is less than $295,141, in which
case the base amount of the proposed civil penalty in the Pre-Penalty
Notice shall be capped at one-half the statutory maximum penalty
applicable to the apparent 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. For
apparent violations where the statutory maximum penalty applicable to
the apparent violation is $295,141 or greater, the maximum base amount
shall be capped at $295,141. For apparent violations where the statutory
maximum penalty applicable to the apparent violation is less than
$295,141, the maximum base amount shall be capped at the statutory
maximum penalty amount applicable to the apparent 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.
Note to paragraph (a):
The applicable statutory maximum civil penalty per violation for
each statute enforced by OFAC is as follows: International Emergency
Economic Powers Act (IEEPA)--greater of $295,141 or twice the amount of
the underlying transaction; Trading with the Enemy Act (TWEA)--$86,976;
Foreign Narcotics Kingpin Designation Act (FNKDA)--$1,466,485;
Antiterrorism and Effective Death Penalty Act of 1996 (AEDPA)--greater
of $77,909 or twice the amount of which a financial institution was
required to retain possession or control; and Clean Diamond Trade Act
(CDTA)--$13,333. The civil penalty amounts authorized under these
statutes 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).
The following matrix represents the base amount of the proposed
civil penalty for each category of violation:
[[Page 50]]
[GRAPHIC] [TIFF OMITTED] TR19MR18.001
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 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
[[Page 51]]
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:
OFAC Risk Matrix
------------------------------------------------------------------------
Low Moderate High
------------------------------------------------------------------------
Stable, well-known customer base Customer base A large,
in a localized environment. changing due to fluctuating
branching, client base in an
merger, or international
acquisition in environment.
the domestic
market.
Few high-risk customers; these A moderate number A large number of
may include nonresident aliens, of high-risk high-risk
foreign customers (including customers. customers.
accounts with U.S. powers of
attorney), and foreign
commercial customers.
No overseas branches and no Overseas branches Overseas branches
correspondent accounts with or correspondent or multiple
foreign banks. accounts with correspondent
foreign banks. accounts with
foreign banks.
No electronic services (e.g., e- The institution The institution
banking) offered, or products offers limited offers a wide
available are purely electronic (e.g., array of
informational or non- e-banking) electronic (e.g.,
transactional. products and e-banking)
services. products and
services (i.e.,
account
transfers, e-bill
payment, or
accounts opened
via the
Internet).
Limited number of funds A moderate number A high number of
transfers for customers and non- of funds customer and non-
customers, limited third-party transfers, mostly customer funds
transactions, and no for customers. transfers,
international funds transfers. Possibly, a few including
international international
funds transfers funds transfers.
from personal or
business accounts.
No other types of international Limited other A high number of
transactions, such as trade types of other types of
finance, cross-border ACH, and international international
management of sovereign debt. transactions. transactions.
[[Page 52]]
No history of OFAC actions. No A small number of Multiple recent
evidence of apparent violation recent actions actions by OFAC,
or circumstances that might (i.e., actions where the
lead to a violation. within the last institution has
five years) by not addressed the
OFAC, including issues, thus
notice letters, leading to an
or civil money increased risk of
penalties, with the institution
evidence that the undertaking
institution similar
addressed the violations in the
issues and is not future.
at risk of
similar
violations in the
future.
Management has fully assessed Management Management does
the institution's level of risk exhibits a not understand,
based on its customer base and reasonable or has chosen to
product lines. This understanding of ignore, key
understanding of risk and the key aspects aspects of OFAC
strong commitment to OFAC of OFAC compliance risk.
compliance is satisfactorily compliance and The importance of
communicated throughout the its commitment is compliance is not
organization. generally clear emphasized or
and communicated
satisfactorily throughout the
communicated organization.
throughout the
organization, but
it may lack a
program
appropriately
tailored to risk.
The board of directors, or board The board has The board has not
committee, has approved an OFAC approved an OFAC approved an OFAC
compliance program that compliance compliance
includes policies, procedures, program that program, or
controls, and information includes most of policies,
systems that are adequate, and the appropriate procedures,
consistent with the policies, controls, and
institution's OFAC risk profile. procedures, information
controls, and systems are
information significantly
systems necessary deficient.
to ensure
compliance, but
some weaknesses
are noted.
Staffing levels appear adequate Staffing levels Management has
to properly execute the OFAC appear generally failed to provide
compliance program. adequate, but appropriate
some deficiencies staffing levels
are noted. to handle
workload.
Authority and accountability for Authority and Authority and
OFAC compliance are clearly accountability accountability
defined and enforced, including are defined, but for compliance
the designation of a qualified some refinements have not been
OFAC officer. are needed. A clearly
qualified OFAC established. No
officer has been OFAC compliance
designated. officer, or an
unqualified one,
has been
appointed. The
role of the OFAC
officer is
unclear.
Training is appropriate and Training is Training is
effective based on the conducted and sporadic and does
institution's risk profile, management not cover
covers applicable personnel, provides adequate important
and provides necessary up-to- resources given regulatory and
date information and resources the risk profile risk areas or is
to ensure compliance. of the nonexistent.
organization;
however, some
areas are not
covered within
the training
program.
The institution employs strong The institution The institution
quality control methods. employs limited does not employ
quality control quality control
methods. methods.
------------------------------------------------------------------------
[74 FR 57601, Nov. 9, 2009, as amended at 81 FR 43073, July 1, 2016; 82
FR 10435, Feb. 10, 2017; 83 FR 11877, Mar. 19, 2018]
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 involving blocked property.
510.202 Effect of transfers violating the provisions of this part.
510.203 Holding of funds in interest-bearing accounts; investment and
reinvestment.
510.204 Expenses of maintaining blocked physical property; liquidation
of blocked property.
510.205 Prohibited importation of goods, services, or technology from
North Korea.
510.206 Prohibited exportation and reexportation of goods, services, or
technology to North Korea.
510.207 Prohibited vessel transactions related to North Korean
registration and flagging.
510.208 Prohibited aircraft landing or vessel calling in the United
States.
510.209 Prohibited new investment in North Korea.
510.210 Prohibitions or strict conditions with respect to correspondent
or payable-through accounts or blocking of certain foreign
financial institutions identified by the Secretary of the
Treasury.
510.211 Prohibited facilitation.
510.212 Evasions; attempts; causing violations; conspiracies.
510.213 Exempt transactions.
Subpart C_General Definitions
510.300 Applicability of definitions.
510.301 Arms or related materiel.
510.302 Blocked account; blocked property.
[[Page 53]]
510.303 Correspondent account.
510.304 Effective date.
510.305 Entity.
510.306 Financial, material, or technological support.
510.307 Financial services.
510.308 Financial transaction.
510.309 Foreign financial institution.
510.310 Foreign person.
510.311 Government of North Korea.
510.312 Information or informational materials.
510.313 Interest.
510.314 Knowingly.
510.315 Licenses; general and specific.
510.316 Loans or other extensions of credit.
510.317 Luxury goods.
510.318 New investment.
510.319 North Korean person.
510.320 OFAC.
510.321 Payable-through account.
510.322 Person.
510.323 Property; property interest.
510.324 Transfer.
510.325 United States.
510.326 United States person; U.S. person.
510.327 U.S. depository institution.
510.328 U.S. financial institution.
510.329 U.S.-registered money transmitter.
510.330 U.S.-registered broker or dealer in securities.
Subpart D_Interpretations
510.401 Reference to amended sections.
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.
510.405 Exportation and reexportation of goods, services, or technology.
510.406 Offshore transactions involving blocked property.
510.407 Payments from blocked accounts to satisfy obligations
prohibited.
510.408 Charitable contributions.
510.409 Credit extended and cards issued by financial institutions to a
person whose property and interests in property are blocked.
510.410 Setoffs prohibited.
510.411 Entities owned by one or more persons whose property and
interests in property are blocked.
510.412 Facilitation; change of policies and procedures; referral of
business opportunities offshore.
510.413 Significant transaction(s).
Subpart E_Licenses, Authorizations, and Statements of Licensing Policy
510.501 General and specific licensing procedures.
510.502 Effect of license or other authorization.
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.
510.506 Investment and reinvestment of certain funds.
510.507 Provision of certain legal services.
510.508 Payments for legal services from funds originating outside the
United States.
510.509 Emergency medical services.
510.510 North Korean mission to the United Nations and employees of the
United Nations.
510.511 Noncommercial, personal remittances.
510.512 Certain services in support of nongovernmental organizations'
activities.
510.513 Official business of the Federal Government.
510.514 Official activities of international organizations.
510.515 Third-country diplomatic and consular funds transfers.
510.516 Transactions related to telecommunications and mail.
510.517 Certain transactions related to patents, trademarks, copyrights,
and other intellectual property.
510.518 Calling of certain vessels and landing of certain aircraft.
510.519 Transactions related to closing a correspondent or payable-
through account.
Subpart F_Reports
510.601 Records and reports.
Subpart G_Penalties and Finding of Violation
510.701 Penalties.
510.702 Pre-Penalty Notice; settlement.
510.703 Penalty imposition.
510.704 Administrative collection; referral to United States Department
of Justice.
510.705 Finding of Violation.
Subpart H_Procedures
510.801 Procedures.
510.802 Delegation of certain authorities of the Secretary of the
Treasury.
Subpart I_Paperwork Reduction Act
510.901 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); Pub.
L. 114-122, 130 Stat. 93 (22 U.S.C. 9201-9255); Pub. L. 115-44, 131 Stat
886 (22 U.S.C. 9201 note); E.O. 13466, 73 FR 36787, June 27, 2008, 3
CFR, 2008 Comp., p. 195; E.O.
[[Page 54]]
13551, 75 FR 53837, September 1, 2010; E.O. 13570, 76 FR 22291, April
20, 2011; E.O. 13687, 80 FR 819, January 6, 2015; E.O. 13722, 81 FR
14943, March 18, 2016; E.O. 13810, 82 FR 44705, September 25, 2017.
Source: 83 FR 9187, Mar. 5, 2018, 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.
Subpart B_Prohibitions
Sec. 510.201 Prohibited transactions involving blocked property.
(a)(1) All property and interests in property that are in the United
States, that come within the United States, or that are or come within
the possession or control of any U.S. person of the Government of North
Korea or the Workers' Party of Korea are blocked and may not be
transferred, paid, exported, withdrawn, or otherwise dealt in.
(2) All property and interests in property of North Korea or a North
Korean national that were blocked pursuant to the Trading With the Enemy
Act as of June 16, 2000 and remained blocked on June 26, 2008, are
blocked and may not be transferred, paid, exported, withdrawn, or
otherwise dealt in.
(3) All property and interests in property that are in the United
States, that come within the United States, or that are or come within
the possession or control of any U.S. person of the following persons
are blocked and may not be transferred, paid, exported, withdrawn, or
otherwise dealt in:
(i) E.O. 13551 Annex. The persons listed in the Annex to Executive
Order 13551 of August 30, 2010;
(ii) E.O. 13551. 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 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 paragraphs (a)(3)(ii)(A) through
(D) of this section or any person whose property and interests in
property are blocked pursuant to paragraph (a)(3)(i) or (ii) of this
section;
(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
[[Page 55]]
property are blocked pursuant to paragraph (a)(3)(i) or (ii) of this
section; or
(G) To have attempted to engage in any of the activities described
in paragraphs (a)(3)(ii)(A) through (F) of this section;
(iii) E.O. 13687. Any person determined by the Secretary of the
Treasury, in consultation with the Secretary of State:
(A) To be an agency, instrumentality, or controlled entity of the
Government of North Korea or the Workers' Party of Korea;
(B) To be an official of the Government of North Korea;
(C) To be an official of the Workers' Party of Korea;
(D) To have materially assisted, sponsored, or provided financial,
material, or technological support for, or goods or services to or in
support of, the Government of North Korea or any person whose property
and interests in property are blocked pursuant to paragraph (a)(3)(iii)
of this section; or
(E) To be owned or controlled by, or to have acted or purported to
act for or on behalf of, directly or indirectly, the Government of North
Korea or any person whose property and interests in property are blocked
pursuant to paragraph (a)(3)(iii) of this section;
(iv) E.O. 13722. Any person determined by the Secretary of the
Treasury, in consultation with the Secretary of State:
(A) To operate in any industry in the North Korean economy as may be
determined by the Secretary of the Treasury, in consultation with the
Secretary of State, to be subject to paragraph (a)(3)(iv) of this
section, such as transportation, mining, energy, or financial services;
Note 1 to paragraph (a)(3)(iv)(A):
Any industry in the North Korean economy that is determined by the
Secretary of the Treasury, in consultation with the Secretary of State,
to be subject to paragraph (a)(3)(iv) of this section will be so
identified in a publication in the Federal Register.
(B) To have sold, supplied, transferred, or purchased, directly or
indirectly, to or from North Korea or any person acting for or on behalf
of the Government of North Korea or the Workers' Party of Korea, metal,
graphite, coal, or software, where any revenue or goods received may
benefit the Government of North Korea or the Workers' Party of Korea,
including North Korea's nuclear or ballistic missile programs;
(C) To have engaged in, facilitated, or been responsible for an
abuse or violation of human rights by the Government of North Korea or
the Workers' Party of Korea or any person acting for or on behalf of
either such entity;
(D) To have engaged in, facilitated, or been responsible for the
exportation of workers from North Korea, including exportation to
generate revenue for the Government of North Korea or the Workers' Party
of Korea;
(E) To have engaged in significant activities undermining
cybersecurity through the use of computer networks or systems against
targets outside of North Korea on behalf of the Government of North
Korea or the Workers' Party of Korea;
(F) To have engaged in, facilitated, or been responsible for
censorship by the Government of North Korea or the Workers' Party of
Korea;
(G) 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 paragraph (a)(1) or (a)(3)(iv) of this section;
(H) 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)(1) or (a)(3)(iv) of this section; or
(I) To have attempted to engage in any of the activities described
in paragraphs (a)(3)(iv)(A) through (H) of this section;
(v) E.O. 13810 section 1. Any person determined by the Secretary of
the Treasury, in consultation with the Secretary of State:
(A) To operate in the construction, energy, financial services,
fishing, information technology, manufacturing, medical, mining,
textiles, or transportation industries in North Korea;
(B) To own, control, or operate any port in North Korea, including
any seaport, airport, or land port of entry;
[[Page 56]]
(C) To have engaged in at least one significant importation from or
exportation to North Korea of any goods, services, or technology;
(D) To be a North Korean person, including a North Korean person
that has engaged in commercial activity that generates revenue for the
Government of North Korea or the Workers' Party of Korea;
(E) 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 paragraph (a)(3)(v) of this section; or
(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 paragraph
(a)(3)(v) of this section; or
(vi) E.O. 13810 section 4. Any person that is a foreign financial
institution:
(A) Determined by the Secretary of the Treasury, in consultation
with the Secretary of State, to have, on or after September 21, 2017,
knowingly conducted or facilitated any significant transaction:
(1) On behalf of any person whose property and interests in property
are blocked pursuant to Executive Order 13551, Executive Order 13687,
Executive Order 13722, or Executive Order 13810, or of any person whose
property and interests in property are blocked pursuant to Executive
Order 13382 in connection with North Korea-related activities; or
(2) In connection with trade with North Korea; and
(B) With respect to which the Secretary of the Treasury, in
consultation with the Secretary of State, has exercised the authority to
block all property and interests in property.
Note 2 to paragraph (a)(3)(vi):
See Sec. 510.210 for alternative sanctions that can be imposed on a
foreign financial institution when the determination specified in
paragraph (a)(3)(vi)(A) of this section is made.
Note 3 to paragraph (a):
The names of persons listed in or designated or identified pursuant
to Executive Order 13551, Executive Order 13687, Executive Order 13722,
or Executive Order 13810 and whose property and interests in property
are blocked pursuant to those orders and paragraph (a) of this section
are published in the Federal Register and incorporated into OFAC's
Specially Designated Nationals and Blocked Persons List (SDN List) with
the identifier ``DPRK.'' The names of persons referenced in paragraph
(a)(vi)(A)(2) of this section and listed in or designated or identified
pursuant to Executive Order 13382 whose property and interests in
property are blocked pursuant to Executive Order 13382 in connection
with North Korea-related activities are published in the Federal
Register and incorporated into OFAC's SDN List with the identifier
``[NPWMD]'' and descriptive text ``Executive Order 13810 Information:
Subject to blocking in connection with North Korea-related activities.
The SDN List is accessible through the following page on OFAC's website:
www.treasury.gov/sdn. Additional information pertaining to the SDN List
can be found in appendix A to this chapter. See Sec. 510.411 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. The property and interests in property of persons who
meet the definition of the term Government of North Korea, as defined in
Sec. 510.311, are blocked pursuant to paragraph (a) of this section
regardless of whether the names of such persons are published in the
Federal Register or incorporated into the SDN List.
Note 4 to paragraph (a):
The International Emergency Economic Powers Act (50 U.S.C. 1701-
1706), in Section 203 (50 U.S.C. 1702), authorizes the blocking of
property and interests in property of a person during the pendency of an
investigation. The names of persons whose property and interests in
property are blocked pending investigation pursuant to paragraph (a) of
this section also are published in the Federal Register and incorporated
into the SDN List with the identifier ``BPI-DPRK.''
Note 5 to paragraph (a):
Sections 501.806 and 501.807 of this chapter describe the procedures
to be followed by persons seeking, respectively, the unblocking of funds
that they believe were blocked due to mistaken identity, and
administrative reconsideration of their status as persons whose property
and interests in property are blocked pursuant to paragraph (a) of this
section.
(b) The prohibitions in paragraph (a) of this section include
prohibitions on the following transactions:
(1) The making of any contribution or provision of funds, goods, or
services by, to, or for the benefit of any person whose property and
interests in property are blocked pursuant to paragraph (a) of this
section; and
(2) The receipt of any contribution or provision of funds, goods, or
services from any person whose property and
[[Page 57]]
interests in property are blocked pursuant to paragraph (a) of this
section.
(c) Unless authorized by this part or by a specific license
expressly referring to this part, any dealing in securities (or evidence
thereof) held within the possession or control of a U.S. person and
either registered or inscribed in the name of, or known to be held for
the benefit of, or issued by, the Government of North Korea, the
Workers' Party of Korea, or any other person whose property and
interests in property are blocked pursuant to paragraph (a) of this
section is prohibited. This prohibition includes the transfer (including
the transfer on the books of any issuer or agent thereof), disposition,
transportation, importation, exportation, or withdrawal of, or the
endorsement or guaranty of signatures on, any securities on or after the
effective date. This prohibition applies irrespective of the fact that
at any time (whether prior to, on, or subsequent to the effective date)
the registered or inscribed owner of any such securities may have or
might appear to have assigned, transferred, or otherwise disposed of the
securities.
(d) All funds that are in the United States, that come within the
United States, or that are or come within the possession or control of
any U.S. person and that originate from, are destined for, or pass
through a foreign bank account that has been determined by the Secretary
of the Treasury to be owned or controlled by a North Korean person, or
to have been used to transfer funds in which any North Korean person has
an interest, are blocked and may not be transferred, paid, exported,
withdrawn, or otherwise dealt in.
(e) Funds subject to blocking or blocking pending investigation
pursuant to paragraph (d) of this section may be identified via actual
or constructive notice from OFAC to relevant U.S. persons believed to be
holding or to soon come into possession of such funds. To the extent a
foreign bank account determined to meet the criteria contained in
paragraph (d) of this section is publicized, it will be published in the
Federal Register.
(f)(1) The prohibitions in paragraph (a)(1) of this section apply
except to the extent provided in regulations, orders, directives, or
licenses that may be issued pursuant to this part or pursuant to the
export control authorities implemented by the U.S. Department of
Commerce, and notwithstanding any contract entered into or any license
or permit granted prior to the effective date.
(2) The prohibitions in paragraphs (a)(2), (a)(3)(i) through (iii),
and (d) of this section apply except to the extent provided by
regulations, orders, directives, or licenses that may be issued pursuant
to this part, and notwithstanding any contract entered into or any
license or permit granted prior to the effective date.
(3) The prohibitions in paragraphs (a)(3)(iv) through (v) of this
section apply except to the extent provided by regulations, orders,
directives, or licenses that may be issued pursuant to this part, and
notwithstanding any contract entered into or any license or permit
granted prior to the effective date. These prohibitions are in addition
to the export control authorities administered by the Department of
Commerce.
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 interests 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 interests in property.
(b) No transfer before the effective date shall be the basis for the
assertion or recognition of any right, remedy, power, or privilege with
respect to, or any interest in, any property or interests in property
blocked pursuant to Sec. 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, a license or other authorization
issued by
[[Page 58]]
OFAC before, during, or after a transfer shall validate such transfer or
make it enforceable to the same extent that it would be valid or
enforceable but for the provisions of this part and any regulation,
order, directive, ruling, instruction, or license issued pursuant to
this part.
(d) Transfers of property that otherwise would be null and void or
unenforceable by virtue of the provisions of this section shall not be
deemed to be null and void or unenforceable as to any person with whom
such property is or was held or maintained (and as to such person only)
in cases in which such person is able to establish to the satisfaction
of OFAC each of the following:
(1) Such transfer did not represent a willful violation of the
provisions of this part by the person with whom such property is or was
held or maintained (and as to such person only);
(2) The person with whom such property is or was held or maintained
did not have reasonable cause to know or suspect, in view of all the
facts and circumstances known or available to such person, that such
transfer required a license or authorization issued pursuant to this
part and was not so licensed or authorized, or, if a license or
authorization did purport to cover the transfer, that such license or
authorization had been obtained by misrepresentation of a third party or
withholding of material facts or was otherwise fraudulently obtained;
and
(3) The person with whom such property is or was held or maintained
filed with OFAC a report setting forth in full the circumstances
relating to such transfer promptly upon discovery that:
(i) Such transfer was in violation of the provisions of this part or
any regulation, ruling, instruction, license, or other directive or
authorization issued pursuant to this part;
(ii) Such transfer was not licensed or authorized by OFAC; or
(iii) If a license did purport to cover the transfer, such license
had been obtained by misrepresentation of a third party or withholding
of material facts or was otherwise fraudulently obtained.
Note 1 to paragraph (d):
The filing of a report in accordance with the provisions of
paragraph (d)(3) of this section shall not be deemed evidence that the
terms of paragraphs (d)(1) and (2) of this section have been satisfied.
(e) Unless licensed pursuant to this part, any attachment, judgment,
decree, lien, execution, garnishment, or other judicial process is null
and void with respect to any property and interests in property blocked
pursuant to Sec. 510.201.
Sec. 510.203 Holding of funds in interest-bearing accounts;
investment and reinvestment.
(a) Except as provided in paragraph (e) or (f) of this section, or
as otherwise directed or authorized by OFAC, any U.S. person holding
funds, such as currency, bank deposits, or liquidated financial
obligations, subject to Sec. 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) 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. 510.201 may
continue to be held until maturity in the original instrument, provided
any interest, earnings, or other proceeds derived therefrom are
[[Page 59]]
paid into a blocked interest-bearing account in accordance with
paragraph (a) or (f) of this section.
(f) Blocked funds held in accounts or instruments outside the United
States at the time the funds become subject to Sec. 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.
(g) This section does not create an affirmative obligation for the
holder of blocked tangible property, such as chattels or real estate, or
of other blocked property, such as debt or equity securities, to sell or
liquidate such property. However, OFAC may issue licenses permitting or
directing such sales or liquidation in appropriate cases.
(h) Funds subject to this section may not be held, invested, or
reinvested in a manner that provides financial or economic benefit or
access to the Government of North Korea, the Workers' Party of Korea, or
any other person whose property and interests in property are blocked
pursuant to Sec. 510.201(a), nor may their holder cooperate in or
facilitate the pledging or other attempted use as collateral of blocked
funds or other assets.
Sec. 510.204 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. 510.201 shall
be the responsibility of the owners or operators of such property, which
expenses shall not be met from blocked funds.
(b) Property blocked pursuant to Sec. 510.201 may, in the
discretion of OFAC, be sold or liquidated and the net proceeds placed in
a blocked interest-bearing account in the name of the owner of the
property.
Sec. 510.205 Prohibited importation of goods, services, or technology
from North Korea.
(a) The importation into the United States, directly or indirectly,
of any goods, services, or technology from North Korea is prohibited.
(b) The prohibitions in this section apply except to the extent
provided by regulations, orders, directives, or licenses that may be
issued pursuant to this part, and notwithstanding any contract entered
into or any license or permit granted prior to the effective date.
Sec. 510.206 Prohibited exportation or reexportation of goods, services,
or technology to North Korea.
(a) The exportation or reexportation, directly or indirectly, from
the United States, or by a U.S. person, wherever located, of any goods,
services, or technology to North Korea is prohibited.
(b) The prohibitions in this section apply except to the extent
provided in regulations, orders, directives, or licenses that may be
issued pursuant to this part or pursuant to the export control
authorities implemented by the U.S. Department of Commerce, and
notwithstanding any contract entered into or any license or permit
granted prior to the effective date.
Sec. 510.207 Prohibited vessel transactions related to North Korean
registration and flagging.
(a) U.S. 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.
(b) The prohibitions in this section apply except to the extent
provided by regulations, orders, directives, or licenses that may be
issued pursuant to this part, and notwithstanding any contract entered
into or any license or permit granted prior to the effective date.
Sec. 510.208 Prohibited aircraft landing or vessel calling
in the United States.
(a) No aircraft in which a foreign person has an interest that has
landed at a place in North Korea may land at a
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place in the United States within 180 days after departure from North
Korea.
(b) No vessel in which a foreign person has an interest that has
called at a port in North Korea within the previous 180 days, and no
vessel in which a foreign person has an interest that has engaged in a
ship-to-ship transfer with such a vessel within the previous 180 days,
may call at a port in the United States.
(c) The prohibitions in this section apply except to the extent
provided by regulations, orders, directives, or licenses that may be
issued pursuant to this part, and notwithstanding any contract entered
into or any license or permit granted prior to the effective date.
Sec. 510.209 Prohibited new investment in North Korea.
(a) New investment, as defined in Sec. 510.318, in North Korea by a
U.S. person, wherever located, is prohibited.
(b) The prohibitions in this section apply except to the extent
provided by regulations, orders, directives, or licenses that may be
issued pursuant to this part or pursuant to the export control
authorities implemented by the U.S. Department of Commerce, and
notwithstanding any contract entered into or any license or permit
granted prior to the effective date.
Sec. 510.210 Prohibitions or strict conditions with respect to correspondent
or payable-through accounts or blocking of certain foreign financial
institutions identified by the Secretary of the Treasury.
(a) Prohibited activities. A U.S. financial institution shall not:
(1) 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 section; or
(2) Maintain a correspondent account or a payable-through account in
the United States in a manner that is inconsistent with any strict
condition imposed and in effect pursuant to this section.
(b) Sanctionable activity by foreign financial institutions. The
Secretary of the Treasury, in consultation with the Secretary of State,
may determine that a foreign financial institution has, on or after
September 21, 2017, knowingly conducted or facilitated any significant
transaction:
(1) On behalf of any person whose property and interests in property
are blocked pursuant to Executive Order 13551, Executive Order 13687,
Executive Order 13722, or Executive Order 13810, or on behalf of any
person whose property and interests in property are blocked pursuant to
Executive Order 13382 in connection with North Korea-related activities;
or
(2) In connection with trade with North Korea.
Note 1 to paragraph (b):
The names of persons listed in or designated or identified pursuant
to Executive Order 13351, Executive Order 13687, Executive Order 13722,
or Executive Order 13810 and whose property and interests in property
are blocked pursuant to those orders are published in the Federal
Register and incorporated into OFAC's List of Specially Designated
Nationals and Blocked Persons (SDN List) with the identifier ``DPRK.''
The names of persons listed in or designated or identified pursuant to
Executive Order 13382 and whose property and interests in property are
blocked pursuant to that order in connection with North Korea-related
activities are published in the Federal Register and incorporated into
OFAC's SDN List with the identifier ``[NPWMD],'' and descriptive text
``Executive Order 13810 information: Subject to blocking in connection
with North Korea-related activities''. The SDN List is accessible
through the following page on OFAC's website: www.treasury.gov/sdn.
Additional information pertaining to the SDN List can be found in
Appendix A to this chapter. See Sec. 510.411 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. The property and interests in property of persons who meet the
definition of the term Government of North Korea are blocked pursuant to
paragraph (a) of this section regardless of whether the names of such
persons are published in the Federal Register or incorporated into the
SDN List.
(c) Imposition of sanctions on foreign financial institutions. Upon
determining that a foreign financial institution has engaged in
sanctionable activity described in paragraph (b) of this section, the
Secretary of the Treasury, in consultation with the Secretary of State,
may:
[[Page 61]]
(1) 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 the foreign financial institution; or
(2) Impose one or more strict conditions on the maintaining by a
U.S. financial institution of a correspondent account or a payable-
through account in the United States for the foreign financial
institution. Such conditions may include the following:
(i) Prohibiting or restricting any provision of trade finance
through the correspondent account or payable-through account of the
foreign financial institution;
(ii) 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;
(iii) 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;
(iv) 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
(v) Prohibiting or restricting the processing of foreign exchange
transactions through the correspondent account or payable-through
account of the foreign financial institution.
(d) Applicability of prohibitions. The prohibitions in this section
apply except to the extent provided by regulations, orders, directives,
or licenses that may be issued pursuant to this part, and
notwithstanding any contract entered into or any license or permit
granted prior to the effective date.
Note 2 to Sec. 510.210: 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 or for which
the maintenance of a correspondent account or payable-through account is
subject to one or more strict conditions pursuant to this section will
be added to the Correspondent Account or Payable-Through Account
Sanctions (CAPTA) List on OFAC's website (www.treasury.gov/ofac), and
published in the Federal Register along with the applicable prohibition
or strict condition(s).
Sec. 510.211 Prohibited facilitation.
(a) Except as otherwise authorized, U.S. persons, wherever located,
are prohibited from approving, financing, facilitating, or guaranteeing
a transaction by a foreign person where the transaction by that foreign
person would be prohibited by Sec. 510.201(d), Sec. 510.206, or Sec.
510.209 if performed by a U.S. person or within the United States.
(b)(1) The prohibitions in this section with respect to Sec.
510.201(d) apply except to the extent provided by regulations, orders,
directives, or licenses that may be issued pursuant to this part, and
notwithstanding any contract entered into or any license or permit
granted prior to the effective date.
(2) The prohibitions in this section with respect to Sec. Sec.
510.206 and 510.209 apply except to the extent provided in regulations,
orders, directives, or licenses that may be issued pursuant to this part
or pursuant to the export control authorities implemented by the U.S.
Department of Commerce, and notwithstanding any contract entered into or
any license or permit granted prior to the effective date.
Sec. 510.212 Evasions; attempts; causing violations; conspiracies.
(a) Any transaction on or after the effective date that evades or
avoids, has the purpose of evading or avoiding, causes a violation of,
or attempts to violate any of the prohibitions set forth in this part is
prohibited.
(b) Any conspiracy formed to violate the prohibitions set forth in
this part is prohibited.
Sec. 510.213 Exempt transactions.
(a) United Nations Participation Act. The exemptions described in
this section do not apply to transactions involving property or
interests in property of persons whose property and interests in
property are blocked pursuant to the authority of the United Nations
Participation Act, as amended (22 U.S.C. 287c(b)) (UNPA).
Note 1 to paragraph (a):
Persons whose property and interests in property are blocked
pursuant to the authority of the
[[Page 62]]
UNPA include those listed on both OFAC's Specially Designated Nationals
and Blocked Persons List (SDN List) and the Consolidated United Nations
Security Council Sanctions List (see https://www.un.org) as well as
persons listed on the SDN List for being owned or controlled by, or
acting for or on behalf of, such persons.
(b) Personal communications. The prohibitions contained in this part
do not apply to any postal, telegraphic, telephonic, or other personal
communication that does not involve the transfer of anything of value.
(c) Information or informational materials. (1) The prohibitions
contained in this part do not apply to the importation from any country
and the exportation to any country of any information or informational
materials, as defined in Sec. 510.312, whether commercial or otherwise,
regardless of format or medium of transmission.
(2) This section does not exempt from regulation transactions
related to information or informational materials not fully created and
in existence at the date of the transactions, or to the substantive or
artistic alteration or enhancement of information or informational
materials, or to the provision of marketing and business consulting
services. Such prohibited transactions include payment of advances for
information or informational materials not yet created and completed
(with the exception of prepaid subscriptions for widely circulated
magazines and other periodical publications); provision of services to
market, produce or co-produce, create, or assist in the creation of
information or informational materials; and payment of royalties with
respect to income received for enhancements or alterations made by U.S.
persons to such information or informational materials.
(3) This section does not exempt transactions incident to the
exportation of software subject to the Export Administration
Regulations, 15 CFR parts 730 through 774, or to the exportation of
goods (including software) or technology for use in the transmission of
any data, or to the provision, sale, or leasing of capacity on
telecommunications transmission facilities (such as satellite or
terrestrial network connectivity) for use in the transmission of any
data. The exportation of such items or services and the provision, sale,
or leasing of such capacity or facilities to a person whose property and
interests in property are blocked pursuant to Sec. 510.201(a) are
prohibited.
(d) Travel. The prohibitions contained in this part do not apply to
transactions ordinarily incident to travel to or from any country,
including importation or exportation of accompanied baggage for personal
use, maintenance within any country including payment of living expenses
and acquisition of goods or services for personal use, and arrangement
or facilitation of such travel including nonscheduled air, sea, or land
voyages.
Note 2 to paragraph (d):
As of September 1, 2017, the U.S. Department of State has restricted
the use of U.S. passports to travel into, in, or through North Korea.
See 22 CFR 51.63. U.S. nationals who wish to travel to or within North
Korea for the extremely limited purposes that are set forth in federal
regulations must apply for a passport with a special validation from the
Department of State. See travel.state.gov for additional details.
(e) Official business. The prohibitions contained in Sec. Sec.
510.201(a)(1), 510.201(a)(3)(iv) through (vi) and (d), 510.206, and
510.208 through 510.211 do not apply to transactions for the conduct of
the official business of the Federal Government or the United Nations
and its Specialized Agencies, Programmes, Funds, and Related
Organizations by employees, grantees, or contractors thereof.
Note 3 to paragraph (e):
For an organizational chart listing the Specialized Agencies,
Programmes, Funds, and Related Organizations of the United Nations, see
the following page on the United Nations website: http://www.unsceb.org/
directory.
Subpart C_General Definitions
Sec. 510.300 Applicability of definitions.
The definitions in this subpart apply throughout the entire part.
Sec. 510.301 Arms or related materiel.
The term arms or related materiel means arms or related materiel of
all types, including any battle tanks, armored combat vehicles, large
caliber artillery systems, combat aircraft, attack helicopters,
warships, missiles or
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missile systems, or related materiel including spare parts.
Note 1 to Sec. 510.301: For additional guidance as to items that
constitute arms or related materiel, please see determinations by the
United Nations Security Council or its committee created pursuant to
United Nations Security Council Resolution 1718, as well as designations
by the Secretary of State of defense articles and defense services
pursuant to the Arms Export Control Act and listed on the United States
Munitions List (USML). In addition, items on the Commerce Control List
as well as certain uncontrolled items that are subject to the Export
Administration Act may be considered related materiel.
Sec. 510.302 Blocked account; blocked property.
For the purposes of this part, the terms blocked account and blocked
property shall mean:
(a) Any account or property subject to the prohibitions in Sec.
510.201(a) held in the name of the Government of North Korea, the
Workers' Party of Korea, or any other person whose property and
interests in property are blocked pursuant to Sec. 510.201(a), or in
which such person has an interest, and with respect to which payments,
transfers, exportations, withdrawals, or other dealings may not be made
or effected except pursuant to a license or other authorization from
OFAC expressly authorizing such action; and
(b) Any account or property subject to the prohibitions in Sec.
510.201(d), and with respect to which payments, transfers, exportations,
withdrawals, or other dealings may not be made or effected except
pursuant to a license or other authorization from OFAC expressly
authorizing such action.
Note 1 to Sec. 510.302: See Sec. 510.411 concerning the blocked
status of property and interests in property of an entity that is
directly or indirectly owned, whether individually or in the aggregate,
50 percent or more by one or more persons whose property and interests
in property are blocked pursuant to Sec. 510.201(a).
Sec. 510.303 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. 510.304 Effective date.
(a) The term effective date refers to the effective date of the
applicable prohibitions and directives contained in this part as
follows:
(1) With respect to transfers or other dealings in blocked property
and interests in property of the Government of North Korea, as defined
in Sec. 510.311, or the Workers' Party of Korea prohibited by Sec.
510.201(a)(1), 12:01 a.m. eastern daylight time, March 16, 2016;
(2) With respect to a person whose property and interests in
property are blocked pursuant to Sec. 510.201(a)(3)(i), 12:01 p.m.
eastern daylight time, August 30, 2010;
(3) With respect to a person whose property and interests in
property are otherwise blocked pursuant to Sec. 510.201(a), the earlier
of the date of actual or constructive notice that such person's property
and interests in property are blocked;
(4) With respect to funds subject to blocking pursuant to Sec.
510.201(d), the earlier of the date of actual or constructive notice
that funds are blocked or that a foreign bank account that the funds
originate from, are destined for, or pass through has been determined to
meet the criteria contained in Sec. 510.201(d).
(5) With respect to the prohibition set forth in Sec. 510.207, June
26, 2008;
(6) With respect to the prohibition set forth in Sec. 510.205,
12:01 a.m. eastern daylight time, April 19, 2011;
(7) With respect to the prohibitions set forth in Sec. Sec. 510.206
and 510.209, 12:01 a.m. eastern daylight time, March 16, 2016;
(8) With respect to the prohibitions set forth in Sec. 510.208,
12:01 a.m. eastern daylight time, September 21, 2017; and
(9) With respect to the prohibition set forth in Sec. 510.210,
12:01 a.m. eastern daylight time, September 21, 2017. The effective date
of a prohibition or strict condition imposed pursuant to Sec. 510.210
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
[[Page 64]]
is the earlier of the date the U.S. financial institution receives
actual or constructive notice of such prohibition, condition, or
blocking.
(b) For the purposes of this section, constructive notice is the
date that a notice of the blocking of the relevant person's property and
interests in property is published in the Federal Register.
Sec. 510.305 Entity.
The term entity means a partnership, association, trust, joint
venture, corporation, group, subgroup, or other organization.
Sec. 510.306 Financial, material, or technological support.
The term financial, material, or technological support, as used in
Sec. 510.201(a)(3)(ii)(E), (a)(3)(iii)(D), (a)(3)(iv)(G), and
(a)(3)(v)(E), means any property, tangible or intangible, including
currency, financial instruments, securities, or any other transmission
of value; weapons or related materiel; chemical or biological agents;
explosives; false documentation or identification; communications
equipment; computers; electronic or other devices or equipment;
technologies; lodging; safe houses; facilities; vehicles or other means
of transportation; or goods. ``Technologies'' as used in this definition
means specific information necessary for the development, production, or
use of a product, including related technical data such as blueprints,
plans, diagrams, models, formulae, tables, engineering designs and
specifications, manuals, or other recorded instructions.
Sec. 510.307 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. 510.308 Financial transaction.
The term financial transaction means any transfer of value involving
a financial institution.
Sec. 510.309 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 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, dealers in
precious metals, stones, or jewels, 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 OFAC.
Sec. 510.310 Foreign person.
The term foreign person means any person that is not a U.S. person.
Sec. 510.311 Government of North Korea.
The term Government of North Korea includes:
(a) The state and the Government of the Democratic People's Republic
of Korea, as well as any political subdivision, agency, or
instrumentality thereof;
(b) Any entity owned or controlled, directly or indirectly, by the
foregoing, including any corporation, partnership, association, or other
entity in which the Government of North Korea owns a 50 percent or
greater interest or a controlling interest, and any entity which is
otherwise controlled by that government;
(c) Any person that is, or has been, acting or purporting to act,
directly or indirectly, for or on behalf of any of the foregoing; and
(d) Any other person determined by OFAC to be included within
paragraphs (a) through (c) of this section.
Note 1 to Sec. 510.311: The names of persons that OFAC has
determined fall within this
[[Page 65]]
definition are published in the Federal Register and incorporated into
OFAC's Specially Designated Nationals and Blocked Persons List (SDN
List) with the identifier ``[DPRK].'' The SDN List is accessible through
the following page on OFAC's website: www.treasury.gov/sdn. However, the
property and interests in property of persons who meet the definition of
the term Government of North Korea are blocked pursuant to Sec.
510.201(a) regardless of whether the names of such persons are published
in the Federal Register or incorporated into the SDN List.
Note 2 to Sec. 510.311: Section 501.807 of this chapter describes
the procedures to be followed by persons seeking administrative
reconsideration of OFAC's determination that they fall within the
definition of the term Government of North Korea.
Sec. 510.312 Information or informational materials.
(a)(1) The term information or informational materials includes
publications, films, posters, phonograph records, photographs,
microfilms, microfiche, tapes, compact disks, CD ROMs, artworks, and
news wire feeds.
(2) To be considered information or informational materials,
artworks must be classified under heading 9701, 9702, or 9703 of the
Harmonized Tariff Schedule of the United States.
(b) The term information or informational materials, with respect to
exports, does not include items:
(1) That were, as of April 30, 1994, or that thereafter become,
controlled for export pursuant to section 5 of the Export Administration
Act of 1979, 50 U.S.C. App. 2401-2420 (1979) (EAA), or section 6 of the
EAA to the extent that such controls promote the nonproliferation or
antiterrorism policies of the United States; or
(2) With respect to which acts are prohibited by 18 U.S.C. chapter
37.
Sec. 510.313 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. 510.314 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. 510.315 Licenses; general and specific.
(a) Except as otherwise provided in this part, the term license
means any license or authorization contained in or issued pursuant to
this part.
(b) The term general license means any license or authorization the
terms of which are set forth in subpart E of this part or made available
on OFAC's website: www.treasury.gov/ofac.
(c) The term specific license means any license or authorization
issued pursuant to this part, but not set forth in subpart E of this
part or made available on OFAC's website: www.treasury.gov/ofac.
Note 1 to Sec. 510.315: See Sec. 501.801 of this chapter on
licensing procedures.
Sec. 510.316 Loans or other extensions of credit.
The term loans or other extensions of credit 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: Overdrafts; currency swaps;
purchases of securities or debt securities, including securities from or
issued by the Government of North Korea; 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 or extended to a prohibited borrower or prohibited
recipient; the issuance of standby letters of credit; and drawdowns on
existing lines of credit.
Sec. 510.317 Luxury goods.
The term luxury goods includes those items listed in 15 CFR
746.4(b)(1) and supplement no. 1 to part 746 and similar items.
Sec. 510.318 New investment.
The term new investment means a transaction after 12:01 a.m. eastern
daylight March 16, 2016 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. 510.316.
[[Page 66]]
Sec. 510.319 North Korean person.
(a) The term North Korean person means any North Korean citizen,
North Korean permanent resident alien, or entity organized under the
laws of North Korea or any jurisdiction within North Korea (including
foreign branches).
(b) For the purposes of Sec. 510.201(a)(3)(v), the term North
Korean person shall not include any United States citizen, any permanent
resident alien of the United States, any alien lawfully admitted to the
United States, or any alien holding a valid United States visa.
Sec. 510.320 OFAC.
The term OFAC means the Department of the Treasury's Office of
Foreign Assets Control.
Sec. 510.321 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. 510.322 Person.
The term person means an individual or entity.
Sec. 510.323 Property; property interest.
The terms property and property interest include money, checks,
drafts, bullion, bank deposits, savings accounts, debts, indebtedness,
obligations, notes, guarantees, debentures, stocks, bonds, coupons, any
other financial instruments, bankers acceptances, mortgages, pledges,
liens or other rights in the nature of security, warehouse receipts,
bills of lading, trust receipts, bills of sale, any other evidences of
title, ownership, or indebtedness, letters of credit and any documents
relating to any rights or obligations thereunder, powers of attorney,
goods, wares, merchandise, chattels, stocks on hand, ships, goods on
ships, real estate mortgages, deeds of trust, vendors' sales agreements,
land contracts, leaseholds, ground rents, real estate and any other
interest therein, options, negotiable instruments, trade acceptances,
royalties, book accounts, accounts payable, judgments, patents,
trademarks or copyrights, insurance policies, safe deposit boxes and
their contents, annuities, pooling agreements, services of any nature
whatsoever, contracts of any nature whatsoever, and any other property,
real, personal, or mixed, tangible or intangible, or interest or
interests therein, present, future, or contingent.
Sec. 510.324 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. 510.325 United States.
The term United States means the United States, its territories and
possessions, and all areas under the jurisdiction or authority thereof.
[[Page 67]]
Sec. 510.326 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. 510.327 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 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. 510.328 U.S. financial institution.
The term U.S. financial institution means any U.S. entity (including
its foreign branches) that is engaged in the business of accepting
deposits, making, granting, transferring, holding, or brokering loans or
other extensions of credit, or purchasing or selling foreign exchange,
securities, commodity futures or options, or procuring purchasers and
sellers thereof, as principal or agent. It includes depository
institutions, banks, savings banks, trust companies, securities brokers
and dealers, 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. 510.329 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 1010.100(ff)(5), and that is registered pursuant to 31
CFR 1022.380.
Sec. 510.330 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.
Subpart D_Interpretations
Sec. 510.401 Reference to amended sections.
(a) Reference to any section in this part is a reference to the same
as currently amended, unless the reference includes a specific date. See
44 U.S.C. 1510.
(b) Reference to any ruling, order, instruction, direction or
license issued pursuant to this part is a reference to the same as
currently amended unless otherwise so specified.
Sec. 510.402 Effect of amendment.
Unless otherwise specifically provided, any amendment, modification,
or revocation of any provision in or appendix to this part or chapter or
of any order, regulation, ruling, instruction, or license issued by OFAC
does not affect any act done or omitted, or any
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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 the Government of North Korea, the Workers' Party of
Korea, or any other person whose property and interests in property are
blocked pursuant to Sec. 510.201(a), such property shall no longer be
deemed to be property blocked pursuant to Sec. 510.201(a), unless there
exists in the property another interest that is blocked pursuant to
Sec. 510.201(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. 510.201(a), such property shall be deemed to be property in which
such person has an interest and therefore blocked.
Sec. 510.404 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 the Government of North
Korea, the Workers' Party of Korea, or any other person whose property
and interests in property are blocked pursuant to Sec. 510.201(a);
(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; or
(3) An ordinarily incident transaction, not explicitly authorized
within the terms of the license, with a foreign financial institution
that is subject to sanctions pursuant to Sec. 510.210 when the
transaction is one that is prohibited by Sec. 510.210.
(b) For example, a license authorizing a person to complete a
securities sale involving Company A, whose property and interests in
property are blocked pursuant to Sec. 510.201(a), also authorizes other
persons to engage in activities that are ordinarily incident and
necessary to complete the sale, including transactions by the buyer,
broker, transfer agents, and banks, provided that such other persons are
not themselves persons whose property and interests in property are
blocked pursuant to Sec. 510.201(a).
Sec. 510.405 Exportation and reexportation of goods, services, or technology.
(a) The prohibition on the exportation and reexportation of goods,
services, or technology contained in Sec. 510.206 applies to services
performed on behalf of a person in North Korea or the Government of
North Korea or where the benefit of such services is otherwise received
in North Korea, if such services are performed:
(1) In the United States; or
(2) Outside the United States by a U.S. person, including by a
foreign 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 North Korea is presumed to be received in
North Korea.
(c) The prohibitions contained in Sec. 510.201 apply to services
performed in the United States or by U.S. persons, wherever located,
including by a foreign branch of an entity located in the United States:
(1) On behalf of or for the benefit of the Government of North
Korea, the Workers' Party of Korea, or any other person whose property
and interests in property are blocked pursuant to Sec. 510.201(a); or
(2) With respect to property interests of the Government of North
Korea, the Workers' Party of Korea, or any other person whose property
and interests in
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property are blocked pursuant to Sec. 510.201(a).
(d)(1) For example, U.S. persons may not, except as authorized by or
pursuant to this part, provide legal, accounting, financial, brokering,
freight forwarding, transportation, public relations, or other services
to any person in North Korea or to the Government of North Korea, the
Workers' Party of Korea, or any other person whose property and
interests in property are blocked pursuant to Sec. 510.201(a).
(2) For example, a U.S. person is engaged in a prohibited
exportation of services to North Korea when it extends credit to a
third-country firm specifically to enable that firm to manufacture goods
for sale to North Korea or the Government of North Korea.
Note 1 to Sec. 510.405: See Sec. Sec. 510.507 and 510.509 on
licensing policy with regard to the provision of certain legal and
emergency medical services.
Sec. 510.406 Offshore transactions involving blocked property.
The prohibitions in Sec. 510.201 on transactions or dealings
involving blocked property (including a blocked account) apply to
transactions by any U.S. person in a location outside the United States
with respect to property held in the name of the Government of North
Korea, the Workers' Party of Korea, or any other person whose property
and interests in property are blocked pursuant to Sec. 510.201(a) or
any property blocked by Sec. 510.201(d).
Sec. 510.407 Payments from blocked accounts to satisfy
obligations prohibited.
Pursuant to Sec. 510.201, no debits may be made to a blocked
account to pay obligations to U.S. persons or other persons, except as
authorized by or pursuant to this part.
Note 1 to Sec. 510.407: See also Sec. 510.502(e), which provides
that no license or other authorization contained in or issued pursuant
to this part authorizes transfers of or payments from blocked property
or debits to blocked accounts unless the license or other authorization
explicitly authorizes the transfer of or payment from blocked property
or the debit to a blocked account.
Sec. 510.408 Charitable contributions.
Unless specifically authorized by OFAC pursuant to this part, no
charitable contribution of funds, goods, services, or technology,
including contributions to relieve human suffering, such as food,
clothing, or medicine, may be made by, to, or for the benefit of, or
received from, the Government of North Korea, the Workers' Party of
Korea, or any other person whose property and interests in property are
blocked pursuant to Sec. 510.201(a). For the purposes of this part, a
contribution is made by, to, or for the benefit of, or received from,
the Government of North Korea, the Workers' Party of Korea, or any other
person whose property and interests in property are blocked pursuant to
Sec. 510.201(a) if made by, to, or in the name of, or received from or
in the name of, such a person; if made by, to, or in the name of, or
received from or in the name of, an entity or individual acting for or
on behalf of, or owned or controlled by, such a person; or if made in an
attempt to violate, to evade, or to avoid the bar on the provision of
contributions by, to, or for the benefit of such a person, or the
receipt of contributions from such a person.
Note 1 to Sec. 510.408: Separate authorization by the Department of
Commerce under the Export Administration Regulations (EAR), 15 CFR part
730 through 774, may be required if the charitable contributions are
subject to the EAR.
Sec. 510.409 Credit extended and cards issued by financial institutions
to a person whose property and interests in property are blocked.
The prohibition in Sec. 510.201 on dealing in property subject to
that section and the prohibition in Sec. 510.206 on exporting services
to North Korea prohibit U.S. financial institutions from performing
under any existing credit agreements, including charge cards, debit
cards, or other credit facilities issued by a financial institution to
the Government of North Korea, the Workers' Party of Korea, or any other
person whose property and interests in property are blocked pursuant to
Sec. 510.201(a).
Sec. 510.410 Setoffs prohibited.
A setoff against blocked property (including a blocked account),
whether by
[[Page 70]]
a U.S. bank or other U.S. person, is a prohibited transfer under Sec.
510.201 if effected after the effective date.
Sec. 510.411 Entities owned by one or more persons whose property
and interests in property are blocked.
(a) Persons whose property and interests in property are blocked
pursuant to Sec. 510.201(a) have an interest in all property and
interests in property of an entity in which such persons directly or
indirectly own, whether individually or in the aggregate, a 50 percent
or greater interest. The property and interests in property of such an
entity, therefore, are blocked, and such an entity is a person whose
property and interests in property are blocked pursuant to Sec.
510.201(a), regardless of whether the name of the entity is incorporated
into OFAC's Specially Designated Nationals and Blocked Persons List (SDN
List).
(b) This section, which deals with the consequences of ownership of
entities, in no way limits the definition of the Government of North
Korea in Sec. 510.311, which includes within its definition other
persons whose property and interests in property are blocked but who are
not on the SDN List.
Sec. 510.412 Facilitation; change of policies and procedures;
referral of business opportunities offshore.
With respect to Sec. 510.211, a prohibited facilitation or approval
of a transaction by a foreign person occurs, among other instances, when
a U.S. 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 North Korea or
the Government of North Korea without the approval of the U.S. person,
where such transaction previously required approval by the U.S. person
and such transaction by the foreign affiliate would be prohibited by
this part if performed directly by a U.S. person or from the United
States;
(b) Refers to a foreign person purchase orders, requests for bids,
or similar business opportunities involving North Korea or the
Government of North Korea 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 U.S. person or from
the United States.
Sec. 510.413 Significant transaction(s).
In determining, for purposes of Sec. Sec. 510.201(a)(3)(vi) and
510.210, whether a transaction(s) is significant, the Secretary of the
Treasury or the Secretary's designee may consider the totality of the
facts and circumstances. As a general matter, the Department of the
Treasury may consider some or all of the following factors:
(a) Size, number, and frequency. The size, number, and frequency of
transaction(s) over a period of time, including whether the
transaction(s) is increasing or decreasing over time and the rate of
increase or decrease.
(b) Nature. The nature of the transaction(s), including the type,
complexity, and commercial purpose of the transaction(s).
(c) Level of awareness; pattern of conduct. (1) Whether the
transaction(s) is performed with the involvement or approval of
management or only by clerical personnel; and
(2) Whether the transaction(s) 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) and North Korea or a blocked person
described in Sec. 510.201.
(e) Impact. The impact of the transaction(s) on the objectives of
Executive Order 13810 including the economic or other benefit conferred
or attempted to be conferred on North Korea or a blocked person
described in Sec. 510.201.
(f) Deceptive practices. Whether the transaction(s) involves an
attempt to obscure or conceal the actual parties or true nature of the
transaction(s) to evade sanctions.
(g) Other relevant factors. Such other factors that the Department
of the Treasury deems relevant on a case-by-
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case basis in determining the significance of a transaction(s).
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. General licenses and
statements of licensing policy relating to this part also may be
available through the North Korea sanctions page on OFAC's website:
www.treasury.gov/ofac.
Sec. 510.502 Effect of license or other authorization.
(a) No license or other authorization contained in this part, or
otherwise issued by OFAC, authorizes or validates any transaction
effected prior to the issuance of such license or other authorization,
unless specifically provided in such license or authorization.
(b) No regulation, ruling, instruction, or license authorizes any
transaction prohibited under this part unless the regulation, ruling,
instruction, or license is issued by OFAC and specifically refers to
this part. No regulation, ruling, instruction, or license referring to
this part shall be deemed to authorize any transaction prohibited by any
other part of this chapter unless the regulation, ruling, instruction,
or license specifically refers to such part.
(c) Any regulation, ruling, instruction, or license authorizing any
transaction otherwise prohibited under this part has the effect of
removing a prohibition contained in this part from the transaction, but
only to the extent specifically stated by its terms. Unless the
regulation, ruling, instruction, or license otherwise specifies, such an
authorization does not create any right, duty, obligation, claim, or
interest in, or with respect to, any property that would not otherwise
exist under ordinary principles of law.
(d) Nothing contained in this part shall be construed to supersede
the requirements established under any other provision of law or to
relieve a person from any requirement to obtain a license or other
authorization from another department or agency of the U.S. Government
in compliance with applicable laws and regulations subject to the
jurisdiction of that department or agency. For example, exports of
goods, services, or technical data that are not prohibited by this part
or that do not require a license by OFAC nevertheless may require
authorization by the U.S. Department of Commerce, the U.S. Department of
State, or other agencies of the U.S. Government.
(e) No license or other authorization contained in or issued
pursuant to this part authorizes transfers of or payments from blocked
property or debits to blocked accounts unless the license or other
authorization explicitly authorizes the transfer of or payment from
blocked property or the debit to a blocked account.
(f) Any payment relating to a transaction authorized in or pursuant
to this part that is routed through the U.S. financial system should
reference the relevant OFAC general or specific license authorizing the
payment to avoid the blocking or rejection of the transfer.
Sec. 510.503 Exclusion from licenses.
OFAC reserves the right to exclude any person, property,
transaction, or class thereof from the operation of any license or from
the privileges conferred by any license. OFAC also reserves the right to
restrict the applicability of any license to particular persons,
property, transactions, or classes thereof. Such actions are binding
upon actual or constructive notice of the exclusions or restrictions.
Sec. 510.504 Payments and transfers to blocked accounts
in U.S. financial institutions.
Any payment of funds or transfer of credit in which the Government
of North Korea, the Workers' Party of Korea, or any other person whose
property and interests in property are blocked pursuant to Sec.
510.201(a) has any interest that comes within the possession or control
of a U.S. financial institution, or any payment of funds or
[[Page 72]]
transfer of credit, subject to Sec. 510.201(d) 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 1 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.
(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 Investment and reinvestment of certain funds.
Subject to the requirements of Sec. 510.203, U.S. financial
institutions are authorized to invest and reinvest assets blocked
pursuant to Sec. 510.201, 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 the Government of North Korea or any
other person whose property and interests in property are blocked
pursuant to Sec. 510.201(a).
Sec. 510.507 Provision of certain legal services.
(a) The provision of the following legal services to or on behalf of
the Government of North Korea, the Workers' Party of Korea, any other
person whose property and interests in property are blocked pursuant to
Sec. 510.201(a) or any further Executive orders relating to the
national emergency declared in Executive Order 13466 of June 26, 2008,
or any person in North Korea, or in circumstances in which the benefit
is otherwise received in North Korea, is authorized, provided that
receipt of payment of professional fees and reimbursement of incurred
expenses must be authorized: Pursuant to Sec. 510.508, which authorizes
certain payments for legal services from funds originating outside the
United States; via specific license; or otherwise pursuant to this part:
(1) Provision of legal advice and counseling on the requirements of
and compliance with the laws of the United States or any jurisdiction
within the United States, provided that such advice and counseling are
not provided to facilitate transactions in violation of this part;
(2) Representation of persons named as defendants in or otherwise
made parties to legal, arbitration, or administrative proceedings before
any U.S. federal, state, or local court or agency;
(3) Initiation and conduct of legal, arbitration, or administrative
proceedings before any U.S. federal, state, or local court or agency;
(4) Representation of persons before any U.S. federal, state, or
local court
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or agency with respect to the imposition, administration, or enforcement
of U.S. sanctions against such persons or North Korea; and
(5) Provision of legal services in any other context in which
prevailing U.S. law requires access to legal counsel at public expense.
(b) The provision of any other legal services to or on behalf of the
Government of North Korea, the Workers' Party of Korea, any other person
whose property and interests in property are blocked pursuant to Sec.
510.201(a) or any further Executive orders relating to the national
emergency declared in Executive Order 13466 of June 26, 2008, or any
person in North Korea, or in circumstances in which the benefit is
otherwise received in North Korea, not otherwise authorized in this
part, requires the issuance of a specific license.
(c) Consistent with Sec. 510.404, U.S. persons do not need to
obtain specific authorization to provide related services, such as
making filings and providing other administrative services, that are
ordinarily incident to the provision of services authorized by paragraph
(a) of this section. Additionally, U.S. persons who provide services
authorized by paragraph (a) of this section do not need to obtain
specific authorization to contract for related services that are
ordinarily incident to the provision of those legal services, such as
those provided by private investigators or expert witnesses, or to pay
for such services.
(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. 510.201, or any further Executive orders relating to
the national emergency declared in Executive Order 13466 of June 26,
2008, is prohibited unless licensed pursuant to this part.
Note 1 to Sec. 510.507: Pursuant to part 501, subpart E, of this
chapter, U.S. persons seeking administrative reconsideration or judicial
review of their designation or the blocking of their property and
interests in property may apply for a specific license from OFAC to
authorize the release of certain blocked funds for the payment of
professional fees and reimbursement of incurred expenses for the
provision of such legal services where alternative funding sources are
not available. For more information, see OFAC's Guidance on the Release
of Limited Amounts of Blocked Funds for Payment of Legal Fees and Costs
Incurred in Challenging the Blocking of U.S. Persons in Administrative
or Civil Proceedings, which is available on OFAC's website at:
www.treasury.gov/ofac.
Sec. 510.508 Payments for legal services from funds originating
outside the United States.
(a) Professional fees and incurred expenses. Receipt of payment of
professional fees and reimbursement of incurred expenses for the
provision of legal services authorized pursuant to Sec. 510.507(a) to
or on behalf of the Government of North Korea, the Workers' Party of
Korea, any other person whose property and interests in property are
blocked pursuant to Sec. 510.201(a) or any further Executive orders
relating to the national emergency declared in Executive Order 13466 of
June 26, 2008, or any person in North Korea, or in circumstances in
which the benefit is otherwise received in North Korea, is authorized
from funds originating outside the United States, provided that the
funds received by U.S. persons as payment of professional fees and
reimbursement of incurred expenses for the provision of legal services
authorized pursuant to Sec. 510.507(a) do not originate from:
(1) A source within the United States;
(2) Any source, wherever located, within the possession or control
of a U.S. person; or
(3) Any individual or entity, other than the person on whose behalf
the legal services authorized pursuant to Sec. 510.507(a) are to be
provided, whose property and interests in property are blocked pursuant
to any part of this chapter or any Executive order or statute.
Note 1 to paragraph (a):
Nothing in this paragraph (a) authorizes payments for legal services
using funds in which any other person whose property and interests in
property are blocked pursuant to Sec. 510.201(a), any other part of
this chapter, or any Executive order has an interest.
(b) Reports. (1) U.S. persons who receive payments pursuant to
paragraph
[[Page 74]]
(a) of this section must submit annual reports no later than 30 days
following the end of the calendar year during which the payments were
received providing information on the funds received. Such reports shall
specify:
(i) The individual or entity from whom the funds originated and the
amount of funds received; and
(ii) If applicable:
(A) The names of any individuals or entities providing related
services to the U.S. person receiving payment in connection with
authorized legal services, such as private investigators or expert
witnesses;
(B) A general description of the services provided; and
(C) The amount of funds paid in connection with such services.
(2) The reports, which must reference this section, are to be
submitted to OFAC using one of the following methods:
(i) Email (preferred method): [email protected];
or
(ii) U.S. mail: OFAC Regulations Reports, Office of Foreign Assets
Control, U.S. Department of the Treasury, 1500 Pennsylvania Avenue NW,
Freedman's Bank Building, Washington, DC 20220.
Sec. 510.509 Emergency medical services.
The provision and receipt of nonscheduled emergency medical services
that are otherwise prohibited by this part or any further Executive
orders relating to the national emergency declared in Executive Order
13466 of June 26, 2008 are authorized.
Sec. 510.510 North Korean mission to the United Nations and employees
of the United Nations.
(a) Except as provided in paragraph (c) of this section, the
provision of goods or services in the United States to the official
mission of the Government of North Korea to the United Nations (the
mission) and payment for such goods or services 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 the employees of the
mission, their families, or persons forming part of their household, and
are not for resale;
(2) The transaction does not involve the purchase, sale, financing,
or refinancing of real property;
(3) The transaction does not involve the purchase, sale, financing,
or refinancing of luxury goods;
(4) The transaction is not otherwise prohibited by law; and
(5) Funds transfers to or from the mission or the employees of the
mission, their families, or persons forming part of their household are
conducted through an account at a U.S. financial institution
specifically licensed by OFAC.
(b) Except as provided in paragraph (c) of this section, the
provision of goods or services in the United States to the employees of
the mission or of the United Nations, their families, or persons forming
part of their household, and payment for such goods or services, are
authorized, provided that:
(1) The goods or services are for personal use of the employees of
the mission or of the United Nations, their families, or persons forming
part of their household, and are not for resale;
(2) The transaction does not involve the purchase, sale, financing,
or refinancing of luxury goods;
(3) The transaction is not otherwise prohibited by law; and
(4) Funds transfers to or from employees of the mission, their
families, or persons forming part of their household are conducted
through an account at a U.S. financial institution specifically licensed
by OFAC.
(c) This section does not authorize U.S. financial institutions to
open and operate accounts for, or extend credit to, the mission of the
Government of North Korea or to the employees of the mission, their
families, or persons forming part of their household. U.S. financial
institutions are required to obtain specific licenses to operate
accounts for, or extend credit to, the mission or to the employees of
the mission, their families, or persons forming part of their household.
Note 1 to Sec. 510.510: Nothing in this section authorizes the
transfer of any property to the Government of North Korea, the Workers'
Party of Korea, or any other person whose property and interests in
property are blocked pursuant to Sec. 510.201(a) other than the
mission, nor does this section authorize any debit to a blocked account.
[[Page 75]]
Sec. 510.511 Noncommercial, personal remittances.
(a)(1) U.S. persons are authorized to send and receive and 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 North Korea or for or on behalf of
an individual ordinarily resident in North Korea, other than an
individual whose property and interests in property are blocked pursuant
to Sec. 510.201(a), in cases in which the transfers involve
noncommercial, personal remittances, up to a maximum of $5,000 per year.
(2) Noncommercial, personal remittances do not include charitable
donations of funds to or for the benefit of an entity or funds transfers
for use in supporting or operating a business, including a family-owned
business.
(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) An individual who is a U.S. person is authorized to carry funds
as a noncommercial, personal remittance, as described in paragraph (a)
of this section, to an individual in North Korea or ordinarily resident
in North Korea, other than an individual whose property and interests in
property are blocked pursuant to Sec. 510.201(a), provided that the
individual who is a U.S. person is carrying the funds on his or her
behalf, not on behalf of another person.
Sec. 510.512 Certain services in support of nongovernmental
organizations' activities.
(a) Nongovernmental organizations are authorized to export or
reexport services to North Korea that would otherwise be prohibited by
this part in support of the following not-for-profit activities:
(1) Activities to support humanitarian projects to meet basic human
needs in North Korea, including drought, flood, and disaster relief; the
distribution of food, medicine, and clothing intended to be used to
relieve human suffering; the provision of shelter; the provision of
clean water, sanitation, and hygiene assistance; the provision of
health-related services; assistance for individuals with disabilities;
and environmental programs;
(2) Activities to support democracy building in North Korea,
including rule of law, citizen participation, government accountability,
universal human rights and fundamental freedoms, access to information,
and civil society development projects;
(3) Activities to support non-commercial development projects
directly benefiting the North Korean people, including preventing
infectious disease and promoting maternal/child health, sustainable
agriculture, and clean water assistance; and
(4) Activities to support environmental protection, including the
preservation and protection of threatened or endangered species and the
remediation of pollution or other environmental damage.
(b) Nongovernmental organizations are authorized to export or
reexport to North Korea from a third country food, as defined in
paragraph (f)(1) of this section, and medicine, as defined in paragraph
(f)(2) of this section, in support of the activities authorized in
paragraph (a) of this section, provided that the food and medicine are
not subject to the Export Administration Regulations (15 CFR parts 730
through 774) (EAR). For export or reexport by a U.S. person to North
Korea from a third country of other items that are not subject to the
EAR, a specific license from OFAC is required.
Note 1 to paragraph (b):
Pursuant to 15 CFR 746.4(a), a license from the Department of
Commerce is required to export or reexport any item subject to the EAR
to North Korea, except food and medicine designated as EAR99.
Note 2 to paragraphs (a) and (b):
The authorizations in paragraphs (a) and (b) of this section do not
eliminate the need to comply with other applicable provisions of law,
including any requirements of agencies other than the Department of the
Treasury's Office of Foreign Assets Control. Such requirements include
the EAR administered by the
[[Page 76]]
Department of Commerce and the International Traffic in Arms Regulations
(22 CFR parts 120 through 130) administered by the Department of State.
(c) 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 on behalf of U.S. or third-country
nongovernmental organizations, including transfers of funds to or from
North Korea, in support of the activities authorized by paragraphs (a)
and (b) of this section.
(d) Nongovernmental organizations are authorized to engage in
transactions with the Government of North Korea that are necessary for
the activities authorized by paragraphs (a) and (b) of this section,
including payment of reasonable and customary taxes, fees, and import
duties to, and purchase or receipt of permits, licenses, or public
utility services from, the Government of North Korea.
Note 3 to paragraph (d):
This paragraph (d) only authorizes nongovernmental organizations to
conduct limited transactions with the Government of North Korea that are
necessary for the activities described in paragraphs (a) and (b) of this
section, such as payment of reasonable and customary taxes and other
fees. Partnerships and partnership agreements between nongovernmental
organizations and the Government of North Korea or other blocked persons
that are necessary for nongovernmental organizations to provide
authorized services are not permitted without a specific license from
OFAC.
(e) Except as authorized in paragraph (d) of this section, this
section does not authorize the exportation or reexportation of services
to, charitable donations to or for the benefit of, or any other
transactions involving the Government of North Korea, the Workers' Party
of Korea, or any other person whose property and interests in property
are blocked pursuant to Sec. 510.201(a). Specific licenses may be
issued on a case-by-case basis for these purposes.
(f)(1) For purposes of this section, the term food means items that
are consumed by and provide nutrition to humans and animals, and seeds,
with the exception of castor bean seeds, that germinate into items that
will be consumed by and provide nutrition to humans and animals.
Examples of ``food'' include processed or unprocessed food items for
human consumption, feed, vitamins, minerals, food additives, dietary
supplements, and containers of drinking water. The term food does not
include livestock, cigarettes, alcoholic beverages, gum, castor beans,
castor bean seeds, certified pathogen-free eggs (unfertilized or
fertilized), dried egg albumin, live animals (excluding cattle embryos),
Rosary/Jequirity peas, non-food-grade gelatin powder, peptones and their
derivatives, super absorbent polymers, western red cedar, and all
fertilizers.
(2) The term medicine means an item that falls within the definition
of the term ``drug'' in section 201 of the Federal Food, Drug, and
Cosmetic Act (21 U.S.C. 321) and that, in the case of an item subject to
the EAR, is designated as EAR99 or, in the case of an item not subject
to the EAR, is not listed under any multilateral export control regime.
Sec. 510.513 Official business of the Federal Government.
All transactions otherwise prohibited by the provisions of this
part, other than Sec. Sec. 510.201(a)(1), (a)(3)(iv) through (vi), and
(d), 510.206, and 510.208 through 510.211, that are for the conduct of
the official business of the Federal Government by employees, grantees,
or contractors thereof are authorized.
Note 1 to Sec. 510.513: Section 510.213(e) exempts transactions for
the conduct of the official business of the Federal Government by
employees, grantees, or contractors thereof to the extent such
transactions are subject to the prohibitions contained in Sec. Sec.
510.201(a)(1), (a)(3)(iv) through (vi), and (d), 510.206, and 510.208
through 510.211.
Sec. 510.514 Official activities of international organizations.
All transactions and activities otherwise prohibited by the
provisions of this part, other than Sec. Sec. 510.201(a)(1), (a)(3)(iv)
through (vi), and (d), 510.206, and 510.208 through 510.211, that are
for the conduct of the official business of the United Nations and its
Specialized Agencies, Programmes, Funds, and Related Organizations by
employees, contractors, or grantees thereof are authorized.
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Note 1 to Sec. 510.514: For an organizational chart listing the
Specialized Agencies, Programmes, Funds, and Related Organizations of
the United Nations, see the following page on the United Nations
website: http://www.unsceb.org/directory.
Note 2 to Sec. 510.514: Section 510.213(e) exempts transactions for
the conduct of the official business of the United Nations by employees,
grantees, or contractors thereof to the extent such transactions are
subject to the prohibitions contained in Sec. Sec. 510.201(a)(1),
(a)(3)(iv) through (vi), and (d), 510.206, and 510.208 through 510.211.
Note 3 to Sec. 510.514: Separate authorization from the Department
of Commerce may be required for the export or reexport of items related
to such transactions and activities, if the items are subject to the
Export Administration Regulations, 15 CFR parts 730 through 744.
Sec. 510.515 Third-country diplomatic and consular funds transfers.
(a) Except as provided in paragraph (b) of this section, U.S.
depository institutions, U.S.-registered brokers or dealers in
securities, and U.S.-registered money transmitters are authorized to
process funds transfers necessary for the operating expenses or other
official business of third-country diplomatic or consular missions in
North Korea.
(b) This section does not authorize funds transfers involving
accounts blocked pursuant to Sec. 510.201(d).
Sec. 510.516 Transactions related to telecommunications and mail.
(a)(1) Except as provided in paragraph (a)(2) of this section, all
transactions necessary for the receipt and transmission of
telecommunications involving North Korea are authorized.
(2) This section does not authorize:
(i) The provision, sale, or lease of telecommunications equipment or
technology; or
(ii) The provision, sale, or lease of capacity on telecommunications
transmission facilities (such as satellite or terrestrial network
connectivity).
(b) All transactions of common carriers incident to the receipt or
transmission of mail and packages between the United States and North
Korea are authorized provided that the importation or exportation of
such mail and packages is exempt from or authorized pursuant to this
part.
Sec. 510.517 Certain transactions related to patents, trademarks,
copyrights, and other intellectual property.
(a) All of the following transactions in connection with a patent,
trademark, copyright, or other form of intellectual property protection
in the United States or North Korea are authorized, including
exportation of services to North Korea, payment for such services, and
payment to persons in North Korea directly connected to such
intellectual property protection:
(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 any opposition or infringement
proceeding with respect to a patent, trademark, copyright, or other form
of intellectual property protection, or the entrance of a defense to any
such proceeding.
(b) This section authorizes the payment of fees to the U.S.
Government or the Government of North Korea, and of the reasonable and
customary fees and charges to attorneys or representatives within the
United States or North Korea, in connection with the transactions
authorized in paragraph (a) of this section, except that payment
effected pursuant to the terms of this paragraph (b) may not be made
from a blocked account.
Sec. 510.518 Calling of certain vessels and landing of certain aircraft.
(a) Vessels and aircraft in which a foreign person has an interest
that have called or landed at a port or place in North Korea within the
previous 180 days, and vessels in which a foreign person has an interest
that have engaged in a ship-to-ship transfer with such a vessel within
the previous 180 days, are authorized to call or land at a port or place
in the United States in the following circumstances only:
(1) The vessel is in distress and seeks refuge in the United States;
[[Page 78]]
(2) The vessel's call at a port in North Korea was due solely to its
distress and the resulting need to seek refuge;
(3) The aircraft is engaging in a nontraffic stop or an emergency
landing in the United States; or
(4) The aircraft's landing in North Korea was due solely to an
emergency landing.
(b) For purposes of this section, a nontraffic stop includes a stop
for any purpose other than taking on or discharging cargo, passengers,
or mail.
Sec. 510.519 Transactions related to closing a correspondent
or payable-through account.
(a) During the 10-day period beginning on the effective date of the
prohibition in Sec. 510.210 on the opening or maintaining of a
correspondent account or a payable-through account for a foreign
financial institution listed on the Correspondent Account or Payable-
Through Account Sanctions (CAPTA) List, 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 OFAC 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 CAPTA List. 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. The reports, which must reference this
section, are to be submitted to OFAC using one of the following methods:
(1) Email (preferred method): [email protected]; or
(2) U.S. mail: Attention: Office of Compliance and Enforcement,
Office of Foreign Assets Control, U.S. Department of the Treasury, 1500
Pennsylvania Avenue NW, Freedman's Bank Building, Washington, DC 20220.
(c) Specific licenses may be issued on a case-by-case basis to
authorize transactions outside the scope or time period authorized in
paragraph (a) of this section 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 CAPTA List. 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 CAPTA List.
Note 1 to Sec. 510.519: 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
CAPTA List. See Sec. 510.101.
Subpart F_Reports
Sec. 510.601 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 79]]
Subpart G_Penalties and Finding of Violation
Sec. 510.701 Penalties.
(a) Section 206 of the International Emergency Economic Powers Act
(50 U.S.C. 1705) (IEEPA) is applicable to violations of the provisions
of any license, ruling, regulation, order, directive, or instruction
issued by or pursuant to the direction or authorization of the Secretary
of the Treasury pursuant to this part or otherwise under IEEPA.
(1) A civil penalty not to exceed the amount set forth in section
206 of IEEPA may be imposed on any person who violates, attempts to
violate, conspires to violate, or causes a violation of any license,
order, regulation, or prohibition issued under IEEPA.
Note 1 to paragraph (a)(1):
IEEPA provides for a maximum civil penalty not to exceed the greater
of $295,141 or an amount that is twice the amount of the transaction
that is the basis of the violation with respect to which the penalty is
imposed.
(2) A person who willfully commits, willfully attempts to commit,
willfully conspires to commit, or aids or abets in the commission of a
violation of any license, order, regulation, or prohibition may, upon
conviction, be fined not more than $1,000,000, or if a natural person,
be imprisoned for not more than 20 years, or both.
(b)(1) The civil penalties provided in IEEPA are subject to
adjustment pursuant to the Federal Civil Penalties Inflation Adjustment
Act of 1990 (Pub. L. 101-410, as amended, 28 U.S.C. 2461 note).
(2) The criminal penalties provided in IEEPA are subject to
adjustment pursuant to 18 U.S.C. 3571.
(c) Pursuant to 18 U.S.C. 1001, whoever, in any matter within the
jurisdiction of the executive, legislative, or judicial branch of the
government of the United States, knowingly and willfully falsifies,
conceals, or covers up by any trick, scheme, or device a material fact;
or makes any materially false, fictitious, or fraudulent statement or
representation; or makes or uses any false writing or document knowing
the same to contain any materially false, fictitious, or fraudulent
statement or entry shall be fined under title 18, United States Code,
imprisoned, or both.
(d) Section 5 of the United Nations Participation Act, as amended
(22 U.S.C. 287c(b)) (UNPA), provides that any person who willfully
violates or evades or attempts to violate or evade any order, rule, or
regulation issued by the President pursuant to the authority granted in
that section, upon conviction, shall be fined not more than $10,000 and,
if a natural person, may also be imprisoned for not more than 10 years;
and the officer, director, or agent of any corporation who knowingly
participates in such violation or evasion shall be punished by a like
fine, imprisonment, or both and any property, funds, securities, papers,
or other articles or documents, or any vessel, together with her tackle,
apparel, furniture, and equipment, or vehicle, or aircraft, concerned in
such violation shall be forfeited to the United States.
(e) Violations involving transactions described at section
203(b)(1), (3), and (4) of IEEPA shall be subject only to the penalties
set forth in paragraph (d) of this section.
(f) Violations of this part may also be subject to other applicable
laws.
Sec. 510.702 Pre-Penalty Notice; settlement.
(a) When required. If OFAC has reason to believe that there has
occurred a violation of any provision of this part or a violation of the
provisions of any license, ruling, regulation, order, directive, or
instruction issued by or pursuant to the direction or authorization of
the Secretary of the Treasury pursuant to this part or otherwise under
the International Emergency Economic Powers Act (50 U.S.C. 1705) (IEEPA)
and determines that a civil monetary penalty is warranted, OFAC will
issue a Pre-Penalty Notice informing the alleged violator of the
agency's intent to impose a monetary penalty. A Pre-Penalty Notice shall
be in writing. The Pre-Penalty Notice may be issued whether or not
another agency has taken any action with respect to the matter. For a
description of the contents of a Pre-Penalty Notice, see appendix A to
part 501 of this chapter.
[[Page 80]]
(b) Response--(1) Right to respond. An alleged violator has the
right to respond to a Pre-Penalty Notice by making a written
presentation to OFAC. For a description of the information that should
be included in such a response, see appendix A to part 501 of this
chapter.
(2) Deadline for response. A response to a Pre-Penalty Notice must
be made within 30 days as set forth in paragraphs (b)(2)(i) and (ii) of
this section. The failure to submit a response within 30 days shall be
deemed to be a waiver of the right to respond.
(i) Computation of time for response. A response to a Pre-Penalty
Notice must be postmarked or date-stamped by the U.S. Postal Service (or
foreign postal service, if mailed abroad) or courier service provider
(if transmitted to OFAC by courier) on or before the 30th day after the
postmark date on the envelope in which the Pre-Penalty Notice was
mailed. If the Pre-Penalty Notice was personally delivered by a non-U.S.
Postal Service agent authorized by OFAC, a response must be postmarked
or date-stamped on or before the 30th day after the date of delivery.
(ii) Extensions of time for response. If a due date falls on a
federal holiday or weekend, that due date is extended to include the
following business day. Any other extensions of time will be granted, at
the discretion of OFAC, only upon specific request to OFAC.
(3) Form and method of response. A response to a Pre-Penalty Notice
need not be in any particular form, but it must be typewritten and
signed by the alleged violator or a representative thereof, contain
information sufficient to indicate that it is in response to the Pre-
Penalty Notice, and include the OFAC identification number listed on the
Pre-Penalty Notice. A copy of the written response may be sent by
facsimile, but the original also must be sent to OFAC's Office of
Compliance and Enforcement by mail or courier and must be postmarked or
date-stamped in accordance with paragraph (b)(2) of this section.
(c) Settlement. Settlement discussion may be initiated by OFAC, the
alleged violator, or the alleged violator's authorized representative.
For a description of practices with respect to settlement, see appendix
A to part 501 of this chapter.
(d) Guidelines. Guidelines for the imposition or settlement of civil
penalties by OFAC are contained in appendix A to part 501 of this
chapter.
(e) Representation. A representative of the alleged violator may act
on behalf of the alleged violator, but any oral communication with OFAC
prior to a written submission regarding the specific allegations
contained in the Pre-Penalty Notice must be preceded by a written letter
of representation, unless the Pre-Penalty Notice was served upon the
alleged violator in care of the representative.
Sec. 510.703 Penalty imposition.
If, after considering any written response to the Pre-Penalty Notice
and any relevant facts, OFAC determines that there was a violation by
the alleged violator named in the Pre-Penalty Notice and that a civil
monetary penalty is appropriate, OFAC may issue a Penalty Notice to the
violator containing a determination of the violation and the imposition
of the monetary penalty. For additional details concerning issuance of a
Penalty Notice, see appendix A to part 501 of this chapter. The issuance
of the Penalty Notice shall constitute final agency action. The violator
has the right to seek judicial review of that final agency action in
federal district court.
Sec. 510.704 Administrative collection; referral to United States
Department of Justice.
In the event that the violator does not pay the penalty imposed
pursuant to this part or make payment arrangements acceptable to OFAC,
the matter may be referred for administrative collection measures by the
Department of the Treasury or to the United States Department of Justice
for appropriate action to recover the penalty in a civil suit in a
federal district court.
Sec. 510.705 Finding of Violation.
(a) When issued. (1) OFAC may issue an initial Finding of Violation
that identifies a violation if OFAC:
(i) Determines that there has occurred a violation of any provision
of
[[Page 81]]
this part, or a violation of the provisions of any license, ruling,
regulation, order, directive, or instruction issued by or pursuant to
the direction or authorization of the Secretary of the Treasury pursuant
to this part or otherwise under the International Emergency Economic
Powers Act;
(ii) Considers it important to document the occurrence of a
violation; and
(iii) Based on the Guidelines contained in appendix A to part 501 of
this chapter, concludes that an administrative response is warranted but
that a civil monetary penalty is not the most appropriate response.
(2) An initial Finding of Violation shall be in writing and may be
issued whether or not another agency has taken any action with respect
to the matter. For additional details concerning issuance of a Finding
of Violation, see appendix A to part 501 of this chapter.
(b) Response--(1) Right to respond. An alleged violator has the
right to contest an initial Finding of Violation by providing a written
response to OFAC.
(2) Deadline for response; default determination. A response to an
initial Finding of Violation must be made within 30 days as set forth in
paragraphs (b)(2)(i) and (ii) of this section. The failure to submit a
response within 30 days shall be deemed to be a waiver of the right to
respond, and the initial Finding of Violation will become final and will
constitute final agency action. The violator has the right to seek
judicial review of that final agency action in federal district court.
(i) Computation of time for response. A response to an initial
Finding of Violation must be postmarked or date-stamped by the U.S.
Postal Service (or foreign postal service, if mailed abroad) or courier
service provider (if transmitted to OFAC by courier) on or before the
30th day after the postmark date on the envelope in which the initial
Finding of Violation was served. If the initial Finding of Violation was
personally delivered by a non-U.S. Postal Service agent authorized by
OFAC, a response must be postmarked or date-stamped on or before the
30th day after the date of delivery.
(ii) Extensions of time for response. If a due date falls on a
federal holiday or weekend, that due date is extended to include the
following business day. Any other extensions of time will be granted, at
the discretion of OFAC, only upon specific request to OFAC.
(3) Form and method of response. A response to an initial Finding of
Violation need not be in any particular form, but it must be typewritten
and signed by the alleged violator or a representative thereof, contain
information sufficient to indicate that it is in response to the initial
Finding of Violation, and include the OFAC identification number listed
on the initial Finding of Violation. A copy of the written response may
be sent by facsimile, but the original also must be sent to OFAC by mail
or courier and must be postmarked or date-stamped in accordance with
paragraph (b)(2) of this section.
(4) Information that should be included in response. Any response
should set forth in detail why the alleged violator either believes that
a violation of the regulations did not occur and/or why a Finding of
Violation is otherwise unwarranted under the circumstances, with
reference to the General Factors Affecting Administrative Action set
forth in the Guidelines contained in appendix A to part 501. The
response should include all documentary or other evidence available to
the alleged violator that supports the arguments set forth in the
response. OFAC will consider all relevant materials submitted in the
response.
(c) Determination--(1) Determination that a Finding of Violation is
warranted. If, after considering the response, OFAC determines that a
final Finding of Violation should be issued, OFAC will issue a final
Finding of Violation that will inform the violator of its decision. A
final Finding of Violation shall constitute final agency action. The
violator has the right to seek judicial review of that final agency
action in federal district court.
(2) Determination that a Finding of Violation is not warranted. If,
after considering the response, OFAC determines a Finding of Violation
is not warranted, then OFAC will inform the alleged violator of its
decision not to issue a final Finding of Violation.
[[Page 82]]
Note 1 to paragraph (c)(2):
A determination by OFAC that a final Finding of Violation is not
warranted does not preclude OFAC from pursuing other enforcement actions
consistent with the Guidelines contained in appendix A to part 501 of
this chapter.
(d) Representation. A representative of the alleged violator may act
on behalf of the alleged violator, but any oral communication with OFAC
prior to a written submission regarding the specific alleged violations
contained in the initial Finding of Violation must be preceded by a
written letter of representation, unless the initial Finding of
Violation was served upon the alleged violator in care of the
representative.
Subpart H_Procedures
Sec. 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.
Sec. 510.802 Delegation of certain authorities of
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, Executive Order
13551 of August 30, 2010, Executive Order 13570 of April 18, 2011,
Executive Order 13687 of January 2, 2015, Executive Order 13722 of March
15, 2016, Executive Order 13810 of September 20, 2017, and any further
Executive orders relating to the national emergency declared in
Executive Order 13466 of June 26, 2008, and any action that the
Secretary of the Treasury is authorized to take pursuant to Presidential
Memorandum of May 18, 2016: Delegation of Certain Functions and
Authorities under the North Korea Policy Enhancement Act of 2016 and
Presidential Memorandum of September 29, 2017: Delegation of Certain
Functions and Authorities under the Countering America's Adversaries
Through Sanctions Act of 2017, the Ukraine Freedom Support Act of 2014,
and the Support for the Sovereignty, Integrity, Democracy, and Economic
Stability of Ukraine Act of 2014, may be taken by the Director of OFAC
or by any other person to whom the Secretary of the Treasury has
delegated authority so to act.
Subpart I_Paperwork Reduction Act
Sec. 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, 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 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.
515.209 Restrictions on direct financial transactions with certain
entities and subentities.
Subpart C_General Definitions
515.301 Foreign country.
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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; person
subject to U.S. jurisdiction.
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.
515.421 Transactions ordinarily incident to a licensed transaction.
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.
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.
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 [Reserved]
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 as a consequence of the existence or change of
marital status authorized.
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.
[[Page 84]]
515.530 Exportation of powers of attorney or instructions relating to
certain types of transactions.
515.532 Completion of certain securities transactions.
515.533 Exportations from the United States to Cuba; reexportations to
Cuba; importation and servicing or repair of certain items
previously exported or reexported to Cuba.
515.534 Negotiation of, and entry into, contingent contracts relating to
transactions prohibited by this part.
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 Certain gifts sent to the United States.
515.545 Transactions related to information and informational materials.
515.546 Accounts of Cuban sole proprietorships.
515.547 Certain transactions related to medical research and Cuban-
origin pharmaceuticals; research samples.
515.548 Overflight payments, emergency landings, and air ambulance
services authorized.
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 export and import transactions by U.S.-owned or -
controlled foreign firms.
515.560 Travel-related transactions to, from, and within Cuba by persons
subject to U.S. jurisdiction.
515.561 Family visits.
515.562 Official business of the U.S. government, foreign governments,
and certain intergovernmental organizations.
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 Provision of travel, carrier, other transportation-related, and
remittance forwarding services.
515.573 Physical presence and business presence in Cuba authorized;
Cuban news bureaus.
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, reexportation, and importation of certain internet-
based services; importation of software.
515.579 Funds transfers for third-country official missions and certain
intergovernmental organizations.
515.580 Global insurance policies covering individuals traveling to
Cuba.
515.581 Transactions related to conferences in third countries.
515.582 Importation of certain goods and services produced by
independent Cuban entrepreneurs.
515.583 Provision of certain goods and services to Cuban nationals
sequestered aboard vessels in U.S. ports.
515.584 Certain financial transactions involving Cuba.
515.585 Certain transactions in third countries.
515.586 Cuban official missions in the United States.
515.587 Remittances from Cuban nationals to persons subject to U.S.
jurisdiction.
515.588 Certain Cuban legal services authorized.
515.589 Authorization of emergency medical services.
515.590 Certain grants, scholarships, and awards.
515.591 Services related to infrastructure.
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 85]]
Subpart I_Miscellaneous Provisions
515.901 Paperwork Reduction Act notice.
Authority: 22 U.S.C. 2370(a), 6001-6010, 7201-7211; 31 U.S.C.
321(b); 50 U.S.C. 4301- 4341; 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 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
[[Page 86]]
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 other direction or
authorization thereunder, or
(ii) Such transfer was not licensed or authorized by the Secretary
of the Treasury, or
[[Page 87]]
(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;
(2) The proceeds are held in a blocked account indicating the
designated national who is the payee or owner of the instrument; and,
[[Page 88]]
(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
(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]
[[Page 89]]
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.
Note to paragraph (a):
See Sec. 515.545 for general licenses authorizing certain travel-
related and other transactions that are directly incident to the export,
import, or transmission of informational materials and certain
transactions related to the creation, dissemination, or artistic or
other substantive alteration or enhancement of informational materials.
(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; 81 FR 4584, Jan. 27, 2016]
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 vessels engaged in certain trade and travel with
Cuba, see Sec. 515.550.
[58 FR 34710, June 29, 1993, as amended at 66 FR 36687, July 12, 2001;
80 FR 2292, Jan. 16, 2015; 80 FR 56918, Sept. 21, 2015]
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]
[[Page 90]]
Sec. 515.209 Restrictions on direct financial transactions with certain
entities and subentities.
(a) Except as otherwise authorized pursuant to this part, no person
subject to U.S. jurisdiction may engage in a direct financial
transaction with any person that the Secretary of State has identified
as an entity or subentity that is under the control of, or acts for or
on behalf of, the Cuban military, intelligence, or security services or
personnel and with which direct financial transactions would
disproportionately benefit such services or personnel at the expense of
the Cuban people or private enterprise in Cuba. For purposes of this
prohibition, a person engages in a direct financial transaction by
acting as the originator on a transfer of funds whose ultimate
beneficiary is an entity or subentity on the State Department's List of
Restricted Entities and Subentities Associated with Cuba (``Cuba
Restricted List'') or as the ultimate beneficiary on a transfer of funds
whose originator is an entity or subentity on the Cuba Restricted List,
including a transaction by wire transfer, credit card, check, or payment
of cash. This prohibition does not apply to certain transactions set
forth in paragraphs (b) and (c) of this section.
Note to paragraph (a):
The names of entities and subentities that the Secretary of State
has identified as meeting the criteria set forth in this section are
published in the Federal Register and incorporated into the Cuba
Restricted List. Entities or subentities that are owned or controlled by
another entity or subentity on this list are not treated as restricted
unless also specified by name on the Cuba Restricted List. The Cuba
Restricted List is maintained by the State Department and will be
published in the Federal Register. It is also accessible through the
following page on the State Department's Web site: http://www.state.gov/
e/eb/tfs/spi/cuba/cubarestrictedlist/index.htm.
(b) The prohibition in paragraph (a) of this section does not apply
to any travel-related transactions, including those that involve direct
financial transactions with an entity or subentity on the Cuba
Restricted List, provided those travel-related transactions were
initiated prior to the date that entity or subentity was added to the
Cuba Restricted List as published in the Federal Register.
(c) The prohibition in paragraph (a) of this section does not apply
to any transactions related to commercial engagements that involve
direct financial transactions with an entity or subentity on the Cuba
Restricted List, provided those commercial engagements were in place
prior to the date that entity or subentity was added to the Cuba
Restricted List as published in the Federal Register.
Note to Sec. 515.209: This section does not prohibit a person
subject to U.S. jurisdiction from participating in an indirect financial
transaction, such as those authorized pursuant to Sec. 515.584(d)
relating to funds transfers or Sec. 515.584(g) relating to U.S. dollar
monetary instruments, where the person does not act as the originator or
beneficiary on a transfer of funds.
[82 FR 51999, Nov. 9, 2017]
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.
[[Page 91]]
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 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
[[Page 92]]
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 as an unblocked
national shall, while so licensed, be regarded as a person who is not a
national of any designated foreign country.
[80 FR 2292, Jan. 16, 2015]
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
[[Page 93]]
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]
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
[[Page 94]]
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 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;
person subject to U.S. jurisdiction.
The terms person subject to the jurisdiction of the United States
and person subject to U.S. jurisdiction include:
(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; 80
FR 2292, Jan. 16, 2015; 81 FR 13991, Mar. 16, 2016]
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
[[Page 95]]
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 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;
[[Page 96]]
(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 state-run media organizations and programs, including
newspapers, television, and radio; and members and employees of the
Supreme Court (Tribuno Supremo Nacional).
[82 FR 51999, Nov. 9, 2017]
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.
[81 FR 71374, Oct. 17, 2016]
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
[[Page 97]]
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 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.
With respect to 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
all transactions incident to the administration and distribution of the
assets of blocked estates of decedents.
[80 FR 56919, Sept. 21, 2015]
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. Attention is directed to Sec. 515.585,
which authorizes certain dealings in commodities of Cuban origin outside
the United States.
[81 FR 13991, Mar. 16, 2016]
[[Page 98]]
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;
(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 who are traveling other than in a non-immigrant status
or pursuant to other non-immigrant travel authorization issued by the
U.S. government 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; 80
FR 56919, Sept. 21, 2015]
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 by a person subject to U.S.
jurisdiction 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, as amended at 81 FR 71374, Oct. 17, 2016]
Sec. 515.421 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) A transaction by or with a prohibited official of the Government
of Cuba, as defined in Sec. 515.337, or a prohibited member of the
Cuban Communist Party, as defined in Sec. 515.338, where the terms of
the applicable general or specific license expressly exclude
transactions with such persons;
(2) A transaction involving a debit to a blocked account or a
transfer of blocked property that is not explicitly authorized within
the terms of the license;
(3) A transaction prohibited by Sec. 515.208;
(4) In the case of export or reexport-related transactions
authorized by Sec. 515.533(a), payment or financing that is not
authorized by Sec. 515.533 or Sec. 515.584(f); or
Note to paragraph (a)(4):
See Sec. 515.533(a)(4) for payment and financing terms for
exportations or reexportations authorized pursuant to Sec. 515.533.
[[Page 99]]
(5) A direct financial transaction prohibited by Sec. 515.209,
where the terms of the applicable general or specific license expressly
exclude such a transaction.
(b) Examples. (1) A specific license authorizing a person to
complete a securities sale involving Cuban Company A, whose property and
interests in property are blocked pursuant to this part, also authorizes
other persons to engage in activities that are ordinarily incident and
necessary to complete the sale, including transactions by the buyer,
broker, transfer agents, and banks.
(2) A general license authorizing a person to import certain goods
from independent Cuban entrepreneurs also authorizes funds transfers or
payments that are ordinarily incident to the importation, including
payments made using online payment platforms.
[80 FR 56919, Sept. 21, 2015, as amended at 81 FR 4584, Jan. 27, 2016;
81 FR 71374, Oct. 17, 2016; 82 FR 52000, Nov. 9, 2017]
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.
[28 FR 6974, July 9, 1963, as amended at 80 FR 56919, Sept. 21, 2015]
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.
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
[[Page 100]]
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.
(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 national of Cuba who:
(i) Has taken up residence in the United States; and
(ii) Is a United States citizen; is a lawful permanent resident
alien of the United States; has applied to become a lawful permanent
resident alien of the United States and has an adjustment of status
application pending; or is lawfully present and intending to lawfully
remain in the United States on a permanent basis; and
(iii) 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.
(2) Any individual national of Cuba who has taken up permanent
residence outside of Cuba, provided that the required documentation
specified in paragraph (c) of this section is obtained and the
individual is not a prohibited official of the Government of Cuba, as
defined in Sec. 515.337, or a prohibited member of the Cuban Communist
Party, as defined in Sec. 515.338;
(3) Any entity that otherwise would be a national of Cuba solely
because of the interest therein of one or more persons licensed in this
paragraph (a) as an unblocked national;
(4) Any entity, office, or other sub-unit authorized pursuant to
Sec. 515.573; and
(5) Any individual authorized to establish domicile in Cuba pursuant
to Sec. 515.573(a)(4).
Note to Sec. 515.505(a):
An individual unblocked pursuant to this paragraph does not become
blocked again merely by leaving the United States or the country in
which he or she has taken up permanent residence. An individual
unblocked national remains unblocked unless and until the individual
thereafter becomes domiciled in or a permanent resident of Cuba.
(b) General license unblocking blocked accounts. Banking
institutions, as defined in Sec. 515.314, including U.S. registered
brokers or dealers in securities and U.S. registered money transmitters,
are authorized to unblock any blocked account, as defined in Sec.
515.319, that had been previously blocked solely because of the interest
therein of one or more persons licensed in paragraph (a) of this section
as unblocked nationals.
(c) Required documentation. In determining whether an individual
national of Cuba qualifies as an unblocked national under paragraph
(a)(2) of this section, persons subject to U.S. jurisdiction must obtain
evidence demonstrating that the individual satisfies the requirements of
that paragraph. Such evidence may include copies of documents issued by
government authorities demonstrating citizenship or lawful permanent
residence in a third country. These could include, depending on the
information provided in the document in question, a passport, voter
registration card, permanent resident alien card, national identity
card, or other similar documents. Where such documents are unavailable,
persons subject to U.S. jurisdiction may also rely on evidence that the
individual has been resident for the past two years without interruption
in a single country outside of Cuba, or a sworn statement or other
evidence that the individual does not intend to, or would not be welcome
to, return to Cuba.
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(d) For the purposes of paragraph (a)(1) of this section, the term
``lawfully present and intending to lawfully remain in the United States
on a permanent basis'' includes an individual with a pending application
for asylum or who has been paroled into the United States under Cuban
Parole or Cuban Medical designations. It does not include anyone present
in the United States in a non-immigrant status.
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 are present in the United States in
a non-immigrant status or pursuant to other non-immigrant travel
authorization issued by the U.S. government.
[80 FR 2292, Jan. 16, 2015, as amended at 80 FR 56919, Sept. 21, 2015;
81 FR 13991, Mar. 16, 2016]
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]