[Federal Register Volume 59, Number 68 (Friday, April 8, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-8366]


[[Page Unknown]]

[Federal Register: April 8, 1994]


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DEPARTMENT OF THE TREASURY

Office of Foreign Assets Control

31 CFR Parts 500, 505, 520

 

Foreign Assets Control, Transaction Control, and Foreign Funds 
Control Regulations; Civil Penalties

AGENCY: Office of Foreign Assets Control, Treasury.

ACTION: Final rule; amendments.

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SUMMARY: This rule amends the Foreign Assets Control, Transaction 
Control, and Foreign Funds Control Regulations (collectively, the 
``Regulations'') to add procedures for administering civil penalty 
authority. An interpretive section is added concerning certain 
statutory limitations on civil penalty authority. A statement of Office 
of Management and Budget authorization for the collection of 
information pursuant to this rule is also added to the Regulations.

EFFECTIVE DATE: October 23, 1992.

FOR FURTHER INFORMATION CONTACT: Betsy Sue Scott, Civil Penalties 
Officer (tel.: 202/622-2480), or William B. Hoffman, Chief Counsel 
(tel.: 202/622-2410), Office of Foreign Assets Control, Department of 
the Treasury, Washington, D.C. 20220.

SUPPLEMENTARY INFORMATION:

Electronic Availability

    This document is available as an electronic file on The Federal 
Bulletin Board the day of publication in the Federal Register. By modem 
dial 202/512-1387 or call 202/512-1530 for disks or paper copies. This 
file is available in Postscript, WordPerfect 5.1 and ASCII.

Background

    The Office of Foreign Assets Control is amending the Foreign Assets 
Control Regulations, 31 CFR part 500 (the ``FACR''), to reflect new 
civil penalty authority provided by the enactment, on October 23, 1992, 
of section 1710(c) of the Cuban Democracy Act of 1992, 22 U.S.C. 6001-
6010 (the ``CDA''). Because the CDA amends section 16 of the Trading 
with the Enemy Act, 50 U.S.C. App. 16 (``TWEA''), to permit the 
imposition of civil monetary penalties and civil forfeiture, Subpart G 
is extensively revised to establish the procedures governing the 
imposition of civil penalties. In addition, Sec. 500.413 is added to 
the FACR to provide an interpretation of the limitations contained in 
the CDA on the use of civil penalties. Section 500.901 is amended to 
reflect Office of Management and Budget approval of the information 
collection contained in this rule.
    The Transaction Control Regulations, 31 CFR part 505 (the ``TCR''), 
and the Foreign Funds Control Regulations, 31 CFR part 520 (the 
``FFCR''), which were promulgated pursuant to TWEA, are also amended to 
incorporate by reference the regulatory sections on civil penalty 
procedures being added to the FACR.
    Because this rule involves a foreign affairs function, Executive 
Order 12866 and the provisions of the Administrative Procedure Act, 5 
U.S.C. 553, requiring notice of proposed rulemaking, opportunity for 
public participation, and delay in effective date, are inapplicable. 
Because no notice of proposed rulemaking is required for this rule, the 
Regulatory Flexibility Act, 5 U.S.C. 601-612, does not apply.
    The collections of information contained in Secs. 500.703 and 
500.704 have been submitted to and approved by the Office of Management 
and Budget under the Paperwork Reduction Act of 1980, 44 U.S.C. 3501-
3520, and have been assigned control number 1505-0147. Comments 
concerning the collection of information and the accuracy of estimated 
average annual burden and suggestions for reducing this burden should 
be directed to OMB, Paperwork Reduction Project (1505-0147), 
Washington, D.C. 20503, with copies to the Office of Foreign Assets 
Control, U.S. Treasury Department, 1500 Pennsylvania Avenue, N.W.--
Annex, Washington, D.C. 20220. Any such comments should be submitted no 
later than June 7, 1994.
    This information is required by the Office of Foreign Assets 
Control for civil penalty purposes to determine whether and to what 
extent a civil penalty is appropriate. The likely respondents are 
individuals and business organizations. Estimated total annual 
reporting burden for Secs. 500.703 and 500.704: 100 hours.
    The estimated annual burden per respondent varies from one to four 
hours, depending on individual circumstances, with an estimated average 
of 2 hours.
    Estimated number of respondents: 50.
    Estimated annual frequency of response: 1.

List of Subjects in 31 CFR Parts 500, 505, and 520

    Administrative practice and procedure, Banks, Banking, Finance, 
Foreign investments in U.S., Foreign trade, International 
organizations, North Korea, Penalties, Reporting and recordkeeping 
requirements, Securities, Services, Telecommunications, Travel 
restrictions, Vietnam
    For the reasons set forth in the preamble, 31 CFR part 500 is 
amended as set forth below:

PART 500--FOREIGN ASSETS CONTROL REGULATIONS

    1. The authority citation for part 500 continues to read as 
follows:

    Authority: 50 U.S.C. App. 1-44; E.O. 9193, 3 CFR, 1938-1943 
Comp., p. 1174; E.O. 9989, 3 CFR, 1943-1948 Comp., p. 748.

    2. Subpart G of part 500 is revised to read as follows:

Subpart G--Penalties

500.701 Penalties.
500.702 Prepenalty notice.
500.703 Presentation responding to prepenalty notice.
500.704 Hearing.
500.705 Penalty notice.
500.706 Judicial Review.
500.707 Referral to United States Department of Justice; 
administrative collection measures.

Subpart G--Penalties


Sec. 500.701 Penalties.

    (a) Attention is directed to section 16 of the Trading with the 
Enemy Act (50 U.S.C. App. 16), which provides that:
    (1) Whoever shall willfully violate any provision of that act or 
any license, rule, or regulation issued thereunder, and whoever shall 
willfully violate, neglect, or refuse to comply with any order of the 
President issued in compliance with the provisions of that act shall, 
upon conviction, be fined not more than $1,000,000 or, if a natural 
person, be fined not more than $100,000 or imprisoned for not more than 
10 years, or both; and the 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.
    (2) Upon conviction, any property, funds, securities, paper, or 
other articles or documents, or any vessel, together with its tackle, 
apparel, furniture, and equipment, concerned in a violation of the act 
may be forfeited to the United States.
    (3) The Secretary of the Treasury may impose a civil penalty of not 
more than $50,000 on any person who violates any license, order, or 
regulation issued under that act;
    (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 paragraph (a)(3) of this section shall, at 
the discretion of the Secretary of the Treasury, be forfeited to the 
United States Government.
    (5) The penalties described in paragraphs (a)(3) and (4) of this 
section may not be imposed for:
    (i) newsgathering, research, or the export or import of, or 
transmission of information or informational materials; or
    (ii) for clearly defined educational or religious activities, or 
activities of recognized human rights organizations, that are 
reasonably limited in frequency, duration, and number of participants.
Persons who engage in prohibited transactions related to the activities 
described in this paragraph may be subject to criminal penalties or 
other penalties as appropriate.
    (6) The penalties provided in the Trading with the Enemy Act are 
subject to increase pursuant to 18 U.S.C. 3571.
    (b) 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 
representation or makes or uses any false writing or document knowing 
the same to contain any false, fictitious or fraudulent statement or 
entry, shall be fined not more than $10,000 or imprisoned not more than 
5 years, or both.


Sec. 500.702 Prepenalty notice.

    (a) When required: If the Director of the Office of Foreign Assets 
Control has reasonable cause to believe that there has occurred a 
violation of any provision of this part or a violation of the 
provisions of any license, ruling, regulation, order, direction or 
instruction issued by or pursuant to the direction or authorization of 
the Secretary of the Treasury pursuant to this part or otherwise under 
the Trading with the Enemy Act, and the Director determines that 
further proceedings are warranted, he shall issue to the person 
concerned a notice of his intent to impose a monetary penalty and/or 
forfeiture. The prepenalty notice shall be issued whether or not 
another agency has taken any action with respect to this matter.
    (b) Contents--(1) Facts of violation. The prepenalty notice shall 
describe the violation, specify the laws and regulations allegedly 
violated, and state the amount of the proposed monetary penalty and/or 
forfeiture.
    (2) Right to make presentation or request a hearing. The prepenalty 
notice also shall inform the person of his right to make a written 
presentation within 30 days of mailing of the notice as to why a 
monetary penalty and/or forfeiture should not be imposed, or, if 
imposed, why it should be in a lesser amount than proposed. In addition 
or alternatively, within 30 days of mailing of the notice, the person 
may request an agency hearing conducted pursuant to 5 U.S.C. 554-557 to 
present his defenses to the imposition of a penalty or forfeiture and 
to offer any other information that he believes should be included in 
the agency record prior to a final determination concerning the 
imposition of a penalty or forfeiture.
    (3) Right to discovery. The prepenalty notice also shall inform the 
person of his right prior to a hearing to review documents relied on by 
the agency in making its determination to issue the prepenalty notice. 
The availability of such documents is subject to the agency's assertion 
of privileges normally available to the agency.


Sec. 500.703 Presentation responding to prepenalty notice.

    (a) Time within which to respond. The named person shall have 30 
days from the date of mailing of the prepenalty notice to make a 
written presentation to the Director.
    (b) Form and contents of written presentation. The written 
presentation need not be in any particular form, but shall contain 
information sufficient to indicate that it is in response to the 
prepenalty notice. It should contain responses to the allegations in 
the prepenalty notice and set forth the reasons why the person believes 
the penalty or forfeiture should not be imposed or, if imposed, why it 
should be in a lesser amount than proposed.


Sec. 500.704 Hearing.

    (a) The named person shall have 30 calendar days from the date of 
mailing of the prepenalty notice to request a hearing.
    (b) The hearing shall be conducted in a manner consistent with 5 
U.S.C. 554-557.


Sec. 500.705 Penalty notice.

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


Sec. 500.706 Judicial Review.

    Any person may seek judicial review as provided under 5 U.S.C. 702 
for a penalty imposed pursuant to this part.


Sec. 500.707 Referral to United States Department of Justice; 
administrative collection measures.

    In the event that the person named does not pay the penalty imposed 
pursuant to this part within 30 days of the mailing of the written 
notice of the imposition of the penalty, the matter may be referred for 
administrative collection measures or to the United States Department 
of Justice for appropriate action to recover the penalty in a civil 
suit in a Federal district court.

    3. Section 500.901 is amended by adding a sentence at the end of 
the paragraph to read as follows:


Sec. 500.901 Paperwork Reduction Act notice.

    * * * The information collection requirements in Secs. 500.703 and 
500.704 have been approved by the Office of Management and Budget and 
assigned control number 1505-0147.

PART 505--TRANSACTION CONTROL REGULATIONS

    1. The authority citation for part 505 is revised to read as 
follows:

    Authority: 50 U.S.C. App. 1-44; E.O. 9193, 3 CFR, 1938-1943 
Comp., p. 1174; E.O. 9989, 3 CFR, 1943-1948 Comp., p.748.

    2. Section 505.50 is revised to read as follows:


Sec. 505.50 Penalties.

    For provisions relating to penalties, see Secs. 500.701 through 
500.707 of this chapter.

PART 520--FOREIGN FUNDS CONTROL REGULATIONS

    1. The authority citation for part 520 is revised to read as 
follows:

    Authority: 50 U.S.C. App. 1-44; E.O. 8389, 3 CFR, 1938-1943 
Comp., p. 645; as amended by E.O. 8785, 3 CFR, 1938-1943 Comp., p. 
948; E.O. 8832, 3 CFR, 1938-1943 Comp., p. 969; E.O. 8963, 3 CFR, 
1938-1943 Comp., p. 1033; E.O 8998, 3 CFR, 1938-1943 Comp., p. 1053; 
E.O. 9193, 3 CFR, 1938-1943 Comp., p. 1174; E.O. 10348, 3 CFR, 1949-
1953 Comp., p. 871; E.O. 11281, 3 CFR, 1966-1970 Comp., p. 546.

    2. Section 520.701 is revised to read as follows:


Sec. 520.701 Penalties.

    For provisions relating to penalties, see Secs. 500.701 through 
500.707 of this chapter.

    Dated: March 25, 1994.
R. Richard Newcomb,
Director, Office of Foreign Assets Control.
    Approved: March 29, 1994.
John P. Simpson,
Deputy Assistant Secretary (Regulatory, Tariff, and Trade Enforcement).
[FR Doc. 94-8366 Filed 4-4-94; 2:54 pm]
BILLING CODE 4810-25-F