[Federal Register Volume 60, Number 126 (Friday, June 30, 1995)]
[Rules and Regulations]
[Pages 34142-34143]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-16121]



=======================================================================
-----------------------------------------------------------------------

DEPARTMENT OF THE TREASURY


Office of Foreign Assets Control

31 CFR Chapter V


Compliance with 31 CFR Chapter V with Respect to Fully-Automated 
Financial Transactions

AGENCY: Office of Foreign Assets Control, Treasury.

ACTION: Policy Statement.

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

SUMMARY: Due to the wide availability and use by financial institutions 
of name-recognition software to screen fully-automated financial 
transactions for potential violations of economic sanctions programs, 
the Office of Foreign Assets Control (``FAC'') will no longer treat 
fully-automated transactions differently from manually-processed 
transactions for civil penalty purposes.

EFFECTIVE DATE: September 1, 1995.

FOR FURTHER INFORMATION CONTACT: Dennis P. Wood, Chief, Compliance 
Programs Division, tel.: 202/622-2490, or Mrs. B.S. Scott, Chief, Civil 
Penalties Program, tel.: 202/622-6140, 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 and type ``/GO/FAC'' or call 202/512-1530 for disks 
or paper copies. This file is available for downloading in WordPerfect 
5.1, ASCII, and Postscript formats. The document is also accessible for 
downloading in ASCII format without charge from Treasury's Electronic 
Library (``TEL'') in the ``Business, Trade and Labor Mall'' of the 
FedWorld bulletin board. By modem dial 703/321-3339, and select self-
expanding file ``T11FR00.EXE'' in TEL. For Internet access, use one of 
the following protocols: Telnet = fedworld.gov (192.239.93.3); World 
Wide Web (Home Page) = http://www.fedworld.gov; FTP = ftp.fedworld.gov 
(192.239.92.205).

Background

    Essential elements of economic sanctions programs administered by 
FAC include prohibitions on transfers of property to or for the benefit 
of targeted governments, entities, and individuals, including the 
blocking of targeted persons' property, when it comes within the 
jurisdiction of the United States. Civil monetary penalties may be 
imposed administratively by FAC for violations of these transfer 
prohibitions and blocking requirements pursuant to the statutes 
authorizing most FAC sanctions programs. See, e.g., 22 U.S.C. 5113(b) 
(repealed June 8, 1994, see Pub. L. 103-149, section 4(a), 107 Stat. 
1504 (1993)); Pub. L. 101-513, section 586E, 104 Stat. 2047 (1990); 50 
U.S.C. 1705; 50 U.S.C. App. 16.
    A large proportion of financial transactions are now handled by 
computer, without intervention by bank or other financial institution 
personnel. In the past, FAC treated such fully-automated or ``straight 
through'' transactions as being beyond the knowledge of financial 
institutions. Thus, for purposes of administering its 

[[Page 34143]]
civil monetary penalty authority under sanctions programs contained in 
31 CFR chapter V, FAC considered the fact that a transfer violation 
arose in a fully-automated transaction as a strongly mitigating 
circumstance in determining liability.

    In the past few years, financial institutions that handle 
significant volumes of international transfers have developed and put 
into use ``interdiction software'' that scans incoming automated 
transfer instructions for words (names of banks and transaction 
parties, geographical locations, and transaction descriptions) likely 
to indicate that a transaction is subject to the prohibitions in 31 CFR 
chapter V. Commercial interdiction software is now widely available and 
in use, and information needed to update the database used in screening 
transactions as FAC amends its lists of blocked persons and specially 
designated nationals is immediately available for computer downloading 
from numerous governmental and private sources. The use of such 
software by financial institutions has substantially enhanced the 
effectiveness of FAC sanctions programs.

    It has been determined that it is no longer appropriate to treat 
fully-automated financial transactions that violate economic sanctions 
prohibitions as being beyond a financial institution's knowledge or 
intent. Beginning on September 1, 1995, FAC will no longer treat the 
fully-automated processing of violative transactions as a full defense 
in civil penalty proceedings.

    Dated: May 31, 1995.

R. Richard Newcomb,

Director, Office of Foreign Assets Control.

    Approved: June 5, 1995.

John P. Simpson,

Deputy Assistant Secretary (Regulatory, Tariff & Trade Enforcement).

[FR Doc. 95-16121 Filed 6-27-95; 4:26 pm]

BILLING CODE 4810-25-F