[Federal Register Volume 61, Number 23 (Friday, February 2, 1996)]
[Rules and Regulations]
[Pages 3805-3813]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-2183]
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DEPARTMENT OF THE TREASURY
Office of Foreign Assets Control
31 CFR Part 595
Terrorism Sanctions Regulations
AGENCY: Office of Foreign Assets Control, Department of the Treasury.
ACTION: Final rule.
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SUMMARY: The Office of Foreign Assets Control of the U.S. Department of
the Treasury is issuing the Terrorism Sanctions Regulations to
implement the President's declaration of a national emergency and
imposition of sanctions against certain persons whose acts of violence
have the purpose or effect of disrupting the Middle East peace process.
EFFECTIVE DATE: February 2, 1996.
FOR FURTHER INFORMATION: Contact the Office of Foreign Assets Control,
Department of the Treasury, Washington, DC 22201, Tel.: 202/622-2520.
SUPPLEMENTARY INFORMATION:
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Background
On January 24, 1995, the President issued Executive Order 12947,
declaring a national emergency with respect to ``grave acts of violence
committed by foreign terrorists that disrupt the Middle East peace
process,'' and invoking the authority, inter alia, of the International
Emergency Economic Powers Act (50 U.S.C. 1701-1706). The order blocks
all property and interests in property of 12 terrorist organizations
designated in the order, as well as the property and interests in
property of other persons who are designated by the Secretary of State
or the Secretary of the Treasury. The order also authorizes the
Secretary of the Treasury, in consultation with the Secretary of State
and, as appropriate, the Attorney General, to take such actions,
including the promulgation of rules and regulations, as may be
necessary to carry out the purposes of the order. In implementation of
the order, the Treasury Department is issuing the Terrorism Sanctions
Regulations (the ``Regulations'').
The Regulations block all property and interests in property of (1)
persons designated in Executive Order 12947; (2) persons designated by
the Secretary of State, in coordination with the Secretary of the
Treasury and the Attorney General, because they are found (a) to have
committed, or to pose a significant risk of committing, acts of
violence that have the purpose or effect of disrupting the Middle East
peace process, or (b) to assist in, sponsor, or provide financial,
material, or technological support for, or services in support of, such
acts of violence.
The Regulations also block all property and interests in property
of persons determined by the Secretary of the Treasury, in coordination
with the Secretary of State and the Attorney General, to be owned or
controlled by, or to act for or on behalf of, any other designated
person. Persons coming within any of these categories are called
specially designated terrorists (``SDTs''). Executive Order 12947
blocks all property or interests in property of SDTs that are in the
United States, that hereinafter come within the United States, or that
are or hereafter come within the possession or control of U.S. persons,
including their overseas branches. Section 1(b) of Executive Order
12947 also prohibits any transaction or dealing by U.S. persons or in
the United States in property or interests in property of SDTs,
including the making or receiving of any contribution of funds, goods,
or services for the benefit of an SDT.
Transactions otherwise prohibited under this part but found to be
consistent with U.S. policy may be authorized by a general license
contained in subpart E or by a specific license issued pursuant to the
procedures described in Sec. 595.801 of subpart H. Civil and criminal
penalties for violations of the Regulations are described in subpart G.
Since the Regulations involve a foreign affairs function, the
provisions of Executive Order 12866 and the Administrative Procedure
Act (5 U.S.C. 553), requiring notice of proposed rulemaking,
opportunity for public
[[Page 3806]]
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. Wherever
possible, however, it is the practice of the Office of Foreign Assets
Control to receive written submissions or hold informal consultations
with interested parties concerning any rule or other public document.
Paperwork Reduction Act
The Regulations are being issued without prior notice and public
procedure pursuant to the Administrative Procedure Act (5 U.S.C. 553).
Pursuant to the Paperwork Reduction Act of 1995 (44 U.S.C. 3507), the
collections of information contained in the Regulations have been
submitted to and approved by the Office of Management and Budget
(``OMB'') pending public comment, and have been assigned control number
1505-0156. An agency may not conduct or sponsor, and a person is not
required to respond to, a collection of information unless the
collection of information displays a valid control number.
The collections of information in the Regulations are contained in
Secs. 595.503, 595.504, subpart F, and Secs. 595.703 and 595.801. This
information is required by the Office of Foreign Assets Control for
licensing, compliance, civil penalty, and enforcement purposes. This
information will be used to determine the eligibility of applicants for
the benefits provided through specific licenses, to determine whether
persons subject to the Regulations are in compliance with applicable
requirements, and to determine whether and to what extent civil penalty
or other enforcement action is appropriate. The likely respondents and
record keepers are individuals and business organizations.
No assurances of confidentiality are given to persons who furnish
information to OFAC unless specifically indicated in advance. It is the
policy of OFAC to protect the confidentiality of information in
appropriate cases pursuant to the exemptions from disclosure provided
under the Freedom of Information Act (5 U.S.C. 552) and the Privacy Act
(5 U.S.C. 552a).
Estimated total annual reporting and/or recordkeeping burden: 500
hours.
The estimated annual burden per respondent/record keeper varies
from 30 minutes to 2 hours, depending on individual circumstances, with
an estimated average of 1 hour.
Estimated number of respondents and/or record keepers: 500.
Estimated annual frequency of responses: 1-12.
Comments are invited on: (a) whether these collections of
information are necessary for the proper performance of the functions
of the agency, including whether the information shall have practical
utility; (b) the accuracy of the agency's estimate of the burden of the
collections of information; (c) ways to enhance the quality, utility,
and clarity of the information to be collected; and (d) ways to
minimize the burden of the collection of information on respondents,
including through the use of automated collection techniques or other
forms of information technology.
Comments concerning the above information, the accuracy of
estimated average annual burden, and suggestions for reducing this
burden should be directed to OMB, Paperwork Reduction Project, control
number 1505-0156, Washington, DC 20503, with a copy to the Office of
Foreign Assets Control, Department of the Treasury, 1500 Pennsylvania
Ave., N.W., Annex, Washington, DC 20220. Any such comments should be
submitted not later than April 2, 1996. Comments on aspects of the
Regulations other than those involving collections of information
should not be sent to OMB.
List of Subjects in 31 CFR Part 595
Administrative practice and procedure, Banking and finance,
Blocking of assets, Fines and penalties, Reporting and recordkeeping
requirements, Specially designated terrorists, Terrorism, Transfer of
assets.
For the reasons set forth in the preamble, 31 CFR part 595 is added
to read as follows:
PART 595--TERRORISM SANCTIONS REGULATIONS
Subpart A--Relation of this Part to Other Laws and Regulations
Sec.
595.101 Relation of this part to other laws and regulations.
Subpart B--Prohibitions
595.201 Prohibited transactions involving blocked property.
595.202 Effect of transfers violating the provisions of this part.
595.203 Holding of certain types of blocked property in interest-
bearing accounts.
595.204 Prohibited dealing in property; contributions of funds,
goods, or services.
595.205 Evasions; attempts; conspiracies.
595.206 Exempt transactions.
Subpart C--General Definitions
595.301 Blocked account; blocked property.
595.302 Effective date.
595.303 Entity.
595.304 Foreign person.
595.305 General license.
595.306 Information and informational materials.
595.307 Interest.
595.308 License.
595.309 Person.
595.310 Property; property interest.
595.311 Specially designated terrorist.
595.312 Specific license.
595.313 Transfer.
595.314 United States.
595.315 United States person; U.S. person.
595.316 U.S. financial institution.
Subpart D--Interpretations
595.401 Reference to amended sections.
595.402 Effect of amendment.
595.403 Termination and acquisition of an interest in blocked
property.
595.404 Setoffs prohibited.
595.405 Transactions incidental to a licensed transaction.
595.406 Provision of services.
595.407 Offshore transactions.
595.408 Charitable contributions to specially designated terrorists.
Subpart E--Licenses, Authorizations and Statements of Licensing Policy
595.501 Effect of license or authorization.
595.502 Exclusion from licenses and authorizations.
595.503 Payments and transfers to blocked accounts in U.S. financial
institutions.
595.504 Investment and reinvestment of certain funds.
595.505 Entries in certain accounts for normal service charges
authorized.
595.506 Provision of certain legal services to a specially
designated terrorist.
595.507 Authorization of emergency medical services.
Subpart F--Reports
595.601 Required records.
595.602 Reports to be furnished on demand.
595.603 Registration of persons holding blocked property subject to
595.201.
Subpart G--Penalties
595.701 Penalties.
595.702 Prepenalty notice.
595.703 Presentation responding to prepenalty notice.
595.704 Penalty notice.
595.705 Administrative collection action; referral to United States
Department of Justice.
Subpart H--Procedures
595.801 Licensing.
595.802 Decisions.
595.803 Amendment, modification, or revocation.
595.804 Rulemaking.
595.805 Delegation by the Secretary of the Treasury.
595.806 Rules governing availability of information.
Subpart I--Paperwork Reduction Act
595.901 Paperwork Reduction Act notice.
Authority: 50 U.S.C. 1601-1641, 1701-1706; 3 U.S.C. 301; E.O.
12947, 60 FR 5079 (January 25, 1995).
[[Page 3807]]
Subpart A--Relation of This Part to Other Laws andRegulations
Sec. 595.101 Relation of this part to other laws and regulations.
(a) This part is separate from, and independent of, the other parts
of this chapter. Differing foreign policy and national security
contexts may result in differing interpretations of similar language
among the parts of this chapter. No license or authorization contained
in or issued pursuant to those other parts authorizes any transaction
prohibited by this part. No license or authorization contained in or
issued pursuant to any other provision of law or regulation authorizes
any transaction prohibited by this part.
(b) No license or authorization contained in or issued pursuant to
this part relieves the involved parties from complying with any other
applicable laws or regulations.
Subpart B--Prohibitions
Sec. 595.201 Prohibited transactions involving blocked property.
Except as authorized by regulations, orders, directives, rulings,
instructions, licenses, or otherwise, no property or interests in
property of a specially designated terrorist, that are in the United
States, that hereafter come within the United States, or that are or
hereafter come within the possession or control of U.S. persons,
including their overseas branches, may be transferred, paid, exported,
withdrawn or otherwise dealt in.
Sec. 595.202 Effect of transfers violating the provisions of this
part.
(a) Any transfer after the effective date, which is in violation of
any provision of this part or of any regulation, order, directive,
ruling, instruction, license, or other authorization hereunder and
involves any property held in the name of a specially designated
terrorist or in which a specially designated terrorist has or has had
an interest since such date, is null and void and shall not be the
basis for the assertion or recognition of any interest in or right,
remedy, power or privilege with respect to such property.
(b) No transfer before the effective date shall be the basis for
the assertion or recognition of any right, remedy, power, or privilege
with respect to, or interest in, any property held in the name of a
specially designated terrorist or in which a specially designated
terrorist has an interest, or has had an interest since such date,
unless the person with whom such property is held or maintained, prior
to such date, had written notice of the transfer or by any written
evidence had recognized such transfer.
(c) Unless otherwise provided, an appropriate license or other
authorization issued by or pursuant to the direction or authorization
of the Director of the Office of Foreign Assets Control before, during,
or after a transfer shall validate such transfer or render it
enforceable to the same extent that it would be valid or enforceable
but for the provisions of the International Emergency Economic Powers
Act, this part, and any regulation, order, directive, ruling,
instruction, or license issued hereunder.
(d) Transfers of property which otherwise would be null and void or
unenforceable by virtue of the provisions of this section shall not be
deemed to be null and void or unenforceable as to any person with whom
such property was held or maintained (and as to such person only) in
cases in which such person is able to establish to the satisfaction of
the Director of the Office of Foreign Assets Control each of the
following:
(1) Such transfer did not represent a willful violation of the
provisions of this part by the person with whom such property was held
or maintained;
(2) The person with whom such property was held or maintained did
not have reasonable cause to know or suspect, in view of all the facts
and circumstances known or available to such person, that such transfer
required a license or authorization by or pursuant to this part and was
not so licensed or authorized, or if a license or authorization did
purport to cover the transfer, that such license or authorization had
been obtained by misrepresentation of a third party or the withholding
of material facts or was otherwise fraudulently obtained; and
(3) The person with whom such property was held or maintained filed
with the Office of Foreign Assets Control a report setting forth in
full the circumstances relating to such transfer promptly upon
discovery that:
(i) Such transfer was in violation of the provisions of this part
or any regulation, ruling, instruction, license, or other direction or
authorization hereunder; or
(ii) Such transfer was not licensed or authorized by the Director
of the Office of Foreign Assets Control; or
(iii) If a license did purport to cover the transfer, such license
had been obtained by misrepresentation of a third party or the
withholding of material facts or was otherwise fraudulently obtained.
Note: The filing of a report in accordance with the provisions of
paragraph (d)(3) of this section shall not be deemed evidence that the
terms of paragraphs (d)(1) and (2) of this section have been satisfied.
(e) Unless licensed or authorized pursuant to this part, any
attachment, judgment, decree, lien, execution, garnishment, or other
judicial process is null and void with respect to any property which,
on or since the effective date, was held in the name of a specially
designated terrorist or in which there existed an interest of a
specially designated terrorist.
Sec. 595.203 Holding of certain types of blocked property in interest-
bearing accounts.
(a)(1) Any person, including a U.S. financial institution,
currently holding property subject to Sec. 595.201 which, as of the
effective date or the date of receipt if subsequent to the effective
date, is not being held in an interest-bearing account, or otherwise
invested in a manner authorized by the Office of Foreign Assets
Control, shall transfer such property to, or hold such property or
cause such property to be held in, an interest-bearing account or
interest-bearing status in a U.S. financial institution as of the
effective date or the date of receipt if subsequent to the effective
date of this section, unless otherwise authorized or directed by the
Office of Foreign Assets Control.
(2) The requirement set forth in paragraph (a)(1) of this section
shall apply to currency, bank deposits, accounts, obligations, and any
other financial or economic resources or assets, and any proceeds
resulting from the sale of tangible or intangible property. If interest
is credited to an account separate from that in which the interest-
bearing asset is held, the name of the account party on both accounts
must be the same and must clearly indicate the specially designated
terrorist having an interest in the accounts. If the account is held in
the name of a specially designated terrorist, the name of the account
to which interest is credited must be the same.
(b) For purposes of this section, the term interest-bearing account
means a blocked account in a U.S. financial institution earning
interest at rates that are commercially reasonable for the amount of
funds in the account. Except as otherwise authorized, the funds may not
be invested or held in instruments the maturity of which exceeds 90
days.
(c) This section does not apply to blocked tangible property, such
as chattels, nor does it create an affirmative obligation on the part
of the holder of
[[Page 3808]]
such blocked tangible property to sell or liquidate the property and
put the proceeds in a blocked account. However, the Office of Foreign
Assets Control may issue licenses permitting or directing sales of
tangible property in appropriate cases.
Sec. 595.204 Prohibited dealing in property; contributions of funds,
goods, or services.
Except as otherwise authorized, no U.S. person may deal in property
or interests in property of a specially designated terrorist, including
the making or receiving of any contribution of funds, goods, or
services to or for the benefit of a specially designated terrorist.
Sec. 595.205 Evasions; attempts; conspiracies.
Any transaction for the purpose of, or which has the effect of,
evading or avoiding, or which facilitates the evasion or avoidance of,
any of the prohibitions set forth in this part, is hereby prohibited.
Any attempt to violate the prohibitions set forth in this part is
hereby prohibited. Any conspiracy formed for the purpose of engaging in
a transaction prohibited by this part is hereby prohibited.
Sec. 595.206 Exempt transactions.
(a) Personal Communications. The prohibitions contained in this
part do not apply to any postal, telegraphic, telephonic, or other
personal communication, which does not involve the transfer of anything
of value.
(b) Information and informational materials.--(1) The importation
from any country and the exportation to any country of information or
informational materials as defined in Sec. 595.306, whether commercial
or otherwise, regardless of format or medium of transmission, are
exempt from the prohibitions and regulations of this part.
(2) This section does not authorize transactions related to
information and informational materials not fully created and in
existence at the date of the transactions, or to the substantive or
artistic alteration or enhancement of informational materials, or to
the provision of marketing and business consulting services by a U.S.
person. Such prohibited transactions include, without limitation,
payment of advances for informational materials not yet created and
completed, provision of services to market, produce or co-produce,
create or assist in the creation of information and informational
materials, and payment of royalties to a specially designated terrorist
with respect to income received for enhancements or alterations made by
U.S. persons to information or informational materials imported from a
specially designated terrorist.
(3) This section does not authorize transactions incident to the
exportation of technical data under restriction as defined in
Sec. 779.4 of the Export Administration Regulations, 15 CFR parts 768-
799 (1994), or to the exportation of goods for use in the transmission
of any data. The exportation of such goods to specially designated
terrorists is prohibited, as provided in Sec. 595.201 of this part.
(c) Travel. The prohibitions contained in this part do not apply to
transactions ordinarily incident to travel to or from any country,
including importation of accompanied baggage for personal use,
maintenance within any country including payment of living expenses and
acquisition of goods or services for personal use, and arrangement or
facilitation of such travel including non scheduled air, sea, or land
voyages.
Subpart C--General Definitions
Sec. 595.301 Blocked account; blocked property.
The terms blocked account and blocked property shall mean any
account or property subject to the prohibition in Sec. 595.201 held in
the name of a specially designated terrorist or in which a specially
designated terrorist has an interest, and with respect to which
payments, transfers, exportations, withdrawals, or other dealings may
not be made or effected except pursuant to an authorization or license
from the Office of Foreign Assets Control authorizing such action.
Sec. 595.302 Effective date.
The term effective date refers to the effective date of the
applicable prohibitions and directives contained in this part which is
12:01 a.m. EST, January 24, 1995, or, in the case of specially
designated terrorists designated after that date, the earlier of the
date on which a person receives actual or constructive notice of such
designation.
Sec. 595.303 Entity.
The term entity means a partnership, association, corporation, or
other organization, group or subgroup.
Sec. 595.304 Foreign Person.
The term foreign person means any citizen or national of a foreign
state (including any such individual who is also a citizen or national
of the United States), or any entity not organized solely under the
laws of the United States or existing solely in the United States, but
does not include a foreign state.
Sec. 595.305 General license.
The term general license means any license or authorization the
terms of which are set forth in this part.
Sec. 595.306 Information and informational materials.
(a)(1) For purposes of this part, the term information and
informational materials means publications, films, posters, phonograph
records, photographs, microfilms, microfiche, tapes, compact disks, CD
ROMs, artworks, and news wire feeds, and other information and
informational articles.
(2) To be considered informational materials, artworks must be
classified under chapter subheading 9701, 9702, or 9703 of the
Harmonized Tariff Schedule of the United States.
(b) The terms information and informational materials with respect
to U.S. exports do not include items:
(1) That were, as of April 30, 1994, or that thereafter become,
controlled for export pursuant to section 5 of the Export
Administration Act of 1979, 50 U.S.C. App. 2401-2420 (the ``EAA''), or
section 6 of the EAA to the extent that such controls promote
nonproliferation or antiterrorism policies of the United States,
including ``software'' that is not ``publicly available'' as these
terms are defined in 15 CFR Parts 779 and 799.1; or
(2) With respect to which acts are prohibited by 18 U.S.C. chapter
37.
Sec. 595.307 Interest.
Except as otherwise provided in this part, the term interest when
used with respect to property (e.g., `` an interest in property'')
means an interest of any nature whatsoever, direct or indirect.
Sec. 595.308 License.
Except as otherwise specified, the term license means any license
or authorization contained in or issued pursuant to this part.
Sec. 595.309 Person.
The term person means an individual or entity.
Sec. 595.310 Property; property interest.
The terms property and property interest include, but are not
limited to, money, checks, drafts, bullion, bank deposits, savings
accounts, debts, indebtedness, obligations, notes, guarantees,
debentures, stocks, bonds, coupons, any other financial instruments,
bankers acceptances, mortgages, pledges, liens or other rights in the
nature of security, warehouse
[[Page 3809]]
receipts, bills of lading, trust receipts, bills of sale, any other
evidences of title, ownership or indebtedness, letters of credit and
any documents relating to any rights or obligations thereunder, powers
of attorney, goods, wares, merchandise, chattels, stocks on hand,
ships, goods on ships, real estate mortgages, deeds of trust, vendors
sales agreements, land contracts, leaseholds, ground rents, real estate
and any other interest therein, options, negotiable instruments, trade
acceptances, royalties, book accounts, accounts payable, judgments,
patents, trademarks or copyrights, insurance policies, safe deposit
boxes and their contents, annuities, pooling agreements, services of
any nature whatsoever, contracts of any nature whatsoever, and any
other property, real, personal, or mixed, tangible or intangible, or
interest or interests therein, present, future or contingent.
Sec. 595.311 Specially designated terrorist.
(a) The term specially designated terrorist means:
(1) Persons listed in the Annex to Executive Order 12947;
(2) Foreign persons designated by the Secretary of State, in
coordination with the Secretary of the Treasury and the Attorney
General, because they are found:
(i) To have committed, or to pose a significant risk of committing,
acts of violence that have the purpose or effect of disrupting the
Middle East peace process, or
(ii) To assist in, sponsor, or provide financial, material, or
technological support for, or services in support of, such acts of
violence; and
(3) Persons determined by the Secretary of the Treasury, in
coordination with the Secretary of State and the Attorney General, to
be owned or controlled by, or to act for or on behalf of, any other
specially designated terrorist.
(b) [Reserved]
Sec. 595.312 Specific license.
The term specific license means any license or authorization not
set forth in this part but issued pursuant to this part.
Sec. 595.313 Transfer.
The term transfer means any actual or purported act or transaction,
whether or not evidenced by writing, and whether or not done or
performed within the United States, the purpose, intent, or effect of
which is to create, surrender, release, convey, transfer, or alter,
directly or indirectly, any right, remedy, power, privilege, or
interest with respect to any property and, without limitation upon the
foregoing, shall include the making, execution, or delivery of any
assignment, power, conveyance, check, declaration, deed, deed of trust,
power of attorney, power of appointment, bill of sale, mortgage,
receipt, agreement, contract, certificate, gift, sale, affidavit, or
statement; the making of any payment; the setting off of any obligation
or credit; the appointment of any agent, trustee, or fiduciary; the
creation or transfer of any lien; the issuance, docketing, filing, or
levy of or under any judgment, decree, attachment, injunction,
execution, or other judicial or administrative process or order, or the
service of any garnishment; the acquisition of any interest of any
nature whatsoever by reason of a judgment or decree of any foreign
country; the fulfillment of any condition; the exercise of any power of
appointment, power of attorney, or other power; or the acquisition,
disposition, transportation, importation, exportation, or withdrawal of
any security.
Sec. 595.314 United States.
The term United States means the United States, its territories and
possessions, and all areas under the jurisdiction or authority thereof.
Sec. 595.315 United States person; U.S. person.
The term United States person or U.S. person means any United
States citizen, permanent resident alien, entity organized under the
laws of the United States or any jurisdiction within the United States
(including foreign branches); or any person in the United States.
Sec. 595.316 U.S. financial institution.
The term U.S. financial institution means any U.S. person
(including foreign branches) that is engaged in the business of
accepting deposits, making, granting, transferring, holding, or
brokering loans or credits, or purchasing or selling foreign exchange,
securities, commodity futures or options, or procuring purchasers and
sellers thereof, as principal or agent; including, but not limited to,
depository institutions, banks, savings banks, trust companies,
securities brokers and dealers, commodity futures and options brokers
and dealers, forward contract and foreign exchange merchants,
securities and commodities exchanges, clearing corporations, investment
companies, employee benefit plans, and U.S. holding companies, U.S.
affiliates, or U.S. subsidiaries of any of the foregoing. This term
includes those branches, offices and agencies of foreign financial
institutions which are located in the United States, but not such
institutions' foreign branches, offices, or agencies.
Subpart D--Interpretations
Sec. 595.401 Reference to amended sections.
Except as otherwise specified, reference to any section of this
part or to any regulation, ruling, order, instruction, direction, or
license issued pursuant to this part shall be deemed to refer to the
same as currently amended.
Sec. 595.402 Effect of amendment.
Any amendment, modification, or revocation of any section of this
part or of any order, regulation, ruling, instruction, or license
issued by or under the direction of the Director of the Office of
Foreign Assets Control shall not, unless otherwise specifically
provided, be deemed to affect any act done or omitted to be done, or
any civil or criminal suit or proceeding commenced or pending prior to
such amendment, modification, or revocation. All penalties,
forfeitures, and liabilities under any such order, regulation, ruling,
instruction, or license shall continue and may be enforced as if such
amendment, modification, or revocation had not been made.
Sec. 595.403 Termination and acquisition of an interest in blocked
property.
(a) Whenever a transaction licensed or authorized by or pursuant to
this part results in the transfer of property (including any property
interest) away from a specially designated terrorist, such property
shall no longer be deemed to be property in which a specially
designated terrorist has or has had an interest, or which is held in
the name of a specially designated terrorist, unless there exists in
the property another interest of a specially designated terrorist, the
transfer of which has not been effected pursuant to license or other
authorization.
(b) Unless otherwise specifically provided in a license or
authorization issued pursuant to this part, if property (including any
property interest) is transferred or attempted to be transferred to a
specially designated terrorist, including by the making of any
contribution of funds, goods, or services to or for the benefit of a
specially designated terrorist, such property shall be deemed to be
property in which there exists an interest of the specially designated
terrorist.
Sec. 595.404 Setoffs prohibited.
A setoff against blocked property (including a blocked account),
whether
[[Page 3810]]
by a U.S. bank or other U.S. person, is a prohibited transfer under
Sec. 595.201 if effected after the effective date.
Sec. 595.405 Transactions incidental to a licensed transaction.
Any transaction ordinarily incident to a licensed transaction and
necessary to give effect thereto is also authorized, except a
transaction by an unlicensed, specially designated terrorist or
involving a debit to a blocked account or a transfer of blocked
property not explicitly authorized within the terms of the license.
Sec. 595.406 Provision of services.
(a) Except as provided in Sec. 595.206, the prohibitions contained
in Secs. 595.201 and 595.204 apply to services performed by U.S.
persons, wherever located:
(1) On behalf of, or for the benefit of, a specially designated
terrorist; or
(2) With respect to property interests of a specially designated
terrorist.
(b) Example: U.S. persons may not, except as authorized by the
Office of Foreign Assets Control by or pursuant to this part, provide
legal, accounting, public relations, educational, or other services to
a specially designated terrorist. See Sec. 595.506.
Sec. 595.407 Offshore transactions.
The prohibitions contained in Sec. 595.201 apply to transactions by
U.S. persons in locations outside the United States with respect to
property which the U.S. person knows, or has reason to know, is held in
the name of a specially designated terrorist, or in which the U.S.
person knows, or has reason to know, a specially designated terrorist
has or has had an interest since the effective date.
Sec. 595.408 Charitable contributions to specially designated
terrorists.
(a) Unless otherwise specifically authorized by the Office of
Foreign Assets Control by or pursuant to this part, no charitable
contribution or donation of funds, goods, services,or technology to
relieve human suffering, such as food, clothing or medicine, may be
made to or for the benefit of a specially designated terrorist. For
purposes of this part, a contribution or donation is made to or for the
benefit of a specially designated terrorist if made to or in the name
of a specially designated terrorist; if made to or in the name of an
entity or individual acting for or on behalf of, or owned or controlled
by, a specially designated terrorist; or if made in an attempt to
violate, to evade or to avoid the bar on the provision of contributions
or donations to specially designated terrorists.
(b) Individuals and organizations who donate or contribute funds,
goods, services or technology without knowledge or reason to know that
the donation or contribution is destined to or for the benefit of a
specially designated terrorist shall not be subject to penalties for
such donation or contribution.
Subpart E--Licenses, Authorizations, and Statements of Licensing
Policy
Sec. 595.501 Effect of license or authorization.
(a) No license or other authorization contained in this part, or
otherwise issued by or under the direction of the Director of the
Office of Foreign Assets Control, shall be deemed to authorize or
validate any transaction effected prior to the issuance of the license,
unless specifically provided in such license or authorization.
(b) No regulation, ruling, instruction, or license authorizes any
transaction prohibited under this part unless the regulation, ruling,
instruction, or license is issued by the Office of Foreign Assets
Control and specifically refers to this part. No regulation, ruling,
instruction, or license referring to this part shall be deemed to
authorize any transaction prohibited by any provision of this chapter
unless the regulation, ruling, instruction or license specifically
refers to such provision.
(c) Any regulation, ruling, instruction, or license authorizing any
transaction otherwise prohibited under this part has the effect of
removing a prohibition or prohibitions contained in this part from the
transaction, but only to the extent specifically stated by its terms.
Unless the regulation, ruling, instruction, or license otherwise
specifies, such an authorization does not create any right, duty,
obligation, claim, or interest in, or with respect to, any property
which would not otherwise exist under ordinary principles of law.
Sec. 595.502 Exclusion from licenses and authorizations.
The Director of the Office of Foreign Assets Control reserves the
right to exclude any person, property, or transaction from the
operation of any license, or from the privileges therein conferred, or
to restrict the applicability thereof with respect to particular
persons, property, transactions, or classes thereof. Such action shall
be binding upon all persons receiving actual or constructive notice of
such exclusion or restriction.
Sec. 595.503 Payments and transfers to blocked accounts in U.S.
financial institutions.
(a) Any payment of funds or transfer of credit or other financial
or economic resources or assets into a blocked account in a U.S.
financial institution is authorized, provided that a transfer from a
blocked account pursuant to this authorization may only be made to
another blocked account held in the same name on the books of the same
U.S. financial institution. This authorization is subject to the
condition that written notification from the U.S. financial institution
receiving an authorized payment or transfer is furnished to the
Compliance Programs Division, Office of Foreign Assets Control, U.S.
Treasury Department, 1500 Pennsylvania Avenue, NW--Annex, Washington,
DC 20220, within 10 days from the value date of the payment or
transfer. This notification shall confirm that the payment or transfer
has been deposited into a blocked account pursuant to this section and
Sec. 595.203 and shall provide the account number, the name and address
of the person in whose name the account is held and, if the account
party is not a specially designated terrorist, the name of the
specially designated terrorist having an interest in the account, the
name and address of the transferee U.S. financial institution, the name
and address of the transferor financial institution, the amount of the
payment or transfer, the name and telephone number of a contact person
at the transferee financial institution from whom compliance
information may be obtained, and the name and telephone number of the
person, registered with the Office of Foreign Assets Control pursuant
to Sec. 595.603, responsible for the administration of blocked assets
at the transferee financial institution from whom records on blocked
assets may be obtained.
(b) This section does not authorize any transfer from a blocked
account within the United States to an account held outside the United
States.
Sec. 595.504 Investment and reinvestment of certain funds.
(a) U.S. financial institutions are hereby authorized and directed
to invest and reinvest assets held in blocked accounts in the name of a
specially designated terrorist, subject to the following conditions:
(1) The assets representing such investments and reinvestments are
credited to a blocked account or sub-account which is in the name of
the specially designated terrorist and which is located in the United
States or within
[[Page 3811]]
the possession or control of a U.S. person; and
(2) The proceeds of such investments and reinvestments are not
credited to a blocked account or sub-account under any name or
designation which differs from the name or designation of the specific
blocked account or sub-account in which such funds or securities were
held; and
(3) No immediate financial or economic benefit or access accrues
(e.g., through pledging or other use) to the specially designated
terrorist.
(b)(1) U.S. persons seeking to avail themselves of this
authorization must register with the Office of Foreign Assets Control,
Blocked Assets Section, before undertaking transactions authorized
under this section.
(2) Transactions conducted pursuant to this section must be
reported to the Office of Foreign Assets Control, Blocked Assets
Division, in a report filed no later than 10 business days following
the last business day of the month in which the transactions occurred.
Sec. 595.505 Entries in certain accounts for normal service charges
authorized.
(a) U.S. financial institutions are hereby authorized to debit any
blocked account with such U.S. financial institution in payment or
reimbursement for normal service charges owed to such U.S. financial
institution by the owner of such blocked account.
(b) As used in this section, the term normal service charge shall
include charges in payment or reimbursement for interest due; cable,
telegraph, or telephone charges; postage costs; custody fees; small
adjustment charges to correct bookkeeping errors; and, but not by way
of limitation, minimum balance charges, notary and protest fees, and
charges for reference books, photostats, credit reports, transcripts of
statements, registered mail insurance, stationary and supplies, check
books, and other similar items.
Sec. 585.506 Provision of certain legal services to a specially
designated terrorist.
(a) The provision to or on behalf of a specially designated
terrorist of the legal services set forth in paragraph (b) of this
section is authorized, provided that all receipts of payment therefor
must be specifically licensed. The provision of any other legal
services as interpreted in Sec. 595.406 requires the issuance of a
specific license.
(b) Specific licenses may be issued, on a case-by-case basis,
authorizing receipt of payment of professional fees and reimbursement
of incurred expenses for the following legal services by U.S. persons
to a specially designated terrorist:
(1) Provision of legal advice and counselling to a specially
designated terrorist on the requirements of and compliance with the
laws of any jurisdiction within the United States, provided that such
advice and counselling is not provided to facilitate transactions in
violation of this part;
(2) Representation of a specially designated terrorist when named
as a defendant in or otherwise made a party to domestic U.S. legal,
arbitration, or administrative proceedings;
(3) Initiation of domestic U.S. legal, arbitration, or
administrative proceedings in defense of property interests subject to
U.S. jurisdiction of a specially designated terrorist;
(4) Representation of a specially designated terrorist before any
federal agency with respect to the imposition, administration, or
enforcement of U.S. sanctions against a specially designated terrorist;
and
(5) Provision of legal services in any other context in which
prevailing U.S. law requires access to legal counsel at public expense.
(c) Enforcement of any lien, judgment, arbitral award, decree, or
other order through execution, garnishment or other judicial process
purporting to transfer or otherwise alter or affect a property interest
of a specially designated terrorist is prohibited unless specifically
licensed in accordance with Sec. 595.202(e).
Sec. 595.507 Authorization of emergency medical services.
The provision of nonscheduled emergency medical services to a
specially designated terrorist located in the United States is
authorized, provided that any payment for such services requires prior
authorization by specific license.
Subpart F--Reports
Sec. 595.601 Required records.
(a) Except as otherwise provided, every person engaging in any
transaction subject to the provisions of this part shall keep a full
and accurate record of each 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 subject to Sec. 595.201 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.
(b) Any person, other than an individual, required to maintain
records pursuant to this section, must designate an individual to be
responsible for providing information concerning such records to the
Office of Foreign Assets Control when so requested.
Sec. 595.602 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, complete information relative to any transaction, regardless
of whether such transaction is effected pursuant to license or
otherwise, subject to the provisions of this part. Such reports may be
required to 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 the person required to make such
reports. Reports with respect to transactions may be required either
before or after such transactions are completed. The Director of
Foreign Assets Control 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.
Sec. 595.603 Registration of persons holding blocked property subject
to Sec. 595.201.
(a) Any individual holding property subject to Sec. 595.201 must
register with the Office of Foreign Assets Control, Blocked Assets
Division by the later of February 12, 1996, or within 10 days after the
date such property is received or becomes subject to Sec. 595.201.
(b) Any person, other than an individual, holding property subject
to Sec. 595.201 must register the name, title, address, and telephone
number of the individual designated under Sec. 595.601(b) to be
responsible for the administration of blocked assets, from whom the
Office of Foreign Assets Control can obtain information and records.
The registration shall be sent to the Blocked Assets Division, Office
of Foreign Assets Control, U.S. Treasury Department, 1500 Pennsylvania
Avenue, NW--Annex, Washington, DC 20220, by the later of February 12,
1996,
[[Page 3812]]
or, unless notification is given pursuant to Sec. 595.503, 10 days
after the date such property is received or becomes subject to
Sec. 595.201.
Subpart G--Penalties
Sec. 595.701 Penalties.
(a) Attention is directed to section 206 of the International
Emergency Economic Powers Act (50 U.S.C. 1705), which provides that a
civil penalty of not to exceed $10,000 may be imposed on any person who
violates any license, order, or regulation issued under the
International Emergency Economic Powers Act; and that whoever willfully
violates any license, order, or regulation issued under the
International Emergency Economic Powers Act, shall, upon conviction, be
fined not more than $50,000, or, if a natural person, may be imprisoned
for not more than 10 years, or both; and any officer, director, or
agent of any corporation who knowingly participates in such violation
may be punished by a like fine, imprisonment, or both. Section 206 of
the International Emergency Economic Powers Act is applicable to
violations of any provision of this part and to violations of the
provisions of any license, ruling, regulation, order, direction, or
instruction issued by or pursuant to the direction or authorization of
the Secretary of the Treasury pursuant to this part or otherwise under
the International Emergency Economic Powers Act.
(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
five years, or both.
(d) Violations of this part may also be subject to relevant
provisions of other applicable laws.
Sec. 595.702 Prepenalty notice.
(a) When required. If the Director of the Office of Foreign Assets
Control has reasonable cause to believe that there has occurred a
violation of any provision of this part or a violation of the
provisions of any license, ruling, regulation, order, direction or
instruction issued by or pursuant to the direction or authorization of
the Secretary of the Treasury pursuant to this part or otherwise under
the International Emergency Economic Powers Act, and the Director
determines that further proceedings are warranted, he shall issue to
the person concerned a notice of his intent to impose a monetary
penalty. The prepenalty notice shall be issued whether or not another
agency has taken any action with respect to this matter.
(b) Contents.--(1) Facts of violation. The prepenalty notice shall
describe the violation, specify the laws and regulations allegedly
violated, and state the amount of the proposed monetary penalty.
(2) Right to make presentation. The prepenalty notice also shall
inform the person of his right to make a written presentation within 30
days of mailing of the notice as to why a monetary penalty should not
be imposed, or, if imposed, why it should be in a lesser amount than
proposed.
Sec. 595.703 Presentation responding to prepenalty notice.
(a) Time within which to respond. The named person shall have 30
days from the date of mailing of the prepenalty notice to make a
written presentation to the Director of the Office of Foreign Assets
Control.
(b) Form and contents of written presentation. The written
presentation need not be in any particular form, but shall contain
information sufficient to indicate that it is in response to the
prepenalty notice. It should contain responses to the allegations in
the prepenalty notice and set forth the reasons why the person believes
the penalty should not be imposed or, if imposed, why it should be in a
lesser amount than proposed.
Sec. 595.704 Penalty notice.
(a) No violation. If, after considering any presentations made in
response to the prepenalty notice and any relevant facts, the Director
of the Office of Foreign Assets Control determines that there was no
violation by the person named in the prepenalty notice, he promptly
shall notify the person in writing of that determination and that no
monetary penalty will be imposed.
(b) Violation. If, after considering any presentations made in
response to the prepenalty notice, the Director of the Office of
Foreign Assets Control determines that there was a violation by the
person named in the prepenalty notice, he promptly shall issue a
written notice of the imposition of the monetary penalty to that
person.
Sec. 595.705 Administrative collection; referral to United States
Department of Justice.
In the event that the person named does not pay the penalty imposed
pursuant to this part or make payment arrangements acceptable to the
Director of the Office of Foreign Assets Control within 30 days of the
mailing of the written notice of the imposition of the penalty, the
matter may be referred for administrative collection measures by the
Department of the Treasury or to the United States Department of
Justice for appropriate action to recover the penalty in a civil suit
in a Federal district court.
Subpart H--Procedures
Sec. 595.801 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 part. All such
licenses in effect on the date of publication are set forth in subpart
E of this part. 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 part which
are not authorized by general license may be effected only under
specific licenses.
(2) Applications for specific licenses. Applications for specific
licenses to engage in any transactions prohibited by or pursuant to
this part may be filed by letter with the Office of Foreign Assets
Control. Any person having an interest in a transaction or proposed
transaction may file an application for a license authorizing such
transaction, but the applicant for a specific license is required to
make full disclosure of all parties in interest to the transaction so
that a decision on the application may be made with full knowledge of
all relevant facts and so that the identity and location of the persons
who know about the transaction may be easily ascertained in the event
of inquiry.
(3) Information to be supplied. The applicant must supply all
information specified by relevant instructions and/or forms, and must
fully disclose the
[[Page 3813]]
names of all the 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. 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 or discuss or argue
the application 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 any specifically designated person, agency,
or instrumentality.
(7) Address. License applications, reports, and inquiries should be
addressed to the appropriate section 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, N.W.--Annex, Washington, D.C. 20220.
Sec. 595.802 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. 595.803 Amendment, modification, or revocation.
The provisions of this part and any rulings, licenses, whether
general or specific, authorizations, instructions, orders, or forms
issued hereunder may be amended, modified, or revoked at any time.
Sec. 595.804 Rulemaking.
(a) All rules and other public documents are issued by the
Secretary of the Treasury upon recommendation of 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. Wherever possible, however, it is the practice of the
Office of Foreign Assets Control to receive written submissions or hold
informal consultations with interested parties before the issuance of
any rule or other public document.
(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. 595.805 Delegation by the Secretary of the Treasury.
Any action which the Secretary of the Treasury is authorized to
take pursuant to Executive Order 12947 or any further Executive orders
relating to the national emergency declared in Executive Order 12947
may be taken by the Director of the Office of Foreign Assets Control,
or by any other person to whom the Secretary of the Treasury has
delegated authority so to act.
Sec. 595.806 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.
(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 part may be
obtained in person or by writing to the Office of Foreign Assets
Control, U.S. Department of the Treasury, 1500 Pennsylvania Avenue,
N.W.--Annex, Washington, D.C. 20220, or by calling 202/622-2480.
Subpart I--Paperwork Reduction Act
Sec. 595.901 Paperwork Reduction Act notice.
The information collection requirements in Secs. 595.503, 595.504,
subpart F, and Secs. 595.703 and 595.801 have been approved by the
Office of Management and Budget under the Paperwork Reduction Act and
assigned control number 1505-0156.
Dated: December 21, 1995.
R. Richard Newcomb,
Director, Office of Foreign Assets Control.
Approved: January 4, 1996.
John P. Simpson
Deputy Assistant Secretary (Regulatory, Tariff & Trade Enforcement).
[FR Doc. 96-2183 Filed 1-29-96; 5:06 pm]
BILLING CODE 4810-25-F