[Federal Register Volume 63, Number 129 (Tuesday, July 7, 1998)]
[Rules and Regulations]
[Pages 36571-36578]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-17870]
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DEPARTMENT OF STATE
22 CFR Part 140
[Public Notice 2840]
Bureau for International Narcotics and Law Enforcement Affairs;
Prohibition on Assistance to Drug Traffickers
AGENCY: Department of State (Bureau for International Narcotics and Law
Enforcement Affairs).
ACTION: Final rule.
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SUMMARY: The Department of State issues these regulations to implement
Section 487 of the Foreign Assistance Act of 1961, as amended (``FAA'')
(22 U.S.C. 2291f).
Section 487(a) directs the President to take all reasonable steps
to ensure that assistance provided under the Foreign Assistance Act or
the Arms Export Control Act is not provided to or through any
individual or entity that the President knows or has reason to believe
has been convicted of a violation of, or a conspiracy to violate, any
law or regulation of the United States, a State or the District of
Columbia, or a foreign country relating to narcotic or psychotropic
drugs or other controlled substances; or is or has been an illicit
trafficker in any such controlled substance or is or has been a knowing
assistor, abettor, conspirator, or colluder with others in the illicit
trafficking of any such substance. This rule establishes a single
government-wide enforcement mechanism for Section 487. The regulations
seek to achieve rigorous statutory enforcement in a
[[Page 36572]]
manner consistent with efficient foreign assistance program
administration. They also seek to ensure protection of the procedural
rights and interests of assistance recipients.
DATES: Effective date: October 5, 1998.
FOR FURTHER INFORMATION CONTACT: Office of Policy, Planning and
Coordination, Bureau for International Narcotics and Law Enforcement
Affairs, Department of State, 202-647-0457, or Office of Law
Enforcement and Intelligence, Office of the Legal Adviser, Department
of State, 202-647-7324.
SUPPLEMENTARY INFORMATION: This rule implements Section 487 of the
Foreign Assistance Act of 1961, as amended (22 U.S.C. Sec. 2291f). The
requirements of Section 487 are described in the Summary, above. The
law further directs that regulations be issued to carry out the section
and be submitted to Congress before they take effect. The
responsibilities of the President under Section 487 have been delegated
to the Secretary of State (E.O. 12163). The Secretary of State is
issuing these regulations and has delegated the responsibility for
their implementation to the Assistant Secretary for International
Narcotics and Law Enforcement Affairs. The regulations are set forth in
a new part of the Code of Federal Regulations, 22 CFR Part 140.
Proposed regulations were published for comment on Feb. 9, 1995 (60 FR
7737) and modifications have been made in light of comments received.
The regulations have been submitted to Congress, as required by Section
487(c).
The procedures prescribed by these regulations apply to assistance
under the Foreign Assistance Act of 1961, as amended, and the Arms
Export Control Act. The regulations are set up in three Subparts:
General (Subpart A, Secs. 140.1-140.3); Applicability (Subpart B,
Sec. 140.4); and Enforcement (Subpart C, Secs. 140.5-140.14).
The General Subpart (Subpart A) provides a statement of the
regulations' purpose (Sec. 140.1), based upon the language of Section
487 of the Foreign Assistance Act; identifies the authorities for
issuance of the regulations (Sec. 140.2); and defines key terms used in
the regulations (Sec. 140.3). The broad coverage of the regulations is
reflected in the definitions of drug trafficking (Sec. 140.3(e)), money
laundering (Sec. 140.3(f)), and narcotics offense (Sec. 140.3(g)),
which are intended to be comprehensive. As noted in the definition of
drug trafficking, it encompasses drug-related money laundering. One
commenting agency asked for further definition of the terms
``illicit,'' ``illicitly,'' and ``criminal.'' That comment was not
adopted because we believe such definitions are not necessary. We note
that the terms encompass activities that are illicit or illegal under
the laws applicable to such activities.
Two of the key terms defined in the regulations are ``covered
country'' (Sec. 140.3(d)) and ``covered assistance'' (Sec. 140.3(c)).
The term ``covered country'' corresponds to those countries listed on
the ``majors list,'' i.e., the list of major illicit drug producing
countries and major drug-transit countries, as determined annually by
the President and transmitted to the appropriate Congressional
committees as required by section 490(h) of the FAA.
The term ``covered assistance'' is defined broadly, while excluding
assessed contributions to an international organization and assistance
that by operation of law is not subject to Section 487. The definition
further provides that assistance in amounts less than $100,000 is
excluded unless it pertains to: recipients of scholarships,
fellowships, or participant training; or a covered individual or entity
reasonably suspected of being or having been involved in drug
trafficking by the agency providing assistance. These definitions are
intended to ensure rigorous application of the statutory prohibition on
assistance to drug traffickers, while fostering efficient program
administration. Several comments requested a more complete listing of
assistance that would be excluded from the term ``covered assistance''
by operation of other laws. Because such a list depends on specific
statutory exemptions and is subect to change, we have concluded that
further guidance in this area is more appropriately left to the
implementing regulations of the relevant agency, which will be in a
better position to keep the guidance current.
One agency recommended the addition of a definition of the term
``convicted;'' that definition has been added as Sec. 140.3(a).
For ease of reference, the term ``covered individual or entity'' is
defined in Sec. 140.4, where it is used, rather than in the definition
section. Likewise, the term ``key individual'' is described in
Sec. 140.6(a)(3), where it is introduced.
The term ``Country Narcotics Coordinator'' is defined in section
140.3(b). Comments from one agency acknowledged that the definition is
drafted to preserve flexibility by not specifying particular positions
at U.S. posts abroad but recommended further clarification to ensure
that a designated CNC would be qualified to handle sensitive law
enforcement information. The definition has not been changed, but we
note that the CNC is a key position often held by the Deputy Chief of
Mission at a U.S. diplomatic post. In the event that another person
were assigned to exercise these functions, that person would
necessarily have equally appropriate clearances to handle sensitive law
enforcement information.
The Applicability Subpart (Subpart B) explains the scope of the
regulations. Their applicability is keyed primarily to ``covered
individuals and entities'' that receive or provide direct or first-tier
``covered assistance'' and are located or providing assistance within a
``covered country.'' Concerns were raised that the definition of a
``covered country'' as one on the list of major illicit drug producing
or drug-transit countries issued annually pursuant to section 490(h) of
the Foreign Assistance Act of 1961, as amended, would preclude action
concerning assistance to a portion of a country or to another country
on which relevant information is developed after issuance of the list.
In response, Sec. 104.4(b) has been rewritten to include coverage of
assistance within any other country, or portion thereof, that the
Secretary of State or the Secretary's designee may at any time
determine should be treated as if it were a covered country in order to
fulfill the purpose of the regulations (Sec. 140.4(b)(1)). Furthermore,
the regulations have been drafted carefully to ensure they are given
their full statutory scope, i.e., that they are applied whenever an
agency providing covered assistance has reasonable grounds to suspect
that a proposed recipient individual or entity may be or may have been
involved in drug trafficking or may have been convicted of a narcotics
offense regardless of the country involved (Sec. 140.4(b)(2); see also
Secs. 140.3(c)(2), 140.7(a), 140.9(a) and 140.11).
The regulations are also applicable where a government agency
providing covered assistance within a covered country has specifically
designated a recipient beyond the first tier (see Secs. 140.4(a),
140.7(b)). Additionally, they apply to individuals who receive a
scholarship, fellowship, or participant training (unless the assistance
is provided through a multilateral institution or international
organization and the recipient has not been designated by the agency
providing assistance). Further assurance that drug traffickers will not
receive assistance is provided by the requirement that where an agency
providing covered assistance to a multilateral institution or
international organization does not
[[Page 36573]]
designate the assistance recipient, the agency's agreement with the
multilateral institution or international organization shall stipulate
that such entity is to make reasonable efforts to ensure that the
assistance is not diverted in support of drug trafficking
(Sec. 140.7(c)).
The factual circumstances that give rise to application of the
regulations are highly varied and may, on occasion, have potentially
serious or sensitive foreign relations, national security, or law
enforcement consequences. In rare circumstances, such potential
consequences may require that, in fulfilling the statutory requirements
of Section 487, the procedures set forth in the regulations be
expanded, modified, utilized in a different manner or not utilized.
This necessary flexibility is provided in the initial clause of
Sec. 140.4. In response to comments by one agency raising concerns
about possible disclosure of law enforcement investigatory information,
however, that section has been amended to provide that Secs. 140.13 and
140.14 will apply in all cases.
The Enforcement Subpart (Subpart C) contains an overview
(Sec. 140.5), which outlines the Subpart's scope. The applicable
determination procedures, criteria to be applied in deciding whether to
withhold assistance or take other measures, and procedures concerning
violations identified subsequent to the obligation of funds are set
forth in the Enforcement Subpart. The applicability of these procedures
varies depending on the nature of the proposed recipient. The general
framework is set forth in Sec. 140.6, in the context of covered
assistance to foreign government entities. Variations of that framework
are set forth in separate sections for: multilateral institutions and
international organizations (Sec. 140.7); recipients of scholarships,
fellowships, and participant training (Sec. 140.8); other non-
governmental entities and individuals (Sec. 140.9); and intermediate
credit institutions (Sec. 140.10). (Note: In Sec. 140.9 the use of the
phrase ``non-governmental entity'' is meant to encompass a broader
category of organizations than might be encompassed by the term ``non-
governmental organization'' or its acronym, ``NGO.'' As explained in
Sec. 140.9, it includes not only private voluntary agencies and
educational institutions, but also for-profit firms and any other non-
governmental organizations.)
The determination procedures set forth in the regulations are
applied by the Country Narcotics Coordinator (as defined in
Sec. 140.3(b)), who is responsible in the first instance for reviewing
available information to determine whether a proposed assistance
recipient is to be granted or denied assistance or whether other
measures are to be taken to structure the provision of the assistance
in such a way as to meet the requirements of Section 487 of the Foreign
Assistance Act (Sec. 140.6(a)). Comments from one agency pointed out
that agencies providing information that will be used for this purpose
have a strong interest in how the system for reviewing information as
required under Sec. 140.6(a)(1) is developed and suggested that
parameters of such a system be included in the regulations. We have
decided not to change the regulations on this point although we will
provide guidance to CNCs separately on this matter in order to preserve
flexibility in developing and adjusting such a system over time.
Nevertheless, the State Department will consult with agencies that
supply information in developing that guidance. An agency proposing
assistance is responsible for providing the Country Narcotics
Coordinator with the name of each key individual within a prospective
recipient entity who may be expected to control or benefit from
assistance as well as other relevant information that is readily
available (Sec. 140.6(a)(3)). Questions as to who should be included in
the group of key individuals will be resolved by the CNC, with review
by the Assistant Secretary for INL at the request of the agency.
Section 140.6(a)(6) further provides that it is the Assistant
Secretary of State for International Narcotics and Law Enforcement
Affairs (rather than the Country Narcotics Coordinator), in
consultation with appropriate bureaus and agencies, who ordinarily will
make any decision to withhold assistance or take other measures based
on information or allegations that a key individual who is a senior
government official of a foreign government has been convicted of a
narcotics offense or has been engaged in drug trafficking. Personal
involvement at or above the Assistant Secretary of State level is
appropriate in such a case because it involves inherently sensitive
foreign policy issues.
The regulations provide a two-week period, extendable if necessary
for another two weeks, within which the Country Narcotics Coordinator,
in consultation with the agency proposing the assistance and other
appropriate bureaus and agencies, is to make a determination whether
assistance is to be provided or withheld, or other measures are to be
taken to meet the requirements of section 487. The reference to other
appropriate bureaus and agencies was added in response to a comment
from one agency noting that the decision would need to be made on the
basis of information supplied by other, often law enforcement,
agencies. Section 140.6(b) outlines the factors to be considered in
determining whether to withhold assistance or take other measures. In
response to comments from one agency requesting additional guidance
concerning the standard ``reasonable belief,'' we have changed that
term as used in 140.6(b) to the exact words of the statute, ``reason to
believe'' that a proposed recipient has been engaged in drug
trafficking activities. When there is evidence that might lead to such
a finding, the CNC will decide whether reports are credible and sources
reliable, thus providing a reason to believe rather than merely raising
a suspicion.
In response to comments requesting further guidance on
implementation, a new subsection (b)(3)(v) has been added to make clear
that measures other than denial of assistance may be appropriate in
certain cases where a negative determination is made as to one or more
key individuals.
The enforcement procedures applicable to recipients of
scholarships, fellowships, and participant training (Sec. 140.8) and to
other non-governmental entities and individuals (Sec. 140.9) include a
pre-approval certification process. The regulations specify that false
certification may subject the signatory to U.S. criminal prosecution
under 18 U.S.C. 1001. (See Secs. 140.8(b), 140.9(c).) Although this
penalty is described in the regulations, it is established
independently by the referenced statute. The identification of a
penalty in the regulations is not meant to limit the application of any
criminal or civil penalty otherwise applicable.
Section 140.10 concerns the procedures applicable to intermediate
credit institutions. Such institutions are to be treated as either
foreign government entities or non-governmental entities, depending on
the nature of the particular institution. Section 140.10 also requires
that agreements with such intermediate credit institutions include a
contract clause concerning a refund procedure applicable to loans
exceeding $1,000 made by any intermediate credit institution.
Section 140.11 clarifies that the enforcement procedures
established by Secs. 140.6-140.10 are not exhaustive, but represent
only the minimum applicable procedures implementing Section 487 of the
Foreign Assistance Act.
The remaining provisions of the regulations establish notification
and
[[Page 36574]]
review procedures. One agency commented that only the law enforcement
agency whose investigation may be affected by disclosure of information
is in a position to make a determination regarding the appropriateness
of notifications and any decision to provide additional information. In
response to these comments, Sec. 140.13(a) has been amended to ensure
that no information beyond the statutory basis for withholding,
suspending or terminating assistance to a foreign government or entity
will be provided without the agreement of the originating agency.
Special care has also been taken to minimize the risk that notification
will interfere with an ongoing criminal investigation (Sec. 140.13(b)).
An agency proposing covered assistance may request review of a Country
Narcotics Coordinator's decision that the assistance must be withheld
or other measures taken to comply with section 487 (Sec. 140.12). In
addition, where the prospective assistance recipient is a U.S. entity,
U.S. citizen, or permanent U.S. resident, a Country Narcotics
Coordinator's preliminary decision to withhold assistance is referred
to the Assistant Secretary of State for International Narcotics and Law
Enforcement Affairs for final determination (Sec. 140.14). As with
Sec. 140.13, in response to comments, Sec. 140.14(a) has been revised
to provide that decisions on appropriate action concerning U.S.
entities and individuals will be taken in consultation not only with
the agency proposing the assistance but also the agency or agencies
that provided information reviewed or relied upon in making the
preliminary decision. One agency expressed concerns that procedures
previously anticipated for review of denials of assistance under this
section could be viewed as introducing a standard of proof inconsistent
with section 487 and could lead to disclosure of classified materials
or law enforcement investigative information. The section has been
amended to remove references to pre-existing review procedures which
would not ordinarily be applicable in the context of assistance grants.
Section 140.14(b) also now states explicitly that the regulations shall
not be interpreted to create a right to classified information or law
enforcement investigatory information by such entity or individual.
This amendment involves a foreign affairs function of the United
States, as well as public grants, benefits and contracts, and is
accordingly not subject to the requirements of the Regulatory
Flexibility Act, as amended by the Small Business Regulatory
Enforcement Fairness Act of 1996. It is also exempt from review under
Executive Order 12866 but has been reviewed internally by the
Department to ensure consistency with the purposes thereof.
List of Subjects in 22 CFR Part 140
Drug traffic control, Foreign aid.
For the reasons set out in the preamble, 22 CFR 140 is added to
subchapter N as follows:
PART 140--PROHIBITION ON ASSISTANCE TO DRUG TRAFFICKERS
Subpart A--General
Sec.
140.1 Purpose.
140.2 Authorities.
140.3 Definitions.
Subpart B--Applicability
140.4 Applicability.
Subpart C--Enforcement
140.5 Overview.
140.6 Foreign government entities.
140.7 Multilateral institutions and international organizations.
140.8 Recipients of scholarships, fellowships, and participant
training.
140.9 Other non-governmental entities and individuals.
140.10 Intermediate credit institutions.
140.11 Minimum enforcement procedures.
140.12 Interagency review procedures.
140.13 Notification to foreign entities and individuals.
140.14 Special procedures for U.S. entities and individuals.
Authority: 22 U.S.C. 2651a(a)(4).
Subpart A--General
Sec. 140.1 Purpose.
(a) This part implements Section 487 of the Foreign Assistance Act
of 1961, as amended (22 U.S.C. Sec. 2291f).
(b) Section 487(a) directs the President to ``take all reasonable
steps'' to ensure that assistance under the Foreign Assistance Act of
1961 (FAA) and the Arms Export Control Act (AECA) ``is not provided to
or through any individual or entity that the President knows or has
reason to believe'':
(1) has been convicted of a violation of, or a conspiracy to
violate, any law or regulation of the United States, a State or the
District of Columbia, or a foreign country relating [to] narcotic or
psychotropic drugs or other controlled substances; or
(2) is or has been an illicit trafficker in any such controlled
substance or is or has been a knowing assistor, abettor,
conspirator, or colluder with others in the illicit trafficking in
any such substance.
Sec. 140.2 Authorities.
Authority to implement FAA Section 487 was delegated by the
President to the Secretary of State by E.O. 12163, as amended, and
further delegated by the Secretary to the Assistant Secretary of State
for International Narcotics and Law Enforcement Affairs by Delegation
of Authority No. 145, dated Feb. 4, 1980 (45 FR 11655), as amended.
Sec. 140.3 Definitions.
The following definitions shall apply for the purpose of this part:
(a) Convicted. The act of being found guilty of or legally
responsible for a criminal offense, and receiving a conviction or
judgment by a court of competent jurisdiction, whether by verdict or
plea, and including convictions entered upon a plea of nolo contendere.
(b) Country Narcotics Coordinator. The individual assigned by the
Chief of Mission of a U.S. diplomatic post, in consultation with the
Assistant Secretary of State for International Narcotics and Law
Enforcement Affairs, in each foreign country to coordinate United
States government policies and activities within a country related to
counternarcotics efforts.
(c) Covered assistance. Any assistance provided by an agency of the
United States government under the FAA or AECA, except that it does not
include:
(1) Assistance that by operation of the law is not subject to FAA
Section 487, such as:
(i) Disaster relief and rehabilitation provided under Chapter 9 of
Part I of the FAA; and
(ii) Assistance provided to small farmers when part of a community-
based alternative development program under Part I or Chapter 4 of Part
II of the FAA;
(2) Assistance in a total amount less than $100,000 regarding a
specific activity, program, or agreement, except that the procedures in
Sec. 140.8 for recipients of scholarships, fellowships, and participant
training shall apply regardless of amount. However, assistance shall be
deemed covered assistance regardless of amount if the agency providing
assistance has reasonable grounds to suspect that a covered individual
or entity may be or may have been involved in drug trafficking; or
(3) Payments of dues or other assessed contributions to an
international organization.
(d) Covered country. A country that has been determined by the
President to be either a ``major illicit drug producing'' or ``major
drug-transit'' country under Chapter 8 of Part I of the
[[Page 36575]]
FAA. The list of covered countries is submitted to Congress annually
and set forth in the International Narcotics Control Strategy Report.
(e) Drug trafficking. Any activity undertaken illicitly to
cultivate, produce, manufacture, distribute, sell, finance or
transport, or to assist, abet, conspire, or collude with others in
illicit activities, including money laundering, relating to narcotic or
psychotropic drugs, precursor chemicals, or other controlled
substances.
(f) Money laundering. The process whereby proceeds of criminal
activity are transported, transferred, transformed, converted, or
intermingled with legally acquired funds, for the purpose of concealing
or disguising the true nature, source, disposition, movement, or
ownership of those proceeds. The goal of money laundering is to make
funds derived from or associated with illicit activity appear to have
been acquired legally.
(g) Narcotics offense. A violation of, or a conspiracy to violate,
any law or regulation of the United States, a State or the District of
Columbia, or a foreign country relating to narcotic or psychotropic
drugs or other controlled substances.
Subpart B--Applicability
Sec. 140.4 Applicability.
Except as otherwise provided herein or as otherwise specially
determined by the Secretary of State or the Secretary's designee
(except that decisions on notification and/or disclosure shall in all
cases be subject to the provisions of Secs. 140.13 through 140.14), the
procedures prescribed by this part apply to any ``covered individual or
entity,'' i.e., any individual or entity, including a foreign
government entity, a multilateral institution or international
organization, or a U.S. or foreign non-governmental entity: (a)(1) That
is receiving or providing covered assistance as a party to a grant,
loan, guarantee, cooperative agreement, contract, or other direct
agreement with an agency of the United States (a ``first-tier''
recipient); or
(2) That is receiving covered assistance
(A) Beyond the first tier if specifically designated to receive
such assistance by a U.S. government agency; or
(B) In the form of a scholarship, fellowship, or participant
training, except certain recipients funded through a multilateral
institution or international organization, as provided in
Sec. 140.7(c); and
(b)(1) That is located in or providing covered assistance within a
covered country or within any other country, or portion thereof, that
the Secretary of State or the Secretary's designee may at any time
determine should be treated, in order to fulfill the purpose of this
part, as if it were a covered country; or
(2) As to which the agency providing assistance or any other
interested agency has reasonable grounds to suspect current or past
involvement in drug trafficking or conviction of a narcotics offense,
regardless of whether the assistance is provided within a covered
country.
Examples:
(1) Under a $500,000 bilateral grant agreement with the Agency
for International Development providing covered assistance, Ministry
Y of Government A, the government of a covered country, enters into
a $150,000 contract with Corporation X. Ministry Y is a covered
entity. However, Corporation X is not a covered entity because the
contract is not a direct contract with an agency of the United
States.
(2) Under a $1,000,000 grant from the Department of State
providing covered assistance, Corporation B makes a $120,000
subgrant to University Y for the training of 12 individuals. If
Corporation B is located in or providing assistance within a covered
country, it is a covered entity and the 12 individuals receiving
participant training are covered individuals. University Y is not a
covered entity.
(3) University C, which is not located in a covered country,
receives a $1 million regional assistance research project grant
from the Agency for International development, $80,000 of which is
provided for research in covered countries. University C is not a
covered entity. (However, if $100,000 or more were provided for
research in a covered country or countries, or if University C were
located in a covered country, then University C would be a covered
entity.)
Subpart C--Enforcement
Sec. 140.5 Overview.
This subpart sets forth the enforcement procedures applicable
pursuant to Sec. 140.4 to the various types of covered individuals and
entities with respect to covered assistance. Section 140.6 establishes
the procedures applicable to foreign government entities, including any
such entity that is covered by the definition of a ``foreign state''
set forth in the Foreign Sovereign Immunities Act, 28 U.S.C. Sec.
1603(a). Section 140.7 establishes the procedures applicable to
multilateral institutions and international organizations. Section
140.8 establishes the procedures applicable to recipients of
scholarships and fellowships and participant trainees. Section 140.9
establishes the procedures applicable to non-governmental entities.
Section 140.10 sets forth additional procedures applicable to
intermediate credit institutions. Sections 140.11 through 140.14
contain general provisions related to the enforcement process.
Sec. 140.6 Foreign government entities.
(a) Determination Procedures. (1) The Country Narcotics Coordinator
shall be responsible for establishing a system for reviewing available
information regarding narcotics offense convictions and drug
trafficking of proposed assistance recipients under this section and,
except under the circumstances described in Sec. 140.6(a)(6),
determining whether a proposed recipient is to be denied such
assistance or other measures are to be taken as a result of the
application of FAA Section 487.
(2) Prior to providing covered assistance to or through a proposed
recipient, the agency providing the assistance shall provide the
Country Narcotics Coordinator in the country in which the proposed
recipient is located or, as appropriate, where assistance is to be
provided, the information specified in Sec. 140.6(a)(3) in order that
the Country Narcotics Coordinator may carry out his or her
responsibilities under this part.
(3) In each case, the agency proposing the assistance shall provide
to the Country Narcotics Coordinator the name of each key individual
within the recipient entity who may be expected to control or benefit
from assistance as well as other relevant identifying information
(e.g., address, date of birth) that is readily available. If a question
arises concerning who should be included within the group of key
individuals of an entity, the agency providing the assistance shall
consult with the Country Narcotics Coordinator, and the decision shall
be made by the Country Narcotics Coordinator. If the agency proposing
the assistance disagrees with the Country Narcotics Coordinator's
decision regarding who should be included within the group of key
individuals, the agency may request that the decision be reviewed by
the Assistant Secretary of State for International Narcotics and Law
Enforcement Affairs in consultation with other appropriate bureaus and
agencies. Any such review undertaken by the Assistant Secretary of
State for International Narcotics and Law Enforcement Affairs shall be
completed expeditiously.
(4) Within fourteen calendar days after receiving the name of a
proposed recipient and other relevant information, the Country
Narcotics Coordinator shall determine whether any available information
may warrant withholding assistance or taking other measures under this
part, based on the
[[Page 36576]]
criteria set forth in Sec. 140.6(b). If, during that period, the
Country Narcotics Coordinator determines that available information
does not so indicate, he or she shall notify the proposing agency that
the assistance may be provided to the proposed recipient.
(5) If, during the initial fourteen-day period, the Country
Narcotics Coordinator determines that information exists that may
warrant withholding assistance or taking other measures under this
part, then the Country Narcotics Coordinator shall have another
fourteen calendar days to make a final determination whether the
assistance shall be provided or withheld or such other measures taken.
(6) A decision to withhold assistance or to take other measures
based on information or allegations that a key individual who is a
senior government official of the host nation has been convicted of a
narcotics offense or has been engaged in drug trafficking shall be made
by the Assistant Secretary of State for International Narcotics and Law
Enforcement Affairs, or by a higher ranking official of the Department
of State, in consultation with other appropriate bureaus and agencies.
For the purpose of this part, ``senior government official'' includes
host nation officials at or above the vice minister level, heads of
host nation law enforcement agencies, and general or flag officers of
the host nation armed forces.
(b) Criteria to be Applied. (1) A decision to withhold assistance
or take other measures shall be based on knowledge or reason to believe
that the proposed recipient, within the past ten years, has:
(i) Been convicted of a narcotics offense as defined in this part;
or
(ii) Been engaged in drug trafficking, regardless of whether there
has been a conviction.
(2) Factors that may support a decision to withhold assistance or
take other measures based on reason to believe that the proposed
recipient has been engaged in drug trafficking activities within the
past ten years when there has been no conviction of such an offense may
include, but are not limited to, the following:
(i) Admission of participation in such activities;
(ii) A long record of arrests for drug trafficking activities with
an unexplained failure to prosecute by the local government;
(iii) Adequate reliable information indicating involvement in drug
trafficking.
(3) If the Country Narcotics Coordinator knows or has reason to
believe that a key individual (as described in Sec. 140.6(a)(3)) within
a proposed recipient entity has been convicted of a narcotics offense
or has been engaged in drug trafficking under the terms of this part,
the Country Narcotics Coordinator must then decide whether withholding
assistance from the entity or taking other measures to structure the
provision of assistance to meet the requirements of section 487 is
warranted. This decision shall be made in consultation with the agency
proposing the assistance and other appropriate bureaus and agencies. In
making this determination, the Country Narcotics Coordinator shall take
into account:
(i) The extent to which such individual would have control over
assistance received;
(ii) The extent to which such individual could benefit personally
from the assistance;
(iii) Whether such individual has acted alone or in collaboration
with others associated with the entity;
(iv) The degree to which financial or other resources of the entity
itself have been used to support drug trafficking; and
(v) Whether the provision of assistance to the entity can be
structured in such a way as to exclude from the effective control or
benefit of the assistance any key individuals with respect to whom a
negative determination has been made.
(c) Violations Identified Subsequent to Obligation. The foregoing
procedures provide for a determination before funds are obligated. If,
however, subsequent to an obligation of funds an assistance recipient
or a key individual of such recipient is found to have been convicted
of a narcotics offense or to have been engaged in drug trafficking
(e.g., the head of a recipient entity changes during the course of an
activity and the new head is found to have been engaged in drug
trafficking), appropriate action should be taken, including, if
necessary, termination of the assistance. Agreements shall be written
to permit termination of assistance in such circumstances.
Sec. 140.7 Multilateral institutions and international organizations.
Assistance provided to or through multilateral institutions or
international organizations is subject to this part as follows:
(a) Where the government agency providing assistance has reasonable
grounds to suspect that a recipient multilateral institution or
international organization may be or may have been involved in drug
trafficking, the provisions of Sec. 140.6 shall apply.
(b) Where the government agency providing assistance designates the
recipient of assistance from the multilateral institution or
international organization and the designated recipient is a covered
individual or entity, the provisions of this part shall apply as if the
assistance were provided directly to the designated recipient.
(c) Where the government agency providing assistance does not
designate the recipient of assistance from the multilateral institution
or international organization, this part do not apply, other than as
provided in paragraph (a) of this section, except that the agency's
agreement with the multilateral institution or international
organization shall stipulate that such entity is to make reasonable
efforts, as necessary, to ensure that the assistance is not diverted in
support of drug trafficking.
Example:
The State Department provides $600,000 to the United Nations for
the United Nations Drug Control Program, specifically designating
that Government D of a covered country receive $150,000 and
Corporation E receive $60,000 for training programs in a covered
country. Individuals who will receive training are not specifically
designated by the State Department. The United Nations is a covered
entity based on Sec. 140.4(a)(1); Government D is a covered entity
based on Secs. 140.4(b) and 140.7(b); Corporation E is not a covered
entity under Secs. 140.4(b) and 140.7(b) because it has been
designated to receive less than $100,000 in assistance
(Sec. 140.3(c)(2)). Participant trainees are not covered individuals
because they fall under the exception contained in Sec. 140.7(c)
(see also Sec. 140.4(a)(2)).
Sec. 140.8 Recipients of scholarships, fellowships, and participant
training.
(a) Procedures. Individuals who are located in a covered country
and who are proposed recipients of scholarships, fellowships, or
participant training, except those falling under the exception
contained in Sec. 140.7(c), are subject to the review procedures,
criteria, and procedures concerning violations identified subsequent to
obligation of funds set forth in Sec. 140.6. Such review of recipient
individuals is in addition to the provisions applicable to the
recipient entity providing the assistance.
(b) Certifications. Individuals who are located in a covered
country and who are proposed recipients of scholarships, fellowships,
or participant training shall also be required to certify prior to
approval that, within the last ten years, they have not been convicted
of a narcotics offense, have not been engaged in drug trafficking, and
have not knowingly assisted, abetted, conspired,
[[Page 36577]]
or colluded with others in drug trafficking. False certification may
subject the assistance recipient to U.S. criminal prosecution under 18
U.S.C. Sec. 1001 and to withdrawal of assistance under this part.
Sec. 140.9 Other non-governmental entities and individuals.
(a) Procedures. Section 140.9 applies to private voluntary
agencies, educational institutions, for-profit firms, other non-
governmental entities and private individuals. A non-governmental
entity that is not organized under the laws of the United States shall
be subject to the review procedures and criteria set forth in
Sec. 140.6(a) and (b). A non-governmental entity that is organized
under the laws of the United States shall not be subject to such review
procedures and criteria. However, an agency providing assistance shall
follow such review procedures and criteria, as modified by section
Sec. 140.14, if the agency has reasonable grounds to suspect that a
proposed U.S. non-governmental entity or a key individual of such
entity may be or may have been involved in drug trafficking or may have
been convicted of a narcotics offense. Procedures set forth in
Sec. 140.6(c) concerning violations identified subsequent to obligation
shall apply to both U.S. and foreign non-governmental entities.
Examples:
(1) A $100,000 grant to a covered U.S. university for
participant training would not be subject to the review procedures
and criteria in Sec. 140.6(a) and (b). However, a proposed
participant would be subject to the review procedures and criteria
in Sec. 140.6(a) and (b) as part of the agency's approval process.
(2) A $100,000 grant to a covered foreign private voluntary
agency for participant training would be subject to the review
procedures and criteria in Sec. 140.6(a) and (b). In addition, each
proposed participant would be subject to the review procedures and
criteria in Sec. 140.6(a) and (b) as part of the agency's approval
process.
(b) Refunds. A clause shall be included in grants, contracts, and
other agreements with both U.S. and foreign non-governmental entities
requiring that assistance provided to or through such an entity that is
subsequently found to have been engaged in drug trafficking, as defined
in this part, shall be subject to refund or recall.
(c) Certifications. Prior to approval of covered assistance, key
individuals (as described in Sec. 140.6(a)(3)) in both U.S. and foreign
non-governmental entities shall be required to certify that, within the
last ten years, they have not been convicted of a narcotics offense,
have not been engaged in drug trafficking and have not knowingly
assisted, abetted, conspired, or colluded with others in drug
trafficking. False certification may subject the signatory to U.S.
criminal prosecution under 18 U.S.C. Sec. 1001.
Sec. 140.10 Intermediate credit institutions.
(a) Treatment as Non-Governmental Entity or as a Foreign Government
Entity. Intermediate credit institutions (``ICIs'') shall be subject to
either the procedures applicable to foreign government entities or
those applicable to non-governmental entities, depending on the nature
of the specific entity. The Assistant Secretary of State for
International Narcotics and Law Enforcement Affairs or the Assistant
Secretary's designee, in consultation with the agency proposing the
assistance and other appropriate bureaus and agencies, shall determine
(consistent with the definition of ``foreign state'' set forth in the
Foreign Sovereign Immunities Act, 28 U.S.C. 1603(a) and made applicable
by Sec. 140.5) whether the ICI will be treated as a non-governmental
entity or a foreign government entity.
(b) Refunds. In addition to measures required as a consequence of
an ICI's treatment as a non-governmental entity or a foreign government
entity, a clause shall be included in agreements with all ICIs
requiring that any loan greater than $1,000 provided by the ICI to an
individual or entity subsequently found to have been convicted of a
narcotics offense or engaged in drug trafficking, as defined in this
part, shall be subject to refund or recall.
Sec. 140.11 Minimum enforcement procedures.
Sections 140.6 through 140.10 represent the minimum procedures that
each agency providing assistance must apply in order to implement FAA
Section 487. Under individual circumstances, however, additional
measures may be appropriate. In those cases, agencies providing
assistance are encouraged to take additional steps, as necessary, to
ensure that the statutory restrictions are enforced.
Sec. 140.12 Interagency review procedures.
If the agency proposing the assistance disagrees with a
determination by the Country Narcotics Coordinator to withhold
assistance or take other measures, the agency may request that the
determination be reviewed by the Assistant Secretary of State for
International Narcotics and Law Enforcement Affairs in coordination
with other appropriate bureaus and agencies. Unless otherwise
determined by the Assistant Secretary of State for International
Narcotics and Law Enforcement Affairs, the assistance shall continue to
be withheld pending resolution of the review.
Sec. 140.13 Notification to foreign entities and individuals.
(a) Unless otherwise determined under Sec. 140.13(b), if a
determination has been made that assistance to a foreign entity or
individual is to be withheld, suspended, or terminated under this part,
the agency administering such assistance shall so inform the affected
entity or individual. Except as the agency administering such
assistance, the Country Narcotics Coordinator, and the agency or
agencies that are the source of information that formed the basis for
withholding, suspending, or terminating assistance may otherwise agree,
the entity or individual shall be notified solely of the statutory
basis for withholding, suspending, or terminating assistance.
(b) Before such notification, the Country Narcotics Coordinator
shall be responsible for ascertaining, in coordination with the
investigating agency, that notification would not interfere with an on-
going criminal investigation. If the investigating agency believes that
there is a significant risk of such interference, the Country Narcotics
Coordinator, in coordination with the investigating agency, shall
determine the means of compliance with this statute that best minimizes
such risk.
Sec. 140.14 Special procedures for U.S. entities and individuals.
(a) If the Country Narcotics Coordinator makes a preliminary
decision that evidence exists to justify withholding, suspending, or
terminating assistance to a U.S. entity, U.S. citizen, or permanent
U.S. resident, the matter shall be referred immediately to the
Assistant Secretary of State for International Narcotics and Law
Enforcement Affairs for appropriate action, to be taken in consultation
with the agency proposing the assistance and the agency or agencies
that provided information reviewed or relied upon in making the
preliminary decision.
(b) If a determination is made that assistance is to be withheld,
suspended, or terminated under this part, the Assistant Secretary of
State for International Narcotics and Law Enforcement Affairs, or the
Assistant Secretary's designee, shall notify the affected U.S. entity,
U.S. citizen, or permanent U.S. resident and provide such entity or
individual with an opportunity to respond before action is taken. In no
event, shall this part be interpreted to create a right to classified
[[Page 36578]]
information or law enforcement investigatory information by such entity
or individual.
Dated: May 31, 1998.
Madeleine K. Albright,
Secretary of State.
[FR Doc. 98-17870 Filed 7-6-98; 8:45 am]
BILLING CODE 4710-08-V