[Federal Register Volume 67, Number 25 (Wednesday, February 6, 2002)]
[Rules and Regulations]
[Pages 5472-5477]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-2763]


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DEPARTMENT OF THE TREASURY

Office of Foreign Assets Control

31 CFR Part 591


Rough Diamonds (Sierra Leone & Liberia) Sanctions Regulations

AGENCY: Office of Foreign Assets Control, Treasury.

ACTION: Interim rule.

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SUMMARY: The Treasury Department's Office of Foreign Assets Control is 
issuing regulations to implement Executive Order 13194 of January 18, 
2001, as expanded in scope in Executive Order 13213 of May 22, 2001, 
prohibiting, with limited exceptions, the importation into the United 
States of rough diamonds from Sierra Leone or Liberia.

DATES: Effective date: February 6, 2002.
    Comments: Written comments must be received no later than April 8, 
2002.

ADDRESSES: Comments may be submitted either via regular mail to the 
attention of Chief, Policy Planning and Program Management Division, 
rm. 2176 Main Treasury Annex, 1500 Pennsylvania Ave. NW., Washington, 
DC 20220 or via OFAC's Web site 
(http://www.treas.gov/ofac).

FOR FURTHER INFORMATION CONTACT: Chief of Licensing, tel.: 202/622-
2480, or Chief Counsel, tel.: 202/622-2410, Office of Foreign Assets 
Control, Department of the Treasury, Washington, DC 20220.

SUPPLEMENTARY INFORMATION:

Electronic Availability

    This document is available as an electronic file on The Federal 
Bulletin Board the day of publication in the Federal Register. By 
modem, dial 202/512-1387 and type ``/GO FAC,'' or call 202/512-1530 for 
disk or paper copies. This file is available for downloading without 
charge in ASCII and Adobe Acrobat7 readable (*.PDF) formats. For 
Internet access, the address for use with the World Wide Web (Home 
Page), Telnet, or FTP protocol is: fedbbs.access.gpo.gov. This document 
and additional information concerning the programs of the Office of 
Foreign Assets Control are available for downloading from the Office's 
Internet Home Page: http://www.treas.gov/ofac, or in fax form through 
the Office's 24-hour fax-on-demand service: call 202/622-0077 using a 
fax machine, fax modem, or (within the United States) a touch-tone 
telephone.

Background

    On January 18, 2001, the President issued Executive Order 13194 (66 
FR 7389, Jan. 23, 2001), taking into account United Nations Security 
Council Resolution 1306 of July 5, 2000. This order declared a national 
emergency in response to the actions of the insurgent Revolutionary 
United Front in Sierra Leone (``RUF'') and prohibits the importation 
into the United States of rough diamonds from Sierra Leone that have 
not been controlled by the Government of Sierra Leone through its 
Certificate of Origin regime. The stated purpose of the order is to 
ensure that the direct or indirect importation into the United States 
of rough diamonds from Sierra Leone will not contribute financial 
support to the RUF, whose illicit trade in rough diamonds fuels the 
civil war in Sierra Leone by funding the rebels' aggressive actions and 
procurement of weapons, while at the same time seeking to avoid 
undermining the legitimate diamond trade or diminishing confidence in 
the integrity of the legitimate diamond industry.
    On May 22, 2001, the President issued Executive Order 13213 (66 FR 
28829, May 24, 2001), taking into account United Nations Security 
Council Resolution 1343 of March 7, 2001. This order expanded the scope 
of the national emergency declared in Executive Order 13194 to respond 
to, among other things, the Government of Liberia's complicity in the 
RUF's illicit trade in rough diamonds through Liberia. Executive Order 
13213 prohibits the direct or indirect importation into the United 
States of all rough diamonds from Liberia, whether or not such diamonds 
originated in Liberia.
    Both Executive orders authorize the Secretary of the Treasury, in 
consultation with the Secretary of State, to promulgate rules and 
regulations as may be necessary to carry out the purposes of the 
orders. To implement the orders, the Treasury Department's Office of 
Foreign Assets Control, acting under authority delegated by the 
Secretary of the Treasury, is promulgating the Rough Diamonds (Sierra 
Leone & Liberia) Sanctions Regulations (the ``Regulations'').
    Section 591.201 of subpart B of the Regulations implements section 
1 of Executive Order 13194 and section 1 of Executive Order 13213 by 
prohibiting (1) subject to limited exceptions, the direct or indirect 
importation into the United States of all rough diamonds from Sierra 
Leone on or after January 19, 2001, and (2) the direct or indirect 
importation into the United States of all

[[Page 5473]]

rough diamonds from Liberia on or after May 23, 2001. Section 591.202 
implements section 2 of Executive Order 13194 by excepting from the 
import prohibition those importations of rough diamonds from Sierra 
Leone that are controlled through the Certificate of Origin regime of 
the Government of Sierra Leone, provided that the diamonds have not 
physically entered the territory of Liberia.
    Section 591.203 implements section 3 of Executive Order 13194 and 
section 2 of Executive Order 13213 by prohibiting any transaction by a 
United States person or within the United States that evades or avoids, 
or has the purpose of evading or avoiding, or attempts to violate, any 
of the prohibitions set forth in the order. The regulation also 
prohibits any conspiracy formed to violate any of the prohibitions of 
the Executive orders.
    Subpart C of part 591 provides definitions of terms used in the 
Regulations. Subpart D sets forth interpretive guidance for the 
Regulations. For example, Sec. 591.403 makes clear that any transaction 
that is ordinarily incident to a licensed transaction and necessary to 
give effect to the licensed transaction is also authorized.
    Subpart E relates to licenses, authorizations, and statements of 
licensing policy. Section 591.501 refers the reader to subpart D of 
part 501 of 31 CFR chapter V for procedures relating to general 
licenses and the issuance of specific licenses to authorize 
transactions otherwise prohibited under part 591 but found to be 
consistent with U.S. policy. Subpart F refers the reader to subpart C 
of part 501 of 31 CFR chapter V for provisions relating to required 
records and reports. Penalties for violations of the Regulations are 
described in subpart G of the Regulations.

Request for Comments

    Because the promulgation of the Regulations pursuant to Executive 
Orders 13194 and 13213 involves 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 participation, and delay in effective date, are 
inapplicable. However, because of the importance of the issues raised 
by the Regulations, this rule is issued in interim form and comments 
will be considered in the development of final regulations. 
Accordingly, the Department encourages interested persons who wish to 
comment to do so at the earliest possible time to permit the fullest 
consideration of their views. Comments may address the impact of the 
Regulations on the submitter's activities, whether of a commercial, 
non-commercial, or humanitarian nature, as well as changes that would 
improve the clarity and organization of the Regulations.
    The period for submission of comments will close April 8, 2002. The 
Department will consider all comments received before the close of the 
comment period in developing final regulations. Comments received after 
the end of the comment period will be considered if possible, but their 
consideration cannot be assured. The Department will not accept public 
comments accompanied by a request that a part or all of the material be 
treated confidentially because of its business proprietary nature or 
for any other reason. The Department will return such comments and 
materials when submitted by regular mail to the person submitting the 
comments and will not consider them in the development of final 
regulations. In the interest of accuracy and completeness, the 
Department requires comments in written form.
    All public comments on these regulations will be a matter of public 
record. Copies of public record concerning these regulations will be 
made available not sooner than May 7, 2002, and will be obtainable from 
OFAC's website (http://www.treas.gov/ofac). If that service is 
unavailable, written requests for copies may be sent to: Office of 
Foreign Assets Control, U.S. Department of the Treasury, 1500 
Pennsylvania Ave. NW., Washington, DC 20220, Attn: Chief, Records 
Division.
    Because no notice of proposed rulemaking is required for this rule, 
the Regulatory Flexibility Act (5 U.S.C. 601-612) does not apply.

Paperwork Reduction Act

    The collections of information related to the Regulations are 
contained in 31 CFR part 501 (the ``Reporting and Procedures 
Regulations''). Pursuant to the Paperwork Reduction Act of 1995 (44 
U.S.C. 3507), those collections of information have been previously 
approved by the Office of Management and Budget under control number 
1505-0164. An agency may not conduct or sponsor, and a person is not 
required to respond to, a collection of information unless the 
collection of information displays a valid control number.

List of Subjects in CFR Part 591

    Administrative practice and procedure, Certificate of origin, 
Diamonds, Foreign trade, Imports, Liberia, Penalties, Reporting and 
recordkeeping requirements, and Sierra Leone.


    For the reasons set forth in the preamble, 31 CFR chapter V is 
amended by adding part 591 to read as follows:

PART 591--ROUGH DIAMONDS (SIERRA LEONE & LIBERIA) SANCTIONS 
REGULATIONS

Subpart A--Relation of This Part to Other Laws and Regulations
Sec.
591.101  Relation of this part to other laws and regulations.
Subpart B--Prohibitions
591.201   Prohibited importation of rough diamonds.
591.202   Permitted importation of rough diamonds.
591.203   Evasions; attempts; conspiracies.
Subpart C--General Definitions
591.301   Controlled through the Certificate of Origin regime of the 
Government of Sierra Leone.
591.302   Effective date.
591.303   Entity.
591.304   Importation into the United States.
591.305   Licenses; general and specific.
591.306   Person.
591.307   Rough diamond.
591.308   Rough diamonds from Sierra Leone or Liberia.
591.309   United States.
591.310   United States person; U.S. person.
Subpart D--Interpretations
591.401   Reference to amended sections.
591.402   Effect of amendment.
591.403   Transactions incidental to a licensed transaction.
591.404   Transshipment or transit through the United States 
prohibited.
591.405   Direct or indirect importation of rough diamonds from 
Sierra Leone or Liberia.
591.406   Importation into and release from a bonded warehouse or 
foreign trade zone.
Subpart E--Licenses, Authorizations and Statements of Licensing Policy
591.501   General and specific licensing procedures.
591.502   Effect of license or authorization.
591.503   Exclusion from licenses.
Subpart F--Reports
591.601   Records and reports.
Subpart G--Penalties
591.701   Penalties.
591.702   Prepenalty notice.
591.703   Response to prepenalty notice; informal settlement.
591.704   Penalty imposition or withdrawal.
591.705   Administrative collection; referral to United States 
Department of Justice.
Subpart H--Procedures
591.801   Procedures.
591.802   Delegation by the Secretary of the Treasury.

[[Page 5474]]

Subpart I--Paperwork Reduction Act
591.901   Paperwork Reduction Act notice.

    Authority: 3 U.S.C. 301; 22 U.S.C. 287c; 31 U.S.C. 321(b); 50 
U.S.C. 1601-1651, 1701-1706; Pub. L. 101-410, 104 Stat. 890 (28 
U.S.C. 2461 note); E.O. 13194, 66 FR 7389 (Jan. 23, 2001); E.O. 
13213, 66 FR 28829 (May 24, 2001).

Subpart A--Relation of This Part to Other Laws and Regulations


Sec. 591.101  Relation of this part to other laws and regulations.

    This part is separate from, and independent of, the other parts of 
this chapter, with the exception of part 501 of this chapter, the 
recordkeeping and reporting requirements and license application and 
other procedures of which apply to this part. Actions taken pursuant to 
part 501 of this chapter with respect to the prohibitions contained in 
this part are considered actions taken pursuant to this part. Differing 
foreign policy and national security circumstances may result in 
differing interpretations of similar language among the parts of this 
chapter. No license or authorization contained in or issued pursuant to 
those other parts authorizes any transaction prohibited by this part. 
No license or authorization contained in or issued pursuant to any 
other provision of law or regulation authorizes any transaction 
prohibited by this part. No license or authorization contained in or 
issued pursuant to this part relieves the involved parties from 
complying with any other applicable laws or regulations.

Subpart B--Prohibitions


Sec. 591.201  Prohibited importation of rough diamonds.

    Except to the extent provided in Sec. 591.202 or authorized by 
other regulations, orders, directives, rulings, instructions, licenses 
or otherwise, and notwithstanding the existence of any rights or 
obligations conferred or imposed by any international agreement or any 
contract entered into or any license or permit granted prior to the 
effective date, the direct or indirect importation into the United 
States of all rough diamonds from Sierra Leone or Liberia is 
prohibited.


Sec. 591.202  Permitted importation of rough diamonds.

    The prohibition in Sec. 591.201 of the importation into the United 
States of rough diamonds from Sierra Leone does not apply if the 
importation is controlled through the Certificate of Origin regime of 
the Government of Sierra Leone and the rough diamonds have not 
physically entered the territory of Liberia.


Sec. 591.203  Evasions; attempts; conspiracies.

    (a) Except as otherwise authorized, and notwithstanding the 
existence of any rights or obligations conferred or imposed by any 
international agreement or any contract entered into or any license or 
permit granted prior to the effective date, any transaction by any 
United States person or within the United States on or after the 
effective date that evades or avoids, has the purpose of evading or 
avoiding, or attempts to violate any of the prohibitions set forth in 
this part is prohibited.
    (b) Except as otherwise authorized, and notwithstanding the 
existence of any rights or obligations conferred or imposed by any 
international agreement or any contract entered into or any license or 
permit granted prior to the effective date, any conspiracy formed for 
the purpose of engaging in a transaction prohibited by this part is 
prohibited.

Subpart C--General Definitions


Sec. 591.301  Controlled through the Certificate of Origin regime of 
the Government of Sierra Leone.

    The term controlled through the Certificate of Origin regime of the 
Government of Sierra Leone means accompanied by a Certificate of Origin 
or other documentation that demonstrates to the satisfaction of the 
United States Customs Service (or analogous officials of a United 
States territory or possession with its own customs administration) 
that the rough diamonds were legally exported from Sierra Leone with 
the approval of the Government of Sierra Leone.


Sec. 591.302  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., eastern standard time, January 19, 2001, with respect to 
importations of rough diamonds from Sierra Leone and which is 12:01 
a.m., eastern daylight time, May 23, 2001, with respect to importations 
of rough diamonds from Liberia.


Sec. 591.303  Entity.

    The term entity means a partnership, association, trust, joint 
venture, corporation, group, subgroup, or other organization.


Sec. 591.304  Importation into the United States.

    The term importation into the United States means the bringing of 
goods into the United States.


Sec. 591.305  Licenses; general and specific.

    (a) Except as otherwise specified, the term license means any 
license or authorization contained in or issued pursuant to this part.
    (b) The term general license means any license or authorization the 
terms of which are set forth in subpart E of this part.
    (c) The term specific license means any license or authorization 
not set forth in subpart E of this part but issued pursuant to this 
part.

    Note to Sec. 591.305. See Sec. 501.801 of this chapter on 
licensing procedures.

Sec. 591.306  Person.

    The term person means an individual or entity.


Sec. 591.307  Rough diamond.

    The term rough diamond means all unworked diamonds classifiable in 
heading 7102 of the Harmonized Tariff Schedule of the United States.


Sec. 591.308  Rough diamonds from Sierra Leone or Liberia.

    The term rough diamonds from Sierra Leone or Liberia means rough 
diamonds extracted in Sierra Leone or Liberia and rough diamonds that 
have physically entered the territories of Sierra Leone or Liberia, 
regardless of where they have been extracted.


Sec. 591.309  United States.

    The term United States means the United States, its territories and 
possessions, and all areas under the jurisdiction or authority thereof.


Sec. 591.310  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.

Subpart D--Interpretations


Sec. 591.401  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 refers to the same as currently 
amended.

[[Page 5475]]

Sec. 591.402  Effect of amendment.

    Unless otherwise specifically provided, any amendment, 
modification, or revocation of any provision in or appendix to this 
part or chapter or of any order, regulation, ruling, instruction, or 
license issued by or under the direction of the Director of the Office 
of Foreign Assets Control does not affect any act done or omitted, 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 continue and may be enforced as if such 
amendment, modification, or revocation had not been made.


Sec. 591.403  Transactions incidental to a licensed transaction.

    Any transaction ordinarily incident to a licensed transaction and 
necessary to give effect thereto is also authorized.


Sec. 591.404  Transshipment or transit through the United States 
prohibited.

    The prohibitions in Sec. 591.201 apply to the importation into the 
United States, for transshipment or transit, of rough diamonds from 
Sierra Leone or Liberia that are intended or destined for any country 
other than the United States.


Sec. 591.405  Direct or indirect importation of rough diamonds from 
Sierra Leone or Liberia.

    The prohibitions in Sec. 591.201 apply to the importation of rough 
diamonds from Sierra Leone or Liberia whether those rough diamonds are 
being imported directly into the United States from Sierra Leone or 
Liberia, or indirectly through any other country.


Sec. 591.406  Importation into and release from a bonded warehouse or 
foreign trade zone.

    The prohibitions in Sec. 591.201 apply to the importation into and 
release from a bonded warehouse or foreign trade zone of the United 
States. However, Sec. 591.201 does not prohibit the release from a 
bonded warehouse or a foreign trade zone of rough diamonds from Sierra 
Leone or Liberia that were imported into that bonded warehouse or 
foreign trade zone prior to the effective date.

Subpart E--Licenses, Authorizations and Statements of Licensing 
Policy


Sec. 591.501  General and specific licensing procedures.

    For provisions relating to licensing procedures, see part 501, 
subpart D, of this chapter. Licensing actions taken pursuant to part 
501 of this chapter with respect to the prohibitions contained in this 
part are considered actions taken pursuant to this part.


Sec. 591.502  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, authorizes or validates 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 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. 591.503  Exclusion from licenses.

    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 conferred by any 
license. The Director of the Office of Foreign Assets Control also 
reserves the right to restrict the applicability of any license to 
particular persons, property, transactions, or classes thereof. Such 
actions are binding upon all persons receiving actual or constructive 
notice of the exclusions or restrictions.

Subpart F--Reports


Sec. 591.601  Records and reports.

    For provisions relating to required records and reports, see part 
501, subpart C, of this chapter. Recordkeeping and reporting 
requirements imposed by part 501 of this chapter with respect to the 
prohibitions contained in this part are considered requirements arising 
pursuant to this part.

Subpart G--Penalties


Sec. 591.701  Penalties.

    (a) Attention is directed to section 206 of the International 
Emergency Economic Powers Act (the ``Act'') (50 U.S.C. 1705), which is 
applicable 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 Act. Section 206 of the 
Act, as adjusted by the Federal Civil Penalties Inflation Adjustment 
Act of 1990 (Public Law 101-410, as amended, 28 U.S.C. 2461 note), 
provides that:
    (1) A civil penalty not to exceed $11,000 per violation may be 
imposed on any person who violates or attempts to violate any license, 
order, or regulation issued under the Act;
    (2) Whoever willfully violates or willfully attempts to violate any 
license, order, or regulation issued under the Act, upon conviction, 
shall be fined not more than $50,000 and, if a natural person, may also 
be imprisoned for not more than 10 years; 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.
    (b) The criminal penalties provided in the Act are subject to 
increase pursuant to 18 U.S.C. 3571.
    (c) Attention is directed to section 5 of the United Nations 
Participation Act (22 U.S.C. 287c(b)), which provides that any person 
who willfully violates or evades or attempts to violate or evade any 
order, rule, or regulation issued by the President pursuant to the 
authority granted in that section, upon conviction, shall be fined not 
more than $10,000 and, if a natural person, may also be imprisoned for 
not more than 10 years; and the officer, director, or agent of any 
corporation who knowingly participates in such violation or evasion 
shall be punished by a like fine, imprisonment, or both and any 
property, funds, securities, papers, or other articles or documents, or 
any vessel, together with her tackle, apparel, furniture, and 
equipment, or vehicle, or aircraft, concerned in such violation shall 
be forfeited to the United States. The criminal penalties provided in 
the United Nations Participation Act are subject to increase pursuant 
to 18 U.S.C. 3571.
    (d) Attention is also directed to 18 U.S.C. 1001, which provides 
that whoever, in any matter within the jurisdiction of the executive, 
legislative, or judicial branch of the Government of the United States, 
knowingly and

[[Page 5476]]

willfully falsifies, conceals, or covers up by any trick, scheme, or 
device a material fact, or makes any materially false, fictitious, or 
fraudulent statement or representation or makes or uses any false 
writing or document knowing the same to contain any materially false, 
fictitious, or fraudulent statement or entry shall be fined under title 
18, United States Code, or imprisoned not more than five years, or 
both.
    (e) Violations of this part may also be subject to relevant 
provisions of other applicable laws.


Sec. 591.702  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, the Director shall 
notify the alleged violator of the agency's intent to impose a monetary 
penalty by issuing a prepenalty notice. The prepenalty notice shall be 
in writing. The prepenalty notice may be issued whether or not another 
agency has taken any action with respect to the matter.
    (b) Contents of notice--(1) Facts of violation. The prepenalty 
notice shall describe the violation, specify the laws and regulations 
allegedly violated, and state the amount of the proposed monetary 
penalty.
    (2) Right to respond. The prepenalty notice also shall inform the 
respondent of respondent's right to make a written presentation within 
the applicable 30-day period set forth in Sec. 591.703 as to why a 
monetary penalty should not be imposed or why, if imposed, the monetary 
penalty should be in a lesser amount than proposed.
    (c) Informal settlement prior to issuance of prepenalty notice. At 
any time prior to the issuance of a prepenalty notice, an alleged 
violator may request in writing that, for a period not to exceed sixty 
(60) days, the agency withhold issuance of the prepenalty notice for 
the exclusive purpose of effecting settlement of the agency's potential 
civil monetary penalty claims. In the event the Director grants the 
request, under terms and conditions within his discretion, the Office 
of Foreign Assets Control will agree to withhold issuance of the 
prepenalty notice for a period not to exceed 60 days and will enter 
into settlement negotiations of the potential civil monetary penalty 
claim.


Sec. 591.703  Response to prepenalty notice; informal settlement.

    (a) Deadline for response. The respondent may submit a response to 
the prepenalty notice within the applicable 30-day period set forth in 
this paragraph. The Director may grant, at his discretion, an extension 
of time in which to submit a response to the prepenalty notice. The 
failure to submit a response within the applicable time period set 
forth in this paragraph shall be deemed to be a waiver of the right to 
respond.
    (1) Computation of time for response. A response to the prepenalty 
notice must be postmarked or date-stamped by the U.S. Postal Service 
(or foreign postal service, if mailed abroad) or courier service 
provider (if transmitted to OFAC by courier) on or before the 30th day 
after the postmark date on the envelope in which the prepenalty notice 
was mailed. If the respondent refused delivery or otherwise avoided 
receipt of the prepenalty notice, a response must be postmarked or 
date-stamped on or before the 30th day after the date on the stamped 
postal receipt maintained at the Office of Foreign Assets Control. If 
the prepenalty notice was personally delivered to the respondent by a 
non-U.S. Postal Service agent authorized by the Director, a response 
must be postmarked or date-stamped on or before the 30th day after the 
date of delivery.
    (2) Extensions of time for response. If a due date falls on a 
federal holiday or weekend, that due date is extended to include the 
following business day. Any other extensions of time will be granted, 
at the Director's discretion, only upon the respondent's specific 
request to the Office of Foreign Assets Control.
    (b) Form and method of response. The response must be submitted in 
writing and may be handwritten or typed. The response need not be in 
any particular form. A copy of the written response may be sent by 
facsimile, but the original must also be sent to the Office of Foreign 
Assets Control Civil Penalties Division by mail or courier and must be 
postmarked or date-stamped, in accordance with paragraph (a) of this 
section.
    (c) Contents of response. A written response must contain 
information sufficient to indicate that it is in response to the 
prepenalty notice.
    (1) A written response must include the respondent's full name, 
address, telephone number, and facsimile number, if available, or those 
of the representative of the respondent.
    (2) A written response should either admit or deny each specific 
violation alleged in the prepenalty notice and also state if the 
respondent has no knowledge of a particular violation. If the written 
response fails to address any specific violation alleged in the 
prepenalty notice, that alleged violation shall be deemed to be 
admitted.
    (3) A written response should include any information in defense, 
evidence in support of an asserted defense, or other factors that the 
respondent requests the Office of Foreign Assets Control to consider. 
Any defense or explanation previously made to the Office of Foreign 
Assets Control or any other agency must be repeated in the written 
response. Any defense not raised in the written response will be 
considered waived. The written response also should set forth the 
reasons why the respondent believes the penalty should not be imposed 
or why, if imposed, it should be in a lesser amount than proposed.
    (d) Default. If the respondent elects not to submit a written 
response within the time limit set forth in paragraph (a) of this 
section, the Office of Foreign Assets Control will conclude that the 
respondent has decided not to respond to the prepenalty notice. The 
agency generally will then issue a written penalty notice imposing the 
penalty proposed in the prepenalty notice.
    (e) Informal settlement. In addition to or as an alternative to a 
written response to a prepenalty notice, the respondent or respondent's 
representative may contact the Office of Foreign Assets Control as 
advised in the prepenalty notice to propose the settlement of 
allegations contained in the prepenalty notice and related matters. 
However, the requirements set forth in paragraph (f) of this section as 
to oral communication by the representative must first be fulfilled. In 
the event of settlement at the prepenalty stage, the claim proposed in 
the prepenalty notice will be withdrawn, the respondent will not be 
required to take a written position on allegations contained in the 
prepenalty notice, and the Office of Foreign Assets Control will make 
no final determination as to whether a violation occurred. The amount 
accepted in settlement of allegations in a prepenalty notice may vary 
from the civil penalty that might finally be imposed in the event of a 
formal determination of violation. In the event no settlement is 
reached, the time limit specified in paragraph (a) of this section for 
written response to the prepenalty notice will remain in effect unless 
additional time

[[Page 5477]]

is granted by the Office of Foreign Assets Control.
    (f) Representation. A representative of the respondent may act on 
behalf of the respondent, but any oral communication with the Office of 
Foreign Assets Control prior to a written submission regarding the 
specific allegations contained in the prepenalty notice must be 
preceded by a written letter of representation, unless the prepenalty 
notice was served upon the respondent in care of the representative.


Sec. 591.704  Penalty imposition or withdrawal.

    (a) No violation. If, after considering any 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 
respondent named in the prepenalty notice, the Director shall notify 
the respondent in writing of that determination and of the cancellation 
of the proposed monetary penalty.
    (b) Violation. (1) If, after considering any written response to 
the prepenalty notice, or default in the submission of a written 
response, and any relevant facts, the Director of the Office of Foreign 
Assets Control determines that there was a violation by the respondent 
named in the prepenalty notice, the Director is authorized to issue a 
written penalty notice to the respondent of the determination of 
violation and the imposition of the monetary penalty.
    (2) The penalty notice shall inform the respondent that payment or 
arrangement for installment payment of the assessed penalty must be 
made within 30 days of the date of mailing of the penalty notice by the 
Office of Foreign Assets Control.
    (3) The penalty notice shall inform the respondent of the 
requirement to furnish the respondent's taxpayer identification number 
pursuant to 31 U.S.C. 7701 and that such number will be used for 
purposes of collecting and reporting on any delinquent penalty amount.
    (4) The issuance of the penalty notice finding a violation and 
imposing a monetary penalty shall constitute final agency action. The 
respondent has the right to seek judicial review of that final agency 
action in federal district court.


Sec. 591.705  Administrative collection; referral to United States 
Department of Justice.

    In the event that the respondent 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 
date of mailing of the penalty notice, 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 federal district court.

Subpart H--Procedures


Sec. 591.801  Procedures.

    For license application procedures and procedures relating to 
amendments, modifications, or revocations of licenses; administrative 
decisions; rulemaking; and requests for documents pursuant to the 
Freedom of Information and Privacy Acts (5 U.S.C. 552 and 552a), see 
part 501, subpart D, of this chapter.


Sec. 591.802  Delegation by the Secretary of the Treasury.

    Any action that the Secretary of the Treasury is authorized to take 
pursuant to Executive Order 13194 of January 18, 2001 (66 FR 7389, 
January 23, 2001), Executive Order 13213 of May 22, 2001 (66 FR 28829, 
May 24, 2001), and any further Executive orders relating to the 
national emergency declared in Executive Order 13194 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.

Subpart I--Paperwork Reduction Act


Sec. 591.901  Paperwork Reduction Act notice.

    For approval by the Office of Management and Budget (``OMB'') under 
the Paperwork Reduction Act of 1995 (44 U.S.C. 3507) of information 
collections relating to recordkeeping and reporting requirements, 
licensing procedures (including those pursuant to statements of 
licensing policy), and other procedures, see Sec. 501.901 of this 
chapter. An agency may not conduct or sponsor, and a person is not 
required to respond to, a collection of information unless it displays 
a valid control number assigned by OMB.

    Dated: December 14, 2001.
R. Richard Newcomb,
Director, Office of Foreign Assets Control.
    Approved: January 30, 2002.
Jimmy Gurule,
Under Secretary (Enforcement), Department of the Treasury.
[FR Doc. 02-2763 Filed 2-1-02; 10:26 am]
BILLING CODE 4810-25-P