[Federal Register Volume 70, Number 58 (Monday, March 28, 2005)]
[Rules and Regulations]
[Pages 15583-15584]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 05-6046]


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DEPARTMENT OF THE TREASURY

Office of Foreign Assets Control

31 CFR Part 560


Iranian Transactions Regulations

AGENCY: Office of Foreign Assets Control, Treasury.

ACTION: Final rule.

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SUMMARY: The Office of Foreign Assets Control (``OFAC'') of the U.S. 
Department of the Treasury is revising the Iranian Transactions 
Regulations to clarify the applicability of certain general licenses to 
brokers and dealers in securities.

DATES: Effective Date: March 28, 2005.

FOR FURTHER INFORMATION CONTACT: Chief of Policy Planning and Program 
Management, tel. 202/622-4855, Chief of Licensing, tel.: 202/622-2480, 
Chief of Compliance, tel. 202/622-2490, or Chief Counsel, tel.: 202/
622-2410, Office of Foreign Assets Control, Department of the Treasury, 
Washington, DC 20220 (not toll free numbers).

SUPPLEMENTARY INFORMATION:

Electronic and Facsimile Availability

    This file is available for download without charge in ASCII and 
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supports HTTP, FTP, and Telnet at fedbbs.access.gpo.gov. It may also be 
accessed by modem dialup at 202/512-1387 followed by typing ``/GO/
FAC.'' Paper copies of this document can be obtained by calling the 
Government Printing Office at 202/512-1530. 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 via FTP at ofacftp.treas.gov. 
Facsimiles of information are available 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

    The Iranian Transactions Regulations, 31 CFR part 560 (the 
``ITR''), implement a series of Executive orders, beginning with 
Executive Order 12957, issued on March 15, 1995. In that order, the 
President declared a national emergency pursuant to IEEPA to deal with 
the unusual and extraordinary threat to the national security, foreign 
policy, and economy of the United States constituted by the actions and 
policies of the Government of Iran, including its support for 
international terrorism, its efforts to undermine the Middle East peace 
process and its efforts to acquire weapons of mass destruction and the 
means to deliver them. To deal with this threat, Executive Order 12957 
imposed prohibitions on certain transactions with respect to the 
development of Iranian petroleum resources. On May 6, 1995, the 
President issued Executive Order 12959 imposing comprehensive trade 
sanctions to further respond to this threat, and on August 19, 1997, 
the President issued Executive Order 13059 consolidating and clarifying 
the previous orders.
    The Treasury Department's Office of Foreign Assets Control 
(``OFAC'') is amending the ITR to include definitions relating to 
registered brokers and dealers in securities and to clarify the 
application to such brokers and dealers of general licenses relating to 
funds transfers to and from Iran and to the operation of Iranian 
accounts. To this

[[Page 15584]]

end, OFAC is adding a new provision at 31 CFR 560.321 to establish a 
regulatory definition of the term United States registered broker or 
dealer in securities and amending Sec.  560.320 of the ITR to clarify 
that the term Iranian accounts includes accounts of persons located in 
Iran or of the Government of Iran maintained on the books of a United 
States registered broker or dealer in securities. Section 560.516 of 
the ITR is being amended to clarify that United States registered 
brokers or dealers in securities are authorized to process certain 
transfers of funds to or from Iran. Section 560.517 of the ITR is being 
amended to clarify that United States registered brokers or dealers in 
securities are within the scope of the general license authorizing the 
exportation of certain Iranian account-related services to Iran. A 
corresponding technical change to Sec.  560.532 of the ITR is also 
included.

Public Participation

    Because the amendment of the ITR involves a foreign affairs 
function, the provisions of Executive Order 12866 and the 
Administrative Procedure Act (5 U.S.C. 553) (the ``APA'') requiring 
notice of proposed rulemaking, opportunity for public participation, 
and delay in effective date, are inapplicable. Because no notice of 
proposed rulemaking is required for this rule, the Regulatory 
Flexibility Act (5 U.S.C. 601-612) does not apply.

Paperwork Reduction Act

    The collections of information related to 31 CFR parts 31 CFR parts 
560 are contained in 31 CFR part 501 (the ``Reporting, Procedures and 
Penalties Regulations''). Pursuant to the Paperwork Reduction Act of 
1995 (44 U.S.C. 3507), those collections of information have been 
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 31 CFR Part 560

    Administrative practice and procedure, Banks, banking, Brokers, 
Securities, Iran.

0
For the reasons set forth in the Preamble, 31 CFR part 560 is amended 
as follows:

PART 560--IRANIAN TRANSACTIONS REGULATIONS

0
1. The authority citation for part 560 continues to read as follows:

    Authority: 3 U.S.C. 301; 18 U.S.C. 2339B, 2332d; 22 U.S.C. 
2349aa-9; 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); Pub. L. 106-387, 114 
Stat. 1549; E.O. 12613, 52 FR 41940, 3 CFR, 1987 Comp., p. 256; E.O. 
12957, 60 FR 14615, 3 CFR, 1995 Comp., p. 332; E.O. 12959, 60 FR 
24757, 3 CFR, 1995, Comp., 356; E.O. 13059, 62 FR 44531, 3 CFR, 1997 
Comp., p. 217.

Subpart C--General Definitions

0
2. Revise Sec.  560.320 to read as follows:


Sec.  560.320  Iranian accounts.

    The term Iranian accounts means accounts of persons located in Iran 
or of the Government of Iran maintained on the books of either a United 
States depository institution or a United States registered broker or 
dealer in securities.


0
3. Add a new Sec.  560.321 to subpart C to read as follows:


Sec.  560.321  United States registered broker or dealer in securities.

    The term United States registered broker or dealer in securities 
means any U.S. citizen, permanent resident alien, or entity organized 
under the laws of the United States or of any jurisdiction within the 
United States, including its foreign branches, or any agency, office or 
branch of a foreign entity located in the United States, that:
    (a) Is a ``broker'' or ``dealer'' in securities within the meanings 
set forth in the Securities Exchange Act of 1934;
    (b) Holds or clears customer accounts; and
    (c) Is registered with the Securities and Exchange Commission under 
the Securities Exchange Act of 1934.

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

0
4. Amend Sec.  560.516 by redesignating paragraphs (b) through (d) as 
paragraphs (c) through (e), respectively, and adding a new paragraph 
(b) to read as follows:


Sec.  560.516  Payment and United States dollar clearing transactions 
involving Iran.

* * * * *
    (b) United States registered brokers or dealers in securities are 
authorized to process transfers of funds to or from Iran, or for the 
direct or indirect benefit of persons in Iran or the Government of 
Iran, if the transfer is covered in full by any of the conditions set 
forth in paragraphs (a)(2) through (4) of this section and does not 
involve the debiting or crediting of an Iranian account.
* * * * *


0
5. Amend Sec.  560.517 by revising the section heading and paragraph 
(b) and adding paragraph (c) to read as follows:


Sec.  560.517  Exportation of services: Iranian accounts at United 
States depository institutions or United States registered brokers or 
dealers in securities.

* * * * *
    (b) United States registered brokers or dealers in securities are 
prohibited from performing services with respect to Iranian accounts, 
as defined in Sec.  560.320, at the instruction of the Government of 
Iran or persons located in Iran, except that United States registered 
brokers or dealers in securities are authorized to provide and be 
compensated for services and incidental transactions with respect to:
    (1) The limited maintenance of an Iranian account, including only 
the payment into such account of interest, cash dividends, and stock 
dividends; the debiting of service charges; and the execution of stock 
splits and dividend reinvestment plans; and
    (2) At the request of the account party, the closing of Iranian 
accounts through the one-time liquidation of all assets in the account 
at fair market value and the lump sum transfer only to the account 
party of all proceeds derived therefrom and all remaining funds in the 
account.
    (c) Specific licenses may be issued with respect to the operation 
of Iranian accounts that constitute accounts of:
    (1) Foreign government missions and their personnel in Iran; or
    (2) Missions of the Government of Iran in the United States.


0
6. Revise the last sentence of paragraph (d) of Sec.  560.532 to read 
as follows:


Sec.  560.532  Payment for and financing of export and reexport of 
commercial commodities, medicine, and medical devices.

* * * * *
    (d) * * * See Sec.  560.516(c).
* * * * *

    Dated: February 9, 2005.
Robert W. Werner,
Director, Office of Foreign Assets Control.
    Approved: February 18, 2005.
Juan C. Zarate,
Assistant Secretary (Terrorist Financing).
[FR Doc. 05-6046 Filed 3-23-05; 3:08 pm]
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