[Federal Register Volume 70, Number 157 (Tuesday, August 16, 2005)]
[Rules and Regulations]
[Pages 48240-48254]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 05-16144]



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Part II





Department of the Treasury





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Office of Foreign Assets Control



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31 CFR Part 537



Burmese Sanctions Regulations; Interim Final Rule

  Federal Register / Vol. 70, No. 157 / Tuesday, August 16, 2005 / 
Rules and Regulations  

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DEPARTMENT OF THE TREASURY

Office of Foreign Assets Control

31 CFR Part 537


Burmese Sanctions Regulations

AGENCY: Office of Foreign Assets Control, Treasury.

ACTION: Interim final rule.

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SUMMARY: The Office of Foreign Assets Control of the U.S. Department of 
the Treasury is amending and reissuing in their entirety the Burmese 
Sanctions Regulations to implement Executive Order 13310 of July 28, 
2003, which placed new sanctions on Burma.

DATES: Effective Date: August 16, 2005.
    Comments: Written comments must be received no later than October 
17, 2005.

ADDRESSES: You may submit comments by any of the following methods:
     Federal eRulemaking Portal: http://www.regulations.gov. 
Follow the instructions for submitting comments.
     Agency Web Site: http://www.treas.gov/offices/enforcement/ofac/comment.html.
     Fax: Chief of Records, (202) 622-1657.
     Mail: Chief of Records, ATTN: Request for Comments, Office 
of Foreign Assets Control, Department of the Treasury, 1500 
Pennsylvania Avenue, NW., Washington, DC 20220.
    Instructions: All submissions received must include the agency name 
and the FR Doc. number that appears at the end of this document. 
Comments received will be posted without change to http://www.treas.gov/ofac, including any personal information provided. For 
detailed instructions on submitting comments and additional information 
on the rulemaking process, see the ``Public Participation'' heading of 
the SUPPLEMENTARY INFORMATION section of this document. To read 
background documents or comments received, go to http://www.treas.gov/ofac.

FOR FURTHER INFORMATION CONTACT: Chief of Licensing, tel.: (202) 622-
2480 or Chief of Policy Planning and Program Management, tel.: (202) 
622-4855, Office of Foreign Assets Control, or Chief Counsel, tel.: 
(202) 622-2410, Office of Chief Counsel (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 
Adobe Acrobat readable (*.PDF) formats at GPO Access. GPO Access 
supports HTTP, FTP, and Telnet at http://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

    On May 20, 1997, in response to the Burmese government's large-
scale repression of, and violence against, the democratic opposition, 
President Clinton issued Executive Order 13047, determining that these 
actions and policies of the Government of Burma constituted an unusual 
and extraordinary threat to the national security and foreign policy of 
the United States and declaring a national emergency to deal with that 
threat. Executive Order 13047 prohibits new investment in Burma by U.S. 
persons and any facilitation by a U.S. person of new investment in 
Burma by a foreign person.
    On July 28, 2003, the Burmese Freedom and Democracy Act of 2003 
(BFDA) was signed into law, to restrict the financial resources of 
Burma's ruling military junta, the State Peace and Development Council 
(SPDC). The BFDA requires the President to ban the importation into the 
United States of products of Burma, beginning 30 days after the date of 
enactment of the BFDA, as well as to consider blocking the assets of 
certain SPDC members and taking steps to prevent further financial or 
technical assistance to Burma until certain conditions are met.
    To implement the BFDA and to take additional steps with respect to 
the Government of Burma's continued repression of the democratic 
opposition in Burma, the President issued Executive Order 13310 (the 
``Order'') on July 28, 2003. The Order blocks all property and 
interests in property of the persons listed in the Annex to the Order 
and of certain persons determined, at a future point, by the Secretary 
of the Treasury, in consultation with the Secretary of State, to meet 
the criteria set forth in the Order. It also bans the importation into 
the United States of products of Burma (while waiving the ban where it 
would conflict with the international obligations of the United States 
under certain conventions on diplomatic and consular relations and 
similar agreements) and the exportation or reexportation to Burma of 
financial services from the United States or by U.S. persons. The Order 
exempts from its blocking and financial service prohibitions any 
transactions pursuant to pre-May 21, 1997 agreements between a U.S. 
person and any entity in Burma. It authorizes the Secretary of the 
Treasury, in consultation with the Secretary of State, to take such 
actions, including the promulgation of rules and regulations, as may be 
necessary to carry out the purposes of the Order.
    In implementation of the Order, the Office of Foreign Assets 
Control (``OFAC'') is amending the Burmese Sanctions Regulations, 31 
CFR part 537 (the ``Regulations''), and, due to the extensive nature of 
these amendments, reissuing the Regulations in their entirety. Section 
537.201 of the Regulations implements section 1 of the Order and blocks 
all property and interests in property of (1) persons listed in the 
Annex to the Order; and (2) persons determined by the Secretary of the 
Treasury, in consultation with the Secretary of State, to be senior 
officials of the Government of Burma or of certain Burmese political 
organizations, or to be owned or controlled by, or acting for or on 
behalf of, any person whose property or interests in property are 
blocked pursuant to the Order.
    Section 537.202 of the Regulations implements section 2 of the 
Order. Section 537.202(a) prohibits the exportation or reexportation of 
financial services to Burma from the United States or by U.S. persons, 
wherever located. The term exportation or reexportation of financial 
services to Burma is defined in Sec.  537.305 of the Regulations to 
mean any activity with a monetary aspect, including, but not limited 
to, banking services, insurance services, and brokering services. A 
note to Sec.  537.305 explains the unique nature of this defined term. 
Section 537.202(b) prohibits any approval, financing, facilitation, or 
guarantee by a U.S. person, wherever located, of a foreign person's 
transaction in cases in which that transaction would be prohibited if 
engaged in by a U.S. person.
    Section 537.203 of the Regulations implements section 3 of the 
Order and prohibits the importation into the United States of articles 
that are products of Burma.

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    The pre-existing prohibition on new investment in Burma is set 
forth in Sec.  537.204.
    Section 537.206 of the Regulations implements section 4 of the 
Order and prohibits any transaction by a U.S. person or within the 
United States that evades or avoids, or that has the purpose of evading 
or avoiding, or attempts to violate, any of the prohibitions set forth 
in the Order.
    Exemptions from the prohibitions contained in the Regulations are 
set forth in Sec.  537.210. Paragraphs (a), (b) and (d) of Sec.  
537.210 contain the exemptions from the President's powers under the 
International Emergency Economic Powers Act (50 U.S.C. 1702), as set 
forth in Sec.  203 of that act. Paragraph (c) of section 537.210 
implements section 13 of the Order by exempting from the prohibitions 
contained in the Regulations activities undertaken pursuant to pre-May 
21, 1997 contracts, other than those for the importation of Burmese 
products, between U.S. persons and either the Government of Burma or a 
nongovernmental entity in Burma.
    Subpart C of the Regulations contains definitions of terms used in 
the Regulations. Subpart D contains interpretations clarifying the 
prohibitions of this part. Transactions otherwise prohibited by this 
part but found to be consistent with U.S. policy may be authorized by a 
general license contained in subpart E of the Regulations or by a 
specific license issued pursuant to the procedures described in subpart 
D of the Reporting, Procedures and Penalties Regulations set forth in 
part 501 of chapter V of title 31, Code of Federal Regulations. 
Penalties for violations of the Regulations are set forth in subpart G 
of part 537.
    As part of several general licenses issued prior to the publication 
of these regulations, OFAC had authorized certain transfers through 
financial institutions whose property or interests in property were 
blocked pursuant to Sec.  537.201(a), provided that the account was not 
on the books of a financial institution that was a U.S. person. The 
text explaining this authorization has been removed from particular 
license sections and, to denote general application, appears in Sec.  
537.404, an interpretive section that explains the circumstances under 
which transactions incident to licensed transactions are authorized.

Public Participation; Procedural Requirements

    Because the Regulations involve 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. However, this rule is being 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, noncommercial 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 October 17, 2005. 
The Department will consider all comments postmarked 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 submission be treated confidentially because of its business 
proprietary nature or for any other reason. The Department will return 
such submissions to the originator without considering 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 the public record concerning these Regulations will 
be made available not sooner than November 14, 2005 and will be 
obtainable from OFAC's Web site  (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 31 CFR Part 537

    Administrative practice and procedure, Banks, Banking, Blocking of 
assets, Burma, Exports, Foreign trade, Humanitarian aid, Imports, 
Information, Investments, Loans, New Investment, Penalties, Reporting 
and recordkeeping requirements, Services, Specially Designated 
Nationals, Transportation.

0
For the reasons set forth in the preamble, part 537 of 31 CFR chapter V 
is revised to read as follows:

PART 537--BURMESE SANCTIONS REGULATIONS

Subpart A--Relation of This Part to Other Laws and Regulations
Sec.
537.101 Relation of this part to other laws and regulations.

Subpart B--Prohibitions

537.201 Prohibited transactions involving certain blocked property.
537.202 Prohibited exportation or reexportation of financial 
services to Burma.
537.203 Prohibited importation of products of Burma.
537.204 Prohibited new investment in Burma.
537.205 Prohibited facilitation.
537.206 Evasions; attempts; conspiracies.
537.207 Effect of transfers violating the provisions of this part.
537.208 Holding of funds in interest-bearing accounts; investment 
and reinvestment.
537.209 Expenses of maintaining blocked property; liquidation of 
blocked account.
537.210 Exempt transactions.

Subpart C--General Definitions

537.301 Blocked account; blocked property.
537.302 Economic development of resources located in Burma.
537.303 Effective date.
537.304 Entity.
537.305 Exportation or reexportation of financial services to Burma.
537.306 Foreign person.
537.307 Government of Burma.
537.308 Information or informational materials.
537.309 Interest.
537.310 Licenses; general and specific.
537.311 New investment.
537.312 Nongovernmental entity in Burma.
537.313 Person.
537.314 Product of Burma.
537.315 Property; property interest.
537.316 Resources located in Burma.
537.317 Transfer.
537.318 United States.
537.319 U.S. depository institution.

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537.320 U.S. financial institution.
537.321 U.S. person.
537.322 U.S. registered broker or dealer in securities.
537.323 U.S. registered money transmitter.

Subpart D--Interpretations

537.401 Reference to amended sections.
537.402 Effect of amendment.
537.403 Termination and acquisition of an interest in blocked 
property.
537.404 Transactions incidental to a licensed transaction 
authorized.
537.405 Provision of services.
537.406 Offshore transactions.
537.407 Payments from blocked accounts to satisfy obligations 
prohibited.
537.408 Setoffs prohibited.
537.409 Activities under pre-May 21, 1997 agreements.
537.410 Contracts and subcontracts regarding economic development of 
resources in Burma.
537.411 Purchase of shares in economic development projects in 
Burma.
537.412 Investments in entities involved in economic development 
projects in Burma.
537.413 Sale of interest in economic development projects in Burma.

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

537.501 General and specific licensing procedures.
537.502 Effect of license or authorization.
537.503 Exclusion from licenses.
537.504 Payments and transfers to blocked accounts in U.S. financial 
institutions.
537.505 Entries in certain accounts for normal service charges 
authorized.
537.506 Investment and reinvestment of certain funds.
537.507 Provision of certain legal services authorized.
537.508 Authorization of emergency medical services.
537.509 Official activities of the U.S. Government and certain 
international organizations.
537.510 Third-country diplomatic and consular funds transfers.
537.511 Importation of accompanied baggage and household effects of 
U.S. diplomatic and consular officials.
537.512 Importation for official or personal use by foreign 
diplomatic and consular officials.
537.513 Importation and exportation of diplomatic pouches.
537.514 Importation of certain personal and household effects.
537.515 Importation of information or informational materials.
537.516 Importation of Burmese-origin articles and incidental 
transactions.
537.517 Noncommercial, personal remittances.
537.518 Transactions incident to exportations to Burma.
537.519 Activities undertaken pursuant to certain pre-May 21, 1997 
agreements.
537.520 Payments for overflights of Burmese airspace.
537.521 Operation of accounts.
537.522 Certain transactions related to patents, trademarks and 
copyrights authorized.
537.523 Authorization of nongovernmental organizations to engage in 
humanitarian or religious activities.
537.524 Divestiture of U.S. person's investments in Burma.
537.525 Transactions related to U.S. citizens residing in Burma.
537.526 Authorized transactions necessary and ordinarily incident to 
publishing.

Subpart F--Reports

537.601 Records and Reports.

Subpart G--Penalties

537.701 Penalties.
537.702 Prepenalty notice.
537.703 Response to prepenalty notice; informal settlement.
537.704 Penalty imposition or withdrawal.
537.705 Administrative collection; referral to United States 
Department of Justice.

Subpart H--Procedures

537.801 Procedures.
537.802 Delegation by the Secretary of the Treasury.

Subpart I--Paperwork Reduction Act

537.901 Paperwork Reduction Act notice.

    Authority: 3 U.S.C. 301; 31 U.S.C. 321(b); 50 U.S.C 1601-1651, 
1701-1706; Sec. 570, Pub. L. 104-208, 110 Stat. 3009; Pub. L. 108-
61, 117 Stat. 864; E.O. 13047, 62 FR 28301, 3 CFR 1997 Comp., p. 
202; E.O. 13310, 68 FR 44853, 3 CFR 2004 Comp., p. 241.

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


Sec.  537.101  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.  537.201  Prohibited transactions involving certain blocked 
property.

    (a) Except as authorized by regulations, orders, directives, 
rulings, instructions, licenses or otherwise, and notwithstanding any 
contracts entered into or any license or permit granted prior to 12:01 
a.m. eastern daylight time, July 29, 2003, all property and interests 
in property of the following persons that are in the United States, 
that hereafter come within the United States, or that are or hereafter 
come within the possession or control of U.S. persons, including their 
overseas branches, are blocked and may not be transferred, paid, 
exported, withdrawn or otherwise dealt in:
    (1) Any person listed in the Annex to Executive Order 13310 of July 
28, 2003 (68 FR 44853, July 30, 2003); and
    (2) Any person determined by the Secretary of the Treasury, in 
consultation with the Secretary of State,
    (i) To be a senior official of the Government of Burma, the State 
Peace and Development Council of Burma, the Union Solidarity and 
Development Association of Burma, or any successor entity to any of the 
foregoing, or
    (ii) To be owned or controlled by, or acting or purporting to act 
for or on behalf of, directly or indirectly, any person whose property 
or interests in property are blocked pursuant to this section.

    NOTE TO PARAGRAPH (a) OF Sec.  537.201:
    The names of persons whose property or interests in property are 
blocked pursuant to Sec.  537.201(a) are announced in the Federal 
Register, published on OFAC's Web site, and incorporated on an 
ongoing basis with the identifier [BURMA]into Appendix A to this 
chapter V.

    (b) Unless otherwise authorized by this part or by a specific 
license expressly referring to this section, any dealing in any 
security (or evidence thereof) held within the possession or control of 
a U.S. person and either registered or inscribed in the name of or 
known to be held for the benefit of any person whose property or 
interests in property are blocked pursuant to paragraph (a) of this 
section is prohibited. This prohibition includes but is not limited to 
the transfer (including the transfer on the books of any issuer or 
agent thereof), disposition, transportation, importation, exportation, 
or withdrawal of any such security or the endorsement or guaranty of 
signatures on any such security. This prohibition applies irrespective 
of the fact that at any time (whether prior to, on, or subsequent to 
12:01 a.m. eastern daylight time, July 29, 2003) the

[[Page 48243]]

registered or inscribed owner of any such security may have or might 
appear to have assigned, transferred, or otherwise disposed of the 
security.


Sec.  537.202  Prohibited exportation or reexportation of financial 
services to Burma.

    Except as authorized, and notwithstanding any contracts entered 
into or any license or permit granted prior to July 29, 2003, the 
exportation or reexportation of financial services to Burma, directly 
or indirectly, from the United States or by a U.S. person, wherever 
located, is prohibited.


Sec.  537.203  Prohibited importation of products of Burma.

    Except as otherwise authorized, and notwithstanding any contracts 
entered into or any license or permit granted prior to August 28, 2003, 
the importation into the United States of any article that is a product 
of Burma is prohibited.

    NOTE TO Sec.  537.203: Section 3(b) of the Burmese Freedom and 
Democracy Act of 2003 provides that the prohibition contained in 
this section may be waived by the President for any or all articles 
that are a product of Burma if the President determines and notifies 
specified committees of Congress that to do so is in the national 
interest of the United States. Therefore, the Office of Foreign 
Assets Control will not issue licenses authorizing transactions 
prohibited under this section in the absence of such a waiver 
process. The President's waiver functions and authorities under 
section 3(b) have been delegated to the Secretary of State.


Sec.  537.204  Prohibited new investment in Burma.

    Except as otherwise authorized, new investment, as defined in Sec.  
537.311, in Burma by U.S. persons is prohibited.

    NOTE TO Sec.  537.204: Section 570 of the Foreign Operations, 
Export Financing, and Related Programs Appropriations Act, 1997 
(Public Law 104-208) provides that the prohibition contained in this 
section may be waived, temporarily or permanently, by the President 
if he determines and certifies to Congress that the application of 
this sanction would be contrary to the national interests of the 
United States. Licenses are thus not available for purposes of 
authorizing transactions prohibited under this section in the 
absence of such a waiver determination and certification to 
Congress.


Sec.  537.205  Prohibited facilitation.

    (a) Except as otherwise authorized, U.S. persons, wherever located, 
are prohibited from approving, financing, facilitating, or guaranteeing 
a transaction by a person who is a foreign person where the transaction 
would be prohibited if performed by a U.S. person or within the United 
States.
    (b) With respect to new investment in Burma, the prohibition 
against facilitation does not include the entry into, performance of, 
or financing of a contract to sell or purchase goods, services, or 
technology unless such contract includes any of the activities 
described in Sec.  537.311(a)(2), (3) or (4).

    NOTE TO Sec.  537.205: This section's prohibitions include, but 
are not limited to, the approval, financing, facilitation, or 
guarantee of transactions prohibited by either section 570 of the 
Foreign Operations, Export Financing, and Related Programs 
Appropriations Act, 1997 (Pub. L. 104-208), or the Burmese Freedom 
and Democracy Act of 2003 (Pub. L. 108-61). The prohibitions of 
these two statutes may be waived by the President upon the making of 
certain determinations and notification to Congress. Therefore, the 
Office of Foreign Assets Control will not issue licenses authorizing 
the approval, financing, facilitation, or guarantee of the 
transactions prohibited by these statutes in the absence of such 
waivers.


Sec.  537.206  Evasions; attempts; conspiracies.

    (a) Any transaction by a U.S. 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) Any conspiracy formed to violate any of the prohibitions set 
forth in this part is prohibited.

    NOTE TO Sec.  537.206: See Sec.  537.303 for a definition of the 
term effective date.


Sec.  537.207  Effect of transfers violating the provisions of this 
part.

    (a) Any transfer after July 28, 2003, that is in violation of any 
provision of this part or of any regulation, order, directive, ruling, 
instruction, or license issued pursuant to this part, and that involves 
any property or interest in property blocked pursuant to Sec.  
537.201(a), is null and void and shall not be the basis for the 
assertion or recognition of any interest in or right, remedy, power, or 
privilege with respect to such property or property interests.
    (b) No transfer before July 29, 2003 shall be the basis for the 
assertion or recognition of any right, remedy, power, or privilege with 
respect to, or any interest in, any property or interest in property 
blocked pursuant to Sec.  537.201(a), unless the person with whom such 
property is held or maintained, prior to that date, had written notice 
of the transfer or by any written evidence had recognized such 
transfer.
    (c) Unless otherwise provided, an appropriate license or other 
authorization issued by or pursuant to the direction or authorization 
of the Director of the Office of Foreign Assets Control before, during, 
or after a transfer shall validate such transfer or make it enforceable 
to the same extent that it would be valid or enforceable but for the 
provisions of the International Emergency Economic Powers Act (50 
U.S.C. 1701-1706), this part, and any regulation, order, directive, 
ruling, instruction, or license issued pursuant to this part.
    (d) Transfers of property that otherwise would be null and void or 
unenforceable by virtue of the provisions of this section shall not be 
deemed to be null and void or unenforceable as to any person with whom 
such property was held or maintained (and as to such person only) in 
cases in which such person is able to establish to the satisfaction of 
the Director of the Office of Foreign Assets Control each of the 
following:
    (1) Such transfer did not represent a willful violation of the 
provisions of this part by the person with whom such property was held 
or maintained;
    (2) The person with whom such property was held or maintained did 
not have reasonable cause to know or suspect, in view of all the facts 
and circumstances known or available to such person, that such transfer 
required a license or authorization issued pursuant to this part and 
was not so licensed or authorized, or, if a license or authorization 
did purport to cover the transfer, that such license or authorization 
had been obtained by misrepresentation of a third party or withholding 
of material facts or was otherwise fraudulently obtained; and
    (3) The person with whom such property was held or maintained filed 
with the Office of Foreign Assets Control a report setting forth in 
full the circumstances relating to such transfer promptly upon 
discovery that:
    (i) Such transfer was in violation of the provisions of this part 
or any regulation, ruling, instruction, license, or other direction or 
authorization issued pursuant to this part;
    (ii) Such transfer was not licensed or authorized by the Director 
of the Office of Foreign Assets Control; or
    (iii) If a license did purport to cover the transfer, such license 
had been obtained by misrepresentation of a third party or withholding 
of material facts or was otherwise fraudulently obtained.

    NOTE TO PARAGRAPH (d) OF Sec.  537.207: The filing of a report 
in accordance with the provisions of paragraph (d)(3) of this 
section shall not be deemed evidence that the terms of paragraphs 
(d)(1) and (d)(2) of this section have been satisfied.


[[Page 48244]]


    (e) Except to the extent otherwise provided by law or unless 
licensed pursuant to this part, any attachment, judgment, decree, lien, 
execution, garnishment, or other judicial process is null and void with 
respect to any property in which, at or since 12:01 a.m. eastern 
daylight time, July 29, 2003, there existed an interest of a person 
whose property or interests in property are blocked pursuant to Sec.  
537.201(a).


Sec.  537.208  Holding of funds in interest-bearing accounts; 
investment and reinvestment.

    (a) Except as provided in paragraph (c) or (d) of this section, or 
as otherwise directed by the Office of Foreign Assets Control, any U.S. 
person holding funds, such as currency, bank deposits, or liquidated 
financial obligations, subject to Sec.  537.201(a) shall hold or place 
such funds in a blocked interest-bearing account located in the United 
States.
    (b)(1) For purposes of this section, the term blocked interest-
bearing account means a blocked account:
    (i) In a federally-insured U.S. bank, thrift institution, or credit 
union, provided the funds are earning interest at rates that are 
commercially reasonable; or
    (ii) With a broker or dealer registered with the Securities and 
Exchange Commission under the Securities Exchange Act of 1934, provided 
the funds are invested in a money market fund or in U.S. Treasury 
bills.
    (2) For purposes of this section, a rate is commercially reasonable 
if it is the rate currently offered to other depositors on deposits or 
instruments of comparable size and maturity.
    (3) Funds held or placed in a blocked account pursuant to this 
paragraph (b) may not be invested in instruments the maturity of which 
exceeds 180 days. If interest is credited to a separate blocked account 
or subaccount, the name of the account party on each account must be 
the same.
    (c) Blocked funds held in instruments the maturity of which exceeds 
180 days at the time the funds become subject to Sec.  537.201(a) may 
continue to be held until maturity in the original instrument, provided 
any interest, earnings, or other proceeds derived therefrom are paid 
into a blocked interest-bearing account in accordance with paragraph 
(b) or (d) of this section.
    (d) Blocked funds held in accounts or instruments outside the 
United States at the time the funds become subject to Sec.  537.201(a) 
may continue to be held in the same type of accounts or instruments, 
provided the funds earn interest at rates that are commercially 
reasonable.
    (e) This section does not create an affirmative obligation for the 
holder of blocked tangible property, such as chattels or real estate, 
or of other blocked property, such as debt or equity securities, to 
sell or liquidate such property at the time the property becomes 
subject to Sec.  537.201(a). However, the Office of Foreign Assets 
Control may issue licenses permitting or directing such sales in 
appropriate cases.
    (f) Funds subject to this section may not be held, invested, or 
reinvested in a manner that provides immediate financial or economic 
benefit or access to any person whose property or interests in property 
are blocked pursuant to Sec.  537.201(a), nor may their holder 
cooperate in or facilitate the pledging or other attempted use as 
collateral of blocked funds or other assets.


Sec.  537.209  Expenses of maintaining blocked property; liquidation of 
blocked account.

    (a) Except as otherwise authorized, and notwithstanding the 
existence of any rights or obligations conferred or imposed by any 
international agreement or contract entered into or any license or 
permit granted before 12:01 a.m. eastern daylight time, July 29, 2003, 
all expenses incident to the maintenance of physical property blocked 
pursuant to Sec.  537.201(a) shall be the responsibility of the owners 
or operators of such property, which expenses shall not be met from 
blocked funds.
    (b) Property blocked pursuant to Sec.  537.201(a) may, in the 
discretion of the Director, Office of Foreign Assets Control, be sold 
or liquidated and the net proceeds placed in a blocked interest-bearing 
account in the name of the owner of the property.


Sec.  537.210  Exempt transactions.

    (a) Personal communications. The prohibitions contained in this 
part, other than those set forth in Sec.  537.203, do not apply to any 
postal, telegraphic, telephonic, or other personal communication that 
does not involve the transfer of anything of value.
    (b) Information or informational materials. (1) The prohibitions 
contained in this part, other than those set forth in Sec.  537.203, do 
not apply to the importation from any country, or the exportation to 
any country, whether commercial or otherwise, of information or 
informational materials, regardless of format or medium of 
transmission.

    NOTE TO PARAGRAPH (b)(1) of Sec.  537.210: Section 537.203 
prohibits the importation of products of Burma into the United 
States pursuant to the Burmese Freedom and Democracy Act of 2003. 
Therefore, the importation into the United States of information or 
informational materials that are products of Burma is not exempt 
from the prohibition set forth in Sec.  537.203. However, such 
transactions are authorized by the general license set forth in 
Sec.  537.515.

    (2) This section does not exempt from regulation or authorize 
transactions related to information or informational materials not 
fully created and in existence at the date of the transactions, or to 
the substantive or artistic alteration or enhancement of informational 
materials, or to the provision of marketing and business consulting 
services. Such prohibited transactions include, but are not limited to, 
payment of advances for information or informational materials not yet 
created and completed (with the exception of prepaid subscriptions for 
widely-circulated magazines and other periodical publications); 
provision of services to market, produce or co-produce, create, or 
assist in the creation of information or informational materials; and, 
with respect to information or informational materials imported from 
persons whose property or interests in property are blocked pursuant to 
Sec.  537.201(a), payment of royalties with respect to income received 
for enhancements or alterations made by U.S. persons to such 
information or informational materials.
    (3) This section does not exempt from regulation or authorize 
transactions incident to the exportation of software subject to the 
Export Administration Regulations, 15 CFR parts 730-774, or to the 
exportation of goods, technology or software, or to the provision, 
sale, or leasing of capacity on telecommunications transmission 
facilities (such as satellite or terrestrial network connectivity) for 
use in the transmission of any data. The exportation of such items or 
services and the provision, sale, or leasing of such capacity or 
facilities to a person whose property or interests in property are 
blocked pursuant to Sec.  537.201(a) are prohibited.
    (c) Pre-1997 contracts. The prohibitions contained in this part, 
other than those set forth in Sec.  537.203, do not apply to any 
activity undertaken pursuant to an agreement, or pursuant to the 
exercise of rights under such an agreement, that was entered into by a 
U.S. person with the Government of Burma or a non-governmental entity 
in Burma prior to 12:01 a.m. eastern daylight time on May 21, 1997.
    (d) Travel Exemption. The prohibitions contained in this part, 
other than the prohibition against the importation into the United 
States of

[[Page 48245]]

products of Burma set forth in Sec.  537.203, do not apply to 
transactions ordinarily incident to travel to or from any country, 
including exportation or importation of accompanied baggage (other than 
importation of baggage that comes within the prohibition set forth in 
Sec.  537.203) for personal use, maintenance within any country, 
including payment of living expenses and acquisition of goods or 
services for personal use, and arrangement or facilitation of such 
travel, including nonscheduled air, sea, or land voyages.

    NOTE TO Sec.  537.211: See the authorizations relating to the 
importation of certain personal and household effects set forth in 
Sec. Sec.  537.511 and 537.514.

Subpart C--General Definitions


Sec.  537.301  Blocked account; blocked property.

    The terms blocked account and blocked property shall mean any 
account or property subject to the prohibitions in Sec.  537.201 held 
in the name of a person whose property or interests in property are 
blocked pursuant to Sec.  537.201(a), or in which such person has an 
interest, and with respect to which payments, transfers, exportations, 
withdrawals, or other dealings may not be made or effected except 
pursuant to an authorization or license from the Office of Foreign 
Assets Control expressly authorizing such action.


Sec.  537.302  Economic development of resources located in Burma.

    (a) The term economic development of resources located in Burma 
means activities pursuant to a contract the subject of which includes 
responsibility for the development or exploitation of resources located 
in Burma, including making or attempting to make those resources 
accessible or available for exploitation or economic use. The term 
shall not be construed to include not-for-profit educational, health, 
or other humanitarian programs or activities.
    (b) Examples: The economic development of resources located in 
Burma includes a contract conferring rights to explore for, develop, 
extract, or refine petroleum, natural gas, or minerals in the ground in 
Burma; or a contract to assume control of a mining operation in Burma, 
acquire a forest or agricultural area for commercial use of the timber 
or other crops, or acquire land for the construction and operation of a 
hotel or factory.


Sec.  537.303  Effective date.

    The term effective date refers to the effective date of the 
applicable prohibitions and directives contained in this part as 
follows:
    (a) With respect to prohibited transfers or other dealings in 
blocked property or interests in property of persons listed in the 
Annex to Executive Order 13310 of July 28, 2003 (68 FR 44853, July 30, 
2003), 12:01 a.m. eastern daylight time, July 29, 2003;
    (b) With respect to prohibited transfers or other dealings in 
blocked property or interests in property of persons designated 
pursuant to Sec.  537.201(a)(2), the earlier of the date on which 
either actual notice or constructive notice is received of such 
person's designation;
    (c) With respect to the exportation or reexportation of financial 
services to Burma prohibited by Sec.  537.202, 12:01 a.m. eastern 
daylight time, July 29, 2003;
    (d) With respect to the importation into the United States of 
products of Burma prohibited by Sec.  537.203, 12:01 a.m. eastern 
daylight time, August 28, 2003;
    (e) With respect to new investment prohibited by Sec.  537.204, 
12:01 a.m. eastern daylight time, May 21, 1997.


Sec.  537.304  Entity.

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


Sec.  537.305  Exportation or reexportation of financial services to 
Burma.

    The term exportation or reexportation of financial services to 
Burma means:
    (a) The transfer of funds, directly or indirectly, from the United 
States or by a U.S. person, wherever located, to Burma; or
    (b) The provision, directly or indirectly, to persons in Burma of 
insurance services, investment or brokerage services (including but not 
limited to brokering or trading services regarding securities, debt, 
commodities, options or foreign exchange), banking services, money 
remittance services; loans, guarantees, letters of credit or other 
extensions of credit; or the service of selling or redeeming traveler's 
checks, money orders and stored value.

    NOTE TO Sec.  537.305: This defined term has not appeared in 
other parts of 31 CFR chapter V and is specifically tailored to 
further the goals of the sanctions prohibitions set forth in this 
part.

Sec.  537.306  Foreign person.

    The term foreign person means any person that is not a U.S. person.


Sec.  537.307  Government of Burma.

    The term Government of Burma means the Government of Burma 
(sometimes referred to as Myanmar), its agencies, instrumentalities and 
controlled entities, and the Central Bank of Burma.


Sec.  537.308  Information or informational materials.

    (a) For purposes of this part, the term information or 
informational materials includes, but is not limited to, publications, 
films, posters, phonograph records, photographs, microfilms, 
microfiche, tapes, compact disks, CD ROMs, artworks, and news wire 
feeds.

    NOTE TO PARAGRAPH (a) OF Sec.  537.307: To be considered 
information or informational materials, artworks must be classified 
under chapter heading 9701, 9702, or 9703 of the Harmonized Tariff 
Schedule of the United States.

    (b) The term information or informational materials, with respect 
to United States exports, does not include items:
    (1) That were, as of April 30, 1994, or that thereafter become, 
controlled for export pursuant to section 5 of the Export 
Administration Act of 1979, 50 U.S.C. App. 2401-2420 (1979) (the 
``EAA''), or section 6 of the EAA to the extent that such controls 
promote the nonproliferation or antiterrorism policies of the United 
States; or
    (2) With respect to which acts are prohibited by 18 U.S.C. chapter 
37.


Sec.  537.309  Interest.

    Except as otherwise provided in this part, the term interest when 
used with respect to property (e.g., ``an interest in property'') means 
an interest of any nature whatsoever, direct or indirect.


Sec.  537.310  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.  537.309: See Sec.  501.801 of this chapter on 
licensing procedures.


Sec.  537.311  New investment.

    (a) The term new investment means any of the following activities 
if such activity is undertaken pursuant to an agreement, or pursuant to 
the exercise of rights under such an agreement, that is entered into 
with the Government of Burma or a nongovernmental entity in Burma on or 
after May 21, 1997:
    (1) The entry into a contract that includes the economic 
development of

[[Page 48246]]

resources located in Burma, as defined in Sec.  537.302;
    (2) The entry into a contract providing for the general supervision 
and guarantee of another person's performance of a contract that 
includes the economic development of resources located in Burma;
    (3) The purchase of a share of ownership, including an equity 
interest, in the economic development of resources located in Burma; or
    (4) The entry into a contract providing for the participation in 
royalties, earnings, or profits in the economic development of 
resources located in Burma, without regard to the form of the 
participation.
    (b) The term new investment shall not include the entry into, 
performance of, or financing of a contract to sell or purchase goods, 
services, or technology unless such contract includes any of the 
activities described in paragraph (a)(2), (a)(3) or (a)(4) of this 
section.


Sec.  537.312  Nongovernmental entity in Burma.

    The term nongovernmental entity in Burma means a partnership, 
association, trust, joint venture, corporation, or other organization, 
wherever organized, that is located in Burma or exists for the 
exclusive or predominant purpose of engaging in the economic 
development of resources located in Burma or derives its income 
predominantly from such economic development, and is not the Government 
of Burma.


Sec.  537.313  Person.

    The term person means an individual or entity.


Sec.  537.314  Product of Burma.

    The term product of Burma means goods of Burmese origin pursuant to 
rules of origin of U.S. Customs and Border Protection.


Sec.  537.315  Property; property interest.

    The terms property and property interest include, but are not 
limited to, money, checks, drafts, bullion, bank deposits, savings 
accounts, debts, indebtedness, obligations, notes, guarantees, 
debentures, stocks, bonds, coupons, any other financial instruments, 
bankers acceptances, mortgages, pledges, liens or other rights in the 
nature of security, warehouse receipts, bills of lading, trust 
receipts, bills of sale, any other evidences of title, ownership or 
indebtedness, letters of credit and any documents relating to any 
rights or obligations thereunder, powers of attorney, goods, wares, 
merchandise, chattels, stocks on hand, ships, goods on ships, real 
estate mortgages, deeds of trust, vendors' sales agreements, land 
contracts, leaseholds, ground rents, real estate and any other interest 
therein, options, negotiable instruments, trade acceptances, royalties, 
book accounts, accounts payable, judgments, patents, trademarks or 
copyrights, insurance policies, safe deposit boxes and their contents, 
annuities, pooling agreements, services of any nature whatsoever, 
contracts of any nature whatsoever, and any other property, real, 
personal, or mixed, tangible or intangible, or interest or interests 
therein, present, future or contingent.


Sec.  537.316  Resources located in Burma.

    The term resources located in Burma means any resources, including 
natural, agricultural, commercial, financial, industrial and human 
resources, located within the territory of Burma, including the 
territorial sea, or located within the exclusive economic zone or 
continental shelf of Burma.


Sec.  537.317  Transfer.

    The term transfer means any actual or purported act or transaction, 
whether or not evidenced by writing, and whether or not done or 
performed within the United States, the purpose, intent, or effect of 
which is to create, surrender, release, convey, transfer, or alter, 
directly or indirectly, any right, remedy, power, privilege, or 
interest with respect to any property and, without limitation upon the 
foregoing, shall include the making, execution, or delivery of any 
assignment, power, conveyance, check, declaration, deed, deed of trust, 
power of attorney, power of appointment, bill of sale, mortgage, 
receipt, agreement, contract, certificate, gift, sale, affidavit, or 
statement; the making of any payment; the setting off of any obligation 
or credit; the appointment of any agent, trustee, or fiduciary; the 
creation or transfer of any lien; the issuance, docketing, filing, or 
levy of or under any judgment, decree, attachment, injunction, 
execution, or other judicial or administrative process or order, or the 
service of any garnishment; the acquisition of any interest of any 
nature whatsoever by reason of a judgment or decree of any foreign 
country; the fulfillment of any condition; the exercise of any power of 
appointment, power of attorney, or other power; or the acquisition, 
disposition, transportation, importation, exportation, or withdrawal of 
any security.


Sec.  537.318  United States.

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


Sec.  537.319  U.S. depository institution.

    The term U.S. depository institution means any entity (including 
its foreign branches) organized under the laws of the United States or 
of any jurisdiction within the United States, or any agency, office or 
branch located in the United States of a foreign entity, that is 
engaged primarily in the business of banking (for example, banks, 
savings banks, savings associations, credit unions, trust companies and 
United States bank holding companies) and is subject to regulation by 
federal or state banking authorities.


Sec.  537.320  U.S. financial institution.

    The term U.S. financial institution means any U.S. entity 
(including foreign branches) that is engaged in the business of 
accepting deposits, making, granting, transferring, holding, or 
brokering loans or credits, or purchasing or selling foreign exchange, 
securities, commodity futures or options, or procuring purchasers and 
sellers thereof, as principal or agent; including, but not limited to, 
depository institutions, banks, savings banks, trust companies, 
securities brokers and dealers, commodity futures and options brokers 
and dealers, forward contract and foreign exchange merchants, 
securities and commodities exchanges, clearing corporations, investment 
companies, employee benefit plans, and U.S. holding companies, U.S. 
affiliates, or U.S. subsidiaries of any of the foregoing. This term 
includes those branches, offices and agencies of foreign financial 
institutions that are located in the United States, but not such 
institutions' foreign branches, offices, or agencies.


Sec.  537.321  U.S. person.

    The term U.S. person means any United States citizen, permanent 
resident alien, entity organized under the laws of the United States or 
any jurisdiction within the United States (including foreign branches), 
or any person in the United States.


Sec.  537.322  U.S. registered broker or dealer in securities.

    The term U.S. 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:

[[Page 48247]]

    (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.


Sec.  537.323  U.S. registered money transmitter.

    The term U.S. registered money transmitter 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 is a money 
transmitter, as defined in 31 CFR 103.11(uu)(5), and that is registered 
pursuant to 31 CFR 103.41.

Subpart D--Interpretations


Sec.  537.401  Reference to amended sections.

    Except as otherwise specified, reference to any provision in or 
appendix to this part or chapter or to any regulation, ruling, order, 
instruction, direction, or license issued pursuant to this part refers 
to the same as currently amended.


Sec.  537.402  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.  537.403  Termination and acquisition of an interest in blocked 
property.

    (a) Whenever a transaction licensed or authorized by or pursuant to 
this part results in the transfer of property (including any property 
interest) away from a person, such property shall no longer be deemed 
to be property blocked pursuant to Sec.  537.201(a), unless there 
exists in the property another interest that is blocked pursuant to 
Sec.  537.201(a) or any other part of this chapter, the transfer of 
which has not been effected pursuant to license or other authorization.
    (b) Unless otherwise specifically provided in a license or 
authorization issued pursuant to this part, if property (including any 
property interest) is transferred or attempted to be transferred to a 
person whose property or interests in property are blocked pursuant to 
Sec.  537.201(a), such property shall be deemed to be property in which 
that person has an interest and therefore blocked.


Sec.  537.404  Transactions incidental to a licensed transaction 
authorized.

    (a) Any transaction ordinarily incident to a licensed transaction 
and necessary to give effect thereto is also authorized, except:
    (1) A transaction, not explicitly authorized within the terms of 
the license, by or with a person whose property or interests in 
property are blocked pursuant to Sec.  537.201(a), except as provided 
in paragraph (b) of this section; or
    (2) A transaction, not explicitly authorized within the terms of 
the license, involving a debit to a blocked account or a transfer of 
blocked property, except as provided in paragraph (b) of this section.
    (b) Transactions licensed pursuant to subpart E of this part and 
those transactions falling within the scope of paragraph (a) of this 
section are authorized even though they may involve transfers to or 
from an account of a financial institution whose property or interests 
in property are blocked pursuant to Sec.  537.201(a), provided that the 
account is not on the books of a financial institution that is a U.S. 
person.


Sec.  537.405  Provision of services.

    (a) Except as provided in Sec.  537.210, the prohibitions on 
transactions involving blocked property contained in Sec.  537.201 
apply to services performed in the United States or by U.S. persons, 
wherever located, including by an overseas branch of an entity located 
in the United States:
    (1) On behalf of or for the benefit of a person whose property or 
interests in property are blocked pursuant to Sec.  537.201(a); or
    (2) With respect to property interests subject to Sec.  537.201.
    (b) Example: U.S. persons may not, except as authorized by or 
pursuant to this part, provide legal, accounting, financial, brokering, 
freight forwarding, transportation, public relations, or other services 
to a person whose property or interests in property are blocked 
pursuant to Sec.  537.201(a).

    NOTE TO Sec.  537.405: See Sec. Sec.  537.507 and 537.508 on 
licensing policy with regard to the provision of certain legal or 
medical services, respectively.

Sec.  537.406  Offshore transactions.

    The prohibitions in Sec.  537.201 on transactions involving blocked 
property apply to transactions by any U.S. person in a location outside 
the United States with respect to property that the U.S. person knows, 
or has reason to know, is held in the name of a person whose property 
or interests in property are blocked pursuant to Sec.  537.201(a) or in 
which the U.S. person knows, or has reason to know, a person whose 
property or interests in property are blocked pursuant to Sec.  
537.201(a) has or has had an interest since the effective date.


Sec.  537.407  Payments from blocked accounts to satisfy obligations 
prohibited.

    Pursuant to Sec.  537.201, no debits may be made to a blocked 
account to pay obligations to U.S. persons or other persons, except as 
authorized by or pursuant to this part.


Sec.  537.408  Setoffs prohibited.

    A setoff against blocked property (including a blocked account), 
whether by a U.S. bank or other U.S. person, is a prohibited transfer 
under Sec.  537.201 if effected after the effective date.


Sec.  537.409  Activities under pre-May 21, 1997 agreements.

    Section 537.210(c) exempts from all prohibitions contained in this 
part, except those contained in Sec.  537.203, activities undertaken by 
a U.S. person pursuant to an agreement entered into prior to May 21, 
1997, between a U.S. person and the Government of Burma or a 
nongovernmental entity in Burma. A U.S. person who is a party to a pre-
May 21, 1997 agreement falling outside the scope of Sec.  537.203 may 
enter into subsequent agreements with foreign persons where such 
agreements are pursuant to, or in exercise of rights under, the pre-May 
21, 1997 agreement and are specifically contemplated by the pre-May 21, 
1997 agreement. The exercise of rights under a pre-May 21, 1997 
agreement falling outside the scope of Sec.  537.203 may include the 
exercise of options to extend the contract, depending on such factors 
as the degree of specificity with which the option to extend is 
described in the pre-May 21, 1997 agreement, and the degree to which 
the party wishing to renew can enforce its decision to exercise the 
option.

[[Page 48248]]

Sec.  537.410  Contracts and subcontracts regarding economic 
development of resources in Burma.

    Section 537.204 prohibits new investment in Burma by U.S. persons. 
Section 537.311 defines the term new investment to include certain 
contracts providing for the general supervision and guarantee of 
another person's performance of a contract that includes the economic 
development of resources located in Burma. With respect to entry into 
such contracts, only the following will be considered new investment in 
Burma:
    (a) Entry into contracts for supervision and guarantee at the 
highest level of project management, such as entry into a contract with 
a development project's sponsor or owner to become a prime contractor 
or general manager for a development project;
    (b) Entry into subcontracts where the functional scope of the 
subcontractor's obligations is substantially similar to that of a prime 
contractor's or general manager's obligations for a development 
project; or
    (c) Entry into a contract or subcontract where the consideration 
includes a share of ownership in, or participation in the royalties, 
earnings or profits of, the economic development of resources located 
in Burma.


Sec.  537.411  Purchase of shares in economic development projects in 
Burma.

    The purchase, directly or indirectly, from the Government of Burma 
or a nongovernmental entity in Burma of shares of ownership, including 
an equity interest, in the economic development of resources located in 
Burma is prohibited unless the purchase is pursuant to an agreement 
entered into prior to May 21, 1997.


Sec.  537.412  Investments in entities involved in economic development 
projects in Burma.

    (a) The purchase of shares in a third-country company that is 
engaged in the economic development of resources located in Burma is 
prohibited by Sec.  537.204 where the company's profits are 
predominantly derived from the company's economic development of 
resources located in Burma.
    (b) If a U.S. person holds shares in an entity which subsequently 
engages predominantly in the economic development of resources located 
in Burma or subsequently derives its income exclusively or 
predominantly from such economic development, the U.S. person is not 
required to relinquish its shares, but may not purchase additional 
shares. Divestiture of the shares in such an entity to a foreign 
person--otherwise constituting the facilitation of that foreign 
person's investment in Burma--is authorized under general license 
pursuant to Sec.  537.524.


Sec.  537.413  Sale of interest in economic development projects in 
Burma.

    The sale to a foreign person of a U.S. person's equity or income 
interest in a development project in Burma constitutes facilitation of 
that foreign person's investment in Burma, unless pursuant to a pre-May 
21, 1997 agreement. Such a sale, however, is authorized by general 
license under Sec.  537.524.

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


Sec.  537.501  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.  537.502  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 by this part has the effect of 
removing a prohibition or prohibitions contained in this part from the 
transaction, but only to the extent specifically stated by its terms. 
Unless the regulation, ruling, instruction, or license otherwise 
specifies, such an authorization does not create any right, duty, 
obligation, claim, or interest in, or with respect to, any property 
which would not otherwise exist under ordinary principles of law.


Sec.  537.503  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.


Sec.  537.504  Payments and transfers to blocked accounts in U.S. 
financial institutions.

    Any payment of funds or transfer of credit in which a person whose 
property or interests in property are blocked pursuant to Sec.  
537.201(a) has any interest, that comes within the possession or 
control of a U.S. financial institution, must be blocked in an account 
on the books of that financial institution. A transfer of funds or 
credit by a U.S. financial institution between blocked accounts in its 
branches or offices is authorized, provided that no transfer is made 
from an account within the United States to an account held outside the 
United States, and further provided that a transfer from a blocked 
account may only be made to another blocked account held in the same 
name.

    NOTE TO Sec.  537.504: Please refer to Sec.  501.603 of this 
chapter for mandatory reporting requirements regarding financial 
transfers. See also Sec.  537.208 concerning the obligation to hold 
blocked funds in interest-bearing accounts.


Sec.  537.505  Entries in certain accounts for normal service charges 
authorized.

    (a) A U.S. financial institution is authorized to debit any blocked 
account held at that financial institution in payment or reimbursement 
for normal service charges owed it by the owner of that blocked 
account.
    (b) As used in this section, the term normal service charge shall 
include charges in payment or reimbursement for interest due; cable, 
telegraph, internet, or telephone charges; postage costs; custody fees; 
small adjustment charges to correct bookkeeping errors; and, but not by 
way of limitation, minimum balance charges, notary and protest fees, 
and charges for reference books, photocopies, credit reports, 
transcripts of statements, registered mail, insurance, stationery and 
supplies, and other similar items.

[[Page 48249]]

Sec.  537.506  Investment and reinvestment of certain funds.

    Subject to the requirements of Sec.  537.208, U.S. financial 
institutions are authorized to invest and reinvest assets blocked 
pursuant to Sec.  537.201, subject to the following conditions:
    (a) The assets representing such investments and reinvestments are 
credited to a blocked account or subaccount which is held in the same 
name at the same U.S. financial institution, or within the possession 
or control of a U.S. person, but funds shall not be transferred outside 
the United States for this purpose;
    (b) The proceeds of such investments and reinvestments shall not be 
credited to a blocked account or subaccount under any name or 
designation that differs from the name or designation of the specific 
blocked account or subaccount in which such funds or securities were 
held; and
    (c) No immediate financial or economic benefit accrues (e.g., 
through pledging or other use) to persons whose property or interests 
in property are blocked pursuant to Sec.  537.201(a).


Sec.  537.507  Provision of certain legal services authorized.

    (a) The provision of the following legal services to or on behalf 
of persons whose property or interests in property are blocked pursuant 
to Sec.  537.201(a) is authorized, provided that all receipts of 
payment of professional fees and reimbursement of incurred expenses 
must be specifically licensed:
    (1) Provision of legal advice and counseling on the requirements of 
and compliance with the laws of any jurisdiction within the United 
States, provided that such advice and counseling are not provided to 
facilitate transactions in violation of this part;
    (2) Representation of persons when named as defendants in or 
otherwise made parties to domestic U.S. legal, arbitration, or 
administrative proceedings;
    (3) Initiation and conduct of domestic U.S. legal, arbitration, or 
administrative proceedings in defense of property interests subject to 
U.S. jurisdiction;
    (4) Representation of persons before any federal or state agency 
with respect to the imposition, administration, or enforcement of U.S. 
sanctions against such persons; and
    (5) Provision of legal services in any other context in which 
prevailing U.S. law requires access to legal counsel at public expense.
    (b) The provision of any other legal services to persons whose 
property or interests in property are blocked pursuant to Sec.  
537.201(a), not otherwise authorized in this part, requires the 
issuance of a specific license.
    (c) Entry into a settlement agreement affecting property or 
interests in property or the enforcement of any lien, judgment, 
arbitral award, decree, or other order through execution, garnishment, 
or other judicial process purporting to transfer or otherwise alter or 
affect property or interests in property blocked pursuant to Sec.  
537.201(a) is prohibited except to the extent otherwise provided by law 
or unless specifically licensed in accordance with Sec.  537.207(e).


Sec.  537.508  Authorization of emergency medical services.

    The provision of nonscheduled emergency medical services in the 
United States to persons whose property or interests in property are 
blocked pursuant to Sec.  537.201(a) is authorized, provided that all 
receipt of payment for such services must be specifically licensed.


Sec.  537.509  Official activities of the U.S. Government and certain 
international organizations.

    All transactions and activities otherwise prohibited by this part 
that are for the conduct of the official business of the United States 
Government, the United Nations, the World Bank, or the International 
Monetary Fund are authorized. This section does not authorize any 
importation into the United States of any article that is a product of 
Burma.


Sec.  537.510  Third-country diplomatic and consular funds transfers.

    All transactions that are related to funds transfers otherwise 
prohibited by Sec. Sec.  537.201 and 537.202 and that are for the 
conduct of diplomatic or consular activities of third-country 
diplomatic or consular missions in Burma are authorized.


Sec.  537.511  Importation of accompanied baggage and household effects 
of U.S. diplomatic and consular officials.

    U.S. diplomatic or consular officials entering the United States 
directly or indirectly from Burma are authorized to engage in all 
transactions incident to the importation into the United States of 
products of Burma as accompanied baggage or household effects, provided 
that such products are not intended for any other person or for sale 
and are not otherwise prohibited from importation under applicable 
United States laws.


Sec.  537.512  Importation for official or personal use by foreign 
diplomatic and consular officials.

    All transactions incident to the importation into the United States 
of any article that is a product of Burma that is destined for official 
or personal use by personnel employed by a diplomatic mission or 
consulate in the United States are authorized, provided that such 
article is not intended for any other person or for sale and is not 
otherwise prohibited from importation under applicable United States 
laws.


Sec.  537.513  Importation and exportation of diplomatic pouches.

    All transactions in connection with the importation into the United 
States or the exportation from the United States of diplomatic pouches 
and their contents are authorized.


Sec.  537.514  Importation of certain personal and household effects.

    (a) A U.S. person who maintained a residence in Burma prior to July 
28, 2003, is authorized to import into the United States personal and 
household effects that are products of Burma, including accompanied 
baggage and articles for family use, provided the imported items were 
purchased by the U.S. person prior to July 28, 2003, have been actually 
used abroad by the U.S. person or by other family members arriving from 
the same foreign household, are not intended for any other person or 
for sale, and are not otherwise prohibited from importation.
    (b) A national of Burma who arrives in the United States after July 
28, 2003, is authorized to import into the United States personal and 
household effects that are products of Burma, including accompanied 
baggage and articles for family use, provided the imported items are 
ordinarily incident to the Burmese national's arrival in the United 
States, have been actually used abroad by the Burmese national or by 
other family members arriving from the same foreign household, are not 
intended for any other person or for sale, and are not otherwise 
prohibited from importation.


Sec.  537.515  Importation of information or informational materials.

    The importation of information or informational materials that are 
products of Burma and all transactions directly incident to such 
importation are authorized.


Sec.  537.516  Importation of Burmese-origin articles and incidental 
transactions.

    (a) The importation of an article that is a product of Burma, 
otherwise prohibited by Sec.  537.203, is authorized, provided the 
article was purchased prior to July 28, 2003, shipped from Burma to the 
United States prior to August 28, 2003, and is not property in which a 
person whose property or

[[Page 48250]]

interests in property are blocked pursuant to Sec.  537.201(a) has an 
interest.
    (b) All transactions otherwise prohibited by Sec. Sec.  537.201 and 
537.202 that are directly incident to the importation into the United 
States of an article that is a product of Burma are authorized, 
provided that:
    (1) The importation is authorized pursuant to paragraph (a) of this 
section; or
    (2) The importation occurred prior to August 28, 2003, and was not 
from a person whose property or interests in property are blocked 
pursuant to Sec.  537.201(a).
    (c) All transactions otherwise prohibited by Sec. Sec.  537.201 and 
537.202 that are directly incident to the importation into a country 
other than the United States or Burma of an article that is a product 
of Burma are authorized, provided that:
    (1) The article was purchased prior to July 28, 2003, shipped from 
Burma prior to August 28, 2003, and is not property in which a person 
whose property or interests in property are blocked pursuant to Sec.  
537.201(a) has an interest; or
    (2) The importation occurred prior to August 28, 2003, and was not 
from a person whose property or interests in property are blocked 
pursuant to Sec.  537.201(a).
    (d) Financing agreements with respect to the importations described 
in paragraphs (a), (b) and (c) of this section may be performed only 
according to their terms and may not be extended or renewed.


Sec.  537.517  Noncommercial, personal remittances.

    (a)(1) U.S. depository institutions, U.S. registered brokers or 
dealers in securities, and U.S. registered money transmitters are 
authorized to process transfers of funds to or from Burma or for or on 
behalf of an individual ordinarily resident in Burma in cases in which 
the transfer involves a noncommercial, personal remittance, provided 
the following conditions are met:
    (i) The transfer is not by, to, or through a person whose property 
or interests in property are blocked pursuant to Sec.  537.201(a), 
except as explained in Sec.  537.404 of this part; and
    (ii) Total remittances to the territory of Burma in any consecutive 
3-month period do not exceed $300 per Burmese household, regardless of 
the number of individuals comprising the household.
    (2) Noncommercial, personal remittances do not include charitable 
donations to or for the benefit of an entity or funds transfers for use 
in supporting or operating a business.

    NOTE TO PARAGRAPH (a) OF Sec.  537.517: U.S. persons may make 
charitable donations to nongovernmental organizations in Burma that 
are authorized to operate pursuant to Sec.  537.523, provided that 
the donations are made pursuant to Sec.  537.523 and the terms of 
the authorization.

    (b) The transferring institutions identified in paragraph (a) of 
this section may rely on the originator of a funds transfer with regard 
to compliance with paragraph (a) of this section, provided that the 
transferring institution does not know or have reason to know that the 
funds transfer is not in compliance with paragraph (a) of this section.
    (c) This section does not authorize transactions with respect to 
property blocked pursuant to Sec.  537.201, except as explained in 
Sec.  537.404(b) of this part.


Sec.  537.518  Transactions incident to exportations to Burma.

    All transactions otherwise prohibited by Sec. Sec.  537.201 and 
537.202 that are ordinarily incident to an exportation to Burma of 
goods, technology or services, other than financial services, are 
authorized, provided the exportation is not to or on behalf of a person 
whose property or interests in property are blocked pursuant to Sec.  
537.201(a). This section does not authorize a financial institution 
that is a U.S. person to advise or confirm any financing by a person 
whose property or interests in property are blocked pursuant to Sec.  
537.201(a).


Sec.  537.519  Activities undertaken pursuant to certain pre-May 21, 
1997 agreements.

    Except as prohibited by Sec.  537.203, U.S. persons are authorized 
to engage in any activity, or any transaction incident to an activity, 
undertaken pursuant to an agreement entered into prior to 12:01 a.m., 
eastern daylight time, on May 21, 1997, or pursuant to the exercise of 
rights under such an agreement, provided that the parties to the 
agreement include:
    (a) The Government of Burma or a nongovernmental entity in Burma, 
and
    (b) An entity organized under the laws of a foreign state.

    NOTE TO Sec.  537.519: The authorization contained in Sec.  
537.519 pertains to pre-May 21, 1997 contracts between foreign 
business entities and either the Government of Burma or a 
nongovernmental entity in Burma. Pre-May 21, 1997 contracts between 
U.S. persons and the Government of Burma or a nongovernmental entity 
in Burma are exempt from all prohibitions contained in this part 
except those contained in Sec.  537.203. See Sec.  537.210 
(exemptions).

Sec.  537.520  Payments for overflights of Burmese airspace.

    Payments to Burma of charges for services rendered by the 
Government of Burma in connection with the overflight of Burma or 
emergency landing in Burma of aircraft owned or operated by a U.S. 
person or registered in the United States are authorized.


Sec.  537.521  Operation of accounts.

    The operation of an account in a U.S. financial institution for an 
individual ordinarily resident in Burma, other than an individual whose 
property or interests in property are blocked pursuant to Sec.  
537.201(a), is authorized, provided that each transaction processed 
through the account:
    (a) Is of a personal nature and not for use in supporting or 
operating a business;
    (b) Does not involve a transfer directly or indirectly to Burma or 
for the benefit of individuals ordinarily resident in Burma unless 
authorized by Sec.  537.517; and
    (c) Is not otherwise prohibited by this part.


Sec.  537.522  Certain transactions related to patents, trademarks and 
copyrights authorized.

    (a) All of the following transactions in connection with patent, 
trademark, copyright or other intellectual property protection in the 
United States or Burma, except for those transactions prohibited by 
Sec.  537.203, are authorized:
    (1) The filing and prosecution of any application to obtain a 
patent, trademark, copyright or other form of intellectual property 
protection;
    (2) The receipt of a patent, trademark, copyright or other form of 
intellectual property protection;
    (3) The renewal or maintenance of a patent, trademark, copyright or 
other form of intellectual property protection; and
    (4) The filing and prosecution of opposition or infringement 
proceedings with respect to a patent, trademark, copyright or other 
form of intellectual property protection, or the entrance of a defense 
to any such proceedings.
    (b) This section authorizes the payment of fees currently due to 
the United States Government, or of the reasonable and customary fees 
and charges currently due to attorneys or representatives within the 
United States, in connection with the transactions authorized in 
paragraph (a) of this section. Payment effected pursuant to the terms 
of this paragraph may not be made from a blocked account.
    (c) This section authorizes the payment of fees currently due to 
the

[[Page 48251]]

Government of Burma, or of the reasonable and customary fees and 
charges currently due to attorneys or representatives within Burma, in 
connection with the transactions authorized in paragraph (a) of this 
section.
    (d) Nothing in this section affects obligations under any other 
provision of law.


Sec.  537.523  Authorization of nongovernmental organizations to engage 
in humanitarian or religious activities.

    (a) Specific licenses may be issued on a case-by-case basis 
authorizing nongovernmental organizations to engage in transactions 
otherwise prohibited by Sec. Sec.  537.201 and 537.202 that are 
necessary for their humanitarian or religious activities in Burma. 
Applications for specific licenses must include:
    (1) The organization's name in English, in the language of origin, 
and any acronym or other names used to identify the organization;
    (2) Address and phone number of the organization's headquarters 
location;
    (3) Identification of field offices and partner offices, including 
addresses and organizational names used;
    (4) Identification of key staff, such as directors and senior 
officers, at the organization's headquarters and partner offices, 
including the nationality, citizenship, current country of residence, 
place and date of birth, and current position of each person 
identified;
    (5) Identification of subcontracting organizations, if any, to the 
extent known or contemplated at the time of the application;
    (6) Existing sources of income, such as official grants, private 
endowments, commercial activities;
    (7) Financial institutions that hold deposits on behalf of or 
extend lines of credit to the organization (names of individuals and 
organizations shall be provided in English, in the language of origin, 
and shall include any acronym or other names used to identify the 
individuals or organizations);
    (8) Independent accounting firms, if employed in the production of 
the organization's financial statements (names of individuals and 
organizations shall be provided in English, in the language of origin, 
and shall include any acronym or other names used to identify the 
individuals or organizations);
    (9) A detailed description of the organization's humanitarian, 
environmental or religious activities and projects in countries or 
geographic areas subject to economic sanctions pursuant to this chapter 
V, including, if applicable, a summary of all information provided in 
grant proposals or funding requests made in connection with the 
proposed activities;
    (10) Most recent official registry documents, annual reports, and 
annual filings with the pertinent government, as applicable; and
    (11) Names and addresses of organizations to which the applicant 
currently provides or proposes to provide funding, services or material 
support, to the extent known at the time of the application, as 
applicable.
    (b) This section does not authorize transfers from blocked 
accounts.

    NOTE TO Sec.  537.523: Authorization pursuant to this section 
does not excuse a U.S. person from compliance with other applicable 
U.S. laws governing the exportation or reexportation of U.S.-origin 
goods, software, or technology (including technical data). See, 
e.g., the Export Administration Regulations administered by the U.S. 
Department of Commerce (15 CFR parts 730-774).


Sec.  537.524  Divestiture of U.S. person's investments in Burma.

    All transactions, except those prohibited by Sec.  537.203, related 
to the divestiture or transfer to a foreign person of a U.S. person's 
share of ownership, including an equity interest, in the economic 
development of resources located in Burma are authorized. U.S. persons 
participating in such a transaction valued at more than $10,000 are 
required, within 10 business days after the transaction takes place, to 
file a report for statistical purposes with the Office of Foreign 
Assets Control, U.S. Treasury Department, 1500 Pennsylvania Avenue NW.-
Annex, Washington, DC 20220.


Sec.  537.525  Transactions related to U.S. citizens residing in Burma.

    To the extent otherwise prohibited, U.S. citizens who reside on a 
permanent basis in Burma are authorized to pay their personal living 
expenses and engage in other transactions in Burma ordinarily incident 
to their routine and necessary personal maintenance.


Sec.  537.526  Authorized transactions necessary and ordinarily 
incident to publishing.

    (a) To the extent that such activities are not exempt from this 
part, and subject to the restrictions set forth in paragraphs (b) 
through (d) of this section, U.S. persons are authorized to engage in 
all transactions necessary and ordinarily incident to the publishing 
and marketing of manuscripts, books, journals, and newspapers 
(collectively, ``written publications''), in paper or electronic 
format. This section does not apply if the parties to the transactions 
described in this paragraph include the State Peace and Development 
Council of Burma or the Union Solidarity and Development Association of 
Burma, or any successor entity to any of the foregoing entities, or any 
person, other than personnel of academic and research institutions, 
acting or purporting to act directly or indirectly on behalf of the 
foregoing entities with respect to the transactions described in this 
paragraph. Pursuant to this section, the following activities are not 
prohibited, provided that U.S. persons ensure that they are not 
engaging, without specific authorization, in the activities identified 
in paragraph (d) of this section:
    (1) Commissioning and making advance payments for identifiable 
written publications not yet in existence, to the extent consistent 
with industry practice;
    (2) Collaborating on the creation and enhancement of written 
publications;
    (3) Augmenting written publications through the addition of items 
such as photographs, artwork, translation, and explanatory text;
    (4) Substantive and artistic editing of written publications;
    (5) Payment of royalties for written publications;
    (6) Creating or undertaking a marketing campaign to promote a 
written publication; and
    (7) Other transactions necessary and ordinarily incident to the 
publishing and marketing of written publications as described in this 
paragraph (a).
    (b) This section does not authorize transactions constituting the 
exportation or reexportation of financial services from the United 
States or by U.S. persons to Burma that are not necessary and 
ordinarily incident to the publishing and marketing of written 
publications as described above. For example, this section does not 
authorize U.S. persons to transfer funds to Burma relating to the 
following:
    (1) The provision or receipt of individualized or customized 
services (including, but not limited to, accounting, legal, design, or 
consulting services), other than those necessary and ordinarily 
incident to the publishing and marketing of written publications, even 
though such individualized or customized services are delivered through 
the use of information and informational materials;
    (2) The creation or undertaking of a marketing campaign for any 
person with respect to any service or product other than a written 
publication, or the

[[Page 48252]]

creation or undertaking of a marketing campaign of any kind for the 
benefit of the State Peace and Development Council of Burma or the 
Union Solidarity and Development Association of Burma; or
    (3) The operation of a publishing house, sales outlet, or other 
office in Burma.
    (c) This section does not authorize U.S. persons to engage in 
transactions constituting the exportation or reexportation of financial 
services to Burma that relate to the services of publishing houses or 
translators in Burma unless such activity is primarily for the 
dissemination of written publications in Burma.
    (d) This section does not authorize:
    (1) The importation into the United States of any article that is a 
product of Burma other than information and informational materials;
    (2) Transactions constituting the exportation or reexportation of 
financial services from the United States or by U.S. persons to Burma 
that relate to the development, production, design, or marketing of 
technology specifically controlled by the International Traffic in Arms 
Regulations, 22 CFR parts 120 through 130 (ITAR), the Export 
Administration Regulations, 15 CFR parts 730 through 774 (EAR), or the 
Department of Energy Regulations set forth at 10 CFR part 810.
    (3) Transactions constituting the exportation or reexportation of 
financial services from the United States or by U.S. persons to Burma 
that relate to the exportation of information or technology subject to 
the authorization requirements of 10 CFR part 810, or Restricted Data 
as defined in section 11(y) of the Atomic Energy Act of 1954, as 
amended, or of other information, data, or technology the release of 
which is controlled under the Atomic Energy Act and regulations 
therein;
    (4) Transactions constituting the exportation or reexportation of 
financial services from the United States or by U.S. persons to Burma 
that relate to the exportation of information subject to license 
application requirements under the EAR. These EAR license application 
requirements cover not only the exportation of information controlled 
on the Commerce Control List, 15 CFR part 774, but also the exportation 
of any information subject to the EAR where a U.S. person knows or has 
reason to know that the information will be used, directly or 
indirectly, with respect to certain nuclear, missile, chemical and 
biological weapons, and nuclear-maritime end-uses. In addition, U.S. 
persons are precluded from exporting any information subject to the EAR 
to certain restricted end-users, as provided in the Commerce 
Department's end-user and end-use based controls set forth at 15 CFR 
part 744; or
    (5) Transactions constituting the exportation or reexportation of 
financial services from the United States or by U.S. persons to Burma 
that relate to the exportation of information subject to licensing 
requirements under the ITAR, or exchanges of information that are 
subject to regulation by other government agencies.

Subpart F--Reports


Sec.  537.601  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.  537.701  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 (Pub. L. 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 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 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.
    (d) Violations of this part may also be subject to relevant 
provisions of other applicable laws.


Sec.  537.702  Prepenalty notice.

    (a) When required. If the Director of the Office of Foreign Assets 
Control has reason 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 the respondent's right to make a written presentation 
within the applicable 30-day period set forth in Sec.  537.703 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 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 the Director's discretion, 
the Office of Foreign Assets Control will agree to withhold issuance of 
the

[[Page 48253]]

prepenalty notice for a period not to exceed 60 days and will enter 
into settlement negotiations of the potential civil monetary penalty 
claim.


Sec.  537.703  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 the Director's 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 
typewritten form and signed by the respondent or a representative 
thereof. The response need not be in any particular form. A copy of the 
written response may be sent by facsimile, but the original also must 
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) Failure to Respond. Where OFAC receives no response to a 
prepenalty notice within the applicable time period set forth in 
paragraph (a) of this section, a penalty notice generally will be 
issued, taking into account the mitigating and/or aggravating factors 
present in the record. If there are no mitigating factors present in 
the record, or the record contains a preponderance of aggravating 
factors, the proposed prepenalty amount generally will be assessed as 
the final penalty.
    (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 is granted by the Office of Foreign Assets Control.
    (f) Guidelines. Guidelines for the imposition or settlement of 
civil penalties by the Office of Foreign Assets Control have been 
codified in the Appendix to the Reporting, Procedures and Penalties 
Regulations, 31 CFR part 501.
    (g) 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.  537.704  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 the 
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.

[[Page 48254]]

Sec.  537.705  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 a federal district court.

Subpart H--Procedures


Sec.  537.801  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.  537.802  Delegation by the Secretary of the Treasury.

    Any action that the Secretary of the Treasury is authorized to take 
pursuant to Executive Order 13047 of May 20, 1997 (62 FR 28299, May 22, 
1997) and Executive Order 13310 of July 28, 2003 (68 FR 44853, July 30, 
2003), and any further Executive orders relating to the national 
emergency declared therein, 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.  537.901  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 record keeping 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: June 10, 2005.
Robert W. Werner,
Director, Office of Foreign Assets Control.
    Approved: July 25, 2005.
Stuart A. Levey,
Under Secretary, Office of Terrorism and Financial Intelligence, 
Department of the Treasury.
[FR Doc. 05-16144 Filed 8-11-05; 9:03 am]
BILLING CODE 4810-25-P