[Federal Register Volume 70, Number 214 (Monday, November 7, 2005)]
[Rules and Regulations]
[Pages 67339-67342]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 05-22186]



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  Federal Register / Vol. 70, No. 214 / Monday, November 7, 2005 / 
Rules and Regulations  

[[Page 67339]]



OFFICE OF PERSONNEL MANAGEMENT

5 CFR Part 950

RIN 3206-AK 71


Solicitation of Federal Civilian and Uniformed Service Personnel 
for Contributions to Private Voluntary Organizations--Sanctions 
Compliance Certification

AGENCY: Office of Personnel Management.

ACTION: Final rule.

-----------------------------------------------------------------------

SUMMARY: The Office of Personnel Management (OPM) is issuing a final 
regulation for the Combined Federal Campaign (CFC). This regulation 
requires that each federation and unaffiliated organization applying to 
participate in the CFC must, as a condition of participation, certify 
that it is in compliance with all statutes, Executive orders, and 
regulations restricting or prohibiting U.S. persons from engaging in 
transactions and dealings with countries, entities, and individuals 
subject to economic sanctions administered by the U.S. Department of 
the Treasury's Office of Foreign Assets Control (OFAC).

DATES: This rule is effective November 7, 2005.

FOR FURTHER INFORMATION CONTACT: Mark W. Lambert, Senior Compliance 
Officer for the Office of CFC Operations, by telephone on (202) 606-
2564, by FAX on (202) 606-0902, or by e-mail at [email protected].

SUPPLEMENTARY INFORMATION:

I. Background of This Rulemaking

    As a condition of participating in the 2005 CFC, OPM required 
organizations to certify that they do not knowingly employ individuals, 
or contribute funds to entities or persons, on either the Department of 
the Treasury's Office of Foreign Assets Control's Specially Designated 
Nationals List or the Terrorist Exclusion List. OPM's Office of CFC 
Operations issued guidance on compliance with that certification, CFC 
Memorandum 2004-12, which described the rationale for the certification 
and set forth instructions for checking these lists.
    On March 29, 2005, OPM issued a Notice of Proposed Rulemaking (70 
FR 15783 (March 29, 2005)) (NPRM) to modify the certification. The 
proposed rule governs the solicitation of Federal civilian and 
uniformed services personnel at the workplace for contributions to 
private non-profit organizations through the CFC under the authority of 
Executive Order 12353 (March 23, 1982). OPM has plenary authority under 
5 CFR part 950 to administer the CFC in compliance with legal 
standards.
    As explained in the NPRM, the proposed regulation requires that 
each federation and unaffiliated organization applying to participate 
in the CFC must, as a condition of participation, certify that it is in 
compliance with all statutes, Executive orders, and regulations 
restricting or prohibiting U.S. persons from engaging in transactions 
and dealings with countries, entities, and individuals subject to 
economic sanctions administered by the U.S. Department of the 
Treasury's Office of Foreign Assets Control (OFAC).
    OFAC is the office principally responsible for administering and 
enforcing U.S. economic sanctions programs imposed pursuant to the 
International Emergency Economic Powers Act (50 U.S.C. 1701 et seq.) 
and other authorities. These programs further U.S. foreign policy and 
national security goals and are directed primarily against foreign 
states and nationals, including sponsors of global terrorism and 
foreign narcotics traffickers. OFAC acts, pursuant to delegated 
authority, under Presidential wartime and peacetime national emergency 
powers. The programs administered by OFAC restrict or prohibit U.S. 
persons from engaging in transactions and dealings with targeted 
countries, entities, and individuals. OFAC publishes a list of 
Specially Designated Nationals and Blocked Persons (SDN List). The 
persons on the SDN List are subject to economic sanctions. The SDN List 
and additional information relating to the economic sanctions programs 
that OFAC administers are available at http://www.treas.gov/ofac. A 
link to the SDN List is available on the CFC Web site (http://www.opm.gov/cfc).
    The vulnerability of the charitable sector to abuse by terrorists 
and others underscores the importance of due diligence within the 
charitable sector. For example, between October 2001 and December 2004, 
the United States: (i) Imposed sanctions against five U.S.-based 
charities and thirty-five non-U.S. charities for terrorist financing 
activity under the authority of Executive Order 13224 (Sept. 23, 2001) 
and the International Emergency Economic Powers Act, 50 U.S.C. 1701, et 
seq.; (ii) convicted and sentenced the leader of a U.S.-based charity 
for racketeering and fraud owing to terrorist-related support; (iii) 
indicted more than one U.S.-based charity and its leadership under 
pending terrorist financing charges; and (iv) investigated numerous 
other charities operating in the U.S. that were suspected of 
involvement in supporting terrorist activities.
    Accordingly, in order to further the purposes of the economic 
sanctions imposed by the President, to ensure that organizations 
participating in the CFC are exercising appropriate diligence, and to 
help safeguard the integrity of the CFC and the interests of Federal 
employees who contribute to the CFC, the final regulation requires that 
each federation, federation member, and unaffiliated organization 
applying to participate in the CFC must, as a condition of 
participation, complete the following certification:

    I certify that the organization named in this application is in 
compliance with all statutes, Executive orders, and regulations 
restricting or prohibiting U.S. persons from engaging in 
transactions and dealings with countries, entities, or individuals 
subject to economic sanctions administered by the U.S. Department of 
the Treasury's Office of Foreign Assets Control. The organization 
named in this application is aware that a list of countries subject 
to such sanctions, a list of Specially Designated Nationals and 
Blocked Persons subject to such sanctions, and overviews and 
guidelines for each such sanctions program can be found at http://www.treas.gov/ofac. Should any change in circumstances pertaining to 
this certification occur at any time, the organization will notify 
OPM's Office of CFC Operations immediately.

[[Page 67340]]

II. Explanation of Changes

    OPM received 13 written comments in response to the NPRM from: four 
Local Federal Coordinating Committees, which oversee local campaign 
activities; two Principal Combined Fund Organizations, which administer 
local campaigns on behalf of Federal employees; four charitable 
organizations that participate or have participated in the CFC; one 
Federal agency; one Federal employee; and one citizen. OPM has found 
these comments very helpful, and, in several important respects, the 
final rule contains revisions made in response to these comments.
    In general, each of the 13 commenters believed that the 
certification and regulatory changes proposed in the NPRM were 
improvements over the 2005 certification and OPM guidance. Five of the 
13 commenters voiced their concurrence with the regulatory changes and 
certification proposed in the NPRM.
    One of the commenters wanted to know how the propositions in the 
NPRM would affect the American Red Cross. OPM believes that the 
regulatory change and certification will affect all organizations in 
the same manner. Each organization wishing to participate in the CFC 
will need to determine the steps necessary to ensure that it can 
accurately certify to the sanctions compliance statement in order to 
participate in the CFC.
    Another commenter suggested clarifying the NPRM wording of 5 CFR 
Sec.  950.605 to specify that federation members, as well as 
federations and unaffiliated organizations, must certify to the 
sanctions compliance statement. OPM agrees and has made the change to 5 
CFR Sec.  950.605.
    One commenter recommended that we implement the proposed 
certification in the NPRM for the 2005 CFC. OPM disagrees with the 
commenter, because the certification in the NPRM was not finalized as 
of the application deadline for the 2005 CFC. The proposed regulation 
remained subject to change based on comments from stakeholders during 
the time period that decisions needed to be made on the eligibility of 
CFC applicants for the 2005 CFC.
    One commenter stated that the proposed certification in the NPRM 
continued to contain ambiguities and recommended that OPM clarify these 
ambiguities prior to finalizing the regulation. The primary concern of 
the commenter was that it was not clear what an organization must do to 
be compliant and whether or not checking government sanctions lists 
would still be mandatory, as was required by the 2005 certification and 
OPM guidance. The commenter asserted that if list-checking was 
mandatory, OPM should clarify whether CFC Memorandum 2004-12 applies in 
whole or in part to the proposed NPRM certification. The commenter 
requested that these clarifications be made prior to the adoption of 
the final rule, by the issuance by OPM of a second proposed rule 
containing the clarifications and providing the public with a chance to 
comment again.
    Under the final rule, effective for 2006 and subsequent campaigns, 
OPM does not mandate that applicants check the Specially Designated 
Nationals (SDN) List or the Terrorist Exclusion List (TEL). Charities, 
however, as a minimum, should follow the U.S. Department of the 
Treasury Anti-Terrorist Financing Guidelines: Voluntary Best Practices 
for U.S. Based Charities, which is located on the OFAC Web site at 
http://www.treas.gov/offices/enforcement/key-issues/protecting/index.shtml. Thus, even though OPM will not mandate list-checking by 
applicants for the 2006 and subsequent campaigns, it continues to 
encourage charities to check the SDN List and the TEL as a way to help 
ensure compliance with applicable regulations and as an important part 
of implementing the type of risk-based compliance program proposed by 
the Guidelines. It is the intention of OPM that applicants enhance 
their efforts to ensure that funds collected through the CFC not be 
used to finance unlawful activities or those who engage in them, not 
that such efforts be diminished. This is not a departure from prior 
policy. The new certification takes into account the fact that the 
various charities participating in the CFC operate under unique 
circumstances and it is ultimately their responsibility to ensure 
compliance with the OFAC economic sanctions programs. OPM does not 
believe it is necessary to issue a second proposed rule and will 
continue to consider feedback from stakeholders throughout the current 
and future campaigns.
    One of the commenters recommended changes to the Supplementary 
Information section of the NPRM to reflect that more than one U.S. 
based charity and its leadership have been indicted for providing 
material support or resources to terrorist organizations. The commenter 
further requested that OPM clarify the entry that states ``(iv) 
investigated numerous other charities operating in the U.S. and 
suspected of terrorist financing activity'' to read ``(iv) investigated 
numerous other charities operating in the U.S. suspected of involvement 
in supporting terrorist activities.'' OPM agrees and made the changes 
to the Supplementary Information in this final regulation. The 
commenter also recommended a final regulation similar to the one issued 
and used by the United States Agency for International Aid (USAID). 
Although OPM reviewed and considered the regulation and guidance used 
by USAID, OPM believes that the proposed certification, with revisions 
based on public comments, more appropriately meets the needs of the 
CFC. USAID enters into assistance agreements with organizations and 
must ensure that it, as an entity, complies with the OFAC sanctions 
program as well as criminal statutes against providing material support 
to terrorist groups. As a result, USAID requires disclosure of 
contractors and subgrantees of its grants, as well as compliance 
verifications on these contractors and subgrantees. Although OPM 
facilitates Federal employee support for charitable recipients through 
the CFC, OPM does not provide direct support to organizations in the 
manner that USAID does, nor does OPM collect comparable information 
from its participating organizations. As a result, the burden of 
ensuring compliance with the OFAC sanctions programs properly rests 
with the charities that provide the charitable benefits, and that are 
in any event charged with compliance with OFAC sanctions programs as a 
matter of law. OPM does annually conduct a match of participating 
charities at the national level against the OFAC list and requires 
LFCCs to similarly conduct an annual match of local charitable 
organizations against the OFAC list.
    One commenter objected to the last sentence in the proposed 
certification, stating that it implies the organization has violated 
the law and raises Constitutional concerns of self-incrimination. The 
commenter suggested that OPM revise this sentence to match the one used 
in the 2005 certification. While OPM intends for voluntary compliance 
with this regulation to include reporting instances of non-compliance, 
OPM agrees that the suggested language accomplishes that purpose and 
has made the change to the last sentence of the certification in this 
final regulation.
    One commenter proposed that the certification should be clarified 
to recognize that no entity can ensure absolute compliance and to 
provide a standard that allows each charity to plan its individual 
approach to compliance. The commenter stated that by requiring a 
charity to state that it is in compliance, CFC puts the applicant in 
the potential position of having to

[[Page 67341]]

prove a negative: that there is no diversion of funds. The commenter 
cited the certification used by USAID as providing a clearer and more 
realistic statement: ``does not knowingly provide support or resources 
* * * to the best of its current knowledge.'' The commenter pointed out 
that the USAID guidance states that list checking may be used but is 
not mandatory, defines ``material support'' and clarifies what a 
charity must do if it believes recipients of its support are involved 
in terrorist acts. The commenter also proposed that the CFC provide a 
process for charities that discover noncompliance with the 
certification during the fiscal year to cure the problem without 
interrupting their participation in the program and that absent 
negligence in oversight, the CFC should not attempt to recoup donations 
already received when a charity comes forward to report and cure non-
compliance. The commenter stated that any other approach is inherently 
unfair and discourages charities from coming forward to report and 
correct problems. Finally, the commenter suggested the removal of OPM's 
description of a ``pattern of abuse of U.S. and foreign charities'' 
included in the Supplementary Information in the NPRM. The commenter 
based this suggestion on a citation from a 2004 research paper, which 
disputed that U.S. charities were unwittingly being used to support 
terrorist activities.
    OPM agrees with some of the comments made by this commenter and 
disagrees with others. As stated previously, OPM believes that this 
final rule will provide the required clarification and that the best 
practices guidance issued by the U.S. Department of the Treasury will 
assist charities in their compliance efforts. As explained above, OPM 
reviewed and considered the regulation and guidance used by USAID but 
believes that the proposed certification, with revisions based on 
public comments, more appropriately meets the needs of the CFC. In 
regard to the comments on charities that discover instances of non-
compliance and are able to resolve them without affecting CFC 
participation, the proposed rule and this final regulation state that 
OPM ``will take steps it deems necessary.'' These steps may include the 
items iterated in the NPRM and in this final regulation. Historically, 
OPM has chosen to work with charities to correct occurrences of non-
compliance with CFC regulations and will continue to do so. However, 
OPM recognizes that circumstances vary. Particularly with regard to 
this sensitive issue, it has determined that it must reserve discretion 
to act appropriately given unforeseen future events.
    Finally, OPM opted to remove the language regarding ``a pattern of 
abuse'' noted in the Supplementary Information of the NPRM. While more 
than one U.S. based charity and its leadership have been indicted for 
providing material support or revenues to terrorist organizations, OPM 
acknowledges that there are differing views regarding this assertion. 
Furthermore, OPM does not intend this NPRM to be the forum for this 
debate.
    The final commenter reiterated the comments provided by the 
previously described commenter, which we already have addressed in this 
discussion.

Waiver of Delayed Effective Date

    Pursuant to 5 U.S.C. 553(d)(3), I find that good cause exists for 
making this rule effective upon the date of publication of this notice. 
In accordance with established practice, OPM will begin accepting 
applications for the 2006 CFC on December 1, 2005. Waiting 30 days from 
the date of publication of this notice to make the rule effective will 
not provide sufficient time in advance of December 1, 2005, for the 
application form for the 2006 CFC to be made available to parties 
wishing to complete and submit the form.

Regulatory Flexibility Act

    I certify that this regulation will not have a significant economic 
impact on a substantial number of small entities. Organizations 
applying to the CFC have an existing, independent obligation to comply 
with U.S. sanctions laws. Requiring them to execute a certification 
with respect to such compliance is not burdensome. OPM has taken steps 
to minimize the economic impact on small entities by including in the 
text of the certification the OFAC Web site address at which extensive 
information on U.S. sanctions is available via the internet free of 
charge, including the text-searchable OFAC SDN List.

Executive Order 12866, Regulatory Review

    This rule has been reviewed by the Office of Management and Budget 
in accordance with Executive Order 12866.

List of Subjects in 5 CFR Part 950

    Administrative practice and procedures, Charitable contributions, 
Government employees, Military personnel, Nonprofit organizations and 
Reporting and recordkeeping requirements.

Office of Personnel Management.
Linda M. Springer,
Director.

0
Accordingly, OPM amends 5 CFR part 950 as follows:

PART 950--SOLICITATION OF FEDERAL CIVILIAN AND UNIFORMED SERVICE 
PERSONNEL FOR CONTRIBUTIONS TO PRIVATE VOLUNTARY ORGANIZATIONS

0
1. The authority citation for part 950 continues to read as follows:

    Authority: E.O. 12353 (March 23, 1982), 47 FR 12785 (March 25, 
1982). 3 CFR, 1982 Comp., p. 139. E.O. 12404 (February 10, 1983), 48 
FR 6685 (February 15, 1983), Pub. L. 100-202, and Pub. L. 102-393 (5 
U.S.C. 1101 Note).


0
2. In Subpart A Sec.  950.104 add paragraph (b)(18) to read as follows:


Sec.  950.104  Local Federal Coordinating Committee responsibilities.

* * * * *
    (b) * * *
    (18) Determining whether each local federation, federation member, 
and unaffiliated organization that applies to participate in the local 
campaign has completed the sanctions compliance certification required 
pursuant to Sec.  950.605. The LFCC must deny participation to any 
federation or organization that has not completed the sanctions 
compliance certification.
* * * * *

0
3. In Subpart F, add new Sec.  950.605 to read as follows:


Sec.  950.605  Sanctions compliance certification.

    Each federation, federation member and unaffiliated organization 
applying for participation in the CFC must, as a condition of 
participation, complete a certification that it is in compliance with 
all statutes, Executive orders, and regulations restricting or 
prohibiting U.S. persons from engaging in transactions and dealings 
with countries, entities or individuals subject to economic sanctions 
administered by the U.S. Department of the Treasury's Office of Foreign 
Assets Control (OFAC). Should any change in circumstances pertaining to 
this certification occur at any time, the organization must notify 
OPM's Office of CFC Operations immediately. OPM will take such steps as 
it deems appropriate under the circumstances, including, but not 
limited to, notifying OFAC and/or other enforcement authorities of such 
change, suspending disbursement of CFC funds not yet disbursed, 
retracting (to the extent practicable) CFC funds already

[[Page 67342]]

disbursed, and suspending or expelling the organization from the CFC.

[FR Doc. 05-22186 Filed 11-3-05; 11:13 am]
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