[Federal Register Volume 72, Number 99 (Wednesday, May 23, 2007)]
[Rules and Regulations]
[Pages 28855-28864]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E7-9822]


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DEPARTMENT OF THE TREASURY

Office of Foreign Assets Control

31 CFR Part 593


Former Liberian Regime of Charles Taylor Sanctions Regulations

AGENCY: Office of Foreign Assets Control, Treasury.

ACTION: Final rule.

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SUMMARY: The Office of Foreign Assets Control of the U.S. Department of 
the Treasury is adding new part 593 to chapter V of 31 CFR to carry out 
the purposes of Executive Order 13348 of July 22, 2004, ``Blocking 
Property of Certain Persons and Prohibiting the Importation of Certain 
Goods from Liberia.'' These regulations implement targeted sanctions 
directed at the regime of former President Charles Taylor. The 
sanctions are not directed against the country of Liberia, the 
Government of Liberia, or the Central Bank of Liberia.

DATES: Effective Date: May 23, 2007.

FOR FURTHER INFORMATION CONTACT: Assistant Director for Compliance, 
Outreach & Implementation, tel.: 202/622-2490, Assistant Director for 
Licensing, tel.: 202/622-2480, Assistant Director for Policy, tel.: 
202/622-4855, Office of Foreign Assets Control, or Chief Counsel 
(Foreign Assets Control), tel.: 202/622-2410, Office of the General 
Counsel, Department of the Treasury, Washington, DC 20220 (not toll 
free numbers).

SUPPLEMENTARY INFORMATION: 

Electronic and Facsimile Availability

    This document and additional information concerning the Office of 
Foreign Assets Control (``OFAC'') are available from OFAC's Web site 
(http://www.treas.gov/ofac) or via facsimile through a 24-hour fax-on 
demand service, tel.: (202) 622-0077.

Background

    On July 22, 2004, the President, invoking the authority of, inter 
alia, the International Emergency Economic Powers Act (50 U.S.C. 1701-
1706) (``IEEPA'') and section 5 of the United Nations Participation Act 
(22 U.S.C. 287c), issued Executive Order 13348 (69 FR 44885, July 27, 
2004) (''the Order''), effective at 12:01 a.m. eastern daylight time on 
July 23, 2004. The Order also noted United Nations Security Council 
Resolutions 1521 of December 22, 2003, and 1532 of March 12, 2004, 
which, inter alia, called on member states to impose an asset freeze on 
certain senior members of former Liberian President Charles Taylor's 
government and certain other persons and to prevent the importation 
into their territories of all round logs and timber products 
originating in Liberia.
    Section 1(a) of the Order blocks, with certain exceptions, all 
property and interests in property 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 United States persons, of: (1) The 
persons listed in an Annex to the Order; and (2) any person determined 
by the Secretary of the Treasury, in consultation with the Secretary of 
State:
     To be or have been an immediate family member of Charles 
Taylor;
     To have been a senior official of the former Liberian 
regime headed by Charles Taylor or otherwise to have been or be a close 
ally or associate of Charles Taylor or the former Liberian regime;
     To have materially assisted, sponsored, or provided 
financial, material, or technological support for, or goods or services 
in support of, the unlawful depletion of Liberian resources, the 
removal of Liberian resources from that country, and the secreting of 
Liberian funds and property by any person whose property and interests 
in property are blocked pursuant to the Order; or
     To be owned or controlled by, or acting or purporting to 
act for or on behalf of, directly or indirectly, any person whose 
property and interests in property are blocked pursuant to the Order.
    In Section 1(b) of the Order, the President determined that the 
exemption from IEEPA regulation provided in section 203(b)(2) of IEEPA 
(50 U.S.C. 1702(b)(2)) for the making of donations of the types of 
articles specified in such section (i.e., articles, such as food, 
clothing, and medicine, intended to be used to relieve human suffering) 
by, to, or for the benefit of, any person whose property and interests 
in property are blocked pursuant to the Order would seriously impair 
his ability to deal with the national emergency declared in the Order, 
and prohibited such donations. Accordingly, the donation of such items 
is not exempted from the scope of these regulations and is prohibited, 
unless authorized by OFAC.
    Section 1(c) of the Order provides that the blocking of property 
and interests in property includes, but is not limited to, the making 
or receiving of any contribution or provision of funds, goods or 
services by, to, or for the benefit of, any person listed in or 
designated pursuant to the Order, and the receipt of any contribution 
or provision of funds, goods, or services from any such person.
    Section 2 of the Order prohibits, with certain exceptions, the 
direct or indirect importation into the United States of any round log 
or timber product originating in Liberia.
    Section 3 of the Order prohibits any transaction by a United States 
person that evades or avoids, or has the purpose of evading or 
avoiding, or attempts to violate, any of the prohibitions set forth in 
the Order, as well as any conspiracy formed to violate such 
prohibitions.
    Section 6 of the Order 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. Acting under 
authority delegated by the Secretary of

[[Page 28856]]

the Treasury, the Department of the Treasury's Office of Foreign Assets 
Control (``OFAC'') is promulgating these Former Liberian Regime of 
Charles Taylor Sanctions Regulations, 31 CFR part 593 (the 
``Regulations'').
    These regulations are promulgated in furtherance of the sanctions 
set forth in Executive Order 13348, which are targeted sanctions 
directed at the regime of former President Charles Taylor. The 
sanctions are not directed against the country of Liberia, the 
Government of Liberia, or the Central Bank of Liberia. They do not 
generally prohibit the provision of banking services to the country of 
Liberia, including the maintenance of correspondent banking 
relationships with Liberian banks, unless the bank in question, or any 
other person engaged in the transaction, is a person whose property and 
interests in property are blocked pursuant to Sec.  593.201(a). In 
addition, the importation into the United States of rough diamonds from 
Liberia is governed by the Rough Diamonds Control Regulations, 31 CFR 
part 592.
    Subpart B of the Regulations implements the prohibitions contained 
in Sections 1, 2, and 3 of the Order. See Sec. Sec.  593.201, 593.205, 
and 593.206. Appendix A to 31 CFR chapter V has previously been amended 
to incorporate the names of persons set forth in the Annex to the 
Order. Persons identified in the Annex to the Order or designated by or 
under the authority of the Secretary of the Treasury pursuant to the 
Order are referred to throughout the Regulations as ``persons whose 
property and interests in property are blocked pursuant to Sec.  
593.201(a).'' Their names are or will be published on OFAC's Specially 
Designated Nationals and Blocked Persons List, which is accessible via 
OFAC's Web site, announced in the Federal Register, and incorporated on 
an ongoing basis into appendix A to 31 CFR chapter V, which lists 
persons who are the targets of various sanctions programs administered 
by OFAC.
    Sections 593.202 and 593.203 of subpart B detail the effect of 
transfers of blocked property in violation of the Regulations and set 
forth the requirement to hold blocked funds, such as currency, bank 
deposits, or liquidated financial obligations, in interest-bearing 
blocked accounts. Section 593.204 of subpart B provides that all 
expenses incident to the maintenance of blocked physical property shall 
be the responsibility of the owners and operators of such property, and 
that such expenses shall not be met from blocked funds. The section 
further provides that blocked property may, in the discretion of the 
Director of OFAC, be sold or liquidated and the net proceeds placed in 
a blocked interest-bearing account in the name of the owner of the 
property.
    Section 593.205 sets forth the prohibition contained in Section 2 
of the Order with respect to the importation into the United States of 
round logs or timber products from Liberia. However, in Resolution 1689 
of June 20, 2006, the United Nations Security Council decided to lift 
the multilateral prohibition on importation of round logs and timber 
products set forth in paragraph 10 of Resolution 1521. In accordance 
with the decision of the Security Council in Resolution 1689, OFAC is 
issuing Sec.  593.510, a general license authorizing the importation 
into the United States of round logs and timber products originating in 
Liberia.
    Subpart C of part 593 defines key terms used throughout the 
Regulations, and subpart D sets forth interpretive sections regarding 
the general prohibitions contained in subpart B. Transactions otherwise 
prohibited under part 593 but found to be consistent with U.S. policy 
may be authorized by one of the general licenses contained in subpart E 
or by a specific license issued pursuant to the procedures described in 
subpart E of 31 CFR part 501.
    Subpart F of part 593 refers to subpart C of part 501 for 
applicable recordkeeping and reporting requirements. Subpart G 
describes the civil and criminal penalties applicable to violations of 
the Regulations, as well as the procedures governing the potential 
imposition of a civil monetary penalty.
    Subpart H of part 593 refers to subpart D of part 501 for 
applicable provisions relating to administrative procedures. Subpart I 
of the Regulations sets forth a Paperwork Reduction Act notice.

Public Participation

    Because the Regulations involve a foreign affairs function, the 
provisions of Executive Order 12866 and the Administrative Procedure 
Act (5 U.S.C. 553) requiring notice of proposed rulemaking, opportunity 
for public participation, and delay in effective date are inapplicable.
    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, Procedures and Penalties 
Regulations''). Pursuant to the Paperwork Reduction Act of 1995 (44 
U.S.C. 3507), those collections of information have been approved by 
the Office of Management and Budget under control number 1505-0164. An 
agency may not conduct or sponsor, and a person is not required to 
respond to, a collection of information unless the collection of 
information displays a valid control number.

List of Subjects in 31 CFR Part 593

    Administrative practice and procedure, Banks, Banking, Blocking of 
assets, Credit, Foreign trade, Imports, Liberia, Penalties, Reporting 
and recordkeeping requirements, Securities.


0
For the reasons set forth in the preamble, the Office of Foreign Assets 
Control adds part 593 to 31 CFR Chapter V to read as follows:

PART 593--FORMER LIBERIAN REGIME OF CHARLES TAYLOR SANCTIONS 
REGULATIONS

Subpart A--Relation of This Part to Other Laws and Regulations
Sec.
593.101 Relation of this part to other laws and regulations.
Subpart B--Prohibitions
593.201 Prohibited transactions involving blocked property.
593.202 Effect of transfers violating the provisions of this part.
593.203 Holding of blocked physical funds in interest-bearing 
accounts; investment and reinvestment.
593.204 Expenses of maintaining blocked physical property; 
liquidation of blocked account.
593.205 Prohibition on the importation of any round log or timber 
product originating in Liberia.
593.206 Evasions; attempts; conspiracies.
Subpart C--General Definitions
593.301 Blocked account; blocked property.
593.302 Effective date.
593.303 Entity.
593.304 Interest.
593.305 Licenses; general and specific.
593.306 Originating in Liberia.
593.307 Person.
593.308 Property; property interest.
593.309 Round log or timber product.
593.310 Transfer.
593.311 United States.
593.312 U.S. financial institution.
593.313 United States person; U.S. person.
Subpart D--Interpretations
593.401 Reference to amended sections.
593.402 Effect of amendment.
593.403 Termination and acquisition of an interest in blocked 
property.
593.404 Transactions ordinarily incident to a licensed transaction.
593.405 Provision of services.
593.406 Offshore transactions.
593.407 Payments from blocked accounts to satisfy obligations 
prohibited.

[[Page 28857]]

593.408 Charitable Contributions.
593.409 Credit extended and cards issued by U.S. financial 
institutions.
593.410 Setoffs prohibited.
593.411 Importation into the United States.
593.412 Release of any round log or timber product originating in 
Liberia from a bonded warehouse or foreign trade zone.
593.413 Transshipments or transit through the United States 
prohibited.
Subpart E--Licenses, Authorizations and Statements of Licensing Policy
593.501 General and specific licensing procedures.
593.502 Effect of license or authorization.
593.503 Exclusion from licenses.
593.504 Payments and transfers to blocked accounts in U.S. financial 
institutions.
593.505 Entries in certain accounts for normal service charges 
authorized.
593.506 Investment and reinvestment of certain funds.
593.507 Provision of certain legal services authorized.
593.508 Authorization of emergency medical services.
593.509 Transactions related to mail authorized.
593.510 Transactions related to the importation of any round log and 
timber product originating in Liberia authorized.
Subpart F--Reports
593.601 Records and reports.
Subpart G--Penalties
593.701 Penalties.
593.702 Prepenalty notice.
593.703 Response to prepenalty notice; informal settlement.
593.704 Penalty imposition or withdrawal.
593.705 Administrative collection; referral to United States 
Department of Justice.
Subpart H--Procedures
593.801 Procedures.
593.802 Delegation by the Secretary of the Treasury.
Subpart I--Paperwork Reduction Act
593.901 Paperwork Reduction Act notice.

    Authority: 3 U.S.C. 301; 31 U.S.C. 321(b); 50 U.S.C. 1601-1651, 
1701-1706; 22 U.S.C. 287c; Pub. L. 109-177, 120 Stat. 192; E.O. 
13348, 69 FR 44885, 3 CFR, 2004 Comp., p. 189.

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


Sec.  593.101  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 
any other provision of law or regulation authorizes any transaction 
prohibited by this part. No license 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.  593.201  Prohibited transactions involving 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 the 
effective date, property and interests in property 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, of the following persons are blocked 
and may not be transferred, paid, exported, withdrawn, or otherwise 
dealt in:
    (1) Any person listed in the Annex to Executive Order 13348 of July 
22, 2004 (69 FR 44885, July 27, 2004); and
    (2) Any person determined by the Secretary of the Treasury, in 
consultation with the Secretary of State:
    (i) To be or have been an immediate family member of Charles 
Taylor;
    (ii) To have been a senior official of the former Liberian regime 
headed by Charles Taylor or otherwise to have been or be a close ally 
or associate of Charles Taylor or the former Liberian regime;
    (iii) To have materially assisted, sponsored, or provided 
financial, material, or technological support for, or goods or services 
in support of, the unlawful depletion of Liberian resources, the 
removal of Liberian resources from that country, and the secreting of 
Liberian funds and property by any person whose property and interests 
in property are blocked pursuant to this paragraph (a); or
    (iv) To be owned or controlled by, or acting or purporting to act 
for or on behalf of, directly or indirectly, any person whose property 
and interests in property are blocked pursuant to this paragraph (a).

    Note to paragraph (a) of Sec.  593.201. The names of persons 
whose property and interests in property are blocked pursuant to 
paragraph (a) of this section are published on the Office of Foreign 
Assets Control's Specially Designated Nationals and Blocked Persons 
List (the ``SDN List''), which is accessible via the Office of 
Foreign Assets Control's Web site, announced in the Federal 
Register, and incorporated on an ongoing basis with the identifier 
[LIBERIA] into Appendix A to 31 CFR chapter V. In addition, section 
203 of the International Emergency Economic Powers Act (50 U.S.C. 
1701-1706) (``IEEPA'') explicitly authorizes the blocking of 
property and interests in property of a person or entity during the 
pendency of an investigation. The names of such persons also are 
published on the SDN List, announced in the Federal Register, and 
incorporated on an ongoing basis with the identifier [BPI-LIBERIA] 
into Appendix A to 31 CFR chapter V. Sections 501.806 and 501.807 of 
this chapter V describe the procedures to be followed by persons 
seeking, respectively, the unblocking of funds that they believe 
were blocked due to mistaken identity, or administrative 
reconsideration of their listing or designation pursuant to Sec.  
593.201(a).

    (b) The blocking of property and interests in property pursuant to 
Sec.  593.201(a) includes, but is not limited to, the prohibition of 
the making or receiving by a United States person of any contribution 
or provision of funds, goods, or services by, to, or for the benefit of 
a person whose property and interests in property are blocked pursuant 
to Sec.  593.201(a).
    (c) 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, or issued by, any person whose 
property and interests in property are blocked pursuant to Sec.  
593.201(a) 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, or the endorsement or guaranty of signatures on, any 
such security on or after the effective date. This prohibition applies 
irrespective of the fact that at any time (whether prior to, on, or 
subsequent to the effective date) the registered or inscribed owner of 
any such security may have or might appear to have assigned, 
transferred, or otherwise disposed of the security.


Sec.  593.202  Effect of transfers violating the provisions of this 
part.

    (a) Any transfer after the effective date 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.  
593.201(a), is null and void and shall

[[Page 28858]]

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 the effective date 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.  593.201(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 IEEPA, Executive Order 13348, 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 is or 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 is or was 
held or maintained;
    (2) The person with whom such property is or 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 is or 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.  593.202. 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.

    (e) Except to the extent otherwise provided by law, 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, on or since the effective date, there 
existed an interest of a person whose property and interests in 
property are blocked pursuant to Sec.  593.201(a).


Sec.  593.203  Holding of blocked 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.  593.201(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 (15 
U.S.C. 78a et seq.), 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.  593.201(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.  593.201(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.  593.201(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 and interests in 
property are blocked pursuant to Sec.  593.201(a), nor may their holder 
cooperate in or facilitate the pledging or other attempted use as 
collateral of blocked funds or other assets.


Sec.  593.204  Expenses of maintaining blocked physical 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 prior to the effective date, all expenses incident to 
the maintenance of physical property blocked pursuant to Sec.  
593.201(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.  593.201(a) may, in the 
discretion of the Director of the 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.

[[Page 28859]]

Sec.  593.205  Prohibition on the importation of any round log or 
timber product originating in Liberia.

    Except as otherwise authorized by regulations, orders, directives, 
rulings, instructions, licenses, or otherwise, and notwithstanding any 
contract entered into or any license or permit granted prior to the 
effective date of this section, the importation into the United States, 
directly or indirectly, of any round log or timber product originating 
in Liberia is prohibited.

    Note to Sec.  593.205. See section 593.510, which authorizes 
transactions related to the importation of any round log or timber 
product originating in Liberia. This general license has been issued 
in accordance with United Nations Security Council Resolution 1689 
of June 20, 2006.

Sec.  593.206  Evasions; attempts; conspiracies.

    (a) Except as otherwise authorized, and notwithstanding any 
contract entered into or any license or permit granted prior to the 
effective date, any transaction by any 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) Except as otherwise authorized, and notwithstanding any 
contract entered into or any license or permit granted prior to the 
effective date, any conspiracy formed to violate the prohibitions set 
forth in this part is prohibited.

Subpart C--General Definitions


Sec.  593.301  Blocked account; blocked property.

    The terms blocked account and blocked property shall mean any 
account or property subject to the prohibitions in Sec.  593.201 held 
in the name of a person whose property and interests in property are 
blocked pursuant to Sec.  593.201(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.  593.302  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 a person whose property and interests in 
property are blocked pursuant to Sec.  593.201(a)(1), or with respect 
to the prohibitions set forth at Sec.  593.205, 12:01 a.m. eastern 
daylight time, July 23, 2004;
    (b) With respect to a person whose property and interests in 
property are blocked pursuant to Sec.  593.201(a)(2), the earlier of 
the date of actual or constructive notice of such person's designation.


Sec.  593.303  Entity.

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


Sec.  593.304  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.  593.305  Licenses; general and specific.

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

    Note to Sec.  593.305. See Sec.  501.801 of this chapter on 
licensing procedures.

Sec.  593.306  Originating in Liberia.

    The term originating in Liberia means:
    (a) Any product determined to be a good of Liberian origin pursuant 
to the rules of origin of U.S. Customs and Border Protection; or
    (b) Any product that has entered into Liberian commerce.


Sec.  593.307  Person.

    The term person means an individual or entity.


Sec.  593.308  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 there under, 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.  593.309  Round log or timber product.

    The term round log or timber product means any product classifiable 
in Chapter 44 of the Harmonized Tariff Schedule of the United States.


Sec.  593.310  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.  593.311  United States.

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

[[Page 28860]]

Sec.  593.312  U.S. financial institution.

    The term U.S. financial institution means any U.S. entity 
(including its 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.  593.313  United States person; U.S. person.

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

Subpart D--Interpretations


Sec.  593.401  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.  593.402  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.  593.403  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 blocked property (including any 
property interest) away from a person, such property shall no longer be 
deemed to be property blocked pursuant to Sec.  593.201(a), unless 
there exists in the property another interest that is blocked pursuant 
to Sec.  593.201(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 and interests in property are blocked pursuant to 
Sec.  593.201(a), such property shall be deemed to be property in which 
that person has an interest and therefore blocked.


Sec.  593.404  Transactions ordinarily incident to a licensed 
transaction.

    Any transaction ordinarily incident to a licensed transaction and 
necessary to give effect thereto is also authorized, except:
    (a) An ordinarily incident transaction, not explicitly authorized 
within the terms of the license, by or with a person whose property and 
interests in property are blocked pursuant to Sec.  593.201(a); or
    (b) An ordinarily incident transaction, not explicitly authorized 
within the terms of the license, involving a debit to a blocked account 
or a transfer of blocked property.


Sec.  593.405  Provision of services.

    (a) The prohibitions on transactions involving blocked property 
contained in Sec.  593.201 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 and 
interests in property are blocked pursuant to Sec.  593.201(a); or
    (2) With respect to property interests subject to Sec.  593.201.
    (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 and interests in property are blocked 
pursuant to Sec.  593.201(a).

    Note to Sec.  593.405. See Sec. Sec.  593.507 and 593.508, 
respectively, on licensing policy with regard to the provision of 
certain legal or medical services.

Sec.  593.406  Offshore transactions.

    The prohibitions in Sec.  593.201 on transactions involving blocked 
property apply to transactions by any U.S. person in a location outside 
the United States with respect to property held in the name of a person 
whose property and interests in property are blocked pursuant to Sec.  
593.201(a), or property in which a person whose property and interests 
in property are blocked pursuant to Sec.  593.201(a) has or has had an 
interest since the effective date.


Sec.  593.407  Payments from blocked accounts to satisfy obligations 
prohibited.

    Pursuant to Sec.  593.201, 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.  593.408  Charitable contributions.

    Unless otherwise specifically authorized by the Office of Foreign 
Assets Control by or pursuant to this part, no charitable contribution 
or donation of funds, goods, services, or technology, including those 
to relieve human suffering, such as food, clothing or medicine, may be 
made by, to, or for the benefit of a person whose property or interests 
in property are blocked pursuant to Sec. 593.201(a). For purposes of 
this part, a contribution or donation is made by, to, or for the 
benefit of a person whose property or interests in property are blocked 
pursuant to Sec. 593.201(a) if made by, to, or in the name of such a 
person; if made by, to, or in the name of an entity or individual 
acting for or on behalf of, or owned or controlled by, such a person; 
or if made in an attempt to violate, to evade, or to avoid the bar on 
the provision of contributions or donations by, to, or for such a 
person.


Sec.  593.409  Credit extended and cards issued by U.S. financial 
institutions.

    The prohibition in Sec.  593.201 on dealing in property subject to 
that section prohibits U.S. financial institutions from performing 
under any existing credit agreements, including, but not limited to, 
charge cards, debit cards, or other credit facilities issued by a U.S. 
financial institution to a person whose property and interests in 
property are blocked pursuant to Sec.  593.201(a).


Sec.  593.410  Setoffs prohibited.

    A setoff against blocked property (including a blocked account), 
whether

[[Page 28861]]

by a U.S. bank or other U.S. person, is a prohibited transfer under 
Sec.  593.201 if effected after the effective date.


Sec.  593.411  Importation into the United States.

    With respect to the prohibitions set forth in Sec.  593.205, the 
term importation into the United States generally means the bringing of 
any such products into the United States. In the case of round logs or 
timber products originating in Liberia being transported by vessel, 
importation into the United States means the bringing of any such 
products into the United States with the intent to unlade. See also 
Sec.  593.413 and Sec.  593.510.


Sec.  593.412  Release of any round log or timber product originating 
in Liberia from a bonded warehouse or foreign trade zone.

    (a) The prohibitions in Sec.  593.205 apply to importation into a 
bonded warehouse or a foreign trade zone in the United States.
    (b) Section 593.205 does not prohibit the release from a bonded 
warehouse or foreign trade zone of any round log or timber product 
originating in Liberia imported into a bonded warehouse or foreign 
trade zone either prior to the effective date or in a transaction 
authorized pursuant to this part on or after the effective date.
    (c) Notwithstanding paragraph (b) of this section, any round log or 
timber product originating in Liberia in which persons whose property 
and interests in property are blocked pursuant to Sec.  593.201(a) have 
an interest may not be released unless authorized by the Office of 
Foreign Assets Control.

    Note to Sec.  593.412. See Sec.  593.510.

Sec.  593.413  Transshipment or transit through the United States 
prohibited.

    Except as otherwise specified:
    (a) The prohibitions in Sec.  593.205 apply to the importation into 
the United States, for transshipment or transit to third countries, of 
any round log or timber product originating in Liberia.
    (b) In the case of any round log or timber product originating in 
Liberia, the prohibitions in Sec.  593.205 apply to the unlading in the 
United States and the intent to unlade in the United States of such 
products intended or destined for third countries.

    Note to Sec.  593.413. See Sec.  593.510.

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


Sec.  593.501  General and specific licensing procedures.

    For provisions relating to licensing procedures, see part 501, 
subpart E 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.  593.502  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 such license or other 
authorization, unless specifically provided in such license or 
authorization.
    (b) No regulation, ruling, instruction, or license authorizes any 
transaction prohibited under this part unless the regulation, ruling, 
instruction, or license is issued by the Office of Foreign Assets 
Control and specifically refers to this part. No regulation, ruling, 
instruction, or license referring to this part shall be deemed to 
authorize any transaction prohibited by any provision of this chapter 
unless the regulation, ruling, instruction, or license specifically 
refers to such provision.
    (c) Any regulation, ruling, instruction, or license authorizing any 
transaction otherwise prohibited under this part has the effect of 
removing a prohibition contained in this part from the transaction, but 
only to the extent specifically stated by its terms. Unless the 
regulation, ruling, instruction, or license otherwise specifies, such 
an authorization does not create any right, duty, obligation, claim, or 
interest in, or with respect to, any property which would not otherwise 
exist under ordinary principles of law.


Sec.  593.503  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.  593.504  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 and interests in property are blocked pursuant to Sec.  
593.201(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 
be made only to another blocked account held in the same name.

    Note to Sec.  593.504. Please refer to Sec.  501.603 of this 
chapter for mandatory reporting requirements regarding financial 
transfers. See also Sec.  593.203 concerning the obligation to hold 
blocked funds in interest-bearing accounts.

Sec.  593.505  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 charges 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.


Sec.  593.506  Investment and reinvestment of certain funds.

    Subject to the requirements of Sec.  593.203, U.S. financial 
institutions are authorized to invest and reinvest assets blocked 
pursuant to Sec.  593.201, 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 a person whose

[[Page 28862]]

property and interests in property are blocked pursuant to Sec.  
593.201(a).


Sec.  593.507  Provision of certain legal services authorized.

    (a) The provision of the following legal services to or on behalf 
of persons whose property and interests in property are blocked 
pursuant to Sec.  593.201(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 and interests in property are blocked pursuant to Sec.  
593.201(a), not otherwise authorized in this part, requires the 
issuance of a specific license.
    (c) Entry into a settlement agreement affecting property and 
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 and interests in property blocked pursuant to Sec.  
593.201(a) is prohibited unless specifically licensed in accordance 
with Sec.  593.202(e).


Sec.  593.508  Authorization of emergency medical services.

    The provision of nonscheduled emergency medical services in the 
United States to persons whose property and interests in property are 
blocked pursuant to Sec.  593.201(a) is authorized, provided that all 
receipt of payment for such services must be specifically licensed.


Sec.  593.509  Transactions related to mail authorized.

    All transactions by U.S. persons, including payment and transfers 
to common carriers, incident to the receipt or transmission of mail 
between a U.S. person and a person whose property and interests in 
property are blocked pursuant to Sec.  593.201(a) are authorized, 
provided the mail is limited to personal communications not involving a 
transfer of anything of value and not exceeding 12 ounces in weight.


Sec.  593.510  Transactions related to the importation of any round log 
or timber product originating in Liberia authorized.

    Except as otherwise prohibited by Sec.  593.201, all transactions 
that are prohibited by Sec.  593.205 with respect to the importation 
into the United States of any round log or timber product originating 
in Liberia are authorized.

Subpart F--Reports


Sec.  593.601  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.  593.701  Penalties.

    (a) Attention is directed to section 206 of the International 
Emergency Economic Powers Act (IEEPA) (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 IEEPA.
    (1) A civil penalty not to exceed the amount set forth in Section 
206 of IEEPA, as amended, may be imposed on any person who violates or 
attempts to violate any license, order, or regulation issued under 
IEEPA;

    Note to paragraph (a)(1) of Sec.  593.701. As of May 23, 2007, 
the maximum civil penalty for a violation of IEEPA is $50,000.

    (2) Whoever willfully violates or willfully attempts to violate any 
license, order, or regulation issued under IEEPA, upon conviction, 
shall be fined not more than $50,000, and if a natural person, may also 
be imprisoned for not more than 20 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) Attention is directed to section 5 of the United Nations 
Participation Act, as amended (22 U.S.C. 287c(b)) (``UNPA''), which 
provides that any person who willfully violates or evades or attempts 
to violate or evade any order, rule, or regulation issued by the 
President pursuant to the authority granted in that section, upon 
conviction, shall be fined not more than $10,000 and, if a natural 
person, may also be imprisoned for not more than 10 years; and the 
officer, director, or agent of any corporation who knowingly 
participates in such violation or evasion shall be punished by a like 
fine, imprisonment, or both and any property, funds, securities, 
papers, or other articles or documents, or any vessel, together with 
her tackle, apparel, furniture, and equipment, or vehicle, or aircraft, 
concerned in such violation shall be forfeited to the United States.
    (c) Violations involving transactions described at section 
203(b)(1), (3-4) of IEEPA (50 U.S.C. 1702(b)(1), (3-4)) shall be 
subject only to the penalties set forth in paragraph (b) of this 
section.
    (d)(1) The civil penalties provided in IEEPA are subject to 
adjustment pursuant to the Federal Civil Penalties Inflation Adjustment 
Act of 1990 (Pub. L. 101-410, as amended, 28 U.S.C. 2461 note).
    (2) The criminal penalties provided in IEEPA and UNPA are subject 
to increase pursuant to 18 U.S.C. 3571.
    (e) 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 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.
    (f) Violations of this part may also be subject to relevant 
provisions of other applicable laws.


Sec.  593.702  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

[[Page 28863]]

authorization of the Secretary of the Treasury pursuant to this part or 
otherwise under IEEPA, 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.  593.703 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 prepenalty notice for a period not to exceed 60 days and will enter 
into settlement negotiations of the potential civil monetary penalty 
claim.


Sec.  593.703  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 the Office of Foreign Assets Control by 
courier) on or before the 30th day after the postmark date on the 
envelope in which the prepenalty notice was mailed. 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 need not be in any 
particular form, but it must be typewritten and signed by the 
respondent or a representative thereof. 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 and must identify the Office of Foreign Assets 
Control identification number listed on 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. If the Office of Foreign Assets Control 
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's Civil 
Penalties Division 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 (g) 
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 are available 
on OFAC's Web site (http://www.treas.gov/ofac).
    (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.  593.704  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

[[Page 28864]]

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.


Sec.  593.705  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.  593.801  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 E, of this chapter.


Sec.  593.802  Delegation by the Secretary of the Treasury.

    Any action that the Secretary of the Treasury is authorized to take 
pursuant to Executive Order 13348 of July 22, 2004 (69 FR 44885, July 
27, 2004), 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.  593.901  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: March 20, 2007.
Adam J. Szubin,
Director, Office of Foreign Assets Control.
[FR Doc. E7-9822 Filed 5-22-07; 8:45 am]
BILLING CODE 4811-42-P