[Federal Register Volume 75, Number 176 (Monday, September 13, 2010)]
[Rules and Regulations]
[Pages 55463-55475]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-22546]


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DEPARTMENT OF THE TREASURY

Office of Foreign Assets Control

31 CFR Part 576


Iraq Stabilization and Insurgency Sanctions Regulations

AGENCY: Office of Foreign Assets Control, Treasury.

ACTION: Final rule.

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SUMMARY: The Department of the Treasury's Office of Foreign Assets 
Control (``OFAC'') is adding the Iraq Stabilization and Insurgency 
Sanctions Regulations as a new part to the Code of Federal Regulations, 
to implement Executive Order 13303 of May 22, 2003, Executive Order 
13315 of August 28, 2003, Executive Order 13350 of July 29, 2004, 
Executive Order 13364 of November 29, 2004, and Executive Order 13438 
of July 17, 2007.

[[Page 55464]]


DATES: Effective Date: September 13, 2010.

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, or Chief Counsel (Foreign Assets Control), tel.: 202/622-
2410 (not toll free numbers).

SUPPLEMENTARY INFORMATION:

Electronic and Facsimile Availability

    This document and additional information concerning OFAC are 
available from OFAC's Web site (http://www.treas.gov/ofac). Certain 
general information pertaining to OFAC's sanctions programs also is 
available via facsimile through a 24-hour fax-on-demand service, tel.: 
202/622-0077.

Background

    Following the removal from power of the regime of Saddam Hussein in 
Iraq, the President issued Executive Order 13303 of May 22, 2003, under 
the authority of, inter alia, the International Emergency Economic 
Powers Act, 50 U.S.C. 1701 et seq. (``IEEPA''), the National 
Emergencies Act, 50 U.S.C. 1601 et seq. (``NEA''), and section 5 of the 
United Nations Participation Act, 22 U.S.C. 287c (``UNPA''). In 
Executive Order 13303, the President found that the threat of 
attachment or other judicial process against the Development Fund for 
Iraq, Iraqi petroleum and petroleum products, and interests therein, 
and proceeds, obligations, or financial instruments arising from or 
related to the sale or marketing thereof obstructed the orderly 
reconstruction of Iraq, the restoration and maintenance of peace and 
security in the country, and the development of political, 
administrative, and economic institutions in Iraq. The President 
further determined that this situation constituted an unusual and 
extraordinary threat to the national security and foreign policy of the 
United States and declared a national emergency to deal with that 
threat.
    To deal with this emergency, section 1 of Executive Order 13303 
provided that, unless licensed or otherwise authorized, any attachment, 
judgment, execution, or other judicial process is prohibited and shall 
be deemed null and void with respect to (1) the Development Fund for 
Iraq, and (2) all Iraqi petroleum and petroleum products, and interests 
therein, and proceeds, obligations, or any financial instruments of any 
nature arising from or related to the sale or marketing thereof, and 
interests therein, in which any foreign country or national thereof has 
any interest, that are in, or come within, the United States, or that 
are in, or come within, the possession or control of United States 
persons. Executive Order 13303 also provided that two earlier Executive 
orders that had imposed comprehensive sanctions against Iraq following 
the invasion of Kuwait, including a trade embargo and a blocking of 
Iraqi government assets (i.e., Executive Order 12722 of August 2, 1990, 
and Executive Order 12724 of August 9, 1990), as well as a more recent 
Executive order confiscating and vesting title to certain blocked Iraqi 
property (i.e., Executive Order 13290 of March 20, 2003) were not 
applicable to the property and interests in property described in 
section 1.
    On August 28, 2003, the President issued Executive Order 13315, 
under the authority of, inter alia, IEEPA, the NEA, and the UNPA, and 
in view of United Nations Security Council Resolution (``UNSCR'') 1483 
of May 22, 2003. The President issued this Order to expand the scope of 
the national emergency declared in Executive Order 13303 to address the 
unusual and extraordinary threat to the national security and foreign 
policy of the United States posed by obstacles to the orderly 
reconstruction of Iraq, the restoration and maintenance of peace and 
security in that country, and the development of its political, 
administrative, and economic institutions. The President found that the 
removal of Iraqi property from the country by certain senior officials 
of the former Iraqi regime and their family members constituted such an 
obstacle. The President determined that the United States was engaged 
in armed hostilities and that it was in the interest of the United 
States to confiscate certain additional property of the former Iraqi 
regime, certain senior officials of the former regime, immediate family 
members of those officials, and controlled entities.
    Section 1 of Executive Order 13315 blocked all property and 
interests in property in the United States or in the possession or 
control of United States persons, including any overseas branch, of: 
(1) The former Iraqi regime, (2) its state bodies, corporations, or 
agencies, (3) persons listed in the Annex to the Order, and (4) persons 
determined by the Secretary of the Treasury, in consultation with the 
Secretary of State, to be senior officials of the former Iraqi regime 
or their immediate family members or to be owned or controlled by, or 
acting or purporting to act for or on behalf of, directly or 
indirectly, any of the persons listed in the Annex or determined to be 
subject to the Order.
    Section 2 of Executive Order 13315 authorized the Secretary of the 
Treasury, in consultation with the Secretary of State, to confiscate 
property blocked pursuant to section 1 and determined to belong to a 
person, organization, or country that had planned, authorized, aided, 
or engaged in armed hostilities against the United States. Section 2 
directed that all right, title, and interest in such confiscated 
property shall vest in the Department of the Treasury, and such vested 
property shall promptly be transferred to the Development Fund for 
Iraq.
    Section 3 of Executive Order 13315 prohibited any transaction by a 
United States person or within the United States that evades or avoids, 
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 4 defined certain terms 
used in the Order. Section 5 set forth the President's determination 
that the making of donations of the type specified in section 203(b)(2) 
of IEEPA (i.e., donations of articles, such as food, clothing, and 
medicine, intended to be used to relieve human suffering) by or to 
persons determined to be subject to the sanctions would seriously 
impair his ability to deal with the national emergency declared in 
Executive Order 13303 and expanded in scope in this Order and would 
endanger Armed Forces of the United States that were engaged in 
hostilities. Accordingly, the President prohibited the donation of such 
items unless authorized by OFAC.
    On July 29, 2004, the President issued Executive Order 13350, 
which, because of the removal of the regime of Saddam Hussein and other 
developments, terminated the national emergency that had been declared 
in Executive Order 12722 with respect to Iraq, and revoked that Order, 
Executive Order 12724, and subsequent Orders that were based on the 
national emergency declared in Executive Order 12722. In Executive 
Order 13350, the President also took certain additional steps to deal 
with the national emergency declared in Executive Order 13303 and 
expanded in Executive Order 13315, which remains in effect.
    Among other things, the President's termination of the national 
emergency that had been declared in Executive Order 12722 and his 
revocation of that and related Orders ended, as of July 30, 2004, the 
import and export prohibitions that had been imposed pursuant to 
Executive Orders 12722 and 12724 and related regulations, including

[[Page 55465]]

the Iraqi Sanctions Regulations, 31 CFR part 575. As a practical 
matter, most import and export transactions had been authorized by the 
provisions of subpart E of part 575 since May 23, 2003. OFAC has now 
removed the Iraqi Sanctions Regulations from 31 CFR chapter V effective 
September 13, 2010.
    Section 1 of Executive Order 13350 provided for the continuation of 
prohibitions under section 207 of IEEPA, 50 U.S.C. 1706, with regard to 
transactions involving property blocked pursuant to Executive Orders 
12722 and 12724 that continued to be blocked as of July 30, 2004. In 
addition, section 1 provided that the termination of the national 
emergency declared in Executive Order 12722 shall not affect any action 
taken or proceeding pending but not finally concluded or determined as 
of July 30, 2004, any action or proceeding based on any act committed 
prior to such date, or any rights or duties that matured or penalties 
that were incurred prior to such date. Accordingly, property blocked 
pursuant to Executive Orders 12722 and 12724 as of July 30, 2004, 
remained blocked.
    Section 2 replaced and superseded the Annex to Executive Order 
13315 in its entirety with the Annex to Executive Order 13350. Section 
3 amended Executive Order 13290 by substituting the national emergency 
declared in Executive Order 13303 and expanded in Executive Order 13315 
for the one declared in Executive Order 12722. Section 4 prohibited the 
trade in or transfer of ownership or possession of Iraqi cultural 
property or other items of archeological, historical, cultural, rare 
scientific, and religious importance that were illegally removed, or 
for which a reasonable suspicion existed that they were illegally 
removed, from the Iraq National Museum, the National Library, and other 
locations in Iraq since August 6, 1990, unless licensed or authorized 
pursuant to Executive Order 13350 or otherwise consistent with U.S. 
law. Section 5 prohibited the making of donations of the type specified 
in section 203(b)(2) of IEEPA by or to persons determined to be subject 
to the sanctions imposed by Executive Order 13315, as amended by 
Executive Order 13350.
    The President issued Executive Order 13364 on November 29, 2004, 
further modifying the scope of the national emergency that was declared 
in Executive Order 13303, expanded in Executive Order 13315, and 
modified in Executive Order 13350. The President found that the threat 
of attachment or other judicial process against the Central Bank of 
Iraq constituted an obstacle to the orderly reconstruction of Iraq, the 
restoration and maintenance of peace and security in that country, and 
the development of political, administrative, and economic institutions 
in Iraq. Accordingly, Executive Order 13364 amended section 1 of 
Executive Order 13303 to extend that section's protection from 
attachment, judgment, execution, or other judicial process to any 
accounts, assets, investments, or any other property of any kind owned 
by, belonging to, or held by the Central Bank of Iraq, or held or 
otherwise controlled by any financial institution in the name or on 
behalf of, or otherwise for, the Central Bank of Iraq.
    In addition, consistent with UNSCRs 1483 and 1546, dated May 22, 
2003, and June 8, 2004, respectively, Executive Order 13364 amended 
section 1 of Executive Order 13303 to limit the immunity provided 
therein in two ways. First, it provided that the immunity from 
attachment for Iraqi petroleum and petroleum products and interests 
therein shall apply only until title passes to the initial purchaser. 
Second, it restricted the overall prohibition against attachment, 
judgment, execution, or other judicial process so that the immunity 
from attachment shall not apply with respect to any final judgment 
arising out of a contractual obligation entered into by the Government 
of Iraq, including any agency or instrumentality thereof, after June 
30, 2004.
    Finally, on July 17, 2007, the President issued Executive Order 
13438, finding that acts of violence threatening the peace and 
stability of Iraq and undermining efforts to promote economic 
reconstruction and political reform in Iraq and to provide humanitarian 
assistance to the Iraqi people constitute an unusual and extraordinary 
threat to the national security and foreign policy of the United 
States. Accordingly, he determined that it was in the interests of the 
United States to take additional steps with respect to the national 
emergency declared in Executive Order 13303, expanded in Executive 
Order 13315, and relied upon for additional steps in Executive Orders 
13350 and 13364.
    Section 1 of Executive Order 13438 blocked the property and 
interests in property in the United States or in the possession or 
control of United States persons, including any overseas branch, of any 
person determined by the Secretary of the Treasury, in consultation 
with the Secretary of State and the Secretary of Defense: (i) To have 
committed, or to pose a significant risk of committing, an act of 
violence that has the purpose or effect of (A) threatening the peace or 
stability of Iraq or the Government of Iraq, or (B) undermining efforts 
to promote economic reconstruction and political reform in Iraq or to 
provide humanitarian assistance to the Iraqi people; (ii) to have 
materially assisted, sponsored, or provided financial, material, 
logistical, or technical support for, or goods or services in support 
of, such an act or acts of violence or any person whose property and 
interests in property are blocked pursuant to the Order; or (iii) to be 
owned or controlled by or to have acted or purported to act for or on 
behalf of, directly or indirectly, any person whose property and 
interests in property are blocked pursuant to the Order. The 
prohibitions in section 1 include, but are not limited to, the making 
of any contribution or provision of funds, goods, or services by, to, 
or for the benefit of any person whose property and interests in 
property have been blocked, and the receipt of any contribution or 
provision of funds, goods, or services from any such person.
    Acting under authority delegated to the Secretary of the Treasury 
by Executive Orders 13303, 13315, 13350, 13364 and 13438, OFAC is 
promulgating these Iraq Stabilization and Insurgency Sanctions 
Regulations, 31 CFR part 576 (the ``Regulations''), to implement the 
provisions of those orders.
    Subpart A of the Regulations clarifies the relation of this part to 
other laws and regulations. Subpart B of the Regulations sets forth: 
(a) The prohibitions contained in section 1 of Executive Order 13303, 
as amended by Executive Order 13364; (b) the prohibitions contained in 
section 1 of Executive Order 13315, as amended by Executive Order 
13350; (c) the prohibitions contained in sections 1 and 4 of Executive 
Order 13350; and (d) the prohibitions contained in section 1 of 
Executive Order 13438. See Sec. Sec.  576.201, 576.206, 576.208. 
Persons identified in the Annex to Executive Order 13315, as amended by 
Executive Order 13350, or designated by or under the authority of the 
Secretary of the Treasury pursuant to Executive Orders 13315 or 13438 
are referred to throughout the Regulations as ``persons whose property 
and interests in property are blocked pursuant to Sec.  576.201(a).'' 
The names of persons listed in or designated pursuant to Executive 
Orders 13315, 13350, and 13438 are published on OFAC's Specially 
Designated Nationals and Blocked Persons List, which is accessible via 
OFAC's Web site. Those names also are published in the Federal Register 
as they are added to the List, and the entire List is republished

[[Page 55466]]

annually as Appendix A to 31 CFR chapter V.
    Subpart C of the Regulations defines key terms used throughout this 
part. Subpart D of the Regulations sets forth interpretive sections 
regarding other provisions in the Regulations. Section 576.411 of 
subpart D interprets a provision unique to Part 576, Sec.  576.208, 
which provides that the trade in or transfer of certain Iraqi cultural 
property is prohibited. OFAC may establish a violation of Sec.  576.208 
separate from, and independent of, other laws and regulations that 
prohibit the trade in or transfer of Iraqi cultural property. Section 
576.411 states that the mere compliance with certain legal, 
administrative, or procedural requirements, such as those set forth by 
U.S. Customs and Border Protection, does not preclude a violation of 
Sec.  576.208.
    Transactions otherwise prohibited under the Regulations but found 
to be consistent with U.S. policy may be authorized by one of the 
general licenses contained in subpart E of the Regulations or by a 
specific license issued pursuant to the procedures described in subpart 
E of part 501 of 31 CFR chapter V. In addition to the general licenses, 
subpart E of the Regulations also contains certain statements of 
licensing policy. In particular, OFAC may license or authorize, on a 
case-by-case basis, judicial process with regard to property and 
interests in property protected by Sec.  576.206(a) to satisfy 
liability for damages assessed in connection with an ecological 
accident, including an oil spill. See Sec.  576.508. The language in 
Sec.  576.508 derives from UNSCR 1483, which requires all States to 
provide immunity to Iraqi petroleum, petroleum products, and natural 
gas in regard to any form of attachment, garnishment, or execution in 
their respective domestic legal systems, unless the proceeds are needed 
to satisfy liability for damages assessed in connection with an 
ecological accident that occurred after May 22, 2003.
    Subpart F of the Regulations refers to subpart C of part 501 for 
applicable recordkeeping and reporting requirements. Subpart G of the 
Regulations 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 the 
Regulations refers to subpart D of part 501 for applicable provisions 
relating to administrative procedures and sets forth a delegation of 
authorities. Subpart I of the Regulations sets forth a Paperwork 
Reduction Act notice.

Public Participation

    Because the Regulations involve a foreign affairs function, 
Executive Order 12866 and the provisions of 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 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 576

    Administrative practice and procedure, Banks, Banking, Blocking of 
assets, Courts, Exports, Foreign trade, Imports, Iraq, Oil imports, 
Penalties, Petroleum, Petroleum products, Reporting and recordkeeping 
requirements, Specially designated nationals.


0
For the reasons set forth in the preamble, the Department of the 
Treasury's Office of Foreign Assets Control adds part 576 to 31 CFR 
chapter V to read as follows:

PART 576--IRAQ STABILIZATION AND INSURGENCY SANCTIONS REGULATIONS

Subpart A--Relation of This Part to Other Laws and Regulations
Sec.
576.101 Relation of this part to other laws and regulations.
Subpart B--Prohibitions
576.201 Prohibited transactions involving blocked property.
576.202 Effect of transfers violating the provisions of this part.
576.203 Holding of funds in interest-bearing accounts; investment 
and reinvestment.
576.204 Expenses of maintaining blocked physical property; 
liquidation of blocked property.
576.205 Evasions; attempts; conspiracies.
576.206 Protection granted to the Development Fund for Iraq, Iraqi 
Petroleum and Petroleum Products, and the Central Bank of Iraq.
576.207 Exemption for property controlled by the military forces of 
the United States and their coalition partners in Iraq.
576.208 Prohibited transactions related to certain Iraqi cultural 
property.
576.209 Exempt transactions.
Subpart C--General Definitions
576.301 Blocked account; blocked property.
576.302 Development Fund for Iraq.
576.303 Effective date.
576.304 Entity.
576.305 Former Iraqi regime.
576.306 Information or informational materials.
576.307 Interest.
576.308 Iraqi petroleum and petroleum products.
576.309 Licenses; general and specific.
576.310 Government of Iraq.
576.311 Person.
576.312 Property; property interest.
576.313 Transfer.
576.314 UNSC Resolution 1483.
576.315 United States.
576.316 U.S. financial institution.
576.317 United States person; U.S. person.
Subpart D--Interpretations
576.401 Reference to amended sections.
576.402 Effect of amendment.
576.403 Setoffs prohibited.
576.404 Termination and acquisition of an interest in property.
576.405 Transactions ordinarily incident to a licensed transaction.
576.406 Provision of services.
576.407 Offshore transactions.
576.408 Payments from blocked accounts to satisfy obligations 
prohibited.
576.409 Charitable contributions.
576.410 Credit extended and cards issued by U.S. financial 
institutions.
576.411 Prohibited transactions involving certain Iraqi cultural 
property.
576.412 Entities owned by a person whose property and interests in 
property are blocked.
Subpart E--Licenses, Authorizations, and Statements of Licensing Policy
576.501 General and specific licensing procedures.
576.502 Effect of license or authorization.
576.503 Exclusion from licenses.
576.504 Payments and transfers to blocked accounts in U.S. financial 
institutions.
576.505 Entries in certain accounts for normal service charges 
authorized.
576.506 Investment and reinvestment of certain funds.
576.507 Provision of certain legal services authorized.
576.508 Judicial process in legal proceedings involving ecological 
accidents.
576.509 Authorization of emergency medical services.
576.510 Unblocking certain blocked property.

[[Page 55467]]

576.511 Property controlled by the military forces of the United 
States and their coalition partners in Iraq.
576.512 Transactions with certain blocked persons authorized.
Subpart F--Reports
576.601 Records and reports.
Subpart G--Penalties
576.701 Penalties.
576.702 Pre-Penalty Notice; settlement.
576.703 Penalty imposition.
576.704 Administrative collection; referral to United States 
Department of Justice.
Subpart H--Procedures
576.801 Procedures.
576.802 Delegation by the Secretary of the Treasury.
Subpart I--Paperwork Reduction Act
576.901 Paperwork Reduction Act notice.

    Authority: 3 U.S.C. 301; 22 U.S.C. 287c; 31 U.S.C. 321(b); 50 
U.S.C. 1601-1651, 1701-1706; Pub. L. 110-96, 121 Stat. 1011; E.O. 
13303, 68 FR 31931, 3 CFR, 2003 Comp., p. 227; E.O. 13315, 68 FR 
52315, 3 CFR, 2003 Comp., p. 252; E.O. 13350, 69 FR 46055, 3 CFR, 
2004 Comp., p. 196; E.O. 13364, 69 FR 70177, 3 CFR, 2004 Comp., p. 
236; E.O. 13438, 72 FR 39719, 3 CFR, 2007 Comp., p. 224.

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


Sec.  576.101  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.

    Note to Sec.  576.101:  The Iraqi Sanctions Regulations, 31 CFR 
part 575, have been removed from 31 CFR chapter V.

Subpart B--Prohibitions


Sec.  576.201  Prohibited transactions involving blocked property.

    (a) 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 U.S. persons, 
including their overseas branches, of the former Iraqi regime or its 
state bodies, corporations, or agencies, or of the following persons 
are blocked and may not be transferred, paid, exported, withdrawn, or 
otherwise dealt in:
    (1) Persons listed in the Annex to Executive Order 13315 of August 
28, 2003, as amended by Executive Order 13350 of July 29, 2004; and
    (2) Persons determined by the Secretary of the Treasury, in 
consultation with the Secretary of State,
    (i) To be senior officials of the former Iraqi regime or their 
immediate family members; or
    (ii) To be owned or controlled by, or acting or purporting to act 
for or on behalf of, directly or indirectly, any of the persons whose 
property and interests in property are blocked pursuant to paragraphs 
(a)(1) or (a)(2) of this section; and
    (3) Persons determined by the Secretary of the Treasury, in 
consultation with the Secretary of State and the Secretary of Defense,
    (i) To have committed, or to pose a significant risk of committing, 
an act or acts of violence that have the purpose or effect of:
    (A) Threatening the peace or stability of Iraq or the Government of 
Iraq; or
    (B) Undermining efforts to promote economic reconstruction and 
political reform in Iraq or to provide humanitarian assistance to the 
Iraqi people;
    (ii) To have materially assisted, sponsored, or provided financial, 
material, logistical, or technical support for, or goods or services in 
support of, such an act or acts of violence or any person whose 
property and interests in property are blocked pursuant to paragraph 
(a)(3) of this section; or
    (iii) To be owned or controlled by, or to have acted or purported 
to act for or on behalf of, directly or indirectly, any person whose 
property and interests in property are blocked pursuant to paragraph 
(a)(3) of this section.

    Note 1 to paragraph (a) of Sec.  576.201:  The names of persons 
listed in or designated pursuant to Executive Order 13315, as 
amended by Executive Order 13350, or designated pursuant to 
Executive Order 13438 of July 17, 2007, 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 (``SDN'' list) (which 
is accessible via the Office of Foreign Assets Control's Web site), 
published in the Federal Register, and incorporated into Appendix A 
to this chapter with the identifier ``[IRAQ2]'' (for persons 
designated pursuant to paragraphs (a)(1) and (a)(2) of this section) 
or ``[IRAQ3]'' (for persons designated pursuant to paragraph (a)(3) 
of this section). See Sec.  576.412 concerning entities that may not 
be listed on the SDN list but whose property and interests in 
property are nevertheless blocked pursuant to paragraph (a) of this 
section.


    Note 2 to paragraph (a) of Sec.  576.201:  The International 
Emergency Economic Powers Act (50 U.S.C. 1701-1706) (``IEEPA''), in 
section 203 (50 U.S.C. 1702), explicitly authorizes the blocking of 
property and interests in property of a person during the pendency 
of an investigation. The names of persons whose property and 
interests in property are blocked pending investigation pursuant to 
this part are published on the SDN list, published in the Federal 
Register, and incorporated into Appendix A to this chapter with the 
identifier ``[BPI-IRAQ2]'' or ``[BPI-IRAQ3].''


    Note 3 to paragraph (a) of Sec.  576.201:  Sections 501.806 and 
501.807 of this chapter 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 status as persons whose property and 
interests in property are blocked pursuant to paragraph (a) of this 
section.

    (b) All property and interests in property blocked pursuant to 
Executive Order 12722 of August 2, 1990, or Executive Order 12724 of 
August 9, 1990, that continued to be blocked as of July 30, 2004, 
remain blocked and may not be transferred, paid, exported, withdrawn, 
or otherwise dealt in, 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.

    Note to paragraph (b) of Sec.  576.201:  In Sec.  576.510 of 
this part, the Office of Foreign Assets Control authorizes all 
transactions involving property and interests in property blocked 
solely pursuant to Executive Orders 12722 or 12724. The Iraqi 
Sanctions Regulations, 31 CFR part 575, which implemented Executive 
Orders 12722 and 12724, have been removed from 31 CFR chapter V.

    (c) The prohibitions in paragraphs (a) and (b) of this section 
include, but are not limited to, prohibitions on the following 
transactions:
    (1) The making of any contribution or provision of funds, goods, or 
services

[[Page 55468]]

by, to, or for the benefit of any person whose property and interests 
in property are blocked pursuant to paragraphs (a) or (b) of this 
section; and
    (2) The receipt of any contribution or provision of funds, goods, 
or services from any person whose property and interests in property 
are blocked pursuant to paragraphs (a) or (b) of this section.
    (d) 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 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, 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.
    (e) The prohibitions in paragraphs (a) and (b) of this section 
apply except to the extent transactions are 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.


Sec.  576.202  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.  
576.201(a) or Sec.  576.201(b), 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 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.  576.201(a) or Sec.  576.201(b), 
unless the person who holds or maintains such property, 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 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 Orders 13315, 13350, or 
13438, 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 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 (and as to such person only);
    (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 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 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.  576.202: 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) 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.  
576.201(a), or with respect to any property and interests in property 
blocked pursuant to Sec.  576.201(b).


Sec.  576.203  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.  576.201(a) or Sec.  576.201(b) 
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.  576.201(a) or 
Sec.  576.201(b) 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

[[Page 55469]]

Sec.  576.201(a) or Sec.  576.201(b) 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 other blocked property, such as debt or equity securities, to sell 
or liquidate such property. However, the Office of Foreign Assets 
Control may issue licenses permitting or directing such sales or 
liquidation 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.  576.201(a), nor may their holder 
cooperate in or facilitate the pledging or other attempted use as 
collateral of blocked funds or other assets.


Sec.  576.204  Expenses of maintaining blocked physical property; 
liquidation of blocked property.

    (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.  
576.201(a) or Sec.  576.201(b) 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.  576.201(a) or Sec.  
576.201(b) may, in the discretion 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.


Sec.  576.205  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.


Sec.  576.206  Protection granted to the Development Fund for Iraq, 
Iraqi Petroleum and Petroleum Products, and the Central Bank of Iraq.

    (a) Unless licensed or otherwise authorized pursuant to this part, 
and except as provided in paragraph (b) of this section, any 
attachment, judgment, decree, lien, execution, garnishment, or other 
judicial process on or after the effective date is prohibited, and 
shall be deemed null and void, with respect to the following:
    (1) The Development Fund for Iraq;
    (2) All Iraqi petroleum and petroleum products, and interests 
therein, but only until title passes to the initial purchaser, and 
proceeds, obligations, or any financial instruments of any nature 
whatsoever arising from or related to the sale or marketing thereof, 
and interests therein, in which any foreign country or a national 
thereof has any interest, 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; and
    (3) Any accounts, assets, investments, or any other property of any 
kind owned by, belonging to, or held by the Central Bank of Iraq, or 
held, maintained, or otherwise controlled by any financial institution 
of any kind in the name of, on behalf of, or otherwise for the Central 
Bank of Iraq.
    (b) The prohibitions in paragraph (a) of this section shall not 
apply with respect to any final judgment arising out of a contractual 
obligation entered into by the Government of Iraq, including any agency 
or instrumentality thereof, after June 30, 2004.


Sec.  576.207  Exemption for property controlled by the military forces 
of the United States and their coalition partners in Iraq.

    The prohibitions in Sec.  576.201(a)(1) and (a)(2) shall not apply 
to property and interests in property that come under the control of 
the military forces of the United States and their coalition partners 
present in Iraq and acting in their official capacity under the command 
or operational control of the commander of United States Central 
Command.


Sec.  576.208  Prohibited transactions related to certain Iraqi 
cultural property.

    Unless licensed or otherwise authorized pursuant to this part or 
otherwise consistent with U.S. law, the trade in or transfer of 
ownership or possession of Iraqi cultural property or other items of 
archeological, historical, cultural, rare scientific, and religious 
importance that were illegally removed, or for which a reasonable 
suspicion exists that they were illegally removed, from the Iraq 
National Museum, the National Library, and other locations in Iraq 
since August 6, 1990, is prohibited.

    Note to Sec.  576.208:  See Sec.  576.411 for interpretive 
guidance on this section. Questions concerning whether particular 
Iraqi cultural property or other items are subject to this section 
should be directed to the Cultural Heritage Center, U.S. Department 
of State, tel. 202-632-6301, fax 202-632-6300, Web site http://culturalheritage.state.gov, e-mail [email protected].

Sec.  576.209  Exempt transactions.

    (a) Personal communications. The prohibitions contained in Sec.  
576.201(a)(3) 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 importation 
from any country and the exportation to any country of any information 
or informational materials, as defined in Sec.  576.306, whether 
commercial or otherwise, regardless of format or medium of 
transmission, are exempt from the prohibitions of Sec.  576.201(a)(3).
    (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 and interests in property are blocked pursuant 
to Sec.  576.201(a)(3), 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 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 for use

[[Page 55470]]

in the transmission of any data, 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 and interests in property are blocked pursuant to 
Sec.  576.201(a) are prohibited.
    (c) Travel. The prohibitions contained in Sec.  576.201(a)(3) do 
not apply to any transactions ordinarily incident to travel to or from 
any country, including importation of accompanied baggage 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.

Subpart C--General Definitions


Sec.  576.301  Blocked account; blocked property.

    The terms blocked account and blocked property shall mean:
    (a) (1) Any account or property subject to the prohibitions in 
Sec.  576.201(a) held in the name of a person whose property and 
interests in property are blocked pursuant to Sec.  576.201(a), or in 
which such person has an interest, or
    (2) Any account or property subject to the prohibitions in Sec.  
576.201(b), and
    (b) 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.

    Note to Sec.  576.301:  See Sec.  576.412 concerning the blocked 
status of property and interests in property of an entity that is 50 
percent or more owned by a person whose property and interests in 
property are blocked pursuant to Sec.  576.201(a).

Sec.  576.302  Development Fund for Iraq.

    The term Development Fund for Iraq means the fund established on or 
about May 22, 2003, on the books of the Central Bank of Iraq, by the 
Administrator of the Coalition Provisional Authority responsible for 
the temporary governance of Iraq and all accounts held for the fund or 
for the Central Bank of Iraq in the name of the fund.


Sec.  576.303  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 a person whose property and interests in 
property are blocked pursuant to Sec.  576.201(a)(1), 12:01 a.m. 
Eastern Daylight Time (``e.d.t.''), August 29, 2003, for those persons 
listed on the Annex to Executive Order 13315, and 12:01 a.m., e.d.t., 
July 30, 2004, for those persons added to the Annex to Executive Order 
13315 by Executive Order 13350;
    (b) With respect to a person whose property and interests in 
property are otherwise blocked pursuant to Sec.  576.201(a)(2) or 
(a)(3), the earlier of the date of actual or constructive notice that 
such person's property and interests in property are blocked;
    (c) With respect to the transactions prohibited by Sec.  
576.206(a)(1) and (a)(2), 12:01 a.m. e.d.t., May 23, 2003;
    (d) With respect to the transactions prohibited by Sec.  
576.206(a)(3), 12:01 a.m. Eastern Standard Time (``e.s.t.''), November 
30, 2004.
    (e) With respect to the transactions prohibited by Sec.  576.201(b) 
or Sec.  576.208, 12:01 a.m. e.d.t., July 30, 2004.


Sec.  576.304  Entity.

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


Sec.  576.305  Former Iraqi regime.

    The term former Iraqi regime means the Saddam Hussein regime that 
governed Iraq until on or about May 1, 2003.


Sec.  576.306  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.  576.307:  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 sections 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.  576.307  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.  576.308  Iraqi petroleum and petroleum products.

    The term Iraqi petroleum and petroleum products means any 
petroleum, petroleum products, or natural gas originating in Iraq, 
including any Iraqi-origin oil inventories, wherever located.


Sec.  576.309  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.  576.309:  See Sec.  501.801 of this chapter for 
licensing procedures.

Sec.  576.310  Government of Iraq.

    The term Government of Iraq means:
    (a) Any interim or permanent Iraqi government in authority after 
June 30, 2004, and any subdivision, agency, or instrumentality thereof; 
and
    (b) Any partnership, association, corporation, or other 
organization substantially owned or controlled by the foregoing.


Sec.  576.311  Person.

    The term person means an individual or entity.


Sec.  576.312  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

[[Page 55471]]

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.  576.313  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. Without limitation on the 
foregoing, it 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.  576.314  UNSC Resolution 1483.

    The term UNSC Resolution 1483 means United Nations Security Council 
Resolution No. 1483, adopted May 22, 2003.


Sec.  576.315  United States.

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


Sec.  576.316  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. It includes but is 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.  576.317  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.  576.401  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, directive, or license issued pursuant to this part refers 
to the same as currently amended.


Sec.  576.402  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 the Office of Foreign Assets Control does not affect 
any act done or omitted, or any civil or criminal 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.  576.403  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.  576.201 if made after the effective date.


Sec.  576.404  Termination and acquisition of an interest in 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.  576.201, unless there exists 
in the property another interest that is blocked pursuant to Sec.  
576.201 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.  576.201(a), such property shall be deemed to be property in which 
that person has an interest and therefore blocked.
    (c) Unless otherwise provided in a license or authorization issued 
pursuant to this part, Iraqi petroleum and petroleum products shall 
enjoy the protections of Sec.  576.206 until title passes to the 
initial purchaser. For purposes of this part, an initial purchaser is a 
purchaser other than the Government of Iraq or persons acting for it or 
on its behalf in the marketing or sale of Iraqi petroleum and petroleum 
products.


Sec.  576.405  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.  576.201(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.
    (c)

    Example. A license authorizing Company A, whose property and 
interests in property are blocked pursuant to Sec.  576.201(a), to 
complete a securities sale also authorizes all activities by other 
parties required to

[[Page 55472]]

complete the sale, including transactions by the buyer, broker, 
transfer agents, banks, etc., provided that such other parties are 
not themselves persons whose property and interests in property are 
blocked pursuant to Sec.  576.201(a).


Sec.  576.406  Provision of services.

    (a) Except as provided in Sec.  576.209, the prohibitions on 
transactions involving blocked property contained in Sec.  576.201 
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.  576.201(a); or
    (2) With respect to property interests subject to Sec.  576.201.
    (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.  576.201(a).

    Note to Sec.  576.406:  See Sec. Sec.  576.507 and 576.509 on 
licensing policy with regard to the provision of certain legal and 
medical services.

Sec.  576.407  Offshore transactions.

    The prohibitions in Sec.  576.201 on transactions or dealings 
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.  576.201, or property in which a person whose 
property and interests in property are blocked pursuant to Sec.  
576.201 has or has had an interest since the effective date.


Sec.  576.408  Payments from blocked accounts to satisfy obligations 
prohibited.

    Pursuant to Sec.  576.201, 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.  576.409  Charitable contributions.

    Unless specifically authorized by the Office of Foreign Assets 
Control pursuant to this part, no charitable contribution of funds, 
goods, services, or technology, including contributions to relieve 
human suffering, such as food, clothing or medicine, may be made by, 
to, or for the benefit of, or received from, a person whose property 
and interests in property are blocked pursuant to Sec.  576.201(a). For 
the purposes of this part, a contribution is made by, to, or for the 
benefit of, or received from, a person whose property and interests in 
property are blocked pursuant to Sec.  576.201(a) if made by, to, or in 
the name of, or received from or in the name of, such a person; if made 
by, to, or in the name of, or received from 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 by, to, or for the 
benefit of such a person, or the receipt of contributions from any such 
person.


Sec.  576.410  Credit extended and cards issued by U.S. financial 
institutions.

    The prohibition in Sec.  576.201 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.  576.201(a).


Sec.  576.411  Prohibited transactions involving certain Iraqi cultural 
property.

    (a) The prohibition on trade in or transfer of ownership or 
possession of certain Iraqi cultural property in Sec.  576.208 is 
separate from, and independent of, other laws and regulations that may 
also prohibit the same conduct.
    (b) The mere compliance with certain legal, administrative, or 
procedural requirements, such as the filing of a U.S. Customs and 
Border Protection Form 3461 (Entry/Immediate Delivery) or U.S. Customs 
and Border Protection Form 7501 (Entry Summary), does not render the 
trade in or transfer of Iraqi cultural property otherwise consistent 
with U.S. law for purposes of Sec.  576.208. The trade in or transfer 
of Iraqi cultural property as described in Sec.  576.208 would violate 
Sec.  576.208 regardless of whether the U.S. Customs and Border 
Protection forms were truthfully and accurately completed.

    Note to Sec.  576.411: Other laws and regulations potentially 
applicable to the unlawful trade in or transfer of Iraqi cultural 
property include, but are not limited to, the transportation of 
stolen goods, 18 U.S.C. 2314; the receipt of stolen goods, 18 U.S.C. 
2315; the importation of goods contrary to law, 18 U.S.C. 545 and 19 
U.S.C. 1595a(a), (b), and (c); the exportation of goods contrary to 
law, 19 U.S.C. 1595a(d); the importation of stolen cultural 
property, 19 U.S.C. 2607; the importation of cultural property 
pertaining to the inventory of a museum or religious or secular 
public monument, 19 CFR 12.104a; and the emergency protection of 
Iraqi cultural antiquities, 19 CFR 12.104j.

Sec.  576.412  Entities owned by a person whose property and interests 
in property are blocked.

    A person whose property and interests in property are blocked 
pursuant to Sec.  576.201(a) has an interest in all property and 
interests in property of an entity in which it owns, directly or 
indirectly, a 50 percent or greater interest. The property and 
interests in property of such an entity, therefore, are blocked, and 
such an entity is a person whose property and interests in property are 
blocked pursuant to Sec.  576.201(a), regardless of whether the entity 
itself is listed in the Annex to Executive Order 13315, as amended, or 
designated pursuant to Sec.  576.201(a)(2) or (3).

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


Sec.  576.501  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.  576.502  Effect of license or authorization.

    (a) No license or other authorization contained in this part, or 
otherwise issued by 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 other part of this chapter 
unless the regulation, ruling, instruction, or license specifically 
refers to such part.
    (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

[[Page 55473]]

with respect to, any property which would not otherwise exist under 
ordinary principles of law.


Sec.  576.503  Exclusion from licenses.

    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 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 actual or constructive notice of 
the exclusions or restrictions.


Sec.  576.504  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.  
576.201(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.  576.504:  See Sec.  501.603 of this chapter for 
mandatory reporting requirements regarding financial transfers. See 
also Sec.  576.203 concerning the obligation to hold blocked funds 
in interest-bearing accounts.

Sec.  576.505  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.


Sec.  576.506  Investment and reinvestment of certain funds.

    Subject to the requirements of Sec.  576.203, U.S. financial 
institutions are authorized to invest and reinvest assets blocked 
pursuant to Sec.  576.201, subject to the following conditions:
    (a) The assets representing such investments and reinvestments are 
credited to a blocked account or subaccount that 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 property and interests 
in property are blocked pursuant to Sec.  576.201(a).


Sec.  576.507  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.  576.201(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 the United States or 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 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.  
576.201(a), not otherwise authorized in this part, requires the 
issuance of a specific license.
    (c) Entry into a settlement agreement 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.  576.201(a) is prohibited unless licensed 
pursuant to this part.


Sec.  576.508  Judicial process in legal proceedings involving 
ecological accidents.

    The Office of Foreign Assets Control may issue specific licenses on 
a case-by-case basis to authorize the attachment, judgment, decree, 
lien, execution, garnishment, or other judicial process against 
property and interests in property protected by Sec.  576.206 to 
satisfy liability for damages assessed in connection with an ecological 
accident (including an oil spill) that occurred after May 22, 2003.


Sec.  576.509  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.  576.201(a) is authorized, provided that all 
receipt of payment for such services must be specifically licensed.


Sec.  576.510  Unblocking certain blocked property.

    (a) Except for such property and interests in property described in 
paragraph (b) of this section, all transactions involving property and 
interests in property blocked pursuant to Sec.  576.201(b) of this part 
are authorized.
    (b) The authorization in paragraph (a) of this section does not 
apply to blocked property and interests in property of persons subject 
to sanctions pursuant to Sec.  576.201(a) of this part or any other 
part of 31 CFR chapter V.


Sec.  576.511  Property controlled by the military forces of the United 
States and their coalition partners in Iraq.

    The prohibition in Sec.  576.201(a)(3) that deals with blocked 
property and interests in property shall not apply to property and 
interests in property controlled by the military forces of the United 
States and their coalition partners present in Iraq and acting in their 
official capacity under the command or operational control of the 
commander of United States Central Command.


[[Page 55474]]


    Note to Sec.  576.511:  See Sec.  576.207 of this part, which 
exempts property and interests in property that come under the 
control of the military forces of the United States and their 
coalition partners present in Iraq and acting in their official 
capacity from the prohibitions in Sec.  576.201(a)(1) and (2).

Sec.  576.512  Transactions with certain blocked persons authorized.

    (a) All transactions with state bodies, corporations, or agencies 
of the former Iraqi regime that are otherwise prohibited by Sec.  
576.201(a) are authorized.
    (b) The authorization in paragraph (a) of this section does not 
apply to any transactions with state bodies, corporations, or agencies 
of the former Iraqi regime listed in Appendix A to 31 CFR chapter V.

Subpart F--Reports


Sec.  576.601  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.  576.701  Penalties.

    (a) Attention is directed to section 206 of the International 
Emergency Economic Powers Act (50 U.S.C. 1705) (``IEEPA''), which is 
applicable to violations of the provisions of any license, ruling, 
regulation, order, directive, 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 may be imposed on any person who violates, attempts to 
violate, conspires to violate, or causes a violation of any license, 
order, or regulation issued under IEEPA.

    Note to paragraph (a)(1) of Sec.  576.701:  As of the date of 
publication in the Federal Register of the final rule adding this 
part to 31 CFR chapter V September 13, 2010, IEEPA provides for a 
maximum civil penalty not to exceed the greater of $250,000 or an 
amount that is twice the amount of the transaction that is the basis 
of the violation with respect to which the penalty is imposed.

    (2) A person who willfully commits, willfully attempts to commit, 
or willfully conspires to commit, or aids or abets in the commission of 
a violation of any license, order, regulation, or prohibition may, upon 
conviction, be fined not more than $1,000,000, or if a natural person, 
may be imprisoned for not more than 20 years, or both.
    (b) Adjustments to penalty amounts. (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 are subject to 
adjustment 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; 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, imprisoned, or both.
    (d) Violations of this part may also be subject to relevant 
provisions of other applicable laws.


Sec.  576.702  Pre-Penalty Notice; settlement.

    (a) When required. If 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 IEEPA and determines that a 
civil monetary penalty is warranted, the Office of Foreign Assets 
Control will issue a Pre-Penalty Notice informing the alleged violator 
of the agency's intent to impose a monetary penalty. A Pre-Penalty 
Notice shall be in writing. The Pre-Penalty Notice may be issued 
whether or not another agency has taken any action with respect to the 
matter. For a description of the contents of a Pre-Penalty Notice, see 
Appendix A to part 501 of this chapter.
    (b)(1) Right to respond. An alleged violator has the right to 
respond to a Pre-Penalty Notice by making a written presentation to the 
Office of Foreign Assets Control. For a description of the information 
that should be included in such a response, see Appendix A to part 501 
of this chapter.
    (2) Deadline for response. A response to a Pre-Penalty Notice must 
be made within the applicable 30-day period set forth in this 
paragraph. 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.
    (i) Computation of time for response. A response to a Pre-Penalty 
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 Pre-Penalty Notice was mailed. If the Pre-Penalty 
Notice was personally delivered by a non-U.S. Postal Service agent 
authorized by the Office of Foreign Assets Control, a response must be 
postmarked or date-stamped on or before the 30th day after the date of 
delivery.
    (ii) 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 discretion of the Office of Foreign Assets Control, only upon 
specific request to the Office of Foreign Assets Control.
    (3) Form and method of response. A response to a Pre-Penalty Notice 
need not be in any particular form, but it must be typewritten and 
signed by the alleged violator or a representative thereof, must 
contain information sufficient to indicate that it is in response to 
the Pre-Penalty Notice, and must include the Office of Foreign Assets 
Control identification number listed on the Pre-Penalty Notice. 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 (b)(2) of this section.
    (c) Settlement. Settlement discussion may be initiated by the 
Office of Foreign Assets Control, the alleged violator, or the alleged 
violator's authorized representative. For a description of practices 
with respect to settlement, see Appendix A to part 501 of this chapter.
    (d) Guidelines. Guidelines for the imposition or settlement of 
civil penalties by the Office of Foreign Assets Control are contained 
in Appendix A to part 501 of this chapter.
    (e) Representation. A representative of the alleged violator may 
act on behalf of the alleged violator, but any oral communication with 
the Office of Foreign Assets Control prior to a written submission 
regarding the specific allegations contained in the Pre-Penalty

[[Page 55475]]

Notice must be preceded by a written letter of representation, unless 
the Pre-Penalty Notice was served upon the alleged violator in care of 
the representative.


Sec.  576.703  Penalty imposition.

    If, after considering any written response to the Pre-Penalty 
Notice and any relevant facts, the Office of Foreign Assets Control 
determines that there was a violation by the alleged violator named in 
the Pre-Penalty Notice and that a civil monetary penalty is 
appropriate, the Office of Foreign Assets Control may issue a Penalty 
Notice to the violator containing a determination of the violation and 
the imposition of the monetary penalty. For additional details 
concerning issuance of a Penalty Notice, see Appendix A to part 501 of 
this chapter. The issuance of the Penalty Notice shall constitute final 
agency action. The violator has the right to seek judicial review of 
that final agency action in federal district court.


Sec.  576.704  Administrative collection; referral to United States 
Department of Justice.

    In the event that the violator does not pay the penalty imposed 
pursuant to this part or make payment arrangements acceptable to the 
Office of Foreign Assets Control, 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.  576.801  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.  576.802  Delegation by the Secretary of the Treasury.

    (a) Except as provided in paragraph (b) of this section, any action 
that the Secretary of the Treasury is authorized to take pursuant to 
Executive Order 13303 of May 22, 2003, and any subsequent Executive 
orders relating to the national emergency declared therein, including 
but not limited to Executive Order 13315 of August 28, 2003, and 
Executive Order 13438 of July 17, 2007, 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 the authority so to act.
    (b) Unless otherwise delegated, the authority provided in section 2 
of Executive Order 13315 to confiscate property blocked pursuant to 
this part and transfer all vested right, title, and interest in such 
property to the Development Fund for Iraq shall be exercised only by 
the Secretary of the Treasury, in consultation with the Secretary of 
State.

Subpart I--Paperwork Reduction Act


Sec.  576.901  Paperwork Reduction Act notice.

    For approval by the Office of Management and Budget (``OMB'') under 
the Paperwork Reduction Act of 1995 (44 U.S.C. 3507) of information 
collections relating to recordkeeping and reporting requirements, 
licensing procedures (including those pursuant to statements of 
licensing policy), and other procedures, see 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: September 1, 2010.
Adam J. Szubin,
Director, Office of Foreign Assets Control, Department of the Treasury.
    Approved: September 2, 2010.
Stuart A. Levey,
Under Secretary, Office of Terrorism and Financial Intelligence, 
Department of the Treasury.
[FR Doc. 2010-22546 Filed 9-10-10; 8:45 am]
BILLING CODE 4810-AL-P