[Federal Register Volume 77, Number 247 (Wednesday, December 26, 2012)]
[Rules and Regulations]
[Pages 75845-75850]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2012-30680]


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DEPARTMENT OF THE TREASURY

Office of Foreign Assets Control

31 CFR Part 560


Iranian Transactions and 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 amending the Iranian Transactions and Sanctions 
Regulations (the ``ITSR'') to implement section 218 and portions of 
sections 602 and 603 of the Iran Threat Reduction and Syria Human 
Rights Act of 2012; section 5, portions of section 6, and other related 
provisions of Executive Order 13622 of July 30, 2012; and section 4 of 
Executive Order 13628 of October 9, 2012. These amendments, inter alia, 
add a new section to the ITSR to prohibit certain transactions by 
entities owned or controlled by a U.S. person and established or 
maintained outside the United States. They also expand the categories 
of persons whose property and interests in property are blocked to 
include any person determined by the Secretary of the Treasury, in 
consultation with the Secretary of State, to have provided material 
support for certain Government of Iran-related entities or certain 
activities by the Government of Iran.

DATES: Effective Date: December 26, 2012.

FOR FURTHER INFORMATION CONTACT: Assistant Director for Sanctions 
Compliance & Evaluation, 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 (not toll free numbers).

SUPPLEMENTARY INFORMATION:

Electronic and Facsimile Availability

    This document and additional information concerning OFAC are 
available from OFAC's Web site (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

    On October 22, 2012, the Department of the Treasury's Office of 
Foreign Assets Control (``OFAC'') published a

[[Page 75846]]

final rule in the Federal Register (77 FR 64664) changing the heading 
of the former Iranian Transactions Regulations to the Iranian 
Transactions and Sanctions Regulations, 31 CFR part 560 (the ``ITSR''), 
amending the renamed ITSR, and reissuing them in their entirety, to 
implement Executive Order 13599 of February 5, 2012 (``E.O. 13599''), 
and sections 1245(c) and (d)(1)(B) of the National Defense 
Authorization Act for Fiscal Year 2012 (Pub. L. 112-81). This final 
rule made many significant amendments, as well as technical and 
conforming changes, to the ITSR. OFAC is now amending the ITSR to 
implement the sections discussed below of Executive Order 13622 of July 
30, 2012, ``Authorizing Additional Sanctions With Respect to Iran'' 
(``E.O. 13622''), the Iran Threat Reduction and Syria Human Rights Act 
of 2012 (Pub. L. 112-158) (the ``TRA''), and Executive Order 13628 of 
October 9, 2012, ``Authorizing the Implementation of Certain Sanctions 
Set Forth in the Iran Threat Reduction and Syria Human Rights Act of 
2012 and Additional Sanctions With Respect to Iran'' (``E.O. 13628'').
    On July 30, 2012, the President, invoking the authority of, inter 
alia, the International Emergency Economic Powers Act (50 U.S.C. 1701 
et seq.) (``IEEPA''), issued E.O. 13622. The President issued E.O. 
13622 to take additional steps with respect to the national emergency 
declared in Executive Order 12957 of March 15, 1995 (``E.O. 12957''), 
particularly in light of the Government of Iran's use of revenues from 
petroleum, petroleum products, and petrochemicals for illicit purposes, 
Iran's continued attempts to evade international sanctions through 
deceptive practices, and the unacceptable risk posed to the 
international financial system by Iran's activities.
    Section 5 of E.O. 13622 blocks 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 any U.S. person, including any foreign branch, of any person 
determined by the Secretary of the Treasury, in consultation with the 
Secretary of State, to have materially assisted, sponsored, or provided 
financial, material, or technological support for, or goods or services 
in support of, the National Iranian Oil Company (``NIOC''), the 
Naftiran Intertrade Company (``NICO''), or the Central Bank of Iran, or 
the purchase or acquisition of U.S. bank notes or precious metals by 
the Government of Iran. Section 10 of E.O. 13622 defines the terms NIOC 
and NICO as including any entity owned or controlled by, or operating 
for or on behalf of, respectively, NIOC and NICO.
    Section 6 of E.O. 13622 provides that section 5(a) of the order, 
among other specified provisions, shall not apply to any person for 
conducting or facilitating a transaction involving a natural gas 
development and pipeline project initiated prior to July 31, 2012, to 
bring gas from Azerbaijan to Europe and Turkey, as described in section 
6. Although it is not named in the section, section 6 refers to the 
Shah Deniz natural gas field in Azerbaijan's sector of the Caspian Sea 
and related pipeline projects to bring the gas from Azerbaijan to 
Europe and Turkey.
    On August 10, 2012, the President signed into law the TRA. Section 
218 of the TRA directs the President to prohibit entities owned or 
controlled by a United States person and established or maintained 
outside the United States from knowingly engaging in any transaction 
directly or indirectly with the Government of Iran or any person 
subject to the jurisdiction of the Government of Iran that would be 
prohibited by an order or regulation issued pursuant to IEEPA if the 
transaction were engaged in by a United States person or in the United 
States. Section 218 also extends civil penalty liability under IEEPA to 
U.S. parent companies if the foreign entities they own or control 
violate, attempt to violate, conspire to violate, or cause a violation 
of any order or regulation issued to implement this section. The law 
allows the U.S. person to avoid civil penalties for violations if it 
divests or terminates its business with the foreign entity by February 
6, 2013.
    Sections 602 and 603 of the TRA provide that nothing in that law, 
including section 218, shall apply to, respectively, the authorized 
intelligence activities of the United States and any activity relating 
to a project for the development of natural gas and the construction 
and operation of a pipeline to transport natural gas from Azerbaijan to 
Turkey and Europe that meets certain specified criteria. The project 
that meets the criteria in section 603 is the project to develop the 
Shah Deniz natural gas field in Azerbaijan's sector of the Caspian Sea 
and related pipeline projects to bring the gas from Azerbaijan to 
Europe and Turkey, as discussed above in connection with section 6 of 
E.O. 13622. The exemption in section 603 will not apply in the event 
that the President makes certain certifications to Congress to the 
effect that an Iranian entity's share of the project has increased 
relative to its share on January 1, 2002, or that an Iranian entity has 
assumed an operational role in the project, as described in section 
603(b) of the TRA.
    On October 9, 2012, the President, invoking the authority of, inter 
alia, IEEPA and the TRA, issued E.O. 13628, in order to take additional 
steps to deal with the national emergency declared in E.O. 12957 with 
respect to Iran. In implementation of section 218 of the TRA, section 
4(a) of E.O. 13628 prohibits entities owned or controlled by a United 
States person and established or maintained outside the United States 
from knowingly engaging in any transactions, directly or indirectly, 
with the Government of Iran or any person subject to the jurisdiction 
of the Government of Iran, if the transactions would be prohibited by 
E.O. 12957, Executive Order 12959 of May 6, 1995, Executive Order 13059 
of August 19, 1997, E.O. 13599, section 5 of E.O. 13622, or section 12 
of E.O. 13628, or any regulation issued pursuant to the foregoing, if 
the transaction were engaged in by a United States person or in the 
United States. Section 4(d) of E.O. 13628 provides that the prohibition 
in section 4(a) applies except to the extent provided by statutes, or 
in regulations, orders directives, or licenses that may be issued 
pursuant to this order.
    Section 4(b) of E.O. 13628 provides that penalties for violations 
of the prohibition in section 4(a) may be assessed against the United 
States person that owns or controls the foreign entity that engaged in 
the prohibited transaction. Section 4(c) provides that such penalties 
shall not apply if the United States person that owns or controls the 
foreign entity divests or terminates its business with that entity not 
later than February 6, 2013.
    Today, OFAC is amending the ITSR to implement sections 5 and 6 of 
E.O. 13622, sections 218, 602, and 603 of the TRA, and section 4 of 
E.O. 13628. To implement the relevant provisions of E.O. 13622, OFAC is 
amending paragraph (c) of section 560.211 of the ITSR to add the new 
blocking criteria set forth in section 5(a) of the order, as well as 
the exemption from this new authority for a natural gas development and 
pipeline project described in section 6 of the order.
    OFAC is making a number of changes to the ITSR to implement the 
relevant provisions of the TRA and E.O. 13628. First, new section 
560.215 is being added to subpart B of the ITSR to prohibit entities 
owned or controlled by a United States person and established or 
maintained outside the United States from knowingly engaging in any

[[Page 75847]]

transaction directly or indirectly with the Government of Iran or any 
person subject to the jurisdiction of the Government of Iran that would 
be prohibited by the ITSR if the transaction were engaged in by a 
United States person or in the United States. This new section also 
contains the exemptions set forth in sections 602 and 603 of the TRA 
for, respectively, U.S. intelligence activities and a natural gas-
related project, as described above.
    Second, new section 560.555 is being added to subpart E of the ITSR 
to authorize, from October 9, 2012, through March 8, 2013, all 
transactions ordinarily incident and necessary to the winding-down of 
transactions prohibited by new section 560.215, provided that the 
authorized transactions do not involve a U.S. person or occur in the 
United States. Paragraph (b) of section 560.555 specifies that this new 
general license does not authorize any transactions prohibited by 
section 560.205. Paragraph (c) of section 560.555 provides that 
transactions involving Iranian financial institutions are authorized 
pursuant to this new general license only if the property and interests 
in property of the Iranian financial institution are blocked solely 
pursuant to this part.
    Third, another general license, new section 560.556, is being added 
to subpart E of the ITSR to authorize an entity owned or controlled by 
a United States person and established or maintained outside the United 
States (a ``U.S.-owned or -controlled foreign entity'') to engage in a 
transaction otherwise prohibited by section 560.215 that would be 
authorized by a general license set forth in or issued pursuant to this 
part if engaged in by a U.S. person or in the United States. Paragraph 
(b) of new section 560.556 provides that this section does not 
authorize any transaction by a U.S.-owned or -controlled foreign entity 
otherwise prohibited by section 560.215 if the transaction would be 
prohibited by any other part of chapter V of 31 CFR if engaged in by a 
U.S. person or in the United States.
    Fourth, OFAC is amending several existing general licenses that, by 
their terms, apply to transactions by U.S.-owned or -controlled foreign 
entities to exclude from the scope of each authorization any 
transaction by a U.S.-owned or -controlled foreign entity otherwise 
prohibited by section 560.215 if the transaction would be prohibited by 
any other part of chapter V of 31 CFR if engaged in by a U.S. person or 
in the United States. This change is being made to sections 560.508, 
560.509, 560.510, 560.522, 560.525, 560.530, 560.532, 560.539, and 
560.553. OFAC is making further conforming changes to sections 560.532 
and 560.539 to account for the new prohibition in section 560.215.
    Fifth, OFAC is amending section 560.701 of subpart G of the ITSR by 
adding new paragraph (a)(3), which provides for civil penalties under 
section 206(b) of IEEPA (50 U.S.C. 1705(b)) to be imposed on a United 
States person if an entity owned or controlled by the United States 
person and established or maintained outside the United States 
violates, attempts to violate, conspires to violate, or causes a 
violation of the prohibition set forth in section 560.215, unless the 
United States person divests or terminates its business with the entity 
by February 6, 2013, such that the U.S. person no longer owns or 
controls the entity, as defined in new section 560.215.
    Finally, OFAC is making two technical corrections to section 
560.505 of subpart E of the ITSR.

Public Participation

    Because the amendment of the ITSR involves 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 ITSR are contained in 
31 CFR part 501 (the ``Reporting, Procedures and Penalties 
Regulations''). Pursuant to the Paperwork Reduction Act of 1995 (44 
U.S.C. 3507), those collections of information have been approved by 
the Office of Management and Budget under control number 1505-0164. An 
agency may not conduct or sponsor, and a person is not required to 
respond to, a collection of information unless the collection of 
information displays a valid control number.

List of Subjects in 31 CFR Part 560

    Administrative practice and procedure, Banks, Banking, Blocking of 
Assets, Brokers, Credit, Foreign Trade, Investments, Loans, Securities, 
Services, Iran.

    For the reasons set forth in the preamble, the Department of the 
Treasury's Office of Foreign Assets Control amends part 560 of 31 CFR 
chapter V as follows:

PART 560--IRANIAN TRANSACTIONS AND SANCTIONS REGULATIONS

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

    Authority: 3 U.S.C. 301; 18 U.S.C. 2339B, 2332d; 22 U.S.C. 
2349aa-9; 22 U.S.C. 7201-7211; 31 U.S.C. 321(b); 50 U.S.C. 1601-
1651, 1701-1706; Pub. L. 101-410, 104 Stat. 890 (28 U.S.C. 2461 
note); Pub. L. 110-96, 121 Stat. 1011 (50 U.S.C. 1705 note); Pub. L. 
111-195, 124 Stat. 1312 (22 U.S.C. 8501-8551); Pub. L. 112-81, 125 
Stat. 1298; Pub. L. 112-158, 126 Stat. 1214; E.O. 12613, 52 FR 
41940, 3 CFR, 1987 Comp., p. 256; E.O. 12957, 60 FR 14615, 3 CFR, 
1995 Comp., p. 332; E.O. 12959, 60 FR 24757, 3 CFR, 1995 Comp., p. 
356; E.O. 13059, 62 FR 44531, 3 CFR, 1997 Comp., p. 217; E.O. 13599, 
77 FR 6659, February 8, 2012; E.O. 13622, 77 FR 45897, August 2, 
2012; E.O. 13628, 77 FR 62139, October 12, 2012.

Subpart B--Prohibitions

0
2. Amend Sec.  560.210 by revising paragraph (e) to read as follows:


Sec.  560.210  Exempt transactions.

* * * * *
    (e) Official Business. The prohibitions in Sec.  560.211(a) through 
(c)(1) do not apply to transactions for the conduct of the official 
business of the Federal Government by employees, grantees, or 
contractors thereof.
* * * * *

0
3. Amend Sec.  560.211 by revising paragraph (c) and Note 1 to 
paragraphs (a) through (c) of Sec.  560.211 to read as follows:


Sec.  560.211  Prohibited transactions involving blocked property.

* * * * *
    (c) 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 any United States 
person, including any foreign branch, of the following persons are 
blocked and may not be transferred, paid, exported, withdrawn, or 
otherwise dealt in:
    (1) Any person determined by the Secretary of the Treasury, in 
consultation with the Secretary of State, 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 paragraphs (a) through (c)(1) of this section; or
    (2) Any person determined by the Secretary of the Treasury, in 
consultation with the Secretary of State, to have materially assisted, 
sponsored, or provided financial, material, or technological support 
for, or goods or

[[Page 75848]]

services in support of, the National Iranian Oil Company (``NIOC''); 
the Naftiran Intertrade Company (``NICO''); any entity owned or 
controlled by, or operating for or on behalf of, NIOC or NICO; the 
Central Bank of Iran; or the purchase or acquisition of U.S. bank notes 
or precious metals by the Government of Iran. This paragraph shall not 
apply with respect to any person for conducting or facilitating a 
transaction that involves a natural gas development and pipeline 
project initiated prior to July 31, 2012, to bring gas from Azerbaijan 
to Europe and Turkey in furtherance of a production sharing agreement 
or license awarded by a sovereign government other than the Government 
of Iran before July 31, 2012.

    Note to Paragraph (c)(2) of Sec.  560.211: The natural gas 
development and pipeline project referred to in this paragraph is 
the project to develop the Shah Deniz natural gas field in 
Azerbaijan's sector of the Caspian Sea and related pipeline projects 
to bring the gas from Azerbaijan to Europe and Turkey.


    Note 1 to Paragraphs (a) Through (c) of Sec.  560.211: The names 
of persons identified as already blocked or designated for blocking 
pursuant to Executive Order 13599 of February 5, 2012, and Executive 
Order 13622 of July 30, 2012, whose property and interests in 
property therefore are blocked pursuant to this section, are 
published in the Federal Register and incorporated into the Office 
of Foreign Assets Control's Specially Designated Nationals and 
Blocked Persons List (``SDN List'') with the identifier ``[IRAN].'' 
The SDN List is accessible through the following page on the Office 
of Foreign Control's Web site: www.treasury.gov/sdn. Additional 
information pertaining to the SDN List can be found in Appendix A to 
this chapter. See Sec.  560.425 concerning entities that may not be 
listed on the SDN List but whose property and interests in property 
are nevertheless blocked pursuant to this section. Executive Order 
13599 blocks the property and interests in property of the 
Government of Iran and Iranian financial institutions, as defined in 
Sec.  560.304 and Sec.  560.324, respectively. The property and 
interests in property of persons falling within the definitions of 
the terms Government of Iran and Iranian financial institution are 
blocked pursuant to this section regardless of whether the names of 
such persons are published in the Federal Register or incorporated 
into the SDN List.

* * * * *

0
4. Add new section Sec.  560.215 to read as follows:


Sec.  560.215  Prohibitions on foreign entities owned or controlled by 
U.S. persons.

    (a) Except as otherwise authorized pursuant to this part, an entity 
that is owned or controlled by a United States person and established 
or maintained outside the United States is prohibited from knowingly 
engaging in any transaction, directly or indirectly, with the 
Government of Iran or any person subject to the jurisdiction of the 
Government of Iran that would be prohibited pursuant to this part if 
engaged in by a United States person or in the United States.

    Note to Paragraph (a) of Sec.  560.215:  If a transaction is 
exempt from the prohibitions of this part if engaged in by a U.S. 
person, it would not be prohibited for an entity that is owned or 
controlled by a United States person and established or maintained 
outside the United States (a ``U.S.-owned or -controlled foreign 
entity'') to engage in the transaction to the same extent that it 
would not be prohibited for the U.S. person to engage in the 
transaction and provided that the U.S.-owned or -controlled foreign 
entity satisfies all the requirements of the exemption. See also 
Sec.  560.556 of this part for a general license authorizing a U.S.-
owned or -controlled foreign entity to engage in a transaction 
otherwise prohibited by Sec.  560.215 that would be authorized by a 
general license set forth in or issued pursuant to this part if 
engaged in by a U.S. person or in the United States, subject to 
certain exclusions. Finally, if a transaction prohibited by Sec.  
560.215 is one for which a U.S. person might apply for a specific 
license--for example, the exportation of medical devices to Iran--a 
U.S.-owned or -controlled foreign entity may apply for a specific 
license to engage in the transaction.

    (b) Definitions: (1) For purposes of paragraph (a) of this section, 
an entity is ``owned or controlled'' by a United States person if the 
United States person:
    (i) Holds a 50 percent or greater equity interest by vote or value 
in the entity;
    (ii) Holds a majority of seats on the board of directors of the 
entity; or
    (iii) Otherwise controls the actions, policies, or personnel 
decisions of the entity.
    (2) For purposes of paragraph (a) of this section, the term 
knowingly means that the person engages in the transaction with actual 
knowledge or reason to know.
    (3) For purposes of paragraph (a) of this section, a person is 
``subject to the jurisdiction of the Government of Iran'' if the person 
is organized under the laws of Iran or any jurisdiction within Iran, 
ordinarily resident in Iran, or in Iran, or owned or controlled by any 
of the foregoing.

    Note to Paragraph (b) of Sec.  560.215:  See Sec.  560.304 of 
this part for the definition of the term Government of Iran.

    (c) The prohibition in paragraph (a) of this section does not apply 
to any activity relating to a project:
    (1) For the development of natural gas and the construction and 
operation of a pipeline to transport natural gas from Azerbaijan to 
Turkey and Europe;
    (2) That provides to Turkey and countries in Europe energy security 
and energy independence from the Government of the Russian Federation 
and the Government of Iran; and
    (3) That was initiated before August 10, 2012, pursuant to a 
production-sharing agreement, or an ancillary agreement necessary to 
further a production-sharing agreement, entered into with, or a license 
granted by, the government of a country other than Iran before August 
10, 2012.

    Note to Paragraph (c) of Sec.  560.215:  The exemption in 
paragraph (c) of this section applies to the Shah Deniz natural gas 
field in Azerbaijan's sector of the Caspian Sea and related pipeline 
projects to bring the gas from Azerbaijan to Europe and Turkey.

    (d) The prohibition in paragraph (a) of this section does not apply 
to the authorized intelligence activities of the United States 
Government.

    Note to Sec.  560.215: A U.S. person is subject to the civil 
penalties provided for in section 206(b) of the International 
Emergency Economic Powers Act (``IEEPA'') (50 U.S.C. 1705(b)) if any 
foreign entity that it owns or controls violates the prohibition set 
forth in this section. See Sec.  560.701(a)(3) of this part for 
civil penalties.

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

0
5. Amend Sec.  560.505 by revising paragraph (a)(2) and the Note to 
Sec.  560.505 to read as follows:


Sec.  560.505  Activities and services related to certain nonimmigrant 
and immigrant categories authorized.

    (a)(1) * * *
    (2) U.S. persons are authorized to export services to Iran in 
connection with the filing of an individual's application for the non-
immigrant visa categories listed in paragraph (a)(1) of this section.
* * * * *

    Note to Sec.  560.505:  See Sec.  560.554 of this part for 
general licenses authorizing the importation and exportation of 
services related to conferences in the United States or third 
countries.


0
6. Amend Sec.  560.508 by redesignating paragraph (b) as paragraph (c) 
and adding new paragraph (b) to read as follows:


Sec.  560.508  Telecommunications and mail transactions authorized.

* * * * *
    (b) Paragraph (a) of this section does not authorize any 
transaction by an entity owned or controlled by a United States person 
and established or maintained outside the United States otherwise 
prohibited by Sec.  560.215 if the

[[Page 75849]]

transaction would be prohibited by any other part of this chapter V if 
engaged in by a U.S. person or in the United States.
* * * * *

0
7. Add new paragraph (c) to Sec.  560.509 to read as follows:


Sec.  560.509  Certain transactions related to patents, trademarks, and 
copyrights authorized.

* * * * *
    (c) This section does not authorize any transaction by an entity 
owned or controlled by a United States person and established or 
maintained outside the United States otherwise prohibited by Sec.  
560.215 if the transaction would be prohibited by any other part of 
this chapter V if engaged in by a U.S. person or in the United States.

0
8. Add new paragraph (e) to Sec.  560.510 to read as follows:


Sec.  560.510  Transactions related to the resolution of disputes 
between the United States or United States nationals and the Government 
of Iran.

* * * * *
    (e) This section does not authorize any transaction by an entity 
owned or controlled by a United States person and established or 
maintained outside the United States otherwise prohibited by Sec.  
560.215 if the transaction would be prohibited by any other part of 
this chapter V if engaged in by a U.S. person or in the United States.

0
9. Amend Sec.  560.522 by redesignating the existing text as paragraph 
(a) and adding new paragraph (b) to read as follows:


Sec.  560.522  Allowable payments for overflights of Iranian airspace.

* * * * *
    (b) This section does not authorize any transaction by an entity 
owned or controlled by a United States person and established or 
maintained outside the United States otherwise prohibited by Sec.  
560.215 if the transaction would be prohibited by any other part of 
this chapter V if engaged in by a U.S. person or in the United States.

0
10. Add new paragraph (e) to Sec.  560.525 to read as follows:


Sec.  560.525  Provision of certain legal services.

* * * * *
    (e) This section does not authorize any transaction by an entity 
owned or controlled by a United States person and established or 
maintained outside the United States otherwise prohibited by Sec.  
560.215 if the transaction would be prohibited by any other part of 
this chapter V if engaged in by a U.S. person or in the United States.

0
11. Add new paragraph (g) to Sec.  560.530 to read as follows:


Sec.  560.530  Commercial sales, exportation, and reexportation of 
agricultural commodities, medicine, and medical devices.

* * * * *
    (g) Excluded transactions by U.S.-owned or -controlled foreign 
entities. Nothing in this section or in any general license set forth 
in or issued pursuant to this section authorizes any transaction by an 
entity owned or controlled by a United States person and established or 
maintained outside the United States otherwise prohibited by Sec.  
560.215 if the transaction would be prohibited by any other part of 
this chapter V if engaged in by a U.S. person or in the United States.

0
12. Amend Sec.  560.532 by revising paragraphs (a)(3) and (a)(4) and 
adding new paragraph (e) to read as follows:


Sec.  560.532  Payment for and financing of exports and reexports of 
agricultural commodities, medicine, and medical devices.

    (a) * * *
    (3) Financing by third-country financial institutions that are not 
United States persons, entities owned or controlled by United States 
persons and established or maintained outside the United States, 
Iranian financial institutions, or the Government of Iran. Such 
financing may be confirmed or advised by U.S. financial institutions 
and by financial institutions that are entities owned or controlled by 
United States persons and established or maintained outside the United 
States; or
    (4) Letter of credit issued by an Iranian financial institution 
whose property and interests in property are blocked solely pursuant to 
this part. Such letter of credit must be initially advised, confirmed, 
or otherwise dealt in by a third-country financial institution that is 
not a United States person, an entity owned or controlled by a United 
States person and established or maintained outside the United States, 
an Iranian financial institution, or the Government of Iran before it 
is advised, confirmed, or dealt in by a U.S. financial institution or a 
financial institution that is an entity owned or controlled by a United 
States person and established or maintained outside the United States.
* * * * *
    (e) Nothing in this section authorizes any transaction by an entity 
owned or controlled by a United States person and established or 
maintained outside the United States otherwise prohibited by Sec.  
560.215 if the transaction would be prohibited by any other part of 
this chapter V if engaged in by a U.S. person or in the United States.

0
13. Amend Sec.  560.539 by revising paragraphs (a)(4), (a)(5), (b)(2), 
and (b)(3) and adding new paragraph (b)(4) to read as follows:


Sec.  560.539  Official activities of certain international 
organizations.

    (a) * * *
    (4) Funds transfers to or from accounts of the international 
organizations covered in this section, provided that funds transfers to 
or from Iran are not routed through an account of an Iranian bank on 
the books of a U.S. financial institution or a financial institution 
that is an entity owned or controlled by a United States person and 
established or maintained outside the United States; and
    (5) The operation of accounts for employees, contractors, and 
grantees located in Iran of the international organizations covered in 
this section. Transactions conducted through these accounts must be 
solely for the employee's, contractor's, or grantee's personal use and 
not for any commercial purposes in or involving Iran. Any funds 
transfers to or from an Iranian bank must be routed through a third-
country bank that is not a United States person or an entity owned or 
controlled by a United States person and established or maintained 
outside the United States.
    (b) * * *
    (2) The reexportation to Iran of any U.S.-origin goods or 
technology listed on the CCL;
    (3) The exportation or reexportation from the United States or by a 
U.S. person, wherever located, to Iran of any services not necessary 
and ordinarily incident to the official business in Iran. Such 
transactions require separate authorization from OFAC; or
    (4) Any transaction by an entity owned or controlled by a United 
States person and established or maintained outside the United States 
otherwise prohibited by Sec.  560.215 if the transaction would be 
prohibited by any other part of this chapter V if engaged in by a U.S. 
person or in the United States.
* * * * *

0
14. Add new paragraph (d) to Sec.  560.553 to read as follows:


Sec.  560.553  Payments from funds originating outside the United 
States authorized.

* * * * *
    (d) Nothing in this section authorizes any transaction by an entity 
owned or controlled by a United States person and established or 
maintained outside

[[Page 75850]]

the United States otherwise prohibited by Sec.  560.215 if the 
transaction would be prohibited by any other part of this chapter V if 
engaged in by a U.S. person or in the United States.
* * * * *

0
15. Add new Sec.  560.555 to read as follows:


Sec.  560.555  Winding-down of transactions prohibited by Sec.  
560.215.

    (a) Except as set forth in paragraphs (b) and (c) of this section, 
all transactions ordinarily incident and necessary to the winding-down 
of transactions prohibited by Sec.  560.215 are authorized from October 
9, 2012, through March 8, 2013, provided that those ordinarily incident 
and necessary transactions do not involve a U.S. person or occur in the 
United States.
    (b) Nothing in this section authorizes any transactions prohibited 
by Sec.  560.205.
    (c) Transactions involving Iranian financial institutions are 
authorized pursuant to paragraph (a) of this section only if the 
property and interests in property of the Iranian financial institution 
are blocked solely pursuant to this part.

0
16. Add new Sec.  560.556 to read as follows:


Sec.  560.556  Foreign entities owned or controlled by U.S. persons 
authorized to engage in transactions that are authorized by general 
license if engaged in by a U.S. person or in the United States.

    (a) Except as set forth in paragraph (b) of this section, an entity 
owned or controlled by a United States person and established or 
maintained outside the United States (a ``U.S.-owned or -controlled 
foreign entity'') is authorized to engage in a transaction otherwise 
prohibited by Sec.  560.215 that would be authorized by a general 
license set forth in or issued pursuant to this part if engaged in by a 
U.S. person or in the United States, provided the U.S.-owned or -
controlled foreign entity is authorized to engage in the transaction 
only to the same extent as the U.S. person is authorized to engage in 
the transaction and subject to all the conditions and requirements set 
forth in the general license for the U.S. person.
    (b) This section does not authorize any transaction by a U.S.-owned 
or -controlled foreign entity otherwise prohibited by Sec.  560.215 if 
the transaction would be prohibited by any other part of this chapter V 
if engaged in by a U.S. person or in the United States.

Subpart G--Civil Penalties

0
17. Amend Sec.  560.701 by adding new paragraph (a)(3) to read as 
follows:


Sec.  560.701  Penalties.

    (a) * * *
    (3) As set forth in section 218 of the Iran Threat Reduction and 
Syria Human Rights Act of 2012 (Pub. L. 112-158), a civil penalty not 
to exceed the amount set forth in section 206 of IEEPA may be imposed 
on a United States person if an entity owned or controlled by the 
United States person and established or maintained outside the United 
States violates, attempts to violate, conspires to violate, or causes a 
violation of the prohibition set forth in Sec.  560.215 or of any 
order, regulation, or license set forth in or issued pursuant to this 
part concerning such prohibition. The penalties set forth in this 
paragraph shall not apply with respect to a transaction described in 
Sec.  560.215 by an entity owned or controlled by the United States 
person and established or maintained outside the United States if the 
United States person divests or terminates its business with the entity 
not later than February 6, 2013, such that the U.S. person no longer 
owns or controls the entity, as defined in Sec.  560.215(b)(1).
* * * * *

    Dated: December 14, 2012.
Adam J. Szubin,
Director, Office of Foreign Assets Control.
[FR Doc. 2012-30680 Filed 12-21-12; 4:15 pm]
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