\[Federal Register: February 6, 2002 (Volume 67, Number 25)\]

\[Rules and Regulations\]

\[Page 5472-5477\]

From the Federal Register Online via GPO Access \[wais.access.gpo.gov\]

\[DOCID:fr06fe02-10\]

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DEPARTMENT OF THE TREASURY

Office of Foreign Assets Control

31 CFR Part 591

Rough Diamonds (Sierra Leone & Liberia) Sanctions Regulations

AGENCY: Office of Foreign Assets Control, Treasury.

ACTION: Interim rule.

\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\--

SUMMARY: The Treasury Department\'s Office of Foreign Assets Control is

issuing regulations to implement Executive Order 13194 of January 18,

2001, as expanded in scope in Executive Order 13213 of May 22, 2001,

prohibiting, with limited exceptions, the importation into the United

States of rough diamonds from Sierra Leone or Liberia.

DATES: Effective date: February 6, 2002.

Comments: Written comments must be received no later than April 8,

2002\.

ADDRESSES: Comments may be submitted either via regular mail to the

attention of Chief, Policy Planning and Program Management Division,

rm. 2176 Main Treasury Annex, 1500 Pennsylvania Ave. NW., Washington,

DC 20220 or via OFAC\'s Web site

([http://www.treas.gov/ofac](http://frwebgate.access.gpo.gov/cgi-bin/leaving.cgi?from=leavingFR.html&log=linklog&to=http://www.treas.gov/ofac)).

FOR FURTHER INFORMATION CONTACT: Chief of Licensing, tel.: 202/622-

2480, or Chief Counsel, tel.: 202/622-2410, Office of Foreign Assets

Control, Department of the Treasury, Washington, DC 20220.

SUPPLEMENTARY INFORMATION:

Electronic Availability

This document is available as an electronic file on The Federal

Bulletin Board the day of publication in the Federal Register. By

modem, dial 202/512-1387 and type \`\`/GO FAC,\'\' or call 202/512-1530
for

disk or paper copies. This file is available for downloading without

charge in ASCII and Adobe Acrobat7 readable (\*.PDF) formats. For

Internet access, the address for use with the World Wide Web (Home

Page), Telnet, or FTP protocol is: fedbbs.access.gpo.gov. This document

and additional information concerning the programs of the Office of

Foreign Assets Control are available for downloading from the Office\'s

Internet Home Page:
[http://www.treas.gov/ofac](http://frwebgate.access.gpo.gov/cgi-bin/leaving.cgi?from=leavingFR.html&log=linklog&to=http://www.treas.gov/ofac),
or in fax form through

the Office\'s 24-hour fax-on-demand service: call 202/622-0077 using a

fax machine, fax modem, or (within the United States) a touch-tone

telephone.

Background

On January 18, 2001, the President issued Executive Order 13194 (66

FR 7389, Jan. 23, 2001), taking into account United Nations Security

Council Resolution 1306 of July 5, 2000. This order declared a national

emergency in response to the actions of the insurgent Revolutionary

United Front in Sierra Leone (\`\`RUF\'\') and prohibits the importation

into the United States of rough diamonds from Sierra Leone that have

not been controlled by the Government of Sierra Leone through its

Certificate of Origin regime. The stated purpose of the order is to

ensure that the direct or indirect importation into the United States

of rough diamonds from Sierra Leone will not contribute financial

support to the RUF, whose illicit trade in rough diamonds fuels the

civil war in Sierra Leone by funding the rebels\' aggressive actions and

procurement of weapons, while at the same time seeking to avoid

undermining the legitimate diamond trade or diminishing confidence in

the integrity of the legitimate diamond industry.

On May 22, 2001, the President issued Executive Order 13213 (66 FR

28829, May 24, 2001), taking into account United Nations Security

Council Resolution 1343 of March 7, 2001. This order expanded the scope

of the national emergency declared in Executive Order 13194 to respond

to, among other things, the Government of Liberia\'s complicity in the

RUF\'s illicit trade in rough diamonds through Liberia. Executive Order

13213 prohibits the direct or indirect importation into the United

States of all rough diamonds from Liberia, whether or not such diamonds

originated in Liberia.

Both Executive orders authorize the Secretary of the Treasury, in

consultation with the Secretary of State, to promulgate rules and

regulations as may be necessary to carry out the purposes of the

orders. To implement the orders, the Treasury Department\'s Office of

Foreign Assets Control, acting under authority delegated by the

Secretary of the Treasury, is promulgating the Rough Diamonds (Sierra

Leone & Liberia) Sanctions Regulations (the \`\`Regulations\'\').

Section 591.201 of subpart B of the Regulations implements section

1 of Executive Order 13194 and section 1 of Executive Order 13213 by

prohibiting (1) subject to limited exceptions, the direct or indirect

importation into the United States of all rough diamonds from Sierra

Leone on or after January 19, 2001, and (2) the direct or indirect

importation into the United States of all

\[\[Page 5473\]\]

rough diamonds from Liberia on or after May 23, 2001. Section 591.202

implements section 2 of Executive Order 13194 by excepting from the

import prohibition those importations of rough diamonds from Sierra

Leone that are controlled through the Certificate of Origin regime of

the Government of Sierra Leone, provided that the diamonds have not

physically entered the territory of Liberia.

Section 591.203 implements section 3 of Executive Order 13194 and

section 2 of Executive Order 13213 by prohibiting any transaction by a

United States person or within the United States that evades or avoids,

or has the purpose of evading or avoiding, or attempts to violate, any

of the prohibitions set forth in the order. The regulation also

prohibits any conspiracy formed to violate any of the prohibitions of

the Executive orders.

Subpart C of part 591 provides definitions of terms used in the

Regulations. Subpart D sets forth interpretive guidance for the

Regulations. For example, Sec. 591.403 makes clear that any transaction

that is ordinarily incident to a licensed transaction and necessary to

give effect to the licensed transaction is also authorized.

Subpart E relates to licenses, authorizations, and statements of

licensing policy. Section 591.501 refers the reader to subpart D of

part 501 of 31 CFR chapter V for procedures relating to general

licenses and the issuance of specific licenses to authorize

transactions otherwise prohibited under part 591 but found to be

consistent with U.S. policy. Subpart F refers the reader to subpart C

of part 501 of 31 CFR chapter V for provisions relating to required

records and reports. Penalties for violations of the Regulations are

described in subpart G of the Regulations.

Request for Comments

Because the promulgation of the Regulations pursuant to Executive

Orders 13194 and 13213 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. However, because of the importance of the issues raised

by the Regulations, this rule is issued in interim form and comments

will be considered in the development of final regulations.

Accordingly, the Department encourages interested persons who wish to

comment to do so at the earliest possible time to permit the fullest

consideration of their views. Comments may address the impact of the

Regulations on the submitter\'s activities, whether of a commercial,

non-commercial, or humanitarian nature, as well as changes that would

improve the clarity and organization of the Regulations.

The period for submission of comments will close April 8, 2002. The

Department will consider all comments received before the close of the

comment period in developing final regulations. Comments received after

the end of the comment period will be considered if possible, but their

consideration cannot be assured. The Department will not accept public

comments accompanied by a request that a part or all of the material be

treated confidentially because of its business proprietary nature or

for any other reason. The Department will return such comments and

materials when submitted by regular mail to the person submitting the

comments and will not consider them in the development of final

regulations. In the interest of accuracy and completeness, the

Department requires comments in written form.

All public comments on these regulations will be a matter of public

record. Copies of public record concerning these regulations will be

made available not sooner than May 7, 2002, and will be obtainable from

OFAC\'s website
([http://www.treas.gov/ofac](http://frwebgate.access.gpo.gov/cgi-bin/leaving.cgi?from=leavingFR.html&log=linklog&to=http://www.treas.gov/ofac)).
If that service is

unavailable, written requests for copies may be sent to: Office of

Foreign Assets Control, U.S. Department of the Treasury, 1500

Pennsylvania Ave. NW., Washington, DC 20220, Attn: Chief, Records

Division.

Because no notice of proposed rulemaking is required for this rule,

the Regulatory Flexibility Act (5 U.S.C. 601-612) does not apply.

Paperwork Reduction Act

The collections of information related to the Regulations are

contained in 31 CFR part 501 (the \`\`Reporting and Procedures

Regulations\'\'). Pursuant to the Paperwork Reduction Act of 1995 (44

U.S.C. 3507), those collections of information have been previously

approved by the Office of Management and Budget under control number

1505-0164. An agency may not conduct or sponsor, and a person is not

required to respond to, a collection of information unless the

collection of information displays a valid control number.

List of Subjects in CFR Part 591

Administrative practice and procedure, Certificate of origin,

Diamonds, Foreign trade, Imports, Liberia, Penalties, Reporting and

recordkeeping requirements, and Sierra Leone.

For the reasons set forth in the preamble, 31 CFR chapter V is

amended by adding part 591 to read as follows:

PART 591\--ROUGH DIAMONDS (SIERRA LEONE & LIBERIA) SANCTIONS

REGULATIONS

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

Sec.

591.101 Relation of this part to other laws and regulations.

Subpart B\--Prohibitions

591.201 Prohibited importation of rough diamonds.

591.202 Permitted importation of rough diamonds.

591.203 Evasions; attempts; conspiracies.

Subpart C\--General Definitions

591.301 Controlled through the Certificate of Origin regime of the

Government of Sierra Leone.

591.302 Effective date.

591.303 Entity.

591.304 Importation into the United States.

591.305 Licenses; general and specific.

591.306 Person.

591.307 Rough diamond.

591.308 Rough diamonds from Sierra Leone or Liberia.

591.309 United States.

591.310 United States person; U.S. person.

Subpart D\--Interpretations

591.401 Reference to amended sections.

591.402 Effect of amendment.

591.403 Transactions incidental to a licensed transaction.

591.404 Transshipment or transit through the United States

prohibited.

591.405 Direct or indirect importation of rough diamonds from

Sierra Leone or Liberia.

591.406 Importation into and release from a bonded warehouse or

foreign trade zone.

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

591.501 General and specific licensing procedures.

591.502 Effect of license or authorization.

591.503 Exclusion from licenses.

Subpart F\--Reports

591.601 Records and reports.

Subpart G\--Penalties

591.701 Penalties.

591.702 Prepenalty notice.

591.703 Response to prepenalty notice; informal settlement.

591.704 Penalty imposition or withdrawal.

591.705 Administrative collection; referral to United States

Department of Justice.

Subpart H\--Procedures

591.801 Procedures.

591.802 Delegation by the Secretary of the Treasury.

\[\[Page 5474\]\]

Subpart I\--Paperwork Reduction Act

591.901 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. 101-410, 104 Stat. 890 (28

U.S.C. 2461 note); E.O. 13194, 66 FR 7389 (Jan. 23, 2001); E.O.

13213, 66 FR 28829 (May 24, 2001).

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

Sec. 591.101 Relation of this part to other laws and regulations.

This part is separate from, and independent of, the other parts of

this chapter, with the exception of part 501 of this chapter, the

recordkeeping and reporting requirements and license application and

other procedures of which apply to this part. Actions taken pursuant to

part 501 of this chapter with respect to the prohibitions contained in

this part are considered actions taken pursuant to this part. Differing

foreign policy and national security circumstances may result in

differing interpretations of similar language among the parts of this

chapter. No license or authorization contained in or issued pursuant to

those other parts authorizes any transaction prohibited by this part.

No license or authorization contained in or issued pursuant to any

other provision of law or regulation authorizes any transaction

prohibited by this part. No license or authorization contained in or

issued pursuant to this part relieves the involved parties from

complying with any other applicable laws or regulations.

Subpart B\--Prohibitions

Sec. 591.201 Prohibited importation of rough diamonds.

Except to the extent provided in Sec. 591.202 or authorized by

other regulations, orders, directives, rulings, instructions, licenses

or otherwise, and notwithstanding the existence of any rights or

obligations conferred or imposed by any international agreement or any

contract entered into or any license or permit granted prior to the

effective date, the direct or indirect importation into the United

States of all rough diamonds from Sierra Leone or Liberia is

prohibited.

Sec. 591.202 Permitted importation of rough diamonds.

The prohibition in Sec. 591.201 of the importation into the United

States of rough diamonds from Sierra Leone does not apply if the

importation is controlled through the Certificate of Origin regime of

the Government of Sierra Leone and the rough diamonds have not

physically entered the territory of Liberia.

Sec. 591.203 Evasions; attempts; conspiracies.

\(a\) Except as otherwise authorized, and notwithstanding the

existence of any rights or obligations conferred or imposed by any

international agreement or any contract entered into or any license or

permit granted prior to the effective date, any transaction by any

United States 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 the

existence of any rights or obligations conferred or imposed by any

international agreement or any contract entered into or any license or

permit granted prior to the effective date, any conspiracy formed for

the purpose of engaging in a transaction prohibited by this part is

prohibited.

Subpart C\--General Definitions

Sec. 591.301 Controlled through the Certificate of Origin regime of

the Government of Sierra Leone.

The term controlled through the Certificate of Origin regime of the

Government of Sierra Leone means accompanied by a Certificate of Origin

or other documentation that demonstrates to the satisfaction of the

United States Customs Service (or analogous officials of a United

States territory or possession with its own customs administration)

that the rough diamonds were legally exported from Sierra Leone with

the approval of the Government of Sierra Leone.

Sec. 591.302 Effective date.

The term effective date refers to the effective date of the

applicable prohibitions and directives contained in this part, which is

12:01 a.m., eastern standard time, January 19, 2001, with respect to

importations of rough diamonds from Sierra Leone and which is 12:01

a.m., eastern daylight time, May 23, 2001, with respect to importations

of rough diamonds from Liberia.

Sec. 591.303 Entity.

The term entity means a partnership, association, trust, joint

venture, corporation, group, subgroup, or other organization.

Sec. 591.304 Importation into the United States.

The term importation into the United States means the bringing of

goods into the United States.

Sec. 591.305 Licenses; general and specific.

\(a\) Except as otherwise specified, the term license means any

license or authorization contained in or issued pursuant to this part.

\(b\) The term general license means any license or authorization the

terms of which are set forth in subpart E of this part.

\(c\) The term specific license means any license or authorization

not set forth in subpart E of this part but issued pursuant to this

part.

Note to Sec. 591.305. See Sec. 501.801 of this chapter on

licensing procedures.

Sec. 591.306 Person.

The term person means an individual or entity.

Sec. 591.307 Rough diamond.

The term rough diamond means all unworked diamonds classifiable in

heading 7102 of the Harmonized Tariff Schedule of the United States.

Sec. 591.308 Rough diamonds from Sierra Leone or Liberia.

The term rough diamonds from Sierra Leone or Liberia means rough

diamonds extracted in Sierra Leone or Liberia and rough diamonds that

have physically entered the territories of Sierra Leone or Liberia,

regardless of where they have been extracted.

Sec. 591.309 United States.

The term United States means the United States, its territories and

possessions, and all areas under the jurisdiction or authority thereof.

Sec. 591.310 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. 591.401 Reference to amended sections.

Except as otherwise specified, reference to any section of this

part or to any regulation, ruling, order, instruction, direction, or

license issued pursuant to this part refers to the same as currently

amended.

\[\[Page 5475\]\]

Sec. 591.402 Effect of amendment.

Unless otherwise specifically provided, any amendment,

modification, or revocation of any provision in or appendix to this

part or chapter or of any order, regulation, ruling, instruction, or

license issued by or under the direction of the Director of the Office

of Foreign Assets Control does not affect any act done or omitted, or

any civil or criminal suit or proceeding commenced or pending prior to

such amendment, modification, or revocation. All penalties,

forfeitures, and liabilities under any such order, regulation, ruling,

instruction, or license continue and may be enforced as if such

amendment, modification, or revocation had not been made.

Sec. 591.403 Transactions incidental to a licensed transaction.

Any transaction ordinarily incident to a licensed transaction and

necessary to give effect thereto is also authorized.

Sec. 591.404 Transshipment or transit through the United States

prohibited.

The prohibitions in Sec. 591.201 apply to the importation into the

United States, for transshipment or transit, of rough diamonds from

Sierra Leone or Liberia that are intended or destined for any country

other than the United States.

Sec. 591.405 Direct or indirect importation of rough diamonds from

Sierra Leone or Liberia.

The prohibitions in Sec. 591.201 apply to the importation of rough

diamonds from Sierra Leone or Liberia whether those rough diamonds are

being imported directly into the United States from Sierra Leone or

Liberia, or indirectly through any other country.

Sec. 591.406 Importation into and release from a bonded warehouse or

foreign trade zone.

The prohibitions in Sec. 591.201 apply to the importation into and

release from a bonded warehouse or foreign trade zone of the United

States. However, Sec. 591.201 does not prohibit the release from a

bonded warehouse or a foreign trade zone of rough diamonds from Sierra

Leone or Liberia that were imported into that bonded warehouse or

foreign trade zone prior to the effective date.

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

Policy

Sec. 591.501 General and specific licensing procedures.

For provisions relating to licensing procedures, see part 501,

subpart D, of this chapter. Licensing actions taken pursuant to part

501 of this chapter with respect to the prohibitions contained in this

part are considered actions taken pursuant to this part.

Sec. 591.502 Effect of license or authorization.

\(a\) No license or other authorization contained in this part, or

otherwise issued by or under the direction of the Director of the

Office of Foreign Assets Control, authorizes or validates any

transaction effected prior to the issuance of the license, unless

specifically provided in such license or authorization.

\(b\) No regulation, ruling, instruction, or license authorizes any

transaction prohibited under this part unless the regulation, ruling,

instruction, or license is issued by the Office of Foreign Assets

Control and specifically refers to this part. No regulation, ruling,

instruction, or license referring to this part shall be deemed to

authorize any transaction prohibited by any provision of this chapter

unless the regulation, ruling, instruction, or license specifically

refers to such provision.

\(c\) Any regulation, ruling, instruction, or license authorizing any

transaction otherwise prohibited under this part has the effect of

removing a prohibition contained in this part from the transaction, but

only to the extent specifically stated by its terms. Unless the

regulation, ruling, instruction, or license otherwise specifies, such

an authorization does not create any right, duty, obligation, claim, or

interest in, or with respect to, any property which would not otherwise

exist under ordinary principles of law.

Sec. 591.503 Exclusion from licenses.

The Director of the Office of Foreign Assets Control reserves the

right to exclude any person, property, or transaction from the

operation of any license or from the privileges conferred by any

license. The Director of the Office of Foreign Assets Control also

reserves the right to restrict the applicability of any license to

particular persons, property, transactions, or classes thereof. Such

actions are binding upon all persons receiving actual or constructive

notice of the exclusions or restrictions.

Subpart F\--Reports

Sec. 591.601 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. 591.701 Penalties.

\(a\) Attention is directed to section 206 of the International

Emergency Economic Powers Act (the \`\`Act\'\') (50 U.S.C. 1705), which
is

applicable to violations of the provisions of any license, ruling,

regulation, order, direction, or instruction issued by or pursuant to

the direction or authorization of the Secretary of the Treasury

pursuant to this part or otherwise under the Act. Section 206 of the

Act, as adjusted by the Federal Civil Penalties Inflation Adjustment

Act of 1990 (Public Law 101-410, as amended, 28 U.S.C. 2461 note),

provides that:

\(1\) A civil penalty not to exceed \$11,000 per violation may be

imposed on any person who violates or attempts to violate any license,

order, or regulation issued under the Act;

\(2\) Whoever willfully violates or willfully attempts to violate any

license, order, or regulation issued under the Act, upon conviction,

shall be fined not more than \$50,000 and, if a natural person, may also

be imprisoned for not more than 10 years; and any officer, director, or

agent of any corporation who knowingly participates in such violation

may be punished by a like fine, imprisonment, or both.

\(b\) The criminal penalties provided in the Act are subject to

increase pursuant to 18 U.S.C. 3571.

\(c\) Attention is directed to section 5 of the United Nations

Participation Act (22 U.S.C. 287c(b)), which provides that any person

who willfully violates or evades or attempts to violate or evade any

order, rule, or regulation issued by the President pursuant to the

authority granted in that section, upon conviction, shall be fined not

more than \$10,000 and, if a natural person, may also be imprisoned for

not more than 10 years; and the officer, director, or agent of any

corporation who knowingly participates in such violation or evasion

shall be punished by a like fine, imprisonment, or both and any

property, funds, securities, papers, or other articles or documents, or

any vessel, together with her tackle, apparel, furniture, and

equipment, or vehicle, or aircraft, concerned in such violation shall

be forfeited to the United States. The criminal penalties provided in

the United Nations Participation Act are subject to increase pursuant

to 18 U.S.C. 3571.

\(d\) 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

\[\[Page 5476\]\]

willfully falsifies, conceals, or covers up by any trick, scheme, or

device a material fact, or makes any materially false, fictitious, or

fraudulent statement or representation or makes or uses any false

writing or document knowing the same to contain any materially false,

fictitious, or fraudulent statement or entry shall be fined under title

18, United States Code, or imprisoned not more than five years, or

both.

\(e\) Violations of this part may also be subject to relevant

provisions of other applicable laws.

Sec. 591.702 Prepenalty notice.

\(a\) When required. If the Director of the Office of Foreign Assets

Control has reasonable cause to believe that there has occurred a

violation of any provision of this part or a violation of the

provisions of any license, ruling, regulation, order, direction, or

instruction issued by or pursuant to the direction or authorization of

the Secretary of the Treasury pursuant to this part or otherwise under

the International Emergency Economic Powers Act, and the Director

determines that further proceedings are warranted, the Director shall

notify the alleged violator of the agency\'s intent to impose a monetary

penalty by issuing a prepenalty notice. The prepenalty notice shall be

in writing. The prepenalty notice may be issued whether or not another

agency has taken any action with respect to the matter.

\(b\) Contents of notice\--(1) Facts of violation. The prepenalty

notice shall describe the violation, specify the laws and regulations

allegedly violated, and state the amount of the proposed monetary

penalty.

\(2\) Right to respond. The prepenalty notice also shall inform the

respondent of respondent\'s right to make a written presentation within

the applicable 30-day period set forth in Sec. 591.703 as to why a

monetary penalty should not be imposed or why, if imposed, the monetary

penalty should be in a lesser amount than proposed.

\(c\) Informal settlement prior to issuance of prepenalty notice. At

any time prior to the issuance of a prepenalty notice, an alleged

violator may request in writing that, for a period not to exceed sixty

\(60\) days, the agency withhold issuance of the prepenalty notice for

the exclusive purpose of effecting settlement of the agency\'s potential

civil monetary penalty claims. In the event the Director grants the

request, under terms and conditions within his discretion, the Office

of Foreign Assets Control will agree to withhold issuance of the

prepenalty notice for a period not to exceed 60 days and will enter

into settlement negotiations of the potential civil monetary penalty

claim.

Sec. 591.703 Response to prepenalty notice; informal settlement.

\(a\) Deadline for response. The respondent may submit a response to

the prepenalty notice within the applicable 30-day period set forth in

this paragraph. The Director may grant, at his discretion, an extension

of time in which to submit a response to the prepenalty notice. The

failure to submit a response within the applicable time period set

forth in this paragraph shall be deemed to be a waiver of the right to

respond.

\(1\) Computation of time for response. A response to the prepenalty

notice must be postmarked or date-stamped by the U.S. Postal Service

(or foreign postal service, if mailed abroad) or courier service

provider (if transmitted to OFAC by courier) on or before the 30th day

after the postmark date on the envelope in which the prepenalty notice

was mailed. If the respondent refused delivery or otherwise avoided

receipt of the prepenalty notice, a response must be postmarked or

date-stamped on or before the 30th day after the date on the stamped

postal receipt maintained at the Office of Foreign Assets Control. If

the prepenalty notice was personally delivered to the respondent by a

non-U.S. Postal Service agent authorized by the Director, a response

must be postmarked or date-stamped on or before the 30th day after the

date of delivery.

\(2\) Extensions of time for response. If a due date falls on a

federal holiday or weekend, that due date is extended to include the

following business day. Any other extensions of time will be granted,

at the Director\'s discretion, only upon the respondent\'s specific

request to the Office of Foreign Assets Control.

\(b\) Form and method of response. The response must be submitted in

writing and may be handwritten or typed. The response need not be in

any particular form. A copy of the written response may be sent by

facsimile, but the original must also be sent to the Office of Foreign

Assets Control Civil Penalties Division by mail or courier and must be

postmarked or date-stamped, in accordance with paragraph (a) of this

section.

\(c\) Contents of response. A written response must contain

information sufficient to indicate that it is in response to the

prepenalty notice.

\(1\) A written response must include the respondent\'s full name,

address, telephone number, and facsimile number, if available, or those

of the representative of the respondent.

\(2\) A written response should either admit or deny each specific

violation alleged in the prepenalty notice and also state if the

respondent has no knowledge of a particular violation. If the written

response fails to address any specific violation alleged in the

prepenalty notice, that alleged violation shall be deemed to be

admitted.

\(3\) A written response should include any information in defense,

evidence in support of an asserted defense, or other factors that the

respondent requests the Office of Foreign Assets Control to consider.

Any defense or explanation previously made to the Office of Foreign

Assets Control or any other agency must be repeated in the written

response. Any defense not raised in the written response will be

considered waived. The written response also should set forth the

reasons why the respondent believes the penalty should not be imposed

or why, if imposed, it should be in a lesser amount than proposed.

\(d\) Default. If the respondent elects not to submit a written

response within the time limit set forth in paragraph (a) of this

section, the Office of Foreign Assets Control will conclude that the

respondent has decided not to respond to the prepenalty notice. The

agency generally will then issue a written penalty notice imposing the

penalty proposed in the prepenalty notice.

\(e\) Informal settlement. In addition to or as an alternative to a

written response to a prepenalty notice, the respondent or respondent\'s

representative may contact the Office of Foreign Assets Control as

advised in the prepenalty notice to propose the settlement of

allegations contained in the prepenalty notice and related matters.

However, the requirements set forth in paragraph (f) of this section as

to oral communication by the representative must first be fulfilled. In

the event of settlement at the prepenalty stage, the claim proposed in

the prepenalty notice will be withdrawn, the respondent will not be

required to take a written position on allegations contained in the

prepenalty notice, and the Office of Foreign Assets Control will make

no final determination as to whether a violation occurred. The amount

accepted in settlement of allegations in a prepenalty notice may vary

from the civil penalty that might finally be imposed in the event of a

formal determination of violation. In the event no settlement is

reached, the time limit specified in paragraph (a) of this section for

written response to the prepenalty notice will remain in effect unless

additional time

\[\[Page 5477\]\]

is granted by the Office of Foreign Assets Control.

\(f\) Representation. A representative of the respondent may act on

behalf of the respondent, but any oral communication with the Office of

Foreign Assets Control prior to a written submission regarding the

specific allegations contained in the prepenalty notice must be

preceded by a written letter of representation, unless the prepenalty

notice was served upon the respondent in care of the representative.

Sec. 591.704 Penalty imposition or withdrawal.

\(a\) No violation. If, after considering any response to the

prepenalty notice and any relevant facts, the Director of the Office of

Foreign Assets Control determines that there was no violation by the

respondent named in the prepenalty notice, the Director shall notify

the respondent in writing of that determination and of the cancellation

of the proposed monetary penalty.

\(b\) Violation. (1) If, after considering any written response to

the prepenalty notice, or default in the submission of a written

response, and any relevant facts, the Director of the Office of Foreign

Assets Control determines that there was a violation by the respondent

named in the prepenalty notice, the Director is authorized to issue a

written penalty notice to the respondent of the determination of

violation and the imposition of the monetary penalty.

\(2\) The penalty notice shall inform the respondent that payment or

arrangement for installment payment of the assessed penalty must be

made within 30 days of the date of mailing of the penalty notice by the

Office of Foreign Assets Control.

\(3\) The penalty notice shall inform the respondent of the

requirement to furnish the respondent\'s taxpayer identification number

pursuant to 31 U.S.C. 7701 and that such number will be used for

purposes of collecting and reporting on any delinquent penalty amount.

\(4\) The issuance of the penalty notice finding a violation and

imposing a monetary penalty shall constitute final agency action. The

respondent has the right to seek judicial review of that final agency

action in federal district court.

Sec. 591.705 Administrative collection; referral to United States

Department of Justice.

In the event that the respondent does not pay the penalty imposed

pursuant to this part or make payment arrangements acceptable to the

Director of the Office of Foreign Assets Control within 30 days of the

date of mailing of the penalty notice, the matter may be referred for

administrative collection measures by the Department of the Treasury or

to the United States Department of Justice for appropriate action to

recover the penalty in a civil suit in federal district court.

Subpart H\--Procedures

Sec. 591.801 Procedures.

For license application procedures and procedures relating to

amendments, modifications, or revocations of licenses; administrative

decisions; rulemaking; and requests for documents pursuant to the

Freedom of Information and Privacy Acts (5 U.S.C. 552 and 552a), see

part 501, subpart D, of this chapter.

Sec. 591.802 Delegation by the Secretary of the Treasury.

Any action that the Secretary of the Treasury is authorized to take

pursuant to Executive Order 13194 of January 18, 2001 (66 FR 7389,

January 23, 2001), Executive Order 13213 of May 22, 2001 (66 FR 28829,

May 24, 2001), and any further Executive orders relating to the

national emergency declared in Executive Order 13194 may be taken by

the Director of the Office of Foreign Assets Control or by any other

person to whom the Secretary of the Treasury has delegated authority so

to act.

Subpart I\--Paperwork Reduction Act

Sec. 591.901 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 Sec. 501.901 of this

chapter. An agency may not conduct or sponsor, and a person is not

required to respond to, a collection of information unless it displays

a valid control number assigned by OMB.

Dated: December 14, 2001.

R. Richard Newcomb,

Director, Office of Foreign Assets Control.

Approved: January 30, 2002.

Jimmy Gurule,

Under Secretary (Enforcement), Department of the Treasury.

\[FR Doc. **02**-**2763** **Filed** 2-1-**02**; 10:26 am\]

BILLING CODE 4810-25-P