[Federal Register Volume 75, Number 234 (Tuesday, December 7, 2010)]
[Rules and Regulations]
[Pages 75904-75911]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-30520]


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DEPARTMENT OF THE TREASURY

Office of Foreign Assets Control

31 CFR Parts 594, 595, and 597


Global Terrorism Sanctions Regulations; Terrorism Sanctions 
Regulations; Foreign Terrorist Organizations Sanctions Regulations

AGENCY: Office of Foreign Assets Control, Treasury.

ACTION: Final rule.

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SUMMARY: The Office of Foreign Assets Control (``OFAC'') of the U.S. 
Department of the Treasury is amending the Global Terrorism Sanctions 
Regulations (``GTSR'') and the Terrorism Sanctions Regulations 
(``TSR'') to expand the scope of authorizations in each of those 
programs for the provision of certain legal services. In addition, OFAC 
is adding new general licenses under the GTSR, the TSR, and the Foreign 
Terrorist Organizations Sanctions Regulations to authorize U.S. persons 
to receive specified types of payment for certain authorized legal 
services.

DATES: Effective Date: December 7, 2010.

FOR FURTHER INFORMATION CONTACT: Assistant Director for Compliance, 
Outreach & Implementation, tel.: 202/622-2490, Assistant Director for

[[Page 75905]]

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

SUPPLEMENTARY INFORMATION: 

Electronic and Facsimile Availability

    This document and additional information concerning 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

    OFAC administers three sanctions programs with respect to 
terrorists and terrorist organizations. The Terrorism Sanctions 
Regulations, 31 CFR part 595 (``TSR''), implement Executive Order 12947 
of January 23, 1995, in which the President declared a national 
emergency with respect to ``grave acts of violence committed by foreign 
terrorists that disrupt the Middle East peace process.'' The Global 
Terrorism Sanctions Regulations, 31 CFR part 594 (``GTSR''), implement 
Executive Order 13224 of September 23, 2001, in which the President 
declared an emergency more generally with respect to ``grave acts of 
terrorism and threats of terrorism committed by foreign terrorists.'' 
The Foreign Terrorist Organizations Sanctions Regulations, 31 CFR part 
597 (``FTOSR''), implement provisions of the Antiterrorism and 
Effective Death Penalty Act of 1996.
    OFAC is revising sections in the GTSR and the TSR that authorize 
the provision of certain legal services to expand the scope of 
authorized services. In addition, OFAC is adding a new section to the 
GTSR, TSR, and FTOSR authorizing U.S. persons to receive specified 
types of payment for certain authorized legal services. Section 594.506 
of the GTSR and section 595.506 of the TSR authorize U.S. persons to 
provide certain authorized legal services to or on behalf of persons 
whose property and interests in property are blocked under those 
regulations, provided that any payment of professional fees and 
reimbursement of incurred expenses must be specifically licensed. OFAC 
is expanding the scope of these general licenses by adding to the 
authorized legal services the initiation and conduct of legal, 
arbitration, or administrative proceedings before any U.S. federal, 
state, or local court or agency for or on behalf of persons whose 
property and interests in property are blocked under the GTSR or TSR.
    The FTOSR prohibit financial transactions involving assets, within 
the possession or control of U.S. financial institutions, in which a 
designated foreign terrorist organization or its agent has an interest. 
While the FTOSR, therefore, do not prohibit U.S. persons from providing 
legal services to designated foreign terrorist organizations or agents 
thereof, any payment for such services through a U.S. financial 
institution is prohibited. Section 597.505 of the FTOSR provides that 
OFAC may issue specific licenses, on a case-by-case basis, authorizing 
the receipt of payment of professional fees and reimbursement of 
incurred expenses through a U.S. financial institution for certain 
legal services provided by U.S. persons to designated foreign terrorist 
organizations or agents thereof.
    In specific licenses it has issued for payment of U.S. persons for 
professional services rendered and reimbursement of expenses incurred 
in connection with authorized legal services provided on behalf of 
blocked persons, OFAC has authorized several payment mechanisms. First, 
OFAC has issued specific licenses authorizing payment of fees and 
reimbursement of expenses where the funds used for such payment or 
reimbursement originate outside the United States and do not come from 
a U.S. person or any person, other than the person on whose behalf the 
authorized legal services are provided, whose property and interests in 
property are blocked. Second, OFAC has issued specific licenses 
authorizing the establishment of legal defense funds that collect 
donations from persons who are neither designated nor blocked to pay 
legal fees and reimburse expenses incurred in connection with 
authorized legal services rendered on behalf of blocked persons. With 
this rule, OFAC incorporates these mechanisms for payment into general 
licenses by adding new section 594.517 to the GTSR, new section 595.515 
to the TSR, and new section 597.513 to the FTOSR. These new sections 
authorize payments from funds originating outside the United States in 
connection with certain authorized legal services rendered to or on 
behalf of designated persons, as well as the formation of legal defense 
funds to gather donations and dispense funds in connection with 
payments for such legal services.
    In addition to the payment mechanisms discussed above, OFAC may 
issue specific licenses authorizing the release of a limited amount of 
blocked funds for the payment of legal fees and expenses incurred in 
seeking administrative reconsideration or judicial review of the 
designation of a U.S. person or the blocking of the property and 
interests in property of a U.S. person where alternative funding 
sources are not available. For more information on this third mechanism 
for payment, see OFAC's Guidance on the Release of Limited Amounts of 
Blocked Funds for Payment of Legal Fees and Costs Incurred in 
Challenging the Blocking of U.S. Persons in Administrative or Civil 
Proceedings, which is available at: http://www.treas.gov/resource-center/sanctions/Documents/legal_fee_guide.pdf.

Public Participation

    Because these amendments to 31 CFR parts 594, 595, and 597 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 31 CFR parts 594, 595, 
and 597 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

31 CFR Part 594

    Administrative practice and procedure, Banks, Banking, Currency, 
Foreign investments in United States, Penalties, Reporting and 
recordkeeping requirements, Securities, Terrorism.

31 CFR Part 595

    Administrative practice and procedure, Banks, Banking, Currency, 
Foreign investments in United States, Penalties, Reporting and 
recordkeeping requirements, Securities, Terrorism.

[[Page 75906]]

31 CFR Part 597

    Administrative practice and procedure, Banks, Banking, Currency, 
Foreign investments in United States, Penalties, Reporting and 
recordkeeping requirements, Securities, Terrorism.

0
For the reasons set forth in the preamble, the Office of Foreign Assets 
Control amends 31 CFR parts 594, 595, and 597 as follows:

PART 594--GLOBAL TERRORISM SANCTIONS REGULATIONS

0
1. The authority citation for part 594 continues to read as follows:

    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); Pub. L. 110-96, 121 Stat. 1011; E.O. 13224, 66 FR 
49079, 3 CFR, 2001 Comp., p. 786; E.O. 13268, 67 FR 44751, 3 CFR, 
2002 Comp., p. 240; E.O. 13284, 68 FR 4075, 3 CFR, 2003 Comp., p. 
161.

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

0
2. Amend Sec.  594.506 by revising the introductory text of paragraph 
(a), redesignating existing paragraphs (b) and (c) as paragraphs (c) 
and (d), respectively, and adding new paragraph (b) to read as follows:


Sec.  594.506  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.  594.201(a) is authorized, provided that all receipts 
of payment of professional fees and reimbursement of incurred expenses 
must be specifically licensed or otherwise authorized pursuant to this 
part:
* * * * *
    (b) The provision of legal services not otherwise authorized by 
paragraph (a) of this section to or on behalf of persons whose property 
and interests in property are blocked pursuant to Sec.  594.201(a) in 
connection with the initiation and conduct of legal, arbitration, or 
administrative proceedings before any U.S. federal, state, or local 
court or agency is authorized, provided that all receipts of payment of 
professional fees and reimbursement of incurred expenses must be 
specifically licensed.
* * * * *

0
3. Add new Sec.  594.517 to subpart E to read as follows:


Sec.  594.517  Payments from funds originating outside the United 
States and the formation of legal defense funds authorized.

    (a) Payments from funds originating outside the United States. 
Effective December 7, 2010, receipts of payment of professional fees 
and reimbursement of incurred expenses for the provision of legal 
services authorized pursuant to Sec.  594.506(a) are authorized from 
funds originating outside the United States, provided that:
    (1) Prior to receiving payment for legal services authorized 
pursuant to Sec.  594.506(a) rendered to persons whose property and 
interests in property are blocked pursuant to Sec.  594.201(a), the 
U.S. person that is an attorney, law firm, or legal services 
organization provides to the Office of Foreign Assets Control a copy of 
a letter of engagement or a letter of intent to engage specifying the 
services to be performed and signed by the individual to whom such 
services are to be provided or, where services are to be provided to an 
entity, by a legal representative of the entity. The copy of a letter 
of engagement or a letter of intent to engage, accompanied by 
correspondence referencing this paragraph (a), is to be mailed to: 
Licensing Division, Office of Foreign Assets Control, U.S. Department 
of the Treasury, 1500 Pennsylvania Avenue, NW., Annex, Washington, DC 
20220;
    (2) The funds received by U.S. persons as payment of professional 
fees and reimbursement of incurred expenses for the provision of legal 
services authorized pursuant to Sec.  594.506(a) must not originate 
from:
    (i) A source within the United States;
    (ii) Any source, wherever located, within the possession or control 
of a U.S. person; or
    (iii) Any individual or entity, other than the person on whose 
behalf the legal services authorized pursuant to Sec.  594.506(a) are 
to be provided, whose property and interests in property are blocked 
pursuant to any part of this chapter or any Executive order;

    Note to paragraph (a)(2) of Sec.  594.517:  This paragraph 
authorizes the blocked person on whose behalf the legal services 
authorized pursuant to Sec.  594.506(a) are to be provided to make 
payments for authorized legal services using funds originating 
outside the United States that were not previously blocked. Nothing 
in this paragraph authorizes payments for legal services using funds 
in which any other person whose property and interests in property 
are blocked pursuant to Sec.  594.201(a) or any other part of this 
chapter holds an interest.

    (3) Reports. (i) U.S. persons who receive payments in connection 
with legal services authorized pursuant to Sec.  594.506(a) must submit 
quarterly reports no later than 30 days following the end of the 
calendar quarter during which the payments were received providing 
information on the funds received. Such reports shall specify:
    (A) The individual or entity from whom the funds originated and the 
amount of funds received; and
    (B) If applicable:
    (1) The names of any individuals or entities providing related 
services to the U.S. person receiving payment in connection with 
authorized legal services, such as private investigators or expert 
witnesses;
    (2) A general description of the services provided; and
    (3) The amount of funds paid in connection with such services.
    (ii) In the event that no transactions occur or no funds are 
received during the reporting period, a statement is to be filed to 
that effect.
    (iii) Reports, which must reference this paragraph (a), are to be 
mailed to: Licensing Division, Office of Foreign Assets Control, U.S. 
Department of the Treasury, 1500 Pennsylvania Avenue, NW., Annex, 
Washington, DC 20220; and

    Note to paragraph (a)(3) of Sec.  594.517:  U.S. persons who 
receive payments in connection with legal services authorized 
pursuant to Sec.  594.506(a) do not need to obtain specific 
authorization to contract for related services that are ordinarily 
incident to the provision of those legal services, such as those 
provided by private investigators or expert witnesses, or to pay for 
such services. Additionally, U.S. persons do not need to obtain 
specific authorization to provide related services that are 
ordinarily incident to the provision of legal services authorized 
pursuant to Sec.  594.506(a).

    (4) Nothing in this paragraph (a) authorizes the receipt of payment 
of professional fees or reimbursement of incurred expenses for the 
provision of legal services authorized pursuant to Sec.  594.506(b).

    Note 1 to paragraph (a) of Sec.  594.517:  Any payment 
authorized in or pursuant to this paragraph that is routed through 
the U.S. financial system should reference this paragraph (a) to 
avoid the blocking of the transfer.


    Note 2 to paragraph (a) of Sec.  594.517:  Nothing in this 
paragraph authorizes the transfer of any blocked property, the 
debiting of any blocked account, the entry of any judgment or order 
that effects a transfer of blocked property, or the execution of any 
judgment against property blocked pursuant to any Executive order or 
this Chapter. U.S. persons seeking administrative reconsideration or 
judicial review of their designation or the blocking of their 
property and interests in property may apply for a specific license 
from the Office of Foreign Assets Control to authorize the release 
of a

[[Page 75907]]

limited amount of blocked funds for the payment of legal fees where 
alternative funding sources are not available. For more information, 
see OFAC's Guidance on the Release of Limited Amounts of Blocked 
Funds for Payment of Legal Fees and Costs Incurred in Challenging 
the Blocking of U.S. Persons in Administrative or Civil Proceedings, 
which is available at: http://www.treas.gov/resource-center/sanctions/Documents/legal_fee_guide.pdf.

    (b) Legal defense funds. Effective December 7, 2010, U.S. persons 
that are attorneys, law firms, or legal services organizations are 
authorized to form legal defense funds from which payments of 
professional fees and reimbursement for expenses incurred in connection 
with the provision of legal services authorized pursuant to Sec.  
594.506(a) may be debited provided that:
    (1) The legal defense fund must be held in a savings or checking 
account at a financial institution located in the United States;
    (2) Prior to debiting the legal defense fund, the U.S. person 
responsible for establishing the legal defense fund must submit the 
following information to the Office of Foreign Assets Control: A copy 
of a letter of engagement or a letter of intent to engage specifying 
the services to be performed and signed by the individual to whom such 
services are to be provided or, where services are to be provided to an 
entity, by a legal representative of the entity; the name of the 
individual or entity responsible for establishing the legal defense 
fund; the name of the financial institution at which the account for 
the legal defense fund will be held; a point of contact at the 
financial institution holding the account for the legal defense fund; 
and the account name and account number for the legal defense fund. The 
foregoing information must be accompanied by correspondence referencing 
this paragraph (b) and is to be mailed to: Licensing Division, Office 
of Foreign Assets Control, U.S. Department of the Treasury, 1500 
Pennsylvania Avenue, NW., Annex, Washington, DC 20220;
    (3) The legal defense fund may not receive funds from a person 
whose property and interests in property are blocked pursuant to Sec.  
594.201(a) or any other part of this chapter;
    (4) The U.S. person responsible for establishing the legal defense 
fund must notify the financial institution at which the account for the 
legal defense fund is held that the account may only be debited to make 
payments of professional fees and reimburse expenses incurred in 
connection with the provision of legal services authorized pursuant to 
Sec.  594.506(a);
    (5) Reports. (i) U.S. persons responsible for establishing legal 
defense funds from which payments of professional fees and 
reimbursement for expenses incurred in connection with the provision of 
legal services authorized pursuant to Sec.  594.506(a) may be debited 
must submit quarterly reports no later than 30 days following the end 
of the calendar quarter during which the funds were deposited with or 
debited from the account of the legal defense fund providing 
information on the funds received by the legal defense fund and debits 
made to the legal defense fund during the reporting period. Such 
reports shall specify:
    (A) The individual or entity from whom the funds originated and the 
amount of funds received; and
    (B) Any individual or entity to whom any payments were made, 
including, if applicable:
    (1) The names of any individuals or entities providing related 
services to the U.S. person receiving payment in connection with 
authorized legal services, such as private investigators or expert 
witnesses;
    (2) A general description of the services provided; and
    (3) The amount of funds paid in connection with such services.
    (ii) In the event that no transactions occur or no funds are 
received during the reporting period, a statement is to be filed to 
that effect.
    (iii) Reports, which must reference this paragraph (b), are to be 
mailed to: Licensing Division, Office of Foreign Assets Control, U.S. 
Department of the Treasury, 1500 Pennsylvania Avenue, NW., Annex, 
Washington, DC 20220; and

    Note to paragraph (b)(5) of Sec.  594.517:  U.S. persons who 
receive payments in connection with legal services authorized 
pursuant to Sec.  594.506(a) do not need to obtain specific 
authorization to contract for related services that are ordinarily 
incident to the provision of those legal services, such as those 
provided by private investigators or expert witnesses, or to pay for 
such services. Additionally, U.S. persons do not need to obtain 
specific authorization to provide related services that are 
ordinarily incident to the provision of legal services authorized 
pursuant to Sec.  594.506(a).

    (6) Nothing in this paragraph (b) authorizes the formation or 
debiting of legal defense funds in connection with the provision of 
legal services authorized pursuant to Sec.  594.506(b).

    Note 1 to paragraph (b) of Sec.  594.517:  Any payment 
authorized in or pursuant to this paragraph that is routed through 
the U.S. financial system should reference this paragraph (b) to 
avoid the blocking of the transfer.


    Note 2 to paragraph (b) of Sec.  594.517:  Any funds remaining 
in a legal defense fund account after all payments of professional 
fees and reimbursement of incurred expenses authorized pursuant to 
this paragraph have been made or upon termination of the legal 
services for which payment is authorized pursuant to this paragraph 
are property in which the person to or on whose behalf the legal 
services were rendered has an interest and is subject to the 
prohibitions of this part. Persons in the possession or control of 
such remaining funds may apply for the unblocking of the funds by 
following the procedures set forth at Sec.  501.801 of this chapter.

PART 595--TERRORISM SANCTIONS REGULATIONS

0
4. The authority citation for part 595 continues to read as follows:

    Authority:  3 U.S.C. 301; 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; E.O. 12947, 60 FR 5079, 3 CFR, 1995 
Comp., p. 319; E.O. 13099, 63 FR 45167, 3 CFR, 1998 Comp., p. 208.

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

0
5. Amend Sec.  595.506 by revising the introductory text of paragraph 
(a), redesignating existing paragraphs (b) and (c) as paragraphs (c) 
and (d), respectively, and adding new paragraph (b) to read as follows:


Sec.  595.506  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.  595.201(a) is authorized, provided that all receipts 
of payment of professional fees and reimbursement of incurred expenses 
must be specifically licensed or otherwise authorized pursuant to this 
part:
* * * * *
    (b) The provision of legal services not otherwise authorized by 
paragraph (a) of this section to or on behalf of persons whose property 
and interests in property are blocked pursuant to Sec.  595.201(a) in 
connection with the initiation and conduct of legal, arbitration, or 
administrative proceedings before any U.S. federal, state, or local 
court or agency is authorized, provided that all receipts of payment of 
professional fees and reimbursement of incurred expenses must be 
specifically licensed.

0
6. Add new Sec.  595.515 to subpart E to read as follows:

[[Page 75908]]

Sec.  595.515  Payments from funds originating outside the United 
States and the formation of legal defense funds authorized.

    (a) Payments from funds originating outside the United States. 
Effective December 7, 2010, receipts of payment of professional fees 
and reimbursement of incurred expenses for the provision of legal 
services authorized pursuant to Sec.  595.506(a) are authorized from 
funds originating outside the United States, provided that:
    (1) Prior to receiving payment for legal services authorized 
pursuant to Sec.  595.506(a) rendered to persons whose property and 
interests in property are blocked pursuant to Sec.  595.201(a), the 
U.S. person that is an attorney, law firm, or legal services 
organization provides to the Office of Foreign Assets Control a copy of 
a letter of engagement or a letter of intent to engage specifying the 
services to be performed and signed by the individual to whom such 
services are to be provided or, where services are to be provided to an 
entity, by a legal representative of the entity. The copy of a letter 
of engagement or a letter of intent to engage, accompanied by 
correspondence referencing this paragraph (a), is to be mailed to: 
Licensing Division, Office of Foreign Assets Control, U.S. Department 
of the Treasury, 1500 Pennsylvania Avenue, NW., Annex, Washington, DC 
20220;
    (2) The funds received by U.S. persons as payment of professional 
fees and reimbursement of incurred expenses for the provision of legal 
services authorized pursuant to Sec.  595.506(a) must not originate 
from:
    (i) A source within the United States;
    (ii) Any source, wherever located, within the possession or control 
of a U.S. person; or
    (iii) Any individual or entity, other than the person on whose 
behalf the legal services authorized pursuant to Sec.  595.506(a) are 
to be provided, whose property and interests in property are blocked 
pursuant to any part of this chapter or any Executive order;

    Note to paragraph (a)(2) of Sec.  595.515:  This paragraph 
authorizes the blocked person on whose behalf the legal services 
authorized pursuant to Sec.  595.506(a) are to be provided to make 
payments for authorized legal services using funds originating 
outside the United States that were not previously blocked. Nothing 
in this paragraph authorizes payments for legal services using funds 
in which any other person whose property and interests in property 
are blocked pursuant to Sec.  595.201(a) or any other part of this 
chapter holds an interest.

    (3) Reports. (i) U.S. persons who receive payments in connection 
with legal services authorized pursuant to Sec.  595.506(a) must submit 
quarterly reports no later than 30 days following the end of the 
calendar quarter during which the payments were received providing 
information on the funds received. Such reports shall specify:
    (A) The individual or entity from whom the funds originated and the 
amount of funds received; and
    (B) If applicable:
    (1) The names of any individuals or entities providing related 
services to the U.S. person receiving payment in connection with 
authorized legal services, such as private investigators or expert 
witnesses;
    (2) A general description of the services provided; and
    (3) The amount of funds paid in connection with such services.
    (ii) In the event that no transactions occur or no funds are 
received during the reporting period, a statement is to be filed to 
that effect.
    (iii) Reports, which must reference this paragraph (a), are to be 
mailed to: Licensing Division, Office of Foreign Assets Control, U.S. 
Department of the Treasury, 1500 Pennsylvania Avenue, NW., Annex, 
Washington, DC 20220; and

    Note to paragraph (a)(3) of Sec.  595.515:  U.S. persons who 
receive payments in connection with legal services authorized 
pursuant to Sec.  595.506(a) do not need to obtain specific 
authorization to contract for related services that are ordinarily 
incident to the provision of those legal services, such as those 
provided by private investigators or expert witnesses, or to pay for 
such services. Additionally, U.S. persons do not need to obtain 
specific authorization to provide related services that are 
ordinarily incident to the provision of legal services authorized 
pursuant to Sec.  595.506(a).

    (4) Nothing in this paragraph (a) authorizes the receipt of payment 
of professional fees or reimbursement of incurred expenses for the 
provision of legal services authorized pursuant to Sec.  595.506(b).

    Note 1 to paragraph (a) of Sec.  595.515:  Any payment 
authorized in or pursuant to this paragraph that is routed through 
the U.S. financial system should reference this paragraph Sec.  
595.515(a) to avoid the blocking of the transfer.


    Note 2 to paragraph (a) of Sec.  595.515:  Nothing in this 
paragraph authorizes the transfer of any blocked property, the 
debiting of any blocked account, the entry of any judgment or order 
that effects a transfer of blocked property, or the execution of any 
judgment against property blocked pursuant to any Executive order or 
this Chapter. U.S. persons seeking administrative reconsideration or 
judicial review of their designation or the blocking of their 
property and interests in property may apply for a specific license 
from the Office of Foreign Assets Control to authorize the release 
of a limited amount of blocked funds for the payment of legal fees 
where alternative funding sources are not available. For more 
information, see OFAC's Guidance on the Release of Limited Amounts 
of Blocked Funds for Payment of Legal Fees and Costs Incurred in 
Challenging the Blocking of U.S. Persons in Administrative or Civil 
Proceedings, which is available at: http://www.treas.gov/resource-center/sanctions/Documents/legal_fee_guide.pdf.

    (b) Legal defense funds. Effective December 7, 2010, U.S. persons 
that are attorneys, law firms, or legal services organizations are 
authorized to form legal defense funds from which payments of 
professional fees and reimbursement for expenses incurred in connection 
with the provision of legal services authorized pursuant to Sec.  
595.506(a) may be debited provided that:
    (1) The legal defense fund must be held in a savings or checking 
account at a financial institution located in the United States;
    (2) Prior to debiting the legal defense fund, the U.S. person 
responsible for establishing the legal defense fund must submit the 
following information to the Office of Foreign Assets Control: a copy 
of a letter of engagement or a letter of intent to engage specifying 
the services to be performed and signed by the individual to whom such 
services are to be provided or, where services are to be provided to an 
entity, by a legal representative of the entity; the name of the 
individual or entity responsible for establishing the legal defense 
fund; the name of the financial institution at which the account for 
the legal defense fund will be held; a point of contact at the 
financial institution holding the account for the legal defense fund; 
and the account name and account number for the legal defense fund. The 
foregoing information must be accompanied by correspondence referencing 
this paragraph Sec.  595.515(b) and is to be mailed to: Licensing 
Division, Office of Foreign Assets Control, U.S. Department of the 
Treasury, 1500 Pennsylvania Avenue, NW., Annex, Washington, DC 20220;
    (3) The legal defense fund may not receive funds from a person 
whose property and interests in property are blocked pursuant to Sec.  
595.201(a) or any other part of this chapter;
    (4) The U.S. person responsible for establishing the legal defense 
fund must notify the financial institution at which the account for the 
legal defense fund is held that the account may only be debited to make 
payments of professional fees and reimburse expenses incurred in 
connection with the provision of legal services authorized pursuant to 
Sec.  595.506(a);

[[Page 75909]]

    (5) Reports. (i) U.S. persons responsible for establishing legal 
defense funds from which payments of professional fees and 
reimbursement for expenses incurred in connection with the provision of 
legal services authorized pursuant to Sec.  595.506(a) may be debited 
must submit quarterly reports no later than 30 days following the end 
of the calendar quarter during which the funds were deposited with or 
debited from the account of the legal defense fund providing 
information on the funds received by the legal defense fund and debits 
made to the legal defense fund during the reporting period. Such 
reports shall specify:
    (A) The individual or entity from whom the funds originated and the 
amount of funds received; and
    (B) Any individual or entity to whom any payments were made, 
including, if applicable:
    (1) The names of any individuals or entities providing related 
services to the U.S. person receiving payment in connection with 
authorized legal services, such as private investigators or expert 
witnesses;
    (2) A general description of the services provided; and
    (3) The amount of funds paid in connection with such services.
    (ii) In the event that no transactions occur or no funds are 
received during the reporting period, a statement is to be filed to 
that effect.
    (iii) Reports, which must reference this paragraph (b), are to be 
mailed to: Licensing Division, Office of Foreign Assets Control, U.S. 
Department of the Treasury, 1500 Pennsylvania Avenue, NW., Annex, 
Washington, DC 20220; and

    Note to paragraph (b)(5) of Sec.  595.515: U.S. persons who 
receive payments in connection with legal services authorized 
pursuant to Sec.  595.506(a) do not need to obtain specific 
authorization to contract for related services that are ordinarily 
incident to the provision of those legal services, such as those 
provided by private investigators or expert witnesses, or to pay for 
such services. Additionally, U.S. persons do not need to obtain 
specific authorization to provide related services that are 
ordinarily incident to the provision of legal services authorized 
pursuant to Sec.  595.506(a).

    (6) Nothing in this paragraph (b) authorizes the formation or 
debiting of legal defense funds in connection with the provision of 
legal services authorized pursuant to Sec.  595.506(b).

    Note 1 to paragraph (b) of Sec.  595.515: Any payment authorized 
in or pursuant to this paragraph that is routed through the U.S. 
financial system should reference this paragraph Sec.  595.515(b) to 
avoid the blocking of the transfer.


    Note 2 to paragraph (b) of Sec.  595.515: Any funds remaining in 
a legal defense fund account after all payments of professional fees 
and reimbursement of incurred expenses authorized pursuant to this 
paragraph have been made or upon termination of the legal services 
for which payment is authorized pursuant to this paragraph are 
property in which the person to or on whose behalf the legal 
services were rendered has an interest and is subject to the 
prohibitions of this part. Persons in the possession or control of 
such remaining funds may apply for the unblocking of the funds by 
following the procedures set forth at Sec.  501.801 of this chapter.

PART 597--FOREIGN TERRORIST ORGANIZATIONS SANCTIONS REGULATIONS

0
7. The authority citation for part 597 continues to read as follows:

    Authority: 31 U.S.C. 321(b); Pub. L. 101-410, 104 Stat. 890 (28 
U.S.C. 2461 note); Pub. L. 104-132, 110 Stat. 1214, 1248-53 (8 
U.S.C. 1189, 18 U.S.C. 2339B).

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

0
8. Amend Sec.  597.505 by revising the introductory text and adding a 
new note to the section to read as follows:


Sec.  597.505  Payment for certain legal services.

    Except as otherwise authorized, specific licenses may be issued, on 
a case-by-case basis, authorizing receipt of payment of professional 
fees and reimbursement of incurred expenses through a U.S. financial 
institution for the following legal services by U.S. persons:
* * * * *

    Note to Sec.  597.505: See Sec.  597.513 of this part for 
authorized mechanisms for payment through a U.S. financial 
institution of professional fees and reimbursement of incurred 
expenses for legal services specified in this section provided by a 
U.S. person to or on behalf of a foreign terrorist organization or 
an agent thereof.


0
9. Add new Sec.  597.513 to subpart E to read as follows:


Sec.  597.513  Payments from funds originating outside the United 
States and the formation of legal defense funds authorized.

    (a) Payments from funds originating outside the United States. 
Effective December 7, 2010, receipts of payment through a U.S. 
financial institution of professional fees and reimbursement of 
incurred expenses for the provision of legal services specified in 
Sec.  597.505 are authorized from funds originating outside the United 
States, provided that:
    (1) Prior to receiving payment through a U.S. financial institution 
for legal services specified in Sec.  597.505 rendered to a foreign 
terrorist organization or agent thereof, the U.S. person that is an 
attorney, law firm, or legal services organization provides to the 
Office of Foreign Assets Control a copy of a letter of engagement or a 
letter of intent to engage specifying the services to be performed and 
signed by the individual to whom such services are to be provided or, 
where services are to be provided to an entity, by a legal 
representative of the entity. The copy of a letter of engagement or a 
letter of intent to engage, accompanied by correspondence referencing 
this paragraph Sec.  597.513(a), is to be mailed to: Licensing 
Division, Office of Foreign Assets Control, U.S. Department of the 
Treasury, 1500 Pennsylvania Avenue, NW., Annex, Washington, DC 20220;
    (2) The funds received by U.S. persons through a U.S. financial 
institution as payment of professional fees and reimbursement of 
incurred expenses for the provision of legal services specified in 
Sec.  597.505 must not originate from:
    (i) A source within the United States;
    (ii) Any source, wherever located, within the possession or control 
of a U.S. person; or
    (iii) Any individual or entity, other than the person on whose 
behalf the legal services specified in Sec.  597.505 are to be 
provided, whose property and interests in property are blocked pursuant 
to any part of this chapter or any Executive order;

    Note to paragraph (a)(2) of Sec.  597.513: This paragraph 
authorizes the person on whose behalf the legal services specified 
in Sec.  597.505 are to be provided to make payments for specified 
legal services using funds originating outside the United States 
that were not previously blocked. Nothing in this paragraph 
authorizes payments for legal services using funds in which any 
other person whose assets and funds are subject to the prohibitions 
in Sec.  597.201(a) or whose property and interests in property are 
blocked pursuant to any other part of this chapter holds an 
interest.

    (3) Reports. (i) U.S. persons who receive payments in connection 
with legal services specified in Sec.  597.505 must submit quarterly 
reports no later than 30 days following the end of the calendar quarter 
during which the payments were received providing information on the 
funds received. Such reports shall specify:
    (A) The individual or entity from whom the funds originated and the 
amount of funds received; and
    (B) If applicable:
    (1) The names of any individuals or entities providing related 
services to the U.S. person receiving payment in

[[Page 75910]]

connection with specified legal services, such as private investigators 
or expert witnesses;
    (2) A general description of the services provided; and
    (3) The amount of funds paid in connection with such services.
    (ii) In the event that no transactions occur or no funds are 
received during the reporting period, a statement is to be filed to 
that effect.
    (iii) Reports, which must reference this paragraph (a), are to be 
mailed to: Licensing Division, Office of Foreign Assets Control, U.S. 
Department of the Treasury, 1500 Pennsylvania Avenue, NW., Annex, 
Washington, DC 20220; and

    Note to paragraph (a)(3) of Sec.  597.513: U.S. persons who 
receive payments in connection with legal services specified in 
Sec.  597.505 do not need to obtain specific authorization to make 
payments through a U.S. financial institution for related services 
that are ordinarily incident to the provision of those legal 
services, such as those provided by private investigators or expert 
witnesses.

    (4) Nothing in this paragraph (a) authorizes the receipt of payment 
through a U.S. financial institution of professional fees or 
reimbursement of incurred expenses for the provision of legal services 
not specified in Sec.  597.505.

    Note 1 to paragraph (a) of Sec.  597.513: Any payment authorized 
in or pursuant to this paragraph that is routed through the U.S. 
financial system should reference this paragraph (a) to avoid the 
blocking of the transfer.


    Note 2 to paragraph (a) of Sec.  597.513: Nothing in this 
paragraph authorizes the transfer of any blocked property, the 
debiting of any blocked account, the entry of any judgment or order 
that effects a transfer of blocked property, or the execution of any 
judgment against property blocked pursuant to any Executive order or 
this chapter. U.S. persons seeking administrative reconsideration or 
judicial review of their designation or the blocking of their 
property and interests in property may apply for a specific license 
from the Office of Foreign Assets Control to authorize the release 
of a limited amount of blocked funds for the payment of legal fees 
where alternative funding sources are not available. For more 
information, see OFAC's Guidance on the Release of Limited Amounts 
of Blocked Funds for Payment of Legal Fees and Costs Incurred in 
Challenging the Blocking of U.S. Persons in Administrative or Civil 
Proceedings, which is available at: http://www.treas.gov/resource-center/sanctions/Documents/legal_fee_guide.pdf.

    (b) Legal defense funds. Effective December 7, 2010, U.S. persons 
that are attorneys, law firms, or legal services organizations are 
authorized to form legal defense funds from which payments of 
professional fees and reimbursement for expenses incurred in connection 
with the provision of legal services specified in Sec.  597.505 may be 
debited provided that:
    (1) The legal defense fund must be held in a savings or checking 
account at a financial institution located in the United States;
    (2) Prior to debiting the legal defense fund, the U.S. person 
responsible for establishing the legal defense fund must submit the 
following information to the Office of Foreign Assets Control: A copy 
of a letter of engagement or a letter of intent to engage specifying 
the services to be performed and signed by the individual to whom such 
services are to be provided or, where services are to be provided to an 
entity, by a legal representative of the entity; the name of the 
individual or entity responsible for establishing the legal defense 
fund; the name of the financial institution at which the account for 
the legal defense fund will be held; a point of contact at the 
financial institution holding the account for the legal defense fund; 
and the account name and account number for the legal defense fund. The 
foregoing information must be accompanied by correspondence referencing 
this paragraph (b) and is to be mailed to: Licensing Division, Office 
of Foreign Assets Control, U.S. Department of the Treasury, 1500 
Pennsylvania Avenue, NW., Annex, Washington, DC 20220;
    (3) The legal defense fund may not receive funds from a person 
whose assets and funds are subject to the prohibitions in Sec.  
597.201(a) or whose property and interests in property are blocked 
pursuant to any other part of this chapter;
    (4) The U.S. person responsible for establishing the legal defense 
fund must notify the financial institution at which the account for the 
legal defense fund is held that the account may only be debited to make 
payments of professional fees and reimburse expenses incurred in 
connection with the provision of legal services specified in Sec.  
597.505;
    (5) Reports. (i) U.S. persons responsible for establishing legal 
defense funds from which payments of professional fees and 
reimbursement for expenses incurred in connection with the provision of 
legal services specified in Sec.  597.505 may be debited must submit 
quarterly reports no later than 30 days following the end of the 
calendar quarter during which the funds were deposited with or debited 
from the account of the legal defense fund providing information on the 
funds received by the legal defense fund and debits made to the legal 
defense fund during the reporting period. Such reports shall specify:
    (A) The individual or entity from whom the funds originated and the 
amount of funds received; and
    (B) Any individual or entity to whom any payments were made, 
including, if applicable:
    (1) The names of any individuals or entities providing related 
services to the U.S. person receiving payment in connection with 
specified legal services, such as private investigators or expert 
witnesses;
    (2) A general description of the services provided; and
    (3) The amount of funds paid in connection with such services.
    (ii) In the event that no transactions occur or no funds are 
received during the reporting period, a statement is to be filed to 
that effect.
    (iii) Reports, which must reference this paragraph (b), are to be 
mailed to: Licensing Division, Office of Foreign Assets Control, U.S. 
Department of the Treasury, 1500 Pennsylvania Avenue, NW., Annex, 
Washington, DC 20220; and

    Note to paragraph (b)(5) of Sec.  597.513: U.S. persons who 
receive payments in connection with legal services specified in 
Sec.  597.505 do not need to obtain specific authorization to make 
payments through a U.S. financial institution for related services 
that are ordinarily incident to the provision of those legal 
services, such as those provided by private investigators or expert 
witnesses.

    (6) Nothing in this paragraph (b) authorizes the formation or 
debiting of legal defense funds in connection with the provision of 
legal services not specified in Sec.  597.505.

    Note 1 to paragraph (b) of Sec.  597.513: Any payment authorized 
in or pursuant to this paragraph that is routed through the U.S. 
financial system should reference this paragraph (b) to avoid the 
blocking of the transfer.


    Note 2 to paragraph (b) of Sec.  597.513: Any funds remaining in 
a legal defense fund account after all payments of professional fees 
and reimbursement of incurred expenses authorized pursuant to this 
paragraph have been made or upon termination of the legal services 
for which payment is authorized pursuant to this paragraph are 
deemed to be funds of the foreign terrorist organization or agent 
thereof to or on whose behalf the legal services were rendered and 
subject to the prohibitions of this part. U.S. financial 
institutions in the possession or control of such remaining funds 
may apply for the unblocking of the funds by following the 
procedures set forth at Sec.  501.801 of this chapter.



[[Page 75911]]


    Dated: December 1, 2010.
Adam J. Szubin,
Director, Office of Foreign Assets Control.
[FR Doc. 2010-30520 Filed 12-6-10; 8:45 am]
BILLING CODE 4810-AL-P