41334 Federal Register / Vol. 65, No. 129 / Wednesday, July 5, 2000 / Rules and Regulations

Example 8. G creates and funds a trust, T1,

for the benefit of G’s children and

grandchildren. After G’s death, under

authority granted to the trustees in the trust

instrument, the trustees of T1 transfer a

portion of the assets of T1 to another trust,

T2, and retain a power to revoke T2 and

revest the assets of T2 in T1. Under

paragraphs (e)(1) and (5) of this section, G is

the grantor of T1 and T2. In addition, because

the trustees of T1 have retained a power to

revest the assets of T2 in T1, T1 is treated as

the owner of T2 under section 678(a).

Example 9. G creates and funds a trust, T1,

for the benefit of B. G retains a power to

revest the assets of T1 in G within the

meaning of section 676. Under the trust

agreement, B is given a general power of

appointment over the assets of T1. B

exercises the general power of appointment

with respect to one-half of the corpus of T1

in favor of a trust, T2, that is for the benefit

of C, B’s child. Under paragraph (e)(1) of this

section, G is the grantor of T1, and under

paragraphs (e)(1) and (5) of this section, B is

the grantor of T2.

(7) The rules of this section are

applicable to any transfer to a trust, or

transfer of an interest in a trust, on or

after August 10, 1999.

§ 1.671–2T [Removed]

Par. 4. Section 1.671–2T is removed.

§ 1.672(f)–2 [Amended]

Par. 5. Section 1.672(f)–2 is amended

as follows:

1. In paragraph (b)(1) the language

‘‘§ 1.671–2T(e)(2)’’ is removed, and

‘‘§ 1.671–2(e)(2)’’ is added in its place.

2. In paragraph (d) Example 1 the

language ‘‘§ 1.671–2T(e)’’ is removed,

and ‘‘§ 1.671–2(e)’’ is added in its place.

§ 1.672(f)–3 [Amended]

Par. 6. Section 1.672(f)–3 is amended

as follows:

1. In paragraph (a)(1) the language

‘‘§ 1.671–2T(e)’’ is removed, and

‘‘§ 1.671–2(e)’’ is added in its place.

2. In paragraph (a)(4) Example 2 the

language ‘‘§ 1.671–2T(e)’’ is removed,

and ‘‘§ 1.671–2(e)’’ is added in its place.

3. In paragraph (b)(1) the language

‘‘§ 1.671–2T(e)(2)’’ is removed, and

‘‘§ 1.671–2(e)(2)’’ is added in its place.

4. In paragraph (b)(1) the language

‘‘§ 1.671–2T(e)’’ is removed, and

‘‘§ 1.671–2(e)’’ is added in its place.

5. In paragraph (b)(4) Example 1 the

language ‘‘§ 1.671–2T(e)’’ is removed,

and ‘‘§ 1.671–2(e)’’ is added in its place.

6. In paragraph (b)(4) Example 2 the

language ‘‘§ 1.671–2T(e)’’ is removed

and ‘‘§ 1.671–2(e)’’ is added in its place.

§ 1.672(f)–4 [Amended]

Par. 7. Section 1.672(f)–4 is amended

as follows:

1. In paragraph (c)(1) the language

‘‘§ 1.671–2T(e)(2)’’ is removed, and

‘‘§ 1.671–2(e)(2)’’ is added in its place.

2. In paragraph (c)(1) the language

‘‘§ 1.671–2T(e)(4)’’ is removed, and

‘‘§ 1.671–2(e)(4)’’ is added in its place.

3. In paragraph (d)(1) the language

‘‘§ 1.671–2T(e)(2)(ii)’’ is removed, and

‘‘§ 1.671–2(e)(2)(ii)’’ is added in its

place.

4. In paragraph (g) Example 4 the

language ‘‘§ 1.671–2T(e)’’ is removed,

and ‘‘§ 1.671–2(e)’’ is added in its place.

§ 1.672(f)–5 [Amended]

Par. 8. In § 1.672(f)–5, paragraph (a)(1)

is amended by removing the language

‘‘§ 1.671–2T(e)(2)’’ and adding ‘‘§ 1.671–

2(e)(2)’’ in its place.

Robert E. Wenzel,

Deputy Commissioner of Internal Revenue.

Approved: June 28, 2000.

Jonathan Talisman,

Deputy Assistant Secretary of the Treasury.

[FR Doc. 00–16931 Filed 7–3–00; 8:45 am]

BILLING CODE 4830–01–U

DEPARTMENT OF THE TREASURY

Office of Foreign Assets Control

31 CFR Parts 501 and 598

Reporting and Procedures

Regulations; Foreign Narcotics

Kingpin Sanctions Regulations

AGENCY: Office of Foreign Assets

Control, Treasury.

ACTION: Final rule; amendments.

SUMMARY: The Office of Foreign Assets

Control of the U.S. Department of the

Treasury is amending its Reporting and

Procedures Regulations, and issuing the

Foreign Narcotics Kingpin Sanctions

Regulations, in implementation of the

Foreign Narcotics Kingpin Designation

Act.

EFFECTIVE DATE: July 5, 2000.

FOR FURTHER INFORMATION CONTACT: J.

Robert McBrien, Chief, International

Programs, tel.: 202/622–2420, or Barbara

C. Hammerle, Deputy Chief Counsel,

tel.: 202/622–2410, Office of Foreign

Assets Control, Department of the

Treasury, Washington, DC 20220.

SUPPLEMENTARY INFORMATION:

Electronic and Facsimile 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

Acrobat 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,

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 December 3, 1999, President

Clinton signed into law the Foreign

Narcotics Kingpin Designation Act, Pub.

L. No. 106–120, title VIII, 113 Stat. 1606,

1626–1636 (1999) (to be codified at 21

U.S.C. 1901–1908, 8 U.S.C.

1182(a)(2)(C)) (the ‘‘Act’’), which

provides authority for the application of

sanctions to significant foreign narcotics

traffickers and their organizations

operating worldwide. Section 805(b) of

the Act blocks all property and interests

in property within the United States or

within the possession or control of any

United States person, which are owned

or controlled by significant foreign

narcotics traffickers, as identified by the

President, or foreign persons designated

by the Secretary of the Treasury, in

consultation with the Attorney General,

the Director of Central Intelligence, the

Director of the Federal Bureau of

Investigation, the Administrator of the

Drug Enforcement Administration, the

Secretary of Defense, and the Secretary

of State, because they are found to be:

(1) Materially assisting in, or

providing financial or technological

support for or to, or providing goods or

services in support of, the international

narcotics trafficking activities of a

significant foreign narcotics trafficker or

foreign persons designated by the

Secretary of the Treasury pursuant to

section 805(b) of the Act;

(2) Owned, controlled, or directed by,

or acting for or on behalf of, a significant

foreign narcotics trafficker or foreign

persons designated by the Secretary of

the Treasury pursuant to section 805(b)

of the Act; or

(3) Playing a significant role in

international narcotics trafficking.

Significant foreign narcotics

traffickers and persons coming within

any of the above three categories are

referred to as specially designated

narcotics traffickers.

Section 805(e)(1) of the Act authorizes

the Secretary of the Treasury, in

consultation with the Attorney General,

the Director of Central Intelligence, the

Director of the Federal Bureau of

Investigation, the Administrator of the

Federal Register / Vol. 65, No. 129 / Wednesday, July 5, 2000 / Rules and Regulations 41335

Drug Enforcement Administration, the

Secretary of Defense, and the Secretary

of State, to take such actions as may be

necessary to carry out the Act, including

the promulgation of rules and

regulations permitted under the Act.

Section 806 of the Act authorizes the

Secretary of the Treasury to issue

regulations and orders as may be

necessary for the exercise of authorities

granted by the Act.

In implementation of the Act, the

Office of Foreign Assets Control of the

Department of the Treasury is issuing

the Foreign Narcotics Kingpin Sanctions

Regulations, 31 CFR Part 598 (the

‘‘Regulations’’). These Regulations are

separate from, and independent of, the

Narcotics Trafficking Sanctions

Regulations, 31 CFR Part 536, which

implement the national emergency

declared in Executive Order 12978 of

October 21, 1995, with respect to

significant foreign narcotics traffickers

centered in Colombia. See § 598.101.

Sanctions imposed and persons named

as specially designated narcotics

traffickers pursuant to 31 CFR part 536

are not affected by this part 598. Section

809 of the Act, which amends section

212(a)(2)(C) of the Immigration and

Nationality Act, is not implemented by

these Regulations.

Subpart B of the Regulations

implements section 805 of the Act.

Specifically, section 598.201

implements section 805(a) of the Act by

providing that specially designated

narcotics traffickers are subject to any

and all sanctions authorized by the Act

until revoked or waived. Section

598.202 implements section 805(b) of

the Act by providing that property and

interests in property owned or

controlled by specially designated

narcotics traffickers and within the

United States or within the possession

or control of a United States person are

blocked. Section 598.203 of the

Regulations implements section

805(c)(1) of the Act by prohibiting

transactions and dealings by U.S.

persons or within the United States in

property or interests in property of

specially designated narcotics

traffickers. Section 598.204 implements

section 805(c)(2) of the Act by

prohibiting transactions that have the

effect of evading or avoiding, and

attempts or conspiracies to violate, the

prohibitions set forth in this part.

Sections 598.205 and 598.206 of the

Regulations detail the effect of transfers

of blocked property in violation of the

Regulations and the required holding of

blocked property in interest-bearing

accounts.

Subpart C of the Regulations

implements section 808 of the Act and

defines key terms used throughout the

Regulations. Subpart D of the

Regulations sets forth interpretive

sections regarding the general

prohibitions of subpart B.

Transactions otherwise prohibited

under this part but found to be

consistent with U.S. policy may be

authorized by a general license

contained in subpart E or by a specific

license issued pursuant to the

procedures set forth in subpart D of part

501 of chapter V. The general licenses

contained in subpart E include an

authorization for U.S. financial

institutions to debit blocked accounts

for normal service charges. See

§ 598.506. Section 598.507 authorizes

the provision of certain legal services,

provided that receipt of payment for

such services is specifically licensed.

Subpart F of the Regulations

implements sections 806(a)–(b) of the

Act by reference to the Reporting and

Procedures Regulations in subpart C of

31 CFR part 501, which set forth

provisions relating to required records

and reports. Subpart G implements

section 807 of the Act by describing the

civil and criminal penalties applicable

to violations of the Regulations.

Specifically, section 598.701 sets forth

the civil and criminal penalties

prescribed in sections 807(a)–(b) of the

Act, and section 598.706 implements

section 807(c) of the Act by providing

that civil penalties shall be subject to

judicial review only to the extent

provided in 5 U.S.C. 702.

Subpart H provides certain

administrative procedures applicable to

this part and implements others by

reference to the Reporting and

Procedures Regulations in subpart D of

31 CFR part 501, which contain

provisions relating to administrative

procedures. Section 598.802

implements section 805(e)(3) of the Act

by clarifying that records or information

obtained or created in the

implementation of the Regulations are

not subject to disclosure under section

552(a)(3) of the Freedom of Information

Act (5 U.S.C. 552(a)(3)). Section 598.803

delegates to the Office of Foreign Assets

Control those actions that the Secretary

of the Treasury is authorized to take

pursuant to the Act. Subpart I of the

Regulations sets forth a Paperwork

Reduction Act notice.

In addition to adding a new part 598,

the Office of Foreign Assets Control is

revising its Reporting and Procedures

Regulations contained in 31 CFR part

501 in implementation of certain

provisions of the Act. Pursuant to

section 805(e)(3) of the Act, section

501.805(a) is amended to add a note

clarifying the inapplicability of section

552(a)(3) of the Freedom of Information

Act.

In implementing the Regulations, the

Office of Foreign Assets Control will

seek to consult with foreign

governments where appropriate.

Because the Regulations involve a

foreign affairs function, Executive Order

12866 and the provisions of the

Administrative Procedure Act (5 U.S.C.

553) requiring notice of proposed

rulemaking, opportunity for public

participation, and delay in effective

date, are inapplicable. Because no

notice of proposed rulemaking is

required for this rule, the Regulatory

Flexibility Act (5 U.S.C. 601–612) does

not apply.

Paperwork Reduction Act

The collections of information related

to the Regulations are contained in the

Reporting and Procedures Regulations

in 31 CFR part 501. Pursuant to the

Paperwork Reduction Act of 1995 (44

U.S.C. 3507), those collections of

information were previously approved

by the Office of Management and

Budget (‘‘OMB’’) 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 598

Administrative practice and

procedure, Banks, banking, Blocking of

assets, Drug traffic control, Narcotics

trafficking, Penalties, Reporting and

recordkeeping requirements, Significant

foreign narcotics traffickers, Specially

designated narcotics traffickers, Transfer

of assets.

For the reasons set forth in the

preamble, 31 CFR Chapter V is amended

as follows:

PART 501—REPORTING AND

PROCEDURES REGULATIONS

1. The authority citation for part 501

is revised to read as follows:

Authority: 21 U.S.C. 1901–1908; 22 U.S.C.

287c; 31 U.S.C. 321(b); 50 U.S.C. 1701–1706;

50 U.S.C. App. 1–44.

Subpart D—Procedures

2. A note is added to paragraph (a) of

§ 501.805 to read as follows:

§ 501.805 Rules governing availability of

information.

(a) * * *

Note to paragraph (a) of § 501.805: Records

or information obtained or created in the

implementation of part 598 of this chapter

are not subject to disclosure under section

41336 Federal Register / Vol. 65, No. 129 / Wednesday, July 5, 2000 / Rules and Regulations

552(a)(3) of the Freedom of Information Act.

See § 598.802 of this chapter.

* * * * *

3. Part 598 is added to read as follows:

PART 598—FOREIGN NARCOTICS

KINGPIN SANCTIONS REGULATIONS

Subpart A—Relation of This Part to Other

Laws and Regulations

Sec.

598.101 Relation of this part to other laws

and regulations.

Subpart B—Prohibitions

598.201 Applicability of sanctions.

598.202 Blocking of assets.

598.203 Prohibited transactions involving

blocked property.

598.204 Evasions; attempts; conspiracies.

598.205 Effect of transfers violating the

provisions of this part.

598.206 Holding of funds in interestbearing accounts; investment and

reinvestment.

Subpart C—General Definitions

598.301 Blocked account; blocked property.

598.302 Effective date.

598.303 Entity.

598.304 Foreign Narcotics Kingpin

Designation Act.

598.305 Foreign person.

598.306 General license.

598.307 Interest.

598.308 License.

598.309 Narcotic drug; controlled

substance; listed chemical.

598.310 Narcotics trafficking.

598.311 Person.

598.312 Property; property interest.

598.313 Significant foreign narcotics

trafficker.

598.314 Specially designated narcotics

trafficker.

598.315 Specific license.

598.316 Transfer.

598.317 United States.

598.318 United States person; U.S. person.

598.319 U.S. financial institution.

Subpart D—Interpretations

598.401 Reference to amended sections.

598.402 Effect of amendment.

598.403 Termination and acquisition of an

interest in blocked property.

598.404 Setoffs prohibited.

598.405 Transactions incidental to a

licensed transaction.

598.406 Provision of services.

598.407 Offshore transactions.

598.408 Alleged change in ownership or

control of an entity designated as a

specially designated narcotics trafficker.

598.409 Credit extended and cards issued

by U.S. financial institutions.

598.410 Payments from blocked accounts to

U.S. exporters and for other obligations

prohibited.

Subpart E—Licenses, Authorizations, and

Statements of Licensing Policy

598.501 General and specific licensing

procedures.

598.502 Effect of license.

598.503 Exclusion from licenses.

598.504 Payments and transfers to blocked

accounts in U.S. financial institutions.

598.505 Investment and reinvestment of

certain funds.

598.506 Entries in certain accounts for

normal service charges authorized.

598.507 Provision of certain legal services

authorized.

Subpart F—Reports

598.601 Records and reports.

Subpart G—Penalties

598.701 Penalties.

598.702 Prepenalty notice.

598.703 Response to prepenalty notice;

informal settlement.

598.704 Penalty imposition or withdrawal.

598.705 Administrative collection; referral

to United States Department of Justice.

598.706 Judicial review of civil penalty.

Subpart H—Procedures

598.801 Procedures.

598.802 Availability of information

pursuant to the Freedom of Information

Act.

598.803 Delegation by the Secretary of the

Treasury.

Subpart I—Paperwork Reduction Act

598.901 Paperwork Reduction Act notice.

Authority: 3 U.S.C. 301; 21 U.S.C. 1901–

1908; 31 U.S.C. 321(b); Pub. L. 101–410, 104

Stat. 890 (28 U.S.C. 2461 note).

Subpart A—Relation of This Part to

Other Laws and Regulations

§ 598.101 Relation of this part to other

laws and regulations.

(a) This part is separate from, and

independent of, the other parts of this

chapter, including part 536 of this

chapter, ‘‘Narcotics Trafficking

Sanctions Regulations,’’ with the

exception of part 501 of this chapter, the

provisions 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 contexts 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.

(b) No license contained in or issued

pursuant to this part relieves the

involved parties from complying with

any other applicable laws or regulations.

Subpart B—Prohibitions

§ 598.201 Applicability of sanctions.

A specially designated narcotics

trafficker is subject to any and all

sanctions authorized by the Foreign

Narcotics Kingpin Designation Act and

implemented in this part. The

application of sanctions on any

specially designated narcotics trafficker

will remain in effect until revoked by

the President pursuant to section

804(h)(2) of the Foreign Narcotics

Kingpin Designation Act, waived by the

President pursuant to section 804(g)(1)

of that Act, or revoked by the Secretary

of the Treasury pursuant to section

805(e)(1)(A) of that Act.

§ 598.202 Blocking of assets.

Except to the extent provided in

regulations, orders, instructions,

licenses, or directives issued pursuant

to this part, and notwithstanding any

contract entered into or any license or

permit granted prior to the effective

date, there are blocked as of the effective

date, and any date thereafter, all such

property and interests in property

within the United States, or within the

possession or control of any United

States person, which are owned or

controlled by a specially designated

narcotics trafficker.

§ 598.203 Prohibited transactions

involving blocked property.

(a) Except to the extent provided in

regulations, orders, instructions,

licenses, or directives issued pursuant

to this part, and notwithstanding any

contract entered into or any license or

permit granted prior to the effective

date, any transaction or dealing by a

United States person, or within the

United States, in property or interests in

property of a specially designated

narcotics trafficker is prohibited.

(b) Unless otherwise authorized by

this part or by a specific license

expressly referring to this section, any

dealing in any security (or evidence

thereof) held within the possession or

control of a U.S. person and either

registered or inscribed in the name of or

known to be held for the benefit of any

specially designated narcotics trafficker

is prohibited. This prohibition includes

but is not limited to the transfer

(including the transfer on the books of

any issuer or agent thereof), disposition,

transportation, importation, exportation,

or withdrawal of any such security or

the endorsement or guaranty of

signatures on any such security.

(c) When a transaction results in the

blocking of funds at a financial

institution pursuant to this section and

a party to the transaction believes the

Federal Register / Vol. 65, No. 129 / Wednesday, July 5, 2000 / Rules and Regulations 41337

funds have been blocked due to

mistaken identity, that party may seek

to have such funds unblocked pursuant

to the administrative procedures set

forth in § 501.806 of this chapter.

§ 598.204 Evasions; attempts;

conspiracies.

Except to the extent provided in

regulations, orders, instructions,

licenses, or directives issued pursuant

to this part, and notwithstanding any

contract entered into or any license or

permit granted prior to the effective

date, any transaction or dealing by any

United States person, or within the

United States, that evades or avoids, or

has the effect of evading or avoiding,

and any endeavor, attempt, or

conspiracy to violate any of the

prohibitions set forth in this part is

prohibited.

§ 598.205 Effect of transfers violating the

provisions of this part.

(a) Any transfer after the effective date

that is in violation of any provision of

this part or of any regulation, order,

directive, ruling, instruction, or license

issued pursuant to this part, and that

involves any property or interest in

property of a specially designated

narcotics trafficker is null and void and

shall not be the basis for the assertion

or recognition of any interest in or right,

remedy, power, or privilege with respect

to such property or property interests.

(b) No transfer before the effective

date shall be the basis for the assertion

or recognition of any right, remedy,

power, or privilege with respect to, or

any interest in, any property or interest

in property of a specially designated

narcotics trafficker, unless the person

with whom such property is held or

maintained, prior to that date, had

written notice of the transfer or by any

written evidence had recognized such

transfer.

(c) Unless otherwise provided, an

appropriate license or other

authorization issued by or pursuant to

the direction or authorization of the

Director of the Office of Foreign Assets

Control before, during, or after a transfer

shall validate such transfer or make it

enforceable to the same extent that it

would be valid or enforceable but for

the provisions of the Foreign Narcotics

Kingpin Designation Act, this part, and

any regulation, order, directive, ruling,

instruction, or license issued pursuant

to this part.

(d) Property transfers that otherwise

would be null and void or

unenforceable by virtue of the

provisions of this section shall not be

deemed to be null and void or

unenforceable as to any person with

whom such property was held or

maintained (and as to such person only)

in cases in which such person is able to

establish to the satisfaction of the

Director of the Office of Foreign Assets

Control each of the following:

(1) Such transfer did not represent a

willful violation of the provisions of this

part by the person with whom such

property was held or maintained;

(2) The person with whom such

property was held or maintained did not

have reasonable cause to know or

suspect, in view of all the facts and

circumstances known or available to

such person, that such transfer required

a license issued pursuant to this part

and was not so licensed, or if a license

did purport to cover the transfer, that

such license had been obtained by

misrepresentation of a third party or

withholding of material facts or was

otherwise fraudulently obtained; and

(3) The person with whom such

property was held or maintained filed

with the Office of Foreign Assets

Control a report setting forth in full the

circumstances relating to such transfer

promptly upon discovery that:

(i) Such transfer was in violation of

the provisions of this part or any

regulation, ruling, instruction, direction,

or license issued pursuant to this part;

(ii) Such transfer was not licensed or

authorized by the Director of the Office

of Foreign Assets Control; or

(iii) If a license did purport to cover

the transfer, such license had been

obtained by misrepresentation of a third

party or withholding of material facts or

was otherwise fraudulently obtained.

Note to paragraph (d) of § 598.205: The

filing of a report in accordance with the

provisions of paragraph (d)(3) of this section

shall not be deemed evidence that the terms

of paragraphs (d)(1) and (2) of this section

have been satisfied.

(e) Unless licensed or authorized

pursuant to this part, any attachment,

judgment, decree, lien, execution,

garnishment, or other judicial process is

null and void with respect to any

property in which on or since the

effective date there existed an interest of

a specially designated narcotics

trafficker.

§ 598.206 Holding of funds in interestbearing accounts; investment and

reinvestment.

(a) Except as provided in paragraph

(c) or (d) of this section, or as otherwise

directed by the Office of Foreign Assets

Control, any U.S. person holding funds,

such as currency, bank deposits, or

liquidated financial obligations, subject

to § 598.202 shall hold or place such

funds in a blocked interest-bearing

account located in the United States.

(b)(1) For purposes of this section, the

term blocked interest-bearing account

means a blocked account:

(i) In a federally-insured U.S. bank,

thrift institution, or credit union,

provided the funds are earning interest

at rates that are commercially

reasonable; or

(ii) With a broker or dealer registered

with the Securities and Exchange

Commission under the Securities

Exchange Act of 1934, provided the

funds are invested in a money market

fund or in U.S. Treasury bills.

(2) For purposes of this section, a rate

is commercially reasonable if it is the

rate currently offered to other depositors

on deposits or instruments of

comparable size and maturity.

(3) Funds held or placed in a blocked

account pursuant to this paragraph (b)

may not be invested in instruments the

maturity of which exceeds 180 days. If

interest is credited to a separate blocked

account or sub-account, the name of the

account party on each account must be

the same.

(c) Blocked funds held in instruments

the maturity of which exceeds 180 days

at the time the funds become subject to

§ 598.202 may continue to be held until

maturity in the original instrument,

provided any interest, earnings, or other

proceeds derived therefrom are paid

into a blocked interest-bearing account

in accordance with paragraph (b) or (d)

of this section.

(d) Blocked funds held in accounts or

instruments outside the United States at

the time the funds become subject to

§ 598.202 may continue to be held in the

same type of accounts or instruments,

provided the funds earn interest at rates

that are commercially reasonable.

(e) This section does not create an

affirmative obligation for the holder of

blocked tangible property, such as

chattels or real estate, or of other

blocked property, such as debt or equity

securities, to sell or liquidate such

property at the time the property

becomes subject to § 598.202. However,

the Office of Foreign Assets Control may

issue licenses permitting or directing

such sales in appropriate cases.

(f) Funds subject to this section may

not be held, invested, or reinvested in

a manner that provides immediate

financial or economic benefit or access

to specially designated narcotics

traffickers, nor may their holder

cooperate in or facilitate the pledging or

other attempted use as collateral of

blocked funds or other assets.

Note to § 598.206: Please refer to § 598.505

for authorized investment and reinvestment

of certain funds held in blocked accounts.

41338 Federal Register / Vol. 65, No. 129 / Wednesday, July 5, 2000 / Rules and Regulations

Subpart C—General Definitions

§ 598.301 Blocked account; blocked

property.

The terms blocked account and

blocked property mean any account or

property subject to § 598.202 held in the

name of a specially designated narcotics

trafficker, or in which a specially

designated narcotics trafficker has an

interest, and with respect to which

payments, transfers, exportations,

withdrawals, or other dealings may not

be made or effected except pursuant to

an authorization or license from the

Office of Foreign Assets Control

authorizing such action.

§ 598.302 Effective date.

The term effective date refers to the

effective date of the applicable

prohibitions and directives of this part,

which is December 3, 1999, or, in the

case of specially designated narcotics

traffickers designated after that date, the

earlier of the date on which actual or

constructive notice of such designation

is received.

§ 598.303 Entity.

The term entity means a partnership,

joint venture, association, corporation,

organization, network, group, or

subgroup, or any form of business

collaboration.

§ 598.304 Foreign Narcotics Kingpin

Designation Act.

The term Foreign Narcotics Kingpin

Designation Act means the Foreign

Narcotics Kingpin Designation Act, Pub.

L. 106–120, title 8, 113 Stat. 1606, 1626–

1636 (codified at 21 U.S.C. 1901–1908,

8 U.S.C. 1182(a)(2)(C)).

§ 598.305 Foreign person.

The term foreign person means any

citizen or national of a foreign state or

any entity not organized under the laws

of the United States, but does not

include a foreign state.

§ 598.306 General license.

The term general license means any

license or authorization the terms of

which are set forth in this part.

§ 598.307 Interest.

Except as otherwise provided in this

part, the term interest when used with

respect to property (e.g., an interest in

property) means an interest of any

nature whatsoever, direct or indirect.

§ 598.308 License.

Except as otherwise specified, the

term license means any license or

authorization contained in or issued

pursuant to this part.

§ 598.309 Narcotic drug; controlled

substance; listed chemical.

The terms narcotic drug, controlled

substance, and listed chemical have the

meanings given those terms in section

102 of the Controlled Substances Act

(21 U.S.C. 802).

§ 598.310 Narcotics trafficking.

The term narcotics trafficking means

any illicit activity to cultivate, produce,

manufacture, distribute, sell, finance, or

transport narcotic drugs, controlled

substances, or listed chemicals, or

otherwise endeavor or attempt to do so,

or to assist, abet, conspire, or collude

with others to do so.

§ 598.311 Person.

The term person means an individual

or entity.

§ 598.312 Property; property interest.

The terms property and property

interest include but are not limited to

money, checks, drafts, bullion, bank

deposits, savings accounts, debts,

indebtedness, obligations, notes,

guarantees, debentures, stocks, bonds,

coupons, any other financial

instruments, bankers acceptances,

mortgages, pledges, liens or other rights

in the nature of security, warehouse

receipts, bills of lading, trust receipts,

bills of sale, any other evidences of title,

ownership, or indebtedness, letters of

credit and any documents relating to

any rights or obligations thereunder,

powers of attorney, goods, wares,

merchandise, chattels, stocks on hand,

ships, goods on ships, real estate

mortgages, deeds of trust, vendors’ sales

agreements, land contracts, leaseholds,

ground rents, real estate and any other

interest therein, options, negotiable

instruments, trade acceptances,

royalties, book accounts, accounts

payable, judgments, patents, trademarks

or copyrights, insurance policies, safe

deposit boxes and their contents,

annuities, pooling agreements, services

of any nature whatsoever, contracts of

any nature whatsoever, and any other

property, real, personal, or mixed,

tangible or intangible, or interest or

interests therein, whether present,

future, or contingent.

§ 598.313 Significant foreign narcotics

trafficker.

The term significant foreign narcotics

trafficker means any foreign person that

plays a significant role in international

narcotics trafficking that the President

has determined to be appropriate for

sanctions and has publicly identified

under section 804(b) or section 804(h)(1)

of the Foreign Narcotics Kingpin

Designation Act.

§ 598.314 Specially designated narcotics

trafficker.

The term specially designated

narcotics trafficker means:

(a) Significant foreign narcotics

traffickers; and

(b) Foreign persons designated by the

Secretary of the Treasury, in

consultation with the Attorney General,

the Director of Central Intelligence, the

Director of the Federal Bureau of

Investigation, the Administrator of the

Drug Enforcement Administration, the

Secretary of Defense, and the Secretary

of State, because they are found to be:

(1) Materially assisting in, or

providing financial or technological

support for or to, or providing goods or

services in support of, the international

narcotics trafficking activities of a

specially designated narcotics trafficker;

(2) Owned, controlled, or directed by,

or acting for or on behalf of, a specially

designated narcotics trafficker; or

(3) Playing a significant role in

international narcotics trafficking.

Note to § 598.314: Please refer to the

appendices at the end of this chapter V for

listings of persons determined to fall within

this definition who have been designated

pursuant to this part. Section 501.807 of this

chapter V sets forth the procedures to be

followed by persons seeking administrative

reconsideration of their designation or who

wish to assert that the circumstances

resulting in designation no longer apply.

§ 598.315 Specific license.

The term specific license means any

license not set forth in this part but

issued pursuant to this part.

§ 598.316 Transfer.

The term transfer means any actual or

purported act or transaction, whether or

not evidenced by writing, and whether

or not done or performed within the

United States, the purpose, intent, or

effect of which is to create, surrender,

release, convey, transfer, or alter,

directly or indirectly, any right, remedy,

power, privilege, or interest with respect

to any property. Without limitation

upon the foregoing, the term transfer

includes the making, execution, or

delivery of any assignment, power,

conveyance, check, declaration, deed,

deed of trust, power of attorney, power

of appointment, bill of sale, mortgage,

receipt, agreement, contract, certificate,

gift, sale, affidavit, or statement; the

making of any payment; the setting off

of any obligation or credit; the

appointment of any agent, trustee, or

fiduciary; the creation or transfer of any

lien; the issuance, docketing, filing, or

levy of or under any judgment, decree,

attachment, injunction, execution, or

other judicial or administrative process

Federal Register / Vol. 65, No. 129 / Wednesday, July 5, 2000 / Rules and Regulations 41339

or order; the service of any garnishment;

the acquisition of any interest of any

nature whatsoever by reason of a

judgment or decree of any foreign

country; the fulfillment of any

condition; the exercise of any power of

appointment, power of attorney, or

other power; or the acquisition,

disposition, transportation, importation,

exportation, or withdrawal of any

security.

§ 598.317 United States.

The term United States means the

United States, its territories and

possessions, and all areas under the

jurisdiction or authority thereof.

§ 598.318 United States person; U.S.

person.

The term United States person or U.S.

person means any United States citizen

or national, permanent resident alien,

an entity organized under the laws of

the United States (including its foreign

branches), or any person within the

United States.

§ 598.319 U.S. financial institution.

The term U.S. financial institution

means any U.S. entity (including a

foreign branch) that is engaged in the

business of accepting deposits, making,

granting, transferring, holding, or

brokering loans or credits, or purchasing

or selling foreign exchange, securities,

commodity futures or options, as

principal or agent. This terms includes

but is not limited to depository

institutions, banks, savings banks, trust

companies, securities brokers and

dealers, commodity futures and options

brokers and dealers, forward contract

and foreign exchange merchants,

securities and commodities exchanges,

clearing corporations, investment

companies, employee benefit plans, and

U.S. holding companies, U.S. affiliates,

or U.S. subsidiaries of any of the

foregoing. This term includes those

branches, offices, and agencies of

foreign financial institutions which are

located in the United States, but not

such institutions’ foreign branches,

offices, or agencies.

Subpart D—Interpretations

§ 598.401 Reference to amended sections.

Except as otherwise specified,

reference to any provision in or

appendix to this part or chapter or to

any regulation, ruling, order,

instruction, direction, or license issued

pursuant to this part refers to the same

as currently amended.

§ 598.402 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.

§ 598.403 Termination and acquisition of

an interest in blocked property.

(a) Whenever a transaction licensed

pursuant to this part results in the

transfer of property (including any

property interest) away from a specially

designated narcotics trafficker, the

transferred property will no longer be

considered property in which that

person has or has had an interest.

Provided no other specially designated

narcotics trafficker has any interest in

the transferred property following the

transfer, the transferred property will no

longer be considered property blocked

pursuant to § 598.202.

(b) Unless otherwise specifically

provided in a license issued pursuant to

this part, if property (including any

property interest) is transferred or

attempted to be transferred to a

specially designated narcotics trafficker,

such property shall be deemed to be

property in which that person has an

interest, and such property is therefore

blocked pursuant to § 598.202.

§ 598.404 Setoffs prohibited.

A setoff against blocked property

(including a blocked account), whether

by a U.S. financial institution or other

U.S. person, is a prohibited transfer

under § 598.203 if effected after the

effective date.

§ 598.405 Transactions incidental to a

licensed transaction.

Any transaction ordinarily incident to

a licensed transaction and necessary to

give effect to the licensed transaction is

also authorized by the license. Except as

specifically authorized by the terms of

a license, prohibited transactions by

specially designated narcotics traffickers

and debits to accounts blocked pursuant

to § 598.202 are not considered

incidental to a licensed transaction and

therefore remain prohibited.

§ 598.406 Provision of services.

(a) The prohibitions contained in

§ 598.203 apply to services performed

by U.S. persons, wherever located:

(1) On behalf of or for the benefit of

a specially designated narcotics

trafficker; or

(2) With respect to property interests

of a specially designated narcotics

trafficker.

(b) Example: U.S. persons may not,

except as authorized by or pursuant to

this part, provide legal, accounting,

financial, brokering, freight forwarding,

transportation, public relations, or other

services to a specially designated

narcotics trafficker. See § 598.507 on

licensing policy with regard to the

provision of certain legal services.

§ 598.407 Offshore transactions.

The prohibitions contained in

§ 598.203 apply to transactions by any

U.S. person in a location outside the

United States with respect to property

in which the U.S. person knows, or has

reason to know, that a specially

designated narcotics trafficker has or

has had an interest since the effective

date.

§ 598.408 Alleged change in ownership or

control of an entity designated as a

specially designated narcotics trafficker.

(a) A change or alleged change in

ownership or control of an entity

designated as a specially designated

narcotics trafficker shall not be the basis

for removal of that entity from the list

of specially designated narcotics

traffickers unless, upon investigation by

the Office of Foreign Control and

submission of evidence by the entity, it

is demonstrated to the satisfaction of the

Director of the Office of Foreign Assets

Control that the transfer to a bona fide

purchaser at arm’s length, or other

means of changing ownership or

control, is legitimate and that the entity

no longer meets the criteria for

designation under § 598.314. Evidence

submitted must conclusively

demonstrate that all ties with other

specially designated narcotics traffickers

have been completely severed, and may

include, but is not limited to, articles of

incorporation; identification of new

directors, officers, shareholders, and

sources of capital; and contracts

evidencing the sale of the entity to its

new owners.

(b) Any continuing substantial

financial obligations on the part of the

new owners to any specially designated

narcotics traffickers, including longterm payment plans, leases, or rents,

will be considered as evidence of

continuing control of the entity by the

specially designated narcotics trafficker.

Purchase of a designated entity without

ongoing substantial financial obligations

to a specially designated narcotics

trafficker may nonetheless be a basis for

41340 Federal Register / Vol. 65, No. 129 / Wednesday, July 5, 2000 / Rules and Regulations

subsequent designation of the

purchaser, if the transaction is

determined materially to assist in or

provide financial support for the

international narcotics trafficking

activities of specially designated

narcotics traffickers for purposes of

§ 598.314(b)(1). For example, any

acquisition transaction resulting in a

direct cash transfer to or other

enrichment of a specially designated

narcotics trafficker could lead to

designation of the purchaser. Mere

change in name of an entity will not be

considered as constituting a change of

the entity’s status.

§ 598.409 Credit extended and cards

issued by U.S. financial institutions.

The prohibition in § 598.203 on

dealing in property in which a specially

designated narcotics trafficker has an

interest prohibits U.S. financial

institutions from performing under any

existing credit agreements, including,

but not limited to, charge cards, debit

cards, or other credit facilities issued by

a U.S. financial institution to a specially

designated narcotics trafficker.

§ 598.410 Payments from blocked

accounts to U.S. exporters and for other

obligations prohibited.

No debits may be made to a blocked

account to pay obligations to U.S.

persons or other persons, including

payment for goods or services exported

prior to the effective date of the

blocking, except as authorized pursuant

to this part.

Subpart E—Licenses, Authorizations,

and Statements of Licensing Policy

§ 598.501 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.

§ 598.502 Effect of license.

(a) No license contained in this part,

or otherwise issued by or under the

direction of the Director of the Office of

Foreign Assets Control pursuant to this

part, authorizes or validates any

transaction effected prior to the issuance

of the license, unless the prior

transaction is specifically authorized in

such license.

(b) No regulation, ruling, instruction,

or license authorizes any transaction

prohibited by 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

authorizes 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 by this part has the

effect of removing from the transaction

a prohibition or prohibitions contained

in this part, 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 that

would not otherwise exist under

ordinary principles of law in or with

respect to any property.

§ 598.503 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.

§ 598.504 Payments and transfers to

blocked accounts in U.S. financial

institutions.

Any payment of funds or transfer of

credit in which a specially designated

narcotics trafficker has any interest that

comes within the possession or control

of a U.S. financial institution must be

blocked in an account on the books of

that financial institution. A transfer of

funds or credit by a U.S. financial

institution between blocked accounts in

its branches or offices is authorized,

provided that no transfer is made from

an account within the United States to

an account held outside the United

States, and further provided that a

transfer from a blocked account may

only be made to another blocked

account held in the same name.

Note to § 598.504: Please refer to part 501,

subpart C of this chapter for mandatory

reporting requirements regarding financial

transfers. See also § 598.206 concerning the

obligation to hold blocked funds in interestbearing accounts.

§ 598.505 Investment and reinvestment of

certain funds.

Subject to the requirements of

§ 598.206, U.S. financial institutions are

authorized to invest and reinvest assets

held in blocked accounts in the name of

a specially designated narcotics

trafficker, subject to the following

conditions:

(a) The assets representing such

investments and reinvestments are

credited to a blocked account or

subaccount that is held in the same

name at the same U.S. financial

institution, or within the possession or

control of a U.S. person, but in no case

may funds be transferred outside the

United States for this purpose;

(b) The proceeds of such investments

and reinvestments are not credited to a

blocked account or subaccount under

any name or designation that differs

from the name or designation of the

specific blocked account or subaccount

in which such funds or securities were

held; and

(c) No immediate financial or

economic benefit accrues (e.g., through

pledging or other use) to the specially

designated narcotics trafficker.

§ 598.506 Entries in certain accounts for

normal service charges authorized.

(a) U.S. financial institutions are

authorized to debit any blocked account

with such U.S. financial institution in

payment or reimbursement for normal

service charges owed to such U.S.

financial institution by the owner of

such blocked account.

(b) As used in this section, the term

normal service charges includes but is

not limited to charges in payment or

reimbursement for interest due; cable,

telegraph, or telephone charges; postage

costs; custody fees; small adjustment

charges to correct bookkeeping errors;

minimum balance charges; notary and

protest fees; and charges for reference

books, photocopies, credit reports,

transcripts of statements, registered

mail, insurance, stationery and supplies,

and other similar items.

§ 598.507 Provision of certain legal

services authorized.

(a) The provision to or on behalf of a

specially designated narcotics trafficker

of the legal services set forth in

paragraph (b) of this section is

authorized, provided that all receipt of

payment for such services must be

specifically licensed.

(b) Specific licenses may be issued on

a case-by-case basis authorizing receipt

from unblocked sources of payment of

professional fees and reimbursement of

incurred expenses for the following

legal services by U.S. persons to a

specially designated narcotics trafficker:

(1) Provision of legal advice and

counseling on the requirements of and

compliance with the laws of any

jurisdiction within the United States,

Federal Register / Vol. 65, No. 129 / Wednesday, July 5, 2000 / Rules and Regulations 41341

provided that such advice and

counseling is not provided to facilitate

transactions that would violate any

prohibition contained in this chapter;

(2) Representation of a specially

designated narcotics trafficker when

named as a defendant in or otherwise

made a party to domestic U.S. legal,

arbitration, or administrative

proceedings;

(3) Initiation and conduct of domestic

U.S. legal, arbitration, or administrative

proceedings in defense of property

interests subject to U.S. jurisdiction of a

specially designated narcotics trafficker;

(4) Representation of a specially

designated narcotics trafficker before

any federal or state agency with respect

to the imposition, administration, or

enforcement of U.S. sanctions against

such person; and

(5) Provision of legal services in any

other context in which prevailing U.S.

law requires access to legal counsel at

public expense.

(c) The provision of any other legal

services to a specially designated

narcotics trafficker, not otherwise

authorized in this part, requires the

issuance of a specific license.

(d) Entry into a settlement agreement

affecting property or interests in

property of a specially designated

narcotics trafficker or the enforcement

of any lien, judgment, arbitral award,

decree, or other order through

execution, garnishment, or other

judicial process purporting to transfer or

otherwise alter or affect property or

interests in property of a specially

designated narcotics trafficker is

prohibited unless specifically licensed

in accordance with § 598.205(e).

Subpart F—Reports

§ 598.601 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

§ 598.701 Penalties.

(a) Attention is directed to section 807

of the Foreign Narcotics Kingpin

Designation Act, which is applicable to

violations of the provisions of any

license, rule, or regulation issued by or

pursuant to the direction or

authorization of the Secretary of the

Treasury pursuant to this part or

otherwise under that Act. Section 807 of

Foreign Narcotics Kingpin Designation

Act provides that:

(1) Whoever willfully violates the

provisions of the Foreign Narcotics

Kingpin Designation Act, or any license,

rule, or regulation issued pursuant to

that Act, or willfully neglects or refuses

to comply with any order of the

President issued under that Act, shall be

imprisoned for not more than 10 years,

fined in the amount provided in title 18,

United States Code, or both, or, in the

case of an entity, fined not more than

$10,000,000;

(2) Any officer, director, or agent of

any entity who knowingly participates

in a violation of the provisions of the

Foreign Narcotics Kingpin Designation

Act, shall be imprisoned for not more

than 30 years, fined not more than

$5,000,000, or both;

(3) A civil penalty not to exceed

$1,000,000 per violation may be

imposed by the Secretary of the

Treasury on any person who violates

any license, order, rule, or regulation

issued in compliance with the

provisions of the Foreign Narcotics

Kingpin Designation Act.

(b) The criminal penalties provided in

this part are subject to increase pursuant

to 18 U.S.C. 3571.

(c) Attention is directed to 18 U.S.C.

1001, which provides that whoever, in

any matter within the jurisdiction of any

department or agency of the United

States, knowingly and willfully falsifies,

conceals, or covers up by any trick,

scheme, or device a material fact, or

makes any materially false, fictitious, or

fraudulent statement or representation,

or makes or uses any false writing or

document knowing the same to contain

any materially false, fictitious, or

fraudulent statement or entry shall be

fined under title 18, United States Code,

or imprisoned not more than five years,

or both.

(d) Violations of this part may also be

subject to relevant provisions of other

applicable laws.

§ 598.702 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 Foreign

Narcotics Kingpin Designation Act, and

the Director determines that further

proceedings are warranted, the Director

shall issue to the person concerned a

notice of intent to impose a monetary

penalty. This prepenalty notice shall be

issued whether or not another agency

has taken any action with respect to this

matter.

(b) Contents—(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 30 days of the date

of mailing of the notice 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.

§ 598.703 Response to prepenalty notice;

informal settlement.

(a) Deadline for response. The

respondent shall have 30 days from the

date of mailing of the prepenalty notice

to make a written response to the

Director of the Office of Foreign Assets

Control.

(b) Form and contents of response.

The written response need not be in any

particular form, but must contain

information sufficient to indicate that it

is in response to the prepenalty notice.

It should contain responses to the

allegations in the prepenalty notice and

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.

(c) Informal settlement. In addition or

as an alternative to a written response

to a prepenalty notice issued pursuant

to this section, 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. 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 30-day

period specified in paragraph (a) of this

section for written response to the

prepenalty notice remains in effect

unless additional time is granted by the

Office of Foreign Assets Control.

41342 Federal Register / Vol. 65, No. 129 / Wednesday, July 5, 2000 / Rules and Regulations

§ 598.704 Penalty imposition or

withdrawal.

(a) No violation. If, after considering

any response to a 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 promptly

shall notify the respondent in writing of

that determination and that no monetary

penalty will be imposed.

(b) Violation. If, after considering any

response to a prepenalty notice 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 promptly shall issue

a written notice of the imposition of the

monetary penalty to the respondent.

The issuance of a written notice of the

imposition of a monetary penalty shall

constitute final agency action.

(1) The penalty notice shall inform

the respondent that payment of the

assessed penalty must be made within

30 days of the date of mailing of the

penalty notice.

(2) 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.

§ 598.705 Administrative collection;

referral to United States Department of

Justice.

In the event that the respondent does

not pay a 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 a penalty

notice, the matter may be referred for

administrative collection measures by

the Department of the Treasury or to the

United States Department of Justice for

appropriate action to recover the

penalty in a civil suit in a Federal

district court.

§ 598.706 Judicial review of civil penalty.

A civil penalty imposed pursuant to

this subpart G is subject to judicial

review only to the extent provided in 5

U.S.C. 702.

Subpart H—Procedures

§ 598.801 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 Privacy Act (5 U.S.C.

552a), see part 501, subpart D of this

chapter.

§ 598.802 Availability of information

pursuant to the Freedom of Information Act.

Any record or information obtained or

created in the implementation of this

part is not subject to disclosure under

section 552(a)(3) of the Freedom of

Information Act. Information required to

be made available to the public under

other provisions of the Freedom of

Information Act (5 U.S.C. 552) will be

made available in accordance with

§ 501.805(a) of this chapter.

§ 598.803 Delegation by the Secretary of

the Treasury.

Any action that the Secretary of the

Treasury is authorized to take pursuant

to the Foreign Narcotics Kingpin

Designation Act 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

§ 598.901 Paperwork Reduction Act notice.

For approval by the Office of

Management and Budget (‘‘OMB’’)

under the Paperwork Reduction Act of

1995 (44 U.S.C. 3507) of information

collections relating to recordkeeping

and reporting requirements, licensing

procedures (including those pursuant to

statements of licensing policy), and

other procedures, see § 501.901 of this

chapter. An agency may not conduct or

sponsor, and a person is not required to

respond to, a collection of information

unless it displays a valid control

number assigned by OMB.

Dated: June 6, 2000.

R. Richard Newcomb,

Director, Office of Foreign Assets Control.

Approved: June 13, 2000.

Elisabeth A. Bresee,

Assistant Secretary (Enforcement),

Department of the Treasury.

[FR Doc. 00–16844 Filed 6–29–00; 3:39 pm]

BILLING CODE 4810–25–P

DEPARTMENT OF TRANSPORTATION

Coast Guard

33 CFR Part 165

[CGD01–00–160]

RIN 2115–AA97

Safety Zone: Hudson Valley Triathlon,

Hudson River, Ulster Landing, NY

AGENCY: Coast Guard, DOT.

ACTION: Temporary final rule.

SUMMARY: The Coast Guard is

establishing a temporary safety zone for

the annual Hudson Valley Triathlon

swim located on the Hudson River. This

action is necessary to provide for the

safety of life on navigable waters during

the event. This action is intended to

restrict vessel traffic in a portion of the

Hudson River.

DATES: This rule is effective from 6:30

a.m. (e.s.t.) until 8:30 a.m. (e.s.t.) on July

9, 2000.

ADDRESSES: Comments and material

received from the public, as well as

documents indicated in this preamble as

being available in the docket, are part of

docket (CGD01–00–160) and are

available for inspection or copying at

Coast Guard Activities New York, 212

Coast Guard Drive, room 204, Staten

Island, New York 10305, between 8 a.m.

and 3 p.m., Monday through Friday,

except Federal holidays. The telephone

number is (718) 354–4012.

FOR FURTHER INFORMATION CONTACT:

Lieutenant M. Day, Waterways

Oversight Branch, Coast Guard

Activities New York (718) 354–4012.

SUPPLEMENTARY INFORMATION:

Regulatory Information

We did not publish a notice of

proposed rulemaking (NPRM) for this

regulation. Under 5 U.S.C. 553(b)(8), the

Coast Guard finds that good cause exists

for not publishing an NPRM. Good

cause exists for not publishing an NPRM

due to the date the Application for

Approval of Marine Event was received,

there was insufficient time to draft and

publish an NPRM. Special Local

Regulations have been published for

this event in 33 CFR 100.121 for the

same date. The location of this year’s

event has been moved 3.5 nautical miles

north in the vicinity of Barrytown

Reach, north of the Kingston-Rhinecliff

Bridge. The safety zone encompasses

about 800 yards of Barrytown Reach and

is about 1,000 yards smaller than the

permanent area, and it is also scheduled

to start and finish 30 minutes earlier as

compared to the current regulations.

Further, it is a annual, local event,

recreational vessels may still transit to

the east of the zone during the event, the

zone is only in affect for 2 hours, and

commercial traffic is not heavy in this

area of the Hudson River. It is expected

that no more than 1 or 2 commercial

vessels may be affected by this event.

Due to the publication of this annual

event in the Local Notice to Mariners,

commercial traffic will be able to adjust

their transit time to arrive before or after

the event. Any delay encountered in

this regulation’s effective date would be

unnecessary and contrary to public