11724 Federal Register / Vol. 77, No. 38 / Monday, February 27, 2012 / Rules and Regulations 

DEPARTMENT OF THE TREASURY 

Office of Foreign Assets Control 

31 CFR Part 561 

Iranian Financial Sanctions 

Regulations 

AGENCY: Office of Foreign Assets 

Control, Treasury. 

ACTION: Final rule. 

SUMMARY: The Department of the 

Treasury’s Office of Foreign Assets 

Control (‘‘OFAC’’) is amending the 

Iranian Financial Sanctions Regulations 

and reissuing them in their entirety, in 

order to implement section 1245(d) of 

the National Defense Authorization Act 

for Fiscal Year 2012, which provides for 

the imposition of sanctions with respect 

to the Central Bank of Iran and 

designated Iranian financial institutions. 

DATES: Effective Date: February 27, 

2012. 

FOR FURTHER INFORMATION CONTACT: 

Assistant Director for Sanctions 

Compliance & Evaluation, tel.: 202/622– 

2490, Assistant Director for Licensing, 

tel.: 202/622–2480, Assistant Director 

for Policy, tel.: 202/622–4855, Office of 

Foreign Assets Control, or Chief Counsel 

(Foreign Assets Control), tel.: 202/622– 

2410, Office of the General Counsel, 

Department of the Treasury (not toll free 

numbers). 

SUPPLEMENTARY INFORMATION: 

Electronic and Facsimile Availability 

This document and additional 

information concerning OFAC are 

available from OFAC’s Web site 

(www.treas.gov/ofac). Certain general 

information pertaining to OFAC’s 

sanctions programs also is available via 

facsimile through a 24-hour fax-ondemand service, tel.: 202/622–0077. 

Background 

On July 1, 2010, the President signed 

into law the Comprehensive Iran 

Sanctions, Accountability, and 

Divestment Act of 2010 (Pub. L. 111– 

195) (22 U.S.C. 8501–8551) 

(‘‘CISADA’’). Subsection 104(c) of 

CISADA required the Secretary of the 

Treasury, not later than 90 days after the 

date of CISADA’s enactment, to 

prescribe regulations to prohibit, or 

impose strict conditions on, the opening 

or maintaining in the United States of a 

correspondent account or a payablethrough account for a foreign financial 

institution that the Secretary finds 

knowingly engages in specified 

sanctionable activities, subject to certain 

waiver authorities provided to the 

Secretary in subsection 104(f) of 

CISADA. Subsection 104(d) of CISADA 

required the Secretary of the Treasury, 

not later than 90 days after the date of 

CISADA’s enactment, to prescribe 

regulations to prohibit any person 

owned or controlled by a U.S. financial 

institution from knowingly engaging in 

transactions with or benefitting Iran’s 

Islamic Revolutionary Guard Corps 

(‘‘IRGC’’) or any of its agents or affiliates 

whose property and interests in 

property are blocked pursuant to the 

International Emergency Economic 

Powers Act (50 U.S.C. 1701 et seq.) 

(‘‘IEEPA’’). On August 16, 2010, the 

Department of the Treasury’s Office of 

Foreign Assets Control (‘‘OFAC’’) 

published the Iranian Financial 

Sanctions Regulations, 31 CFR Part 561 

(the ‘‘IFSR’’), to implement subsections 

104(c) and (d) and other related 

provisions of CISADA (75 FR 49836). 

On September 28, 2010, the President 

issued Executive Order 13553 (75 FR 

60567, October 1, 2010) (‘‘E.O. 13553’’), 

invoking the authority of, inter alia, 

IEEPA and CISADA, and in order to take 

additional steps with respect to the 

national emergency declared in 

Executive Order 12957 of March 15, 

1995, with respect to Iran. 

Section 8 of E.O. 13553 authorizes the 

Secretary of the Treasury, in 

consultation with the Secretary of State, 

to take such actions, including the 

promulgation of rules and regulations, 

and to employ all powers granted to the 

President by IEEPA, as may be 

necessary to carry out section 104 of 

CISADA. In addition, section 8 of E.O. 

13553 authorizes the Secretary of the 

Treasury to redelegate these functions to 

other officers and agencies of the United 

States Government consistent with 

applicable law. E.O. 13553 thereby 

provided IEEPA authority for the IFSR. 

On December 31, 2011, the President 

signed into law the National Defense 

Authorization Act for Fiscal Year 2012 

(Pub. L. 112–81) (‘‘NDAA’’). Section 

1245(d)(1) of the NDAA requires the 

President to prohibit the opening, and 

prohibit or impose strict conditions on 

the maintaining, in the United States of 

a correspondent account or a payablethrough account by a foreign financial 

institution that the President determines 

has knowingly conducted or facilitated 

any significant financial transaction 

with the Central Bank of Iran or another 

Iranian financial institution designated 

by the Secretary of the Treasury 

pursuant to IEEPA. Pursuant to section 

1245(d)(2), a foreign financial 

institution conducting or facilitating a 

transaction for the sale of food, 

medicine, or medical devices to Iran 

will not be subject to sanctions under 

the NDAA for such transactions. 

For a private foreign financial 

institution, section 1245(d)(1) of the 

NDAA calls for sanctions beginning 60 

days after the date of enactment of the 

NDAA for transactions other than those 

for the purchase of petroleum or 

petroleum products from Iran. For 

transactions by a private foreign 

financial institution for the purchase of 

petroleum or petroleum products from 

Iran, section 1245(d)(4)(C) calls for 

sanctions pursuant to section 1245(d)(1) 

beginning 180 days after the date of 

enactment of the NDAA (or later, as 

further described below). For a foreign 

financial institution owned or 

controlled by the government of a 

foreign country, including the central 

bank of a foreign country, section 

1245(d)(3) calls for sanctions pursuant 

to section 1245(d)(1) beginning 180 days 

after the date of enactment of the NDAA 

(or later, as further described below) and 

only for transactions for the sale or 

purchase of petroleum or petroleum 

products to or from Iran. 

For all foreign financial institutions, 

section 1245(d)(4)(C) of the NDAA 

provides that the sanctions in section 

1245(d)(1) shall apply for transactions 

for the purchase of petroleum or 

petroleum products from Iran only if the 

President makes required periodic 

determinations that there is sufficient 

supply of petroleum and petroleum 

products from countries other than Iran 

to permit a significant reduction in the 

volume of petroleum and petroleum 

products purchased from Iran by or 

through foreign financial institutions. 

Section 1245(d)(4)(D) of the NDAA 

provides for an exception to the 

imposition of sanctions on any foreign 

financial institution if the President 

determines and periodically reports to 

Congress that the country with primary 

jurisdiction over that foreign financial 

institution has significantly reduced its 

volume of crude oil purchases from Iran 

during a specified period of time 

preceding the report. 

Pursuant to section 1245(d)(5) of the 

NDAA, the President may waive the 

imposition of sanctions in section 

1245(d)(1) for a period of not more than 

120 days, and may renew that waiver for 

additional periods of not more than 120 

days, provided the President determines 

that such a waiver is in the national 

security interest of the United States 

and submits a report to Congress 

providing justification for the waiver 

and that includes any concrete 

cooperation that the President has 

received or expects to receive as a result 

of the waiver. 

Finally, section 1245(g) of the NDAA 

provides that the President may exercise 

all authorities under sections 203 and 


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Federal Register / Vol. 77, No. 38 / Monday, February 27, 2012 / Rules and Regulations 11725 

205 of IEEPA and may impose the 

penalties provided in section 206(b) and 

(c) of IEEPA to implement and enforce 

section 1245 of the NDAA. 

Section 1245(d) of the NDAA does not 

repeal or amend section 104(c) of 

CISADA. Though section 1245(d) of the 

NDAA imposes sanctions on foreign 

financial institutions similar to the 

financial sanctions under CISADA and 

the IFSR prior to this regulatory 

amendment (i.e., prohibiting and/or 

imposing strict conditions on opening 

or maintaining correspondent accounts 

or payable-through accounts in the 

United States), there are differences in 

the underlying financial transactions 

that serve as the trigger for the 

imposition of sanctions. Therefore, 

section 1245(d) of the NDAA and 

section 104(c) of CISADA, as 

implemented, respectively, by new 

§ 561.203 and by § 561.201 of the IFSR, 

are separate from, and independent of, 

each other. 

On February 5, 2012, the President, 

invoking the authority of, inter alia, 

IEEPA and section 1245 of the NDAA, 

issued Executive Order 13599 

(‘‘Blocking Property of the Government 

of Iran and Iranian Financial 

Institutions’’) (‘‘E.O. 13599’’), in order to 

take additional steps with respect to the 

national emergency declared in 

Executive Order 12957 of March 15, 

1995, with respect to Iran, particularly 

in light of the deceptive practices of the 

Central Bank of Iran and other Iranian 

banks to conceal transactions of 

sanctioned parties, the deficiencies in 

Iran’s anti-money laundering regime 

and the weaknesses in its 

implementation, and the continuing and 

unacceptable risk posed to the 

international financial system by Iran’s 

activities. 

Section 1 of E.O. 13599 blocks all 

property and interests in property that 

are in the United States, that come 

within the United States, or that are or 

come within the possession or control of 

any United States person, including any 

overseas branch, of the Government of 

Iran (including the Central Bank of 

Iran), any Iranian financial institution, 

and any person determined by the 

Secretary of the Treasury, in 

consultation with the Secretary of State, 

to be owned or controlled by, or to have 

acted or purported to act for or on behalf 

of, directly or indirectly, any person 

whose property and interests in 

property are blocked pursuant to E.O. 

13599. The property and interests in 

property of the persons described above 

may not be transferred, paid, exported, 

withdrawn, or otherwise dealt in. 

In addition, Section 10 of E.O. 13599 

delegates to the Secretary of the 

Treasury, in consultation with the 

Secretary of State, the authority to 

exercise the relevant functions and 

authorities conferred upon the President 

by sections 1245(d)(1)(A) and (g)(1) of 

the NDAA. 

Today, OFAC is amending the IFSR to 

accomplish several purposes. First, 

OFAC is amending the IFSR to 

implement section 1245(d) and other 

related provisions of section 1245 of the 

NDAA. Section 561.203 of the IFSR 

adds the prohibitions and exceptions set 

forth in section 1245(d) of the NDAA. 

Sections 561.318 through 561.327 of the 

IFSR define new key terms used in 

§ 561.203 of the IFSR, and §§ 561.406 

and 561.407 of the IFSR contain new 

interpretive provisions regarding 

§ 561.203 of the IFSR. In particular, 

§§ 561.318 and 561.319 of the IFSR 

define the terms petroleum and 

petroleum products, and § 561.327 of 

the IFSR defines the term food, 

medicine, and medical devices. Section 

561.406 of the IFSR provides an 

interpretation of the phrase country with 

primary jurisdiction over the foreign 

financial institution for purposes of 

§ 561.203 of the IFSR. An amended 

§ 561.404 of the IFSR sets forth the types 

of factors that, as a general matter, the 

Secretary of the Treasury will consider 

in determining whether a transaction is 

significant, for purposes of both 

§§ 561.201 and 561.203 of the IFSR. 

Second, to implement section 8 of 

E.O. 13553, OFAC is adding IEEPA to 

the authority citation for the IFSR. As a 

related change, OFAC is amending 

§ 561.802 of the IFSR to add a 

delegation of IEEPA authorities to the 

Director of OFAC or any other person to 

whom the Secretary of the Treasury has 

delegated authority to act. With the 

amendments to the authority citation 

and § 561.802 of the IFSR, OFAC is 

clarifying that it may exercise the same 

IEEPA authorities that are used in 

OFAC’s other IEEPA-based sanctions 

programs—in addition to authorities 

under section 104 of CISADA—to 

investigate, regulate, or prohibit 

transactions under the IFSR. 

Third, OFAC is amending § 561.201 of 

the IFSR to remove references to 

Appendix A to Part 561 throughout the 

section. Section 561.201 provided that 

if, upon a finding by the Secretary of the 

Treasury that a foreign financial 

institution knowingly engaged in one or 

more of the sanctionable activities set 

forth in paragraph (a) of § 561.201, the 

Secretary decided to prohibit a U.S. 

financial institution from opening or 

maintaining a correspondent account or 

a payable-through account in the United 

States for that foreign financial 

institution, the name of that foreign 

financial institution would be added to 

Appendix A to Part 561. Today’s 

amendment removes the references to 

Appendix A throughout § 561.201 and 

instead provides that the names of the 

foreign financial institutions sanctioned 

under either § 561.201 or § 561.203 will 

be added to the List of Foreign Financial 

Institutions Subject to Part 561 (the 

‘‘Part 561 List’’), which is a new list to 

be maintained on the Office of Foreign 

Assets Control’s Web site 

(www.treasury.gov/ofac) on its Iran 

Sanctions page, and published in the 

Federal Register. This list also will state 

the prohibition or strict condition(s) that 

apply with respect to each sanctioned 

foreign financial institution. In addition, 

OFAC is making conforming 

amendments to § 561.504 of the IFSR to 

remove references to Appendix A 

throughout the section and substitute 

therefor references to the Part 561 List 

on OFAC’s Web site, as described 

below. In a final related amendment, 

OFAC is removing Appendix A to Part 

561, which had been reserved. 

Fourth, OFAC is amending the IFSR 

to add a reporting requirement to the 

general license in § 561.504, which 

authorizes transactions related to 

closing a correspondent account or a 

payable-through account for a foreign 

financial institution. OFAC is also 

amending § 561.504 to make the general 

license and reporting requirement 

applicable when correspondent 

accounts or payable-through accounts 

for a foreign financial institution are 

required to be closed pursuant to new 

§ 561.203, as well as § 561.201. As set 

forth in amended § 561.201 and new 

§ 561.203 of the IFSR, if the Secretary of 

the Treasury decides to prohibit the 

opening or maintaining of 

correspondent accounts or payablethrough accounts in the United States 

for a foreign financial institution, the 

name of the foreign financial institution 

will be added to the Part 561 List. 

Amended paragraph (a) of § 561.504 

authorizes transactions related to 

closing a correspondent account or a 

payable-through account for a foreign 

financial institution whose name is 

added to the Part 561 List during the 10- 

day period beginning on the effective 

date of the prohibition in § 561.201(c) or 

§ 561.203(c). Under new paragraph (b) 

of § 561.504, a U.S. financial institution 

that maintained a correspondent 

account or a payable-through account 

for a foreign financial institution whose 

name is added to the Part 561 List on 

OFAC’s Web site must file a report with 

OFAC that provides full details on the 

closing of each such account within 30 

days of the closure of the account. The 


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11726 Federal Register / Vol. 77, No. 38 / Monday, February 27, 2012 / Rules and Regulations 

report must include complete 

information on all transactions 

processed or executed in winding down 

and closing the account. Former 

paragraphs (b) and (c) of § 561.504 are 

being redesignated as paragraphs (c) and 

(d), respectively. 

In connection with the new reporting 

requirement in § 561.504(b), OFAC also 

is amending § 561.901 of the IFSR to 

add a statement that the information 

collection in § 561.504(b) has been 

approved by the Office of Management 

and Budget (‘‘OMB’’) and assigned 

control number 1505–0243 (see 

discussion under Paperwork Reduction 

Act, below). 

Finally, OFAC is amending 

§§ 561.702(b)(3) and 561.802 of the IFSR 

to make technical changes or 

corrections. 

Public Participation and Paperwork 

Reduction Act 

Because the IFSR involve a foreign 

affairs function, the provisions of 

Executive Order 12866 and the 

Administrative Procedure Act (5 U.S.C. 

553) requiring notice of proposed 

rulemaking, opportunity for public 

participation, and delay in effective date 

are inapplicable. Because no notice of 

proposed rulemaking is required for this 

rule, the Regulatory Flexibility Act (5 

U.S.C. 601–612) does not apply. 

With respect to section 2 (44 U.S.C. 

3507) of the Paperwork Reduction Act 

of 1995 (44 U.S.C. 3501 et seq.), the 

collection of information in § 561.601 of 

the IFSR is made pursuant to OFAC’s 

Reporting, Procedures and Penalties 

Regulations, 31 CFR part 501, and has 

been approved by OMB under control 

number 1505–0164. See 31 CFR 

501.901. The collection of information 

in § 561.504(b) of the IFSR has been 

submitted to and approved by OMB 

pending public comment and has been 

assigned OMB control number 1505– 

0243. Section 561.504(b) specifies that a 

U.S. financial institution that 

maintained a correspondent account or 

payable-through account for a foreign 

financial institution listed on the Part 

561 List on OFAC’s Web site 

(www.treasury.gov/ofac) must file a 

report with OFAC that provides full 

details on the closing of each such 

account within 30 days of the closure of 

the account. This collection of 

information assists in verifying that U.S. 

financial institutions are complying 

with prohibitions on maintaining 

correspondent accounts or payablethrough accounts for foreign financial 

institutions listed on the Part 561 List, 

and the information collected will be 

used to further OFAC’s compliance and 

enforcement functions. 

With respect to all of the foregoing 

collections of information, 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. 

The likely respondents and 

recordkeepers affected by the new 

collection of information in § 561.504(b) 

are U.S. financial institutions operating 

correspondent accounts or payablethrough accounts for foreign financial 

institutions. Because this is a new 

collection of information, OFAC cannot 

predict the response rate for the 

§ 561.504(b) reporting requirement at 

this time. For future submissions, OFAC 

will report retrospectively on the 

response rate during the previous 

reporting period. 

The estimated average reporting/ 

recordkeeping burden is 2 hours per 

response. 

Comments are invited on: (a) Whether 

this collection of information is 

necessary for the proper performance of 

the functions of the agency, including 

whether the information has practical 

utility; (b) the accuracy of the agency’s 

estimate of the burden of the collection 

of information; (c) ways to enhance the 

quality, utility, and clarity of the 

information to be collected; (d) ways to 

minimize the burden of the collection of 

information on respondents, including 

through the use of automated collection 

techniques and other forms of 

information technology; and (e) the 

estimated capital or start-up costs of the 

operation, maintenance, and/or 

purchase of services to provide 

information. 

Comments concerning the above 

information and the accuracy of these 

burden estimates, and suggestions for 

reducing this burden, should be 

directed to OMB, Attention: Desk 

Officer for the Department of the 

Treasury, Office of Information and 

Regulatory Affairs, Washington, DC 

20503, with a copy to Chief of Records, 

Attention: Request for Comments, Office 

of Foreign Assets Control, Department 

of the Treasury, 1500 Pennsylvania 

Avenue NW., Washington, DC 20220. 

Any such comments should be 

submitted not later than April 27, 2012. 

All comments on the collection of 

information in § 561.504(b) will be a 

matter of public record. 

List of Subjects in 31 CFR Part 561 

Administrative practice and 

procedure, Banks, Banking, Brokers, 

Foreign trade, Investments, Loans, 

Securities, Iran. 

For the reasons set forth in the 

preamble, the Department of the 

Treasury’s Office of Foreign Assets 

Control is revising part 561 of 31 CFR 

chapter V to read as follows: 

PART 561—IRANIAN FINANCIAL 

SANCTIONS REGULATIONS 

Subpart A—Relation of This Part to Other 

Laws and Regulations 

Sec. 

561.101 Relation of this part to other laws 

and regulations. 

Subpart B—Prohibitions 

561.201 CISADA-based sanctions on certain 

foreign financial institutions. 

561.202 Prohibitions on persons owned or 

controlled by U.S. financial institutions. 

561.203 NDAA-based sanctions on certain 

foreign financial institutions. 

Subpart C—General Definitions 

561.301 Effective date. 

561.302 UNSC Resolution 1737. 

561.303 UNSC Resolution 1747. 

561.304 UNSC Resolution 1803. 

561.305 UNSC Resolution 1929. 

561.306 Correspondent account. 

561.307 Payable-through account. 

561.308 Foreign financial institution. 

561.309 U.S. financial institution. 

561.310 Money laundering. 

561.311 Agent. 

561.312 Act of international terrorism. 

561.313 Financial services. 

561.314 Knowingly. 

561.315 Person. 

561.316 Entity. 

561.317 Money service businesses. 

561.318 Petroleum. 

561.319 Petroleum products. 

561.320 Iranian financial institution. 

561.321 Government of Iran. 

561.322 Entity owned or controlled by the 

Government of Iran. 

561.323 Foreign financial institution owned 

or controlled by the government of a 

foreign country. 

561.324 Designated Iranian financial 

institution. 

561.325 Financial transaction. 

561.326 Privately owned foreign financial 

institution. 

561.327 Food, medicine, and medical 

devices. 

Subpart D—Interpretations 

561.401 Reference to amended sections. 

561.402 Effect of amendment. 

561.403 Facilitation of certain efforts, 

activities, or transactions by foreign 

financial institutions. 

561.404 Significant transaction or 

transactions; significant financial 

services; significant financial 

transaction. 

561.405 Entities owned by a person whose 

property and interests in property are 

blocked. 

561.406 Country with primary jurisdiction 

over the foreign financial institution. 

561.407 Conducting or facilitating a 

financial transaction with the Central 

Bank of Iran or a designated Iranian 

financial institution. 


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Federal Register / Vol. 77, No. 38 / Monday, February 27, 2012 / Rules and Regulations 11727 

Subpart E—Licenses, Authorizations, and 

Statements of Licensing Policy 

561.501 General and specific licensing 

procedures. 

561.502 Effect of license or authorization. 

561.503 Exclusion from licenses. 

561.504 Transactions related to closing a 

correspondent account or payablethrough account. 

Subpart F—Reports 

561.601 Records and reports. 

Subpart G—Penalties 

561.701 Penalties. 

561.702 Pre-Penalty Notice; settlement. 

561.703 Penalty imposition. 

561.704 Administrative collection; referral 

to United States Department of Justice. 

Subpart H—Procedures 

561.801 Procedures. 

561.802 Delegation by the Secretary of the 

Treasury. 

561.803 Consultations. 

Subpart I—Paperwork Reduction Act 

561.901 Paperwork Reduction Act notice. 

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 (50 U.S.C. 

1705 note); Pub. L. 111–195, 124 Stat. 1312 

(22 U.S.C. 8501–8551); Pub. L. 112–81, 125 

Stat. 1298; E.O. 12957, 60 FR 14615, 3 CFR, 

1995 Comp., p. 332; E.O. 13553, 75 FR 60567, 

3 CFR, 2010 Comp., p. 253; E.O. 13599, 77 

FR 6659, February 8, 2012. 

Subpart A—Relation of This Part to 

Other Laws and Regulations 

§ 561.101 Relation of this part to other 

laws and regulations. 

This part is separate from, and 

independent of, the other parts of this 

chapter, with the exception of part 501 

of this chapter, the recordkeeping and 

reporting requirements and license 

application and other procedures of 

which apply to this part. Actions taken 

pursuant to part 501 of this chapter with 

respect to the prohibitions contained in 

this part or the conditions imposed 

pursuant to this part are considered 

actions taken pursuant to this part. 

Differing foreign policy and national 

security circumstances may result in 

differing interpretations of similar 

language among the parts of this 

chapter. No license or authorization 

contained in or issued pursuant to those 

other parts authorizes any transaction 

prohibited by this part. No license or 

authorization contained in or issued 

pursuant to any other provision of law 

or regulation authorizes any transaction 

prohibited by this part. No license or 

authorization contained in or issued 

pursuant to this part relieves the 

involved parties from complying with 

any other applicable laws or regulations. 

Subpart B—Prohibitions 

§ 561.201 CISADA-based sanctions on 

certain foreign financial institutions. 

Upon a finding by the Secretary of the 

Treasury that a foreign financial 

institution knowingly engages in one or 

more of the activities described in 

paragraphs (a)(1) through (5) of this 

section, consistent with the Secretary of 

the Treasury’s authorities under the 

Comprehensive Iran Sanctions, 

Accountability, and Divestment Act of 

2010 (Pub. L. 111–195) (22 U.S.C. 8501– 

8551) (‘‘CISADA’’), either the Secretary 

of the Treasury will impose one or more 

strict conditions, as set forth in 

paragraph (b) of this section, on the 

opening or maintaining of a 

correspondent account or a payablethrough account in the United States for 

that foreign financial institution, or, as 

set forth in paragraph (c) of this section, 

the Secretary of the Treasury will 

prohibit a U.S. financial institution from 

opening or maintaining a correspondent 

account or a payable-through account in 

the United States for that foreign 

financial institution. The name of the 

foreign financial institution and the 

relevant prohibition or strict 

condition(s) will be added to the List of 

Foreign Financial Institutions Subject to 

Part 561 (the ‘‘Part 561 List’’) on the 

Office of Foreign Assets Control’s Web 

site (www.treasury.gov/ofac) on the Iran 

Sanctions page and published in the 

Federal Register. 

(a) A foreign financial institution 

engages in an activity described in this 

paragraph if, in any location or 

currency, the foreign financial 

institution knowingly: 

(1) Facilitates the efforts of the 

Government of Iran (including efforts of 

Iran’s Islamic Revolutionary Guard 

Corps or any of its agents or affiliates)— 

(i) To acquire or develop weapons of 

mass destruction or delivery systems for 

weapons of mass destruction; or 

(ii) To provide support for 

organizations designated as foreign 

terrorist organizations under section 

219(a) of the Immigration and 

Nationality Act (8 U.S.C. 1189(a)) or 

support for acts of international 

terrorism, as defined in § 561.312 of this 

part; 

(2) Facilitates the activities of a 

person subject to financial sanctions 

pursuant to United Nations Security 

Council Resolutions 1737, 1747, 1803, 

or 1929, or any other resolution adopted 

by the Security Council that imposes 

sanctions with respect to Iran; 

Note to paragraph (a)(2) of § 561.201: 

Persons subject to financial sanctions 

pursuant to the United Nations Security 

Council resolutions listed in § 561.201(a)(2) 

include individuals and entities listed in the 

Annex to UNSC Resolution 1737, Annex I of 

UNSC Resolution 1747, Annexes I and III of 

UNSC Resolution 1803, and Annexes I, II, 

and III of UNSC Resolution 1929; and 

individuals and entities designated by the 

Security Council or by the Committee 

established pursuant to UNSC Resolution 

1737 (the ‘‘Committee’’) as being engaged in, 

directly associated with or providing support 

for Iran’s proliferation sensitive nuclear 

activities, or the development of nuclear 

weapon delivery systems; and individuals 

and entities acting on behalf of or at the 

direction of those so listed or designated; and 

entities owned or controlled by those so 

listed or designated; and individuals and 

entities determined by the Security Council 

or the Committee to have assisted listed or 

designated individuals or entities in evading 

sanctions of, or in violating the provisions of, 

UNSC Resolutions 1737, 1747, 1803, or 1929. 

(3) Engages in money laundering to 

carry out an activity described in 

paragraphs (a)(1) or (2) of this section; 

(4) Facilitates efforts by the Central 

Bank of Iran or any other Iranian 

financial institution to carry out an 

activity described in paragraphs (a)(1) or 

(2) of this section; or 

(5) Facilitates a significant transaction 

or transactions or provides significant 

financial services for— 

(i) Iran’s Islamic Revolutionary Guard 

Corps or any of its agents or affiliates 

whose property and interests in 

property are blocked pursuant to the 

International Emergency Economic 

Powers Act (50 U.S.C. 1701 et seq.) 

(‘‘IEEPA’’); or 

(ii) A financial institution whose 

property and interests in property are 

blocked pursuant to parts 544 or 594 of 

this chapter in connection with Iran’s 

proliferation of weapons of mass 

destruction or delivery systems for 

weapons of mass destruction or Iran’s 

support for international terrorism. 

Note to paragraph (a)(5) of § 561.201: The 

names of persons whose property and 

interests in property are blocked pursuant to 

IEEPA are published in the Federal Register 

and incorporated into the Office of Foreign 

Assets Control’s Specially Designated 

Nationals and Blocked Persons List (the 

‘‘SDN List’’). The SDN List is accessible 

through the following page on the Office of 

Foreign Assets Control’s Web site: 

www.treasury.gov/sdn. Additional 

information pertaining to the SDN List can be 

found in appendix A to this chapter. Agents 

or affiliates of Iran’s Islamic Revolutionary 

Guard Corps (‘‘IRGC’’) whose property and 

interests in property are blocked pursuant to 

IEEPA are identified by a special reference to 

the ‘‘IRGC’’ at the end of their entries on the 

SDN List, in addition to the reference to the 

regulatory part of this chapter pursuant to 

which their property and interests in 

property are blocked. For example, an 

affiliate of the IRGC whose property and 

interests in property are blocked pursuant to 


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11728 Federal Register / Vol. 77, No. 38 / Monday, February 27, 2012 / Rules and Regulations 

the Weapons of Mass Destruction 

Proliferators Sanctions Regulations, 31 CFR 

part 544, will have the tag ‘‘[NPWMD] 

[IRGC]’’ at the end of its entry on the SDN 

List. Financial institutions whose property 

and interests in property are blocked 

pursuant to parts 544 or 594 of this chapter 

in connection with Iran’s proliferation of 

weapons of mass destruction or delivery 

systems for weapons of mass destruction or 

Iran’s support for international terrorism also 

are identified by the tag ‘‘[IFSR]’’ in addition 

to the tag referencing part 544 or part 594, 

as the case may be, located at the end of their 

entries on the SDN List (e.g., [NPWMD] 

[IFSR] or [SDGT] [IFSR]). In addition, see 

§ 561.405 concerning entities that may not be 

listed on the SDN List but whose property 

and interests in property are nevertheless 

blocked. 

(b) The Secretary of the Treasury may 

impose one or more strict conditions on 

the opening or maintaining by a U.S. 

financial institution of a correspondent 

account or a payable-through account in 

the United States for a foreign financial 

institution that the Secretary finds 

engages in one or more of the activities 

described in paragraph (a) of this 

section. Except as otherwise authorized 

pursuant to this part, a U.S. financial 

institution shall not open or maintain a 

correspondent account or payablethrough account in the United States in 

a manner that is inconsistent with any 

strict condition imposed and in effect 

pursuant to this paragraph. Such 

conditions may include, but are not 

limited to, the following: 

(1) Prohibiting or restricting any 

provision of trade finance through the 

correspondent account or payablethrough account of the foreign financial 

institution; 

(2) Restricting the transactions that 

may be processed through the 

correspondent account or payablethrough account of the foreign financial 

institution to certain types of 

transactions, such as personal 

remittances; 

(3) Placing monetary limits on, or 

limiting the volume of, the transactions 

that may be processed through the 

correspondent account or payablethrough account of the foreign financial 

institution; 

(4) Requiring pre-approval from the 

U.S. financial institution for all 

transactions processed through the 

correspondent account or payablethrough account of the foreign financial 

institution; or 

(5) Prohibiting or restricting the 

processing of foreign exchange 

transactions through the correspondent 

account or payable-through account of 

the foreign financial institution. 

Note to paragraph (b) of § 561.201: The 

name of the foreign financial institution, 

together with the actual strict condition or 

conditions to be imposed, will be added to 

the Part 561 List on the Office of Foreign 

Assets Control’s Web site (www.treasury.gov/ 

ofac) on the Iran Sanctions page, and 

published in the Federal Register. 

(c) If the Secretary of the Treasury 

does not impose one or more strict 

conditions, pursuant to paragraph (b) of 

this section, on the opening or 

maintaining of a correspondent account 

or a payable-through account in the 

United States for a foreign financial 

institution that the Secretary finds 

engages in one or more of the activities 

described in paragraph (a) of this 

section, the Secretary, consistent with 

CISADA, will prohibit the opening or 

maintaining by a U.S. financial 

institution of a correspondent account 

or a payable-through account in the 

United States for that foreign financial 

institution. Except as otherwise 

authorized pursuant to this part, a U.S. 

financial institution shall not open or 

maintain a correspondent account or a 

payable-through account in the United 

States for a foreign financial institution 

for which the opening or maintaining of 

such an account is prohibited pursuant 

to this paragraph. 

Note to paragraph (c) of § 561.201: The 

names of foreign financial institutions for 

which the opening or maintaining of a 

correspondent account or a payable-through 

account in the United States is prohibited 

will be listed on the Part 561 List on the 

Office of Foreign Assets Control’s Web site 

(www.treasury.gov/ofac) on the Iran 

Sanctions page, and published in the Federal 

Register. 

Note to § 561.201: The Part 561 List will 

specify whether U.S. financial institutions 

are required to: 

(1) Impose strict conditions on the opening 

or maintaining of a correspondent account or 

a payable-through account for a particular 

foreign financial institution pursuant to 

paragraph (b) of this section; 

(2) Prohibit the opening or maintaining of 

a correspondent account or a payablethrough account for a particular foreign 

financial institution pursuant to paragraph 

(c) of this section; 

(3) Prohibit the opening or maintaining of 

a correspondent account or a payablethrough account for a particular foreign 

financial institution pursuant to 

§ 561.203(a)(1) and (a)(2)(i); or 

(4) Prohibit the opening of a correspondent 

account or a payable-through account and 

impose strict conditions on maintaining a 

preexisting correspondent account or a 

payable-through account for a particular 

foreign financial institution pursuant to 

§ 561.203(a)(1) and (a)(2)(ii). Where 

applicable, the Part 561 List also will specify 

the strict condition or conditions to be 

imposed on the correspondent account or the 

payable-through account. 

§ 561.202 Prohibitions on persons owned 

or controlled by U.S. financial institutions. 

Except as otherwise authorized 

pursuant to this part, any person that is 

owned or controlled by a U.S. financial 

institution is prohibited from knowingly 

engaging in any transaction with or 

benefitting Iran’s Islamic Revolutionary 

Guard Corps or any of its agents or 

affiliates whose property and interests 

in property are blocked pursuant to the 

International Emergency Economic 

Powers Act (50 U.S.C. 1701 et seq.) 

(‘‘IEEPA’’). 

Note 1 to § 561.202: The names of persons 

whose property and interests in property are 

blocked pursuant to IEEPA are published in 

the Federal Register and incorporated into 

the Office of Foreign Assets Control’s 

Specially Designated Nationals and Blocked 

Persons List (the ‘‘SDN List’’). The SDN List 

is accessible through the following page on 

the Office of Foreign Assets Control’s Web 

site: www.treasury.gov/sdn. Additional 

information pertaining to the SDN List can be 

found in appendix A to this chapter. Agents 

or affiliates of Iran’s Islamic Revolutionary 

Guard Corps (‘‘IRGC’’) whose property and 

interests in property are blocked pursuant to 

IEEPA are identified by a special reference to 

the ‘‘IRGC’’ at the end of their entries on the 

SDN List, in addition to the reference to the 

regulatory part of this chapter pursuant to 

which their property and interests in 

property are blocked. For example, an 

affiliate of the IRGC whose property and 

interests in property are blocked pursuant to 

the Weapons of Mass Destruction 

Proliferators Sanctions Regulations, 31 CFR 

part 544, will have the tag ‘‘[NPWMD] 

[IRGC]’’ at the end of its entry on the SDN 

List. In addition, see § 561.405 concerning 

entities that may not be listed on the SDN 

List but whose property and interests in 

property are nevertheless blocked. 

Note 2 to § 561.202: A U.S. financial 

institution is subject to the civil penalties 

provided for in section 206(b) of IEEPA if any 

person that it owns or controls violates the 

prohibition set forth in this section and the 

U.S. financial institution knew or should 

have known of such violation. See 

§ 561.701(a)(2). 

§ 561.203 NDAA-based sanctions on 

certain foreign financial institutions. 

(a) Imposition of sanctions. Subject to 

the limitations, exceptions, and 

conditions set forth in paragraphs (d) 

through (h) of this section, upon a 

determination by the Secretary of the 

Treasury that a foreign financial 

institution has knowingly conducted or 

facilitated any significant financial 

transaction with the Central Bank of 

Iran or a designated Iranian financial 

institution, consistent with section 1245 

of the National Defense Authorization 

Act for Fiscal Year 2012 (Pub. L. 112– 

81), the Secretary of the Treasury: 


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(1) Will prohibit U.S. financial 

institutions from opening a 

correspondent account or a payablethrough account in the United States for 

the foreign financial institution with 

respect to which the determination has 

been made; and either 

(2)(i) Will prohibit U.S. financial 

institutions from maintaining a 

correspondent account or a payablethrough account in the United States for 

the foreign financial institution with 

respect to which the determination has 

been made; or 

(ii) Will impose one or more strict 

conditions on the maintaining of any 

correspondent account or payablethrough account that had been opened 

in the United States for the foreign 

financial institution prior to the 

Secretary of the Treasury’s 

determination with respect to the 

foreign financial institution. 

Note 1 to paragraph (a) of § 561.203: The 

names of designated Iranian financial 

institutions are identified on the Specially 

Designated Nationals and Blocked Persons 

List (the ‘‘SDN List’’) on the Office of Foreign 

Assets Control’s Web site with the tag 

‘‘[NDAA]’’ at the end of their entries, in 

addition to the reference to the regulatory 

part of this chapter pursuant to which their 

property and interests in property are 

blocked. The SDN List is accessible through 

the following page on the Office of Foreign 

Assets Control’s Web site: www.treasury.gov/ 

sdn. 

Note 2 to paragraph (a) of § 561.203: The 

name of any foreign financial institution with 

respect to which a determination has been 

made pursuant to this paragraph (a), along 

with the relevant sanctions to be imposed 

(prohibition(s) and/or strict condition(s)), 

will be added to the List of Foreign Financial 

Institutions Subject to Part 561 (the ‘‘Part 561 

List’’), which is maintained on the Office of 

Foreign Assets Control’s Web site 

(www.treasury.gov/ofac) on the Iran 

Sanctions page, and published in the Federal 

Register. 

(b) Strict conditions. The strict 

conditions that might be imposed on the 

maintaining of a pre-existing 

correspondent account or payablethrough account for a foreign financial 

institution pursuant to paragraph 

(a)(2)(ii) of this section include, but are 

not limited to, the following: 

(1) Prohibiting or restricting any 

provision of trade finance through the 

correspondent account or payablethrough account of the foreign financial 

institution; 

(2) Restricting the transactions that 

may be processed through the 

correspondent account or payablethrough account of the foreign financial 

institution to certain types of 

transactions, such as personal 

remittances; 

(3) Placing monetary limits on, or 

limiting the volume of, the transactions 

that may be processed through the 

correspondent account or payablethrough account of the foreign financial 

institution; 

(4) Requiring pre-approval from the 

U.S. financial institution for all 

transactions processed through the 

correspondent account or payablethrough account of the foreign financial 

institution; or 

(5) Prohibiting or restricting the 

processing of foreign exchange 

transactions through the correspondent 

account or payable-through account of 

the foreign financial institution. 

(c) Prohibitions. (1) Except as 

otherwise authorized pursuant to this 

part, a U.S. financial institution shall 

not open a correspondent account or 

payable-through account in the United 

States for a foreign financial institution 

for which the opening of such an 

account is prohibited pursuant to 

paragraph (a)(1) of this section. 

(2) Except as otherwise authorized 

pursuant to this part, a U.S. financial 

institution shall not maintain a 

correspondent account or payablethrough account in the United States for 

a foreign financial institution for which 

the maintaining of such an account is 

prohibited pursuant to paragraph 

(a)(2)(i) of this section. 

(3) Except as otherwise authorized 

pursuant to this part, a U.S. financial 

institution shall not maintain a 

correspondent account or payablethrough account in the United States for 

a foreign financial institution in a 

manner that is inconsistent with any 

strict condition imposed and in effect 

pursuant to paragraph (a)(2)(ii) of this 

section. 

(d) Privately owned foreign financial 

institutions. (1) Subject to the 

exceptions set forth in paragraphs (f) 

and (h) of this section, sanctions may be 

imposed pursuant to paragraph (a) of 

this section beginning on February 29, 

2012, with respect to any significant 

financial transaction conducted or 

facilitated by a privately owned foreign 

financial institution that is not for the 

purchase of petroleum or petroleum 

products from Iran. 

(2) Subject to the exceptions and 

conditions set forth in paragraphs (g) 

and (h) of this section, sanctions may be 

imposed pursuant to paragraph (a) of 

this section with respect to any 

significant financial transaction 

conducted or facilitated by a privately 

owned foreign financial institution on 

or after June 28, 2012, for the purchase 

of petroleum or petroleum products 

from Iran. 

(e) Government-owned or -controlled 

foreign financial institutions, including 

foreign central banks. Subject to the 

exceptions and conditions set forth in 

paragraphs (g) and (h) of this section, 

sanctions may be imposed pursuant to 

paragraph (a) of this section on a foreign 

financial institution owned or 

controlled by the government of a 

foreign country, including a central 

bank of a foreign country, only insofar 

as it engages in a significant financial 

transaction on or after June 28, 2012, for 

the sale or purchase of petroleum or 

petroleum products to or from Iran. 

(f) Sanctions will not be imposed 

under paragraph (a) of this section with 

respect to any foreign financial 

institution for conducting or facilitating 

a transaction for the sale of food, 

medicine, or medical devices to Iran. 

(g) The Secretary of the Treasury may 

impose sanctions pursuant to paragraph 

(a) of this section with respect to any 

significant financial transaction 

conducted or facilitated by a foreign 

financial institution on or after June 28, 

2012, for the purchase of petroleum or 

petroleum products from Iran only if the 

President determines, not later than 

March 30, 2012, and every 180 days 

thereafter, that there is a sufficient 

supply of petroleum and petroleum 

products from countries other than Iran 

to permit a significant reduction in the 

volume of petroleum and petroleum 

products purchased from Iran by or 

through foreign financial institutions. 

Such successive sufficiency 

determinations by the President shall 

render subject to sanctions under 

paragraph (a) of this section those 

financial transactions conducted or 

facilitated by a foreign financial 

institution for the purchase of 

petroleum or petroleum products from 

Iran during each successive 180-day 

period beginning 90 days after the 

President’s determination. 

Note to paragraph (g) of § 561.203: Under 

Section 1245(d)(4)(B) of the NDAA, the 

President is to make a determination, not 

later than March 30, 2012, and every 180 

days thereafter, of whether the price and 

supply of petroleum and petroleum products 

produced in countries other than Iran is 

sufficient to permit purchasers of petroleum 

and petroleum products from Iran to reduce 

significantly in volume their purchases from 

Iran. This determination is to be based on 

reports on the availability and price of 

petroleum and petroleum products produced 

in countries other than Iran that, pursuant to 

section 1245(d)(4)(A) of the NDAA, the 

Administrator of the Energy Information 

Administration, in consultation with the 

Secretary of the Treasury, the Secretary of 

State, and the Director of National 


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11730 Federal Register / Vol. 77, No. 38 / Monday, February 27, 2012 / Rules and Regulations 

Intelligence, is to submit to Congress 

beginning not later than February 29, 2012, 

and every 60 days thereafter. 

(h) Sanctions will not be imposed 

under paragraph (a) of this section on a 

foreign financial institution if the 

Secretary of State determines and 

reports to Congress not later than 90 

days after the date on which the 

President makes the initial 

determination referenced in paragraph 

(g) of this section, and every 180 days 

thereafter, that the country with primary 

jurisdiction over the foreign financial 

institution has significantly reduced its 

volume of crude oil purchases from Iran 

during the period prior to the initial 

determination, and during successive 

180-day periods. 

Note to § 561.203: The sanctions regime 

described in § 561.203 is separate from the 

sanctions regime described in § 561.201 and 

applies in addition to, and independently of, 

the sanctions regime imposed under 

§ 561.201. 

Subpart C—General Definitions 

§ 561.301 Effective date. 

(a) The effective date of a prohibition 

or condition imposed pursuant to 

§ 561.201 or § 561.203 on the opening or 

maintaining of a correspondent account 

or a payable-through account in the 

United States by a U.S. financial 

institution for a particular foreign 

financial institution is the earlier of the 

date the U.S. financial institution 

receives actual or constructive notice of 

such prohibition or condition. 

(b) The effective date of the 

prohibition contained in § 561.202 with 

respect to Iran’s Islamic Revolutionary 

Guard Corps and any of its agents or 

affiliates whose property and interests 

in property are blocked as of August 16, 

2010, is August 16, 2010. 

(c) The effective date of the 

prohibition contained in § 561.202 with 

respect to an agent or affiliate of Iran’s 

Islamic Revolutionary Guard Corps 

whose property and interests in 

property become blocked after August 

16, 2010, is the earlier of the date of 

actual or constructive notice that such 

person’s property and interests in 

property are blocked. 

§ 561.302 UNSC Resolution 1737. 

The term UNSC Resolution 1737 

means United Nations Security Council 

Resolution 1737, adopted December 23, 

2006. 

§ 561.303 UNSC Resolution 1747. 

The term UNSC Resolution 1747 

means United Nations Security Council 

Resolution 1747, adopted March 24, 

2007. 

§ 561.304 UNSC Resolution 1803. 

The term UNSC Resolution 1803 

means United Nations Security Council 

Resolution 1803, adopted March 3, 

2008. 

§ 561.305 UNSC Resolution 1929. 

The term UNSC Resolution 1929 

means United Nations Security Council 

Resolution 1929, adopted June 9, 2010. 

§ 561.306 Correspondent account. 

The term correspondent account 

means an account established by a U.S. 

financial institution for a foreign 

financial institution to receive deposits 

from, or to make payments on behalf of, 

the foreign financial institution, or to 

handle other financial transactions 

related to such foreign financial 

institution. 

§ 561.307 Payable-through account. 

The term payable-through account 

means a correspondent account 

maintained by a U.S. financial 

institution for a foreign financial 

institution by means of which the 

foreign financial institution permits its 

customers to engage, either directly or 

through a subaccount, in banking 

activities usual in connection with the 

business of banking in the United 

States. 

§ 561.308 Foreign financial institution. 

The term foreign financial institution 

means any foreign entity that is engaged 

in the business of accepting deposits, 

making, granting, transferring, holding, 

or brokering loans or credits, or 

purchasing or selling foreign exchange, 

securities, commodity futures or 

options, or procuring purchasers and 

sellers thereof, as principal or agent. It 

includes but is not limited to depository 

institutions, banks, savings banks, 

money service businesses, 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 

holding companies, affiliates, or 

subsidiaries of any of the foregoing. The 

term does not include the international 

financial institutions identified in 22 

U.S.C. 262r(c)(2), the International Fund 

for Agricultural Development, the North 

American Development Bank, or any 

other international financial institution 

so notified by the Office of Foreign 

Assets Control. 

§ 561.309 U.S. financial institution. 

The term U.S. financial institution 

means any U.S. entity that is engaged in 

the business of accepting deposits, 

making, granting, transferring, holding, 

or brokering loans or credits, or 

purchasing or selling foreign exchange, 

securities, commodity futures or 

options, or procuring purchasers and 

sellers thereof, as principal or agent. It 

includes but is not limited to depository 

institutions, banks, savings banks, 

money service businesses, trust 

companies, insurance companies, 

securities brokers and dealers, 

commodity futures and options brokers 

and dealers, forward contract and 

foreign exchange merchants, securities 

and commodities exchanges, clearing 

corporations, investment companies, 

employee benefit plans, and U.S. 

holding companies, U.S. affiliates, or 

U.S. subsidiaries of any of the foregoing. 

This term includes those branches, 

offices, and agencies of foreign financial 

institutions that are located in the 

United States, but not such institutions’ 

foreign branches, offices, or agencies. 

§ 561.310 Money laundering. 

The term money laundering means 

engaging in deceptive practices to 

obscure the nature of transactions 

involving the movement of illicit cash 

or illicit cash equivalent proceeds into, 

out of, or through a country, or into, out 

of, or through a financial institution, 

such that the transactions are made to 

appear legitimate. 

§ 561.311 Agent. 

The term agent includes an entity 

established by a person for purposes of 

conducting transactions on behalf of the 

person in order to conceal the identity 

of the person. 

§ 561.312 Act of international terrorism. 

The term act of international 

terrorism has the same definition as that 

provided under section 14 of the Iran 

Sanctions Act of 1996 (50 U.S.C. 1701 

note). As of February 27, 2012, the term 

act of international terrorism means an 

act which is violent or dangerous to 

human life and that is a violation of the 

criminal laws of the United States or of 

any state or that would be a criminal 

violation if committed within the 

jurisdiction of the United States or any 

state and which appears to be intended 

to intimidate or coerce a civilian 

population; to influence the policy of a 

government by intimidation or coercion; 

or to affect the conduct of a government 

by assassination or kidnapping. 

§ 561.313 Financial services. 

The term financial services includes 

loans, transfers, accounts, insurance, 

investments, securities, guarantees, 

foreign exchange, letters of credit, and 

commodity futures or options. 


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§ 561.314 Knowingly. 

The term knowingly, with respect to 

conduct, a circumstance, or a result, 

means that a person has actual 

knowledge, or should have known, of 

the conduct, the circumstance, or the 

result. 

§ 561.315 Person. 

The term person means an individual 

or entity. 

§ 561.316 Entity. 

The term entity means a partnership, 

association, trust, joint venture, 

corporation, or other organization. 

§ 561.317 Money service businesses. 

The term money service businesses 

means any agent, agency, branch, or 

office of any person doing business, 

whether or not on a regular basis or as 

an organized business concern, in one 

or more of the capacities listed in 31 

CFR 103.11(uu)(1) through (5). The term 

does not include a bank or a person 

registered with, and regulated or 

examined by, the Securities and 

Exchange Commission or the 

Commodity Futures Trading 

Commission. 

§ 561.318 Petroleum. 

A mixture of hydrocarbons that exists 

in liquid phase in natural underground 

reservoirs and remains liquid at 

atmospheric pressure after passing 

through surface separating facilities. 

Also known as crude oil. 

§ 561.319 Petroleum products. 

The term petroleum products 

includes unfinished oils, liquefied 

petroleum gases, pentanes plus, aviation 

gasoline, motor gasoline, naphtha-type 

jet fuel, kerosene-type jet fuel, kerosene, 

distillate fuel oil, residual fuel oil, 

petrochemical feedstocks, special 

naphthas, lubricants, waxes, petroleum 

coke, asphalt, road oil, still gas, and 

miscellaneous products obtained from 

the processing of crude oil (including 

lease condensate), natural gas, and other 

hydrocarbon compounds. The term does 

not include natural gas, liquefied 

natural gas, biofuels, methanol, and 

other non-petroleum fuels. 

§ 561.320 Iranian financial institution. 

The term Iranian financial institution 

means any entity (including foreign 

branches), wherever located, organized 

under the laws of Iran or any 

jurisdiction within Iran, or owned or 

controlled by the Government of Iran, or 

in Iran, or owned or controlled by any 

of the foregoing, that is engaged in the 

business of accepting deposits, making, 

granting, transferring, holding, or 

brokering loans or credits, or purchasing 

or selling foreign exchange, securities, 

commodity futures or options, or 

procuring purchasers and sellers 

thereof, as principal or agent. It includes 

but is not limited to depository 

institutions, banks, savings banks, 

money service businesses, trust 

companies, insurance 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 holding 

companies, affiliates, or subsidiaries of 

any of the foregoing. 

§ 561.321 Government of Iran. 

The term Government of Iran 

includes: 

(a) The state and the Government of 

Iran, as well as any political 

subdivision, agency, or instrumentality 

thereof; 

(b) Any entity owned or controlled 

directly or indirectly by the foregoing; 

(c) Any person to the extent that such 

person is, or has been, or to the extent 

that there is reasonable cause to believe 

that such person is, or has been, acting 

or purporting to act directly or 

indirectly on behalf of any of the 

foregoing; and 

(d) Any person or entity identified by 

the Secretary of the Treasury to be the 

Government of Iran under 31 CFR part 

560. 

§ 561.322 Entity owned or controlled by 

the Government of Iran. 

The phrase entity owned or controlled 

by the Government of Iran means any 

entity, including a financial institution, 

in which the Government of Iran owns 

a 50 percent or greater interest or a 

controlling interest, and any entity, 

including a financial institution, which 

is otherwise controlled by that 

government. 

§ 561.323 Foreign financial institution 

owned or controlled by the government of 

a foreign country. 

The phrase foreign financial 

institution owned or controlled by the 

government of a foreign country means 

any foreign financial institution, 

including a central bank of a foreign 

country, in which a government of a 

foreign country owns a 50 percent or 

greater interest and any foreign financial 

institution which is otherwise 

controlled by a government of a foreign 

country. 

§ 561.324 Designated Iranian financial 

institution. 

The term designated Iranian financial 

institution means any Iranian financial 

institution whose property and interests 

in property are blocked by the 

Department of the Treasury pursuant to 

any part of this chapter or any Executive 

order issued pursuant to the 

International Emergency Economic 

Powers Act (50 U.S.C. 1701 et seq.) and 

whose name is listed on the Specially 

Designated Nationals and Blocked 

Persons List on the Office of Foreign 

Assets Control’s Web site, except for any 

Iranian financial institution whose 

property and interests in property are 

blocked solely pursuant to Executive 

Order 13599 of February 5, 2012. 

Note to § 561.324: Facilitating significant 

transactions or providing significant financial 

services for a financial institution whose 

property and interests in property are 

blocked pursuant to parts 544 or 594 of this 

chapter in connection with Iran’s 

proliferation of weapons of mass destruction 

or delivery systems for weapons of mass 

destruction or Iran’s support for international 

terrorism has, since the enactment of 

CISADA on July 1, 2010, constituted an 

activity that could subject a foreign financial 

institution to prohibitions or strict conditions 

on correspondent accounts or payablethrough accounts in the United States. See 

§ 561.201. 

§ 561.325 Financial transaction. 

The term financial transaction means 

any transfer of value involving a 

financial institution. 

§ 561.326 Privately owned foreign financial 

institution. 

The phrase privately owned foreign 

financial institution means any foreign 

financial institution that is not owned or 

controlled by the government of a 

foreign country. 

§ 561.327 Food, medicine, and medical 

devices. 

(a) The term food means items that are 

intended to be consumed by and 

provide nutrition to humans or animals 

in Iran, including vitamins and 

minerals, food additives and 

supplements, and bottled drinking 

water, and seeds that germinate into 

items that are intended to be consumed 

by and provide nutrition to humans or 

animals in Iran. For purposes of this 

definition, the term food does not 

include: 

(1) Alcoholic beverages, cigarettes, 

gum, or fertilizer; and 

(2) The following excluded food 

items: castor beans, castor bean seeds, 

raw eggs, fertilized eggs (other than fish 

and shrimp roe), dried egg albumin, live 

animals, Rosary/Jequirity peas, nonfood-grade gelatin powder, and 

peptones and their derivatives. 

(b) The term medicine has the same 

meaning given the term ‘‘drug’’ in 


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11732 Federal Register / Vol. 77, No. 38 / Monday, February 27, 2012 / Rules and Regulations 

section 201 of the Federal Food, Drug, 

and Cosmetic Act (21 U.S.C. 321) but 

does not include any item listed on the 

Commerce Control List in the Export 

Administration Regulations, 15 CFR 

part 774, supplement no. 1 (excluding 

items classified as EAR 99). 

(c) The term medical devices has the 

meaning given the term ‘‘device’’ in 

section 201 of the Federal Food, Drug, 

and Cosmetic Act (21 U.S.C. 321) but 

does not include any item listed on the 

Commerce Control List in the Export 

Administration Regulations, 15 CFR 

part 774, supplement no. 1 (excluding 

items classified as EAR 99). 

Subpart D—Interpretations 

§ 561.401 Reference to amended sections. 

Except as otherwise specified, 

reference to any provision in or 

appendix to this part or chapter or to 

any regulation, ruling, order, 

instruction, directive, or license issued 

pursuant to this part refers to the same 

as currently amended. 

§ 561.402 Effect of amendment. 

Unless otherwise specifically 

provided, any amendment, 

modification, or revocation of any 

provision in or appendix to this part or 

chapter or of any order, regulation, 

ruling, instruction, or license issued by 

the Office of Foreign Assets Control 

does not affect any act done or omitted, 

or any civil or criminal proceeding 

commenced or pending, prior to such 

amendment, modification, or 

revocation. All penalties, forfeitures, 

and liabilities under any such order, 

regulation, ruling, instruction, or license 

continue and may be enforced as if such 

amendment, modification, or revocation 

had not been made. 

§ 561.403 Facilitation of certain efforts, 

activities, or transactions by foreign 

financial institutions. 

For purposes of §§ 561.201 and 

561.203 of this part, the term facilitate 

or facilitated used with respect to 

certain efforts, activities, or transactions 

refers to the provision of assistance by 

a foreign financial institution for those 

efforts, activities, or transactions, 

including, but not limited to, the 

provision of currency, financial 

instruments, securities, or any other 

transmission of value; purchasing; 

selling; transporting; swapping; 

brokering; financing; approving; 

guaranteeing; or the provision of other 

services of any kind; or the provision of 

personnel; or the provision of software, 

technology, or goods of any kind. 

§ 561.404 Significant transaction or 

transactions; significant financial services; 

significant financial transaction. 

In determining, for purposes of 

§ 561.201(a)(5), whether a transaction is 

significant, whether transactions are 

significant, or whether financial services 

are significant, or, for purposes 

§ 561.203(a), whether a financial 

transaction is significant, the Secretary 

of the Treasury may consider the totality 

of the facts and circumstances. As a 

general matter, the Secretary may 

consider some or all of the following 

factors: 

(a) Size, number, and frequency: The 

size, number, and frequency of 

transactions, financial services, or 

financial transactions performed over a 

period of time, including whether the 

transactions, financial services, or 

financial transactions are increasing or 

decreasing over time and the rate of 

increase or decrease. 

(b) Nature: The nature of the 

transaction(s), financial services, or 

financial transaction, including the 

type, complexity, and commercial 

purpose of the transaction(s), financial 

services, or financial transaction. 

(c) Level of Awareness; Pattern of 

Conduct: (1) Whether the transaction(s), 

financial services, or financial 

transaction is performed with the 

involvement or approval of management 

or only by clerical personnel; and (2) 

Whether the transaction(s), financial 

services, or financial transaction is part 

of a pattern of conduct or the result of 

a business development strategy. 

(d) Nexus: The proximity between the 

foreign financial institution engaging in 

the transaction(s) or providing the 

financial services and a blocked person 

described in § 561.201(a)(5), or between 

the foreign financial institution 

conducting or facilitating the financial 

transaction described in § 561.203 and 

the Central Bank of Iran or a designated 

Iranian financial institution, as defined 

in § 561.324. For example, a transaction 

or financial service in which a foreign 

financial institution provides brokerage 

or clearing services to, or maintains an 

account or makes payments for a 

blocked person described in paragraph 

(a)(5) of § 561.201, the Central Bank of 

Iran, or a designated Iranian financial 

institution in a direct customer 

relationship generally would be of 

greater significance than a transaction or 

financial service a foreign financial 

institution conducts for or provides to a 

blocked person described in 

§ 561.201(a)(5), the Central Bank of Iran, 

or a designated Iranian financial 

institution indirectly or in a tertiary 

relationship. 

(e) Impact: The impact of the 

transaction(s) or financial services on 

the objectives of the Comprehensive 

Iran Sanctions, Accountability, and 

Divestment Act of 2010, or of the 

financial transaction on the objectives of 

the National Defense Authorization Act 

for Fiscal Year 2012, including: 

(1) The economic or other benefit 

conferred or attempted to be conferred 

on a blocked person described in 

§ 561.201(a)(5), or on the Central Bank 

of Iran or designated Iranian financial 

institution, as described or defined in 

§§ 561.203 and 561.324; 

(2) Whether and how the 

transaction(s), financial services, or 

financial transaction contributes to the 

proliferation of weapons of mass 

destruction or delivery systems for such 

weapons, to support for international 

terrorism, to the suppression of human 

rights, to an increase in Iran’s crude oil 

revenues, or to connecting the Central 

Bank of Iran or a designated Iranian 

financial institution to the international 

financial system; and 

(3) Whether the transaction(s), 

financial services, or financial 

transaction supports humanitarian 

activity or involves the payment of basic 

expenses as specified in and authorized 

pursuant to UNSC Resolution 1737 or 

the payment of extraordinary expenses 

that have been authorized by the 

Sanctions Committee established 

pursuant to UNSC Resolution 1737, or 

the payment for the sale of food, 

medicine, or medical devices to Iran. 

(f) Deceptive practices: Whether the 

transaction(s), financial services, or 

financial transaction involves an 

attempt to obscure or conceal the actual 

parties or true nature of the 

transaction(s), financial services, or 

financial transaction or to evade 

sanctions; for example, whether the 

transaction enabled the Central Bank of 

Iran to facilitate the evasion of sanctions 

by a blocked person described in 

§ 561.201(a)(5) or a designated Iranian 

financial institution, as defined in 

§ 561.324. 

(g) Central Bank of Iran Reserves, 

Settlement Services, Foreign Currency 

Exchanges, and Official Development 

Assistance Repayment: Other factors 

involved in making a determination of 

whether a transaction(s), financial 

service, or financial transaction is 

significant are whether the transaction 

solely involves the passive holding of 

Central Bank of Iran reserves by a 

foreign financial institution; whether 

the Central Bank of Iran’s role is limited 

to providing settlement services or 

foreign currency exchanges in 

transactions between a non-designated 

Iranian financial institution and a 


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foreign financial institution; and 

whether the transaction involves only 

the repayment of official development 

assistance by the Central Bank of Iran or 

the transfer of funds required as a 

condition of Iran’s membership in an 

international financial institution. 

(h) Other relevant factors: Such other 

factors that the Secretary deems relevant 

on a case-by-case basis in determining 

the significance of a transaction(s), 

financial services, or financial 

transaction. 

§ 561.405 Entities owned by a person 

whose property and interests in property 

are blocked. 

A person whose property and 

interests in property are blocked 

pursuant to the International Emergency 

Economic Powers Act (50 U.S.C. 1701 et 

seq.) has an interest in all property and 

interests in property of an entity in 

which it owns, directly or indirectly, a 

50 percent or greater interest. The 

property and interests in property of 

such an entity, therefore, are blocked, 

and such an entity is a person whose 

property and interests in property are 

blocked pursuant to the International 

Emergency Economic Powers Act (50 

U.S.C. 1701 et seq.), regardless of 

whether the entity itself is listed on the 

Office of Foreign Assets Control’s 

Specially Designated Nationals and 

Blocked Persons List. 

§ 561.406 Country with primary 

jurisdiction over the foreign financial 

institution. 

For purposes of § 561.203(h), a 

country includes any jurisdiction that 

has its own central bank or contains a 

separate financial sector authority, and 

a foreign financial institution (including 

its foreign branches outside of the 

United States) is under a country’s 

primary jurisdiction if the foreign 

financial institution is organized under 

the laws of the country or any 

jurisdiction within that country. 

§ 561.407 Conducting or facilitating a 

financial transaction with the Central Bank 

of Iran or a designated Iranian financial 

institution. 

A foreign financial institution 

conducts or facilitates a financial 

transaction with the Central Bank of 

Iran or a designated Iranian financial 

institution if it maintains an account for 

such entities or engages in a financial 

transaction directly or indirectly with 

such entities. 

Note to § 561.407: See § 561.404 for factors 

that may be considered in determining 

whether a financial transaction is significant, 

as required for the imposition of certain 

sanctions pursuant to this part. 

Subpart E—Licenses, Authorizations, 

and Statements of Licensing Policy 

§ 561.501 General and specific licensing 

procedures. 

For provisions relating to licensing 

procedures, see part 501, subpart E of 

this chapter. Licensing actions taken 

pursuant to part 501 of this chapter with 

respect to the prohibitions contained in 

this part or conditions imposed 

pursuant to this part are considered 

actions taken pursuant to this part. 

§ 561.502 Effect of license or 

authorization. 

(a) No license or other authorization 

contained in this part, or otherwise 

issued by the Office of Foreign Assets 

Control, authorizes or validates any 

transaction effected prior to the issuance 

of such license or other authorization, 

unless specifically provided in such 

license or authorization. 

(b) No regulation, ruling, instruction, 

or license authorizes any transaction 

prohibited under this part unless the 

regulation, ruling, instruction, or license 

is issued by the Office of Foreign Assets 

Control and specifically refers to this 

part. No regulation, ruling, instruction, 

or license referring to this part shall be 

deemed to authorize any transaction 

prohibited by any other part of this 

chapter unless the regulation, ruling, 

instruction, or license specifically refers 

to such part. 

(c) Any regulation, ruling, instruction, 

or license authorizing any transaction 

otherwise prohibited under this part has 

the effect of removing a prohibition 

contained in this part from the 

transaction, but only to the extent 

specifically stated by its terms. Unless 

the regulation, ruling, instruction, or 

license otherwise specifies, such an 

authorization does not create any right, 

duty, obligation, claim, or interest in, or 

with respect to, any property which 

would not otherwise exist under 

ordinary principles of law. 

§ 561.503 Exclusion from licenses. 

The Office of Foreign Assets Control 

reserves the right to exclude any person, 

property, or transaction from the 

operation of any license or from the 

privileges conferred by any license. The 

Office of Foreign Assets Control also 

reserves the right to restrict the 

applicability of any license to particular 

persons, property, transactions, or 

classes thereof. Such actions are binding 

upon actual or constructive notice of the 

exclusions or restrictions. 

§ 561.504 Transactions related to closing a 

correspondent account or payable-through 

account. 

(a) During the 10-day period 

beginning on the effective date of the 

prohibition in § 561.201(c) or 

§ 561.203(c)(2) on the maintaining of a 

correspondent account or a payablethrough account for a foreign financial 

institution whose name is added to the 

Part 561 List, maintained on the Office 

of Foreign Assets Control’s Web site 

(www.treasury.gov/ofac) on the Iran 

Sanctions page, U.S. financial 

institutions that maintain correspondent 

accounts or payable-through accounts 

for the foreign financial institution are 

authorized to: 

(1) Process only those transactions 

through the account, or permit the 

foreign financial institution to execute 

only those transactions through the 

account, that are for the purpose of, and 

necessary for, closing the account; and 

(2) Transfer the funds remaining in 

the correspondent account or the 

payable-through account to an account 

of the foreign financial institution 

located outside of the United States and 

close the correspondent account or the 

payable-through account. 

(b) A report must be filed with the 

Office of Foreign Assets Control within 

30 days of the closure of an account, 

providing full details on the closing of 

each correspondent account or payablethrough account maintained by a U.S. 

financial institution for a foreign 

financial institution whose name is 

added to the Part 561 List, maintained 

on the Office of Foreign Assets Control’s 

Web site (www.treasury.gov/ofac) on the 

Iran Sanctions page. Such report must 

include complete information on the 

closing of the account and on all 

transactions processed or executed 

through the account pursuant to this 

section, including the account outside 

of the United States to which funds 

remaining in the account were 

transferred. Reports should be 

addressed to the attention of the 

Sanctions, Compliance & Evaluations 

Division, Office of Foreign Assets 

Control, U.S. Department of the 

Treasury, 1500 Pennsylvania Avenue 

NW., Washington, DC 20220. 

(c) Specific licenses may be issued on 

a case-by-case basis to authorize 

transactions by a U.S. financial 

institution with respect to a 

correspondent account or a payablethrough account maintained by the U.S. 

financial institution for a foreign 

financial institution whose name is 

added to the Part 561 List, that are 

outside the scope of the transactions 

authorized in paragraph (a) of this 

section and/or that occur beyond the 10- 


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11734 Federal Register / Vol. 77, No. 38 / Monday, February 27, 2012 / Rules and Regulations 

day period authorized in that paragraph. 

License applications should be filed in 

conformance with § 501.801 of the 

Reporting, Procedures and Penalties 

Regulations, 31 CFR part 501. 

(d) Nothing in this section authorizes 

the opening of a correspondent account 

or a payable-through account for a 

foreign financial institution whose name 

appears on the Part 561 List. 

Note to § 561.504: This section does not 

authorize a U.S. financial institution to 

unblock property or interests in property, or 

to engage in any transaction or dealing in 

property or interests in property, blocked 

pursuant to any other part of this chapter, in 

the process of closing a correspondent 

account or a payable-through account for a 

foreign financial institution whose name has 

been added to the Part 561 List, maintained 

on the Office of Foreign Assets Control’s Web 

site (www.treasury.gov/ofac) on the Iran 

Sanctions page. See § 561.101. 

Subpart F—Reports 

§ 561.601 Records and reports. 

For provisions relating to required 

records and reports, see part 501, 

subpart C, of this chapter. 

Subpart G—Penalties 

§ 561.701 Penalties. 

(a) Civil Penalties. (1) As set forth in 

section 104(c) of the Comprehensive 

Iran Sanctions, Accountability, and 

Divestment Act of 2010 (Pub. L. 111– 

195) (‘‘CISADA’’) and section 1245(g)(2) 

of the National Defense Authorization 

Act for Fiscal Year 2012 (Pub. L. 112– 

81) (‘‘NDAA’’), a civil penalty not to 

exceed the amount set forth in section 

206(b) of the International Emergency 

Economic Powers Act (‘‘IEEPA’’) (50 

U.S.C. 1705(b)) may be imposed on any 

person who violates, attempts to violate, 

conspires to violate, or causes a 

violation of any prohibition contained 

in § 561.201 or § 561.203 or of any 

license set forth in or issued pursuant to 

this part. 

(2) As set forth in section 104(d) of 

CISADA, a civil penalty not to exceed 

the amount set forth in section 206(b) of 

IEEPA may be imposed on a U.S. 

financial institution if: 

(i) A person owned or controlled by 

the U.S. financial institution violates, 

attempts to violate, conspires to violate, 

or causes a violation of the prohibition 

in § 561.202 or of any order, regulation, 

or license set forth in or issued pursuant 

to this part concerning such prohibition; 

and 

(ii) The U.S. financial institution 

knew or should have known that the 

person violated, attempted to violate, 

conspired to violate, or caused a 

violation of such prohibition. 

Note to paragraph (a) of § 561.701: As of 

February 27, 2012, IEEPA provides for a 

maximum civil penalty not to exceed the 

greater of $250,000 or an amount that is twice 

the amount of the transaction that is the basis 

of the violation with respect to which the 

penalty is imposed. 

(b) Criminal Penalty. As set forth in 

section 104(c) of CISADA and section 

1245(g)(2) of the NDAA, a person who 

willfully commits, willfully attempts to 

commit, or willfully conspires to 

commit, or aids or abets in the 

commission of a violation of any 

prohibition contained in §§ 561.201 or 

561.203 shall, upon conviction, be fined 

not more than $1,000,000, or if a natural 

person, be imprisoned for not more than 

20 years, or both. 

(c) Adjustments to penalty amounts. 

(1) The civil penalties provided in 

IEEPA are subject to adjustment 

pursuant to the Federal Civil Penalties 

Inflation Adjustment Act of 1990 (Pub. 

L. 101–410, as amended, 28 U.S.C. 2461 

note). 

(2) The criminal penalties provided in 

IEEPA are subject to adjustment 

pursuant to 18 U.S.C. 3571. 

(d) Attention is also directed to 18 

U.S.C. 1001, which provides that 

‘‘whoever, in any matter within the 

jurisdiction of the executive, legislative, 

or judicial branch of the Government of 

the United States, knowingly and 

willfully falsifies, conceals, or covers up 

by any trick, scheme, or device a 

material fact; makes any materially 

false, fictitious, or fraudulent statement 

or representation; or makes or uses any 

false writing or document knowing the 

same to contain any materially false, 

fictitious, or fraudulent statement or 

entry’’ shall be fined under title 18, 

United States Code, imprisoned, or 

both. 

(e) Violations of this part may also be 

subject to relevant provisions of other 

applicable laws. 

§ 561.702 Pre-Penalty Notice; settlement. 

(a) When required. If the Office of 

Foreign Assets Control has reason to 

believe that there has occurred a 

violation of any provision of this part or 

a violation of the provisions of any 

license, ruling, regulation, order, 

direction, or instruction issued by or 

pursuant to the direction or 

authorization of the Secretary of the 

Treasury pursuant to this part or 

otherwise under IEEPA and determines 

that a civil monetary penalty may be 

warranted, the Office of Foreign Assets 

Control may issue a Pre-Penalty Notice 

informing the alleged violator of the 

agency’s intent to impose a monetary 

penalty. A Pre-Penalty Notice shall be in 

writing. The Pre-Penalty Notice may be 

issued whether or not another agency 

has taken any action with respect to the 

matter. For a description of the contents 

of a Pre-Penalty Notice, see Appendix A 

to part 501 of this chapter. 

(b)(1) Right to respond. An alleged 

violator has the right to respond to a 

Pre-Penalty Notice by making a written 

presentation to the Office of Foreign 

Assets Control. For a description of the 

information that should be included in 

such a response, see Appendix A to part 

501 of this chapter. 

(2) Deadline for response. A response 

to a Pre-Penalty Notice must be made 

within 30 days of the date of service of 

the Pre-Penalty Notice. The failure to 

submit a response within the applicable 

time period set forth in this paragraph 

shall be deemed to be a waiver of the 

right to respond. 

(i) Computation of time for response. 

A response to a Pre-Penalty Notice must 

be postmarked or date-stamped by the 

U.S. Postal Service (or foreign postal 

service, if mailed abroad) or courier 

service provider (if transmitted to the 

Office of Foreign Assets Control by 

courier) on or before the 30th day after 

the postmark date on the envelope in 

which the Pre-Penalty Notice was 

mailed. If the Pre-Penalty Notice was 

personally delivered by a non-U.S. 

Postal Service agent authorized by the 

Office of Foreign Assets Control, a 

response must be postmarked or datestamped on or before the 30th day after 

the date of delivery. 

(ii) Extensions of time for response. If 

a due date falls on a federal holiday or 

weekend, that due date is extended to 

include the following business day. Any 

other extensions of time will be granted, 

at the discretion of the Office of Foreign 

Assets Control, only upon specific 

request to the Office of Foreign Assets 

Control. 

(3) Form and method of response. A 

response to a Pre-Penalty Notice need 

not be in any particular form, but it 

must be typewritten and signed by the 

alleged violator or a representative 

thereof, must contain information 

sufficient to indicate that it is in 

response to the Pre-Penalty Notice, and 

must include the Office of Foreign 

Assets Control identification number 

listed on the Pre-Penalty Notice. A copy 

of the written response may be sent by 

facsimile, but the original also must be 

sent to the Office of Foreign Assets 

Control Enforcement Division by mail or 

courier and must be postmarked or datestamped in accordance with paragraph 

(b)(2) of this section. 

(c) Settlement. Settlement discussion 

may be initiated by the Office of Foreign 

Assets Control, the alleged violator, or 

the alleged violator’s authorized 


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representative. For a description of 

practices with respect to settlement, see 

Appendix A to part 501 of this chapter. 

(d) Guidelines. Guidelines for the 

imposition or settlement of civil 

penalties by the Office of Foreign Assets 

Control are contained in Appendix A to 

part 501 of this chapter. 

(e) Representation. A representative of 

the alleged violator may act on behalf of 

the alleged violator, but any oral 

communication with the Office of 

Foreign Assets Control prior to a written 

submission regarding the specific 

allegations contained in the Pre-Penalty 

Notice must be preceded by a written 

letter of representation, unless the PrePenalty Notice was served upon the 

alleged violator in care of the 

representative. 

§ 561.703 Penalty imposition. 

If, after considering any timely 

written response to the Pre-Penalty 

Notice and any relevant facts, the Office 

of Foreign Assets Control determines 

that there was a violation by the alleged 

violator named in the Pre-Penalty 

Notice and that a civil monetary penalty 

is appropriate, the Office of Foreign 

Assets Control may issue a Penalty 

Notice to the violator containing a 

determination of the violation and the 

imposition of the monetary penalty. For 

additional details concerning issuance 

of a Penalty Notice, see Appendix A to 

part 501 of this chapter. The issuance of 

the Penalty Notice shall constitute final 

agency action. The violator has the right 

to seek judicial review of that final 

agency action in federal district court. 

§ 561.704 Administrative collection; 

referral to United States Department of 

Justice. 

In the event that the violator does not 

pay the penalty imposed pursuant to 

this part, the matter may be referred for 

administrative collection measures by 

the Department of the Treasury or to the 

United States Department of Justice for 

appropriate action to recover the 

penalty in a civil suit in a federal 

district court. 

Subpart H–Procedures 

§ 561.801 Procedures. 

For license application procedures 

and procedures relating to amendments, 

modifications, or revocations of 

licenses; administrative decisions; 

rulemaking; and requests for documents 

pursuant to the Freedom of Information 

and Privacy Acts (5 U.S.C. 552 and 

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

chapter. 

§ 561.802 Delegation by the Secretary of 

the Treasury. 

Any action that the Secretary of the 

Treasury is authorized to take pursuant 

to subsections 104(c), (d), (h), or (i) of 

the Comprehensive Iran Sanctions, 

Accountability, and Divestment Act of 

2010 (Pub. L. 111–195) (22 U.S.C. 8501– 

8551), pursuant to section 8 of 

Executive Order 13553 of September 28, 

2010 (3 CFR, 2010 Comp., p. 253), or 

pursuant to section 10 of Executive 

Order 13599 of February 5, 2012, and 

any action of the Secretary of the 

Treasury described in this part, 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. 

§ 561.803 Consultations. 

In implementing section 104 of the 

Comprehensive Iran Sanctions, 

Accountability, and Divestment Act of 

2010 (Pub. L. 111–195) (22 U.S.C. 8501– 

8551), the Secretary of the Treasury 

shall consult with the Secretary of State 

and may, in the sole discretion of the 

Secretary of the Treasury, consult with 

such other agencies and departments 

and such other interested parties as the 

Secretary considers appropriate. 

Subpart I—Paperwork Reduction Act 

§ 561.901 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 the information 

collections relating to the recordkeeping 

and reporting requirements of § 561.601, 

licensing procedures (including those 

pursuant to statements of licensing 

policy), and other procedures, see 

§ 501.901 of this chapter. The 

information collection in § 561.504(b) 

has been approved by OMB and 

assigned control number 1505–0243. 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: February 21, 2012. 

Adam J. Szubin, 

Director, Office of Foreign Assets Control. 

Approved: February 21, 2012. 

David S. Cohen, 

Under Secretary, Office of Terrorism and 

Financial Intelligence, Department of the 

Treasury. 

[FR Doc. 2012–4472 Filed 2–24–12; 8:45 am] 

BILLING CODE 4810–AL–P 


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