[Federal Register Volume 63, Number 126 (Wednesday, July 1, 1998)]
[Rules and Regulations]
[Pages 35809-35820]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-17538]


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DEPARTMENT OF THE TREASURY

Office of Foreign Assets Control

31 CFR Part 538


Sudanese Sanctions Regulations

AGENCY: Office of Foreign Assets Control, Department of the Treasury.

ACTION: Final rule.

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SUMMARY: The Office of Foreign Assets Control of the U.S. Department of 
the Treasury is issuing the Sudanese Sanctions Regulations to implement 
the President's declaration of a national emergency and imposition of 
sanctions against Sudan.

EFFECTIVE DATE: July 1, 1998.

FOR FURTHER INFORMATION CONTACT: Steven I. Pinter, Chief of Licensing 
(tel.: 202/622-2480), or William B. Hoffman, Chief Counsel (tel.: 202/
622-2410), Office of Foreign Assets Control, Department of the 
Treasury, Washington, DC 20220.

SUPPLEMENTARY INFORMATION:

Electronic Availability

     This document is available as an electronic file on The Federal 
Bulletin Board the day of publication in the Federal Register. By 
modem, dial 202/515-1387 and type ``/GO FAC,'' or call 202/512-1530 for 
disk or paper copies. This file is available for downloading without 
charge in WordPerfect 5.1, ASCII, and Adobe Acrobat<SUP>R</SUP> 
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. The document is also accessible for downloading 
in ASCII format without charge from Treasury's Electronic Library 
(``TEL'') in the ``Business, Trade and Labor Mall'' of the FedWorld 
bulletin board. By modem, dial 703/321-3339, and select self-expanding 
file ``T11FR00.EXE'' in TEL. For Internet access, use one of the 
following protocols: Telnet = fedworld.gov (192.239.93.3); World Wide 
Web (Home Page) = http://www.fedworld.gov; FTP = ftp.fedworld.gov 
(192.239.92.205). Additional information concerning the programs of the 
Office of Foreign Assets Control is available for downloading from the 
Office's Internet Home Page: http://www.ustreas.gov/treasury services/
fac/fac.html, 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 November 3, 1997, the President issued Executive Order 13067 (62 
FR 59989, Nov. 5, 1997), declaring a national emergency with respect to 
``the policies and actions of the Government of Sudan,'' and invoking 
the authority, inter alia, of the International Emergency Economic 
Powers Act (50 U.S.C. 1701-1706). The order blocks all property and 
interests in property of the Government of Sudan, its agencies, 
instrumentalities, and controlled entities, including the Central Bank 
of Sudan, that are in the United States, that are or hereafter come 
within the United States, or that are or hereafter come within the 
possession or control of U.S. persons, including their overseas 
branches; and orders other specific sanctions against Sudan. The order 
also authorizes the Secretary of the Treasury, in consultation with the 
Secretary of State and, as appropriate, other agencies, to take such 
actions, including the promulgation of rules and regulations, as may be 
necessary to carry out the purposes of the order. In implementation of 
the order, the Treasury Department is issuing the Sudanese Sanctions 
Regulations (the ``Regulations'').
    Section 538.201 of the Regulations, implementing section 1 of 
Executive Order 13067 (the ``Executive Order''), blocks all property 
and interests in property of the Government of Sudan, its agencies, 
instrumentalities, and controlled entities, including the Central Bank 
of Sudan, that are in the United States, that hereafter come within the 
United States, or that are or hereafter come within the possession or 
control of U.S. persons, including their overseas branches. As 
interpreted by Sec. 538.305 of the Regulations, Sec. 538.201 also 
blocks all property and interests in property of persons determined by 
the Secretary of the Treasury, in consultation with the Secretary of 
State, to be owned or controlled by, or to be acting on behalf of, the 
Government of Sudan. Persons coming within any of these categories are 
called specially designated nationals (``SDNs''). Section 538.204 of 
the Regulations, implementing section 2(a) of the Executive Order, 
generally prohibits the importation into the United States of goods or 
services of Sudanese origin. Section 538.205 of the Regulations, 
implementing section 2(b) of the Executive Order, generally prohibits 
the exportation or reexportation to Sudan of goods, technology or 
services from the United States, by a U.S. person, or requiring the 
issuance of a license by a Federal agency. Section 538.206 of the 
Regulations, implementing section 2(c) of the Executive Order, 
prohibits the facilitation by a U.S. person of the exportation or 
reexportation of goods, technology or services to or from Sudan. 
Section 538.207 of the Regulations, implementing section 2(d) of the 
Executive Order, prohibits the performance by any U.S. person of any 
contract, including a financing contract, in support of an industrial, 
commercial, public utility, or governmental project in Sudan. Section 
538.208 of the Regulations, implementing section 2(e) of the Executive 
Order, prohibits the grant or extension of credits or loans by any U.S. 
person to the Government of Sudan. Section 538.209 of the Regulations, 
implementing section 2(f) of the Executive Order, prohibits 
transactions relating to the transportation of cargo to or from Sudan. 
Pursuant to section 3 of the Executive Order, Sec. 538.211 of the 
Regulations exempts certain transactions from the prohibitions of the 
Executive Order and Regulations.
    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 described in subpart D of part 501 of 31 CFR chapter V. 
Penalties for violations of the Regulations are described in subpart G 
of the Regulations.
    Since the Regulations involve a foreign affairs function, the 
provisions of Executive Order 12866 and the Administrative Procedure 
Act (5 U.S.C. 553)(the ``APA'') requiring notice of proposed 
rulemaking, opportunity for

[[Page 35810]]

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 Regulations are being issued without prior notice and public 
comment procedure pursuant to the APA. Pursuant to the Paperwork 
Reduction Act of 1995 (44 U.S.C. 3507), the collections of information 
contained in the Regulations have been submitted to and approved by the 
Office of Management and Budget (``OMB'') pending public comment and 
has been assigned control number 1505-0169. 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.
    Other collections of information related to the Regulations are 
contained in part 501 of this chapter (the ``Reporting and Procedures 
Regulations''). Pursuant to the Paperwork Reduction Act of 1995 (44 
U.S.C. 3507), the collections of information in part 501 have been 
approved by the Office of Management and Budget (``OMB'') under control 
number 1505-1604.
    The new collections of information in the Regulations are contained 
in Secs. 538.506 and 538.521. Section 538.506(d) imposes a reporting 
requirement in lieu of specific licensing for performance of certain 
trade transactions pursuant to contracts entered into prior to November 
4, 1997. This information will be used to determine whether persons 
subject to the Regulations are in compliance with the applicable 
requirements, and to determine whether and to what extent civil penalty 
or other enforcement action is appropriate.
    Section 538.521 requires nongovernmental organizations involved in 
humanitarian or religious activities in Sudan to obtain a registration 
number to engage in transactions otherwise prohibited by the 
Regulations. This information will be used to register applicants as 
nongovernmental organizations and to determine whether persons subject 
to the Regulations are in compliance with the applicable requirements.
    The Regulations do not provide for confidential treatment of 
reports submitted pursuant to Secs. 538.506 and 538.521. However, it is 
the policy of the Office of Foreign Assets Control to protect the 
confidentiality of information in appropriate cases pursuant to the 
exemptions from disclosure provided under the Freedom of Information 
Act (5 U.S.C. 552) and the Privacy Act (5 U.S.C. 552a).
    The likely respondents and record keepers are humanitarian 
organizations, business organizations, and financial institutions.
    The estimated total annual reporting and/or recordkeeping burden: 
100 hours.
    The estimated annual burden per respondent/record keeper varies 
from 1-3 hours, depending on individual circumstances, with and 
estimated average of 2 hours.
    Estimated number of respondents and/or record keepers: 50.
    Estimated annual frequency of responses: 1.
    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 or other forms of information 
technology; and (e) estimated capital or start-up costs and costs of 
operation maintenance, and purchase of services to provide information.
    Comments concerning the above information, the accuracy of 
estimated average burden, and suggestions for reducing this burden 
should be directed to the Office of Management and Budget, Paperwork 
Reduction Project, control number 1505-0169, Washington, DC 20503, with 
a copy to the Office of Foreign Assets Control, U.S. Department of the 
Treasury, 1500 Pennsylvania Ave., NW-Annex, Washington, DC 20220. Any 
such comments should be submitted not later than August 31, 1998. 
Comments on aspects of the Regulations other than those involving 
collections of information should not be sent to the OMB.

List of Subjects in 31 CFR Part 538

    Administrative practice and procedure, Banks, banking, Blocking of 
assets, Exports, Foreign trade, Humanitarian aid, Imports, Penalties, 
Reporting and recordkeeping requirements, Specially designated 
nationals, Sudan, Terrorism, Transportation.

    For the reasons set forth in the preamble, 31 CFR part 538 is added 
to read as follows:

PART 538--SUDANESE SANCTIONS REGULATIONS

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

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

Subpart B--Prohibitions

538.201 Prohibited transactions involving blocked property.
538.202 Effect of transfers violating the provisions of this part.
538.203 Holding of funds in interest-bearing accounts; investment 
and reinvestment.
538.204 Prohibited importation of goods or services from Sudan.
538.205 Prohibited exportation and reexportation of goods, 
technology, or services to Sudan.
538.206 Prohibited facilitation.
538.207 Prohibited performance of contracts.
538.208 Prohibited grant or extension of credits or loans to the 
Government of Sudan.
538.209 Prohibited transportation-related transactions involving 
Sudan.
538.210 Evasions; attempts; conspiracies.
538.211 Exempt transactions.

Subpart C--General Definitions

538.301 Blocked account; blocked property.
538.302 Effective date.
538.303 Entity.
538.304 General license.
538.305 Government of Sudan.
538.306 Information and informational materials.
538.307 Interest.
538.308 License.
538.309 Person.
538.310 Property; property interest.
538.311 Specific license.
538.312 Sudanese origin.
538.313 Transfer.
538.314 United States.
538.315 United States person; U.S. person.
538.316 U.S. financial institution.

Subpart D--Interpretations

538.401 Reference to amended sections.
538.402 Effect of amendment.
538.403 Termination and acquisition of an interest in blocked 
property.
538.404 Setoffs prohibited.
538.405 Transactions incidental to a licensed transaction.
538.406 Exportation of services; performance of service contracts; 
legal services.
538.407 Facilitation by a United States person.
538.408 Offshore transactions.
538.409 Transshipments through the United States prohibited.
538.410 Imports of Sudanese goods from third countries; 
transshipments.
538.411 Exports to third countries; transshipments.
538.412 Operation of accounts.
538.413 Funds transfers.
538.414 Loans or extensions of credit.
538.415 Payments involving Sudan.
538.416 Payments from blocked accounts to U.S. exporters and for 
other obligations prohibited.

[[Page 35811]]

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

538.501 Effect of license or authorization.
538.502 Exclusion from licenses and authorizations.
538.503 Payments and transfers to blocked accounts in U.S. financial 
institutions.
538.504 Entries in certain accounts for normal service charges 
authorized.
538.505 Provision of certain legal services to the Government of 
Sudan, persons in Sudan, or benefitting Sudan.
538.506 30-day delayed effective date for pre-November 4, 1997 trade 
contracts involving Sudan.
538.507 Reexports by non-U.S. persons.
538.508 Certain payments by the Government of Sudan of obligations 
to persons within the United States authorized.
538.509 Certain services relating to participation in various events 
authorized.
538.510 Importation and exportation of certain gifts authorized.
538.511 Accompanied baggage authorized.
538.512 Transactions related to telecommunications authorized.
538.513 Transactions related to mail authorized.
538.514 Certain transactions related to patents, trademarks and 
copyrights authorized.
538.515 Certain imports for diplomatic or official personnel 
authorized.
538.516 Diplomatic pouches.
538.517 Allowable payments for overflights of Sudanese airspace.
538.518 Household goods and personal effects.
538.519 Aircraft and maritime safety.
538.520 Extensions or renewals of loans and credits.
538.521 Registration of nongovernmental organizations.
538.522 Transactions related to U.S. citizens residing in Sudan.

Subpart F--Reports

538.601 Records and reports.

Subpart G--Penalties

538.701 Penalties.
538.702 Prepenalty notice.
538.703 Response to prepenalty notice; informal settlement.
538.704 Penalty imposition or withdrawal.
538.705 Administrative collection; referral to United States 
Department of Justice.

Subpart H--Procedures

538.801 Procedures.
538.802 Delegation by the Secretary of the Treasury.

Subpart I--Paperwork Reduction Act

538.901 Paperwork Reduction Act notice.

    Authority: 3 U.S.C. 301; 31 U.S.C. 321(b); 50 U.S.C. 1601-1651, 
1701-1706; E.O. 13067, 62 FR 59989, 3 CFR, 1997 Comp., p. 230.

Subpart A--Relation of This Part to Other Laws andRegulations


Sec. 538.101  Relation of this part to other laws and regulations.

    (a) This part is separate from, and independent of, the other parts 
of this chapter 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. 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 or authorization contained in or issued pursuant to 
this part relieves the involved parties from complying with any other 
applicable laws or regulations.

Subpart B--Prohibitions


Sec. 538.201  Prohibited transactions involving blocked property.

    (a) Except as authorized by regulations, orders, directives, 
rulings, instructions, licenses, or otherwise, no property or interests 
in property of the Government of Sudan, that are in the United States, 
that hereafter come within the United States, or that are or hereafter 
come within the possession or control of U.S. persons, including their 
overseas branches, may be transferred, paid, exported, withdrawn or 
otherwise dealt in.
    (b) Unless otherwise authorized by this part or by a specific 
license expressly referring to this section, the transfer (including 
the transfer on the books of any issuer or agent thereof), disposition, 
transportation, importation, exportation, or withdrawal of, or the 
endorsement or guaranty of signatures on, or otherwise dealing in any 
security (or evidence thereof) registered or inscribed in the name of 
the Government of Sudan, and held within the possession or control of a 
U.S. person is prohibited, irrespective of the fact that at any time 
(either prior to, on, or subsequent to the effective date) the 
registered or inscribed owner thereof may have, or appears to have, 
assigned, transferred, or otherwise disposed of 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 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 Sec. 501.806 of this 
chapter.


Sec. 538.202  Effect of transfers violating the provisions of this 
part.

    (a) Any transfer after the effective date, which is in violation of 
any provision of this part or of any regulation, order, directive, 
ruling, instruction, license, or other authorization hereunder and 
involves any property or interest in property blocked pursuant to 
Sec. 538.201 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 interest in, any property or interest in property 
blocked pursuant to Sec. 538.201, unless the person with whom such 
property is held or maintained, prior to such 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 render it 
enforceable to the same extent that it would be valid or enforceable 
but for the provisions of the International Emergency Economic Powers 
Act, this part, and any regulation, order, directive, ruling, 
instruction, or license issued hereunder.
    (d) Transfers of property which 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

[[Page 35812]]

a license or authorization by or pursuant to this part and was not so 
licensed or authorized, or if a license or authorization did purport to 
cover the transfer, that such license or authorization had been 
obtained by misrepresentation of a third party or the 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, license, or other direction or 
authorization hereunder; or
    (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 the 
withholding of material facts or was otherwise fraudulently obtained.
    Note to paragraph (d): 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 or 
interest in property blocked pursuant to Sec. 538.201.


Sec. 538.203 Holding of funds in interest-bearing accounts; investment 
and reinvestment.

    (a) Except as provided in paragraphs (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 Sec. 538.201(a) 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 which 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 Sec. 538.201 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 Sec. 538.201 may 
continue to be held in the same type of accounts or instruments, 
provided the funds earn interest at rates which 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 Sec. 538.201. 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 which provides immediate financial or economic 
benefit or access to the Government of Sudan or its entities, nor may 
their holder cooperate in or facilitate the pledging or other attempted 
use as collateral of blocked funds or other assets.


Sec. 538.204  Prohibited importation of goods or services from Sudan.

    Except as otherwise authorized, the importation into the United 
States, directly or indirectly, of any goods or services of Sudanese 
origin, other than information or informational materials, is 
prohibited.


Sec. 538.205  Prohibited exportation and reexportation of goods, 
technology, or services to Sudan.

    Except as otherwise authorized, the exportation or reexportation, 
directly or indirectly, to Sudan of any goods, technology (including 
technical data, software, or other information) or services from the 
United States or by a United States person, wherever located, or 
requiring the issuance of a license by a Federal agency is prohibited, 
except for information or informational materials or donations of 
articles intended to relieve human suffering, such as food, clothing, 
and medicine.


Sec. 538.206  Prohibited facilitation.

    Except as otherwise authorized, the facilitation by a United States 
person, including but not limited to brokering activities, of the 
exportation or reexportation of goods, technology, or services from 
Sudan to any destination, or to Sudan from any location, is prohibited.


Sec. 538.207  Prohibited performance of contracts.

    Except as otherwise authorized, the performance by any United 
States person of any contract, including a financing contract, in 
support of an industrial, commercial, public utility, or governmental 
project in Sudan is prohibited.


Sec. 538.208  Prohibited grant or extension of credits or loans to the 
Government of Sudan.

    Except as otherwise authorized, the grant or extension of credits 
or loans by any United States person to the Government of Sudan is 
prohibited.


Sec. 538.209  Prohibited transportation-related transactions involving 
Sudan.

    Except as otherwise authorized, the following are prohibited:
    (a) Any transaction by a U.S. person relating to transportation of 
cargo to or from Sudan;
    (b) The provision of transportation of cargo to or from the United 
States by any Sudanese person or any vessel or aircraft of Sudanese 
registration; or
    (c) The sale in the United States by any person holding authority 
under 49 U.S.C. subtitle VII of any transportation of cargo by air that 
includes any stop in Sudan.


Sec. 538.210  Evasions; attempts; conspiracies.

     Any transaction by any United States person or within the United 
States that evades or avoids, or has the purpose of evading or 
avoiding, or attempts to violate, any of the prohibitions set forth in 
this part is prohibited. Any conspiracy formed for the purpose of 
engaging in a transaction prohibited by this part is prohibited.


Sec. 538.211  Exempt transactions.

    (a) Personal Communications. The prohibitions contained in this 
part do not apply to any postal, telegraphic, telephonic, or other 
personal

[[Page 35813]]

communication, which does not involve the transfer of anything of 
value.
    (b) Information and informational materials. (1) The importation 
from any country and the exportation to any country of information or 
informational materials as defined in Sec. 538.306, whether commercial 
or otherwise, regardless of format or medium of transmission, are 
exempt from the prohibitions and regulations of this part.
    (2) This section does not authorize transactions related to 
information and informational materials not fully created and in 
existence at the date of the transactions, or to the substantive or 
artistic alteration or enhancement of informational materials, or to 
the provision of marketing and business consulting services. Such 
prohibited transactions include, without limitation, payment of 
advances for informational materials not yet created and completed, 
provision of services to market, produce or co-produce, create or 
assist in the creation of information and informational materials, and 
payment of royalties to the Government of Sudan or a person in Sudan 
with respect to income received for enhancements or alterations made by 
U.S. persons to information or informational materials imported from 
the Government of Sudan or a person in Sudan.
    (3) This section does not authorize transactions incident to the 
exportation of software subject to the Export Administration 
Regulations, 15 CFR parts 730-774, or to the exportation of goods, 
technology or software for use in the transmission of any data. The 
exportation of such items to the Government of Sudan or to Sudan is 
prohibited, as provided in Secs. 538.201 and 538.205.
    (c) Travel. The prohibitions contained in this part do not apply to 
transactions ordinarily incident to travel to or from any country, 
including exportation or importation of accompanied baggage for 
personal use, maintenance within any country including payment of 
living expenses and acquisition of goods or services for personal use, 
and arrangement or facilitation of such travel including non-scheduled 
air, sea, or land voyages.
    (d) Official Business. The prohibitions contained in this part do 
not apply to transactions for the conduct of the official business of 
the Federal Government or the United Nations by employees thereof.
    (e) Journalistic activity. The prohibitions contained in this part 
do not apply to transactions in Sudan for journalistic activity by 
persons regularly employed in such capacity by a news-gathering 
organization.

Subpart C--General Definitions


Sec. 538.301  Blocked account; blocked property.

    The terms blocked account and blocked property shall mean any 
account or property subject to the prohibition in Sec. 538.201 held in 
the name of the Government of Sudan or in which the Government of Sudan 
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.


Sec. 538.302  Effective date.

    The term effective date refers to the effective date of the 
applicable prohibitions and directives contained in this part which is 
12:01 a.m. EST, November 4, 1997.


Sec. 538.303  Entity.

    The term entity means a partnership, association, trust, joint 
venture, corporation, or other organization.


Sec. 538.304  General license.

    The term general license means any license or authorization the 
terms of which are set forth in this part.


Sec. 538.305  Government of Sudan.

    The term Government of Sudan includes:
    (a) The state and the Government of Sudan, as well as any political 
subdivision, agency, or instrumentality thereof, including the Central 
Bank of Sudan;
    (b) Any entity owned or controlled 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, since the effective date, acting or purporting 
to act directly or indirectly on behalf of any of the foregoing; and
    (d) Any other person determined by the Director of the Office of 
Foreign Assets Control to be included within paragraphs (a) through (c) 
of this section.
    Note to Sec. 538.305: Please refer to the appendices at the end 
of this chapter for listings of persons determined to fall within 
this definition who have been designated pursuant to this part. 
Section 501.807 of this chapter 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 the designation are no longer applicable.


Sec. 538.306  Information and informational materials.

    (a)(1) For purposes of this part, the term information and 
informational materials means publications, films, posters, phonograph 
records, photographs, microfilms, microfiche, tapes, compact disks, CD 
ROMs, artworks, and news wire feeds, and other information and 
informational materials.
    (2) To be considered informational materials, artworks must be 
classified under chapter subheading 9701, 9702, or 9703 of the 
Harmonized Tariff Schedule of the United States.
    (b) The term information and informational materials with respect 
to U.S. exports does not include items:
    (1) That were, as of April 30, 1994, or that thereafter become, 
controlled for export pursuant to section 5 of the Export 
Administration Act of 1979, 50 U.S.C. App. 2401-2420 (the ``EAA''), or 
section 6 of the EAA to the extent that such controls promote 
nonproliferation or antiterrorism policies of the United States.
    (2) With respect to which acts are prohibited by 18 U.S.C. chapter 
37.


Sec. 538.307  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.


Sec. 538.308  License.

    Except as otherwise specified, the term license means any license 
or authorization contained in or issued pursuant to this part.


Sec. 538.309  Person.

    The term person means an individual or entity.


Sec. 538.310  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,

[[Page 35814]]

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, present, 
future or contingent.


Sec. 538.311  Specific license.

    The term specific license means any license or authorization not 
set forth in this part but issued pursuant to this part.


Sec. 538.312  Sudanese origin.

    The term goods or services of Sudanese origin includes:
    (a) Goods produced, manufactured, grown, extracted, or processed 
within Sudan;
    (b) Goods which have entered into Sudanese commerce;
    (c) Services performed in Sudan or by a person ordinarily resident 
in Sudan who is acting as an agent, employee, or contractor of the 
Government of Sudan or of a business entity located in Sudan. Services 
of Sudanese origin are not imported into the United States when such 
services are provided in the United States by a Sudanese national 
employed or resident in the United States.
    (d) The term services of Sudanese origin does not include:
    (1) Diplomatic and consular services performed by or on behalf of 
the Government of Sudan;
    (2) Diplomatic and consular services performed by or on behalf of 
the Government of the United States.


Sec. 538.313  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 and, without limitation upon the 
foregoing, shall include 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 or order, or 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.


Sec. 538.314  United States.

    The term United States means the United States, its territories and 
possessions, and all areas under the jurisdiction or authority thereof.


Sec. 538.315  United States person; U.S. person.

    The term United States person or U.S. person means any United 
States citizen, permanent resident alien, entity organized under the 
laws of the United States or any jurisdiction within the United States 
(including foreign branches), or any person in the United States.


Sec. 538.316  U.S. financial institution.

    The term U.S. financial institution means any U.S. entity 
(including foreign branches) 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; including, but 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


Sec. 538.401  Reference to amended sections.

    Except as otherwise specified, reference to any section of this 
part or to any regulation, ruling, order, instruction, direction, or 
license issued pursuant to this part shall be deemed to refer to the 
same as currently amended.


Sec. 538.402  Effect of amendment.

    Any amendment, modification, or revocation of any section of this 
part 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 shall not, unless otherwise specifically 
provided, affect any act done or omitted to be done, or any civil or 
criminal suit or proceeding commenced or pending prior to such 
amendment, modification, or revocation. All penalties, forfeitures, and 
liabilities under any such order, regulation, ruling, instruction, or 
license continue and may be enforced as if such amendment, 
modification, or revocation had not been made.


Sec. 538.403  Termination and acquisition of an interest in blocked 
property.

    (a) Whenever a transaction licensed or authorized by or pursuant to 
this part results in the transfer of property (including any property 
interest) away from the Government of Sudan, such property shall no 
longer be deemed to be property in which the Government of Sudan has or 
has had an interest unless there exists in the property another 
interest of the Government of Sudan, the transfer of which has not been 
effected pursuant to license or other authorization.
    (b) Unless otherwise specifically provided in a license or 
authorization issued pursuant to this part, if property (including any 
property interest) is transferred or attempted to be transferred to the 
Government of Sudan, such property shall be deemed to be property in 
which there exists an interest of the Government of Sudan.


Sec. 538.404  Setoffs prohibited.

    A setoff against blocked property (including a blocked account), 
whether by a U.S. bank or other U.S. person, is a prohibited transfer 
under Sec. 538.201 if effected after the effective date.


Sec. 538.405  Transactions incidental to a licensed transaction.

    Any transaction ordinarily incident to a licensed transaction and 
necessary to give effect thereto is also authorized, except a 
transaction by an unlicensed Sudanese governmental entity or involving 
a debit to a blocked account or a transfer of blocked property not 
explicitly authorized within the terms of the license.

[[Page 35815]]

Sec. 538.406  Exportation of services; performance of service 
contracts; legal services.

    (a) The prohibition on the exportation of services contained in 
Sec. 538.205 applies to services performed on behalf of the Government 
of Sudan, or where the benefit of such services is otherwise received 
in Sudan, when such services are performed:
    (1) In the United States;
    (2) By a U.S. person, wherever located;
    (3) By an entity located in the United States, including its 
overseas branches; or
    (4) Outside the United States by an individual U.S. person 
ordinarily resident in the United States.
    (b) The benefit of services performed anywhere in the world on 
behalf of the Government of Sudan, including services performed for a 
controlled entity or agent of the Government of Sudan, is presumed to 
be received in Sudan.
    (c) The prohibitions contained in Secs. 538.201 and 538.207 apply 
to services performed by U.S. persons, wherever located:
    (1) On behalf of the Government of Sudan;
    (2) With respect to property interests of the Government of Sudan; 
or
    (3) In support of an industrial, commercial, public utility or 
governmental project in Sudan.
    (d) Example: U.S. persons may not, without specific authorization 
from the Office of Foreign Assets Control, represent an individual or 
entity with respect to contract negotiations, contract performance, 
commercial arbitration, or other business dealings with the Government 
of Sudan. See Sec. 538.505 on licensing policy with regard to the 
provision of certain legal services.


Sec. 538.407  Facilitation by a United States person.

    (a) The prohibition contained in Sec. 538.206 against facilitation 
by a United States person of the exportation or reexportation of goods, 
technology, or services between Sudan and any destination (including 
the United States) bars any unlicensed action by a U.S. person that 
assists or supports trading activity with Sudan by any person. 
Facilitation of a trade or financial transaction that could be engaged 
in directly by a U.S. person or from the United States consistent with 
the prohibitions, general licenses and exemptions contained in this 
part is not prohibited. Activity of a purely clerical or reporting 
nature that does not further trade or financial transactions with Sudan 
or the Government of Sudan is not considered prohibited facilitation. 
For example, reporting on the results of a subsidiary's trade with 
Sudan is not prohibited, while financing or insuring that trade or 
warranting the quality of goods sold by a subsidiary to the Government 
of Sudan constitutes prohibited facilitation.
    (b) To avoid potential liability for U.S. persons under this part, 
a U.S. parent corporation must ensure that its foreign subsidiaries act 
independently of any U.S. person with respect to all transactions and 
activities relating to the exportation or reexportation of goods, 
technology, or services between Sudan and any other location including 
but not limited to business and legal planning; decision making; 
designing, ordering or transporting goods; and financial, insurance, 
and other risks. See Sec. 538.505 with respect to exports of, inter 
alia, certain legal services benefitting Sudan.
    (c) No U.S. person may change its policies or operating procedures, 
or those of a foreign affiliate or subsidiary, in order to enable a 
foreign entity owned or controlled by U.S. persons to enter into a 
transaction that could not be entered into directly by a U.S. person or 
from the United States pursuant to this part.
    (d) No U.S. person may refer to a foreign person purchase orders, 
requests for bids, or similar business opportunities involving Sudan or 
the Government of Sudan to which the United States person could not 
directly respond as a result of the prohibitions contained in this 
part.


Sec. 538.408  Offshore transactions.

    (a) The prohibitions contained in Secs. 538.201 and 538.206 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, the Government of Sudan has or has had an interest 
since the effective date, or with respect to goods, technology or 
services which the U.S. person knows, or has reason to know, are of 
Sudanese origin or owned or controlled by the Government of Sudan.
    (b) Prohibited transactions include, but are not limited to, 
importation into or exportation from locations outside the United 
States of, or purchasing, selling, financing, swapping, insuring, 
transporting, lifting, storing, incorporating, transforming, brokering, 
or otherwise dealing in, within such locations, goods, technology or 
services of Sudanese origin.
    (c) Examples. (1) A U.S. person may not, within the United States 
or abroad, purchase, sell, finance, insure, transport, act as a broker 
for the sale or transport of, or otherwise deal in, Sudanese crude oil 
or sugar refined in Sudan.
    (2) A U.S. person may not, within the United States or abroad, 
conduct transactions of any nature whatsoever with an entity that the 
U.S. person knows or has reason to know is the Government of Sudan, 
including a controlled entity or agent of that Government, or which 
benefits or supports the business of an entity located in Sudan, unless 
the entity is licensed by the Office of Foreign Assets Control to 
conduct such transactions with U.S. persons or the transaction is 
generally licensed in, or exempted from the prohibitions of, this part.


Sec. 538.409  Transshipments through the United States prohibited.

    (a) The prohibitions in Sec. 538.205 apply to the importation into 
the United States, for transshipment or transit, of goods which are 
intended or destined for Sudan, or an entity operated from Sudan.
    (b) The prohibitions in Sec. 538.204 apply to the importation into 
the United States, for transshipment or transit, of goods of Sudanese 
origin which are intended or destined for third countries.
    (c) Goods in which the Government of Sudan has an interest which 
are imported into or transshipped through the United States are blocked 
pursuant to Sec. 538.201.


Sec. 538.410  Imports of Sudanese goods from third countries; 
transshipments.

    (a) Importation into the United States from third countries of 
goods containing raw materials or components of Sudanese origin is not 
prohibited if those raw materials or components have been incorporated 
into manufactured products or otherwise substantially transformed in a 
third country.
    (b) Importation into the United States of goods of Sudanese origin 
that have been transshipped through a third country without being 
incorporated into manufactured products or otherwise substantially 
transformed in a third country are prohibited.


Sec. 538.411  Exports to third countries; transshipments.

    Exportation of goods or technology (including technical data, 
software, information not exempted from the prohibition of this part 
pursuant to Sec. 538.211, or technical assistance) from the United 
States to third countries is prohibited if the exporter knows, or has 
reason to know, that the goods or technology are intended for 
transshipment to Sudan (including passage through, or storage in, 
intermediate destinations). The

[[Page 35816]]

exportation of goods or technology intended specifically for 
incorporation or substantial transformation into a third-country 
product is also prohibited if the particular product is to be used in 
Sudan, is being specifically manufactured to fill a Sudanese order, or 
if the manufacturer's sales of the particular product are predominantly 
to Sudan.


Sec. 538.412  Operation of accounts.

    The operation of an account in a financial institution for a 
private Sudanese person does not constitute the exportation of a 
service to Sudan; however, such operation may not include the execution 
of transactions in support of transactions or activities prohibited by 
subpart B of this part.


Sec. 538.413  Funds transfers.

    The transfer of funds to Sudan from the United States does not 
constitute an exportation of services pursuant to Sec. 538.205.


Sec. 538.414  Loans or extensions of credit.

    (a) The prohibition in Sec. 538.205 applies to loans or extensions 
of credit to a person in Sudan, including overdraft protection on 
checking accounts, and the unlicensed renewal or rescheduling of 
credits or loans in existence as of the effective date, whether by 
affirmative action or operation of law.
    (b) The prohibition in Sec. 538.205 applies to financial services 
including loans or credits extended in any currency.


Sec. 538.415  Payments involving Sudan.

    Before a United States financial institution initiates a payment 
subject to the prohibitions contained in this part on behalf of any 
customer, or credits a transfer subject to such prohibitions to the 
account on its books of the ultimate beneficiary, the U.S. financial 
institution must determine that the transfer is not prohibited by this 
part.


Sec. 538.416  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, technology 
or services exported prior to the effective date, except as authorized 
pursuant to this part.

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


Sec. 538.501  Effect of license or authorization.

    (a) No license or other authorization contained in this part, or 
otherwise issued by or under the direction of the Director of the 
Office of Foreign Assets Control, authorizes or validates any 
transaction effected prior to the issuance of the license, unless 
specifically provided in such license or authorization.
    (b) No regulation, ruling, instruction, or license authorizes any 
transaction prohibited under this part unless the regulation, ruling, 
instruction, or license is issued by the Office of Foreign Assets 
Control and specifically refers to this part. No regulation, ruling, 
instruction, or license referring to this part shall be deemed to 
authorize any transaction prohibited by any provision of this chapter 
unless the regulation, ruling, instruction or license specifically 
refers to such provision.
    (c) Any regulation, ruling, instruction, or license authorizing any 
transaction otherwise prohibited under this part has the effect of 
removing a prohibition or prohibitions contained in this part from the 
transaction, but only to the extent specifically stated by its terms. 
Unless the regulation, ruling, instruction, or license otherwise 
specifies, such an authorization does not create any right, duty, 
obligation, claim, or interest in, or with respect to, any property 
which would not otherwise exist under ordinary principles of law.


Sec. 538.502  Exclusion from licenses and authorizations.

    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 therein conferred, or 
to restrict the applicability thereof with respect to particular 
persons, property, transactions, or classes thereof. Such action shall 
be binding upon all persons receiving actual or constructive notice of 
such exclusion or restriction.


Sec. 538.503  Payments and transfers to blocked accounts in U.S. 
financial institutions.

    Any payment of funds or transfer of credit in which the Government 
of Sudan 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 Sec. 538.503: Please refer to Sec. 501.603 of this 
chapter for mandatory reporting requirements regarding financial 
transfers. See also Sec. 538.203 concerning the obligation to hold 
blocked funds in interest-bearing accounts.


Sec. 538.504  Entries in certain accounts for normal service charges 
authorized.

    (a) U.S. financial institutions are hereby 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 charge shall 
include charges in payment or reimbursement for interest due; cable, 
telegraph, or telephone charges; postage costs; custody fees; small 
adjustment charges to correct bookkeeping errors; and, but not by way 
of limitation, 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.


Sec. 538.505  Provision of certain legal services to the Government of 
Sudan, persons in Sudan, or benefitting Sudan.

    (a) The provision to the Government of Sudan, to a person in Sudan, 
or in circumstances in which the benefit is otherwise received in 
Sudan, of the legal services set forth in paragraph (b) of this section 
is authorized, provided that all receipts of payment therefor must be 
specifically licensed. The provision of any other legal services as 
interpreted in Sec. 538.406 requires the issuance of a specific 
license.
    (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 the Government of Sudan or to a person in 
Sudan:
    (1) Provision of legal advice and counseling to the Government of 
Sudan, to a person in Sudan, or in circumstances in which the benefit 
is otherwise received in Sudan, on the requirements of and compliance 
with the laws of any jurisdiction within the United States, provided 
that such advice and counseling is not provided to

[[Page 35817]]

facilitate transactions in violation of this part;
    (2) Representation of the Government of Sudan or a person in Sudan 
when named as a defendant in or otherwise made a party to domestic U.S. 
legal, arbitration, or administrative proceedings;
    (3) Initiation of domestic U.S. legal, arbitration, or 
administrative proceedings in defense of property interests subject to 
U.S. jurisdiction of the Government of Sudan, or of a person in Sudan;
    (4) Representation of the Government of Sudan or a person in Sudan 
before any federal agency with respect to the imposition, 
administration, or enforcement of U.S. sanctions against Sudan; 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) 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 a property interest 
of the Government of Sudan is prohibited unless specifically licensed 
in accordance with Sec. 538.202(e).


Sec. 538.506  30-day delayed effective date for pre-November 4, 1997 
trade contracts involving Sudan.

    (a) Pre-existing trade contracts. Trade transactions required under 
a contract entered into prior to November 4, 1997 (a ``pre-existing 
trade contract''), otherwise prohibited by this part, including the 
importation of goods or services of Sudanese origin or the exportation 
of goods, services, or technology that was authorized under applicable 
Federal regulations in force immediately prior to November 4, 1997, are 
authorized without specific licensing by the Office of Foreign Assets 
Control as follows:
    (1) Exports or reexports are authorized until 12:01 a.m. EST, 
December 4, 1997, and non-financing activity by U.S. persons incidental 
to the performance of the pre-existing trade contract (such as the 
provision of transportation or insurance) is authorized through 12:01 
a.m. EST, February 2, 1998, if the pre-existing trade contract is for:
    (i) The exportation of goods, services, or technology from the 
United States or a third country that was authorized under applicable 
Federal regulations in force immediately prior to November 4, 1997; or
    (ii) The reexportation of goods or technology that was authorized 
under applicable Federal regulations in force immediately prior to 
November 4, 1997.
    (2) If the pre-existing trade contract is for the importation of 
goods or services of Sudanese origin or other trade transactions 
relating to goods or services of Sudanese origin or owned or controlled 
by the Government of Sudan, importations under the pre-existing trade 
contract are authorized until 12:01 a.m. EST, December 4, 1997.
    (3) For purposes of this section, goods are considered to be 
exported upon final loading aboard the exporting conveyance in the 
country of export. Goods are considered to be imported upon arrival in 
the jurisdiction of the country of importation.
    (b)(1) Financing for pre-existing trade contracts. In general, no 
financing services prohibited by this part may be performed after 12:01 
a.m. EST, November 4, 1997. However, letters of credit and other 
financing agreements with respect to the trade transactions authorized 
in paragraph (a) of this section may be performed according to their 
terms, and may be extended or renewed, except that:
    (i) Any payment required to be made to the Government of Sudan or 
any person blocked pursuant to this part or otherwise, including 
payments authorized with respect to trade transactions described in 
paragraph (a) of this section, must be made into a blocked account in 
the United States; and
    (ii) No payment may be made from a blocked account unless 
authorized by a specific license issued by the Office of Foreign Assets 
Controls.
    (2) Specific licenses may be issued by the Office of Foreign Asset 
Controls on a case-by-case basis to permit a U.S. bank to debit a 
blocked account of the Government of Sudan for funds held as collateral 
under an irrevocable letter of credit issued or confirmed by it, or a 
letter of credit reimbursement confirmed by it, for goods, services or 
technology exported, or goods or technology reexported, prior to 12:01 
a.m. EST, December 4, 1997, directly or indirectly to Sudan, or to 
third countries for an entity operated from Sudan, or for the benefit 
of the Government of Sudan. The application for a license must:
    (i) Present evidence satisfactory to the Office of Foreign Asset 
Controls that the exportation or reexportation occurred prior to 12:01 
a.m. EST, December 4, 1997; and
    (ii) Include an explanation of the facts and circumstances 
surrounding the entry and execution of the export or reexport 
transaction, including the names and addresses of all Sudanese 
participants in the transaction and all Sudanese persons having an 
ownership interest in the beneficiary of the letter of credit.
    (c) Blocked Government of Sudan accounts. Nothing in this section 
permits debits to a blocked account of the Government of Sudan absent 
the issuance of a specific license by Office of Foreign Asset Controls 
authorizing such a debit. The operation of an account of the Government 
of Sudan in a financial institution does not constitute a trade 
transaction for purposes of this section.
    (d) Existence of contract. The existence of a contract will be 
determined with reference to the principles contained in Article 2 of 
the Uniform Commercial Code.
    (e) Reporting requirement. Although a specific license from Office 
of Foreign Asset Controls is not required for any transaction 
authorized in paragraph (a) of this section, any U.S. person engaging 
in a transaction described in paragraph (a) of this section is required 
to report such transaction immediately to the Office of Foreign Asset 
Controls and provide a description of the underlying trade contract. 
Such reports should be directed to the Office of Foreign Assets 
Control, Attn: Compliance Programs Division/Sudan Contracts, 1500 
Pennsylvania Avenue, NW, Annex - 2nd Floor, Washington, DC 20220. Such 
reports may be made by facsimile transmission to 202/622-1657.
    (f) Licensing and reporting provisions. For provisions relating to 
applications to the Office of Foreign Asset Controls for specific 
licenses and reporting requirements, see Secs. 501.606 and 501.808 of 
this chapter.


Sec. 538.507  Reexports by non-U.S. persons.

    (a) Goods, technology and services subject to export license 
application requirements under other United States regulations. The 
reexportation to Sudan or the Government of Sudan by a non-U.S. person 
of any goods, technology or services exported from the United States, 
the exportation of which to Sudan is subject to export or reexport 
license application requirements is authorized under this section 
provided that, for reexportation of goods, the goods:
    (1) Have been incorporated into another product outside the United 
States and constitute 10 per cent or less by value of that product 
exported from a third country; or
    (2) Have been substantially transformed outside the United States.
    Note to paragraph (a) of Sec. 538.507: Goods, technology and 
software of U.S. origin that are subject to the Export 
Administration Regulations (15 CFR parts 730-774) may require 
specific authorization from the

[[Page 35818]]

Department of Commerce, Bureau of Export Administration, even though 
such goods have been substantially transformed abroad.
    (b) Goods, technology and services not subject to export license 
application requirements under other United States regulations. The 
reexportation to Sudan or the Government of Sudan by a non-U.S. person 
of any goods, technology or services of U.S. origin, the exportation of 
which to Sudan is not subject to any export license application 
requirements under any other United States regulations, is authorized 
under this section. However, the reexportation by non-U.S. persons of 
U.S.-origin goods, technology or software classified as EAR99 under the 
Export Administration Regulations (15 CFR parts 730-774) may require 
specific authorization from the Department of Commerce, Bureau of 
Export Administration.


Sec. 538.508  Certain payments by the Government of Sudan of 
obligations to persons within the United States authorized.

    Specific licenses may be issued on a case-by-case basis to permit 
the transfer of funds after the effective date by, through, or to any 
U.S. financial institution or other U.S. person not blocked pursuant to 
this chapter, from a non-blocked account outside of the United States, 
solely for the purpose of payment of obligations of the Government of 
Sudan to persons or accounts within the United States, provided that 
the obligation arose prior to the effective date, and the payment 
requires no debit to a blocked account.


Sec. 538.509  Certain services relating to participation in various 
events authorized.

    The importation of Sudanese-origin services into the United States 
is authorized where such services are performed in the United States by 
a Sudanese national who enters the United States on a visa issued by 
the State Department for the purpose of participating in a public 
conference, performance, exhibition or similar event, and such services 
are consistent with that purpose.


Sec. 538.510  Importation and exportation of certain gifts authorized.

    The importation into the United States of Sudanese-origin goods, 
and the exportation from the United States of goods, is authorized for 
goods sent as gifts to persons provided that the value of the gift is 
not more than $100; the goods are of a type and in quantities normally 
given as gifts between individuals; and the goods are not controlled 
for chemical and biological weapons (CB), missile technology (MT), 
national security (NS), or nuclear proliferation (NP)(see Commerce 
Control List, 15 CFR part 774 of the Export Administration 
Regulations).


Sec. 538.511  Accompanied baggage authorized.

    (a) Persons entering the United States directly or indirectly from 
Sudan are authorized to import into the United States Sudanese-origin 
accompanied baggage normally incident to travel.
    (b) Persons leaving the United States for Sudan are authorized to 
export from the United States accompanied baggage normally incident to 
travel.
    (c) For purposes of this section, the term accompanied baggage 
normally incident to travel includes only baggage that:
    (1) Accompanies the traveler on the same aircraft, train, or 
vehicle;
    (2) Includes only articles that are necessary for personal use 
incident to travel, are not intended for any other person or for sale, 
and are not otherwise prohibited from importation or exportation under 
applicable United States laws.


Sec. 538.512  Transactions related to telecommunications authorized.

    All transactions with respect to the receipt and transmission of 
telecommunications involving Sudan are authorized. This section does 
not authorize the provision to the Government of Sudan or a person in 
Sudan of telecommunications equipment or technology.


Sec. 538.513  Transactions related to mail authorized.

    All transactions by U.S. persons, including payment and transfers 
to common carriers, incident to the receipt or transmission of mail 
between the United States and Sudan are authorized, provided that mail 
is limited to personal communications not involving a transfer of 
anything of value.


Sec. 538.514  Certain transactions related to patents, trademarks and 
copyrights authorized.

    (a) All of the following transactions in connection with patent, 
trademark, copyright or other intellectual property protection in the 
United States or Sudan are authorized:
    (1) The filing and prosecution of any application to obtain a 
patent, trademark, copyright or other form of intellectual property 
protection;
    (2) The receipt of a patent, trademark, copyright or other form of 
intellectual property protection;
    (3) The renewal or maintenance of a patent, trademark, copyright or 
other form of intellectual property protection; and
    (4) The filing and prosecution of opposition or infringement 
proceedings with respect to a patent, trademark, copyright or other 
form of intellectual property protection, or the entrance of a defense 
to any such proceedings.
    (b) This section authorizes the payment of fees currently due to 
the United States Government, or of the reasonable and customary fees 
and charges currently due to attorneys or representatives within the 
United States, in connection with the transactions authorized in 
paragraph (a) of this section. Payment effected pursuant to the terms 
of this paragraph may not be made from a blocked account.
    (c) This section authorizes the payment of fees currently due to 
the Government of Sudan, or of the reasonable and customary fees and 
charges currently due to attorneys or representatives within Sudan, in 
connection with the transactions authorized in paragraph (a) of this 
section.
    (d) Nothing in this section affects obligations under any other 
provision of law.


Sec. 538.515  Certain imports for diplomatic or official personnel 
authorized.

    All transactions ordinarily incident to the importation of any 
goods or services into the United States destined for official or 
personal use by the diplomatic missions of the Government of Sudan to 
the United States and to international organizations located in the 
United States are authorized, provided that such goods or services are 
not for resale, and unless such importation is otherwise prohibited by 
law.


Sec. 538.516  Diplomatic pouches.

    All transactions in connection with the importation into the United 
States from Sudan, or the exportation from the United States to Sudan, 
of diplomatic pouches and their contents are authorized.


Sec. 538.517  Allowable payments for overflights of Sudanese airspace.

    Payments to Sudan of charges for services rendered by the 
Government of Sudan in connection with the overflight of Sudan or 
emergency landing in Sudan of aircraft owned by a United States person 
or registered in the United States are authorized.


Sec. 538.518  Household goods and personal effects.

    (a) The exportation from the United States to Sudan of household 
and personal effects, including baggage and articles for family use, of 
persons

[[Page 35819]]

departing the United States to relocate in Sudan is authorized provided 
the articles included in such effects have been actually used by such 
persons or by family members accompanying them, are not intended for 
any other person or for sale, and are not otherwise prohibited from 
exportation.
    (b) The importation of Sudanese-origin household and personal 
effects, including baggage and articles for family use, of persons 
arriving in the United States is authorized; to qualify, articles 
included in such effects must have been actually used abroad by such 
persons or by other family members arriving from the same foreign 
household, must not be intended for any other person or for sale, and 
must not be otherwise prohibited from importation.


Sec. 538.519  Aircraft and maritime safety.

    Specific licenses may be issued on a case-by-case basis for the 
exportation and reexportation of goods, services, and technology to 
insure the safety of civil aviation and safe operation of U.S.-origin 
commercial passenger aircraft, and to ensure the safety of ocean-going 
maritime traffic in international waters.


Sec. 538.520  Extensions or renewals of loans and credits.

    (a) Specific licenses may be issued on a case-by-case basis for 
rescheduling loans or otherwise extending the maturities of existing 
loans, and for charging fees or interest at commercially reasonable 
rates in connection therewith, provided that no new funds or credits 
are thereby transferred or extended to Sudan or the Government of 
Sudan.
    (b) Specific licenses may be issued on a case-by-case basis, at the 
request of the account party, for the extension or renewal of a letter 
of credit or a standby letter of credit issued or confirmed by a U.S. 
financial institution.


Sec. 538.521  Registration of nongovernmental organizations.

    (a) Registration numbers may be issued on a case-by-case basis for 
the registration of nongovernmental organizations involved in 
humanitarian or religious activities in Sudan, authorizing transactions 
otherwise prohibited by this part, including the exportation of goods 
and services to Sudan and the transfer of funds to and from Sudan for 
the purpose of relieving human suffering.
    (b) Applications for registration must include the name and address 
of the organization's headquarters; the name, title, and telephone 
number of a person to be contacted in connection with registration 
pursuant to this section; the organization's local address in Sudan and 
name if different; and a detailed description of its humanitarian or 
religious activities and projects in Sudan. Applications should be 
submitted to the Compliance Programs Division, Office of Foreign Assets 
Control, U.S. Department of the Treasury, 1500 Pennsylvania Avenue, NW, 
Annex, Washington, DC 20220.
    (c) Applicants conducting transactions pursuant to this section 
should reference the registration number on all funds transfers, and 
all purchase, shipping, and financing documents.


Sec. 538.522  Transactions related to U.S. citizens residing in Sudan.

    U.S. persons are authorized to engage in transactions in Sudan 
ordinarily incident to the routine and necessary maintenance and other 
personal living expenses of U.S. citizens who reside on a permanent 
basis in Sudan.

Subpart F--Reports


Sec. 538.601  Records and reports.

    For additional provisions relating to records and reports, see 
subpart C of part 501 of this chapter.

Subpart G--Penalties


Sec. 538.701  Penalties.

    (a) Attention is directed to section 206 of the International 
Emergency Economic Powers Act (the ``Act'')(50 U.S.C. 1705), which is 
applicable to violations of the provisions of any license, ruling, 
regulation, order, direction or instruction issued by or pursuant to 
the direction or authorization of the Secretary of the Treasury 
pursuant to this part or otherwise under the Act. Section 206 of the 
Act, as adjusted by the Federal Civil Penalties Inflation Adjustment 
Act of 1990 (Pub. L. 101-410, as amended, 28 U.S.C. 2461 note), 
provides that:
    (1) A civil penalty not to exceed $11,000 per violation may be 
imposed on any person who violates any license, order, or regulation 
issued under the Act;
    (2) Whoever willfully violates any license, order, or regulation 
issued under the Act shall, upon conviction be fined not more than 
$50,000, or, if a natural person, may be imprisoned for not more than 
10 years, or both; and any officer, director, or agent of any 
corporation who knowingly participates in such violation may be 
punished by a like fine, imprisonment, or both.
    (b) The criminal penalties provided in the Act are subject to 
increase pursuant to 18 U.S.C. 3571.
    (c) Attention is also 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 false, fictitious or fraudulent statement or 
representation or makes or uses any false writing or document knowing 
the same to contain any 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.


Sec. 538.702  Prepenalty notice.

    (a) When required. If the Director of the Office of Foreign Assets 
Control has reasonable cause to believe that there has occurred a 
violation of any provision of this part or a violation of the 
provisions of any license, ruling, regulation, order, direction or 
instruction issued by or pursuant to the direction or authorization of 
the Secretary of the Treasury pursuant to this part or otherwise under 
the International Emergency Economic Powers Act, and the Director 
determines that further proceedings are warranted, he shall issue to 
the person concerned a notice of his intent to impose a monetary 
penalty. The 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 mailing of the notice as to why a monetary penalty should 
not be imposed, or, if imposed, why it should be in a lesser amount 
than proposed.


Sec. 537.703 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

[[Page 35820]]

particular form, but shall 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, if imposed, why 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 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 is not 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.


Sec. 537.704  Penalty imposition or withdrawal.

    (a) No violation. If, after considering any response to the 
prepenalty notice and any relevant facts, the Director of the Office of 
Foreign Assets Control determines that there was no violation by the 
respondent named in the prepenalty notice, the Director 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 the prepenalty 
notice, 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.
    (1) The penalty notice shall inform the respondent that payment of 
the assessed penalty must be made within 30 days of the 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 collection and reporting on any delinquent penalty amount 
in the event of a failure to pay the penalty imposed.


Sec. 537.705  Administrative collection; referral to United States 
Department of Justice.

    In the event that the respondent does not pay the penalty imposed 
pursuant to this part or make payment arrangements acceptable to the 
Director of the Office of Foreign Assets Control within 30 days of the 
mailing of the written notice of the imposition of the penalty, 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


Sec. 538.801  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 
subpart D of part 501 of this chapter.


Sec. 538.802  Delegation by the Secretary of the Treasury.

    Any action which the Secretary of the Treasury is authorized to 
take pursuant to Executive Order 13067 (3 CFR, 1997 Comp., p. 230), and 
any further Executive orders relating to the national emergency 
declared with respect to Sudan in Executive Order 13067, may be taken 
by the Director of the Office of Foreign Assets Control, or by any 
other person to whom the Secretary of the Treasury has delegated 
authority so to act.

Subpart I--Paperwork Reduction Act


Sec. 538.901  Paperwork Reduction Act notice.

    The information collection requirements in Secs. 538.506 and 
538.521 have been approved by the Office of Management and Budget 
(``OMB'') and assigned control number 1505-0169. For approval by OMB 
under the Paperwork Reduction Act of other information collections 
relating to recordkeeping and reporting requirements, to licensing 
procedures (including those pursuant to statements of licensing 
policy), and to other procedures, see Sec. 501.901 of this chapter. An 
agency may not conduct or sponsor, and a person is not required to 
respond to, a collection of information unless it displays a valid 
control number assigned by OMB.

    Dated: June 18, 1998.
R. Richard Newcomb,
Director, Office of Foreign Assets Control.
    Approved: June 25, 1998.
James E. Johnson,
Assistant Secretary (Enforcement), Department of the Treasury.
[FR Doc. 98-17538 Filed 6-29-98; 8:51 am]
BILLING CODE 4810-25-F