[Federal Register Volume 74, Number 69 (Monday, April 13, 2009)]
[Rules and Regulations]
[Pages 16771-16781]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E9-8336]


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DEPARTMENT OF THE TREASURY

Office of Foreign Assets Control

31 CFR Part 544


Weapons of Mass Destruction Proliferators Sanctions Regulations

AGENCY: Office of Foreign Assets Control, Treasury.

ACTION: Final rule.

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SUMMARY: The Department of the Treasury's Office of Foreign Assets 
Control (``OFAC'') is adding a new part to the Code of Federal 
Regulations to carry out the purposes of Executive Order 13382 of June 
28, 2005, ``Blocking Property of Weapons of Mass Destruction 
Proliferators and Their Supporters.''

DATES: Effective Date: April 13, 2009.

FOR FURTHER INFORMATION CONTACT: Assistant Director for Compliance, 
Outreach & Implementation, 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 (http://www.treas.gov/ofac) or via 
facsimile through a 24-hour fax-on demand service, tel.: 202/622-0077.

[[Page 16772]]

Background

    On June 28, 2005, the President, invoking the authority of, inter 
alia, the International Emergency Economic Powers Act (50 U.S.C. 1701-
1706) (``IEEPA''), issued Executive Order 13382 (70 FR 38567, July 1, 
2005) (``E.O. 13382''), effective at 12:01 a.m. eastern daylight time 
on June 29, 2005. In E.O. 13382, the President took additional steps 
with respect to the national emergency described and declared in 
Executive Order 12938 of November 14, 1994, regarding the proliferation 
of weapons of mass destruction and the means of delivering them.
    Section 1 of E.O. 13382 blocks, with certain exceptions, 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 United States persons, of: (1) The persons 
listed in an Annex to E.O. 13382; (2) any foreign person determined by 
the Secretary of State, in consultation with the Secretary of the 
Treasury, the Attorney General, and other relevant agencies, to have 
engaged, or attempted to engage, in activities or transactions that 
have materially contributed to, or pose a risk of materially 
contributing to, the proliferation of weapons of mass destruction or 
their means of delivery (including missiles capable of delivering such 
weapons), including any efforts to manufacture, acquire, possess, 
develop, transport, transfer or use such items, by any person or 
foreign country of proliferation concern; (3) any person determined by 
the Secretary of the Treasury, in consultation with the Secretary of 
State, the Attorney General, and other relevant agencies, to have 
provided, or attempted to provide, financial, material, technological 
or other support for, or goods or services in support of, any activity 
or transaction described in clause (2) above, or any person whose 
property and interests in property are blocked pursuant to E.O. 13382; 
and (4) any person determined by the Secretary of the Treasury, in 
consultation with the Secretary of State, the Attorney General, and 
other relevant agencies, to be owned or controlled by, or acting or 
purporting to act for or on behalf of, directly or indirectly, any 
person whose property and interests in property are blocked pursuant to 
E.O. 13382.
    Section 1 of E.O. 13382 further provides that the prohibition on 
any transaction or dealing by a United States person or within the 
United States in blocked property or interests in property includes, 
but is not limited to, the making of any contribution or provision of 
funds, goods, or services by, to, or for the benefit of, any person 
whose property and interests in property are blocked pursuant to E.O. 
13382, and the receipt of any contribution or provision of funds, 
goods, or services from any such person. Section 1 of E.O. 13382 
further prohibits any transaction by a United States person or within 
the United States that evades or avoids, or has the purpose of evading 
or avoiding, or attempts to violate any of the prohibitions set forth 
in E.O. 13382, as well as any conspiracy formed to violate such 
prohibitions.
    In Section 3 of E.O. 13382, the President determined that the 
making of donations of certain articles, such as food, clothing, and 
medicine intended to relieve human suffering, as specified in section 
203(b)(2) of IEEPA (50 U.S.C. 1702(b)(2)), by, to, or for the benefit 
of any person whose property and interests in property are blocked 
pursuant to E.O. 13382 would seriously impair his ability to deal with 
the national emergency declared in Executive Order 12938, and the 
President therefore prohibited such donations. Accordingly, the 
donation of such items is prohibited unless authorized by OFAC.
    Section 6 of E.O. 13382 authorizes the Secretary of the Treasury, 
in consultation with the Secretary of State, to take such actions, 
including the promulgation of rules and regulations, as may be 
necessary to carry out the purposes of E.O. 13382. In furtherance of 
those purposes, OFAC is promulgating the Weapons of Mass Destruction 
Proliferators Sanctions Regulations, 31 CFR part 544 (the 
``Regulations'').
    Subpart A of the Regulations, which discusses the relation of the 
Regulations to other economic sanctions programs, includes a Note to 
Sec.  544.101 clarifying that the sanctions implemented pursuant to the 
Weapons of Mass Destruction Trade Control Regulations set forth in 31 
CFR part 539 are separate and distinct from the sanctions implemented 
pursuant to these Regulations, even though both programs are based on 
the same declaration of national emergency in Executive Order 12938 of 
November 14, 1994. Accordingly, a ``designated foreign person'' whose 
goods, technology, or services are prohibited from being imported into 
the United States under the Weapons of Mass Destruction Trade Control 
Regulations is not necessarily a person whose property and interests in 
property are blocked pursuant to these Regulations. Consequently, the 
property and interests in property of a ``designated foreign person'' 
under the Weapons of Mass Destruction Trade Control Regulations are not 
necessarily blocked by these Regulations, unless the ``designated 
foreign person'' has separately become a person whose property and 
interests in property are blocked pursuant to these Regulations. 
However, the importation into the United States of goods, technology, 
or services (other than information or informational materials) 
produced or provided by a ``designated foreign person'' under the 
Weapons of Mass Destruction Trade Control Regulations remains 
prohibited. To help the public distinguish between these two programs, 
persons designated by the Secretary of State under the Weapons of Mass 
Destruction Trade Control Regulations are listed in a separate appendix 
to part 539 and are not listed on OFAC's Specially Designated Nationals 
and Blocked Persons List (``SDN list''), which is accessible via OFAC's 
Web site and can be found at Appendix A to 31 CFR chapter V. Persons 
whose property and interests in property are blocked under these 
Regulations are listed on OFAC's SDN list with the identifier 
``[NPWMD].''
    Subpart B of the Regulations implements the prohibitions contained 
in Section 1 of E.O. 13382. See, e.g., Sec. Sec.  544.201 and 544.205. 
Persons identified in the Annex to E.O. 13382, designated by the 
Secretary of State or the Secretary of the Treasury pursuant to E.O. 
13382, or otherwise subject to the blocking provisions of E.O. 13382 
are referred to throughout the Regulations as ``persons whose property 
and interests in property are blocked pursuant to Sec.  544.201(a).'' 
The names of persons listed in or designated pursuant to E.O. 13382 are 
or will be published on OFAC's SDN list. Those names also have been or 
will be published in the Federal Register.
    Sections 544.202 and 544.203 of subpart B detail the effect of 
transfers of blocked property in violation of the Regulations and set 
forth the requirement to hold blocked funds, such as currency, bank 
deposits, and liquidated financial obligations, in interest-bearing 
blocked accounts. Section 544.204 of subpart B provides that all 
expenses incident to the maintenance of blocked physical property shall 
be the responsibility of the owners or operators of such property and 
that such expenses shall not be met from blocked funds, unless 
otherwise authorized. The section further provides that blocked 
property may, in OFAC's discretion, be sold or liquidated and the net 
proceeds placed in a blocked interest-bearing account in the name of 
the owner of the property.

[[Page 16773]]

    Section 544.205 implements the prohibitions of E.O. 13382 on any 
transaction by a United States person or within the United States that 
evades or avoids, has the purpose of evading or avoiding, or attempts 
to violate any of the prohibitions set forth in E.O. 13382, and on any 
conspiracy formed to violate such prohibitions.
    Section 544.206 of subpart B details transactions that are exempt 
from the prohibitions of part 544 pursuant to sections 203(b)(1), (3), 
and (4) of IEEPA (50 U.S.C. 1702(b)(1), (3), and (4)). These exemptions 
relate to personal communications, the importation and exportation of 
information or informational materials, and transactions ordinarily 
incident to travel. The President determined in Section 3 of E.O. 13382 
that donations of the type of articles specified in Sec. 203(b)(2) of 
IEEPA (50 U.S.C. 1702(b)(2)), i.e., articles such as food, clothing, 
and medicine intended to relieve human suffering, by, to, or for the 
benefit of any person whose property and interests in property are 
blocked would seriously impair the President's ability to deal with the 
declared national emergency. Accordingly, such donations are not 
exempted from these Regulations and are prohibited, unless authorized 
by OFAC.
    Subpart C of part 544 defines key terms used throughout the 
Regulations, and subpart D sets forth interpretive sections regarding 
the general prohibitions contained in subpart B. Section 544.411 sets 
out the rule that the property and interests in property of an entity 
are blocked if the entity is 50 percent or more owned by a person whose 
property and interests in property are blocked, whether or not the 
entity itself is named in the Annex to E.O. 13382 or designated by the 
Secretary of State or OFAC.
    Transactions otherwise prohibited under part 544 but found to be 
consistent with U.S. policy may be authorized by one of the general 
licenses contained in subpart E or by a specific license issued 
pursuant to the procedures described in subpart E of part 501 of 31 CFR 
chapter V. In addition to the general licenses, subpart E of part 544 
also contains certain statements of licensing policy.
    Subpart F of part 544 refers to subpart C of part 501 for 
applicable recordkeeping and reporting requirements. Subpart G 
describes the civil and criminal penalties applicable to violations of 
the Regulations, as well as the procedures governing the potential 
imposition of a civil monetary penalty. Subpart G also refers to 
Appendix A of part 501 for a more complete description of these 
procedures.
    Subpart H of part 544 refers to subpart E of part 501 for 
applicable provisions relating to administrative procedures and 
memorializes a delegation of authority by the Secretary of the 
Treasury. Subpart I of the Regulations sets forth a Paperwork Reduction 
Act notice.

Public Participation

    Because the Regulations 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.

Paperwork Reduction Act

    The collections of information related to the Regulations are 
contained in 31 CFR part 501 (the ``Reporting, Procedures and Penalties 
Regulations''). Pursuant to the Paperwork Reduction Act of 1995 (44 
U.S.C. 3507), those collections of information have been approved by 
the Office of Management and Budget under control number 1505-0164. An 
agency may not conduct or sponsor, and a person is not required to 
respond to, a collection of information unless the collection of 
information displays a valid control number.

List of Subjects in 31 CFR Part 544

    Administrative practice and procedure, Banks, Banking, Blocking of 
assets, Credit, Foreign trade, Penalties, Proliferation, Reporting and 
recordkeeping requirements, Securities, Services, Weapons of mass 
destruction.

0
For the reasons set forth in the preamble, the Department of the 
Treasury's Office of Foreign Assets Control adds part 544 to 31 CFR 
chapter V to read as follows:

PART 544--WEAPONS OF MASS DESTRUCTION PROLIFERATORS SANCTIONS 
REGULATIONS

Subpart A--Relation of This Part to Other Laws and Regulations
Sec.
544.101 Relation of this part to other laws and regulations.
Subpart B--Prohibitions
544.201 Prohibited transactions involving blocked property.
544.202 Effect of transfers violating the provisions of this part.
544.203 Holding of funds in interest-bearing accounts; investment 
and reinvestment.
544.204 Expenses of maintaining blocked physical property; 
liquidation of blocked property.
544.205 Evasions; attempts; conspiracies.
544.206 Exempt transactions.
Subpart C--General Definitions
544.301 Blocked account; blocked property.
544.302 Effective date.
544.303 Entity.
544.304 Information or informational materials.
544.305 Interest.
544.306 Licenses; general and specific.
544.307 Person.
544.308 Property; property interest.
544.309 Transfer.
544.310 United States.
544.311 U.S. financial institution.
544.312 United States person; U.S. person.
Subpart D--Interpretations
544.401 Reference to amended sections.
544.402 Effect of amendment.
544.403 Termination and acquisition of an interest in blocked 
property.
544.404 Transactions ordinarily incident to a licensed transaction.
544.405 Provision of services.
544.406 Offshore transactions.
544.407 Payments from blocked accounts to satisfy obligations 
prohibited.
544.408 Charitable contributions.
544.409 Credit extended and cards issued by U.S. financial 
institutions.
544.410 Setoffs prohibited.
544.411 Entities owned by a person whose property and interests in 
property are blocked.
Subpart E--Licenses, Authorizations and Statements of Licensing Policy
544.501 General and specific licensing procedures.
544.502 Effect of license or authorization.
544.503 Exclusion from licenses.
544.504 Payments and transfers to blocked accounts in U.S. financial 
institutions.
544.505 Entries in certain accounts for normal service charges 
authorized.
544.506 Investment and reinvestment of certain funds.
544.507 Provision of certain legal services authorized.
544.508 Authorization of emergency medical services.
Subpart F--Reports
544.601 Records and reports.
Subpart G--Penalties
544.701 Penalties.
544.702 Pre-Penalty Notice; settlement.
544.703 Penalty imposition.
544.704 Administrative collection; referral to United States 
Department of Justice.
Subpart H--Procedures
544.801 Procedures.
544.802 Delegation by the Secretary of the Treasury.
Subpart I--Paperwork Reduction Act
544.901 Paperwork Reduction Act notice.


[[Page 16774]]


    Authority:  3 U.S.C. 301; 31 U.S.C. 321(b); 50 U.S.C. 1601-1651, 
1701-1706; Public Law 101-410, 104 Stat. 890 (28 U.S.C. 2461 note); 
Public Law 110-96, 121 Stat. 1011; E.O. 12938, 59 FR 59099, 3 CFR, 
1994 Comp., p. 950; E.O. 13094, 63 FR 40803, 3 CFR, 1998 Comp., p. 
200; E.O. 13382, 70 FR 38567, 3 CFR, 2005 Comp., p. 170.

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


Sec.  544.101  Relation of this part to other laws and regulations.

    This part is separate from, and independent of, the other parts of 
this chapter, with the exception of part 501 of this chapter, the 
recordkeeping and reporting requirements and license application and 
other procedures of which apply to this part. Actions taken pursuant to 
part 501 of this chapter with respect to the prohibitions contained in 
this part are considered actions taken pursuant to this part. Differing 
foreign policy and national security circumstances may result in 
differing interpretations of similar language among the parts of this 
chapter. No license or authorization contained in or issued pursuant to 
those other parts authorizes any transaction prohibited by this part. 
No license or authorization contained in or issued pursuant to any 
other provision of law or regulation authorizes any transaction 
prohibited by this part. No license or authorization contained in or 
issued pursuant to this part relieves the involved parties from 
complying with any other applicable laws or regulations.

    Note to Sec.  544.101:  The sanctions implemented pursuant to 
the Weapons of Mass Destruction Trade Control Regulations set forth 
in part 539 of this chapter are separate and distinct from the 
sanctions implemented pursuant to this part, even though both 
programs have been imposed pursuant to the same declaration of 
national emergency in Executive Order 12938 of November 14, 1994. 
Accordingly, a ``designated foreign person'' whose goods, 
technology, or services are prohibited from being imported into the 
United States under part 539 is not necessarily a person whose 
property and interests in property are blocked pursuant to Sec.  
544.201(a). Consequently, the property and interests in property of 
a ``designated foreign person'' under part 539 are not blocked, 
unless the ``designated foreign person'' has separately become a 
person whose property and interests in property are blocked pursuant 
to Sec.  544.201(a) or any other part of 31 CFR chapter V. Note, 
however, that the importation into the United States of goods, 
technology, or services (other than information or informational 
materials) produced or provided by a ``designated foreign person'' 
under part 539 is prohibited by that part.

Subpart B--Prohibitions


Sec.  544.201  Prohibited transactions involving blocked property.

    (a) Except as authorized by regulations, orders, directives, 
rulings, instructions, licenses or otherwise, and notwithstanding any 
contracts entered into or any license or permit granted prior to the 
effective date, all property and interests in property 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, of the following persons are blocked 
and may not be transferred, paid, exported, withdrawn, or otherwise 
dealt in:
    (1) Any person listed in the Annex to Executive Order 13382 of June 
28, 2005 (70 FR 38567, July 1, 2005);
    (2) Any foreign person determined by the Secretary of State, in 
consultation with the Secretary of the Treasury, the Attorney General, 
and other relevant agencies, to have engaged, or attempted to engage, 
in activities or transactions that have materially contributed to, or 
pose a risk of materially contributing to, the proliferation of weapons 
of mass destruction or their means of delivery (including missiles 
capable of delivering such weapons), including any efforts to 
manufacture, acquire, possess, develop, transport, transfer or use such 
items, by any person or foreign country of proliferation concern;
    (3) Any person determined by the Secretary of the Treasury, in 
consultation with the Secretary of State, the Attorney General, and 
other relevant agencies, to have provided, or attempted to provide, 
financial, material, technological or other support for, or goods or 
services in support of, any activity or transaction described in 
paragraph (a)(2) of this section, or any person whose property and 
interests in property are blocked pursuant to this section; and
    (4) Any person determined by the Secretary of the Treasury, in 
consultation with the Secretary of State, the Attorney General, and 
other relevant agencies, to be owned or controlled by, or acting or 
purporting to act for or on behalf of, directly or indirectly, any 
person whose property and interests in property are blocked pursuant to 
this section.

    Note to paragraph (a) of Sec.  544.201:  1. The names of persons 
listed in or designated pursuant to Executive Order 13382, whose 
property and interests in property are blocked pursuant to paragraph 
(a) of this section, are published on the Office of Foreign Assets 
Control's Specially Designated Nationals and Blocked Persons List 
(``SDN'' list) (which is accessible via the Office of Foreign Assets 
Control's Web site), published in the Federal Register, and 
incorporated into Appendix A to this chapter with the identifier 
``[NPWMD].'' See Sec.  544.411 concerning entities that may not be 
listed on the SDN list but whose property and interests in property 
are nevertheless blocked pursuant to paragraph (a) of this section.
    2. Section 203 of the International Emergency Economic Powers 
Act (50 U.S.C. 1701-1706) (``IEEPA'') explicitly authorizes the 
blocking of property and interests in property of a person during 
the pendency of an investigation. The names of persons whose 
property and interests in property are blocked pending investigation 
pursuant to this part also are published on the SDN list, published 
in the Federal Register, and incorporated into Appendix A to this 
chapter with the identifier ``[BPI-NPWMD].''
    3. Sections 501.806 and 501.807 of this chapter describe the 
procedures to be followed by persons seeking, respectively, the 
unblocking of funds that they believe were blocked due to mistaken 
identity, or administrative reconsideration of their status as 
persons whose property and interests in Property are blocked 
pursuant to paragraph (a) of this section.

    (b) The prohibitions in paragraph (a) of this section include, but 
are not limited to, prohibitions on the following transactions when 
engaged in by a United States person or within the United States:
    (1) The making of any contribution or provision of funds, goods, or 
services by, to, or for the benefit of any person whose property and 
interests in property are blocked pursuant to paragraph (a) of this 
section; and
    (2) The receipt of any contribution or provision of funds, goods, 
or services from any person whose property and interests in property 
are blocked pursuant to paragraph (a) of this section.
    (c) Unless otherwise authorized by this part or by a specific 
license expressly referring to this section, any dealing in any 
security (or evidence thereof) held within the possession or control of 
a U.S. person and either registered or inscribed in the name of, or 
known to be held for the benefit of, or issued by, any person whose 
property and interests in property are blocked pursuant to paragraph 
(a) of this section is prohibited. This prohibition includes but is not 
limited to the transfer (including the transfer on the books of any 
issuer or agent thereof), disposition, transportation, importation, 
exportation, or withdrawal of, or the endorsement or guaranty of 
signatures on, any such security on or after the effective date. This 
prohibition applies irrespective of the fact that at any time (whether 
prior to, on, or subsequent to the effective date) the registered or 
inscribed owner

[[Page 16775]]

of any such security may have or might appear to have assigned, 
transferred, or otherwise disposed of the security.


Sec.  544.202  Effect of transfers violating the provisions of this 
part.

    (a) Any transfer after the effective date that is in violation of 
any provision of this part or of any regulation, order, directive, 
ruling, instruction, or license issued pursuant to this part, and that 
involves any property or interest in property blocked pursuant to Sec.  
544.201(a), is null and void and shall not be the basis for the 
assertion or recognition of any interest in or right, remedy, power, or 
privilege with respect to such property or property interests.
    (b) No transfer before the effective date shall be the basis for 
the assertion or recognition of any right, remedy, power, or privilege 
with respect to, or any interest in, any property or interest in 
property blocked pursuant to Sec.  544.201(a), unless the person who 
holds or maintains such property, prior to that date, had written 
notice of the transfer or by any written evidence had recognized such 
transfer.
    (c) Unless otherwise provided, an appropriate license or other 
authorization issued by or pursuant to the direction or authorization 
of the Director of the Office of Foreign Assets Control before, during, 
or after a transfer shall validate such transfer or make it enforceable 
to the same extent that it would be valid or enforceable but for the 
provisions of IEEPA, Executive Order 13382, this part, and any 
regulation, order, directive, ruling, instruction, or license issued 
pursuant to this part.
    (d) Transfers of property that otherwise would be null and void or 
unenforceable by virtue of the provisions of this section shall not be 
deemed to be null and void or unenforceable as to any person with whom 
such property is or 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 is or was 
held or maintained (and as to such person only);
    (2) The person with whom such property is or was held or maintained 
did not have reasonable cause to know or suspect, in view of all the 
facts and circumstances known or available to such person, that such 
transfer required a license or authorization issued 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 withholding of material facts or was otherwise fraudulently 
obtained; and
    (3) The person with whom such property is or 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 directive or 
authorization issued pursuant to this part;
    (ii) Such transfer was not licensed or authorized by the Director 
of the Office of Foreign Assets Control; or
    (iii) If a license did purport to cover the transfer, such license 
had been obtained by misrepresentation of a third party or withholding 
of material facts or was otherwise fraudulently obtained.

    Note to paragraph (d) of Sec.  544.202: 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 (d)(2) of this section have been satisfied.

    (e) Unless licensed pursuant to this part, any attachment, 
judgment, decree, lien, execution, garnishment, or other judicial 
process is null and void with respect to any property in which, on or 
since the effective date, there existed an interest of a person whose 
property and interests in property are blocked pursuant to Sec.  
544.201(a).


Sec.  544.203  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.  544.201(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 that are 
commercially reasonable; or
    (ii) With a broker or dealer registered with the Securities and 
Exchange Commission under the Securities Exchange Act of 1934 (15 
U.S.C. 78a et seq.), 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 subaccount, 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.  544.201(a) 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 paragraphs 
(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.  544.201(a) 
may continue to be held in the same type of accounts or instruments, 
provided the funds earn interest at rates that are commercially 
reasonable.
    (e) This section does not create an affirmative obligation for the 
holder of blocked tangible property, such as chattels or real estate, 
or of other blocked property, such as debt or equity securities, to 
sell or liquidate such property. However, the Office of Foreign Assets 
Control may issue licenses permitting or directing such sales or 
liquidation in appropriate cases.
    (f) Funds subject to this section may not be held, invested, or 
reinvested in a manner that provides immediate financial or economic 
benefit or access to any person whose property and interests in 
property are blocked pursuant to Sec.  544.201(a), nor may their holder 
cooperate in or facilitate the pledging or other attempted use as 
collateral of blocked funds or other assets.


Sec.  544.204  Expenses of maintaining blocked physical property; 
liquidation of blocked property.

    (a) Except as otherwise authorized, and notwithstanding the 
existence of any rights or obligations conferred or imposed by any 
international agreement or contract entered into or any license or 
permit granted prior to the effective date, all expenses incident to 
the maintenance of physical property blocked pursuant to Sec.  
544.201(a) shall be the responsibility of the owners or operators of 
such property, which

[[Page 16776]]

expenses shall not be met from blocked funds.
    (b) Property blocked pursuant to Sec.  544.201(a) may, in the 
discretion of the Office of Foreign Assets Control, be sold or 
liquidated and the net proceeds placed in a blocked interest-bearing 
account in the name of the owner of the property.


Sec.  544.205  Evasions; attempts; conspiracies.

    (a) Except as otherwise authorized, and notwithstanding any 
contract entered into or any license or permit granted prior to the 
effective date, any transaction by a U.S. person or within the United 
States on or after the effective date that evades or avoids, has the 
purpose of evading or avoiding, or attempts to violate any of the 
prohibitions set forth in this part is prohibited.
    (b) Except as otherwise authorized, and notwithstanding any 
contract entered into or any license or permit granted prior to the 
effective date, any conspiracy formed to violate the prohibitions set 
forth in this part is prohibited.


Sec.  544.206  Exempt transactions.

    (a) Personal communications. The prohibitions contained in this 
part do not apply to any postal, telegraphic, telephonic, or other 
personal communication that does not involve the transfer of anything 
of value.
    (b) Information or informational materials. (1) The importation 
from any country and the exportation to any country of any information 
or informational materials, as defined in Sec.  544.304, whether 
commercial or otherwise, regardless of format or medium of 
transmission, are exempt from the prohibitions of this part.
    (2) This section does not exempt from regulation or authorize 
transactions related to information or 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, but are not limited to, 
payment of advances for information or informational materials not yet 
created and completed (with the exception of prepaid subscriptions for 
widely circulated magazines and other periodical publications); 
provision of services to market, produce or co-produce, create, or 
assist in the creation of information or informational materials; and, 
with respect to information or informational materials imported from 
persons whose property and interests in property are blocked pursuant 
to Sec.  544.201(a), payment of royalties with respect to income 
received for enhancements or alterations made by U.S. persons to such 
information or informational materials.
    (3) This section does not exempt or 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, or to 
the provision, sale, or leasing of capacity on telecommunications 
transmission facilities (such as satellite or terrestrial network 
connectivity) for use in the transmission of any data. The exportation 
of such items or services and the provision, sale, or leasing of such 
capacity or facilities to a person whose property and interests in 
property are blocked pursuant to Sec.  544.201(a) are prohibited.
    (c) Travel. The prohibitions contained in this part do not apply to 
any transactions ordinarily incident to travel to or from any country, 
including 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 nonscheduled air, sea, or land 
voyages.

Subpart C--General Definitions


Sec.  544.301  Blocked account; blocked property.

    The terms blocked account and blocked property shall mean any 
account or property subject to the prohibitions in Sec.  544.201 held 
in the name of a person whose property and interests in property are 
blocked pursuant to Sec.  544.201(a), or in which such person 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 expressly authorizing such action.

    Note to Sec.  544.301: See Sec.  544.411 concerning the blocked 
status of property and interests in property of an entity that is 50 
percent or more owned by a person whose property and interests in 
property are blocked pursuant to Sec.  544.201(a).

Sec.  544.302  Effective date.

    The term effective date refers to the effective date of the 
applicable prohibitions and directives contained in this part as 
follows:
    (a) With respect to a person whose property and interests in 
property are blocked pursuant to Sec.  544.201(a)(1), 12:01 a.m. 
eastern daylight time, June 29, 2005; and
    (b) With respect to a person whose property and interests in 
property are blocked pursuant to Sec.  544.201(a)(2), (a)(3), or 
(a)(4), the earlier of the date of actual or constructive notice of 
such person's designation.


Sec.  544.303  Entity.

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


Sec.  544.304  Information or informational materials.

    (a) For purposes of this part, the term information or 
informational materials includes, but is not limited to, publications, 
films, posters, phonograph records, photographs, microfilms, 
microfiche, tapes, compact disks, CD-ROMs, artworks, and news wire 
feeds.

    Note to paragraph (a) of Sec.  544.304:  To be considered 
information or informational materials, artworks must be classified 
under chapter heading 9701, 9702, or 9703 of the Harmonized Tariff 
Schedule of the United States.

    (b) The term information or informational materials, with respect 
to United States 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 (1979) (the 
``EAA''), or section 6 of the EAA to the extent that such controls 
promote the nonproliferation or antiterrorism policies of the United 
States; or
    (2) With respect to which acts are prohibited by 18 U.S.C. chapter 
37.


Sec.  544.305  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.  544.306  Licenses; general and specific.

    (a) Except as otherwise specified, the term license means any 
license or authorization contained in or issued pursuant to this part.
    (b) The term general license means any license or authorization the 
terms of which are set forth in subpart E of this part.
    (c) The term specific license means any license or authorization 
not set forth in subpart E of this part but issued pursuant to this 
part.


[[Page 16777]]


    Note to Sec.  544.306:  See Sec.  501.801 of this chapter on 
licensing procedures.

Sec.  544.307  Person.

    The term person means an individual or entity.


Sec.  544.308  Property; property interest.

    The terms property and property interest include, but are not 
limited to, money, checks, drafts, bullion, bank deposits, savings 
accounts, debts, indebtedness, obligations, notes, guarantees, 
debentures, stocks, bonds, coupons, any other financial instruments, 
bankers acceptances, mortgages, pledges, liens or other rights in the 
nature of security, warehouse receipts, bills of lading, trust 
receipts, bills of sale, any other evidences of title, ownership or 
indebtedness, letters of credit and any documents relating to any 
rights or obligations thereunder, powers of attorney, goods, wares, 
merchandise, chattels, stocks on hand, ships, goods on ships, real 
estate mortgages, deeds of trust, vendors' sales agreements, land 
contracts, leaseholds, ground rents, real estate and any other interest 
therein, options, negotiable instruments, trade acceptances, royalties, 
book accounts, accounts payable, judgments, patents, trademarks or 
copyrights, insurance policies, safe deposit boxes and their contents, 
annuities, pooling agreements, services of any nature whatsoever, 
contracts of any nature whatsoever, and any other property, real, 
personal, or mixed, tangible or intangible, or interest or interests 
therein, present, future or contingent.


Sec.  544.309  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.  544.310  United States.

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


Sec.  544.311  U.S. financial institution.

    The term U.S. financial institution means any U.S. entity 
(including its 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 that are located in the United States, but not such 
institutions' foreign branches, offices, or agencies.


Sec.  544.312  United States person; U.S. person.

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

Subpart D--Interpretations


Sec.  544.401  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.


Sec.  544.402  Effect of amendment.

    Unless otherwise specifically provided, any amendment, 
modification, or revocation of any provision in or appendix to this 
part or chapter or of any order, regulation, ruling, instruction, or 
license issued by or under the direction of the Director of the Office 
of Foreign Assets Control does not affect any act done or omitted, or 
any civil or criminal suit or proceeding commenced or pending prior to 
such amendment, modification, or revocation. All penalties, 
forfeitures, and liabilities under any such order, regulation, ruling, 
instruction, or license continue and may be enforced as if such 
amendment, modification, or revocation had not been made.


Sec.  544.403  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 a person, such property shall no longer be deemed 
to be property blocked pursuant to Sec.  544.201(a), unless there 
exists in the property another interest that is blocked pursuant to 
Sec.  544.201(a) or any other part of this chapter, 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 a 
person whose property and interests in property are blocked pursuant to 
Sec.  544.201(a), such property shall be deemed to be property in which 
that person has an interest and therefore blocked.


Sec.  544.404  Transactions ordinarily incident to a licensed 
transaction.

    Any transaction ordinarily incident to a licensed transaction and 
necessary to give effect thereto is also authorized, except:
    (a) An ordinarily incident transaction, not explicitly authorized 
within the terms of the license, by or with a person whose property and 
interests in property are blocked pursuant to Sec.  544.201(a); or
    (b) An ordinarily incident transaction, not explicitly authorized 
within the terms of the license, involving a debit to a blocked account 
or a transfer of blocked property.
    (c) Example. A license authorizing Company A, whose property and 
interests in property are blocked pursuant to Sec.  544.201(a), to 
complete a securities sale also authorizes all

[[Page 16778]]

activities by other parties required to complete the sale, including 
transactions by the buyer, broker, transfer agents, banks, etc., 
provided that such other parties are not themselves persons whose 
property and interests in property are blocked pursuant to Sec.  
544.201(a).


Sec.  544.405  Provision of services.

    (a) Except as provided in Sec.  544.206, the prohibitions on 
transactions involving blocked property contained in Sec.  544.201 
apply to services performed in the United States or by U.S. persons, 
wherever located, including by an overseas branch of an entity located 
in the United States:
    (1) On behalf of or for the benefit of a person whose property and 
interests in property are blocked pursuant to Sec.  544.201(a); or
    (2) With respect to property interests subject to Sec.  544.201.
    (b) Example: U.S. persons may not, except as authorized by or 
pursuant to this part, provide legal, accounting, financial, brokering, 
freight forwarding, transportation, public relations, or other services 
to a person whose property and interests in property are blocked 
pursuant to Sec.  544.201(a).

    Note to Sec.  544.405:  See Sec. Sec.  544.507 and 544.508 on 
licensing policy with regard to the provision of certain legal and 
medical services.

Sec.  544.406  Offshore transactions.

    The prohibitions in Sec.  544.201 on transactions or dealings 
involving blocked property apply to transactions by any U.S. person in 
a location outside the United States with respect to property held in 
the name of a person whose property and interests in property are 
blocked pursuant to Sec.  544.201(a), or property in which a person 
whose property and interests in property are blocked pursuant to Sec.  
544.201(a) has or has had an interest since the effective date.


Sec.  544.407  Payments from blocked accounts to satisfy obligations 
prohibited.

    Pursuant to Sec.  544.201, no debits may be made to a blocked 
account to pay obligations to U.S. persons or other persons, except as 
authorized by or pursuant to this part.


Sec.  544.408  Charitable contributions.

    Unless specifically authorized by the Office of Foreign Assets 
Control pursuant to this part, no charitable contribution of funds, 
goods, services, or technology, including contributions to relieve 
human suffering, such as food, clothing, or medicine, may be made by, 
to, or for the benefit of a person whose property and interests in 
property are blocked pursuant to Sec.  544.201(a). For the purposes of 
this part, a contribution is made by, to, or for the benefit of a 
person whose property and interests in property are blocked pursuant to 
Sec.  544.201(a) if made by, to, or in the name of such a person; if 
made by, to, or in the name of an entity or individual acting for or on 
behalf of, or owned or controlled by, such a person; or if made in an 
attempt to violate, to evade, or to avoid the bar on the provision of 
contributions by, to, or for the benefit of such a person.


Sec.  544.409  Credit extended and cards issued by U.S. financial 
institutions.

    The prohibition in Sec.  544.201 on dealing in property subject to 
that section prohibits U.S. financial institutions from performing 
under any existing credit agreements, including, but not limited to, 
charge cards, debit cards, or other credit facilities issued by a U.S. 
financial institution to a person whose property and interests in 
property are blocked pursuant to Sec.  544.201(a).


Sec.  544.410  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.  544.201 if effected after the effective date.


Sec.  544.411  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 Sec.  544.201(a) 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 Sec.  544.201(a), regardless of whether the entity 
itself is listed in the Annex to Executive Order 13382 or designated 
pursuant to Sec.  544.201(a).

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


Sec.  544.501  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 
are considered actions taken pursuant to this part.


Sec.  544.502  Effect of license or authorization.

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


Sec.  544.503  Exclusion from licenses.

    The Director of the Office of Foreign Assets Control reserves the 
right to exclude any person, property, or transaction from the 
operation of any license or from the privileges conferred by any 
license. The Director of the Office of Foreign Assets Control also 
reserves the right to restrict the applicability of any license to 
particular persons, property, transactions, or classes thereof. Such 
actions are binding upon actual or constructive notice of the 
exclusions or restrictions.


Sec.  544.504  Payments and transfers to blocked accounts in U.S. 
financial institutions.

    Any payment of funds or transfer of credit in which a person whose 
property and interests in property are blocked pursuant to Sec.  
544.201(a) 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

[[Page 16779]]

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 be made only to another blocked account held in the 
same name.

    Note to Sec.  544.504:  See Sec.  501.603 of this chapter for 
mandatory reporting requirements regarding financial transfers. See 
also Sec.  544.203 concerning the obligation to hold blocked funds 
in interest-bearing accounts.

Sec.  544.505  Entries in certain accounts for normal service charges 
authorized.

    (a) A U.S. financial institution is authorized to debit any blocked 
account held at that financial institution in payment or reimbursement 
for normal service charges owed it by the owner of that blocked 
account.
    (b) As used in this section, the term normal service charges shall 
include charges in payment or reimbursement for interest due; cable, 
telegraph, internet, 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.  544.506  Investment and reinvestment of certain funds.

    Subject to the requirements of Sec.  544.203, U.S. financial 
institutions are authorized to invest and reinvest assets blocked 
pursuant to Sec.  544.201, subject to the following conditions:
    (a) The assets representing such investments and reinvestments are 
credited to a blocked account or subaccount that is held in the same 
name at the same U.S. financial institution, or within the possession 
or control of a U.S. person, but funds shall not be transferred outside 
the United States for this purpose;
    (b) The proceeds of such investments and reinvestments shall not be 
credited to a blocked account or subaccount under any name or 
designation that differs from the name or designation of the specific 
blocked account or subaccount in which such funds or securities were 
held; and
    (c) No immediate financial or economic benefit accrues (e.g., 
through pledging or other use) to persons whose property and interests 
in property are blocked pursuant to Sec.  544.201(a).


Sec.  544.507  Provision of certain legal services authorized.

    (a) The provision of the following legal services to or on behalf 
of persons whose property and interests in property are blocked 
pursuant to Sec.  544.201(a) is authorized, provided that all receipts 
of payment of professional fees and reimbursement of incurred expenses 
must be specifically licensed:
    (1) Provision of legal advice and counseling on the requirements of 
and compliance with the laws of the United States or any jurisdiction 
within the United States, provided that such advice and counseling are 
not provided to facilitate transactions in violation of this part;
    (2) Representation of persons named as defendants in or otherwise 
made parties to domestic U.S. legal, arbitration, or administrative 
proceedings;
    (3) Initiation and conduct of domestic U.S. legal, arbitration, or 
administrative proceedings in defense of property interests subject to 
U.S. jurisdiction;
    (4) Representation of persons before any federal or state agency 
with respect to the imposition, administration, or enforcement of U.S. 
sanctions against such persons; and
    (5) Provision of legal services in any other context in which 
prevailing U.S. law requires access to legal counsel at public expense.
    (b) The provision of any other legal services to persons whose 
property and interests in property are blocked pursuant to Sec.  
544.201(a), not otherwise authorized in this part, requires the 
issuance of a specific license.
    (c) Entry into a settlement agreement or the enforcement of any 
lien, judgment, arbitral award, decree, or other order through 
execution, garnishment, or other judicial process purporting to 
transfer or otherwise alter or affect property or interests in property 
blocked pursuant to Sec.  544.201(a) is prohibited unless specifically 
licensed in accordance with Sec.  544.202(e).


Sec.  544.508  Authorization of emergency medical services.

    The provision of nonscheduled emergency medical services in the 
United States to persons whose property and interests in property are 
blocked pursuant to Sec.  544.201(a) is authorized, provided that all 
receipt of payment for such services must be specifically licensed.

Subpart F--Reports


Sec.  544.601  Records and reports.

    For provisions relating to required records and reports, see part 
501, subpart C, of this chapter. Recordkeeping and reporting 
requirements imposed by part 501 of this chapter with respect to the 
prohibitions contained in this part are considered requirements arising 
pursuant to this part.

Subpart G--Penalties


Sec.  544.701  Penalties.

    (a) Attention is directed to section 206 of the International 
Emergency Economic Powers Act (50 U.S.C. 1705) (``IEEPA''), which is 
applicable to violations of the provisions of any license, ruling, 
regulation, order, directive, 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.
    (1) A civil penalty not to exceed the amount set forth in section 
206 of IEEPA may be imposed on any person who violates, attempts to 
violate, conspires to violate, or causes a violation of any license, 
order, regulation, or prohibition issued under IEEPA.

    Note to paragraph (a)(1) of Sec.  544.701:  As of the date of 
publication in the Federal Register of the final rule adding this 
part to 31 CFR chapter V (April 13, 2009), 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.

    (2) 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 license, order, regulation, or prohibition may, 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.
    (b) 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.
    (c) 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,

[[Page 16780]]

United States Code, 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.  544.702  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 is warranted, the Office of Foreign Assets 
Control will 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 the applicable 30-day period set forth in this 
paragraph. 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 date-stamped 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 Civil Penalties 
Division by mail or courier and must be postmarked or date-stamped 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 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 Pre-
Penalty Notice was served upon the alleged violator in care of the 
representative.


Sec.  544.703  Penalty imposition.

    If, after considering any 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.


Sec.  544.704  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 or make payment arrangements acceptable to the 
Director of the Office of Foreign Assets Control, 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.  544.801  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.


Sec.  544.802  Delegation by the Secretary of the Treasury.

    Any action that the Secretary of the Treasury is authorized to take 
pursuant to Executive Order 13382 of June 28, 2005 (70 FR 38567, July 
1, 2005), and any further Executive Orders relating to the national 
emergency declared in Executive Order 12938 of November 14, 1994, as 
expanded by Executive Order 13094 of July 28, 1998, and with respect to 
which additional steps were taken in Executive Order 13382 of June 28, 
2005, 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.  544.901  Paperwork Reduction Act notice.

    For approval by the Office of Management and Budget (``OMB'') under 
the Paperwork Reduction Act of 1995 (44 U.S.C. 3507) of information 
collections relating to recordkeeping and reporting requirements, 
licensing procedures (including those pursuant to statements of 
licensing policy), and other procedures, see Sec.  501.901 of this 
chapter. An agency may not conduct or sponsor, and a person is not 
required to respond to, a collection of information unless it displays 
a valid control number assigned by OMB.


[[Page 16781]]


    Dated: March 31, 2009.
Adam J. Szubin,
Director, Office of Foreign Assets Control.
    Approved: April 3, 2009.
Stuart A. Levey,
Under Secretary, Office of Terrorism and Financial Intelligence, 
Department of the Treasury.
[FR Doc. E9-8336 Filed 4-10-09; 8:45 am]
BILLING CODE 4811-45-P