[Federal Register Volume 87, Number 84 (Monday, May 2, 2022)]
[Rules and Regulations]
[Pages 26094-26119]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-09371]



[[Page 26093]]

Vol. 87

Monday,

No. 84

May 2, 2022

Part III





Department of the Treasury





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Office of Foreign Assets Control





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31 CFR Part 589





Ukraine-/Russia-Related Sanctions Regulations; Final Rule

Federal Register / Vol. 87 , No. 84 / Monday, May 2, 2022 / Rules and 
Regulations

[[Page 26094]]



DEPARTMENT OF THE TREASURY

Office of Foreign Assets Control

31 CFR Part 589


Ukraine-/Russia-Related 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 changing the heading of the Ukraine Related Sanctions 
Regulations to the Ukraine-/Russia-Related Sanctions Regulations, and 
replacing the Ukraine Related Sanctions Regulations that were published 
in abbreviated form on May 8, 2014, with a more comprehensive set of 
regulations that includes additional interpretive and definitional 
guidance, general licenses, and other regulatory provisions that will 
provide further guidance to the public. Among other things, this 
amendment implements the Ukraine-/Russia-related Executive order of 
December 19, 2014, and provisions of the Ukraine Freedom Support Act of 
2014, the Support for the Sovereignty, Integrity, Democracy, and 
Economic Stability of Ukraine Act of 2014, and the Countering America's 
Adversaries Through Sanctions Act. In addition, this amendment 
incorporates four directives regarding sectoral sanctions issued 
pursuant to the Ukraine-/Russia-related Executive order of March 20, 
2014, and six general licenses that have until now appeared only on 
OFAC's website, as well as seven new general licenses.

DATES: This rule is effective May 2, 2022.

FOR FURTHER INFORMATION CONTACT: OFAC: Assistant Director for 
Licensing, 202-622-2480; Assistant Director for Regulatory Affairs, 
202-622-4855; or Assistant Director for Sanctions Compliance & 
Evaluation, 202-622-2490.

SUPPLEMENTARY INFORMATION:

Electronic Availability

    This document and additional information concerning OFAC are 
available on OFAC's website: www.treas.gov/ofac.

Background

    On May 8, 2014, OFAC published the Ukraine Related Sanctions 
Regulations, 31 CFR part 589 (79 FR 26365, May 8, 2014), to implement 
Executive Order (E.O.) 13660 of March 6, 2014, ``Blocking Property of 
Certain Persons Contributing to the Situation in Ukraine'' (79 FR 
13493, March 10, 2014); E.O. 13661 of March 16, 2014, ``Blocking 
Property of Additional Persons Contributing to the Situation in 
Ukraine'' (79 FR 15535, March 19, 2014); and E.O. 13662 of March 20, 
2014, ``Blocking Property of Additional Persons Contributing to the 
Situation in Ukraine'' (79 FR 16169, March 24, 2014). The Ukraine 
Related Sanctions Regulations were initially issued in abbreviated form 
to provide immediate guidance to the public. OFAC is changing the 
heading of the Ukraine Related Sanctions Regulations to the Ukraine-/
Russia-Related Sanctions Regulations (the ``Regulations'') and 
reissuing the Regulations as a more comprehensive set of regulations 
that includes additional interpretive guidance and definitions, general 
licenses, and other regulatory provisions that will provide further 
guidance to the public.
    This rule implements E.O. 13685 of December 19, 2014 (``Blocking 
Property of Certain Persons and Prohibiting Certain Transactions with 
Respect to the Crimea Region of Ukraine'') (79 FR 77357, December 24, 
2014), provisions of the Ukraine Freedom Support Act of 2014, as 
amended (22 U.S.C. 8921-8930) (UFSA), and the Support for the 
Sovereignty, Integrity, Democracy, and Economic Stability of Ukraine 
Act of 2014, as amended (22 U.S.C. 8901-8910) (SSIDES), and sections of 
title II of the Countering America's Adversaries Through Sanctions Act 
(Pub. L. 115-44, 131 Stat. 886 (codified in scattered sections of 22 
U.S.C.)) (CAATSA). In addition, this rule incorporates four directives 
issued pursuant to E.O. 13662 regarding sectoral sanctions and six new 
general licenses that have until now appeared only on OFAC's website, 
and adds seven new general licenses. Because of the number of 
regulatory sections being updated or added, OFAC is reissuing the 
Regulations in their entirety.

Executive Orders

    E.O. 13660. On March 6, 2014, the President, invoking the authority 
of, inter alia, the International Emergency Economic Powers Act (50 
U.S.C. 1701 et seq.) (IEEPA), issued E.O. 13660. In E.O. 13660, the 
President determined that the actions and policies of persons, 
including persons who have asserted governmental authority in the 
Crimean region without the authorization of the Government of Ukraine, 
that undermine democratic processes and institutions in Ukraine; 
threaten its peace, security, stability, sovereignty, and territorial 
integrity; and contribute to the misappropriation of its assets, 
constitute an unusual and extraordinary threat to the national security 
and foreign policy of the United States, and declared a national 
emergency to deal with that threat.
    Section 1(a) of E.O. 13660 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 any U.S. person, of any person determined by 
the Secretary of the Treasury, in consultation with the Secretary of 
State to, among other things, be responsible for or complicit in 
actions or policies that undermine democratic processes or institutions 
in Ukraine or threaten the peace, security, stability, sovereignty, or 
territorial integrity of Ukraine.
    E.O. 13661. On March 16, 2014, the President, invoking the 
authority of, inter alia, IEEPA, issued E.O. 13661. In E.O. 13661, the 
President expanded the scope of the national emergency declared in E.O. 
13660, finding that the actions and policies of the Government of the 
Russian Federation with respect to Ukraine--including the recent 
deployment of Russian Federation military forces in the Crimea region 
of Ukraine--undermine democratic processes and institutions in Ukraine; 
threaten its peace, security, stability, sovereignty, and territorial 
integrity; and contribute to the misappropriation of its assets, and 
thereby constitute an unusual and extraordinary threat to the national 
security and foreign policy of the United States. Section 1(a) of E.O. 
13661 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 any 
United States person, of: (i) The persons listed in the Annex to E.O. 
13661, and (ii) persons determined by the Secretary of the Treasury, in 
consultation with the Secretary of State to, among other things, be an 
official of the Government of the Russian Federation or operate in the 
arms or related materiel sector in the Russian Federation.
    E.O. 13662. On March 20, 2014, the President, invoking the 
authority of, inter alia, IEEPA, issued E.O. 13662. In E.O. 13662, the 
President expanded the scope of the national emergency declared in E.O. 
13660 and expanded by E.O. 13661, finding that the actions and policies 
of the Government of the Russian Federation, including its purported 
annexation of Crimea and its use of force in Ukraine, continue to 
undermine democratic processes and institutions in Ukraine; threaten 
its peace, security, stability, sovereignty,

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and territorial integrity; and contribute to the misappropriation of 
its assets, and thereby constitute an unusual and extraordinary threat 
to the national security and foreign policy of the United States.
    Section 1(a) of E.O. 13662 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 any United States person, of any person 
determined by the Secretary of the Treasury, in consultation with the 
Secretary of State to, among other things, operate in such sectors of 
the Russian Federation economy as may be determined by the Secretary of 
the Treasury, in consultation with the Secretary of State, such as 
financial services, energy, metals and mining, engineering, and defense 
and related materiel.
    E.O. 13685. On December 19, 2014, the President, invoking the 
authority of, inter alia, IEEPA, issued E.O. 13685 (``Blocking Property 
of Certain Persons and Prohibiting Certain Transactions With Respect to 
the Crimea Region of Ukraine''). In E.O. 13685, the President took 
additional steps to address the Russian occupation of the Crimea region 
of Ukraine, and with respect to the national emergency declared in E.O. 
13660 and expanded by E.O.s 13661 and 13662.
    Section 1(a) of E.O. 13685 prohibits, among other things, new 
investment in the Crimea region of Ukraine by a United States person, 
and the importation into, or exportation from, the United States, 
directly or indirectly, of any goods, services, or technology from or 
to the Crimea region of Ukraine. Section 2(a) of E.O. 13685 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 any United States 
person, of any person determined by the Secretary of the Treasury, in 
consultation with the Secretary of State to meet certain criteria.
    Other E.O. provisions. In section 3 of E.O.s 13660, 13661, and 
13662, and section 4 of E.O. 13685, the President determined that the 
making of donations of certain articles, such as food, clothing, and 
medicine, intended to be used 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 section 1 of E.O.s 13660, 13661, or 13662, or 
section 2 of E.O. 13685, respectively, would seriously impair the 
President's ability to deal with the national emergency declared in 
E.O. 13660 and expanded by E.O.s 13661 and 13662. The President 
therefore prohibited the donation of such items except to the extent 
provided by statutes, or in regulations, orders, directives or licenses 
that may be issued pursuant to E.O.s 13660, 13661, 13362, and 13685 
respectively.
    Section 4 of E.O.s 13660, 13661, and 13662, and section 5 of E.O. 
13685 provide that the prohibition on any transaction or dealing in 
blocked property or interests in property includes 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. 13660, E.O. 13661, E.O. 13662, or E.O. 13685 
(collectively, ``the Ukraine-/Russia-related Executive Orders''), 
respectively, and the receipt of any contribution or provision of 
funds, goods, or services from any such person.
    Section 5 of E.O.s 13660, 13661, and 13662, and section 6 of E.O. 
13685 prohibit any transaction by a U.S. 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 the 
Ukraine-/Russia-related Executive Orders, respectively, as well as any 
conspiracy formed to violate such prohibitions.
    Sections 8 of E.O.s 13660, 13661, and 13662, and section 10 of E.O. 
13685 authorize the Secretary of the Treasury, in consultation with the 
Secretary of State, to take such actions, including the promulgation of 
rules and regulations, and to employ all powers granted to the 
President by IEEPA, as may be necessary to carry out the purposes of 
the Ukraine-/Russia-related Executive Orders, and also provide that the 
Secretary of the Treasury may redelegate any of these functions to 
other officers and agencies of the U.S. Government. In furtherance of 
the Ukraine-/Russia-related Executive Orders, among other authorities, 
OFAC is promulgating the Regulations.
    Sectoral determinations and directives issued pursuant to E.O. 
13662. Section 1(a)(i) of E.O. 13662 blocks all property and interests 
in property of any person determined by the Secretary of the Treasury, 
in consultation with the Secretary of State, to operate in certain 
sectors of the Russian Federation economy, such as financial services, 
energy, metals and mining, engineering, and defense and related 
materiel. Pursuant to this provision, on July 16, 2014, the Secretary 
of the Treasury, in consultation with the Secretary of State, 
determined that section 1(a)(i) of E.O. 13662 shall apply to the 
financial services and energy sectors of the Russian Federation 
economy. On September 12, 2014, the Secretary of the Treasury, in 
consultation with the Secretary of State, determined that section 
1(a)(i) of E.O. 13662 shall apply to the defense and related materiel 
sector of the Russian Federation economy (79 FR 63021, October 21, 
2014).
    Effective August 2, 2017, section 223(a) of CAATSA modified the 
implementation of section 1(a) of E.O. 13662 by providing that the 
Secretary of the Treasury may determine that a person meets one or more 
of the criteria in section 1(a) of E.O. 13662 if that person is a 
state-owned entity operating in the railway or metals and mining sector 
of the economy of the Russian Federation.
    To further implement the Secretary's determinations under section 
1(a)(i) of E.O. 13662, OFAC issued four directives prohibiting 
specified activities by a U.S. person or within the United States 
pursuant to sections 1(a)(i), 1(b), and 8 of E.O. 13662 and Sec.  
589.802. As described below, the directives have been amended several 
times. The full text of the current directives that are being 
incorporated into the Regulations can be found on the Ukraine-/Russia-
Related Sanctions page on OFAC's website: www.treas.gov/ofac. The names 
of persons determined to be subject to one or more directives issued 
under E.O. 13662 are published on OFAC's Sectoral Sanctions 
Identifications List (SSI List), which can also be found on the 
Ukraine-/Russia-Related Sanctions page on OFAC's website: 
www.treas.gov/ofac.
    Directive 1. On July 16, 2014, OFAC issued ``Directive 1 Pursuant 
to Executive Order 13662'' (79 FR 63021, October 21, 2014) to further 
implement the determination by the Secretary of the Treasury, in 
consultation with the Secretary of State, that section 1(a)(i) of E.O. 
13662 applies to the financial services sector of the Russian 
Federation Economy. On September 12, 2014, OFAC replaced ``Directive 1 
Pursuant to Executive Order 13662'' with ``Directive 1 (as Amended) 
Under Executive Order 13622'' (79 FR 63021, October 21, 2014). Section 
223(b) of CAATSA requires the Secretary of the Treasury to modify 
``Directive 1 (as Amended) Under Executive Order 13622,'' or any 
successor directive, to ensure that the directive prohibits the conduct 
by United States persons or persons within the United States of all 
transactions in, provision of financing for, and other dealings in new 
debt of longer than 14

[[Page 26096]]

days maturity or new equity of persons determined to be subject to the 
directive, their property, or their interests in property. OFAC 
replaced ``Directive 1 (as Amended) Under Executive Order 13622'' with 
``Directive 1 (as Amended on September 29, 2017) Under Executive Order 
13622'' (Directive 1) on September 29, 2017 on OFAC's website.
    Directive 1 prohibits the following activities by a U.S. person or 
within the United States: (1) For new debt or new equity issued on or 
after July 16, 2014 and before September 12, 2014, all transactions in, 
provision of financing for, and other dealings in new debt of longer 
than 90 days maturity or new equity of persons determined to be subject 
to Directive 1 or any earlier version thereof, their property, or their 
interests in property; (2) For new debt or new equity issued on or 
after September 12, 2014 and before November 28, 2017, all transactions 
in, provision of financing for, and other dealings in new debt of 
longer than 30 days maturity or new equity of persons determined to be 
subject to Directive 1 or any earlier version thereof, their property, 
or their interests in property; and (3) For new debt or new equity 
issued on or after November 28, 2017, all transactions in, provision of 
financing for, and other dealings in new debt of longer than 14 days 
maturity or new equity of persons determined to be subject to Directive 
1 or any earlier version thereof, their property, or their interests in 
property. Directive 1 also prohibits (1) Any transaction that evades or 
avoids, has the purpose of evading or avoiding, causes a violation of, 
or attempts to violate any of the prohibitions contained in the 
directive; and (2) Any conspiracy formed to violate any of the 
prohibitions in the directive.
    Directive 2. On July 16, 2014, OFAC issued ``Directive 2 Pursuant 
to Executive Order 13662'' (79 FR 63021, October 21, 2014) to further 
implement the determination by the Secretary of the Treasury that 
section 1(a)(i) of E.O. 13662 applies to the energy sector of the 
Russian Federation economy. On September 12, 2014, OFAC replaced 
``Directive 2 Pursuant to Executive Order 13662'' with ``Directive 2 
(as Amended) Under E.O. 13662'' (79 FR 63021, October 21, 2014). 
Section 223(c) of CAATSA requires the Secretary of the Treasury to 
modify ``Directive 2 (as Amended) Under E.O. 13662'' or any successor 
directive to ensure that the directive prohibits the conduct by United 
States persons or persons within the United States of all transactions 
in, provision of financing for, and other dealings in new debt of 
longer than 60 days maturity of persons determined to be subject to the 
directive, their property, or their interests in property. OFAC 
replaced ``Directive 2 (as Amended) Under E.O. 13662'' with ``Directive 
2 (as Amended on September 29, 2017) Under Executive Order 13662'' 
(Directive 2) on September 29, 2017 on its website.
    Directive 2 prohibits the following activities by a U.S. person or 
within the United States: (1) For new debt issued on or after July 16, 
2014 and before November 28, 2017, all transactions in, provision of 
financing for, and other dealings in new debt of longer than 90 days 
maturity of persons determined to be subject to Directive 2 or any 
earlier version thereof, their property, or their interests in 
property; and (2) For new debt issued on or after November 28, 2017, 
all transactions in, provision of financing for, and other dealings in 
new debt of longer than 60 days maturity of persons determined to be 
subject to Directive 2 or any earlier version thereof, their property, 
or their interests in property. Directive 2 also prohibits (1) Any 
transaction that evades or avoids, has the purpose of evading or 
avoiding, causes a violation of, or attempts to violate any of the 
prohibitions contained in the directive; and (2) Any conspiracy formed 
to violate any of the prohibitions in the directive.
    Directive 3. On September 12, 2014, OFAC issued ``Directive 3 Under 
E.O. 13662'' (79 FR 63021, October 21, 2014) (Directive 3) following 
the Secretary of the Treasury's determination that section 1(a)(i) of 
E.O. 13662 applies to the defense and related materiel sector of the 
Russian Federation economy. Directive 3 prohibits all transactions in, 
provision of financing for, and other dealings in new debt of longer 
than 30 days maturity of persons determined to be subject to Directive 
3, their property, or their interests in property. Directive 3 also 
prohibits: (1) Any transaction that evades or avoids, has the purpose 
of evading or avoiding, causes a violation of, or attempts to violate 
any of the prohibitions contained in Directive 3; and (2) Any 
conspiracy formed to violate any of the prohibitions in Directive 3.
    Directive 4. On September 12, 2014, OFAC issued ``Directive 4 Under 
Executive Order 13662'' (79 FR 63021, October 21, 2014) to further 
implement the Secretary of the Treasury's July 16, 2014 determination 
that section 1(a)(i) of E.O. 13662 applies to the energy sector of the 
Russian Federation economy. Section 223(d) of CAATSA requires the 
Secretary of the Treasury to modify ``Directive 4 Under Executive Order 
13662'' or any successor directive, to ensure that the directive 
prohibits the provision, exportation, or reexportation, directly or 
indirectly, by United States persons or persons within the United 
States, of goods, services (except for financial services), or 
technology in support of exploration or production for new deepwater, 
Arctic offshore, or shale projects that: (1) Have the potential to 
produce oil; and (2) Involve any person determined to be subject to the 
directive or the property or interests in property of such a person who 
has a controlling interest or a substantial noncontrolling ownership 
interest in such a project defined as not less than a 33 percent 
interest. OFAC replaced ``Directive 4 Under Executive Order 13662'' 
with ``Directive 4 (as Amended on October 13, 2017) Under Executive 
Order 13662'' (Directive 4) on October 31, 2017 on its website.
    Directive 4 prohibits the following activities by a U.S. person or 
within the United States: The provision, exportation, or reexportation, 
directly or indirectly, of goods, services (except for financial 
services), or technology in support of exploration or production for 
deepwater, Arctic offshore, or shale projects: (1) That have the 
potential to produce oil in the Russian Federation, or in maritime area 
claimed by the Russian Federation and extending from its territory, and 
that involve any person determined to be subject to Directive 4 or any 
earlier version thereof, their property, or their interests in 
property; or (2) that are initiated on or after January 29, 2018, that 
have the potential to produce oil in any location, and in which any 
person determined to be subject to Directive 4 or any earlier version 
thereof, their property, or their interests in property has (a) a 33 
percent or greater ownership interest, or (b) ownership of a majority 
of the voting interests. Additionally, Directive 4 prohibits: (1) Any 
transaction that evades or avoids, has the purpose of evading or 
avoiding, causes a violation of, or attempts to violate any of the 
prohibitions contained in the directive; and (2) Any conspiracy formed 
to violate any of the prohibitions in the directive.

Statutes

    UFSA. UFSA was signed into law on December 18, 2014 and amended by 
CAATSA on August 2, 2017. Among other things, section 5 of UFSA 
requires the imposition of sanctions on any foreign financial 
institution that the President determines knowingly engages in 
significant transactions involving certain activities for persons

[[Page 26097]]

sanctioned pursuant to section 4 of UFSA or knowingly facilitated a 
significant financial transaction on behalf of any Russian person 
included on the list of Specially Designated Nationals and Blocked 
Persons (``SDN List'') maintained by OFAC, pursuant to UFSA, E.O.s 
13660, 13661, or 13662, or any other Executive order addressing the 
crisis in Ukraine.
    SSIDES. SSIDES was signed into law on April 3, 2014 and amended by 
CAATSA on August 2, 2017. SSIDES requires the President to block all 
property and interests in property that are in the United States, that 
come within the United States, or that are or come within the 
possession or control of any U.S. person of, persons who meet specific 
criteria, such as a current or former official of the Government of 
Ukraine that the President determines has perpetrated, or is 
responsible for ordering, controlling, or otherwise directing, 
significant acts of violence or gross human rights abuses in Ukraine 
against persons associated with the antigovernment protests in Ukraine 
that began on November 21, 2013.
    CAATSA. CAATSA established new sanctions authorities and 
exceptions, in addition to amending, modifying, or otherwise affecting: 
The Ukraine-/Russia-related Executive Orders, E.O. 13694 of April 1, 
2015, ``Blocking the Property of Certain Persons Engaging in 
Significant Malicious Cyber-Enabled Activities'' (80 FR 18077, April 2, 
2015), and E.O. 13757 of December 28, 2016, ``Taking Additional Steps 
to Address the National Emergency With Respect to Significant Malicious 
Cyber-Enabled Activities'' (82 FR 1, January 3, 2017); Directives 1, 2, 
and 4; UFSA; and SSIDES. Section 236 of CAATSA establishes an exception 
from sanctions for activities subject to the reporting requirements 
under title V of the National Security Act of 1947 (50 U.S.C. 3091 et 
seq.), or any authorized intelligence activities of the United States, 
and section 237 of CAATSA establishes an exception from sanctions for 
activities of the National Aeronautics and Space Administration.
    Title II of CAATSA also requires the imposition of sanctions with 
respect to, among others: Activities of the Russian Federation that 
undermine cybersecurity; persons who knowingly provide financial 
services in support of activities that undermine cybersecurity; persons 
who invest in or contribute to the ability of the Russian Federation to 
privatize state-owned assets in a manner that unjustly benefits 
officials of the Government of the Russian Federation; persons who 
engage in a significant transaction with a person that is part of, or 
operates for or on behalf of, the defense or intelligence sectors of 
the Government of the Russian Federation; and persons who transfer arms 
and related materiel to Syria. OFAC anticipates incorporating these 
provisions of title II of CAATSA into the CFR at a later date.

Current Regulatory Action

    Subpart A of the Regulations clarifies the relation of this part to 
other laws and regulations. Subpart B of the Regulations implements the 
prohibitions contained in section 1 of E.O. 13660, E.O. 13661, E.O. 
13662, and sections 1 and 2 of E.O. 13685, as well as the prohibitions 
contained in any further Executive orders issued pursuant to the 
national emergency declared in E.O. 13660. See, e.g., Sec.  589.201. 
Additionally, subpart B implements section 5 of UFSA, sections 8 
through 11 of SSIDES, and the prohibitions in Directives 1, 2, 3, and 4 
issued pursuant to E.O. 13662.
    The following persons are referred to throughout the Regulations as 
``persons whose property and interests in property are blocked pursuant 
to Sec.  589.201'': Persons identified in the Annex to E.O. 13661; 
designated by or under the authority of the Secretary of the Treasury, 
in consultation with the Secretary of State, pursuant to the Ukraine-/
Russia-related Executive Orders, or SSIDES; otherwise subject to the 
blocking provisions of the Ukraine-/Russia-related Executive Orders, or 
SSIDES; and persons who are blocked pursuant to any further Executive 
orders issued pursuant to the national emergency declared in E.O. 
13660. The names of persons designated, or identified as blocked 
pursuant to, as applicable, the Ukraine-/Russia-related Executive 
Orders, or any further Executive orders issued pursuant to the national 
emergency declared in E.O. 13660, or SSIDES, are published on the SDN 
List, which is accessible via OFAC's website. Those names also are 
published in the Federal Register as they are added to the SDN List.
    Sections 589.202 through 589.205 of subpart B implement Directives 
1 through 4, respectively. The names of persons identified as subject 
to Directive 1, 2, 3, or 4, which are implemented in Sec. Sec.  589.202 
through 589.205, are published on OFAC's SSI List, which is accessible 
via OFAC's website, and are published in the Federal Register along 
with the applicable Directive(s) as they are added to the SSI List. 
These persons are referred to throughout the Regulations as ``persons 
subject to Sec.  589.202, 589.203, 589.204 or 589.205.'' Section 
589.206 of subpart B prohibits new investment in the Crimea region of 
Ukraine, Sec.  589.207 details the prohibition on exportation, 
reexportation, sale or supply of goods or services to that region, and 
Sec.  589.208 prohibits the importation of goods, services, and 
technology from that region.
    Section 589.209 details prohibitions or strict conditions with 
respect to correspondent or payable-through accounts of foreign 
financial institutions that are determined to engage in significant 
transactions involving certain activities for persons with respect to 
which sanctions are imposed under section 4 of UFSA, or to have 
facilitated significant transactions on behalf of certain blocked 
persons. The names of foreign financial institutions for which the 
opening or maintaining of a correspondent account or a payable-through 
account in the United States is prohibited or subject to one or more 
strict conditions pursuant to Sec.  589.209 will be added to the List 
of Foreign Financial Institutions Subject to Correspondent Account or 
Payable-Through Account Sanctions (CAPTA List) on OFAC's website, and 
be published in the Federal Register along with the applicable 
prohibition or strict condition(s) as they are added to the CAPTA List.
    Sections 589.210 and 589.211 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, or liquidated financial obligations, in interest-bearing 
blocked accounts. Section 589.212 of subpart B provides that all 
expenses incident to the maintenance of blocked tangible property shall 
be the responsibility of the owners and 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.
    Section 589.213 of subpart B prohibits any transaction by a U.S. 
person or within the United States that evades or avoids, has the 
purpose of evading or avoiding, causes a violation, or attempts to 
violate any of the prohibitions set forth in subpart B of the 
Regulations, and any conspiracy formed to violate such prohibitions.
    Section 589.214 of subpart B details transactions that are exempt 
from the prohibitions of the Regulations pursuant to: Section 203(b)(1) 
of IEEPA (50 U.S.C. 1702(b)(1)), which relates to personal

[[Page 26098]]

communications; section 236 of CAATSA, which relates to U.S. 
intelligence activities; section 237 of CAATSA, which relates to 
activities of the National Aeronautics and Space Administration; 
section 7 of E.O. 13685, which relates to activities for the official 
business of the United States Government; and sections 8(b)(3) and 
9(b)(3) of SSIDES, which relate to the importation of goods. Section 
589.215 details the prohibition on approving, financing, facilitating, 
or guaranteeing a transaction by a foreign person where the transaction 
would be prohibited by Sec.  589.206, 589.207, or 589.208 if performed 
by a U.S. person or within the United States.
    Subpart C of the Regulations defines key terms used throughout the 
Regulations. Thirty new sections are being added to define key terms 
used in the new regulatory prohibitions or elsewhere in the 
Regulations. The definition of Ukraine-related Executive orders, which 
was in Sec.  589.310, is being removed from the Regulations because 
revisions to Sec.  589.201 make it unnecessary. To keep the definitions 
in alphabetical order, the definitions that were in the prior 
abbreviated set of regulations are being renumbered. OFAC is adding a 
definition of shale projects at Sec.  589.334 that expands the 
definition formerly on OFAC's website as Frequently Asked Question 
(FAQ) 418.
    In subpart D, which contains interpretive sections regarding the 
Regulations, Sec.  589.401 is being expanded, Sec.  589.405 is being 
redesignated as Sec.  589.410, and new Sec. Sec.  589.405 through 
589.409 are being added. Section 589.405 clarifies that the 
prohibitions contained in Sec.  589.201 apply to certain services 
performed on behalf of, or performed by or at the direction of, any 
person whose property and interests in property are blocked pursuant to 
Sec.  589.201. Section 589.406 has been redesignated as Sec.  589.411 
and updated to explain that the property and interests in property of 
an entity are blocked if the entity is directly or indirectly owned, 
whether individually or in the aggregate, 50 percent or more by one or 
more persons whose property and interests in property are blocked, 
whether or not the entity itself is incorporated into OFAC's SDN List. 
Additionally, OFAC is incorporating the following interpretations from 
its existing FAQs into the Regulations: Sec.  589.411 clarifies that 
the interpretation set forth in Sec.  589.411 applies to those included 
on OFAC's SSI List; new Sec.  589.412 clarifies that, for the purposes 
of Sec.  589.205(b), OFAC considers the aggregate ownership interest or 
majority of voting rights held by one or more persons subject to Sec.  
589.205, their property, or their interests in property, including 
entities owned 50 percent or more by one or more persons subject to 
Sec.  589.205; and new Sec.  589.413 provides interpretive language 
about significant transactions or financial transactions. OFAC is also 
adding new Sec.  589.414 to provide interpretative language about 
facilitation.
    Transactions otherwise prohibited by the Regulations but found to 
be consistent with U.S. policy may be authorized by one of the general 
licenses contained in subpart E of the Regulations or by a specific 
license issued pursuant to the procedures described in subpart E of 31 
CFR part 501. General licenses and statements of licensing policy 
relating to this part also may be available through the Ukraine-/
Russia-Related Sanctions page on OFAC's website: www.treas.gov/ofac.
    With this rule, OFAC is updating several existing general licenses 
in the Regulations. In the authorization for legal services in Sec.  
589.506, the authorization is being updated to include the provision of 
legal services to or on behalf of a person in the Crimea region of 
Ukraine, and authorization for the payment of professional fees or 
reimbursement of incurred expenses for authorized legal services to 
such persons is authorized as long as it does not involve the debiting 
of any blocked account or transfer of any blocked property. The note to 
Sec.  589.506 is also being updated to include certain specific 
services. The authorization for payments for legal services in Sec.  
589.507 is being updated to remove the requirement that attorneys send 
OFAC a copy of their letter of engagement prior to receiving payment, 
and to permit email filing of reports. Section 589.508 is being amended 
to remove the requirement that payment for emergency medical services 
be specifically licensed.
    Additionally, OFAC is incorporating six general licenses into the 
Regulations that were previously posted only on OFAC's website. New 
Sec.  589.512 incorporates General License 1B, authorizing certain 
transactions related to derivatives prohibited by Directives 1, 2, and 
3; General License 1B, which superseded prior versions of such general 
license, was issued on OFAC's website on November 28, 2017 and will be 
removed upon publication of this rule. New Sec. Sec.  589.513 through 
589.517 incorporate General Licenses 4, 6, 7, 8, and 9, respectively, 
which authorize with respect to the Crimea region of Ukraine: 
Exportation or reexportation of agricultural commodities, medicine, 
medical supplies, and replacement parts; noncommercial, personal 
remittances; operation of accounts; transactions related to 
telecommunications and mail; and exportation of certain services and 
software incident to internet-based communications. General License 4 
was issued on December 19, 2014, General Licenses 6, 7, and 8 were 
issued on January 30, 2015, and General License 9 was issued on May 22, 
2015, each on OFAC's website; each of these general licenses will be 
removed upon publication of this rule.
    OFAC is also incorporating seven new general licenses into the 
Regulations. New Sec. Sec.  589.509, 589.510, and 589.511 incorporate 
general licenses authorizing certain transactions relating to 
investment and reinvestment of funds, official business of the U.S. 
government, and official business of certain international 
organizations and entities. New Sec. Sec.  589.518, 589.519, and 
589.520 authorize activities specific to the Crimea region of Ukraine: 
Transactions necessary and ordinarily incident to publishing, emergency 
landings and air ambulance services, and the export of certain services 
in support of nongovernmental organizations' activities. New Sec.  
589.521 authorizes transactions related to closing a correspondent or 
payable-through account. The addition of these general licenses to the 
Regulations do not represent a significant alteration of the United 
States' foreign policy with regard to the Russian Federation. Subpart F 
of the Regulations refers to subpart C of part 501 for recordkeeping 
and reporting requirements. Subpart G of the Regulations 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 or issuance of a Finding of 
Violation. Subpart G also refers to appendix A of part 501 for a more 
complete description of these procedures. In Subpart G, Sec.  589.701 
reflects the 2022 civil monetary penalty increase as required by 
section 4 of the Federal Civil Penalties Inflation Adjustment Act (1990 
Pub. L. 101-410, 104 Stat. 890; 28 U.S.C. 2461 note), as amended by the 
Federal Civil Penalties Inflation Adjustment Act Improvements Act of 
2015 (Pub. L. 114-74, 129 Stat. 599, 28 U.S.C. 2461 note).
    Subpart H of the Regulations refers to subpart E of part 501 for 
applicable provisions relating to administrative procedures and 
contains a delegation of certain authorities of the Secretary of the 
Treasury. Subpart I of the

[[Page 26099]]

Regulations sets forth a Paperwork Reduction Act notice.

Public Participation

    Because the Regulations involve a foreign affairs function, the 
provisions of E.O. 12866 of September 30, 1993, ``Regulatory Planning 
and Review'' (58 FR 51735, October 4, 1993), 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 589

    Administrative practice and procedure, Arctic offshore, Banks, 
banking, Blocking of assets, Correspondent account, Credit, Crimea, 
Debt, Deepwater, Facilitation, Foreign trade, Human rights abuses, 
Payable-through account, Reporting and recordkeeping requirements, 
Russian Federation, Sanctions, Securities, Services, Shale projects, 
Ukraine.

0
For the reasons set forth in the preamble, OFAC revises 31 CFR part 589 
to read as follows:

PART 589--UKRAINE-/RUSSIA-RELATED SANCTIONS REGULATIONS

Subpart A--Relation of This Part to Other Laws and Regulations
Sec.
589.101 Relation of this part to other laws and regulations.
Subpart B--Prohibitions
589.201 Prohibited transactions.
589.202 Prohibited transactions with respect to the financial 
services sector of the Russian Federation economy (Directive 1).
589.203 Prohibited transactions with respect to financing activities 
in the energy sector of the Russian Federation economy (Directive 
2).
589.204 Prohibited transactions with respect to the defense and 
related materiel sector of the Russian Federation economy (Directive 
3).
589.205 Prohibited transactions with respect to oil producing 
activities in the energy sector of the Russian Federation economy 
(Directive 4).
589.206 Prohibited new investment in the Crimea region of Ukraine.
589.207 Prohibited exportation, reexportation, sale, or supply of 
goods, services, or technology to the Crimea region of Ukraine.
589.208 Prohibited importation of goods, services, or technology 
from the Crimea region of Ukraine.
589.209 Prohibitions or strict conditions with respect to 
correspondent or payable-through accounts of foreign financial 
institutions that have knowingly facilitated certain significant 
transactions.
589.210 Effect of transfers violating the provisions of this part.
589.211 Holding of funds in interest-bearing accounts; investment 
and reinvestment.
589.212 Expenses of maintaining blocked tangible property; 
liquidation of blocked property.
589.213 Evasions; attempts; causing violations; conspiracies.
589.214 Exempt transactions.
589.215 Prohibited facilitation.
Subpart C--General Definitions
589.300 Applicability of definitions.
589.301 Arctic offshore projects.
589.302 Arms or related materiel sector of the Russian Federation 
economy.
589.303 Blocked account; blocked property.
589.304 Correspondent account.
589.305 Covered Executive order.
589.306 Crimea region of Ukraine.
589.307 Debt.
589.308 Deepwater projects.
589.309 Defense and related materiel sector of the Russian 
Federation economy.
589.310 Effective date.
589.311 Energy sector of the Russian Federation economy.
589.312 Entity.
589.313 Equity.
589.314 Financial, material, or technological support.
589.315 Financial services sector of the Russian Federation economy.
589.316 Foreign financial institution.
589.317 Foreign person.
589.318 Government of the Russian Federation.
589.319 [Reserved]
589.320 Initiated.
589.321 Interest.
589.322 Knowingly.
589.323 Licenses; general and specific.
589.324 Loans or other extensions of credit.
589.325 Metals and mining sector of the Russian Federation economy.
589.326 New investment.
589.327 OFAC.
589.328 Payable-through account.
589.329 Person.
589.330 Production.
589.331 Property; property interest.
589.332 Railway sector of the Russian Federation economy.
589.333 Russian person.
589.334 Shale projects.
589.335 Special Russian crude oil project.
589.336 Structured.
589.337 Transfer.
589.338 United States.
589.339 United States person; U.S. person.
589.340 U.S. depository institution.
589.341 U.S. financial institution.
589.342 U.S.-registered broker or dealer in securities.
589.343 U.S.-registered money transmitter.
Subpart D--Interpretations
589.401 Reference to amended sections.
589.402 Effect of amendment.
589.403 Termination and acquisition of an interest in blocked 
property.
589.404 Transactions ordinarily incident to a licensed transaction.
589.405 Exportation and reexportation of goods, services, or 
technology; provision and receipt of services.
589.406 Offshore transactions involving blocked property.
589.407 Payments from blocked accounts to satisfy obligations 
prohibited.
589.408 Charitable contributions.
589.409 Credit extended and cards issued by financial institutions 
to a person whose property and interests in property are blocked.
589.410 Setoffs prohibited.
589.411 Entities owned by one or more persons whose property and 
interests in property are blocked or who are subject to Sec.  
589.202, Sec.  589.203, Sec.  589.204, or Sec.  589.205.
589.412 Projects owned, or to which a majority of voting rights are 
held, by one or more persons subject to Sec.  589.205.
589.413 Significant transaction(s); significant financial 
transaction(s).
589.414 Facilitation; change of policies and procedures; referral of 
business opportunities offshore.
Subpart E--Licenses, Authorizations, and Statements of Licensing Policy
589.501 General and specific licensing procedures.
589.502 Effect of license or other authorization.
589.503 Exclusion from licenses.
589.504 Payments and transfers to blocked accounts in U.S. financial 
institutions.
589.505 Entries in certain accounts for normal service charges.
589.506 Provision of certain legal services.
589.507 Payments for legal services from funds originating outside 
the United States.
589.508 Emergency medical services.
589.509 Investment and reinvestment of certain funds.
589.510 Official business of the United States Government.
589.511 Official business of certain international organizations and 
entities.
589.512 Certain transactions related to derivatives prohibited by 
Sec.  589.202, Sec.  589.203, or Sec.  589.204.
589.513 Exportation or reexportation of agricultural commodities, 
medicine, medical supplies, and replacement parts to the Crimea 
region of Ukraine.

[[Page 26100]]

589.514 Noncommercial, personal remittances to or from the Crimea 
region of Ukraine or for or on behalf of an individual ordinarily 
resident in the Crimea region of Ukraine.
589.515 Operation of accounts for individuals ordinarily resident in 
the Crimea region of Ukraine.
589.516 Transactions related to telecommunications and mail 
involving the Crimea region of Ukraine.
589.517 Exportation of certain services and software incident to 
internet-based communications to the Crimea region of Ukraine.
589.518 Transactions necessary and ordinarily incident to publishing 
in the Crimea region of Ukraine.
589.519 Emergency landings and air ambulance services in the Crimea 
region of Ukraine.
589.520 Certain transactions in support of nongovernmental 
organizations' activities in the Crimea region of Ukraine.
589.521 Transactions related to closing a correspondent or payable-
through account.
Subpart F--Reports
589.601 Records and reports.
Subpart G--Penalties and Findings of Violation
589.701 Penalties.
589.702 Pre-Penalty Notice; settlement.
589.703 Penalty imposition.
589.704 Administrative collection; referral to United States 
Department of Justice.
589.705 Findings of Violation.
Subpart H--Procedures
589.801 Procedures.
589.802 Delegation of certain authorities of the Secretary of the 
Treasury.
Subpart I--Paperwork Reduction Act
589.901 Paperwork Reduction Act notice.

    Authority: 3 U.S.C. 301; 22 U.S.C. 8901-8910, 8921-8930; 31 
U.S.C. 321(b); 50 U.S.C. 1601-1651, 1701-1706; Pub. L. 101-410, 104 
Stat. 890, as amended (28 U.S.C. 2461 note); Pub. L. 115-44, 131 
Stat. 886 (codified in scattered sections of 22 U.S.C.); E.O. 13660, 
79 FR 13493, 3 CFR, 2014 Comp., p. 226; E.O. 13661, 79 FR 15535, 3 
CFR, 2014 Comp., p. 229; E.O. 13662, 79 FR 16169, 3 CFR, 2014 Comp., 
p. 233; E.O. 13685, 79 FR 77357, 3 CFR, 2014 Comp., p. 313.

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


Sec.  589.101  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.

Subpart B--Prohibitions


Sec.  589.201  Prohibited transactions.

    (a) All property and interests in property that are in the United 
States, that come within the United States, or that are or come within 
the possession or control of any U.S. person of the following persons 
are blocked and may not be transferred, paid, exported, withdrawn, or 
otherwise dealt in:
    (1) Executive Order (E.O.) 13660. Any person determined by the 
Secretary of the Treasury, in consultation with the Secretary of State:
    (i) To be responsible for or complicit in, or to have engaged in, 
directly or indirectly, any of the following:
    (A) Actions or policies that undermine democratic processes or 
institutions in Ukraine;
    (B) Actions or policies that threaten the peace, security, 
stability, sovereignty, or territorial integrity of Ukraine; or
    (C) Misappropriation of state assets of Ukraine or of an 
economically significant entity in Ukraine;
    (ii) To have asserted governmental authority over any part or 
region of Ukraine without the authorization of the Government of 
Ukraine;
    (iii) To be a leader of an entity that has, or whose members have, 
engaged in any activity described in paragraph (a)(1)(i) or (ii) or of 
an entity whose property and interests in property are blocked pursuant 
to this paragraph (a)(1);
    (iv) To have materially assisted, sponsored, or provided financial, 
material, or technological support for, or goods or services to or in 
support of, any activity described in paragraph (a)(1)(i) or (ii) or 
any person whose property and interests in property are blocked 
pursuant to this paragraph (a)(1);
    (v) To be owned or controlled by, or to have acted or purported to 
act for or on behalf of, directly or indirectly, any person whose 
property or interests in property are blocked pursuant to this 
paragraph (a)(1);
    (2) E.O. 13661 Annex. The persons listed in the Annex to E.O. 13661 
of March 16, 2014;
    (3) E.O. 13661. Any person determined by the Secretary of the 
Treasury, in consultation with the Secretary of State:
    (i) To be an official of the Government of the Russian Federation;
    (ii) To operate in the arms or related materiel sector in the 
Russian Federation;
    (iii) To be owned or controlled by, or to have acted or purported 
to act for or on behalf of, directly or indirectly:
    (A) A senior official of the Government of the Russian Federation; 
or
    (B) A person whose property or interests in property are blocked 
pursuant to paragraph (a)(2) of this section or this paragraph (a)(3); 
or
    (iv) To have materially assisted, sponsored, or provided financial, 
material, or technological support for, or goods or services to or in 
support of:
    (A) A senior official of the Government of the Russian Federation; 
or
    (B) A person whose property or interests in property are blocked 
pursuant to paragraph (a)(2) of this section or this paragraph (a)(3);
    (4) E.O. 13662 and Secretary of the Treasury determinations. Any 
person determined by the Secretary of the Treasury, in consultation 
with the Secretary of State:
    (i) To operate in the defense and related materiel sector of the 
Russian Federation economy;
    (ii) To operate in the financial services sector of the Russian 
Federation economy;
    (iii) To operate in the energy sector of the Russian Federation 
economy;
    (iv) To be a state-owned entity operating in the railway sector of 
the Russian Federation economy;
    (v) To be a state-owned entity operating in the metals and mining 
sector of the Russian Federation economy;
    (vi) To operate in any other sectors of the Russian Federation 
economy as may be determined by the Secretary of the Treasury, in 
consultation with the Secretary of State;

    Note 1 to paragraph (a)(4)(vi). Any sector in the Russian 
Federation economy that is determined by the Secretary of the 
Treasury, in consultation with the Secretary of State, to be subject 
to this paragraph (a)(4)(vi) will be so identified in a publication 
in the Federal Register.

    (vii) To have materially assisted, sponsored, or provided 
financial,

[[Page 26101]]

material, or technological support for, or goods or services to or in 
support of, any person whose property and interests in property are 
blocked pursuant to this paragraph (a)(4); or
    (viii) To be owned or controlled by, or to have acted for or on 
behalf of, directly or indirectly, any person whose property and 
interests in property are blocked pursuant to this paragraph (a)(4);
    (5) E.O. 13685. Any person determined by the Secretary of the 
Treasury, in consultation with the Secretary of State:
    (i) To operate in the Crimea region of Ukraine;
    (ii) To be a leader of an entity operating in the Crimea region of 
Ukraine;
    (iii) To be owned or controlled by, or to have acted or purported 
to act for or on behalf of, directly or indirectly, any person whose 
property and interests in property are blocked pursuant to this 
paragraph (a)(5); or
    (iv) To have materially assisted, sponsored, or provided financial, 
material, or technological support for, or goods or services in support 
of, any person whose property and interests in property are blocked 
pursuant to this paragraph (a)(5);
    (6) Support for the Sovereignty, Integrity, Democracy, and Economic 
Stability of Ukraine Act of 2014, as amended (22 U.S.C. 8901-8910) 
(SSIDES). (i) Any person, including a current or former official of the 
Government of Ukraine or a person acting on behalf of that Government, 
that the Secretary of the Treasury, in consultation with the Secretary 
of State, determines has perpetrated, or is responsible for ordering, 
controlling, or otherwise directing, significant acts of violence or 
gross human rights abuses in Ukraine against persons associated with 
the antigovernment protests in Ukraine that began on November 21, 2013;
    (ii) Any person that the Secretary of the Treasury, in consultation 
with the Secretary of State, determines has perpetrated, or is 
responsible for ordering, controlling, or otherwise directing, 
significant acts that are intended to undermine the peace, security, 
stability, sovereignty, or territorial integrity of Ukraine, including 
acts of economic extortion;
    (iii) Any official of the Government of the Russian Federation, or 
a close associate or family member of such an official, that the 
Secretary of the Treasury, in consultation with the Secretary of State, 
determines is responsible for, complicit in, or responsible for 
ordering, controlling, or otherwise directing, acts of significant 
corruption in Ukraine, including the expropriation of private or public 
assets for personal gain, corruption related to government contracts or 
the extraction of natural resources, bribery, or the facilitation or 
transfer of the proceeds of corruption to foreign jurisdictions;
    (iv) Any individual that the Secretary of the Treasury, in 
consultation with the Secretary of State, determines materially 
assisted, sponsored, or provided financial, material, or technological 
support for, or goods or services in support of, the commission of acts 
described in paragraph (a)(6)(i), (ii), or (iii) of this section;
    (v) Any official of the Government of the Russian Federation, or a 
close associate or family member of such an official, that the 
Secretary of the Treasury, in consultation with the Secretary of State, 
determines is, on or after August 2, 2017, responsible for, or 
complicit in, or responsible for ordering, controlling, or otherwise 
directing, acts of significant corruption in the Russian Federation or 
elsewhere, including the expropriation of private or public assets for 
personal gain, corruption related to government contracts or the 
extraction of natural resources, bribery, or the facilitation or 
transfer of the proceeds of corruption to foreign jurisdictions;
    (vi) Any individual who has materially assisted, sponsored, or 
provided financial, material, or technological support for, or goods or 
services in support of, an act described in paragraph (a)(6)(v) of this 
section and has been added to the SDN List for such behavior;
    (vii) A foreign person that the Secretary of the Treasury, in 
consultation with the Secretary of State, determines knowingly, on or 
after August 2, 2017:
    (A) Materially violates, attempts to violate, conspires to violate, 
or causes a violation of any license, order, regulation, or prohibition 
contained in or issued pursuant to any covered Executive order, SSIDES, 
or the Ukraine Freedom Support Act of 2014, as amended (22 U.S.C. 8921-
8930) (UFSA); or
    (B) Facilitates a significant transaction or transactions, 
including deceptive or structured transactions, for or on behalf of:
    (1) Any person subject to sanctions imposed by the United States 
with respect to the Russian Federation; or
    (2) Any child, spouse, parent, or sibling of an individual 
described in paragraph (a)(6)(vii)(B)(1) of this section.
    (viii) A foreign person that the Secretary of the Treasury, in 
consultation with the Secretary of State, determines, based on credible 
information, on or after August 2, 2017:
    (A) Is responsible for, complicit in, or responsible for ordering, 
controlling, or otherwise directing, the commission of serious human 
rights abuses in any territory forcibly occupied or otherwise 
controlled by the Government of the Russian Federation;
    (B) Materially assists, sponsors, or provides financial, material, 
or technological support for, or goods or services to, a foreign person 
described in paragraph (a)(6)(viii)(A) of this section; or
    (C) Is owned or controlled by, or acts or purports to act for or on 
behalf of, directly or indirectly, a foreign person described in 
paragraph (a)(6)(viii)(A) of this section.
    (b) The prohibitions in paragraph (a) of this section include 
prohibitions on the following transactions:
    (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 authorized by this part or by a specific license 
expressly referring to this part, any dealing in securities (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 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 securities 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 of any such 
securities may have or might appear to have assigned, transferred, or 
otherwise disposed of the securities.
    (d) The prohibitions in paragraph (a) of this section apply except 
to the extent provided by statutes, or in regulations, orders, 
directives, or licenses that may be issued pursuant to this part, and 
notwithstanding any contract entered into or any license or permit 
granted prior to the effective date.

[[Page 26102]]

    (e) All transactions prohibited pursuant to any Executive order 
issued after December 19, 2014 pursuant to the national emergency 
declared in E.O. 13660 of March 6, 2014, are prohibited pursuant to 
this part.

    Note 2 to Sec.  589.201. The names of persons designated or 
identified as blocked pursuant to E.O. 13660, E.O. 13661, E.O. 
13662, or E.O. 13685 are published in the Federal Register and 
incorporated into OFAC's Specially Designated Nationals and Blocked 
Persons List (SDN List) with the following identifiers: for E.O. 
13660: ``[UKRAINE-EO13660]''; for E.O. 13661: ``[UKRAINE-EO13661]''; 
for E.O. 13662: ``[UKRAINE-EO13662]''; and for E.O. 13685: 
``[UKRAINE-EO13685].'' The names of persons listed in, or designated 
or identified pursuant to any further Executive orders issued 
pursuant to the national emergency declared in E.O. 13660, whose 
property and interests in property therefore are blocked pursuant to 
this section, are published in the Federal Register and incorporated 
into OFAC's SDN List using the identifier formulation ``[UKRAINE-
E.O.[number pursuant to which the person's property and interests in 
property are blocked]].'' The names of persons designated pursuant 
to SSIDES, whose property and interests in property therefore are 
blocked pursuant to this section, are published in the Federal 
Register and incorporated into OFAC's SDN List using the identifier 
``[SSIDES].'' Certain transactions with persons blocked pursuant to 
paragraph (a) of this section, or blocked pursuant to other parts of 
31 CFR chapter V in connection with certain Ukraine/Russia-related 
activities, may result in the imposition of secondary sanctions, and 
therefore such blocked persons' entries on the SDN List will also 
include the descriptive prefix text ``Secondary sanctions risk:'', 
followed by information about the applicable secondary sanctions 
authority. The SDN List is accessible through the following page on 
OFAC's website: www.treas.gov/sdn. Additional information pertaining 
to the SDN List can be found in appendix A to this chapter. See 
Sec.  589.411 concerning entities that may not be listed on the SDN 
List but whose property and interests in property are nevertheless 
blocked pursuant to this section.


    Note 3 to Sec.  589.201. The International Emergency Economic 
Powers Act (50 U.S.C. 1701 et seq.), in Section 203 (50 U.S.C. 
1702), and SSIDES authorize 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 section also are 
published in the Federal Register and incorporated into the SDN List 
using the following identifiers: for E.O. 13660: ``[BPI-UKRAINE-
EO13660]''; for E.O. 13661: ``[BPI-UKRAINE-EO13661]''; for E.O. 
13662: ``[BPI-UKRAINE-EO13662]''; for E.O. 13685: ``[BPI-UKRAINE-
EO13685]''; for SSIDES: ``[BPI-SSIDES]''; and for any further 
Executive orders issued pursuant to the national emergency declared 
in E.O. 13660: ``[BPI-UKRAINE-E.O.[E.O. number pursuant to which the 
person's property and interests in property are blocked pending 
investigation]].''


    Note 4 to Sec.  589.201. 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 this section.


    Note 5 to Sec.  589.201. Section 216 of the Countering America's 
Adversaries Through Sanctions Act (22 U.S.C. 9511) (CAATSA) requires 
Congressional review prior to the termination of sanctions imposed 
pursuant to E.O.13660, E.O. 13661, E.O. 13662, E.O. 13685, or 
SSIDES. Section 222 of CAATSA (22 U.S.C. 9522) describes the 
Congressional notification required prior to the termination of 
sanctions imposed pursuant to E.O. 13660, E.O. 13661, E.O. 13662, or 
E.O. 13685. Sections 8(d), 9(d), 10(e), and 11(e) of SSIDES (22 
U.S.C. 8907(d), 8908(d), 8909(e), and 8910(e)) describe the 
Congressional notification required prior to the termination of 
sanctions imposed pursuant to these sections.

Sec.  589.202  Prohibited transactions with respect to the financial 
services sector of the Russian Federation economy (Directive 1).

    The following activities by a U.S. person or within the United 
States are prohibited:
    (a) For new debt or new equity issued on or after July 16, 2014 and 
before September 12, 2014, all transactions in, provision of financing 
for, and other dealings in new debt of longer than 90 days maturity or 
new equity of persons determined to be subject to this section, their 
property, or their interests in property;
    (b) For new debt or new equity issued on or after September 12, 
2014 and before November 28, 2017, all transactions in, provision of 
financing for, and other dealings in new debt of longer than 30 days 
maturity or new equity of persons determined to be subject to this 
section, their property, or their interests in property; and
    (c) For new debt or new equity issued on or after November 28, 
2017, all transactions in, provision of financing for, and other 
dealings in new debt of longer than 14 days maturity or new equity of 
persons determined to be subject to this section, their property, or 
their interests in property.

    Note 1 to Sec.  589.202. The names of persons subject to this 
section (and earlier versions of Directive 1) are published in the 
Federal Register and incorporated into OFAC's Sectoral Sanctions 
Identifications List (SSI List) with the descriptive text 
``Executive Order 13662 Directive Determination--Subject to 
Directive 1.'' Certain transactions with persons subject to this 
section may result in the imposition of secondary sanctions, and 
therefore such persons' entries on the SSI List will also include 
the descriptive prefix text ``Secondary sanctions risk:'', followed 
by information about the applicable secondary sanctions authority. 
The SSI List is accessible via the Ukraine-/Russia-Related Sanctions 
page on OFAC's website: www.treas.gov/ofac. See Sec.  589.411 
concerning entities that may not be listed on the SSI List but whose 
property and interests in property are nevertheless subject to the 
prohibitions in this section.


    Note 2 to Sec.  589.202. Section 216 of the Countering America's 
Adversaries Through Sanctions Act (22 U.S.C. 9511) (CAATSA) requires 
Congressional review prior to the termination of sanctions imposed 
pursuant to E.O. 13662. Section 222 of CAATSA (22 U.S.C. 9522) 
describes the Congressional notification required prior to the 
termination of sanctions imposed pursuant to E.O. 13662.

Sec.  589.203  Prohibited transactions with respect to financing 
activities in the energy sector of the Russian Federation economy 
(Directive 2).

    The following activities by a U.S. person or within the United 
States are prohibited:
    (a) For new debt issued on or after July 16, 2014 and before 
November 28, 2017, all transactions in, provision of financing for, and 
other dealings in new debt of longer than 90 days maturity of persons 
determined to be subject to this section, their property, or their 
interests in property; and
    (b) For new debt issued on or after November 28, 2017, all 
transactions in, provision of financing for, and other dealings in new 
debt of longer than 60 days maturity of persons determined to be 
subject to this section, their property, or their interests in 
property.

    Note 1 to Sec.  589.203. The names of persons subject to this 
section (and earlier versions of Directive 2) are published in the 
Federal Register and incorporated into OFAC's Sectoral Sanctions 
Identifications List (SSI List) with the descriptive text 
``Executive Order 13662 Directive Determination--Subject to 
Directive 2.'' Certain transactions with persons subject to this 
section may result in the imposition of secondary sanctions, and 
therefore such persons' entries on the SSI List will also include 
the descriptive prefix text ``Secondary sanctions risk:'', followed 
by information about the applicable secondary sanctions authority. 
The SSI List is accessible through the Ukraine-/Russia-Related 
Sanctions page on OFAC's website: www.treas.gov/ofac. See Sec.  
589.411 concerning entities that may not be listed on the SSI List 
but whose property and interests in property are nevertheless 
subject to the prohibitions in this section.


    Note 2 to Sec.  589.203. Section 216 of CAATSA (22 U.S.C. 9511) 
requires Congressional review prior to the termination

[[Page 26103]]

of sanctions imposed pursuant to E.O. 13662. Section 222 of CAATSA 
(22 U.S.C. 9522) describes the Congressional notification required 
prior to the termination of sanctions imposed pursuant to E.O. 
13662.

Sec.  589.204  Prohibited transactions with respect to the defense and 
related materiel sector of the Russian Federation economy (Directive 
3).

    All transactions in, provision of financing for, and other dealings 
in new debt of longer than 30 days maturity of persons determined to be 
subject to this section, their property, or their interests in property 
by a U.S. person or within in the United States are prohibited.

    Note 1 to Sec.  589.204. The names of persons subject to this 
section are published in the Federal Register and incorporated into 
OFAC's Sectoral Sanctions Identifications List (SSI List) with the 
descriptive text ``Executive Order 13662 Directive Determination--
Subject to Directive 3.'' Certain transactions with persons subject 
to this section may result in the imposition of secondary sanctions, 
and therefore such persons' entries on the SSI List will also 
include the descriptive prefix text ``Secondary sanctions risk:'', 
followed by information about the applicable secondary sanctions 
authority. The SSI List is accessible via the Ukraine-/Russia-
Related Sanctions page on OFAC's website: www.treas.gov/ofac. See 
Sec.  589.411 concerning entities that may not be listed on the SSI 
List but whose property and interests in property are nevertheless 
subject to the prohibitions of this section.


    Note 2 to Sec.  589.204. Section 216 of CAATSA (22 U.S.C. 9511) 
requires Congressional review prior to the termination of sanctions 
imposed pursuant to E.O. 13662. Section 222 of CAATSA (22 U.S.C. 
9522) describes the Congressional notification required prior to the 
termination of sanctions imposed pursuant to E.O. 13662.

Sec.  589.205  Prohibited transactions with respect to oil-producing 
activities in the energy sector of the Russian Federation economy 
(Directive 4).

    The following activities by a U.S. person or within the United 
States are prohibited: The provision, exportation, or reexportation, 
directly or indirectly, of goods, services (except for financial 
services), or technology in support of exploration or production for 
deepwater, Arctic offshore, or shale projects:
    (a) That have the potential to produce oil in the Russian 
Federation, or in maritime area claimed by the Russian Federation and 
extending from its territory, and that involve any person determined to 
be subject to this section, their property, or their interests in 
property; or
    (b) That are initiated on or after January 29, 2018, that have the 
potential to produce oil in any location, and in which any person 
determined to be subject to this section, their property, or their 
interests in property has a 33 percent or greater ownership interest, 
or ownership of a majority of the voting interests.

    Note 1 to Sec.  589.205. This section does not apply to projects 
that have the potential to produce gas only.


    Note 2 to Sec.  589.205. The names of persons subject to this 
section (and earlier versions of Directive 4) are published in the 
Federal Register and incorporated into OFAC's Sectoral Sanctions 
Identifications List (SSI List) with the descriptive text 
``Executive Order 13662 Directive Determination--Subject to 
Directive 4.'' Certain transactions with persons subject to this 
section may result in the imposition of secondary sanctions, and 
therefore such persons' entries on the SSI List will also include 
the descriptive prefix text ``Secondary sanctions risk:'', followed 
by information about the applicable secondary sanctions authority. 
The SSI List is accessible through the Ukraine-/Russia-Related 
Sanctions page on OFAC's website: www.treas.gov/ofac. See Sec.  
589.411 concerning entities that may not be listed on the SSI List 
but whose property and interests in property are nevertheless 
subject to the prohibitions of this section.


    Note 3 to Sec.  589.205. See Sec.  589.412 concerning projects 
in which persons subject to paragraph (b) of this section own a 33 
percent or greater ownership interest, or ownership of a majority of 
the voting interests.


    Note 4 to Sec.  589.205. See Sec.  746.5 of the Export 
Administration Regulations (15 CFR parts 730 through 774) for the 
Department of Commerce's related license requirement on exports, 
reexports, and transfers (in-country) of certain items for use in 
specified deepwater, Arctic offshore, or shale projects.


    Note 5 to Sec.  589.205. Section 216 of CAATSA (22 U.S.C. 9511) 
requires Congressional review prior to the termination of sanctions 
imposed pursuant to E.O. 13662. Section 222 of CAATSA (22 U.S.C. 
9522) describes the Congressional notification required prior to the 
termination of sanctions imposed pursuant to E.O. 13662.

Sec.  589.206  Prohibited new investment in the Crimea region of 
Ukraine.

    Except as otherwise authorized, new investment, as defined in Sec.  
589.326, in the Crimea region of Ukraine by a United States person, 
wherever located, is prohibited.


Sec.  589.207  Prohibited exportation, reexportation, sale, or supply 
of goods, services, or technology to the Crimea region of Ukraine.

    Except as otherwise authorized, the exportation, reexportation, 
sale, or supply, directly or indirectly, from the United States, or by 
a United States person, wherever located, of any goods, services, or 
technology to the Crimea region of Ukraine is prohibited.


Sec.  589.208  Prohibited importation of goods, services, or technology 
from the Crimea region of Ukraine.

    Except as otherwise authorized, the importation into the United 
States, directly or indirectly, of any goods, services, or technology 
from the Crimea region of Ukraine is prohibited.


Sec.  589.209  Prohibitions or strict conditions with respect to 
correspondent or payable-through accounts of foreign financial 
institutions that have knowingly facilitated certain significant 
transactions.

    (a) Prohibited activities. A U.S. financial institution shall not:
    (1) Open or maintain a correspondent account or a payable-through 
account in the United States for a foreign financial institution for 
which the opening or maintaining of such an account is prohibited 
pursuant to this section; or
    (2) Maintain a correspondent account or a payable-through account 
in the United States for a foreign financial institution in a manner 
that is inconsistent with any strict condition imposed and in effect 
pursuant to this section.
    (b) Sanctionable activity by foreign financial institutions 
involving certain activity for persons with respect to which sanctions 
are imposed pursuant to section 4 of the Ukraine Freedom Support Act of 
2014, as amended (22 U.S.C. 8921-8930) (UFSA). The Secretary of the 
Treasury, in consultation with the Secretary of State, may determine 
that a foreign financial institution knowingly engages, on or after 
August 2, 2017, in significant transactions involving the following 
activities for persons with respect to which sanctions are imposed 
pursuant to section 4 of UFSA (22 U.S.C. 8923):
    (1) Knowingly manufacturing or selling defense articles transferred 
into Syria or into the territory of a specified country without the 
consent of the internationally recognized government of that country;
    (2) Transferring defense articles into Syria or into the territory 
of a specified country without the consent of the internationally 
recognized government of that country; or
    (3) Brokering or otherwise assisting in the transfer of defense 
articles into Syria or into the territory of a specified country 
without the consent of the internationally recognized government of 
that country; or
    (4) Knowingly, on or after December 18, 2014, assisting, 
sponsoring, or providing financial, material, or technological support 
for, or goods or

[[Page 26104]]

services to or in support of, any entity owned or controlled by the 
Government of the Russian Federation or owned or controlled by 
nationals of the Russian Federation; and with respect to an activity 
described in paragraph (a)(1), (2), or (3) of this section;
    (5) Knowingly making a significant investment in a special Russian 
crude oil project; or
    (6) The withholding by Gazprom of significant natural gas supplies 
from member countries of the North Atlantic Treaty Organization, or 
further withholding by Gazprom of significant natural gas supplies from 
countries such as Ukraine, Georgia, or Moldova.

    Note 1 to paragraph (b). Persons with respect to which sanctions 
are imposed pursuant to section 4 of UFSA (22 U.S.C. 8923) will be 
identified either on OFAC's Non-SDN Menu-Based List (NS-MBS List) or 
on OFAC's Specially Designated Nationals and Blocked Persons List 
(SDN List). Upon the imposition of non-blocking sanctions from a 
menu of sanctions as provided by section 4 of UFSA, OFAC will place 
the name and other relevant identifiers of the sanctioned person on 
the NS-MBS List. The NS-MBS List also will specify the type of 
sanction or sanctions imposed on the listed person and the legal 
authority under which the person is sanctioned. When blocking is 
chosen as a menu-based sanction and imposed on a person, that person 
is identified solely on OFAC's SDN List, along with any other menu-
based sanctions imposed on that person.

    (c) Sanctionable activity by foreign financial institutions on 
behalf of Russian persons included on the SDN List. The Secretary of 
the Treasury, in consultation with the Secretary of State, may 
determine that a foreign financial institution has, on or after 
September 1, 2017, knowingly facilitated a significant financial 
transaction on behalf of any Russian person included on OFAC's SDN List 
pursuant to UFSA, E.O. 13660, E.O. 13661, E.O. 13662, or any other 
Executive order addressing the crisis in Ukraine.

    Note 2 to paragraph (c). For information regarding persons 
included on OFAC's SDN List pursuant to UFSA, E.O. 13660, E.O. 
13661, or E.O. 13662, or any other Executive order issued pursuant 
to the national emergency declared in E.O. 13660, including 
identifier information for entries on the SDN List, see note 1 to 
Sec.  589.201.

    (d) Imposition of sanctions on foreign financial institutions. Upon 
determining that a foreign financial institution has engaged in 
sanctionable activity described in paragraph (b) or (c) of this 
section, the Secretary of the Treasury, in consultation with the 
Secretary of State, shall:
    (1) Prohibit the opening by a U.S. financial institution of a 
correspondent account or a payable-through account in the United States 
for the foreign financial institution; and
    (2) Prohibit or impose one or more strict conditions on the 
maintaining by a U.S. financial institution of a correspondent account 
or a payable-through account in the United States for the foreign 
financial institution. Such conditions may include the following:
    (i) Prohibiting or restricting any provision of trade finance 
through the correspondent account or payable-through account of the 
foreign financial institution;
    (ii) Restricting the transactions that may be processed through the 
correspondent account or payable-through account of the foreign 
financial institution to certain types of transactions, such as 
personal remittances;
    (iii) Placing monetary limits on, or limiting the volume of, the 
transactions that may be processed through the correspondent account or 
payable-through account of the foreign financial institution;
    (iv) Requiring pre-approval from the U.S. financial institution for 
all transactions processed through the correspondent account or 
payable-through account of the foreign financial institution; or
    (v) Prohibiting or restricting the processing of foreign exchange 
transactions through the correspondent account or payable-through 
account of the foreign financial institution.

    Note 3 to Sec.  589.209. The names of foreign financial 
institutions for which the opening of a correspondent account or a 
payable-through account in the United States is prohibited and for 
which the maintaining of a correspondent account or payable-through 
account is prohibited or subject to one or more strict conditions 
pursuant to this section will be added to the List of Foreign 
Financial Institutions Subject to Correspondent Account or Payable-
Through Account Sanctions (CAPTA List) on OFAC's website 
(www.treas.gov/ofac), and published in the Federal Register along 
with the applicable prohibition or strict condition(s).


    Note 4 to Sec.  589.209. Section 216 of the Countering America's 
Adversaries Through Sanctions Act (22 U.S.C. 9511) (CAATSA) requires 
Congressional review prior to the termination of sanctions imposed 
pursuant to UFSA. Section 5(g) of UFSA (22 U.S.C. 8924(g)) describes 
the Congressional notification required prior to the termination of 
sanctions imposed pursuant section 5 of UFSA.

Sec.  589.210  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.  
589.201, 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 interest in property.
    (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.  589.201, 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, a license or other authorization 
issued by OFAC 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 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 OFAC 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 OFAC 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,

[[Page 26105]]

or other directive or authorization issued pursuant to this part;
    (ii) Such transfer was not licensed or authorized by OFAC; 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.
    (e) 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.
    (f) 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 or interest in 
property blocked pursuant to Sec.  589.201.


Sec.  589.211  Holding of funds in interest-bearing accounts; 
investment and reinvestment.

    (a) Except as provided in paragraph (e) or (f) of this section, or 
as otherwise directed or authorized by OFAC, any U.S. person holding 
funds, such as currency, bank deposits, or liquidated financial 
obligations, subject to Sec.  589.201 shall hold or place such funds in 
a blocked interest-bearing account located in the United States.
    (b)(1) For the 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) Funds held or placed in a blocked account pursuant to paragraph 
(a) of this section may not be invested in instruments the maturity of 
which exceeds 180 days.
    (c) For the 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.
    (d) For the purposes of this section, if interest is credited to a 
separate blocked account or subaccount, the name of the account party 
on each account must be the same.
    (e) Blocked funds held in instruments the maturity of which exceeds 
180 days at the time the funds become subject to Sec.  589.201 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 
(a) or (f) of this section.
    (f) Blocked funds held in accounts or instruments outside the 
United States at the time the funds become subject to Sec.  589.201 may 
continue to be held in the same type of accounts or instruments, 
provided the funds earn interest at rates that are commercially 
reasonable.
    (g) This section does not create an affirmative obligation for the 
holder of blocked tangible property, such as real or personal property, 
or of other blocked property, such as debt or equity securities, to 
sell or liquidate such property. However, OFAC may issue licenses 
permitting or directing such sales or liquidation in appropriate cases.
    (h) Funds subject to this section may not be held, invested, or 
reinvested in a manner that provides financial or economic benefit or 
access to any person whose property and interests in property are 
blocked pursuant to Sec.  589.201, nor may their holder cooperate in or 
facilitate the pledging or other attempted use as collateral of blocked 
funds or other assets.


Sec.  589.212  Expenses of maintaining blocked tangible 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 tangible property blocked pursuant to Sec.  589.201 
shall be the responsibility of the owners or operators of such 
property, which expenses shall not be met from blocked funds.
    (b) Property blocked pursuant to Sec.  589.201 may, in the 
discretion of OFAC, 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.  589.213  Evasions; attempts; causing violations; conspiracies.

    (a) Any transaction on or after the effective date that evades or 
avoids, has the purpose of evading or avoiding, causes a violation of, 
or attempts to violate any of the prohibitions set forth in this part 
is prohibited.
    (b) Any conspiracy formed to violate the prohibitions set forth in 
this part is prohibited.


Sec.  589.214  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) U.S. intelligence activities. The prohibitions contained in 
this part do not apply to activities subject to the reporting 
requirements under title V of the National Security Act of 1947 (50 
U.S.C. 3091 et seq.), or any authorized intelligence activities of the 
United States.
    (c) Activities of the National Aeronautics and Space 
Administration. The prohibitions contained in this part do not apply to 
activities of the National Aeronautics and Space Administration (NASA), 
including the supply by any entity of the Russian Federation of any 
product or service, or the procurement of such product or service by 
any contractor or subcontractor of the United States or any other 
entity, relating to or in connection with any space launch conducted 
for NASA or any other non-Department of Defense customer.
    (d) Importation of goods. The prohibitions contained in this part 
do not apply to the importation of any goods that would otherwise be 
prohibited solely because of the interest of a person whose property 
and interests in property are blocked solely pursuant to Sec.  
589.201(a)(6)(i), (ii), (iii), (iv), or (v). For the purposes of this 
paragraph (d), the term ``good(s)'' means any article, natural or 
manmade substance, material, supply or manufactured product, including 
inspection and test equipment, and excluding technical data.
    (e) Official business. The prohibitions contained in Sec. Sec.  
589.201(a)(5), 589.206, 589.207, and 589.208 do not apply to 
transactions for the conduct of the official business of the United 
States Government by employees, grantees, or contractors thereof.

    Note 1 to paragraph (e). See Sec.  589.510 for a general license 
authorizing transactions for the conduct of the official business of 
the United States Government not otherwise exempt.

Sec.  589.215  Prohibited facilitation.

    Except as otherwise authorized, U.S. persons, wherever located, are 
prohibited from approving, financing, facilitating, or guaranteeing a 
transaction by a foreign person where the transaction by that foreign 
person would be prohibited by Sec.  589.206, Sec.  589.207, or Sec.  
589.208 of this part if performed by a U.S. person or within the United 
States.

[[Page 26106]]

Subpart C--General Definitions


Sec.  589.300  Applicability of definitions.

    The definitions in this subpart apply throughout the entire part.


Sec.  589.301  Arctic offshore projects.

    (a) The term Arctic offshore projects as used in Sec.  589.205 
means projects that have the potential to produce oil in areas that--
    (1) Involve drilling operations originating offshore, and
    (2) Are located above the Arctic Circle.
    (b) The term Arctic offshore projects as used in Sec.  589.205 does 
not apply to horizontal drilling operations originating onshore where 
such drilling operations extend under the seabed to areas above the 
Arctic Circle.


Sec.  589.302  Arms or related materiel sector of the Russian 
Federation economy.

    The term arms or related materiel sector of the Russian Federation 
economy includes: The procurement, development, test manufacture, 
maintenance, upgrade and refurbishment, shipping, supply, sale, and 
storage to, from, within, or transiting the Russian Federation of arms 
or related materiel of all types, including any battle tanks, armored 
combat vehicles, large caliber artillery systems, combat aircraft, 
attack helicopters, warships, missiles or missile systems, or related 
materiel; critical enablers, aggregates, components, parts, as well as 
related documentation and instructions for such items; or training for 
the use of included systems, provision of simulation equipment, 
documentation (including training manuals, maintenance orders, or 
technical bulletins), prototypes, software upgrades, and licensing and 
manufacturing agreements for such items.


Sec.  589.303  Blocked account; blocked property.

    The terms blocked account and blocked property mean any account or 
property subject to the prohibitions in Sec.  589.201 held in the name 
of a person whose property and interests in property are blocked 
pursuant to Sec.  589.201, 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 a 
license or other authorization from OFAC expressly authorizing such 
action.

    Note 1 to Sec.  589.303. See Sec.  589.411 concerning the 
blocked status of property and interests in property of an entity 
that is directly or indirectly owned, whether individually or in the 
aggregate, 50 percent or more by one or more persons whose property 
and interests in property are blocked pursuant to Sec.  589.201.

Sec.  589.304  Correspondent account.

    The term correspondent account means an account established by a 
U.S. financial institution for a foreign financial institution to 
receive deposits from, or to make payments on behalf of, the foreign 
financial institution, or to handle other financial transactions 
related to such foreign financial institution.


Sec.  589.305  Covered Executive order.

    The term covered Executive order means any of the following: 
Executive Order (E.O.) 13660, E.O. 13661, E.O. 13662, E.O. 13685, E.O. 
13694, relating to the Russian Federation, or E.O. 13757, relating to 
the Russian Federation.


Sec.  589.306  Crimea region of Ukraine.

    The term Crimea region of Ukraine includes the land territory in 
that region as well as any maritime areas over which sovereignty, 
sovereign rights, or jurisdiction is claimed based on purported 
sovereignty over that land territory.


Sec.  589.307  Debt.

    The term debt as used in Sec. Sec.  589.202 through 589.204 
includes bonds, loans, extensions of credit, loan guarantees, letters 
of credit, drafts, bankers' acceptances, discount notes or bills, or 
commercial paper.


Sec.  589.308  Deepwater projects.

    The term deepwater projects as used in Sec.  589.205 means projects 
that involve underwater activities at depths of more than 500 feet.


Sec.  589.309  Defense and related materiel sector of the Russian 
Federation economy.

    The term defense and related materiel sector of the Russian 
Federation economy includes: The military, armed forces, or security 
forces of the Russian Federation; the military, armed forces, or 
security forces of the Russian Federation's use of arms or related 
materiel; and any person manufacturing, supplying, providing financing 
for, procuring, or distributing goods, services, or technology to the 
military, armed forces, or security forces of the Russian Federation; 
or financing, developing, testing, producing, or sustaining such goods 
or services or technology, or arms or related materiel, within or 
transiting the Russian Federation.


Sec.  589.310  Effective date.

    (a) The term effective date refers to the effective date of the 
applicable prohibitions and directives contained in this part as 
follows:
    (1) With respect to a person whose property and interests in 
property are blocked pursuant to Sec.  589.201(a)(2), 12:01 a.m. 
eastern daylight time, March 17, 2014;
    (2) With respect to a person whose property and interests in 
property are otherwise blocked pursuant to Sec.  589.201, the earlier 
of the date of actual or constructive notice that such person's 
property and interests in property are blocked;
    (3) With respect to the transactions prohibited by Sec.  589.202, 
Sec.  589.203, Sec.  589.204, or Sec.  589.205, the earlier of the date 
of actual or constructive notice that a person was added to the 
Sectoral Sanctions Identifications List (SSI List);
    (4) With respect to the transactions prohibited by Sec. Sec.  
589.206 through 589.208, 3:30 p.m. eastern standard time, December 19, 
2014; and
    (5) With respect to the transactions prohibited by Sec.  589.209, 
the effective date of a prohibition on the opening or a prohibition or 
strict condition imposed on the maintaining of a correspondent account 
or a payable-through account in the United States by a U.S. financial 
institution for a particular foreign financial institution pursuant to 
Sec.  589.209(d) is the earlier of the date the U.S. financial 
institution receives actual or constructive notice of such prohibition 
or condition.
    (b) For the purposes of this section, constructive notice is the 
date that a notice of the blocking of the relevant person's property 
and interests in property, or a notice of the person's addition to the 
SSI List, or a notice of the imposition of a prohibition or strict 
condition pursuant to Sec.  589.209, is published in the Federal 
Register.


Sec.  589.311  Energy sector of the Russian Federation economy.

    The term energy sector of the Russian Federation economy includes 
the procurement, exploration, extraction, drilling, mining, harvesting, 
production, refinement, liquefaction, gasification, regasification, 
conversion, enrichment, fabrication, or transport to, from, or within 
the Russian Federation, of petroleum, natural gas, liquified natural 
gas, natural gas liquids, or petroleum products or other products 
capable of producing energy, such as coal or wood or agricultural 
products used to manufacture biofuels, the development, production, 
generation, transmission or exchange of power, through any means, 
including nuclear, electrical, thermal,

[[Page 26107]]

and renewable, in or involving the Russian Federation.


Sec.  589.312  Entity.

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


Sec.  589.313  Equity.

    The term equity as used in Sec.  589.202 includes stocks, share 
issuances, depositary receipts, or any other evidence of title or 
ownership.


Sec.  589.314  Financial, material, or technological support.

    The term financial, material, or technological support, as used in 
this part, means any property, tangible or intangible, including 
currency, financial instruments, securities, or any other transmission 
of value; weapons or related materiel; chemical or biological agents; 
explosives; false documentation or identification; communications 
equipment; computers; electronic or other devices or equipment; 
technologies; lodging; safe houses; facilities; vehicles or other means 
of transportation; or goods. ``Technologies'' as used in this section 
means specific information necessary for the development, production, 
or use of a product, including related technical data such as 
blueprints, plans, diagrams, models, formulae, tables, engineering 
designs and specifications, manuals, or other recorded instructions.


Sec.  589.315  Financial services sector of the Russian Federation 
economy.

    The financial services sector of the Russian Federation economy 
includes economic or financial services, including government-operated 
and private banks and financial institutions, credit card companies, 
investment banking services, foreign exchange services, money services 
businesses, payday lenders, mortgage companies, securities exchanges, 
securities dealers, asset managers, and insurance services, or any 
entities that are 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, in or involving the Russian Federation.


Sec.  589.316  Foreign financial institution.

    The term foreign financial institution means any foreign entity 
that is engaged in the business of accepting deposits, making, 
granting, transferring, holding, or brokering loans or credits, or 
purchasing or selling foreign exchange, securities, futures or options, 
or procuring purchasers and sellers thereof, as principal or agent. It 
includes depository institutions, banks, savings banks, money services 
businesses, trust companies, insurance companies, securities brokers 
and dealers, futures and options brokers and dealers, forward contract 
and foreign exchange merchants, securities and commodities exchanges, 
clearing corporations, investment companies, employee benefit plans, 
dealers in precious metals, stones, or jewels, and holding companies, 
affiliates, or subsidiaries of any of the foregoing. The term does not 
include the international financial institutions identified in 22 
U.S.C. 262r(c)(2), the International Fund for Agricultural Development, 
the North American Development Bank, or any other international 
financial institution so notified by OFAC.


Sec.  589.317  Foreign person.

    (a) For the purposes of Sec. Sec.  589.201(a)(6) and 589.413, the 
term foreign person means any citizen or national of a foreign state 
(including any such individual who is also a citizen or national of the 
United States), or any entity not organized solely under the laws of 
the United States or existing solely in the United States, but does not 
include a foreign state.
    (b) For the purposes of the rest of this part, the term foreign 
person means any person that is not a U.S. person.


Sec.  589.318  Government of the Russian Federation.

    The term Government of the Russian Federation means the Government 
of the Russian Federation, any political subdivision, agency, or 
instrumentality thereof, including the Central Bank of the Russian 
Federation, and any person owned or controlled by, or acting for or on 
behalf of, the Government of the Russian Federation.


Sec.  589.319  [Reserved]


Sec.  589.320  Initiated.

    The term initiated as used in Sec.  589.205(b) means when a 
government or any of its political subdivisions, agencies, or 
instrumentalities (including any entity owned or controlled directly or 
indirectly by any of the foregoing) formally grants exploration, 
development, or production rights to any party.


Sec.  589.321  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.  589.322  Knowingly.

    The term knowingly, with respect to conduct, a circumstance, or a 
result, means that a person has actual knowledge, or should have known, 
of the conduct, the circumstance, or the result.


Sec.  589.323  Licenses; general and specific.

    (a) Except as otherwise provided in this part, 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 or made 
available on OFAC's website: www.treas.gov/ofac.
    (c) The term specific license means any license or authorization 
issued pursuant to this part but not set forth in subpart E of this 
part or made available on OFAC's website: www.treas.gov/ofac.

    Note 1 to Sec.  589.323. See Sec.  501.801 of this chapter on 
licensing procedures. See also note 1 to Sec.  589.501.

Sec.  589.324  Loans or other extensions of credit.

    The term loans or other extensions of credit means any transfer or 
extension of funds or credit on the basis of an obligation to repay, or 
any assumption or guarantee of the obligation of another to repay an 
extension of funds or credit, including: Overdrafts; currency swaps; 
purchases of debt securities issued by persons subject to the 
prohibitions in this part; purchases of a loan made by another person; 
sales of financial assets subject to an agreement to repurchase; 
renewals or refinancings whereby funds or credits are transferred to or 
extended to a prohibited borrower or prohibited recipient; the issuance 
of standby letters of credit; and drawdowns on existing lines of 
credit.


Sec.  589.325  Metals and mining sector of the Russian Federation 
economy.

    The term metals and mining sector of the Russian Federation economy 
includes any act, process, or industry of extracting, at the surface or 
underground, ores, coal, precious stones, or any other minerals or 
geological materials in the Russian Federation, or any act of 
procuring, processing, manufacturing, or refining such geological 
materials, or transporting them to, from, or within the Russian 
Federation.


Sec.  589.326  New investment.

    The term new investment as used in Sec.  589.206 means a 
transaction on or after 3:30 p.m. eastern standard time, December 19, 
2014 that constitutes:

[[Page 26108]]

    (a) A commitment or contribution of funds or other assets; or
    (b) A loan or other extension of credit as defined in Sec.  
589.324.


Sec.  589.327  OFAC.

    The term OFAC means the Department of the Treasury's Office of 
Foreign Assets Control.


Sec.  589.328  Payable-through account.

    The term payable-through account means a correspondent account 
maintained by a U.S. financial institution for a foreign financial 
institution by means of which the foreign financial institution permits 
its customers to engage, either directly or through a subaccount, in 
banking activities usual in connection with the business of banking in 
the United States.


Sec.  589.329  Person.

    The term person means an individual or entity.


Sec.  589.330  Production.

    The term production as used in Sec.  589.205 refers to the lifting 
of oil to the surface and the gathering, treating, field processing, 
and field storage of such oil. The production stage of a project ends 
when extracted oil is transported out of a field production storage 
tank or otherwise off a field production site. The term production as 
used in Sec.  589.205 does not apply to the provision by U.S. persons 
or within the United States of goods, technology, or services to 
persons determined to be subject to Sec.  589.205 when such 
transactions relate only to the transportation, refining, or other 
dealings involving oil that has already been extracted from a deepwater 
project as defined in Sec.  589.308, Arctic offshore project as defined 
in Sec.  589.301, or shale project as defined in Sec.  589.334, and 
transported out of a field production storage tank or otherwise off of 
a field production site.


Sec.  589.331  Property; property interest.

    The terms property and property interest include 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.  589.332  Railway sector of the Russian Federation economy.

    The term railway sector of the Russian Federation economy includes 
the following activities and items produced in, sold from, purchased 
in, transiting, or distributed in the Russian Federation: The 
procurement, design, manufacture, construction, maintenance, repair, 
refurbishment, assembly, sale, purchase, distribution, and 
transportation of trains, locomotives, rail cars, and other equipment 
used to transport passengers and goods via trains; any materials that 
are used to manufacture trains or other means necessary to move the 
trains, such as railway lines, equipment, engineering, mechanical, or 
electrical systems or methods, or technology; and any infrastructure or 
services used to support railway operations, such as passenger 
ticketing and on-board food sales or services.


Sec.  589.333  Russian person.

    The term Russian person means an individual who is a citizen or 
national of the Russian Federation, or an entity organized under the 
laws of the Russian Federation.


Sec.  589.334  Shale projects.

    The term shale projects as used in Sec.  589.205 includes projects 
that have the potential to produce oil from resources located in shale 
formations as well as projects that have the potential to produce oil 
from resources located in fine-grained sedimentary rock formations 
including shale, limestone, dolomites, sandstones, and clay.


Sec.  589.335  Special Russian crude oil project.

    The term special Russian crude oil project means a project intended 
to extract crude oil from:
    (a) The exclusive economic zone of the Russian Federation in waters 
more than 500 feet deep;
    (b) Russian artic offshore locations; or
    (c) Shale formation located in the Russian Federation.


Sec.  589.336  Structured.

    The term structured, with respect to a transaction, has the meaning 
given the term ``structure'' in 31 CFR 1010.100(xx) (or any 
corresponding similar regulation or ruling issued by the U.S. 
Department of the Treasury).


Sec.  589.337  Transfer.

    The term transfer means any actual or purported act or transaction, 
whether or not evidenced by writing, and whether or not done or 
performed within the United States, the purpose, intent, or effect of 
which is to create, surrender, release, convey, transfer, or alter, 
directly or indirectly, any right, remedy, power, privilege, or 
interest with respect to any property. Without limitation on the 
foregoing, it 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.  589.338  United States.

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


Sec.  589.339  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.  589.340  U.S. depository institution.

    The term U.S. depository institution means any entity (including 
its foreign

[[Page 26109]]

branches) organized under the laws of the United States or any 
jurisdiction within the United States, or any agency, office, or branch 
located in the United States of a foreign entity, that is engaged 
primarily in the business of banking (for example, banks, savings 
banks, savings associations, credit unions, trust companies, and United 
States bank holding companies) and is subject to regulation by Federal 
or State banking authorities.


Sec.  589.341  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, futures or options, or procuring purchasers and sellers 
thereof, as principal or agent. It includes depository institutions, 
banks, savings banks, money services businesses, trust companies, 
insurance companies, securities brokers and dealers, futures and 
options brokers and dealers, forward contract and foreign exchange 
merchants, securities and commodities exchanges, clearing corporations, 
investment companies, employee benefit plans, dealers in precious 
metals, stones, or jewels, 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.  589.342  U.S.-registered broker or dealer in securities.

    The term U.S.-registered broker or dealer in securities means any 
U.S. citizen, permanent resident alien, or entity organized under the 
laws of the United States or of any jurisdiction within the United 
States (including its foreign branches), or any agency, office, or 
branch of a foreign entity located in the United States, that:
    (a) Is a ``broker'' or ``dealer'' in securities within the meanings 
set forth in the Securities Exchange Act of 1934;
    (b) Holds or clears customer accounts; and
    (c) Is registered with the Securities and Exchange Commission under 
the Securities Exchange Act of 1934.


Sec.  589.343  U.S.-registered money transmitter.

    The term U.S.-registered money transmitter means any U.S. citizen, 
permanent resident alien, or entity organized under the laws of the 
United States or of any jurisdiction within the United States, 
including its foreign branches, or any agency, office, or branch of a 
foreign entity located in the United States, that is a money 
transmitter, as defined in 31 CFR 1010.100 and that is registered 
pursuant to 31 CFR 1022.380.

Subpart D--Interpretations


Sec.  589.401  Reference to amended sections.

    (a) Reference to any section in this part is a reference to the 
same as currently amended, unless the reference includes a specific 
date. See 44 U.S.C. 1510.
    (b) Reference to any ruling, order, instruction, direction, or 
license issued pursuant to this part is a reference to the same as 
currently amended unless otherwise so specified.


Sec.  589.402  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 OFAC does not affect any act done or omitted, or any 
civil or criminal proceeding commenced or pending, prior to such 
amendment, modification, or revocation. All penalties, forfeitures, and 
liabilities under any such order, regulation, ruling, instruction, or 
license continue and may be enforced as if such amendment, 
modification, or revocation had not been made.


Sec.  589.403  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 whose property and interests in property 
are blocked pursuant to Sec.  589.201, such property shall no longer be 
deemed to be property blocked pursuant to Sec.  589.201, unless there 
exists in the property another interest that is blocked pursuant to 
Sec.  589.201, 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.  589.201, such property shall be deemed to be property in which 
such person has an interest and therefore blocked.


Sec.  589.404  Transactions ordinarily incident to a licensed 
transaction.

    (a) Any transaction ordinarily incident to a licensed transaction 
and necessary to give effect thereto is also authorized, except:
    (1) 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.  589.201; or
    (2) 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.
    (b) For example, a license authorizing a person to complete a 
securities sale involving Company A, whose property and interests in 
property are blocked pursuant to Sec.  589.201, also authorizes other 
persons to engage in activities that are ordinarily incident and 
necessary to complete the sale, including transactions by the buyer, 
broker, transfer agents, and banks, provided that such other persons 
are not themselves persons whose property and interests in property are 
blocked pursuant to Sec.  589.201.


Sec.  589.405  Exportation and reexportation of goods, services, or 
technology; provision and receipt of services.

    (a) The prohibition on the exportation, reexportation, sale, or 
supply of goods, services, or technology contained in Sec.  589.207 
applies to services performed on behalf of a person in the Crimea 
region of Ukraine or where the benefit of such services is otherwise 
received in the Crimea region of Ukraine, if such services are 
performed:
    (1) In the United States; or
    (2) Outside the United States by a U.S. person.
    (b) The prohibitions contained in Sec.  589.201 apply to services 
performed in the United States or by U.S. persons, wherever located:
    (1) On behalf of or for the benefit of any person whose property 
and interests in property are blocked pursuant to Sec.  589.201; or
    (2) With respect to property interests of any person whose property 
and interests in property are blocked pursuant to Sec.  589.201.
    (c) The prohibitions contained in Sec.  589.201 apply to services 
received in the United States or by U.S. persons, wherever located, 
where the service is performed by or at the direction of a person whose 
property and interests in property are blocked pursuant to Sec.  
589.201.
    (d)(1) For example, U.S. persons may not, except as authorized by 
or pursuant

[[Page 26110]]

to this part, provide legal, accounting, financial, brokering, freight 
forwarding, transportation, public relations, or other services to any 
person in the Crimea region of Ukraine or any person whose property and 
interests in property are blocked pursuant to Sec.  589.201, or 
negotiate with or enter into contracts signed by a person whose 
property and interests in property are blocked pursuant to Sec.  
589.201.
    (2) For example, a U.S. person is engaged in a prohibited 
exportation of services to the Crimea region of Ukraine when it extends 
credit to a third-country firm specifically to enable that firm to 
manufacture goods for sale to the Crimea region of Ukraine.

    Note 1 to Sec.  589.405. See, for example, Sec. Sec.  589.506 
and 589.508 for general licenses authorizing the provision of 
certain legal and emergency medical services.

Sec.  589.406  Offshore transactions involving blocked property.

    The prohibitions in Sec.  589.201 on transactions or dealings 
involving blocked property, as defined in Sec.  589.303, apply to 
transactions by any U.S. person in a location outside the United 
States.


Sec.  589.407  Payments from blocked accounts to satisfy obligations 
prohibited.

    Pursuant to Sec.  589.201, 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.

    Note 1 to Sec.  589.407. See also Sec.  589.502(e), which 
provides that no license or other authorization contained in or 
issued pursuant to this part authorizes transfers of or payments 
from blocked property or debits to blocked accounts unless the 
license or other authorization explicitly authorizes the transfer of 
or payment from blocked property or the debit to a blocked account.

Sec.  589.408  Charitable contributions.

    Unless specifically authorized by OFAC 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, or 
received from, a person whose property and interests in property are 
blocked pursuant to Sec.  589.201. For the purposes of this part, a 
contribution is made by, to, or for the benefit of, or received from, a 
person whose property and interests in property are blocked pursuant to 
Sec.  589.201 if made by, to, or in the name of, or received from or in 
the name of, such a person; if made by, to, or in the name of, or 
received from 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, or the 
receipt of contributions from such a person.


Sec.  589.409  Credit extended and cards issued by financial 
institutions to a person whose property and interests in property are 
blocked.

    The prohibition in Sec.  589.201 on dealing in property subject to 
that section prohibits U.S. financial institutions from performing 
under any existing credit agreements, including charge cards, debit 
cards, or other credit facilities issued by a financial institution to 
a person whose property and interests in property are blocked pursuant 
to Sec.  589.201.


Sec.  589.410  Setoffs prohibited.

    A setoff against blocked property (including a blocked account), 
whether by a U.S. financial institution or other U.S. person, is a 
prohibited transfer under Sec.  589.201 if effected after the effective 
date.


Sec.  589.411  Entities owned by one or more persons whose property and 
interests in property are blocked or who are subject to Sec.  589.202, 
Sec.  589.203, Sec.  589.204, or Sec.  589.205.

    (a) Persons whose property and interests in property are blocked 
pursuant to Sec.  589.201 have an interest in all property and 
interests in property of an entity in which such persons directly or 
indirectly own, whether individually or in the aggregate, 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.  
589.201, regardless of whether the name of the entity is incorporated 
into OFAC's Specially Designated Nationals and Blocked Persons List 
(SDN List).
    (b) Persons subject to Sec.  589.202, Sec.  589.203, Sec.  589.204, 
or Sec.  589.205 have an interest in all property and interests in 
property of an entity in which such persons directly or indirectly own, 
whether individually or in the aggregate, a 50 percent or greater 
interest. The property and interests in property of such an entity, 
therefore, are also subject to Sec.  589.202, Sec.  589.203, Sec.  
589.204, or Sec.  589.205, regardless of whether the name of the entity 
is incorporated into OFAC's Sectoral Sanctions Identifications List.


Sec.  589.412  Projects owned, or to which a majority of voting rights 
are held, by one or more persons subject to Sec.  589.205.

    The prohibitions in Sec.  589.205(b) apply to projects owned 33 
percent or more, or to projects in which a majority of voting interests 
are held, individually or in the aggregate, by one or more persons 
subject to Sec.  589.205, their property, or their interests in 
property, including entities owned 50 percent or more by one or more 
persons subject to Sec.  589.205.

    Example 1 to Sec.  589.412: If two entities that are each 
subject to Sec.  589.205 each hold a 20 percent ownership interest 
in Project X, or together own a majority of the voting interests in 
Project X, then the prohibition in Sec.  589.205(b) applies to 
Project X.


Sec.  589.413  Significant transaction(s); significant financial 
transaction(s).

    In determining, for the purposes of Sec. Sec.  589.201(a)(6)(vii) 
and 589.209, whether a transaction or a financial transaction is 
significant, the Secretary of the Treasury or the Secretary's designee 
will consider the totality of the facts and circumstances. As a general 
matter, some or all of the following factors may be considered:
    (a) Size, number, and frequency. The size, number, and frequency of 
transaction(s) over a period of time, including whether the 
transaction(s) is increasing or decreasing over time and the rate of 
increase or decrease.
    (b) Nature. The nature of the transaction(s), including the type, 
complexity, and commercial purpose of the transaction(s).
    (c) Level of awareness; pattern of conduct. (1) Whether the 
transaction(s) is performed with the involvement or approval of 
management or only by clerical personnel; and
    (2) Whether the transaction(s) is part of a pattern of conduct or 
the result of a business development strategy.
    (d) Nexus. (1) For the purposes of Sec.  589.201(a)(6)(vii), the 
proximity between the foreign person engaging in the transaction(s) and 
the person(s) subject to sanctions pursuant to the Support for the 
Sovereignty, Integrity, Democracy, and Economic Stability of Ukraine 
Act of 2014, as amended (22 U.S.C. 8901-8910) (SSIDES), the Ukraine 
Freedom Support Act of 2014, as amended (22 U.S.C. 8921-8930) (UFSA), 
title II of the Countering America's Adversaries Through Sanctions Act 
(Pub. L. 115-44, 131 Stat. 886 (codified in scattered sections of 22 
U.S.C.)) (CAATSA), and any covered Executive order, or any child, 
spouse, parent, or sibling of such an individual.
    (2) For the purposes of Sec.  589.209(b), the proximity between the 
foreign

[[Page 26111]]

financial institution engaging in the transaction(s) and the person 
with respect to which sanctions are imposed under section 4 of UFSA.
    (3) For the purposes of Sec.  589.209(c), the proximity between the 
foreign financial institution engaging in the financial transaction(s) 
and the Russian person included on OFAC's Specially Designated 
Nationals and Blocked Persons List (SDN List) as blocked pursuant to 
UFSA, E.O. 13660, E.O. 13661, E.O. 13662, or any other Executive order 
addressing the crisis in Ukraine.
    (e) Impact. The impact of the transaction(s) on the objectives of 
UFSA, SSIDES, CAATSA, E.O. 13660, E.O. 13661, E.O. 13662, E.O. 13685, 
or any other Executive order issued pursuant to the national emergency 
declared in E.O. 13660.
    (f) Deceptive practices. Whether the transaction(s) involves an 
attempt to obscure or conceal the actual parties or true nature of the 
transaction(s), or to evade sanctions.
    (g) Other relevant factors. Such other factors that the Secretary 
of the Treasury or the Secretary's designee deems relevant on a case-
by-case basis in determining the significance of a transaction(s).
    (h) Persons solely identified on the Sectoral Sanctions 
Identifications List (SSI List) or Non-SDN Menu-Based Sanctions List 
(NS-MBS List). For the purposes of Sec.  589.201(a)(6)(vii) and Sec.  
589.209(b), a transaction in which the person(s) subject to sanctions 
is only identified on the SSI List or the NS-MBS List must also involve 
deceptive practices, for example attempts to obscure or conceal the 
actual parties or true nature of the transaction(s), or to evade 
sanctions, to potentially be considered significant.
    (i) Applicability. For the purposes of this part, a transaction is 
not significant if U.S. persons would not require a specific license 
from OFAC to participate in it.


Sec.  589.414  Facilitation; change of policies and procedures; 
referral of business opportunities offshore.

    With respect to Sec.  589.215, a prohibited facilitation or 
approval of a transaction by a foreign person occurs, among other 
instances, when a U.S. person:
    (a) Alters its operating policies or procedures, or those of a 
foreign affiliate, to permit a foreign affiliate to accept or perform a 
specific contract, engagement, or transaction described in Sec. Sec.  
589.206 through 589.208 without the approval of the U.S. person, where 
such transaction previously required approval by the U.S. person and 
such transaction by the foreign affiliate would be prohibited by this 
part if performed directly by a U.S. person or from the United States;
    (b) Refers to a foreign person purchase orders, requests for bids, 
or similar business opportunities involving a transaction described in 
Sec. Sec.  589.206 through 589.208 to which the U.S. person could not 
directly respond as a result of the prohibitions contained in this 
part; or
    (c) Changes the operating policies and procedures of a particular 
affiliate with the specific purpose of facilitating transactions that 
would be prohibited by this part if performed by a U.S. person or from 
the United States.

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


Sec.  589.501  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. General 
licenses and statements of licensing policy relating to this part also 
may be available through the Ukraine-/Russia-Related Sanctions page on 
OFAC's website: www.treas.gov/ofac.

    Note 1 to Sec.  589.501. Section 216 of the Countering America's 
Adversaries Through Sanctions Act (22 U.S.C. 9511) requires 
Congressional review prior to the issuance of a license that 
significantly alters the United States' foreign policy with regard 
to the Russian Federation.

Sec.  589.502  Effect of license or other authorization.

    (a) No license or other authorization contained in this part, or 
otherwise issued by OFAC, 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 OFAC and specifically refers to 
this part. No regulation, ruling, instruction, or license referring to 
this part shall be deemed to authorize any transaction prohibited by 
any other part of this chapter unless the regulation, ruling, 
instruction, or license specifically refers to such part.
    (c) Any regulation, ruling, instruction, or license authorizing any 
transaction 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.
    (d) Nothing contained in this part shall be construed to supersede 
the requirements established under any other provision of law or to 
relieve a person from any requirement to obtain a license or other 
authorization from another department or agency of the U.S. Government 
in compliance with applicable laws and regulations subject to the 
jurisdiction of that department or agency. For example, exports of 
goods, services, or technical data that are not prohibited by this part 
or that do not require a license by OFAC nevertheless may require 
authorization by the U.S. Department of Commerce, the U.S. Department 
of State, or other agencies of the U.S. Government.
    (e) No license or other authorization contained in or issued 
pursuant to this part authorizes transfers of or payments from blocked 
property or debits to blocked accounts unless the license or other 
authorization explicitly authorizes the transfer of or payment from 
blocked property or the debit to a blocked account.
    (f) Any payment relating to a transaction authorized in or pursuant 
to this part that is routed through the U.S. financial system should 
reference the relevant OFAC general or specific license authorizing the 
payment to avoid the blocking or rejection of the transfer.


Sec.  589.503  Exclusion from licenses.

    OFAC reserves the right to exclude any person, property, 
transaction, or class thereof from the operation of any license or from 
the privileges conferred by any license. OFAC 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.  589.504  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.  
589.201 has any interest that comes within the possession or control of 
a U.S. financial institution

[[Page 26112]]

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

    Note 1 to Sec.  589.504. See Sec.  501.603 of this chapter for 
mandatory reporting requirements regarding financial transfers. See 
also Sec.  589.211 concerning the obligation to hold blocked funds 
in interest-bearing accounts.

Sec.  589.505  Entries in certain accounts for normal service charges.

    (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.  589.506  Provision of certain legal services.

    (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.  589.201, or to whom the provision of legal services 
would be prohibited by Sec.  589.207, is authorized, provided that any 
receipt of payment of professional fees and reimbursement of incurred 
expenses must be authorized pursuant to Sec.  589.507, which authorizes 
certain payments for legal services from funds originating outside the 
United States; via specific license; or otherwise pursuant to this 
part:
    (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 legal, arbitration, or administrative proceedings 
before any U.S. Federal, State, or local court or agency;
    (3) Initiation and conduct of legal, arbitration, or administrative 
proceedings before any U.S. Federal, State, or local court or agency;
    (4) Representation of persons before any U.S. Federal, State, or 
local court or agency with respect to the imposition, administration, 
or enforcement of U.S. sanctions against such persons or enforcement of 
U.S. sanctions against the Crimea region of Ukraine; 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 or on behalf of 
persons whose property and interests in property are blocked pursuant 
to Sec.  589.201, or to whom the provision of legal services would be 
prohibited by Sec.  589.207, not otherwise authorized in this part, 
requires the issuance of a specific license.
    (c) U.S. persons do not need to obtain specific authorization to 
provide related services, such as making filings and providing other 
administrative services that are ordinarily incident to the provision 
of services authorized by paragraph (a) of this section. Additionally, 
U.S. persons who provide services authorized by paragraph (a) of this 
section do not need to obtain specific authorization to contract for 
related services that are ordinarily incident to the provision of those 
legal services, such as those provided by private investigators or 
expert witnesses, or to pay for such services. See Sec.  589.404.
    (d) 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.  589.201 is prohibited unless licensed 
pursuant to this part.
    (e) All receipts of payment of professional fees and reimbursement 
of incurred expenses for the provision of legal services authorized 
pursuant to paragraph (a) of this section to or on behalf of a person 
in the Crimea region of Ukraine, or in circumstances in which the 
benefit is otherwise received in the Crimea region of Ukraine, other 
than those persons whose property and interest in property are blocked 
pursuant to Sec.  589.201, are authorized, except that nothing in this 
section authorizes the debiting of any blocked account or the transfer 
of any blocked property.

    Note 1 to Sec.  589.506. Pursuant to part 501, subpart E, of 
this chapter, U.S. persons seeking administrative reconsideration or 
judicial review of their designation or the blocking of their 
property and interests in property may apply for a specific license 
from OFAC to authorize the release of certain blocked funds for the 
payment of professional fees and reimbursement of incurred expenses 
for the provision of such legal services where alternative funding 
sources are not available.

Sec.  589.507  Payments for legal services from funds originating 
outside the United States.

    (a) Professional fees and incurred expenses. (1) Receipt of payment 
of professional fees and reimbursement of incurred expenses for the 
provision of legal services authorized pursuant to Sec.  589.506(a) to 
or on behalf of any person whose property and interests in property are 
blocked pursuant to Sec.  589.201 is authorized from funds originating 
outside the United States, provided that the funds do not originate 
from:
    (i) A source within the United States;
    (ii) Any source, wherever located, within the possession or control 
of a U.S. person; or
    (iii) Any individual or entity, other than the person on whose 
behalf the legal services authorized pursuant to Sec.  589.506(a) are 
to be provided, whose property and interests in property are blocked 
pursuant to any part of this chapter or any Executive order or statute.
    (2) Nothing in paragraph (a) of this section authorizes payments 
for legal services using funds in which any other person whose property 
and interests in property are blocked pursuant to Sec.  589.201, any 
other part of this chapter, or any Executive order or statute has an 
interest.
    (b) Reports. (1) U.S. persons who receive payments pursuant to 
paragraph (a) of this section must submit annual reports no later than 
30 days following the end of the calendar year during which the 
payments were received providing information on the funds received. 
Such reports shall specify:
    (i) The individual or entity from whom the funds originated and the 
amount of funds received; and
    (ii) If applicable:
    (A) The names of any individuals or entities providing related 
services to the U.S. person receiving payment in connection with 
authorized legal services, such as private investigators or expert 
witnesses;
    (B) A general description of the services provided; and

[[Page 26113]]

    (C) The amount of funds paid in connection with such services.
    (2) The reports, which must reference this section, are to be 
submitted to OFAC using one of the following methods:
    (i) Email (preferred method): <a href="/cdn-cgi/l/email-protection#367970777564534659444276424453574543444f18515940"><span class="__cf_email__" data-cfemail="f7b8b1b6b4a59287988583b7838592968482858ed9909881">[email protected]</span></a>; or
    (ii) U.S. mail: OFAC Regulations Reports, Office of Foreign Assets 
Control, U.S. Department of the Treasury, 1500 Pennsylvania Avenue NW, 
Freedman's Bank Building, Washington, DC 20220.


Sec.  589.508  Emergency medical services.

    The provision and receipt of nonscheduled emergency medical 
services that are prohibited by this part are authorized.


Sec.  589.509  Investment and reinvestment of certain funds.

    Subject to the requirements of Sec.  589.211, U.S. financial 
institutions are authorized to invest and reinvest assets blocked 
pursuant to Sec.  589.201, 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 a person whose property and interests 
in property are blocked pursuant to Sec.  589.201.


Sec.  589.510  Official business of the United States Government.

    All transactions prohibited by this part that are for the conduct 
of the official business of the United States Government by employees, 
grantees, or contractors thereof are authorized.


Sec.  589.511  Official business of certain international organizations 
and entities.

    All transactions prohibited by this part that are for the conduct 
of the official business of the following entities, by employees, 
grantees, or contractors thereof are authorized:
    (a) The United Nations, including its Programmes, Funds, and Other 
Entities and Bodies, as well as its Specialized Agencies and Related 
Organizations;
    (b) The International Centre for Settlement of Investment Disputes 
(ICSID) and the Multilateral Investment Guarantee Agency (MIGA);
    (c) The African Development Bank Group, the Asian Development Bank, 
the European Bank for Reconstruction and Development, and the Inter-
American Development Bank Group (IDB Group), including any fund entity 
administered or established by any of the foregoing; and
    (d) The International Committee of the Red Cross and the 
International Federation of Red Cross and Red Crescent Societies.


Sec.  589.512  Certain transactions related to derivatives prohibited 
by Sec.  589.202, Sec.  589.203, or Sec.  589.204.

    (a) All transactions by U.S. persons, wherever located, and 
transactions within the United States involving derivative products 
whose value is linked to an underlying asset that constitutes 
prohibited debt issued by a person subject to Sec.  589.202, Sec.  
589.203, or Sec.  589.204, or prohibited equity issued by a person 
subject to Sec.  589.202, are authorized.
    (b) This section does not authorize the holding, purchasing, or 
selling of underlying assets otherwise prohibited by Sec.  589.202, 
Sec.  589.203, or Sec.  589.204 by U.S. persons, wherever are located, 
or within the United States.


Sec.  589.513  Exportation or reexportation of agricultural 
commodities, medicine, medical supplies, and replacement parts to the 
Crimea region of Ukraine.

    (a)(1) Agricultural commodities, medicine, and medical supplies. 
Except as provided in paragraphs (b)(1) through (3) of this section, 
the exportation or reexportation, from the United States or by a U.S. 
person, wherever located, of agricultural commodities, medicine, and 
medical supplies to the Crimea region of Ukraine, or to persons in 
third countries purchasing specifically for resale to the Crimea region 
of Ukraine, and the conduct of related transactions are authorized.
    (2) Replacement parts. Except as provided in paragraph (b)(1) of 
this section, the exportation or reexportation, from the United States 
or by a U.S. person, wherever located, of replacement parts for medical 
supplies exported or reexported pursuant to paragraph (a)(1) of this 
section, and the conduct of related transactions are authorized, 
provided that such replacement parts are designated as EAR99, or, in 
the case of replacement parts that are not subject to the Export 
Administration Regulations, 15 CFR parts 730 through 744 (EAR), are not 
listed under any multilateral export control regime; and further 
provided that such replacement parts are limited to a one-for-one 
export or reexport basis (i.e., only one replacement part can be 
exported or reexported to replace a broken or non-operational 
component).

    Note 1 to paragraph (a). Related transactions in this paragraph 
include the making of shipping and cargo inspection arrangements, 
the obtaining of insurance, the arrangement of financing and 
payment, shipping of the goods, receipt of payment, and the entry 
into contracts (including executory contracts).

    (b)(1) Excluded persons. Paragraphs (a)(1) and (2) of this section 
do not authorize the exportation or reexportation of agricultural 
commodities, medicine, medical supplies, or replacement parts to 
military or law enforcement purchasers or importers.
    (2) Excluded agricultural commodities. Paragraph (a)(1) of this 
section does not authorize the exportation or reexportation of the 
following items: Castor beans, castor bean seeds, certified pathogen-
free eggs (unfertilized or fertilized), dried egg albumin, live animals 
(excluding live cattle), embryos (excluding cattle embryos), Rosary/
Jequirity peas, non-food-grade gelatin powder, peptones and their 
derivatives, super absorbent polymers, western red cedar, or all 
fertilizers.
    (3) Excluded medicines. Paragraph (a)(1) of this section does not 
authorize the exportation or reexportation of the following medicines: 
Non-NSAID analgesics, cholinergics, anticholinergics, opioids, 
narcotics, benzodiazapenes, and bioactive peptides.
    (c)(1) Other excluded items agricultural commodities. For the 
purposes of this section, agricultural commodities do not include 
furniture made from wood; clothing manufactured from plant or animal 
materials; agricultural equipment (whether hand tools or motorized 
equipment); pesticides, insecticides, or herbicides; or cosmetics 
(unless derived entirely from plant materials).
    (2) Other excluded medicine. For the purposes of this section, 
medicine does not include cosmetics.
    (d) Nothing in this section relieves the exporter from compliance 
with the export license application requirements of another Federal 
agency.
    (e) Nothing in this section authorizes the exportation or 
reexportation of any agricultural commodity, medicine, or medical 
device controlled on the United States Munitions List established under 
section 38 of the Arms Export Control Act (22 U.S.C. 2778); controlled 
on any

[[Page 26114]]

control list established under the Export Administration Act of 1979 or 
any successor statute (50 U.S.C. App. 2401 et seq.); or used to 
facilitate the development or production of a chemical or biological 
weapon or weapon of mass destruction.
    (f) Nothing in this section affects prohibitions on the sale or 
supply of U.S. technology or software used to manufacture agricultural 
commodities, medicine, or medical devices, such as technology to design 
or produce biotechnological items or medical devices.
    (g) Nothing in this section affects U.S. nonproliferation export 
controls, including the end-user and end-use controls maintained under 
Part 744 of the EAR, 15 CFR part 744.
    (h) Nothing in this section authorizes any transaction or dealing 
with a person whose property and interests in property are blocked 
pursuant to 31 CFR 536.201, 544.201, 594.201, 597.201, or 598.202, or 
with any foreign organization, group, or person subject to any 
restriction for its involvement in weapons of mass destruction or 
missile proliferation, or involving property blocked pursuant to this 
chapter or any other activity prohibited by this chapter not otherwise 
authorized in or pursuant to this part.
    (i) Nothing in this section authorizes the exportation or 
reexportation of any agricultural commodity, medicine, or medical 
device that is not designated as EAR99 or, in the case of any 
agricultural commodity, medicine, or medical device not subject to the 
EAR, is not listed under any multilateral export control regime.
    (j) For the purposes of this section, agricultural commodities, 
medicine, medical devices, and medical supplies are defined below.
    (1) Agricultural commodities. For the purposes of this section, 
agricultural commodities are:
    (i) In the case of products subject to the EAR, products that are 
designated as EAR99, and, in the case of products not subject to the 
EAR, products that are not listed under any multilateral export control 
regime, in each case that fall within the term ``agricultural 
commodity'' as defined in section 102 of the Agricultural Trade Act of 
1978 (7 U.S.C. 5602); and
    (ii) In the case of products subject to the EAR, products that are 
designated as EAR99, and in the case of products not subject to the 
EAR, products that are not listed under any multilateral export control 
regime, in each case that are intended for ultimate use in the Crimea 
region of Ukraine as: Food for humans (including raw, processed, and 
packaged foods, live animals, vitamins and minerals, food additives or 
supplements, and bottled drinking water) or animals (including animal 
feeds); seeds for food crops; fertilizers or organic fertilizers; or 
reproductive materials (such as live animals, fertilized eggs, embryos, 
and semen) for the production of food animals;
    (2) Medicine. For the purposes of this section, medicine is an item 
that falls within the definition of the term ``drug'' in section 201 of 
the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 321) and that, in 
the case of an item subject to the EAR, is designated as EAR99 or, in 
the case of an item not subject to the EAR, is not listed under any 
multilateral export control regime.
    (3) Medical devices. For the purposes of this section, a medical 
device is an item that falls within the definition of ``device'' in 
section 201 of the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 321) 
and that, in the case of an item subject to the EAR, is designated as 
EAR99, or in the case of an item not subject to the EAR, is not listed 
under any multilateral export control regime.
    (4) Medical supplies. For purposes of this section, the term 
medical supplies means those medical devices, as defined in paragraph 
(j)(3) of this section, that are included on the List of Medical 
Supplies on OFAC's website (www.treas.gov/ofac) on the Ukraine-/Russia-
Related Sanctions page.

    Note 1 to paragraph (j)(4). The List of Medical Supplies is 
maintained on OFAC's website (www.treas.gov/ofac) on the Ukraine-/
Russia-Related Sanctions page. The list will be published in the 
Federal Register, as will any changes to the list.

    (k) Specific licenses may be issued on a case-by-case basis to 
authorize the export or reexport of medical devices that are not 
medical supplies (and therefore not authorized pursuant to paragraph 
(a)(1) of this section) to the Crimea region of Ukraine, or to persons 
in third countries purchasing specifically for resale to the Crimea 
region of Ukraine.


Sec.  589.514  Noncommercial, personal remittances to or from the 
Crimea region of Ukraine or for or on behalf of individuals ordinarily 
resident in the Crimea region of Ukraine.

    (a)(1) U.S. persons are authorized to send and receive, and U.S. 
depository institutions, U.S.-registered brokers or dealers in 
securities, and U.S.-registered money transmitters are authorized to 
process transfers of, funds to or from the Crimea region of Ukraine or 
for or on behalf of an individual ordinarily resident in the Crimea 
region of Ukraine in cases in which the transfer involves a 
noncommercial, personal remittance, provided the transfer is not by, 
to, or through any person whose property and interests in property are 
blocked pursuant to Sec.  589.201.
    (2) Noncommercial, personal remittances do not include charitable 
donations of funds to or for the benefit of an entity or funds 
transfers for use in supporting or operating a business, including a 
family-owned business.
    (b) The transferring institutions identified in paragraph (a) of 
this section may rely on the originator of a funds transfer with regard 
to compliance with paragraph (a), provided that the transferring 
institution does not know or have reason to know that the funds 
transfer is not in compliance with paragraph (a).
    (c) An individual who is a U.S. person is authorized to carry funds 
as a noncommercial, personal remittance, as described in paragraph (a) 
of this section, to an individual in the Crimea region of Ukraine or to 
an individual ordinarily resident in the Crimea region of Ukraine, 
other than an individual whose property and interests in property are 
blocked pursuant Sec.  589.201, provided that the individual who is a 
U.S. person is carrying the funds on his or her behalf, but not on 
behalf of another person.


Sec.  589.515  Operation of accounts for individuals ordinarily 
resident in the Crimea region of Ukraine.

    The operation of an account in a U.S. financial institution for an 
individual ordinarily resident in the Crimea region of Ukraine, other 
than an individual whose property and interests in property are blocked 
Sec.  589.201, is authorized, provided that transactions processed 
through the account:
    (a) Are of a personal nature and not for use in supporting or 
operating a business;
    (b) Do not involve transfers, directly or indirectly, to the Crimea 
region of Ukraine or for the benefit of individuals ordinarily resident 
in the Crimea region of Ukraine unless authorized by Sec.  589.514; and


Sec.  589.516  Transactions related to telecommunications and mail 
involving the Crimea region of Ukraine.

    (a)(1) Except as provided in paragraph (a)(2) of this section, all 
transactions with respect to the receipt and transmission of 
telecommunications involving the Crimea region of Ukraine are 
authorized, provided that no payment pursuant to this section may 
involve any transaction with a person whose property and interests in 
property are blocked pursuant to Sec.  589.201.

[[Page 26115]]

    (2) This section does not authorize:
    (i) The provision, sale, or lease of telecommunications equipment 
or technology; or
    (ii) The provision, sale, or lease of capacity on 
telecommunications transmission facilities (such as satellite or 
terrestrial network activity).
    (b) All transactions of common carriers incident to the receipt or 
transmission of mail and packages between the United States and the 
Crimea region of Ukraine are authorized, provided that the importation 
or exportation of such mail and packages is exempt from or authorized 
pursuant to this part.


Sec.  589.517  Exportation of certain services and software incident to 
internet-based communications to the Crimea Region of Ukraine.

    (a) Except as provided in paragraph (d) of this section, the 
exportation or reexportation, directly or indirectly, from the United 
States or by U.S. persons, wherever located, to persons in the Crimea 
region of Ukraine of services incident to the exchange of personal 
communications over the internet, such as instant messaging, chat and 
email, social networking, sharing of photos and movies, web browsing, 
and blogging, is authorized, provided that such services are widely 
available to the public at no cost to the user.
    (b) Except as provided in paragraph (d) of this section, the 
exportation or reexportation, directly or indirectly, from the United 
States or by U.S. persons, wherever located, to persons in the Crimea 
region of Ukraine of software necessary to enable the services 
described in paragraph (a) of this section is authorized, provided that 
such software is designated EAR99 under the Export Administration 
Regulations, 15 CFR parts 730 through 774 (EAR), or is classified by 
the Department of Commerce as mass market software under export control 
classification number (ECCN) 5D992 of the EAR, and provided further 
that such software is widely available to the public at no cost to the 
user.
    (c) Except as provided in paragraph (d) of this section, the 
exportation or reexportation, directly or indirectly, from the United 
States or by U.S. persons, wherever located, to persons in the Crimea 
region of Ukraine of software that is not subject to the EAR because it 
is of foreign origin and is located outside the United States that is 
necessary to enable the services described in paragraph (a) of this 
section is authorized, provided that such software is not listed under 
any multilateral export control regime, or would meet the criteria for 
classification under ECCN 5D992 of the EAR if it were subject to the 
EAR, and provided further that such software is widely available to the 
public at no cost to the user.
    (d) This section does not authorize:
    (1) The exportation or reexportation, directly or indirectly, of 
services or software with knowledge or reason to know that such 
services or software are intended for any person whose property and 
interests in property are blocked pursuant to Sec.  589.201.
    (2) The exportation or reexportation, directly or indirectly, of 
any goods or technology listed on the Commerce Control List in the EAR, 
15 CFR part 774, supplement No. 1 (CCL), except for software necessary 
to enable the services described in paragraph (a) of this section that 
is classified by the Department of Commerce as mass market software 
under ECCN 5D992 of the EAR;
    (3) The exportation or reexportation, directly or indirectly, of 
commercial-grade internet connectivity services or telecommunications 
transmission facilities (such as dedicated satellite links or dedicated 
lines that include quality of service guarantees); or
    (4) The exportation or reexportation, directly or indirectly, of 
web-hosting services that are for commercial endeavors or of domain 
name registration services.
    (e) Specific licenses may be issued on a case-by-case basis for the 
exportation or reexportation of services or software incident to the 
exchange of personal communications over the internet not specified in 
paragraph (a), (b), or (c) of this section, and for the exportation or 
reexportation of hardware incident to the exchange of personal 
communications over the internet.


Sec.  589.518  Transactions necessary and ordinarily incident to 
publishing in the Crimea region of Ukraine.

    (a) To the extent that such activities are not exempt from this 
part, and subject to the restrictions set forth in paragraphs (b) 
through (d) of this section, U.S. persons are authorized to engage in 
all transactions necessary and ordinarily incident to the publishing 
and marketing of manuscripts, books, journals, and newspapers in paper 
or electronic format (collectively, ``written publications'') involving 
the Crimea region of Ukraine. This paragraph does not apply if the 
parties to the transactions described in this paragraph include any 
person whose property and interests in property are blocked pursuant to 
Sec.  589.201. Pursuant to this section, the following activities are 
authorized, provided that U.S. persons ensure that they are not 
engaging, without separate authorization, in the activities identified 
in paragraphs (b) through (d) of this section:
    (1) Commissioning and making advance payments for identifiable 
written publications not yet in existence, to the extent consistent 
with industry practice;
    (2) Collaborating on the creation and enhancement of written 
publications;
    (3)(i) Augmenting written publications through the addition of 
items such as photographs, artwork, translation, explanatory text, and, 
for a written publication in electronic format, the addition of 
embedded software necessary for reading, browsing, navigating, or 
searching the written publication;
    (ii) Exporting embedded software necessary for reading, browsing, 
navigating, or searching a written publication in electronic format, 
provided that, to the extent authorization is required under the Export 
Administration Regulations, 15 CFR parts 730 through 774 (EAR), the 
exportation is licensed or otherwise authorized by the Department of 
Commerce under the provisions of the EAR;
    (4) Substantive editing of written publications;
    (5) Payment of royalties for written publications;
    (6) Creating or undertaking a marketing campaign to promote a 
written publication; and
    (7) Other transactions necessary and ordinarily incident to the 
publishing and marketing of written publications as described in this 
paragraph (a).
    (b) This section does not authorize transactions involving the 
provision of goods or services not necessary and ordinarily incident to 
the publishing and marketing of written publications as described in 
paragraph (a) of this section. For example, this section does not 
authorize persons subject to the jurisdiction of the United States:
    (1) To provide or receive individualized or customized services 
(including, but not limited to, accounting, legal, design, or 
consulting services), other than those necessary and ordinarily 
incident to the publishing and marketing of written publications, even 
though such individualized or customized services are delivered through 
the use of information and informational materials;
    (2) To create or undertake for any person a marketing campaign with 
respect to any service or product other than a written publication, or 
to create

[[Page 26116]]

or undertake a marketing campaign of any kind;
    (3) To engage in the exportation or importation of goods to or from 
the Crimea region of Ukraine other than the exportation of embedded 
software described in paragraph (a)(3)(ii) of this section; or
    (4) To operate a publishing house, sales outlet, or other office in 
the Crimea region of Ukraine.
    (c) This section does not authorize U.S. persons to engage the 
services of publishing houses or translators in the Crimea region of 
Ukraine unless such activity is primarily for the dissemination of 
written publications in the Crimea region of Ukraine.
    (d) This section does not authorize:
    (1) The exportation from or the importation into the United States 
of services for the development, production, or design of software;
    (2) Transactions for the development, production, design, or 
marketing of technology specifically controlled by the International 
Traffic in Arms Regulations, 22 CFR parts 120 through 130 (ITAR), the 
EAR, or the Department of Energy Regulations set forth at 10 CFR part 
810.
    (3) The exportation of information or technology subject to the 
authorization requirements of 10 CFR part 810, or Restricted Data as 
defined in section 11 y. of the Atomic Energy Act of 1954, as amended, 
or of other information, data, or technology the release of which is 
controlled under the Atomic Energy Act and regulations therein;
    (4) The exportation of any item (including information) subject to 
the EAR where a U.S. person knows or has reason to know that the item 
will be used, directly or indirectly, with respect to certain nuclear, 
missile, chemical, or biological weapons or nuclear-maritime end-uses 
as set forth in part 744 of the EAR. In addition, U.S. persons are 
precluded from exporting any item subject to the EAR to certain 
restricted end-users, as set forth in part 744 of the EAR, as well as 
certain persons whose export privileges have been denied pursuant to 
parts 764 or 766 of the EAR, without authorization from the Department 
of Commerce; or
    (5) The exportation of information subject to licensing 
requirements under the ITAR, or exchanges of information that are 
subject to regulation by other government agencies.


Sec.  589.519  Emergency landings and air ambulance services in the 
Crimea region of Ukraine.

    (a) The receipt of, and payment of charges for, services rendered 
in connection with emergency landings in the Crimea region of Ukraine 
by aircraft registered in the United States or owned or controlled by, 
or chartered to, persons subject to U.S. jurisdiction that would be 
prohibited by Sec.  589.206, Sec.  589.207, or Sec.  589.208 are 
authorized.
    (b) U.S. persons are authorized to engage in all transactions 
prohibited by Sec.  589.206, Sec.  589.207, or Sec.  589.208 that are 
necessary to provide air ambulance and related medical services, 
including medical evacuation from the Crimea region of Ukraine, for 
individuals in the Crimea region of Ukraine.


Sec.  589.520  Certain transactions in support of nongovernmental 
organizations' activities in the Crimea region of Ukraine.

    Nongovernmental organizations are authorized to export or reexport 
services to the Crimea region of Ukraine that would be prohibited by 
Sec.  589.206 in support of the following not-for-profit activities:
    (a) Activities to support humanitarian projects to meet basic human 
needs in the Crimea region of Ukraine, including drought and flood 
relief; food, nutrition, and medicine distribution; the provision of 
health services; assistance for vulnerable populations, including 
individuals with disabilities; and environmental programs;
    (b) Activities to support democracy building in the Crimea region 
of Ukraine, including activities to support rule of law, citizen 
participation, government accountability, universal human rights and 
fundamental freedoms, access to information, and civil society 
development projects;
    (c) Activities to support education in the Crimea region of 
Ukraine, including combating illiteracy, increasing access to 
education, international exchanges, and assisting education reform 
projects;
    (d) Activities to support non-commercial development projects 
directly benefiting the Crimean people, including preventing infectious 
disease and promoting maternal/child health, and clean water 
assistance; and
    (e) Activities to support environmental protection, including the 
preservation and protection of threatened or endangered species and the 
remediation of pollution or other environmental damage.


Sec.  589.521  Transactions related to closing a correspondent or 
payable-through account.

    (a) During the 10-day period beginning on the effective date of the 
prohibition in Sec.  589.209 on the opening and the prohibition or 
imposition of one or more strict conditions on the maintaining of a 
correspondent account or a payable-through account for a foreign 
financial institution listed on the List of Foreign Financial 
Institutions Subject to Correspondent Account or Payable-Through 
Account Sanctions (CAPTA List), U.S. financial institutions that 
maintain correspondent accounts or payable-through accounts for the 
foreign financial institution are authorized to:
    (1) Process only those transactions through the account, or permit 
the foreign financial institution to execute only those transactions 
through the account, that are for the purpose of, and necessary for, 
closing the account; and
    (2) Transfer the funds remaining in the correspondent account or 
the payable-through account to an account of the foreign financial 
institution located outside of the United States and close the 
correspondent account or the payable-through account.
    (b) A report must be filed with OFAC within 30 days of the closure 
of an account, providing full details on the closing of each 
correspondent account or payable-through account maintained by a U.S. 
financial institution for a foreign financial institution whose name is 
added to the CAPTA List. Such report must include complete information 
on the closing of the account and on all transactions processed or 
executed through the account pursuant to this section, including the 
account outside of the United States to which funds remaining in the 
account were transferred. The reports, which must reference this 
section, are to be submitted to OFAC using one of the following 
methods:
    (1) Email (preferred method): <a href="/cdn-cgi/l/email-protection#bcf3fafdffeed9ccd3cec8fcc8ced9ddcfc9cec592dbd3ca"><span class="__cf_email__" data-cfemail="b6f9f0f7f5e4d3c6d9c4c2f6c2c4d3d7c5c3c4cf98d1d9c0">[email protected]</span></a>; or
    (2) U.S. mail: Attention: Office of Compliance and Enforcement, 
Office of Foreign Assets Control, U.S. Department of the Treasury, 1500 
Pennsylvania Avenue NW, Freedman's Bank Building, Washington, DC 20220.
    (c) Specific licenses may be issued on a case-by-case basis to 
authorize transactions outside the scope or time period authorized in 
paragraph (a) of this section by a U.S. financial institution with 
respect to a correspondent account or a payable-through account 
maintained by the U.S. financial institution for a foreign financial 
institution whose name is added to the CAPTA List. License applications 
should be filed in conformance with Sec.  501.801 of the Reporting, 
Procedures and Penalties Regulations, 31 CFR part 501.
    (d) Nothing in this section authorizes the opening of a 
correspondent account or a payable-through account for a foreign 
financial institution whose name appears on the CAPTA List.

    Note 1 to Sec.  589.521. This section does not authorize a U.S. 
financial institution to

[[Page 26117]]

unblock property or interests in property, or to engage in any 
transaction or dealing in property or interests in property, blocked 
pursuant to any other part of this chapter in the process of closing 
a correspondent account or a payable-through account for a foreign 
financial institution whose name has been added to the CAPTA List. 
See Sec.  589.101.

Subpart F--Reports


Sec.  589.601  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 and Findings of Violation


Sec.  589.701  Penalties.

    (a) Section 206 of the International Emergency Economic Powers Act 
(50 U.S.C. 1705) (IEEPA) 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.
    (2) IEEPA provides for a maximum civil penalty not to exceed the 
greater of $330,947or 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.
    (3) A person who willfully commits, willfully attempts to commit, 
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)(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) Pursuant to 18 U.S.C. 1001, 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; 
or makes any materially false, fictitious, or fraudulent statement or 
representation; or makes or uses any false writing or document knowing 
the same to contain any materially false, fictitious, or fraudulent 
statement or entry shall be fined under title 18, United States Code, 
imprisoned, or both.
    (d) Violations of this part may also be subject to other applicable 
laws.


Sec.  589.702  Pre-Penalty Notice; settlement.

    (a) When required. If OFAC 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, 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 
the International Emergency Economic Powers Act (50 U.S.C. 1701 et 
seq.) and determines that a civil monetary penalty is warranted, OFAC 
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) Response--(1) Right to respond. An alleged violator has the 
right to respond to a Pre-Penalty Notice by making a written 
presentation to OFAC. For a description of the information that should 
be included in such a response, see appendix A to part 501 of this 
chapter.
    (2) Deadline for response. A response to a Pre-Penalty Notice must 
be made within 30 days as set forth in paragraphs (b)(2)(i) and (ii) of 
this section. The failure to submit a response within 30 days 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 OFAC by courier), or dated if sent by 
email, on or before the 30th day after the postmark date on the 
envelope in which the Pre-Penalty Notice was mailed or date the Pre-
Penalty Notice was emailed. If the Pre-Penalty Notice was personally 
delivered by a non-U.S. Postal Service agent authorized by OFAC, 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 OFAC, only upon specific request to OFAC.
    (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 (electronic 
signature is acceptable), contain information sufficient to indicate 
that it is in response to the Pre-Penalty Notice, and include the OFAC 
identification number listed on the Pre-Penalty Notice. The response 
must be sent to OFAC's Office of Compliance and Enforcement by mail or 
courier or email and must be postmarked or date-stamped in accordance 
with paragraph (b)(2) of this section.
    (c) Settlement. Settlement discussion may be initiated by OFAC, 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 OFAC 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 
OFAC 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.  589.703  Penalty imposition.

    If, after considering any written response to the Pre-Penalty 
Notice and any relevant facts, OFAC determines that there was a 
violation by the alleged violator named in the Pre-Penalty Notice and 
that a civil monetary penalty is appropriate, OFAC 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.

[[Page 26118]]

Sec.  589.704  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 OFAC, 
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.


Sec.  589.705  Findings of Violation.

    (a) When issued. (1) OFAC may issue an initial Finding of Violation 
that identifies a violation if OFAC:
    (i) Determines that there has occurred a violation of any provision 
of this part, or a violation 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 the International Emergency 
Economic Powers Act (50 U.S.C. 1701 et seq.);
    (ii) Considers it important to document the occurrence of a 
violation; and
    (iii) Based on the Guidelines contained in appendix A to part 501 
of this chapter, concludes that an administrative response is warranted 
but that a civil monetary penalty is not the most appropriate response.
    (2) An initial Finding of Violation shall be in writing and may be 
issued whether or not another agency has taken any action with respect 
to the matter. For additional details concerning issuance of a Finding 
of Violation, see appendix A to part 501 of this chapter.
    (b) Response--(1) Right to respond. An alleged violator has the 
right to contest an initial Finding of Violation by providing a written 
response to OFAC.
    (2) Deadline for response; default determination. A response to an 
initial Finding of Violation must be made within 30 days as set forth 
in paragraphs (b)(2)(i) and (ii) of this section. The failure to submit 
a response within 30 days shall be deemed to be a waiver of the right 
to respond, and the initial Finding of Violation will become final and 
will constitute final agency action. The violator has the right to seek 
judicial review of that final agency action in Federal district court.
    (i) Computation of time for response. A response to an initial 
Finding of Violation 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 OFAC by courier), or dated if sent 
by email, on or before the 30th day after the postmark date on the 
envelope in which the initial Finding of Violation was served or date 
the Finding of Violation was sent by email. If the initial Finding of 
Violation was personally delivered by a non-U.S. Postal Service agent 
authorized by OFAC, 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 OFAC, only upon specific request to OFAC.
    (3) Form and method of response. A response to an initial Finding 
of Violation need not be in any particular form, but it must be 
typewritten and signed by the alleged violator or a representative 
thereof (electronic signature is acceptable), contain information 
sufficient to indicate that it is in response to the initial Finding of 
Violation, and include the OFAC identification number listed on the 
initial Finding of Violation. The response must be sent to OFAC's 
Office of Compliance and Enforcement by mail or courier or email and 
must be postmarked or date-stamped in accordance with paragraph (b)(2) 
of this section.
    (4) Information that should be included in response. Any response 
should set forth in detail why the alleged violator either believes 
that a violation of the regulations did not occur and/or why a Finding 
of Violation is otherwise unwarranted under the circumstances, with 
reference to the General Factors Affecting Administrative Action set 
forth in the Guidelines contained in appendix A to part 501 of this 
chapter. The response should include all documentary or other evidence 
available to the alleged violator that supports the arguments set forth 
in the response. OFAC will consider all relevant materials submitted in 
the response.
    (c) Determination--(1) Determination that a Finding of Violation is 
warranted. If, after considering the response, OFAC determines that a 
final Finding of Violation should be issued, OFAC will issue a final 
Finding of Violation that will inform the violator of its decision. A 
final Finding of Violation shall constitute final agency action. The 
violator has the right to seek judicial review of that final agency 
action in Federal district court.
    (2) Determination that a Finding of Violation is not warranted. If, 
after considering the response, OFAC determines a Finding of Violation 
is not warranted, then OFAC will inform the alleged violator of its 
decision not to issue a final Finding of Violation.

    Note 1 to paragraph (c)(2). A determination by OFAC that a final 
Finding of Violation is not warranted does not preclude OFAC from 
pursuing other enforcement actions consistent with the Guidelines 
contained in appendix A to part 501 of this chapter.

    (d) Representation. A representative of the alleged violator may 
act on behalf of the alleged violator, but any oral communication with 
OFAC prior to a written submission regarding the specific alleged 
violations contained in the initial Finding of Violation must be 
preceded by a written letter of representation, unless the initial 
Finding of Violation was served upon the alleged violator in care of 
the representative.

Subpart H--Procedures


Sec.  589.801  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.  589.802  Delegation of certain authorities of the Secretary of 
the Treasury.

    Any action that the Secretary of the Treasury is authorized to take 
pursuant to Executive Order (E.O.) 13660 of March 6, 2014, E.O. 13661 
of March 16, 2014, E.O. 13662 of March 20, 2014, E.O. 13685 of December 
19, 2014, E.O. 13849 of September 20, 2018, and any further Executive 
orders relating to the national emergency declared in E.O. 13660, and 
any action that the Secretary of the Treasury is authorized to take 
pursuant to Presidential Memorandum of September 29, 2017: Delegation 
of Certain Functions and Authorities under the Countering America's 
Adversaries Through Sanctions Act of 2017, the Ukraine Freedom Support 
Act of 2014, and the Support for the Sovereignty, Integrity, Democracy, 
and Economic Stability of Ukraine Act of 2014, may be taken by the 
Director of OFAC or by any other person to whom the Secretary of the 
Treasury has delegated authority so to act.

Subpart I--Paperwork Reduction Act


Sec.  589.901  Paperwork Reduction Act notice.

    For approval by the Office of Management and Budget (OMB) under

[[Page 26119]]

the Paperwork Reduction Act of 1995 (44 U.S.C. 3507) of information 
collections relating to recordkeeping and reporting requirements, 
licensing procedures, 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.

Andrea M. Gacki,
Director, Office of Foreign Assets Control.
[FR Doc. 2022-09371 Filed 4-29-22; 8:45 am]
BILLING CODE P


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