Source: https://www.federalregister.gov/articles/2015/12/31/2015-32881/cyber-related-sanctions-regulations
Timestamp: 2016-08-30 20:47:43
Document Index: 289827729

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Federal Register | Cyber-Related Sanctions Regulations
Publication Date: Thursday, December 31, 2015
Dates: Effective: December 31, 2015.
-81759 (8 pages)
31 CFR 578
Shorter URL: https://federalregister.gov/a/2015-32881 Related Topics
The Department of the Treasury's Office of Foreign Assets Control (OFAC) is issuing regulations to implement Executive Order 13694 of April 1, 2015 (“Blocking the Property of Certain Persons Engaging in Significant Malicious Cyber-Enabled Activities”). OFAC intends to supplement this part 578 with a more comprehensive set of regulations, which may include additional interpretive and definitional guidance and additional general licenses and statements of licensing policy.
List of Subjects in 31 CFR Part 578
Subpart D—Interpretations Subpart E—Licenses, Authorizations, and Statements of Licensing Policy
Subparts F-G—[Reserved]
Subpart A—Relation of This Part to Other Laws and Regulations Subpart B—Prohibitions
Effective: December 31, 2015.
On April 1, 2015, the President issued Executive Order 13694 (80 FR 18077, April 2, 2015) (E.O. 13694), invoking the authority of, inter alia, the International Emergency Economic Powers Act (50 U.S.C. 1701-1706). OFAC is issuing the Cyber-Related Sanctions Regulations, 31 CFR part 578 (the “Regulations”), to implement E.O. 13694, pursuant to authorities delegated to the Secretary of the Treasury in E.O. 13694. A copy of E.O. 13694 appears in Appendix A to this part.
The Regulations are being published in abbreviated form at this time for the purpose of providing immediate guidance to the public. OFAC intends to supplement this part 578 with a more comprehensive set of regulations, which may include additional interpretive and definitional guidance, including regarding “cyber-enabled” activities, and additional general licenses and statements of licensing policy. The appendix to the Regulations will be removed when OFAC supplements this part with a more comprehensive set of regulations.
List of Subjects in 31 CFR Part 578 Back to Top
For the reasons set forth in the preamble, the Department of the Treasury's Office of Foreign Assets Control adds part 578 to 31 CFR chapter V to read as follows:
PART 578—CYBER-RELATED SANCTIONS REGULATIONS Back to Top
578.101 Relation of this part to other laws and regulations.
578.201 Prohibited transactions.
578.202 Effect of transfers violating the provisions of this part.
578.203 Holding of funds in interest-bearing accounts; investment and reinvestment. 578.204 Expenses of maintaining blocked property; liquidation of blocked property.
578.300 Applicability of definitions.
578.301 Blocked account; blocked property.
578.302 Effective date.
578.303 Entity.
578.304 Financial, material, or technological support.
578.305 Interest.
578.306 Licenses; general and specific.
578.307 OFAC.
578.308 Person.
578.309 Property; property interest.
578.310 Transfer.
578.311 United States.
578.312 United States person; U.S. person.
578.313 U.S. financial institution.
Subpart D—Interpretations 578.401 [Reserved]
578.402 Effect of amendment.
578.403 Termination and acquisition of an interest in blocked property.
578.404 Transactions ordinarily incident to a licensed transaction.
578.405 Setoffs prohibited.
578.406 Entities owned by persons whose property and interests in property are blocked.
578.501 General and specific licensing procedures.
578.502 [Reserved]
578.503 Exclusion from licenses.
578.504 Payments and transfers to blocked accounts in U.S. financial institutions.
578.505 Entries in certain accounts for normal service charges authorized.
578.506 Provision of certain legal services authorized.
578.507 Payments for legal services from funds originating outside the United States authorized.
578.508 Authorization of emergency medical services.
578.801 [Reserved]
578.802 Delegation by the Secretary of the Treasury.
578.901 Paperwork Reduction Act notice.
Appendix A to Part 578—Executive Order 13694 Authority:
3 U.S.C. 301; 31 U.S.C. 321(b); 50 U.S.C. 1601-1651, 1701-1706; Pub. L. 101-410, 104 Stat. 890 (28 U.S.C. 2461 note); Pub. L. 110-96, 121 Stat. 1011 (50 U.S.C. 1705 note); E.O. 13694, 80 FR 18077, April 2, 2015.
Subpart A—Relation of This Part to Other Laws and Regulations Back to Top
§ 578.101 Relation of this part to other laws and regulations.
Note to § 578.101:
This part has been published in abbreviated form for the purpose of providing immediate guidance to the public. OFAC intends to supplement this part with a more comprehensive set of regulations, which may include additional interpretive and definitional guidance, including regarding “cyber-enabled” activities, and additional general licenses and statements of licensing policy.
Subpart B—Prohibitions Back to Top
§ 578.201 Prohibited transactions.
Note 1 to § 578.201: The names of persons designated pursuant to Executive Order 13694, whose property and interests in property therefore are blocked pursuant to this section, are published in the Federal Register and incorporated into OFAC's Specially Designated Nationals and Blocked Persons List (SDN List) with the identifier “[CYBER].” The SDN List is accessible through the following page on OFAC's Web site: www.treasury.gov/sdn. Additional information pertaining to the SDN List can be found in Appendix A to this chapter. See § 578.406 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 2 to § 578.201: The International Emergency Economic Powers Act (50 U.S.C. 1701-1706), in Section 203 (50 U.S.C. 1702), authorizes the blocking of property and interests in property of a person during the pendency of an investigation. The names of persons whose property and interests in property are blocked pending investigation pursuant to this section also are published in the Federal Register and incorporated into the SDN List with the identifier “[BPI-CYBER]”.
Note 3 to § 578.201: 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. § 578.202 Effect of transfers violating the provisions of this part.
(a) Any transfer after the effective date that is in violation of any provision of this part or of any regulation, order, directive, ruling, instruction, or license issued pursuant to this part, and that involves any property or interest in property blocked pursuant to § 578.201, is null and void and shall not be the basis for the assertion or recognition of any interest in or right, remedy, power, or privilege with respect to such property or property interest.
(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 § 578.201, 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.
(e) Unless licensed pursuant to this part, any attachment, judgment, decree, lien, execution, garnishment, or other judicial process is null and void with respect to any property and interests in property blocked pursuant to § 578.201.
§ 578.203 Holding of funds in interest-bearing accounts; investment and reinvestment.
(a) Except as provided in paragraphs (e) or (f) of this section, or as otherwise directed by OFAC, any U.S. person holding funds, such as currency, bank deposits, or liquidated financial obligations, subject to § 578.201 shall hold or place such funds in a blocked interest-bearing account located in the United States.
(e) Blocked funds held in instruments the maturity of which exceeds 180 days at the time the funds become subject to § 578.201 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 paragraphs (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 § 578.201 may continue to be held in the same type of accounts or instruments, provided the funds earn interest at rates that are commercially reasonable.
(h) Funds subject to this section may not be held, invested, or reinvested in a manner that provides immediate financial or economic benefit or access to any person whose property and interests in property are blocked pursuant to § 578.201, nor may their holder cooperate in or facilitate the pledging or other attempted use as collateral of blocked funds or other assets.
§ 578.204 Expenses of maintaining blocked property; liquidation of blocked property.
(a) Except as otherwise authorized, and notwithstanding the existence of any rights or obligations conferred or imposed by any international agreement or contract entered into or any license or permit granted prior to the effective date, all expenses incident to the maintenance of physical property blocked pursuant to § 578.201 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 § 578.201 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.
§ 578.300 Applicability of definitions.
§ 578.301 Blocked account; blocked property.
The terms blocked account and blocked property shall mean any account or property subject to the prohibitions in § 578.201 held in the name of a person whose property and interests in property are blocked pursuant to § 578.201, 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 to § 578.301: See § 578.406 concerning the blocked status of property and interests in property of an entity that is 50 percent or more owned by persons whose property and interests in property are blocked pursuant to § 578.201.
§ 578.302 Effective date.
The term effective date refers to the effective date of the applicable prohibitions and directives contained in this part, and, with respect to a person whose property and interests in property are blocked pursuant to § 578.201, is the earlier of the date of actual or constructive notice that such person's property and interests in property are blocked.
§ 578.303 Entity.
§ 578.304 Financial, material, or technological support.
§ 578.305 Interest.
§ 578.306 Licenses; general and specific.
Note to § 578.306:
§ 578.307 OFAC.
§ 578.308 Person.
§ 578.309 Property; property interest.
§ 578.310 Transfer.
§ 578.311 United States.
§ 578.312 United States person; U.S. person.
§ 578.313 U.S. financial institution.
§ 578.401 [Reserved]
§ 578.402 Effect of amendment.
§ 578.403 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 § 578.201, such property shall no longer be deemed to be property blocked pursuant to § 578.201, unless there exists in the property another interest that is blocked pursuant to § 578.201, the transfer of which has not been effected pursuant to license or other authorization.
(b) Unless otherwise specifically provided in a license or other 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 § 578.201, such property shall be deemed to be property in which such a person has an interest and therefore blocked.
§ 578.404 Transactions ordinarily incident to a licensed transaction.
(a) An ordinarily incident transaction, not explicitly authorized within the terms of the license, by or with a person whose property and interests in property are blocked pursuant to § 578.201; or
§ 578.405 Setoffs prohibited.
A setoff against blocked property (including a blocked account), whether by a U.S. bank or other U.S. person, is a prohibited transfer under § 578.201 if effected after the effective date.
§ 578.406 Entities owned by persons whose property and interests in property are blocked.
Persons whose property and interests in property are blocked pursuant to § 578.201 have an interest in all property and interests in property of an entity in which such blocked persons own, whether individually or in the aggregate, directly or indirectly, a 50 percent or greater interest. The property and interests in property of such an entity, therefore, are blocked, and such an entity is a person whose property and interests in property are blocked pursuant to § 578.201, regardless of whether the name of the entity is incorporated into OFAC's Specially Designated Nationals and Blocked Persons List (SDN List).
§ 578.501 General and specific licensing procedures.
§ 578.502 [Reserved]
§ 578.503 Exclusion from licenses.
§ 578.504 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 § 578.201 has any interest that comes within the possession or control of a U.S. financial institution must be blocked in an account on the books of that financial institution. A transfer of funds or credit by a U.S. financial institution between blocked accounts in its branches or offices is authorized, provided that no transfer is made from an account within the United States to an account held outside the United States, and further provided that a transfer from a blocked account may be made only to another blocked account held in the same name.
Note to § 578.504:
See § 501.603 of this chapter for mandatory reporting requirements regarding financial transfers. See also § 578.203 concerning the obligation to hold blocked funds in interest-bearing accounts.
§ 578.505 Entries in certain accounts for normal service charges authorized.
§ 578.506 Provision of certain legal services authorized.
(a) The provision of the following legal services to or on behalf of persons whose property and interests in property are blocked pursuant to § 578.201 or any further Executive orders relating to the national emergency declared in Executive Order 13694 of April 1, 2015, is authorized, provided that receipt of payment of professional fees and reimbursement of incurred expenses must be specifically licensed, authorized pursuant to § 578.507, which authorizes certain payments for legal services from funds originating outside the United States, or otherwise authorized pursuant to this part:
(b) The provision of any other legal services to persons whose property and interests in property are blocked pursuant to § 578.201 or any further Executive orders relating to the national emergency declared in Executive Order 13694 of April 1, 2015, not otherwise authorized in this part, requires the issuance of a specific license.
(c) Entry into a settlement agreement or the enforcement of any lien, judgment, arbitral award, decree, or other order through execution, garnishment, or other judicial process purporting to transfer or otherwise alter or affect property or interests in property blocked pursuant to § 578.201 or any further Executive orders relating to the national emergency declared in Executive Order 13694 of April 1, 2015, is prohibited unless licensed pursuant to this part.
Note to § 578.506:
§ 578.507 Payments for legal services from funds originating outside the United States authorized.
(a) Receipts of payment of professional fees and reimbursement of incurred expenses for the provision of legal services authorized pursuant to § 578.506(a) to or on behalf of any person whose property and interests in property are blocked pursuant to § 578.201 or any further Executive orders relating to the national emergency declared in Executive Order 13694, of April 1, 2015, are authorized from funds originating outside the United States, provided that the funds received by U.S. persons as payment of professional fees and reimbursement of incurred expenses for the provision of legal services authorized pursuant to § 578.506(a) do not originate from:
(3) Any individual or entity, other than the person on whose behalf the legal services authorized pursuant to § 578.506(a) are to be provided, whose property and interests in property are blocked pursuant to any part of this chapter or any Executive order.
Note to paragraph (a) of § 578.507:
This paragraph authorizes the blocked person on whose behalf the legal services authorized pursuant to § 578.506(a) are to be provided to make payments for authorized legal services using funds originating outside the United States that were not previously blocked. Nothing in this paragraph authorizes payments for legal services using funds in which any other person whose property and interests in property are blocked pursuant to § 578.201, any other part of this chapter, or any Executive order has an interest.
(b) Reports. (1) U.S. persons who receive payments in connection with legal services authorized pursuant to § 578.506(a) 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:
Note to § 578.507:
U.S. persons who receive payments in connection with legal services authorized pursuant to § 578.506(a) 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. Additionally, U.S. persons do not need to obtain specific authorization to provide related services that are ordinarily incident to the provision of legal services authorized pursuant to § 578.506(a).
§ 578.508 Authorization of emergency medical services.
The provision of nonscheduled emergency medical services in the United States to persons whose property and interests in property are blocked pursuant to § 578.201 or any further Executive orders relating to the national emergency declared in Executive Order 13694 of April 1, 2015 and all receipt of payment for such services are authorized.
Subparts F-G—[Reserved] Back to Top
Subpart H—Procedures Back to Top
§ 578.801 [Reserved]
§ 578.802 Delegation by the Secretary of the Treasury.
Subpart I—Paperwork Reduction Act Back to Top
§ 578.901 Paperwork Reduction Act notice.
Appendix A to Part 578—Executive Order 13694 Back to Top
Executive Order 13694 of April 1, 2015 Back to Top
Blocking the Property of Certain Persons Engaging in Significant Malicious Cyber-Enabled Activities Back to Top
[FR Doc. 2015-32881 Filed 12-30-15; 8:45 am]