Source: https://www.federalregister.gov/documents/2009/05/28/E9-11953/democratic-republic-of-the-congo-sanctions-regulations
Timestamp: 2017-11-24 01:19:18
Document Index: 570853177

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74 FR 25439
25439-25448 (10 pages)
E9-11953
https://www.federalregister.gov/d/E9-11953 https://www.federalregister.gov/d/E9-11953
The Department of the Treasury's Office of Foreign Assets Control (“OFAC”) is adding a new part to the Code of Federal Regulations to implement Executive Order 13413 of October 27, 2006, “Blocking Property of Certain Persons Contributing to the Conflict in the Democratic Republic of the Congo.”
This document and additional information concerning the OFAC are available from OFAC's Web site (http://www.treas.gov/​ofac) or via facsimile through a 24-hour fax-on-demand service, tel.: (202) 622-0077.
On October 27, 2006, the President, invoking the authority of, inter alia, the International Emergency Economic Powers Act (50 U.S.C. 1701-1706) (“IEEPA”) and section 5 of the United Nations Participation Act (22 U.S.C. 287c), issued Executive Order 13413 (71 FR 64105, October 31, 2006) (“E.O. 13413”), effective at 12:01 a.m. eastern standard time on October 30, 2006. In E.O. 13413, the President determined that the situation in or in relation to the Democratic Republic of the Congo (the “DRC”) constitutes 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. E.O. 13413 noted United Nations Security Council Resolutions 1596 of April 18, 2005, 1649 of December 21, 2005, and 1698 of July 31, 2006, which, inter alia, expressed serious concern over the destabilizing presence of armed groups Start Printed Page 25440and militias in the DRC. In addition, numerous other United Nations Security Council Resolutions condemned these militias and armed groups for committing serious violations of human rights and international humanitarian law, including the massacre of civilians, sexual violence against women and girls, and the recruitment and use of children in the hostilities.
Section 1(a) of E.O. 13413 blocks, with certain exceptions, all property and interests in property that are in the United States, that come within the United States, or that are or come within the possession or control of United States persons, of: (1) the persons listed in the Annex to E.O. 13413; and (2) any person determined by the Secretary of the Treasury, after consultation with the Secretary of State:
To be a political or military leader of a foreign armed group operating in the DRC that impedes the disarmament, repatriation, or resettlement of combatants;
To be a political or military leader of a Congolese armed group that impedes the disarmament, demobilization, or reintegration of combatants;
To be a political or military leader recruiting or using children in armed conflict in the DRC in violation of applicable international law;
To have committed serious violations of international law involving the targeting of children in situations of armed conflict in the DRC, including killing and maiming, sexual violence, abduction, and forced displacement;
To have directly or indirectly supplied, sold, or transferred to the DRC, or been the recipient in the territory of the DRC of, arms and related materiel, including military aircraft and equipment, or advice, training, or assistance, including financing and financial assistance, related to military activities;
To have materially assisted, sponsored, or provided financial, material, or technological support for, or goods or services in support of, the activities described in the criteria of clause 2 above or any person listed in or designated pursuant to E.O. 13413; or
To be owned or controlled by, or acting or purporting to act for or on behalf of, directly or indirectly, any person listed in or designated pursuant to E.O. 13413.
In section 1(b) of E.O. 13413, 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 E.O. 13413 would seriously impair his ability to deal with the national emergency declared in E.O. 13413, and the President therefore prohibited such donations. Accordingly, the donation of such items is prohibited, unless authorized by OFAC.
Section 1(c) of E.O. 13413 provides that the prohibition on any transaction or dealing by a United States person or within the United States in blocked property or interests in property includes, but is not limited to, the making of any contribution or provision of funds, goods, or services by, to, or for the benefit of, any person whose property and interests in property are blocked pursuant to E.O. 13413, and the receipt of any contribution or provision of funds, goods, or services from any such person.
Section 2 of E.O. 13413 prohibits any transaction by a United States person or within the United States that evades or avoids, or has the purpose of evading or avoiding, or attempts to violate any of the prohibitions set forth in E.O. 13413, as well as any conspiracy formed to violate such prohibitions.
Section 5 of E.O. 13413 authorizes the Secretary of the Treasury, after consultation with the Secretary of State, to take such actions, including the promulgation of rules and regulations, as may be necessary to carry out the purposes of E.O. 13413. In furtherance of these purposes, OFAC is promulgating these Democratic Republic of the Congo Sanctions Regulations, 31 CFR Part 547 (the “Regulations”). As described above, these sanctions are targeted sanctions directed at certain persons who contribute to the conflict in the DRC. The sanctions are not directed against the country of the DRC or the Government of the DRC. They do not generally prohibit trade or the provision of banking or other financial services to the country of the DRC, unless the transaction or service in question involves a person whose property and interests in property are blocked pursuant to § 547.201(a).
Subpart B of the Regulations implements the prohibitions contained in sections 1 and 2 of E.O. 13413. See, e.g., §§ 547.201 and 547.205. Persons identified in the Annex to E.O. 13413 or designated by or under the authority of the Secretary of the Treasury pursuant to E.O. 13413, or otherwise subject to the blocking provisions of E.O. 13413 are referred to throughout the Regulations as “persons whose property and interests in property are blocked pursuant to § 547.201(a).” The names of persons listed in or designated pursuant to E.O. 13413 are or will be published on OFAC's Specially Designated Nationals and Blocked Persons List, which is accessible via OFAC's Web site and can be found at Appendix A to 31 CFR chapter V. Those names also have been or will be published in the Federal Register.
Sections 547.202 and 547.203 of subpart B detail the effect of transfers of blocked property in violation of the Regulations and set forth the requirement to hold blocked funds, such as currency, bank deposits, or liquidated financial obligations, in interest-bearing blocked accounts. Section 547.204 of subpart B provides that all expenses incident to the maintenance of blocked physical property shall be the responsibility of the owners or operators of such property and that such expenses shall not be met from blocked funds, unless otherwise authorized. The section further provides that blocked property may, in OFAC's discretion, be sold or liquidated and the net proceeds placed in a blocked interest-bearing account in the name of the owner of the property.
Section 547.205 implements the prohibitions in sections 2(a) and 2(b) of E.O. 13413 on any transaction by a United States person or within the United States that evades or avoids, has the purpose of evading or avoiding, or attempts to violate any of the prohibitions set forth in E.O. 13413, and on any conspiracy formed to violate such prohibitions.
Subpart C of the Regulations defines key terms used throughout the Regulations and subpart D sets forth interpretive sections regarding the general prohibitions contained in subpart B. Section 547.411 sets out the rule that the property and interests in property of an entity are blocked if the entity is 50 percent or more owned by a person whose property and interests in property are blocked, whether or not the entity itself is listed in or designated pursuant to E.O. 13413.
Transactions otherwise prohibited under the Regulations but found to be consistent with U.S. policy may be authorized by one of the general licenses contained in subpart E or by a specific license issued pursuant to the procedures described in subpart E of part 501 of 31 CFR chapter V. Subpart E of part 547 also contains certain statements of licensing policy in addition to the general licenses.
Subpart F of the Regulations refers to subpart C of part 501 for applicable recordkeeping and reporting requirements. Subpart G describes the civil and criminal penalties applicable Start Printed Page 25441to violations of the Regulations, as well as the procedures governing the potential imposition of a civil monetary penalty. Subpart G also refers to Appendix A of part 501 for a more complete description of these procedures.
For the reasons set forth in the preamble, the Department of the Treasury's Office of Foreign Assets Control adds part 547 to 31 CFR Chapter V to read as follows:
547.501
547.504
547.506
547.802
Authority: 3 U.S.C. 301; 31 U.S.C. 321(b); 50 U.S.C. 1601-1651, 1701-1706; 22 U.S.C. 287c; Pub. L. 101-410, 104 Stat. 890 (28 U.S.C. 2461 note); Pub. L. 110-96, 121 Stat. 1011; E.O. 13413, 71 FR 64105, 3 CFR, 2006 Comp., p. 247.
§ 547.101
(i) To be a political or military leader of a foreign armed group operating in the Democratic Republic of the Congo Start Printed Page 25442that impedes the disarmament, repatriation, or resettlement of combatants;
Note 1 to paragraph (a) of § 547.201:
1. The names of persons listed in or designated pursuant to Executive Order 13413, whose property and interests in property are blocked pursuant to paragraph (a) of this section, are published on the Office of Foreign Assets Control's Specially Designated Nationals and Blocked Persons List (“SDN List”) (which is accessible via the Office of Foreign Assets Control's Web site), published in the Federal Register, and incorporated into Appendix A to this chapter with the identifier “[DRC].” See § 547.411 concerning entities that may not be listed on the SDN list but whose property and interests in property are nevertheless blocked pursuant to paragraph (a) of this section.
Note 2 to paragraph (a) of § 547.201.
Section 203 of the International Emergency Economic Powers Act (50 U.S.C. 1701-1706) (“IEEPA”) explicitly authorizes the blocking of property and interests in property of a person during the pendency of an investigation. The names of persons whose property and interests in property are blocked pending investigation pursuant to this part also are published on the SDN List, published in the Federal Register and incorporated into Appendix A to this chapter with the identifier “[BPI-DRC].”
Note 3 to paragraph (a) of § 547.201.
(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 § 547.201(a), is null and void and shall not be the basis for the assertion or recognition of any interest in or right, remedy, power, or privilege with respect to such property or property interests.
(b) No transfer before the effective date shall be the basis for the assertion or recognition of any right, remedy, power, or privilege with respect to, or any interest in, any property or interest in property blocked pursuant to § 547.201(a), unless the person who holds or maintains such property, prior to that date, had written notice of the transfer or by any written evidence had recognized such transfer.
(i) Such transfer was in violation of the provisions of this part or any Start Printed Page 25443regulation, ruling, instruction, license, or other direction or authorization issued pursuant to this part;
Note to paragraph (d) of § 547.202:
(e) Unless licensed pursuant to this part, any attachment, judgment, decree, lien, execution, garnishment, or other judicial process is null and void with respect to any property in which, on or since the effective date, there existed an interest of a person whose property and interests in property are blocked pursuant to § 547.201(a).
(a) Except as provided in paragraph (c) or (d) of this section, or as otherwise directed by the Office of Foreign Assets Control, any U.S. person holding funds, such as currency, bank deposits, or liquidated financial obligations, subject to § 547.201(a) shall hold or place such funds in a blocked interest-bearing account located in the United States.
(c) Blocked funds held in instruments the maturity of which exceeds 180 days at the time the funds become subject to § 547.201(a) may continue to be held until maturity in the original instrument, provided any interest, earnings, or other proceeds derived therefrom are paid into a blocked interest-bearing account in accordance with paragraph (b) or (d) of this section.
(d) Blocked funds held in accounts or instruments outside the United States at the time the funds become subject to § 547.201(a) may continue to be held in the same type of accounts or instruments, provided the funds earn interest at rates that are commercially reasonable.
(f) Funds subject to this section may not be held, invested, or reinvested in a manner that provides immediate financial or economic benefit or access to any person whose property and interests in property are blocked pursuant to § 547.201(a), nor may their holder cooperate in or facilitate the pledging or other attempted use as collateral of blocked funds or other assets.
(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 § 547.201(a) 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 § 547.201(a) may, in the discretion of the Office of Foreign Assets Control, be sold or liquidated and the net proceeds placed in a blocked interest-bearing account in the name of the owner of the property.
The terms blocked account and blocked property shall mean any account or property subject to the prohibitions in § 547.201 held in the name of a person whose property and interests in property are blocked pursuant to § 547.201(a), or in which such person has an interest, and with respect to which payments, transfers, exportations, withdrawals, or other dealings may not be made or effected except pursuant to an authorization or license from the Office of Foreign Assets Control expressly authorizing such action.
Note to § 547.302:
See § 547.411 concerning the blocked status of property and interests in property of an entity that is 50 percent or more owned by a person whose property and interests in property are blocked pursuant to § 547.201(a).
(a) With respect to a person whose property and interests in property are blocked pursuant to § 547.201(a)(1), 12:01 a.m. eastern standard time on October 30, 2006;
(b) With respect to a person whose property and interests in property are blocked pursuant to § 547.201(a)(2), the earlier of the date of actual or constructive notice of such person's designation.
§ 547.304
§ 547.305
Note to § 547.306:
§ 547.307
§ 547.308
§ 547.309
§ 547.310
§ 547.312
Unless otherwise specifically provided, any amendment, Start Printed Page 25445modification, or revocation of any provision in or appendix to this part or chapter or of any order, regulation, ruling, instruction, or license issued by or under the direction of the Director of the Office of Foreign Assets Control does not affect any act done or omitted, or any civil or criminal suit or proceeding commenced or pending prior to such amendment, modification, or revocation. All penalties, forfeitures, and liabilities under any such order, regulation, ruling, instruction, or license continue and may be enforced as if such amendment, modification, or revocation had not been made.
(a) Whenever a transaction licensed or authorized by or pursuant to this part results in the transfer of property (including any property interest) away from a person, such property shall no longer be deemed to be property blocked pursuant to § 547.201(a), unless there exists in the property another interest that is blocked pursuant to § 547.201(a) or any other part of this chapter, the transfer of which has not been effected pursuant to license or other authorization.
(b) Unless otherwise specifically provided in a license or authorization issued pursuant to this part, if property (including any property interest) is transferred or attempted to be transferred to a person whose property and interests in property are blocked pursuant to § 547.201(a), such property shall be deemed to be property in which that person has an interest and therefore blocked.
(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 § 547.201(a); or
(c) Example. A license authorizing Company A, whose property and interests in property are blocked pursuant to § 547.201(a), to complete a securities sale also authorizes all activities by other parties required to complete the sale, including transactions by the buyer, broker, transfer agents, banks, etc., provided that such other parties are not themselves persons whose property and interests in property are blocked pursuant to § 547.201(a).
(a) The prohibitions on transactions involving blocked property contained in § 547.201 apply to services performed in the United States or by U.S. persons, wherever located, including by an overseas branch of an entity located in the United States:
(2) With respect to property interests subject to § 547.201.
(b) Example. U.S. persons may not, except as authorized by or pursuant to this part, provide legal, accounting, financial, brokering, freight forwarding, transportation, public relations, or other services to a person whose property and interests in property are blocked pursuant to § 547.201(a).
Note to § 547.405:
See §§ 547.507 and 547.508 on licensing policy with regard to the provision of certain legal or medical services.
The prohibitions in § 547.201 on transactions or dealings involving blocked property apply to transactions by any U.S. person in a location outside the United States with respect to property held in the name of a person whose property and interests in property are blocked pursuant to § 547.201(a), or property in which a person whose property and interests in property are blocked pursuant to § 547.201(a) has or has had an interest since the effective date.
Unless specifically authorized by the Office of Foreign Assets Control pursuant to this part, no charitable contribution of funds, goods, services, or technology, including contributions to relieve human suffering, such as food, clothing or medicine, may be made by, to, or for the benefit of a person whose property and interests in property are blocked pursuant to § 547.201(a). For the purposes of this part, a contribution is made by, to, or for the benefit of a person whose property and interests in property are blocked pursuant to § 547.201(a) if made by, to, or in the name of such a person; if made by, to, or in the name of an entity or individual acting for or on behalf of, or owned or controlled by, such a person; or if made in an attempt to violate, to evade, or to avoid the bar on the provision of contributions by, to, or for the benefit of such a person.
The prohibition in § 547.201 on dealing in property subject to that section prohibits U.S. financial institutions from performing under any existing credit agreements, including, but not limited to, charge cards, debit cards, or other credit facilities issued by a U.S. financial institution to a person whose property and interests in property are blocked pursuant to § 547.201(a).
A person whose property and interests in property are blocked pursuant to § 547.201(a) has an interest in all property and interests in property of an entity in which it owns, directly or indirectly, a 50 percent or greater interest. The property and interests in property of such an entity, therefore, are blocked, and such an entity is a person whose property and interests in property are blocked pursuant to § 547.201(a), regardless of whether the entity itself is listed in the Annex to Executive Order 13413 or designated pursuant to § 547.201(a).
(a) No license or other authorization contained in this part, or otherwise issued by or under the direction of the Start Printed Page 25446Director of the Office of Foreign Assets Control, authorizes or validates any transaction effected prior to the issuance of such license or other authorization, unless specifically provided in such license or authorization.
§ 547.504
Any payment of funds or transfer of credit in which a person whose property and interests in property are blocked pursuant to § 547.201(a) has any interest that comes within the possession or control of a U.S. financial institution must be blocked in an account on the books of that financial institution. A transfer of funds or credit by a U.S. financial institution between blocked accounts in its branches or offices is authorized, provided that no transfer is 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 § 547.504:
See § 501.603 of this chapter for mandatory reporting requirements regarding financial transfers. See also § 547.203 concerning the obligation to hold blocked funds in interest-bearing accounts.
§ 547.505
§ 547.506
Subject to the requirements of § 547.203, U.S. financial institutions are authorized to invest and reinvest assets blocked pursuant to § 547.201, subject to the following conditions:
(c) No immediate financial or economic benefit accrues (e.g., through pledging or other use) to persons whose property and interests in property are blocked pursuant to § 547.201(a).
(a) The provision of the following legal services to or on behalf of persons whose property and interests in property are blocked pursuant to § 547.201(a) is authorized, provided that all receipts of payment of professional fees and reimbursement of incurred expenses must be specifically licensed:
(b) The provision of any other legal services to persons whose property and interests in property are blocked pursuant to § 547.201(a), not otherwise authorized in this part, requires the issuance of a specific license.
(c) Entry into a settlement agreement or the enforcement of any lien, judgment, arbitral award, decree, or other order through execution, garnishment, or other judicial process purporting to transfer or otherwise alter or affect property or interests in property blocked pursuant to § 547.201(a) is prohibited unless specifically licensed in accordance with § 547.202(e).
The provision of nonscheduled emergency medical services in the United States to persons whose property and interests in property are blocked pursuant to § 547.201(a) is authorized, provided that all receipt of payment for such services must be specifically licensed.
§ 547.601
Note to paragraph (a)(1) of § 547.701:
(e) Attention is also directed to 18 U.S.C. 1001, which provides that whoever, in any matter within the jurisdiction of the executive, legislative, or judicial branch of the Government of the United States, knowingly and willfully falsifies, conceals, or covers up by any trick, scheme, or device a material fact; makes any materially false, fictitious or fraudulent statement or representation; or makes or uses any false writing or document knowing the same to contain any materially false, fictitious or fraudulent statement or entry; shall be fined under title 18, United States Code, imprisoned not more than five years, or both.
§ 547.801
§ 547.901
[FR Doc. E9-11953 Filed 5-27-09; 8:45 am]