Source: https://www.federalregister.gov/documents/2004/09/23/04-21329/rough-diamonds-control-regulations
Timestamp: 2018-09-18 13:37:04
Document Index: 397845621

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A Rule by the Foreign Assets Control Office on 09/23/2004
56936-56942 (7 pages)
https://www.federalregister.gov/d/04-21329 https://www.federalregister.gov/d/04-21329
The Treasury Department's Office of Foreign Assets Control is revising the Rough Diamonds Control Regulations previously issued as an interim final rule. The regulations carry out the purposes of Executive Order 13312 of July 29, 2003, which implemented the Clean Diamond Trade Act and the Kimberley Process Certification Scheme for rough diamonds. Based on its experience and that of other involved agencies, OFAC is revising certain reporting and recordkeeping requirements of the regulations.
OFAC's Chief of Policy Planning and Program Management, tel.: (202) 622-4855, or Chief Counsel, tel.: (202) 622-2410.
On July 29, 2003, the President issued Executive Order 13312, to implement the Clean Diamond Trade Act (Pub. L. 108-19) and the multilateral Kimberley Process Certification Scheme for rough diamonds (KPCS). The Clean Diamond Trade Act requires the President, subject to certain waiver authorities, to prohibit the importation into, and exportation from, the United States of any rough diamond not controlled through the KPCS. This means shipments of rough diamonds between the United States and non-Participants in the KPCS generally are prohibited, and shipments between the United States and Participants are permitted only if they are handled in accordance with the standards, practices, and procedures of the KPCS set out in these regulations.
The Treasury Department's Office of Foreign Assets Control (OFAC), acting pursuant to Executive Order 13312 and delegated authority, published the Rough Diamonds Control Regulations, 31 CFR part 592 (the Regulations), as an interim final rule on August 4, 2003 (68 FR 45777). The Regulations, which are described in detail in the preamble to the interim final rule, implement the Clean Diamond Trade Act and the KPCS.
OFAC requested public comments on the Regulations. No public comments were received. However, based on its experience and that of other agencies that also participate in the implementation and administration of the Clean Diamond Trade Act and the KPCS, OFAC is revising the Regulations in four respects: (1) To specify that the ultimate consignee is responsible for retaining the original Kimberley Process Certificate accompanying an importation into the United States; (2) to require the ultimate consignee to report the receipt of a shipment of rough diamonds to the relevant foreign exporting authority within 15 calendar days of the date that the shipment arrived at a U.S. port of entry; (3) to advise persons engaged in the diamond trade of a pending requirement of U.S. Customs and Border Protection (Customs) that customs brokers, importers, and filers making entry of a shipment of rough diamonds either submit through Custom's Automated Broker Interface (ABI) system the unique identifying number of the Kimberley Process Certificate accompanying the shipment or, for non-ABI entries, indicate the certificate number on the Customs Form 7501 Entry Summary at each entry line; and (4) to clarify the country-of-origin reporting requirements for shipments of Start Printed Page 56937parcels of mixed origin rough diamonds. OFAC is now issuing the Regulations as a final rule, incorporating these four revisions and the others described below.
Section 592.301 of the Regulations defines the term Controlled through the Kimberley Process Certification Scheme. OFAC is revising two subsections of this definition and adding a note to the section. First, § 592.301(a)(1) requires, among other things, that a shipment of rough diamonds imported into the United States be accompanied by a Kimberley Process Certificate validated by the relevant exporting authority. The certificate must be presented if demanded by Customs. Also, § 592.501 of the Regulations requires a United States person importing rough diamonds into the United States to maintain full and accurate records of the transaction for at least five years after the date of the transaction. OFAC has been advised that persons engaged in the diamond trade are uncertain which person should maintain possession of the original Kimberley Process Certificate accompanying an importation into the United States. To eliminate this uncertainty and to facilitate OFAC's and Customs' enforcement efforts, OFAC is revising § 592.301(a)(1) to specify that the ultimate consignee reported on the Customs Form 7501 Entry Summary or its electronic equivalent filed with Customs is responsible for retaining that certificate for a period of at least five years from the date of the importation.
Second, § 592.301(a)(3) of the Regulations originally required the importer of record in the United States to confirm receipt of a shipment of rough diamonds to the relevant foreign exporting authority. OFAC is revising this subsection to specify which person involved in an importation is required now to report the receipt of a shipment in an effective and timely manner. As revised, § 592.301(a)(3) specifies that the ultimate consignee reported on the Customs Form 7501 Entry Summary or its electronic equivalent filed with Customs is the person responsible for reporting receipt of the shipment to the foreign exporting authority. Also, the revised § 592.301(a)(3) now requires that the ultimate consignee must report specified information about the shipment to the foreign exporting authority within 15 calendar days of the date that the shipment arrived at a U.S. port of entry.
OFAC also is adding a note to § 592.301 to reflect a pending Customs requirement that customs brokers, importers, and filers making entry of a shipment of rough diamonds either submit through Customs' Automated Broker Interface (ABI) system the unique identifying number of the Kimberley Process Certificate accompanying the shipment or, for non-ABI entries, indicate the certificate number on the Customs Form 7501 Entry Summary at each entry line. This requirement will take effect on November 1, 2004. The submission of the Kimberley Process Certificate number will facilitate the Census Bureau's compilation of statistical data relating to the importation of rough diamonds.
Section 592.307 of the Regulations defines the term Kimberley Process Certificate to include a requirement that the certificate identify the country of origin for a shipment of one or more parcels of rough diamonds of unmixed (i.e., from the same) origin. The definition's silence with respect to the treatment of a shipment that includes a parcel of mixed origin rough diamonds has prompted questions from importers as to whether the certificate may be used and how it should be completed, in such circumstances. A shipment including a parcel of mixed-origin rough diamonds is to be entered into the United States with the Kimberley Process Certificate validated by the relevant exporting authority, and the certificate need not indicate the countries of origin of the diamonds. With respect to such a shipment, however, OFAC is adding a note to § 592.307(b) to state that the country-of-origin field must be filled in with asterisks. The note also advises that the shipment still must comply with all other country-of-origin reporting requirements imposed by law.
OFAC is also revising the definition of Effective date in § 592.302 of the Regulations in light of the new reporting requirements imposed by § 592.301(a)(3), as well as revising § 592.801 to reflect the Office of Management and Budget's (OMB) issuance of three control numbers authorizing the collections of information in the Regulations. Finally, OFAC is revising § 592.602 to reflect properly the basis upon which the Director of OFAC may decide to issue a prepenalty notice and to make other minor corrections.
This file is available for download without charge in ASCII and Adobe Acrobat readable (*.PDF) formats at GPO Access. GPO Access supports HTTP, FTP, and Telnet at fedbbs.access.gpo.gov. It may also be accessed by modem dialup at (202) 512-1387 followed by typing “/GO/FAC.” Paper copies of this document can be obtained by calling the Government Printing Office at (202) 512-1530. Additional information concerning the programs administered by OFAC is available for download from the Office's Internet Home Page at: http://www.treas.gov/​ofac or via FTP at ofacftp.treas.gov. Facsimiles of information are available through the Office's 24-hour fax-on-demand service: call (202) 622-0077 using a fax machine, a fax modem, or (within the United States) a touch-tone telephone.
With respect to section 3507 of the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq.), the collections of information in §§ 592.301(a)(1), 592.501, and 592.603 of the Regulations are made pursuant to OFAC's Reporting, Procedures and Penalties Regulations (31 CFR part 501) and have been approved by OMB under control number 1505-0164. See 31 CFR 501.901. The collection of information in § 592.301(a)(4) relating to the Census Bureau's Foreign Trade Statistics Regulations (15 CFR part 30) has been approved by OMB under control number 0607-0152. See Automated Export System Mandatory Filing for Exports (Reexports) of Rough Diamonds, 68 FR 59877 (Oct. 20, 2003).
The collection of information in § 592.301(a)(3) of the Regulations has been submitted to and approved by OMB pending public comment and has been assigned OMB control number 1505-0198. Section 592.301(a)(3) specifies that the ultimate consignee identified on the Customs Form 7501 Entry Summary filed with Customs is required to report specified information about the shipment of rough diamonds imported into the United States to the foreign exporting authority within 15 calendar days of the date that the shipment arrived at a U.S. port of entry. This collection of information is needed to monitor the integrity of international rough diamond shipments, and the information collected will be used to further the compliance, enforcement, and civil penalty programs of OFAC, Start Printed Page 56938U.S. Customs and Border Protection, and the Bureau of Immigration and Customs Enforcement. See sections 5(a) and 8 of the Clean Diamond Trade Act.
With respect to all of the foregoing collections of information, 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.
The likely respondents and recordkeepers affected by the new collection of information in § 592.301(a)(3) are business organizations and individuals engaged in the international diamond trade. The estimated annual number of respondents and recordkeepers is 250, and the estimated total annual number of responses is 3,000.
The estimated total annual reporting and/or recordkeeping burden is estimated to be 500 hours. The estimated average annual burden per respondent/recordkeeper is 2 hours, based on an estimated annual frequency of 10 to 15 responses and an estimated time per response of 10 minutes.
Comments are invited on: (a) Whether this collection of information is necessary for the proper performance of the functions of the agency, including whether the information has practical utility; (b) the accuracy of the agency's estimate of the burden of the collection of information; (c) ways to enhance the quality, utility, and clarity of the information to be collected; (d) ways to minimize the burden of the collection of information on respondents, including through the use of automated collection techniques and other forms of information technology; and (e) estimated capital or start-up costs of operation, maintenance, and purchase of services to provide information.
Comments concerning the above information, the accuracy of these burden estimates, and suggestions for reducing this burden should be directed to OMB, Attention: Desk Officer for the Department of the Treasury, Office of Information and Regulatory Affairs, Washington, DC 20503, with a copy to Chief of Records, Attention: Request for Comments, Office of Foreign Assets Control, Department of the Treasury, 1500 Pennsylvania Avenue, NW., Washington, DC 20220. Any such comments should be submitted not later than November 22, 2004. All comments on the collection of information in § 592.301(a)(3) will be a matter of public record.
For the reasons set forth in the preamble, 31 CFR chapter V, part 592 is revised to read as follows:
An importation of any rough diamond from, or an exportation of any rough diamond to, a non-Participant is not controlled through the Kimberley Process Certification Scheme and thus is not permitted, except in the following circumstance. The Secretary of State may, pursuant to section 4(b) of the Clean Diamond Trade Act, waive the prohibitions contained in section 4(a) of that Act with Start Printed Page 56939respect to a particular country for periods of not more than one year each. The Secretary of State will publish a notice in the Federal Register identifying any country with respect to which a waiver applies and specifying the relevant time period during which the waiver will apply.
(1) Kimberley Process Certificate. A shipment of rough diamonds imported into, or exported from, the United States must be accompanied by an original Kimberley Process Certificate. The certificate must be presented in connection with an importation or exportation of rough diamonds if demanded by United States customs officials. Pursuant to 31 CFR §§ 501.601 and 501.602, the person identified as the ultimate consignee (see Customs Directive 3550-079A) on the Customs Form 7501 Entry Summary or its electronic equivalent filed with U.S. Customs and Border Protection in connection with an importation of rough diamonds must retain the original Kimberley Process Certificate for a period of at least five years from the date of importation and must make such certificate available for examination upon demand.
(4) Validation of Kimberley Process Certificate for exportations from the United States. With respect to the exportation of rough diamonds from the United States and regardless of the destination, the U.S. Census Bureau requires the filing of export information through the Automated Export System. Submission of export information through the Automated Export System must be done in advance and must be confirmed by the return of an Internal Transaction Number. The return to the filer of the Internal Transaction Number shall constitute the validation of the Kimberley Process Certificate for an exportation of rough diamonds from the United States to a Participant. The exporter is required to report the Internal Transaction Number on the Kimberley Process Certificate accompanying any exportation from the United States. The Internal Transaction Number is a unique confirmation number generated by the Automated Export System to the filer who provides in a timely manner the complete commodity shipment data when such data have been accepted by the system.
The Secretary of State will periodically publish in the Federal Register an up-to-date listing of all Participants and their importing and exporting authorities. Where appropriate, such listing also will describe any modification of the requirements set forth in paragraph (a) of this section.
Pursuant to 31 CFR §§ 501.601 and 501.602, the recordkeeping and reporting requirements imposed by § 592.501 apply to all U.S. persons engaged in the importation into, or exportation from, the United States of any shipment of rough diamonds.
Note 3 to § 592.301.
Effective November 1, 2004, customs brokers, importers, and filers making entry of a shipment of rough diamonds must either submit through U.S. Customs' Automated Broker Interface (ABI) system the unique identifying number of the Kimberley Process Certificate accompanying the shipment or, for non-ABI entries, indicate the certificate number on the Customs Form 7501 Entry Summary at each entry line.
(a) With respect to all provisions of this part except for § 592.301(a)(3), 12:01 a.m., eastern daylight time, July 30, 2003; and
(b) With respect to § 592.301(a)(3), September 23, 2004.
(a) The term importing authority means one or more entities designated by a Participant into whose territory a shipment of rough diamonds is being Start Printed Page 56940imported as having the authority to enforce the laws and regulations of the Participant regulating imports, including the verification of the Kimberley Process Certificate accompanying the shipment.
A shipment including a parcel of mixed-origin rough diamonds is to be entered into the United States with the Kimberley Process Certificate accompanying the shipment, and the certificate need not indicate the countries of origin of the diamonds. With respect to such a shipment, the country-of-origin field on the certificate must be filled in with asterisks. The shipment must, however, still comply with all other country-of-origin reporting requirements imposed by statute or regulation.
The prohibitions in § 592.201 apply to the importation into, or exportation from, the United States, for transshipment or transit, of any rough diamond intended or destined for any country other than the United States, unless the shipment is sealed in a tamper-resistant container, accompanied by a Kimberley Process Certificate, and leaves the United States in the identical state in which it entered. The validation, recordkeeping, and reporting procedures applicable to importations and exportations do not apply in this case.
(3) Those customs laws of the United States, both civil and criminal, including those laws relating to seizure Start Printed Page 56941and forfeiture, that apply to articles imported in violation of such laws shall apply with respect to any rough diamond imported in violation of the Act.
As reflected in paragraphs (a)(1) and (2) of this section, section 8(a) of the Clean Diamond Trade Act (Pub. L. 108-19) establishes penalties with respect to any violation of any regulation issued under the Act. OFAC prepenalty, penalty, and administrative collection procedures relating to such violations are set forth below in §§ 592.602 through 592.605. Section 8(c) of the Act also authorizes the U.S. Bureau of Customs and Border Protection and the U.S. Bureau of Immigration and Customs Enforcement, as appropriate, to enforce the penalty provisions set forth in paragraph (a) of this section and to enforce the laws and regulations governing exports of rough diamonds, including with respect to the validation of the Kimberley Process Certificate by the U.S. Bureau of the Census. The Office of Foreign Assets Control civil penalty procedures set forth below are separate from, and independent of, any penalty procedures that may be followed by the U.S. Bureau of Customs and Border Protection and the U.S. Bureau of Immigration and Customs Enforcement in their exercise of the authorities set forth in section 8(c) of the Clean Diamond Trade Act.
(a) When required. If the Director of the Office of Foreign Assets Control has reason to believe that there has occurred a violation of any provision of this part or a violation of the provisions of any regulation or order issued by or pursuant to the direction or authorization of the Secretary of the Treasury pursuant to this part or otherwise under the Clean Diamond Trade Act, and the Director determines that further civil proceedings are warranted, the Director shall notify the alleged violator of the agency's intent to impose a monetary penalty by issuing a prepenalty notice. The prepenalty notice shall be in writing. The prepenalty notice may be issued whether or not another agency has taken any action with respect to the matter.
(2) Right to respond. The prepenalty notice also shall inform the respondent of the respondent's right to make a written presentation within the applicable 30-day period set forth in § 592.603 as to why a monetary penalty should not be imposed or why, if imposed, the monetary penalty should be in a lesser amount than proposed.
(1) Computation of time for response. A response to the prepenalty notice must be postmarked or date-stamped by the U.S. Postal Service (or foreign postal service, if mailed abroad) or courier service provider (if transmitted to the Office of Foreign Assets Control by courier) on or before the 30th day after the postmark date on the envelope in which the prepenalty notice was mailed. If the respondent refused delivery or otherwise avoided receipt of the prepenalty notice, a response must be postmarked or date-stamped on or before the 30th day after the date on the stamped postal receipt maintained at the Office of Foreign Assets Control. If the prepenalty notice was personally delivered to the respondent by a non-U.S. Postal Service agent authorized by the Director, a response must be postmarked or date-stamped on or before the 30th day after the date of delivery.
(3) A written response should include any information in defense, evidence in support of an asserted defense, or other factors that the respondent requests the Office of Foreign Assets Control to consider. Any defense or explanation previously made to the Office of Foreign Assets Control or any other agency must be repeated in the written response. Any defense not raised in the written response will be considered waived. The written response also should set forth the reasons why the respondent believes the penalty should not be imposed or why, if imposed, it should be in a lesser amount than proposed. Start Printed Page 56942
For approval by the Office of Management and Budget (OMB) under the Paperwork Reduction Act of 1995 (44 U.S.C. 3507) of the information collections relating to the recordkeeping and reporting requirements of §§ 592.301(a)(1), subpart C, § 592.501, subpart E, and 592.603, subpart F, see § 501.901 of this chapter. The information collection requirements in §§ 592.301(a)(3) and (a)(4), subpart C, have been approved by the OMB and assigned control numbers 1505-0198 and 0607-0152, respectively. 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.
Approved: September 2, 2004.
[FR Doc. 04-21329 Filed 9-20-04; 10:11 am]