Terrorism Sanctions Regulations

DEPARTMENT OF THE TREASURY

Office of Foreign Assets Control

31 CFR Part 595

Terrorism Sanctions Regulations

AGENCY: Office of Foreign Assets Control, Department of the Treasury.

ACTION: Final rule.

-----------------------------------------------------------------------

SUMMARY: The Office of Foreign Assets Control of the U.S. Department of

the Treasury is issuing the Terrorism Sanctions Regulations to

implement the President's declaration of a national emergency and

imposition of sanctions against certain persons whose acts of violence

have the purpose or effect of disrupting the Middle East peace process.

EFFECTIVE DATE: February 2, 1996.

FOR FURTHER INFORMATION: Contact the Office of Foreign Assets Control,

Department of the Treasury, Washington, DC 22201, Tel.: 202/622-2520.

SUPPLEMENTARY INFORMATION:

Electronic Availability

This document is available as an electronic file on The Federal

Bulletin Board the day of publication in the Federal Register. By

modem, dial 202/515-1387 and type ``/GO FAC,'' or call 202/512-1530 for

disks or paper copies. This file is available for downloading without

charge in WordPerfect, ASCII, and Adobe AcrobatTM readable (*.PDF)

formats. The document is also accessible for downloading in ASCII

format without charge from Treasury's Electronic Library (``TEL'') in

the ``Business, Trade and Labor Mall'' of the FedWorld bulletin board.

By modem dial 703/321-3339, and select the appropriate self-expanding

file in TEL. For Internet access, use one of the following protocols:

Telnet = fedworld.gov (192.239.93.3); World Wide Web (Home Page) =

http://www.fedworld.gov; FTP = ftp.fedworld.gov (192.239.92.205).

Background

On January 24, 1995, the President issued Executive Order 12947,

declaring a national emergency with respect to ``grave acts of violence

committed by foreign terrorists that disrupt the Middle East peace

process,'' and invoking the authority, inter alia, of the International

Emergency Economic Powers Act (50 U.S.C. 1701-1706). The order blocks

all property and interests in property of 12 terrorist organizations

designated in the order, as well as the property and interests in

property of other persons who are designated by the Secretary of State

or the Secretary of the Treasury. The order also authorizes the

Secretary of the Treasury, in consultation with the Secretary of State

and, as appropriate, the Attorney General, to take such actions,

including the promulgation of rules and regulations, as may be

necessary to carry out the purposes of the order. In implementation of

the order, the Treasury Department is issuing the Terrorism Sanctions

Regulations (the ``Regulations'').

The Regulations block all property and interests in property of (1)

persons designated in Executive Order 12947; (2) persons designated by

the Secretary of State, in coordination with the Secretary of the

Treasury and the Attorney General, because they are found (a) to have

committed, or to pose a significant risk of committing, acts of

violence that have the purpose or effect of disrupting the Middle East

peace process, or (b) to assist in, sponsor, or provide financial,

material, or technological support for, or services in support of, such

acts of violence.

The Regulations also block all property and interests in property

of persons determined by the Secretary of the Treasury, in coordination

with the Secretary of State and the Attorney General, to be owned or

controlled by, or to act for or on behalf of, any other designated

person. Persons coming within any of these categories are called

specially designated terrorists (``SDTs''). Executive Order 12947

blocks all property or interests in property of SDTs that are in the

United States, that hereinafter come within the United States, or that

are or hereafter come within the possession or control of U.S. persons,

including their overseas branches. Section 1(b) of Executive Order

12947 also prohibits any transaction or dealing by U.S. persons or in

the United States in property or interests in property of SDTs,

including the making or receiving of any contribution of funds, goods,

or services for the benefit of an SDT.

Transactions otherwise prohibited under this part but found to be

consistent with U.S. policy may be authorized by a general license

contained in subpart E or by a specific license issued pursuant to the

procedures described in Sec. 595.801 of subpart H. Civil and criminal

penalties for violations of the Regulations are described in subpart G.

Since the Regulations involve a foreign affairs function, the

provisions of Executive Order 12866 and the Administrative Procedure

Act (5 U.S.C. 553), requiring notice of proposed rulemaking,

opportunity for public

[[Page 3806]]

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. Wherever

possible, however, it is the practice of the Office of Foreign Assets

Control to receive written submissions or hold informal consultations

with interested parties concerning any rule or other public document.

Paperwork Reduction Act

The Regulations are being issued without prior notice and public

procedure pursuant to the Administrative Procedure Act (5 U.S.C. 553).

Pursuant to the Paperwork Reduction Act of 1995 (44 U.S.C. 3507), the

collections of information contained in the Regulations have been

submitted to and approved by the Office of Management and Budget

(``OMB'') pending public comment, and have been assigned control number

1505-0156. 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 collections of information in the Regulations are contained in

Secs. 595.503, 595.504, subpart F, and Secs. 595.703 and 595.801. This

information is required by the Office of Foreign Assets Control for

licensing, compliance, civil penalty, and enforcement purposes. This

information will be used to determine the eligibility of applicants for

the benefits provided through specific licenses, to determine whether

persons subject to the Regulations are in compliance with applicable

requirements, and to determine whether and to what extent civil penalty

or other enforcement action is appropriate. The likely respondents and

record keepers are individuals and business organizations.

No assurances of confidentiality are given to persons who furnish

information to OFAC unless specifically indicated in advance. It is the

policy of OFAC to protect the confidentiality of information in

appropriate cases pursuant to the exemptions from disclosure provided

under the Freedom of Information Act (5 U.S.C. 552) and the Privacy Act

(5 U.S.C. 552a).

Estimated total annual reporting and/or recordkeeping burden: 500

hours.

The estimated annual burden per respondent/record keeper varies

from 30 minutes to 2 hours, depending on individual circumstances, with

an estimated average of 1 hour.

Estimated number of respondents and/or record keepers: 500.

Estimated annual frequency of responses: 1-12.

Comments are invited on: (a) whether these collections of

information are necessary for the proper performance of the functions

of the agency, including whether the information shall have practical

utility; (b) the accuracy of the agency's estimate of the burden of the

collections of information; (c) ways to enhance the quality, utility,

and clarity of the information to be collected; and (d) ways to

minimize the burden of the collection of information on respondents,

including through the use of automated collection techniques or other

forms of information technology.

Comments concerning the above information, the accuracy of

estimated average annual burden, and suggestions for reducing this

burden should be directed to OMB, Paperwork Reduction Project, control

number 1505-0156, Washington, DC 20503, with a copy to the Office of

Foreign Assets Control, Department of the Treasury, 1500 Pennsylvania

Ave., N.W., Annex, Washington, DC 20220. Any such comments should be

submitted not later than April 2, 1996. Comments on aspects of the

Regulations other than those involving collections of information

should not be sent to OMB.

List of Subjects in 31 CFR Part 595

Administrative practice and procedure, Banking and finance,

Blocking of assets, Fines and penalties, Reporting and recordkeeping

requirements, Specially designated terrorists, Terrorism, Transfer of

assets.

For the reasons set forth in the preamble, 31 CFR part 595 is added

to read as follows:

PART 595--TERRORISM SANCTIONS REGULATIONS

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

Sec.

595.101 Relation of this part to other laws and regulations.

Subpart B--Prohibitions

595.201 Prohibited transactions involving blocked property.

595.202 Effect of transfers violating the provisions of this part.

595.203 Holding of certain types of blocked property in interest-

bearing accounts.

595.204 Prohibited dealing in property; contributions of funds,

goods, or services.

595.205 Evasions; attempts; conspiracies.

595.206 Exempt transactions.

Subpart C--General Definitions

595.301 Blocked account; blocked property.

595.302 Effective date.

595.303 Entity.

595.304 Foreign person.

595.305 General license.

595.306 Information and informational materials.

595.307 Interest.

595.308 License.

595.309 Person.

595.310 Property; property interest.

595.311 Specially designated terrorist.

595.312 Specific license.

595.313 Transfer.

595.314 United States.

595.315 United States person; U.S. person.

595.316 U.S. financial institution.

Subpart D--Interpretations

595.401 Reference to amended sections.

595.402 Effect of amendment.

595.403 Termination and acquisition of an interest in blocked

property.

595.404 Setoffs prohibited.

595.405 Transactions incidental to a licensed transaction.

595.406 Provision of services.

595.407 Offshore transactions.

595.408 Charitable contributions to specially designated terrorists.

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

595.501 Effect of license or authorization.

595.502 Exclusion from licenses and authorizations.

595.503 Payments and transfers to blocked accounts in U.S. financial

institutions.

595.504 Investment and reinvestment of certain funds.

595.505 Entries in certain accounts for normal service charges

authorized.

595.506 Provision of certain legal services to a specially

designated terrorist.

595.507 Authorization of emergency medical services.

Subpart F--Reports

595.601 Required records.

595.602 Reports to be furnished on demand.

595.603 Registration of persons holding blocked property subject to

595.201.

Subpart G--Penalties

595.701 Penalties.

595.702 Prepenalty notice.

595.703 Presentation responding to prepenalty notice.

595.704 Penalty notice.

595.705 Administrative collection action; referral to United States

Department of Justice.

Subpart H--Procedures

595.801 Licensing.

595.802 Decisions.

595.803 Amendment, modification, or revocation.

595.804 Rulemaking.

595.805 Delegation by the Secretary of the Treasury.

595.806 Rules governing availability of information.

Subpart I--Paperwork Reduction Act

595.901 Paperwork Reduction Act notice.

Authority: 50 U.S.C. 1601-1641, 1701-1706; 3 U.S.C. 301; E.O.

12947, 60 FR 5079 (January 25, 1995).

[[Page 3807]]

Subpart A--Relation of This Part to Other Laws andRegulations

Sec. 595.101 Relation of this part to other laws and regulations.

(a) This part is separate from, and independent of, the other parts

of this chapter. Differing foreign policy and national security

contexts 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.

(b) 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. 595.201 Prohibited transactions involving blocked property.

Except as authorized by regulations, orders, directives, rulings,

instructions, licenses, or otherwise, no property or interests in

property of a specially designated terrorist, that are in the United

States, that hereafter come within the United States, or that are or

hereafter come within the possession or control of U.S. persons,

including their overseas branches, may be transferred, paid, exported,

withdrawn or otherwise dealt in.

Sec. 595.202 Effect of transfers violating the provisions of this

part.

(a) Any transfer after the effective date, which is in violation of

any provision of this part or of any regulation, order, directive,

ruling, instruction, license, or other authorization hereunder and

involves any property held in the name of a specially designated

terrorist or in which a specially designated terrorist has or has had

an interest since such date, 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.

(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 interest in, any property held in the name of a

specially designated terrorist or in which a specially designated

terrorist has an interest, or has had an interest since such date,

unless the person with whom such property is held or maintained, prior

to such date, had written notice of the transfer or by any written

evidence had recognized such transfer.

(c) Unless otherwise provided, an appropriate license or other

authorization issued by or pursuant to the direction or authorization

of the Director of the Office of Foreign Assets Control before, during,

or after a transfer shall validate such transfer or render it

enforceable to the same extent that it would be valid or enforceable

but for the provisions of the International Emergency Economic Powers

Act, this part, and any regulation, order, directive, ruling,

instruction, or license issued hereunder.

(d) Transfers of property which 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 was held or maintained (and as to such person only) in

cases in which such person is able to establish to the satisfaction of

the Director of the Office of Foreign Assets Control each of the

following:

(1) Such transfer did not represent a willful violation of the

provisions of this part by the person with whom such property was held

or maintained;

(2) The person with whom such property 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 by or 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 the withholding

of material facts or was otherwise fraudulently obtained; and

(3) The person with whom such property was held or maintained filed

with the Office of Foreign Assets Control a report setting forth in

full the circumstances relating to such transfer promptly upon

discovery that:

(i) Such transfer was in violation of the provisions of this part

or any regulation, ruling, instruction, license, or other direction or

authorization hereunder; or

(ii) Such transfer was not licensed or authorized by the Director

of the Office of Foreign Assets Control; or

(iii) If a license did purport to cover the transfer, such license

had been obtained by misrepresentation of a third party or the

withholding of material facts or was otherwise fraudulently obtained.

Note: 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.

(e) Unless licensed or authorized pursuant to this part, any

attachment, judgment, decree, lien, execution, garnishment, or other

judicial process is null and void with respect to any property which,

on or since the effective date, was held in the name of a specially

designated terrorist or in which there existed an interest of a

specially designated terrorist.

Sec. 595.203 Holding of certain types of blocked property in interest-

bearing accounts.

(a)(1) Any person, including a U.S. financial institution,

currently holding property subject to Sec. 595.201 which, as of the

effective date or the date of receipt if subsequent to the effective

date, is not being held in an interest-bearing account, or otherwise

invested in a manner authorized by the Office of Foreign Assets

Control, shall transfer such property to, or hold such property or

cause such property to be held in, an interest-bearing account or

interest-bearing status in a U.S. financial institution as of the

effective date or the date of receipt if subsequent to the effective

date of this section, unless otherwise authorized or directed by the

Office of Foreign Assets Control.

(2) The requirement set forth in paragraph (a)(1) of this section

shall apply to currency, bank deposits, accounts, obligations, and any

other financial or economic resources or assets, and any proceeds

resulting from the sale of tangible or intangible property. If interest

is credited to an account separate from that in which the interest-

bearing asset is held, the name of the account party on both accounts

must be the same and must clearly indicate the specially designated

terrorist having an interest in the accounts. If the account is held in

the name of a specially designated terrorist, the name of the account

to which interest is credited must be the same.

(b) For purposes of this section, the term interest-bearing account

means a blocked account in a U.S. financial institution earning

interest at rates that are commercially reasonable for the amount of

funds in the account. Except as otherwise authorized, the funds may not

be invested or held in instruments the maturity of which exceeds 90

days.

(c) This section does not apply to blocked tangible property, such

as chattels, nor does it create an affirmative obligation on the part

of the holder of

[[Page 3808]]

such blocked tangible property to sell or liquidate the property and

put the proceeds in a blocked account. However, the Office of Foreign

Assets Control may issue licenses permitting or directing sales of

tangible property in appropriate cases.

Sec. 595.204 Prohibited dealing in property; contributions of funds,

goods, or services.

Except as otherwise authorized, no U.S. person may deal in property

or interests in property of a specially designated terrorist, including

the making or receiving of any contribution of funds, goods, or

services to or for the benefit of a specially designated terrorist.

Sec. 595.205 Evasions; attempts; conspiracies.

Any transaction for the purpose of, or which has the effect of,

evading or avoiding, or which facilitates the evasion or avoidance of,

any of the prohibitions set forth in this part, is hereby prohibited.

Any attempt to violate the prohibitions set forth in this part is

hereby prohibited. Any conspiracy formed for the purpose of engaging in

a transaction prohibited by this part is hereby prohibited.

Sec. 595.206 Exempt transactions.

(a) Personal Communications. The prohibitions contained in this

part do not apply to any postal, telegraphic, telephonic, or other

personal communication, which does not involve the transfer of anything

of value.

(b) Information and informational materials.--(1) The importation

from any country and the exportation to any country of information or

informational materials as defined in Sec. 595.306, whether commercial

or otherwise, regardless of format or medium of transmission, are

exempt from the prohibitions and regulations of this part.

(2) This section does not authorize transactions related to

information and informational materials not fully created and in

existence at the date of the transactions, or to the substantive or

artistic alteration or enhancement of informational materials, or to

the provision of marketing and business consulting services by a U.S.

person. Such prohibited transactions include, without limitation,

payment of advances for informational materials not yet created and

completed, provision of services to market, produce or co-produce,

create or assist in the creation of information and informational

materials, and payment of royalties to a specially designated terrorist

with respect to income received for enhancements or alterations made by

U.S. persons to information or informational materials imported from a

specially designated terrorist.

(3) This section does not authorize transactions incident to the

exportation of technical data under restriction as defined in

Sec. 779.4 of the Export Administration Regulations, 15 CFR parts 768-

799 (1994), or to the exportation of goods for use in the transmission

of any data. The exportation of such goods to specially designated

terrorists is prohibited, as provided in Sec. 595.201 of this part.

(c) Travel. The prohibitions contained in this part do not apply to

transactions ordinarily incident to travel to or from any country,

including importation of accompanied baggage for personal use,

maintenance within any country including payment of living expenses and

acquisition of goods or services for personal use, and arrangement or

facilitation of such travel including non scheduled air, sea, or land

voyages.

Subpart C--General Definitions

Sec. 595.301 Blocked account; blocked property.

The terms blocked account and blocked property shall mean any

account or property subject to the prohibition in Sec. 595.201 held in

the name of a specially designated terrorist or in which a specially

designated terrorist 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 authorizing such action.

Sec. 595.302 Effective date.

The term effective date refers to the effective date of the

applicable prohibitions and directives contained in this part which is

12:01 a.m. EST, January 24, 1995, or, in the case of specially

designated terrorists designated after that date, the earlier of the

date on which a person receives actual or constructive notice of such

designation.

Sec. 595.303 Entity.

The term entity means a partnership, association, corporation, or

other organization, group or subgroup.

Sec. 595.304 Foreign Person.

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.

Sec. 595.305 General license.

The term general license means any license or authorization the

terms of which are set forth in this part.

Sec. 595.306 Information and informational materials.

(a)(1) For purposes of this part, the term information and

informational materials means publications, films, posters, phonograph

records, photographs, microfilms, microfiche, tapes, compact disks, CD

ROMs, artworks, and news wire feeds, and other information and

informational articles.

(2) To be considered informational materials, artworks must be

classified under chapter subheading 9701, 9702, or 9703 of the

Harmonized Tariff Schedule of the United States.

(b) The terms information and informational materials with respect

to U.S. exports do not include items:

(1) That were, as of April 30, 1994, or that thereafter become,

controlled for export pursuant to section 5 of the Export

Administration Act of 1979, 50 U.S.C. App. 2401-2420 (the ``EAA''), or

section 6 of the EAA to the extent that such controls promote

nonproliferation or antiterrorism policies of the United States,

including ``software'' that is not ``publicly available'' as these

terms are defined in 15 CFR Parts 779 and 799.1; or

(2) With respect to which acts are prohibited by 18 U.S.C. chapter

37.

Sec. 595.307 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. 595.308 License.

Except as otherwise specified, the term license means any license

or authorization contained in or issued pursuant to this part.

Sec. 595.309 Person.

The term person means an individual or entity.

Sec. 595.310 Property; property interest.

The terms property and property interest include, but are not

limited to, money, checks, drafts, bullion, bank deposits, savings

accounts, debts, indebtedness, obligations, notes, guarantees,

debentures, stocks, bonds, coupons, any other financial instruments,

bankers acceptances, mortgages, pledges, liens or other rights in the

nature of security, warehouse

[[Page 3809]]

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. 595.311 Specially designated terrorist.

(a) The term specially designated terrorist means:

(1) Persons listed in the Annex to Executive Order 12947;

(2) Foreign persons designated by the Secretary of State, in

coordination with the Secretary of the Treasury and the Attorney

General, because they are found:

(i) To have committed, or to pose a significant risk of committing,

acts of violence that have the purpose or effect of disrupting the

Middle East peace process, or

(ii) To assist in, sponsor, or provide financial, material, or

technological support for, or services in support of, such acts of

violence; and

(3) Persons determined by the Secretary of the Treasury, in

coordination with the Secretary of State and the Attorney General, to

be owned or controlled by, or to act for or on behalf of, any other

specially designated terrorist.

(b) [Reserved]

Sec. 595.312 Specific license.

The term specific license means any license or authorization not

set forth in this part but issued pursuant to this part.

Sec. 595.313 Transfer.

The term transfer means any actual or purported act or transaction,

whether or not evidenced by writing, and whether or not done or

performed within the United States, the purpose, intent, or effect of

which is to create, surrender, release, convey, transfer, or alter,

directly or indirectly, any right, remedy, power, privilege, or

interest with respect to any property and, without limitation upon the

foregoing, shall include the making, execution, or delivery of any

assignment, power, conveyance, check, declaration, deed, deed of trust,

power of attorney, power of appointment, bill of sale, mortgage,

receipt, agreement, contract, certificate, gift, sale, affidavit, or

statement; the making of any payment; the setting off of any obligation

or credit; the appointment of any agent, trustee, or fiduciary; the

creation or transfer of any lien; the issuance, docketing, filing, or

levy of or under any judgment, decree, attachment, injunction,

execution, or other judicial or administrative process or order, or the

service of any garnishment; the acquisition of any interest of any

nature whatsoever by reason of a judgment or decree of any foreign

country; the fulfillment of any condition; the exercise of any power of

appointment, power of attorney, or other power; or the acquisition,

disposition, transportation, importation, exportation, or withdrawal of

any security.

Sec. 595.314 United States.

The term United States means the United States, its territories and

possessions, and all areas under the jurisdiction or authority thereof.

Sec. 595.315 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. 595.316 U.S. financial institution.

The term U.S. financial institution means any U.S. person

(including foreign branches) that is engaged in the business of

accepting deposits, making, granting, transferring, holding, or

brokering loans or credits, or purchasing or selling foreign exchange,

securities, commodity futures or options, or procuring purchasers and

sellers thereof, as principal or agent; including, but not limited to,

depository institutions, banks, savings banks, trust companies,

securities brokers and dealers, commodity futures and options brokers

and dealers, forward contract and foreign exchange merchants,

securities and commodities exchanges, clearing corporations, investment

companies, employee benefit plans, and U.S. holding companies, U.S.

affiliates, or U.S. subsidiaries of any of the foregoing. This term

includes those branches, offices and agencies of foreign financial

institutions which are located in the United States, but not such

institutions' foreign branches, offices, or agencies.

Subpart D--Interpretations

Sec. 595.401 Reference to amended sections.

Except as otherwise specified, reference to any section of this

part or to any regulation, ruling, order, instruction, direction, or

license issued pursuant to this part shall be deemed to refer to the

same as currently amended.

Sec. 595.402 Effect of amendment.

Any amendment, modification, or revocation of any section of this

part 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 shall not, unless otherwise specifically

provided, be deemed to affect any act done or omitted to be done, 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 shall continue and may be enforced as if such

amendment, modification, or revocation had not been made.

Sec. 595.403 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 specially designated terrorist, such property

shall no longer be deemed to be property in which a specially

designated terrorist has or has had an interest, or which is held in

the name of a specially designated terrorist, unless there exists in

the property another interest of a specially designated terrorist, 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

specially designated terrorist, including by the making of any

contribution of funds, goods, or services to or for the benefit of a

specially designated terrorist, such property shall be deemed to be

property in which there exists an interest of the specially designated

terrorist.

Sec. 595.404 Setoffs prohibited.

A setoff against blocked property (including a blocked account),

whether

[[Page 3810]]

by a U.S. bank or other U.S. person, is a prohibited transfer under

Sec. 595.201 if effected after the effective date.

Sec. 595.405 Transactions incidental to a licensed transaction.

Any transaction ordinarily incident to a licensed transaction and

necessary to give effect thereto is also authorized, except a

transaction by an unlicensed, specially designated terrorist or

involving a debit to a blocked account or a transfer of blocked

property not explicitly authorized within the terms of the license.

Sec. 595.406 Provision of services.

(a) Except as provided in Sec. 595.206, the prohibitions contained

in Secs. 595.201 and 595.204 apply to services performed by U.S.

persons, wherever located:

(1) On behalf of, or for the benefit of, a specially designated

terrorist; or

(2) With respect to property interests of a specially designated

terrorist.

(b) Example: U.S. persons may not, except as authorized by the

Office of Foreign Assets Control by or pursuant to this part, provide

legal, accounting, public relations, educational, or other services to

a specially designated terrorist. See Sec. 595.506.

Sec. 595.407 Offshore transactions.

The prohibitions contained in Sec. 595.201 apply to transactions by

U.S. persons in locations outside the United States with respect to

property which the U.S. person knows, or has reason to know, is held in

the name of a specially designated terrorist, or in which the U.S.

person knows, or has reason to know, a specially designated terrorist

has or has had an interest since the effective date.

Sec. 595.408 Charitable contributions to specially designated

terrorists.

(a) Unless otherwise specifically authorized by the Office of

Foreign Assets Control by or pursuant to this part, no charitable

contribution or donation of funds, goods, services,or technology to

relieve human suffering, such as food, clothing or medicine, may be

made to or for the benefit of a specially designated terrorist. For

purposes of this part, a contribution or donation is made to or for the

benefit of a specially designated terrorist if made to or in the name

of a specially designated terrorist; if made to or in the name of an

entity or individual acting for or on behalf of, or owned or controlled

by, a specially designated terrorist; or if made in an attempt to

violate, to evade or to avoid the bar on the provision of contributions

or donations to specially designated terrorists.

(b) Individuals and organizations who donate or contribute funds,

goods, services or technology without knowledge or reason to know that

the donation or contribution is destined to or for the benefit of a

specially designated terrorist shall not be subject to penalties for

such donation or contribution.

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

Policy

Sec. 595.501 Effect of license or authorization.

(a) No license or other authorization contained in this part, or

otherwise issued by or under the direction of the Director of the

Office of Foreign Assets Control, shall be deemed to authorize or

validate any transaction effected prior to the issuance of the license,

unless specifically provided in such license or authorization.

(b) No regulation, ruling, instruction, or license authorizes any

transaction prohibited under this part unless the regulation, ruling,

instruction, or license is issued by the Office of Foreign Assets

Control and specifically refers to this part. No regulation, ruling,

instruction, or license referring to this part shall be deemed to

authorize any transaction prohibited by any provision of this chapter

unless the regulation, ruling, instruction or license specifically

refers to such provision.

(c) Any regulation, ruling, instruction, or license authorizing any

transaction otherwise prohibited under this part has the effect of

removing a prohibition or prohibitions 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

which would not otherwise exist under ordinary principles of law.

Sec. 595.502 Exclusion from licenses and authorizations.

The Director of the Office of Foreign Assets Control reserves the

right to exclude any person, property, or transaction from the

operation of any license, or from the privileges therein conferred, or

to restrict the applicability thereof with respect to particular

persons, property, transactions, or classes thereof. Such action shall

be binding upon all persons receiving actual or constructive notice of

such exclusion or restriction.

Sec. 595.503 Payments and transfers to blocked accounts in U.S.

financial institutions.

(a) Any payment of funds or transfer of credit or other financial

or economic resources or assets into a blocked account in a U.S.

financial institution is authorized, provided that a transfer from a

blocked account pursuant to this authorization may only be made to

another blocked account held in the same name on the books of the same

U.S. financial institution. This authorization is subject to the

condition that written notification from the U.S. financial institution

receiving an authorized payment or transfer is furnished to the

Compliance Programs Division, Office of Foreign Assets Control, U.S.

Treasury Department, 1500 Pennsylvania Avenue, NW--Annex, Washington,

DC 20220, within 10 days from the value date of the payment or

transfer. This notification shall confirm that the payment or transfer

has been deposited into a blocked account pursuant to this section and

Sec. 595.203 and shall provide the account number, the name and address

of the person in whose name the account is held and, if the account

party is not a specially designated terrorist, the name of the

specially designated terrorist having an interest in the account, the

name and address of the transferee U.S. financial institution, the name

and address of the transferor financial institution, the amount of the

payment or transfer, the name and telephone number of a contact person

at the transferee financial institution from whom compliance

information may be obtained, and the name and telephone number of the

person, registered with the Office of Foreign Assets Control pursuant

to Sec. 595.603, responsible for the administration of blocked assets

at the transferee financial institution from whom records on blocked

assets may be obtained.

(b) This section does not authorize any transfer from a blocked

account within the United States to an account held outside the United

States.

Sec. 595.504 Investment and reinvestment of certain funds.

(a) U.S. financial institutions are hereby authorized and directed

to invest and reinvest assets held in blocked accounts in the name of a

specially designated terrorist, subject to the following conditions:

(1) The assets representing such investments and reinvestments are

credited to a blocked account or sub-account which is in the name of

the specially designated terrorist and which is located in the United

States or within

[[Page 3811]]

the possession or control of a U.S. person; and

(2) The proceeds of such investments and reinvestments are not

credited to a blocked account or sub-account under any name or

designation which differs from the name or designation of the specific

blocked account or sub-account in which such funds or securities were

held; and

(3) No immediate financial or economic benefit or access accrues

(e.g., through pledging or other use) to the specially designated

terrorist.

(b)(1) U.S. persons seeking to avail themselves of this

authorization must register with the Office of Foreign Assets Control,

Blocked Assets Section, before undertaking transactions authorized

under this section.

(2) Transactions conducted pursuant to this section must be

reported to the Office of Foreign Assets Control, Blocked Assets

Division, in a report filed no later than 10 business days following

the last business day of the month in which the transactions occurred.

Sec. 595.505 Entries in certain accounts for normal service charges

authorized.

(a) U.S. financial institutions are hereby authorized to debit any

blocked account with such U.S. financial institution in payment or

reimbursement for normal service charges owed to such U.S. financial

institution by the owner of such blocked account.

(b) As used in this section, the term normal service charge shall

include charges in payment or reimbursement for interest due; cable,

telegraph, 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, photostats, credit reports, transcripts of

statements, registered mail insurance, stationary and supplies, check

books, and other similar items.

Sec. 585.506 Provision of certain legal services to a specially

designated terrorist.

(a) The provision to or on behalf of a specially designated

terrorist of the legal services set forth in paragraph (b) of this

section is authorized, provided that all receipts of payment therefor

must be specifically licensed. The provision of any other legal

services as interpreted in Sec. 595.406 requires the issuance of a

specific license.

(b) Specific licenses may be issued, on a case-by-case basis,

authorizing receipt of payment of professional fees and reimbursement

of incurred expenses for the following legal services by U.S. persons

to a specially designated terrorist:

(1) Provision of legal advice and counselling to a specially

designated terrorist on the requirements of and compliance with the

laws of any jurisdiction within the United States, provided that such

advice and counselling is not provided to facilitate transactions in

violation of this part;

(2) Representation of a specially designated terrorist when named

as a defendant in or otherwise made a party to domestic U.S. legal,

arbitration, or administrative proceedings;

(3) Initiation of domestic U.S. legal, arbitration, or

administrative proceedings in defense of property interests subject to

U.S. jurisdiction of a specially designated terrorist;

(4) Representation of a specially designated terrorist before any

federal agency with respect to the imposition, administration, or

enforcement of U.S. sanctions against a specially designated terrorist;

and

(5) Provision of legal services in any other context in which

prevailing U.S. law requires access to legal counsel at public expense.

(c) 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 a property interest

of a specially designated terrorist is prohibited unless specifically

licensed in accordance with Sec. 595.202(e).

Sec. 595.507 Authorization of emergency medical services.

The provision of nonscheduled emergency medical services to a

specially designated terrorist located in the United States is

authorized, provided that any payment for such services requires prior

authorization by specific license.

Subpart F--Reports

Sec. 595.601 Required records.

(a) Except as otherwise provided, every person engaging in any

transaction subject to the provisions of this part shall keep a full

and accurate record of each transaction engaged in, regardless of

whether such transaction is effected pursuant to license or otherwise,

and such record shall be available for examination for at least 5 years

after the date of such transaction. Except as otherwise provided, every

person holding property subject to Sec. 595.201 shall keep a full and

accurate record of such property, and such record shall be available

for examination for the period of time that such property is blocked

and for at least 5 years after the date such property is unblocked.

(b) Any person, other than an individual, required to maintain

records pursuant to this section, must designate an individual to be

responsible for providing information concerning such records to the

Office of Foreign Assets Control when so requested.

Sec. 595.602 Reports to be furnished on demand.

Every person is required to furnish under oath, in the form of

reports or otherwise, from time to time and at any time as may be

required, complete information relative to any transaction, regardless

of whether such transaction is effected pursuant to license or

otherwise, subject to the provisions of this part. Such reports may be

required to include the production of any books of account, contracts,

letters or other papers, connected with any such transaction or

property, in the custody or control of the person required to make such

reports. Reports with respect to transactions may be required either

before or after such transactions are completed. The Director of

Foreign Assets Control may, through any person or agency, conduct

investigations, hold hearings, administer oaths, examine witnesses,

receive evidence, take depositions, and require by subpoena the

attendance and testimony of witnesses and the production of all books,

papers, and documents relating to any matter under investigation,

regardless of whether any report has been required or filed in

connection therewith.

Sec. 595.603 Registration of persons holding blocked property subject

to Sec. 595.201.

(a) Any individual holding property subject to Sec. 595.201 must

register with the Office of Foreign Assets Control, Blocked Assets

Division by the later of February 12, 1996, or within 10 days after the

date such property is received or becomes subject to Sec. 595.201.

(b) Any person, other than an individual, holding property subject

to Sec. 595.201 must register the name, title, address, and telephone

number of the individual designated under Sec. 595.601(b) to be

responsible for the administration of blocked assets, from whom the

Office of Foreign Assets Control can obtain information and records.

The registration shall be sent to the Blocked Assets Division, Office

of Foreign Assets Control, U.S. Treasury Department, 1500 Pennsylvania

Avenue, NW--Annex, Washington, DC 20220, by the later of February 12,

1996,

[[Page 3812]]

or, unless notification is given pursuant to Sec. 595.503, 10 days

after the date such property is received or becomes subject to

Sec. 595.201.

Subpart G--Penalties

Sec. 595.701 Penalties.

(a) Attention is directed to section 206 of the International

Emergency Economic Powers Act (50 U.S.C. 1705), which provides that a

civil penalty of not to exceed $10,000 may be imposed on any person who

violates any license, order, or regulation issued under the

International Emergency Economic Powers Act; and that whoever willfully

violates any license, order, or regulation issued under the

International Emergency Economic Powers Act, shall, upon conviction, be

fined not more than $50,000, or, if a natural person, may be imprisoned

for not more than 10 years, or both; and any officer, director, or

agent of any corporation who knowingly participates in such violation

may be punished by a like fine, imprisonment, or both. Section 206 of

the International Emergency Economic Powers Act is applicable to

violations of any provision of this part and to violations of the

provisions of any license, ruling, regulation, order, direction, or

instruction issued by or pursuant to the direction or authorization of

the Secretary of the Treasury pursuant to this part or otherwise under

the International Emergency Economic Powers Act.

(b) Attention is directed to 18 U.S.C. 1001, which provides that

whoever, in any matter within the jurisdiction of any department or

agency of the United States, knowingly and willfully falsifies,

conceals or covers up by any trick, scheme, or device a material fact,

or makes any false, fictitious or fraudulent statements or

representation or makes or uses any false writing or document knowing

the same to contain any false, fictitious or fraudulent statement or

entry, shall be fined not more than $10,000 or imprisoned not more than

five years, or both.

(d) Violations of this part may also be subject to relevant

provisions of other applicable laws.

Sec. 595.702 Prepenalty notice.

(a) When required. If the Director of the Office of Foreign Assets

Control has reasonable cause to believe that there has occurred a

violation of any provision of this part or a violation of the

provisions of any license, ruling, regulation, order, direction or

instruction issued by or pursuant to the direction or authorization of

the Secretary of the Treasury pursuant to this part or otherwise under

the International Emergency Economic Powers Act, and the Director

determines that further proceedings are warranted, he shall issue to

the person concerned a notice of his intent to impose a monetary

penalty. The prepenalty notice shall be issued whether or not another

agency has taken any action with respect to this matter.

(b) Contents.--(1) Facts of violation. The prepenalty notice shall

describe the violation, specify the laws and regulations allegedly

violated, and state the amount of the proposed monetary penalty.

(2) Right to make presentation. The prepenalty notice also shall

inform the person of his right to make a written presentation within 30

days of mailing of the notice as to why a monetary penalty should not

be imposed, or, if imposed, why it should be in a lesser amount than

proposed.

Sec. 595.703 Presentation responding to prepenalty notice.

(a) Time within which to respond. The named person shall have 30

days from the date of mailing of the prepenalty notice to make a

written presentation to the Director of the Office of Foreign Assets

Control.

(b) Form and contents of written presentation. The written

presentation need not be in any particular form, but shall contain

information sufficient to indicate that it is in response to the

prepenalty notice. It should contain responses to the allegations in

the prepenalty notice and set forth the reasons why the person believes

the penalty should not be imposed or, if imposed, why it should be in a

lesser amount than proposed.

Sec. 595.704 Penalty notice.

(a) No violation. If, after considering any presentations made in

response to the prepenalty notice and any relevant facts, the Director

of the Office of Foreign Assets Control determines that there was no

violation by the person named in the prepenalty notice, he promptly

shall notify the person in writing of that determination and that no

monetary penalty will be imposed.

(b) Violation. If, after considering any presentations made in

response to the prepenalty notice, the Director of the Office of

Foreign Assets Control determines that there was a violation by the

person named in the prepenalty notice, he promptly shall issue a

written notice of the imposition of the monetary penalty to that

person.

Sec. 595.705 Administrative collection; referral to United States

Department of Justice.

In the event that the person named does not pay the penalty imposed

pursuant to this part or make payment arrangements acceptable to the

Director of the Office of Foreign Assets Control within 30 days of the

mailing of the written notice of the imposition of the penalty, the

matter may be referred for administrative collection measures by the

Department of the Treasury or to the United States Department of

Justice for appropriate action to recover the penalty in a civil suit

in a Federal district court.

Subpart H--Procedures

Sec. 595.801 Licensing.

(a) General licenses. General licenses have been issued authorizing

under appropriate terms and conditions certain types of transactions

which are subject to the prohibitions contained in this part. All such

licenses in effect on the date of publication are set forth in subpart

E of this part. It is the policy of the Office of Foreign Assets

Control not to grant applications for specific licenses authorizing

transactions to which the provisions of an outstanding general license

are applicable. Persons availing themselves of certain general licenses

may be required to file reports and statements in accordance with the

instructions specified in those licenses. Failure to file such reports

or statements will nullify the authority of the general license.

(b) Specific licenses.--(1) General course of procedure.

Transactions subject to the prohibitions contained in this part which

are not authorized by general license may be effected only under

specific licenses.

(2) Applications for specific licenses. Applications for specific

licenses to engage in any transactions prohibited by or pursuant to

this part may be filed by letter with the Office of Foreign Assets

Control. Any person having an interest in a transaction or proposed

transaction may file an application for a license authorizing such

transaction, but the applicant for a specific license is required to

make full disclosure of all parties in interest to the transaction so

that a decision on the application may be made with full knowledge of

all relevant facts and so that the identity and location of the persons

who know about the transaction may be easily ascertained in the event

of inquiry.

(3) Information to be supplied. The applicant must supply all

information specified by relevant instructions and/or forms, and must

fully disclose the

[[Page 3813]]

names of all the parties who are concerned with or interested in the

proposed transaction. If the application is filed by an agent, the

agent must disclose the name of his principal(s). Such documents as may

be relevant shall be attached to each application as a part of such

application except that documents previously filed with the Office of

Foreign Assets Control may, where appropriate, be incorporated by

reference. Applicants may be required to furnish such further

information as is deemed necessary to a proper determination by the

Office of Foreign Assets Control. Any applicant or other party in

interest desiring to present additional information or discuss or argue

the application may do so at any time before or after decision.

Arrangements for oral presentation should be made with the Office of

Foreign Assets Control.

(4) Effect of denial. The denial of a license does not preclude the

reopening of an application or the filing of a further application. The

applicant or any other party in interest may at any time request

explanation of the reasons for a denial by correspondence or personal

interview.

(5) Reports under specific licenses. As a condition for the

issuance of any license, the licensee may be required to file reports

with respect to the transaction covered by the license, in such form

and at such times and places as may be prescribed in the license or

otherwise.

(6) Issuance of license. Licenses will be issued by the Office of

Foreign Assets Control acting on behalf of the Secretary of the

Treasury or licenses may be issued by the Secretary of the Treasury

acting directly or through any specifically designated person, agency,

or instrumentality.

(7) Address. License applications, reports, and inquiries should be

addressed to the appropriate section or individual within the Office of

Foreign Assets Control, or to its Director, at the following address:

Office of Foreign Assets Control, U.S. Department of the Treasury, 1500

Pennsylvania Avenue, N.W.--Annex, Washington, D.C. 20220.

Sec. 595.802 Decisions.

The Office of Foreign Assets Control will advise each applicant of

the decision respecting filed applications. The decision of the Office

of Foreign Assets Control acting on behalf of the Secretary of the

Treasury with respect to an application shall constitute final agency

action.

Sec. 595.803 Amendment, modification, or revocation.

The provisions of this part and any rulings, licenses, whether

general or specific, authorizations, instructions, orders, or forms

issued hereunder may be amended, modified, or revoked at any time.

Sec. 595.804 Rulemaking.

(a) All rules and other public documents are issued by the

Secretary of the Treasury upon recommendation of the Director of the

Office of Foreign Assets Control. In general, rulemaking by the Office

of Foreign Assets Control involves foreign affairs functions of the

United States, and for that reason is exempt from the requirements

under the Administrative Procedure Act (5 U.S.C. 553) for notice of

proposed rulemaking, opportunity for public comment, and delay in

effective date. Wherever possible, however, it is the practice of the

Office of Foreign Assets Control to receive written submissions or hold

informal consultations with interested parties before the issuance of

any rule or other public document.

(b) Any interested person may petition the Director of the Office

of Foreign Assets Control in writing for the issuance, amendment, or

repeal of any rule.

Sec. 595.805 Delegation by the Secretary of the Treasury.

Any action which the Secretary of the Treasury is authorized to

take pursuant to Executive Order 12947 or any further Executive orders

relating to the national emergency declared in Executive Order 12947

may be taken by the Director of the Office of Foreign Assets Control,

or by any other person to whom the Secretary of the Treasury has

delegated authority so to act.

Sec. 595.806 Rules governing availability of information.

(a) The records of the Office of Foreign Assets Control which are

required by the Freedom of Information Act (5 U.S.C. 552) to be made

available to the public shall be made available in accordance with the

definitions, procedures, payment of fees, and other provisions of the

regulations on the Disclosure of Records of the Departmental Offices

and of other bureaus and offices of the Department of the Treasury

issued under 5 U.S.C. 552 and published at 31 CFR part 1.

(b) The records of the Office of Foreign Assets Control which are

required by the Privacy Act (5 U.S.C. 552a) to be made available to an

individual shall be made available in accordance with the definitions,

procedures, requirements for payment of fees, and other provisions of

the Regulations on the Disclosure of Records of the Departmental

Offices and of other bureaus and offices of the Department of the

Treasury issued under 5 U.S.C. 552a and published at 31 CFR part 1.

(c) Any form issued for use in connection with this part may be

obtained in person or by writing to the Office of Foreign Assets

Control, U.S. Department of the Treasury, 1500 Pennsylvania Avenue,

N.W.--Annex, Washington, D.C. 20220, or by calling 202/622-2480.

Subpart I--Paperwork Reduction Act

Sec. 595.901 Paperwork Reduction Act notice.

The information collection requirements in Secs. 595.503, 595.504,

subpart F, and Secs. 595.703 and 595.801 have been approved by the

Office of Management and Budget under the Paperwork Reduction Act and

assigned control number 1505-0156.

Dated: December 21, 1995.

R. Richard Newcomb,

Director, Office of Foreign Assets Control.

Approved: January 4, 1996.

John P. Simpson

Deputy Assistant Secretary (Regulatory, Tariff & Trade Enforcement).

[FR Doc. 96-2183 Filed 1-29-96; 5:06 pm]

BILLING CODE 4810-25-F