Sudanese Sanctions Regulations

Federal RegisterJul 1, 1998

Ask Donna

What actually matters in this document.

Text

DEPARTMENT OF THE TREASURY

Office of Foreign Assets Control

31 CFR Part 538

Sudanese 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 Sudanese Sanctions Regulations to implement

the President's declaration of a national emergency and imposition of

sanctions against Sudan.

EFFECTIVE DATE: July 1, 1998.

FOR FURTHER INFORMATION CONTACT: Steven I. Pinter, Chief of Licensing

(tel.: 202/622-2480), or William B. Hoffman, Chief Counsel (tel.: 202/

622-2410), Office of Foreign Assets Control, Department of the

Treasury, Washington, DC 20220.

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

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

charge in WordPerfect 5.1, ASCII, and Adobe AcrobatR

readable (*.PDF) formats. For Internet access, the address for use with

the World Wide Web (Home Page), Telnet, or FTP protocol is:

fedbbs.access.gpo.gov. 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 self-expanding

file ``T11FR00.EXE'' 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). Additional information concerning the programs of the

Office of Foreign Assets Control is available for downloading from the

Office's Internet Home Page: http://www.ustreas.gov/treasury services/

fac/fac.html, or in fax form through the Office's 24-hour fax-on-demand

service: call 202/622-0077 using a fax machine, fax modem, or (within

the United States) a touch-tone telephone.

Background

On November 3, 1997, the President issued Executive Order 13067 (62

FR 59989, Nov. 5, 1997), declaring a national emergency with respect to

``the policies and actions of the Government of Sudan,'' 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 the Government of Sudan, its agencies,

instrumentalities, and controlled entities, including the Central Bank

of Sudan, that are in the United States, that are or 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; and orders other specific sanctions against Sudan. The order

also authorizes the Secretary of the Treasury, in consultation with the

Secretary of State and, as appropriate, other agencies, 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 Sudanese Sanctions

Regulations (the ``Regulations'').

Section 538.201 of the Regulations, implementing section 1 of

Executive Order 13067 (the ``Executive Order''), blocks all property

and interests in property of the Government of Sudan, its agencies,

instrumentalities, and controlled entities, including the Central Bank

of Sudan, 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. As

interpreted by Sec. 538.305 of the Regulations, Sec. 538.201 also

blocks all property and interests in property of persons determined by

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

State, to be owned or controlled by, or to be acting on behalf of, the

Government of Sudan. Persons coming within any of these categories are

called specially designated nationals (``SDNs''). Section 538.204 of

the Regulations, implementing section 2(a) of the Executive Order,

generally prohibits the importation into the United States of goods or

services of Sudanese origin. Section 538.205 of the Regulations,

implementing section 2(b) of the Executive Order, generally prohibits

the exportation or reexportation to Sudan of goods, technology or

services from the United States, by a U.S. person, or requiring the

issuance of a license by a Federal agency. Section 538.206 of the

Regulations, implementing section 2(c) of the Executive Order,

prohibits the facilitation by a U.S. person of the exportation or

reexportation of goods, technology or services to or from Sudan.

Section 538.207 of the Regulations, implementing section 2(d) of the

Executive Order, prohibits the performance by any U.S. person of any

contract, including a financing contract, in support of an industrial,

commercial, public utility, or governmental project in Sudan. Section

538.208 of the Regulations, implementing section 2(e) of the Executive

Order, prohibits the grant or extension of credits or loans by any U.S.

person to the Government of Sudan. Section 538.209 of the Regulations,

implementing section 2(f) of the Executive Order, prohibits

transactions relating to the transportation of cargo to or from Sudan.

Pursuant to section 3 of the Executive Order, Sec. 538.211 of the

Regulations exempts certain transactions from the prohibitions of the

Executive Order and Regulations.

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 subpart D of part 501 of 31 CFR chapter V.

Penalties for violations of the Regulations are described in subpart G

of the Regulations.

Since the Regulations involve a foreign affairs function, the

provisions of Executive Order 12866 and the Administrative Procedure

Act (5 U.S.C. 553)(the ``APA'') requiring notice of proposed

rulemaking, opportunity for

[[Page 35810]]

public participation and delay in effective date are inapplicable.

Because no notice of proposed rulemaking is required for this rule, the

Regulatory Flexibility Act (5 U.S.C. 601-612) does not apply.

Paperwork Reduction Act

The Regulations are being issued without prior notice and public

comment procedure pursuant to the APA. 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

has been assigned control number 1505-0169. 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.

Other collections of information related to the Regulations are

contained in part 501 of this chapter (the ``Reporting and Procedures

Regulations''). Pursuant to the Paperwork Reduction Act of 1995 (44

U.S.C. 3507), the collections of information in part 501 have been

approved by the Office of Management and Budget (``OMB'') under control

number 1505-1604.

The new collections of information in the Regulations are contained

in Secs. 538.506 and 538.521. Section 538.506(d) imposes a reporting

requirement in lieu of specific licensing for performance of certain

trade transactions pursuant to contracts entered into prior to November

4, 1997. This information will be used to determine whether persons

subject to the Regulations are in compliance with the applicable

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

or other enforcement action is appropriate.

Section 538.521 requires nongovernmental organizations involved in

humanitarian or religious activities in Sudan to obtain a registration

number to engage in transactions otherwise prohibited by the

Regulations. This information will be used to register applicants as

nongovernmental organizations and to determine whether persons subject

to the Regulations are in compliance with the applicable requirements.

The Regulations do not provide for confidential treatment of

reports submitted pursuant to Secs. 538.506 and 538.521. However, it is

the policy of the Office of Foreign Assets Control 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).

The likely respondents and record keepers are humanitarian

organizations, business organizations, and financial institutions.

The estimated total annual reporting and/or recordkeeping burden:

100 hours.

The estimated annual burden per respondent/record keeper varies

from 1-3 hours, depending on individual circumstances, with and

estimated average of 2 hours.

Estimated number of respondents and/or record keepers: 50.

Estimated annual frequency of responses: 1.

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 or other forms of information

technology; and (e) estimated capital or start-up costs and costs of

operation maintenance, and purchase of services to provide information.

Comments concerning the above information, the accuracy of

estimated average burden, and suggestions for reducing this burden

should be directed to the Office of Management and Budget, Paperwork

Reduction Project, control number 1505-0169, Washington, DC 20503, with

a copy to the Office of Foreign Assets Control, U.S. Department of the

Treasury, 1500 Pennsylvania Ave., NW-Annex, Washington, DC 20220. Any

such comments should be submitted not later than August 31, 1998.

Comments on aspects of the Regulations other than those involving

collections of information should not be sent to the OMB.

List of Subjects in 31 CFR Part 538

Administrative practice and procedure, Banks, banking, Blocking of

assets, Exports, Foreign trade, Humanitarian aid, Imports, Penalties,

Reporting and recordkeeping requirements, Specially designated

nationals, Sudan, Terrorism, Transportation.

For the reasons set forth in the preamble, 31 CFR part 538 is added

to read as follows:

PART 538--SUDANESE SANCTIONS REGULATIONS

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

Sec.

538.101 Relation of this part to other laws and regulations.

Subpart B--Prohibitions

538.201 Prohibited transactions involving blocked property.

538.202 Effect of transfers violating the provisions of this part.

538.203 Holding of funds in interest-bearing accounts; investment

and reinvestment.

538.204 Prohibited importation of goods or services from Sudan.

538.205 Prohibited exportation and reexportation of goods,

technology, or services to Sudan.

538.206 Prohibited facilitation.

538.207 Prohibited performance of contracts.

538.208 Prohibited grant or extension of credits or loans to the

Government of Sudan.

538.209 Prohibited transportation-related transactions involving

Sudan.

538.210 Evasions; attempts; conspiracies.

538.211 Exempt transactions.

Subpart C--General Definitions

538.301 Blocked account; blocked property.

538.302 Effective date.

538.303 Entity.

538.304 General license.

538.305 Government of Sudan.

538.306 Information and informational materials.

538.307 Interest.

538.308 License.

538.309 Person.

538.310 Property; property interest.

538.311 Specific license.

538.312 Sudanese origin.

538.313 Transfer.

538.314 United States.

538.315 United States person; U.S. person.

538.316 U.S. financial institution.

Subpart D--Interpretations

538.401 Reference to amended sections.

538.402 Effect of amendment.

538.403 Termination and acquisition of an interest in blocked

property.

538.404 Setoffs prohibited.

538.405 Transactions incidental to a licensed transaction.

538.406 Exportation of services; performance of service contracts;

legal services.

538.407 Facilitation by a United States person.

538.408 Offshore transactions.

538.409 Transshipments through the United States prohibited.

538.410 Imports of Sudanese goods from third countries;

transshipments.

538.411 Exports to third countries; transshipments.

538.412 Operation of accounts.

538.413 Funds transfers.

538.414 Loans or extensions of credit.

538.415 Payments involving Sudan.

538.416 Payments from blocked accounts to U.S. exporters and for

other obligations prohibited.

[[Page 35811]]

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

538.501 Effect of license or authorization.

538.502 Exclusion from licenses and authorizations.

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

institutions.

538.504 Entries in certain accounts for normal service charges

authorized.

538.505 Provision of certain legal services to the Government of

Sudan, persons in Sudan, or benefitting Sudan.

538.506 30-day delayed effective date for pre-November 4, 1997 trade

contracts involving Sudan.

538.507 Reexports by non-U.S. persons.

538.508 Certain payments by the Government of Sudan of obligations

to persons within the United States authorized.

538.509 Certain services relating to participation in various events

authorized.

538.510 Importation and exportation of certain gifts authorized.

538.511 Accompanied baggage authorized.

538.512 Transactions related to telecommunications authorized.

538.513 Transactions related to mail authorized.

538.514 Certain transactions related to patents, trademarks and

copyrights authorized.

538.515 Certain imports for diplomatic or official personnel

authorized.

538.516 Diplomatic pouches.

538.517 Allowable payments for overflights of Sudanese airspace.

538.518 Household goods and personal effects.

538.519 Aircraft and maritime safety.

538.520 Extensions or renewals of loans and credits.

538.521 Registration of nongovernmental organizations.

538.522 Transactions related to U.S. citizens residing in Sudan.

Subpart F--Reports

538.601 Records and reports.

Subpart G--Penalties

538.701 Penalties.

538.702 Prepenalty notice.

538.703 Response to prepenalty notice; informal settlement.

538.704 Penalty imposition or withdrawal.

538.705 Administrative collection; referral to United States

Department of Justice.

Subpart H--Procedures

538.801 Procedures.

538.802 Delegation by the Secretary of the Treasury.

Subpart I--Paperwork Reduction Act

538.901 Paperwork Reduction Act notice.

Authority: 3 U.S.C. 301; 31 U.S.C. 321(b); 50 U.S.C. 1601-1651,

1701-1706; E.O. 13067, 62 FR 59989, 3 CFR, 1997 Comp., p. 230.

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

Sec. 538.101 Relation of this part to other laws and regulations.

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

of this chapter with the exception of part 501 of this chapter, the

recordkeeping and reporting requirements and license application and

other procedures of which apply to this part. 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. 538.201 Prohibited transactions involving blocked property.

(a) Except as authorized by regulations, orders, directives,

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

in property of the Government of Sudan, 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.

(b) Unless otherwise authorized by this part or by a specific

license expressly referring to this section, the transfer (including

the transfer on the books of any issuer or agent thereof), disposition,

transportation, importation, exportation, or withdrawal of, or the

endorsement or guaranty of signatures on, or otherwise dealing in any

security (or evidence thereof) registered or inscribed in the name of

the Government of Sudan, and held within the possession or control of a

U.S. person is prohibited, irrespective of the fact that at any time

(either prior to, on, or subsequent to the effective date) the

registered or inscribed owner thereof may have, or appears to have,

assigned, transferred, or otherwise disposed of any such security.

financial institution pursuant to this section and a party to the

transaction believes the funds have been blocked due to mistaken

identity, that party may seek to have such funds unblocked pursuant to

the administrative procedures set forth in Sec. 501.806 of this

chapter.

Sec. 538.202 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 or interest in property blocked pursuant to

Sec. 538.201 is null and void and shall not be the basis for the

assertion or recognition of any interest in or right, remedy, power or

privilege with respect to such property or property 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 interest in, any property or interest in property

blocked pursuant to Sec. 538.201, 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.

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

[[Page 35812]]

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 to paragraph (d): 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 or

interest in property blocked pursuant to Sec. 538.201.

Sec. 538.203 Holding of funds in interest-bearing accounts; investment

and reinvestment.

(a) Except as provided in paragraphs (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 Sec. 538.201(a) shall hold or place

such funds in a blocked interest-bearing account located in the United

States.

(b)(1) For purposes of this section, the term blocked interest-

bearing account means a blocked account:

(i) In a federally-insured U.S. bank, thrift institution, or credit

union, provided the funds are earning interest at rates which are

commercially reasonable; or

(ii) With a broker or dealer registered with the Securities and

Exchange Commission under the Securities Exchange Act of 1934, provided

the funds are invested in a money market fund or in U.S. Treasury

Bills.

(2) For purposes of this section, a rate is commercially reasonable

if it is the rate currently offered to other depositors on deposits or

instruments of comparable size and maturity.

(3) Funds held or placed in a blocked account pursuant to this

paragraph (b) may not be invested in instruments the maturity of which

exceeds 180 days. If interest is credited to a separate blocked account

or sub-account, the name of the account party on each account must be

the same.

180 days at the time the funds become subject to Sec. 538.201 may

continue to be held until maturity in the original instrument, provided

any interest, earnings, or other proceeds derived therefrom are paid

into a blocked interest-bearing account in accordance with paragraph

(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 Sec. 538.201 may

continue to be held in the same type of accounts or instruments,

provided the funds earn interest at rates which are commercially

reasonable.

(e) This section does not create an affirmative obligation for the

holder of blocked tangible property, such as chattels or real estate,

or of other blocked property, such as debt or equity securities, to

sell or liquidate such property at the time the property becomes

subject to Sec. 538.201. However, the Office of Foreign Assets Control

may issue licenses permitting or directing such sales in appropriate

cases.

(f) Funds subject to this section may not be held, invested, or

reinvested in a manner which provides immediate financial or economic

benefit or access to the Government of Sudan or its entities, nor may

their holder cooperate in or facilitate the pledging or other attempted

use as collateral of blocked funds or other assets.

Sec. 538.204 Prohibited importation of goods or services from Sudan.

Except as otherwise authorized, the importation into the United

States, directly or indirectly, of any goods or services of Sudanese

origin, other than information or informational materials, is

prohibited.

Sec. 538.205 Prohibited exportation and reexportation of goods,

technology, or services to Sudan.

Except as otherwise authorized, the exportation or reexportation,

directly or indirectly, to Sudan of any goods, technology (including

technical data, software, or other information) or services from the

United States or by a United States person, wherever located, or

requiring the issuance of a license by a Federal agency is prohibited,

except for information or informational materials or donations of

articles intended to relieve human suffering, such as food, clothing,

and medicine.

Sec. 538.206 Prohibited facilitation.

Except as otherwise authorized, the facilitation by a United States

person, including but not limited to brokering activities, of the

exportation or reexportation of goods, technology, or services from

Sudan to any destination, or to Sudan from any location, is prohibited.

Sec. 538.207 Prohibited performance of contracts.

Except as otherwise authorized, the performance by any United

States person of any contract, including a financing contract, in

support of an industrial, commercial, public utility, or governmental

project in Sudan is prohibited.

Sec. 538.208 Prohibited grant or extension of credits or loans to the

Government of Sudan.

Except as otherwise authorized, the grant or extension of credits

or loans by any United States person to the Government of Sudan is

prohibited.

Sec. 538.209 Prohibited transportation-related transactions involving

Sudan.

Except as otherwise authorized, the following are prohibited:

(a) Any transaction by a U.S. person relating to transportation of

cargo to or from Sudan;

(b) The provision of transportation of cargo to or from the United

States by any Sudanese person or any vessel or aircraft of Sudanese

registration; or

under 49 U.S.C. subtitle VII of any transportation of cargo by air that

includes any stop in Sudan.

Sec. 538.210 Evasions; attempts; conspiracies.

Any transaction by any 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

this part is prohibited. Any conspiracy formed for the purpose of

engaging in a transaction prohibited by this part is prohibited.

Sec. 538.211 Exempt transactions.

(a) Personal Communications. The prohibitions contained in this

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

personal

[[Page 35813]]

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. 538.306, 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. 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 the Government of Sudan or a person in Sudan

with respect to income received for enhancements or alterations made by

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

the Government of Sudan or a person in Sudan.

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

exportation of software subject to the Export Administration

Regulations, 15 CFR parts 730-774, or to the exportation of goods,

technology or software for use in the transmission of any data. The

exportation of such items to the Government of Sudan or to Sudan is

prohibited, as provided in Secs. 538.201 and 538.205.

transactions ordinarily incident to travel to or from any country,

including exportation or 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.

(d) Official Business. The prohibitions contained in this part do

not apply to transactions for the conduct of the official business of

the Federal Government or the United Nations by employees thereof.

(e) Journalistic activity. The prohibitions contained in this part

do not apply to transactions in Sudan for journalistic activity by

persons regularly employed in such capacity by a news-gathering

organization.

Subpart C--General Definitions

Sec. 538.301 Blocked account; blocked property.

The terms blocked account and blocked property shall mean any

account or property subject to the prohibition in Sec. 538.201 held in

the name of the Government of Sudan or in which the Government of Sudan

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. 538.302 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, November 4, 1997.

Sec. 538.303 Entity.

The term entity means a partnership, association, trust, joint

venture, corporation, or other organization.

Sec. 538.304 General license.

The term general license means any license or authorization the

terms of which are set forth in this part.

Sec. 538.305 Government of Sudan.

The term Government of Sudan includes:

(a) The state and the Government of Sudan, as well as any political

subdivision, agency, or instrumentality thereof, including the Central

Bank of Sudan;

(b) Any entity owned or controlled by the foregoing;

to the extent that there is reasonable cause to believe that such

person is, or has been, since the effective date, acting or purporting

to act directly or indirectly on behalf of any of the foregoing; and

(d) Any other person determined by the Director of the Office of

Foreign Assets Control to be included within paragraphs (a) through (c)

of this section.

Note to Sec. 538.305: Please refer to the appendices at the end

of this chapter for listings of persons determined to fall within

this definition who have been designated pursuant to this part.

Section 501.807 of this chapter sets forth the procedures to be

followed by persons seeking administrative reconsideration of their

designation, or who wish to assert that the circumstances resulting

in the designation are no longer applicable.

Sec. 538.306 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 materials.

(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 term information and informational materials with respect

to U.S. exports does 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.

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

37.

Sec. 538.307 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. 538.308 License.

Except as otherwise specified, the term license means any license

or authorization contained in or issued pursuant to this part.

Sec. 538.309 Person.

The term person means an individual or entity.

Sec. 538.310 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 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,

[[Page 35814]]

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. 538.311 Specific license.

The term specific license means any license or authorization not

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

Sec. 538.312 Sudanese origin.

The term goods or services of Sudanese origin includes:

(a) Goods produced, manufactured, grown, extracted, or processed

within Sudan;

(b) Goods which have entered into Sudanese commerce;

in Sudan who is acting as an agent, employee, or contractor of the

Government of Sudan or of a business entity located in Sudan. Services

of Sudanese origin are not imported into the United States when such

services are provided in the United States by a Sudanese national

employed or resident in the United States.

(d) The term services of Sudanese origin does not include:

(1) Diplomatic and consular services performed by or on behalf of

the Government of Sudan;

(2) Diplomatic and consular services performed by or on behalf of

the Government of the United States.

Sec. 538.313 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. 538.314 United States.

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

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

Sec. 538.315 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. 538.316 U.S. financial institution.

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

(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. 538.401 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. 538.402 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, 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 continue and may be enforced as if such amendment,

modification, or revocation had not been made.

Sec. 538.403 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 the Government of Sudan, such property shall no

longer be deemed to be property in which the Government of Sudan has or

has had an interest unless there exists in the property another

interest of the Government of Sudan, 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 the

Government of Sudan, such property shall be deemed to be property in

which there exists an interest of the Government of Sudan.

Sec. 538.404 Setoffs prohibited.

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

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

under Sec. 538.201 if effected after the effective date.

Sec. 538.405 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 Sudanese governmental entity or involving

a debit to a blocked account or a transfer of blocked property not

explicitly authorized within the terms of the license.

[[Page 35815]]

Sec. 538.406 Exportation of services; performance of service

contracts; legal services.

(a) The prohibition on the exportation of services contained in

Sec. 538.205 applies to services performed on behalf of the Government

of Sudan, or where the benefit of such services is otherwise received

in Sudan, when such services are performed:

(1) In the United States;

(2) By a U.S. person, wherever located;

(3) By an entity located in the United States, including its

overseas branches; or

(4) Outside the United States by an individual U.S. person

ordinarily resident in the United States.

(b) The benefit of services performed anywhere in the world on

behalf of the Government of Sudan, including services performed for a

controlled entity or agent of the Government of Sudan, is presumed to

be received in Sudan.

to services performed by U.S. persons, wherever located:

(1) On behalf of the Government of Sudan;

(2) With respect to property interests of the Government of Sudan;

(3) In support of an industrial, commercial, public utility or

governmental project in Sudan.

(d) Example: U.S. persons may not, without specific authorization

from the Office of Foreign Assets Control, represent an individual or

entity with respect to contract negotiations, contract performance,

commercial arbitration, or other business dealings with the Government

of Sudan. See Sec. 538.505 on licensing policy with regard to the

provision of certain legal services.

Sec. 538.407 Facilitation by a United States person.

(a) The prohibition contained in Sec. 538.206 against facilitation

by a United States person of the exportation or reexportation of goods,

technology, or services between Sudan and any destination (including

the United States) bars any unlicensed action by a U.S. person that

assists or supports trading activity with Sudan by any person.

Facilitation of a trade or financial transaction that could be engaged

in directly by a U.S. person or from the United States consistent with

the prohibitions, general licenses and exemptions contained in this

part is not prohibited. Activity of a purely clerical or reporting

nature that does not further trade or financial transactions with Sudan

or the Government of Sudan is not considered prohibited facilitation.

For example, reporting on the results of a subsidiary's trade with

Sudan is not prohibited, while financing or insuring that trade or

warranting the quality of goods sold by a subsidiary to the Government

of Sudan constitutes prohibited facilitation.

(b) To avoid potential liability for U.S. persons under this part,

a U.S. parent corporation must ensure that its foreign subsidiaries act

independently of any U.S. person with respect to all transactions and

activities relating to the exportation or reexportation of goods,

technology, or services between Sudan and any other location including

but not limited to business and legal planning; decision making;

designing, ordering or transporting goods; and financial, insurance,

and other risks. See Sec. 538.505 with respect to exports of, inter

alia, certain legal services benefitting Sudan.

or those of a foreign affiliate or subsidiary, in order to enable a

foreign entity owned or controlled by U.S. persons to enter into a

transaction that could not be entered into directly by a U.S. person or

from the United States pursuant to this part.

(d) No U.S. person may refer to a foreign person purchase orders,

requests for bids, or similar business opportunities involving Sudan or

the Government of Sudan to which the United States person could not

directly respond as a result of the prohibitions contained in this

part.

Sec. 538.408 Offshore transactions.

(a) The prohibitions contained in Secs. 538.201 and 538.206 apply

to transactions by any U.S. person in a location outside the United

States with respect to property in which the U.S. person knows, or has

reason to know, the Government of Sudan has or has had an interest

since the effective date, or with respect to goods, technology or

services which the U.S. person knows, or has reason to know, are of

Sudanese origin or owned or controlled by the Government of Sudan.

(b) Prohibited transactions include, but are not limited to,

importation into or exportation from locations outside the United

States of, or purchasing, selling, financing, swapping, insuring,

transporting, lifting, storing, incorporating, transforming, brokering,

or otherwise dealing in, within such locations, goods, technology or

services of Sudanese origin.

or abroad, purchase, sell, finance, insure, transport, act as a broker

for the sale or transport of, or otherwise deal in, Sudanese crude oil

or sugar refined in Sudan.

(2) A U.S. person may not, within the United States or abroad,

conduct transactions of any nature whatsoever with an entity that the

U.S. person knows or has reason to know is the Government of Sudan,

including a controlled entity or agent of that Government, or which

benefits or supports the business of an entity located in Sudan, unless

the entity is licensed by the Office of Foreign Assets Control to

conduct such transactions with U.S. persons or the transaction is

generally licensed in, or exempted from the prohibitions of, this part.

Sec. 538.409 Transshipments through the United States prohibited.

(a) The prohibitions in Sec. 538.205 apply to the importation into

the United States, for transshipment or transit, of goods which are

intended or destined for Sudan, or an entity operated from Sudan.

(b) The prohibitions in Sec. 538.204 apply to the importation into

the United States, for transshipment or transit, of goods of Sudanese

origin which are intended or destined for third countries.

are imported into or transshipped through the United States are blocked

pursuant to Sec. 538.201.

Sec. 538.410 Imports of Sudanese goods from third countries;

transshipments.

(a) Importation into the United States from third countries of

goods containing raw materials or components of Sudanese origin is not

prohibited if those raw materials or components have been incorporated

into manufactured products or otherwise substantially transformed in a

third country.

(b) Importation into the United States of goods of Sudanese origin

that have been transshipped through a third country without being

incorporated into manufactured products or otherwise substantially

transformed in a third country are prohibited.

Sec. 538.411 Exports to third countries; transshipments.

Exportation of goods or technology (including technical data,

software, information not exempted from the prohibition of this part

pursuant to Sec. 538.211, or technical assistance) from the United

States to third countries is prohibited if the exporter knows, or has

reason to know, that the goods or technology are intended for

transshipment to Sudan (including passage through, or storage in,

intermediate destinations). The

[[Page 35816]]

exportation of goods or technology intended specifically for

incorporation or substantial transformation into a third-country

product is also prohibited if the particular product is to be used in

Sudan, is being specifically manufactured to fill a Sudanese order, or

if the manufacturer's sales of the particular product are predominantly

to Sudan.

Sec. 538.412 Operation of accounts.

The operation of an account in a financial institution for a

private Sudanese person does not constitute the exportation of a

service to Sudan; however, such operation may not include the execution

of transactions in support of transactions or activities prohibited by

subpart B of this part.

Sec. 538.413 Funds transfers.

The transfer of funds to Sudan from the United States does not

constitute an exportation of services pursuant to Sec. 538.205.

Sec. 538.414 Loans or extensions of credit.

(a) The prohibition in Sec. 538.205 applies to loans or extensions

of credit to a person in Sudan, including overdraft protection on

checking accounts, and the unlicensed renewal or rescheduling of

credits or loans in existence as of the effective date, whether by

affirmative action or operation of law.

(b) The prohibition in Sec. 538.205 applies to financial services

including loans or credits extended in any currency.

Sec. 538.415 Payments involving Sudan.

Before a United States financial institution initiates a payment

subject to the prohibitions contained in this part on behalf of any

customer, or credits a transfer subject to such prohibitions to the

account on its books of the ultimate beneficiary, the U.S. financial

institution must determine that the transfer is not prohibited by this

part.

Sec. 538.416 Payments from blocked accounts to U.S. exporters and for

other obligations prohibited.

No debits may be made to a blocked account to pay obligations to

U.S. persons or other persons, including payment for goods, technology

or services exported prior to the effective date, except as authorized

pursuant to this part.

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

Policy

Sec. 538.501 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, authorizes or validates 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.

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. 538.502 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. 538.503 Payments and transfers to blocked accounts in U.S.

financial institutions.

Any payment of funds or transfer of credit in which the Government

of Sudan 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

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

Note to Sec. 538.503: Please refer to Sec. 501.603 of this

chapter for mandatory reporting requirements regarding financial

transfers. See also Sec. 538.203 concerning the obligation to hold

blocked funds in interest-bearing accounts.

Sec. 538.504 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, photocopies, credit reports, transcripts

of statements, registered mail, insurance, stationery and supplies, and

other similar items.

Sec. 538.505 Provision of certain legal services to the Government of

Sudan, persons in Sudan, or benefitting Sudan.

(a) The provision to the Government of Sudan, to a person in Sudan,

or in circumstances in which the benefit is otherwise received in

Sudan, 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. 538.406 requires the issuance of a specific

license.

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

authorizing receipt, from unblocked sources, of payment of professional

fees and reimbursement of incurred expenses for the following legal

services by U.S. persons to the Government of Sudan or to a person in

Sudan:

(1) Provision of legal advice and counseling to the Government of

Sudan, to a person in Sudan, or in circumstances in which the benefit

is otherwise received in Sudan, on the requirements of and compliance

with the laws of any jurisdiction within the United States, provided

that such advice and counseling is not provided to

[[Page 35817]]

facilitate transactions in violation of this part;

(2) Representation of the Government of Sudan or a person in Sudan

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 the Government of Sudan, or of a person in Sudan;

(4) Representation of the Government of Sudan or a person in Sudan

before any federal agency with respect to the imposition,

administration, or enforcement of U.S. sanctions against Sudan; and

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

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

other order through execution, garnishment or other judicial process

purporting to transfer or otherwise alter or affect a property interest

of the Government of Sudan is prohibited unless specifically licensed

in accordance with Sec. 538.202(e).

Sec. 538.506 30-day delayed effective date for pre-November 4, 1997

trade contracts involving Sudan.

(a) Pre-existing trade contracts. Trade transactions required under

a contract entered into prior to November 4, 1997 (a ``pre-existing

trade contract''), otherwise prohibited by this part, including the

importation of goods or services of Sudanese origin or the exportation

of goods, services, or technology that was authorized under applicable

Federal regulations in force immediately prior to November 4, 1997, are

authorized without specific licensing by the Office of Foreign Assets

Control as follows:

(1) Exports or reexports are authorized until 12:01 a.m. EST,

December 4, 1997, and non-financing activity by U.S. persons incidental

to the performance of the pre-existing trade contract (such as the

provision of transportation or insurance) is authorized through 12:01

a.m. EST, February 2, 1998, if the pre-existing trade contract is for:

(i) The exportation of goods, services, or technology from the

United States or a third country that was authorized under applicable

Federal regulations in force immediately prior to November 4, 1997; or

(ii) The reexportation of goods or technology that was authorized

under applicable Federal regulations in force immediately prior to

November 4, 1997.

(2) If the pre-existing trade contract is for the importation of

goods or services of Sudanese origin or other trade transactions

relating to goods or services of Sudanese origin or owned or controlled

by the Government of Sudan, importations under the pre-existing trade

contract are authorized until 12:01 a.m. EST, December 4, 1997.

(3) For purposes of this section, goods are considered to be

exported upon final loading aboard the exporting conveyance in the

country of export. Goods are considered to be imported upon arrival in

the jurisdiction of the country of importation.

(b)(1) Financing for pre-existing trade contracts. In general, no

financing services prohibited by this part may be performed after 12:01

a.m. EST, November 4, 1997. However, letters of credit and other

financing agreements with respect to the trade transactions authorized

in paragraph (a) of this section may be performed according to their

terms, and may be extended or renewed, except that:

(i) Any payment required to be made to the Government of Sudan or

any person blocked pursuant to this part or otherwise, including

payments authorized with respect to trade transactions described in

paragraph (a) of this section, must be made into a blocked account in

the United States; and

(ii) No payment may be made from a blocked account unless

authorized by a specific license issued by the Office of Foreign Assets

Controls.

(2) Specific licenses may be issued by the Office of Foreign Asset

Controls on a case-by-case basis to permit a U.S. bank to debit a

blocked account of the Government of Sudan for funds held as collateral

under an irrevocable letter of credit issued or confirmed by it, or a

letter of credit reimbursement confirmed by it, for goods, services or

technology exported, or goods or technology reexported, prior to 12:01

a.m. EST, December 4, 1997, directly or indirectly to Sudan, or to

third countries for an entity operated from Sudan, or for the benefit

of the Government of Sudan. The application for a license must:

(i) Present evidence satisfactory to the Office of Foreign Asset

Controls that the exportation or reexportation occurred prior to 12:01

a.m. EST, December 4, 1997; and

(ii) Include an explanation of the facts and circumstances

surrounding the entry and execution of the export or reexport

transaction, including the names and addresses of all Sudanese

participants in the transaction and all Sudanese persons having an

ownership interest in the beneficiary of the letter of credit.

permits debits to a blocked account of the Government of Sudan absent

the issuance of a specific license by Office of Foreign Asset Controls

authorizing such a debit. The operation of an account of the Government

of Sudan in a financial institution does not constitute a trade

transaction for purposes of this section.

(d) Existence of contract. The existence of a contract will be

determined with reference to the principles contained in Article 2 of

the Uniform Commercial Code.

(e) Reporting requirement. Although a specific license from Office

of Foreign Asset Controls is not required for any transaction

authorized in paragraph (a) of this section, any U.S. person engaging

in a transaction described in paragraph (a) of this section is required

to report such transaction immediately to the Office of Foreign Asset

Controls and provide a description of the underlying trade contract.

Such reports should be directed to the Office of Foreign Assets

Control, Attn: Compliance Programs Division/Sudan Contracts, 1500

Pennsylvania Avenue, NW, Annex - 2nd Floor, Washington, DC 20220. Such

reports may be made by facsimile transmission to 202/622-1657.

(f) Licensing and reporting provisions. For provisions relating to

applications to the Office of Foreign Asset Controls for specific

licenses and reporting requirements, see Secs. 501.606 and 501.808 of

this chapter.

Sec. 538.507 Reexports by non-U.S. persons.

(a) Goods, technology and services subject to export license

application requirements under other United States regulations. The

reexportation to Sudan or the Government of Sudan by a non-U.S. person

of any goods, technology or services exported from the United States,

the exportation of which to Sudan is subject to export or reexport

license application requirements is authorized under this section

provided that, for reexportation of goods, the goods:

(1) Have been incorporated into another product outside the United

States and constitute 10 per cent or less by value of that product

exported from a third country; or

(2) Have been substantially transformed outside the United States.

Note to paragraph (a) of Sec. 538.507: Goods, technology and

software of U.S. origin that are subject to the Export

Administration Regulations (15 CFR parts 730-774) may require

specific authorization from the

[[Page 35818]]

Department of Commerce, Bureau of Export Administration, even though

such goods have been substantially transformed abroad.

(b) Goods, technology and services not subject to export license

application requirements under other United States regulations. The

reexportation to Sudan or the Government of Sudan by a non-U.S. person

of any goods, technology or services of U.S. origin, the exportation of

which to Sudan is not subject to any export license application

requirements under any other United States regulations, is authorized

under this section. However, the reexportation by non-U.S. persons of

U.S.-origin goods, technology or software classified as EAR99 under the

Export Administration Regulations (15 CFR parts 730-774) may require

specific authorization from the Department of Commerce, Bureau of

Export Administration.

Sec. 538.508 Certain payments by the Government of Sudan of

obligations to persons within the United States authorized.

Specific licenses may be issued on a case-by-case basis to permit

the transfer of funds after the effective date by, through, or to any

U.S. financial institution or other U.S. person not blocked pursuant to

this chapter, from a non-blocked account outside of the United States,

solely for the purpose of payment of obligations of the Government of

Sudan to persons or accounts within the United States, provided that

the obligation arose prior to the effective date, and the payment

requires no debit to a blocked account.

Sec. 538.509 Certain services relating to participation in various

events authorized.

The importation of Sudanese-origin services into the United States

is authorized where such services are performed in the United States by

a Sudanese national who enters the United States on a visa issued by

the State Department for the purpose of participating in a public

conference, performance, exhibition or similar event, and such services

are consistent with that purpose.

Sec. 538.510 Importation and exportation of certain gifts authorized.

The importation into the United States of Sudanese-origin goods,

and the exportation from the United States of goods, is authorized for

goods sent as gifts to persons provided that the value of the gift is

not more than $100; the goods are of a type and in quantities normally

given as gifts between individuals; and the goods are not controlled

for chemical and biological weapons (CB), missile technology (MT),

national security (NS), or nuclear proliferation (NP)(see Commerce

Control List, 15 CFR part 774 of the Export Administration

Regulations).

Sec. 538.511 Accompanied baggage authorized.

(a) Persons entering the United States directly or indirectly from

Sudan are authorized to import into the United States Sudanese-origin

accompanied baggage normally incident to travel.

(b) Persons leaving the United States for Sudan are authorized to

export from the United States accompanied baggage normally incident to

travel.

normally incident to travel includes only baggage that:

(1) Accompanies the traveler on the same aircraft, train, or

vehicle;

(2) Includes only articles that are necessary for personal use

incident to travel, are not intended for any other person or for sale,

and are not otherwise prohibited from importation or exportation under

applicable United States laws.

Sec. 538.512 Transactions related to telecommunications authorized.

All transactions with respect to the receipt and transmission of

telecommunications involving Sudan are authorized. This section does

not authorize the provision to the Government of Sudan or a person in

Sudan of telecommunications equipment or technology.

Sec. 538.513 Transactions related to mail authorized.

All transactions by U.S. persons, including payment and transfers

to common carriers, incident to the receipt or transmission of mail

between the United States and Sudan are authorized, provided that mail

is limited to personal communications not involving a transfer of

anything of value.

Sec. 538.514 Certain transactions related to patents, trademarks and

copyrights authorized.

(a) All of the following transactions in connection with patent,

trademark, copyright or other intellectual property protection in the

United States or Sudan are authorized:

(1) The filing and prosecution of any application to obtain a

patent, trademark, copyright or other form of intellectual property

protection;

(2) The receipt of a patent, trademark, copyright or other form of

intellectual property protection;

(3) The renewal or maintenance of a patent, trademark, copyright or

other form of intellectual property protection; and

(4) The filing and prosecution of opposition or infringement

proceedings with respect to a patent, trademark, copyright or other

form of intellectual property protection, or the entrance of a defense

to any such proceedings.

(b) This section authorizes the payment of fees currently due to

the United States Government, or of the reasonable and customary fees

and charges currently due to attorneys or representatives within the

United States, in connection with the transactions authorized in

paragraph (a) of this section. Payment effected pursuant to the terms

of this paragraph may not be made from a blocked account.

the Government of Sudan, or of the reasonable and customary fees and

charges currently due to attorneys or representatives within Sudan, in

connection with the transactions authorized in paragraph (a) of this

section.

(d) Nothing in this section affects obligations under any other

provision of law.

Sec. 538.515 Certain imports for diplomatic or official personnel

authorized.

All transactions ordinarily incident to the importation of any

goods or services into the United States destined for official or

personal use by the diplomatic missions of the Government of Sudan to

the United States and to international organizations located in the

United States are authorized, provided that such goods or services are

not for resale, and unless such importation is otherwise prohibited by

law.

Sec. 538.516 Diplomatic pouches.

All transactions in connection with the importation into the United

States from Sudan, or the exportation from the United States to Sudan,

of diplomatic pouches and their contents are authorized.

Sec. 538.517 Allowable payments for overflights of Sudanese airspace.

Payments to Sudan of charges for services rendered by the

Government of Sudan in connection with the overflight of Sudan or

emergency landing in Sudan of aircraft owned by a United States person

or registered in the United States are authorized.

Sec. 538.518 Household goods and personal effects.

(a) The exportation from the United States to Sudan of household

and personal effects, including baggage and articles for family use, of

persons

[[Page 35819]]

departing the United States to relocate in Sudan is authorized provided

the articles included in such effects have been actually used by such

persons or by family members accompanying them, are not intended for

any other person or for sale, and are not otherwise prohibited from

exportation.

(b) The importation of Sudanese-origin household and personal

effects, including baggage and articles for family use, of persons

arriving in the United States is authorized; to qualify, articles

included in such effects must have been actually used abroad by such

persons or by other family members arriving from the same foreign

household, must not be intended for any other person or for sale, and

must not be otherwise prohibited from importation.

Sec. 538.519 Aircraft and maritime safety.

Specific licenses may be issued on a case-by-case basis for the

exportation and reexportation of goods, services, and technology to

insure the safety of civil aviation and safe operation of U.S.-origin

commercial passenger aircraft, and to ensure the safety of ocean-going

maritime traffic in international waters.

Sec. 538.520 Extensions or renewals of loans and credits.

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

rescheduling loans or otherwise extending the maturities of existing

loans, and for charging fees or interest at commercially reasonable

rates in connection therewith, provided that no new funds or credits

are thereby transferred or extended to Sudan or the Government of

Sudan.

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

request of the account party, for the extension or renewal of a letter

of credit or a standby letter of credit issued or confirmed by a U.S.

financial institution.

Sec. 538.521 Registration of nongovernmental organizations.

(a) Registration numbers may be issued on a case-by-case basis for

the registration of nongovernmental organizations involved in

humanitarian or religious activities in Sudan, authorizing transactions

otherwise prohibited by this part, including the exportation of goods

and services to Sudan and the transfer of funds to and from Sudan for

the purpose of relieving human suffering.

(b) Applications for registration must include the name and address

of the organization's headquarters; the name, title, and telephone

number of a person to be contacted in connection with registration

pursuant to this section; the organization's local address in Sudan and

name if different; and a detailed description of its humanitarian or

religious activities and projects in Sudan. Applications should be

submitted to the Compliance Programs Division, Office of Foreign Assets

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

Annex, Washington, DC 20220.

should reference the registration number on all funds transfers, and

all purchase, shipping, and financing documents.

Sec. 538.522 Transactions related to U.S. citizens residing in Sudan.

U.S. persons are authorized to engage in transactions in Sudan

ordinarily incident to the routine and necessary maintenance and other

personal living expenses of U.S. citizens who reside on a permanent

basis in Sudan.

Subpart F--Reports

Sec. 538.601 Records and reports.

For additional provisions relating to records and reports, see

subpart C of part 501 of this chapter.

Subpart G--Penalties

Sec. 538.701 Penalties.

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

Emergency Economic Powers Act (the ``Act'')(50 U.S.C. 1705), which is

applicable 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 Act. Section 206 of the

Act, as adjusted by the Federal Civil Penalties Inflation Adjustment

Act of 1990 (Pub. L. 101-410, as amended, 28 U.S.C. 2461 note),

provides that:

(1) A civil penalty not to exceed $11,000 per violation may be

imposed on any person who violates any license, order, or regulation

issued under the Act;

(2) Whoever willfully violates any license, order, or regulation

issued under the 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.

(b) The criminal penalties provided in the Act are subject to

increase pursuant to 18 U.S.C. 3571.

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 statement 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 under title 18, United States Code, 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. 538.702 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 respond. The prepenalty notice also shall inform the

respondent of respondent's 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. 537.703 Response to prepenalty notice; informal settlement.

(a) Deadline for response. The respondent shall have 30 days from

the date of mailing of the prepenalty notice to make a written response

to the Director of the Office of Foreign Assets Control.

(b) Form and contents of response. The written response need not be

in any

[[Page 35820]]

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 respondent believes the penalty should not be imposed

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

written response to a prepenalty notice pursuant to this section, the

respondent or respondent's representative may contact the Office of

Foreign Assets Control as advised in the prepenalty notice to propose

the settlement of allegations contained in the prepenalty notice and

related matters. In the event of settlement at the prepenalty stage,

the claim proposed in the prepenalty notice will be withdrawn, the

respondent is not required to take a written position on allegations

contained in the prepenalty notice, and the Office of Foreign Assets

Control will make no final determination as to whether a violation

occurred. The amount accepted in settlement of allegations in a

prepenalty notice may vary from the civil penalty that might finally be

imposed in the event of a formal determination of violation. In the

event no settlement is reached, the 30-day period specified in

paragraph (a) of this section for written response to the prepenalty

notice remains in effect unless additional time is granted by the

Office of Foreign Assets Control.

Sec. 537.704 Penalty imposition or withdrawal.

(a) No violation. If, after considering any 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

respondent named in the prepenalty notice, the Director promptly shall

notify the respondent in writing of that determination and that no

monetary penalty will be imposed.

(b) Violation. If, after considering any response to the prepenalty

notice, the Director of the Office of Foreign Assets Control determines

that there was a violation by the respondent named in the prepenalty

notice, the Director promptly shall issue a written notice of the

imposition of the monetary penalty to the respondent.

(1) The penalty notice shall inform the respondent that payment of

the assessed penalty must be made within 30 days of the mailing of the

penalty notice.

(2) The penalty notice shall inform the respondent of the

requirement to furnish the respondent's taxpayer identification number

pursuant to 31 U.S.C. 7701 and that such number will be used for

purposes of collection and reporting on any delinquent penalty amount

in the event of a failure to pay the penalty imposed.

Sec. 537.705 Administrative collection; referral to United States

Department of Justice.

In the event that the respondent 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. 538.801 Procedures.

For license application procedures and procedures relating to

amendments, modifications, or revocations of licenses; administrative

decisions; rulemaking; and requests for documents pursuant to the

Freedom of Information and Privacy Acts (5 U.S.C. 552 and 552a), see

subpart D of part 501 of this chapter.

Sec. 538.802 Delegation by the Secretary of the Treasury.

Any action which the Secretary of the Treasury is authorized to

take pursuant to Executive Order 13067 (3 CFR, 1997 Comp., p. 230), and

any further Executive orders relating to the national emergency

declared with respect to Sudan in Executive Order 13067, 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.

Subpart I--Paperwork Reduction Act

Sec. 538.901 Paperwork Reduction Act notice.

The information collection requirements in Secs. 538.506 and

538.521 have been approved by the Office of Management and Budget

(``OMB'') and assigned control number 1505-0169. For approval by OMB

under the Paperwork Reduction Act of other information collections

relating to recordkeeping and reporting requirements, to licensing

procedures (including those pursuant to statements of licensing

policy), and to other procedures, see Sec. 501.901 of this chapter. An

agency may not conduct or sponsor, and a person is not required to

respond to, a collection of information unless it displays a valid

control number assigned by OMB.

Dated: June 18, 1998.

R. Richard Newcomb,

Director, Office of Foreign Assets Control.

Approved: June 25, 1998.

James E. Johnson,

Assistant Secretary (Enforcement), Department of the Treasury.

[FR Doc. 98-17538 Filed 6-29-98; 8:51 am]

BILLING CODE 4810-25-F

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.