FINAL
RULES PUBLISHED IN THE FEDERAL REGISTER DURING 2004
TREASURY DEPARTMENT, OFFICE OF FOREIGN ASSET CONTROL
FOREIGN ASSET CONTROL REGULATIONS
(31 CFR Part 500 et seq.)
NOTE: CHANGES TO THE FOREIGN ASSET CONTROL REGULATIONS LISTED BELOW ARE NUMBERED CONSECUTIVELY, BEGINNING IN JANUARY OF THE NEW YEAR.
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1. List of Countries Requiring With an International Boycott (69. FR 19617 April 13, 2004)
Commentary: The Department of Treasury has published a current list of countries, which may require participation in, or cooperating with, and international boycott (within the meaning of Section 999(b)(3) of the Internal Revenue Code of 1986). On the basis of the best information currently available to the Department of the Treasury, the following countries may require participation in, or cooperation with, and international boycott (within the meaning of Section 999(b)(3) of the International Revenue Code of 1986): Bahrain, Kuwait, Lebanon, Libya, Oman, Qatar, Republic of Yemen, Saudi Arabia, Syria, and the United Arab Emirates.
2. Alphabetical Listing of Blocked Persons, Specially Designated Nationals, Specially Designated Terrorists, Specially Designated Global Terrorists, Foreign Terrorists Organizations, and Specially Designated Narcotics Traffickers(69 FR 30362 on May 27, 2004)
Commentary: The Treasury Department, Office of Foreign Assets Control has amended Appendix A to 31 CFR Chapter V to (1) reflect the addition or removal, since it was last published, of the names of individuals and entities subject to the various economic sanctions programs administrated by the Treasury’s Office of Foreign Assets Control and (2) provide updated identifying and clarifying information for certain individuals and entities included in the appendix. The Treasury Department also is amending the notes to the appendices to 31 CFR Chapter V to reflect the revisions to Appendix A and changes in the status of several programs. The file is available for download without charge in ASCII and Adobe Acrobat readable (*.PDF) formats at GPO Access (http://fedbbs.access.gpo.gov/).
3. Cuban Assets Control Regulations(69 FR 33768 on June 16, 2004)
Commentary: The Treasury Department, Office of Foreign Assets Control has amended the Cuban Assets Control Regulations, Part 515 of Chapter V of 31 CFR, to implement the President’s May 6, 2004 direction with respect to certain recommendations in the May 2004 Report to the President from the Commission for Assistance to a Free Cuba. This rule also contains additional substantive amendments consistent with the President’s policy as well as technical and clarifying amendments. For a detailed list, please refer to the printed regulation cited above.
4. Revocation of OFAC Specific Licenses To Engage in Travel-Related Transactions Incident to Visiting Close Relatives in Cuba (69 FR 33775 on June 16, 2004)
Commentary: The Treasury Department, Office of Foreign Assets Control has amended the terms of current licenses issued pursuant to the Cuban Assets Control Regulations (CACR) in effect prior to June 30, 2004 (the effective date of the interim final rule published elsewhere in this issue) so that they terminate no later than 12:01 a.m. Eastern Standard Time on June 30, 2004. Specifically, in order to be consistent with the President’s May 6, 2004 direction and the new amendments to the CACR, any license issued pursuant to Paragraph (a) of §515.561 on or before June 16, 2004, and that expires according to its own terms on or after June 30, 2004, is hereby amended to expire at 12:01 a.m. Easter Standard Time on June 30, 2004. Accordingly, all persons who hold such license may not use them to engage in any Cuba travel-related transactions on or after June 30, 2004.
5. Zimbabwe Sanctions Regulations(69 FR 45246 on July 29, 2004)
Commentary: The Treasury Department, Office of Foreign Assets Control has added new regulations to implement Executive Order 13288 of March 6, 2003, “Blocking Property of Persons Undermining Democratic Processes or Institutions in Zimbabwe.” Executive Order 13288 declared a national emergency with respect to “the actions and policies of certain members of the Government of Zimbabwe and other persons to undermine Zimbabwe, to politically motivated violence and intimidation in the country, and to political and economic instability in the southern African region * * *”. Specifically, Part 541 is added to 31 CFR Chapter V, and is entitled “Administrative practice and procedure, Banks, Banking, Blocking of assets, Penalties, Reporting and recordkeeping requirements, Securities, Services, Zimbabwe.” A summary of the sections follows below.
Section 1 of the order blocks, with certain exceptions, all property and interests in property of the persons described in Sections 1(a) and 1(b) 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 United States persons, including their overseas branches. The persons described in Section 1(a) are those listed in the Annex to the order. The persons described in Section 1(b) are any persons determined by the Secretary of the Treasury, in consultation with the Secretary of State, to be owned or controlled by, or acting or purporting to act directly or indirectly for or on behalf of, any of the persons listed in the Annex to the order.
Section 2(a) of the order prohibits any transaction or dealing by a United States person or within the United States in property blocked pursuant to the order, including but not limited to, the making or receiving of any contribution of funds, goods or services to or for the benefit of a person listed in or designated pursuant to the order. Section 2(b) of the order prohibits any transaction by a United States person or within the United States that evades or avoids, or has the purpose of evading or avoiding, or attempts to violate, any of the prohibitions set forth in the order. Section 2(c) also prohibits any conspiracy formed to violate such prohibitions.
Section 4 of the order authorizes the Secretary of the Treasury, in consultation with the Secretary of State, to take such actions, including the promulgation of rules and regulations, as may be necessary to carry out the purposes of the order. Acting under authority delegated by the Secretary of the Treasury, the Department of the Treasury's Office of Foreign Assets Control (“OFAC”) is promulgating these Zimbabwe Sanctions Regulations, 31 CFR Part 541 (the “Regulations”).
Subpart B of the Regulations implements the prohibitions contained in sections 1 and 2 of the order. See Sec. Sec. 541.201, 541.204. Appendix A to 31 CFR Chapter V has previously been amended to incorporate the names of persons set forth in the Annex to the order. Persons identified in the Annex to the order or designated by or under the authority of the Secretary of the Treasury pursuant to the order are referred to throughout the Regulations as “persons whose property or interests in property are blocked pursuant to Sec. 541.201(a).” Their names are or will be published on OFAC's Web site, announced in the Federal Register and incorporated on an ongoing basis into appendix A to 31 CFR Chapter V, which lists persons that are the targets of various sanctions programs administered by OFAC.
Sections 541.202 and 541.203 of subpart B, respectively, detail the effect of transfers of blocked property in violation of the Regulations and set forth the requirement to hold blocked funds in interest-bearing blocked accounts. Section 541.205 of subpart B provides that all expenses incident to the maintenance of blocked physical property shall be the responsibility of the owners and operators of such property, and that such expenses shall not be met from blocked property. The section further provides that blocked property may, in the discretion of the Director of OFAC, be sold or liquidated and the net proceeds placed in a blocked interest-bearing account in the name of the owner of the property.
Section 541.206 of subpart B details transactions that are exempt from the prohibitions of part 541. These exemptions derive from the exemptions set out in Sections 203(b)(1), (3) and (4) of IEEPA (50 U.S.C. 1702(b)(1), (3), and (4)) and relate to personal communications, the importation and exportation of information or informational materials, and travel.
Subpart C of part 541 defines key terms used throughout the Regulations, and subpart D sets forth interpretive sections regarding the general prohibitions contained in subpart B. Transactions otherwise prohibited under part 541 but found to be consistent with U.S. policy may be authorized by one of the general licenses contained in subpart E or by a specific license issued pursuant to the procedures described in subpart D of 31 CFR part 501.
Subpart F of part 541 refers to subpart C of part 501 for applicable record keeping and reporting requirements. Subpart G describes the civil and criminal penalties applicable to violations of the Regulations, as well as the procedures governing the imposition of a civil monetary penalty.
Subpart H of part 541 refers to subpart D of part 501 for applicable provisions relating to administrative procedures. Subpart I of the Regulations sets forth a Paperwork Reduction Act notice.
6. Implementation of Executive Order 13315 with Respect to Iraq; General License No. 1; Final Rule(69 FR 46090 on July 30, 2004)
Commentary: The Office of Foreign Assets Control (OFAC) of the U.S. Department of Treasury has amended the Iraqi Sanctions Regulations, in light of the President’s termination of the national emergency declared in Executive Order 12722. Notwithstanding the termination of the national emergency, Executive Order 13315, pursuant to the President’s authority under Section 207 of the International Emergency Economic Powers Act (IEEPA), continues prohibitions with regard to transactions involving any property block pursuant to Executive Order 12722 or Executive Order 12724 that remains blocked as of July 30, 2004. Executive Order 13315 indicates that the terminations “shall not affect any action taken or proceeding pending but not concluded” as of July 30, 2004, nor will it affect “any rights or duties that had matured” prior to that date. All property and interests in property, including accounts, that were blocked as of May 23, 2003, pursuant to Executive Order 12722 or Executive Order 12724, or subpart B of the Regulations, remain blocked and subject to the prohibitions and requires of the Regulations.
The Treasury Department is further revising Section 575.533 to recognize the transfer of the Commerce Department of licensing jurisdiction over exports from the United States to Iraq. Effective July 30, 2004, all applications for exportation or reexportation to Iraq of any items controlled by the Department of Commerce under the EAR (15 CFR Parts 730 through 799) for exportation to Iraq are submitted to the Department of Commerce, Bureau of Industry and Security. Paragraph (b)(2) of Section 575.533 is revised to remove reference to OFAC’s issuance of specific license for the exportation of certain goods to Iraq. All OFAC licenses for the exportation or reexportation of goods, software or technology to Iraq issued pursuant to Part 575 shall remain valid until the expiration data stated in the license, or if no exportation data is provided in the license, until July 30, 2005.
Paragraph (a) of General License No. 1 under Executive Order 13315 permits all transactions with state bodies, corporations, or agencies of the former Iraqi regime that are prohibited by Section 1 of Executive Order 13315, with four exceptions described in paragraph (b). Paragraph (b)(1) of General License No. 1 specifies that all property and interests in property of those persons named in the Annex to Executive Order 13315 or later determined to be subject to the Executive Order are to remain blocked and subject to the prohibitions and requirements of the Executive Order.
Paragraph (b)(2) of General License No. 1 states that all property and interests in property, including accounts, that were blocked pursuant to subpart B of the Iraqi Sanctions Regulations, 31 CFR part 575, as of May 23, 2003, shall remain blocked. Paragraph (b)(3) of General License No. 1 states that the general license does not permit transactions with those persons that are listed in Appendix A to chapter V of title 31, Code of Federal Regulations (commonly referred to as the “Specially Designated Nationals List”--or “SDN List”), except for those organizations listed in paragraph (b)(4).
Notwithstanding paragraph (b)(3), paragraph (b)(4) of General License No. 1 lifts economic sanctions on certain entities, even though they are Iraqi SDNs and are listed in Appendix A to chapter V of Title 31, Code of Federal Regulation. This provision makes clear that U.S. persons may engage in economic transactions with these entities and, thereby, contribute to the orderly and expeditious reconstruction of Iraq. Note that the list of entities in paragraph (b)(4) of section 575.533 and the list in paragraph (b)(4) of General License No. 1 are identical.
Finally, paragraph (b)(5) of General License No. 1 provides that the general license does not authorize transactions with respect to Iraqi cultural property or other items of archaeological, historical, cultural, rare scientific, and religious importance illegally removed from the Iraq National Museum, the National Library, and other locations in Iraq since August 6, 1990. Any trade in or transfer of such items, including items with respect to which reasonable suspicion exists that they have been illegally removed, remains prohibited by subpart B of the Regulations. The note to paragraph (b)(4) refers inquiries concerning particular Iraqi cultural property to the Cultural Property Office at the Department of State.
Examples of transactions authorized by section 575.533 and General License No. 1 include investment by U.S. persons in Iraq, the importation of goods or services of Iraqi origin (with the exception of the cultural properties described in paragraph (b)(3)), travel-related transactions involving Iraq, the transfer of funds to or from Iraq, and transactions related to transportation to or from Iraq. This authorization, however, does not eliminate the need to comply with other provisions of 31 CFR Chapter V or with other applicable provisions of law, including any aviation, financial, or trade requirements of agencies other than OFAC. Such requirements include the Export Administration Regulations (15 CFR parts 730 et seq.) administered by the Bureau of Industry and Security, Department of Commerce, and the International Traffic in Arms Regulations (22 CFR chapters 120-130) administered by the Department of State.
7. Comment Request Regarding the Effectiveness of Licensing Procedures for Exportation of Agricultural Commodities, Medicine and Medical Devices to Sudan, Libya and Iran(69 FR 48183 on August 9, 2004)
Commentary: The Treasury Department, Office of Foreign Assets Control has published a solicitation for comments regarding the effectiveness of OFAC’s licensing procedures implementing the Trade Sanctions Reform and Export Enhancement Act of 2000 (the “Act”), for the exportation of agricultural commodities, medicine, and medical devices to Sudan, Libya, and Iran. Pursuant to Section 906(c) of the Act, OFAC is required to submit a biennial report to the Congress on the operation of licensing procedures for such exports. The report is to include:
(1) The number of types of licenses applied for;
(2) The number and types of licenses approved;
(3) The average amount of time elapsed from the date of filing of a license application until the date of its approval;
(4) The extent to which the licensing procedures were effectively implements; and
(5) A description of comments received from interested parties about the extent to which the licensing procedures were effective, after holding a public 30-day comment period.
Interested parties submitting comments are requested to be as specific as possible. All comments received on or before September 8, 2004 will be considered by OFAC in developing the report to the Congress.
8. Rough Diamond Control Regulations(69 FR 56936 on September 23, 2004)
Commentary: The Treasury Department, Office of Foreign Assets Control (OFAC) has published a final rule revising the Rough Diamonds Control Regulations previously issued as an interim final rule. These regulations carry out the purposes of Executive Order 13312 of July 19, 2003, which implemented the Clean Diamond Trade Act and the Kimberley Process Certification Scheme for rough diamonds. Based on its experience and that of other involved agencies, OFAC revised certain reporting and recordkeeping requirements of the regulations.
9. Publication of General Licenses Related to the Cuba, Burma, and Western Balkans Sanctions Programs(69 FR 64632 on November 5, 2004)
Commentary: The Treasury Department’s Office of Foreign Assets Control (OFAC) has published a notice of publication of general licenses in the Cuba, Burma, and Western Balkans sanctions programs. The Cuban General License relates to travel-related transactions. The Burma general licenses relate to Official Government and International Organization Activities; Third-Country Diplomatic and Consular Funds Transfers; Importations for U.S. Diplomatic and Consular Officials; Importations for Foreign Diplomatic and Consular Officials; Diplomatic Pouches; Noncommercial Personal Remittances; Transactions Incident to Certain Imports; Export-related Transactions; Importation of Information and Informational Material; Importations of Certain Personal and Household Effects; Activities Undertaken Pursuant to Certain Pre-May 21, 1997 Agreements; Allowable Payments for Overflights of Burmese Airespace; and Importation of Burmese-origin Articles. The Western Balkans General License relates to Legal Representation in Matters Pending Before the International Criminal Tribunal for the Former Yugoslavia. For a detailed explanation of the general licenses, please refer to the publication.
10. Cuban Assets Control Regulations, Sudanese Sanctions Regulations, and Iranian Transactions Regulations (69 FR 75468 on December 17, 2004)
Commentary: The Treasury Department’s Office of Foreign Assets Control (OFAC) has published a final rule revising the Cuban Assets Control Regulations (CACR), the Sudanese Sanctions Regulations (SSR), and the Iranian Transactions Regulations (ITR) to add general licenses pertaining to publishing activities. Specifically, OFAC amended the CACR, SSR, and ITR to authorize certain activities relating to publishing that otherwise entail the prohibited exportation of services, to, or prohibited importation of services from, Cuba, Sudan, or Iran.
OFAC is issuing the new general licenses set forth at 31 CFR 515.577, 31 CFR 538.529 and 31 CFR 560.538 to authorize transactions not already exempt from regulation that directly support the publishing and marketing of manuscripts, books, journals, and newspapers, in paper or electronic format. Each of the general licenses is similar in structure and scope, authorizing a variety of activities relating to publishing with appropriate exceptions, such as those for the governments of each of the sanctioned countries. Section 515.545, a pre-existing general license pertaining to information and information materials remains in effect, but is being revised to include a note referring to the further authorizations contained in Section 515.577.