[Federal Register Volume 75, Number 176 (Monday, September 13, 2010)]
[Rules and Regulations]
[Pages 55463-55475]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-22546]
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DEPARTMENT OF THE TREASURY
Office of Foreign Assets Control
31 CFR Part 576
Iraq Stabilization and Insurgency Sanctions Regulations
AGENCY: Office of Foreign Assets Control, Treasury.
ACTION: Final rule.
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SUMMARY: The Department of the Treasury's Office of Foreign Assets
Control (``OFAC'') is adding the Iraq Stabilization and Insurgency
Sanctions Regulations as a new part to the Code of Federal Regulations,
to implement Executive Order 13303 of May 22, 2003, Executive Order
13315 of August 28, 2003, Executive Order 13350 of July 29, 2004,
Executive Order 13364 of November 29, 2004, and Executive Order 13438
of July 17, 2007.
[[Page 55464]]
DATES: Effective Date: September 13, 2010.
FOR FURTHER INFORMATION CONTACT: Assistant Director for Compliance,
Outreach & Implementation, tel.: 202/622-2490, Assistant Director for
Licensing, tel.: 202/622-2480, Assistant Director for Policy, tel.:
202/622-4855, or Chief Counsel (Foreign Assets Control), tel.: 202/622-
2410 (not toll free numbers).
SUPPLEMENTARY INFORMATION:
Electronic and Facsimile Availability
This document and additional information concerning OFAC are
available from OFAC's Web site (http://www.treas.gov/ofac). Certain
general information pertaining to OFAC's sanctions programs also is
available via facsimile through a 24-hour fax-on-demand service, tel.:
202/622-0077.
Background
Following the removal from power of the regime of Saddam Hussein in
Iraq, the President issued Executive Order 13303 of May 22, 2003, under
the authority of, inter alia, the International Emergency Economic
Powers Act, 50 U.S.C. 1701 et seq. (``IEEPA''), the National
Emergencies Act, 50 U.S.C. 1601 et seq. (``NEA''), and section 5 of the
United Nations Participation Act, 22 U.S.C. 287c (``UNPA''). In
Executive Order 13303, the President found that the threat of
attachment or other judicial process against the Development Fund for
Iraq, Iraqi petroleum and petroleum products, and interests therein,
and proceeds, obligations, or financial instruments arising from or
related to the sale or marketing thereof obstructed the orderly
reconstruction of Iraq, the restoration and maintenance of peace and
security in the country, and the development of political,
administrative, and economic institutions in Iraq. The President
further determined that this situation constituted an unusual and
extraordinary threat to the national security and foreign policy of the
United States and declared a national emergency to deal with that
threat.
To deal with this emergency, section 1 of Executive Order 13303
provided that, unless licensed or otherwise authorized, any attachment,
judgment, execution, or other judicial process is prohibited and shall
be deemed null and void with respect to (1) the Development Fund for
Iraq, and (2) all Iraqi petroleum and petroleum products, and interests
therein, and proceeds, obligations, or any financial instruments of any
nature arising from or related to the sale or marketing thereof, and
interests therein, in which any foreign country or national thereof has
any interest, that are in, or come within, the United States, or that
are in, or come within, the possession or control of United States
persons. Executive Order 13303 also provided that two earlier Executive
orders that had imposed comprehensive sanctions against Iraq following
the invasion of Kuwait, including a trade embargo and a blocking of
Iraqi government assets (i.e., Executive Order 12722 of August 2, 1990,
and Executive Order 12724 of August 9, 1990), as well as a more recent
Executive order confiscating and vesting title to certain blocked Iraqi
property (i.e., Executive Order 13290 of March 20, 2003) were not
applicable to the property and interests in property described in
section 1.
On August 28, 2003, the President issued Executive Order 13315,
under the authority of, inter alia, IEEPA, the NEA, and the UNPA, and
in view of United Nations Security Council Resolution (``UNSCR'') 1483
of May 22, 2003. The President issued this Order to expand the scope of
the national emergency declared in Executive Order 13303 to address the
unusual and extraordinary threat to the national security and foreign
policy of the United States posed by obstacles to the orderly
reconstruction of Iraq, the restoration and maintenance of peace and
security in that country, and the development of its political,
administrative, and economic institutions. The President found that the
removal of Iraqi property from the country by certain senior officials
of the former Iraqi regime and their family members constituted such an
obstacle. The President determined that the United States was engaged
in armed hostilities and that it was in the interest of the United
States to confiscate certain additional property of the former Iraqi
regime, certain senior officials of the former regime, immediate family
members of those officials, and controlled entities.
Section 1 of Executive Order 13315 blocked all property and
interests in property in the United States or in the possession or
control of United States persons, including any overseas branch, of:
(1) The former Iraqi regime, (2) its state bodies, corporations, or
agencies, (3) persons listed in the Annex to the Order, and (4) persons
determined by the Secretary of the Treasury, in consultation with the
Secretary of State, to be senior officials of the former Iraqi regime
or their immediate family members or to be owned or controlled by, or
acting or purporting to act for or on behalf of, directly or
indirectly, any of the persons listed in the Annex or determined to be
subject to the Order.
Section 2 of Executive Order 13315 authorized the Secretary of the
Treasury, in consultation with the Secretary of State, to confiscate
property blocked pursuant to section 1 and determined to belong to a
person, organization, or country that had planned, authorized, aided,
or engaged in armed hostilities against the United States. Section 2
directed that all right, title, and interest in such confiscated
property shall vest in the Department of the Treasury, and such vested
property shall promptly be transferred to the Development Fund for
Iraq.
Section 3 of Executive Order 13315 prohibited any transaction by a
United States person or within the United States that evades or avoids,
has the purpose of evading or avoiding, or attempts to violate, any of
the prohibitions set forth in the Order, as well as any conspiracy
formed to violate such prohibitions. Section 4 defined certain terms
used in the Order. Section 5 set forth the President's determination
that the making of donations of the type specified in section 203(b)(2)
of IEEPA (i.e., donations of articles, such as food, clothing, and
medicine, intended to be used to relieve human suffering) by or to
persons determined to be subject to the sanctions would seriously
impair his ability to deal with the national emergency declared in
Executive Order 13303 and expanded in scope in this Order and would
endanger Armed Forces of the United States that were engaged in
hostilities. Accordingly, the President prohibited the donation of such
items unless authorized by OFAC.
On July 29, 2004, the President issued Executive Order 13350,
which, because of the removal of the regime of Saddam Hussein and other
developments, terminated the national emergency that had been declared
in Executive Order 12722 with respect to Iraq, and revoked that Order,
Executive Order 12724, and subsequent Orders that were based on the
national emergency declared in Executive Order 12722. In Executive
Order 13350, the President also took certain additional steps to deal
with the national emergency declared in Executive Order 13303 and
expanded in Executive Order 13315, which remains in effect.
Among other things, the President's termination of the national
emergency that had been declared in Executive Order 12722 and his
revocation of that and related Orders ended, as of July 30, 2004, the
import and export prohibitions that had been imposed pursuant to
Executive Orders 12722 and 12724 and related regulations, including
[[Page 55465]]
the Iraqi Sanctions Regulations, 31 CFR part 575. As a practical
matter, most import and export transactions had been authorized by the
provisions of subpart E of part 575 since May 23, 2003. OFAC has now
removed the Iraqi Sanctions Regulations from 31 CFR chapter V effective
September 13, 2010.
Section 1 of Executive Order 13350 provided for the continuation of
prohibitions under section 207 of IEEPA, 50 U.S.C. 1706, with regard to
transactions involving property blocked pursuant to Executive Orders
12722 and 12724 that continued to be blocked as of July 30, 2004. In
addition, section 1 provided that the termination of the national
emergency declared in Executive Order 12722 shall not affect any action
taken or proceeding pending but not finally concluded or determined as
of July 30, 2004, any action or proceeding based on any act committed
prior to such date, or any rights or duties that matured or penalties
that were incurred prior to such date. Accordingly, property blocked
pursuant to Executive Orders 12722 and 12724 as of July 30, 2004,
remained blocked.
Section 2 replaced and superseded the Annex to Executive Order
13315 in its entirety with the Annex to Executive Order 13350. Section
3 amended Executive Order 13290 by substituting the national emergency
declared in Executive Order 13303 and expanded in Executive Order 13315
for the one declared in Executive Order 12722. Section 4 prohibited the
trade in or transfer of ownership or possession of Iraqi cultural
property or other items of archeological, historical, cultural, rare
scientific, and religious importance that were illegally removed, or
for which a reasonable suspicion existed that they were illegally
removed, from the Iraq National Museum, the National Library, and other
locations in Iraq since August 6, 1990, unless licensed or authorized
pursuant to Executive Order 13350 or otherwise consistent with U.S.
law. Section 5 prohibited the making of donations of the type specified
in section 203(b)(2) of IEEPA by or to persons determined to be subject
to the sanctions imposed by Executive Order 13315, as amended by
Executive Order 13350.
The President issued Executive Order 13364 on November 29, 2004,
further modifying the scope of the national emergency that was declared
in Executive Order 13303, expanded in Executive Order 13315, and
modified in Executive Order 13350. The President found that the threat
of attachment or other judicial process against the Central Bank of
Iraq constituted an obstacle to the orderly reconstruction of Iraq, the
restoration and maintenance of peace and security in that country, and
the development of political, administrative, and economic institutions
in Iraq. Accordingly, Executive Order 13364 amended section 1 of
Executive Order 13303 to extend that section's protection from
attachment, judgment, execution, or other judicial process to any
accounts, assets, investments, or any other property of any kind owned
by, belonging to, or held by the Central Bank of Iraq, or held or
otherwise controlled by any financial institution in the name or on
behalf of, or otherwise for, the Central Bank of Iraq.
In addition, consistent with UNSCRs 1483 and 1546, dated May 22,
2003, and June 8, 2004, respectively, Executive Order 13364 amended
section 1 of Executive Order 13303 to limit the immunity provided
therein in two ways. First, it provided that the immunity from
attachment for Iraqi petroleum and petroleum products and interests
therein shall apply only until title passes to the initial purchaser.
Second, it restricted the overall prohibition against attachment,
judgment, execution, or other judicial process so that the immunity
from attachment shall not apply with respect to any final judgment
arising out of a contractual obligation entered into by the Government
of Iraq, including any agency or instrumentality thereof, after June
30, 2004.
Finally, on July 17, 2007, the President issued Executive Order
13438, finding that acts of violence threatening the peace and
stability of Iraq and undermining efforts to promote economic
reconstruction and political reform in Iraq and to provide humanitarian
assistance to the Iraqi people constitute an unusual and extraordinary
threat to the national security and foreign policy of the United
States. Accordingly, he determined that it was in the interests of the
United States to take additional steps with respect to the national
emergency declared in Executive Order 13303, expanded in Executive
Order 13315, and relied upon for additional steps in Executive Orders
13350 and 13364.
Section 1 of Executive Order 13438 blocked the property and
interests in property in the United States or in the possession or
control of United States persons, including any overseas branch, of any
person determined by the Secretary of the Treasury, in consultation
with the Secretary of State and the Secretary of Defense: (i) To have
committed, or to pose a significant risk of committing, an act of
violence that has the purpose or effect of (A) threatening the peace or
stability of Iraq or the Government of Iraq, or (B) undermining efforts
to promote economic reconstruction and political reform in Iraq or to
provide humanitarian assistance to the Iraqi people; (ii) to have
materially assisted, sponsored, or provided financial, material,
logistical, or technical support for, or goods or services in support
of, such an act or acts of violence or any person whose property and
interests in property are blocked pursuant to the Order; or (iii) to be
owned or controlled by or to have acted or purported to act for or on
behalf of, directly or indirectly, any person whose property and
interests in property are blocked pursuant to the Order. The
prohibitions in section 1 include, but are not limited to, the making
of any contribution or provision of funds, goods, or services by, to,
or for the benefit of any person whose property and interests in
property have been blocked, and the receipt of any contribution or
provision of funds, goods, or services from any such person.
Acting under authority delegated to the Secretary of the Treasury
by Executive Orders 13303, 13315, 13350, 13364 and 13438, OFAC is
promulgating these Iraq Stabilization and Insurgency Sanctions
Regulations, 31 CFR part 576 (the ``Regulations''), to implement the
provisions of those orders.
Subpart A of the Regulations clarifies the relation of this part to
other laws and regulations. Subpart B of the Regulations sets forth:
(a) The prohibitions contained in section 1 of Executive Order 13303,
as amended by Executive Order 13364; (b) the prohibitions contained in
section 1 of Executive Order 13315, as amended by Executive Order
13350; (c) the prohibitions contained in sections 1 and 4 of Executive
Order 13350; and (d) the prohibitions contained in section 1 of
Executive Order 13438. See Sec. Sec. 576.201, 576.206, 576.208.
Persons identified in the Annex to Executive Order 13315, as amended by
Executive Order 13350, or designated by or under the authority of the
Secretary of the Treasury pursuant to Executive Orders 13315 or 13438
are referred to throughout the Regulations as ``persons whose property
and interests in property are blocked pursuant to Sec. 576.201(a).''
The names of persons listed in or designated pursuant to Executive
Orders 13315, 13350, and 13438 are published on OFAC's Specially
Designated Nationals and Blocked Persons List, which is accessible via
OFAC's Web site. Those names also are published in the Federal Register
as they are added to the List, and the entire List is republished
[[Page 55466]]
annually as Appendix A to 31 CFR chapter V.
Subpart C of the Regulations defines key terms used throughout this
part. Subpart D of the Regulations sets forth interpretive sections
regarding other provisions in the Regulations. Section 576.411 of
subpart D interprets a provision unique to Part 576, Sec. 576.208,
which provides that the trade in or transfer of certain Iraqi cultural
property is prohibited. OFAC may establish a violation of Sec. 576.208
separate from, and independent of, other laws and regulations that
prohibit the trade in or transfer of Iraqi cultural property. Section
576.411 states that the mere compliance with certain legal,
administrative, or procedural requirements, such as those set forth by
U.S. Customs and Border Protection, does not preclude a violation of
Sec. 576.208.
Transactions otherwise prohibited under the Regulations but found
to be consistent with U.S. policy may be authorized by one of the
general licenses contained in subpart E of the Regulations or by a
specific license issued pursuant to the procedures described in subpart
E of part 501 of 31 CFR chapter V. In addition to the general licenses,
subpart E of the Regulations also contains certain statements of
licensing policy. In particular, OFAC may license or authorize, on a
case-by-case basis, judicial process with regard to property and
interests in property protected by Sec. 576.206(a) to satisfy
liability for damages assessed in connection with an ecological
accident, including an oil spill. See Sec. 576.508. The language in
Sec. 576.508 derives from UNSCR 1483, which requires all States to
provide immunity to Iraqi petroleum, petroleum products, and natural
gas in regard to any form of attachment, garnishment, or execution in
their respective domestic legal systems, unless the proceeds are needed
to satisfy liability for damages assessed in connection with an
ecological accident that occurred after May 22, 2003.
Subpart F of the Regulations refers to subpart C of part 501 for
applicable recordkeeping and reporting requirements. Subpart G of the
Regulations describes the civil and criminal penalties applicable to
violations of the regulations, as well as the procedures governing the
potential imposition of a civil monetary penalty. Subpart H of the
Regulations refers to subpart D of part 501 for applicable provisions
relating to administrative procedures and sets forth a delegation of
authorities. Subpart I of the Regulations sets forth a Paperwork
Reduction Act notice.
Public Participation
Because the Regulations involve a foreign affairs function,
Executive Order 12866 and the provisions of the Administrative
Procedure Act (5 U.S.C. 553) requiring notice of proposed rulemaking,
opportunity for 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 collections of information related to the Regulations are
contained in 31 CFR part 501 (the ``Reporting, Procedures and Penalties
Regulations''). Pursuant to the Paperwork Reduction Act of 1995 (44
U.S.C. 3507), those collections of information have been previously
approved by the Office of Management and Budget under control number
1505-0164. 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.
List of Subjects in 31 CFR Part 576
Administrative practice and procedure, Banks, Banking, Blocking of
assets, Courts, Exports, Foreign trade, Imports, Iraq, Oil imports,
Penalties, Petroleum, Petroleum products, Reporting and recordkeeping
requirements, Specially designated nationals.
0
For the reasons set forth in the preamble, the Department of the
Treasury's Office of Foreign Assets Control adds part 576 to 31 CFR
chapter V to read as follows:
PART 576--IRAQ STABILIZATION AND INSURGENCY SANCTIONS REGULATIONS
Subpart A--Relation of This Part to Other Laws and Regulations
Sec.
576.101 Relation of this part to other laws and regulations.
Subpart B--Prohibitions
576.201 Prohibited transactions involving blocked property.
576.202 Effect of transfers violating the provisions of this part.
576.203 Holding of funds in interest-bearing accounts; investment
and reinvestment.
576.204 Expenses of maintaining blocked physical property;
liquidation of blocked property.
576.205 Evasions; attempts; conspiracies.
576.206 Protection granted to the Development Fund for Iraq, Iraqi
Petroleum and Petroleum Products, and the Central Bank of Iraq.
576.207 Exemption for property controlled by the military forces of
the United States and their coalition partners in Iraq.
576.208 Prohibited transactions related to certain Iraqi cultural
property.
576.209 Exempt transactions.
Subpart C--General Definitions
576.301 Blocked account; blocked property.
576.302 Development Fund for Iraq.
576.303 Effective date.
576.304 Entity.
576.305 Former Iraqi regime.
576.306 Information or informational materials.
576.307 Interest.
576.308 Iraqi petroleum and petroleum products.
576.309 Licenses; general and specific.
576.310 Government of Iraq.
576.311 Person.
576.312 Property; property interest.
576.313 Transfer.
576.314 UNSC Resolution 1483.
576.315 United States.
576.316 U.S. financial institution.
576.317 United States person; U.S. person.
Subpart D--Interpretations
576.401 Reference to amended sections.
576.402 Effect of amendment.
576.403 Setoffs prohibited.
576.404 Termination and acquisition of an interest in property.
576.405 Transactions ordinarily incident to a licensed transaction.
576.406 Provision of services.
576.407 Offshore transactions.
576.408 Payments from blocked accounts to satisfy obligations
prohibited.
576.409 Charitable contributions.
576.410 Credit extended and cards issued by U.S. financial
institutions.
576.411 Prohibited transactions involving certain Iraqi cultural
property.
576.412 Entities owned by a person whose property and interests in
property are blocked.
Subpart E--Licenses, Authorizations, and Statements of Licensing Policy
576.501 General and specific licensing procedures.
576.502 Effect of license or authorization.
576.503 Exclusion from licenses.
576.504 Payments and transfers to blocked accounts in U.S. financial
institutions.
576.505 Entries in certain accounts for normal service charges
authorized.
576.506 Investment and reinvestment of certain funds.
576.507 Provision of certain legal services authorized.
576.508 Judicial process in legal proceedings involving ecological
accidents.
576.509 Authorization of emergency medical services.
576.510 Unblocking certain blocked property.
[[Page 55467]]
576.511 Property controlled by the military forces of the United
States and their coalition partners in Iraq.
576.512 Transactions with certain blocked persons authorized.
Subpart F--Reports
576.601 Records and reports.
Subpart G--Penalties
576.701 Penalties.
576.702 Pre-Penalty Notice; settlement.
576.703 Penalty imposition.
576.704 Administrative collection; referral to United States
Department of Justice.
Subpart H--Procedures
576.801 Procedures.
576.802 Delegation by the Secretary of the Treasury.
Subpart I--Paperwork Reduction Act
576.901 Paperwork Reduction Act notice.
Authority: 3 U.S.C. 301; 22 U.S.C. 287c; 31 U.S.C. 321(b); 50
U.S.C. 1601-1651, 1701-1706; Pub. L. 110-96, 121 Stat. 1011; E.O.
13303, 68 FR 31931, 3 CFR, 2003 Comp., p. 227; E.O. 13315, 68 FR
52315, 3 CFR, 2003 Comp., p. 252; E.O. 13350, 69 FR 46055, 3 CFR,
2004 Comp., p. 196; E.O. 13364, 69 FR 70177, 3 CFR, 2004 Comp., p.
236; E.O. 13438, 72 FR 39719, 3 CFR, 2007 Comp., p. 224.
Subpart A--Relation of This Part to Other Laws and Regulations
Sec. 576.101 Relation of this part to other laws and regulations.
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. Actions taken pursuant to
part 501 of this chapter with respect to the prohibitions contained in
this part are considered actions taken pursuant to this part. Differing
foreign policy and national security circumstances 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. 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.
Note to Sec. 576.101: The Iraqi Sanctions Regulations, 31 CFR
part 575, have been removed from 31 CFR chapter V.
Subpart B--Prohibitions
Sec. 576.201 Prohibited transactions involving blocked property.
(a) All property and interests in property 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, of the former Iraqi regime or its
state bodies, corporations, or agencies, or of the following persons
are blocked and may not be transferred, paid, exported, withdrawn, or
otherwise dealt in:
(1) Persons listed in the Annex to Executive Order 13315 of August
28, 2003, as amended by Executive Order 13350 of July 29, 2004; and
(2) Persons determined by the Secretary of the Treasury, in
consultation with the Secretary of State,
(i) To be senior officials of the former Iraqi regime or their
immediate family members; or
(ii) To be owned or controlled by, or acting or purporting to act
for or on behalf of, directly or indirectly, any of the persons whose
property and interests in property are blocked pursuant to paragraphs
(a)(1) or (a)(2) of this section; and
(3) Persons determined by the Secretary of the Treasury, in
consultation with the Secretary of State and the Secretary of Defense,
(i) To have committed, or to pose a significant risk of committing,
an act or acts of violence that have the purpose or effect of:
(A) Threatening the peace or stability of Iraq or the Government of
Iraq; or
(B) Undermining efforts to promote economic reconstruction and
political reform in Iraq or to provide humanitarian assistance to the
Iraqi people;
(ii) To have materially assisted, sponsored, or provided financial,
material, logistical, or technical support for, or goods or services in
support of, such an act or acts of violence or any person whose
property and interests in property are blocked pursuant to paragraph
(a)(3) of this section; or
(iii) To be owned or controlled by, or to have acted or purported
to act for or on behalf of, directly or indirectly, any person whose
property and interests in property are blocked pursuant to paragraph
(a)(3) of this section.
Note 1 to paragraph (a) of Sec. 576.201: The names of persons
listed in or designated pursuant to Executive Order 13315, as
amended by Executive Order 13350, or designated pursuant to
Executive Order 13438 of July 17, 2007, whose property and interests
in property are blocked pursuant to paragraph (a) of this section,
are published on the Office of Foreign Assets Control's Specially
Designated Nationals and Blocked Persons List (``SDN'' list) (which
is accessible via the Office of Foreign Assets Control's Web site),
published in the Federal Register, and incorporated into Appendix A
to this chapter with the identifier ``[IRAQ2]'' (for persons
designated pursuant to paragraphs (a)(1) and (a)(2) of this section)
or ``[IRAQ3]'' (for persons designated pursuant to paragraph (a)(3)
of this section). See Sec. 576.412 concerning entities that may not
be listed on the SDN list but whose property and interests in
property are nevertheless blocked pursuant to paragraph (a) of this
section.
Note 2 to paragraph (a) of Sec. 576.201: The International
Emergency Economic Powers Act (50 U.S.C. 1701-1706) (``IEEPA''), in
section 203 (50 U.S.C. 1702), explicitly authorizes the blocking of
property and interests in property of a person during the pendency
of an investigation. The names of persons whose property and
interests in property are blocked pending investigation pursuant to
this part are published on the SDN list, published in the Federal
Register, and incorporated into Appendix A to this chapter with the
identifier ``[BPI-IRAQ2]'' or ``[BPI-IRAQ3].''
Note 3 to paragraph (a) of Sec. 576.201: Sections 501.806 and
501.807 of this chapter describe the procedures to be followed by
persons seeking, respectively, the unblocking of funds that they
believe were blocked due to mistaken identity, or administrative
reconsideration of their status as persons whose property and
interests in property are blocked pursuant to paragraph (a) of this
section.
(b) All property and interests in property blocked pursuant to
Executive Order 12722 of August 2, 1990, or Executive Order 12724 of
August 9, 1990, that continued to be blocked as of July 30, 2004,
remain blocked and may not be transferred, paid, exported, withdrawn,
or otherwise dealt in, except as authorized by regulations, orders,
directives, rulings, instructions, licenses or otherwise, and
notwithstanding any contracts entered into or any license or permit
granted prior to the effective date.
Note to paragraph (b) of Sec. 576.201: In Sec. 576.510 of
this part, the Office of Foreign Assets Control authorizes all
transactions involving property and interests in property blocked
solely pursuant to Executive Orders 12722 or 12724. The Iraqi
Sanctions Regulations, 31 CFR part 575, which implemented Executive
Orders 12722 and 12724, have been removed from 31 CFR chapter V.
(c) The prohibitions in paragraphs (a) and (b) of this section
include, but are not limited to, prohibitions on the following
transactions:
(1) The making of any contribution or provision of funds, goods, or
services
[[Page 55468]]
by, to, or for the benefit of any person whose property and interests
in property are blocked pursuant to paragraphs (a) or (b) of this
section; and
(2) The receipt of any contribution or provision of funds, goods,
or services from any person whose property and interests in property
are blocked pursuant to paragraphs (a) or (b) of this section.
(d) Unless otherwise authorized by this part or by a specific
license expressly referring to this section, any dealing in any
security (or evidence thereof) held within the possession or control of
a U.S. person and either registered or inscribed in the name of, or
known to be held for the benefit of, or issued by, any person whose
property and interests in property are blocked pursuant to paragraph
(a) of this section is prohibited. This prohibition includes but is not
limited to 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, any such security on or after the effective date. This
prohibition applies irrespective of the fact that at any time (whether
prior to, on, or subsequent to the effective date) the registered or
inscribed owner of any such security may have or might appear to have
assigned, transferred, or otherwise disposed of the security.
(e) The prohibitions in paragraphs (a) and (b) of this section
apply except to the extent transactions are authorized by regulations,
orders, directives, rulings, instructions, licenses, or otherwise, and
notwithstanding any contracts entered into or any license or permit
granted prior to the effective date.
Sec. 576.202 Effect of transfers violating the provisions of this
part.
(a) Any transfer after the effective date that is in violation of
any provision of this part or of any regulation, order, directive,
ruling, instruction, or license issued pursuant to this part, and that
involves any property or interest in property blocked pursuant to Sec.
576.201(a) or Sec. 576.201(b), is null and void and shall not be the
basis for the assertion or recognition of any interest in or right,
remedy, power, or privilege with respect to such property or property
interests.
(b) No transfer before the effective date shall be the basis for
the assertion or recognition of any right, remedy, power, or privilege
with respect to, or any interest in, any property or interest in
property blocked pursuant to Sec. 576.201(a) or Sec. 576.201(b),
unless the person who holds or maintains such property, prior to that
date, had written notice of the transfer or by any written evidence had
recognized such transfer.
(c) Unless otherwise provided, an appropriate license or other
authorization issued by the Office of Foreign Assets Control before,
during, or after a transfer shall validate such transfer or make it
enforceable to the same extent that it would be valid or enforceable
but for the provisions of IEEPA, Executive Orders 13315, 13350, or
13438, this part, and any regulation, order, directive, ruling,
instruction, or license issued pursuant to this part.
(d) Transfers of property that 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 is or 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 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 is or was
held or maintained (and as to such person only);
(2) The person with whom such property was held or maintained did
not have reasonable cause to know or suspect, in view of all the facts
and circumstances known or available to such person, that such transfer
required a license or authorization issued 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 withholding
of material facts or was otherwise fraudulently obtained; and
(3) The person with whom such property is or 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 issued pursuant to this part;
(ii) Such transfer was not licensed or authorized by 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 withholding
of material facts or was otherwise fraudulently obtained.
Note to paragraph (d) of Sec. 576.202: 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 (d)(2) of this section have been satisfied.
(e) Unless licensed pursuant to this part, any attachment,
judgment, decree, lien, execution, garnishment, or other judicial
process is null and void with respect to any property in which, on or
since the effective date, there existed an interest of a person whose
property and interests in property are blocked pursuant to Sec.
576.201(a), or with respect to any property and interests in property
blocked pursuant to Sec. 576.201(b).
Sec. 576.203 Holding of funds in interest-bearing accounts;
investment and reinvestment.
(a) Except as provided in paragraph (c) or (d) of this section, or
as otherwise directed by the Office of Foreign Assets Control, any U.S.
person holding funds, such as currency, bank deposits, or liquidated
financial obligations, subject to Sec. 576.201(a) or Sec. 576.201(b)
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 that are
commercially reasonable; or
(ii) With a broker or dealer registered with the Securities and
Exchange Commission under the Securities Exchange Act of 1934 (15
U.S.C. 78a et seq.), 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 subaccount, the name of the account party on each account must be
the same.
(c) Blocked funds held in instruments the maturity of which exceeds
180 days at the time the funds become subject to Sec. 576.201(a) or
Sec. 576.201(b) 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
[[Page 55469]]
Sec. 576.201(a) or Sec. 576.201(b) may continue to be held in the
same type of accounts or instruments, provided the funds earn interest
at rates that 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 other blocked property, such as debt or equity securities, to sell
or liquidate such property. However, the Office of Foreign Assets
Control may issue licenses permitting or directing such sales or
liquidation in appropriate cases.
(f) Funds subject to this section may not be held, invested, or
reinvested in a manner that provides immediate financial or economic
benefit or access to any person whose property and interests in
property are blocked pursuant to Sec. 576.201(a), nor may their holder
cooperate in or facilitate the pledging or other attempted use as
collateral of blocked funds or other assets.
Sec. 576.204 Expenses of maintaining blocked physical property;
liquidation of blocked property.
(a) Except as otherwise authorized, and notwithstanding the
existence of any rights or obligations conferred or imposed by any
international agreement or contract entered into or any license or
permit granted prior to the effective date, all expenses incident to
the maintenance of physical property blocked pursuant to Sec.
576.201(a) or Sec. 576.201(b) shall be the responsibility of the
owners or operators of such property, which expenses shall not be met
from blocked funds.
(b) Property blocked pursuant to Sec. 576.201(a) or Sec.
576.201(b) may, in the discretion of the Office of Foreign Assets
Control, be sold or liquidated and the net proceeds placed in a blocked
interest-bearing account in the name of the owner of the property.
Sec. 576.205 Evasions; attempts; conspiracies.
(a) Except as otherwise authorized, and notwithstanding any
contract entered into or any license or permit granted prior to the
effective date, any transaction by any U.S. person or within the United
States on or after the effective date that evades or avoids, has the
purpose of evading or avoiding, or attempts to violate any of the
prohibitions set forth in this part is prohibited.
(b) Except as otherwise authorized, and notwithstanding any
contract entered into or any license or permit granted prior to the
effective date, any conspiracy formed to violate the prohibitions set
forth in this part is prohibited.
Sec. 576.206 Protection granted to the Development Fund for Iraq,
Iraqi Petroleum and Petroleum Products, and the Central Bank of Iraq.
(a) Unless licensed or otherwise authorized pursuant to this part,
and except as provided in paragraph (b) of this section, any
attachment, judgment, decree, lien, execution, garnishment, or other
judicial process on or after the effective date is prohibited, and
shall be deemed null and void, with respect to the following:
(1) The Development Fund for Iraq;
(2) All Iraqi petroleum and petroleum products, and interests
therein, but only until title passes to the initial purchaser, and
proceeds, obligations, or any financial instruments of any nature
whatsoever arising from or related to the sale or marketing thereof,
and interests therein, in which any foreign country or a national
thereof has any interest, 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; and
(3) Any accounts, assets, investments, or any other property of any
kind owned by, belonging to, or held by the Central Bank of Iraq, or
held, maintained, or otherwise controlled by any financial institution
of any kind in the name of, on behalf of, or otherwise for the Central
Bank of Iraq.
(b) The prohibitions in paragraph (a) of this section shall not
apply with respect to any final judgment arising out of a contractual
obligation entered into by the Government of Iraq, including any agency
or instrumentality thereof, after June 30, 2004.
Sec. 576.207 Exemption for property controlled by the military forces
of the United States and their coalition partners in Iraq.
The prohibitions in Sec. 576.201(a)(1) and (a)(2) shall not apply
to property and interests in property that come under the control of
the military forces of the United States and their coalition partners
present in Iraq and acting in their official capacity under the command
or operational control of the commander of United States Central
Command.
Sec. 576.208 Prohibited transactions related to certain Iraqi
cultural property.
Unless licensed or otherwise authorized pursuant to this part or
otherwise consistent with U.S. law, the trade in or transfer of
ownership or possession of Iraqi cultural property or other items of
archeological, historical, cultural, rare scientific, and religious
importance that were illegally removed, or for which a reasonable
suspicion exists that they were illegally removed, from the Iraq
National Museum, the National Library, and other locations in Iraq
since August 6, 1990, is prohibited.
Note to Sec. 576.208: See Sec. 576.411 for interpretive
guidance on this section. Questions concerning whether particular
Iraqi cultural property or other items are subject to this section
should be directed to the Cultural Heritage Center, U.S. Department
of State, tel. 202-632-6301, fax 202-632-6300, Web site http://culturalheritage.state.gov, e-mail [email protected].
Sec. 576.209 Exempt transactions.
(a) Personal communications. The prohibitions contained in Sec.
576.201(a)(3) do not apply to any postal, telegraphic, telephonic, or
other personal communication that does not involve the transfer of
anything of value.
(b) Information or informational materials. (1) The importation
from any country and the exportation to any country of any information
or informational materials, as defined in Sec. 576.306, whether
commercial or otherwise, regardless of format or medium of
transmission, are exempt from the prohibitions of Sec. 576.201(a)(3).
(2) This section does not exempt from regulation or authorize
transactions related to information or 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, but are not limited to,
payment of advances for information or informational materials not yet
created and completed (with the exception of prepaid subscriptions for
widely circulated magazines and other periodical publications);
provision of services to market, produce or co-produce, create, or
assist in the creation of information or informational materials; and,
with respect to information or informational materials imported from
persons whose property and interests in property are blocked pursuant
to Sec. 576.201(a)(3), payment of royalties with respect to income
received for enhancements or alterations made by U.S. persons to such
information or informational materials.
(3) This section does not exempt or 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
[[Page 55470]]
in the transmission of any data, or to the provision, sale, or leasing
of capacity on telecommunications transmission facilities (such as
satellite or terrestrial network connectivity) for use in the
transmission of any data. The exportation of such items or services and
the provision, sale, or leasing of such capacity or facilities to a
person whose property and interests in property are blocked pursuant to
Sec. 576.201(a) are prohibited.
(c) Travel. The prohibitions contained in Sec. 576.201(a)(3) do
not apply to any transactions ordinarily incident to travel to or from
any country, including importation of accompanied baggage for personal
use, maintenance within any country including payment of living
expenses and acquisition of goods or services for personal use, and
arrangement or facilitation of such travel including nonscheduled air,
sea, or land voyages.
Subpart C--General Definitions
Sec. 576.301 Blocked account; blocked property.
The terms blocked account and blocked property shall mean:
(a) (1) Any account or property subject to the prohibitions in
Sec. 576.201(a) held in the name of a person whose property and
interests in property are blocked pursuant to Sec. 576.201(a), or in
which such person has an interest, or
(2) Any account or property subject to the prohibitions in Sec.
576.201(b), and
(b) With respect to which payments, transfers, exportations,
withdrawals, or other dealings may not be made or effected except
pursuant to an authorization or license from the Office of Foreign
Assets Control expressly authorizing such action.
Note to Sec. 576.301: See Sec. 576.412 concerning the blocked
status of property and interests in property of an entity that is 50
percent or more owned by a person whose property and interests in
property are blocked pursuant to Sec. 576.201(a).
Sec. 576.302 Development Fund for Iraq.
The term Development Fund for Iraq means the fund established on or
about May 22, 2003, on the books of the Central Bank of Iraq, by the
Administrator of the Coalition Provisional Authority responsible for
the temporary governance of Iraq and all accounts held for the fund or
for the Central Bank of Iraq in the name of the fund.
Sec. 576.303 Effective date.
The term effective date refers to the effective date of the
applicable prohibitions and directives contained in this part as
follows:
(a) With respect to a person whose property and interests in
property are blocked pursuant to Sec. 576.201(a)(1), 12:01 a.m.
Eastern Daylight Time (``e.d.t.''), August 29, 2003, for those persons
listed on the Annex to Executive Order 13315, and 12:01 a.m., e.d.t.,
July 30, 2004, for those persons added to the Annex to Executive Order
13315 by Executive Order 13350;
(b) With respect to a person whose property and interests in
property are otherwise blocked pursuant to Sec. 576.201(a)(2) or
(a)(3), the earlier of the date of actual or constructive notice that
such person's property and interests in property are blocked;
(c) With respect to the transactions prohibited by Sec.
576.206(a)(1) and (a)(2), 12:01 a.m. e.d.t., May 23, 2003;
(d) With respect to the transactions prohibited by Sec.
576.206(a)(3), 12:01 a.m. Eastern Standard Time (``e.s.t.''), November
30, 2004.
(e) With respect to the transactions prohibited by Sec. 576.201(b)
or Sec. 576.208, 12:01 a.m. e.d.t., July 30, 2004.
Sec. 576.304 Entity.
The term entity means a partnership, association, trust, joint
venture, corporation, group, subgroup or other organization.
Sec. 576.305 Former Iraqi regime.
The term former Iraqi regime means the Saddam Hussein regime that
governed Iraq until on or about May 1, 2003.
Sec. 576.306 Information or informational materials.
(a) For purposes of this part, the term information or
informational materials includes, but is not limited to, publications,
films, posters, phonograph records, photographs, microfilms,
microfiche, tapes, compact disks, CD ROMs, artworks, and news wire
feeds.
Note to paragraph (a) of Sec. 576.307: To be considered
information or informational materials, artworks must be classified
under chapter heading 9701, 9702, or 9703 of the Harmonized Tariff
Schedule of the United States.
(b) The term information or informational materials, with respect
to United States exports, does not include items:
(1) That were, as of April 30, 1994, or that thereafter become,
controlled for export pursuant to sections 5 of the Export
Administration Act of 1979, 50 U.S.C. App. 2401-2420 (1979) (the
``EAA''), or section 6 of the EAA to the extent that such controls
promote the nonproliferation or antiterrorism policies of the United
States; or
(2) With respect to which acts are prohibited by 18 U.S.C. chapter
37.
Sec. 576.307 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. 576.308 Iraqi petroleum and petroleum products.
The term Iraqi petroleum and petroleum products means any
petroleum, petroleum products, or natural gas originating in Iraq,
including any Iraqi-origin oil inventories, wherever located.
Sec. 576.309 Licenses; general and specific.
(a) Except as otherwise specified, the term license means any
license or authorization contained in or issued pursuant to this part.
(b) The term general license means any license or authorization the
terms of which are set forth in subpart E of this part.
(c) The term specific license means any license or authorization
not set forth in subpart E of this part but issued pursuant to this
part.
Note to Sec. 576.309: See Sec. 501.801 of this chapter for
licensing procedures.
Sec. 576.310 Government of Iraq.
The term Government of Iraq means:
(a) Any interim or permanent Iraqi government in authority after
June 30, 2004, and any subdivision, agency, or instrumentality thereof;
and
(b) Any partnership, association, corporation, or other
organization substantially owned or controlled by the foregoing.
Sec. 576.311 Person.
The term person means an individual or entity.
Sec. 576.312 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
[[Page 55471]]
mortgages, deeds of trust, vendors' sales agreements, land contracts,
leaseholds, ground rents, real estate and any other interest therein,
options, negotiable instruments, trade acceptances, royalties, book
accounts, accounts payable, judgments, patents, trademarks or
copyrights, insurance policies, safe deposit boxes and their contents,
annuities, pooling agreements, services of any nature whatsoever,
contracts of any nature whatsoever, and any other property, real,
personal, or mixed, tangible or intangible, or interest or interests
therein, present, future or contingent.
Sec. 576.313 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. Without limitation on the
foregoing, it 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. 576.314 UNSC Resolution 1483.
The term UNSC Resolution 1483 means United Nations Security Council
Resolution No. 1483, adopted May 22, 2003.
Sec. 576.315 United States.
The term United States means the United States, its territories and
possessions, and all areas under the jurisdiction or authority thereof.
Sec. 576.316 U.S. financial institution.
The term U.S. financial institution means any U.S. entity
(including its 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. It includes but is 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 that are located in the United States, but not such
institutions' foreign branches, offices, or agencies.
Sec. 576.317 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.
Subpart D--Interpretations
Sec. 576.401 Reference to amended sections.
Except as otherwise specified, reference to any provision in or
appendix to this part or chapter or to any regulation, ruling, order,
instruction, directive, or license issued pursuant to this part refers
to the same as currently amended.
Sec. 576.402 Effect of amendment.
Unless otherwise specifically provided, any amendment,
modification, or revocation of any provision in or appendix to this
part or chapter or of any order, regulation, ruling, instruction, or
license issued by the Office of Foreign Assets Control does not affect
any act done or omitted, or any civil or criminal 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. 576.403 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. 576.201 if made after the effective date.
Sec. 576.404 Termination and acquisition of an interest in property.
(a) Whenever a transaction licensed or authorized by or pursuant to
this part results in the transfer of property (including any property
interest) away from a person, such property shall no longer be deemed
to be property blocked pursuant to Sec. 576.201, unless there exists
in the property another interest that is blocked pursuant to Sec.
576.201 or any other part of this chapter, the transfer of which has
not been effected pursuant to license or other authorization.
(b) Unless otherwise specifically provided in a license or
authorization issued pursuant to this part, if property (including any
property interest) is transferred or attempted to be transferred to a
person whose property and interests in property are blocked pursuant to
Sec. 576.201(a), such property shall be deemed to be property in which
that person has an interest and therefore blocked.
(c) Unless otherwise provided in a license or authorization issued
pursuant to this part, Iraqi petroleum and petroleum products shall
enjoy the protections of Sec. 576.206 until title passes to the
initial purchaser. For purposes of this part, an initial purchaser is a
purchaser other than the Government of Iraq or persons acting for it or
on its behalf in the marketing or sale of Iraqi petroleum and petroleum
products.
Sec. 576.405 Transactions ordinarily incident to a licensed
transaction.
Any transaction ordinarily incident to a licensed transaction and
necessary to give effect thereto is also authorized, except:
(a) An ordinarily incident transaction, not explicitly authorized
within the terms of the license, by or with a person whose property and
interests in property are blocked pursuant to Sec. 576.201(a); or
(b) An ordinarily incident transaction, not explicitly authorized
within the terms of the license, involving a debit to a blocked account
or a transfer of blocked property.
(c)
Example. A license authorizing Company A, whose property and
interests in property are blocked pursuant to Sec. 576.201(a), to
complete a securities sale also authorizes all activities by other
parties required to
[[Page 55472]]
complete the sale, including transactions by the buyer, broker,
transfer agents, banks, etc., provided that such other parties are
not themselves persons whose property and interests in property are
blocked pursuant to Sec. 576.201(a).
Sec. 576.406 Provision of services.
(a) Except as provided in Sec. 576.209, the prohibitions on
transactions involving blocked property contained in Sec. 576.201
apply to services performed in the United States or by U.S. persons,
wherever located, including by an overseas branch of an entity located
in the United States:
(1) On behalf of or for the benefit of a person whose property and
interests in property are blocked pursuant to Sec. 576.201(a); or
(2) With respect to property interests subject to Sec. 576.201.
(b)
Example: U.S. persons may not, except as authorized by or
pursuant to this part, provide legal, accounting, financial,
brokering, freight forwarding, transportation, public relations, or
other services to a person whose property and interests in property
are blocked pursuant to Sec. 576.201(a).
Note to Sec. 576.406: See Sec. Sec. 576.507 and 576.509 on
licensing policy with regard to the provision of certain legal and
medical services.
Sec. 576.407 Offshore transactions.
The prohibitions in Sec. 576.201 on transactions or dealings
involving blocked property apply to transactions by any U.S. person in
a location outside the United States with respect to property held in
the name of a person whose property and interests in property are
blocked pursuant to Sec. 576.201, or property in which a person whose
property and interests in property are blocked pursuant to Sec.
576.201 has or has had an interest since the effective date.
Sec. 576.408 Payments from blocked accounts to satisfy obligations
prohibited.
Pursuant to Sec. 576.201, no debits may be made to a blocked
account to pay obligations to U.S. persons or other persons, except as
authorized by or pursuant to this part.
Sec. 576.409 Charitable contributions.
Unless specifically authorized by the Office of Foreign Assets
Control pursuant to this part, no charitable contribution of funds,
goods, services, or technology, including contributions to relieve
human suffering, such as food, clothing or medicine, may be made by,
to, or for the benefit of, or received from, a person whose property
and interests in property are blocked pursuant to Sec. 576.201(a). For
the purposes of this part, a contribution is made by, to, or for the
benefit of, or received from, a person whose property and interests in
property are blocked pursuant to Sec. 576.201(a) if made by, to, or in
the name of, or received from or in the name of, such a person; if made
by, to, or in the name of, or received from or in the name of, an
entity or individual acting for or on behalf of, or owned or controlled
by, such a person; or if made in an attempt to violate, to evade, or to
avoid the bar on the provision of contributions by, to, or for the
benefit of such a person, or the receipt of contributions from any such
person.
Sec. 576.410 Credit extended and cards issued by U.S. financial
institutions.
The prohibition in Sec. 576.201 on dealing in property subject to
that section prohibits U.S. financial institutions from performing
under any existing credit agreements, including, but not limited to,
charge cards, debit cards, or other credit facilities issued by a U.S.
financial institution to a person whose property and interests in
property are blocked pursuant to Sec. 576.201(a).
Sec. 576.411 Prohibited transactions involving certain Iraqi cultural
property.
(a) The prohibition on trade in or transfer of ownership or
possession of certain Iraqi cultural property in Sec. 576.208 is
separate from, and independent of, other laws and regulations that may
also prohibit the same conduct.
(b) The mere compliance with certain legal, administrative, or
procedural requirements, such as the filing of a U.S. Customs and
Border Protection Form 3461 (Entry/Immediate Delivery) or U.S. Customs
and Border Protection Form 7501 (Entry Summary), does not render the
trade in or transfer of Iraqi cultural property otherwise consistent
with U.S. law for purposes of Sec. 576.208. The trade in or transfer
of Iraqi cultural property as described in Sec. 576.208 would violate
Sec. 576.208 regardless of whether the U.S. Customs and Border
Protection forms were truthfully and accurately completed.
Note to Sec. 576.411: Other laws and regulations potentially
applicable to the unlawful trade in or transfer of Iraqi cultural
property include, but are not limited to, the transportation of
stolen goods, 18 U.S.C. 2314; the receipt of stolen goods, 18 U.S.C.
2315; the importation of goods contrary to law, 18 U.S.C. 545 and 19
U.S.C. 1595a(a), (b), and (c); the exportation of goods contrary to
law, 19 U.S.C. 1595a(d); the importation of stolen cultural
property, 19 U.S.C. 2607; the importation of cultural property
pertaining to the inventory of a museum or religious or secular
public monument, 19 CFR 12.104a; and the emergency protection of
Iraqi cultural antiquities, 19 CFR 12.104j.
Sec. 576.412 Entities owned by a person whose property and interests
in property are blocked.
A person whose property and interests in property are blocked
pursuant to Sec. 576.201(a) has an interest in all property and
interests in property of an entity in which it owns, directly or
indirectly, a 50 percent or greater interest. The property and
interests in property of such an entity, therefore, are blocked, and
such an entity is a person whose property and interests in property are
blocked pursuant to Sec. 576.201(a), regardless of whether the entity
itself is listed in the Annex to Executive Order 13315, as amended, or
designated pursuant to Sec. 576.201(a)(2) or (3).
Subpart E--Licenses, Authorizations, and Statements of Licensing
Policy
Sec. 576.501 General and specific licensing procedures.
For provisions relating to licensing procedures, see part 501,
subpart E, of this chapter. Licensing actions taken pursuant to part
501 of this chapter with respect to the prohibitions contained in this
part are considered actions taken pursuant to this part.
Sec. 576.502 Effect of license or authorization.
(a) No license or other authorization contained in this part, or
otherwise issued by the Office of Foreign Assets Control, authorizes or
validates any transaction effected prior to the issuance of such
license or other authorization, unless specifically provided in such
license or authorization.
(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 other part of this chapter
unless the regulation, ruling, instruction, or license specifically
refers to such part.
(c) Any regulation, ruling, instruction, or license authorizing any
transaction otherwise prohibited under this part has the effect of
removing a prohibition 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
[[Page 55473]]
with respect to, any property which would not otherwise exist under
ordinary principles of law.
Sec. 576.503 Exclusion from licenses.
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 conferred by any license. The Office of Foreign
Assets Control also reserves the right to restrict the applicability of
any license to particular persons, property, transactions, or classes
thereof. Such actions are binding upon actual or constructive notice of
the exclusions or restrictions.
Sec. 576.504 Payments and transfers to blocked accounts in U.S.
financial institutions.
Any payment of funds or transfer of credit in which a person whose
property and interests in property are blocked pursuant to Sec.
576.201(a) has any interest that comes within the possession or control
of a U.S. financial institution must be blocked in an account on the
books of that financial institution. A transfer of funds or credit by a
U.S. financial institution between blocked accounts in its branches or
offices is authorized, provided that no transfer is made from an
account within the United States to an account held outside the United
States, and further provided that a transfer from a blocked account may
be made only to another blocked account held in the same name.
Note to Sec. 576.504: See Sec. 501.603 of this chapter for
mandatory reporting requirements regarding financial transfers. See
also Sec. 576.203 concerning the obligation to hold blocked funds
in interest-bearing accounts.
Sec. 576.505 Entries in certain accounts for normal service charges
authorized.
(a) A U.S. financial institution is authorized to debit any blocked
account held at that financial institution in payment or reimbursement
for normal service charges owed it by the owner of that 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, internet, 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. 576.506 Investment and reinvestment of certain funds.
Subject to the requirements of Sec. 576.203, U.S. financial
institutions are authorized to invest and reinvest assets blocked
pursuant to Sec. 576.201, subject to the following conditions:
(a) The assets representing such investments and reinvestments are
credited to a blocked account or subaccount that is held in the same
name at the same U.S. financial institution, or within the possession
or control of a U.S. person, but funds shall not be transferred outside
the United States for this purpose;
(b) The proceeds of such investments and reinvestments shall not be
credited to a blocked account or subaccount under any name or
designation that differs from the name or designation of the specific
blocked account or subaccount in which such funds or securities were
held; and
(c) No immediate financial or economic benefit accrues (e.g.,
through pledging or other use) to a person whose property and interests
in property are blocked pursuant to Sec. 576.201(a).
Sec. 576.507 Provision of certain legal services authorized.
(a) The provision of the following legal services to or on behalf
of persons whose property and interests in property are blocked
pursuant to Sec. 576.201(a) is authorized, provided that all receipts
of payment of professional fees and reimbursement of incurred expenses
must be specifically licensed:
(1) Provision of legal advice and counseling on the requirements of
and compliance with the laws of the United States or any jurisdiction
within the United States, provided that such advice and counseling are
not provided to facilitate transactions in violation of this part;
(2) Representation of persons named as defendants in or otherwise
made parties to domestic U.S. legal, arbitration, or administrative
proceedings;
(3) Initiation and conduct of domestic U.S. legal, arbitration, or
administrative proceedings in defense of property interests subject to
U.S. jurisdiction;
(4) Representation of persons before any federal or state agency
with respect to the imposition, administration, or enforcement of U.S.
sanctions against such persons; and
(5) Provision of legal services in any other context in which
prevailing U.S. law requires access to legal counsel at public expense.
(b) The provision of any other legal services to persons whose
property or interests in property are blocked pursuant to Sec.
576.201(a), not otherwise authorized in this part, requires the
issuance of a specific license.
(c) Entry into a settlement agreement or the enforcement of any
lien, judgment, arbitral award, decree, or other order through
execution, garnishment, or other judicial process purporting to
transfer or otherwise alter or affect property or interests in property
blocked pursuant to Sec. 576.201(a) is prohibited unless licensed
pursuant to this part.
Sec. 576.508 Judicial process in legal proceedings involving
ecological accidents.
The Office of Foreign Assets Control may issue specific licenses on
a case-by-case basis to authorize the attachment, judgment, decree,
lien, execution, garnishment, or other judicial process against
property and interests in property protected by Sec. 576.206 to
satisfy liability for damages assessed in connection with an ecological
accident (including an oil spill) that occurred after May 22, 2003.
Sec. 576.509 Authorization of emergency medical services.
The provision of nonscheduled emergency medical services in the
United States to persons whose property and interests in property are
blocked pursuant to Sec. 576.201(a) is authorized, provided that all
receipt of payment for such services must be specifically licensed.
Sec. 576.510 Unblocking certain blocked property.
(a) Except for such property and interests in property described in
paragraph (b) of this section, all transactions involving property and
interests in property blocked pursuant to Sec. 576.201(b) of this part
are authorized.
(b) The authorization in paragraph (a) of this section does not
apply to blocked property and interests in property of persons subject
to sanctions pursuant to Sec. 576.201(a) of this part or any other
part of 31 CFR chapter V.
Sec. 576.511 Property controlled by the military forces of the United
States and their coalition partners in Iraq.
The prohibition in Sec. 576.201(a)(3) that deals with blocked
property and interests in property shall not apply to property and
interests in property controlled by the military forces of the United
States and their coalition partners present in Iraq and acting in their
official capacity under the command or operational control of the
commander of United States Central Command.
[[Page 55474]]
Note to Sec. 576.511: See Sec. 576.207 of this part, which
exempts property and interests in property that come under the
control of the military forces of the United States and their
coalition partners present in Iraq and acting in their official
capacity from the prohibitions in Sec. 576.201(a)(1) and (2).
Sec. 576.512 Transactions with certain blocked persons authorized.
(a) All transactions with state bodies, corporations, or agencies
of the former Iraqi regime that are otherwise prohibited by Sec.
576.201(a) are authorized.
(b) The authorization in paragraph (a) of this section does not
apply to any transactions with state bodies, corporations, or agencies
of the former Iraqi regime listed in Appendix A to 31 CFR chapter V.
Subpart F--Reports
Sec. 576.601 Records and reports.
For provisions relating to required records and reports, see part
501, subpart C, of this chapter. Recordkeeping and reporting
requirements imposed by part 501 of this chapter with respect to the
prohibitions contained in this part are considered requirements arising
pursuant to this part.
Subpart G--Penalties
Sec. 576.701 Penalties.
(a) Attention is directed to section 206 of the International
Emergency Economic Powers Act (50 U.S.C. 1705) (``IEEPA''), which is
applicable to violations of the provisions of any license, ruling,
regulation, order, directive, or instruction issued by or pursuant to
the direction or authorization of the Secretary of the Treasury
pursuant to this part or otherwise under IEEPA.
(1) A civil penalty not to exceed the amount set forth in section
206 of IEEPA may be imposed on any person who violates, attempts to
violate, conspires to violate, or causes a violation of any license,
order, or regulation issued under IEEPA.
Note to paragraph (a)(1) of Sec. 576.701: As of the date of
publication in the Federal Register of the final rule adding this
part to 31 CFR chapter V September 13, 2010, IEEPA provides for a
maximum civil penalty not to exceed the greater of $250,000 or an
amount that is twice the amount of the transaction that is the basis
of the violation with respect to which the penalty is imposed.
(2) A person who willfully commits, willfully attempts to commit,
or willfully conspires to commit, or aids or abets in the commission of
a violation of any license, order, regulation, or prohibition may, upon
conviction, be fined not more than $1,000,000, or if a natural person,
may be imprisoned for not more than 20 years, or both.
(b) Adjustments to penalty amounts. (1) The civil penalties
provided in IEEPA are subject to adjustment pursuant to the Federal
Civil Penalties Inflation Adjustment Act of 1990 (Pub. L. 101-410, as
amended, 28 U.S.C. 2461 note).
(2) The criminal penalties provided in IEEPA are subject to
adjustment pursuant to 18 U.S.C. 3571.
(c) Attention is also directed to 18 U.S.C. 1001, which provides
that whoever, in any matter within the jurisdiction of the executive,
legislative, or judicial branch of the Government of the United States,
knowingly and willfully falsifies, conceals, or covers up by any trick,
scheme, or device a material fact; makes any materially false,
fictitious, or fraudulent statement or representation; or makes or uses
any false writing or document knowing the same to contain any
materially false, fictitious, or fraudulent statement or entry shall be
fined under title 18, United States Code, imprisoned, or both.
(d) Violations of this part may also be subject to relevant
provisions of other applicable laws.
Sec. 576.702 Pre-Penalty Notice; settlement.
(a) When required. If the Office of Foreign Assets Control has
reason to believe that there has occurred a violation of any provision
of this part or a violation of the provisions of any 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 IEEPA and determines that a
civil monetary penalty is warranted, the Office of Foreign Assets
Control will issue a Pre-Penalty Notice informing the alleged violator
of the agency's intent to impose a monetary penalty. A Pre-Penalty
Notice shall be in writing. The Pre-Penalty Notice may be issued
whether or not another agency has taken any action with respect to the
matter. For a description of the contents of a Pre-Penalty Notice, see
Appendix A to part 501 of this chapter.
(b)(1) Right to respond. An alleged violator has the right to
respond to a Pre-Penalty Notice by making a written presentation to the
Office of Foreign Assets Control. For a description of the information
that should be included in such a response, see Appendix A to part 501
of this chapter.
(2) Deadline for response. A response to a Pre-Penalty Notice must
be made within the applicable 30-day period set forth in this
paragraph. The failure to submit a response within the applicable time
period set forth in this paragraph shall be deemed to be a waiver of
the right to respond.
(i) Computation of time for response. A response to a Pre-Penalty
Notice must be postmarked or date-stamped by the U.S. Postal Service
(or foreign postal service, if mailed abroad) or courier service
provider (if transmitted to the Office of Foreign Assets Control by
courier) on or before the 30th day after the postmark date on the
envelope in which the Pre-Penalty Notice was mailed. If the Pre-Penalty
Notice was personally delivered by a non-U.S. Postal Service agent
authorized by the Office of Foreign Assets Control, a response must be
postmarked or date-stamped on or before the 30th day after the date of
delivery.
(ii) Extensions of time for response. If a due date falls on a
Federal holiday or weekend, that due date is extended to include the
following business day. Any other extensions of time will be granted,
at the discretion of the Office of Foreign Assets Control, only upon
specific request to the Office of Foreign Assets Control.
(3) Form and method of response. A response to a Pre-Penalty Notice
need not be in any particular form, but it must be typewritten and
signed by the alleged violator or a representative thereof, must
contain information sufficient to indicate that it is in response to
the Pre-Penalty Notice, and must include the Office of Foreign Assets
Control identification number listed on the Pre-Penalty Notice. A copy
of the written response may be sent by facsimile, but the original also
must be sent to the Office of Foreign Assets Control Civil Penalties
Division by mail or courier and must be postmarked or date-stamped in
accordance with paragraph (b)(2) of this section.
(c) Settlement. Settlement discussion may be initiated by the
Office of Foreign Assets Control, the alleged violator, or the alleged
violator's authorized representative. For a description of practices
with respect to settlement, see Appendix A to part 501 of this chapter.
(d) Guidelines. Guidelines for the imposition or settlement of
civil penalties by the Office of Foreign Assets Control are contained
in Appendix A to part 501 of this chapter.
(e) Representation. A representative of the alleged violator may
act on behalf of the alleged violator, but any oral communication with
the Office of Foreign Assets Control prior to a written submission
regarding the specific allegations contained in the Pre-Penalty
[[Page 55475]]
Notice must be preceded by a written letter of representation, unless
the Pre-Penalty Notice was served upon the alleged violator in care of
the representative.
Sec. 576.703 Penalty imposition.
If, after considering any written response to the Pre-Penalty
Notice and any relevant facts, the Office of Foreign Assets Control
determines that there was a violation by the alleged violator named in
the Pre-Penalty Notice and that a civil monetary penalty is
appropriate, the Office of Foreign Assets Control may issue a Penalty
Notice to the violator containing a determination of the violation and
the imposition of the monetary penalty. For additional details
concerning issuance of a Penalty Notice, see Appendix A to part 501 of
this chapter. The issuance of the Penalty Notice shall constitute final
agency action. The violator has the right to seek judicial review of
that final agency action in federal district court.
Sec. 576.704 Administrative collection; referral to United States
Department of Justice.
In the event that the violator does not pay the penalty imposed
pursuant to this part or make payment arrangements acceptable to the
Office of Foreign Assets Control, 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. 576.801 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
part 501, subpart E, of this chapter.
Sec. 576.802 Delegation by the Secretary of the Treasury.
(a) Except as provided in paragraph (b) of this section, any action
that the Secretary of the Treasury is authorized to take pursuant to
Executive Order 13303 of May 22, 2003, and any subsequent Executive
orders relating to the national emergency declared therein, including
but not limited to Executive Order 13315 of August 28, 2003, and
Executive Order 13438 of July 17, 2007, 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 the authority so to act.
(b) Unless otherwise delegated, the authority provided in section 2
of Executive Order 13315 to confiscate property blocked pursuant to
this part and transfer all vested right, title, and interest in such
property to the Development Fund for Iraq shall be exercised only by
the Secretary of the Treasury, in consultation with the Secretary of
State.
Subpart I--Paperwork Reduction Act
Sec. 576.901 Paperwork Reduction Act notice.
For approval by the Office of Management and Budget (``OMB'') under
the Paperwork Reduction Act of 1995 (44 U.S.C. 3507) of information
collections relating to recordkeeping and reporting requirements,
licensing procedures (including those pursuant to statements of
licensing policy), and other procedures, see 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: September 1, 2010.
Adam J. Szubin,
Director, Office of Foreign Assets Control, Department of the Treasury.
Approved: September 2, 2010.
Stuart A. Levey,
Under Secretary, Office of Terrorism and Financial Intelligence,
Department of the Treasury.
[FR Doc. 2010-22546 Filed 9-10-10; 8:45 am]
BILLING CODE 4810-AL-P