[Code of Federal Regulations]
[Title 31, Volume 2]
[Revised as of July 1, 2004]
From the U.S. Government Printing Office via GPO Access
[CITE: 31CFR536.408]

[Page 680]
 
                  TITLE 31--MONEY AND FINANCE: TREASURY
 
 CHAPTER V--OFFICE OF FOREIGN ASSETS CONTROL, DEPARTMENT OF THE TREASURY
 
PART 536_NARCOTICS TRAFFICKING SANCTIONS REGULATIONS--Table of Contents
 
                        Subpart D_Interpretations
 
Sec. 536.408  Alleged change in ownership or control of an entity 
designated as a specially designated narcotics trafficker.

    (a) A change or alleged change in ownership or control of an entity 
designated as a specially designated narcotics trafficker shall not be 
the basis for removal of that entity from the list of specially 
designated narcotics traffickers unless, upon investigation by the 
Office of Foreign Assets Control and submission of evidence by the 
entity, it is demonstrated to the satisfaction of the Director of the 
Office of Foreign Assets Control that the transfer to a bona fide 
purchaser at arm's length is legitimate and that the entity no longer 
meets the criteria for designation under Sec. 536.312. Evidence 
submitted must conclusively demonstrate that all ties with other 
specially designated narcotics traffickers have been completely severed, 
and may include, but is not limited to, articles of incorporation; 
identification of new directors, officers, shareholders, and sources of 
capital; and contracts evidencing the sale of the entity to its new 
owners.
    (b) Any continuing substantial financial obligations on the part of 
the new owners to any specially designated narcotics traffickers, 
including long-term payment plans, leases, or rents, will be considered 
as evidence of continuing control of the entity by the specially 
designated narcotics trafficker. Purchase of a designated entity without 
ongoing substantial financial obligations to a specially designated 
narcotics trafficker may nonetheless be a basis for subsequent 
designation of the purchaser, if the transaction is determined 
materially to assist in or provide financial support for the narcotics 
trafficking activities of specially designated narcotics traffickers for 
purposes of Sec. 536.312(b)(2). For example, any acquisition 
transaction resulting in a direct cash transfer to or other enrichment 
of a specially designated narcotics trafficker could lead to designation 
of the purchaser. Mere change in name of an entity will not be 
considered as constituting a change of the entity's status.

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