[Code of Federal Regulations]

[Title 31, Volume 3]

[Revised as of July 1, 2005]

From the U.S. Government Printing Office via GPO Access

[CITE: 31CFR536.408]



[Page 168]

 

                  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.