[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: 31CFR598.408]



[Page 498]

 

                  TITLE 31--MONEY AND FINANCE: TREASURY

 

 CHAPTER V--OFFICE OF FOREIGN ASSETS CONTROL, DEPARTMENT OF THE TREASURY

 

PART 598_FOREIGN NARCOTICS KINGPIN SANCTIONS REGULATIONS--Table of 

Contents

 

                        Subpart D_Interpretations

 

Sec. 598.408  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 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, or other means of changing ownership or control, is 

legitimate and that the entity no longer meets the criteria for 

designation under Sec. 598.314. 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 

international narcotics trafficking activities of specially designated 

narcotics traffickers for purposes of Sec. 598.314(b)(1). 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.