Office of Foreign Assets Control, Treasury § 597.513

§ 596.601 31 CFR Ch. V (7–1–20 Edition)

to revoke this general license. Unless 552 and 552a), see part 501, subpart E, of revoked, the general license will re- this chapter. main in effect. [62 FR 45112, Aug. 25, 1997, as amended at 68 NOTE 1 TO § 596.506: This authorization does FR 53660, Sept. 11, 2003] not eliminate the need to comply with other provisions of 31 CFR chapter V, including 31 § 596.802 Delegation by the Secretary CFR part 596, or other applicable provisions of the Treasury. of law, including any requirements of agen- Any action which the Secretary of cies other than the Department of the Treas- ury’s Office of Foreign Assets Control. Such the Treasury is authorized to take pur- requirements include the Export Adminis- suant to section 321 of the tration Regulations (15 CFR parts 730 Antiterrorism and Effective Death through 774) administered by the Bureau of Penalty Act of 1996, Pub. L. 104–132, 110 Industry and Security of the Department of Stat. 1214, 1254 (18 U.S.C. 2332d), may be Commerce and the International Traffic in taken by the Director, Office of For- Arms Regulations (22 CFR parts 120 through eign Assets Control, or by any other 130) administered by the Department of State. person to whom the Secretary of the Treasury has delegated authority so to [83 FR 30540, June 29, 2018] act. [61 FR 43463, Aug. 23, 1996. Redesignated at 62 Subpart F—Reports FR 45112, Aug. 25, 1997] § 596.601 Records and reports. For provisions relating to records Subpart I—Paperwork Reduction and reports, see subpart C of part 501 of Act this chapter. § 596.901 Paperwork Reduction Act no- [62 FR 45112, Aug. 25, 1997] tice. For approval by the Office of Man- Subpart G—Penalties agement and Budget (‘‘OMB’’) under the Paperwork Reduction Act of infor- § 596.701 Penalties. mation collections relating to record- Attention is directed to 18 U.S.C. keeping and reporting requirements, to 2332d, as added by Public Law 104–132, licensing procedures (including those section 321, which provides that, except pursuant to statements of licensing as provided in regulations issued by the policy), and to other procedures, see Secretary of the Treasury, in consulta- § 501.901 of this chapter. An agency may tion with the Secretary of State, a not conduct or sponsor, and a person is United States person, knowing or hav- not required to respond to, a collection ing reasonable cause to know that a of information unless it displays a country is designated under section 6(j) valid control number assigned by OMB. of the Export Administration Act, 50 U.S.C. App. 2405, as a country sup- [62 FR 45112, Aug. 25, 1997] porting international terrorism, en- gages in a financial transaction with PART 597—FOREIGN TERRORIST the government of that country, shall ORGANIZATIONS SANCTIONS be fined under title 18, United States REGULATIONS Code, or imprisoned for not more than 10 years, or both. Subpart A—Relation of This Part to Other Laws and Regulations Subpart H—Procedures Sec. 597.101 Relation of this part to other laws § 596.801 Procedures. and regulations. For license application procedures and procedures relating to amend- Subpart B—Prohibitions ments, modifications, or revocations of 597.201 Prohibited transactions involving licenses; administrative decisions; blocked assets or funds of foreign ter- rulemaking; and requests for docu- rorist organizations or their agents. ments pursuant to the Freedom of In- 597.202 Effect of transfers violating the pro- formation and Privacy Acts (5 U.S.C. visions of this part.

656

VerDate Sep<11>2014 11:23 Nov 02, 2020 Jkt 250130 PO 00000 Frm 00666 Fmt 8010 Sfmt 8010 Q:\31\31V3.TXT PC31 kpayne on VMOFRWIN702 with $$_JOB Office of Foreign Assets Control, Treasury § 597.101

597.203 Holding of funds in interest-bearing 597.513 Payments from funds originating accounts; investment and reinvestment. outside the United States and the forma- 597.204 Evasions; attempts; conspiracies. tion of legal defense funds authorized.

Subpart C—General Definitions Subpart F—Reports 597.301 Agent. 597.601 Records and reports. 597.302 Assets. 597.303 Blocked account; blocked funds. Subpart G—Penalties 597.304 Designation. 597.305 Effective date. 597.701 Penalties. 597.306 Entity. 597.702 Prepenalty notice. 597.307 Financial institution. 597.703 Response to prepenalty notice. 597.704 Penalty notice. 597.308 Financial transaction. 597.705 Administrative collection; referral 597.309 Foreign terrorist organization. to United States Department of Justice. 597.310 Funds. 597.311 General license. Subpart H—Procedures 597.312 Interest. 597.313 License. 597.801 Procedures. 597.314 Person. 597.802 Delegation by the Secretary of the 597.315 Specific license. Treasury. 597.316 Transaction. 597.317 Transfer. Subpart I—Paperwork Reduction Act 597.318 United States. 597.319 U.S. financial institution. 597.901 Paperwork Reduction Act notice. AUTHORITY: 31 U.S.C. 321(b); Pub. L. 101–410, Subpart D—Interpretations 104 Stat. 890 (28 U.S.C. 2461 note); Pub. L. 104– 597.401 Reference to amended sections. 132, 110 Stat. 1214, 1248–53 (8 U.S.C. 1189, 18 597.402 Effect of amendment. U.S.C. 2339B). 597.403 Termination and acquisition of an SOURCE: 62 FR 52495, Oct. 8, 1997, unless interest in blocked funds. otherwise noted. 597.404 Setoffs prohibited. 597.405 Transactions incidental to a licensed transaction. Subpart A—Relation of This Part to 597.406 Offshore transactions. Other Laws and Regulations 597.407 Palestinian Authority. § 597.101 Relation of this part to other Subpart E—Licenses, Authorizations, and laws and regulations. Statements of Licensing Policy (a) This part is separate from, and independent of, the other parts of this 597.500 Licensing procedures. chapter, with the exception of part 501 597.501 Effect of license or authorization. 597.502 Exclusion from licenses and author- of this chapter, the recordkeeping and izations. reporting requirements and license ap- 597.503 Payments and transfers to blocked plication and other procedures of which accounts in U.S. financial institutions. apply to this part. Differing statutory 597.504 Entries in certain accounts for nor- authority and foreign policy and na- mal service charges authorized. tional security contexts may result in 597.505 Payment for certain legal services. differing interpretations of similar lan- 597.506 Official activities of certain inter- guage among the parts of this chapter. national organizations; U.S. person em- No license or authorization contained ployees of certain governments. 597.507 Travel, employment, residence and in or issued pursuant to those other maintenance transactions with the Pal- parts authorizes any transaction pro- estinian Authority. hibited by this part. No license or au- 597.508 Payment of taxes and incidental fees thorization contained in or issued pur- to the Palestinian Authority. suant to any other provision of law or 597.509 Transactions with entities under the regulation authorizes any transaction control of the Palestinian President and prohibited by this part. certain other entities. (b) No license or authorization con- 597.510 Concluding activities with the Pales- tained in or issued pursuant to this tinian Authority. 597.511 In-kind donations of medicine, med- part relieves the involved parties from ical devices, and medical services. complying with any other applicable 597.512 Transactions with the Palestinian laws or regulations. This part does not Authority authorized. implement, construe, or limit the

657

VerDate Sep<11>2014 11:23 Nov 02, 2020 Jkt 250130 PO 00000 Frm 00667 Fmt 8010 Sfmt 8010 Q:\31\31V3.TXT PC31 kpayne on VMOFRWIN702 with $$_JOB § 597.201 31 CFR Ch. V (7–1–20 Edition)

scope of any other part of this chapter, accordance with § 501.603 of this chap- including (but not limited to) the Ter- ter. rorism Sanctions Regulations, part 595 (c) Publication in the FEDERAL REG- of this chapter, and does not excuse ISTER of the designation of an organiza- any person from complying with any tion as a foreign terrorist organization other part of this chapter, including pursuant to 8 U.S.C. 1189(a) shall be (but not limited to) part 595 of this deemed to constitute a further direc- chapter. tive from the Secretary of the Treas- (c) This part does not implement, ury for purposes of paragraph (a) of construe, or limit the scope of any this section, and shall require the ac- criminal statute, including (but not tions contained in paragraph (b) of this limited to) 18 U.S.C. 2339B(a)(1) and section. 2339A, and does not excuse any person (d) The requirements of paragraph (b) from complying with any criminal of this section shall remain in effect statute, including (but not limited to) until the effective date of an adminis- 18 U.S.C. 2339B(a)(1) and 18 U.S.C. trative, judicial, or legislative revoca- 2339A. tion of the designation of an organization as a foreign terrorist organization, Subpart B—Prohibitions or until the designation lapses, pursuant to 8 U.S.C. 1189. § 597.201 Prohibited transactions in- (e) When a transaction results in the volving blocked assets or funds of foreign terrorist organizations or blocking of funds at a financial institu- their agents. tion pursuant to this section and a party to the transaction believes the (a) Upon notification to Congress of funds have been blocked due to mis- the Secretary of State’s intent to des- taken identity, that party may seek to ignate an organization as a foreign ter- have such funds unblocked pursuant to rorist organization pursuant to 8 U.S.C. the administrative procedures set forth 1189(a), until the publication in the in § 501.806 of this chapter. Requests for FEDERAL REGISTER as described in the unblocking of funds pursuant to paragraph (c) of this section, any U.S. § 501.806 must be submitted to the at- financial institution receiving notice from the Secretary of the Treasury by tention of the Compliance Programs means of order, directive, instruction, Division. regulation, ruling, license, or otherwise § 597.202 Effect of transfers violating shall, except as otherwise provided in the provisions of this part. such notice, block all financial transactions involving any assets of such or- (a) Any transfer after the effective ganization within the possession or date which is in violation of § 597.201 or control of such U.S. financial institu- any other provision of this part or of tion until further directive from the any regulation, order, directive, ruling, Secretary of the Treasury, Act of Con- instruction, license, or other author- gress, or order of court. ization hereunder and involves any (b) Except as otherwise authorized by funds or assets held in the name of a order, directive, instruction, regula- foreign terrorist organization or its tion, ruling, license, or otherwise, from agent or in which a foreign terrorist and after the designation of an organi- organization or its agent has or has zation as a foreign terrorist organiza- had an interest since such date, is null tion pursuant to 8 U.S.C. 1189(a), any and void and shall not be the basis for U.S. financial institution that becomes the assertion or recognition of any in- aware that it has possession of or con- terest in or right, remedy, power or trol over any funds in which the des- privilege with respect to such funds or ignated foreign terrorist organization assets. or its agent has an interest shall: (b) No transfer before the effective (1) Retain possession of or maintain date shall be the basis for the assertion control over such funds; and or recognition of any right, remedy, (2) Report to the Secretary of the power, or privilege with respect to, or Treasury the existence of such funds in interest in, any funds or assets held in

658

VerDate Sep<11>2014 11:23 Nov 02, 2020 Jkt 250130 PO 00000 Frm 00668 Fmt 8010 Sfmt 8010 Q:\31\31V3.TXT PC31 kpayne on VMOFRWIN702 with $$_JOB Office of Foreign Assets Control, Treasury § 597.203

the name of a foreign terrorist organi- eign Assets Control a report setting zation or its agent or in which a for- forth in full the circumstances relating eign terrorist organization or its agent to such transfer promptly upon dis- has an interest, or has had an interest covery that: since such date, unless the financial in- (i) Such transfer was in violation of stitution with whom such funds or as- the provisions of this part or any regu- sets are held or maintained, prior to lation, ruling, instruction, license, or such date, had written notice of the other direction or authorization here- transfer or by any written evidence had under; or recognized such transfer. (ii) Such transfer was not licensed or (c) Unless otherwise provided, an ap- authorized by the Director of the Office propriate license or other authoriza- of Foreign Assets Control; or tion issued by or pursuant to the direc- (iii) If a license did purport to cover tion or authorization of the Director of the transfer, such license had been ob- the Office of Foreign Assets Control be- tained by misrepresentation of a third fore, during, or after a transfer shall party or the withholding of material validate such transfer or render it en- facts or was otherwise fraudulently ob- forceable to the same extent that it tained. would be valid or enforceable but for the provisions of this part, and any NOTE TO PARAGRAPH (d): The filing of a re- regulation, order, directive, ruling, in- port in accordance with the provisions of struction, or license issued hereunder. paragraph (d)(3) of this section shall not be deemed evidence that the terms of para- (d) Transfers of funds or assets which graphs (d)(1) and (2) of this section have been otherwise would be null and void or un- satisfied. enforceable by virtue of the provisions of this section shall not be deemed to (e) Except for exercises of judicial au- be null and void or unenforceable as to thority pursuant to 8 U.S.C. 1189(b), un- any financial institution with whom less licensed or authorized pursuant to such funds or assets were held or main- this part, any attachment, judgment, tained (and as to such financial institu- decree, lien, execution, garnishment, tion only) in cases in which such finan- or other judicial process is null and cial institution is able to establish to void with respect to any funds or assets the satisfaction of the Director of the which, on or since the effective date, Office of Foreign Assets Control each were in the possession or control of a of the following: U.S. financial institution and were held (1) Such transfer did not represent a in the name of a foreign terrorist orga- willful violation of the provisions of nization or its agent or in which there this part by the financial institution existed an interest of a foreign ter- with whom such funds or assets were rorist organization or its agent. held or maintained; (2) The financial institution with § 597.203 Holding of funds in interest- which such funds or assets were held or bearing accounts; investment and reinvestment. maintained did not have reasonable cause to know or suspect, in view of all (a) Except as provided in paragraph the facts and circumstances known or (c) of this section, or as otherwise di- available to such institution, that such rected by the Office of Foreign Assets transfer required a license or author- Control, any U.S. financial institution ization by or pursuant to this part and holding funds subject to § 597.201(b) was not so licensed or authorized, or if shall hold or place such funds in a a license or authorization did purport blocked interest-bearing account which to cover the transfer, that such license is in the name of the foreign terrorist or authorization had been obtained by organization or its agent and which is misrepresentation of a third party or located in the United States. the withholding of material facts or (b)(1) For purposes of this section, was otherwise fraudulently obtained; the term interest-bearing account means and a blocked account: (3) The financial institution with (i) in a federally-insured U.S. bank, which such funds or assets were held or thrift institution, or credit union, pro- maintained filed with the Office of For- vided the funds are earning interest at

659

VerDate Sep<11>2014 11:23 Nov 02, 2020 Jkt 250130 PO 00000 Frm 00669 Fmt 8010 Sfmt 8010 Q:\31\31V3.TXT PC31 kpayne on VMOFRWIN702 with $$_JOB § 597.204 31 CFR Ch. V (7–1–20 Edition)

rates which are commercially reason- Subpart C—General Definitions able for the amount of funds in the account or certificate of deposit; or § 597.301 Agent. (ii) with a broker or dealer registered (a) The term agent means: with the Securities and Exchange Com- (1) Any person owned or controlled mission under the Securities Exchange by a foreign terrorist organization; or Act of 1934, provided the funds are in- (2) Any person to the extent that vested in a money market fund or in such person is, or has been, or to the U.S. Treasury Bills. extent that there is reasonable cause (2) Funds held or placed in a blocked to believe that such person is, or has interest-bearing account pursuant to been, since the effective date, acting or this paragraph may not be invested in purporting to act directly or indirectly instruments the maturity of which ex- on behalf of a foreign terrorist organi- ceeds 180 days. If interest is credited to zation. a separate blocked account or sub-ac- (b) The term agent includes, but is count, the name of the account party not limited to, any person determined by the Director of the Office of Foreign on each account must be the same and Assets Control to be an agent as de- must clearly indicate the foreign ter- fined in paragraph (a) of this section. rorist organization or agent having an interest in the accounts. NOTE TO § 597.301: The names of persons des- (c) Blocked funds held as of the effec- ignated as foreign terrorist organizations or determined to fall within this definition are tive date in the form of stocks, bonds, published in the FEDERAL REGISTER and in- debentures, letters of credit, or instru- corporated into the Office of Foreign Assets ments which cannot be negotiated for Control’s Specially Designated Nationals the purpose of placing the funds in a and Blocked Persons List (‘‘SDN List’’) with blocked interest-bearing account pur- the identifier ‘‘[FTO].’’ The SDN List is ac- suant to paragraph (a) may continue to cessible through the following page on the Office of Foreign Assets Control’s Web site: be held in the form of the existing se- http://www.treasury.gov/sdn. Additional infor- curity or instrument until liquidation mation pertaining to the SDN List can be or maturity, provided that any divi- found in appendix A to this chapter. Section dends, interest income, or other pro- 501.807 of this chapter sets forth the proce- ceeds derived therefrom are paid into a dures to be followed by a person seeking ad- blocked interest-bearing account in ac- ministrative reconsideration of a determination that the person falls within this defini- cordance with the requirements of this tion, or who wishes to assert that the cir- section. cumstances resulting in such a determina- (d) Funds subject to this section may tion are no longer applicable. not be held, invested, or reinvested in a [62 FR 52495, Oct. 8, 1997, as amended at 76 FR manner in which an immediate finan- 38544, June 30, 2011; 78 FR 38577, June 27, 2013] cial or economic benefit or access ac- crues to the foreign terrorist organiza- § 597.302 Assets. tion or its agent. The term assets includes, but is not limited to, money, checks, drafts, bul- § 597.204 Evasions; attempts; conspir- lion, bank deposits, savings accounts, acies. debts, indebtedness, obligations, notes, Any transaction for the purpose of, guarantees, debentures, stocks, bonds, or which has the effect of, evading or coupons, any other financial instru- avoiding, or which facilitates the eva- ments, bankers acceptances, mort- sion or avoidance of, any of the prohi- gages, pledges, liens or other rights in bitions set forth in this part, is hereby the nature of security, warehouse re- prohibited. Any attempt to violate the ceipts, bills of lading, trust receipts, prohibitions set forth in this part is bills of sale, any other evidences of title, ownership or indebtedness, let- hereby prohibited. Any conspiracy ters of credit and any documents relat- formed for the purpose of engaging in a ing to any rights or obligations there- transaction prohibited by this part is under, powers of attorney, goods, hereby prohibited. wares, merchandise, chattels, stocks on hand, ships, goods on ships, real estate

660

VerDate Sep<11>2014 11:23 Nov 02, 2020 Jkt 250130 PO 00000 Frm 00670 Fmt 8010 Sfmt 8010 Q:\31\31V3.TXT PC31 kpayne on VMOFRWIN702 with $$_JOB Office of Foreign Assets Control, Treasury § 597.310

mortgages, deeds of trust, vendors’ § 597.307 Financial institution. sales agreements, land contracts, lease- The term financial institution shall holds, ground rents, real estate and any have the definition given that term in other interest therein, options, nego- 31 U.S.C. 5312(a)(2) as from time to time tiable instruments, trade acceptances, amended, notwithstanding the defini- royalties, book accounts, accounts pay- tion of that term in 31 CFR part 103. able, judgments, patents, trademarks or copyrights, insurance policies, safe NOTE: The breadth of the statutory defini- deposit boxes and their contents, annu- tion of financial institution precludes its re- ities, pooling agreements, services of production in this section. Among the types any nature whatsoever, contracts of of businesses covered are insured banks (as defined in 12 U.S.C. 1813(h)), commercial any nature whatsoever, and any other banks or trust companies, private bankers, property, real, personal, or mixed, tan- agencies or branches of a foreign bank in the gible or intangible, or interest or inter- United States, insured institutions (as de- ests therein, present, future or contin- fined in 12 U.S.C. 1724(a)), thrift institutions, gent. brokers or dealers registered with the Secu- rities and Exchange Commission under 15 § 597.303 Blocked account; blocked U.S.C. 78a et seq., securities or commodities funds. brokers and dealers, investment bankers or investment companies, currency exchanges, The terms blocked account and blocked issuers, redeemers, or cashiers of traveler’s funds shall mean any account or funds checks, checks, money orders, or similar in- subject to the prohibitions in § 597.201 struments, credit card system operators, in- held in the name of a foreign terrorist surance companies, dealers in precious met- organization or its agent or in which a als, stones or jewels, pawnbrokers, loan or fi- foreign terrorist organization or its nance companies, travel agencies, licensed agent has an interest, and with respect senders of money, telegraph companies, businesses engaged in vehicle sales, including to which payments, transfers, expor- automobile, airplane or boat sales, persons tations, withdrawals, or other dealings involved in real estate closings and settle- may not be made or effected except ments, the United States Postal Service, a pursuant to an authorization or license casino, gambling casino, or gaming estab- from the Office of Foreign Assets Con- lishment with an annual gaming revenue of trol authorizing such action. more than $1,000,000 as further described in 31 U.S.C. 5312(a)(2), or agencies of the United § 597.304 Designation. States Government or of a State or local government carrying out a duty or power of The term designation includes both any of the businesses described in 31 U.S.C. the designation and redesignation of a 5312(a)(2). foreign terrorist organization pursuant to 8 U.S.C. 1189. § 597.308 Financial transaction. The term financial transaction means § 597.305 Effective date. a transactioninvolving the transfer or Except as that term is used in movement of funds, whether by wire or § 597.201(d), the term effective date refers other means. to the effective date of the applicable prohibitions and directives contained § 597.309 Foreign terrorist organiza- in this part which is October 6, 1997, or, tion. in the case of foreign terrorist organi- The term foreign terrorist organization zations designated after that date and means an organization designated or their agents, the earlier of the date on redesignated as a foreign terrorist or- which a financial institution receives ganization, or with respect to which actual or constructive notice of such the Secretary of State has notified designation or of the Secretary of Congress of the intention to designate Treasury’s exercise of his authority to as a foreign terrorist organization, block financial transactions pursuant under 8 U.S.C. 1189(a). to 8 U.S.C. 1189(a)(2)(C) and § 597.201(a). § 597.310 Funds. § 597.306 Entity. The term funds includes coin or cur- The term entity includes a partner- rency of the United States or any other ship, association, corporation, or other country, traveler’s checks, personal organization, group, or subgroup. checks, bank checks, money orders,

661

VerDate Sep<11>2014 11:23 Nov 02, 2020 Jkt 250130 PO 00000 Frm 00671 Fmt 8010 Sfmt 8010 Q:\31\31V3.TXT PC31 kpayne on VMOFRWIN702 with $$_JOB § 597.311 31 CFR Ch. V (7–1–20 Edition)

stocks, bonds, debentures, drafts, let- § 597.317 Transfer. ters of credit, any other negotiable in- The term transfer means any actual strument, and any electronic represen- or purported act or transaction, wheth- tation of any of the foregoing. An elec- er or not evidenced by writing, and tronic representation of any of the whether or not done or performed with- foregoing includes any form of digital in the United States, the purpose, in- or electronic cash, coin, or currency in tent, or effect of which is to create, use currently or placed in use in the fu- surrender, release, convey, transfer, or ture. alter, directly or indirectly, any right, remedy, power, privilege, or interest § 597.311 General license. with respect to any property and, with- The term general license means any li- out limitation upon the foregoing, cense or authorization the terms of shall include the making, execution, or which are set forth in this part. delivery of any assignment, power, con- veyance, check, declaration, deed, deed § 597.312 Interest. of trust, power of attorney, power of Except as otherwise provided in this appointment, bill of sale, mortgage, re- part, the term interest when used with ceipt, agreement, contract, certificate, respect to funds or assets (e.g., ‘‘an in- gift, sale, affidavit, or statement; the terest in funds’’) means an interest of making of any payment; the setting off any nature whatsoever, direct or indi- of any obligation or credit; the ap- rect. pointment of any agent, trustee, or fi- duciary; the creation or transfer of any § 597.313 License. lien; the issuance, docketing, filing, or levy of or under any judgment, decree, Except as otherwise specified, the attachment, injunction, execution, or term means any license or au- license other judicial or administrative proc- thorization contained in or issued pur- ess or order, or the service of any gar- suant to this part. nishment; the acquisition of any interest of any nature whatsoever by reason § 597.314 Person. of a judgment or decree of any foreign The term person means an individual country; the fulfillment of any condi- or entity. tion; the exercise of any power of appointment, power of attorney, or other § 597.315 Specific license. power; or the acquisition, disposition, The term specific license means any li- transportation, importation, expor- cense or authorization not set forth in tation, or withdrawal of any security. this part but issued pursuant to this part. § 597.318 United States. The term United States means the § 597.316 Transaction. United States, its territories, states, The term transaction shall have the commonwealths, districts, and posses- meaning set forth in 18 U.S.C. sions, and all areas under the jurisdic- 1956(c)(3), as from time to time amend- tion or authority thereof. ed. As of the effective date, this term includes a purchase, sale, loan, pledge, § 597.319 U.S. financial institution. gift, transfer, delivery, or other dis- The term U.S. financial institution position of any asset, and with respect means: to a financial institution includes a de- (a) Any financial institution orga- posit, withdrawal, transfer between ac- nized under the laws of the United counts, exchange of currency, loan, ex- States, including such financial insti- tension of credit, purchase or sale of tution’s foreign branches; any stock, bond, certificate of deposit, (b) Any financial institution oper- or other monetary instrument, use of a ating or doing business in the United safe deposit box, or any other payment, States; or transfer, or delivery by, through, or to (c) Those branches, offices and agen- a financial institution, by whatever cies of foreign financial institutions means effected. which are located in the United States,

662

VerDate Sep<11>2014 11:23 Nov 02, 2020 Jkt 250130 PO 00000 Frm 00672 Fmt 8010 Sfmt 8010 Q:\31\31V3.TXT PC31 kpayne on VMOFRWIN702 with $$_JOB Office of Foreign Assets Control, Treasury § 597.407

but not such foreign financial institu- have been held by a foreign terrorist tions’ other foreign branches, offices, organization or its agent, or at any or agencies. time thereafter are transferred or at- tempted to be transferred to a foreign Subpart D—Interpretations terrorist organization or its agent, including by the making of any contribu- § 597.401 Reference to amended section to or for the benefit of a foreign tions. terrorist organization or its agent, Except as otherwise specified, ref- such funds shall be deemed to be funds erence to any section of this part or to in which there exists an interest of the any regulation, ruling, order, instruc- foreign terrorist organization or its tion, direction, or license issued pursu- agent. ant to this part shall be deemed to refer to the same as currently amend- § 597.404 Setoffs prohibited. ed. A setoff against blocked funds (including a blocked account) by a U.S. fi- § 597.402 Effect of amendment. nancial institution is a prohibited Any amendment, modification, or transaction under § 597.201 if effected revocation of any section of this part after the effective date. or of any order, regulation, ruling, instruction, or license issued by or under § 597.405 Transactions incidental to a licensed transaction. the direction of the Director of the Of- fice of Foreign Assets Control shall Any transaction ordinarily incident not, unless otherwise specifically pro- to a licensed transaction and necessary vided, be deemed to affect any act done to give effect thereto is also author- or omitted to be done, or any civil or ized, except a transaction by an unli- criminal suit or proceeding commenced censed, foreign terrorist organization or pending prior to such amendment, or its agent or involving a debit to a modification, or revocation. All pen- blocked account or a transfer of alties, forfeitures, and liabilities under blocked funds not explicitly authorized any such order, regulation, ruling, in- within the terms of the license. struction, or license shall continue and may be enforced as if such amendment, § 597.406 Offshore transactions. modification, or revocation had not The prohibitions contained in been made. § 597.201 apply to transactions by U.S. financial institutions in locations out- § 597.403 Termination and acquisition side the United States with respect to of an interest in blocked funds. funds or assets which the U.S. financial (a) Whenever a transaction licensed institution knows, or becomes aware, or authorized by or pursuant to this are held in the name of a foreign ter- part results in the transfer of funds (in- rorist organization or its agent, or in cluding any interest in funds) away which the U.S. financial institution from a foreign terrorist organization or knows, or becomes aware that, a for- its agent, such funds shall no longer be eign terrorist organization or its agent deemed to be funds in which the for- has or has had an interest since the ef- eign terrorist organization or its agent fective date. has or has had an interest, or which are held in the name of a foreign terrorist § 597.407 Palestinian Authority. organization or its agent, unless there Following the January 2006 Pales- exists in the funds another interest of tinian elections, Hamas, a designated a foreign terrorist organization or its terrorist entity whose property and in- agent, the transfer of which has not terests in property are blocked pursu- been effected pursuant to license or ant to § 597.201, has been determined to other authorization. have a property interest in the trans- (b) Unless otherwise specifically pro- actions of the Palestinian Authority. vided in a license or authorization Accordingly, pursuant to § 597.201, U.S. issued pursuant to this part, if funds persons are prohibited from engaging (including any interest in funds) are or in transactions with the Palestinian at any time since the effective date Authority unless authorized. Certain

663

VerDate Sep<11>2014 11:23 Nov 02, 2020 Jkt 250130 PO 00000 Frm 00673 Fmt 8010 Sfmt 8010 Q:\31\31V3.TXT PC31 kpayne on VMOFRWIN702 with $$_JOB § 597.500 31 CFR Ch. V (7–1–20 Edition)

transactions with the Palestinian Au- § 597.502 Exclusion from licenses and thority may be authorized by license, authorizations. see subpart E of this part. The Director of the Office of Foreign [71 FR 27202, May 10, 2006] Assets Control reserves the right to ex- clude any person, property, or trans- Subpart E—Licenses, Authoriza- action from the operation of any li- tions, and Statements of Li- cense, or from the privileges therein conferred, or to restrict the applica- censing Policy bility thereof with respect to par- § 597.500 Licensing procedures. ticular persons, property, transactions, or classes thereof. Such action shall be For provisions relating to licensing binding upon all persons receiving ac- procedures, see part 501, subpart E, of tual or constructive notice of such ex- this chapter. Licensing actions taken clusion or restriction. pursuant to part 501 of this chapter with respect to the prohibitions con- § 597.503 Payments and transfers to tained in this part are considered ac- blocked accounts in U.S. financial tions taken pursuant to this part. institutions. [68 FR 53660, Sept. 11, 2003] (a) Any payment of funds or transfer of credit or other financial or economic § 597.501 Effect of license or authoriza- resources or assets by a financial insti- tion. tution into a blocked account in a U.S. (a) No license or other authorization financial institution is authorized, pro- contained in this part, or otherwise vided that a transfer from a blocked issued by or under the direction of the account pursuant to this authorization Director of the Office of Foreign Assets may only be made to another blocked Control, shall be deemed to authorize account held in the same name on the or validate any transaction effected books of the same U.S. financial insti- prior to the issuance of the license, un- tution. less specifically provided in such li- (b) This section does not authorize cense or authorization. any transfer from a blocked account (b) No regulation, ruling, instruction, within the United States to an account or license authorizes any transaction held outside the United States. prohibited under this part unless the NOTE TO § 597.503: Please refer to §§ 501.603 regulation, ruling, instruction, or li- and 597.601 of this chapter for mandatory re- cense is issued by the Office of Foreign porting requirements regarding financial Assets Control and specifically refers transfers. to this part. No regulation, ruling, instruction, or license referring to this § 597.504 Entries in certain accounts part shall be deemed to authorize any for normal service charges author- transaction prohibited by any provi- ized. sion of this chapter unless the regula- (a) U.S. financial institutions are tion, ruling, instruction or license spe- hereby authorized to debit any blocked cifically refers to such provision. account with such U.S. financial insti- (c) Any regulation, ruling, instruc- tution in payment or reimbursement tion, or license authorizing any trans- for normal service charges owed to action otherwise prohibited under this such U.S. financial institution by the part has the effect of removing a prohi- owner of such blocked account. bition or prohibitions contained in this (b) As used in this section, the term part from the transaction, but only to normal service charge shall include the extent specifically stated by its charges in payment or reimbursement terms. Unless the regulation, ruling, for interest due; cable, telegraph, or instruction, or license otherwise speci- telephone charges; postage costs; cus- fies, such an authorization does not tody fees; small adjustment charges to create any right, duty, obligation, correct bookkeeping errors; and, but claim, or interest in, or with respect not by way of limitation, minimum to, any property which would not oth- balance charges, notary and protest erwise exist under ordinary principles fees, and charges for reference books, of law. photostats, credit reports, transcripts

664

VerDate Sep<11>2014 11:23 Nov 02, 2020 Jkt 250130 PO 00000 Frm 00674 Fmt 8010 Sfmt 8010 Q:\31\31V3.TXT PC31 kpayne on VMOFRWIN702 with $$_JOB Office of Foreign Assets Control, Treasury § 597.507

of statements, registered mail insur- (g) Representation of a foreign ter- ance, stationery and supplies, check rorist organization seeking judicial re- books, and other similar items. view of a designation before the United States Court of Appeals for the District § 597.505 Payment for certain legal of Columbia Circuit pursuant to 8 services. U.S.C. 1189(b)(1).

Except as otherwise authorized, spe- NOTE TO § 597.505: See § 597.513 of this part cific licenses may be issued, on a case- for authorized mechanisms for payment by-case basis, authorizing receipt of through a U.S. financial institution of pro- payment of professional fees and reim- fessional fees and reimbursement of incurred bursement of incurred expenses expenses for legal services specified in this through a U.S. financial institution for section provided by a U.S. person to or on be- the following legal services by U.S. half of a foreign terrorist organization or an agent thereof. persons: (a) Provision of legal advice and [62 FR 52495, Oct. 8, 1997, as amended at 73 FR counseling to a foreign terrorist orga- 78633, Dec. 23, 2008; 75 FR 75909, Dec. 7, 2010] nization or an agent thereof on the re- § 597.506 Official activities of certain quirements of and compliance with the international organizations; U.S. laws of any jurisdiction within the person employees of certain govern- United States, provided that such ad- ments. vice and counseling is not provided to (a) Effective April 12, 2006, U.S. finan- facilitate transactions in violation of cial institutions are authorized to en- any of the prohibitions of this part; gage in all financial transactions with (b) Representation of a foreign ter- the Palestinian Authority otherwise rorist organization or an agent thereof prohibited by this part that are for the when named as a defendant in or other- conduct of the official business of the wise made a party to domestic U.S. United Nations, provided that no pay- legal, arbitration, or administrative ment pursuant to this license may in- proceedings; volve a debit to an account of the Pal- (c) Initiation and conduct of domes- estinian Authority on the books of a tic U.S. legal, arbitration, or adminis- U.S. financial institution or to any ac- trative proceedings on behalf of a for- count blocked pursuant to this part. eign terrorist organization or an agent (b) For purposes of this section only, thereof; the term ‘‘United Nations’’ means its (d) Representation of a foreign ter- principal organs, including funds, bod- rorist organization or an agent thereof ies, commissions, agencies, depart- before any federal or state agency with ments and other entities of the Secu- respect to the imposition, administra- rity Council, General Assembly, Eco- tion, or enforcement of U.S. sanctions nomic and Social Council and Secre- against a foreign terrorist organization tariat, specifically including, among or an agent thereof; others, the World Bank, the Inter- (e) Representation of an agent of a national Monetary Fund, the World foreign terrorist organization, wher- Food Programme, and the World ever located, detained within the juris- Health Organization. diction of the United States or by the (c) The retention and reporting provi- United States government, with re- sions of § 597.201 shall not apply with spect to either such detention or any respect to transactions authorized by charges made against such agent, in- paragraph (a) of this section. cluding, but not limited to, the con- [71 FR 27202, May 10, 2006] duct of military commission prosecu- tions and the initiation and conduct of § 597.507 Travel, employment, resi- federal court proceedings; dence and maintenance trans- (f) Provision of legal services to a actions with the Palestinian Au- foreign terrorist organization or an thority. agent thereof in any other context in (a) Effective April 12, 2006, U.S. finan- which prevailing U.S. law requires ac- cial institutions are authorized to en- cess to legal counsel at public expense; gage in all transactions that are ordi- and narily incident to U.S. persons’ travel

665

VerDate Sep<11>2014 11:23 Nov 02, 2020 Jkt 250130 PO 00000 Frm 00675 Fmt 8010 Sfmt 8010 Q:\31\31V3.TXT PC31 kpayne on VMOFRWIN702 with $$_JOB § 597.508 31 CFR Ch. V (7–1–20 Edition)

to or from, or employment, residence Broadcasting Corporation (including or personal maintenance within, the the Voice of Palestine, Wafa News jurisdiction of the Palestinian Author- Agency, and the General Public Infor- ity, including, but not limited to, re- mation Agency/State Information ceipt of salaries, payment of living ex- Services); penses and acquisition of goods or serv- (2) The Palestinian Judiciary, includ- ices for personal use. Nothing in this li- ing the Higher Judicial Council; cense authorizes any debit to an ac- (3) Members of the Palestinian Legis- count of the Palestinian Authority on lative Council (PLC) who were not the books of a U.S. financial institu- elected to the PLC on the party slate tion or to any account blocked pursu- of Hamas or any other Foreign Ter- ant to this part. rorist Organization (FTO), Specially (b) The retention and reporting pro- Designated Terrorist (SDT), or Spe- visions of § 597.201 shall not apply with cially Designated Global Terrorist respect to transactions authorized by (SDGT); and paragraph (a) of this section. (4) The following independent agencies: The Central Elections Commis- [71 FR 27202, May 10, 2006] sion; the Independent Citizens Rights § 597.508 Payment of taxes and inci- Commission; the General Audit Au- dental fees to the Palestinian Au- thority/External Audit Agency; and the thority. Palestinian Monetary Authority. (a) Effective April 12, 2006, U.S. finan- (b) Effective April 12, 2006, U.S. financial institutions are authorized to con- cial institutions are authorized to re- duct all transactions ordinarily inci- ject transactions with members of the dent to the following activities by U.S. Palestinian Legislative Council (PLC) persons: the payment of taxes or fees who were elected to the PLC on the to, or the purchase or receipt of per- party slate of Hamas or any other For- mits or public utility services from, eign Terrorist Organization (FTO), the Palestinian Authority where such Specially Designated Terrorist (SDT), transactions are necessary and ordi- or Specially Designated Global Ter- narily incident to such persons’ day-to- rorist (SDGT), provided that any such day operations. Nothing in this license individuals are not named on OFAC’s authorizes a debit to an account of the list of Specially Designated Nationals Palestinian Authority on the books of and Blocked Persons. a U.S. financial institution or to any (c) Nothing in this license authorizes account blocked pursuant to this part. a debit to an account of the Pales- (b) The retention and reporting pro- tinian Authority on the books of a U.S. visions of § 597.201 shall not apply with financial institution or to any account respect to transactions authorized by blocked pursuant to this part. paragraph (a) of this section. (d) The retention and reporting provisions of § 597.201 shall not apply with [71 FR 27202, May 10, 2006] respect to transactions authorized by paragraph (a) of this section. The re- § 597.509 Transactions with entities under the control of the Palestinian tention provisions of § 597.201 shall not President and certain other enti- apply with respect to transactions au- ties. thorized by paragraph (b) of this sec- (a) Effective April 12, 2006, U.S. finan- tion. cial institutions are authorized to en- [71 FR 27202, May 10, 2006] gage in all transactions otherwise prohibited under this part with the fol- § 597.510 Concluding activities with lowing entities and individuals: the Palestinian Authority. (1) The Palestinian Authority Presi- (a) Effective April 12, 2006, all trans- dency, including only the Office of the actions and activities with the Pales- President, Presidential Security, Gen- tinian Authority otherwise prohibited eral Intelligence Apparatus, Governors under this part are authorized through and Governorate staff, the Attorney May 12, 2006, provided that they are General’s Office, the Palestine Invest- necessary to conclude ongoing con- ment Fund (PIF), the Border Crossings tracts or programs with the Pales- Administration, and the Palestine tinian Authority, and further provided

666

VerDate Sep<11>2014 11:23 Nov 02, 2020 Jkt 250130 PO 00000 Frm 00676 Fmt 8010 Sfmt 8010 Q:\31\31V3.TXT PC31 kpayne on VMOFRWIN702 with $$_JOB Office of Foreign Assets Control, Treasury § 597.513

that no payment pursuant to this li- respect to transactions authorized by cense may involve a debit to an ac- paragraphs (a) and (c) of this section. count of the Palestinian Authority on [71 FR 58744, Oct. 5, 2006] the books of a U.S. financial institution or to any account blocked pursu- § 597.512 Transactions with the Pales- ant to this part. tinian Authority authorized. (b) The retention and reporting pro- (a) As of June 20, 2007, U.S. persons visions of § 597.201 shall not apply with are authorized to engage in all trans- respect to transactions authorized by actions otherwise prohibited under this paragraph (a) of this section. part with the Palestinian Authority. [71 FR 27202, May 10, 2006] (b) For purposes of this section only, the term Palestinian Authority means § 597.511 In-kind donations of medi- the Palestinian Authority government cine, medical devices, and medical of Prime Minister Salam Fayyad and services. President Mahmoud Abbas, including (a) Effective July 6, 2006, U.S. finan- all branches, ministries, offices, and cial institutions are authorized to con- agencies (independent or otherwise) duct all transactions ordinarily inci- thereof. dent to the provision by nongovern- [72 FR 61518, Oct. 31, 2007] mental organizations that are U.S. persons of in-kind donations of medicine, § 597.513 Payments from funds origi- medical devices, and medical services nating outside the United States to the Palestinian Authority Ministry and the formation of legal defense of Health, provided that such donations funds authorized. are strictly for distribution in the West (a) Payments from funds originating Bank or Gaza and not intended for re- outside the United States. Effective De- sale, and provided further that no pay- cember 7, 2010, receipts of payment ment pursuant to this license may in- through a U.S. financial institution of volve a debit to an account of the Pal- professional fees and reimbursement of estinian Authority on the books of a incurred expenses for the provision of U.S. financial institution or to any ac- legal services specified in § 597.505 are count blocked pursuant to this part. authorized from funds originating out- (b) For the purposes of this section side the United States, provided that: only, the term medical device has the (1) Prior to receiving payment meaning given the term ‘‘device’’ in through a U.S. financial institution for section 201 of the Federal Food, Drug, legal services specified in § 597.505 ren- and Cosmetic Act (21 U.S.C. 321), in- dered to a foreign terrorist organiza- cluding medical supplies, but does not tion or agent thereof, the U.S. person include any item listed on the Com- that is an attorney, law firm, or legal merce Control List in the Export Ad- services organization provides to the ministration Regulations, 15 CFR part Office of Foreign Assets Control a copy 774, supplement no. 1. of a letter of engagement or a letter of (c) U.S. financial institutions are au- intent to engage specifying the serv- thorized to conduct all transactions or- ices to be performed and signed by the dinarily incident to the provision by individual to whom such services are to nongovernmental organizations that be provided or, where services are to be are U.S. persons of in-kind donations of provided to an entity, by a legal rep- medical devices listed on the Com- resentative of the entity. The copy of a merce Control List to the Palestinian letter of engagement or a letter of in- Authority Ministry of Health, provided tent to engage, accompanied by cor- that respondence referencing this paragraph (1) Such donation is licensed by § 597.513(a), is to be mailed to: Licens- OFAC; and ing Division, Office of Foreign Assets (2) Such donation is authorized under Control, U.S. Department of the Treas- or pursuant to the Export Administra- ury, 1500 Pennsylvania Avenue, NW., tion Regulations. Annex, Washington, DC 20220; (d) The retention and reporting pro- (2) The funds received by U.S. persons visions of § 597.201 shall not apply with through a U.S. financial institution as

667

VerDate Sep<11>2014 11:23 Nov 02, 2020 Jkt 250130 PO 00000 Frm 00677 Fmt 8010 Sfmt 8010 Q:\31\31V3.TXT PC31 kpayne on VMOFRWIN702 with $$_JOB § 597.513 31 CFR Ch. V (7–1–20 Edition)

payment of professional fees and reim- Treasury, 1500 Pennsylvania Avenue, bursement of incurred expenses for the NW., Annex, Washington, DC 20220; and provision of legal services specified in § 597.505 must not originate from: NOTE TO PARAGRAPH (a)(3) OF § 597.513: U.S. persons who receive payments in connection (i) A source within the United States; with legal services specified in § 597.505 do (ii) Any source, wherever located, not need to obtain specific authorization to within the possession or control of a make payments through a U.S. financial in- U.S. person; or stitution for related services that are ordi- (iii) Any individual or entity, other narily incident to the provision of those than the person on whose behalf the legal services, such as those provided by pri- legal services specified in § 597.505 are vate investigators or expert witnesses. to be provided, whose property and in- (4) Nothing in this paragraph (a) au- terests in property are blocked pursu- thorizes the receipt of payment ant to any part of this chapter or any through a U.S. financial institution of Executive order; professional fees or reimbursement of NOTE TO PARAGRAPH (a)(2) OF § 597.513: This incurred expenses for the provision of paragraph authorizes the person on whose legal services not specified in § 597.505. behalf the legal services specified in § 597.505 are to be provided to make payments for NOTE 1 TO PARAGRAPH (a) OF § 597.513: Any specified legal services using funds origi- payment authorized in or pursuant to this nating outside the United States that were paragraph that is routed through the U.S. fi- not previously blocked. Nothing in this para- nancial system should reference this paragraph authorizes payments for legal services graph (a) to avoid the blocking of the trans- using funds in which any other person whose fer. assets and funds are subject to the prohibi- NOTE 2 TO PARAGRAPH (a) OF § 597.513: Noth- tions in § 597.201(a) or whose property and in- ing in this paragraph authorizes the transfer terests in property are blocked pursuant to of any blocked property, the debiting of any any other part of this chapter holds an inter- blocked account, the entry of any judgment est. or order that effects a transfer of blocked property, or the execution of any judgment (3) Reports. (i) U.S. persons who re- against property blocked pursuant to any ceive payments in connection with Executive order or this chapter. U.S. persons legal services specified in § 597.505 must seeking administrative reconsideration or submit quarterly reports no later than judicial review of their designation or the 30 days following the end of the cal- blocking of their property and interests in endar quarter during which the pay- property may apply for a specific license from the Office of Foreign Assets Control to ments were received providing infor- authorize the release of a limited amount of mation on the funds received. Such re- blocked funds for the payment of legal fees ports shall specify: where alternative funding sources are not (A) The individual or entity from available. For more information, see OFAC’s whom the funds originated and the Guidance on the Release of Limited Amounts of amount of funds received; and Blocked Funds for Payment of Legal Fees and (B) If applicable: Costs Incurred in Challenging the Blocking of (1) The names of any individuals or U.S. Persons in Administrative or Civil Pro- entities providing related services to ceedings, which is available at: http:// www.treas.gov/resource-center/sanctions/Docu- the U.S. person receiving payment in ments/legallfeelguide.pdf. connection with specified legal services, such as private investigators or (b) Legal defense funds. Effective De- expert witnesses; cember 7, 2010, U.S. persons that are at- (2) A general description of the serv- torneys, law firms, or legal services or- ices provided; and ganizations are authorized to form (3) The amount of funds paid in con- legal defense funds from which pay- nection with such services. ments of professional fees and reim- (ii) In the event that no transactions bursement for expenses incurred in occur or no funds are received during connection with the provision of legal the reporting period, a statement is to services specified in § 597.505 may be be filed to that effect. debited provided that: (iii) Reports, which must reference (1) The legal defense fund must be this paragraph (a), are to be mailed to: held in a savings or checking account Licensing Division, Office of Foreign at a financial institution located in the Assets Control, U.S. Department of the United States;

668

VerDate Sep<11>2014 11:23 Nov 02, 2020 Jkt 250130 PO 00000 Frm 00678 Fmt 8010 Sfmt 8010 Q:\31\31V3.TXT PC31 kpayne on VMOFRWIN702 with $$_JOB Office of Foreign Assets Control, Treasury § 597.513

(2) Prior to debiting the legal defense the legal defense fund during the re- fund, the U.S. person responsible for es- porting period. Such reports shall tablishing the legal defense fund must specify: submit the following information to (A) The individual or entity from the Office of Foreign Assets Control: A whom the funds originated and the copy of a letter of engagement or a let- amount of funds received; and ter of intent to engage specifying the (B) Any individual or entity to whom services to be performed and signed by any payments were made, including, if the individual to whom such services applicable: are to be provided or, where services (1) The names of any individuals or are to be provided to an entity, by a entities providing related services to legal representative of the entity; the the U.S. person receiving payment in name of the individual or entity re- connection with specified legal serv- sponsible for establishing the legal de- ices, such as private investigators or fense fund; the name of the financial expert witnesses; institution at which the account for (2) A general description of the serv- the legal defense fund will be held; a ices provided; and point of contact at the financial insti- (3) The amount of funds paid in con- tution holding the account for the nection with such services. legal defense fund; and the account (ii) In the event that no transactions name and account number for the legal occur or no funds are received during defense fund. The foregoing informa- the reporting period, a statement is to tion must be accompanied by cor- be filed to that effect. respondence referencing this paragraph (iii) Reports, which must reference (b) and is to be mailed to: Licensing Di- this paragraph (b), are to be mailed to: vision, Office of Foreign Assets Con- Licensing Division, Office of Foreign trol, U.S. Department of the Treasury, Assets Control, U.S. Department of the 1500 Pennsylvania Avenue, NW., Annex, Treasury, 1500 Pennsylvania Avenue, Washington, DC 20220; NW., Annex, Washington, DC 20220; and (3) The legal defense fund may not receive funds from a person whose assets NOTE TO PARAGRAPH (b)(5) OF § 597.513: U.S. and funds are subject to the prohibi- persons who receive payments in connection with legal services specified in § 597.505 do tions in § 597.201(a) or whose property not need to obtain specific authorization to and interests in property are blocked make payments through a U.S. financial in- pursuant to any other part of this stitution for related services that are ordi- chapter; narily incident to the provision of those (4) The U.S. person responsible for es- legal services, such as those provided by pri- tablishing the legal defense fund must vate investigators or expert witnesses. notify the financial institution at (6) Nothing in this paragraph (b) au- which the account for the legal defense thorizes the formation or debiting of fund is held that the account may only legal defense funds in connection with be debited to make payments of profes- the provision of legal services not spec- sional fees and reimburse expenses in- ified in § 597.505. curred in connection with the provision of legal services specified in § 597.505; NOTE 1 TO PARAGRAPH (b) OF § 597.513: Any (5) Reports. (i) U.S. persons respon- payment authorized in or pursuant to this sible for establishing legal defense paragraph that is routed through the U.S. financial system should reference this para- funds from which payments of profes- graph (b) to avoid the blocking of the trans- sional fees and reimbursement for ex- fer. penses incurred in connection with the NOTE 2 TO PARAGRAPH (b) OF § 597.513: Any provision of legal services specified in funds remaining in a legal defense fund ac- § 597.505 may be debited must submit count after all payments of professional fees quarterly reports no later than 30 days and reimbursement of incurred expenses au- following the end of the calendar quar- thorized pursuant to this paragraph have ter during which the funds were depos- been made or upon termination of the legal services for which payment is authorized ited with or debited from the account pursuant to this paragraph are deemed to be of the legal defense fund providing in- funds of the foreign terrorist organization or formation on the funds received by the agent thereof to or on whose behalf the legal legal defense fund and debits made to services were rendered and subject to the

669

VerDate Sep<11>2014 11:23 Nov 02, 2020 Jkt 250130 PO 00000 Frm 00679 Fmt 8010 Sfmt 8010 Q:\31\31V3.TXT PC31 kpayne on VMOFRWIN702 with $$_JOB § 597.601 31 CFR Ch. V (7–1–20 Edition)

prohibitions of this part. U.S. financial insti- per violation, or twice the amount of tutions in the possession or control of such which the financial institution was re- remaining funds may apply for the quired to retain possession or control. unblocking of the funds by following the pro- (2) The civil penalties provided in 18 cedures set forth at § 501.801 of this chapter. U.S.C. 2339B(b) are subject to adjust- [75 FR 75909, Dec. 7, 2010] ment pursuant to the Federal Civil Penalties Inflation Adjustment Act of Subpart F—Reports 1990 (Pub. L. 101–410, as amended, 28 U.S.C. 2461 note). § 597.601 Records and reports. (3) The applicable maximum civil For provisions relating to records penalty per violation is $81,283 or twice and reports, see subpart C of part 501 of the amount of which a financial insti- this chapter; provided, however, that tution was required to retain posses- all of the powers afforded the Director sion or control. pursuant to the first 3 sentences of (c) Attention is directed to 18 U.S.C. § 501.602 of this chapter may also be ex- 1001, which provides that whoever, in ercised by the Attorney General in con- any matter within the jurisdiction of ducting administrative investigations the executive, legislative, or judicial pursuant to 18 U.S.C. 2339B(e); provided branch of the Government of the further, that the investigative author- United States, knowingly and willfully ity of the Director pursuant to § 501.602 falsifies, conceals or covers up by any of this chapter shall be exercised in ac- trick, scheme, or device a material cordance with 18 U.S.C. 2339B(e); and fact, or makes any materially false, provided further, that for purposes of fictitious or fraudulent statement or this part no person other than a U.S. fi- representation, or makes or uses any nancial institution and its directors, false writing or document knowing the officers, employees, and agents shall be same to contain any materially false, required to maintain records or to file fictitious or fraudulent statement or any reports or furnish any information entry, shall be fined under title 18, under §§ 501.601, 501.602, or 501.603 of this United States Code, or imprisoned not chapter. more than 5 years, or both. (d) Conduct covered by this part may Subpart G—Penalties also be subject to relevant provisions of other applicable laws. § 597.701 Penalties. [62 FR 52495, Oct. 8, 1997, as amended at 68 FR (a) Attention is directed to 18 U.S.C. 61361, Oct. 28, 2003; 81 FR 43077, July 1, 2016; 2339B(a)(1), as added by Public Law 104– 82 FR 10439, Feb. 10, 2017; 83 FR 11880, Mar. 19, 132, 110 Stat. 1250–1253, section 303, 2018; 84 FR 27719, June 14, 2019; 85 FR 19888, which provides that whoever, within Apr. 9, 2020] the United States or subject to the jurisdiction of the United States, know- § 597.702 Prepenalty notice. ingly provides material support or re- (a) When required. If the Director of sources to a foreign terrorist organiza- the Office of Foreign Assets Control tion, or attempts or conspires to do so, has reasonable cause to believe that shall be fined under title 18, United there has occurred a violation of any States Code, or imprisoned for not provision of this part or a violation of more than 10 years, or both. the provisions of any license, ruling, (b)(1) Pursuant to 18 U.S.C. 2339B(b), regulation, order, direction or instruc- except as authorized by the Secretary tion issued by or pursuant to the direc- of the Treasury, any financial institution or authorization of the Secretary tion that knowingly fails to retain pos- of the Treasury pursuant to this part, session of or maintain control over and the Director, acting in coordina- funds in which a foreign terrorist orga- tion with the Attorney General, deter- nization or its agent has an interest, or mines that civil penalty proceedings to report the existence of such funds in are warranted, the Director shall issue accordance with these regulations, to the person concerned a notice of in- shall be subject to a civil penalty in an tent to impose a monetary penalty. amount that is the greater of the The prepenalty notice shall be issued amount set forth in 18 U.S.C. 2339B(b) whether or not another agency has

670

VerDate Sep<11>2014 11:23 Nov 02, 2020 Jkt 250130 PO 00000 Frm 00680 Fmt 8010 Sfmt 8010 Q:\31\31V3.TXT PC31 kpayne on VMOFRWIN702 with $$_JOB Office of Foreign Assets Control, Treasury § 597.705

taken any action with respect to this settlement is reached, the 30–day pe- matter. riod specified in paragraph (a) of this (b) Contents—(1) Facts of violation. section for written response to the The prepenalty notice shall describe prepenalty notice remains in effect un- the violation, specify the laws and reg- less additional time is granted by the ulations allegedly violated, and state Office of Foreign Assets Control. the amount of the proposed monetary penalty. § 597.704 Penalty notice. (2) Right to respond. The prepenalty (a) No violation. If, after considering notice also shall inform the respondent any written response to the prepenalty of respondent’s right to respond within notice and any relevant facts, the Di- 30 days of mailing of the notice as to rector of the Office of Foreign Assets why a monetary penalty should not be Control determines that there was no imposed, or, if imposed, why it should violation by the respondent, the Direc- be in a lesser amount than proposed. tor promptly shall notify the respondent in writing of that determination § 597.703 Response to prepenalty no- and that no monetary penalty will be tice. imposed. (a) Time within which to respond. The (b) Violation. (1) If, after considering respondent shall have 30 days from the any written response to the prepenalty date of mailing of the prepenalty no- notice and any relevant facts, the Di- tice to respond in writing to the Direc- rector of the Office of Foreign Assets tor of the Office of Foreign Assets Con- Control determines that there was a trol. violation by the respondent, the Direc- (b) Form and contents of written re- tor promptly shall issue a written no- sponse. The written response need not tice of the imposition of the monetary be in any particular form, but shall penalty on the respondent. The contain information sufficient to indi- issuance of a written notice of the im- cate that it is in response to the position of a monetary penalty shall prepenalty notice. It should respond to constitute final agency action. the allegations in the prepenalty no- (2) The penalty notice shall inform tice and set forth the reasons why the the respondent that payment of the as- respondent believes the penalty should sessed penalty must be made within 30 not be imposed or, if imposed, why it days of the mailing of the penalty no- should be in a lesser amount than pro- tice. posed. (3) The penalty notice shall inform (c) Informal settlement. In addition or the respondent of the requirement to as an alternative to a written response furnish respondent’s taxpayer identi- to a prepenalty notice pursuant to this fication number pursuant to 31 U.S.C. section, the respondent or respondent’s 7701 and that the Department intends representative may contact the Office to use such number for the purposes of of Foreign Assets Control as advised in collecting and reporting on any delin- the prepenalty notice to propose the quent penalty amount in the event of a settlement of allegations contained in failure to pay the penalty imposed. the prepenalty notice and related mat- ters. In the event of settlement at the § 597.705 Administrative collection; re- prepenalty stage, the prepenalty notice ferral to United States Department will be withdrawn, the respondent is of Justice. not required to take a written position In the event that the respondent does on allegations contained in the not pay the penalty imposed pursuant prepenalty notice, and the Office of to this part or make payment arrange- Foreign Assets Control will make no ments acceptable to the Director of the final determination as to whether a Office of Foreign Assets Control within violation occurred. The amount accept- 30 days of the mailing of the written ed in settlement of allegations in a notice of the imposition of the penalty, prepenalty notice may vary from the the matter may be referred for admin- civil penalty that might finally be im- istrative collection measures by the posed in the event of a formal deter- Department of the Treasury or to the mination of violation. In the event no United States Department of Justice

671

VerDate Sep<11>2014 11:23 Nov 02, 2020 Jkt 250130 PO 00000 Frm 00681 Fmt 8010 Sfmt 8010 Q:\31\31V3.TXT PC31 kpayne on VMOFRWIN702 with $$_JOB § 597.801 31 CFR Ch. V (7–1–20 Edition)

for appropriate action to recover the PART 598—FOREIGN NARCOTICS penalty in a civil suit in a Federal dis- KINGPIN SANCTIONS REGULA- trict court. TIONS

Subpart H—Procedures Subpart A—Relation of this Part to Other Laws and Regulations § 597.801 Procedures. Sec. For license application procedures 598.101 Relation of this part to other laws and procedures relating to amend- and regulations. ments, modifications, or revocations of licenses; administrative decisions; Subpart B—Prohibitions rulemaking; and requests for docu- 598.201 Applicability of sanctions. ments pursuant to the Freedom of In- 598.202 Blocking of assets. formation and Privacy Acts (5 U.S.C. 598.203 Prohibited transactions involving 552 and 552a), see part 501, subpart E, of blocked property. this chapter. 598.204 Evasions; attempts; conspiracies. 598.205 Effect of transfers violating the pro- [62 FR 52495, Oct. 8, 1997, as amended at 68 FR visions of this part. 53660, Sept. 11, 2003] 598.206 Holding of funds in interest-bearing accounts; investment and reinvestment. § 597.802 Delegation by the Secretary of the Treasury. Subpart C—General Definitions Any action which the Secretary of 598.301 Blocked account; blocked property. the Treasury is authorized to take pur- 598.302 Effective date. suant to 8 U.S.C. 1189 or 18 U.S.C. 598.303 Entity. 2339B, as added by Public Law 104–132, 598.304 Foreign Narcotics Kingpin Designa- 110 Stat. 1248–1253, sections 302 and 303, tion Act. 598.305 Foreign person. may be taken by the Director of the Of- 598.306 General license. fice of Foreign Assets Control, or by 598.307 Interest. any other person to whom the Sec- 598.308 License. retary of the Treasury has delegated 598.309 Narcotic drug; controlled substance; authority so to act. listed chemical. 598.310 Narcotics trafficking. 598.311 Person. Subpart I—Paperwork Reduction 598.312 Property; property interest. Act 598.313 Significant foreign narcotics trafficker. § 597.901 Paperwork Reduction Act no- 598.314 Specially designated narcotics traf- tice. ficker. 598.315 Specific license. For approval by the Office of Man- 598.316 Transfer. agement and Budget (‘‘OMB’’) under 598.317 United States. the Paperwork Reduction Act of infor- 598.318 United States person; U.S. person. mation collections relating to record- 598.319 U.S. financial institution. keeping and reporting requirements, to licensing procedures (including those Subpart D—Interpretations pursuant to statements of licensing 598.401 Reference to amended sections. policy), and to other procedures, see 598.402 Effect of amendment. § 501.901 of this chapter. An agency may 598.403 Termination and acquisition of an not conduct or sponsor, and a person is interest in blocked property. not required to respond to, a collection 598.404 Setoffs prohibited. 598.405 Transactions incidental to a licensed of information unless it displays a transaction. valid control number assigned by OMB. 598.406 Provision of services. 598.407 Offshore transactions. 598.408 Alleged change in ownership or control of an entity designated as a specially designated narcotics trafficker. 598.409 Credit extended and cards issued by U.S. financial institutions.

672

VerDate Sep<11>2014 11:23 Nov 02, 2020 Jkt 250130 PO 00000 Frm 00682 Fmt 8010 Sfmt 8010 Q:\31\31V3.TXT PC31 kpayne on VMOFRWIN702 with $$_JOB