Rule2022-09371
Ukraine-/Russia-Related Sanctions Regulations
Primary source
Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.
Published
May 2, 2022
Effective
May 2, 2022
Issuing agencies
Treasury DepartmentForeign Assets Control Office
Abstract
The Department of the Treasury's Office of Foreign Assets Control (OFAC) is changing the heading of the Ukraine Related Sanctions Regulations to the Ukraine-/Russia-Related Sanctions Regulations, and replacing the Ukraine Related Sanctions Regulations that were published in abbreviated form on May 8, 2014, with a more comprehensive set of regulations that includes additional interpretive and definitional guidance, general licenses, and other regulatory provisions that will provide further guidance to the public. Among other things, this amendment implements the Ukraine-/Russia-related Executive order of December 19, 2014, and provisions of the Ukraine Freedom Support Act of 2014, the Support for the Sovereignty, Integrity, Democracy, and Economic Stability of Ukraine Act of 2014, and the Countering America's Adversaries Through Sanctions Act. In addition, this amendment incorporates four directives regarding sectoral sanctions issued pursuant to the Ukraine-/Russia-related Executive order of March 20, 2014, and six general licenses that have until now appeared only on OFAC's website, as well as seven new general licenses.
Full Text
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[Federal Register Volume 87, Number 84 (Monday, May 2, 2022)]
[Rules and Regulations]
[Pages 26094-26119]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2022-09371]
[[Page 26093]]
Vol. 87
Monday,
No. 84
May 2, 2022
Part III
Department of the Treasury
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Office of Foreign Assets Control
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31 CFR Part 589
Ukraine-/Russia-Related Sanctions Regulations; Final Rule
Federal Register / Vol. 87 , No. 84 / Monday, May 2, 2022 / Rules and
Regulations
[[Page 26094]]
DEPARTMENT OF THE TREASURY
Office of Foreign Assets Control
31 CFR Part 589
Ukraine-/Russia-Related 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 changing the heading of the Ukraine Related Sanctions
Regulations to the Ukraine-/Russia-Related Sanctions Regulations, and
replacing the Ukraine Related Sanctions Regulations that were published
in abbreviated form on May 8, 2014, with a more comprehensive set of
regulations that includes additional interpretive and definitional
guidance, general licenses, and other regulatory provisions that will
provide further guidance to the public. Among other things, this
amendment implements the Ukraine-/Russia-related Executive order of
December 19, 2014, and provisions of the Ukraine Freedom Support Act of
2014, the Support for the Sovereignty, Integrity, Democracy, and
Economic Stability of Ukraine Act of 2014, and the Countering America's
Adversaries Through Sanctions Act. In addition, this amendment
incorporates four directives regarding sectoral sanctions issued
pursuant to the Ukraine-/Russia-related Executive order of March 20,
2014, and six general licenses that have until now appeared only on
OFAC's website, as well as seven new general licenses.
DATES: This rule is effective May 2, 2022.
FOR FURTHER INFORMATION CONTACT: OFAC: Assistant Director for
Licensing, 202-622-2480; Assistant Director for Regulatory Affairs,
202-622-4855; or Assistant Director for Sanctions Compliance &
Evaluation, 202-622-2490.
SUPPLEMENTARY INFORMATION:
Electronic Availability
This document and additional information concerning OFAC are
available on OFAC's website: <a href="http://www.treas.gov/ofac">www.treas.gov/ofac</a>.
Background
On May 8, 2014, OFAC published the Ukraine Related Sanctions
Regulations, 31 CFR part 589 (79 FR 26365, May 8, 2014), to implement
Executive Order (E.O.) 13660 of March 6, 2014, ``Blocking Property of
Certain Persons Contributing to the Situation in Ukraine'' (79 FR
13493, March 10, 2014); E.O. 13661 of March 16, 2014, ``Blocking
Property of Additional Persons Contributing to the Situation in
Ukraine'' (79 FR 15535, March 19, 2014); and E.O. 13662 of March 20,
2014, ``Blocking Property of Additional Persons Contributing to the
Situation in Ukraine'' (79 FR 16169, March 24, 2014). The Ukraine
Related Sanctions Regulations were initially issued in abbreviated form
to provide immediate guidance to the public. OFAC is changing the
heading of the Ukraine Related Sanctions Regulations to the Ukraine-/
Russia-Related Sanctions Regulations (the ``Regulations'') and
reissuing the Regulations as a more comprehensive set of regulations
that includes additional interpretive guidance and definitions, general
licenses, and other regulatory provisions that will provide further
guidance to the public.
This rule implements E.O. 13685 of December 19, 2014 (``Blocking
Property of Certain Persons and Prohibiting Certain Transactions with
Respect to the Crimea Region of Ukraine'') (79 FR 77357, December 24,
2014), provisions of the Ukraine Freedom Support Act of 2014, as
amended (22 U.S.C. 8921-8930) (UFSA), and the Support for the
Sovereignty, Integrity, Democracy, and Economic Stability of Ukraine
Act of 2014, as amended (22 U.S.C. 8901-8910) (SSIDES), and sections of
title II of the Countering America's Adversaries Through Sanctions Act
(Pub. L. 115-44, 131 Stat. 886 (codified in scattered sections of 22
U.S.C.)) (CAATSA). In addition, this rule incorporates four directives
issued pursuant to E.O. 13662 regarding sectoral sanctions and six new
general licenses that have until now appeared only on OFAC's website,
and adds seven new general licenses. Because of the number of
regulatory sections being updated or added, OFAC is reissuing the
Regulations in their entirety.
Executive Orders
E.O. 13660. On March 6, 2014, the President, invoking the authority
of, inter alia, the International Emergency Economic Powers Act (50
U.S.C. 1701 et seq.) (IEEPA), issued E.O. 13660. In E.O. 13660, the
President determined that the actions and policies of persons,
including persons who have asserted governmental authority in the
Crimean region without the authorization of the Government of Ukraine,
that undermine democratic processes and institutions in Ukraine;
threaten its peace, security, stability, sovereignty, and territorial
integrity; and contribute to the misappropriation of its assets,
constitute 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.
Section 1(a) of E.O. 13660 blocks, with certain exceptions, all
property and interests in property that are in the United States, that
come within the United States, or that are or come within the
possession or control of any U.S. person, of any person determined by
the Secretary of the Treasury, in consultation with the Secretary of
State to, among other things, be responsible for or complicit in
actions or policies that undermine democratic processes or institutions
in Ukraine or threaten the peace, security, stability, sovereignty, or
territorial integrity of Ukraine.
E.O. 13661. On March 16, 2014, the President, invoking the
authority of, inter alia, IEEPA, issued E.O. 13661. In E.O. 13661, the
President expanded the scope of the national emergency declared in E.O.
13660, finding that the actions and policies of the Government of the
Russian Federation with respect to Ukraine--including the recent
deployment of Russian Federation military forces in the Crimea region
of Ukraine--undermine democratic processes and institutions in Ukraine;
threaten its peace, security, stability, sovereignty, and territorial
integrity; and contribute to the misappropriation of its assets, and
thereby constitute an unusual and extraordinary threat to the national
security and foreign policy of the United States. Section 1(a) of E.O.
13661 blocks, with certain exceptions, all property and interests in
property that are in the United States, that come within the United
States, or that are or come within the possession or control of any
United States person, of: (i) The persons listed in the Annex to E.O.
13661, and (ii) persons determined by the Secretary of the Treasury, in
consultation with the Secretary of State to, among other things, be an
official of the Government of the Russian Federation or operate in the
arms or related materiel sector in the Russian Federation.
E.O. 13662. On March 20, 2014, the President, invoking the
authority of, inter alia, IEEPA, issued E.O. 13662. In E.O. 13662, the
President expanded the scope of the national emergency declared in E.O.
13660 and expanded by E.O. 13661, finding that the actions and policies
of the Government of the Russian Federation, including its purported
annexation of Crimea and its use of force in Ukraine, continue to
undermine democratic processes and institutions in Ukraine; threaten
its peace, security, stability, sovereignty,
[[Page 26095]]
and territorial integrity; and contribute to the misappropriation of
its assets, and thereby constitute an unusual and extraordinary threat
to the national security and foreign policy of the United States.
Section 1(a) of E.O. 13662 blocks, with certain exceptions, all
property and interests in property that are in the United States, that
come within the United States, or that are or come within the
possession or control of any United States person, of any person
determined by the Secretary of the Treasury, in consultation with the
Secretary of State to, among other things, operate in such sectors of
the Russian Federation economy as may be determined by the Secretary of
the Treasury, in consultation with the Secretary of State, such as
financial services, energy, metals and mining, engineering, and defense
and related materiel.
E.O. 13685. On December 19, 2014, the President, invoking the
authority of, inter alia, IEEPA, issued E.O. 13685 (``Blocking Property
of Certain Persons and Prohibiting Certain Transactions With Respect to
the Crimea Region of Ukraine''). In E.O. 13685, the President took
additional steps to address the Russian occupation of the Crimea region
of Ukraine, and with respect to the national emergency declared in E.O.
13660 and expanded by E.O.s 13661 and 13662.
Section 1(a) of E.O. 13685 prohibits, among other things, new
investment in the Crimea region of Ukraine by a United States person,
and the importation into, or exportation from, the United States,
directly or indirectly, of any goods, services, or technology from or
to the Crimea region of Ukraine. Section 2(a) of E.O. 13685 blocks,
with certain exceptions, all property and interests in property that
are in the United States, that come within the United States, or that
are or come within the possession or control of any United States
person, of any person determined by the Secretary of the Treasury, in
consultation with the Secretary of State to meet certain criteria.
Other E.O. provisions. In section 3 of E.O.s 13660, 13661, and
13662, and section 4 of E.O. 13685, the President determined that the
making of donations of certain articles, such as food, clothing, and
medicine, intended to be used to relieve human suffering, as specified
in section 203(b)(2) of IEEPA (50 U.S.C. 1702(b)(2)), by, to, or for
the benefit of any person whose property and interests in property are
blocked pursuant to section 1 of E.O.s 13660, 13661, or 13662, or
section 2 of E.O. 13685, respectively, would seriously impair the
President's ability to deal with the national emergency declared in
E.O. 13660 and expanded by E.O.s 13661 and 13662. The President
therefore prohibited the donation of such items except to the extent
provided by statutes, or in regulations, orders, directives or licenses
that may be issued pursuant to E.O.s 13660, 13661, 13362, and 13685
respectively.
Section 4 of E.O.s 13660, 13661, and 13662, and section 5 of E.O.
13685 provide that the prohibition on any transaction or dealing in
blocked property or interests in property includes 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 are
blocked pursuant to E.O. 13660, E.O. 13661, E.O. 13662, or E.O. 13685
(collectively, ``the Ukraine-/Russia-related Executive Orders''),
respectively, and the receipt of any contribution or provision of
funds, goods, or services from any such person.
Section 5 of E.O.s 13660, 13661, and 13662, and section 6 of E.O.
13685 prohibit any transaction by a U.S. 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
Ukraine-/Russia-related Executive Orders, respectively, as well as any
conspiracy formed to violate such prohibitions.
Sections 8 of E.O.s 13660, 13661, and 13662, and section 10 of E.O.
13685 authorize the Secretary of the Treasury, in consultation with the
Secretary of State, to take such actions, including the promulgation of
rules and regulations, and to employ all powers granted to the
President by IEEPA, as may be necessary to carry out the purposes of
the Ukraine-/Russia-related Executive Orders, and also provide that the
Secretary of the Treasury may redelegate any of these functions to
other officers and agencies of the U.S. Government. In furtherance of
the Ukraine-/Russia-related Executive Orders, among other authorities,
OFAC is promulgating the Regulations.
Sectoral determinations and directives issued pursuant to E.O.
13662. Section 1(a)(i) of E.O. 13662 blocks all property and interests
in property of any person determined by the Secretary of the Treasury,
in consultation with the Secretary of State, to operate in certain
sectors of the Russian Federation economy, such as financial services,
energy, metals and mining, engineering, and defense and related
materiel. Pursuant to this provision, on July 16, 2014, the Secretary
of the Treasury, in consultation with the Secretary of State,
determined that section 1(a)(i) of E.O. 13662 shall apply to the
financial services and energy sectors of the Russian Federation
economy. On September 12, 2014, the Secretary of the Treasury, in
consultation with the Secretary of State, determined that section
1(a)(i) of E.O. 13662 shall apply to the defense and related materiel
sector of the Russian Federation economy (79 FR 63021, October 21,
2014).
Effective August 2, 2017, section 223(a) of CAATSA modified the
implementation of section 1(a) of E.O. 13662 by providing that the
Secretary of the Treasury may determine that a person meets one or more
of the criteria in section 1(a) of E.O. 13662 if that person is a
state-owned entity operating in the railway or metals and mining sector
of the economy of the Russian Federation.
To further implement the Secretary's determinations under section
1(a)(i) of E.O. 13662, OFAC issued four directives prohibiting
specified activities by a U.S. person or within the United States
pursuant to sections 1(a)(i), 1(b), and 8 of E.O. 13662 and Sec.
589.802. As described below, the directives have been amended several
times. The full text of the current directives that are being
incorporated into the Regulations can be found on the Ukraine-/Russia-
Related Sanctions page on OFAC's website: <a href="http://www.treas.gov/ofac">www.treas.gov/ofac</a>. The names
of persons determined to be subject to one or more directives issued
under E.O. 13662 are published on OFAC's Sectoral Sanctions
Identifications List (SSI List), which can also be found on the
Ukraine-/Russia-Related Sanctions page on OFAC's website:
<a href="http://www.treas.gov/ofac">www.treas.gov/ofac</a>.
Directive 1. On July 16, 2014, OFAC issued ``Directive 1 Pursuant
to Executive Order 13662'' (79 FR 63021, October 21, 2014) to further
implement the determination by the Secretary of the Treasury, in
consultation with the Secretary of State, that section 1(a)(i) of E.O.
13662 applies to the financial services sector of the Russian
Federation Economy. On September 12, 2014, OFAC replaced ``Directive 1
Pursuant to Executive Order 13662'' with ``Directive 1 (as Amended)
Under Executive Order 13622'' (79 FR 63021, October 21, 2014). Section
223(b) of CAATSA requires the Secretary of the Treasury to modify
``Directive 1 (as Amended) Under Executive Order 13622,'' or any
successor directive, to ensure that the directive prohibits the conduct
by United States persons or persons within the United States of all
transactions in, provision of financing for, and other dealings in new
debt of longer than 14
[[Page 26096]]
days maturity or new equity of persons determined to be subject to the
directive, their property, or their interests in property. OFAC
replaced ``Directive 1 (as Amended) Under Executive Order 13622'' with
``Directive 1 (as Amended on September 29, 2017) Under Executive Order
13622'' (Directive 1) on September 29, 2017 on OFAC's website.
Directive 1 prohibits the following activities by a U.S. person or
within the United States: (1) For new debt or new equity issued on or
after July 16, 2014 and before September 12, 2014, all transactions in,
provision of financing for, and other dealings in new debt of longer
than 90 days maturity or new equity of persons determined to be subject
to Directive 1 or any earlier version thereof, their property, or their
interests in property; (2) For new debt or new equity issued on or
after September 12, 2014 and before November 28, 2017, all transactions
in, provision of financing for, and other dealings in new debt of
longer than 30 days maturity or new equity of persons determined to be
subject to Directive 1 or any earlier version thereof, their property,
or their interests in property; and (3) For new debt or new equity
issued on or after November 28, 2017, all transactions in, provision of
financing for, and other dealings in new debt of longer than 14 days
maturity or new equity of persons determined to be subject to Directive
1 or any earlier version thereof, their property, or their interests in
property. Directive 1 also prohibits (1) Any transaction that evades or
avoids, has the purpose of evading or avoiding, causes a violation of,
or attempts to violate any of the prohibitions contained in the
directive; and (2) Any conspiracy formed to violate any of the
prohibitions in the directive.
Directive 2. On July 16, 2014, OFAC issued ``Directive 2 Pursuant
to Executive Order 13662'' (79 FR 63021, October 21, 2014) to further
implement the determination by the Secretary of the Treasury that
section 1(a)(i) of E.O. 13662 applies to the energy sector of the
Russian Federation economy. On September 12, 2014, OFAC replaced
``Directive 2 Pursuant to Executive Order 13662'' with ``Directive 2
(as Amended) Under E.O. 13662'' (79 FR 63021, October 21, 2014).
Section 223(c) of CAATSA requires the Secretary of the Treasury to
modify ``Directive 2 (as Amended) Under E.O. 13662'' or any successor
directive to ensure that the directive prohibits the conduct by United
States persons or persons within the United States of all transactions
in, provision of financing for, and other dealings in new debt of
longer than 60 days maturity of persons determined to be subject to the
directive, their property, or their interests in property. OFAC
replaced ``Directive 2 (as Amended) Under E.O. 13662'' with ``Directive
2 (as Amended on September 29, 2017) Under Executive Order 13662''
(Directive 2) on September 29, 2017 on its website.
Directive 2 prohibits the following activities by a U.S. person or
within the United States: (1) For new debt issued on or after July 16,
2014 and before November 28, 2017, all transactions in, provision of
financing for, and other dealings in new debt of longer than 90 days
maturity of persons determined to be subject to Directive 2 or any
earlier version thereof, their property, or their interests in
property; and (2) For new debt issued on or after November 28, 2017,
all transactions in, provision of financing for, and other dealings in
new debt of longer than 60 days maturity of persons determined to be
subject to Directive 2 or any earlier version thereof, their property,
or their interests in property. Directive 2 also prohibits (1) Any
transaction that evades or avoids, has the purpose of evading or
avoiding, causes a violation of, or attempts to violate any of the
prohibitions contained in the directive; and (2) Any conspiracy formed
to violate any of the prohibitions in the directive.
Directive 3. On September 12, 2014, OFAC issued ``Directive 3 Under
E.O. 13662'' (79 FR 63021, October 21, 2014) (Directive 3) following
the Secretary of the Treasury's determination that section 1(a)(i) of
E.O. 13662 applies to the defense and related materiel sector of the
Russian Federation economy. Directive 3 prohibits all transactions in,
provision of financing for, and other dealings in new debt of longer
than 30 days maturity of persons determined to be subject to Directive
3, their property, or their interests in property. Directive 3 also
prohibits: (1) Any transaction that evades or avoids, has the purpose
of evading or avoiding, causes a violation of, or attempts to violate
any of the prohibitions contained in Directive 3; and (2) Any
conspiracy formed to violate any of the prohibitions in Directive 3.
Directive 4. On September 12, 2014, OFAC issued ``Directive 4 Under
Executive Order 13662'' (79 FR 63021, October 21, 2014) to further
implement the Secretary of the Treasury's July 16, 2014 determination
that section 1(a)(i) of E.O. 13662 applies to the energy sector of the
Russian Federation economy. Section 223(d) of CAATSA requires the
Secretary of the Treasury to modify ``Directive 4 Under Executive Order
13662'' or any successor directive, to ensure that the directive
prohibits the provision, exportation, or reexportation, directly or
indirectly, by United States persons or persons within the United
States, of goods, services (except for financial services), or
technology in support of exploration or production for new deepwater,
Arctic offshore, or shale projects that: (1) Have the potential to
produce oil; and (2) Involve any person determined to be subject to the
directive or the property or interests in property of such a person who
has a controlling interest or a substantial noncontrolling ownership
interest in such a project defined as not less than a 33 percent
interest. OFAC replaced ``Directive 4 Under Executive Order 13662''
with ``Directive 4 (as Amended on October 13, 2017) Under Executive
Order 13662'' (Directive 4) on October 31, 2017 on its website.
Directive 4 prohibits the following activities by a U.S. person or
within the United States: The provision, exportation, or reexportation,
directly or indirectly, of goods, services (except for financial
services), or technology in support of exploration or production for
deepwater, Arctic offshore, or shale projects: (1) That have the
potential to produce oil in the Russian Federation, or in maritime area
claimed by the Russian Federation and extending from its territory, and
that involve any person determined to be subject to Directive 4 or any
earlier version thereof, their property, or their interests in
property; or (2) that are initiated on or after January 29, 2018, that
have the potential to produce oil in any location, and in which any
person determined to be subject to Directive 4 or any earlier version
thereof, their property, or their interests in property has (a) a 33
percent or greater ownership interest, or (b) ownership of a majority
of the voting interests. Additionally, Directive 4 prohibits: (1) Any
transaction that evades or avoids, has the purpose of evading or
avoiding, causes a violation of, or attempts to violate any of the
prohibitions contained in the directive; and (2) Any conspiracy formed
to violate any of the prohibitions in the directive.
Statutes
UFSA. UFSA was signed into law on December 18, 2014 and amended by
CAATSA on August 2, 2017. Among other things, section 5 of UFSA
requires the imposition of sanctions on any foreign financial
institution that the President determines knowingly engages in
significant transactions involving certain activities for persons
[[Page 26097]]
sanctioned pursuant to section 4 of UFSA or knowingly facilitated a
significant financial transaction on behalf of any Russian person
included on the list of Specially Designated Nationals and Blocked
Persons (``SDN List'') maintained by OFAC, pursuant to UFSA, E.O.s
13660, 13661, or 13662, or any other Executive order addressing the
crisis in Ukraine.
SSIDES. SSIDES was signed into law on April 3, 2014 and amended by
CAATSA on August 2, 2017. SSIDES requires the President to block all
property and interests in property that are in the United States, that
come within the United States, or that are or come within the
possession or control of any U.S. person of, persons who meet specific
criteria, such as a current or former official of the Government of
Ukraine that the President determines has perpetrated, or is
responsible for ordering, controlling, or otherwise directing,
significant acts of violence or gross human rights abuses in Ukraine
against persons associated with the antigovernment protests in Ukraine
that began on November 21, 2013.
CAATSA. CAATSA established new sanctions authorities and
exceptions, in addition to amending, modifying, or otherwise affecting:
The Ukraine-/Russia-related Executive Orders, E.O. 13694 of April 1,
2015, ``Blocking the Property of Certain Persons Engaging in
Significant Malicious Cyber-Enabled Activities'' (80 FR 18077, April 2,
2015), and E.O. 13757 of December 28, 2016, ``Taking Additional Steps
to Address the National Emergency With Respect to Significant Malicious
Cyber-Enabled Activities'' (82 FR 1, January 3, 2017); Directives 1, 2,
and 4; UFSA; and SSIDES. Section 236 of CAATSA establishes an exception
from sanctions for activities subject to the reporting requirements
under title V of the National Security Act of 1947 (50 U.S.C. 3091 et
seq.), or any authorized intelligence activities of the United States,
and section 237 of CAATSA establishes an exception from sanctions for
activities of the National Aeronautics and Space Administration.
Title II of CAATSA also requires the imposition of sanctions with
respect to, among others: Activities of the Russian Federation that
undermine cybersecurity; persons who knowingly provide financial
services in support of activities that undermine cybersecurity; persons
who invest in or contribute to the ability of the Russian Federation to
privatize state-owned assets in a manner that unjustly benefits
officials of the Government of the Russian Federation; persons who
engage in a significant transaction with a person that is part of, or
operates for or on behalf of, the defense or intelligence sectors of
the Government of the Russian Federation; and persons who transfer arms
and related materiel to Syria. OFAC anticipates incorporating these
provisions of title II of CAATSA into the CFR at a later date.
Current Regulatory Action
Subpart A of the Regulations clarifies the relation of this part to
other laws and regulations. Subpart B of the Regulations implements the
prohibitions contained in section 1 of E.O. 13660, E.O. 13661, E.O.
13662, and sections 1 and 2 of E.O. 13685, as well as the prohibitions
contained in any further Executive orders issued pursuant to the
national emergency declared in E.O. 13660. See, e.g., Sec. 589.201.
Additionally, subpart B implements section 5 of UFSA, sections 8
through 11 of SSIDES, and the prohibitions in Directives 1, 2, 3, and 4
issued pursuant to E.O. 13662.
The following persons are referred to throughout the Regulations as
``persons whose property and interests in property are blocked pursuant
to Sec. 589.201'': Persons identified in the Annex to E.O. 13661;
designated by or under the authority of the Secretary of the Treasury,
in consultation with the Secretary of State, pursuant to the Ukraine-/
Russia-related Executive Orders, or SSIDES; otherwise subject to the
blocking provisions of the Ukraine-/Russia-related Executive Orders, or
SSIDES; and persons who are blocked pursuant to any further Executive
orders issued pursuant to the national emergency declared in E.O.
13660. The names of persons designated, or identified as blocked
pursuant to, as applicable, the Ukraine-/Russia-related Executive
Orders, or any further Executive orders issued pursuant to the national
emergency declared in E.O. 13660, or SSIDES, are published on the SDN
List, which is accessible via OFAC's website. Those names also are
published in the Federal Register as they are added to the SDN List.
Sections 589.202 through 589.205 of subpart B implement Directives
1 through 4, respectively. The names of persons identified as subject
to Directive 1, 2, 3, or 4, which are implemented in Sec. Sec. 589.202
through 589.205, are published on OFAC's SSI List, which is accessible
via OFAC's website, and are published in the Federal Register along
with the applicable Directive(s) as they are added to the SSI List.
These persons are referred to throughout the Regulations as ``persons
subject to Sec. 589.202, 589.203, 589.204 or 589.205.'' Section
589.206 of subpart B prohibits new investment in the Crimea region of
Ukraine, Sec. 589.207 details the prohibition on exportation,
reexportation, sale or supply of goods or services to that region, and
Sec. 589.208 prohibits the importation of goods, services, and
technology from that region.
Section 589.209 details prohibitions or strict conditions with
respect to correspondent or payable-through accounts of foreign
financial institutions that are determined to engage in significant
transactions involving certain activities for persons with respect to
which sanctions are imposed under section 4 of UFSA, or to have
facilitated significant transactions on behalf of certain blocked
persons. The names of foreign financial institutions for which the
opening or maintaining of a correspondent account or a payable-through
account in the United States is prohibited or subject to one or more
strict conditions pursuant to Sec. 589.209 will be added to the List
of Foreign Financial Institutions Subject to Correspondent Account or
Payable-Through Account Sanctions (CAPTA List) on OFAC's website, and
be published in the Federal Register along with the applicable
prohibition or strict condition(s) as they are added to the CAPTA List.
Sections 589.210 and 589.211 of subpart B detail the effect of
transfers of blocked property in violation of the Regulations and set
forth the requirement to hold blocked funds, such as currency, bank
deposits, or liquidated financial obligations, in interest-bearing
blocked accounts. Section 589.212 of subpart B provides that all
expenses incident to the maintenance of blocked tangible property shall
be the responsibility of the owners and operators of such property, and
that such expenses shall not be met from blocked funds, unless
otherwise authorized. The section further provides that blocked
property may, in OFAC's discretion, be sold or liquidated and the net
proceeds placed in a blocked interest-bearing account in the name of
the owner of the property.
Section 589.213 of subpart B prohibits any transaction by a U.S.
person or within the United States that evades or avoids, has the
purpose of evading or avoiding, causes a violation, or attempts to
violate any of the prohibitions set forth in subpart B of the
Regulations, and any conspiracy formed to violate such prohibitions.
Section 589.214 of subpart B details transactions that are exempt
from the prohibitions of the Regulations pursuant to: Section 203(b)(1)
of IEEPA (50 U.S.C. 1702(b)(1)), which relates to personal
[[Page 26098]]
communications; section 236 of CAATSA, which relates to U.S.
intelligence activities; section 237 of CAATSA, which relates to
activities of the National Aeronautics and Space Administration;
section 7 of E.O. 13685, which relates to activities for the official
business of the United States Government; and sections 8(b)(3) and
9(b)(3) of SSIDES, which relate to the importation of goods. Section
589.215 details the prohibition on approving, financing, facilitating,
or guaranteeing a transaction by a foreign person where the transaction
would be prohibited by Sec. 589.206, 589.207, or 589.208 if performed
by a U.S. person or within the United States.
Subpart C of the Regulations defines key terms used throughout the
Regulations. Thirty new sections are being added to define key terms
used in the new regulatory prohibitions or elsewhere in the
Regulations. The definition of Ukraine-related Executive orders, which
was in Sec. 589.310, is being removed from the Regulations because
revisions to Sec. 589.201 make it unnecessary. To keep the definitions
in alphabetical order, the definitions that were in the prior
abbreviated set of regulations are being renumbered. OFAC is adding a
definition of shale projects at Sec. 589.334 that expands the
definition formerly on OFAC's website as Frequently Asked Question
(FAQ) 418.
In subpart D, which contains interpretive sections regarding the
Regulations, Sec. 589.401 is being expanded, Sec. 589.405 is being
redesignated as Sec. 589.410, and new Sec. Sec. 589.405 through
589.409 are being added. Section 589.405 clarifies that the
prohibitions contained in Sec. 589.201 apply to certain services
performed on behalf of, or performed by or at the direction of, any
person whose property and interests in property are blocked pursuant to
Sec. 589.201. Section 589.406 has been redesignated as Sec. 589.411
and updated to explain that the property and interests in property of
an entity are blocked if the entity is directly or indirectly owned,
whether individually or in the aggregate, 50 percent or more by one or
more persons whose property and interests in property are blocked,
whether or not the entity itself is incorporated into OFAC's SDN List.
Additionally, OFAC is incorporating the following interpretations from
its existing FAQs into the Regulations: Sec. 589.411 clarifies that
the interpretation set forth in Sec. 589.411 applies to those included
on OFAC's SSI List; new Sec. 589.412 clarifies that, for the purposes
of Sec. 589.205(b), OFAC considers the aggregate ownership interest or
majority of voting rights held by one or more persons subject to Sec.
589.205, their property, or their interests in property, including
entities owned 50 percent or more by one or more persons subject to
Sec. 589.205; and new Sec. 589.413 provides interpretive language
about significant transactions or financial transactions. OFAC is also
adding new Sec. 589.414 to provide interpretative language about
facilitation.
Transactions otherwise prohibited by 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 31
CFR part 501. General licenses and statements of licensing policy
relating to this part also may be available through the Ukraine-/
Russia-Related Sanctions page on OFAC's website: <a href="http://www.treas.gov/ofac">www.treas.gov/ofac</a>.
With this rule, OFAC is updating several existing general licenses
in the Regulations. In the authorization for legal services in Sec.
589.506, the authorization is being updated to include the provision of
legal services to or on behalf of a person in the Crimea region of
Ukraine, and authorization for the payment of professional fees or
reimbursement of incurred expenses for authorized legal services to
such persons is authorized as long as it does not involve the debiting
of any blocked account or transfer of any blocked property. The note to
Sec. 589.506 is also being updated to include certain specific
services. The authorization for payments for legal services in Sec.
589.507 is being updated to remove the requirement that attorneys send
OFAC a copy of their letter of engagement prior to receiving payment,
and to permit email filing of reports. Section 589.508 is being amended
to remove the requirement that payment for emergency medical services
be specifically licensed.
Additionally, OFAC is incorporating six general licenses into the
Regulations that were previously posted only on OFAC's website. New
Sec. 589.512 incorporates General License 1B, authorizing certain
transactions related to derivatives prohibited by Directives 1, 2, and
3; General License 1B, which superseded prior versions of such general
license, was issued on OFAC's website on November 28, 2017 and will be
removed upon publication of this rule. New Sec. Sec. 589.513 through
589.517 incorporate General Licenses 4, 6, 7, 8, and 9, respectively,
which authorize with respect to the Crimea region of Ukraine:
Exportation or reexportation of agricultural commodities, medicine,
medical supplies, and replacement parts; noncommercial, personal
remittances; operation of accounts; transactions related to
telecommunications and mail; and exportation of certain services and
software incident to internet-based communications. General License 4
was issued on December 19, 2014, General Licenses 6, 7, and 8 were
issued on January 30, 2015, and General License 9 was issued on May 22,
2015, each on OFAC's website; each of these general licenses will be
removed upon publication of this rule.
OFAC is also incorporating seven new general licenses into the
Regulations. New Sec. Sec. 589.509, 589.510, and 589.511 incorporate
general licenses authorizing certain transactions relating to
investment and reinvestment of funds, official business of the U.S.
government, and official business of certain international
organizations and entities. New Sec. Sec. 589.518, 589.519, and
589.520 authorize activities specific to the Crimea region of Ukraine:
Transactions necessary and ordinarily incident to publishing, emergency
landings and air ambulance services, and the export of certain services
in support of nongovernmental organizations' activities. New Sec.
589.521 authorizes transactions related to closing a correspondent or
payable-through account. The addition of these general licenses to the
Regulations do not represent a significant alteration of the United
States' foreign policy with regard to the Russian Federation. Subpart F
of the Regulations refers to subpart C of part 501 for 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 or issuance of a Finding of
Violation. Subpart G also refers to appendix A of part 501 for a more
complete description of these procedures. In Subpart G, Sec. 589.701
reflects the 2022 civil monetary penalty increase as required by
section 4 of the Federal Civil Penalties Inflation Adjustment Act (1990
Pub. L. 101-410, 104 Stat. 890; 28 U.S.C. 2461 note), as amended by the
Federal Civil Penalties Inflation Adjustment Act Improvements Act of
2015 (Pub. L. 114-74, 129 Stat. 599, 28 U.S.C. 2461 note).
Subpart H of the Regulations refers to subpart E of part 501 for
applicable provisions relating to administrative procedures and
contains a delegation of certain authorities of the Secretary of the
Treasury. Subpart I of the
[[Page 26099]]
Regulations sets forth a Paperwork Reduction Act notice.
Public Participation
Because the Regulations involve a foreign affairs function, the
provisions of E.O. 12866 of September 30, 1993, ``Regulatory Planning
and Review'' (58 FR 51735, October 4, 1993), and 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 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 589
Administrative practice and procedure, Arctic offshore, Banks,
banking, Blocking of assets, Correspondent account, Credit, Crimea,
Debt, Deepwater, Facilitation, Foreign trade, Human rights abuses,
Payable-through account, Reporting and recordkeeping requirements,
Russian Federation, Sanctions, Securities, Services, Shale projects,
Ukraine.
0
For the reasons set forth in the preamble, OFAC revises 31 CFR part 589
to read as follows:
PART 589--UKRAINE-/RUSSIA-RELATED SANCTIONS REGULATIONS
Subpart A--Relation of This Part to Other Laws and Regulations
Sec.
589.101 Relation of this part to other laws and regulations.
Subpart B--Prohibitions
589.201 Prohibited transactions.
589.202 Prohibited transactions with respect to the financial
services sector of the Russian Federation economy (Directive 1).
589.203 Prohibited transactions with respect to financing activities
in the energy sector of the Russian Federation economy (Directive
2).
589.204 Prohibited transactions with respect to the defense and
related materiel sector of the Russian Federation economy (Directive
3).
589.205 Prohibited transactions with respect to oil producing
activities in the energy sector of the Russian Federation economy
(Directive 4).
589.206 Prohibited new investment in the Crimea region of Ukraine.
589.207 Prohibited exportation, reexportation, sale, or supply of
goods, services, or technology to the Crimea region of Ukraine.
589.208 Prohibited importation of goods, services, or technology
from the Crimea region of Ukraine.
589.209 Prohibitions or strict conditions with respect to
correspondent or payable-through accounts of foreign financial
institutions that have knowingly facilitated certain significant
transactions.
589.210 Effect of transfers violating the provisions of this part.
589.211 Holding of funds in interest-bearing accounts; investment
and reinvestment.
589.212 Expenses of maintaining blocked tangible property;
liquidation of blocked property.
589.213 Evasions; attempts; causing violations; conspiracies.
589.214 Exempt transactions.
589.215 Prohibited facilitation.
Subpart C--General Definitions
589.300 Applicability of definitions.
589.301 Arctic offshore projects.
589.302 Arms or related materiel sector of the Russian Federation
economy.
589.303 Blocked account; blocked property.
589.304 Correspondent account.
589.305 Covered Executive order.
589.306 Crimea region of Ukraine.
589.307 Debt.
589.308 Deepwater projects.
589.309 Defense and related materiel sector of the Russian
Federation economy.
589.310 Effective date.
589.311 Energy sector of the Russian Federation economy.
589.312 Entity.
589.313 Equity.
589.314 Financial, material, or technological support.
589.315 Financial services sector of the Russian Federation economy.
589.316 Foreign financial institution.
589.317 Foreign person.
589.318 Government of the Russian Federation.
589.319 [Reserved]
589.320 Initiated.
589.321 Interest.
589.322 Knowingly.
589.323 Licenses; general and specific.
589.324 Loans or other extensions of credit.
589.325 Metals and mining sector of the Russian Federation economy.
589.326 New investment.
589.327 OFAC.
589.328 Payable-through account.
589.329 Person.
589.330 Production.
589.331 Property; property interest.
589.332 Railway sector of the Russian Federation economy.
589.333 Russian person.
589.334 Shale projects.
589.335 Special Russian crude oil project.
589.336 Structured.
589.337 Transfer.
589.338 United States.
589.339 United States person; U.S. person.
589.340 U.S. depository institution.
589.341 U.S. financial institution.
589.342 U.S.-registered broker or dealer in securities.
589.343 U.S.-registered money transmitter.
Subpart D--Interpretations
589.401 Reference to amended sections.
589.402 Effect of amendment.
589.403 Termination and acquisition of an interest in blocked
property.
589.404 Transactions ordinarily incident to a licensed transaction.
589.405 Exportation and reexportation of goods, services, or
technology; provision and receipt of services.
589.406 Offshore transactions involving blocked property.
589.407 Payments from blocked accounts to satisfy obligations
prohibited.
589.408 Charitable contributions.
589.409 Credit extended and cards issued by financial institutions
to a person whose property and interests in property are blocked.
589.410 Setoffs prohibited.
589.411 Entities owned by one or more persons whose property and
interests in property are blocked or who are subject to Sec.
589.202, Sec. 589.203, Sec. 589.204, or Sec. 589.205.
589.412 Projects owned, or to which a majority of voting rights are
held, by one or more persons subject to Sec. 589.205.
589.413 Significant transaction(s); significant financial
transaction(s).
589.414 Facilitation; change of policies and procedures; referral of
business opportunities offshore.
Subpart E--Licenses, Authorizations, and Statements of Licensing Policy
589.501 General and specific licensing procedures.
589.502 Effect of license or other authorization.
589.503 Exclusion from licenses.
589.504 Payments and transfers to blocked accounts in U.S. financial
institutions.
589.505 Entries in certain accounts for normal service charges.
589.506 Provision of certain legal services.
589.507 Payments for legal services from funds originating outside
the United States.
589.508 Emergency medical services.
589.509 Investment and reinvestment of certain funds.
589.510 Official business of the United States Government.
589.511 Official business of certain international organizations and
entities.
589.512 Certain transactions related to derivatives prohibited by
Sec. 589.202, Sec. 589.203, or Sec. 589.204.
589.513 Exportation or reexportation of agricultural commodities,
medicine, medical supplies, and replacement parts to the Crimea
region of Ukraine.
[[Page 26100]]
589.514 Noncommercial, personal remittances to or from the Crimea
region of Ukraine or for or on behalf of an individual ordinarily
resident in the Crimea region of Ukraine.
589.515 Operation of accounts for individuals ordinarily resident in
the Crimea region of Ukraine.
589.516 Transactions related to telecommunications and mail
involving the Crimea region of Ukraine.
589.517 Exportation of certain services and software incident to
internet-based communications to the Crimea region of Ukraine.
589.518 Transactions necessary and ordinarily incident to publishing
in the Crimea region of Ukraine.
589.519 Emergency landings and air ambulance services in the Crimea
region of Ukraine.
589.520 Certain transactions in support of nongovernmental
organizations' activities in the Crimea region of Ukraine.
589.521 Transactions related to closing a correspondent or payable-
through account.
Subpart F--Reports
589.601 Records and reports.
Subpart G--Penalties and Findings of Violation
589.701 Penalties.
589.702 Pre-Penalty Notice; settlement.
589.703 Penalty imposition.
589.704 Administrative collection; referral to United States
Department of Justice.
589.705 Findings of Violation.
Subpart H--Procedures
589.801 Procedures.
589.802 Delegation of certain authorities of the Secretary of the
Treasury.
Subpart I--Paperwork Reduction Act
589.901 Paperwork Reduction Act notice.
Authority: 3 U.S.C. 301; 22 U.S.C. 8901-8910, 8921-8930; 31
U.S.C. 321(b); 50 U.S.C. 1601-1651, 1701-1706; Pub. L. 101-410, 104
Stat. 890, as amended (28 U.S.C. 2461 note); Pub. L. 115-44, 131
Stat. 886 (codified in scattered sections of 22 U.S.C.); E.O. 13660,
79 FR 13493, 3 CFR, 2014 Comp., p. 226; E.O. 13661, 79 FR 15535, 3
CFR, 2014 Comp., p. 229; E.O. 13662, 79 FR 16169, 3 CFR, 2014 Comp.,
p. 233; E.O. 13685, 79 FR 77357, 3 CFR, 2014 Comp., p. 313.
Subpart A--Relation of This Part to Other Laws and Regulations
Sec. 589.101 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.
Subpart B--Prohibitions
Sec. 589.201 Prohibited transactions.
(a) All property and interests in property that are in the United
States, that come within the United States, or that are or come within
the possession or control of any U.S. person of the following persons
are blocked and may not be transferred, paid, exported, withdrawn, or
otherwise dealt in:
(1) Executive Order (E.O.) 13660. Any person determined by the
Secretary of the Treasury, in consultation with the Secretary of State:
(i) To be responsible for or complicit in, or to have engaged in,
directly or indirectly, any of the following:
(A) Actions or policies that undermine democratic processes or
institutions in Ukraine;
(B) Actions or policies that threaten the peace, security,
stability, sovereignty, or territorial integrity of Ukraine; or
(C) Misappropriation of state assets of Ukraine or of an
economically significant entity in Ukraine;
(ii) To have asserted governmental authority over any part or
region of Ukraine without the authorization of the Government of
Ukraine;
(iii) To be a leader of an entity that has, or whose members have,
engaged in any activity described in paragraph (a)(1)(i) or (ii) or of
an entity whose property and interests in property are blocked pursuant
to this paragraph (a)(1);
(iv) To have materially assisted, sponsored, or provided financial,
material, or technological support for, or goods or services to or in
support of, any activity described in paragraph (a)(1)(i) or (ii) or
any person whose property and interests in property are blocked
pursuant to this paragraph (a)(1);
(v) 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 or interests in property are blocked pursuant to this
paragraph (a)(1);
(2) E.O. 13661 Annex. The persons listed in the Annex to E.O. 13661
of March 16, 2014;
(3) E.O. 13661. Any person determined by the Secretary of the
Treasury, in consultation with the Secretary of State:
(i) To be an official of the Government of the Russian Federation;
(ii) To operate in the arms or related materiel sector in the
Russian Federation;
(iii) To be owned or controlled by, or to have acted or purported
to act for or on behalf of, directly or indirectly:
(A) A senior official of the Government of the Russian Federation;
or
(B) A person whose property or interests in property are blocked
pursuant to paragraph (a)(2) of this section or this paragraph (a)(3);
or
(iv) To have materially assisted, sponsored, or provided financial,
material, or technological support for, or goods or services to or in
support of:
(A) A senior official of the Government of the Russian Federation;
or
(B) A person whose property or interests in property are blocked
pursuant to paragraph (a)(2) of this section or this paragraph (a)(3);
(4) E.O. 13662 and Secretary of the Treasury determinations. Any
person determined by the Secretary of the Treasury, in consultation
with the Secretary of State:
(i) To operate in the defense and related materiel sector of the
Russian Federation economy;
(ii) To operate in the financial services sector of the Russian
Federation economy;
(iii) To operate in the energy sector of the Russian Federation
economy;
(iv) To be a state-owned entity operating in the railway sector of
the Russian Federation economy;
(v) To be a state-owned entity operating in the metals and mining
sector of the Russian Federation economy;
(vi) To operate in any other sectors of the Russian Federation
economy as may be determined by the Secretary of the Treasury, in
consultation with the Secretary of State;
Note 1 to paragraph (a)(4)(vi). Any sector in the Russian
Federation economy that is determined by the Secretary of the
Treasury, in consultation with the Secretary of State, to be subject
to this paragraph (a)(4)(vi) will be so identified in a publication
in the Federal Register.
(vii) To have materially assisted, sponsored, or provided
financial,
[[Page 26101]]
material, or technological support for, or goods or services to or in
support of, any person whose property and interests in property are
blocked pursuant to this paragraph (a)(4); or
(viii) To be owned or controlled by, or to have acted for or on
behalf of, directly or indirectly, any person whose property and
interests in property are blocked pursuant to this paragraph (a)(4);
(5) E.O. 13685. Any person determined by the Secretary of the
Treasury, in consultation with the Secretary of State:
(i) To operate in the Crimea region of Ukraine;
(ii) To be a leader of an entity operating in the Crimea region of
Ukraine;
(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 this
paragraph (a)(5); or
(iv) To have materially assisted, sponsored, or provided financial,
material, or technological support for, or goods or services in support
of, any person whose property and interests in property are blocked
pursuant to this paragraph (a)(5);
(6) Support for the Sovereignty, Integrity, Democracy, and Economic
Stability of Ukraine Act of 2014, as amended (22 U.S.C. 8901-8910)
(SSIDES). (i) Any person, including a current or former official of the
Government of Ukraine or a person acting on behalf of that Government,
that the Secretary of the Treasury, in consultation with the Secretary
of State, determines has perpetrated, or is responsible for ordering,
controlling, or otherwise directing, significant acts of violence or
gross human rights abuses in Ukraine against persons associated with
the antigovernment protests in Ukraine that began on November 21, 2013;
(ii) Any person that the Secretary of the Treasury, in consultation
with the Secretary of State, determines has perpetrated, or is
responsible for ordering, controlling, or otherwise directing,
significant acts that are intended to undermine the peace, security,
stability, sovereignty, or territorial integrity of Ukraine, including
acts of economic extortion;
(iii) Any official of the Government of the Russian Federation, or
a close associate or family member of such an official, that the
Secretary of the Treasury, in consultation with the Secretary of State,
determines is responsible for, complicit in, or responsible for
ordering, controlling, or otherwise directing, acts of significant
corruption in Ukraine, including the expropriation of private or public
assets for personal gain, corruption related to government contracts or
the extraction of natural resources, bribery, or the facilitation or
transfer of the proceeds of corruption to foreign jurisdictions;
(iv) Any individual that the Secretary of the Treasury, in
consultation with the Secretary of State, determines materially
assisted, sponsored, or provided financial, material, or technological
support for, or goods or services in support of, the commission of acts
described in paragraph (a)(6)(i), (ii), or (iii) of this section;
(v) Any official of the Government of the Russian Federation, or a
close associate or family member of such an official, that the
Secretary of the Treasury, in consultation with the Secretary of State,
determines is, on or after August 2, 2017, responsible for, or
complicit in, or responsible for ordering, controlling, or otherwise
directing, acts of significant corruption in the Russian Federation or
elsewhere, including the expropriation of private or public assets for
personal gain, corruption related to government contracts or the
extraction of natural resources, bribery, or the facilitation or
transfer of the proceeds of corruption to foreign jurisdictions;
(vi) Any individual who has materially assisted, sponsored, or
provided financial, material, or technological support for, or goods or
services in support of, an act described in paragraph (a)(6)(v) of this
section and has been added to the SDN List for such behavior;
(vii) A foreign person that the Secretary of the Treasury, in
consultation with the Secretary of State, determines knowingly, on or
after August 2, 2017:
(A) Materially violates, attempts to violate, conspires to violate,
or causes a violation of any license, order, regulation, or prohibition
contained in or issued pursuant to any covered Executive order, SSIDES,
or the Ukraine Freedom Support Act of 2014, as amended (22 U.S.C. 8921-
8930) (UFSA); or
(B) Facilitates a significant transaction or transactions,
including deceptive or structured transactions, for or on behalf of:
(1) Any person subject to sanctions imposed by the United States
with respect to the Russian Federation; or
(2) Any child, spouse, parent, or sibling of an individual
described in paragraph (a)(6)(vii)(B)(1) of this section.
(viii) A foreign person that the Secretary of the Treasury, in
consultation with the Secretary of State, determines, based on credible
information, on or after August 2, 2017:
(A) Is responsible for, complicit in, or responsible for ordering,
controlling, or otherwise directing, the commission of serious human
rights abuses in any territory forcibly occupied or otherwise
controlled by the Government of the Russian Federation;
(B) Materially assists, sponsors, or provides financial, material,
or technological support for, or goods or services to, a foreign person
described in paragraph (a)(6)(viii)(A) of this section; or
(C) Is owned or controlled by, or acts or purports to act for or on
behalf of, directly or indirectly, a foreign person described in
paragraph (a)(6)(viii)(A) of this section.
(b) The prohibitions in paragraph (a) of this section include
prohibitions on the following transactions:
(1) 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 are blocked pursuant to paragraph (a) 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 paragraph (a) of this section.
(c) Unless authorized by this part or by a specific license
expressly referring to this part, any dealing in securities (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 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 securities 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
securities may have or might appear to have assigned, transferred, or
otherwise disposed of the securities.
(d) The prohibitions in paragraph (a) of this section apply except
to the extent provided by statutes, or in regulations, orders,
directives, or licenses that may be issued pursuant to this part, and
notwithstanding any contract entered into or any license or permit
granted prior to the effective date.
[[Page 26102]]
(e) All transactions prohibited pursuant to any Executive order
issued after December 19, 2014 pursuant to the national emergency
declared in E.O. 13660 of March 6, 2014, are prohibited pursuant to
this part.
Note 2 to Sec. 589.201. The names of persons designated or
identified as blocked pursuant to E.O. 13660, E.O. 13661, E.O.
13662, or E.O. 13685 are published in the Federal Register and
incorporated into OFAC's Specially Designated Nationals and Blocked
Persons List (SDN List) with the following identifiers: for E.O.
13660: ``[UKRAINE-EO13660]''; for E.O. 13661: ``[UKRAINE-EO13661]'';
for E.O. 13662: ``[UKRAINE-EO13662]''; and for E.O. 13685:
``[UKRAINE-EO13685].'' The names of persons listed in, or designated
or identified pursuant to any further Executive orders issued
pursuant to the national emergency declared in E.O. 13660, whose
property and interests in property therefore are blocked pursuant to
this section, are published in the Federal Register and incorporated
into OFAC's SDN List using the identifier formulation ``[UKRAINE-
E.O.[number pursuant to which the person's property and interests in
property are blocked]].'' The names of persons designated pursuant
to SSIDES, whose property and interests in property therefore are
blocked pursuant to this section, are published in the Federal
Register and incorporated into OFAC's SDN List using the identifier
``[SSIDES].'' Certain transactions with persons blocked pursuant to
paragraph (a) of this section, or blocked pursuant to other parts of
31 CFR chapter V in connection with certain Ukraine/Russia-related
activities, may result in the imposition of secondary sanctions, and
therefore such blocked persons' entries on the SDN List will also
include the descriptive prefix text ``Secondary sanctions risk:'',
followed by information about the applicable secondary sanctions
authority. The SDN List is accessible through the following page on
OFAC's website: <a href="http://www.treas.gov/sdn">www.treas.gov/sdn</a>. Additional information pertaining
to the SDN List can be found in appendix A to this chapter. See
Sec. 589.411 concerning entities that may not be listed on the SDN
List but whose property and interests in property are nevertheless
blocked pursuant to this section.
Note 3 to Sec. 589.201. The International Emergency Economic
Powers Act (50 U.S.C. 1701 et seq.), in Section 203 (50 U.S.C.
1702), and SSIDES authorize 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 section also are
published in the Federal Register and incorporated into the SDN List
using the following identifiers: for E.O. 13660: ``[BPI-UKRAINE-
EO13660]''; for E.O. 13661: ``[BPI-UKRAINE-EO13661]''; for E.O.
13662: ``[BPI-UKRAINE-EO13662]''; for E.O. 13685: ``[BPI-UKRAINE-
EO13685]''; for SSIDES: ``[BPI-SSIDES]''; and for any further
Executive orders issued pursuant to the national emergency declared
in E.O. 13660: ``[BPI-UKRAINE-E.O.[E.O. number pursuant to which the
person's property and interests in property are blocked pending
investigation]].''
Note 4 to Sec. 589.201. 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 this section.
Note 5 to Sec. 589.201. Section 216 of the Countering America's
Adversaries Through Sanctions Act (22 U.S.C. 9511) (CAATSA) requires
Congressional review prior to the termination of sanctions imposed
pursuant to E.O.13660, E.O. 13661, E.O. 13662, E.O. 13685, or
SSIDES. Section 222 of CAATSA (22 U.S.C. 9522) describes the
Congressional notification required prior to the termination of
sanctions imposed pursuant to E.O. 13660, E.O. 13661, E.O. 13662, or
E.O. 13685. Sections 8(d), 9(d), 10(e), and 11(e) of SSIDES (22
U.S.C. 8907(d), 8908(d), 8909(e), and 8910(e)) describe the
Congressional notification required prior to the termination of
sanctions imposed pursuant to these sections.
Sec. 589.202 Prohibited transactions with respect to the financial
services sector of the Russian Federation economy (Directive 1).
The following activities by a U.S. person or within the United
States are prohibited:
(a) For new debt or new equity issued on or after July 16, 2014 and
before September 12, 2014, all transactions in, provision of financing
for, and other dealings in new debt of longer than 90 days maturity or
new equity of persons determined to be subject to this section, their
property, or their interests in property;
(b) For new debt or new equity issued on or after September 12,
2014 and before November 28, 2017, all transactions in, provision of
financing for, and other dealings in new debt of longer than 30 days
maturity or new equity of persons determined to be subject to this
section, their property, or their interests in property; and
(c) For new debt or new equity issued on or after November 28,
2017, all transactions in, provision of financing for, and other
dealings in new debt of longer than 14 days maturity or new equity of
persons determined to be subject to this section, their property, or
their interests in property.
Note 1 to Sec. 589.202. The names of persons subject to this
section (and earlier versions of Directive 1) are published in the
Federal Register and incorporated into OFAC's Sectoral Sanctions
Identifications List (SSI List) with the descriptive text
``Executive Order 13662 Directive Determination--Subject to
Directive 1.'' Certain transactions with persons subject to this
section may result in the imposition of secondary sanctions, and
therefore such persons' entries on the SSI List will also include
the descriptive prefix text ``Secondary sanctions risk:'', followed
by information about the applicable secondary sanctions authority.
The SSI List is accessible via the Ukraine-/Russia-Related Sanctions
page on OFAC's website: <a href="http://www.treas.gov/ofac">www.treas.gov/ofac</a>. See Sec. 589.411
concerning entities that may not be listed on the SSI List but whose
property and interests in property are nevertheless subject to the
prohibitions in this section.
Note 2 to Sec. 589.202. Section 216 of the Countering America's
Adversaries Through Sanctions Act (22 U.S.C. 9511) (CAATSA) requires
Congressional review prior to the termination of sanctions imposed
pursuant to E.O. 13662. Section 222 of CAATSA (22 U.S.C. 9522)
describes the Congressional notification required prior to the
termination of sanctions imposed pursuant to E.O. 13662.
Sec. 589.203 Prohibited transactions with respect to financing
activities in the energy sector of the Russian Federation economy
(Directive 2).
The following activities by a U.S. person or within the United
States are prohibited:
(a) For new debt issued on or after July 16, 2014 and before
November 28, 2017, all transactions in, provision of financing for, and
other dealings in new debt of longer than 90 days maturity of persons
determined to be subject to this section, their property, or their
interests in property; and
(b) For new debt issued on or after November 28, 2017, all
transactions in, provision of financing for, and other dealings in new
debt of longer than 60 days maturity of persons determined to be
subject to this section, their property, or their interests in
property.
Note 1 to Sec. 589.203. The names of persons subject to this
section (and earlier versions of Directive 2) are published in the
Federal Register and incorporated into OFAC's Sectoral Sanctions
Identifications List (SSI List) with the descriptive text
``Executive Order 13662 Directive Determination--Subject to
Directive 2.'' Certain transactions with persons subject to this
section may result in the imposition of secondary sanctions, and
therefore such persons' entries on the SSI List will also include
the descriptive prefix text ``Secondary sanctions risk:'', followed
by information about the applicable secondary sanctions authority.
The SSI List is accessible through the Ukraine-/Russia-Related
Sanctions page on OFAC's website: <a href="http://www.treas.gov/ofac">www.treas.gov/ofac</a>. See Sec.
589.411 concerning entities that may not be listed on the SSI List
but whose property and interests in property are nevertheless
subject to the prohibitions in this section.
Note 2 to Sec. 589.203. Section 216 of CAATSA (22 U.S.C. 9511)
requires Congressional review prior to the termination
[[Page 26103]]
of sanctions imposed pursuant to E.O. 13662. Section 222 of CAATSA
(22 U.S.C. 9522) describes the Congressional notification required
prior to the termination of sanctions imposed pursuant to E.O.
13662.
Sec. 589.204 Prohibited transactions with respect to the defense and
related materiel sector of the Russian Federation economy (Directive
3).
All transactions in, provision of financing for, and other dealings
in new debt of longer than 30 days maturity of persons determined to be
subject to this section, their property, or their interests in property
by a U.S. person or within in the United States are prohibited.
Note 1 to Sec. 589.204. The names of persons subject to this
section are published in the Federal Register and incorporated into
OFAC's Sectoral Sanctions Identifications List (SSI List) with the
descriptive text ``Executive Order 13662 Directive Determination--
Subject to Directive 3.'' Certain transactions with persons subject
to this section may result in the imposition of secondary sanctions,
and therefore such persons' entries on the SSI List will also
include the descriptive prefix text ``Secondary sanctions risk:'',
followed by information about the applicable secondary sanctions
authority. The SSI List is accessible via the Ukraine-/Russia-
Related Sanctions page on OFAC's website: <a href="http://www.treas.gov/ofac">www.treas.gov/ofac</a>. See
Sec. 589.411 concerning entities that may not be listed on the SSI
List but whose property and interests in property are nevertheless
subject to the prohibitions of this section.
Note 2 to Sec. 589.204. Section 216 of CAATSA (22 U.S.C. 9511)
requires Congressional review prior to the termination of sanctions
imposed pursuant to E.O. 13662. Section 222 of CAATSA (22 U.S.C.
9522) describes the Congressional notification required prior to the
termination of sanctions imposed pursuant to E.O. 13662.
Sec. 589.205 Prohibited transactions with respect to oil-producing
activities in the energy sector of the Russian Federation economy
(Directive 4).
The following activities by a U.S. person or within the United
States are prohibited: The provision, exportation, or reexportation,
directly or indirectly, of goods, services (except for financial
services), or technology in support of exploration or production for
deepwater, Arctic offshore, or shale projects:
(a) That have the potential to produce oil in the Russian
Federation, or in maritime area claimed by the Russian Federation and
extending from its territory, and that involve any person determined to
be subject to this section, their property, or their interests in
property; or
(b) That are initiated on or after January 29, 2018, that have the
potential to produce oil in any location, and in which any person
determined to be subject to this section, their property, or their
interests in property has a 33 percent or greater ownership interest,
or ownership of a majority of the voting interests.
Note 1 to Sec. 589.205. This section does not apply to projects
that have the potential to produce gas only.
Note 2 to Sec. 589.205. The names of persons subject to this
section (and earlier versions of Directive 4) are published in the
Federal Register and incorporated into OFAC's Sectoral Sanctions
Identifications List (SSI List) with the descriptive text
``Executive Order 13662 Directive Determination--Subject to
Directive 4.'' Certain transactions with persons subject to this
section may result in the imposition of secondary sanctions, and
therefore such persons' entries on the SSI List will also include
the descriptive prefix text ``Secondary sanctions risk:'', followed
by information about the applicable secondary sanctions authority.
The SSI List is accessible through the Ukraine-/Russia-Related
Sanctions page on OFAC's website: <a href="http://www.treas.gov/ofac">www.treas.gov/ofac</a>. See Sec.
589.411 concerning entities that may not be listed on the SSI List
but whose property and interests in property are nevertheless
subject to the prohibitions of this section.
Note 3 to Sec. 589.205. See Sec. 589.412 concerning projects
in which persons subject to paragraph (b) of this section own a 33
percent or greater ownership interest, or ownership of a majority of
the voting interests.
Note 4 to Sec. 589.205. See Sec. 746.5 of the Export
Administration Regulations (15 CFR parts 730 through 774) for the
Department of Commerce's related license requirement on exports,
reexports, and transfers (in-country) of certain items for use in
specified deepwater, Arctic offshore, or shale projects.
Note 5 to Sec. 589.205. Section 216 of CAATSA (22 U.S.C. 9511)
requires Congressional review prior to the termination of sanctions
imposed pursuant to E.O. 13662. Section 222 of CAATSA (22 U.S.C.
9522) describes the Congressional notification required prior to the
termination of sanctions imposed pursuant to E.O. 13662.
Sec. 589.206 Prohibited new investment in the Crimea region of
Ukraine.
Except as otherwise authorized, new investment, as defined in Sec.
589.326, in the Crimea region of Ukraine by a United States person,
wherever located, is prohibited.
Sec. 589.207 Prohibited exportation, reexportation, sale, or supply
of goods, services, or technology to the Crimea region of Ukraine.
Except as otherwise authorized, the exportation, reexportation,
sale, or supply, directly or indirectly, from the United States, or by
a United States person, wherever located, of any goods, services, or
technology to the Crimea region of Ukraine is prohibited.
Sec. 589.208 Prohibited importation of goods, services, or technology
from the Crimea region of Ukraine.
Except as otherwise authorized, the importation into the United
States, directly or indirectly, of any goods, services, or technology
from the Crimea region of Ukraine is prohibited.
Sec. 589.209 Prohibitions or strict conditions with respect to
correspondent or payable-through accounts of foreign financial
institutions that have knowingly facilitated certain significant
transactions.
(a) Prohibited activities. A U.S. financial institution shall not:
(1) Open or maintain a correspondent account or a payable-through
account in the United States for a foreign financial institution for
which the opening or maintaining of such an account is prohibited
pursuant to this section; or
(2) Maintain a correspondent account or a payable-through account
in the United States for a foreign financial institution in a manner
that is inconsistent with any strict condition imposed and in effect
pursuant to this section.
(b) Sanctionable activity by foreign financial institutions
involving certain activity for persons with respect to which sanctions
are imposed pursuant to section 4 of the Ukraine Freedom Support Act of
2014, as amended (22 U.S.C. 8921-8930) (UFSA). The Secretary of the
Treasury, in consultation with the Secretary of State, may determine
that a foreign financial institution knowingly engages, on or after
August 2, 2017, in significant transactions involving the following
activities for persons with respect to which sanctions are imposed
pursuant to section 4 of UFSA (22 U.S.C. 8923):
(1) Knowingly manufacturing or selling defense articles transferred
into Syria or into the territory of a specified country without the
consent of the internationally recognized government of that country;
(2) Transferring defense articles into Syria or into the territory
of a specified country without the consent of the internationally
recognized government of that country; or
(3) Brokering or otherwise assisting in the transfer of defense
articles into Syria or into the territory of a specified country
without the consent of the internationally recognized government of
that country; or
(4) Knowingly, on or after December 18, 2014, assisting,
sponsoring, or providing financial, material, or technological support
for, or goods or
[[Page 26104]]
services to or in support of, any entity owned or controlled by the
Government of the Russian Federation or owned or controlled by
nationals of the Russian Federation; and with respect to an activity
described in paragraph (a)(1), (2), or (3) of this section;
(5) Knowingly making a significant investment in a special Russian
crude oil project; or
(6) The withholding by Gazprom of significant natural gas supplies
from member countries of the North Atlantic Treaty Organization, or
further withholding by Gazprom of significant natural gas supplies from
countries such as Ukraine, Georgia, or Moldova.
Note 1 to paragraph (b). Persons with respect to which sanctions
are imposed pursuant to section 4 of UFSA (22 U.S.C. 8923) will be
identified either on OFAC's Non-SDN Menu-Based List (NS-MBS List) or
on OFAC's Specially Designated Nationals and Blocked Persons List
(SDN List). Upon the imposition of non-blocking sanctions from a
menu of sanctions as provided by section 4 of UFSA, OFAC will place
the name and other relevant identifiers of the sanctioned person on
the NS-MBS List. The NS-MBS List also will specify the type of
sanction or sanctions imposed on the listed person and the legal
authority under which the person is sanctioned. When blocking is
chosen as a menu-based sanction and imposed on a person, that person
is identified solely on OFAC's SDN List, along with any other menu-
based sanctions imposed on that person.
(c) Sanctionable activity by foreign financial institutions on
behalf of Russian persons included on the SDN List. The Secretary of
the Treasury, in consultation with the Secretary of State, may
determine that a foreign financial institution has, on or after
September 1, 2017, knowingly facilitated a significant financial
transaction on behalf of any Russian person included on OFAC's SDN List
pursuant to UFSA, E.O. 13660, E.O. 13661, E.O. 13662, or any other
Executive order addressing the crisis in Ukraine.
Note 2 to paragraph (c). For information regarding persons
included on OFAC's SDN List pursuant to UFSA, E.O. 13660, E.O.
13661, or E.O. 13662, or any other Executive order issued pursuant
to the national emergency declared in E.O. 13660, including
identifier information for entries on the SDN List, see note 1 to
Sec. 589.201.
(d) Imposition of sanctions on foreign financial institutions. Upon
determining that a foreign financial institution has engaged in
sanctionable activity described in paragraph (b) or (c) of this
section, the Secretary of the Treasury, in consultation with the
Secretary of State, shall:
(1) Prohibit the opening by a U.S. financial institution of a
correspondent account or a payable-through account in the United States
for the foreign financial institution; and
(2) Prohibit or impose one or more strict conditions on the
maintaining by a U.S. financial institution of a correspondent account
or a payable-through account in the United States for the foreign
financial institution. Such conditions may include the following:
(i) Prohibiting or restricting any provision of trade finance
through the correspondent account or payable-through account of the
foreign financial institution;
(ii) Restricting the transactions that may be processed through the
correspondent account or payable-through account of the foreign
financial institution to certain types of transactions, such as
personal remittances;
(iii) Placing monetary limits on, or limiting the volume of, the
transactions that may be processed through the correspondent account or
payable-through account of the foreign financial institution;
(iv) Requiring pre-approval from the U.S. financial institution for
all transactions processed through the correspondent account or
payable-through account of the foreign financial institution; or
(v) Prohibiting or restricting the processing of foreign exchange
transactions through the correspondent account or payable-through
account of the foreign financial institution.
Note 3 to Sec. 589.209. The names of foreign financial
institutions for which the opening of a correspondent account or a
payable-through account in the United States is prohibited and for
which the maintaining of a correspondent account or payable-through
account is prohibited or subject to one or more strict conditions
pursuant to this section will be added to the List of Foreign
Financial Institutions Subject to Correspondent Account or Payable-
Through Account Sanctions (CAPTA List) on OFAC's website
(<a href="http://www.treas.gov/ofac">www.treas.gov/ofac</a>), and published in the Federal Register along
with the applicable prohibition or strict condition(s).
Note 4 to Sec. 589.209. Section 216 of the Countering America's
Adversaries Through Sanctions Act (22 U.S.C. 9511) (CAATSA) requires
Congressional review prior to the termination of sanctions imposed
pursuant to UFSA. Section 5(g) of UFSA (22 U.S.C. 8924(g)) describes
the Congressional notification required prior to the termination of
sanctions imposed pursuant section 5 of UFSA.
Sec. 589.210 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.
589.201, 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 interest in property.
(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. 589.201, 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, a license or other authorization
issued by OFAC 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 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 OFAC 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 is or 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 OFAC 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,
[[Page 26105]]
or other directive or authorization issued pursuant to this part;
(ii) Such transfer was not licensed or authorized by OFAC; 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.
(e) 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 (2) of this section have been satisfied.
(f) 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 or interest in
property blocked pursuant to Sec. 589.201.
Sec. 589.211 Holding of funds in interest-bearing accounts;
investment and reinvestment.
(a) Except as provided in paragraph (e) or (f) of this section, or
as otherwise directed or authorized by OFAC, any U.S. person holding
funds, such as currency, bank deposits, or liquidated financial
obligations, subject to Sec. 589.201 shall hold or place such funds in
a blocked interest-bearing account located in the United States.
(b)(1) For the 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) Funds held or placed in a blocked account pursuant to paragraph
(a) of this section may not be invested in instruments the maturity of
which exceeds 180 days.
(c) For the 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.
(d) For the purposes of this section, if interest is credited to a
separate blocked account or subaccount, the name of the account party
on each account must be the same.
(e) Blocked funds held in instruments the maturity of which exceeds
180 days at the time the funds become subject to Sec. 589.201 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
(a) or (f) of this section.
(f) Blocked funds held in accounts or instruments outside the
United States at the time the funds become subject to Sec. 589.201 may
continue to be held in the same type of accounts or instruments,
provided the funds earn interest at rates that are commercially
reasonable.
(g) This section does not create an affirmative obligation for the
holder of blocked tangible property, such as real or personal property,
or of other blocked property, such as debt or equity securities, to
sell or liquidate such property. However, OFAC may issue licenses
permitting or directing such sales or liquidation in appropriate cases.
(h) Funds subject to this section may not be held, invested, or
reinvested in a manner that provides financial or economic benefit or
access to any person whose property and interests in property are
blocked pursuant to Sec. 589.201, nor may their holder cooperate in or
facilitate the pledging or other attempted use as collateral of blocked
funds or other assets.
Sec. 589.212 Expenses of maintaining blocked tangible 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 tangible property blocked pursuant to Sec. 589.201
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. 589.201 may, in the
discretion of OFAC, 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. 589.213 Evasions; attempts; causing violations; conspiracies.
(a) Any transaction on or after the effective date that evades or
avoids, has the purpose of evading or avoiding, causes a violation of,
or attempts to violate any of the prohibitions set forth in this part
is prohibited.
(b) Any conspiracy formed to violate the prohibitions set forth in
this part is prohibited.
Sec. 589.214 Exempt transactions.
(a) Personal communications. The prohibitions contained in this
part do not apply to any postal, telegraphic, telephonic, or other
personal communication that does not involve the transfer of anything
of value.
(b) U.S. intelligence activities. The prohibitions contained in
this part do not apply to activities subject to the reporting
requirements under title V of the National Security Act of 1947 (50
U.S.C. 3091 et seq.), or any authorized intelligence activities of the
United States.
(c) Activities of the National Aeronautics and Space
Administration. The prohibitions contained in this part do not apply to
activities of the National Aeronautics and Space Administration (NASA),
including the supply by any entity of the Russian Federation of any
product or service, or the procurement of such product or service by
any contractor or subcontractor of the United States or any other
entity, relating to or in connection with any space launch conducted
for NASA or any other non-Department of Defense customer.
(d) Importation of goods. The prohibitions contained in this part
do not apply to the importation of any goods that would otherwise be
prohibited solely because of the interest of a person whose property
and interests in property are blocked solely pursuant to Sec.
589.201(a)(6)(i), (ii), (iii), (iv), or (v). For the purposes of this
paragraph (d), the term ``good(s)'' means any article, natural or
manmade substance, material, supply or manufactured product, including
inspection and test equipment, and excluding technical data.
(e) Official business. The prohibitions contained in Sec. Sec.
589.201(a)(5), 589.206, 589.207, and 589.208 do not apply to
transactions for the conduct of the official business of the United
States Government by employees, grantees, or contractors thereof.
Note 1 to paragraph (e). See Sec. 589.510 for a general license
authorizing transactions for the conduct of the official business of
the United States Government not otherwise exempt.
Sec. 589.215 Prohibited facilitation.
Except as otherwise authorized, U.S. persons, wherever located, are
prohibited from approving, financing, facilitating, or guaranteeing a
transaction by a foreign person where the transaction by that foreign
person would be prohibited by Sec. 589.206, Sec. 589.207, or Sec.
589.208 of this part if performed by a U.S. person or within the United
States.
[[Page 26106]]
Subpart C--General Definitions
Sec. 589.300 Applicability of definitions.
The definitions in this subpart apply throughout the entire part.
Sec. 589.301 Arctic offshore projects.
(a) The term Arctic offshore projects as used in Sec. 589.205
means projects that have the potential to produce oil in areas that--
(1) Involve drilling operations originating offshore, and
(2) Are located above the Arctic Circle.
(b) The term Arctic offshore projects as used in Sec. 589.205 does
not apply to horizontal drilling operations originating onshore where
such drilling operations extend under the seabed to areas above the
Arctic Circle.
Sec. 589.302 Arms or related materiel sector of the Russian
Federation economy.
The term arms or related materiel sector of the Russian Federation
economy includes: The procurement, development, test manufacture,
maintenance, upgrade and refurbishment, shipping, supply, sale, and
storage to, from, within, or transiting the Russian Federation of arms
or related materiel of all types, including any battle tanks, armored
combat vehicles, large caliber artillery systems, combat aircraft,
attack helicopters, warships, missiles or missile systems, or related
materiel; critical enablers, aggregates, components, parts, as well as
related documentation and instructions for such items; or training for
the use of included systems, provision of simulation equipment,
documentation (including training manuals, maintenance orders, or
technical bulletins), prototypes, software upgrades, and licensing and
manufacturing agreements for such items.
Sec. 589.303 Blocked account; blocked property.
The terms blocked account and blocked property mean any account or
property subject to the prohibitions in Sec. 589.201 held in the name
of a person whose property and interests in property are blocked
pursuant to Sec. 589.201, or in which such person has an interest, and
with respect to which payments, transfers, exportations, withdrawals,
or other dealings may not be made or effected except pursuant to a
license or other authorization from OFAC expressly authorizing such
action.
Note 1 to Sec. 589.303. See Sec. 589.411 concerning the
blocked status of property and interests in property of an entity
that is directly or indirectly owned, whether individually or in the
aggregate, 50 percent or more by one or more persons whose property
and interests in property are blocked pursuant to Sec. 589.201.
Sec. 589.304 Correspondent account.
The term correspondent account means an account established by a
U.S. financial institution for a foreign financial institution to
receive deposits from, or to make payments on behalf of, the foreign
financial institution, or to handle other financial transactions
related to such foreign financial institution.
Sec. 589.305 Covered Executive order.
The term covered Executive order means any of the following:
Executive Order (E.O.) 13660, E.O. 13661, E.O. 13662, E.O. 13685, E.O.
13694, relating to the Russian Federation, or E.O. 13757, relating to
the Russian Federation.
Sec. 589.306 Crimea region of Ukraine.
The term Crimea region of Ukraine includes the land territory in
that region as well as any maritime areas over which sovereignty,
sovereign rights, or jurisdiction is claimed based on purported
sovereignty over that land territory.
Sec. 589.307 Debt.
The term debt as used in Sec. Sec. 589.202 through 589.204
includes bonds, loans, extensions of credit, loan guarantees, letters
of credit, drafts, bankers' acceptances, discount notes or bills, or
commercial paper.
Sec. 589.308 Deepwater projects.
The term deepwater projects as used in Sec. 589.205 means projects
that involve underwater activities at depths of more than 500 feet.
Sec. 589.309 Defense and related materiel sector of the Russian
Federation economy.
The term defense and related materiel sector of the Russian
Federation economy includes: The military, armed forces, or security
forces of the Russian Federation; the military, armed forces, or
security forces of the Russian Federation's use of arms or related
materiel; and any person manufacturing, supplying, providing financing
for, procuring, or distributing goods, services, or technology to the
military, armed forces, or security forces of the Russian Federation;
or financing, developing, testing, producing, or sustaining such goods
or services or technology, or arms or related materiel, within or
transiting the Russian Federation.
Sec. 589.310 Effective date.
(a) The term effective date refers to the effective date of the
applicable prohibitions and directives contained in this part as
follows:
(1) With respect to a person whose property and interests in
property are blocked pursuant to Sec. 589.201(a)(2), 12:01 a.m.
eastern daylight time, March 17, 2014;
(2) With respect to a person whose property and interests in
property are otherwise blocked pursuant to Sec. 589.201, the earlier
of the date of actual or constructive notice that such person's
property and interests in property are blocked;
(3) With respect to the transactions prohibited by Sec. 589.202,
Sec. 589.203, Sec. 589.204, or Sec. 589.205, the earlier of the date
of actual or constructive notice that a person was added to the
Sectoral Sanctions Identifications List (SSI List);
(4) With respect to the transactions prohibited by Sec. Sec.
589.206 through 589.208, 3:30 p.m. eastern standard time, December 19,
2014; and
(5) With respect to the transactions prohibited by Sec. 589.209,
the effective date of a prohibition on the opening or a prohibition or
strict condition imposed on the maintaining of a correspondent account
or a payable-through account in the United States by a U.S. financial
institution for a particular foreign financial institution pursuant to
Sec. 589.209(d) is the earlier of the date the U.S. financial
institution receives actual or constructive notice of such prohibition
or condition.
(b) For the purposes of this section, constructive notice is the
date that a notice of the blocking of the relevant person's property
and interests in property, or a notice of the person's addition to the
SSI List, or a notice of the imposition of a prohibition or strict
condition pursuant to Sec. 589.209, is published in the Federal
Register.
Sec. 589.311 Energy sector of the Russian Federation economy.
The term energy sector of the Russian Federation economy includes
the procurement, exploration, extraction, drilling, mining, harvesting,
production, refinement, liquefaction, gasification, regasification,
conversion, enrichment, fabrication, or transport to, from, or within
the Russian Federation, of petroleum, natural gas, liquified natural
gas, natural gas liquids, or petroleum products or other products
capable of producing energy, such as coal or wood or agricultural
products used to manufacture biofuels, the development, production,
generation, transmission or exchange of power, through any means,
including nuclear, electrical, thermal,
[[Page 26107]]
and renewable, in or involving the Russian Federation.
Sec. 589.312 Entity.
The term entity means a partnership, association, trust, joint
venture, corporation, group, subgroup, or other organization.
Sec. 589.313 Equity.
The term equity as used in Sec. 589.202 includes stocks, share
issuances, depositary receipts, or any other evidence of title or
ownership.
Sec. 589.314 Financial, material, or technological support.
The term financial, material, or technological support, as used in
this part, means any property, tangible or intangible, including
currency, financial instruments, securities, or any other transmission
of value; weapons or related materiel; chemical or biological agents;
explosives; false documentation or identification; communications
equipment; computers; electronic or other devices or equipment;
technologies; lodging; safe houses; facilities; vehicles or other means
of transportation; or goods. ``Technologies'' as used in this section
means specific information necessary for the development, production,
or use of a product, including related technical data such as
blueprints, plans, diagrams, models, formulae, tables, engineering
designs and specifications, manuals, or other recorded instructions.
Sec. 589.315 Financial services sector of the Russian Federation
economy.
The financial services sector of the Russian Federation economy
includes economic or financial services, including government-operated
and private banks and financial institutions, credit card companies,
investment banking services, foreign exchange services, money services
businesses, payday lenders, mortgage companies, securities exchanges,
securities dealers, asset managers, and insurance services, or any
entities that are 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, in or involving the Russian Federation.
Sec. 589.316 Foreign financial institution.
The term foreign financial institution means any foreign entity
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, futures or options,
or procuring purchasers and sellers thereof, as principal or agent. It
includes depository institutions, banks, savings banks, money services
businesses, trust companies, insurance companies, securities brokers
and dealers, futures and options brokers and dealers, forward contract
and foreign exchange merchants, securities and commodities exchanges,
clearing corporations, investment companies, employee benefit plans,
dealers in precious metals, stones, or jewels, and holding companies,
affiliates, or subsidiaries of any of the foregoing. The term does not
include the international financial institutions identified in 22
U.S.C. 262r(c)(2), the International Fund for Agricultural Development,
the North American Development Bank, or any other international
financial institution so notified by OFAC.
Sec. 589.317 Foreign person.
(a) For the purposes of Sec. Sec. 589.201(a)(6) and 589.413, the
term foreign person means any citizen or national of a foreign state
(including any such individual who is also a citizen or national of the
United States), or any entity not organized solely under the laws of
the United States or existing solely in the United States, but does not
include a foreign state.
(b) For the purposes of the rest of this part, the term foreign
person means any person that is not a U.S. person.
Sec. 589.318 Government of the Russian Federation.
The term Government of the Russian Federation means the Government
of the Russian Federation, any political subdivision, agency, or
instrumentality thereof, including the Central Bank of the Russian
Federation, and any person owned or controlled by, or acting for or on
behalf of, the Government of the Russian Federation.
Sec. 589.319 [Reserved]
Sec. 589.320 Initiated.
The term initiated as used in Sec. 589.205(b) means when a
government or any of its political subdivisions, agencies, or
instrumentalities (including any entity owned or controlled directly or
indirectly by any of the foregoing) formally grants exploration,
development, or production rights to any party.
Sec. 589.321 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. 589.322 Knowingly.
The term knowingly, with respect to conduct, a circumstance, or a
result, means that a person has actual knowledge, or should have known,
of the conduct, the circumstance, or the result.
Sec. 589.323 Licenses; general and specific.
(a) Except as otherwise provided in this part, 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 or made
available on OFAC's website: <a href="http://www.treas.gov/ofac">www.treas.gov/ofac</a>.
(c) The term specific license means any license or authorization
issued pursuant to this part but not set forth in subpart E of this
part or made available on OFAC's website: <a href="http://www.treas.gov/ofac">www.treas.gov/ofac</a>.
Note 1 to Sec. 589.323. See Sec. 501.801 of this chapter on
licensing procedures. See also note 1 to Sec. 589.501.
Sec. 589.324 Loans or other extensions of credit.
The term loans or other extensions of credit means any transfer or
extension of funds or credit on the basis of an obligation to repay, or
any assumption or guarantee of the obligation of another to repay an
extension of funds or credit, including: Overdrafts; currency swaps;
purchases of debt securities issued by persons subject to the
prohibitions in this part; purchases of a loan made by another person;
sales of financial assets subject to an agreement to repurchase;
renewals or refinancings whereby funds or credits are transferred to or
extended to a prohibited borrower or prohibited recipient; the issuance
of standby letters of credit; and drawdowns on existing lines of
credit.
Sec. 589.325 Metals and mining sector of the Russian Federation
economy.
The term metals and mining sector of the Russian Federation economy
includes any act, process, or industry of extracting, at the surface or
underground, ores, coal, precious stones, or any other minerals or
geological materials in the Russian Federation, or any act of
procuring, processing, manufacturing, or refining such geological
materials, or transporting them to, from, or within the Russian
Federation.
Sec. 589.326 New investment.
The term new investment as used in Sec. 589.206 means a
transaction on or after 3:30 p.m. eastern standard time, December 19,
2014 that constitutes:
[[Page 26108]]
(a) A commitment or contribution of funds or other assets; or
(b) A loan or other extension of credit as defined in Sec.
589.324.
Sec. 589.327 OFAC.
The term OFAC means the Department of the Treasury's Office of
Foreign Assets Control.
Sec. 589.328 Payable-through account.
The term payable-through account means a correspondent account
maintained by a U.S. financial institution for a foreign financial
institution by means of which the foreign financial institution permits
its customers to engage, either directly or through a subaccount, in
banking activities usual in connection with the business of banking in
the United States.
Sec. 589.329 Person.
The term person means an individual or entity.
Sec. 589.330 Production.
The term production as used in Sec. 589.205 refers to the lifting
of oil to the surface and the gathering, treating, field processing,
and field storage of such oil. The production stage of a project ends
when extracted oil is transported out of a field production storage
tank or otherwise off a field production site. The term production as
used in Sec. 589.205 does not apply to the provision by U.S. persons
or within the United States of goods, technology, or services to
persons determined to be subject to Sec. 589.205 when such
transactions relate only to the transportation, refining, or other
dealings involving oil that has already been extracted from a deepwater
project as defined in Sec. 589.308, Arctic offshore project as defined
in Sec. 589.301, or shale project as defined in Sec. 589.334, and
transported out of a field production storage tank or otherwise off of
a field production site.
Sec. 589.331 Property; property interest.
The terms property and property interest include 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 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. 589.332 Railway sector of the Russian Federation economy.
The term railway sector of the Russian Federation economy includes
the following activities and items produced in, sold from, purchased
in, transiting, or distributed in the Russian Federation: The
procurement, design, manufacture, construction, maintenance, repair,
refurbishment, assembly, sale, purchase, distribution, and
transportation of trains, locomotives, rail cars, and other equipment
used to transport passengers and goods via trains; any materials that
are used to manufacture trains or other means necessary to move the
trains, such as railway lines, equipment, engineering, mechanical, or
electrical systems or methods, or technology; and any infrastructure or
services used to support railway operations, such as passenger
ticketing and on-board food sales or services.
Sec. 589.333 Russian person.
The term Russian person means an individual who is a citizen or
national of the Russian Federation, or an entity organized under the
laws of the Russian Federation.
Sec. 589.334 Shale projects.
The term shale projects as used in Sec. 589.205 includes projects
that have the potential to produce oil from resources located in shale
formations as well as projects that have the potential to produce oil
from resources located in fine-grained sedimentary rock formations
including shale, limestone, dolomites, sandstones, and clay.
Sec. 589.335 Special Russian crude oil project.
The term special Russian crude oil project means a project intended
to extract crude oil from:
(a) The exclusive economic zone of the Russian Federation in waters
more than 500 feet deep;
(b) Russian artic offshore locations; or
(c) Shale formation located in the Russian Federation.
Sec. 589.336 Structured.
The term structured, with respect to a transaction, has the meaning
given the term ``structure'' in 31 CFR 1010.100(xx) (or any
corresponding similar regulation or ruling issued by the U.S.
Department of the Treasury).
Sec. 589.337 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. 589.338 United States.
The term United States means the United States, its territories and
possessions, and all areas under the jurisdiction or authority thereof.
Sec. 589.339 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.
Sec. 589.340 U.S. depository institution.
The term U.S. depository institution means any entity (including
its foreign
[[Page 26109]]
branches) organized under the laws of the United States or any
jurisdiction within the United States, or any agency, office, or branch
located in the United States of a foreign entity, that is engaged
primarily in the business of banking (for example, banks, savings
banks, savings associations, credit unions, trust companies, and United
States bank holding companies) and is subject to regulation by Federal
or State banking authorities.
Sec. 589.341 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, futures or options, or procuring purchasers and sellers
thereof, as principal or agent. It includes depository institutions,
banks, savings banks, money services businesses, trust companies,
insurance companies, securities brokers and dealers, futures and
options brokers and dealers, forward contract and foreign exchange
merchants, securities and commodities exchanges, clearing corporations,
investment companies, employee benefit plans, dealers in precious
metals, stones, or jewels, 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. 589.342 U.S.-registered broker or dealer in securities.
The term U.S.-registered broker or dealer in securities means any
U.S. citizen, permanent resident alien, or entity organized under the
laws of the United States or of any jurisdiction within the United
States (including its foreign branches), or any agency, office, or
branch of a foreign entity located in the United States, that:
(a) Is a ``broker'' or ``dealer'' in securities within the meanings
set forth in the Securities Exchange Act of 1934;
(b) Holds or clears customer accounts; and
(c) Is registered with the Securities and Exchange Commission under
the Securities Exchange Act of 1934.
Sec. 589.343 U.S.-registered money transmitter.
The term U.S.-registered money transmitter means any U.S. citizen,
permanent resident alien, or entity organized under the laws of the
United States or of any jurisdiction within the United States,
including its foreign branches, or any agency, office, or branch of a
foreign entity located in the United States, that is a money
transmitter, as defined in 31 CFR 1010.100 and that is registered
pursuant to 31 CFR 1022.380.
Subpart D--Interpretations
Sec. 589.401 Reference to amended sections.
(a) Reference to any section in this part is a reference to the
same as currently amended, unless the reference includes a specific
date. See 44 U.S.C. 1510.
(b) Reference to any ruling, order, instruction, direction, or
license issued pursuant to this part is a reference to the same as
currently amended unless otherwise so specified.
Sec. 589.402 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 OFAC 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. 589.403 Termination and acquisition of an interest in blocked
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 whose property and interests in property
are blocked pursuant to Sec. 589.201, such property shall no longer be
deemed to be property blocked pursuant to Sec. 589.201, unless there
exists in the property another interest that is blocked pursuant to
Sec. 589.201, 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. 589.201, such property shall be deemed to be property in which
such person has an interest and therefore blocked.
Sec. 589.404 Transactions ordinarily incident to a licensed
transaction.
(a) Any transaction ordinarily incident to a licensed transaction
and necessary to give effect thereto is also authorized, except:
(1) 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. 589.201; or
(2) 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.
(b) For example, a license authorizing a person to complete a
securities sale involving Company A, whose property and interests in
property are blocked pursuant to Sec. 589.201, also authorizes other
persons to engage in activities that are ordinarily incident and
necessary to complete the sale, including transactions by the buyer,
broker, transfer agents, and banks, provided that such other persons
are not themselves persons whose property and interests in property are
blocked pursuant to Sec. 589.201.
Sec. 589.405 Exportation and reexportation of goods, services, or
technology; provision and receipt of services.
(a) The prohibition on the exportation, reexportation, sale, or
supply of goods, services, or technology contained in Sec. 589.207
applies to services performed on behalf of a person in the Crimea
region of Ukraine or where the benefit of such services is otherwise
received in the Crimea region of Ukraine, if such services are
performed:
(1) In the United States; or
(2) Outside the United States by a U.S. person.
(b) The prohibitions contained in Sec. 589.201 apply to services
performed in the United States or by U.S. persons, wherever located:
(1) On behalf of or for the benefit of any person whose property
and interests in property are blocked pursuant to Sec. 589.201; or
(2) With respect to property interests of any person whose property
and interests in property are blocked pursuant to Sec. 589.201.
(c) The prohibitions contained in Sec. 589.201 apply to services
received in the United States or by U.S. persons, wherever located,
where the service is performed by or at the direction of a person whose
property and interests in property are blocked pursuant to Sec.
589.201.
(d)(1) For example, U.S. persons may not, except as authorized by
or pursuant
[[Page 26110]]
to this part, provide legal, accounting, financial, brokering, freight
forwarding, transportation, public relations, or other services to any
person in the Crimea region of Ukraine or any person whose property and
interests in property are blocked pursuant to Sec. 589.201, or
negotiate with or enter into contracts signed by a person whose
property and interests in property are blocked pursuant to Sec.
589.201.
(2) For example, a U.S. person is engaged in a prohibited
exportation of services to the Crimea region of Ukraine when it extends
credit to a third-country firm specifically to enable that firm to
manufacture goods for sale to the Crimea region of Ukraine.
Note 1 to Sec. 589.405. See, for example, Sec. Sec. 589.506
and 589.508 for general licenses authorizing the provision of
certain legal and emergency medical services.
Sec. 589.406 Offshore transactions involving blocked property.
The prohibitions in Sec. 589.201 on transactions or dealings
involving blocked property, as defined in Sec. 589.303, apply to
transactions by any U.S. person in a location outside the United
States.
Sec. 589.407 Payments from blocked accounts to satisfy obligations
prohibited.
Pursuant to Sec. 589.201, 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.
Note 1 to Sec. 589.407. See also Sec. 589.502(e), which
provides that no license or other authorization contained in or
issued pursuant to this part authorizes transfers of or payments
from blocked property or debits to blocked accounts unless the
license or other authorization explicitly authorizes the transfer of
or payment from blocked property or the debit to a blocked account.
Sec. 589.408 Charitable contributions.
Unless specifically authorized by OFAC 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. 589.201. 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. 589.201 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 such a person.
Sec. 589.409 Credit extended and cards issued by financial
institutions to a person whose property and interests in property are
blocked.
The prohibition in Sec. 589.201 on dealing in property subject to
that section prohibits U.S. financial institutions from performing
under any existing credit agreements, including charge cards, debit
cards, or other credit facilities issued by a financial institution to
a person whose property and interests in property are blocked pursuant
to Sec. 589.201.
Sec. 589.410 Setoffs prohibited.
A setoff against blocked property (including a blocked account),
whether by a U.S. financial institution or other U.S. person, is a
prohibited transfer under Sec. 589.201 if effected after the effective
date.
Sec. 589.411 Entities owned by one or more persons whose property and
interests in property are blocked or who are subject to Sec. 589.202,
Sec. 589.203, Sec. 589.204, or Sec. 589.205.
(a) Persons whose property and interests in property are blocked
pursuant to Sec. 589.201 have an interest in all property and
interests in property of an entity in which such persons directly or
indirectly own, whether individually or in the aggregate, 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.
589.201, regardless of whether the name of the entity is incorporated
into OFAC's Specially Designated Nationals and Blocked Persons List
(SDN List).
(b) Persons subject to Sec. 589.202, Sec. 589.203, Sec. 589.204,
or Sec. 589.205 have an interest in all property and interests in
property of an entity in which such persons directly or indirectly own,
whether individually or in the aggregate, a 50 percent or greater
interest. The property and interests in property of such an entity,
therefore, are also subject to Sec. 589.202, Sec. 589.203, Sec.
589.204, or Sec. 589.205, regardless of whether the name of the entity
is incorporated into OFAC's Sectoral Sanctions Identifications List.
Sec. 589.412 Projects owned, or to which a majority of voting rights
are held, by one or more persons subject to Sec. 589.205.
The prohibitions in Sec. 589.205(b) apply to projects owned 33
percent or more, or to projects in which a majority of voting interests
are held, individually or in the aggregate, by one or more persons
subject to Sec. 589.205, their property, or their interests in
property, including entities owned 50 percent or more by one or more
persons subject to Sec. 589.205.
Example 1 to Sec. 589.412: If two entities that are each
subject to Sec. 589.205 each hold a 20 percent ownership interest
in Project X, or together own a majority of the voting interests in
Project X, then the prohibition in Sec. 589.205(b) applies to
Project X.
Sec. 589.413 Significant transaction(s); significant financial
transaction(s).
In determining, for the purposes of Sec. Sec. 589.201(a)(6)(vii)
and 589.209, whether a transaction or a financial transaction is
significant, the Secretary of the Treasury or the Secretary's designee
will consider the totality of the facts and circumstances. As a general
matter, some or all of the following factors may be considered:
(a) Size, number, and frequency. The size, number, and frequency of
transaction(s) over a period of time, including whether the
transaction(s) is increasing or decreasing over time and the rate of
increase or decrease.
(b) Nature. The nature of the transaction(s), including the type,
complexity, and commercial purpose of the transaction(s).
(c) Level of awareness; pattern of conduct. (1) Whether the
transaction(s) is performed with the involvement or approval of
management or only by clerical personnel; and
(2) Whether the transaction(s) is part of a pattern of conduct or
the result of a business development strategy.
(d) Nexus. (1) For the purposes of Sec. 589.201(a)(6)(vii), the
proximity between the foreign person engaging in the transaction(s) and
the person(s) subject to sanctions pursuant to the Support for the
Sovereignty, Integrity, Democracy, and Economic Stability of Ukraine
Act of 2014, as amended (22 U.S.C. 8901-8910) (SSIDES), the Ukraine
Freedom Support Act of 2014, as amended (22 U.S.C. 8921-8930) (UFSA),
title II of the Countering America's Adversaries Through Sanctions Act
(Pub. L. 115-44, 131 Stat. 886 (codified in scattered sections of 22
U.S.C.)) (CAATSA), and any covered Executive order, or any child,
spouse, parent, or sibling of such an individual.
(2) For the purposes of Sec. 589.209(b), the proximity between the
foreign
[[Page 26111]]
financial institution engaging in the transaction(s) and the person
with respect to which sanctions are imposed under section 4 of UFSA.
(3) For the purposes of Sec. 589.209(c), the proximity between the
foreign financial institution engaging in the financial transaction(s)
and the Russian person included on OFAC's Specially Designated
Nationals and Blocked Persons List (SDN List) as blocked pursuant to
UFSA, E.O. 13660, E.O. 13661, E.O. 13662, or any other Executive order
addressing the crisis in Ukraine.
(e) Impact. The impact of the transaction(s) on the objectives of
UFSA, SSIDES, CAATSA, E.O. 13660, E.O. 13661, E.O. 13662, E.O. 13685,
or any other Executive order issued pursuant to the national emergency
declared in E.O. 13660.
(f) Deceptive practices. Whether the transaction(s) involves an
attempt to obscure or conceal the actual parties or true nature of the
transaction(s), or to evade sanctions.
(g) Other relevant factors. Such other factors that the Secretary
of the Treasury or the Secretary's designee deems relevant on a case-
by-case basis in determining the significance of a transaction(s).
(h) Persons solely identified on the Sectoral Sanctions
Identifications List (SSI List) or Non-SDN Menu-Based Sanctions List
(NS-MBS List). For the purposes of Sec. 589.201(a)(6)(vii) and Sec.
589.209(b), a transaction in which the person(s) subject to sanctions
is only identified on the SSI List or the NS-MBS List must also involve
deceptive practices, for example attempts to obscure or conceal the
actual parties or true nature of the transaction(s), or to evade
sanctions, to potentially be considered significant.
(i) Applicability. For the purposes of this part, a transaction is
not significant if U.S. persons would not require a specific license
from OFAC to participate in it.
Sec. 589.414 Facilitation; change of policies and procedures;
referral of business opportunities offshore.
With respect to Sec. 589.215, a prohibited facilitation or
approval of a transaction by a foreign person occurs, among other
instances, when a U.S. person:
(a) Alters its operating policies or procedures, or those of a
foreign affiliate, to permit a foreign affiliate to accept or perform a
specific contract, engagement, or transaction described in Sec. Sec.
589.206 through 589.208 without the approval of the U.S. person, where
such transaction previously required approval by the U.S. person and
such transaction by the foreign affiliate would be prohibited by this
part if performed directly by a U.S. person or from the United States;
(b) Refers to a foreign person purchase orders, requests for bids,
or similar business opportunities involving a transaction described in
Sec. Sec. 589.206 through 589.208 to which the U.S. person could not
directly respond as a result of the prohibitions contained in this
part; or
(c) Changes the operating policies and procedures of a particular
affiliate with the specific purpose of facilitating transactions that
would be prohibited by this part if performed by a U.S. person or from
the United States.
Subpart E--Licenses, Authorizations, and Statements of Licensing
Policy
Sec. 589.501 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. General
licenses and statements of licensing policy relating to this part also
may be available through the Ukraine-/Russia-Related Sanctions page on
OFAC's website: <a href="http://www.treas.gov/ofac">www.treas.gov/ofac</a>.
Note 1 to Sec. 589.501. Section 216 of the Countering America's
Adversaries Through Sanctions Act (22 U.S.C. 9511) requires
Congressional review prior to the issuance of a license that
significantly alters the United States' foreign policy with regard
to the Russian Federation.
Sec. 589.502 Effect of license or other authorization.
(a) No license or other authorization contained in this part, or
otherwise issued by OFAC, 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 OFAC 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 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 with respect to, any property that would not otherwise
exist under ordinary principles of law.
(d) Nothing contained in this part shall be construed to supersede
the requirements established under any other provision of law or to
relieve a person from any requirement to obtain a license or other
authorization from another department or agency of the U.S. Government
in compliance with applicable laws and regulations subject to the
jurisdiction of that department or agency. For example, exports of
goods, services, or technical data that are not prohibited by this part
or that do not require a license by OFAC nevertheless may require
authorization by the U.S. Department of Commerce, the U.S. Department
of State, or other agencies of the U.S. Government.
(e) No license or other authorization contained in or issued
pursuant to this part authorizes transfers of or payments from blocked
property or debits to blocked accounts unless the license or other
authorization explicitly authorizes the transfer of or payment from
blocked property or the debit to a blocked account.
(f) Any payment relating to a transaction authorized in or pursuant
to this part that is routed through the U.S. financial system should
reference the relevant OFAC general or specific license authorizing the
payment to avoid the blocking or rejection of the transfer.
Sec. 589.503 Exclusion from licenses.
OFAC reserves the right to exclude any person, property,
transaction, or class thereof from the operation of any license or from
the privileges conferred by any license. OFAC 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. 589.504 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.
589.201 has any interest that comes within the possession or control of
a U.S. financial institution
[[Page 26112]]
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 1 to Sec. 589.504. See Sec. 501.603 of this chapter for
mandatory reporting requirements regarding financial transfers. See
also Sec. 589.211 concerning the obligation to hold blocked funds
in interest-bearing accounts.
Sec. 589.505 Entries in certain accounts for normal service charges.
(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 charges 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. 589.506 Provision of certain legal services.
(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. 589.201, or to whom the provision of legal services
would be prohibited by Sec. 589.207, is authorized, provided that any
receipt of payment of professional fees and reimbursement of incurred
expenses must be authorized pursuant to Sec. 589.507, which authorizes
certain payments for legal services from funds originating outside the
United States; via specific license; or otherwise pursuant to this
part:
(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 legal, arbitration, or administrative proceedings
before any U.S. Federal, State, or local court or agency;
(3) Initiation and conduct of legal, arbitration, or administrative
proceedings before any U.S. Federal, State, or local court or agency;
(4) Representation of persons before any U.S. Federal, State, or
local court or agency with respect to the imposition, administration,
or enforcement of U.S. sanctions against such persons or enforcement of
U.S. sanctions against the Crimea region of Ukraine; 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 or on behalf of
persons whose property and interests in property are blocked pursuant
to Sec. 589.201, or to whom the provision of legal services would be
prohibited by Sec. 589.207, not otherwise authorized in this part,
requires the issuance of a specific license.
(c) U.S. persons do not need to obtain specific authorization to
provide related services, such as making filings and providing other
administrative services that are ordinarily incident to the provision
of services authorized by paragraph (a) of this section. Additionally,
U.S. persons who provide services authorized by paragraph (a) of this
section do not need to obtain specific authorization to contract for
related services that are ordinarily incident to the provision of those
legal services, such as those provided by private investigators or
expert witnesses, or to pay for such services. See Sec. 589.404.
(d) 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. 589.201 is prohibited unless licensed
pursuant to this part.
(e) All receipts of payment of professional fees and reimbursement
of incurred expenses for the provision of legal services authorized
pursuant to paragraph (a) of this section to or on behalf of a person
in the Crimea region of Ukraine, or in circumstances in which the
benefit is otherwise received in the Crimea region of Ukraine, other
than those persons whose property and interest in property are blocked
pursuant to Sec. 589.201, are authorized, except that nothing in this
section authorizes the debiting of any blocked account or the transfer
of any blocked property.
Note 1 to Sec. 589.506. Pursuant to part 501, subpart E, of
this chapter, U.S. persons seeking administrative reconsideration or
judicial review of their designation or the blocking of their
property and interests in property may apply for a specific license
from OFAC to authorize the release of certain blocked funds for the
payment of professional fees and reimbursement of incurred expenses
for the provision of such legal services where alternative funding
sources are not available.
Sec. 589.507 Payments for legal services from funds originating
outside the United States.
(a) Professional fees and incurred expenses. (1) Receipt of payment
of professional fees and reimbursement of incurred expenses for the
provision of legal services authorized pursuant to Sec. 589.506(a) to
or on behalf of any person whose property and interests in property are
blocked pursuant to Sec. 589.201 is authorized from funds originating
outside the United States, provided that the funds do not originate
from:
(i) A source within the United States;
(ii) Any source, wherever located, within the possession or control
of a U.S. person; or
(iii) Any individual or entity, other than the person on whose
behalf the legal services authorized pursuant to Sec. 589.506(a) are
to be provided, whose property and interests in property are blocked
pursuant to any part of this chapter or any Executive order or statute.
(2) Nothing in paragraph (a) of this section authorizes payments
for legal services using funds in which any other person whose property
and interests in property are blocked pursuant to Sec. 589.201, any
other part of this chapter, or any Executive order or statute has an
interest.
(b) Reports. (1) U.S. persons who receive payments pursuant to
paragraph (a) of this section must submit annual reports no later than
30 days following the end of the calendar year during which the
payments were received providing information on the funds received.
Such reports shall specify:
(i) The individual or entity from whom the funds originated and the
amount of funds received; and
(ii) If applicable:
(A) The names of any individuals or entities providing related
services to the U.S. person receiving payment in connection with
authorized legal services, such as private investigators or expert
witnesses;
(B) A general description of the services provided; and
[[Page 26113]]
(C) The amount of funds paid in connection with such services.
(2) The reports, which must reference this section, are to be
submitted to OFAC using one of the following methods:
(i) Email (preferred method): <a href="/cdn-cgi/l/email-protection#367970777564534659444276424453574543444f18515940"><span class="__cf_email__" data-cfemail="f7b8b1b6b4a59287988583b7838592968482858ed9909881">[email protected]</span></a>; or
(ii) U.S. mail: OFAC Regulations Reports, Office of Foreign Assets
Control, U.S. Department of the Treasury, 1500 Pennsylvania Avenue NW,
Freedman's Bank Building, Washington, DC 20220.
Sec. 589.508 Emergency medical services.
The provision and receipt of nonscheduled emergency medical
services that are prohibited by this part are authorized.
Sec. 589.509 Investment and reinvestment of certain funds.
Subject to the requirements of Sec. 589.211, U.S. financial
institutions are authorized to invest and reinvest assets blocked
pursuant to Sec. 589.201, 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. 589.201.
Sec. 589.510 Official business of the United States Government.
All transactions prohibited by this part that are for the conduct
of the official business of the United States Government by employees,
grantees, or contractors thereof are authorized.
Sec. 589.511 Official business of certain international organizations
and entities.
All transactions prohibited by this part that are for the conduct
of the official business of the following entities, by employees,
grantees, or contractors thereof are authorized:
(a) The United Nations, including its Programmes, Funds, and Other
Entities and Bodies, as well as its Specialized Agencies and Related
Organizations;
(b) The International Centre for Settlement of Investment Disputes
(ICSID) and the Multilateral Investment Guarantee Agency (MIGA);
(c) The African Development Bank Group, the Asian Development Bank,
the European Bank for Reconstruction and Development, and the Inter-
American Development Bank Group (IDB Group), including any fund entity
administered or established by any of the foregoing; and
(d) The International Committee of the Red Cross and the
International Federation of Red Cross and Red Crescent Societies.
Sec. 589.512 Certain transactions related to derivatives prohibited
by Sec. 589.202, Sec. 589.203, or Sec. 589.204.
(a) All transactions by U.S. persons, wherever located, and
transactions within the United States involving derivative products
whose value is linked to an underlying asset that constitutes
prohibited debt issued by a person subject to Sec. 589.202, Sec.
589.203, or Sec. 589.204, or prohibited equity issued by a person
subject to Sec. 589.202, are authorized.
(b) This section does not authorize the holding, purchasing, or
selling of underlying assets otherwise prohibited by Sec. 589.202,
Sec. 589.203, or Sec. 589.204 by U.S. persons, wherever are located,
or within the United States.
Sec. 589.513 Exportation or reexportation of agricultural
commodities, medicine, medical supplies, and replacement parts to the
Crimea region of Ukraine.
(a)(1) Agricultural commodities, medicine, and medical supplies.
Except as provided in paragraphs (b)(1) through (3) of this section,
the exportation or reexportation, from the United States or by a U.S.
person, wherever located, of agricultural commodities, medicine, and
medical supplies to the Crimea region of Ukraine, or to persons in
third countries purchasing specifically for resale to the Crimea region
of Ukraine, and the conduct of related transactions are authorized.
(2) Replacement parts. Except as provided in paragraph (b)(1) of
this section, the exportation or reexportation, from the United States
or by a U.S. person, wherever located, of replacement parts for medical
supplies exported or reexported pursuant to paragraph (a)(1) of this
section, and the conduct of related transactions are authorized,
provided that such replacement parts are designated as EAR99, or, in
the case of replacement parts that are not subject to the Export
Administration Regulations, 15 CFR parts 730 through 744 (EAR), are not
listed under any multilateral export control regime; and further
provided that such replacement parts are limited to a one-for-one
export or reexport basis (i.e., only one replacement part can be
exported or reexported to replace a broken or non-operational
component).
Note 1 to paragraph (a). Related transactions in this paragraph
include the making of shipping and cargo inspection arrangements,
the obtaining of insurance, the arrangement of financing and
payment, shipping of the goods, receipt of payment, and the entry
into contracts (including executory contracts).
(b)(1) Excluded persons. Paragraphs (a)(1) and (2) of this section
do not authorize the exportation or reexportation of agricultural
commodities, medicine, medical supplies, or replacement parts to
military or law enforcement purchasers or importers.
(2) Excluded agricultural commodities. Paragraph (a)(1) of this
section does not authorize the exportation or reexportation of the
following items: Castor beans, castor bean seeds, certified pathogen-
free eggs (unfertilized or fertilized), dried egg albumin, live animals
(excluding live cattle), embryos (excluding cattle embryos), Rosary/
Jequirity peas, non-food-grade gelatin powder, peptones and their
derivatives, super absorbent polymers, western red cedar, or all
fertilizers.
(3) Excluded medicines. Paragraph (a)(1) of this section does not
authorize the exportation or reexportation of the following medicines:
Non-NSAID analgesics, cholinergics, anticholinergics, opioids,
narcotics, benzodiazapenes, and bioactive peptides.
(c)(1) Other excluded items agricultural commodities. For the
purposes of this section, agricultural commodities do not include
furniture made from wood; clothing manufactured from plant or animal
materials; agricultural equipment (whether hand tools or motorized
equipment); pesticides, insecticides, or herbicides; or cosmetics
(unless derived entirely from plant materials).
(2) Other excluded medicine. For the purposes of this section,
medicine does not include cosmetics.
(d) Nothing in this section relieves the exporter from compliance
with the export license application requirements of another Federal
agency.
(e) Nothing in this section authorizes the exportation or
reexportation of any agricultural commodity, medicine, or medical
device controlled on the United States Munitions List established under
section 38 of the Arms Export Control Act (22 U.S.C. 2778); controlled
on any
[[Page 26114]]
control list established under the Export Administration Act of 1979 or
any successor statute (50 U.S.C. App. 2401 et seq.); or used to
facilitate the development or production of a chemical or biological
weapon or weapon of mass destruction.
(f) Nothing in this section affects prohibitions on the sale or
supply of U.S. technology or software used to manufacture agricultural
commodities, medicine, or medical devices, such as technology to design
or produce biotechnological items or medical devices.
(g) Nothing in this section affects U.S. nonproliferation export
controls, including the end-user and end-use controls maintained under
Part 744 of the EAR, 15 CFR part 744.
(h) Nothing in this section authorizes any transaction or dealing
with a person whose property and interests in property are blocked
pursuant to 31 CFR 536.201, 544.201, 594.201, 597.201, or 598.202, or
with any foreign organization, group, or person subject to any
restriction for its involvement in weapons of mass destruction or
missile proliferation, or involving property blocked pursuant to this
chapter or any other activity prohibited by this chapter not otherwise
authorized in or pursuant to this part.
(i) Nothing in this section authorizes the exportation or
reexportation of any agricultural commodity, medicine, or medical
device that is not designated as EAR99 or, in the case of any
agricultural commodity, medicine, or medical device not subject to the
EAR, is not listed under any multilateral export control regime.
(j) For the purposes of this section, agricultural commodities,
medicine, medical devices, and medical supplies are defined below.
(1) Agricultural commodities. For the purposes of this section,
agricultural commodities are:
(i) In the case of products subject to the EAR, products that are
designated as EAR99, and, in the case of products not subject to the
EAR, products that are not listed under any multilateral export control
regime, in each case that fall within the term ``agricultural
commodity'' as defined in section 102 of the Agricultural Trade Act of
1978 (7 U.S.C. 5602); and
(ii) In the case of products subject to the EAR, products that are
designated as EAR99, and in the case of products not subject to the
EAR, products that are not listed under any multilateral export control
regime, in each case that are intended for ultimate use in the Crimea
region of Ukraine as: Food for humans (including raw, processed, and
packaged foods, live animals, vitamins and minerals, food additives or
supplements, and bottled drinking water) or animals (including animal
feeds); seeds for food crops; fertilizers or organic fertilizers; or
reproductive materials (such as live animals, fertilized eggs, embryos,
and semen) for the production of food animals;
(2) Medicine. For the purposes of this section, medicine is an item
that falls within the definition of the term ``drug'' in section 201 of
the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 321) and that, in
the case of an item subject to the EAR, is designated as EAR99 or, in
the case of an item not subject to the EAR, is not listed under any
multilateral export control regime.
(3) Medical devices. For the purposes of this section, a medical
device is an item that falls within the definition of ``device'' in
section 201 of the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 321)
and that, in the case of an item subject to the EAR, is designated as
EAR99, or in the case of an item not subject to the EAR, is not listed
under any multilateral export control regime.
(4) Medical supplies. For purposes of this section, the term
medical supplies means those medical devices, as defined in paragraph
(j)(3) of this section, that are included on the List of Medical
Supplies on OFAC's website (<a href="http://www.treas.gov/ofac">www.treas.gov/ofac</a>) on the Ukraine-/Russia-
Related Sanctions page.
Note 1 to paragraph (j)(4). The List of Medical Supplies is
maintained on OFAC's website (<a href="http://www.treas.gov/ofac">www.treas.gov/ofac</a>) on the Ukraine-/
Russia-Related Sanctions page. The list will be published in the
Federal Register, as will any changes to the list.
(k) Specific licenses may be issued on a case-by-case basis to
authorize the export or reexport of medical devices that are not
medical supplies (and therefore not authorized pursuant to paragraph
(a)(1) of this section) to the Crimea region of Ukraine, or to persons
in third countries purchasing specifically for resale to the Crimea
region of Ukraine.
Sec. 589.514 Noncommercial, personal remittances to or from the
Crimea region of Ukraine or for or on behalf of individuals ordinarily
resident in the Crimea region of Ukraine.
(a)(1) U.S. persons are authorized to send and receive, and U.S.
depository institutions, U.S.-registered brokers or dealers in
securities, and U.S.-registered money transmitters are authorized to
process transfers of, funds to or from the Crimea region of Ukraine or
for or on behalf of an individual ordinarily resident in the Crimea
region of Ukraine in cases in which the transfer involves a
noncommercial, personal remittance, provided the transfer is not by,
to, or through any person whose property and interests in property are
blocked pursuant to Sec. 589.201.
(2) Noncommercial, personal remittances do not include charitable
donations of funds to or for the benefit of an entity or funds
transfers for use in supporting or operating a business, including a
family-owned business.
(b) The transferring institutions identified in paragraph (a) of
this section may rely on the originator of a funds transfer with regard
to compliance with paragraph (a), provided that the transferring
institution does not know or have reason to know that the funds
transfer is not in compliance with paragraph (a).
(c) An individual who is a U.S. person is authorized to carry funds
as a noncommercial, personal remittance, as described in paragraph (a)
of this section, to an individual in the Crimea region of Ukraine or to
an individual ordinarily resident in the Crimea region of Ukraine,
other than an individual whose property and interests in property are
blocked pursuant Sec. 589.201, provided that the individual who is a
U.S. person is carrying the funds on his or her behalf, but not on
behalf of another person.
Sec. 589.515 Operation of accounts for individuals ordinarily
resident in the Crimea region of Ukraine.
The operation of an account in a U.S. financial institution for an
individual ordinarily resident in the Crimea region of Ukraine, other
than an individual whose property and interests in property are blocked
Sec. 589.201, is authorized, provided that transactions processed
through the account:
(a) Are of a personal nature and not for use in supporting or
operating a business;
(b) Do not involve transfers, directly or indirectly, to the Crimea
region of Ukraine or for the benefit of individuals ordinarily resident
in the Crimea region of Ukraine unless authorized by Sec. 589.514; and
Sec. 589.516 Transactions related to telecommunications and mail
involving the Crimea region of Ukraine.
(a)(1) Except as provided in paragraph (a)(2) of this section, all
transactions with respect to the receipt and transmission of
telecommunications involving the Crimea region of Ukraine are
authorized, provided that no payment pursuant to this section may
involve any transaction with a person whose property and interests in
property are blocked pursuant to Sec. 589.201.
[[Page 26115]]
(2) This section does not authorize:
(i) The provision, sale, or lease of telecommunications equipment
or technology; or
(ii) The provision, sale, or lease of capacity on
telecommunications transmission facilities (such as satellite or
terrestrial network activity).
(b) All transactions of common carriers incident to the receipt or
transmission of mail and packages between the United States and the
Crimea region of Ukraine are authorized, provided that the importation
or exportation of such mail and packages is exempt from or authorized
pursuant to this part.
Sec. 589.517 Exportation of certain services and software incident to
internet-based communications to the Crimea Region of Ukraine.
(a) Except as provided in paragraph (d) of this section, the
exportation or reexportation, directly or indirectly, from the United
States or by U.S. persons, wherever located, to persons in the Crimea
region of Ukraine of services incident to the exchange of personal
communications over the internet, such as instant messaging, chat and
email, social networking, sharing of photos and movies, web browsing,
and blogging, is authorized, provided that such services are widely
available to the public at no cost to the user.
(b) Except as provided in paragraph (d) of this section, the
exportation or reexportation, directly or indirectly, from the United
States or by U.S. persons, wherever located, to persons in the Crimea
region of Ukraine of software necessary to enable the services
described in paragraph (a) of this section is authorized, provided that
such software is designated EAR99 under the Export Administration
Regulations, 15 CFR parts 730 through 774 (EAR), or is classified by
the Department of Commerce as mass market software under export control
classification number (ECCN) 5D992 of the EAR, and provided further
that such software is widely available to the public at no cost to the
user.
(c) Except as provided in paragraph (d) of this section, the
exportation or reexportation, directly or indirectly, from the United
States or by U.S. persons, wherever located, to persons in the Crimea
region of Ukraine of software that is not subject to the EAR because it
is of foreign origin and is located outside the United States that is
necessary to enable the services described in paragraph (a) of this
section is authorized, provided that such software is not listed under
any multilateral export control regime, or would meet the criteria for
classification under ECCN 5D992 of the EAR if it were subject to the
EAR, and provided further that such software is widely available to the
public at no cost to the user.
(d) This section does not authorize:
(1) The exportation or reexportation, directly or indirectly, of
services or software with knowledge or reason to know that such
services or software are intended for any person whose property and
interests in property are blocked pursuant to Sec. 589.201.
(2) The exportation or reexportation, directly or indirectly, of
any goods or technology listed on the Commerce Control List in the EAR,
15 CFR part 774, supplement No. 1 (CCL), except for software necessary
to enable the services described in paragraph (a) of this section that
is classified by the Department of Commerce as mass market software
under ECCN 5D992 of the EAR;
(3) The exportation or reexportation, directly or indirectly, of
commercial-grade internet connectivity services or telecommunications
transmission facilities (such as dedicated satellite links or dedicated
lines that include quality of service guarantees); or
(4) The exportation or reexportation, directly or indirectly, of
web-hosting services that are for commercial endeavors or of domain
name registration services.
(e) Specific licenses may be issued on a case-by-case basis for the
exportation or reexportation of services or software incident to the
exchange of personal communications over the internet not specified in
paragraph (a), (b), or (c) of this section, and for the exportation or
reexportation of hardware incident to the exchange of personal
communications over the internet.
Sec. 589.518 Transactions necessary and ordinarily incident to
publishing in the Crimea region of Ukraine.
(a) To the extent that such activities are not exempt from this
part, and subject to the restrictions set forth in paragraphs (b)
through (d) of this section, U.S. persons are authorized to engage in
all transactions necessary and ordinarily incident to the publishing
and marketing of manuscripts, books, journals, and newspapers in paper
or electronic format (collectively, ``written publications'') involving
the Crimea region of Ukraine. This paragraph does not apply if the
parties to the transactions described in this paragraph include any
person whose property and interests in property are blocked pursuant to
Sec. 589.201. Pursuant to this section, the following activities are
authorized, provided that U.S. persons ensure that they are not
engaging, without separate authorization, in the activities identified
in paragraphs (b) through (d) of this section:
(1) Commissioning and making advance payments for identifiable
written publications not yet in existence, to the extent consistent
with industry practice;
(2) Collaborating on the creation and enhancement of written
publications;
(3)(i) Augmenting written publications through the addition of
items such as photographs, artwork, translation, explanatory text, and,
for a written publication in electronic format, the addition of
embedded software necessary for reading, browsing, navigating, or
searching the written publication;
(ii) Exporting embedded software necessary for reading, browsing,
navigating, or searching a written publication in electronic format,
provided that, to the extent authorization is required under the Export
Administration Regulations, 15 CFR parts 730 through 774 (EAR), the
exportation is licensed or otherwise authorized by the Department of
Commerce under the provisions of the EAR;
(4) Substantive editing of written publications;
(5) Payment of royalties for written publications;
(6) Creating or undertaking a marketing campaign to promote a
written publication; and
(7) Other transactions necessary and ordinarily incident to the
publishing and marketing of written publications as described in this
paragraph (a).
(b) This section does not authorize transactions involving the
provision of goods or services not necessary and ordinarily incident to
the publishing and marketing of written publications as described in
paragraph (a) of this section. For example, this section does not
authorize persons subject to the jurisdiction of the United States:
(1) To provide or receive individualized or customized services
(including, but not limited to, accounting, legal, design, or
consulting services), other than those necessary and ordinarily
incident to the publishing and marketing of written publications, even
though such individualized or customized services are delivered through
the use of information and informational materials;
(2) To create or undertake for any person a marketing campaign with
respect to any service or product other than a written publication, or
to create
[[Page 26116]]
or undertake a marketing campaign of any kind;
(3) To engage in the exportation or importation of goods to or from
the Crimea region of Ukraine other than the exportation of embedded
software described in paragraph (a)(3)(ii) of this section; or
(4) To operate a publishing house, sales outlet, or other office in
the Crimea region of Ukraine.
(c) This section does not authorize U.S. persons to engage the
services of publishing houses or translators in the Crimea region of
Ukraine unless such activity is primarily for the dissemination of
written publications in the Crimea region of Ukraine.
(d) This section does not authorize:
(1) The exportation from or the importation into the United States
of services for the development, production, or design of software;
(2) Transactions for the development, production, design, or
marketing of technology specifically controlled by the International
Traffic in Arms Regulations, 22 CFR parts 120 through 130 (ITAR), the
EAR, or the Department of Energy Regulations set forth at 10 CFR part
810.
(3) The exportation of information or technology subject to the
authorization requirements of 10 CFR part 810, or Restricted Data as
defined in section 11 y. of the Atomic Energy Act of 1954, as amended,
or of other information, data, or technology the release of which is
controlled under the Atomic Energy Act and regulations therein;
(4) The exportation of any item (including information) subject to
the EAR where a U.S. person knows or has reason to know that the item
will be used, directly or indirectly, with respect to certain nuclear,
missile, chemical, or biological weapons or nuclear-maritime end-uses
as set forth in part 744 of the EAR. In addition, U.S. persons are
precluded from exporting any item subject to the EAR to certain
restricted end-users, as set forth in part 744 of the EAR, as well as
certain persons whose export privileges have been denied pursuant to
parts 764 or 766 of the EAR, without authorization from the Department
of Commerce; or
(5) The exportation of information subject to licensing
requirements under the ITAR, or exchanges of information that are
subject to regulation by other government agencies.
Sec. 589.519 Emergency landings and air ambulance services in the
Crimea region of Ukraine.
(a) The receipt of, and payment of charges for, services rendered
in connection with emergency landings in the Crimea region of Ukraine
by aircraft registered in the United States or owned or controlled by,
or chartered to, persons subject to U.S. jurisdiction that would be
prohibited by Sec. 589.206, Sec. 589.207, or Sec. 589.208 are
authorized.
(b) U.S. persons are authorized to engage in all transactions
prohibited by Sec. 589.206, Sec. 589.207, or Sec. 589.208 that are
necessary to provide air ambulance and related medical services,
including medical evacuation from the Crimea region of Ukraine, for
individuals in the Crimea region of Ukraine.
Sec. 589.520 Certain transactions in support of nongovernmental
organizations' activities in the Crimea region of Ukraine.
Nongovernmental organizations are authorized to export or reexport
services to the Crimea region of Ukraine that would be prohibited by
Sec. 589.206 in support of the following not-for-profit activities:
(a) Activities to support humanitarian projects to meet basic human
needs in the Crimea region of Ukraine, including drought and flood
relief; food, nutrition, and medicine distribution; the provision of
health services; assistance for vulnerable populations, including
individuals with disabilities; and environmental programs;
(b) Activities to support democracy building in the Crimea region
of Ukraine, including activities to support rule of law, citizen
participation, government accountability, universal human rights and
fundamental freedoms, access to information, and civil society
development projects;
(c) Activities to support education in the Crimea region of
Ukraine, including combating illiteracy, increasing access to
education, international exchanges, and assisting education reform
projects;
(d) Activities to support non-commercial development projects
directly benefiting the Crimean people, including preventing infectious
disease and promoting maternal/child health, and clean water
assistance; and
(e) Activities to support environmental protection, including the
preservation and protection of threatened or endangered species and the
remediation of pollution or other environmental damage.
Sec. 589.521 Transactions related to closing a correspondent or
payable-through account.
(a) During the 10-day period beginning on the effective date of the
prohibition in Sec. 589.209 on the opening and the prohibition or
imposition of one or more strict conditions on the maintaining of a
correspondent account or a payable-through account for a foreign
financial institution listed on the List of Foreign Financial
Institutions Subject to Correspondent Account or Payable-Through
Account Sanctions (CAPTA List), U.S. financial institutions that
maintain correspondent accounts or payable-through accounts for the
foreign financial institution are authorized to:
(1) Process only those transactions through the account, or permit
the foreign financial institution to execute only those transactions
through the account, that are for the purpose of, and necessary for,
closing the account; and
(2) Transfer the funds remaining in the correspondent account or
the payable-through account to an account of the foreign financial
institution located outside of the United States and close the
correspondent account or the payable-through account.
(b) A report must be filed with OFAC within 30 days of the closure
of an account, providing full details on the closing of each
correspondent account or payable-through account maintained by a U.S.
financial institution for a foreign financial institution whose name is
added to the CAPTA List. Such report must include complete information
on the closing of the account and on all transactions processed or
executed through the account pursuant to this section, including the
account outside of the United States to which funds remaining in the
account were transferred. The reports, which must reference this
section, are to be submitted to OFAC using one of the following
methods:
(1) Email (preferred method): <a href="/cdn-cgi/l/email-protection#bcf3fafdffeed9ccd3cec8fcc8ced9ddcfc9cec592dbd3ca"><span class="__cf_email__" data-cfemail="b6f9f0f7f5e4d3c6d9c4c2f6c2c4d3d7c5c3c4cf98d1d9c0">[email protected]</span></a>; or
(2) U.S. mail: Attention: Office of Compliance and Enforcement,
Office of Foreign Assets Control, U.S. Department of the Treasury, 1500
Pennsylvania Avenue NW, Freedman's Bank Building, Washington, DC 20220.
(c) Specific licenses may be issued on a case-by-case basis to
authorize transactions outside the scope or time period authorized in
paragraph (a) of this section by a U.S. financial institution with
respect to a correspondent account or a payable-through account
maintained by the U.S. financial institution for a foreign financial
institution whose name is added to the CAPTA List. License applications
should be filed in conformance with Sec. 501.801 of the Reporting,
Procedures and Penalties Regulations, 31 CFR part 501.
(d) Nothing in this section authorizes the opening of a
correspondent account or a payable-through account for a foreign
financial institution whose name appears on the CAPTA List.
Note 1 to Sec. 589.521. This section does not authorize a U.S.
financial institution to
[[Page 26117]]
unblock property or interests in property, or to engage in any
transaction or dealing in property or interests in property, blocked
pursuant to any other part of this chapter in the process of closing
a correspondent account or a payable-through account for a foreign
financial institution whose name has been added to the CAPTA List.
See Sec. 589.101.
Subpart F--Reports
Sec. 589.601 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 and Findings of Violation
Sec. 589.701 Penalties.
(a) Section 206 of the International Emergency Economic Powers Act
(50 U.S.C. 1705) (IEEPA) 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, regulation, or prohibition issued under IEEPA.
(2) IEEPA provides for a maximum civil penalty not to exceed the
greater of $330,947or 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.
(3) A person who willfully commits, willfully attempts to commit,
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,
be imprisoned for not more than 20 years, or both.
(b)(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) Pursuant to 18 U.S.C. 1001, 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;
or 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 other applicable
laws.
Sec. 589.702 Pre-Penalty Notice; settlement.
(a) When required. If OFAC 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, 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
the International Emergency Economic Powers Act (50 U.S.C. 1701 et
seq.) and determines that a civil monetary penalty is warranted, OFAC
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) Response--(1) Right to respond. An alleged violator has the
right to respond to a Pre-Penalty Notice by making a written
presentation to OFAC. 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 30 days as set forth in paragraphs (b)(2)(i) and (ii) of
this section. The failure to submit a response within 30 days 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 OFAC by courier), or dated if sent by
email, on or before the 30th day after the postmark date on the
envelope in which the Pre-Penalty Notice was mailed or date the Pre-
Penalty Notice was emailed. If the Pre-Penalty Notice was personally
delivered by a non-U.S. Postal Service agent authorized by OFAC, 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 OFAC, only upon specific request to OFAC.
(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 (electronic
signature is acceptable), contain information sufficient to indicate
that it is in response to the Pre-Penalty Notice, and include the OFAC
identification number listed on the Pre-Penalty Notice. The response
must be sent to OFAC's Office of Compliance and Enforcement by mail or
courier or email and must be postmarked or date-stamped in accordance
with paragraph (b)(2) of this section.
(c) Settlement. Settlement discussion may be initiated by OFAC, 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 OFAC 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
OFAC prior to a written submission regarding the specific allegations
contained in the Pre-Penalty 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. 589.703 Penalty imposition.
If, after considering any written response to the Pre-Penalty
Notice and any relevant facts, OFAC determines that there was a
violation by the alleged violator named in the Pre-Penalty Notice and
that a civil monetary penalty is appropriate, OFAC 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.
[[Page 26118]]
Sec. 589.704 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 OFAC,
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.
Sec. 589.705 Findings of Violation.
(a) When issued. (1) OFAC may issue an initial Finding of Violation
that identifies a violation if OFAC:
(i) Determines that there has occurred a violation of any provision
of this part, or a violation 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 the International Emergency
Economic Powers Act (50 U.S.C. 1701 et seq.);
(ii) Considers it important to document the occurrence of a
violation; and
(iii) Based on the Guidelines contained in appendix A to part 501
of this chapter, concludes that an administrative response is warranted
but that a civil monetary penalty is not the most appropriate response.
(2) An initial Finding of Violation shall be in writing and may be
issued whether or not another agency has taken any action with respect
to the matter. For additional details concerning issuance of a Finding
of Violation, see appendix A to part 501 of this chapter.
(b) Response--(1) Right to respond. An alleged violator has the
right to contest an initial Finding of Violation by providing a written
response to OFAC.
(2) Deadline for response; default determination. A response to an
initial Finding of Violation must be made within 30 days as set forth
in paragraphs (b)(2)(i) and (ii) of this section. The failure to submit
a response within 30 days shall be deemed to be a waiver of the right
to respond, and the initial Finding of Violation will become final and
will constitute final agency action. The violator has the right to seek
judicial review of that final agency action in Federal district court.
(i) Computation of time for response. A response to an initial
Finding of Violation 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 OFAC by courier), or dated if sent
by email, on or before the 30th day after the postmark date on the
envelope in which the initial Finding of Violation was served or date
the Finding of Violation was sent by email. If the initial Finding of
Violation was personally delivered by a non-U.S. Postal Service agent
authorized by OFAC, 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 OFAC, only upon specific request to OFAC.
(3) Form and method of response. A response to an initial Finding
of Violation need not be in any particular form, but it must be
typewritten and signed by the alleged violator or a representative
thereof (electronic signature is acceptable), contain information
sufficient to indicate that it is in response to the initial Finding of
Violation, and include the OFAC identification number listed on the
initial Finding of Violation. The response must be sent to OFAC's
Office of Compliance and Enforcement by mail or courier or email and
must be postmarked or date-stamped in accordance with paragraph (b)(2)
of this section.
(4) Information that should be included in response. Any response
should set forth in detail why the alleged violator either believes
that a violation of the regulations did not occur and/or why a Finding
of Violation is otherwise unwarranted under the circumstances, with
reference to the General Factors Affecting Administrative Action set
forth in the Guidelines contained in appendix A to part 501 of this
chapter. The response should include all documentary or other evidence
available to the alleged violator that supports the arguments set forth
in the response. OFAC will consider all relevant materials submitted in
the response.
(c) Determination--(1) Determination that a Finding of Violation is
warranted. If, after considering the response, OFAC determines that a
final Finding of Violation should be issued, OFAC will issue a final
Finding of Violation that will inform the violator of its decision. A
final Finding of Violation shall constitute final agency action. The
violator has the right to seek judicial review of that final agency
action in Federal district court.
(2) Determination that a Finding of Violation is not warranted. If,
after considering the response, OFAC determines a Finding of Violation
is not warranted, then OFAC will inform the alleged violator of its
decision not to issue a final Finding of Violation.
Note 1 to paragraph (c)(2). A determination by OFAC that a final
Finding of Violation is not warranted does not preclude OFAC from
pursuing other enforcement actions consistent with the Guidelines
contained in appendix A to part 501 of this chapter.
(d) Representation. A representative of the alleged violator may
act on behalf of the alleged violator, but any oral communication with
OFAC prior to a written submission regarding the specific alleged
violations contained in the initial Finding of Violation must be
preceded by a written letter of representation, unless the initial
Finding of Violation was served upon the alleged violator in care of
the representative.
Subpart H--Procedures
Sec. 589.801 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. 589.802 Delegation of certain authorities of the Secretary of
the Treasury.
Any action that the Secretary of the Treasury is authorized to take
pursuant to Executive Order (E.O.) 13660 of March 6, 2014, E.O. 13661
of March 16, 2014, E.O. 13662 of March 20, 2014, E.O. 13685 of December
19, 2014, E.O. 13849 of September 20, 2018, and any further Executive
orders relating to the national emergency declared in E.O. 13660, and
any action that the Secretary of the Treasury is authorized to take
pursuant to Presidential Memorandum of September 29, 2017: Delegation
of Certain Functions and Authorities under the Countering America's
Adversaries Through Sanctions Act of 2017, the Ukraine Freedom Support
Act of 2014, and the Support for the Sovereignty, Integrity, Democracy,
and Economic Stability of Ukraine Act of 2014, may be taken by the
Director of OFAC or by any other person to whom the Secretary of the
Treasury has delegated authority so to act.
Subpart I--Paperwork Reduction Act
Sec. 589.901 Paperwork Reduction Act notice.
For approval by the Office of Management and Budget (OMB) under
[[Page 26119]]
the Paperwork Reduction Act of 1995 (44 U.S.C. 3507) of information
collections relating to recordkeeping and reporting requirements,
licensing procedures, and other procedures, see Sec. 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.
Andrea M. Gacki,
Director, Office of Foreign Assets Control.
[FR Doc. 2022-09371 Filed 4-29-22; 8:45 am]
BILLING CODE P
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