[Federal Register Volume 60, Number 27 (Thursday, February 9, 1995)]
[Proposed Rules]
[Pages 7737-7742]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-3279]
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DEPARTMENT OF STATE
Bureau of International Narcotics Matters
22 CFR Part 140
[Public Notice 2159]
Prohibition on Assistance to Drug Traffickers
AGENCY: Bureau of International Narcotics Matters, Department of State.
ACTION: Proposed rule.
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SUMMARY: The Bureau of International Narcotics Matters plans to issue
regulations to implement Section 487 of the Foreign Assistance Act of
1961, as amended (22 U.S.C. Sec. 2291f). Section 487(a) directs the
President to take all reasonable steps to ensure that assistance
provided under the Foreign Assistance Act or the Arms Export Control
Act is not provided to or through any individual or entity that the
President knows or has reason to believe: (1) has been convicted of a
violation of, or a conspiracy to violate, any law or regulation of the
United States, a State or the District of Columbia, or a foreign
country relating to narcotic or psychotropic drugs or other controlled
substances; or (2) is or has been an illicit trafficker in any such
controlled substance or is or has been a knowing assistor, abettor,
conspirator, or colluder with others in the illicit trafficking of any
such substance. The law further directs that regulations be issued to
carry out the section and be submitted to Congress before they take
effect. The proposed regulation will be set forth in a new part of the
Code of Federal Regulations, 22 CFR part 140, which will establish a
single governmentwide enforcement mechanism for Section 487. The
proposed regulations seek to achieve rigorous statutory enforcement in
a manner consistent with efficient foreign assistance program
administration. They also seek to ensure protection of the procedural
rights and interests of assistance recipients.
DATES: Comments due: April 10, 1995.
ADDRESSES: Send comments to: Bureau of International Narcotics and Law
Enforcement Affairs, Room 7334, 2201 C Street NW., Washington, DC
20520.
FOR FURTHER INFORMATION CONTACT: William R. Brownfield, Office of
International Narcotics and Law Enforcement Affairs, Department of
State, 202-647-0457, or Jo Brooks, Office of the Legal Adviser,
Department of State, 202-647-7324.
SUPPLEMENTARY INFORMATION: This rule will implement Section 487 of the
Foreign Assistance Act of 1961, as amended (22 U.S.C. Sec. 2291f). The
requirements of Section 487 are described in the Summary, above.
The procedures prescribed by these regulations apply to assistance
under the Foreign Assistance Act of 1961 and the Arms Export Control
Act. The regulations are set up in three Subparts: General (Subpart A,
Secs. 140.1-140.3); Applicability (Subpart B, Sec. 104.4); and
Enforcement (Subpart C, Secs. 140.5-140.14).
The General Subpart (Subpart A) provides a statement of the
regulations' purpose (Sec. 140.1), based upon the language of Section
487 of the Foreign Assistance Act; identifies the authorities for
issuance of the regulations (Sec. 140.2); and defines key terms used in
the regulations (Sec. 140.3). The broad coverage of the regulations is
reflected in the definitions of drug trafficking (Sec. 140.3(b)), money
laundering (Sec. 140.3(c)), and narcotics offense (Sec. 140.3(d)),
which are intended to be comprehensive. As noted in the definition of
drug trafficking, it encompasses drug-related money laundering.
Two of the key terms defined in the regulations are ``covered
country'' (Sec. 140.3(e)) and ``covered assistance'' (Sec. 140.3(f)).
The term ``covered country'' corresponds to those countries listed on
the ``majors list,'' i.e., the list of major illicit drug producing
countries and major drug-transit countries, determined annually by the
President and transmitted to the appropriate Congressional committees
as required by Chapter 8 of Part I of the Foreign Assistance Act. The
term ``covered assistance'' is defined broadly, while excluding
assessed contributions to an international organization and assistance
that by operation of law is not subject to Section 487. The definition
further provides that assistance in amounts less than $100,000 is
excluded unless it pertains to: recipients of scholarships,
fellowships, or participant training; or a covered individual or entity
reasonably suspected of being or having been involved in drug
trafficking. These definitions are intended to ensure rigorous
application of the statutory prohibition on assistance to drug
traffickers, while fostering efficient program administration.
For ease of reference, the term ``covered individual or entity'' is
defined in Sec. 140.4, where it is used, rather than in the definition
section. Likewise, the term ``key individual'' is described in
Sec. 140.6(a)(3), where it is introduced.
The Applicability Subpart (Subpart B) explains the scope of the
regulations. Their applicability is keyed primarily to ``covered
individuals and entities'' that receive or provide direct or first-tier
``covered assistance'' and are located or providing assistance within a
``covered country.'' However, the regulations have been drafted
carefully to ensure they are given their full statutory scope, i.e.,
that they are applied whenever an affected agency has reasonable
grounds to suspect that a proposed recipient individual or entity may
be or may have been involved in drug trafficking or may have been
convicted of a narcotics offense (see Sec. 140.4(c); see also
Secs. 140.3(f)(2), 140.7(a), 140.9(a), and 140.11). They are also
applicable where a government agency providing covered assistance has
specifically designated a recipient beyond the first tier (see
Secs. 140.4(c), 140.7(b)). Additionally, the regulations apply to
individuals who receive a scholarship, fellowship, or participant
training (unless the assistance is provided through a multilateral
institution or international organization and the recipient has not
been designated by the agency providing assistance). Further assurance
that drug traffickers will not receive assistance is provided by the
requirement that where an agency providing covered assistance to a
multilateral institution or international [[Page 7738]] organization
does not designate the assistance recipient, the agency's agreement
with the multilateral institution or international organization shall
stipulate that such entity is to make reasonable efforts to ensure that
the assistance is not diverted in support of drug trafficking
(Sec. 140.7(c)).
The Enforcement Subpart (Subpart C) contains an overview
(Sec. 140.5), which outlines the Subpart's scope. The applicable review
procedures, criteria to be applied in deciding whether to withhold
assistance or take other measures, and procedures concerning violations
identified subsequent to the obligation of funds are set forth in the
Enforcement Subpart. The applicability of these procedures varies
depending on the nature of the proposed recipient. The general
framework is set forth in Sec. 140.6, in the context of covered
assistance to foreign government entities. Variations of that framework
are set forth in separate sections for: multilateral institutions and
international organizations (Sec. 140.7); recipients of scholarships,
fellowships, and participant training (Sec. 140.8); non-governmental
entities (Sec. 140.9); and intermediate credit institutions (140.10).
(Note: In Sec. 140.9 the use of the phrase ``non-governmental entity''
is meant to encompass a broader category of organizations than might be
encompassed by the term ``non-governmental organization'' or its
acronym, ``NGO.'' As explained in Sec. 140.9, it includes not only
private voluntary agencies and educational institutions, but also for-
profit firms and any other non-governmental organization.)
The review procedures set forth in the regulations are applied by
the Country Narcotics Coordinator (as defined in Sec. 140.3(a)), who is
responsible in the first instance for reviewing available information
to determine whether a proposed assistance recipient is to be denied
assistance or whether other measures are to be taken as a result of
Section 487 of the Foreign Assistance Act (see Sec. 140.6(a)). An
agency proposing assistance is responsible for providing the Country
Narcotics Coordinator with the name of each key individual within a
prospective recipient entity who may be expected to control or benefit
from assistance as well as other relevant information that is readily
available (Sec. 140.6(a)(3)).
The regulations provide a two-week period, extendable if necessary
for another two weeks, within which the Country Narcotics Coordinator,
in consultation with the head of the agency proposing assistance or the
agency head's designee, is to make a final determination whether to
provide or withhold assistance or take other measures. Section 140.6(b)
outlines the factors to be considered in determining whether to
withhold assistance or take other measures.
Section 140.6(b)(4) further provides that it is the Assistant
Secretary for International Narcotics Matters (rather than the Country
Narcotics Coordinator), in consultation with affected bureaus and
agencies, who shall make any decision to withhold assistance or take
other measures based on information or allegations that a key
individual who is a senior government official of a foreign government
has been convicted of a narcotics offense or has been engaged in drug
trafficking (Sec. 140.6(b)(4)). Personal involvement at the Assistant
Secretary level is appropriate in such a case because it involves
inherently sensitive foreign policy issues.
The enforcement procedures applicable to recipients of
scholarships, fellowships, and participant training (Sec. 140.8) and
U.S. and foreign non-governmental entities (Sec. 140.9) include a pre-
approval certification process. The regulations specify that false
certification may subject the signatory to U.S. criminal prosecution
under 18 U.S.C. Sec. 1001. (See Secs. 140.8(b), 140.9(c).) Although
this penalty is described in the regulations, it is established
independently by the referenced statute. The identification of a
penalty in the regulations is not meant to limit the application of any
criminal or civil penalty otherwise applicable.
Section 140.10 concerns the procedures applicable to intermediate
credit institutions. Such institutions are to be treated as either
foreign government entities or non-governmental entities, depending on
the nature of the particular institution. Section 140.10 also requires
that agreements with such intermediate credit institutions include a
contract clause concerning a refund procedure applicable to loans
exceeding $1,000 made by any intermediate credit institution.
Section 140.11 clarifies that the enforcement procedures
established by Secs. 140.6-140.10 are not exhaustive, but represent
only the minimum applicable procedures implementing Section 487 of the
Foreign Assistance Act.
The remaining provisions of the regulations, Secs. 140.11-140.14,
establish notification and appeal procedures. Special care has been
taken to ensure that notification will not be done in a manner that
would interfere with any criminal investigation that may be ongoing
(Sec. 140.13(b)). A Country Narcotics Coordinator's decision to
withhold assistance or take other measures may be appealed by the
agency proposing such assistance (Sec. 140.12). In addition, where the
prospective assistance recipient is a U.S. entity, U.S. citizen, or
permanent U.S. resident, a Country Narcotics Coordinator's preliminary
decision to withhold assistance is referred to the Assistant Secretary
of State for International Narcotics Matters for review and action. An
adverse decision affecting a U.S. entity, U.S. citizen, or permanent
U.S. resident may be contested in accordance with applicable agency
regulations regarding governmentwide debarment and suspension
(nonprocurement) and governmentwide requirements for drug-free
workplace (grants).
This amendment involves a foreign affairs function of the United
States. It is exempt from review under Executive Order 12866 but has
been reviewed internally by the Department to ensure consistency with
the purposes thereof. It is also excluded from the procedures of 5
U.S.C. Secs. 553 and 554.
List of Subjects in 22 CFR Part 140
Drug traffic control, Foreign aid.
For the reasons set out in the preamble, 22 CFR subchapter N is
proposed to be amended by adding part 140 to read as follows:
PART 140--PROHIBITION ON ASSISTANCE TO DRUG TRAFFICKERS
Subpart A--General
140.1 Purpose.
140.2 Authorities.
140.3 Definitions.
Subpart B--Applicability
140.4 Applicability.
Subpart C--Enforcement
140.5 Overview.
140.6 Foreign government entities.
140.7 Multilateral institutions and international organizations.
140.8 Recipients of scholarships, fellowships, and participant
training.
140.9 Non-governmental entities.
140.10 Intermediate credit institutions.
140.11 Minimum enforcement procedures.
140.12 Interagency appeal procedures.
140.13 Notification to foreign entities and individuals.
140.14 Notification to and opportunity to contest for U.S. entities
and individuals.
Authority: 22 U.S.C. 2651a.
Subpart A--General
Sec. 140.1 Purpose.
(a) These regulations implement Section 487 of the Foreign
Assistance Act of 1961, as amended (22 U.S.C. Sec. 2291f).
[[Page 7739]]
(b) Section 487(a) directs the President to ``take all reasonable
steps'' to ensure that assistance under the Foreign Assistance Act of
1961 (FAA) and the Arms Export Control Act (AECA) ``is not provided to
or through any individual or entity that the President knows or has
reason to believe'':
(1) has been ``convicted of a violation of, or a conspiracy to
violate, any law or regulation of the United States, a State or the
District of Columbia, or a foreign country relating [to] narcotic or
psychotropic drugs or other controlled substances''; or
(2) ``is or has been an illicit trafficker in any such controlled
substance or is or has been a knowing assistor, abettor, conspirator,
or colluder with others in the illicit trafficking in any such
substance.''
Sec. 140.2 Authorities.
Authority to implement FAA Section 487 was delegated by the
President to the Secretary of State by E.O. 12163, as amended, and
further delegated by the Secretary to the Assistant Secretary for
International Narcotics Matters by Delegation of Authority No. 145,
dated Feb. 4, 1980 (45 FR 11655), as amended.
Sec. 140.3 Definitions.
The following definitions shall apply for purposes of these
regulations:
(a) Country Narcotics Coordinator. The individual assigned by the
chief of mission in each foreign country to coordinate United States
government policies and activities within a country related to
counternarcotics efforts. As determined by the State Department's
Bureau of International Narcotics Matters, these responsibilities may,
as necessary, be performed by another person.
(b) Drug trafficking. Any activity undertaken illicitly to
cultivate, produce, manufacture, distribute, sell, finance or
transport, or otherwise assist, abet, conspire, or collude with others
in illicit activities relating to, narcotic or psychotropic drugs,
precursor chemicals, or other controlled substances, including drug-
related money laundering.
(c) Money laundering. The process whereby proceeds of criminal
activity, are transported, transferred, transformed, converted, or
intermingled with legally acquired funds, for the purpose of concealing
or disguising the true nature, source, disposition, movement, or
ownership of those proceeds. The goal of money laundering is to make
funds derived from or associated with illicit activity appear legally
acquired.
(d) Narcotics offense. A violation of, or a conspiracy to violate,
any law or regulation of the United States, a State or the District of
Columbia, or a foreign country relating to narcotic or psychotropic
drugs or other controlled substances.
(e) Covered country. A country that has been determined by the
President to be either a ``major illicit drug producing'' or ``major
drug-transit'' country under Chapter 8 of Part I of the FAA. The list
of covered countries is maintained by the State Department's Bureau of
International Narcotics matters.
(f) Covered assistance. Any assistance provided by an agency of the
United States government under the FAA or AECA, except that it does not
include:
(1) Assistance that by operation of the law is not subject to FAA
Section 487, including:
(i) Disaster relief and rehabilitation provided under Chapter 9 of
Part I of the FAA; and
(ii) Assistance provided to small farmers when part of a
community-based alternative development program under Part I or Chapter
4 of Part II of the FAA;
(2) Assistance in an amount less than $100,000, except that the
procedures in Sec. 140.8 for recipients of scholarships, fellowships,
and participant training shall apply regardless of amount. However,
assistance shall be deemed covered assistance regardless of amount if
the agency has reasonable grounds to suspect that a covered individual
or entity may be or may have been involved in drug trafficking; or
(3) Assessed contributions to an international organization.
Subpart B--Applicability
Sec. 140.4 Applicability.
(a) Except as otherwise provided herein or as otherwise determined
by the Secretary of State or the Secretary's designee, the procedures
prescribed by these regulations apply to any ``covered individual or
entity,'' i.e., any individual or entity, including any foreign
government entity and any U.S. or foreign non-governmental entity, that
is:
(1) (i) Receiving or providing covered assistance under a direct or
first-tier grant, loan, guarantee, cooperative agreement, contract, or
other direct agreement with an agency of the United States; or
(ii) Receiving covered assistance in the form of a scholarship,
fellowship, or participant training, except as provided in
Sec. 140.7(c); and
(2) Located in or providing assistance within a covered country.
Examples:
(1) Under a $500,000 project grant agreement with the Agency for
International Development providing covered assistance, Government A
enters into a $150,000 contract with Corporation X. Government A is
a covered entity. However, Corporation X is not a covered entity
because the contract is not a direct contract with an agency of the
United States.
(2) Under a $1,000,000 grant from the Department of State
providing covered assistance, Corporation B makes a $120,000
subgrant to University Y for the training of 12 individuals.
Corporation B is a covered entity and the 12 individuals receiving
participant training are covered individuals. University Y is not a
covered entity.
(3) University C receives a $1 million regional assistance
research project grant from the Agency for International
Development, but only $80,000 is provided for research in covered
countries. University C is not a covered entity. (However, if
$100,000 or more were provided for research in a covered country or
countries, then University C would be a covered entity.)
(b) For purposes of Sec. 140.4(a), where a government agency
providing covered assistance specifically designates a recipient of
such assistance, the recipient shall be deemed a covered individual or
entity.
(c) Unless otherwise determined by the Secretary of State or the
Secretary's designee, these regulations do not apply to assistance to
or through individuals and entities in non-covered countries. However,
an affected agency shall apply these regulations if the agency has
reasonable grounds to suspect that an individual or entity located in
or providing covered assistance in a non-covered country may be or may
have been involved in drug trafficking or may have been convicted of a
narcotics offense.
Subpart C--Enforcement
Sec. 140.5 Overview.
This subpart sets forth the enforcement procedures applicable
pursuant to Sec. 140.4 to the various types of covered individuals and
entities with respect to covered assistance. Section 140.6 establishes
the procedures applicable to foreign government entities, including any
such entity that is covered by the definition of a ``foreign state''
set forth in the Foreign Sovereign Immunities Act, 28 U.S.C. Sec.
1603(a). Section 140.7 establishes the procedures applicable to
multilateral institutions and international organizations. Section
140.8 establishes the procedures applicable to recipients of
scholarships and fellowships and participant trainees. Section 140.9
establishes the procedures applicable to non-governmental entities.
Section 140.10 [[Page 7740]] sets forth additional procedures
applicable to intermediate credit institutions. Sections 140.11 through
140.14 contain general provisions related to the enforcement process.
Sec. 140.6 Foreign government entities.
(a) Review procedures. (1) The Country Narcotics Coordinator shall
be responsible for establishing a system for reviewing available
information regarding narcotics offense convictions and drug
trafficking of proposed assistance recipients under this section and,
except under the circumstances described in Sec. 140.6(b)(4),
determining whether a proposed recipient is to be denied such
assistance or other measures are to be taken as a result of the
application of FAA Section 487.
(2) Prior to providing assistance to or through a proposed
recipient, the head of the agency providing the assistance, or the
agency head's designee, shall provide the Country Narcotics Coordinator
in the country in which the proposed recipient is located or, as
appropriate, where assistance is to be provided, the information
specified in Sec. 140.6(a)(3) in order that the Country Narcotics
Coordinator may carry out his or her responsibilities under these
regulations.
(3) In each case, the agency proposing the assistance shall provide
to the Country Narcotics Coordinator the name of each key individual
within the entity who may be expected to control or benefit from
assistance as well as other relevant identifying information (e.g.,
address, date of birth) that is readily available. If a question arises
concerning who should be included within the group of key individuals
of an entity, the head of the agency providing the assistance, or the
agency head's designee, shall consult with the Country Narcotics
Coordinator, and the final decision shall be made by the Country
Narcotics Coordinator.
(4) Within fourteen calendar days after receiving the name of a
proposed recipient and other relevant information, the Country
Narcotics Coordinator shall determine whether any available information
may warrant withholding assistance or taking other measures under these
regulations, based on the criteria set forth in Sec. 140.6(b). If,
during that period, the Country Narcotics Coordinator determines that
available information does not so indicate, he or she shall notify the
proposing agency that the assistance may be provided to the proposed
recipient.
(5) If, during the initial fourteen-day period, the Country
Narcotics Coordinator determines that information exists that may
warrant withholding assistance or taking other measures under these
regulations, then the Country Narcotics Coordinator shall have another
fourteen calendar days to make a final determination whether to provide
or withhold the assistance or take such other measures.
(b) Criteria to be applied. (1) A decision to withhold assistance
or take other measures shall be based on knowledge or a reasonable
belief that the proposed recipient individual or entity, or one or more
key individuals within a proposed recipient entity, during the past ten
years, has:
(i) Been convicted of a narcotics offense as defined in these
regulations; or
(ii) Been engaged in drug trafficking, regardless of whether there
has been a conviction.
(2) Factors that may support a decision to withhold assistance or
take other measures based on the belief that the proposed recipient has
been engaged in drug trafficking during the past ten years when there
has been no conviction of such an offense may include, but are not
limited to, the following:
(i) Admission of participation in such activities;
(ii) A long record of arrests for drug-trafficking with an
unexplained failure to prosecute by the local government;
(iii) Several reliable and corroborative reports.
(3) If the Country Narcotics Coordinator determines that a key
individual (as described in Sec. 140.6(a)(3)) within a proposed
recipient entity has been convicted of a narcotics offense or has been
engaged in drug trafficking under the terms of these regulations, the
Country Narcotics Coordinator must then decide whether withholding
assistance or taking other measures in connection with the entity
itself is warranted. This decision shall be made in consultation with
the head of the agency proposing the assistance, or the agency head's
designee. In making this determination, the Country Narcotics
Coordinator shall take into account:
(i) The extent to which such individual would have control over
assistance received;
(ii) The extent to which such individual could benefit personally
from the assistance;
(iii) The degree to which financial or other resources of the
entity itself have been used to support drug trafficking; and
(iv) Whether such individual has acted alone or in collaboration
with others associated with the entity.
(4) A decision to withhold assistance or to take other measures
based on information or allegations that a key individual who is a
senior government official of the host nation has been convicted of a
narcotics offense or has been engaged in drug trafficking shall be made
by the Assistant Secretary for International Narcotics Matters in
consultation with the affected bureaus and other interested agencies.
For purposes of these regulations, ``senior government official''
includes host nation officials at or above the vice minister level,
heads of host nation law enforcement agencies, and general or flag
officers of the host nation armed forces. In making the decision
whether to withhold assistance or take other measures because of
information or allegations that a senior government official of the
host nation has engaged in drug trafficking, the criteria set forth in
Secs. 140.6(b)(2) and (3) shall apply.
(c) Violations identified subsequent to obligation. The foregoing
procedures require a review before funds are obligated. If, however,
subsequent to an obligation of funds an assistance recipient is found
to have been convicted of a narcotics offense or to have been engaged
in drug trafficking (e.g., the head of a recipient entity changes
during the course of an activity and the new head is found to have been
engaged in drug trafficking), appropriate action should be taken,
including, if necessary, termination of the assistance. Agreements
shall be written to permit termination of assistance in such
circumstances.
Sec. 140.7 Multilateral institutions and international organizations.
Assistance provided to or through multilateral institutions or
international organizations is subject to these regulations as follows:
(a) Where the government agency providing assistance has reasonable
grounds to suspect that a recipient multilateral institution or
international organization may be or may have been involved in drug
trafficking, the agency shall apply the provisions of Sec. 140.6.
(b) Where the government agency providing assistance designates the
recipient of assistance from the multilateral institution or
international organization and the designated recipient is a covered
individual or entity, the agency shall apply the provisions of these
regulations that would apply if the assistance were provided directly
to the designated recipient.
(c) Where the government agency providing assistance does not
designate the recipient of assistance from the
[[Page 7741]] multilateral institution or international organization,
these regulations do not apply to such recipients of assistance, except
that the agency's agreement with the multilateral institution or
international organization shall stipulate that such entity is to make
reasonable efforts to ensure that the assistance is not diverted in
support of drug trafficking.
Example:
The State Department provides $600,000 to the United Nations for
the United Nations Drug Control Program, specifically designating
that Government D receive $150,000 and Corporation E receive $60,000
for programs in a covered country. Individuals who will receive
training are not specifically designated by the State Department.
The United Nations is a covered entity based on Sec. 140.4(a)(1)(i);
Government D is a covered entity based on Secs. 140.4(b) and
140.7(b); Corporation E is not a covered entity under Secs. 140.4(b)
and 140.7(b) because it has been designated to receive less than
$100,000 in assistance. Participant trainees are not covered
individuals because they fall under the exception contained in
Sec. 140.7(c) (see also Sec. 140.4(a)(1)(ii)).
Sec. 140.8 Recipients of scholarships, fellowships, and participant
training.
(a) Procedures. Individuals who are located in a covered country
and who are proposed recipients of scholarships, fellowships, or
participant training are subject to the review procedures, criteria,
and procedures concerning violations identified subsequent to
obligation set forth in Sec. 140.6. Such review of recipient
individuals is in addition to the provisions applicable to the entity
providing the assistance.
(b) Certifications. Individuals who are located in a covered
country and who are proposed recipients of scholarships, fellowships,
or participant training shall also be required to certify prior to
approval that, within the last ten years, they have not been convicted
of a narcotics offense, have not been engaged in drug trafficking, and
have not knowingly assisted, abetted, conspired, or colluded with
others in drug trafficking. False certification may subject the
assistance recipient to U.S. criminal prosecution under 18 U.S.C. Sec.
1001 and to withdrawal of assistance under these regulations.
Sec. 140.9 Non-governmental entities.
(a) Procedures. Section 140.9 applies to private voluntary
agencies, educational institutions, for-profit firms, or any other non-
governmental entity. A non-governmental entity that is not organized
under the laws of the United States shall be subject to the review
procedures and criteria set forth in Secs. 140.6(a) and (b). A non-
governmental entity that is organized under the laws of the United
States shall not be subject to such review procedures and criteria.
However, an affected agency shall follow such procedures if the agency
has reasonable grounds to suspect that a proposed U.S. non-governmental
entity or a key individual of such entity may be or may have been
involved in drug trafficking or may have been convicted, within the
last ten years, of a narcotics offense. Procedures set forth in
Sec. 140.6(c) concerning violations identified subsequent to obligation
shall apply to both U.S. and foreign non-governmental entities.
Examples:
(1) A $100,000 grant to a covered U.S. university for
participant training would not be subject to the review procedures
and criteria in Secs. 140.6(a) and (b). However, a proposed
participant would be subject to the review procedures and criteria
in Secs. 140.6 (a) and (b) as part of the agency's approval process.
(2) A $100,000 grant to a covered foreign private voluntary
agency for participant training would be subject to the review
procedures and criteria in Secs. 140.6(a) and (b). In addition, each
proposed participant would be subject to the review procedures and
criteria in Secs. 140.6(a) and (b) as part of the agency's approval
process.
(b) Refunds. A clause shall be included in grants, contracts, and
other agreements with both U.S. and foreign non-governmental entities
requiring that assistance provided to or through such an entity that is
found to have been engaged in drug trafficking, as defined in these
regulations, shall be subject to refund.
(c) Certifications. Prior to approval of covered assistance, key
individuals (as described in Sec. 140.6(a)(3)) in both U.S. and foreign
non-governmental entities shall be required to certify that, within the
last ten years, they have not been convicted of a narcotics offense,
have not been engaged in drug trafficking and have not knowingly
assisted, abetted, conspired, or colluded with others in drug
trafficking. False certification may subject the signatory to U.S.
criminal prosecution under 18 U.S.C. Sec. 1001.
Sec. 140.10 Intermediate credit institutions.
(a) Treatment as Non-Governmental Entity or as a Foreign Government
Entity. Intermediate credit institutions (``ICIs'') shall be subject to
either the procedures applicable to foreign government entities or
those applicable to non-governmental entities, depending on the nature
of the specific entity. The Assistant Secretary for International
Narcotics Matters or the Assistant Secretary's designee, in
consultation with the head of the agency proposing the assistance or
the agency head's designee, shall determine (consistent with the
definition of ``foreign state'' set forth in the Foreign Sovereign
Immunities Act, 28 U.S.C. Sec. 1603(a) and made applicable by
Sec. 140.5) whether the ICI will be treated as a non-governmental
entity or a foreign government entity.
(b) Refunds. In addition to measures required as a consequence of
an ICI's treatment as a non-governmental entity or a foreign government
entity, a clause shall be included in agreements with all ICIs
requiring that any loan greater than $1,000 provided to an individual
or entity found to have been convicted of a narcotics offense or
engaged in drug trafficking, as defined in these regulations, shall be
subject to refund or recall.
Sec. 140.11 Minimum enforcement procedures.
Sections 140.6 through 140.10 represent the minimum procedures that
each agency is required to apply in order to implement FAA Section 487.
Under individual circumstances, however, additional measures may be
appropriate. In those cases, agencies are encouraged to take additional
steps, as necessary, to ensure that the statutory restrictions are
enforced.
Sec. 140.12 Interagency appeal procedures.
If the agency proposing the assistance disagrees with a
determination by the Country Narcotics Coordinator to withhold
assistance or take other measures, the head of the agency, or the
agency head's designee, may request that the determination be reviewed
by the Assistant Secretary of State for International Narcotics Matters
in coordination with other affected bureaus and agencies. The
assistance shall continue to be withheld pending resolution of the
appeal.
Sec. 140.13 Notification to foreign entities and individuals.
(a) Unless otherwise determined under Sec. 140.13(b), if a
determination has been made that assistance to a foreign entity or
individual is to be withheld, suspended, or terminated under these
regulations, the agency administering such assistance shall so inform
the affected entity or individual. Except as the agency administering
such assistance and the Country Narcotics Coordinator may otherwise
determine, the entity or individual shall be notified solely of the
statutory basis for withholding assistance.
(b) Before such notification, the Country Narcotics Coordinator
shall be responsible for determining that notification would not
interfere with an on-going criminal investigation. If an
[[Page 7742]] investigation is underway, the Country Narcotics
Coordinator, in consultation with the investigating agency, shall
determine whether notification is appropriate or whether other action
should be taken.
Sec. 140.14 Notification to and opportunity to contest for U.S.
entities and individuals.
(a) If the Country Narcotics Coordinator makes a preliminary
decision that evidence exists to justify withholding assistance to a
U.S. entity, U.S. citizen, or permanent U.S. resident, the matter shall
be referred immediately to the Assistant Secretary of State for
International Narcotics Matters for appropriate action, to be taken in
coordination with the agency proposing the assistance.
(b) If a determination has been made that assistance is to be
withheld, suspended, or terminated under these regulations, the
Assistant Secretary of State for International Narcotics Matters, or
the Assistant Secretary's designee, shall notify the affected U.S.
entity, U.S. citizen, or permanent U.S. resident and provide such
entity or individual with an opportunity to contest the action in
accordance with the provisions of applicable agency regulations
regarding governmentwide debarment and suspension (nonprocurement) and
governmentwide requirements for drug-free workplace (grants) (for
example, regulations set forth in 22 CFR part 137 (State Department) or
22 CFR part 208 (Agency for International Development)).
Dated: February 1, 1995.
Robert S. Gelbard,
Assistant Secretary for International Narcotics Matters.
[FR Doc. 95-3279 Filed 2-8-95; 8:45 am]
BILLING CODE 4710-17-P
