[Federal Register Volume 63, Number 98 (Thursday, May 21, 1998)]
[Rules and Regulations]
[Pages 27846-27852]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-13477]
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DEPARTMENT OF THE TREASURY
Office of Foreign Assets Control
31 CFR Part 537
Burmese Sanctions Regulations
AGENCY: Office of Foreign Assets Control, Treasury.
ACTION: Final rule.
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SUMMARY: The Office of Foreign Assets Control of the U.S. Department of
the Treasury is issuing the Burmese Sanctions Regulations to implement
Executive Order 13047 of May 20, 1997, ``Prohibiting New Investment in
Burma.''
EFFECTIVE DATE: May 21, 1998.
FOR FURTHER INFORMATION CONTACT: Steven I. Pinter, Chief of Licensing,
tel.: 202/622-2480, or William B. Hoffman, Chief Counsel, tel.: 202/
622-2410, Office of Foreign Assets Control, Department of the Treasury,
Washington, DC 20220.
SUPPLEMENTARY INFORMATION:
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(192.239.92.205). Additional information concerning the programs of the
Office of Foreign Assets Control is available for downloading from the
Office's Internet Home Page: http://www.ustreas.gov/treasury/services/
fac/fac.html, or in fax form through the Office's 24-hour fax-on-demand
service: call 202/622-0077 using a fax machine, fax modem, or (within
the United States) a touch-tone telephone.
Background
On May 20, 1997, the President issued Executive Order 13047 (the
``Order''), effective at 12:01 a.m. EDT on May 21, 1997, certifying to
Congress under section 570(b) of the Foreign Operations, Export
Financing, and Related Programs Appropriations Act, 1997, (Public Law
104-208) (the ``Act'') that the Government of Burma has committed
large-scale repression of the Democratic opposition in Burma after
September 30, 1996, thereby invoking the prohibition on new investment
in Burma by U.S. persons, contained in that section. The President also
declared a national emergency to deal with the threat posed to the
national security and foreign policy of the United States by the
actions and policies of the Government of Burma, invoking the
authority, inter alia, of the International Emergency Economic Powers
Act (50 U.S.C. 1701-1706). The Order authorizes the Secretary of the
Treasury, in consultation with the Secretary of State, to take such
actions, including the promulgation of rules and regulations, as may be
necessary to carry out the purposes of the Order. In implementation of
the Order, the Treasury Department is issuing the Burmese Sanctions
Regulations, 31 CFR part 537 (the ``Regulations'').
Section 537.201 of the Regulations implements section 1 of the
Order, and prohibits new investment in Burma by U.S. persons. The term
new investment, defined in section 4(d) of the Order, means any of the
following activities, if such an activity is undertaken pursuant to an
agreement, or pursuant to the exercise of rights under such an
agreement, that is entered into with the Government of Burma or a
nongovernmental entity in Burma on or after May 21, 1997:
(1) the entry into a contract that includes the economic
development of resources located in Burma;
(2) the entry into a contract providing for the general supervision
and guarantee of another person's performance of a contract that
includes the economic development of resources located in Burma;
(3) the purchase of a share of ownership, including an equity
interest, in the economic development of resources located in Burma; or
(4) the entry into a contract providing for the participation in
royalties, earnings, or profits in the economic development of
resources located in Burma, without regard to the form of the
participation.
Section 537.202 of the Regulations implements section 2(a) of the
Order and prohibits any approval or other facilitation by a United
States person, wherever located, of a transaction by a foreign person
where the transaction would constitute prohibited new investment in
Burma if engaged in by a United States person or within the United
States.
Section 537.203 of the Regulations implements section 2(b) of the
Order and prohibits any transaction by a U.S. person or within the
United States that evades or avoids, or that has the purpose of evading
or avoiding, or attempts to violate, any of the prohibitions set forth
in the Order.
The prohibitions contained in these sections are subject to the
exemption contained in section 3 of the Order, implemented in
Sec. 537.204 of the Regulations, which excludes from the new investment
and facilitation prohibitions the entry into or performance or
financing of a contract to sell or purchase goods, services, or
technology. This exemption, however, does not apply where the entry
into such a contract on or after the effective date of the Order is for
the general supervision and guarantee of another person's performance
of a contract for the economic development of resources located in
Burma; or where such
[[Page 27847]]
contract provides for payment, in whole or in part, in: (1) shares of
ownership, including an equity interest, in the economic development of
resources located in Burma; or (2) participation in royalties, earnings
or profits in the economic development of resources located in Burma.
Section 537.301 indicates that the term economic development of
resources located in Burma shall not be construed to include not-for-
profit educational, health, or other humanitarian programs or
activities. See Sec. 537.301.
Transactions otherwise prohibited under Sec. 537.201 may not be
authorized unless the President, or the President's duly authorized
designee, exercises waiver authority provided in section 570(e) of the
Act, upon a determination and certification to Congress that
application of the waived sanction would be contrary to the national
security interests of the United States. Transactions otherwise
prohibited under Secs. 537.202 and 537.203 but found to be consistent
with U.S. policy may be authorized by a general license contained in
subpart E of this part or by a specific license issued pursuant to the
procedures described in subpart C of 31 CFR part 501. Civil and
criminal penalties for violation of the Regulations are described in
subpart G.
Since the Regulations involve a foreign affairs function, the
provisions of Executive Order 12866 and the Administrative Procedure
Act (5 U.S.C. 553)(the ``APA'') 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
As authorized in the APA, the Regulations are being issued without
prior notice and public comment procedure. The collections of
information related to the Regulations are contained in 31 CFR part 501
(the ``Reporting and Procedures 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
(``OMB'') under control number 1505-0164. An adjustment to the approved
burden hours to reflect the additional burden imposed in administering
the Regulations has been filed with OMB. 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 537
Administrative practice and procedure, Burma, Penalties, New
investment, Reporting and recordkeeping requirements.
For the reasons set forth in the preamble, 31 CFR part 537 is added
to read as follows:
PART 537--BURMESE SANCTIONS REGULATIONS
Subpart A--Relation of this Part to Other Laws and Regulations
Sec.
537.101 Relation of this part to other laws and regulations.
Subpart B--Prohibitions
537.201 Prohibited new investment by U.S. persons.
537.202 Prohibited approval or other facilitation by a U.S. person
of a foreign person's investment.
537.203 Evasions; attempts; conspiracies.
537.204 Exempt transactions.
Subpart C--General Definitions
537.301 Economic development of resources located in Burma.
537.302 Effective date.
537.303 Entity.
537.304 Foreign person.
537.305 General license.
537.306 Government of Burma.
537.307 License.
537.308 New investment.
537.309 Nongovernmental entity in Burma.
537.310 Person.
537.311 Resources located in Burma.
537.312 Specific license.
537.313 United States.
537.314 United States person; U.S. person.
Subpart D--Interpretations
537.401 Reference to amended sections.
537.402 Effect of amendment.
537.403 Economic development of resources located in Burma.
537.404 Purchase of shares in economic development projects in
Burma.
537.405 Investment in entities involved in economic development
projects in Burma.
537.406 General supervision and guarantee.
537.407 Activities under pre-May 21, 1997 agreements.
537.408 Sale or purchase of goods, services or technology.
537.409 Approval or other facilitation of a foreign person's
investment.
Subpart E--Licenses, Authorizations and Statements of Licensing Policy
537.501 General and specific licensing procedures.
537.502 Effect of license or authorization.
537.503 Exclusion from licenses and authorizations.
537.504 Divestiture of U.S. person's equity investment in Burma.
Subpart F--Reports
537.601 Recordkeeping and reporting requirements.
Subpart G--Penalties
537.701 Penalties.
537.702 Prepenalty notice.
537.703 Response to prepenalty notice; informal settlement.
537.704 Penalty imposition or withdrawal.
537.705 Administrative collection action; referral to United States
Department of Justice.
Subpart H--Procedures
537.801 Procedures.
537.802 Delegation by the Secretary of the Treasury.
Subpart I--Paperwork Reduction Act
537.901 Paperwork Reduction Act notice.
Authority: 3 U.S.C. 301; 31 U.S.C. 321(b); 50 U.S.C. 1601-1651,
1701-1706; sec 570, Pub. L. 104-208, 110 stat. 3009-166; E.O. 13047,
61 FR 28301, 3 CFR, Comp., p. 202.
Subpart A--Relation of This Part to Other Laws and Regulations
Sec. 537.101 Relation of this part to other laws and regulations.
(a) This part is separate from, and independent of, the other parts
of this chapter. Differing foreign policy and national security
contexts 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.
(b) 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. 537.201 Prohibited new investment by U.S. persons.
Except to the extent provided in regulations, orders, directives,
or licenses that may by issued in conformity with section 570 of the
Foreign Operations, Export Financing, and Related Programs
Appropriations Act, 1997 (Public Law 104-208)(the ``Act''), new
investment in Burma by United States persons is prohibited.
Note to Sec. 537.201: Section 570 of the Act provides that the
prohibition contained in this section may be waived, temporarily or
permanently, by the President if he determines and certifies to
Congress that the application of this sanction would be contrary to
the national interests of the United States. Licenses are thus not
available for purposes of authorizing transactions prohibited under
this section in the absence
[[Page 27848]]
of such a waiver determination and certification to Congress.
Sec. 537.202 Prohibited approval or other facilitation by a U.S.
person of a foreign person's investment.
Except to the extent provided in regulations, orders, directives,
or licenses that may be issued pursuant to this part, any approval or
other facilitation by a United States person, wherever located, of a
transaction by a foreign person where the transaction would constitute
prohibited new investment in Burma under this part if engaged in by a
United States person or within the United States is prohibited.
Sec. 537.203 Evasions; attempts; conspiracies.
Except to the extent provided in regulations, orders, directives,
or licenses that may be issued pursuant to this part, any transaction
by a United States person or within the United States that evades or
avoids, or has the purpose of evading or avoiding, or attempts to
violate, any of the prohibitions set forth in this part is prohibited.
Sec. 537.204 Exempt transactions.
Nothing in this part shall be construed to prohibit the entry into,
performance of, or financing of a contract to sell or purchase goods,
services, or technology, except:
(a) Where the entry into such a contract on or after the effective
date is for the general supervision and guarantee of another person's
performance of a contract for the economic development of resources
located in Burma; or
(b) Where such contract provides for payment, in whole or in part,
in:
(1) Shares of ownership, including an equity interest, in the
economic development of resources located in Burma; or
(2) Participation in royalties, earnings, or profits in the
economic development of resources located in Burma.
Note to Sec. 537.204: The term economic development of resources
located in Burma is defined in Sec. 537.301 to exclude not-for-
profit educational, health or other humanitarian programs or
activities.
Subpart C--General Definitions
Sec. 537.301 Economic development of resources located in Burma.
The term economic development of resources located in Burma shall
not be construed to include not-for-profit educational, health, or
other humanitarian programs or activities.
Sec. 537.302 Effective date.
The term effective date refers to the effective date of the
applicable prohibitions and directives contained in this part which is
12:01 a.m. EDT, May 21, 1997.
Sec. 537.303 Entity.
The term entity means a partnership, association, trust, joint
venture, corporation, or other organization.
Sec. 537.304 Foreign person.
The term foreign person means any citizen or national of a foreign
state or any entity not organized under the laws of the United States.
Sec. 537.305 General license.
The term general license means any license or authorization the
terms of which are set forth in this part.
Sec. 537.306 Government of Burma.
The term Government of Burma includes:
(a) The state and the Government of Burma, as well as any political
subdivision, agency, or instrumentality thereof;
(b) Any entity owned or controlled directly or indirectly by the
foregoing.
Sec. 537.307 License.
Except as otherwise specified, the term license means any license
or authorization contained in this part, or issued pursuant to the
authority of this part under procedures set forth in this part or in
subpart C of part 501 of this chapter.
Sec. 537.308 New investment.
The term new investment means any of the following activities, if
such an activity is undertaken pursuant to an agreement, or pursuant to
the exercise of rights under such an agreement, that is entered into
with the Government of Burma or a nongovernmental entity in Burma on or
after the effective date:
(a) The entry into a contract that includes the economic
development of resources located in Burma;
(b) The entry into a contract providing for the general supervision
and guarantee of another person's performance of a contract that
includes the economic development of resources located in Burma;
(c) The purchase of a share of ownership, including an equity
interest, in the economic development of resources located in Burma; or
(d) The entry into a contract providing for the participation in
royalties, earnings, or profits in the economic development of
resources located in Burma, without regard to the form of the
participation.
Sec. 537.309 Nongovernmental entity in Burma.
The term nongovernmental entity in Burma means a partnership,
association, trust, joint venture, corporation, or other organization,
wheresoever organized, that is located in Burma or exists for the
exclusive or predominant purpose of engaging in the economic
development of resources located in Burma or derives its income
predominantly from such economic development, and is not the Government
of Burma.
Sec. 537.310 Person.
The term person means an individual or entity.
Sec. 537.311 Resources located in Burma.
The term resources located in Burma means any resources, including
natural, agricultural, commercial, financial, industrial and human
resources, located within the territory of Burma, including the
territorial sea, or located within the exclusive economic zone or
continental shelf of Burma.
Sec. 537.312 Specific license.
The term specific license means any license or authorization not
set forth in this part but issued pursuant to the authority of this
part.
Sec. 537.313 United States.
The term United States means the United States, its territories and
possessions, and all areas under the jurisdiction or authority thereof.
Sec. 537.314 United States person; U.S. person.
The term United States person or U.S. person means any United
States citizen, permanent resident alien, juridical person organized
under the laws of the United States (including foreign branches), or
any person in the United States.
Subpart D--Interpretations
Sec. 537.401 Reference to amended sections.
Except as otherwise specified, reference to any section of this
part or to any regulation, ruling, order, instruction, direction, or
license issued pursuant to this part shall be deemed to refer to the
same as currently amended.
Sec. 537.402 Effect of amendment.
Any amendment, modification, or revocation of any section of this
part or of any order, regulation, ruling, instruction, or license
issued by or under the direction of the Director of the Office of
Foreign Assets Control shall not, unless otherwise specifically
provided, be deemed to affect any act done or omitted to be done, or
any civil
[[Page 27849]]
or criminal suit or 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 shall continue and may be enforced as if such amendment,
modification, or revocation had not been made.
Sec. 537.403 Economic development of resources located in Burma.
The term economic development of resources located in Burma refers
to activities pursuant to a contract the subject of which includes
responsibility for the development or exploitation of resources located
in Burma, including making or attempting to make those resources
accessible or available for exploitation or economic use. Examples
include contracts conferring rights to explore for, develop, extract,
or refine petroleum, natural gas, or minerals in the ground in Burma;
contracts to take over a mining operation in Burma; acquire a forest or
agricultural area and exploit the timber or other crops; or acquire
land and construct and run a hotel or factory on it. The term economic
development of resources located in Burma is defined in Sec. 537.301
specifically to exclude contracts for not-for-profit educational,
health or other humanitarian programs or activities. See also
Sec. 537.204 for the exception that applies to the entry into,
performance of, or financing of a contract to sell or purchase goods,
services or technology.
Sec. 537.404 Purchase of shares in economic development projects in
Burma.
The purchase of shares, including an equity interest, in the
economic development of resources located in Burma, is prohibited when
those shares are purchased after the effective date directly or
indirectly from the Government of Burma or a nongovernmental entity in
Burma, unless purchased pursuant to an agreement entered into prior to
May 21, 1997. U.S. persons may purchase debt instruments issued by the
Government of Burma or a nongovernmental entity in Burma, directly or
indirectly, provided that such instruments are not convertible into
equity, and do not provide for participation, including as collateral
or security, in royalties, earnings, or profits in the economic
development of resources located in Burma.
Sec. 537.405 Investments in entities involved in economic development
projects in Burma.
(a) The purchase of shares in a third-country company that is
engaged in the economic development of resources located in Burma is
prohibited by Sec. 537.201 where the company's profits are
predominantly derived from the company's economic development of
resources located in Burma.
(b) If a U.S. person holds shares in an entity which subsequently
engages exclusively or predominantly in the economic development of
resources located in Burma or subsequently derives its income
exclusively or predominantly from such economic development, the United
States person is not required to relinquish its shares, but may not
purchase additional shares. Divestment of the shares in such an entity
to a foreign person -- constituting the facilitation of that foreign
person's investment in Burma -- is authorized under general license
pursuant to Sec. 537.504.
Sec. 537.406 General supervision and guarantee.
Section 537.201 prohibits the entry by a U.S. person into a
contract providing for the general supervision and guarantee of another
person's performance of a contract that includes the economic
development of resources located in Burma, if the U.S. person's
contract is entered into on or after the effective date, unless
undertaken pursuant to, or in exercise of rights under, a pre-effective
date agreement. For the purposes of Sec. 537.201, only the entry into
contracts for supervision and guarantee at the top level of project
management, such as entry into a contract with a development project's
sponsor or owner to become a prime contractor or general manager for a
development project, will be considered new investment in Burma. By
contrast, subcontracts to provide goods, services, or technology to a
prime contractor or general manager of a development project are exempt
from the prohibitions of this part pursuant to Sec. 537.204 unless:
(a) The functional scope of the subcontractor's obligations is
substantially similar to that of a prime contractor's or general
manager's obligations; or
(b) The consideration for such subcontracts includes a share of
ownership in, or participation in the royalties, earnings or profits
of, the economic development of resources located in Burma.
Sec. 537.407 Activities under pre-May 21, 1997 agreements.
(a) Activities undertaken by a U.S. person pursuant to an agreement
entered into prior to May 21, 1997, between the U.S. person and the
Government of Burma or a nongovernmental entity in Burma are not
prohibited new investments, as defined in Sec. 537.308.
(b) A U.S. person who is a party to a pre-effective date agreement
for the development of economic resources located in Burma may enter
into subsequent agreements with foreign persons where such agreements
are pursuant to, or in exercise of rights under, the pre-effective date
agreement. The facilitation of foreign persons' investment in Burma
under these circumstances is authorized pursuant to the general license
contained in Sec. 537.504.
(c) A U.S. person may not enter into a contract for the economic
development of resources located in Burma after May 21, 1997, if
pursuant to, or in exercise of rights under, a pre-effective date
agreement, unless the contractual arrangement is specifically
contemplated in the pre-effective date agreement.
(d) The exercise of rights under pre-effective date agreements may
include the exercise of options to extend the contract, depending on
such factors as the degree of specificity with which the option to
extend is described in the pre-effective date agreement, and the degree
to which the party wishing to renew can enforce its decision to
exercise the option.
Sec. 537.408 Sale or purchase of goods, services or technology.
(a) Section 537.204 exempts from any prohibition under this part
the entry into, performance of, or financing of a contract to sell or
purchase goods, services, or technology, except:
(1) Where the entry into a contract on or after the effective date
is for the general supervision and guarantee of another person's
performance of a contract for the economic development of resources
located in Burma; or
(2) Where such contract provides for payment, in whole or in part,
in:
(i) Shares of ownership, including an equity interest, in the
economic development of resources located in Burma; or
(ii) Participation in royalties, earnings, or profits in the
economic development of resources located in Burma.
(b) Examples: The following examples are based upon the assumption
that neither Sec. 537.204(a) nor Sec. 537.204(b) applies.
(1) A U.S. person may market goods or services in Burma through a
sales representative or sales agent, or through a U.S. person or
subsidiary established and operating in Burma before May 21, 1997, or
through any established foreign (including Burmese) distributorship.
[[Page 27850]]
The U.S. person may not, however, establish and operate a new business,
branch, office or showroom in Burma to market such goods or services or
facilitate the establishment of a new foreign entity to do so. This
would constitute the development of a commercial resource.
(2) A U.S. person may rent, lease or purchase space in existing
buildings in connection with the continued operation of a business in
operation prior to the effective date. It may change locations, modify
and renovate existing space and upgrade machinery or equipment. Unless
pursuant to a pre-effective date agreement or the exercise of specific
rights under such agreement, however, the U.S. person may not expand
its business operations by opening additional stores, branches, offices
or showrooms beyond the number that were in existence immediately prior
to May 21, 1997. The U.S. person may not construct a new commercial
building to house its business as this would constitute the economic
development of land and commercial resources in Burma.
(3) A U.S. person involved in exempt activities may hire and train
Burmese employees to carry out such activities. The employment of
personnel in Burma under these circumstances is considered the purchase
of employment services which is exempt from prohibition under
Sec. 537.204. Any training incidental to the performance of the
employee's services is likewise exempt. For example, a U.S. person
engaged in the sale of copy machines may hire and train a Burmese
employee to carry out activities pursuant to such sales, including
office support personnel, personnel to provide after-sale service and
maintenance in accordance with the terms of a purchase or lease
agreement, sales representatives and supervisory personnel. A U.S.
person may not, however, open a business after the effective date, the
purpose of which is the sale of vocational skills training in the
maintenance of copy machines, as this would constitute the economic
development of human resources in Burma.
(4) Contracts for the purchase or sale of services incident to the
registration and renewal of patents, trademarks and copyrights are not
prohibited by this part.
(5) A U.S. bank is allowed to provide trade financing as a service
either to the Government of Burma or to nongovernmental entities in
Burma, but cannot provide them loans earmarked for economic development
of resources in Burma if loan repayment is secured by the project. A
U.S. bank can provide development project financing as a service, so
long as the financing instruments are not convertible into equity, and
do not provide for participation, including as collateral or security,
in royalties, earnings, or profits in the economic development of
resources located in Burma.
Sec. 537.409 Approval or other facilitation of a foreign person's
investment.
(a) The prohibition contained in Sec. 537.202 against approval or
other facilitation of a foreign person's investment in Burma bars any
action by a U.S. person that assists or supports a foreign person's
activity that would constitute prohibited new investment under
Sec. 537.201 if engaged in by a U.S. person. This facilitation
prohibition is subject to the exemption for trade in goods, services
and technology set forth in Sec. 537.204.
(b) Examples: (1) A U.S. corporation is prohibited from brokering,
financing, guaranteeing, or approving the entry by any foreign person,
including a foreign affiliate, into a contract for the development of,
e.g., a natural gas field, a tourist hotel complex, or a rubber
plantation in Burma, unless pursuant to the affiliate's exercise of
rights under an agreement entered into prior to the effective date. An
independent U.S. contractor, however, may perform brokerage, financing,
or guarantee services if under a service contract meeting the
conditions of Sec. 537.204.
(2) The sale to a foreign person of a U.S. person's equity or
income interest in a development project in Burma constitutes
facilitation of that foreign person's investment in Burma, unless
pursuant to a pre-effective date agreement. Such a sale, however, is
authorized by general license under Sec. 537.504.
(3) A U.S. national or permanent resident alien employed in Burma
or in a third country by a foreign person may participate in any
decision-making role in an activity by the foreign person that includes
economic development of resources located in Burma as exempt employment
services pursuant to Sec. 537.204, unless such services are undertaken
pursuant to a post-effective date agreement between the foreign person
and the Government of Burma or a nongovernmental entity in Burma and:
(i) involve the general supervision and guarantee of the foreign
person's performance of a contract for the economic development of
resources located in Burma, or
(ii) where the individual U.S. person's compensation is provided
for, in whole or in part, from shares of ownership in the development
project or participation in royalties, earnings, or profits in the
development project.
Subpart E--Licenses, Authorizations, and Statements of Licensing
Policy
Sec. 537.501 General and specific licensing procedures.
For provisions relating to licensing procedures, see subpart C of
part 501 of this chapter.
Sec. 537.502 Effect of license or authorization.
(a) No license or other authorization contained in this part, or
otherwise issued by or under the direction of the Director of the
Office of Foreign Assets Control, shall be deemed to authorize or
validate any transaction effected prior to the issuance of the license,
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 the Office of Foreign Assets
Control 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 provision of this chapter
unless the regulation, ruling, instruction or license specifically
refers to such provision.
(c) Any regulation, ruling, instruction, or license authorizing any
transaction otherwise prohibited under this part has the effect of
removing a prohibition or prohibitions 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
which would not otherwise exist under ordinary principles of law.
Sec. 537.503 Exclusion from licenses and authorizations.
The Director of the Office of Foreign Assets Control reserves the
right to exclude any person, property, or transaction from the
operation of any license, or from the privileges therein conferred, or
to restrict the applicability thereof with respect to particular
persons, property, transactions, or classes thereof. Such action shall
be binding upon all persons receiving actual or constructive notice of
such exclusion or restriction.
Sec. 537.504 Divestiture of U.S. person's equity investment in Burma.
Notwithstanding the prohibition in Sec. 537.202 against the
facilitation by a
[[Page 27851]]
U.S. person of a foreign person's investment, all transactions related
to the divestiture or transfer to a foreign person of a U.S. person's
share of ownership including an equity interest in the economic
development of resources located in Burma are authorized. U.S. persons
participating in such transactions valued at more than $10,000 are
required, within 10 business days after the agreement is signed, to
file a report for statistical purposes with the Office of Foreign
Assets Control, U.S. Treasury Department, 1500 Pennsylvania Avenue NW--
Annex, Washington, DC 20220.
Note to Sec. 537.504: This authorization includes arrangements
by U.S. persons with pre-effective date investments in Burma to
``farm in'' or sell a stake in the investment to a foreign person.
For purposes of this section, the term farm-in arrangement is
defined to mean the sale of an equity interest in an investment in
the economic development of resources located in Burma.
Subpart F--Reports
Sec. 537.601 Recordkeeping and reporting requirements.
For provisions relating to records and reports, see subpart B of
part 501 of this chapter.
Subpart G--Penalties
Sec. 537.701 Penalties.
(a) Attention is directed to section 206 of the International
Emergency Economic Powers Act (50 U.S.C. 1705) (the ``Act''), which is
applicable to violations of the provisions of any license, ruling,
regulation, order, direction 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 Act. Section 206 of the
Act, as adjusted by the Federal Civil Penalties Inflation Adjustment
Act of 1990 (Pub.L. 101-410, as amended, 28 U.S.C. 2461 note), provides
that:
(1) A civil penalty of not to exceed $11,000 per violation may be
imposed on any person who violates any license, order, or regulation
issued under the Act;
(2) Whoever willfully violates any license, order, or regulation
issued under the Act shall, upon conviction, be fined not more than
$50,000, or, if a natural person, may be imprisoned for not more than
10 years, or both; and any officer, director, or agent of any
corporation who knowingly participates in such violation may be
punished by a like fine, imprisonment or both.
(b) The criminal penalties provided in the Act are subject to
increase pursuant to 18 U.S.C. 3571.
(c) Attention is also directed to 18 U.S.C. 1001, which provides
that whoever, in any matter within the jurisdiction of any department
or agency of the United States, knowingly and willfully falsifies,
conceals or covers up by any trick, scheme, or device a material fact,
or makes any false, fictitious or fraudulent statements or
representations or makes or uses any false writing or document knowing
the same to contain any false, fictitious or fraudulent statement or
entry, shall be fined under title 18, United States Code, or imprisoned
not more than 5 years, or both.
(d) Violations of this part may also be subject to relevant
provisions of other applicable laws.
Sec. 537.702 Prepenalty notice.
(a) When required. If the Director of the Office of Foreign Assets
Control has reasonable cause 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, direction 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, and the Director
determines that further proceedings are warranted, he shall issue to
the person concerned a notice of his intent to impose a monetary
penalty. The prepenalty notice shall be issued whether or not another
agency has taken any action with respect to this matter.
(b) Contents--(1) Facts of violation. The prepenalty notice shall
describe the violation, specify the laws and regulations allegedly
violated, and state the amount of the proposed monetary penalty.
(2) Right to respond. The prepenalty notice also shall inform the
respondent of respondent's right to make a written presentation within
30 days of mailing of the notice as to why a monetary penalty should
not be imposed, or, if imposed, why it should be in a lesser amount
than proposed.
Sec. 537.703 Response to prepenalty notice; informal settlement.
(a) Deadline for response. The respondent shall have 30 days from
the date of mailing of the prepenalty notice to make a written response
to the Director of the Office of Foreign Assets Control.
(b) Form and contents of response. The written response need not be
in any particular form, but shall contain information sufficient to
indicate that it is in response to the prepenalty notice. It should
contain responses to the allegations in the prepenalty notice and set
forth the reasons why the respondent believes the penalty should not be
imposed or, if imposed, why it should be in a lesser amount than
proposed.
(c) Informal settlement. In addition or as an alternative to a
written response to a prepenalty notice pursuant to this section, the
respondent or respondent's representative may contact the Office of
Foreign Assets Control as advised in the prepenalty notice to propose
the settlement of allegations contained in the prepenalty notice and
related matters. In the event of settlement at the prepenalty stage,
the claim proposed in the prepenalty notice will be withdrawn, the
respondent is not required to take a written position on allegations
contained in the prepenalty notice, and the Office of Foreign Assets
Control will make no final determination as to whether a violation
occurred. The amount accepted in settlement of allegations in a
prepenalty notice may vary from the civil penalty that might finally be
imposed in the event of a formal determination of violation. In the
event no settlement is reached, the 30-day period specified in
paragraph (a) of this section for written response to the prepenalty
notice remains in effect unless additional time is granted by the
Office of Foreign Assets Control.
Sec. 537.704 Penalty imposition or withdrawal.
(a) No violation. If, after considering any response to the
prepenalty notice and any relevant facts, the Director of the Office of
Foreign Assets Control determines that there was no violation by the
respondent named in the prepenalty notice, the Director promptly shall
notify the respondent in writing of that determination and that no
monetary penalty will be imposed.
(b) Violation. If, after considering any response to the prepenalty
notice, the Director of the Office of Foreign Assets Control determines
that there was a violation by the respondent named in the prepenalty
notice, the Director promptly shall issue a written notice of the
imposition of the monetary penalty to the respondent.
(1) The penalty notice shall inform the respondent that payment of
the assessed penalty must be made within 30 days of the mailing of the
penalty notice.
(2) The penalty notice shall inform the respondent of the
requirement to furnish the respondent's taxpayer identification number
pursuant to 31 U.S.C. 7701 and that such number will be used for
purposes of collection and
[[Page 27852]]
reporting on any delinquent penalty amount in the event of a failure to
pay the penalty imposed.
Sec. 537.705 Administrative collection; referral to United States
Department of Justice.
In the event that the respondent does not pay the penalty imposed
pursuant to this part or make payment arrangements acceptable to the
Director of the Office of Foreign Assets Control within 30 days of the
mailing of the written notice of the imposition of the penalty, 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.
Subpart H--Procedures
Sec. 537.801 Procedures.
For provisions relating to procedures, see subpart C of part 501 of
this chapter.
Sec. 537.802 Delegation by the Secretary of the Treasury.
Any action which the Secretary of the Treasury is authorized to
take pursuant to Executive Order 13047 or any further executive orders
relating to the national emergency declared in Executive Order 13047
may be taken by the Director of the Office of Foreign Assets Control,
or by any other person to whom the Secretary of the Treasury has
delegated authority so to act.
Subpart I--Paperwork Reduction Act
Sec. 537.901 Paperwork Reduction Act notice.
For approval by the Office of Management and Budget under the
Paperwork Reduction Act of information collections relating to
recordkeeping and reporting requirements, to licensing procedures
pursuant to statements of licensing policy, and to other procedures,
see Sec. 501.901 of this chapter.
Dated: April 21, 1998.
R. Richard Newcomb,
Director, Office of Foreign Assets Control.
Approved: May 11, 1998.
James E. Johnson,
Assistant Secretary (Enforcement), Department of the Treasury.
[FR Doc. 98-13477 Filed 5-18-98; 9:52 am]
BILLING CODE 4810-25-F
