03-13053. Iraqi Sanctions Regulations; Authorizations of Non-Commercial Funds Transfers and Related Transactions, Activities by the U.S. Government and Its Contractors or Grantees, Privately Financed Humanitarian Transactions, and Certain Exports ...

AGENCY:

Office of Foreign Assets Control, Treasury.

ACTION:

Interim final rule.

SUMMARY:

The Office of Foreign Assets Control (“OFAC”) of the U.S. Department of the Treasury is amending the Iraqi Sanctions Regulations, to include four general licenses issued May 7, 2003. Subject to certain conditions, these general licenses authorize the following activities involving Iraq: non-commercial funds transfers (including family remittances) and related transactions, activities by the U.S. Government and its contractors or grantees, privately financed humanitarian transactions, and certain exports and reexports to Iraq. OFAC also is publishing a technical amendment to its regulatory definition of the terms “humanitarian activities,” “humanitarian purposes,” and “humanitarian support.”

DATES:

Effective May 7, 2003. Written comments must be received no later than July 28, 2003.

ADDRESSES:

Comments may be submitted to the Chief of Records, ATTN: Request for Comments, Office of Foreign Assets Control, Department of the Treasury, 1500 Pennsylvania Avenue, NW., Washington, DC 20220. Alternatively, comments may be submitted via facsimile to the Chief of Records at 202/622-1657 or via OFAC's Web site http://www.treas.gov/​offices/​enforcement/​ofac/​comment.html.

FOR FURTHER INFORMATION CONTACT:

OFAC's Chief of Licensing, tel. [phone], Chief of Policy Planning and Program Management, tel. [phone], or Chief Counsel, tel. [phone].

SUPPLEMENTARY INFORMATION:

Background

On August 2, 1990, upon Iraq's invasion of Kuwait, the President issued Executive Order 12722, declaring a national emergency with respect to Iraq. This order, issued under the authority of, inter alia, the International Emergency Economic Powers Act (50 U.S.C. 1701 et seq.), the National Emergencies Act (50 U.S.C. 1601 et seq.), and section 301 of title 3 of the U.S. Code, imposed economic sanctions, including a complete trade embargo, against Iraq. In keeping with United Nations Security Council Resolution 661 of August 6, 1990, and under the United Nations Participation Act (22 U.S.C. 287c), the President also issued Executive Order 12724 of August 9, 1990, which imposed additional restrictions. The Iraqi Sanctions Regulations, 31 CFR part 575, implement Executive Orders 12722 and 12724 and are administered by the Treasury Department's Office of Foreign Assets Control (“OFAC”).

In light of recent developments in Iraq, OFAC issued four general licenses on May 7, 2003, to authorize additional transactions involving Iraq. The new sections published today incorporate these four general licenses into the Iraqi Sanctions Regulations.

Paragraph (a) of new § 575.529 authorizes U.S. persons to transfer funds to any person in Iraq for non-commercial humanitarian purposes, including family remittances, provided that no U.S. person may transfer more than $500 per month to any person in Iraq. Paragraph (b) authorizes U.S. financial institutions to engage in all transactions ordinarily incident to such transfers of funds. Paragraph (c) provides that this section does not authorize transfers from blocked accounts.

Paragraph (a) of new § 575.530 authorizes activities by the U.S. government and its contractors or grantees. Paragraph (b)(1) contains a restriction on the exportation or reexportation of any goods or technology (including technical data or other information) controlled by the Department of Commerce under the Export Administration Regulations (15 CFR chapter VII, subchapter C) for exportation to Iraq; any such exports or reexports must be separately authorized by OFAC. Paragraph (b)(2) describes the circumstances in which some exports or reexports of goods to Iraq must be submitted to the United Nations “661 Committee.” Paragraph (c) requires that all payments and funds transfers initiated pursuant to this authorization, and all related documentation, reference this section number. Note 1 to section 575.530 explains that the activities of any subcontractors or other persons who are engaged to perform activities within the scope of the relevant contract or grant are also authorized and subject to the same restrictions. Note 2 to section 575.530 provides information concerning the use of U.S. passports for travel to, in, or through Iraq.

New § 575.531 authorizes all transactions that are necessary to provide privately financed humanitarian support, or to plan or prepare for the provision of humanitarian support, to the Iraqi people in Iraq. Paragraph (a) includes examples of some of the newly-authorized transactions. The note to paragraph (a) references the definition of “humanitarian support” that appears elsewhere in the Iraqi Sanctions Regulations. Paragraphs (b) and (c) contain special provisions on the exportation or reexportation of goods or technology to Iraq. Paragraph (d) provides that this new section does not authorize any transactions with persons on the Department of Defense's 55-person Watch List. Paragraph (e) requires that all payments and funds transfers initiated pursuant to this authorization, and all related documentation, reference this section number. The note to § 575.531 provides information concerning the use of U.S. passports for travel to, in, or through Iraq.

New § 575.532 authorizes the exportation from the United States or, if subject to U.S. jurisdiction, the exportation or reexportation from a third country to Iraq of any goods, subject to two conditions. First, the exportation or reexportation of any goods or technology (including technical data or other information) controlled by the Department of Commerce under the Export Administration Regulations for exportation to Iraq, or listed on the United Nations Goods Review List, must be separately authorized by OFAC. Second, any exportation or reexportation of goods to Iraq must be submitted to the United Nations 661 Committee to the extent and in the manner required under applicable UN Security Council resolutions; for information concerning this second condition, exporters or reexporters should contact the State Department office identified in § 575.532.

These new authorizations do not eliminate the need to comply with other provisions of law, including any aviation, financial, or trade requirements of agencies other than OFAC.

OFAC also is amending § 575.330, which defines the terms “humanitarian activities,” “humanitarian purposes,” and “humanitarian support.” OFAC is amending section 575.330 to remove the phrase “[f]or purposes of §§ 575.527 and 575.528,” so that the definition is not limited only to those two sections of the Iraqi Sanctions Regulations.

Request for Comments

Because amendment of these regulations involves 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. However, because of the importance of the issues addressed in these regulations, this rule is being issued in interim form and comments will be considered in the development of a final rule.

Accordingly, OFAC encourages interested persons who wish to comment to do so at the earliest possible time to permit the fullest consideration of their views. Comments may address the impact of the regulations on the submitter's activities, whether of a commercial, non-commercial or humanitarian nature, as well as changes that would improve the clarity and organization of the regulations.

The period for submission of comments will close July 28, 2003. The address for submitting comments appears near the beginning of this document. OFAC will consider all comments received before the close of the comment period in developing final regulations. Comments received after the end of the comment period will be considered if possible, but their consideration cannot be assured. OFAC will not accept public comments accompanied by a request that a part or all of the submission be treated confidentially because of its business proprietary nature or for any other reason. OFAC will return such a submission to the originator without considering the comments in the development of final regulations. In the interest of accuracy and completeness, OFAC requires comments in written form.

All public comments on these regulations will be a matter of public record. Copies of the public record concerning these regulations will be made available not sooner than August 25, 2003, and will be obtainable from OFAC's Web site http://www.treas.gov/​ofac. If that service is unavailable, written requests for copies may be sent to Office of Foreign Assets Control, U.S. Department of the Treasury, 1500 Pennsylvania Ave, NW., Washington, DC 20220, Attn: Chief, Records Division.

Electronic Availability

This document is available as an electronic file on The Federal Bulletin Board the day of publication in the Federal Register. By modem, dial 202/512-1387 and type “/GO FAC,” or call 202/512-1530 for disk or paper copies. This file is available for downloading without charge in ASCII and Adobe Acrobat readable (*.PDF) formats. For Internet access, the address for use with the World Wide Web, Telnet, or FTP protocol is fedbbs.access.gpo.gov. This document and additional information concerning OFAC are available from OFAC's Web site: http://www.treas.gov/​ofac.

Paperwork Reduction Act

The collections of information related to these regulations can be found in 31 CFR part 501. Pursuant to the Paperwork Reduction Act of 1995 (44 U.S.C. 3507), those collections of information have been previously approved by the Office of Management and Budget under control number 1505-0164.

List of Subjects in 31 CFR Part 575

• Administrative practice and procedure
• Banks, banking
• Blocking of assets
• Exports
• Foreign trade
• Humanitarian aid
• Imports
• Iran
• Iraq
• Oil imports
• Penalties
• Petroleum
• Petroleum products
• Reporting and recordkeeping requirements
• Specially designated nationals
• Terrorism
• Travel restrictions

For the reasons stated in the preamble, 31 CFR part 575 is amended as set forth below:

PART 575—IRAQI SANCTIONS REGULATIONS

1. The authority citation for 31 CFR part 575 continues to read as follows:

Authority: 3 U.S.C. 301; 18 U.S.C. 2332d; 22 U.S.C. 287c; Pub. L. 101-410, 104 Stat. 890 (28 U.S.C. 2461 note); 31 U.S.C. 321(b); 50 U.S.C. 1601-1651, 1701-1706; Pub. L. 101-513, 104 Stat. 2047-2055 (50 U.S.C. 1701 note); E.O. 12722, 55 FR 31803, 3 CFR, 1990 Comp., p. 294; E.O. 12724, 55 FR 33089, 3 CFR, 1990 Comp., p. 297; E.O. 12817, 57 FR 48433, 3 CFR, 1992 Comp., p. 317.

Subpart C—General Definitions

2. Revise § 575.330 to read as follows:

§ 575.330

Humanitarian activities, humanitarian purposes, and humanitarian support.

The terms humanitarian activities, humanitarian purposes, and humanitarian support mean, as these terms have been defined by the Department of State for relevant United Nations Security Council Resolutions on Iraq, humanitarian relief, educational, cultural, recreational, and human rights-related activities, and activities to ameliorate the effects of or to investigate war crimes. Such purposes may include preparatory activities and transactions.

Subpart E—Licenses, Authorizations, and Statements of Licensing Policy

3. Add a new § 575.529 to subpart E to read as follows:

§ 575.529

Non-commercial funds transfers and related transactions.

(a) U.S. persons are authorized to transfer funds to any person in Iraq for non-commercial humanitarian purposes, including family remittances, provided that no U.S. person may transfer more than $500 per month to any person in Iraq.

(b) U.S. financial institutions are authorized to engage in all transactions ordinarily incident to the transfer of funds authorized by paragraph (a) of this section, including the opening of new correspondent accounts for funds transfers with Iraqi financial institutions. U.S. financial institutions may rely on originators of funds transfers with regard to compliance with this part.

(c) This section does not authorize transfers from blocked accounts.

4. Add a new § 575.530 to subpart E to read as follows:

§ 575.530

Activities by the U.S. Government and its contractors or grantees.

(a) Subject to the provisions of paragraph (b) of this section, U.S. government agencies and their contractors or grantees are authorized to engage in all transactions otherwise prohibited by subpart B of this part that are within the scope of their official duties or the relevant U.S. government contracts or grants.

(b)(1) The exportation from the United States or, if subject to U.S. jurisdiction, the exportation or reexportation from a third country to Iraq of any goods or technology (including technical data or other information) controlled by the Department of Commerce under the Export Administration Regulations (15 CFR chapter VII, subchapter C) for exportation to Iraq must be separately authorized by or pursuant to this part.

(2) If the contracting or granting U.S. government agency has determined that the relevant contract or grant is not in support of U.S. government humanitarian assistance or reconstruction efforts in Iraq, or not in support of U.S. or allied forces deployed in military contingency, humanitarian, or peacekeeping operations in Iraq, then the exportation or reexportation of any goods to Iraq must be submitted to the 661 Committee to the extent and in the manner required under applicable UN Security Council resolutions. If this paragraph (b)(2) applies to a proposed exportation or reexportation, the exporter or reexporter should contact the Office of Peacekeeping and Humanitarian Operations, Room 5323, U.S. Department of State, 2201 C Street NW., Washington, DC 20520 (tel [phone], fax [phone]) for procedures concerning submissions to the 661 Committee.

(c) All payments and funds transfers initiated pursuant to this authorization, and all related documentation, must reference this section number.

Note 1 to § 575.530:

This authorization and the restrictions on certain exportations or reexportations extend to the activities of any subcontractors or other persons who are engaged to perform activities within the scope of the relevant contract or grant. See 31 CFR 575.418.

Note 2 to § 575.530:

U.S. citizens who wish to travel to Iraq pursuant to this authorization may be required to apply to the Department of State to have their passports validated for travel to Iraq, pursuant to 22 CFR 51.73 and 51.74 and public notices issued thereunder, including Public Notice 4283, 68 FR 8791 (February 25, 2003), as amended by Public Notice 4337, 68 FR 18722 (Apr. 16, 2003), and any subsequent public notices regarding the restriction on the use of U.S. passports for travel to, in or through Iraq. Such applications, if required, should be submitted to the Deputy Assistant Secretary for Passport Services, ATTN: Office of Passport Policy and Advisory Services, U.S. Department of State, 2401 E Street, NW., Washington, DC 20522-0907. Such applications must include the applicant's name, date and place of birth, dates of proposed travel, and purpose of the trip. This general license does not in any way create a presumption in favor of passport validation.

5. Add a new § 575.531 to subpart E to read as follows:

§ 575.531

Privately financed humanitarian transactions.

(a) Subject to the conditions and limitations set forth in paragraphs (b)-(e) of this section, all transactions otherwise prohibited by subpart B of this part that are necessary to provide privately financed humanitarian support, or to plan or prepare for the provision of humanitarian support, to the Iraqi people in Iraq are authorized. Transactions authorized by this section include, but are not limited to, the exportation to Iraq of goods and services necessary for the provision of humanitarian support, the financing of such humanitarian support, travel-related transactions necessary to provide humanitarian support, and related funds transfers by U.S. financial institutions.

Note to paragraph (a):

The term humanitarian support means, as this term has been defined by the Department of State for relevant United Nations Security Council Resolutions on Iraq, humanitarian relief, educational, cultural, recreational, and human rights-related activities, and activities to ameliorate the effects of or to investigate war crimes. Such purposes may include preparatory activities and transactions. See 31 CFR 575.330.

(b) The exportation from the United States or, if subject to U.S. jurisdiction, the exportation or reexportation from a third country to Iraq of any goods or technology (including technical data or other information) controlled by the Department of Commerce under the Export Administration Regulations (15 CFR chapter VII, subchapter C) for exportation to Iraq or listed on the United Nations Goods Review List must be separately authorized by or pursuant to this part.

(c) Any exportation or reexportation of goods to Iraq pursuant to this authorization must be submitted to the United Nations 661 Committee to the extent, and in the manner, required under applicable UN Security Council resolutions. For procedures concerning submissions to the 661 Committee, the exporter or reexporter should contact the Office of Peacekeeping and Humanitarian Operations, Room 5323, U.S. Department of State, 2201 C Street NW., Washington, DC 20520 (tel [phone], fax [phone]).

(d) This section does not authorize any transactions with persons on the Department of Defense's 55-person Watch List.

(e) All payments and funds transfers initiated pursuant to this authorization, and all related documentation, must reference this section number.

Note to § 575.531:

U.S. citizens who wish to travel to Iraq pursuant to this authorization may be required to apply to the Department of State to have their passports validated for travel to Iraq, pursuant to 22 CFR 51.73 and 51.74 and public notices issued thereunder, including Public Notice 4283, 68 FR 8791 (February 25, 2003), as amended by Public Notice 4337, 68 FR 18722 (Apr. 16, 2003), and any subsequent public notices regarding the restriction on the use of U.S. passports for travel to, in or through Iraq. Such applications, if required, should be submitted to the Deputy Assistant Secretary for Passport Services, ATTN: Office of Passport Policy and Advisory Services, U.S. Department of State, 2401 E Street, NW., Washington, DC 20522-0907. Such applications must include the applicant's name, date and place of birth, dates of proposed travel, and purpose of the trip. This general license does not in any way create a presumption in favor of passport validation.

6. Add a new § 575.532 to subpart E to read as follows:

§ 575.532

Certain exports and reexports to Iraq.

The exportation from the United States or, if subject to U.S. jurisdiction, the exportation or reexportation from a third country to Iraq of any goods is authorized, provided that the exportation or reexportation of any goods or technology (including technical data or other information) controlled by the Department of Commerce under the Export Administration Regulations (15 CFR chapter VII, subchapter C) for exportation to Iraq, or listed on the United Nations Goods Review List, must be separately authorized by or pursuant to this part, and any exportation or reexportation to Iraq must be submitted to the 661 Committee to the extent and in the manner required under applicable UN Security Council resolutions. For procedures concerning submissions to the 661 Committee, the exporter or reexporter should contact the Office of Peacekeeping and Humanitarian Operations, Room 5323, U.S. Department of State, 2201 C Street NW., Washington, DC 20520 (tel [phone], fax [phone]).

Dated: May 9, 2003.

R. Richard Newcomb,

Director, Office of Foreign Assets Control.

Approved: May 20, 2003.

Juan C. Zarate,

Deputy Assistant Secretary (Terrorist Financing and Financial Crimes), Department of the Treasury.