[Federal Register Volume 60, Number 126 (Friday, June 30, 1995)]
[Rules and Regulations]
[Pages 34142-34143]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-16121]
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DEPARTMENT OF THE TREASURY
Office of Foreign Assets Control
31 CFR Chapter V
Compliance with 31 CFR Chapter V with Respect to Fully-Automated
Financial Transactions
AGENCY: Office of Foreign Assets Control, Treasury.
ACTION: Policy Statement.
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SUMMARY: Due to the wide availability and use by financial institutions
of name-recognition software to screen fully-automated financial
transactions for potential violations of economic sanctions programs,
the Office of Foreign Assets Control (``FAC'') will no longer treat
fully-automated transactions differently from manually-processed
transactions for civil penalty purposes.
EFFECTIVE DATE: September 1, 1995.
FOR FURTHER INFORMATION CONTACT: Dennis P. Wood, Chief, Compliance
Programs Division, tel.: 202/622-2490, or Mrs. B.S. Scott, Chief, Civil
Penalties Program, tel.: 202/622-6140, Office of Foreign Assets
Control, Department of the Treasury, Washington, D.C. 20220.
SUPPLEMENTARY INFORMATION:
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 disks
or paper copies. This file is available for downloading in WordPerfect
5.1, ASCII, and Postscript formats. The document is also accessible for
downloading in ASCII format without charge from Treasury's Electronic
Library (``TEL'') in the ``Business, Trade and Labor Mall'' of the
FedWorld bulletin board. By modem dial 703/321-3339, and select self-
expanding file ``T11FR00.EXE'' in TEL. For Internet access, use one of
the following protocols: Telnet = fedworld.gov (192.239.93.3); World
Wide Web (Home Page) = http://www.fedworld.gov; FTP = ftp.fedworld.gov
(192.239.92.205).
Background
Essential elements of economic sanctions programs administered by
FAC include prohibitions on transfers of property to or for the benefit
of targeted governments, entities, and individuals, including the
blocking of targeted persons' property, when it comes within the
jurisdiction of the United States. Civil monetary penalties may be
imposed administratively by FAC for violations of these transfer
prohibitions and blocking requirements pursuant to the statutes
authorizing most FAC sanctions programs. See, e.g., 22 U.S.C. 5113(b)
(repealed June 8, 1994, see Pub. L. 103-149, section 4(a), 107 Stat.
1504 (1993)); Pub. L. 101-513, section 586E, 104 Stat. 2047 (1990); 50
U.S.C. 1705; 50 U.S.C. App. 16.
A large proportion of financial transactions are now handled by
computer, without intervention by bank or other financial institution
personnel. In the past, FAC treated such fully-automated or ``straight
through'' transactions as being beyond the knowledge of financial
institutions. Thus, for purposes of administering its
[[Page 34143]]
civil monetary penalty authority under sanctions programs contained in
31 CFR chapter V, FAC considered the fact that a transfer violation
arose in a fully-automated transaction as a strongly mitigating
circumstance in determining liability.
In the past few years, financial institutions that handle
significant volumes of international transfers have developed and put
into use ``interdiction software'' that scans incoming automated
transfer instructions for words (names of banks and transaction
parties, geographical locations, and transaction descriptions) likely
to indicate that a transaction is subject to the prohibitions in 31 CFR
chapter V. Commercial interdiction software is now widely available and
in use, and information needed to update the database used in screening
transactions as FAC amends its lists of blocked persons and specially
designated nationals is immediately available for computer downloading
from numerous governmental and private sources. The use of such
software by financial institutions has substantially enhanced the
effectiveness of FAC sanctions programs.
It has been determined that it is no longer appropriate to treat
fully-automated financial transactions that violate economic sanctions
prohibitions as being beyond a financial institution's knowledge or
intent. Beginning on September 1, 1995, FAC will no longer treat the
fully-automated processing of violative transactions as a full defense
in civil penalty proceedings.
Dated: May 31, 1995.
R. Richard Newcomb,
Director, Office of Foreign Assets Control.
Approved: June 5, 1995.
John P. Simpson,
Deputy Assistant Secretary (Regulatory, Tariff & Trade Enforcement).
[FR Doc. 95-16121 Filed 6-27-95; 4:26 pm]
BILLING CODE 4810-25-F
